American Thought Leaders - Recession Frenzy Is Missing the Point: Jeffrey Tucker on Skewed Data and the Root Causes of Our Economic Woes

Episode Date: August 12, 2024

Sponsor special: Up to $2,500 of FREE silver AND a FREE safe on qualifying orders - Call 855-862-3377 or text “AMERICAN” to 6-5-5-3-2The end of the U.S. dollar gold standard in 1971 had unexpected, far-reaching consequences for the United States and its adversaries, ones that are central to today’s economic and geopolitical realities. What happened?Jeffrey Tucker is the senior economics columnist at The Epoch Times and the founder and president of the Brownstone Institute.“You’re gutting your entire industrial base and turning yourself into a whole country of indebted and stupid consumers. And you’re not making anything anymore. This is a crazy system,” said Tucker.In this episode, we dive into what’s really going on with the U.S. economy. Are we in a recession? Are prices and unemployment rising or falling? What about domestic goods and imports? And what is the data really saying?“You need to adjust this data by inflation, which is easy to say. But if you’re going to do that, you need an accurate reading of inflation. And if you don’t have that, you’re going to end up with inaccurate data,” said Tucker.He claims that many financial indicators we use to measure economic growth are inaccurate.“So now, we’ve got the highest rate of multiple job holders we’ve ever seen. Some people are holding two full-time jobs, which is extremely strange,” he said.Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of The Epoch Times.

You're gutting your entire industrial base and turning yourself into a whole country of indebted and stupid consumers, and you're not making anything anymore. This is a crazy system. The end of the U.S. dollar-gold standard in 1971 had unexpected, far-reaching consequences for the U.S. and its adversaries, ones that are central to today's economic and geopolitical realities. What happened? Jeffrey Tucker is the Senior Economics Columnist at the Epoch Times and the founder and president of the Brownstone Institute. In this episode, we dive into what's really going on with the U.S. economy. Are we in a recession?

Are prices and unemployment rising or falling? What about domestic goods and imports? And what is the data really saying? So you need to adjust this data by inflation. But if you're going to do that, you need an accurate reading of inflation. And if you don't have that, you're going to end up with inaccurate data. This is American Thought Leaders, and I'm Jan Jekielek. Before we start, I'd like to take a moment to thank the sponsor of our podcast, American Hartford Gold. As you all know, inflation is getting worse. The Fed raised rates for the

fifth time this year, and Fed Chairman Jerome Powell is telling Americans to brace themselves for potentially more pain ahead. But there is one way to hedge against inflation. American Hartford Gold makes it simple and easy to diversify your savings and retirement accounts with physical gold and silver. With one short phone call, they can have physical gold and silver delivered right to your door or inside your IRA or 401k. American Hartford Gold is one of the highest rated firms in the country, with an A-plus rating with a Better Business Bureau and thousands of satisfied clients. If you call them right now, they'll give you up to $2,500 of free silver and a free safe on qualifying orders. Call 855-862-3377 or text American to 65532. Again, that's 855-862-3377 or text American to 65532.

Jeffrey Tucker, such a pleasure to have you on American Thought Leaders. Thank you, Jan. Thanks for having me. Let's talk about these new employment numbers. Let's talk about people yelling in the streets, recession all of a sudden after everything was seemingly okay. Let's talk about this. Yeah, it's the strangest thing to watch. Just one number coming out on Friday morning with just a tiny tick up in the unemployment rate would completely change the ethos of Washington, Wall Street, all mainstream media. In the blink of an eye, we went from the booming, growing economy. We're so happy. Inflation's gone. Things are fantastic. To suddenly, oh, no, the recession is probably already here. The world's falling apart, what are we going to do? Sell, sell, sell. To say the least, it's an overreaction. For one thing, the data is a month old, which goes without saying. It's not as if the recession arrived on Friday. The data was from

the month earlier. The other thing to observe about this is that it wasn't particularly bad relative to what it's been in the past. The decay in the jobs market has been very overwhelmingly obvious to me and many others for at least two years, if not going back. We never really recovered out of the lockdown period. We never recovered the worker participation ratios or labor participation rates. They're still below 219 levels. So, and we can take apart the jobs data. There's a growing divergence between household survey and business payrolls, strongly suggesting double counting in the establishment survey.

That gap never previously even existed. And then suddenly in the last four years, it appeared and it's widening. It gets wider to the point that one is plunging and the other is rising. That happened for several months over the course of the last eight months. Then you have the revisions.

So every month, the jobs data would come out. They'd say, oh, 220,000 jobs. And the 190,000 jobs from last month is now revised down to really only 90,000 jobs. Wait, where did those jobs go? It began to look for a while like all the jobs would be pushed a month forward and taken out of the previous month and put into the new month. So there was a lot of illusions in this data all along, to the point that I had lost interest in the headline numbers, so-called unemployment, because it doesn't include discouraged workers. It doesn't account for the people who just dropped out, the people who've just decided to do something other than work. The unemployment data only

counts the people who are desperately looking for jobs and can't find one. And that ended up being relatively low. But it doesn't mean that much. That doesn't mean a healthy jobs market. In other words, the jobs market has not been healthy for a very long time. But there was something that broke the psychology of denial that happened on Friday morning. And it has something to do with Wall Street and Main Street's mainstream media's attachment to this headline unemployment number.

So when that broke, then everything else fell down. And suddenly somebody screamed, there's an elephant in the room. Everybody started running around like mad. Yeah. Why don't you lay out for me a little more about why these numbers could be so different? Because you're looking at a range of different types of data. And I know because you've been covering this issue. I can't stop writing about it because I've just become obsessed with it. And I'll tell you, it's because when you're trained in economics, you're trained to trust the data. The economists trust CPI and GDP and jobs numbers

the way epidemiologists believe in vaccines. It's really part of your profession. 171 00RDNMNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN And you're taught this over and over and over to believe in these numbers and believe in national income accounting, believe in GDP, believe in all these things. And so in the last four years, I began to examine the things much more closely with a real curious eye. A lot of times you don't see something unless you're somehow motivated to see it. And I began taking these numbers apart a lot more in recent years, in fact, to the point of absurd obsessions, actually.

And what I've realized is that they've, well, I think they've always been approximations, but I feel as if in the last several years, last four, they've become highly politicized and really mixed up ever since the lockdowns kind of blew up everything. The labor numbers, the output numbers, the trade data, everything kind of fell apart. And it just took a long time to get back to the point where you're collecting data more accurately. And during that period, there's a lot of loss of trust. One thing that's happened is a lot fewer businesses

pick up the phone when the survey takers want to know how many people they've hired. They're just not interested in answers. So you've got far fewer answers than you used to have, and less accurate data collection. And we can go through each of these numbers. But I just want to quickly go back to this unemployment point because um we we do this thing called uh business cycles we want we believe and we've always believed for at least a century that economic activity goes in these kind of up

and down motions there's a trade cycle's a recovery, maybe a little bit of irrational exuberance, a correction to that, a bit of a sinking point, and then it recovers again. And economists have believed this, and it's been more or less true for 100 years. And so it becomes really important to date the business cycle. When did the recovery begin? When did the recession begin? How long did the recession last? How big a recovery did we have? And how long did it last? And how much did we grow? These are interesting questions. Well, why do we ask them? Well, it has something to do with our curiosity for, is the world outside of my own personal experience actually functioning? What kind of world do I live in? Are we getting richer? Are we getting poorer? You know, what's

happening to the status of others? What is our country doing? Are we growing? Are we shrinking? We want answers to these questions. The only way we really get answers to those questions is by assembling data. I mean, we pretend to do science, right? And we shove it into these machines, and then wait for the ticker tape to come out. And it has a number on it. We declare it recovery, recession, growth, shrinkage,

you know, whatever the thing is. And we put a label on it and tell that, here's where we are. We're in recession recession we're in recovery but we have to have some standards uh to determine this so traditionally uh the recession and probably arbitrarily but traditionally the recession has been declared successive quarters of declining real GDP. Okay, so the GDP numbers measure output. Output. It's a lot of things in that term, output. Let's say you can measure it. Let's measure it. Real output means you have to adjust that output by inflation. So that if your output numbers are just measuring increases in prices, that's no good. So now you've got another problem because you need an accurate measure of inflation too.

So you get an accurate measure of output and an accurate measure of inflation. Shove them together. Out comes your real GDP. Now you can look at two successive quarters, three months, and then another three months. And if both those are zero or negative, you say now we're in recession. That's the rule. We made it up.

We made up a lot of the story. But it's a rule. And it's what we've always believed in. Well, we were presented with a serious problem in the first and second quarter of 2022. Because we had two successive quarters of declining GDP. But nobody wanted there to be a recession. We can't have a recession right now. That's a terrible idea. This is terrible timing. So instead, people say, oh, there's no recession. Well, how do we know there's no recession? Well, there's always been a footnote here. And the footnote is that the labor markets have to be unhealthy.

There has to be rising unemployment. Granted, if you had two successive quarters of declining real GDP and rising unemployment, then it would be a recession. Okay, that was the excuse in quarters one and two. And guys like me were going, folks, we've had two successive quarters of declining real GDP. That is a recession. You can't just come along and say that's not a recession. Oh sure we can. Because every previous recession has been associated with higher unemployment. What are you gonna do about that? Oh good point. Good point I guess. Okay so we got through that and like okay well I thought it felt like a

recession to me. I think it was a recession, but nobody agrees with me. I'll just live with it. OK, that sustained itself until Friday. And now we've got a problem. So now we've got an uptick, according to the so-called SOM rule, whatever, which is a 50 basis points increase in unemployment rate

over the previous year over year statistics. So we crossed that point in the data. And the SOM rule is that that's a recession. So now you've got an additional problem. So it just broke the market psychology. I guess my point is nothing really changed except the perceptions. So suddenly, everybody was suddenly, on Friday, screaming recession.

Well, the thing is that you've been asking questions about these unemployment numbers for some time. Yeah, yeah, yeah. I have been. The jobs numbers, I think, have been really sketchy, and especially because of the two surveys, the payroll survey and the household survey. So if the bakery across the street

fires a full-time employee and hires two part-timers, and the phone rings, how many jobs have you created? Have you created any jobs this month? Yeah. Yeah, we used to have one employee, and now we've got two.

Oh, well, that's great. Okay. The household across the street, you know, they call up the household, how's everything going? Well, I used to have a full-time job, now I've got two jobs, but I think that just counts as one job. So that's where the divergence comes. Whether you're talking to the households,

they're going to be reporting how many people are working in that household. If you call up the businesses, they're going to report how many people they've employed. So when the multiple job holders started massively increasing, starting four years ago after the lockdowns, after the opening came alive, and there's a number of reasons for this because hospitality was hurt so much during lockdowns they started hiring ever more and more part-timers so now we've got the highest rate of multiple jobs holders we've ever seen some people are holding two full-time jobs which is extremely strange i told a story the other day in an epoch article that i was i was in line at the grocery store you know and uh

you should never talk to people in line you shouldn't comment on other people's groceries it's it's sort of rude but but this nice lady had two um clothes hampers collapsible clothes hampers and i'm a bit of a talker right I said hey this is pretty nice clothes after she got there shut up I said what I'm just curious you know what drew you to those clothes hampers and why did you buy two she goes you know I don't know anything about these things I'm just shopping here for instacart I said so you're not actually buying for yourself? You're buying for somebody else?

Yeah, yeah, they just sit at home and click buttons. And I push carts around, fill it up, and deliver it to them. Oh, that's really interesting. Not having done this much myself, I was very curious about this. Well, the next time I went back to the store, I went, how many other people here are doing this? And it turned out I bumped into a bunch of people.

I said, you shop for yourself or you shop for Instacart? I work for Instacart. So the store full of people shopping for other people. And then I began to ask their stories. University educated, full-time job of the day, working the nights and weekends for Instacart. And you have to ask yourself, is this normal? You've got a university degree, and you've got a full-time job, but you're filling your nights and weekends. I'm all for work. I mean,

you've got a work ethic that's fantastic. That's great, you know, hustling for money. But it didn't seem quite right. It doesn't, something seems a little odd that a full-time salary with the university education is not enough to pay your bills. You can't pay your groceries and your mortgage and your car payment. So you have to get a second and a third job. Anyway, that's what's going on in this country. We spent way too much time in the jobs markets because there's other things wrong with the data. And I do I would like to turn if we can turn some attention over to this inflation number which ends up being really important. It's almost hard to imagine how there could not be inflation given the amount of money that was injected into the system over the last four years. Well thank you for saying that. It puts you in a rare category of a person who actually understands the cause of inflation. I'll be very honest. I don't understand a lot. In fact, I'm making a point of educating myself deeply because I feel I have this instinctive

sense that something is very, very wrong. And multiple things are. And that just seems obvious. But how could that not be obvious? Yeah. And I guess the other day I think writing an Epoch I posted a really clean chart that tracked into against what I think I think I used purchasing the the index of wholesale prices or the the PPI, for final demand, which is, I think, a little more reliable than the consumer price index. And what you see is an exact parallel. They're going up at exactly the same pace, but just with a lag. And just M2 is the fungible... Yeah, that's the money that people have. Anything that you have that can be immediately converted into cash in theory. So it's checking deposits and other checkable deposits and things. And that was a really, it's a really, I mean, again, it's just kind of an obvious graph

in a sense, but it's astonishing how tight the correlation is. It's almost exact. Yeah, it is. And I was very interested to see it unfold because, you know, we've never in our lifetimes experienced anything like a $6 trillion infusion of cash over the course of 24 months. It was even less. It's like 20 months. We've never seen anything like that I mean that was an astonishing rate and and it came about because Congress spent so much money and they're just over trillion here or trillion there trillion here or trillion there and that causes the Treasury to dig around in his books and notice they don't have any money to actually accommodate these spending mandates

from Congress. So they create IOUs. But now the IOUs are on the market looking for buyers. And the Fed, as is its job, I guess you could say, raises its hand and says, no problem, we'll take them. And they take them in the sense that they buy them with newly created money, right? So you're buying all these bonds and that money was put directly in people's bank accounts. That's what made it different from 2008. In 2008 we had what they called quantitative easing, but it didn't produce price increases like many of us thought. I mean, I thought there was going to be a big inflation. I didn't understand what was really going on. What happened was the Federal Reserve created trillions in new money

and recapitalized the banks with it, and then came up with this Ben Bernanke's brilliant solution. Not so brilliant. We can talk about that a little bit. But it worked for those purposes. They kept them in the Fed as deposits. The Fed is paying higher than market rates to keep the money off the streets. It's like like the Fed has a gigantic mattress and it just stuffed all the money in it like they used to do during the Great Depression. So it didn't cause the inflation. But this time, in 2020, yeah, it was the metaphorical helicopter, you know, flying over all the cities and counties

in Americas, dropping money out of it. And we didn't know what the results were going to be. It was very difficult to predict, but looking back, it seems incredibly obvious that it was going to produce an immense and troubling level of inflation and when janet yellen came out in i think the spring of 2021 said we've got transitory inflation you remember that and people heard that as temporary. But that's not what she said.

She said transitory. In other words, we're transitioning from one thing to another. Nobody asked, what are we transitioning to? What she should have said is we're transitioning to a world in which your dollar is worth a lot less than it used to be because we've got to pay for what just happened. So the question then becomes, you know, how much less? The official data says 20% over four years. So if it was a dollar in 2019, it's now worth 80 cents today.

Those numbers are not really believable, And I promise you that anybody who's listening to this interview is probably screaming right now. That's not true. I've seen my grocery bills. I know what I used to pay back then. I know my habits of eating out in the past. I know the lunch that used to cost me $20 is now $80. I know this. I just replaced my air conditioner unit. I paid three times what I did for it 10 years ago. People know this. And if you've ever been shopping for cars or houses or or your car insurance, or your house insurance, or your health insurance,

or the interest rates you pay. Well, and this is very interesting because this is something you've dug into as well in some of your writing, at least the writing that I've read, which is that there's certain types of products which have increased astronomically, as you're describing. But then there's a whole other class of products that are flat. And hey, there's no inflation if you look at those products. And I hadn't seen anyone actually look at why. Well, if I may, I would like to give you two examples,

one domestic and then one related to international exchange which is a thicket in itself but let's just talk about a domestic one. The least increases that you will find in any sector that I found and domestically is in wine, beer and liquor. They are up maybe five%, maybe 10%, maybe not at all. And if you go to your local merchant, which I do all the time, I love to talk to merchants about their pricing schemes. What are they expecting in profitability?

What are their differences between their retail and wholesale prices? I love this kind of stuff. You'll see it. You can still buy a really fantastic $12 bottle of wine now and you can do the same thing four years ago. And I think the reason for that is that the margins, the profit margins were very high in the past. They were always very high. And you know this. Any wine drinker knows this. I'm sorry to burst your bubble, but when you're paying $1,000 for a bottle of wine,

there's not that much difference between that bottle and one that costs $30. I know myself that I've served the cheapest possible wine in a fancy carafe and tricked even the best palate. So. You're not supposed to admit that publicly. I know. I'll never get anybody to come to my house again for dinner again. But so they've always been having very high profit margins. So you think

that they're cutting into their profit margins to keep the price low to keep people buying? Yeah, because nobody wants to raise prices on consumers, contrary to what people say. It's not corporations ripping people off. Businesses hate to charge consumers more money because they always risk that there's going to be a decline in demand. They don't know what their price elasticity of demand for their products are. They don't know. There's nothing built into the structure of the universe that guarantees that. So they know they're going to sell less at a higher price than they would at a lower price. That's just the

law of demand. And they don't want to bump up against that much less tested. So if the margins are there, they're going to keep prices low as possible. So now here's what gets interesting. The people who want to raise prices the least in the retail sector are the restaurants. They can't stand it, right? Because people complain. Your average pizzeria has been selling the same pizza to the same guy four times a week for 10 years. I mean, it's unbelievable how these customers, they know the menus, they know the prices, and they're going to scream if the

prices go up but they've always had really tight margins right so you've got a problem they can't raise prices on on their food because they're going to risk declining demand so how are they going to how are they going to deal with the higher costs of everything? Rent, transportation, all the inputs of all the goods. How are they going to do that? The answer was right down the street at the liquor store, where the margins were always huge. Now they're tighter, but the prices aren't higher. Buy it wholesale, sell it retail,

because the price elasticities of demand are such in restaurants that the person who wants a glass of wine with dinner always starts their dinner with a cocktail, or always gets a beer with a pizza. They're always going to do that no matter the price. So the prices of liquor, wine, and cocktails at restaurants have gone through the roof. It's unthinkable five years ago that that the house wine at a restaurant would be twenty five dollars a glass. That is just inconceivable. Inconceivable. It used to be like five dollars a glass or whatever. But but people will continue to buy it because the average customer has a much higher tolerance for higher prices in that class of good. And so restaurants reduce their profitability from 50% to 10% or 5% and build in the difference on their drink menus. And you're probably not a drinker, but anybody who's listening to this who has seen this will

know. And this is also why when you go to the restaurants and they come to you and say, hey, great to have you. Can I start you off the cocktail? You say, eh, not so much tonight. They lose interest in you. They're like, pfft, let's get this guy in and out of here as soon as possible. We're not going to make any money off him. It's also why you're paying more for Spark in the Water

and sodas and everything else. So that's where the profit margins are. So I guess the rule here is, again, we're speaking domestically. The rule is that if you had a really high margins of profitability before the great inflation began, you're going to eat into those margins just to survive and do and try to pass those prices on as little as possible to the customer. That's why fast food is up 80 percent or 100 percent because the margins are always extremely tight. So they get really sensitive to inflation. But other things, like I say, the liquor stores are not so much. If I can move from that example, that was just one example, but what I find most interesting is the price of imports. They have been subject to almost no inflation at all. And that has been the saving grace of the great inflation. If you could just exclude import prices entirely

from the CPI, which you can't, but if you did, that alone would change the dynamics of the CPI dramatically. And you discover these things slowly. But I was in the market for some sheets the other day and looked at Amazon. I noticed that I could get a set of all cotton, really nice sheets for like $45.

How is that possible? And then I remembered. We don't have a textile industry anymore. We drove it out. It's gone. It's all in China. So I went to, there's a special index of prices for imports. It's nearly flat.

So there you go. So now we've got this, as if we needed more problems in this country. We've got a gigantic inflation and any goods that are rooted and grounded and American produced dollar based from beginning to end, dollar sourced from wholesale to retail, from resources all the way to your grocery store. Those have experienced something close to what I think we would call a hyperinflation over four years. Meanwhile, flat prices for all imported goods. Incredible. That's incredible. Well, and looking at the numbers in the aggregate

hides the level of inflation that's happening domestically and dramatically. And I wonder to what extent that is true. I know that's true to some extent. I don't know how much, but yeah, I think it probably does. I would be really curious to see what that looks like. You know, just how much of the flat import prices have dragged down the CPI. There's some reason the CPI is low because it doesn't make any sense otherwise. When you see a 60% increase in car prices or 100 or 170% increase in medium housing prices and you see 70, 80, 100% increases in fast food prices and grocery prices overall at 35% over four years. And you keep going through the list, all these things, insurance, health insurance, you name

it. And then you look at the CPI and they're saying, oh, overall, our index says 20%. There's something going on. And that's when you have to get it kind of granular. So the import prices matter, but it also matters that CPI itself does strange things. Like instead of looking at medium home prices, which are like this, they look at something called owner-occupied rent, which is like this. So home prices are not in CPI. What's in CPI is owner-occupied rent, which is a fancy formula, a big black box. Car prices are not in CPI. What they do is they use these

adjustments called hedonic adjustments, which is a very interesting subject. We do a whole show on hedonic adjustments, strangely named after the same root as hedonism, meaning at the pleasure of economists. They will adjust prices. Hedonic adjustments, they can look at the card and say, well, this has a lot of emission controls. This has a fancy thing that screams at you all the time if you're not putting both hands on the string, or whatever the thing is. The economists judge it to be a higher quality, so therefore they adjust the price downwards. That's what a hedonic adjustment is.

Hedonic adjustments never go in the other direction. If the quality degrades for whatever reason, they're always reducing the overall prices based on what the economists consider higher quality. It all began in the computer industry because they said, well, same computer, but a lot more memory. So just because one is $1,000 and the other is $1,200, really it should be like you're getting a lot more memory per dollar, so you should adjust the price downwards. That kind of makes sense maybe in the 80s and 90s, but they've gotten carried away with it, so now we've got hedonic adjustments. Interest rates have been excluded entirely from CPI.

They're not even considered as relevant. And because we use owner equivalent rent to determine house prices, we don't include housing insurance at all as part of the CPI. Even though that's become so unaffordable in some places, that people have had to sell their homes because they can't afford the insurance. Basically, you're telling me that we're used to using certain kinds of indicators to tell us what to expect on a particular measure, which we're not actually following, but that those indicators might not actually be apt anymore.

Yeah, they may not be. And I think this is easily demonstrated, because you can use all sorts of tools to re-examine things. I have a friend who works for a quant, a quantitative economist who worked for a health care company. And he just made two simple adjustments to the figures over the last years. He replaced medium home prices, which we have,

put that in place of owner-occupied rent. And then he included interest rates with just two adjustments, two of 18 possible adjustments, just two, and quickly generated a figure of 127% inflation over four years. Very quickly. Showed all of his work.

It's just math. 127% over four years with just those two adjustments. So it's very interesting. Let me just show you one other example of something that's utterly fascinating here. It concerns the increase in the health insurance prices, which I'm not sure how many people are aware of how much health insurance is increased because a lot of that is paid by the employer. But they have gone up dramatically. But according to CPI, they were flat and falling for two years, dramatically falling, and that now have leveled out a little bit. And the way they came up with this was by measuring the premium that's being

paid for the health insurance against how much medical care was being consumed. So during 2020, consumption of medical resources fell by one third, which historians of the future are going to be a little bit mystified how in the middle of a pandemic, health care spending fell. That's going to confuse a lot of people. But nonetheless, it started rising dramatically from 2021 to 2022 and on. The CPI records a dramatic decline in health insurance premiums, even though they were going up, because they were measuring the increase in the premiums against the overall consumption, thinking that those, because they're consuming more, that somehow that should be

adjusted against price, which I don't think, I mean, there's an argument to be had about that, but it's a little strange. You know, what happened in 2020 was, I think, unprecedented is a kind of a very light way to put it. It just changed the dynamics of all sorts of these kinds of equations, I suppose, right? Yeah, it did. It did. You know, you make a good point because here's the problem. The CPI, all the things that the CPI would normally exclude

in the old days, it didn't bother us that much because they weren't they weren't a disproportionate part of the index. Like if you have the same error built across a long period of time, did that overall adjust for that? But if that error is the thing that's changing most dramatically, now you've broken the model. And that is precisely what's happened over the last four years. The things that have gone up the most are the things that were already previously most distorted in the CPI. Interest rates, for example.

They've been flat for 25 years. They were zero. And then suddenly, they went through the roof. Well, so it didn't matter if we excluded them in the past. It matters that we exclude them now. It's the same thing with housing prices. It's the same thing with health insurance prices and cars. The hedonic adjustments maybe weren't

that big a deal in the past, but when cars suddenly are up 50%, 70%, the hedonic adjustments really matter. So all the things that have gone way up were the very thing that in the CPI were already problematic. It's just that the post-pandemic period has exposed all those things. So sometimes when I talk about this, people say, well, who cares? We don't need an accurate measure of inflation. Well, we do. Because we do other things than the data.

Like we collect data on retail sales. We collect data on wholesale factory orders. And if you just collect nominal data on retail sales, you're not going to really get any information. Or you're going to get misleading information. So if I got a haircut last month for $20, and a haircut this month now costs $25, and an economist is watching, if he said, yeah, we got a 20% increase here in haircuts over a month.

In spending on haircuts, right? Yeah. Yeah. That's incorrect. It's just I got the same haircut. It just costs more now. So you need to adjust this data by inflation, which is easy to say. But if you're going to do that, you need an accurate reading of inflation.

And if you don't have that, you're going to end that, you need an accurate reading of inflation. And if you don't have that, you're going to end up with inaccurate data. But even if you use current CPI data and adjust that against retail sales, which are typically not reported in real terms, why we report GDP in real terms but not retail sales and factory orders, I don't know. It's just a matter of habit. But E.J. Antony, my colleague and friend who works at the Heritage Foundation, routinely does this. He pulls back the curtain every month when the retail sales and wholesale factory orders comes out and bumps them up against a conventional reading on CPI and shows they're not up, but they're're down and that's been true for four years four years once we start getting an accurate read of inflation i'm not going to speculate about what that is i mean we know that over four years it's at least 127 percent i know that's going to shock people but

you run the numbers yourself you know replace owner-occupied rent with median housing prices and then include as part of the cpi the increase in interest rates you end up at 127 over four years now if you want to keep going and and add health insurance costs real health insurance costs and and you want to add real increases in in house prices and you start going through all these things, you know, where do you end up? And I hope people are following what I'm saying, because the implications here are really profound. We started this interview with the great question of the business cycles. Are we recovering? Are we in recession? That's where we began this interview, because we want to track this because we want to know. We want to know and we want to date these things. But we always want to date this in real terms. We data and adjust that by corrected inflation numbers. What does that do to real GDP?

I'm pretty sure it puts us in the negative rate for a lot of years, probably dating all the way back to March 2020. I mean, it's very possible, Rihanna, it's serious, that we never, we went into recession, it was supposed to be a brief one-month recession, that we, in real terms, never really came out of it. And that's a really alarming thing. So this is a little bit why I'm, when I listen to these, there's a sudden frenzy on the streets about the recession.

Oh my goodness, where did this come from? I'm thinking, I don't know. I've been watching this very carefully for four years and I'm not sure it ever really went away. But I do think things are getting worse. You mentioned something which I found incredibly concerning. It's this idea that the imports are actually flat on inflation, whereas the locally produced manufacturing, all of these services have gone up dramatically. For the last many decades, we watched the manufacturing sector get gutted.

A lot of this went to China and now has been diversifying a bit out of China as well into kind of neighboring areas and so forth. But the effect of what you're describing perhaps might be a further gutting of the sort of the productivity in the heartland. Do you read it that way? And if it is, it's sort of a, I mean, it seems like an emergency that should be dealt with. I am so sorry to say this, but the emergency dates back 40 years. And the emergency is getting worse. I mean, we have gutted, I guess I've counted 12 in my head, 12 major industries that we've just utterly destroyed

since we went off the gold standard. It's not normal that you would have a whole country with industrial corpses littering everywhere. It doesn't make any sense. You drive through New England, it breaks your heart. It doesn't make any sense that you would have a country that used to be so good at apparel and textiles and toys and shoes and watches and pianos and steel and consumer electronics and really machine tools and really everything. a country of extraordinary enterprise, amazing skill, precision, and drive, and passion, to suddenly not do any of that stuff anymore? I mean, we had the intellectual capital,

we had the physical capital, we had the markets, we had the supply chains. Does it seem right that we would just destroy all that? I guess my point is, this is not free trade. It's not free trade by any standard. And somebody might argue with me, no, no, it's just free trade. That's just the way it goes. It's just not true. And I could explain this. There is that was that was explained by the great Scottish philosopher named David Hume, who wrote a letter to Montesquieu, the other great political theory. And the issue concerned mercantilism. Does a country need an industrial policy to try to hoard gold and put up tariffs? And David Hume said, no, you don't have to do that.

It all takes care of itself. You're exporting tons uh tons tons of goods uh you're importing a lot of money that's going to make your prices go up and then your goods are going to become less competitive and you will sell fewer and you'll be uh incentivized to to import more and the same is true for the other country the The operation works in the reverse. And so you have what he called the price specie flow mechanism. And he described it. And it worked. And it worked for 200 years. The word specie means it's an aggregate term describing money that was based in silver, gold, copper, whatever kind of real thing.

So it was restrained and contained. And Hume also said, what if you have someone that releases a big paper money and has big inflation of its own? And he said, well, everybody knows that'll burn itself out in no time. And so that's just not an issue. And he was right. And Adam Smith picked up the theory. David Ricardo picked up the theory.

Frederick Bastiat picked up that theory. After World War II, they picked up the theory again and gave us GATT and so on. And it all seemed to work until that one day in 1971 when Richard Nixon just got rid of the gold and started floating exchange rates and created for the first time in hundreds when Richard Nixon just got rid of gold and started floating exchange rates and created for the first time in hundreds of years, first time in history, really, a global market of fiat currency

that swung wildly against each other. And now you can look at it as it was an unprecedented opportunity for some people, but it didn't go so well for the United States because it was that date where we saw the deindustrialization start to take place. And it happened slowly at first, and then faster and faster, and then all at once. And I think back to 1985 when James Baker tried to do something about this, he tried to refix exchange rates, it was hopeless because you tried to do it without any kind of real

discipline and anchor. I guess my point is the accounts never settle anymore. They never settle. Nothing ever settles. Now we run forever deficits. And we fund this with paper money, generating assets, fake assets, but assets for the world, mostly, in this case, bought by China, which inflates on top of that, building up gigantic, really ultimately unsustainable and preposterous and incredible industrial base that has no real basis in economic reality

at all. We're talking about like 40 trillion dollars in non-financial distribution of credits that have been bolstering Chinese industry. And what are they doing? They're selling us products that we used to make. And there's no adjustment. David Hume would be looking at this going, guys, what are you doing? This is insane. You're gutting your entire industrial base and turning yourself into a whole country of indebted and stupid consumers, and you're not making anything anymore.

This is a crazy system. You're reminding me of when I was reading Robert Lighthizer's book, the former U.S. trade representative who, let's say, was one of the first to actually put the Chinese regime on notice with his policies. When I read his book, I remember I had a conversation with him. them as subsequently the thing that i learned from your book and this is this is relevant to here is that you believe deeply that if any trade relationship runs in deficit in one direction surplus another for too long if it doesn't equilibrate yep then that's a problem someone is gaming the system that is true yeah that is true i mean it's just true and by the way i didn't always understand this i didn't always believe. I used to think that trade deficits and national income accounting was just mythical. But it's not mythical. Part of free trade doctrine, the idea of free trade, again, Bastiat, Ricardo, Adam Smith, David Hume, is the idea that accounts settle over time. There's a built-in settlement mechanism that takes place. So the exporters become importers, and the importers become exporters, and everybody's cooperating together to the mutual benefit. And that's a beautiful world, and that's how modernity was

built. But you cannot have a system like the U.S. has with China, where we print all the fake paper and send it out to the world, because we happen to be the world reserve currency thanks to the petrodollar system, right, which was hammered out in 1976 to save the dollar against the disaster. And that petrodollar system lived from 1976 until last month, by the way. Very interesting. Where you have dollars, the world reserve reserve currency we produce a bunch of debt exported to the world their central banks buy it and inflate it upon it to build industrial

structures that compete against all the productive capacity in the u.s to sell us cheap things get us addicted to the to cheap products because god knows we like cheap products and um and we don't make anything anymore that's what that's where financialization comes from so so debt is is the leading export of of of the U.S and so it's a leading product that we make and it this is not sustainable it's just not going to work and it you're right it's worse. And it is a tremendous emergency. The common wisdom among people, I guess, who seem to me to try to understand and know better is that granting China under the Communist Party permanent trade relations status and then accession to the WTO in 2001 that those

one that was the one to punch that created the decline and you're saying there's a whole other system I don't I don't think it's not trade as such the problem was the the Federal Reserve's creation of so much and this goes back decades and it's worse now than ever, but it goes back decades of so much money, so many dollar-based assets to ship around the world that allowed, for example, the wand to peg itself. It pegged its currency at a very, very low, low rate against the dollar to allow it to become this mighty exporter, take our stuff. And, you know, you're just looking over with binoculars

and going what are they making huh they think they're gonna make some iPhones some electric cars some solar panels here's some credits you assign the industry to do it underpriced them boom it's gone and they're picking off our industries one by one bang bang bang bang using using treasury bills sitting in their central bank on top of which they're inflating they have been inflating 15 per year for the last 20 years the people's central bank 15 per year for 20 years based on dollar-based assets sitting in their central bank that our federal reserve has made so you know you're uh making me think here because i've often

in the past months been talking about tick-tock as being perhaps the most powerful weapon in the Chinese regime's arsenal against the US and the free world. And I think you might be describing something that's in my mind right now competing for that title. Well, the arsenal is the entire, I'm sorry to say it, it's the entire industrial structure of China. And it's not the case. I'm sorry to say this to all my dearly beloved free market, free trader friends, whom I adore. But it's not because China reformed its economy.

It's because the yuan was pegged so low using dollar assets that it's holding in the central banks. They game the system so hard. And wake up, my friends. Look around this country. Drive around. What do you see? There's no more toys. There's no more furniture. There's no more textiles, for God's sake. Steel? Forget it. You know, we've lost everything. This country used to be a country of makers and producers and manufacturers. We were the best in the world. Not that we were only an export economy. We were never only an export economy. We had exports and we had imports.

And other people had exports and they had imports. That's the way it worked. And that's how the world got rich. Until everything broke. And the signs are the absolute gutting of American industry. And that, I'm sorry, is not free markets. That is not capitalism. That is a rigged currency system where one country has figured

out how to pillage another country, build an industrial structure to utterly destroy its complete industrial base. Now, you know, what do we do about it? I know that's going to be your question, and I don't want to be put on the spot. Well, before we jump into that, right, and I mean, we've known some of the dimensions of this for some time, because we've seen this happening, and of course, the massive social effects that have come with that, and then we've known some of the dimensions of this for some time because we've seen this happening and the you know of course the massive social effects that have come with that and then compounded by

the drug warfare that the regime is waging on these exact same communities right that were you know that the the jobs left and the industrial base left from and you know we we could discuss all that we're talking about let's go back for a sec, we're talking about a recession, right? And the perception now that there really is one. And that the economic reality that you're describing... It's much more serious than a recession. It's much more serious than a trade cycle. Correct.

I think this is a distraction, really. I mean, I'm glad for people to recognize the recession is here. I'm even happy for Wall Street financials to be under pressure. I mean, but the problems we're dealing with are much more substantial. I mean, if you can just go back to David Hume a second. His idea is that if you become an importing country, you're exporting money and you're importing goods. What should happen to your price level under those conditions? You should see increasing value of the remaining money that you have

because there's less of it, you see? Right? So you should have downward pressure on wages and on prices and everything in your own country. And that should automatically feed into a productive machinery to allow you to become then an exporter. But that's all contingent upon these, on this, remember it's the price-specie flow mechanism.

So your prices have to be adaptable. We never allowed that to happen in this country instead we wanted to ever higher and higher and higher prices for everything and that's what we're seeing over 40 years so we didn't allow the mechanism to work as a consequence we became this forever import country and this never export country you think the only export we export anymore is dollars in debt and I john let's say this recession runs this course and we get out of we still have to fix this problem because because we can't function this way as a nation there are fixes there are fixes um i think i think we need to look to what

mile did in argentina he he cut the of one one percent of gdp one and a half percent of the gdp you cut it back stop creating the debt i mean stop with the debt production just stop it unplug the printing presses and cut the budget and stop congress from doing insane things you could fix it but if we're going to save American manufacturing it's got to start there you're reminding me of a famous Bob Hope skit stop it because actually that is yeah there there really is no other thing you can do other than make a decision to stop that I've had I've had fantasies the last several weeks thinking about this, about how would you prepare the public for what needs to happen

to restore our industrial base, to restore this country as a sovereign, mighty producer again? How would you prepare the public for what needs to happen? I think you need honesty. You have to explain to people what went wrong. You probably need some charts and graphs about what China has done by building its industrial structures

on top of U.S. debt, about how much U.S. debt has grown, about how much of that debt has been funded with printing. You need some truth. And just say, this has to stop. It has to stop because we're not going to have jobs left. We're not going to have paying jobs left. I don't know if I should say this word,

but it reminds me of the term austerity. Yeah, so I agree with that. and i don't think it's impa 40 years ago um 40 42 years ago we had a president who explained in this country that we were going to go through a period of austerity and that was ronald reagan uh he had a new federal reserve chairman who shut off the monetary spigots, let interest rates rise to their natural level, median savings. Our savings rates are now running 3.2%, by the way, just FYI. Which is inconceivable. But he prepared the whole country.

He said, we've mismanaged the system in the past. We've all suffered. In order to get it right, there's going to be a period of suffering. But if we go through this, we're going to come out prosperous on the other side. Now, they were on a clock, right? It's scary, because the American elections happen every four years.

So you've got a four-year timetable. And he knew that. Moving into the midterm elections in 1982, the country was in deep recession. And it lost off the printing presses that's all that's really all that happened and then he cut taxes too which is nice but sure enough by 1983 everything had really bounced back it was a really quick period of suffering that we went through economies are robust and they're resilient and they respond very, very quickly. When I say economies, it's not like some machine that's out there. What happens is that the people, people are responsive and people get to work. If they

think they're going to be rewarded for their work, if they think the government is going to live within its means, if they believe that they're going to be told the truth and people start to trust again, they get to work. They become enterprising. They get on board. They're all about investment. And they can rebuild really fast. I think the rebuilding of this country could take place rather quickly, actually, much more quickly than people think. I don't think

it's hopeless at all. I wrote a column the other day for EPOC. It's something like, the situation is not hopeless, but we need truth and we need action. Well, there's another context here that, you know, I was just looking at a report. I haven't, you know, dug into it. I basically read the abstract, but there's a report that explains using all sorts of metrics about, for example, food buying would be one example of how the Chinese regime is preparing for war, is preparing to bunker down. Another way to put it, and this is something I've covered on the show before, is the regime is decoupling from the global economy on its own terms, i.e. it's picking the things it wants to decouple that are strategically beneficial, but keeping the flows that are beneficial

to it in play. There's been this discussion about decoupling from China because of the you know huge supply chain vulnerabilities and so forth that exist and so forth but it that that is actually happening but it's happening not in a way that's beneficial to the free world at the moment from what I can tell and this is a very very very important context here, right, for everything that you're talking about. It is. Now, if something should break in the U.S.-China financial relationship, this monetary finance Ponzi game that's been going on for

the better part of 30, 40 years, If that should break, China's industrial structure is going to have to reconfigure itself entirely. It's just not going to work anymore. If the U.S. debt does not work as their asset, and if the U.S. loses its international markets for its own debts, which could easily happen, and what could actually break it is the end of the petrodollar very important thing happened I think on June 4th this year where Saudi Arabia failed

to renew its commitment to the petrodollar and now you've got BRICS moving in into that space right then I think Saudi Arabia recently joined BRICS which is a new proposed currency union, basically, a trade union currency. If that should happen, then the dollar will stop having that status as an international reserve currency, and that's going to change everything. It changes things, but there's a reason it continues to have that status and the reason is that you can trust that you can settle your accounts with it whereas you know the yuan you'd be insane to trust. Of course no you can't. The only reason anybody trusts yuan is because of the dollar because of the dollar reserves the central bank. That's it. So the loss of the dollar or even the pullback of the dollar could have a profound effect on China, too. So they obviously don't want that. And the U.S. elites don't want that. And by the way, there's two reasons why the dollar is the

international reserve of currency. One is petrodollar status. But the second one is that the U.S. pays its bills. Right. I mean we are we are too big to fail. There is no default premium on U.S. debt. Everybody knows that the U.S. is going to print its way out of any kind of financial crisis which means that the dollar status of international reserve currency is being promised at the potential expense of American citizens. We've gone through a big wave of inflation. We don't know how much. Four years? I think it's at least 127%. Could be 150, could be more. I don't know, depending on the good. Domestically produced goods, not imports, right? Right. And now we're talking about lowering interest rates to dig us out of an impending recession, which the Fed wants to do in September. After 1971, we had a big wave of inflation that subsided,

and the Federal Reserve lowered rates. Then we had another wave of inflation that subsided, the Federal Reserve lowered rates. And then we had the big third wave, which got us to the double digits that gutted American savings and capital in 1978 and 1979 that led to a practical political revolution in this country. My concern is that the last four years in the inflation, and it has subsided, right? It's subsided, I think, relatively in recent days and recent months. Is that going to be our first wave? We're going to test fate with two more waves and recreate the 1970s all over again, that would be, I think, a very terrible idea. So I'm really against, not that Jerome Powell cares anything about what I'm about to say, but I think lowering rates right now is a catastrophic risk. I think it's a terrible idea, a far better idea. We do haveS. government start to live within its means again, shut off the monetary spigots and call Congress to a heel.

There's this other dimension which we've touched on a little bit, but I think is incredibly important. It's these incredibly low interest rates that came from the third wave, I guess, as you describe it. I mean, got the capital markets addicted to such cheap money. We do. But it actually kind of changed how Wall Street works. It changed many things. And we're still kind of living in that reality where all sorts of money is created by manipulating money,

right? Because the money is so cheap, the risk is so low. Yeah. That was really set off in the most extreme form after 2008, after the rescuing of the financial crisis. We experimented with zero interest rates, subsidized entirely by money printing that stayed 172 off the streets, as I described earlier, and stayed in 173 the bank vaults. But it also ballooned up capital 174 to finance and went to so-called higher order 175 production goods. And it was during that time that 176 we had saw so much corporate consolidation, the

177 creation of these ginormous, expansive, white-collared professional job pools that reached the point of absurdity. So during lockdowns, we tried to preserve it by dumping trillions of dollars on the economy, and we stayed. Everybody thought, this is great. This is great.

I sit home with my mouse jiggler and lounging at the pool and the treasury sending me money and we're all staying rich even though nobody's working. This is nirvana. Of course, we paid the price in inflation. The greatest head fake in the history of economics as far as I'm concerned. The wealth just went away. But my concern is that this bubble in professional services and the white collar credential classes, earning six figures and up, but not actually doing anything, has got a long way to go before it becomes normalized again. And I think, you know, when Elon took over Twitter. Right, you got a hint of what that might look like.

Yeah, he fired four out of five employees just almost immediately. And then the platform, few bumps, but it started working better than ever. A lot of serious business people in the United States were watching that and thinking, hmm, I wonder if I could do that. So we could be seeing this happen. We've already seen a lot of layoffs in the tech sector, in the information sector, a lot. And a lot of job freezing taking place in hospitality,

even, across the board. But it could get a lot worse we could get back in this country to building things you know people want to they want to get back to doing stuff life's too dull sitting around as a white-collar employee just pretending to work all the time not actually working this is not satisfying my lives need more than just debt and money. It's ugly. We need mission and purpose. We need achievement. It's glorious. Making me live at home, you're proud of it. It's great. But what if our whole lives were spent making things again? That'd be a good life.

Yes, to get back to that, we might have to go through some years of pullbacks and suffering and readjustment. But I don't know. I think we're robust. We're Americans. We can do that. Help us remember who we are, what we're capable of. As we finish up, basically the Chinese regime holds these huge amounts of these debt instruments, U.S. debt instruments, right, that has been driving this whole thing. This is what you've been telling me, you've been discussing, and that's where

we're at. They're in the process of decoupling on their own terms. There's some interest at decoupling, but this, you know, let's call it the global economy is quite intertwined. So it's unclear how things start to change. I don't know. So how to extricate oneself or do you just have to do it and bite the bullet and see what happens? Look, we have to start with sound finance. If we can fix the money system, I'm not saying we have to go back to a hard money standard, you know, like in the 19th century or something like that. I would love to do that. I'm not sure how I would do that. If somebody put me in charge, I wouldn't even know how to achieve that. But I do think if we can just start running

a sound fiscal policy and a sound monetary policy and stop assisting China in its price-fixing scheme for the international exchange and stop subsidizing their industrial pillaging of America, you know, that would be a good step in the right direction. I think it could fix itself if we get our house in order. I think China is right now counting on the fact that America will never do that.

Will continue to be stupid and continue to want to forever live off TikTok and credit while they laugh at us and make all the stuff that we buy. This country would love to get back to being a productive, wonderful, mission-driven maker of real things. By Americans, for Americans, or whoever wanted to buy it. And I think it could happen. You know, the decoupling part, piece of your story, I think it happens just naturally. And I don't even like the word because it means maybe no relationship. I don't care who the U.S. trades with. You know, whether it's Vietnam, Mexico, Canada, whatever. As long as this price-specie flow mechanism of David Hume is really working.

As long as it's a genuine market where there is genuine settlement and we don't have one one country living on on debt that the other country is using to inflate and build up huge industrial structures to pillage the other country and get the entire country addicted to cheap products and and and financialization that is what's wrong yeah and I think sometimes you know there's a rude awakening can catalyze resolve. One thing that Americans really need, and I say this especially to white-collar intellectuals who imagine themselves to be above it all. Look around, open your eyes, see what's happened to American manufacturing industry, work ethic over the last several decades. Just take a hard look at what

this country is actually making now compared to what we used to have. And make a list in your own mind of all the industries that used to be ours that are now just somebody else and just ask yourself is this is this right is this the way it's supposed to be it doesn't make any sense it's not justified it's not sustainable and it happens for a reason and those those reasons we can fix i think they are fixable and then we can have. They are fixable. And then we can have genuine free trade like we used to have. I have an episode coming up with Greg Autry, which we've published recently. We were talking about the space industry in America. And this is actually one of these industries that has done incredibly well.

And part of the reason why is something called the Wolf Amendment for former Congressman Frank Wolf basically passed legislation, had legislation passed that would prevent the U.S. from cooperating with the communist China. Very interesting. Space related technology and and and i'm not even raging against this kind of i guess what you would call industrial policy like i used to because i understand where it comes from in the same sense i understand where well tariffs come from if i can jump in just for one second okay like you're describing a situation where the system is being massively gained yeah and not entirely just by one side there There's a bunch of folks gaming. So this was kind of a prevention

of a certain type of gaming from happening. But really, what the effect of it has been to just allow a normal market to work. We do have the ability, a tried and tested ability to have an incredibly successful industry right and we have it thriving and you know it's put up all these starlink satellites and opened up connectivity for all sorts of people around the world and and so this is what i guess what

i'm trying to say is that this this uh this optimistic view of what americans want to do that you're describing that some people that I know might be watching might have forgotten about, actually exists here already. It does, right. And we just need to do more of it. Well, it's interesting your thought about, okay, you target one industry and you make sure that it thrives by de-gaming the system, is what you're describing.

Something like that happened with steel in the 1880s in the United States. We had a really high tariff to build up the U.S. steel industry against mostly European and German. Because it was a brand new industry, right? And the U.S. wanted to do well. And again, I'm a free trader. I don't really like tariffs. Still, it worked. I mean, it worked to build up a giant steel industry. But in 1913, an interesting thing happened. The federal government decided to stop funding itself through tariffs and start

funding itself through income taxes. Now, which one is more damaging. I would say by far the income tax is far inferior way for governments to raise money. And one of the interests- If I recall, it was a temporary measure. I keep hearing people remind me of that. It was a constitutional amendment. But the most important thing about the income tax in 1913 is that it was only for the very rich. Oh sure.

That's what they always say. Nobody leaves that anymore. But more and more you're hearing and I welcome this kind of talk politically in this country. People are talking about getting rid of the income tax and replacing it with a tariff revenue. I mean between the two I'd far prefer that. I think that's a wonderful idea. That would be a reform I would support, I think. Fascinating. Yeah, it is fascinating, right? Well, Jeffrey, final thought as we finish?

Well, yeah, I just want to say this. I think a lot of what I've talked about today might be a little bit shocking, right? Particularly on the fakeness of the economic data and on the unfairness or the destabilization or instability of our so-called free trade regime, which I don't believe is functioning like free trade. I would only say this.

Don't take my word for any of this. Run the data yourself. Look at things with honest, true, sincere desire to know what's really happening. And I think you'll come to my conclusions, but if you don't, that's fine. And anybody's free to write me and correct me on any of the points we've made in this interview. Well, Jeffrey Tucker, it's such a pleasure to have had you on. Nice to be here, Jan. Thank you.

Thank you all for joining Jeffrey Tucker and me on this episode of American Thought Leaders. I'm your host, Jan Jekielek.