>> I THINK IT WAS BACK IN JULY
YOU SAID INFLATION WAS GOING TO
BE TEMPORARY.
A LOT OF AMERICANS ARE WONDERING
WHAT YOUR DEFINITION OF
TEMPORARY IS.
>> YOU ARE BEING A WISEGUY A
LITTLE BIT AND I UNDERSTAND
THAT’S YOUR JOB.
LARRY: LESTER HOLT JUST LATE OUT
THERE.
WISE GUY?
EVERYTHING MR. BIDEN AND HIS
TEAM HAS SAID ON INFLATION HAS
BEEN WRONG.
YELLEN, THE TREASURY SECRETARY
IS STILL OUT THERE SAYING THE
INFLATION RIGHT ABOUT IT END OF
THE YEAR IS GOING TO BE 2%.
SHE IS NUTS. JOINING ME TO TALK ABOUT THIS IS
JOINING ME TO TALK ABOUT THIS IS MY OLD PAL ROBERT HELLER.
MY OLD PAL ROBERT HELLER.
AND ART LAFFER.
TWO GENIUSES, IT’S A GREAT
PLEASURE TO HAVE YOU ON THE
SHOW.
COMMODITY PRICES.
WE HAVE A CHART.
THE CRB COMMODITY INDEX IS
SOARING.
AND GOING BACK TO YOUR DAYS ON
THE FED, IT SEEMS TO ME THE
FEDERAL RESERVE HAS GOT TO
TIGHTEN POLICY WITH HIGHER RATES
AND SELLING BONDS RATHER THAN
BUYING THEM.
UNTIL THEY SEE THE COMMODITY
INDICATORS COME DOWN.
YOU TELL ME ABOUT THAT.
TO ME THAT’S SOMETHING THEY HAVE
GOT TO DO.
>> ABSOLUTELY.
GOOD TO SEE YOU AGAIN.
COMMODITIES ARE ALWAYS A LEADING
INDICATOR.
AND COMMODITIES REACT FAST JUST
LIKE THE STOCK MARKET REACTS
FAST.
BUT THE REST OF THE ECONOMY,
THERE ARE A LOT OF ADJUSTMENTS
THAT GO OUT.
THE WAGE NEGOTIATIONS, AND OTHER
CONTRACTS.
IT TAKES A WHILE FOR THAT TO
COME INTO PLAY.
BUT THE LEADING INDICATOR ALL OF
THEM IS THE MONEY SUPPLY.
THE LAST TWO YEARS THE MONEY
SUPPLY MASS BEEN SOARING 20% PER
YEAR.
THAT HAS DRIVEN UP COMMODITY
PRICES AND THE WHOLE INFLATION
TRAIN.
>> THREE REAGAN APPOINTEES.
YOURSELF, MY FRIEND DWAYNE
ANGEL.
AND MANLY JOHNSON.
YOU WERE A TERRIFIC THREESOME ON
THE FEDERAL RESERVE BOARD
WORKING WITH VOARK.
NOT ALWAYS AGREEING, BUT WORKING
WITH VOLCKER.
ART LAFFER, BEFORE I GET TO THE
RIDICULOUS NOMINATIONS WHO ARE
UNQUALIFIED TO GO ON THE BOARD.
JEROME POWELL, THEY DON’T TALK
ABOUT THE MONEY SUPPLY OR
COMMODITY PRICE INDICATORS AS
LEADING INDICATORS OF THEIR
POLICY.
AND I DON’T THINK THEY HAVE AN
ACTION PLAN.
WHAT DO YOU THINK, ART?
>> IT’S FUN BEING ON WITH THE
TWO OF YOU.
I APOLOGIZE FOR MY DRESS.
I’M IN THE HILLS OF APPALACHIA.
THE WAY THEY DID IT, THE WAY YOU
DID IT AS A TEAM WHICH WAS
SPECTACULAR.
AND ALLEN GREENSPAN AS WELL.
YOU MADE SURE THE MONETARY BASE
DIDN’T GROW TOO RAPIDLY.
PAULRAPIDLY.
PAUL VOLCKER STOPPED THAT IN THE
1970s.
AND IT WORKED.
THEY LET INTEREST RATES GET UP,
I THINK THE PRIME WHEN REAGAN
TOOK OFFICE WAS 21.5%.
THEY ARE TALKING ABOUT RAISING
IT 1% WHICH MEANS YOU HAVE A
NEGATIVE REAL RATE OF 6%.
IT MAKES NO SENSE.
I DON’T SEE ANY HOPE FOR
INFLATION COMING DOWN
SUBSTANTIALLY.
>>SUBSTANTIALLY.
LAHR REQUIRE WAS TALKING TO OUR
FRIEND KEVIN HASSETT THIS
MORNING.
HE SAID THE FED OUGHT TO BE
RAISING THE FUNDS RATE, THE FED
FUNDS TARGET RATE BY 50 BASIS
POINTS EACH MEETING UNTIL THIS
COMMODITY INDEX OR OTHER MARKET
INDICATORS START BENDING DOWN.
WHAT THEY ARE GOING TO DO MAYBE
IS THE INCREMENTAL POINTS THAT
ARTHUR MENTIONED WHICH WILL HAVE
NO IMPACT WHATSOEVER.
WHAT DO YOU THINK ABOUT THAT?
>> I THINK THE FEDERAL RESERVE
IS WAY BEHIND THE CURVE.
YOU ARE GOING TO GET THE FED
FUND TRADE CLOSE TO THE
INFLATION RATE, AND A LITTLE BIT ABOVE IT TO PUSH INFLATION DOWN
ABOVE IT TO PUSH INFLATION DOWN
AGAIN.
LARRY: ROBERT IS RIGHT.
>> THE HEADLINE STORY IN THE
"WALL STREET JOURNAL."
HIGHER INFLATION IS PROBABLY
COSTING YOU $280 A MONTH.
IT SURPRISES ME BECAUSE USUALLY
THEY ROLL OVER FOR THE LEFT WING
KEYNESIANS.
AND THERE IS A SECOND STUDY BY
ONE OF THE BIG BANKS THAT
BASICALLY SAID IT’S THE MIDDLE
CLASS THAT GETS HURT THE HARDEST
BECAUSE NECESSITY DRIVE THEIR
CARS.
GASOLINE PRICES ARE UP.
GROCERY PRICES ARE WAY UP.
THEY GET HIT HARDER THAN THE
UPPER CLASS AND THE LOWER
INCOMES BECAUSE THE LOWER
INCOMES DON’T DRIVE OWN CARS AND
DRIVE.
THAT’S WHY I SAY SAVE AMERICA,
KILL INFLATION.
WE’LL BE KILLING THE MIDDLE
CLASS.
>> THE RICH GET HURT, TOO.
AND THE POOR GETS HURT EVEN MORE
THAN THE OTHER TWO.
YOU HAVE GOT TO STOP THIS RIGHT
NOW.
KILL INFLATION IS THE RIGHT
THING TO DO.
WHEN IT USED TO BE CALLED IS THE
CRUELEST TAX OF ALL IT’S A VERY,
VERY CRUEL TAX.
IT’S VERY TOUGH TO STOP.
BUT ROBERT IS WRIGHT.
I THINK THEY SHOULD STOP BUYING
BONDS AND LET INTEREST RATES SET
UNTIL WHERE THEY SHOULD SETTLE
IN.
MY GUESS IS YOU WILL SEE THE
10-YEAR BOND FIELD UP AROUND