Whitehouse: Add Trillions To “Ease Inflation”

Weekly Commentary • Nov 16 2021
Whitehouse: Add Trillions To “Ease Inflation”
David McAlvany Posted on November 16, 2021
  • Fifth circuit court questions vaccine mandate
  • April inflation 2.6 “transitories” to 6.2 now!
  • “What do you mean by that?” A look at meaning


The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick

Whitehouse: Add Trillions To “Ease Inflation”
November 16, 2021

“Those who, all year long, have been characterizing this inflation episode as transitory appear hesitant to revisit their convictions despite consistently contradictory data. In this case, they include inappropriate framing, confirmation biases, narrative inertia, and resistance to a loss of face. Yet, its persistence in the face of repeatedly contradictory data seriously increases the risk of otherwise avoidable economic, financial, institutional and social damage.” –  Mohamed El-Erian

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. 

I have learned, over the last 35 years here, Dave, that see, I told you so just is really not that satisfactory. Looking at inflation right now, we’ve been told, no, the printing of money, that’s not going to turn into inflation. In fact, we ought to print more to try to dispel any inflationary fears. They’ve called it transitory. Now, at this point, everything that you’ve been saying, Dave, and really, anyone who understands money, who is saying when you print money you create inflation, I guess it’s here.

David: Yeah. With some obvious frustration, the president of Queens’ College, Cambridge, Mohamed El-Erian, was speaking to Bloomberg Television last week. And this was, of course, following the inflation statistics that were reported midweek. And the interviewer asked him this, “One of the worst inflation calls in decades. Why, why do you think it’s this bad?” And his response was, because they didn’t show humility at the beginning of the process. There are lots of structural changes going on in the post-pandemic economy, post-immediate shock, you can’t simply dismiss them as transitory. You’ve got to respect the fact that behaviors change, and they just didn’t have the open mindset enough to see that. So, they got stuck in this narrative, and they held on to it for too long, and the result of which is they’re looking at inflation that is much higher than they ever expected. They’re looking at inflation that is much broader than they expected. And they’re looking at inflation that is going to last even longer than they expect, even now. So, it’s going to go down in history as one of the worst inflation calls by the Federal Reserve.

Kevin: I wonder how Powell will be treated in history. We’ve had a number of Fed chiefs in the past, I think of Burns and Miller and Greenspan, Yellen, we could go to McChesney Martin before all of them. But how will history treat Powell?

David: It was interesting because he came out of the gates being very different, being willing to oppose the current tide. It wasn’t as if he was just being antagonistic on purpose, but there was a reason for him to express his views and have bit of a spine. And we began to see that unwind, and him to accommodate the markets aggressively in a series of decisions. But I think the most recent one, we mentioned last week, the fall of 2019, before the coronavirus emerged, he was already engaged in QE.

Kevin: Well, let me ask. I mean, because we talked about Greenspan in the last couple of weeks, and Greenspan wrote that beautiful piece in the 1960s about gold and discipline in money. It’s almost like they get to the Federal Reserve and they sell themselves to the inflation devil, the accommodation devil, let’s call it that, because it turns to inflation. But the accommodation devil, it’s a terrible thing. I even remember Doug Noland, who works with us, when Powell came in, Doug was like “Give him a chance. It wasn’t the worst pick out there.”

David: It’s Arthur Burns and it’s William Miller that did not leave strong impressions on the world. I mean, they, in some sense, became the pushover Patsies of the administrations that they served. In a very different way, of course, Greenspan was, let’s call him of the same ilk in the sense that he became a practical man. Leaving idealism behind, he adapted very well to a political environment. Greenspan made it through five appointments. Think of that. I mean, this is Xi Jinping’s dream. He was almost Fed president for life. He made it through four different presidents….

Kevin: And different administrations as far as Democrat, Republican.

David: That’s right. And so, maybe that proves that obscure language is at the heart of diplomacy.

Kevin: Greenspeak.

David: That’s right. At least, he navigated the diplomacy necessary between the White House and the Federal Reserve obligations. Ran the gauntlet, he made it through. To be fair, he made it through on more than just words. But then came Yellen, single-term gal, and in some sense, like Miller and Burns, may not leave much of an impression, or even a positive one as time goes on. Volcker made it through two terms, and it was—

Kevin: That’s hard to believe because he was politically unpopular with the Reagan administration.

David: I know. I know. Personality-wise, he almost reminds you of like Churchill at the Fed.

Kevin: Right.

David: A good war time leader, a bit of a pain in the derrière to deal with on a day-in day out basis. But, like Churchill, he was fighting a war. It was a war against inflation, and he took that seriously.

Kevin: Okay. So, I have a question though, because when you’re a politician, and people are not happy with inflation, people, a lot of times, may be placated by a replacement. We’re starting to hear that, we may have a new Fed chairman coming up.

David: Yep. So, inflation in the early 21st century, do we have a change of guard at the Fed? Do we have more Powell, or do we get Lael Brainard instead? Brainard is a preference of the progressive left, uber-dove, and the only real alternative to what Elizabeth Warren describes as a “dangerous man.” I wonder, if I reflect on this, I wonder if dangerous applies equally to women as it does to men. Can anyone be dangerous? 

Lael would be the second woman in the post, Yellen was the first ever. And while continuity in the position has typically been the default mode for presidents in choosing the Fed chair, you really can’t rule out Biden scoring some points with constituents on a change, not only in post, but in pronoun. So, Biden might just try and pin the inflation burst on Powell, and scapegoat coming into the midterms. But when you bring someone in who is very progressive, and they’re thinking about money and credit, I think there is an implicit danger. And again, that’s regardless of pronouns.

Kevin: Well, and you call it progressive, but there’s a point where you step over the line to actual socialist or communist thinking. And I think of Omarova right now. There’s a lot of people nervous that Omarova may actually get to be comptroller of the currency. She’s got Marxism written all over her.

David: That would be an interesting appointment. She has bold new ideas for the commercial banking system, and sort of melding, blending everything into a unified bank system.

Kevin: Have you read her thesis on Marx?

David: No. No I haven’t. That’s something that I would like to do. She wrote her thesis on Marx from Moscow State University. That’s not Moscow, Idaho, by the way.

Kevin: Right.

David: I haven’t taken the time to do that. When I read her comments on tackling climate change, it makes me think that some form of a Marxist or Hegelian dialectic are alive and well in her thinking. Speaking of the oil, coal, and gas industries, she says, “We want them to go bankrupt if we want to tackle climate change.”

Kevin: Oh, there’s a solution. Yeah. There—

David: Think, okay, well— Again, there’s these transitions, and sometimes, these transitions take time. 

The Glasgow meeting in recent weeks has been fascinating to watch and listen in on. And one of the gals I love to read from the Financial Times, Gillian Tett, she covered the backlash against nuclear power in a recent opinion piece, and was just engaging and welcoming a deeper conversation on the topic. Fact check everything, be fair minded, was her reminder that we should have more light than heat in the equation when it comes to the discussion on nuclear energy. And the irony, of course, is that Glasgow sources three quarters of its power from nuclear energy. It’s reliable. It’s in a place where solar would be a nonstarter. If you spend any time on the island, you’re lucky to have a sunshiny day here and there. And wind’s only an intermittent solution.

Kevin: And we talked about things needing to make sense. I still go back and think, all right, what would you teach a third-grader about going into debt or printing money, inflation? And if it doesn’t make sense to a third-grader, it probably doesn’t make sense. It’s interesting how Biden, at this point, is now saying, yeah, we need to print more money to quell the inflation, and I’ve got 17 Nobel Prize winners in economics that would say the same thing.

David: Well, it’s almost as if you stack the deck in your favor. If we create and support a series of extreme ideas, and then, give the microphone over to people who are not criticizable. Again, if this is a woman in that post, or a minority in that post, or a transgender person in that post, then, the idea is off the table for discussion, because any retort or response—

Kevin: You’ll be canceled.

David: You have a person with the problem—

Kevin: Yeah.

David: —not the idea. And so, it really is a fascinating structuring of this— Again, modern monetary theory, that’s one version. But think, as you mentioned, Omarova and comptroller of the currency, that nominee, what a fascinating potential outcome that would be, along with Lael Brainard. Biden this week claims that 17 Nobel Prize winners in economics have said that the Build Back Better plan is going to ease inflationary pressures.

Kevin: Well, there you go. Yeah.

David: And I scratch my head. I haven’t seen the president’s list. So, I’m not sure if this is— Well, frankly, I’m not sure this is a strong endorsement of economists as an academic cohort.

Kevin: Well, okay. But even Harris, I mean vice president, which we don’t normally hear from, funny thing, but Harris is saying, yeah, we just need to add another couple of trillion to get rid of this inflation.

David: It would be curious to inject one to two trillion dollars in cash into the economy, and have it, as Biden says, ease inflationary pressures. I mean, it’s almost like saying the opposite of reality as a way of confirming reality. I mean, there’s been a lot of that in recent years, accuse someone of the very thing you’re doing. It’s just, what are we doing?

Kevin: Well, we need parody, we need parody to help us out a little bit.

David: It’s insane.

Kevin: Every sad situation needs a jester to make a joke.

David: Babylon Bee scores another classic this week, they say “Infrastructure Bill Includes Capital Building Expansion to Hold Pfizer Lobbyists.”

Kevin: Wow. Boy, that says a lot. The other thing that says a lot is when you’re doing your very best to make sure that you eliminate any liability for the jab, from—whether it’s doctors or what have you—make sure that these guys don’t have a liability. Well, why, why, if it’s safe, why are we worried about that?

David: That’s a stroke of genius. Think of Pfizer’s maneuverings to get the five to 11-year-olds in the application of the vaccine for children under the emergency use authorization, which, again, lifetime indemnity. What a beautiful legal structure for operating your business.

Kevin: Maybe they could just get Big Bird to tell them don’t sue, don’t sue the doctor, Big Bird, I got it in my arm. Actually, no, my wing, and it hurt a little bit, I did it for everybody else. That’s the truth. Big Bird did that.

David: On a less humorous note, it’s worth remembering Governor Pritzker in Illinois, promoting a new law protecting doctors from lawsuits for administering the COVID vaccine. Again, different personalities, maybe it strikes them different ways. It’s safe, of course. Right? The vaccine. But indemnification is this critical piece that needs to be in place for government, for pharma, now, for doctors.

Kevin: Yeah.

David: You know, it’s a powerful legal structure.

Kevin: [Unclear.]

David: It’s a very powerful legal structure, being permanently indemnified.

Kevin: Okay. Yeah. But there’s pushback, because did you read the Fifth Circuit Court? They didn’t hold back. It didn’t even sound like legalese. They were slapping—

David: Right. Remains stay pending adequate judicial review of its petitioners’ underlying motions for permanent injunction. Yeah, it’s interesting. Fifth Circuit Court is saying, wait a minute, we’ve got issues here. Not sure that OSHA has authority on this point. Not sure that this is going to work at all. I think it’s worth quoting the inventor of the mRNA vaccine. Brilliant guy. He’s pointing out that there is a corporate liability, which is in the process of going parabolic. And this has been my concern for some time. When you start mandating, you may say, okay, well, government’s got our back on this. The Fifth Circuit Court says, maybe not.

Kevin: Yeah.

David: Fifth Circuit Court says you may be stepping in it right now. Check what’s on the bottom of your shoe. If you’ve been requiring employees to get it, this is potentially a problem for you. This, again, what the inventor of the mRNA vaccine says. I predict that the failure of the Biden vaccine mandates will eventually lead to a huge legal liability for companies and academic institutions, illegal termination, vaccine damages, et cetera. 

This will also be a major financial windfall for independent lawyers. Why independent lawyers you ask? Because the large firms are all getting bought out by pharma contracting for legal work, and triggering conflict of interest clauses that block them from taking these cases. What does this have to do with Biden’s mandates? Because if they fail in the courts, and this is what was fascinating to me, if they fail in the courts, then, the legal top cover for the academic institutions, hospitals, and businesses vanish. Government and pharma are indemnified. So then, the organizations become the bag holders for liability.

Kevin: Let’s go ahead and repeat that because for the person who’s sitting there going, I own a business, and I may be muscled into forcing people to get the jab—

David: Yeah. Remember who’s indemnified and who’s not. If you don’t have a clear path to indemnification, be aware of the risk that you’re taking, as you contribute to saving the world.

Kevin: Yeah. Well, let’s get back to inflation because, I mean, it is, at this point, inflation is just blowing the doors off of everything. I mean, all these expectations that they’ve been giving us, they’ve been terribly low on the charts.

David: Yeah. October—this is midweek—we blew past expectations, 0.9 for the month. And that puts us at an annual rate of 6.2%. So, we’re back to the highs of July 1991. 1991. It’s been a while.

Kevin: Wow.

David: April to November, if you look at each of those individual reports, it’s a fascinating sequence. Okay. So, let’s go back to the April print, 2.6%, and then 4.2, and then 5, and then 5.4, and then 5.4 again, and then, 5.3.

Kevin: Yep. Yep. And they said, oh, yeah, it’s transitory, it’s dropping.

David: See, told you so. It’s transitory. Oops. Then, back to 5.4. And now, this month, 6.2%. So, 6.2, of course, is the inverse of where we started, 2.6% in April. And Reuters pointed out that even though workers’ wages were up as well, it was just another gut punch, to use their words, once you accounted for inflation.

Kevin: And is it fair to even compare this to the inflation in 1991? 1991, we had the Persian Gulf war. We had Saddam Hussein’s— Artificially high energy prices is what we had.

David: Yeah. Noland pointed this out over the weekend that 1990, 1991, that inflation was transitory, bumped by a surge in oil following the first Persian Gulf war. So, inflation stats ended up crumbling along with Saddam’s military. Took about six-12 months for inflation stats to come back to three in that range. But here in the US now, we have not only the higher print for CPI, 6.2, we’ve got the producer price index which is inflation for corporations, if you want to think about it that way, 8.6%. And we know that when corporations experience inflation, that’s the stuff that gets passed on—

Kevin: —yeah, the producers.

David: Yeah.

Kevin: Yeah.

David: Producers of stuff end up producing more consumer price inflation for us just on a delayed basis. So—

Kevin: Well, I’ve been getting this question all weekend long, because I went to a family reunion, and they’re like, well, how is it that the dollar is going through so much inflation? Are other countries printing too? Well, of course they are. I mean, if you really look, you’ve got every other country that’s also experiencing higher inflation. You brought up Germany last week.

David: Yep. If you think about dollar strength, dollar weakness, one of the things you have to also take into account is what’s going on with the euro. And we could talk about the technical structure of the euro, but look, Germany is at 4.6% inflation. They’re under pressure. You’ve got Japan under pressure. They’re at a four-decade high in terms of their inflation numbers. Japan business confidence at a seven-month low, really no surprise there. The UK is under pressure. We covered that last week. The US is under pressure. We just spoke of that. Brazil’s at 10.6%. Mexico’s in line with us, 6.24%, just a skosh higher than us. Russia’s under pressure. Chinese, their producer price index— again, business inflation, if you can call it that, or corporate inflation, 13½% in China. You can make the list of—

Kevin: Wow. Wait. 13½% in China already, producer price index?

David: Yeah. That’s not going to impact what we import from them.

Kevin: Right.

David: You can make the list of countries adapting to higher levels inflation, dozens long, and Powell will still hang his opinion on a definition or a redefinition of a word: transitory.

Kevin: Right. And so, what does transitory mean? I mean, to you, to the public, it sounds to me like transitory just means that inflation’s going to get higher and higher.

David: Well, back to El-Erian, he was with Bill Gross at Pimco for years, and still is an advisor to Allianz. And as I mentioned, president of one of the colleges there in Cambridge, in the UK. He says, and this is in the Financial Times article in the last couple of days, “Once again, a widely watched inflation data release surprises on the upside. Once again, the underlying drivers of inflation continue to broaden. Once again, it is the most vulnerable segments of the population that are hit hardest. And once again, those who all year long have been characterizing this inflation episode as transitory appear hesitant to revisit their convictions despite consistently contradictory data. At one level, this hesitancy should not come as a huge surprise given the usual behavioral traps. In this case, they include inappropriate framing, confirmation biases, narrative inertia, and resistance to a loss of face. Yet, its persistence in the face of repeatedly contradictory data seriously increases the risk of otherwise avoidable economic, financial, institutional, and social damage.”

Kevin: And this is why we have to be able to define terms, but also define: what are the motives? And the motives, when they were telling us that this is transitory, the motive was not to tell the truth. This goes back to what El-Erian said originally, it’s hubris, it’s lack of humility that’s gotten us into this situation.

David: Yeah. Once again, El-Erian is on fire. But yeah, you’re right. You look at the mindset, you look at narrative, you look at humility, El-Erian’s references to these are profoundly important. How we see the world, how we define reality and frame the issues in front of us lead to actions which are consequential to us, and perhaps, even to others as well.

Kevin: Well, we’ve talked about Harold James, he’s been a regular guest of the commentary through the years. He’s written a new book on the definition of terms, The War of Words. We’ve been looking forward to this, the book’s out at this point. Next week. Next week is when you get to talk to him, and we get to hear what he has to say.

David: Yeah. I just wanted to say one more thing on inflation, because this is a fascinating sub-dynamic coming from the US real estate market. And again, just to the point of, there are structural changes which have occurred, and there’s an important note that comes from those structural changes. US real estate, second quarter, we have 1.1 million cash-out refis, the refinancings of homes, 1.1 million in the second quarter. A total of $63 billion of equity pulled out. Those are the highest numbers since mid-2007.

Kevin: Yeah. I remember— I was going to say this reminds me of right before the crash in the 2007.

David: That brings the total, if you’re looking at the full year in terms of cash out refis, to nearly one in five Americans having pulled money out of their properties in the last year. Now, you could look at that positive and negative. Greater cash reserve. Yep, that adds a little bit of resilience to the household balance sheet. But it also suggests that there is a potential upset to a balance sheet if there’s a price move lower. You can have people who are underwater on their mortgages that much faster. Right? I think what we’ve discussed in terms of increasing demand and an exaggerated demand profile, not just supply and supply chain dynamics, as they increase inflationary pressures, but on the demand side there’s pressures as well. I think that $63 billion in cash-out refi is worth keeping in mind as another inflationary input.

Kevin: Yeah. One of the things that causes inflation is we’re a wash and cash. Even the refis, that’s cash that’s coming out that will be spent. But let’s go back to the importance of language. Because, again, when you and I are talking on a Monday night, when we’re getting ready for the Commentary, and you’re sipping on your Talisker and I may be sipping on my Talisker, we really are, we’ve traveled decades together. We are really trying to understand the words in the same way, so that we can make progress. Not everybody does that. Even Harold James says, you can use words to try to solve a problem, or you can use them as terms of abuse. So, the question that I would ask is, the importance of language, its meaning, its conveyance, and the importance of human agenda, basically, using that language. You need to find out, like a legal contract, you need to find out if everybody’s on the same page.

David: You know, a quick thank you, speaking of Talisker in our conversations on a Monday evening. July 1975, my dad met a gentleman in Phoenix, Arizona. He’s been a good family friend since then. He listens to the commentary each week, and thought that there was a moment for instruction, and perhaps, personal growth on my part. And so, he sent me a beautiful Christofle glass. It’s a crystal glass with my name etched in it.

Kevin: It’s beautiful. Yeah, I saw that. Yeah.

David: And his suggestion was, “Please, Speyside only.”

Kevin: Which is a type of scotch, for the listener who doesn’t drink scotch.

David: I wanted to honor him with Speyside instead of Islay.

Kevin: And that happened last night.

David: That’s right.

Kevin: That’s right, and you showed me. Yeah.

David: I thank you. It’s deeply appreciated.

Kevin: And the older I get, if I ever forget your name, Dave, every time you go bottoms up, I can see it says McAlvany.

David: That’s right, at the bottom of the glass.

Kevin: Yeah.

David: The importance of language is in the meaning that it conveys, and in the understanding it can create between people. When my wife and I were married 22 years ago, we discovered that our libraries were largely duplicative. And the beauty of that was in shared verbal and written references that we had both absorbed in our study of philosophy. We’re both of those oddball students who decided that studying the obscure and the abstract made sense, somehow, so, we share enough words in our family vernacular to live with a deeper understanding of each other. 

To me, words are a relational resource for us to be known. And then, there’s this aspect of being understood, which you brought up on a Monday night. It helps that we share ideas and have read similar content, but being understood goes a long way towards a voice being legitimized, towards conflict being minimized, towards the individual’s value being elevated. And in that sense, speaking is powerful. Words are powerful. Listening is, perhaps, even more so. Listening implies that the words we hear have a common interpretation, and that’s not all we sell.

Kevin: We had talked about the liability when we were talking, going back to the jab, the vaccine, and from a legal perspective, you better know what those documents say. I mean, you being a business owner, Dave, you’re continually reviewing legal documents. What is that for? Well, it’s because we want to make sure that all parties, you want to make sure that all parties, are signing and saying, yes, we understand what this is. A lot of those legal documents start with a definition of terms.

David: That’s right. When I look at a legal document, there in the first section there’s typically the equivalent of a glossary.

Kevin: Right.

David: Two parties agree to a contract, and it must be with a common understanding of the details and the obligations between parties, where does liability rest? How is conflict to be resolved? What’s the jurisdiction for that? There are a dozen, or dozens, of definitions for the purpose of that document. And the key thing to recognize is that two people signing the document are acknowledging the meaning and use of the words as they apply to the contract details. There’s really not supposed to be ambiguity. You could say that clarity is foundational. It’s an objective. Now, I say that because— Actually, you can find contrary to that, in some cases, complexity and lack of clarity are the key objective instead, to not know what you are binding yourself to. You have to read contracts very carefully.

Kevin: Well, it goes back to Biden saying, pay no attention to the fact that we’re printing too much money, 17 economists, they say that it’s good. We talked about confusing or creating complexity to try to keep people on their heels, and not really seeing what’s going on. But goes even further than that. Because again, going back to what Harold James has said, you can see words being used as terms of abuse. In other words, they’re being weaponized.

David: That’s right. Yeah, words can be weaponized. Clarity is not necessarily the goal. I mean, in a healthy relationship, you would think, yes, absolutely. But not everyone’s looking for that. Right? Understanding and knowing can become subservient to winning, to dominating, to the power potentially gained through those words. The War of Words is the title of Harold James’ new book, and it’s his attempt to recover the meaning of words that gained popular use in the 19th century, but have become terms of abuse here in the 21st. So, power plays often employ rhetoric, but the use of a single word is either a badge of honor, or as an accusation and an indictment. That’s becoming normal in the world of tweets and sort of micro communications.

Kevin: I remember when you made the call back to me, I think you were up in New York at a used bookstore, and you bellied up to the bar with quite a bit of money for an Oxford English dictionary. How many of volumes was it? When I think of a dictionary, I’m thinking of one book. You’ve got a whole shelf of Oxford English dictionary. Do you remember?

David: Two shelves, I think it’s either 12 or 13 volumes.

Kevin: Yeah. And you came home with that. That was your prized possession. Why, though?

David: It’s beautiful.

Kevin: Why? Because a word is important.

David: Yeah. Again, you might think what are we doing here? We’re talking about the glossary of globalization, The War of Words by Harold James. This is not an academic tic. Some sort of a twitch.

Kevin: Right.

David: You know, to start with definitions or to consider how a word has evolved through time, this has some tradition to it.

Kevin: Yeah.

David: Suggestion is not new. The Oxford English dictionary is not merely a dictionary. It’s a history of language. It’s where etymology and philology meet. Mortimer Adler took the time to outline— This goes back many years, speaking of sets of books, one that I recommended to you decades ago.

Kevin: Yeah.

David: And I would recommend to any of our listeners. Mortimer Adler’s collection, The Great Books of the Western World, he begins that with two volumes, 102 words, 102 essays. And he’s looking at these words as they stretch through five centuries of use, so that the engagement and conversation on those words, it’s those ideas, the ideas which are a part of those words, so the engagement is clear.

Kevin: And we’re not talking just about not understanding each other, we’re talking about people actually being able to get along and not go to war sometimes.

David: Yeah.

Kevin: I mean, it’s so powerful. Think about it. What would certain words mean to people several thousand years ago, versus what they mean to us today?

David: We talked about this when you were in New York City during the Occupy Wall Street movement.

Kevin: Right.

David: And you’ve got people who are calling people capitalists as if that’s a four-letter word.

Kevin: Right.

David: Right? And there’s other people who would say, I am a capitalist, as if, again, that’s a badge of honor. So, there’s progression, and there’s evolution to meaning. Aristotle might reference liberty, it has a different meaning than Robespierre’s reference to the same word.

Kevin: Right. Right. Sure. That’s definitely—

David: Right. So Augustine references beauty in the fourth century context, and that’s different than, say, Freud, who also has a use for the word beauty, but it may be steeped in references to the subconscious. Does that make sense?

Kevin: Yeah, absolutely. Absolutely.

David: Well, Raymond Williams took a similar project, and published a book back in the ’80s called Keywords: A Vocabulary of Culture and Society. And James has done something similar with words that are meaningful to him and important to a broader cultural conversation. So, subtitle of his book, Glossary of Globalization, The War of Words: A Glossary of Globalization.

Kevin: Dave, while you’ve got the book here, do you mind reading just a couple of the words that he’s defining? Because he’s got a chapter for an entire word.

David: So, it’s capitalism, socialism, democracy, nation state, nationalism, hegemony, multilateralism, politic, geopolitics, debt, technocracy, populism. And the difference between globalism and globalization. We’ve had that conversation many times—

Kevin: Right.

David: —in our years of doing this commentary. Neoliberalism, I mean, there are some really fun conversations. So much to learn in terms of the history of where the word started, who popularized it, what the philosophy and usage was at that time, what it’s become used as.

Kevin: And I would say you read— We’ve read Harold James for years because he brings— You think you know what capitalism is, until you read his definition.

David: Yeah. Next week we’re joined by a professor of history and international affairs at Princeton. And I’m reminded when I encounter scholars like Harold James that there is a spectrum of curiosity. And while I love to learn, my learning is catapulted and enabled forward by diligent managers of a million details, and he is one of those managers.

Kevin: Well, Stephen King, I know, has just been a machine through the years, writing horror. But how in the world does he write the amount of books that he writes? I mean, Harold James, he’s not sitting down and making up a story. He’s having to do deep research. And he writes— How many books has he written?

David: Well, you mentioned Stephen King. Stephen King doesn’t have to worry about references and indexes and bibliographies and tying it all together and making sure that in terms of sort of a peer-reviewed understanding an idea, that it’s coherent and is ready for being criticized—

Kevin: But this is like being published for a doctoral thesis, basically.

David: Every time.

Kevin: Yeah.

David: We’ve looked at The Creation and Destruction of Value a number of years ago. When we’ve talked to James before, we’ve looked at The End of Globalization. Fascinating conversation with him on that as well. We have not taken the time to cover his works on, say, Deutsche Bank’s involvement in the Nazi appropriation of Jewish property. It’s fascinating. I’ve only dipped my toe into his tome on the creation of the European Monetary Union. Believe it or not, there are books with a certain page number that scare me away. He’s got his history of the Krupp industrial empire, which today is ThyssenKrupp. 

He’s written a new book almost every year since the late ’90s, and each of these stretch from 300 to 500 pages, impressively. What’s really impressive to me, if you like rabbit holes, and I do, each has a bibliography and notes that are at least 10% of the total book. So, you’ve got this vast resource at the end. And again, the idea that you can sort of stitch all of these ideas and the conversation amongst various authors and other researchers—it’s a lot of work.

Kevin: Well, and he can be very transparent and very tough because wasn’t it Deutsche Bank that actually paid him to do the research on the history of Deutsche Bank? There were some skeletons in the closet.

David: They were paying him to reveal the skeletons. And so— I mean, in his handling of Krupp and Deutsche Bank, I found him to be honest. I found it to be a lot of transparency with the failures of those organizations. And yet, there’s insight. There’s no trace of the cancel culture we see so often today where using one wrong word is enough for social erasure or de-legitimization. He is the embodiment of an academic who is highly critical, but equally generous and fair-minded.

Kevin: One of the things that I’ve noticed about him when I either hear our interviews with him, or other interviews, is he is very careful even in his own definition of terms when the question is asked. He is not going to jump right in to answering any of your questions until he knows exactly what you’re saying.

David: Right. Defining terms does not have to be the precursor to debate, or to academic jousting. It may be an expression of active listening between two people. So, back this away from a glossary of globalization and an in-depth intellectual pursuit as to the history of capitalism or socialism, or what have you, just slow down long enough to engage meaningfully, and ask, what do you mean by that? Because you may find that it reveals something you don’t know, or perhaps, a concept that you didn’t understand. Or may reveal that the other party doesn’t mean to be understood, but is in sort of the linguistic and intellectual appropriation mode, seizing control of a mental space like the old-fashioned colonizer of a physical landscape. And we’ve got plenty of versions of that today. Dozens of woke versions of that where dialogue and understanding are not as important as submission.

Kevin: This is reminding me of Columbo. Do you remember the old show Columbo? Have you ever watched— I mean, just the old reruns. This was a show back in the 1970s. And Columbo was a detective. And he would look like a fool as he would come in, and he’d ask a couple of questions. He had the long trench coat on and a cigar in one pocket. And as he was walking out, he would turn around and he would ask a key question, a defining question. Oftentimes, when someone would answer the question, instead of him acting like he understood, he would say, well, what do you mean by that? I remembered that when you said what do you mean by that?

David: Some academics are on a quest to prove something. Maybe they’re proving themselves to the world. Maybe they have a particular axe to grind, and you can tell in the tone that there’s a real edge to them. I experienced James, Harold James, as someone who’s in the constant search. He’s in discovery mode and has been for decades. 

Coming back to El-Erian’s comments, his conversation about inflation with the Financial Times, inappropriate framing, confirmation bias, narrative inertia, resistance to a loss of face. What I love about El-Erian is, he’s a PhD. He understands economics. He’s also a market practitioner, and he recognizes that when you’re wrong, the markets will reveal it instantaneously. It’s not a question of conversation. And if you’re wrong, it’s best to acknowledge it, lest you deal with things like an entrenched position, and now even greater loss of face than would’ve been the case two, three, four months ago. Our conversation’s need to be engaging. They need to not be trapped by mindset, or a particular set of tracks, narrative tracks, if you will. And to engage in the conversation about words is really to engage in a conversation about humility. And I think, again, we come back to, what do you mean by that? What do you mean by that?

Kevin: You’ve been listening to the McAlvany Weekly Commentary. Now, I’m Kevin Orrick, along with David McAlvany. You can find us at mcalvany.com, M-C-A-L-V-A-N-Y.com. And you can call us at (800) 525-9556.

This has been the McAlvany Weekly Commentary. The views expressed should not be considered to be a solicitation or a recommendation for your investment portfolio. You should consult a professional financial advisor to assess your suitability for risk and investment. Join us again next week for a new addition of the McAlvany Weekly Commentary.

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