EXPENSIVE, EDWARD THANK YOU.
>> JOINING ME NOW FORMER
ECONOMY ADVISER TO PRESIDENT
REAGAN, ART LAFFER.
WE’RE AT THE POINT WE’RE
TALKING ABOUT CHICKEN OR
TURKEY FOR THANKSGIVING,
TALK ABOUT WHAT THIS MEANS
FOR SPENDING, THE REAL
CONCERN IS THAT CONSUMERS
MAY BE GETTING TO THE END 6
END OF THE LINE.
>> I AM NOT SUPERLY
CONCERNED OVER IT.
WHAT YOU HAVE SEEN IS WAGES
HAVE NOT RISEN AS MUCH AS
PRICES, REAL INCOMES HAVE
DROPPED, PEOPLE WILL HAVE TO
CUT BACK ON SPENDING, WE
HAVE HAD NO SURGE OF
EMPLOYMENT.
WE HAVE NO HUGE NEW PEOPLE
JOINING THE INCOME STREAM.
WHAT HAS HAPPENED IS RATE OF
INFLATION HAS DIMINISHED BUT
NOT FOR LONG THAT WAS -- THE
NUMBERS ARE STILL VERY BAD,
AS FAR AS BAD AS THEY WERE,
THEY ARE NOT, THEY ARE
BETTER THAN THEY USED TO BE,
THEY ARE STILL BAD AND PRICES STYLE HIGHER AN A
PRICES STYLE HIGHER AN A
YEAR AGO.
>> YOU THINK ABOUT AVERAGE
AMERICAN HOUSEHOLD.
URE HAVE INFLATION, ROUND A
HOLIDAY, A DOWNER TO PAY
MORE, BUT THE REAL ISSUE
WITH AMERICAN HOUSEHOLDS HAS
BEEN RUN-UP OF DEBT,
AMERICAN HOUSEHOLD DEBT IS
AT RECORD LEVELS, CREDIT
CARD BALANCES RISING AT 15%
-- SORRY MORE THAN 15%,
FASTEST IN TWO DECADES, HOW
BIG OF AN ISSUE IS THAT
AMERICAN HOUSE ROADS HOLDS
TAKING SO MUCH DEBT?
>> I THINK IT IS MORE
DANGEROUS ABOUT WHAT THE
ECONOMY WILL LOOK LIKE IN TO
FUTURE.
THEY HAVE TO PAY IT BACK
LATER, OR SUFFER THE
INTEREST EXPENSES, THE
INTEREST PAYMENTS ON DEBT IS
HIGHER THAN IT HAS BEEN.
AND THAT MEANS IT WILL BE A
MUCH BIGGER PROBLEM FOR THE
BUDGETS OF FAMILIES GOING
FORWARD.
THAT IS A SERIOUS LONG-TERM
PROBLEM THAT DEBT INCREASE
CANNOT CONTINUE THE WAY IT
LAS WITHOUT A BIG INCREASE
IN BANKRUPTCY.
THAT BODES BADLY FOR U.S.
ECONOMY.
DAVID:
>> IT GROWS AWAYS.
I WANT TO TALK ABOUT THIS
RAILWAY STRIKE THIS TO ME,
HAS BEEN A BIG X-FACTOR IN
THE BACKGROUND, WE HAD ABOUT
WHAT LOOKED TO BE A SOLUTION
IN SEPTEMBER THAT WAS MORE
OF A POLITICAL MOVE TO ME,
NOW WE’RE SEEING WE COULD
HAVE A STRIKE.
ART, WHEN YOU THINK ABOUT
HOW MUCH GOODS ARE MOVED ON
RAIL CARS EVERY SINGLE DAY,
300,000 BARRELS OF CRUDE
EVERY DAY.
WHAT KIND OF AFFECT WOULD
THAT HAVE IF WE GET A SHORT
RAILWAY STRIKE IN EARLY
DECEMBER?
>> THAT WOULD HAVE A REALLY
SUBSTANTIAL EFFECT, YOU ARE
WAY TOO YOUNG TO REMEMBER
THE DAYS WE HAD NATIONWIDE
STRIKES, AUTO STRIKES, AND
ALL OF THESE PEOPLE, THE
STRIKES GOING BACK TO THAT
TYPE OF ERA, UNIONS TRIED TO
GET WAGE INCREASES BY ALWAYS
THREATENING THEN DOING
STRIKES NATIONWIDE.
THAT IS NOT A NATION YOU
WANT TO BE IN.
IT REALLY IS VERY DISRUPTIVE
TO THE ECONOMY.
AND THEN WE HIT THE CALM
PERIOD WHEN REAGAN WAS
ELECTED IT NEVER REALLY CAME
BACK TO OLD-TIME STRIKE, RIGHT NOW IT LOOKS TO ME
RIGHT NOW IT LOOKS TO ME
THAT ISSUE OF UNION MILL IS
COMING BACK, YOU WILL SEE
MORE PRESSURE BY UNIONS TO
RAISE WAGES OR STRIKE.
THAT IS NOT A GOOD WORLD TO
BE IN.
THE STATES THAT HAVE RIGHT
TO WORK, THEY ARE GROWING
FASTER THAN THE STATES THAT
DON’T HAVE RIGHT TO WORK.
THE UNION PRESSURE IS A VERY
DETRIMENT AT DETRIMENTAL
EFFECT ON OVERALL ECONOMY,
I’M WORRIED ABOUT A RAIL
STRIKE AND ANYTHING ELSE
THAT WOULD FOLLOW.
>> PRESIDENT BIDEN HAS
OFFERED UNIONS THE KEYS TO
THE KINGDOM.
EVERY SINGLE ECONOMIC SPEECH
HE GIVES, ESSENTIALLY SAYS,
I WANT UNION JOBS, I WANT
UNION INGLUENCE INFLUENCE.
HE IS SETTING THE TABLE FOR
THESE KIND OF STRIKES IS HE
NOT?
IF YOU ARE A UNION, A UNION
WORKER, YOU KNOW YOU ARE IN
THE DRIVER’S SEAT, HOW MUCH
DEEPER COULD THIS GO IF THE
PRESIDENT IS SETTING THIS
TONE?
>> IF YOU GO BACK IN TIME,
IT CAN GO VERY FAR, IN
QUARTERS NOW.
A METRIC MODEL OF 1972, I
TOOK INTO ACCOUNT UNION
ACTIVITY TO EXPLAIN
GDP GROWTH.
THAT IS HOW POWERFUL IT WAS.
WE HAD NOTHING LIKE THAT
SINCE THE LATE ’70S.
IF WE GO BACK TO THAT ERA,
YOU WILL SEE A LOT OF DAMAGE
DONE ON THE ECONOMY, BECAUSE
OF THE UNION STRIKES, AND
WORK STOPPAGES AND ALL OF
THAT.
THAT IS NOT A WORLD YOU WANT
TO GO BACK TO, IT IS REALLY
-- I WISHES COUNTRY WERE
RIGHT TO WORK BOUABIDE BUT
-- BIDEN WANTS TO TAKE TIME
BACK.
THAT WILL REAL HURT THE
ECONOMY.
>> WHAT WORRIES ME, YOU HAVE
FEDERAL RESERVE RAISING
INTEREST RATES QUICKLY,
TRYING TO CRUSH DEMAND.
I THINK YOU ARE STARTING TO
SEE REAL SIGNS OF THAT.
THAT MIGHT GET YOU PART OF
THE WAY ON THE INFLATION
STORY, BUT WE BOTH KNOW THAT
THE INFLATION STORY IS ALSO
PARTLY A STORY OF SUPPLY.
SUPPLY CHAINS OF A
PRODUCTIVE AMERICA.
SO I LOOK AT GETTING OUT OF
THIS INFLATION MESS, YES I’M
HAPPY IT HAS COME DOWN A
LITTLE BIT.
BUT AT SOME LEVEL DO WE GET
STUCK WHERE THE FEDS HAVE
DONE ALL OF DAMAGE IT CAN
DO.
BUT UNLESS WE GET MORE
PRODUCTIVE, PRICES WILL
REMAIN HIGH.
>> DON’T FOR THE MOMENT
THINK THAT INFLATION IS DOWN
LOW ENOUGH TO WHERE IT IS
ACCEPTABLE.
IT IS NOT.
IT HAS DROPPED TO WHERE IT
IS LOWER THAN IT WAS 4 OR 7
MONTHS AGO.
IT IS BY NO MEANS
ACCEPTABLE.
WHAT SHOULD FED DO?
I HAVE ALWAYS BEEN OPPOSED
TO WHAT THE FED HAS DONE BY
RAISING INTEREST RATES A
POLITICAL A TIME, PAUL
VOLCKER LET MARKETS SET
INTEREST RATES HE FOLLOWED
WITH DISCOUNT RATE,
FOLLOWING THE MARKET NOT
LEADING THE MARKET.
THIS THED FED DECIDED PRICE
CONTROL IS THE RIGHT ANSWER
SO PUT THE FED’S BALANCE
SHEET.
THAT FED BALANCE SHEET HAS,
PANNED TO BE ALMOST 9
TRILLION, THAT NEEDS TO BE
CONTRACTED TO BRING
INFLATION DOWN, THERE IS
LITTLE CONTRACTION GOING
DOWN, THERE IS A LIGHT SLIDE
REDUCTION IN FED’S BALANCE
SHOOT BUT NOT ENOUGH.
O OTHER SIDE, GOOD SIDE, TOO
MUCH MONEY, CHASES TOO FEW
GOODS, THERE ARE NO POLICIES
PUT IN TO BY THIS
ADMINISTRATION.
WHETHER IT BE UNION STOP OR
REGULATIONS OR GOVERNMENT
SPENDING, THERE IS NO --
NOTHING IN THIS
ADMINISTRATION POLICIES THAT
WOULD INCREASE THE SUPPLY OF
GOODS.
YOU WANT TO HAVE REDUCED
MONEY AND INCREASED SUPPLY
OF GOODING TO SPRING
INFLATION DOWN IN THE MARKET
SENSE THEREBY BE WILL BE TO
ACCEPT A 2% INFLATION PERIOD
WE’RE NOT NEAR THAT.
>> WE’RE NOWHERE NEAR IT, WE
HAVE NO EFFECTIVE SUPPLY
SIDE POLICY FROM THE BIDEN
ADMINISTRATION.
NEVER HAVE AND I’M AFRAID WE
NEVER WILL.
ART WE HAVE TO LEAVE IT
THERE, ALWAYS GOOD TO SEE
YOU, ENJOY THAT TURKEY ON
THANKSGIVING.
>> I WILL, I’M HAVING
CHICKEN.
A MAN OF THE PEOPLE.