they bring these 20 fish back in
this is awesome for me
i like to fly fish
i don’t like deep sea fishing
so for me this would be great
i wanna be a farmer so i gonna grow corn
somebody else is gonna pick some fruit
somebody else will offer to clean & cook the fish
someone else will say i wanna be a boat mechaing….
so then what happens?
you sit down for dinner
and you don’t have 2 fish anymore
you have 2 fish some corn some fruit
somebody is cooking the dinner for you
somebody is repairing the boat
and we now have plenty
we have created wealth
it’s a perfect example of supply-side economics
you invent something that raises productivity
you then have the ability to demand new supply
so, the island become wealthier
however, it doesn’t have to end this way
how else can it end?
well… the other 8 people that don’t have a boat they’re standing around on the beach and one of those 8, a politician, starts giving speeches and telling that “ this is not fair”
“we only can catch 2 fish a day and the people with the boat catch 10, the income used to be equal now is not” “what if we raise a tax of 80% on anybody who uses a boat?”
then they build a jail or whatever they do and they take16 fish and they give 2 to all other 8
now none is better off now everybody has 2 fish so what they did by taxation ?
they stole the benefit of the new INVENTION and none is better off
and it’s get worse than that
because over time the boaters aren't gonna be able to fix their net or their boat
and it's gonna wither and die and break
and they’re gonna go back to catching 2 fish a day
and there are some of those 8 people
that are gonna get dependant on the boat
that are gonna forget how to fish
and then despair is gonna to set in
there is two ways the world can go all the time
and if you believe in inventions and growth and supply-side economics and freedom
you end up with more wealth
that’s what a lot of Americans decided to do
that’s what America is
that’s how you create wealth
all this was tried before
salomon knows it. everybody knows it
the ideas of Marx weren’t new
he's famous but their ideas weren’t new
nothing was new about that
and modern monetary theory MMT is Keynesianism on steroids
just like Marx and his followers
they are still pushing anti-capitalist mentality
and what’s fascinating about it
is when you fight it, just like Marx
you get met by ridicule, derision, slander and insult
because they can’t defend it in an economic argument
it's a political argument not an economic argument
America has survived this storms before
even though we have learned this lessons
we have republicans and democrats who let the government grow, all the time.
when we look at this redistribution
i dont’ think our founders would recognize our country today. i don’t
let me explain…
1930
NON-defense GOVT spending was 2,5 % of GDP
THIS IS NON-defense GOVT spending
WW2 ruins all this charts. ( bc it was so big )
TODAY GOVT spending is 30% of GDP
2024
NON-DEFENSE GOVT spending 34.25% of GDP
think about those numbers
from 2.5% to 30%
over the last 90 years
GOVT HAS GROWN 10X FASTER THAN THE ECONOMY
10 TIMES FASTER
and GOVT is the one that tells us we’re GREEDY
GOVT is the greediest institution on the face of the earth
wait a minute
not all GOVT spending is wasteful
( we can argue all day long )
just to say:
defense, highways, police, fire, hydroelectric dams
( all of them add to our productivity over time )
LOOK: nobody is building billion-dollar paper mills in Somalia or Venezuela. it’s NOT SAFE
is stupid to invest that much money in those countries
we at least keep things safe.
AMERICA is SAFE
we have a court system
we have the rule of law
we have police
we have fire
we're supposed to be our brother’s keepers, right?
SO, WHY this is NOT a GOVT problem?
bc churches and families have given it up?
we’ve allowed GOVT to shoulder more in the bore of the burden
from crisis to crisis they GRAB MORE
from the new deal to the Great Society to tarp to Covid 19 and now WW3.
GOVTs increased its role
how much of our personal income is transfer payment from the GOVT?
transfer payments include programs like
social security
medicare
medicaid
unemployment insurance…
( and other welfare and assistance )
some stats:
1930s transfer payments was basically zero
1959 6% of all personal income came from the GOVT
by 2012 it was up to 17,8%
and last year it hit 21,6%
$2 out of every $10 of income was transfer payment from the GOVT
do the math. they didn’t take16 fish but they took 4
btw. it was 25% of the gains in wealth that we’ve had.
go back to 1935
GOVT was about 10% of GDP
that means we had 10% of the ECONOMY
i’ll call it 10 people in the wagon
and that means there are 90 left to pull the wagon
then we go to the end of GREAT SOCIETY
17 people in the wagon and 83 people pulling
today we have 27 in the wagon and 73 pulling
just to be fair, 13 people work for the GOVT so we should put them in the wagon too
these numbers aren’t perfectly accurate but i’m making a point
which one of these wagons goes faster?
the more people in the wagon the fewer people pulling
the slower we grow
if we look our ECONOMY
in the 1980s and 1990s we grew over 3% per year in terms of GDP
in the last 20 years. it’s under 2%
( 1,5% difference in growth rates over a generation is a massive amount of standard of living )
and that’s why people are feeling bad about the economy today
a lot of conservatives that’s what they talk about
how we’re growing so slow, how hard is to get ahead, how living standards are falling
and people talk about ECONOMY in terms of GROW, relative to the size.
all of that is important. is really important
but what we're missing is the MOST IMPORTANT ISSUE
when people are in the wagon and they shouldn’t be in the wagon
what happens to them?
GOD created man in its image
so man is supposed to be a creator. a producer
becoming entitled to others production
( that’s what happens when you’re in the wagon )
undermine self-worth and connection to community
PEOPLE’S SOULS DIE WHEN THEY ARE IN THE WAGON
and they shouldn’t be there
so yeah, GDP is growing slower, we have fewer jobs, there’s fewer wages
housing isn’t as affordable, gas is more expensive….
BUT SOULS ARE DYING
AND THAT’S THE MOST IMPORTANT PIECE OF DATA WE OUGHT TO LOOK AT
if you think about history
the UK had a gin problem
the Soviet Union had a vodka problem
we have an opioid problem
and all of this is because SOULS are DYING.
the BIG problem is SOULS are DYING.
look at this chart
before 1975
70% of the people were affiliated with a church and a synagogue
and then we fell
by the end of the panic of 2008, it was down to 60%
and in the covid to 40%
i’m not telling everybody’s a member
i think some people don’t even know what being member of a church is
maybe probable everybody on this room does
the point is
the bigger GOVT gets the less faith in something else people have
so, when i look at this
GOVT has become a savior. the ultimate higher power
and the saddest part is that we’re supposed to be our brother’s keeper
so, if we are supposed to be our brother’s keepers
how many brothers/sisters are we supposed to keep?
what’s the answer to that?
how many people are hopeless, luckless, feckless, and need our help?
absolutely need our help? can’t do it on their own
is it 5 out of a hundred?
if it's 5 out of a hundred i actually think that's too high.
if it's 5 out of a hundred that means we have 16 people in the wagon that shouldn't be there
so, when i look at our world that’s what worries me
is not necessarily the slower growth
is that underneath it we're rotting. huh?
just to make it clear, cuz i’m sure there are people in this room that receive social security medicare, and that's part of this GOVT spending, no doubt about it.
and i would never begrudge anyone who’s paid into those programs for being willing to take out of them
but this is my point:
when social security and medicare exist,
when programmes like that exist, financial planning, the family, the church, decisions about life are all changed
people save less than they would have otherwise
they don't worry about dealing with long-term health care problems bc medicare exists.
so, overtime, the problems created by these small decisions each and every day, each and every year by millions and millions of people, compound.
and as we’ve learned, the road to serfdom is paved with good intentions.
those programs have good intentions but the errors that they introduce in our economy compound over time. and we are living with some of those compounded problems today.
this is ONE of the PROBLEMS
the other PROBLEM
go back to the great society
we have spent $ 25 T ( inflation adjusted today )
trying to undo the wrongs of history
( welfare, food stamps, all of those things trying to redistribute income )
and all we’re left with is the fifth or sixth generation of welfare recipients in inner cities with bad schools and a lousy place to live
we're not doing a great job of taking care of our brothers and sisters
WE ONLY HAVE A GOVT SYSTEM THAT HAS GROWN AND GROWN AND GROWN
in spite of all of this
in spite of the evidence that these problems have failed
they’re still pushing their great reset agenda
look: during COVID
we have done unprecedented things
we shut down schools. we shut down churches
we printed $4 trillion. we spent $5 trillion
it was literally FEUDALISM
vaccinate to take a plane
vaccinate to access medicare
( feudalism )
the Q is
GOVT has become so big and intrusive that it can leverage its power and even more GOVT power ?
locking down the ECONOMY was one of the worst things of all time
the biggest policy mistake of all time
brutal
a market based economy only works when information flows
it takes billions of pieces of information
millions of people to get you a tomato in the store
( think about that )
you have to build the trucks
somebody has to make the lights
turn on the power to get the light in the store
you know, farmers have to grow…..
all of the millions and billions of things
so when you break that information chain
when the economy is locked down. it’s mayhem
ships are backed up at boards, empty shelves, higher prices, and delays in service
you can’t turn off the economy like the light switch and turn it back on
and bc GOVT can only handle about a dozen pieces of information at a time
the more the GOVT try to fix this the more mayhem it creates
( CHAOS )
what's happening to the economy?
we all know this. it isn’t a mystery
since FEB 2020, and this i find fascinating
retail sales are up 20%
that’s PRE-PANDEMIC
( i’m not talking about from the bottom in APRIL
after we shut down )
FEB 2020 retail sales are up 20%
in normal times with NO pandemic
they’d be up about 7%
so, how is it possible that retail sales are up 13% faster than normal and yet we have 4 million fewer people working?
the answer is we borrowed from our kids
we gave it to everybody spend a day
we printed more money
and what does this do?
it’s like giving morphine to an accident victim
they don’t know how badly they’re hurt
that’s what we have done
by paying people not to work
by giving people money and letting them spend
retailers selling more goods than their never sold in their lives
it makes it feel like nothing’s wrong. when in fact:
ALL WE HAVE DONE IS BUILD DEBT AFTER DEBT AFTER DEBT
this is M2
Milton Friedman told me to watch M2
he didn’t tell me to watch QE and the monetary base
he said: what is happening with the money supply in the banking system?
this is year over year % growth in M2
we peaked at 27%
we’re now growing 13%
if you look back over history
is the fastest money grow since the 70’s
this is why we have inflation
is not all bc of supply chain problems
is bc we have printed way too much money and we are addicted to it
conclusion:
i described the problems of the economy
NOW. where do we go from here?
the fisherman and the boat or the redistribution of wealth by politicians?
WEALTH CREATION OR WEALTH DISTRIBUTION?
that’s the battle of all of humankind
rise and fall of nations
wealth and poverty
( all of it it’s gone on forever )
one thing i hear people say about AMERICA is…
democracies only last 200 years.
( it’s not really perfectly true )
but we get the point
we’re getting close to the end
we’re gonna vote ourselves
the majority votes… the minority pays for it
OK. i get the point
i look back in history and i see it
but re-member
there is ONLY ONE U.S. Constitution
there is ONLY ONE AMERICA
there’s no historical precedent
so don’t tell me AMERICA only lasts 200 years
it’s never been around before, so how can you tell me that?
