Dave Smith and Robbie Bernstein dismantle John Oliver's viral inflation segment, arguing that mainstream media erroneously blames corporate greed and supply chains while ignoring the singular root cause: a $4 trillion money supply expansion in 2020. They assert that Federal Reserve policies, not partisan spending or Putin's actions, devalued currency by flooding the economy with liquidity, rendering Oliver's "truthy" narrative misleading. Ultimately, this Austrian economic perspective suggests that true correction requires deflation to punish debtors, exposing how monetary expansion rather than market forces drives current price surges. [Automatically generated summary]
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Understanding CPI Definitions00:14:19
Fill her up.
You're listening to the Gash Digital Network.
We need to roll back the state.
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If you want to know who America's next enemy is, look at who we're funding right now.
Every single one of these problems are a result of government being way too big.
What's up, everybody?
Welcome to a brand new episode of Part of the Problem.
I am Dave Smith.
As always, I am joined by the King of the Cawks, Robbie the Fire.
Bernstein, what's up, my brother?
How you feeling?
I'm doing great.
Nevada, Las Vegas, Summer Porch Store.
Lewis J. Gilmas is coming out for it.
It's going to be a fucking killer show.
So show that all up.
You got Lewis coming to the Summer Porch tour.
Yeah, I think he was partying out in Vegas anyway.
So he's going to come by and do a guest spot, but it's going to be fun to have him there.
Oh, that feels weird that he's going to do it before I do it.
All right.
Open invite, buddy.
Anytime.
Yeah, well, obviously, but I thought that was that went without saying, but still, well, that's very cool.
Come out and see, come out and see Rob on all his tours.
Of course, I will be out at Young Americans for Liberty in just a few days now for the Revolution 2022.
And I'm very much looking forward to that.
Okay.
So for today's episode, I wanted to respond to a piece that was put out by John Stewart, by John Stewart, by John Oliver.
Sorry.
He used to work for him on HBO on his show Last Week Tonight or something like that.
And he did this whole extended piece on inflation.
And I've gotten a ton of people who have asked me to tear this apart.
It's great.
It's such an important topic.
It's nice that the media is finally going to cover this and educate the masses about what happens when government spends too much.
Well, the thing that's interesting about it, right, is that this has kind of become the, it's gone super viral.
It's got like just on YouTube, I think it had like 4 million views on it.
And then it's been shared on a whole bunch of other platforms as well.
So everyone like saw this piece.
It was put out last week.
And this is become the thing that almost you're like, you know, left of center friend will share around, watch, spend 20 minutes or however long it is watching it and go, yep, got it now.
Got it down.
Okay.
Now I understand why all these people who are saying the problem is just like Biden or spending or too much money printing.
No, they're wrong.
They don't really understand it.
And so this is, it's a good thing for us to respond to, especially since this is such an issue that is central to what we talk about so often.
I love the New York Times intellectuals that they can just watch one video up on the HBO and go, I'm smarter than everyone.
I get it now.
Well, I will say, let me preface our entire episode by saying that I do not hate John Oliver.
And I think, look, the truth is, and maybe you can relate to this, Rob, as well, that people who are funny or people who are comedians who are attempting to be funny at the very least, who do kind of long chunks on relevant political or economic issues, I almost feel like I have a sort of kinship with them.
And I appreciate what they're trying to do.
And personally, I always thought John Oliver was very funny when he was on the daily show.
And there's been a lot of segments on his show on HBO that I think are very funny.
So I like that about him.
And I like that he is, he's not always funny, but he's always at least attempting to be funny.
He's not like a lot of these other guys who have completely abandoned the even idea that I'm going to try to be funny.
You know what I mean?
He's like, he is trying.
And I think he is funny.
I thought there were actually a couple of things in this piece that were funny.
So it's not.
I've criticized that every time I've tuned in, it seems to be a lot of, we've got a really big problem here, a really big problem.
Look how bad it is.
That's why we need government to spend more.
And can you believe that they haven't spent more on this?
It's like, that's basically the template: oh my God, look at this issue.
But government could spend more if they just acknowledged how bad this issue was.
Well, fair enough.
And I probably haven't watched enough of his show on HBO.
I did watch a lot of him back in the day on the daily show, but I maybe you're right about that.
Look, the truth is this, Rob.
Okay.
And I don't mean to sound like a dick when I say this, but in terms of comedians who are going to talk about economics, me and you are the only ones who should do it.
And I don't mean, I know that sounds fucked up, but really, I don't think there's anyone else.
I don't think there's any other comedians besides me and you who should ever fucking talk about economics because they don't even know what the fuck they're talking about.
They have no idea what this topic even involves.
They don't even know what economics is.
They don't know what a price is.
They don't know what inflation is.
They don't know what any of this is.
Maybe I'm wrong.
And there's like one or two who I'm not thinking of, but it's the list is at most five deep.
Okay.
It's not a lot.
And so that's that's just what it is.
But John Oliver did a long segment.
He does these long chunks where he kind of takes apart different issues.
And this one was on inflation.
And anyway, it was the perfect timing.
A lot of people asked me to respond to this.
I'm also, this is my talk at Young Americans for Liberty this week when I go down there is supposed to be on the Federal Reserve.
So it's something I've already kind of been, you know, just in my mind very recently.
And of course, inflation is the thing that we've been talking about forever.
So, okay.
Let's we'll get into this piece in a second.
Let me just preface by saying this.
I think that anybody who talks about anything to do with economics, let alone inflation, is going to have a very tough time getting it right if they don't understand economics.
And by economics, I mean correct economics.
And by correct economics, I mean Austrian economics.
That's really what you have to understand in order to know what the fuck you're talking about with any of this shit.
And so when you talk about inflation, it's almost like there's several different definitions, but maybe three, three real different definitions that people are talking about.
And it's important to kind of understand what they're saying with this.
So first, I would say according to economists, the technical, like according to mainstream economists today, the technical definition of inflation is too much money chasing too few goods, more money chasing less goods, something like that.
According to the popular figures in the corporate press and political, you know, economic advisors and things like this, it's the CPI.
According to people who actually know what the fuck they're talking about, who understand Austrian economics, it's an increase in the money supply.
So there are three different things.
Like, for example, inflation to the, like if you just listen to CNN or just read the New York Times or the Wall Street, even the Wall Street Journal, then they'll basically talk about inflation as if it is the CPI.
And the CPI is a number that, you know, many people are probably familiar with when they said, oh, inflation was up 9.2%.
That's, they're saying the consumer price index was up 9.2%.
And when they'll say this year, we didn't have inflation, they're talking about the CPI.
Or when they say, this is the worst inflation in 40 years, they're talking about measuring the CPI over the last 40 years.
However, if literally, if you're taking a Series 6 or Series 7 exam, and the question is, what is inflation?
If you say a rise in prices, you will get that answer wrong.
The correct answer is more money chasing less goods or something like that.
The Austrian perspective, or another way to view it, the correct economic perspective is to say an increase in the money supply.
Let me just go through this a little bit so people understand what I mean.
The consumer price index is this number.
It's a government number that they come up with that is basically like, well, look, we're going to take several consumer goods and create this index, and then we'll measure whether it goes up or down.
And then we'll measure whether, you know, there's inflation is bad.
And they basically determine that, like, well, if it goes up like three or four percent, that's fine.
But if it goes up like six or seven percent, that's bad.
And if it goes up nine percent, well, that's really bad.
That's kind of how they're measuring this.
Um, that is a very flawed way of understanding what's really going on.
It, if you look at it the way we look at it, that, well, really, this is a monetary phenomenon.
And the issue here is whether more money has been created, then you're going to understand this on a much better level.
And you're going to understand like what's really happening here and what's really driving all of this.
And whether the price, the consumer price index goes up or down is, it's not that it's irrelevant.
It's that it's, you're getting a very small portion of the bigger picture of what's actually happening.
Does that make sense?
Like the way I'm saying it?
Do you get what I'm saying?
All right.
So for, for example, well, look, even within the consumer price index, they're only taking into account a small window of prices.
You know, what they call consumer prices.
Like, you know, okay, there's lots of prices out there.
Some of them wouldn't call it consumer prices, but I don't know.
When, you know, like a lot of people will say, hey, in 2019, there was no problem with inflation.
But in 2022, there's a major problem with inflation.
But in 2019, Donald Trump was bragging about a record high stock market, right?
Well, okay.
I mean, that may not be eggs and milk or gasoline or whatever prices people have a problem with going up today, but what is that?
That's prices going up, right?
Like that's prices are rising.
Okay, it's a certain class of prices.
There's lots of different ways to look at what prices are doing or housing prices or all there's lots of different prices.
And all of them going up have kind of the same issue.
You know, if stock prices are going up, well, okay, it's a lot harder for someone else to buy into the stock market now.
Now, okay, I understand why some people say that's not as important as if the price of eggs and milk and cereal and bread are going up, but I'm just making the point that it's still prices that are rising.
All right.
And what the Austrian economists, the people who actually understand this shit, understand is that really the issue isn't just whether prices are going up or going down.
The issue is what's going on with the money.
That's really what matters.
And this is, I don't know, Rob, we've talked about this before, but I've made the point several times that the reason why that's so important to understand is that if, let's say, for example, you doubled the money supply and prices were about to crash, but instead they stayed the same.
Many mainstream economists would say, oh, there's been no inflation.
But of course, something really big there happened.
The doubling the money supply had a huge effect.
It's almost like if you were running a race, you're running as fast as you can, and I grab your shirt behind you and start pulling backward.
And the mainstream economist were to say, unless Rob is moving backward, nothing is happening.
There's no force pulling him back now.
And as long as he's going forward, everything's fine.
And then we'll only start measuring this once he's actually moving backward.
The Deflation Debt Hangover00:07:34
You'd go, oh, well, okay, there's a problem with that, right?
The problem is that without you pulling him back, he might be going much faster, right?
Does that make sense?
That you might be going much faster.
And then if you're only measuring it once he starts moving backward, you're waiting till this is a calamity before you're even acknowledging what's going on here.
I don't know.
Is that a good analogy?
I just came up with that on the spot.
I like it.
And I would add one element to it.
Sure.
Imagine if there were a whole bunch of people that had to watch the speed at which I was moving and then make an evaluation and place bets based on how fast I was moving.
And they're getting a distorted signal where they think, oh, wow, Rob's really doing great.
But what they don't see is that there's a drag and that my legs are actually frying out and I can't actually keep this pace.
And so they start making all these moves thinking, hey, I'm really going to finish this race at a certain speed, but they don't realize that my legs are more fatigued than what they can see because of the drag behind me.
So that's the other issue here is that I think that's right.
There's bad signals.
And ultimately, if you wanted to get the correct signal, if you wanted to understand what's actually happening here, the question isn't like if Rob's running and I'm grabbing, pulling him back on his shirt, the question isn't, is he going forward or backward?
In the same way, the question isn't, are prices rising or falling?
The real question is, is he moving as far forward as he would be if I wasn't holding him versus when I am holding him.
And so that's the question here, right?
Like, what would prices have done without this monetary infusion versus what they're doing now?
And I would just add that the monetary infusion, even if you don't currently see the inflation.
So usually like it tends, I mean, they wanted to hit 2% forever, and now it's out of control.
So there is sometimes, I think, part to two of the aspects to me of the Austrian is that one is like, even if we don't monitor inflation the way they do, if you printed it, it's there because it's going to be monitored down the line at some juncture in time.
That is going to hit the market.
And then the bigger issue is that you're signaling to people that if there's more money in the system, I mean, I might get this backwards, but that essentially you think people are saving more.
And so you got more opportunities to make investments because you think there's going to be more consumption down the down the line, but that could be a false signal because there's just cheap money in the system, which is basically the deflation of credit asset bubbles.
Yeah, I know.
I think that's actually right.
I think that's completely right.
So the issue really is.
So for example, to put this in more real terms, and this is something, by the way, that I think that even our opponents are acknowledging without actually acknowledging.
So the view of the establishment is that deflation is what we must fight.
That has been the view of the Federal Reserve.
And of course, from there, the corporate press and the political class and all of them since the creation of the Federal Reserve, but really since the departure from the gold standard when the Brenton Woods agreement collapsed in 71, 72, whenever it was.
That, okay, yeah, you want inflation.
You want to target like 2%, 3% inflation.
You don't want any more inflation than that, but you definitely don't want deflation.
But the truth is you actually do want deflation.
And I don't say that.
Listen, overall, deflation is good and recessions are good.
And when I say that, it doesn't mean that no one's hurt in deflationary times or that no one's hurt in a recession.
But the way to understand this, as the Austrian economists understand this, and the good economists understand this.
The way to understand it is that both of these things, like, look, a recession is very painful for a lot of people.
It's very painful.
I'm not trying to act like it isn't.
But you know what else is painful?
A hangover.
Like a really bad hangover fucking sucks.
But the problem isn't really the hangover.
The problem was getting blackout drunk the night before.
The hangover is actually the cure.
It's actually your body purging all of these fucking, you know, like toxins.
Like that's, that's what hurts.
But it's actually the necessary response to get you healthy again.
And that's what a recession is.
It's the necessary response to the imbalances, the overstimulation that occurred before the recession.
Now, deflation, if you think about it, if you think about prices falling, think about all the pain we're feeling from prices rising.
Well, prices falling are the opposite of that.
Prices falling means that poor people can afford more things.
It means that people on a fixed income are getting wealthier.
It means that savers are being rewarded.
It means that people who go huge into debt are being punished.
These are all healthy signs of an economy.
You know, anytime deflation in prices, let's say, like prices lowering is that essentially means like, look, if you're improving your like if you,
if you come up with a labor-saving device where it used to, let's say it used to take 100 men to produce something and now it only takes 10 men to produce that thing, the cost is going to plummet.
That's what genuine progress is, is prices coming down.
All right.
That's all I'm going to say.
Go ahead.
No, I do think that there's one thing worth explaining, which is, you're right, the biggest benefit to deflation is incentivizes saving.
And if you incentivize people to save, they become less consumptive.
You can have an economy that actually has a spiritual fabric to it of people not running around compulsive in spending, but they're actually thinking, you know, with longer time preferences.
You know, they're looking for the future.
That's all gold.
I love it.
I'm glad that you said that because it's an important point to mention that this is, there's no separation between these economic issues and the cultural issues.
They're actually all one because they're all human issues.
And that, yes, it's true that you also create kind of like a culture of rewarding the people who are planning for the future.
It's a rewarding a low time preference culture.
That's that's a very important element to all of this.
The current system, just the current system doesn't allow for deflation because there's too much debt in the system.
And so if you have deflation, anyone who's in debt, that means that it's harder for them to pay off their debts.
And it's not just that, but as you have more and more deflation, you almost have like a debtor's trap that I can, I like, I owe the old debt, right?
And the currency is becoming harder to accumulate.
It's bad for people in debt.
Yeah.
Blaming Biden For Inflation00:12:08
So the current system literally doesn't allow for it.
It would kind of very bad.
Yes, it's very bad for people who carry huge amounts of debt.
It's very bad for speculators.
It's very bad for all of the people who are ripping the rest of us off right now.
So that's kind of the, you know, the starting point.
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All right, let's get back into the show.
All right, let's get into John Oliver's thing and see where we can.
By the way, we probably won't play the whole thing, but we'll get into it enough that we can take apart his central message.
All right, let's play it.
Given that it is hurting so many people right now, tonight, let's examine inflation.
What caused it?
What we've done to address it so far, and what could happen next.
And let's start with how exactly we got here, because you've probably heard a lot of explanations flying around.
This is Biden inflation, a 39-year high created by Joe Biden.
Make no mistake, inflation is largely the fault of Putin.
The supply chain is the catalyst at the end of the day.
Inflation is not caused by the Build Back Better or the bipartisan bill.
It's caused by corporate greed.
Yeah, there has been a flurry of finger pointing, with many tending to place the blame on whatever they were already mad at.
With some Democrats blaming corporate greed, Republicans blaming Joe Biden, Biden blaming Putin, and your dog presumably blaming the vacuum cleaner.
And here is the interesting thing: aside from the dog, they're probably all at least a little bit right.
Because the truth is, there is no one cause of inflation.
At the best of times, it involves a multitude of factors.
And the situation that we're in right now has been an unprecedented perfect storm.
And to understand that storm, let's pause this.
Pause for a moment.
Okay, so look, here's what caused the inflation that we're dealing with today.
Okay.
This is it.
There's really two major things.
We locked down the economy and we tremendously increased the supply of money.
That's the cause of inflation.
Not a great combo.
Yeah, it's a very bad combination.
Okay.
So we had these, I don't know, completely unprecedented, unfathomable in 2019 lockdowns where we, by government force, shut down the economy and a tremendous increase in the supply of money.
Both of those together.
That's what caused inflation.
Now, for him to say, you know, well, there's these people are blaming Biden and they're blaming this one particular bill, the Build Back Better bill.
The Democrats are blaming corporate greed.
The, you know, everybody's blaming someone else.
Well, they're all probably right a little bit.
It's like, no, actually, this is what caused it.
What caused it is the fact that we locked down the economy and we fucking printed insane amounts of money.
I think just in 2020, there was something like close to $4 trillion printed.
Again, when I say printed, because I know people give you shit for this, sometimes they go, well, they didn't actually print the money.
There's, you know, the Federal Reserve creates money out of thin air.
Sometimes they do it the majority of the time, they do it just electronically, you know, just send zeros through a computer and now a bank has way more money in their bank account.
Okay, fine.
But you know what I'm saying?
Injecting money into the system.
And so that's the fucking issue here.
That's what happened.
And to speak to the corporate greed part, that's about as accurate as the dog barking at its vacuum.
This is very new logic, but did corporations just get greedy?
You mean they could have charged more last year, but for some reason they were just being charitable and charging us less than the maximum profit they can make and they're all doing it at once.
How do we all have more money to be able to fund corporate greed?
We're just being more charitable.
We decided that we're going to donate more of our income to every corporation at once and we all have enough money to fund the corporate greed.
The corporate greed part is actually like, okay, the blaming Biden for the spending programs is not completely accurate.
Of course, the truth is that, right, if you're blaming Biden for his big spending, you also should really blame Donald Trump for his big spending.
Of course, Donald Trump, who bragged when he had that $2 trillion stimulus package about how it's the biggest thing.
It's the biggest thing.
Such classic Trump fucking thing.
This is so big.
It's big.
And I was the president when the biggest thing got passed, right?
Okay.
He should be blamed for that and the six plus trillion dollars that the federal government spent in 2020.
He had at the end of the day, Donald Trump had to ink his name on every last one of those spending bills for them to go through in 2020.
Okay.
So he should get a lot of the blame for this.
So it shouldn't just be Biden, although Biden should get a lot of the blame for it as well.
But okay, understand they're being partisan and only blaming Biden for it.
Now, the real problem isn't, it's not really a fiscal phenomenon as much as it is a monetary phenomenon.
It's not the fact that the government taxed some money and then spent that money, which they had taxed.
The truth is that they spent money well beyond the entire tax revenue of the United States of America.
So it was because there was money printed and that that was injected into the system.
Okay.
However, to just blame the Biden part of the spending and not the Trump part of the spending is incomplete.
To blame corporate greed is retarded.
It is fucking retarded and has nothing to do with anything.
Not even like, as you said, and I think he will make this point ultimately, but of course, corporations just start getting greedy.
And this is so that is all just stupid.
Go ahead.
Trump is definitely at fault for increasing spending.
And the Republicans in general, they're done pretending to be fiscally conservative with the exception of Rand Paul.
But guess what?
When he gets up and gives his speech and say, hey, gosh, darn, we can't afford this.
It doesn't matter.
He's the one guy that does it.
All right, good.
So he gets to be the one guy who gets to like, that's the part he gets to play in the play.
And it doesn't matter.
I suppose.
I suppose.
But if you're actually looking at it, if you're actually talking about what, who is to blame for this, it is not, this is not something that started in January 2021.
This started in this started way earlier, but the real have what we're feeling right now started in 2020.
But to me, the real culprit is really just the attitude of, hey, government can afford to buy you everything that you need and that we should socialize all these costs.
It's almost like if you had two parents and you were dead broke and you got one parent going, we got to go to Disney World.
This family needs a vacation.
And the dad's like, well, we can't afford that, but why don't we go to the motel down the street and you can't afford that either.
And then you turn out being broke.
It's like, yeah, the dad's at fault.
He shouldn't have spent the money even going to the motel.
But the mom's kind of a little bit more at fault because she introduced and pushed the idea that like we can afford to do something.
And so he, so I, between the two parties, I do think that the Democrats push the spending a little bit more than the Republicans.
So like, in other words, if there's one single culprit, it's the idea of, hey, government can afford to spend.
Yes, if there's one culprit, it's the idea of like that we're even talking about spending more money on a vacation.
But yes, I agree with you.
Sure.
Whoever's pushing it more deserves a little bit more of the blame.
So I don't disagree with that.
All right, let's keep playing John Oliver a little.
Because the truth is, there is no one cause of inflation at the best of times.
It involves a multitude of factors, and the situation that we're in right now has been an unprecedented perfect storm.
And to understand that storm, it might actually help to pause for a moment to talk about the mechanics of inflation.
Okay, let's pause right now before he pauses because let me tell you what he's doing here that I hate.
He's what he's doing here is saying something that sounds truthy.
It sounds truthy, but it's bullshit.
It's fucking bullshit.
And this is the, you know, it's like I always hate when people, you know, when sometimes when people play the middle ground, but have nothing to say?
And it just kind of sounds right, even though it's not right at all.
You know, like sometimes the response I'll get from people will be like, you know, if because I'm such a radical libertarian, and so they'll be like, okay, I mean, Dave makes some good points, but like he goes a little too far.
And you're like, well, I mean, I guess that sounds nice, but you didn't make a point.
You don't, there's no argument to that.
It's like the when centrists or moderates try to just sound correct because they're centrists or moderates.
You go, well, I mean, we don't need to go too far left or too far right.
Let's just kind of meet in the middle.
I guess that kind of sounds nice.
It kind of sounds nice to say, hey, I'm the one who's going like, well, I recognize that there's multiple factors to what's going on here.
Okay.
But of course, that meeting in the middle is not, you know, if someone was like, I'm for the abolition of slavery and someone else was like, I'm for continuing slavery, you wouldn't go, okay, okay.
You guys are both being a little extreme here.
What we should probably do is meet somewhere in the middle, have some slaves, but not completely the institution we have now.
We're not going to go completely in the abolitionist direction.
You know, that might like sound nice, but actually sometimes when there's issues, one side is correct and the other side is wrong.
So to say like, oh, okay, well, there's these multi-you know, it's like Michael Malice says it's such a great fucking quote when he says, factual, but not truthful.
Misleading Demand Arguments00:10:24
Factual, but not truthful.
That's what this is.
Well, actually, there's multiple factors that cause inflation.
Like, yeah, that is factually true.
There are, and when they say inflation, they mean price is rising.
Okay, fair enough.
We got that.
We're dealing with their definition of inflation right now.
But yes, factually, it is true that there's multiple causes, but it would, it would be kind of like if, um, let's say I took a sledgehammer and I just, with all my force, just whacked Rob in his fucking, you know, I don't know, what's a good soft part of the fucking body?
Your hamstring.
No, not the titty.
Titty's not good enough.
Hamstring, okay?
You're right in the hamstring.
Yeah.
Sorry, I came up with that very quickly, but let's just say that I've been thinking about this for a long time and I finally got the opportunity.
So I take a sledgehammer and I just fucking whack you as hard as I can in the hamstring.
Okay.
And then about three days later, you're like, dude, my hamstring is fucking killing me.
Like I'm in a lot of pain right now.
Every step I take, I'm feeling massive pain in my hamstring.
And you go, well, I think the cause of this is that you hit me with a sledgehammer a few days ago in the hamstring.
I think that's why I'm hurting.
And I were to say to you, well, okay, there's actually multiple factors involved in this.
Like you've been walking on it for three days.
And as we all know, Rob wears skinny jeans.
Your jeans have been, you know, very tight and tugging on it.
And also, you know, whatever, you didn't stretch that morning.
And like also, there's gravity, which pulls you down and makes everything hurt a little bit more.
You know what I'm saying?
Like it's not fact, like it's not technically factually incorrect.
The truth is your hamstring might be feeling better if you hadn't walked on it.
And maybe if you wore, you know, I don't know if the tight jeans thing really fits in, but you know, maybe if you wore looser jeans, it wouldn't like hurt as much.
And maybe if you had stretched earlier that day, it wouldn't hurt as much.
But it's just so misleading.
It's like, no, the reason why your hamstring is hurting is because it was fucking hit with the sledgehammer.
Like that is the reason.
Even if all these other things might play a little tiny bit of a factor on the margins, there's one major reason.
And the reason why we're dealing with inflation today is because we shut the economy down and printed trillions of dollars.
Do you know?
Okay, when, when in 2008, as George W. Bush was leaving office, getting ready to leave office, and Barack Obama was getting ready to come in, the Federal Reserve balance sheet, which meaning the assets that the Federal Reserve had, the things that they had bought, put money into the system.
You know, the way that this system works is basically that the central government lends money to the U.S. government at interest.
And nowadays, they also buy tons of other assets.
But what was it at, Rob?
Do you know it was like $880 billion, something like that?
When Donald Trump took office, okay, so this is through the Obama administration.
It started around $880 billion.
When Donald Trump took office, it was at $4.5 trillion.
Today, it's at about $9 trillion.
We've flooded the market with liquidity, flooded the market with money.
And at the same time, we fucking locked down the economy.
You know, it's like, okay, this is the sledgehammer to the knee or to the hamstring, whatever my goddamn analogy was.
Okay.
That's what it is.
So it's completely misleading to go, well, there's a multitude of factors and there's all these different things.
No, really, there's one major factor here.
In the same way that you're saying, well, there's a multitude of factors of why Rob's hamstring is hurting.
It's like, no, it's because I hit it with a sledgehammer.
That's why.
That's the fucking problem.
And it might sound more sophisticated and adult-like to say, well, I recognize, I recognize the complexity of this issue.
It's like, no, actually, you're just, you're just fucking misleading people.
The truth is that this is what caused it.
All right.
Let's keep it.
Sorry, go ahead.
Yeah, but to speak to your sledgehammer example, the other thing is the other elements here are government's fault.
It's almost like if they then put the skinny jeans on me and continue to poke at it, like Biden didn't need to start a war with Putin, even if that's only 10% of the price increase when it comes to oil.
He didn't need to do that.
And guess what?
We didn't need to shut down our economy.
So like, don't tell me that it's the result of the government action of shutting down the economy and starting a war.
Then they're still fucking at fault.
To be fair, not starting a war, but fucking, you know, provoking a war and then launching sanctions against the fucking Russians.
So to be fair, but yes, I agree with you.
And to understand that storm, it might actually help to pause for a moment to talk about the mechanics of inflation.
Very basically, it happens whenever there is too much demand for too little supply.
If people have lots of money to spend, they usually want to buy more stuff.
But if there is not enough stuff to go around, then the price of that stuff goes up.
I'll give you an example.
Let's sell.
All right, hold on.
Pause it before we get to the fucking example here because this is again, what he's saying is not technically wrong, but it's very misleading.
So when he goes, look, here's what when there's always too much demand.
There's always at every juncture in time, everyone would like to consume everything at all times.
There never isn't too much demand.
If I could go live in a fucking mansion by the ocean and pack it full with hookers, I would do that.
I can't afford to do that, right?
Everyone would fly private if they could.
Everyone would consume everything that they could if they, you know, what keeps them from it?
They don't have enough money to do so.
So there's no such concept of just people conceptually now having more demand than they did beforehand.
It's that they can actually, there's some sort of a resource that they can spend.
They can spend more money.
Well, how do they have more money?
Do they earn more money?
Well, someone handed them more money.
Well, that's fucking inflation.
The demand, right?
It's not demand, it did not change.
It's the fact that people can actually take action on their demand, which is relative to how much more money that they have.
And if everyone has more money, then that's the sign of a broken system that they were just handed more money and that you got more money chasing fewer goods.
Inflation.
Right.
Right.
So, so look, demand to make this out to be a look, there are laws of supply and demand.
And I grant that.
And we could almost deal with the supply side and the demand side and kind of talk about that real quick.
But look, if you're going to say demand could loosely be described as people's desire and ability to purchase something, right?
Something in that ballpark.
So if you're talking about like the desire to purchase something, it's not as if there's like, oh man, people just want eggs and gasoline and groceries more than they ever did before, right?
Like that's that's obviously not what's going on here.
It's not the fact that like, oh, there's some tremendous now.
You to the point that you're making almost like a kind of counter, but not really a counter to what you're saying.
But there are instances where you could say, oh, okay, a demand, like the desire part of a demand does not exist anymore, right?
Okay.
So maybe say Nokia phones that were made in the year 2002.
There's probably not much of a demand for those anymore.
You know, if you opened a business, if you opened like a business, you had a warehouse with fucking 5 million 2002 Nokia phones, you'd probably have trouble selling those.
There's just not much of a demand.
Yeah, well, right.
And there's only so many of those.
And even those guys have smartphones at this point.
They know how to fucking, you know, hotwire the, what's the term I'm looking for?
Whatever.
They know how to turn location services off or whatever.
But you know what I'm saying?
There's not much of a demand for that anymore.
There's not much of a demand for horse and buggies anymore.
You know, there's not much of a demand for.
So yes, there isn't the desire.
Even though people have the money to buy those things, they don't desire them anymore, right?
So that would be a crash in demand.
But that's not what we're talking about here.
Hasn't been a drastic increase in demand for these basic things that we're talking about, and so so this is a very it's true, but it's very misleading.
It's like, oh no, what's changed is what the money that's been injected into the system, and where that's been injected is kind of interesting too.
It's not as if regular middle class people have had some huge infusion of money into into their lives that they're oh now, all of a sudden, they want all these things that they didn't have before.
And if supply has been now to the supply side, if supply has been constrained, what really did that?
Now, you can argue about all these different things, but what really constrained the supply?
Well, what constrained it is that the economy was shut down.
People were then paid more to not work than to work, and this is kind of the the recipe of what we've we've gotten here.
So I don't even disagree with him that there is something to the supply and demand, but where exactly it's coming from and specifically what issues are there with supply and what issues are there with demand?
That's what we have to kind of hammer down on.
Saving Money During Pandemic00:14:59
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All right, let's get back into the show uh, so okay let's uh let's, keep playing.
If people have lots of money to spend, they usually want to buy more stuff, but if there is not enough stuff to go around, then the price of that stuff goes up.
I'll give you an example.
Let's say that every single person in America suddenly wins the lottery and everyone now has 40 million dollars to spend.
What are they going to do?
Well, I would assume that they do what I would, which is immediately buy this 1500 emeralds Patina Fountain statue of a frog spreading its unnaturally long legs in the manner that's for a second, which I do.
I think this is actually kind of funny.
So props to John Oliver for that.
But I'll say that what's interesting about this, I'm sure a lot of you have already kind of noticed.
What's interesting is that even in his example, what he had to create was what?
A giant infusion of new money.
What did he say?
$40 million?
Every person has $40 million, let's say.
Like, right.
Okay.
So you just created a scenario in your mind where there was a giant infusion of money.
Oh my God, there's all this new money all of a sudden.
What are we going to do with that?
So already you're almost kind of admitting that this is a monetary phenomenon.
Now, of all the reasons you talked about before, you talked about fiscal, you know, you talked about Joe Biden's spending bill, talked about corporate greed, talked about Vladimir Putin, all these things.
You ignored the thing that's right in front of you, which is the creation of new money.
But as soon as you wanted to create an analogy to say, well, imagine this situation, it's the first thing you said.
The first thing was, well, imagine there was all this money that doesn't exist right now, just infused into the system.
So yeah, okay.
So what are we talking about here?
I don't know.
Anything on that, Rob?
Frog was weirding me out.
Yeah, I could see it.
I could see the frog at your place.
All right, let's keep playing.
Seems offensive, but I'm not exactly sure to who.
Now, by the way, the frog comes in two sizes, large and giant.
Now, obviously, if you win the lottery, you are springing for the giant one.
But here is the problem.
There are currently only three of them left in stock.
So the statues are likely to get more expensive because everyone suddenly wants one as they all have more money to spend, but there are only three left.
Basically, high demand, not enough supply.
And that's how we get frogflation.
So too much money chasing a limited supply of goods can lead to inflation.
And some on the right have seized on the too much money part of that idea to suggest that inflation is really just down to one thing.
When you put $6 trillion of fiscal stimulus into the economy as President Biden and Democrats did last year, you're going to end up with big time inflation.
The March stimulus package literally manufactured inflation.
This inflation is caused by Democrat policies.
It didn't just happen.
This is the Democrat tax on the middle class.
Wow.
That is some pretty heavy fire there.
Calling something a tax on the middle class is one of the best ways to make it look bad just after calling it a close associate of Prince Andrew.
That is a pretty funny bet, by the way.
I got to say, that's a pretty funny joke.
Just short of an associate of Prince Andrew.
I like that.
Yeah, it is a tax on the middle class.
This is like that classic thing where it's like, oh, you're playing politics here because it makes us look.
No, it is bad.
We're trying to tell you that if you do this, it's going to be bad.
And now we got a real world example, which allows us to educate people to the fact that it is bad.
Like, and then, oh, and this one also, if you agree, your example is $40 million, everyone wins the lottery.
So they might all want to go purchase something.
So the price is going to go up.
And now we know that government infused $6 trillion into the system.
So let's say you're John Oliver and you want to say, fine, that's not the only cause of the inflation.
Well, what percentage of it do you think you've already acknowledged that if you have too much money chasing too few goods and you acknowledge that we drastically increased the amount of money available?
Well, he doesn't seem, he doesn't seem to have acknowledged that.
He acknowledged that the government spent more money, but that's not exactly the same thing as acknowledging that we've increased the money supply, right?
So if you were to acknowledge, just to be technical here, and this is what's annoying about what he's doing.
If you, let's say you taxed $6 trillion and then spent that $6 trillion, you didn't technically increase the money supply, right?
So he's not actually acknowledging that the money supply was drastically increased.
Now, he did, look, I'll say that he did, look, he shows videos of Republicans saying, well, this is the Democrat plan.
And okay, it's fair enough to go, well, I don't know, dude.
I mean, look, you know, like I said before, during when the Republican was president, this also happened.
So obviously there's something about that that's a little bit politicized to just put this on the Democrats.
And there was that one spending bill, the Build Back Better bill or whatever that was just passed with basically just with Democrat support.
Okay, fine.
So they, you know, are responsible for that one.
But if you remember to the big spending bills in 2020, Thomas Massey was like a man on an island screen and Rand Paul and a few of the others who were like, this is insane.
What are you talking about?
We're not doing this.
And, you know, the rest of them were all like basically, oh, you're Osama bin Laden if you don't want to spend trillions of dollars in this package.
So it's not as if there's no Republican blame here.
There's a ton of blame to go around to the Republicans.
But yes, essentially, it's like this, the situation is that this money was created out of thin air and then infused into the economy.
And that that is really what we're talking about here.
There's also something kind of interesting about John Oliver recognizing this law of supply and demand and not going, okay, but why does that not apply to money?
You know, if you're going to say, well, if there's way more, you know, in his example, he's saying, well, if there's way less of a supply and way more of a demand, then you're going to have prices go up, which is fairly true.
You know, I mean, that wouldn't really be a reason for prices of everything to go up, but it would certainly, you know, in his frog statue example, okay, yes, if there's a ton of demand and way less supply, the prices will go up.
But now let's talk about money.
Let's say there's way more money.
Like there's way more of a supply of money.
And the demand for money is, I don't know, relatively consistent.
Like people want money, you know?
Okay.
Well, what does creating way more money do?
Value goes down.
I guess the value would go down.
By your own logic, I guess the value would go down.
So, you know, John Oliver, right here, you've got yourself in a little bit of a pickle.
This should probably blow this whole argument out of the water, right?
If you're saying, if you're making the supply-demand argument, okay, well, there's way more of a supply of money and the exact same demand.
So what the fuck happens to the value of the money?
Oh yeah, it gets way less valuable.
And what is it called when money gets way less valuable?
That's right, inflation.
So there you go.
There's your fucking answer.
All right, let's keep playing.
Biden's stimulus package has become a common refrain on the right when discussing inflation.
And the reality is there is a kernel of truth to it.
Thanks to the pandemic era stimulus bills, people did have more cash on hand.
That is not the only reason.
As strange as it sounds, many people saved money during the early days of the pandemic simply because we were all stuck at home.
By one estimate, households actually accumulated two and a half trillion dollars in excess savings during the pandemic.
And to the extent that people were spending money, it mostly wasn't on services like flights or hotels or restaurants.
Instead, it went to goods like furniture, appliances, or I don't know, some steamy watercolor rat erotica.
I'm just describing what most people did in 2020.
And what's more, the notion that our economy would be fine if not for Biden's stimulus completely ignores what it would have looked like without it.
Because I'm not really sure.
Let's pause for a second because there's something really interesting that he got at there, which is that actually people's instincts, like what people did was start to save money during the pandemic.
And that is a really very important point that he's making.
He's right about that.
Yes, that's actually what people started to do.
What people start to do in very dangerous times is save money.
I know I started to do that.
That's that's what a lot of people who are responsible start to do.
They save money because they go, shit, I don't know what's going on right now.
Let me save some money, you know, in case there's a dangerous situation here.
I want to be okay.
It is literally the responsible thing to do.
It's also the thing that will put a deflationary pressure on prices to do to pull your money out of the economy and start saving it, right?
That's kind of the goal of raising interest rates, right?
That you start encouraging people to save rather than spend.
To pull, that's that's kind of how you rein in inflation.
And so he's right about that: the $2.5 trillion in savings increase.
Okay.
And that's that really kind of tells you a lot that people wanted to be like, oh, like it's almost like the market response was for people to go, okay, let's cleanse this.
Let's cleanse this problem by saving money because this is, we might be in a dangerous situation.
We don't know the future is, you know, not assured to be good.
So let's save some money now.
And then, of course, what happened was all of the policies came in to undo that and to encourage people to fucking spend their money.
So that's a real interesting point for him to kind of acknowledge without even realizing that he's acknowledging that.
All right, let's keep playing.
Income workers who were in real trouble.
It also helped us avoid a COVID-induced financial crisis.
And while with hindsight, most economists would say that we could have made it more targeted and precise so that we didn't increase the money supply any more than we absolutely had to.
It is very important to note that according to one estimate without the American Rescue Plan, they always like to pretend government intervention works.
It's just we got to get it at the right level, but they can never get the right level.
It's like that's why it doesn't work.
Like they have this fictitious idea that there's some magic amount of intervention.
There's a magic amount of regulation.
There's a magic amount like, and that doesn't exist.
That's the entire issue is that it expands and then it keeps doing more and more and more.
And then at some point, it eats itself alive.
Like, but then it's like, you know what I mean?
That's what they always like to claim.
Well, if we had gotten the magic level right, we had the right instincts.
We just did too much of it.
Yeah.
Well, there's also something else right at the heart of what he's saying here, which is that basically he's saying, like, okay, all right, sure.
I mean, he's not even talking about the printing money, but he's talking about the spending of the money, which is pretty, this is hilarious in a way, because you're like, spending what money?
You know, you're not talking about spending the money that the government taxed or borrowed, because that wouldn't be nearly enough to cover what the government has spent over the last three years.
But he's talking about government spending money.
Okay, fine.
Let's for a second forget about the fact that they didn't have the money to spend, you know, like if you, it's funny.
It's like if you had like $10,000 in your bank account and you spent $50,000.
And I go, the issue here is that you spent your money.
I go, wait, wait a minute, but we're missing something.
You didn't just spend your money.
You also found all this other money.
How that, where'd you get that from?
Okay, fine.
We'll ignore the printing money for a second.
But he's saying, look, people might be critical of spending this money because it caused inflation.
But look, what if we hadn't spent this money?
Destroying Lives And Currency00:02:57
What would that have looked like?
I'll tell you what it would look like.
Well, we just wouldn't have lied that we could have shut down.
Imagine if we accepted the fact that we don't have money that we don't have and government didn't pretend like everyone could just not work and stay in their homes.
We wouldn't have shut down.
The entire issue is that they pretended like we could afford to shut down and that they could afford to just send everybody checks and then there wouldn't be an unintended consequence from it.
So what he exactly, exactly.
So what he's doing here is assuming the shutdown is a given.
And then look, if we had the shutdown and hadn't spent money, that would have been painful too.
Well, yes, of course.
But what if we just didn't shut down?
I mean, it's unbelievable that they can still get away with this when even like we've talked about a bunch on the show, the John Hopkins study, you know, demonstrated that there were no like or minimal lives saved by the shutdown.
It's pretty clear at this point that the shutdown wasn't necessary.
Lockdowns were a fucking disaster.
So sure, if you assume the lockdown and then say there's no injection of liquidity into the system, then oh my God, I think that would have been bad too.
Now, when he goes, well, it could have been more targeted or it could have been more limited.
It's like, yeah, I guess you're right.
I guess even if we had the lockdowns, we didn't have to bail out every single major corporation in the fucking country.
Yes, I guess you're right.
Even if we had the lockdown, we didn't need to give the Lakers so many millions of dollars that once they were caught red-handed, they fucking turned the money back over.
Yes, I guess we didn't need to give multi-billion dollar corporations more billions in excess wealth.
Okay, fine.
It could have been calibrated a little bit better.
But if we were going to lock, you know, the fucking waitress wife and the fucking plumber husband in their home for months, then we had to give them at least $1,200.
That's really the issue here.
You know, like, what a fucking twisted way of even looking at this.
No, the issue is that you never had to fucking make it illegal for them to work to begin with.
So that's what you need to fucking compare it to.
What if, what if you never fucking destroyed their whole goddamn lives and then destroyed their currency after that?
What would that look like compared to destroying their lives and destroying their currencies?
That's the question.
And I think they were only able to do the lockdown because they could pretend like they could afford to send you a check.
I think the option of sending a check didn't exist, then we never would have locked down.
Sheath Underwear Sponsorship00:02:03
Also, what you were talking about with the fraud with the PPE loans, there's probably an irony there that I believe over 50% went abroad to fraud.
But imagine how much worse inflation would be if that money wasn't sent abroad.
Like there's almost an irony there.
Yeah, that is that is ironic.
That's a that's a good fucking point.
Yeah, I guess.
Well, I guess we're lucky.
I guess we're lucky.
We're lucky that people in India managed to defraud the U.S. government for 50% of the PPE loans.
Jesus.
Yeah.
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All right, let's keep playing.
Global Central Bank Inflation00:03:57
The economy would have come close to suffering a double-digit recession in the spring of 2021.
So two things are likely true here.
The government stimulus did contribute to inflation, but it was also a necessary intervention.
And the money point is the, but it also allowed our government to lie to us and pretend like it could afford to shut down an economy, which created a mass, a mass power grab by the government to institutionalize socialism and potentially they didn't fail at it, but link us to our health records, force everyone to get vaccinated.
Yes, you're right.
The government's ability to pretend like it has money that it doesn't have was able to create a more socialized evil structure.
Yes, that's right.
We probably exactly, if you take the lockdowns and the restrictions as a given, then yes, the incredibly high government spending, again, without talking about the monetary policy, even though in his own example, he had to use an injection of money, then yes, the government's fiscal policy did allow that to be easier.
By the way, he is right about this.
It's the same thing as being like Michael Malice said, such a brilliant fucking way to put it, factual, but not truthful.
So like, yes, it is factually true that it made it much easier for the government to lock people down and restrict their basic rights and shut down the economy if they could send more money out.
That is true.
And yes, it is true that if they had locked you down and restricted your rights and stopped you from working and not sent any money out, that there would have been more of a fall in GDP.
I think that is absolutely true.
So that is factually true.
But if you want to be truthful, you'd realize that, like, yeah, maybe you don't want something that makes it easier and less painful for the government to fucking destroy your most basic rights.
All right, let's keep playing.
Inflation clearly isn't just about the stimulus at all.
After all, it's not just a problem here in the US.
Britain and Germany have seen inflation rates hit four decade highs.
And in seven Eastern European nations, it's now expected to search population.
Brian, I swear I won't do this every two seconds.
But the fact that every single one of these central banks work in tandem so that no one currency falls too much against the other ones.
And they've been doing this for the last 20 years and manipulating interest rates and tailored.
Yeah, look, man, the dollar is the reserve currency of the world.
So to say, oh, all these other currencies are also having the problem that the dollar is having.
And look, all these other fucking countries who also had lockdowns and printed tons of money are also having inflation does not change the basic central point that the reason we're having this is because we locked down the economy and printed trillions of dollars.
It doesn't change that.
Like, I'm sorry.
That's, that's all fucking related.
Name a country where the dollar isn't the reserve currency that didn't have fucking lockdowns, that didn't print trillions of dollars, that also had this exact same problem.
And then we're talking.
Hey, look, these other banks, these other countries with central banks also have inflation.
So it must be the only way that not just with central banks, with central banks that print money pegged to the US dollar.
You know, like pegged to our dollar and also had lockdowns, or at least close to.
Well, that's a little distorted with the Euro at the moment, but I get what you're saying.
Corporate Profits Vs Prices00:15:57
Yeah.
All right.
Let's keep let's keep playing.
Lost double digits.
And in Japan, it's had particularly dramatic consequences.
We're at an aquarium in Hakone.
The effects of inflation can be felt here too.
With the rising price of feed, they've chosen to use the cheaper mackerel.
How are the penguins reacting to the new feed?
She tries to coax it to eat.
The penguin doesn't like it.
No, no, it does not.
And I do not blame it.
I love absolutely everything about that.
My new favorite genre of news segment is now footage of what appears to be a large flightless bird being a massive bitch, which, now that I say it out loud, would be a pretty accurate title for this show.
But also, remember, demand is one side of this equation.
The other side is supply.
And to quote my therapist, let's come back to that frog spreading its leg statue.
Because in that scenario where everyone won the lottery, if there happened to be enough frog statues for everyone to buy, then there wouldn't be any imbalance between supply and demand and prices would remain stable.
But remember, there are only three giant statues left in stock.
And if for whatever reason they can't make any more, the price of the remaining statues will then go up, especially because there aren't actually three of them left anymore because I have one and it's right over here.
Look at it.
Look at my beautiful frog statue.
And crucially, crucially, what that means is there are now only two of the frog statues left.
Except to be honest, there aren't two because I have another one as well that is right over there.
Look at my second frog statue.
What an absolute perfect pair.
And what that means is that the last remaining frog statue is going to be worth an absolute fortune, which to be honest is very good news for me because I did get that one as well.
Here it is.
I'm rich.
I've got all the frogs.
I've cornered the frog statue market.
I am good at business.
But look, the larger macroeconomic point that I'm making is demand is certainly a factor, but a smaller supply also leads to inflation.
And generally speaking, we've had diminished and disrupted supplies of a lot of consumer goods, primarily because, thanks to COVID, factories overseas have been shut or have slowed down considerably.
Take for instance, bicycles.
There has been a massive bike shortage over the last couple of years, thanks in large part to lockdowns and slowdowns disrupting bike production in China, where roughly 90% of all bikes sold in the US are produced.
Meanwhile, demand for bikes soared as shoppers tried to stay active during lockdowns, meaning that just a few months into the pandemic, we were already seeing stories like this.
Bike shops across the country now seeing skyrocketing demand and supplies dwindling.
In Albuquerque, New Mexico.
This is actually the only one we have right at the moment.
And in New York City, have you ever seen a bike shortage like this before?
No, never.
I'm selling way more pink and purple to guys because they're just like, whatever, it doesn't matter what color it is.
That's, it is what it is.
It's a bike.
It's true.
The bike shortage even broke down gender stereotypes.
But interestingly, interestingly, while pink and purple bikes attracted a new maintainer.
Obviously, it's such a great thing that guys have to ride around in a pink bike that makes them ashamed, but they fucking just can't get anything else.
All right.
Okay.
So I'm glad that gets a big applause from the studio.
So look, I don't think anyone would be denying that something like this very targeted specific market, assuming this is all true, which I assume.
Okay, if 90% of the bikes were produced in an area that shut down in China, that shut down, then yes, that would lead to the price of bikes increasing.
And okay, fine.
But that's not really what we're talking about right now.
We're not talking about, that is not the reason why we have rampant inflation and prices all over the place.
It's not because 90% of the production has been shut down overseas.
Like what, what is really going on here?
Yes, the theory that if very little is being produced of something that there's tremendous demand for, and again, even in that situation, you're talking about, well, why is there so much demand for bikes?
And it's like, well, because the government's fucking making basically everything else unavailable.
And okay, there's this one place that makes bikes and they're fucking not making them anymore.
Okay, fine.
But that's not what we're dealing with right now.
That is not what's going on with every single price all around you everywhere.
Okay, let's keep playing.
Compared to 2019, which means essentially one thing.
If you are the sort of person who stayed active and exercised during lockdown, inflation is your fault and you're a terrible, terrible person.
The point is, inflation truly was a perfect storm going into the year.
And it seems like everything that's happened since then has only made it worse.
When Biden said inflation is largely the fault of Putin, that is clearly not true.
Inflation was happening before Putin even invaded Ukraine.
So that's just not how time works.
What is true, though, is that Putin definitely exacerbated the problem.
The invasion of Ukraine greatly impacted food and fuel prices as the world cut off its oil purchases from Russia, driving gas prices, which were already rising up to outrageous levels, perhaps best summed up by this guy.
All right.
So let's just pause it.
It's like this is kind of like the thing that I was saying before.
This was the example that I was using.
It's like, if I fucking hit you with a sledgehammer and the hamstring and you go, you know, okay.
And then after that, you blamed the fact that you didn't stretch enough that morning.
That's the problem.
And you go, well, that's not really true because you didn't stretch the morning before that and your hamstring didn't hurt.
So today it does hurt.
But it is true that not stretching exacerbated that.
Like, yeah, I mean, technically, that maybe is true, but it has nothing to do with it.
Technically, it's factual, but it has nothing to do with the truth of the matter here, which is that this is what really caused that.
Yes.
Okay.
Did Putin, I don't know.
Did Biden sanctioning Putin exacerbate fucking rising gas prices?
Yes.
But by how much?
You know, how much?
Someone really tell me how much.
How much you think?
Was it fucking a dollar per gallon?
No.
5%.
Yeah, exactly.
Because it was still selling to China and to India.
So that oil is still on the market.
Yes, exactly.
And what is, I know Gene Epstein was on your show and he kind of like broke this all down, right?
It's like, yeah, no, it's a tiny percentage of it.
It has nothing.
If you actually go look at the fucking reality of the situation, as fucking John Oliver was talking about supply and demand, right?
How much supply was actually coming from Russia?
Like what supply of our fucking gas and food was actually coming from Russia?
Oh yeah, really like next to nothing.
So this is, this is very little to do with price inflation with in any of these areas.
So, okay, fine.
You can that, you know, it's like if you want to go, um, you know, we will blame all these problems.
Yes, it's multifaceted.
Okay.
But the reality is, no, it's actually very clear what happened here.
It's very clear.
That's the reality.
It's very clear what happened here, that the Fed flooded the market with liquidity and it was right on the heels of us shutting the economy down, all of which was completely unnecessary and stupid.
And, you know, I shouldn't even say stupid.
It was great for the ruling elite.
They got to make out with fucking huge profits, but it fucked everybody else over and maybe has destroyed the country.
It's so goddamn bad.
And they pretended that we could afford to do it.
It was their claim of, hey, we can have everyone stay home and we can hand you this money.
To me, it's like if they, if someone gave you a stock option not to work and then the stock option turned out to be worthless, it's like, yeah, that guy's at fault.
He told me he had something for me.
Yeah, no, that's exactly what it is.
That's exactly right.
And then they go, well, you know, the reason why you're impoverished right now is multifaceted.
There's a lot of reasons why.
And part of it is, you know, you're like, you know, whatever.
You know, it's what you were doing the two years before then.
And part of it is your own greed.
And part of it is like, yeah, all of that's true.
Yeah, it's true that your childhood issues were part of why you would agree to do that.
But the real issue is that someone came and offered you this thing that ruined your life and bribed you into doing it.
That's really what fucking happened.
All right.
Let's play a little bit more and then we'll wrap this up soon.
Now I see what you motherfuckers are talking about with new gas prices.
My shoe was on empty.
I put 20 bucks in the fucking in the fucking tank.
Look at this shit.
What the fuck?
This is what 20 fucking dollars gets me?
Are you fucking kidding me?
If I had to bet, I'd say 80% of a gas station employee's job right now is to talk people down from exactly this situation.
The other 20% is, as always, tracking down some of the bluest drinks you've ever seen.
Now, is it a good idea to sell those in the same store where you sell antifreeze?
Not for me to say.
So Putin invading Ukraine didn't start this inflationary cycle, but it is making it worse.
And the same can be said of corporate greed.
It is absolutely true that some companies are taking advantage of this environment to drive up prices and they're getting record profits in return.
And that is infuriating.
But most economists will tell you that's not what caused inflation in the first place.
After all, it's not like corporations only just got greedy in the last two years.
Companies will shamelessly profiteer the exact same way that a dog will make an absolute meal out of its own bull sack.
If left to its own devices, that's unfortunately just what it's going to do.
So to recap.
All right.
So let's pause real quick right there.
All right.
So the idea that corporations, you know, like that this is even part of the issue.
And I do appreciate that he at least acknowledged like, yeah, they've always kind of been greedy.
Look, it's not, it's not exactly clear that when prices are rising, then there's this ability for corporations to charge a little bit more.
And oh, okay.
You could just as easily argue that when prices are falling in a great economy, that then corporations would have more of an ability to charge a little bit more and no one would even notice.
In fact, right now, we're more in a situation and a dynamic where people are really trying to save wherever they can.
So in fact, it might be more advantageous for corporations to charge a little bit less and therefore, you know, steal more of the market share.
Like, right?
That's not, that's not completely clear.
Obviously, corporations would always rather make more money.
But in an environment where everyone's going, holy shit, all of the prices are rising, maybe they'd be more likely to buy something that's making less money.
And to say, oh, well, corporate profits are high and therefore that's evidence somehow that corporations are jacking up their prices.
Well, no, it might also be evidence that we've had the biggest corporate bailouts in the history of the world over the last two and a half years.
You know, it might be evidence of things like we're talking about with, like, say, the gas companies.
They'll use this as an example all the time, where they'll say, okay, well, these Oil companies are making record high profits while the price of gas is going up.
And part of that is because they don't want to fucking reinvest it because everyone's talking about moving off of fucking fossil fuels in the next 10 years.
So they're like, I don't know what to do.
I guess we'll just fucking hold on to these fucking profits.
It's not, it's not so clear that even when a corporation is making record profits, that that means that they're raising prices in a fucking like opportunistic way because we live in an inflationary world right now.
Corporations might be making like giant corporations might be making more profits because you've created a system that's fucking beneficial to giant corporations.
All right, let's keep playing.
So to recap, rising prices are due to a ton of factors: a pandemic, a stimulus, change spending patterns, supply chain issues, the war in Ukraine, to name just a few.
And anyone loudly saying that one thing is the course of inflation is either lying or has absolutely no idea what they're talking about.
All right, pause it right there.
This is this is what's so fucking annoying, man.
This is what pisses me off about fucking what John Oliver is doing here: he names off a bunch of fucking things, none of which are the main fucking things, and then goes, anybody who's talking about one thing or the other is lying or they don't understand what they're talking about.
Dig up Milton Friedman, dig him up, ask him.
That guy doesn't know anything about economics.
Well, it's like, okay, so yes, anyone who's just saying it's the stimulus package or it's corporate greed, or it's supply chain issues or it's this or it's that, it's like no no no dude, it's because the fucking infusion of new money and the fucking lockdowns.
That's why and you can say in the same way that I said, the reason Rob's hamstring is hurting is because I bashed him with a fucking sledgehammer the other day.
You can name all of these other fucking factors, but you're going to ignore that.
You're going to ignore the main thing, even though in your own example, you had to fucking mention a huge infusion you know everyone wins a lottery you had to mention a huge infusion of fucking new money.
The Fed As Savior Myth00:04:47
But now where does he go with this?
Let's keep playing.
Whichever combination of things got us into this mess, the entity that many are looking to to get us out of it is the Federal Reserve.
One of its key duties is to keep an eye out for things that can destabilize the economy.
Like all right, let's just pause it, control it already, like this is what pisses me off.
What a fucking hack.
What a fucking hack.
You are dude that you didn't mention the Federal Reserve once as being the institution that maybe had something to do with this, but you now.
The first time they get mentioned is as maybe they're the institution that can bring us Of this, yeah, sure, it could be corporate greed, or it could be Biden, or it could be the Republicans, but maybe the institution that can bring us out of this is the Federal Reserve.
Man, you that's some real fucking like you're a real hack to bring that up now.
All right, let's let's keep watching by raising and lowering interest rates.
Very basically, the Fed can increase how much it costs for banks to borrow money, a cost that they then pass along to businesses and consumers through higher rates on things like mortgages and credit cards.
And the higher the interest rates, the less inclined people and businesses will be to borrow and the more inclined they'll be to save.
Essentially, the Fed can indirectly influence how much people are spending.
So, when it comes to the demand side of the economy, they have some real power here.
All right, let's just pause it right there.
Okay, so they have some real power.
Finally, he gets to the Fed.
We're going to wrap up on this, but finally, he gets to where we don't need to play the rest of this video.
But here's just so for people who are spreading this around and need a good like rebuttal to this video.
This will hopefully serve as that.
Okay, so he's saying finally, the Fed is mentioned.
And the comment is that maybe they can save us from all of this.
Because if they raise interest rates, Rob, you see, maybe that can reign in inflation.
Well, let me ask you: if raising interest rates can reign in inflation, is it possible that lowering interest rates could, I don't know, not rein in inflation, maybe even cause it?
Because the Federal Reserve's response to 2020 was to bring interest rates to, let me check my notes here, zero.
Zero.
That's what the Federal Reserve, Fed, Fed fund target rate was in 2020, was zero.
I believe zero, between zero and 0.25, something like that.
That was what their fucking target Fed fund rate was.
So, what do you want to do here?
Do you really want to say that the Fed could they can only solve these problems, but not ever cause them?
Really?
The Fed, the Federal Reserve balance sheet going from $880 billion to $9 trillion had no effect on monetary policy.
It had no effect on what the prices of things were.
I mean, as John Oliver just said, supply and demand, those laws matter, right?
So, injecting that much, injecting that much liquidity into the markets, injecting this much new money into the markets that has nothing to do with the price of money.
What are we talking about when we talk about inflation other than the price of money?
This is, but all of a sudden, the Fed has to be put out there as the savior.
This is what's so goddamn crazy.
They're not the savior.
They're the culprit.
This is what caused the entire problem.
And unless someone can come up with a really good argument of why we needed to lock down and needed to print trillions of dollars, then don't sit here and be surprised about why we're dealing with inflation today.
Summer Port Store Wrap Up00:00:59
Because that's what it's all about.
All right.
Final thoughts, Rob.
Anything you want to add?
And then we'll wrap this episode up.
Preach, baby, and the Fed.
And the fucking Fed.
There you go.
All right.
We're done.
I'll see you guys out at Young Americans for Liberty Revolution 2022.
I'll be out there in Orlando in a few days, Rob.
One more time.
Remind them where you're going to be.
Summer Port Store.
This weekend, I will be in Las Vegas with BK Chris, myself, and Louis J. Gomez doing a spot on the stand-up comedy show.
So that's going to be a fucking party.
And then Summer Port Store dates coming up next week out on a farm in Michigan.
After that, we've got a full weekend with DC, Maryland, and then a end of summer barbecue with the Mises Elite.
Dave, you should come out for that one.
That's going to be at Jeff's house.
That's going to be cool.
And then last one's going to be Denver and then moving on to September.