POLICY COUNSEL
MAY 2025 POLICY COUNSEL SPEECHES
Joel Rosenberg
Founder and President
The Joshua Fund
What an honor to be with you guys. I appreciate you having a failed political consultant as part of your thing. I once helped Steve Forbes – we had such a wonderful evening last night – but I do need to confess that I worked on both the 1996 and 2000 Steve Forbes campaigns as a senior advisor and later as deputy campaign manager and helped him lose both and about $70 million of his daughters’ inheritance money. So, they didn’t put us at the same table. No, I’m just teasing. We had a wonderful time; it was great to see him again.
It’s an honor to be here and I want to use the time wisely to give you a sense of what’s happening in America’s number one ally in the Middle East, and I would argue number one ally worldwide, Israel.
Now, Lynn and I are dual U.S.-Israeli citizens. That means we get to vote twice. It’s like living in Chicago. Eleven years ago, we became dual citizens, and we moved to Israel, and we have an apartment in Jerusalem, and we live there full-time.
People have been asking us since we got here, “What’s a day in the life for you guys these days?”
I said, “Well, let me share with you about this past Sunday.”
On Sunday morning, Lynn and I got up took our youngest of our four sons to be inducted into the Israeli Defense Forces. Two of our other sons have already served, one in a Special Forces unit. So, this war in Gaza is not over and it feels very personal to us. We’re currently on Day 580 of this brutal and bitter war since October 7th, and now our youngest is in the army.
From there, I went to the TBN Studios in Jerusalem and interviewed our new U.S. Ambassador to Israel, Mike Huckabee, for his first exclusive interview since arriving in the country. It’s really extraordinary to have a true friend of the movement, as well as a personal friend, there in that vital role.
Then, Mike and his wife, Janet, came over to our little apartment, and we had dinner. What a wonderful way to welcome them, just as friends and fellow Evangelicals, fellow conservatives, and to not have an agenda with them, just to be able to welcome them and spend a few hours together catching up and talking about the road ahead.
Earlier that day, a Houthi missile was fired by terrorists in Yemen, came 1,800 miles, and hit the grounds of our airport, Ben Gurion International Airport. At that point, most international flights were canceled, including the United Airlines flight that we were scheduled to come here on. My assistant in the States then scrambled to get us the last two seats on the last flight out of Saigon – I mean, Tel Aviv – and we made it on an EL AL flight.
So, we’re very, very happy to be here at CNP. But that’s a snapshot of our life these days.
We woke up on the morning of October 7th to about 5,000 rockets being fired at Israel – including eight rounds of rockets being fired from Gaza at Jerusalem, our capital – plus some 5,000 Hamas terrorists invading Israel and slaughtering 1,200 innocent men, women, and children.
It’s just been a horror show. We’ve been through a lot of skirmishes and rocket wars, but nothing like this.
Israel is living in its darkest hour, and there are still 59 Israeli, American, and international hostages, still being held against their will in Gaza, in those terror tunnels. We believe that most of them have perished, but we believe there are about 20 or 21, maybe, still alive. Please continue to pray for their release and for Israel to achieve total victory over Hamas in Gaza.
It’s been a nightmare, honestly. Exhausting. And grieving the whole country. Israelis are resilient, but this has certainly taken a toll.
This is the longest war that Israel has fought since the War of Independence, and actually twice as long as the War of Independence itself back in 1948.
It is really amazing that we’re still in this and it’s not over yet.
But I want to share some good things, some words of encouragement, and then we’ll take some questions, okay?
We’re living in a country that’s being attacked from seven different directions.
It’s actually eight if you add the avalanche of lies being fired at Israel every single day from much of the mainstream media as well from so many social media platforms, including the Communist Chinese owned TikTok platform.
It is a little bit quieter this week than it was a few months ago, but one of the things you have to do is find purpose in the middle of a war so that you’re not just sitting around watching bad news every day on television or on your phone.
Lynn and I have been fortunate, as God has been leading us to serve the people of Israel and her neighbors. I am Jewish on my father’s side, not Jewish on my mom’s side. We’re both devout Evangelical followers of Jesus. For almost 20 years, we’ve run a nonprofit organization called The Joshua Fund. About five years ago, we started this organization called Near East Media, which runs two websites, ALL ISRAEL NEWS and ALL ARAB NEWS. And I’m glad to be able to tell you that CNP’s next president, our dear friend of 30 years almost, Ken Blackwell, serves on the board of Near East Media and we’re super grateful for him and Rosa.
For the last 580 days, Lynn and I have been very much focused on two areas: First, serving in The Joshua Fund to serve the Church and help the global Church serve the local community through local congregations to be a blessing to Israel. And second, serving through Near East Media to educate Christians around the world about what’s really happening in Israel and the region, why it matters, and how Christians can be a blessing.
When it comes to The Joshua Fund, we operate not just in Israel but also in the Palestinian territories and in five neighboring Arab countries—Lebanon, Syria, Jordan, Iraq, and Egypt. You can imagine the complexity of such a ministry, logistically, and staff-wise, and moving money legally and carefully. But this is so important. The question for us is simple: How can Christians strengthen the local church and provide humanitarian relief to care for the poor and needy and educate the global Church about what’s happening in the Middle East, when you’re facing genocide, not by Israel but by Hamas. And when the Syrian people were facing genocide by the forces of ISIS several years ago.
There has been so much pain and suffering and war and poverty in the Epicenter in recent years. It is a very complex and challenging environment to minister in. But here are a few pieces of encouragement.
In the almost 20 years that The Joshua Fund has existed, the Lord has raised up and invested through The Joshua Fund more than $100 million to strengthen the church, to care for the poor and needy and victims of war and terror, and to serve the poor, and serve the church in Israel and the neighboring countries. That’s important, right? Because the Abrahamic Covenant isn’t just about Israel, though I’m very glad that it is. But God said, “I will bless you, Abraham, and you will be a blessing to all the families of the earth.” So, this notion of blessing both Israel and her neighbors is so Biblical and so important.
So is the mission of educating the global Church about God’s heart and prophetic plan for Israel and for the neighbors and for their enemies. After all, Jesus commands us, “Love your neighbors.” That’s hard enough. But He also commands us, “Love your enemies.” That’s even more difficult.
The Joshua Fund invests in 24 different food distribution centers through local messianic and Evangelical congregations in Israel, providing them with the food and the other humanitarian supplies to care for the poor and needy.
The key to this work is serving with unconditional love. It’s not about thinking, “Well, we’ll give you help if you decide to believe in Jesus.” Obviously, we want everyone to believe in Jesus, but unconditional love is unconditional love. And that’s how Jesus did ministry. When Jesus fed the 5,000 men – and all the women and children – in Galilee, He didn’t say, “If you’re going to follow Me forever as Messiah, get in this line, you get your chow. Otherwise, go find a McDonald’s or get your own falafel or whatever, because you’re on your own.” No. Jesus demonstrated unconditional love. When He healed the ten lepers, how many came back to worship him as Messiah? Only one. But He healed all of them. Why? Because that’s what unconditional love looks like. And that’s the heart of The Joshua Fund.
In terms of educating the global Church, Lynn and I have a podcast sponsored by The Joshua Fund called, “Inside the Epicenter.” It has surged in traffic since October 7th to be in the top 1.5 percent of all podcasts in the world. Now, we’re not Joe Rogan. We’re certainly not getting that level of traffic, but we are seeing immense hunger for real information, credible, solid information about what’s happening in Israel and the Arab/Muslim world and getting it from a Biblical worldview, and I would also say from a conservative worldview. Not everyone who is listening to our podcasts is a follower of Jesus or wants to be. Many Muslims, many Jews, and others of no faith and other faiths, are listening. They’re curious. But there is tremendous hunger for a credible understanding of what’s really happening because people distrust the media — and they should.
One of the other elements of what we’ve been doing, with our wonderful team, in addition to rolling up our sleeves and taking food and other supplies into congregations that are serving on the front lines under rocket fire, is bringing small delegations of Evangelical leaders to Israel to see what’s happening for themselves.
Well, I should note that our teammates are truly risking their lives to care for the poor and needy and those under rocket fire. They are risking their lives to serve the local church and to show unconditional love to Israelis and Palestinians that don’t know the Lord. And Lynn and I are right there with them. I mean, Lynn was up on the Lebanon border not long ago, bringing hot meals to those Israelis in danger. And she was literally in range of RPGs, rocket propelled grenades. She didn’t 100% realize how much danger she and her colleagues were in until they got back to safety. That is a little bit rattling, but she does it. We do it. Our team does it. Because the work is so important.
At the same time, we also have been bringing small groups of Evangelical leaders to see what’s been going on.
In December 2023, not long after the war erupted, Ken Blackwell, Mike Huckabee, and I led a small solidarity mission, the first delegation of influential Evangelical leaders to come into Israel so soon after October 7th. To do what? To go to Israeli communities on the border and to see the devastation for themselves, to walk through bloodstained homes, charred because the Hamas-Palestinians had burned people alive in them. Bullet holes everywhere. On-going explosions. We could still hear the explosions of the very intense ongoing war while we were there. We also took these Evangelical leaders to meet with hostage families, to listen to them, to hear their heart-breaking stories, and to pray for them. We met with Prime Minister Benjamin Netanyahu. We took the group to meet with Israeli soldiers, to meet with Israeli and Palestinian Evangelical and messianic leaders on the ground in the time of war.
Then just last month, we brought another CNP couple, Chad and Dana Connelly, and some of their colleagues, on another solidarity mission. Chad runs “Faith Wins” with his network of pastors all over the country. They asked, “Can we bring a delegation, a solidarity mission, to do something similar to what you did with Mike Huckabee? The war is a little quieter now, and we want our pastors and their wives to see it for themselves and bear witness of it.” That was an amazing trip. We not only took them to Biblical sites in between to meet Arab and Jewish pastors and ministry leaders but also to tour Israeli communities invaded and savaged on October 7th. And while it didn’t work out to meet with Prime Minister Netanyahu because he had just traveled to Washington, we sat with President Isaac Herzog in the President’s Residence.
So, these are some of the things we’re trying to do to help equip and educate Evangelicals far beyond our capacity to do it ourselves. That’s part of the mission of The Joshua Fund. It’s also the mission of ALL ISRAEL NEWS and ALL ARAB NEWS, too.
We started these two news and analysis websites about five years ago. You can find them at www.allisraelnews.com and www.allarab.news.
I told the young team as we started, “Listen, don’t focus on traffic. I don’t want you to focus on traffic. I want you to focus on three things: credibility, credibility, credibility. I want you to follow the ‘George Costanza Doctrine’ of journalism.”
Now, if you’re not a Seinfeld fan, you need to know that George Costanza was the idiot on the show. He was the idiot friend of Jerry. And one day, George just plunks down in the booth at the diner and says, “Jerry, every decision I’ve ever made, from what I wear, to what I eat, to what I do, it’s all been wrong.”
And Jerry says, “Well, if every decision you’ve made is wrong, then the opposite would have to be right.”
And George says, “That’s right. I should do the opposite. So, instead of tuna salad, I’ll have chicken salad.”
And Jerry is like, “You know, chicken is not really the opposite of tuna. Salmon is the opposite because tuna swim with the current and salmon swim against it.”
Anyway, watch the episode because every decision George starts to make starts working out for him. It gets him a job with the New York Yankees and a beautiful girlfriend and the whole thing.
So, I told our team, “This is the ‘George Costanza Doctrine’ of journalism. Everything you hate about social media and the mainstream media, do the opposite.”
That’s what we’ve been up to. I’ll give you a couple examples.
After the New York Times led the world with an eight-column, massive headline, “Israel Bombs Palestinian Hospital,” in the first month of the war, I said, “Whoa, guys, if that’s true, we’ll report it, and Israel will have to take its lumps. But that seems unlikely that Israel would target a hospital. So, let’s wait a bit, do more reporting, and see what is really true. Let’s not follow the New York Times. Let’s do this right.”
Sure enough, it became clear just a few hours later with video and intercepts that a Palestinian rocket had misfired and fallen on the hospital. Then Israeli intelligence picked up intercepts of radio communications between Hamas operatives going “Wait, that was us, oh my gosh, I can’t believe we bombed the hospital.” It didn’t matter to the New York Times. Their correction was on page 97, on the bottom, or whatever. But that’s how we’re trying to do things differently. We waited. We got the facts. Then we published the truth, not a bunch of Hamas lies.
Since October 7th, we’ve taken our readers into the Gaza Strip. I put on a flak jacket and a helmet and went in with the IDF’s 98th Brigade into newly discovered terror tunnels underneath the city of Khan Younis. I got to report on the actual cages that I personally stepped into where twelve Israeli hostages were held. I got to report from the lair of Yahyah Sinwar, Hamas’ bloodthirsty, demon-possessed, mastermind of the entire October 7th war.
That’s rare that a little news organization like ALL ISRAEL NEWS, only a few years old, would have an opportunity to do that. But it’s about building relationships and building trust.
We have also interviewed Israeli pastors who live on the front lines of the war, including one pastor whose entire congregation was almost decimated by a near direct hit by a Hezbollah missile right in front of his congregation. No other media outlet in Israel covered that attack and the destruction of that congregation but that was important to us, and important to our readers, so we went up there and covered it.
We’ve also covered the visits of Evangelical and conservative leaders such as former Secretary of State Mike Pompeo, former Vice President Mike Pence, presidential candidate and former Governor Nikki Haley, Florida Governor Ron DeSantis, the Reverend Franklin Graham, and others.
We’ve also introduced our readers – and taken them into the room with – Israelis they need to know. For example, we’ve sat with hostage families and interviewed them personally, like Aviva Siegel, who spent 53 days in a terror tunnel, and is married to an American Israeli, Keith Siegel, who was just recently released. Their stories are chilling and horrifying, but it is so important to hear them firsthand.
We have covered the plight of Palestinian Christians in Gaza and reported the latest results of a major Palestinian pollster trying to understand the shifting views of Arab Muslims and Christians in Gaza and the West Bank.
We have met with and reported on Prime Minister Netanyahu, President Herzog, former Israeli Prime Ministers Naftali Bennett and Yair Lapid, and others, to hear their perspectives.
I believe that journalism should cover the good, the bad, the ugly about political leaders. I liken it to Monday Night Football. In our family, we’re Pittsburgh Steelers fans because Lynn’s family is originally from Pittsburgh. So, we love the Steelers. Now, I don’t mind the anchors in the booth criticizing the Steelers if they do something stupid. But I don’t like to think that the guys in the booth hate the Steelers and want them to burn in hell. Yet that is the way so many reporters and commentators are covering Trump and Netanyahu. Do these men have flaws? They do, but my goodness, you can feel the anger and the enmity from so many reporters.
That is not the way to do journalism. So, we’re trying to do it very differently.
We’ve covered President Trump’s return to power, and we’ve covered it very closely. He certainly keeps us on our toes. He’s coming to the Middle East this week. We don’t know what his message is going to be, especially when it comes to Iran, and we’re a little anxious, I’ve got to say. The column I wrote this morning for ALL ISRAEL NEWS is about how Israeli and a growing number of Evangelical leaders are getting anxious about Trump’s approach towards negotiating a new nuclear Iran and even why he’s being so friendly towards Qatar, a country that is very close to the Iranian regime and openly allows Hamas leaders to live in Qatar’s capital of Doha.
So, we may talk about that in our Q&A time in just a moment.
There is another topic we might want to cover. Did you see what President Trump said when Bibi Netanyahu was invited to the Oval Office a few months ago? I’m going to paraphrase but the President basically said [doing a Trump impression], “We’re gonna make Gaza great again. It’s gonna be fantastic. We’re gonna take it. We’re gonna clean it up. We’re gonna own it. It’s gonna be fantastic. We’re gonna have Gaza-a-Largo. We’re gonna have Gaza Disney. And we are going to have world-class golf courses because you need only 18 holes for a golf course and there are a lot of holes in Gaza..”
Now, we’re not quite sure where the President is going with this, but we’re having fun covering him.
So, that’s a little bit about what’s happening in Israel and the region, and how Evangelical ministries like The Joshua Fund, ALL ISRAEL NEWS, and ALL ARAB NEWS are trying to be a blessing and make a difference.
Steve Forbes
Chairman and Editor-in-Chief
Forbes Media
With an introduction like that, good night. It’s only going to be downward from here. I was of two minds when I was told that I’d be speaking after dinner. One is after, a meal, sleep is harder to resist. But the virtue is, there’s nothing they can throw at the speaker.
But it is great to be here. Tom Fitton has done great work, not only here, but also with Judicial Watch, cleaning up voter rolls. You know, I think it was 20 years ago, laws were passed to clean up the rolls, but the laws were never obeyed, something I know that just absolutely shocks you, like gambling in Morocco. It is remarkable that it’s been thanks to their relentless efforts that millions of rolls have been cleaned up and names have been removed. And also, too, they fought the IRS and defended and investigated the wrongful death of Peanut the squirrel. Look it up. It has its humor, but it also is an example of the overreach of the state. As we should have known, back to the revolutionary times, the smaller the better. But human nature being what it is, if organizations are unchecked, they will just find a reason to get bigger—mission creep, whatever you want to call it.
I also want to thank Ken. He’s mentioned some of the ways that we fought together over the years, including back in 1998, when I think you were a treasurer in Ohio, the governor then was proposing an increase in the Sales Tax. We had great fun going around the state attacking it. I have stronger words for it, but at the end of the day, we won. However, the empire never sleeps. And a Republican governor was proposing this tax increase and his successor, a nominal Republican, finally pushed it through. But at least we put up a good fight. Ken was instrumental in my two runs for president. If I’d listened to his advice, we’d be meeting at my library. He was chairman, and I’ll use the word chairman—the Federal Reserve had a meeting today, and they call him chair, the “head of the Fed chair.” Why not sofa or couch or something? You know, “chair.” It shows how far The Republic has fallen. We now call bankers “chairs.” But, he and Rosa have been great friends of Sabina and mine for over 30 years. We’ve been vacationing together and are still speaking to each other. And so, when Ken extended the invitation, I accepted with alacrity before he could reconsider.
I’ve been asked to make some remarks before we do Q &A on the US economy. It’s amazing this administration’s a little over a hundred days old. It seems like four years with all the activity. Whatever you think of the President, I wish I had his energy. He doesn’t sleep. He only does about four hours a night. And so, you wake up in the morning and know something’s going to happen. Executive order, proclamation, take over a country—something’s going to happen. For the media, which is always attacking him, they should be grateful. They’ve never had a greater constant source of copy than our incumbent President.
So, in terms of the economy, the economy basically is very, very strong. The reason that we have problems are from the wounds that are self-inflicted. I just want to go over a few of them: the Fed, tariffs, getting a proper tax bill, debt, and also I have to mention, in terms of things unexpectedly happening, we’re going to see it more and more overseas because unfortunately today, Xi Jinping, Putin and others are convinced the U.S. is a declining power and that’s how you get miscalculations.
Take what’s happening now between India and Pakistan, two nuclear powers. Noone wants a wider war. I think both sides are trying to figure out face-saving ways to get this thing done before it escalates. But we should remember from the history books in 1914, Sarajevo. An assassination happened, everyone figured that’s the Balkans, and on to the next thing. But sadly, tragic events took place, and we got a devastating World War, the worst event in human history. And we’re still living with the dreadful consequences of it today and what it unleashed ideologically.
So, in terms of miscalculations, that’s one of the key things I hope that the United States conveys to people like Xi and Putin who are not the normal people you deal with. They are determined, Xi Jinping, of establishing China as the hegemon power in the world, where literally we kowtow to Beijing. Vladimir Putin is determined to reconstitute, one way or the other, the old Soviet empire. And the Mullahs in Iran are determined to get the bomb. And that’s why I believe negotiating with them—I’m being blunt here since I’ve had my free meal—is a mistake. People may bob and weave, but these people have goals, they’re determined to pursue them, and how they judge things is not the way we in the West judge them. We’ve got to make sure they understand where we’re coming from and when we say we’re going to do something, we back it up. Even in the case of Ukraine, to get Vladimir Putin’s attention to a real negotiation, you don’t even have to announce it. You send in A-10s, you send in weaponry, pour it in, and then he will be in a mood to negotiate. That’s what he listens to, that’s the only thing, unfortunately, that man understands. And then you can get real peace.
Let’s start with the Federal Reserve. Inflation has been around for 4,000 years since human beings first organized governments. First recorded money was about 2,500 years ago, and we’ve had inflation ever since. You’d think after thousands of years of experience, our central bankers would understand inflation. They don’t, and that is a danger. The big flaw of the Federal Reserve today is they believe that prosperity causes inflation—that a vibrant economy causes inflation. When things are going well, they wonder if the economy is overheating, as if the economy was a machine instead of people. But ask yourself, if your income is going up, do you start feeling like you’re overheating at night? Do you start sweating? Oh my God, I’m doing well! Take it away, cool it off! It’s preposterous. They have this thing called the Phillips curve, nothing to do with baseball, named after an economist who posited that there’s a trade-off between inflation and unemployment. You want low unemployment; you have to have higher inflation. If you want low inflation, you have to have higher unemployment. Well, experience shows its absolute nonsense. But the amazing thing is its still holy writ at the Federal Reserve and other central banks around the world.
In terms of what they don’t understand, there are two kinds of inflation: non-monetary inflation and monetary. Non-monetary is prices that may go up because of disruptions to production. Could be a natural disaster, earthquake, flood, or the like. It could be higher taxes. If you raise the sales tax 10%, that increases the cost of products by 10%. Nothing the Fed can do about that. With the tariffs, which will raise prices—I’ll leave it to the economic theologians to discuss how it actually falls out—but it does raise prices and so the Federal Reserve is saying that’s why we can’t cut interest rates, as if the Fed can ameliorate that by depressing the economy. That’s how they think you control inflation. They think it’s their writ to either stimulate or depress the economy, and yet they’re never called out on a mindset that really is worthy of the Soviet Union, not a free people.
Who gave these people the right to control whether we increase unemployment and interest rates. Nobody questions, why do they control interest rates? It’s a form of rent control. In the old days, they used to call it “renting the money.” And so, we all know what rent control can do to a real estate market. But we don’t bat an eye that the Fed is trying to form a rent control in terms of the price of borrowing money, the price of renting money. They can’t do it very well, but it does have a real impact. So, in terms of non-monetary inflation, Powell did it again today. He confuses the two, “Oh, if tariffs go up a lot, that’s going to increase prices, and therefore we can’t cut interest rates because that’ll stimulate the economy, and that’s bad for them.” Someday somebody’s going to do justice to how nonsensical that is.
But what the Fed can control is what you might call monetary inflation, traditional kinds. That is reducing the value of the currency, usually by creating too much of it. There are sometimes other factors as well. But non-monetary, they can control, and yet central bankers here in the U.S. and around the world never mention the stability of the U.S. dollar, the stability of other currencies. Now they don’t understand that money measures value, the way scales measure weight, clocks measure time, rulers measure length. We all know that markets work best when you have fixed weights and measures. You buy a pound of hamburger. You don’t have to worry day-to-day if it floats. You know, is it 18 ounces in a pound one day, 13 the next? You don’t have to worry about it. So, if money measures value, why is that allowed to fluctuate? Imagine if the Federal Reserve was in charge of the time bureau, and they decided to float the clock. 60 minutes an hour one day, 48 the next, you know life would be more difficult. Commerce would be more difficult. And imagine baking a cake. It says bake the batter 30 minutes. Is that nominal minutes? Is that inflation adjusted minutes? Is it Mexican minutes? It’s preposterous. And yet it’s treated with very real seriousness.
So, what should the Fed do? They didn’t do it today. I wrote a piece earlier today recommending things, but they’re in their own world and they know everything, but they pay, amazingly, interest on bank reserves. They pay 4.4% interest on four trillion dollars of bank reserves. So, if they don’t want to look like they’re caving into the evil president and lowering the federal funds rate, which is meaningless right now anyway, they should have cut the interest rate on bank reserves. Cut it in half. Give banks an incentive instead of sitting on the money. Banks last year collected $176 billion of interest on dead money sitting at the Federal Reserve. Put it to work because we do need liquidity in this economy. The fact of the matter is you look at what’s happened since 2008. It was so-called quantitative easing, suppressing the cost of money, like rent control. What happened was, with zero interest rates, everyone who could got into debt. Governments loved it. They borrowed more and it cost less. It’d be like you put $10,000 on a credit card and the monthly payment goes down. What’s not to like? And so, government debt blew up. A lot of private debt, people who could borrow blew up. Smaller businesses were hurt since they don’t have the clout to get this kind of free money. And so, it distorted the credit markets in that way, hurt small businesses here and around the world.
The fact of the matter is now with interest rates going up, thanks to inflation, you have debt crises coming around the world. The New York Times the other day had a piece on poor Kenya. They borrowed a lot. They’re in deep trouble. All their money now is going to be for interest payments. So, you get a slowdown in the world. You’re going to have some dreadful consequences of people who can no longer pay interest on those debts. That’s not good. So, in terms of the indebtedness—not to bore you with numbers—but total global debt today is $300 trillion. The total GDP of the world is $100 trillion, three to one ratio. And the interest rates go up. You don’t have to do much in math to see that’s going to be a real problem.
The best barometer of inflation, something economists hate, is gold, for a variety of reasons. It’s intrinsic value rarely changes. When you see the price change, that’s the value of the currency changing or the feelings about the future of that currency that are changing, not the intrinsic value of gold. It’s like the North Star. So, what the Fed should do is say that henceforth they’re bending the Phillips curve, and they want to have a stable value for the dollar, and they’re going to use as their metric the price of gold. You don’t have to even start by going back to a gold standard, just say you’re going to look at the thing.
Since 2023, the price of gold is going from $1,800 to well over $3,000. That tells you inflation is coming. Just as in 2019 when gold went from around $1,100 or $1,200 to $1,800, $2,000 just before COVID. COVID came, the Fed had to debase the dollar, and we saw the consequences of that. Even though everyone’s saying inflation is down, they’re planting the seeds for another round. The problem is they don’t know what to do about it. The Fed’s inclination would be, “If we print money, that’s going to be even more inflation. But politically, can we depress the economy to fight this inflation?”
The best thing to do, among other things, is say you’re going to look at the gold price. You want stability for the dollar, and behind the scenes, you tell Congress, and I’m going to get to this in a moment, tax cuts, deregulation, basic things. You want production here and around the world. The other thing the Fed should do to show that it’s no longer in its poisonous universe is cease their construction of what you might call Versailles on the Washington Mall. The New York Post revealed the other day that in the last few years, the Fed has been embarking on a program to fancify their headquarters, $2.5 billion. They’re already $600 million over budget. Versailles, this shows how concerned the Fed is about Main Street, not to mention Wall Street. $2.5 billion remodeling. You thought your kitchen was expensive. This is at a time when the Fed is losing money. Now this is a neat trick: a central bank which can print money, create money, is losing money operationally. Because remember they created all those near zero coupon bonds. With inflation going up, interest rates going up, the money they pay to banks and others, I think the last number I saw they lost $76 billion. So, losing money, which comes ultimately out of our pockets in terms of lower economic activity, and they’re building their own new Versailles. One of the things they’re doing is building a special elevator bank that can rush the dignitaries running the Fed quickly to their private dining room without having to make stops along the way. That’s our Fed in action.
The next thing, and this will be a bit more controversial, so if you need a drink take it, that is tariffs. Tariffs are tax, sales tax, excise tax, whatever you want to compare it to, and that raises costs. Now I’ll get to in a moment the reasons they think they’re doing this and what they hope to get out of it but make no mistake it does raise costs. Right now, most of the threatened tariffs have not taken place. They have a 10% basis, and they have China at 145. The President said today he’s not going to lower that tariff. The markets didn’t react because they figure that it’s just a Donald tactic, negotiating tactics. So, the markets didn’t react to it. They just brushed it off. But you have a 10% basis; other countries have few higher rates.
But unfortunately, the way they went about it is that they did not think this thing through and planned it strategically. Remember when the President on Liberation Day, April 2nd, had that chart of all those tariffs countries? The way that was put together wouldn’t pass ECON 101. It was trade deficits, but they left out services. We do run a big surplus in services. They also, in their haste, put in places like the Herring and St. Donald’s Islands off the coast of Australia. You’ve never heard of it. Now those islands now have a 10% tariff. The trouble is that no one lives there. The only occupants are penguins. So, people are wondering, when Secretary Bessent meets with the Chinese in Switzerland, is he going to take time out to negotiate removal of tariffs on penguins and seals on those islands? So, it just goes to show that it wasn’t well planned.
They’re also assuming that China’s not going to make a move on Taiwan in response to deflect attention. We hope that’s the case. But the fact of the matter is, more trade means more prosperity. One of the things to keep in mind is that in the 1930s, starting with our Smoot-Hawley tariff, which blew up the global trading system, 26 nations reacted to these huge tariffs. And that led to other things. We had a global depression. Countries would engage in competitive devaluations. It was a horror. So, after the war was coming to a close, Allied leaders said we want to avoid a repeat of that. And so, the first years systematically, trade barriers were reduced. And as a result, in the last 50 years, the global economies increased sixfold. Trade has grown enormously, even faster than economic growth. And one of the things that made the great growth possible was human ingenuity called “the box.” Containers. A seemingly simple thing took immense effort by a trucker from North Carolina to invent and design the thing. Finally got it through. Ports resisted it. Unions resisted it. But as a result, it reduced shipping costs by almost 95% because you didn’t have back breaking labor to unload it, load it, a lot of pilferage, a lot of breakage, it was a miracle. And it made possible those handhelds that we have. The supply chains would not have been able to happen without the box and the speed at which you could quickly get it and unload it across the oceans.
In terms of trade, the thing they focus on is the trade deficit. They make it the equivalent of a company losing money. It isn’t. All of you here have a trade deficit with this hotel. We’ve had a trade deficit with our printers for over a century. Adam Smith taught us, when you have a transaction, each gets something from the transaction. He talked about the baker. You go to the restaurant, and the beer brewer. You want the food. And so you pay money, you get the food, they get the money and buy what they want with that money. Each gets something from the transaction.
The focus on trade deficits, one they ignore, I mentioned, services often, they ignore capital flows. While we were buying stuff abroad, people were investing literally hundreds of billions of dollars in this country. In the 1800s, that is how we financed our growth, was from the Scottish Trust, the Dutch, and the others. In terms of trade numbers in and of themselves, they mean nothing about a nation’s health. In the 1800s, we had the most phenomenal growth in world history and chronic trade deficits. In the 1930s, during the Great Depression, when we had 25% unemployment, we had trade surpluses. In the 80s and 90s, when Reagan got his reforms in, we had great growth in the 80s and 90s. The more we grew, the more the trade deficit grew because we were buying more, and people were investing more here. They saw great opportunity.
So, keep in mind that not only does it ignore capital, but it also ignores the fact that among developed nations are imports in terms of raw materials. Most of the trade involves companies buying parts, materials, raw materials, going back and forth across the border, and our percentage of GDP from imports is the lowest among developed nations. It’s the largest number because we have the largest economy in the world by far. But if you look at things proportionately, it’s not.
The big excuse they give for the tariffs is, in addition to a misunderstanding of trade, is a more legitimate one, and that is manufacturing. This country in the last 20-25 years has acted as if they are out to destroy manufacturing. Massive regulations in the last 20 some odd years. Fourteen hundred major regulations—things that cost at least $100 million of the economy—were enacted. Were factories suddenly sweatshops or anything? No, it was gratuitous. Some of it was for alternative energy. Some of it was they didn’t like dishwashers. Remember the dishwashers? You could do loads under five hours. And what these regulations did is hurt productivity, hurt advancement, because you are trying to comply with all these crazy rules and regulations. So, we destroyed manufacturing, not destroyed it, but did severe harm to it. Regulations cost large manufacturers about $25,000 per employee versus $5,000 in taxes. Smaller manufacturers pay $50,000 per employee. Remember, 90% of manufacturers are small, and so is China spending $50,000 in regulations per employee? More like zero. So, we put a $25,000, $50,000 tax—most of it unnecessary—on our manufacturers. Any wonder we had problems?
The other thing, of course, was taxes. The first Trump administration took the first whack at that by knocking the corporate rate down to 21%. Hopefully, they will knock it again, which I’ll get to in a moment, to 15%. But there were certain trade abuses, especially from our “friends” in China. They have badly treated US companies. We all know what they’ve done to intellectual property. And hacking our infrastructure here. They admitted it last December when we did something about Taiwan they didn’t like. I hope the Pentagon retaliated behind the scenes by doing something to their infrastructure, but you know, with Joe Biden, it probably didn’t happen. In terms of the abuses we suffer, you focus laser-like. Specific companies, specific industries, you hit ’em. You don’t have to hit ’em with broad tariffs. You have to hit the specific miscreants, specific criminals. If you have to, you go after the government. But you don’t do it broad brush, you do it more laser-like.
So, what’s going to happen? There are a lot of lawsuits now. Does the president have the authority to do these tariffs? The legislation they rely on does not mention the word “tariff.” What you’re going to have happen is what happened, in a way, with Franklin Roosevelt back in 1935. A key cornerstone of the New Deal then was the National Recovery Administration (NRA), the Blue Eagles they called it. It was really the most fascistic state domination thing we ever did. Industries could come together and set prices, set wages, set working conditions. It was really un-American. So, after two years, the Supreme Court ruled unanimously—Conservatives and Liberals alike—said this is unconstitutional and threw it out. Roosevelt was furious. He tried to pack the court, but did not succeed. It saved his administration from their own mistake. I think what you’re going to see here, the courts are going to do the same thing, especially with the 10% tariff the President wants to put on everybody. The court’s going to say, “That sounds permanent, you’ve got to get Congress to approve it.” So, I think you’re going to see a more laser-like, refined approach to tariffs when this thing finally makes it through the court. Which will be a good thing because we need to focus on the big, big thing. And that is taxes.
Given the headwinds and the uncertainty out there, we need a far bigger tax cut than what they’re contemplating now, both the White House and the Congress. Far bigger. They have to renew 2017. They also have to make sure that instant expensing is renewed. It’s been allowed to decline; put it back to where it was in 2017. They need to keep SALT for businesses and put in the tips for social security over time. Nice stuff. But then, they’ve got to do big reductions in not only the corporate tax, the President talks about 15, which is not bad, do it. But personal income tax rates. This will also take care of the problem of SALT for individuals. I hate to bore you with numbers, but I’m going to do it anyway. In the tax code they have a 22% bracket and 24% bracket, which you reach between $100,000-$400,000. Reduce that to 10%, 12%, or 15%. Reduce the 30% brackets—32%, 35%, 37%—reduce them to 30%. And, while they’re at it, and this is strange, I don’t understand why the Republicans resist this, but why not reduce the capital gains tax? It’s so strange, and I’ve talked to some of these people, and they just don’t bite on it. Well, they could raise the highest income tax rate from 37% to 237% and the Democrats would still say it’s a giveaway to the rich. And so you’re going to get the criticism, so do what’s right. The nice thing about the Capital Gains levy, when you reduce it, it instantly raises revenue. So cut it at 12% or 15%, because they don’t punish people for realizing as much for past gains and allows people to redeploy capital to newer opportunities. Every time we reduce Capital Gains tax, government revenues go up instantly. Tet our guys resist it. I don’t understand it.
In terms of looking at things we have some very great opportunities. What’s happening in breakthroughs in health care—remember this country, and this is a real trade problem, is the font of most new medicines and medical devices in the world. Government-run systems couldn’t survive without our effective subsidy. We spend $2.5 to $3 trillion to develop a new drug over10 to 15 years. They get it at a knockdown price because they’ve practiced the Tony Soprano way. They say, if you don’t sell our system at a knockdown price, in effect, we’ll steal the patents. Well, that’s something that should be number one on the trade list. You’re not going to steal our stuff anymore. You’ll be punished if you do, but you’re going to pay your fair share of developing these drugs because it’s good for us and it can be good for you. And the more we develop, the better for everyone.
So in looking out, there are a lot of problems, but fantastic opportunities. By the way, the time’s going to come, among the great things happening, when they’re going to be able to develop artificial, or pigs or whatever, where they can get it, we’re going to be able to replace, hearts, lungs, liver, kidney, like changing a tire. You don’t have to wait, oh, can I get a donor? And imagine how many tens of thousands of lives that will save, and anxiety that will reduce. These things can happen, but you need a free market where people are allowed to do things.
So hopefully, we get the tariff problem resolved. Congress finally wakes up on our side, big tax cut, and they say, “Oh, we need offsets.” No, you don’t. Deficit hawks say, “Oh, we need bigger cuts.” Doge is doing a pretty good job, so stop acting like bird brains. They call themselves hawks, but they act like bird brains. The way you get out of the problems we have is through growth. After World War II, debt was 121% of GDP until the early ’70s when we started to debase the dollar again. It went down to 35%. Growth, a little bit of sensible restraint on spending, makes it work. As for Social Security, Medicare, Medicaid—free markets work. They all assume it’s going to end because they assume 1.8% growth. Our historic average is over 3%. You make these reforms, we get back to 3% to 3.5%. Those problems go 20 years down the road on the social security, which gives you time to put in a new system for younger people, where they own it. Every dollar in their payroll tax, they earn it. The nice thing is that they earn it from their own labor. It is not a gift from politicians. It is their labor that creates it. And that is going to create a different mindset.
So, there are positive ways to deal with it. So, we don’t have to raise the retirement age to 85. We don’t have to shoot up Medicare for everyone above the age of 80. There are very, very positive reforms. So, let’s think positively, get some of these hurdles out of the way. Thank you.