Santelli Exchange: Subpar Growth to 'Infinity & Beyond'

March 1, 2016

Rick Santelli: Thanks Simon. I would like to welcome my guest today, Chip Dickson. Chip, thanks for taking the time.

Chip Dickson: Rick, thanks a lot.

Rick Santelli: You know, Chip, I’d call our economy the “Buzz Lightyear” economy; we have sub-par growth to infinity and beyond! Do you disagree with that?

Chip Dickson: No I agree with it, I call it the “low velocity” economy. The economic velocity is just not sufficient (enough) to generate an adequate amount of jobs…income growth, a lot of opportunity. In fact, I think the participation rate is a lot more important than the unemployment rate, and it remains too low.

Rick Santelli: You know, Chip, it’s funny you mention that because Fed never mentioned that. You know, you talk to people that trade the auto stocks; if they’re long they want to talk to what Phil “four on the floor” LeBeau talks about: record auto sales. But record auto sales? Been there, done that; doesn’t necessarily make the stock go up. I look at the fact that the participation rate covers up the negatives of employment. Everything that the economy’s doing, it has been doing and most likely will continue to do. This puts the Fed in a real bind, doesn’t it?

Chip Dickson: Sure it does, it makes it hard for them to get rates back up. The level of government debt makes it hard for them to get rates back up; it makes it hard for savers to get an adequate return. And so I think you need to flip from monetary solutions to fiscal solutions and we just aren’t offering them right now.

Rick Santelli: Yeah, but whether it’s Apple versus the FBI or, in this instance, fiscal versus monetary, the fact is that I think policy has set a “pick”, to use a basketball term, for Congress’ inactivity. I just don’t see Congress’ inactivity changing anytime soon. We are in an election year. So, you know, I guess it’s either more of the same from the Fed and experimenting or we wait another year before you get new politicians that actually try to dig in if they’re ever meant to do that. Your thought?

Chip Dickson: I think you get more of the same, and I think this is a year where we wait because we are in an election year and we won’t know what changes will be made until next year.

Rick Santelli: Alright, my final thought is: you know, I’ve coined a term. You know we’ve all heard of jobless recoveries. Is this going to be a “job-full recession”? Basically, I’m sticking with this theme. I’ve listened to Dudley’s comments but I look at it like…we are currently 1.9 percent 2015 growth. We will probably be a smidge better if first quarter is any indication of this year, and with the globe pushing our growth down a bit, maybe it’ll lower our  glide path. But even if we don’t go into recession, should the Fed keep normalizing?

Chip Dickson: I don’t think the Fed is going to keep normalizing because our rates are so much higher than most other countries. It pushes pressure on the dollar to go up, and that slows economic activity so I don’t think that’s going to happen. I think you’re still going to see decent drive growth but I think (it’s) not sufficient (enough) to really push the participation rate up, and that’s important.

Rick Santelli: So basically, you’re looking at it from my new category: policy contagion. In the end, it almost doesn’t matter what the fundamentals are. What matters is who’s doing the most? If all stimulus is fungible, all bad policy is fungible as well. Final 20 seconds, finish it up, Chip.

Chip Dickson: So we need to go to more stimulative or constructive fiscal policies, and we need to do things that begin to reduce our debt levels and allow the consumers and other people…to be able to participate a lot more in the economy. Thank you.

Rick Santelli: Alright, Chip. Thanks, it’s sounds like the reg’s are the first thing I would attack to get to the final ends that you’re looking for.

Chip Dickson: Absolutely.