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Even now, you see, that's why we need a stimulus check. That's why the plan outlined by Andrew Yang is effective. We are able to give people $1,000 a month. We are able to give people $2,000 a month. If we're spending trillions of dollars on the military , why can't we spend the money on sending checks to people ?
Yeah, but if we can save these big companies , you know, the whole concept about social programs. The idea that two wrongs together make a right thing , but that's not the case. And that bailout was a mistake. I mean, just because we made the mistake of bailing out the banks in '08 does n't mean we should repeat that mistake by bailing out the airlines or hotels.
And just because we made the mistake of saving Wall Street does n't mean we should compound the mistake by saving Main Street. Why do we bail out? But why do we bail out ? Like, why do we save those who are too big to fail? What is this? Well, because clearly, there are two reasons for this. One is the politics of it, the industries that get bailouts , they use some of that money to line the pockets of the politicians who voted to save them , right?
I mean, this is a change that is going to happen. But, when it comes to economics, even? You have visible and invisible influences. And when the government rescues a business , those receiving the bailout benefit immediately. The company survives, jobs are saved, and the people who benefit from the bailout are known and they will vote for you.
But what you don't see are the negative consequences that spread throughout the economy for which there is no political support. But, let's take one of these industries that gets saved , like airlines, right? Let's say we did n't save the airlines or any hotels or any of these companies. Politicians want to portray it as if if we had n't saved these industries , they would have disappeared.
Like, "Oh, we need airlines. We need hotels. We can't let these industries go bankrupt. How are we going to get around?" Okay? Look, this is a bailout lie. If the government had not bailed out the companies, they would have gone through general bankruptcy. During bankruptcy, companies do n't stop operating, right?
They continue to work. What happens is that they no longer have to pay their debts , that's why they're in bankruptcy because they borrowed a lot of money , but they go through bankruptcy, and who gets ruined ? Common shareholders, and unsecured creditors. There are investors who take losses. But, businesses, as long as they have value, they survive, and new owners come in.
And most importantly, they will be more responsible than failed owners and the companies will not have all that debt. The debt is eliminated. So , now that businesses do n't have all that debt, they can be more efficient. They can offer a more competitive product. They can reduce prices. Maybe they can pay better salaries because they're not burdened with all this debt.
Instead, we are keeping these companies alive by loading them with even more debt. Therefore, they will be even less efficient and some companies will need to downsize. You know, the government is saying we can't do this, we have to make sure that companies do n't lay off any workers. Why? What if they need to lay off workers?
What if they have too many workers? This is why they are not profitable because they have to reduce their workforce to make the business competitive and reflect the free market demand for their products or services. If we keep raising wages , it is a waste of labor resources. We are wasting those resources.
We need to free that labor to work somewhere else where the market will direct it, but now we are creating these zombie companies that are subject to the state, and the cost to society of subsidizing these businesses far outweighs the benefits to the people who are being saved. But again, this is an unintended consequence of government intervention.
Let the free market work , and we will have an equitable distribution of resources , and we will all collectively benefit from a higher standard of living. But when we have government intervene and divert resources from where the market wants them, to where politics demands , everyone suffers because we have a lower quality of life, a lower standard of living because we are raising production costs and making the economy less efficient.
So, let's say we have to make that adjustment. Let's say we're open to it. Suppose we find someone strong enough to put this before the American people, and suppose they convince 51% of the people to say, "I'm with it." I am with you. Let's go through the process of letting 'too big to fail ' organizations fail.
Let's go through the process where I go back and I might not be able to get 100% financing for the house. Perhaps it will be limited to 60% financing for the house. If you don't have a 40% down payment for a house, you probably should n't own a home. You should probably rent a house. Let's say we go through this process.
Who benefits, right? Who benefits from government policy guaranteeing mortgages ? It's not actually the person who is buying the house. This is a person who has a house to sell. Because by guaranteeing mortgages, the government is helping to drive up real estate prices. What would happen if there was no mortgage guarantee from the government?
If individuals had to convince banks to take out loans based on their creditworthiness and ability to repay, banks would not be willing to lend as much money , and they would ask for more collateral. They don't give you a mortgage on a 3% or 5% down payment. They ask for a 20, 25% down payment , right?
And so, if that were the case, real estate prices would fall, would n't they? So, people would still be able to buy homes , they just would n't need to take out as much debt because the price would be lower. So, maybe you can afford a 20% down payment when the house is worth 300,000 , but if the house price drops to 100,000 , you'll be able to afford 20% , right?
You wo n't have that much debt. The beneficiary of this policy is a person who already owns a house and wants to sell it. He can sell it at a much higher price if the government is guaranteeing the buyer 's mortgage. But then a bubble forms. You have a fake real estate market. I want a real real estate market that reflects the free market, not government subsidies, because the government now has to keep this whole pyramid going with more debt.
But still it would be a very unlikely political battle because at this point, wouldn't it? Republicans have already embraced socialism. They actually agreed with the Democrats that we need a bigger government , didn't they? And that's a logical thing, isn't it? Look, the Republicans' stand is illogical.
Republicans say that in good times profits should be private , but in bad times losses should be shared. That is, in good times taxes should be low and government limited , but in bad times big government and help from everyone, even the rich, is necessary. This doesn't make sense. At least the Democrats have a logical, albeit flawed, argument.
We need big government all the time. If we need big government in bad times , we need it in good times too. If we have to share the losses, let's share the profits too, right? This is a clear argument that I think will win, which is why I think Trump will only be a one- time president , because he can't promise more than Biden or the Democratic candidate.
When it's a contest between two Democrats , Democrats beat Trump Biden. You are saying that you do n't think Trump will beat Biden. No. And I thought Trump would beat Clinton. Very few people felt that way at that time. Because I thought Trump could beat Clinton because he was telling how bad the economy was, and he was promising real solutions.
Now they will try to repeat the same lie that didn't work for Hillary , although now they will try to blame the coronavirus for this problem. And maybe that strategy will work. So you really believe that Biden will defeat Trump ? But at this point, look, I do n't think Republicans can promise more than Democrats because the election will depend on who gives away the most free stuff.
And I think the Democrats win that argument. Now, what's going to happen is that when the economy completely collapses, if there's hyperinflation or complete collapse , and there's massive poverty , inflation will be so high that price controls will have to be implemented , and as soon as they do that, there will be shortages of things , the black market will grow.
Meaning, it would be a complete disaster. Then we can have a real campaign on whether we should fully embrace socialism. Have we become so poor ? Are we helpless? Are we suffering this suffering and poverty ? Isn't it? Is it because of too much capitalism and greed? Is n't it? Or is it due to too much government intervention and central planning?
Is it bureaucracy and socialism that destroyed the prosperity created by capitalism, or did socialism create prosperity and capitalism destroy it ? And so, do we need to become a nation of slaves or a nation of free people? I mean, this would be a real debate between big government and freedom. And hopefully freedom can win that debate.
I don't know. I mean, it's a hard decision to make. Oh, you know. But are you saying on the record that Biden will beat Trump? I think Biden will beat Trump or if for some strange reason Biden doesn't become the nominee, whoever is at the top of the ticket will beat Trump. But I mean, is it for sure?
No. I mean, I think that's what your percentage is ? If you were a bettor in Las Vegas , what would your percentage be if you said it was at least 70-80% that it would be Biden? Is it 70-80% Biden? Yes, because we will still be in a recession in November. So, you'll have a lot of people voting during a recession.
And you know, Trump promised a lot of people to make their lives better and their lives are going to get worse. Oh and you know what, they were n't expecting the coronavirus though. However, Trump did not expect a pandemic. But he was going to lose even without that. We were going to be in a recession even without the coronavirus.
It was already starting. The economy was already collapsing. The bubble was already bursting. So, yes, this may be his only chance , which is one reason Trump may be encouraged to extend the shutdown even longer. Because if everything remains closed in November , it's easy to blame it on the virus. But let's say we try to restart the economy in May or June , and then we're still in a deep recession, which we will be by November , then it will be difficult for Trump to blame the virus.
I mean, he will. I mean, I think before the virus, he was going to blame the Federal Reserve. But I think voters will only blame Republicans and Trump. And look, they won't be able to make bigger promises than the Democrats. There will be a competition between us on who will give away the most free stuff.
Who do you think will win? Look, I think when both people are promising big government , the Democrats win. This debate will not be about less government versus more government or capitalism versus socialism. Capitalism-socialism has already won this debate. Bernie Sanders has now become the main face of both political parties.
I mean, the things that Republicans are supporting today , even Bernie Sanders would have been ashamed to suggest to them 6 months ago.
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