When is AI going to change the economy? We talk about that, and Josh Hawley, Senator Hawley joins us to unpack the Senate betrayal. What is the Everyman's CPI? And why does it matter?
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00:02:42.000The common man is a reference to Aaron Copeland, the fanfare for the common man.
00:02:47.000But the point is that that is growing much more quickly than wages and has been growing much more quickly than wages for the last four or five years.
00:02:57.000So it's one thing maybe if you can get a flat panel television cheaper, but it's very different when your utility prices are going up or food or shelter or all the other things that you have to pay for are going on.
00:03:10.000So then how much has the everyday man's CPI gone up in the last year?
00:03:16.000Well, it's up about 4.2%, so which is higher than the 3.1% that was reported this morning for the headline number.
00:03:28.000And it's also grown about 7% more than wages in the past four years.
00:03:32.000So that's part of the reason why you'll hear people talk about real wages starting to improve, which is wages after inflation.
00:03:39.000But the problem is that the level of prices generally doesn't go down.
00:03:44.000So if you're behind, you're still behind, even if you're starting to catch up.
00:03:48.000And that's one of the reasons why the administration is not getting the credit for the economy it believes it deserves, despite the fact that you're close to full employment and stock prices are near all-time highs.
00:04:01.000The average person is still very far behind where they were before the pandemic.
00:04:07.000Yeah, so the other question I have that I think is important: can you just reiterate, how does the government currently calculate CPI?
00:04:16.000And how did we get such a bizarre calculation that the media always touts?
00:04:24.000I'm going to tell you, it's pretty complicated.
00:04:26.000You know, the BLS, there's about 800 or 900 people that work there that work on this thing, which is, you know, probably gives you an idea of part of the problem with government debt.
00:04:36.000You have that many people working on a price, but it's quite literally thousands of prices that go into this calculation.
00:04:44.000And it looks at prices on a month-to-month basis.
00:04:47.000And then I tend to look at it on a year-over-year basis.
00:04:50.000And it gives various weightings to those factors that are in the CPI.
00:04:57.000So I can't give you a quick example because it literally would be spreadsheets upon spreadsheets that would come up with it.
00:05:05.000We isolated 67 major categories within the thousands that we think are quite big.
00:05:11.000And that's how we came up with our common man CPI.
00:05:14.000We made a decision as to what's discretionary and what is something you have to pay for.
00:05:20.000What, I mean, the obvious answer is fiscal policy coupled with monetary policy, but what specifically is driving this inflation from a policy perspective?
00:05:30.000If you had to explain that to somebody who is not as initiated in economic or finance parlance.
00:05:37.000Yeah, there's two, yeah, there's two easy because I think inflation is always and everywhere a monetary phenomenon.
00:05:44.000So we've increased the money supply by 40% since 2000.
00:05:50.000So it would stand to reason that prices would be up 40% over some period of time.
00:05:55.000And then we've also increased the size of our budget deficit dramatically over that period of time.
00:06:06.000And so while the Fed is trying to tighten monetary policy to a certain extent, it's being offset by massive fiscal stimulus, by massive government spending.
00:06:17.000Last year, the deficit was 7% of GDP, which is unheard of at a period of time in which the unemployment rate is this low.
00:06:28.000And we've only done that three other times in the post-war period, but each time the unemployment rate was above seven.
00:06:35.000And the deficit only goes higher when you do go into, when we eventually do go into recession, the deficit will go meaningfully higher because there are things called automatic stabilizers like unemployment insurance or food stamps or welfare that automatically kick in.
00:06:50.000They don't have to be voted upon by Congress.
00:07:47.000I mean, and again, this can get a little complicated.
00:07:49.000One of the things that has happened since the global financial crisis in 2008, 2009 is that the Fed has largely monetized most of the debt, which is just a fancy way for saying it's bought most of the debt from the federal government.
00:08:03.000So, what would normally give you an indication to stop spending would be higher interest rates has largely been obscured by the fact that you have a captive buyer in the Fed.
00:08:18.000And so, this has also been highly regressive, which is to say that your average guy has gotten zero on his savings from 2009 through 2021, while a wealthy person that has a private equity portfolio or something that's highly leveraged has done has done great.
00:08:40.000So, this is a very, you know, I think it was started with good intentions, but it's gotten out of hand.
00:08:48.000And right now, the fiscal and monetary policy are, they're actually right now, they're working at odds with one another, but this massive, what they call quantitative easing, has allowed policymakers to live in a fantasy world that their spending doesn't have many consequences.
00:09:05.000And sooner or later, it will have consequences.
00:09:08.000Yeah, privately, they think AI is going to solve this, that there are going to be such efficiency, such growth.
00:09:16.000In a lot of these private intelligentsia circles, they whisper just NVIDIA will solve it.
00:09:21.000You know, AI is going to just basically make labor irrelevant and we'll have a brave and Ozempic, you know, and NVIDIA would be the two things that, you know, and certainly, you know, and the U.S. is extraordinarily special.
00:09:36.000You have to say that because it does have the most innovative companies in the world, in my opinion, that's largely in spite of big government as opposed to because of, but that is, it's not an excuse to run massive structural deficits.
00:09:52.000And I would also say when it comes to AI, no one really quite knows how consequential it will be.
00:09:59.000I don't doubt that it will be consequential.
00:10:01.000I do very much doubt that anyone knows when.
00:10:18.000You're in such the nation stages of this technology that you can't, you know, I think Churchill once said you don't want to confuse deliverance with victory.
00:10:46.000But there's no divine right to have a reserve currency.
00:10:50.000There have been many societies that have lost it, and they've lost it largely in the same way we appear to be trying to lose it, which is by foreign excursions and bread and circuses and all sorts of other things to try to keep our best as a civilization to commit suicide.
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00:12:13.000So, Jason, challenge me if I'm incorrect here, but if the laws of economics, which don't change, are not going to be uprooted in the next couple of months and years, it's either they can tax their way out of these massive deficits, they can cut spending, or they could decide to inflate their way out of it.
00:12:33.000Certainly seems that they're signaling and sending smoke screen: hey, we're just going to inflate our way out of it.
00:12:39.000There's no spending cuts on the horizon.
00:12:41.000This is why I think we're going to be entering a new normal of five, seven double-digit inflation annualized.
00:13:54.000And so, there is this hope that maybe there'll be this 20 to 30 percent growth because we have a bunch of robots and AI solving everything.
00:14:02.000But, of course, no conversation about the cost or the displacement or I mean, how do you even integrate it?
00:14:11.000I mean, it's a nice little widget and tool, I guess.
00:14:14.000And by the way, the people who are going to be immediately displaced are actually the college-educated mid-level management, first and foremost.
00:14:20.000It's not the plumber or the electrician or the welder, hilariously, which is why they're like, oh, we have to get robots too, so that we could displace jobs everywhere.
00:14:28.000So, this is going to be a lot messier than people think.
00:14:30.000It's okay, you have this really powerful technology.
00:14:41.000Yeah, it can help you write, you know, dirty limericks and all sorts of, you know, right now.
00:14:46.000I'm not saying it won't have an impact, but I also think that like many other significant technological changes, it takes a long time to get into business processes that really change the way people do business.
00:15:02.000And the internet, as an example, really took about 14 years before it was something that was truly integrated into business processes and had a meaningful change in the way people were able to earn profits.
00:15:16.000The Lord only knows how long this will take, but it's not, I'm relatively certain it's not going to be in the next year or two years.
00:15:24.000This is going to be an evolutionary process.
00:15:28.000And as you point out, there will be unintended consequences.
00:15:32.000Generally speaking, I'm a very free market person.
00:15:34.000So I don't want to create artificial barriers around technology because I think there's always new technology and there's new innovations that come about.
00:15:44.000But I think the other point that you made, I think was a very good one, if you don't mind my saying, is that everyone's been telling kids, I have young, I have a college-age son, and I have a daughter who's 15.
00:15:58.000And everyone for the last 10 years has been telling me to learn how to code.
00:16:02.000And I would say artificial intelligence, in my opinion, the most immediate casualty of artificial intelligence is coding.
00:16:11.000You know, there's still going to be people that really know how to do it, but there's going to be a need for a lot fewer of them.
00:16:17.000And as you pointed out, the trades, the things where you need a human being to come into your house in the middle of the night to stop a flood.
00:16:26.000That's not going to be something that's easily displaced by technology.
00:18:21.000Joining us now is Senator Josh Hawley, who unsurprisingly voted perfectly yesterday and throughout the weekend.
00:18:28.000Senator, thank you for joining the program.
00:18:30.000It's a disappointment to see this legislation advanced, Senator, but I guess the buried nugget of positivity is more of your colleagues voted no than yes.
00:18:43.000It's always great to be with you, Charlie.
00:18:44.000And yes, you know, I mean, here's the deal is that Republicans, Republican leadership couldn't even get a majority of the Senate Republicans to vote for this thing.
00:19:08.000And I was just, you know, the war machine always gets paid.
00:19:11.000That's what I've learned in D.C. Meanwhile, if you're an American, you know, somebody actually lives in this country, I mean, good luck to you.
00:19:55.000Or was it that some people were afraid because the base is so on fire with this topic?
00:20:00.000Well, I do think that voters are making themselves very clear about this, which is they want investment in the United States of America.
00:20:08.000They actually want to secure our border, not Ukraine's.
00:20:11.000They actually want to get crime down in our cities, not Ukraine's.
00:20:15.000So rather than spending another $60 billion on Ukraine, think what that could do in our communities in this country.
00:20:21.000Our voters are saying that loud and clear.
00:20:22.000And I just, I don't understand, Charlie, why it's a virtue for some politicians, many politicians in Washington, to give the middle finger to voters and say, oh, look at me.
00:20:40.000I mean, to me, what is courageous is actually to follow your oath of office and to do the right thing and to do what's right for this country.
00:20:49.000And what's right for this country is to invest in this country to secure this country.
00:20:52.000What's not right is to spend billions on a foreign war that we have no plan to win, that we have a commander-in-chief who's senile should even be in office.
00:21:00.000Why are you supporting that guy and his failed policies?
00:21:03.000So, Senator, I'm going to read one of your colleagues' quotes.
00:21:06.000Our base cannot possibly know what's at stake at the level that any well-briefed U.S. senator should know about what's at stake if Putin wins.
00:21:14.000Number one, I want your reaction to just the snobbery and the contempt that Senator Tillis espouses here.
00:21:58.000So I've yet to hear an answer substantively to any of that.
00:22:01.000And I just think, listen, I'll let my colleagues speak for themselves, but I think calling voters idiots, man, I mean, that's something, but I wouldn't recommend it.
00:22:11.000Yeah, it's breathtaking and remarkable.
00:22:14.000I don't think Tom Tillis is going to come on the show anytime soon.
00:22:18.000So, Senator, I am curious, just do they ever specify what does success look like or what would the end of a conflict be?
00:22:28.000Senator McConnell comes out and he says that, you know, we must defeat the Russians.
00:23:49.000We do know that our own government thinks that the Ukrainian government is corrupt, that they've got major eclectomania problems, which, of course, is a surprise to nobody.
00:23:58.000And yet we just keep writing them checks.
00:24:00.000I just, I think it is, as I said yesterday, it is the middle finger to middle America.
00:24:05.000So there is a story that is gaining steam here.
00:24:07.000And last evening, David Sachs with Elon Musk were in a Twitter space with Senator Mike Lee, Senator Ron Johnson.
00:24:16.000And this has been reported for quite a while, but it's really starting to gain momentum.
00:24:21.000I'm going to play this piece of tape here because, Senator, I want your reaction because this has been around for like the last year.
00:24:30.000Could we get a real investigation, some congressional oversight, a congressional investigation of what exactly happened in that sort of March, April period at the beginning of the war, where, again, they had a draft agreement in Istanbul, and then Boris Johnson came in and the Ukrainians walked away.
00:24:50.000I mean, I would love for the Congress to be able to ask real questions of the administration in its oversight capacity, asking what was your involvement in sabotaging that deal.
00:25:04.000It seems as if that we dispatched Tony Blinken and also Boris Johnson to obliterate a peace deal that could have saved hundreds of thousands of lives.
00:25:31.000I mean, we've now had widespread news reports that our own intelligence agencies were involved, at least at a bare minimum, involved in training the teams that blew up Nord Stream 2.
00:26:32.000So, Senator, what are we hearing about any backdoor negotiations with the House to potentially block Speaker Johnson's ability to block this bill?
00:26:58.000They need to, if they want to do something, first of all, they shouldn't spend any more money in Ukraine.
00:27:02.000I mean, they ought to send a clear message to our allies.
00:27:04.000It's time for our allies to step up here and defend their own backyard.
00:27:08.000We shouldn't spend any more money, number one.
00:27:10.000Number two, they ought to move an Israel aid package separately.
00:27:13.000But really, Speaker Johnson is in control here, and I hope that he will maintain control and stay true to what I think he has said.
00:27:21.000Sometimes it's hard to say, hard to decipher, but what I think he has said, which is that he is not going to take up this bill as passed by the Senate.
00:27:28.000I sure hope he doesn't because it's a bad bill.
00:27:30.000It does nothing to secure our national interests, our borders, zero zilch.
00:27:36.000And the House, you know, the House ought to keep their pledges.
00:27:39.000So final kind of thought here, Senator.
00:27:42.000Can you walk us through from your perspective what went wrong with the border deal negotiation and how foreign funding all of a sudden superseded the priority of the invasion on our southern border?
00:27:59.000From last fall, when Mitch McConnell said, okay, we're going to do border and Ukraine together, it was always about just peeling off enough Republican votes to get Ukraine.
00:30:34.000I'd be curious how someone could find that interview objectionable.
00:30:39.000Okay, yeah, Putin was allowed to talk uninterrupted.
00:30:42.000And what I found to just be hilarious about the whole thing is, you know, they're there to talk about the Ukraine war and Putin says, yeah, I'll get to your question.
00:30:51.000Let me give you the history of how Russia was formed, going back to 900.
00:31:36.000He also was just kind of meandering through Russian history at times, which found to be rather unpersuasive, not exactly that interesting to me.
00:31:46.000Other parts I thought he was making some really good points.
00:31:49.000I thought that Putin was making some points where he was basically saying, why is the West continually lied about who gets NATO membership and NATO expansion?
00:32:00.000You guys said that NATO wasn't going to expand, and yet then you have Lady Graham coming and saying, we're going to play offense against Moscow.
00:32:06.000We're going to play offense against Moscow.
00:32:09.000The Russian hawks are losing because they are not on the side of truth.
00:32:15.000Obsessively hating Vladimir Putin and Russia.
00:32:22.000Believing that that is the greatest threat to American national security, where obviously the Chinese Communist Party or the Mexican drug cartels are far more important, lethal towards the future of America.
00:32:37.000And Putin has said he wouldn't invade Poland.
00:32:54.000We're spending hundreds of billions of dollars and we're involved right now.
00:32:58.000What I analyzed from the Tucker-Putin interview is Putin just kind of, and Tucker isolated on this and Putin brushed it away, is he did feel a little bitter.
00:33:10.000And I thought that was really smart when Tucker said that.
00:33:12.000Putin is someone who thought he could get along with the West, who was lied to by Bill Clinton, lied to by George W. Bush.
00:33:19.000Putin seems very obsessed with old grievances, literally 300-year-old ones.
00:33:26.000But does anybody who saw the Putin-Tucker interview walk away thinking that that's the biggest threat to the American homeland?
00:33:36.000He's like a lying gangster, basically where we're at.
00:33:41.000He's a guy that's like obsessed with controlling Ukraine as part of Russia.
00:33:47.000He believes that the fall of the USSR was one of the greatest failures in Russian history.
00:33:55.000Part of the interview was Putin saying, like, hey, the fall of the USSR could have and should have been the beginning of a new normal in foreign alignments, but the war machine of Langley, Virginia, and Northrop Grumman and Lockheed Martin and Boeing and Raytheon, they don't want peace.
00:34:11.000The American government does not want peace.
00:34:15.000The American government wants war and strife.
00:34:18.000They get powerful and wealthy from war.
00:34:22.000NATO was allegedly established to fight the USSR.
00:34:25.000So when the USSR fell, why didn't we let Russia participate with NATO or just get rid of NATO altogether?
00:34:31.000Donald Trump said some stuff recently about NATO that are making people go nuts.