Roger Stone is joined by Barry Habib, CEO of MBS Highway, to discuss inflation, the stock market, and why the Federal Reserve should be doing more to help the economy. The Stone Zone is hosted by Roger Stone.
00:01:14.600He is the Chief Executive Officer of MBS Highway.
00:01:18.860He's an entrepreneur, but more specifically, he's widely recognized as one of the country's foremost experts on the housing market and mortgages.
00:01:28.880He founded and created the Certified Mortgage Advisory Certification, which is widely accepted as a standard within the mortgage industry.
00:01:38.940He's also a number one Amazon bestselling author for his book, Money in the Streets.
00:01:44.300And he is an outspoken critic of the Federal Reserve.
00:01:50.020When I want to know what's really going on in the economy, I turn to Barry Habib.
00:02:02.360So, Barry, the president's critics have been flipping out about the stock market as if the stock market is the best indicator of how the economy is doing and how the president's use of tariffs to try to get fairer, more equitable trade agreements with our trading partners is working.
00:02:26.860I'm not sure the stock market is the best indicator.
00:02:29.800In fact, I saw Americans got much relief from inflation.
00:02:34.260The Consumer Price Index declined to 2.8 last month after reaching a high of three points in January.
00:02:43.520That follows five consecutive monthly spikes.
00:02:46.840Egg prices are down, going from $8 per dozen to $5.50 a dozen.
00:03:00.540Tell us how the economy is doing from your point of view.
00:03:04.580And then I wanted to get into the inflation rate and how it's being calculated.
00:03:09.760So, Roger, great points on everything.
00:03:12.780And when I hear people talk about the stock market and this and that, let's remember, the stock market was at extraordinarily expensive levels, very, very high multiples.
00:03:23.480In fact, it was overpriced and it's healthy to have a correction.
00:03:26.940You know, a bunch of crybabies looking at the stock market never goes in a straight line.
00:03:31.220A 10% correction happens almost every year.
00:03:34.080You know, where were all these critics where under Joe Biden we had a 10% correction at the end of 2023?
00:03:39.800Was anybody saying, oh, my gosh, this is the president's fault?
00:03:42.320This happens with stock market corrections.
00:03:44.620They occur when the market gets ahead of itself.
00:04:53.880You've been very articulate on this point.
00:04:55.760I want to come back to inflation, though, and how the rate of inflation is calculated by the Fed.
00:05:01.540You wrote a very thoughtful letter to the president, which you shared with me and I shared with him, in which you raised this point regarding the Fed.
00:05:11.680They believe inflation is too high because their favorite measure of inflation, the core PCE, the personal consumption expenditure, sits at 2.6 percent, much higher than their 2 percent target.
00:05:56.220But the problem that we're looking at here is that we may very well be at 2 percent if we were using more real-time data.
00:06:03.520The problem is that the Fed is using numbers from the BLS or the BEA, and the way they aggregate the data is arcane.
00:06:11.500It's based on 40, 50 years ago, and they haven't changed the methodology.
00:06:15.460So what they do is, number one, think about the largest portion of the personal consumption expenditures, as well as the CPI, is something called shelter.
00:06:36.700But if you own a home, what they do is they ask you, if you would rent it, how much we'd rent it for.
00:06:41.740So obviously that has some potential biases because everybody thinks their home might be worth more than it is or might be rented for more than it's worth.
00:06:48.680But that aside, the problem that we have is when they're surveyed, it could be reflective of a lease that was signed 6, 8, 12 months earlier.
00:06:57.220So what if the market's changed in the last 6, 8, 12 months?
00:08:21.920And also, think about how much money the government saves because they spend so much in Social Security based upon cost-of-living adjustments that are tied to these flawed indices.
00:08:33.880During the most recent presidential campaign, I give Robert F. Kennedy Jr. credit for identifying a huge issue in the country, which is the lack of affordable housing.
00:08:45.060Whether it is buying a home or whether it is renting a roof over your head, it's just out of reach for many Americans.
00:08:53.660So what, in your opinion, is the solution to the affordable housing problem?
00:08:59.980Well, here's what it is in a nutshell.
00:09:02.480When you take a look at our demographics, and there's a saying, Roger, that you're probably familiar with called demographics is destiny.
00:11:54.880Back in August and September, we got to 6% and the housing market was vibrant.
00:11:59.000If we get just to 6% and we're at about 6 and 3 quarters, we just get about 3 quarters of a percent,
00:12:04.120you have a very functional, fluid, vibrant housing market.
00:12:07.740Yeah, I'm thinking back to the Reagan days.
00:12:10.020I remember the panic in the early days of his presidency within the first year when he cut taxes.
00:12:17.560I saw Robert Reich, who I actually went to high school with the other day, claiming falsely on X that deficits are massive deficit and inflation were caused by tax cuts.
00:12:29.920But, in fact, every president who has cut taxes, whether it is JFK, whether it is Ronald Reagan, whether it is Donald Trump, the country has experienced a sharp increase in revenues, when, in fact, it was spending and borrowing, but spending that caused our inflation problems.
00:12:51.460Once again, I think Robert Reich is wrong.
00:13:42.240This is like a bunch of spoiled brats that have been giving candy, candy, candy to shut them up, which makes them sick and worse, instead of an adult saying, hey, you're going to have to eat your vegetables, do the right thing, and then you will be long-living, healthy human beings.
00:13:56.040That's what the government is trying to do right now under an adult president in Donald Trump.
00:14:06.780That's what I like to call him, one of the country's foremost experts on both the housing and the mortgage market.
00:14:11.920And we'll be right back with more of Barry Habib in just a minute.
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00:16:48.200We're talking to Barry Habib, the chief executive officer of MBS Highway.
00:16:53.420Probably the country's foremost expert on the housing market and mortgages, but also a keen economic analyst in his own right.
00:17:03.300And we're talking about those lemmings who are running off the edge of the cliff watching the stock market as if that is the correct indicator of how the economy is doing.
00:17:14.300It was tickled me to see AOC in an interview this morning.
00:17:18.420I think it was on MSNBC talking about how strongly she opposes the coming cuts in Social Security and Medicare, which, of course, President Trump has said repeatedly he has no intention or plan to do.
00:17:32.780These people put up straw dogs and then try to knock them down.
00:17:42.360She memorizes these talking points exceedingly well.
00:17:46.140Barry, I'm kind of interested in the fact that gold is at an all-time high.
00:17:51.660And I was also interested to see that Elon Musk and his DOGE, the government efficiency panel that he heads, is demanding to inspect our gold reserve, not only at Fort Knox in Kentucky, but also at the New York Federal Reserve.
00:18:11.540Incredibly, no one has inspected our gold reserve since 1974.
00:18:17.340Now, this has led some to speculate that, well, maybe the gold is not there or maybe it's been dissipated in some way.
00:18:26.480Perhaps this is going to turn out to be like Geraldo Rivera and Al Capone's safe.
00:18:32.040Lots of hype, but then they popped it open and there was nothing there.
00:18:35.000On the other hand, since our dollar is no longer backed by gold, since we essentially have a fiat currency in which your paper dollar, the money in your wallet, is backed by the full faith and credit of the U.S. government, I'm not sure how it would impact the economy.
00:19:12.860Another one this morning that I saw was Jeffrey Sonnenfeld.
00:19:15.780Very childish, very unfair in his approach.
00:19:18.600Joe Kernan tried to put him in his place.
00:19:20.360But this is what you have, and people hear this stuff.
00:19:24.240With regards to gold, you know, Roger, you and I have talked about this.
00:19:28.100As you know, I was very, very bullish on gold back at about $2,500 and telling you that in previous shows that I thought that would do well.
00:19:35.740I think it's got a long way to go because, especially now, as we head into the season in India,
00:19:43.000where they are huge consumers during the month of May of gold, it probably will reach even further heights, maybe $3,100, $3,200 on gold.
00:19:52.660So, I think it has room to go, even in the short term.
00:20:05.660You remember, Roger, you and I talked about the value of gold.
00:20:09.000The storage of gold that the U.S. has is valued at, get ready for this, $29 an ounce, okay, which is what it was, you know, way, way, way, way back.
00:20:21.060However, we know it's now over $3,000 an ounce.
00:20:24.620If it were to be properly marketed, since we have over 800 metric tons, supposedly, of gold, that's the amount that's supposed to be there in our reserve,
00:20:32.820this would amount to about $900 billion that we would have of gold.
00:20:38.780If we don't have it, what happens to the economy?
00:20:42.720I don't know that anything really happens to the economy.
00:20:47.980Well, I think that they, at that point in time, would have to properly evaluate it.
00:20:51.840If they would have evaluated at $3,000 an ounce, it could be a world of crap that we'd be in.
00:20:58.060But since it's valued currently at $29 an ounce, if you only had half of what was there, let's say half the gold in Fort Knox is gone, okay, and at the New York, it's gone.
00:21:10.000You still could say we have $450 billion more than we thought we did because it's valued only at $29 an ounce.
00:21:17.660That's the one thing that very few people know and understand about the gold market, which even if this were to happen, I think that Elon Musk is right in wanting to investigate it.
00:21:57.480This would solve so many problems with taxation, with tax cheats, because you can't cheat a VAT tax.
00:22:04.720This is an area that we need to move towards because this would be something that would generate so much revenue.
00:22:10.780You could give people on the lower end, like a middle class would say, you know, we are fine with this because they can have virtually, I don't know, tens of thousands of dollars more to spend with.
00:22:26.700It would make buying a home so much easier, so much better.
00:22:30.580Think about the percentage of your income that is confiscated through income tax.
00:22:35.440Think about what could happen with that additional money as far as investment goes.