WELCOME TO "KENTUCKY TONIGHT."

I'M RENEE SHAW.

THANK YOU SO MUCH FOR JOINING US.

TONIGHT WE LOOK AT GAS PLACES AND INFLATION.

INFLATION STOOD A 8.3% IN APRIL, ACCORDING TO THE CONSUMER PRICE INDEX.

THAT MEANS THE THINGS YOU BUY COST ABOUT 8% MORE THAN THEY DID JUST A YEAR AGO.

GAS TOPS $4 A GALLON IN KENTUCKY JUST AS PEOPLE PLAN THEIR SUMMER VACATIONS ALL OF US WANT TO KNOW HOW HIGH WILL PRICES GO AND HOW LONG WILL THIS INFLATION LAST?

WHAT'S CAUSING IT AND BACK BE DONE?

WE HAVE A PANEL OF RESPECTED ECONOMISTS TO TALK ABOUT ALL THESE THINGS, BUT FIRST MY CONVERSATION THIS AFTERNOON WITH KENYA STOMP WHO IS EXECUTIVE DIRECTOR OF THE KENTUCKY OFFICE OF ENERGY POLICY.

>> THANK YOU, MS. KENYA STOMP FOR SOME TIME THIS EVENING, WE APPRECIATE.

>> IT THANK YOU, RENEE, FOR INVITING ME TO PARTICIPATE IN THIS DISCUSSION TONIGHT.

>> GAS PRICES, GAS PRICES, GAS PRICES.

ALL OF THE POCKETBOOK ISSUES, IT SEEMS TO BE THAT RISING FUEL COST ISSUES REALLY IS TABLE TALK AROUND THE WATER COOLER, AND THE KITCHEN TABLE MORE SO THAN OTHER STAPLES LIKE MILK, BREAD AND EGGS.

CAN YOU TALK TO US ABOUT WHAT THE AVERAGE PRICE PER GALLON IS IN KENTUCKY?

WE KNOW THAT ACCORDING TO AAA, NATIONAL AT THE AVERAGE IS $4.59 A GL.

HOW DOES THAT COMPARE IN KWE?

>> IN D. IN KENTUCKY?

>> IN KENTUCKY RIGHT NOW WE ARE UNDER THE NATIONAL AVERAGE, A LITTLE OVER $4, AROUND $4.20 THE LAST I LOOKED.

SO FOR KENTUCKIANS WE ARE TRENDING A BIT UNDER THE NATIONAL AVERAGE.

ONE THING TO CONSIDER IS OUR GASOLINE PRICES ARE A FUNCTION OF THE GLOBAL PETROLEUM SUPPLY AND DEMAND.

WE SAW DURING THE PANDEMIC IN THE HEIGHT OF THE PANDEMIC SUBSTANTIAL DECREASE IN DEMAND AND GAS PRICES WERE EXTREMELY LOW AT THAT TIME.

AND THEN AS A RESULT OF COMING OUT OF THE PANDEMIC, WE HAVEN'T HAD PRODUCTION KEEP UP WITH DEMAND, AND THEREFORE WE'RE SEEING THIS HARDWARE WOULD CALL A SHORT-TERM -- WHAT I WOULD CALL A SHORT-TERM RISE IN GAS PRICES.

HERE AT THE ENERGY OFFICE WHEN WE LOOK FORWARD, WE ARE LOOKING THAT GAS PRICES WILL START TO COME DOWN IN 2023, COME BACK TO UNDER $4.00.

ASSUMING THERE ARE NO OTHER MARKET SHOCKS GLOBALLY.

THAT SAID, WE DID HAVE A HUGE IMPACT TO NATURAL GAS AND PETROLEUM MARKETS WITH THE CRISIS IN UKRAINE.

WE HAVE HAD SOME SEASONAL CHALLENGES AND SUPPLY CHAIN CHALLENGES AS WELL, BUT WE ARE EXPECTING PRODUCTION TO COME UP AND MEET SUPPLY.

OR APPLY SUPPLY TO MEET DEMAND.

AND LOOK AT LOWER GAS PRICES COMING INTO 2023.

THAT SAID, RENEE, THE SUMMER HOLIDAYS MEAN MORE GAS TRAVEL AS PEOPLE GET OUT AND START TAKING THEIR TRIPS.

THAT NORMALLY SEASONALLY DOES INCREASE GAS PRICES IN THE SUMMER.

BUT WE'RE SEEING A LOT OF CONVERSATIONS, AS YOU MENTIONED, ABOUT WHAT CAN BE DONE IN TERMS OF GAS TAX HOLIDAYS.

IN TERMS OF WHAT WE CAN DO IN THE SHORT TERM.

BUT THERE IS RELIEF COMING IN THE FUTURE IF THE MARKETS RESPOND, AND HOPEFULLY THIS WILL BE JUST A SHORT-TERM SUPPLY DISRUPTION.

>> LET ME JUST PAUSE RIGHT THERE FOR JUST A MOMENT BECAUSE WHEN YOU SAY SHORT-TERM SUPPLY DISRUPTION, WE HEARD THE SAME FROM THE PRESIDENT SEVERAL MONTHS AGO AND MAYBE PERHAPS SHORT-TERM IN GOVERNMENT TERMS ISN'T THE SAME AS IN ITS CONSUMER.

AND SO WHEN I TALK ABOUT THAT PRICES MAY LEVEL OFF, YOU SAY 2023.

YOU'RE TALKING ABOUT THE REST OF THIS YEAR COULD LOOK LIKE IT DOES NOW OR PERHAPS WORSE?

>> YES.

WHEN WE LOOK AT FORECASTS COMING INTO THE SUMMER, WE DO ANTICIPATE GAS PRICES TO REMAIN HIGH, AND THAT'S JUST WHAT WE'RE FORECASTING GIVEN WHAT'S HAPPENING GLOBALLY.

IT TAKES A WHILE FOR PRODUCTION INCREASES TO MAKE THEIR WAY THROUGH THE SYSTEM, SO FOR INSTANCE, ON NATURAL GAS SIDE, AS PRODUCTION INCREASES, IT CAN TAKE AS MUCH AS SIX TO 12 MONTHS BEFORE WE SEE THOSE, THOSE EFFECTS MAKE ITS WAY TO PRICE THROUGH OUR ENERGY SYSTEMS.

IT'S NOT AN INSTANTANEOUS SWITCH THAT WE TURN ON.

WE HAVE SEEN SOME ACTIONS TAKEN THAT HAVE BEEN MORE SHORT-TERM, BUT I THINK YOUR POINT IS VERY VALID, YOU KNOW, WHEN WE LOOK AT THE ENERGY OFFICE OVER TRENDS, WE'RE OFTEN LOOKING MONTHS, MONTHS AND MONTHS IN ADVANCE, AND FOR MANY CONSUMERS, IT'S AN IMMEDIATE ISSUE THAT WE'RE FACING, NOT JUST WITH GASOLINE PRICES BUT AS WE'RE SEEING IMPACTS ON OUR NATURAL GAS PRICES AS WELL.

>> YOU KNOW, AS YOU ALLUDED TO, THERE ARE SOME STATES THAT HAVE IMPLEMENTED GAS TAX HOLIDAYS, CONNECTICUT AND MANY OTHERS ARE CONSIDERING IT, PERHAPS HAVE ALREADY PASSED.

IS THIS SOMETHING THAT KENTUCKY CAN STILL DO OR BECAUSE OUR GENERAL ASSEMBLY HAS ADJOURNED FOR ITS REGULAR SESSION, IS THERE EXECUTIVE ACTION THAT IS AVAILABLE TO GOVERNOR ANDY BESHEAR IN LOWERING GAS PRICES AT THE PUMP?

>> WELL, I THINK IN TERMS OF POLICY ACTION, THAT'S SOMETHING THAT I THINK WE'RE HERE TODAY ON THIS PANEL DISCUSSION TO TALK ABOUT.

I THINK ALL OPTIONS ARE ON THE TABLE FOR DISCUSSION IN TERMS OF WHAT WE CAN DO TO HELP CONSUMERS DURING THIS PRICE INCREASE THAT WE'RE ALL EXPERIENCING.

I KNOW RIGHT NOW WHAT WE CAN DO IS WORK ON CONSUMPTION.

IF WE CANNOT TAKE SPECIFIC ACTION THAT CAN AFFECT GLOBAL PRICES OF NATURAL GAS AND PETROLEUM PRODUCTS.

>> SO YOU'RE SAYING IF PEOPLE JUST USE LESS, THE PRICE WILL DROP.

IS THAT WHAT YOU'RE SAYING?

>> WHAT I'M SAYING IS WHEN WE LOOK AT COST TO CONSUMERS, IT'S PRICE AND CONSUMPTION TOGETHER.

TODAY WE'RE TALKING ABOUT WHAT WE CAN DO WITH PRICE, BUT WE ALSO HAVE ON THE OTHER SIDE OF THAT EQUATION IS CONSUMPTION.

WHEN WE TALK ABOUT ENERGY PRICES, WE'RE TALKING ABOUT AN ENERGY COST.

WE'RE TALKING ALSO ABOUT WHAT CAN WE DO ON THE CONSUMPTION SIDE.

A LOT OF THAT IS ENERGY EFFICIENCY.

IT'S LOOKING AT BEHAVIOR CHANGES THAT WE CAN MAKE, THAT CAN ALTER CONSUMPTION TO HELP IN THAT EQUATION OF WHEN WE HAVE PRICE AND CONSUMPTION TOGETHER.

THAT'S OUR COST WE'RE EXPENDING ON ENERGY.

IN THIS STATE, YOU KNOW, WE ARE FORTUNATE THAT OVERALL OUR ENERGY PRICES ARE VERY COST COMPETITIVE.

GLOBALLY WE'RE SEEING ENERGY PRICE INCREASES.

NATIONALLY WE'RE SEEING IT AS WELL.

IN KENTUCKY WE HAVE BEEN TRENDING BELOW THOSE AVERAGES AND HAVE BEEN KEEPING OUR COST COMPETITIVENESS.

>> WHAT DO WE KNOW ABOUT THE EFFECTIVENESS OF GAS TAX HOLIDAYS?

DO THEY ACTUALLY HELP MOTORISTS?

>> GAS TAX IS A PERCENTAGE OF WHAT WE PAY AT THE PUMP, SO I DO THINK THAT IT IS AN OPTION THAT EVERYONE IS DISCUSSING, NOT JUST HERE IN KENTUCKY, BECAUSE IT IS A PERCENTAGE OF WHAT WE PAY AT THE PUMP.

AND AGAIN, I THINK ALL OPTIONS ARE ON THE TABLE AS FAR AS A DISCUSSION OF WHAT WE CAN DO IN THE SHORT TERM.

IN TERMS OF NATURAL GAS PRICES, THAT'S ALSO A BIG DRIVER OF ENERGY COSTS IN THE STATE.

WE'RE LOOKING AT WHAT YOU CAN DO ON CONSUMPTION SIDE AS WELL.

WE'RE ALSO LOOKING AT FEDERAL FUNDING THAT'S COMING THAT CAN HELP WITH WEATHERIZATION, ENERGY EFFICIENCY, AND HELP CONSUMERS GET THROUGH THIS PERIOD AS WE LOOK TO WHEN THOSE PRICES WILL COME BACK DOWN.

>> THE COMMONWEALTH CURRENTLY ASSESSES WHAT IS IT, A 26-CENT PER GALLON FUEL TAX?

IS THAT CORRECT?

AND THIS HELPS TO FUND THE ROADS AND BRIDGES ACROSS THE STATE?

>> THAT'S CORRECT.

IN THAT THE FUEL TAX DOES GO TO HELP WITH OUR INFRASTRUCTURE, OUR TRANSPORTATION INFRASTRUCTURE.

>> FOR THOSE CONSUMERS WHO ARE WATCHING TONIGHT WHO WERE EXPECTING TO HEAR A LITTLE BIT BETTER NEWS FROM YOU, IS THERE A SILVER LINING SOMEWHERE WHEN IT COMES TO ESCALATING GAS PRICES?

OTHER THAN WAIT IT OUT UNTIL 2023.

>> I THINK THE SILVER LINING IS KNOWING THAT PRICES WILL COME DOWN.

PRICES ARE EXPECTED TO COME DOWN.

THEY WILL COME DOWN.

THIS IS NOT AS SOMETHING IN THE LONG TERM.

I THINK FOR THOSE CONSUMERS THAT ARE STRUGGLING WITH ENERGY EXPENDITURES, KNOW THAT WE HAVE PROGRAMS IN PLACE THAT CAN HELP WITH UTILITY BILL ASSISTANCE.

UNITED WAY 211, CONNECT.GOV ARE RESOURCES FOR WHEN CONSUMERS ACROSS THE STATE FACE CHALLENGES IN TERMS OF UTILITY BILL PAYMENTS, THAT THERE ARE RESOURCES THERE TO HELP THEM GET THROUGH THIS PERIOD UNTIL WE CAN SEE PRICES RETURN TO A MORE NORMAL LEVEL.

>> KENYA STOMP, THANK YOU SO VERY MUCH FOR BEING WITH US P, THE KENTUCKY OFFICE OF ENERGY POLICY BEEP APPRECIATE YOUR TIME THIS EVENING.

>> THANK YOU SO MUCH, RENEE.

>> SO WE'RE JOINED NOW AT OUR LEXINGTON STUDIO BY KENNETH TROSKE, RICHARD W. AND JANIS H. FIRST ENDOWED CHAIR OF DOMESTICS THEY UNIVERSITY HAVE KENTUCKY AND RESEARCH FELLOW WITH THE INSTITUTE FOR STUDY LABOR IN BONN, JEREMY.

JASON BAIL WEB EXECUTIVE DIRECTOR OF KENTUCKY CENTER FOR ECONOMIC POLICIES.

MICHAEL CLARK, DIRECTOR OF CENTER FOR BUSINESS AND ECONOMIC RESEARCH AND AN ASSOCIATE PROFESSOR OF ECONOMICS AT THE UNIVERSITY OF KENTUCKY'S GATTON COLLEGE OF BUSINESS AND ECONOMICS.

AND CHRIS PHILLIPS, A PROFESSOR OF ECONOMICS AT SOMERSET COMMUNITY COLLEGE.

WE CERTAINLY WANT TO TAKE YOUR QUESTIONS BY TWITTER TONIGHT THE SO GIVE US A WEET TWITTER AT KY SEND AN EMAIL TO KYTONIGHT@KET.

OR USE THE WEB FORM AT KET.ORG/ AND YOU CAN CALL 1-800-494-7605.

WE THANK MS. STUMP FOR HER CONTRIBUTION AT THE BEGINNING OF THE SHOW AND WE THANK THE GENTLEMEN WHO ARE ASSEMBLED TO PARSE ALL OF THAT OUT, WHAT WE HEARD.

LET'S START WITH THE GAS PRICES AND THE OPTIONS THAT ARE AVAILABLE.

I WANT TO GO TO YOU, JASON BAILEY WITH THAT CARRILES STALEY WITH THE GOVERNOR'S OFFICE SPOKESPERSON WANTED TO SHARE THIS WITH US.

THIS STATE GAS TAX IS SET BY STATUTE BOTH IN ITS RATE AND HOW IT'S CALCULATED AND IT WOULD TAKE AN ACT OF THE GENERAL ASSEMBLY TO CHANGE IT, NOTING THIS, GOVERNOR BESHEAR HAS LOOKED A SOLUTIONS TO FREE UP DOLLARS SO KENTUCKIANS CAN AFFORD THE INCREASE IN GAS FROM AN IMMEDIATE PROPERTY TAX ON VEHICLES TO PROPOSING A 1% SALES TAX THAT THE STATE LEGISLATURE FAILED TO ACT ON.

DO YOU WANT TO COMMENT ABOUT THAT?

BECAUSE I KNOW YOU WE'VE TALKED ABOUT THAT ON THE SHOW BEFORE.

>> ON THE SALES TAX FOR GAS TAX?

>> ON THE SALES TAX AND THE GAS TAX.

>> I THINK IT'S HARD.

EVERYBODY WANTS TO DO SOMETHING TO HELP PEOPLE WITH THE SHORT-TERM PAIN.

IT'S HARD TOADS THINGS THAT WILL ACTUALLY BE IMPACTFUL.

THE GAS TAX IS 25 TO 30 CENTS PER GALLON.

BUT GAS LYSIS PRICES ARE VOLATILE.

DURING THE PANDEMIC THEY COLLAPSED.

NOW THEY HAVE SHOT UP A DOLLAR SINCE RUSSIA INVADE UKRAINE.

SO IT'S VERY EASY, AND WE SHOULD TALK, AND ONE ELEMENT OF THIS IS THAT IS IMPORTANT IS THAT THE OIL COMPANIES THAT SET HE IS PRICES HAVE PLAYED A BIG ROLE IN SORT OF THE INCREASE THAT'S HAPPENED.

THEY CAN ADJUST THE PRICES TO CAPTURE SOME OF THE TAX CUTS, SO YOU COULD SUSPEND THE TAX BUT THEY CAN RAISE THE PRICE AND THE CONSUMER DOESN'T NECESSARILY BENEFIT.

SO WHEN YOU'RE TALKING ABOUT A REALLY SMALL TAX LIKE THAT, IT'S NOT NECESSARILY A BENEFIT TO THOSE PEOPLE WHO NEED AT THIS TIME MOST, SO IT'S KIND OF A GIMMICK.

OF A LOT OF STATES HAVE DONE IT, BUT ON ITS IT'S NOT NECESSARILY THE BEST Wii TO DEAL WITH THE PROBLEM.

ONE OF THE THINGS THAT'S BEEN PROPOSED AND THE CONGRESS IS LOOKING AT IS LOOKING AT THE OIL COMPANIES AND THE PROFITS THAT ARE BEING MADE.

IF YOU LOOK AT THE FIRST QUARTER OF YEAR, THE TOP FIVE OIL COMPANIES, BP, EXXON, ET CETERA THEIR PROFITS ARE UP 300%.

A LOT OF THIS IS GOING TO THEIR BOTTOM LINE AND THEY'RE DOING STOCK BUY BASK AND DIVIDENDS, ET CETERA.

THERE'S PROPOSALS, FOR EXAMPLE, TO HAVE THE FTC INVESTIGATE TO SEE IF THERE'S PRICE GOUGING GOING ON.

THIS IS NOT SIMPLY SUPPLY CONSTRAINTS BUT LITERALLY CORPORATIONS HOLDINGS BACK THE THROTTLE TO KEEP THE PRICE HIGH.

I THINK THAT'S A WORTHY CONSIDERATION.

I THINK ANS AND PROFITS TAX IS A WORTHY CONSIDERATION TO LOOK AT IN THIS ENVIRONMENT.

PEOPLE ARE HAVING A HARD TIME WITH THESE PRICES, AND IT'S UNDERSTANDABLE 2 WHEN WE WE LOOK A THINGS.

>> PROFESSOR TROSKE, WHAT DO YOU SAY?

>> ABOUT THE PRICES -- >> ABOUT THE PRICES AND WHETHER OR NOT IT'S PRICE GOUGING GOING ON WITH THE OIL COMPANIES AND WHAT KIND OF PRICE CONTROLS SHOULD BE BUT IN PLACE, IF ANY?

>> I AGREE WITH JASON ON, I DON'T THINK CUTTING THE TAXES, PARTICULARLY THE WAY KENTUCKY ASSESSES THE TAXES AS JUST A FLAT AMOUNT PER GL, 26 CENTS, WHEN GASOLINE PRICES ARE $5.00 SOMETHING OR $4.00 SOMETHING A GALLON, THAT'S NOT GOING TO DO VERY MUCH.

SO IT IS SOMETHING THAT PEOPLE DO TO TRY TO MAKE PEOPLE FEEL A LITTLE BEFORE THE BUT IN REALITY DOESN'T FIX THE PROBLEM VERY MUCH.

PRICE GOUGING, WHO KNOWS WHAT THAT EVEN MEANS.

THEY CHARGE THE PRICE THAT THEY CAN CHARGE IN THE MARKET, AND FOR OIL COMPANIES IT'S USUALLY A PRETTY COMPETITIVE MARKET.

YOU GO AROUND -- YOU LOOK AT GAS STATIONS AND THE PRICES THEY'RE CHARGING, IT'S SEEMS LIKE IT'S A PRETTY COMPETITIVE MARKET.

PROFITS ARE UP NOW.

THEY WERE DOWN BEFORE.

PEOPLE WHO ENGAGE IN FRACKING HAVE NOT INCREASED THE SUPPLY BECAUSE THEY INCREASE SUPPLY A LOT AND GOT BURNED AND THEY WERE TAKING LOSSES, SO THEY HAVE BEEN TRYING TO MAINTAIN THE PRODUCTION AT THE LEVEL THAT THEY WERE DOING BEFORE TO TRY TO RECOUP SOME OF THE LOSSES THAT THEY TOOK PREVIOUSLY.

THERE HAVE BEEN PRICE GOUGING INVESTIGATIONS TIME AND TIME AGAIN, AND STATES HAVE SPENT LOTS AND LOTS OF MONEY ACCUSING PEOPLE OF PRICE GOUGING AND NOT ONE OF THEM HAS EVERRED EXUDE IN A COURT OF LAW.

SO WE HAVE NO EVIDENCE THAT PRICE GOUGING HAS OCCURRED IN THE PAST.

SO THAT SEEMS LIKE SOMETHING THAT'S NOT AS -- THAT'S A LOT OF -- AGAIN, A LOT OF POLITICAL THEATER WITHOUT A LOT OF IMPACT.

SO YOU DO WANT -- YOU WOULD LIKE TO TRY TO FIND SOLUTIONS FOR THE LONG RUN.

THE SOLUTION FOR THE LONG RUN IS TRYING TO GET MORE SUPPLY AND TRYING NOT TO HAVE DISRUPTIONS IN THE MARKET LIKE WE SEE.

YOU ALSO LIKE NOT TO HAVE AN OPEC CARTEL CONTROLLING THE SUPPLY OF OIL.

THAT WOULD BE A GREAT THING.

OPEC'S POWERS WAX AND WANE OVER TIME.

OBVIOUSLY THEY ARE TRYING TO HELP THEMSELVES AS MUCH AS THEY CAN.

THAT'S THE ONE SOURCE, IF YOU COULD GET RID OF BIG BUSINESSES, YOU WOULD GO AFTER OPEC, AND THEN, OF COURSE, YOU WOULD TRY TO PREVENT THINGS LIKE RUSSIA INVADING THE UKRAINE AND DISRUPTING SUPPLIES AS WELL.

SO THOSE ARE THE THINGS THAT YOU WOULD REALLY LIKE TO IF I CAN IN THE LONG RUN.

>> PROFESSOR PHILLIPS, PEOPLE ALWAYS ASK WHY ISN'T THE PRESIDENT DOING MORE, WHY ISN'T HE DOING SOMETHING.

HE RELEASED TENS OF MILLIONS OF RESERVES BUT THAT'S NOT HELPING THE PRICES.

THAT'S NOT MAKING AN IMPACT.

>> MAYBE AT THE MARGIN HELPING, I WOULD SAY, NOT A TREMENDOUS AMOUNT OF HELP, BUT AS WAS MENTIONED, THIS IS A GLOBAL MARKET.

WE HAVE A FREE CAPITALIST MARKET.

THE PRESIDENT DOESN'T HAVE A BUTTON THAT SAYS LOWER GAS, RAISE GAS.

SURE, SOME OF THE POLICIES THAT PRESIDENTS CAN PUT IN PLACE ALONG WITH CONGRESS MAY HAVE LONG-TERM IMPACT, BUT TO IMMEDIATELY IMPACT THE PRICE, IT'S VERY DIFFICULT IF NOT IMPOSSIBLE FOR ANY POLITICIAN OF ANY STRIPE TO MAKE AN IMMEDIATE CHANGE.

>> ALTHOUGH WHEN TIMES ARE GOOD THEY TAKE CREDIT.

>> THEY TAKE CREDIT, ABSOLUTELY.

I WAS ALSO GOING TO MENTION IN 2019 I WENT BACK AND LOOKED AT SOME NUMBERS A FEW MONTHS IN KENTUCKY.

WE WERE AROUND $2.60, $2.70.

JANUARY WE WERE $3.20, $3.25 SO YOU SAW A 50-CENT INCREASE FROM THAT HARDLY SEEM AS BAD.

THE UKRAINE INVASION HAPPENS AND WE'RE UP A DOLLAR.

YEAH, WE'RE SUFFERING.

AUER U. YEAH, WE'RE HURTING.

ABOUT BUT I'M NOT SURE WE CAN PIN ALL OF IT, AND WHERE DOES IT COME FROM?

WE'RE GOING TO TALK ABOUT THIS AS I.

IT GOES.

IT COMES FROM A STRONG COMMITMENT COMES FROM AGGREGATE IN AND EXPLODING.

WE CAN BLAME ALL THE MONEY, ALL THE DOLLARS THAT HAVE BEEN THROAT OUT UNBOTH IN THE FRUMP AND BIDEN ADMINISTRATIONS.

PERHAPS THAT HAS SOMETHING TO DO WITH IT.

BUT OVERALL THE ECONOMY A VERY MIXED BAG.

STRONG GROWTH.

EVERYBODY'S WORKING.

WE'RE BASICALLY AT FULL EMPLOYMENT.

AND, YES, WE HAVE VERY HIGH INFLATION.

BUT WHAT'S THE ALTERNATIVE?

A DEPRESSION?

A RECESSION?

>> ARE WE HEADING THERE, THOUGH, DR. MIKE CLARK?

>> CERTAINLY THE PROBABILITY SEEMS TO BE GOING P. THERE'S A BIT OF A LOT MORE DISCUSSION WITH PRICES GOING UP GENERALLY, WHAT IS THE FED GOING TO HAVE TO DO TO BRING THOSE PRICES BACK IN LINE.

>> HAVE THEY ACTED TOO LATE?

SHOULD THEY HAVE ACTED SOONER?

>> THAT'S A QUESTION.

CERTAINLY, AS THEY'VE BEEN MONITORING THE SITUATION, YOU KNOW, WE'VE SEEN HIGH RATES OF INFLATION HERE NOW FOR THE PAST YEAR.

THE INITIAL FEELING.

AND I THINK THERE WAS GENERAL AGREEMENT, CERTAINLY NOT COMPLETE AGREEMENT BUT GENERAL AGREEMENT THAT A LOT OF THE PRICE INCREASES, I THINK THE WORD AT THE TIME WAS TRANSITORY AND SOUNDS LIKE WE'RE NO USING THAT WORD ANY MORE.

>> STAGFLATION.

WHAT IS STAGFLATION?

>> I THINK THE CONCERN WITH STAGFLATION HAS TO DO IF WE SEE THESE PRICES CONTINUE, THE FED'S RESPONSE IS GOING TO BE TO INCREASE THE INTEREST RATES TO COOL OFF THE ECONOMY.

THE IDEA IF THEY RAISE INRATES, THE DEMAND WILL START TO DECLINE A BIT, PEOPLE WILL START SAVING MONEY, AND THEN AS THAT DECLINE IN DEMAND COMES, THAT TENDS TO REIN IN PRICE.

THE CONCERN IS CAN THEY MAKE THOSE ADJUSTMENTS JUST RIGHT OR DO THEY -- DID THEY DAMPEN DEMAND TOO MUCH SO THAT WE ACTUALLY SEE BOTH HIGH PRICES AND WE ACTUALLY START TO SEE EMPLOYMENT START TO DECLINE.

SO THAT WOULD BE THE CONCERN.

>> WHAT IS TRANSITORY WHEN IT COMES TO -- >> WELL, I THINK TRANSITORY WAS A WORD THAT WAS GETTING USED A LOT OF IN TERMS OF DISCUSSING INFLATION LAST SUMMER.

A LOT OF THE INFLATION WAS BELIEVED TO BE TRANSITORY IN THE SENSE THAT WE HAVE THESE -- WE HAD HIGH DEMAND AND WE HAD A LOT OF SUPPLY CHAIN ISSUES.

AND SO THE FEELING WAS THAT OVER TIME THESE SUPPLY CHAIN ISSUES WOULD STARTLE TO RESOLVE.

LABOR FORCE ISSUES WOULD START TO RESOLVE AS THE VACCINE WAS BEING ROLLED OUT, SCHOOLS WERE BEING REOPENED.

WE'D START TO SEE MORE PEOPLE COME BACK INTO THE LABOR FORCE.

SO THE FEELING WAS, WELL, IF THESE ISSUES ARE GOING TO BE START TO RESOLVE OVER THE NEXT FEW MONTHS, THEN YOU DON'T WANT TO RAISE INTEREST RATES AND COOL DOWN THE ECONOMY WHEN SUPPLY IS GOING TO START TO BE PICKING UP.

SO THAT TURNED OUTED NOT TO BE THE CASE.

SUPPLY CHAIN ISSUES HAVE PERSISTED, ALTHOUGH OUR LABOR FORCE PARTICIPATION HAS ACTUALLY IMPROVED REALLY QUITE SUBSTANTIALLY.

IT'S NOTE QUITE BACK TO WHERE WE WERE.

SO WE STILL SEEM TO HAVE HIGH DEMAND.

PEOPLE HAVE A LOT OF MONEY TO SPEND.

BUT WE REDUCED SUPPLY, AND SO AS A RESULT OF THAT WE HAVE INFLATIONARY PRESSURES WE'VE BEEN HEARING ABOUT.

SO IT HASN'T BEEN AS TRANSITORY AS WHAT WE THOUGHT LAST YEAR.

>> IF I COULD JUST SAY LOOK A THIS NUMBER.

WHEN COVID HIT, OF COURSE, EVERYTHING SHUT DOWN.

THE VACCINES CAME ONLINE ABOUT MARCH, APRIL LAST YEAR.

LOOK AT THE NUMBERS FOR INFLATION.

THAT'S EXACTLY WHEN THEY STARTED TO GO UP, IN MARCH OR APRIL OF LAST YEAR IS WHEN WE STARTED TO SEE THESE 4 OR 5 PERCENT.

SO AS DEMAND EXPLODED, WE TALKED ABOUT THE BOTTLENECKS, SUPPLY BOTTLENECKS CONTINUE AND THAT'S A GLOBAL PHENOMENA.

NOTHING THAT'S GOING ON HERE.

YOU'RE GOING TO SEE INFLATION REALLY CREEP UP.

ONE OTHER THING, WE'VE NEVER HAD A CASE WHERE INFLATION WAS ABOVE 4% HISTORICALLY AND BE UNEMPLOYMENT WAS BELOW 4% IN WHICH A RECESSION DID NOT FOLLOW WITHIN THE NEXT TWO YEARS.

SO THE PROBABILITIES OBVIOUSLY ARE VERY HIGH.

THE QUESTION IS THE SOFT LANDING.

CAN THE FED SO-CALLED SKIRT, I THINK, PROBABLY MOST OF US WOULD THINK GIVEN THEIR TRACK RECORD THE LAST TWO YEARS, MAYBE NOT.

>> SO IN SYNC WITH THE PRESIDENTIAL ELECTION.

>> POTENTIALLY.

>> POTENTIALLY.

>> THE FED IS BRINGING SORT OF A SLEDGEHAMMER TO THE SITUATION AND IT'S KIND OF EASY TO BREAK THINGS WHEN YOU DO THAT, AND THE STRATEGY WHEN THEY RAISE INTEREST RATES IS LITERALLY THAT PEOPLE ARE GOING TO LOSE THEIR JOBS, THE ECONOMY IS GOING TO SLOW DOWN, THERE'S GOING TO BE SOME PAIN BUT IT'S GOING TO BE WORTH IT BECAUSE OF THE INFLATION IS TEMPERED.

YEAH, WITH TRACK RECORD IS NOT GOOD.

PART OF THE ISSUE AROUND THIS PARTICULAR BOUT OF INFLATION IS THAT IT'S UNIQUE IF YOU LOOK HISTORICALLY.

THE PANDEMIC WE'LL SCRAMBLED THE ENTIRE ECONOMY.

IT SHIFTED -- FIRST OF ALL, IT COLLAPSED.

EVERYTHING TWENTY TIE HALT.

BUT THEN WHEN IT STARTED TO COME BACK, PEOPLE COMPLETELY CHANGED THEY'RE BUYING PATTERNS.

THEY BOUGHT FEWER SERVICES AND MORE GOODS.

THEY CANCELED THEIR GYM MEMBERSHIP AND BOUGHT AN EXERCISE BIKE.

THEY DIDN'T EAT OUT AS MUCH AND BOUGHT COOKWARE, ET CETERA, AND IT INCREASED THE DEMAND FOR GOODS SUBSTANTIALLY, AND, YOU KNOW, ATTAINMENT THE SUPPLIERS WERE HIT WITH COVID IN FACTORIES.

SHED SHUTDOWNS.

THEY HAD PEOPLE WHO COULDN'T WASHING WORK BECAUSE THEY WERE CARING FOR CHILDREN.

WORKERS WERE ILL AND DIED, ET CETERA FROM COVID.

AND THEN YOU HAD AT THE SAME TIME WE HAVE BUILT OVER THE LAST FEW DECADES THIS ESSENTIALLY GLOBAL SUPPLY SYSTEM THAT JUTS-IN-TIME DELIVERY SYSTEM WHERE MORE AND MORE PRODUCTION WAS IN OTHER COUNTRIES BUT IT TURNED OUT TO BE VERY VA TRIAL WITH THE CRISIS HIT SO WE SAW BACKUPS AT THE PORTS.

WE SAW -- DEREGULATED TRUCKING AND NOW, WE CAN'T FIND PEOPLE WHO WANT TO BE TRUCK DRIVERS BECAUSE THE WAGE IS SO LOW.

ALL OF THESE TERMS WE SET UP IN TERMS OF ECONOMIC TURNED OUT TO BE NOT HELPFUL IN A CRISIS AND IT'S CREATED THIS SYSTEM WHERE EVERYTHING -- WE'VE CONTINUED TO HAVE THESE SUPPLY CONSTRAINTS.

TRANSITORY, IT'S NOT GOING TO BE TRANSITORY, BUT THE PROJECTIONS ARE STILL TO THAT INFLATION WILL COOL MOST PEOPLE'S, AND PARTIALLY MAYBE FROM THE FEDS' ACTIONS TO SOME DEGREE, BUT WE'RE SEEING THE USED CAR -- THE CAR MARKET COME BACK.

USED CAR PRICES ARE GOING DOWN.

WE HAVE SEEN TELEVISION PRICES GOING DOWN.

THINGS ARE TAKING TIME, BUT THEY'RE STARTING TO BE PUT BACK TOGETHER, AND THE HOPE OR THE CONCERN IS THAT IF THE FED PUSHES TOO HARD, WE'RE GOING TO CAUSE A LOT OF HURT WHEN WE HAVEN'T FULLY, ALTHOUGH EMPLOYMENT IS GROWING DRAMATICALLY, WE'RE NO FULLY BACK TO WHERE WE WERE.

>> DOLLARS WHAT IT MEAN, PROFFERS TROSKE WHEN WE TALK ABOUT WAGES AND WAGE GROWTH AND FAD FOOSE RESTAURANTS ARE STARTING A $14, $15 AN HOUR, HOW DOES THAT FACTOR INTO THE INFLATIONARY BATTLE?

>> OVAL IF YOU'RE PAYING e WOULD MORE MONEY THAT CONTRIBUTES TO INFLATION.

I THINK IT IS IMPORTANT TO RECOGNIZE, AS MIKE MENTIONED, WE ARE -- WE SEE LABOR FORCE PARTICIPATION RATES CLOSE TO WHAT WE SAW BEFORE SO LOTS OF PEOPLE HAVE COME BACK.

AND -- BUT THEY'RE GETTING BETTER JOBS.

I MEAN, TO BE PERFECTLY HONEST.

THERE ARE LOTS OF PEOPLE THAT HAVE MOVED THEIR WAY UP THE WAGE SCALE AND ARE WORKING IN BETTER PLACES AND FOUND BETTER JOBS AND THEY GOT LAID OFF FROM THE RESTAURANT INDUSTRY WHEN COVID STARTS, THEY FOUND A BETTER JOB.

AND NOW RESTAURANTS ARE STRUGGLING TO ADAPT.

THAT'S ONE PART OF THE MARKETS AND THAT'S AN IMPORTANT COMPONENT.

I THINK IT IS IMPORTANT TO RECOGNIZE AS WELL IF YOU LOOK AT PAST INFLATIONARY PERIODS IN THIS '70s, '80, '90S AND YOU LOOK AT THE BEHAVIOR OF THE FED BASED ON THE BEHAVIOR OF THE FED IN THE PAST WE SHOULD HAVE INTEREST RATES AT 11% RIGHT NOW.

THAT'S WHAT THE FED SHOULD BE DOING IF WITH THAT THEY THINK WAS GOING TO WAS SOMETHING THAT WAS OCCURRING BEFORE.

THIS CURRENT FED HAS BEEN VERY SLOW TO ERECT, AND VERY DELIBERATE RACQUET AND IF YOU LOOK AT THEIR PROJECTIONS, THEY'RE PROJECTING THIS IS GOING TO PASS.

THEY THINK PRICES GOING TO COME DOWN NATURALLY AS THE SUPPLY CHAIN OPENS UP FURTHER, AND SO THEY ARE UNWILLING -- THEY'VE ALSO MADE COMMITMENTS IN THE PAST THAT THEY WEREN'T GOING TO JACK UP INTEREST RATES.

AND THEY SEEM TO BE WILLING TO LIVE WITH THOSE COMMITMENTS THAT THEY MADE EVEN THOUGH THERE ARE A LOT OF PEOPLE WHO THINK THAT THEY SHOULD BE RAISING INTEREST RATES.

>> DO YOU BELIEVE THAT?

>> I.

THEY WILL BE RIGHT, IF NOTHING ELSE BAD HAPPENS, AND ONE OF US HAD TO OTHER THINGS THAT'S NOT AS BAD IF CONGRESS DOESN'T AGAIN START THROW MONEY, WRITING PEOPLE CHECKS AND SENDING IT OUTER THE DOOR BECAUSE IF YOU LOOK APPEAL'S BUDGETS SHEETS, THEIR SAVINGS RATES, THE TYPICAL PERSON IN THE ECONOMY IS DOING VERY WELL, AND THAT'S PART OF WHAT HAPPENED IS WE SENT A LOT OF MONEY OUT THE DOOR.

WE WANTED TO HELP SOME PEOPLE.

WE WROTE A LOT OF CHECKS.

WE HELPED A LOT OF PEOPLE WHO NEEDED HELP.

WE HELPED A LOT OF PEOPLE WHO PROBABLY DIDN'T NEED HELP.

SO NOW PEOPLE HAVE LOTS OF MONEY TO SPEND, AND WE HAVE BUDGET DEFICITS.

OUR DEFICIT IS 125% OF OUR GDP.

WE'VE NEVER -- WE WERE ABOVE 100% WHEN WE STARTED THIS CENTURY.

SO IF CONGRESS RESISTS THE URGE TO SPEND MORE MONEY, AND THAT'S PART OF IT.

IES THAT SUPPLY SHOCK.

ALL OF A SUDDEN PEOPLE GOT A LOT OF MONEY AND THEY WANTED TO SPEND IT AND THEY HAD A PERIOD OF TIME WHERE THEY COULDN'T SPEND IT.

NOW THEY HAVE ALL THESE CHECKS.

BUT IT IN THE BANK A WHILE.

NOW THEY WANT TO BUY A HOUSE, A CAR, AND WE WEREN'T ABLE TO SUPPLY THOSE GOODS THAT THEY WANTED AND SO PRICES HAD TO GO UP.

IF THE FED IS BANK.

>>> ON THAT NOT HAPPENING AGAIN, AND IF IT DOESN'T HAPPEN AGAIN, MAYBE THEY WILL BE OKAY AND THEY DON'T NEED TO RAISE INTEREST RATES BUT IF WE RUN INTO ANOTHER CHRISTS AND THEY THINK THE BEST WAY TO TO GET IDENTITY THAT CRISIS IS START WRITING CHECKS AGAIN, WE'RE GOING SEE INFLATION REALLY GET IDENTITY HAND.

>> ALL OF A SUDDEN WE SEE THE SAME LEVEL OF INFLATION, FOR EXAMPLE, IN EUROPE WHICH DIDN'T PROVIDE NEARLY THE PANDEMIC AID THE THAT UNITED STATES PROVIDED, SO THIS IS REALLY A SUPPLY SIDE INFLATION PROBLEM.

THE PANDEMIC AGAIN HAS SCRAMBLE BOTH WHAT PEOPLE SPEND MONEY ON AND WHAT PEOPLE ARE ABLE TO PRODUCE, AND IT HAS GLOBALLY CREATED THE INFLATION.

WHAT WE DID WHEN WE PROVIDED ALL THAT PANDEMIC AID, ALL THAT CHECKS IS WE KEPT IT FROM TURNING INTO A DEPRESSION, AND KEPT FROM HAVING DEFLATION WHICH IS MUCH WORSE THAN INFLATION.

AND WE ACTUALLY REDUCED POVERTY BY ABOUT 22% IN THIS COUNTRY OVER THE LAST YEAR AND HAVE HAD THE -- I MENTIONED IT A COUPLE TIMES -- THE FASTEST JOB RECOVERY WIEDER OF ANY RECESSION IN RECENT MEMORY.

IN A COUPLE MONTHS WE'LL HAVE AS MANY JOBS THAT WE HAD PRE-COVID IN KENTUCKY.

SO IT WAS AN ENORMOUS SUCCESS, BUT WE ARE STILL DEALING WITH THOSE SUPPLY SIDE ISSUES.

THOSE PRODUCTION ISSUES ARE STILL THERE BECAUSE AGAIN THEY WERE -- THEY WERE CREATED BY A PANDEMIC ON TOP OF A GLOBAL SYSTEM THAT WAS INCREDIBLY FRAGILE, NOT RESILIENT.

IT HAD BEEN DEREGULATED AND PRIVATIZED TO SUCH A DEGREE THAT IT JUST COULDN'T WITHSTAND A PANDEMIC, AND THAT'S A SIGNIFICANT LESSON MOVING FORWARD.

>> I THINK DEMAND MAY HAVE GROWN A LITTLE BIT FASTER THAN YOU'RE GIVING IT CREDIT.

WE HAD NEARLY 7% GROWTH LAST YEAR.

AGAIN, WE TALK ABOUT THIGHEST INFLATION IN 40 YEARS.

THE FASTEST ECONOMIC GROWTH THAT WE EVER HAD IN 40 YEARS.

THE FASTEST JOB CREATION THAT WE'VE HAD HAD IN 40 YEARS.

AGAIN, PRESIDENT TRUMP EFFECTIVELY SPENT IN 20203W.

BE $3 TRILLION.

BIDEN COMES IN AND SPENDS ANOTHER 3 TRILLIONED ON TOP OF THAT WITH HIS COVID BILL AND THE INFRASTRUCTURE BILL AND THEY WANTED TO SPENT ANOTHER 2 TRILLION OR SO IN THE BUILD BACK BETTER BILL THAT WA BLOCKED BY SENATOR MANCHIN PRINCIPALLY IN THE SENATE AND THAT DIDN'T GO THROUGH.

AGAIN, WE CAN PARSE THESE THINGS BUT IT'S DEMAND EXPLODING, SUPPLY STILL CONTRACTING THAT'S CAUSING A LOT OF THESE PROBLEMS.

BUT AS JASON MENTIONED, WHEN WE CAN HAVE THE TREAT RAH AGREE RECESS IN 2009 WE HAD ESSENTIALLY ZERO PRICES IN 2015.

SOME HAVE ARGUED THAT THERE I WAS PENT-UP LEVEL OF INFLATION THAT MAYBE SOME BUSINESSES ARE TAKING ADVANTAGE OF NOW.

BUT AS WAS MENTIONED, HERE'S A PRICE.

WHAT'S A PRICE REPRESENT?

IT REPRESENTS THE BESTIAL ALLOCATION OF RESOURCES FOR CONSUMERS THAT THE MARKET CAN SET.

SO IT'S VERY DIFFICULT TO KNOW ARE THEY GOUGING, IS IT TOO HIGH?

I DON'T KNOW WHAT TOO HIGH OR TOO LOW MEANS.

THAT'S THE PRICE.

AND THE GOOD THING ABOUT $4.19 GAS IS THAT YOU CAN BUY FORECAST AND YOU HAVE A CHOICE TO GO AND DO SOMETHING ELSE IF YOU DON'T AFFORD $4.19 GAS.

YOU CAN RIDE A BIKE OR WALK.

PEOPLE DON'T WANT TO HEAR THAT.

>> LET'S NOT FORGET IF THE SUPPLY CHAIN ISSUES.

WE WERE HAVING SUPPLY CHAIN ISSUES BEFORE COVID HIT WITH THE TRUMP TARIFFS.

AND THAT WAS CLEARLY HAVING AN IMPACT ON A A LOT OF PRODUCTS.

YOU LOOK AT THE BABY FORMULA ISSUE RIGHT NOW.

WHY AREN'T WE GETTING BABY FORMULA FROM CANADA?

THEY MIKE PERFECTLY SAFE BABY FORMULA WITH ALL THESE GREAT LABELS THAT EVERYBODY CAN READ.

WE PUT A 17% TARIFF ON BABY FORMULA.

WHY WOULD WE WANT TO DO THAT?

THE SUPPLY CHAIN i WE'RE BUILDING AND THEN THIS INCREDIBLE PANDEMIC HIT, SOMETHING THAT NO ONE WOULD EVER EXPECT.

IT JUST THREW SHOCK WAVES THROUGH THE ENTIRE SYSTEM.

AND WE'RE STILL TRYING TO FIGURE OUT WHERE PEOPLE -- BUSINESSES AREIG STILL TRYING TO FIGURE OUT WHAT WORK'S GOING TO LOOK LIKE IN THE FUTURE.

HOW MANY PEOPLE CAN YOU STICK IN A FACTORY?

DO YOU HAVE HAVE TO HAVE PLEXIGLAS SHIELD BETWEEN ALL THE PEOPLE ON AN ASSEMBLY LINE?

HOW DO WE DO BUSINESS?

WHO IS GOING TO COME BACK?

WHO IS NOT GOING TO COME BACK?

HOW DO WE COMMUNICATE WITH EACH OTHER?

SO WE'RE STILL STRUGGLING TO FIGURE OUT HOW TO SUPPLY GOODS IN THIS NEW WORLD THAT WE'VE ENTERED INTO.

AND SO -- AND AGAIN WITH A LOT OF RESOURCES THROWN ON THE TOP OF IT, AND I AGREE THAT WE IN THE PANDEMIC WE DIDN'T KNOW WHAT WAS GOING TO HAPPEN AND WE DO NOT HAVE A DEPRESSION AND THAT'S A GREAT THING AND A GOOD THING TO AVOID BUT, BOY, WE'RE PAYING THE PRICE FOR THAT NOW TOO, THOUGH, YOU IF YOU'RE GOING TO BENEFIT YOU HAVE TO PAY THE COST, AND RIGHT NOW WE'RE PAYING THAT COST OF PUSHING ALL THAT MONEY OUT THE DOOR AND SOME OF IT GOING TO A LOT OF DIFFERENT PEOPLE.

>> POLICE OFFICERS CLARK WEEKS, THIS COMMENT FROM A LOUISVILLE VIEWER.

THEY SAY, "THE MINUTE BIDEN WENT INTO OFFICE, HE PUT MEASURES INTO PLACE TO CAUSE THIS PROBLEM.

A DAY OR SO AGO HE SAID WE WERE TRANSITIONING AWAY FROM GAS TO ELECTRIC CARS WHETHER WE LIKE IT OR NOT.

OPEN THE PIPELINES, GIVE OIL COMPANIES PERMITS, NOT JUST LEASES TO DRILL, DON'T BUY GAS FROM VENEZUELA, GET OUT OF THE WAY."

>> I'M NOTE SURE I AGREE WITH THAT.

CERTAINLY THERE HAVE BEEN SOME POLICIES WHERE THERE HAVE BEEN SOME DIFFICULT TRADEOFFS BEING MADE, RIGHT?

SO NI A LOT OF THE POLICIES THAT MAYBE HAVE BEEN AIMED AT BROADENING OR VARYING SOME OF OUR ENERGY SOURCES, CERTAINLY GIVEN THE TIMING, THOSE MAY HAVE CONTRIBUTED TO THE HIRE PRICES TO THE EXTENT THAT WE ARE MAYBE DOING THINGS THAT MIGHT IMPEDE THE SUPPLY OF GAS OR OIL OR FOSSIL FUELS.

BUT THERE ARE SOME REASONS FOR DOING THAT.

THERE ARE SOME OTHER SOCIAL BENEFITS ASSOCIATED WITH USING RENEWABLE FUELS.

AND REDUCING CARBON EMISSIONS AND SO FORTH.

SO I THINK WE'VE GOT TO KIND OF CONSIDER NOT ONLY KIND OF THE SITUATION WE'RE IN NOW BUT ALSO THE SITUATION THAT MOTIVATED THOSE AND THINK ABOUT WHAT ARE THE BENEFITS AND THE COST OF ALL THESE DIFFERENT POLICIES.

SO IN THAT CASE WHEN WE START THINKING ABOUT THE POLICIES, THAT RIGHT NOW.

THAT MIGHT SWITCH FROM US FOSSIL FUELS TO OTHER KIND OF SOURCES WE'VE GOT TO THINK WHAT COST WILL THOSE HAVE IN TERMS OF WILL THEY BE MORE EXPENSIVE.

THAT CERTAINLY IS SOMETHING WE'RE GOING TO CARE ABOUT.

WHAT IMPACT MIGHT THIS HAVE IN TERMS OF EMISSION AND AIR POLLUTION IS SO FORTH.

SO THAT'S SOMETHING WE NEED TO BE CONCERNED ABOUT AS WELL.

CERTAINLY THE CIRCUMSTANCES AFTER THAT CHANGED WITH THE WAR IN UKRAINE AND BE THE DISRUPTION IN THE SUPPLY OF OIL AND GAS, SO CERTAINLY THE TIMING OF THIS HAS KIND OF CONTRIBUTED TO THE SITUATION THAT WE'RE IN NOW.

BUT WE ALSO HAVE TO KIND OF THINK ABOUT WHAT ARE THOSE LONG-TERM BENEFITS AND COSTS ASSOCIATED WITH POLICIES AS WELL.

>> I WAS GOING TO SAY THE PIPELINE THAT'S REFERRED TO THERE, LESS THAN 10% WAS COMPLETED.

IT WASN'T SCHEDULED TO OPEN FOR THE NEXT TWO OR THREE YEARS.

THERE'S ALREADY A KEYSTOE PIPELINE THAT NEVER WAS SHUT DOWN THAT CONTINUES TO PUMP.

WE KNOW FROM THE TAR SANDS IN WESTERN CANADA IT COMES ACROSS CANADA AND COMES SOUTH TO THE CENTRAL U.S. ALL THAT THE COMPEL PIPELINE WAS GOING TO DO WAS EVENTUALLY GOING TO BE A SHORTCUT.

IT WAS GOING TO BE A SHORTCUT WHERE IT HAD TO GO LIKE A TRIANGLE.

IT WAS THE HYPE ON THE NEWS THEY WERE GOING TO BUILD UP THEY WERE GOING TO ADD EXTRA CAPACITY DOWN TO ROAD.

I THINK LONG-TERM POTENTIALLY THERE COULD BE SOME GAIN IN TERMS OF OIL PRODUCTION BUT SHORT-TERM THERE WAS NOTHING AT YOU WILL THAT WOULD IMPACT ANYTHING GOING ON TODAY, AT LEAST FOR THAT PARTICULAR PIPELINE.

IN TERMS OF THE LEASES ON PUBLIC LANDS, AGAIN, PRESIDENT BIDEN DID STOP THAT, LEASES ISSUED ON PUBLIC LANDS.

BUT AGAIN, YOU PROBABLY HEARD THIS NUMBER 9,000 LEASES ON THE THERE THAT ARE NOT BEING TAPPED.

AGAIN, IT TAKES A LOT OF MONEY AND RESOURCES TO OPEN UP A NEW WELL.

AND THEN I THINK A MONTH AGO, MAYBE MID-APRIL I THINK PUBLIC PRACTITIONER, PRESIDENT BIDEN REVERSED HIMSELF.

AND HE IS NOW GOING TO REISSUE ON PUB LANDS LEASES.

I THINK WITHIN THE INCREASE ROYALTIY TAX OR SOMETHING TO THAT EFFECT.

SO -- YOU KNOW.

>> I WOULD JUST -- WE'RE PAYING A LOT OF ATTENTION TO THE FED AND ITS ROLE AND THE FED PLAYS AN IMPORTANT ROLE IN THIS, BUT SO DOES CONGRESS, AND WE SORT OF MISSED THE FACT THAT CONGRESS PLAYS AN NUMERICAL NUMERICAL ROLE IN CONTROLLING THE BUDGET AND HOW MUCH WE SPEND, CONGRESS ALONG WITH THE 62 BRANCH.

WHEN WE ENTERED INTO THE FINANCIAL CRISIS, WE FUNDAMENTALLY CHANGED THE FINANCES OF OUR GOVERNMENT.

THE FED'S BALANCE SHEET TWENTY FROM $800 BILLION TO $4 TRILLION.

CONGRESS THREW A LOT OF MONEY AT THE PROBLEM.

UNDER THE OBAMA ADMINISTRATION, WE SAW OUR BUDGET DEFICITS DEBT START TO COME DOWN A LITTLE BIT, AND THEN WE HAD THE TRUMP TAX CUT THAT -- THE TAX REFORM, WHICH WAS A GOOD THING, AND THE TAX CUT IN THE MIDDLE OF AN EXPANSIONARY PERIOD WHICH WAS NOT A WELL-DESIGNED TAX COWART A WELL-TIMED TAX CUT.

AND THEN WE ENTER A PANDEMIC WHERE OUR FISCAL HOUSE IS OUT OF ORDER AND THEN WE JUST FEEL LIKE WE HAVE TO POSH MORE MONEY OUT THE DOOR TO FRY TO AVOID GOING INTO A DEPRESSION.

AT SOME POINT YOU'VE GOT TO LOOK AT CONGRESS AND SAY YOU'VE GOT TO GET THIS FISCAL HOUSE IN ORDER BECAUSE THE NEXT TIME WE HAVE A CRISIS WHERE WE'RE GOING TO WANT TO SPEND OUR WAY OUT OF IT, WE HAVE TO BE AT A PLACE WHERE WE CAN AFFORD TO DO THAT, AND WE CAN'T DO IT RIGHT NOW.

>> JASON BAILEY, YOU WOULD MAKE A CASE FOR FASTING THE BUILD BACK BETTER PLAN OF THE PRESIDENT.

>> THERE WERE 17 NOBEL PRIZE WINNERS WHO SAID THE BUILD BACK BETTER WOULD NOT BE INFLATION PARTNERSHIP IT WAS A TEN-YEAR SPENDING PLAN, NOT DUMPING A BUNCH 911 INTO THE FIRST YEAR.

IT WOULD ACTUALLY HELP PEOPLE IN THIS SITUATION DEAL WITH SOME OF THE COSTS THEY'RE FACING.

CHILD CARE, WHICH ALSO HAS DIRECT LINK TO LABOR FORCE PARTICIPATION WE GO BEING ONE EXAMPLE BUT HOUSING, PRESCRIPTION DRUGS AND OTHER THINGS THAT ARE PEOPLE ARE REALLY STRUGGLING WITH WOULD HAVE BEEN A HUGE HELP TO CONTINUE THAT MONTHLY CHILDE TAX CREDIT WOULD HAVE BEEN A BIG HELP.

I THINK IT'S REALLY IMPORTANT TO TAKE APART WHY THE PRICES THAT ARE GOING UP, THE INFLATION THAT WE'RE SEEING.

THE THE MAJORITY OF IT IS GOING TO CORPORATE PROFITS.

IT'S NOT GOING TO THE INPUTS THAT BUSINESSES BUY OR TO THE WAGES OF THE WORKERS.

WAGE GROWTH HAS ACTUALLY MODERATED IN THE LAST MONTH AND IS NOT -- IT'S NOT A LEVEL THAT YOU WOULD, SO WITH OVERALL HIGH INFLATION IN THE ECONOMY.

THIS IS A UNIQUE SITUATION.

WE HAVEN'T HAD HIGH INFLATION SINCE THE 1970S.

WE'RE IN A MUCH DIFFERENT ECONOMY NOW.

FOR ONE THING, THERE ARE A LOT MORE MONOPOLIES AND GO ON LOPLIES IN THE 1970s ACROSS THE ABILITY TO SET PLACES IS MUC HIGHER THAN IT WAS THEN.

WE QUIT ENFORCING ANTITRUST IN THIS COUNTRY FOR DECADES.

AND SO THERE IS SOME GOOD EVIDENCE THAT AND YOU CAN YOU CAN SEE IT ON PEOPLE WHO TRACK THE SHAREHOLDER CALLS OF MAJOR CORPORATIONS WHERE THEY SAY IT'S A GREAT ENVIRONMENT FOURS WITH INFLATION GOING UP.

NOT THAT THEY CAUSED THE INFLAYING IN THE FIRST PLACE.

IT WAS CAUSED BY THE PANDEMIC AND THE SUPPLY CHAIN BOTTLENECKS BUT THE THEY'RE BEING OPPORTUNISTIC BY RAISING PRICES.

SO IF THAT'S THE SITUATION THAT YOU'RE IN, IF IT'S DRIVEN LARGELY BY CORPORATE PROFITS, YOU'VE GOT TO LOOK AT THAT AND NOT ABOUT LOWERING THE STANDARD OF LIVING OF EVERYDAY PEOPLE AND CUTTING OFF THE THINGS THAT HAVE BEEN SO BENEFICIAL TO PEOPLE THROUGH THIS PANDEMIC, THE AID, WHICH IS WHAT WE'RE DOING.

AND SO IN KENTUCKY THE KENTUCKY LEGISLATURE PASSED SJR 150 WHICH CUTS SNAP BENEFITS, FOOD ASSISTANCE FOR 500,000 KENTUCKIANS, INCLUDING A BUNCH OF KIDS, AND THAT'S GOING TO TAKE $350 MILLION OUT OF FOOD ASSISTANCE WE NOW IN NOVEMBER, AT A TIME WHEN FOOD PRICES -- LOOK AT THE PRICE OF MEAT.

LOOK AT THE PRICE OF EGGS.

THAT'S HURTING PEOPLE.

SO THOSE THINGS TAKING AWAY THE THINGS THAT HURT THE -- THAT HELP THE PEOPLE THE MOST WHO NEED THE HELP IS NOT A GOOD WAY TO SOLVE THIS PROBLEM WHEN, AGAIN, MOST OF IT'S GOING TO CORPORATE PROFITS AND THERE ARE THINGS WE CAN DO TO CRACK DOWN ON THAT.

>> IT'S HARD TO UNDERSTAND HOW MOST OF ITS GOING TO CORPORATE PROFITS WHEN LARGE CORPORATIONS ARE REFERRING TO DROPS IN THEIR VALUE OF SEVERAL TEN, 15, 20 PERCENT OVER THE LAST WEEK, OVER THE LAST COUPLE OF MONTHS.

IT'S NOT GOING TO CORPORATE PROFITS.

AND THERE ARE A LOT OF PROGRAMS THAT ARE BENEFICIAL.

WHEN I SAY CONGRESS NEEDS TO GET THEIR HOUSE IN ORDER, WHAT I'M SAYING IS IF YOU WANT TO HAVE THIS PROGRAM, YOU'D BETTER HAVE FUNDS TO FINANCE IT.

THAT'S ALL.

DON'T GO -- DON'T USE DEBT FINANCING, DON'T INCREASE THE DEBT TO CREATE THESE VALUABLE PROGRAMS, AND YOU THINK THEY'RE VALUABLE, LET'S FIND WAY TO PAY FOR THEM SO THAT WE'RE NOT BLOWING THE DEFICIT OUT OF THE WATER.

>> I THINK WE'VE GOT TO BE CAREFUL ABOUT THIS WHOLE CONCERN ABOUT CORPORATE PROFITS AND PRICE CONTROLS.

SO ARE THEY MAKING MORE?

ARE THE PROFITS HIGHER?

TUEL MIGHT BE.

IT'S HARD FOR ME TO SAY TO WHAT EXTENT THAT'S OCCURRING.

BUT KEEP IN MIND THAT THE HIGHER PRICES IS THE SOLUTION TO A LOT OF THESE SUPPLY CHAIN ISSUES, PARTICULARLY WHEN WE START TALKING ABOUT THINGS LIKE OIL.

WE TALKED A LITTLE BIT EARLIER ABOUT HOW DRILLING FOR OIL SLOWED DOWN DURING THE PERIOD.

THAT'S NOT GOING TO COME BACK OUT WITHOUT THESE HIGHER PRICES.

THAT HIGHER PRICE PROVIDES THAT INCENTIVE FOR BUSINESSES TO PRODUCE MORE, WHICH HELPS ADDRESS -- YOU KNOW, THEY START RECONCILING THE SUPPLY CHAIN ISSUES TO GET THESE PRODUCTS ON IT THERE.

SO WHEN WE START BASICALLY GOING NO THERE AND START PUTTING IN PRICE CONTROLS AND THINGS THAT OF NATURE SAYING, LOOK, YOU CAN'T EARN PROFITS ON THESE TYPES OF THINGS OR THIS LEVEL OF PROFITS, THAT REDUCES EXTENSIVE FOR BUSINESSES TO PUT THE INVESTMENT IN THERE THAT WILL HELP SUPPLY THOSE GOODS.

>> THE DIFFICULT THING IS WHAT'S TOO MUCH PROFIT, AND NONE OF US CAN KNOW THAT.

FIRM WANT TO MAKE MONEY P. THAT'S WHAT THEY WANT TO DO.

IT'S VERY DIFFICULT TO MEASURE SOMETIMES WHAT ANS AND PROFIT IS.

AND I WAS GOING TO MENTION ON THE EXCEPTIVE, AND I MENTIONED BABY FORMULA YEARLY, THERE'S A GREAT -- EARLIER, THERE'S A GREAT EXAMPLE OF HOW MARKET CONS FEDERATION HAS REALLY SERVED TO HURT THE PUBLIC GOOD.

I THINK FOUR COMPANIES HAD OVER 90% MARKET SHARE.

WHEN ABBOT GOES DOWN DOUSE OF THE POTENTIAL FOR THE BACTERIA CONTAMINATION, THAT'S WHY WEED HAVE THE SHORTAGE.

WE NEED MORE COMPETITION IN THE INDUSTRIES.

>> WHY DO FOUR COMPANIES CONTROL THE MARKET SHARE?

BECAUSE EACH STATE, THE FEDERAL GOVERNMENT MANDATES THAT YOU CAN ONLY HAVE ONE SUPPLIER OF BABY FORMULA FOR THE WIC PROGRAM, AND THE WIC PROGRAM IS 65% OF THE NARCOTIC IN MOST STAYED.

ABBOT INDUSTRIES GETS THE SOLE SOURCE SUPPLIER FROM THE STATE GOVS FOR WIC FOR 31 STATES, AND THEN ALL OF A SUDDEN SOMETHING HAPPENS AND ABBOTT INDUSTRIES FACTORY AND THEY'RE SHUT DOWN AND THEY CAN'T PROVIDE THE BABY FORMULA AND THERE'S JUST NOT ENOUGH ROOM FOR OTHER PEOPLE TO STEP IN, PARTICULARLY WHEN WE PREVENT THEM FROM BRINGING BABY FORMULA IN FROM OTHER COUNTRIES AND WE PUT A 17% TARIFF ON IT.

>> THAT'S THE PROBLEM I WAS TALKING ABOUT.

WE'VE ALLOWED THE ECONOMY TO BECOME MONOPOLIZED IN MANY CASES AND IT CREATES THAT FRAGILITY.

THE REASON WE DIDN'T HAVE SEMI CONDUCTORS WE NEED TODAY BUILD NEW CARS WAS THERE A FIRE IN A JAPANESE SEMICONDUCTOR FACTORY DURING THE PANDEMIC THAT SHUT DOWN THE CHAIN.

WE'RE TOO VULNERABLE WHEN WE HAVE JUST A FEW CORPORATIONS THAT CONTROL THINGS.

IT ABSOLUTELY CAN IMPACT PRICES.

AND PRICE GOUGING, YOU KNOW, WE HAVE A PRICE GOUGING LAW IN KENTUCKY.

IN FACT, ATTORNEY GENERAL CAMERON WAS ENFORCING IT DURING THE HURRICANES IN WESTERN KENTUCKY AND DEFEND OF THE THAT LAW.

SO WE ALL KNOW THAT IT CAN EXIST.

THERE ARE SITUATIONS AND CRISES WHERE COMPANIES CAN TAKE ADVANTAGE OF THE SITUATION TO RAISE PRIZES PRICES BEYOND -- BEYOND WHAT THEY OTHERWISE WOULD.

IT'S SOMETHING WE RECOGNIZE.

AND THIS IS WHAT WE'VE HAD NATIONALLY.

WHEN THERE'S A PANDEMIC.

IT HAS TO BE A CAREFUL EXAMINATION, BUT IF THE HIGHER PRICES IS ALL THE INCENTIVE THE COMPANIES NEED TO DRILL MORE OIL, WHY AREN'T THEY DOING THAT NOW?

IT'S BECAUSE THEIR PROFITS ARE PEAKING AND THEIR TELLING THEIR SHAREHOLDERS WE'RE DOING REALLY WELL AND WE'RE DID NOT GOING TO INCREASE PRODUCTION BECAUSE WE'RE AT A -- AN IDEAL POINT IN TERMS OUR PROFIT MARGIN.

SO THAT'S SOME OF THE THINGS THAT WE'RE DEALING WITH.

WE JUST HAVE AN ECONOMY THAT HAS BECOME INCREASINGLY MONOPOLIZED, INCREASINGLY GLOBALIZED, AND IT PUTS US IN A DIFFICULT SITUATION WHEN A CRISIS JUST RESHUFFLES DEMAND, RESHUFFLES SUPPLY, AND IT'S CONTINUING TO DO THAT TODAY.

>> ROSH EXAMINATION FROM MUSCLE EL COUNTY SAYS IS THE INCREASE IN GAS PRICES THE OIL COMPANIES TRYING TO GET EVERY PENNY OUT OF CONSUMERS BEFORE ELECTRIC VEHICLES BECOME THE NORM?

>> I MEAN, I THINK THAT'S WHERE WE'RE HEAD BEEPED KNOW THAT IN KENTUCKY.

WE'RE HOPEFULLY -- WE'RE PLANNING TO OPEN BATTERY PRODUCTION PLANTS HERE.

WE HAVE TO BUILD THE INFRASTRUCTURE.

IT'S GOING TO TAKE A LITTLE BIT OF TIME.

AND THE OIL INDUSTRY, TOO, THE WRITING ON THE WALL, I'M SURE.

AGAIN, IT'S NOT ABOUT THAT THEY'RE CAUSING IN FIRST PLACE BUT THERE ARE WAYS THEY CAN TAKE ADVANTAGE OF THE SITUATION.

I THINK THERE'S PLENTY OF EVIDENCE, IN FACT THEY'RE TELLING THEIR SHAREHOLDERS THAT THEY ARE.

>> I SUSPECT THAT THOSE OIL COMPANIES ARE PUTTING THINGS -- PLANS INTO PLACE THAT WILL ALLOW THEM TO CONTINUE TO OPERATE WHEN ELECTRIC VEHICLES BECOME THE NORM.

WE'RE STILL A LONG WAY FROM ELECTRIC VEHICLE BEING THE NORM BUT I'M SURE THEY'RE PREPARING THEMSELVES AND THEY WILL CONTINUE TO BE SUCCESSFUL.

>> EARLIER YOU ARE MENTIONED ABOUT THE FEDERAL RESERVE, HAD THEY ACTED ACCORDINGLY, THE INTEREST RATES SHOULD BE AROUND 11 AND SOMETHING PERCENT.

SO DO YOU CONSIDER INFLATION TO BE AT CRISIS LEVELS WHERE IT IS NOW?

AND WHAT WOULD BE A CRISIS LEVEL?

>> INFLATION IS HIGH.

THERE'S NO QUESTION ABOUT IT.

IT'S 8%.

IT'S HIGHER THAN IT'S BEEN IN A LONG PERIOD OF TIME.

IT'S WHAT YOU IS GOING TO HAPPEN GOING FORWARD, AND THAT'S A DIFFICULT QUESTION TO ANSWER.

THERE'S SOME VERY SMART PEOPLE, LARRY SUMMERS HAS WRITTEN PAPER RECENTLY CRITICIZE 10 FED FOR NOT ACTING QUICKLY ENOUGH.

THEY WAITED FOR A WHOLE YEAR BEFORE THEY EVEN STARTED RAISING INTEREST RATES, AND AGAIN, VERY METHODICAL.

AND SUMMERS DOESN'T BELIEVE THAT CONGRESS IS GOING TO REFORM THEIR FISCAL HOUSE.

HE BELIEVES THAT UNLESS THE FED RESPONDS QUICKLY AND RAISES THE INTEREST RATES EVEN HIGHER, AT LEAST 8% IF NOT 10%, THEN INFLATION IS GOING TO SPIN OUT OF CONTROL AND WE'RE GOING TO BE BACK IN THE SITUATION YOU SAID STAGFLATION, BACK IN A SITUATION WE HAVEN'T SEEN SINCE THE LATE 70S.

I'M NOT AS CONVINCED THAT THAT'S THE CASE, BUT LARRY SUMMERS A PRETTY SMART GUY WOULD BE W. SO IF HE THINKS IT COULD POSSIBLY OCCUR YOU'VE GO TO TAKE IT SERIOUSLY.

THE PEOPLE AT THE FED THERE ARE A BUNCH OF SMAR PEOPLE THERE.

YOU SEE THEIR PROJECTIONS.

THEY THINK INPOLICE STATION IS GOING TO IN OUR HOSPITAL FLATION IS GOING TO AM COULD DOWN WITH INTEREST RATES, THEOCRATS SLOWLY TO 3% AND INFLATION IS GOING TO COME DOWN TO LEVELS THAT ARE ACCEPTABLE AT THE 4%, THEY'RE SHOOTING FOR 4% INFLATION.

MAYBE THEY'RE RIGHT.

WE'LL SEE.

THEY'VE GOT A DIFFERENT MODEL THAN LARRY SUMMERS DOES.

WE'LL SEE WHOSE MODEL IS RIGHT.

I SUSPECT THAT IF WE SEE ELEVATED LEVELS OF INFLATION FOR MUCH LONGER, WE WILL SEE THE FED START BEHAVING LIKE PAUL VOLCKER WAS IN CHARGE BACK IN THE SEVENS AND CAN JAING INTEREST RATES UP PRETTY QUICKLY.

>> ONE SILVER LINING IS WE MENTIONED 8.3% BUT THAT'S A YEARLY AVERAGE BASED THE ON MONTHLY THAT THEY GET OUT OF APRIL.

APRIL WAS THE LOWEST IT'S BEEN SINCE AUGUST BE .3 FIRST FOR MARCH SO THAT'S THE A BEFORE IT A SILVER LINING.

THE HOPE MAYBE IS THAT THE TRAJECTORY IS TURNING BACK DOWNWARD, AND IF WE SLOWLY SEE THIS 8.3 GO TO 7 OF .5 AND 6 THEN MAYBE THEY WON'T TO HAVE RAISE RATES NEARLY AS FAST.

>> I WAS EXCITED BY THE APRIL NUMBERS UNTIL I STARTED LOOKING A LITTLE BIT OF DETAIL ON WHY IT WAS LOW FROM MARCH TO APRIL.

>> WHY WAS IT?

>> WELL, IT WAS REALLY BECAUSE GAS WAS DOWN IN APRIL AND UNFORTUNATELY GAS IS BACK UP.

>> IT SPOOKS A LOT OF TIMES.

>> EXACTLY.

BUT IF YOU START LOOKING AT SOME OF THE DETAILS, WHAT YOU START TO SEE IS THAT COOLER CPI WAS UP PRETTY GOOD AND IT WAS MOVING INTO SOME OF THE OTHER AREAS LIKE SERVICES WHERE IT HADN'T BEEN AS PREDOMINANT.

SO WITH APRIL BEING A LITTLE BIT SLOWER BECAUSE OF GAS PRICES BEING DOWN AND GAS PRICES HAVE SINCE COME BACK UP, I'M NOT AS ENCOURAGED BY THE APRIL NUMBERS.

>> IT'S A GLIMMER OF A HOPE.

>> IT IS A GLIMMER OF A HOPE.

>> IT IS.

>> AND REALLY WE'RE AT A SITUATION WHERE IT'S BEEN JUST ABOUT A YEAR SINCE WE SAW PRICES REALLY START TO PRICE.

AND SO THE IDEA IS THERE'S JUST KIND OF THIS BASE EFFECT.

PRICES WERE REALLY DRAMATICALLY INCREASED IN THIS PAST YEAR, AND WE TEND TO COMPARE INFLATION TO WHERE IT WAS OR PRICES TO WHERE THEY WERE A YEAR AGO.

AND SO NOW THAT WE'RE AT THE A YEAR INTO THIS, THERE'S A THOUGHT THAT IT'S GOING TO BE THE RATE OF INFLATION WILL NOT BE QUITE AS HIGH IN THE LAST HALF OF THE YEAR AS IT WAS DURING THE FIRST HALF OF THE YEAR.

>> ONE THING WITH INFLATION ISAL THERE WILL BE A WAGE PRICE SPIRAL, THE EXPECTATION OF INFLATION WILL BE EMBEDDED IN PEOPLE'S BEHAVIOR AND SO THEY WILL PUSH FOR HIGHER WAGES.

THAT WILL MEAN PRICES DID GO UP.

AS PRICE GOES UP, PEOPLE PUSH FOR HIGHER PRICES AND IT ACCELERATES.

THAT'S THE PROBLEM YOU HAVE IN VENEZUELA OR WHY GERMANY OR WHEREVER.

PART OF THE ISSUE NOW IS THAT WAGES ARE NOT GROWING AT A SPECTACULAR RATE.

THEY'VE BEEN GROWING AS THE MARKET HAS TIGHTENED BUT IF YOU LOOK AT THE LAST MONTH, THE WAGE GROWTH ACTUALLY MODERATED SOME.

IT'S ABOUT 4%.

AND PART OF THE ISSUE NOW, COMPARED TO LET'S SAY THE 1970S, SO THAT WORKERS DON'T HAVE A LOT OF POWER TO BARGAIN FOR HIGHER WAGES.

WE'VE GOT 6% OF THE PRIVATE SECTOR WORKFORCE THAT'S IN A UNION.

SO EXCEPT FOR THE TIGHTLESS OF THE LABOR MARKET THEY DON'T HAVE THE BARGAINING POWER THEY HAD.

I THINK THE FED IS TAKING THAT INTO ACCOUNT.

THE ABILITY OF WORKERS TO PUSH FOR HIGHER WAGES IS NOT WHAT IT WAS IN THE MIDDLE OF THE CENTURY.

>> THE TIGHTNESS OF THE LABOR MARKET IS REALLY HUGE RIGHT NOW.

THAT IS WHAT IS DRIVING THE HUGE INCREASES -- >> EVERYBODY IS LEAVING THEIR JOBS?

>> THEY'RE FINDING BETTER JOBS.

THEY'RE FINDING THEY DO HAVE POWER, IF THEY'RE NOT GETTING GOOD WAGES OR GOOD WORKING CONDITIONS FROM THEIR CURRENT EMPLOYER THERE ARE OPPORTUNITIES.

AND THAT IS SUBSTANTIAL -- >> HIGHER WAGES AT THEIR CURRENT EMPLOYER.

THEY'RE GOING TO LEAVE THEIR CURRENT EMPLOYER TO CHASE THE RESULTS.

>> THEY ARE NOT CONTRACTUALLY BOUND LIKE THEY USED TO BE BUT IT'S INDIVIDUALLY OFFERED TO THEM IF THEY GO OUT AND SEARCH.

>> KENTUCKY SET A RECORD, RIGHT?

3.9% IS THE LOWEST UNEMPLOYMENT RATE WE'VE SEEN EVER.

AND SO NATIONWIDE SIGHTS 3.6%.

3.6% IS A REALLY LOW UNEMPLOYMENT RATE.

ANYBODY WHO WANTS A JOB CAN FIND ONE AND MANY OF THOSE PEOPLE WHO HAVE JOBS CAN FIND BETTER JOBS BECAUSE AS YOU SAID, A LOT OF FAST FOOD RESTAURANTS ARE STRUGGLING AND OF OFFERING PRETTY GOOD WAGES AND NOT FINDING PEOPLE THE WORK.

>> A LOT OF THOSE WAGE INCREASES HAVE BEEN HAPPENING IN THOSE KINDS OF JOBS.

>> THE MOD PASSION IN WAGE INCREASES IS NOT OCCURRING AT THE LOW END.

IT'S OCCURRING AT THE MIDDLE AND THE UPPER END.

SO LOW END WORKERS HAVE BEEN BENEFITED OVER THIS ENTIRE PERIOD MUCH MORE THAN HIGHER WAGE WORKERS.

WE HAVE SEEN A LOT OF WAGES GOING UP FOR THOSE, EXACTLY THOSE PEOPLE YOU'D LIKE TO, THE LOW WAGE WORKFORCE.

>> THANK GOODNESS.

THAT HAS HAPPENED AND PART OF WHERE IT IS CUSTOMER WHERE DEMAND IS AND THAT'S A GOOD THING.

BUT WE'RE NO SEEING YET -- WE HAVE TO SEE WHAT HAPPENS BUT WE'RE NOT SEEING THAT ACCELERATED WAGE GROWTH THAT HAS YOU CONCERNED IT.

MAKES UP -- WAGES MAKE UP ABOUT 8% OF THE PRICE INCREASE OVERALL.

MOST OF IT IS AGAIN IS THESE INPUTS LIKE OIL AND PRODUCTS, COMMODITIES WHERE THERE ARE SUPPLY CHAIN ISSUES THAT ARE PUSHING MOST OF THE -- IN ADDITION TO THE PROFITS, THE MARGIN, THE MARKUP THAT IS GOING INTO THE PRICES.

>> I WAS GOING TO SAY WHAT'S CURIOUS IS WITH 6 MILLION PEOPLE UNEMPLOYED AND WITH ALL THE OPPORTUNITIES OUT THERE, I KEEP WONDERING WHAT ARE PEOPLE WAITING FOR BECAUSE YOU CAN FIND A JOB.

IT'S JUST MAYBE NOT THE JOB.

AND THIS FEEDS INTO ANOTHER LONG-TERM SOLUTION TO INFLATION POTENTIALLY.

WE'VE TALKED ABOUT A MOMENT AGO IMMIGRATION IS SOMETHING THAT YOU COULD GET TO MAKE UP SOME OF THAT SHORTFALL.

>> YEAH.

>> WE NEED TO MAKE LEGAL IMMIGRATION BETTER AND EASIER.

I KNOW WE HAVE A VERY CONTENTIOUS DEBATE GOING ON ABOUT IMMIGRATION IN THIS COUNTRY, BUT REALLY -- >> SO CLEARING A PATH FOR THE UNDOCUMENTED REMEMBER RIGHT?

>> SOMETHING.

SOMETHING TO REALLY HELP FILL THESE JOBS IN ADDITION TO THE TARIFFS THAT WERE MENTIONED THAT NEED TO BE COMPLETELY ABANDON AND PHASED OUT TO HELP IN THE LONG RUN, AND I THINK, MIKE, YOU MENTIONED ONGOING INCREASING OIL SUPPLIES DOWN THE ROAD, WHATEVER WE CAN DO TO LESSEN THE BURDEN ON THOSE, ON THOSE PETROLEUM PROVIDERS.

>> JEFF SIMS FROM CALLED WAY COUNTY SAYS THIS.

WITH THE CONTINUED RISE IN GLOBALIZATION AND INTERCONNECTION OF GOODS AND SERVICES TO OTHER COUNTRIES, I CONTINUE TO HEAR A RENEWED CALL FOR THE DOMESTIC PRODUCTIONS OF GOODS AND SERVICES.

JUST SO PEOPLE ARE CLEAR IF WE REPATRIATED PRACTICES OF THESE GOODS AND SERVICES FROM ASIA OR OTHER MARKETS, WOULD THE COST OUTPACE THE CURRENT INFLATION IN.

>> YES.

>> YES.

>> YES.

>> I THINK YOU'RE STARTING TO SEE SOME OF THAT RESHORING OR WHATEVER YOU WANT TO CALL IT NOW, AND ONE OF THE THINGS WE'VE SEEN IN IN PRIZES IS THE LACK OF REDUNDANCIES.

WE TALKED ABOUT THERE'S ONE DYE SEMICONDUCTOR PLANT.

THERE'S THIS MICHIGAN BABY FORMULA PLANT THAT GOT CONTAMINATED.

CONTAMINATED BABY FORMULA THAT HAS SHUT DOWN THAT ENTIRE MARKET.

I THINK COUNTRIES ARE START COMPANIES ARE STARTING TO REALIZED THESE FRAGILE SUPPLY CHAIN ISSUES DON'T WORK WHEN THERE'S A CRISIS.

SWEDE EARLIER IN THIS PANDEMIC NOBODY COULD HAVE SEEN COMING, WE'VE HAD PANDEMIC WARNINGS BEFORE.

IF YOU LOOK AT BIRD FLU, YOU THE U.

IF YOU LOOK AT SARS AND WE'RE GOING TO HAVE MORE PANDEMICS.

NOT ONLY THAT BUT WE'RE GOING TO HAVE MORE CLIMATE CHANGE DISRUPTIONS WHICH HAVE ALSO BEEN A BUG FACTOR IF YOU LOOK AT FLOODING IN PORTS, IF YOU LOOK AT HURRICANES.

WE'RE GOING TO HAVE MORE OF THAT.

SO TO BUILD A VERY FRAGILE GLOBAL SUPPLY CHAIN THAT WE DEPEND ON FOR THESE GOODS BY WHICH WE LIVE IN A SYSTEM THAT'S GOING TO BE INCREASINGLY CRISIS-BASED, EVERYBODY SHOULD RECOGNIZE THAT, WE'RE GOING TO HAVE TO THINK ABOUT IT DIFFERENTLY THAN WE HAVE, AND PART OF THAT I THINK IS BRINGING MORE STUFF ONSHORE THAN HAS BEEN THERE BEFORE.

>> I THINK BUSINESSES ARE STARTING TO LOOK AT THAT.

LET'S BE A LITTLE BIT CAREFUL ABOUT THIS WHOLE IDEA OF THE SUPPLY CHAINS AND HOW FRAGILE THEY ARE.

PRIOR TO THIS AD.

WE HAD THE LONGEST RUNNING ECONOMIC EXPANSION.

YOU COULD ARGUMENT, IT WAS KIND OF SLOW GROWTH IN TERMS OF EMPLOYMENT.

BUT IT WAS A LONG EXPANSION.

AND THE GLOBALIZATION HAS RESULTED IN SOME SIGNIFICANT BENEFITS TO SOCIETY IN TERMS OF LOWER PRICES, HIGHER QUALITY OF GOODS, OR HIGHER QUALITY OF LIFE AS A RESULT OF BEING ABLE TOO GET GOOD, INEXPENSIVE GOODS.

CERTAINLY TO THE EXTENT THAT WE SEE THINGS LIKE THIS PAST PANDEMIC MAYBE INCREASING IN TERMS OF THE PROP PROBABILITY, IF WE THINK THESE ARE THINGS THAT ARE GOING TO OCCUR MORE FREQUENTLY, THEN THERE WILL BE A NEED TO KIND OF LOOK AT THE SUPPLY CHAIN AND THINK WE WERE KIND PURSUING THE IDEA OF LOW COST.

LET'S MAKE IT AS EFFICIENT AS POSSIBLE AND THAT HELPS LOWER PRICES AND THAT'S A GOOD THING.

BUT TO THE EXTENT IT DOES BECOME SUSCEPTIBLE TO SOMETHING LIKE THE PANDEMIC, THEN WE DO HAVE TO START THINKING ABOUT AB OBJECT CAN, DO WE NEED SOME REDUNDANCIES.

WE NEED TO THINK WHAT IS THE VALUE OF THAT, AND CERTAINLY BUSINESSES SEEM TO BE MOVING IN THAT DIRECTION.

>> HOW DO YOU CREATE A REDUNDANCY YOU?

PUT FACTORIES IN DIFFERENT PLACES THAT'S GOING TO BE HIT IN DIFFERENT RISKS.

THAT'S GLOBALIZATION.

YOU PUT A FACTORY IN VIETNAM AND BUY IN BANGLADESH.

WHAT WAS UNIQUE ABOUT THE PANDEMIC IS THAT HIT EVERYBODY.

WE DON'T HAVE CRIES THAT ARE WORLDWIDE.

THE PANDEMIC WAS WORLD WIPED.

YEAH, WE HAD IS CZARS FLU AND THAT WAS SERIOUS BUT ALL THOSE WERE PRETTY LIMITED IMPACTS.

WE DON'T HAVE THINGS GLOBAL WARMING AND CLIMATE CHANGE IS SOMETHING THAT CAN AFFECT LARGE SWATH OF AREA, BUT, BOY, IF YOU WANT REDUNDANCY, YOU DIVERSIFY.

YOU PUT THEM IN LOTS OF DIFFERENT PLACES.

>> LIKE INDIA IS HAVING THEIR DROUGHT AND THEY'RE GOING TO HAVE POTENTIAL'S WHEAT SHORTAGE BUT THAT'S CONFINED PRIMARILY TO INDIA.

>> AND COMPANIES HAVE -- I'VE BEEN ON PANELS FOR A LONG PERIOD OF TIME TALKING ABOUT, YOU KNOW, TRYING TO MAKE RISKS IN A SUPPLY CHAIN FOR FIVE YEARS AT LEAST, SO COMPANIES WELL AWARE OF THOSE AND WE'VE BEEN STUDYING IT FOR YEARS.

>> THAT IS BEEN A VERY GOOD DISCUSSION.

I HOPE OUR VIEWERS HAVE LEARNED A LOT.

I.

WE WANT YOU TO COME BACK ON FRIDAY NIGHT.

BILL BRYANT IS A TEAM OF WORKING JOURNALISTS WILL DISCUSS THE NEWS OF THE WEEK WEEK OH "COMMENT ON KENTUCKY."

BEGINNING JUNE 1st YOU WILL SEE A BRAND NEW PROGRAM HERE AT A 6:30 EASTERN TIME RIGHT HERE ON KET TO GIVE AWE AN UPDATE, KENTUCKY CENTRIC PUBLIC AFFAIRS PROGRAMMING IN THE LIKENESS OF PBS NEWSHOUR.

WE HOPE WE WILL SEE YOU THEN.

TAKE GOOD CARE.