tv Cross Talk RT August 11, 2021 5:30pm-6:00pm EDT
well, it's not the 1st time britain's lady has been has been questioned for expensive home prudence. and may the prime minister advise or started said johnson had been on weiss and how costly refurbishments on his private flats above downing street were fully the full details on which johnson has still not disclosed. this time the government defended the work purchased by thing. most of the cash came from private owners. the government, our collection helps to promote the creativity of british art and culture. it acquires new work such a consulting and securing the approval of an independent expert panel. and the majority of funding for acquisitions comes from philanthropic sources, not taxpayer money, and the former head of an english health service trust told us the timing of this latest scandal can be worth i think is a very poor decision. on this occasion. i think there are 2 reasons why it's bad judgment. firstly, we've just recently gone through a pay a pay round without nursing stuff where the government have been pretty mean in the
way that they've approached it. and secondly, of course is the overall economic situation. so whether or not these are good paintings and whether or not that good value for money is not as important as what does it look like? what do people think when they see the economy is not very good. we've just denied frontline and h her stuff, a decent play. rise and the prime ministers hanging too expensive paintings in the sitting room. number 10. it just looks bad. cross cutting away in just a few minutes time. we're backing off and what the latest headlines join us again, but me ah
ah, ah hello and welcome to cross top where all things are considered. i'm peter lavelle. we all see it and we all feel it. the significant increase of inflation has many economist concerned. and consumers, needless to say, terrified why the sudden increase in prices, if it's temporary, and what can be done to tame this cruelest form of taxation on working people, the, the cross fucking increasing inflation. i'm joined by my guess peter ship and west. and he is 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 talk roles and
a fact that means you can jump in anytime you want. and i always appreciate it. we have 3. peter is on the program here, so i'm going to be very specific location where you go to peter and west. and 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 brett, 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 for 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. 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 us government can only do that by keeping interest rates artificially low, but in order to keep seeing money to buy blonds. 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, the 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 $970.00 s. well, 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 good, it'll smooth out as we, but that's not happening here. ok. and, and i mentioned the 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. we thing a repeat of that, go ahead p. i remember declaration to as a kid in the seventy's, so i agree with everything that peter just said, peter chef, but i do want to add the following. you know, we did have a massive increase in the money supply in 2020, just over 25 percent. in the space for a few months, which is definitely
a cause for concern. but a lot of people are looking at the year over year cpi numbers. and it's not a 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 of a year. but you have, remember that right? about a year ago, this time with a situation where russia saudi arabia, and least a lot of boy went to the markets when demand was probably because it locked down. 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 had a huge spike in used cars, an auto insurance, 30 percent, 17 percent increases are expected way, which has to do with shortages and people get back on the road. so there aside your question, it's worth some. but in terms of the c, b, i number about inflation. that's not very alarming. what we see in financial
markets. that's more alarming. okay, well, let'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 be glowing in, you know, g d p numbers and all, but, you know, they're saying all they're all great. but is, 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? because we just mentioned oil use cars, saudi arabia, russia, globally, it will where it's the biggest tripping point. if i could put it that way,
go ahead. well, i would say that we're not talking about like anything there is like thick lation. first of all, just because these like of inflation is exactly the product. well, the recovery on demand, and it's like, you know, probably what most unusual is that it's a 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 advanced economy offered at the desk, the seamless not only from a physical side of but also from a monetary side, but 1st time in to the key emerging markets also over quite any back on your policy . so that's, that's, that's actually makes it a global phenomenon. barge, i probably would disappoint you, but as a formal will probably be in a former center, but i am on that side who believe me, the temporary ethics for now. okay. well, if you think,
because he can tell you there's the, that's the perspective i keep getting illegal 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 the fed is never is honest. i, the fed is all about spin, it's all about trying to ins. 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 they'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 that you can do is been i why do the markets hello everybody, that it's all temporary and that explains their failure to app. but real failure to act is the 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 worse 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 at fed actually fought inflation. so b, 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 1. 1 of the arguments out there is that if, if this inflationary trend is sustained, then it will dramatically cut back on consumption. but the 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 with a w, a, b, a 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 port, and also people on a 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 pointed 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 theory and history. lumber prices, rosemary, 800 percent. over a period stuck into seas have skyrocketed. there's weird price bites in places like hockey mon cards and non fund tompkins. so while the c b i number was kind of nothing. nothing burgers so far will know in a few months where she did a lot of 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 dro, type everybody, but disproportionately. we're going to see it effect on the poor people on a fixed income. ok, sophia, 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 report with the respond via this go to nate. it again, just because emerging market already started the normalization cycle of the monetary policy. so when you moving closer 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 u. s. n station is now higher than the last emerging markets that look at
ok. all right, i'm not know we're going to go to a short break out about short break. we'll continue our discussion on thursday inflation, stay with our team. ah ah, and american governments have often been accused of destroying lives in their own interests. what you see in this, these techniques is the state devising message to end essentially destroy personality of an individual lifetime. means this is how one doctors, theories were allegedly used in psychological warfare against the prisoners deemed a danger to the state. that was the foundation for the method of psychological interrogation, psychological torture, disseminated within the us intelligence community,
and worldwide among allies for the next 30 years. and how the victim say they still live with the consequences today. the welcome back. across stock. were 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 they're truly 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 speculation. 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 they're not going to take our money through tax sage, and they're going to take our per sting 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 can have all blues list. all this government for free. there is no thing is 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 out 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 up? just keep pumping money because the more you pump, the lessons worth, go ahead, peak and great bear out someone. you know,
someone is going to have to be the adult in the room and eventually had to take the action that will and 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 tend to prolong these things and generate more and more unintended consequences as inflation started to rise in the seventy's diction 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 have the final separate 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 in 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 and more money. but people don't usually like rising interest rates and, and a decrease in the,
in the money supply. so someone else 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 affect 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, 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? if 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 in place and 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 that i was already talked about is that information 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's actually means that emerging market currency, it could potentially gain from, from, from the new reality, let's say. so they potentially could feel stronger than us door going forward. and the 2nd point is that probably, you know, we could, we could be in a case over 17, but we could also be in, in the top of 2008, just because i,
i remember that that was a hot topic, the global patient, as it is now when the top of the name and it ends up with a huge correction in financial markets and to cruise the fall. so i think that though i'm not that concerned about like singable things and i'm pretty much concerned about creating bubble and potential created 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's 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. it's 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 is 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 as yet. 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 and 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 is going to lose so much value that we can no longer afford to buy the things that were buying now, pete in. great barrington addressed that issue as well because you know, not only was there a rotation of the dollar before, all this it seems to be on steroids right now. again. so is 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 money and goods. for example, we have the demand for goods and services. you have the demand for the dollar itself. we have inflationary effects, which makes no restrict you 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 982. they haven't done a study. 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. i'm not, 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 with the inertia, what do you see there actually is a very foss recovery, but i would expect it to be like a very short term ethics. but still with the 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 consolidation 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 an issue 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 our viewers for watching us here are to see you next time and remember, cross stock rolls. ah ah, ah, is your media a reflection of reality? the, in
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