 Let's dive into some bad news and some good news, neither of which we hear about in establishment outlets. First, for the bad news, I like to end on an up note. So let's start with the bad news. The bad news comes via our friend David Stockman. And in fact, what I'm going to say to you today revolves around two books I have been reading over the past week or so. And the first one is David Stockman's book, Trumped, subtitled A Nation on the Brink of Ruin and How to Bring it Back. Now Stockman is not saying that Donald Trump is extremely knowledgeable about business cycle theory or interest rates or the Federal Reserve. His point of his book is not really about Trump at all. It really is about the condition the country is in. Such that people would think that the source of their problems is trade agreements and the market and whatever. He does believe that there's a greater chance under Trump that some of the dead would might get cleared out, but he says, I realize that's a pretty thin read to rest my confidence on. But that is an incredibly good book, and I strongly urge you to read it. And you'll say to yourself, I'm just going to read one chapter and then I'm going to do something else. And you'll be astonished. You're reading a book on the U.S. economy and you're just reading chapter after chapter. It's that good. What Stockman is going to say is, it's true that we have heard that there are many indicators of a healthy economy right now. Why? Look at the figures for unemployment and look at the stock market. Only an incorrigible perma-bear could have any concerns about the conditions of the economy today. As yet, let's consider how sluggish the so-called recovery has been. In year eight, we still have 45 million people on food stamps. Median real household income is 5% lower than it was in 2007. And this to me is the most revealing statistic of all. There are 71.3 million full-time, full-pay breadwinner jobs right now. And he's thinking of a breadwinner job as being a job that brings in at least $50,000 a year and it's full-time and it's not just, it's not a restaurant job or a bartender job, but it's a full-pay $50,000 a year at least job, sustainable. 71.3 million breadwinner jobs right now. That is nearly 1.4 million fewer breadwinner jobs than there were when Bill Clinton left office. So they've had 16 years to try out their monetary-central planning theories and that's what they have to show for it. We've had 93 straight months of virtually zero interest rates. We've seen the balance sheet at the Fed expand by $3.5 trillion. That amounts to four times more than all the bond buying that occurred in the entire first 94 years of the existence of the Fed. So it's not for lack of trying. The theory behind cheap interest rates is they're supposed to work like this. The cheap interest rates induce households to take on more debt. And when they take on this additional debt, this borrowing that they've done allows them to supplement the consumption that they can do out of their current income. Because now they have a loan, they can also spend that money. So they borrow and they spend and the spending stimulates aggregate demand. It stimulates, creates rising demand. That in turn leads to more production, which leads to more jobs, which leads to still more income and more spending keeps the cycle going. Now it turns out this is all preposterous nonsense and it becomes clear that this is so. These households reach what Stockman calls peak debt. Households get to the point they can't borrow anymore. They are tapped out. They are leveraged up as much as their income will allow. So now when the Fed keeps trying to do it, you see basically no change in household balance sheets. The whole thing has been a very, very long one-shot parlor trick. That what you are doing is borrowing economic activity from the future and enjoying it today. But when you reach that future and people are tapped out in terms of debt, the parlor trick doesn't work anymore. It has been expended. After seven years of massive monetary stimulus, the domestic production of consumption goods is still 9.1 percent below where it was before the crisis. And it's at a level, same level it was at in 1999. Now remember the whole point of the low interest rate is to stimulate all this consumption. And yet we have far fewer consumption, we have far less consumption, production of consumption goods going on. So it goes to show that the wheels are coming off this thing, in other words, it is not doing what it's supposed to do. So where does all the credit go? Where does all this additional credit go if it's not being borrowed by households and spent allegedly to goose aggregate demand? Where is it going? Well, as Stockman puts it, central bank credit flowed entirely into speculative carry trades, structured finance and corporate financial engineering, and it massively inflated asset values. That's where it is. So if you're wondering why at least some of the people in the 1 percent are doing as well as they are, it's because all this money and credit that was supposed to goose everybody is just gooseing them. Needless to say, the Fed does not come up when talking about the 1 percent or ill-gotten gains or frankly even international trade in the position of American workers. Stockman has a chapter arguing that extremely bad monetary policy rather than trade agreements themselves are responsible for in effect pricing Americans out of jobs and sending those jobs abroad. But since no one thinks to look at the Fed because the Fed has been kept off the table practically since its existence, it continues to get away with this even though it has engaged in the most appalling and preposterous series of monetary policy moves ever conceived. Never before, and again I quote Stockman, in the history of the world prior to 1995 had any central bank decreed that overnight money shall be indefinitely free to carry trade gamblers, nor had any monetary authority commanded that the hard-earned wealth of liquid savers be chronically confiscated by negative returns after inflation and taxes. Well what about inflation, hasn't it been low, isn't the consumer price index quite low? Well yes and no, the consumer price index has been quite low. However, Stockman urges us to consider what he calls the flyover CPI, that is the actual expenses incurred by ordinary people who happen to live between the two coasts. How do we figure this? He says well we weigh in more heavily the four horsemen, which are food, energy, housing and medical, and we get more accurate in reckoning medical and housing costs. And what we find is that those things since Alan Greenspan took the helm at the Fed in 1987 have risen 3.1 percent a year which is an enormous increase, especially cumulative over time. Just looking at the turn of the century to today, what had been $68,000 in today's purchasing power is now worth $55,000. Most people in flyover America can't afford that kind of erosion. Now what would we have had in the absence of this deliberate Fed policy? We would have had higher interest rates. We would have had price deflation. Prices would have gone down and for heaven's sake in the world of smartphones where we're incredibly productive because we can have a business meeting right on this phone. I can take care of things while I'm in the bathroom. I can do all kinds of productive work. Prices should be falling through the floor. Prices would have fallen. Nominal wage rates would have fallen not as fast and we would have had massive reinvestment in the nation's capital stock because we would also have had high savings rates. Well we look at what the Fed has to show for itself after all this. We have the breadwinner job statistic. We have the fact that when you actually look at a statistic that tells you about real people doing real work it shows an an anemic increase even though the American population, the adult population has gone up from 212 to 253 million labor hours in the non-farm economy since the year 2000 have gone up just 0.4% annually. That is one fifth of its rate in the previous 16 years. Meanwhile real capital consumption has risen by 53% over the last 16 years. Real net investment is down by 17%. We have reached peak debt conditions. When the Fed tries its old tricks they don't work. The money just cycles through Wall Street. It doesn't get out to the general public. They're not borrowing. What had been a fairly consistent 75 to 80% ratio household debt to income before 1980 by 2007 at the arrival of peak debt had reached 220%. It doesn't work anymore. The parlor game is over. Moreover what could zero cost overnight money be used for? Nobody uses zero cost overnight money to fund his inventory or equipment or receivables because you can't be sure that you could roll it over and then your business could be in complete turmoil if you can't meet the new interest payments. So nobody uses it. Consumers don't don't do that. It's used to fund speculative trades of Wall Street gamblers according to stock. So this is a pretty grim picture. But it's interesting to note that at the same time that if the Fed really is out of tricks sooner or later people are going to figure that out. Sooner or later there will be enough of us to get that message out. But that I think is a point that neither candidate is really understanding or willing to admit. And that's our theme today is what we don't hear from them. We certainly don't hear what I just told you. And we don't hear David Stockman being referenced by either one. He darn well should be. Now at the same time I told you I've been reading two books. Let me tell you the other book I've been reading. The other book I've been reading is a book by Kevin Kelly with the audacious title The Inevitable. I should have named some of my books that. Subtitle is understanding the 12 technological forces that will shape our future. Now I don't want to be one of these Pollyanna people who says technology will save us from the state and solve all our problems. But what I do want to suggest is that we are on the cusp of something very significant in which the private sector is going to outpace the ability of the state to act as a predator on us. So when we think back to the emergence of the Internet, it's interesting to note that at the beginning the commercial potential of the Internet was not appreciated and was actually disparaged. It was thought that to take this glorious and beautiful thing and start putting the electronic equivalent of billboards on it would be to soil it. So in other words, at the beginning people didn't actually think buying and selling would take place over the Internet. That's how much people didn't get what this thing was and what its potential was. Or they looked at it and they thought, wow, a lot of content can be transmitted through this thing. Where are we going to come up with all this content? We're going to need thousands of channels and they didn't realize we'll produce the content. Never even dawn on them. At the offices of ABC, they thought we're going to have to come up with like 5,000 channels for these couch potatoes to sit and watch. Never dawn on them. We'll create the channels and they'll be much better than your crummy crap that nobody wants to watch. Likewise, for we look at eBay, Craigslist, many of these other places, you get billions of transactions per year and users are doing most of the work. They photograph the item, they catalog it, they do their own, they post, they do their own marketing and they police themselves by and large. They police themselves. Facebook does not have to say, how are we going to generate enough videos and articles to keep people entertained? They produce no content whatsoever. We produce it. No one predicted that. No one predicted that. Or the Twitter or YouTube or Instagram, nobody predicted that. Initially, the thought was, where are we going to come up with all the content we can put on this thing? So it goes to show something just happened that nobody, it wasn't just the Internet itself, it was the human response to it. No one anticipated. Now, as we look at things that impress us technologically, we also have a certain trepidation because we're told that robots are going to take our jobs. Yeah, the Internet is wonderful, but robots, I don't want those. Robots are going to take my job. And I don't mean to make light of that because robots are going to take a lot of jobs. They're going to take a lot of blue collar jobs and they're going to take white collar jobs you don't think they can take. Already, there are robots that can dispense pills at pharmacies. And that's already being done out in California. They have not made one mistake. Can't say that about human pharmacists who now are free to be up at the counter talking to you while the robot is filling your prescription. It's incredible what they can do and what they will be able to do. To me, just the fact that one of Google's newest computers can actually caption a photo perfectly. It can figure out what's happening in the photo and give you a perfect caption. How about that? So just when you think, ain't no machine can do my job? Maybe it can. What kind of world is this that we're moving into? I understand the fear about that. But at the same time, let's think about, first of all, what happened in the past? In the past, most people worked on farms. And that was the case of 200 years ago. And automation pretty much took away 99% of those jobs, literally 99%. They're gone. People wound up with brand new jobs they could never have anticipated. And in pursuing those jobs, we might even argue we became more human because we diversified because we found a niche for ourselves that was unique to us. And we begin as automation is going to make it possible for human beings to do work that is more fulfilling. How is that? Well, first, let's think about the kinds of jobs that automation and robots do that we couldn't do even if we tried, so that first we'll have some kind of appreciation for them. Making a computer chip, there's nobody in this room who could do that. We don't have the precision and the control to do that. So we couldn't even make a single computer chip ourselves. We can't inspect every square millimeter of a CAT scan to look for cancer cells. These are all the points that Kevin Kelly is trying to make to us. We can't inflate molten glass into the shape of a bottle. So there are many tasks that are done by robots through automation that are tasks we physically could not do at all and would not get done otherwise. But also automation creates jobs we didn't even know we wanted done. And Kelly gives this example. He says before we invented automobiles air conditioning, flat screen video displays and animated cartoons, no one living in ancient Rome wished he could watch pictures move while riding to Athens in climate controlled comfort. But once it becomes easy, once our basic work can be done easily through automation, it'll be relatively easy for us to be fed and clothed and sheltered and have our basic needs met, then we can really ask the question, why are we here? What are human beings for? What is the point of my life? And again, from Kelly, industrialization did more than extend the average human lifespan. It led more of us to decide that human beings were meant to be ballerinas, full time musicians, mathematicians, athletes, fashion designers, yoga masters, fan fiction authors, and folks with one of a kind titles on their business cards. Same with automation today, we will look back and be ashamed that human beings ever had to do some of the jobs they do today. Now, here's something controversial. I was watching an interview that Kevin Kelly did. I want to get him on my show, but he's not doing many more book promotion till the spring. So I'm going to nab him then. But he says, you know, when you think about it, there are there's a sense in which we want jobs in which productivity is not the most important thing. Now we think about productivity and efficiency. Robots have that all over us. Okay. When it comes to who can do this thing faster, they can do it faster. So let them do jobs like that. That it's just a matter of, well, so to speak, robotically doing the same thing over and over and over and over again as fast as possible. We can't compete there. Why bother? Where can we compete? Well, we can compete in all the areas that are gloriously inefficient. Science is gloriously inefficient because of all the failures that are involved along the way. Same thing with innovation. Same thing with any kind of art. It is grotesquely inefficient from the point of view of the running of a pin factory. Being creative is inefficient because you go down a lot of dead ends. Healthcare and nursing, these things revolve around relationships and human experiences. They're not about efficiency. So let efficiency go to the robots. We'll take the things that aren't so focused on efficiency and productivity where we excel. And we'll focus on relationships, creativity, human contact, things that make us human. We focus on those things. Now with extraordinary efficiency comes fantastic abundance. And with fantastic abundance comes greater purchasing power because of the pushing down on prices through competition. So even if we earn less in nominal terms, our paychecks will stretch much farther. That's how people became wealthy during and after the Industrial Revolution. It was that we could suddenly produce so many more goods that competitive pressures put downward pressure on their prices. And our paychecks stretch much farther. That will continue to be the case. And so even if I have a job that pays me relatively little, in terms of how many of the incredibly abundant goods I'll be able to acquire, it'll be a salary the likes of which I can hardly imagine. Now I can anticipate one objection. This is an objection I'll hear from leftists and also from some traditionalist conservatives. They'll sniff that consumption and greater material abundance, these don't improve us spiritually. These are actually impoverishing for us. Well, for one thing, there's actually much more materialism under socialism. When you're barely scraping enough together to survive, you are obsessed with material things. But secondly, let's consider what we have been allowed to do by these forces. First, by industrialization alone. I've shared this before, but on my show I had Deirdre McCloskey once and she pointed out that in Burgundy, as recently as the 1840s, the men who worked the vineyards when after the crop was in in the fall, they would go to bed and they would sleep huddled together. And they basically hibernated like that for months because they couldn't afford the heat otherwise or the food they would need to eat if they were expending energy by walking around. Now that is inhuman. And they don't have to live that way anymore. Because they have these terrible material things that are impoverishing them spiritually. The world average of in terms of daily income has gone from $3 a day a couple hundred years ago to $33 a day. And in the advanced countries to $100 a day. Yes, true. People can fritter that away on frivolous things, but there will always be frivolous people. Meanwhile, we have the leisure. Yes, we do. We do have the leisure to do things like participate in an American Kennel Club show or go to an antique show or a square dancing convention or be a bird watcher or or or host a book club in your home. Things that would have been unthinkable to anyone. Just a few hundred years ago. Unthinkable. The material liberation has liberated our spirits and has allowed us to live more fulfilling lives than before. So I don't want to hear the money can't give you happiness thing. I don't want to hear that. This doesn't make you happy that people are free to do these things and pursue things they love. That doesn't make you happy then there ain't no satisfaction you is my answer. And finally look at what we are on the verge of acquiring. A universal library with all the knowledge in the world in one place. Kelly has a section on this. Imagine having every book in every language available to everyone everywhere. Ideally it would contain even every article ever written. Every painting every photograph every film every piece of music all radio and television broadcasts. Now the numbers are huge. There have been three hundred ten million books published. One point four billion articles 180 million songs and so on. Turns out this could be compressed and stored on 50 petabyte discs. Ten years ago to store all this knowledge would have taken a huge building. Today would fit in your bedroom. And in the future it will fit on your phone. But it's not just having access to all this. It's the weaving and the interconnectedness that will come about when all of us interact with all this material. Kelly writes human readers can reliably weave together the pages of old books one hyperlink at a time. Those with a passion for a special subject obscure author or favorite book will over time link up its important parts. Multiply that simple generous act by millions of readers and the universal library can be integrated in full by fans for fans. Imagine you might even be able to subscribe to the marginalia of someone you respect and see could you imagine if Murray Rothbard were alive today you could subscribe to his book marginalia and have his marginalia appear in your book. We are on the eve of an extraordinary transformation whose scope I have barely begun to describe in terms of what it will mean for the quality of our lives. The ingenuity of capitalism is about to overtake the bureaucrats and the monetary central planners. So am I bearish or bullish? Well like Ed Stringham I am bearish on the state and bullish on society. Thank you.