July 17, 2025 • 9 mins
Dr. Jeff Haymond of Cedarville U. looks at the June numbers and says that while Jerome Powell has made some mistakes in the past, the slow approach on rates is a good one
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I'm looking at these numbers. You talk about spinable.
Speaker 2 (00:03):
The CPI Consumer Price Index numbers came out and, like
I say, very very suspinnable.
Speaker 1 (00:10):
I guess depending.
Speaker 2 (00:10):
Upon what what you want to prove, what your point is,
what you want to try to back up and at
two point seven was our number for this past month.
Doctor Jeff Hayman is a PhDs professor of economics at
Cedarville University joining me right now on the Legacy Retirement
Group dot com phone lines to kind of decipher this
whole thing. Two point seven percent was our consumer Price
(00:33):
Index number for the past month. That is a substantial difference,
you know, from the year before. If you track that
that one percent, they say the largest since February. However,
let us remember it's a month to month thing. We're
six months and six and a half months into the
Trump administration. So depending upon what point you want to make,
(00:57):
you can move these numbers around all kinds of way.
Speaker 1 (01:00):
He's doctor, good morning, how are you doing well?
Speaker 3 (01:02):
Thanks for having one In layman terms, what does this
two point seven percent mean to us? Well, I think
the most important point, which is the said kind of position,
is that we have not reached below their two percent threshold. Right,
We've been steadily getting closer back to normal levels from
(01:24):
those very high Biden inflation numbers. But we're kind of
getting to a steady state.
Speaker 4 (01:29):
Which is above where they believe that we should be
with inflation, and I guarantee you it's above where your
listeners want us to be. You know, I don't know
why the fact continues to suggest two percent inflation is
a great number. All of us would write like zero
inflation if.
Speaker 5 (01:45):
We could with our pocketbooks, but.
Speaker 4 (01:48):
That's kind of the big thing going on. I do
want to say very quickly, your point about spinning the
numbers is absolutely true, which is why we need to
look at a broad set of variables that out there.
Cpis out there, PCs.
Speaker 5 (01:59):
You have to look.
Speaker 4 (02:00):
You can't take one month's numbers and put too much
stock into it, but it does start to give us
some clues.
Speaker 2 (02:07):
We are looking at last month, let's say the last
two months. This is two point seven percent. Now for June,
May was two point four percent. So we're seeing an
effective change of point three, which means, you know, if
the boss paid you one hundred bucks last week and
you had a point three difference, he paid you one
hundred bucks and thirty cents this week.
Speaker 1 (02:29):
That's the difference.
Speaker 2 (02:31):
It's not a monumental thing, but the media coverage makes
you think otherwise.
Speaker 4 (02:36):
There, Yeah, for sure, but it doesn't help when President
Trump does we have zero inflation, which we've never had
zero inflation. We can think better, but it's not zero,
and for a media that does not like him, they're
going to just point out that you're wrong, sir. And
so that's I think part of why you're seeing more
focus on it. But it's also beyond just.
Speaker 5 (02:57):
The politics of it. It is a flight uptick.
Speaker 4 (03:01):
And there is this outstanding question about how are tariffs
going to affect.
Speaker 5 (03:06):
The overall price level?
Speaker 4 (03:07):
And we did start to see some of the areas
where you'd expect tariffs to weigh in, such as the
imported items of apparel and things like that, rise and prices.
So you're starting to see a little bit of trickling
of that price effect from the tipms.
Speaker 1 (03:21):
You may be to help me with this too.
Speaker 2 (03:23):
This is the idea of you know, as you said earlier,
we do all love zero inflation, but zero inflation can
be a bad thing as well, because if there's no inflation,
then things aren't costing more, but then the companies aren't
making more, nobody's paying more in taxes, nobody's wages are rising.
Speaker 1 (03:39):
Zero is not necessarily a good number either, is it.
Speaker 4 (03:42):
No, No, zero would be a great number. That's what
we really care about as individuals is our real purchasing power.
And you could have zero inflation, you could have deflation.
In fact, in normal state of affairs, this is going
a loom off on attangent, but you could have actual
defas on a slow level.
Speaker 5 (04:01):
Equal to productivity growth every year.
Speaker 4 (04:04):
We had deflation on that order from about eighteen seventy
nine up to the early nineteen hundreds when there was
a real tight monetary posse, because the real purchasing power
is affected by productivity growth. As long as we're getting
more productive, you can be paid the same amount. And actually,
because we're more production, more goods and services, you're able
to buy more with the same physical amount of money.
Speaker 5 (04:26):
To no.
Speaker 4 (04:27):
Zero inflation would help us plan with stable prices. And
that's what we had, by the way, under a gold standard,
effectively zero inflation for hundreds of years.
Speaker 2 (04:35):
With the international market being what it is. This, by
the way, doctor Jeff Hayman he's a professor of economics
down there at Cedarville University. The concept of deflation in
the economy as it exists today, would that be more
more dependent upon the strength of the American dollar overseas,
being that so much of what we are purchasing is
coming from elsewhere.
Speaker 4 (04:53):
Now no, I mean, again, we're a big global trading partner,
but foreign it is around twenty percent of our economy,
and a lot of that, by the way, of course,
is not just what we import, but what we export,
which is less than that. But we're a world's dominant
power and many services, financial services, other kinds of services
that we export, as well as other commodities that we
(05:15):
export as well. So it's a big deal, but it's
not that big of a driver for deflation. You mentioned deflation.
I would just tell all of our listeners that that
deflation what your intuition suggests that, hey, when prices go down,
you're happier. Is usually true. Deflation can be bad, but
historically that's the exception rather than rule, and that's exacerbated
(05:39):
by policy mistakes by the central banking system. For instance,
in the eighteen hundreds, we had a lot of phases
of so called good deflation, which we're driven by productivity growth,
So it really depends on what want causes the deflation,
whether it's good or bad.
Speaker 2 (05:54):
Going with the assumption that the fad is a good
and necessary thing, and that's a debatable point for many
of us. What's your position with Chairman Powell right now?
Good moves, bad moves, the stagnation in lowering the rates
and so forth. Is he doing a good job despite
the press.
Speaker 5 (06:14):
Uh, that's a tough one. You're absolutely right. He clearly made.
Speaker 4 (06:19):
Some big time mistakes going along with the Biden administration
on funding the inflationary spending that we had, and his
response at that point was and not just him, but
the whole board was really really bad, and many of
the ecconoms were calling out, including myself Times that said,
right now, given the black eye that they've had, they
(06:41):
do not want What they saw is they had their
whole reputation in catters and they don't want to let
inflation get out of hand. And if price levels get
baked in where people's expectations are that they're going to
continue to rise, it makes getting that last little bit
below two percent much much more difficult, which is why
(07:01):
they're stubborn resisting. Mister Biden, or excuse me, mister Trump,
for instance, was very angry that they cut interest rates
right before the election, which were really too close to
actually affect the election all. But here's what happened. The
market reacted negatively, showing that the Fed was wrong and
in cutting because the long term bond rates actually went.
Speaker 5 (07:22):
Up quite a bit after they did that, and.
Speaker 4 (07:25):
So that's another thing. They don't want to repeat that mistake.
If they were to lower rates now and that and
if the long bonds were to go up in value,
that would be very very bad news. And remember even
as mister Trump earlier this year they said they weren't
really concerned about low rates. That was, you know, so
long ago, just took a couple of months ago. They
(07:45):
weren't really concerned about low the short term rates. They
were concerned about the ten year because that affects mortgages.
Speaker 5 (07:51):
Which is a correct view, by the way, But that.
Speaker 4 (07:54):
If they lower the short term interistrates and then the
tenure goes up, that's going to make how inflation worse,
and so they've got to be really careful. That's why
pals in a real bind here right now.
Speaker 5 (08:06):
Because they're still higher inflation.
Speaker 4 (08:08):
And if they go too fast, they've already been back
in November shown that they were wrong in cutting earlier.
If they cut down it goes up that really their
reputation just gets worse and more and more. So he's
been a tough pickle.
Speaker 2 (08:20):
The perception and reaction is so much more important than
the action itself, and that the FED exists like it
or not.
Speaker 1 (08:28):
It's just as we say.
Speaker 2 (08:30):
Oh we have a democracy, we have a hybrid democracy,
a representative republic. We also have a hybrid capitalism system.
And it is not a free for all and get
what you can get and so forth. There is there
is a control element there, and I think you know,
on a personal level, I prefer caution over free wheeling
and hoping.
Speaker 4 (08:52):
Well in that respect, then it sounds like you would
be more in favor of but going slow approach. I
do so, and so given where the mistakes they've made
in the past, and it's not that far distant past.
Even though as November of last year, I think it
is prudent to be a little bit slower. There's a
strong case to be made, by the way, and I'm
supportive of lower rates. A little bit maybe, but it's dicey.
(09:17):
You can go either way on that. I don't think
there's any case for trying to take the interest rate
down two or three percent, as mister Trump has suggested.
Let's remember, for all your listeners, we've had the government
the government give us negative real interest rates for over
a decade, where basically we were forced to take no
interest and be punished for saving to fund the profligate
(09:41):
federal government with all the debt expansion. That's the real
onus on I think the administration's push for this is
the increased cost to service the debt. Well, I actually
kind of like that because that seems to be the
only thing that constrains the government from spending even more money.
I'm looking at these numbers. You talk about spinable.
Speaker 2 (00:03):
The CPI Consumer Price Index numbers came out and, like
I say, very very suspinnable.
Speaker 1 (00:10):
I guess depending.
Speaker 2 (00:10):
Upon what what you want to prove, what your point is,
what you want to try to back up and at
two point seven was our number for this past month.
Doctor Jeff Hayman is a PhDs professor of economics at
Cedarville University joining me right now on the Legacy Retirement
Group dot com phone lines to kind of decipher this
whole thing. Two point seven percent was our consumer Price
(00:33):
Index number for the past month. That is a substantial difference,
you know, from the year before. If you track that
that one percent, they say the largest since February. However,
let us remember it's a month to month thing. We're
six months and six and a half months into the
Trump administration. So depending upon what point you want to make,
(00:57):
you can move these numbers around all kinds of way.
Speaker 1 (01:00):
He's doctor, good morning, how are you doing well?
Speaker 3 (01:02):
Thanks for having one In layman terms, what does this
two point seven percent mean to us? Well, I think
the most important point, which is the said kind of position,
is that we have not reached below their two percent threshold. Right,
We've been steadily getting closer back to normal levels from
(01:24):
those very high Biden inflation numbers. But we're kind of
getting to a steady state.
Speaker 4 (01:29):
Which is above where they believe that we should be
with inflation, and I guarantee you it's above where your
listeners want us to be. You know, I don't know
why the fact continues to suggest two percent inflation is
a great number. All of us would write like zero
inflation if.
Speaker 5 (01:45):
We could with our pocketbooks, but.
Speaker 4 (01:48):
That's kind of the big thing going on. I do
want to say very quickly, your point about spinning the
numbers is absolutely true, which is why we need to
look at a broad set of variables that out there.
Cpis out there, PCs.
Speaker 5 (01:59):
You have to look.
Speaker 4 (02:00):
You can't take one month's numbers and put too much
stock into it, but it does start to give us
some clues.
Speaker 2 (02:07):
We are looking at last month, let's say the last
two months. This is two point seven percent. Now for June,
May was two point four percent. So we're seeing an
effective change of point three, which means, you know, if
the boss paid you one hundred bucks last week and
you had a point three difference, he paid you one
hundred bucks and thirty cents this week.
Speaker 1 (02:29):
That's the difference.
Speaker 2 (02:31):
It's not a monumental thing, but the media coverage makes
you think otherwise.
Speaker 4 (02:36):
There, Yeah, for sure, but it doesn't help when President
Trump does we have zero inflation, which we've never had
zero inflation. We can think better, but it's not zero,
and for a media that does not like him, they're
going to just point out that you're wrong, sir. And
so that's I think part of why you're seeing more
focus on it. But it's also beyond just.
Speaker 5 (02:57):
The politics of it. It is a flight uptick.
Speaker 4 (03:01):
And there is this outstanding question about how are tariffs
going to affect.
Speaker 5 (03:06):
The overall price level?
Speaker 4 (03:07):
And we did start to see some of the areas
where you'd expect tariffs to weigh in, such as the
imported items of apparel and things like that, rise and prices.
So you're starting to see a little bit of trickling
of that price effect from the tipms.
Speaker 1 (03:21):
You may be to help me with this too.
Speaker 2 (03:23):
This is the idea of you know, as you said earlier,
we do all love zero inflation, but zero inflation can
be a bad thing as well, because if there's no inflation,
then things aren't costing more, but then the companies aren't
making more, nobody's paying more in taxes, nobody's wages are rising.
Speaker 1 (03:39):
Zero is not necessarily a good number either, is it.
Speaker 4 (03:42):
No, No, zero would be a great number. That's what
we really care about as individuals is our real purchasing power.
And you could have zero inflation, you could have deflation.
In fact, in normal state of affairs, this is going
a loom off on attangent, but you could have actual
defas on a slow level.
Speaker 5 (04:01):
Equal to productivity growth every year.
Speaker 4 (04:04):
We had deflation on that order from about eighteen seventy
nine up to the early nineteen hundreds when there was
a real tight monetary posse, because the real purchasing power
is affected by productivity growth. As long as we're getting
more productive, you can be paid the same amount. And actually,
because we're more production, more goods and services, you're able
to buy more with the same physical amount of money.
Speaker 5 (04:26):
To no.
Speaker 4 (04:27):
Zero inflation would help us plan with stable prices. And
that's what we had, by the way, under a gold standard,
effectively zero inflation for hundreds of years.
Speaker 2 (04:35):
With the international market being what it is. This, by
the way, doctor Jeff Hayman he's a professor of economics
down there at Cedarville University. The concept of deflation in
the economy as it exists today, would that be more
more dependent upon the strength of the American dollar overseas,
being that so much of what we are purchasing is
coming from elsewhere.
Speaker 4 (04:53):
Now no, I mean, again, we're a big global trading partner,
but foreign it is around twenty percent of our economy,
and a lot of that, by the way, of course,
is not just what we import, but what we export,
which is less than that. But we're a world's dominant
power and many services, financial services, other kinds of services
that we export, as well as other commodities that we
(05:15):
export as well. So it's a big deal, but it's
not that big of a driver for deflation. You mentioned deflation.
I would just tell all of our listeners that that
deflation what your intuition suggests that, hey, when prices go down,
you're happier. Is usually true. Deflation can be bad, but
historically that's the exception rather than rule, and that's exacerbated
(05:39):
by policy mistakes by the central banking system. For instance,
in the eighteen hundreds, we had a lot of phases
of so called good deflation, which we're driven by productivity growth,
So it really depends on what want causes the deflation,
whether it's good or bad.
Speaker 2 (05:54):
Going with the assumption that the fad is a good
and necessary thing, and that's a debatable point for many
of us. What's your position with Chairman Powell right now?
Good moves, bad moves, the stagnation in lowering the rates
and so forth. Is he doing a good job despite
the press.
Speaker 5 (06:14):
Uh, that's a tough one. You're absolutely right. He clearly made.
Speaker 4 (06:19):
Some big time mistakes going along with the Biden administration
on funding the inflationary spending that we had, and his
response at that point was and not just him, but
the whole board was really really bad, and many of
the ecconoms were calling out, including myself Times that said,
right now, given the black eye that they've had, they
(06:41):
do not want What they saw is they had their
whole reputation in catters and they don't want to let
inflation get out of hand. And if price levels get
baked in where people's expectations are that they're going to
continue to rise, it makes getting that last little bit
below two percent much much more difficult, which is why
(07:01):
they're stubborn resisting. Mister Biden, or excuse me, mister Trump,
for instance, was very angry that they cut interest rates
right before the election, which were really too close to
actually affect the election all. But here's what happened. The
market reacted negatively, showing that the Fed was wrong and
in cutting because the long term bond rates actually went.
Speaker 5 (07:22):
Up quite a bit after they did that, and.
Speaker 4 (07:25):
So that's another thing. They don't want to repeat that mistake.
If they were to lower rates now and that and
if the long bonds were to go up in value,
that would be very very bad news. And remember even
as mister Trump earlier this year they said they weren't
really concerned about low rates. That was, you know, so
long ago, just took a couple of months ago. They
(07:45):
weren't really concerned about low the short term rates. They
were concerned about the ten year because that affects mortgages.
Speaker 5 (07:51):
Which is a correct view, by the way, But that.
Speaker 4 (07:54):
If they lower the short term interistrates and then the
tenure goes up, that's going to make how inflation worse,
and so they've got to be really careful. That's why
pals in a real bind here right now.
Speaker 5 (08:06):
Because they're still higher inflation.
Speaker 4 (08:08):
And if they go too fast, they've already been back
in November shown that they were wrong in cutting earlier.
If they cut down it goes up that really their
reputation just gets worse and more and more. So he's
been a tough pickle.
Speaker 2 (08:20):
The perception and reaction is so much more important than
the action itself, and that the FED exists like it
or not.
Speaker 1 (08:28):
It's just as we say.
Speaker 2 (08:30):
Oh we have a democracy, we have a hybrid democracy,
a representative republic. We also have a hybrid capitalism system.
And it is not a free for all and get
what you can get and so forth. There is there
is a control element there, and I think you know,
on a personal level, I prefer caution over free wheeling
and hoping.
Speaker 4 (08:52):
Well in that respect, then it sounds like you would
be more in favor of but going slow approach. I
do so, and so given where the mistakes they've made
in the past, and it's not that far distant past.
Even though as November of last year, I think it
is prudent to be a little bit slower. There's a
strong case to be made, by the way, and I'm
supportive of lower rates. A little bit maybe, but it's dicey.
(09:17):
You can go either way on that. I don't think
there's any case for trying to take the interest rate
down two or three percent, as mister Trump has suggested.
Let's remember, for all your listeners, we've had the government
the government give us negative real interest rates for over
a decade, where basically we were forced to take no
interest and be punished for saving to fund the profligate
(09:41):
federal government with all the debt expansion. That's the real
onus on I think the administration's push for this is
the increased cost to service the debt. Well, I actually
kind of like that because that seems to be the
only thing that constrains the government from spending even more money.
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