May 21, 2025 • 47 mins
MSNBC’s Lawrence O’Donnell dissects Trump’s constant need to exaggerate at every opportunity.The Economist’s Mike Bird details how tariffs are affecting Americans.
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Episode Transcript
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Speaker 1 (00:00):
Hi, I'm Molly John Fast and this is Fast Politics,
where we discussed the top political headlines with some of
today's best minds, and a majority of US companies say
they need to raise prices because of tariffs. We have
such a great show for you today. MSNBC's own Laurence
O'Donnell stops by to talk about Trump's need to exaggerate everything.
(00:24):
Then we'll talk to the economists Mike Byrd about how
the tariffs are going to affect the economy.
Speaker 2 (00:29):
But first the news, Molly.
Speaker 3 (00:32):
As we know, Democratic Representative Shreith thatt Adar was trying
to introduce seven articles of impeachment. But you'll be shocked,
mister Trump, who often talks about how aggrieved he is
about his previous impeachments, he's shutting the whole thing down.
Speaker 1 (00:46):
Yes, I am completely shocked. So let's just talk about this.
There aren't the votes for Trump to be impeached because
Democrats don't control the House. So not only are there
not the votes to impeach him, the votes to bring
the impeachment of for a vote, right because Republicans control
the House. So this was a guy who wanted to
(01:09):
bring it up anyway. Part of this is because voters,
I know you're going to be shocked to hear this,
but voters mostly want Democrats to run a check on
Trump and not to relitigate Biden's age.
Speaker 2 (01:23):
I know you're going to be shocked.
Speaker 1 (01:25):
They actually think the twenty twenty four election happened already
and now they want you to move on and to
try to prevent the sliding autocracy which we are seeing
before our very eyes. I think that when Democrats do things,
it matters. Think back to Corey Booker, I think back
(01:46):
to all of the videos that Chris Murphy has been doing.
They've actually broken through the noise. So I actually think
this was good. You know, in Tromp's first term, we
had Al Green from Texas and he did this and
Pelosi was sort of not pleased with him because he
didn't have the vote. So it's a stunt and not
(02:07):
necessarily something that you can bring to fruition. But honestly,
I think this is good. I think it's good to
just try. And I don't you know, I might. I
was at one point more cynical, and now I'm just like, actually,
trying is good. Good to try, try, try, that's not
(02:28):
bad also, you know, I think that there will be
many opportunities to impeach Donald Trump over the next thousand
plus days.
Speaker 3 (02:38):
So speaking of reasons to impeach Trump, Homeland Security Secretary
Christy nom was again testifying, which is another thing Democrats
could do every day if they want to make themselves
look good.
Speaker 2 (02:49):
They really could.
Speaker 3 (02:50):
Yeah, because we have a saying in the business not
ready for primetime. This doesn't seem like she's ready for
three o'clock at the boarding with no one's watching. Right
here because these answers, I.
Speaker 2 (03:01):
Sort of love her. What I love about her?
Speaker 3 (03:04):
Tell me, what do you love about her? Is it
the dog killing Baly?
Speaker 2 (03:06):
It's the dog killing the makeup.
Speaker 3 (03:10):
The listeners might have just heard by dog growed as
I said that, right.
Speaker 1 (03:13):
The injectibles and crazy injectibles, all of the makeup, the
enormous expensive watch. No listen, nobody likes Christy Nome. Let's
be honest here. But what is incredible is that she
doesn't know what habeas corpus is.
Speaker 2 (03:30):
And I think that what Maggie.
Speaker 1 (03:33):
Hassen, Democrat from New Hampshire did here is she really
did point out an important thing, which is it's much
more effective in these Senate hearings just to ask these
people questions which they clearly cannot answer, than to grand
stand for twenty minutes. So a lot of Senate hearings
and House hearings, any number of hearings, you'll have a
(03:58):
member grandstand and then they'll be a question sort of
and then the person will yell.
Speaker 2 (04:04):
Back at them.
Speaker 1 (04:05):
But this simple idea of asking a member of Trump's
at second administration what a phrase means, in this case,
habeas corpus, it's pretty clarifying. So she asks, She says,
what does habeas corpus mean? And Christy Noms says, habeas
(04:27):
corpus is a constitutional right that the president has to
be able to remove people from this country.
Speaker 2 (04:33):
It's not that's not what it is.
Speaker 1 (04:36):
It's nice that she thinks it's a right, by the way,
So habeas corpus is the legal principle that requires the
government to provide a public reason right for detaining and
imprisoning people. It's a pretty serious protection.
Speaker 3 (04:50):
And it does not what made say, one of the
things that makes America great, right.
Speaker 1 (04:55):
Well, I don't know, it would argue maybe, but anyway,
it's sort of exact with the opposite of what Christy
Gnomes said. It really shows like I just wonder if
you sat down and you just asked these people to
define things, if you would do better during some of
these hearings, you know, what does this mean?
Speaker 2 (05:13):
What does that mean? What do you do in here?
What are you doing there?
Speaker 1 (05:17):
But the point is either way, Christy Noom, while having
a lot of make up, quite a bit of injectibles
and very expensive watches, is a moron SAMAI.
Speaker 3 (05:28):
Elon Musk says he'll do a lot less political spending
moving forward ed. Some people are saying, oh, look, STOs
was a failure. Other people are saying, kind of feels
like he accomplished his mission. If we look back to
when he said to Tucker Carl said that Trump had
to win or else who's going to go to jail?
That he was kind of hitting at that, what are
you thinking?
Speaker 1 (05:48):
We don't know, right, This is like with so many
of these things from Trump world. We don't really know
what's true, right. We don't know if Elon is doing
this or if Elon is saying he's doing this. We
know that Elon polls about as well as the bubonic
plague that we know, right, You know, we just don't
(06:09):
know any more than that. So as much as I
certainly would like to see less Elon and American politics
for any number of reasons, but.
Speaker 2 (06:20):
I wonder if it's true or not.
Speaker 1 (06:22):
And and I'm very suspicious of anything Elon says because
there's no reason to trust Elon.
Speaker 3 (06:29):
You know, he does often say we're going to do
this in two years, and then quite the opposite happens. Yeah,
so my in more grim news. After President Biden's advanced
cancer remarks, you'll be shocked at the right responded with
kindness and empathy and just really well done, decorum, You're hilarious. Yes, yes,
(06:52):
we have a despicable tweet and remarks from both Donald
Trump Junior and JD Vans here.
Speaker 1 (06:57):
Okay, So the thinking here is that the pundit world
wants Democrats to talk about Joe Biden's age. They want
a discussion of Joe Biden's age, they want a reckoning
about Joe Biden's age. But I'm gonna give you guys
a hot take. Voters told us what they thought about
(07:18):
Joe Biden's age. They thought he was too old, and
the polling showed that, and that's why he dropped out
of the election. So is he too old because he's
too old? Or is he too old because he's too old?
He's too old to being old is the best case
scenario in case you're wondering, because there are a lot
of other things that can happen that are less good
(07:39):
than being old.
Speaker 2 (07:41):
You know, I don't know. I mean, I.
Speaker 1 (07:43):
Understand that Tapper has a book he wants to sell
and God bless him, but it doesn't make any sense
to me why we have to engage in this story.
He lost, he's old, he's got cancer. Now this is
all really dark and sad, and I don't.
Speaker 2 (08:00):
Know that it matters. Look, we thought he was old.
He had good days and bad days.
Speaker 1 (08:05):
It's just you know, I was talking behind the scenes
with some people I work with in TV Land, and
we're talking about it was like he had good days
and he had bad days, and sometimes he was good
and sometimes he was less good, like all eighty one
year olds. That's not a conspiracy. That's just getting old.
If only it were a conspiracy. You know, just like
the administration, they did a lot of good stuff, they
(08:25):
couldn't message it. They did some bad stuff, like they
couldn't settle the war in Gazo or in Ukraine, or
protect Taiwan. I mean, there were a lot of failures there,
but there were also a lot of really good things, reshoring, manufacturing,
chips and sciences. So again I don't get what the
goal here is except to sell books about the election,
(08:49):
which was really fucking horrible election and really dark and
ultimately Harris was set up for a glass cliff. This
is the end of the biden Age discourse. In this podcast.
We will no longer be speaking of it because my
man was old and now he has cancer and I
feel really badly for him, and quite frankly, you know,
(09:13):
that's it from it. Lawrence O'Donnell is the host of
the Lawrence O'Donnell Show on MSNBC.
Speaker 2 (09:23):
Welcome to Fast Politics, Lawrence.
Speaker 4 (09:26):
It's so great to be here, and I'm so out
of shape a podcasting because I forgot my headphones and
luckily you reminded me, so here we are.
Speaker 1 (09:37):
You know, it's not so different than you know, television,
all things just longer and slower.
Speaker 4 (09:45):
I think you get clearer thinking in podcasts because you
don't have control rooms screaming about getting to a commercial
in the next You know forty seconds, and so I
like it a lot.
Speaker 1 (09:57):
You don't find someone screaming in your ears, rap rap rap,
not soothing.
Speaker 4 (10:03):
Well by the way they I mean, they've they've learned, uh,
And I learned to ignore that. So they've learned not
to do that for many, many years now. And so
that's why I never interrupt guests. And the control room
used to be screaming at me to interrupt the guest
and in the segment and I and the first time
I didn't do it, I noticed that they figured out
(10:26):
how to do the show. Even though even though I
didn't do the really ugly, messy interrupting thing and throwing
to a commercial. The only time that becomes incredibly tense
is when you're really coming up to the last second
of your show. Then you really have to stop. But
I pretty much design it so that we never have
anybody in that space where where they're going to get
(10:49):
jammed that way and I'm going to get jammed that
way as a host, I just I hated it. It looks
so rough and it's just hard. It's hard for the
audience to understand what this urgency of interruption is about.
Speaker 1 (11:03):
So let speaking of the urgency of interruption. I feel
like you and I we have lived through Trump one
point Oh, we have lived through Biden. You know, it's
four years now we are in Trump two point zero.
Speaker 2 (11:16):
Has America learned anything?
Speaker 4 (11:18):
Not that I can tell no, Because, for example, Trump
has been wrong about pretty much every declarative sentence he's
ever spoken as a politician or as a present or act.
And he's certainly wrong about every single number he mentions,
every number of any kind. I mean, let me just
(11:39):
throw out one from the present. He talks about the
current Air Force one planes. There's two of them as
being forty two years old. They are thirty five and
thirty four. Now, that's the smallest exaggeration he's ever done
with a number ever. But it's just the proof that
there's not a single number he can say that he
(12:00):
won't lie about in a direction that he thinks helps
to make his point about whatever he's talking about. And
there is not a single person in the White House
Press Corps who has ever figured out how to deal
with that. And there is not a single interviewer of
you know, Trump team people who have ever figured out
(12:22):
how to deal with that. They accept, you know, at
their best the people who do the best interviews of
Trump team players, and I think they're all bad interviews
by conception, by definition, they're not going to be good interviews.
But within that group of bad interviews, the best ones
can test a very tiny percentage of the falsehoods, a
(12:44):
very tiny percentage of the falsehoods that are said right
to them to their face. And you know, most of
us don't have data available on every single subject that
Trump or a Trump team player is going to lie about.
So how many people are sitting around knowing how old
the Air Force one planes are? Brett Bear certainly isn't
one of them, because when Donald Trump told him they're
(13:05):
forty years old, Brett Bear goes, oh, you know, I
didn't think the audio the uniist knows they're forty years old. Yeah, no, kidding, Brett,
because they're not. And I didn't know how old they
were either, so I looked it up before I ever
said anything about it. So this is unbelievable flood of falsehood.
And what's interesting about it is those same reporters retain
all the muscle memory of the kind of reaction you
(13:28):
would have to something like that, only and exclusively to
be applied to Joe Biden or other Democrats. If Chuck
Schumer gets a number wrong, he's going to be really pressed.
And if Joe Biden gets a name wrong, we might
just have to write a book about that. It's a
disastrous non learning curve, zero none, and voters, you know,
(13:50):
have learned as far as we can tell, the worst
possible lesson from the era, which is that character doesn't
matter at all, and the number of criminal convictions you
have between presidencies doesn't matter, and the number of criminal
indictments that have been landed on you don't matter. And
(14:11):
that's that is not the news media's fault, you know,
I think the news media across the board did their
best to stress that this matters. I think, you know,
everybody other than the right wing news media did their
absolute best. But you know, it's like, you know, it's
it's like being in a classroom with kids, you know,
who here two plus two and is four and they
(14:32):
just can't they just can't retain it. They just can't
do it. And so that's that's an unsolvable thing, is
that you have. It's not a small number of voters, right,
you have this, you have this possibly controlling number of
voters who have completely eliminated the issue of character, which
means they've eliminated the issue of fidelity to oath, which
(14:55):
means they've eliminated the issue to fidelity to the purpose
that the founders initiated in the creation of this government.
Speaker 1 (15:04):
So we now can talk about something I've been thinking about,
which is this idea. So I was on TV yesterday
with an abundon who I like, and he said, the
mainstream media has to reckon with and the Democratic Party
has to reckon with publicizing Jake Tapper's book. Basically it
was what it was. And I thought to myself, No,
they fucking don't. They knew he was old. They told
(15:27):
us he was old, that he pulled poorly because they
felt he was old.
Speaker 2 (15:33):
Reckon what they reckoned it happened. I mean, can you
explain this to me?
Speaker 4 (15:38):
Yeah, of course they reckoned. And this is the most
ludicrous political challenge that the news media, and the news
media alone has decided to pose to one side of
our politics and never posed anything like it to the
other side of our politics. About the convicted felon who
that side of our politics fully embraced every day so
(16:02):
much so that they would compete to get in the
front row of his criminal trial to show how much
they personally supported paying off porn stars for their silence. Okay,
there's never been any kind of similar media demand, and
you know, book publishing demand. You know that the Republicans
(16:23):
deal with They to put it mildly, range of infirmities
moral to intellectual in Donald Trump. And no, I think
any Democrat who feels like they have to explain, you know,
why they didn't think it was a good idea, or
they didn't jump up and down as soon as they
read their first up ed piece saying Biden should drop
(16:45):
out in the middle of a presidential campaign. Why they
didn't embrace that, Why they didn't embrace the thing that
has never happened before in history. And let me define
for a moment, And this is the this is this
is the section of the puzzle that every one of
these you know, theories of the case decidedly avoids. The
definition of the middle of a presidential campaign. The middle
(17:10):
is two years in to a presidential term. Because the
puzzle parts that are left out every time the subject
comes up, is that a presidential campaign is not two
years long or one year long. It is four years long, okay,
four years long. And so the day after inauguration day,
(17:31):
actually usually before that, the next presidential campaign is being planned.
The minute Hillary Clinton lost, the minute she lost to
Donald Trump, Democrats the next day were planning deciding who
among them would run for president. They were thinking about
it within the latest, by the weekend. By the weekend.
(17:52):
I mean, I can assure you Kamala Harris was thinking
about running for president by the weekend. Joe Biden was
thinking about running for president by that weekend. And they started,
they all did. And so you have to accept with
this idea that what the real menu choice was. And
the real menu choice was Joe Biden, you know, saying
to Ron Klain day after inauguration, Okay, I'm not going
(18:15):
to run for reelection, So what do we want to
accomplish in our four years? And Ron Klan would have
to say what Joe Biden would already know, which is, well,
I guess we're going to accomplish nothing because you will
be a lane duck instantly, and we have a fifty
one seat you know majority in the United States. Senate
(18:36):
Joe Manchin won't vote for a single thing We do
And next week Joe Manchin will be running for president
and he'll be running against your do nothing presidency. And
he'll be and we'll have a large primary field, and
Kamala will probably be in it being attacked for your
do nothing presidency. And that's what the primary will be about.
And from that primary, we'll get a nominee, and that
(18:58):
nominee will go against Trump and wish us luck. That's
your real menu choice. It's that versus what happened. It's
that versus what actually happened, which is Biden's decides. What
we're going to do is we're going to govern. We're
going to do our best at governing. We're going to
accomplish everything we can possibly accomplish, and we're going to
present that to voters. And he accomplishes more than any
(19:22):
president with a fifty one seat majority in the United
States Senate, than any president in history. Like, there's no
legislative accomplishment package even close to that, given the tiny, tiny,
tiny majorities that he had. And so that's the real
menu choice. And if someone wants to embrace every piece
of that puzzle and then make a menu choice, that's
(19:45):
okay with me. But I have never once heard a
single person who was a champion of the get rid
of Biden as a nominee at any point on the calendar,
including after the debate. I've never heard them include every
single piece of the puzzle that has brought us to
that decision point. And they still never do.
Speaker 1 (20:05):
Yeah, it's true and that, but I also think that
you know, there, it's a news cycle that has a
lot of purpose, right, it obfuscates for Trump. I think
what is the most interesting too, is that you see Trump.
There's so many enablers in Trump world, right from the people.
Speaker 2 (20:28):
Who I mean, just at every point. The man is
so enabled.
Speaker 1 (20:32):
And the criticism of Democrats is really that they enabled
Biden right ultimately, and I just think that's a bit ironic.
Speaker 4 (20:42):
The thing that this approach has to ignore is that
Joe Biden, the oldest president in history. On March seventh,
I think it is of twenty twenty four, March seventh
delivers the best State of the Union address ever delivered ever, ever,
you know, like not even like not just of the
time television age, but ever, Okay, better than any of
(21:03):
FDR's State of the Union addresses. And it includes ad libbing,
which no State of the Union dress had ever included before.
And it is both comedic ad libbing and policy ad
libbing at the same time. And he tricks the idiots,
the Marjorie Taylor Green idiots in the audience into forcing
a public agreement with Republicans on policy that they will
(21:25):
not try to cut Social Security, cut Medicare, cut Medicaid.
He does that in the room. He governs in the
room with the clowns in the back of the room,
and the agility of that was something we've never seen before.
When Barack Obama became the first president to be heckled
in a State of the Union address, Barack Obama is
the most deft stand up comedian in the history of
(21:47):
the presidency. Barack Obama said nothing. He stood there and
he looked, and he couldn't, for the life of him,
think of a single thing to say after being heckled
in his State of the Union address. That's and that's
not a criticism of Barack Obama. I understand that it
(22:07):
was the first time. But what the whole concept of
Biden was unfit to run and was obviously unfit to run,
must studiously ignore is that the entire section every section
of the news media that's saying, not now granted that
that State of the Union address was the best State
of the Union address that they had covered. They've never
(22:29):
covered a better State of the Union dress ever, And
so what the one hundred and ten days later, Biden
goes into that debate and Biden does what we all
saw Biden do, and the idea that oh, we knew
this all along, No we didn't, because one hundred and
ten days ago we saw the opposite. We saw the opposite,
So we were shocked and surprised. And anyone who's pretending
(22:52):
that they weren't shocked and surprised is lying about their
own exposure to Joe Biden, including public disposure in the
State of the Union address.
Speaker 2 (23:02):
I had completely forgotten.
Speaker 4 (23:05):
One hundred and ten days. It's one hundred and ten days.
Speaker 5 (23:08):
You know.
Speaker 4 (23:08):
You got to go back and look look at CNN's
coverage of the State of the Union address. Try to
find any one of those anchors saying Biden did a
really bad job tonight because he's old and he can't think,
he's and he got really wiped out by the hecklers
because he was just lost. Did you see how lost
he was no, that doesn't exist, does not exist, you know,
And so listen, I find it incredibly challenging. And I
(23:29):
think the ultimate question there is, you know, did something
happen in those one hundred and ten days, you know,
did something happen you know in the in the age curved?
You know, what was it? I mean, Joe Biden had said,
you know, he was he was feeling really sick. He said,
you know, he was feeling really sick with a cold.
He has also said in private, he has also said
(23:51):
I fucked up that debate. Those are words he has
used in private, Okay. And there's a difference between the
way politicians talk in private the way they talk in
the view. And there's always going there's always going to be,
you know. And so it's an approach, this idea that
it's so obvious, you know, what the Democrats should have
done in a situation that has never existed in campaign
(24:15):
history before. It's never obvious what you do when something
happens for the first time. And by the way, one
of the tiny proofs of that is it's never obvious
what a president should do if he suddenly, for the
first time in history, gets heckled in a State of
the Union address and Barack Obama chose silence, which I
think was a noble choice, but it wasn't obvious what
(24:36):
to do because it had never happened before.
Speaker 2 (24:39):
Yeah, it's a really good point.
Speaker 1 (24:40):
And I also think that, you know, as we're talking
about this and talking about this, sort of the way
in which the confidence with which these people are looking
back on what happened.
Speaker 2 (24:54):
It's really interesting.
Speaker 1 (24:55):
And I also want to bring up you know, John
Allen and Amy wrote this book about the election and
they talked about how Biden had flown back and forth
to Europe numerous.
Speaker 2 (25:07):
Times, you know twice.
Speaker 1 (25:09):
That's right back and forth right before the debate, And
you and I both do a lot of performing, etc.
And it's not so easy, and then debates are ten
times harder. I mean, obviously, whatever we're going to have,
I think we're cursed for another week of this discourse.
But it does strike me that I could see a
(25:30):
world in which is it's just hard.
Speaker 4 (25:32):
It's going to disappear. I mean that's my prediction, but
I think predictions are worthless. But it's inconceivable to me.
I mean, look, I think there are absolutely, relentlessly goofy
Washington reporters who will be on the campaign trail in
Iowa and they will be sticking their very stupid microphones
in front of Democratic candidates and saying, why didn't you
(25:54):
turn on Biden? Did you lie? Were you part of
the conspiracy? They will do that. In fact, I've seen
one on CNN promising to do that four years from now.
That's how crazy they are. That crazy child who's a
veteran campaign reporter, not a CNN employee, but a panelist.
That crazy child believes that he knows what the most
(26:17):
important question will be in Iowa, New Hampshire, and South
Carolina in twenty twenty eight. He's convinced he knows what
it is, and it'll be about Joe Biden. That's what
it'll be about. I mean, that is the proof of
the just rank mental incompetence of the people who are
herded into this herd mentality that they so desperately embrace
(26:42):
because they don't have any higher intellectual framework to use
in campaign coverage. Don't get me started about this, Okay,
I have strong feelings about this.
Speaker 2 (26:53):
Tell us what you really think. Thank you, thank you,
thank you.
Speaker 4 (26:57):
Lawrence, thank you, thank you.
Speaker 1 (27:02):
Mike Bird is the economist Wall Street editor. Welcome to
Fast Politics.
Speaker 5 (27:07):
Mike, glad to be here.
Speaker 2 (27:09):
Talk to me about the tariffs.
Speaker 1 (27:10):
What I think is so interesting about this tariff situation
is Trump was like, we're gonna have one hundred million
trillion dollar tariffs on China.
Speaker 2 (27:18):
No we're not.
Speaker 1 (27:19):
Now nobody's talking about it anymore. But they are still
the largest tariffs at least on China since when.
Speaker 5 (27:27):
Yeah, I mean since since ever essentially, Right, it's the
biggest single increase even still in tariffs at least in
you know, a century. I think the best example I've
heard of this someone talked about anchoring. It's like a
salesperson tactic, you know, and once you get someone's mindset
towards a certain level, you know, anything belower above that
(27:48):
seems like anything below that seems like an improvement. And
that's clearly what's happened with the tariffs. Right. You come
in thinking you're going to get one hundred and forty
five percent on China, which is like functionally in bargo,
right that that means more or less no trade. You
get them down to thirty and it sounds like a
big win. But coming up from from nothing on a
lot of these product lines. That's it's an absolutely huge increase.
Speaker 1 (28:12):
Yeah, so let's talk about all of this, the China tariffs.
We had somebody on this podcast recently was talking about
the shipping right that there were these ports, the big
China ports, which are the Port of Los Angeles, the
Port of Long Beach, you know, just weren't having ships come.
Speaker 2 (28:29):
Now is the shipping back on? What does the supply
chain look like?
Speaker 5 (28:33):
Yeah, my understanding is that there has been a sort
of bull whip effect that a lot of things are
coming back. Basically, i'd say to thirty percent, it's no
longer essentially an embargo, right, one hundred and forty five
percent tariffs means that just a huge number of these
product lines, people just won't buy these products. Right. It's
it's not even that they'll be produced somewhere else, it's
that they just won't exist. They won't be purchased. At
(28:55):
thirty percent, that's a huge increase. But for a lot
of product lines, in the short at least you still
need these items. And yeah, so there's been there's been
a bounce back. What you will see because of this
is that unlike before where one hundred and forty five
percent is so steep that the nobody ends up paying
the tariffs. What you will see now is the huge
(29:16):
sort of ripple effect of the price increases going into
US consumer goods. And that's sort of because of the
shipping effect, sort of ripples out from the west coast
travels east, and as the inventoryes decline and decline and
decline across the country, you see the price increases come through.
You might not see it on day one. You might
wake up in six months and not understand why your
(29:36):
air conditioning unit replacement seems to cost twice as much
as it did before, But that that's what will happen.
Speaker 1 (29:42):
So Amazon said they were going to put in the
tariff increase. So would say, like this ink well because
we all use inkwells, is five bucks. Now with tariffs,
it's going to be fifteen. You know, one be fifteen?
It would be eight, okay or seven?
Speaker 5 (29:59):
Sure?
Speaker 1 (29:59):
And you can tell I can barely do math, right,
I think we can all be clear here that but okay,
so there was certain transparency. Trump got furious because then
people will know what he's done, and he pushed back.
And since Jeff Bezos has all these rockets he wants
to put up in the sky. He said, fine, okay, fine,
so you won against Amazon. The prices are just going
(30:21):
to be raised. No one's going to know why they're
more expensive. But I think people may be able to
figure it out. Now we see Walmart says we're going
to have to raise prices. Trump goes after them, says
you should eat the tariffs because you make so much money.
And also I've never liked the Waltons basically, And then
now and we saw this again. Now Daily Mail has
(30:42):
an article about Target employees totally flamoxed by how much
the tariffs are affecting prices. So, but the equity markets
have recovered.
Speaker 2 (30:55):
Make it make sense.
Speaker 5 (30:56):
Yeah, it's a great question. I think the most important
thing to think of about when it comes to businesses
like Target, like Walmart, even to a lot of Amazon,
is that these are massive businesses. But go go and
look at the profit margins, Go and look at the
operating margins for these companies. These are extremely competitive markets
with pretty tight margins, and you are basically just blowing
(31:20):
them out with these tariffs, right, You are completely erasing
the margins. So the idea of Walmart eating a lot
of these increases is just wildly implausible. There were always
going to be price increases because of this, you know, yeah,
I mean you could argue with like a five percent tariff,
maybe maybe some of the retails can can eat that,
but at the levels we're talking about, it's not even
(31:41):
sort of remotely plausible. The equity market recovering, I think
there's a bit of anchoring going on there as well.
Speaker 2 (31:46):
So explain that to ask what that means anchoring.
Speaker 5 (31:49):
It's basically people got very upset about the tariffs, and
then when the announcement came out that there'd be a
ninety day pause, they were like, oh wow, so that's
one piece of good news and one piece of bad news,
and these two effect actively wash each other out. Now,
the reality is that it doesn't anything like wash itself out.
You know, you've see these sort of the content of
these deals, the one of the UK and the subject
of the negotiations going on between the US and China.
(32:12):
There's not much in them, right. The tariff levels are
going to remain high relative to what they'd otherwise have been.
So I do find the recovery of the equity market
a little bit perplexing. One thing that I will say
is definitely happening is retail buyers of stocks, really sort
of ordinary Americans and certainly not big institutions, have been
(32:33):
relentless buyers of declines in stock prices. This is like
the opposite of how you would expect this to work.
Speaker 2 (32:41):
Right, They're buying the depth.
Speaker 5 (32:42):
Absolutely, and it's a fascinating thing because it's almost like
a form of really strongly engendered behavior. Now, and I
think this partly comes out of twenty twenty, where you
sort of sort of massive pandemic slump that then immediately rebounded.
I think there's maybe a little bit of sort of
the c SO world leaking into what is happening in
(33:02):
the equity market here. But yeah, this has been relentless behavior.
You see big institutions, big investors selling, and you see
retail buying the dip, and they're still doing that.
Speaker 1 (33:12):
So the equity markets whatever, they're high on their own supply.
The bond markets are not high on their own supply.
If anything, they're panicked like the rest of us. So
explain to us what's happening with the bond markets and
also the fact that they become such an indicator.
Speaker 2 (33:29):
I think it's pretty interesting.
Speaker 5 (33:31):
Yeah, totally. So, I guess put this in context that
the two markets where you still can see significant tariff
related effects. The bond market, as you say, you know,
the tenure treasury yield is still about four and a
half percent, that's you know, above where it was when
all of this started at the beginning of April. And
the other one you can see is in the currency markets,
(33:53):
where the dollar is still down quite a bit, right,
So it's not everyone sort of going insane over this.
I think in a the bond market, the important thing
to know, I guess in terms of the basics of
how it works. If you expect US economic growth to
be lower going forward, you would think, oh, the Federal
Reserve will come in and cut interest rates. The Federal
(34:14):
Reserve cuts interest rates, and bond yields go down. But
the last few years have made the Federal Reserve panicked
about inflation and their right to be relatively panicked. Inflation
expectations are higher than they have been. You saw that big,
big burst of inflation that really took them by surprise
in twenty twenty two in particular. So basically the concern
is the US economy slows, inflation remains high, interest rates
(34:36):
remain high, and you have this sort of prolonged nasty
effect in the bond market where yields stay high, which
ultimately means that the US government spends a lot more
on debt interest payments than it previously would have done.
And with the current sort of deficit discussions going on,
the current budget discussions going on in DC, this is
all the more worrying because the sort of yeah, there
(34:58):
seems to be very little seriousness frankly on either side
of the aisle, especially from the Republicans, but on either
side of the aisle about the long term projections here,
which look increasingly dicey four and a half percent on
tenure borrowing is loads. That's pretty high. We had a
very very long period where ten year yields were much
much lower than that during the pandemic and before the pandemic,
(35:18):
after global financial crisis, long periods of time when it
was below two percent. So you know, over time, you're
more than doubling the debt interest on those ten years
as they mature and they have to be refinanced. So yeah,
and that's not fixed at all. The bomb markets certainly
not back to where it is. Foreign buyers of the
US government bonds, those that I speak to, they're a
lot more worried about buying US government assets in general,
(35:41):
just because for sort of implicit trust, the implicit safety
that they have regarded the US government with for decades.
It's not gone, but it's certainly shaken relative to where
it was.
Speaker 2 (35:53):
So let's talk about Moody.
Speaker 1 (35:54):
Is this downgrading of credit not the first time credit
has been downgraded during OBI During the credit crisis, credit
was downgraded to an AA. But all of this again,
the anxiety with the bond market is that there's going
I mean, there are a number of anxieties, but dollar
flight is a big one, right, the idea that somehow
the dollar will no longer be the currency that everybody
(36:18):
has made it, and that will mean servicing our debt
will be more expensive, and it'll be a cascade of
other things that will happen. But the thing that I
keep thinking about that was all of Biden's administration was
really his financial policy, among other things, and I think
it was the best part of that administration actually, because
it got us this soft landing. I mean, there were
(36:39):
a lot of things that were not that where they
didn't do a great job. But this I think they
really did do a great job. And one of the
things they did a great job with was they avoided statflation.
It strikes me because of the tariffs, because they're so inflationary,
because they also slow the economy, because we're having every
month questions are we not in a recession? It does
(37:03):
seem like, And then you have consumer confidence way way
down right. We're seeing these crazy consumer confidence numbers. As
soon as we get one quarter that chose we're in
a recession or one month that so we're in recession,
it's hard for me to imagine we don't dip into stagflation.
So talk about stagflation, which is when things get more
(37:25):
expensive and also in a recession, and then explain to
us what you think is going to happen, and also
what we could do to get out of it or
are we going to get stuck in it.
Speaker 5 (37:36):
It's a great question, and I think the basic building
blocks of it stagflation, portmanteau, stagnation, and inflation. You've had
periods of US history where you've seen this. You know,
there's lots of countries that they've got lots more experience
of this. The UK has had it for various periods.
Lots of countries in Europe, basically portions of the nineteen
seventies nearly nineteen eighties, you had this phenomenon, very high
(37:58):
inflation paired with a economy that they looked pretty rubbish.
We usually think of inflation as a phenomenon, you know,
amount of economists that comes at a time when the
economy is running hot. Right, Unemployment is low, Employers have
got to compete to pay higher wages. They've got to
pay more and more for the goods that they need.
Consumers are doing the same. Prices go up because the
(38:20):
basic supply in the economy is outstripped by this rapacious demount. Now,
what you get in a stagflation scenario is that often
you'll have unemployment that seems far too high for the
economy to be running hot. So you've got low growth,
you've got falling real terms incomes because inflation is so high. Yeah,
(38:41):
so it's a pretty it's a pretty bad scenario. And
it puts the Federal Reserve in this awful position because
they have these two dual mandate, right, these two competing goals,
one of which is to keep unemployment low as low
as possible within the context of its inflation mandate, which
is to keep inflation at around two percent. Now, if
in running at three, four, whatever percent, it's very, very
(39:03):
difficult for them to cut interest rates and try and
stimulate the economy to reduce unemployment. And historically, historically the
FED has tended to lean on the side of if
both of its mandates are being missed, it would rather
take the inflation side more seriously, So interest rates will
be higher than you'd otherwise. Like I think, in terms
of what I expect, basically, I can't see any scenario
(39:26):
where this isn't bad for US growth. I feel like
people sometimes get hung up on the recession stuff, and
my concern is that you don't see a recession this year,
and that people who wanted the tariffs and who like
the tariffs say, oh, well, look at all those people.
They went crazy. They were screeching and screaming about a recession.
We avoided a recession. It was all fine, right, Even
(39:49):
if we avoid a recession, it's not fine. Growth will
be lower, living standards will be lower, Economic opportunity for
Americans will be lower or be worse. There's also no
scenario where this isn't bad for prices, right, the prices
aren't going to go up. The real risk with the
price increases, I think, is that you see this sort
of self fulfilling thing. Right, So people have gotten used
(40:09):
to prices rising more quickly in the last few years,
and they've previously been used to, and you get what
economists refer to as unanchored inflation expectations, where people start
to think, oh, well, I used to think inflation was
sort of running at two percent a year, but now
I think, based on this experience, is probably going to
run at more like four or five or whatever it is.
And you get all of these behavioral things where you know,
(40:30):
an individual business will start raising the price of its
own goods more rapidly because it thinks that its input
prices are going to go up. These things tend to snowball,
and that's how you get into a situation that's really
really difficult in control, like it was in the nineteen seventies,
like it was in the nineteen eighties. Yeah, so I
think that's a meaningful risk, and that's one of the
reasons that I think you're not going to see a
sort of big sudden ride to the rescue from the
(40:53):
Federal Reserve, slashing interest rates and trying to rescue things,
even if the economy does look pretty pretty dismal by
the end of the year.
Speaker 1 (41:00):
Yeah, and it's hard to imagine a world where they
cut interest rates, especially when cutting interest rates is inflationary.
There's a world in which Donald Trump backs off the tariffs,
like really backs off the tariffs.
Speaker 2 (41:14):
We've already seen it back off.
Speaker 1 (41:15):
It a little bit, but it seems likely to me
that as we get more economic pain, Trump will back
off the tariffs.
Speaker 4 (41:23):
Right.
Speaker 1 (41:23):
The idea of entering manufacturing was an idea he had,
but clearly you can't ontour manufacturing by making everything more expensive.
And even if he is unable to learn, I think
someone will explain this to him sooner or later. So
the question is, say tomorrow, he's like, tariffs were bad,
(41:44):
that was stupid. Let's not do this anymore, and he
takes all the tariffs down to zero. Why can you
not undo this and explain to me because it's it's
pretty interesting.
Speaker 5 (41:54):
Yeah, I think you can undo the full effect. I mean,
I put it this way. I didn't think that's going
to happen. I think if it did happen, the equity
market would be up like ten to fifteen percent. I
think everything would explode. But I was talking before about
foreign investors, which would.
Speaker 2 (42:09):
Be actually inflationary, right.
Speaker 5 (42:11):
It would depend. It could be because you see there's
like the wealth effect. People get excited when the stocks
go up, and now you know, they spend more. It
could be.
Speaker 2 (42:20):
Yeah, talk about the foreign investors.
Speaker 5 (42:22):
Yeah, the difficulty of sort of putting this properly back
in the jar and sealing it off again is in
those sort of foreign investors. Right now. I've likened this
before to asking an investor internationally or in America or
basically anywhere in the world, anyone in finance what it
would be like to live without the dollar as the
dominant currency is like asking fish what it's like to
(42:44):
live without water. Right, None of us for any benchmark
for any of this, Right, It's not a world we've
ever lived in that sort of the basic metric by
which you live by is dollar denominated, right. So it's very,
very tough to imagine. But I think there's a problem
here that it demonstrates a sort of fundamental unseeriousness, lack
(43:06):
of competence at the highest levels of the US government,
and I think it's really difficult to address that. I
think that even in the instance that the Republicans lose
the next election and you get another Democrat administration, what
you have Among the people I spoke to that they
were basically, to some degree, a lot of them willing
(43:26):
to consider that the first Trump administration is a bit
of an aberration. Right, it's like, you know, an oddity.
You got that, but then it went away like Brexit, Yeah, exactly, exactly,
you know, I mean more temporary than Brexit. Right, it's
not locked in forever. People say, Okay, that was crazy,
but whatever, you know, back to normal now. I think
the second time has made people think, no, okay, this
(43:48):
is something fundamentally different going on. There's something in American
politics now that I as a foreign investor, and you know,
American politics isn't set up to satisfy foreign investors. But
they say, no, okay, this isn't for me anymore. I
need to reduce my exposure to the US by five
to ten percentage points. And I'm talking about over decades. Right.
(44:08):
These people have really really large portfolios, and they're thinking
over really really long time horizons. But that's a lot
of money. That's a lot of money in the long term,
and I think it's really really difficult to put the
cat back in there.
Speaker 1 (44:20):
And that really is actually dollar flight, Yeah it is.
Speaker 5 (44:24):
It's not going to be like flight from an emerging
market currency where you get these crazy outflows. What it's
going to mean is lower American asset prices, higher American
bond yields, higher American borrowing costs. You look at the
federal deficit. We're talking about six seven percent of GDP
and it's forecast to grow, and nobody has any thoughts
(44:45):
about about seriously reducing it. And if everyone wants dollar assets,
that's fine to some degree. You know, it's maybe not fine,
but it's the most affordable currency to borrow in by
the most trusted government in the world. The international demand
is always there. I don't know what that looks like
when the international bidders just stop showing up. Right, they're
(45:05):
not fire sailing everything they have, but they're saying, actually,
we don't want to fund all this, right, we don't
want that many treasury bills. We don't want that many
treasury bonds. It could get ugly and you haven't really
seen those dynamics before, precisely because the US dollar is
the only reserve currency, there's nothing to compete with it.
But even people choosing a little bit of extra everywhere else, right,
(45:28):
they'll raise my allocation to euros a bit. I'll raise
my allocations to any number of smaller currencies British pound,
Canadian dollar, Australian dollar. There's all sorts that you could navigate.
You know, a few billion dollars into tens of billions
of dollars whatever. It is, tiny percentage points of an
enormous international portfolio. You get rid of that in dollars,
and things can get quite ugly over time.
Speaker 2 (45:49):
Definitely quite ugly over time. Thank you, Mike Bird.
Speaker 5 (45:54):
Thank you very much.
Speaker 2 (45:57):
Nor Jesse Cannon.
Speaker 6 (46:02):
So I am always hearing from the Tim Dillons and
all these people who love to say that democrats hate democracy.
But it's kind of funny because when the will of
people is expressed in these ballot initiatives, there's one party
that constantly overturns them, even when they're overwhelmingly voted for,
like we're seeing in Missouri right now.
Speaker 1 (46:22):
Yeah, they don't really like democracy. The Republican Party Missouri
Republicans vote to repeal state's new paid sick leave law. Again,
Republicans have decided that the way to cut government spending
is to cut healthcare, cut sick leave, cut the things
that people desperately need and at this point really rely on.
(46:46):
They're just doing it because they don't want to cut.
Speaker 2 (46:48):
Taxes for very wealthy people.
Speaker 1 (46:50):
It's going to be terrible, and it's also again punishing
the people who put Donald Trump in office. So just
like the tariffs punish the people who put Donald Trump
in office, these cuts to the social safety net also
punish the people who put Donald Trump in office. Make
(47:11):
it make sense, I can make it make sense, but
at all points this is just incredibly fucked up and bad.
Speaker 2 (47:19):
That's it for.
Speaker 1 (47:20):
This episode of Fast Politics. Tune in every Monday, Wednesday, Thursday,
and Saturday to hear the best minds and politics make.
Speaker 2 (47:31):
Sense of all this chaos.
Speaker 1 (47:33):
If you enjoy this podcast, please send it to a
friend and keep the conversation going.
Speaker 2 (47:39):
Thanks for listening.
Hi, I'm Molly John Fast and this is Fast Politics,
where we discussed the top political headlines with some of
today's best minds, and a majority of US companies say
they need to raise prices because of tariffs. We have
such a great show for you today. MSNBC's own Laurence
O'Donnell stops by to talk about Trump's need to exaggerate everything.
(00:24):
Then we'll talk to the economists Mike Byrd about how
the tariffs are going to affect the economy.
Speaker 2 (00:29):
But first the news, Molly.
Speaker 3 (00:32):
As we know, Democratic Representative Shreith thatt Adar was trying
to introduce seven articles of impeachment. But you'll be shocked,
mister Trump, who often talks about how aggrieved he is
about his previous impeachments, he's shutting the whole thing down.
Speaker 1 (00:46):
Yes, I am completely shocked. So let's just talk about this.
There aren't the votes for Trump to be impeached because
Democrats don't control the House. So not only are there
not the votes to impeach him, the votes to bring
the impeachment of for a vote, right because Republicans control
the House. So this was a guy who wanted to
(01:09):
bring it up anyway. Part of this is because voters,
I know you're going to be shocked to hear this,
but voters mostly want Democrats to run a check on
Trump and not to relitigate Biden's age.
Speaker 2 (01:23):
I know you're going to be shocked.
Speaker 1 (01:25):
They actually think the twenty twenty four election happened already
and now they want you to move on and to
try to prevent the sliding autocracy which we are seeing
before our very eyes. I think that when Democrats do things,
it matters. Think back to Corey Booker, I think back
(01:46):
to all of the videos that Chris Murphy has been doing.
They've actually broken through the noise. So I actually think
this was good. You know, in Tromp's first term, we
had Al Green from Texas and he did this and
Pelosi was sort of not pleased with him because he
didn't have the vote. So it's a stunt and not
(02:07):
necessarily something that you can bring to fruition. But honestly,
I think this is good. I think it's good to
just try. And I don't you know, I might. I
was at one point more cynical, and now I'm just like, actually,
trying is good. Good to try, try, try, that's not
(02:28):
bad also, you know, I think that there will be
many opportunities to impeach Donald Trump over the next thousand
plus days.
Speaker 3 (02:38):
So speaking of reasons to impeach Trump, Homeland Security Secretary
Christy nom was again testifying, which is another thing Democrats
could do every day if they want to make themselves
look good.
Speaker 2 (02:49):
They really could.
Speaker 3 (02:50):
Yeah, because we have a saying in the business not
ready for primetime. This doesn't seem like she's ready for
three o'clock at the boarding with no one's watching. Right
here because these answers, I.
Speaker 2 (03:01):
Sort of love her. What I love about her?
Speaker 3 (03:04):
Tell me, what do you love about her? Is it
the dog killing Baly?
Speaker 2 (03:06):
It's the dog killing the makeup.
Speaker 3 (03:10):
The listeners might have just heard by dog growed as
I said that, right.
Speaker 1 (03:13):
The injectibles and crazy injectibles, all of the makeup, the
enormous expensive watch. No listen, nobody likes Christy Nome. Let's
be honest here. But what is incredible is that she
doesn't know what habeas corpus is.
Speaker 2 (03:30):
And I think that what Maggie.
Speaker 1 (03:33):
Hassen, Democrat from New Hampshire did here is she really
did point out an important thing, which is it's much
more effective in these Senate hearings just to ask these
people questions which they clearly cannot answer, than to grand
stand for twenty minutes. So a lot of Senate hearings
and House hearings, any number of hearings, you'll have a
(03:58):
member grandstand and then they'll be a question sort of
and then the person will yell.
Speaker 2 (04:04):
Back at them.
Speaker 1 (04:05):
But this simple idea of asking a member of Trump's
at second administration what a phrase means, in this case,
habeas corpus, it's pretty clarifying. So she asks, She says,
what does habeas corpus mean? And Christy Noms says, habeas
(04:27):
corpus is a constitutional right that the president has to
be able to remove people from this country.
Speaker 2 (04:33):
It's not that's not what it is.
Speaker 1 (04:36):
It's nice that she thinks it's a right, by the way,
So habeas corpus is the legal principle that requires the
government to provide a public reason right for detaining and
imprisoning people. It's a pretty serious protection.
Speaker 3 (04:50):
And it does not what made say, one of the
things that makes America great, right.
Speaker 1 (04:55):
Well, I don't know, it would argue maybe, but anyway,
it's sort of exact with the opposite of what Christy
Gnomes said. It really shows like I just wonder if
you sat down and you just asked these people to
define things, if you would do better during some of
these hearings, you know, what does this mean?
Speaker 2 (05:13):
What does that mean? What do you do in here?
What are you doing there?
Speaker 1 (05:17):
But the point is either way, Christy Noom, while having
a lot of make up, quite a bit of injectibles
and very expensive watches, is a moron SAMAI.
Speaker 3 (05:28):
Elon Musk says he'll do a lot less political spending
moving forward ed. Some people are saying, oh, look, STOs
was a failure. Other people are saying, kind of feels
like he accomplished his mission. If we look back to
when he said to Tucker Carl said that Trump had
to win or else who's going to go to jail?
That he was kind of hitting at that, what are
you thinking?
Speaker 1 (05:48):
We don't know, right, This is like with so many
of these things from Trump world. We don't really know
what's true, right. We don't know if Elon is doing
this or if Elon is saying he's doing this. We
know that Elon polls about as well as the bubonic
plague that we know, right, You know, we just don't
(06:09):
know any more than that. So as much as I
certainly would like to see less Elon and American politics
for any number of reasons, but.
Speaker 2 (06:20):
I wonder if it's true or not.
Speaker 1 (06:22):
And and I'm very suspicious of anything Elon says because
there's no reason to trust Elon.
Speaker 3 (06:29):
You know, he does often say we're going to do
this in two years, and then quite the opposite happens. Yeah,
so my in more grim news. After President Biden's advanced
cancer remarks, you'll be shocked at the right responded with
kindness and empathy and just really well done, decorum, You're hilarious. Yes, yes,
(06:52):
we have a despicable tweet and remarks from both Donald
Trump Junior and JD Vans here.
Speaker 1 (06:57):
Okay, So the thinking here is that the pundit world
wants Democrats to talk about Joe Biden's age. They want
a discussion of Joe Biden's age, they want a reckoning
about Joe Biden's age. But I'm gonna give you guys
a hot take. Voters told us what they thought about
(07:18):
Joe Biden's age. They thought he was too old, and
the polling showed that, and that's why he dropped out
of the election. So is he too old because he's
too old? Or is he too old because he's too old?
He's too old to being old is the best case
scenario in case you're wondering, because there are a lot
of other things that can happen that are less good
(07:39):
than being old.
Speaker 2 (07:41):
You know, I don't know. I mean, I.
Speaker 1 (07:43):
Understand that Tapper has a book he wants to sell
and God bless him, but it doesn't make any sense
to me why we have to engage in this story.
He lost, he's old, he's got cancer. Now this is
all really dark and sad, and I don't.
Speaker 2 (08:00):
Know that it matters. Look, we thought he was old.
He had good days and bad days.
Speaker 1 (08:05):
It's just you know, I was talking behind the scenes
with some people I work with in TV Land, and
we're talking about it was like he had good days
and he had bad days, and sometimes he was good
and sometimes he was less good, like all eighty one
year olds. That's not a conspiracy. That's just getting old.
If only it were a conspiracy. You know, just like
the administration, they did a lot of good stuff, they
(08:25):
couldn't message it. They did some bad stuff, like they
couldn't settle the war in Gazo or in Ukraine, or
protect Taiwan. I mean, there were a lot of failures there,
but there were also a lot of really good things, reshoring, manufacturing,
chips and sciences. So again I don't get what the
goal here is except to sell books about the election,
(08:49):
which was really fucking horrible election and really dark and
ultimately Harris was set up for a glass cliff. This
is the end of the biden Age discourse. In this podcast.
We will no longer be speaking of it because my
man was old and now he has cancer and I
feel really badly for him, and quite frankly, you know,
(09:13):
that's it from it. Lawrence O'Donnell is the host of
the Lawrence O'Donnell Show on MSNBC.
Speaker 2 (09:23):
Welcome to Fast Politics, Lawrence.
Speaker 4 (09:26):
It's so great to be here, and I'm so out
of shape a podcasting because I forgot my headphones and
luckily you reminded me, so here we are.
Speaker 1 (09:37):
You know, it's not so different than you know, television,
all things just longer and slower.
Speaker 4 (09:45):
I think you get clearer thinking in podcasts because you
don't have control rooms screaming about getting to a commercial
in the next You know forty seconds, and so I
like it a lot.
Speaker 1 (09:57):
You don't find someone screaming in your ears, rap rap rap,
not soothing.
Speaker 4 (10:03):
Well by the way they I mean, they've they've learned, uh,
And I learned to ignore that. So they've learned not
to do that for many, many years now. And so
that's why I never interrupt guests. And the control room
used to be screaming at me to interrupt the guest
and in the segment and I and the first time
I didn't do it, I noticed that they figured out
(10:26):
how to do the show. Even though even though I
didn't do the really ugly, messy interrupting thing and throwing
to a commercial. The only time that becomes incredibly tense
is when you're really coming up to the last second
of your show. Then you really have to stop. But
I pretty much design it so that we never have
anybody in that space where where they're going to get
(10:49):
jammed that way and I'm going to get jammed that
way as a host, I just I hated it. It looks
so rough and it's just hard. It's hard for the
audience to understand what this urgency of interruption is about.
Speaker 1 (11:03):
So let speaking of the urgency of interruption. I feel
like you and I we have lived through Trump one
point Oh, we have lived through Biden. You know, it's
four years now we are in Trump two point zero.
Speaker 2 (11:16):
Has America learned anything?
Speaker 4 (11:18):
Not that I can tell no, Because, for example, Trump
has been wrong about pretty much every declarative sentence he's
ever spoken as a politician or as a present or act.
And he's certainly wrong about every single number he mentions,
every number of any kind. I mean, let me just
(11:39):
throw out one from the present. He talks about the
current Air Force one planes. There's two of them as
being forty two years old. They are thirty five and
thirty four. Now, that's the smallest exaggeration he's ever done
with a number ever. But it's just the proof that
there's not a single number he can say that he
(12:00):
won't lie about in a direction that he thinks helps
to make his point about whatever he's talking about. And
there is not a single person in the White House
Press Corps who has ever figured out how to deal
with that. And there is not a single interviewer of
you know, Trump team people who have ever figured out
(12:22):
how to deal with that. They accept, you know, at
their best the people who do the best interviews of
Trump team players, and I think they're all bad interviews
by conception, by definition, they're not going to be good interviews.
But within that group of bad interviews, the best ones
can test a very tiny percentage of the falsehoods, a
(12:44):
very tiny percentage of the falsehoods that are said right
to them to their face. And you know, most of
us don't have data available on every single subject that
Trump or a Trump team player is going to lie about.
So how many people are sitting around knowing how old
the Air Force one planes are? Brett Bear certainly isn't
one of them, because when Donald Trump told him they're
(13:05):
forty years old, Brett Bear goes, oh, you know, I
didn't think the audio the uniist knows they're forty years old. Yeah, no, kidding, Brett,
because they're not. And I didn't know how old they
were either, so I looked it up before I ever
said anything about it. So this is unbelievable flood of falsehood.
And what's interesting about it is those same reporters retain
all the muscle memory of the kind of reaction you
(13:28):
would have to something like that, only and exclusively to
be applied to Joe Biden or other Democrats. If Chuck
Schumer gets a number wrong, he's going to be really pressed.
And if Joe Biden gets a name wrong, we might
just have to write a book about that. It's a
disastrous non learning curve, zero none, and voters, you know,
(13:50):
have learned as far as we can tell, the worst
possible lesson from the era, which is that character doesn't
matter at all, and the number of criminal convictions you
have between presidencies doesn't matter, and the number of criminal
indictments that have been landed on you don't matter. And
(14:11):
that's that is not the news media's fault, you know,
I think the news media across the board did their
best to stress that this matters. I think, you know,
everybody other than the right wing news media did their
absolute best. But you know, it's like, you know, it's
it's like being in a classroom with kids, you know,
who here two plus two and is four and they
(14:32):
just can't they just can't retain it. They just can't
do it. And so that's that's an unsolvable thing, is
that you have. It's not a small number of voters, right,
you have this, you have this possibly controlling number of
voters who have completely eliminated the issue of character, which
means they've eliminated the issue of fidelity to oath, which
(14:55):
means they've eliminated the issue to fidelity to the purpose
that the founders initiated in the creation of this government.
Speaker 1 (15:04):
So we now can talk about something I've been thinking about,
which is this idea. So I was on TV yesterday
with an abundon who I like, and he said, the
mainstream media has to reckon with and the Democratic Party
has to reckon with publicizing Jake Tapper's book. Basically it
was what it was. And I thought to myself, No,
they fucking don't. They knew he was old. They told
(15:27):
us he was old, that he pulled poorly because they
felt he was old.
Speaker 2 (15:33):
Reckon what they reckoned it happened. I mean, can you
explain this to me?
Speaker 4 (15:38):
Yeah, of course they reckoned. And this is the most
ludicrous political challenge that the news media, and the news
media alone has decided to pose to one side of
our politics and never posed anything like it to the
other side of our politics. About the convicted felon who
that side of our politics fully embraced every day so
(16:02):
much so that they would compete to get in the
front row of his criminal trial to show how much
they personally supported paying off porn stars for their silence. Okay,
there's never been any kind of similar media demand, and
you know, book publishing demand. You know that the Republicans
(16:23):
deal with They to put it mildly, range of infirmities
moral to intellectual in Donald Trump. And no, I think
any Democrat who feels like they have to explain, you know,
why they didn't think it was a good idea, or
they didn't jump up and down as soon as they
read their first up ed piece saying Biden should drop
(16:45):
out in the middle of a presidential campaign. Why they
didn't embrace that, Why they didn't embrace the thing that
has never happened before in history. And let me define
for a moment, And this is the this is this
is the section of the puzzle that every one of
these you know, theories of the case decidedly avoids. The
definition of the middle of a presidential campaign. The middle
(17:10):
is two years in to a presidential term. Because the
puzzle parts that are left out every time the subject
comes up, is that a presidential campaign is not two
years long or one year long. It is four years long, okay,
four years long. And so the day after inauguration day,
(17:31):
actually usually before that, the next presidential campaign is being planned.
The minute Hillary Clinton lost, the minute she lost to
Donald Trump, Democrats the next day were planning deciding who
among them would run for president. They were thinking about
it within the latest, by the weekend. By the weekend.
(17:52):
I mean, I can assure you Kamala Harris was thinking
about running for president by the weekend. Joe Biden was
thinking about running for president by that weekend. And they started,
they all did. And so you have to accept with
this idea that what the real menu choice was. And
the real menu choice was Joe Biden, you know, saying
to Ron Klain day after inauguration, Okay, I'm not going
(18:15):
to run for reelection, So what do we want to
accomplish in our four years? And Ron Klan would have
to say what Joe Biden would already know, which is, well,
I guess we're going to accomplish nothing because you will
be a lane duck instantly, and we have a fifty
one seat you know majority in the United States. Senate
(18:36):
Joe Manchin won't vote for a single thing We do
And next week Joe Manchin will be running for president
and he'll be running against your do nothing presidency. And
he'll be and we'll have a large primary field, and
Kamala will probably be in it being attacked for your
do nothing presidency. And that's what the primary will be about.
And from that primary, we'll get a nominee, and that
(18:58):
nominee will go against Trump and wish us luck. That's
your real menu choice. It's that versus what happened. It's
that versus what actually happened, which is Biden's decides. What
we're going to do is we're going to govern. We're
going to do our best at governing. We're going to
accomplish everything we can possibly accomplish, and we're going to
present that to voters. And he accomplishes more than any
(19:22):
president with a fifty one seat majority in the United
States Senate, than any president in history. Like, there's no
legislative accomplishment package even close to that, given the tiny, tiny,
tiny majorities that he had. And so that's the real
menu choice. And if someone wants to embrace every piece
of that puzzle and then make a menu choice, that's
(19:45):
okay with me. But I have never once heard a
single person who was a champion of the get rid
of Biden as a nominee at any point on the calendar,
including after the debate. I've never heard them include every
single piece of the puzzle that has brought us to
that decision point. And they still never do.
Speaker 1 (20:05):
Yeah, it's true and that, but I also think that
you know, there, it's a news cycle that has a
lot of purpose, right, it obfuscates for Trump. I think
what is the most interesting too, is that you see Trump.
There's so many enablers in Trump world, right from the people.
Speaker 2 (20:28):
Who I mean, just at every point. The man is
so enabled.
Speaker 1 (20:32):
And the criticism of Democrats is really that they enabled
Biden right ultimately, and I just think that's a bit ironic.
Speaker 4 (20:42):
The thing that this approach has to ignore is that
Joe Biden, the oldest president in history. On March seventh,
I think it is of twenty twenty four, March seventh
delivers the best State of the Union address ever delivered ever, ever,
you know, like not even like not just of the
time television age, but ever, Okay, better than any of
(21:03):
FDR's State of the Union addresses. And it includes ad libbing,
which no State of the Union dress had ever included before.
And it is both comedic ad libbing and policy ad
libbing at the same time. And he tricks the idiots,
the Marjorie Taylor Green idiots in the audience into forcing
a public agreement with Republicans on policy that they will
(21:25):
not try to cut Social Security, cut Medicare, cut Medicaid.
He does that in the room. He governs in the
room with the clowns in the back of the room,
and the agility of that was something we've never seen before.
When Barack Obama became the first president to be heckled
in a State of the Union address, Barack Obama is
the most deft stand up comedian in the history of
(21:47):
the presidency. Barack Obama said nothing. He stood there and
he looked, and he couldn't, for the life of him,
think of a single thing to say after being heckled
in his State of the Union address. That's and that's
not a criticism of Barack Obama. I understand that it
(22:07):
was the first time. But what the whole concept of
Biden was unfit to run and was obviously unfit to run,
must studiously ignore is that the entire section every section
of the news media that's saying, not now granted that
that State of the Union address was the best State
of the Union address that they had covered. They've never
(22:29):
covered a better State of the Union dress ever, And
so what the one hundred and ten days later, Biden
goes into that debate and Biden does what we all
saw Biden do, and the idea that oh, we knew
this all along, No we didn't, because one hundred and
ten days ago we saw the opposite. We saw the opposite,
So we were shocked and surprised. And anyone who's pretending
(22:52):
that they weren't shocked and surprised is lying about their
own exposure to Joe Biden, including public disposure in the
State of the Union address.
Speaker 2 (23:02):
I had completely forgotten.
Speaker 4 (23:05):
One hundred and ten days. It's one hundred and ten days.
Speaker 5 (23:08):
You know.
Speaker 4 (23:08):
You got to go back and look look at CNN's
coverage of the State of the Union address. Try to
find any one of those anchors saying Biden did a
really bad job tonight because he's old and he can't think,
he's and he got really wiped out by the hecklers
because he was just lost. Did you see how lost
he was no, that doesn't exist, does not exist, you know,
And so listen, I find it incredibly challenging. And I
(23:29):
think the ultimate question there is, you know, did something
happen in those one hundred and ten days, you know,
did something happen you know in the in the age curved?
You know, what was it? I mean, Joe Biden had said,
you know, he was he was feeling really sick. He said,
you know, he was feeling really sick with a cold.
He has also said in private, he has also said
(23:51):
I fucked up that debate. Those are words he has
used in private, Okay. And there's a difference between the
way politicians talk in private the way they talk in
the view. And there's always going there's always going to be,
you know. And so it's an approach, this idea that
it's so obvious, you know, what the Democrats should have
done in a situation that has never existed in campaign
(24:15):
history before. It's never obvious what you do when something
happens for the first time. And by the way, one
of the tiny proofs of that is it's never obvious
what a president should do if he suddenly, for the
first time in history, gets heckled in a State of
the Union address and Barack Obama chose silence, which I
think was a noble choice, but it wasn't obvious what
(24:36):
to do because it had never happened before.
Speaker 2 (24:39):
Yeah, it's a really good point.
Speaker 1 (24:40):
And I also think that, you know, as we're talking
about this and talking about this, sort of the way
in which the confidence with which these people are looking
back on what happened.
Speaker 2 (24:54):
It's really interesting.
Speaker 1 (24:55):
And I also want to bring up you know, John
Allen and Amy wrote this book about the election and
they talked about how Biden had flown back and forth
to Europe numerous.
Speaker 2 (25:07):
Times, you know twice.
Speaker 1 (25:09):
That's right back and forth right before the debate, And
you and I both do a lot of performing, etc.
And it's not so easy, and then debates are ten
times harder. I mean, obviously, whatever we're going to have,
I think we're cursed for another week of this discourse.
But it does strike me that I could see a
(25:30):
world in which is it's just hard.
Speaker 4 (25:32):
It's going to disappear. I mean that's my prediction, but
I think predictions are worthless. But it's inconceivable to me.
I mean, look, I think there are absolutely, relentlessly goofy
Washington reporters who will be on the campaign trail in
Iowa and they will be sticking their very stupid microphones
in front of Democratic candidates and saying, why didn't you
(25:54):
turn on Biden? Did you lie? Were you part of
the conspiracy? They will do that. In fact, I've seen
one on CNN promising to do that four years from now.
That's how crazy they are. That crazy child who's a
veteran campaign reporter, not a CNN employee, but a panelist.
That crazy child believes that he knows what the most
(26:17):
important question will be in Iowa, New Hampshire, and South
Carolina in twenty twenty eight. He's convinced he knows what
it is, and it'll be about Joe Biden. That's what
it'll be about. I mean, that is the proof of
the just rank mental incompetence of the people who are
herded into this herd mentality that they so desperately embrace
(26:42):
because they don't have any higher intellectual framework to use
in campaign coverage. Don't get me started about this, Okay,
I have strong feelings about this.
Speaker 2 (26:53):
Tell us what you really think. Thank you, thank you,
thank you.
Speaker 4 (26:57):
Lawrence, thank you, thank you.
Speaker 1 (27:02):
Mike Bird is the economist Wall Street editor. Welcome to
Fast Politics.
Speaker 5 (27:07):
Mike, glad to be here.
Speaker 2 (27:09):
Talk to me about the tariffs.
Speaker 1 (27:10):
What I think is so interesting about this tariff situation
is Trump was like, we're gonna have one hundred million
trillion dollar tariffs on China.
Speaker 2 (27:18):
No we're not.
Speaker 1 (27:19):
Now nobody's talking about it anymore. But they are still
the largest tariffs at least on China since when.
Speaker 5 (27:27):
Yeah, I mean since since ever essentially, Right, it's the
biggest single increase even still in tariffs at least in
you know, a century. I think the best example I've
heard of this someone talked about anchoring. It's like a
salesperson tactic, you know, and once you get someone's mindset
towards a certain level, you know, anything belower above that
(27:48):
seems like anything below that seems like an improvement. And
that's clearly what's happened with the tariffs. Right. You come
in thinking you're going to get one hundred and forty
five percent on China, which is like functionally in bargo,
right that that means more or less no trade. You
get them down to thirty and it sounds like a
big win. But coming up from from nothing on a
lot of these product lines. That's it's an absolutely huge increase.
Speaker 1 (28:12):
Yeah, so let's talk about all of this, the China tariffs.
We had somebody on this podcast recently was talking about
the shipping right that there were these ports, the big
China ports, which are the Port of Los Angeles, the
Port of Long Beach, you know, just weren't having ships come.
Speaker 2 (28:29):
Now is the shipping back on? What does the supply
chain look like?
Speaker 5 (28:33):
Yeah, my understanding is that there has been a sort
of bull whip effect that a lot of things are
coming back. Basically, i'd say to thirty percent, it's no
longer essentially an embargo, right, one hundred and forty five
percent tariffs means that just a huge number of these
product lines, people just won't buy these products. Right. It's
it's not even that they'll be produced somewhere else, it's
that they just won't exist. They won't be purchased. At
(28:55):
thirty percent, that's a huge increase. But for a lot
of product lines, in the short at least you still
need these items. And yeah, so there's been there's been
a bounce back. What you will see because of this
is that unlike before where one hundred and forty five
percent is so steep that the nobody ends up paying
the tariffs. What you will see now is the huge
(29:16):
sort of ripple effect of the price increases going into
US consumer goods. And that's sort of because of the
shipping effect, sort of ripples out from the west coast
travels east, and as the inventoryes decline and decline and
decline across the country, you see the price increases come through.
You might not see it on day one. You might
wake up in six months and not understand why your
(29:36):
air conditioning unit replacement seems to cost twice as much
as it did before, But that that's what will happen.
Speaker 1 (29:42):
So Amazon said they were going to put in the
tariff increase. So would say, like this ink well because
we all use inkwells, is five bucks. Now with tariffs,
it's going to be fifteen. You know, one be fifteen?
It would be eight, okay or seven?
Speaker 5 (29:59):
Sure?
Speaker 1 (29:59):
And you can tell I can barely do math, right,
I think we can all be clear here that but okay,
so there was certain transparency. Trump got furious because then
people will know what he's done, and he pushed back.
And since Jeff Bezos has all these rockets he wants
to put up in the sky. He said, fine, okay, fine,
so you won against Amazon. The prices are just going
(30:21):
to be raised. No one's going to know why they're
more expensive. But I think people may be able to
figure it out. Now we see Walmart says we're going
to have to raise prices. Trump goes after them, says
you should eat the tariffs because you make so much money.
And also I've never liked the Waltons basically, And then
now and we saw this again. Now Daily Mail has
(30:42):
an article about Target employees totally flamoxed by how much
the tariffs are affecting prices. So, but the equity markets
have recovered.
Speaker 2 (30:55):
Make it make sense.
Speaker 5 (30:56):
Yeah, it's a great question. I think the most important
thing to think of about when it comes to businesses
like Target, like Walmart, even to a lot of Amazon,
is that these are massive businesses. But go go and
look at the profit margins, Go and look at the
operating margins for these companies. These are extremely competitive markets
with pretty tight margins, and you are basically just blowing
(31:20):
them out with these tariffs, right, You are completely erasing
the margins. So the idea of Walmart eating a lot
of these increases is just wildly implausible. There were always
going to be price increases because of this, you know, yeah,
I mean you could argue with like a five percent tariff,
maybe maybe some of the retails can can eat that,
but at the levels we're talking about, it's not even
(31:41):
sort of remotely plausible. The equity market recovering, I think
there's a bit of anchoring going on there as well.
Speaker 2 (31:46):
So explain that to ask what that means anchoring.
Speaker 5 (31:49):
It's basically people got very upset about the tariffs, and
then when the announcement came out that there'd be a
ninety day pause, they were like, oh wow, so that's
one piece of good news and one piece of bad news,
and these two effect actively wash each other out. Now,
the reality is that it doesn't anything like wash itself out.
You know, you've see these sort of the content of
these deals, the one of the UK and the subject
of the negotiations going on between the US and China.
(32:12):
There's not much in them, right. The tariff levels are
going to remain high relative to what they'd otherwise have been.
So I do find the recovery of the equity market
a little bit perplexing. One thing that I will say
is definitely happening is retail buyers of stocks, really sort
of ordinary Americans and certainly not big institutions, have been
(32:33):
relentless buyers of declines in stock prices. This is like
the opposite of how you would expect this to work.
Speaker 2 (32:41):
Right, They're buying the depth.
Speaker 5 (32:42):
Absolutely, and it's a fascinating thing because it's almost like
a form of really strongly engendered behavior. Now, and I
think this partly comes out of twenty twenty, where you
sort of sort of massive pandemic slump that then immediately rebounded.
I think there's maybe a little bit of sort of
the c SO world leaking into what is happening in
(33:02):
the equity market here. But yeah, this has been relentless behavior.
You see big institutions, big investors selling, and you see
retail buying the dip, and they're still doing that.
Speaker 1 (33:12):
So the equity markets whatever, they're high on their own supply.
The bond markets are not high on their own supply.
If anything, they're panicked like the rest of us. So
explain to us what's happening with the bond markets and
also the fact that they become such an indicator.
Speaker 2 (33:29):
I think it's pretty interesting.
Speaker 5 (33:31):
Yeah, totally. So, I guess put this in context that
the two markets where you still can see significant tariff
related effects. The bond market, as you say, you know,
the tenure treasury yield is still about four and a
half percent, that's you know, above where it was when
all of this started at the beginning of April. And
the other one you can see is in the currency markets,
(33:53):
where the dollar is still down quite a bit, right,
So it's not everyone sort of going insane over this.
I think in a the bond market, the important thing
to know, I guess in terms of the basics of
how it works. If you expect US economic growth to
be lower going forward, you would think, oh, the Federal
Reserve will come in and cut interest rates. The Federal
(34:14):
Reserve cuts interest rates, and bond yields go down. But
the last few years have made the Federal Reserve panicked
about inflation and their right to be relatively panicked. Inflation
expectations are higher than they have been. You saw that big,
big burst of inflation that really took them by surprise
in twenty twenty two in particular. So basically the concern
is the US economy slows, inflation remains high, interest rates
(34:36):
remain high, and you have this sort of prolonged nasty
effect in the bond market where yields stay high, which
ultimately means that the US government spends a lot more
on debt interest payments than it previously would have done.
And with the current sort of deficit discussions going on,
the current budget discussions going on in DC, this is
all the more worrying because the sort of yeah, there
(34:58):
seems to be very little seriousness frankly on either side
of the aisle, especially from the Republicans, but on either
side of the aisle about the long term projections here,
which look increasingly dicey four and a half percent on
tenure borrowing is loads. That's pretty high. We had a
very very long period where ten year yields were much
much lower than that during the pandemic and before the pandemic,
(35:18):
after global financial crisis, long periods of time when it
was below two percent. So you know, over time, you're
more than doubling the debt interest on those ten years
as they mature and they have to be refinanced. So yeah,
and that's not fixed at all. The bomb markets certainly
not back to where it is. Foreign buyers of the
US government bonds, those that I speak to, they're a
lot more worried about buying US government assets in general,
(35:41):
just because for sort of implicit trust, the implicit safety
that they have regarded the US government with for decades.
It's not gone, but it's certainly shaken relative to where
it was.
Speaker 2 (35:53):
So let's talk about Moody.
Speaker 1 (35:54):
Is this downgrading of credit not the first time credit
has been downgraded during OBI During the credit crisis, credit
was downgraded to an AA. But all of this again,
the anxiety with the bond market is that there's going
I mean, there are a number of anxieties, but dollar
flight is a big one, right, the idea that somehow
the dollar will no longer be the currency that everybody
(36:18):
has made it, and that will mean servicing our debt
will be more expensive, and it'll be a cascade of
other things that will happen. But the thing that I
keep thinking about that was all of Biden's administration was
really his financial policy, among other things, and I think
it was the best part of that administration actually, because
it got us this soft landing. I mean, there were
(36:39):
a lot of things that were not that where they
didn't do a great job. But this I think they
really did do a great job. And one of the
things they did a great job with was they avoided statflation.
It strikes me because of the tariffs, because they're so inflationary,
because they also slow the economy, because we're having every
month questions are we not in a recession? It does
(37:03):
seem like, And then you have consumer confidence way way
down right. We're seeing these crazy consumer confidence numbers. As
soon as we get one quarter that chose we're in
a recession or one month that so we're in recession,
it's hard for me to imagine we don't dip into stagflation.
So talk about stagflation, which is when things get more
(37:25):
expensive and also in a recession, and then explain to
us what you think is going to happen, and also
what we could do to get out of it or
are we going to get stuck in it.
Speaker 5 (37:36):
It's a great question, and I think the basic building
blocks of it stagflation, portmanteau, stagnation, and inflation. You've had
periods of US history where you've seen this. You know,
there's lots of countries that they've got lots more experience
of this. The UK has had it for various periods.
Lots of countries in Europe, basically portions of the nineteen
seventies nearly nineteen eighties, you had this phenomenon, very high
(37:58):
inflation paired with a economy that they looked pretty rubbish.
We usually think of inflation as a phenomenon, you know,
amount of economists that comes at a time when the
economy is running hot. Right, Unemployment is low, Employers have
got to compete to pay higher wages. They've got to
pay more and more for the goods that they need.
Consumers are doing the same. Prices go up because the
(38:20):
basic supply in the economy is outstripped by this rapacious demount. Now,
what you get in a stagflation scenario is that often
you'll have unemployment that seems far too high for the
economy to be running hot. So you've got low growth,
you've got falling real terms incomes because inflation is so high. Yeah,
(38:41):
so it's a pretty it's a pretty bad scenario. And
it puts the Federal Reserve in this awful position because
they have these two dual mandate, right, these two competing goals,
one of which is to keep unemployment low as low
as possible within the context of its inflation mandate, which
is to keep inflation at around two percent. Now, if
in running at three, four, whatever percent, it's very, very
(39:03):
difficult for them to cut interest rates and try and
stimulate the economy to reduce unemployment. And historically, historically the
FED has tended to lean on the side of if
both of its mandates are being missed, it would rather
take the inflation side more seriously, So interest rates will
be higher than you'd otherwise. Like I think, in terms
of what I expect, basically, I can't see any scenario
(39:26):
where this isn't bad for US growth. I feel like
people sometimes get hung up on the recession stuff, and
my concern is that you don't see a recession this year,
and that people who wanted the tariffs and who like
the tariffs say, oh, well, look at all those people.
They went crazy. They were screeching and screaming about a recession.
We avoided a recession. It was all fine, right, Even
(39:49):
if we avoid a recession, it's not fine. Growth will
be lower, living standards will be lower, Economic opportunity for
Americans will be lower or be worse. There's also no
scenario where this isn't bad for prices, right, the prices
aren't going to go up. The real risk with the
price increases, I think, is that you see this sort
of self fulfilling thing. Right, So people have gotten used
(40:09):
to prices rising more quickly in the last few years,
and they've previously been used to, and you get what
economists refer to as unanchored inflation expectations, where people start
to think, oh, well, I used to think inflation was
sort of running at two percent a year, but now
I think, based on this experience, is probably going to
run at more like four or five or whatever it is.
And you get all of these behavioral things where you know,
(40:30):
an individual business will start raising the price of its
own goods more rapidly because it thinks that its input
prices are going to go up. These things tend to snowball,
and that's how you get into a situation that's really
really difficult in control, like it was in the nineteen seventies,
like it was in the nineteen eighties. Yeah, so I
think that's a meaningful risk, and that's one of the
reasons that I think you're not going to see a
sort of big sudden ride to the rescue from the
(40:53):
Federal Reserve, slashing interest rates and trying to rescue things,
even if the economy does look pretty pretty dismal by
the end of the year.
Speaker 1 (41:00):
Yeah, and it's hard to imagine a world where they
cut interest rates, especially when cutting interest rates is inflationary.
There's a world in which Donald Trump backs off the tariffs,
like really backs off the tariffs.
Speaker 2 (41:14):
We've already seen it back off.
Speaker 1 (41:15):
It a little bit, but it seems likely to me
that as we get more economic pain, Trump will back
off the tariffs.
Speaker 4 (41:23):
Right.
Speaker 1 (41:23):
The idea of entering manufacturing was an idea he had,
but clearly you can't ontour manufacturing by making everything more expensive.
And even if he is unable to learn, I think
someone will explain this to him sooner or later. So
the question is, say tomorrow, he's like, tariffs were bad,
(41:44):
that was stupid. Let's not do this anymore, and he
takes all the tariffs down to zero. Why can you
not undo this and explain to me because it's it's
pretty interesting.
Speaker 5 (41:54):
Yeah, I think you can undo the full effect. I mean,
I put it this way. I didn't think that's going
to happen. I think if it did happen, the equity
market would be up like ten to fifteen percent. I
think everything would explode. But I was talking before about
foreign investors, which would.
Speaker 2 (42:09):
Be actually inflationary, right.
Speaker 5 (42:11):
It would depend. It could be because you see there's
like the wealth effect. People get excited when the stocks
go up, and now you know, they spend more. It
could be.
Speaker 2 (42:20):
Yeah, talk about the foreign investors.
Speaker 5 (42:22):
Yeah, the difficulty of sort of putting this properly back
in the jar and sealing it off again is in
those sort of foreign investors. Right now. I've likened this
before to asking an investor internationally or in America or
basically anywhere in the world, anyone in finance what it
would be like to live without the dollar as the
dominant currency is like asking fish what it's like to
(42:44):
live without water. Right, None of us for any benchmark
for any of this, Right, It's not a world we've
ever lived in that sort of the basic metric by
which you live by is dollar denominated, right. So it's very,
very tough to imagine. But I think there's a problem
here that it demonstrates a sort of fundamental unseeriousness, lack
(43:06):
of competence at the highest levels of the US government,
and I think it's really difficult to address that. I
think that even in the instance that the Republicans lose
the next election and you get another Democrat administration, what
you have Among the people I spoke to that they
were basically, to some degree, a lot of them willing
(43:26):
to consider that the first Trump administration is a bit
of an aberration. Right, it's like, you know, an oddity.
You got that, but then it went away like Brexit, Yeah, exactly, exactly,
you know, I mean more temporary than Brexit. Right, it's
not locked in forever. People say, Okay, that was crazy,
but whatever, you know, back to normal now. I think
the second time has made people think, no, okay, this
(43:48):
is something fundamentally different going on. There's something in American
politics now that I as a foreign investor, and you know,
American politics isn't set up to satisfy foreign investors. But
they say, no, okay, this isn't for me anymore. I
need to reduce my exposure to the US by five
to ten percentage points. And I'm talking about over decades. Right.
(44:08):
These people have really really large portfolios, and they're thinking
over really really long time horizons. But that's a lot
of money. That's a lot of money in the long term,
and I think it's really really difficult to put the
cat back in there.
Speaker 1 (44:20):
And that really is actually dollar flight, Yeah it is.
Speaker 5 (44:24):
It's not going to be like flight from an emerging
market currency where you get these crazy outflows. What it's
going to mean is lower American asset prices, higher American
bond yields, higher American borrowing costs. You look at the
federal deficit. We're talking about six seven percent of GDP
and it's forecast to grow, and nobody has any thoughts
(44:45):
about about seriously reducing it. And if everyone wants dollar assets,
that's fine to some degree. You know, it's maybe not fine,
but it's the most affordable currency to borrow in by
the most trusted government in the world. The international demand
is always there. I don't know what that looks like
when the international bidders just stop showing up. Right, they're
(45:05):
not fire sailing everything they have, but they're saying, actually,
we don't want to fund all this, right, we don't
want that many treasury bills. We don't want that many
treasury bonds. It could get ugly and you haven't really
seen those dynamics before, precisely because the US dollar is
the only reserve currency, there's nothing to compete with it.
But even people choosing a little bit of extra everywhere else, right,
(45:28):
they'll raise my allocation to euros a bit. I'll raise
my allocations to any number of smaller currencies British pound,
Canadian dollar, Australian dollar. There's all sorts that you could navigate.
You know, a few billion dollars into tens of billions
of dollars whatever. It is, tiny percentage points of an
enormous international portfolio. You get rid of that in dollars,
and things can get quite ugly over time.
Speaker 2 (45:49):
Definitely quite ugly over time. Thank you, Mike Bird.
Speaker 5 (45:54):
Thank you very much.
Speaker 2 (45:57):
Nor Jesse Cannon.
Speaker 6 (46:02):
So I am always hearing from the Tim Dillons and
all these people who love to say that democrats hate democracy.
But it's kind of funny because when the will of
people is expressed in these ballot initiatives, there's one party
that constantly overturns them, even when they're overwhelmingly voted for,
like we're seeing in Missouri right now.
Speaker 1 (46:22):
Yeah, they don't really like democracy. The Republican Party Missouri
Republicans vote to repeal state's new paid sick leave law. Again,
Republicans have decided that the way to cut government spending
is to cut healthcare, cut sick leave, cut the things
that people desperately need and at this point really rely on.
(46:46):
They're just doing it because they don't want to cut.
Speaker 2 (46:48):
Taxes for very wealthy people.
Speaker 1 (46:50):
It's going to be terrible, and it's also again punishing
the people who put Donald Trump in office. So just
like the tariffs punish the people who put Donald Trump
in office, these cuts to the social safety net also
punish the people who put Donald Trump in office. Make
(47:11):
it make sense, I can make it make sense, but
at all points this is just incredibly fucked up and bad.
Speaker 2 (47:19):
That's it for.
Speaker 1 (47:20):
This episode of Fast Politics. Tune in every Monday, Wednesday, Thursday,
and Saturday to hear the best minds and politics make.
Speaker 2 (47:31):
Sense of all this chaos.
Speaker 1 (47:33):
If you enjoy this podcast, please send it to a
friend and keep the conversation going.
Speaker 2 (47:39):
Thanks for listening.
Host
Molly Jong-Fast
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