Hour 1 of https://RushToReason.com plunges listeners into a fast-moving, razor-sharp conversation about the future of AI, healthcare, education, and mental health. John Rush and guest Steve House unravel the myths and realities of artificial intelligence—asking whether we’re facing a technological revolution or sleepwalking into unforeseen danger. Will AI become the greatest diagnostic tool in medical history, spotting disease earlier and cheaper than ever? Or will Big Pharma fight to keep control of the system AI threatens to expose? The hour also challenges America’s failing education model. If AI can tailor learning to every student, why are we still trapped
SPEAKER 04 :
This is Rush to Reason. You are going to shut your damn yapper and listen for a change because I got you pegged, sweetheart. You want to take the easy way out because you’re scared. And you’re scared because if you try and fail, there’s only you to blame. Let me break this down for you. Life is scary. Get used to it. There are no magical fixes. With your host, John Rush.
SPEAKER 17 :
My advice to you is to do what your parents did.
SPEAKER 15 :
Get a job, sir. You haven’t made everybody equal. You’ve made them the same, and there’s a big difference.
SPEAKER 16 :
Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world. You don’t know what it is, but it’s there. It is this feeling that has brought you to me.
SPEAKER 18 :
Are you crazy? Am I? Or am I so sane that you just blew your mind? It’s Rush to Reason with your host, John Rush, presented by Cub Creek Heating and Air Conditioning.
SPEAKER 08 :
All right, Hour 3, Rush to Reason, Denver’s Afternoon Rush, KLZ 560. Thanks for tuning in. Jersey Joe joining us. What’s up, Joe? Oh, John, you know, it’s been two weeks. You ready to drink from a fire hose? Oh, always. Absolutely. Let’s do it.
SPEAKER 06 :
I got so much on. I had to whittle this down. I’m still probably not going to get it all fit in. I want to start off with my quote of the week, and this is by Anonymous, but it’s so true. And the quote is, what you do in private shows in public. Reading shows up in your conversations. Your diet shows up in your energy and your appearance. Your discipline shows up in confidence. Your focus shows up in your results. You are what you cultivate when no one is watching. Good point.
SPEAKER 08 :
Yep. Very well said.
SPEAKER 06 :
You know, John, some of the conversations we have, we only can have them because of what I’ve read. And if people want to make reference to, you know, something by Plato or, you know, a book or Atlas Shrugged, You know, if you don’t read, you’re not going to be able to have meaningful conversations with your peers.
SPEAKER 09 :
Good point.
SPEAKER 06 :
And again, and John, you’re a guy that’s lost over 100 pounds, so you know that your diet shows up in your energy and your appearance. So that was one. I also would like to start off every week with the stupidest thing I’ve heard all week. Okay. And this week, it’s the guy from Great Britain who was on vacation in Florida, and he was at a shooting range.
SPEAKER 08 :
Oh, I saw that. I didn’t talk about it, but I saw it, so explain.
SPEAKER 06 :
So there was a guy from Florida. He was on vacation in Florida, went with shooting rights with friends. And somebody took a picture of him holding a, he’d never shot a shotgun before.
SPEAKER 07 :
Right.
SPEAKER 06 :
And he’s holding a shotgun at a shooting range, you know, trap shooting, shooting. Right. Well, he, he posted on his profile on his social media, I think it was LinkedIn. When he gets home, the police arrest him. Somebody reported the picture saying it was a threatening and he was arrested for posting a picture of himself holding a shotgun.
SPEAKER 08 :
Unbelievable, Joe, as I read that. And granted, he later was whatever, acquitted or they dropped the charges or whatever. But still, what a bunch of nonsense.
SPEAKER 06 :
Police came to his house and arrested him because of a complaint somebody made because he posted a picture of himself holding a shotgun at a shooting range.
SPEAKER 09 :
Unbelievable.
SPEAKER 06 :
Other stupid things, actually, and I had to run her up for the stupidest thing I’ve heard all week. You ever heard of the singer Billie Eilish? Oh, yeah.
SPEAKER 09 :
Billie Eilish, yeah.
SPEAKER 06 :
Anyway, here’s her quote. She’s moving to Canada, and she said the reason she’s moving to Canada is that she can’t stand Elon Musk, and she doesn’t want to be someplace where she would breathe the same air as him. Now, I hate to tell her, but there’s no wall between Canada and the United States that prevents U.S. air from mixing with Canadian air. but she’s moving to Canada because she doesn’t want to breathe the same air as Elon Musk.
SPEAKER 08 :
That’s the dumbest thing I’ve ever heard.
SPEAKER 06 :
Oh, we’ve got more.
SPEAKER 08 :
And Joe, really quick, though, that just shows you the lack of intelligence people in Hollywood and the music world actually have. Sorry, but they’re just dumb as rocks.
SPEAKER 06 :
They are. Now I want to get serious. There’s a pastor, and I’m going to tell you, It’s important I tell you he’s a black man because this is about race. So there’s a pastor of the Redeemer Church in Arizona. His name is Darrell B. Harrison, and he’s a pastor. And here’s his quote. He said, in 1950, only 18% of black households were headed by an unmarried female. Enter progressivism in 1960, and that rate then increased to 22%. By 1970, it had increased to 28%.
SPEAKER 1 :
By 1980, 40%.
SPEAKER 06 :
By 1990, 44%. And today it is 73% of black households are headed by single females, and that’s from the U.S. Census Bureau. Well, and I did a little research on it. Well, how does that compare? You know, there’s no context. How does that compare to other ethnicities? Well, in American Indians and Alaska Native, and people refer to it as Eskimos, it’s 50%. In the Hispanic Latino community, surprisingly, not surprisingly, but fortunately, It’s only 25%. It’s a third of what it is in the black communities. And in the white Caucasian communities, it’s only 24%. So now, is there a connection between no father in the home and crime and violent crime and delinquency? Well, here’s a quote from a well-known U.S. senator. He gave this speech in 2008 on Father’s Day. And here’s the quote. He said, you and I know how true this is in the African-American community. We know that more than half of all black children live in single parent households, a number that has doubled, doubled since we were children. We know the statistics that children who grew up without a father are five times more likely to live in poverty and commit crime, nine times more likely to drop out of schools and 20 times more likely to end up in prison. They’re more likely to have behavioral problems or run away from home or become teenage parents themselves, and the foundations of our community are weaker because of it. Now, John, you probably know who said that quote.
SPEAKER 08 :
Yeah, I do.
SPEAKER 06 :
And every time I quote it, I’ve been accused of quoting some racist cracker from Georgia, a white racist cracker, KKK. That quote was Senator Barack Obama’s father’s day in 2008. That’s right. So if you don’t think it has any credibility, those words came out of Barack Obama’s mouth. Right. Pastor Harrison, it is, when we look at, and I think I’ve shared this statistic, you know, every year the FBI publishes, you know, the homicide statistic, you know, by race of the victim and the race of the attacker. Black men account for 6.5% of the population in this country. They account for 56% of the homicide victims. You know, 6% of the population account for 56% of the homicide victims. And, John, what’s the only factor here? It’s the lack of a father because when you don’t have an intact family, I believe that the gang becomes the surrogate family.
SPEAKER 08 :
It does. That’s exactly right, John. That’s exactly what happens.
SPEAKER 06 :
Right. And then the gang values become your values. That’s right. And if you’re in a gang, the gang values are if somebody disrespects you, you shoot them. That’s right. Correct. My father said if somebody disrespects him, you punch him in the mouth. I’ve had a couple of schoolyard brawls in my time, John.
SPEAKER 09 :
Yeah, yeah.
SPEAKER 06 :
But I never even thought about shooting somebody.
SPEAKER 08 :
No, that thought was never there because that’s not how we were raised.
SPEAKER 06 :
And the other thing, John, I don’t know about you, but, you know, and I think I’ve told this story, you know, I used to spend summers at my grandparents’ cattle ranch working in the carriage range. And we had a bunch of 15-year-old kids, you know, lived on the rural road. They would all, you know, help us. You know, we could pay 10 cents a bale to help load and stack hay. Every kid, every single kid on that rural road had access to a rifle. Every rural farmhouse had a loaded rifle behind the kitchen door. The difference was, John, on Sunday, every single one of those kids was in church.
SPEAKER 08 :
Yeah, that and, you know, Dad was typically teaching, at least in my case, what’s the, you know, what does that actual weapon do? How do you handle it properly? What are the repercussions if you don’t? I mean, there was a lot of training that went in, in my case, Joe, from a very early age. And I’m talking four or five years of age. You know, I think that’s how long I’ve been teaching. shooting guns, five, six years of age. I got my first rifle when I was 10, because at that time, that’s what dads did. And I had a dad that was very much an outdoorsman and wanted to build that into my brother and I, and did, and taught us healthy respect for all of those things, for the environment, for for, you know, everything, Joe. You know, you leave things better than what you found them, but on the same token, the gun sides of things, you know, back in those days, and you know this, no one had a gun safe. Things were stored all over the house, and you knew not to mess with them.
SPEAKER 06 :
Yeah, John, and I was in a lot of their homes. John, there was always a load of rare rifles, because you never knew when you’d have a rapid dog. That’s exactly right. You know, every, you know, or… Again, every farmhouse had a loaded rifle beyond the kitchen door. It was just standard. It’s just the way it was. By the way, we didn’t even have a key to lock our back door. Right, right. In the 15 years I spent, you know, working back and forth and living there in the summers, we never locked the back door ever.
SPEAKER 08 :
Right, right. Yep. No, I grew up the same way, Joe. And, you know, we were quite as rule as what you were, but you didn’t lock the car. You didn’t lock the house. You didn’t lock anything. You just did your thing.
SPEAKER 06 :
It did your thing. And when you’re in church on Sunday, you know, the priest or the pastor— That’s right. —you know, impressed upon you right and wrong, it’s a mortal sin to kill somebody. That’s right.
SPEAKER 08 :
That’s right. Exactly.
SPEAKER 06 :
That doesn’t exist anymore, John. So it’s the fraying of society. Now, kind of shifting over, you know, I heard Bob Duco talk about the billion-plus dollars of Somalia fraud going in and going on. And it’s, you know, and it’s one case—it’s housing fraud, it’s Medicaid fraud, it’s snap fraud. One little 1,500-square-foot deli claimed they were feeding 5,000 people a week. I mean, it’s just – but here’s something that makes it really, really tough. A jury in Minnesota – I forget whether it was a state or federal – prosecuted a guy for $7.2 million of Medicaid money. He had a post office box, John, and he was running five or six different businesses. Wow. And he billed Medicaid for $7.2 million, like in home nursing aides and various services. Unreal. The jury at 12 deliberated 90 minutes and came back after 90 minutes with a unanimous guilty verdict in 12 minutes. The judge overturned the jury verdict.
SPEAKER 08 :
Because?
SPEAKER 06 :
No, you really didn’t have enough evidence. No way you could have reached. Now, typically what happens, prior to going to deliberation, the defense attorney would make a motion saying, Your Honor, I don’t believe the prosecution has proved its case. We’re asking for declaratory judgment. And then the judge, before it even goes to the jury, would either agree or disagree with. The defense didn’t make the motion because they thought, but clearly the defense didn’t think, Clearly, defense must have thought that the prosecution had made its case. Otherwise, they wouldn’t have made the motion. And if the judge didn’t think they had, why did she let the— if she wasn’t going to honor the jury’s verdict, why did she let the jury deliberate if she wasn’t going to? So I’m shaking my head. If you can’t send these people to jail, then why bother to try them in the first place?
SPEAKER 08 :
Why waste taxpayer money?
SPEAKER 06 :
Why waste taxpayer money? I mean, you know, there’s a big, long audio. We don’t have time to play it. But if anybody’s interested, you can look up 7.2 million Medicare-based judge overturns jury verdict. That’s amazing. You can Google the story for yourself. That’s amazing. All right. Speaking of fraud, can we go in the Wayback Machine? Sure. Now, the Wayback, you remember Rocky and Bullwinkle and the Wayback Machine? 1996, back when Chuck Schumer wasn’t a senator, he was a congressman. There was a bill on the floor to enact, instead of a social security number, to have a federal ID number. Everybody would have an ID number instead of a social security number, in addition to a social security number. And here he is arguing in favor of this. And his argument is that illegal aliens come to this country to commit fraud. And so here’s Chuck Schumer arguing, and hopefully you have the clip, arguing and acknowledging the fact that illegal aliens come to this country when they intend of committing fraud.
SPEAKER 15 :
Here we go. Salute him for his work on this rise in support of the amendment. First of all, Social Security card is used from one end of America to the other as an identification card right now. Who are we kidding? If you want to pass a law and says it shouldn’t be, I would ask the chairman and the distinguished minority member of the Social Security Committee to pass that law. But let’s admit the truth. Everywhere people go, they’re asked for a Social Security card. In fact, one way to prove you’re a bona fide person who can have a job is to ask for a driver’s license and a Social Security card. This is an anti-fraud amendment. All over where we go, people say, well, why can’t you stop? illegal immigrants or others from coming here. And the number one answer we give our constituents is when they come here they can get jobs, get benefits against the law because of fraud. And here the gentleman from Florida has put together the most effective anti-fraud measure we can find without it changing the actions of the government one bit. And we find all this opposition. Ladies and gentlemen of this chamber, what I worry about is that this bill, which started out with good intentions, whether you agree with it or disagree with it, is going to end up being the same kind of thing that the public gets angry with us on. We say we’re doing something, and we do nothing. Because every time someone makes a rap… I’ll end it there.
SPEAKER 06 :
But here’s Chuck Schumer acknowledging that illegal immigrants come to the country and commit fraud. How times have changed. 1996, John, that was four, that was 29 years ago. My, how things, what’s changed in 29 years when now he’s saying fraud is virtually non-existent.
SPEAKER 08 :
The party shifted.
SPEAKER 06 :
Party shifted. The goalpost shifted.
SPEAKER 08 :
Yep, exactly right.
SPEAKER 06 :
All right. Talking about stupid and abusive government, SpaceX is a division of Tesla, and SpaceX has done some wonderful things. The last time I looked, they had about 8,000 little basketball-sized satellites they’d launched, which are circling the globe. And providing Internet and communication services, even like the center of the Congo, places where you are 100 miles from the nearest cell phone tower or power line or telephone line, you can now, in the middle of the Congo, middle of the darkest, deepest spot, you can have a cell phone access because of SpaceX. And SpaceX is part of Tesla. Well, they launched from Cape Canaveral in Florida. They launched from, I forget what the name of the Air Force was. rocket base is in houston or vandenberg and the one in houston is um oh shoot what is it i’ll think of in a second go ahead well they do but and vandenberg is the third vandenberg air which is now called vandenberg space force and they had up and somehow it falls under the california coastal commission which is an environmental group so spacex applied for a permit to increase the number of launches like from 12 a year to 18 per year And they denied it, but the reason they denied it is mind-blowing. And here’s Bill Maher, and you can stop this Bill Maher quote after about a minute 30. And one of the guys sitting, there’s two guys in the audience. One is Mark Cuban from Shark Tank, and the other is Joe, what’s his name, from the Morning, Joe Scarborough.
SPEAKER 09 :
Morning Joe.
SPEAKER 06 :
Morning Joe. Okay. And what’s mind-blowing is, is the reason they denied the request. So here’s, play Bill Maher.
SPEAKER 10 :
That’s where the rubber meets the road, because this is important. He wanted to, this week, he’s suing, but he’s suing the 12-member commission, the California Coastal Commission. He launches his rockets from Vandenberg Space Force Base. He used to call it Air Force Base, but I guess now we’re into Space Force time. He wanted the proposal to expand the number of launches. Okay, again, one of the most impressive companies, an American company. He wants a little more. Give it to him. No. The commission, some bureaucrat, said, nope, and this is the reason why. Commissioner Carol Hart saying, we’re dealing with a company, the head of which has aggressively injected himself into the presidential race and made it clear what his point of view is. Yes, because he lives in America and he can do that. It has nothing to do with this. The right thinks that the left is in a very different place with free speech than they have been before, and they’re not wrong. They’re not wrong. This is arrogant. You don’t punish somebody. It would be like if we stopped Henry Ford from making the cars because we didn’t like what he… Yeah, but can you take one anecdotal example? One idiot, right? Truly an idiot to stop… This is not an idiot. This is someone with power.
SPEAKER 08 :
I’ll stop there, Joe. You and I can continue on because, yeah, he’s right. I mean, this is basically a – by the way, I think Mark Cuban’s right. It is an idiot. Bill Maher’s right as well, saying it’s somebody with power. So it’s an idiot with power. Let’s say it that way, Joe.
SPEAKER 06 :
It’s an idiot with power. And by the way, so for her to use governmental power to attempt to stifle his free speech is clearly a violation of the First Amendment. I have no doubt that Tesla, Elon Musk or Tesla, is going to win because clearly this is an attempt by a governmental agency to influence or to prevent his free speech. And it has nothing to do with their charter, which is to protect the California coastal environment. So I don’t know how many people know that stuff like that is going on, but I just find that sort of conduct outrageous.
SPEAKER 08 :
That’s unbelievable. All right, before you leave, because you sent me this earlier this morning, and I was laughing at it. In Delaware, so back in your neck of the woods, PETA has proposed a new law that requires dog owners to walk their dog at least three times a day, with at least one of those walks being at least an hour long. Joe, why wouldn’t anybody own a pet if that were the case?
SPEAKER 06 :
John, I can’t tell you. My daughter owns a Labrador retriever, by the way, and she takes excellent care of him, and he gets… He gets walked in the morning before she leaves, and she gets walked as soon as he comes home. And he’s perfectly fine with that. In five years, he’s never had an accident in the house, and he’s absolutely fine with that.
SPEAKER 08 :
And as most dogs would be, Joe. I mean, this again, this is another situation where you’ve got an organization like PETA, which is a very left-wing radical organization. They claim to be for the rights of animals, but Joe, at the end of the day, they’re not. It’s just basically an organization to – how should I say this? It’s another weaponization of the left. That’s all PETA does.
SPEAKER 06 :
That’s all they do. Hey, one more crazy – Go ahead. Way back – Back in the spring, everybody was predicting that due to climate change, we were going to have this horrendous hurricane season. You know how many hurricanes, and the hurricane season officially ended last week.
SPEAKER 07 :
Right.
SPEAKER 06 :
You know how many hurricanes made landfall in the U.S. this year?
SPEAKER 08 :
Joe, I don’t remember any.
SPEAKER 06 :
John, I’ll give you a hint, John. It’s a whole number less than one.
SPEAKER 08 :
Yeah, okay. So much for climate change. I mean, I know there were some close calls. We had some flooding and different things along those lines. But, Joe, that’s normal. We have that every year. Yeah, but we had no— We didn’t have anything major this year.
SPEAKER 06 :
No actual hurricanes made landfall in the United States this year, despite the doom and gloom predictions.
SPEAKER 08 :
Yeah, if you’d have listened to those guys, you’d have thought all of Florida would have been wiped off the map.
SPEAKER 06 :
By the way, and here’s a—if you have time for a quick statistic. In 2000, 88% of the world’s energy was being produced by fossil fuels. And by energy, I’m talking electricity, electric power, fuel for cars and trains and trucks— Today, 25 years later, that number has fallen to 86%. Now, the world has spent literally trillions of dollars on windmills and solar farms and wind turbines, literally trillions of dollars, and they’ve dropped their percentage from 88%, two points to 86%. But you want to guess how much total global energy consumption has increased in the past 25 years?
SPEAKER 09 :
Way more than that.
SPEAKER 1 :
52%.
SPEAKER 06 :
You’ve got China and India building… two to three new coal-fired power plants every week. So total global energy production has increased by 52%. Well, John, which is a big number, 88% of 100 or 86% of 152? That’s an easy answer, Joe.
SPEAKER 08 :
86% of 152 is 31% more, yet despite the consumption of fossil fuels increasing by 31% over the past 25 years…
SPEAKER 06 :
None of the dire climate predictions made in year 2000 that were supposed to occur in the next five or ten years came true. And, in fact, they’ve all backed away from the original five degrees. They were all predicting a five-degree Celsius increase in average temperatures. They’ve walked away from that, John, because it’s just not going to happen. Mm-hmm. Not going to happen.
SPEAKER 08 :
Nope, you’re exactly right. Somebody said really quick, PETA is, hold on, what is it? PETA is people eating tasty animals. Tasty animals, yep. That’s my chapter, John. Good one, good one, by the way. All right, John. Joe, as always, man, I appreciate it. All right, talk to you next week. All right, sounds great. We’ll talk to you next week. Up next, Geno’s Auto Service, and yes, whatever you need for your vehicle, they’re there to take care of you. Geno’sautoservice.com, and Geno starts with a J.
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SPEAKER 03 :
This is Rush to Reason on KLZ 560.
SPEAKER 08 :
And we are back, Rush to Reason, Denver’s Afternoon Rush, KLZ 560. Scott Garlis joining us now, Bent Pine Capital. Scott, how are you? Hey, John, I’m well. How are you? Good. Thanks for joining us and switching gears this week from Wednesday to today. All right, lots to talk about, as always. We didn’t get a chance to talk last week because of the holiday. And I guess, first things first, what do you think the Fed’s going to do? When do they meet? What’s your outlook look like?
SPEAKER 05 :
Yeah, sure. So they meet next Tuesday, Wednesday. You know, there’s been a lot of speculation between the last meeting and this meeting what they’re going to do because of some of the comments from different Fed members. I think they’re going to cut rates. I think they’re going to cut by another 25 basis points, and I think they’re going to be more dovish, or they’re going to lean toward cutting more next year as well.
SPEAKER 08 :
Okay. Do you think they’re doing that because they just know they have to, or are they finally caving in, or what are your thoughts there?
SPEAKER 05 :
I think they know they have to. I think they’re looking at the labor market and more and more, you know, there’s some fed members. So Mary Gailey, she is not going to be a voting member until two, two years from, I believe it was 27. Um, but you know, she’s, she’s put out some pretty stern warnings and she’s, she’s a middle of the road sort of neutral with dovish person. Um, she’d been pretty pragmatic all along about the way she voted and, And she put out some pretty stern warnings to the Fed saying, hey, look, if we don’t start doing more about this now, we’re going to have a big problem down the road. And it’s, you know, back to what we talked about when inflation started taking off and we were saying the Fed’s making a huge mistake by not raising rates right now. They wound up having to raise rates by so much more after the fact. And think about all the instability that’s still in the economy now. You know, and look at what it’s done.
SPEAKER 08 :
And I think, you know, I was going to ask you that because, you know, one of the questions, you know, and you and I keep referring to this because I think part of what’s really sort of the last kicker to get the economy really going and, you know, the economy depending on how you look at it and what view you look at it from is okay or it’s not okay. It maybe is struggling in some areas. But let’s face it, Scott, if the housing market would take back off again, I think all bets are off. The thing really starts to roll along. The Fed, in my opinion, has purposely kept it in check. And the question I’ve got is, I mean, it’s been a long haul now on the housing side. How long can that continue before it really has huge negative impacts? Or are we there now?
SPEAKER 05 :
I mean, I don’t think we’re there where it has huge negative impacts. I think some of the stuff I was looking at today is we’re really seeing a massive refi boom. well, not a map, but I mean, refinancing is on a weekly basis. They’re up like 150 to 250% year over year. So that’s helping people, right? Because they’re bringing down the costs on what they’re paying for their monthly mortgage payments. So that’s putting money back in their pockets. But it is killing people in terms of credit card payments. The interest expense was 14% before inflation took off and rates started to go up. And now it’s up to like 23%. And when you start doing the math on that, it’s a massive number, the incremental number that comes out of people’s pockets every month just to service the debt.
SPEAKER 07 :
Right.
SPEAKER 05 :
Good point. And not to even pay down the principal. So not to mention the other thing, I had somebody call me and it was asking me questions about this today too. They wanted to dig into some economic details. And we were also talking about, and you and I have talked about this in the past, It’s the off-balance sheet assets of a bunch of the banks. Now, you’ve asked me about this in the last year or so. There are a bunch of people, doomsdayers, that like to say, oh, my God, Bank of America is about to go under because they’ve got all these losses off-balance sheet. You better get your money out of there right now, blah, blah, blah. You know, that’s just a scare tactic.
SPEAKER 08 :
It is. Absolutely.
SPEAKER 05 :
And what we’ve talked about and what it is is it’s U.S. treasuries that these guys hold. that they bought at lower rates before interest rates took way off. And what the market does, because the stock market operates efficiently, those lower rates, if it has a 1% return, what bond investors will do or shorts will do is they’ll knock it down until it has a 4% return. So that price might go from $100, which is known as par, where it’s paying 1%, down to, say, like $92. So it’s now yielding 4%. So it’s the same as what the market is. So by cutting rates, the Federal Reserve is effectively dropping the rates on borrowing costs for the U.S. And so as they do that, all those off-balance sheet Treasury holdings that are losing money, they start making money again. And then as they become worth more, they go back on balance sheet. And then that’s more capital that all these banks can start to lend to help the economy from buying cars, buying homes, you name it. And that creates more jobs.
SPEAKER 08 :
Yeah, it puts more money back into the markets, basically, is what it does. It becomes more liquid. Correct. And if I’m not mistaken, you know, Scott, it’s the old supply and demand. The more supply there is, the cheaper it gets, right?
SPEAKER 05 :
That’s exactly right. So as there’s more money available, it costs less to borrow because… More people, frankly, want to lend it to you. And so back to, you know, this is what Mary Daly and Christopher Waller and Michelle Bowman and others at the Fed are warning about. Like, hey, guys, if you don’t, you know, start cutting rates more, there’s a gap. Like right now, if you look at it, there’s about 100 basis point difference between inflation and the effective federal funds rate, which is what. banks charge each other to lend money overnight. Now, if you look at the historical number, since 2000 to now, the Fed has operated the real rate of interest, which you could say is basically neutral, at negative 0.6%. So to go back to normal, we could cut interest rates by about 150 basis points, and we would kind of be where the Fed in their normal operating rate.
SPEAKER 08 :
Wow, that’s a lot.
SPEAKER 05 :
Yeah, it’s a ton.
SPEAKER 08 :
I mean, that effectively would take – I didn’t look at what a 30-year mortgage is right now, but they’ve been hovering around the, I don’t know, 6% range or so, I want to say, Scott. I haven’t looked the last few days. But, I mean, what you’re saying is if they did that – and I know, I always get people that comment on this, and I understand fully how the mortgage world works in light of what the Fed does on short-term rates. And I get it. It’s not a direct correlation, but it does eventually have an impact. And if you get mortgage rates to go down to 4.5%, oh, gee, Scott – It’s a whole different world at that point in time.
SPEAKER 05 :
It is a completely different world. And because – think about all the people that have – they’ve locked in these low rates of interest prior to COVID. We’ve talked about this too, but they don’t want to sell their house.
SPEAKER 08 :
No, they would actually decide to sell, move, move up, move down, move sideways, do whatever. I mean, at the end of the day, they’d make a move that right now they’re not willing to do.
SPEAKER 05 :
That’s exactly right. And again, that creates – movers, you know, guys that deliver pizzas to these people. It creates all sorts of economic gains.
SPEAKER 08 :
Now, one thing that I know Trump was trying to work around him and Besant both, I believe, and this is a question for you, that they were trying to make, I was reading about this over the Thanksgiving holidays, they were trying to make mortgages, quote unquote, portable. Talk about that.
SPEAKER 05 :
Well, so, yeah, I mean, what a portable mortgage would do, let’s say you’re like 10 years into your Two and seven-eighths mortgage, well, it wouldn’t be that, but that was only a couple years ago. Let’s say you’re 10 years into like a four and a half percent mortgage. What they’re effectively talking about is you could keep that mortgage and go buy another house with it.
SPEAKER 08 :
And just transfer that mortgage to the new house, right?
SPEAKER 05 :
That’s correct.
SPEAKER 08 :
Yeah, which right now you’re not allowed to do. There’s always a bunch of stipulations that, well, that one has to be paid off. You’ve got to start all over and a lot of what you and I are talking about along those lines. So if you could get the administration – I get it. This would only be for FHA-type loans because government has no control over what happens with conventional loans and jumbos and things like that. But there’s a lot of loans out there that fit into the category I just mentioned. If you could portabilize those, make those where they could go from one house to another, that would have a huge impact as well.
SPEAKER 05 :
So back to what you were saying earlier about creating more liquidity in that market. You’re basically making more supply available by taking creative tack like that, which maybe that buys – drops home prices a little bit. Maybe that makes – It makes it more affordable in general for people to move. And again, that has a lot of, I think, fallout’s the wrong word, but that spills over into a lot of places all over the economy.
SPEAKER 08 :
Spillover’s a great word because basically what it does is it injects things in, to your point. Even people… moving i mean i don’t think folks really realize and i do because i’ve done it plenty of times i mean there’s an expense in moving even if you move yourself there’s an expense in moving you’re buying boxes you’re buying shrink wrap you’re doing this you’re doing that you’re buying tape you’re you’re running here you’re running there using more fuel you’re You’re packing all your stuff up. You’re renting things. Even if you do it yourself, you’re renting a U-Haul or whatever the case may be, and you’re doing all of that. And when you get to the new place, there’s money that’s getting spent on the new place because it’s not exactly the way the old place was, and, and, and, and it snowballs. And at the end of the day, it drives buying, which feeds the economy.
SPEAKER 05 :
That is correct. And I tell you what, a buddy of mine just bought a new house. He moved to Florida. He’s in the process of it. And he told me he looked in the building and he said, you know, frankly, he’s like, It’s far cheaper to buy a house that’s already standing than it is right now to go build a new house, just because of all the inflation we’ve seen over the last four years. Think about what that’s done to cost for wood and all these other things. That’s right. But again, yeah, you’re exactly right. When I think about investing, I try to think about every penny counts, every penny counts in terms of Every penny that you can save and you can invest, and it slowly adds up, but it all makes a difference. Every penny saved is a penny earned. But to go the other way, what you’re just talking about, every little incremental expense, when you start multiplying that over what there are 333 million people in this country, but let’s say it’s 60 million people doing that, that is a lot of buying power and spending power within this economy, and that creates a lot of jobs.
SPEAKER 08 :
Yeah, it’s it’s it’s massive. And again, those are the things that trust me, the the Jerome Powell’s of the world know exactly what we’re talking about. I still believe that he’s been a tool of one party to stifle the economy of the other party, knowing that it is the economy stupid and it is a big factor when it comes to midterm elections. And I believe Jerome Powell has been a great tool of the left to stifle. a lot of that. Now, will that change over the next few months? In fact, one thing I was going to ask you is just the conversation that Trump is having about the Fed chair change in May. I mean, will the markets even start looking at that? And that name, as you know, will start getting leaked out and it’ll get more solidified. And by the time we get to, you know, March, it’ll probably be a dead set thing on who’s actually going to be that person. I mean, does that even move some of what we’re talking about?
SPEAKER 05 :
Totally does. Yeah, I mean, Kevin Hassett is the guy that people that are expecting is going to be the announced pick. I would really love to see Christopher Waller as well. Trump has said he’s down to his guy. Hassett and Waller, they’re both viewed as dovish. They’ve both been vocal about the need to cut interest rates. So, yeah, if either of those guys are announced, I think that would be a good thing. Michelle Bowman, who’s also one of the candidates, She has also said she’d like to see rates go even lower for the same things we’ve been talking about. I think the markets would look at that positively. But we’ll see. I mean, you know, Trump said he’s down to the single person. They recently canceled interviews with other people. It could be any day. It could be the beginning of next year. We don’t know. But I think whoever he puts in there, it’s going to be somebody who leans toward cutting. Now, the other question would be, You know, Powell’s term as Fed chair ends in May.
SPEAKER 07 :
Right.
SPEAKER 05 :
But he does have a seat that it doesn’t expire until 28. So, you know, look in the past, whenever this has happened, every Fed chair who has had a similar situation has stepped down and handed their seat back and somebody else gets designated for that seat. Powell could say, hey, I’m not doing that. I’m going to ride this out. It would be very unusual for that to happen.
SPEAKER 08 :
Maybe. I mean, I don’t think he’d want that, quote-unquote, in his legacy. I think what he’s going to do personally, this is my own thought, he’s going to lower rates some, give some token cuts just to make sure that he’s not going down as the president’s foe, if you would, because he doesn’t want that in the textbooks on down the line. Whether people want to admit it or not, they still don’t want to be viewed that way long term. So he’s going to do his best to make sure he leaves somewhat of a positive impression when it’s all said and done. The question I have for you is, knowing everything we just talked about, who the person is that might get appointed and so on, will that be enough time heading into the midterms to really get housing cranked back up? That’s the question.
SPEAKER 05 :
I mean, yes. I think if you got something soon and the market started to price some of that in and you saw rates come back, I think that would definitely help. Look, I think there’s another big thing. How much time do we have?
SPEAKER 08 :
We’re going to keep going.
SPEAKER 05 :
We’re fine.
SPEAKER 08 :
Keep going. We’re fine. Yeah, we got a few minutes. Go ahead.
SPEAKER 05 :
So there’s another big thing going on right now where every five years, there are 12 regional Fed bank presidents. Every five years, they’re up for renomination. And this happens to be one of those years. It’s a year with a one and a year with a six. So in the last three years, Seven of the 12 regional presidents have been reappointed. Now, Bessent came out the other day and said, hey, look, we want this to be a process where the regional president would have had to have lived in that district for at least three years. So they’re familiar with their surroundings, the businesses, what might ail that area versus another area, and before they’re nominated to be that region’s president. Got it. So if you go back and look at the seven that have recently been appointed, only two of them really lived in that district. Susan Collins, she pretty much spent most of her life in Massachusetts, and now she’s a Boston Fed president, the other one being Austin Goolsbee, who was in Chicago for at least 10 years at the Chicago Business School, and now he’s a Chicago Fed president. Now the others, basically there’s a common thread with them, One was SMU Business School. He’s Jeffrey Schmidt. He’s now the Kansas City Fed president. So not in that district. The Dallas Fed president, she came from she was at the New York Fed. So she is far from Texas. The other one in Philadelphia, she came from where was she? She was she was also in New York, I believe. And then – no, I’m sorry. She was at the Chicago Fed’s research president. So Illinois, very far from Philadelphia. And then you had the Cleveland Fed president. She was a partner at Goldman Sachs. And then the last one is the St. Louis Fed president. He worked in New York and then was at a hedge fund in Arlington, Virginia. Gotcha. The point being is all of these people, they aren’t really in touch with the districts they’re in. So are they making the best decisions for those people?
SPEAKER 07 :
Good point.
SPEAKER 05 :
And the answer is probably not.
SPEAKER 07 :
Right.
SPEAKER 05 :
Good point. Trump and Besant are trying, it sounds like, to have this be putting people in charge of those districts that have more pragmatic thought about what’s going on around them instead of people from New York being spread out all over the countries and making decisions based on what’s happening in New York.
SPEAKER 08 :
Makes total sense. Scott, how do folks get a hold of you?
SPEAKER 05 :
Sure. BentPineCapital.com. Otherwise, you can follow me on LinkedIn, Twitter, or Substack. C. Scott Garlis.
SPEAKER 08 :
All right, Scott, as always, I appreciate it, man. Have a great night, and thanks for joining us today. I appreciate it greatly.
SPEAKER 05 :
John, thanks so much for your time.
SPEAKER 08 :
You bet, man. Have a great night. Always a good conversation. Appreciate Scott a bunch. Roof Savers of Colorado coming up next. When it comes to rejuvenating your roof, making it last longer, saving you money on insurance, Dave Hart from Roof Savers can do all of that and more. 303-710-6916.
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SPEAKER 03 :
Stay up to date with Rush to Reason after the show on Twitter at Rush to Reason.
SPEAKER 08 :
All right, we are back. Rush to Reason, Debra’s Afternoon Rush, KLZ 560. Winding things down here, got about a minute or so left. And I started off the week talking about airport travelers, our Transportation Secretary, Sean Duffy, talking about how people start dressing up, quit looking like slobs and so on. Well, to finish off… This Thursday night, we now have travelers that are purposely wearing pajamas to the airport to protest, which, as I look at some of these people in line, I just think, do you realize how stupid you actually look? Further proving my point from Monday that we literally live in a land of slobs. In the United States of America. I think people really anymore, they just don’t care what they look like. All pride in how you look has gone. Now, I’ve not ever said this before, but I think I’m safe to say that, and I realize that our founding fathers, you know, can’t literally roll over in their graves, but… These were guys that, you know, in a time when hygiene wasn’t what it is today, they didn’t have running water like we have. Everybody used an outhouse, you know, things along those lines. You get where I’m coming from here. They didn’t have the modernization that we have now. And yet, and Charlie, I think I’m pretty correct in saying this, took pride. in how they looked and dressed and so on. Am I correct in saying so? He agrees. So they definitely took pride in how they looked and their dress, and that was the day, of course, of wigs on men and all sorts of things because that was kind of the prim and proper thing to do and so on. But point being, they wanted to look and dress. And keep in mind, back then, they didn’t even have the wardrobes that people have today, but they still dressed for the occasion on a routine basis. We have gone completely, literally completely off the rails, gone the other direction. As I explained on Monday, I believe this is all because of Marxism, and anybody would have a hard time convincing me otherwise, because in Marxism you want everybody to look like a slob. And by the way, we’re meeting that goal. We’re achieving that pretty well. I just looked at the pictures of these people that are protesting in pajamas at the airport, and yeah, they’re fitting the bill really well. All right, tomorrow, Andy’s got two movies that we’re going to review. It is Five Nights at Freddy’s 2. That’s a mouthful. And Feckham Hall. And then, of course, we’ll do NFL picks. And then movie rental hour tomorrow is going to be the British are coming, movies with British characters. So that’s it for tonight. Have a great evening. Be safe out there. Rush to Reason, Denver’s Afternoon Rush, KLZ 560.
