Speaker 1: What entity in society doesn't borrow more once it's taking
in more revenue, And so they're thinking that the debt
is the problem as opposed to just the extraction in
the first list, and say we can fix the problem
by raising more revenue, getting more revenue to the US Treasury.
It's just unbelievable. So yeah, in a since the delusions
are endless, I call it the deficit delusion.
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Speaker 3: And welcome.
Speaker 4: You are listening to and watching the Financial Survival Network.
I'm your host Carrie Let's. John Tamney is with us now.
He runs a real clear markets, author of a new
book which we'll be talking about called Deficit Delusion, Delusions,
Delusion Delusion. Okay, but there are multiple delusions out there,
no doubt. There's no shortage of delusions in our modern
world here, No, John, you know, John, you and I
we spoke did a few interviews with you way back
in twenty twelve, twenty eleven. The world's changed quite a
bit since then. But let's talk about deficit delusion or
delusions first. What is the biggest delusion about the deficit?
Speaker 1: That the crisis is ahead? All left, right and supply
side talk about is well yet really bad and we
better they're eventually they're gonna not be so kind to
us the rest of the world, and that's the crisis.
And I'm thinking, have you guys lost your minds? The
crisis is not a future thing. It's not a future
when when lenders decide that they don't want to lend
the United States anymore, now that's kind of a good thing.
When people cut off government. The crisis is in here
and now, I mean it's unseen, but it's in how
much more advanced we'd be if government weren't consuming so
much in the way of precious resources.
Speaker 3: It's in.
Speaker 1: What the grandchildren here, these the left, right and supplic side,
they say, oh, well, yeah, they're going to inherit all
this debt that's so awful and we're having a good
time at the expense of them. Where's the good time
in government spending, it's a bad time. It's the central
planning of precious resources. So that's the crisis, but you
can't see it because you don't see how much more
advanced we be without it. The burden for the grandchildren
is that we leave them a much less evolved world
and even more challenging. We leave them a much bigger government.
This focus on the debt is just so childish, and
it works in saying that the crisis in the future.
It's it's these different economic religions basically saying, yeah, markets
are incredibly stupid. They can't see what we can all see.
They can't see the crisis that's ahead. I mean, it's
just mindless.
Speaker 4: You know, I totally agree with you, because every dollar
that the government spends, it's taken from from the people,
from the businesses that could arguably be spent a lot
more efficiently.
Speaker 3: And you know that you're right.
Speaker 4: The crisis has been ongoing arguably since FDR and when
the when the country really ran off the rails, you know,
when when personal responsibility took a backseat to government largesse.
And as like we can point to the Hoover Dam,
we can point to a lot of bridges and.
Speaker 3: Tunnels that were built.
Speaker 4: We could also point to a lot of post offices
that were built that are basically houses for human non productivity.
Speaker 1: It's also true I like how you fit at houses
for human non productivity. I would throw into that. One
of the things that somebody I'd like to raise money
for is the Museum of the Unseen and literally take
it around the country and I think you can get
good publicity for it, and just people show up and
there's nothing in there. And that's kind of the point.
It's what we're not doing yet. No matter the economic religion,
it's always a future problem. And so they focus on
balanced budgets as though that matters. No, what matters is
how much they extract to balance the budget. In the
United States, it's the accomplishment equivalent of slam dunking on
a six foot basket if you're seven feet tall. I mean,
you're extracting from the most productive people on Earth. Balance
budget misses the point. It's about how much they extract
every year, and they extract too much from us. That's
why we have so much debt. I've never heard of
an entity that can borrow so much unless it's taking
so much in the first place. That's the people trust
the debt. Yet left, right and supply side keep talking
about how, no, we need to fix the debt problem,
we need to raise more revenue. I mean, have they
lost their minds? What entity in society doesn't borrow more
once it's taking in more revenue. And so they're thinking
that the debt is the problem as opposed to just
the extraction in the first place. Say we can fix
the problem by raising more revenue, getting more revenue to
the US Treasury. It's just unbelievable. So yeah, in a sense,
the delusions are endless. I call it the deficit delusion.
Speaker 4: Yeah, so true, because it's a symptom of out of
control government. So I just wrote an article because I
know this case is coming. I don't know how it's
going to come to the Supreme Court. And that is
the impoundment, the ICA impoundment, the Control Act of nineteen
seventy four, which basically, and I gave this example, if
Congress decides that they want to create a monument to
basically the tomb of the faceless bureaucrat and in honor
of them screwing up our lives, messing up, you know,
failing to grant permits all this, and then they're going
to have a bonfire that runs twenty four to seven
and they're going to feed it with freshly minted one
hundred dollars bills from the Federal Reserve, and they mandate
that this bonfire must be kept going twenty four to
seven in perpetuity. Under the Impoundment Control Act of nineteen
seventy four, the President's required to light the match. I mean,
it's absurd, but that case is coming. And that case,
if we have somebody who actually wants to cut government
spending and cut the scale of it back, it's going
to go in favor of the president. We'll see what
he does with that newfound power.
Speaker 1: Well, the only thing I would say, though, in response
to you, is that so what I mean. I'm not
I'm not making a comment on whether it's constitutional or not.
I'm just saying cut spending. That that's like, that's not
going to shrink government, and it's not going to shrink government.
It's like, if you spend less, there's not less consumption
in society. You're just what you don't spend is shifted
to someone else through whatever financial intermediaries you use. When
governments don't spend or when they shrink a program, the
money doesn't disappear, it just goes to something else. And
so I make the argument in the book, I don't
I reject your point that we have out of control government. No,
what we have is a government that takes in too
much revenue. And because it takes in too much revenue,
it can borrow with these and it can borrow an
enormous amounts because markets are a look into the future.
As we both agree, the markets know that the revenue
is going to grow, grow and grow. And so the
problem is over taxation of Americans, that people would spend
the gobs of money that flow to them as a
statement the obviously, but if you cut spending, which oh,
if we just cut, if those can just get too
trillion out of it, that would just free up two
trillion for them to dream up new really awful ideas
with the problem is too much revenue.
Speaker 4: And the problem is that the system Congress totally in
charge of spending money and the president has no say
over it whatsoever under that ICA Act. I'm not saying
if he did, and if he wanted to change it,
then he could. But if he doesn't have control he
does want to change it, he has no power. If
he has control and he doesn't want to change anything,
then nothing is going to change. But the look, they've
already violated that Act numerous times, like hundreds of times
with Doge. And I'm not saying it's the cure all
for the court to rule it unconstitutional. But if we
do get a president who wants to cut spending, and
I'm not convinced that the current occupant is the one
to do that, then at least he might have the
tools to do it. Don't forget the last impeachment of
Trump was brought under the Impoundment Control Act. When they
said he didn't send the money to Ukraine. That was
part of the basis for that. He didn't spend the
money that they told him to spend, and that was
somehow a high crime and a misdemeanor.
Speaker 1: Now, look, I like it until I'm reminded of Let's
say we cut spending, we haven't cut the flow of
revenue into the government. See, even if you could shrink
spending for a year or two, it wouldn't change anything.
The problem is too much revenue now and wait, too much.
Speaker 3: Part of it.
Speaker 4: It's all interconnected, and it's all being stolen here, John,
let's face it. They call it fraud, abuse, waste. I
call it theft, all right, theft that comes in the
form of a ten forty tax return.
Speaker 1: Yeah, it's a tough one because the government is us.
We allowed this to happen, and so it's hard for
me to say it's theft. We keep voting for it.
But I look, I think we have similar goals here.
I think we something similar that the crisis is in
what were the advances that are not happening? And it's
not even a question of arguably less efficient. Of course,
government spending is less efficient, and because it's such a
size consumer of precious wealth, we always have to wonder
what we're not achieving as a consequence.
Speaker 4: And that is the real crime here. Because you and
I agree on this one hundred percent. If government had
stayed at the level it was at before Roosevelt, right,
even if it had gone up slightly from there, the
amount of wealth that this country would possess would just
be astounding. It would far exceed any other, even the
United States pre World War One, because those every dollar
that the government spends is a lost opportunity for the
person that's paying it.
Speaker 1: Right, absolutely absolutely, and you're so right, And I just
I think it's important the way that you describe it. Again,
think of how left, right and supply side do it.
It's always we better do this because the crisis may happen.
They've never sold anything in their lives. I mean, I
can't think of a more loser approach, unpersuasive approach, because
people can say, well, yeah, you've been saying that forever
and it's never comes true. But it should be an
optimistic sale in that Gosh, think of what we could
be doing. Think of as prosperous as we are, and
we're the richest country on earth, were amazing, Think how
much more prosperous, more advanced we would be the present,
if we were at levels from the nineteen thirties would be.
It would make the present look Bangladesh by comparison. We're
nowhere close to what we could achieve.
Speaker 4: Yeah, that is the crime, and unfortunately it's a silent crime.
Speaker 3: Yeah, it's unseen, we don't know, no one knows.
Speaker 4: It what we could have been had the government not
metastasized into its current form. So Let's talk about something though,
because we were talking about a pre call. Your attitude
towards your own life. Really, whether you're optimistic towards your
own life or pessimistic, is going to carry over to
your attitude towards what you expect the government to be.
And I remember there was a guy, Howard Schultz, I
think his name was. He wrote a newsletter called the
One Armed Economist after something FDR once said, and he
basically said, when we have a depression, it's really massive
mental depression on the part of the population. The majority
just get very pessimistic, and then the economy follows suit.
So is this a chicken and egg situation here, John,
or is there something to this?
Speaker 3: Okay?
Speaker 1: So I don't think I would have to convince you
that what drives economic growth isn't consumption. It's savings, as
in entrepreneurs mows with savings. Yeah, nothing new to you there.
And so there's always been this belief out there that, well,
you know, the media can talk us into a recession.
They'll tell us that things are going to get bad,
and economists say, well, yeah, then people will stop spending
and oh boy, the economy is going to be desperate.
But as you and I know, it's the lack of
spending that feeds new ideas. That's not to say that
people won't consume. We're wired to consume.
Speaker 3: That's the easy part.
Speaker 1: But if we're spending less, that just frees up capital
more for businesses and new ideas. And so I've always
felt that recessions are self correcting in that way for
reasons beyond if people are really worried a they're fixing
what they're doing wrong. Recessions signal the recovery, but they
also signal the recovery in that Okay, I'm going to
pull back for a time, I'm nervous about what's ahead.
I'm going to pull back, and that kind of fruit
that builds up the capital base for recovery. And so
I don't think mental can drive depressions. But I think
what you and I were talking about, and correct me
if i'm you, and I think that people's perception of
the world around them is driven a perception of the
future is driven by their own situation. And I think
you're absolutely right. I think someone who has a great day,
if you ask them where things are headed, they would
have a fully different view than if they'd had a
horrible day, We're a horrible year month, or you.
Speaker 4: Just maybe think of that song Everything's Coming Up Roses,
you know, Gypsy we Rustle, you know, one of those
Rogers and Hammerstein plays. You know, when you're feeling good,
the world looks good. When you're feeling bad, you're imagining
the worst around every corner. So because your own economy
starts in your brain and you have to control your
state and not get sucked in because you know there
is a lot of negativity out there. They're problems, for sure,
But john look like the way we live, not just
in the United States, but in Europe and in the
more developed parts of the world, there's never been anything
like this before, where literally, in many ways you live
better than the kings of yesteryear.
Speaker 1: No doubt, living standards are amazing. They're an effect of
innovative people mass producing goods that past generations never imagined
they could have. And you know, I think you hit
on something else that's really important. What's that line from
Hazlit's book Economics and One Lesson. He said, quote, what
is harmful or disastrous to an individual must be equally
a harmful or disastrous the collection of individuals that make
up a nation. In all he was saying, but I
thought it was the most important line in the book
that no one talks about. They're never talked about. He's
just saying, economies are individuals, as you allude and as
you state and so. But this is important when we
consider policy. I don't care what your ideology is. You
can no individuals. Economy is improved if they're heading more
and more of the wealth over to the government, if
they're spending more time dealing with regulators rather than producing
what erard is they're producing, if they're not allowed to
trade with other people who want to trade with them
in other parts of the world, economic growth and optimism
is fairly basic once you break it down to these
first principles that you've broken down to that it's just
it's individuals, and individuals are much more collectively depressed when
policy is suffocating their ability to do to help themselves
as individuals.
Speaker 4: Yeah, but you know the problem, it's kind of like education.
You know, going back I grew up in the sixties,
more than half the population smoked cigarettes, which is an
absolute act of insanity, self destructive. It's maybe not going
to get you now, but maybe maybe in ten years,
maybe in twenty.
Speaker 3: Eventually it's going to get you. Now.
Speaker 4: I never thought i'd live to see the day where
less than twenty percent of the population smokes tobacco cigarettes,
and that number keeps falling. And you know, the left
is always saying education, education, But this is a case
where education really worked. So why can't we have economic
education and personal finance education because we've proven that society
as a whole can actually change their attitudes their behavior.
And you know, I can't say about what they're eating
there as far as processed foods, but at least they're
not smoking cigarettes and taking ten twenty thirty years off
their lifespan like it once were.
Speaker 1: Yeah, no, I know what you're saying. I loved smoking
when I smoked, but yeah, I get your point. I
guess my point there is that we didn't need education
for that. We knew and people knew. People knew. They
knew tell when you're a smoker, you know how you feel.
But there's joy in it, and so people do things.
You know, I don't bungee jump. Some people bungee jump.
I like to smoke. I didn't wear masks during the lockdowns.
That didn't fear me, but it fears scared some people. So,
you know, living.
Speaker 3: That's your thing, where two or three who carries?
Speaker 1: Yeah, you know, let people figure it out. They'll figure
it out, watching and including If lack of masks was
killing people, people would start wearing masks, if that was
the difference between sickness or death.
Speaker 3: Education.
Speaker 1: I just think people get it, you know. I love
people say, well, the pessimists in our myths, they say, oh, well,
things are so bad, And I think, well, in the
nineteen seventies, the Civil Aeronautics Board sexually planned airline routes,
airlines that were created by to move mail around. I
remember in the nineteen seventies, and I know you did
odd and even days for gasoline and waiting long lines
for gasoline because both sides bought into price controls. I
remember that you couldn't own a phone back then, you
had to rent it from the government's preferred monopoly. Yeah,
you talk about taxation, The top rate was seventy percent,
and Ronald Reagan was ridiculed not just by Democrats but
by Republicans for having the temerity to say that we
should lower the rate. They said it had caused cause inflation,
and probably the dumbest one of them all was the CIA,
and most of the economists of the CIA, but economists
in general, they also, well, you know, Soviet Union's just
a different economic system, but there's as almost as large
as ours. Don't tell me that we haven't improved. Don't
tell me things that things aren't better, that people aren't
more knowledgeable. None of those ideas would last a second
in any economic discussion.
Speaker 3: Today.
Speaker 1: We're much smarter, not because of school. Again, the conservatives that,
oh my gosh, they're socialists. Oh these democrats are like
people figure it out, you know, we're not babies. We
can look around, we know it works.
Speaker 3: Yeah, well I'm surprised. You know.
Speaker 4: I've been at Austrian economist or devotee of the Austrian
school since I'm twenty years old, so going on clos
fifty years, and what amazes me is people actually understand
the concept that when you print money and it's not
backed up by increases in productivity, that you get this
thing called inflation. You know, it surprises me, like how
knowledgeable much of the public's become about that. So but
education in that yes, everybody knew cigarettes were bad for you,
but they didn't know exactly how bad they were. I think, yeah, yeah,
I don't feel as good. But you know, I think
the information was hidden from plain sight. But now I
think education, as far as economics goes, it's all Kynesian.
You know, it's all kind of Kynesian brainwashing. And I
think the public is repudiating that.
Speaker 3: Now, are they.
Speaker 1: I've always argued that monetarism, that's just another sturdy leg
of the Kynesian chair, no offense. I think Austrians in
many ways have bought are a variation of Kanesianism. They
imagine that central banks can just produce excess credit. Now
credit is produced in the private economy. So Kanesians say
that government spending drives growth, and so too much government
spending causes inflation. Oh, police, governments can't spend what they
have taken from us. You've already explained that. Sure, money
that circulates circulates because of production. Forget about money printing
and all this. If you go to Venezuela right now,
you go to Iran, you go to Pyongyang. If you
want to buy things, you better have dollars because no
one's going to take the local currency correct. And so
I say this as a way of saying money that's trusted,
reasonably trusted. Now probably you and I. In our perfect world,
the dollar would have a stable definition. I'd love to
have it. But the dollar circulates globally, not because the
FED put it there, but because where there's production, there's money.
But then you have the Austrians saying that somehow, well, yeah,
the FED can just create access credit. No one cannot.
As Mesus was clear, we borrow money for what it
can be exchanged for. And so if the FED can't
create credit, only the private sector can create credit. And
so if the FED tried to print money or whatever
all this wacko stuff, the dollar would see circulating.
Speaker 3: It doesn't.
Speaker 1: Markets are smart, and no one's going to take a
currency that was quote printed, because they're going to say, well,
I won't get back as much as I brought to
market for that currency. And so I just think they're
all I think all the religions need to wake up
and say that people are smart and they see they
see through all this stuff.
Speaker 4: Yeah, well, you know a lot of countries, every fiat
currency out there has has done the same thing and
eventually realize they're intrinsic value. The dollar is the one
that has lasted the longest since it became fiat. You know,
it's fifty four years now, so the experiment is ongoing.
And you know, but the idea of a stable currency,
the banks don't like it, right, Yes, oh I think
they would love it. You think so, But then their
loans become worth more, but yes, harder to pay back.
Speaker 1: Why would they be harder to pay back? With a
stable currency, you'd have suddenly, you'd have all this investment
removed from inflation and hard assets representing existing wealth, and
you could much more capably put it to work in
new ideas. Let's never forget that the dollar fell substantially
in the two thousands. I don't think it's unrelated that
various US banks and investment banks were brought to their
knees by this massive devaluation. Contrasts that with the eighties
and nineties. Ronald Reagan didn't get it, but he ran
on returning to a gold standard. Markets saw ahead and
responded that gold collapsed during the Reagan years. Never forget
that Bill Clinton's Treasury secretary Robert Rubin was big about
a strong, stable dollar. Is in any surprise that Wall
Street's golden years were during those years. Wall Street hates
chaos because it makes a lot more money from investment
banking than it does from trading. That's precisely why Jamie Diamond,
once he took over at JP Morgan, got rid of
all the is. He knew that investors wouldn't pay for
trading profits. There's no money in that. Banks would be
much better off with good money.
Speaker 4: Yeah, they might be, but they are a beneficiary of
inflation because the new money that's created, they get it
first before appreciated.
Speaker 1: No, no, again, If that were true, why did they
nearly die in the two thousands, why were they Why
was Wall Street on its knees in the seventies. Inflation's bad.
Banks lend out money hoping to get something back. Inflation
wipes out the value of their loans. Come on, you
know that.
Speaker 4: Well, yeah, that's why everything is adjustable now. But that
doesn't really address the underlying problem that the dollars they
are getting paid back are worth less than the dollars
they loaned out.
Speaker 3: Yeah.
Speaker 1: No, well, it goes up and down. There are stages
where the dollar's stronger. We haven't seen that in the
twenty first century. I'll go to my grave saying that
George W. Bush was easily the worst president my lifetime
and one of the most awful of many things he does.
Did that no one will ever talk about because no
one talks about money anymore. Is they reverse the Reagan
Clinton era of a strong stable dollar. His Treasury secretaries
from Paul O'Neil on kept saying, Hey, what's the importance
of a strong dollar. Well, it's the utmost importance. It's
the most important current price in the world. They and
the Bush administration oversaw a major devaluation. And it's no
surprise from that where we went.
Speaker 4: To boost to boost exports, the dumbest thing. It doesn't work,
all right, John, So tell me where do we find you?
How do we connect with you on the web?
Speaker 1: Oh, you could go to Twitter or x. I suppose
I'm on there.
Speaker 3: I'm on.
Speaker 1: I'm still editor of Real Clear Markets, and I put
out a at least one column every day begging trying
to convince people to think as I do, not very successfully,
but you know you have to, as I always remind people,
if you can even change thinking a little, that represents
big progress. And so that there's all my books that
everyone listening or watching should buy several copies of number eight.
The Deficit Delusion comes out in August.
Speaker 3: I'm ordering it.
Speaker 4: I pre order on Amazon, and I guess it'll be
available at Amazon and wherever fine books used to be.
Speaker 1: Sold, right, Yeah, that's right, don't I'd like to say
that it's going to be in bookstores everywhere, but I
don't trust my sales history, so but Amazon for sure.
Speaker 4: Yeah, all right, Hey, it's great to talk to you again.
Great to connect. And if you've got a question for
John myself, shoot me an email kl at Kerrie lets
dot com. All of John's info will be in the
show notes of this interview on Financial Survival Network dot com.
When you go there, just ask that you please sign
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Speaker 3: John. Great connecting with you. We'll talk to you again
real soon.
Speaker 1: Thank you so much. Congratulations on your big viewership, Thanks.
Speaker 2: For listening to carry Letz's Financial Survival Network, your solution
to today's trying times. For the latest, go to Financial
Survivalnetwork dot com. Financial Survival Network now more than ever