Speaker 1: Price controls never work and may end up causing more
harm than good. So her policy if price controls is
not going to work. On the other hand, what would
President Trump do well, He said, look at the consumer
price Index. About thirty percent of it in the aggregate
in total is made up of energy prices. Not just
that we buy gasoline and heating oil, but business has
to buy energy to produce the products. So when energy
cars go costs more to produce products. So President Trump said,
there's no reason why energy is so high. The reason
it is so expensive is when the Biden administration Biden
and Harris came in in January of twenty twenty one,
they wanted to restrict the use of fossil fuels.
Speaker 2: You're listening to Carrie Let's's Financial Survival Network, where you
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Speaker 4: And welcome.
Speaker 3: You are listening to and watching the Financial Survival Network.
I'm your host Carry Let's Hey, We're almost at the
end of August, we've got an.
Speaker 4: Election going on.
Speaker 3: We don't really talk much about elections because this is
a family show and you know, the current political situation
is obscene. But we do talk about economics, and there's
a couple of policies. There's Kamaloomics and there's trump Anomics.
We've already had a taste of both of them. I
don't know which one you prefer, but we do know
which one, Professor Bustler, Michael Butler, you prefer.
Speaker 4: So tell us here, are.
Speaker 3: There two distinct economic policies or is one just mimicking
the other?
Speaker 4: And why should we care?
Speaker 1: So there are thanks for having me on your show, Carriage.
So there are two distinct, distinctly different economic policies. So
before we look at it, what is the goal of
economic policy? That includes both monetary and fiscal policy. So
what are the goals of economic policy? They should be
to keep prices stable, rice stability, growth, and full employment.
So let's start with price stability. We have had and
almost continue to have a very severe inflation problem. Remember
when at the end of twenty twenty, the last number
we had for inflation, the inflation rate was running at
about one point four percent starting in twenty twenty one.
The inflation rate continued to go up steadily until June
of twenty twenty two, when it peaked out at nine
point one percent, and the Federal Reserve said, look, we're
going to have to do something about it. So they
started raising interest rates, and it appears to have brought
the inflation rate down. I think it's still a little
too high, and the Federal Reserve shouldn't cut interest rates.
In September. Most people disagree with me and say that
the inflation rate has come down and it's time to
cut interest rates. So suppose inflation flares up again during
the next administration. Kamala Harris's policy is, well, if corporations
and business is going to continue to raise prices, let's
just pass the law that says it's illegal for you
to raise prices. That way, she says, we'll solve the
inflation problem. That was tried in the US in nineteen
seventy one by Richard Nixon. We had an inflation problem.
He put on price controls.
Speaker 4: He crow.
Speaker 1: For about ninety days, so it was illegal or ready
your price during that period, and then he lifted it
and prices ended up soaring during the ninety days when
the price controls were in effect. You ended up with
what we knew was going to happen. Anytime you set
a market price below the equilibrium, you end up with
the shortage of the product. And for those of us
that are old enough to remember, there were lines to
get gasoline. Depending on our last number on your license plate,
told you what day could buy Yes, Selene. So price
controls never work and may end up causing more harm
than good. So her policy of price controls is not
going to work. On the other hand, what would President
Trump do well, He said, look at the consumer price index.
About thirty percent of it in the aggregate in total
is made up of energy prices. Not just that we
buy gasoline and heating oil, but business has to buy
energy to produce the products. So when energy cars go on,
costs more to produce products. So President Trump said, there's
no reason why energy is so high. The reason it
is so expensive is when the Biden administration Biden and
Harris came in in January of twenty twenty one, they
wanted to restrict the use of fossil fuels, so they
canceled the Keystone Pipeline, which would have added another nine
hundred thousand barrels of oil a day. They made the
permitting process more difficult for oil companies, and they withdrew
leases to drill on federal lands. Well, that restricted the
supply of oil, and when you restrict the supply of anything,
the price goes up. So President Trump said, look, let's
just reverse all that, go back to what I was
going to do and started to do back in twenty twenty.
So we're going to start drilling more. We're going to
prove the Keystone pipeline will bring energy prices down, and
that should help significantly to control the inflation problem. So
President Trump will look at the causes of inflation rather
than just saying we're not going to allow anyone to
raise prices. And those price controls, as I said, don't work. Now,
how about the next goal, growth and full employment go together.
Kamala Harris hasn't really given what her policies will be
on economic growth, other than to say, look, I know
in some areas in the housing market, but for instance,
we would like to see more houses being built, and
we'd like to see them less expensive so that more
people will be able to afford new homes. To do that,
she's going to give twenty five thousand dollars down payment
as systems to every eligible I'm not sure how she
defines eligible every eligible home buyer. Well, that'll actually make
the problem worse. The reason housing prices are going up
so fast is that just the same reason why any
there's a far greater demand than there is supply. So
she gives people money to help buy houses. That will
increase the demand and make prices go up even further.
She says, if we increase the demand, the supply will
just catch up to that demand. They'll be able to
build three million more houses. That's not likely to happen.
So what does President Trump say? He says, Look, a
major component when you're buying a house is the cost
of land. He says, I really can't do anything about
the costs of materials and labor is what it is.
But the federal government owns a lot of land. If
we release that land to homebuilders at a lower costs,
that will give homebuilders an incentive to start producing more houses.
That will increase the supply of houses and tend to
bring the price down. The other thing that influences economic
growth significantly is tax policy, and there's a vast difference
in what the two candidates are offering. Kamala Harris says
she wants to do a lot more social programs, give
credits to moms for daycare and the down payment assistance.
So her plan is to in order to pay for that,
she's going to have to raise taxes. Now, she says, well,
I don't want to raise taxes on the middle class
because I'm for the middle class and working people. Let's
have the wealthy pay their fair share. Let's finally have
the wealthy pay their fair share. We're going to raise
those taxes. So I looked at the i R S
in twenty two twenty three. They didn't have twenty twenty
four data, but in twenty twenty three, the top one
percent of income earners earned twenty six percent of all income.
That's a lot. They paid forty six percent of all
income taxes paid. The top twenty percent ended up paying
eighty percent of all the taxes paid. I don't know
how she defines fair share, but I would say the
top income earners are paying way more than their fair share.
In fact, the lowest forty seven percent of income earners,
nearly half don't pay any federal tax at all. Now
they say, well, they pay social Security and Medicare, and
that's true, but the people that pay the high income
taxes also pay Social Security and Medicare. Raising taxes will
stagnate the economy. She wants to raise the corporate tax
rate from twenty one up to twenty eight percent, in
addition to raising taxes on the wealth feet And the
last thing I heard her say was she wants to
tax unrealized capital gains. So what does that mean? So
if you have an asset, house, or land, or something
that has a certain value, at the end of the year,
the value is gone up. You haven't sold your house
or living it, but the value has gone up. She
wants people to pay taxes on how much the value
has gone up. Also very disastrous. On the third things
she said was in twenty seventeen, whanted to effect the
twenty eighteen resident Trump convinced Congress to have a tax
cut for all Americans. Its essentially what he said was,
I'm going to cut everybody's taxes by ten percent. So
it's nice and fair. Everybody gets a ten percent cut
in order to get it through Congress. They could only
get it approved for a ten year period, so these
will expire at the end of twenty twenty six. Kamala
says she wants to let that expire. That will raise
everybody who pays taxes. That will raise their taxes by
ten percent. That will get people less money to spend
and businesses is less and that will tend to slow
down economic activity. What does President Trump want to do?
Make those Trump tax cuts permanent? To keep everybody's tax
rates down, keep the corporate tax rate at twenty one percent,
and only tax capital gain when it's realized when you've
sold something, you have a capital gain, then tech backs it.
So his policies will keep tax rates much lower. That
will spur economic growth. So it's a vast difference between
what the two candidates.
Speaker 4: One.
Speaker 3: So let's go to this wealth tax, because that is
probably the most disturbing thing. Says, It's only going to
be on people over one hundred million. But look, you know,
we know how this works to trickle down economics. They're
a big proponent of that, especially when it comes to
tax policy. Actually, the only time they're a proponent of
trickle down economics as they call it is when it
comes to taxes, meaning that everybody gets taxed eventually. So
my house right now, you know, maybe went up fifty percent,
but I'm not selling it. So then you know, and
this supplies and just say, hey, somebody's the value of
somebody's shareholdings who's a billionaire went up three hundred million.
All right, they can't spend that money, although I guess
in theory they can borrow on the value of their portfolio,
but that's risky.
Speaker 1: Still haven't earned it.
Speaker 3: Yeah, it's what I would call phantom income because it's
income the government thinks you made, but it's income that
never made it to your pocket.
Speaker 1: What's the wisdom of that? There's very little wisdom. Who
this is really going to copper is farmers because the
value of land is going up considered. But you have
a farm that has been in a family for two, three,
four generations and they don't want to sell it. They
want to continue to farm the land to provide food.
If she starts taxing unrealized capital gain, farmers won't have
money to pay the taxes. What are they going to
have to do? They're going to have to sell off
part of their land. To pay the taxes every year,
and that will reduce the amount of farmland available and
eventually reduce the amount of food being produced. And when
you reduce the supply of anything, the price is going
to skyrocket. So all of her plans, she thinks she's
being good to the middle class, all of her plans
will eventually clabber the middle class. You're going to end
up with a stagnant economy, You're going to end up
with a higher inflation number, and eventually then the unemployment
rate is going to start to go up. And this
is not just some theory. Look at all the countries
that have done stuff like this and you can see
what happens to those countries.
Speaker 3: Hey, and I remember when Nixon imposed the wage in
price controls and everybody thought, oh, this will really be good.
But the fact is it didn't work. Even by his
own admission, it didn't work. And it ignores the cause
of the real cause of inflation, which is excessive government spending,
right and printing money, deficit spending and all of this.
Speaker 4: Now, the one.
Speaker 3: Place where I kind of take a little issue is
during Trump's.
Speaker 4: Tenure in office.
Speaker 3: Obviously we had the pandemic, but that became a money
giveaway free for all that has contributed to the underlying inflation.
Speaker 4: It's not just Biden.
Speaker 3: Harris Trump is responsible to some extent for the inflation,
maybe not the bulk of it, but he was just
lucky he got out what price that we had increasing
at one point four percent, largely because energy consumption plunged
in that sent oil price is skidding. You know, there's
some responsibility here, Michael four Trump's actions.
Speaker 1: Okay, so why do we have this inflation? The real
reasons we have inflation is the federal government deficit spent.
That has spent more money than they took in nearly
eleven trillion dollars from twenty twenty Trump's last year up
through the end of twenty twenty four. The fiscal year
ends at September eleven trillion dollars more than they brought
in in tax revenue. On an economy of about twenty
five trillion a year, that's going to add to pure inflation.
The other reason we have inflation is that when inflation
started to tick up in early twenty twenty one, the
Federal Reserve said, well, don't worry about it, it's temporary.
We'll use the term transitory. We don't have to do anything,
it'll just go away. So they didn't do anything. They
kept interest rates in your zero, which kept demand high,
and they kept their bond buying program. Finally, in June
of twenty twenty two, the Federal Reserve recognized the economic
goals include price stability and they started to raise interase rates.
Speaker 4: Imagine that.
Speaker 1: Now. One last thing, he said, well, Trump had a
three trillion dollar deficit in twenty twenty and that's really
what started this. So here's the argument to the other
side of that, for whatever reason, the pandemic, etc. They
shut the economy down completely. So output one from whenever
it was almost down to zero. Unemployment went up to
fourteen fifteen percent. Trump said, we need to fix this quick.
So what I want to see is what we call
V shaped recovery. So we dipped very quickly. I want
to see us come back very quickly. How do we
do that. We have consumers and government, and consumers start
spending a lot of money. So he passed a three
trillion dollars stimulus package at work, and the economy came
roaring back. You can argue whether it was necessary or not,
but at least that was his thinking in twenty twenty one,
when Biden took office, they keep saying inherited a terrible economy.
That's not true. When Biden took office, the inflation rate
was one point four percent. The economy was growing at
a six percent annual rate. When Biden decided to pass
the American Rescue Plan, the Inflation Reduction Act, another three
trillion and stimulus, the economy was already growing. That led
to just pure inflation, and then Biden just kept it
up in the next two years. And this year he's
still going to run another two trillion dollar deficit, and
there's absolutely no reason for that. So you're right, the
big deficit spending started with Trump. Obviously I support his policies,
but you could debate whether and argue whether he should
have had the stimulus or not. But after that stimulus,
you didn't need any more at all. So you're right.
Trump is partially to blame. You can justify it by
saying we wanted to get that v shaped recovery. But
you are accurate that Trump's stimulus contributed to the inflation problem.
Speaker 3: Yeah, I mean, and looked like it started it. But
we're also we also live in a world that's governed
by cycles, and we'd have this low inflation rate over
the past three decades, almost four decades, and lower interest
rates all that. Now, you could argue that the inflation
rate was understated during that time. I don't think there's
any question about it. But you know, it was just
natural that that lower interest rates were going to come
to an end. Artificially lower interest rates they helped spur
inflation as well. Right, So a lot of this is
just hey, being in the wrong time at the wrong place.
But that doesn't mean that just because there's a fire there,
instead of taking the firehose and extinguishing it, you take
the gasolene pump and you pulp more feed for the
fire there.
Speaker 1: Right, act exactly if you believe that the economy operates
in cycles, which it does, and inflation, would it come
back eventually? Anyway, once it starts to come back, you
take action at that point. You don't wait. The Federal
Asserve waited a year and a half later, the fiscal
policy there's still deficit spending four years, three and a
half years after the inflatation started. So what economists, especially
the Federal Reserve, they're supposed to be ahead of this. Yeah,
there's any side of inflation. Like in twenty eighteen, they
passed these tax cuts, the economy was all set to
take off, no signs of inflation. For some reason, the
Federal Reserve starts pushing up interest rates. They're asked why.
They said, well, inflation could be a problem in the future,
and we want to stead stay ahead of this. Why
they didn't take that view in twenty twenty one. I
don't know the same people there, and they took a
much different view.
Speaker 4: Hey, could not agree with you more.
Speaker 3: You know, I just want a place blame because inflation,
deficit spending, that isn't one.
Speaker 4: Party or the other.
Speaker 3: There have been partners in it, absolutely, back to World
War two, arguably before World you know, the Great Depression,
all of this, and you know, it's kind of like
when you got a candy bar and you take.
Speaker 4: That first bite.
Speaker 3: It's delicious, and then you like dobble the whole thing
down and you feel sick afterwards.
Speaker 1: So, as a result of everything you said, we now
have a thirty five trillion dollars public debt. That's the
total of all deficits over time. Where did all this
problems start? It actually started other's deficits in the path.
But really in the early sixties, what happened then John
Kennedy was president. Women decided, look, we don't have to
stay at home. We can enter the workforce too if
we want. So women started entering the workforce. The unemployment
rate started to go up. So Kenny said, look, how
do I stimulate the economy? And as economists there were
Chinesy economists, they said, look, just spend more money. And
Kenny said, well, look we don't have any more money.
I don't want to raise taxes. And they told them
it's okay to run a deficit. Why look, we owe
the money to ourselves and we can always raise taxes
they get rid of a deficit. So they convinced Kennedy
that deficit spending was okay. Since that time, nineteen sixty
two to twenty twenty four, what is that sixty sixty
two years. We only balance the budget four years out
of those sixty two years, and the deficits in the
last decade have gotten much much larger. We're going to
have to confront this public debt problem sooner rather than later.
What happened over the years is every president they said, well,
the deficits run end. Let's try to keep go go.
We'll kick the can down the road. Let the next
president worry about it. Next president gets in says, Okay,
we have a definite problem. I don't want to raise TAXID,
don't want to cuts back, and we'll make the next
guy worry about it. They kept kicking the can down
the road. The point is we're at the end of
the road. There is no more road. We have to
deal with this problem as soon as possible. It takes
a lot of political courage to do that. I'm hoping.
I believe Trump's I hope President Trump windsy election and
at some point he's going to have to confront that problem.
Speaker 4: Well, you know one thing for sure. You know the.
Speaker 3: Opposition here can't even spell inflation, let alone wanting to
do something.
Speaker 4: About it here, right, Yeah, yeah, they don't really.
Speaker 1: The current administration is not really interested in reducing government spending.
In fact, under Biden, government spending has skyrocketed. I think
his next proposed budget for twenty twenty five was I
think six point five trillion. When he got in in
twenty twenty one, I think the budget was about four
point eight trillion, So he ended up massively increasing government
spending and that led to larger deficits. He's going to
end up his four years having about seven point eight
trillion dollars in debt, he added. He says Trump added more.
That's not accurate. Trump added about five point six trillion dollars.
The point is somebody's going to have to face this
and do what we have to do to get the
deficit down. And it's a very difficult thing to do.
Speaker 3: Well, it's actually pretty easy because in the age of
AI and chat GPT, I asked chat GPT to analyze
the twenty twenty five federal budget and come up with
two to three trillion dollars worth of cuts and.
Speaker 4: To not raise taxes because.
Speaker 3: The first time I said I want to balance the budget,
something got into this chat GPT because it just wanted
to raise taxes. And here we cut corporate welfare by
six hundred billion, all right, We cut defense spending by
about eight hundred billion, and still have plenty leftover. Healthcare
spending seven hundred billion, discretionary of federal spending seven hundred billion,
and social security and medicarey for four hundred billion. And
I saved three point two trillion and I didn't even
break a sweave here.
Speaker 4: Michael.
Speaker 1: Yeah, I'll tell you all those things you mentioned carry
are going to be very difficult. It says, let's cut
the military budget. You know, we're in the middle of
a few wars here, and cutting the military that's going
to be that's going to be difficult too. So I
can do it healthcare spending politically, I don't know how
you're going to do that. Yeah, so that's well, it's
going to be very very difficult. So I think up
with some numbers, but actually doing it politically it will
be very difficult. What I think is if they just
hold the line on spending for the next few years,
let the economy grow and tax revenue come up, Eventually
you'll come very close to balancing the budget. You're going
to have to cut some things out, but still you
need to do that because we have to face this
deficit and debt problem sooner rather than later. Look, the
interest on the public debt this year twenty twenty four
was six hundred and sixty billion dollars at the rate
we're going and the fact that when the government borrows money,
there's no plan in place to ever pay the money back.
We're in place to ever pay it back. They sell
a ten or twenty year bond, the bond matures, they
don't have money pay it back. They sell new bonds
and pay off the old bonds or roll over the
public debt. There's a lot of problems with that. One
major is much of this old debt was taken out
a one one and a half percent interest. Today they're
going to be three four percent interest. So you're gonna
double the triple the interest expense even if you don't
take out anymore debt. So we've got to get a
handle on this problem. And the first thing to do
is stop deficits pending and at least news and then
we'll work on getting debt down.
Speaker 4: Okay, I guess we'll leave it at that.
Speaker 3: Hey, we find your work over at newsmas Professor both Newsmax.
Speaker 1: I write a column usually one or two a week
Newsmax Finance. You can you can see me there. I
do have a Facebook page where post all my columns
to search for on Facebook funding democracy, funding democracy.
Speaker 4: Funding democracy.
Speaker 3: The links are in the show notes to this interview
on Financial Survival Network dot com. When you go there,
please sign up for a free newsletter Professor Butler, always
interesting conversation.
Speaker 4: We'll talk to you again real soon, I hope.
Speaker 2: So thanks 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
Speaker 1: Now more than ever.