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Are You Prepared For Hyper-Inflation?

Are You Prepared For Hyper-Inflation?

Episode #58  |  October 21st, 2021
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In This Episode:

Winter is coming. And financially, it’s about to get a whole lot bleaker before there’s any light.

In this episode of American Consequences with Trish Regan, Trish welcomes former White House economist and Wall Street Journal editorial board member Stephen Moore to the podcast.

Steve says the supply chain shortage is growing worse and Americans should be ready for sticker shock everywhere within the next few weeks.

Everyone should expect empty store shelves and ever-escalating prices as we approach the holiday season – Merry Christmas from the Fed.

Financially, the wheels are coming off right now. There are no adults in the White House who know anything about the economy, business, or even making payroll. 

Here’s the forecast as the economy prepares for hyper-inflation in the months ahead.

Guests:

Stephen Moore

Stephen Moore co-founded and served as president of the Club for Growth from 1999 to 2004. Moore is a former member of the Wall Street Journal editorial board. He worked at the Heritage Foundation during the period from 1983 to 1987 and again since 2014. Moore advised Herman Cain's 2012 presidential campaign and Donald Trump's 2016 presidential campaign. Moore advocates tax cuts and other supply-side policies. Moore's columns have appeared in outlets such as the Wall Street Journal, The Washington Times, The Weekly Standard and National Review. Along with Larry Kudlow, Moore advised the Trump administration during the writing and passage of the Tax Cuts and Jobs Act.

Transcript:

Trish Regan:                 [Interlude plays] Most Americans are still going about life investing, retirement planning as though nothing unusual has happened to our financial system, and few seem to realize the repercussions of the trillions and trillions and trillions of dollars that has all been bumped into the U.S. financial system just in the last 18 months alone. Well, this is a wake-up call. I mean, people are recognizing this. You have at least four billionaires that have stated publicly Americans aren’t paying enough attention to this development.

And now, a friend of this show – a former Goldman Sachs banker – says, “Sooner than most people think, millions of Americans will potentially be pushed down, out of the middle class, out of private retirement, out of a decent life based on independence and privacy,” into what he calls a “collectivist nightmare” called financial lockdown.

So find out how to protect yourself, how to protect your family, how to protect your money. You can get a free copy of his new report. In it, he’ll show you the four steps that he recommends you take immediately. Go to retirementwarning2021.com to get your free copy. Again, retirementwarning2021 for a free copy of his new report. [Music plays and stops]

The data keeps coming and the data keeps showing inflation is here. It is eating away at our savings, at our incomes. And you know what? There’s someone to blame. Actually, a few people to blame. Hello, everyone. Welcome to this week’s edition of American Consequences. I am Trish Regan. It’s so good to have you here.

We do have a lot going on. You know, the good news is the market’s been holding up. I love that the market’s been holding up. I just question how much it’s going to hold up. At some point, does it really start to stumble if we don’t get the earnings that everybody wants? I mean, look. You had Delta coming out recently and saying, in the final quarter of the year, they anticipate a pullback. They anticipate that earnings will not come in as strong. and why? Because of inflation. Yeah. You know what? Cost of fuel’s going up – the cost of everything is going up.

And the question is, “Can you really pass that onto customers?” Right now, we see that a lot of businesses are indeed doing that. Right now, consumers are sort of bearing it. Consequently, you’ve got CPI data showing a 5.4% increase. Meanwhile, if businesses are not able to pass along those costs then it means they’re going to have reduced profitability. If they do pass along the costs, well, the other question becomes, “Will people still buy as much? Will they buy as much given that things cost so much more?” I mean, you can understand the conundrum we are facing. You see that Social Security, the cost-of-living adjustment, went up 5.9%.

Oh, whoopie. Everybody’s so excited. Highest in 40 years. Well, guess what? That’s not a good thing. That’s because we have so much inflation. Biden should not be proud of that. This administration should be ashamed that we have to raise the cost-of-living adjustments so much because prices for everything are going up. When you look at real wages right now, what do you see? People aren’t earning more. They’re earning less because they have to pay more for the very basic things that they need: food, energy, housing. So where does this go? Is the Fed concerned enough? They say they’re going to pull back in November on all that bond buying? Of course, I’ll believe it when I see it. I know they say this. How much are they going to do it by?

This all sort of remains to be seen. Meanwhile, interest rates are low, low, low, low, low for as far as you can see out on the horizon. So you still have a very accommodative environment. I guess Wall Street better hope that that accommodative environment stays in place. Because if you pull that away, you might be left with a whole new set of problems. I am so excited to have here with me on the program today my very good friend who I’ve known a long time… is just a brilliant, brilliant economist.

And not only is he brilliant in terms of his ideas, he’s really brilliant at communicating them as well. Sometimes you meet these economists and they’re kind of eggheads. This is a guy who really understands what Americans are going through and how to make our country succeed economically. Stephen Moore. He’s a senior economic contributor for FreedomWorks. He’s got a great show on Newsmax every weekend for FreedomWorks. He’s part of the Committee to Unleash Prosperity, and that’s exactly what he wants to do. Hey, Steve. Welcome back to the program.

 

Stephen Moore:            Hi, Trish. So good to be with you. Thanks for those very kind words. And you and I have known each other and worked with each other for – I don’t know – I think back over 20 years. So it’s great to be with you on your show.

 

Trish Regan:                 Well, you just always make so much sense. And we need somebody to make some sense of what’s going on right now because – gosh. I mean, Steve, these numbers are bad. I think you and I predicted that inflation would be bad. I guess my question now is: What is your prediction as we move out into the coming years? We go into the fall, as we go into the Christmas season and people are waiting to get their goods, their Christmas presents – which are costing more – how does this thing unwind itself? Once inflation starts, how do you control it?

 

Stephen Moore:            I’m really nervous right now about the direction of the country and the leadership in the White House. And I feel like the wheels are coming off a bit. And hopefully I’m wrong. I mean, there’s some things that are going right with the economy, and we do have our businesses reopening. And we’ve come out of the pandemic in better economic shape than just about any other country in the world. And I think actually Trump deserves a lot of the credit for that. But right now, I just don’t think that there’s any adults in the White House who know anything about the economy, who know anything about business, who know anything about meeting a payroll, who know anything other than a kind of Left-wing ideology.

And I think Biden really needs to bring in someone who is a CEO [laughs], who’s actually run something. And so, when you ask me about inflation I think it’s getting worse, not better. And I think it’s going to get worse – a lot worse – in the next few months. And that’s because we have these supply-chain disruptions which are going to – they’re going to start to lead to empty shelves. and they’re going to start to lead to escalating prices.

I’ve been predicting that in the next four to six weeks we’re going to see $5-a-gallon gasoline across the country. We’re going to start to see one of my good friends – I think you know him – John Catsimatidis, who runs a whole series of grocery stores in the New York area and has become an incredibly successful businessman. He’s predicting 10% increases in food prices over the next month. So it’s like a snowball rolling down a hill with this inflation. And shame on the Fed. They’ve been completely behind the curve. I think Jerome Powell has really dropped the ball on this. The White House has been wrong about it. This idea of transitory inflation has just been a wrong narrative.

 

Trish Regan:                 I feel like it’s kind of a malpractice. Right? Because some of these things have been so obvious – certainly on Jerome’s part. Right? Because Jerome should’ve known better. I mean, and Larry Summers – I give the guy credit because he works for many of these Democratic administrations and he has every reason to try to support this idea of, “Let’s just give out free money, and part of it can be from the Fed.” But he’s been very critical of this and warned of inflation. And you know what? Just like us, Steve – and we’re all right. We don’t want to be right because, look, I’ll take a booming economy – I don’t care who’s in office. A booming economy would be a great thing. But now, we’ve got an environment where there’s all this inflation. We’re not adding as many jobs. Not because businesses can’t, but because people don’t want them?

 

Stephen Moore:            So what worries me right now is the dreaded – we’ve been talking, you and I, for the last year about the dreaded “I” word, inflation. And I’m going to add to the mix the dreaded “S” word – stagflation. Because we just got a report from the Atlanta Federal Reserve that came out on October 15 which recorded 1.2% growth for the 3rd quarter. 1.2%. That’s anemic. You know, we should be growing at 5, 6%, as we were in previous quarters as we came out of the pandemic.

And so, you get – I mean, it’s just reminding me a little bit of the 1970s. I did live through the ‘70s. And what happened is, the inflation did snowball. It wrecked the economy. It led to not just high inflation but high unemployment. The Biden people have this all mixed up. They think that, you know, inflation is high because unemployment is down. No. Under Reagan and under Trump, we had high growth and low inflation. These things tend not – you know, tend to run in the same direction, not opposite directions. And so, the most important thing I have to say to your audience is this.

If you share Trish’s and my concern about the negative effects of inflation – which are a real tax on the lowest-income people and do a lot of damage to the economy. If you are concerned about it, the absolutely worst thing we could do right now is to pass a $4 trillion spending bill that is paid for with much higher taxes, more debt and more money printing. I mean, that is going to make – if you think inflation’s bad now, stick around. So we have to stop this bill. It is the worst bill I’ve seen in my 35 years in working in Washington. It will have a very, very negative economic effect.

 

Trish Regan:                 So I have a feeling that the – I don’t know if they’re just a bunch of Millennials running around in the White House. But whoever’s pulling the strings there is highly political but not thoughtful. Because, like, the oil-price thing – that’s a great example. You’re saying $5 gas. I mean, we’re nearly at $4 in the area I live, and I think you’re right. I think $4 is coming very soon. It could be $5 before you know it. So I’m like, “Guys. How did you not think this wouldn’t happen? I mean, you shut down the Keystone XL pipeline and you discouraged everyone from investing in this energy sector. Simultaneously, you get all this ESG stuff that’s getting forced onto everybody so nobody – again – wants to invest in these energy companies.

So if you want to get the oil out of the ground, I have a feeling it’s going to cost more. And then, you factor in what the Fed’s doing with all the money printing, of course the dollar value goes down and oil’s priced in dollars. It, again, just strikes me as so obvious. And what is their answer? And the answer, unfortunately, Steve, is political as well. They want to tap the strategic petroleum reserve. I mean, I wish they would just put politics aside for a moment and think, “What is best for the people we’re here to represent?”

 

Stephen Moore:            Well, tapping the strategic petroleum reserve is simply not a solution. [Laughs] Right? It might for a few weeks bring the price of the gas at the pump down by 10 or 15 cents a gallon for a few weeks. But it’s a temporary measure. It’s not going to solve the problem. It’s putting a Band-Aid on a cancer patient. Right? And so, we need to be producing more American energy. We became completely independent of foreign oil under Trump and we were not importing any oil from OPEC, which was a great thing. And now, how embarrassing is it – now we have a president that has to go hat in hand and beg the Saudis and the OPEC countries to increase their oil output because we’re not producing here at home?

I mean, it makes zero sense. And so, when you talk about the energy situations – I wrote a book a few years ago called Fueling Freedom about the fracking revolution and the shale oil and gas revolution, which really was a spectacular achievement of American know-how and technology. And we’re shutting down our wealth. It’s crazy. And meanwhile, in Europe, a big piece in the Financial Times about a week ago. And I’ll quote it to you, Trish. And the headline of the story was, “Europe is now held hostage,” unquote to Russia for their energy.

I mean, that makes no sense from an economic or a national-security standpoint, and we’ve got to be – I’m always about we should produce our oil, our gas, our coal, our nuclear, our wind. We should use whatever energy we can, and these policies are only benefiting two people: Vladimir Putin, who is going to become the richest person in the world if we stop producing our oil and gas, and the second one is President Xi in China. And they are benefiting from these policies while we’re hurting our own economy in the name of climate change. You know? And I just think it’s a very misguided policy.

By the way. While we’ve been speaking, something came over the wire that over the last year – this is according to the Labor Department, Trish – wages over the last year were up 1%. But inflation was up, you know, 5%. So wages are worsening for the workers. Real wages, what you can buy with the paycheck. This is a crisis. We had big gains. How many times did you and I talk about this during the Trump years, of how much workers benefited from the Trump tax cut policies, deregulation policies, the trade policies, getting tough with China? So you can tell I’m frustrated.

 

Trish Regan:                 No. I hear your frustration. I likewise feel that. And one of my frustrations was – maybe it was last month or the month before. I was reading in the New York Times and everywhere how great it was that wages were finally going up. Now, nobody – none of these reporters… and I’m just astounded at the lack of thoughtfulness and vigilance in their reporting. None of them bothered to cite real wages, which is what you’re talking about. Nobody took into effect, into account, the effect of inflation which basically wipes out any wage gains. I’m like, “Come on, guys.” I mean, you think about right now, Social Security increasing, the cost-of-living adjustment going up 5.9%.

Now, if inflation is 5.4%, it means it’s really not that big of an increase. We’ll see in time whether it’s actually on a real level, actually even less. Because if inflation starts getting into the 6, 7% territory or even 8, then who cares about a 5.9% increase? I mean, I just am frustrated by so much. I’ll use that malpractice term again, Steve. Because a lot of this is so highly preventable. The other thing – you mentioned some of these foreign countries. I think that’s relevant. You know, I’ve spent a lot of time looking at the policy on Venezuela.

And the Trump administration did a good job trying to get that to the finish line, trying to see a change of regime so that we could open that up and have a good market relationship with people that were not socialist dictators down there. But now I’m looking at it, 3.5 million barrels of oil that we could get if we had anybody that was thoughtful and strategic there in the State Department. Another big source of oil, we’re not getting it. We’re not getting it, 3.5 million a day, because the Chinese are – or the Russians are, the Iranians are. I mean, it’s really a mess. Afghanistan was a mess. The economy is a mess. Here’s the question for you. How much more can the people stand? Right? Americans knows it’s a mess. That’s why his poll numbers are so bad.

 

Stephen Moore:            Well, look. American people always want to give a new president a honeymoon, and they want to give a new president the benefit of the doubt. And we all do. You know? “Let’s see if this can work.” And it’s only been nine months [laughs]. It feels longer than that, doesn’t it? But so far, I do think Americans are starting to wonder, “Well, why is Biden” – I always get eating by my liberal friends, “Why is Biden doing this? Why is Biden doing that? Why is he shutting down the pipelines? Why is he reducing American drilling for oil and gas? Why is he not sealing the border? Why is he not…” I mean, here’s another one. I mean, we’re 80% done with building the wall at the Mexican border and then they stopped building it. You know, a chain is only as strong as its weakest link. So what sense does it make to build 80% of a wall and not make 100%? You know, the horses are going to leave the barn if the door isn’t closed.

 

Trish Regan:                 By the way. That’s not that controversial. Right? I mean, let’s keep it in perspective. Until Trump, the Left actually was all for borders.

 

Stephen Moore:            That is very true. And I’m just struggling to find anything that Biden has really gotten right. His vaccine mandate, for example, is really hurting businesses. It’s really hurting, you know – you’re getting a lot of workers not showing up for work because of the vaccine issue. You’ve got, you know, this crazy new policy with respect to getting people back in our jobs and we’ve been paying people not to work now for a year and a half.

And so, we’ve got 11 million job openings in the country right now. Casey Mulligan – one of the top labor economists – has a piece in the Wall Street Journal this week that says, “If you pass the Biden plan with all these free things” – you know, everything’s going to be free… childcare’s going to be free, kindergarten’s going to be free. Prenatal care’s going to be free. As the New York Times put it, Biden is proposing cradle-to-grave government. People are – the incentive for people to work is going to go down so much that you’re going to have 8 million fewer Americans working if you pass that bill. So I don’t think they believe in incentives. Economics is about incentives. If you subsidize something, you get more of it. If you tax something, you get less of it. So his plan is to tax the businesses and tax the productive entrepreneurs and small business owners in our country and then give the money out to people who are not working. And that’s not a very smart policy.

 

Trish Regan:                 So let me ask you this. Why is the stock market doing as well as it’s doing, then? Is this an inflation thing? I mean, how do you think about market valuations in light of, you know, a slowing economy?

 

Stephen Moore:            Well, [laughs] you know this better than I do. I mean, so you were asking – and I would ask you that question. But my short answer is, I still think that the markets are addicted to this cheap money. I agree with that. But I think as long as the Fed keeps the spigots open – you know, we’re not producing oil, but we’re producing a lot of money, and it’s flashing around in the economy and it’s going right into the stock market. Where else are you going to put it?

Are you going to buy a bond? You know, 1.5% interest rate? And so, I think that’s what’s happening. But at the end of the day, I’d be very, very wary of this bull market continuing. Because the bad policies eventually lead to a crash. And if we stay on this course, I do believe that we will have a financial crash at some point. But I still think there’s time to reverse – you know, the Titanic is headed to an iceberg, but I still think there’s time to turn the Titanic around.

 

Trish Regan:                 What’s interesting, Steve, is that I think people – and by the way, we’re talking with Stephen Moore. He’s a senior economic contributor at FreedomWorks, a host on Newsmax. He’s at Committee to Unleash Prosperity, which I just – I put out a great e-mail every single day at Trish Intel. But I love your e-mail. I got to tell you. It’s really very, very informative. and for people like me that really crave that economic news crossed with politics, you hit it spot on. So sign up for the Committee to Unleash Prosperity’s e-mail. You should check that out. But anyway. I guess people have recognized this. They recognize the weakness, they’re not happy, they don’t like the inflation, they realize small-business owners are going crazy because they can’t find workers. So what’s the outcome of this – change in ’22?

 

Stephen Moore:            Well, if they pass – I tell people, “If they pass this horrific bill, it’s not going to really matter much what happens in 2022.” You and I will spend the rest of our policy and economic careers trying to undo the damage that bill does. I mean, let me just give you one example, because we’re talking about the American competitiveness and America relative to Russia and China. Well, you pass this bill and we’re going to have a higher business-tax rate than China does. I mean, we’re supposed to be the land of the free and we’re going to have higher taxes than they do. We’re going to have higher tax rates than Russia does. It just makes no sense.

One of the things I loved about Trump – and there were a lot of things I didn’t love about Trump [laughs] – but one of the things I admired about him was, it was this idea of putting America’s interests first. And we should do that. We should always do that. America comes first. That’s what a president of America should do. And I’m not so sure this president’s doing that. Why would he want to raise our tax rates to higher than all the other countries? Our small businesses, by the way, get clobbered – clobbered – under this bill. Their tax rate for successful small businesses goes up to 45%. I don’t think there’s any businesses in the world that have tax rates that high.

Now, you don’t have to be a wild-eyed supply sider like I am to know that if you pay a 45% tax rate in the United States when you can go to another country and pay a 20% tax rate, that’s going to affect where the money goes and where the money flows and where the jobs flow. So we got to stop that bill. You know, your and my buddy, Larry Kudlow, says this very well. He’s we’ve got to, “Save our country by killing this bill.” Because if we don’t, it’s going to have severe, severe negative effects and I think it could cause a real gut-wrenching recession.

 

Trish Regan:                 Haven’t we seen from Sinema and Manchin some resistance to the insanity?

 

Stephen Moore:            Yeah. God bless them. But where are the rest? I mean, this is a sad situation to me – that where are the prominent Democrats in the country who are moderate, pro-business Democrats speaking out against this horrid bill? I just don’t hear it. It’s so depressing to me that the hard Left taking over control of the Democratic party has seized so much control that everyone else is afraid to speak up and speak out. I mean, another example. One of the great success stories – social-welfare success stories – was under Bill Clinton, a Democrat, who passed the Bipartisan Welfare Reform Bill in 1996 – 25 years ago – that really overhauled the welfare system in an incredibly productive way.

We got half of the people who were on welfare into work and into productive, you know, work and productive jobs, and they climbed the economic ladder and we said, “Yes. We’re going to have a safety net for people, but it’s not going to be a way of life. And you’re going to have to work or take training or go to school or something to get trained.” Biden gets rid of all of that. All of it. There’s no work requirements in all of this stuff. You just get all this free stuff and… [laughs]

I’m frustrated because the experiment worked, and yet they still want to reverse it. The experiment of the Trump tax cuts worked. I mean, my God. We have so much money flowing in this country, more jobs than ever before. We had the lowest poverty rate and the Left still wants to reverse policies that worked. They keep talking about the science, Trish. OK. Let’s talk about the science. We had an experiment and it worked, and they still want to reverse it.

 

Trish Regan:                 Well, it’s pretty messed up. I mean, you hit the nail on the head. It’s really messed up. We’re pretty broken and I’m worried about the country just like you. So, Steve, I know you got to run. I just have one more question for you. Do you think, like, everyday Americans – I know you’re talking… I love how you simplify this. But do people get it? I mean, do they really get it? I think they might. I was talking to a woman who runs a hairdressing salon recently. She can’t keep employees – people that went out like a year ago, they don’t want to come back because she said they’re getting so many benefits from the government.

I’m like, “Wait a second. Isn’t that over? Like, didn’t we end those in September?” And she said, “Well, no. There’s extensions you can apply for,” this, that, and the other if you have to care for someone at home because you’re worried they might get COVID. It’s almost like they’ve taken this COVID – which, by the way, very real, very scary, very awful – but they’ve used it and weaponized it politically, economically, to really change the country. Your thoughts on that?

 

Stephen Moore:            Look. I believe that this country is not socialistic. We don’t have socialism in our DNA. We have freedom in our DNA and free enterprise. And I think the American people will revolt against this. This isn’t what people voted for. They didn’t like Trump’s antics in the White House and they didn’t like a lot of the way he acted and said things. But I believe at the end of the day we’re going to reject this and the American people will revolt against a lurch toward Big Government socialism. So I think we will right the ship before [laughs] it hits that iceberg.

I really do believe we will, because it would be such a disaster to have to dig out of this. I lived through the 1970s. I was a teenager back then. I remember, Trish, going to the store and going to the gas pump. And every time you go, everything was more expensive. And it just felt like, “My God. What’s happening to our great country?” And then, Ronald Reagan came along and within two years everything was fixed and we became the most prosperous country in the history of the planet.

And I think that will happen again. But we have to – it’s not going to happen by – we have to all have our voices heard and say, “No. No. We don’t want this. We don’t want $4 or $5 trillion more in debt. We don’t want to pay people not to work. We don’t want to hurt our small businesses. We do want to produce American energy. We do want to secure our border.” All of these things I think are 80/20 issues. And so, thanks to voices like yours I really think we’re going to turn this around.

 

Trish Regan:                 And yours. Thank you so much, Steve. Great to have you here today. Much appreciated.

 

Stephen Moore:            OK. Thanks, Trish. [Music plays and stops]

 

Trish Regan:                 My sincerest thanks to Stephen Moore. Just a brilliant economist who I’ve known a long, long time who really cares about making sure that this country is as prosperous as possible. I should point out – I didn’t say this. But he was an adviser to Donald Trump on his economic team. And wow. I mean, when you look at the success economically that the country had via those policies – again, I get it. Some people didn’t like the personality. But wow. On the policies for this economy, those were really hard to argue with. You saw median incomes going up at massive amounts for the first time. And this is like real wages. Right? Adjusted for inflation.

So with the right team in place, with the right goals, with a sense of what we can do – the values of freedom and capitalism that we hold so dear. This is what we need more of. We need more thoughtful people in Washington, D.C., that are going to be looking out for this country’s future, making us the biggest economic success we can be. Thank you so much for tuning in. Remember to go to americanconsequences.com where you will see a weekly story from me and lots and lots and lots of other phenomenal writers right there on americanconsequences.com.

I’ll see you on trishintel.com, my daily website with my daily program. And next week, we have a terrific, terrific interview lined up for you with someone from NBER – National Bureau of Economic Research, somebody who’s at University of California Berkeley, a professor of Economics and Political Science, Barry Eichengreen. We’re so looking forward to that. I’ll be back with you next week here on American Consequences. Until then, have a terrific week.

 

Announcer:                   Thank you for listening to this episode of American Consequences. Want more Trish? Read her weekly articles, Thursdays, in our magazine at americanconsequences.com and subscribe for free to get all of our daily articles and the monthly magazine. We’d love to hear from you too. Send Trish a note – [email protected] This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Trish Regan’s American Consequences is produced by Stansberry Research and American Consequences and is copyrighted by the Stansberry Radio Network.

 

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