Transcription
All right, thank you very much for that very, very generous introduction. I appreciate it, and thank everyone here for coming out. It's really an honor. I was here, but golly, it was like at least 15 years ago last time. A lot of things have changed. You guys are doing an amazing job, really, and the timing is just right. Believe me, I was hoping that this wouldn't be what we were fearing the most, right? Because it wasn't; we were looking at four years of unmitigated disaster, dismantling what America's all about. It's more than just mismanagement; it would have been something cataclysmic in my mind.
One of the great things I love about this election is we also saw the traditional media lose, and the pollsters lose. Someone should tell them they lost, because they still don't know. Their bubble and their world have shrunk so much; their influence has shrunk. Imagine that you own Hollywood, you own Madison Avenue, you own all the media—just 99% of the media—and you still can't force-feed the American public lies anymore. It's a beautiful day.
So, Trump shakes up the world. When I was a little kid, February 25th, 1964, Muhammad Ali beat Sonny Liston. Any boxing fans in here? He was an 8-to-1 underdog, an 8-to-1 underdog. He beat Sonny Liston, knocked him out in the seventh round. That time he shocked the world. They fought a year later, May 25th, 1965, and then he knocked him out in the first round. That's when he shook up the world, and that's exactly what Donald Trump is doing, going to do right now. Donald Trump, the people's champ. The first time he shocked the world; this time he's going to shake up the world because this time they're prepared. It's hard to drain a swamp when everybody hires part of the Trump swamp, right? They gone down there. Listen, it's tough. It's not the bureaucracy's marbled in; the resistance is marbled in. It's tough, and he couldn't do it with the crew that he hired, well, because they were part of it. But this time he's coming down, and we're innovative thinkers—Elon Musk, obviously; Robert Kennedy Jr., obviously; and some other folks out there—and he knows the mistakes that he made last time. But it's not going to be an easy job.
Here's the beautiful thing: he's got what they call a mandate, an undeniable mandate, and I think he will have the Senate—well, he has the Senate—but they have the House, and they'll have the power the next two years. Obviously, he's got to move the needle a little bit. We know how these midterms can be, particularly when there's so much high hopes. You want to avoid the so-called shocking, but right now he's got a mandate, and he's going to need a mandate because the challenges are significant. We've got the domestic economy and also the domestic divide. There are still millions of Americans who have gone, who are going in a different direction, and ultimately we want everyone to sort of try to be on the same page. Of course, the world is on fire too, which we don't—I don't know—we're not paying enough attention to. Ukraine is losing badly; Israel is fighting a fight almost by themselves. They were really mistreated, in my mind, by the Biden administration. About two months ago, the ambassador to Israel came to Fox, and he gathered a few people, and we saw footage of 10% of the people who were murdered, slaughtered, and they had refused—they refused a show on television. It's a big debate within the government, but if you ever saw that, you—I wish these kids in colleges who think that somehow Israel is the aggressor here could see that. I mean, the first time in my life I actually saw human beings decapitated with a knife. It's just horrific. The world is on fire. The bad actors, though, they didn't do any of this stuff when Trump was in office, and it's time. We've got some big challenges ahead, but let's talk about how we got here in America, because there were some great comments made by the president of this college about the size of government.
You go back—this is a famous saying in politics—"a chicken in every pot, a car in every garage." It actually began with King Henry IV of France, who said, "No peasant in my realm will be so poor that he will not have a chicken in his pot every Sunday." Now it's associated with Hoover, although he never used it. Some—during while he was running for president—a local Republican used it and talked again about the proverbial chicken in every pot. Later on, it was flipped on its head; it was considered to be sort of a negative, out-of-touch kind of thing among, with Hoover and the Republicans. But this is the beginning, right? Transactional politics, if you will. Let me see, fast forward here a little bit. So George Bush and Nancy Pelosi wanted to stimulate the economy in 2008, and they came up with—I guess I want to say 30 billion, 40 billion. Sounds like a small number now, right? It's the kind of money Zelensky finds in his couch—"Oh man, I forgot to cash this check!" But back then it was a lot of money, and there was a lot of debate on whether or not it worked, right? A lot of people said, "Well, it didn't really move to NATO." Then, of course, you do these studies and studies and studies, and finally they say, "You know what? This—the stimulus actually, in 2008, it did work because it generated what they call aggregate demand for consumption." Nancy Pelosi actually went out later, when Obama was in office, and she explained it—what she called the multiplier effect. As what she said is, "If we give people—whenever we give people one dollar in food stamps, they go out and spend $1.79." So keep this in mind, because the government understands how to manipulate the public. She said this out loud, though. So the goal wasn't to shore people's finances up as much as it was to goose the economy.
So fast forward again. So 2008, 30 billion, 40 billion; then, of course, Obama comes in—that's a much higher number—and then the opportunity of all opportunities. Emanuel Pop famously said, "You want to take advantage of a crisis? Well, how about a pandemic that comes around every 100 years or something?" To effect the ultimate emergency, the $1.9 trillion Biden COVID package was the ultimate gift. We did not need it. Household balance sheets were as strong as they'd ever been; corporate balance sheets were as strong as they'd ever been; the vaccine had been created, and America simply did not need this money. This is our household debt service payments as a percentage of disposable income. So right there, it had never been that low, and that's where they decided Americans needed a financial bailout. It's pretty clear Americans did not need a financial bailout. By the way, this is on top of 600 billion that Trump had just pushed through. Unfortunately for him, Mitch McConnell held it up because he didn't want him to be re-elected, so—and it worked. So he had 600 billion coming in; then they layered on another 1.9 trillion. We did not need this money, right? But we got it. Corporations didn't need the money either. So you can see the arrow where corporations—their net worth at the time—and of course, since then it's only gone significantly higher. So no one needed the money. Households didn't really need the money; corporations didn't need the money, but the money was pushed through anyway. This is what they understand, and this is what a lot of people don't get, believe it or not.
This is a beautiful report; it came out from Stanford, February of '23. I love it; I advise everyone to read it. I was shocked it came out from that university. I'd always talk to people about our economy; I've always considered our economy a trickle-up economy, and that trickle-down, which is a disparaging comment—you know, a way of describing typically Republican economic theory—it's trickle-up now. It was always easy to see it was trickle-up before the internet. The day after Thanksgiving, those Black Friday sales, and a gazillion people would give the malls the bum's rush. They run over security guards, kill people, fight each other, right? All to give the richest people in the world their money—trickle-up. We've always had a trickle-up economy, but this was amazing in this piece because it's specifically focused on that 1.9 trillion that was pushed through, and essentially what you have is they call a propensity to consume. Now the bottom 40% of households do it immediately. So when the stimulus checks went out and those malls were packed, those are your bottom 40% of people. They couldn't wait to go out and spend it. $1,400—I'm not sure if you saw it here, but I saw it in New York and New Jersey; it was crazy. And of course, they're in these stores they shouldn't be in—Louis Vuitton and Gucci, right? Why the hell are you buying a $900 belt buckle when you live in the projects? It's just—and of course, you know how people think. Remember, Nancy Pelosi already told us; they know how to manipulate us. So if you go into the mall with a check from the government for 1,400 bucks, of course you're going to spend an extra 500, because normally this 1,400 would have come out of your pocket. So in your mind you're saving $900. So yeah, it's wonderful when you start counting the GDP—"Oh man, our GDP number was this, and the economy is that!" And it shocked me how many Wall Street economists to this day go with this nonsense, and you don't know how many times I would have to correct my colleagues at Fox or Fox Business. I send emails—"I heard you today; no, it was not a strong report. I know everyone's saying it was strong, but you have to look at the details of these reports." So the money makes its way up higher income levels, store owners, whatever; they get the money; they hold on to it a little bit longer, but eventually it all trickles up to the top 1%. They said it would take five years for the 1.9 trillion to find its way into the pockets of the top 1%, also known as political donors, right?
And so immediately—this was our savings, by the way. They had this term—"excess savings"—I had never heard of it before. I thought it was just for white people. I had never heard of it before. I was like—I was so confused the first time an economist said, "Charles, we've got 2.1 trillion in excess savings." I was like, "What? Like, you know, we have like a coffee can with a few bucks in it." I ain't—I never heard anybody—heard the term "excess savings" before. Well, we had 2.1 trillion in excess savings. I thought you had a savings account. I never—you could have excess savings. That's a wonderful thing. So we had—we had 2.1 trillion in excess savings. Well, of course, we're Americans; we shop till we drop, and they know we shop till we drop, and all of a sudden these red lines—this is a draw-down on savings; we're spending the heck out of it as fast as we can. You know, at this period here—right around this period—the richest person in the world became Bernard Arnault, you know, Bernard Arnault, CEO of Louis Vuitton. Yeah, I mean, he was making a lot of money off those kids buying those belt buckles. So what did it get us? Well, inflation erupted. This is a part of modern monetary theory that they still can't figure out. If the government—according to folks who believe in this modern monetary theory, which was really pushed hard by AOC when she first got in office—and Biden had the chance to put it into play; Biden-Harris had a chance to actually say, "Forget about it; let's do it. We've got the ultimate emergency." So inflation rate erupts to 9.1%, a level it hadn't been in in four decades. And I love now, because as it—as it starts to drift, economists come on—"Well, inflation's down." No, no; the rate of growth has slowed, right? But inflation is not down. There's your inflation right there; it's not down, not even by a little bit. This—this chart right here with the red arrow explains the election outcome on Tuesday. That one single chart! I get so frustrated, even on Fox, when we use this chart when we talk about inflation, because this is the real chart. No other chart; this is the only chart we should use to talk about inflation. The accumulative impact on the American household, on the average American, has been devastating, absolutely devastating. It has screwed up the house—the housing market—so that you have so many folks with 4% or 3% mortgages; they're not going to sell their house and buy one with a 7% mortgage. So it skewed that up. This has wrecked our nation. The American people told you it wrecked our nation on Tuesday, but before then you could hardly get a professional economist who would acknowledge this. Obviously, politicians wouldn't acknowledge it, but this is what—what happened with the grand experiment with modern monetary theory.
Also, what's happened as government has gotten larger and larger and—and—and the financialization of our economy has gotten larger and larger, we have less velocity of money. This right here, to me, has been one of the most amazing things in history. Before, money used to circulate in our economy; everyone got a piece of the action, and then it sort of stopped right at—right at the beginning of the great financial crisis. And I think there's a lot of reasons for it, including what I call the financialization of our economy. I think online has a lot to do with it, but also just to sort of focus on big businesses taking over local businesses. Or in my neighborhood, when I grew up in Harlem, I used to work—I worked since I was 13 years old. I used to clean car windows at red lights with Windex and paper towels. Man, I did that before the crackheads did it. Man, it's hard competing against a crackhead, though. You're like, "Okay, you got it." I worked in bodegas; I did everything—shoveled snow. I had every kind of job. I've been working straight through since I'm 13 years old. And when I lived in Harlem, it was so weird because they used this reverse psychology on us, right? And they still use it on—in a lot of Black communities—"Well, there's no big businesses here; they don't like us. You know, where's our McDonald's? Where's our—" But when I was growing up there and there weren't any big businesses, I used to go to 125th Street, where the famous Apollo Theater is—um—and by the way, I just saw Smokey Robinson there recently—84 years old, amazing, amazing. If Biden had his—had his bigger—he might still be president. Good thing he didn't. They—a complaint in our neighborhood—"Well, how come we don't have these big stores, right?" But what we had—you go to 125th Street—every—on all the different avenues—yeah, row after row after row after row after row of vendors, right? People selling things—whatever—albums, incense, all kinds of stuff. And I used to get my money and go down there, and you haggle with them, right? "Two for 30. Now, how about I give you 25 bucks? Give me this," you know? But it was great. And so the person you buy the jeans from will go across the street and buy some record albums; the person from the record albums would go across to the restaurant and have lunch; the person owned the diner would go across the street and do this, and the money circulated in the community. We have velocity of money. Now you go—"H&M opens up! Whoa, look at this! A great big store opens up!" Yeah. So every time we buy something there from H&M, it immediately goes to wherever they—I think the headquarters is in Scandinavia somewhere or Spain. It immediately leaves the neighborhood; there's no velocity of money. So that's a big issue that's haunting us in this country right now—the financialization of our country, our economy, and our stock markets and our financial markets. It is taking over; it is swamping us. We have become so good at one thing—money making money—but money doesn't invest in factories anymore; it doesn't invest in education anymore; it has one purpose—money making more money.
So here's an example of this financialization and how it's worked over the last few years. 1973, GDP 1.3 trillion. You go down now to 2015, 12 trillion. But you start looking at the other parts of this, right? The credit markets in '73, the credit markets were less than—about 170% of GDP. Look in 2005, a $4 trillion economy with a $41 trillion credit—38, 328, same thing. The financial sector debt—look at the financial sector debt in '73; it was less than 10%. By 2005, it was 32%. This is keeps going on and on. They're monetizing debt; they're making money from debt; they're creating ways of making more money. A lot of us just borrow time more than making money, right? This is the sort of—sort of—Damocles that's over our head as a nation. Give you a more recent example—that debt-driven prosperity. So since 2009, our debt level has gone up 200%, and isn't it ironic? Our GDP is up—up 200%. The stock market—if you put a dollar in the stock market in January of 2009 into this year, reinvested the dividends, you'd be up 750%. I think employment's up 28% in that same time frame. There's a massive disconnect, a massive disconnect. Household wealth is up 170%, not even keeping up with debt or GDP. This is the financialization of our economy, a debt-driven prosperity. So that 35 trillion that was referenced earlier, sooner or later it will come tumbling down. I don't know when, because they've gotten better and better at this stuff, but I tell you who's hurting from it—the average American.
The University of Michigan comes out with their sentiment report; they just had one on Friday. I didn't get a chance to really go through it—go through it. So this is the one before that. And so the American public says—well, this black line here—they can see that the growth of inflation is expected to slow dramatically, but then when they were asked about what hurts them the most, consumers said high prices for their worst personal finances—that's still at a record level, near 50%. Again, that gets back to the other chart. Even as the growth of inflation slows, it's too late, and it's—it's been extraordinarily painful, and people expressed that on Tuesday. Meanwhile, what's happening with the economy? The jobs market is slowing dramatically. This is your 3-month moving average. Of course, this last jobs report, we lost 28,000 private sector jobs, and there'll be some adjustments for the hurricane, but it's still going to be a shockingly depressing number, and you can see where it's been coming down ever since the peak in 2021. So it's not new; we've had a labor issue, a labor problem for a long time. One of the reasons is that there are six ways the government—the Bureau of Labor Statistics—can count unemployment—U1, U2, U3, U4, U5, and U6. I'm not sure why this is, but some reason they settled on the U3 number being the number that we always talk about to represent unemployment. So again, you'll hear someone say—"Well, an economist or a politician"—our unemployment rate is only 4.1% with the U3 number. If you drop out, you're not counted. If you just simply drop out, you're not counted at all, but you exist. Eight million American men have dropped out; 8 million. They don't count them at this 4.1% number. They live; they exist; they have to eat. Many of them live in desperation; they expressed that on Tuesday. So this unemployment number, again, is just so phony baloney; it's ridiculous. It really is. Thanks. Wages are also slipping; the growth of wages are slipping. So this is the employment cost index; this is a quarterly report. We got one last week, and they have what they call unit labor cost, and that number is really starting to slip faster and faster, and I really worry because we're just now starting to use AI. This is even before AI; we're starting to slip faster and faster. Last week, when Google reported their earnings, one of the most fascinating parts about the whole earnings—they said 25% of all their new code was written by AI. We just spent the last 10 years saying, "Teach girls how to code; teach factory workers how to code," you know? Well, maybe not. So again, you hear a lot of Wall Streeters, a lot of economists say the economy is great—"Look at productivity!" Well, productivity is a euphemism for—"We need fewer people." It's fantastic for corporate bottom lines, but it's not necessarily a good thing for the American public.
So here's the thinking, and this is what's been happening lately: the wealth effect—stock market goes higher; rich people buy stuff, right? Now the top 20% of Americans do 40% of the consumption; they're buying things; you got to hire people; you hire people; the economy looks great; stock market goes higher. I tell people the fix is—the fix is really, really in passive investing. People get paid every week; money goes into the 401K; that money automatically is invested in the stock market; typically it goes proportionally, so the strongest, biggest strongest stocks—that's where the lion's share of it will go. Well, guess what? If all that money is going into these stocks, they remain the strongest stocks; they lift the market; the market goes up; more people want to be in it; it's a—it's a heck of a positive feedback loop. And if that starts to get a little shaky, something happens, and the Federal Reserve comes in, and they become friendlier and more accommodative, and they start to put money back into the economy. And if that's not enough, the federal government will come in and swoop in. The fix is in if you own stocks; the fix has been in, but a lot of people either don't own stocks or they don't own a lot of stocks.
Here's the dilemma for President Trump. And by the way, did you guys know that every speech I gave this year up to June was based on Germany? Because Germany is the ultimate—the ultimate cautionary tale for Americans. The ultimate cautionary tale for Americans. What Germany did to themselves is mind-boggling. You've never seen economic suicide on this scale before. If you think about Germany—and I—and I talk about this place in Germany called Swabia—when the Industrial Revolution began, you had these railroads; the UK, Great Britain, dominated; Germany was way behind. But there was a small area in Bavaria called Swabia where they had this tremendous work ethic. We call it right now is the Protestant work ethic. They were very religious; they became very frugal because they were poor; it was a poor region; they saved their money; they didn't squander; they believed in hard work, and they started to invest in themselves. Then, you know, they had people who eventually came out of there named Benz—you may have heard of that—these kind of people—Daimler. Anyway, Germany finally caught up and surpassed Great Britain, and they had a system after both World Wars—you had these—these treaties; they had one treaty and one agreement, and ostensibly they were to stop the German war machine—the Treaty of Versailles and the Potsdam Agreement. But if you ever look at these things, they were really designed to stop them industrially so that the rest of Europe could catch up. And still Germany came out ahead. So this mighty German economy, where people around the world pay premium for these products—and if it's a German car, you would pay more money; if it's a German electric razor, you would pay more money; if it's a German coffee machine, because you knew what you were getting—they gave it all up for the Green Party, for climate change. They've crushed their economy to a point I can't even describe to you right now. Volkswagen just announced it's laying off like 10, 20,000 people. I mean, they've crushed their own economy. Here's the irony: they shut down all the nuclear power plants; they use more coal right now than every country in Europe combined, right? All in the name of climate—they've—they've destroyed themselves, and we're in that—we're getting in that direction, in a sense that fiscal policy—people get addicted to free checks. Believe it or not, people like what they think is free money. It's hard to describe, but—and a lot of times a lot of folks who are well-off say, "Oh, man, that's really ridiculous. Out, you know." Well, I can tell you right now, I've been in some great hotels around the world, and when I walk in and sometimes they have that piece of chocolate on the pillow—"Like, oh wow, a piece of chocolate! A free chocolate! I'm so giddy!" So I mean, we like free stuff, let's just put it that way. We kind of dig free stuff, at least we think it's free. It was built into the $500-a-day rate, though, right?
So I'm always an advocate for everyone to invest in the stock market, and Wall Street has a mixed reaction to—to—to Main Street being in the market. They love it when you're in the market as long as you're handing them the check; they don't like it so much when you think you could do it on your own. Right now, this—the average stock market portfolio, according to the University of Michigan, when they ask people what is—what is it now? It's up to 250,000; not long ago it was 100,000. Wall Street might actually—might actually just try to put a few bumps in a row to shake these folks up a little bit—make sure they take that money and give it to a professional, because how could you take it from 100,000 to 250, anyway, right? And here's the thing we've got to keep in mind: despite the fact that we have a greater percentage of people who own stocks than ever before, we still need more. I still would like to see more people in the market, but also remember this: the top 10% of Americans still own 93% of the stock market. Again, that's the wealth effect, and they've gotten better at manipulating the stock market. So these spikes are your bull markets, right? These are years that go before the last 20% draw-down, and you can see in recent years it's just gotten better and better and better. They perfected it. So the crashes happen; everyone licks their wounds; they bail out Wall Street; they go back to the drawing board—"How can we perfect this thing?" Like Constantin Noble or something—you know—we just—it becomes impenetrable. These are your—your returns from the last—the first two years after a new bull market. So again, you can see back in the day—57, 62, 43%, 52%—starts getting a little bit better, but then the last two bull markets after the first few years were up 93%, and this bull market's on its way. They perfected the financialization of our stock market; it's really remarkable; it's really amazing. But it's coming at the expense of something else; it's coming at the expense of building America, rebuilding America; it's coming at the expense of really educating our kids; it's—it's enriching a handful of people, and there will be a massive revolt. Tuesday was an example of that; there will be a massive revolt of—somehow not taking this from folks, but finding out a way to reinvest in America in a smart way. I've got great—great hopes that Trump, Elon Musk, and the rest will do that. I really do. Because whenever they brag about how quickly our economy has come back versus all these other countries—I mean, it's—first of all, they—they—they—they're comparing us against Europe; they've already gone down this path. We should not brag about having a quicker recovery than European nations or Japan. These places shot themselves in the foot; they're not coming back; they'll never see the glory they had before. They've had open borders for too long; they've had welfare states for too long; they've gone to war with their most creative people—that's why their most creative people come to America to start businesses. And then on top of all of that, they have the fertility crisis. You can't buy a pizza in Italy from an Italian; you're going to buy it from someone from Morocco or somewhere else. They just don't have the people. Hungary doesn't have the people; those nations are dying. Japan will go from 120 million people to 80 million people already; they sell more adult diapers than baby diapers. Part of that is a cultural problem that we have to figure out here in this country. Twenty years ago in Japan, a professor came up with a term called "grass eaters." What he noticed is that these young men refuse to be like their parents—Japan famous for their work ethic—two-hour commutes both ways to work, work for the same company for 50 years; they didn't want to do that. Instead, they want to play video games all night and sleep all day. And now they're at the point where they identify—they're the person—they're the person on that screen or the creation on that screen, not themselves. Thirty percent of the men there, 30 and under, expressed no interest in sex at all—not—would anyone—men, boys, boys—they, girls, they don't care; they—they're not interested in it. President Xi of China last year—who—who knows—who understands this stuff, because you know, for him and for China, they feel like they were robbed by the West—by the—by the Westerners—and anytime they bring up the Opium Wars, you know what they're saying. So he brought up the Opium Wars last year, talking about the same battle. So I think he cut the hours on Fridays—two hours on Friday, one hour on Saturday—and then last year during college graduation season, he says, "Our—our college graduates won't lie flat," in other words, they're not just going to graduate and chill out. Now there was some—some pushback; a lot of those kids graduate, they had the cap and gown on, and they're laying on the ground flat, you know? But the point is, he knows that it's—it's an issue; it's an issue here too. So you layer on top of that income inequality and inflation; all of these things—we have them in a much more—in abundance than they do in Europe. So while we can brag about how quickly we recovered, it's not—hasn't been that great.
So this is what I'm excited about. I'm excited about the new Gilded Age. Now in my last book—my recent book that I just published in October—I have a chapter there on the Roaring Twenties, and as I was thinking about the book, the parallels seemed perfect. You know, coming out of the Spanish flu, coming out of COVID, coming out of a war—World War I, coming out of the war on terror, there was a big depression in the early 20s; we had a big depression right when—when the COVID first hit. But now I'm really starting to think the parallel might be the Gilded Age, and if so, it could be amazing. Now many have heard President Trump talk about William McKinley a lot. William McKinley is getting a second look; he's getting a second look in part because of the industrial—industrialization that he used. Obviously, he used tariffs; that was a big part of his fight, but he had the gold standard; he held back on antitrust enforcement; in other words, he let free markets rule. William McKinley is getting a nice second look, and I'm—I'm doing more research on this, but I think this is going to be the parallel that we want. By the way, after McKinley, Republicans won the White House in the next 30 years; they only lost twice. He created an era. Coming out of that period in 1893, even before he was president, we had the Chicago World's Fair, which, for me, was the introduction of consumerism—Ferris wheel, skyscrapers, the White City. If you ever get a chance to study any of the world's fairs, that's the one you want to look at. So I'm thinking about Trump and the new Gilded Age. The Gilded Age is known for rapid industrialization, economic growth, political corruption—sounds familiar—issues of race, ethnicity, immigration, labor, women's rights—sounds familiar—notable figures: John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, J.P. Morgan. We've got Elon Musk, Mark Zuckerberg, Jeff Bezos. The similarity is really, really eerie, really eerie. And one of the things that kind of got me thinking about this even more—I have this habit—I write every single day for my subscribers; I have my own research firm, and I also write, obviously, for my show—and I'm always thinking like these phrases we use—"autopilot." If you ever get a chance to study the origins of the term "autopilot," it's phenomenal. Some guy takes these gyroscopes that his dad created for this—for the Navy and puts them on planes, and he's at the Paris Air Show; America goes last; he's flying by, and he takes his hands off the steering wheel. That was the first autopilot, and everyone loses their mind. So recently I was thinking, "Wow, the market and the economy feels like it's on easy street." So I start digging in—"Where is Easy Street?" So this is the first time it was recorded—the use of it—but was so ironic about this, right? "If you inquire where he is going, he will say, 'Up on Easy Street to see Miss Comfort.'" This was in a union magazine in 1886-87. And you think of the Gilded Age and these robber barons, and you think, "Well, unions must have had a heart. They were on easy street; they were doing great; everyone was doing great." It was an amazing time in this country. Again, we had 30 years of amazing prosperity. So it's just one of the things that—again, I'm going to dig into it a little bit more, but I'm really thinking the parallel—and maybe for folks out—you know, to look into and study—might be the Gilded Age more so than—more so than the Roaring Twenties.
One other thing I just wanted to mention: no one talks about the world being on fire. So you've got political risk through the roof, and then you have mentions by corporations—whether it's on conference calls or—or—or earnings calls—no one's talking about it
Back to Pittsburgh, then Japan, back to Texas, Alabama, North Carolina, and Virginia. My high school was the first school I went to, two years in a row. The bad news: I don't have any childhood friends. The good news: I know how to make friends quickly. Right? Um, a lot of things in my life, in terms of mentors, it's really interesting because they weren't necessarily mentors at that specific time. Like my grandfather and my grandmother; in my book, I honor them in the first chapter. I talk about how they bought their land; they gave up everything. I mean, you just got to read it. I just wish I had it here, but they—everything they worked for, the mule, the mules they had, the farming equipment they had—for that dirt, for that Alabama dirt. And it was hard for a black family to own a farm in 1952 without taking a lot of heat. And I, I read later where the guy they bought it from actually was tricking a lot of black farmers, and they took the land back. I didn't appreciate it as a kid. You know, I was like this little bratty ass kid. I didn't like the house; I didn't like the fact they didn't have running water. And I didn't know, until I—us—even looked at my grandfather's shoes; he had one pair of shoes, and they were turned up at the toe. I didn't appreciate that until I became a man, until I had to pay bills, until I had kids. You know what I mean? So it's weird when you talk about mentors; they, he, they, they were mentoring me; I didn't even know it at that time.
Um, and so my mom, you know, we moved to Harlem. We got picked on a lot; we sounded like white kids; we wore the wrong clothes. They beat us up every day. And one day I was standing on the stoop by myself, and one of the ringleaders was going by on his bike. I'd never seen him by himself, Andre. I just said, okay, I'm going to go for it. So I ran across the street and I punched Andre. He fell off his bike and he ran away. And I always tell people, if this was a Disney movie, the credits would have went up, and we'd have lived happily ever after. But it wasn't a Disney movie. They got me in a schoolyard that night; about nine, ten people circling me, beat me up. And then one guy was really choking the hell out of me. I couldn't—I was like blacking out, and I see someone coming out of my building with a nightgown and a—I looked, it was my mother in her nightgown with a kitchen knife. I mean, it was pure hell. You guys have no idea; it was pure hell.
Um, so, you know, my parents, uh, my grandparents, my father, in a different way. My father was a military man; I looked up to how sharp he was. Night, he polished his buckle with Brasso and those kind of things. And then I had three critical teachers, three important teachers: Mrs. Flood. I had a serious speech impediment; I still have a speech impediment. I'll switch words and skip over words all the time. And so one day I remember Mrs. Flood, when my mom was in school, you know, parent-teacher meeting, and I was so nervous because we—us—have to read out loud in her class, and I'm, you know, I get just close enough the ease dropped, and she, she says, you know, Charles, when we're reading out loud, he'll get to a word and then he'll change it because he can't pronounce the word. She says, you know how brilliant he is to be able to do that. I was like, "I am so…" Mr. Austin and Mrs. Galotti. So I think, I think, I think it—you got to have at least one or two teachers in your life, these kids that touch their lives. And then again with the mentorship, it was weird; I didn't have a mentor per se at the time, but my parents and my grandparents were my mentors, and I started to appreciate them and build off their strength as a man. So thank you very much for your talk.
Uh, my question is, when we're looking at the economic state of America today and also comparing that to the economic state of America historically, do you think religion, and specifically Christianity, has a place in the conversation? And if so, how? Well, the question is, the answer is, yeah, absolutely. Um, and I, and I think it's, I think it's the Protestant work ethic that got us where we are now. There's no doubt in my mind. And, and it's still lingering out there, but there's been a war against it, right? And, and it's, and it's, and it's fashioned in so many ways—the work-life balance, those kind of things, you know, these, uh, uh, you know, where people are encouraged not to work, encouraged not to sweat. But there's no doubt it's played an a mass—massive role in how we were able to get to this place in such a short period of time. Uh, and you know, I talk about how there was Swabia in Germany; there's also a little region in Sweden called Smaland. And in the late 1800s, the King went there; he was, he marveled; he gave this speech about, wow, you, you, you folks, this is the most barren, hardest place to live in Sweden, and yet you have figured out a way to become prosperous. And it all—first and foremost—very religious, believing in God, hard work, save your money, and businesses came out of there—one that you probably heard of is called Ikea, right? So I think it's played a role; I think it's playing less of a role, although I—there's a resurgence. One, I'm going to do a show soon based on a Christian investing show, real soon. So I am seeing it with more CEOs, and again, not necessarily afraid to talk—I mean, if you know some of the CEOs haven't been afraid to talk about some other things. So it's about time to come out the closet if you're a Christian, right? Um, so it's played a role. I don't think we would be the greatest country in the world if it wasn't for the Protestant work ethic and our strong belief in God, and uh, but it has diminished, but I think it's got to be essential if we're going to remain number one in the world. Thank you.
Mr. Payne, President Trump has repeatedly said that he would impose a 20% tariff on countries, with an additional 60% tariff on China's. How do you think this would affect the American economy, and would you think that this would uh, create more jobs in America? Well, uh, the idea is, you know, I'm glad you asked, because one, one of the reasons I think McK is going to become more well-known is because he effectively used tariffs. By the way, we also used tariffs in—at the 1922—that recession that I talked about was, was it—it was a Great Recession; it was short-lived; it was the McCumber—uh, Fordney–McCumber tariffs. And, and here's the thing, and the folks at the Wall Street Journal hate this, but listen, they—that's—that this old-school conservative orthodoxy about everything we do should be to benefit the bottom line of corporate America—that's out; that's out. And both parties have been able, for the last few decades, to fool their voters—the Republicans getting folks in the heartland to go along with policies that sent their jobs to China, and in return we got fentanyl; and liberal politicians able to fool black voters into this, hey, you know what, let government take care of you kind of stuff. And, and so I think, I think it can work, and for many reasons. And a lot of people go back and say, well, it didn't work in the Great Depression. Our economy was roughly equal to Europe, right? Now our economy is here, Europe is here, even China is here. We don't use our strength; we don't use our weight; we're so weak. I'm—we're talking about a heavyweight going against a welterweight. Yes, maybe the welterweight will get a couple of punches in, but the heavyweight will knock this person out, and the welterweight knows it. I've already predicted, before the election, that China is going to come up with some—I'm calling it Trump's Iranian hostage deal. Anyone remember the Iranian hostages? 444 days. Uh, they let them go January 20th, 1981, the day that Ronald Reagan was being—yeah, I think—on by Inauguration Day. China was going to make some major concessions, major concessions before then, before then. China's economy is reeling; they are in desperate trouble. They mismanaged the one-child policy; they mismanaged the CO2 policy; ripping off other countries doesn't work. Companies have already started to leave. The first Trump presidency crushed China; crushed them. It sparked an onshoring phenomenon in this country; it helped Vietnam; it's helped Mexico; it's helped India; it's helped India tremendously. So I do think it will work as a, as a diplomatic, as a, as a negotiating tool, but also to bring jobs back to America. I think it'll work.
Um, I have a lot of peers who see public money as kind of the answer to a lot of issues. So my question is, how do I, in a short interaction, maybe open up a peer's eyes to the fact that public money is not always, or often not, the solution to economic growth? Well, uh, we have to start with the fact that there's no—no such thing as free money, right? I think that's the first thing that we have to start with. And your peers, what are the things they complain about? The cost of college? Well, government interference—were there with President Obama kicking out the middleman, saying we'll take care of all these loans, we'll essentially just rubber-stamp them. What happened in the meantime? Tuition's went through the roof; campuses got beautiful, but you know, college is now extraordinarily expensive. Uh, what's—what are we dealing with right now? Government puts trillions of dollars into the economy. Yeah, you went to the mall a few times; maybe you went down to Mexico for spring break, but now you're dealing with GR; you can't even find a place to rent; you need three roommates. So they're living—they're paying for it right now; they just—they just can't connect the dots. You have to help them connect the dots. There aren't a lot of dots; it's one dot. Okay, they, they put—put trillions in, and you can't afford a ham sandwich. That's it; just one dot, you know? Um, it's—I understand indoctrination, and it's been going on for years and years, and it's not always easy to, um, to, you know, to, to get people to change minds, even even when they're suffering from the very policies that they, um, that they, um, that they champion. I've had friends—I would have this debate with friends of mine, you know, like Obama—when Trump was in office—I say, you know, what's a lot better than Obama? So—and then my—the answer would be, yeah, but I just kind of felt better when Obama was in office. Felt—I mean, oh, next time you get a bill, don't send a check in; send a note—I'm feeling good, passing it on to you. It ain't going to work; it ain't going to work. But the good news, I really believe, if you look at these exit polls, people are waking up; they're waking up now. The other side is not going to lay down; they own all the megaphones still, right? And, and so this is it, but I think, I think if you just say, hey, your life is so much more expensive—I mean, people complain—complain about their parents could buy a house at, at, you know, 28 years old, and their grandparents, you know, who bought most of the houses—the average age of home buyers last month, 56 years old. Tell—tell your friends; tell them that—that's what happens with free money; it CRA—it messes up everything, and the only people who benefit are the rich people and old people. Tell them, old [Laughter] people. We have time for one more question. Thank you, Mr. Payne. I appreciate your enthusiasm. I'm interested in um, comparing the late '70s and early '80s with the situation now. And of course, in the late '70s, we had that stagflation—high inflation and, and uh, um, slow economic growth. And if I'm correct, um, Paul Volcker uh, tightened the uh, monetary policy in order to clobber inflation, but that took a while, right? In fact, the first couple of years of the Reagan administration, he was really hurting—I mean, the country was hurting, and he was hurting politically, right? And, um, just this week, the uh, the Fed reduced the interest rate, which would seem to me to be the opposite of uh, what had happened uh, under Volcker. And isn't that going to make it even harder for everyday people uh, to deal with inflation?
That's a great question, because it brings up a serious dilemma. There's four buckets of the way uh, Fed policy is transmitted into the economy. I originally had uh, Boward on, who was used to be in charge of the St. Louis Fed, um, and I couldn't get him—I mean, golly, I couldn't get him to at least acknowledge that we need to find—that the Federal Reserve has to find a better way to implement policy, because to a degree they're in a conundrum. Again, it gets back—when you have the federal government—Inflation Reduction Act—this act, that act—we're paying corporations with $50 billion in the bank—billions of dollars—open factories; it just doesn't make sense. So when you have these—this massive force—this inflationary force on one side that that they can't tame or control, it makes it even harder. But here's what's so interesting about what's happening right now. So I tell you, the top 20% of households are doing 40% of the consumption. So retail sales numbers come in, and they're higher than expected. So you say, well, golly, there's a reason that the Fed should hike rates. CPI comes in; inflation read and is higher than expected. But when you look at the categories, what's the most—what's at the top? Home insurance, auto insurance, rent. And the reason I bring this up is, the Fed trying to crush the economy to bring down inflation—the folks—the folks who are driving it aren't going to be as hurt as the ones who are suffering from it, because the average credit card interest payment has gone from 15% to 23%. Now the Fed—Fed pushes to 25%, the bottom 75% of American households are going to be just crushed even more. In other words, the Fed has won the war against the bottom 75%; they've won the war; we surrendered. Look at delinquency rates; they're through the roof. You won that war, but the problem is, there's just been so much money—as you know—you ever think about this? When we say we're paying a trillion dollars a year in interest on our debt, who's getting it, and what are they doing with it, right? So you've got this—this money still gushing in between a federal government and ultra-wealthy folks who are getting paid every time interest rates go up; they make more money; they're going out; they're keeping the retail sales higher—not even using principle. So it's a conundrum; I don't know how to get around it. I do believe—well, this last one was really a doozy. I think obviously he was really late in the beginning; I think he was too tepid; they waited too late; they started at a 25 basis point hike, then 50, then the four 75s in a row. They should have just come—they should have just came out with 75 and crushed it. That's hindsight; I don't know—I'm trying to learn—I don't know exactly how he can fight inflation that's being driven by 25% of the population and the federal government, but he's already defeated everyone else. So we're going to continue to punish people who are already getting crushed, who are already missing home payments, who already saw the credit card rate go from 15% to 23%; they're not spending; that's not them; it's not them. I don't know how to—I don't know what the solution is, though. Paul Volcker—I mean, J. Powell says that Paul Volcker is his idol; that he loves him; he wants to be him. And you know, part of his job is completely out of his control, but I also think that there's so many egos there too, you know, particularly these economists. He's not a trained economist, but it's one of those things—I'm just not sure what the answer is. You know, also the—another wildcard is a—is a jobs market—the labor front—our—our jobs market is a—is—is a—is in trouble; it's—it's—it's really an unmitigated disaster. And four Fed meetings ago, he more or less said that unfortunately our—our Federal Reserve—our Central Bank—has a dual mandate—no other Central Bank has a dual mandate—inflation and full employment. So he wants to focus on full employment, because historically when the unemployment rate—the U3 unemployment rate—starts to go through the roof, it doesn't stop—I mean, it—when it—when it breaks out, it breaks out big time. He—he wants it to stay at 4.4%, um, which is going to be tough, because more people are going to start looking for jobs; they're not going to have a choice. And I think we're going to break through there. So it's a—it's a heck of a conundrum, but it's not as simple as saying, you know, because if we use this government data, it's really bad; it's—it's—we—we need to find a way to even get off of it or fix it, you know? So I know I didn't really answer the question, because it's hard to answer it honestly. Uh, I know people pick sides on this thing, but if you look at the—how really complicated it is—a lot of people—he—the Federal Reserve has done their job in crushing a big chunk of this economy. Now the question is, if you wanted to crush this part of it, these people are going to suffer more. All right. All right. Thank you for…