The Tucker Carlson Show - Tucker Carlson - Is the Fed lowering rates to get Joe Biden reelected, or is the truth actually much scarier than that? Jeffrey Gundlach explains.
Aired: 2024-01-02
Duration: 04:08


=== Fed's Unexpected Pivot (02:29) ===

[00:00:00]  About three weeks ago, Jay Powell, the chairman of the Federal Reserve, announced that it was, quote, premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease.
[00:00:13]  That's Fed speak, and in case you're not familiar with it, that means we plan to keep interest rates high.
[00:00:20]  Okay.
[00:00:21]  Then last week, two weeks later, with no warning at all, Jay Powell seemed to pivot dramatically.
[00:00:27]  Let's say almost the opposite.
[00:00:29]  Actually, he said, cutting interest rates is something that, quote, begins to come into view and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.
[00:00:40]  In other words, we are lowering rates.
[00:00:43]  So many people who are paying attention concluded that this was political.
[00:00:47]  Joe Biden is losing the race and the Fed is trying to save him.
[00:00:52]  But what is even worse than that?
[00:00:54]  What if it's not just Joe Biden they're trying to save, but the U.S. economy?
[00:00:59]  What if the fundamentals are so weak underneath that the Fed is desperately scrambling, groping in the dark to figure out what to do?
[00:01:08]  You have to think that's possible.
[00:01:09]  The Fed is supposed to be stable.
[00:01:11]  That's why they speak like 19th century jurists, to convey stability.
[00:01:17]  But if they're changing their mind and the biggest question that they address in two weeks, one direction, another direction, That suggests chaos.
[00:01:26]  And that's bad.
[00:01:27]  The world has fundamentally changed because of the zero interest rate policy.
[00:01:32]  You know, we have all this debt.
[00:01:34]  It was made possible by zero interest rates.
[00:01:36]  And in the past, decade after decade, when you had low unemployment, you had low deficits.
[00:01:44]  That makes sense.
[00:01:45]  When there's low unemployment, you don't have to pay so much unemployment benefits.
[00:01:48]  You have higher tax receipts because more people are employed.
[00:01:51]  But starting in 2015, something changed.
[00:01:54]  We've had low unemployment since 2015, and yet the deficit has been rising since 2015. This is unprecedented to have a rising deficit.
[00:02:04]  With what's considered to be close to full employment.
[00:02:07]  So we have a debt-based economic scheme.
[00:02:09]  The deficit is a percent of GDP is running at above 6%.
[00:02:13]  People talk about this is a good economy, but if we actually didn't run a budget deficit, if we had a balanced budget, GDP would be negative over the last 12 months.
[00:02:23]  And so this is the fundamental problem.
[00:02:24]  And I think that's factoring somewhat into the Fed's logic, but it's not tenable.

=== Debt-Based Economy Shift (01:38) ===

[00:02:29]  We cannot keep going on.
[00:02:31]  With this deficit-based scheme.
[00:02:33]  I think people are starting to understand that.
[00:02:35]  It's amazing how many things have so fundamentally changed.
[00:02:39]  You know, when I was in college, there was this Greenpeace movement and their motto was save the whales.
[00:02:46]  And now the environmentalist movement is killing the whales with windmill construction in the ocean.
[00:02:53]  You know, when I was in college, I went to Dartmouth College near the Vermont-New Hampshire border.
[00:02:58]  It's in New Hampshire.
[00:02:59]  There were a lot of sort of hippie types that had bumper stickers that said, split wood, not atoms.
[00:03:07]  And now what are we doing?
[00:03:08]  We're saying zero carbon.
[00:03:10]  We're now saying anything but split wood, anything but burn coal.
[00:03:14]  So everything changes.
[00:03:15]  You know, the women's movement was a big deal back in the 70s.
[00:03:19]  Women's right.
[00:03:20]  Equal opportunity.
[00:03:22]  Now it's the opposite of that.
[00:03:24]  Now it's women's, at least in athletics, women are under attack.
[00:03:29]  So it's weird how everything changes, but that's the way society and long-term economic cycles work, is that things that were norms in the past become outdated as societal...
[00:03:43]  Conditions change, attitudes change, the means of production change, and those norms just can't hold up.
[00:03:49]  And we're in one of those radical transformations.
[00:03:52]  Of course, we see that in the political spectrum, where, you know, everyone thought the 2016 election was wacky, and then the 2020 election turned out to be wackier.
[00:04:02]  And I think everybody can sense that the 2024 election is going to be the wackiest of our lifetime.