Join us for an enlightening conversation as John Rush engages with listeners and industry experts on the significance of price versus value in consumer goods. Reflecting on Bob from Thornton’s insights about the real cost and worth of products from China, Rush emphasizes the importance of understanding the true value of what we purchase—a discussion particularly timely in today’s economic climate where consumer decisions can significantly influence market trends. Amidst advertisements for local businesses, the episode also highlights practical perspectives on personal finance and the importance of informed purchasing decisions.
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This is Rush to Reason.
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With your host, John Rush.
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Are you crazy? Am I? Or am I so sane that you just blew your mind?
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It’s Rush to Reason with your host, John Rush, presented by Cub Creek Heating and Air Conditioning.
SPEAKER 09 :
All right, we are back. Hour number three, Rush to Reason, Denver’s Afternoon Rush, KLZ 560. Ken Davis, Job Creators Network. Ken, welcome. How are you?
SPEAKER 06 :
I am delighted to be with you, John.
SPEAKER 09 :
Always a joy, and we saw some great news. I was reading it this morning, and lowest inflation numbers that we have had in four years.
SPEAKER 06 :
Yes, and look at that. When all the supposed experts, the professional economists, the progressives, their stenographer lapdogs in the press, everybody was predicting that the first inflation report after the implementation by the president of his tariff program would be a disaster, because the tariffs will disrupt supplies and drive up prices. Not a bit of it. Not a bit of it. Inflation was 2.3% for the year, April to April. That’s the lowest since February 2021, when we were still in the pandemic. For the month, it was up just two-tenths of a percent from March to April. Again, the experts had predicted 0.3%, so it’s a third, 33% lower than predicted. Now, this is a great report, and a lot of the particular… Items or categories of items that are so important to American households. Energy is down 3.7 percent for the year. Gasoline down almost 12 percent for the year. And eggs. Who can forget eggs?
SPEAKER 09 :
That’s right. Eggs. That’s right.
SPEAKER 06 :
All the egg talk. That was down almost 13% for the month from March to April, down 13%. And that’s an early sign of the success of the efforts by the Agriculture Department, the Federal Agriculture Department, to repopulate the hen flocks across the country. But no, no. It’s a great report.
SPEAKER 09 :
And, well, Ken, really quick, too, I think this is – and to your point, I’m not one of those experts that you mentioned earlier, although what we’re seeing now are things that I have been predicting here since – not only since Trump took office, but just some of the things that needed to happen to get things back on track. And the things that – And maybe I’m, I don’t know, I guess because I’m a business owner and I’ve been that way for a long time since 1986, and I look at things a little differently than probably Wall Street does. I think for me, Ken, I understand the things that people buy on a daily basis. And yes, I get tariffs and I get that we import a lot of goods from around the world itself. But I will tell you, Ken, that. The things that you just mentioned, some of the things that we’re seeing a drop in as far as our daily consumables of Americans are concerned, they are not things that we import anyway. So when I started looking at some of the things that were going to be happening on the tariff thing, I didn’t even mind that we were going to be at 145 percent on Chinese tariffs right off the bat. I knew things would come down over time because China needs us worse than we need them. But at the end of the day, Ken, the majority of things that we bring in from China are not things that we need for our daily lives.
SPEAKER 06 :
Well, that’s exactly right, and it’s a critically important point. I mean, I think overall trade imports account for about 12% of the total economy. I mean, it is important, and we do have unsustainable, unjustified deficits, trade deficits with countries like China, and it is… The president, President Trump, ought to get the standing applause from every American for his efforts to address this problem that people recognize. I mean, if you look at the academic journals and the Sunday feature sections and stuff like that, There is and has been a widespread agreement that you cannot run massive trade deficits for extended periods of time without undermining your economic security and your currency and your overall economic health. So He’s gotten a lot of, oh, my God, what’s going to happen criticism for simply tackling something, boldly and courageously attacking a problem that everybody has admitted exists. needs to be addressed.
SPEAKER 09 :
The other thing, Ken, too, that I want to jump in and say is, again, we’re all of these highfalutin, high-powered individuals that are supposedly the best and the brightest, and yet you don’t hear anything from them along these lines. I mean, going back to the tariff. conversation in something that it even took me a second to kind of think through. But once I did, I’m like, OK, wait, time out. First of all, tariffs are on the cost of the good that’s being exported, not what it’s being sold for here in the United States of America. So let you know, we’ll take a pair of tennis shoes that cost ten dollars. And I’m not exaggerating when I say ten dollars. That’s not far off from the actual cost in some cases. But in the American consumer’s eyes, they’re thinking, well, those tennis shoes cost me $125, so there’s going to be a 145% tariff on that $145. Ken, that’s not true. The $145, it’s not that anymore, by the way, but that $145 there for a week or whatever it was, was on the $10, not on the retail price. That’s something that, frankly, hasn’t been communicated well enough with the average American.
SPEAKER 06 :
Well, that’s right, but the… If you look at the general discussion of any policy issues, and certainly economic issues, you’ve got a discouraging mix of indifference and lack of information and sometimes, I think, intentional… Agree.
SPEAKER 09 :
Willful. Yes.
SPEAKER 06 :
Agree. Intentional distortion, in this case… hysterical fear-mongering in order to undermine the overall position and political clout or strength of the of the administration that’s right that’s right this is the same this is the same coastal legacy progressive press corps that um flogged the Russian collusion story and covered up the Hunter Biden laptop story and on and on and on. So this is just the latest chapter. And so what we saw this and their latest entry was, of course, it’s going to the tariffs are going to devastate jobs and drive up prices and tank the market. And of course, there was anxiety-induced short-term adjustments in the stock market. But the jobs report, the most recent jobs report, blew the doors off. That’s right. And this inflation report is a winner. And so the president is on the right track. You know, look, prices of domestic products, as you point out, there are a lot of factors. The cost of the imported item for things that are imported, is only a small portion or a portion of the end sale price. And the end sale price is a result of a lot of things. And one huge factor driving end-use retail purchase prices in the last four years has been this devastating Biden combination of blowout spending, money printing, and production choking regulations.
SPEAKER 09 :
I want to add one more thing to that, Ken. Energy prices, you can add on to that list of what you just gave as well.
SPEAKER 06 :
Yeah. I mean, since day one, I mean, Biden wasn’t finished with his – inauguration day lunch when he started a war on the energy industry. And energy goes into everything.
SPEAKER 08 :
That’s right.
SPEAKER 06 :
That’s right. And that’s been aggressively addressed and reversed in the Energy Department and at the EPA in an unprecedented list of executive orders and cancellations. of Department of Energy Biden regulations using the Congressional Review Act.
SPEAKER 09 :
That’s right. That’s right. Ken, Job Creators Network, how do folks find it?
SPEAKER 06 :
Well, I’ve written a book on the progressive state and its harms called Revolution, and it’s referring to the American Revolution.
SPEAKER 08 :
Okay.
SPEAKER 06 :
A call to… Turn back the lawless left and restore the promise of America, and it’s available on Amazon Books.
SPEAKER 09 :
Awesome. Well, Ken, I sure appreciate you very much. I appreciate you filling in today very much. And, again, you are welcome, and I appreciate it. We very much think alike. So thanks for what you’re doing, sir.
SPEAKER 06 :
Well, thank you for having me and for everything you’re doing.
SPEAKER 09 :
You’re very welcome, Ken. Appreciate it very much. Have a great evening. Ken Davis, again, he is filling on the – we had a couple of people that couldn’t make it for the Job Creators Network, but he’s filling in, and I appreciate that very much. Flesh Law coming up next, 303-806-8886. Whether it’s criminal or civil, give Flesh Law a call today, 303-806-8886.
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SPEAKER 09 :
This is Rush to Reason on KLZ 560. All right, we are back. Bob and Thornton, you’re next. Go ahead, sir.
SPEAKER 03 :
Hi, John. I was interested in your last guest there. I want to bring up something. This is something that you and I, I think we’re on the same page on this. We know the difference between price and value. There’s a price for something, and there’s a value of something. Very true. And they’re not interchangeable.
SPEAKER 09 :
No, they’re not equally the same, exactly.
SPEAKER 03 :
Now, let’s talk about the Chinese manufacturers selling into our economy here. Let’s snap a chalk line, you know. It’s roughly about… 50% of the population. And there’s the haves and the have-nots. And the reason that there is haves and have-nots is mostly because they’ve made their own choices.
SPEAKER 08 :
I was going to say decisions, right?
SPEAKER 03 :
Yeah, exactly.
SPEAKER 08 :
I agree.
SPEAKER 03 :
The other one. The Chinese are selling into the lower half of that chalk line. They’re selling products that people don’t need without money that they don’t have.
SPEAKER 08 :
Very true, Bob.
SPEAKER 03 :
You and I, when we make a purchase, study it. If there’s value, we purchase it. If it’s based on just price and it’s garbage, you gave me some good advice on staying away from a Dodge Hornet the other day, and I appreciate that.
SPEAKER 09 :
You’re welcome.
SPEAKER 03 :
I was looking at price, and then I decided there was a value there, and I made that decision. So I thank you for all your information. I just hang on to every word that you say.
SPEAKER 09 :
Well, and I appreciate that, Bob. Mutual respect back and forth as well. And you’re right. And one of those things that I’ve tried to convey here on air, and it’s always hard because you hate to just throw certain segments of the population under the bus, but you are correct in what you just said, and you said it very wisely, that the Chinese government, the Chinese manufacturers, have relied to a large extent on a lot of individuals in this country that are looking for price and price only. And frankly, Bob, and I’m not trying to be mean here, but I’m not sure they would understand a value product if it hit them in the eye. I mean, literally, they are looking at price and price only. What they don’t understand is in most cases, probably all cases, that cheap product, frankly, at the end of the day, is not a good value for them because if it doesn’t last very long and it doesn’t even perform the way that it should, literally, they may be buying that over and over and over again where they could have bought the higher-priced item to begin with and been done with it.
SPEAKER 03 :
Okay, that’s what I had to say, John, and again, I thank you for all your… You’re very welcome, Bob.
SPEAKER 09 :
No, I appreciate it very much. Thank you in mutual respect and appreciate you listening. And Bob sends me all sorts of things. He’s one of those, one of you individuals out there listening that send me a lot of different articles and things to read and look at, and I do. I do read and look at all of those things. But, you know, Bob brings up a great point in something that… Again, you’re not going to hear this out of the mass media, the mainstream media. And that is one of the things I was arguing with Jordan Goodman about yesterday when he was on during the first hour at 3 o’clock, which is, frankly, other than a few electronic components and things along those lines, some rare earth metals and so on, which, by the way, that’s already been handled with the last rounds of agreements that happened over the weekend. But the reality is, other than a few items along those lines, we don’t have to buy anything from China. Now, we do, because in a lot of cases, it’s a very inexpensive, cheap item, and we buy it there. For example, I’ll give you a quick example. There are a – I’m looking at my Yeti, and, yes, I have a Yeti in front of me. It’s one of my – I don’t know what the ounce thing on this is, but it’s one of the large tumblers. I can fill it up. I can pretty much use it all day long. I refill it when I’m down here at the station. I know everybody probably laughs at me for having it because it’s huge. On the same token, this thing can be a lethal weapon. I keep a little lasso on one end of it or a tether on one end of it. If need be, and I had to swing that thing around, you could literally knock somebody out with it. It’s a Yeti. And those of you that are familiar with Yeti know the value, back to Bob’s point, of what that Yeti gives me. Is it an inexpensive item? No. Is it something that as long as I don’t lose it will last me probably my lifetime? Yes. Are there other imitations to Yeti that I can buy for a lot less money? Absolutely. China makes some knockoffs of Yetis. A lot of you have seen them. By the way, I call them Chedis. China made Yetis. They’re Chedis, not Yetis. And I make fun of them because a lot of people have them. In fact, most of what you’ll see that have writing or logos or engravings or whatever, even though you can get that in a Yeti and there are some of those out there, most of those cooler type cups that you see that are engraved, especially in some sort of a mass quantity, are Chedis. They’re Chinese imported knockoffs of a Yeti. And at the end of the day, are they as good as a Yeti? No, they’re not. They’re not. I’ve seen them. I’ve used them. I’ve had some of them given to me as gifts, by the way, over the years from different organizations where they’ll get a bunch of these things printed up. They give you one and so on. And you look at the bottom, it says made in China. And it’s not a Yeti. Again, it’s a Chetty. That’s what I call it. Now, that’s not the formal name. So any of you that are out there running around, don’t go looking for one with the name Chetty because you won’t find it. It’s just a Chinese Yeti. That’s what I call it. Point being… You can go find those, to Bob’s point. And they are literally, and I’m not joking, they are literally a fraction. You could probably buy 10 of those for one Yeti, and I’m not exaggerating. There’s that much of a price difference between the one and to the other. But there is that much difference, in my opinion, in quality. You can pick them up and just feel one to the other and know what the price, you know, know what the quality difference is. Yes, there’s a huge price difference, but they are not one and the same. And it goes back to what Bob was talking about. There’s value, in my opinion, in buying the Yeti over the Chetty, knowing that I’m going to outlast that Chetty at least 10 to 1, meaning that I’m getting a better value and I’m not buying it over and over and over again. And the way it functions, by the way, and how long it keeps things cold and the ice that stays in it and so on, there is a vast difference from one to the other. And that’s just one product example. I can go down the list. Now, I get it. There are some items that the only place it comes from is China. I understand that. Although you have to wonder why. Why? You know, where was the master plan behind having that item come only from China versus being made here in America? I’ve had numerous examples from a lot of you as listeners that have family members in certain towns. You know, we had Jordan on yesterday or he was talking about how nobody wants a steel mill in their backyard. That’s not true. That’s not true. Many of you emailed or texted in after Jordan was off saying, I’ve got family members in such and such a town that used to have a steel mail in it, and they would love to have that back. They would love to go back to work at the steel mill. The town would love to have that steel mill back. So I disagree with Jordan on that because there are parts of America where you could bring those things back. He is correct in the fact that environmentalists are a bunch of hypocrites. They’d rather have that stuff in those factories somewhere else so that we don’t have the quote-unquote pollution here in America. But the reality is the pollution is still going to exist if we keep buying steel, and we will. Steel and aluminum. And the left is just a bunch of hypocrites. We don’t want it in our backyard, so we’ll send it to Mexico. We’ll send it to Canada. We’ll send it to China, wherever. As long as we don’t see it, it’s good. They think as long as you don’t see it, it doesn’t exist. That’s how a lefty looks at it. And again, they’re hypocrites. Not in my backyard individuals. So I’m dovetailing into what Bob was talking about, and I believe, yes, there is a big difference in quality in things that you can buy in certain places outside of China. Now, I’m looking at a cup here that sits on this studio desk because people come and go, and there’s a cup full of pens. And I would venture to guess that probably, if not all, at least two-thirds of those pens are probably made in China. And it’s simply because of cost. Now, can we make a pen in America? Sure, we could. Sure, easily. Do we? No, because at this point, it’s still cheaper to get it someplace else and let somebody else go through that. But that’s an example of could we do that in America? We absolutely could. There’s so many things we could still bring back here to our soil and make. We’ve just chosen not to because it’s cheaper and maybe even easier. I don’t know about the easy part, but it’s cheaper to have it done someplace else. So, again, I appreciate Ken, our first guest we had. at five o’clock and then bob following that up as well scott garless we’ll talk to him in just a moment and kind of dovetail back into this with him uh don’t go anywhere roof savers of colorado and for some of you listening you may have just gone through a hailstorm and we’re kind of in that season where hail can happen at any given time you find yourself coming out of a hailstorm you want to get things inspected when it comes to your roof or there’s even any damage i’ve always said this don’t call your insurance company before calling dave hart at roof savers of colorado 303-710-6916
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The best export we have is Common Sense. You’re listening to Rush to Reason.
SPEAKER 09 :
All right, we are back. Rush to Reason, Denver’s Afternoon Rush, KLZ 560. And a lot of you send me text messages. I do my best to answer those or at least read those during the breaks and so on. So, again, if I don’t respond or something along those lines, you know why. I don’t. I’m doing my very best. It’s easier, of course, like Tuesdays when Andy’s here. I can do things a lot faster that way. But I do my very best to handle things even when he’s not here that way. So at any rate, Charlie’s doing his best to get Scott lined up. We’ll get him on air here in just a few minutes. In the meantime. Something else I had in my notes that I was going to try to get to, hopefully I’ve got enough time to maybe I can squeeze this in really quick, and that is Charlie sent me something earlier today about the vehicle emissions here in Colorado likely doubling their testing fees. That is something that I will keep my eye on. They will, of course, have to have some approvals on that before they just arbitrarily go out there and raise prices, but it looks like for more than two decades it’s been roughly $25 since 1982. or no, sorry, $25 for vehicles made in 82 or after, $15 for vehicles made before that, but they’re trying to double that to $30 and $50 respectively, and I will let you know how that ends up turning out. Scott Garlis joining us now. Scott, how are you, sir? Hey, John, I’m well. How are you? I’m doing very well. Good to talk to you. Good reports today, by the way, on inflation, lowest we’ve seen in four years.
SPEAKER 07 :
Yeah, so that’s right. So the Consumer Price Index came out. It showed growth was up 2.3% year-over-year. Yeah, that was a downtick from what we saw last month. And, yeah, it’s the lowest since February 21. I mean, that’s a big deal.
SPEAKER 09 :
It’s a huge deal. Now, not to boast, but I think you and I can take a bow sometimes. These are things that, frankly, you and I have been talking about. We’ve been looking at other indicators outside of, of course, what Wall Street and mainstream media talk about. And kind of, in my opinion, the handwriting was on the wall for some of these things when you start getting energy prices down. when you start handling some of the things that he has done in regards to tariffs, and we see some of the deals that are working out along those lines, and again, where Wall Street and mainstream media gets all uptight is over some things that frankly, and I’ve talked about this before with others, Scott, some of the things that tariffs have have affected are not things that we americans buy every single day and i would even go as far as to say that in a lot of cases china included outside of a few items we don’t have to buy at all the reality is we can’t get by without buying from a lot of these countries we choose to buy from some of these countries for obvious reasons but at the end of the day scott we don’t have to in the core things that we buy daily if people would turn off the news stop reading, you know, not that many people get that paper anymore, but if they’d stop looking at news sites, if they’d stop looking at, you know, X and some of the other things where there’s Postmate and so on, in other words, if they would turn all that noise off, go about their daily lives, they wouldn’t know any of that stuff was even going on.
SPEAKER 07 :
Totally. And again, it’s just, it’s people get so hooked in by the disaster scenario, and that’s all anybody pitches out there right now, and so they just They get sucked into that garbage. I mean, how many people right now are probably regretting that they blew out of all their stocks?
SPEAKER 09 :
Most, because all that, you know, all but within a few, and you know this better than I do, but all but a few thousand dollars, as far as the Dow is concerned, were back up to where it was initially. I mean, the reality is, if you’d have just hung on to things, you’d be right back where you were.
SPEAKER 07 :
Yeah, yeah, you’re certainly getting close. This is true.
SPEAKER 09 :
I mean, what are we, 3,000 or so away from where we started? It’s not that far off. Am I wrong?
SPEAKER 07 :
Yeah, no, I want to say the S&P 500, I’m not looking at it right this very second, but it’s probably like… We’re at 58.92 today, and I don’t remember where we started. So we’re probably close to like 6% from the highs.
SPEAKER 09 :
Okay, and we’re probably not far off of that with the Dow Jones. It’s at 42, and I think we were around 45, 46 when things kind of went down. So we’re not that far away is my point.
SPEAKER 07 :
Yeah, exactly. That’s about the same. Some of the other stuff going on is, you had these announcements out of the Middle East the last couple of days where they’re going to sell a lot of AI-related chips to them. NVIDIA and advanced micro devices, companies have gotten bashed over all this. Their prices are taking off the last couple of days. Technology stocks are still … We talk about this a lot, too. If things do slow down, companies are going to invest more in tech to create margin and efficiency. These companies are still going to see a lot of demand, no matter what.
SPEAKER 09 :
Exactly. I don’t know. I just keep going back to some of the conversations you and I have had over and over again. And frankly, we’ve been talking all the way through COVID. We were correct on the Fed being too slow to raise rates at that time. They’ve been too slow to lower them back down. As far as I’m concerned, they got all nervous last week over things that, frankly, they didn’t need to be nervous over. And frankly, I think now, Scott, today they’ve got egg on their face. They literally could have done a quarter point rate cut last week and we would have been just fine doing so.
SPEAKER 07 :
You know, I agree with that. And it was interesting because I know I saw the Chicago Fed president, Goolsbee, came out and made some comments this morning saying, well, you know, the April data really doesn’t show any of the trade effects yet or the tariff effects yet.
SPEAKER 09 :
It’s because there aren’t any, pal.
SPEAKER 07 :
Right. And sort of, you know, like we’ve discussed, a bird in the hand is worth two in the bush. And inflation is still coming down. You know, and you can say, well, it might go up, but it But we’ve been saying that for several months now, and it’s still not good. Well, not you and I are saying it, but others are saying that, and it’s still not taking off.
SPEAKER 09 :
Well, and Scott, again, I had another guest on top of the hour, but when you look at some of the core things that we buy as Americans on a daily basis, mainly energy, I mean, you start looking at the things that we do there and knowing that prices are continually moving down. I mean, are they going to get down to $2 a gallon at the pump? Folks, no, and I know that’s what the White House is saying. Mathematically, that really won’t work. I mean, you’d have to get oil all the way down into the $35 a barrel or less, and the reality is we don’t want it that low. But you know what? We can handle $2.75 a gallon pretty easily. That’s still a dollar a gallon less than it was not that long ago, Scott, and that’s a huge decrease all said and done, especially when you look at all the shippers and the people that have to spend money to get things to us. Those are huge savings at the end of the day.
SPEAKER 07 :
Completely. I mean, to your point, so food and energy are, I mean, those are the two things that help all of us the most. Because when those prices come down, because it’s stuff we use in our lives every day. Now, what always cracks me up is the Fed doesn’t consider those core inflation numbers because they’re volatile. It’s like, well, but they’re the things everybody uses. How the hell are they not core to inflation?
SPEAKER 21 :
Right.
SPEAKER 07 :
Yeah, but even core inflation, too, all the items, food and energy, that is coming down as well. So, yeah, I mean, there’s a really good case being made for it’s time for the Fed to start cutting rates again.
SPEAKER 09 :
Well, and the reason I say that, and there’s some people out there that maybe would argue with me on that, Scott, but this is where I want to get your opinion because you’ve got some connections in this end of things. They need rates to come down some, and I know that short-term rates don’t necessarily drive mortgage rates, but they do. There’s a correlation there. There’s also a correlation, direct correlation, to the commercial market. property end of things and scott i know that if they really want to get things back on track and get some things geared back up they’ve got to get the rates down you know honestly it needs to come down an entire point to really get those two sections of the economy back on track yeah it would definitely help with commercial property prices all real estate prices you know we talked about this last time it would help with the building industry as well um and i think we touched on this in the last couple weeks if not we have recently um
SPEAKER 07 :
You know, all the lending capacity that’s sitting, you know, sort of off balance sheet, unrealized losses for banks right now because of their treasury holdings they had prior to the Fed really raising rates. And, you know, they lost value because the interest payment on those things is lower. But if you can get rates down, the value of those treasury bonds would go back up. And that would free up more lending capacity from banks, which would help get the economy revved back up.
SPEAKER 09 :
That’s exactly right. I went to lunch this week with my banker and had a conversation with even his boss, where he’s really kind of high up in this particular bank that I bank with. And we had some of these similar conversations. And the reality is they have some money. They want to get it out into the marketplace. I think there’s a lot of banks looking at that very same thing. Again, they want to make sure that they’re lending correctly. They don’t have any issues. Banks don’t like risk, as you know, or they want low risk, I should say. And, Scott, they know as well as I that if you get some of these costs down like we’re talking about, even for their business customers or especially their business customers, they know that their chance of survival is much higher. They’re more willing to lend. So it’s not even a – How should I say this, Scott? It’s a perception even from the bank to the business, knowing that if the business has more ability to make things work because their expenses are lower, they’re more willing to lend. And it’s this big circle that, frankly, the Fed does not look at.
SPEAKER 07 :
No, I mean, it should help borrowing costs for the U.S., too. That’s right. Treasury interest payments. It’s just it’s like. What are you guys thinking? Why are you not thinking of these things? And then the whole side of if we want all these companies to come in and invest in the U.S., they’re going to need to borrow. So we want to get banks, you know, have their balance sheets in good shape so that they can lend plenty of money to businesses to reinvest in the U.S.A.
SPEAKER 09 :
It’s funny that you say that, too, because people would say, well, wait a minute, if you’ve got all these companies, they’ve got all this money, why would they need to borrow money here? Well, there’s all sorts of reasons, Scott, that you could probably explain better than I, but it has to do with even taxation and all sorts of other things that happen when they bring that money in. In a lot of cases, even Apple, who is as big as they are and have as much cash in the bank as they do, they will still borrow money at times because at the end of the day, it’s still less costly for them to do that than to use their own money.
SPEAKER 07 :
Correct, correct. And that’s why you see people do like debt payment or debt raises overseas, stuff like that. Right. But yes, you’re right.
SPEAKER 09 :
So my point is, you know, people think, well, they just need to bring all that cash in here anyways. No, they will look at all the things, Scott, that you and I are talking about right now, and if they can come in here and get a line of credit that is, you know, two points above prime, and you can get prime down around 2%, and they can now have a line of credit for 4.5% to 5% versus 8%, that’s a huge difference.
SPEAKER 07 :
That’s a humongous difference.
SPEAKER 09 :
And, frankly, that’s where we need to head back to if we really want to get things stimulated again.
SPEAKER 07 :
Correct. I mean, people, you know, if somebody really wanted to go check it out and make sense of it, go pull up an interest rate calculator on a computer and run it. Yeah, and you’ll see really fast the balloon payments on that. The interest payments add up.
SPEAKER 09 :
That’s right. And so, to your point, if you really want to get some of these outside, you know, investment companies or manufacturers, I guess what I’m trying to say, Scott, back on our soil and bring some of that stuff back in, even though they may very well be an American company. And you’re thinking, well, that’s not even outside money coming back in. But it’s still money they have to spend, invest, and make things happen. And the reality is they want to do that as cheaply as possible, which offsets their cost, which enables them to bring that manufacturing back here.
SPEAKER 07 :
Yeah, yeah, that’s right. And it’s, you know, the other part of this, too, is Something else that happened over the weekend with the whole China-U.S. announcement. And so, you know, you coupled it with dropping tariffs from 145% to 30%, and they’re talking about dropping from 125% to 10%. That’s a big deal from a growth outlook as well, because all of a sudden, you’re not looking at this dire, oh, my God, the economy is going to implode. You know, all these Wall Street banks that took their growth forecast to recession for this year, all of a sudden they’re backpedaling, saying no recession, and you throw that slowing inflation. And, you know, I think it was end of last week, all I heard on CNBC, I rarely turn it on, but when I do, they’re like, stagflation, stagflation. I’m like, oh, my God, this is why I don’t watch.
SPEAKER 09 :
For everybody listening, because I think most know what stagflation is, but for those that don’t, explain stagflation.
SPEAKER 07 :
It is stagnant economic growth with high inflation. So basically it would be like you have zero growth to contraction, but you have inflation picking up. And what we’re all of a sudden seeing is that’s not really happening.
SPEAKER 09 :
No, it isn’t. In fact, it’s the opposite of that, Scott. In fact, I predict, and I could be wrong in this, but we haven’t been too wrong all the way through this. Maybe our timing is a little off, and that’s because, frankly, the Fed’s not reacting the way that they should be or we’d be in a different spot right now. But the reality is I predict that you’re going to see some economic growth. You’re going to see a lot of what we saw during Trump’s first term to where it’s economic growth without inflation, meaning that the Fed could lower rates to even further that along. And if they do, we could see inflation back down in the 1.5% to less than 2% range.
SPEAKER 07 :
I would love if we got inflation back to 1.5%. Yeah, but 1.5% to 2%, even if we got it just to 2%, that would be phenomenal.
SPEAKER 09 :
Correct. And frankly, and this is something that a lot of folks don’t understand either, is I have arguments even with some listeners at times, Scott. You can’t have it go the other way. As much as people want to see retraction in prices because they think they’re saving money, for the overall health of the economy, that’s not good. You need a little bit of inflation to keep things moving along. Am I correct?
SPEAKER 07 :
Yeah, yeah. We have talked about this in the past. That is correct. That’s a sign of a healthy economy. Japan has battled deflation, or they battled deflation for, gosh.
SPEAKER 09 :
Negative interest rates for the longest time, right, Scott?
SPEAKER 07 :
That’s correct. And they finally have started to get out of that. We don’t want to go there. That’s not a good thing for our economy.
SPEAKER 09 :
We want to see, yes, we’ve had tremendous inflation, and I know it’s hard, and people have to try to make more in wages and things to kind of combat that. And while you can see some pockets, eggs, for example, Scott, where, yes, they can come back down to where they were yesterday, at one time because they went up they spiked up yeah you could see some adjustments along those lines and in commodities especially like you know you know food prices for example scott some of that stuff will do that naturally anyways depending upon what’s going on in the marketplace supply and demand and so on but overall you don’t want to see a retraction of the economy no no you don’t um that that yeah we don’t want a retraction we just we would slow stable growth is great OK, now next Fed meeting is is it next month? Is it June? They skipped July. Am I right in that?
SPEAKER 07 :
No, I think it’s June, July and then they skipped August. Yes. Yes. So it’s two per quarter.
SPEAKER 09 :
OK, so so they’ll have another one coming up. What’s your predictions as to what they do in June? And it’ll be latter part of June. So it’s a little ways away.
SPEAKER 07 :
Yeah, you know, I think June is on the table for a potential rate cut. I think July is pretty certain. But I think there’s a 50-50 shot we could see a rate cut in June.
SPEAKER 09 :
Okay. Again, you know my feelings. I think they’re behind. I think if they do a cut, it’s only going to be a quarter point. There’s another thing you and I have talked about in the past as well. All that does, that quarter point cut at the end of the day, really doesn’t save and or change much in the marketplace. It’s more of a signal that, you know, we feel confident that things are going in the right direction. We’re going to go ahead and lower rates. That’s really all that is, correct? That quarter point doesn’t really do a whole lot at the end of the day.
SPEAKER 07 :
Yeah, no, it doesn’t do a ton, but it starts to add up for households. You know, if you can get rates down and their borrowing costs and credit cards, whatever, come down, yeah, it starts to put money back in people’s pockets, which at the end of the day, that’s a good thing economically. And that’s why when people talk about rate cuts support economic growth, that is why.
SPEAKER 09 :
Yeah, because to your point on what we’ve talked about even here, and for those of you that are not in the business end of things, trust me when I say that. Those of us that are in business, and we do use other people’s money to make money. And a lot of companies, Scott, to the point that we talked about earlier, even those that are flush with cash will still use other people’s money to finance and do things. And anytime you make that cheaper where it’s easier for them to do so, they will, and that stimulates the economy.
SPEAKER 07 :
Correct. That is correct.
SPEAKER 09 :
This is not a hard equation, frankly, by the way, at the end of the day.
SPEAKER 07 :
No, no, it’s not. I just don’t know why our central bank is so apprehensive right now. They have a 210 basis point rate cut cushion, and they refuse to touch it.
SPEAKER 09 :
Yeah, and that was a question I was going to have for you is, you know, why do you think that is? What do you think they’re so afraid of? You know, what is it that, you know, are they watching too much CNN? I mean, what is the deal?
SPEAKER 07 :
I just I think Jerome Powell has gotten his back up. The media has sort of stoked this fight between Powell and Trump. And so I think Jerome Powell is acting like I’m not going to be told what to do. So I’m not going to do it until I feel like it’s the right time. And it’s you know, he went the last couple of speeches he did. He he talked about that and was like, come on, man, you’re. You’re not supposed to be political. You have talked about how apolitical the Fed is, yet here you are being political. It’s ridiculous. It’s childish is what he’s doing.
SPEAKER 09 :
And I agree, and I’m afraid to say this, Scott, and Trump has said that he won’t do anything about him, but if you continue down that path, he’s liable to not have a job.
SPEAKER 07 :
Yeah, no, the reason why Trump won’t do that is it would be really bad for international finance markets. It would be really bad for the U.S. market.
SPEAKER 09 :
People would lose faith, and I know it’s… Even though he continues to go down this path of, I’m not political, but I’m going to talk political anyways?
SPEAKER 07 :
Yes, yeah. Interesting. He would, believe it or not. Yeah, it is. It’s like, because you’re the one side, you’re like, this is ridiculous, and the other side, you’re like… My God, but yeah, there would be a very negative reaction to that. So Trump kind of has to ride this one out.
SPEAKER 09 :
Do you think there’s any ability for some of the other folks, not Trump, that could sit down with Jerome Powell and really say, listen, guys, we’ve got to get back on track? And I know we’re short on time, but give me your answer.
SPEAKER 07 :
Yeah, yeah, there’s always a possibility.
SPEAKER 09 :
Okay, all right. Scott, how do folks find you? How do they follow you?
SPEAKER 07 :
Yeah, sure. Twitter, Substack, or LinkedIn, C. Scott Garlis.
SPEAKER 09 :
As always, I appreciate your wisdom, Scott, very much.
SPEAKER 07 :
John, thanks so much for your time.
SPEAKER 09 :
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SPEAKER 09 :
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