Bad Inflation Data Drops While Trump’s in China (And Other Headlines)
Summary
High Inflation: The hosts emphasize hotter CPI and PPI prints, noting persistent core inflation and a multi-year failure to return to the Fed’s 2% target.
Energy Prices: Gasoline and diesel are central to the discussion, with war-related disruptions expected to keep energy prices elevated and continue filtering through to broader costs.
Commodity Chemicals: Plastics (e.g., plastic pipes) are highlighted as critical to construction and infrastructure, with supply hits likely to push input costs higher.
Federal Reserve: The Fed’s credibility is questioned, citing premature rate cuts and sustained inflation readings (including PCE) above target.
Supply Shocks: Multiple recent global disruptions (pandemic, Russia-Ukraine, US-Iran) are cited as destroying supply, exacerbating inflation beyond just oil.
Geopolitics: The Trump–Xi summit and Strait of Hormuz dynamics are discussed as mostly optics, with uncertain real impact but potential implications for oil flows.
Equities Mention: Boeing is mentioned only in passing as diplomatic theater; no specific stock pitches are made.
Market Outlook: Overall tone suggests ongoing inflationary pressures and risks, with potential relative support for energy and commodity-linked areas.
Transcript
[music] >> Welcome back to the Power Market Podcast. I'm Ryan McMaken, editor-in-chief at the Mises Institute. And joining me today are two of our contributing editors. We've got Tho Bishop and we've got Connor O'Keefe. And we're going to cover a variety of topics in terms of what's going on in the news this week, but first, Tho, we got some upcoming events. We got a new book. We got stuff going on at the Mises Institute, right? Yeah, well, I'm recording live, well, I mean, not when you're watching it, but I'm recording in person in apartment 15 here in Rothbard Village because we are enjoying Rothbard University this weekend. So, prepare for more content from this great event hitting your Mises Institute media channels. But, if you could not make it to Auburn this year, you're missing out, but there are other opportunities to enjoy fine company like we'll have this weekend. Next up we'll be in the great state of New Hampshire. Why is the healthcare system broken? It's going to be on June 27th in Windham, New Hampshire. And then we've got a gold and silver prospecting for liberty event in New Mexico come August 15th in Albuquerque. And if you are a student listening to this podcast right now, stop what you're doing, pause the episode, go to mises.org/events or mises.org/misesu. Register for Mises University right now. It's the best week of the year. One of a kind experience. I promise you, you will not be disappointed. We've got travel scholarships. We've got We put you up in a beautiful Auburn hotel, the Auburn hotel, literally the name of the building. It is something you cannot miss. So, again, if you're a student, stop what you're doing, apply right now. You will not miss out. But, if you're also if you're a student, but even if you're not, we do have two great books that are coming out since we are still celebrating the year of Rothbard. One of those is not entirely Rothbard related, but it's still human action 75th anniversary a book of essays that is a package of the event we had celebrating the 75th anniversary a couple of years ago. Some great great academic articles on that that is available on the website right now. And then coming up soon is our Murray Rothbard the making of an Austrian economist. Now this book is really awesome. It is co-written by Joe Salerno and Patrick Newman cuz who else is going to read Rothbard's handwriting? I got a sneak peek of the audio book version and it is fantastic. I am almost done with this thing. I'm on the final chapter right now. But if if you're interested in Man, Economy, and State, if you've never read Man, Economy, and State, if you're interested in how did Murray Rothbard become Murray Rothbard, this book it's it's an intellectual biography. It's more focused on his economic work than his broader political project that would be like a 2,000 page book I think if you put all of Rothbard together. But it was very interesting seeing how his natural evolution from a neoclassical program to being a radical Austrian and how that directly tied into his development of anarcho-capitalism. All of that and much much more featured in this brilliant book. I mean it'll be going live here very very shortly, but if you like Rothbard, I promise you you're going to want to read this book. And Ryan, have I sold that enough? I'm pretty excited about the book. It's great. Especially since it covers the economics so much. Yeah, if you're interested in the other side of it the political side, I would certainly recommend Justin Raimondo's book Enemy of the State really the first biography of Rothbard and a good book. I have it here on my shelf. I mean [clears throat] Raimondo. You know Raimondo is Raimondo is one of those writers I still miss. Like I wish there was still a weekly Raimondo article. Same with Will Grigg. Remember William Norman Grigg? Man, I I he was still writing columns. So yeah, you can still read Raimondo's biography. Check that out. That would be a great like double thing to read. The new Rothbard book and that old and then you would basically know a lot of what you need to know about Rothbard. So, I'm sure we'll be discussing more about that later because I haven't had a chance to read it. So, we'll know more as the year gets older. Yeah, I'm looking forward to having a beverage and talking more with Patrick Newman about it, which are some of the highlights that come when you're at a Mises Institute event. That's right. >> [laughter] >> Well, let's look at what's going on this week. There's been some new economic data. The boy, there's been really quite a few things going on, none of which are like closely related. So, it was hard to come up thematically with something for this episode. But Connor, why don't you get us started? Just tell us what we should start talking about. Uh well, one kind of dramatic thing this week was the inflation report. The I guess the inflation numbers for April um came out hot, which is not unexpected. I believe CPI was 3.8% year-over-year, but then PPI was at 6%, which I think is the highest it's been since 2022 when inflation was really peaking um post-pandemic. Um and that was that was pretty striking. The other thing that stuck out to me was that core uh inflation was also higher, which and core inflation is, in my opinion, kind of a a dumb thing to focus on because food and energy, which are stripped from core inflation, are actually very important for trying to determine, you know, how easy it is for people to make a living. But it can be helpful for isolating different factors when you're looking at these reports. And all of the focus right now is on gas prices and diesel. And that's really important and really dramatic, but there's a lot of other things that are happening as a result of well, I mean, it's two things as we often talk about. The only way to get true inflation is when you mess with the money supply. And I think you guys mentioned a few weeks ago Robert Barro had a great article on on our blog about that. I think he's written a few more since then. So yeah, there's plenty of funny business happening on that side. But then also the other point that I just coming back to is that the yeah, the economic destruction of this war goes so far beyond just the oil. And everybody's so focused on the oil, but like all of these other factors that the one I can't get over is plastics. I was just driving somewhere by construction site and there was just a pile of plastic pipes. And it's like plastic pipes are so important for and all kinds of buildings and infrastructure. And it's something that if you don't work with it, you like never think about this. But that the supply of that is going to take a big hit because of this. Probably is already starting. And I think when I'm like looking at this inflation report, that's evidence to me that this stuff is just starting to kind of filter through and at least get picked up by the data. The fact that uh product the PPI was so different than CPI. I mean that kind of backs up what we've been saying that this is mainly hitting higher order goods. But it's just I guess a pet peeve of mine throughout all this, which isn't new for this specific um event this specific situation, is just how people talk about inflation as if it's just it they almost speak about it as if all these companies see the war break out and then they use it as an excuse to raise prices. And it's like this optional thing that's just we're stuck with because these companies are greedy. But really what's happening is that supply is being destroyed. There is not enough for everybody that wants it anymore. And so it's it's it's much better to think of it as like when you're going to the store and the shelves are empty. Like that's actually the situation we're in. It's not just that everything's more expensive. Now for us in the more developed world, it's mainly going to come out as higher prices, fortunately. But it's at the end of the day, it's because supply is being destroyed by this and I guess that to me that this inflation was report was more evidence that that's starting, but once again we're we're only in the early days of that. Yeah, the it was important that the core numbers continued to go up, right? Because if we're just if it was just a function of gasoline, something like that, you'd be like, "Oh, it's just gas, you know, I'm sure it'll just come right back down soon, right?" But looking at even the core numbers, that suggests an ongoing upward trend even excluding gasoline and food and that sort of thing. And yeah, to give you some precise numbers, right? For April, these are April numbers, 3.8% increase in the the overall CPI number. And you have to go back to 2023 to get a similar number in terms of inflation. That was Really, look at it. 3 years, right? I mean, that was that's significant. And even the month-over-month numbers, that was 0.64% increase month-over-month. That's the second highest in month-over-month growth going back to 2022. Last month was a big surge in the month-over-month numbers. That was 0.1 that was 0.86, which was a big jump in the month-to-month numbers. But then we got and this this month was slightly smaller, but still a big big jump in the larger context. So you've got to go back 4 years to see a number similar to that. And that would and you know, if you remember 2022 was when Jerome Powell was talking about how it's all transitory inflation, it's no big deal and everything. That was those were like 40-year high numbers in inflation that we got in 2022. And unless something changes, that's the direction that things are heading in right now in terms of the overall numbers. Now, that includes gas and uh, or overall and food. If we look at the the core numbers, yeah, 2.75 for the year-over-year. And let's see how what is that looking like in terms of historically? Uh, that is the highest in it looks like oh, about a year. So, that's a fairly significant jump there. And I should note this has been heading back upward again for the last 2 months. So, uh, there's not not much sign of like anything built in in terms of relief there. And we should note that the month-over-month number in core was was quite high. You got to go back to 2020 January 2025 to get a higher number. And really kind of back to 2023 again. That was .37 was the month-to-month increase. And the month before that it was .19. So, a big jump from March to April. And yeah, to get similar numbers, you're going back to uh, early 2025 again. So, uh, you know, almost 18 months here in a little bit. Uh, this I mean, this is not right? Do you guys remember it was 2024. It was September. The election was going to happen soon. Right? And Jerome Powell gets up there and says, "Oh, we're cutting the interest rate." Going to cut the target interest rate. And everybody's like, "He's obviously cutting to help Kamala get reelected." He's like, "No, no, no. Inflation's under control. Everything's heading quickly back to the 2% target." Total BS, right? There's no way he actually believed that. And here we are a long time later and we're we ain't getting back to 2%. Uh, and so that was either just a blatant lie or a horrible miscalculation on the part of the Fed. Neither one is particularly comforting. Well, building off of that point, I mean, we're throwing a lot of numbers around to me like this can be simplified with one number and that's five. Cuz it's been five years since inflation has been at the Fed's target of 2%. And that's by their own their own numbers, right? So, like, you know, I I don't want to see people throwing in like shadow stats, links in the in the market. I love you, like, if you're doing that, I love you. But, like, this is by their own criteria, right? The Fed is running inflation for five years. That is half a decade. Well above the 2% target rate. And again, like, I I remember just watching when when Powell was at I think I think it was like Cato event in 2022 or something like that saying that it is so difficult to to to build respect for the institutional target when it allows to drift. And obviously, again, there's aspects of this that go beyond Fed policy. The Fed policy is a is a major factor, right? Obviously, the money supply issue is a very very major factor in this. You know, if you want to throw in, oh, well, this is a this is a catastrophic war situation that is is building upon that. Although, speaking of which, I mean, we're dealing with three massive global supply chain issues within that same five-year period. Um that is not to give any, you know, any any any cover for the Fed. Man, I just kind of remarkable that we've been COVID, Russia-Ukraine, and now US-Iran. I mean, these are three crazy crazy global supply chain issues during that time. But, again, like, this is now half a decade where Americans have now been forced to deal with the the reality and the consequences of inflation that's flying off and very well beyond the explicit target rate. And I mean, I was talking with someone today. I mean, this this is one of the the wealthiest people I know. And he was talking about how he he himself was having to cut back on regular expenses. I mean, they they they weren't like, you know, kitchen table issues per se. I mean, they were they were they were some of the the the privileges and perks that comes from someone of of that that that that class. But, but he himself was was, you know, starting to make explicit real changes to the way he was allocating his funds just because of how bad the situation is. And obviously again I think the fact that people are now almost just used to as frustrated upset angry I mean I think all of this fuels fire in various populist directions and this is obviously global situation we might talk about some particular electoral things that might be driving some of this are illustrations of this further further going forward but again I just the cultural consequences of this being so normalized now for such a prolonged period of time and and again as as you guys have illustrated I mean getting this genie back in the bottle even for what the Fed was again already running hot prior to this is this is more than just you know gas prices are going to go down when when we've already when we finally really for this time for totally for sure when this war everything's going back to normal I mean that we're obviously seeing far more damage than you know simply open up the spigots of the gas pump. Well and to his credit at least Powell has not been obedient to the point of of framing the price increases as something like the mullahs price hike or something like that blaming Iran the way he blamed Putin for rising prices when the fault of course was the US regime for inflating the dollar supply and just as a final comment on inflation by the way first of all don't send us angry emails we we don't agree with the the Fed's 2% inflation goal that's just their It's just there. Yeah and which they can't even accomplish their standard is this the legislation for the Fed says it should be 0% by the way that legislation goes back to the late 70s so they're not even following the law on that and then as Austrians have pointed out a million times in a actually free economy the real price inflation rate would probably be negative because thanks to innovation you're overcoming scarcity so you would actually have falling prices in most cases. So, that's the reality of what price increases should be. Certainly not 2% which is just this crackpot theory that they came up with in the '80s and '90s. Uh but just to know before anyone says, "Oh, but what about PCE inflation? That's what the Fed's really going off of. They're not going off CPI." Okay. Just know three the most recent PCE number, which is the Fed's preferred inflation number, that was 3.5%. That was outrageously high by the Fed's own standards, right? 3.5%. That was March. We don't even have April's numbers yet. Which could very well be higher. Uh so, just just be aware of that. Yes, I'm aware of what the numbers they like, but even those numbers are terrible. So, thanks, Fed. All right. So, what's next? Well, I mean >> [laughter] >> There's plenty we could talk about it. The other big story right now that we just don't have a lot of information on right now is the summit in China between Trump and Xi. It started well, it's difficult cuz they're on the other side of the world. So, figuring out which day it it is compared to us is confusing. But started I guess today which is a lot earlier and they've been Trump and Xi have been meeting and there's just not a lot of information at least as of the time of recording that's come out about the specifics of it. The thing that stood out to me though immediately from when his plane touched down was how much the CCP was leaning into the flattery which is smart because that is how you manipulate Donald Trump is you make him feel amazing. And they so they had all these school children out there waving flags and of course all the MAGA influencers are talking about how this just proves how much we're respected on the world stage. And it's like, "No, he's being manipulated." And the influencers are being manipulated um, too, but there's I know things to watch uh, with the the broader summit, but um, it seems like I mean my my read on it is that uh, G is wants to make some moves with Taiwan and and hopefully change the US position towards Taiwan, which would be a big deal. Uh, I think Trump is mainly there um, hoping that he can get them to back off their support for Iran and basically help him get out of the mess that he created in the Middle East. He brought a bunch of CEOs with him, so I'm sure he would love something to get some deal put together that would, you know, make the stock markets happy and make people think, "Okay, we're finally going to get out of this economic rut cuz we have some new brand new deal." But as far as I can tell there was no like usually the the way that works is they send people over there. Negotiations go on for a long time and then the leaders come in and basically sign the papers and take pictures and I don't think anything was actually happening beforehand, so I if a deal happens, it's probably going to just just be purely for optics, but I don't know. We'll see. I was like, "They're they're buying 200 jets, Boeing jets, Connor." Oh, is that right? 200. That's the president is the biggest Boeing >> Boeing salesman. Is that what Ivanka said? Yeah. Okay, great. It kind of all the economic problems solved. Look at that. We solved some We solved China. >> Soybeans, soybeans and Boeing jets. We've got it made. Well, and does it even matter if any of this leads to anything permanent, right? All that matters for the MAGA people is that he can say some things that gets people really excited and then the MAGA people in their minds Trump is the great man, the genius, the amazing diplomat. Then they completely forget about it. And then that's it. It's like with uh, Venezuela, right? Oh, we defeated socialism in Venezuela cuz Trump said so on day one. And then of course that didn't happen at all. Uh, the same regime is in power. Doesn't matter. We forgot about it. >> state. Did did you hear about that, Ryan? Right. I mean, Maga moved on. They don't care. They don't read books and stuff about >> Let's bring them all in as voters. >> Right? It just It just doesn't matter. So, yeah, all that matters is the first few days after the summit to say like all this stuff about oh, Trump has announced that she has offered uh to help the US open the Strait of Hormuz. I would love to see what the details of that actually are. First of all, I mean, the fact that Trump said something doesn't mean anything at all. Uh but What does that mean for China? I mean, the the Chinese are not humanitarians in the sense of let's help out the Americans. So, I'm just interested in in what that actually means. None of this means anything on face value cuz that's how the Chinese and the Russians do diplomacy. Uh it's not uh some It's not broad moral gestures or anything like that. It's what's good for my nation-state. And Must be nice. Right. >> [laughter] >> Must be nice to have a normal country where the diplomats try and do what's good for your country, not for some foreign countries on the other side of the planet as is typical in the US. Uh so, I mean, I just I don't see what's going to come out of this. He's going to announce maybe some plane purchases or whatever, but I mean, come on. >> look at the the specific language, at least that I was seeing from Xi, it was very I mean, they choose their words very, very carefully. And the the dynamic is that I believe right before the summit, which is probably smart, that Iran just let started letting Chinese ships through. So, suddenly, now the only really real detriment to China having access to the strait is the US blockade and whether the US starts to sort of kind of flips the dynamic, which is smart, but the way she was talking about it was very much like he they support an open strait. Basically, yeah, we don't want Iran to close it, but we also don't want the US to close it. So, actually, like the the there when you actually dig into the the specifics of it there, it's kind of a backhanded comment against the US and you know, in terms of what they're doing there. So, like it's of course Trump then takes that and is like, oh China's just going to swoop in and start escorting all these cargo ships with us, but that if you actually listen to them, that's not at all what that's not my interpretation at least. And again, it doesn't matter for the average Trump supporting American voter. They're not interested in those details either. And so, when none none of that happens a week from now, it won't matter. They'll have already moved on to whatever the next thing. Right, I mean it's just amazing how out of nowhere everybody started saying that the US has been at war with Iran for 47 years or whatever. No one used that phrase ever before like late March 2026 and suddenly they all repeat it like it's something that we've all known for decades. So, uh apparently it's easy to accomplish this little game that uh that he uses and I'm kind of impressed a little bit as the number of times it's worked, but uh it's a big black pill if you were if you were dumb enough to think that the average American has critical thinking skills. Uh got bad news. The bad news turns out they don't. All right. Well, what what other horrible things going on? >> [laughter] >> Should we talk about? Do we have to give a shout out to to Kevin Warsh not becoming getting through the process now? Well, >> by the Senate, right? Confirmed through the Senate. So, I guess the question >> Which which means J. Powell is no longer under investigation. So, like I mean our our hats to to J. Powell on that, but takes away a fun topic, but uh Well, is Powell then going to remain on the Board of Governors? He he claimed he was planning on it. Yeah, that he basically said you'll have to fire me if you want me. From my cold dead hands, I think is what J. Powell said. >> Which is very fascinating. I mean, I saw an op-ed saying, "This is outrageous. No one else does this. This is Powell meddling." Why have appointed terms if you're expected to leave after you're chairman? I'd change the law if you want people to automatically be forced to leave after the chairman. I mean, I don't care about Powell or whatever, but uh this Is he Is he on the board or is he not? But that's the I think mistake of Well, not not that I I don't even think this was it like really all that strategic, but the whole MAGA approach to this has been to demonize Powell. The The Fed is fine when you don't have Powell there, and he is the villain that's messing everything up with his "Too late, Powell" or whatever. And so in in that narrative, in that story, if you had to get rid of the guy, and then everything's going to work, and we're just going to lead the country to, you know, amazing economic success with the super great Fed. Um and so the focus becomes him. But as we've been pointing out, it's not Powell. It's the institution that is the problem. And so that this is the the downside or one of the many downsides of the MAGA approach to the Fed. It It is worth noting though that this is a break from historical norms. Cuz I remember the same sort of conversation was going on. It didn't progress as far. It obviously didn't get to the, you know, actualization, but I mean, there were kind of conversation about whether Janet Yellen was going to stay um when Powell when Powell became chair the first time around. Um and she ended up resigning, whatever. Things move on. But like this is unusual. This is This is unprecedented by a Fed chair to stay on the board after his chairmanship. So at the very least, it is worth noting that this is, you know, yet another breakdown or yet another change of norms with the institution. And it it will be interesting. I mean, again, you know, there there are We've already discussed this a few times whenever Mr. Warsh has come up on on this show. But like I mean, Warsh has said some very interesting things when when in particular to the balance sheet, um some some broader conversations about some of the issues with the Fed. Um I mean he himself was on the Fed during 2008 and you know, there were some certain some some things there that he supported that are very worthy of criticism. You know, but but there's a lot that he says rhetorically that is very reformist in nature. Um our expectation is that the machine will march on and that for all the great and lofty rhetoric when it actually comes to governing this sort of ship that's becomes a whole different thing. But I do think that there's a there it is a interesting dynamic in a in a unique environment when you have a former chair on the board if you have any sort of reformist sort of, you know, in that short term when you're first getting in and you're, you know, you you you you you get the newly painted office and and you know, you you think you're on top of the world at that very moment and you still got the old guy the the old boss still in the room. Um that is a dynamic within institutions that can that can lead to further fracturing and and some some interesting um you know, inner inner politics stuff in its own right there. Um so it is worth noting at the very least that yeah, this is something that is is very different for this body and just simply yet another example of one of these very independent, very serious institutions um having normal practices being thrown out the window in our current day and age. Which is great. Yeah. Well, and I don't know about that. But what's interesting about that though is uh and that that sounds kind of reasonable when you're talking about Yellen and Powell because that those were appointed by different presidents. Here I I don't have the the term lengths uh memorized right now, but is this like a this is probably a unique situation where Powell was appointed by Trump and now he's leaving and it's another Trump appointee. Of course they're like enemies now which is kind of interesting there, but what would be interesting if that was kind of part of the motivation of um of that norm beforehand. That really goes against the whole idea that these are not supposed to be politicized presidential appointees. These are supposed to be, you know, pure uh these these economists that are just purely interested in the the national interest, but it's a that's I don't know, that's interesting. I hadn't thought about that. >> Well, it's it is it because like historically you typically often have Fed chairs that go beyond presidencies, right? I mean, Yellen Yellen was was relatively short in that that regard because she was an Obama appointee and then was in was was was replaced by Trump, you know, pretty relatively quickly in the grand scheme of things. You know, but Bernanke was, you know, survived Obama, Greenspan and, you know, was the maestro for quite some time, right? You know, it's not unusual to have I mean cuz, you know, the Fed usually finds a way of being everyone's best friend. That's what happens when you have near the money supply. You know, but but again but I do think that's worth noting though is that even the shortening itself of Fed governor terms or Fed chair terms is a I think an an interesting illustration of the changing dynamics of this as an institution and the broader political environment. Which is a good byproduct and this is a result of people talking about the Fed, criticizing the Fed, and people need to have an opinion about the Fed. So, this is all all going our way. Well, I double checked. >> facetious there. A little facetious. And it's uh yeah, pro uh Powell's term expires in January 31, 2028. His governor term. Uh so, that'll be interesting if he sticks it out till then cuz that's not like next month. That's uh that's not in the near future. I do appreciate the opportunity cost cuz, you know, he's giving up a a really fat salary of speaking gigs right now, which you know, he's probably or not not being able to fully utilize I'm I'm I'm not suggesting he's not getting, you know, whatever. But I mean, that's what what happens. I I think Powell was a Powell was probably a lot wealthier than most Fed chairs in the first place. He's just doing it for the love of the game, man. The love of the game. Nothing will stop a Washington hack from collecting speaker fees. I mean, members of the Supreme Court do that all the time, right? Um these terms are so long, right? These 14-year terms, it looks like Powell was appointed in 2012 as as governor. Yeah, cuz he was I was I was one of the ironies of him like being selected in the first place that he was an he was an Obama appointee to the board in the first place. Yeah. That's the I I just I I just often don't think about just how very long those terms are. I mean, I have never even had a job for 14 years. I mean, it's uh that's a long time. Uh what's interesting though, I've noticed uh is along the lines of what you've said though is uh this idea of having someone with acknowledged expertise on the board. And I think that would be uh neat for lack of a better term to have like a shadow governor on the board. This is one of the things that I actually think is good that the British Westminster system has. Um I don't know that I've never really kind of come down one way or the other on that very much. But there are some cool things that the Westminster system does and I think the shadow government is is one of those things, right? Where they've got essentially a cabinet in waiting uh that critiques and is in place as sort of a threat to the current cabinet in place. So, the Dems for example, if there's a Republican in the White House the Dems should have like their shadow secretary of state, their shadow secretary of the treasury. Basically to hey what listen, I'm going to use a term I learned from my kids. So that these shadow members can mog the the the sitting members of the cabinet, right? So uh every time that Pete Heck says says something stupid, then you've got these shadow uh secretary of war uh defense or whatever to say, "No, no. That's a stupid thing. This is what we should be doing instead." I I that'd would really fun to have Powell sitting on the board saying, "No, no, this is what we should be doing." in terms of monetary policy, and people would actually listen to him because he's a former board or a former chair. I think that would be great. He should have a he should have a competing press conference. Yeah. >> Right? Yeah, that'd be great. That is the only way actually that you could have people come to real critical thinking inspired opinions, right? If you if every one of these stupid press conferences had a counter press conference. Right? Just like there's the response to the State of the Union address, which is always a strip-down lame thing, but if it was something just as long, just as meaningful, or at least nearly so, then maybe people might actually get real conflicting opinions and info, right? >> conference, yeah. Well, the the closest thing is that you had a little bit of that dynamic with Thomas Hoenig during the Bernanke years, where like it it was like after every meeting it seemed like he had an op-ed in the Wall Street Journal explaining like why the Bernanke Fed's decision was like crap, and like That was [laughter] like That was a that was a fun time. I mean, I mean, not not necessarily quite as as entertaining and theatrical as as a press conference. I don't know how you know, but but like I said, there was there a little bit at one point. And then they got they got thrown out. There was a a New York Times op-ed from Janet Yellen and is Jared Bernstein attacking Warsh earlier this week. So, maybe we're going to get some more of that. And yeah, there there'll be like the shad- the shadow economic council and Fed is just, you know, the Biden and Obama group. But still, that I mean, I thought that was excellent. Their I thought their article was nonsense, but you know, that's that's not surprising. Um but just the fact that they're they're attacking the next Fed chair is excellent. So, it's not as chaotic as I want it, but it's it's certainly trending in that direction. Well, if you talk to the old-school people that talk about the Constitution and stuff like that, they'll point out that, right, the original vice president was the guy who came in second place. Right? Before they modified the uh Constitution to make it be this ticket where the president and vice president ran together, the idea was that you had a vice president from the opposing party or you had a vice president who hated the president cuz they'd been competing against each other. And he got the second highest number of electoral college votes. Now he's the vice president. So he was kind of a standing threat to the sitting president. I can see the problem there cuz it's kind of a motivation to assassinate the president cuz then you actually do change the the ticket uh if the assassination is successful. But still, I could see the benefits of that as well. So yeah, there used to be much less respect to this idea that whoever's in the position of power must have the the podium at all times, must have the dominant position in terms of messaging. And I think I think it'd be great to have constant chaos in terms of conflicting messages in Washington. That's absolutely the way it should be. And that's the way it would have been back in the days of Jefferson and John Adams and that sort of thing. And I don't see a problem. That's why I love Aaron Burr cuz like he was beefing with both Hamilton Well, I mean obviously shot Hamilton, but he was also beefing with Jefferson just as much. And so I had That's a guy I could respect right there. >> [laughter] >> Well, so you wanted to talk a little bit about the LA mayor's race. Yeah, well well, I get I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I campaign there in LA. Now I don't I don't particularly care about the politics of of LA that much. I don't plan on being out in LA anytime soon. Yeah, maybe maybe if Spencer Pratt starts cracking down on you know street crime, maybe that will slightly improve my chances of ending up in LA anytime soon. I do know we've got some great donors in LA, some of which will be here at Rothbard University. Um but in particular the rise of these very theatrical AI commercials and videos. We've got like Karen Bass and like Joker face and you've got like Rich King Gavin Newsom and you know, the the people rising up in power and and Karen Bass walking through a a playground and bragging about how like almost none of the needles in kids parks have AIDS anymore. Um you know, touting her very many accomplishments. But I I I do think though that that there this does tap into a a you know, the the sweet spot of where modern American politics I think is right now. And I think part of it was the vibes that Trump had in 2024. Um perhaps less so right now. But it's it's this this this middle ground of demonstrating uh competency or just like like normal person concerns about like security and like not coddling drug addicts and you know, having drug needles in children's parks mixed with entertainment value. And so just very middle ground of like, you know, you're you're living in a politically created hellhole. Nothing is working because of the politicians. I'm a brash entertaining guy who's going to explain just how absurd the situation is. Not talking through I've got my my 16-point white paper plan about how this government reform is going to uh redeem these drug addicts and in Skid Row. You know, we're we're just going to unleash the police if you will. Um and and we're just going to clean these things up so that normal hardworking people don't have to be worried about having a knife through their neck if they look the wrong guy in the eye. And you know, I I I'm never going to be particularly optimistic about California electoral outcomes, right? I've no idea if this guy is going to be a viable candidate when push comes to shove. It was entertaining to see him to use Ryan's favorite word, mog his his opponents during the LA debate. Um uh Was it earlier this week, last late last week? Everything runs together with with this wonderful timeline we have right now. But but I do think there's something that Rothbard would very much appreciate about Spencer Pratt's campaign. And I I think got does go to just the the demand and the the desire for people just to to point out the obvious of the absurdities. Cuz you listen to most politicians, you know, team red, team blue, whatever, but you can people in DC being more concerned about, you know, the mullahs of Iran than, you know, inflation, gas prices, things that normal Americans are are concerned about, right? Like I mean there's a very obvious clear disconnect. Um you know, and and you have the the ability to democratize your message out there and now use very fancy tools to do very entertaining parody videos. Uh you know, I I'm very uh very excited to see what this may turn into further as I have a feeling that none of these uh kitchen table issues are going to be resolved anytime soon. Yeah, that's true. I haven't been following that race too much, but this past week I've been paying more attention uh to Mondaire in New York than I have really since he got elected. Got elected and yeah, I certainly don't like just about anything he's doing on a policy level, but it was striking with him is he basically won his campaign with these videos that he'd go make out on the street. And he's just still doing that. He's basically just continued his campaign. And uh there there was one that went viral last month for tax day or in front of this um I I forget the the firm, but this executive's penthouse. >> Griffin's house. Yeah, yeah, yeah. It was Griffin. And it was like like hundreds of millions of dollars. And so, you know, has this minute-long, you know, well-produced viral video. Um and then he just did another one that went it came out I think on Tuesday um about and it was it was if you actually dig into it, the thing was so dishonest about how they inherited this $12 billion deficit and he brought that down to zero without like basically cutting any social programs and did it by taxing the rich and so and then he like throws in some quick line um mentioning that like they got some support from Albany cuz a lot of it was basically a bailout from the state government. And then like you actually dig into it and there's so it was just so shady. Like they're just assuming that they're going to get hundreds of millions of dollars from like improving efficiency and stuff like that. And then this like they're making ambulance rides more expensive. So like like if you actually dig into it, it's not anything like what he's presenting, but he puts it all in this 1-minute video. Once again, well produced. He performs it well. And the the fact is that most people if they support him, they want to believe whatever he's saying. So they're not actually going to go dig into it. And it's just that was striking to me. I really feels like that is a good example of what I guess you could call like the post-Trump politicians. But obviously there's overlap of a post that changes that Trump brought to politics where it's all about the theater of it. And yeah, and people if they support you, they want to believe. And so if you just like I remember we were talking about him when I guess he won his primary and I was saying like okay, this is probably the peak of it and it's going to it's a lot more difficult when you get in and actually have to start governing. And sure enough, he's hit a lot of roadblocks. It is not of course all rosy from his perspective, but if you can do all of that quietly enough and then package these nice 1-minute videos, your supporters will love that. They won't really care about any of the the the junk. Obviously like give it enough time and yeah, this there there are institutional changes he's making that will have consequences, but people are so not not removed from the consequences, but it's so indirect for people that they can just watch this video and be like, this is excellent. This is great. And I think that's really Trump didn't bring that, but he he brought that out and made that like the center of and a lot of it's like the internet, too. Um that is the dynamic of a successful politician going forward. Just keep the campaign going and give it you know, twist things enough so that your supporters can pretend that it's awesome with you. And yeah, you can basically kick the consequences of all the terrible things you're doing down the road. And I yeah, so Mondani was it this last week is a good um example of that model working. Unfortunately. Well, did I see that was I correct in seeing that he's had to back off on this huge tax increase for the rich? >> Cuz so many are leaving town? There's there He wanted to do this giant property tax increase, which he did back off. But then the thing that I guess he like bullied the governor into finally proposing was a I I forget the term, it's like French. But basically a tax on um luxury homes. So I think homes over $5 million that are second homes. So the idea being which is this is true, like there's a lot of luxury penthouses and apartments in New York City that are sitting empty because it's these hyper-rich people from all over the globe that buy these houses and they want to come to New York, they want to stay somewhere nice, but so that they buy it. That that's something that's attainable for them with their level of wealth, but it's sitting empty. So it's like this good populist like we're going to go tax that. But I what was interesting about it is I guess his office said that they're just that their estimate was that it was going to be bringing $500 million um a year starting, you know, immediately. And the comptroller said, "No, it's probably going to be I think his estimate was like uh $350 million or something." Um but like that's another example like Mondani just took that $500 million uh which by the way the tax has not gone into effect yet. Uh it still needs to be approved. Um but they just, you know, that that's one of the reasons he claims to have gotten rid of this $12 billion deficit. So, it's all like on purpose, but this is what politics is. It's like very confusing if you are actually trying to understand what's happening, but they just package it in these ways that sound good enough and then people move on. Yeah, I think that's a that's a theme we keep encountering when we're talking about Democratic politics. It's I mean, there's there's not follow through. It What matters is what's going on in the moment. And part of that is I've tried to suggest that maybe there are that maybe elections aren't frequent enough, right? Every US Senator knows that just don't do anything unpopular in the last couple of years, the last year before you stand for re-election. And everyone will just forget about all that stuff that happened during the first four or five years of your term. And it works out pretty well for them. Uh and it's it's interesting to me if you look back at how often they had to stand for re-election and then uh 18th and 19th century, some state senators had uh they had to stand for re-election every 6 months in some states. And state legislatures in general, you were looking at 1-year terms. Annual elections were the common thing for colonial legislatures and into the early 19th century, and you can see it even in our own time period. Um in my own lifetime, I don't know about your guys, but in the '80s and '90s, you still had most governors that uh or at least you had a lot more governors that were standing for 2-year terms. Back then, that was uh for Bill Clinton, for example, his first few terms as governor, these were 2-year terms. And then they eventually changed it to 4-year terms. That's been That's been a trend in American politics is to make the terms longer and longer. I think to make it harder to remember between the last election and now what the guy even did. So, it's it's a very anti-democratic thing that they've been doing and it's uh quite remarkable uh how much resistance there is to going back to uh shorter terms, even though it's already been done before. So, uh that just seems to be yet another aspect of American {quote} {unquote} democracy right now. That's like how you rhyme democracy with making. >> [laughter] >> Cuz I keep close tabs on this thing I love that is American democracy. Yes. >> I I think there's this flawed idea that cuz it's so naked during campaign season that they're basically trying to woo all these donors. And so, there's this idea that when you're running for re-election is when you're like susceptible to interest groups. And then, when you're not running for re-election, that's when you can, you know, have the the interest of voters at front of mind. And that's obvious if you actually understand how the government works. No, it's always about interest groups the entire time. But, I think that's a big motivation behind all of, you know, lengthening these terms and probably why like the Fed has such long terms there. Like it's this idea that it's only in those little, you know, few months when they're campaigning that they actually have to focus on, you know, pleasing the other powerful people. But, uh but no, that's that's a constant thing with any state. Yeah, it's amazing how 18th century Americans would have never fallen for that clay. They would have been like, "The only way these people will ever do what we want them to do is if they have to constantly grovel to us, the voters. Otherwise, they don't care about us at all." And that was a big complaint about the 6-year term for the US Senate. It's like "People, this is this is an appointment for life, folks. Giving these federal senators a 6-year term, that's crazy talk." Unfortunately, uh the federalists got what they wanted on that. But, yeah, the anti-federalists didn't go in for that idea at all. Yeah, what a what a strange counterintuitive thing is that democracy only works when there aren't elections, right? Wow, what what a great trick getting people to fall for that one. All right, well, if we go ahead better go wrap up this episode here on the Power Market Podcast. Thank you guys for joining me today though Bishop Connor O'Keefe. All of you out there listening, thank you for joining us. We'll be back next time with more so we'll see you then. >> [music]
Bad Inflation Data Drops While Trump’s in China (And Other Headlines)
Summary
Transcript
[music] >> Welcome back to the Power Market Podcast. I'm Ryan McMaken, editor-in-chief at the Mises Institute. And joining me today are two of our contributing editors. We've got Tho Bishop and we've got Connor O'Keefe. And we're going to cover a variety of topics in terms of what's going on in the news this week, but first, Tho, we got some upcoming events. We got a new book. We got stuff going on at the Mises Institute, right? Yeah, well, I'm recording live, well, I mean, not when you're watching it, but I'm recording in person in apartment 15 here in Rothbard Village because we are enjoying Rothbard University this weekend. So, prepare for more content from this great event hitting your Mises Institute media channels. But, if you could not make it to Auburn this year, you're missing out, but there are other opportunities to enjoy fine company like we'll have this weekend. Next up we'll be in the great state of New Hampshire. Why is the healthcare system broken? It's going to be on June 27th in Windham, New Hampshire. And then we've got a gold and silver prospecting for liberty event in New Mexico come August 15th in Albuquerque. And if you are a student listening to this podcast right now, stop what you're doing, pause the episode, go to mises.org/events or mises.org/misesu. Register for Mises University right now. It's the best week of the year. One of a kind experience. I promise you, you will not be disappointed. We've got travel scholarships. We've got We put you up in a beautiful Auburn hotel, the Auburn hotel, literally the name of the building. It is something you cannot miss. So, again, if you're a student, stop what you're doing, apply right now. You will not miss out. But, if you're also if you're a student, but even if you're not, we do have two great books that are coming out since we are still celebrating the year of Rothbard. One of those is not entirely Rothbard related, but it's still human action 75th anniversary a book of essays that is a package of the event we had celebrating the 75th anniversary a couple of years ago. Some great great academic articles on that that is available on the website right now. And then coming up soon is our Murray Rothbard the making of an Austrian economist. Now this book is really awesome. It is co-written by Joe Salerno and Patrick Newman cuz who else is going to read Rothbard's handwriting? I got a sneak peek of the audio book version and it is fantastic. I am almost done with this thing. I'm on the final chapter right now. But if if you're interested in Man, Economy, and State, if you've never read Man, Economy, and State, if you're interested in how did Murray Rothbard become Murray Rothbard, this book it's it's an intellectual biography. It's more focused on his economic work than his broader political project that would be like a 2,000 page book I think if you put all of Rothbard together. But it was very interesting seeing how his natural evolution from a neoclassical program to being a radical Austrian and how that directly tied into his development of anarcho-capitalism. All of that and much much more featured in this brilliant book. I mean it'll be going live here very very shortly, but if you like Rothbard, I promise you you're going to want to read this book. And Ryan, have I sold that enough? I'm pretty excited about the book. It's great. Especially since it covers the economics so much. Yeah, if you're interested in the other side of it the political side, I would certainly recommend Justin Raimondo's book Enemy of the State really the first biography of Rothbard and a good book. I have it here on my shelf. I mean [clears throat] Raimondo. You know Raimondo is Raimondo is one of those writers I still miss. Like I wish there was still a weekly Raimondo article. Same with Will Grigg. Remember William Norman Grigg? Man, I I he was still writing columns. So yeah, you can still read Raimondo's biography. Check that out. That would be a great like double thing to read. The new Rothbard book and that old and then you would basically know a lot of what you need to know about Rothbard. So, I'm sure we'll be discussing more about that later because I haven't had a chance to read it. So, we'll know more as the year gets older. Yeah, I'm looking forward to having a beverage and talking more with Patrick Newman about it, which are some of the highlights that come when you're at a Mises Institute event. That's right. >> [laughter] >> Well, let's look at what's going on this week. There's been some new economic data. The boy, there's been really quite a few things going on, none of which are like closely related. So, it was hard to come up thematically with something for this episode. But Connor, why don't you get us started? Just tell us what we should start talking about. Uh well, one kind of dramatic thing this week was the inflation report. The I guess the inflation numbers for April um came out hot, which is not unexpected. I believe CPI was 3.8% year-over-year, but then PPI was at 6%, which I think is the highest it's been since 2022 when inflation was really peaking um post-pandemic. Um and that was that was pretty striking. The other thing that stuck out to me was that core uh inflation was also higher, which and core inflation is, in my opinion, kind of a a dumb thing to focus on because food and energy, which are stripped from core inflation, are actually very important for trying to determine, you know, how easy it is for people to make a living. But it can be helpful for isolating different factors when you're looking at these reports. And all of the focus right now is on gas prices and diesel. And that's really important and really dramatic, but there's a lot of other things that are happening as a result of well, I mean, it's two things as we often talk about. The only way to get true inflation is when you mess with the money supply. And I think you guys mentioned a few weeks ago Robert Barro had a great article on on our blog about that. I think he's written a few more since then. So yeah, there's plenty of funny business happening on that side. But then also the other point that I just coming back to is that the yeah, the economic destruction of this war goes so far beyond just the oil. And everybody's so focused on the oil, but like all of these other factors that the one I can't get over is plastics. I was just driving somewhere by construction site and there was just a pile of plastic pipes. And it's like plastic pipes are so important for and all kinds of buildings and infrastructure. And it's something that if you don't work with it, you like never think about this. But that the supply of that is going to take a big hit because of this. Probably is already starting. And I think when I'm like looking at this inflation report, that's evidence to me that this stuff is just starting to kind of filter through and at least get picked up by the data. The fact that uh product the PPI was so different than CPI. I mean that kind of backs up what we've been saying that this is mainly hitting higher order goods. But it's just I guess a pet peeve of mine throughout all this, which isn't new for this specific um event this specific situation, is just how people talk about inflation as if it's just it they almost speak about it as if all these companies see the war break out and then they use it as an excuse to raise prices. And it's like this optional thing that's just we're stuck with because these companies are greedy. But really what's happening is that supply is being destroyed. There is not enough for everybody that wants it anymore. And so it's it's it's much better to think of it as like when you're going to the store and the shelves are empty. Like that's actually the situation we're in. It's not just that everything's more expensive. Now for us in the more developed world, it's mainly going to come out as higher prices, fortunately. But it's at the end of the day, it's because supply is being destroyed by this and I guess that to me that this inflation was report was more evidence that that's starting, but once again we're we're only in the early days of that. Yeah, the it was important that the core numbers continued to go up, right? Because if we're just if it was just a function of gasoline, something like that, you'd be like, "Oh, it's just gas, you know, I'm sure it'll just come right back down soon, right?" But looking at even the core numbers, that suggests an ongoing upward trend even excluding gasoline and food and that sort of thing. And yeah, to give you some precise numbers, right? For April, these are April numbers, 3.8% increase in the the overall CPI number. And you have to go back to 2023 to get a similar number in terms of inflation. That was Really, look at it. 3 years, right? I mean, that was that's significant. And even the month-over-month numbers, that was 0.64% increase month-over-month. That's the second highest in month-over-month growth going back to 2022. Last month was a big surge in the month-over-month numbers. That was 0.1 that was 0.86, which was a big jump in the month-to-month numbers. But then we got and this this month was slightly smaller, but still a big big jump in the larger context. So you've got to go back 4 years to see a number similar to that. And that would and you know, if you remember 2022 was when Jerome Powell was talking about how it's all transitory inflation, it's no big deal and everything. That was those were like 40-year high numbers in inflation that we got in 2022. And unless something changes, that's the direction that things are heading in right now in terms of the overall numbers. Now, that includes gas and uh, or overall and food. If we look at the the core numbers, yeah, 2.75 for the year-over-year. And let's see how what is that looking like in terms of historically? Uh, that is the highest in it looks like oh, about a year. So, that's a fairly significant jump there. And I should note this has been heading back upward again for the last 2 months. So, uh, there's not not much sign of like anything built in in terms of relief there. And we should note that the month-over-month number in core was was quite high. You got to go back to 2020 January 2025 to get a higher number. And really kind of back to 2023 again. That was .37 was the month-to-month increase. And the month before that it was .19. So, a big jump from March to April. And yeah, to get similar numbers, you're going back to uh, early 2025 again. So, uh, you know, almost 18 months here in a little bit. Uh, this I mean, this is not right? Do you guys remember it was 2024. It was September. The election was going to happen soon. Right? And Jerome Powell gets up there and says, "Oh, we're cutting the interest rate." Going to cut the target interest rate. And everybody's like, "He's obviously cutting to help Kamala get reelected." He's like, "No, no, no. Inflation's under control. Everything's heading quickly back to the 2% target." Total BS, right? There's no way he actually believed that. And here we are a long time later and we're we ain't getting back to 2%. Uh, and so that was either just a blatant lie or a horrible miscalculation on the part of the Fed. Neither one is particularly comforting. Well, building off of that point, I mean, we're throwing a lot of numbers around to me like this can be simplified with one number and that's five. Cuz it's been five years since inflation has been at the Fed's target of 2%. And that's by their own their own numbers, right? So, like, you know, I I don't want to see people throwing in like shadow stats, links in the in the market. I love you, like, if you're doing that, I love you. But, like, this is by their own criteria, right? The Fed is running inflation for five years. That is half a decade. Well above the 2% target rate. And again, like, I I remember just watching when when Powell was at I think I think it was like Cato event in 2022 or something like that saying that it is so difficult to to to build respect for the institutional target when it allows to drift. And obviously, again, there's aspects of this that go beyond Fed policy. The Fed policy is a is a major factor, right? Obviously, the money supply issue is a very very major factor in this. You know, if you want to throw in, oh, well, this is a this is a catastrophic war situation that is is building upon that. Although, speaking of which, I mean, we're dealing with three massive global supply chain issues within that same five-year period. Um that is not to give any, you know, any any any cover for the Fed. Man, I just kind of remarkable that we've been COVID, Russia-Ukraine, and now US-Iran. I mean, these are three crazy crazy global supply chain issues during that time. But, again, like, this is now half a decade where Americans have now been forced to deal with the the reality and the consequences of inflation that's flying off and very well beyond the explicit target rate. And I mean, I was talking with someone today. I mean, this this is one of the the wealthiest people I know. And he was talking about how he he himself was having to cut back on regular expenses. I mean, they they they weren't like, you know, kitchen table issues per se. I mean, they were they were they were some of the the the privileges and perks that comes from someone of of that that that that class. But, but he himself was was, you know, starting to make explicit real changes to the way he was allocating his funds just because of how bad the situation is. And obviously again I think the fact that people are now almost just used to as frustrated upset angry I mean I think all of this fuels fire in various populist directions and this is obviously global situation we might talk about some particular electoral things that might be driving some of this are illustrations of this further further going forward but again I just the cultural consequences of this being so normalized now for such a prolonged period of time and and again as as you guys have illustrated I mean getting this genie back in the bottle even for what the Fed was again already running hot prior to this is this is more than just you know gas prices are going to go down when when we've already when we finally really for this time for totally for sure when this war everything's going back to normal I mean that we're obviously seeing far more damage than you know simply open up the spigots of the gas pump. Well and to his credit at least Powell has not been obedient to the point of of framing the price increases as something like the mullahs price hike or something like that blaming Iran the way he blamed Putin for rising prices when the fault of course was the US regime for inflating the dollar supply and just as a final comment on inflation by the way first of all don't send us angry emails we we don't agree with the the Fed's 2% inflation goal that's just their It's just there. Yeah and which they can't even accomplish their standard is this the legislation for the Fed says it should be 0% by the way that legislation goes back to the late 70s so they're not even following the law on that and then as Austrians have pointed out a million times in a actually free economy the real price inflation rate would probably be negative because thanks to innovation you're overcoming scarcity so you would actually have falling prices in most cases. So, that's the reality of what price increases should be. Certainly not 2% which is just this crackpot theory that they came up with in the '80s and '90s. Uh but just to know before anyone says, "Oh, but what about PCE inflation? That's what the Fed's really going off of. They're not going off CPI." Okay. Just know three the most recent PCE number, which is the Fed's preferred inflation number, that was 3.5%. That was outrageously high by the Fed's own standards, right? 3.5%. That was March. We don't even have April's numbers yet. Which could very well be higher. Uh so, just just be aware of that. Yes, I'm aware of what the numbers they like, but even those numbers are terrible. So, thanks, Fed. All right. So, what's next? Well, I mean >> [laughter] >> There's plenty we could talk about it. The other big story right now that we just don't have a lot of information on right now is the summit in China between Trump and Xi. It started well, it's difficult cuz they're on the other side of the world. So, figuring out which day it it is compared to us is confusing. But started I guess today which is a lot earlier and they've been Trump and Xi have been meeting and there's just not a lot of information at least as of the time of recording that's come out about the specifics of it. The thing that stood out to me though immediately from when his plane touched down was how much the CCP was leaning into the flattery which is smart because that is how you manipulate Donald Trump is you make him feel amazing. And they so they had all these school children out there waving flags and of course all the MAGA influencers are talking about how this just proves how much we're respected on the world stage. And it's like, "No, he's being manipulated." And the influencers are being manipulated um, too, but there's I know things to watch uh, with the the broader summit, but um, it seems like I mean my my read on it is that uh, G is wants to make some moves with Taiwan and and hopefully change the US position towards Taiwan, which would be a big deal. Uh, I think Trump is mainly there um, hoping that he can get them to back off their support for Iran and basically help him get out of the mess that he created in the Middle East. He brought a bunch of CEOs with him, so I'm sure he would love something to get some deal put together that would, you know, make the stock markets happy and make people think, "Okay, we're finally going to get out of this economic rut cuz we have some new brand new deal." But as far as I can tell there was no like usually the the way that works is they send people over there. Negotiations go on for a long time and then the leaders come in and basically sign the papers and take pictures and I don't think anything was actually happening beforehand, so I if a deal happens, it's probably going to just just be purely for optics, but I don't know. We'll see. I was like, "They're they're buying 200 jets, Boeing jets, Connor." Oh, is that right? 200. That's the president is the biggest Boeing >> Boeing salesman. Is that what Ivanka said? Yeah. Okay, great. It kind of all the economic problems solved. Look at that. We solved some We solved China. >> Soybeans, soybeans and Boeing jets. We've got it made. Well, and does it even matter if any of this leads to anything permanent, right? All that matters for the MAGA people is that he can say some things that gets people really excited and then the MAGA people in their minds Trump is the great man, the genius, the amazing diplomat. Then they completely forget about it. And then that's it. It's like with uh, Venezuela, right? Oh, we defeated socialism in Venezuela cuz Trump said so on day one. And then of course that didn't happen at all. Uh, the same regime is in power. Doesn't matter. We forgot about it. >> state. Did did you hear about that, Ryan? Right. I mean, Maga moved on. They don't care. They don't read books and stuff about >> Let's bring them all in as voters. >> Right? It just It just doesn't matter. So, yeah, all that matters is the first few days after the summit to say like all this stuff about oh, Trump has announced that she has offered uh to help the US open the Strait of Hormuz. I would love to see what the details of that actually are. First of all, I mean, the fact that Trump said something doesn't mean anything at all. Uh but What does that mean for China? I mean, the the Chinese are not humanitarians in the sense of let's help out the Americans. So, I'm just interested in in what that actually means. None of this means anything on face value cuz that's how the Chinese and the Russians do diplomacy. Uh it's not uh some It's not broad moral gestures or anything like that. It's what's good for my nation-state. And Must be nice. Right. >> [laughter] >> Must be nice to have a normal country where the diplomats try and do what's good for your country, not for some foreign countries on the other side of the planet as is typical in the US. Uh so, I mean, I just I don't see what's going to come out of this. He's going to announce maybe some plane purchases or whatever, but I mean, come on. >> look at the the specific language, at least that I was seeing from Xi, it was very I mean, they choose their words very, very carefully. And the the dynamic is that I believe right before the summit, which is probably smart, that Iran just let started letting Chinese ships through. So, suddenly, now the only really real detriment to China having access to the strait is the US blockade and whether the US starts to sort of kind of flips the dynamic, which is smart, but the way she was talking about it was very much like he they support an open strait. Basically, yeah, we don't want Iran to close it, but we also don't want the US to close it. So, actually, like the the there when you actually dig into the the specifics of it there, it's kind of a backhanded comment against the US and you know, in terms of what they're doing there. So, like it's of course Trump then takes that and is like, oh China's just going to swoop in and start escorting all these cargo ships with us, but that if you actually listen to them, that's not at all what that's not my interpretation at least. And again, it doesn't matter for the average Trump supporting American voter. They're not interested in those details either. And so, when none none of that happens a week from now, it won't matter. They'll have already moved on to whatever the next thing. Right, I mean it's just amazing how out of nowhere everybody started saying that the US has been at war with Iran for 47 years or whatever. No one used that phrase ever before like late March 2026 and suddenly they all repeat it like it's something that we've all known for decades. So, uh apparently it's easy to accomplish this little game that uh that he uses and I'm kind of impressed a little bit as the number of times it's worked, but uh it's a big black pill if you were if you were dumb enough to think that the average American has critical thinking skills. Uh got bad news. The bad news turns out they don't. All right. Well, what what other horrible things going on? >> [laughter] >> Should we talk about? Do we have to give a shout out to to Kevin Warsh not becoming getting through the process now? Well, >> by the Senate, right? Confirmed through the Senate. So, I guess the question >> Which which means J. Powell is no longer under investigation. So, like I mean our our hats to to J. Powell on that, but takes away a fun topic, but uh Well, is Powell then going to remain on the Board of Governors? He he claimed he was planning on it. Yeah, that he basically said you'll have to fire me if you want me. From my cold dead hands, I think is what J. Powell said. >> Which is very fascinating. I mean, I saw an op-ed saying, "This is outrageous. No one else does this. This is Powell meddling." Why have appointed terms if you're expected to leave after you're chairman? I'd change the law if you want people to automatically be forced to leave after the chairman. I mean, I don't care about Powell or whatever, but uh this Is he Is he on the board or is he not? But that's the I think mistake of Well, not not that I I don't even think this was it like really all that strategic, but the whole MAGA approach to this has been to demonize Powell. The The Fed is fine when you don't have Powell there, and he is the villain that's messing everything up with his "Too late, Powell" or whatever. And so in in that narrative, in that story, if you had to get rid of the guy, and then everything's going to work, and we're just going to lead the country to, you know, amazing economic success with the super great Fed. Um and so the focus becomes him. But as we've been pointing out, it's not Powell. It's the institution that is the problem. And so that this is the the downside or one of the many downsides of the MAGA approach to the Fed. It It is worth noting though that this is a break from historical norms. Cuz I remember the same sort of conversation was going on. It didn't progress as far. It obviously didn't get to the, you know, actualization, but I mean, there were kind of conversation about whether Janet Yellen was going to stay um when Powell when Powell became chair the first time around. Um and she ended up resigning, whatever. Things move on. But like this is unusual. This is This is unprecedented by a Fed chair to stay on the board after his chairmanship. So at the very least, it is worth noting that this is, you know, yet another breakdown or yet another change of norms with the institution. And it it will be interesting. I mean, again, you know, there there are We've already discussed this a few times whenever Mr. Warsh has come up on on this show. But like I mean, Warsh has said some very interesting things when when in particular to the balance sheet, um some some broader conversations about some of the issues with the Fed. Um I mean he himself was on the Fed during 2008 and you know, there were some certain some some things there that he supported that are very worthy of criticism. You know, but but there's a lot that he says rhetorically that is very reformist in nature. Um our expectation is that the machine will march on and that for all the great and lofty rhetoric when it actually comes to governing this sort of ship that's becomes a whole different thing. But I do think that there's a there it is a interesting dynamic in a in a unique environment when you have a former chair on the board if you have any sort of reformist sort of, you know, in that short term when you're first getting in and you're, you know, you you you you you get the newly painted office and and you know, you you think you're on top of the world at that very moment and you still got the old guy the the old boss still in the room. Um that is a dynamic within institutions that can that can lead to further fracturing and and some some interesting um you know, inner inner politics stuff in its own right there. Um so it is worth noting at the very least that yeah, this is something that is is very different for this body and just simply yet another example of one of these very independent, very serious institutions um having normal practices being thrown out the window in our current day and age. Which is great. Yeah. Well, and I don't know about that. But what's interesting about that though is uh and that that sounds kind of reasonable when you're talking about Yellen and Powell because that those were appointed by different presidents. Here I I don't have the the term lengths uh memorized right now, but is this like a this is probably a unique situation where Powell was appointed by Trump and now he's leaving and it's another Trump appointee. Of course they're like enemies now which is kind of interesting there, but what would be interesting if that was kind of part of the motivation of um of that norm beforehand. That really goes against the whole idea that these are not supposed to be politicized presidential appointees. These are supposed to be, you know, pure uh these these economists that are just purely interested in the the national interest, but it's a that's I don't know, that's interesting. I hadn't thought about that. >> Well, it's it is it because like historically you typically often have Fed chairs that go beyond presidencies, right? I mean, Yellen Yellen was was relatively short in that that regard because she was an Obama appointee and then was in was was was replaced by Trump, you know, pretty relatively quickly in the grand scheme of things. You know, but Bernanke was, you know, survived Obama, Greenspan and, you know, was the maestro for quite some time, right? You know, it's not unusual to have I mean cuz, you know, the Fed usually finds a way of being everyone's best friend. That's what happens when you have near the money supply. You know, but but again but I do think that's worth noting though is that even the shortening itself of Fed governor terms or Fed chair terms is a I think an an interesting illustration of the changing dynamics of this as an institution and the broader political environment. Which is a good byproduct and this is a result of people talking about the Fed, criticizing the Fed, and people need to have an opinion about the Fed. So, this is all all going our way. Well, I double checked. >> facetious there. A little facetious. And it's uh yeah, pro uh Powell's term expires in January 31, 2028. His governor term. Uh so, that'll be interesting if he sticks it out till then cuz that's not like next month. That's uh that's not in the near future. I do appreciate the opportunity cost cuz, you know, he's giving up a a really fat salary of speaking gigs right now, which you know, he's probably or not not being able to fully utilize I'm I'm I'm not suggesting he's not getting, you know, whatever. But I mean, that's what what happens. I I think Powell was a Powell was probably a lot wealthier than most Fed chairs in the first place. He's just doing it for the love of the game, man. The love of the game. Nothing will stop a Washington hack from collecting speaker fees. I mean, members of the Supreme Court do that all the time, right? Um these terms are so long, right? These 14-year terms, it looks like Powell was appointed in 2012 as as governor. Yeah, cuz he was I was I was one of the ironies of him like being selected in the first place that he was an he was an Obama appointee to the board in the first place. Yeah. That's the I I just I I just often don't think about just how very long those terms are. I mean, I have never even had a job for 14 years. I mean, it's uh that's a long time. Uh what's interesting though, I've noticed uh is along the lines of what you've said though is uh this idea of having someone with acknowledged expertise on the board. And I think that would be uh neat for lack of a better term to have like a shadow governor on the board. This is one of the things that I actually think is good that the British Westminster system has. Um I don't know that I've never really kind of come down one way or the other on that very much. But there are some cool things that the Westminster system does and I think the shadow government is is one of those things, right? Where they've got essentially a cabinet in waiting uh that critiques and is in place as sort of a threat to the current cabinet in place. So, the Dems for example, if there's a Republican in the White House the Dems should have like their shadow secretary of state, their shadow secretary of the treasury. Basically to hey what listen, I'm going to use a term I learned from my kids. So that these shadow members can mog the the the sitting members of the cabinet, right? So uh every time that Pete Heck says says something stupid, then you've got these shadow uh secretary of war uh defense or whatever to say, "No, no. That's a stupid thing. This is what we should be doing instead." I I that'd would really fun to have Powell sitting on the board saying, "No, no, this is what we should be doing." in terms of monetary policy, and people would actually listen to him because he's a former board or a former chair. I think that would be great. He should have a he should have a competing press conference. Yeah. >> Right? Yeah, that'd be great. That is the only way actually that you could have people come to real critical thinking inspired opinions, right? If you if every one of these stupid press conferences had a counter press conference. Right? Just like there's the response to the State of the Union address, which is always a strip-down lame thing, but if it was something just as long, just as meaningful, or at least nearly so, then maybe people might actually get real conflicting opinions and info, right? >> conference, yeah. Well, the the closest thing is that you had a little bit of that dynamic with Thomas Hoenig during the Bernanke years, where like it it was like after every meeting it seemed like he had an op-ed in the Wall Street Journal explaining like why the Bernanke Fed's decision was like crap, and like That was [laughter] like That was a that was a fun time. I mean, I mean, not not necessarily quite as as entertaining and theatrical as as a press conference. I don't know how you know, but but like I said, there was there a little bit at one point. And then they got they got thrown out. There was a a New York Times op-ed from Janet Yellen and is Jared Bernstein attacking Warsh earlier this week. So, maybe we're going to get some more of that. And yeah, there there'll be like the shad- the shadow economic council and Fed is just, you know, the Biden and Obama group. But still, that I mean, I thought that was excellent. Their I thought their article was nonsense, but you know, that's that's not surprising. Um but just the fact that they're they're attacking the next Fed chair is excellent. So, it's not as chaotic as I want it, but it's it's certainly trending in that direction. Well, if you talk to the old-school people that talk about the Constitution and stuff like that, they'll point out that, right, the original vice president was the guy who came in second place. Right? Before they modified the uh Constitution to make it be this ticket where the president and vice president ran together, the idea was that you had a vice president from the opposing party or you had a vice president who hated the president cuz they'd been competing against each other. And he got the second highest number of electoral college votes. Now he's the vice president. So he was kind of a standing threat to the sitting president. I can see the problem there cuz it's kind of a motivation to assassinate the president cuz then you actually do change the the ticket uh if the assassination is successful. But still, I could see the benefits of that as well. So yeah, there used to be much less respect to this idea that whoever's in the position of power must have the the podium at all times, must have the dominant position in terms of messaging. And I think I think it'd be great to have constant chaos in terms of conflicting messages in Washington. That's absolutely the way it should be. And that's the way it would have been back in the days of Jefferson and John Adams and that sort of thing. And I don't see a problem. That's why I love Aaron Burr cuz like he was beefing with both Hamilton Well, I mean obviously shot Hamilton, but he was also beefing with Jefferson just as much. And so I had That's a guy I could respect right there. >> [laughter] >> Well, so you wanted to talk a little bit about the LA mayor's race. Yeah, well well, I get I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I campaign there in LA. Now I don't I don't particularly care about the politics of of LA that much. I don't plan on being out in LA anytime soon. Yeah, maybe maybe if Spencer Pratt starts cracking down on you know street crime, maybe that will slightly improve my chances of ending up in LA anytime soon. I do know we've got some great donors in LA, some of which will be here at Rothbard University. Um but in particular the rise of these very theatrical AI commercials and videos. We've got like Karen Bass and like Joker face and you've got like Rich King Gavin Newsom and you know, the the people rising up in power and and Karen Bass walking through a a playground and bragging about how like almost none of the needles in kids parks have AIDS anymore. Um you know, touting her very many accomplishments. But I I I do think though that that there this does tap into a a you know, the the sweet spot of where modern American politics I think is right now. And I think part of it was the vibes that Trump had in 2024. Um perhaps less so right now. But it's it's this this this middle ground of demonstrating uh competency or just like like normal person concerns about like security and like not coddling drug addicts and you know, having drug needles in children's parks mixed with entertainment value. And so just very middle ground of like, you know, you're you're living in a politically created hellhole. Nothing is working because of the politicians. I'm a brash entertaining guy who's going to explain just how absurd the situation is. Not talking through I've got my my 16-point white paper plan about how this government reform is going to uh redeem these drug addicts and in Skid Row. You know, we're we're just going to unleash the police if you will. Um and and we're just going to clean these things up so that normal hardworking people don't have to be worried about having a knife through their neck if they look the wrong guy in the eye. And you know, I I I'm never going to be particularly optimistic about California electoral outcomes, right? I've no idea if this guy is going to be a viable candidate when push comes to shove. It was entertaining to see him to use Ryan's favorite word, mog his his opponents during the LA debate. Um uh Was it earlier this week, last late last week? Everything runs together with with this wonderful timeline we have right now. But but I do think there's something that Rothbard would very much appreciate about Spencer Pratt's campaign. And I I think got does go to just the the demand and the the desire for people just to to point out the obvious of the absurdities. Cuz you listen to most politicians, you know, team red, team blue, whatever, but you can people in DC being more concerned about, you know, the mullahs of Iran than, you know, inflation, gas prices, things that normal Americans are are concerned about, right? Like I mean there's a very obvious clear disconnect. Um you know, and and you have the the ability to democratize your message out there and now use very fancy tools to do very entertaining parody videos. Uh you know, I I'm very uh very excited to see what this may turn into further as I have a feeling that none of these uh kitchen table issues are going to be resolved anytime soon. Yeah, that's true. I haven't been following that race too much, but this past week I've been paying more attention uh to Mondaire in New York than I have really since he got elected. Got elected and yeah, I certainly don't like just about anything he's doing on a policy level, but it was striking with him is he basically won his campaign with these videos that he'd go make out on the street. And he's just still doing that. He's basically just continued his campaign. And uh there there was one that went viral last month for tax day or in front of this um I I forget the the firm, but this executive's penthouse. >> Griffin's house. Yeah, yeah, yeah. It was Griffin. And it was like like hundreds of millions of dollars. And so, you know, has this minute-long, you know, well-produced viral video. Um and then he just did another one that went it came out I think on Tuesday um about and it was it was if you actually dig into it, the thing was so dishonest about how they inherited this $12 billion deficit and he brought that down to zero without like basically cutting any social programs and did it by taxing the rich and so and then he like throws in some quick line um mentioning that like they got some support from Albany cuz a lot of it was basically a bailout from the state government. And then like you actually dig into it and there's so it was just so shady. Like they're just assuming that they're going to get hundreds of millions of dollars from like improving efficiency and stuff like that. And then this like they're making ambulance rides more expensive. So like like if you actually dig into it, it's not anything like what he's presenting, but he puts it all in this 1-minute video. Once again, well produced. He performs it well. And the the fact is that most people if they support him, they want to believe whatever he's saying. So they're not actually going to go dig into it. And it's just that was striking to me. I really feels like that is a good example of what I guess you could call like the post-Trump politicians. But obviously there's overlap of a post that changes that Trump brought to politics where it's all about the theater of it. And yeah, and people if they support you, they want to believe. And so if you just like I remember we were talking about him when I guess he won his primary and I was saying like okay, this is probably the peak of it and it's going to it's a lot more difficult when you get in and actually have to start governing. And sure enough, he's hit a lot of roadblocks. It is not of course all rosy from his perspective, but if you can do all of that quietly enough and then package these nice 1-minute videos, your supporters will love that. They won't really care about any of the the the junk. Obviously like give it enough time and yeah, this there there are institutional changes he's making that will have consequences, but people are so not not removed from the consequences, but it's so indirect for people that they can just watch this video and be like, this is excellent. This is great. And I think that's really Trump didn't bring that, but he he brought that out and made that like the center of and a lot of it's like the internet, too. Um that is the dynamic of a successful politician going forward. Just keep the campaign going and give it you know, twist things enough so that your supporters can pretend that it's awesome with you. And yeah, you can basically kick the consequences of all the terrible things you're doing down the road. And I yeah, so Mondani was it this last week is a good um example of that model working. Unfortunately. Well, did I see that was I correct in seeing that he's had to back off on this huge tax increase for the rich? >> Cuz so many are leaving town? There's there He wanted to do this giant property tax increase, which he did back off. But then the thing that I guess he like bullied the governor into finally proposing was a I I forget the term, it's like French. But basically a tax on um luxury homes. So I think homes over $5 million that are second homes. So the idea being which is this is true, like there's a lot of luxury penthouses and apartments in New York City that are sitting empty because it's these hyper-rich people from all over the globe that buy these houses and they want to come to New York, they want to stay somewhere nice, but so that they buy it. That that's something that's attainable for them with their level of wealth, but it's sitting empty. So it's like this good populist like we're going to go tax that. But I what was interesting about it is I guess his office said that they're just that their estimate was that it was going to be bringing $500 million um a year starting, you know, immediately. And the comptroller said, "No, it's probably going to be I think his estimate was like uh $350 million or something." Um but like that's another example like Mondani just took that $500 million uh which by the way the tax has not gone into effect yet. Uh it still needs to be approved. Um but they just, you know, that that's one of the reasons he claims to have gotten rid of this $12 billion deficit. So, it's all like on purpose, but this is what politics is. It's like very confusing if you are actually trying to understand what's happening, but they just package it in these ways that sound good enough and then people move on. Yeah, I think that's a that's a theme we keep encountering when we're talking about Democratic politics. It's I mean, there's there's not follow through. It What matters is what's going on in the moment. And part of that is I've tried to suggest that maybe there are that maybe elections aren't frequent enough, right? Every US Senator knows that just don't do anything unpopular in the last couple of years, the last year before you stand for re-election. And everyone will just forget about all that stuff that happened during the first four or five years of your term. And it works out pretty well for them. Uh and it's it's interesting to me if you look back at how often they had to stand for re-election and then uh 18th and 19th century, some state senators had uh they had to stand for re-election every 6 months in some states. And state legislatures in general, you were looking at 1-year terms. Annual elections were the common thing for colonial legislatures and into the early 19th century, and you can see it even in our own time period. Um in my own lifetime, I don't know about your guys, but in the '80s and '90s, you still had most governors that uh or at least you had a lot more governors that were standing for 2-year terms. Back then, that was uh for Bill Clinton, for example, his first few terms as governor, these were 2-year terms. And then they eventually changed it to 4-year terms. That's been That's been a trend in American politics is to make the terms longer and longer. I think to make it harder to remember between the last election and now what the guy even did. So, it's it's a very anti-democratic thing that they've been doing and it's uh quite remarkable uh how much resistance there is to going back to uh shorter terms, even though it's already been done before. So, uh that just seems to be yet another aspect of American {quote} {unquote} democracy right now. That's like how you rhyme democracy with making. >> [laughter] >> Cuz I keep close tabs on this thing I love that is American democracy. Yes. >> I I think there's this flawed idea that cuz it's so naked during campaign season that they're basically trying to woo all these donors. And so, there's this idea that when you're running for re-election is when you're like susceptible to interest groups. And then, when you're not running for re-election, that's when you can, you know, have the the interest of voters at front of mind. And that's obvious if you actually understand how the government works. No, it's always about interest groups the entire time. But, I think that's a big motivation behind all of, you know, lengthening these terms and probably why like the Fed has such long terms there. Like it's this idea that it's only in those little, you know, few months when they're campaigning that they actually have to focus on, you know, pleasing the other powerful people. But, uh but no, that's that's a constant thing with any state. Yeah, it's amazing how 18th century Americans would have never fallen for that clay. They would have been like, "The only way these people will ever do what we want them to do is if they have to constantly grovel to us, the voters. Otherwise, they don't care about us at all." And that was a big complaint about the 6-year term for the US Senate. It's like "People, this is this is an appointment for life, folks. Giving these federal senators a 6-year term, that's crazy talk." Unfortunately, uh the federalists got what they wanted on that. But, yeah, the anti-federalists didn't go in for that idea at all. Yeah, what a what a strange counterintuitive thing is that democracy only works when there aren't elections, right? Wow, what what a great trick getting people to fall for that one. All right, well, if we go ahead better go wrap up this episode here on the Power Market Podcast. Thank you guys for joining me today though Bishop Connor O'Keefe. All of you out there listening, thank you for joining us. We'll be back next time with more so we'll see you then. >> [music]