War Doesn't Stop the Casinofication of the American Economy

Welcome back to the power market podcast. I'm Ryan McMake, an editor-in-chief at the

Mises Institute and joining me as usual, our two of our contributing editors. We've

got Tho Bishop and we have Connor O'Keefe and this is your weekly current events podcast

from the Mises Institute. Be sure and check us out if you want some of our more academic

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this year. So if you haven't checked it out yet, give it a give it a look. And we're excited for

Juan Giro's edition later this year. All right. Well, I want to start off by talking about an article

that you had sent around to meet Connor and a couple of others. And I think that'll kind of

talking in the direction of, well, what is the central bank and the federal government going to do

given the situation in the global economy, which is looking none too rosy at the

moment. And normal people know this the most. I've noticed kind of an odd phenomenon that the

higher income, the more economically comfortable a person is, the more they think that the global

economy is going gangbusters. And I guess that's not shocking, right? If your world seems fine,

then I guess the economy is fine. But as we've seen just over and over again since 2009,

the bailouts really function to create this bifurcated economy. You've got younger people who don't

own tons of assets. They're struggling. And those are the people who rely on wages and the economy

is more and more, well, the policy environment is more and more oriented against making a start

in the economy. It's against young people's against wage earners and it's very much in favor of

older asset owners. And of course, huge Wall Street firms and that sort of thing. So it's a great

economy for the oligarchs looking not so good for normal people. But if you own lots of assets

already, you think, oh, well, things are things are pretty good. And I have noticed sort of that

that attitude, in many cases, look just when the subject of the economy comes up. But

if we look at the employment data and we look at inflation, we look at consumer sentiment,

there's some big problems in what is being called the golden age economy by the current

administration. But I think that's convincing fewer and fewer people. But this is seeping into

internal politics at the central bank and in the treasury. And I think is really

showing some of the some of the problems that the central government and its institutions are

facing in terms of making everything look like it's fine and in terms of fiscal and monetary

governance. So this article you sent around has called it's been a weird 24 hours

for the Fed. And we've touched on some of these issues before. There's all sorts of odd stuff going

on with governance and conflict between the administration and the Fed. So bring us up to date.

What makes these 24 hours so weird from this article from a couple of days ago?

Yeah, yes, this is from from Axios, which we're not endorsing the publication per se. But I do

love a good play by play with the drama, the political drama of the Fed. In this case,

this isn't even really, you know, it's not connected to any of these larger headwinds. I mean,

this is not really connected to Iran, even at all. You know, I just I love this narrative,

the soap opera of this political drama around the Fed. This of course goes back to one of our

favorite topics of 2025, which was the, you know, the investigations of the the overspending with

the Fed building and the private elevators and the butterfly gardens and, you know, all that sort

of special stuff. Again, it's it's in the grand scheme of things. This is frivolous. This is

this is minor stuff. But to the extent that it just further politicizes and embarrasses

a U of E the the you know, lauded institution of the Federal Reserve and further that

throws politics into the fire there. Back and forth here is continuing the drama because again,

you know, as we have talked about Kevin Warsh was nominated several weeks ago or several months

ago now to replace Drowm Powell. But the nomination process going through the Senate has been held

up by Republicans on Tom Tellus being one of the most vocal opponents here talking, you know,

basically saying we're not moving on this until the DOJ ends its probe of Drowm Powell here.

So there's been some back and forth in this regard. I didn't realize I'm going to this continues

on my theme of 2026 being the dumbest year on record. I didn't realize that the lead prosecutor

the tip of the spear of the Powell investigation is judge Jeanine from from Fox News back in the

day, which is like perfect. And just his feeds exactly what I love about this story.

But I mean, this was mainly just back and forth. You know, it looked like like things were very

coast on. It's not this start and stop. Again, it's just these, these, these, these, these, uh,

you know, these bumps in the road on what is traditionally, right? Traditionally, this is a painless

process. The speculation over whether Powell will leave the Fed after he is no longer,

um, you know, the head of the board after he's no longer Fed chair, um, Powell seems dedicated to

saying that he is not Trump is threatened to fire him, which opens up, you know, further topics

over the presence ability to remove, uh, Fed governors, you know, we're still dealing with lawsuits

in terms of, of that conversation with some of these other players. I don't see a bill. Pulse

dimension in here, unfortunately, but I am still trying to track down the rumors that were, uh, I

was enjoyed reading on Twitter earlier this week about whether or not Scott Bessent had punched Kevin

Hesseert, who's the, you know, the, the head of the, uh, economic, uh, you know, expert, whatever,

yeah, economic advisors saying, so again, like this is, this is, and the grand scheme of things

of war turmoil and energy prices and despair, particularly for, for younger people and, and,

you know, on bad jobs numbers. This is all more, more wrestling than it is, you know,

questions of great civilization, but still, I, I, I, I, I'm enjoying this aspect of Fed drama,

and, and this, uh, this, this true soap opera, I think, uh, Rothbard would very much enjoy if he was

with us today. Yeah, well, Connor, it doesn't even really matter in terms of policy.

Like, who are they going to put it in the short term? Right? It's, why would anything be drastically

different if they appoint, uh, Fed chairman A or Fed chairman B? It's not like they're going to let

some true hard money person, whether A or B get in as chairman of the Fed, it's just not going to

happen. So this just seems to be, I suppose, some disagreements over, like, details of vision,

or maybe there's just some personal vendetta. Yeah, I think it's certainly personal. And

I, this is something I've been reflecting on in a larger sense. I've been doing a, uh, reread

slash my first, like, cover to cover read of conceived and liberty for the, the anniversary for

the 250th. And I was recently reading, um, Rothbard's chapter about, uh, Thomas Paine and

common sense and kind of the role that common sense played in the revolution as it was kicking off.

Essentially what Rothbard says is that there was this very, um, persistent public taboo against

criticizing the king directly. And it was always about, like, the advisors around him and that he

was being misled, but they would never say anything ill about the actual king. And then when common

sense came around and, uh, he basically launched a very direct personal attack on the king,

calling him the royal brute of Britain. And basically shouted at that taboo. And then it was,

essentially, okay, to going forward. And that was like an important step. And there's a quote

I don't remember the exact word in there that Paine says that, um, I think about a lot where he said

something to the effect of you have to oppose the tyrant and the tyranny. You need both, uh, you

need to focus on both. And I think a lot of the issues with the right right now is that they are

so focused on the individuals that they lose track of the systemic issues here. And like, I think

back to an episode we've talked about on the show before, if you go back to sort of the pre-Trump

days, the issue is they weren't focused on the tyrant or the tyranny. The anecdote being, um,

when McCain defended Obama's honor in that debate when, you know, some lady asking

question launched kind of a personal attack. And it was like, oh, the Republican line was that

the Democrats are, they have good intentions, but we just disagree with them on some of the specifics

of policy while the Democrats were being brutal, you know, to, to the right. And Trump really

represented a swing away with a swing away from that on the right and launching into these

personal attacks. And that's largely something I'm in favor of. I, uh, it's another comment thing

we talk about is that so many of our issues come back to the fact that these officials and politicians

and government bureaucrats don't face any accountability for what they're doing. And that needs

to change and that does involve, um, naming them and pointing them out specifically. And I,

I think, um, I would actually put a lot of this on Andrew Breitbart. I think he's the one that

really started this with the, the modern right, um, going out, you know, filming individual bureaucrats

doing crazy things, getting these people's faces out in front of people. And that's a good thing,

but the problem is that if you focus on that so much, it can lead you to think that if we can just

get rid of this one crazy person, then everything will go back to working how it should. And that's

just not the case that the problem with the Fed is not Jerome Powell doing crazy things or refusing

to cut rates. It's so much deeper that the problem is the Fed itself. And so I, you know, I, with

Trump, my take is more that, you know, they had some disagreements and he's just obsessed with

removing Powell and kind of winning that personal man-to-man battle. But I think for the larger

movement, um, they, they guess the interesting thing here is that this seems a lot, like,

this is very driven by Trump. It's not like most average Trump supporters are like super passionate

about monetary policy or Jerome Powell or whatever, which is why it's like, I'm, I'm with you,

though, I'm happy that he's causing this chaos because it wouldn't be happening without this

personal animus. But yeah, the whole idea that even, okay, Powell steps down and they fire him,

like he is no longer on the board at all and wars comes in. That's not going to lead to any meaningful

change in monetary policy. I mean, even the fact that I had been reading some reporting that's

um, indicating that the Trump administration is kind of, and Trump specifically is backing

away a bit from his demand to lower rates, probably, you know, related to the whole war situation.

So there may be literally no difference in monetary policy going forward once if he gets in when,

I don't, the process is messy. But whenever Powell is actually gone into a new guy's in there,

I don't expect any meaningful change. Well, I do think Powell, I think, do think,

best that has said, you know, we're not expecting any cuts right now. We're going to let the chaos

of the war environment, you know, provide some more data there. But I think Trump has said,

like, when Washington gets in there, I'm expecting cuts, baby cuts. But one article I did want to

highlight from Powered Market that I think goes into the sort of, you know, the scam, you know,

just how absurd some of the way that we talk about Fed policy and particularly during the

last few years of Powell is by Robert Aero about, he was talking about, you know, why was the

crash delayed once quantitative easing, you know, sort of become, you know, was being put in place

by the Fed and he talks about how it's like, yeah, like they basically stopped one, you know,

they stopped using one tool the Fed has to inject liquidity in the market. But then they

did it through a different door with reverse repose and how that was adding, you know, 100,

you know, a whole bunch of liquidity on the other side that pretty much equaled out, right?

And so again, like this, this does, you know, it's kind of technical in the weeds. But like,

it does, it is an example of this sort of routine that again, this is the Fed itself, right? This

is not Trump rhetoric. This is not an external propaganda per se or some of the politics stuff,

but this is the way the Fed itself can gain its own levers to, you know, make a strong signal.

It's doing one thing. Well, actually doing another thing in actual financial markets. And so that's,

if you want to really kind of see how this game has played, I think that this article by Robert

Erro is actually a really good kind of example of just the technical aspects that go into sort of

Mount Bailey routinely that we definitely skip from time to time from Federal Reserve.

Yeah, if you want to read that, go on mises.org over on the right side. It's the power and market

section of the site. Why the crash was delayed is the one you want to read. You know, he notes

interestingly the myth of quantitative tightening, right, which lasts for about five minutes at some

point in 2025. Because they've, in fact, I even had a discussion with someone from this the other

day who was absolutely convinced that the Fed assets were in steep decline. Whereas since December,

they've started buying up treasuries again, 40 billion a month and have added more than,

and that's really kind of a minimum because they're buying even a little bit more than that to

maintain the target industry where it is. So they're over 160 billion in new treasuries being bought

up by the Fed. That's all being bought up with newly created money. And so they're, again, they're

converting debt into dollars. It's a type of monetization of the debt. And that's also helping

keep the economic situation from really revealing itself because it's, it's simply stealth liquidity

while pretending that they're engaging in some sort of quantitative tightening, which they,

of course, are not. So if you look at that curve in terms of total assets owned by the Fed,

and you pull out a treasury assets owned by the Fed, that's, that's been going up for months

now. And so that, that giant mountain of assets owned by the Fed is not going away. And that helps

to reveal really what the Fed knows is the actual economic situation right now. But that's not doing

anything to help the price inflation situation that is rising prices. And the most recent CPI data

that came out late last week shows a big spike there. If you look at the month to month data,

that's shot up to over 0.8% month over month in terms of the overall CPI. You have to go back

to 2022 to get a bigger reading than that. 2022, much of my chagrin was four years ago. So

it's been a while since we've had a big jump like that. And also if you just look at the year

over year change, that's up at 3.3%. You've got to go back to 2024 to do that. And essentially you're

going back to 2022 when you had those big 40 plus year highs in overall inflation. And you see

some similar stuff as well in PPI. In fact, PPI numbers as a producer price index is even worse.

Now this is prices faced by actual producers, right? The only prices that don't matter or that

matter are not just the prices faced by consumers, right? If you are one of the millions of American

small business owners, you know that the cost faced by producers are significant and can even be

crippling. And those numbers, when you're looking at the year over year changes, you have to go

all the way back to 2023 to get that. It's been basically the upward trend has been nonstop

since 2023 in terms of PPI growth year over year. So what happens is producers and those numbers

are larger. So that's 4% is the most recent number that came out on Monday. The PPI increase was

4% year over year. So obviously nowhere near the 2% neighborhood that they want for consumer

prices. But the reason that tends to be higher is because producers will buy up goods and services

that they need to create their finished product products. But they for reasons of trying to maintain

market share will do everything they can to keep their prices that they charge at the end level

as low as they can. So you would expect to see lower consumer prices than you would

producer prices. But those are all problematic in terms of economic growth in terms of

production in terms of companies being able to actually accumulate capital invest in capital grow

their businesses because they're quietly having their wealth siphoned off by these high

producer prices. And I know consumers are complaining all the time about how how they're being

gouged by the producers by small business owners and such. But really for the most part those

small business owners are trying to keep prices as low as they can because they don't want to lose

their customers. And at some point those prices are going to have to go up and fewer people are

going to shop there as they should. Right. You shouldn't just keep buying stuff that's outlandishly

expensive. It's not a good place to put your money. But this of course is forced upon many

producers by the government as they continue to inflate the money supply. And more dollars are

chasing goods. The prices go up. And that's it makes life more expensive for both the producers and

the consumer. So we're seeing a clear upward trend in all of that. And if you look at the accumulated

price growth since 2020 when all bets were off and Trump just doubled down on spending massive

amounts of money and demanding that the Fed of course produce six trillion dollars in new dollars

to basically pay people to stay home from work and not do anything in order to conform with

Trump's beloved stay-at-home idea where he tried the best he could to implement the mandatory

stay-at-home orders and the business close downs and all of that. Which some people now try and say

he didn't really do that. That's true because only the states could get away with doing that

constitutionally. But Trump encouraged it every step of the way for the first several months. And it

was his CDC where he kept Fauci in power forever. It seems giving him a daily bully pulpit to talk

about COVID and all of that. And in order for Trump to encourage of course government vaccines and

mandatory vaccines and all of that the the economic outcome of that was massive amounts of inflation.

And so thanks to the combined Trump Biden policies of COVID we got huge amounts of inflation and

no deflation since then. So prices have gone up relentlessly. They've even accelerated in recent

months. And by any measure whether it's CPI, core CPI, PPI, core PPI, all of that is at least 25 percent

higher than what it was in 2020. And overall CPI is up at about it's up 28 percent. And PPI is

up nearly 30 percent at 29 percent. And if your income was keeping up with that that's great. And for

some white collar people their incomes have indeed, especially if you're well established in

career at that point, your incomes have kept up. But this is just one example of how if you're at the

if you're beginning in your career, if you are not lucky enough to be at the higher end of the

income strata, then you probably are not experiencing a 25 percent increase in your overall income

during that period. So you are in fact in real terms significantly poor today. Then you were in 2020

and that's the reality for a lot of Americans. And so we look here at price inflation and it ain't

going back to 2 percent. It's now been 18 months since the Fed was assuring everybody. Powell gets

up and your member Powell decided, Hey, the election day is almost here. It's late 2024. I guess

that we need to get our man Biden reelected or rather, I guess, to get Kamala elected because there's

really no other explanation for why they would cut interest rates, the target industry in September

2024. Unless it was some sort of electoral political decision because it was so clear that

the target inflation rate was not about to be accomplished, even though that's what Powell said.

Oh, it's heading back rapidly to the 2 percent goal. We're going to be there any day now.

So now we have to temper the economy and we have to cut a little bit more because we're worrying

about job growth and all of that sort of thing completely wrong. Couldn't have been more wrong

because here we are more than a year and a half later. And it's never even gotten close

back to 2 percent. In fact, I would suggest that the real de facto goal for the inflationary

is 3 percent now. That is what the Fed is doing because you'll see that even as in later cuts

and Fed policy, overall, even as you started to see inflation rates actively head back up,

the Fed was cutting into that anyway. When all the indicators was that the inflation

dragon up enslaved, the Fed was actually cutting the target rate. Why? Because it makes sense if you

look back and you think in your mind, well, what if the target industry was actually 3 percent,

not 2 percent, that actually makes a lot of sense now. So they've increased that significantly

in real terms. So they're just lying to your face essentially at this point when they say that

the target rate is 2 percent. And they clearly don't, they don't care that that people are losing

tons of their purchasing power month after month, year after year. And why? Because really the

matter here is making sure that interest rates and treasuries remain low. And this comes back

again to quantitative easing. The real goal here is to purchase treasuries as needed in order

to make sure that as the federal government dumps trillions of dollars. And it's estimated that

they're going to be spending a couple of trillion extra on top of usual, the usual defense spending

for this Iran war in the coming year or two. That they're, how are they going to do that? Well,

obviously it's going to be deficit spending. So they're going to have to dump a trillion or two

extra. That's on top of the usual deficits, which are already about 1.6, 1.8 trillion per year

under Trump. They're going to have to come up with a whole bunch extra on that, dump it into the

global economy. And there will be buyers, but will there be buyers at interest rates that are low

enough to make it feasible for the federal government to keep up with all of its usual programs?

The federal government, the federal government is not seem to think that and I think that's part

of why the central government or why the central bank is back to purchasing 40 billion again

every month in treasuries. So that seems to be where we're at. There's huge amounts of new debt

coming down the bike. Inflation is going up. The Fed should in fact then be raising rates or

allowing rates to go back up, but they can't because they have to purchase new treasuries in order

to keep the interest rates from getting out of hand. So don't expect the Fed to actually care

about the cost of living for normal people. Remember what the primary goal of every central

bank is to finance government spending. That's why they were created. That's why they exist.

They're there to keep cheap credit available to all national governments. That's all they really

care about, all that talking about employment, maximum employment, price stability. That's all

just political cover. That's just stuff they say in order to try and manufacture consent

for the central bank. So that's just one aspect of the economy that we're facing right now.

And it's interesting. I mean, Kevin Warsh has made his entire, you know, assuming,

is it me actually ever gets confirmed again? I was going to be, you know, stay tuned.

But like one of the priorities that he has made in his kind of public

sell on what his sharemanship would look like is, oh, we're going to normalize the balance

sheet. But of course, like precisely for the reasons that you just outlined, right? Is that

that in particular is going to be an extremely difficult thing, no matter what your intent might

be, given the fact that you're not interested. The cost for financing the debt right now is

well over a trillion dollars. These are the very real, this is a situation and that's why,

you know, typically we were very much nothing ever happens, bros, when it comes to

anyone talking about a significant Fed reforms, new personalities coming in.

That's going to be a very interesting dynamic that he's going to inherit,

you know, given everything that's going on right now. And of course, right now, the biggest,

when it came to the economy, the best thing that Trump had going for us, we've repeated

multiple times the last several weeks, was gas prices. And now that, you know, I know there's been

a little bit of softening in the last week relative to it was at the peaks of the crisis,

but it's still well over 90, well over 30% of what it was, prices are, you know,

over 90 dollars, it's, you know, 30% higher than it was at the start of the war.

You know, that is something that, you know, every American feels right now, that is something that

is going directly into those production prices right now. There's something that wouldn't, you know,

not inflation in the, you know, the, the, the, the Austrian sense, but price inflation has

felt a normal people. And that is one of the biggest things that are driving down those that are,

you know, particularly those firmly in the middle class and lower. And like, that is the biggest

anchor that any presidency ever has and direct to continuing consequence of the military

adventure. Right. And I just wrote about it this a few weeks ago, because it goes so much beyond,

so much further beyond gas prices, if you actually dig into it, the amount of economic

destruction that has already happened because of the war is substantial. And specifically, it is

mainly in, you know, with those producer goods. So it's stuff that hasn't really hit

consumers yet directly, but will at some point. And yeah, you're like, that's an important thing to

stress. And you mentioned this in your recent article, Ryan, that it's not actually inflation when

you have these big supply shocks, because inflation, we're talking about a general rise in prices.

And that can only happen if you're affecting the monetary unit. When you have, you know,

some goods going up in price that's going to have deflation or not deflationary, but the price of

other goods like complimentary goods are going to decrease. So it's not actually technically inflation,

but the way that they measure it, you know, mainly with like CPI, PPI, yeah, picks all this up. So

this is what I was talking about early in the war. It puts the Fed in kind of this interesting

situation, which is kind of a question of which one takes off first, because yeah, right now,

seeing high prices that are mainly coming from energy, but are pretty quickly going to be coming from

other areas like the fertilizer crisis is a huge deal, but that's probably not going to hit

food markets for a couple of months here, because it's affecting farmers when during the planting

season, but you know, it takes months for that to all work its way into like an actual finished

food product. And that's just going to be absent down the road, which is going to mean very high

prices. So you have like all these various rises and price that, you know, are picked up as

the CPI going up as price inflation, the Fed supposed to, you know, guard against that and not

let things run too hot when price inflation is going up. But the reason that's actually happening

is because of economic destruction, the opposite of economic production. You have all this stuff

that has been destroyed or shut down. It can't just be kicked back up again very quickly,

and that's going to mean there's not enough stuff available for people that need it,

and that means the world is poorer. Like that is economic trouble that will become more obvious.

Now, it's going to be a question that I kind of doubt that's going to be clearly tied to the war

in the minds of most people, but that's the fact that that's what we're going to be facing. And that

by all indications, it looks like it's going to be some pretty substantial economic pain,

which is of course when the Fed is supposed to come in and rescue the economy. And so the fact

that they have kind of these two, like the two things they're supposed to be guarding against,

there are reasons to expect things to get worse on both fronts at basically the same time,

because of the same general cause. I think it puts them in kind of a difficult position,

which I don't, I have no sympathy for them on that front, but I just think especially

with all of the goods that are not directly, you know, not oil and LNG, like people are really

underestimating how damaging, even plastic, plastics are so important for so many different

lines of production, you know, medical supplies, IV bags, syringes, stuff like that. Like you could

just kind of go down the rabbit hole in any one of these things, or like plastic piping for

construction. Like the fact that there will be less of this available than people demand is going

to have, it's going to impact all of us. It's going to be very painful. And yeah, when traditionally

the Fed comes in and rescues the economy, like when something like that really starts to gain

steam, you know, that's what we're used to seeing. But then if the CPI is going up and up and up

because of this too, I mean, yeah, I would expect them to do it anyway, like you're saying,

Ryan, they don't actually really care about protecting the value of money or anything. But

when it comes to the optics of all the dual mandate and always looking for these two concerns,

I think it's going to become more obvious in the near future that they actually care about one more

than the other. Yeah, well, one of the stupidest things I've heard Trump say in terms of economics

in recent days, we have to clarify this particular topic of the economy because

there are probably vastly stupider things that about foreign policy. But saying that the blockade

of the straight, the closing of the straight, whether it's through the US's blockade or through

Iran's closing of the straight through their own methods, that that would be good for America

because America produces oil. So then everybody will just buy American oil and then Americans

will be better off. Like that only makes sense if you are so dumb that you don't understand

that oil is bought and sold in a global marketplace. And that if there's less oil coming out of

the straight, then that means people are bidding up the price of oil produced everywhere else.

And you are going to be paying a lot more for it. And so the global rise of oil will go up

significantly. And that's what people have to pay in this country for oil because people are

free to sell it wherever the buyers are. And so the price will be bid up. Now, thanks to monetary

inflation, not only will oil prices be bid up as you note, Connor, but everything else will be

bid up as well because there will be more money chasing a not only a stable amount of goods,

not only an amount of goods that's not increasing at the same rate as the money supply,

but actually probably a decreasing number of goods, which makes inflation all the worse.

And so all that oil is going to be needed for everything around the globe.

And the truth is America isn't even really totally self-sufficient in terms of oil.

Americans do import oil because it's crucial to so many different sorts of goods.

So they're going to have to be buying that oil in the global marketplace. The only way that even

the Trump argument would work would be if you just banned oil exports out of the United States,

which by the way, I don't say he wouldn't be willing to do, but that's just the sort of communism

that I can see MAGA getting behind where now going to outlaw the exporting of goods

related to oil or oil itself out of the United States. You know, private property would be damned.

You don't get to sell that to willing buyers anymore. I could see Trump doing that,

but that would be the only way of even making the Trump fantasy of the idea that Americans are

somehow better off. Now, obviously, there's like second and third and fourth order effects,

so it doesn't even really make sense, even if you banned the export of oil, but I could see how

it might at least seem plausible on the surface. But if you're not going to ban exports, then his comment

about how a declining global production in oil somehow benefits America is just crazy talk.

But that seems to be where we're at right now. But all of this, as you note, feeds into an

article, I sent around to you guys the other day, consumer sentiment plummets to record low

as a Rand War jacks up inflation. Now, right, the Iran War is not jacking up inflation.

As you just noted, Connor, it's actually monetary production, monetary growth that is creating a

general increase in prices. What you would just see is an increase in some goods and then a decrease

in prices and other goods because people would have to transfer their money to only those goods

that where there are now fewer of them, just oil related goods. But since there's so much monetary

inflation, you can see all prices go up. But the price, yeah, the price of living is going up.

There's so much uncertainty because of the war. And now, of course, the administration's goals

and the war are just to get back to what the status quo was before the war to open the straight

back up. Straight that was open before the war. And then Trump got caused to be closed. I know he

wants to open again. And that these are major economic disruptions that are very problematic

to people. And so you get consumer sentiment as at the lowest level you've ever seen. And of course,

it's not just a Rand War inflation. It's employment. If you look at the employment situation as well,

that's really not good. We can look at that hires. If you look at overall hires, release I believe

last Thursday, then you have to go back to 2014 unless you so you would exclude COVID on this

because that's just such a has nothing to do with normal economic behavior. You got to go back

to 2014 to find a period where you had fewer hires. And then if you look at actual employment

situation, there are two surveys of employment. There's the establishment survey and there's

the household survey. And these are two different measures that I guess we don't really have time

to get into any detail. But the point I'm going to make is that neither of them looks very good

right now. Often they're divergent and you might be able to find some good news on one of them.

But if we look at say the household survey, which is an actual phone survey, calls people to ask

them do you have a job? And they say yes or no, that's where they determine what the unemployment

rate is because they determine are you looking for a job? Do you have a job? That sort of thing.

Well, those numbers are all down. In fact, down by over the last year, 661,000 jobs it looks like.

And then over the last three months, down by it looks like let's see 83,000 of those positions

per month over the last three months. So there's a significant deterioration there in the household

survey. And then normally the better news comes out of the establishment survey, which is just a

survey of big employers and they ask them just to they have jobs. It doesn't matter if it's

part time or full time. Hey, do you have jobs there that you're adding? And the answer is yes or no.

And we're looking there. And normally a healthy number, there's going to be at least

over 150,000 something like that. But if we look at what's going on there in recent months,

we're looking at 15,000 average over the last three months. And over the last year,

a total of 260,000, which comes out to, let's see, looks like 21,000 per month in terms of job

growth. These are poultry tiny numbers in terms of job growth. And you can be seen in the fact that

the unemployment rate is basically flat. They get all excited because it goes up like a tenth of

a percent or something. A lot of that's just driven by people leaving the workforce. But when you

look at hires being in the dumper, you look at these tiny job numbers, you look at what the situation

is with unemployment and labor force participation. There's there's every good reason to believe that

ordinary Americans are aware of what the employment situation is or where it's headed. And that's part

of why consumer sentiment is so bad. There's really very few bright spots here in this employment

data. Well, an interesting point here, though, that maybe we could, maybe we need to ask more

questions about this is how the markets are responsive ridiculously to this sort of data.

So they, for example, this most recent month, they released some new jobs data that was last week

and they say, Oh, hey, we added more than 100,000 jobs. The market says, Oh, great.

And but then we all know how this dog and pony show works. They come back a month later and they

revised down those numbers significantly. That was the most recent number here was a downward

revision of it looks like about 41,000 was the downward revision to already negative numbers.

And so that created basically negative job growth in recent months, even with an upper revision

in January. So these numbers, once you get past that first initial job number release,

which always tends to look much, much better than the reality. And then it makes the markets say,

Oh, look, I, I guess the, the economy's firing on all cylinders again. And then the next month comes,

they revised down the number significantly. It's no surprise are those of us who are paying

attention, but the overall job's numbers then don't even take any notice because it's not a headline

number. So it's sort of this song and dance that we're constantly seeing and you, you can no longer

glean any information from how the market responds to this stuff because a sane person can see how,

oh, the negative revisions come later. So I need to take all these numbers with a grain of salt.

The markets don't seem to be behaving that way. Just like no matter how uncertain the global

economy becomes, no matter how many times Trump says he's going to close the straight or he's going

to escalate the war, the S&P 500 just keeps going up. So these numbers apparently have nothing

to do with reality. And I find that, I find that kind of curious. And it's definitely a change in

the situation for a way at 20 years ago where the market seemed a lot more connected to the actual

real world. Hey, for all this doom and gloom, I think the S&P 500 hit a new high today. So again,

that does just go to the disconnect. And of course, all of this, you know, the combination of,

you know, both both the stagnant job market and also the element of, you know, hey, if you're

if you're heavily invested in stocks, you're having a good day right now. This is further just,

you know, divides the generational experience of this economy, which again, I think is one of the

most important kind of meta narratives of, you know, not just American politics but old politics

right now because it's this generational conflict, which is the the natural byproduct of this,

you know, financialist system that we have. You know, it's is, you know, that is a source of

major turmoil. Again, not just from an American standpoint, but really a global standpoint right now.

Yeah, and just the disconnect. That's something I've been reflecting a lot with this war because

it's, I guess we're just so used to, I mean, at least for me, the whole time I've been paying

attention to the stock market and the trading, it's always felt so decoupled from the actual

economy. And like what I wrote about in that piece is like an important point that is so often

left out and people can just forget is that the entire point of the economy is to produce stuff

that people want to buy and, you know, value enough to pay for. And yet when you don't really focus

on, you know, the actual business that's happening, but you look at the stock market or all this

stuff. I mean, it's, of course, it looks like a casino to most people. It's like all these,

this pump and dump happening constantly. And certainly as you're adding in all the new kind of

interesting dynamics with the, these basically betting markets and how like you have these people

that are betting like huge amounts of money right before the president announces some, you know,

development and the war and then the thing goes crazy and people are making insane amounts of money.

Like I can understand why the average Gen Z person who's struggling sees all this and it's like,

it's all fake. And because a lot of it is fake, but then but at the same time, like everything I

was talking about before, we have real economic destruction that's going to actually cause like real

problems that is important to talk about and to point out and to prepare people for, but when

you have this sense that, you know, it's just, it's essentially just numbers on a screen and like

it's that disconnect is so damaging and really damages the ability to actually like pivot into a

much more productive direction here, which is concerning. And it's a reason I, I don't obviously

sympathize, but I understand why young Americans are like turning anti-capitalists because this is

their whole understanding of what capitalism is, um, is essentially people inside or trading

calcium and like betting markets and like the whole thing's just, it's just like this illusion that's

so decoupled from reality, but the fact is reality is still here and it's still impacting all of us.

And yeah, it's, it's hard to have a nuance take on all this, this day and age and in this

media environment, but yeah, this is a nuanced issue and like there are some serious, serious

issues with the current economic setup, but like the answer's not communism, it's not to throw all

of this out like, oh, this is markets and so we need to pivot completely away from that, but it's

just, I can understand the, the drop in consumer sentiment because it's like, it's not even just,

oh, things are bad right now, but there's like, there's no sense of hope for like things are

going to get better at some point. It's just, it's so, it's almost like you couldn't design

a system that better for it, you know, it's a lead to some kind of like economic populist

revolution and that's just, it's what we're living through.

Yeah, I mean, it's very real, like the, the, the, the cacenification of the economy is,

it's very real, I even saw like, you know, and I'm not necessarily even trying to critique this

particular change, like I'm, you know, but, but like, you know, there's talks about removing the

$25,000 limit for like date trading. Again, I'm not saying that's, that's good or bad, but, but it

plays into like this larger view that the best way to, to get rich or the, the, the most sustainable

way or the, the only way to, to really make major gains in the modern economy is to play it like

a casino. And that's what it has appeals a lot of people to, to the stock market. I've been

remember, you know, you've, you've got the bar school, barstool sports people becoming stock

analysts, analysts, uh, during COVID and not with, with all everything that was happening

during then, but like, it is the democratization of this cacenification of the economy that is

becoming very, very normalized, you know, whether that's directly through the stock market or

playing similar sort of macro trends with call sheet, I mean, this is, and it is incredible how

quickly this has picked, picked up and normalized. Well, with you saying all that, I just realized

how much more stupid the world would have been in 2007 or so if we had had social media to

the extent that we have it today, because it was bad enough then because the, the bag boy,

bagging your groceries at the grocery store was also a mortgage broker and owned ten condos and

was a, uh, investment guru, at least in his own mind. And everyone was telling you everywhere how

they had figured out how to make, uh, countless piles of cash from investing in real estate,

because real estate always goes up, right? And we've got the same level of dumbness coming from,

uh, social media now, except now it's magnified because it goes out over all of the social media

platforms. In 2007, you pretty much had to run into these people in real life, uh, or they,

they were buying like three a.m. time slots on TV. Uh, this was back when people used to like,

just switch around the dial, watch TV. And you, you would see this stuff and, uh, it was just

constant bubble talk, right? Oh, you got to buy now. You'll be locked out forever by this stuff,

this is the same way now with our financialized economy, right? That was just an earlier stage

of financialization. Now we don't even bother with real estate anymore, just by, by stocks,

by some sort of odd new creative asset, quote unquote, that you can get. And you got people at bar

stool sports who are now the experts on what it is that you should be buying. And they also tell

you that you're just a sucker. If you just put your money in there and don't, don't leverage it

to, uh, to the, to the gills, uh, in order to put yourself into a very, um, unstable situation where

you might actually have a margin call rather than just putting money in stocks and holding that.

Then you're, you're just dumb, bro, you're not, uh, leveraging it as much as you could.

So I do think that's a, that affects young people. I think the most too, because they don't know

better. They don't know that these are con artists trying to get them to put themselves into a high

risk situation, uh, where they will end up in deep, deep trouble. Uh, so I do feel bad for the

young people who have to face this because we, I remember how it fell in 2007 or so when I was,

what would I have been back? That was around 30 years old or so. Uh, so that was, that was grim.

You did feel like you weren't doing it. But then you met the person who foreclosed on 10 properties

and all of that stuff and didn't feel so bad anymore. Uh, but when you're looking at the economy,

you think, well, it's never going to end. They'd, nothing ever changes, right? They'll just keep,

they'll find some other sneaky way to make the economy, uh, somehow bounce back. They'll somehow

enrich the billionaires even more and they'll somehow make number go up and everything will be fine

again. Uh, the thing is, is that things don't change until they do. And that was the situation in,

uh, say, the Soviet Union in 1986, right? So we're using the last 1,000 more years folks, right?

You can't act like it's never going to go away or Americans in 1774. Nothing ever changes. It

will be part of the British Empire for a thousand years or, uh, French nobility in 1788, right?

We'll be in charge forever. Everything's fine. I don't know why these people are complaining.

Um, things don't change until they do. And now you, what you'll get when you get the con artist

stock people, though, like, well, bro, would you just take all your money out of the stock market,

then, man, you're not even going to know. I don't know. I don't know. I'm not, first of all,

I'm not going to retire for decades. So it's not like, if that, all that stuff loses 50% value,

whatever. It's not going to affect me in the near medium term. Uh, but you do have to just face

the reality that history is not this serene thing where everything just slowly improves all the time.

And regimes can always stay in power, right? So you know, this not even Pareto,

who is a hardcore pessimist thought that regimes can keep it going forever, right? They make

mistakes. They become decadent within even the ruling class and they screw it up. And then

everything comes falling down and they get replaced by a new governing elite. Uh, so it happens.

Uh, but I do continue to talk to people and like, no, it's going to be fine. Everything's going

to be fine. The dollar will be around forever. The dollar will be the dominant currency for the

next thousand years. There's, there's no change coming. I mean, I don't know how, how soon

stuff will happen. I do know that if you don't have some sort of major change in the economy that

helps to, uh, be lie, the current regime's ability to control everything and make everything

fine all the time. If you don't get something that makes that obvious that they're not in fact able

to manage everything fine. You're just going to get a more, uh, and more tyrannical ruling class,

right? Because they'll be able to trade in and bank on this mirage of wisdom and the

ability to manage everything. So you really have kind of two choices. You can choose between

tyranny or you can choose between temporary economic displacement and economic displacement

will happen eventually. Uh, but I don't know when that's going to happen, but I can guarantee

that in the meantime, you'll get more tyranny. So we'll see what happens. You could end up with

more tyranny after the economic displacement because people will adopt the wrong type of regime

after where they won't learn the lessons. And that's certainly a possibility, uh, but we shall see

on that. So I just can't make a prediction. I don't know what's going to happen, but I can tell

you that things only last until they're over. One and, and, and, you know, I know that the, uh,

the topic of, um, kind of, uh, or Vaughn and Hungary can, can go into weird directions.

But I do think it's interesting that, you know, what we've heard for, you know, a decade plus from,

you know, from very serious people, right, was how Orbaugh had created a, you know,

basically a dictatorship, you know, a false democracy and all of that. And he had, you know,

it's, you know, I created this massive propaganda state for himself. And with his election,

it was, I think, you know, a lot of it was economic factors that even a regime that had built

itself, you know, with, with the intent of staying in power, you know, lost an election because

of economic headwinds. And again, I think there's a, there's a lesson there that would be lost,

thankfully, on, on those in power. But I, but even if an Orbaugh can fall in Hungary because of,

of, uh, economic headwinds and, you know, state capacity, everything like that, um, you know, those,

the, the amount of institutions and castles you built for yourself, um, you know, those two

can fall in a pretty short order. Right. And I, the, the, the important step for the American people,

at least, is to realize it's not a partisan thing. It's not the, the, the, the Democrats have,

Democrats haven't figured out and their Republicans are messing everything up for vice versa. It is

people like Jerome Powell. It's the, the people at the Fed and the mostly faceless people that are

the actual regime that have ruined all of this. And the politicians are kind of a distraction. So,

no, like, uh, another blue wave in the midterms would not be regime change, uh, regime collapse.

It's just that's theater to keep you distracted from the actual regime.

All right. Well, we'll go ahead and wrap up with that observation. Um, always, always ending on,

oh, wait, no, it's radio Rothbard where we always end up on a downer note. We're more optimistic

here at Powered Bargain. Uh, well, as you can tell from this episode, you're right.

You sure this, this is one of our happier episodes. Uh, but at least finally,

we got to talk about something other than the war for a while. But I think we had like three

episodes in a row or something on that because it just dominated everything. But there was all

this economic news in the last week. Um, but luckily the war is over now, right? Oh, like,

for this 17th time. Thank goodness. Um, the, yeah, don't, don't go listening to any John

Miersheimer videos on YouTube. If you want to have a happy day, I can tell you that much because

that's a, that's always a constant downer. I think he's actually on vacation for a couple of

weeks. So you might be able to get some happy news, uh, as far as the war goes for a little while.

But I'm sure we'll be back to that as, as time goes on. But the economic news wasn't even

that happy. It's just a recession isn't nearly as awful as, uh, say, you know, a major war, uh,

you had a country with 90 million people. That's sort of, it's all relative. Yeah. Right.

Exactly. Right. I don't know if bombs are aiming down my house or anything like that. Uh, so thank

you gentlemen for joining me today. Thank you. Everyone out there for listening. And we'll be back

next time before so we'll see you.