WE’RE COMING BACK TOMORROW -- ♪.
LARRY: HELLO, FOLKS, WELCOME TO
"KUDLOW," I’M LARRY KUDLOW.
SO AS YOU KNOW, FORMER FED CHAIR
BEN BERNANKE WAS JUST AWARDED A
NOBEL PRIZE IN ECONOMICS.
SO A FRIEND OF MINE SUGGESTED IT
WAS THE WORST NOBEL ECONOMICS
PRIZE SINCE PAUL KRUGMAN.
WELL, I’M NOT SURE I WOULD GO
QUITE THAT FAR BUT THAT IS
PROBABLY BECAUSE I KNOW BEN, AND
I DO RESPECT HIM AS A FINE
PUBLIC SERVANT AND A VERY GOOD
FORMER PROFESSOR AT PRINCETON.
IN FACT BEING A REPUBLICAN ON
THE PRINCETON FACULTY WAS NOT
SUCH AN EASY THING TO DO SO
THERE.
THIS ISN’T PERSONAL BUT, BUT,
BUT, I THINK HIS STOP AND GO
POLICIES, ESPECIALLY IN THE
EARLY 2000S WHEN HE KEPT
INTEREST RATES TOO LOW FOR TOO
LONG, WHEN HE CREATED WAY TOO
MUCH HIGH-POWERED LIQUIDITY,
WHEN HE TOOK A STRONG DOLLAR AND
MADE IT A WEAK DOLLAR, WHEN ALL
OF HIS UNSOUND, FINE-TUNING
CREATED A BOOM IN GOLD AND
COMMODITIES AND HOUSING I THINK
ALL OF THAT WAS A BIG BUNGLE AND
THAT BUNGLE LED TO A FINANCIAL
MELTDOWN, MOST ESPECIALLY A
MORTGAGE MELTDOWN HE HAD TO
RESCUE LATER ON.
KIND OF LIKE A FIREMAN WHO
STARTS THE FIRE AND THEN WANTS
TO TAKE CREDIT FOR PUTTING IT
OUT.
NOT GOOD.
NOT ALL TOO REMINISCENT OF
SIMILAR MISTAKES JAY POWELL DID
TWO YEARS AGO.
BERNANKE POST 9/11 WAS WORRIED
ABOUT DEFLATION.
SO HE AUTHORED A MAJOR LEAGUE
MONEY SUPPLY HELICOPTER DROP
WHEN IN FACT THE GEORGE W. BUSH
TAX CUTS SUCCESSFULLY BOOSTED
POST-9/11 ECONOMIC GROWTH.
I RAISE THIS BECAUSE BUSH MOVED
TO THE SUPPLY SIDE.
HE DOESN’T GET CREDIT FOR IT BUT
HE SHOULD.
HE CHOPPED DOWN THE TOP PERSONAL
TAX RATE AND OBLITERATED THE TAX
RATES ON CAPITAL GAINS AND
DIVIDENDS.
SO EVERYTHING WAS TAXED LESS
INCLUDING INVESTMENT AND WE GOT
MORE OF IT.
THE BUSH BOOM DID NOT REQUIRE A
MAJOR OPENING OF THE MONETARY
SPIGOTS.
WE WERE DOING JUST FINE.
THE SUPPLY SIDE WORKED, THE
LAFFER CURVE WORKED.
BEN BERNANKE WAS NOT WATCHING
THIS AND THAT IS WHAT GOT
EVERYBODY INTO TROUBLE.
SO DOES IT SOUND FAMILIAR?
POST-COVID THE V-SHAPE RECOVERY
IN 2020 AND 2021 WAS IGNORED BY
THE BIDEN SOCIALISTS AND THE
JAY POWELL MODERN MONETARY
THEORISTS AT THE FED.
REMEMBER?
EVERYBODY WAS CHEERLEADING FOR
TWO TRILLION DOLLAR STIMULUS
PACKAGE.
THAT IS, EVERYBODY IN THE
LEFT-WING CAMP BUT WE DIDN’T
NEED IT AND IT STARTED BIG
INFLATION AND JAY POWELL OPENED
THOSE MONETARY SPIGOTS WIDER AND
WIDER EVEN THOUGH THE ECONOMY
WAS GROWING AT 6% BEQUEATHED BY
DONALD TRUMP’S TAX CUTS AND
DEREGULATION AND ENERGY
DOMINATION POLICIES.
SO HERE WE ARE AGAIN.
ONLY IT IS KIND OF A REVERSE
RESCUE.
BERNANKE HAD TO SAVE AMERICA HE
THOUGHT BY TURNING THE SPIGOTS
ON, THEN OFF, AND BACK ON AGAIN.
JAY POWELL OPENED THE SPIGOTS ON
AND WIDER AND CRUNCHING DOWN AS
THOUGH IF THERE IS NO TOMORROW.
I DO NOT KNOW IF THIS IS MODERN
MONETARY THEORY BUT I DO KNOW IN
BOTH CASES IT WAS BAD MONETARY
PRACTICE.
THERE IS AN EASIER, SOFTWARE
WAY, HOW ABOUT KEEP THE DOLLAR
STEADY?
KEEP IT STEADY IN RELATION TO
COMMODITIES, GOLD, REAL GOODS?
KEEP THE SPIGOTS AD MEDIUM OPEN
AND WE’LL HAVE PRICE STABILITY?
WE’LL LEAVE THE GROWTH
INCENTIVES TO TAX, REGULATORY,
LIMITED SPENDING POLICIES WHERE
IT BELONGS?
THE MONETARY LEVER IS FOR
INFLATION.
THE FISCAL LEVER IS FOR GROWTH.
BEGINNING WITH RONALD REAGAN AND
JACK KEMP AND ART LAFFER AND
STEVE FORBES AND A WHOLE LOT OF
US WE’VE BEEN SAYING THIS FOR
OVER FOUR DECADE.
NOW, ONE MORE POINT ABOUT BEN
BERNANKE’S POLICIES.
I DON’T KNOW WHY HE AND OTHERS
ARE SO DETERMINED TO BAIL OUT
FAILING INSTITUTIONS.
YOU KNOW WE HAD A CHANCE DURING
THE FINANCIAL CRISIS TO GET RID
OF SOME REAL TURKEYS LIKE FANNIE
AND FREDDIE, WHO SHOULD HAVE
BEEN PRIVATIZED.
OR REMEMBER THE CRAZINESS,
BEAR STEARNS WAS BAILED OUT.
MERRILL WAS SOLD AND LEHMAN WAS
LEFT TO FAIL.
WHOLE PARTS OF AIG INSURANCE
COULD HAVE BEEN DUMPED OR
JUNCTIONED BUT THEY WERE BAILED
OUT ALSO.
YOU KNOW STANFORD’S JOHN TAYLOR
HAS OFTEN WRITTEN IT WAS THE
UNKNOWABLE, ERRATIC BAILOUT
POLICIES THAT DID AS MUCH OR
EVEN MORE DAMAGE TO THE
FINANCIAL WORLD AS THE OPENING
UP OF THE MONETARY SPIGOTS AFTER
THE CRISIS CAME UPON US.
GOVERNMENTS SHOULDN’T PICK
WINNERS AND LOSERS, STILL,
TODAY.
IT IS INCREDIBLE TO ME FANNIE
AND FREDDIE ARE NOW OWNED LOCK,
STOCK AND BARREL BY THE U.S.
GOVERNMENT, AKA, THE TAXPAYERS.
WE SHOULDN’T BAIL OUT STUDENT
LOANS, MORTGAGE LOANS, GASOLINE
PRICES, POTHEADS, BANKS, CAR
COMPANIES, SEMICONDUCTOR
COMPANIES, ELECTRIC VEHICLE
MAKERS, WIND AND SOLAR FARMS,
INSURANCE FIRMS.
HOW ABOUT MAKE MY DAY?
NO NEW BAILOUTS.
OR MAKE MY DAY, $31 TRILLION OF