00:04:53.980And so I think that there's an argument that the Fed should cut in September.
00:04:57.060And so usually what I'm, like, saying, wow, this has to be politics, is because I can't think of a sound economic reason for what they're doing.
00:05:03.620But I think you could see that with the weak labor market that it might be okay for the Fed to start to cut, even though it's right before the election.
00:05:10.620So, historically, what we've seen, during the Trump years, they raised rates too fast.
00:05:22.180During the Biden years, they raised rates, they cut rates too slow.
00:05:35.000So, going back to the Trump years, Jerome Powell takes over from Janet Yellen, the Democrat.
00:05:47.280When he started raising rates, and we kept telling, speaking out, I don't know if you could speak to him directly, but we were saying, hey, wait a minute.
00:05:57.880In the Trump economy, there's no inflation here.
00:06:01.040Do you think what he did back then was designed to hurt Trump politically or simply incompetence?
00:06:11.160I think that for Jay Powell, it was incompetence.
00:06:14.580And for Janet Yellen, who really started the hiking cycle right when Trump took office, that it was partisan politics.
00:06:21.500And we've seen that, Peter, even lately.
00:06:23.920Like, I don't know if you've noticed, but Secretary Yellen has been doing political events, campaign events with Vice President Harris.
00:06:32.080I can't remember a Treasury Secretary out there actually on the stump, stumping with the politician.
00:06:39.120That's sort of not something that is in the job description for a Treasury Secretary.
00:06:42.820And so I think that we've seen that she is a kind of more partisan animal than we expected.
00:06:47.580And if you consider the moves that were made to try to squash the economy when Trump took office, that it all kind of starts to make a little bit more sense than it did back then.
00:06:57.340So Powell is the chair when Biden takes over his reappointment is looming and he's worried about whether or not he's going to get reappointed.
00:07:14.420Do you think that factored into his decision not to raise rates quickly enough when inflation started percolating?
00:07:23.320Or again, is he just I mean, he's not an economist, unbelievably.
00:07:29.280I mean, what's what's your take of the guy?
00:07:34.020Well, you know, as you know, Peter, I used to come back and talk to you about the lunches I had with him when I was chair of the Council of Economic Advisors and he was chair of the Fed.
00:07:41.820And I don't think that he's a corrupt or partisan person.
00:07:46.180I think that the Fed staff is filled with a whole bunch of sort of like you, Harvard trained economists who believe in Keynesian economics and Phillips curves and things like that.
00:07:58.320And they were surprised by inflation because it didn't make sense to them, even though it should make sense to anyone who is not an ideological economist.
00:08:07.180So my view is that the Fed staff is a very one sided kind of, you know, Cambridge, Massachusetts trained Keynesians.
00:08:17.180And that they don't understand that if you have a supply side policy, then that increases supply.
00:08:22.780So that puts downward pressure on inflation.
00:08:25.080And if you have a big demand side policy like printing money and mailing it to people and forgiving student debt and, you know, maybe subsidizing new homes as a new proposal from Vice President Harris.
00:08:35.520Well, then that's going to be inflationary. So I think that in the end, the Powell, the Powell legacy is going to be that he ended up moving late because the staff didn't serve him well.
00:08:47.700But once he started to move, he actually moved pretty aggressively as one of the more aggressive hike cycles that we've seen.
00:08:52.800And inflation has gone down. And so I think that he got in there in earnest to address the inflation situation in the end.
00:09:01.440And, you know, I commend him for that.
00:09:08.140So these these these advisers who are advising him, they're they're Keynesian.
00:09:16.120Does that mean they lean Democrat or are they just Keynesian?
00:09:19.980Because the other aspect of this is like if they don't understand the benefits of supply side policies with Trump and they start to hike to too quickly.
00:09:31.600Is it also the case they don't understand that the initial pulse of inflation when Biden took office was some of his mismanagements of the supply chains themselves?
00:09:45.120Did they not they just don't don't get any of that?
00:09:49.420Or again, I mean, I I thought that all he was doing, all Powell was doing was was holding back on rate hikes so he'd get reappointed.
00:10:00.420I mean, that was kind of my take, but maybe that's too simple.
00:10:05.280Well, I think that what everybody thought at the time, you know, in their defense was that because of covid, there were supply disruptions and the supply disruptions were going to open up and then everything was going to be fine again.
00:10:19.660And so you can imagine if like we're getting our apples from Canada and there's one bridge from Canada and the bridge is closed.
00:10:27.760Then the price of apples on our side is going to go way up.
00:10:30.980But if you could open the bridge again, you know, then then apples look at the price again.
00:10:35.320And so I think that that's kind of what people thought was going to happen, that it was a big supply disruption and it was going to turn off.
00:10:42.600But the problem is that while watching that supply disruption ball, what they weren't watching was the government spending ball.
00:10:49.180And again, there was all that covid relief money that was passed on a bipartisan basis to offset the terrible shutdowns that Fauci tricked us into doing.
00:10:58.800And then that created budget space for the Democrats to spend all that money again, even though the covid thing was over.
00:11:04.840And so so there's a massive, massive explosion in demand and in government spending.
00:11:10.120And that's where the inflation came from.
00:11:11.820And the supply disruption thing was was a story that just wasn't as serious as people thought.
00:11:17.580I think that it was really kind of like like every economic model, even Keynesian models would tell you you're going to get inflation if you spend like that.
00:11:25.560And so I would say it was kind of like partisan denial more than anything else.
00:11:31.480So, look, the problem with the Fed is that it's a one trick pony.
00:11:37.980Basically, it either raises rates to control inflation or cuts rates to push growth out of a recession.
00:11:47.640Right. So if it puts you, I don't know.
00:11:51.700The hypothetical here is that let's say you're the chair of the Fed and you're seeing two massive spending bills going through Congress.
00:12:05.200Do you think the Fed has a responsibility to tell the executive and legislative branches that, hey, you're going to make my job a whole lot harder if you throw all this gasoline on the inflationary fire?
00:12:29.300Or does the Fed stay passive and then just take what they get in and raise rates?
00:12:35.340I mean, there was the famous Fed chair when Lyndon Johnson started all the Vietnam War expenditures, who was very activist about, hey, don't do that.
00:12:50.120What's your view on what a proper Fed chair should do?
00:12:53.660Right. Well, so, you know, you're a real student of history, Peter, and you'll remember that Alan Greenspan used to testify at the Humphrey Hawkins speeches twice a year up at Congress.
00:13:05.240And he always let off with you guys need to, you know, not spend too much, have a budget that's kind of mostly balanced, because if you do that, then it'll make it a lot easier for me to control inflation.
00:13:16.320And so I think that a missed opportunity for this Fed chair is when all of this runaway spending started to happen, that, you know, he could have gone up to Congress and said, you know, if you do this, I'm going to have to lift the federal funds rate to five, six percent in order to get inflation back under control, because you're just going to print inflation.
00:13:34.300And so you can remember there's like different curves that shift in different directions.
00:13:38.000We could go to a blackboard. But if the government shifted, you know, demand curve out, then you can shift the supply curve back with Fed policy and end up in a place without inflation.
00:13:50.000But it's going to cost, you know, the economy quite a bit of growth. And so I think that was a missed opportunity.
00:13:55.680I think that the next Fed chair, whoever that might be, should basically just be truthful about, look, my job is to control inflation.
00:14:03.640If you do this, here's how I'm going to respond.
00:14:06.640And talk about the limits of interest rate policy when fiscal policy, if fiscal policy is out of control, monetary policy, it's going to be very difficult for that to kick in.
00:14:22.400All right. So we're going to take a quick break here, Kevin. When we come back, I want to dive into the Kamala Harris economic speech and get your thoughts on where she might take America.
00:14:37.800All right. Hey, Peter K. Navarro in with Kevin Hassett here in Steve Bannon's War Room.
00:15:01.820They now want to use the technology behind Bitcoin for their own Orwellian purposes, their gold to dominate our economy by forcing everyone to use central bank digital currencies, which they control.
00:15:13.520Imagine your every purchase being called into question, your every move tracked like you live in a communist country.
00:15:21.220This is not the America we want, but it is the America they want to create.
00:18:04.040You know, let's go on, and as you always do, Peter, let's just start with the substance.
00:18:09.540The substance is that when she was a candidate before, she was pretty much running as a sort of slightly different version of Bernie Sanders.
00:18:18.920Had a lot of very far-left proposals, like a guaranteed job for everybody and, you know, ending, going carbon neutral, I think it was by 2030.
00:18:31.280You know, things that were extremely harmful for the economy, ending fracking.
00:18:39.500And over the last couple of weeks, she's been kind of backing away from that stuff.
00:18:45.360She hired some pretty moderate campaign advisors like Brian Deese and Gene Sperling, people who had worked in the Obama administration and the Clinton administration in the past, kind of, you know, old hands.
00:18:58.500And so I think that there was this attempt to signal that she's not really going to be pursuing the really divisive far-left policies that she proposed when she was a candidate before.
00:19:09.300But then all of a sudden, she puts out her platform, and it's the most left-wing platform that any of us have ever seen.
00:19:17.060And, you know, the highlight of it or low light of it, of course, is that there's this price setting for groceries.
00:19:24.080And really, the bill in Congress that it's modeled after, it basically sets it up so that the government can set the price of everything.
00:19:35.180So if the government decides that a company's charging too much money for something, then they can hit it with an exorbitant fine.
00:19:41.580And so what would happen over time is that the government would decide what's a fair price, what's not a fair price.
00:19:46.740And if you charge more than that, especially if you're a Republican donor or something, then they're going to hit you with a big fine and say, you know, that price is wrong.
00:19:55.860And before you know it, the government's going to be setting prices with her proposal.
00:20:00.100And when that happens, you know, the price will be set below the market-clearing price.
00:20:04.600There'll be more demand than supply, and so there'll be long lines, you know, coupons that you'll have to have from the government so you can buy things.
00:20:13.540And before you know it, a lot of shops will close.
00:20:16.620And the shops that will close first will be the shops in minority neighborhoods, sadly, because they tend to be the least profitable.
00:20:23.700And so it's really, really terrible policy.
00:20:26.640And the thing is that, you know, I know some folks who are friends of mine who are Democrats, and they're kind of like, oh, she's just doing that to get the base excited, and she's not really going to do it.
00:20:38.920But if you look at her stump speeches, she spends quite a bit of time bragging about the prices that they already have set, the drug prices, where they had the government negotiate much lower prices on some drugs.
00:20:51.100And, you know, our friends Casey Bulligan and Tom Phillips wrote an article about how that actually, paradoxically, has cost people their drug benefit in a lot of ways.
00:20:58.700But the fact is that she celebrates price-setting, having the government price set in the area where she's done it already, which means that she's serious about doing it in the future.
00:21:07.680And it really is the road to Venezuela.
00:21:10.620You know, it's just a disastrous economic policy.
00:21:13.360And the kind of good thing is that even with the liberal media being biased at everything, the New York Times, the Washington Post, just about everybody who is normally a knee-jerk supporter of whatever a Democrat might say has come out and trashed this plan.
00:21:39.380So she's channeling Pocahontas there in terms of the Bernie Sanders, Liz Warren, progressive kind of thing.
00:21:49.720I would be remiss in not pointing out that this guy named Gene Sperling, I don't know if you know this, Kevin, but when I was on the campaign trail with the boss in 2016,
00:22:04.540I actually debated Gene Sperling prior to the debate night when the boss was debating his opponent.
00:22:18.920They had me do Sperling in the afternoon.
00:22:21.680And what's interesting about Sperling is, I think you know this, he was the guy that led China into the WTO back in the day.
00:23:44.080So it goes back to our earlier conversation, Peter, that these people really just don't understand supply and demand, right?
00:23:52.680And so the problem with housing in America is that demand has gone up a lot, in part because millions and millions of people have come across the border and they need a place to stay.
00:24:06.960And so we've had this big increase in demand for places to stay, and the supply can't really adjust, in part because mortgage interest rates are so high, it's really hard to borrow money to do anything like that.
00:24:18.620And so there's been little supply, lots of demand, and so then the price goes way up.
00:24:25.180And so what Harris is proposing is to give the $25,000 down payment assistance to a first-time home buyer.
00:24:34.200And what that's going to do is that when you're bidden to buy a house, then, you know, you're going to have an extra $25,000.
00:24:40.760The guy that you're bidden against is going to have an extra $25,000.
00:24:43.760And inevitably, that's going to cause housing inflation.
00:24:46.540The price of the house will go up by $25,000.
00:24:49.280And, you know, there could be some supply response, but really the way to get that is what President Trump's proposing, which is to open up public lands around cities and have, like, really easy zoning for the construction of new homes.
00:25:03.760You need to flood the country with supply of housing, not increase demand.
00:25:09.540And so it's just really very, very similar to the Bidenomics that gave us right away inflation, throw demand at things and not think about supply.
00:25:17.720The final thing is that when – I don't know where they got the number, but they have this estimate that it'll be about – it'll create about 3 million homes.
00:25:27.860Peter, you know this data better than I do.
00:25:30.080But the last I checked, the estimate of the number of illegals that have come into the country is more than 5 million.
00:25:36.360And so if you think about it, that all the new homes with this really extravagant policy they're proposing under their estimate that are being built aren't enough to house the people they let across the border over the last four years.
00:25:47.720So to summarize, what you're saying here is that because of the way the housing market's constructed right now and the role that the illegal immigration's playing,
00:26:02.040that all you'll see is you'll give people $25,000 extra, and they'll have to go buy a house which costs $25,000 extra.
00:26:30.760And so if you were to sell the house the day after this policy passes, then Kamala Harris would have given you a check for $25,000 effectively.
00:26:40.840So it's a transfer to people who own existing homes.
00:26:54.220I mean, that's the other part of it, right?
00:26:56.920It's like when this high interest rate environment, you've got people in existing homes who might want to otherwise sell to move up for a bigger family or move down because they've got empty nesters.
00:27:10.960They're not doing that, and that's part of the housing constraints.
00:27:14.740Hey, can you stick around for just a little bit more?
00:27:21.040All right, so what we're going to do, come back, I want to talk a little bit about, because what we like to do is contrast Kamala's America with Trump's America.
00:27:31.820We want to talk a little bit about what Donald Trump's going to do on the economy to turn all of Kamala's mess around.
00:27:41.320Peter K. Navarro here in the war room with the great Kevin Hassett, sitting in for Stephen K. Bannon.
00:27:48.360And so stay right here if you care about your pocketbook.
00:28:55.120Go to HomeTitleLock.com today and make sure your title is safe.
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00:29:30.860We are with the great Kevin Hassett, my former colleague in the White House, in the West Wing,
00:29:36.440the former chairman of the Council of Economic Advisors.
00:29:41.580And we were talking off air about something that I was totally unaware of, but I think it's worth Kevin waxing a little eloquent on this whole thing about where Kamala's policies are coming from.
00:29:59.360And Elizabeth Warren pops to mind, according to Kevin.
00:30:04.960So talk a little bit about where she's getting her ideas from and who's controlling this party and how that's rippling through the Democrats who may or may not go to the convention.
00:30:16.720Right. Yeah. If you think about it, Peter, if we go back and look at President Biden's campaign in the past, that he ran as, you know, compared to the people that he was running against as a moderate,
00:30:31.340as a continuation of President Obama's policies, which compared to the proposals of Elizabeth Warren and Bernie Sanders were moderate.
00:30:38.960And then but he was losing. And then what happened was that right up at the end in the South Carolina primary, all the people who were not way, way left dropped out all at once.
00:30:54.060And then as if the fix was in. And then Biden ended up getting the nominations and get the nomination.
00:31:02.020And then with that nomination, you know, he ended up winning the White House.
00:31:06.260And what did he do? He went in and he let Elizabeth Warren and Bernie Sanders basically run the country.
00:31:12.180If you look at the people who he placed in agencies, this is inside baseball stuff.
00:31:16.740But, hey, I live in Washington. I do inside baseball stuff.
00:31:19.100It's, you know, they're all people who are like Elizabeth Warren staffers and Bernie Sanders staffers and so on.
00:31:24.120And now what's going on, the really interesting thing is that Vice President Harris doesn't feel like she needs to fake it anymore, fake being a moderate.
00:31:35.720She's proposing, you know, Elizabeth Warren's price fixing thing, for example.
00:31:40.640And it's a signal that really they've decided that they're going to let the left wing of their party run everything and they're going to be explicit about it.
00:31:48.660And to some sense, we should commend that.
00:31:50.800Like, it's much more honest, right, than what Biden did.
00:31:54.520But it is something that the moderates in the Democratic Party, I think, rue.
00:32:01.140And one of the things that I'm going to be keeping track of is how many of the, say, Senate candidates, Democratic Senate candidates who are in traditionally red states or purple states even bother going to the convention because the convention is going to be a very, very far left celebration of, you know, the victory of the far left over the Democratic Party.
00:32:23.160But their Democratic Party's power is going to depend a lot on convincing, you know, moderate people in swing states that they're not crazy.
00:32:32.760And, you know, but if you're out there, you know, bragging about how awesome it's going to be when the government sets the price of everything, you know, then you're probably going to have a problem getting moderate senators elected in swing states.
00:32:43.380So I think the war room could serve a useful function, keeping track of who's not speaking at the convention.
00:33:04.260I mean, I think in some sense the best thing that's happened to the Trump campaign with Kamala Harris is this initial huge surge in her poll numbers to create this.
00:33:19.960I think she somehow thinks that her rise in popularity is attributable to her rather than simply not Joe Biden.
00:33:32.820I mean, I think I think pretty much anybody could have stepped in when Biden dropped out.
00:33:39.140I mean, literally anybody and would have seen the same kind of bounce back.
00:33:45.540The thing, Peter, the thing about this, though, is that that even Joe Biden in his diminished capacity, you know, he's smart enough to understand that you don't tell the government to set the price of food.
00:34:06.000It's like she thinks somehow that the people love her and it's somehow that that empowers her then to go on and do kind of whatever she wants to do.
00:34:20.380I mean, this I mean, to me, the two major strategic mistakes so far and they're big is appointing somebody is equally far left from the California, the Midwest, Minnesota to be her running mate.
00:34:34.680And number two, leading with economics, which she has a glass chin on and coming out with, I don't know, Venezuelan proposals.
00:34:46.560But if you're telling me that that she's a effectively a Liz Warren puppet, just like Joe Biden was, that all makes sense.
00:34:57.300That's why I have you on the war room, Kevin, because you make sense out of what seemingly is inexplicable.
00:35:03.700Let's end the segment here with what do you think Donald Trump can do to reverse all of this angst and problems in the economy?
00:35:20.900What do you see him doing day one, day two through the first hundred days to make all this right, brother?
00:35:27.400You know, I think that when when we went in and I can remember, Peter, you and I started out disagreeing about a lot of stuff.
00:35:35.720And we I think we really moved each other's opinions about a whole bunch of things over time.
00:35:41.120And I really enjoyed working with you.
00:35:42.620And we ended up with a policy that was, of course, led by President Trump that created prosperity, you know, about sixty five hundred in per family and income growth.
00:35:54.120When President Trump left office, inflation was at one point eight percent and we gave him the three percent growth that he promised.
00:36:03.240Remember, we we we were told it's the new normal and you'd have to be crazy to think you could have growth of three percent.
00:36:08.480But but it happened relatively quickly.
00:36:10.780And I think that if you bring back the policies, especially like the deregulation, the trade policy, the tax policy that gave us that prosperity, then we'll get the prosperity again.
00:36:22.620The the hard part, of course, is going to be that this Biden spending has racked up an enormous deficit and enormous amount of debt.
00:36:32.300And the hard part is going to be, you know, getting ahead of the curve on that, which is going to require Congress to work with the president to cut spending a lot.
00:36:42.500And that's something Congress doesn't like to do.
00:36:59.700Like if you look at the deficit situation of the U.S., it's like nobody in his right mind would say, oh, if they continue their current policies, it's going to be fine.
00:37:08.000You can't conclude that if you look at how much we're borrowing.
00:37:12.520In fact, the last two years, Peter, we increased the debt by more than the increase in GDP.
00:37:19.100And so the way to think about that is imagine you're running a business, you borrow 100 grand, you give your wife a job for 70,000, you blow 30,000 in Vegas.
00:37:28.000The end of the year, somebody said, how's your guy do?
00:37:36.860And so we've got this big debt that we've run up, and we've got to get ahead of the curve on it.
00:37:43.580And if we don't, then basically we won't have money to do things like defend the country that we need to do.
00:37:49.460But because we've done that and we've run up this big debt, then foreign investors around the world will be looking at the U.S. saying, geez, I don't necessarily want to put my money in that country because their fiscal policy is so crazy.
00:38:01.540And so if you come in and you cut spending a lot, you could actually create like this euphoria that, wow, the Americans got their act together.
00:38:09.360And your old friend, Alberto Alicina at Harvard, wrote a bunch of papers that showed that if you come in and you cut spending a lot when you're in a situation this bad, then you could actually make GDP go up a lot.
00:38:22.460Because everybody's like, oh, now I understand I'm not buying into a banana republic.
00:38:27.180I'm buying into a country that has its act together.
00:38:29.100So that's like investment, that's investment-led growth then?
00:38:33.620Yeah, that's right, which is supply-side-led growth, and it reduces inflation.
00:38:43.420It's, I mean, it is, though, problematic.
00:38:47.420I wanted to get your take on that portion of the spending that's going into the EV, electric vehicle mandate, and how that is creating a strong incentive for our auto industry to go offshore to Shanghai.
00:39:06.820Because, I mean, look, Michigan is in play here.
00:39:09.980The UAW workers got a big paycheck, but I think it's going to be the last paycheck of a three-year negotiating cycle because that industry is going offshore.
00:39:23.820Or what, and what, how do you, how do you change that?
00:39:26.780Yeah, there's, so basically, if you're an auto worker and you make a traditional internal combustion engine car, then the plan of these carbon-neutral folks, like Vice President Harris, is to destroy your job.
00:39:42.080And what's going on is that the traditional car manufacturing jobs are disappearing in places like Michigan, and electric vehicle production is happening, or at least assembly, is happening in places like Tennessee.
00:39:58.720But when Ford or GM moves their production from Michigan to Tennessee, there's a big difference for the unions in that the union hasn't organized the places where the electrics are being made.
00:40:13.120And so the electric vehicle push of the Biden-Harris administration is effectively, you know, going to put the United Auto Workers out of business, because they're either going to be importing cars, these electric cars, or assembling them in the South where the union hasn't organized the workers.
00:40:29.980And so it'd just be stunning to me if there were somebody whose life depends on the auto industry in Michigan.
00:40:36.720It'd be stunning to me if they were to continue to support these democratic policies.
00:40:41.320All right, so everyone out there in media land, you heard, I think, that first in the war room.
00:40:51.680It's like, this is so interesting, Kevin.
00:40:55.480What you're saying is that not only is the Biden-Kamala Harris spending bill pushing offshore the auto industry,
00:41:06.520but it's moving it from Michigan to places like Tennessee, and basically Michigan's going to be kind of a hollowed-out version of what it was back in the 2000s when China first got in the WTO.
00:41:54.680You spent your life building a store, a convenience store, a gas station.
00:41:58.740You know, in their plan, 2030, there's no reason for you to be in business anymore.
00:42:05.120And so the disruption of all that is huge.
00:42:07.580Yeah, I mean, all EVs are like a little bit of metal on top of a big battery, which is why if China controls the battery industry globally like they do, we're screwed.
00:42:21.480Hey, Kevin, I always wish you the best, brother.
00:42:26.620The boss is going to need you if he gets back in there again.
00:42:29.920So rest now because you're going to be a busy, busy man.
00:42:37.520And I appreciated your support just before I went into prison there defending the Constitution.
00:42:47.400And you were a rock there while I was there.
00:46:32.660So every time a letter comes or a phone call that you don't pick up and you've got anxiety and nerves and you're freaking out and your family's having dinner and those phones are ringing, they've got time.