In this episode of The War Room, Stephen K. Bannon is joined by Stephanie Pomboy and Dave Brat to discuss the disastrous state of American finances, and the lies that the ruling class tell us about it.
00:11:27.000Just give a heads up to not just the classical Christian and the Catholic schools, but to the homeschool moms at Liberty.
00:11:32.000The kids that come there, what percentage?
00:11:34.000And to be blunt, how far ahead academically, even from the best prep schools, the best Catholic schools, the best Christian, the best secular prep schools,
00:11:44.000how far ahead when the parents actually have to get engaged and teach them themselves, how far ahead are the homeschool kids, sir?
00:11:51.000Well, they're way ahead because they learn what they're aiming at in the first place.
00:11:57.000They're aiming to glorify God, which is the highest good possible.
00:12:02.000And when you know what you're aiming at, then you align the rest of your studies.
00:12:07.000Which used to be called the liberal arts, the trivium and the quadrivium and all the major courses in history and philosophy and theology and Bible that they taught at Harvard back when Harvard's motto was truth for Christ in church.
00:12:21.000So, again, you get back to key words like the truth.
00:12:25.000It's the cornerstone of biblical wisdom.
00:12:28.000It's the cornerstone of the Judeo Christian West.
00:12:31.000It should be the cornerstone of education.
00:12:33.000If you're not pursuing truth in education, I'd like to know what you're pursuing.
00:12:38.000And Tiffany and Tina, you know, please support them.
00:14:14.000In fact, we're going to have the macro maven join us and walk us through exactly where we are as a country, as your community, yourself, your family.
00:19:26.000But basically that the Trump supporters, what this show is, it's a tribe of uneducated people with no degrees.
00:19:34.000And that's what they hate the most is that we've made such a drive to make sure that people start to understand the basics of macroeconomics.
00:19:44.000Because the system does not want working class people to understand macro.
00:19:49.000They don't really want them to understand how the economy works, how capital markets work, the intersection between capital markets and the economy.
00:19:58.000And that's why they want they want to obfuscate the budget, all of it.
00:20:01.000But this week that the receipt showed up.
00:20:05.000And on midnight on the 30th, the end of the fiscal year, a two trillion dollar deficit in the Financial Times of London, the Wall Street Journal, CNBC, Bloomberg.
00:20:17.000Bloomberg, both the print edition of Bloomberg and the network, the business section of the New York Times, the business section of the Washington Post all went along with whatever Biden put out there.
00:20:39.000What is the reality of where we stand as an economy and capital markets, ma'am?
00:20:44.000Well, I think your audience understands just like Main Street in general understands far better than Washington, D.C., what the actual state of the economy is.
00:20:55.000I mean, they live it every single day.
00:20:57.000You know, I have friends who have real jobs, unlike me, you know, just pontificating about the economy and the markets.
00:21:04.000And they always say to me, well, tell me what's going on in the economy.
00:21:15.000I mean, the fact is that the people who are living it every day, they get it and they see that their cost of living has absolutely skyrocketed.
00:21:23.000And while Wall Street and the Fed may celebrate the fact that the manufactured inflation data has come down toward 2%, that is offering no relief to consumers out there at all.
00:21:37.000It means that the price of everything that exploded and is completely usurious is getting slightly less usurious, you know, at a slightly slower pace than it was prior.
00:21:48.000I mean, the screw is being turned just a little less aggressively than it was before, but it's still being turned and it's still painful.
00:21:55.000And as relates to this government deficit, I mean, gosh, don't even get me started here, Steve.
00:22:01.000Obviously, we started with a massive spending problem.
00:22:04.000And it's, you know, both a Democrat and Republican problem, it seems, these days.
00:22:10.000But what's happened in the last couple of months, and we've got a lot of this to come, is that we now have a receipt problem.
00:22:18.000One of the reasons why the deficit has mushroomed beyond the CBO's initial forecast is that they have a $300 billion shortfall of receipts from their projections.
00:22:30.000Why are receipts slowing? These are receipts from individual and corporate taxes.
00:22:39.000You know, tax receipts is probably the best single economic indicator there is because no one's paying taxes on revenue they're not collecting.
00:23:32.000Tell me about the data that the American people are being given on the inflation data and the labor data, ma'am.
00:23:39.000Well, I mean, Steve, you and I could go on this for a week or at least I could because I'm a nerdy economist and I get into all these numbers.
00:23:46.000So, the inflation data, you know, they weight everything based on technological advancement.
00:23:55.000So, they'll tell you that because your car now has automatic windows and you don't have to actually roll the window down like you and I did when we were growing up, Steve, that that's massively deflationary.
00:24:06.000So, basically, any progress is viewed as deflation.
00:24:11.000So, they have managed through those kind of statistical shenanigans to suppress the level of the reported inflation.
00:24:20.000And, of course, they have a vested interest in doing that because the cost of living adjustment for all the social welfare programs and social security, et cetera, is tied to that measure.
00:24:31.000So, not surprisingly, they're going to find every way they can to suppress the reported inflation data.
00:24:37.680But, as I said, you know, people in the real world are living it and they know that their prices aren't growing 3 percent.
00:24:44.200They know that the price of things has effectively doubled since Biden got into office.
00:24:50.240And, you know, just as a side note on that, we've seen a huge rebound in oil prices in the last several weeks.
00:24:56.820I'm looking at my screen this morning. We're back over $86 a barrel for crude.
00:25:01.760That's the highest since last November.
00:25:03.880And it presages retail gasoline prices that are going to move up probably over $4 a gallon nationwide in a hurry.
00:25:11.440So, that's going to be compounding the woes for the average consumer.
00:25:15.660But getting back to the statistical shenanigans, the employment one is one of my favorites because this number is so fraught with misrepresentation, let's say.
00:25:25.800One reason why it is, is that that monthly payroll employment report includes something called a birth-death adjustment.
00:25:34.780And this is something where the BLS goes out and they try to guesstimate how many jobs were created in that month by businesses that haven't yet established a payroll.
00:25:44.540So, you started a business and you're just, you know, you haven't yet hit the payroll numbers.
00:25:49.440But so, they compute some level of jobs created by those new businesses.
00:25:56.280And that number, even if you read the footnotes in the BLS report, they confess is essentially pulled out of thin air.
00:26:03.740They go back and they look at, well, how many jobs were created this way a year ago based on tax filings?
00:26:09.960And they just assume, well, okay, it's probably about the same amount today.
00:26:14.600So, what happens is when the economy is at a turning point, as we are now, I believe, and we're about to tip into recession,
00:26:21.960those payroll data will tend to overstate the level of employment because they're assuming that you're creating all these same new jobs every month through new business formation,
00:26:31.400that you really aren't because the economy is slowing and, in fact, you probably have businesses shutting down, not being created.
00:26:39.520So, that's one of the reasons why these numbers end up having to be revised.
00:26:43.660And we saw that big revision that you mentioned, Steve, the $300,000 plus revision.
00:26:48.320And I think that's just – that was a preliminary revision.
00:26:52.100And I think when they do the final revision, it will be substantially larger than that.
00:26:55.660Stephanie, if you can just hang with us through the break.
00:26:59.860We're going to take a short break, but I just got to ask you one question.
00:27:02.860Why did the business media go along with this, the revered Financial Times of London, the Wall Street Journal, the business section of the New York Times?
00:27:09.500Why did they just go along and not be calling this out?
00:27:12.880Why does it take a working-class show like the War Room to call them out?
00:27:16.920Why did they go along with the manufacturing inflation data and the manufacturing jobs?
00:27:22.340And it was obvious that this was propaganda, not data.
00:27:29.240Well, I think the reason they do it, and it's a cop-out in my view, is that this is what the Fed looks at.
00:27:35.340So, the bigger question is, why does the Fed hang its hat on employment data that everyone knows is completely fraught with all kinds of issues?
00:30:10.720She was pressed by one reporter after the other saying, hey, can you explain why this $2 trillion deficit, you said it wasn't going to happen, what happened?
00:30:19.020And she went back and forth and finally said, ask an economist.
00:30:21.560So, Stephanie Pomboy, the macro maven, where are we exactly?
00:30:26.060And kind of, you know, quo vadis, where do we go here?
00:30:33.980And this deficit is going to be in perpetuity because now you have a structural issue.
00:30:38.280So what should the – we know Biden and these guys are out of control.
00:30:42.560What should the House Republicans and hopefully people in the Senate, the adults in the room, what should the adults do in the next three weeks leading up to midnight on the 30th of September, ma'am?
00:30:55.280Well, I mean, I'm so far afield from the Washington political scene, mercifully.
00:31:02.140But I will say, you know, the cure for all of this, to the extent that we haven't already passed the point of no return, is to go back to all the policies of the Trump administration.
00:31:14.760This all was self-inflicted with the massive spending and then the rampant increase in energy prices, which really is the key issue here.
00:31:24.720The Fed never would have had to raise interest rates this far this fast had we not had this massive inflation-led increase in – I'm sorry, energy-led increase in inflation.
00:31:38.100And that's really what's driving this deficit is that the debt service is mushrooming just because we're paying now substantially more interest to service all this debt.
00:31:50.240So this is – at this point, it's really hard to rein it in because, as you said, this is going to be in perpetuity.
00:31:57.000But nothing cures a deficit like growth in the economy, and you've got to just go back to those pro-business Trump policies, deregulation, not all this incredible heavy regulation and the woke agenda, but deregulation, tax cuts,
00:32:13.140and most importantly, a real return to domestic energy production.
00:32:20.300I think those are the things that are most important.
00:32:22.860And what the House Republicans can do to advance those is questionable to me, but they've got to do everything they can to at least hold back spending.
00:32:33.100So, you know, I'm sorry I don't have a more optimistic message, but I think we're kind of stuck.
00:32:39.460But you said something that's very important because this is how nations either go to the next level or not decline, but the bottom falls out.
00:32:49.140You said this is in case we're not past the point of no return.
00:32:57.820Well, I think we may be past the point of no return just because the deficits are so big now.
00:33:03.360Even if we had growth in the economy, it would be very hard to grow our way out of them.
00:33:08.460I mean, we really need someone like, you know, a repeat of the Trump policies to get us there, but it would still take time.
00:33:15.640And in the meantime, you know, what's going to happen is that the inability to service debt at these levels,
00:33:21.320I fear is going to find the Federal Reserve going back to quantitative easing where they become the marginal buyer just to kind of put a cap on this explosion in the deficit by suppressing interest rates again.
00:33:36.620And then we have all of the unintended consequences of that, which we're now living through.
00:33:43.820And frankly, you know, Steve, for the average American, I'm much more concerned about the impact of all this on the private sector than Washington.
00:33:53.900You know, the Federal Reserve is there to print money and service those debts, and they have the power of taxation.
00:34:00.320But the average business doesn't have access to a printing press and the power to tax.
00:34:04.920And they're struggling with higher impact costs and substantially higher debt service.
00:34:10.260And I think we're going to see that come back and hurt the average consumer in the form of massive layoffs.
00:34:17.500I think we're going to go from labor hoarding, which we've seen over the post-pandemic period, to labor shedding in a pretty quick fashion.
00:34:26.020So I think we've got a lot of really tough time in the economy ahead of us.
00:34:30.420That's not going to help the deficit financing, and that's going to get the Fed back involved.
00:34:34.160And we're going to keep going around in this stupid circle, exasperatingly.
00:35:36.580What Stephanie was talking about there is what a lot of very smart people on Wall Street are talking about right now, that were in a closed feedback loop.
00:35:45.760Much like 1938, when the Roosevelt administration had come in and put all these tools in order to try to pack the courts, they had all the massive increase in federal government to try to stop the depredations of the beginning of the stock market crash in the Great Depression.
00:36:07.440They came in in 1932, by 1934, 1935, because of this massive infusion of federal spending and other things they did, actions they took, things started to look a little brighter, a little bit of employment increased.
00:36:20.760But then by like 1937, 1938, they were falling back into many of the problems of 1932, and there is a negative feedback loop.
00:36:33.380Now, what Stephanie just told you there at the end is what a lot of people are talking about.
00:36:38.860And just to give you some insight, baseball, this is the pressure that's coming on, not just the House Freedom Caucus, but for other people in Washington, D.C. on the House side that say something, we have to have a moment here of clarity.
00:36:50.960We have to have a moment that defines ourselves and defines what we're going to do, because people are saying, oh, no, no, no, no, no.
00:36:56.620This thing is teetering because of what Biden's done.
00:36:59.340It's teetering right on an edge, a knife's edge.
00:37:03.380And it'll collapse and fall over, and the Democrats will get totally blamed for it.
00:37:07.560But if you, the Republicans, try to take action, you try to take action, and you force the Biden's hand for the government shutdown, you know, you don't approve a CR, that you're going to get blamed for it.
00:37:21.220That the thing will fall and you get blamed for it.
00:38:11.620You know, somebody's talking about, oh, you've got to read the, you know, somebody said the other day, you must read all the histories of World War II so the United States understands what's going on here, what the stakes are in Ukraine.
00:38:25.180Well, in the history of World War II, the leaders of the United States of America, and particularly the military, said under no circumstances ever will we get in any type of land war in places like the Ukraine.
00:38:39.600We're not going to get sucked into land battles in eastern Europe or the Ukraine.
00:38:45.700So here we stand right now, and this is what this huge fight's going to be, and McCarthy is going to be forced to go to Hakeem Jeffries just like he did.
00:38:54.060Remember, he had more Democrat votes than Republicans because I think 70 Republicans voted against the debt ceiling deal in the first place.
00:39:03.220So in reaching out to Hakeem Jeffries, because that's what it's going to take to get his CR, then the moment of truth on the motion of AK.
00:39:32.300These subpoenas should have gone out months ago.
00:39:35.920All the action they're taking now and running around subpoenaing Mayorkas and the Secret Service and Hunter Biden, that's all performative because they should have taken these actions.
00:39:46.440They should have flooded the zone with subpoenas right from the get-go.
00:39:50.100They tried to play patty-cake, not the smash-mouth way the Democrats play.
00:39:53.880Look what the Democrats are doing right now, the Department of Justice and the FBI doing it, Donald Trump.
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00:45:22.520And this is one of the things we've got to talk about ending the Fed.
00:45:25.320It has to be on the table as a discussion.
00:45:28.580We have to get control of our currency, and we can't have an independent organization doing that anymore.
00:45:34.400It can't happen because it's a tool of the elite.
00:45:38.140Make sure you go to Birchgold right now.
00:45:39.780I've got a new installment coming out in mid-September, but I need you all up to speed, you uneducated tribe, as MSNBC is calling you, and Steve Ratner and Morning Joe.
00:45:49.920The college degree is the end-all and be-all of education.
00:50:31.000And it's – and use that promo code WARROOM.
00:50:33.700The support, Steve, from your audience has been – I'll tell you, you talk about lifting our spirits when we – it's just helped so much.