RUSH: We’re gonna start with Gail in Wayne, Pennsylvania. Hi, Gail. Glad that you called. Welcome to the EIB Network. Hello.

CALLER: Hello, Rush. I’m so honored to speak with you.

RUSH: Thank you.

CALLER: Thank you so much for continuing your brilliance. Thank you.

RUSH: Well, I appreciate that. I feel kind of embarrassed because you’re very nice, very sweet. You’re complimenting my brilliance, but I just admitted I’ve tried to be boring and low pro-life, and you didn’t notice, so —

CALLER: It’s impossible.

RUSH: I guess. It was pointed out at me also, you know, I have 25 years of opinion assets built up, even if I bring to a screeching halt my opinion income, I still have opinion assets, 25 years, can still be plucked and used to infuriate people.

CALLER: Yes. And thank you. Thank you for doing it. I and millions appreciate you so much.

RUSH: Well, thank you. Folks, becoming less high profile is harder than losing weight. I just want to tell you.

CALLER: You deserve it.

RUSH: (laughing) Anyway, welcome. What did you call about?

CALLER: In the economic sense, there is a reason that Rolls-Royce sales are spiking, as well as the sale of paintings and other big commodities, homes. When the environment, the tax environment is not friendly to investment, our money is not gonna go into capital investment. All the money’s gonna go into this type of thing as in France. It has been traditional, they put their money, anybody with extra money will buy antiques rather than investing.

RUSH: Are you rich?

CALLER: Pardon?

RUSH: Are you rich? Are you wealthy?

CALLER: No.

RUSH: You’re speaking of this as though you have firsthand experience at it.

CALLER: I graduated with honors with an undergraduate degree in economics. I also have a master of business in strategic management, although I’ve been a small businessperson, and I’ve been in the trenches.

RUSH: Okay. Small business, it means you are rich.

CALLER: Yeah. (laughing).

RUSH: Well, that’s what people think, small business, you got a pile of money you’re not using. You could be using it to hire people or give raises, but you’re out buying Rolls-Royces.

CALLER: This is what people do, and this is how the wealthy —

RUSH: She’s not taking my bait. She’s very smart. She’s not taking my bait. Now, why would the rich buy a Rolls-Royce instead of investing the money in something?

CALLER: Because when the tax rate is too high, why would you do this? And this goes for the people that you always talk about that are not the income producers, the ones that have just a lot of wealth sitting in the bank that’s not even being taxed. Why are they gonna put themselves out to invest in our economy here? No, no, no. They will buy these paintings, et cetera. That’s what’s being encouraged.

RUSH: Well, now, wait, I think I know the kind of paintings you’re talking about —

CALLER: Renoir, et cetera.

RUSH: Well, those are gonna be investments.

CALLER: Well, what would you rather see, investment in manufacturing —

RUSH: I don’t care. It’s not my business. If someone wants to invest in Renoirs, that’s fine. See, this is the difference between me and a lot of people. I don’t care. If they want to buy a Rolls, I don’t care. Doesn’t matter to me. Doesn’t ruin my day. Doesn’t make me dislike them. I don’t resent them.

CALLER: No, I don’t care, either. If nothing else —

RUSH: Well, you just said wouldn’t I prefer they invest in manufacturing.

CALLER: Well, I would prefer it because I care for the country to be stronger, but in truth if they want to put their money in an offshore account, if they want to buy beautiful paintings, at least with Rolls-Royces they’re gonna employ some people to build them.

RUSH: Right. Yeah, Rolls-Royces are made entirely by hand. I think still are. Yeah

CALLER: I care for the country. I would like to see investment made when we expand technology. As we saw with Steve Jobs, you expand employment, you expand the options, the pie grows. This is the economic sense of —

RUSH: It’s gonna be very hard to do. It’s gonna happen in spot markets. For example, in certain elements of high-tech market, what you just described is happening. There are people growing. Like Apple is still trying to grow and they’re pulling it off. Well, Samsung, too; they’re not an American company. But there are pockets of the American economy which are growing.

But en masse, when you talk about economic theory, it’s not possible. The mathematics doesn’t work out. Please confirm this for the audience since you have an MBA or a degree in economics. You simply… The private sector, what people think of as the American economy, you can’t take money out of it and at the same time have it grow, right?

CALLER: I am for the open markets worldwide, if that’s what you’re getting at.

RUSH: No. I’m getting at the fact that government is growing and therefore it’s impossible for the economy to grow.

CALLER: No! No!

RUSH: If the government is getting bigger by taxing people —

CALLER: No! That’s not money. Transfer payments are just simply shuffling around the money that’s there. It’s not enlarging the pie.

RUSH: Exactly. It’s making the pie smaller.

CALLER: Correct.

RUSH: It’s taking the money away from where it is earned and produced and then government’s taking it and spending it. And, by the way, they’re spending and borrowing money they don’t have, in addition. They’re either redistributing it, giving it away, buying stuff, or doing whatever. But it’s not possible for the private sector to grow. This is the whole argument with the stimulus. You know, the Democrats and Obama told people, “We’re gonna spend a trillion dollars, $787 billion.”

This is Keynesian economic theory. “We are gonna have to juice the economy. We’re gonna have to put a trillion dollars into this economy to speed it up.” So what they wanted people to think — and a lot of people did think this — is that the economy was sitting as it was and an additional $1 trillion was injected. And by virtue of that, the economy should have grown and there should have been increased economic activity.

Now, the flaw in that is that the trillion dollars that government put into the economy had first to be taken out of it, because the government doesn’t have money. Government doesn’t produce anything. So the $787 billion stimulus could not possibly stimulate the economy. The Keynesian economic theory is basically impossible, because the money was not acquired from somewhere else and injected into the economy and as a result the economy grew.

The economy shrank first because that money had to first being taken out of it. When the government spends $787 billion — whether they borrow it, whether they print it, or whether they get it via taxes — the fact of the matter is it is not money that existed somewhere else that they’re shifting. They first have to take the money out of the private sector and then they put it back in and claim a miracle.

It never was going to work. This kind of stimulus never does work. FDR tried it for years and years and years, and he ended up prolonging the Great Depression! It is a flawed, faulty economic theory. The name itself is even nearly criminally incorrect: “Stimulus.” It’s the exact opposite. The economy shrank before the money was put back. That was a net wash, a net zero.