Speaker 1: Why from Dall Hartliner and the Crossroads of America.
Speaker 2: It's Tony Katz today. What in the world is going
Speaker 2: on with the end? What is going on with the
Speaker 2: Japanese economy? I mean, I thought they were out of
Speaker 2: the stagflation. Why are we propping it up. I'm not
Speaker 2: saying I'm opposed. I just want to understand. Why is
Speaker 2: this Argentina all over again where we're buying pesos. I mean,
Speaker 2: we got the money back, so I guess all was good.
Speaker 2: But is this what we do now? Or is this
Speaker 2: about something having to do with China? Is this about
Speaker 2: the politics more than it is about the money? But
Speaker 2: it is costing us money? Or is it not? You see,
Speaker 2: that's just it. Everybody wants to say something, but no
Speaker 2: one actually digs into what is actually going on. Tony Katz.
Speaker 2: Tony Katz today, good to be with you. Just call
Speaker 2: me the digger because that's what I'm doing. Doctor Mattwill
Speaker 2: joins me right now, economist at the University of Indianapolis.
Speaker 2: We're going to get to Japan. We're going to talk
Speaker 2: about what's going on with the yen here. But I
Speaker 2: want to start where I start, which is our economy
Speaker 2: and on Friday. I was out on Friday, but happy
Speaker 2: to be back today. And we take a look at
Speaker 2: GDP's second quarter GDP and it grew at a rate
Speaker 2: of one point five percent, not two point one percent
Speaker 2: that was the first quarter one point five percent. In
Speaker 2: all of these cases, a number means nothing unless we
Speaker 2: can analyze why the number is what it is. So
Speaker 2: you take a look at one point five percent. Economist
Speaker 2: to Matt Will, what's the story. It's false. I will
Speaker 2: tell you that the number is much higher than one
Speaker 2: point five percent. And this goes back to the Keynesian
Speaker 2: flaw and how they calculate GDP. So yeah, let's look
Speaker 2: at the headline one point five. By the way, the
Speaker 2: market wasn't phase because the market knows what I know.
Speaker 1: First of all. One of the reasons it was only
Speaker 1: one point five is because the government portion of the
Speaker 1: GDP was reduced.
Speaker 2: That's a good thing.
Speaker 1: You and I everyone listening to the show knows that
Speaker 1: the smaller government is better. So that pulled down GDP. Also,
Speaker 1: imports pulled it down one and a half percent. Again,
Speaker 1: a huge flaw with the GDP formula is that it
Speaker 1: punishes the country for imports, but it ignores foreign direct investment,
Speaker 1: because those dollars that we spend to buy stuff from
Speaker 1: overseas flows back into the United States. Exports boosted it
Speaker 1: by half.
Speaker 2: That's good.
Speaker 1: Consumption up half two points two percent. Investments were up,
Speaker 1: in fact, fixed investments, you know, equipment and buildings and
Speaker 1: stuff up one and a half percent. I'm telling you
Speaker 1: this is this is good underneath the hood. Accept the eyeword.
Speaker 1: Inflation is still over five percent in the sport. Let's
Speaker 1: hold off a little bit and let's get back to this.
Speaker 2: The argument is that the GDP number of one point
Speaker 2: five percent is false because we're to schedule a discussion
Speaker 2: of government is about government spend or government lack of spend.
Speaker 1: Government growth. The growth of government reduces GDP, I mean
Speaker 1: increases GDP. So when the government is constrained, that causes
Speaker 1: a GDP to go down. And that's what this report shows.
Speaker 1: It shows less. You know, we call real versus you know,
Speaker 1: nominal dollars. So inflation adjusted government spend and the economy
Speaker 1: it decreased yer point one four percent.
Speaker 2: So when the government is spending, when government is spending.
Speaker 2: Talking to doctor Mattwill, economist at the University of Indianapolis.
Speaker 2: When the government is spending, we consider that growth. In
Speaker 2: the United States, when we talk about GDP gross domestic product,
Speaker 2: government spending is seen as as growths. So when the
Speaker 2: government is going on wild spending spreeze, those people who
Speaker 2: engage the spending can look at the GDP it say see,
Speaker 2: look how much we're growing.
Speaker 1: And that's what happened under Biden. That was his primary source.
Speaker 1: When we looked at the microscopic parts of GDP under
Speaker 1: by and we saw that almost all the growth in
Speaker 1: the economy was coming from government growth. Under Trump, it's
Speaker 1: a completely different picture. Almost all of the growth is
Speaker 1: coming from private industry. In fact, GDP is subtracting, I
Speaker 1: mean government is subtracting from GDP. So the formula which
Speaker 1: John Maynard Kaines wrote back in the forties, and by
Speaker 1: the way, at the end of his life he actually said,
Speaker 1: you know what, it's really flawed, but it's the best
Speaker 1: we've got. And I would agree with him. It's very flawed,
Speaker 1: but it's the only thing we have at the moment.
Speaker 1: It ignores a lot of things like import exports, foreign
Speaker 1: direct investment, So you have to look under the hood,
Speaker 1: not all one point five percents are created equal.
Speaker 2: Now let's get to the next which you talked about
Speaker 2: investments up point five three percent, about half a percent
Speaker 2: investments into you're talking about long lasting goods, manufacturing goods,
Speaker 2: is investments into my four oh one k.
Speaker 1: What are these investments made up of. Yeah, that's an
Speaker 1: important point that you're making. This is company investment, private
Speaker 1: corporate investments in production, manufacturing, including services, so anything that
Speaker 1: a company is investing to expand their business. So that's
Speaker 1: we're not talking you and I saving for retirement. This
Speaker 1: is actual investments made by companies to grow their businesses.
Speaker 1: And underneath that this half a percent growth, one and
Speaker 1: a half percent of the GDP was due to fixed investments.
Speaker 1: That's putting up a facility to build some product that
Speaker 1: is a long term benefit. That is huge. And we
Speaker 1: didn't see that under Biden. We've seen that under Trump
Speaker 1: because he's instituted policies and deregulation that has encouraged this.
Speaker 1: And you know, we talk about are those other countries
Speaker 1: around the world investing that's not even in this number.
Speaker 1: That's foreign direct investment which should be included, which isn't
Speaker 1: in the GDP calculation.
Speaker 2: Talking to doctor Matt Well, economists at the University of Indianapolis.
Speaker 2: Let's keep breaking this down understanding our numbers, and one
Speaker 2: of these is manufacturing. When it comes to the ISM report,
Speaker 2: which is something you look to keep in high regard,
Speaker 2: this tells us something. This matters. ISM was fifty three
Speaker 2: point three. That's up about six percent, which is the
Speaker 2: six straight increase that we have had. That signals what. Wow.
Speaker 1: It signals wow because that's the private economy. So go
Speaker 1: back to the GDP that was plus one and a
Speaker 1: half percent on fixed investments by companies. We have proof
Speaker 1: it's not just a bogus estimate by the government ISM
Speaker 1: Private Industry Report. Actual companies calling in saying, hey, this
Speaker 1: is what we're doing. So this is the six month
Speaker 1: in a row. Inventories are up, production is up. There's
Speaker 1: these are sub parts of the ISM report. New orders
Speaker 1: are up. This is fantastic. It's what Trump wanted to
Speaker 1: do with the terroriffs, but the tariffs actually delayed it.
Speaker 1: I believe these things would have been up inventories, production,
Speaker 1: new orders without the tariffs sooner. But the tariffs have
Speaker 1: been in place for a long time. Now they're they're
Speaker 1: they're baked into the economy, not in a good way
Speaker 1: in some places, like inflation. The only thing in the
Speaker 1: ISM report that was concerning is employment is flat. But actually,
Speaker 1: if you consider all the disruption with AI, flat employment
Speaker 1: right now, that's good because it should be dropping with
Speaker 1: all the disruption, So the growth is overcompensating for the
Speaker 1: AI disruption. There's a lot of good things that's report,
Speaker 1: except double digit inflation for manufacturers. That's right, double digit
Speaker 1: commodity prices, aluminum, copper, It's not good.
Speaker 2: This now leads into what you said where the problem is,
Speaker 2: Where the issue is with inflation. We have seen Kevin
Speaker 2: Walsh now Chairman of the Federal Reserve twice say we're
Speaker 2: not changing interest rates. They are not going down. This
Speaker 2: can't please President Trump at all, but we have been
Speaker 2: I have been very very consistent. I think you have
Speaker 2: been with me on this. I would never say otherwise.
Speaker 2: The inflation is here. You've argued that it's baked into
Speaker 2: everything Wall Street is doing. What somehow is still unfathomable
Speaker 2: to people is that we accept that this is the
Speaker 2: way it is. We aren't. There is no aggressive push
Speaker 2: to bring it down because we discuss policy. So where
Speaker 2: is inflation right now, and what are the competing forces.
Speaker 1: Well, first of all, I don't agree that we've accepted it.
Speaker 1: I don't do not accept inflation. And if Wall Street
Speaker 1: is accepting it, shame on them.
Speaker 2: But they are. I mean, I'm arguing that they are right.
Speaker 2: That's the point. I didn't say you and I sitting
Speaker 2: on a barstool are happy with this. This whole thing sucks.
Speaker 2: To quote Rodney Dangerfield from Caddy Shack, But I do
Speaker 2: say that Wall Street has absolutely accepted this. They've baked
Speaker 2: it into the cake. We've discussed this many times. It
Speaker 2: is not where Midwest Main Street is, but it's absolutely
Speaker 2: in my view outsider looking in where Wall Street is.
Speaker 1: Well, let me tell you, I'm gonna pivot a little
Speaker 1: bit and say, Kevin Walsh is he is doing the
Speaker 1: right thing. He's announced he's not going to change rates.
Speaker 1: I'm okay with that. I think the Fed funds rate
Speaker 1: is where it should be. I think this is a
Speaker 1: stable rate. And notice Trump didn't scream at him about
Speaker 1: this because Wall Street's pushing him to increase. He even
Speaker 1: had some of his governors. Three of his fellow governors
Speaker 1: voted to increase rates last week, but he refused. He's
Speaker 1: playing the long game. What he's doing, and people pay
Speaker 1: attention to this. He is reducing the amount of information
Speaker 1: flow out of the FED. He set up a special
Speaker 1: commission to look at the selling of assets off the
Speaker 1: FED balance sheet. I am convinced that he's going to slowly,
Speaker 1: behind the scenes, move this giant ship, and he's going
Speaker 1: to convince his fellow governors once this special Commission does
Speaker 1: their work, to start shedding assets from the balance sheet,
Speaker 1: sell those assets, pull the cash out of the economy
Speaker 1: without increasing inflation. He knows how to cut inflation, and
Speaker 1: he's going to do it the right way. I'm confident
Speaker 1: based on what he's doing right now his strategy that
Speaker 1: he's going to pull it off patience, and I think
Speaker 1: even Trump has patience with.
Speaker 2: Him on this. But let's continue on this conversation of
Speaker 2: inflation in general. Never mind where we are about the
Speaker 2: market accepting this. The inflation is here. What are the
Speaker 2: competing forces that are causing it to remain.
Speaker 1: Well, it's still the tariffs, It's still growth of government deficits. Now,
Speaker 1: we talked about government spending earlier, but the deficits also
Speaker 1: contribute to this whole phenomenon because the FED is forced
Speaker 1: to monetize the deficits, so we have to cut the deficits.
Speaker 1: And that's where the FED is between a rock and
Speaker 1: a hard place, because they don't control the fiscal policy.
Speaker 1: They only control the monetary policy, so they can control
Speaker 1: the cash in the economy, but so can the federal
Speaker 1: government by deficit spending. And that deficit spending is really
Speaker 1: massive at the moment, and that's a huge issue. That's
Speaker 1: causing the sustained inflation despite the growth in the economy
Speaker 1: in the private sector.
Speaker 2: So that's the economy, that's the GDP. But we have
Speaker 2: to get into the conversation about Japan and the end
Speaker 2: because this has got some people and I don't even
Speaker 2: know if it's confused. It's got them bothered like somehow
Speaker 2: we're doing something very very wrong. But I think most
Speaker 2: people don't understand what we're doing. We will break that
Speaker 2: down with doctor Matt Will, economist at the University of Indianapolis.
Speaker 2: Keep it right here, guys, I'm Tony Katz, and this
Speaker 2: is Tony Katz. Today.
Speaker 3: The Democratic National Committee, it's been well publicized, has been
Speaker 3: struggling with debt. Republicans are sitting on at least one
Speaker 3: hundred and thirty million dollar war chess. What does the
Speaker 3: success of LSIED tell you about what the definition of
Speaker 3: power is right now, because in our universe we often
Speaker 3: think power is money. That's the opposite of what he's
Speaker 3: running on.
Speaker 4: Well, what I have read is that some of the
Speaker 4: big donors are holding back because they're not quite sure
Speaker 4: what they're funding right now. And I think that we're
Speaker 4: in the middle of an interesting debate right now about
Speaker 4: I mean, where is the center of the Democratic Party,
Speaker 4: And this election will help it, but it doesn't have
Speaker 4: a center the way the Republican Party has a center,
Speaker 4: which is Donald Trump. And so what's happened is it's
Speaker 4: allowed I think the media, among other things and I
Speaker 4: mean Fox US, but I also mean MS now to
Speaker 4: focus on the extremes right without. I don't think there's
Speaker 4: that many DSA candidates out there, but you look at
Speaker 4: the media and that's all there are is DSA candidates
Speaker 4: out there. And the result of that is you put
Speaker 4: forward a Democratic Party that looks like it's extreme, which
Speaker 4: it has its extremes, but no focus at all, by
Speaker 4: the way, on the Republican extremes.
Speaker 2: Because the Republicans aren't engaged in these extremes. I mean,
Speaker 2: one could argue that the point being made there in
Speaker 2: MS now is a legitimate point. Maybe there aren't as
Speaker 2: many communist candidates, Democratic socialists or communists end of discussion.
Speaker 2: As you know, we talk about them, but there's only, like,
Speaker 2: you know, five or six as opposed to five hundred.
Speaker 2: But you're talking about people who could be the next
Speaker 2: senator from Michigan. You had a guy who had a
Speaker 2: Nazi tattoo and multiple allegations which are deemed credible by
Speaker 2: the vast majority. It hasn't been in front of a
Speaker 2: court of law yet, so I can't say that of
Speaker 2: sexual impropriety. And you replace him with a guy who
Speaker 2: married I'm sorry, didn't marry, but had kids with his
Speaker 2: second cousin. That's Troy Jackson. You have got a lot
Speaker 2: of radicalness out there. You've got a mayor in New York,
Speaker 2: a mayor in Seattle. These are not small cities engaging
Speaker 2: these full on communist agendas. Of course, you have a
Speaker 2: reason to be concerned. Tony Katz, Tony Kats today, good
Speaker 2: to be with you. So the counter to that argument
Speaker 2: is we're obsessing about these things. But I only named
Speaker 2: a handful. Those handful affect a lot of lives. Those
Speaker 2: handful tell a story about growth, and those handful is
Speaker 2: the recognition that the political left is broken and has
Speaker 2: been commondeared by these communists. This is who they are.
Speaker 2: They are communists, and they are Islamist adjacent. They're certainly
Speaker 2: Islamis supportive because they say nothing. They say nothing of
Speaker 2: what we see all around the country of this growing threat.
Speaker 2: They look at the communism and say, this is what
Speaker 2: the young people want. They don't one hundred million people
Speaker 2: dead at the hands of communis. Well, that's not really
Speaker 2: the case. That's not true. That's not what happens. They
Speaker 2: will lie about anything and everything, everywhere and all the time.
Speaker 2: But we know that we're aware of that because we
Speaker 2: discuss these things. But the real story here is if
Speaker 2: you allow this to metastasize, if you allow this radicalness
Speaker 2: of an ideology to grow and to fester, you will
Speaker 2: have an unrecognizable country, and then you will have no
Speaker 2: country whatsoever. So, while he is correct, it may only
Speaker 2: be my word handful of these communists running for office,
Speaker 2: it is that they feel emboldened to run. They feel
Speaker 2: that this is their time. I have no idea if
Speaker 2: Hassan Piker is a legit guy or doing this for
Speaker 2: the clicks, I have no clue. All I know is
Speaker 2: his ideology has to lose and screw him and Iona
Speaker 2: Pressley and Rashida Talib and Elanomar and then the Kazu Cortes.
Speaker 2: They don't care that these people are communists. They say welcome,
Speaker 2: because in the end the goal is the same, the
Speaker 2: dismantling of Western civilization and the ending of the United States,
Speaker 2: the ripping asunder of the Constitution. When it's just one person,
Speaker 2: you notice, and that's where this falls apart. If Steve
Speaker 2: Lisman over there, he's a CNBC guy, but he was
Speaker 2: doing an interview on MS now saying there's no focus
Speaker 2: at all in the Republican extremes because everyone is obsessed
Speaker 2: with the DSA. I put forth to you that Republicans extremes,
Speaker 2: to the extent that there are extremes, they get rooted
Speaker 2: out by Republicans. Democrats welcome it, embrace it, laud it,
Speaker 2: glorify it, and then say, how dare you ask questions
Speaker 2: about it? We have to beat those Republicans. Graham Platter
Speaker 2: is a Nazi credibly accused in my view, of multiple
Speaker 2: accounts of sexual and propose innocent until proven guilty in
Speaker 2: a court of law. Fetishizes about pleasuring himself in a
Speaker 2: porta potty and laughs when American soldiers are killed and
Speaker 2: Democrats said, hey, we have to win the Senate. There's
Speaker 2: the difference. Republicans would have felt the pressure immediately and
Speaker 2: he begne. He'd begne. We got rid of the senator
Speaker 2: from Idaho for having a wide stance. Do you remember
Speaker 2: this guy? He's he's in the bathrooms. Larry Craig is
Speaker 2: his name. Arrested for lude conduct in a men's bathroom
Speaker 2: at the Minneapolis Saint Paul International Airport. He entered a
Speaker 2: guilty plea for disorderly conduct a wide stance because he
Speaker 2: put it where the foot was underneath the stall door.
Speaker 2: He was tapping his foot. It was a signal that
Speaker 2: somebody wanted to engage and lude conduct. I don't know,
Speaker 2: and these are not This is not my world, thank
Speaker 2: you very much. Gone. The Left is openly endorsing communists,
Speaker 2: and we got rid of Larry Craig because he liked
Speaker 2: to tap dance while he was going number two I'm
Speaker 2: sorry they don't like us. These things are not comparable.
Speaker 2: I don't know why the hell were pretending that they
Speaker 2: are just madness, So you can argue that it's an obsession.
Speaker 2: Rational people would argue that they're communists. Know, by the way,
Speaker 2: ripping the Democrat Party apart. Now, when I say ripping
Speaker 2: it apart, they are ripping apart those people who won't
Speaker 2: accept the communists. Communists are gonna win this thing. The
Speaker 2: Communists are gonna win this thing. I don't think the
Speaker 2: Democrats have what it takes to keep him ount. I
Speaker 2: don't think they want to keep him out. Power is power.
Speaker 2: Power is power, and they don't care how they get it.
Speaker 2: They will morph, they will maneuver, they will be these people.
Speaker 2: Wait till Representative Acosti Cortes learns she's not enough to
Speaker 2: the left, because that crop is coming up soon. If
Speaker 2: you want the revolution to remain, there always has to
Speaker 2: be somebody who's more revolution minded than you. And for
Speaker 2: all these squad members, that is coming really really quick
Speaker 2: and coming directly at them. Find everything I do at
Speaker 2: Tony kats dot com. I've got more with doctor Matt
Speaker 2: Will coming up. Keep it here. I'm Tony Katz, And
Speaker 2: this is Tony Katz today. So this whole yen thing
Speaker 2: with President Trump has got a bunch of people in
Speaker 2: an uproar, except I don't know if there's anything to
Speaker 2: uproar here. When you hear about this deal, We're we're
Speaker 2: propping up the end or are we buying the yen?
Speaker 2: Is this like that Argentine the deal where we bought
Speaker 2: pesos and they got dollars and then they they did
Speaker 2: pay us back. So what is the story here? I mean,
Speaker 2: what maybe we should be asking what's up with the
Speaker 2: Japanese economy? Tony Katz, Tony Katz today, Great to be
Speaker 2: with you talking to doctor Matt Will, economist at the
Speaker 2: University of Indianapolis. The story out of Japan, which the
Speaker 2: market doesn't seem to care too much about. Again, the
Speaker 2: market fascinating. It was just so happy that there's an
Speaker 2: alleged deal with Iran and the opening of the Straight
Speaker 2: of Horn moves boom, like the Dow opened and it
Speaker 2: went over seven hundred in the first hour. I don't
Speaker 2: know where it's gonna close, No one does, but everyone
Speaker 2: was very, very excited. But this yen story and what's
Speaker 2: going on with the Japanese economy. Now, this is the
Speaker 2: kind of stuff that always puts me a bit on edge.
Speaker 2: At first, I thought this was a story much like
Speaker 2: Argentina and US buying pesos. And then I said, well,
Speaker 2: this is Japan. This is a country that's coming out
Speaker 2: of thirty plus years of stagflation. I thought they had
Speaker 2: already come out of it. This does not signal that.
Speaker 2: And then there's the question whether or not this is
Speaker 2: an economic move or a political move. Talk to me
Speaker 2: about what's happening in the Japanese economy. What did they
Speaker 2: signal to the world, and why did the US come
Speaker 2: to the rescue.
Speaker 1: Wow, Okay, there's a lot to unpack here, and I'm
Speaker 1: gonna put on my professor cap and try to explain
Speaker 1: it clearly. But you added one thing that I had
Speaker 1: not thought about, because I'm an economics nerd, the political angle.
Speaker 1: You are one hundred percent correct. I had not thought
Speaker 1: about why the US is doing this. It's political. So
Speaker 1: what's going on here? The US bought yen a significant amount.
Speaker 1: This takes them out of circulation. So go back to
Speaker 1: the same discussion we have about inflation and taking dollars
Speaker 1: out of the economy. The United States government bought yen
Speaker 1: and took them out of circulation in Japan. So that
Speaker 1: makes the yen stronger, that reduces their inflation, and that's
Speaker 1: a good thing for them, but it also makes the
Speaker 1: yen stronger against the buller, which we our currency, which
Speaker 1: is which is a side issue. But it's interesting why
Speaker 1: we are accepting that. And I got a theory as
Speaker 1: to why we're accepting that. But it's a little different
Speaker 1: than Argentina. And let me tell it's similar, but not exactly.
Speaker 1: Argentina needed US dollars, they needed US dollars to buy
Speaker 1: other things, so we gave them US dollars by buying pasos.
Speaker 1: Japan doesn't need dollars. They just need fewer yen. They've
Speaker 1: got plenty of US dollars. They needed fewer yen in
Speaker 1: their economy, and they wanted us to take them out.
Speaker 1: And I got to give, you know, Scott Bessant and
Speaker 1: the Treasury Department genius for how they did it. They
Speaker 1: did it in a way that we've never seen before.
Speaker 1: And Wall Street got very upset at this. They didn't
Speaker 1: buy yen with dollars, they bought yen with euros. They
Speaker 1: took the euros that we hold, and we do hold
Speaker 1: a lot of international currencies, and they bought the yen
Speaker 1: with that. That totally messed up Wall Street's arbitrage and
Speaker 1: the speculators and the traders because they didn't want to
Speaker 1: spend dollars. My theory is that they believe the dollar
Speaker 1: is a good investment right now because Trump's all about investing.
Speaker 1: He's all about I'm going to make money here and
Speaker 1: make money there. And Scott Bessen did a very good
Speaker 1: pivot and disrupted the markets, and I think it's going
Speaker 1: to help Japan. But Japan has to get their own
Speaker 1: house in order.
Speaker 2: Also, Okay, everything you just said makes people want to
Speaker 2: have a drink. No part of that for the normal
Speaker 2: person makes any sense. So let's start going back. Why
Speaker 2: did Japan need us to buy yen and pull yen
Speaker 2: out of their economy.
Speaker 1: Japan is causing their own inflation and they're asking us
Speaker 1: for help to bail them out because they're not doing
Speaker 1: enough domestically. Their own prime minister, she's doing a great
Speaker 1: job in trying to be responsible. She's a good free
Speaker 1: market capitalist type person. Yes, what, it's a culture. They
Speaker 1: have tremendous they have price caps, they have price caps,
Speaker 1: they have government subsidies across the board for their citizens,
Speaker 1: and therefore she's having a tough time domestically controlling this monster,
Speaker 1: which is the Japanese government and what they give to
Speaker 1: their citizens. I know, this sounds weird. They also have
Speaker 1: another problem, this is going to sound very weird. Their
Speaker 1: people save too much and don't borrow enough. They have
Speaker 1: one of the highest savings rates in the world and
Speaker 1: they have one of the lowest borrowing rates in the world. Well,
Speaker 1: that doesn't encourage people to grow their businesses. And because
Speaker 1: of the price controls, I'm hoping I'm not losing people here.
Speaker 1: Their CPI is low, but their PPI is seven point
Speaker 1: one percent. Their producers are experienced inflation as bad as ours,
Speaker 1: and they can't pass it along because of government controls.
Speaker 1: So she's trying to rein in this government monster. This
Speaker 1: this okay, ready Godzilla in Japan see to do that.
Speaker 2: But that's not my role, okay.
Speaker 1: But she needed the US government help, and they reached
Speaker 1: out and asked us for help. It was a coordinated effort.
Speaker 1: I'm pretty impressed with how it's going in our cooperation
Speaker 1: on this.
Speaker 2: So they needed Yen out of the economy to thwart
Speaker 2: the inflation issue, which is because of their own government policies.
Speaker 2: But they're not about changing the government policies, not changing
Speaker 2: them fast enough.
Speaker 1: She is trying to change them. She's having great difficulty,
Speaker 1: and you can imagine Trump wants to keep her politically strong.
Speaker 1: So you added that genius touch there. I didn't think about.
Speaker 1: There is politics here, and he wants to prop her up.
Speaker 1: He doesn't want her to suffer. And by the way,
Speaker 1: she will be punished if she tries to take away
Speaker 1: some of those goodies.
Speaker 2: And understand that the politics here, you can argue, are
Speaker 2: within Japan and of itself, but these are politics that
Speaker 2: are about China and thwarting China and making a strong
Speaker 2: Pacific rim. And this is about shipping lanes and the
Speaker 2: Taiwan Straight and the Yellow Sea in the South China Sea.
Speaker 2: This is about navigable seas. This is about hegemonic power.
Speaker 2: There's a lot here. And Sonai Takaichi, the Prime minister
Speaker 2: that we're talking about, has been very very westward looking
Speaker 2: and forward looking with President Trump wanting that alliance because
Speaker 2: she knows if Taiwan goes, everything is up for grabs.
Speaker 2: She's nobody's fool talking to doctor Matt Will, economist at
Speaker 2: the University of Indianapolis. So let's now go back to
Speaker 2: what happened here. We end up buying yen to pull
Speaker 2: yen out of the system, and we pay them in
Speaker 2: euros that we're holding. What the hell do they do
Speaker 2: with the euro? What gets weird is I don't care
Speaker 2: if you give me a pound of gold, or you
Speaker 2: give me the equivalent in dollars, or you give me
Speaker 2: the equivalent in platinum. The money is still there, so
Speaker 2: it's not necessarily pulled out. All you did is go
Speaker 2: from a liquid to a solid to a gas man.
Speaker 2: You changed its form, but you didn't change the thing.
Speaker 1: Ah, but Japanese citizens don't pay for stuff in euros.
Speaker 1: They pay for stuff in yen. So, to quote one
Speaker 1: of our favorite politicians, you put it in the lock
Speaker 1: box in the corner of Tokyo and nobody touches it.
Speaker 1: So the euros are in the lock box and no
Speaker 1: one's touching them, so it's not causing the inflation. I
Speaker 1: got to go back and.
Speaker 2: Just say, told don did you just quote al Gore
Speaker 2: on this show? You got the reference? Yes, my gosh, guys,
Speaker 2: I want to apologize to everybody. I try to vet
Speaker 2: the people on this show to the best of my ability,
Speaker 2: Doctor Wils quoting Al Gore, My goodness, gracious sir, but
Speaker 2: continue please, Well.
Speaker 1: But your analysis I was doing the I can explain
Speaker 1: what I understand what occurred, the mechanics. I can even
Speaker 1: go into what we call a cash and carry trade
Speaker 1: in an arbitrage yen dollar rates. But you said the political.
Speaker 1: Now I understand why the why was missing. You know,
Speaker 1: all the financial press this morning are going over the
Speaker 1: top looking at this, crunching the numbers, saying this is
Speaker 1: this is interesting.
Speaker 2: But that's the why.
Speaker 1: The why is the politics because he needs Trump needs
Speaker 1: her in that place for the whole China's situation, and
Speaker 1: because it actually makes a dollar stronger or weaker. I mean,
Speaker 1: this is he's going against his own thing. By the way,
Speaker 1: you know how he could solve the problem with China
Speaker 1: much or with Japan much easier. Eliminate the tariffs. Eliminate
Speaker 1: the tariffs. It's causing their exports to cost more. If
Speaker 1: he would just eliminate the tariffs, that would have a
Speaker 1: huge benefit for Japan. So why don't we just eliminate
Speaker 1: the tariffs.
Speaker 2: He's not going to do this on any level. So
Speaker 2: here we are. We just bought this currency. So this
Speaker 2: is different. Talking to doctor Matt Will, economist at the
Speaker 2: University of Indianapolis. And by the way, I'm with you,
Speaker 2: I'm getting rid of all all the tariffs and as
Speaker 2: you know, I'm not a tariff guy. We buy this currency.
Speaker 2: It does didn't hurt us. I mean it does if
Speaker 2: you want to argue, we can the dollar, which would
Speaker 2: be Trump going against his own desires. But he sees
Speaker 2: a bigger long term value. And now we hold on
Speaker 2: to this yend like we held on to the euro.
Speaker 2: It doesn't change anything. Is that how it's different than
Speaker 2: the Argentina deal.
Speaker 1: Yes, the Argentina deal was a swap. We knew that
Speaker 1: we were buying pesos and we knew that we were
Speaker 1: going to sell them back. That was a you know,
Speaker 1: a swap is literally that Japan had access to what's
Speaker 1: called a repo. A repo is like a swap. It's
Speaker 1: an overnight where you sell your currency and buy it back.
Speaker 1: They didn't want that. They want it taken off the market,
Speaker 1: not forever, but for the foreseeable future. And so Yeah,
Speaker 1: we own the Euros. They're sitting you know, in electronic
Speaker 1: form and banking, you know, New York or d C.
Speaker 1: And they'll just sit there until we decide we want
Speaker 1: to get rid of them.
Speaker 2: So now we get into the next steps here, what
Speaker 2: happens in the Japanese economy or what should we be
Speaker 2: looking for? What are the markers in the Japanese economy
Speaker 2: to see whether or not this has provided them value?
Speaker 2: And is there something we need to be looking at
Speaker 2: to see whether or not it has done us harm?
Speaker 1: Okay, I could not have answered that until you mentioned
Speaker 1: the political angle. Now I get it. So this is
Speaker 1: what I think is going to happen. I think it
Speaker 1: gives the Prime Minister cover. I think it allows her
Speaker 1: to go to her you know whatever they call their
Speaker 1: you know congress in Japan. I'm not familiar with that,
Speaker 1: and say, look, I've got Trump on my side. They're
Speaker 1: supporting us. Look what they did with buying yen. They've
Speaker 1: been very beneficial. Now, you guys, if you want me
Speaker 1: to keep getting my friend Trump to help us, you
Speaker 1: have to start helping me change some things in our economy.
Speaker 1: I think she's going to be able to use it
Speaker 1: as leverage to improve the elimination of the subsidies. I mean,
Speaker 1: I won't bore you with the details, but things like rice,
Speaker 1: it's amazing how much subsidy goes into the right place
Speaker 1: farms in Japan, so much so that there are blocks
Speaker 1: in Tokyo of rice farms. The most densely populated city
Speaker 1: in the world, and they have rice farms because of
Speaker 1: the subsidies make it so financially advantageous. I think she's
Speaker 1: going to be able to slowly change the policies, get
Speaker 1: people in the country on board, and I think she's
Speaker 1: using Trump's aid as a tool to make that happen.
Speaker 1: So kudos for her. I think she's doing a pretty
Speaker 1: good job in trying to use this for domestic gain.
Speaker 2: By the way, in Japan they have a bicameral system
Speaker 2: that comes based modeled after our system after the Emperor.
Speaker 2: Just as I only know little things here and there,
Speaker 2: doctor Well, it's one of the weird things that I know,
Speaker 2: doctor Matt Will, economist at the University of Indianapolis. I
Speaker 2: appreciate you taking the time to be with us. There's
Speaker 2: much more show to get to keep it here. I'm
Speaker 2: Tony Katz. This is Tony Katz today.
Speaker 5: I know you don't have the fever again in the
Speaker 5: regular season, but coming out of the break, one of
Speaker 5: the big news stories has been Sophie Cunningham and the
Speaker 5: protest for her and protests against her. And you know,
Speaker 5: they had a national televised game today and Cheryl, you know,
Speaker 5: wor A's shirt and it's just a conversation. I'm wondering,
Speaker 5: just what do you think about it? Do you do
Speaker 5: you think that's good for the league? Does it detract
Speaker 5: from the basketball? Is it just noise? I'm just wondering
Speaker 5: what your opinion is.
Speaker 2: So that's the question asked the head coach of the
Speaker 2: Golden State Valkyries. Her name is Natalie Nikassi.
Speaker 6: Me.
Speaker 2: I'm Tony Katz. This is Tony Kats today. I'm glad
Speaker 2: you guys are here. Of course, the WNBA has screwed
Speaker 2: it all up. They've screwed it all up, every last
Speaker 2: bit of it. There is so much hatred in the WNBA.
Speaker 2: It is racial, it is sexual orientation based. They really
Speaker 2: don't want the popularity if it means that two white
Speaker 2: women might be popular. They it is clear it's what
Speaker 2: they've said, and all of this so called anger towards
Speaker 2: Sophie Cunningham for saying girls should be a girl, sports
Speaker 2: should be for girls. She didn't say anything political. It's
Speaker 2: totally normal. Now she is taking pictures with Riley Gaines,
Speaker 2: and Riley Gaines is definitely political. So you could argue
Speaker 2: she's playing in the space, or she's at least embracing it,
Speaker 2: or maybe she likes Riley Gaines. How would I know?
Speaker 2: Somebody at The Guardian wrote that she's anti trans and
Speaker 2: anti black. What in the world. But it goes to
Speaker 2: prove that the WNBA wants to be a league for
Speaker 2: black women. That more than anything, that's what they want,
Speaker 2: at least that's what the reporter class wants. This is
Speaker 2: where black women play, this is where black women are stars.
Speaker 2: But Kate and Clark has electrified the whole league, in
Speaker 2: the whole country, and Sophie Cunningham's popular. That's all. You
Speaker 2: can't control these things. You could utilize it to your
Speaker 2: advantage if you wanted to. But how does the coach
Speaker 2: of the Golden State Valkyries answer the question about what
Speaker 2: she thinks of what's going on?
Speaker 6: I think, thank you for that question.
Speaker 2: I think just in terms of.
Speaker 6: How I'm seeing it is if I could answer with like,
Speaker 6: for me, sports is about belonging.
Speaker 2: It's about inclusivity.
Speaker 6: It's about allowing everyone to be their authentic self.
Speaker 2: You know I'm big on that.
Speaker 6: Just because I have been criticized for my height, for
Speaker 6: my ethnicity. I've been in those you shouldn't belong here
Speaker 6: many times.
Speaker 2: Sports is about belonging. Okay. I thought sports was about winning.
Speaker 2: I thought it was about fair play. I thought it
Speaker 2: was about excellence. It's about belonging. What possibly possibly are
Speaker 2: you talking about? What nonsense is this? What does your
Speaker 2: ethnicity coach have to do with any of it? Should
Speaker 2: boys play in girls' sports? The answer is no, and
Speaker 2: every other answer is wrong. And the WNBA, the w
Speaker 2: stands for women WNBA. It's the Women's National Basketball Association.
Speaker 2: And I know I'm telling you something you already know,
Speaker 2: and this has been your argument. How is it possible
Speaker 2: that they're doing this to themselves? Well, the answer has
Speaker 2: to be equally as obvious. They do not want popularity,
Speaker 2: they do not want growth, they do not want to
Speaker 2: get better. They want to be a welfare league. They
Speaker 2: want to have grievance, and they want only to cater
Speaker 2: to black women and gay women and no one else.
Speaker 2: Everyone else is a token who has to adhere to
Speaker 2: their powerful and yet wholly ugly politics or be excommunicated.
Speaker 2: It's not me saying it, they're saying it. Don't get
Speaker 2: angry with us for noticing just how bigoted they are.
Speaker 2: They really will let men play in the WNBA. It's
Speaker 2: coming any day. Find everything at Tonycotts dot com tomorrow. Everyone,
Speaker 2: take care,