The case to raise the inflation target

Make Me Smart August 21, 2023 Transcript

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Kai Ryssdal 

So if you’re ready, Drew, why don’t we commence. As they say en Paris. I don’t know where that came from. I don’t know where. Hey everybody, I’m Kai Ryssdal, welcome back to Make Me Smart on a Monday. Yes, it’s a Monday, where we make today make sense. That’s the tagline for this for this podcast.

Sabri Ben-Achour

And I’m Sabri Ben-Achour, stepping in for Kimberly Adams, thanks for joining us today. Indeed, it is a Monday.

Kai Ryssdal

Monday, 21st of August, Sabri doing doing double duty today, by the way. He filed a spot for the show. And now he’s doing this. So you know, you got to get up pretty early in the morning to be Sabri Ben-Achour. I’ll tell you that. Alright, so well, look, I mean, we have a stupidly early morning meeting. And then we do this stupidly at the end of the day and you know, burning the candle at both ends. That’s all I’m saying. We will do what we always do on this podcast, little bit of news, a little bit of make me smile, and then we will move smartly about our days. Sabri you get to go first.

Sabri Ben-Achour 

Okay, so for my news fix, I saw a couple things. One was my spot that I did for today’s show, which people can listen to it. Basically, basically Japan and China by have the most US Treasury bonds among foreign countries, and they are a little less interested in in having them these days, basically, for reasons internal to their economies, and their currencies. But one thing that I learned in the course of doing this was that it’s actually it’s not just Japan and China that has reduced appetite. If you think about it, a lot of entities are less interested in holding treasury bonds. Banks are less interested in holding treasuries right now. The Federal Reserve is less interested in holding treasuries right now. Because they’re, you know, unwinding. So you have like, on the margins like this decline in interest in holding treasuries at the same time as the Treasury Department is pumping more and more of them out. And anyway, that’s just one reason why the yields on the tenure are so high, meaning the cost of borrowing so high, it’s just that the borrowing that was so easy for so long, is about to get, is getting, has gotten a lot more expensive for the government. So putting that out there.

Kai Ryssdal  

No, that’s it’s actually a huge story. And I’m glad number one you did the spot for us. And I’m glad you’re highlighting it here because rising, the money getting more expensive is not just for you and me and the guy down the street, money getting more expensive as for the government, the United States as well. And as we think about national debt and all that jazz. It’s a real deal. It’s a real deal. So yeah, there you go. You want to do the Maui thing real quick since Biden’s out there.

Sabri Ben-Achour 

Yeah, sure. Sure. So, you know, this has been becoming more prominent over the over the past week, I’d say but people are concerned that there would be a land grab in the aftermath of these fires. And the governor has said, you know, we’re gonna put a moratorium on anyone snapping up land, even threatening to prosecute people who pursue unsolicited offers to buy land in the wake of this disaster. And it’s just, it’s, it’s just very, it resurrects a very tragic history, you know, where we’re, you know, U.S. colonists took away, overthrow the Hawaiian royal family, they took a bunch of land, took a bunch of royal land, and you throw that in with gentrification concerns, that you see many holiday getaway spots, but this one in particular. And, you know, I personally, just wonder how they will, how they will do that, because I imagine there’s probably a lot of desperate people who might be inclined to sell. And you know, how they’re gonna help those folks out to keep them from doing that. I think that’s what the goal is.

Kai Ryssdal 

No totally, you betcha. No, totally. I totally agree. It’s, you know, it’s tragic enough story without people being taken advantage of, and I, you know, the governor of Hawaii, Governor Green has said he’s gonna keep an eye on that. And we’ll see we’ll see if he can actually deliver on that promise. Okay, so mine are twofold. One is a long, long, long read and and the other one is a slightly shorter, but, you know, kind of dense read. There’s a piece out in the New Yorker today by Ronan Farrow about Elon Musk, and how he has come to dominate so many things, not just electric vehicles, not just rocket ships, but also the internet and satellites and how that is playing out specifically in Ukraine with his Starlink system. And and I will let you read it yourself. I don’t I don’t know if it’s like a free copy that I got somehow, but I think you can I think this one is not behind the paywall. And it’s, wow. So let’s just say benevolent dictator is is, it is not quite the right phrase, because benevolent is not what Elon Musk is doing now. And we’ve talked about him a lot on his podcast with Twitter and Tesla, and SpaceX and all that jazz. But there’s more to that guy than meets the eye. And not all of it is good. And you should read this piece in The New Yorker. That is all I have to say. Because it’s it’s just something, something something, something. Yeah, the other one. Sorry you go ahead.

Sabri Ben-Achour 

I was just gonna say, you know, the idea of a super-rich, super powerful individual having influence on world affairs is usually something you see in the movies. You know, it’s usually, you know, it’s because it’s so it’s so it seems so fictional, that one person would in reality have so much power, but it’s, it’s real. I mean, this guy has the balance of a war in his hand.

Kai Ryssdal 

He has so much power. Yes, so much power. And it’s just, it’s not right. Anyway, so that’s that. So here’s the really wonky one. And I just offer this as fodder for those of you who are gripped as I am by Jay Powell’s speech coming up on Friday, I’m not really gripped, I’ll read it. But whatever. Federal Reserve Bank of Kansas City hosts an annual shindig up in Jackson Hole, Wyoming, it’s a very big deal. Lots of people are there, there will be lots of speeches, the most important speech will be given by Jerome Powell, the chairman of the Fed, who knows what he’s going to say, but there is now an increasing call, Mohamed El-Erian did it on Marketplace a couple of weeks ago, Jason Furman does it in The Wall Street Journal today. Furman, of course, ran the Council of Economic Advisers under Obama, for the Fed to decide that they want now a 3% target for inflation as opposed to a 2% target for inflation. And why does that matter? Well, we are at 3% right now. And if you believe as Raphael Bostic does, the president of the Atlanta Fed, that now the hard part has started for the Fed, because it has been completely successful in getting your interest rates down from our inflation down from 9% to 3%, where it sits now. But if they want to try to get it to 2%, it’s going to be much, much harder. It is in fact, the hard part. That is what Bostick says. And so maybe El-Erian and Jason Furman say the Fed oughta just say, “You know what? We’re good at 3%. We’re going to put it at 3%. And we’re going to leave it there.” It’s an interesting idea. There is zero chance, zero chance that Jay Powell comes out on Friday and says, yep, 3% we’re happy now. But it’s an interesting discussion, because I mean, the Fed has been has been beleaguered in its attempts to get inflation back up to 2% when inflation was running really low. And they have been reasonably hard pressed to get it down to 2%. So I think they had to give it a whack, but we’ll see what happens. We’ll see what happens. I don’t know.

Sabri Ben-Achour 

What do you think? Well, I don’t know. I mean, I have never understood personally why they decided 2% versus 3% versus 1.5%. To begin with, I’ve never quite nailed down.

Kai Ryssdal 

Because New, because New Zealand did it. Truly, the Central Bank of New Zealand did it or the Royal Bank of New Zealand or whatever it is, and everybody kind of followed suit. And now we’re just kind of stuck with it because the kiwis did it. Love New Zealanders, I do. Anyway, alright, let’s let’s move along here we’re getting vey dense. No look at this. I’m looking at your thing. I did not well, you tell the thing and then I’ll give my reaction to it.

Sabri Ben-Achour 

Oh, yeah, the Venus flytrap has been removed from the endangered species list. And as a plant person, that is fun news for me, although it’s still a state endangered plant, but basically the I guess, the federal, the U.S. Fish and Wildlife. US Fish and Wildlife agency. Yes. U.S. Fish and Wildlife agency says basically, there’s so many people helping it. As long as they keep helping it it’s gonna be fine. So we don’t need to put it on the list.

Kai Ryssdal 

So, so did you know that the Venus flytrap was on the endangered list? You probably did because because you’re a very serious I mean, you you you discount yourself by saying you’re just a plant guy you’re a very serious plant knowledgeable person. Truly.

Sabri Ben-Achour 

I knew it was protected but I did not know at what legal level it was protected. So yeah, I guess I did not know it’s actually on the actual endangered species list. But you know, it grows in the U.S.. I don’t know if people know that. But it grows in like North Carolina, South Carolina and sort of swampy areas. It’s like a, it’s so foreign, but it’s actually very homegrown. And you can buy like you can buy a, they breed it now like to make fancy versions of Venus flytraps with all like different colors and frills and stuff. So you can own one they’re perfectly legal to have. Don’t just can’t like pick them up from the wild which is a terrible idea for any plant.

Kai Ryssdal 

Alright, so so here’s mine. And and everybody who listens to this podcast knows that I’m big soccer fan and of course I was up very early on Sunday morning to watch the Women’s final. Spain beats England one nothing. But there was a news conference on Friday in Australia in which the head of FIFA which is the soccer’s governing body, the president of FIFA, Gianni Infantino, gave a speech in which he announced that the Women’s World Cup was breaking even this year at $570 million in revenue, which is awesome and great for the women’s game. We’ll let the women get more money, not enough money because they don’t get paid as much as the men. But that’s really good news. It’s really cool that the women’s game is so popular. I will then just have to point out the Gianni Infantino went on to say this to the women as they’re wrapping up just a spectacular tournament. Here’s the quote, which just shake my damn head, “Pick the right battles, pick the right fights. You have the power to change. You have the power to convince us men what we have to do and what we don’t have to do. Just do it with men, with FIFA. You’ll find open doors, just push the doors.” Dude, read the room. Okay, read the room. Read the room. I can’t even with that. I just I just it was such a good tournament and and it was just it’s great that they’re making money and it’s great that women are getting more money now. But the idea that women have to put up with that crud just bugs me that just bugs me. Just bugs me. That’s all I’m saying. That’s all I’m saying.

Sabri Ben-Achour

Yeah. Yeah.

Kai Ryssdal 

There we go. Alright, so we’re done on, where are we on a Monday? We’re going to do a little bit of robotaxi stuff. It’s gonna be me and Reema Khrais on our Tuesday show in a deep dive self-driving cars, robotaxis, all that good stuff. Why is it so hard? Where are we that technology? Where are we with safety and regulations? And is perhaps a self-driving future already here? Spoiler alert No, because we have to get better than this if it’s going to be self-driving future. In the meanwhile, call us and tell us if you’ve been in one of those robotaxis and if so, how terrifying was it? 508-U-B-SMART or email works as well, makemesmart@marketplace.org is how you get to us. And we read them all. Courtney does. I don’t know. Kimberly does, Sabri does. Nova does. Make Me Smart is produced by Courtney Bergsieker. Today’s program was engineered by Drew Jostad. Ellen Rolfes writes our newsletter. Our intern is Niloufar Shahbandi.

Sabri Ben-Achour 

Marisa Cabrera is our senior producer. Bridget Bodner is the director of podcasts and Francesca Levy is the Executive Director of Digital.

Kai Ryssdal

Yes she does. Wham.