Scott Horton Show - Just the Interviews - 7/6/23 Ryan McMaken: Where in the Boom-Bust Cycle Are We?

Episode Date: July 11, 2023

Scott is again joined by Ryan McMaken of the Mises Institute to talk about the economy. First, they examine the major fluctuations in the money supply to help us predict where in the boom-bust cycle we might be. They then identify the dominant economic philosophy of the U.S. government before finishing with a discussion of the national debt, housing and employment.  Discussed on the show: “Money Supply Growth Falls to Depression-Era Levels for Second Month in April” (Mises.org) For a New Liberty by Murray Rothbard Ryan McMaken is executive editor at the Mises Institute. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Breaking Away: The Case of Secession, Radical Decentralization, and Smaller Polities and Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre. This episode of the Scott Horton Show is sponsored by: Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott. Get Scott’s interviews before anyone else! Subscribe to the Substack. Shop Libertarian Institute merch or donate to the show through Patreon, PayPal or Bitcoin: 1DZBZNJrxUhQhEzgDh7k8JXHXRjY Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, y'all, welcome to the Scott Horton Show. I'm the director of the Libertarian Institute, editorial director of anti-war.com, author of the book, Pools Aaron, Time to End the War in Afghanistan, and the brand new, enough already, time to end the war on terrorism. And I've recorded more than 5,500 interviews since 2004. almost all on foreign policy and all available for you at scothorton.4 you can sign up the podcast feed there and the full interview archive is also available at youtube.com slash scott horton's show all right you guys introducing ryan mick macken again from the meesa's institute he is the editor there of their great website welcome back to the show how you doing right

hello it's great to be with you i'm okay well good uh happy to talk with you again listen so um i don't have any money so i necessarily don't know very much about all this um market stuff if i do know about basic uh messessian business cycle theory the boom and the bust i've lived it my whole life i didn't even need to reject a island man to know um And so I'm always very interested in what's happening with the economy. Where in this cycle are we and how do we judge all of the various severe government interventions this way and that coming and going in the economy and especially nowadays in the aftermath of the lock-ins and the massive monetary inflation of the last couple of years and the new high interest rates and all these things going on? And you have this great article at Mises called Money Supply Growth Falls to Depression Era Levels for second month in April. Okay, well, maybe your headline writer is just trying to grab my attention.

But no, the article actually says that too. But how meaningful is that? Yeah, I actually wrote that headline. I get to write my own headlines, which is exciting. I know you did. I was just teasing. And I get, I, I, I am careful not to put stuff in there that has nothing to do with the article, right? They, um, because our, our website has some standards, uh, and so I just wanted to, uh, emphasize that, yeah, this is unusual, the way that the money supply has fallen this much. And, uh, it doesn't actually have to fall. I mean, the fact that growth turned

negative. I mean, let's be crystal clear. We're talking about a negative number here, right? We're talking about the amount of money in the economy is less now than it was a year ago, which almost never, ever happened. So you'll see plenty of cases where growth in the money supply goes almost flat, you know, I guess it's up 0.3% or 0.5% or something like that year over year, but almost never goes to zero and certainly doesn't go below zero in terms of actually getting smaller. And so that has actually happened. Now, that hadn't happened at all in the last 30 years or so. The last time it had happened was in the early 90s. But to get to the sorts of numbers we're now looking at where it was down 12%

year over year in April? I mean, that's just huge. And you have to go back to the Great Depression to see those levels of declines in the money supply. Of course, then a lot of listeners are like, so what? What does that even mean? It's important because the boom bust cycle is in many ways governed by how fast the money supply is growing

or shrinking. And so you ended up with this big boom period over really it has existed almost continually since about 2012 or so I mean there was a there was kind of a slow period

of coming out of the great recession but things didn't really take off till about 2012 and then continued up until 2020 where there was a big crash because of the lockdowns and all of that but that was immediately returned to boom status by printing essentially

$2.2 trillion dollars so we then entered this mega inflationary period. Well, at first, since then, since 2020, there's been a lot more money creation. But that was the one single huge burst. That could be really sarcastic in both ways, too. Is that all like, oh, that doesn't sound like very much. That's a lot of money.

But then also, is that all? Because I know that ain't all. They went way beyond that, too, right? Absolutely. Well, that doesn't even count what had been going on. since 2009 when they had, when the Federal Reserve had bought up, had basically printed money to purchase about $8 trillion worth of mortgage-backed securities and government debt. So, I mean, this is a long thing that's been going on for about 15 years.

It's just you reach this huge explosion of all of a sudden we're just going to print up a couple trillion and keep in mind the entire federal budget in 2019 was about 4.3 trillion yeah so suddenly they're printing up half what you would consider to be a normal federal budget that these is just huge well and but but since then the federal budget's ballooned to over six trillion so like everything's different now okay but then well look I mean as an economist I'm a great anti-war guy so the best I can do is try to you know copy and paste our current experience onto our recent past and try to figure out where in the cycle

are we? And it sounds like well okay I mean as you said they crashed the economy they essentially created a recession with the lockdown is a very little one a very literal one on economic activity

but at the same time just immediately filled that hole with cash and all this new money which has led to all this price inflation then they raise the interest rates because they get afraid that like well we're kind of overdoing it here right and so they want to stop all the new loans going out and all the new monetary expansion so they raise the interest rates because they're trying to create a crash and then but it seems like we've had some sort of corrections

we haven't really had a crash so does that mean we're right around like bear sterns and layman time in 2007 but that the real september 2008 is still ahead and if so is that good news because man we need this correction because it was the bubble. That was wrong. Well, you have to do a couple of things once you've had a decade of highly inflationary policy. And that's where the money supply growth or contraction comes into play, is that you had this long, long period of big expansion in the money supply. So you had big year-over-year growth over and over and over again month to month. And that caused a bunch of asset price inflation, made stocks go up, made home prices go up. That made Wall Street very happy.

Eventually, though, that when you create money, it's very unpredictable. Where's it going to go? What's it going to do? But by 2022, it started to filter into food prices and just everyday stuff that just the cost of living for normal people who weren't even looking at buying a house or buying any stocks. We're now looking at big price increases, 40-year highs in inflation. And so that's then why you started to see the money supply shrink because the Fed got so concerned about inflation that they started to let the money supply slow down significantly, and then it started to shrink. And so it's important the way you phrase it, because a lot of people, they, they think that the Fed is trying to cause a recession. They're not trying to

cause a recession so much as they're just trying to avoid massive inflation. Which always causes a recession, though, right? Usually, it could just cause something like happened in Japan, where you just have a long period of kind of letting the air out of the economy. It's a slow deflationary period where the standard of living just gradually goes back. The 1970s, right? Kind of stagflation era thing. Yeah, I go, well, they had low inflation in Japan, so that wasn't stagflation. You had here in the 70s of stagflation period. You could have stagflation where the economy, where unemployment goes up, but prices don't slow, which is the worst case scenario, I think. And that could still happen because they don't really know what's going to happen with inflation.

But the reason they're trying to get rid of inflation is because they're afraid, because inflation usually comes with social unrest. That was, I mean, just look at Latin America. I mean, inflation was at the root of a lot of those 1970s and 1980s periods of what you would call dirty wars and revolutions and coups and all of that stuff. Inflation was central to all of that. And so they want to do something about inflation here. If they can get rid of inflation without causing a recession, they will maybe have something like Japan, because then that doesn't seem as bad from a policy. maker standpoint. Yeah, it's making everybody worse off. But then you don't get the headlines about how there's massive unemployment or there's inflation. That's what they call the soft

landing, best case scenario for half a crash, kind of. Yeah, the soft landing is you're worse off and your children will be worse off and the economy will slowly get worse and worse and there won't be any capital accumulation. And you're not setting a foundation for a stronger growth period in the future. You're just enduring a long period of things getting worse. I think that's what they actually want because that doesn't make big headlines. They could make fool people into thinking everything's fine. If you actually had a real recession, that would actually cause a lot of these totally wasteful zombie banks and zombie corporations that Wall Street loves. They would actually finally go out of business and then you could start to rebuild the

economy on a better foundation. That would be the better solution. And prices would actually come down. But the Fed doesn't want that to happen. They want to keep prices high, especially in stocks and real estate, and so it's hard to predict what's going to happen. But the fact that they just backed off some of this massive money printing is why the money creation process went into reverse. And when it's that much, you start to think, okay, a recession is very likely or at least some sort of long economic dislocation. And so, yeah, that's bad news in terms of the short term, and that's why we mentioned it. Like money supply crashed, so get ready for something weird and unusual and unpleasant to happen.

Could be a Japan-style deflation or could be just an out-and-out crash. So, you know, it's interesting the way this always plays out, and I'm always trying to keep up. You know, I understand what you're saying that, I guess, you know, if in my mind, 1999, 2000, and 2008 are more like classic boom-bust things. that this is more complicated because all the different countervailing pressures here and stuff and just the amount of money they created and then the lockdowns and then the aftermath of the lockdowns and i'm going to ask you about that thing that you wrote about the latest jobs report here in a minute but i wanted to point out this uh quote i guess from a shareholder meeting or something with um uh from j p morgan and she's saying we

need a recession because we need workers to be worried about their jobs so that they'll stop demanding raises. This is what everybody knows causes inflation is when people who work for a living, you know, I guess lower in salary workers and hourly wage earners, when they finally have had enough and demand a cost of living increase or they'll quit. That's when inflation really becomes a problem for big business, and that's when they demand that government do something about it and clamp down on the rest of us.

And I just wanted to point out how horrible and cynical that is. You know, the Marxists are still only half right about their analysis of the situation, but there is a class war there, and it is them versus us in a lot of ways. Well, when you started, you said you don't have any money so you don't know how the economy works. Well, this woman's a perfect example of how there's plenty of people with tons of money

and they don't really understand how the economy works either. Because if they were, of course, it could be there's just cynically saying that because that's what they think the stockholders want to hear. And they do know how the economy works. But the reality, of course, is that if they were actually interested in free markets or returning to some semblance of sanity in the economy, they would want to. to the Fed to stop inflating, not just cause a recession. And causing a recession for the purpose of bringing down wages is silly. The purpose, the reason the Fed should be allowing interest

rates to rise. And again, the Fed isn't setting interest rates higher. The Fed's just leasing off of its ramming down interest rates with its policy. In a somewhat unhampered economy, in a functioning economy, interest rates would be much higher than they are. But the Fed constantly intervenes to ram interest rates down to keep asset prices high to make Wall Street happy. Now, so Wall Street saying, oh, well, here's what they, here's what Wall Street really wants. They want you to somehow keep workers from getting up at E by reducing wages, but then they want the Fed to immediately go back to ramming down interest rates again so they can inflate the next bubble and keep asset prices high for Wall Street. So they want really two conflicting things

at once, and they probably just figure the Fed can do both. Just get wages down, and then you can start inflating asset prices, because they want high asset prices. They just don't high wages. Right. So they're fine with inflation. They're fine with monetary inflation, and it's not high wages that causes inflation. It's monetary inflation. It's creating money, and that's what the central bank does. But, of course, Jamie Diamond and J.P. Morgan people, their best buds with the Federal Reserve, every time the Federal Reserve shuts down another bank, they hand over all its assets to J.P. Morgan. J.P. Morgan's happy. And I assume the Fed won't be done until there's like two banks left in America. Maybe J.P. Morgan and Bank of America.

I don't know. But it's, of course, a very nice inbred corrupt system that they have together. But, yeah, A, because of what the Fed has done over the last 15 years, which has inflate the money supply so much, the only way out, unfortunately, the best case scenario is to have a real recession where you pop all of these financial bubbles and start with a more sound economy. And that's going to create temporary unemployment in the meantime because everybody's working for these zombie corporations that rely on super low interest rates and Fed meddling to keep them afloat. They won't be able to stay in business and pay people's salary.

So they're just going to have to go away. But they weren't producing any value anyway. The only reason they even existed was because of Fed meddling in the economy. And which is why they're going to keep meddling in politics. so they can stay in business at the expense of the market and reality and the rest of us. And I do appreciate how their first resort is just to cruelty. And, you know, of course, the lower the wage that is being earned, the longer it takes for them to get the cost of living increase to, you know.

So they're not only not the cause of the price inflation, they're the last ones to finally get the adjustment for it. And then they got to take the blame for it all and take the hit. So I always appreciated the cynicism there, you know. We need to make sure it's clear that when the Fed inflates the economy, the benefits of that new money go to bankers to people who sell government securities and Wall Street, the people who already have assets. And the last people to benefit from new money creation are just ordinary workers further down the total. But by then, prices have already adjusted up to take into account the reality of the new larger amount of money. So they don't even have a period where they could buy cheaper things with their larger amount of money that they've received.

They've already, they're already facing higher prices. So, yeah, they never had a beneficial period from the inflation like bond dealers did. Right. I feel bad for liberals and leftists in a way where, you know, that funny meme about the guy who reluctantly agrees with somebody hates on the Internet or something like that. where they have to admit that here, it's not just capitalists, but it's the free market capitalistist guys in the world, the anarcho-capitalists, even, the Austrian school libertarians.

They're the ones who can explain more and better than anyone else why it is that real wages don't go up, even when wages go up. Why it is the economy booms and bust, why it is that every small business has to get, you know, on its rear end every 10 years or so and start over again and all of the ways that the most powerful banks and corporations wage economic war on the people of the country it's not coming from the left it's not coming from any kind of socialist with any kind of argument for a new government program to ameliorate the effect or anything like that it's the purest free market guys of all

who understand this is the revolution right here your right to trade in a free market this is as good as it gets. If we could perfect that, we'd be a lot better off, you know? Well, in the center left is the worst, because they're just basically an agreement with people like John McCain or the Bush family on all this economic stuff. They've got all the exact same, quote-unquote, solutions. And it's exactly what got us to where we are now, a bankocracy, essentially, a heavily financialized economy, where it's, let's create money. It will better. benefit our friends the most, and then we'll give a few table scraps to regular folks once the bankers are done with it. And that's basically what the dominant economic ideology is in

Washington right now. The idea that there's any sort of like free market ideology dominant among the U.S. Senate or anyone in the White House is just simply laughable at this point. Yeah. Well, and this is where I have sympathy for a lot of liberals and leftists that they're brought up being told this is what capitalism is. So they're looking for the opposite of that when the real opposite, it would be a real free market. Yeah, that's exactly right. I mean, and that would be such a radical change at this point that you'd have to be going way, way back. I mean, the last time you had a president stand up there and actually embrace true market freedom and denounce the Wall Street bankers and all that was probably Grover Cleveland.

So once the Cleveland type of Democrats died out in the 1890s, that was it. It was all the McKinley big government crony. It's sort of quote-unquote capitalism after that. And so that's been dominant for more than a century. And those people are the architects of the system we have now. So it requires big, big change as a complete dismantling of the federal banking system at this point. No problem, man. We'll just do Kennedy's silver certificates.

Well, of course, there are different ways you can finally unravel this, right? Where you start allowing currency competition. You start allowing at least just some small startups, real competition in the banking industry to occur. Some people are trying to do this. In fact, like we've got people associated with us, the woman who, who's Caitlin Long is trying to start Custodia Bank in Wyoming, where it's a full reserve bank where they're not lending out your money that you put into the bank where you would put money in your bank and it would actually be safe and you would know it was there. But the Fed won't approve their applications for all of the requirement required permits that they need to do this and to create a bank that would compete with the big guys like JP Morgan. So it's very much a car. where they control competition and ensure the monopoly power of the big banks. And so all of those, even the slow, gradual methods that you could bring in place to offer an alternative are being kept out by the federal government at this time.

So you do, in a certain sense, you're going to need a major economic disruption where people just realize just how unworkable the system is becoming, that you need a bunch of new players. in the system. You need true competition. You need actual entrepreneurs to offer a different product. But right now, most of that just simply isn't allowed. Give me just a minute here. At the Libertarian Institute, we published books. Real good ones. So far, we've got Will Griggs Snow Quarter. Sheldon Richmond's coming to Palestine and what social animals owe to each other. And four of mine. Fool's Aaron. Enough already. The great Ron Paul. And my brand new one. Hotter than the Sun. Time to abolish nuclear weapons. And I'm happy to announce that we've just published our managing editor Keith Knight's first one,

The Voluntarius Handbook, an excellent collection of essays by the world's greatest libertarian thinkers and writers, including me. Check them all out at Libertarian Institute.org slash books. And for a limited time, signed copies of enough already and hotter than the sun are available at Scott Horton.org slash books. Hey guys, I had some wasps in my house, so I shot them to death with my trusty bug assault 3.0 model with the improved salt reservoir and bar safety. I don't have a deal with them, but the show does earn a kickback every time you get a bug of salt or anything else you buy from Amazon.com. By way of the link in the right-hand margin on the front page at Scott Horton.org. So keep that in mind.

And don't worry about the mess. Your wife will clean it up. Book Club on Monday. Jim on Tuesday Date night on Wednesday Out on the town on Thursday Quiet night in on Friday It's good to have a routine

And it's good for your eyes too Because with regular comprehensive eye exams at Specsavers You'll know just how healthy they are Visit Spexavers.cavers.caiator to book your next eye exam Eye exams provided by independent optometrists you know Ryan let me ask you man I guess if I went back in time a couple decades I wouldn't be able to imagine that the national debt could be over 30 trillion dollars and I know some of that is intra government agency debt maybe some argue it's only 22 or whatever it is but still that is so much but they talk about it they at least call it nominally 30 trillion and I guess that's what they're paying interest on anyway so that's what counts and um or that's a major part of what counts anyway and then i seen up there uh was it yelling testifying that yeah i mean of course yes the plan is that we're going to get up to 50 trillion dollars by 20 30 whatever it was i forget

um and i was thinking is there's a magic number at some point i'm not asking you what the number is because i'm not saying that you would claim it but is there a point where the world just gives up on this and says it i guess i mean congress can they have to keep printing money to pay off the debt so that they don't have to tax us enough just to pay the interest on the debt without us all overthrowing them. So at some point, luck runs out here, right? Yeah, the issue is, can you keep up with the debt service? It's like with anything where you've got a big debt and you have to keep making payments on it.

And the question is, can you make the payments? So as long as the federal government can keep making the payments, it really doesn't matter how big the debt gets. However, there are political complications to that, right? The feds just can't take every dollar they get from taxes and devote it to paying debt service on the debt, because they've made all these promises to voters, right? Oh, yeah, we collect $4 trillion a year in taxes, and don't worry, we'll pay for your Social Security, your Medicare, your Medicaid, and all of you people who are paranoid about foreign boogeymen, we need to have huge military installations everywhere. And of course, we need to keep all the checks flow into Raytheon.

So all of that money has to be paid in addition to making good on your debt payments. And at some point, that starts to overwhelm the entire federal budget. And so when you look at it, now we're getting to the point, not just because the the number is larger in terms of the federal debt, but the interest number is larger. So interest having to be paid over time is going to double or even triple as this new, all these new debt instruments, new bonds that they've sold, are coming due at higher percentages. So in recent, in the last year, as interest rates have gone up, you're now having to pay more and more on your new debt. And so eventually you're going to have more and more of that new debt at 3%, 4%, 5%,

whereas they've been paying 1% for a long, long time. So that's doubling or tripling. So now you're looking at paying, boy, $900 billion, even a trillion in debt service. So now you're paying more in debt service than you're even paying for the defense budget in some cases. The Social Security is like $1.3 trillion or so. So that's just a huge drain. on the economy overall, it gets you nothing, and you can't use it to shore up any of your political allies. No special interest groups get that except investors and Wall Street people. And so the question is, all right, can we just keep paying more and more of this money forever?

And that's when you start to get into discussions of default while they're not going to just say, oh, we're not paying it back. What they could say is, well, we'll pay it back 90 cents on the dollar. because we just can't afford to pay the full amount anymore. And that would make interest rates, of course, go up even more because the risk then of government bonds would go up significantly. But I do think you'll start to see more and more suggestions of, well, what can we do in terms of actually getting this debt bill down,

maybe negotiate some lower amounts? This is something that's not going to happen next year. We're talking maybe 10 years from now, certainly in the future. But all those other costs, wars, welfare, that's not going away. And so they're going to have to manage all of that. And the questions, can they just keep shoveling more and more money to debt service? And at some point, yeah, you can't anymore. And you have a sovereign debt crisis.

And you need to come up with some sort of solution. And that involves some sort of limited default, usually. Yeah. It just drives me crazy. I think about all the tens or even hundreds. I don't know how to calculate it at all. Thousands of dollars I've been taxed by the national government over my lifetime. And to know that all that went into a rim for a tire, for a plane that they don't even use anymore.

They just got thrown away in some stupid warehouse sitting there somewhere, this kind of thing. It just drives me mad. But then worse is all of that. I mean, man, the tens of thousands that they've taken from me is a lot to me. And I'm speaking for every other regular smuck in this country. It's just incalculable, you know, in our own minds, the opportunity costs we've lost from the thousands and thousands and thousands and thousands of dollars they take from us all the time and more. And to know that it's all just going to pay this tiny remainder, a pennies on the dollar for some sovereign U.S. government bondholder somewhere that they all buy. bought those bonds with money that they pruned out of nothing in the first place, too, and all of this, just to keep their crooked racket going.

They can't even pretend that they killed somebody with the money. They just blew it, you know, never mind helping somebody or something like that. They just blew it on paying the interest on the debt to God knows who, but probably someone evil, who didn't deserve a dividend for me. well and of course debt incurred now is just future taxes for somebody else and so it's not free it's whatever they're blowing it on someone's going to pay for it at some point either in reduced growth because having a huge debt low just sucks resources out of the economy means less growth less capital accumulation less entrepreneurship so you're paying for it that way paying for just an outright taxation to make good on the debt service. I mean, it's not even just something for

our people our age. It's going to be people born 10, 20, 30 years from now. We're going to still be dealing with that and seeing their standard of living go down. And for what, right? And that's why it's important to note, and you've probably run articles on this, and I've written some myself, is that when you're calculating the cost of national defense, quote, unquote. You have to include in, of course, not just the Pentagon money, but you also got to include VA expenses because that's just deferred salaries, essentially, for personnel who are recruited for the military. But you also have to include the share of the federal debt that went to military spending in the past, because you're still paying for that now. You're still paying

the debt service on that now. And so simply waging wars, based on a borrowed dime, that's just adding then to future costs that you have to pay on debt service. So you need to add to that. Just Pentagon bill of, say, $800, $900 trillion, you then got to add whatever portion of the national debt is remaining from old wars. And so you ignore that. And you're basically letting them off the hook for just blowing that money on who knows what, on whatever their latest lost war is. Yeah.

That's a big portion of the debt service. Well, you know, not to get all French Revolution on you and everything, but it's so apparent that the people with the power just don't care about us at all. And the way they talk about how they just have unlimited packages of hundreds of millions or even billions of dollars at a time to send over there to the war in Ukraine, while, as everyone can see, bridges are falling down and hospitals are run down and the basics of the functioning of the economy are falling apart all around us, the homeless crisis in virtually every city and town in the country, and just Joe Biden talking about, well, we have to pay all the civil servant salaries in Ukraine while people are going hungry on the streets of America. I think people are really feeling that. They don't know where Ukraine is.

They probably have an idea that it's east of Slovakia somewhere and probably none of their damn business, you know? Yeah, they have no idea where it is or what the history is with the Soviet Union or any of that. And it would just seem reasonable, even if you're opposed to social democracy in general and huge social benefits schemes, especially at the federal level where they're just completely divorced from reality. local needs anyway. You could probably at least make the case, though, is that, well, if you're going to tax a bunch of Americans for a bunch of money, you could at least spend that money back in their communities where they might potentially benefit from it in some way. But that's not happening at all when you're just spending all that money to hopefully

provoke World War III, hopefully from their point of view. World War III with the Russians, that doesn't benefit anybody. Whereas at least if they had spent that money on like some local hospital or something like that, well, you could probably get a piece of that or maybe even be a patient in that hospital. But yeah, when it's all just spent on corrupt Ukrainian overlords who hate freedom of the press and democracy, they keep outlawing all that stuff, it's now a one-party state, with, of course, forced military service. Well, you're not benefiting from that in any way. If anything, you're you face incineration if the U.S. manages to trigger a nuclear war. So no benefit whatsoever, whereas at least if they

were building a bridge, there might be some benefits. So defense spending is just, especially when it has nothing to do with defending the U.S., just there's no potential benefit there at all. Well, and back to that initial inflation we were talking about, I wonder what percentage of homeless people in the country now were made homeless starting in 2020, 2021, during especially the housing inflation. I mean, I know that I got gentrified right the hell out of Austin, and I'm about to get gentrified even further out. My landlord just raised my rent, and I can't do it.

I don't know what the hell I'm going to do. And I got a lot better jobs than a lot of people. I have a lot of jobs. But a lot of people, you know, are not set like me. I know that I know how it feels to be a light bill away from, I don't know what the hell I'm going to do. And I know there are a lot of people going through that. You know, I read this thing.

I admit it was at Vox.com. It was like these social scientists went out. And they were saying, you know, it's true that a lot of people on the street do meth, but a lot of them do meth because they're on the street. They weren't drug addicts before. But now they've got to stay awake. They fall asleep. They're going to get churned.

And so they're in this trap, you know, as people who they got kicked out. Landlord said, sorry, you got to go. I'm bulldozing this house and selling the lot for a million dollars, and the new housing, boom, out you go. And then they had nowhere else to go. And so they didn't do anything wrong. They weren't smoking crack before this. They weren't messed up before this, but now they're messed up, and they live under a bridge. And there's millions of them, or I don't know how many millions, hundreds and hundreds of thousands, maybe millions of them.

Well, that whole phenomenon of organizations like Black Rock and other huge investment firms buying up single-family houses. to rent them out at inflated prices, that's a result of Federal Reserve central bank policy right there. It was a fairly complex issue, we would call it yield starvation. It's where they're suppressing interest rates. So investment firms look further and further afield from their usual investments to get a decent return because interest rates on everything else is so low. And so they're then branching out into buying, like these are huge firms, which never used to buy single family houses, or they never used to buy storefronts, like in some tiny small town, outdoor shopping mall, strip mall. But if you look at the Wall Street Journal, this has been a recent trend in the last few years where now they're just trying to find any new place that they can put their money in and collect big rents on that.

is that normally it would have been too small, too decentralized, too difficult to manage, because it's actually pretty, there's a lot of management costs that come from dealing with single family houses and renting them out. This is very different from just like owning a hundred unit apartment building or something, right? And each house is different and has different needs and they're on different contracts and all of this stuff. Normally a big company would never bother with that, but because of the way that the Federal Reserve has suppressed interest rates and really changed the economy and created these real estate bubbles. They're now doing that and they're buying out single family homes from underneath normal people who just want to live

in the homes as first time home buyers and that sort of thing. So that's fortunately that's coming to an end somewhat. You're seeing that a lot of these large investment houses, they're dumping their single family housing portfolio, which is I think all good news. But it was made a particularly acute from 2020 to about early 2023 because of just the inability to get a high return when the Fed is jamming down all those interest rates to 1% or less. So let's just hope that that would be a benefit of a real crash is that housing prices would go down. It would turn away a lot of these investment houses from looking at single-famination.

family houses anymore, it'd be good for first-time homebuyers. It would bring rents out as well. And so there are potential benefits from a deflationary period. You just have to make sure the Fed just doesn't return to its old ways and bailing out billionaires as they did in 2009, just to keep the investment class happy and everybody else just paying high prices. Yeah. All right, man. Well, last issue here, and I'm sorry, I know I already kept you over time. Can I keep you one more question here? Yeah. Tell me about this thing that you did about the jobs data and what all that means in this inflationary, recessionary time that we're living in.

Well, the jobs data, if you just look at something other than this headline that the administration likes to use, it's just not great. You mentioned real wages a few minutes ago, and that's one thing where we've seen a negative increase for the last 26 months, I think, now at this point. So what that means is that they're always crowing about how wages went up. But if you actually look at the gap between wage growth year over year and inflation growth over that same period, wage growth is not keeping up with inflation growth. So that means your real wages, your inflation adjusted wages are actually going down. And this is an average, right, an average hourly wage. Federal government puts out data on this.

But they never mention it when they put out their jobs data. But if you look at that, you've been actually getting poorer if you have average wages. for the last more than two years, 26 months. So that's one issue. Another issue is if you look at what's called the household survey, the federal government always, Biden's always crowing about the establishment survey, which is the survey of large employers, and they survey only the number of jobs.

If you look at a different survey they use called the household survey, this is a survey of actual people and ask them, do you have a job? Do you want a job? And then what we find looking at that is that actually has been going down in recent months where there's fewer people saying that they have jobs and that a huge number of this when you delve even further into the data is that the self-employed are going away. You're seeing a sizable crash in the number of self-employed people just like you did in 2007 and 2008 before that financial crisis. So there's lots of jobs data that that's not

exactly something we should be celebrating, but they just never really mentioned it and focus laser-like on the one bit of data that makes it look like the economy's fine. And that's the establishment survey. And that's what they're always quoting on the jobs number. And so I highly recommend people look beyond that and get a more nuanced view of what the jobs data says. So with this jobs data and I saw some housing price data coming in. And as we started talking about the money supply, at the beginning, does it look to you like there's going to be a real crash? Or they're just going to mud along more or less like this? Well, if we're going off past reliable indicators, it would look like that. You're looking at a real full-blown recession because you've got things like the manufacturing survey is tanking. Actually, two different manufacturing surveys that the Fed puts out are tanking to recession era levels. the economic indicators of the forward indicators that show where's the economy headed and say the next six months,

they're all looking at levels that we would expect during a period that comes right before a recession. Then there's the yield curve, which has plummeted down to levels that we haven't seen since 1981. And when the yield curve goes negative, which it is right now, that has basically a 100% accurate record of predicting a recession. And it's the deepest into recession territory we've seen it in 40 years. So that certainly suggests all that. It's always possible that there's something weird going on and none of these things point to an actual recession and that maybe you'll just have this low, slow letting out of air, which I think, is actually even worse because it lets the government get away with what they've been doing and impoverishing us for even longer. So it's hard to predict, though. But again, I'm just hoping

we avoid the worst case scenario, which is recession plus continued high price inflation, which would be like a 1970s sort of situation. So let's just hope that doesn't happen. Yeah. I mean, I think it's Chapter 11 of For New Liberty where Rothbard says, you know, they always try to prick the bubble with their little needle and let the air. out slowly, but it always pops. Yeah, they always say that. They always say there's going to be a soft landing. They always say, I mean, the Fed was saying in like March of 2008, oh, we see no recession on the horizon. We see no problems, even though officially later it turned out the recession that started

in December of 07 when they were saying, we see no recession on the horizon. So, I mean, the people of the Fed, the Fed comes, they have no idea what's going on. There is no correlation between what they predict will happen and what actually does happen. in terms of the economy. So certainly don't go off anything those people say. Yeah. Sound advice from the man at Mises. Thank you very much. Really appreciate your time, Ryan, as always. Thank you, Scott. All right you guys, that's Ryan McMakin. He's the editor over there at the Miseswire. That's Mises.org. The Scott Horton Show, anti-war radio, can be heard on KPFK, 90.7 FM in L.A.

APSRadio.com. Anti-war.com. Scotthorton.org.org. and libertarian institute.org.