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What is stagflation? · Stuff You Should Know

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Speaker 1: Brought to you by the reinvented two thousand twelve camera.
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Speaker 1: It's ready. Are you welcome to Stuff You Should Know
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Speaker 1: from house Stuff Works dot Com. Hey, and welcome to
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Speaker 1: the podcast. I'm Josh Clark, There's Charles W. Chuck Bryant,
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Speaker 1: and this is Stuff you Should Know the podcast. Um,
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Speaker 1: and we are going to be talking today about econ
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Speaker 1: one oh one. That's right, this is Chuck's favorite subject.
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Speaker 1: I think this in UM physics. I know, I know
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Speaker 1: why I hate econ boy, because I just money. I
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Speaker 1: hate money, and some tough economists beat you up on No,
0:45
Speaker 1: just money, the whole thing. Like Emily pays all our bills.
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Speaker 1: I can't even if I had to do that. You said,
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Speaker 1: she's the CFO, right, Yeah, if I had to be
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Speaker 1: the CFO, then we'd be in big trouble. Yeah, because
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Speaker 1: I just don't like it. I don't like anything about it. Well,
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Speaker 1: this is more UM, less household economics, more macro economics. Yeah,
1:04
Speaker 1: this is interesting. I thought this is there. There's a
1:06
Speaker 1: historical battle involved the seventies. People in Bell Bottoms, probably Um,
1:14
Speaker 1: Ronald Reagan, everybody. That's the whole cast of characters. Let's
1:19
Speaker 1: do it well, Chuck. I was reading an article UM
1:23
Speaker 1: as is my Way, UM about rampant inflation in two
1:28
Speaker 1: thousand eleven. YEA. And basically, this guy named Michael Snyder
1:33
Speaker 1: UM was is warning that we're going to see, I think,
1:38
Speaker 1: as he puts, an inflation that we've never seen before
1:42
Speaker 1: in the US. And inflation is this huge boogeyman where
1:47
Speaker 1: money buys less because prices rise. And there's all sorts
1:53
Speaker 1: of reasons that comes about, but one of the one
1:55
Speaker 1: of the if you look at classic economics, the reason
1:59
Speaker 1: why inflation tends to happen is that there's too much
2:03
Speaker 1: of something, right, the old supply demand right. You have
2:06
Speaker 1: in this case, too much money on the market. Therefore,
2:10
Speaker 1: since money is subject to supply demand, more money there
2:13
Speaker 1: is on the market, the cheaper it is because there's
2:16
Speaker 1: more of it, demand goes down, prices go up, right
2:20
Speaker 1: for the cost of goods exactly, and you have inflation.
2:26
Speaker 1: What this guy's warning about is that UM airline fares
2:30
Speaker 1: for the past holiday season were thirty percent more than
2:33
Speaker 1: they were the year before. H price of food has
2:36
Speaker 1: been increasing, UM. There's been double digit health insurance premium
2:42
Speaker 1: race races. I haven't noticed. I don't think that that
2:46
Speaker 1: has anything to do with inflation. I think that's just
2:48
Speaker 1: the insurance companies punishing the USA UM. He also he
2:53
Speaker 1: gives some other steps cotton increased, beef up, pork up
2:58
Speaker 1: sixty percent, hides or ups you know that run for
3:03
Speaker 1: the hills. Hides are up. UM and food prices especially
3:09
Speaker 1: are kind of a problem when inflation occurs because you
3:13
Speaker 1: need food to eat. That's very sensitive. And the USDA
3:17
Speaker 1: released their figure saying basically like, yes, porks can arise,
3:20
Speaker 1: some beefs can arise some, but overall the food cost
3:24
Speaker 1: inflation is going to be like one percent, which is
3:26
Speaker 1: definitely doable. If you look at the government statistics, right,
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Speaker 1: our inflation is pretty much at zero maybe one percent,
3:34
Speaker 1: which now, yeah, which is actually less than healthy. You
3:37
Speaker 1: want things to increase, you want inflation to take place,
3:40
Speaker 1: but you wanted to plod along at a very slow,
3:43
Speaker 1: steady rate. Inflation is the reason why up to say
3:46
Speaker 1: two thousand and seven, house grew in value over thirty
3:51
Speaker 1: years thanks to inflation. You paid X number of dollars
3:54
Speaker 1: for it, and it increased in value in large part
3:57
Speaker 1: because inflation. So inflation is good as long as the
3:59
Speaker 1: center control hyperinflation is really bad. The worst thing of all, though,
4:04
Speaker 1: is stag inflation. And if inflation happens right now, we
4:07
Speaker 1: are a prime in a in a prime seat for
4:10
Speaker 1: stag inflation, which would be very, very bad. Do you
4:13
Speaker 1: want to tell everybody what stag inflation? Can? I give
4:16
Speaker 1: a couple of stats because he's one form later on
4:18
Speaker 1: when when we're talking about inflation, h July two thousand
4:23
Speaker 1: eight is when it peaked in the last let's just
4:26
Speaker 1: say decade inflation. Yeah, July two thousand eight, it peaked
4:29
Speaker 1: at five point six percent, So keep that number in mind. Okay,
4:32
Speaker 1: I'm gonna write it down. And December of last year,
4:36
Speaker 1: so just a couple of short months ago, it was
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Speaker 1: about one point five and the average for two thousand
4:42
Speaker 1: nine was negative point three. It's a negative percentage in
4:48
Speaker 1: two thousand nine. And there's something to be said about
4:51
Speaker 1: deflation as well, because that money that you do have,
4:53
Speaker 1: if you have any, becomes much more valuable. That's right.
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Speaker 1: So keep those numbers in mind as as we proceed here.
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Speaker 1: Uh down point point three four, negative point three four
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Speaker 1: in two thousand nine, and we peaked in two thousand
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Speaker 1: eight five, which was a staggering number I got him
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Speaker 1: compared to like everybody. You can ask me if you
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Speaker 1: need a reminder later on. So, stagflation, Josh, is not
5:16
Speaker 1: something that we made up, even though I thought it
5:18
Speaker 1: was something you made up. It describes a really bad,
5:22
Speaker 1: perfect storm of economic news. It's when you have high unemployment, right,
5:27
Speaker 1: slow growth coupled with high inflation. And this is something
5:32
Speaker 1: that people didn't think was possible. No, and and let's
5:35
Speaker 1: let's describe that. Let's point that out. Where we are
5:38
Speaker 1: right now. We have very high unemployment I think it's
5:39
Speaker 1: at ten percent nationally, pretty much getting better. Slow economic growth,
5:44
Speaker 1: for sure. We're in a recession, after all, still crawling
5:47
Speaker 1: out of it, trying to at least, Right, we're in
5:49
Speaker 1: a basically a stagnant economy, which means it's it's growing
5:52
Speaker 1: very sluggishly or not growing at all. Yes, but our
5:55
Speaker 1: inflation is is pretty good, right, thankfully. But since we
5:59
Speaker 1: have those other two I said, we're in a prime
6:01
Speaker 1: spot for if inflation does come along, We're in a
6:04
Speaker 1: prime spot for stag inflation. The reason stag inflation is
6:08
Speaker 1: so insidious, Chuck, is because it forms a vicious cycle. Right,
6:14
Speaker 1: So you've got um you have high prices because of inflation,
6:19
Speaker 1: which means that people can't spend as much money, or
6:23
Speaker 1: when they do spend money, it doesn't buy as much.
6:25
Speaker 1: Your dollars shrinking essentially. Okay, so you have a shrinking dollar.
6:28
Speaker 1: You know, high unemployment, which means people have less money
6:31
Speaker 1: to spend, right in, Your savings aren't worth as much,
6:34
Speaker 1: right which ultimately leads to a sluggish economy. So there's
6:39
Speaker 1: no way to to for this thing to naturally cycle
6:42
Speaker 1: out of it like this could keep going indefinitely, this
6:45
Speaker 1: horrible plodding along what I think Carter called malaise. What
6:50
Speaker 1: he said, I think so I believe it uh economic
6:54
Speaker 1: slow down as normal people don't. You know, a lot
6:57
Speaker 1: of people freaked out with the recession, but people really
7:00
Speaker 1: he knew about it. Economics said, recessions are kind of
7:03
Speaker 1: what corrects it in the end, exactly we've talked about,
7:06
Speaker 1: so don't freak out too much in our in our audiobook, Yeah,
7:08
Speaker 1: we talked about how if you look at the economy
7:11
Speaker 1: is made up of like a forest. There's a big, heavy,
7:13
Speaker 1: huge trees which represent really well managed businesses, and then
7:19
Speaker 1: you've got the underbrush which are just kind of add ons.
7:21
Speaker 1: They're they're artificial almost they they shouldn't necessarily be there.
7:25
Speaker 1: They're kind of sucking off of the bubble speculation and
7:29
Speaker 1: artificially inflated economy. Right, and then when the wildfire comes along,
7:35
Speaker 1: which is the recession, the underbrush is burned away and
7:40
Speaker 1: things correct themselves. Sure, it's a pretty um dehumanizing way
7:45
Speaker 1: of looking at things, but so is economics. You're right. Uh,
7:49
Speaker 1: And part of the seventies people didn't think this was
7:51
Speaker 1: possible because of our friend Mr Kane's John and Inner
7:55
Speaker 1: Kines with stagflation. Yeah, it wasn't even a word before
7:58
Speaker 1: the seventies. Yeah, well we should point out to it.
8:00
Speaker 1: It's a contraction of stagnant and inflation. If you didn't
8:02
Speaker 1: figure that out, So there that is. Did somebody thought
8:05
Speaker 1: a stagged party and inflation? Really? Oh well, a lot
8:12
Speaker 1: of people thought bartering was bartending. I noticed that that.
8:15
Speaker 1: We got a lot of suggestions for bartending podcasts, and
8:19
Speaker 1: all of a sudden, after the bartering podcast, people got
8:21
Speaker 1: their whistle wet. So if you're canes I in in
8:24
Speaker 1: your economic theory, you're gonna favor supply and demand and
8:29
Speaker 1: you're gonna think that's pretty much what it's all about.
8:31
Speaker 1: Demand is high. You got a booming economy, prices are
8:34
Speaker 1: going to go up. Inflation is gonna rise some in
8:37
Speaker 1: relation to uh, the economy rising. Right. What what you're
8:41
Speaker 1: talking about is the Phillips curve, right, yeah? Is that
8:44
Speaker 1: was was that the Phillips curve? Yeah, So that the
8:47
Speaker 1: X axis of the Phillips curve is unemployment, yes, and
8:52
Speaker 1: then the y axis is inflation, right, yeah, And that
8:56
Speaker 1: happened from about fifty eight to seventy three post war boom,
8:59
Speaker 1: things were rising in that in sort of a not
9:01
Speaker 1: a wonder one ratio, but it even happened before then,
9:05
Speaker 1: Like the Phillips curve is is vetted that that it
9:08
Speaker 1: is correct. Basically, as unemployment rises, inflation goes down naturally,
9:16
Speaker 1: and if you have low unemployment, inflation rises if the
9:21
Speaker 1: converse is true, supposedly right, And the reason why is
9:25
Speaker 1: because when unemployments high, demand is low, therefore inflation is down.
9:31
Speaker 1: Prices are low, so inflation is down. And historically this
9:35
Speaker 1: this holds up if you go back and chart all
9:38
Speaker 1: this up to the seventies, this is this was the case,
9:42
Speaker 1: and that's how it is naturally. The problem is the
9:45
Speaker 1: FED in the sixties thought, well, if we just keep
9:49
Speaker 1: unemployment artificially low, will trade that off for slightly higher inflation.
9:54
Speaker 1: But we can keep on top of that so we
9:56
Speaker 1: can expect high inflation and act accordingly, but we'll have
10:00
Speaker 1: artificially low unemployment or near full employment, which is where
10:04
Speaker 1: everybody's employing. Yeah. They basically thought the rate of inflation
10:07
Speaker 1: would rise in a safe manner that they could keep
10:10
Speaker 1: up with. Yes, do you remember I don't know if
10:12
Speaker 1: I've used this before, but do you remember um that
10:14
Speaker 1: Simpsons where Homer brings home Pinty the lobster. Have I
10:18
Speaker 1: used this one before and puts Pinchy in the fish
10:21
Speaker 1: tank And Pinching needs salt water, but the goldfish needs freshwater,
10:25
Speaker 1: so it keeps adding salt and then like regular water
10:28
Speaker 1: until they're both like half floating in the middle of
10:30
Speaker 1: trying to balance it, and you end up killing both. Right.
10:33
Speaker 1: But that's kind of what you have to do if
10:35
Speaker 1: you're going to get in and regulate the economy, if
10:38
Speaker 1: you're not just going to let it do its own thing,
10:41
Speaker 1: you have that's the that's the trick you have to
10:43
Speaker 1: do to keep a scary job. Oh yeah, it's gotta
10:45
Speaker 1: be terrifying. Imagine the pressure that like Bernanke and those
10:48
Speaker 1: who preceded him are under, because I mean, history will
10:51
Speaker 1: make a villain or a monster or a hero out
10:54
Speaker 1: of you depending on what you do. You're not going
10:57
Speaker 1: to just do nothing. It's you're going to leave an
11:00
Speaker 1: impression on depending on what you did. Like, you can't
11:04
Speaker 1: go in and lead the FED and be like, I'm
11:05
Speaker 1: not doing anything. You know, it's two thumbs and wouldn't
11:08
Speaker 1: want that job. This guy right here. So you said
11:12
Speaker 1: they got it wrong, Yeah, they got the Philip they
11:16
Speaker 1: got their interpretation of the Phillips curb wrong. Yeah, and
11:18
Speaker 1: what that produced is called a wage price spiral. And
11:22
Speaker 1: we can get into more detail, but the long and
11:24
Speaker 1: short of it is that inflation rows faster than wages.
11:27
Speaker 1: Did you want to know how let's hear it. Well,
11:31
Speaker 1: this is this is what basically bucked the Phillips curve.
11:36
Speaker 1: Is that through government spending, like the government can spend
11:39
Speaker 1: on uh, infrastructure, the public sector to create jobs right
11:44
Speaker 1: through government spending UM and through you know tax policy
11:50
Speaker 1: that that forms UM the way the government can create
11:54
Speaker 1: or manipulate aggregate demand. Okay, I's say for example, you
11:58
Speaker 1: keep taxes low and you increase consumer spending, you can
12:02
Speaker 1: kick start an economy. Right. Um, you keep unemployment low,
12:07
Speaker 1: you trade off for a higher rate of inflation, like
12:09
Speaker 1: we saw they did. That's fine, that can conceivably work.
12:12
Speaker 1: The problem is they put too much money into an economy,
12:16
Speaker 1: kept pumping money into the economy no matter what. And
12:19
Speaker 1: what they found was, like you said, the wage price spiral,
12:22
Speaker 1: and basically it's where prices rise. So the the they
12:26
Speaker 1: the fed, new that inflation was going to happen. But
12:29
Speaker 1: when inflation happens, prices rise. When labor is sitting there
12:32
Speaker 1: working their tail off and prices are rising, they make
12:35
Speaker 1: the assumption that that means that industry, their bosses, their
12:40
Speaker 1: employers are making gobs of cash. Well, labor says, we
12:43
Speaker 1: want some of that cash, so give us more, give
12:47
Speaker 1: us higher wages, which they did to a certain degree,
12:50
Speaker 1: but they couldn't keep up. But the problem with that
12:52
Speaker 1: if you're if you're captain of industry, is that if
12:56
Speaker 1: you pay more, that raises your cost of product, which
13:00
Speaker 1: means that you have to raise the price, which means
13:03
Speaker 1: that your employees need more money because of inflation, and
13:06
Speaker 1: it creates this again another vicious cycle, and that's the
13:09
Speaker 1: wage price spiral. It spirals upward and um basically eventually
13:15
Speaker 1: employers stop increasing wages and inflation just takes off. And
13:19
Speaker 1: we might have survived that Josh in the seventies, as
13:22
Speaker 1: bad as it was, we might have eked through if
13:24
Speaker 1: it were not for the oil embargo of nineteen seventy three.
13:29
Speaker 1: When everyone knows oil went through the roof, and that's
13:31
Speaker 1: not just uh, you know Sally at the gas pomp,
13:35
Speaker 1: that's across all industry, and it the that coupled with
13:39
Speaker 1: everything else going on, all of a sudden. In nineteen seventy,
13:43
Speaker 1: inflation was at five point five percent, which in July
13:46
Speaker 1: tw two thousand eight, I said it was five point six.
13:49
Speaker 1: So in nineteen seventy they thought it was high at
13:51
Speaker 1: five point five, seventy four, twelve point two, and then
13:56
Speaker 1: it peaked at thirteen point three percent in nineteen s
13:59
Speaker 1: and again most economists agree that you want an economy
14:03
Speaker 1: that's inflating in about two percent a year. This is yeah,
14:07
Speaker 1: I mean into July two thousand eight at five point
14:10
Speaker 1: six percent, people were freaking and imagine thirteen point three percent.
14:14
Speaker 1: So basically Carter's just standing around, just getting it from
14:18
Speaker 1: all sides. He's got hostages in a ran that he
14:21
Speaker 1: can't get get um released. Um, he's got malaise forever.
14:26
Speaker 1: You got stock market that basically stopped working, right, he's
14:29
Speaker 1: got brownouts and lines of the gas pump, and yeah,
14:33
Speaker 1: he's got an economy that's um and out of control
14:37
Speaker 1: of inflation. He has no idea what to do. Right,
14:40
Speaker 1: then insteps. This guy named Paul Volker cannot throw in
14:43
Speaker 1: one more stat Uh talked about the stock market. From
14:47
Speaker 1: seventy to seventy nine, the SMP five returned an average
14:50
Speaker 1: of five point nine percent annually. But when you've got UH,
14:54
Speaker 1: the inflation that you subtract, you're actually losing money. The
14:57
Speaker 1: entire market is losing money two point six per center, right,
15:00
Speaker 1: two point six percentage points lower than inflation. So basically
15:04
Speaker 1: everybody's throwing in on the stock market during that time
15:07
Speaker 1: was paying two point six percent in losses. Not good, No,
15:13
Speaker 1: that's very bad, especially couple with inflation. People like you said,
15:16
Speaker 1: we're freaking out right, So bring us on to the
15:19
Speaker 1: savior of sorts. So Paul Vulker comes along, and you
15:22
Speaker 1: might recognize that named chuck. He's an economic advisor to Obama,
15:27
Speaker 1: but he got his chops as the head of the FED. UM.
15:32
Speaker 1: And in nineteen seventy nine he basically says, Okay, Kensian
15:36
Speaker 1: liberal monetary policy is is done. It's failing us, or
15:41
Speaker 1: we're falling apart right now. We have to try something else.
15:45
Speaker 1: And basically what they tried was the stuff that was created.
15:48
Speaker 1: It's it's called neoliberalism. Is created by a guy named
15:52
Speaker 1: Milton Friedman. Yes, and his basic formula was, quote too
15:58
Speaker 1: much money chasing too few goods. So the Fed's free
16:01
Speaker 1: up too much money to circulate in the economy, and
16:04
Speaker 1: that's not a good thing. Right. So everything we see
16:07
Speaker 1: the FED doing now is based on Freedman's economic policies. Right. Um,
16:13
Speaker 1: Remember we said that um with with the FED in
16:18
Speaker 1: the sixties and then the seventies. Um that their whole
16:21
Speaker 1: thing was throw more money at it because that will
16:23
Speaker 1: increase spending, which will increase demand, and yetta, yetta, everything
16:27
Speaker 1: will be fine in the midst of this emergency. The
16:30
Speaker 1: what's considered the fatal flaw they made was that rather
16:33
Speaker 1: than start sucking up some of this money to make
16:36
Speaker 1: it more scarce, and two Hens make it more valuable. UM,
16:40
Speaker 1: they they pump more money into it. Well, Vulker comes along,
16:44
Speaker 1: using Freedman's ideas and says, we gotta get some money
16:47
Speaker 1: off of the market, so we're gonna start buying it up.
16:50
Speaker 1: And what they did was they started issuing treasury bonds.
16:53
Speaker 1: They sold t bills. That's how the government issues and
16:57
Speaker 1: UM and purchases debt, and that's how they control the
17:00
Speaker 1: amount of money on the market. You know that. Yeah,
17:03
Speaker 1: that's Freedman's ideas. So when the economy is good, they're
17:06
Speaker 1: gonna raise interest rates to slow down the flow of
17:10
Speaker 1: money basically, yeah, because bubbles no better than a recession. Yeah,
17:14
Speaker 1: and the same in reverse. When the economy is tanking,
17:16
Speaker 1: they're gonna lower the interest rate and say, hey, go
17:18
Speaker 1: out by house because look how it is exactly which
17:20
Speaker 1: is exactly what they're doing right now, what we're seeing
17:22
Speaker 1: right now. It was started in nineteen seventy nine, and
17:25
Speaker 1: it didn't really exist, at least in practice in the
17:28
Speaker 1: United States before then. Apparently Freedman and his UM people
17:32
Speaker 1: tested out these theories. Is neoliberalism with UM in Chile
17:37
Speaker 1: when Augusto Pinochet with US back c I A coup
17:43
Speaker 1: um took over the Freedman's Chicago School. People went down
17:48
Speaker 1: there were like, hey, let us help you set up
17:49
Speaker 1: this new economy. Yeah, that's what happened in Iraq. Apparently
17:54
Speaker 1: it was designed to figure out how to get the
17:57
Speaker 1: u S mits in other entries coffers by setting up
18:02
Speaker 1: an economy that was very friendly to capitalism. It's it
18:06
Speaker 1: happens here now too. One of the results of it, Chuck,
18:09
Speaker 1: is when you cut off the flow of money. And
18:13
Speaker 1: this was the reason why they didn't why the the
18:15
Speaker 1: FED in the sixties and seventies didn't think to do this.
18:18
Speaker 1: When you cut off the flow of money, that means
18:20
Speaker 1: companies have less money. Right, demand goes down and people
18:25
Speaker 1: get laid off. So, since the focus of the FED
18:28
Speaker 1: during the post war boom and up into the late
18:31
Speaker 1: seventies was to keep unemployment as low as possible, it
18:34
Speaker 1: was all on jobs. At the time, the way Freeman
18:37
Speaker 1: looked at it was the opposite, like, no, you don't
18:39
Speaker 1: focus on that. You focus on keeping the economy growing
18:43
Speaker 1: in a manageable pace. Maybe don't worry quite so much
18:45
Speaker 1: about unemployment. As a result of that, you took off money,
18:49
Speaker 1: unemployment goes up. So inflation and in fact is what
18:52
Speaker 1: the current standards think controls the economy more so than
18:56
Speaker 1: the joblessness rate. Right. Interesting, Well, there's less uh focus
19:01
Speaker 1: on on although it is a factor and a cause
19:05
Speaker 1: for concern. It's anything like it was as far as
19:07
Speaker 1: Fed monetary policy went in the sixties. The thing is,
19:11
Speaker 1: Freedman gets tons Freedman and Vulcar get tons of credit.
19:16
Speaker 1: But they fix the economy by kicking in like basically
19:20
Speaker 1: kickstarting a recession. Yeah, and the recession was painful, but
19:23
Speaker 1: then inflation stabilized, so it does work. But you're gonna
19:26
Speaker 1: have to go through an impression and a recession. Well yeah.
19:29
Speaker 1: And the trick is is the Fed has to predict
19:33
Speaker 1: the short term and the long term and they have
19:35
Speaker 1: to identify when that where that exact point is, or
19:39
Speaker 1: maybe not exact, but get pretty close when they need
19:43
Speaker 1: to start controlling that money flow again and the interest rates,
19:46
Speaker 1: and good lord, it's on the hands of a few,
19:49
Speaker 1: it isn't it. Right, Well, if you if you raise
19:51
Speaker 1: interest rates too early, um, what you're going to do
19:54
Speaker 1: is stop borrow when you're gonna stop growth. Right, So
19:58
Speaker 1: if you're if you're economy hasn't really been kickstarted, is
20:02
Speaker 1: on its own. Um, then you're gonna you're gonna push
20:05
Speaker 1: it right back into a reception, a double difference session. Right. Um,
20:08
Speaker 1: if you wait too long, then there's gonna be too
20:11
Speaker 1: much money on the market, which is what that guy
20:14
Speaker 1: I was talking about at the beginning is worried about
20:16
Speaker 1: that there's a lot of money and like cash reserves
20:19
Speaker 1: and banks and people hoarding it. But once it eventually
20:21
Speaker 1: hits the market, our inflation is going to just go
20:24
Speaker 1: through the roof. You worried about stagflation as you think
20:26
Speaker 1: it's common. He's worried about inflation. And if if, if
20:30
Speaker 1: we remain in these factors, then I'm saying that would
20:33
Speaker 1: cause stag inflation. But um, I guess I got one
20:37
Speaker 1: last thing. What you got? The irony of Freedman's success
20:42
Speaker 1: proves the Phillips curve works. Yeah. When he when his
20:47
Speaker 1: policies carried out by Vulker kicked in, unemployment, unemployment rose,
20:52
Speaker 1: inflation went down. Yeah, you're right. Yeah, I've never felt
20:55
Speaker 1: so helpless in my life. Yeah, we're we're in trouble.
20:58
Speaker 1: We're just as small but small little pieces in this
21:01
Speaker 1: whole puzzle. Yeah we are. Um, that's why they call
21:03
Speaker 1: it macro economics. And that's why you're concerned with microeconomics
21:09
Speaker 1: because you love your CFO exactly the end and my
21:12
Speaker 1: house right just reset lower, So I'm all, I'm all
21:15
Speaker 1: happy right now, I said the end? Oh sorry, Uh.
21:19
Speaker 1: If you want to learn more about stag inflation, um,
21:22
Speaker 1: can I borrow some money? Then chuck? No, because that's
21:25
Speaker 1: going to be used to paid on other debt. It's
21:27
Speaker 1: all a big visious cycle like we thought. Oh well,
21:29
Speaker 1: while we're on it, while are you talking about debt?
21:31
Speaker 1: Um f y I if you have fixed debt? Right? Yeah, Um,
21:35
Speaker 1: let's say you owe somebody twelve dollars. Best time to
21:38
Speaker 1: owe to pay that that money off is when inflation
21:41
Speaker 1: is high, money is cheap and abundant. Good point. Yeah,
21:44
Speaker 1: it's best to save when money is cheap or whey
21:47
Speaker 1: is expensive. Right, all right, So that's it, right, Truer
21:52
Speaker 1: words have never been spoken, that is it. If you
21:54
Speaker 1: want to learn more about stag inflation and see a
21:57
Speaker 1: really sad line of nineteen eighties auto workers in Detroit,
22:03
Speaker 1: you can type in stagflation in the search bart how
22:06
Speaker 1: stuff works dot com, And as always, we encourage you
22:09
Speaker 1: to read all of our economics articles because they are fascinating,
22:13
Speaker 1: I said, search bar right. Well, that means it's time
22:16
Speaker 1: for a listener mail. Hey guys, how this is from
22:21
Speaker 1: Jason How Hey guys, how's it going? I hope all
22:22
Speaker 1: as well? Catching up on the podcast and Chuck mentioned
22:25
Speaker 1: that he had a big wheel but wanted a green machine. Well,
22:28
Speaker 1: my first memory actually is of a green machine. My
22:30
Speaker 1: friend Boomer got one, and my mom Dot who was
22:34
Speaker 1: the greatest mother ever by the way, uh and I
22:37
Speaker 1: lived in an apartment complex. She was sitting on the
22:39
Speaker 1: bench outside with her neighbor and I went to the
22:40
Speaker 1: top of the hill to try this green machine. Out.
22:43
Speaker 1: Came down as fast as I could, because that's what
22:46
Speaker 1: you do, and uh I could Uh. I figured I
22:49
Speaker 1: would skid right out in front of the bench. I
22:51
Speaker 1: was going very fast though, pulled the handbrake the last second,
22:54
Speaker 1: and the handbrake came off completely in my hand, and
22:57
Speaker 1: I remember thinking, Uh. Then I was in my neighbor's
23:01
Speaker 1: arms running for the car as I crashed into the bench,
23:04
Speaker 1: busted my face and I wide open. At the hospital
23:07
Speaker 1: they had to put me in a straight jacket in
23:09
Speaker 1: order to stitch up my face, he's freaking out. I
23:12
Speaker 1: guess so. My eye was stuck shut for a few weeks.
23:15
Speaker 1: And my very next memory is the night my eye opened.
23:19
Speaker 1: I was at my grandmother sisters house. He's either talking
23:24
Speaker 1: about his great aunt or his grandmother was named. Says okay, okay.
23:29
Speaker 1: When it opened, I was really excited. I showed my grandmother.
23:31
Speaker 1: She told me to shut his tic Tac dough was on.
23:35
Speaker 1: Remember that show. I love that show, l O L.
23:38
Speaker 1: He says, these moments made me laugh so hard. Thank you,
23:41
Speaker 1: Chuck and Josh. We're talking about the green machine and
23:44
Speaker 1: letting me reminisce. It's from Jason in Baltimore, Maryland. Wait
23:48
Speaker 1: to talk about the green machine, Chuck, it was the best.
23:51
Speaker 1: It's good news. I bet you could find those on
23:53
Speaker 1: the on the eBay. They'll cost you some money maybe.
23:57
Speaker 1: So if you've got okay enough and do you have one? Oh,
24:01
Speaker 1: I don't know, Jerry got my green machine? How about
24:03
Speaker 1: if you've got a story about someone you're nemesis getting
24:06
Speaker 1: something that you deserved. Good one, very good one. Okay,
24:10
Speaker 1: what Chuck just said? Wrap it up, spanking on the bottom.
24:14
Speaker 1: Sending in an email to Stuff podcast at how Stuff
24:17
Speaker 1: works dot com for more on this and thousands of
24:24
Speaker 1: other topics. Is it how stuff works dot com. To
24:27
Speaker 1: learn more about the podcast, click on the podcast icon
24:30
Speaker 1: in the upper right corner of our homepage. The How
24:32
Speaker 1: Stuff Works iPhone app has arrived. Download it today on iTunes.
24:39
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24:42
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