 So inflation reported higher than expectation today. I don't know why anybody was surprised given everything that's going on in the world, given the fact that the Fed has done nothing to take money in a sense out of the economy. Given supply chain problems, the shutdown in shutdowns, the continued shutdowns in China, the continuation rise in all prices, the threat of global food shortages will drive up food prices all over. It's surprising that it's only 8.6, it's surprising it's not going up even further. But this is the interesting thing about this number that is inflation. Larry Summers. Now I don't know if you guys know who Larry Summers is, but Larry Summers is a well-known economist. He's one of the real Keynesians, he's a neo-Keynesian, very well-known, very famous. He was the president of Harvard, you might recall that he was kind of a straight shooting president of Harvard General, he's a straight shooter. And he was fired for saying something about women and science and math. And he was fired from the presidency of Harvard University. Anyway, Larry Summers again, main line, I'd say main line, liberal kind of left of center, not wacky left, but left of center economist, disagreeing on a lot of things. He's been very good at inflation. He called, he said this was going to be, that the stimulus was going to be inflationary. About a year ago he has been complaining that the Fed is taking too long to react, that everybody's just sitting on their hands and are reacting. He ran a little experiment, which others have done before, where he took the way inflation was measured in the 1970s. And he adjusted today's inflation to the methodology of the 1970s. And what he discovered was, something that we've known for years now, is that if you do it that way, and whether it's justified to do it that way is a question, but if you do it that way, inflation is higher than it was at its peak in the 1970s. And remember, to get that inflation down, we had to do a number of different things. The Federal Reserve had to raise short-term interest rates to close to 20%, 20 to zero. The U.S. government had to reform taxes, the tax code, and actually increased revenue, which gives confidence to the bond market that debt would be repaid. And President Carter, particularly Carter and then Ronald Reagan had to deregulate the economy to spur supply. None of those things are happening. So, really, if you think about where we are in the inflationary cycle, we're much closer to the beginning of the 1970s than we are to the beginning of the 1980s, when inflation was finally crushed. The Fed responded moderately in the early 1970s. Government continued to spend like there was no tomorrow in the beginning of the 1970s. Everything about the 1970s was supportive of inflation, and it looks like the same thing is happening right now. So it's really, really, and of course, we get the oil shock, the oil embargo in 1973. It just lines up so perfectly with the early to mid-1970s. So inflation is going to be with us. Inflation is not actually going away. As I said in previous shows, we're likely to get stagflation. The market, which was expecting a slight decline in inflation for some bizarre reason, which I don't know, understand. Responded very strongly to the inflation number. I don't have the numbers exactly in front of me, but the NASDAQ went down more than 3%. The S&P and the Dow went down more than 2%. Bank stocks went down 3%. So the market responded very dramatically to it. Almost everybody last year and early this year called inflation transitory. Not just Janet Yellen. Janet Yellen famously said that. To Janet Yellen's credit, it's rare that I give Janet Yellen credit. Well, once in a while I do. She's actually admitted she made a mistake. Now, how many people ever admit to making a mistake in government? So she has actually admitted to making the mistake. So they have it. And it's not like, as I've said many, many times, it's not like if Trump had been elected, we wouldn't have inflation now. We would. He supported the stimulus package that Biden passed when Trump was gonna do the same thing. $2,000 checks to everybody. If you remember, Trump was committed to that. He complained it was actually too small. They gave too few checks to people. So this inflation is not solely Biden's. It's Trump Biden inflation. And Trump would have been even more adamant with regard to Powell not raising interest rates. So it's completely unclear to me that the government would have responded any differently if Trump had been elected president. But luckily he was not. Now, there is a confusion about inflation, which I always want to mention. It's always worth talking about every time inflation comes up. We talk about this, but it's really, really crucial. The real meaning of inflation is the increase in the money supply. The increase in the amount of money that is in the economy. And we've been living with inflation for a very long time by that measure, although the challenge with that measure on inflation is what do you mean by money? Is it M0, M1, M2? Is it just cash? Is it checking accounts? Is it saving accounts? Do government bonds count as money when interest rates are zero? There's an argument they should. What counts as money? So a big problem that we have in defining inflation is in defining money in a fiat economy, in a fiat economy. It is very, very, very difficult to actually define what monetary inflation is. So that's part of the problem in the monetary inflation definition. But the other problem is, okay, well, what is the way in which people feel the inflation? Well, the Austrian economists will tell you, inflation causes malinvestment. That is investment in the wrong products, in the wrong industries, in the wrong time frames. It distorts supply and demand. It distorts investment primarily, right? The consequence of that are higher prices, lack of inefficiency, the wrong products being produced, and slower economic growth, and the wrong kind of economic growth, accretion of bubbles, all of that stuff. None of which is actually directly felt by the public. You could argue that inflation causes asset prices to go up. So stock markets go up, real estate goes up, things like that. Again, it's going up. Regular people don't feel it as a problem. What do they feel? They feel it as a problem when prices are going up. That they feel, that hurts. Prices right now are going up. If you're buying the stuff that most Americans buy, food, gas, rent, prices are going up dramatically, eight to 10%. Now that's eight to 10% lowering of your standard of living, unless your income is going up 10% at the same time. If you've got a variable rate mortgage, you're suddenly going to have to pay a lot more on your mortgage. So your cost of living is going up dramatically. Now, wages are also going up quite fast. But are they keeping up with inflation? Not for everybody, particularly not for the poor. So inflation is something people actually feel, actually touches them. And that's why people use price inflation as a stand-in for inflation, even though the cause and the distortive effect of inflation, the cause is monetary inflation, the growth in the money supply. And the distortive impact of the growth of the monetary supply happens even when you don't get price inflation. So we've had inflation for the last 10 years. It's not been price inflation. It hasn't manifest itself in price of money. Now it has, partially because of the helicopter money, the Trump and Biden administration, the way they distribute the money to all of us to basically just consume. And what it results in is basically a lowering of the standard of living. And we're heading towards stagnation because it makes economic calculation very difficult for business people. It makes economic decision-making very difficult. It makes it very difficult to think and plan long term. And therefore, the economy is growing to a halt. So the specter of inflation is disastrous. And one of the reasons politicians for decades now have tried to really avoid inflation is because Americans were pissed off about inflation in the 1970s. They were pissed off. And there's a real political price to pay if you're going to inflict inflation on the American people. And then Moe Biba can pronounce thank you for the $20, because I like the economic and politics topics. Thank you. So inflation hit a high. Stocks are down. I think, and I've said this before, stocks still have a long way potentially to go down. This is not the end of it. They'll bump up. Now keep going down. The economy, there's nothing. There's no good news on the horizon. There's no deregulation on the horizon. There's probably no tax cuts on the horizon. There's no significant lowering of trade barriers on the horizon, which would be very good. I mean, Biden hasn't even repealed Trump's ridiculous increases in tariffs. There's no good news on the horizon. There's inflation. And inflation's bad news. And I don't see this Congress doing anything positive for the inflation. Then you're going to get, now it could be that if Republicans get elected, they could cut a deal with Biden to start cutting spending, to reducing the deficit. That would be good news for the market. And that would be good news for inflation, because part of inflation is expectation of inflation. And if that government debt actually starts going down, that's a good sign. But I don't think it'll go down, because I don't think they can get anywhere close to a surplus. But at least they can stop the ever-growing acceleration of government debt in this country. Hard to tell what's going to happen at any particular price. I don't know. I don't have any insight into how much drilling is going on right now. Not much from what I understand because of ESG and because of the concerns that people in the oil industry have that they drill today, but then they're going to be shut down tomorrow. It's not clear what the Saudis are doing exactly, and whether they'll increase production or not increase production. It's not clear if the US is going to cut a deal with Iran in order to get more oil into the market and let them off the hook in terms of sanctions. So there's just a lot going on in terms of the oil markets to say that one particular outcome is likely to happen versus any other outcomes. So there's always challenges with refining capacity. And part of the problem right now with refining capacity is that some of the refiners, and again, I mentioned this in an earlier show, some of the refiners in Louisiana, I think, specialize in refining heavy oil. Well, the heavy oil that they were refining was heavy oil that they were importing from Russia. This is why we're importing oil from Russia. US oil is not that heavy. It's not light like the Saudi oil, but it's not heavy. So once we stopped importing oil from Russia, these, in a sense, these refineries are dormant because they don't have heavy oil in the US. They're only other two places that have heavy oil. There's one Venezuela, but we won't import oil from Venezuela. And that's why, by the way, the Biden administration immediately, when cutting off the Russians, ran off to Venezuela to try to suck up to them to get the oil flowing back to the US. They couldn't cut a deal there, so we don't have Venezuela and oil coming in. And then the other place is Canada. The tar sands of Canada produces heavy oil. That's what the pipeline, what was the pipeline called? The pipeline was supposed to deliver that heavy oil from Canada all the way down to Louisiana to define as their Keystone pipeline. Thank you, Paul. And be able to refine that oil. So right now, because we don't have access to heavy oil, some of the refineries are sitting dormant. And then you've got the whole problem in the summers, where in California, in particular, by regulation, they have to combine oil with ethanol, which requires particular refining capability that now is not available for other things, for other things, and so on. So yeah, anyway, so that is why we're short on refining capacity. All prices are very hard to predict primarily because there's so much supply that is held in few hands. It's not really a market. And when you look at Saudis and you look at OPEC and how much oil they can release, when you look at the then one has to wonder, of course, there are other places that have vast quantities of oil like Mexico, where it's not being deployed. The largest reserves of oil in the world actually held by Venezuela. I mean, there's a ton of oil out there in the world. There's no shortage of oil. There's no shortage of oil. So the world has plenty of oil. It's getting it. It's actually accessing it and getting it to the United States. Thank you for listening or watching the Iran Book Show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening. You get value from watching. Show your appreciation. 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