1 00:00:03,600 --> 00:00:06,040 Speaker 1: Welcome to ask fear and greed when we answer questions 2 00:00:06,040 --> 00:00:09,840 Speaker 1: about business, investing, economics, politics, and more. I'm Michael Thompson 3 00:00:09,960 --> 00:00:12,920 Speaker 1: and hello Sean Aylmer. Hello Michael, Sean I reckon. This 4 00:00:12,960 --> 00:00:16,320 Speaker 1: one is going to be right up your alley because 5 00:00:16,320 --> 00:00:19,640 Speaker 1: you love educating me on the economy. 6 00:00:20,600 --> 00:00:23,680 Speaker 2: Yes, do you retain any of it? Yes? 7 00:00:24,079 --> 00:00:26,240 Speaker 1: Sorry. If you were to test me one day, if 8 00:00:26,280 --> 00:00:28,880 Speaker 1: you were to sit down in high school style put 9 00:00:28,880 --> 00:00:32,360 Speaker 1: out a test, I reckon, I would I would ace it. 10 00:00:32,479 --> 00:00:35,000 Speaker 2: What happens to yields when bond prices rise? 11 00:00:35,240 --> 00:00:39,960 Speaker 1: So the question today, Sean, the US economy teetering on 12 00:00:40,000 --> 00:00:45,519 Speaker 1: the edge of stagflation. What is stagflation and why is 13 00:00:45,560 --> 00:00:47,479 Speaker 1: it so bad? 14 00:00:47,880 --> 00:00:50,800 Speaker 2: Right? So the premise is probably not quite right. We're 15 00:00:50,800 --> 00:00:52,920 Speaker 2: not tear. I don't think the US is teetering on 16 00:00:52,960 --> 00:00:55,520 Speaker 2: the edge of stagflation, but there's a chance of it. 17 00:00:55,880 --> 00:00:59,760 Speaker 1: Where is your sense of theater? Where is the sensational. 18 00:00:59,480 --> 00:01:03,840 Speaker 2: They're talking about it rather than teetering on it? Fine, 19 00:01:04,800 --> 00:01:07,880 Speaker 2: basic stag plation is the worse of everything. So you're 20 00:01:07,880 --> 00:01:11,880 Speaker 2: getting no economic growth, you're getting inflation, and you're getting 21 00:01:11,920 --> 00:01:16,760 Speaker 2: rising unemployment. Normally, in most economic cycles you get one 22 00:01:16,840 --> 00:01:19,400 Speaker 2: but not the other. And then the gold of wax economy, 23 00:01:19,400 --> 00:01:21,319 Speaker 2: which Australia is pretty close to at the moment. You've 24 00:01:21,319 --> 00:01:26,120 Speaker 2: got low unemployment, low inflation, and economic growth. Now at 25 00:01:26,120 --> 00:01:28,240 Speaker 2: the moment Australia we haven't got a lot of economic growth, 26 00:01:28,360 --> 00:01:29,280 Speaker 2: but we've got the other two. 27 00:01:29,319 --> 00:01:31,520 Speaker 1: And we talked about that previously as being the sweet spot. 28 00:01:32,000 --> 00:01:33,520 Speaker 1: For the sweet spot, if you're able to kind of 29 00:01:33,600 --> 00:01:35,800 Speaker 1: nail all of those, which is very hard to do, 30 00:01:36,000 --> 00:01:37,720 Speaker 1: then that's that's ideal. 31 00:01:37,880 --> 00:01:41,160 Speaker 2: Yeah, And so the anti sweet spot, the sour spot, 32 00:01:41,319 --> 00:01:44,800 Speaker 2: sour spot, thank you very much. The sour spot is 33 00:01:44,840 --> 00:01:48,880 Speaker 2: when you're getting rising unemployment, you were getting rising prices 34 00:01:49,320 --> 00:01:53,480 Speaker 2: and growth has slowed. Last month, US FED Reserve chair 35 00:01:53,640 --> 00:01:56,240 Speaker 2: Joam Powell mentioned it, not by name, but he talked 36 00:01:56,280 --> 00:01:58,760 Speaker 2: about weak growth and rising prices. That's why people are 37 00:01:58,800 --> 00:02:02,080 Speaker 2: talking about stack placient again. It was a real nineteen seventies, 38 00:02:02,160 --> 00:02:05,280 Speaker 2: nineteen eighties phenomenon. Now, some of us went to high 39 00:02:05,320 --> 00:02:08,680 Speaker 2: school in the nineteen eighties. My economics teacher, I'm going 40 00:02:08,760 --> 00:02:12,799 Speaker 2: to call him Bob Cochran, mostly because that was his name. 41 00:02:13,000 --> 00:02:15,320 Speaker 1: I was gonna say that's a very specific suitonym. 42 00:02:15,560 --> 00:02:17,280 Speaker 2: He was the economics teacher, and he used to wear 43 00:02:17,320 --> 00:02:18,480 Speaker 2: shorts all the time. 44 00:02:18,960 --> 00:02:21,560 Speaker 1: Yeah, economics and maths teachers. It seems to be a thing. 45 00:02:21,639 --> 00:02:25,040 Speaker 1: And as socks, yeah, walking on walking socks. Yeah, absolutely absolutely. 46 00:02:25,800 --> 00:02:27,440 Speaker 2: And he used to say I remember him saying, if 47 00:02:27,440 --> 00:02:29,880 Speaker 2: you could solve the stag fation problem of the nineteen eighties, 48 00:02:29,919 --> 00:02:32,680 Speaker 2: you could be a millionaire. Not but I did just 49 00:02:32,880 --> 00:02:33,920 Speaker 2: how I remember staate plation. 50 00:02:34,200 --> 00:02:35,520 Speaker 1: He didn't solve it. 51 00:02:35,840 --> 00:02:39,680 Speaker 2: I mean the will solved it. Really. It was of 52 00:02:39,800 --> 00:02:42,400 Speaker 2: seventies and eighties seeing sort of partly because of the 53 00:02:42,480 --> 00:02:46,480 Speaker 2: old price shocks, so prices went through the roof and 54 00:02:46,560 --> 00:02:48,880 Speaker 2: economies couldn't keep But we kind of got a sense 55 00:02:48,919 --> 00:02:50,480 Speaker 2: of it with the Ukraine War, where we had the 56 00:02:50,639 --> 00:02:54,959 Speaker 2: rising energy prices. Economic growth was quite slow and labor 57 00:02:55,000 --> 00:02:58,880 Speaker 2: market wasn't particularly strong. The problem with stagflation really is 58 00:02:58,919 --> 00:03:01,760 Speaker 2: it builds on itself. If you've got higher prices and 59 00:03:01,800 --> 00:03:04,440 Speaker 2: people haven't got jobs, that's going to slow the economy 60 00:03:04,480 --> 00:03:07,880 Speaker 2: down and it kind of becomes this dreadful spiral that 61 00:03:07,960 --> 00:03:11,239 Speaker 2: they get into. Australia is not going to have stack equation. 62 00:03:11,520 --> 00:03:15,000 Speaker 2: That's my confident prediction. Yeah, look for the US isn't 63 00:03:15,200 --> 00:03:19,080 Speaker 2: so good the reason there, this is a tariff's discussion. 64 00:03:19,639 --> 00:03:23,480 Speaker 2: You put tariffs in US, consumer spending has to sorry, 65 00:03:23,600 --> 00:03:30,400 Speaker 2: inflation increases. Consumers already are the consumer sentiment has fallen already, 66 00:03:30,840 --> 00:03:36,000 Speaker 2: so we're seeing higher prices. The economy is slowing. Employment 67 00:03:36,040 --> 00:03:39,680 Speaker 2: will start unemployment will start rising. You're actually looking at 68 00:03:39,680 --> 00:03:43,440 Speaker 2: stagflation sort of. Companies like Coca Cola, the car manufacturers 69 00:03:43,440 --> 00:03:45,200 Speaker 2: that have come out and just said we've got to 70 00:03:45,200 --> 00:03:48,840 Speaker 2: put up our prices but demand is weaker. That is 71 00:03:48,880 --> 00:03:51,920 Speaker 2: stagflation when it's on the way to stakeflation at least. 72 00:03:52,040 --> 00:03:53,160 Speaker 2: So it's quite a scary thing. 73 00:03:54,360 --> 00:03:57,240 Speaker 1: It sounds like it is teetering on the edge of 74 00:03:57,280 --> 00:04:01,080 Speaker 1: stack plation. I'm now trying to redeem the headline that I. 75 00:04:01,160 --> 00:04:03,600 Speaker 2: Use soon to be teetering. 76 00:04:03,840 --> 00:04:06,160 Speaker 1: Yeah, yeah, so we're just getting in slightly early. 77 00:04:06,360 --> 00:04:08,520 Speaker 2: Yeah yeah, so it could look good. 78 00:04:08,720 --> 00:04:11,680 Speaker 1: Oh man, yeah, let's go for good. I think I 79 00:04:11,720 --> 00:04:13,240 Speaker 1: think that all makes sense. I mean, it's one of 80 00:04:13,280 --> 00:04:16,080 Speaker 1: those terms that you hear a lot, but until someone 81 00:04:16,120 --> 00:04:18,160 Speaker 1: just sits down and just explains exactly what it is, 82 00:04:18,200 --> 00:04:20,440 Speaker 1: it kind of just is a little bit opaque. 83 00:04:20,720 --> 00:04:23,000 Speaker 2: Yes, I mean, you basically end up in a recession 84 00:04:23,000 --> 00:04:23,799 Speaker 2: if you have stagflation. 85 00:04:24,000 --> 00:04:28,160 Speaker 1: Okay, all right, but Australia sweet spot, US not. 86 00:04:28,120 --> 00:04:31,640 Speaker 2: So sweet spot, sweet spot at the moment sweetish Yeah, okay, 87 00:04:31,680 --> 00:04:32,120 Speaker 2: all right. 88 00:04:32,560 --> 00:04:36,520 Speaker 1: That was a good question, great answer. I reckon. Bob 89 00:04:36,560 --> 00:04:40,680 Speaker 1: Cochrane would be proud of you. Thank you very much. 90 00:04:40,680 --> 00:04:41,640 Speaker 2: Sure, thank you. Michael. 91 00:04:41,920 --> 00:04:43,760 Speaker 1: Remember, if you have your own question that you would 92 00:04:43,760 --> 00:04:46,800 Speaker 1: like us to answer, it can be as outlandish as 93 00:04:47,080 --> 00:04:49,120 Speaker 1: the suggestion that the US is teetering on the edge 94 00:04:49,120 --> 00:04:51,640 Speaker 1: of stagflation, or it can be something very very straightforward 95 00:04:52,240 --> 00:04:56,880 Speaker 1: business economics, politics, nothing, relationships, nothing is off limits. Send 96 00:04:56,960 --> 00:04:59,440 Speaker 1: it on through via the website, go to fearangreed dot com, 97 00:04:59,560 --> 00:05:01,560 Speaker 1: dot a you, or you can go to any of 98 00:05:01,560 --> 00:05:05,560 Speaker 1: the social media platforms as well, LinkedIn Instagram, Facebook, send 99 00:05:05,640 --> 00:05:07,280 Speaker 1: us a message and we will pop it on the 100 00:05:07,279 --> 00:05:10,039 Speaker 1: listen answer it very very quickly. I'm Michael Thompson and 101 00:05:10,120 --> 00:05:11,599 Speaker 1: this ask beer and Greed.