1 00:00:06,040 --> 00:00:15,680 Speaker 1: Madam Speaker, the President of the United States. Thank you, 2 00:00:15,760 --> 00:00:28,120 Speaker 1: thank you, thank you, bring me back. Hello, and welcome 3 00:00:28,120 --> 00:00:31,120 Speaker 1: to Stephanomics, the podcast that brings the global economy to you. 4 00:00:31,680 --> 00:00:34,599 Speaker 1: And what we heard after that confirmed that President Joe 5 00:00:34,640 --> 00:00:37,199 Speaker 1: Biden wants to turn the page on four decades of 6 00:00:37,320 --> 00:00:40,440 Speaker 1: US tax cuts and talk of shrinking government with a 7 00:00:40,479 --> 00:00:43,479 Speaker 1: call for not just more government, but higher taxes to 8 00:00:43,479 --> 00:00:46,199 Speaker 1: pay for it. He celebrated his first hundred days in 9 00:00:46,200 --> 00:00:49,879 Speaker 1: office this week with yet another massive spending package, this 10 00:00:49,960 --> 00:00:52,840 Speaker 1: one squarely aimed at taxing the rich to give money 11 00:00:52,840 --> 00:00:56,640 Speaker 1: to everyone else. Or told, he's proposed nearly six trillion 12 00:00:56,720 --> 00:01:00,000 Speaker 1: dollars in new spending since taking office, paid for by 13 00:00:59,840 --> 00:01:03,040 Speaker 1: at least four trillion dollars worth of higher tax revenues 14 00:01:03,800 --> 00:01:06,360 Speaker 1: now as it happens. The US central Bank, the Federal Reserve, 15 00:01:06,720 --> 00:01:10,000 Speaker 1: also met this week to consider its next move. Its 16 00:01:10,040 --> 00:01:13,640 Speaker 1: policymakers looked at the ocean of new government spending coming 17 00:01:13,680 --> 00:01:17,160 Speaker 1: down the track, the booming stock market, and the rapidly 18 00:01:17,240 --> 00:01:21,480 Speaker 1: recovering US economy, and decided interest rate should stay at 19 00:01:21,560 --> 00:01:24,720 Speaker 1: rock bottom and that the bank should continue to push 20 00:01:24,720 --> 00:01:26,720 Speaker 1: money into the economy at a rate of a hundred 21 00:01:26,720 --> 00:01:30,240 Speaker 1: and twenty billion dollars a month. All in all, it 22 00:01:30,280 --> 00:01:32,360 Speaker 1: seemed like a good time to consider whether we really 23 00:01:32,400 --> 00:01:36,080 Speaker 1: are seeing a revolution in US economic policy under the 24 00:01:36,120 --> 00:01:39,880 Speaker 1: man that Donald Trump used to call Sleepy Joe. A 25 00:01:39,880 --> 00:01:42,880 Speaker 1: little later, will also hear why Americans rich and Paul 26 00:01:43,240 --> 00:01:47,600 Speaker 1: are retiring earlier these days thanks to the pandemic. And 27 00:01:47,680 --> 00:01:49,360 Speaker 1: that's the opposite of what we were told was going 28 00:01:49,400 --> 00:01:52,200 Speaker 1: to happen with the population aging and most of us 29 00:01:52,320 --> 00:01:56,840 Speaker 1: expecting to work a lot longer. But first, let's have 30 00:01:56,960 --> 00:01:59,960 Speaker 1: that talk about Biden's first hundred days and there's big 31 00:02:00,040 --> 00:02:03,800 Speaker 1: new plan for American families with two of Bloomberg's smartest 32 00:02:03,840 --> 00:02:07,840 Speaker 1: analyst of US economic policy, Federal Reserve reporter Rich Miller 33 00:02:08,120 --> 00:02:18,280 Speaker 1: and White House reporter Nancy Cook. Rich Nancy, thank you 34 00:02:18,360 --> 00:02:19,960 Speaker 1: very much for doing this in what I know has 35 00:02:20,000 --> 00:02:24,799 Speaker 1: been a very busy week. Nancy, maybe just kicking off 36 00:02:24,800 --> 00:02:26,880 Speaker 1: with you, can I ask you quickly just to tell 37 00:02:26,919 --> 00:02:30,120 Speaker 1: me about the plan for American families and how it 38 00:02:30,160 --> 00:02:34,200 Speaker 1: fits in with the president's other massive spending plans since 39 00:02:34,240 --> 00:02:37,800 Speaker 1: becoming president. Well, Stephanie, I think that's the key operative word, 40 00:02:37,919 --> 00:02:42,239 Speaker 1: massive spending plans. This latest bill that he's talking about 41 00:02:42,360 --> 00:02:45,800 Speaker 1: is a one point eight trillion dollar plan that includes 42 00:02:45,880 --> 00:02:49,560 Speaker 1: one trillion dollars of government spending and another eight hundred 43 00:02:49,639 --> 00:02:53,359 Speaker 1: billion dollars and tax cuts and credits for families. It's 44 00:02:53,360 --> 00:02:58,679 Speaker 1: a very sweeping plan that would try to expand preschool access, 45 00:02:58,760 --> 00:03:01,600 Speaker 1: access to community car college, set up a national paid 46 00:03:01,680 --> 00:03:06,440 Speaker 1: family leave program, expand and extend the child tax credit 47 00:03:06,440 --> 00:03:11,360 Speaker 1: through It's really a liberals wish list. And it comes 48 00:03:11,400 --> 00:03:14,760 Speaker 1: on top of the other two major plans that Biden 49 00:03:14,840 --> 00:03:18,760 Speaker 1: has proposed, the one point nine trillion dollar COVID relief bill, 50 00:03:18,800 --> 00:03:22,280 Speaker 1: which has past Congress, and then the infrastructure package, which 51 00:03:22,400 --> 00:03:25,520 Speaker 1: is two point to five trillion dollars, which Congress hasn't 52 00:03:25,560 --> 00:03:28,720 Speaker 1: even taken up yet. So basically, he is proposing about 53 00:03:28,760 --> 00:03:32,520 Speaker 1: six trillion dollars in spending um in a very short period. 54 00:03:33,600 --> 00:03:35,200 Speaker 1: And if you add and as you suggest, you know, 55 00:03:35,200 --> 00:03:36,720 Speaker 1: if you add the one point I tried in for 56 00:03:36,760 --> 00:03:40,000 Speaker 1: this package, and then about to each for the short 57 00:03:40,120 --> 00:03:45,360 Speaker 1: term stimulus and infrastructure, I mean you're talking real money. 58 00:03:45,640 --> 00:03:48,360 Speaker 1: I mean rich is it? Is it remotely realistic that 59 00:03:49,360 --> 00:03:52,680 Speaker 1: all of that spending is really going to come through? 60 00:03:52,720 --> 00:03:55,200 Speaker 1: I mean, where are the deficit hawks that we used 61 00:03:55,240 --> 00:03:57,040 Speaker 1: to hear from. Well, first of all, you got to 62 00:03:57,080 --> 00:04:00,360 Speaker 1: remember the different time frame from these bills. The first 63 00:04:00,360 --> 00:04:02,960 Speaker 1: one that Nancy was referring to is, you know, getting 64 00:04:03,000 --> 00:04:05,440 Speaker 1: going to get spent very quickly. We already have, you know, 65 00:04:05,440 --> 00:04:09,240 Speaker 1: the checks are in people's bank accounts and are being 66 00:04:09,280 --> 00:04:12,040 Speaker 1: spent the judging by what we've seen with the trade 67 00:04:12,040 --> 00:04:18,080 Speaker 1: deficit shooting up. Um. But the other other two packages 68 00:04:18,200 --> 00:04:21,320 Speaker 1: are more longer term. The first one, the infrastructure one, 69 00:04:21,560 --> 00:04:23,960 Speaker 1: is more of an eight year plan and the families 70 00:04:24,040 --> 00:04:26,840 Speaker 1: one is more of a ten year plan. So it's 71 00:04:26,880 --> 00:04:29,479 Speaker 1: not all coming all at once. And as far as 72 00:04:29,520 --> 00:04:32,920 Speaker 1: the deficit hawks, um, you can't see them in the markets. Uh. 73 00:04:33,080 --> 00:04:36,080 Speaker 1: The treasury yields went up a little bit, but now 74 00:04:36,120 --> 00:04:38,560 Speaker 1: I've come back down. You can't really. I mean, the 75 00:04:38,600 --> 00:04:42,200 Speaker 1: Republicans are grousing a little bit about this, but with 76 00:04:42,760 --> 00:04:46,719 Speaker 1: interest costs so low, Treasury Secretary Janet and Yellen is saying, 77 00:04:47,080 --> 00:04:49,200 Speaker 1: now is the time to go big and we don't 78 00:04:49,240 --> 00:04:52,520 Speaker 1: have to worry about the deficits. Well, and it's interesting 79 00:04:52,560 --> 00:04:57,000 Speaker 1: you say that. I mean, philosophically, we are that we 80 00:04:57,320 --> 00:05:02,400 Speaker 1: remember that the Volca Reagan paradigm we had in the eighties. 81 00:05:02,480 --> 00:05:05,440 Speaker 1: You know, not only the sort of tax cuts, small 82 00:05:05,839 --> 00:05:10,400 Speaker 1: small government philosophy of Ronald Reagan, but also Paul Veoker 83 00:05:10,520 --> 00:05:15,920 Speaker 1: coming in as a very muscular anti inflation central bank governor, 84 00:05:16,160 --> 00:05:19,159 Speaker 1: and the two of them kind of defined an era 85 00:05:20,200 --> 00:05:22,400 Speaker 1: for you. I guess Richard would be fair to say, 86 00:05:22,400 --> 00:05:24,440 Speaker 1: you don't quite go back to the Vulcar fed but 87 00:05:24,520 --> 00:05:29,160 Speaker 1: you certainly have. You've been around the block for for 88 00:05:29,160 --> 00:05:32,040 Speaker 1: a while. You know this is this is It is 89 00:05:32,080 --> 00:05:35,159 Speaker 1: not overstating it to say this is overturning a very 90 00:05:35,200 --> 00:05:39,200 Speaker 1: long time paradigm, but not just the role of the 91 00:05:39,240 --> 00:05:42,040 Speaker 1: government but also the central bank. Yeah, I think, I mean, 92 00:05:42,120 --> 00:05:48,000 Speaker 1: I think it's right Vulcar and and Reagan together. You know, 93 00:05:48,040 --> 00:05:52,920 Speaker 1: there was a tremendous change in in the way in 94 00:05:52,960 --> 00:05:58,000 Speaker 1: the economy went from the government to the markets. The 95 00:05:58,200 --> 00:06:03,440 Speaker 1: emphasis was on efficiency not equality, and and the power 96 00:06:03,480 --> 00:06:06,000 Speaker 1: also went from a labor to the owners at capital. 97 00:06:06,040 --> 00:06:09,279 Speaker 1: And it was monetary policy that was premier, not fiscal policy. 98 00:06:09,800 --> 00:06:12,200 Speaker 1: And all of that we're seeing, you know, turned on 99 00:06:12,279 --> 00:06:15,080 Speaker 1: its head. You know, Volker wanted to get inflation down, 100 00:06:15,880 --> 00:06:19,360 Speaker 1: power wants to get inflation up. I mean, and Nancy, 101 00:06:19,560 --> 00:06:23,240 Speaker 1: we just heard there about raising efficiency. If you look 102 00:06:23,279 --> 00:06:26,880 Speaker 1: at these packages together, particularly, I guess the Infrastructure and 103 00:06:26,920 --> 00:06:29,640 Speaker 1: the Families Act, you know how much of it is 104 00:06:29,880 --> 00:06:35,200 Speaker 1: about raising the growth rate, making the economy stronger, and 105 00:06:35,240 --> 00:06:40,960 Speaker 1: how much is just classic redistributive big government. I think 106 00:06:41,080 --> 00:06:44,479 Speaker 1: that the first plan, the COVID Relief Plan, was really 107 00:06:44,520 --> 00:06:47,680 Speaker 1: about raising the growth rate and making sure that the 108 00:06:47,720 --> 00:06:50,920 Speaker 1: economy could crawl out of the whole from COVID nineteen. 109 00:06:51,360 --> 00:06:54,560 Speaker 1: I think these next two packages, the Family's Plan and 110 00:06:54,600 --> 00:06:59,080 Speaker 1: the Infrastructure Plan, are really huge government programs that are 111 00:06:59,120 --> 00:07:01,920 Speaker 1: trying to reshape, ape and re orient the economy in 112 00:07:01,920 --> 00:07:05,560 Speaker 1: a completely different way. They're trying to redistribute some of 113 00:07:05,600 --> 00:07:08,440 Speaker 1: the wealth that we saw, you know, rich people gain 114 00:07:08,640 --> 00:07:13,320 Speaker 1: during the pandemic. They are trying to give money to 115 00:07:14,320 --> 00:07:18,440 Speaker 1: communities like African American communities that have typically had more 116 00:07:18,480 --> 00:07:21,640 Speaker 1: of a wealth gap. They're trying to create new jobs 117 00:07:21,720 --> 00:07:25,080 Speaker 1: in clean energy, raise the wages of workers for things 118 00:07:25,160 --> 00:07:28,400 Speaker 1: like home health care aids and childcare workers. And so 119 00:07:28,520 --> 00:07:31,880 Speaker 1: it really is a massive government program to try to 120 00:07:31,920 --> 00:07:35,080 Speaker 1: reshape the economy for what the Biden White House argues 121 00:07:35,280 --> 00:07:37,640 Speaker 1: is sort of the things we need to do to 122 00:07:37,760 --> 00:07:40,160 Speaker 1: prepare for climate change and to make sure that there's 123 00:07:40,200 --> 00:07:43,880 Speaker 1: a stable middle class. Of course, Republicans are very against 124 00:07:43,960 --> 00:07:47,120 Speaker 1: these ideas, and the two parties are interestingly sort of 125 00:07:47,160 --> 00:07:51,440 Speaker 1: going back to their most extreme positions, where you know, 126 00:07:51,480 --> 00:07:55,320 Speaker 1: Democrats are really proposing some of the most sweeping redistributive 127 00:07:55,360 --> 00:07:58,800 Speaker 1: policies that we've seen in decades, whereas Republicans are going 128 00:07:58,840 --> 00:08:01,680 Speaker 1: back to many of their all arguments, not about the deficit, 129 00:08:01,760 --> 00:08:03,520 Speaker 1: as you and Rich have talked about, but about the 130 00:08:03,640 --> 00:08:07,000 Speaker 1: need for small government, um, you know, keeping tax cuts 131 00:08:07,040 --> 00:08:10,080 Speaker 1: in place. Um. It just shows how polarized the politics 132 00:08:10,120 --> 00:08:13,400 Speaker 1: are on the future of the economy, but about the 133 00:08:13,440 --> 00:08:16,600 Speaker 1: politics of this though. I noticed with the infrastructure Bill 134 00:08:16,960 --> 00:08:19,200 Speaker 1: that you know, a lot of it's paid for in 135 00:08:19,360 --> 00:08:25,040 Speaker 1: theory by raising taxes on companies and business, and that 136 00:08:25,120 --> 00:08:29,600 Speaker 1: seemed to be quite popular with the broader public. Is 137 00:08:29,600 --> 00:08:31,480 Speaker 1: this can the same be said of some of these 138 00:08:31,560 --> 00:08:35,200 Speaker 1: efforts to increase taxes on the very wealthy. If you're 139 00:08:35,280 --> 00:08:40,240 Speaker 1: just fixing on how much people can inherit who are 140 00:08:40,240 --> 00:08:42,959 Speaker 1: in the really the highest bit of the income scale 141 00:08:43,520 --> 00:08:47,720 Speaker 1: and sort of closing loopholes for the super wealthy, I mean, 142 00:08:48,160 --> 00:08:52,760 Speaker 1: isn't that quite politically popular? That's also politically popular? There 143 00:08:52,800 --> 00:08:55,199 Speaker 1: has been a raft of polling done in the last 144 00:08:55,240 --> 00:08:58,400 Speaker 1: several months that show that, you know, raising taxes on 145 00:08:58,679 --> 00:09:02,640 Speaker 1: rich people, raising taxes on capital gains, these are things 146 00:09:02,640 --> 00:09:06,680 Speaker 1: that gains so much political traction during the presidential campaign. 147 00:09:07,120 --> 00:09:09,120 Speaker 1: And one thing that the Biden White House really has 148 00:09:09,160 --> 00:09:12,840 Speaker 1: going for them is they are proposing dramatic chat tax changes, 149 00:09:12,920 --> 00:09:16,000 Speaker 1: but those tax changes are not as dramatic as the 150 00:09:16,040 --> 00:09:19,000 Speaker 1: ideas that let's say, Senator Elizabeth Warren put out during 151 00:09:19,000 --> 00:09:22,559 Speaker 1: the campaign or Senator Bernie Sanders. And the White House 152 00:09:22,600 --> 00:09:25,480 Speaker 1: feels like they do have some political cover because they 153 00:09:25,520 --> 00:09:29,920 Speaker 1: can say to more moderate Democrats and Republicans, look, we're 154 00:09:29,960 --> 00:09:33,000 Speaker 1: not going as far as some wings of the party wanted. 155 00:09:33,480 --> 00:09:35,880 Speaker 1: And they're trying to make the argument that wealthy people 156 00:09:36,000 --> 00:09:38,720 Speaker 1: gain so much during the pandemic, you know it's time 157 00:09:38,760 --> 00:09:41,000 Speaker 1: to make them pay their fair share. How much of 158 00:09:41,040 --> 00:09:44,040 Speaker 1: this actually has any chance of becoming law, Well, I 159 00:09:44,080 --> 00:09:46,640 Speaker 1: think that that's the key question. People that I talked 160 00:09:46,679 --> 00:09:50,600 Speaker 1: to think that these two bills are huge, and uh 161 00:09:50,640 --> 00:09:53,120 Speaker 1: they're they're such big asks of Congress. Most people I 162 00:09:53,120 --> 00:09:56,760 Speaker 1: speak to think that ultimately these two packages will be 163 00:09:56,880 --> 00:09:59,720 Speaker 1: condensed into one package, and a lot of the things 164 00:09:59,800 --> 00:10:03,440 Speaker 1: will be taken out, particularly things from the American Family's Plan, 165 00:10:03,880 --> 00:10:07,240 Speaker 1: like potentially the paid leave aspect or um you know, 166 00:10:07,400 --> 00:10:11,280 Speaker 1: universal preschool. I think the there's a lot of bipartisan 167 00:10:11,760 --> 00:10:15,400 Speaker 1: interest in doing things like infrastructure, rebuilding roads and bridges 168 00:10:15,440 --> 00:10:18,080 Speaker 1: in the US and spending money that way. I think 169 00:10:18,160 --> 00:10:20,559 Speaker 1: some of the components of the Family's Plan or will 170 00:10:20,600 --> 00:10:24,079 Speaker 1: be a much tougher left politically and rich. Just thinking 171 00:10:24,080 --> 00:10:26,360 Speaker 1: about the economics of this, I mean, there's some bits 172 00:10:26,400 --> 00:10:32,200 Speaker 1: of the US tax code which to outsiders seem extraordinary. 173 00:10:32,240 --> 00:10:36,520 Speaker 1: I mean, the fact that when people die, when you know, 174 00:10:36,559 --> 00:10:40,840 Speaker 1: someone very rich dies and there as inherit, you know, 175 00:10:40,960 --> 00:10:43,439 Speaker 1: hundreds of millions of dollars, all of the capital gains 176 00:10:43,480 --> 00:10:47,200 Speaker 1: or those get kind of counted in the inheritance and 177 00:10:47,240 --> 00:10:50,120 Speaker 1: you can sort of start scratch if you're the person 178 00:10:50,160 --> 00:10:52,560 Speaker 1: inheriting it. The fact that people would just never pay 179 00:10:52,600 --> 00:10:55,160 Speaker 1: any tax on any of that or those capital gains 180 00:10:55,200 --> 00:10:58,720 Speaker 1: seems crazy to outsiders, even countries that have relatively lower 181 00:10:58,800 --> 00:11:01,560 Speaker 1: tax rates. I mean, do there is an economic case 182 00:11:01,600 --> 00:11:06,120 Speaker 1: for some of these changes? Oh, there's definitely an economic 183 00:11:06,160 --> 00:11:09,440 Speaker 1: case for some some of these changes. Um, not so 184 00:11:09,520 --> 00:11:11,840 Speaker 1: much on the inheritance tax, which of course, the Republicans 185 00:11:11,880 --> 00:11:14,760 Speaker 1: tried to rebrand as the death tax, and and actually 186 00:11:14,760 --> 00:11:18,400 Speaker 1: probably succeeded in doing But on some of the change changes, 187 00:11:18,480 --> 00:11:23,640 Speaker 1: like increasing educational opportunities, expanding childcare, all of that is 188 00:11:23,679 --> 00:11:27,520 Speaker 1: aimed at both increasing the size of the labor force 189 00:11:27,800 --> 00:11:31,480 Speaker 1: but also increasing the skills of the labor force, and 190 00:11:31,559 --> 00:11:34,520 Speaker 1: that's aimed at lifting this sort of long term potential 191 00:11:34,520 --> 00:11:38,640 Speaker 1: growth rate economy. Likewise, with the public infrastructure, it's it's 192 00:11:38,679 --> 00:11:42,160 Speaker 1: you know, improving roads, improving broadband so that you improve 193 00:11:42,320 --> 00:11:46,120 Speaker 1: productivity and therefore improve the potential growth rate accounty. So 194 00:11:46,200 --> 00:11:49,120 Speaker 1: while Nancy was right in saying, you know, a lot 195 00:11:49,160 --> 00:11:52,560 Speaker 1: of this focus is on redistribution, there is an argument 196 00:11:52,559 --> 00:11:55,640 Speaker 1: they're making, sort of a little more sot voce that 197 00:11:55,720 --> 00:11:58,199 Speaker 1: this is going to lift the long term potential growth 198 00:11:58,280 --> 00:12:08,960 Speaker 1: rate of the economy. And you have Janet Yelling there, 199 00:12:09,000 --> 00:12:12,800 Speaker 1: who was at the FED and is now Treasury Secretary. 200 00:12:13,400 --> 00:12:17,199 Speaker 1: Um she used to have to worry about inflation in theory. 201 00:12:17,240 --> 00:12:20,480 Speaker 1: The Treasury Secretary doesn't worry so much about inflation. But 202 00:12:21,040 --> 00:12:23,679 Speaker 1: this this surely has to be a concern if you're 203 00:12:23,720 --> 00:12:26,240 Speaker 1: looking at all of that spending and borrowing going down 204 00:12:26,280 --> 00:12:29,560 Speaker 1: the track Rich. Yeah. I mean the White House has 205 00:12:29,760 --> 00:12:32,600 Speaker 1: has gone out of its way to make clear that 206 00:12:32,600 --> 00:12:35,760 Speaker 1: that this is something they're watching very very carefully. The 207 00:12:35,760 --> 00:12:39,920 Speaker 1: the Council and Economic Advisors took the unusual step of 208 00:12:39,960 --> 00:12:42,840 Speaker 1: putting out a blog sort of post, sort of taking 209 00:12:42,880 --> 00:12:46,600 Speaker 1: apart the the arguments of people like Larry Summers are 210 00:12:46,920 --> 00:12:50,000 Speaker 1: about inflation. But I think in the end, you know, 211 00:12:50,360 --> 00:12:53,720 Speaker 1: if we do get inflation, Janet Yellen recognizes as a 212 00:12:53,760 --> 00:12:56,240 Speaker 1: former FED it's going to be up to the Fed 213 00:12:56,640 --> 00:13:00,280 Speaker 1: to control it. Fiscal policy is not nimble enough, and 214 00:13:00,280 --> 00:13:03,040 Speaker 1: and all these fiscal depending on how much it gets done, 215 00:13:03,240 --> 00:13:05,800 Speaker 1: all these fiscal policies will be in train, all the 216 00:13:05,920 --> 00:13:08,840 Speaker 1: spending will be in train. And if we get inflation 217 00:13:08,880 --> 00:13:11,080 Speaker 1: and there's there's needs to be something done about it, 218 00:13:11,080 --> 00:13:14,040 Speaker 1: it's going to be the Fed and j. Powell or 219 00:13:14,000 --> 00:13:17,559 Speaker 1: wherever his successor, is a job to make sure it 220 00:13:17,600 --> 00:13:20,200 Speaker 1: doesn't get out of control. And we did have we 221 00:13:20,240 --> 00:13:22,920 Speaker 1: had the novel backdrop for the State of the Union 222 00:13:23,120 --> 00:13:27,120 Speaker 1: of two women sitting behind the President, the Leader of 223 00:13:27,120 --> 00:13:31,240 Speaker 1: the House, Nancy Pelosi, and the Vice President. And you've 224 00:13:31,240 --> 00:13:34,400 Speaker 1: got a lot of chairs changing at the FED in 225 00:13:34,480 --> 00:13:38,840 Speaker 1: the next year or so, including the potentially the reappointment 226 00:13:38,960 --> 00:13:44,400 Speaker 1: or not of J. Pow as the the chairman. Do 227 00:13:44,480 --> 00:13:47,079 Speaker 1: you think do you think President Biden is going to 228 00:13:47,160 --> 00:13:49,920 Speaker 1: want to make the US Central Bank look different as well, 229 00:13:50,240 --> 00:13:53,440 Speaker 1: put in some different faces, maybe different color phases. Thanks 230 00:13:53,480 --> 00:13:57,520 Speaker 1: for putting me on the spot set for me, um, 231 00:13:57,640 --> 00:14:00,440 Speaker 1: I don't know. I did. On the one hand, it's 232 00:14:00,440 --> 00:14:03,640 Speaker 1: hard to conceive of a more dubbish Central Bank chairman 233 00:14:03,640 --> 00:14:07,400 Speaker 1: than we have now and J. Powell that argues for 234 00:14:07,400 --> 00:14:12,040 Speaker 1: for for keeping him in place. Uh. On the other hand, 235 00:14:12,080 --> 00:14:15,280 Speaker 1: there there's the big there's a progressive wring of the 236 00:14:15,320 --> 00:14:18,120 Speaker 1: Democratic Party which is going to be pushing hard for 237 00:14:18,320 --> 00:14:21,440 Speaker 1: someone as you say, maybe maybe you know a woman 238 00:14:21,720 --> 00:14:24,920 Speaker 1: or maybe African American or so that would be the 239 00:14:24,920 --> 00:14:27,720 Speaker 1: first the first black chairman of the FEN for sure, 240 00:14:28,080 --> 00:14:32,040 Speaker 1: for sure. And while Powell has you know, probably more 241 00:14:32,080 --> 00:14:35,480 Speaker 1: than exceeded Democrats wishes when it comes to monetary policy, 242 00:14:35,920 --> 00:14:40,080 Speaker 1: he's been he's been more friendly, I would say, to 243 00:14:40,240 --> 00:14:44,520 Speaker 1: some changes on the loosening the regulations on the banks. 244 00:14:45,080 --> 00:14:48,040 Speaker 1: And you know, you have people like Senator Elizabeth Warren 245 00:14:48,160 --> 00:14:50,640 Speaker 1: who really want to keep their thumbs on the banks 246 00:14:50,680 --> 00:14:53,920 Speaker 1: and maybe do even more and attack private equity, etcetera. 247 00:14:54,360 --> 00:14:56,600 Speaker 1: So that when I'd argue to for replacing him, But 248 00:14:56,720 --> 00:14:58,800 Speaker 1: I mean, it's probably gonna be come down to a 249 00:14:58,840 --> 00:15:01,920 Speaker 1: decision later this year. If the economy is going swimmingly 250 00:15:01,960 --> 00:15:04,040 Speaker 1: well as a lot of people expect, it might be 251 00:15:04,080 --> 00:15:07,520 Speaker 1: easier to replace him. So just stepping back. Finally, you know, 252 00:15:07,560 --> 00:15:10,440 Speaker 1: we always focus, rightly or wrongly on the first hundred 253 00:15:10,520 --> 00:15:16,880 Speaker 1: days relative to your expectations. You've both been in Washington 254 00:15:16,960 --> 00:15:20,000 Speaker 1: a long time. How would how would you rate President 255 00:15:20,040 --> 00:15:23,200 Speaker 1: Biden's first first hundred days. You certainly spend a lot 256 00:15:23,200 --> 00:15:24,880 Speaker 1: of money, or try to spend a lot of money, 257 00:15:24,960 --> 00:15:29,120 Speaker 1: but any surprises, Nancy, I think that his first one 258 00:15:29,200 --> 00:15:31,720 Speaker 1: hundred days have gone well. I think that even his 259 00:15:31,800 --> 00:15:34,680 Speaker 1: critics would say that that they have gone well because 260 00:15:35,120 --> 00:15:37,400 Speaker 1: he basically did two of the key things that he 261 00:15:37,440 --> 00:15:39,680 Speaker 1: needed to do, which is, um, you know, inject a 262 00:15:39,720 --> 00:15:42,960 Speaker 1: bunch of money into the economy to try to improve growth, 263 00:15:43,000 --> 00:15:45,760 Speaker 1: to try to improve unemployment, to make sure that you know, 264 00:15:45,840 --> 00:15:49,120 Speaker 1: families have stable financial footing. And then he's done a 265 00:15:49,120 --> 00:15:50,760 Speaker 1: good job. He and his team have done a good 266 00:15:50,840 --> 00:15:53,440 Speaker 1: job of getting the pandemic under control, ramping up the 267 00:15:53,520 --> 00:15:56,560 Speaker 1: vaccine nation rate, and so the first one hundred days 268 00:15:56,560 --> 00:15:59,600 Speaker 1: have really been dealing with these crises. I think what 269 00:15:59,680 --> 00:16:02,640 Speaker 1: has a prize me and many other political reporters is 270 00:16:02,720 --> 00:16:08,680 Speaker 1: just how progressive and revolutionary his agenda has been. President 271 00:16:08,720 --> 00:16:12,040 Speaker 1: Biden has always been seen as a real centrist, a 272 00:16:12,120 --> 00:16:15,800 Speaker 1: creature of the Senate, and institutionalist. He did not run 273 00:16:16,040 --> 00:16:21,160 Speaker 1: a campaign that anyone saw as hugely progressive, that all 274 00:16:21,160 --> 00:16:24,240 Speaker 1: that attention went to Senator Elizabeth Warren or Bernie Sanders. 275 00:16:24,840 --> 00:16:27,360 Speaker 1: And yet once he has gotten into the White House, 276 00:16:27,720 --> 00:16:32,320 Speaker 1: he has pursued policies that have shocked progressives and delighted them. 277 00:16:32,680 --> 00:16:36,600 Speaker 1: And it's just much more of an ambitious, sweeping agenda 278 00:16:36,760 --> 00:16:40,000 Speaker 1: in line with really the most progressive wing of the 279 00:16:40,040 --> 00:16:44,000 Speaker 1: party then I think Democrats thought was possible just before 280 00:16:44,040 --> 00:16:46,440 Speaker 1: we get to rich. I just wanted it is interesting 281 00:16:46,480 --> 00:16:48,920 Speaker 1: that and that's obviously it's been striking to a lot 282 00:16:48,920 --> 00:16:52,800 Speaker 1: of people. I guess that you could argue that if 283 00:16:52,800 --> 00:16:54,240 Speaker 1: it's not going to if most of it's not going 284 00:16:54,280 --> 00:16:58,800 Speaker 1: to get past in this Senate, that this is you 285 00:16:58,800 --> 00:17:00,560 Speaker 1: know that he's not he doesn't really believe this, and 286 00:17:00,600 --> 00:17:03,600 Speaker 1: this is all gesturing, this is all just sort of 287 00:17:03,640 --> 00:17:06,680 Speaker 1: getting the left off his back. I think that that 288 00:17:06,800 --> 00:17:09,280 Speaker 1: is there's some truth to that. With the American Family's Plan, 289 00:17:09,359 --> 00:17:12,480 Speaker 1: this most recent plan, I don't think that I've been 290 00:17:12,480 --> 00:17:15,240 Speaker 1: told that his heart is not as in this plan 291 00:17:15,560 --> 00:17:18,640 Speaker 1: as it is with infrastructure. But I do think that 292 00:17:18,760 --> 00:17:22,080 Speaker 1: he feels very strongly about the infrastructure package. I think 293 00:17:22,119 --> 00:17:24,840 Speaker 1: that he feels very strongly that they needed to pass 294 00:17:24,880 --> 00:17:27,480 Speaker 1: the one point nine trilliant dollar COVID relief plan, the 295 00:17:27,520 --> 00:17:30,879 Speaker 1: Family's Plan. They unveiled the third because it is the 296 00:17:30,960 --> 00:17:33,560 Speaker 1: last priority for the White House, and I think that 297 00:17:33,600 --> 00:17:37,400 Speaker 1: plan is much more of one that has less support 298 00:17:37,440 --> 00:17:39,199 Speaker 1: in the West wing or a bit more of a 299 00:17:39,240 --> 00:17:42,520 Speaker 1: divided support among his top advisors and even from the President, 300 00:17:42,800 --> 00:17:45,119 Speaker 1: and that is seen as something to get progressives office 301 00:17:45,160 --> 00:17:48,520 Speaker 1: back and rich Bella, what do you think of the 302 00:17:48,560 --> 00:17:52,360 Speaker 1: first hundred days and anything? Have you been surprised by 303 00:17:52,400 --> 00:17:55,840 Speaker 1: by Button's radicalism or or anything else. I mean, I 304 00:17:56,200 --> 00:17:58,879 Speaker 1: think I've been a bit surprised by his radicalism. But 305 00:17:59,080 --> 00:18:01,760 Speaker 1: if you go back to the actual proposals that he 306 00:18:01,800 --> 00:18:06,840 Speaker 1: laid out during the campaign, he is following along with 307 00:18:06,920 --> 00:18:09,040 Speaker 1: many of them. I mean, if you go back and 308 00:18:09,080 --> 00:18:11,000 Speaker 1: read the literature, what that was. You know, he was 309 00:18:11,000 --> 00:18:13,000 Speaker 1: putting out at the time, even though he came across 310 00:18:13,040 --> 00:18:16,720 Speaker 1: as as Nancy said, compared to War and and uh 311 00:18:16,840 --> 00:18:21,600 Speaker 1: Sanders as a centrist, his his his proposals were pretty radical. 312 00:18:22,560 --> 00:18:24,600 Speaker 1: I think maybe one thing that he might have learned 313 00:18:24,640 --> 00:18:28,600 Speaker 1: from President Trump is if you promise something, try to 314 00:18:28,640 --> 00:18:30,879 Speaker 1: deliver it. And I think that's what he's trying to do. 315 00:18:30,960 --> 00:18:34,560 Speaker 1: And that's Uh. Whether as as you and Nancy pointed out, 316 00:18:34,640 --> 00:18:37,560 Speaker 1: whether you know, especially with the second two packages, it 317 00:18:37,560 --> 00:18:40,679 Speaker 1: turns out to be more aspirational than than actual, you know, 318 00:18:40,920 --> 00:18:45,359 Speaker 1: remains to be seen. But I think he did. He 319 00:18:45,440 --> 00:18:50,200 Speaker 1: did campaign with a pretty progressive platform. Maybe the rhetoric wasn't. 320 00:18:50,400 --> 00:18:55,000 Speaker 1: The rhetoric was more I'm, you know, gonna cooperate with Republicans, etcetera. 321 00:18:55,040 --> 00:18:57,720 Speaker 1: But if you if you, if you actually read the proposals, 322 00:18:57,760 --> 00:18:59,560 Speaker 1: there was a hell of a lot of spending he 323 00:18:59,280 --> 00:19:03,000 Speaker 1: would he was, he was putting out there interesting. Well, 324 00:19:03,240 --> 00:19:05,120 Speaker 1: in a hundred days, maybe we'll come back and see 325 00:19:05,119 --> 00:19:07,880 Speaker 1: how much more money he's tried to spend in the meantime. 326 00:19:08,040 --> 00:19:10,560 Speaker 1: Nancy Cook, Richmond, thank you very much, Thank you, thanks 327 00:19:10,600 --> 00:19:20,800 Speaker 1: so much. And now I wanted to bring you a 328 00:19:20,840 --> 00:19:24,160 Speaker 1: different take on the recovery from US economy reporter Mike 329 00:19:24,240 --> 00:19:27,600 Speaker 1: Sasso in Atlanta, who, together with his colleague Alex Tanzi, 330 00:19:27,680 --> 00:19:30,040 Speaker 1: has been taking a look at why so many people 331 00:19:30,160 --> 00:19:33,360 Speaker 1: at different ends of the US labor market are deciding 332 00:19:34,359 --> 00:19:41,760 Speaker 1: one is a good time to retire. Economists speak for 333 00:19:41,880 --> 00:19:45,480 Speaker 1: K shaped recovery in the United States, so named because 334 00:19:45,520 --> 00:19:48,760 Speaker 1: many Americans with office jobs fared well during the COVID 335 00:19:48,840 --> 00:19:52,600 Speaker 1: nineteen recession, and their fates resembled the upward slope of 336 00:19:52,640 --> 00:19:56,119 Speaker 1: the letter K. Many others in the travel and restaurant 337 00:19:56,160 --> 00:20:00,520 Speaker 1: industries have faired poorly, though, and occupy the downward slope 338 00:20:00,960 --> 00:20:04,760 Speaker 1: that same dynamic as occurring in retirement. The pandemic has 339 00:20:04,800 --> 00:20:08,400 Speaker 1: sparked a retirement russia sorts in the US, at least 340 00:20:08,440 --> 00:20:11,360 Speaker 1: among those fortunate enough to have built up their savings 341 00:20:11,400 --> 00:20:15,960 Speaker 1: and investments. A soaring stock market has boosted their retirement accounts, 342 00:20:16,320 --> 00:20:20,479 Speaker 1: while the pandemic caused many to reevaluate their priorities in life. 343 00:20:20,960 --> 00:20:24,840 Speaker 1: In Massachusetts, Melissa Martini put away her business outfits for 344 00:20:24,960 --> 00:20:28,320 Speaker 1: good at the end of March. She's retiring five years 345 00:20:28,359 --> 00:20:31,680 Speaker 1: earlier than she expected from her job as an administrator 346 00:20:31,720 --> 00:20:37,840 Speaker 1: for the agency that oversees the Massachusetts Parks. I'm fifty 347 00:20:37,880 --> 00:20:41,879 Speaker 1: eight right now, and I had it not been for 348 00:20:42,080 --> 00:20:45,080 Speaker 1: the stresses of the pandemic and the cuts and my staff, 349 00:20:45,119 --> 00:20:48,439 Speaker 1: I probably would have stayed in my position another five years. 350 00:20:48,520 --> 00:20:52,480 Speaker 1: But I was looking at retiring, probably at sixty two 351 00:20:52,560 --> 00:20:56,240 Speaker 1: or sixty three. I've seen so many people who have 352 00:20:56,520 --> 00:21:01,800 Speaker 1: decided to wait too long to retire. And you know, 353 00:21:01,840 --> 00:21:07,359 Speaker 1: many of my colleagues or older family members, and they 354 00:21:07,400 --> 00:21:09,640 Speaker 1: get one year of retirement and then they get sick 355 00:21:09,760 --> 00:21:13,080 Speaker 1: and they pass on, and it's just I don't want 356 00:21:13,119 --> 00:21:16,920 Speaker 1: that for myself. Traditionally, Americans have waited to retire until 357 00:21:16,960 --> 00:21:19,800 Speaker 1: they at least reached their mid sixties. That's when most 358 00:21:19,840 --> 00:21:24,240 Speaker 1: are eligible for full retirement benefits from the Social Security Administration. 359 00:21:24,800 --> 00:21:28,520 Speaker 1: The pandemic, however, has upended that thinking for the fortunate ones. 360 00:21:29,200 --> 00:21:32,600 Speaker 1: After the global financial crisis of two thousand seven, the 361 00:21:32,680 --> 00:21:35,679 Speaker 1: US stock market took more than five years to recover 362 00:21:35,720 --> 00:21:40,200 Speaker 1: its losses. In this pandemic recession, it took only seven months. 363 00:21:40,720 --> 00:21:44,280 Speaker 1: Many are getting out while it's getting still good. While 364 00:21:44,320 --> 00:21:47,680 Speaker 1: the pandemic caused some Americans to delay applying for their 365 00:21:47,720 --> 00:21:52,120 Speaker 1: Social Security retirement benefits, overall, it cost a net increase 366 00:21:52,160 --> 00:21:55,840 Speaker 1: of one point seven million applications, according to the US 367 00:21:55,880 --> 00:21:59,800 Speaker 1: Census Bureau. Some of those people retired willingly. Others lost 368 00:21:59,800 --> 00:22:02,240 Speaker 1: their jobs and see little hope of getting a new one. 369 00:22:02,680 --> 00:22:06,280 Speaker 1: Martini chose to retire after the state in Massachusetts kept 370 00:22:06,320 --> 00:22:09,840 Speaker 1: cutting her subordinates during the pandemic, leaving her with too 371 00:22:09,920 --> 00:22:14,120 Speaker 1: much work into little time. It's just there's too much stress, 372 00:22:15,280 --> 00:22:20,240 Speaker 1: too much responsibility to UM to really handle without the resources. 373 00:22:21,320 --> 00:22:23,879 Speaker 1: So my husband and I looked at our investments and 374 00:22:23,920 --> 00:22:27,840 Speaker 1: our finances and UM, and we decided, you know what, 375 00:22:28,080 --> 00:22:32,520 Speaker 1: I can survive on my state pension of my pay 376 00:22:32,600 --> 00:22:36,040 Speaker 1: for the rest of my life because our investments were 377 00:22:36,080 --> 00:22:38,960 Speaker 1: such that we could afford for me to do that. 378 00:22:39,400 --> 00:22:42,080 Speaker 1: Six years ago, she and her husband bought a forty 379 00:22:42,080 --> 00:22:45,880 Speaker 1: two foot sailboat. He's also retiring early, and they plan 380 00:22:46,000 --> 00:22:50,159 Speaker 1: to put it to good use. And UM, we're hoping 381 00:22:50,240 --> 00:22:53,080 Speaker 1: that at some point in the future, when we're not 382 00:22:53,119 --> 00:22:56,440 Speaker 1: worried about aging parents, UM, we won't be able to 383 00:22:56,480 --> 00:22:59,399 Speaker 1: sail to the Caribbean in the intertime and live on 384 00:22:59,440 --> 00:23:03,040 Speaker 1: the boat or females a venture in the Virgin Islands. 385 00:23:03,040 --> 00:23:06,960 Speaker 1: Probably to be sure, economists will spend years researching this 386 00:23:07,119 --> 00:23:11,320 Speaker 1: most unusual recession and its case shaped recovery. While some 387 00:23:11,440 --> 00:23:15,879 Speaker 1: recent national surveys suggest people are retiring early, others are 388 00:23:15,880 --> 00:23:19,760 Speaker 1: being left behind. A recent survey from the Employee Benefits 389 00:23:19,840 --> 00:23:24,800 Speaker 1: Research Institute suggests the pandemic in net terms, prompted more 390 00:23:24,920 --> 00:23:28,240 Speaker 1: US workers to delay retirement than to speed it up. 391 00:23:28,840 --> 00:23:33,399 Speaker 1: It's cited job losses in other stresses. Ultimately, the pandemic 392 00:23:33,480 --> 00:23:36,520 Speaker 1: helps to shed more light on the gap between America's 393 00:23:36,560 --> 00:23:48,440 Speaker 1: haves and its have not. So I'm delighted to talk 394 00:23:48,480 --> 00:23:50,960 Speaker 1: now to Alex Tanzi, a senior editor for the Real 395 00:23:50,960 --> 00:23:55,119 Speaker 1: Economy Team in Washington who worked with Mike pulling together 396 00:23:55,200 --> 00:23:57,240 Speaker 1: some data to go with the story, but has also 397 00:23:57,359 --> 00:24:04,080 Speaker 1: been thinking about broader quest of generational inequality. We tend 398 00:24:04,119 --> 00:24:08,000 Speaker 1: to think that the last few years have not been 399 00:24:08,040 --> 00:24:11,920 Speaker 1: great to young people relative too old, and it was 400 00:24:11,960 --> 00:24:15,399 Speaker 1: sort of symbolized in that piece by the fact that 401 00:24:15,440 --> 00:24:19,600 Speaker 1: you have older Americans actually able to retire sooner than 402 00:24:19,680 --> 00:24:24,119 Speaker 1: they thought because of how well the stock market has done. Alex, 403 00:24:24,160 --> 00:24:28,920 Speaker 1: do you have a sense that the pandemic has worsened 404 00:24:29,640 --> 00:24:35,640 Speaker 1: generational inequality? The pandemic is um across the board, has 405 00:24:35,720 --> 00:24:40,760 Speaker 1: created this case shaped recovery. So there's millennials and younger 406 00:24:40,760 --> 00:24:44,000 Speaker 1: people that are doing exceptionally well, people that had a 407 00:24:44,119 --> 00:24:47,600 Speaker 1: job and kept their job. Um. But at the same time, 408 00:24:48,840 --> 00:24:51,960 Speaker 1: many people on that age cohort you know, I had 409 00:24:52,040 --> 00:24:55,480 Speaker 1: service sector jobs and lost their jobs. So it's it's 410 00:24:55,520 --> 00:24:59,480 Speaker 1: a it's a mixed picture. Um, it's very nuanced. But 411 00:24:59,600 --> 00:25:02,159 Speaker 1: you did you did find some interesting data that suggested 412 00:25:02,240 --> 00:25:05,160 Speaker 1: that the wealth gap might even be closing in some 413 00:25:05,240 --> 00:25:09,120 Speaker 1: parts of the labor market. That's right. So the St. 414 00:25:09,160 --> 00:25:12,760 Speaker 1: Louis Federal Reserve did the report, and they're showing that 415 00:25:12,960 --> 00:25:16,960 Speaker 1: the the wealth gap for millennials is getting a little 416 00:25:17,000 --> 00:25:19,040 Speaker 1: bit better. At one point they were calling it the 417 00:25:19,119 --> 00:25:23,280 Speaker 1: Lost generation, but now they're showing that Um, while they're 418 00:25:23,320 --> 00:25:27,520 Speaker 1: still less wealthy than they were expected to be at 419 00:25:27,520 --> 00:25:31,720 Speaker 1: this age, they're closing the gap. And the oldest millennials 420 00:25:31,760 --> 00:25:36,359 Speaker 1: are you know, they're approaching forty, so they're not exactly, um, 421 00:25:36,400 --> 00:25:40,040 Speaker 1: super young anymore, but they are gaining wealth and they 422 00:25:40,040 --> 00:25:44,520 Speaker 1: are um purchasing real estate, and the real estate markets 423 00:25:44,520 --> 00:25:47,399 Speaker 1: don't exceptionally well in the US this year, so they 424 00:25:47,480 --> 00:25:53,280 Speaker 1: have received equity gains and their real estate holdings and also, um, 425 00:25:53,400 --> 00:25:57,280 Speaker 1: the stock market obviously has done um quite well. If 426 00:25:57,320 --> 00:26:01,359 Speaker 1: I analyze the last three quarters of twenty twenty, people 427 00:26:01,480 --> 00:26:04,440 Speaker 1: under the age of forty saw their biggest wealth gained 428 00:26:04,520 --> 00:26:09,040 Speaker 1: ever of any cohort at any time. So they had 429 00:26:09,080 --> 00:26:13,960 Speaker 1: a sevent annualized increase in the last three quarters, which 430 00:26:14,080 --> 00:26:16,880 Speaker 1: um it was better than any other group has done 431 00:26:16,880 --> 00:26:19,439 Speaker 1: it any other time. Just sort of thing through the 432 00:26:19,440 --> 00:26:21,520 Speaker 1: logic of that, because obviously, if they have less money, 433 00:26:21,800 --> 00:26:23,800 Speaker 1: it's more that they were they were able to have 434 00:26:23,880 --> 00:26:28,679 Speaker 1: the biggest percentage increase. But in absolute terms, the older 435 00:26:28,720 --> 00:26:31,120 Speaker 1: generations are still really the ones who are sitting on 436 00:26:31,200 --> 00:26:34,200 Speaker 1: a big chunk of the wealth. Surely that's a that's 437 00:26:34,240 --> 00:26:38,520 Speaker 1: exactly right. Millennials did see their assets well to over 438 00:26:38,600 --> 00:26:43,199 Speaker 1: ten trillion dollars, but at the same time, you know, 439 00:26:43,240 --> 00:26:46,160 Speaker 1: for example, of baby boomers have seven times that much. 440 00:26:47,240 --> 00:26:50,880 Speaker 1: So millennials also hold quite a bit of debt, and 441 00:26:50,960 --> 00:26:54,040 Speaker 1: the type of debt they hold isn't exactly the so 442 00:26:54,200 --> 00:26:57,720 Speaker 1: called good debt. They are purchasing more real estate, which 443 00:26:57,800 --> 00:27:00,199 Speaker 1: you know, what's good debt. Remind me what good is? 444 00:27:00,880 --> 00:27:04,400 Speaker 1: Usually it's mortgage. Debt is considered good because it's appreciating 445 00:27:04,480 --> 00:27:08,000 Speaker 1: asset most of the time. But millennials tend to hold 446 00:27:08,160 --> 00:27:10,680 Speaker 1: quite a bit of consumer debt, which is credit card debt. 447 00:27:11,240 --> 00:27:14,440 Speaker 1: So for example, UM, you know, like I just mentioned, 448 00:27:14,480 --> 00:27:18,560 Speaker 1: baby boomers have seven times the assets as millennials, but 449 00:27:18,680 --> 00:27:23,640 Speaker 1: baby boomers have less debt. So millennials have more debt 450 00:27:23,640 --> 00:27:27,280 Speaker 1: than baby boomers. And you know, one type of that 451 00:27:27,359 --> 00:27:29,439 Speaker 1: debt that's been making the news quite a bit is 452 00:27:29,480 --> 00:27:34,359 Speaker 1: student loans, which is just um gone up by astronomical 453 00:27:34,400 --> 00:27:38,560 Speaker 1: amounts in the last decade or so. And we've were 454 00:27:38,960 --> 00:27:42,240 Speaker 1: earlier in the program, we've been touching on the potential 455 00:27:42,280 --> 00:27:47,040 Speaker 1: for inflation. UM, if you're if there's a younger generation, 456 00:27:47,160 --> 00:27:50,080 Speaker 1: as you point out, the younger generation isn't necessarily millennials anymore, 457 00:27:50,280 --> 00:27:53,919 Speaker 1: but it's below younger than that, UM that's sitting on 458 00:27:53,960 --> 00:28:00,199 Speaker 1: a lot of debt which is not tied to rising assets. Um, 459 00:28:00,520 --> 00:28:03,560 Speaker 1: what does what does inflation mean for them? I mean, 460 00:28:03,600 --> 00:28:05,520 Speaker 1: we tend to think that inflation is not so bad 461 00:28:05,560 --> 00:28:07,800 Speaker 1: for debt is because it sort of inflates away the 462 00:28:07,880 --> 00:28:09,600 Speaker 1: value of the debt. But I guess they'd also be 463 00:28:09,640 --> 00:28:13,920 Speaker 1: paying higher interest rates, definitely be paying higher interest rates, 464 00:28:14,000 --> 00:28:18,040 Speaker 1: and that's probably one of the biggest reasons for pessimism 465 00:28:18,080 --> 00:28:22,439 Speaker 1: because wage gains really haven't been there. So if the 466 00:28:22,480 --> 00:28:24,720 Speaker 1: other side of the the coin starts to increase a lot, 467 00:28:24,800 --> 00:28:29,160 Speaker 1: if their debt payments are debt service costs increases rapidly, 468 00:28:29,840 --> 00:28:34,160 Speaker 1: it's gonna put quite a bind on their disposable income. 469 00:28:34,960 --> 00:28:38,800 Speaker 1: One problem, you know, in the past, people have always said, 470 00:28:38,920 --> 00:28:42,720 Speaker 1: you know, a college education is needed and you can't 471 00:28:42,720 --> 00:28:46,600 Speaker 1: really succeed without it. But at the same time, more 472 00:28:46,640 --> 00:28:50,920 Speaker 1: and more people are receiving a degree, so that the 473 00:28:51,080 --> 00:28:54,440 Speaker 1: value of a college degree is going down while the 474 00:28:54,520 --> 00:28:57,320 Speaker 1: prices are going up. So they've gone into quite a 475 00:28:57,320 --> 00:29:00,560 Speaker 1: bit of debt to acquire a college to agreed that 476 00:29:00,880 --> 00:29:04,560 Speaker 1: appreciates and value. Well, it's one of those things that 477 00:29:04,960 --> 00:29:09,040 Speaker 1: raises the stakes if and when interest rates do go up, 478 00:29:09,080 --> 00:29:11,200 Speaker 1: because you're going to have this very disparate effects on 479 00:29:11,320 --> 00:29:14,400 Speaker 1: different bits of the population. Alex Tangi, that's fascinating. Thank 480 00:29:14,440 --> 00:29:25,120 Speaker 1: you very much, Thank you very much. So that's it 481 00:29:25,200 --> 00:29:27,600 Speaker 1: for this episode of Stephanomics. I'll be back next week 482 00:29:27,680 --> 00:29:30,880 Speaker 1: with more from around the world. In the meantime, please 483 00:29:30,920 --> 00:29:32,600 Speaker 1: if you can take the time to rate the show, 484 00:29:32,920 --> 00:29:35,800 Speaker 1: it would help us broaden our reach. For more news 485 00:29:35,800 --> 00:29:39,200 Speaker 1: and analysis from Bloomberg Economics during the week, follow as 486 00:29:39,240 --> 00:29:43,320 Speaker 1: Economics on Twitter. This episode was produced, as ever by 487 00:29:43,400 --> 00:29:47,320 Speaker 1: Magnus Hendrickson, with special thanks to Mike Sasso, Alex Tanzy, 488 00:29:47,760 --> 00:29:51,280 Speaker 1: Rich Miller, and Nancy Cook. Lucy Meekin is the executive 489 00:29:51,280 --> 00:29:54,760 Speaker 1: producer of Stephanomics and the head of Bloomberg Podcast This, 490 00:29:54,840 --> 00:29:55,640 Speaker 1: Francesca Levi