CLAY: Buck and I are both up here together in New York City. And, as we told you would happen, breaking news for those of you out there in the market for a home or just borrowing money in general, the Fed has raised its interest rates by another three-quarter points, the biggest raises back-to-back since the early 1990s to try to combat 9.1% inflation, 75-point-basis-point-increase as was widely expected. The stock market basically unmoved as that was just announced in the last five minutes. But your borrowing cost increasing as there is a desperate desire to try and bring down that 9.1% inflation.

Also creating, potentially, a larger issue as we’ve been discussing throughout the course of today’s show, it’s very rare to be raising interest rates in a recession. And tomorrow morning, we will officially get news, at least for purposes of this show, despite what the Biden administration is trying to argue on the contrary, we expect that the economy will have shrunk again, a negative growth rate in the second quarter, which will be back-to-back negative growth rates which suggest that we are essentially already in a recession. So, that news breaking, Buck, during a commercial break there. And again, those basis points rise going to cost you more to get a mortgage, going to cost you more to borrow money in an effort to try to slow down the economy and bring back inflation.

BUCK: Yeah, man, this is what happens when you spend too much money or, rather, put too much money into the economy. It’s as though we were running an experiment over the course of covid and then even accelerated into the Biden administration where we said, let’s really reduce economic productivity for a little while, let’s make sure we go into an artificial, temporary recession, flood the country with money without any underlying economic activity to support it or, rather, reduced economic activity to support it and see if we can create some really bad inflation.

That is what has happened here. And the fact that the Biden White House is the least capable crew on economic matters to have been in charge of the country certainly since the Carter administration isn’t confidence inspiring at this moment. I think that’s fair to say. And I believe we’re just at the beginning of this. Things are gonna tighten up. There’s gonna be… You know, the forest fire is gonna burn for a while before the undergrowth and the new growth can come about.

I think this is gonna be a real challenge, it could be a real challenge honestly for any administration. But it just so happens that we have the worst possible people making the decisions right now at the highest level of government in a variety of posts, and Joe Biden is not up for this. He wasn’t up for being president. He’s certainly not up for being president of a country that is going into it looks like the roughest economic period it seems certainly since the 2008, but that didn’t last very long. Everyone says, “Oh, in 2008, the entire economy was melted down.”

Part of that narrative, I think, was so that they could bail out the banks like Goldman Sachs which got a hundred percent on the dollar for its counterparty risk with AIG. It’s good to have Paulson being the Treasury secretary as a former Goldman Sachs guy. Too bad for Lehman Brothers, though. But if you look at the more structural economic issues, I think you gotta go back to periods of stagflation, you go back to the Carter era, you go back to the seventies and the high price of gas, the gas lines, all the stuff, inflation, obviously. We’re revisiting some of the things in the past that we were hoping we’d never see again economically.

CLAY: Unfortunately, everybody seems to have a working memory of about two generations. And then whatever happened 40 years plus ago, people convinced themselves that it could never happen again. And that’s why I thought last week when we had Art Laffer on was so interesting because he was there at the inception of the Reagan revolution when they managed to defeat the inflation that was brought to bear by Jimmy Carter.

And where are we? I think historically you can draw an analogy that much as Jimmy Carter was an accidental president, Joe Biden’s an accidental president. He’s an accidental president because he happened to run during covid. They were able to hang that around Donald Trump’s neck, and they got Joe Biden into office. And just like Jimmy Carter, Democrats have control of Congress and inflation runs out of control because they are awful at all economic issues.