Well, let me just give you a couple of Friday topics, OK? Let me start off with today’s producer price index, which rose unexpectedly — a lot. Now, over the past 12 months, these wholesale prices have jumped 7.4%, food is up 15.5, energy is up 16.2.
So let me get this right. The Fed’s been jacking up their interest rate targets by leaps and bounds since the beginning of the year. Interest rates across the board have gone up — a lot. Everyone is correctly worried about recession, but wholesale inflation continues to roar. What’s up with that?
In fact, using the old methodology — a lot of people do because a lot of people don’t believe the new methodology is any good, but using the old measure — finished goods PPI is actually up 10.6% and in fact, even getting rid of energy and food it’s up 8.1%. Now, mind you, remember, the Fed’s inflation target is 2. They’re nowhere near it.
The consumer price index comes out next week and the Cleveland Fed Nowcast estimates it’s going to be about 6% annually just for the month alone. So, you could say the Fed’s approach of smashing the economy is not working.
All Wall Street demand–siders think inflation is over and Fed tightening is going to stop because the economy is sinking and then they say there’s not going to be any real recession… we’ll all live happily ever after. Now, I do agree we will all live happily ever after, but these inflation numbers are unconvincing in the Fed’s battle and people have been in denial about the inflation problem basically for the last two years.
Which brings me to my final thought: Why now shouldn’t we turn the oil and gas spigots back on? That’ll help inflation. Make sure the expiring Trump business tax cuts do not expire. Stop the regulatory war against businesses large and small. Get rid of the IRS expansion. Allow the economy the freedom and the incentives to produce more goods and services on the supply-side. That will get inflation down pronto as long as the Fed geniuses just keep a sound and steady dollar. Let’s not make this any harder than it needs to be.
Now, I do have a second point tonight. Speaking of the war against businesses, alright? I don’t know why Microsoft shouldn’t be permitted to purchase Activision. Now look, I am no expert on these video games or Activision, in fact, I think these video games are probably destroying the minds of our children and promoting violence and bad behavior, but they exist. That’s another subject. Microsoft, on the other hand, is a fabulous company. They’ll probably make the games better or the software delivery better and they’ll probably cut prices. In other words, big is not bad by itself.
Now, the Federal Trade Commission Chair Lina Khan is a hardcore socialist. She hates business, she hates capitalism and she hates successful companies, and she’s got a whole paper trail down through the years proving this. The question that should be asked is whether consumers would be harmed by this merger. I haven’t seen any evidence of that.
These so-called vertical mergers, by the way, have survived the courts and most of the time have proven to be very positive in terms of lowering consumer prices. Let me repeat, the standard for anti-trust should not be, “big is bad.” It should be, “who is being harmed, who are the victims, what’s the consumer welfare impact?” Lina Khan hasn’t proven any of that.
The Biden FTC is trying to strangle American business and free market capitalism because they are socialists, and when they’re not trying to strangle businesses and free market capitalism, they’re drudging up unbelievably stupid and restrictive climate rules, which is itself a form of central planning jammed down the throats of Americans who don’t want this. The latest example is the climate rules for our new defense weapon systems.
You know, by the time they’re done, Northrop Grumman’s new B-21 stealth bomber, which is a fabulous thing, it’s unbelievably great for America’s defense — by the time these climate rates are done, they’ll have to run these bombers by little triple-A batteries.
What’s that sound I hear? It’s the sound of the Chinese cheering American stupidity. This is the regulatory state at work to promote America last and American decline, but I don’t want American decline. I want America first. I want free market capitalism, not socialist central planning.
I am sick of these ideologues running all through the Biden administration who really don’t like America, OK? Let’s lay it out with some truth. That’s my riff on a Friday.
This article is adapted from Larry Kudlow’s opening commentary on the December 9, 2022, edition of “Kudlow.”