This week, Peter is back to discuss new economic data, Powell's recent remarks in the Netherlands, and the Biden administration's new tariffs. More and more signs point to economic stagflation, but Biden, Powell and their cronies continue to deflect blame and raise taxes on ordinary Americans.
The Dow may have traded above 40,000 this week, but that doesn't necessarily mean Americans are richer:
“Inflation creates an illusion of prosperity, an illusion of wealth. This is another reason why the government loves inflation so much. They are truly partners. The government gets all kinds of hidden benefits from inflation, but it never wants to admit it. He never wants to say it out loud. But everything the government does is supported by inflation. … They sort of worship inflation, but they never say its name – not in the context of how they use it, right? So, when the public is outraged by the sharp rise in prices and the fall in their standard of living, the government then speaks of inflation. But he will talk about it as if it were an exogenous event that was completely beyond his control.”
Contrary to what progressives think, inflation is not the result of capitalism:
“Everything is more expensive because of the government’s devaluation of our money. This is why we have inflation. This is not an accident, nor a natural byproduct of capitalism. Capitalism does the opposite! I pointed this out, but the CPI from 1800 to 1900 lost 50% of its value. Prices have been falling for a hundred years! This is what capitalism does. Over the next hundred years, prices skyrocketed. This is what socialism does. This is what the government is doing. This is what the central bank does.
Wednesday's inflation report was not as bad as expected, although the rise in industrial metal prices appears to differ:
“While everyone is saying, 'Hey, we got some great news on inflation,' copper is telling you that inflation is not good. It's bad. So I prefer to believe the market rather than the Fed telling us that inflation is under control. …Look at copper… “Dr. Copper” – this tells you that inflation is anything but under control.
New data on retail sales, manufacturing and housing permits all point to a slowing economy:
“It’s a sign of a weaker economy. Why are they building less housing? Because Americans can't afford them. They have no purchasing power and mortgage rates have increased. But of course, if we don’t increase the supply of housing, the housing shortage will continue.”
Peter returns to customs tariffs, the big political news of the week:
“(Biden) announces them like he's announcing good news, like, 'Hey, I have great news, everyone!' We have these rates. Prices are taxes! Higher tariffs mean higher taxes. …Who wants to hear that? And it’s not, “Oh, we’re going to tax the rich.” No, no, it's not taxes that weigh on the rich. In fact, the rich don't care at all about these tariffs. It is the middle class or the poor who will pay these prices. And that's Biden's base, right? It's him he's playing against. These are the votes he wants. And he tells his own people to raise taxes, but he doesn't say it that way. He lies.”
The new tariffs are a textbook case of government regulation at odds with other government regulations. None of this makes sense:
“Biden likes to claim, 'Oh, we all care about the environment.' We want people to turn to solar energy. 50% tariffs on solar panels – 50%! People are expected to convert to solar energy. You know, there are all kinds of tax credits. You invest in solar panels, you benefit from a tax credit. The government therefore subsidizes people who use solar energy. Tesla receives subsidies to sell battery cars. The government is paying Americans and trying to encourage them to use solar energy. Yet now we want to tax them when they do it. Do you want to buy solar panels? Now the government will raise the price of the very panels it is subsidizing you to buy. …The government has two policies with conflicting objectives.
Jerome Powell spoke in Amsterdam this week and gave an alarming look at his naivety:
“Powell basically said, 'No, I have no regrets, nothing. I wouldn't change anything. We did everything right. …If this is truly what Powell believes, then there is no hope of them solving problems they clearly don't understand. Powell has no idea where inflation comes from. So how is he going to get rid of it?
The simple fact is that the economy is too complicated for any one man or institution to plan. Tariffs, central banks and tax credits only serve to distort and manipulate economic incentives to benefit the interests of those in power. Powell and Biden illustrate this perfectly.
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