Aug 26, 2026 · 1h 33m
Laffer backs sound money and supply-led growth
Despite Big Real Challenges, The Economy Is In Good Shape & Getting Better | Dr. Art Laffer
The conversation tests whether stable money, simpler taxes, and more housing supply can address inflation, debt, affordability, and demographic pressure without ideological shortcuts.
- 1Art Laffer says changing immigration flows distort headline GDP and labor statistics without necessarily signaling weaker prosperity.
- 2Laffer favors stable-valued money, broad-based taxes, and incentives that make policymakers bear the costs of poor economic decisions.
- 3He argues that housing affordability requires more supply, while currency devaluation, tariffs, and subsidies offer limited lasting solutions.
Don't miss
Laffer links housing affordability to supply rather than controls or subsidies, making construction and production central to his broader economic prescription.
The brief
Art Laffer opens with an optimistic view of the U.S. economy, arguing that changing immigration flows alter GDP and labor statistics without necessarily reducing prosperity.
His monetary case is uncompromising: a stable-valued dollar matters more than an inflation target, and he sees Kevin Warsh as unusually qualified to lead the Fed.
Laffer extends the incentive argument to government, proposing simpler taxes and direct financial consequences for policymakers whose decisions produce poor economic outcomes.
Tariffs, Treasury borrowing, and Japan’s weakening yen become tests of the same principle: interventions may shift prices or trade flows without creating durable prosperity.
The conversation returns to housing and welfare, where Laffer favors expanding supply, rewarding work, and judging policies by evidence rather than ideology or virtue signaling.
What was said on this episode
32 statements · 22 positive · 8 negative · 2 neutral
Kevin Warsh will materially improve the Federal Reserve over the next quarter century
“He will make a material difference, I believe, over the next quarter century. And that is really good news.”
Listen at 1:17
The U.S. economy is currently in strong macroeconomic condition
“this economy is poised. It's in great, great shape as far as sort of macroeconomics is concerned.”
Listen at 4:20
Changed immigration flows substantially affect reported U.S. GDP figures
“That is a huge, huge factor in the GDP numbers.”
Listen at 7:01
Migration changes alter economic measurement more than underlying economic conditions
“There's nothing fundamentally economically happening because of these changes in migration. That's what I'm trying to say. This is not good economics, bad economics. It's just we count them differently.”
Listen at 8:07
Current U.S. policies will not materially reduce prosperity
“I don't see anything really negative that we put into place that's going to materially affect prosperity.”
Listen at 10:38
Kevin Warsh has the strongest credentials among Federal Reserve chairs
“he is the single best Fed Chairman with regard to credentials and balance sheet and resume of any of those Fed Chairman.”
Listen at 12:35
Kevin Warsh is positioned to pursue zero U.S. inflation through a price rule
“I think he is just perfectly positioned to return us to a price rule where he focuses on absolutely the number one objective is to have no inflation in the U.S. whatsoever.”
Listen at 12:51
Kevin Warsh will likely target zero inflation
“I think his goal will be zero inflation.”
Listen at 16:26
Guaranteed zero inflation would lower interest rates and expand capital markets
“If we knew there were going to be no inflation guaranteed for the next 20 years, what do you think would happen to interest rates? What would happen to contracts? You'd have an explosion in the capital market. You'd have lower interest rates because inspected inflation would come down.”
Listen at 16:52
U.S. inflation averaged zero under the pre-1913 monetary system
“From 1776 until 1913, the average rate of inflation was zero.”
Listen at 17:40
The U.S. price level rose roughly thirty-fivefold since 1930
“By God, the price level from 1930. to the present has written up risen 35-fold.”
Listen at 19:45
Private markets can create stablecoins tied to a consumer-goods bundle
“what I'd like to see happening is something along the cryptocurrency lines where private markets create a stable coin, which is stable in value with respect to the consumer. bundle, consumer goods bundle.”
Listen at 23:12
Cryptocurrencies will increasingly replace failed government currencies
“they are the wave of the future where the private market now is coming in and is trying to replace government monies that have been such a failure.”
Listen at 24:43
Politicians should receive performance-based compensation
“Why don't you just put them on commission?”
Listen at 29:59
Politicians’ compensation should rise with GDP growth and fall when growth is weak
“If GDP grows at 3% per year, they get their pay. If it grows at 4% per year, give them double their pay. Grows at 5% per year, triple their pay. Grows at 2% per year, no pay. Grows at 1% a year, they owe us their pay.”
Listen at 30:03
A low-rate broad-based flat tax without exceptions reduces tax-system gaming
“It's like a low rate, broad based flat tax. No exceptions, because then if there are no exceptions, there's no way of gaming the system”
Listen at 35:43
Free trade supported U.S. economic development from 1640 to 1870
“It has been free trade that has provided us from 1640 until 1870.”
Listen at 38:31
Five policies constitute the pillars of prosperity
“Those are the five pillars of prosperity. Low rate broad-based flat tax, spending restraint, sound money. minimal regulations and free trade”
Listen at 45:16
Treasury Operation Twist is not working effectively
“I don't think it's working very well.”
Listen at 50:36
Recent Treasury intervention worsened inflation and interest-rate outlooks
“the outlook for inflation, the outlook for interest rates has worsened.”
Listen at 51:03
Japan should strengthen the yen rather than the U.S. weaken the dollar
“I would much prefer them to make the yen stronger rather than us to make the dollar weaker.”
Listen at 59:33
Currency depreciation produces higher inflation relative to other currencies
“All a weak currency does is gives you higher inflation than the currencies against which you're devaluing. That's all it does.”
Listen at 1:02:56
Continuous currency depreciation guarantees higher inflation and interest rates
“if you have continuous depreciation of your currency, you will have higher inflation and higher interest rates guaranteed.”
Listen at 1:03:14
Economic claims that conflict with data should be rejected
“Everything is database. You know, if it doesn't conform with the data, it's wrong.”
Listen at 1:05:57
A good high-paying job is better welfare than dependency programs
“The best form of welfare, as Kennedy put it, is still a good high paying job.”
Listen at 1:07:09
The U.S. will approach a near-perfect flat tax within ten years
“I'm very hopeful that in the next 10 years, we'll really get close to a perfect flat tax.”
Listen at 1:15:46
Taxing work while subsidizing nonwork reduces labor-force participation
“If you tax people who work and you pay people who don't work, don't be surprised if you get less people working.”
Listen at 1:17:25
Continued economic improvement will leave the U.S. better off within ten years
“if we continue doing that, in 10 years, we'll be in a lot better shape than we are today”
Listen at 1:17:53
Welfare and taxing the rich do not improve affordability; increasing supply does
“giving people who don't work money doesn't work. Taxing the rich doesn't work. And affordability is all about increasing the supply of a product.”
Listen at 1:20:38
Increasing housing supply makes housing more affordable
“You need to increase supply to make things more affordable.”
Listen at 1:21:45
Lower production taxes, deregulation, sound money, and free trade increase affordability
“Cut taxes on production and output and stuff. Deregulate. Sound money. Minimal regulator. Free trade. And get the hell out of the way and people will produce a lot and everything will become affordable.”
Listen at 1:21:53
California’s proposed wealth tax would have strongly negative consequences
“If it passes, it's got some very negative consequences for California.”
Listen at 1:26:17
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.