CNBC's Santelli Corrects Ezra Klein's Economics

CNBC's Rick Santelli had to explain the economy to MSNBC contributor Ezra Klein on today's Morning Joe (h/t Hot Air). Klein argued that another recession would "move money around in ways that are unfair."

An exasperated Santelli concisely described what was wrong with Klein's characterization of what recession does to an economy:

"First of all, money doesn't move around in ways that are unfair. Money moves around because people that have it, control it or invest it, it's theirs and they put it places that they deem appropriate, and any outsider looking at that process using adjectives like unfair just don't understand markets and capitalism."

Santelli then reiterated the same points he expressed in his impassioned rant on the floor of the Chicago Mercantile Exchange in 2009. "We have a bunch of entities that should have failed it would have brought religion to the system, it would have been a good thing." He also opined on how he thought an economic recovery could play out:

"I think an involvement by outsiders, feds, European central bank isn't going to help, no. I think we should let this play out as it's playing out, and once we come to a new normal or a new stable foundation, maybe at lower equity rates, maybe at lower interest rates, that at that point maybe we can actually see congress, maybe it would be after 2012 elections, but we could see, you know, maybe they can pull out knees crazy Dodd-Frank bills that nobody can understand, maybe we can cleanse the system of everything that seems to be slowing it down."

A transcript follows.

MSNBC
"Morning Joe"

08/05/2011

8:12 a.m. EDT

EZRA KLEIN: Hey Rick, I'm not as with you on the cleansing analogies, which I think can go a little bit too far. I just mean as - recessions I don't think are periods of cleansing fire, per se.

RICK SANTELLI: But they are.

KLEIN: Ken Rogoff and - well, we can agree to disagree. Ken Rogoff and Carmen Reinhart have done, I think most people agree, the best work on financial crises, and they've said that we got this wrong from the beginning, which I think is somewhat what you're talking about -

SANTELLI: I said that in '09, didn't I?

KLEIN: Sorry?

SANTELLI: I said that in February of '09, didn't I? I was a bit early.

KLEIN: Well, I guess we can go back to the tape. Anyway -

SANTELLI: We certainly can. About 3 million people have.

KLEIN: What Ken Rogoff thinks is in order to get past this, we're going to need a round of significant inflation, and what Ken Rogoff has argued, and other people have argued, is we keep sitting here and saying "what is Congress going to do, what is the legislative going to do, what are the politicians going to do?" In Washington, in the media generally, we often tend to overlook the role of the Federal Reserve. And if he thinks and Reingart thinks that we're going to have to go through a period of recession and that's going to be painful and it is going to move money around in ways that are unfair, is it time to just speed that along, is that simply the only hope?

SANTELLI: Well, first of all, money doesn't move around in ways that are unfair. Money moves around because people that have it, control it or invest it, it's theirs and they put it places that they deem appropriate, and any outsider looking at that process using adjectives like unfair just don't understand markets and capitalism.

[CROSSTALK]

KLEIN: - increase inflation believes the shift of wealth from one side to the other on creditors and debitors, they believe that to be unfair.

SANTELLI: And that's why the Fed's got it wrong, all of their assumptions are wrong. That's silly, that's why the programs haven't worked.

KLEIN: But it seems sort of beside the point, what you're saying, you're saying we shouldn't use moralistic language, but that doesn't change the question of whether or not we're going to have inflation.

[CROSSTALK]

SANTELLI: - let's get the inputs right. What we have we have a bunch of entities that should have failed it would have brought religion to the system, it would have been a good thing, but we prohibited that from happening.

JOE SCARBOROUGH, host: Going to Ezra's underlying question, do you believe that needs to be sped along now?

SANTELLI: I think an involvement by outsiders, Feds, European central bank isn't going to help, no. I think we should let this play out as it's playing out, and once we come to a new normal or a new stable foundation, maybe at lower equity rates, maybe at lower interest rates, that at that point maybe we can actually see congress, maybe it would be after 2012 elections, but we could see, you know, maybe they can pull out knees crazy Dodd-Frank bills that nobody can understand, maybe we can cleanse the system of everything that seems to be slowing it down, let the entrepreneurs invest and maybe we'll be able to deliver promises to people that are having rough times today.

SCARBOROUGH: All right, Rick Santelli thank you for your cleansing thoughts. We appreciate it.