It's the whole point. When did companies learn how to do this? You finish your argument. I know, but did you invite me on here just to lecture to me? No, I just want to ask you. Okay. Point is to get markets that are more competitive. [00:00:15] We just want to put one more tool in the toolbox when CEOs are going on the phone saying, boy, inflation is great because it gives us a chance to raise our. It's not about it's not about. Diverting the attention away from the real issues that might actually help the middle class that you always talk about helping. [00:00:32] For 40 years, companies didn't know how to price gouge. CNBC's Joe Kernen and Senator Elizabeth Warren went to war over the notion of companies price gouging consumers, and the idea that the federal government should step in to stop it. [00:00:49] Now, Kernen is absolutely terrified that the federal government might want to do something to mitigate crony capitalism. And before we get to his clip, I just want to we have now done several videos on the idea that Kamala Harris has floated price fixing [00:01:06] in order to respond to price gouging. Let me be very clear. Kamala Harris has not put out any detailed policies whatsoever. Okay. She has not proposed price fixing. She has called out price gouging, which we do have evidence of. [00:01:22] And we've presented on the show multiple times. And we'll do it again during this story. But look, I think it's because this isn't my first rodeo, Jake. And every election cycle we get into, like these super detailed debates, like the nitty gritty of every debate, like Medicare for all, [00:01:39] none of this stuff is going to happen. Okay. So like, quote me later, none of this stuff is going to happen. Okay. So we're kind of wasting our time, but at least it gives us an opportunity to talk about what some of these companies who are not impacted by supply chain bottlenecks, [00:01:55] how they use the inflation narrative in order to increase their prices, to increase their profit margins That is very much real. Jake, any thoughts before we go to the first video? So I want to attack Kern more later. But first, two quick points. [00:02:11] First of all, when CNBC is attacking you, you're winning. The only thing that it costs you is potential corporate donors. But Kamala Harris has already raised a stunning half $1 billion since she entered the race. It doesn't look like she's hurting for money. And what the voters, a bunch of CNBC anchors going, you're being unfair to our [00:02:29] beloved corporations is great politics. So thank you. Keep it coming CNBC keep attacking does nothing but help Democrats. And he said in that little clip, for 40 years there hasn't been any price gouging on companies, meaning like, oh, you guys want to do something about it now when you [00:02:46] didn't do anything about it before? Yeah, that's because they were controlled by your corporate buddies before. And so now that they're finally trying to do something to protect people, of course you're flipping out, because what if it cost me a nickel? I don't care about you guys. But what if it costs me my stocks? My beloved stocks? [00:03:01] Hey, don't scroll away. Come back, come back. Because before the video continues, we just want to urge you to lend your support to tight. You power our honest reporting. You do it at tight. Dot com slash team. And we love you for it. Besides which as you're going to hear from Senator Warren yourself, [00:03:19] there are various states who do have laws going after price gouging. So it's not like this has never been dealt with before. We'll get to that in just a moment. Let's go to the first video where he goes on and on about how the federal government should do nothing about price gouging. I can paint you a picture of how that would work and how it's worked [00:03:36] in the past where we've tried to artificially hold prices down. Competition doesn't come in. People don't like if beef is too high. People don't move. The chicken competitors don't come in to undercut where the beef prices are. Nothing works when you try to artificially control prices. [00:03:54] It's just a supply and demand issue. It's a flawed idea. - So. So, did you have a question here? - Yes. Why would you propose a flawed idea when the real problem. So let me ask you really want to help the middle class? If you really sincerely want to help people having trouble at the grocery store. [00:04:10] It's not price gouging that's the issue. So look, I didn't love the way Warren handled that. Like, I liked the way that she said, are you going to ask me a question or are you just making a statement here? Right. Because he was just making a statement. But I would have used this as an opportunity to make it abundantly clear no one's having a conversation about fixing prices. [00:04:28] Yeah, but look, so you can disagree with my style, and a lot of people do, but that's I would come back mocking, when did I say price controls? You're just going on and on with your straw man. And it's fun. Go have beat the straw man a little bit more. But we didn't say price controls. You just made that up. [00:04:44] We're talking about price gouging. And price gouging is already on the in on the books in so many different states. It's something we've adjudicated before. And you're acting like it's like, oh my God, it's something that nobody's ever thought of before. So you want to inform your audience or you want to just keep making things up? [00:05:02] That's how I would have handled it. So let's go to Warren, who now you know, defends laws meant to protect consumers from price gouging. That's different from price fixing. And I've said it before, I'm going to say it again. I am against price fixing. That has yielded terrible results in the past. [00:05:19] Let's watch what Warren has to say. Where have you been for the last 30 years? As three dozen states have price gouging laws and they have used them effectively. States like Texas and Florida, they've used price gouging laws. [00:05:37] Price gouging laws are not price control is. There were corporations that said, whoa, now that we have inflation, now that prices are up overall, this is a great opportunity for us to raise prices not just in passing along [00:05:53] costs, but to go way, way, way above that. And what how do we know that it was way, way above, just passing along costs? Look at what happened to their profit margins. If they'd just been passing along costs, profit margins would [00:06:11] have stayed about the same. But for some industries, some companies profit margins shot up. So in the interest of shortening that clip. So it didn't go on too long. You know in the middle of that she said, look, there was inflation [00:06:26] in certain sectors of the economy as a result of Covid. Obviously everything shuts down during Covid. When everything opens up, there's increased demand, but there were bottlenecks in the supply chain. So in certain sectors of the economy there was decreased inventory [00:06:43] or decreased supply and high demand. And so yes, in certain sectors you did see inflation over those issues. And it wasn't price gouging. However, there were certain companies that were not impacted by those bottlenecks, and they decided to take advantage of the inflation narrative [00:07:00] in order to increase their prices when they really didn't need to. And then they would brag about it during their calls with their shareholders, their quarterly calls. And remember, guys, one of the biggest crimes you can commit in the United States is defrauding your investors. [00:07:16] And so they have to tell the truth when they're doing those calls with their shareholders. And I want to give you a little taste, a little tastey taste of some of the stuff that these corporate executives were saying about inflation, starting with the CEO of Iron Mountain Inc., who told Wall [00:07:32] Street analysts at a September 20th, 2022 investor event that the high levels of inflation of the past several years have helped the company increase its margins, meaning profits, and that for that reason, he had long been doing my inflation dance. [00:07:47] Praying for inflation. Okay. There's more. This is the Kroger CEO, Rodney McMullen, who said this during an earnings call. Our business operates the best when inflation is about 3% to 4%. A little bit [00:08:03] of inflation is always good in our business because they can increase prices and increase their profits. AutoZone, which sells car parts and accessories, saw earnings jump 13%. CFO Jamere Jackson called Inflation. [00:08:20] A little bit of our friend in terms of what we see in terms of retail pricing. So like all you have to do is listen to what they're saying during these calls with their investors. But what's so frustrating, Jake, is the constant denialism about price gouging even happening. [00:08:37] And they're about to get into that debate. In the next clip. - Let's watch. - Prices were going up. And the difference is when they started going up sharply and people noticed that companies, some companies also noticed and said, you know, we could raise [00:08:53] our prices just passing along costs. That's what you do in a competitive market. - This is not widespread companies. - This is not widespread. I let you finish in some markets what we've seen in markets where there's less competition that CEOs said, we can do more than pass along costs. [00:09:12] And you don't have to take my word for it. Do you listen to earnings calls? I listen guys have gotten. On the example you use for Kraft. - You finish the. - Example. You. - Use. - For craft is totally fallacious. It's totally fallacious. - You throw the numbers, you. - Just want to keep talking. [00:09:29] They can't do that because. - Because it's not a monopoly, margins. - Are going to increase. Other companies come in. - That's the way the system. - Works, where there's more concentration. That's the whole point. It makes your point when markets. Are lean has only 20%. There's more price gouging. When markets are more competitive. [00:09:48] It's not price. There is no price gouging. Now remember the price gouging also translates to higher returns for the investors. And CNBC's main purpose is to focus on the stock market and focus on ensuring that investors get a return on their investment. [00:10:03] Just one more quote or one more factoid to know about Coca-Cola Co's CEO James Quincey said in February of 2023, the company had earned the right to push price hikes onto consumers because it's classic Coke and Fanta sodas. Lead the beverage category. [00:10:20] So that's like the admission is amazing. But anyway, go ahead. Yeah, that's going to lead to the point that I'm making here, he said to Elizabeth Warren. That wasn't widespread. That's not true at all. New York Times did a pretty good story about how the number of times, [00:10:35] demand elasticity was mentioned in shareholder calls, and it went up seven x during inflation. So why did it go up seven times? What does it mean. So whether demand is elastic or inelastic means can do people have to buy it no [00:10:52] matter what, in which case it's inelastic. And there you can push prices higher because they've got to buy it anyway. Right. Or prices demand is elastic and it depends on whether they like the price or not. Right. So during this inflation situation, what the CEOs realizing [00:11:12] these companies realize is that it'd be demand became in an inelastic, which means, oh, we can increase our prices and it's not going to have much of an effect. Let me quote two CEOs to give you a sense of it. Callaway Golf's CEO chief executive Oliver Brewer, the third, [00:11:30] wrote in to offset inflationary pressure, we have raised raised prices nicely this year and as the avid golf consumer is both affluent and passionate, there has been no discernible pushback, meaning, hey, we could raise prices and they're not pushing back. They're still buying it. So let's keep on raising it. [00:11:46] And we'll say it's because of inflation when it's not necessarily the case. That's the implication. Keurig doctor Pepper more consumer good product Robert Gamgort, their chief executive, said the good news is our brand strength has held up well in the face of new pricing, [00:12:02] with modest elasticity impacts across our portfolio during the quarter, meaning, guys, they're still buying it anyway, so we just kept on jacking up the prices. So that's exactly what Elizabeth Warren and Kamala Harris are talking about. And CNBC's pretending they don't know what it means, and then pretending [00:12:20] to be frustrated that Elizabeth Warren doesn't understand the economics of it. The whole thing is totally misleading on purpose to protect corporations.