and the hope is that you can get it back there without causing recession like paul volcker doug, you know, i talked to a couple of senators recently, i won't name them, they both voted on in favor of the re nomination of j. jerome powell, as chairman of the federal reserve board, but at the time they talk to him a lot about the feds role in the economy of buying bonds and you know, the need to begin tapering that and bring it down. and i just saw them the other evening and they were very upset that in their view, and i don't know if it's accurate. the fed has not been tapering off, has not been coming coming out of the economy. so it raises this question. so i like to ask you is what blind spot and what mistakes this is the fed and making right now in this, in your view, or is it managing the portfolio of u. s. economy as, as, as well as it can, are, you know, how would jason fermon council the fed to begin dealing with some of these questions where people begin to feel like this is a rigged economy and not one where they, the market is working as well as it could, yes, it's steve la

now, some years ago i interviewed former federal reserve chairman paul volcker, i think you were actually there in the same conference. and at this meeting, i asked former chairman bulk or what it was like to try and team inflation, where the prime rate went up to $21.00 and a half percent. and you had this period of time afterward that led to a big recession in 1980 to 82. and we got 10 percent unemployment. is that a pathway that we're going to see coming out of this? that rates has to go up? that you're going to have to have a wall on took to bring demand down, because supply is so limited. i mean, it is that one of the policy responses that you think is serious on the table because that would also be a shocker for a lot of people in this economy. yeah, the goal of the fed is and should be to avoid exactly that problem. and that's part of why you want the fed to do more up front, so they don't have to do a huge amount later on. i mean, some of this is phrased as the hawks want this and the doves want that i think that's the wrong way to think about it. any one like myself who was calli

states economy given the inflationary backdrop that hasn't faced any of his predecessor since paul volcker was in office during the late seventy's early 19 eighties. so the challenge is gigantic for j. powell and trying to assess what his legacy is going to be at this point is premature because it's been more than 40 years since we've been going into an economic slowdown, which we are with inflation at this high levels. excellent points and it's all still to be determined. you heard it here for its former findings letter danielle of the martino booth. thank you so much for your time and insight. thank you for having me. and we can talk about the federal reserve and it's policies without of course, talking about how the stock market plays a role. so let's continue this conversation by bringing in lawrence mcdonald, editor of heat bear traps to report lawrence's great, have you back on the show today. now i know it's been a busy week for markets with several key earnings reports playing a role. but how much is the fed and of course, anticipation over what it might do impacting investors righ

and when paul volcker was chairman of the fed $992.00, they tried to raise interest rates to reduce the inflationary pressure. but now what you have is, once again the fed is talking about, they're going to raise the interest rates at this meeting to be have coming up in march. but the regulations are an even bigger issue than rising than, than the interest rates. you can't keep hamstring in the american people in our economy with these ridiculous policies. and let's just go back to the elephant in the room when you basically have covered and you're using cove it as an excuse to, to hamper all these businesses. what do you think is going to happen? you can look into washington d. c, and you're putting these mass mandates. you're putting these vaccine card mandates . businesses are suffering as a result of that. so why are you surprised? you're seeing the economy suffering. what about be the media in the u. s. will sol my and she made it very much. backings are bought in the wake of his, his victory m. what do you make of that coverage of what's going on in times of the economy and polit

poker was based on pulled by jimmy carter with the express purpose of financing. inflation and paul volcker knew exactly what he had to do. you have to increase in straits fast. he had to get the money supply under control and he sent straight to work to do that. in his 1st few months in office he increased interest rates by 3 percent in one month, even he raised $200.00 basis points. so that's a far cry from this discussion, having now about the noise at $25.00 basis points or 50 basic points. he was all in with 200 basis points and he tightened the screws for quite some time. and he kept in strict above 10 percent for 3 years, and that's what was necessary to get placed under control. i think we're going to need to see something some of this time around. so i don't detect any average height on the part of the fit. this time around in terms of really engaging in that kind of policy, really taking the bull by the horns and false inflation. now i think the response so far has been tested great powers talking 1st good night. inflation existed at all and then he said it's trans trace as then d

paul volcker came into his position to try to cure the ugliness of inflation. it started in august 1979. inflation peaked in 1980 at 14%. on treasuries, went to 14%, 15% in 1980, 1981. i can't believe i am saying all these negative things, but i am just repeating history. these things are possible because they are possible for people serious about their own investments. so what would you do if you had some certainty that might happen ? lisa: what are you doing if you see this as a likely possibility? michael: people will throw out that stocks are an inflation hedge. that is true if you have moderate inflation. if you have large inflation, which we may or may not have, i think you may have a situation where all markets, the tradable markets are affected negatively. look at the history of gold. look at the history of real estate in these periods. go back to the 1970's and 1980's and read the history. all markets are affected. it is a question of where you lose the least money. one of the things the people listening to this forecast would be wise to think about is

we went up to 12% about paul volcker pulled it in. where we're heading if the president has another $2 trillion to spend and fed would enable it. what happened if we continued? i don't think so. i think what you got here is "new york times" trying to paper over joe biden's debacle. charles: real quick. by the way, pleasure to have both you guys at the same time. larry, real quick, i was also reading there is more and more talk it is time to rethink the fed. now maybe it is unreasonable to think we can no longer to do without it but should it be rehabilitated in some way? >> well, one thing you and i talked about you need to have risk-takers that have actually sat in a risk-taking seat on the fed board. to have academics sitting there on top of trillions of dollars of risk, not one of them really ever sat in a true risk-taking seat. that is a toxic combination because academics at the end of day, they don't understand risk. they react too late to risk. i think that is what is happening in the market now. charles: larry, peter, thanks v

think ronald reagan and paul volcker 40 years ago. but no, once again, biden has gone big woke.

the only double-dip recession the united states has had is from paul volcker.my into recession now they may do it they may do it inadvertently, but i don't think they have the spine to crush the economy to stymie demand to get rid of inflation because that's really what it would take right now so i think you want to take the over on nflation for the time being. >> the assumption there, though, rich, is that the fed has the ability to control where inflation is headed and could actually step in to prevent it i wonder because recently we've been getting comments from various bank ceos, the credit suisse financial services forum in florida the bank of america ceo said they are stress testing a portfolio in the event that inflation gets out of control and becomes a headwind to economic growth. do you take that scenario off the table or, i mean, is that a possibility in your view >> it certainly is a possibility. of course, melissa eventually you know inflation gets so high nobody can afford anything unless wages keep up. so i would say two things. we are in the ear

amount of ignorance because if you talk to the most important central bankers that we've had, paul volckern alan greenspan i've had numerous conversations with both of them and to talk about gold is to talk about prior international monetary systems and how they have worked or not worked, and it turns out that alan greenspan is fairly recently, in the last few years, said that he considers gold a primary global currency. charles: yeah. >> so i think it just shows a lack of understanding of what one seeks to accomplish through an international monetary system and we need to grow lessons from what has worked in the past and we had numerous versions. charles: and what's so interesting about it, of course they said your nomination was a political, or it was politicized and we see what's happening at the fed now, judy thank you very much, appreciate it. >> that's true, thanks. charles: folks all the major indices the s&p just went green, nasdaq is already green, some serious bottom fishing there, we're going to talk later in the show how you should go about that. gold is slightly down, but here

since paul volcker in the early '80s since any fed had to contend with inflation as high as it is. fed will rescue markets is based on a false premise because the inflation and inflation we're fighting is extremely real right now and it put jay powell in a very precarious position. charles: so this morning the chicago pmi was out. it saw the leest decline in 18 months. every component was slammed. new orders lowest level in 20 months. production hammered, backlog down, inventories are up. there are signs that the fed could be adding speed bums to an economy already slowing down. how does that change everything? >> charles, there are no right answers. the fed missed an opportunity in 2021 to pull back and be rational at a time it was appropriate to be rational. now they're dealing with a economy slowing to everything you just mentioned. we've seen backlogs across the country decline. backlogs seeing future demand. we've seen that come collapsing down in the face of runaway inflation. anybody, everybody who follows me and you who has not googled stagflation needs to go ahead and do t

we didn't have all this debt in 1980 when paul voc iser allowed interest rates to go to 20% -- paul volcker. what would happen to the economy given all the debt that we have if interest rates even went to 10%? what about 5%? we couldn't even handle 2.5% in 2018, and the economy's in much worse shape now with a lot more debt than it was then. lauren: yeah. i know, we're talking around getting to 1%. larry, gas up 40%, used cars up 40%, appliances up 10%, food up 7%, the most since 1981, and rent, which is a third of kpi, up -- cpi, up about 3.5%. those numbers are higher than that overall cpi print of 7.5%. so how bad is inflation really, and do you think now with this selloff that we're getting today we're starting to see rates going up, that mentality, priced into the market, serving -- giving fed flexibility, basically, to hike, hike, hike and hike? >> yeah. i think it's also testing the will of the fed. can, you know, these kind of rate hikes, can the equity market actually sustain them. and i don't think the fed is particularly concerned at this point with financial conditions the way t

think it be very helpful for hem to go 50 basis points, but even with that, let's remember what paul volckerht months he didn't go a point and a half or two. he went 7 percentage points. now, the economy did slow, he's back and then he pumped it again and went up around 17 or 18. it takes dramatic action to crack the back of an inflation like this , when you've got these kind of supply chain problems. simply there's too much money chasing too few goods. charles: so depending on where oil goes from here, there are signs that the cpi, consumer price index, maybe topping out. how would that inform where the fed goes afterwards? >> well oil topping out be helpful, however let's remember there's a ripple effect , a downstream effect from oil that's yet to be seen, for example, with farm products, fertilizer, fuel for farming and so fourth, herbicides and what not. they are shipping, the rates have gone up. do you think if the price of diesel comes down by 20% the shipping rates are coming down, with the omicron ripping through ship crews? i don't think so. that's not going to be a magic formula h

friedman is turning over in his grave and that money, unless they take it out, which by the way, be paul volcker and you'd cause a recession, if that money doesn't get taken out, it will show up in inflation over the next two, three, four years. so yeah, a little bit better inflation than 2022 but it's here for a while. charles: boys and girls buckle up, joe, brian, thank you both very much. appreciate it. want to bring in nancy tengler and talk about the market grappling with the notion of higher rates, at the same time, nancy, you've got strong earnings. you know, it's so intriguing because even coming into this week, the big talk was that this market was overvalued in fact some compared it to the tulip bubble which yesterday was the 38 fifth anniversary of it imploding if anybody can remember in the netherlands they were so valuable in in fact he thought it was an onion and they put him in prison for life, so you know, where are we right now we're not a tulip bubble levels but do we need more air to come out of this market, nancy? >> i'm not sure, charles. look since the s&p was established i

paul volcker indicated you could get to better times but it makes a bad situation at least in the interim even worse. i am wondering given the fact the federal reserve is deemed late to this fight and late pool back some of that fight, then what? charles: you are right about the soft landing part. markets, individual stocks, the economy, whatever is going to drive down, it is going to hit. i believe we should hit sooner rather than later. i know it is scary and painful but it is better than prolonging the situation. a lot of these folks, my own personal hunch, believe in the transitory story. it wasn't working out and had so much egg on their face, they put up square jars who would hit this. what they believe their dilemma is what happens if cpi, and start to ease, never had to be aggressive in an economy slowing down but that is what you are looking at. charles: are we in stagflation? i've seen inflation continue to soar with the expenditure, better than 5%. it is staying with us. the backdrop is a strong economy, something jimmy carter never had. charles: personal in command consumption

it begins a series of interest rate increases in order to get inflation out of the economy as paul volckern the 1980's with president reagan's backing and it is important that the fed show that it is serious about inflation and it can do this by raising interest rates, by cutting back on its purchases, treasury bonds, mortgage-backed securities, starting to whittle down it's over $8 trillion balance sheet and also showing basically that it is serious in terms of its forecast, saying that inflation next year will be around 3.5% is not a serious forecast. they need to be serious. host: diana furchtgott-roth is with us to talk about the biden administration spending policy and a look ahead to the jobs numbers, most recently what may be ahead in terms of the effects of inflation and other issues. we welcome your calls. (202) 748-8001 republicans. (202) 748-8000 democrats. for all others, that line is (202) 748-8002. ms. furchtgott-roth the headline of "the washington examiner" is this, "biden's crushing money blizzard, failure of the american rescue plan." what is your view of how well that mo

stuart: you and i are the similar vintage, you and i remember paul volcker hiking interest rates 100i don't see that happening that now. >> i don't either. irritable powell syndrome will not allow us to have 100 basis points but it will allow us to have 50 basis points. stuart: you are determined to repeat that. >> such a classic statement. it is comical but it works. it explains what is going on. when you have the dow down 1000, up 800, down a thousand, up a hundred, something else is going on. stuart: dennis, thank you for being with us. see you soon. >> thank you, stuart. stuart: now we're talking about the end, not the end but certainly the other side of the covid story, the covid surge. so i'm inclined to look at some of the reopening stocks. rachel: yep. stuart: they're moving this morning. lauren: after tyson foods you have norwegian, royal caribbean, all top of the s&p 500. why? new omicron infections fallen more than half by mid-january. new jersey ending mask mandates in school. australia opening up to vaccinated tourists this, is good news. the reopening trade is strong to

have been politically motivated as well so they have catching up to do and if you go back to the paul volcker if you remember them, had they had to go back into a recession to get out of it so it's possible that we're going to have a short-term recession in here but again for investors' point of view, that may happen. attend, have you to look at what the fundamentals of the companies are and which ones do you believe in that can weather a recession and who is well set up. again, you need a strong balance sheet. it's that simple. maria: yeah. all right, wolfgang. great to see you this morning. thanks so much. >> my pleasure. maria: wolfgang coaster joining us. we are just getting started this morning. president trump will join me in the 8:00 a.m. hour, he will weigh in on the state of the economy, china, a lot more, coming up with president donald trump coming up. we are watching ukraine, how rising tensions with russia are testing the administration as well as sending an important message to china. we're on that all morning long. plus, the school mask mandate debate, why governors in blue sta

the average portfolio manager wasn't investing during the paul volcker years and they've only experiencede market continued to perform very strongly during those periods and so i think once we get through this period of earnings where companies can't purchase their shares we'll then begin to see the companies coming back in, buying shares, putting a floor under the market and then we'll get the rally that we probably would enjoy sooner. but that is going to benefit technology. i aagree completely with mike. we've been in there buying as well because these are companies that are delivering on earnings and are not interest rate dependent in terms of borrowing for the most part and so we expect to continue to see strength in many of those names, not the growth of any price names as i've always said but growth at a reasonable price. maria: yeah, i mean, you know, if you're talking -- for those people talking about eight rate hikes, that would suggest that we're going to see an intermeeting hike because we only have seven meetings, right? i mean, we've got meetings every six weeks. the first m

the end of the decade, and really stayed with us for a very long time, and it wasn't until the paul volckerent got rid of inflation. do we have to do the same thing again this time around? >> i believe that eventually, it's going to come to it but i can't tell you when, i don't think anybody can predict the exact timing of the market, and anybody trying to do it is just, i think, wasting time, but i think look at a macro picture and if you lived this before, and you have to realize that at this point, we're sort of in a precipice, when it's going to happen though, could be three years, five years, you don't know, or three days. i think that a catalyst was this russian ukrainian but i think we should be able to get through that. stuart: when you say we're at a precipice do you mean like on the edge of a huge sell-off? >> well, we already had a sell-off, so you already had 10% , but i don't want to be an alarmist, because nobody is sure when this is going to happen, but you're building toward it. you can't keep pumping money into an economy. you can't keep just printing up money. i mean then

steve, we remember paul volcker who licked inflation in the early 80s with rates that were way above fight inflation, conquer inflation just with interest rates. back in the 1970s before volcker came in, we had raised interest rates numerous times but inflation was bad because they were always behind the curve. a key to fighting inflation monetary inflation, david, is stop creating too much money, which the fed is still printing up, using a device borrowing money overnight, $1.6 trillion, who knows when that dam is going to break and the other thing of course is supply chains which this administration whether it's energy policies, trying to put price controls in the internet again, wherever they turn they're trying to hubble supply chains rather than trying to let them re-heal and get the economy back on its feet. david: the fed let's face it is monetizing the debt debt to put a phrase to it? >> that's right why they have been buying into recently $120 billion of bonds each month , where do they get the money to pay those bonds , the atm, they create out of thin air and borrow that b