Well, it seems like there is an eerie feeling around America that we are in a recession. There’s also an eerie feeling that inflation may never stop. It might be unstoppable, the Fed might be handcuffed, and it might last forever, sending us into a spiral towards hyperinflation and more. Well, luckily, today we are going to cover both those topics and more with Lacy Hunt. Lacy, if you don’t know, is an economist and the executive vice president of the Hoisington Investment Management company. That’s a firm that manages over $5 billion for pension funds, endowments, insurance companies and others.

Lacy has also authored two books, a time to be rich and dynamics of forecasting financial cycles, theory and techniques. Today, though, Lacy is going to dive deep. We’ve got questions. We need answers on a recession question on inflation, where rates are going to be, how is the US going to deal with this on a global scale? Lacy, thank you so much for joining us today. And let’s kick it off with the first question. Is the US in a recession, and what are you seeing under the hood? The data at the present time do not confirm a recession.

However, we’re dealing with an economy that’s clearly got serious problems, both secular and monetary problems, fundamental issues that are going to remain with us for a long time. And we’re also dealing with economic data from the government. That’s a very low quality. And when stress starts entering the system, the data can be revised significantly downward. And we got a taste of this in the first quarter, where, as the April indicators were released, in virtually every major sector, there were significant downward revisions to the March and February data. And so the preliminary increase in real GDP of 1.6% very likely didn’t hold up.

There’s another set of more obscure but highly relevant labor market data that indicates that the economy is much weaker with regard to employment and wages. And that’s the quarterly census of employment and wages. The monthly payroll report, which everybody considers the golden standard, is a maximum survey of 670,000 institutions. And in recent months, sometimes less than half of those institutions are responding. But we have over 11 million institutions, and ultimately that data will be benchmarked to the QCEW. And last week, for example, we received, with the typical six month lag, the census for the fourth quarter.

And what it showed is that there was a considerable overstatement in the non farm payroll jobs relative to the quarterly census. And this is the second consecutive quarter, second consecutive quarter in which the QCEW has been materially weaker. It’s true, in the third quarter and we also have another even more obscure Bureau of Labor Statistics indicator called the employment dynamics. It is seasonally adjusted. The QCEW is not. But the employment dynamic showed that jobs actually fell in the third quarter. They didn’t rise. There was a substantial discrepancy of over 700,000. And so right now, it is not, there’s not sufficient data to say that a recession is here, but data is being revised downward.

There are major problems with where we are in terms of the labor market. And I might recall this reminds me a lot of previous, earlier circumstances. The year was 1974. Arthur Burns was chairman of the Fed. And throughout the summer and early fall, he professed that the economy was doing fine if the recession started in March of of 1973. In the summer of 2008, Ben Bernanke was saying the economy was holding up. Well, there were problems. But when all was said and done, the National Bureau of Economic Research said that the recession had started in December of 2012.

So a recession is not yet verifiable from the data, but there are problems. And the data could certainly be revised to show an even weaker picture than we had. The other thing, I mean, I think a lot of people at home in America kind of feel it. They feel like there’s a recession. Are there certain things that you would point to that would be whether they’re government statistics or just things that you’re seeing that say, hey, this seems like we’re in a recession. And I guess a follow up question on that, is there a straw that might break the camel’s back in one of those points? What could be the thing that really tips us off that like, hey, we’re in a pretty heavy duty recession? At these cyclical turning points, sometimes the soft data, the surveys turn out to be better than the so called hard data from the government.

Right now there’s a major divergence. But last week, the Federal Reserve bank of New York released their surveys on how well off people feel they are. And for all adults, the sense of well being was back at the lows that we reached during the pandemic of 2020. And if you look at the households that have children 18 years or younger, those folks are saying that they’re facing the worst conditions since 2015. And there’s a good reason for this, because if you look at average weekly earnings of all of our full time, hourly and salaried workers, which comprises 120 million people, we’ve experienced a one and a half percent per annum decline over the last 15 quarters.

The so called time period in the recovery from the pandemic, the majority of our people are hurting quite badly, and there’s a reason for that, is that the majority of our people are severely damaged during inflation. Very, very few benefit from inflation, and the modest and moderate income households are hurt the worst. So we’re seeing a very substantial negative impact and a bad attitude about where the economy is today from how people are responding. I saw a recent Harris poll in which 56% of those surveys said the economy was in recession. Even sometimes when an indicator seems to be okay.

The conference board, for example, showed some improvement in their index for the month of May. But the critical component of that series that I like to look at is the difference between current conditions and expectations. And right now there is a record discrepancy and the current conditions are much higher than the expectations. And that tends to be the leading indicator of where we’re going. Clearly, folks have reason to worry. And even if you look at the labor markets themselves and the general view is the labor markets are holding strong. But there are, there are three rules that people have provided us for.

One is the McKelvey rule. Ed McKelvey was a former chief economist of Goldman Sachs of an earlier era, and he noted that whenever there was an increase in three tenths of 1% in the moving average of the unemployment rate, compared with its twelve month average, that the economy was in recession. Well, we’ve met the McKelvey rule. There’s another rule, it’s probably more widely known, the Som rule, which says that there has to be an increase of five tenths of 1% in the unemployment rate on a three month moving average versus its twelve month average. We haven’t quite met that, but we’re very close to it.

And then there’s the Lazar rule, developed by Nancy Lazar at Piper Sandler. What Nancy showed is that whenever the unemployment rate rises by five tenths of 1%, the economy is in recession. Well, the low point in the unemployment rate was 3.4. Last month it was 3.9. That’s a five tenths of 1%. That’s more than 10%, which is Nancy’s rule. There are indications even in the labor market that suggest the economy is facing hard times. And one final one that I might mention comes from the National Federation of Independent Business or Small Businesses. And if you take their hiring plans, you’ll see that it’s very well correlated with the unemployment rate if you have to invert the hiring plans.

But when you do so, you see that when we have fewer hiring plans, the unemployment rate moves higher and it suggests that the unemployment rate is going higher. So there are significant problems and moreover, people are concerned. And that’s a piece of important information in its own right. You mentioned 1974, 2008. Is there something because we’re trying to get, I think like we were talking about, I think a lot of people feel this and then, you know, if their friends are losing jobs or unemployment becoming a problem, is there anything in those times or anything that you could think back on history that would be like another canary in the coal mine or something thats saying this is going to happen? Or is there some event that might make this more obvious or have some of the, I guess, more mainstream government stats, whatever wed say that would actually admit that, because it sounds like a lot of things are slowing down and by a lot of metrics were in or really close to a recession, but it’s just not mainstream yet.

So it’s almost like a shadow recession right now that we’re feeling. But is there anything that would sort of break the dam or break it wide open? You could have problems in a number of sectors. For example, we know right now that the delinquency rate on consumer credit cards and automobile loans, regardless of whether you look at the 30 day or 90 day serious delinquencies, that those are back at 2010 2011 levels. They’re not very far away from the credit delinquencies that existed when we went into the zero eight recession. And they’re moving higher, and with good reason, because the interest rates that consumers are paying on the critical things that are necessary for rising standard of living are extremely high.

For example, the nationwide average on consumer credit cards is over 22%. There’s an important rule that’s taught in both economics and finance courses. It involves compound interest. It’s called the rule of 72. And if you take 72 and you divide by the annual interest rate, it’ll tell you the length of time it takes before you double your interest expense. So when you’re paying more than 22% on your credit card, if you borrow $10,000, in a little bit more than three years, you will have paid $10,000 in interest. And for an economy where wages are rising only about three and a half percent, that’s an exorbitant situation.

It’s not a sustainable situation. And that’s why we’re seeing the consumer beginning to buckle. The National Federation of Independent Business, who I referred to earlier, did a survey of the small business lending rates, and the average is 10%. You apply the rule of 72. That means in 7.2 years, your interest expense double. So if you borrow 100,000 for your small business, you incur a hundred thousand dollar in interest expense in a little bit more than seven years. These are exorbitant rates. They’re not going to be able to sustain. Another area where we have problems is in a lot of the different sub components of commercial real estate.

The office vacancy rate, according to Moody’s analytics, is 19.6%. It’s at an all time high. It’s higher than it was during the.com bubble and in other periods of extreme exuberance when Federal Reserve chairman said that they were not a problem. We’re beginning to see a significant rise in the delinquency rate on multifamily units. We’re beginning to see that some of the reits are slowing down redemptions because their cash flow is poor. We’re seeing properties taken over by creditors and being sold onto the open market for a fraction of what they’re worth. One of the things that typically happens in periods of extreme monetary tightness, such as we have today, is that you get some sort of financial accident, and that tends to crystallize the negative elements that are already present within the economy.

Another important challenge is that the global economy is extremely weak. And in fact, the United States, with all of its problems, is being relied upon as the buyer of last resort. The Chinese, the Japanese, the Europeans are all trying to improve their economies by selling more to the United States. And over time, this will help to take care of the inflationary problem, but it also will reduce the level of economic output and job opportunities in the United States. Ed? Yeah, I think we’re seeing a lot of these things line up. Is there anything else that would tell you that we’re sort of running on fumes? I know you talked about consumer credit.

I’ve heard you say in the past stuff about buy now, pay later. Are there other things like that? Because that’s. The savings rate has plummeted. We’re seeing consumer credit, interest rates are high, plus credit. Anything else that would indicate we’re running on fumes there? I talked earlier about the fact that it looks like that wage and salary compensation in the second half of last year was considerably overstated. Well, that has implications, because the payroll labor data is used to compute personal income. And if the QCEW and the bed reports are accurate, then personal income was overstated.

If it were not overstated, then the saving rate, which is already near all time historic lows, is even lower. And under either circumstance, if income is worse, then that’s a challenge in meeting credit obligations and other living obligations. But if the consumer spending has held up as well in the face of this deterioration in income, then the saving rate is even lower, and that’s not a healthy situation. So we have problems. And I think one of the things that we need to keep in mind is that the central bank has an employment target or unemployment target and an inflation target.

Those are both lagging economic indicators, monetary policy variables, money supply, bank credit, both of which are weak. The level of interest rates, particularly for the consumer sector, are all negative considerations. But monetary policy works with a long lag. And the containment of inflation typically tends to occur at the point in time in which the labor markets visibly break. And this puts the Federal Reserve in a very difficult situation, because even though they can cut the interest rates significantly and very quickly, that policy works very, very slowly. And so in the past, when the Federal Reserve has allowed inflation to get out of control, such as they did in 2020 and 2021, it was very costly to bring the economy back into balance.

And unfortunately, they have to do that because the inflation has such a deleterious effect on so many people. So there’s a lot of evidence from prior business cycles, the evidence that we can see, that suggests that the economy is in a much more fragile condition than is generally believed. Ed, they’re sort of like a rock and a hard spot, right? Because what could they do? It seems like you brought up inflation, and now let’s dive into that a little bit more. It seems like inflation’s almost unstoppable, and we’re in a spot where they’re talking about cutting rates.

Is this something the Fed can handle? Well, there’s really nothing that they can do at this stage of the game. The best thing is to prevent the surge in inflation in the first place. And this is why a lot of very smart people, originating with the late Nobel laureate Milton Friedman and continuing on later from the outstanding work of John Taylor, professor at Stanford, is that discretionary monetary policy has basically failed us at the Federal Reserve. By keying off of lagging indicators, they tend to overstimulate the booms. I like to use the phrase they boom the booms and then to contain the inflation.

Because the damage of inflation is so hard for so many, the Federal Reserve tends to slump. The slumps. The predicament that we’re in was really created by the failure to deal with inflation during the pandemic. In other words, we have another case where discretionary monetary policy has failed very badly. Okay. And diving into sort of the root causes of inflation, because there’s different ways it can get into the system. If you had to put your finger on it, where is this coming from? What is causing the inflation that we’re seeing now? In my opinion, inflation is largely a monetary phenomenon.

There are many elements that interact in the picture. You have the intersection of the aggregate demand and aggregate supply curve, but the element that really starts an inflationary process is excessive monetary and credit growth. And in 2020 and 2021, my preferred measure of money, which excludes currency and very small items and keys off of the other deposit liabilities of the commercial banks, surged at a record rate, or near record rate, maybe in a tremendously different situation. Monetary growth was a little bit faster at the end of World War Two, and it was off the charts. You had nearly a 20% rate of growth.

And historically, other deposit liabilities of the banks have only grown at 3% per annum when adjusted for the inflated inflation rate. And now we’re seeing a decline in real ODL over the last twelve months, 24 months, 36 months, also declines in bank credit, which would be bank loans and investments over the same time periods. And so you’ve gone from one extreme period of monetary largesse, to a period of extreme monetary tightness. Whenever there is extreme monetary largesse, such as we had during 2020 and 2021, and you push interest rates down to very low level, you encourage people to take excessive risks.

And at the time the interest rates were low, credit ratings were much higher. A substantial amount of loans were put on in 2020 and 2021. Bloomberg recently did a study that in the commercial property sector, we have $1.2 trillion of these loans that are maturing. And every month that goes by, when the interest rates remain high, it creates a problem, because firms need to refinance those loans. Their credit ratings are not nearly as high. And this is a ripe condition for adding to the problems going forward. One of the things that we cover in the halls of paradigm is this isnt a QE issue anymore, obviously, but its more of a just the amount of money that the government is spending.

Like whoever becomes the next president, they’re basically going to have a $3 trillion checkbook, and that’s deficit spending, let alone other spending or whatever. Is that also where, from where you see it, is that where some of this money is getting into the system to keep inflation high? It was really the intersection of monetary and fiscal policy. During the pandemic, the Federal Reserve really stepped outside the bounds of traditional monetary policy, and there was a more or less direct funding of the government. Activities. Fiscal policy by itself is really no longer effective. And if you use the outstanding econometric skills that we have, the fiscal thrust has really been a drain for quite some time.

For example, from 1870 to 1970, the growth rate in the real standard of living was about 2.2% per annum, and which is also the rate of growth in the 20 years leading up to 1970. But as we become more and more indebted, the real per capita growth rate has dropped to 1.3%. We’ve lost 40% of the growth in our standard of living. And the reason for that, up until this time, is that we were triggering the laws of diminishing returns. If you use the production function, which is one of the most important concepts in economics, if you begin to use a factor of production, such as debt capital, initially, this will increase economic output.

But if you continue to overuse debt capital, you eventually trigger diminishing marginal returns. So, for example, in 1950s and sixties and seventies, for each dollar of new debt, we were generating about seventy cents of GDP growth. It’s now down to less than $0.30. That’s the evidence of the overuse of debt. But now we’ve created an even more intolerable situation. And 2023, the economy experienced the condition of negative net national saving. Now, net national saving occurs when the federal budget deficit, what we in economics call government to saving, exceeds private and foreign saving. And that happened in 2023.

It was only the 8th time since 1928, four times during the Great Depression of the 1930s, and in the great financial crisis of 2008 to 2010. Now, in economics, one of the most important concepts is the circular flow. What we spend equals what we earn equals what we produce. And from that circular flow, we can derive certain things just by algebraic substitution. One of them is that gross domestic income equals gross domestic product. Another one is that physical investment equals net national saving. In other words, to be able to add hard assets that can increase the standard of living over time, someone has to push back from the dinner table.

You have to have saving out of income. But last year, the federal budget deficit, in very round numbers, was 2 trillion household saving, the corporate saving, the foreign saving, was 1.9 trillion. So we had a net deficit. It didn’t matter during the pandemic, because the Federal Reserve was accelerating monetary growth. But in that situation, you get the nasty aspect of the higher inflation. And so, the fact of the matter is, if you use the Federal Reserve now to try to overcome the negative consequences of negative net national saving, all you would do is accelerate inflation. You still wouldn’t be able to increase physical I.

If you do not get an increase in physical investment, then you cannot increase the capital stock. And without increasing the capital stock, you cannot increase the standard of living. And so the fact of the matter is, the excessive budget deficits have now put us in a far extreme situation. We were in a bad situation in which the government debt issues were harmful and it was bringing down the growth rate. I might add that if we had been able to stay on our long term trend of growth in the standard of living in the last 20 years, the average real per capita income in 2023 would have been 78,000 instead of the 62,000 that it actually was.

So the fiscal effects are very deleterious. And if we continue along this path, which I’m afraid we’re going to, because fiscal policy is really not effective. Fiscal policy cannot deal with the consequences of trying to restore equilibrium, then our standard of living will continue to slip lower. And keep in mind that it didn’t go dramatically lower in any one year. It was a constant drip. So we came down from 2.2 and we’re now at 1.3. Last year was only 0.9. And I think when the first quarter data is finally available to us, we’ll see that it was even weaker in the first quarter.

All right, got more questions to dig into more topics, but I want to dive into this one. It seems like Im going to get a depressing answer, but. Right, because you just said it, if the Fed came in to help fix this, its just going to lead to inflation, is there anything like, if you were in charge here, what could we do to help fix this other than its all tough medicine from here. Right. The answers are in fiscal policy. And fiscal policy would require, there are many programs that could be done, but theyre not politically feasible.

But I can tell you this, the notion that when you’re dealing with negative net national saving, and if you’re going to have, let’s say someone comes up with an idea to spend an additional $100 billion, and the idea is really popular and it seems well conceived and so forth, the fact of the matter is it’s not going to help us because in the current environment, what you’re going to do is you’re going to have negative net national saving of 2.1 trillion. And in that environment, fiscal policy is not going to move us forward. And historically we didn’t have sufficient data to tell us.

But the notion that we can somehow overcome fiscal policy by sending money supply up the flagpole is no more than a very transitory fix, which is what we got in 2021. And ultimately you will make more and more people miserable by trying to run huge increases in debt at very high levels and using money supply growth to try to offset its negative consequence. That will basically lead to a very destabilizing environment. And if you had to guess where this is all heading, because we could have really tough medicine all the way through, and then maybe inflation stops or otherwise it seems like we’re going to have runaway inflation.

Which way do you lean on that one? At the present time, I think I take the Federal Reserve’s word that they are going to achieve their 2% target. Chairman foul recently said, it’s not negotiable, but the fact of the matter is, over time and circumstances, it is negotiable. But if the Federal Reserve sticks to its 2% target, then ultimately they’ll bring the inflation rate down and we can have a normal business cycle recovery. However, it will lag the traditional gains in the standard of living, and that will leave a lot of people very unsatisfied. All right, I want to get to another question on rates, and then I want to bring it talk about globally, too, because we’ve got stuff happening over in Europe like ECB.

They could be doing cuts. I want to talk about that in a second. But before we do, we’ll do a, this will be a quick segue into something else. We’ve got the election months from now, right? I’m not going to make, you don’t have to give us a prediction on the election, but is there anything that the election will play into here with what we talked about, with the recession or inflation or anything that you can see coming down the road? Anything you want to cover there? Well, first of all, I don’t expect any real surprises in either monetary or fiscal policy this year.

I think we’re locked in now with what we had. The administration is doing certain things to try to boost the economy. They just forgave another $7.7 billion of student loans and some other minor things are being done, but these are of no consequence. In my opinion. The Federal Reserve is not going to be influenced by the election. If the evidence of economic deterioration becomes clear, they’ll drop the rates sooner than are generally believed. And if that’s not the case, then it’ll be later. But the Federal Reserve is not going to respond to their inflation. I’ve looked at the records and I’ve never seen any indication that the Federal Reserve has been bent by fiscal policy.

Other than perhaps in 1972, when we were a period of wage and price controls. And Arthur Burns, who was chairman of the Fed, had compromised himself by being chair of the dividend and interest rate control committee of the wage and price structure, which was a highly unusual situation. So I don’t see any federal reserve response. Now, as with regard to the election, the best possible outcome for the country, not for the individual parties, but possibly for the country, would be, is if we had a split government in which neither agenda prevails. And so we just have a period of consolidation, and that would be a replay of what we had during the 1990s.

Bill Clinton was president. He was a Democrat. Newt Gingrich ran the show on Capitol Hill. He was a Republican. They had very different agendas. They were able to compromise and do certain things that were vital to the country, but there were no major mistakes that were a result of one party pressing through an extreme agenda or the other. And we were able to improve our financial health, and the economy was well served by it. So a split government might actually be the best economic outcome, although it may make a lot of people unhappy. Yeah, I think 2024 is set up to make someone, half of the country unhappy one way or the other.

So we’ll see. All right, let’s get back into your wheelhouse and let’s talk rates. I think you might answer part of this question just before, too, but do you see any surprises? Do you see a rate cut here in 2024? What do you see coming down the road and how do they get there? Because the other parts would be, if we’re talking globally, the ECB looks like they’re going to cut, and then all of a sudden that starts putting pressure on the US. Where do you see all this unfolding? Anything that you want to put out there for predictions? I think the ECB will cut.

And that’s in June. Yes, I think that near term cut is likely there. But keep in mind, Europe is much weaker. Parts of Europe have already been in recession, including our quasi recession, for over a year now. And the fact that the ECB is cutting is a sign of the fact that global conditions are not good. This may help the Europeans, but it really doesn’t work to our benefit, because it will tend to make the dollar, which is already trading in the top 10% of its value, possibly go even higher. So the rate cut is an indication of the fact that world conditions are not good.

And while it may help the Europeans, it may not be beneficial for us. And I suspect that the ECB move is going to change the normal pattern, and that Europe will lead the US rather than the US leading Europe. Does that lead anywhere? Do you think we start, do we cut in 2024? I believe rates will be cut this year. The condition that suggests to me that this is likely, we may or we may not hit the inflation target, but I think we’re going to see the unemployment rate move above 4% and get into the range that will make the Federal Reserve uneasy.

And so, as a matter of compromise, I think there will be rate cuts. And do you think it would be more, almost like not an emergency, it would be during one of their normal meetings. But unless, of course, we have a financial accident, or if there is some overall pressure, such as the failure of a major institution or a group of institutions in which the Federal Reserve then would have to act more significantly. Yeah, and depending on how quickly they act, that goes back to the first problem, right. That could still cause more inflation if inflation is not actually gone.

Yeah, I think that’s what we’re seeing. I mean, it just looks like I’m not really that worried about inflation from a longer term standpoint, because the monetary deceleration is really quite profound. And in addition to that, one of the things that was rather outstanding in the QCEW report is that they found that the rate of increase in wages was significantly slower than what was reported, reported in the monthly non farm payroll numbers, the so called CES report. The QCEW, put wage increases at 3.6%, 510 percent less. So the rate of increase in wages is coming down.

Firms do not have pricing power. There are sticky costs in insurance and in other areas, healthcare and so forth, and in housing. But in time, these will be resolved and the inflation rate will come down. And unless the Federal Reserve abandons their target, which I don’t expect, over the near term, then we’re going to continue to see the inflation rate work lower, which means that overall interest rates can come down. The process, however, is going to be labored. Do you ever see, I mean, it’s something we talk about in the hallways here, but does CPI or PCI, does that ever actually come down? I mean, it can start decreasing, but will it actually lurk? Because what we’ve seen over the last, whatever it is, three years, like CPI is up 22%.

So, like, I don’t. That’s a problem. And people are saying the price level is a problem. It’s not the rate of increase. But one of the great aspects of the american economy is that our middle income households that we rely on to go to work each day raise the households carry a very heavy load for the economy is that they were in a position to buy cars and houses. So if you look at home prices and vehicle prices, depending on which deflator you use, the prices now are 15% to 20% higher than they were in 2019.

But the wage series that I quoted earlier, the real average weekly earnings of full time, hourly and salaried workers has fallen in one and a half percent per annum in the last 15 quarters. The critical key things that make the standard of living in the United States so special is the ability to buy cars and houses. And as long as those prices remain that high, it’s going to be a long time before we return to normality there, which suggests that it’s going to. The United States is going to be in a prolonged period of subpar economic performance.

The cost of things are just simply too high. Ed, I think that’s something we’re seeing. Obviously, housing prices is obvious. But if you’re watching at home and you haven’t been able to buy a car recently, prices haven’t come down. Availability is tough, but I think the oxygen is leaving the air. And I think things are going to slow down there soon because I don’t think it’s easy for normal Americans to buy cars. Middle class Americans at this point, and we’re seeing confirmation of what you said. For example, if you look at vehicle sales in April and the first four months of this year, compared to their best levels of the last five years, new vehicle sales are down 13%.

If you look at existing home sales versus in the last four months versus their best levels of five years ago, we’re down about 35%. And we’re down about 35% for new home sales. These three sectors, which have been play such a special role in the american economy, are all performing very poorly. And the situation is not going to change very quickly at all in the current situation. Okay, let’s switch gears a little bit. What are you doing? And I can frame this question two different ways, but what are you doing personally to protect or grow your family’s wealth, or set another way for anyone that’s watching at home? What should they be doing in this type of environment? Well, I’m not a personal investment advisor.

I’m in the institutional fixed income market. We’re strictly operating in the government sector. The present time we have a long duration. We think the trend there is going to reward investors over the next several years. They may have to be patient, but we think there is great value and the long duration will be of advantage for them. In terms of individuals, I would say that probably the best strategy is not to follow the strategy of the federal government of the United States. Live within your means and try to accumulate wealth the hard fashioned way by work and saving.

And if you do that, you will prosper regardless of what happens to the national economy. This is every now and then we around paradigm. We say, oh, you should run for president. See, that’s the kind of mindset we need running for president here. Save some money. You know, the keynesian economics, which I’m not a fan of, we call a neoclassical economist. For me, one of the greatest fallacies is that they advocate, you know, you can spend whatever you want to at the federal level, and it will be beneficial. Now, we’ve proven that it generates a law of diminishing returns and diminishing revenue, product of debt.

We’ve got a negative net national situation, and we know those situations were not realistic. But one of the things that told you the notion that we could somehow spend our way out of wealth or a way out of overspending and living beyond our means was the fact that individuals, households, businesses, state and local governments, they fail under that circumstance. And so I think that contrary to the keynesian notion that there is some set of different behavior for the federal government than for everyone else is not right. Good common sense, sound management of one’s affairs is the key and the priority, and it should be as much of a priority for individuals as it is for the country as a whole.

Yeah, absolutely. Very well said. All right, Lacy, I think that’s everything that we’ve got. I’ll give you the last word here. If there’s anything else, anything we didn’t cover or anything else that you see coming down the road for 2024 that everyone at home needs to know. You know, Matt, you’re such a great questioner. I think we’ll have to leave it at that. I’m pretty well satisfied with the interview. Congratulations. It’s really a great pleasure for me to be interviewed by such a first rate professional journalist such as yourself. And thank you for the great questions.

We’ll call it an organization. We won’t call it won’t be me. Paradigm as an organization is filled with great mindsets, thinkers, and world class insights. Okay. For your organization, the questions that you prepared for me are first rate, and it was my pleasure to spend this time with you. Thank you. Awesome. Thank you so much, Lacy. We appreciate it. All right, well, you heard it here first. I will say, without shame. If you’re not subscribed to the Paradigm press YouTube channel, now is the time to do it. The button is right there below. Also, give us that little thumbs up.

Give us a like if you liked what you saw here, we’re going to be covering more topics like this about the economy. Are we in a recession? Where’s inflation going? And you’ll find it all here. Also, if you’ve got any questions, go ahead. Or comments from today’s video, go ahead and enter them into the comments below and we will see you all next time. Thanks so much for tuning in.
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