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LARRY: JUST ONE MORE TIME, DOES
THE NIGHT LOOK DARKEST BEFORE
THE DAWN COMES OR DOES IT TURN
COMPLETELY BLACK AFTER IT GOES
DARK?
JOINING ME STEVE MOORE, FOBS
EDITOR-IN-CHIEF AND AUTHOR OF
"INFLATION.
I DON’T KNOW IF YOU HEARD THE
MIKE PENCE ENTER VIEW.
HE SAYS THINGS CAN CHANGE.
HE IS ISSUING A WARNING TO OUR
FRIEND, I LOVE THE GUY, SENATOR
JOE MANCHIN NEGOTIATING
PRIVATELY BEHIND CLOSED DOORS
WITH CHUCK SCHUMER ABOUT A
POSSIBLE TRILLION DOLLAR
SPENDING PACKAGE, $1.7 TRILLION
IN TAXES.
MR. MANCHIN WOULD BREAK MY MART
IF HE DOES THAT.
SO I ASK YOU, STEVE FORBES, IS
THE NIGHT DARKEST BEFORE IT
TURNS TO DAWN?
OR ARE THINGS DARKEST BEFORE
THEY TURN COMPLETELY BLACK?
WHEN DOES STEVE FORBES SAY?
>> THE SUN SHALL COME UP.
THE QUESTION IS WHEN.
LARRY: RIGHT.
>> IS LOT OF THAT IS IN THE
HANDS OF THE FEDERAL RESERVE.
AS FOR SENATOR MANCHIN, I’M
LOOKING TO SINEMA ARIZONA, SHE
DOESN’T LIKE TAXES.
A LOT OF DEMOCRATS WHATEVER THEY
SAY PUBLICLY, ARE GETTING
QUEASY, SPENDING BLOWOUT PEOPLE
ASSOCIATE WITH RISING PRICES
WHEN THE ECONOMY IS GOING INTO
RECESSION OR COMPLETE SLOW DOWN.
THIS ADMINISTRATION, YOU NEVER
KNOW HEARING FROM THEM, FIRST
QUARTER WAS DOWN, SECOND QUARTER
QUARTER, BEST AT FLAT, THIRD AND
FOURTH QUARTER QUARTS AT BEST
FLAT.
SOUNDS LIKE PROSPERITY IS BEHIND
A VERY FAR CORNER WITH THIS
CROWD.
LARRY: APPARENTLY YOU’RE RIGHT.
APPARENTLY JOE BIDEN MET WITH
LARRY SUMMERS, SUMMERS PROBABLY
HIS BIGGEST DEMOCRATIC CRITIC OF
THE BIG SPENDING PACKAGE 18
MONTHS AGO WHICH SUMMERS ALONG
WITH OTHERS PREDICTED INFLATION
WOULD COME.
DO YOU THINK BIDEN WOULD LISTEN
TO SUMMERS, TAKE ANYTHING AWAY?
AGAIN YOU HEAR RUMORS ABOUT
BUILD BACK SMALL PACKAGE WHICH
SOUNDS LIKE A TRILLION DOLLARS
EVER SPENDING IS ONLY SMALL WHEN
YOU COMPARE IT TO FIVE AND
$6 TRILLION?
SPENDING.
>> THAT’S RIGHT.
THEY BROUGHT LARRY SUMMERS IN
ONLY FOR OPTICS.
THAT HE IS LISTENING TO PEOPLE
SHOWING THE BEST ADVICE POSSIBLE
BUT THERE IS NO SIGN YET OF A
REAL POLICY CHANGE.
WHICH HE WANTED TO DO, WHICH WE
NEVER DO BEFORE THE ELECTION,
THAT KEYSTONE PIPELINE IS NOT
SUCH A BAD IDEA.
LET’S GO FORWARD WITH IT.
LARRY: STEVE FORBES, WHAT IS
YOUR QUICK TAKE NOW?
THE FED DID WHAT IT DID, 75
BASIS POINTS LAST WEEK.
PERHAPS ADDITIONAL 75 BASIS
POINTS BUT YOU’RE NOT HAPPY WITH
THAT AS I UNDERSTAND IT.
YOU AND I TALKED ABOUT THIS.
THAT KIND OF DODGES THE
QUESTION.
NOBODY KNOWS WHAT THE RIGHT
TARGET RATE IS ACTUALLY.
THEY ARE TRYING TO SOUND LIKE
PAUL VOLCKER AS MUCH AS THEY CAN
BUT ARE YOU BUYING IT, COULD YOU
SEE A SHIFT IN INFLATION
EXPECTATIONS?
WHAT DO YOU THINK THE NEXT MOVE
SHOULD BE BY THE FED?
>> WHAT THE FED SHOULD DO IS
STARTING A AGRESSIVELY SELLING
ITS BOND PORTFOLIO, FREE THE
BONEDS.
THAT WAY GET IT BACK INTO THE
PRIVATE SECTOR.
THEY SHOW NO SIGNS OF DOING
THAT.
WOULD BE MORE MEANINGFUL THAN
INTEREST RATES.
ALL THAT DOES IS ARTIFICIALLY
RAISE THE COST OF THINGS THAT
SHOULD BE SET BY BORROWER AND
LENDER.
UNFORTUNATELY THE FED ONLY WAY
THEY KNOW HOW TO FIGHT INFLATION
IS CRUSHING DEMAND IN THE
ECONOMY.
THAT IS WHY I THINK WE’RE FACING
REAL DANGERS OF A REAL DOWNTURN.
THEN THE QUESTION BECOMES WHAT
WILL THE FED DO NEXT WHEN THINGS
START TO HIT THE FAN?
WE HAVE EXCHANGE RATE CRISIS
PERHAPS BREWING WITH JAPAN.
A BIG CRISIS THERE.
WILL THE FED PANIC WHEN THINGS
START TO GO SOUTH.
LARRY: FORMER FEDERAL RESERVE
GOVERNOR HELLER WAS ON.
HE WAS A ON WITH WAYNE ANGELL
AND MANLY JOHNSON, THEY GAVE US A LONG PERIOD OF PRICE STABILITY
A LONG PERIOD OF PRICE STABILITY
I WILL ADD FOR THE MOST PART
ALAN GREENSPAN.
HELLER IS TALKING ABOUT A
DOUBLE-DIP.
WE’RE IN A RECESSION NOW.
KIND OF WHAT YOU INFERRED, THE
FED SEEING A RECESSION WILL LET
UP.
THAT WILL LEAD TOWARDS EVEN
HIGHER INFLATION AND THEN EVEN
WORSE, MUCH WORSE RECESSION
LATER ON.
HAVE YOU THOUGHT ABOUT THIS
DOUBLE-DIP SCENARIO WHICH IS
KIND OF SCARY BUT YOU KNOW, THEN
AGAIN IT’S OUT THERE?
>> IT IS OUT THERE AND THE FACT
IT’S OUT THERE IS THE REAL
SHOCKER.
AND I DON’T THINK ANYONE AT THE
FEDERAL RESERVE IS PAYING
ATTENTION WHAT IS HAPPENING TO
THE YEN.
IN JAPAN THEY HAVE CRAZILY FOR
YEARS PUT A LIMIT OF 0.25% ON
THEIR 10-YEAR BOND, A QUARTER OF
A POINT.
THAT IS SACROSANCT.
THAT IS ABOUT TO GET BUSTED.
YOU ALREADY SEE IT IN THE
EXCHANGE RATE MARKET.
125 YEN TO THE DOLLAR.
THAT IS THE RED LINE.
NOW IT IS 135.
THAT WILL BE BREACHED IN THE
NEXT FEW MONTHS AS CONTINUE
CRAZY BOND BUYING THEY CAN’T
FOREVER.
WE HAVE A CRISIS BREWING THERE,
IS A BLACK SWAN OUT THERE
WHETHER JOP OR SOMETHING ELSE.
OUR OWN ECONOMY GOING DOWN,
ESPECIALLY FOR ELECTION,
PROSPECT OF A PRESIDENTIAL
ELECTION, I THINK FED WILL SHOW
THEY HAVE THE BACKBONE OF AN
ECLAIRE.
THE REAL PROBLEM IS THEY DON’T
KNOW REALLY WHAT TO DO IS OTHER
THAN CRUSH DEMAND.
LARRY: THE BACKBONE OF AN
ECLAIRE.
THAT IS A FORBES CLASSIC, WHAT
THAT IS.
THAT ONE IS A FORBES CLASSIC,
THE BACKBONE OF AN ECLAIRE.