Kevin Hassett

Why was it, if you're a person forming expectations over the next five, 10 years, which is very often a planning horizon for buying a house or something like that,

could legitimately worry that inflation is going to come back up.

But it's very important to think about why the Fed was unable to control inflation for so long and it got out of control and what the Fed can do to signal that that's not going to happen again.

I can tell you that what Greenspan did when he saw like really reckless spending is that he testified and said, you guys can't do this, that it's going to make it impossible for me to run the Fed and keep inflation under control.

And what this set of folks did is they said, oh, it's transitory.

I wouldn't say, oh, it's transitory if it wasn't.

Well, obviously, the best way to address affordability is to increase real incomes, real wages that right before the COVID emergency, we had promised.

It's kind of like the ranges you and I just talked about.

I had promised based on our modeling.

And the president had promised at all his speeches that we'd get about $4,000 of an increase in real wages.

And I had actually told him, based on our modeling, it was between four and eight.

If it was you, you would have said six.

But he wanted to under-promise and over-deliver.

And then we got the six increase in real wages.

And so therefore, things were affordable.

And then for the Biden four years, the real wage decline is like, depending on which measure you use, $2,500 to $3,000 or a little bit more.

And so real wages went down, which meant that wages

went up slower than prices, which is kind of typically a key feature of most Keynesian models, is that wages are kind of stickier than prices.

And so that real wage decline means that things, people are right to say that there's been a problem with affordability.

And, you know, real wages are up this year in part because of the things that we're doing.