November 4, 2025 • 38 mins
In this episode of The Truth with Lisa Boothe, Lisa sits down with Heritage Foundation economist EJ Antoni to expose the growing socialist movement in America—starting with New York City’s potential election of socialist mayor Zohran Mamdani. They break down new polling showing why more young Americans are embracing socialism, revisit socialism’s historic economic failures, and explain how left-wing policies are driving businesses, jobs, and families out of cities. Lisa and EJ compare Biden’s economic record to Trump’s, making the case for free markets, lower taxes, and personal responsibility as the path to prosperity. The Truth with Lisa Boothe is part of the Clay Travis & Buck Sexton Podcast Network - new episodes debut every Tuesday & Thursday.
Follow Clay & Buck on YouTube: https://www.youtube.com/c/clayandbuck
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Truth with Lisa Booth, where we try
to get to the heart of the issues that matter
to you. Today is election day in New York City,
and the city's next mayor could be and will probably be,
socialist Zoron Mom Donnie. He holds a commanding lead in
the race right now, and he will oversee eight point
five million residents as well as a massive economy. So
(00:23):
we'll talk to EJ and Tony, chief economist at the
Heritage about how much damage Zoron can do in the
next four years plus. It's concerning because Axio has recently
found that sixty seven percent of college students view socialism favorably.
This also comes as AOC and people like Bernie Sanders
(00:44):
have now become part of the mainstream and the Democrat Party.
So where is this all heading. We'll dig into what
socialism is and the impact it could have in New
York City and potentially elsewhere in the country with the
rise of some of these figures on the left. Also,
we'll get a snapshot on the economy heading into the
twenty twenty six midterms and get EJ's take on if
(01:07):
President Trump's tariff strategy is working. So stay tuned for
EJ and Tony.
Speaker 2 (01:17):
Well.
Speaker 1 (01:17):
EJ. It's great to have you on the show. Appreciate
you making the time, my friend.
Speaker 3 (01:21):
Oh, Lisa, thank you for having me again.
Speaker 2 (01:23):
It is great to be back with you.
Speaker 1 (01:25):
You always do a great job of explaining some of
these complicated issues, you know, EJ. I wanted to start.
I don't know if you saw that Axios poll recently
that surveyed US college students, but they found that sixty
seven percent of the respondents hold a positive or neutral
association with the word socialism, compared to only forty percent
(01:46):
for the word capitalism. You know, I think we talk
about capitalism, we talk about socialism, but like, how would
you describe socialism, Like, how would you define it as
an economist?
Speaker 2 (01:58):
Well, socialism is is theft. Socialism is forced to certain extent, Lisa,
it's not even an economic system, right, It's actually a
way of taking and existing economic system and forgive me,
but bastardizing it in such a way as to achieve
(02:19):
political ends. In other words, what socialism does is it
gives the government rights which properly belong to the people,
certain property rights. The government gets to dictate to you
things like where you're going to work, how much you're
going to work, how much you're going to earn from
that work, what you can do with your earnings, etc.
(02:42):
That effectively is socialism. The problem is today education is
more like indoctrination, and so kids are not taught that
in high school in college. Instead, they are taught all
of these fanciful ideas about socialism. They're told the promises.
I guess I should say socialism and not the actual
outcomes the promises of socialism, or that everyone is somehow equal,
(03:07):
that everyone somehow earns the same amount. Doctor Art Laffer
has done phenomenal work, not just theoretically but even empirically,
showing that as long as you have these promises in socialism,
I should say things like everyone is going to work,
everyone is going to earn the same amount. What happens, well,
(03:27):
everything devolves backwards until everyone decides they don't want to
work because if you earn more than what the government
says you can, what are you going to do?
Speaker 3 (03:36):
Well, you're going to work less.
Speaker 2 (03:37):
Why on earth would you earn more only for the
government to take it away from you? And if you earn,
if you currently work less than whatever the guaranteed income
is right, If you work and earn less than that,
you know that the government is going to artificially increase
your income to whatever their predetermined amount is. So why
(03:59):
on earth would you work that much? You in fact
would also work less, because again, if you don't make
enough money, the government is just going to give you
whatever you need to get your universal basic income or
whatever else they want to call that scheme.
Speaker 3 (04:13):
So everyone decides to work less and less and less
and less until nobody works at all.
Speaker 2 (04:18):
And it's a shockingly good illustration of again what we
see in reality. All the different places socialism has been tried,
whether it's in Russia, whether it's in South America, you know,
to a certain extent our neighbors here in North America,
like in Canada, the more they socialize things, the worse
it gets. Look a look at Canadian medicine, for example.
(04:40):
Ask yourself, is it Americans that are having to go
across the border to Canada to get healthcare treatments in
their socialized system or is it Canadians who are having
to come across the border to flee their socialized healthcare
system and get American private healthcare. It, of course is
the latter because in Canada, sure, the healthcare is technically
(05:02):
free quote unquote, except you have to wait literally months
to get life saving treatment. And so if your choice
is either dying or coming across the border to American
paying cash, a lot of people decide to.
Speaker 3 (05:15):
Do the latter.
Speaker 2 (05:15):
These are the fruits of socialism. It's not a matter
of it sounds good on paper. The promises are very
very nice. Everyone is equal, everyone gets what they need,
nobody goes hungry. Those are great promises. Who could be
against things like that, right, Lisa. They always sound great
on paper. It's only the implementation that always goes sideways.
Speaker 1 (05:38):
Well, and we see too in a lot of these places,
like you know, Venezuela. Like the irony is these people
push social zone because they want like quote unquote equity,
but then in reality you're just empowering like the government,
the people in charge, right, and then everyone else suffers.
So it's like it's actually like the end result is
the opposite of what they're saying they're trying to accomplished.
Speaker 3 (06:01):
Right.
Speaker 2 (06:01):
And you make such a great point, Lisa, that you
always in socialism end up having this upper class, this
ruling class. If you will and everyone else. Their situation
just gets worse and worse. They fall into into poverty, right,
as they said, an animal farm, as George Orwell said, rather,
what was the phrase he used? All animals are equal,
(06:22):
but some are more equal than others. Uh, you know,
especially if you want the government to have the power
to be able to make everyone equal, they have to
have the power to take things away from you. And
that means there are certain individuals who are going to
have to occupy those seats of power. And isn't it
amazing human nature being what it is that those individuals
(06:45):
always manage to scrape a little bit off the top
as they take from a and give to b.
Speaker 1 (06:52):
Well, and we're even saying that with you know, like
AOC and Bernie Sanders, for instance, Like AOC went to
the Mecala and like, you know, we're a really expensive dress.
That said, I think it was like tax the rich.
Or you know, Bernie Sanders flies private and stays in
very fancy hotels and like they both have managed to
make a lot of money, or Bernie Sanders become a millionaire. Right,
(07:13):
so they were already kind of seeing it in practice,
how they you know, spouse you know, equity and all
these you know, different terms, and you know, try to
pretend they're populous, but then inevitably like they're just enriching
themselves in the process, which is like sort of seeing
how socialism plays out, you know, when enacted, right, oh,
one hundred percent.
Speaker 3 (07:34):
It's another really great point, Lias.
Speaker 2 (07:35):
And how many of these people in Congress do you
see where they're making I don't know what it is,
Like it's like two hundred thousand dollars or something like that,
I think they make, which you know, that's a good income,
but that's not enough to go from a net worth
of a few hundred thousand dollars, which is where several
of them have entered, and within five six years they
have net worths in the tens of millions of dollars.
(07:58):
I'm sorry, that doesn't pass the smell test. Even if
you are a Nancy Pelosi or a Dan Crenshaw kind
of investor, you know, that is still that still does
not explain those ridiculous increases in net wealth because they're
selling their power, they're selling their influence, which again, you
only have that kind of power, and you only have
(08:18):
that kind of influence to sell if the government is
using it for nefarious purposes like socialism.
Speaker 1 (08:25):
Narry, Look, how like Maduro has all this money and
everyone else, you know, can barely afford to eat. You know,
Zoron will likely become New York City's mayor, overseeing a
massive economy, a city of eight point five million people.
He's a member of the Democratic Socialist of America. What
do you think his policies, like government run grocery stores
(08:49):
will do to New York City And how much damage
do you think can be done in a four year period.
Speaker 3 (08:54):
Well, I think they will do.
Speaker 2 (08:55):
Those policies will do exactly what they have done elsewhere
that they've been trying, and even where they've already been
tried in New York. You know, when he talks about
things like rent control, I mean they already have that
right in one form or another. So some of these policies, really,
I should say, all these policies least, so we can
just look at New York or other places in America
(09:15):
where they have been tried, or other places around the
world where they've been tried, and sure enough, it is
the exact same result every single time, which is none
of them actually achieve their intended ends, and all of
them make the situation worse. When you do things like
you say, you know what, we're gonna make it illegal
for you to sell groceries or to sell utilities, whether
(09:36):
that's gas, electric water, you name it above a certain price.
What happens? Will you end up creating shortages because a
grocer is not going to say, oh goodness, you know,
I can't sell this apple profitably, so I guess I'm
just gonna have to sell it at a loss.
Speaker 3 (09:51):
No, I'm not going to sell it at all. That's
what I'm gonna do. And you know what, people are
gonna have to go without. They're gonna have to look,
e's gonna have to sale.
Speaker 2 (10:01):
That's what's going to happen. It is what has happened,
not just in places again like New York City, but
elsewhere around the country. Look at what they've done in
places like the state of Minnesota, where they've tried to
have state run grocery stores. It's been the exact same thing.
There's no food because they're all those stores are losing money.
Anytime you do have some food that comes in below
(10:24):
market prices, everyone flocks to those stores quickly buys it
out and they can't keep it stocked because again it's
not profitable to do, so you are losing money on it.
And when you have programs like rent control, that's a
really funny one because even far left so called economists
will say rent control doesn't work. It produces exactly the
(10:45):
opposite of the kinds of results that you want. What
we see with rent control is absentee landlordism. Again, you
can't force somebody to provide a product to the marketplace
that on which they're going to lose money. And I'm
not talking about things like lost leaders, where businesses will
purposely sell something at a loss to get you into
(11:06):
the store to buy something else. No, No, we're talking
about doing this en mass. What happens when we get
things like rent control is landlords say, well, I'm just
not going to provide all the different things that I
used to in order to cut costs, and that's how
I'm going to be able to still make money on
this property. So landlords don't repair things, landlords don't follow
(11:27):
up on the complaints.
Speaker 3 (11:29):
Of leases, etc.
Speaker 2 (11:31):
And you end up with these rundown slums. You also
get this very weird kind of barbell distribution. This bifurcation.
I guess you could call it of residences, where you
end up with landlords who say, all right, I either
can run a slum profitably, I can't run any kind
of middle income housing profitably. I'll lose money on that.
(11:53):
But if I do luxury homes that's exempt from rent control,
so I can make a profit there. So the only
kinds of homes that you end up getting in those
markets again are the rundown slums that nobody wants to
live in but people have to because it's now their
only option. The middle income homes went away, and then
(12:13):
you get the protected rich who still get their luxury condos,
their luxury town homes, the luxury high rise buildings.
Speaker 3 (12:21):
Et cetera.
Speaker 2 (12:22):
So instead of creating this kind of one class utopia
that socialism always tries to sell us on, you end
up creating this two class not even a class system,
but a cast system where you have the highs and
the lows, you have the haves and the have nots,
and that's it, and there's never any way to get
from one to the other. You end up driving a
(12:44):
wedge between these groups instead of bridging the divide.
Speaker 1 (12:47):
Got to take a quick Commercial break more with ej
Antoni on the other side. You know, what kind of
well flight do you think we'll see from New York
City in terms of, you know, businesses and high on
high income earners deciding to leave.
Speaker 3 (13:03):
Oh, it'll be extreme. You know.
Speaker 2 (13:05):
I wrote a paper with Steve Moore back in I
want to say it was the summer of twenty twenty one, Lisa,
if memory serves, and what we were analyzing in that
was New York's latest big tax increase, and we explained
how you know, if you do the math and you
do some regression analysis, you look at other states, and
you know, doctor Art Laugher's done a lot of good
(13:26):
work on this, as have a lot of other good
data scientists, and what you just time after time, what
you keep finding, Lisa, is that as you keep driving
up these top marginal tax rates, you end up driving
high income earners out of those places. That's a big
part of the reason why we've seen so many people
and they take their jobs and their incomes with them.
(13:47):
We've seen so many people leaving the state of New York.
We've seen them leaving Illinois, California, et cetera. Right, And
where are they going they're going to Texas, they're going
to Tennessee, they're going to our favorite far right. And
what has happened is they've basically protected they've shielded their
incomes from state income taxes by doing so. Now there's
(14:09):
other there's other parts of the tax equation to consider, right,
sales taxes, property taxes, et cetera. But at the end
of the day, they're still choosing to move from those
states with a high tax burden to a low tax
burden because they're saving themselves a whole heck of a
lot of money and doing so.
Speaker 3 (14:24):
So we when we did this paper, we you.
Speaker 2 (14:26):
Know, we got out our calculators, we did the math,
and we found that over the course of a decade,
in extra one million people, almost all high income earners
were going to leave the state of New York. Now
as they do that, it's not all high income earners
because there's a trickle down effect. Right when when a
high income earner is no longer no longer living in
(14:47):
New York City, for example, he's not going to the
grocery store, he's not buying food. So maybe you lose
a job for a you know, a guy stocking the shelves.
He's no longer getting his suit strike clean there. So
maybe now there you lose a job one of the
city's many dry cleaners, and so on and so on. Right,
there's just this kind of cascade effect. You're going to
lose jobs in restaurants, right, waitresses and bartenders and so on,
(15:11):
and at the end of the day, again it's a
million people who leave the state over the course of
a decade. That effect is only going to be exacerbated
if you get the kinds of big spending and big
taxing policies that this guy, this literal communist has been
advocating for in the city.
Speaker 1 (15:30):
You know, I think the challenges you know, obviously we're
seeing sort of uh, you know, people like AOC and
Bernie Sanders become more mainstream in their party, and Zorn
might as well too, and we've seen some reluctance to
embrace them from party leaders, but you know, that'll probably
change after the election, I guess. You know, they were
(15:52):
talking about equity and things like that, which obviously you know,
are an affordability and you know, things like that obviously
concerns and a lot of these cities like New York
City where it's so expensive to live. I guess how
to Republicans, I mean, this might be more of a
messaging question, But I guess what should our response.
Speaker 2 (16:08):
Be to just this kind of spread of commoc.
Speaker 1 (16:11):
And Bernie Sanders are making because you know, I think
to young people, yeah, I mean, like, you know, what
should our response be? I guess because I mean the
challenge is I guess it's more of a messaging thing,
you know, because you talk about giving away free things
to people who are concerned about affordability. That sounds a
little bit better than talking about like reducing tach you
know what I mean, Like, it's a little bit of
a challenge.
Speaker 2 (16:30):
I think part of it least is that we are
and this is what this is what old generals tend
to do. Uh, we've been fighting new battles with the
same old tactics. We're kind of reliving, uh, you know,
historical moments instead of living in the present. So I
find when I talk to young people, when I like
visit colleges and give speeches, a lot of them are
(16:52):
increasingly unimpressed with empirical analysis. If I if I tell
them what I just told you in the audience about
how a million peopleeople are going to leave the state
of New York, and they're going to take their jobs
and their incomes with them, and everyone left in New
York is worse off as a result. If I put
it in those terms, they don't really seem to care
that much. It doesn't really speak to them because they
(17:13):
haven't you know, they don't. Frankly, they don't have a
lot of those critical thinking skills. They don't have the
ability to do empirical analyses. And so the only way
I think that we can speak to a lot of
these folks now is just by putting everything in moral terms.
And it's not to say it, but you know that
that morality is somehow below mathematics. That's not the point
at all. It's just that I think basic laws of
(17:36):
morality to some extent, are written on every human heart.
Speaker 3 (17:40):
Right. We have a certain sense of justice that's just kind.
Speaker 2 (17:43):
Of ingrained in our DNA, where we can kind of
intrinsically notice when something is fair or not. Now, obviously,
you know, concupiscence condull that part of your conscience over time,
so you don't see it as much, and so that
you think the government taking from someone and giving it
to me, Well, that's fair, right. But again I think
that's where we kind of have to make an appeal.
(18:04):
So when I talk about socialism a lot of times,
again mostly to young people, I almost exclusively put it
in moral terms, and I explain to them socialism is theft.
Socialism says that someone else has a right to what
you have earned. Socialism says that fit that I literally
(18:24):
have a fair share of what you worked hard for.
And look, is it fair for me, as a professor
to take some of your grade that you have earned
and give it to someone else? In other words, this
person over here they got an F and you got
an A. But if I redistribute some of your correct
(18:46):
answers to them, now you both get a C.
Speaker 3 (18:48):
And that's equal. That's fair right.
Speaker 2 (18:51):
And of course then immediately there's an uproar from the crowd.
Speaker 3 (18:53):
No, No, that wouldn't be fair. No, please don't do that.
Speaker 2 (18:57):
So again that's think those I think are the kinds
of thing that we need to say to young people
because they're just not ready for maybe the more robust
intellectual arguments that were made in yesteryear, the kinds of
things that I think helped convince young people in the eighties,
in the nineties, maybe even the early two thousands. That
(19:18):
just doesn't work anymore, unfortunately, because we've robbed kids again.
Speaker 3 (19:23):
We indoctrinated them instead of educating them.
Speaker 2 (19:26):
We robbed them of the opportunity to learn these kinds
of critical thinking skills that would have given them the
framework with which to understand socialism.
Speaker 1 (19:37):
Well, so, I think my question to you took like
five minutes to as ask. So, you know, the economy
is likely going to be the top issue heading into
the midterms as it was heading into the twenty twenty
four presidential election. How would you gauge today's economy.
Speaker 2 (19:55):
It's definitely a moment of transition, I think is the
best way to phrase, at least so, because we're basically
having to undo a lot of the stuff that the
Biden administration did, and that means the economy is sobering up.
Speaker 3 (20:10):
Maybe that's another good analogy is alcoholism.
Speaker 2 (20:12):
We've and I know we've kind of used that, you
know a few times on your show before. But if
you want to think of it as the Biden administration
was a government spending and hiring binge, Right, the government
spent all this money and that made GDP look good.
They hired all these people that made the jobs numbers
look good, but all of the government spending and all
of those government bureaucrats, they weren't actually doing anything productive.
(20:36):
It's like if we go back to World War two.
You know, GDP went through the roof after the depression
and once we got into World War two, but people
weren't any better off if you look at the actual
part of the economy that was spent on or that consumers,
you know, where it was consumer spending, it was business
investment in the private sector, not the public sector, but
(20:56):
just the private sector. Those things were going down during
the war, not up. You had price controls, you had
rationing people's standard of living, the consumer goods that they
had available to them. All those things got worse, not
better during the war. And so the explosion in GDP
would make you think that the standard of living had
(21:17):
gone through the roof. It didn't not at all. And
in fact that the private again private GDP, if you will,
not stuff that was going towards the war effort, but
that was actually like available for people to consume that
especially on a per capita basis and adjusted for inflation.
Again it didn't go up, it went down. So what
happened though, was the fact that literally half of GDP
(21:40):
was getting blown up in the European theater and in
the Pacific. But it made the numbers look really good.
That was the story, in a nutshell, of the Biden
administration making the numbers look good, not actually making people's
lives better. And so as you undo all of that, well,
it's going to cause a lot of economic disruptions. There's
no doubt about that.
Speaker 3 (22:01):
You're going to see.
Speaker 2 (22:01):
For example, we've let go now well over one hundred
thousand bureaucrats, federal bureaucrats this year. That's going to weigh
down your job's numbers, right, the portion of GDP. And
we only have the first two quarters of the year
to look at. We don't have the third quarter because
the government shut down. But in the first two quarters, Lisa,
in each of those quarters, the percent the part of
(22:22):
GDP that measures government purchases again, that didn't go up.
It actually went down. And so the result of that
has been to drag down the headline numbers. And we're
reorienting the economy away from the unproductive public sector and
to the productive private sector. And that's going to cause
some short term pain, some short term disruptions. Biden was
(22:46):
basically just one nightly drinking binge after the next, but
each one was followed up the next morning. Oh I
don't feel so good. Hair of the dog, right, I'm
just gonna have another drink so I don't feel as bad.
That was the economic history. I guess you could say, uh,
you know of the Biden administration and what has it
been under Trump. We're putting the bottle away, We're ordering
(23:07):
a black coffee. It's gonna be painful sobering up, but
it's necessary and more importantly, more importantly, it's the path
to long run health. This is how you get sustainable
economic growth.
Speaker 3 (23:22):
That's you know, that's a.
Speaker 2 (23:23):
Good clip, not like the two percent we saw under
Obama where people weren't happy with it, but a robust
three or four percent. And again we're talking private sector
growth here, not just growth in government.
Speaker 1 (23:36):
Do you think we'll see that before the mid terms,
because obviously the challenge politically is that Americans need to
feel the relief in order to you know, vote for
Republicans heading into the mid terms.
Speaker 2 (23:51):
Well, I think we're we're definitely already seeing some of
the relief. But the problem is, you know, we have
to appreciate the starting point. And I talked to, you know,
some people in Republican circles who you know, they're just look,
they're good people, Lisa, but they're very disconnected from the
common man. You know, they do very very well for themselves,
(24:12):
and I don't begrudge them for that, but these are
not folks who ever do their own food shopping, let's say.
And because they make a very good income, they are
relatively insulated from problems like the cost of living. And
so they look at the official numbers like I do,
and they say, oh wow, people's inflation adjusted paychecks rose,
(24:34):
you know, rose about one percent in just like the
first six, seven, maybe eight months of the Trump administration.
I mean, that's great news. So it's not just that
your paycheck's gotten bigger, but it's what your paycheck can
actually buy. Okay, that's great news, but what's the context.
The context is, for the previous four years under the
Biden administration, the total change in people's weekly paychecks adjusted
(24:59):
for inflation was negative four percent. So at the end
of his term, what your paycheck could actually buy bought
four percent less on average than what it could when
he took office. That's why we have a cost of
living crisis still in this country, because now, over the
course of roughly five years, it's not that you're up
one percent, it's that you're down a net three percent.
(25:22):
And on top of that, you have to consider that
people have racked up well over a trillion dollars in
credit card debt. Right the interest rate on those credit
cards is near a record high. So there are a
lot of other aspects that aren't captured in that statistic
that tell us the cost of living today is much
much worse than it was in twenty nineteen. So this
(25:42):
is like if you have I don't know, you have
Usain Bolt, the fastest man in the world running a race,
except he is starting a whole lap behind everybody else. Yes,
he has made incredible progress in his first his first
go around the track, but he still hasn't caught up
to all the other runners that are slower than him.
That's the way a lot of Americans feel right now. Yes,
(26:05):
things have gotten a little better this year. They're not
as bad as they were last year, but they're still
significantly worse than they were in twenty nineteen quick break.
Speaker 1 (26:14):
If you like what you're hearing, please share on social
media or send it to your family and friends. President
Trump will build a pick a new FED chair come
this spring. What impact do you think that would have
or will have heading into the midterms.
Speaker 2 (26:31):
I think a tremendous impact for a couple of reasons.
One is going to be market confidence. Markets just don't
have any confidence in power right now. They have much
more confidence, interestingly in Scott Bessen and I would love
him as FED chair, except I don't think we can
spare him at Treasury. We need him so that when
rates finally come down, he can be there to refinance
(26:52):
the debt he is, you know, he is an absolute
master of sovereign debt markets, including US treasuries, and he
is the world's best bond salesman.
Speaker 3 (27:02):
So again, we just need him.
Speaker 2 (27:03):
We need him there unfortunately or unfortunately, But in terms
of Palell, why don't markets trust him? It's because he
says he's data dependent, except even though we have all
the data, we never know what he's going to do
with it. Well, then you're not data dependent, mister Powell.
No one knows what you're going to do with the
same data from one month to the next. So he
(27:24):
is neither data dependent nor politically independent. He is neither
of those. He is clearly a political animal. There was
no empirical justification for cutting rates last year, right before
the election, and yet he gave us an emergency fifty
basis point cut to try to goose the stock market
and get their preferred candidate across the finish line.
Speaker 3 (27:45):
The FED.
Speaker 2 (27:45):
The people at the FED overwhelmingly donate to and support
Democrats exclusively. You can't tell me it's an independent institution. Please,
let's dispense with that garbage. So markets have never have
any idea what Pale's going to do. Right, if you
have somebody in there who is actually data dependent and
is dead on reliable, what happens. Markets as soon as
(28:08):
economic data is released basically move before they even wait
for the Fed to move, because.
Speaker 3 (28:13):
They know what the Fed's going to do. And to
a certain extent, this.
Speaker 2 (28:16):
Was true for I think for Alan Greenspan at least
for part of his career, and that was very helpful
to markets. So if you get somebody in there who
is much less politically biased, I think that's a huge
help The other big thing is that the entire monetary
framework that he has built LISA since COVID has been
an absolute disaster. And this is something we've talked about
(28:38):
a few times before as well, is how they are
paying banks not to lend money. They literally are paying banks.
It's something like four hundred million dollars a day in
interest for the banks to keep the money parked at
the FED. In other words, the FED is saying to
these banks and these other financial institutions, Hey, instead of
lending money to the private sector so that somebody can
(28:59):
get the mortgage or student loan, auto loan, credit card,
you name it, instead of lending money to the treasury
for the deficit, or refinancing the debt, instead of doing
any of those things, lend.
Speaker 3 (29:12):
It to us. It's risk free.
Speaker 2 (29:15):
It's literally an overnight loan, so there's no term premium
you might call it. In other words, the bank doesn't
have to worry about a thirty year mortgage where their
money is now tied up for three decades, and the
Fed's going to pay you interest on it. It's a completely
risk free rate of return. Why would you not do that?
It's a no brainer. And so the FED has been
sterilizing trillions of dollars that way to try to keep
(29:36):
bank reserves at this magical.
Speaker 3 (29:38):
Ratio they have.
Speaker 2 (29:39):
Well, there's a couple problems with that. One is the
fact that it is robbing the private market of capital.
It is making it much more difficult for you and
I to get a mortgage, or to open up a
credit card, or to get lower interest rates on any
of those things. A big reason why interest rates on
mortgages are so high today is that you are literally
having compete with Jerome Poal for loanable funds. The Treasury
(30:04):
is also having to compete with Jerome pal for loanable funds,
and the result of that is the interest rate on
refinancing the debt this year is artificially high, even though
the deficit is coming down, even though we are making
remarkable progress both in cutting spending and in bringing in
more revenue, and markets have rewarded the Treasury by putting
(30:26):
in the new lows for the year on benchmark treasuries.
Despite all of that, those yields can't really drop any further,
because if they do, you're now bumping up against the
point where banks would rather just lend to Powell at
the FED, because why on earth would I get a
lower rate of return somewhere else. It's what we call
(30:47):
a floor on interest rates. And all of this has
again resulted in this bizarre framework where because Powell is
now trying to maintain this artificial framework, the market is
forcing his hand. We just stopped quantity, or we're about
to stop, I should say, what we call quantitative easing,
(31:09):
which is the FED selling off its balance sheet, and
instead they're going to start adding to the balance sheet
in the coming months. Why because the market is forcing
their hand. That's going to actually create inflationary pressures in
the economy. But pal is obsessed with the financial plumbing,
not with inflation, not with the job market. What you
need in Palell's replacement, I really think is going to
(31:32):
be somebody, if not Kevin Walsh, then someone likes him,
and someone like him, and someone who understands the market
as well as he does.
Speaker 3 (31:42):
What you need to do is basically exactly.
Speaker 2 (31:43):
The opposite of what Pale has been doing. You need
to stop paying banks to lend, not to lend, I
should say, and what is that going to do?
Speaker 3 (31:52):
Well?
Speaker 2 (31:52):
Banks are going to take several trillion dollars out of
the FED and start lending it normally, that would expand
the money supply and be inflationtionary. But at the same time,
the FED can very quickly sell off its balance sheet
countering that. So what you do is you have now
greatly increased the amount of capital available for the market.
You have put tremendous downward pressure on interest rates, which
(32:15):
is going to provide relief for American families and federal
finances alike. The only loser in this whole change would
be Wall Street, because the big banks are no longer
going to have going to be able to ride the
gravy train of getting this you know, getting these insurance handouts,
excuse me, this interest handout. So that those are the
(32:36):
kinds of changes that need to be made. And if
you do all that, sorry to make a long story
endless here, if you do all that, I think it
would provide a tremendous boost to the private economy. And
even if these changes aren't made until May, when the
next FED share comes in, I think you could literally
see significant change in the economy in just a few months.
(32:56):
And that would put us right before right before.
Speaker 1 (32:58):
The midterms, you know, and then before we go the
Supreme Corps is considering the legality of Trump's tariffs, so
you know, we'll see what happens with that. But we've
seen some movement, at least on China with rare earth minerals.
You know, how would you assess his tariff strategy to
date and sort of where do you what are you
keeping your eye on right now in terms of where
(33:19):
it's heading.
Speaker 3 (33:21):
Well, the tariff.
Speaker 2 (33:23):
Strategy has definitely been multifaceted. And one of the reasons
why it's so difficult to assess it, Lisa, is because
some of those some of those goals are contradictory. In
other words, if you have if you have an instance
where you say, all right, we want to increase revenue, right,
we want to increase customs duties from these tariffs, because
(33:45):
that's what that's what a tariff is, right, it's a
tax on imports.
Speaker 3 (33:48):
Well, then you're going to.
Speaker 2 (33:50):
End up selling less or excuse me, you're going to
end up buying less of those imports because if you
tax something more, you get.
Speaker 3 (33:55):
Less of it.
Speaker 2 (33:56):
But then at the same time, you have and I
should say that goes hand in glove with this idea
of you know, we want to decrease imports. We want
to increase what we call net exports. But those things
run run contradictory in the long run. In other words,
over time, what's going to happen. You are going to
(34:18):
reshore manufacturing. People are going to say it's not worth
it to make stuff overseas and import it into the US.
Speaker 3 (34:24):
We're going to make a factory into the US.
Speaker 2 (34:26):
And that's great because now you've now you've increased the
number of US manufacturing jobs and you have reshored supply chains.
That's good for national security reasons. But what does that
do now to your your customs duties?
Speaker 3 (34:39):
Well, now they're going to fall off a cliff.
Speaker 2 (34:41):
So one of the things you have to understand with
with this whole tariff strategy, with the whole game that's
being played here, is that they are trying to achieve
more than one goal. They're just not trying to achieve
all of them at exactly the same time, and they're
not all trying to be achieved in the same market words.
There might be one area like steel where we say
(35:03):
that that's more of a national security interest, and so
the primary goal there is not increasing revenue to the treasury.
The primary goal there is getting the facilities and the
jobs back here.
Speaker 3 (35:14):
At home somewhere else.
Speaker 2 (35:16):
The real goal might be not even economic at all.
It might be a non economic issue like fentanyl. Look
at the amazing progress the president has made with the
huge tariffs that they had put on and threatened to
go even higher on China. What happened, China back down
on pretty much all of their demands and said, all right,
we're going to make sure that we're policing, and we
(35:38):
got to make sure they're actually going to fall through
on this. But China has said they've promised that they're
going to, you know, police the amount of fentanyl and
fentanyl precursors that are coming into the country. You know,
that's really great news, but it has nothing it doesn't
even have anything to do with with economic issues. So,
you know, getting back to the Treasury Secretary, he has
called this strategic ambiguity. In other words, other nations don't
(36:02):
really know beyond the simple demands that the president makes,
what his actual goals are, especially not in all instances.
And the result of that has been all these countries
know is that, look, if we want to avoid some
really really damaging economic effects, we just have to do
what the president says. And sure enough, look at Canada.
(36:23):
Canada decided they were not going to play ball. They
decided they were not going to do what the President
was asking, which were relatively simple things. Right, let us
sell our dairy in your country. Well, they have a
very small but very powerful dairy lobby in Canada. I
think it's concentrated in Ontario if I remember correctly, but
I'm not positive. But wherever it is, maybe it's Montreal.
They essentially said, no, no, we're not going to give
(36:45):
into that. We're going to keep all these dairy restrictions
in place, and so the President slapped a bunch of
tariffs on them. Now, there were other reasons to it, right,
It wasn't just dairy Canada. Canada really hoses a lot
of our manufacturing base in different ways. But whatever the case,
the Canadian economy, the last economic report I saw, they're
in contraction right now. In other words, they're basically headed
(37:07):
towards the recession. Their unemployment rate is not looking good.
I think it's like seven or eight percent. There are
a whole host of economic indicators that are flashing red
for Canada right now. Why because they need US a
lot more than we need them.
Speaker 3 (37:21):
At the end of the day, if you look at.
Speaker 2 (37:22):
The size of our economy, we obviously have the upper
hand in a trade war. If you look at exports,
their economy is much more dependent on exports than we are.
So again we have the upper hand. And if you
want to really drill down within exports, almost all of
their exports come here to the United States, and so
if we shut off trade, that is a huge, huge
(37:44):
drag on their economy. It is an anchor around the neck.
But in the US, very few of our exports actually
go to Canada. I think it's single digits per percentage wise.
I mean I don't even think it's ten percent. So yes,
that a trade war hurts the United States too, it hurts.
Speaker 3 (38:01):
Canada a whole heck of a lot more.
Speaker 2 (38:03):
You know, there are no winners in trade wars, but
not everyone loses the same.
Speaker 1 (38:07):
Ejntoni, appreciate you making the time, my friend.
Speaker 2 (38:10):
Thank you so much, Lisa, my pleasure.
Speaker 3 (38:12):
Thank you for having me.
Speaker 1 (38:13):
That was Ejntoni. Appreciate him for making the time to
come on the show. Appreciate you guys at home for
listening every Tuesday and Thursday, but you can listen throughout
the week. I want to think John Cassio and my
producer for putting the show together. Until next time,
Welcome to the Truth with Lisa Booth, where we try
to get to the heart of the issues that matter
to you. Today is election day in New York City,
and the city's next mayor could be and will probably be,
socialist Zoron Mom Donnie. He holds a commanding lead in
the race right now, and he will oversee eight point
five million residents as well as a massive economy. So
(00:23):
we'll talk to EJ and Tony, chief economist at the
Heritage about how much damage Zoron can do in the
next four years plus. It's concerning because Axio has recently
found that sixty seven percent of college students view socialism favorably.
This also comes as AOC and people like Bernie Sanders
(00:44):
have now become part of the mainstream and the Democrat Party.
So where is this all heading. We'll dig into what
socialism is and the impact it could have in New
York City and potentially elsewhere in the country with the
rise of some of these figures on the left. Also,
we'll get a snapshot on the economy heading into the
twenty twenty six midterms and get EJ's take on if
(01:07):
President Trump's tariff strategy is working. So stay tuned for
EJ and Tony.
Speaker 2 (01:17):
Well.
Speaker 1 (01:17):
EJ. It's great to have you on the show. Appreciate
you making the time, my friend.
Speaker 3 (01:21):
Oh, Lisa, thank you for having me again.
Speaker 2 (01:23):
It is great to be back with you.
Speaker 1 (01:25):
You always do a great job of explaining some of
these complicated issues, you know, EJ. I wanted to start.
I don't know if you saw that Axios poll recently
that surveyed US college students, but they found that sixty
seven percent of the respondents hold a positive or neutral
association with the word socialism, compared to only forty percent
(01:46):
for the word capitalism. You know, I think we talk
about capitalism, we talk about socialism, but like, how would
you describe socialism, Like, how would you define it as
an economist?
Speaker 2 (01:58):
Well, socialism is is theft. Socialism is forced to certain extent, Lisa,
it's not even an economic system, right, It's actually a
way of taking and existing economic system and forgive me,
but bastardizing it in such a way as to achieve
(02:19):
political ends. In other words, what socialism does is it
gives the government rights which properly belong to the people,
certain property rights. The government gets to dictate to you
things like where you're going to work, how much you're
going to work, how much you're going to earn from
that work, what you can do with your earnings, etc.
(02:42):
That effectively is socialism. The problem is today education is
more like indoctrination, and so kids are not taught that
in high school in college. Instead, they are taught all
of these fanciful ideas about socialism. They're told the promises.
I guess I should say socialism and not the actual
outcomes the promises of socialism, or that everyone is somehow equal,
(03:07):
that everyone somehow earns the same amount. Doctor Art Laffer
has done phenomenal work, not just theoretically but even empirically,
showing that as long as you have these promises in socialism,
I should say things like everyone is going to work,
everyone is going to earn the same amount. What happens, well,
(03:27):
everything devolves backwards until everyone decides they don't want to
work because if you earn more than what the government
says you can, what are you going to do?
Speaker 3 (03:36):
Well, you're going to work less.
Speaker 2 (03:37):
Why on earth would you earn more only for the
government to take it away from you? And if you earn,
if you currently work less than whatever the guaranteed income
is right, If you work and earn less than that,
you know that the government is going to artificially increase
your income to whatever their predetermined amount is. So why
(03:59):
on earth would you work that much? You in fact
would also work less, because again, if you don't make
enough money, the government is just going to give you
whatever you need to get your universal basic income or
whatever else they want to call that scheme.
Speaker 3 (04:13):
So everyone decides to work less and less and less
and less until nobody works at all.
Speaker 2 (04:18):
And it's a shockingly good illustration of again what we
see in reality. All the different places socialism has been tried,
whether it's in Russia, whether it's in South America, you know,
to a certain extent our neighbors here in North America,
like in Canada, the more they socialize things, the worse
it gets. Look a look at Canadian medicine, for example.
(04:40):
Ask yourself, is it Americans that are having to go
across the border to Canada to get healthcare treatments in
their socialized system or is it Canadians who are having
to come across the border to flee their socialized healthcare
system and get American private healthcare. It, of course is
the latter because in Canada, sure, the healthcare is technically
(05:02):
free quote unquote, except you have to wait literally months
to get life saving treatment. And so if your choice
is either dying or coming across the border to American
paying cash, a lot of people decide to.
Speaker 3 (05:15):
Do the latter.
Speaker 2 (05:15):
These are the fruits of socialism. It's not a matter
of it sounds good on paper. The promises are very
very nice. Everyone is equal, everyone gets what they need,
nobody goes hungry. Those are great promises. Who could be
against things like that, right, Lisa. They always sound great
on paper. It's only the implementation that always goes sideways.
Speaker 1 (05:38):
Well, and we see too in a lot of these places,
like you know, Venezuela. Like the irony is these people
push social zone because they want like quote unquote equity,
but then in reality you're just empowering like the government,
the people in charge, right, and then everyone else suffers.
So it's like it's actually like the end result is
the opposite of what they're saying they're trying to accomplished.
Speaker 3 (06:01):
Right.
Speaker 2 (06:01):
And you make such a great point, Lisa, that you
always in socialism end up having this upper class, this
ruling class. If you will and everyone else. Their situation
just gets worse and worse. They fall into into poverty, right,
as they said, an animal farm, as George Orwell said, rather,
what was the phrase he used? All animals are equal,
(06:22):
but some are more equal than others. Uh, you know,
especially if you want the government to have the power
to be able to make everyone equal, they have to
have the power to take things away from you. And
that means there are certain individuals who are going to
have to occupy those seats of power. And isn't it
amazing human nature being what it is that those individuals
(06:45):
always manage to scrape a little bit off the top
as they take from a and give to b.
Speaker 1 (06:52):
Well, and we're even saying that with you know, like
AOC and Bernie Sanders, for instance, Like AOC went to
the Mecala and like, you know, we're a really expensive dress.
That said, I think it was like tax the rich.
Or you know, Bernie Sanders flies private and stays in
very fancy hotels and like they both have managed to
make a lot of money, or Bernie Sanders become a millionaire. Right,
(07:13):
so they were already kind of seeing it in practice,
how they you know, spouse you know, equity and all
these you know, different terms, and you know, try to
pretend they're populous, but then inevitably like they're just enriching
themselves in the process, which is like sort of seeing
how socialism plays out, you know, when enacted, right, oh,
one hundred percent.
Speaker 3 (07:34):
It's another really great point, Lias.
Speaker 2 (07:35):
And how many of these people in Congress do you
see where they're making I don't know what it is,
Like it's like two hundred thousand dollars or something like that,
I think they make, which you know, that's a good income,
but that's not enough to go from a net worth
of a few hundred thousand dollars, which is where several
of them have entered, and within five six years they
have net worths in the tens of millions of dollars.
(07:58):
I'm sorry, that doesn't pass the smell test. Even if
you are a Nancy Pelosi or a Dan Crenshaw kind
of investor, you know, that is still that still does
not explain those ridiculous increases in net wealth because they're
selling their power, they're selling their influence, which again, you
only have that kind of power, and you only have
(08:18):
that kind of influence to sell if the government is
using it for nefarious purposes like socialism.
Speaker 1 (08:25):
Narry, Look, how like Maduro has all this money and
everyone else, you know, can barely afford to eat. You know,
Zoron will likely become New York City's mayor, overseeing a
massive economy, a city of eight point five million people.
He's a member of the Democratic Socialist of America. What
do you think his policies, like government run grocery stores
(08:49):
will do to New York City And how much damage
do you think can be done in a four year period.
Speaker 3 (08:54):
Well, I think they will do.
Speaker 2 (08:55):
Those policies will do exactly what they have done elsewhere
that they've been trying, and even where they've already been
tried in New York. You know, when he talks about
things like rent control, I mean they already have that
right in one form or another. So some of these policies, really,
I should say, all these policies least, so we can
just look at New York or other places in America
(09:15):
where they have been tried, or other places around the
world where they've been tried, and sure enough, it is
the exact same result every single time, which is none
of them actually achieve their intended ends, and all of
them make the situation worse. When you do things like
you say, you know what, we're gonna make it illegal
for you to sell groceries or to sell utilities, whether
(09:36):
that's gas, electric water, you name it above a certain price.
What happens? Will you end up creating shortages because a
grocer is not going to say, oh goodness, you know,
I can't sell this apple profitably, so I guess I'm
just gonna have to sell it at a loss.
Speaker 3 (09:51):
No, I'm not going to sell it at all. That's
what I'm gonna do. And you know what, people are
gonna have to go without. They're gonna have to look,
e's gonna have to sale.
Speaker 2 (10:01):
That's what's going to happen. It is what has happened,
not just in places again like New York City, but
elsewhere around the country. Look at what they've done in
places like the state of Minnesota, where they've tried to
have state run grocery stores. It's been the exact same thing.
There's no food because they're all those stores are losing money.
Anytime you do have some food that comes in below
(10:24):
market prices, everyone flocks to those stores quickly buys it
out and they can't keep it stocked because again it's
not profitable to do, so you are losing money on it.
And when you have programs like rent control, that's a
really funny one because even far left so called economists
will say rent control doesn't work. It produces exactly the
(10:45):
opposite of the kinds of results that you want. What
we see with rent control is absentee landlordism. Again, you
can't force somebody to provide a product to the marketplace
that on which they're going to lose money. And I'm
not talking about things like lost leaders, where businesses will
purposely sell something at a loss to get you into
(11:06):
the store to buy something else. No, No, we're talking
about doing this en mass. What happens when we get
things like rent control is landlords say, well, I'm just
not going to provide all the different things that I
used to in order to cut costs, and that's how
I'm going to be able to still make money on
this property. So landlords don't repair things, landlords don't follow
(11:27):
up on the complaints.
Speaker 3 (11:29):
Of leases, etc.
Speaker 2 (11:31):
And you end up with these rundown slums. You also
get this very weird kind of barbell distribution. This bifurcation.
I guess you could call it of residences, where you
end up with landlords who say, all right, I either
can run a slum profitably, I can't run any kind
of middle income housing profitably. I'll lose money on that.
(11:53):
But if I do luxury homes that's exempt from rent control,
so I can make a profit there. So the only
kinds of homes that you end up getting in those
markets again are the rundown slums that nobody wants to
live in but people have to because it's now their
only option. The middle income homes went away, and then
(12:13):
you get the protected rich who still get their luxury condos,
their luxury town homes, the luxury high rise buildings.
Speaker 3 (12:21):
Et cetera.
Speaker 2 (12:22):
So instead of creating this kind of one class utopia
that socialism always tries to sell us on, you end
up creating this two class not even a class system,
but a cast system where you have the highs and
the lows, you have the haves and the have nots,
and that's it, and there's never any way to get
from one to the other. You end up driving a
(12:44):
wedge between these groups instead of bridging the divide.
Speaker 1 (12:47):
Got to take a quick Commercial break more with ej
Antoni on the other side. You know, what kind of
well flight do you think we'll see from New York
City in terms of, you know, businesses and high on
high income earners deciding to leave.
Speaker 3 (13:03):
Oh, it'll be extreme. You know.
Speaker 2 (13:05):
I wrote a paper with Steve Moore back in I
want to say it was the summer of twenty twenty one, Lisa,
if memory serves, and what we were analyzing in that
was New York's latest big tax increase, and we explained
how you know, if you do the math and you
do some regression analysis, you look at other states, and
you know, doctor Art Laugher's done a lot of good
(13:26):
work on this, as have a lot of other good
data scientists, and what you just time after time, what
you keep finding, Lisa, is that as you keep driving
up these top marginal tax rates, you end up driving
high income earners out of those places. That's a big
part of the reason why we've seen so many people
and they take their jobs and their incomes with them.
(13:47):
We've seen so many people leaving the state of New York.
We've seen them leaving Illinois, California, et cetera. Right, And
where are they going they're going to Texas, they're going
to Tennessee, they're going to our favorite far right. And
what has happened is they've basically protected they've shielded their
incomes from state income taxes by doing so. Now there's
(14:09):
other there's other parts of the tax equation to consider, right,
sales taxes, property taxes, et cetera. But at the end
of the day, they're still choosing to move from those
states with a high tax burden to a low tax
burden because they're saving themselves a whole heck of a
lot of money and doing so.
Speaker 3 (14:24):
So we when we did this paper, we you.
Speaker 2 (14:26):
Know, we got out our calculators, we did the math,
and we found that over the course of a decade,
in extra one million people, almost all high income earners
were going to leave the state of New York. Now
as they do that, it's not all high income earners
because there's a trickle down effect. Right when when a
high income earner is no longer no longer living in
(14:47):
New York City, for example, he's not going to the
grocery store, he's not buying food. So maybe you lose
a job for a you know, a guy stocking the shelves.
He's no longer getting his suit strike clean there. So
maybe now there you lose a job one of the
city's many dry cleaners, and so on and so on. Right,
there's just this kind of cascade effect. You're going to
lose jobs in restaurants, right, waitresses and bartenders and so on,
(15:11):
and at the end of the day, again it's a
million people who leave the state over the course of
a decade. That effect is only going to be exacerbated
if you get the kinds of big spending and big
taxing policies that this guy, this literal communist has been
advocating for in the city.
Speaker 1 (15:30):
You know, I think the challenges you know, obviously we're
seeing sort of uh, you know, people like AOC and
Bernie Sanders become more mainstream in their party, and Zorn
might as well too, and we've seen some reluctance to
embrace them from party leaders, but you know, that'll probably
change after the election, I guess. You know, they were
(15:52):
talking about equity and things like that, which obviously you know,
are an affordability and you know, things like that obviously
concerns and a lot of these cities like New York
City where it's so expensive to live. I guess how
to Republicans, I mean, this might be more of a
messaging question, But I guess what should our response.
Speaker 2 (16:08):
Be to just this kind of spread of commoc.
Speaker 1 (16:11):
And Bernie Sanders are making because you know, I think
to young people, yeah, I mean, like, you know, what
should our response be? I guess because I mean the
challenge is I guess it's more of a messaging thing,
you know, because you talk about giving away free things
to people who are concerned about affordability. That sounds a
little bit better than talking about like reducing tach you
know what I mean, Like, it's a little bit of
a challenge.
Speaker 2 (16:30):
I think part of it least is that we are
and this is what this is what old generals tend
to do. Uh, we've been fighting new battles with the
same old tactics. We're kind of reliving, uh, you know,
historical moments instead of living in the present. So I
find when I talk to young people, when I like
visit colleges and give speeches, a lot of them are
(16:52):
increasingly unimpressed with empirical analysis. If I if I tell
them what I just told you in the audience about
how a million peopleeople are going to leave the state
of New York, and they're going to take their jobs
and their incomes with them, and everyone left in New
York is worse off as a result. If I put
it in those terms, they don't really seem to care
that much. It doesn't really speak to them because they
(17:13):
haven't you know, they don't. Frankly, they don't have a
lot of those critical thinking skills. They don't have the
ability to do empirical analyses. And so the only way
I think that we can speak to a lot of
these folks now is just by putting everything in moral terms.
And it's not to say it, but you know that
that morality is somehow below mathematics. That's not the point
at all. It's just that I think basic laws of
(17:36):
morality to some extent, are written on every human heart.
Speaker 3 (17:40):
Right. We have a certain sense of justice that's just kind.
Speaker 2 (17:43):
Of ingrained in our DNA, where we can kind of
intrinsically notice when something is fair or not. Now, obviously,
you know, concupiscence condull that part of your conscience over time,
so you don't see it as much, and so that
you think the government taking from someone and giving it
to me, Well, that's fair, right. But again I think
that's where we kind of have to make an appeal.
(18:04):
So when I talk about socialism a lot of times,
again mostly to young people, I almost exclusively put it
in moral terms, and I explain to them socialism is theft.
Socialism says that someone else has a right to what
you have earned. Socialism says that fit that I literally
(18:24):
have a fair share of what you worked hard for.
And look, is it fair for me, as a professor
to take some of your grade that you have earned
and give it to someone else? In other words, this
person over here they got an F and you got
an A. But if I redistribute some of your correct
(18:46):
answers to them, now you both get a C.
Speaker 3 (18:48):
And that's equal. That's fair right.
Speaker 2 (18:51):
And of course then immediately there's an uproar from the crowd.
Speaker 3 (18:53):
No, No, that wouldn't be fair. No, please don't do that.
Speaker 2 (18:57):
So again that's think those I think are the kinds
of thing that we need to say to young people
because they're just not ready for maybe the more robust
intellectual arguments that were made in yesteryear, the kinds of
things that I think helped convince young people in the eighties,
in the nineties, maybe even the early two thousands. That
(19:18):
just doesn't work anymore, unfortunately, because we've robbed kids again.
Speaker 3 (19:23):
We indoctrinated them instead of educating them.
Speaker 2 (19:26):
We robbed them of the opportunity to learn these kinds
of critical thinking skills that would have given them the
framework with which to understand socialism.
Speaker 1 (19:37):
Well, so, I think my question to you took like
five minutes to as ask. So, you know, the economy
is likely going to be the top issue heading into
the midterms as it was heading into the twenty twenty
four presidential election. How would you gauge today's economy.
Speaker 2 (19:55):
It's definitely a moment of transition, I think is the
best way to phrase, at least so, because we're basically
having to undo a lot of the stuff that the
Biden administration did, and that means the economy is sobering up.
Speaker 3 (20:10):
Maybe that's another good analogy is alcoholism.
Speaker 2 (20:12):
We've and I know we've kind of used that, you
know a few times on your show before. But if
you want to think of it as the Biden administration
was a government spending and hiring binge, Right, the government
spent all this money and that made GDP look good.
They hired all these people that made the jobs numbers
look good, but all of the government spending and all
of those government bureaucrats, they weren't actually doing anything productive.
(20:36):
It's like if we go back to World War two.
You know, GDP went through the roof after the depression
and once we got into World War two, but people
weren't any better off if you look at the actual
part of the economy that was spent on or that consumers,
you know, where it was consumer spending, it was business
investment in the private sector, not the public sector, but
(20:56):
just the private sector. Those things were going down during
the war, not up. You had price controls, you had
rationing people's standard of living, the consumer goods that they
had available to them. All those things got worse, not
better during the war. And so the explosion in GDP
would make you think that the standard of living had
(21:17):
gone through the roof. It didn't not at all. And
in fact that the private again private GDP, if you will,
not stuff that was going towards the war effort, but
that was actually like available for people to consume that
especially on a per capita basis and adjusted for inflation.
Again it didn't go up, it went down. So what
happened though, was the fact that literally half of GDP
(21:40):
was getting blown up in the European theater and in
the Pacific. But it made the numbers look really good.
That was the story, in a nutshell, of the Biden
administration making the numbers look good, not actually making people's
lives better. And so as you undo all of that, well,
it's going to cause a lot of economic disruptions. There's
no doubt about that.
Speaker 3 (22:01):
You're going to see.
Speaker 2 (22:01):
For example, we've let go now well over one hundred
thousand bureaucrats, federal bureaucrats this year. That's going to weigh
down your job's numbers, right, the portion of GDP. And
we only have the first two quarters of the year
to look at. We don't have the third quarter because
the government shut down. But in the first two quarters, Lisa,
in each of those quarters, the percent the part of
(22:22):
GDP that measures government purchases again, that didn't go up.
It actually went down. And so the result of that
has been to drag down the headline numbers. And we're
reorienting the economy away from the unproductive public sector and
to the productive private sector. And that's going to cause
some short term pain, some short term disruptions. Biden was
(22:46):
basically just one nightly drinking binge after the next, but
each one was followed up the next morning. Oh I
don't feel so good. Hair of the dog, right, I'm
just gonna have another drink so I don't feel as bad.
That was the economic history. I guess you could say, uh,
you know of the Biden administration and what has it
been under Trump. We're putting the bottle away, We're ordering
(23:07):
a black coffee. It's gonna be painful sobering up, but
it's necessary and more importantly, more importantly, it's the path
to long run health. This is how you get sustainable
economic growth.
Speaker 3 (23:22):
That's you know, that's a.
Speaker 2 (23:23):
Good clip, not like the two percent we saw under
Obama where people weren't happy with it, but a robust
three or four percent. And again we're talking private sector
growth here, not just growth in government.
Speaker 1 (23:36):
Do you think we'll see that before the mid terms,
because obviously the challenge politically is that Americans need to
feel the relief in order to you know, vote for
Republicans heading into the mid terms.
Speaker 2 (23:51):
Well, I think we're we're definitely already seeing some of
the relief. But the problem is, you know, we have
to appreciate the starting point. And I talked to, you know,
some people in Republican circles who you know, they're just look,
they're good people, Lisa, but they're very disconnected from the
common man. You know, they do very very well for themselves,
(24:12):
and I don't begrudge them for that, but these are
not folks who ever do their own food shopping, let's say.
And because they make a very good income, they are
relatively insulated from problems like the cost of living. And
so they look at the official numbers like I do,
and they say, oh wow, people's inflation adjusted paychecks rose,
(24:34):
you know, rose about one percent in just like the
first six, seven, maybe eight months of the Trump administration.
I mean, that's great news. So it's not just that
your paycheck's gotten bigger, but it's what your paycheck can
actually buy. Okay, that's great news, but what's the context.
The context is, for the previous four years under the
Biden administration, the total change in people's weekly paychecks adjusted
(24:59):
for inflation was negative four percent. So at the end
of his term, what your paycheck could actually buy bought
four percent less on average than what it could when
he took office. That's why we have a cost of
living crisis still in this country, because now, over the
course of roughly five years, it's not that you're up
one percent, it's that you're down a net three percent.
(25:22):
And on top of that, you have to consider that
people have racked up well over a trillion dollars in
credit card debt. Right the interest rate on those credit
cards is near a record high. So there are a
lot of other aspects that aren't captured in that statistic
that tell us the cost of living today is much
much worse than it was in twenty nineteen. So this
(25:42):
is like if you have I don't know, you have
Usain Bolt, the fastest man in the world running a race,
except he is starting a whole lap behind everybody else. Yes,
he has made incredible progress in his first his first
go around the track, but he still hasn't caught up
to all the other runners that are slower than him.
That's the way a lot of Americans feel right now. Yes,
(26:05):
things have gotten a little better this year. They're not
as bad as they were last year, but they're still
significantly worse than they were in twenty nineteen quick break.
Speaker 1 (26:14):
If you like what you're hearing, please share on social
media or send it to your family and friends. President
Trump will build a pick a new FED chair come
this spring. What impact do you think that would have
or will have heading into the midterms.
Speaker 2 (26:31):
I think a tremendous impact for a couple of reasons.
One is going to be market confidence. Markets just don't
have any confidence in power right now. They have much
more confidence, interestingly in Scott Bessen and I would love
him as FED chair, except I don't think we can
spare him at Treasury. We need him so that when
rates finally come down, he can be there to refinance
(26:52):
the debt he is, you know, he is an absolute
master of sovereign debt markets, including US treasuries, and he
is the world's best bond salesman.
Speaker 3 (27:02):
So again, we just need him.
Speaker 2 (27:03):
We need him there unfortunately or unfortunately, But in terms
of Palell, why don't markets trust him? It's because he
says he's data dependent, except even though we have all
the data, we never know what he's going to do
with it. Well, then you're not data dependent, mister Powell.
No one knows what you're going to do with the
same data from one month to the next. So he
(27:24):
is neither data dependent nor politically independent. He is neither
of those. He is clearly a political animal. There was
no empirical justification for cutting rates last year, right before
the election, and yet he gave us an emergency fifty
basis point cut to try to goose the stock market
and get their preferred candidate across the finish line.
Speaker 3 (27:45):
The FED.
Speaker 2 (27:45):
The people at the FED overwhelmingly donate to and support
Democrats exclusively. You can't tell me it's an independent institution. Please,
let's dispense with that garbage. So markets have never have
any idea what Pale's going to do. Right, if you
have somebody in there who is actually data dependent and
is dead on reliable, what happens. Markets as soon as
(28:08):
economic data is released basically move before they even wait
for the Fed to move, because.
Speaker 3 (28:13):
They know what the Fed's going to do. And to
a certain extent, this.
Speaker 2 (28:16):
Was true for I think for Alan Greenspan at least
for part of his career, and that was very helpful
to markets. So if you get somebody in there who
is much less politically biased, I think that's a huge
help The other big thing is that the entire monetary
framework that he has built LISA since COVID has been
an absolute disaster. And this is something we've talked about
(28:38):
a few times before as well, is how they are
paying banks not to lend money. They literally are paying banks.
It's something like four hundred million dollars a day in
interest for the banks to keep the money parked at
the FED. In other words, the FED is saying to
these banks and these other financial institutions, Hey, instead of
lending money to the private sector so that somebody can
(28:59):
get the mortgage or student loan, auto loan, credit card,
you name it, instead of lending money to the treasury
for the deficit, or refinancing the debt, instead of doing
any of those things, lend.
Speaker 3 (29:12):
It to us. It's risk free.
Speaker 2 (29:15):
It's literally an overnight loan, so there's no term premium
you might call it. In other words, the bank doesn't
have to worry about a thirty year mortgage where their
money is now tied up for three decades, and the
Fed's going to pay you interest on it. It's a completely
risk free rate of return. Why would you not do that?
It's a no brainer. And so the FED has been
sterilizing trillions of dollars that way to try to keep
(29:36):
bank reserves at this magical.
Speaker 3 (29:38):
Ratio they have.
Speaker 2 (29:39):
Well, there's a couple problems with that. One is the
fact that it is robbing the private market of capital.
It is making it much more difficult for you and
I to get a mortgage, or to open up a
credit card, or to get lower interest rates on any
of those things. A big reason why interest rates on
mortgages are so high today is that you are literally
having compete with Jerome Poal for loanable funds. The Treasury
(30:04):
is also having to compete with Jerome pal for loanable funds,
and the result of that is the interest rate on
refinancing the debt this year is artificially high, even though
the deficit is coming down, even though we are making
remarkable progress both in cutting spending and in bringing in
more revenue, and markets have rewarded the Treasury by putting
(30:26):
in the new lows for the year on benchmark treasuries.
Despite all of that, those yields can't really drop any further,
because if they do, you're now bumping up against the
point where banks would rather just lend to Powell at
the FED, because why on earth would I get a
lower rate of return somewhere else. It's what we call
(30:47):
a floor on interest rates. And all of this has
again resulted in this bizarre framework where because Powell is
now trying to maintain this artificial framework, the market is
forcing his hand. We just stopped quantity, or we're about
to stop, I should say, what we call quantitative easing,
(31:09):
which is the FED selling off its balance sheet, and
instead they're going to start adding to the balance sheet
in the coming months. Why because the market is forcing
their hand. That's going to actually create inflationary pressures in
the economy. But pal is obsessed with the financial plumbing,
not with inflation, not with the job market. What you
need in Palell's replacement, I really think is going to
(31:32):
be somebody, if not Kevin Walsh, then someone likes him,
and someone like him, and someone who understands the market
as well as he does.
Speaker 3 (31:42):
What you need to do is basically exactly.
Speaker 2 (31:43):
The opposite of what Pale has been doing. You need
to stop paying banks to lend, not to lend, I
should say, and what is that going to do?
Speaker 3 (31:52):
Well?
Speaker 2 (31:52):
Banks are going to take several trillion dollars out of
the FED and start lending it normally, that would expand
the money supply and be inflationtionary. But at the same time,
the FED can very quickly sell off its balance sheet
countering that. So what you do is you have now
greatly increased the amount of capital available for the market.
You have put tremendous downward pressure on interest rates, which
(32:15):
is going to provide relief for American families and federal
finances alike. The only loser in this whole change would
be Wall Street, because the big banks are no longer
going to have going to be able to ride the
gravy train of getting this you know, getting these insurance handouts,
excuse me, this interest handout. So that those are the
(32:36):
kinds of changes that need to be made. And if
you do all that, sorry to make a long story
endless here, if you do all that, I think it
would provide a tremendous boost to the private economy. And
even if these changes aren't made until May, when the
next FED share comes in, I think you could literally
see significant change in the economy in just a few months.
(32:56):
And that would put us right before right before.
Speaker 1 (32:58):
The midterms, you know, and then before we go the
Supreme Corps is considering the legality of Trump's tariffs, so
you know, we'll see what happens with that. But we've
seen some movement, at least on China with rare earth minerals.
You know, how would you assess his tariff strategy to
date and sort of where do you what are you
keeping your eye on right now in terms of where
(33:19):
it's heading.
Speaker 3 (33:21):
Well, the tariff.
Speaker 2 (33:23):
Strategy has definitely been multifaceted. And one of the reasons
why it's so difficult to assess it, Lisa, is because
some of those some of those goals are contradictory. In
other words, if you have if you have an instance
where you say, all right, we want to increase revenue, right,
we want to increase customs duties from these tariffs, because
(33:45):
that's what that's what a tariff is, right, it's a
tax on imports.
Speaker 3 (33:48):
Well, then you're going to.
Speaker 2 (33:50):
End up selling less or excuse me, you're going to
end up buying less of those imports because if you
tax something more, you get.
Speaker 3 (33:55):
Less of it.
Speaker 2 (33:56):
But then at the same time, you have and I
should say that goes hand in glove with this idea
of you know, we want to decrease imports. We want
to increase what we call net exports. But those things
run run contradictory in the long run. In other words,
over time, what's going to happen. You are going to
(34:18):
reshore manufacturing. People are going to say it's not worth
it to make stuff overseas and import it into the US.
Speaker 3 (34:24):
We're going to make a factory into the US.
Speaker 2 (34:26):
And that's great because now you've now you've increased the
number of US manufacturing jobs and you have reshored supply chains.
That's good for national security reasons. But what does that
do now to your your customs duties?
Speaker 3 (34:39):
Well, now they're going to fall off a cliff.
Speaker 2 (34:41):
So one of the things you have to understand with
with this whole tariff strategy, with the whole game that's
being played here, is that they are trying to achieve
more than one goal. They're just not trying to achieve
all of them at exactly the same time, and they're
not all trying to be achieved in the same market words.
There might be one area like steel where we say
(35:03):
that that's more of a national security interest, and so
the primary goal there is not increasing revenue to the treasury.
The primary goal there is getting the facilities and the
jobs back here.
Speaker 3 (35:14):
At home somewhere else.
Speaker 2 (35:16):
The real goal might be not even economic at all.
It might be a non economic issue like fentanyl. Look
at the amazing progress the president has made with the
huge tariffs that they had put on and threatened to
go even higher on China. What happened, China back down
on pretty much all of their demands and said, all right,
we're going to make sure that we're policing, and we
(35:38):
got to make sure they're actually going to fall through
on this. But China has said they've promised that they're
going to, you know, police the amount of fentanyl and
fentanyl precursors that are coming into the country. You know,
that's really great news, but it has nothing it doesn't
even have anything to do with with economic issues. So,
you know, getting back to the Treasury Secretary, he has
called this strategic ambiguity. In other words, other nations don't
(36:02):
really know beyond the simple demands that the president makes,
what his actual goals are, especially not in all instances.
And the result of that has been all these countries
know is that, look, if we want to avoid some
really really damaging economic effects, we just have to do
what the president says. And sure enough, look at Canada.
(36:23):
Canada decided they were not going to play ball. They
decided they were not going to do what the President
was asking, which were relatively simple things. Right, let us
sell our dairy in your country. Well, they have a
very small but very powerful dairy lobby in Canada. I
think it's concentrated in Ontario if I remember correctly, but
I'm not positive. But wherever it is, maybe it's Montreal.
They essentially said, no, no, we're not going to give
(36:45):
into that. We're going to keep all these dairy restrictions
in place, and so the President slapped a bunch of
tariffs on them. Now, there were other reasons to it, right,
It wasn't just dairy Canada. Canada really hoses a lot
of our manufacturing base in different ways. But whatever the case,
the Canadian economy, the last economic report I saw, they're
in contraction right now. In other words, they're basically headed
(37:07):
towards the recession. Their unemployment rate is not looking good.
I think it's like seven or eight percent. There are
a whole host of economic indicators that are flashing red
for Canada right now. Why because they need US a
lot more than we need them.
Speaker 3 (37:21):
At the end of the day, if you look at.
Speaker 2 (37:22):
The size of our economy, we obviously have the upper
hand in a trade war. If you look at exports,
their economy is much more dependent on exports than we are.
So again we have the upper hand. And if you
want to really drill down within exports, almost all of
their exports come here to the United States, and so
if we shut off trade, that is a huge, huge
(37:44):
drag on their economy. It is an anchor around the neck.
But in the US, very few of our exports actually
go to Canada. I think it's single digits per percentage wise.
I mean I don't even think it's ten percent. So yes,
that a trade war hurts the United States too, it hurts.
Speaker 3 (38:01):
Canada a whole heck of a lot more.
Speaker 2 (38:03):
You know, there are no winners in trade wars, but
not everyone loses the same.
Speaker 1 (38:07):
Ejntoni, appreciate you making the time, my friend.
Speaker 2 (38:10):
Thank you so much, Lisa, my pleasure.
Speaker 3 (38:12):
Thank you for having me.
Speaker 1 (38:13):
That was Ejntoni. Appreciate him for making the time to
come on the show. Appreciate you guys at home for
listening every Tuesday and Thursday, but you can listen throughout
the week. I want to think John Cassio and my
producer for putting the show together. Until next time,
The Clay Travis and Buck Sexton Show News
Hosts And Creators
Clay Travis
Buck Sexton
Show Links
WebsiteNewsletterPopular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.