Heavily in the new west coast talk breaks down the prospects for an economic recovery. Hello and welcome across top were all beings are considered im Peter Lavelle as the culture war consumes american politics during this election cycle the economy remains in a big area state millions of people live on the margins the only constant for them is insecurity economists debate and eventually recovery they speak of you of the end you know but is the reality a k. A recovery a permanent underclass. To discuss this and more im joined by my guest Richard Wolffe in new york he is Professor Emeritus of economics at the university of massachusetts amherst as well as author of the recent books understanding socialism and understanding marxism and in west cork we cross to peter schiff he is chief global strategist at europe a civic Asset Management right gentlemen crosswalk rules in effect that means you can jump in anytime you want and i always appreciate it ok lets go to new york richard you know looking at the news about the economy looking at a lot of macro numbers and sometimes i think its very quite confusing and where the economy is going particularly when we look at unemployment permanent unemployment and jobs that are permanently lost here but the more i look at it and you gentlemen are preeminent experts here i dont i dont really think its that you are an l. Im really quite taken with this k. A recovery the rich got richer and the poor got or is that an oversimplification richard go ahead not at all i think weve already seen that now folks white some time that at least 2 know or 3 or 4 decades of growing inequality both of wealth and income and instead of that being understood as having contributed to this combination pandemic and crash were living through instead of that being understood we see the crash having made it worse the growth of the wealthy at the very top having outstripped everything we could have imagined at the same time that now over 60000000 americans have had to file for one or another kind of state or federal Unemployment Compensation assistance this is a system that is still going out of control in terms of extremes of wells inequality and income. Quality and theres nothing on the horizon that suggests that thats going to change and so i think that is becoming a permanent quality of this economy and is a society that used to in the 20th century pretend that it was a vast middle class that capitalism was a tide that listed all boats i dont think this is politically already a logically sustainable peter the same question to you because if we look at the Consumption Patterns of the top 10 percent during the worst of the pen demick a lot down their consumption went down Something Like 15 percent but the class that serves them their income went down more than 30 percent thats according to some reports here so i mean and we do know that they just pays those stories in the billionaire stories how theyve really done well out of all of this year is that is that a kin to a kate recovery because we do have this growing and maybe permanent underclass go ahead well you know i dont even care what letter you want to try to use to describe it my problem is with the word recovery because i dont think weve recovered at all sure there has been a recovery in the stock market in that the market recovered what it lost in the early days of coded and yes i mean this recession that were currently in began with a very substantial collapse and yes theres been a bit of a balance off of that collapse but were still in a recession and so i dont know if recovering to being in a less severe recession then we were in at one point really qualifies as a recovery and i dont think weve seen the lows i think were going to relapsed i think were actually going to go down and theres a good chance that the stock market might make new lows as well but regardless of what happens with that bubble in the short run the reality is that main streets. Pain has actually been wall street again its precisely because the economy remains so weak and whats really at the root cause of the weakness is not capitalism its the failure to have capitalism its the Federal Reserve that is monetizing massive government debts that are only inflating asset bubbles but at the same time it is depriving the real economy of the resources that it actually needs to grow and build a Real Recovery that would in fact lift all boats instead were settling for a fake recovery because thats the easiest one to create because in order to have a Real Recovery were going to have to have some short term pain in order to make that possible because what has to recover is not consumption but production we need more savings we need more Capital Investment and to and to enable lat we actually need higher Interest Rates not lower Interest Rates and we need a Smaller Government not a larger government so everything that we have done since the pandemic began is actually weakening the economy and were compound ing all of the stakes that we made before the pandemic if you remember we were already slipping along before anybody heard of covert 19 and 4th quarter 2018 thats when the wheels started coming off the bus thats when the fed did the about face and started cutting rates thats when they really started to move from quantitative tightening back a quantitative easing now in march of 2020 right those trends excel aerated we went right back to 0 and we went we skipped q. E. 4 and went right to q e infinity but all these policies are simply blowing more air into a big bubble analysts same time theyre depriving the real economy of the air that it needs to grow if it if i go back to it when all of these mistakes and i cant simply agree with much when you present but much of those mistakes have benefited the same people the rich and people that weve ever known in the history of humanity those mistakes ok yes. Id agree with you no no no a lot of assets were aware of were great were agreeing but im to focusing on richard here his name but because these mistakes who benefited these people why should they do anything about it and he made out i mean theres no excuse me let me go to richard here theres no one getting to the recording these mistakes granted yeah i think the use of the word mistakes here it always amazes me its a mistake over and over again year after year peter is quite right i agree but these mistakes being systematic the repeated over and over again are not dealt with adequately by suggesting that if only those mistakes werent made we would have some nice functioning capitalism that would look again lift all boats it seems to me that the people at the top had figured out that if and when they can they can make more money if that drowns the economy and in that downturn they can turn back to their advantage as well using Monetary Policy to insulate the stocks upon which the bulk of their wealth depends this is a mistake that so often repeated that the word mistake starts to lose its meaning this is the way capitalism slayers out it might be nice to imagine that it would function some other way but thats the utopian imagery of it stateless capitalism that probably never existed but in the last 100 years some are sure has disappeared as this state has become a major lender for the growth and concentration of wealth with or without the mergers between the state and the biggest chap in the lists which is happening more and more as we see i think this is the real capitalism we have to live with and not the imaginary one that peter likes to suggest i read. I mean the middle im in the middle of that boat between when you said you agree with peter i think you agree with both peter and youre going to go to the other theater here. What you used the word countless and i think it is you know i think its very problematic because it doesnt seem to be benefiting the whole lot of people these days nonetheless here i would agree with peter our guest here in the sense that im tired of socialism for the very very rich and then everybody else gets the crumbs in the countless the economy go ahead 1st of all dont confuse what america has now with capitalism i mean whats left of capitalism have been destroyed by socialism so its the socialism that has crept into the system that is responsible for the problems in this mass disparity in wealth but also you assume that this is going to end well for the rich i assure you its not these asset bubbles are temporary a lot of this wealth only exists on paper people are not actually spending that money its just on a on an on a brokerage account statement what is coming is a major collapse in the value of the dollar the inflation is ultimately going to result in the cost of living rising much faster than the paper value of peoples assets so believe me the rich are going to get theirs too everybody in america is going to be impoverished to a degree by these failed policies its not just of course the middle class theyre just going to suffer the most but in the end the rich are going to suffer too but the real solution for everybody is a return to capitalism what we need is sound own money and independent fed that no longer artificially manipulates in Interest Rates to prop up asset prices and to subsidize government deficit spending we need much higher Interest Rates that will result in a big decline in spending from government and consumers who have more savings will have more capital or Capital Investment we need a lot less regulation as well as. The Government Spending so we could have a more vibrant economy instead of the sick economy we have now that is on life support that is temporarily benefiting people who own the assets that benefit from the inflation that the fed is creating but also nellie that inflation is going to rise result in an increase in the cost of living for everybody and we are headed for a dollar crisis and clearly the rich on more dollars than anybody else play they have the most to lose when the value of the dollars theyre holding completely implodes ok im certain i think we have one day all 3 of us have been coming to a crisis that is on her rights but richard how can how can you save money and how can you invest money if you dont have a job i mean its very simple here. Yeah i mean im mazed a little bit by this and were going to have high Interest Rates were going to really crunch down on the economy you mention in passing that consumers will have to save more dont have anything left to save from thats why this level of savings of the great mass of americans is virtually 0 or negative already they didnt suffering for so long theres nothing left to crunch down on them which is already happening now is a recipe for much more true more oil and gas in this society zen were already then were already seeing i agree with peter that this is going to end very badly and its going to diesel late the bubble at the stock market alongside of Everything Else but for me this is the end of an empire for the 1st time in my adult life i dont see a way out i dont see a solution emerging i used to it my ear that way capitalism over change the Great Depression and all the other afflictions that is as imposed on the people around it but i dont hassle isnt it in those those inflections government did not listen honestly out of work late in that it struck me as one. Remarkable state still blames socialism for the ills of chapter the lism is an extraordinary look at a time like this when the socialist movement is coming back from a period of a story we missed precisely at the times that the rose and equality what went lampton as you let us oh she was a barrel all eyes and well they need to surface undermining them so your structure available is on me look youre talking about everybody that social workers are going to have to jump in here were going to go to a heart rate now in your discussions on whether a recovery say what are. They 1st. For if youre born into a poor family if youre born into a minority family if youre born into a family that only has a single parent that really constrains your life chances people that i. Pointed to generational poverty. Its a fight every day you rule out your needs and the needs of your family. Welcome back to cross or all things are considered im Peter Lavelle tree mind you were discussing whether there will be a k. Recovery. Ok richard let me go back to you in new york. A few years ago i met an indian businessmen very successful indian businessmen and at the time indias economy was doing why. Well again usually using these macro Macro Economic indicators ok g. D. P. Growth. Income number of people employed but at the same time theres like 200000000 people that live in stark poverty in india and i said to him i said is your the indian model just to accept that youre going to have 200000000 people and start poverty because hes used your economy is growing and for as an investment target people are pouring money into it i mean is it it has the Indian Economy sense except that its going to have an underclass so im asking you is this whats happening to america where you were going to have an underclass permanent under cattle class and if. It will the perception is that the will be enough political stability to maintain the status quo because it seems to me i agree with the last remarks you made in the 1st part of the per the program is that you know i dont see a way out here go ahead richard yeah i think thats exactly whats happening i think were learning in a variety of ways to live with an enormous underclass i disagree with you that we didnt already have one i think are good but i think it we are now learning to live with a much larger one and you can see that in a variety of ways except in spite what people claim of 200000 people dead from a pandemic that didnt have anything like that impact in many many other countries United States has 4 and a half percent of the worlds people it has 25 percent of the cold cases and 25 percent of the deaths for a rich country thats a stupefying sale year of management but its also the acceptance of uns decouple suffering in its population as if it were normal and ditto for the level of poverty divil ditto for the level of discrimination dr Antony Funnell chief yesterday at the bloomberg chua. Ology senate explained how people of color in america have the lowest wealth the lowest income dalias. Cases of coal did and they are the frontline workers theyre the ones that are suffering from hypertension diabetes obesity if you wanted the truth of everything the black lives Matter Movement wanted to suggest about systemic racism you could just listen to dr found chief in 15 minutes and you would get it and it is being accepted mainly by the government right now as official policy so instead doing absolutely nothing to undercut it i think we are becoming the society we used to see overseas enclaves of wells new York San Francisco chicago and all of that and so rounded by a sea of really desperate poverty they have accepted that in india and they have for 50 years if not more despite being independent from Great Britain they have accepted it in brazil another case and more weight you look at trump both sonora and moldy and you can see the kind of right wing government for which this is an acceptable range you know peter and obviously i want to follow politics very carefully and i watch snippets of the the republican and democratic conventions and i was appalled absolutely appalled that Neither Party had a proactive economic agenda pursued into prison to pursue in light of the. High unemployment. And the structural changes that are going through the economy i didnt see that from either party here and it goes back to my question to richard is there is this an exception acceptance that were just going to have a whole lot more poor people. Well you know were i disagree that weve even been having a growing economy i dont think we had any growth even before coding and i think the g. D. P. Numbers were manufactured based on understating the true rate of inflation and so by understating inflation you can make it appear that a stagnating or shrinking economy is is actually growing its not you know the reason that americans dont have any savings is because the economy has been growing theyve been able to keep it together through debt theyve used debt to replace their income but why is that its because we dont have a vibrant economy because we dont have real increases in productivity thanks to Big Government and banks the Federal Reserve so were in this gigantic hall because we have banded capitalism and embraced a socialist form of government we have Government Central planning we have Central Planning on Interest Rates we have price fixing and market manipulation and we have an economy where were trying to generate growth by printing money and giving it to people to spend and that is not going to work well i said the only way to get really konami growth is to shrink government so that we can have a stronger more vibrant economy because we need more productivity to consume more we have to produce more and the government doesnt produce anything all it does is interfere with the productive efforts of the private sector you know the problem is though but peter but the government it particularly in the last 2 years that particularly during this economic turndown they chose winners i mean the you know so jeff bezos announced goal in 08 theres a real socialist in america because youre the winner in all of this ok i mean i think you know these terms calculus and socialism dont really mean anything for me is that both lose it whos been out of it promote all of this the middle class is not the working class isnt the Big Tech Companies are in