‘Falling gas prices give Democrats a sense of optimism for November,’ The Hill reported earlier this week. But that doesn’t mean Democrats deserve ANY credit. Financial expert Carol Roth, author of ‘The War On Small Business,’ joins Glenn to explain the ACTUAL reasons gas prices have dropped and the one way Biden actually is just making it worse. Plus, Roth and Glenn discuss whether the coming energy crisis could lead to the federal government nationalizing the entire industry…
Below is a rush transcript that may contain errors
GLENN: Carol Roth, the war on small business author. And former recovering investment banker, that actually can break things down and talk and explain what things mean to the regular schlubs of America.
Welcome, Carol. How are you?
CAROL: You know, just enjoying the Biden economy. How are you?
GLENN: Oh, my gosh. That party yesterday was absolutely incredible. Incredible.
I mean, it was surreal. They were celebrating that the interest rate is coming down. Can you explain what happened with the interest rate numbers. The CPI numbers.
CAROL: All right. Well, James Taylor was there. So we saw fire. And we saw rain. We saw a revery hot CPI report yesterday. As we know, the CPI is one of the measures of inflation. And one of the measures of consumer inflation. We do know it's understated because they have messed with it, for the last several decades. To underplay it. But it's still a benchmark to sort of compare. It was considered hot by all expectations. We knew there was going to be some decline, in the headline number, because of the sharp decline in gasoline prices.
GLENN: Wait. Wait. But could you explain why the price of gasoline was going down?
CAROL: Sure. So before we get to the nitty-gritty.
CAROL: So there were a couple of reasons why gasoline is come down. Some of it was our president pulling a little bit of a stunt, pulling oil out of our oil reserves. And putting it out in the markets, to kind of depress it. Some of it was artificial, because the gas taxes have been on hiatus in certain locales. But the biggest reason, that the gasoline prices are coming down. Because of the price of oil is coming down. And the biggest reason the price of oil is coming down is because the price of oil got too high.
It's just pure demand destruction. There's a saying in the commodities market, that the best cure for high prices, is high prices.
And that's we saw. Not only here in the United States, where people maybe decided not to take a road trip. Or reroute their lives. You know, so they're not using as much energy. And particularly gasoline. But also, on a global stage. Obviously, the prices are going through the roof, as we know in Europe. Completely self-inflicted.
But, you know, again, they're having to make those same choices. And then China, as we've discussed previously. Is having its own issues. And particularly, with parts of that country, being under lockdown. And being a top consumer of oil. They weren't using it.
So the demand destruction, is that reason. That big reason, that we had to decrease in oil. And then decrease in gas.
GLENN: So just confirm, this is a good way to look at the words demand instruction. Because you'll hear people to say, what we're looking for is demand destruction in the oil prices. And blah, blah, blah. And, you know, it just kind of goes over people's heads. And I describe it today. Every time you hear demand instruction, put your fame. So Carol Roth, your bank. Your bank account. At let's say Bank of America.
What they're looking for. What they're really looking for, is Carol Roth's bank account at Bank of America to be destroyed. So you don't have the money to go and buy the things. Correct?
Looking to price things so crazy. That you can't -- you can't afford it.
CAROL: Yeah. It's the outgrowth of high prices, that basically Carol Roth says, you know -- I'm looking at my bank account. It's being destroyed.
And there's no way that I can go on that road trip. So I'm just not going to be one of those people in the market, who is purchasing gasoline this month. I'm going to take a reprieve. I'm going to work from home. That's part of the whole story of the Federal Reserve. What they're trying to do to, quote, unquote, slow down the economy. And engineer their -- another big -- you know, kind of financial speak. A soft landing. Trying to quell inflation without tanking the economy.
And that's their tool kit, is all about demand destruction. They don't want the consumer to purchase. They don't want businesses to make investments. And we've already had two quarters of negative growth.
So if they're trying to get the economy to slow down, you know what that means? That means more contraction.
GLENN: Okay. So that's why gas is going down. And that was really the only thing that went down. Right?
We had food prices skyrocketed.
CAROL: Yeah. It's crazy. I saw a stat in there, that food in the house, it was something like they were in the highest levels since the late 1970s. '79, I think. So we have hot numbers in food, in shelter. In medical care services. This isn't like ancillary stuff. This isn't the fancy clothes. This is the stuff that you're -- you know, you need to be able to live your life.
And it was the -- the fact that we thought, maybe -- the lower energy prices would flow through, no pun intended, a little bit more of the economy. But it's just shown that we have a very broad base, in terms of inflation. It's not just coming from that one pocket. It's not just Putin's fault, Glenn.
CAROL: And that is going to take a long time to come back down to normalized levels.
GLENN: So we have something else to add on top of that. And you can call it climate change or just a bad season, or whatever. But I was talking to my aunt, who is like 85 years old, yesterday.
Quite a conversation. I said!
Anyway, she was canning yesterday. And she was like, there have been no peaches. No beans. She said, we planted our bean garden three times. We had a hard time even finding seeds for it.
There is -- we are facing a real crisis just because the crops didn't come through, and that's happening globally. You add to that, all of the other problems. We haven't seen -- we're now just about to get into the time, where we would be using this summer's crops. Correct?
So food prices still have a lot way to -- a long way to go. In the up direction, don't they?
CAROL: They do. And that's part of the issue. Why I'm sort of banging my head against the wall, in terms of these discussion points. Because as we talk about the demand destruction that the fed policy is trying to enact.
Our issue is the broad-based supply issue. And as you mentioned, one of the areas that is undersupplied is food. Part of that, as you mentioned, because of weather events. Some of that because of fertilizer shortages. Some of it is because of by-products from energy that go into dry grains. Some of that, because of, you know, war in Ukraine.
But all of these things happening at the same time, are creating those shortages.
And again, as the consumer decides what to substitute. They may be able to substitute to a lower cost food, but they can't substitute food. And that will continue to be an issue, all across the globe.
GLENN: Well, they can't eat bugs. They're supposed to be very, very tasty.
Okay. Hang on just a second. I want to ask you a couple of things about the fed, and what they're planning on doing. And I'm reading some disturbing things, that I would just like -- talk me down from the tree. We'll do that in 60 seconds.
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So a couple of things, let's -- let me start with the fed. I am -- I am reading now, that the fed is going to raise the rates again.
But as astonishing as it seems to me, that we are at these historically speaking low rates. And it's going to stop the heart of the economy. They're saying now, the next rate, or rate hike. Or two. Could just put us into a tailspin. Do you believe that?
CAROL: I do. If you go back to Janet Yellen, our, quote, unquote, esteemed Treasury secretary. The one that told us that inflation would be transitory. And that they needed to get information on $600 e-commerce transactions to keep the billionaires in check, Glenn.
She was on -- one of those weekend shows. And she said, basically, that they fed is going need to a great deal of skill. And also, some luck to achieve this soft landing. Trying to bring down inflation, without taking the economy.
Well, we know on the skill side, we know that they don't have the skills. You know, they were behind the curve in terms of raising the rates to begin with. They waited until we were at, you know, historic 40-year highs, before they even started thinking about reversing course.
So obviously, we know that probably is not -- that the skill part of it. The luck part of it isn't on our side either. Because they don't have the right tool set. As we've been talking about this supply side, versus demand side. And the demand destruction. Their tool set, in terms of raising the target interest rate. As well as potentially reducing the assets under balance sheet. Although, I don't know if they'll ever get around to that. That, again, is to destroy demand.
It's just to have the consumer slow purchases. It's to have businesses slow investment. First, they have the government that's working, you know, against them on that. The government policy is spending more. So those two things are at odds. Which makes absolutely no sense.
But the problem we have now, isn't a demand side issue. It's a supply side issue. As we've been talking about, we have brought under supply. So unless the fed knows how to print labor, print food, print oil, print housing, they are not going to be able to solve for that -- for that Delta, that distance between supply and demand without completely slowing the economy to the point that we are in a severe recession. And that is what the market is signaling, both the stock market and the bond market right now.
Is saying, boy, we don't have the confidence, that the fed not only has the tools, but that they aren't going to put us in a worse situation. And on top of that, then you also have the global economy, you know, in tatters as well. Which isn't a lot -- not a lot. So I'm not real bullish on the skill and luck of the fed right now.
GLENN: So I was in -- I was in Italy last week. And just talked to people. Sit at a restaurant or whatever. And we just talk to people. And one of the more disturbing trends that I heard was, you know, that -- that things are getting really bad. And one person described it to me, as the winds of revolution are sweeping Europe.
Because -- and it's fascinating. Everyone knew, it was the same problem, we have here. The elites are going in one direction. And the people are going in another.
The people are saying, give it back to us. And the elites are saying, give it all to us.
And that's not going to last. And I kept hearing things like, we're just going to have to learn to -- that the this year days of having things that you wanted, and easy lives, are over. Can you describe what that means?
That Americans are just going to have to live a different kind of life.
CAROL: Yeah. It's so frustrating. That, you know, we have the leading economy in the world.
And you have all of these first world countries, that really have spent time, using their technology, to help other countries. And to help lift up human flourishing around the globe. I mean, if you think about China, and what we've done in terms of the extreme poverty there.
Lifting out 90 percent of their population, from extreme poverty. Because they were able to trade with us. And basically suck up some of our capitalism into the communist system. You know, that's what we should be doing. We should be taking that leadership, saying that we know how to do things the best way. And we're going to help everybody flourish. Instead, you have these elites, no. You know, we want this to be a third world country. And we want to be in a dictatorship. Where us at the top, have our own set of rules, and have all the power. And you just suffer. And you're going to have to suck it up.
And, unfortunately, there are some people, who will go along with that. Yeah. You know, crisis. We have to do all this together. Kind of what happened with covid. But we should have happened over the past two years. That they don't have our best outcomes.
CAROL: Yeah. Outcomes at heart. And they will do anything. Lie. Completely do anything they can to get and usurp that power. And we've already seen, you know, smaller amounts of civil unrest, you know, in developed countries. Whether it was the freedom convoy, or in the Netherlands with the farmers. And, you know, you're right. This could end up becoming a much bigger issue. Which, you know, if it changes the tide. You know, in a sense, it may not be the worst outcome. Not that obviously, I ever want to see any sort of violence or unrest. But we need to change the tenor, and the people need to take back common sense and sanity here.
GLENN: So the -- the one thing that kind of makes sense to me. Is -- you know, if you're somebody who wants control of things. You need to control medicine. They do. They need to control education. They do.
But they need to control energy. You know, I'm seeing this happening in Europe because they're ahead of us. And they're all -- people are going to freeze to death, this winter. They will freeze to death. And people did be able to pay their power bill. Which will put the energy companies into distress. And they won't have the money to do it. Because people aren't paying their bills, et cetera, et cetera. And I just think the government will step in and say, they couldn't get it done. This needs to be done by the government. And you could see the West just taking and absorbing all of our energy companies. Do you think that's a possibility?
Because I think it's likely, at least in Europe.
CAROL: I mean, so if you think about the desire to nationalize, control, have sort of a public/private partnership. At least in the US. California is sort of our incubator for that. And they're starting to test that in a lot of different realms. They just put together that fast recovery act. Which is going to be a state council on fast food. So they'll manage the fast food industry.
And, again, that is a step to try to nationalize these industries. I definitely see a place. We've already been hearing from the U.S. and abroad about things like price caps. We have a big problem in Europe, in terms of the way, they have kind of financed themselves, and a potential collapse of, you know, some of the energy companies and utilities out there. So, yes. You're going to have some -- the governments come in with a bailout. And then they may use that as an excuse. Well, we're bailing them out anyway. They can't manage them. We need to take this over. So whether it's food. Whether it's energy.
Whether it's any aspect of our economic freedom. These crisis are their touch points.
And, again, self-inflicted crisis. In order for them to say, we created the problem. But don't look at that. We'll fix that for you.
GLENN: Carol, will you do me a favor? I would like to do a special with just a group of experts, that can tell the average person, what's coming, and how do we deal with it.
I mean, it's so overwhelming to the average person. And I don't think, because people make it so complex. Because it is complex.
But they make it so complex, that they -- they don't even think about breaking it down into smaller bite sizes, that people can understand. So can you find a bunch of people, that you really think get it. That maybe can sit around at a roundtable, and maybe have a conversation about this.
CAROL: Yes. I would love to be honored to. And I will be in touch.
GLENN: Okay. Good. Carol, we'll talk again. Carol Roth. Carol Roth. Make sure you follow her. She's really, really spot-on. You can follow her at CarolRoth.com.
Also, tonight is a special on the energy crisis. And the collapse that is coming for Europe and what it means to America. Not just the explanation. But what we need to do about it. That's tonight. BlazeTV.com.