BRETT: We’re starting to see a circumstance form that we haven’t seen in a very long time. You’re hearing analogies to the Carter administration on foreign policy fronts, on the cost of gasoline, on the scarcity of gasoline — and, of course, on the I-word, inflation. We’re starting to see inflation in the economy, and it’s becoming worrisome for a number of people.
You try to put a wooden fence in your yard, good luck on buying lumber. Steel has gotten expensive. We had a call from someone yesterday on that very point. Inflation is beginning to manifest itself because we’re pumping so much cash into the economy from government coffers that we’re borrowing that you’ve got too many dollars chasing too few commodities that are out there.
Larry Summers is one of these guys who’s starting to raise this alarm. CNN’s John Berman invited economist Larry Summers on to New Day. It was John Berman and Brianna Keilar yesterday morning. Remember, Larry Summers is president emeritus at Harvard University.
He served as the 71st secretary of the Treasury for President Clinton and the director of the National Economic Council for President Obama. He’s sour on Biden’s administration. He didn’t hold back on why when appearing yesterday morning to point out that the Biden camp is overheating the economy and causing inflation.
SUMMERS: I look at the facts and the amount of money we’re putting into households’ hands relative to the capacity of the economy to produce, and I look at the serene complacency that we’re in a new era and that we can increase demand almost without limit — and that we’re still trying to get inflation up — that we’re hearing out of Washington. I think all of that together is much larger than the kind of extra-fiscal policy we had in the 1960s.
BRETT: So Berman then asks, “What would you do about it now if you were in the Biden administration?”
SUMMERS: First, I’d recognize that our challenge right now is no longer insufficient spending. It’s the economy overheating. Second, I’d support the efforts that many states are making to get people back to work by converting unemployment insurance into reemployment bonuses.
But overall, this is heavily about expectations and psychology, and I think if we recognize that there is an issue and a problem and make clear a policy commitment to do what’s necessary to keep us in a world of stable prices, those expectations can be self-fulfilling. But if we say, “There isn’t any problem and we can let it all rip with policy,” those expectations can be self-fulfilling, too.
RUSH: Montgomery County, Pennsylvania. This is Steve. Great to have you on the program, sir. Hello.
CALLER: Hello, Rush. Good afternoon. I think you’re exactly right about the liberals’ need for a crisis. I think there’s a little long-term planning going on here and whether it’s next year or the year after it’s the inflation crisis. They’re deliberately inflating the currency through deficit spending and monetary policy, and we’re gonna hear a couple years from now that we need a greater social safety net for seniors because those on fixed income get adversely affected by inflation; for the poor, because the poor get adversely affected by inflation; and we can’t deal with deficits now, we need to raise taxes on the top one half of earners.
RUSH: Exactly. You’ve nailed it. Excellent. Way to go. You should apply for a fellowship here. You have just nailed exactly what’s going to happen. The Federal Reserve. I got a note from a professional golfer friend of mine who had just heard that the Federal Reserve is going to pump a trillion dollars into the credit markets.
And the professional golfer said, “Where are we getting this?” I said, “We are printing this. We don’t have this. We are printing this money,” $300 billion of it, by the way, to buy the long bond, which is causing bond yields to plummet. What else is going to happen with inflation, the value of the dollar is going to decrease, isn’t it?
RUSH: Yes siree, Bob. So we’re going to need exactly what you said. We’re going to have to chaos. There are going to be tax increases and increased social safety net. Gasoline prices. By the way, inflation’s already started. Consumer prices rose four-tenths of 1% in February. That’s the largest amount in seven months. Gasoline prices went up 8%. The price… Let me check the barrel price of oil right now. Let’s see. Crude oil, yeah, right here. Oh, ho! It’s 51 bucks. Just last week, it was in the low forties.
CALLER: And you’re going to hear this as the need of the government to take over more role of energy and price of crude at the pump and every other sector they can get their hands on, college education, the works.
RUSH: Well, don’t forget, when it gets really bad, then we’ll hear the need for price controls. In fact, there already are some economists out there who are now starting to sound the drums for price controls.
Of course, the bourgeois love of the notion of price controls. They think that means prices will remain steady. (chuckles) They are deadly. They are one of the worst mistakes that can be made, unless you’re trying to just turn everything upside down economically. That would create a depression. If that’s what they want, that’s how they can do it.
BRETT: So you hear Rush cite a number in that conversation with the caller. Consumer prices rose four-tenths of 1% in February — this is back in ’09 — the largest amount in seven months. Well, look at the inflation number now. The data last week showed the Consumer Price Index (that’s what it costs you to buy stuff) jumped 4.2% from a year earlier.
That’s the fastest since 2008. Since 2008. So the inflation is there, and what happens? Well, when you have price increases, it gets handed down to the consumer. So the poor are the most hard hit by this inflation. You’re somebody who’s earning $30,000, and you have a set amount of money that you can spend on your groceries.
Go try to buy chicken, go try to buy beef, go try to buy pork and see what those prices are. They’re moving. There have been articles written in a number of newspapers in the last two or three weeks about the price of chicken wings are skyrocketing, and labor costs are skyrocketing.
Because you’ve got people who are attempting to hire people to work in their restaurants or in their retail locations, and they’re bidding against Joe Biden’s government, ’cause Joe Biden’s gonna pay ’em to the end of the year not to work! On top of that, they’re also pumping out billions in universal basic income. This is a potential catastrophe in the making. Larry Summers is right, and I’m glad he’s saying it, ’cause it shows he’s being honest as it relates to the direction of this economy.
BRETT: As we went to that break at the bottom of the hour, I alluded to this notion of universal basic income. Larry Summers’ critique of the economy on CNN yesterday is interesting because he’s talking about an overheated economy. Too much money is getting pumped into the economy. But what if I told you that 88% of children are now going to be covered by monthly payments starting in July?
RUSH: Milton Friedman, the great economist, said it’s just obvious that you cannot have free immigration and a welfare state. Now, the left and all of their members, the left says we must have open borders. And they give as their reason social justice, and it’s all rooted in this cockamamie belief the United States has spread misery and suffering around the world, and we’ve done it in any number of ways.
Our superpower status derives from theft and consumption. We’ve simply gone out around the world and taken everything we wanted. We stole it from there, we stole it from over there, we took it from that group, we took it from that country. We’ve enriched ourselves at the expense of the world, and so the world is in dire straits because we exist as a superpower.
It’s simply not fair. It’s not right that one country should have so much and the rest of the world should have so little. And so the left believes in open borders. And not just open borders. The left believes in guaranteed welfare to those who get here, one way or another. And now, have you noticed universal income is said to be the ultimate answer to the future. Universal income.
You know what that is? We are a nation $20 trillion in debt. We have an additional 200 — this is gonna boggle your mind — $200 trillion in unfunded liabilities. And we have people like Mark Zuckerberg and Bill Gates and Elon Musk and the rest of the glitterati in Silicon Valley suggesting that what we need to have here is universal income, free money, because, of course, the future is artificial intelligence, which means robots, which means massive unemployment.
Progress, technological progress must mean people will lose their jobs and be replaced by machines. And Silicon Valley doesn’t want to feel guilty about that, so here comes universal income. So open borders, guaranteed welfare to those who get here one way or another, and now universal income. The ultimate answer.
Now, I missed the part about unlimited revenues. Where do the unlimited revenues to pay for all this come from? Where do we get that? Well, we don’t. We’re not gonna have to money to pay for all of this. Now, you square that, you Millennials, you love sustainability, what we’re doing here is simply is not sustainable. We can’t sustain a nation of growth and prosperity with something called free money and universal income. We just can’t do it. We can’t do it with open borders.
You want to feed the world because the United States has led to starvation around the world, you want the world to have free health care because the United States doesn’t share it’s great health care, you want everybody to have a guaranteed income? What, you want the world to come here for all of it?
Are there no limits on this? You want the whole world to come here? Is that what our price must be for our racism, for our slavery, for our bigotry, for our feminism, for our homophobia, for all of these ills that we have engaged in, the world must be permitted come here.
I have an idea, a little test, and I’m serious.
I know a lot of you in this audience are young people, you are Millennials, some of you are college students. I know you’re there. I know you’re there in droves. We have the audience research to prove it. We know you’re out there and I have a little test for you. You either already started school at university or it’s coming up, it’s very soon, either way, I have an idea.
Why don’t each of you take in a bunch of new roommates and provide them everything they want and need. You do it under the idea of fairness, under the idea that you may have more, you may have less, but you should do it. If free money, universal income, guaranteed welfare, unending health care, if this is the answer, you do it. Do a little test lab. Provide it for your roommates and see how it works and get back to us. Tell us how it works out. I mean, working Millennials can’t even afford their student loans, much less ESPN now.
The moral of the story is, when you don’t have the money, you shouldn’t take on obligations you can’t sustain. And we don’t have the money for any of this, not to mention the morality here is all wrong, and not the fact that doing all this is really, at the end of the day, not helpful to anybody. Because all it’s gonna do is create people that are ill-equipped and unprepared to fend for themselves.
BRETT: And the crazy part of this is – the notion of the Great Reset that you hear people talking about, like Klaus Schwab over in Europe — they think that you can just do this on the global scale. Just give everybody a house, give everybody transportation, give everybody money and food and stuff, and it will just be a utopia.
No. It is. It’s actually a utopia. It doesn’t exist, and the idea that you think for a moment that people are going to put up with this? It’s absolutely loony. You know, you look at how this situation ends up, and it ends up the same way it has in the past, in the Soviet Union: Poverty, desperation.
Because at some point, you’re gonna be pumping out money to everybody, bring everybody into the country, and you’re gonna have people who decide they want to take stuff from everybody else. You will end up with a tribalist kind of model where one group of people is gonna gang up on another group of people to take their stuff, and then how are you supposed to backfill all of that?
Well, you can’t. The beauty of a free-market system is the fact that a free-market system works, and the proof is in the pudding. If you look at the historical track record of where we were, say, in 1776 versus where we are now, the economy has grown exponentially. The global economy has grown exponentially.
But, by and large, it’s been driven by the American economy in the last hundred years. And we didn’t make all that money by stealing money from poor people ’cause poor people don’t have money. We create products. We create services. We create things that people want to use.
China is the opposite model. They decide, “Well, you know what? We’ll just pirate all the technology — we don’t have to do any R&D — and we’ll just manufacture stuff at a much cheaper rate.” It’s like a pirate economy. It’s not hard to understand that there is no free lunch.
There just isn’t one. Somebody pays that tab somewhere along the line. I think some of these people are probably running and hiding in cryptocurrency? It’s ’cause they’re going, “Uh-oh. This is gonna get bad fast. I better go somewhere else and figure something else out.” Only the politician can dream this kind of stuff up.