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Dec. 16, 2008 - Rush Limbaugh Program
35:01
December 16, 2008, Tuesday, Hour #3
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It is definitely winter time, wherever you might be, the Arctic blast covering the upper Midwest.
You've already had cold temperatures down in the southeast, ice and mudslides in the Southwest.
Winter, isn't it wonderful?
Just gets you in the good mood.
I'll be honest with you, I don't like winter, which is uh why I live in Minnesota.
These are the days, though, you know, these global warming pontificators, and you hear Al Gore, James Hanson, and the usual media suspects, you just you just want to grab them by the scruff and slap them silly.
Come to think of it any day, I feel like grabbing them by the scruff and slapping them silly, especially when it comes to the uh former vice president.
But the uh breaking news story, some really important news now.
We've talked about tobacco lawsuits, we've talked about Blogoevich, we've talked about the bailout, but some really important news, Podrick Harrington voted PGA tour player of the year by his peers today.
First European to win the award since 1990.
Now that makes me happy.
It was between well, I wouldn't say necessarily Podrick makes me happy, uh, but I like the I like the golf news because it makes me think of what will come, you know, in a couple of days, the days start getting longer, December 21st, isn't it?
The winter solstice.
Uh and then we've got the PGA tour starting.
That's that's good news.
Apparently the big debate was between Tiger and Podrick because Tiger, while playing only the first half of the season and only two majors did win the U.S. Open, second on the money list.
But I don't know how you don't give it to Harrington.
I mean, the guy wins British Open PGA had a fabulous year, so the really important news I wanted to bring to your attention, of course.
Do you hear I don't know if you heard it at the top of your news hour, but the Federal Reserve.
Now, this is exactly what we've been talking about.
We created these asset bubbles with easy money.
When the Federal Reserve wants to create money out of thin air, which by the way, doesn't make anybody richer.
If in your neighborhood a flame uh a uh plane flew by and dropped thousand dollar bills out of the sky, if there were such a thing, the money, more money than the eye could see.
Would your community be richer?
Of course not.
The same amount of goods and services would be produced, they would just cost double or however much you increased the monetary base.
That's what the Fed does when it starts to buy T bills, when it starts to buy other instruments, which it's done lately with their particular uh bailout mania, they create money out of thin air.
Somebody's got a mortgage backed security, somebody's got a treasury bill, in comes Chairman Bernanke and the Federal Reserve, and they say, Hey, we're gonna buy that from you.
You give us this piece of paper, we'll give you cash and put a credit on your account and your bank.
Where did the money come from?
Out of thin air.
That's quite different than fiscal policy when the government borrows their taxes.
Then they take from one pocket and give to another.
It's not good policy, but it's not inflationary.
Now, the Federal Reserve said today, or they're thinking about, according to reports, that in lieu of the drop in consumer prices, and the last one was pretty severe, why they've got to keep priming the pump.
They can't afford to have anybody not have enough money.
They're going to inject liquidity, they're going to create more excess reserves.
It won't do anything.
It won't make people lend.
If 40% interest rates for, you know, Detroit debt doesn't make people lend, a little more money from the Fed isn't going to do it until we get a market clearing where the healthy companies have survived, the weak ones have gone under, and the creditors can say, Oh, I see your balance sheet.
We have transparency there, I'm going to loan you the money.
All the Fed is doing, all the bailouts are doing, all a stimulus package will do, is divert precious resources when it comes to the stimulus package, you got to go back to your old uh macroeconomics class, the guns and butter debate, most important rule in economics called opportunity cost.
If you decide to build guns, you can't b build butter or make butter.
If you decide to make butter, you can't make guns.
You've got to choose their finite resources.
Now the best way to get around that is to have a growing economy so you can make more of both.
But if you have an economy that's stagnant, it's a zero-sum game.
And that's where we are.
And so if if Barack Obama wants to enact this stimulus package to borrow another trillion dollars, to give make work jobs to bridges to nowhere, and make schools into green schools, or give mayors money so they can have a You know, a senior aquatic center, that's not creating wealth.
It's no different than if you handed out the money as a welfare check.
Now it's it's doubly bad because once the economy does start to turn, and once credit does start to flow, and confidence does come back, if it does, and I think it will, then all of that money spent on that is money that could have been spent making you more productive in your job.
If I choose to go to my bank or my brokerage and I save money, the capital markets can take that money and they can give it to the next Stephen Jobs or Bill Gates or whomever, or they can give it to the government.
What do you think is going to make you more productive?
Government never will.
Because governments spend money for a return on a voter.
Why do you think they're so hellbent on propping up the UAW in Detroit?
They're hell bent on that because the UAW is democratic power.
That's what they're investing for.
Because if you take 40 billion, as the White House is now ill-advisedly proposing, and you give it to Detroit, that's 40 billion that could have been spent upgrading your machine shop, upgrading your assembly line, giving you a better truck if you're a truck driver, as I mentioned earlier.
All of that would increase productivity.
If you give it to a company that's going to more than likely go into bankruptcy anyway, you have an increased productivity.
So, which is why I have a fundamental distrust for the quote unquote government investment schemes.
And you add on to that, the Federal Reserve doing now exactly what they did to get us into this mess, creating money out of the out of the blue, out of whole cloth.
Where is that money going to go?
Well, once again, the when the economy turns, they're they're relying on a recession to keep prices low.
But obviously, by priming the pump, they're hoping that that doesn't happen and then confidence starts to turn.
Well, if it does, there's going to be that much more money and the lending starts and the banks draw down their excess reserves, and all of a sudden you're going to see rampant inflation.
You're not just going to see an asset bubble like we had with tech stocks or housing or commodities.
You're going to see generalized inflation.
And if you don't think this is true, go back to 1978, 1979, 1980.
When Chairman Volker, before we got religion under the tutelage of Ronald Reagan, was expanding the monetary base.
Jimmy Carter was hoping he would to prime the pump for the 1980 general election, and we had 21.5% interest rates, and you had 13% inflation because of easy money.
And inflation will come roaring back.
Sooner or later, folks, you got to ask the question you got all these bailouts, trillions and trillions of dollars.
We've got easy money from the Fed, which is going to devalue the dollar.
What are the foreign markets going to say when they look at the dollar and say it's worth half what it was ten years ago?
If that, if there's a run on the dollar, you're really running the risk of chaos.
Now all of a sudden, you're talking about your entire retirement savings being wiped out because what's going to happen to the dollar is the same thing to happen to housing prices.
You can bid it up for only so long.
And then it bursts.
And if that happens, we're going to be a third world banana republic that wiped out our workers' savings.
You thought you had 500 grand in the bank enough for retirement, it's now worth 200,000.
You can have interest rates going through the sky, interest rates, the same, or I should say inflation and interest rates going sky high.
In short, we are doing now the same thing to correct this problem that got us into this problem.
And I don't quite frankly understand it.
Now they keep saying Japanese-style deflation, depression.
Folks, I don't know how else you break an asset bubble that burst without letting prices fall.
If the government artificially bit up the price of housing by making loans too easy, by making money too easy, the housing price has to fall.
That's deflation.
That's not a bad thing.
Not every recession leads to a deflation crisis.
So I I'm one of those that thinks that thinks all of these bailouts were a bad idea.
We should have let Bear Stearns go under without bailing out JP Morgan, basically in the process.
And we should have sent a clear signal.
We had an artificial boom.
Now we're going to have to suffer the bust, and the bust will be directly proportionate to how much the government bit up things in the artificial boom.
And once that market clears, we will have recovery.
It would be severe, but it would be short.
Now we're stretching it out.
We're stretching it out because nobody knows who's going to get bailed out next.
Nobody knows whom to lend money to exacerbating the entire situation.
Not to mention what the president's environmental policy is going to do.
Yesterday, the president elect decided to nominate.
You could not get more green than these people.
Carol Browner, the Al Gore protege, the EPA honcho during the Clinton years, is now going to be the energy czar.
Stephen Chu, the director of the Lawrence Berkeley National Laboratory, is set to be tapped as energy secretary as of yesterday.
Go back to September of this year.
Here's what the incoming energy secretary had to say about energy policy.
See if this comforts you.
Quote.
Somehow we have to figure out how to boost the price of gasoline to the levels in Europe, close quote.
That should get the economy rolling again, shouldn't it?
You know, my wife reminded me, as well as a couple of callers about um albuterol.
Have you heard about this?
Well, many of you suffer from asthma out there.
And there are a lot of people have asthma, many more than I ever thought.
And there was a very effective inhaler.
It was the albuterol inhaler.
It's now being phased out.
It's being phased out because it's not environmentally friendly.
Think about this.
There was something about, was it the uh CFC's, yeah, I believe the federal ban on the propellant chlorofluorocarbons or chlorofluorocarbons.
Uh caused albuterol to be the inhaler, very effective, very cheap.
Its replacement, according to most, less efficient, more costly.
You know, you we've got to have a reckoning with this green movement that is lost all sense of reality.
We have got to stand up, and you want to talk about the Republican Party returning to its Reaganite roots.
They better start with this environment nonsense, alternative energy, and windmills as far as the eye can see, even though they are horribly inefficient, horribly costly, and don't blow or don't run all the time because the wind doesn't blow.
Solar panels and all the rest.
Meanwhile, we've got cheap, abundant energy right here, and we've got to raise taxes on it to get it to the level of Europe.
We're banning coal-fired power plants, the most abundant source in America.
What is it about environmentalists where they hate humans?
Think about this.
An inhaler that relieves people from a serious condition known as asthma, we don't care.
Ban it.
Jock Custeau is more important, the memory of him is more important than any human.
We got fires raging all over the country at times.
But can we get in there and clear out the underbrush, the kindling, the fuel?
No, no, no, okay.
Just leave that fuel right there so the next fire is even worse.
You might violate the Endangered Species Act.
Cafe standards in Detroit's defense that are killing the American profitability of the SUV, the most profitable car line for Detroit.
Those have been effectively banned by this environmental jihad.
Even the National Academy of Sciences says this drive for more fuel economy results in much smaller vehicles, resulting in anywhere from 1,500 to 3,000 more deaths a year.
Because when you hit a tree with a Ford focus, you don't have as much protection as you do with a big honk and SUV, whether it's an explorer or a Tahoe or whatever.
But nope, can't build those.
They're not fuel efficient.
Cafe standards.
Well, that was shrewd.
The DDT issue.
Remember Rachel Rachel Carson's book in 1969, Silent Spring, DDT is bad.
In fact, there was never any conclusive evidence of any harm to humans.
We banned it in the USA, and now they're trying to ban it in Africa.
One little problem there, malaria is the number one killer of pregnant women and children in Africa, but they want to ban it there.
Environmentalists don't care about humans.
Haven't even mentioned the cost that makes it all poorer.
There's even talk that the foam that was replaced on the Columbia Space Shuttle may have contributed to that disaster.
Maybe.
Nobody knows for certain.
But the foam was was replaced because of uh it wasn't environmentally friendly.
You start to get the drift after a while.
1800-282-2882.
I'm Jason Lewis, in for El Rushbow.
More calls when we return on the Excellence and Broadcasting Network.
All right, here we go.
1800-282-2882 back with me, Minnesota's real anchor man, filling in for El Rushbow, the great one, America's real anchor man.
He will be back tomorrow.
Check out RushLimbaugh.com.
In the meantime, Tim and San Diego, gorgeous San Diego, our friends at KOGO down there.
Welcome to the Rush Limbaugh program.
Well, thank you, Mr. Lewis.
Uh fabulous job uh filling in here.
Thank you.
Basically, uh, you know, I've been a conservative uh activist and believer, you know, pretty much since Russia's heyday years ago.
I'm 32 years old.
Um, you know, I think that the Bush administration has set precedence uh on an activist spending and uh just no really no uh restrictions on on what to do with the power of of the federal government that I think will em empower,
embolden, and and and strengthen uh left wing Democrats coming up here, you know, maybe in the next few years, and uh it's tough to say how long, really.
Well, that's right.
What what will happen once you couldn't be more correct?
What will happen when the bailouts and the easy money fail again?
They will blame the Bush administration because they started them.
Precisely.
What do we do as as conservative activists, as true believers?
What do we do to strengthen our base to strengthen our cause?
Where do we go?
How do we do this?
Start look, I you know, this sounds counterintuitive, but I said it earlier, I'll say it again.
Um politics is not just a game you win or lose.
See how many R's you can elect opposed to D's.
Politics is life.
It's more important than that.
So quite frankly, in your zeal to win, and the Republican, you know, once you get a party, and Madison warned about this in Federalist 10 inadvertently with factions, once you start talking about parties, they take the place of the movement.
They take the place of the cause and the people within the parties, the party chairs, uh the elected officeholders, the consultants become more important than the cause itself.
So whatever it takes to win to keep up us in power is what they're going to do.
And the political party is a conduit to an end.
It's not the end of itself.
I agree with that.
You know, I don't know why our administration that had so much I had so much hope and uh and belief and and Bush in the beginning.
Why did they turn into Keynesian uh economist?
I don't understand.
I don't know why so many people apologize for free minds and free markets.
So when you talk about a kinder, gentler nation, when you talk about um bipartisanship and reaching across the aisle, when you talk about compassionate conservatism, you are already apologizing for Reagan.
You are already apologizing for every principle we hold.
I mean, I love the Colin Powell's of the world going after Rush.
Here's what the liberal Republicans basically say, Tim.
They say, look, you conservatives are a problem, but you won't be in the party, you won't be a problem within the party if you just give up every principle you've ever held dear.
You know, Democrats don't do that to each other.
No, they don't.
They know better than that.
How do we how do we clean the party?
How do we go forward?
Be willing to lose.
As young people, you know.
I'll be blunt.
Be willing to lose.
How many times have you heard a Republican apologist for a moderate candidate say, yeah, but they can win.
Now, usually, you know, you take a look at the Republican liberals in the Northeast.
They're not winning much.
So usually it's bad politics and bad policy.
But even if they they win, what good is it?
So say I don't care.
Winning is not the goal here.
Changing the country is the goal.
And sometimes you have to use, you know, moral swasion to do that.
Absolutely.
It it's shocking to me.
You know, the recent election uh with Obama coming in.
Uh, in San Diego, he carried the county, which is it was unbelievable.
I never would have thought that would have happened.
It really is.
You gotta you have to also watch who you surround yourself with, and I'll let you go here.
But I mean you've got Bernanke starting to talk about the virtue of FDR, lovely, and you've got Hank Paulson, who formed a global uh environmental company or firm with Al Gore uh before he came to power.
So still having more fun than a human being should be allowed.
It is great to be back in the Till of the Hunt chair behind the Golden EIB Mike L. Rushbow.
Back tomorrow to keep things a rolling here at the Excellence in Broadcasting Network.
In the meantime, as I say, check out Rushlimbaugh.com.
Joining us now, Representative Louis Gomert, he's the first district of Texas Congressman, and he's the main proponent of the tax holiday instead of the bailout.
Representative Gomerton, welcome to the Rush Limbaugh program.
Well, thank you.
It's been great hearing the things that you stand for, all the right things.
I appreciate that, my friend.
Now let's let's talk a little bit about uh H.R. 7309.
You're talking about a two-month income and FICA tax holiday, correct?
Yeah, exactly.
When we look at the way that uh Paulson is squandered the $350 billion so far, and has nothing to show for it other than uh some wealthy pockets somewhere, uh we looked at what would be the best thing to do.
Now some say this is Keynesian and all those people are are intellectual uh fools because it's not Keynesian to say we want people to keep their own money that they earned.
And so basically we've said, all right, there's a hundred and one billion dollars a month that gets paid into uh individual uh income tax from withholding, and then there's another sixty-five point six billion that is withheld from people's paycheck for FICA.
You put those together for two months, you've got three hundred and thirty-three or four billion dollars, and uh that's still cheaper than what uh is left for uh Paulson to squander, but it would be left in people's own paychecks.
This isn't like the goofy uh stimulus earlier this year where you know we sent money to people that didn't pay any in.
Right the rebate plan.
Oh, wasn't that a great plan?
Well, you may have uh some people heard me ask the president.
I didn't I didn't know there was an open mic when he came by.
I was upset that forty billion was going is rebates people didn't pay taxes.
And I say, by the way, Mr. President, how do you give a rebate to people that didn't put any bait in?
And that's but this doesn't do that.
This allows people to keep their own money for two months it and let them decide who to bail out.
Let them that's precisely what that's precisely in uh what Barack Obama proposes in his tax cut plan.
His tax cuts include tax credits, which are which go to people that don't have an income tax liability, that's going to be a check.
Uh that is not a tax cut.
If you're going to give tax cuts to people who pay the burden, I'm afraid you're gonna have to put up with MSNBC calling them tax cuts for the rich because the the people out there, and it's not just the Uber rich, but I'm talking about the top ten percent, the top five, the top one percent pay as much as the bottom ninety-five percent right now.
Well, and we have got to have massive tax overhaul, and we squandered the chance to do that uh up through 06.
We should have done it.
People lost their nerve.
We didn't.
So right now we've got to deal with the political realities, but this would be not like a tax credit.
This is money in the account.
I mean money in the paycheck each month that otherwise goes to the government.
Some would say, well, won't that hurt Social Security people that receiving that?
No, because that money is made up for the money that Paulson doesn't get to squander.
People say, Well, we gotta have that money coming in.
Well, this is money that he will not be allowed to squander.
I get a feeling that you're not on the Hank Paulson cheerleading squad.
Now, don't don't sugarcoat it, Louie.
Give it to us straight here.
I'm sorry.
Jason, when I go back to September and when I heard uh King Henry go out and say that he was gonna stand good for every dollar in the money market, but not do that for money in good solid community banks.
He knew as smart as he is, he was gonna cause a run, which he did on banks where people drooped down to a hundred thousand and transferred to money market.
That's not a man that I consider very uh anything but disingenuous.
So I'm sorry.
You know that our Treasury secretary and former Goldman Sachs CEO co-founded Al Gore's Generation Investment Management to buy carbon offsets before he uh started the bailout thing.
And I'm looking to plant some trees uh this week because uh yeah, yeah, I'm gonna see about going into that business myself.
Well, speaking about uh the you know, speaking about Keynesian doctrine, I mean these guys are dyed in the wool, Keynesians when it comes to priming the pump with government spending.
And and as you point out, there are two kinds fundamentally there are two kinds of deficits to run.
One is harmful and one is generally harmless.
If you run a budget deficit, if you have a budget in balance and you run a deficit because you increase spending on a stimulus program, which is a euphemism for government uh boondoggles.
If you do if if you do that, that's bad.
It crowds out the private sector, frankly, whether it's done by borrowing or taxes.
But if you if you run a deficit because you cut taxes, it's actually harmless because you now you've reignited the engines of economic growth and you can grow out of that.
The key here, uh Representative Gomer, is government spending crowds out the capital markets, not how we finance it.
That's right.
And one of the problems was, yeah, we cut taxes and it stimulated more revenues to the Federal Treasury than ever in our history.
The problem was we didn't cut the spending at the same time.
And and some have attacked uh the idea of a two-month tax holiday by saying, Well, what if what if people put it in their savings account?
Wouldn't that just kill the whole idea?
And the pr one of our big problems right now is Paulson went around screaming the financial sky was falling.
We've got to reignite some confidence in the economy, and if some people need to catch up on their mortgage or put a little in a savings account, then it's all good because it helps reinvest in confidence in the economy.
Well, the argument, of course, uh i is moot because that's exactly what they did with the rebate.
A lot of people spent that, and that didn't stop them from promoting a rebate for people who didn't have a tax liability.
And by the way, Paulson's bailout and more importantly, and and deleterious what the Federal Reserve is doing in creating fiat money by taking all of these financial houses on their balance sheet, they're injecting liquidity as far as the eye can see, that's still not getting lending going.
So that money's still being saved.
That's exactly right.
In fact, I'm hearing from more and more people that have gone to the banks that got billions in tax dollars and they're tightening up their credit and not loaning like they would it.
And then some are using it to monopolize banking, buying smaller banks.
Yeah, that was the the idea, right?
Taxpayer dollars to monopolize banking.
Well, here's the only thing.
Here's the only problem or only concern.
I'm sorry.
Here's the only concern I've got, Representative Gomer, with the problem, and that's you alluded to it earlier, and I think it's a fair criticism, and that is it's temporary.
And what's to prevent is Milton Friedman used to say, the best income tax reduction is permanent income tax reduction.
Then people will know what's going to happen a year from now, two years from now, and that that you know, in order to make a long-term investment, you have to have long-term sum certainty.
So what's to say, okay, we're going to get a little boost for two months?
People might sell their stock then, but once the tax you know comes back in two months, we're going to be in the same fix.
Well, this is a seventeen percent tax decrease for a year.
And one of the one of the great byproducts of this will be we have a seventy percent uh decrease in in tax tax cut, as you will, for one year.
Then people are gonna notice for a change just how much money they're sending to Washington every month, and then I think there'll be more demanding of that permanent tax cut that we're not gonna otherwise be able to get.
So I think it it is a great approach, but for people to say this is a bad idea because it's only a seventeen percent tax cut for one year, they don't see the big picture in where this goes and how it could ultimately give us what we need to have long-term tax cure.
Well, I think you ought to go a step further.
I think you need to go a step further and uh, you know, put an amendment to the bill to repeal withholding.
That's probably the most insidious thing uh that FDR gave us, the idea that the government gets our money first, and nobody really knows.
If they had to write out a check every month to the government, the way we write out checks to other creditors, there would be a tax revolution today.
Absolutely.
And that's you know, we would hope that that is gonna be a re a result if we can get this bill to the floor, because if we get it to the floor, it'll pass.
And it we may not get it to the floor by the end of the year, but I'm gonna file it on day one and we're gonna keep pushing.
And if the American public will let the representatives and senators know, hey, let me do that last uh part of that seven hundred billion dollar bailout with the money that I earned, then it will get to the floor because no matter which party's in the majority, they want to stay there.
Well, that is true.
And now we've got the specter of a six hundred billion to one trillion dollar addition to all of this called a stimulus package that Barack Obama and his merry band of demand side economists are now pushing.
And if we're going to run up another trillion dollars in debt, why don't we run it up by giving tax relief to the American people as a sp as opposed to make work jobs programs which produce very little wealth?
Well, no kidding, and there's no telling how many acorns would be in that stimulus package that could just devastate the country.
Yes, unfortunately, those blind squirrels don't find acorns very often, and uh that's what we're we're dealing with with many members of Congress, blind squirrels, unlike you, my friend.
Well, well, I uh there are so many really good quality uh folks in Congress.
We've just got to make sure that the right voices get heard and that people understand this kind of thinking that uh Obama's talking about just throwing trillions of dollars at a problem when it's that is Keynesian when you take from somebody and give uh to others uh that's that's even gone beyond that to pure social media.
Well, we've been talking about that all day today, and that is the opportunity cost.
The money doesn't grow on trees, so when you you know rob Peter to pay Paul, you end up with a pretty sore anyway.
Got to move representative.
I'll give you one example.
I I heard somebody uh recently ask, you know, so what is really wrong with socialism?
I was an exchange student of the Soviet Union back in 73 for the summer, was out at a collective farm, and all the farmers were sitting out in the shade, and I worked on farms and ranches and had then, and I walked up to them and I spoke a little Russian back then, and I said, uh, you know, uh when do you work out in the field?
And they all laughed, and one of them said, I'll make the same number of rubles if I'm out in the field or if I'm here in the shade, so I'm here in the shade.
That's why socialism never ever works.
Yeah, I mean, uh we nobody likes to admit it, but um there is something called self-interest that is part of our nature, and when you try to destroy that, amazingly, you get people who produce less.
Representative Louis Gomert, Texas, thanks so much for joining us.
Be well down in the first district.
Thank you so much.
You're doing God's work.
Appreciate you.
Thank you, my friend.
Back with calls when we return on the Rush Limbaugh program.
Wow, that sounds nice.
Let's see, one more segment, maybe two more segments to go before we say goodbye today.
I am uh Jason Lewis, Minnesota's real anchor man in for America's real anchor man on the Excellence in Broadcasting Network.
El Rushbow returns tomorrow.
We can all hardly wait.
Check out Rush Limbaugh.com.
In the meantime, let's squeeze in as many calls as we can.
1800-282-2882 Donna in Illinois.
What is that uh town in Illinois, Donna?
That's called Shanahan.
Shanahan, great.
Yes.
Well, fire away, my dear.
Well, I'm trying to understand the whole economic situation, and there's one piece that I just can't understand.
Um, the piece that doesn't fit is why aren't interest rates naturally rising up?
Because if banks need more money to lend, then the higher interest rates would encourage more saving.
And if credit is hard to get, then wouldn't credit automatically become more expensive with a higher interest rate.
You are, my dear, uh, more of an economist than you will ever know.
Of course, interest rates should have gone up, but you understand we now live in an entitlement mentality.
And the entitlement mentality says, in order to avoid a little recession, we are going to put the entire country at risk for a much bigger one with monetary policy and fiscal fiscal stimulus nonsense.
And here's why.
You couldn't be more correct.
We got into this situation because we had fundamentally an artificial boom.
An easy money induced artificial boom that bit up the price of housing so high that even people couldn't afford houses anymore and the bubble burst.
If you've got too much money floating out there, the the monetary authorities, the central bank should be reining in the money supply to a degree, and then you would have interest rates rise.
Again, naturally, if you've got companies on shaky ground, interest rates must rise for their debt because it's a greater risk.
This whole experiment is designed to make certain that the markets don't function and interest rates don't rise, which is why we're setting ourselves up for another artificial bubble.
So you're saying by the Fed keeping lowering the um the interest rate, it's actually making the situation worse.
It will.
Now it isn't immediate.
Well, I'm my guess is it is right now.
What they're afraid of is runaway deflation.
But the deflation that we're suffering today was due to the artificial inflation and housing that they created.
Exactly.
By buying the subprime mortgages and guaranteeing those and the easy money policy.
So how do you get out from under a um a misallocation of demand towards housing without letting those prices fall?
Exactly.
You've got to let them fall.
It has to correct itself.
Exactly.
Market correction.
That's not market failure.
That's exactly how the market corrects.
You've got to allow bankruptcy.
You've got to let prices fall.
You've got to tolerate a little deflation.
It doesn't necessarily have to spiral into a depression.
But my argument is this that we're actually we're actually by keeping the easy money going, by keeping the stimulus spending going, we are setting the stage here for a a prolonged malaise and recession of doubt, uncertainty, if you will, Because nobody knows whom to lend to.
Nobody knows when the recovery is going to come.
Nobody can see who's healthy and who isn't.
And so we're prolonging the crisis.
And when and if we do recover, you're going to see runaway inflation.
Now, it may not be six months, a year from now, but it will come.
This money has got to go someplace.
Right.
Donna, thanks for calling.
I'm glad you did in Des Plains, Illinois.
A lot of Illinois folks today.
Good to hear from you.
Jennifer, you are up next.
Hi.
Hello?
Hello, Jennifer.
Hello.
How are you, Mr. Lewis?
I'm just uh lovely.
Good.
I'm called to tell you I live in a suburb of Chicago, which by definition is any suburb that borders the city of Chicago.
A lot of people call in and they they say, Oh, I'm from the suburbs well.
They're not.
And until you've lived the nightmare that is Crook County politics for your entire life, I don't think anybody can honestly understand what's going on here.
The way Blugoyevitch is conducting himself right now, to me and to everybody who lives around here, this is normal.
This is the way politics are in our area.
No, this is normal to us.
What he's doing right now, the Democrats and the Republicans alike can stand out there and say, Oh, yes, well, he's he's he's insane, he's nuts, he should be taken out.
No, this is they all act this way.
Well, look, it's y you know two wrongs don't make a right because everybody does it.
Doesn't mean what he did on a wiretap is uh, you know, pardonable, but it does make you wonder, okay, when are they going to go after the rest?
Well, and this this leads to the other thing that I wanted to mention to you.
People keep calling and say, how did Obama wind up a state senator?
And I can tell you, four years ago we had a wonderful state senator, a Republican, a great man.
His name was Peter Fitzgerald, no relation to Patrick Fitzgerald, but he brought Patrick Hasterell to this state to start prosecuting to try to get rid of the corruption.
When he did that, he annoyed so many Republicans because a lot of Republicans here that are Democrats in cheap clothing.
Fair enough.
Always a pleasure filling in for the big guy.
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