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a few minutes time for us view state speak, the press, new hobby will be here at most time to go through the morning news headlines will be very happy to see with us by then the i i hello and welcome to cross talk, where all things are considered. i'm peter labelle. we all see it and we all feel it is significant. increase of inflation has many economist concerned, and consumers, needless to say, terrified why the sudden increase in prices. is this temporary and what can be done to tame this cruelest form of taxation on working people use the the

cross fucking increasing inflation. i'm joined by my guess peter ship and weston. he is the host of the peter ship show podcast in great barrington. we have pete earl, he's an economist at the american institute for economic research. and here in moscow we have sophia done. yes, she is a russia and c i s. economists at renaissance capital r, i cross roles. and in fact, that means you can jump in anytime you want, and i always appreciate it. we have 3. peter is on the program here, so i'm going to be very specific location where you go to peter in, in west and peter, i've been walking, obviously i'm a news junkie. i'm always trying to figure out what's going on. i cover a wide brett, the media and there seems to be a lot of questions about the severity of the inflation that we're experiencing, how long it's going to last and actually where it's coming from. i know this is your yours, one of your great specializations and i compliment you. i see you all the time on a variety of programs. what is your take here?

because if i can just add the little salt and pepper to it, it's been politicized as well. as usual, go ahead peter. well, you laid it out correctly and the intro inflation is attacks, and the source is government because that's who taxes us. the only way to reduce inflation would be to dramatically cut government spending because government spending is being paid for through inflation. we're running record budget deficits . and so instead of taking our money and spending it, the government is taking our purchasing power by printing new money and spending that. so the increase in prices that we're all experiencing is the tax that we are paying to finance government. in addition, the federal reserve is trying to prop up the stock market prop up the real estate market and prop up the u. s. government can only do that by keeping interest rates artificially low, but in order keep seeing

money to buy blonds. so as long as the fed is artificially suppressed, the interest rates, it is going to have to create inflation to do it. and because we have so much that the fed is now forced to keep interest rates at 0 and not so unfortunately, average americans, the middle class of the working poor, are going to suffer the most severe bout of inflation in us history far greater than anything experienced during the decade of the 97020 you know, let me go to paid here and in great barrington, i mean one of the explanations i've been told in it and it's basically coming from the fed. this is all temporary, it's pent up demand. it's going to, it'll smooth out as we, but that's not happening here. ok. and, and i mentioned that working class middle class people in my introduction intentionally because i room, i was small, i was young, but i do remember the 19 seventy's and that was a very,

very dreary time. and we thing a repeat of that. go ahead p. i remember declaration to as a kid in the seventy's, so i agree with everything that peter just said, peter chef, but i do want to add the following. you know, we did have a massive increase in the money supply in 2020, just over 25 percent. in the space for a few months, which is a different cause for concern. but a lot of people are looking at the year over year cpi numbers. and it's not like the headline number. you have to look at what might be index is too big contributors to the recent jump. right? so 1st you have gasoline, oil in the energy basket, which were up over 50 percent of a year. but you have, remember that right? about a year ago, this time with a situation where russia saudi arabia, and least a lot of boy went to the markets when demand was probably because of locked down. so you've had this surgeon oil prices, but it's come from where one point we had west texas international that are intermediate rather at negative $32.00 negative $34000.00 barrel. the 2nd thing is

we've had a huge spike in used cars, an auto insurance, 30 percent, 17 percent increases are expected way, which has to do with shortages and people get back on the road. so there aside, your question is worrisome. but in terms of the c p, i number about inflation. that's not very alarming. what we see in financial markets that's more alarming. okay, well, it's, it's go to our guest in moscow here. so yeah, i'm very concerned. i mean, if you look at it globally, where is most of this inflation coming from? because we have a lot of western governments have pumped huge amounts of money, which i find really, in some cases it was absolutely necessary. i don't have a problem with that, but i mean, there's so much money that has been allocated to be pumped into the economy. is it really necessary right now? because from what i understand, a lot of these glowing in, you know, g d p numbers and all, but, you know, they're saying all they're all great. but is,

is that counting inflation is inflation pumping up those numbers? they're really real numbers here. can you, can you make an assessment on a global scale when it comes to inflation? because we just mentioned oil use cars, saudi arabia, russia, globally, it will. where is the biggest tripping pointed. if i could put it that way, go ahead. so i would say that we're not talking about like anything there is like equation 1st of all, just because the y completion is exactly the products, well the recovery on demand and it's like, you know, probably what most unusual is that it's very, very symmetric across the globe, and the reaction to the crisis was very symmetric across the globe. so it was quite different from previous to crisis. just because like a not only advanced economy offered at the depth is seamless, not only from a physical side of but also from a monetary side,

but 1st time in to the key emerging markets also over quite any back on your policy . so that's, that's, that's actually makes it a global phenomenon. barge. i probably, i would disappoint you, but as a formal will probably be in a former center, but i am on that side who believe that the temporary ethics for now. okay, well if you think, because you can, there's the, that's the perspective i keep getting legal back to peter here is, is the fed being responsible here because, i mean it's, it's not over the last 14 months so that we've seen increased huge injections here we've, we've seen a lot of really easy money for a long time now, and then we've got supercharged go ahead peter was the federal reserve has never responsible. so why should they change now? but remember, what are the other things the fed is never is honest. i, the fed is all about spin, it's all about trying to ins. so if you recall,

early in the mortgage crisis, when the sub prime market blew up and the threat to the entire mortgage market was obvious, as was the threat to the economy. what did the federal reserve do? they came out and reassured everybody that there was nothing to worry about that the subprime problems were contain. why did they do that? because they, we're hoping that by denying that the problem existed, maybe they can somehow, well it out of existence and somehow get people to change their behavior in the face of what should have been an obvious crisis. and they were hoping to averted, and i think you're doing the same thing now. the fed has absolutely no ability to fight inflation. so why even acknowledge that it's a threat when you can't do anything about it. so the only thing that you can do is been i why do the markets hello everybody, that it's all temporary and that explains their failure to app. but real

failure act is big. it's impossible because the only way to fight inflation is it turn off the monetary spigots to raise interest rates of cards. economy that they've erected. we have a worse financial crisis in 2008. the government would be forced to slash spending dramatically. they may even have the default on the national debt, who knows what happened at fed actually fought inflation. so b, because they can, they're just denying the problem, but there is absolutely no evidence to suggest what we're really experiencing is the beginning of a long overdue, huge increase. and the cost of living, not only the result of the inflation that the fed has created since the pandemic, but of all the inflation that we created before the big that we've yet to deal with,

you know, made a p 1. 1 of the arguments out there is that if, if this inflationary trend is sustained, then it will dramatically cut back on consumption. but this things will be just too expensive here. i mean, how does that play into what is, what is call, what is called the recovery from the pandemic? because, you know, we could go through a w, a, b, a k, all the, all the alphabet letters here. but how is going to affect the recovery and who is going to be hurt most? we've already mentioned working people go ahead, peep. so the problems of inflation fall most heavily upon people who have either low income, the working poor, and also people on a fixed income because the reduction of the value of dollars while receiving the same amount of dollars, basically winds up being a sort of a tax you know, i point out before the d, c, p, i numbers are a little bit misleading, but we have seen classic inflationary effects. both financial markets and commodities,

which is perfectly aligned with both economic during history. lumber prices, rosemary, 800 percent. over a period starting to see some skyrocketed, there's weird price bites in places like hockey mon cards and non fund tompkins. so while the c p i number was kind of nothing. nothing burgers so far will know when a few months where she mixed signals but commodities, whether it's lumber or whether it's food commodities, all that sort of thing affect everyone. so it won't be long before these price increases. do start dro, type everybody, but disproportionately. we're going to see it effect on the poor people on a fixed income. okay. so if you're in moscow here, i mean, this 30 seconds before we go to the break here. i mean, is there any kind of coordinated global approach to dealing with this problem? because it's growing in magnitude and it's coming fast. go ahead. well, i would say that the, the, the now the mom report with the respond via this go to need it again just because emerging market already started the normalization cycle of the monetary policy. so

we're moving close to neutral rate some somehow. oh, think he's the ethic over the increase of the right. and i think that's important. see what we see now is that very unusual dynamic between emerging market develop market like, for example, the us inflation is now higher than the last emerging market that i'd look at. ok. all right, i'm not know we're going to go to a short break out about your break. we'll continue our discussion on searching in place and stay with me. ah, ah, ah, these are the 4 people who pulled the trigger. i survived something on survival.

one of the hardest things that i had the face was not having a face. i had a little patient that accepted their accept the fact that i made that appointment. we had no fears. del change pretty fast for shots. different stories behind the bullets. always be polite, never engage with an aggravated or confrontational office. don't get into any conversation to start answering questions. just ask for an attorney to survive and interrogation, you've gotta be ready to stand your ground. definitely don't want to be going to throw in the jump suit, one cups. you're more likely to walk free if you're rich and guilty when you are, if you're poor,

you got 2 eyes and 2 ears and one mouth. so you should be seeing and hear and a whole lot more than you're saying if you don't take that advice, usually going to dig yourself a whole ah, welcome back to cross sac. we're all things considered. i'm peter lavelle to remind you we're discussing searching inflation. ah, let's go back to peter and western peter, you know, we've, we've talked about how we condiments. look at this, we have 3 economists on the panel here. and it, all of you make a lot of perfect sense to me, but it's really a political problem at the end of the day because a lot of promises, i have been made promises that are going to be made here. it's, it's about how we get out of this crisis here and the powers that be decided you

spend your way out. ok, and all 3 of you, of enumerated so far in this program, the immense dangers of it. and they're not, they don't have the downside, like the rest of us. ok, working people, they're the ones that get us up for the most and they will be a backlash. we at least 3 of us here. remember the 19 seventy's and stagflation. go ahead, peter. well, of course it is political, i mean, the bided administration. every member of congress wants to give the voters something for nothing. right. the government wants to make sure that all the people who don't have jobs, many of them, of course, are just choosing not to have jobs. but the government wants to make sure that they have plenty of money to spend, even though they didn't earn that money. even though they didn't help produce any goods or provide any services, the government wants to give the money to buy goods and services. well, where's the money coming from? they're not raising taxes. they're just spending money. and so the money is being created, it's being conjured into existence by the federal reserve,

but that is inflation. you see every single dollar that the federal government spends, the american public has to cover the costs. and so they're not going to take our money through tax, and they're going to take our per sting power through inflation. and so they print all this money, the government spends the money, but the federal are printed the money and it goes into the economy. and now as non productive unemployed, people go to buy stuff, they didn't help produce. all that happens is the price goes up and it's amazing that people don't understand or they expect that we can have all the lose lose all those government for free. there is no thing is a free lunch we're spending is going to keep getting worse. and of course, as government spends more it week as the economy, which means even more spending, inflation is going to go through the roof and we keep talking about the 1970 s.

what we're going to experience is going to be far worse. and in fact, it probably already is worse than the 1900 seventy's. if we were using the cpi that existed back and then to measure prices right now, we would see that the cpi is already rise, being at a faster rate than it ever did that i havanese and we're just calling out from here . okay, well let me go to pete in great barrington, i mean, but then how does all of this end here? because it seems like it's, we're chasing our tail here because you know, you can pump in all of this money here. but if people can afford goods, then you're going to start seeing sectors of the economy collapsing here. i mean, how we, how do you get out of this trap? the trap of just keep pumping money because the more you pump the lessons worth go ahead, peak and great bear someone. yeah, someone is going to have to be the adult in the room and eventually had to take the action that will and this in the late 70 was it was paul volcker. we don't know the

name of the person, at least i don't think we do. we do it this time, but you know, the government, it tends to, tends to prolong these things and generate more and more unintended consequences as inflation started to rise in the seventy's diction put on price controls and then host of other things happened about 50 years ago actually almost to the day to few months away, we have the final several of the dollar from gold. busy i was, i think, august 15th, 1971. and so eventually somebody is going to have to be a really unpopular person and either try to choke off the flow, new money in the money supply. or maybe, you know what, you would hope that they would look at the, the, the, the incentives that the fed faces, which are highly symmetrical. you know, everybody loves lower interest rates are more money, but people don't usually like rising interest rates and, and a decrease in the, in the money supply. so someone else is going to have to rise up and do the unpopular things. and although they won't be liked for it,

they will be doing the right thing and they will be doing something really sort of on her own or should at that point. okay, so here in moscow here, i mean, how is this going to put effect the emerging markets? i mean, 1st of all, a lot of these economies are still feeling the, the, the very strong impact of the coven crisis. i mean, western agencies tend to focus on western countries here, but when you look at country, you know, go to asia, we have india has a major crisis still dealing with it. south america also here. i mean, how is this good? we have a 3rd of inflation here, and we still have the supply chains that are been cut or very, very weak here. how does it, how does the global economy recover from this? because governments are always looking at single countries here. but if we look at it and broadly here, i mean, it seems to me they're going to be on very much on the short end of the stick here . i mean, you start recovering and then also you get this huge wave of in place and coming out you well yeah, the feeder is,

is exactly the point. so colby is still here and the result feel here. so i'm not only on like a developed market, but also an emerging market to so the problem is still here and uncertainty still here. but again, i would note to point here that i was already talked about is that inflation is high and emerging market. but sometimes it's even lower than it in develop market or in us now. so that's actually makes like that position in, in, in financial markets, it's actually means that the merchant market currency could potentially gain from, from, from the new reality. let's see. so they potentially could feel stronger than us door going forward. and the 2nd point is that probably, you know, we could, we could be in a case over the 17th. but we could also be in, in the top of 2008, just because i, i remember that that was a hot topic, a global plate. and as it is now in the top of 2008,

and it ends up with huge correction and financial markets and to cruise the fall. so i think that though i'm not that concerned about like singable things, i'm pretty much concerned about credit bubbles and potential creditors and the potential correction that could follow. so we want, we could wait for it. let's say another blacks want to come to just to rigor, the correction that would be a very broad base. that's exactly where i wanted to go. peter well, in western here. i mean what we see here with all of this cash injections here is this huge. i mean, we talked about like the housing bubble, but i think almost every sector is turned into a bubble right now. it's really quite terrify watching it here. the amount of money that is being pumped in, it's over the last 14 months, it's hard to comprehend. and it's out there and it's just not how we think it's just about what sector it seems to me this is like

a perfect storm to collide. go ahead, peter. oh, sure. because of the federal reserve and the reckless monetary policy is just about every single financial asset is dramatically miss price. and that has no tremendous distortions in the economy and massive negative implications. just look at the bond market. look at the yield on a tenure us treasury which is below one and a half percent is like 1.4 percent. inflation is 5 times that and look at the yield . there is no way that that yield reflects reality. it of x. 2 it reflects fantasy and everything is price to fantasy. you know, you have the extreme examples in means stops oxer crit currencies. but the fed has done tremendous damage and there is no savior on the horizon that's going to do the right thing like paul vulgar. because the consequences are doing of doing the right thing are so horrific at this point that they're never going to be tried. but of

course, the consequences of continued do the neuron thing are even more horrific. but that's what's gonna happen because politicians don't give a damn about that. all they want to do is kick the can down the road as long as they can. they don't care, they make the problem worse just so long as it blows up later, rather than sooner. and that is what is going to happen. but i think on the emerging markets, they are going to finally be the big beneficiaries. because we're going to print the dollar into oblivion, the dollar is going to crash. and then what's gonna happen is a lot of the goods that are being sent to the united states are no longer going to come to the united states because nobody here will be able to afford to buy them. and so all those goods that are produced abroad will stay abroad and so prices will come down for people in emerging markets as their currencies go, way up and things become cheaper for them as americans get priced out of all these mark is because our current is gonna lose so much value that we can no longer afford to buy the things that we're buying. now. peter,

great barrington addressed that issue as well because, you know, not only was there a rotation of the dollar before all of this, it seems to be on steroids. right now, again, so short sighted, so short sighted. go ahead, pete did great barrington. yeah, so i just, i need to mention this in economics. we sometimes talk about a signal extraction problem, right? so it can be difficult to determine what things are infecting money and goods. for example, we have the demand for goods and services, drip the demand for the dollar itself. we have inflationary banks, which makes numbers tricky to reach. my point is that it is undoubtedly true. we've had the largest increase in the money supply and it's about time in history. but also we had the entire nation blocked down. as somebody reopen basically the same time, create a fixed amount of goods and services. suddenly, house upon by many tide, more consumers unusual. all right, so my point is i advocate being prepared, not panicking, having hedges, but people been saying hybrid patients right around the corner since 1982. they

haven't done this any good. so be prepared. don't panic, especially when the data is still mixed in somebody inconclusive. ok, well, it's sophia here in moscow. i mean, this has been a very depressing program here. i mean, how does this all end here? i mean, we gave, you could give like an russian accent here. i mean, i've been told that economists think that the russian economy is overheating. how do you see it one minute last, last comment? go ahead. well, i would say that to me now with the nurse, what do you see there? she's a very foss recovery, but i would expect us to be like very short term ethics, but still with spec to see grew up with $4.00, which is the largest in indicate. so were nice catch up, grow full of what, but more modern growth next year. well, you have a normalization of the monetary policy and the fiscal constants, nation inside. so that actually means that they can pretty much balance now. so,

and that actually means that another strong point is bad. credit bubble is not an issue for either russia or neighbors. ok, well we, we ended on a, on a good note there, but one thing i've learned on this program here, the dollar has a very treacherous future. i'm a, i'm very worried about it. i want to take my guess in great barrington, west and in moscow and thanks to our viewers for watching us here are to see you next time. and remember cross talk roles. ah ah ah

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