John Lonsky, CEO of The Lonskynky Group, joins us to discuss the Dow hitting a new low and the impact of the Powell Powell Powell announcement on the Dow and the economy. John also talks about why the economy is so fragile and why he thinks a crash is inevitable.
00:15:59.580I have to assume for December we're going to see that trend continue upwards maybe 2.9 to 3.
00:16:06.980What happened in that period of August and September that we saw that little drop off in inflation that now looks like it's back on a trajectory on its way back up?
00:16:16.020After Kamala Harris and Joe Biden told us in October and November, inflation's under control.
00:16:22.140I don't know about you, John, but when I pick up my insurance bills and whatnot, you know, when I go to the grocery store, I see absolutely no evidence of a declining rate of inflation.
00:16:34.100I happen to think that service sector inflation is taking off much more so than as it's measured by the Bureau of Labor Statistics, by the federal government.
00:16:46.540I don't believe any of this at all, quite frankly.
00:16:57.140And so I think, you know, they maybe tried to pull a stunt on the back of what had been declining gasoline prices, but that now has, you know, gasoline prices have bottomed out.
00:17:11.120But worse yet, it seems as though food prices are beginning to lift off one more time.
00:17:19.120Just in time for the holiday season when Americans seemingly have to go shopping for their families and shopping to celebrate the holidays.
00:17:26.420And I hear so many complaints, you know, for families that have younger children above these steep price hikes for toys this Christmas season.
00:18:43.200This man, it seems, is manipulating the markets.
00:18:45.760How does President Trump allow him to stay in his job knowing this man's a politician?
00:18:52.480Well, I think Trump lacks, to the best of my knowledge, the constitutional authority to fire Jerome Powell.
00:19:00.920But you say, yeah, Jerome Powell is not an economist.
00:19:04.100And by the way, the last time we had a lawyer or a non-economist like Powell had the Federal Reserve was under Jimmy Carter.
00:19:12.380The guy's name was G. William Miller and inflation went through the roof and, you know, cost Carter any chance at being reelected as president back in the election of 1980.
00:19:26.520So it's sort of like history is repeating itself.
00:19:30.800You know, Powell, he's a political animal.
00:19:35.440You mentioned the Inflation Reduction Act that had the effect of swelling the budget deficit and actually should have been called the Inflation Preservation Act because it extended the spout of rapid price inflation and elevated prices.
00:19:51.500When he was Fed chairman, did Jerome Powell ever question the wisdom of this Inflation Reduction Act that added to government spending, government subsidies?
00:20:33.780You had Janet Yellen, who I think is, I thought at least, was a hair smarter than Powell.
00:20:39.120It seems that she's completely either lost her mind or I don't know what she's up to.
00:20:42.500But she was sitting there cheering this thing on and she knows damn well that everything her party was pushing was not good for the economy and not good for Americans, John.
00:20:52.600Yeah, they were not being honest about the economic cost of this reduction in carbon emissions.
00:21:00.140Believe me, if they followed through on the plan proposed by John Kerry and company, the cost would have been humongous.
00:21:08.660The cost would have led to higher inflation and slower growth and the loss of tens of thousands, if not more, in terms of jobs.
00:21:17.220If you want to do something like this, at least be honest with people.
00:21:22.920Don't try to sugarcoat a change in the functioning of the economy that in all reality would prove to be very, very costly.
00:21:33.440And I think the American people caught on to this.
00:21:36.060They realized that this was a giant scam, if you like.
00:21:39.880I want to I want to turn to something, too.
00:21:43.000It's another issue and it's coupled with another issue.
00:21:46.440And we'll try not to play politics on it because you are an economist.
00:21:50.640The fact that U.S. real wages, if you look at what they are continuously on a decline from April of 2021 to flat now, I mean, completely flat.
00:22:12.720People aren't making more money to adjust for inflation and to adjust for inflation.
00:22:17.200Right now, you need to make it get a considerably high promotion or raise.
00:22:22.400And these companies are just not doing it.
00:22:24.620But it seems like companies now are making more money than they've ever made before.
00:22:28.420A lot of companies exploited covid raised prices when they didn't need to be raised as high as they were.
00:22:34.740Hopefully these people pay the price for what they've done.
00:22:37.240But you couple that now with illegal immigration and the illegals that are taking jobs in this country.
00:22:42.820And then you couple that, John, with what President Trump wants to do when it comes to tariffs in this country and adding tariffs onto countries like Mexico, countries like Canada, countries like China, who have been eating our lunch for the last four years now.
00:23:20.000They're hiring these illegals to come work construction jobs or restaurant jobs.
00:23:23.460They're paying them, you know, half the wages of what an American or illegal citizen would be making.
00:23:28.340And they're driving wages down for for folks who could have those jobs.
00:23:32.400What do you see coming January now, January 20th, as it comes to illegal immigration, the deportations and what it will mean for real wages for American people?
00:23:44.000Hey, wage depression by illegal immigrants helps to explain why the Republicans did so much better with your lower income voter in the United States.
00:24:24.040And what I find to be funny about this is the fact that you have these proponents of a sanctuary city, these well-off liberals, you know, from towns like around New York City, from Rye, Chappaqua, Bronxville, Scarsdale, whatever.
00:24:42.760You've got to go ahead and block these people and take care of them.
00:24:45.440But I'll be damned if these limousine liberals want to have these illegal immigrants housed in their own communities.
00:24:53.900I'll be damned if they want to have their kids going to their schools that they pay such high taxes for in order to fund these schools.
00:25:02.360It's it's nonsensical. The hypocrisy is galling.
00:25:05.960So you've got to sympathize for those people getting hurt by this.
00:25:09.600And you really have to get angry at the people who push for these types of policies, who have this way of making sure that they're insulated from paying the cost of such policies.
00:25:23.680You know, it's funny you brought that up about the hypocrisy.
00:25:26.340Well, you remember what happened when I think it was DeSantis or Abbott flew him up to Martha's Vineyard.
00:25:31.220They couldn't get them out of there fast enough.
00:27:22.940If you do this coupled with penalizing those folks who hire them and you get this border fixed, I guarantee you, you could fix this migrant issue in probably less than two years that President Trump has with this, at least Republican Congress.
00:27:49.140And what we should, you know, the State Department should wake up to their part of the problem and that they should go to these countries where the illegal immigrants are coming from and tell them it's time to shape up.
00:28:00.780It's time to get rid of their silly socialist or Marxist doctrines that's restraining growth in all these different economies.
00:28:08.640And also they have to push a lot of the corrupt officials, government officials from these Latin American economies and elsewhere out of office, try to clean up the act overseas.
00:28:20.000And I'm going to go take I'm going to go a stretch further.
00:28:23.380I'm going to go across the Pacific Ocean and I'm going to make a forecast.
00:28:27.800And that is that as long as China remains allied with Russia and Iran and North Korea, the Chinese export engine will never roar the way it did in the past.
00:28:46.740Well, the Chinese leadership has made a humongous, huge mistake that they need to correct if they want to have the Chinese economy return to the type of growth that provides the Chinese youth with the opportunity of finding a job.
00:29:03.500I think the Chinese youth unemployment right now is above 25 percent.
00:29:07.980I've been told that youth unemployment in China is so bad that Chinese young people are leaving the cities of China and moving to rural areas to take up a newfound occupation as a farmer.
00:29:25.560You know, it's kind of crazy because I've been on the show and Lou's been on the show and Lou's been doing it for 30 years.
00:29:32.420Criticizing the Chinese as masters of deception because everything they do is a lie.
00:29:36.880I mean, the Chinese people individually, I'm saying the CCP, the Chinese government, everything that they tell us is a lie.
00:29:42.920They told us 100000 people died in China from covid.
00:29:45.840OK, you know, I got a million dollars for you if you can prove that to be true.
00:29:50.180But it's it's now become the American government.
00:29:53.200This has become the same exact way when it comes to lying.
00:29:56.680I want to take one more quick break here.
00:29:58.320We're coming back with John Lonsky is the CEO of the Lonsky Group.
00:30:00.840And I want to go a little bit further into these tariffs that President Trump plans to to enact.
00:30:06.880On, like I said, Canada, Mexico and China, just being the three of the three main ones who have been eating our lunch for the last four years and what it means for this economy.
00:30:16.120I also want to take up that nearly 1500 page omnibus bill that Mike Johnson wants to give us all as a Christmas gift.
00:31:48.820It's going to kill the American economy.
00:31:50.800We're not going to be able to afford anything.
00:31:52.940Well, if I look at it the way it is right now, things are pretty unaffordable.
00:31:58.020If you look at the amount of debt people are in and the price of things and the inflation that's hit them,
00:32:04.100how much worse can it possibly get under these tariffs that they say is going to get so bad, John?
00:32:07.800Well, you know, let's not overlook the fact that the imposition of tariffs on exports from Canada, Mexico and China are contingent on these countries doing something to help stop the inflow of illegal immigrants into the United States.
00:32:30.620Whether or not these tariffs are going to be imposed depends upon the willingness of these three countries to halt the inflow of fentanyl that has contributed to so many deaths in the U.S.,
00:32:45.100so many so much heartache, my goodness, and anguish and sad.
00:32:48.640So Trump is using the threat of tariffs as a negotiating tool, a negotiating chip.
00:32:58.340And the reality is that because we have such a large consumer-driven economy, I mean, he has the balance of power.
00:33:09.400He has a strong bargaining position dealing with Canada, Mexico and China, I think, on these issues.
00:33:16.600And I'm pretty sure, given the sad state of affairs as far as China is concerned, the underperformance of the economies of Canada and Mexico,
00:33:26.460people don't know this, but I think the Canadian economy is growing about 1.2 percent versus we have nearly 3 percent growth in the United States.
00:33:35.740Likewise, in Mexico, a relatively poor country, you're getting economic growth of less than 2 percent.
00:33:42.120These countries are in a weak position vis-a-vis the United States, and perhaps they have no choice but to agree to do more,
00:33:52.060to halt the inflow of illegal immigrants and the inflow of fentanyl into the United States.
00:33:58.680And this would be, you know, a feather in Trump's cap if he manages to successfully get what he wants.
00:34:06.120You know, if you look at, John, if you look at America's imports, among the top three things that they're importing are computer goods.
00:34:16.520You know, Tim Cook sending his Apple computers over here.
00:34:19.340And the reason I bring this up, I should preface it with this, is, you know, there's some on the left who say,
00:34:24.140OK, well, Trump, it's almost like they're playing for the other side, which drives me nuts, John.
00:34:28.640You see these folks on Twitter, and hopefully you don't spend as much time on Twitter as I do because it makes me angry.
00:34:33.020But you see these folks on Twitter who are, like, rooting against America.
00:34:37.300You know, oh, Trump puts tariffs on them.
00:34:39.400They're going to get us with tariffs, you know.
00:34:40.980So if you look at among the top three things that America imports cost-wise, luxury vehicles from Germany.
00:35:03.400I guess, Tim, you're going to have to find a place out of China to start making your computers.
00:35:07.880And if you want to keep selling computers, because I'd have to assume America is probably the number one consumer of Apple products in the world.
00:35:14.860OK, Tim Cook, maybe it's time for you to learn your lesson and go start making them somewhere else.
00:35:19.340I understand that there's certain things you can't make in America.
00:35:46.540I mean, my goodness, you could go ahead and help bring inflation down pretty quickly if the federal government, instead of discouraging drilling for oil and natural gas, tries to encourage the production of oil and natural gas.
00:36:03.140That's just another example where the Democratic Party failed to make the American people understand just how very costly this pursuit of zero carbon emissions is.
00:36:17.780Do you really want to go down that path?
00:36:20.120Well, you know, you have to be willing to pay the cost.
00:36:23.100And as you hinted at, these costs are going to be borne unequally.
00:36:29.240People with a lot of money, upper income Americans, are not going to feel the same amount of economic pain as middle income and lower income Americans will if you follow through with further reductions in the ability of the United States to drill for oil and natural gas.
00:36:49.140John, I got another thing we got to talk about because it's just happening this week as if the not so bright have gotten dimmer out in California.
00:36:58.360They just approved the ban of gas powered cars to sell the gas to sell gas powered cars by 2035.
00:37:07.200I mean, you see what happened in this election with regard to New York.
00:37:12.460President Trump getting a million more votes in New York this time than he did last time.
00:37:17.900President Trump won Beverly Hills County, John, the probably most liberal place in America, where if you walk down the street and you're wearing one of these hats, it's over for you.
00:37:28.580President Trump winning Beverly Hills, California for the first time in a very long time.
00:37:34.740Do these people not read the writing on the wall, John?
00:37:38.040With this last election, you want to go ahead now and ban gas cars because everyone could go out and afford to go buy yourself a brand new electric vehicle.
00:37:47.900Yeah, you have to have the charging stations and whatnot.
00:37:50.960You have to have the electric power generation capacity to provide the power so you could use electric cars.
00:38:00.160Because on top of that, you know, talking about electric generation capacity, let's not forget about the demands now being imposed on power generation by the development of artificial intelligence.
00:38:13.640My goodness, that's supposedly going to soak up, I don't know, billions of kilowatts in order to reach its full potential.
00:38:24.260So, but where's the electric power going to come from?
00:38:29.120It's going to come from natural gas powered plants, maybe a few oil powered plants and perhaps nuclear plants.
00:38:36.600But all of a sudden, of course, these people that were so opposed to nuclear energy are now very much in favor of it so that they can get full use of artificial intelligence.
00:38:47.720And perhaps at the same time, have enough power left over for electric vehicles and you need a transmission facilities.
00:38:56.060And so many communities don't want these new power lines going through their community.
00:39:01.740We go on and on with all of the problems that these grandiose plans and goals of the Democratic Party present to the United States.
00:39:12.720Yeah. You know, the other thing people don't talk about it, I talk about it often on the shows, where do you dispose of the batteries, John?
00:39:19.360Where do you if you care about the environment so much?
00:39:22.400If you're a simple engineer, it doesn't take an engineer to figure it out.
00:39:26.760If you're a simple engineer as an American folk, where do you dispose of these batteries, these lithium ion batteries that if catch fire, these things explode?
00:39:35.200Where do you dispose of them if you care so much about this environment?
00:39:37.560Well, you're going to put them in the same place where you put the spec uranium fuel rods, I guess, bury them in some mountain in Nevada.
00:40:23.980People will learn their lesson and try to avoid areas that are susceptible to natural disasters.
00:40:30.880I mean, to be quite frank, if you want to get rid of fossil fuels, the most efficient way of doing so is by increasing the federal excise taxes on fossil fuels.
00:40:43.360But believe me, no politician is willing to propose to do that if they have any hope of getting reelected.
00:41:06.540You're an economist and you understand it.
00:41:08.920And, you know, I think a lot of people on the show, if not the whole entire audience, understands what's going on, what the government's trying to do to us.
00:41:16.120I want to talk about something else that the government's trying to do to us, and it's trying to pass a fifteen hundred page omnibus before Christmas, just as they like to do every single year.
00:41:29.200Passing of Mike Johnson's woke policies, whatever he wants.
00:41:33.680Also, we mentioned real wages stagnant.
00:41:36.680John Congress, those members of Congress somehow are going to be voting for a 20 percent raise for themselves, a little bit higher than inflation.
00:41:44.880So they're you know, they're getting the long end of the stick.
00:41:48.700They're going to be making over two hundred thousand dollars a year, almost three times more than the average household median income in America.
00:42:08.580You know, you're running a deficit of over six percent of GDP.
00:42:11.860Historically, you don't get a budget deficit above six percent of GDP unless you are in a recession, unless you have high unemployment.
00:42:21.360But by the way, today we have a near full employment economy.
00:42:25.020And nevertheless, we still run this huge federal budget deficit.
00:42:28.960And I guess that's one of the reasons why you should not be confident about disinflation becoming well established in 2025.
00:42:39.900OK, so the people in Washington, let them have their last fling.
00:42:45.220This is it, because come inauguration day around January 20th, things will change dramatically, I believe.
00:42:53.760And it will be following the inauguration, a time of some significant belt tightening in D.C., a time of material reductions and federal spending that are so very important.
00:43:08.940If we are going to get rid of this inflation problem, if we're going to get interest rates and mortgage yields back to where they were prior to COVID, say, in 2019.
00:43:21.020We haven't had a budget passed in, I think, over 20 years, maybe more.
00:43:25.000I don't understand why the Republicans are so feckless in the sense, shut the government down.
00:43:34.880Let the constituents call these members of Congress, the folks on this show, probably we give out the number every single day, who call these folks and tell them what they want.
00:43:58.280Everyone knows what happens when you default on something, you lose it.
00:44:01.700What's that going to do to American currency when eventually one day we default on it because we can't simply keep printing money anymore and people don't respect the dollar anymore because it's worth absolutely nothing because these politicians decided to run our debt up.
00:44:16.920And it's probably going to be more than that one day, hopefully not in my lifetime, but the way things are going, it's looking awfully like that.
00:44:24.040Why don't the Republicans say, OK, that's fine.
00:45:58.720We spend a huge amount of money on health care.
00:46:02.540And yet we find that this is a relatively unhealthy population in the United States compared to other advanced economies.
00:46:11.480There's so much that needs to be done in D.C.
00:46:14.160And, you know, I would say this is going to be the last gasp for those big spenders in Washington, that everything should be changing after Inauguration Day.
00:46:26.860And, you know, as I noted earlier, that these major changes, these pullbacks in government spending, unfortunately, are going to entail some pain.
00:46:37.460It seems President Trump is literally the only man, not in D.C. yet, but who's been in D.C., who has the gut to go ahead and say, shut it down.
00:46:46.640He famously told Nancy Pelosi and Chuck Schumer, which they paraded, shut the thing down.
00:46:53.600He's the only man, I think, probably that I've ever seen in my lifetime who is trying to cut the national debt, who's trying to get a balanced budget through.
00:47:03.080If COVID didn't happen, his plans were to start paying down the national debt.
00:47:06.160It would have been the first time we've seen a president do it in how long, John?
00:47:09.340It seems that things are just things that are just common sense, aren't so common for these folks in D.C.
00:47:15.060And I don't know if it's on purpose, John, or if it's by design, but it doesn't seem like there's one person there.
00:47:20.920A lot of these guys come out, they'll go on Fox News, they'll go on CNN, they talk tough.
00:47:25.360But when push comes to shove, they go ahead and vote for that C.R., that continuing resolution, C.R. after C.R. after C.R.
00:47:32.760I don't think Mike Johnson's the man for the job.
00:47:34.900As we wrap up here, what's your thoughts on how we push forward into this new year?
00:47:39.160Do you think the Republicans grow a backbone and say enough's enough?