THAT WILL DO IT FOR
"THE CLAMAN COUNTDOWN."
♪.
LARRY: HELLO, FOLKS, WELCOME TO
"KUDLOW," I’M LARRY KUDLOW.
SO I KNOW WE’RE COMING INTO
THANKSGIVING AND IT IS TRULY ONE
OF MY FAVORITE HOLIDAYS AND
THANKSGIVING IS THE
QUINTESSENTIAL AMERICAN HISTORY
STORY, CELEBRATING THE FIRST
HARVEST OF OUR EARLIEST
SETTLERS.
THAT IS THE INSPIRING AND
OPTIMISTIC TALE.
ONE OF THE REASONS I LOVE IT IS
THAT HISTORY IS SO OPTIMISTIC
AND I’M A OPTIMISTIC PERSON WHO
ALWAYS BELIEVES IN THE GREATEST
OF THE SOUL OF THE FOUNDING OF
THE UNITED STATES OF AMERICA BUT
I HAVE TO DEPART FROM THIS
OPTIMISTIC SCRIPT FOR JUST A
LITTLE BIT TALKING ABOUT THE
ECONOMY.
I GOT TO TELL YOU, I SEE A
NUMBER OF IMPORTANT INDICATORS
THAT ARE ALL POINTING TO
RECESSION.
I DON’T LIKE THIS BUT THAT IS
WHAT I’M LOOKING AT.
WE MAY ALREADY BE IN RECESSION
BUT NEXT YEAR LOOKS LIKE AN EVEN
DEEPER DOWNTURN.
NOW THERE IS A WAY OUT OF THIS
MESS AND I’M GOING TO GET TO
THAT IN A FEW MOMENTS BUT FIRST,
SOME STRAIGHTFORWARD, EMPIRICAL
FACTOIDS.
I BEGIN WITH A HUGE DROP IN THE
CONFERENCE BOARD’S LEADING
ECONOMIC INDICATOR.
THIS IS A VERY OLD-FASHIONED
SERIES BUT IT’S A HIGHLY
ACCURATE FORECASTING TOOL.
IT HAS GOT INTEREST RATE SPREADS
AND CONSUME EXPECTATIONS, STOCK
PRICES PERMITS FOR BUILDING NEW
HOMES AND OTHER MEASURES THERE
ARE 10 IN ALL.
AS YOU SEE BY THE RATE THE RATE
OF CHANGE IS ABSOLUTELY
PLUNGING.
SECOND, MAYBE A MORE
CONTROVERSIAL INDICATOR CALLED
M2 WHICH IS AN INADEQUATE
MEASURE OF THE NATION’S MONEY
SUPPLY BUT STILL SOMETHING TO
PAY ATTENTION TO, IT WAS
PIONEERED BY THE GREAT NOBEL
PRIZE WINNER MILTON FRIEDMAN.
THIS IS A MONETARY
INTERPRETATION OF THE ECONOMY
AND TELLS US ABOUT FUTURE
INFLATION AND GROWTH.
YOU CAN SEE BY THIS CHART FOR 20
YEARS M2 WAS BASICALLY GROWING
MODESTLY THAT HAD SOMETHING TO
DO WITH 2% INFLATION, NOT
EVERYTHING BUT SOMETHING TO DO
WITH LOW INFLATION.
THEN WE COME TO THE CRAZINESS OF
THE LAST TWO YEARS WITH MASSIVE
INCREASE IN FEDERAL SPENDING LED
TO EQUALLY MASSIVE MONEY
PRINTING BY THE FEDERAL RESERVE.
THIS WAS THE SINGLE BIGGEST
MISTAKE BY JOE BIDEN.
IT MOVED INFLATION RATE UP FROM
1% TO NEARLY 10%.
BECAUSE OF THAT REAL WAGES HAVE
FALLEN 18 CONSECUTIVE MONTHS.
THAT IS THE SOFT UNDERBELLY OF
THE BIDEN ECONOMY AND NOW, AS
THE FED MAKES ITS BELATED
CORRECTION FOR ITS OWN PRIOR
MISTAKES, THE AMERICAN ECONOMY
IS IN GREAT JEOPARDY.
THIS ALL COULD HAVE BEEN AVOIDED
BUT IT WASN’T AVOIDED AND NOW
HERE WE ARE, WITH THE THREAT OF
A DIFFICULT DOWNTURN NEXT YEAR,
ONE THAT PROBABLY BEGAN THIS
YEAR BUT MILTON FRIEDMAN ARGUED
INFLATION IS TOO MUCH MONEY
CHASING TOO FEW GOODS.
OVERSIMPLIFYING A BIT THE UNCLE
SAM CREATED MONEY,
OVERREGULATION, TAX INCREASES,
THE WAR AGAINST FOSSIL FUEL
PRODUCTION ALL CREATED TALL
BARRIERS TO THE PRODUCTION OF
GOODS.
YES WE HAD A COVID SUPPLY CHAIN
HANGOVER.
YES THERE IS VLADMIR PUTIN
INVADING UKRAINE BUT THE BULK OF
THIS ECONOMIC MESS, HOMEGROWN,
BASED ON THE POLICIES OF BIG
GOVERNMENT SOCIALISM AND CENTRAL
PLANNING ON A GRAND SCALE.
BESIDES THE LEAD BEING
INDICATORS AND ONE MORE, THE
BOND MARKET IS TURNED UPSIDE
DOWN ON ITS HEAD WITH SHORT-TERM
INTEREST RATES MUCH HIGHER THAN
LONG-TERM RATES.
THAT IS A VERY USEFUL RECESSION
FORECASTING MODEL THAT WAS
DEVELOPED YEARS AGO AT THE
NEW YORK FED.
IT HAS A VERY HIGH DEGREE OF
ACCURACY.
BASICALLY WHEN THE THREE MONTH
T-BILL EXCEEDS THE YIELD ON THE
10-YEAR TREASURY BOND THE
PROBABILITY OF RECESSION ONE
YEAR HENCE GOES HIGHER AND
HIGHER.
RIGHT NOW THE THREE MONTH BILL
IS 4.30 AND THE 10-YEAR IS 3.80.
THERE IS A VERY ALARMING SIGN.
THERE ARE OTHER INDICATORS I
COULD POINT TO, HOUSING
DOWNTURN, SLOW DOWN IN
MANUFACTURING, I DON’T WANT TO
GET DEEPER IN THE WEEDS THAN I
HAVE TO.
NO MODEL IS PERFECT BUT I WOULD
SUGGEST KEEPING AN EYE ON
LEADING INDECONOMIC INDICATORS,
M2, AND THE YIELD CURVE GIVES
EVERYBODY A SENSE WHERE WE’RE
HEADED.
INFLATION WILL COME DOWN SLOWLY
BUT THE RECESSION MAY BE VERY
DIFFICULT.
AGAIN EVER THE OPTIMIST WE
SHOULD BE ABLE TO DO A LOT
BETTER IN THE FUTURE REGARDING
ECONOMIC POLICY THAN WE HAVE
DONE IN THE LAST TWO YEARS.
YOU HEARD THIS BEFORE FROM ME
BUT FIRST WE SHOULD IMMEDIATELY
OPEN THE SPIGOTS TO PRODUCE MORE
OIL AND GAS, ALLOW PERMITTING
AND PIPELINING AND REFINING.
ALL OF THAT WOULD REDUCE PRICES
PROMOTE JOBS, AND ECONOMIC
GROWTH.
JOHN KERRY COP 27 GREEN NEW DEAL
SOCIALIST, REDISTRIBUTION
CLIMATE REPARATIONS SCHEME, HE
IS TRYING TO BRIBE POOR
COUNTRIES NOT TO USE OIL AND GAS
IS JUST DUMBER THAN DUMB.
JOE BIDEN CLOSING COAL PLANTS
ALL ACROSS AMERICA, DUMBER THAN
DUMB.
REGULATIONS ON CLEAN BURNING
NATURAL GAS EVEN DUMBER THAN
DUMB, IF SUCH A DUMBNESS IS
POSSIBLE.
WE NEED TO REIMPOSE WORKFARE AND
WORK REQUIREMENTS ON ABLE-BODIED
PEOPLE RECEIVING GOVERNMENT
ASSISTANCE, OKAY?
THIS SUCCEEDED 25 YEARS AGO IN
REDUCING WELFARE SPENDING AND
ULTIMATELY LED TO A BALANCED
BUDGET.
ALSO, WE NEED TO MAKE
DONALD TRUMP’S SUPPLY SIDE
BUSINESS TAX CUTS PERMANENT.
THEN WE NEED TO REIN IN THE
BIDEN REGULATORY ASSAULT ON ALL
BUSINESSES, A POLICY THAT
LITERALLY STRANGLED THE ECONOMY.
AT THE END OF THE DAY WE’VE HAD
LESS MONEY CHASING MORE GOODS
UNDER THOSE POLICIES.
LESS MONEY CHASING MORE GOODS.
INFLATION WOULD CRASH.
THE ECONOMY WOULD SOAR.
WE’VE DONE THIS IN THE PAST AND
WE CAN DO IT IN THE FUTURE.
IT’S TIME TO ACT LIKE STEWARDS
OF ECONOMIC PROSPERITY.
LET US REPLACE UTOPIAN SOCIALIST
SCHEMES THAT ALWAYS CAUSE
RECESSION AND IMPOVERISHMENT
WHEREVER THEY ARE IMPLEMENTED.
I KNOW WE CAN RIGHT THIS SHIP.
I WILL SAY, HAPPY THANKSGIVING,