SEAN: INFLATION UNDER PRESIDENT
BIDEN IS NOT LETTING UP WITH THE
AVERAGE FAMILY PAYING 400 EXTRA
FOR THE SAME GOODS.
BIDEN AND DEMOCRATS ARE PUSHING
FOR MORE SPENDING, HIGHER TAXES
INSTEAD OF EMBRACING SUPPLY-SIDE
ECONMICS.
JOINING ME TO DISCUSS, KEVIN
HASSETT FORMER COUNCIL OF
ECONOMIC ADVISORS CHAIR AND
AUTHOR OF "THE DRIFT, STOPPING
AMERICA’S SLIDE INTO SOCIALISM."
I CAN’T WAIT TO READ THIS.
WE HAVE THE SAME OUTFIT ON, BLUE
TIES, RED SHIRTS.
IF YOU MAKE A PLAN, HOW DO I
CRASH THE AMERICAN ECONOMY CAN
JOE BIDEN DO IT ANY BETTER,
RAISE RATES, INCREASE REGULATION
AND THREATEN HIGHER TAXES?
>> YEAH.
I THINK IF HE ACTUALLY ENACTED
HIGHER TAXES IT WOULD BE ONLY
THING THAT WOULD BE WORSE.
BUT RIGHT NOW YOU KNOW, THE
ECONOMY HAD TWO NEGATIVE
QUARTERS.
NOW IT IS TEETERING ON THE BRINK OF RECESSION.
OF RECESSION.
THAT IS WHAT MARKETS EXPECT NEXT
YEAR.
PLAIN NATION IS OUT OF CONTROL
THE WORST SINCE THE 1970s.
IT IS NOT PUTIN’S PRICE HIKE.
IT IS BIDEN’S.
HIS POLICIES WERE CRAFTED BY
DESIGN TO MAKE THE SITUATION WE
NOW SEE.
IF YOU REMEMBER THEY HAD MODERN
MONETARY THEORY.
SEAN: THAT’S RIGHT.
HOW IS THAT WORKING FOR YOU?
>> HOW IS THAT WORKING FOR YOU.
THEY DESPISE SUPPLY-SIDE
ECONMICS WHEN YOU ARE A SCIENCE
DENIER.
THEY ACCUSE REPUBLICANS OF
SCIENCE DEMYERS.
THE ECONOMIC LITERATURE WHAT WE
DID IN THE TRUMP ADMINISTRATION
WORKED.
THEY’RE REVERSING THAT STUFF.
SEAN: THROUGH THE REAGAN YEARS
IT ACTUALLY WORKS.
WE TALKED ABOUT THE AVERAGE
FAMILY IS PAYING $400 MORE A
MONTH BECAUSE OF INFLATION.
THEIR SALARIES HAVE ACTUALLY
GONE DOWN WHEN YOU FACTOR IN
INFLATION BY 2.8%.
RIGHT NOW WE’RE INTO DECEMBER.
WE’RE LOOKING TOWARDS THE
CHRISTMAS, HOLIDAY SHOPPING
SEASON.
ARE PEOPLE SPENDING, OR ARE THEY
STAYING HOME WITH THEIR WALLETS?
>> THIS IS ONE OF THE THINGS
THAT HAS BEEN THE BIGGEST
SURPRISE TO ME IN THE ECONOMIC
DATA IN A REALLY LONG TIME, AS
YOU SAID BECAUSE PEOPLE’S
SALARIES HAVE NOT KEPT UP
INFLATION, EVERYBODY’S REAL
INCOME IS DOWN BUT REAL SPENDING
IS UP.
AND SO, SPENDING YEAR-OVER-YEAR
IS UP ALMOST 4%.
IT IS GOING TO BE A VERY STRONG
CHRISTMAS IT LOOKS LIKE DATA
WE’RE HEARING AND IN ANECDOTES.
BUT INCOME IS DOWN.
SO WHAT THAT MEANS IS PEOPLE ARE
BORROWING LIKE CRAZY.
IN FACT, CREDIT CARD DEBT
YEAR-OVER-YEAR IS UP 15%.
15%.
THAT IS THE KIND OF INCREASE
THAT CAN’T BE SUSTAINED PEOPLE
RIGHT NOW ARE BORROWING LIKE
CRAZY AND CONSUMING EVEN THOUGH
THEIR INCOMES ARE NOT KEEPING UP
WITH INFLATION.
I THINK THEY EXPECT IF THERE IS
RECESSION THE FED WILL ENGINEER
THERE WILL BE ANOTHER BIG
BAILOUT.
THAT IS MY EXPLANATION FOR IT.
SEAN: I DON’T KNOW IF BIDEN WILL
BAIL PEOPLE OUT OF THEIR CREDIT
CARD DEBT.
IF THE GOVERNMENT DOESN’T BAIL
THEM OUT, THEY HAVE ALL THE
MASSIVE DEBT, INCOMES HAVE GONE
DOWN, WHAT DOES IT MEAN FOR THE
ECONOMY?
>> YOU THOUGHT JOE BIDEN’S
ECONOMY COULDN’T GET WORSE BUT
IT CAN.
I THINK THAT IS WHAT IS GOING ON
NOW WE’RE INCHING ALONG NOT
GOING INTO A DEEP RECESSION
BECAUSE PEOPLE ARE BORROWING
LIKE CRAZY, BUT ONE OF THE
THINGS THAT HAPPENS, RIGHT, WHEN
EVERYBODY DOES THAT, PEOPLE
START TO DEFAULT.
WHEN PEOPLE START TO DEFAULT,
EVERYBODY GETS NERVOUS ABOUT THE
BANKS, YOU CAN REMEMBER THE
FINANCIAL CRISIS IN 2008.
GOING INTO THE FINANCIAL CRISIS,
BASICALLY WE HAD A BETTER
SITUATION THAN WE HAVE NOW IN
MOST PLACES.
THE OTHER THING THAT, THE OTHER
SHOE THAT WILL DROP IS REAL
ESTATE PRICES.
I’VE BEEN FOLLOWING REAL ESTATE
REALLY CLOSELY FOR THE LAST SIX,
SEVEN MONTHS, WITH THE FED RATE
HIKES YOU EXPECT REAL ESTATE
PRICES GOING DOWN BUT WHAT
HAPPENED NOBODY IS SELLING THEIR
HOUSE.
THEY ARE SITTING ON THE
INVENTORY BUT DON’T WANT TO TAKE
A BIG LOSS.
SOONER OR LATER PEOPLE HAVE TO
MOVE.
WHEN THAT HAPPENS, PEOPLE WILL
LOSE A LOT OF MONEY ON THEIR
HOUSES.
START HANDING HOUSES BACK TO THE
BANKS AT THE SAME TIME THE
CREDIT CARD DEBT RUN UP.
THAT IS RECIPE FOR A VERY HARD
TIME.
SEAN: I WAS WATCHING TWITTER,
RON KLAIN THE WHITE HOUSE CHIEF
OF STAFF, RIGHT BEFORE THANKS
GIVING PUT OUT A TWEET, GIVING
YOUNGSTERS, HIPSTERS GOING HOME
TO TALK ABOUT THE WITH THEIR
PARENTS THE JOE BIDEN ACCESSES
THAT JOB JOB IS TACKLING
INFLATION, BECAUSE INFLATION IN
JUNE CPI WAS 9.1%.
IN NOVEMBER IT WAS 7.7%.
SO IT HAS COME DOWN A LITTLE
BIT, WILD SUCCESS.
HAS JOE BIDEN DONE ANYTHING, CAN
YOU NAME JOE BIDEN ONE THING
EXCEPT FOR RELEASING OIL FROM
THE STRATEGIC OIL RESERVE WHICH
IS NOT A LONG-TERM SOLUTION,
ANYTHING JOE BIDEN HAS DONE TO
ADDRESS INFLATION?
>> NO.
IN FACT IT IS ONE OF THE THINGS
THEY DO VERY EFFECTIVELY WHICH
IS BASICALLY LIE ABOUT THE
ECONOMY.
THE LIE IS KIND OF A STRONG
WORD, I DON’T USUALLY USE IT.
THAT IS WHAT THEY’RE DOING.
THEY CLAIM THEY’RE FIGHTING
INFLATION BECAUSE THEY HAD THE
BIGGEST DEFICIT REDUCTION OF ANY
PRESIDENT, RIGHT?
IF YOU GO BACK TO LOOK IN 2019
THE CONGRESSIONAL BUDGET
FORECASTED WHAT 2023 SPENDING
WILL BE.
NOW WE KNOW WHAT 2023 SPENDING
WILL BE AFTER REDUCTION OF COVID
RELIEF.
IT IS $600 BILLION THAN WE
THOUGHT HIGHER IN 2019.
THE INCREASE IN SPENDING UNDER
DEMOCRATS AND JOE BIDEN IS
SOMETHING UNDER PRECEDENTED.
DON’T LET THEM TRICK YOU THAT
THEY’RE DEFICIT REDUCERS.
THEY SAY IT EVERY DAY AND
MAINSTREAM MEDIA.
SEAN: THIS IS GOING GREAT
BECAUSE THE MEDIA TELLS ME.
NO END IN SIGHT, REAL
CHALLENGING BUT IT LOOKS LIKE
THE FED WILL START LOWERING
RATE, SEEMING TO PULL BACK FROM
IT THE 75 BASIS POINT HIKES IT
HAS BEEN DOING.
THE FED-WATCHERS ARE SAYING
MAYBE 50 POINTS.
IS THIS GOING TO BE TOO MUCH TOO
SOON DO YOU THINK?
>> YOU REMEMBER HOW THE FED WAS
IN DENIAL FOR THE LONGEST TIME,
THEY SAID IT WAS TRANSITORY.
SEAN: TRANSITORY.
>> THEY’RE STILL KIND OF, DO YOU
KNOW WHAT THE FED STAFF SAYING
INFLATION WILL BE MORE THAN A
YEAR FROM NOW?
SEAN: NO.
>> 2%.
JUST AMAZING.
IT IS A MIRACLE.
TRANSITORY STILL IN OTHER WORDS.
WHAT THE FED IS SIGNALING NOW
THEY WILL GIVE US 50 BASIS
POINTS AT THE NEXT MEETING.
THEY WILL SHIFT TO GIVE US 25
BASIS POINTS NEXT YEAR UNTIL
INFLATION IS UNDER CONTROL AND
WOULD WORK IF INFLATION WERE
TRANSITORY BUT I THINK THAT IS
WHAT IS GOING TO HAPPEN MARKETS
AND CONSUMERS WILL BE SURPRISED
ON THE UPSIDE THAT THE FED WON’T
BE ABLE TO ACCOMPLISH THAT.
IT IS REALLY QUITE ASTONISHING
THEY’RE BASICALLY SAYING IT IS
TRANSITORY.
SEAN: AS YOU LOOK INSIDE THEY
MAKE THE PROJECTIONS LITTLE OVER
A YEAR FROM NOW, INFLATION WILL
BE AT THE TARGET OF 2%, IS THIS
JUST BOLD-FACED LYING?
THEY CAN’T BELIEVE WE’LL GET
THERE, CAN THEY, OR DO THEY
BELIEVE THE POLICIES WILL WORK
AND WE WILL HAVE ONLY 2% A
LITTLE OVER A YEAR FROM NOW?
>> I HAVE A OLD MATH JOKE, I
DON’T AIR DARE SAY, ALL PROOF IN
WASHINGTON IS PROVED BY
INDUCTION, SOMETHING IS TRUE
TODAY IF IT WAS TRUE YESTERDAY.
WHAT HAPPENS THE FED BACK IN THE
’60s, SOME GUYS BUILT A MODEL
HOW THE ECONOMY WORKS.
THEY STILL BELIEVE IT.
THEY HAVE NOT PAID ATTENTION TO
THE SCIENCE.
THEY HAVEN’T UPDATED PRIORS HOW
THINGS WORK.
WHEN I WAS CEA CHAIR I WOULD
LUNCH WITH THE FED CHAIR ALMOST
ONCE A MONTH, I WOULD TALK ABOUT
WHAT THE STAFF WAS SAYING, IT
WAS REALLY NOT CONSISTENT WITH
MODERN SCIENCE.
I WOULD SAY IN MANY WAYS
ESPECIALLY BECAUSE IT WAS IN
DENIAL ABOUT SUPPLY-SIDE
ECONMICS.
I DON’T THINK THE STAFF IS
LYING.
SEAN: THEY BELIEVE IT.
>> BECAUSE INSTITUTIONALLY IF
THERE IS SOME MODEL THAT AT SOME
POINT PEOPLE SAID THIS MODEL
WORKS, IF YOU’RE A YOUNG GUY
SAYS YOU CAN’T USE THAT MODEL,
THEY DON’T PROMOTE YOU, YOU
DON’T MOVE FORWARD.
THE BUREAUCRACY IS TAKING OLD
1960S, ’70s KEYNESIAN MODELS
AND --
SEAN: YOU MIGHT THINK SHAME
WOULD TAKE OVER PUBLICLY BEING
SO WRONG AND CHANGE COURSE.