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Speaker 1: Welcome to Stuff You Should Know, a production of I

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Speaker 1: Heart Radio. Hey, and welcome to the podcast. I'm Josh Clark.

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Speaker 1: There's Charles w. Chuck, Wayne Waynester, Wayne Train, what what,

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Speaker 1: Wayne Bryant, And there's Jerry Jerome Roland over there, and

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Speaker 1: this is Stuff you should Know. Yeah, kill me episode whatever, dude,

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Speaker 1: this is fine. I was going to say that, I

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Speaker 1: know it's again. We just did an economics episode. What

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Speaker 1: was it. I don't know, but I think economics is

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Speaker 1: literally right there. Besides, like chemistry and physics for me,

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Speaker 1: now maybe worse because at least those are interesting to me.

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Speaker 1: Chemistry and physics still make sense because they're really hard

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Speaker 1: to understand. Economics doesn't make sense because it's b s

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Speaker 1: and it's just that's key to understanding economics. I'm good here,

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Speaker 1: I'll tell you where I'm gonna need help. I'm good,

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Speaker 1: except for like were paragraphs right there where it says

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Speaker 1: kill me, it really does, think kill me right there,

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Speaker 1: and then right there where it says wake up listeners. Whatever,

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Speaker 1: I'm good. I'm gonna need your help there the rest

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Speaker 1: of it, this is a personal challenge to keep everyone interested.

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Speaker 1: That's funny because on the John Your document. I have

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Speaker 1: blah blah blah over there. Oh boy, are seeing how

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Speaker 1: the sausage? That's like year one stuff. Dude, No, we've

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Speaker 1: been doing that forever. I think we generally are into

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Speaker 1: one another's topics. Yeah, it's not the topic, and I

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Speaker 1: think economics is boring, is heck? I don't think he

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Speaker 1: was what we'll talk about John here in the John

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Speaker 1: Your episode. How about that? I was about to defend

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Speaker 1: my position on well that have already been out. I

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Speaker 1: don't know, man, we'll find out. I think people should

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Speaker 1: play these back to back. So you should, especially the

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Speaker 1: Cleft episode, because the listener mail from the Cleft episode

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Speaker 1: really sets up some of the jokes in the night

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Speaker 1: Trap episode that follows. So don't listen to those two. Well,

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Speaker 1: those are too fun to listen to. I think listeners

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Speaker 1: listen to these two back to back. It's like Thilman

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Speaker 1: Louise territory right into the Grand Canyon. What does that mean?

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Speaker 1: Have you never seen Tholm and Louise? I have, but

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Speaker 1: I don't get how it applies to listening to these

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Speaker 1: episodes out of order spoiler alert for Tholma and Louise. Everybody,

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Speaker 1: Oh you already kind of in the Grand Canyon. They

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Speaker 1: drive into the Grand Canon at the end, just straight

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Speaker 1: off that cliff, And that's what would happened if they

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Speaker 1: listen to both of these episodes back to back. Well,

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Speaker 1: i'll tell you what. If you watch Thelma and Louise

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Speaker 1: as their drive, it really is as they're Actually I've

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Speaker 1: only seen the last ten minutes. Yeah, really, you're like,

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Speaker 1: what was their problem? Yeah? Why they do that? It

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Speaker 1: seems a little overreacting. Um the the if you listen

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Speaker 1: really really closely, I mean, like, turn your volume up

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Speaker 1: so loud that you can hear the fawse of the video,

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Speaker 1: the grain of the video making it sound, you can hear.

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Speaker 1: I can't remember who's Thelma? Oh why do you ask me?

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Speaker 1: I always get these two confused. Right now, Gina Davis

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Speaker 1: is Thelma? I thought she was Louise. Okay, Jerry's got it.

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Speaker 1: Jerry so mad right now? So so it is Tholma

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Speaker 1: is Gina Davis says, It says to Louise, well, we

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Speaker 1: can thank John you're for this beautiful view on the

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Speaker 1: way to our deaths because no one else cared about

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Speaker 1: the natural environment. That's actually absolutely right. He's still alone,

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Speaker 1: No one thought the way that he thought. So we're

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Speaker 1: talking about inflation. Obviously that was the most fun part

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Speaker 1: of this episode. But no, it's not. Chuck. I refused

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Speaker 1: to believe that we're talking about inflation. And the reason

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Speaker 1: that I picked this is because inflation is kind of

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Speaker 1: a thing right now. There's a lot of fear until today, Yeah,

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Speaker 1: I think until today, Um, when the fag came out

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Speaker 1: and said, everybody, calm down, stop being dramatic, Joe's ruining

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Speaker 1: the dry there's not going to be an inflation fear

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Speaker 1: or there's not gonna be inflation. Stop your fears. And

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Speaker 1: as a matter of fact, um, the fear stopped. Everybody

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Speaker 1: stopped worrying about inflation because the fact came out and

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Speaker 1: said something. Yes. And but the reason I picked this

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Speaker 1: is because it's good to know what people are talking

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Speaker 1: about when they're like, uh, we should be really worried

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Speaker 1: about inflation right now. And all you have to do

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Speaker 1: is understand a few basic things, and all of a sudden,

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Speaker 1: you're in the convo, baby, sure, and we're going to

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Speaker 1: explain those few basic things to everybody. And then the

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Speaker 1: next time inflation starts to go crazy, you can say

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Speaker 1: everybody just calmed down. Yeah, it's just cost push going on. Yeah.

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Speaker 1: You you you'll be like, uh at every party you

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Speaker 1: go to, you can talk about that, and you'll be

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Speaker 1: the equivalent of Colleen Robinson. Who's that from what we

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Speaker 1: do in the Shadows? Is that the Energy Empire? Oh yeah, yeah,

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Speaker 1: he probably sits around and talks about inflation. Yeah. Yeah,

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Speaker 1: you threw me off with the Colleen. Well that's how Yeah,

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Speaker 1: I understand now no spoiler alert. We're watching that again

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Speaker 1: a little bit, just because what we've been watching is

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Speaker 1: and just finishes I'll be Gone in the Dark, the

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Speaker 1: great documentary about the Golden State Killer and Michelle McNamara's

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Speaker 1: research and dog in Pursuits. I'll be Gone in the Dark.

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Speaker 1: Is it Netflix? No, it's hbom X, but it's it's great,

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Speaker 1: but it's so heavy. We will then cleanse the palette

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Speaker 1: with reruns of what we do in the Shadows, very smart,

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Speaker 1: the Great Palate Cleanser, which is what I'm gonna do

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Speaker 1: right after we record this. Okay, have you done stalling now? Yeah.

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Speaker 1: So one of the things that really kind of gets

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Speaker 1: people about inflation is the idea that like, if you

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Speaker 1: go back to the sixties. Yeah, the good old days

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Speaker 1: you could buy like a brand new car for like

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Speaker 1: three grand, brand new car, and that's when they made

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Speaker 1: them big and shiny. Yeah, you want to and very unsafe.

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Speaker 1: Do you want a house? All right, give me, I

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Speaker 1: don't know, it's yours. And that's a nice house to

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Speaker 1: very nice house. Like a ticket to a movie cost

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Speaker 1: a dollar. Now, if you pay a dollar to see

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Speaker 1: a movie, you have to see something terrible like Hidalgo

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Speaker 1: or national Security or something that's like a dollar movie.

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Speaker 1: Today this is like good movies. Yeah, the dollar movies

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Speaker 1: were a penny, right, Yeah, basically, so, um, all of

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Speaker 1: this sounds like it makes it sound like the good

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Speaker 1: old days were just this cheap, idyllic paradise. But that's

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Speaker 1: just not the case because of inflation, where you can't

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Speaker 1: really compare today's you know, cars, or today's houses, or

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Speaker 1: today's movie ticket prices without using an adjustment for inflation. Yeah,

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Speaker 1: because I think in nineteen sixty seven, if you were like,

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Speaker 1: if you made a lot of money, you made about

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Speaker 1: nineteen thousand dollars a year. That was a lot of money. Yeah,

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Speaker 1: sixty of American households earned less than eight thousand three

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Speaker 1: dollars a year. Uh, and so yeah, I mean they

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Speaker 1: have all these inflation calculators is one of our favorite

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Speaker 1: things to do. Let's go look at inflation calculators online.

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Speaker 1: West Egg. Yeah. West Egg is when I use mostly,

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Speaker 1: but there are a couple more because I think one

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Speaker 1: of them sometimes doesn't go back far enough. But honestly,

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Speaker 1: when it goes back too far, it's just a little

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Speaker 1: bit of like, I don't know, this seems about right right, Well,

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Speaker 1: that was the thing. Do you remember when when I

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Speaker 1: can't remember, we were talking about but it wasn't too

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Speaker 1: long ago, and I was saying, like, I don't think

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Speaker 1: this fully captures that this adjustment for inflation. I think

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Speaker 1: things were cheaper where things were more expensive. And that's

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Speaker 1: the point of of like tracking inflation is to say, actually, yes,

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Speaker 1: things were more expensive back then. Things do actually get

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Speaker 1: cheaper over time because technology becomes more less novel and stuff.

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Speaker 1: So for example, like a TV, like if you wanted

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Speaker 1: to buy a new color TV when it came out

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Speaker 1: in the sixties, Um, you paid probably about a thousand

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Speaker 1: dollars for that for that TV, right, that's a crazy price.

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Speaker 1: Back then, it was an enormous price. Like you would pay.

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Speaker 1: That would mean then in today's dollars that you would

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Speaker 1: pay something like ten ring in for a new TV. Yeah,

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Speaker 1: and TVs when they first started coming out with the

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Speaker 1: new flat screens were really expensive. And then, like you said,

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Speaker 1: that technology gets better and they get cheaper and cheaper

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Speaker 1: and cheaper. Where now you can get a I mean

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Speaker 1: it depends on what kind of flat screen, but you

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Speaker 1: can get a good flat screen for five bucks. Tops

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Speaker 1: in a decent one for five bucks. I mean you

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Speaker 1: walk into cost because they just give you one for

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Speaker 1: walking in, and it's huge. They're huge, they're much better,

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Speaker 1: They're enormous, they're lighter, they look better, and they're cheaper.

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Speaker 1: I think like a TV today, like the sixties TV

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Speaker 1: is about twenty of that how much it would cost

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Speaker 1: the person buying that color TV. So all of this

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Speaker 1: kind of goes to say like prices may go up

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Speaker 1: over time, but they actually relatively might actually be going

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Speaker 1: down too, or they could just be going up. Thankfully,

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Speaker 1: there are people who track this kind of stuff because

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Speaker 1: when you look at inflation, when you look at the

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Speaker 1: cost of price, the eyes of prices over time, that's

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Speaker 1: what inflation is. One way to put it. Yeah, overall prices,

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Speaker 1: goods and services. It's not just like, oh, gases a

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Speaker 1: lot for the next three months because the summertime. That's

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Speaker 1: not inflation, right, right, It's more like Hubba bubba costs

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Speaker 1: way more today than it did when we were kids. Sure,

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Speaker 1: that's a good example of inflation, but it's a general

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Speaker 1: rise in prices. And if you track this stuff, you

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Speaker 1: can actually track allegedly the health of your economy and

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Speaker 1: make allegedly good decisions on how to juice that economy

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Speaker 1: to keep it going at a steady, controllable rate, but

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Speaker 1: ever upward, right, which is what the FED does. Uh?

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Speaker 1: Did we do one on the Fed or we just

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Speaker 1: danced around them a lot? I don't remember. I know

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Speaker 1: we've done one on currency, how much money there is

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Speaker 1: in the world. We do one on stag inflation, which

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Speaker 1: will mention in a few I thought it was groundbreaking.

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Speaker 1: We did a whole Remember when all the rage was

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Speaker 1: those uh super stuff guides, Yeah, the super Stuff guide,

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Speaker 1: the audiobooks. We do one on economics. Remember that guy

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Speaker 1: who was like chicken. He kept using chicken as an example. Really, yeah,

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Speaker 1: he was great. And then yeah, there it was a

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Speaker 1: good It was a good listen if you ask me, Okay,

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Speaker 1: I'm glad those didn't become a thing though why I

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Speaker 1: don't know. It's a lot of work for Jerry and us.

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Speaker 1: And Jerry loved it, No she didn't. She keeps asking

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Speaker 1: when we're gonna bring those back. So there are a

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Speaker 1: couple of There are a couple of ways to look

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Speaker 1: at this. And it's funny, how like when you look

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Speaker 1: at most of this stuff, economists don't all agree. There's

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Speaker 1: a lot of chicken in the eggs stuff going on. Yeah,

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Speaker 1: exactly where it's like you're just saying the same thing

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Speaker 1: in a different way. It's still the same thing. And ye,

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Speaker 1: And this is sort of the first example which is

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Speaker 1: all maddening, isn't it. It is because some people say,

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Speaker 1: you know what, in a free market, in an open market,

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Speaker 1: it's just supplying to man like it always has been. Uh,

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Speaker 1: if the product has is greater in supply, it's gonna

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Speaker 1: go up in price. Uh. If it's greater than demand,

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Speaker 1: and prices are going to go down. And it's really

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Speaker 1: just as simple as that for these products and for

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Speaker 1: money and cash. And some people say, well, no, that's

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Speaker 1: not true at all. Uh. Inflation is the thing that

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Speaker 1: happens first. And you don't increase the supply of money

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Speaker 1: beyond demand because some people say, oh, well, the Fed

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Speaker 1: just increases the supply of money, right, and they did

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Speaker 1: it too much, and now prices are going up because

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Speaker 1: another way to put it is not just that prices rise,

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Speaker 1: but that inflation actually is a decrease in the buying

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Speaker 1: power of the dollar. Yeah, which is again, I know,

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Speaker 1: the exact same way to say this the other one

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Speaker 1: I know, but it's like the nuance of nitpicky. It

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Speaker 1: really is very nipicky. But we're talking macroeconomics for like,

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Speaker 1: you know, the money of three million people, and like

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Speaker 1: how it kind of moves and interact. So like if

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Speaker 1: you could figure this out, if you could just kind

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Speaker 1: of crack the code, I mean, but you can't. You

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Speaker 1: can do anything they haven't been able to so far.

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Speaker 1: And inflation a really good example of that, because nobody

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Speaker 1: can agree on exactly like you're saying, what causes it.

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Speaker 1: So one way to look at it is is that

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Speaker 1: you can split explanations in a couple of ways. Is

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Speaker 1: it based on a change in the demand or the

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Speaker 1: cost of goods or services or the products or is

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Speaker 1: it because of money? So the first one is that

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Speaker 1: money thing where there's too much money on the market, right,

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Speaker 1: which just if you don't get into economics, that just

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Speaker 1: sounds like a mind numbing thing to even think about,

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Speaker 1: but it's it's really simple to understand. Money is just

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Speaker 1: like anything else. If there's a lot of money, there's

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Speaker 1: a big supply, that means anybody has it who cares,

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Speaker 1: which means that there's um less value to it. Yeah,

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Speaker 1: and that's not just cash in circulation, it's cash and credit.

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Speaker 1: It's like everything we think of is kind of like

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Speaker 1: buying power, I guess. Yeah. And another way to look

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Speaker 1: at it is if there's a lot of money on

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Speaker 1: the market, that means the average person has more money

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Speaker 1: than usual. That means that they can buy more stuff

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Speaker 1: than usual. That means that more people are requesting, trying

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Speaker 1: to buy demand, right, more goods than they usually are.

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Speaker 1: So if demand is increasing, that means there's like more

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Speaker 1: That means prices will rise, which means it costs more

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Speaker 1: money to buy those things. And a good way to

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Speaker 1: put it is that there's um lots of money chasing

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Speaker 1: fewer goods. Yeah, that's how that's how that one's explained.

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Speaker 1: That's one explanation for inflation. There's too much money, which

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Speaker 1: causes prices to rise because there's more people trying to

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Speaker 1: buy those goods than usual. That's right. And the I

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Speaker 1: think one example here, Professor John T. Harvey at TCU,

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Speaker 1: He's who I was talking about earlier. He's like, no,

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Speaker 1: that's not really true. He says inflation happens first, and

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Speaker 1: that they don't increase the supply of money beyond demand

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Speaker 1: because that you wouldn't need you need more money because

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Speaker 1: prices are going up. So then that brings more money

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Speaker 1: in the market. Right, that's right. Growth accompanies the inflation,

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Speaker 1: it doesn't cause it. Yeah. So again this is all

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Speaker 1: these economists are saying, no, there's too much money, and

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Speaker 1: this guy is saying, no, the prices are rising, which

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Speaker 1: brings more money into existence. And in the meantime, everyone

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Speaker 1: else in the room is like, I gotta go to

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Speaker 1: the bathroom, I gotta go take a call, I gotta

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Speaker 1: go finger foods. Yeah, and we say it every time.

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Speaker 1: But the fact that you have liberal economists and conservative

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Speaker 1: economists that right there is that reveals it all. It's

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Speaker 1: all made up. It's all who do let's take a

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Speaker 1: break on who do you That's nice little cliffhanger. That

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Speaker 1: was my signal, and we'll come back and talk about

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Speaker 1: two other theories that are kind of the same thing

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Speaker 1: right after this. So Chuck is want to say, you're

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Speaker 1: doing great, Well, that's because I haven't gotten to those

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Speaker 1: paragraphs yet. It's gonna be just easy, okay, okay. So

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Speaker 1: there are another couple of theories. Again, economists are gonna

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Speaker 1: agree and disagree about these two theories. They are the

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Speaker 1: cost push theory and the demand pull theory. It's even

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Speaker 1: right there in the title push and pull. Essentially, it's

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Speaker 1: the same action going on, but one is choosing to

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Speaker 1: look at one side and one's choosing to look at

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Speaker 1: the other. So cost push means that it's the increase

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Speaker 1: of uh, the cost of like labor or the cost

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Speaker 1: of raw materials. Uh. Basically anything that's gonna end up

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Speaker 1: getting like a loaf of bread on a shelf, including

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Speaker 1: like the fuel for the trucking and packaging and all

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Speaker 1: that stuff. That that is what is going to push

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Speaker 1: up in prices. That that is the driver of inflation,

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Speaker 1: which makes a lot of sense. Like there was apparently

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Speaker 1: right now, I don't know if it's still going on,

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Speaker 1: but it definitely was the spring. There's a shortage in

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Speaker 1: wood in lumber still happening, okay, because of at least

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Speaker 1: in part, the wildfires that California suffered last year were

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Speaker 1: so devastating that it actually affected the national supply of lumber. Yeah,

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Speaker 1: and I also read that the lumber people decreased production

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Speaker 1: overall because they thought because of the pandemic, they thought

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Speaker 1: there was going to be a big lull. They didn't

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Speaker 1: want all this extra inventory on their hands. It turned

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Speaker 1: out everyone was like, no, I want to build stuff now,

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Speaker 1: and they dis miscalculated. So it's not a good time

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Speaker 1: to build a pavilion at your family camp. Let's just

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Speaker 1: say that, right, or to try to increase the housing stock. Right.

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Speaker 1: So that means then that lumber going up in price

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Speaker 1: makes building a new house that much more expensive. So

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Speaker 1: the house, the finished product, has become more expensive because

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Speaker 1: of the input that raw material lumber. That's a really

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Speaker 1: good example of cost push theory of why prices are

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Speaker 1: rising because of something downstream in the production process. Yeah,

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Speaker 1: but there's a key little factor here. All of this

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Speaker 1: is true, Uh, when companies are running already at full

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Speaker 1: production capacity. So that's a really key element there. It

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Speaker 1: can't be a company that's um like behind or whatever.

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Speaker 1: It's like it's a company that's just humming along basically,

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Speaker 1: and then something happens in the supply chain, let's say,

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Speaker 1: big increase in fuel or lumber cost or any kind

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Speaker 1: of raw material. I think did Dave help us with this?

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Speaker 1: This is a Dave How Stuff Works article? Okay, yeah, wow,

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Speaker 1: I know, hats off. We found another one. But he's

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Speaker 1: as bread as the example. At the cost of wheat

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Speaker 1: goes up, the cost of flower is obviously going to

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Speaker 1: go up, and the cost of bread is eventually going

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Speaker 1: to go up under the uh the CP theory, and

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Speaker 1: so people like you and I end up paying more

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Speaker 1: for a new house, or more for a loaf of bread,

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Speaker 1: more for whatever, because something somewhere that was a component

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Speaker 1: in that caused this rise in prices, that would cause

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Speaker 1: that would that's the cost push example of theory of

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Speaker 1: of inflation, the kind of opposite of that. But I

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Speaker 1: don't even know the right word. They say, no, no, no,

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Speaker 1: it's not the raw materials that um cause the increase

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Speaker 1: in prices. It's actually the demand for that finished product

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Speaker 1: that that that causes the increase in prices, and so

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Speaker 1: housing right now actually is a really good example of

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Speaker 1: both cost push and demand pull at the same time. Yes,

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Speaker 1: it's crazy, and it's also demonstrating like, okay, we have

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Speaker 1: no idea what's going on, or at the very least,

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Speaker 1: that these things don't exist in isolation, and that is

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Speaker 1: that people like you're saying there the pandemic, We're like, no,

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Speaker 1: we want to move. I don't want to live in

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Speaker 1: the city anymore. I want to live as far away

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Speaker 1: from other people as possible, but but only as close

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Speaker 1: as instat cart will deliver. That's as close as I

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Speaker 1: want to live to the web van. Sure, yeah, um

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Speaker 1: so uh it was totally unpredicted. But the upshot of

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Speaker 1: it is that there is a lot of people trying

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Speaker 1: to buy houses right now and the housing markets just

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Speaker 1: gone through the roof, and so that's caused housing prices

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Speaker 1: to increase, and it's caused like all of the other

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Speaker 1: components of the housing market to increase as well. So downstream,

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Speaker 1: that demand for houses caused every bit of housing to

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Speaker 1: increase as a as a result. Yeah, and the example

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Speaker 1: Dave to stick with the bread as well. Because it's

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Speaker 1: a I think it's slightly easier to understand than the

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Speaker 1: housing market because it's so weirdly affected by a lot

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Speaker 1: of things. Right now, is that if the cost of

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Speaker 1: or if a lot of people want bread, the baker

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Speaker 1: doesn't immediately raise the prices because of that demand, um

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Speaker 1: until they run out of the flower. Then they got

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Speaker 1: to go back and buy more wheat, and the wheat

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Speaker 1: farmer might say, well, now it's a little more expensive. Yeah,

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Speaker 1: there's a lot of bakers who are have everybody wants

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Speaker 1: my wheat right now, and so that's when the cost

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Speaker 1: is eventually pulled and uh and then increased I guess

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Speaker 1: for the consumer. Right So it looks like if you're

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Speaker 1: just looking at it, like oh this this wheat price,

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Speaker 1: this raw material rose in in cost and that caused

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Speaker 1: bread to rise, and people are like, no, no, that

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Speaker 1: that's an illusion. It was actually this demand for bread

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Speaker 1: that increased that caused the wheat to rise. And again

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Speaker 1: it sounds so similar to cost push demand pull does

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Speaker 1: that it doesn't even matter, but it really does matter.

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Speaker 1: It does matter because and this part is the key here.

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Speaker 1: If you're at home and you're just like stop talking,

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Speaker 1: this is what kind of drove at home for me,

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Speaker 1: the difference in those two it might seem like just

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Speaker 1: words and nitpicky, but it's really not because in one

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Speaker 1: scenario and demand pull, you've got an economy that's really

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Speaker 1: humming and people like I want to buy all that stuff. Yeah,

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Speaker 1: it means a lot of people have a lot of

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Speaker 1: money that that they want to spend and that yes,

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Speaker 1: that means like you have a healthy economy, right then, right,

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Speaker 1: and under cost push, it's more like hey, uh, people

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Speaker 1: feel like they have to do this repair on their

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Speaker 1: house and I'm sorry, it's just a lot more expensive.

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Speaker 1: It's not like oh I need this new thing. It's

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Speaker 1: like I have to pay for this thing and it's

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Speaker 1: a lot more expensive because of the raw materials or whatever.

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Speaker 1: The labor has gone up, right, And and yeah, it's

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Speaker 1: much worse because that means, like you said, the company

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Speaker 1: is humming along at max capacity, and all of a sudden,

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Speaker 1: it's like we don't have wheat anymore, and we aren't

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Speaker 1: gonna be able to satisfy demand because we don't have

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Speaker 1: this basic component. It means that there's something broken in

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Speaker 1: your supply chain or the mechanisms of production and that's

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Speaker 1: not a good place to be in. So it's very

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Speaker 1: healthy economy or everybody has money increasing demand or demand

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Speaker 1: increases because you can't supply the basic parts to to

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Speaker 1: create those goods. Right, Okay, I know the beginning of

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Speaker 1: this part, so I'll take it, and then I have

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Speaker 1: a cot set up in the next room. I'm just

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Speaker 1: gonna go. I feel like you're setting me up for failure. Now,

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Speaker 1: you'll do fine because there's no math. Well, there is

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Speaker 1: math involved, but you'll still do fine. Where is their

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Speaker 1: math involved? Uh? In this part the annual rate of

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Speaker 1: inflation calculation. So but if if we get it wrong,

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Speaker 1: we'll just say Dave got it wrong, we'll pass that.

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Speaker 1: We'll cost push it his way. So we're talking about

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Speaker 1: how inflation is actually measured now, and uh, this is

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Speaker 1: a big deal because we like to keep track every

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Speaker 1: year and say that you know, inflation, what is it?

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Speaker 1: Usually between about one and a half percent to three

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Speaker 1: and a half percent annually in the US generally, unless

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Speaker 1: it's like the nineteen seventies or early eighties. I think

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Speaker 1: over the last several years it's gone between negative two

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Speaker 1: point one well in like five something per cent, which

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Speaker 1: is pretty five points. Something is pretty high. It's generally

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Speaker 1: in the two to three range. It is for our experience,

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Speaker 1: but in the early eighties it was as high as

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Speaker 1: almost that's bad. It was very bad, but not as

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Speaker 1: bad as like why Amar Republic Germany or in which

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Speaker 1: we've talked about a million times, where their hyper inflation

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Speaker 1: was just out of control. Yeah, wouldn't. We'll get to that, okay.

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Speaker 1: So we have to measure the um the inflation rate

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Speaker 1: because we like to keep tabs on our economy so

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Speaker 1: the FED can can do their weird black magic. And

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Speaker 1: so the Bureau of Labor Statistics the BLS, is who

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Speaker 1: kind of sets this stuff by working through a big

424
00:23:42,240 --> 00:23:46,560
Speaker 1: data collection system called the Consumer Price Index. It's nuts,

425
00:23:47,040 --> 00:23:50,720
Speaker 1: it is nuts how big it is. They take, Uh,

426
00:23:50,880 --> 00:23:52,439
Speaker 1: what they try and fill up is what's called the

427
00:23:52,440 --> 00:23:56,119
Speaker 1: CPI market basket. And it's basically, if you imagine a

428
00:23:56,160 --> 00:24:01,840
Speaker 1: grocery basket that includes everything everything basically like eighty tho items. Yeah,

429
00:24:01,880 --> 00:24:04,200
Speaker 1: I'm not just groceries. They have two hundred categories of

430
00:24:04,240 --> 00:24:12,000
Speaker 1: products in eight major groups food, housing, apparel, transportation, medical care, recreation, education, communication,

431
00:24:12,200 --> 00:24:15,280
Speaker 1: and then other which is basically everything else, uh, funerals

432
00:24:15,280 --> 00:24:21,160
Speaker 1: and manicures basically the other and saunas sounds. Yeah, definitely

433
00:24:21,640 --> 00:24:24,960
Speaker 1: that might be under recreation you think, I think it

434
00:24:25,040 --> 00:24:27,240
Speaker 1: might be or medical care. It's good for you, Yeah,

435
00:24:27,320 --> 00:24:31,280
Speaker 1: for sure, depending on how progressive your your Bureau of

436
00:24:31,359 --> 00:24:34,760
Speaker 1: Labor Statistics agency is at the time. That's right. So

437
00:24:34,880 --> 00:24:37,640
Speaker 1: every couple of years, thank you for waiting until I finished.

438
00:24:39,160 --> 00:24:42,960
Speaker 1: The Bureau of Labor Statistics interviews twenty four thousand American

439
00:24:43,000 --> 00:24:46,320
Speaker 1: families on the stuff that they bought. Yeah, because if

440
00:24:46,320 --> 00:24:48,160
Speaker 1: you have if you want to figure out what eighty

441
00:24:48,200 --> 00:24:50,760
Speaker 1: thousand items you need to include basket, you have to

442
00:24:50,760 --> 00:24:53,120
Speaker 1: find out what Americans are actually buying. Yeah, I bought

443
00:24:53,160 --> 00:24:55,959
Speaker 1: you a slide whistle. That's right. They called me up

444
00:24:55,960 --> 00:24:57,359
Speaker 1: and I said, I bought a slide whistle. That's the

445
00:24:57,359 --> 00:24:59,359
Speaker 1: only thing about this year. They said you're the one,

446
00:24:59,640 --> 00:25:01,440
Speaker 1: and they said that must have been for a very

447
00:25:01,440 --> 00:25:04,960
Speaker 1: special guy in your life, and it said it's true. Wow,

448
00:25:05,000 --> 00:25:08,640
Speaker 1: I'm blessing right. Uh. Then they have another twelve thousand

449
00:25:08,640 --> 00:25:12,720
Speaker 1: families that are keeping a spending diary. Basically it's kind

450
00:25:12,720 --> 00:25:15,000
Speaker 1: of like Nielsen a little bit. For that one. They

451
00:25:15,000 --> 00:25:16,600
Speaker 1: did kind of remind me that a little bit because

452
00:25:16,600 --> 00:25:18,679
Speaker 1: they're just trying to get a big broad overview of

453
00:25:19,000 --> 00:25:22,720
Speaker 1: what a typical schmuck here in America spend. And you say,

454
00:25:22,720 --> 00:25:25,480
Speaker 1: where's my three or five dollars? And they just go ahead,

455
00:25:25,680 --> 00:25:29,399
Speaker 1: they hang up real quick exactly somebody else. Uh. And

456
00:25:29,440 --> 00:25:32,200
Speaker 1: then every month they have a big team of assistance

457
00:25:32,280 --> 00:25:36,399
Speaker 1: that records the prices of those eighty thousand things. And

458
00:25:36,440 --> 00:25:38,840
Speaker 1: this is an effort to get just a good look

459
00:25:39,160 --> 00:25:41,800
Speaker 1: at what that big market basket looks like. Yeah, so

460
00:25:42,040 --> 00:25:44,159
Speaker 1: two years they figure out what they need to be

461
00:25:44,200 --> 00:25:46,639
Speaker 1: buying or what Americans are buying. They use that data

462
00:25:46,680 --> 00:25:50,359
Speaker 1: for another couple of years, but every month they go

463
00:25:51,119 --> 00:25:56,959
Speaker 1: and price all items in that that market basket every

464
00:25:57,000 --> 00:25:59,399
Speaker 1: single month. If you get a figure out inflation, you

465
00:25:59,480 --> 00:26:01,960
Speaker 1: got to be as current is possible. Yeah, So the

466
00:26:02,119 --> 00:26:05,280
Speaker 1: to figure out what item needs to be in the basket.

467
00:26:05,359 --> 00:26:11,040
Speaker 1: So there's like two d categories, eight broad categories, two subcategories.

468
00:26:11,400 --> 00:26:15,720
Speaker 1: So like transportation will have like auto insurance category subway

469
00:26:16,600 --> 00:26:20,240
Speaker 1: exactly m or food will have like you know, cheese

470
00:26:20,320 --> 00:26:24,000
Speaker 1: will be one. But in that cheese category sample, I

471
00:26:24,080 --> 00:26:27,399
Speaker 1: think they call it, there's you know a bunch of

472
00:26:27,400 --> 00:26:30,760
Speaker 1: different kinds that everybody buys like Kraft singles. Some are

473
00:26:30,800 --> 00:26:33,880
Speaker 1: Velvita slice. People like me, man, I used to love Velvita.

474
00:26:34,080 --> 00:26:37,240
Speaker 1: It's still good. I have it, had it in decades.

475
00:26:37,880 --> 00:26:40,760
Speaker 1: I will buy you somebody. Do you get blocks of Lvita? No,

476
00:26:40,840 --> 00:26:43,679
Speaker 1: we don't get blocks of Lvita. You get slices now, Okay,

477
00:26:43,720 --> 00:26:47,439
Speaker 1: but it's not cheese, right, and the cheese product perform cheese,

478
00:26:47,480 --> 00:26:50,800
Speaker 1: but I think it's still qualifies under the cheese sample

479
00:26:50,880 --> 00:26:53,040
Speaker 1: in the market basket that but if you're making a

480
00:26:53,119 --> 00:26:55,840
Speaker 1: chili cheese for something, you got to use it. Sure, yeah,

481
00:26:55,880 --> 00:26:57,560
Speaker 1: that's good. No, but this is it's good for grilled

482
00:26:57,640 --> 00:27:02,639
Speaker 1: cheeses to of course, so um that particular brand, but

483
00:27:02,720 --> 00:27:07,080
Speaker 1: not just that brand, like the you know, sixteen slice package.

484
00:27:07,280 --> 00:27:11,840
Speaker 1: They find it makes up sevent of the market for

485
00:27:11,880 --> 00:27:14,920
Speaker 1: that type of cheese. So they'll pick that one. They

486
00:27:15,000 --> 00:27:17,280
Speaker 1: use that for four years and then they go reevaluate it.

487
00:27:17,320 --> 00:27:20,720
Speaker 1: This is like the level of detail the BLS is

488
00:27:20,760 --> 00:27:23,639
Speaker 1: putting into their their basket. And so they take all

489
00:27:23,680 --> 00:27:26,240
Speaker 1: of this and they price it. Every single month. They

490
00:27:26,320 --> 00:27:28,920
Speaker 1: literally go to the store and I meant to say

491
00:27:28,960 --> 00:27:33,800
Speaker 1: literally that time and say, oh, well, the Velveta Cheese

492
00:27:33,800 --> 00:27:37,880
Speaker 1: slice sixteen pack is three forty nine, right, now, write

493
00:27:37,920 --> 00:27:40,239
Speaker 1: the price down. I think so, And then they go

494
00:27:40,320 --> 00:27:42,440
Speaker 1: back and they type it it and every month they

495
00:27:42,440 --> 00:27:46,480
Speaker 1: say this is how much that this cost and they

496
00:27:46,520 --> 00:27:53,040
Speaker 1: compare it strangely too. Right. Take it from here, Chuck, Well,

497
00:27:54,000 --> 00:27:59,720
Speaker 1: two was basically, uh was that was the baseline year

498
00:27:59,760 --> 00:28:03,640
Speaker 1: where they said, all right, here's our CPI index. It's

499
00:28:03,720 --> 00:28:07,280
Speaker 1: not an actual um it's an index. It's not a

500
00:28:07,320 --> 00:28:09,520
Speaker 1: dollar figure. I know, I looked everywhere. I'm like, how

501
00:28:09,600 --> 00:28:12,600
Speaker 1: much does that eight thousand, you know, item basket cost

502
00:28:12,680 --> 00:28:16,960
Speaker 1: in real dollars? Everything? Every they won't sorry, index buddy, Yeah,

503
00:28:17,000 --> 00:28:19,360
Speaker 1: they'll talk about UFOs sooner than they'll tell you how

504
00:28:19,440 --> 00:28:23,760
Speaker 1: much is in that basket? How much? So eighty two

505
00:28:23,800 --> 00:28:26,720
Speaker 1: is when that baseline figure was set, which was the

506
00:28:26,760 --> 00:28:30,639
Speaker 1: Consumer Price Index is a hundred uh in two thousand six.

507
00:28:30,760 --> 00:28:34,040
Speaker 1: It hit two hundred in April two thousand six, which

508
00:28:34,600 --> 00:28:37,320
Speaker 1: basically at that point they should have said, they should

509
00:28:37,320 --> 00:28:39,120
Speaker 1: have just reset it and said we have a new

510
00:28:39,160 --> 00:28:42,520
Speaker 1: base here because we doubled it, and they didn't know.

511
00:28:42,680 --> 00:28:44,880
Speaker 1: They just and I'm not sure why really they just

512
00:28:44,920 --> 00:28:47,920
Speaker 1: sort of left it in two. It seems like a

513
00:28:49,160 --> 00:28:50,920
Speaker 1: maybe they're just used to that math, it seems like

514
00:28:50,960 --> 00:28:53,320
Speaker 1: it would be a lot of extra math. And it wasn't. No,

515
00:28:53,680 --> 00:28:55,760
Speaker 1: it wasn't that they doubled it. It was that it

516
00:28:56,160 --> 00:29:00,600
Speaker 1: was the exact same in two I think. Or was

517
00:29:00,640 --> 00:29:03,480
Speaker 1: it that they doubled it. No, it was doubled. But

518
00:29:04,560 --> 00:29:06,240
Speaker 1: they said they should. I mean, some people say they

519
00:29:06,240 --> 00:29:07,560
Speaker 1: should have said like, all right, well we have a

520
00:29:07,560 --> 00:29:11,000
Speaker 1: new base, but they're still using the two. I guess,

521
00:29:11,280 --> 00:29:13,880
Speaker 1: I just I just don't know why. I don't either why.

522
00:29:14,160 --> 00:29:18,360
Speaker 1: Maybe it makes perfect sense. So so the actual um

523
00:29:18,600 --> 00:29:21,080
Speaker 1: number that they come up with is a number that's

524
00:29:21,160 --> 00:29:26,440
Speaker 1: relative to the amount that it costs in night two. Yeah,

525
00:29:26,480 --> 00:29:28,280
Speaker 1: this is where I kind of got a little foggy.

526
00:29:28,480 --> 00:29:31,080
Speaker 1: So for example, and that I mean, I fell asleep

527
00:29:31,080 --> 00:29:35,240
Speaker 1: on my debts in in two thousand nineteen, the c

528
00:29:35,480 --> 00:29:38,760
Speaker 1: p I, the consumer price index for that basket of

529
00:29:38,800 --> 00:29:42,920
Speaker 1: goods was two nine point to T two, okay, meaning

530
00:29:42,960 --> 00:29:46,840
Speaker 1: that that amount of goods cost almost two and a

531
00:29:46,840 --> 00:29:49,920
Speaker 1: half times what that same basket of goods would have

532
00:29:49,960 --> 00:29:54,800
Speaker 1: cost you in nineteen eighty two. Sure, so you say, okay,

533
00:29:55,120 --> 00:29:57,200
Speaker 1: I don't care how much it costs in nineteen eighty two.

534
00:29:57,240 --> 00:29:58,920
Speaker 1: I want to know how much it's affecting me now,

535
00:29:59,000 --> 00:30:00,760
Speaker 1: and they said, we'll just set a now, settle down.

536
00:30:01,160 --> 00:30:03,000
Speaker 1: They can take that number and say, well, how much

537
00:30:03,080 --> 00:30:05,840
Speaker 1: was it last month or how much was it last year?

538
00:30:06,400 --> 00:30:08,880
Speaker 1: So they can compare, say like the two thousand nineteen

539
00:30:08,920 --> 00:30:11,480
Speaker 1: and two thousand twenty c p I s and find

540
00:30:11,520 --> 00:30:13,960
Speaker 1: that there was a difference of something like about three

541
00:30:14,000 --> 00:30:16,800
Speaker 1: point oh two six between those two numbers. Then they

542
00:30:16,840 --> 00:30:20,840
Speaker 1: divide that by the two thousand nineteen percent um number

543
00:30:21,080 --> 00:30:24,640
Speaker 1: and they get the actual percentage that says the cp I,

544
00:30:24,800 --> 00:30:29,120
Speaker 1: the consumer price index, the amount of basically what it

545
00:30:29,200 --> 00:30:33,240
Speaker 1: cost people to just live in two thousand nineteen was

546
00:30:33,600 --> 00:30:37,720
Speaker 1: one two percent less than it costs in which means

547
00:30:37,760 --> 00:30:43,160
Speaker 1: that inflation rose one between and two thousand nineteen. Right,

548
00:30:43,440 --> 00:30:47,680
Speaker 1: And when you hear about inflation annual inflation rate, that

549
00:30:47,800 --> 00:30:51,680
Speaker 1: is generally what people are pointing to. But as we

550
00:30:51,760 --> 00:30:54,320
Speaker 1: will see, that is not how everyone likes to look

551
00:30:54,320 --> 00:30:58,160
Speaker 1: at inflation. There are other things to take into consideration.

552
00:30:58,920 --> 00:31:01,360
Speaker 1: I think the FED like to look at core inflation,

553
00:31:01,960 --> 00:31:06,320
Speaker 1: which is that CPI minus uh volatile things like food

554
00:31:06,360 --> 00:31:08,680
Speaker 1: and energy, things that like the prices kind of go

555
00:31:08,760 --> 00:31:17,960
Speaker 1: up and down uh more volatively. Sure is that a word, yeah, molybdium. Yeah. Uh.

556
00:31:18,000 --> 00:31:22,080
Speaker 1: And then the FED also looks at another data set

557
00:31:22,120 --> 00:31:26,560
Speaker 1: compiled by the pure the Bureau of Economic Analysis. This

558
00:31:26,640 --> 00:31:28,600
Speaker 1: gets a little wonky, but it actually does make sense.

559
00:31:28,640 --> 00:31:30,600
Speaker 1: The difference between the BLS and the b e A

560
00:31:30,680 --> 00:31:35,040
Speaker 1: indexes uh comes down to the fact that if chicken

561
00:31:35,120 --> 00:31:36,880
Speaker 1: costs a lot more money all of a sudden because

562
00:31:36,920 --> 00:31:40,560
Speaker 1: of some supplies or shortage or whatever, or increased demand, rather,

563
00:31:41,120 --> 00:31:44,080
Speaker 1: then people might go to the other white meat and say, well,

564
00:31:44,080 --> 00:31:46,840
Speaker 1: I'll start buying pork then. Yeah. That was explained by

565
00:31:46,960 --> 00:31:50,440
Speaker 1: Benjamin apple Bomb from the New York Times Economics blog

566
00:31:50,600 --> 00:31:54,440
Speaker 1: Benjamin Okay, yeah, he said, I swear to god I

567
00:31:54,520 --> 00:31:58,840
Speaker 1: nailed the apple Bob apple Bomb Okay, yeah, that's my

568
00:31:58,960 --> 00:32:05,400
Speaker 1: imaginary friend, Binjamine apple Bomb. Um. So uh he was.

569
00:32:05,440 --> 00:32:07,479
Speaker 1: He was explaining it like that, that that's the difference

570
00:32:07,480 --> 00:32:11,920
Speaker 1: that people adjust, Like we're not just like automatons were like, Okay,

571
00:32:11,960 --> 00:32:15,240
Speaker 1: well we're buying chicken and that's all we eat, and

572
00:32:15,320 --> 00:32:18,680
Speaker 1: we also buy X amount of hot dogs. It's like, yeah,

573
00:32:18,720 --> 00:32:20,480
Speaker 1: if the price of chicken goes up, you're gonna eat

574
00:32:20,520 --> 00:32:23,160
Speaker 1: something else that month. That that's just how people do

575
00:32:23,680 --> 00:32:27,280
Speaker 1: and so he was saying that the Bureau of Economic

576
00:32:27,280 --> 00:32:30,800
Speaker 1: Analysis really is much better at taking that into consideration.

577
00:32:31,080 --> 00:32:33,080
Speaker 1: And so since about two thousand, the FEDS kind of

578
00:32:33,080 --> 00:32:36,040
Speaker 1: relied a little more on that one than the c

579
00:32:36,240 --> 00:32:39,160
Speaker 1: p I. But the CPI is still very much the

580
00:32:39,200 --> 00:32:42,400
Speaker 1: most broadcast one. But it turns out that economists used

581
00:32:42,400 --> 00:32:46,160
Speaker 1: whichever one suits their needs and politician given month to

582
00:32:46,280 --> 00:32:50,000
Speaker 1: say our policies are right and your stink. That's a

583
00:32:50,040 --> 00:32:52,440
Speaker 1: great place for a break, and we'll come back and

584
00:32:52,480 --> 00:32:55,160
Speaker 1: talk about why inflation even matters and what we can

585
00:32:55,160 --> 00:33:24,880
Speaker 1: do about it, which is nothing right for this? All right,

586
00:33:25,600 --> 00:33:28,600
Speaker 1: So we're back to wrap this up. This wasn't as

587
00:33:28,600 --> 00:33:30,880
Speaker 1: bad as This wasn't as bad as I thought. Why

588
00:33:30,960 --> 00:33:34,040
Speaker 1: is it funny? I'm just I'm glad we're reaching in here.

589
00:33:34,320 --> 00:33:37,040
Speaker 1: I'm glad to see that you've come around a little bit.

590
00:33:37,080 --> 00:33:40,200
Speaker 1: You did great explaining everything. I appreciate it. So. Uh,

591
00:33:40,560 --> 00:33:44,480
Speaker 1: strength of Dave's research, I think, sure, not like the

592
00:33:44,720 --> 00:33:50,880
Speaker 1: John Mirror person. Dave's wonderful his work, he is, He's great. Uh.

593
00:33:50,920 --> 00:33:54,160
Speaker 1: So inflation can be a bad thing because of some

594
00:33:54,360 --> 00:33:58,560
Speaker 1: sort of obvious things. But one is if you have

595
00:33:58,600 --> 00:34:02,160
Speaker 1: a fixed income and you're living off a pension or something.

596
00:34:02,680 --> 00:34:06,120
Speaker 1: A lot of times, most times that pension isn't going

597
00:34:06,160 --> 00:34:10,040
Speaker 1: to go up because inflation goes up. Luckily, social security does.

598
00:34:10,480 --> 00:34:13,880
Speaker 1: It's tied to that CPI UM, which was a really

599
00:34:13,920 --> 00:34:17,840
Speaker 1: smart thing to make people like not absolutely loath social

600
00:34:17,880 --> 00:34:22,200
Speaker 1: security in every way. But yeah, social Security will go up,

601
00:34:22,560 --> 00:34:24,880
Speaker 1: but your pension won't. So that's a big deal. And

602
00:34:24,920 --> 00:34:27,920
Speaker 1: that's why inflation matters. Yeah, I mean it also stinks

603
00:34:27,960 --> 00:34:29,560
Speaker 1: for those of us who are like, man, I'm paying

604
00:34:29,600 --> 00:34:32,640
Speaker 1: way more for bread than I was this time last year,

605
00:34:32,680 --> 00:34:36,640
Speaker 1: and why should i? Um. It also has an effect

606
00:34:36,719 --> 00:34:40,960
Speaker 1: on investments too. Um. Remember, a different way of looking

607
00:34:40,960 --> 00:34:43,400
Speaker 1: at inflation is not just that prices are rising, but

608
00:34:43,480 --> 00:34:46,480
Speaker 1: that the buying power of the dollar is going down. Yeah,

609
00:34:46,800 --> 00:34:49,480
Speaker 1: so your investment, Yeah, if you have an investment is

610
00:34:49,520 --> 00:34:52,600
Speaker 1: worth ten grand. Uh, you know, five years from now,

611
00:34:52,719 --> 00:34:55,880
Speaker 1: it's still the dollar amount, still worth ten grand, but

612
00:34:56,160 --> 00:34:58,200
Speaker 1: the value of the dollars far less than it was

613
00:34:58,280 --> 00:35:00,440
Speaker 1: five years before, and so that ten grand just doesn't

614
00:35:00,440 --> 00:35:03,680
Speaker 1: amount to quite as much. Another thing that can happen

615
00:35:03,960 --> 00:35:08,560
Speaker 1: is your interest rates might go up or uh not.

616
00:35:08,640 --> 00:35:10,799
Speaker 1: Your interest rate role reset. But if you go to

617
00:35:10,840 --> 00:35:13,320
Speaker 1: buy a house or something. The interest rate might be

618
00:35:13,440 --> 00:35:16,200
Speaker 1: higher because a bank might say, you know, I think

619
00:35:16,200 --> 00:35:19,359
Speaker 1: inflation is gonna be pretty bad this year, so we're

620
00:35:19,360 --> 00:35:21,160
Speaker 1: gonna we're gonna have to charge more money on that

621
00:35:21,200 --> 00:35:24,840
Speaker 1: loan because we're losing that dollar value, right exactly, and

622
00:35:24,920 --> 00:35:28,560
Speaker 1: banks don't like losing money. Um. There's also like a

623
00:35:28,560 --> 00:35:32,000
Speaker 1: lot of uncertainty that could come when inflation is going on.

624
00:35:32,080 --> 00:35:33,880
Speaker 1: Remember I said inflation, Like, there are a lot of

625
00:35:33,920 --> 00:35:38,880
Speaker 1: inflation fears until today. Um. That has a really deletrious

626
00:35:38,920 --> 00:35:42,880
Speaker 1: effect on business in that Um, they don't it's harder

627
00:35:42,880 --> 00:35:44,799
Speaker 1: to plan for the future. They don't know how much

628
00:35:44,840 --> 00:35:47,319
Speaker 1: the cost of the goods that they need to make

629
00:35:47,400 --> 00:35:50,160
Speaker 1: their finished products they're going to be, right, So you

630
00:35:50,200 --> 00:35:52,279
Speaker 1: don't know, you know, if you're gonna buy a whole

631
00:35:52,320 --> 00:35:56,200
Speaker 1: bunch of you know, meal worm spray for your your

632
00:35:56,320 --> 00:36:00,320
Speaker 1: flower to make bread with. Um, is a better to

633
00:36:00,360 --> 00:36:01,919
Speaker 1: buy it now? Is it better to buy it later?

634
00:36:02,080 --> 00:36:04,000
Speaker 1: And how much am I going to price? Has spread

635
00:36:04,080 --> 00:36:07,040
Speaker 1: for it's it's just a catastrophe. And then they eventually

636
00:36:07,080 --> 00:36:09,880
Speaker 1: just give up and go home and watch Judge Judy. Yeah,

637
00:36:10,000 --> 00:36:13,600
Speaker 1: I gotta say that's um. Like with Emily, small business

638
00:36:13,640 --> 00:36:17,359
Speaker 1: that I think, especially with small businesses, she can't just

639
00:36:17,400 --> 00:36:19,799
Speaker 1: be like, oh, well, shipping is a lot more now

640
00:36:19,840 --> 00:36:23,600
Speaker 1: because fuel costs are going up or packaging is increases.

641
00:36:23,640 --> 00:36:26,520
Speaker 1: So she can't just raise and lower her prices willy

642
00:36:26,640 --> 00:36:29,760
Speaker 1: nilly when you're a small business selling soap in lotion

643
00:36:29,800 --> 00:36:32,319
Speaker 1: and candles, Which is funny because that is one of

644
00:36:32,320 --> 00:36:35,960
Speaker 1: the major explanations for inflation. I know, but you just

645
00:36:36,000 --> 00:36:37,520
Speaker 1: can't do that as a small as you can be

646
00:36:37,560 --> 00:36:40,040
Speaker 1: like our soap a quarter more all of a sudden,

647
00:36:40,880 --> 00:36:43,439
Speaker 1: or a quarter less, like she kind of a lock

648
00:36:43,520 --> 00:36:46,400
Speaker 1: in for a little while. Like a price increase for

649
00:36:46,440 --> 00:36:49,120
Speaker 1: a small business like that is sort of a big deal.

650
00:36:49,160 --> 00:36:53,880
Speaker 1: You got to really think it through. Yeah, yeah, I do. Um.

651
00:36:53,960 --> 00:36:56,239
Speaker 1: And that's actually another problem with it too. It's like

652
00:36:56,280 --> 00:37:01,120
Speaker 1: if if Emily can make less money um selling her wares,

653
00:37:01,280 --> 00:37:06,160
Speaker 1: but she's paying more to make them, her profit margin declines.

654
00:37:06,200 --> 00:37:10,840
Speaker 1: In that sense, she might have less to expand um

655
00:37:10,880 --> 00:37:13,520
Speaker 1: to hire more people total, and so that has a

656
00:37:13,600 --> 00:37:16,759
Speaker 1: ripple effect through the economy where it can affect employment.

657
00:37:16,880 --> 00:37:20,000
Speaker 1: Higher prices can actually lead to lower employment. Yeah, Like

658
00:37:20,000 --> 00:37:22,560
Speaker 1: she gets killed on shipping, that's her big one, Like

659
00:37:22,640 --> 00:37:25,680
Speaker 1: she loses money a lot of money every year on

660
00:37:25,719 --> 00:37:29,200
Speaker 1: shipping costs. But you can't just like she's not Amazon,

661
00:37:29,320 --> 00:37:31,919
Speaker 1: so she can't can't ship for free, and you can't

662
00:37:31,920 --> 00:37:34,520
Speaker 1: also charge what it really costs to ship. You just

663
00:37:34,560 --> 00:37:36,480
Speaker 1: have to kind of take the hit. Yeah, you know

664
00:37:36,920 --> 00:37:41,000
Speaker 1: it's interesting. Uh. I guess we can talk about hyper

665
00:37:41,040 --> 00:37:43,000
Speaker 1: inflation a little bit. We've covered it a few times

666
00:37:43,480 --> 00:37:47,160
Speaker 1: over the past thirteen years. But the one big one

667
00:37:47,400 --> 00:37:49,760
Speaker 1: that people always talk about is, like you mentioned earlier,

668
00:37:49,800 --> 00:37:54,000
Speaker 1: the Weimar Republic of Germany when the mark exploded from

669
00:37:54,239 --> 00:37:58,000
Speaker 1: two thousand marks to the US dollar in nineteen two

670
00:37:58,480 --> 00:38:01,360
Speaker 1: to four point two trip alien marks to the dollar,

671
00:38:02,280 --> 00:38:05,239
Speaker 1: uh less than a year later, And that nuts. That

672
00:38:05,400 --> 00:38:07,160
Speaker 1: is I mean, you can't even wrap your head around

673
00:38:07,239 --> 00:38:11,000
Speaker 1: and remember in Zimbabwe and that I can't remember what

674
00:38:11,000 --> 00:38:14,120
Speaker 1: what decade it was, the eighties, maybe the nineties where

675
00:38:14,120 --> 00:38:17,600
Speaker 1: they were they were like using wheelbarrows to cart trillion

676
00:38:17,640 --> 00:38:21,520
Speaker 1: dollar bills um to the grocery store and still could

677
00:38:21,520 --> 00:38:25,080
Speaker 1: barely buy bread or toilet paper with it. Yeah, the US,

678
00:38:25,160 --> 00:38:27,440
Speaker 1: like I said earlier, it had its own brush with

679
00:38:27,840 --> 00:38:29,520
Speaker 1: I don't know if you call it hyper inflation, but

680
00:38:29,719 --> 00:38:33,920
Speaker 1: definitely much higher inflation than anybody was comfortable with UH,

681
00:38:33,960 --> 00:38:36,480
Speaker 1: and that actually came I was researching this today. A

682
00:38:36,520 --> 00:38:41,319
Speaker 1: lot of people blame the UM, the opeque, oil embargo, UM,

683
00:38:41,360 --> 00:38:44,000
Speaker 1: a lot of other stuff, but it apparently can all

684
00:38:44,040 --> 00:38:47,040
Speaker 1: be laid at the feet of Richard Dixon, who juiced

685
00:38:47,120 --> 00:38:50,319
Speaker 1: the economy. He fired his FED chairman and replaced him

686
00:38:50,360 --> 00:38:54,840
Speaker 1: with a sycophant who had no formal economics training, and

687
00:38:54,880 --> 00:38:57,400
Speaker 1: then started telling him what to do. Sound familiar to

688
00:38:57,560 --> 00:39:00,960
Speaker 1: juice the economy to get reelected. And it worked for

689
00:39:01,000 --> 00:39:02,640
Speaker 1: a minute, and then all of a sudden, it was

690
00:39:02,719 --> 00:39:05,239
Speaker 1: like this plane going up and then the gas was

691
00:39:05,320 --> 00:39:08,520
Speaker 1: no longer in the fuel injector and started just tumble

692
00:39:08,600 --> 00:39:14,480
Speaker 1: back towards the earth. We had almost um uh inflation. Yeah,

693
00:39:14,520 --> 00:39:17,120
Speaker 1: I mean that unemployment. That's a real number that like

694
00:39:18,120 --> 00:39:20,560
Speaker 1: makes an actual difference in American families, like getting what

695
00:39:20,600 --> 00:39:23,480
Speaker 1: they need, Yeah, for sure gas and food and you know,

696
00:39:23,560 --> 00:39:26,799
Speaker 1: paying builds. Yeah. So it took a good decade or

697
00:39:26,840 --> 00:39:29,799
Speaker 1: so to come out of that death spiral that it

698
00:39:29,840 --> 00:39:31,960
Speaker 1: was in, and it took the FED. And this is

699
00:39:32,000 --> 00:39:34,080
Speaker 1: a this was actually a big reason why the FED

700
00:39:34,120 --> 00:39:36,640
Speaker 1: plays such a big role in the economy today is

701
00:39:36,680 --> 00:39:38,759
Speaker 1: because of that the FED had to step in and

702
00:39:38,800 --> 00:39:44,360
Speaker 1: basically do the opposite of um easy money and basically

703
00:39:44,680 --> 00:39:47,879
Speaker 1: get money off of the market to basically say, all

704
00:39:47,960 --> 00:39:49,839
Speaker 1: these people who have money right now, we need to

705
00:39:49,880 --> 00:39:52,920
Speaker 1: take some of their money to lower demand, to cause

706
00:39:52,960 --> 00:39:56,000
Speaker 1: prices to go down. And it was a really hard

707
00:39:56,040 --> 00:40:00,120
Speaker 1: time to be an American in the late se in

708
00:40:00,120 --> 00:40:02,879
Speaker 1: these early eighties because it caused this, uh, the Great

709
00:40:02,920 --> 00:40:06,600
Speaker 1: Inflation and then a pretty big recession. Yeah, there are

710
00:40:06,880 --> 00:40:10,720
Speaker 1: a few things that the FED can do to uh,

711
00:40:10,840 --> 00:40:13,680
Speaker 1: you know. One thing that you might see on stupid

712
00:40:13,960 --> 00:40:17,920
Speaker 1: Facebook comments is like, just print more money. Fed. That's

713
00:40:17,960 --> 00:40:21,200
Speaker 1: all they do anyway, just put more cash into the economy.

714
00:40:21,480 --> 00:40:23,960
Speaker 1: They don't do that. The FED doesn't just print more money.

715
00:40:24,640 --> 00:40:27,240
Speaker 1: They can influence the money supply though, in a few ways.

716
00:40:28,120 --> 00:40:31,040
Speaker 1: One is there's something called the reserve requirement, which is

717
00:40:31,080 --> 00:40:34,000
Speaker 1: basically they say, you know what, if you're a bank,

718
00:40:34,840 --> 00:40:37,800
Speaker 1: you have to have a certain percentage of your customer

719
00:40:38,120 --> 00:40:40,920
Speaker 1: deposits that you don't you can't touch. You gotta leave

720
00:40:40,960 --> 00:40:43,120
Speaker 1: it in there and reserve. So they can lower that

721
00:40:43,160 --> 00:40:47,040
Speaker 1: requirement a little bit, meaning that in theory, more money

722
00:40:47,080 --> 00:40:49,680
Speaker 1: can be in circulation because they're loaning out more or

723
00:40:49,680 --> 00:40:51,839
Speaker 1: they're able to loan out more. So that's one thing

724
00:40:51,840 --> 00:40:56,040
Speaker 1: they can do. Um. They can also uh, they actually

725
00:40:56,160 --> 00:40:58,600
Speaker 1: buy and sell bonds. This is where it gets so

726
00:40:58,840 --> 00:41:02,160
Speaker 1: crazy to me, Like this just sounds so weird, but

727
00:41:02,280 --> 00:41:04,920
Speaker 1: I mean there's a whole market there that actually is

728
00:41:05,040 --> 00:41:08,680
Speaker 1: basically how money gets on or off the market in

729
00:41:08,719 --> 00:41:12,400
Speaker 1: the economy. There's this, there's sales of bonds where companies

730
00:41:12,400 --> 00:41:15,719
Speaker 1: can buy bonds, companies can sell bonds um, and the

731
00:41:15,800 --> 00:41:18,359
Speaker 1: FED will buy or sell them too. And when the

732
00:41:18,360 --> 00:41:22,080
Speaker 1: FED buys bonds is putting money on the market, and

733
00:41:22,080 --> 00:41:25,440
Speaker 1: when the Fed sells bonds, it's accepting money. It's taking

734
00:41:25,480 --> 00:41:28,680
Speaker 1: money off the markets, treating those bonds for money, and

735
00:41:28,719 --> 00:41:31,400
Speaker 1: making sure that that money isn't in circulation anymore, at

736
00:41:31,440 --> 00:41:34,640
Speaker 1: least temporarily. That's what's happening today. They're going to auction

737
00:41:34,680 --> 00:41:38,400
Speaker 1: off a hundred billion dollars in bonds, So a hundred

738
00:41:38,400 --> 00:41:42,520
Speaker 1: billion dollars will not be in the economy tomorrow after

739
00:41:42,560 --> 00:41:45,360
Speaker 1: this auction today because the Fed's taking it off the market,

740
00:41:45,520 --> 00:41:49,360
Speaker 1: which was enough to um to calm those inflation warries.

741
00:41:49,400 --> 00:41:52,319
Speaker 1: Everybody's at uh, the FED steppinge in, It's fine. Well,

742
00:41:52,680 --> 00:41:55,040
Speaker 1: now they're like a hundred people that understand that said,

743
00:41:55,040 --> 00:41:59,480
Speaker 1: oh okay, and everyone else just read the headline. T L. D.

744
00:41:59,719 --> 00:42:02,319
Speaker 1: R right said all right, we're not supposed to worry,

745
00:42:02,320 --> 00:42:04,520
Speaker 1: so I won't worry. But at the same at the

746
00:42:04,560 --> 00:42:07,080
Speaker 1: same time, you made reference though earlier that it was

747
00:42:07,280 --> 00:42:10,120
Speaker 1: like Joe Biden screwing up the economy, that they were

748
00:42:10,160 --> 00:42:13,440
Speaker 1: blaming those stimulus checks for everything from people not working

749
00:42:13,520 --> 00:42:18,440
Speaker 1: purposefully to um there being too much money and increasing

750
00:42:18,480 --> 00:42:23,040
Speaker 1: demand for regular stuff, and the whether that's true or not.

751
00:42:23,160 --> 00:42:25,120
Speaker 1: The FED stepping in and saying, well, we're just gonna

752
00:42:25,160 --> 00:42:27,800
Speaker 1: get some money off the market. Another thing the government

753
00:42:27,800 --> 00:42:31,120
Speaker 1: can do is the opposite of something like stimulus checks.

754
00:42:31,280 --> 00:42:34,160
Speaker 1: It can actually raise taxes. And that's another way for

755
00:42:34,239 --> 00:42:37,040
Speaker 1: the government rather than the FED to get money out

756
00:42:37,040 --> 00:42:40,960
Speaker 1: of circulation by by taking it from people's you know,

757
00:42:41,160 --> 00:42:45,680
Speaker 1: end of your account, end of your account. Uh. And

758
00:42:45,719 --> 00:42:47,640
Speaker 1: then the other The final thing the Fed can do

759
00:42:47,760 --> 00:42:50,400
Speaker 1: is they can lower their discount rate, which is the

760
00:42:50,480 --> 00:42:51,920
Speaker 1: rate that is going to charge a bank for a

761
00:42:51,960 --> 00:42:55,480
Speaker 1: short term loan. And in theory, if a bank is

762
00:42:55,520 --> 00:42:58,000
Speaker 1: paying less for a loan, then they can lend at

763
00:42:58,000 --> 00:43:00,239
Speaker 1: a lower rate as well. If you're going and skiing

764
00:43:00,280 --> 00:43:03,120
Speaker 1: for a loan. And then lastly there's supply side economics.

765
00:43:03,120 --> 00:43:05,640
Speaker 1: Another thing the government can do, which is basically deregulate

766
00:43:05,680 --> 00:43:09,000
Speaker 1: industry in the hopes that it will make industry leaner,

767
00:43:09,120 --> 00:43:12,680
Speaker 1: more competitive, all that stuff, and that that will cause

768
00:43:12,680 --> 00:43:15,920
Speaker 1: prices to go down because businesses will become more efficient

769
00:43:15,960 --> 00:43:19,479
Speaker 1: when it's dog eat dog. I think we've seen, thanks

770
00:43:19,480 --> 00:43:23,000
Speaker 1: to reagonomics, that that doesn't necessarily work very well. That's

771
00:43:23,040 --> 00:43:25,960
Speaker 1: what they say. That's my two cents, And hey, man,

772
00:43:26,080 --> 00:43:29,000
Speaker 1: I'm just as much an economist as any economist. It

773
00:43:29,080 --> 00:43:31,279
Speaker 1: sounds like it. Uh. If you want to know more

774
00:43:31,320 --> 00:43:35,120
Speaker 1: about economics and inflation and stag inflation and deflation and

775
00:43:35,160 --> 00:43:39,319
Speaker 1: all deflations, go do some research and it will blow

776
00:43:39,360 --> 00:43:41,719
Speaker 1: your mind. And since I said that it's time for

777
00:43:41,800 --> 00:43:46,120
Speaker 1: listener mail, I'm gonna call this one of the many

778
00:43:46,160 --> 00:43:52,439
Speaker 1: great responses from our Girl Scout episode. Good morning, Josh

779
00:43:52,520 --> 00:43:54,839
Speaker 1: and Chuck at the pleasure of listening to the Girl

780
00:43:54,920 --> 00:43:57,279
Speaker 1: Scout episode. When I was sewing the badges onto my

781
00:43:57,360 --> 00:44:00,880
Speaker 1: daughter's best in time for our bridging ceremony. My daughters

782
00:44:00,880 --> 00:44:04,879
Speaker 1: our fourth generation Girl Scouts, and I'm a third generation leader.

783
00:44:05,320 --> 00:44:08,319
Speaker 1: I love this very big family. I have the honor

784
00:44:08,320 --> 00:44:10,200
Speaker 1: to service one of five leaders and a multi level

785
00:44:10,200 --> 00:44:13,080
Speaker 1: troop or troop as girls from kindergarten through seventh grade,

786
00:44:13,680 --> 00:44:17,279
Speaker 1: encompassing Daisy, Brownie, Jr. And Cadet levels. We formed as

787
00:44:17,320 --> 00:44:20,080
Speaker 1: a multi level troop so sisters could be in the

788
00:44:20,120 --> 00:44:22,960
Speaker 1: same troop. That's really sweet, and so that their parents

789
00:44:23,239 --> 00:44:26,440
Speaker 1: could have one troop to keep track of. It's a

790
00:44:26,440 --> 00:44:28,880
Speaker 1: great way for the older girls to practice leadership skills

791
00:44:28,880 --> 00:44:31,960
Speaker 1: with the younger girls and gives the younger girls role models.

792
00:44:32,320 --> 00:44:34,600
Speaker 1: This sounds great, very sweet. They should do this everywhere

793
00:44:35,719 --> 00:44:37,600
Speaker 1: everyone else is doing it wrong, she said, But no

794
00:44:37,800 --> 00:44:42,799
Speaker 1: Juliets are allowed. Yeah, no, Juliet. Another unique thing about

795
00:44:42,800 --> 00:44:45,840
Speaker 1: our troop is that we do not charge dues. Everything

796
00:44:45,840 --> 00:44:48,200
Speaker 1: our girls do from uniforms, program supplies, and activities are

797
00:44:48,239 --> 00:44:52,080
Speaker 1: funded solely through cookie sales. We asked new girls to

798
00:44:52,120 --> 00:44:54,719
Speaker 1: buy their first vest for the uniform and from their

799
00:44:54,719 --> 00:44:59,399
Speaker 1: cookie sales take care of the rest. Uh. Caroline here

800
00:44:59,480 --> 00:45:03,120
Speaker 1: leads the Daisies in their troop and says, even at

801
00:45:03,160 --> 00:45:06,360
Speaker 1: the youngest levels, the emphasis is then a girl that experience.

802
00:45:06,360 --> 00:45:09,480
Speaker 1: That means they choose their activities and badges, plan and

803
00:45:09,520 --> 00:45:13,319
Speaker 1: run the meetings, practice leadership skills. Each chance they get

804
00:45:13,719 --> 00:45:15,440
Speaker 1: takes a lot of practice and self control in the

805
00:45:15,440 --> 00:45:17,839
Speaker 1: part of the leaders to give the girls space to lead,

806
00:45:17,840 --> 00:45:21,080
Speaker 1: but the end result is so rewarding. I will leave

807
00:45:21,120 --> 00:45:23,960
Speaker 1: you with one last lesson that I've learned in Girl

808
00:45:24,040 --> 00:45:26,359
Speaker 1: Scouts and a motto that my family has always lived by.

809
00:45:27,280 --> 00:45:30,359
Speaker 1: This is great. This is what everyone should do. Leave

810
00:45:30,400 --> 00:45:33,120
Speaker 1: a place better than you found it. Oh yeah, whether

811
00:45:33,120 --> 00:45:35,120
Speaker 1: it's cleaning up a little extra garbage at campsite or

812
00:45:35,160 --> 00:45:37,640
Speaker 1: making a positive impact on the people in places you

813
00:45:37,680 --> 00:45:40,160
Speaker 1: come across in life, leave it a little better than

814
00:45:40,160 --> 00:45:42,399
Speaker 1: you found it. Thank you for all the many years

815
00:45:42,400 --> 00:45:44,520
Speaker 1: of podcast that are brightened many a dull car ride

816
00:45:44,880 --> 00:45:47,560
Speaker 1: and countless rounds and towards from my family, except for

817
00:45:47,600 --> 00:45:54,480
Speaker 1: the inflation episode. That's weird. How do you know? So

818
00:45:54,560 --> 00:46:00,160
Speaker 1: that is from Caroline and rich Field, Minnesota, and she's

819
00:46:00,160 --> 00:46:04,480
Speaker 1: send in pictures of the daisies and the girl bridging

820
00:46:04,520 --> 00:46:08,800
Speaker 1: ceremony and it's just adorable, these cute little girls in

821
00:46:08,840 --> 00:46:14,320
Speaker 1: their masks doing stuff. Yeah, who is that? That's Caroline? Caroline?

822
00:46:14,440 --> 00:46:16,960
Speaker 1: So I thought, thanks a lot, Caroline, was some great info.

823
00:46:17,000 --> 00:46:19,560
Speaker 1: I'm glad you enjoyed that. So we enjoyed it too.

824
00:46:20,239 --> 00:46:23,319
Speaker 1: Um and uh, I guess it's a hunt Chuck. Yeah,

825
00:46:23,360 --> 00:46:25,000
Speaker 1: I should point out she wrote back and said, by

826
00:46:25,000 --> 00:46:26,840
Speaker 1: the way, my husband is gonna be jealous. I'm getting

827
00:46:26,840 --> 00:46:29,040
Speaker 1: this on listener mail. I should mention that he went

828
00:46:29,040 --> 00:46:31,239
Speaker 1: through boy Scouts all the way through high school just

829
00:46:31,280 --> 00:46:33,839
Speaker 1: so he could go camping. All he did was enough

830
00:46:33,880 --> 00:46:36,240
Speaker 1: to get the badges so you could qualify for camping trips.

831
00:46:36,520 --> 00:46:39,520
Speaker 1: It's awesome. So the rest of them, he said, we

832
00:46:39,560 --> 00:46:43,399
Speaker 1: don't need no stinking badge. Uh. Well, if you want

833
00:46:43,440 --> 00:46:45,959
Speaker 1: to get in touch of this, like Caroline did, you

834
00:46:46,080 --> 00:46:49,400
Speaker 1: can do that via email. Send us one to stuff

835
00:46:49,480 --> 00:46:55,600
Speaker 1: podcast at iHeart radio dot com. Stuff you Should Know

836
00:46:55,719 --> 00:46:58,520
Speaker 1: is a production of I Heart Radio. For more podcasts

837
00:46:58,560 --> 00:47:01,960
Speaker 1: my heart Radio, visit the heart Radio app, Apple Podcasts,

838
00:47:02,080 --> 00:47:10,160
Speaker 1: or wherever you listen to your favorite shows. H m

839
00:47:10,440 --> 00:47:10,640
Speaker 1: hm