GOODS AS OPPOSED TO SERVICES
HAS CONTRIBUTED MASSIVELY TO
THE SUPPLY CHAIN PROBLEMS.
DAVE: ART LAUGH FOR JOINING ME
NOW. GREAT TO SEE YOU.
GREAT TO SEE YOU.
IN ADDITION TO THE FACT PRICE
STABILITY, MAKING SURE YOUR
DOLLAR TODAY IS WORTH THE SAME
AS IT IS TOMORROW OR A YEAR
FROM NOW IS THEIR NUMBER ONE
JOB AND THEY MISS THE NUMBER
ONE JOB IT IS INTERESTING THAT
POWELL SAID HE ESTIMATED SUPPLY
SIDE OF ALL THIS.
HE DIDN’T, HE UNDERESTIMATED
THE FACT THAT THE 11 MILLION
UNFILLED JOB 7 IMPACT ON
INFLATION.
>> LET ME SAY THIS IF I CAN FOR
JANET YELLEN AND JEROME POWELL,
THEY DIDN’T MISS IT FOR THE
REASONS THEY SAY, THEY MISSED
IT, A MODEL THAT DOESN’T FORECAST INFLATION ACCURATELY
FORECAST INFLATION ACCURATELY
OR WELL, THEY DON’T HAVE A GOOD
MODEL THERE AND THEY POP THE
NUMBERS WHICH IS THE WRONG
THING GOOD FOR GOVERNMENT
AGENCIES TO DO.
UNDERSTATEMENT IS ALWAYS BETTER
THAN OVERSTATEMENT, BEING MORE
CAUTIOUS IS BE MORE CAUTIOUS
THAN BEING LESS CAUTIOUS AND
THEY OVERSTATED THE CASE FOR
PRICE STABILITY SUBSTANTIALLY
AND REALLY DON’T KNOW WHAT CAUSES INFLATION.
CAUSES INFLATION.
THEY DON’T HAVE A CLUE AND THEY
ARE PRETENDING THEY KNOW THE
ANSWER AND THEY DON’T.
WE ARE ALL IN THE DARK ON
INFLATION.
ANYONE YEAR AGO COULDN’T HAVE
GUESSED THIS.
IT IS HERE, IT HASN’T BEEN
TEMPORARY.
I DIDN’T KNOW IF IT WAS
TEMPORARY, I WASN’T SURE THEY
WERE WRONG BUT THEY WERE WRONG
NOT BECAUSE THEY DIDN’T KNOW.
YET THEY STILL TALKED ABOUT IT
AND THAT IS SOMETHING THESE
PEOPLE SHOULD NOT DO, DISTRUST
OF GOVERNMENT IS A REAL
PROBLEM. DAVE: YOU AND I HAD A GREAT
DAVE: YOU AND I HAD A GREAT
FRIEND, THE EDITOR OF THE WALL
STREET JOURNAL, HE SAID
INFLATION IS VERY EASY, TOO
MUCH MONEY CHASING FEWER GOODS.
ON BOTH SIDES OF THAT EQUATION,
TOO MUCH MONEY CLEARLY
MONETIZING THE DEFICIT, BUYING
DEFICIT SPENDING, THE TREASURY
HAS BEEN ISSUING, PRINTING MONEY TO DO THAT, THAT’S THE
MONEY TO DO THAT, THAT’S THE
ONE SIDE, THE MAN SIDE, THE
SUPPLY SIDE, THE FACT IS SO
MANY PEOPLE NOT WORKING, SO FEW
THINGS BEING MADE, THAT MAKES
EACH INDIVIDUAL THING WORTH
MORE.
ON BOTH SIDES OF THAT INFLATION
EQUATION THERE ARE INFLATION
PUSHES.
HOW COULD THEY HAVE MISSED
SOMETHING SO FUNDAMENTAL.
>> LET ME A COUPLE MORE.
I WROTE A PIECE IN THE JOURNAL
WITH BOB AS EDITOR, THE BITTER
FRUIT OF DEVALUATION WHICH IS
THE DEVALUATION OF THE US
DOLLAR IN DECEMBER OF 1974 WOULD CAUSE HUGE INFLATION,
WOULD CAUSE HUGE INFLATION,
74-75, I WAS LUCKY I GOT IT
RIGHT.
WE DON’T HAVE DEVALUATION NOW.
THERE IS THE LARRY SUMMERS
ARGUMENT, BY GOVERNMENT
SPENDING INCREASING DEMAND ALL
OF THESE, FEASIBLE WAYS OF
GETTING MORE INFLATION.
THE FED HAS MADE MONEY SO EASY
TO OBTAIN THAT THERE IS NO WAY
YOU CAN RESTRICT INFLATION IF
IT STARTS BY POOLING BACK ON
THE MONETARY BASE.
THERE ARE NO LIMITS TO
EXPANSION OF THE MONEY SUPPLY.
DOESN’T MEAN WE ARE GOING TO
CAUSE IT, BUT STOPPED BY THAT.
WHAT BOTHERS ME ABOUT POWELL AND HUMAN SPEAK, TALKING
AND HUMAN SPEAK, TALKING
GOBBLEDYGOOK, OIL, SAN PEDRO,
THERE IS AN INFLATION ISSUE NOT
ONLY IN THE US BUT OTHER
COUNTRIES AS WELL, WE HAVE AN
INFLATION PROBLEM IN THIS WORLD
BUT WE DO KNOW THINGS THAT CAN
MAKE IT BETTER.
FOR EXAMPLE, LESS EXPANSION ON
THE MONETARY BASE.
DON’T SPEND THAT BILL, DON’T
GIVE PEOPLE MONEY TO CREATE
DEMAND.
DON’T RESTRICT OIL.
HAVE SUPPLIES OF OIL PRICES
AREN’T THE GENERATOR.
WAGE DEMANDS DON’T RAISE
MINIMUM WAGE, DON’T RAISE TAXES
AND GET PEOPLE TO MOVE OUT OF
THE LABOR FORCE.
THESE ARE THINGS THEY SHOULD BE
DOING AND THEY ARE NOT DOING
ONE OF THEM.
DAVE: I DISAGREE ON ONE THING,
THEY TALK ABOUT OIL IN A WAY
BUT KILLING OFF OUR ENERGY
INDEPENDENCE LED HUGELY HIGHER
GAS AND ENERGY.
>> OF COURSE IT HAS.
THERE IS NOT ONE THING THEY