Team,
This is my recent interview with Larry Kudlow on Fox Business. We discuss the Federal Reserve and my piece in The Hill on Iran terror inflation.
Repeat after me — and after Alan Greenspan and Ben Bernanke: NEVER raise interest rates into the teeth of an oil-price shock.
I always appreciate your comments, and please share.
Peter
TRANSCRIPT
LARRY KUDLOW: All right folks, we’ve run along, great, pleasure. Bring back my good friend Peter Navarro. Friend, former colleague, he’s now White House Senior Counselor for Trade and Manufacturing. Peter, thank you for this. We appreciate it. You know, I just—I saw your article today in the papers. I mean, it’s really not Trump’s inflation, it’s inflation caused by Iranian terrorism, and we had to take steps to stop it. I love what you said about that.
DR. NAVARRO: Larry, look, we’re going on the 50-year anniversary, Larry, of Iran terror against Americans. And I’ve got a pretty good memory, but I went and looked at all the times they’ve killed Americans over the last 48 years and it’s mind boggling what other presidents have let Iran get away with. The question for me is like—not like, ‘why is Donald Trump doing this with Iran?’ It’s why hasn’t anybody else done it? I mean, you had the Beirut—probably the worst day in Marine Corps history, you’ve had, here in DC, them trying to assassinate Saudi Arabians. You had, in an absolute carnage, Larry, when we were in Iraq trying to win the war there, Soleimani invented this diabolical weapon that killed 600 Americans. And I know this tragically and personally maimed, cut off the limbs of others. Like, when I go to Walter Reed, you’ve been to Walter Reed. You go in the rehab area there and you see the work of Iran.
So, what they’re doing now, they’re using asymmetric warfare, which is really hard to counter using mines and drones and things like that, anti-ship ballistic. And they’ve frozen the Strait. That’s driving the supply shock, and that’s their inflation. The Democrats are going to try to stick us with it. The legacy media’s going to try to help them do it. But that’s Iran terror inflation. And people need to understand that. We’ve seen now, Larry, it’s like the amount of attacks that they’re like a baby without diapers. Like, the way they’re attacking every country in the Middle East, just throwing missiles at them. Can you imagine what they’d be doing now if they had nuclear weapons? So we’re going to have to deal with this. And then the other important thing, Larry—this is like was my message yesterday to The Hill. The Federal Reserve absolutely should not and cannot raise interest rates into the supply shock inflation.
KUDLOW: Right.
DR. NAVARRO: And we have history on our side there. You go back to 2006. What’s eerie about that, Larry, is that Iran in 2006 was refusing to stand down on nuclear weapons. They were calling for the total wipe off—literally their words—of the map of Israel. They captured British sailors and took a boat, and oil prices were spiking and Bernanke was chairing. You know what he did not do, Larry? He didn’t raise interest rates.
KUDLOW: Right.
DR. NAVARRO: And the next year he would actually be lowering them. So, we’re in perilous territory, but that’s Iran terror inflation.
KUDLOW: No, no, it’s a good point. You’re exactly right. Because of the Iranian shenanigans and a few other things, oil temporarily went up to 150 dollars a barrel. It might’ve even been more than that. Your memory’s fabulous. And you’re right, Ben Bernanke was smart. I mean, it is not a Federal Reserve thing. I think. Look, Kevin Warsh is a very smart guy. You know, you know him. The President really likes him. He’s an old friend of mine. I think you’re going to be on solid ground there. Peter, let me—
DR. NAVARRO: Well, the problem, Larry, if I may, the problem there is you’ve got the friggin’ Jay Powell, the biggest moron in Fed history, staying on, and that’s, like, nobody’s done that as a Fed chair—stayed on—since, I don’t know, the Eighties. And he’s got three Biden appointees, that’s four out of seven that he might control. And my concern is he’s going to play this shadow Fed game and lead these lemmings to a Fed rate hike. And Larry Kudlow is going to be at the top of his game to be vigilant cracking down, and we’ve got to support Kevin Warsh, but we can do it based on pure history and logic. And it wasn’t just Bernanke that refused to raise rates with a supply shock. Same thing happened with Alan Greenspan during the Kuwait oil price shock.
KUDLOW: Right. Right. Right.
DR. NAVARRO: So, you just don’t do that. You don’t raise interest rates in a supply shock. The supply shock does the work because it’s stagflationary. You and I can speak that language, and this is Fox Business. We can talk about it in those terms.
KUDLOW: Well, you’re right. I happen to agree with you. Listen, my solution for the Powell problem is take away his parking spot. Just don’t give him a parking spot. Or give him a parking spot all the way at the end, you know, where the water is flowing into the garage.
DR. NAVARRO: I’m thinking take away his barber and his hair gel and maybe he won’t go out in public.
KUDLOW: Peter Navarro, I love you, buddy. Great work.
DR. NAVARRO: You’re the man, Larry. Miss you here.
KUDLOW: It’s a pleasure to see you. Thanks for helping out.
