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Dec. 30, 2008 - Rush Limbaugh Program
36:14
December 30, 2008, Tuesday, Hour #2
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No, no, I'm not bitter about living in Minnesota.
Not bitter about the top corporate tax rate of 9.8% here.
I'm not bitter of an income tax rate of almost 8% at the top level.
Sales taxes over 7% in most communities.
I'm not bitter about that in Minnesota because look, if nothing else, we've got the weather going for us.
It's about 19 and snowing in the Twin Cities.
Welcome to the North Pole, everybody.
I am Jason Lewis.
Everybody's Santa Claus this Christmas season.
El Rushbo is taking a couple of days off.
He'll be back on Monday.
You want to stay tuned for that.
In the meantime, rushlimbaugh.com up and running as well.
It's always great to be behind the golden EIB mic in the Attila the Hun chair at the Limbaugh Institute for Advanced Conservative Studies.
And we had some advanced conservative studies in that first hour.
Glad to engage some of you out there on the virtue of free markets, free people and free markets.
You know, Kit and I were talking during the break.
You can't eviscerate markets.
You can try to, but they never go away.
All you do is create black markets.
The notion that we've moved beyond a market economy could only be taught in the ivory tower of academia.
Nothing could be more self-evident than the supremacy of markets.
The government can try to distort them, but then they create dislocations, like a housing bubble, like a commodity bubble, like a tech stock bubble.
We can regulate the market, and then you create dislocations.
I mean, you can regulate people to, oh, I don't know, make bad mortgage loans, which we have, and we get a mortgage crisis.
But you can't eviscerate the marketplace.
You can pass an amendment to ban liquor.
You can go with prohibition.
That ought to do away with the market and alcohol, right?
Oh, yeah, Al Capone had something to say about that.
The markets always exist.
And when you try to intervene and supplant the market, what you get is misallocation of resources, i.e., poverty in a lower standard of living.
And for anybody to suggest that you could do that is testament to the lack of America's education prowess these days.
I mean, how many times do we have to go down the road of centrally planned economies and their failure before we get it?
I mean, even in Cuba, the paradise known as Cuba, where everything is free, and of course, when everything is free, nothing is free.
Cuba is suffering a depression.
I'm shocked.
They're preparing for their 50th anniversary of the revolution.
This was the revolution that said the centrally planned economy would be a paradise.
Meanwhile, people are trying to get out of Cuba on old car frames and dying in the ocean.
Gee, I wonder why they're leaving.
The only people going to Cuba are bored Hollywood types like Michael Moore.
Cuba calculates, by the way, its gross domestic product by including state government spending or national spending.
Do you know who else does that?
By the way, just a little education for you.
The United States.
When we calculate our gross domestic product and whether you use an income approach or a wage approach, there's a category called government purchases.
Now, thankfully, we don't include welfare in GDP.
But when we calculate our gross domestic product, if the government creates a make-work job, otherwise now known as a Barack Obama stimulus package, that counts.
They count it.
They count it as though we've created something of value.
So, you know, you've got consumption plus investment plus net exports plus GP government purchases.
And that's what drives a lot of these people who want to, quote unquote, fine-tune the economy.
They think, well, if we can put people to work beautifying schools, putting wireless internet on school buses, building more light rail in Los Angeles, why, that will create jobs and create wealth.
No, just because the government calls it wealth doesn't mean it's wealth.
If the government creates a bridge that nobody uses, oh yeah, we did that.
It was called the bridge to nowhere.
Is that wealth?
But the bureaucrats count it as such.
And a lot of that political reasoning is what's driving government spending.
But if you're talking about your standard of living for every dollar spent on a stimulus package, and we're talking about dollars in a fiscal sense that the Federal Reserve hasn't created out of thin air.
I'm talking about the government taxing or borrowing.
For every dollar spent on a stimulus package, it's $1 you must go without.
You must defer.
You must reduce your consumption or reduce your savings so the government has that to create a bridge to nowhere.
It's infrastructure.
It's good.
Now, you've got to ask yourself a question.
Is that going to improve your standard of living?
Or would it be better if you actually kept that dollar and either consumed with it or, even better yet, loaned it to your neighbor who's starting an internet business or some other business?
What is going to add to the nation's productivity?
What is going to be invested more wisely?
Bureaucrats can't possibly know what to create.
This is what the great economists like Ludwig von Mises and Henry Hazlitt and Hayek all tried to get through the heads of those kids with heads full of mush.
Apparently, it might not be working at St. John's in Minnesota.
But regardless, the government cannot possibly know what is demanded in the market.
The millions and millions of decisions and the private knowledge that somebody like Stephen Jobs is going to start a computer company.
How would the government ever do that?
How would they know?
How could they read his mind?
Government will make investments.
They'll create things based on political interests.
So if the potentate of pork of Minnesota and the United States Congress, Representative James Oberstar, one of the real demagogues of the United States Congress, if he wants to take this stimulus package because he's going to be one of the House architects, as chairman of the Transportation Committee, he's going to make certain his 8th district gets a snowmaking machine that you're going to pay for in Minnesota.
Shrewd.
That's why some of us are a little bit distrustful of government doing this.
And of course, the empirical evidence is everywhere.
Cuba now is going downhill as though it weren't already.
You've got, you know, how is it possible that an oil company loses money in the environment of 2008 when they had very high oil prices?
Well, the state-run Mexican government oil company, Pemex, managed to do that.
The company posted a $7 billion loss in the last few years.
How is that possible?
Actually, that was a couple of years ago when oil prices were even higher.
They posted a loss.
How is that possible?
Because when government owns something, nobody owns it.
There is no market discipline.
The beauty of profit and loss, the beauty of the P ⁇ L, it focuses the mind.
If I've got my money invested with my neighbor's business, I'm going to see his quarterly P ⁇ L statements.
I'm going to look at those.
I'm going to look at his debt to equity ratio or debt to asset ratio.
I'm going to make certain that I get my money back with a return.
But when politicians spend money, there is no market discipline.
If they blow it, if they waste it, they just borrow more or tax more.
They don't get thrown out of office.
They usually become a chairman of the House Transportation Committee.
Therein lies a crucial difference.
The beauty of profit and loss is it focuses the best uses of our resources.
It signals where our money should go.
It provides productivity because profits are always reinvested.
We used to call this the marketplace before academia got a hold of it and apparently brainwashed a few folks.
So I could go on and on about the empirical evidence of state-run companies and government spending.
It doesn't work.
And 2009 will be no different.
And I wish somebody would tell that to the L.A. Times.
You should have seen the editorial in the L.A. Times.
They were lamenting the fact, and thank God for the two-thirds vote requirement in Sacramento to raise taxes, because you had a number of Republicans who are fighting the Uber Liberal Assembly in Sacramento, as well as the Uber Liberal governor, Republican governor, doing for Republicans what a former president did for Fidelity.
Arnold Schwarzenegger wants to raise taxes.
The Assembly wants to raise taxes.
But the Republican minority is saying no way.
And you've got to have a two-thirds vote to raise taxes, and they're holding out.
So naturally, the apologist for big government, the Los Angeles Times, how's that subscription ratio going or that subscription rate going out there?
They blasted the GOP in California for their no-tax hike pledge.
The no-tax pledge, the taxpayer protection pledge from the Americans for Tax Reform, blindly, blindly promotes one policy position over the interests of the economy and even taxpayers in California.
Now, this is downright Orwellian.
This is what?
Through the looking glass.
Words mean exactly what I want them to mean.
The L.A. Times now says raising taxes benefits taxpayers.
Huh?
Yeah.
They think, you know, if you don't raise taxes, you're forgetting the oath to serve the people.
Well, let's take a look at California because it is such a basket case.
They have been spending money like drunken Hollywood actors.
And in fact, the more they tax, the more they spend.
You've got a situation here where they've got the largest state budget deficit in the country.
So what's their answer in California?
Their answer is, let's see, we're going to raise sales taxes one and a half percentage points.
So that's going to bring the state and local sales tax rate in a number of areas to over 9%.
We're going to triple the car tax.
Didn't the former governor get in trouble out there in California for tripling the car tax?
We're going to invigorate the economy by creating government jobs.
Part of which, by the way, will be, and we talked about the futility of rail transit.
Californians want federal money and state tax money to build a railroad, presumably across the state, that's going to cost $34 billion.
That's going to increase your productivity at work, isn't it?
So this thing in California, you know, they've got the worst credit rating, I believe, in the country.
They've got this high-speed rail system they want to spend the money on.
How is it that nine states have no income tax at all?
I believe it's nine.
You know, you're thinking about Texas and Florida and Nevada and Wyoming and Tennessee.
How do they provide their services?
Oh, yeah, those are the states that are growing still.
Yeah, that's right.
Look, the bottom line is this.
The idea that we are undertaxed, and this is the premise of all the tax raisers in the country.
They keep incrementally raising taxes, thinking, well, another quarter won't hurt.
Another dollar won't hurt.
And that's based on a false premise that we are, in fact, undertaxed.
If you take a look at the United States total government spending, federal, state, and local.
Now, remember, when we came out of World War II and we did the right thing, we burst the government war machine bubble and we literally deleveraged and went back to a private economy.
And a lot of people were laid off for a while.
But all of a sudden, in the 50s, the economy boomed because the federal government didn't spend more than 15% of the GDP.
Now we've got a GDP of about $14 trillion.
Do you know how much we spend from that GDP on government at the federal, state, and local level?
You're looking at $6 trillion.
$6 trillion.
The federal government's budget's $3.1 trillion right there.
You add another almost $3 trillion at state and local government, and you're looking at $6 trillion out of a $14 trillion GDP.
You're looking at 40% of our national income being consumed by government.
And yet the LA Times and every liberal from L.A. to New York, from Minneapolis to Houston, is saying, well, what we need is to raise some taxes, especially on the wealthy.
We are undertaxed.
Seriously, folks, this is living proof that some people.
All right, I'm not going to go there.
I'm going to be nice.
A kinder, gentler, jollier Jason Lewis filling in for Rush Limbaugh right here on the Excellence in Broadcasting Network.
We are on the cutting edge of societal evolution.
The Rush Limbaugh program up and running for a Tuesday.
Walt Williams, Walter Williams, back here tomorrow.
That should be fun.
Mark Stein on Friday.
Best of Rush on Thursday, New Year's Day.
And then the big guy, El Rushbo, back on Thursday.
In the meantime, holding down the fort.
In the Northern Command, I am Minnesota's real anchorman, Jason Lewis.
Minnesota's Mr. Wright.
Call me what you want, but just call 1-800-282-2882.
Let's go to St. Paul, Minnesota.
Paul, you are up next.
Hello.
Hello, Jason.
I appreciate the Rush Limbaugh program.
I think you do a great job of filling in for them.
Mega, Christmas dittos to you from the great state.
Actually, I'm in Wisconsin right now.
With respect to your comments about free markets and specifically about these bailouts that have been occurring, it's really been bothering me that Rush has been focused on this notion of a bailout of the UAW, which I think is completely ill-conceived.
If we want to take a look, actually, you know, we don't really have such a thing as free markets.
I think we all need to be honest about that and take a look at how government policy drives business to make some of the decisions that they make.
And if you take a look at our auto industry, for example, the national policy is for unions and companies to negotiate for what used to be a social compact.
And for, you know, starting out with Henry Ford, who realized this even before we had the government policy for collective bargaining, you had these companies enter into agreements with unions for good wages, for health care, eventually for terrific pensions and so forth.
And for 100 years, these companies, General Motors, for example, they've been providing good wages, good benefits, pensions to these employers, and they were doing it under the umbrella of government.
What do you mean they were doing it under the umbrella of government?
Government policy.
Back in the 1940s, the government actually established laws that said that this is what good companies should be doing.
It's actually the national policies.
Collective bargaining is national policy.
What would you say to this?
Let us establish a law.
In fact, I've got a plan to eradicate third world poverty in Africa.
And we'll do it here first, and then we'll go there.
We're going to have the government just establish a policy or a law that says the minimum wage for everyone is $200 an hour.
And we'll just pass a law.
And if we pass a law, we can create something like it grows on trees.
Well, I think that that would be companies, the free market, if you will, governments, we would have to find a way to work within that framework.
What you're saying, of course, is it wouldn't work because governments don't create and passing a law doesn't create anything.
Now, you are right.
Ever since the National Labor NLRB, the National Labor Relations Act, we created this notion of, in a number of communities, closed shops, where if the union got 50% plus one, the entire workforce would have to be unionized.
You didn't have a choice.
A number of states don't like that under Section 14B in the NLRA.
They are right-to-work states.
But that is not an outgrowth of the free market.
If we really had a free market, the only power unions would have, to be perfectly honest with you, Paul, is to say, look, we're going to collectively bargain, and we hope you want to too.
And the company might say, yeah, it might be easier to do one big contract rather than negotiate with everybody.
So we'll do that.
But by the way, if you walk off the job, we're going to replace you.
And if you walk off the job, you better get everybody to walk off.
And they would have no more power than the power of persuasion.
Of course, that would hamstring a number of unions.
They need the power of coercion and force and government to make people pay dues, to make them walk off, to keep them intimidated.
Otherwise, a number of people simply wouldn't latch on to the union agenda.
I don't think it has anything to do with free markets.
Well, they operate within the so-called free market.
And I agree.
The only persuasion that unions, I mean, right now, companies, if they disagree with their employees, I mean, yes, they can send them to the street or the unions can strike.
And if you take a look, for example, in the General Motors case, the UAW, they've used the strike weapon and the just-in-time mechanism, which is a product of the last 30 years, very effectively.
Regrettably, the cost structure that exists, for example, at the UAW, it's completely outpriced General Motors and some of these other companies from certain segments of the market.
Well, wait a minute.
Wait a minute.
You just hit the problem on the head there.
And when General Motors has to pay, or I have to pay, $2,000 to $3,000 per car just for health and retiree and pension plans, not for the car, General Motors has a cost structure problem, and that's because the union has been intransigent over time.
Now, if you take a look at the bailout, Paul, everybody expects the executive to take a cut.
They expect shareholders to take a cut.
The only people that are refusing to take a cut is the UAW.
Why wouldn't you think we're bailing out the UAW?
But that's why I have the problem with you and with Rush.
The UAW folks are taking cuts.
If you take a look at the negotiations that are coming out of Detroit right now, in 2010, workers will go from a $28 basic hourly wage to $15 an hourly wage.
Excluding one, except you've got to exclude one item there.
And that is benefits.
If you include the benefits, then all of a sudden Detroit is way out of whack, and those simply have to be addressed before Detroit's going to be healthy again back after this.
You know, the last caller, nice guy, and a lot of people, I chide the UAW.
Rush chides the UAW, but a lot of good people in unions, I have no problem fundamentally with private sector unions because if they become overbearing, if they ask more than they produce, the market will punish them.
I don't have to go out and buy a car.
I don't have to fly on an airline.
If the union is overreaching and the company is going under or they have to raise prices or what have you, I don't have to patronize them.
So the market will take care of itself if government stays out.
In this particular case, in Detroit, I've got a problem with the bailout because the government is now intervening with my money to bail out an unsustainable cost structure driven by past UAW contracts.
You've got to remember, in the 1950s, we had demolished our competitors.
There was no competition from Germany or Japan or Asia.
We could build a car for whatever we wanted to, and that was the only game in town, and we could sell it.
I'm exaggerating only for effect here.
All of a sudden, those World War II competitors now become economic competitors, and they are driving, this is what markets do, they are driving efficiencies.
They are becoming competitive.
And the UAW is stuck in la-la land saying, well, we don't have to produce more with less.
We don't have to compete.
Well, yes, you do.
And they're hoping the government will tell them they don't want to compete or don't have to compete.
Now, it's altogether another story when it comes to the public unions, of which I vehemently oppose.
Fundamentally, and we're going to talk about this next hour when I get to the single biggest problem in K through 12 education today.
It's called the National Education Association.
Unions are there for the benefit of their members, not for the kids, not for anybody.
They are there to protect mediocrity with one-size-fits-all contracts.
They don't want any stars.
They don't want anybody producing more and earning more because that breaks up the brotherhood.
And without the brotherhood, without the solidarity, you get nothing.
And again, the market will punish that if they get overbearing.
And if they don't get overbearing, God bless them.
Earn as much as you possibly can in free negotiations.
But in the public sector, there is no market.
The idea, quite frankly, and I'm going to go out on a limb here and be somewhat radical, the idea that we even allow government unions is an oddity to me.
The idea that we can have a conflict of interest where every governor or every legislator in your state is negotiating with the very teachers' union that is then lining their pockets with campaign contributions.
Talk about conflicts of interest, serving two masters.
And that's the fastest membership growth in the country, government unions.
And that also, my friends, it's what's driving the Paul Krugmans, the Barack Obamas, the Chris Dodge, the Barney Franks.
They know they've got to build in permanent political constituency if they can get more people on the government payroll in the government union because that money flows right back to the career political types, the career politicians.
And you wonder why we have the largest amount of inputs, $536 billion we spend on education in this country, K through 12.
And yet we get whipped in international test scores.
The National Education Association.
I hope I'm not traumatizing too many of you.
But then again, you're probably not listening because you're on vacation this week.
Tom in Brownsville, Texas.
That ought to do it if the monologue didn't.
Tom in Brownsville, Texas, thanks for waiting.
You're on the Rush Limbaugh program with me, Jason Lewis.
Hi.
How you doing, Jay?
I'm doing fine.
How are you?
I've got a question for you.
I've had a little bit of accounting and college and stuff, and I'm not quite as good as our government is.
But I'm curious, if it's our country they're trying to bail out, why don't they take the $700 billion and give it to the people that are in debt?
Well, it's much more than $700 billion now.
Oh, yes, I'm sure it's going to be a lot of money.
The potential, we should be clear about that.
The potential of the bailout is much more than $700 or a trillion even.
Look, I don't know that that would be the right thing to do because I'm not in, I don't think government should be in the business of rewarding debt and rewarding people that make bad investments.
However, from a macroeconomic standpoint, Tom, you're right.
It's no different than what we're doing with the money.
If we're going to run up a trillion dollars, Tom, or $2 trillion in deficits, why don't we run those up by giving people a tax cut?
Exactly.
I mean, everybody's talking about how these people have been duped into these mortgages.
I've had a mortgage or two, and there was some stuff I didn't understand.
It was my own fault if I signed them.
I'm not one for bailing people out when they get themselves in trouble.
Right.
But on the other hand, if anybody needs to get short-changed on this deal, it's these government agencies and these big businesses that have been ripping people off.
Well, first thing we need to do is stop the bailouts.
I mean, there is data now to conclude that, in fact, things were not going to hell in a handbasket.
I think Rush touched on this last week as much as Paulson and Bernanke and company said they were.
There's data to conclude that the government, just plain and simple, panicked, and that has become a self-fulfilling prophecy driving the downturn.
There was no run on the banks.
It would have been, you know, frankly, if we would have let Bear Stearns collapse, what a wonderful signal that would have been.
There would have been no panic.
There would have been an investment bank that went under.
We wouldn't have had to bail them out so J.B. Morgan can own them at, what was it, 20 cents on the dollar or whatever it was.
Yeah, I'd like to have had some of that myself.
Yeah, right.
That would be the first thing we should have done.
But you're quite right.
Here's what I think you're trying to say.
Remember the Bush stimulus package last summer, last spring?
We're going to tax people like you and me so we can give rebates to the quote-unquote spenders.
And that's going to lift the economy.
They're going to take that rebate and they're going to spend it.
This is pure demand-side Keynesian garbage that apparently Patrick has bought into from Virginia, our caller last hour.
You know, Kitten Mike told me I was going to rip him the rest of the show, and I think they're right.
The point is, that did nothing, did it?
It did nothing to lift the economy because people, first of all, in order to give somebody a rebate, you had to get the money someplace else.
So it was a zero-sum game.
But more importantly, people just took that rebate and they saved it.
They didn't spend it.
So I'm not altogether certain that's going to lift us out of the malaise.
We do not have a lack of spending crisis.
What we've got is an unwillingness to invest crisis.
People are saving money.
They're not spending.
They're deleveraging.
And the money that's going into the banks and the financial institutions is being given to the government in these ridiculous 0% Treasury bills instead of being loaned out to businesses.
So what do we need to do to encourage people to loan money to business?
Well, here's a novel idea.
Increase the rate of return on business investment.
Increase the reward for investing in business.
So if you lowered the top marginal tax rates, and if you're going to run up a billion-dollar stimulus, or I should say a trillion-dollar stimulus package, let's run it up with a tax cut.
In fact, Reagan did, and we grew out of the deficit.
Point is, if you did that and you cut all of the taxes on people who invest, on taxes on the top marginal income tax rate.
So the people who have the money, whether it be individual venture capital funds or individuals themselves or companies or banks, had an incentive to start investing in business again and not 0% Treasury bills because when you cut the taxes, they get to keep more of their return on that investment.
That would be a much better way to use the government deficit, if you will.
So I think you're on to something there, Tom.
Thanks for calling Schomburg, Illinois.
Mark, you're up next on the Excellence in Broadcasting Network.
Hi.
Hi, Jason.
I wish you would expand on your repudiation of Keynesian economics in response to Patrick's errant beliefs.
My understanding of this theory is that Keynes believed that the earth is sort of like a pie and that it only has a limited amount of resources.
So if you, for example, take a piece of the pie, so to speak, so much the less is left for me.
I, however, believe that the correct belief is that the earth is full and there is enough to spare.
In other words, the earth, truly, from human perspective, has limitless and, in fact, renewable resources and that we mortals don't have the capacity to exhaust them.
So it's best to rely on free markets and, in fact, God versus some puny man's arbitrary determination as to who gets what.
Well, it's interesting.
There were so many precepts in Keynes' general theory, it's hard to know where to start.
But, you know, do you realize the kind of trauma, Mark, you are instilling in every program director and every radio station in this country?
What?
They're talking about Keynesian economics.
Oh, no.
Can't we dumb this down?
Give us a lesson in Friedman versus Keynes.
Well, I mean, Friedman was the guy that repudiated Keynes for crying out loud.
He wrote Capitalism and Freedom.
He wrote Free to Choose.
Henry Hazlitt repudiated Keynes.
The idea that you would, quote, a free market economics has somehow buttressing Keynes shows you where our caller was going nowhere.
But look, I think you've described what liberals essentially believe, and that is we have a zero-sum society.
So the only way the rich can gain is by taking from somebody else, when in fact the greatest single resource in the world is people, the human ingenuity.
That is limitless.
So what we need to do so everybody can prosper is to make certain that A, when we work and save and invest, we're rewarded for that, and B, that capital doesn't go to government.
Capital goes to me and the private sector so I can increase my productivity with a new machine, a new tool.
And then productivity goes up, a rising tide lifts all boats, and we all gain without having to rob from somebody else.
I don't know that I would describe that necessarily as a refutation of Keynes.
I certainly would describe it as a wholehearted endorsement of free market classical economics.
You're on the Rush Limbaugh program back after this.
You know, more on economics tomorrow with economist Walter Williams, a brilliant man.
He'll be in New Year's Eve on the Rush Limbaugh program.
I can hardly wait.
Mark Stein, funny guy, he's in on Friday.
And the best of rush, Thursday, New Year's Day, right here on the Excellence and Broadcasting Network.
In the meantime, it's the little old me, Minnesota's real anchor man, Jason Lewis, just trying to fill the shoes of El Rush Bo right now in Greenberg, Georgia.
Here's Granville.
Hi, and welcome to the big show.
Hello.
I was calling mainly because I think the premise that the money supply has been growing too fast is in and of itself wrong.
Productivity has been outgrowing the money supply for a number of years, and that's one of the things that's led to the kinds of recession that we've had.
It inevitably has to lead to recession because the money growth supply, the growth of the money supply does not match the growth of the economy.
Well, it depends how you measure the money supply.
There are a number of different measurements there.
It depends also how you calculate inflation.
We've got this novel little plan, Granville, of calculating inflation without the core inflation rate, they call it.
So they exclude energy, they exclude a few things as if we really don't pay for those.
If, in fact, you were correct and we weren't supplying enough liquidity to the economy, we would be in a severe deflation mode.
And although CPI prices, again, wait a minute, wait a minute.
CPI, I think, is a misleading stat given what they count and what they don't count.
But regardless, we have only seen a drop in CPI in the last couple of months.
You can go back to 1920, 1990, 1980, and tell me when we had deflation year to year.
No, we haven't had deflation, but what we have had is a restrictor on the economic growth this country would have otherwise had, and it also makes us non-competitive in the world.
How on earth, Granville, seriously, how on earth could you say that liquidity wasn't available when we had a housing bubble unlike any in history?
Where did that money come from?
We had the most massive credit expansion in the nation's history leading to this credit bubble.
That came directly from easy money, a 1%.
Let me tell you, can a federal funds rate actually be negative and not be a loose monetary policy?
We had the Federal Reserve loaning money to member banks to get the mortgage thing going, which was a malinvestment, at rates that were negative.
You're telling me that's too tight a monetary policy?
But at the same time, they were using as a target a 3 to 5 percent growth in the economy in the money supply as a whole.
And by limiting the growth of the money supply, what they've effectively done is limit the growth of the product.
No, You keep saying they limited the growth of the money supply.
Limited the growth.
We could double the money supply.
What makes you think tomorrow that's going to grow the economy?
Just as you said, productivity, the actual supply of things, when it grows, it grows the economy.
When people go out and produce.
What grows the economy is actual production.
Right.
Okay.
If, in fact, in Greenberg, Georgia, a plane flew over your community tomorrow and dumped a billion dollars, but nobody produced anything more in Greenberg.
No new doctor's offices were open.
We were producing the very same thing.
Would you be richer?
No, but at the same time, if when productivity is growing at 11, 12 or greater rate, which they were over the last 15 or 20 years, and you limit the growth of the money supply to 3% to 5%, then you're inevitably going to lead to recession.
You can't do that.
No, Granville, if productivity wasn't growing that fast, but even if it were, even if it were growing that fast and we had a restrictive money supply, you would see falling prices because growth is essentially anti-inflationary.
And we haven't seen that when you look at the real price.
And by the way, the best arbiter of inflation, in my view, are the price of commodities, whether it's houses or whether it's pork bellies or the mother of all commodities, gold.
And there aren't many deflation signals there.
Granville, thanks for calling.
I'm Jason Lewis, in for El Rushpoe.
Don't go away.
More coming right up after this.
All right, I want to switch gears just a tad next hour to talk about education.
As you know, Barack Obama, president-elect, has decided to send his child to a private school.
Well, if it's good enough for the president-elect, the common man, why isn't it good enough for you?
Talk about education reform and the big push from liberals everywhere, preschool being collectivized or nationalized, destroying the last market in education preschool.
They want to make that a government job so it's no longer K through 12.
It's going to be E through 12.
All of that on the docket next hour right here on the Rush Limbaugh program.
In the meantime, let's squeeze in Art in Ohio.
You're on the Excellence in Broadcasting Network with me, Jason Lewis.
Hi.
Ditto's, Jason, enjoying your fill-in.
I've got a real question, and you sound like just the guy to answer it.
I've asked several people, including a guy that owns a car a lot, and he can't answer it.
If GM Ford and Chrysler are making all these cars that they can't sell for a profit and they want a bailout from the government to keep them working, for what?
What are they going to do with the cars?
It becomes a bridge to nowhere.
Yeah, I mean, are they going to give them to us because we paid for them?
What do you think we're doing with ethanol?
What do we do with any government subsidy?
What happens is a government subsidy begets a government subsidy.
It's a great question.
So they got these cars.
They can't sell them.
What they will do is they will give you a voucher, kind of like one for your TV, a converter voucher that everybody's relishing now.
And you'll get a voucher to buy a car that you wouldn't pay full price for.
But that means to keep the cars moving, you're going to have to have a perpetual subsidy.
But I didn't want to buy one of their cars in the first place, so I would have.
Well, you'd buy it if the government paid for half of it, wouldn't you?
I doubt it.
I'm not 100% sure.
I mean, let's be fair.
Wait, wait, wait.
Let's be fair to Detroit.
I do think they get a little poor treatment when it comes to the quality of their vehicles.
I think they produce fine vehicles.
I just wish the management and the union would have gone to Washington and said, you know what?
How dare you tell me what we have to do?
You're the guys that got us into this mess by effectively banning the SUV, our most profitable line.
Yeah, well, that's my problem.
I drive an SUV, and I've had three of them now, and I enjoy them.
But it's kind of reminiscent of in the 70s when the unions couldn't compete with the foreigners.
Instead of saying, well, we'll make a better car, we'll lower the price, they came to the government and said put an import tax on it.
So it just made it impossible for me to buy an import or a domestic.
Exactly.
I mean, that's what protectionism does.
It taxes consumers.
That's a great point.
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