Ep. 1455 - The Most Dangerous Moment In Recent Memory

Episode Summary

Executive Summary: The episode argues that the Fed’s slow rate hikes won’t stop inflation and may risk stagflation, while the Biden administration is accused of weak, inconsistent foreign policy on Russia, Ukraine, and Iran. Ben Shapiro frames both economic and geopolitical crises as examples of leaders avoiding hard, necessary decisions, which could worsen long-term instability.

Main Topics: Federal Reserve rate hikes and inflation (Priority: 5/5): Shapiro says the Fed’s 0.25% hike and projected six more increases are too timid to curb inflation, and may instead produce stagflation by slowing growth without restoring price stability. Consumer and household effects of higher interest rates (Priority: 4/5): The discussion covers how rising rates affect mortgages, savings, car loans, credit cards, student loans, and investment behavior, with emphasis on higher borrowing costs and limited gains for average savers. Biden administration economic policy and energy stance (Priority: 4/5): Shapiro criticizes the White House for blaming oil companies, pushing green energy during an energy crisis, and pursuing policies he says discourage business investment and innovation. Russia-Ukraine war escalation and deterrence (Priority: 5/5): The episode highlights Russia’s military failures, civilian attacks, and the growing danger that Putin could escalate with chemical, biological, or even nuclear weapons if cornered. U.S. and NATO response to Ukraine (Priority: 5/5): Zelensky’s plea for help, Biden’s additional aid, and debate over no-fly zones and NATO troop placement are presented as evidence that the West lacks a credible strategy or off-ramp. Iran nuclear talks and sanctions contradictions (Priority: 4/5): Shapiro argues the Biden administration is undermining pressure on Russia by still pursuing an Iran deal that may benefit Russian state energy firms and possibly delist the IRGC.

Key Arguments: The Fed’s gradual rate increases are insufficient relative to the scale of inflation, which Shapiro says is far above the official tone of policy responses. Higher rates will likely reduce spending and borrowing, raise mortgage costs, pressure variable-rate debt, and modestly help savers, but not enough to fix inflation quickly. Slow monetary tightening plus weak fiscal/energy policy could lead to stagflation: persistent inflation alongside economic stagnation. The Biden administration’s repeated blame-shifting on oil prices reflects a failure to address supply constraints and energy dependence realistically. Russia’s battlefield losses are severe, but that may make Putin more volatile rather than more likely to back down. Western deterrence is weak because prior red lines were not enforced, making threats against chemical or nuclear use less credible. Zelensky’s appeal to Congress is framed as morally compelling, but the U.S. and NATO remain cautious because direct military intervention could trigger wider war. Pursuing the Iran deal while trying to pressure Russia creates contradictory leverage and signals weakness to adversaries. Shapiro argues foreign policy ultimately depends on credible force, not just sanctions or rhetoric.

Data Points: Fed rate hike: 0.25% - The Federal Reserve raised interest rates by a quarter point. Expected additional Fed hikes: 6 more by year-end - Officials penciled in six more increases in 2022. Projected Fed funds rate: About 1.5% to 1.75% - Shapiro says this is where rates could end up if hikes continue as signaled. Inflation running rate: 8% to 15%+ - He describes inflation as in double digits overall, with goods around 15% and services around 5%. 30-year fixed mortgage rate: 3.85% - Average mortgage rate cited after yields moved higher. 30-year fixed mortgage rate a year earlier: About 3% - Used to illustrate how quickly borrowing costs have risen. One-year CD APY: 0.14% - FDIC average annual percentage yield for one-year certificates of deposit. Goldman Sachs markets account rate: 0.50% - Example of low savings returns despite rising rates. Credit card APR for good credit: 18.98% - WalletHub data cited to show debt costs remain high and may rise further. Russian debt payment due: $117 million - Interest payment on dollar-denominated government bonds. Russian state energy contract in Iran: $10 billion - Rosatom contract to expand the Bushir nuclear plant, tied to Iran deal concessions. U.S. aid to Ukraine: $800 million - Biden announced additional security assistance to Ukraine. Total new U.S. security assistance that week: $1 billion - Biden said the week’s transfers reached this total. Russian troop deaths: More than 7,000 (estimate) - Comparison made to Iwo Jima and U.S. losses in Iraq/Afghanistan. Russian injured estimate: 14,000 to 21,000 - Used to argue Russian casualties are near a 10% combat-ineffectiveness threshold. U.S. personal savings rate: Highest since World War II - Americans hoarded cash during the pandemic.

Pivotal Quotes: "There’s the long way that’s short, and there’s the short way that’s long." — Ben Shapiro: Used as a metaphor for choosing difficult but effective solutions over easy but failing ones. "We are instead attempting to, again, sort of take the easy path of least resistance." — Ben Shapiro: Describing the Fed and Biden administration as avoiding decisive action on inflation and foreign policy. "I think he is a war criminal." — Joe Biden: Biden’s public comment when asked whether Vladimir Putin is a war criminal.

Implications: Listeners are warned that slow monetary tightening may not prevent a recession and that weak deterrence in foreign policy could embolden Russia and Iran. The episode predicts higher consumer costs, persistent inflation, and increased geopolitical risk.