ALL I WILL SAY IS, THE CALVARY
IS COMING.
HOPE THEY KNOW WHAT THEY’RE
DOING.
JOINING ME TO KICK THIS AROUND
AND CHEW ON IT, MY GREAT PAL,
STEVE FORBES, FORBES MEDIA
CHAIRMAN AND EDITOR-IN-CHIEF.
SO CHUCK SCHUMER, RAISE TAXES,
THAT WILL CONQUER INFLATION.
LET’S START THERE.
THERE IS A LOT OF THINGS FOR US
TO TALK ABOUT.
START WITH CHUCK SCHUMER’S
DICTUM AND HIS ADVICE.
WHAT DO YOU THINK.
>> WHAT DOCTORS DID 200 YEARS
AGO, 300 YEARS AGO, NED A
PATIENT, THEY BELIEVE YOU CURED
THE PATIENT BY BLEEDING THE
PATIENT.
HIS RAISING TAXES IS JUST
ALLUDED TO WILL NOT GET RID OF
ECONOMY, BUT DAMAGE THE ECONOMY.
WHEN IS HURTING A ECONOMY GOOD
FOR FIGHTING INFLATION OR
ANYTHING ELSE.
LARRY: STEPHEN, PEOPLE DON’T PAY
THEIR FAIR SHARE, THAT IS WHAT
BIDEN SAID IN THE PRESS
CONFERENCE.
HE SAID, THIS IS THE NEW
WRINKLE, JUST REFERRED TO
REPUBLICANS NOT PAYING THEIR
FAIR SHARE.
I DON’T KNOW WHAT HE MEANT BY
THAT.
>> WHAT HE MEANT VERSION OF A
FLAT TAX, WHAT DID YOU MAKE,
BOTTOM LINE, SEND IT IN.
THAT WOULD ONLY APPLY TO
REPUBLICANS, OKAY.
WHAT DID YOU THINK OF THE REPORT
TODAY?
DO YOU THINK WE’RE IN A
RECESSION?
>> NOT YET.
THIS IS WHAT IS SO, GIVE YOU
SLEEPLESS NIGHTS THE FED HAS
STARTED TO WORK ITS HARMFUL
POLICY.
LARRY: MY APOLOGY.
>> THE SECOND QUARTER WILL
RECOVER.
THE IDEA THAT GOVERNMENT
SPENDING IS POSITIVE FOR GDP I
THINK IS PREPOSTEROUS, BUT THAT
IS THE WAY THEY CALCULATE THESE
THINGS.
YOU WILL SEE A BETTER
SECOND QUARTER.
THE FED’S DAMAGE COME LATER THIS
YEAR AND NEXT YEAR.
THEY BELIEVE YOU HAVE TO SLOW
THE ECONOMY DOWN TO CURE
INFLATION INSTEAD OF STABLIZING
THE VALUE OF THE DOLLAR.
PEOPLE FORGET, IN 1980S, AT
LEAST THROUGH THE LATE 1990S WE
HAD WHAT YOU CALL INFORMAL GOLD
STANDARD.
GREENSPAN THE FED CHAIRMAN SAID,
HE LOOKED AT THAT VERY CLOSELY
AND COMMODITY INDEXES AND TIED
THE LAR TO IT ROUGHLY.
IT WAS SLOPPY ONE BUT CERTAINLY
BETTER THAN WHAT WE HAVE TODAY.
LARRY: THAT IS AN IMPORTANT
POINT YOU RAISE.
THE EXCHANGE RATE OF THE DOLLAR
IS QUITE STRONG AGAINST OTHER
CURRENCIES BUT THERE IS A LITTLE
BIT, NOT A LOT, BUT COMMODITY
INDEXES ARE TIPPING DOWN.
IS THAT OF ANY INTEREST OR
SIGNIFICANCE TO YOU IN THE FIGHT
AGAINST INFLATION?
>> WHY IS IT HAPPENING?
BECAUSE EUROPE LOOKS LIKE IT
WILL GO INTO RECESSION.
CHINA IS DOING ITS LEVEL BEST TO
WRECK THE SUPPLY CHAINS EVEN
MORE BY RIDICULOUSLY CLOSING
DOWN, LOCKING DOWN CITIES LIKE
SHANGHAI WHEN WE KNOW THAT
DOESN’T WORK.
AS YOU MENTIONED THIS
ADMINISTRATION IS STILL PUTTING
OBSTACLES IN THE WAY.
JUST A COUPLE WEEKS AGO THEY
BROUGHT IN RULES THAT THE TRUMP
ADMINISTRATION STREAMLINED THAT
WILL MAKE MUCH MORE DIFFICULTY
IN DOING INFRASTRUCTURE.
IT WILL TAKE YEARS, THOUSANDS OF
PAGES OF UNREADABLE GIBBERISH
THAT NOBODY READS BUT IT IS
DELAY, AND DELAY MEANS MORE
COSTS AND WHICH MEANS HIGHER
PRICES.
LARRY: I WANT TO COME BACK TO
THAT.
BASICALLY THE GDP DEFLATOR WHICH
IS A VERY BROAD-BASED MEASURE OF
INFLATION, IT’S ONE THE FED
LOOKS AT, THAT PLUS THE
SO-CALLED PCE DEFLATOR.
THAT HIT 8% IN THE FIRST
QUARTER, STEVE.
I THINK IT WAS HIGHER THAN
CONSENSUS EXPECTED.
I’M HAVING A HARD TIME HONESTLY
PUTTING POLITICS ASIDE, JUST
LOOKING AT EMPIRICALS HERE,
GETTING DOWN FROM 8% INFLATION
WITHOUT A RECESSION, I’M HAVING
A HARD TIME GETTING FROM HERE TO
THERE.
I THINK, I GUESS IT IS POSSIBLE
BUT I’M JUST WONDERING, 8% IS A
HIGH INFLATION RATE.
IS THERE A SOFT LANDING OUT
THERE REALLY?
>> MOST OF THE TIME WHEN THE FED
TRIES A SOFT LANDING WHY YOU
NEVER LET THEM NEAR AN AIRPLANE
YOU END UP WITH A CRASH LANDING.
IN THIS CASE A LARGE PART IS
SUPPLY CHAIN PROBLEMS WHICH THIS
ADMINISTRATION IS MAKING WORSE.
IF THEY JUST STEP BACK THAT
WOULD BE EXTREMELY HELPFUL.
BRING BACK THE XL PIPELINE.
THAT WOULD TELL THE WORLD WE’RE
CHANGING THINGS.
SAY WE’LL BE THE SUPPLIER OF
NATURAL GAS TO EUROPE TO GIVE
THOSE LNG PERMITS STREAMLINED
AND GET THEM THROUGH, GREEN
LIGHT THEM.
ON THE FED SIDE, WE’RE FOR A
STABLE DOLLAR.
STOP TRYING TO MANIPULATE
INTEREST RATES.
YES, REDUCE THE MONEY SUPPLY BUT
THE DOLLAR BE THE GUIDE.
YOU POINT OUT THE DOLLAR BEING
STRONG AGAINST OTHER CURRENCIES,
VERY STRONG AGAINST EXAMPLE FOR
THE YEN.
THAT IS A WEAK YEN MORE THAN A
STRONG DOLLAR.
JAPAN HAS GOT SOME TROUBLES
COMING.
SO YOU GOT TO LOOK IN TERMS OF
COMMODITY PRICES WE SAY.
THAT IS A SIGN OF A WEAKENING
ECONOMY, NOT BECAUSE THEY’RE
GETTING THEIR ACT TOGETHER ON
MONEY.
LARRY: SO WE’RE, WE’RE NOT IN
THE RECESSION YET.
YOU AGREE WITH THAT POINT?
>> BUT WE’RE FLIRTING WITH IT
DANGEROUSLY.
ON THE EDGE OF A CLIFF.
LARRY: FUNNY I MENTIONED IT IN
THE RIFF I CALLED IT THE FRONT
END OF A RECESSION.
WE COULD BE AT THE FRONT END OF
A RECESSION AND I’M QUITE
WORRIED ABOUT IT.
WITH POLICY PRESCRIPTIONS TO
HIKE TAXES THAT IS EXACTLY WRONG
AS YOU POINT OUT.
>> I HOPE SCHUMER GOES WITH THAT
THE VOTERS YOU WILL HAVE AS MUCH
SUCCESS AS WALTER MONDALE.
HE RAN AGAINST REAGAN IN 1984,
STARTED HIS INNATING SPEECH IN
SAN FRANCISCO CONVENTION, I WILL
RAISE YOUR TAXES.
TAXES UP OR DOWN.
MONDALE CARRIED ONE STATE.
REAGAN CARRIED 49.
WHICH LED TO THE PATH OF ’86 TAX
CUT, AMONGST OTHER THINGS WE CUT
THE TOP RATE DOWN FROM 50% TO
27%.
LARRY: I LIKE TO SAY THE CALVARY
IS COMING AND THAT’S A
REPUBLICAN AND CONSERVATIVE RED
WAVE BUT I WANT TO RAISE A POINT
WITH YOU.
SOME REPUBLICANS, I DON’T KNOW,
MAYBE AS MANY AS A DOZEN
REPUBLICANS, I DON’T KNOW, IN
THE SENATE HAVE BEEN OR WILL
VOTE FOR THIS CHINA COMPETE
BILL.
ARE YOU AWARE OF THIS, FOLLOW
THIS?
>> YES.
LARRY: THE SENATE CAME OUT WITH
$250 BILLION AND THE HOUSE CAME
OUT WITH 350 BILLION.
THEY’RE IN CONFERENCE, OR
THEY’RE GOING INTO CONFERENCE.
WE HAD SENATOR LUMMIS ON
YESTERDAY.
SHE DOESN’T THINK THE CONFERENCE
IS GOING TO CHANGE MUCH,
THEREFORE, SHE WILL CONTINUE TO
VOTE AGAINST THAT BUT THERE MUST
BE A DOZEN TO 15 REPUBLICANS.
HOW THE HECK WITH AN 8%
INFLATION RATE, PUTTING ASIDE
STUPID, MORE LIKE CHINA BILL,
SUBSIDIES, CORPORATE WELFARE,
INDUSTRIAL POLICY AND STRAIGHT
CONTROL OF THE ECONOMY, THAT IS
ABSOLUTELY CRAZY, THIS SPENDING
OF A QUARTER OF A TRILLION
DOLLARS AND REPUBLICANS ARE
CHIMING IN.
I THINK THIS IS UNPARDONABLE.
>> IF IT WAS 250 BILLION FOR
DEFENSE, OKAY THEY’RE GETTING
THEIR ACT TOGETHER IN THE WORLD
WE LIVE IN TODAY BUT THIS BILL,
YOU THINK ABOUT THE OFFICES
THEY’RE CREATING, GOVERNMENT
EVALUATING LIKE THEY’RE VENTURE
CAPITALISTS FUTURE TECHNOLOGIES
THAT THEY KNOW WHAT THEY ARE?
THEY DON’T EVEN KNOW WHAT WE
HAVE TODAY.
AND SO, AGAINS A YOU POINT OUT,
THIS IS LIKE BEING LIKE CHINA.
WHY SHOULD THE GOVERNMENT BE
TAKING RESOURCES AWAY THINKING
THEY CAN ALLOCATE IT BETTER AND
RUN THINGS BETTER THAN THE FREE
PRIVATE SECTOR?
SO ONE THING TO FUND R&D, AREAS
OF MILITARY HARDWARE AND THE
LIKE, LET THE PRIVATE SECTOR RUN
IT.
THE DEFENSE DEPARTMENT INVENTED
INTERNET.
NO THEY DIDN’T.
STUMBLED INTO BY THE DEFENSE
DEPARTMENT.
OTHERS GOT INTO IT.
WHEN IT WAS RELEASED WE SAW WHAT
HAPPENED.
GIVE IT TO THE PRIVATE SECTOR.
LARRY: INTERESTINGLY, EVEN THE
SEMICONDUCTOR TRADE ASSOCIATION
WHO POINTED OUT TIME AND AGAIN
THERE IS PRESENTLY $200 BILLION
OF PRIVATE INVESTMENT MONEY
GOING INTO PROJECTS RIGHT NOW.
THEY’RE ALREADY BUILDING
PROJECTS BEFORE THIS GOOFY BILL
COMES OUT, BUT, STEVE, WE HAVE
TO TRACK THIS.
A BUN.
OF REPUBLICAN SENATORS ARE
VOTING FOR THIS.
I DON’T THINK THEY DESERVE OUR
SUPPORT AT ALL WHETHER ELECTION
OR RE-ELECTION.
I MEAN THIS SINCERELY.
PART OF THE INFLATION SOLUTION
HAS GOT TO BE TO FREEZE DOMESTIC
SPENDING.
IT HAS JUST GOT TO BE.
STOP DEFICIT FINANCE WHICH
ENCOURAGES THE FED’S MONEY
PRINTING.
GIVE YOU THE LAST WORD.
>> THAT’S RIGHT.
THAT IS WHY TAIWAN SEMICONDUCTOR
IS INVESTING OVER $10 BILLION IN
ARIZONA.
LARRY: RIGHT.
BEFORE THIS BILL.
>> INTEL FOOLISHLY IS BACKING
THIS BILL BUT THEY’RE INVESTING
TENS OF BILLIONS OF DOLLARS FOR
NEWFOUND DRIES AND THE LIKE.
LET PEOPLE DO IT, THEY COME UP
WITH BETTER WAYS AND FASTER WAYS
AND ECONOMY WILL RECOVER.
LET THE ECONOMY RECOVER.
I HOPE THE CALVARY AS YOU
ALLUDED TO EARLIER KNOWS WHAT TO
DO, INSTEAD OF SHOWING UP TO SAY
FIRE GUNS IN THE AIR.
LARRY: I HEAR THE BUGLES BUT I’M
NOT TOO SURE OF THE STRATEGY.