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tv   Cross Talk  RT  August 12, 2021 12:00am-12:30am EDT

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discourse on that terrain, the ah berlin police say the use of violence is part of germany's legal system in response to claims of employing excessive force against protesters. at a recent anti lockdown rally julian assad's supporters gathered outside london, tied court as it heard washington's appeal to extradite the whistleblower to the u . s. a former british opposition leader was among those lending support to the working founder germany. the threat is one question. what is also on the board is the threats of example andy tourist helicopter, with 16 board plunges into a deep lake in russia. as far east contract a region. 8 people are rescued and an investigation into the crashes underway.
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those are headlines for this hour. don't worry in about an hour's time. my colleague kevin will be here with a full and fresh look at your news. this is our international ah, ah ah, ah. hello and welcome to cross talk 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 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. the
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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 or across stock rules and effect, 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 in, in west and peter, i didn't want, 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. i see you all the time on
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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 keep seeing
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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 or the working poor, are going to suffer the most severe bout of inflation in u. s. history far greater than anything experienced during the decade of the $97020.00. you know, let me go to pete here and in great barrington, i mean one of the explanations i've been told in it and it's basically coming from the fed. this is all temporary, it's pent 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 remember i was small, i was young, but i do remember the 19 seventy's and that was a very,
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very dreary time. and we thing a repeat of that. go ahead p. i remember state relation to as a kid in the seventy's, so i re read everything that peter just said, peter chef, but i do want to add the following. we did have a massive increase in the money supply in 2020, just over 25 percent in space for a few months, which is a different cause for concern. but a lot of people are looking at the year over year cpi numbers. and it's not an a look at the headline number, you have to look at what might be index is too big contributors to the recent jump . right? so 1st you have gasoline, oil in the energy basket, which were up over 50 percent year a year. but you have to 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 of lockdown. so you've had this surgeon oil prices, but it's come from where one point we had was touch international or intermediate
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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 70 percent increases or expectedly, which has to do with shortages and people get back on the road. so there are side you inflation is 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 let's, 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 these glowing increase, you know,
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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 when it, because we just mentioned oil used cars, saudi arabia, russia, globally, it will. where is 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 question, 1st of all, just because the lack 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 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 to seamless, not only from a physical side of but also from
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a monetary side. but 1st time in to the key emerging markets also over quite an eoc launch recall. so that's, that's, that's actually makes it a global phenomenon. barge. i probably, i would disappoint you, but as a formal will probably be in a former center, but i'm on that side who believe that inflation is temporary aspect for now. ok, well it's interesting because you can tell there's the 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. busy 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
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spin. it's all about trying to in. so if you recall, early in the mortgage crisis, when the sub prime market blew up 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 the fed could do is been i why the markets hello everybody, that it's all temporary and that explains their failure to act. but real
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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 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,
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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, 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 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
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commodities which is perfectly aligned with both economic during history, lumber prices, rosemary, 800 percent. over a month period starting to seize, have skyrocketed. there's weird price bites in places like welcome on cards and 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 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 just personally, we're going to see it 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 report with a response in vs. disco. denise. it again, just because emerging market is already started the normalization cycle of the
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monetary policy. so we're moving close to neutral rates some somehow. oh, $30.00, 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 than each 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, ah, one i make no, certainly no borders and my number
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is emerge. we don't have authority. we don't, the whole world needs to take action and be ready. people are judge crisis, we can do better, we should be better. everyone is contributing each of their own way. but we also know that this crisis will not go on forever. the challenges for the response has been massive. so many good people are helping us. it makes it feel very proud that we need together in one of the worst, m. a mass shootings in america was in las vegas in 2017. the tragedy a close a little of the real last vegas,
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where many say elected officials are controlled by casino owners. the dangerous shooting revealed what? the l v m p d really is. and now it's part of the machine to the american public. barely remember that it happens, that just shows you the power of money in las vegas. the powerful showed that true colors when the pandemic had the most contagious contagion that we've seen in decades. and then you have a mayor who doesn't care to. here's caroline goodman, offering the lives of the biggest residents to be the control group. to the shiny facade, conceal a deep indifference to the people the vice could have been saved if they were to take an action. absolutely keep the registering and keep the slot machines doing in vegas is a money machine is a huge cash register that is ran by people who don't care about people's lives being lost.
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welcome back to cross sac. were all things are considered on peter lavelle to remind you we're discussing searching inflation. ah, ah, are you, let's go back to peter and western peter, you know, we've, we've talked about 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 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 a sub for the most and they will be a backlash. we at least 3 of us here. remember the 19 seventy's and stagflation. go
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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 span, 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 r 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,
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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. unless all this 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 weakens 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. the seventy's and we're just calling off from here . okay, well, let me go to pete in. great barrington. i mean then how does all of this end here?
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because it seems like a, 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 is going to have to be the adult in the room, and eventually you have to take the action that will end this in 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 it 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 have the final step or, and of the dollar from gold. i was, i think, august 15th, 1971. and so eventually somebody is going to have to be
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a really popular person and either try to choke off the flow, new money in the money supply. or maybe, you know what, you would hope that, that they would look at the, the, the, the incentives at the fed faces, which are highly a 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. so someone eventually 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 sions 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 economists are still feeling the, the, the very strong impact of the coven crisis. i mean, what western news 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 the south america all here. i mean,
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how is this good? if we have a surge 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 me 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 still here. but again, i would note to point here that i was already talked about is that inflation is high and emerging market. but sometimes it's even lower than it in develop market or in, you know. so that's actually makes like that position in, in,
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in financial markets. it's 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 us door going forward. and the 2nd point is that probably, you know, we could, we could be in a case over the 17th, but it 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 in a couple $1008.00, 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 sustainable things. i'm pretty much concerned about credit bubbles and potential creditors 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,
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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 is over the last 14 months, it's hard to comprehend and it's out there. and it's just not how we think it's just about 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 tenure 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
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. there is no way that that yield reflects reality. it of x. 2 it reflects fantasy and everything is price to fantasy. you know, you have the extreme examples in means stops oxer chris 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 can 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
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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 is gonna lose so much value that we can no longer afford to buy the things that we're 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 of this it seems to be on steroids right now. again, so 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 injecting money and goods. for example,
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we have the demand for goods and services. you have the 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 had 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 hybrid patients right around the corner since 1982. 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 here. i mean, how does this all end 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 national,
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what do you see there actually is a very foss recovery, but i would expect us to be like very short term ethics. but still with the spec to see grew up with $4.00, which is the largest didn't indicate. so were nice catch up, grow for what, but more modern growth next year. well, you have a normalization of the monetary policy and the fiscal constants, nation inside. so that actually means that they can pretty much balance now. so, and that actually means that another strong point is bad. 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 in 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 in moscow and thanks to be worth for watching us here to see you next time . remember cross roles ah
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