WEBVTT - Tariffs, DOGE, and Your Money w/ Noahpinion #944 0:00:00.080 --> 0:00:02.639 Welcome to Out of Money. I'm Joel, I'm Matt. 0:00:02.800 --> 0:00:06.400 Today we're talking tariffs, doge and your Money with No Opinion. 0:00:25.520 --> 0:00:27.760 Yeah, Joel, So one of the benefits of hosting your 0:00:27.760 --> 0:00:30.320 own podcast is that you've got the opportunity to speak 0:00:30.320 --> 0:00:32.960 with some amazing folks who are much smarter than you. 0:00:33.479 --> 0:00:34.400 That is definitely the case. 0:00:34.400 --> 0:00:38.360 Today we're joined by economist Noah Smith, author of the 0:00:38.400 --> 0:00:42.199 sub stack No Opinion, where he takes these big, complex 0:00:42.280 --> 0:00:44.599 economic ideas and makes them easier. 0:00:44.240 --> 0:00:46.600 To understand for folks like us. Joel. 0:00:46.840 --> 0:00:50.040 I mean, we tend to focus more on micro econ factors. Right, 0:00:50.080 --> 0:00:52.520 we're a personal finance show, after all, it's still good 0:00:52.560 --> 0:00:54.160 to take a step back and to look at the 0:00:54.160 --> 0:00:58.120 big picture, to honestly to understand, like what's going on 0:00:58.200 --> 0:01:00.880 with the water that we're all swimming in. And given 0:01:01.000 --> 0:01:02.840 all that's been going on lately with tariffs, you know, 0:01:02.920 --> 0:01:05.920 this is a more timely episode. But we're also excited 0:01:05.959 --> 0:01:10.080 to get into some topics like declining birth rates, government spending, 0:01:10.120 --> 0:01:14.480 the economy overall plenty more today. No he actually he 0:01:14.520 --> 0:01:17.760 even believes that rabbits are underrated pets. And I don't 0:01:17.800 --> 0:01:19.720 know if we'll actually see ia eye on that one. 0:01:20.040 --> 0:01:22.880 Who knows. Maybe Noah, you can convince us. But thank 0:01:22.880 --> 0:01:24.600 you for joining us today on the podcast. 0:01:24.880 --> 0:01:26.720 Hey, great to be here. Thanks for having me on. 0:01:26.959 --> 0:01:27.720 We're glad to have you. 0:01:27.720 --> 0:01:27.760 Know. 0:01:27.760 --> 0:01:29.600 A first question we ask everyone who comes on the 0:01:29.600 --> 0:01:32.560 show is what do you like to splur John? Because 0:01:32.600 --> 0:01:34.919 I'm sure you're being smart, you're saving, you're being thoughtful 0:01:34.920 --> 0:01:36.200 about money for your future. 0:01:36.680 --> 0:01:37.320 What do you like to spour? 0:01:37.400 --> 0:01:39.360 John? In the here and now? Though? Besides maybe rabbit 0:01:39.400 --> 0:01:43.360 food splurgeh, I don't really splurge anything. Psychotherapy, I guess. 0:01:43.640 --> 0:01:46.000 Okay, yeah, all right, never heard of that one before, 0:01:46.080 --> 0:01:46.480 but I like that. 0:01:46.640 --> 0:01:49.400 Just you know, I spend almost nothing. I have like 0:01:49.480 --> 0:01:51.920 a you know, over an eighty percent savings rate. 0:01:52.080 --> 0:01:52.760 Holy cow. 0:01:52.960 --> 0:01:53.360 Yeah. 0:01:53.440 --> 0:01:54.559 Are you part of the fire movement? 0:01:54.600 --> 0:01:59.080 Noah, No, no, no, I'm already retired. Like this is 0:01:59.440 --> 0:02:03.360 this is retire this is my hobby. I'm just you know, yes, 0:02:03.400 --> 0:02:05.840 I'm making much more than I made when I was 0:02:05.880 --> 0:02:11.800 a working person. But you know it's it's if I 0:02:11.800 --> 0:02:14.280 if I called myself retired tomorrow, I would be doing 0:02:14.280 --> 0:02:16.960 the exact same thing I am now, and so I 0:02:17.000 --> 0:02:20.799 am essentially retired. I was fascinating fired I don't have 0:02:20.960 --> 0:02:23.840 enough to do that, Like I was fascinating that you 0:02:23.840 --> 0:02:24.919 talk about my personal finance. 0:02:24.919 --> 0:02:26.919 That you continue to do like what you've done before 0:02:26.960 --> 0:02:29.880 because you used to be over at Bloomberg. And just 0:02:30.000 --> 0:02:32.280 let's talk about media for a quick second, because you're 0:02:32.360 --> 0:02:34.920 over on substack writing. We've seen a lot of folks 0:02:35.000 --> 0:02:36.920 do this over time, where they're leaving some of these 0:02:37.240 --> 0:02:39.519 more legacy mainstream media outlets. 0:02:39.880 --> 0:02:40.560 How does that work? 0:02:40.600 --> 0:02:43.399 Can you talk to us about I guess quasi making 0:02:43.440 --> 0:02:45.240 a living writing content over on substack? 0:02:45.360 --> 0:02:49.840 Sure? Absolutely well. So the key to substack is email distribution. 0:02:49.919 --> 0:02:53.200 People get your newsletter in their email inbox every day, 0:02:53.480 --> 0:02:55.160 and so you don't have to worry about promoting each 0:02:55.200 --> 0:02:58.040 post on social media or you know, like having people 0:02:58.040 --> 0:02:59.880 have you in their RSS feeds or however else people 0:02:59.880 --> 0:03:02.880 get distribution. Email turns out to be just the the 0:03:03.000 --> 0:03:06.440 distribution method for blogs. Some people click on the link 0:03:06.440 --> 0:03:08.320 and read it as a web browser, you know, in 0:03:08.360 --> 0:03:12.120 their web browser. Some people you know, just read it 0:03:12.160 --> 0:03:15.320 in line in their emails, et cetera. And some people 0:03:15.360 --> 0:03:17.240 read it in the substack app. And there's all these 0:03:17.280 --> 0:03:18.960 ways to read it, but it turns out that email 0:03:19.080 --> 0:03:22.320 is just the killer app, and and so that's how 0:03:22.360 --> 0:03:24.799 blogs work now, and so substack is really bringing back 0:03:24.840 --> 0:03:29.680 the blogosphere. I pay weall one out of three posts, 0:03:29.919 --> 0:03:32.280 which means that two out of three are free to read. 0:03:32.360 --> 0:03:36.200 And so I only five percent of my audience is paid, 0:03:36.800 --> 0:03:39.880 which means that yeah, most of the people who are 0:03:40.120 --> 0:03:41.960 only reading the two out of three free posts. I 0:03:41.960 --> 0:03:44.520 could pay Weall a lot more, and I could probably 0:03:44.800 --> 0:03:47.400 extract a lot more income in the short term from 0:03:47.440 --> 0:03:50.440 people who read my blog. However, I've chosen not to 0:03:50.480 --> 0:03:52.560 do this because A I care about reach, and B 0:03:52.680 --> 0:03:55.400 I care about long term growth for the unpaid audience. 0:03:56.280 --> 0:03:57.160 And it's interesting. 0:03:57.200 --> 0:03:59.280 I feel like some players from Legacy Media you used 0:03:59.320 --> 0:04:02.040 to write for Legacy Media are kind of moving over 0:04:02.120 --> 0:04:04.640 to substack. I don't know if if Paul Krugman is 0:04:04.680 --> 0:04:06.680 like retiring or if he's like I don't I think 0:04:06.680 --> 0:04:07.880 I can make more money on substack. 0:04:07.920 --> 0:04:09.760 He's not he's not charging, and he doesn't plan to show. 0:04:09.760 --> 0:04:12.160 Oh really, okay, yeah, I think that's fascinating. Waiting for 0:04:12.240 --> 0:04:15.200 fun me think about some of the personalities that have 0:04:15.720 --> 0:04:18.760 was it. Jennifer Rubinstein from The Washington post who left 0:04:18.880 --> 0:04:22.320 and immediately had hundreds of thousands of subscribers. Is that 0:04:22.400 --> 0:04:24.679 going to happen more and more? Were people who built 0:04:24.760 --> 0:04:28.680 up sort of a readership in in like the legacy media, 0:04:28.680 --> 0:04:30.240 they're gonna switch over and do their own thing. 0:04:30.560 --> 0:04:35.919 Well, yes, absolutely, Basically legacy print media combined two things 0:04:35.920 --> 0:04:39.160 that didn't need to be combined. And this is a 0:04:39.200 --> 0:04:41.479 post I'm going to write soon because every year I 0:04:41.520 --> 0:04:45.520 write one sort of naval gazing post about the media 0:04:45.560 --> 0:04:47.719 industry or how to write a substack or something like that. 0:04:47.720 --> 0:04:51.279 That's I limit myself to one year basically, you know, 0:04:51.480 --> 0:04:54.040 how I write or something like that, sage gets made, 0:04:54.279 --> 0:04:56.280 How this sausage gets made. Yeah, I don't want to 0:04:56.279 --> 0:04:58.240 write too much about that, too much naval gazing, but 0:04:58.279 --> 0:05:00.240 I do that once a year, and so one here 0:05:00.279 --> 0:05:04.200 is going to be how the basically mainstream or legacy 0:05:04.200 --> 0:05:09.880 print media combined news reporting and analysis, which we decided 0:05:09.880 --> 0:05:13.320 to call op ed writing. And so actually those are 0:05:13.320 --> 0:05:17.160 two different enough things where the process for producing them 0:05:17.200 --> 0:05:20.320 is very different. Process for producing them well is very different. 0:05:20.640 --> 0:05:24.760 And unfortunately you talk to almost any person who edits 0:05:24.880 --> 0:05:28.080 op ed pieces, and they came from newsroom editing and 0:05:28.120 --> 0:05:31.800 they apply very similar techniques to editing op ed writers 0:05:31.839 --> 0:05:34.520 as they do to editing journalists and reporters, and the 0:05:34.560 --> 0:05:37.040 idea that many people even think of op ed writers 0:05:37.080 --> 0:05:39.840 as journalists, and in fact, many some op ed writers 0:05:39.880 --> 0:05:43.520 even were reporters before they switched to OpEd writing. So 0:05:44.440 --> 0:05:48.880 but in actuality, there are two extremely different skills. Reporting 0:05:49.200 --> 0:05:53.240 requires you to go cultivate sources to you know, sift 0:05:53.480 --> 0:05:57.040 through primary information and to tell truth from falsehood in 0:05:57.080 --> 0:06:00.960 a very narrow category of the world, where analysis or 0:06:01.000 --> 0:06:03.880 op ed writing requires you to draw a whole bunch 0:06:03.920 --> 0:06:07.479 of threads and read very broadly and synthesize, using it 0:06:07.480 --> 0:06:09.560 as sort of an analytical base, such as you know, 0:06:09.640 --> 0:06:13.120 economics or you know, sociology or history or something to 0:06:13.240 --> 0:06:17.520 kind of analyze these events. And so it's just two 0:06:17.560 --> 0:06:22.960 extremely different techniques. Also, OpEd writing employe's voice, which reporting 0:06:23.000 --> 0:06:26.200 should not. That's a stylistic thing. But when you know, 0:06:26.279 --> 0:06:28.200 for example, take Matt Levine. You know, he has this 0:06:28.279 --> 0:06:30.760 famous voice, this sort of this sort of like sort 0:06:30.760 --> 0:06:33.760 of droll sigh with which he talks about the finance world. 0:06:33.880 --> 0:06:35.800 And it's wonderful. It's a wonderful voice, but it's not 0:06:35.880 --> 0:06:41.080 the same as reporting, and now OpEd writers who are 0:06:41.200 --> 0:06:45.479 actually just analysts they you know, similar to like a 0:06:45.520 --> 0:06:48.440 stock analyst or a CIA analyst. Op ed writers are 0:06:48.440 --> 0:06:52.600 realizing that they can be free of editorial constraints, use 0:06:52.680 --> 0:06:56.400 their own voice, also use their own form factors for analysis, 0:06:56.400 --> 0:07:02.080 because for analysis slash op ed writing, the appropriate form 0:07:02.120 --> 0:07:06.360 factor is wildly divergent between topics and between people. And 0:07:06.440 --> 0:07:08.640 so you can have one person who writes seven thousand 0:07:08.640 --> 0:07:10.920 word posts with like a million, you know, references to 0:07:10.960 --> 0:07:14.800 scientific papers. You can have another person who writes like short, punchy, 0:07:15.080 --> 0:07:18.480 like very dramatically written essays, and you can have all 0:07:18.480 --> 0:07:21.480 these different kinds of things. And yet at these legacy 0:07:21.480 --> 0:07:24.360 media places, all the editors are editing the op ed 0:07:24.360 --> 0:07:27.280 writers as if they're all just basically reporters who are 0:07:27.280 --> 0:07:30.680 allowed to express opinions, which is an incredibly stultifying, narrow, 0:07:30.720 --> 0:07:33.800 confining vision for what op ed writing can be. Substack. 0:07:33.960 --> 0:07:37.200 The reason substack is succeeding is not just individualized email distribution, 0:07:37.240 --> 0:07:38.760 although I mean that's a little that's part of it, 0:07:38.800 --> 0:07:43.360 but mostly it is that it has freed op ed 0:07:43.360 --> 0:07:48.160 writers analysts to find their own voice and to use 0:07:48.640 --> 0:07:51.600 the to explore the full potential of the medium. 0:07:51.800 --> 0:07:52.600 It makes so much sense. 0:07:52.680 --> 0:07:54.720 Yeah, as opposed to an editor trying to edit down 0:07:54.760 --> 0:07:59.000 all these different writers to the cohesive voice as to 0:07:59.080 --> 0:08:01.320 what that location is trying to achieve. 0:08:01.160 --> 0:08:03.120 Right, and that voice inevitably sounds like the voice of 0:08:03.160 --> 0:08:04.080 a reporter too. 0:08:04.360 --> 0:08:05.160 Yeah, fascinating. 0:08:05.200 --> 0:08:07.720 Well, I wasn't expecting for us to talk about media. 0:08:08.360 --> 0:08:10.480 That'll be it, though, we'll keep it siloed. Man like. 0:08:10.520 --> 0:08:14.160 I appreciate that you attempt to stay apolitical as much 0:08:14.200 --> 0:08:16.960 as possible while you are talking about the economic impacts 0:08:17.400 --> 0:08:19.920 of political choices. You like to stick to the facts. 0:08:19.920 --> 0:08:22.840 But how would you describe your overall perspective or your 0:08:22.840 --> 0:08:27.680 overall philosophy on economics, Like who have have you been 0:08:27.760 --> 0:08:29.880 influenced the most? When it comes to how you approach 0:08:30.240 --> 0:08:32.120 the different economic ideas that you write about. 0:08:32.320 --> 0:08:37.520 So it's interesting because I'm pretty eclectic, I think, you know, politically, 0:08:37.840 --> 0:08:42.439 I'm a center left type. Politically, I'm like an Obama 0:08:42.520 --> 0:08:46.600 Clinton liberal, and I didn't shift strongly to the left 0:08:46.600 --> 0:08:48.760 and the twenty tens, and I'm not shifting very strongly 0:08:48.800 --> 0:08:51.400 to the right now. I'm just sort of where I 0:08:51.480 --> 0:08:54.640 was in two thousand and five, my basic politics have 0:08:54.679 --> 0:08:58.280 not shifted very much. But in terms of what economic 0:08:58.559 --> 0:09:02.680 approaches I endure, well, that's always evolving because I learned 0:09:02.679 --> 0:09:05.520 so much more all the time. But I've never been 0:09:05.559 --> 0:09:08.640 sort of as as I guess, neoliberal, as the other 0:09:08.679 --> 0:09:10.960 people on the center left tend to be. So if 0:09:11.000 --> 0:09:14.160 you read Jason Furman's article in Foreign Affairs Today, the 0:09:14.160 --> 0:09:16.839 Post Neoliberal Delusion, he says, some things that I think 0:09:16.880 --> 0:09:19.560 are very wrong, but then some things that are very right. 0:09:19.679 --> 0:09:22.160 And so I think that overall, I describe myself as 0:09:22.160 --> 0:09:25.640 an industrialist. I think that we need to intentionally build 0:09:25.679 --> 0:09:28.720 back up, you know, manufacturing in some other like high 0:09:28.720 --> 0:09:32.840 tech industries in America for strategic reasons, for you know, 0:09:32.960 --> 0:09:36.400 just good economic health in various ways. And I think 0:09:36.440 --> 0:09:38.560 this is a lot more possible to do than people believe. 0:09:39.000 --> 0:09:42.480 And so but at the same time I am I'm 0:09:42.520 --> 0:09:46.480 more in favor of trade with poor countries and you know, 0:09:46.520 --> 0:09:51.160 with with you know, other countries than most of the industrialists. 0:09:51.200 --> 0:09:53.840 And I'm much less I'm much more skeptical of like 0:09:54.600 --> 0:09:58.960 NEPA permitting laws and unions too. You know, I've nuanced 0:09:58.960 --> 0:10:02.800 in skeptical views unions, which sometimes I like, but sometimes 0:10:02.840 --> 0:10:05.200 I don't like, and so I think that there's no 0:10:05.320 --> 0:10:08.679 easy way to pigeonhole my economic viewpoint, and until I 0:10:08.760 --> 0:10:12.040 just write a big book explaining it, I think that 0:10:12.160 --> 0:10:14.600 I'm going to always be keeping people guessing as to 0:10:14.640 --> 0:10:17.120 what I really support because there's no easy word or 0:10:17.240 --> 0:10:21.199 name to put to my ideology. So so basically it's 0:10:21.280 --> 0:10:23.680 it's Noahism, which is a cobble together thing, and so 0:10:23.720 --> 0:10:25.720 I really just but before I do that, I'm going 0:10:25.800 --> 0:10:29.200 to write a book like Your Easy Guide to Macroeconomics, 0:10:29.200 --> 0:10:31.719 and that's my next book I'm going to write that 0:10:31.880 --> 0:10:33.839 I'll hopefully get done this year, and then maybe the 0:10:33.880 --> 0:10:37.320 next year I'll write a book like you know, Noah 0:10:37.360 --> 0:10:40.280 Smith's Total Philosophy of the Economy, and that book will 0:10:40.400 --> 0:10:43.120 completely destroy and eat my life because I'll be going 0:10:43.120 --> 0:10:45.040 out on a limb in so many ways that I'll 0:10:45.080 --> 0:10:47.600 be a perfectionist about it and just do exhaustive research 0:10:47.640 --> 0:10:50.800 and just argue with the you know, all these different 0:10:50.800 --> 0:10:52.840 people who disagree with me in a million different ways, 0:10:52.880 --> 0:10:55.320 and I'll become, you know, super depressed and end up 0:10:55.320 --> 0:10:56.640 as like a hermit living in the call. 0:10:57.920 --> 0:11:00.400 Well I mean it though, because yeah, read that, but 0:11:00.440 --> 0:11:03.040 I hope you survive mentally during that project. 0:11:03.520 --> 0:11:04.440 I'll do what I can. Well. 0:11:04.480 --> 0:11:06.600 I think that's actually part of what I love about 0:11:06.640 --> 0:11:08.319 what you write. I don't know what you're going to 0:11:08.400 --> 0:11:09.800 say before you say it. And there are a lot 0:11:09.800 --> 0:11:12.320 of people opinion writers in particularly the ed pages, and 0:11:12.360 --> 0:11:13.880 you're like, oh, it's that author. Well, I know what 0:11:13.920 --> 0:11:16.000 their opinion is going to be. And so yeah, the 0:11:16.080 --> 0:11:18.719 nuance I think is a part of your success on 0:11:19.120 --> 0:11:21.960 this podcast. No, we typically talk about personal finance, but 0:11:22.080 --> 0:11:25.600 macroeconomics policy, they impact all of us as individuals. Like 0:11:25.600 --> 0:11:29.079 there's there are direct connections between some of the things 0:11:29.080 --> 0:11:31.240 that happen, let's say in Washington, d C. In our 0:11:31.320 --> 0:11:33.320 day to day lives and maybe less than some people assume. 0:11:33.559 --> 0:11:36.040 But how do you see the relationship between like big 0:11:36.080 --> 0:11:39.120 picture shifts that are happening macroeconomic stuff and then the 0:11:39.440 --> 0:11:43.439 individual reality that we all faces as Americans and as consumers. 0:11:43.679 --> 0:11:45.640 That's a really good question because when you look at surveys, 0:11:45.640 --> 0:11:47.719 you see that people say that the macroeconomic environment is 0:11:47.720 --> 0:11:51.640 doing terrible, and then they say their personal finances are 0:11:51.679 --> 0:11:54.920 doing great and their city and state are doing pretty good, 0:11:55.280 --> 0:11:58.000 and the farther you get from you and your own circumstances. 0:11:58.000 --> 0:12:00.600 The worst people say things are doing. I interpret this 0:12:00.640 --> 0:12:04.240 to mean that people's ideas about culture and the negativity 0:12:04.240 --> 0:12:06.680 they see in the media about American culture and politics 0:12:06.760 --> 0:12:09.319 and stuff like that is bleeding into their assessments of 0:12:09.400 --> 0:12:13.079 the economy and especially one data point in my favor, 0:12:13.240 --> 0:12:15.800 is that you see huge partisan shifts here. So then 0:12:15.840 --> 0:12:17.920 as soon as you know, a Republican gets elected president, 0:12:18.000 --> 0:12:21.000 the democrats assessment of the economy just drops off a 0:12:21.000 --> 0:12:23.520 cliff in the Republican assessments of the economy sores into 0:12:23.520 --> 0:12:25.840 the stratosphere, and the overall numbers don't stay, that don't 0:12:25.920 --> 0:12:29.760 change much. And that's like literally overnight, literally overnight, literally overnight. 0:12:29.840 --> 0:12:33.640 What indicators, Noah, are you paying attention to that you 0:12:33.720 --> 0:12:38.240 think actually will have an impact on individuals, savers or investors, 0:12:38.800 --> 0:12:42.320 just the typical person that's out there. I'm curious, like, 0:12:42.480 --> 0:12:44.840 which sort of numbers or metrics are you keeping an 0:12:44.840 --> 0:12:45.120 eye on. 0:12:45.240 --> 0:12:48.240 Yeah, keep an eye on, first and foremost, the five 0:12:48.320 --> 0:12:53.600 year break even inflation expectations rate. That number has proven 0:12:53.840 --> 0:12:56.720 to it moves around less than actual inflation, which is 0:12:56.880 --> 0:12:58.720 good for a forecast. You don't want a forecast to 0:12:58.760 --> 0:13:01.000 move as much as the real thing. Like if you 0:13:01.040 --> 0:13:04.600 saw weather forecasters predict like, you know, frigid cold and 0:13:04.760 --> 0:13:07.200 searing heat one day after another, you'd be like, this 0:13:07.280 --> 0:13:09.959 weather forecaster needs to do fewer drugs. So then you 0:13:10.440 --> 0:13:12.600 want a forecast that's a little mild in its predictions. 0:13:12.600 --> 0:13:15.000 You want, like, you know, when there's a heat wave 0:13:15.120 --> 0:13:16.920 or a cold snap, you always want the weather forecaster 0:13:17.000 --> 0:13:21.000 to be a little bit surprised. So inflation expectations have 0:13:21.080 --> 0:13:23.439 done a good job of forecasting inflation, So you want 0:13:23.440 --> 0:13:25.880 to pay attention to that five year break even because 0:13:25.920 --> 0:13:31.160 that gives a sense of people's expectations of inflation once 0:13:31.200 --> 0:13:33.800 you include Fed policy. So when the five year break 0:13:33.840 --> 0:13:37.400 even rises, what that means is people expect inflationary pressures 0:13:37.400 --> 0:13:39.680 to rise and for the Fed to accommodate that instead 0:13:39.679 --> 0:13:42.400 of raising interest rates to force inflation back down. So 0:13:42.880 --> 0:13:45.600 then if people expect that, they're going to behave as 0:13:45.600 --> 0:13:48.240 if it's true, which turns into a self fulfilling prophecy 0:13:48.280 --> 0:13:50.600 because they want to raise prices ahead of everybody else, 0:13:50.640 --> 0:13:52.439 and so that you get a scramble to raise prices. 0:13:53.040 --> 0:13:55.960 So when you saw inflation go to like eight percent 0:13:56.440 --> 0:13:59.040 for you know, half a year or a year or 0:13:59.040 --> 0:14:02.080 however long it did. The post pandemic inflation, which was 0:14:02.200 --> 0:14:05.520 pretty severe. When you saw that happen, you did, you 0:14:05.559 --> 0:14:08.360 saw the five year break even rise to four percent 0:14:08.440 --> 0:14:10.719 three point five to four percent, and so it was 0:14:10.760 --> 0:14:13.439 a much lower swing, but it basically meant that people 0:14:13.440 --> 0:14:15.360 thought that the FED was losing control of inflation or 0:14:15.360 --> 0:14:18.520 were voluntarily giving up control, and that was what That 0:14:18.640 --> 0:14:21.160 rise in expectations is what actually aligned the FED into acting. 0:14:22.360 --> 0:14:24.520 And so that's the thing I would really if you 0:14:24.560 --> 0:14:26.440 want to see when inflation is going to return, keep 0:14:26.440 --> 0:14:29.000 an eye on the five year break even. And then 0:14:29.160 --> 0:14:30.600 you know, the other thing I always keep an eye 0:14:30.640 --> 0:14:33.800 on is the prime age employment to population ratio. Basically, 0:14:34.240 --> 0:14:37.800 adult American adults age twenty five through fifty four, how 0:14:37.800 --> 0:14:42.800 many of them are working. So most employment numbers sort 0:14:42.800 --> 0:14:46.600 of depend on some statistical slide of hand in terms 0:14:46.640 --> 0:14:49.520 of who calls themselves in the labor force, who claims 0:14:49.520 --> 0:14:52.160 that they're looking for work. So the unemployment rate and 0:14:52.200 --> 0:14:55.640 the labor force participation rate are both contaminated by this 0:14:55.840 --> 0:14:59.120 statistical weirdness of you know, do people say they're looking 0:14:59.160 --> 0:15:02.240 for work or not, whereas the employment rate, also called 0:15:02.280 --> 0:15:04.440 the employment to population ratio, those are the same thing. 0:15:05.040 --> 0:15:08.120 The employment rate is not contaminated by this. So whether 0:15:08.160 --> 0:15:09.960 you have a job doesn't depend on whether you say 0:15:09.960 --> 0:15:12.480 you're looking for a job, right, It's just whether you 0:15:12.480 --> 0:15:15.200 have a job, and so do you have a job 0:15:15.280 --> 0:15:17.040 or do you not have a job. And so you 0:15:17.080 --> 0:15:20.320 look at that, and then you know the of course 0:15:20.400 --> 0:15:24.480 there's like early retirements, which is affected by population aging, 0:15:24.520 --> 0:15:26.720 and then there's varying numbers that there's like rising and 0:15:26.720 --> 0:15:30.720 falling school enrollment and things like that, and so those 0:15:30.800 --> 0:15:33.520 things affect people under twenty five and over fifty four. 0:15:34.200 --> 0:15:36.040 But then if you look at twenty five through fifty four, 0:15:36.040 --> 0:15:38.880 you get a very clear picture of you know, sort 0:15:38.880 --> 0:15:42.120 of the macroeconomic employment situation. Look at the employment rate 0:15:42.680 --> 0:15:46.000 of people of people age twenty five through fifty four. 0:15:46.040 --> 0:15:48.480 That's called the prime age employment rate or the prime 0:15:48.520 --> 0:15:51.680 age employment to population ratio. So between that and the 0:15:51.680 --> 0:15:55.080 five year break even inflation rate, I think those are 0:15:55.080 --> 0:15:58.200 the two if I'm just going to check how the 0:15:58.200 --> 0:16:00.400 macroeconomy is doing today, those are the first two I 0:16:00.440 --> 0:16:00.760 look at. 0:16:01.560 --> 0:16:04.400 You just mentioned inflation for a second, I'm curious. Let's 0:16:04.400 --> 0:16:07.160 talk about terists for a second. How do you think, Well, 0:16:07.200 --> 0:16:09.560 it's like the teriffs that would have been that weren't 0:16:09.560 --> 0:16:11.720 that kind of were And it just feels like this 0:16:11.800 --> 0:16:14.880 seesaw kind of when it comes to will they or 0:16:14.920 --> 0:16:16.640 won't they? What's going to happen with tariffs, they get 0:16:16.640 --> 0:16:19.720 punted by a month and so I'm curious to hear 0:16:19.840 --> 0:16:21.920 what you think is going to happen there. But also, 0:16:22.720 --> 0:16:24.840 how is that going to impact inflation? I feel like 0:16:24.880 --> 0:16:28.440 it's commonly been understood from an economic perspective that tariffs 0:16:29.280 --> 0:16:32.720 will lead to higher prices for the end user, for 0:16:32.760 --> 0:16:34.560 the end consumer, for all Americans. 0:16:34.920 --> 0:16:35.840 But I don't know. 0:16:35.880 --> 0:16:37.960 It feels like maybe some of that line of thinking 0:16:38.040 --> 0:16:40.480 has shifted recently to that's fair. 0:16:41.240 --> 0:16:45.320 Yeah, So I think the actual tariffs we get will 0:16:45.320 --> 0:16:50.120 be much less than the tariffs that Trump initially announces 0:16:50.360 --> 0:16:52.680 almost every time. But that doesn't mean we're not going 0:16:52.760 --> 0:16:54.480 to get any tariffs. First of all, we are going 0:16:54.480 --> 0:16:56.080 to get some tariffs, and I don't know where they'll 0:16:56.160 --> 0:16:59.720 end up being. It. Basically, Trump, I think, is guided 0:16:59.720 --> 0:17:02.120 by this stock market, and whichever tariff's tank the stock 0:17:02.160 --> 0:17:04.600 market least or the tariffs Trump will keep. But I 0:17:04.640 --> 0:17:08.800 think that. But also because Trump doesn't really have an 0:17:08.840 --> 0:17:10.600 idea of a counterfactual, it means that the more the 0:17:10.600 --> 0:17:13.680 stock market rises for unrelated reasons like optimism about AI, 0:17:13.720 --> 0:17:17.080 I don't know whatever, the more it rises for unrelated reasons, 0:17:17.119 --> 0:17:19.920 the more tariffs will get because that will make Trump 0:17:20.000 --> 0:17:23.320 think stuff's doing okay, stock market's doing okay. Therefore it's 0:17:23.359 --> 0:17:25.160 okay to just put some more terrafts. 0:17:24.880 --> 0:17:27.240 Up because he thinks he influences. 0:17:26.720 --> 0:17:29.919 Everything, right, or at least, you know, maybe he thinks that, 0:17:30.040 --> 0:17:31.760 or maybe he just thinks that a rising stock market 0:17:31.760 --> 0:17:34.399 will provide cover for the for the terraft. So so 0:17:34.400 --> 0:17:37.280 it's really you know, but I think that basically, you 0:17:37.280 --> 0:17:39.280 see that when the stock market falls, Trump backs off 0:17:40.040 --> 0:17:42.560 pretty consistently, even if it only falls one percent. You know, 0:17:42.600 --> 0:17:45.320 it's like, I know, stocks go up, stocks go down. 0:17:45.480 --> 0:17:47.200 But then if you've got a good run of stocks 0:17:47.280 --> 0:17:51.200 and Trump is like feeling good and you know, yeah, 0:17:51.280 --> 0:17:54.359 So I think that that's my basic assessment. But I 0:17:54.400 --> 0:17:56.879 think that in it so, you're gonna get some teriffs. 0:17:56.880 --> 0:17:58.920 I don't know how much you got some during Trump's 0:17:58.920 --> 0:18:01.520 first term, and ultimately the effect was not very big 0:18:01.520 --> 0:18:05.640 because the United States dollar appreciated that Chinese yuan depreciated, 0:18:05.960 --> 0:18:08.280 China re routed some of its exports through Vietnam, and 0:18:08.320 --> 0:18:12.080 really the tariffs didn't do a lot, whereas so targeted 0:18:12.119 --> 0:18:16.000 tariffs do a lot. You can block specific Chinese products, 0:18:16.040 --> 0:18:20.359 but changing trade deficits through tariffs is extremely hard to do, 0:18:21.480 --> 0:18:23.920 and you basically have to raise tariffs so high that 0:18:23.960 --> 0:18:26.160 it starts breaking something in the economy, which will also 0:18:26.280 --> 0:18:28.720 entail stock market crash. So I don't think Trump is 0:18:28.760 --> 0:18:31.320 going to actually change the trade balance through tariffs at all, 0:18:31.359 --> 0:18:34.000 because he's going to back off of anything severe enough 0:18:34.000 --> 0:18:35.879 to actually do that. You see what I mean. 0:18:36.320 --> 0:18:38.120 Yeah, yeah, So do you think it's more just kind 0:18:38.160 --> 0:18:42.120 of I guess posturing and sort of the narrative of 0:18:42.200 --> 0:18:45.040 him being president of the United States that is also 0:18:45.119 --> 0:18:47.280 dictating how much he's sticking to his guns when it 0:18:47.280 --> 0:18:48.560 comes to some of these different tariffs. 0:18:48.720 --> 0:18:52.200 Yes, and so. But I also think that the main 0:18:52.240 --> 0:18:55.719 effect of these tariff threats is going to be policy uncertainty, 0:18:56.440 --> 0:18:58.800 and policy uncertainty hurts investment, and I think it's going 0:18:58.840 --> 0:19:01.440 to slow down the economy a bit because factory owners 0:19:01.480 --> 0:19:03.120 are not going to know where to build their factories, 0:19:03.480 --> 0:19:04.320 so they're gonna hold off. 0:19:04.359 --> 0:19:08.040 Uncertainty for businesses is typically the worst word, right, Like 0:19:08.320 --> 0:19:10.200 Trump is creating chaos, He's creating uncertainty. 0:19:10.240 --> 0:19:13.679 It's bad for business. Uh, there's tailwinds for business, but 0:19:13.840 --> 0:19:16.560 then there's uh, you know, there's head Trump is creating 0:19:16.600 --> 0:19:20.360 headwinds for business, and the more he instantly backs off, 0:19:20.440 --> 0:19:22.399 the less the headwinds will be because the more businesses 0:19:22.400 --> 0:19:24.880 will conclude. Okay, this is all just blowing smoke. Right 0:19:25.119 --> 0:19:27.439 at the beginning of a president's term, you think that 0:19:27.560 --> 0:19:29.920 everything might change, but by two years in you kind 0:19:29.920 --> 0:19:32.159 of know that, like whether or not he's going to 0:19:32.200 --> 0:19:35.640 break stuff, especially because Democrats will probably gain in the midterms. Yeah. 0:19:35.680 --> 0:19:40.840 So basically I think that if Trump keeps announcing tariffs 0:19:40.840 --> 0:19:43.080