The Duran Podcast - US Economy and the Future of America First w/ Robert Barnes

Episode Date: August 6, 2025

US Economy and the Future of America First w/ Robert Barnes

All right, Alexander, we are here with the great Robert Barnes, and we are going to talk about the U.S. economy. So before we begin, Robert, where can people follow your work? Sure. So for all of the economic predictions and political predictions, along with some sports predictions, you can go to sportspix.com. That's where we put up all of that forecasting and other work that made money on the U.S. GDP in the last quarter. That was nice. Oil price, gas price. Of course, who knows where things are going.

One thing I did not have on my bingo card is we might go to nuclear war because the president gets trolled into doing so. So we'll see how things progress. Yeah, I did not have on my bingo card, the rise of Lindsay Graham, that's for sure. Anyway, we'll talk about the U.S. economy. Maybe we'll also talk about what's going on in the Trump White House and everything there. Really cool Duran Cap Roberts. and definitely go to the Duran shop, everybody. There's a link in the description box down below,

and the Duran mug with the USA flag right there. So Alexander, Robert, let's discuss the U.S. economy. Lots to get to. Let's indeed discuss the U.S. economy because this is an absolutely key subject. It's still the most important economy. In most respects, it's the place which decides the economic weather,

not just for the United States, but for the world. and the economic weather ultimately decides everything else. So if we're in a global recession, that is going to have some effects. And if we're in a global boom, that will also have effects as well. Now, the US economy is for someone outside it, one of the most difficult things to understand. We have altogether too many figures. I should say this. The US churns out statistics more so than any.

other economy I know. It's very, very difficult to work out what is going on in the US economy just by looking at the statistics because the US pours out statistics and then revises them. And you never quite know what to make of the revisions either. And there's all kinds of people who speculate about the accuracy of those statistics, which adds another layer of complication. And the US economy is huge and it is enormously complicated. And frankly, I'm going to say, I think if you want to understand what's going on, don't go to an academic economist, go to someone with a granular understanding of American society and American life and American politics because everything is connected to everything else.

That's an important thing to say, especially about a topic like the economy. And I know of no one else who has that level of granular understanding of American society and American politics and American life better than Robert Barnes does. I've been listening to him very carefully. I've seen his predictions on politics, on elections come right time after time, on the internal political conflicts as well. and I find that a better track record, one that gives me more confidence to understand what is really happening in the economy than anything else. Because if I could just quickly say, if somebody's able to predict elections, by definition, that person must have a good understanding of the economic and social pulse of a country.

So that's my introduction. I'm going to go straight to the question. What is your overall assessment about the US economy now? I say that. I know you know Las Vegas very well. I've had a number of people who've had connections to Las Vegas who say that things there are very down. And they say that that proves that the economy is in bad shape.

But Las Vegas is one city in the United States, a place you know extremely well. What is the truth? Yeah, so there are issues in Vegas that are distinct and unique to Vegas and some that are universal across the board. Vegas is dependent on international tourism. International tourism is down and is expected to stay down due mostly to the Trump effect. That, you know, there's even people that are national tourists who fear they're going to get deported if they travel to Las Vegas. There's a lot of things you can get arrested for in Vegas.

I don't think that will be one of them. But then there's issues. So also immigration, which is. substantially declined. There's been no meaningful immigration since Trump has been elected, net migration to the country. In fact, we're likely to have net out migration. The, you know, over a million people have left the country that were foreign-born workers, along with those that are being deported. And so, and previously we were looking at, you know, almost a several million a quarter under President Joe Biden. So, and immigration to a certain degree, a lot of people

would go to Vegas. So that has had an adverse impact on Las Vegas as well, more so than they would go to, say, Orlando and Disney World, the other big tourist center in the United States, along with Universal Studios and everything else that's there in Orlando. So those issues are universal, the immigration issue, foreign tourism issue, that are impacting adversely Las Vegas. But the other things are unique to Las Vegas, because, for example, Orlando as a tourist destination is not meaningfully down. It's doing pretty well despite the cultural factors here in the United States that led to a decline in Orlando's visits for a while due to Disney being perceived as so woke and opposed to sort of mainland, mainstream, middle American family values that was the primary market for Disney World in

particular. The issues distinct to Las Vegas, Las Vegas used to be run by three wealthy billionaires for the most part, Kikorkin, Edelson, and Wynn. They're all dead. other than when, who's practically dead, because essentially he got kicked out of Las Vegas for a range of reasons due to in the Me Too era, where his ex-wife decided to pay him back for some old issues. And she's out on the board. That has led to Vegas becoming very corporatized. And so it's the complete transition. We went from Mob Vegas to billionaire oligarch Vegas to now corporate Vegas. Corporate Vegas has no sense of touch for what drove people to Las Vegas. Every little thing, you know, your water, cost $8. You go get a cup of coffee and a croissant and it's going to cost you $40. So they nitpick you. Every little resort fees are up. This kind of fee is there. Another fee is over here. It's just become a nightmare for your middle American visitor and tourists. And legalized gambling is taking place across the United States. Tribal casinos in many states and now sports betting across the country in most states. So one of the key, unique, distinct attractions to

Vegas is no longer present. But, principally, they expected some decline from that latter factor, but the real one is the number of complaints about what is happening in Vegas has just escalated. You can follow people like Bill Crackenberger, one of the great all-time sports gamblers. He is constantly complaining about all the nitpicking in Vegas. So I think Vegas will start to see a continuing slight decline. Years ago, the big casinos had shifted to Macau anyway. Macau was a bigger cash cow outside of China than Vegas was anyway. particularly on a per visitor basis. Nobody likes to gamble more than the Chinese, but they're not allowed to do it outside of Macau, at least not legally. And so I expect Vegas to continue to

suffer flight declines. And they're trying to build sport, you know, bring a baseball team, a football team, a hockey team, all those things there, but it's only marginally working. So Vegas will stay strong, but it will not be as strong as it once was unless it reverses its corporate course. Now, for the country as a whole, you had two different issues. kind of facing the Trump administration. One was long term, one was short term. The long term problem was the financialization of the U.S. economy, at least from the perspective of the Trump voter base, which was heavily working class in the industrial Midwest, which is now called the Rust Belt for a reason. You know, that used to be the heartland of American industry, American manufacturing.

You know, going a way back, as you mentioned Alexander, the well-named Alexander Hamilton, idea that, you know, the prosperity of manufacturers were critical and essential to the success of American industry in any great society. But that has been declining since the 1980s. You know, we went from about 20 million manufacturing employees down to under 12 million. Now it's back up to a little under 13 million. But it's nowhere near what it once was as a industrial powerhouse. And as you see with Russia's ability to scale up its military production and give themselves an edge over all of NATO, you also need a strong industrial base to be able to do that, which right now the United States cannot do. So it's had wage impacts, hollowed out,

a lot of Middle America, Appalachia. Also, there was a war on old energy on coal, while China's, you know, adding coal mines every day in one way or another and in creating a strong domestic energy base by doing so. The United States has hollowed out its coal mining industry. So all of coal country, which was the ancestral home of Democratic Party politics since Andrew Jackson has now shifted massively towards the Trump equation because they're unhappy with the economic transition. Learning the code was not a solution for a 45-year-old minor. So he faced those broad, long-term problems. The short-term ones were Biden. Biden's solution to dealing with all this was massive government spending, creating all kinds of government jobs directly and indirectly. A lot of contractors

and things like that. Now they weaponized it for political purposes, because I guess we weaponized everything these days economically. So he was using it for DEI. He was using it to get young progressives, you know, somebody with their English master's degree from Tufts who couldn't get a real job, you know, was getting some government contract gig of some type to implement, you know, whatever it was, training people how to accept trans people in Peru or whatever, you know, that kind of nonsense. But it was a lot of that kind of government spending and was very heavily dependent on that and mass immigration. So, you know, estimates are anywhere from 10 to 20 million immigrants came in, mostly illegal during the Biden administration. Now, what that can do is

that can boost the overall top number, right? The GDP can look good. The national income can look good, but it wasn't translating to ordinary workers, particularly the working class in the industrial Midwest and the new working class in the predominantly the Southwest in terms of what's politically impactful. Young Hispanics, young African-Americans. Young African-Americans. men in particular were finding fewer and fewer economic opportunities. Indeed, under Biden, there was no growth in native-born American civilian job employment. In fact, it declined. Also, wages declined compared to inflation. One part of the problem of being so government dependent, aside from the debt issues that it creates, is the inflationary cycle that it can cause and trigger or make worse, which was a problem anyway because of the global lockdowns triggering, distorting the markets in such a way. you had wacky supply and demand at different times. Either too much demand, not enough supply, then not enough demand and too much supply and so forth. So Trump's attempts to balance that was his new trade policy, instituting some tax policies to try to recreate an industrial policy

incentivize manufacturing here in the United States by if you build a factory, full depreciation, things like that, reducing taxes on tips and overtime, locking in his prior tax cuts for economic certainty purposes. Though the way he's done, tariffs has created massive uncertainty, which has had a range of other impacts. So you look at, if you watch the GDP numbers, they look absolutely wacky. Now, as your point about our unreliability of our statistics, our Department of Labor statistics person just got can't because of the constant revisions and revisions and revisions. He should have known to do those a little bit later. Under Biden, they were much better at waiting at least three months, six months before they said,

oh, yeah, that job number we put out six months ago was fake. But she couldn't hold back and did it anyway early. And so Trump candor would be, it's because the way we gather labor statistics principally, there's some data that's reliable, unemployment claims. That's just how many unemployment claims came in, things like that. But the way they do the jobs study is purely a poll. And polling is in a disgraceful state around the world.

But no better in the United States and definitely no better with government workers. So they just do polls. they do bad polls, and that's why they keep revising and revising and revising upwards, downwards, up or downwards. You have no idea what it's going to mean in any given moment. But you look under the hood at what numbers we can trust and rely, and then you look, you know, Richard Barris, People's Pundit Daily does these detailed economic polling. He looks at that's really even as good, I would say, better than Gallup or the University of Michigan's customer consumer sentiment survey and things like that.

There's other ways, other metrics to measure. You look at the cost of living index. You look at what's under the hood there. And the core of what's happened in the first half of this year is that we had a recession in the first quarter that wasn't a recession because they front-loaded imports. Basically, a country saw, okay, the tariffs are coming in April. Let's flood the U.S. market with imports now. Then under the first wave of Trump tariffs, you had a huge drop-off in imports. And so it looks like we had bad growth in the first, or negative growth in the first quarter and 3% growth on the second quarter. I had placed a bet on the 2.5% being that or higher because I knew the import number

was going to come back the other way. Under the hood, we're growing at about 1.5% give or take. Estimates are going forward for the rest of this year, somewhere between 1.5 and 2.5, depending on where you are. You know, you can look at Kiplinger and other people. They see, hey, the real numbers are closer to one than it is two. Others say, well, we think there are some growth potential from the tax certainty, maybe better growth potential as the tariff uncertainty diminishes,

of course Trump's doing good at not helping on that side of the aisle, as he's now deciding to weaponize tariffs for non-industrial economic policy purposes, but for political partisan purposes as to Russia and elsewhere. Whereas he had big success with the economy so far, where the economy's been good, is native-born American workers and civilian employment has grown dramatically for the first time in five years. And wages have grown at hourly wages, which is the principal mechanism by which working class people are paid here in America, more so than salaried employment. That has had real growth above the cost of living for the first time in five years. So the key metric that a lot of, like, say, Trump's working class base relies upon is working.

Well, how has that come about when you're getting one to two percent growth, real growth? It's entirely because of immigration and energy cost. So on the immigration front, there's been, mostly it's been self-deportations. Foreignborn workers just leaving the workforce, presumably just leaving the country because not wanting to get caught up in one of Trump's immigration raids. And it's the net, it's the psychological, psychic effect of the dramatic nature of Trump's raids. Like there was a lot of political blowback about, you know, grabbing people off the street with

an ice raid at a Home Depot. It seemed kind of dramatic and scary and led some political blowback. But it worked in. terms of everybody was like, I don't want to come now to the United States. So all of a sudden, the border crossings disappeared. There was no, the, the, we would have added under Biden another two, three million immigrants into the country by now that are not here. And then another million left. And you add that where they'll, well, so what happened is you just had a redistribution, reallocation of resources. Even though national income isn't growing at the same rate it did under Biden,

the real wages and real job growth for Native-born Americans is growing much better than, you know, it did under Biden. Trump is cutting the non-defense side of government. So government employment is going down. Government-based employment is going down. And it's shifting to the private sector in the civilian area. And that's where it's been very successful. And the reason why the real wages have been above the cost of living has been almost

entirely energy costs. And not all energy costs, certain utility and electric bills. You'll hear from people saying, my electric bill is sky high. What are you talking about? I'm talking about oil and gas. So there's two factors. factors there. But energy costs is the number one input cost for imports. So there was a fear that imports would trigger that the tariffs would trigger inflation. It did not. There's a range of

studies, theories of price discovery would argue that it's hard to always transfer every input cost to the customer, that at some point you start losing volume, at some point you have to eat some of the profits. And so thus it's not a $1 for dollar transfer to the ultimate end purchaser. and, in fact, imported goods actually declined in cost during the tariff's era in quarter two, according to various studies that are out there. But the main reason is energy costs have been going down globally. So the energy costs cause import cost to decline. That's the biggest input cost that goes into those.

That is the most transferable cost is the energy cost. And in the United States, oil and gas has declined 10%. And that is the biggest input cost to the price of cost of living for forever, definitely in the United States for the last 50 years. control. And it's because Russia and the Saudis have been increasing production to reduce prices. Now, on a go-forward basis, that's a whole different animal. Because if Trump continues to politicize and weaponize tariffs for those purposes, he jeopardizes his industrial policy. He runs a very high risk that the U.S. Court of International Trade and the Court of Federal Claims hearing the appeal of his tariffs says this is outside his constitutional and congressional authority because

it's only based on the trade deficit that he was legally allowed to do tariffs. He's not allowed to do him for any reason. Apparently he thinks otherwise, but legally he's not correct. And the court in the last oral argument earlier this week or last week made clear that they did not think what he was currently doing with tariffs was constitutional or congressionally authorized. that could strip him of all that authority overnight. That decision could be issued any time in the next month or so.

So that will have an impact there. The other impact is if he actually imposes the massive secondary sanctions on Russian oil importers like China and India and others, that he increased, you know, oil is priced globally. Yeah, the U.S. has a very strong, you know, we're a net exporter at the moment. So that gives us a little bit of flexibility and leeway, but it's going to go into the import cost for sure. And it's most likely ultimately translates to the U.S. customer as well. It's just too much of a globally determined price. People like Dumeberg have been saying for a while, this could increase prices anywhere from 25 to 50 percent or even quadruple, like if things got way out of hand.

If he did like 500 percent, then all of a sudden everything unravels because the cost. of living suddenly spikes, in terms of a range of goods and items, taking away the real wage gains that have taken place before, and how it could impact the various aspects of the economy, because a lot of the industries, he's trying to protect in particular, like steel and aluminum, they have a major input cost, is their energy cost? So they could all of a sudden become uncompetitive overnight for a range of reasons. So that's the risks that he faces. I mean, there's an enormous amount that you've told us there.

The first thing to say is this. I read discussions, commentaries, analysis about the US economy right around the world, but of course especially in Europe and especially in Britain. The enormous economic fact that you've disclosed over the course of this programme is what has been happening to immigration. Now, immigration has, it's a political fact, it's a social fact, but it's also a massive economic fact. if we have seen three million people who, two or three million people who might have come to the United States this year not do so, and people who were in the United States and who are part of the economic situation here leave, then that is a colossal economic fact. I'm going to guess that

it's probably a bigger fact actually up to now than the tariffs have been. That's how big and economic fact, it probably is. And coming to what you were saying about, of course, immigration, if it continues on an enormous scale, goosees up GDP. That is absolutely right. That is what we have been seeing in Britain, for example, where GDP growth is very heavily based around importing people from overseas. Now, there is growth and there is growth without development. You could have, they're not exactly the same thing. If your population, the people who live in your country, are increasing, that that by itself is going to improve your GDP thinkers. Your more GDP thinkers may look better, but there may not actually be much development in the future. In the world, you know,

economy and it's entirely possible in that kind of scenario that you can actually see real living standards fall which is what has also been happening in britain by the way real living standards and many other people who are already here now i'd just to quickly add there can be immigration that can be good you could argue that was the case in the 19th century and early 20th century that is a trip down history lane. I'm not going to go there today. I'm just talking about the situation now. So that is an enormous economic fact.

And I can completely understand why GDP overall underlying GDP growth may have fallen from, say, around 2% to 1, 1.5% somewhere around there. And living standards might be right. and why in that kind of situation where there are higher real wages which push productivity, because real wages and productivity growth are very interconnected with each other, you might actually start to see a return to actual developmental growth as opposed to just growth. So these are things which I'm saying, which are banal, actually, people who follow economy. them is closely, and who are not perhaps necessarily academics, they understand all that extremely well. So I think that is a very important thing. And it's extraordinary and very revealing in some ways

that in Europe, we never talk about it. We only talk about tariffs. We never talk about this other side of the equation, which is, as I said, what's happening to the immigration and perhaps outflow figures because to repeat again, I suspect that that is even more important in explaining where the economy is at the moment. So that's one thing I wanted to say. The second is you absolutely do not want to do what some people are talking about with relation to energy costs. You are absolutely correct here. In Britain, energy costs are, I believe, four times higher than they are in the United States. I mean, we have terribly high energy costs here. And the result is accelerating deindustrialization. We are not perhaps an especially strong industrial country anyway,

for reasons which are again historic. We've seen our industrial base erode rapidly over the last 50, 60 years. But adding to energy costs at this particular time is absolutely the worst thing you can do to an industrial base, especially a heavy industrial base, but any kind of industrial base, even small, advanced, high-tech manufacturing, energy is a key input. And in the United States, given that the United States is current. locked into a geopolitical rivalry with China, which is an enormous manufacturing and high-tech power, and which has been taking careful steps to secure its energy costs by cutting deals with the Russians, basically, but with others too. It's the very last thing you should be doing.

Now, I can't imagine white people, or even thinking of doing it. And I want to just now, These are just points flowing from all the things that you said. I'd like to explore, firstly, the politics of this, why we've got ourselves into a situation where we are now doing this incredibly self-destructive, or so it seems to be thing. What has brought this about? And what does the president think he's doing by even experimenting with this? And then afterwards, I'm extremely interested to discuss this topic. about the legal side,

which of course you're the best person to discuss with, because we have been explaining, we've been explaining all the Duran. Alex was the first to bring it up, that we are becoming very alarmed at the way in which sanctions and tariffs seem to have bind into a strange hybrid,

which he's actually won. But let's discuss first the politics. Why is the president doing this? Why is he letting himself be drawn into a situation where he's going to make decisions over the next week or so, which could push up the price of energy and the cost of living and the cost of production in the United States. It's extraordinary.

It appears that he doesn't think it would happen or that the bluff would work or something else. It has been very confusing to many of his long-term and longtime observers. Dumburg, who follows the energy and commodity markets in great detail, filling foam of substack. When he does a podcast, he shows up as like a green chicken or something, which is funny. But very good follower. It has a libertarian leaning in foreign policy and whatnot, but that's mostly rooted in just good economic analysis of global economics. And he's been saying forever that we do not have escalatory domination vis-a-vis Russia as to Ukraine or vis-vis

China economically. And the principal problem, like let's take China, for example, China refines almost 20% of the refining power of oil and gas. And then, of course, they control rare earths. They have a 90 to 95% monopoly on the refinement and production of rare earths. Now, you can get rare earths from other places, but they're environmentally costly mechanisms of actually trying to refine it and produce it, and it's time-consuming to be able to do so. The U.S. has been talking about this for a decade, and it's failed to make any remedy. And it appears the Trump administration was shocked that China would weapon. it. I don't know why. I mean, it's why China was doing it. It was China was trying to control

this part to give themselves an asset so that, you know, if you just had a trade war between U.S. customer demand for Chinese products and Chinese need for U.S. customer access, U.S. might have escalatory domination, not when you throw rare earths into the equation. Rare Earth changes the whole thing. There's a whole bunch of defense products. It's now coming out, Wall Street Journal, other places, that they just can't produce. I mean, basically about two-thirds of our defense industry relies on rare earth. A bunch of other industries, critical constituent components of the supply chain,

rely on rare earth. So maybe that's why he shifted to talk about India. Maybe he doesn't plan on doing this with China. And there'd also be the problem of we just announced a 90-day pause. Now we're going to reverse the 90-day pause by doing these sudden sanctions. Don't be surprised if even in Brazil they carve out coffee, things like Trump has a history of being these big tariffs, big sanctions. And then there's like 3,000 exemptions, you know, written in.

So, you know, big sanctions on Iran, but you can actually keep trading, giving your oil to Russia, China, no problem. You know, so the, I mean, that is, so the, we'll, uh, with Brazil will probably call, he, he's carved out most commodities out of most tariffs. Like a lot of people worried about, you know, banana prices, a whole bunch of things. He carves all that stuff out. His focus is on finished goods anyway, but from an economic perspective. But now this is political, purely political. We're antagonizing the heck out of the Indians. India was an ally.

Modi really liked Trump. I mean, hey, you got along in their first. term, you know, he had a huge rally when he went to India, but India supports its small farmer agriculture-driven economy. It is not going to allow big agriculture to dump all of its products and crush its small farmer base that is its political base in India. So it's not going to happen. It's like you wonder who the heck is. I mean, Stephen Miller is great on immigration. He's an utter idiot when it comes to other foreign policies, kind of, you know, he is what he is. So he suddenly becomes an expert on India. It's like, what the heck? This is now, Vice President

Vance's wife. His family comes from India. One of the first place he went as vice president was a visit to India. So he wanted good relations with India, particularly as you pointed out, Alexander, if you're going to do the Mearsheimer great politics and your great rivalry is China, you want to ally with Russia and India, these two regional neighbors of China, that have had historical antagonism with China. We're doing just the opposite.

No president better for bricks than Donald J. Trump. He is explaining to bricks why they need bricks, why they should be in bricks, why they want bricks, Well, they have to have bricks while attacking bricks on a regular basis. That if you had any doubt about needing independent trading patterns, independent payment systems, independent global relations, independent security arrangements, which is also becoming crystal clear at all these people, because NATO keeps rattling the cage every five seconds. We're going to invade here.

We're going to go over there. We're going to do this. We'll take that. Maybe we'll start nuclear war. You know, he's pushing them together, pushing India together with China, pushing Russia closer together with China. and neither country is going to refuse to take energy imports because China knows that the U.S. cannot, is completely dependent on rare earths.

They've just been playing around with it just to jack up the price over the last three, four months, and they're seeing how much we cave because we depend on it and do not have a substitute. Like people, you know, Trump likes to say all the peace deals that he's negotiated. It's not clear how much, how many of those he actually negotiated. But in Rwanda, that's all about rare earths, right? There's a big rare earth deposit there that's being fought over. That's what that conflict really is all about to a large degree.

But again, that that's going to be, what, five years, 10 years, 15 years from being able to develop it to replace it. So China has a stranglehold on us. China has escalatory dominance for that very reason. And then the way China has developed its economy, they have big surpluses in terms of what they're doing on commodities. They've been doing that for three, four years now. And they have issues without question in China, real estate, other.

issues domestically. But we're not in a position where we can negotiate our way out of it. And the fact that Trump, they've made Trump himself on China, the place he's wanted to get the biggest deal over, made him cry uncle over and over again, makes it highly, I can't see him doing it. And if he does as to China, so it'll probably do it as to India. It's not a big deal really for either side. India doesn't afford a lot to the U.S. pharmaceuticals, some other things, some apparel, some textiles. But it's not nearly as important as the regular. cultural economy or the cheap Russian oil they're getting, thanks to all these crazy sanctions in the first place. You know, five years ago, this wouldn't have been an issue. I think they got 7% of their oil and gas

from Russia. Now it's close to 40%. Why? Because of our insane sanctions policies. You know, how you're multiplying our sanctions policies is supposed to work is mind-boggling to me. I agree that, I mean, it's count. Even Trump himself keeps admitting this. I'm going to do this. It's not going to work, by the way, but I'm going to do it. You know, to Alex's point that it's, you know, you called him widely. It is a Wiley Coyote, and he's playing Roadrunner. I mean, it's like, this is not going to work. So we'll see how, so I'm skeptical of it, but I'm concerned about it. Because the weaponization of the tariffs in this manner is going to cause a host of problems.

And one of the areas where we have real weakness, from the stock market perspective, everything is the magnificent seven. That, in fact, if you factored out the magnificent seven, the stock market really hasn't grown in the first six months. In fact, you could argue it hasn't grown much in the last five years. And that's all AI driven. Everybody thinks AI is that's not going to be another dot com because look, the revenue growth is real. The profitability is already there in ways it wasn't during the dot com boom.

That may be true. But what that means is you have this small share of stocks that from a jobs perspective doesn't translate a lot. AI and tech don't create a lot of U.S.-based highly paid jobs. Now, like there's one area where to be popular with his base, if he was, do sanctions on India would be stop all the H-1B visas that give all the tech jobs to people from India rather than the United States, not the Russian oil sanctions, which can easily backfire on us. It will definitely backfire geopolitically. Economically, we'll see. Now, I think the, because the other areas is weak in the U.S. economy, if you look at why the private investment was down in the second

quarter, it's because real estate's getting hammered. We have a commercial real estate problem. We have a residential real estate problem. The residential real estate is the most homes are more unaffordable than they've ever been in American history. There's a bigger gap between buyers. And I know this personally, because I've got a house for sale in Vegas, there's a bigger gap between buyers and sellers than there's ever been in American history. And that's because the prices went way up during the pandemic and interest rates are sky high. This is what the Fed debate is all about. If Trump, and that's the other risk, if Trump does anything to spike prices, or the Fed can say it's going to spike prices like energy sanctions would do,

then they can say, you know what, we would love to cut rates, but we can't. A lot of people that Fed don't like Trump anyways, and they hate the tariff policy, so they would love to undermine that by keeping rates high. The problem with rates staying high is it freezes the housing market. So the private direct investment in residential real estate, all of the decline, there was good purchases on equipment, durable goods, etc. What went down was investment in structures and investment in residential. real estate. And that's because commercial real estate's getting hammered. The remote work phenomenon

is causing this empty office space. Malls have disappeared because of online shopping. And so you've got all this empty commercial real estate. Any given day, you can see auction of a property that sells for 10 cents on the dollar of what it sold for 10 years before, that kind of thing. And then a lot of the commercial real estate is on short term debt. And so the problem for them is they got to roll over that debt. And they originally got debt during, we built a whole economy, the real estate based on zero interest rates. And that's the problem. What happens when you all of a sudden do five, six, seven percent interest rates? All of a sudden, that whole part of the economy freezes. And then that has knock on effects because what's happening is construction is declining. This is,

this impact part of manufacturing. Like people trying to figure out what the heck is happening in manufacturing, it's mostly kind of going like this because they had an inventory bust and inventory boom. And it led to sort of a bust and boom in the manufacturing. We're right about 12.7 million, which is where we've been for about seven, eight years. We'll have a little, numbers up and down. But part of what was boosted under Biden was Green New Deal manufacturing. Trump is canceling all of that. And then the other manufacturing industries, what are they worried about right now? Why are they not going out in mass hiring? Uncertainty on tariffs. They might benefit from those tariffs, but they don't know where the heck it's going to go. It makes it very difficult

to plan one, two, five years out. This is the problem with Trump's, hey, let's do chaos. Let's negotiate with everybody. Let's go here. Let's go there. I mean, today he's saying, hey, maybe screw the Europe deal. I'm going to give them 35 percent because it turned out they lied to me about the 1.3. trillion, which anybody watching it could have known as a lie to just stick them in Ukraine. But it is what it is. So that creates a problem for them. The second problem is the interest rates. They can't borrow.

I mean, at 7%, they're accustomed to borrowing at 1, 2%. And so when you, you know, that creates lending costs that make it impossible to meaningfully invest in a reliable way. They're waiting for interest rates to come down to reinvest. Aside from the certain import issues will impact some manufacturers and things like that, and they're filtering that through. But those issues, but you're absolutely right, the weaponizing the tariffs has the direct, especially as to Russian energy cost, could unravel all of what Trump is doing economically because it could send the price of good spiking, real wages declining, and under, and what is a already fragile economy could crack. Indeed. Lots to say here. Can I just, again, I'm going to be very, very briefly, because obviously we can't give you forever. But just just a few things.

firstly, about India, one of the most interesting things about the whole India affair, and one which hasn't got the attention that I think it should do, and it's not perhaps an economic one exactly, is that the Indians are saying that the reason they started to buy Russian oil in large quantities was because Biden asked them to. He needed them to buy the oil in order to keep them from buying oil from the Middle East would have increased prices, which would have had an effect on Europe and on the United States. Now, I find that extraordinary.

I have no reason to doubt, but I'm sure that the Indians are telling the complete truth. But that does tell you a little bit more about the kind of administration and the sort of people who were running it that we had under Joe Biden. I mean, they were saying one thing about Russian oil. They were denying, they were saying that they were preventing the Russians from exporting their oil, whilst they were busy finding for the Russians other customers. I find that absolutely astonishing. And I just amazed, as I said, that people aren't talking about it as much as they should be.

About the interest rates and what you've said about the construction industry and about the building industry and about housing, by the way, we have exactly the same problems here in the UK, probably even worse than you do. But that, of course, no doubt, goes far to explain why Trump is so keen to get interest rates come down and why he's got into this battle with Jerome Powell and why it's such a sensitive and important issue in the United States. Of course, in Britain, we have the extra twist that because the interest rates, it means that government debt, the cost of government debt is, is growing and the government, the British government, is having trouble keeping up paying the interest on the debt, let alone the capital. In the United States, you are still a long way from that point. Just to quickly say. Now, I do want to come back to the question of tariffs, and this is my last question because, as I said, we've covered a huge amount of ground.

Now, to repeat again, and I think we're all three of us in agreement here, tariffs protect, is an entirely legitimate economic policy. It's something that has been done in the past, in the United States, extremely successfully. There are many people, I am one of them, who say it was the foundation of America's economic success, its triumphant success in the late 19th and early 20th century. So I have absolutely no fundamental principle opposition to tariffs at all. But having tariffs that are completely different from one country after another country is going to create enormous amount of administrative confusion and chaos. It's going to mean that all sorts of complications in trade are going to happen.

So you're going to have all kinds of countries, not just China, but all kinds of countries, Indonesia selling goods to Vietnam so that they can be re-exported to the United States at lower time. I'm just plucking countries out of the air, but we can all see what's going to happen. It's going to create administrative chaos. It is unnecessary. And to the extent that it is being done for non-economic and taxation purposes,

it goes completely contrary to the principle of what tariffs are supposed to be. And the whole economic argument about protection, which was developed in the United States in the 19th and early 20th century to a level of sophistication which is unsurpassed in the world and which American advocates of protectionism today really should go back and inform themselves about. Americans knew no one better how to do protection. then, and it's all there, it's written in English, beautiful English, by the way, very simple English,

and it can be explained and followed very clearly. But I'd like to discuss now the legal points, because I think these are extremely interesting. And perhaps you can explain firstly, who has the power under the Constitution to raise revenue and what the role of Congress is, what the role of the president is, and the basis upon which Trump has been levying tariffs and why these courts, these courts that you mentioned, why they seem to be talking in the way that they are. It's my very last question to you, Robert, but I can't think of anybody better to answer it than you. So the Constitution gives Congress the authority to issue tariffs and the control over tariffs,

though it gives the President sort of broad foreign policy authority in terms of commander and chief and so on and so forth. However, Congress has delegated certain tariff authority to the president, and the Supreme Court has repeatedly upheld that as long as there's sort of clear direction and standards from Congress that the rate of tariffs and what is tariffed is given to the president, but within the confines of what Congress authorized. And in particular here, the president relied heavily. There are certain sections of other laws that he's used for steel and aluminum and other industries, so it wouldn't apply to those tariffs. This is the broad-scale tariffs he's currently doing, which he's doing under the emergency laws, international emergency laws passed in the 1970s to give

President Carter the authority to seize Iranian assets, for example, during the Iranian hostage crisis and other things like that. In fact, that statute has never been used to impose tariffs before. So Trump came out and said there's an emergency. He said the emergency is our trade deficit. And he has good grounds to say the trade deficit was an emergency. It was at a record rate, 1.2, 1.3 trillion in 2024. He's already cut it in half or is on pace to cut it in half. So he could show success from the tariffs already to date in trade negotiations in that regard.

And so as long as he, as long as there was that relationship that work, that was part of the reason they did individualized countries with reciprocal rates was to say that this particular country, you know, I had problems with that because there's a practical and pragmatic matter, as you point out, because of transshipment and a global economy. So I would, you know, tariff penguin island. We didn't want, you know, people using the island. And China did this tremendously. Like the, there was a lot of focus on decline of Chinese exports after Trump's tariffs. What they missed was China just started trans shipping, trans shipping, Vietnam, tramp shipping through Mexico, things like that. And so the transshipment, problem. The only way you really solve that and provide certainty to people and get away from

administrative quagmires and bureaucratic nightmares and enforcing and implementing it is, as you point out, one universal tariff, you know, and just do product by product tariff. You might do it that way if you were worried about this industry more than that industry and so on and so forth. And that would be like a 15% tariff globally, which is loosely what Trump was talking about during the campaign. You're talking about 10% on everybody and 60% on China. You filter that out 15% globally because China has such a large share of imports into the United States for finished goods in particular. So that's what is so legally his authority and originally went before the Court of International Trade, which I pointed out on social media and all these people are like, oh, Barnes, you don't got to write there. International Court.

They don't understand it's a U.S. court. That's the U.S. Court of International Trade. So Congress, which also controls which courts operate. So the Supreme Court is created by the Constitution, but no other court is. It gives Congress the authority to create the jurisdiction of all other courts. They can take it away at any given moment. And in this case, they've created a specialized court for any tariff dispute. So originally we went to other federal courts, and ultimately, the higher courts recognized,

no, all of this is supposed to go to the Court of International Trade because they handled tariff disputes exclusively. Trump's confidence originally came from the U.S. Court of International Trade had rarely struck down any tariffs. Every president has done some form of them, but usually it's more limited to a particular industry, particular issue, particular country, and so forth. But those have gone through the U.S. Court of International Trade, and it's been affirmed, and the big tariffs all the way back in 1920s, went up to the Supreme Court, I think,

1925, and they said the, because they had challenged then was, could it be delegated in the first place? This was congressional authority to issue tariff. Could they just delegate the rate of tariffs and who was tariffed and what is tariff to the president? Supreme Court said, yes, they can't. And then so the question is, did they? And the issue in this statute is it was never quite in tariffs are not in the statute. Tariffs have never been used relevant to the statute. I thought Trump had a strong argument as long as he limited it to the trade deficit. So if he had a trade deficit-driven tariff policy, then I thought ultimately it would get upheld by the U.S.

Court of International Trade, the Court of Federal Claims that handles appeals from that court and the U.S. Supreme Court. I thought if he started to go way, that it would endanger the legitimacy of that to a judicial system that's already hostile to Trump. They're just the judicial branch as part of the professional managerial class in the United States. Trump represents sort of the business and working classes. And there's just historical sort of class antagonism at issue here. You know, it's like I think as Orwell once said, you know, socialism would be great if you could just get rid of the socialist because, you know, the socialists love the poor, except they smell so bad.

You know, it's that historical kind of class divide underwriting it. And by the questions asked at oral argument, they started focusing on what Trump is currently doing. They're like, how does this relate to tariff policy? How does this relate to a trade deficit? You're saying there's a trade deficit, but now he's talking about using it for military means. It's not a trade deficit, but now he's using it for political reasons. Now he's using it to sanction a government. Now he's using it to institute foreign policy on geopolitics.

So like, that isn't what's in this agreement. That isn't what's in the law. That isn't what Congress has authorized. By the way, it's probably the backstory as to why Trump is okay with them passing a big Russian sanctions law. He wants the law as liberally drafted as possible so that he can justify all future tariffs as somehow Russian sanctions. That's part of why he got snookered in to this whole structure in the first place. he wants Congress to pass it so that he can use, but the key is he has complete authority, no limits, no restrictions, nothing like that.

And he'll use that new law to try to get authority. My guess is in the next month, the appeals court is likely to determine that Trump exceeded his congressional authorization and thus is acting unconstitutionally in instituting the tariffs. Even though they're looking at the old tariff package, they're going to be looking at it through the filter of what's happening currently based on their questions at the oral argument. So I fear he's in trouble there. For those looking forward how to predict what Trump's economic policies are going to be, other than continuing to watch the Durant and get all the geopolitical ramifications and impact,

I recommend following, going back and looking sadly, in my view, the America First Policy Institute. So, for example, the Ukraine policy is right out of the, their America First Policy Institute. Kellogg drafted it. A lot of this nonsense we're seeing came from them. Because of Susie Wiles, Russia turned out right, by the way, she's really running the show tremendously at the White House and throughout the cabinet, even causing problems for Robert Kennedy. He had to cam two of the people that she put in over there that were America First Policy Institute people because of policy deviations. They did while he was on vacation. They went on vacation. He was on vacation. Let's sneak this short. In fact, they were so agitated after he fired him. Apparently one of them

try to swipe his car on the way out. That's what these people are. But basically, America First Policy Institute is donor-driven. So Trump will focus on the donors. So for example, people, like, a good number of people are wondering, why on India are we focused on ag? It's the one area where India cannot sacrifice. They cannot give up their domestic agricultural economy to allow big corporate agriculture from the U.S. to just bombard them. It's because big ag is a big donor to the America First Policy Institute and is dominating agricultural policy for President Trump. So why continuing defer to Lady Lindsay Graham? Because the military industrial complex is one of the biggest donors to the America First Policy Institute.

And it's an defendant industry looking to fat in its pockets. So right now, why Israel? Because Adelson, Miriam Adelson, the widow of Sheldon Aidelson and others gave him $100 million plus for his campaign. I mean, you can go back and find his statements about how he gives her and whatever she wants, whenever she wants. You even criticized Marco Rubio in 2016 saying he's taking money from Miriam Aedelson. You can't trust him anymore. I agreed with that Trump. So on a predictability basis, the area that will be kind of unique, sustain out will be AI and crypto. The whole Trump family is now financially tied to crypto. So truth itself is becoming not a social media

platform. You look at its economic projections. It's trying to become a crypto engine, trying to get deep into that. So you got a lot of money from crypto, this whole family. is invested in crypto. So that's what, you know, stable coins pass. Crypto let, you know, that's where he's, you know, took the SEC off of that industry, released the DOJ off that industry. Roger Veer somehow is still getting prosecuted, Bitcoin Jesus, which makes no sense if you care about crypto. However, Roger Veer is a dissident within the crypto space. Roger Veer is against central banks, central planners, central government, central intelligence agencies manipulating crypto to hurt your freedom. He wants to maximize your freedom. So that's why he's

not getting politically protected by this administration, but everybody else is. So if you, and that stable coins are all about like, there'll be some confusion. Trump wants dollar dominance, but not dollar strength. So he wants the dollar dominate global economic transactions, but he doesn't want the dollar to be strong in the DXY because the stronger the dollar is, the more expensive our exports and the cheaper ever, everybody else's imports. Same reason why Russia right now wants the rubble to come down. They think it's too hot. So people get confused. They'll think Trump, you know, he wants it weak. He's been saying this forever. He would like it to be back 2015, 2012, and it was in the 80s, low 90s. So expect Trump to try to push the dollar down.

He is massive pressure to get interest rates down. They will continue to leverage that on the Fed because it's holding up manufacturing investment. It's holding up commercial real estate investment. It's holding up the residential real estate. He wants to unlock those. But you're right. if he does foolish neocon politics, that the risk that he blows up his entire economic plan is sky high. Robert Barnes, you've not just explained an awful lot about the U.S. economy today, and I would say that's probably the best explanation of the state of the U.S. economy that I've heard from anybody, just to say.

But I think you've also explained an awful lot about what is driving policy in the United States and why we're seeing these policies as well. So I just want to say thank you, and let's do more programs like this. Great. Great show. And Robert, where can people bother your work before we sign out? Yeah, if you want all of the predictions in terms of economics, politics, we're going to have a prediction up on the Bolivian elections.

It might take a different turn than some people expect. Got all kinds of elections, Argentina, parliamentary elections, Norwegian elections, other things coming up, as well as economics and sporting events around the world, including the world football sport that is starting back up in all the global leagues in Europe coming soon. That's at sportspix.locals.com.

I will have the links in the description box down below and as a pinned comment as well. Great show, gentlemen. Take care.