Episode Transcript
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Speaker 1 (00:00):
What if I were to tell you that gross domestic product,
this measurement of economic growth of GDP is pretty much
a worthless calculation.
Speaker 2 (00:11):
What if I were to.
Speaker 1 (00:12):
Tell you that this three percent number we got for
the second quarter, yeah, the first quarter negative zero point
five percent GDP growth is also eh. To put it mildly, well,
my first guest today has four years as I have
(00:34):
as well argue that, yes, GDP is a deeply flawed,
worthless calculation. He's written about this just in the last
couple of days for Real Clear Markets, where he is
the editor. He's also president of the Parkview Institute and
author of so many books, including Coming Up, The Deficit Delusion,
(00:56):
Why Everything Left Right? And Supply Side, What Everything to
tell you about the National Debt is Wrong. John Tamney
is our guest, and he joins me now, John, good afternoon,
Welcome back to KOA.
Speaker 3 (01:13):
Hey Jimmy, thanks for having me on.
Speaker 1 (01:15):
Thanks for coming on. I appreciate it. So I read
the first part of your column and I'm like, yes,
I never disappoints. I always I was looking for this, said, Okay,
John has to have written about the flawed number of
GDP when we got this three percentage point increase last week.
Speaker 2 (01:34):
Let me just ask you.
Speaker 1 (01:35):
A big picture. Why is GDP a worthless calculation.
Speaker 3 (01:40):
Because it has nothing to do with economic growth. Let's
think about what increases GDP government spending, which is double
counting on a level that would make the most crooked
account blush. Governments can only spend insofar as they have
access to the production of the private sector. So to
(02:00):
say the government spending increases economic growth is to pretend again,
is to double count looking at imports. What could be
more bullish as an economic signal than imports. That's a
sign that you're producing. You can only import in so
far as you're exporting. But imports actually bring down a GDP.
(02:22):
Let's just think about what it takes for an economy
to move, or what we do. What if we paid
people all the time to dig holes and then refill
the holes. In a GDP sense, that would cause growth
to go up, But as any rational being would know that,
it would be at the cost of enormous amounts of
productivity as we pay people to do something that was unnecessary.
(02:45):
And that's what GDP is. It's a number that only
an economist could love. It's a monument to things that
has nothing to do with economic growth, even though economists
use it to measure economic growth.
Speaker 1 (02:56):
Here is the equation for GDP as you are alluding to,
John Tamney, consumer spending plus private investment plus government spending
plus exports minus imports, And that's in the parentheses. You
do that calculation, which means when you as you said,
import less, that is a measure that can help boost
(03:16):
the economic growth at least on paper for the GDP equation,
same thing with government spending on paper. So in this situation,
what are a couple of the red flags that you
noticed from the report last week that made you go okay, yeah,
how can we actually trust that this number shows real
economic growth when it has this and this?
Speaker 3 (03:38):
Well, when you look back to the number from three
months ago when GDP declined a zero point zero three
percent or whatever it was, what was that, Well, there's
been a huge surge of imports ahead of the calculation.
And why was there this huge surge, Well, that was
just economic actors in the US trying to get ahead
(03:59):
of the Trump tariffs. And so you could tell from
that that import search that it had nothing to do
with this decline in the economy is just you know,
basically government distortions. And so I wrote at the time,
I said, well, watch out, now that there's been a
pause in the tariffs, there won't be this urgency to
bring just front load as many imports as possible. And
(04:22):
so I said, you're going to see the number go
back up again. This was no insight. This is what
didn't make me smart. It just I know what a
worthless number it is. And so predictably, this time around,
with a pause and tariffs, the urgency wasn't as great,
and so as imports declined, which would never be a
pollish number on its face, that actually drove up GDP.
Speaker 1 (04:41):
Well, John Tamney, we surely have listeners who are scratching
their heads going. But I'm thinking I've been hoping that
we would have more exports and that we wouldn't have
as many imports, because we need to boost American manufacturing
and manufacturing jobs and bring in less from other countries.
Speaker 3 (04:59):
We should be making it more here.
Speaker 1 (05:01):
So how is it not more economically advantageous for us
to be doing more exports than imports.
Speaker 3 (05:09):
Well, as what I always say is that if you're exporting,
your importing, I mean what other reason is there to
export then to get things that you don't have. And
so when you think about imports, why do the reason
they don't hurt us is imports are just a sign
of work being divided. What happens when you divide up
work with people you're just more productive. Is you get
(05:29):
to do the work that's most associated with your skills
and intelligence. And to imports are the bulless thing. That
means that others are doing for use you can do
what you do best. And I'll just add another thing
about this. Why do we normally have a quote trade
deficit as and why do we import more than we export? Well,
(05:50):
a major driver of that is that the whole world
wants to buy shares in US companies. One of our
biggest exports is shares in the world's greatest companies. Think Nvidia,
think app Will, think Google, think Facebook, you know, to
go down the list. Well, when we export those shares,
that doesn't count in the quote trade balance when but
(06:11):
when we import shoes, socks, and t shirts and TVs
from around the world, that does count. And so the
deficit is just a sign that the whole world loves
to put their savings in the United States, and so
it's the very bullus signal what comes down GDP.
Speaker 1 (06:26):
That's really the key to it all is for on
the one hand, when you were at a point in
an economy and you wrote a book called The End
of Work, which is so much about this, that you
have a point in your economy where you're not reliant
upon manufacturing jobs. Instead, you have the opportunity to do
other kinds of work. They may be service industry, they
(06:46):
may involve more writing, they may involve certain technical skills
or what have you. But it's a different kind of work.
And that's actually a sign of advancement, which by definition
requires you to import more from other countries because you
have if you were people that are in the business
of manufacturing and instead they're doing other kinds of jobs.
Speaker 3 (07:05):
Yeah, that's ever and I'm not knocking manufacturing. Beanble should
do what they can, what elevates them the most, what
pays them the most. Let's never forget a Certainly some
of the older listeners remember this well. So much of
culture in the past was about people trying to escape
towns in the manufacturing jobs and jobs and mills and
(07:25):
things like that. They didn't want them. They wanted better work,
and so the theme of the movie was invariably I'm
doing everything I can't I can to get out of
this town to do something better for myself. And so
that's not the knock manufacturing jobs, but Americans historically haven't
liked them, and so the disappearance of them doesn't put
them out of work. If that were true, then New
(07:45):
York City and Los Angeles remonuments to economic desperation. They
were the biggest manufacturing cities one hundred years ago. They
aren't now. That's why they're so prosperous. Those jobs left.
But when jobs leave, that doesn't put you into breadlines.
It freeze you up to do better things. In the
eighteen hundred, ninety seven percent of Americans worked on the farm.
(08:07):
Were they better off them? They all had jobs, and
they worked all the time, six days a week, gone
to dusk, just to try to maybe survive. Thank goodness,
they're not working in firm anymore. And they're not because
tractors and fertilizers and other things that quote took jobs,
treed them to do other things. That's not going to change.
(08:28):
We're seeing this right now with AI. It's going to
destroy all sorts of jobs. But that's not going to
make Americans desperate. It's going to free many more people
to do the kind of work that they love. Look
at what you and I are doing right now. We're
talking about something about which we're passionate and it puts
food on the table. The future is that more and
more people will get to do something that they just
(08:50):
can't get enough of, that they can't not do. And
that's beautiful.
Speaker 1 (08:54):
It's such a profound point because you think as well
about all the YouTubers that have grown different content creators
on TikTok or any number of platforms that are making
money from doing that, and it seems to be a
breakneck speed that it's more and more, and that's because
the opportunity is there to create things with new media
as well as traditional media like here on radio or
(09:17):
in print or what have you. And that really, I
think does say a lot. Again, we're talking with John Tamney,
editor of Real Clear Markets and columnists at Forbes, for example,
where we're going to get to something you wrote about.
I want to cover a couple more things real quickly,
John Tamney, we were just talking about, in essence, the
flaws of gross domestic product and the GDP calculation, as
(09:42):
well as the trade deficit notion. How about the numbers
and jobs data that come from the Bureau of Labor Statistics.
Given the controversy about the firing by President Trump a
few days ago of the Commissioner of the BLS saying, oh, okay,
this data is rigged, how do you look at that
(10:03):
data and whether that at least gives some signal to
the private sector. I'm like, maybe some of the other
data points that we're talking about, and do you have
any problems with that firing?
Speaker 3 (10:13):
Well, I wish that Trump had fired the person for saying,
you know, we don't need this ADP. The payroll company
produces a payroll number every month that's surely far more
accurate than BLS who would know better ADP, which again
is handling payroll for companies around the country, or the
(10:34):
BLS about the employment situation. So I wish it would
have been for the right reasons. I feel like with
this it was Trump basically firing the scale or firing
the scoreboard, taking the scoreboard and just ripping it off
out of the gym because it's revealing the wrong score.
As for the number itself. It was pointed out with
(10:56):
the last employment situation number that a lot of the
job growth had been governmental I think seventy half of it,
and of that a lot of it was schools and
things like that. Well, you knew that number wasn't going
to stay up because in the summertime, obviously schools, public
schools employ fewer people. Let's throw in the other obvious thing. Presently,
(11:23):
we have immigration agents literally ripping people out of jobs.
I know factually it's anecdotally, but I've learned it from
around the country from talking to people. There are people
here quote illegally, and I know that's a bum that's
a very fractious issue. Who are afraid to go into
work right now. And they're afraid because they're because literally
(11:44):
agents are showing up at places of business and deporting them.
And so it was inevitable when so many people who
produce in this country are suddenly being rounded up, that
that number was going to go down. I mean, that's
just you can't get around that truth. What's the biggest
driver of consumption in all of Mexico. It's not tourism,
(12:07):
it's not oil, it's remittances from the United States. So
when you factor in while a lot of these people
are suddenly illegal to be here, that's going to have
an impact on hiring.
Speaker 1 (12:19):
Finally, John Tamney, you have a piece out yesterday in
Forbes entitled the Federal Reserve isn't what pundits wanted to
be and never was. Now we have all the chatter
about the FED, especially recently with President Trump wanting to
get rid of Jerome Powell as chairman and put somebody
else in his place. You have always been sort of this, uh,
(12:43):
out of the mindset that the FED really doesn't do
all that much, that it's overstated, so on and so forth.
I'll talk to us for a moment about your view
of things with regards to the Federal Reserve and its
actual impact in the economy.
Speaker 3 (12:59):
Well, you know something that you know very well. I know,
you know eye pencil and eye pencil thing Letten by
Leonard read along time and go saying, look at this
basic for this prosaic pencil. But it's actually a remarkable miracle.
It's a creation of enormous amounts of global cooperation and
that's just a pencil. Well, think about an Apple iPhone
(13:19):
that's created on six different continents around the world. Boeing planes,
it's something like six million different parts manufactured around the world.
Imagine a GM car. I mean, just go down the list.
And so the FED is its mandate has always been
quote price stability. What on earth could the FED have
to do with price stability? Prices are an effect of
(13:43):
literally billions of hands and machines around the world working
together in enormously sophisticated fashion. What the FED has to
do with it? And let's just throw in price stability
wouldn't be desirable even if the FED could achieve it.
Prices are how a market economy organizes itself. Prices going
(14:03):
up and down are a summons to produce more or less,
to produce in a new way. The FED is going
to control prices if they just fiddle, if they I
mean we right and left saying if the FED just
fiddles with interest rates, it can bring prices down. I mean,
this just does insults stupid. I'm known as the person
(14:24):
who says the FED doesn't count for much. How does
everyone not know? What is so obvious? If the FED
controlled the economy, there wouldn't be much of an economy
to control.
Speaker 1 (14:35):
Then why is the conventional wisdom of a different view,
John Tammany that looks at the FED and says, okay,
what they do is one of the most impactful things
on the economy, which is one of the reasons why
President Trump would look at Jeromen Palin and say, hey,
if you don't do what I want on interest rates,
then I'm feeling bad and I want to get rid
of you.
Speaker 3 (14:52):
Well, that's a great question. I think for politicians, the
FED was created in so many ways just as a
way to take the attention off of them, they can
always blame the FED. I think with economists, you have
to factor in the fact that the Fed's the biggest
employer of economists in the world. Is it any wonder
then that economists would say that the FED, what the
(15:13):
FED does is of great importance. They need it to
continue existing. Let them. That's leave out all the economists
that the FED employees, not at the Federal Reserve, because
people are relying on what on them to analyze what
the Fed's doing. So I think there's a lot of
understandable self interest here. But I think we also doing
what we love, and you and I are living our
(15:34):
best lives getting to do what we can't get enough
of We've got to explain. Hey, guys, wait a second.
If the FED were this important, if it were this
powerful of the central planner, then there wouldn't be much
of an economy to plan because we would be in
really pathetic shape and we're not one of the most
prosperous nation on Earth.
Speaker 1 (15:51):
I would be remistervating and ask one last thing, because
earlier we were talking about mom Donnie of running for
mayor of New York City, and of course he is
is a communist and he wants, you know, government run
grocery stores and the litany of things. Let me ask you,
is capitalism good for the world.
Speaker 3 (16:15):
Oh, it's great for the world. And I can I
just throw in something. I'm reminded of what an entrepreneur
in Houston said to me after Barack Obama was inaugurated
in two thousand and nine. It's what do you think
the future is? I mean, are we going to be okay? Is?
Are you kidding me? I'm way too smart for Obama
and I was way too smart for George w. Wish.
No matter what barriers they put in front of me,
(16:36):
I'm going to keep getting rich. And I think that's
the point. If you're a New Yorker, I don't care.
If you're a socialist, communist, anarchist, whatever it is, you're different.
You're the ultimate. You are ambitious, your ambitions are great,
and no matter your ideology, Zorammdami is going to make
the greatest country in the world, the center of the
(16:58):
global economy. Suddenly left. Oh please, they will eat him
for lunch and a heartbeat. I'm so sick of ourson.
I'd say, Oh my gosh, he's gonna ruin New York City.
He couldn't ruin New York City on his best day.
The people there are way too talented to be ruined.
Speaker 2 (17:16):
I had a feeling you'd say something like that. John Tamney,
author of so many books, including You got to check
out the End of Work since I mentioned it earlier,
Editor of Real Clear Markets, so many other roles as well.
Good to talk with you, my friend. Thanks for the
time as.
Speaker 3 (17:32):
Always, thanks for having me on.
Speaker 1 (17:34):
Thank you sir once again, John Tamney joining us
What if I were to tell you that gross domestic product,
this measurement of economic growth of GDP is pretty much
a worthless calculation.
Speaker 2 (00:11):
What if I were to.
Speaker 1 (00:12):
Tell you that this three percent number we got for
the second quarter, yeah, the first quarter negative zero point
five percent GDP growth is also eh. To put it mildly, well,
my first guest today has four years as I have
(00:34):
as well argue that, yes, GDP is a deeply flawed,
worthless calculation. He's written about this just in the last
couple of days for Real Clear Markets, where he is
the editor. He's also president of the Parkview Institute and
author of so many books, including Coming Up, The Deficit Delusion,
(00:56):
Why Everything Left Right? And Supply Side, What Everything to
tell you about the National Debt is Wrong. John Tamney
is our guest, and he joins me now, John, good afternoon,
Welcome back to KOA.
Speaker 3 (01:13):
Hey Jimmy, thanks for having me on.
Speaker 1 (01:15):
Thanks for coming on. I appreciate it. So I read
the first part of your column and I'm like, yes,
I never disappoints. I always I was looking for this, said, Okay,
John has to have written about the flawed number of
GDP when we got this three percentage point increase last week.
Speaker 2 (01:34):
Let me just ask you.
Speaker 1 (01:35):
A big picture. Why is GDP a worthless calculation.
Speaker 3 (01:40):
Because it has nothing to do with economic growth. Let's
think about what increases GDP government spending, which is double
counting on a level that would make the most crooked
account blush. Governments can only spend insofar as they have
access to the production of the private sector. So to
(02:00):
say the government spending increases economic growth is to pretend again,
is to double count looking at imports. What could be
more bullish as an economic signal than imports. That's a
sign that you're producing. You can only import in so
far as you're exporting. But imports actually bring down a GDP.
(02:22):
Let's just think about what it takes for an economy
to move, or what we do. What if we paid
people all the time to dig holes and then refill
the holes. In a GDP sense, that would cause growth
to go up, But as any rational being would know that,
it would be at the cost of enormous amounts of
productivity as we pay people to do something that was unnecessary.
(02:45):
And that's what GDP is. It's a number that only
an economist could love. It's a monument to things that
has nothing to do with economic growth, even though economists
use it to measure economic growth.
Speaker 1 (02:56):
Here is the equation for GDP as you are alluding to,
John Tamney, consumer spending plus private investment plus government spending
plus exports minus imports, And that's in the parentheses. You
do that calculation, which means when you as you said,
import less, that is a measure that can help boost
(03:16):
the economic growth at least on paper for the GDP equation,
same thing with government spending on paper. So in this situation,
what are a couple of the red flags that you
noticed from the report last week that made you go okay, yeah,
how can we actually trust that this number shows real
economic growth when it has this and this?
Speaker 3 (03:38):
Well, when you look back to the number from three
months ago when GDP declined a zero point zero three
percent or whatever it was, what was that, Well, there's
been a huge surge of imports ahead of the calculation.
And why was there this huge surge, Well, that was
just economic actors in the US trying to get ahead
(03:59):
of the Trump tariffs. And so you could tell from
that that import search that it had nothing to do
with this decline in the economy is just you know,
basically government distortions. And so I wrote at the time,
I said, well, watch out, now that there's been a
pause in the tariffs, there won't be this urgency to
bring just front load as many imports as possible. And
(04:22):
so I said, you're going to see the number go
back up again. This was no insight. This is what
didn't make me smart. It just I know what a
worthless number it is. And so predictably, this time around,
with a pause and tariffs, the urgency wasn't as great,
and so as imports declined, which would never be a
pollish number on its face, that actually drove up GDP.
Speaker 1 (04:41):
Well, John Tamney, we surely have listeners who are scratching
their heads going. But I'm thinking I've been hoping that
we would have more exports and that we wouldn't have
as many imports, because we need to boost American manufacturing
and manufacturing jobs and bring in less from other countries.
Speaker 3 (04:59):
We should be making it more here.
Speaker 1 (05:01):
So how is it not more economically advantageous for us
to be doing more exports than imports.
Speaker 3 (05:09):
Well, as what I always say is that if you're exporting,
your importing, I mean what other reason is there to
export then to get things that you don't have. And
so when you think about imports, why do the reason
they don't hurt us is imports are just a sign
of work being divided. What happens when you divide up
work with people you're just more productive. Is you get
(05:29):
to do the work that's most associated with your skills
and intelligence. And to imports are the bulless thing. That
means that others are doing for use you can do
what you do best. And I'll just add another thing
about this. Why do we normally have a quote trade
deficit as and why do we import more than we export? Well,
(05:50):
a major driver of that is that the whole world
wants to buy shares in US companies. One of our
biggest exports is shares in the world's greatest companies. Think Nvidia,
think app Will, think Google, think Facebook, you know, to
go down the list. Well, when we export those shares,
that doesn't count in the quote trade balance when but
(06:11):
when we import shoes, socks, and t shirts and TVs
from around the world, that does count. And so the
deficit is just a sign that the whole world loves
to put their savings in the United States, and so
it's the very bullus signal what comes down GDP.
Speaker 1 (06:26):
That's really the key to it all is for on
the one hand, when you were at a point in
an economy and you wrote a book called The End
of Work, which is so much about this, that you
have a point in your economy where you're not reliant
upon manufacturing jobs. Instead, you have the opportunity to do
other kinds of work. They may be service industry, they
(06:46):
may involve more writing, they may involve certain technical skills
or what have you. But it's a different kind of work.
And that's actually a sign of advancement, which by definition
requires you to import more from other countries because you
have if you were people that are in the business
of manufacturing and instead they're doing other kinds of jobs.
Speaker 3 (07:05):
Yeah, that's ever and I'm not knocking manufacturing. Beanble should
do what they can, what elevates them the most, what
pays them the most. Let's never forget a Certainly some
of the older listeners remember this well. So much of
culture in the past was about people trying to escape
towns in the manufacturing jobs and jobs and mills and
(07:25):
things like that. They didn't want them. They wanted better work,
and so the theme of the movie was invariably I'm
doing everything I can't I can to get out of
this town to do something better for myself. And so
that's not the knock manufacturing jobs, but Americans historically haven't
liked them, and so the disappearance of them doesn't put
them out of work. If that were true, then New
(07:45):
York City and Los Angeles remonuments to economic desperation. They
were the biggest manufacturing cities one hundred years ago. They
aren't now. That's why they're so prosperous. Those jobs left.
But when jobs leave, that doesn't put you into breadlines.
It freeze you up to do better things. In the
eighteen hundred, ninety seven percent of Americans worked on the farm.
(08:07):
Were they better off them? They all had jobs, and
they worked all the time, six days a week, gone
to dusk, just to try to maybe survive. Thank goodness,
they're not working in firm anymore. And they're not because
tractors and fertilizers and other things that quote took jobs,
treed them to do other things. That's not going to change.
(08:28):
We're seeing this right now with AI. It's going to
destroy all sorts of jobs. But that's not going to
make Americans desperate. It's going to free many more people
to do the kind of work that they love. Look
at what you and I are doing right now. We're
talking about something about which we're passionate and it puts
food on the table. The future is that more and
more people will get to do something that they just
(08:50):
can't get enough of, that they can't not do. And
that's beautiful.
Speaker 1 (08:54):
It's such a profound point because you think as well
about all the YouTubers that have grown different content creators
on TikTok or any number of platforms that are making
money from doing that, and it seems to be a
breakneck speed that it's more and more, and that's because
the opportunity is there to create things with new media
as well as traditional media like here on radio or
(09:17):
in print or what have you. And that really, I
think does say a lot. Again, we're talking with John Tamney,
editor of Real Clear Markets and columnists at Forbes, for example,
where we're going to get to something you wrote about.
I want to cover a couple more things real quickly,
John Tamney, we were just talking about, in essence, the
flaws of gross domestic product and the GDP calculation, as
(09:42):
well as the trade deficit notion. How about the numbers
and jobs data that come from the Bureau of Labor Statistics.
Given the controversy about the firing by President Trump a
few days ago of the Commissioner of the BLS saying, oh, okay,
this data is rigged, how do you look at that
(10:03):
data and whether that at least gives some signal to
the private sector. I'm like, maybe some of the other
data points that we're talking about, and do you have
any problems with that firing?
Speaker 3 (10:13):
Well, I wish that Trump had fired the person for saying,
you know, we don't need this ADP. The payroll company
produces a payroll number every month that's surely far more
accurate than BLS who would know better ADP, which again
is handling payroll for companies around the country, or the
(10:34):
BLS about the employment situation. So I wish it would
have been for the right reasons. I feel like with
this it was Trump basically firing the scale or firing
the scoreboard, taking the scoreboard and just ripping it off
out of the gym because it's revealing the wrong score.
As for the number itself. It was pointed out with
(10:56):
the last employment situation number that a lot of the
job growth had been governmental I think seventy half of it,
and of that a lot of it was schools and
things like that. Well, you knew that number wasn't going
to stay up because in the summertime, obviously schools, public
schools employ fewer people. Let's throw in the other obvious thing. Presently,
(11:23):
we have immigration agents literally ripping people out of jobs.
I know factually it's anecdotally, but I've learned it from
around the country from talking to people. There are people
here quote illegally, and I know that's a bum that's
a very fractious issue. Who are afraid to go into
work right now. And they're afraid because they're because literally
(11:44):
agents are showing up at places of business and deporting them.
And so it was inevitable when so many people who
produce in this country are suddenly being rounded up, that
that number was going to go down. I mean, that's
just you can't get around that truth. What's the biggest
driver of consumption in all of Mexico. It's not tourism,
(12:07):
it's not oil, it's remittances from the United States. So
when you factor in while a lot of these people
are suddenly illegal to be here, that's going to have
an impact on hiring.
Speaker 1 (12:19):
Finally, John Tamney, you have a piece out yesterday in
Forbes entitled the Federal Reserve isn't what pundits wanted to
be and never was. Now we have all the chatter
about the FED, especially recently with President Trump wanting to
get rid of Jerome Powell as chairman and put somebody
else in his place. You have always been sort of this, uh,
(12:43):
out of the mindset that the FED really doesn't do
all that much, that it's overstated, so on and so forth.
I'll talk to us for a moment about your view
of things with regards to the Federal Reserve and its
actual impact in the economy.
Speaker 3 (12:59):
Well, you know something that you know very well. I know,
you know eye pencil and eye pencil thing Letten by
Leonard read along time and go saying, look at this
basic for this prosaic pencil. But it's actually a remarkable miracle.
It's a creation of enormous amounts of global cooperation and
that's just a pencil. Well, think about an Apple iPhone
(13:19):
that's created on six different continents around the world. Boeing planes,
it's something like six million different parts manufactured around the world.
Imagine a GM car. I mean, just go down the list.
And so the FED is its mandate has always been
quote price stability. What on earth could the FED have
to do with price stability? Prices are an effect of
(13:43):
literally billions of hands and machines around the world working
together in enormously sophisticated fashion. What the FED has to
do with it? And let's just throw in price stability
wouldn't be desirable even if the FED could achieve it.
Prices are how a market economy organizes itself. Prices going
(14:03):
up and down are a summons to produce more or less,
to produce in a new way. The FED is going
to control prices if they just fiddle, if they I
mean we right and left saying if the FED just
fiddles with interest rates, it can bring prices down. I mean,
this just does insults stupid. I'm known as the person
(14:24):
who says the FED doesn't count for much. How does
everyone not know? What is so obvious? If the FED
controlled the economy, there wouldn't be much of an economy
to control.
Speaker 1 (14:35):
Then why is the conventional wisdom of a different view,
John Tammany that looks at the FED and says, okay,
what they do is one of the most impactful things
on the economy, which is one of the reasons why
President Trump would look at Jeromen Palin and say, hey,
if you don't do what I want on interest rates,
then I'm feeling bad and I want to get rid
of you.
Speaker 3 (14:52):
Well, that's a great question. I think for politicians, the
FED was created in so many ways just as a
way to take the attention off of them, they can
always blame the FED. I think with economists, you have
to factor in the fact that the Fed's the biggest
employer of economists in the world. Is it any wonder
then that economists would say that the FED, what the
(15:13):
FED does is of great importance. They need it to
continue existing. Let them. That's leave out all the economists
that the FED employees, not at the Federal Reserve, because
people are relying on what on them to analyze what
the Fed's doing. So I think there's a lot of
understandable self interest here. But I think we also doing
what we love, and you and I are living our
(15:34):
best lives getting to do what we can't get enough
of We've got to explain. Hey, guys, wait a second.
If the FED were this important, if it were this
powerful of the central planner, then there wouldn't be much
of an economy to plan because we would be in
really pathetic shape and we're not one of the most
prosperous nation on Earth.
Speaker 1 (15:51):
I would be remistervating and ask one last thing, because
earlier we were talking about mom Donnie of running for
mayor of New York City, and of course he is
is a communist and he wants, you know, government run
grocery stores and the litany of things. Let me ask you,
is capitalism good for the world.
Speaker 3 (16:15):
Oh, it's great for the world. And I can I
just throw in something. I'm reminded of what an entrepreneur
in Houston said to me after Barack Obama was inaugurated
in two thousand and nine. It's what do you think
the future is? I mean, are we going to be okay? Is?
Are you kidding me? I'm way too smart for Obama
and I was way too smart for George w. Wish.
No matter what barriers they put in front of me,
(16:36):
I'm going to keep getting rich. And I think that's
the point. If you're a New Yorker, I don't care.
If you're a socialist, communist, anarchist, whatever it is, you're different.
You're the ultimate. You are ambitious, your ambitions are great,
and no matter your ideology, Zorammdami is going to make
the greatest country in the world, the center of the
(16:58):
global economy. Suddenly left. Oh please, they will eat him
for lunch and a heartbeat. I'm so sick of ourson.
I'd say, Oh my gosh, he's gonna ruin New York City.
He couldn't ruin New York City on his best day.
The people there are way too talented to be ruined.
Speaker 2 (17:16):
I had a feeling you'd say something like that. John Tamney,
author of so many books, including You got to check
out the End of Work since I mentioned it earlier,
Editor of Real Clear Markets, so many other roles as well.
Good to talk with you, my friend. Thanks for the
time as.
Speaker 3 (17:32):
Always, thanks for having me on.
Speaker 1 (17:34):
Thank you sir once again, John Tamney joining us
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