The Madness of Crowds: Liberty U’s Business School Dean David Brat Weighs in on the U.S. Economy’s Future

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Live from Virginia Tuesday morning on The John Fredericks Show –  weekdays on WNTW AM 820/ FM 92.7 – Richmond, WJFN FM 100.5 – Central Virginia, WMPH AM 1010 / FM 100.1 / FM 96.9 (7-9 PM) Hampton Roads, WBRG AM 1050 / FM 105.1 – Lynchburg/Roanoke and Weekdays 6-10 am and 24/7 Stream –  host Fredericks welcomed the Dean of the Liberty University’s Business School David Brat to the show.

During the interview, Brat gave his take on where he saw the economy at present and the future. He added America needs to change course by leaving behind the negative population’s mindset and unifying around the principles that made America great.

Fredericks: Joining us now is Dave Brat. Former congressman of District Seven in Virginia. He is now the dean of the business school at Liberty University. Dave, great to have you, man.

Brat: Hey, thanks for having me on John. Congratulations on your newspaper.

Fredericks: You like it?

Brat: Yeah. I think it’s great and much needed.

Fredericks: TheVirginiaStar.com. Dave, if we had that when you were running for Congress you would have won I bet.

Brat: It would have been good to get the word out. It’s amazing. I’m watching the two conventions as well. It’s amazing how the Dems blame the virus on Trump. I mean it’s barely astounding. China sends it, the media won’t cover any of it.

There are tons of experts coming out now saying it was constructed in a lab with a man-made element to it. That is a big story. That is the story of our lifetime. If that thing was not from nature and man-made by the Chinese that is the story of our lifetime and the press won’t cover it.

Fredericks: (Laughs) They won’t cover it. What did you think of Donald Trump, Jr. last night calling it the CCP virus?

Brat: That’s what it is. I’m glad he didn’t call it the China virus. It’s the CCP. We want to bring freedom to the Chinese people. They are being repressed by the communist party, the CCP. We want to topple that regime. And then they hopefully start behaving like every other nation. We made friends with our arch enemies. The Germans and the Japanese after World War II. We all got rich together. We are good friends.

Fredericks: Alright, Dave. I want to get your comments on some of what President Trump said yesterday. I’m going to run a few clips and I want to get your comments on them. Let’s start with cut five. This is President Trump in Charlotte. He’s saying next year we are going to have one of the best years economically. Everyone knows Dave has a Ph.D. in economics. He taught economics for 20 years I think Dave? A long time.

Brat: Yep. Yep.

Fredericks: Randy Mack and others. So let’s get Dave’s take here. Cut five.

(Trump clip plays)

As you know prior to the plague coming in from China we did numbers by the likes that have never been seen. Our employment numbers. Every number. The stock market. Now you look at it today. The stock market is just about set to break the all-time record. Your 401-K’s. All of the things that we are doing. To me, that’s like a leading indicator. The economy is going to come back. Next year we are going to have one of the best years economically and in other ways that we’ve ever had before.

Fredericks: What are your thoughts, Dave Brat?

Brat: Well, (Sighs) I think it’s possible. But it’s contingent on ending what’s called the madness of crowds. Now you have the left being manipulated by big TV and big technology. And that story is coming out eventually too. But all the violence in the streets. The shops. All the foodies are boarded up in downtown Richmond. They aren’t just boarded up temporarily. They are bankrupt. They are out of business.

Fredericks: They are gone.

Brat: So the cool stuff that made Richmond Richmond is gone. I was yelling from the rooftops 20 years ago, 10 years ago that this country needs to unify around the principles that made this country great. This neo-Marxist group that is trying to convince everybody that are founders are evil. Rich people are evil. That business people are evil. People that go to church are evil. It’s got to go.

If you have that negative mentality of the population that wants to vote that way, that business is a bad thing morally, you won’t. And our test scores show that in cross country comparisons etc. The Nape score you can look at it. We aren’t doing well.

Trump is laying the groundwork, the foundation’s there. The unemployment rate was down by three percent. Anyone that wanted a job could get it. But it goes down now. We have to get our kids thinking positive again. So we’ve got some heavy lifting.

Fredericks: A lot to do. No question about it. I’m glad you brought Richmond up because it’s so depressing now every day when I have to drive downtown. That’s how I get to my studio. You’ve seen it. You have to stay downtown. You see everything is boarded up. The other thing is that I don’t understand, and I have to keep saying this on the air.

Richmond has an anti-graffiti department, right? So why is the F-word still on every single boarded-up building downtown? Why do I have to go by and see that every single day? It makes me sick. I don’t know why it’s not just cleaned up. You are in Lynchburg now but it’s just gross and it just sits there. And they don’t do anything about it.

Brat: I know. It’s the madness of crowds. You still have people that are still blaming this stuff on right-wingers. They are making up fiction after fiction. All of this stuff is coming from radical groups on the Left. And if one right-winger steps out of line you are immediately put in jail.

But you’ve got people standing in front of monuments with guns now across the country. Last night was Wisconsin. It’s all over the place. Portland and whatever. So yes, the country is just psychologically going through a rough patch. And the Left is very good at how they exploit a tragedy. Terrible abuses happen to individuals. But then they are exploited and used to bring about violence. That piece is new. No one has ever proposed that type of thing in the United States of America. It’s got to go.

Fredericks: It’s like Stoney in Richmond doesn’t want to get rid of the graffiti because he doesn’t want to upset the people that did the graffiti to the chagrin of everybody else who has to stare at it every single day when they go down there. It’s disgusting. I wouldn’t bring my family down there it’s that gross.

I have another economics question. All the money that the fed is pumping into the economy and they’ve flooded the zone. Economics 101 teaches us that the printing of money has to be based on production. First, it was the gold standard.

Richard Nixon got us off that. But then Milton Freedman said that’s fine. But the printing of money M1 policy has to be tied to production otherwise you have too many dollars chasing too few goods which drives inflation. Is that going to happen?

Brat: I don’t think so. For you techies, you can go Google the monetary equation, MV=PQ. So the money is way up on the left side. Way up. Seven trillion. And that’s different than government spending which is up to three trillion. But all of that is stimulative. But you have to have a real economy that’s ready to go.

If you printed that much money in an economy that was ready to fly you’d get massive inflation. But that shows you the weakness when the government shuts down the entire economy by Fiat for the first time in Western civilization. Shut down every business and every church. You’ve got to do something drastic. So they pumped a ton of liquidity in there to keep the motor running to sugar high and short run. It’s not real because the economy was shut down.

You can’t have a real economy when it shut down. It’s going to take a long time to work off that. The debt is up to World War II levels. It’s going to be harder to pay that off because we are a more mature economy that will slow down over time compared to coming out of the war when you had pent up demand and all of that. And so we got some tough times. Everyone is going to have to think positively and get to work.

Fredericks: So Corey in Williamsburg says, well it’s not going to be inflation it’s going to be deflation. How do you get deflation when you are printing more money? How is that possible?

Brat: A general depression in the price levels, just lack of demand. I mean what will get you there. And we’ll see about that. That’s kind of mixed right now. Housing is up. Cars are doing OK. Retail is still doing OK.

Fredericks: People got the money to your point. We have the highest savings rate that we’ve had in decades. I was just reading that the other day. We have a huge savings rate. The reason that there isn’t huge inflation is that people aren’t spending the money. Everybody you talk to that is selling a house as soon as they put it on the market and within hours they are getting offers. So there’s a lot of that.

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