To lou and welcome to crossfire all Things Considered im Peter Lavelle at this point no one knows when the cold crisis will abate however it is undeniable that this Health Crisis has negatively impacted the economy what does it mean to return to normal is that even possible now and will the divide separating the rich from the poor can. Discuss the economy and more im joined by my guest peter early grave very. Can he is an economist at the American Institute for Economic Research in miami and we have made rezko he is seen as chief investment strategist and we also have Eric Townsend he is host of the macro voices podcast gentlemen crossed the rules in effect that means you can jump in anytime you want and i was appreciated ok lets go 1st to peter you know in looking at the very the. The broadest picture of whats going on in the economy right now i think we all have to be very honest with ourselves that the election cycle influenced people how they look at the economy how bad it is or how good it is and its all been kind of changing now as we move out of that cycle. Give me your kind of most sober view of whats going on in the economy because you know we hear about a w. Recovery recovery are you and the new one and this time is the k one which you would assume that its. The recovery is good for some people and also at the same time negative for others where we have going in different trajectory so whats your cold sober view of whats going on the economy right now. Thanks it may my my you know inequality is a feature of just about any society advanced or less advanced developing rather wise were really characterized as an advanced market economy is that even if there is a gulf between the rich and the core. Theres a lot of movement at the top if you look at the forbes 500. 00 list every year you tend to see that and also that as the proverb goes a rising tide lifts all boats. The what we call the n. P. R. The nonpharmaceutical interventions to address a covert pandemic and to to kill or government lockouts have actually accomplished what some of said was happening all along what theyve done is theyve widened the gap and theyve got the top 100 in the bottom and theyve also caused a resurgence its a really awful economic and social trends so i dont want to jump too far ahead but my view right now is that while recovery may be underway it a lot depends upon what happens next few months i think were looking at the 21st century manifestation of the smoot hawley tariff in terms of policy a very interesting era kind of how do you look at it because i think the main the bone of contention is here is that theres going to be a recovery but recovery for home and and not only is that an economic question as a political question is well ahead there. Well i think the 1st thing to consider is we dont know where we stand everybody is acting like ok weve got the vaccine its great wait a minute where is the mainstream news to report that theres never been a corona virus vaccine for human beings thats ever worked before lots of people tried for decades and decades to cure the common cold they couldnt do it weve got this brand new experimental messenger r. N. A. Vaccine which is really Cool Technology it sounds very promising im very excited about it i dont mean to naysay have a wait a minute this is brand new on charted territory weve never been here before theres this mix strain theory where the virus has jumped from human beings to minks and back to human beings the science is beyond my pay grade but the essence of it is when you see these species jumps from one species to another and back it is a very ripe time for the virus to mutate in a ways that would render any vaccine affective on the previous mutation but not on the new mutation so we dont know yet how resilient this virus is going to be or i think the term they use is evasion how well the virus is going to be able to mutate in response to the introduction of a vaccine in order to continue spreading you know in defiance of that axiom because a different mutation is able to do that these are all total unknownst the thing that is known is that governments are going to continue to debase the currency by printing money throwing money at the problem and the crazy part is the throwing money at the problem is mostly to bail out big industry and wall street banks and you know the percentage of it thats going to help people in need is minimal so i think its really you know the you know and maybe kind of when bert your answer to my question need different way and i think you know along the same lines that at the end of the day you cant have lockdowns are ever ok to me and Everybody Knows that ok the election cycles over every buy. Ok now lets go to ahmed here because you know its how you manage a crisis like this and this is what it gets down to and i really wish it would be much more bipartisan because you know you can score all the political viewpoints you want to ban it but main street is in big big trouble we have bankruptcy if we have people losing their homes and its dispersed different regionally and all of this and because of again the election cycle here i think in some kind of concerted reaction to it and if that means and including a another stimulus package id like to talk about later here you know these are the issues that i think its just really dont know where we are right now but you know when you take politics out of it i think we have to start thinking about lockdowns im not going to be the solution forever he cant you need an economy. Correct and eric does bring up some valid points as far as sort of the efficacy of the vaccine and over time i have a little bit more confidence in the scientific communities ability to adapt the vaccine as it mutates my bigger concern is with even americans willingness to take the vaccine there was a recent Pew Research Report that came out where almost 49 percent so basically half the population said that they would not take the vaccine right so that really just sort of you know beyond whether its efficacious or not i think what we have to see whether americans are willing to take it because the quicker they take it in the and the quicker we get to the point where a good portion of the population is an ocular lated the quicker well be able to return to economic normalcy which let me jump to that point of fiscal transfers because i think thats very important a new fiscal stimulus bill is crucial to not sort of going into a double dip recession and really bridging that gap to the point where the economy is sufficiently not good or the population is sufficiently nakia lady to be able to return to a more economical economic landscape you know age peter i mean you know if how much if people. I have confidence in the vaccine how much will they have companies than what other decisions governments made i mean im not against the vaccine as a matter of fact i took the sputnik 5 on russian baxi not 2 weeks ago ok so. Im very friendly towards trying to get this resolved not only the United States but around the world but you know people dont trust it then how can they trust the governments decisions about lockdowns and social distancing and a lot of these crazy things that politicians came up with during this thanksgiving day season sure so i do think about that the 1st to answer your question someone asked me last week what are 2 positive things i could think could come out of all these lockdowns what i think is the. Motivation and greater incentives to View Technology not as a luxury but as an essential means of stang employing all that a 2nd is more skepticism about government to be perfectly honest one of these i think is going to be big problem is that youre going to have a whole generation now a both one time Business Owners who lost their businesses or prospect of hopeful entrepreneurs who are now facing the possibility of an actual special threat that the next time some virus or bacteria comes along and it may be one that doesnt have. As much as a 99 percent survival rate for people who are not elderly and or dont have all abilities as Something Else may come along and the former drop out from underneath them so theres a whole i think aspiring productive class of people who may have tried one business who are now going to seek you know other forms of employment or or theyre going to sort this all right their entrepreneurial instinct they sensient an excellent point here and then and i think you know worldwide and particularly in the industrialized world and ive seen it with my own eyes is that you know small entrepreneurs been just clobbered by this and i want to go back to an issue that eric ronna which really you know its like dont hear is that if youre too big to fail you can always be ok. Ok and i think thats one of the big takeaways from all of this because it just as peter put i mean why dont you know if theres an existential threat that is beyond your control why should you put your life savings and blood sweat and tears into a into a business when you know you know that amazon is going to be fine and all these other companies but no ones going to help you out when something happens that is not your salts go ahead there. Well i think we have to put this in context and see the big picture here its the case shaped recovery but really its just the next step in the 4th turning that neal how wrote about in his famous book from 1998 what were seeing here is social division weve reached a point where science has been compromised theres been widespread agreement among credentialed epidemiologists who happen to be registered republicans that face masks are completely useless but theres also widespread agreement among epidemiologists who are registered democrats that theyre absolutely essential so weve gotten to the point where science is undermined by political bias and weve reached the point where Even Television news theres no news anymore you have to choose do i want republican know i want left leaning news or right leaning news the idea of objectivity is lost because people are getting more and more attached to extremes and theyre getting more polarized we dont see any weight i think you dislike your good point but is it because of spear because i think thats what it is people are of are afraid and you have to ground on to some kind of narrative to get you through this crisis and so the media itself is not a huge disservice to the public i agree with you i mean as it is something that works to be a look at all of the cable channels youre absolutely right that well c. N. N. Has that alls open youre down doesnt it ok and then you go over to fox and its a totally different story im not a scientist so i dont know what the big bear well i think the key to this to understanding this is whats really going on is everybody is pissed off with the status quo and if youre upset you know a little bit im not smart enough to know exactly the details of how this stuff works but i do know the system we have is corrupt is hell its unfair to me and im sick of it and i wont take any more that puts people in the mindset where they live for an alternative that is the reasons. Clinton was so successful with his vote showing what change yes but change to what people really need to have that blank field then i want to know change is coming so why is socialism suddenly so popular with entire generations because it sounds like the opposite of what weve got now and what we have now is clearly broken and weve got to do Something Else or should something whatever it is it will be no good but we happen to like having lived in east europe communist Eastern Europe for many years when i was a young man ok thats certainly not an alternative but not mitt just that erics point here i mean if he couldnt go capitalism doesnt work for you then you are going to look for Something Else that is thats a completely normal reaction for people young people going into the workforce to it very much in debt and have no prospects why would they think about that go ahead up the last 30 seconds before we go to the break youre like absolutely i sort of agree with that what were seeing with this pandemic like previous pandemics what they tend to do is that they tend to accelerate the sort of longer term structural trends that are already in place right and we see even now for a couple of years we seem the the median voter in the in the United States has been shifting over to the left similarly by the way weve seen sort of the median voter in europe shifting to the right but thats a different story its sort of more of a reaction to sort of the policies of the past what eric mentioned right a reaction to the status quo so weve had basically since reagan in the United States weve had 3040 years of sort of laissez faire approach and i jump in here were going to continue talking about the status quo and when we come back well continue our discussion on the economy. What happens when people is trust the fans money and the central. Thanks and now bad so were going to find out. Is your media a reflection of reality. In a world transformed. What will make you feel safe. Tyson nation for community. Are you going the right way or are you being led to some. Direct. What is true what is faith. In the world corrupted you need to descend. To join us in the depths. For a mate in the shallowness. Join me every thursday on the alex simon show and ill be speaking to guest of the world of politics sports business im show business ill see you then. Thank you. First. Youre born into a poor family if youre born into a minority family if youre born into a family go down and has a single parent that really constrains your life chances people that all. Born into generational poverty. Fight every day all. Your needs and the needs of your family. Welcome back to cross up where all things are considered im Peter Lavelle to remind you were discussing the economy after coping. Ok lets go back to peter in the 1st part of the program we talked about the possibility of a stimulus and i guess were all kind of an agreement that its necessary i mean it was very distraught and how it was used as a political football i thought it was just tells you everything about whats broken about politics or scoring points you know the rich and. The at the very top you know they were taking care of they with they got their Concierge Service and they were taken care of right from the get go ok and then seeing that working people were just essentially shafted here and because of this lame duck session right now. I believe that there needs to be a stimulus i dont know im not the type of person we you know like nancy pelosi and Chuck Schumer they want a stimulus to reinvent the American Economy i just want to deal with a pandemic and getting small and medium sized businesses back on their feet is that possible. First i think the stimulus or the term stimulus used in the terms used in the ways that were used to seeing it such as with the previous 2 ever spike the government this year thats not a stimulus thats essential redistribution because thats basically not mean its not the way money and that money is being redistributed i think a real stimulus would be something that would stimulate growth for example lower taxes for example lower regulatory burdens on hiring that sort of thing whether it takes the form of a jubilee of sorts maybe 6 months with lower rates right that or whether something more long term or certain areas. I dont see political incentives aligned towards any sort of. Stimulus right now but i also think that what theyve been doing is not stimulative. And eric jump in on that i mean if the economy needs to be again you know we if it is they came recovery so the they dont need upper part of the k. Theyre doing fine theyre drinking wine in the shower and having you know brunch again ok lets talk about the majority of people near i mean. Are you in favor of a direct injection of cash or is it peter is just pointed out that isnt regulations there. Well i think the corruption that we saw in the 1st a militia was supposedly a whole lot of political rhetoric about how were going to help the american Small Business and that was a that was a bet it faced lie what they did is they set up this ridiculous program which was only available to people who had a stablished credit relationships with Major Money Center Banks thats if everybody whos actually really put the sweat equity into a true Small Business its many many years before you get anywhere close to having access to that kind of credit those are mostly and this is the government mentality oh its a Small Business only 600. 00 media employees now thats not a Small Business the guy whos working to create employment for the 10 guys that worked for him in the construction crew thats a Small Business and those guys got completely totally shafted they got nothing out of the last stimulus and meanwhile youve got inmates in prisons or that it running scams getting stimulus benefits youve got. Hedge funds that are borrowing money on attractive terms because you know their Hedge Fund Guys they know that cheap money is a good deal take it if you can get it theres people borrowing money who have absolutely no need to borrow money and theres people who desperately need it in order to keep americans employed who cant get it because the entire system is completely corrupt and i dont see how that changes the next time around i certainly dont think i will with a Biden Administration its going to be different it will be corrupt. Come on whats going to change this so that the people who need it the most which is the true Small Businesses that are actually putting you know a meal in front of their employees families how are they going to get the support that they need and the answer is nobody has a plan for them and theyre now. Really thinking about it because those people dont have enough money to pay k. Street lobbyists to get their interest looked after yes 6 words i live by a meeting i never believed in this time it will be different ok i learned that findings by the way. Then i will ask you a very controversial question and if there is going to be no stimulus for the the middle class and working class people it means they dont and i think thats true i think that you know theyre just written off because its in a you know in the really weird way isnt it but you know i wont get the numbers exact here but you know libby consumption of the top lets say 5 percent it went down maybe 25 percent and considering their level of well you know its not a big deal ok and then if you look at the 2nd tier of people that do service for that people it went down like 50 percent that is a shock to the system but it still works ok it still works it still generates growth maybe not his much but its the different sectors of the economy that theyre disparate in your in theyre getting out of joint because theres so many people at the bottom ready and they just dont matter if they dont move the needle one way or another and i think unfortunately thats some kind of political thinking and particularly when you know when to and i can summarize but i consider myself a conservative but i look at the political calculations of the need the same and g. O. P. Senators and they say well its by problem now thats a very cynical way of dealing with the go ahead. I think the beauty of the american electoral outcome is that the fiscal stimulus bill when it inevitably does arrive and i think it will arrive because the vast majority of americans do want to stimulus know its going to be more sort of targeted right i think had we had a blue wave scenario it was likely to be in the 3 trillion dollar range right where you know disparate groups it was going to be sort of money flowing over the economy i think mcconnells if if the republicans are able to. When one of just one of the georgia runoff elections in january they will control the senate which means up palosi and biden will have to negotiate with mcconnell and i think that thats whats going to happen is that the fiscal stimulus at that point will be a lot more targeted and will hopefully go like you mentioned to those sectors of the economy that need it and that makes economic sense because poor people people with lower disposable income tend to spend it so it has more stimulative effect if its given to people with lower incomes if you give it to people with higher incomes they tend to save it right which is which is not what you want in a recession or potentially a double dip recession so i think it will happen. What are your thoughts on this i mean if it happens what should it look like. Well like i said i dont agree that consumption drives growth and savings and investment that drive growth and for that reason and size redistributing money and then giving it out to people is simply sort of us a form of double spending i think we should do is not only the current meter then there is evidence here with the 1st you know wave of stimulus checks here and that if anything and actually brought on poverty down now i think i guess what i would differ with you on is that this is an exceptionally exceptional situation and i dont like drake money transfers i mean i personally dont really like it ok however thats what and this is were a lot of my conservative friends get angry with me and i say this is what we have government for for an emergency ok and jump through this year to get it would i be and is as i said i mean if you give people at the lower end money they do spend it they desperately need it ok they will spend it and then we can just all kind of you know discuss you know the 3 months 6 months 9 months. Where you would be very definitive ok because theres plenty of studies there that if youre going to have money you know flowing to people for her no other reason that you know that they they dont want you dont have to look for work or Something Like that thats a bad place and i dont like to go their own head here no no i mean so i understand what youre saying and i understand that the view that consumption drives growth is a popular one im still not convinced because of my particular views on the role of savings investment but i would say this and that is that we are in trusting government to get money out there and one of the things i thought was just so quick just actually central planning. Decorative is that we had the p. P. P. Plan their own production plan which basically gave money to people who employed a certain number of employees to try and offset some of their pay what they did was many states the payroll production plant amounts for employees were less than weekly unemployment and so you could these i thought these uproars receiving this is an obsession with the try to lure people back for less money and of course whos going to do that so. If i were to concede a concession that the consumption drives growth that there should be this redistribution. I dont think the government would get it right in terms of who they give it to and how much and on what basis know that i think i think we have a Knowledge Problem i have given coordination problem here which is tremendous ok well i think theyve always been have to agree on a degree of a fish and see ok because governments are very sloppy and. Theyre not theyre not very good at pinpointing how to resolve problems throwing money at it you know in our lifetimes thats thats been the mantra and has limited success here. And eric i mean you know what would be you know it looks like theres going to be a bite in ministration if you were in the room with him what would you tell him is an economic advisers what to do. Oh stop making dirty deals with ukrainian politicians i dont know who are listening with me because of a crisis in the economy ive got a 1000000000 other questions to our right well i think i mean the way that we should have handled these these things is look at where the need is in challenge Small Business challenge american entrepreneurship to do what its better at than anyone on earth which is delivered to the need if we had said look we have a problem somebodys got to figure out how to make more of these and that the 5 masks that the government screwed up and didnt plan ahead to have on the way and whoever can do 2 things number one meet the design criteria show us that your mask really is and that the 5 and number 2 prove that you didnt steal it or otherwise you know do do something sleazy in order to take it away from somebody else and the check is yours all you have to do is to live or if they had said that there would be no problem with masks with them i dont know 72 hours there would be entrepreneurs figuring out how to repurpose other manufacturing equipment to solve that need if you turned out that the governments belief that we needed ventilators was misplaced they werent really looking at the data and understanding that this is more of a blood Borne Disease than a respiratory disease but if we had really needed those ventilators the way to do it was not to say whos got the political connection with the you know the right senator but to instead say look here is a specification if you can build a ventilator that meets this specific ation and deliver it to this address on this day we will write you a check no matter who you are that would have allowed entrepreneurs to jump into action solve the problem meet the requirements of that spec probably improve on it and a lot of cases we dont we dont use the power of entrepreneurs to support government entrepreneurs support the private sector because government is unheralded on this is not going to lead agreement with you. Here instead of worrying about some of the richest people in the history of mankind and that was their Concierge Service for them they forgot about the people exactly you were talking about and that is a tragedy about the situation or as all the time you have here want to take my guess and errors but i think our viewers are watching us here are easy and remember. Always be polite never engage with a negative aided or confrontational i. Dont get into any conversation or start answering questions. Youre more likely to walk free if youre rich and guilty if youre poor and. You got 2 eyes 2 ears and one now. So you should be seen in here and a whole lot more in your sand if you dont take that advice easy going to dig yourself. This is
comparemela.com © 2020. All Rights Reserved.