the world to part, we choose to look for common ground in the me with the hello and welcome to cross talk where all things are considered. i'm peter labelle . we all see it and we all feel it. the significant increase of inflation has many economists concerned, and consumers, needless to say, terrified why the sudden increase in prices is its temporary and what can be done to tame this cruelest form of taxation on working people. in the

cross talking increasing inflation, i'm joined by my guess peter ship and weston. he's the host of the peter ship, show podcast in great barrington. we have pete earl, he's an economist at the american institute for economic research. and here in moscow we have sophia done, yes, she is a russia and c i. s. economists at renaissance capital r, i cross truck roles and a fact that means you can jump in anytime you want. and i always appreciate it. we have 3 peters on the program here, so i'm going to be very specific location where you go to peter and in western peter, i've been what, you know, obviously i'm a news junkie. i'm always trying to figure out what's going on. i cover a wide breath, the media and there seems to be a lot of questions about the severity of the inflation that we're experiencing, how long it's going to last and actually where it's coming from. i know this is your yours, one of your great specializations and i compliment you. i see you all the time on a variety of programs. what is your take here? because if i can just add the little salt and pepper to it,

it's been politicized as well. as usual, go ahead peter. well, you laid it out correctly in the intro. inflation is attacks, and the source is government because that's who taxes us are. the only way to reduce inflation would be to dramatically cut government spending, because government spending is being paid for through inflation. we're running record budget deficits. and so instead of taking our money and spending it, the government is taking our purchasing power by printing new money and spending that. so the increase in prices that we're all experiencing is the tax that we are paying to finance government. in addition to federal reserve is trying to prop up the stock market prop up the real estate market and prop up the u. s. government. it can only do that by keeping interest rates artificially low, but in order to keep seeing

money, to buy blondes. so as long as the fed is artificially suppressed, the interest rates, it is going to have to create inflation to do it. and because we have so much debt that is now forced to keep interest rates at 0 and not so unfortunately, average americans, a middle class of the working poor, are going to suffer the most severe bout of inflation in us history far greater than anything experienced during the decade of the 97020, you know, let me go to pete here and in great barrington, i mean one of the explanations i've been told and it's basically coming from the fed. this is all temporary, it's bent up demand. it's going to, it'll smooth out as we, but that's not happening here. okay. and, and i mentioned that working class middle class people in my introduction intentionally because i room, i was small, i was young, but i do remember the 19 seventy's and that was a very, very dreary time. and we thing

a repeat of that. go ahead p. i remember declaration to as a kid in the seventy's, so i read everything that peter just said, peter chef. but i do want to add the following. you know, we didn't have a massive increase in the money supply in 2020, just over 25 percent. and space of a few months, which is definitely cause for concern. but a lot of people are looking at the year over year cpi numbers. and it's not enough to look at the headline number. you have to look at what might be index, is to be contributors to the recent jump. right? so 1st you have gasoline, oil in the energy basket, which were up over 50 percent, year over year. but you have to remember that right? about a year ago, this time with a situation where a russian saudi arabia, on least a lot of oil in the markets when demand was probably because of lockdown. so you've had this surgeon oil prices, but it's come from where one point we had west texas international that are intermediate rather at negative $32.00 negative $34000.00 barrel. the 2nd thing is

we've got a huge spike in used cars, an auto insurance, 30 percent. 30 percent increases are expected, which has to do with shortages and people get back on the road. so they're assigned to inflation. it's worrisome. but in terms of the c p, i number about inflation. that's not very alarming. what we see in financial markets that's more alarming. okay, well, it's, it's go to our guest in moscow here. so yeah, i'm very concerned. i mean, if you look at it globally, where is most of this inflation coming from? because we have a lot of western governments have pumped huge amounts of money, which i find really, in some cases it was absolutely necessary. i don't have a problem with that. but i mean, there's so much money that has been allocated to be pumped into the economy. is it really necessary right now? because from what i understand, a lot of these glowing in, you know, you know, g d p numbers and all that, you know, they're saying all they're all great. but is that counting inflation is inflation

pumping up those numbers? they're really real numbers here. can you, can you make an assessment on a global scale when it comes to inflation when it, because we just mention oil use cars, saudi arabia, russia, globally, it will where it's the biggest tripping pointed. if i could put it that way, go ahead. well, i would say that we're not talking about like anything there is like the equation. first of all, just because the y completion is exactly the product. well, the recovery on demand, and it's like, you know, probably what most unusual is that it's very, very symmetric across the globe. and the reaction to the crisis was very symmetric across the globe. so it was quite different from previous to crisis. just because like a not only advance economy for at the desk, the seamless not only from a physical side of but also from a monetary side. but the 1st time in to the key,

emerging markets also over quite and he wants your policy. so that's, that's, that's actually makes it a global phenomenon. bar, i probably would disappoint you, but as a formal, probably being a former censor, but i'm on that side who believe that inflation is a temporary aspect for now. ok, well it's interesting because you can tell there's the that that's the perspective i keep getting legal back to peter here is, is the fed being responsible here because, i mean it's, it's not over the last 14 months so that we've seen increased huge injections here . we've, we've seen a lot of really easy money for a long time now, and then we've got supercharged go ahead. peter was the federal reserve has never responsible. so why should they change now? but remember, what are the other things that the fed is never is honest i, the fed is all about spin. it's all about trying to in. so if you recall,

early in the mortgage crisis, when the sub prime market blue op and the threat to the entire mortgage market was obvious, as was the threat to the economy. what did the federal reserve do? they came out and reassured everybody that there was nothing to worry about that the subprime problems were contain. why did they do that? because they, we're hoping that by denying that the problem existed, maybe they can somehow, well it out of existence and somehow get people to change their behavior in the face of what should have been an obvious crisis. and they were hoping to averted, and i think you're doing the same thing now. the fed has absolutely no ability to fight inflation. so why even acknowledge that it's a threat when you can't do anything about it. so the only thing the fed could do is been i why the markets tell everybody that it's all temporary and that explains their failure to app. but real failure to act is big.

it's impossible because the only way to fight inflation is it turn off the monetary spigots to raise interest rates of cards. economy that they've erected. we have a worst financial crisis in 2008. the government would be forced to slash spending dramatically. they may even have the default on the national debt. who knows what happened. it fed actually fought inflation. so be because they can, they're just denying the problem, but there is absolutely no evidence to suggest what we're really experiencing is the beginning of a long overdue, huge increase. and the cost of living, not only the result of the inflation that the fed has created since the pandemic, but of all the inflation that we created before the big that we've yet to deal with, you know, made a p 11 of the arguments out there is that if,

if this inflationary trend is sustained, then it will dramatically cut back on consumption. but this things will be just too expensive here. i mean, how does that play into what is, what is call, what is called the recovery from the pandemic? because, you know, we could go through a w, a, b k, all the, all the alphabet letters here. but how is going to affect the recovery and who is going to be hurt most. we've already mentioned working people go ahead, peep, so the problems of inflation fall most heavily upon people who have either low income, the working poor and also people on fixed income because the reduction of the value of dollars while receiving the same amount of dollars, basically winds up being a sort of a tax, you know, i point out before the d. c. p, i numbers are a little bit misleading, but we have seen classic inflationary effects. both financial markets and commodities which is perfectly aligned with both economic during history, lumber prices, rosemary, 800 percent. over a month period starting to seize,

have skyrocketed, is weird priced by some places like welcome on card to non fund tokens. so while the c p i number was kind of nothing, nothing burgers so far will know when a few months where she's been on mixed signals. but commodities, whether it's lumber or whether it's food commodities, all that sort of thing affect everyone. so it won't be long before the price increases. do start to take everybody, but just personally, we're going to effect on the poor people on a fixed income. okay. so if you're in moscow here, i mean this 30 seconds before we go to the break here. i mean, is there any kind of coordinated global approach to dealing with this problem because it's growing in magnitude and it's coming fast. go ahead. well, i would say that the, the, the now the mom proposed to respond via disco. denise it again, just because emerging market is already started the normalization cycle of the monetary policy. so we're moving close to neutral rate some somehow. 030,

the ethic over the increase of the rate, and i think that's important. see what we see now is that very unusual dynamic between emerging market develop market like, for example, the us inflation is now higher them in most emerging markets that look at ok. all right, i'm not know we're going to go to a short break it out about short break. we'll continue our discussion on searching inflation stay with r t ah, these are the 4 p boy who pulled the trigger. 5, something and survival was the hardest things that i had. the face was not having a face. i had

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the welcome back. across stock. we're all things considered on peter lavelle to remind you we're discussing searching inflation. ah, ah, are you, let's go back to peter in western peter, you know, we've, we've talked about the how economists look at this. we have 3 economists on the panel here. and it, all of you make a lot of perfect sense to me, but it's really a political problem at the end of the day because a lot of promises, i have been made promises that are going to be made here. it's, it's about how we get out of this crisis here and the powers that be decided you spend your way out. ok, and all 3 of you, of enumerated so far in this program, the immense dangers of it. and they're not, they don't have the downside, like the rest of us. ok, working people, they're the ones that get us up for the most and they will be a backlash. we at least 3 of us here. remember the $970.00 and stagflation. go

ahead. peter, well of course it is political, i mean, the bided administration. every member of congress wants to give the voters something for nothing. right. the government wants to make sure that all the people who don't have jobs, many of them, of course, are just choosing not to have jobs. but the government wants to make sure that they have plenty of money to spend, even though they didn't earn that money. even though they didn't help produce any goods or provide any services, the government wants to give the money to buy goods and services. well, where's the money coming from? they're not raising taxes. they're just spending money. and so the money is being created, it's being conjured into existence by the federal reserve, but that is inflation. you see every single dollar that the federal government spends, the american public has to cover the costs. and so if they're not going to take our money through tax sage and they're going to take our purchasing power through

inflation. and so they print all this money, the government spends the money, but the federal reserve prince the money, and it goes into the economy. and now as non productive unemployed, people go to buy stuff. they didn't help produce. all that happens is the price goes up and it's amazing that people don't understand or they expect that we get all blues list all the government for free. there is no thing as a free lunch we're spending is going to keep getting worse. and of course, as government spends more it week as the economy, which means even more spending, inflation is going to go through the roof and we keep talking about the 1970 s. what we're going to experience is going to be far worse. and in fact, it probably already is worse than the 1900 seventy's. if we were using the cpi that existed back and then to measure prices right now, we would see that the cpi is already rising at

a faster rate than it ever did that i havanese and we're just calling up from here . okay, well let me go to pete in great barrington. i mean then how does all of this end here? because it seems like it's, we're chasing our tail here because you know, you can pump in all of this money here. but if people can afford goods, then you're going to start seeing sectors of the economy collapsing here. i mean, how we, how do you get out of this trap that this trap of just keep pumping money? because the more you pump, the lessons worth, go ahead, peak, and great bear someone, you know, someone's going to have to be the adult in the room, and eventually had to take the action that will end this in the late 70 was. it was paul volcker. we don't know the name of the person, at least i don't think we do, we do at this time. but you know, the government, it tends to, tends to prolong these things and generate more and more unintended consequences as inflation started to rise in the seventy's nixon put on price controls. and then

host of other things happened about 50 years ago. actually almost to the day to few months away, we had the final several of the dollar from gold. busy i was, i think, august 15th, 1971. and so eventually somebody is going to have to be a really unpopular person and either try to choke off the flow, new money into the money supply. or maybe, you know what, you would hope that they would look at the, the, the, the incentives that the fed faces, which are highly symmetrical. you know, everybody loves lower interest rates are more money, but people don't usually like rising interest rates and, and a decrease in the, in the money supply. so someone bench is going to have to rise up and do the unpopular things. and although they won't be liked for it, they will be doing the right thing and they will be doing something really sort of on her own or should at that point. okay, so here in moscow here, i mean, how is this going to put effect the emerging markets? i mean, 1st of all, a lot of these economies are still feeling the, the, the very strong impact of the coven crisis. i mean,

what western agencies tend to focus on western countries here, but when you look at country, you know, go to asia, we have india has a major crisis still dealing with south america also here. i mean, how is this good? we have a 3rd of inflation here, and we still have the supply chains that are been cut or very, very weak here. how does it, how does the global economy recover from this? because governments are always looking at single countries here. but if we look at it and broadly here, i mean, it seems to be, they're going to be on very much on the short end of the stick here. i mean, you start recovering and then also you get this huge wave of inflation coming out. you well yeah theories is exactly the point, so colby is still here and the war results still here. so i'm not only on like a developed market but also in emerging markets. so the problem is still here and uncertainty is still here. but again, i would note to point here the talk today was already talked about is that

inflation is high and emerging market, but sometimes it's even lower than it can develop market or in, you know. so that's actually makes like that position in, in, in financial markets, it actually means that the merchant market currency, it could potentially gain from, from, from the new reality. let's see. so they potentially could feel stronger than your door going forward. and the 2nd point is that probably, you know, we could, we could be in a case over the 17th, but we could also be in the, in the top of 2008, just because i, i remember that that was a hot topic. the global patient as it is now in a couple 1000 many and it ends up with huge correction and financial markets and the crew default. so i think that though i'm not that concerned about like thing about things, i'm pretty much concerned about credit bubble and potential credit trees and the

potential correction that could follow. so we want, we could wait for it. let's say another blacks want to come to just to rigor, the correction that would be a very broad base. that's exactly where i wanted to go. peter well, in western here. i mean what we see here with all of this cash injections here is this huge. i mean, we talked about like the, how we thing bubble, but i think almost every sector is turned into a bubble right now. it's really quite terrify watching it here. the amount of money that is being pumped in this over the last 14 months. it is hard to comprehend and it's out there and it's just not how we thing. it's just not what sector it seems to me this is like a perfect storm to collide. go ahead, peter. oh, sure. because the federal reserve and the reckless monetary policy is just about every single financial asset is dramatically miss price. and that has no tremendous distortions in the economy and massive negative implications. just look at the bond

market. look at the yield on a 10 year us treasury, which is below one and a half percent is like 1.4 percent. inflation is 5 times that and look at the yield . there is no way that that yield reflects reality. it of x. it reflects fantasy and everything is price to fantasy. you know, you have the extreme examples in means stops oxer cryptic currencies. but the fed has done tremendous damage and there is no savior on the horizon that's going to do the right thing like paul vulgar. because the consequences are doing of doing the right thing are so horrific at this point that they're never going to be tried. but of course, the consequences of continued do the neuron thing are even more horrific. but that's what's gonna happen because politicians don't give a damn about that. all they want to do is kick the can down the road as long as they can. they don't care if they make the problem worse, just so long as it blows up later. rather than sooner,

and that is what is going to happen. but i think on the emerging markets, they are going to finally be the big beneficiaries. because we're going to print the dollar into oblivion, the dollar is going to crack. and then what is going to happen is a lot of the goods that are being sent to the united states are no longer going to come to the united states because nobody here will be able to afford to buy them. and so all those goods that are produced abroad will stay abroad, and so prices will come down for people in emerging markets as their currencies go, way up and things become cheaper for them as americans get priced out of all these mark is because our current, she's going to lose so much value that we can no longer afford to buy the things that we're buy. now, pete, in. great barrington address that issue as well because you know, not only was there a rotation of the dollar before all of this, it seems to be on steroids right now. again, so it's short sighted so short sighted. go ahead, pete. the great barrington. yeah,

so i just, i need to mention this in economics. we sometimes talk about a signal extraction problem, right? so it can be difficult to determine what things are infecting body and goods. for example, we have the demand for goods and services, drip demand for the dollar itself. we have inflationary effects, which makes numbers tricky to reach. my point is that it is undoubtedly true. we've had the largest increase in the money supply, and it's about time in history. but also we have the entire nation blocked down. as somebody reopen, basically the same time, we had a fixed amount of goods and services suddenly house upon by many tide, more consumers unusual. all right, so my point is i advocate being prepared, not panicking, having hedges, but the people been saying hyper inflation is right around the corner since 1982. they haven't done any good. so be prepared. don't panic, especially when the data is still mixed in somebody inconclusive. ok, well, it's sophia here in moscow. i mean, this has been a very depressing program here. i mean, how does this all and here, i mean,

we gave, you could give like an russian accent here. i mean, i've been told that economists think that the russian economy is overheating. how do you see it one minute last, last comment? go ahead. well, i would say that we, now we senior, actually, what do you see there? she's a very foss recovery, but i would expect us to be like very short term ethics. but still with spec to see i grew up with 4.0, which is the largest didn't indicate. so were nice catch up, grow full of what, but more modern growth next year. well, did you have a normalization of the monetary policy and the fiscal conference nation inside? so that actually means that the vision pretty much balance now. so, and that actually means that another strong point is that credit bubble is not any fuel for either russia or neighbors. ok, well we, we ended on a good note there, but one thing i've learned on this program here, the dollar has

a very treacherous future. i'm a, i'm very worried about it. i want to take my guess in great barrington, west and, and in moscow and thanks to be worth for watching us here are to see you next time and remember cross start growth. ah, ah, always be polite, never engage with an aggravated or confrontational office. don't get into any conversation to start answering questions. just ask for an attorney to survive and interrogation, you've gotta be ready to stand out. definitely don't want to be going to throw in the jump suit one cuffs you're more likely to walk free. if you're rich and guilty, you are,

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