November 11, 2024 • 15 mins
As the world’s governments process what a Trump presidency could mean for them, much of the attention has turned to the impact of Trump's suite of economic reforms.
On today’s podcast, we’re going to look at how changes in the global economy could impact us here in Australia, and why crypto and shares have rocketed up on the news of Trump’s return.
Hosts: Achol Arok and Sam Koslowski
Producer: Orla Maher
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Already, and this is the Daily This is the Daily.
Speaker 2 (00:04):
Ohs oh, now it makes sense.
Speaker 1 (00:14):
Good morning, and welcome to the Daily. OS is Tuesday,
the twelfth of November. I'm Sam and I'm a troll.
Tomorrow is one week since Americans overwhelmingly elected Donald Trump
as the forty seventh President of the United States, sending
him back to the White House with party control of Congress,
as well as decisive victories in all seven swing states.
As the world's government's process what the Trump presidency could
(00:37):
mean for them, much of the attention has turned to
the impact of Trump's suite of economic reforms. On today's podcast,
we're going to look at how changes in the global
economy could impact us here in Australia and why crypto
and shares have rocketed up on the news of Trump's return.
Speaker 2 (00:57):
Now, Sam, there's been a lot of conversation about how
Trump's economic policies will impact not only Americans but us
here in Australia.
Speaker 1 (01:04):
Wait with pause, first lead. Welcome to the podcast. So
good to have you on for the first time. Please continue.
Speaker 2 (01:09):
So excited to be on my first pod. Let's get
into it. So I think we feel like we're meant
to know how we change in US economic policies could
change the world, but it becomes a lot harder to
explain what it actually means. So can you break it
down for us?
Speaker 1 (01:24):
Yeah? Sure, And I think you're one hundred percent right
that it's one thing to know that a Trump presidency
will make the economy different all around the world. It's
another thing to understand why. It can be pretty confusing.
And I think the easiest way to have this discussion
would be to break it up into three key areas.
And I know we love you a little language technique
here at TDA, So let's think about it as three t's, Taxes, tariffs,
(01:47):
and tech.
Speaker 2 (01:48):
We do love a little bit of alliteration here at
the Daily Ears. So let's start with the first and
probably the most familiar to people. Taxes. Now, Trump wants
to cut corporate.
Speaker 1 (01:58):
Taxes, right, Yeah, and we we don't really know too
much about exactly how that's going to happen. He just
got elected, he's still in the process of appointing key
personnel into his office. We don't have firm policies yet,
but it is possible that Trump could lower corporate tax
rates from twenty one percent, which it is now to
fifteen percent. So the current corporate tax rate was actually
signed into law by Trump. The last time he was president,
(02:21):
he brought it down from thirty percent, and this time around,
Trump has what he describes as the America First Agenda,
and I'm going to repeat that phrase a lot in
this episode. And the idea here is that if Trump
lowers tax rates for big corporations in America, they're going
to be more tempted to keep their operations in the
US because it's going to be cheaper for them than
(02:42):
if they move everything overseas. What that means is that
more Americans could get jobs and more stuff will have
them made in America label on it. Now, you have
to remember this corporate tax policy would only apply to
companies that quote make their product in America, which is
a further entire meant to these corporations to actually do
the building on the United States soil. So I want
(03:04):
to play this out for a bit of an example
with you. Let's pick a random company nothing to do
with Donald Trump. Let's say Tesla and Ela Musk. Tesla
needs to make computer chips to put in an electric vehicle,
and currently they might do that in some way like
China or Taiwan, because it's cheaper to do it than
it is in the US. But if they don't have
to pay as much corporations tax, they might want to
(03:25):
move the computer chip production plan to a factory in
let's say Texas, which means that they would hire more
American workers and they'd keep everything within the US economy.
Speaker 2 (03:37):
So that's the major appeal for Americans who are worried
about the economy, right, that it would bring more jobs
back to the US. But what are some of the
concerns around.
Speaker 1 (03:45):
It, you're right, So for you know, somebody who's out
of work, this is a great opportunity to try and
get a manufacturing job, for example, that they might not
have available to them right now. But you have to
remember that federal governments collect taxes as a way to
find as their responsibilities, so they pay for things like
infrastructure or welfare payments or even hosting a major event
(04:07):
like the twenty twenty eight Olympics in Los Angeles through
the tax they collect. And because the US government will,
under this potential new Trump policy, collect less money via
corporate taxes and a range of a whole other tax cuts,
they've got planned. For individuals, they're going to have less
money coming into their bank account, and what that means
is that if they spend more than they are bringing in,
(04:29):
they're going to go into debt. And a debt for
a government could be very bad. And some economists have
estimated that these tax cuts are going to result in
a seven point five trillion with a t US dollars
worth of debt over the next ten years.
Speaker 2 (04:46):
So if lowering taxes will cause the US government to
go into as much debt as you say they will,
how did Trump respond to that?
Speaker 1 (04:53):
Well, it was obviously put to him throughout the entire election.
You know, he couldn't run away from the point that
lower taxes means less money coming into the government. But
the big way he says he's going to solve that
is the second T and that's tariffs.
Speaker 2 (05:05):
Okay, I've heard this word a lot. You have to
explain what that means.
Speaker 1 (05:09):
Sure thing, I'll break down tariffs, but first, here's a
word from our sponsor. Okay, we're back and a troll.
It's actually really simple. It's not a big, scary economic
term that people use when they say tariffs. It's basically
just a tax placed on imported goods or services, and
it can often be categorized by where the good or
(05:29):
services coming from, So say a tariff on all imports
from Russia, or the type of item it is. So
say a tariff on all imported red wine Russia. Is
a good example because tariffs in that case and in
many other cases, can be applied for political reasons, restricting
a country's business as a way of trying to deter
(05:49):
its government from doing certain things. So in twenty twenty two,
Russia invaded Ukraine, the US applied high tariffs to Russian
goods as a way to kind of express their co
opposition to that. And so Trump has said he wants
to put a sixty percent tariff on goods that come
from China. So right now, let's play I know you
love a shop. Let's play it out with Urban Outfitters.
(06:12):
It costs ten dollars for Urban Outfitters, a US company,
to import a T shirt and then they sell it
to consumers for twenty dollars and they make their ten
dollar profit. Now, under this system with tariffs, if there
was a sixty percent tariffs on all goods imported from China,
urban Outfitters have to pay ten dollars to import the
good because they're paying that to the Chinese manufacturer, and
(06:34):
then they have to pay six dollars to the US
government when it hits US land. So if they sell
it to consumers for twenty dollars, they're only going to
make four dollars now because ten dollars from the Chinese
importers and six dollars to the government. That's sixteen dollars
to get it on the shelf. And so what are
they going to do. They're probably going to put the
price of the T shirt up to say twenty six dollars,
(06:56):
so they can still make the ten dollars profit they
want to make.
Speaker 2 (07:00):
So just to clarify, it's the US companies that will
be paying the tariffs, not.
Speaker 1 (07:04):
The Chinese exactly. And I find that this is often
a misconception when we're talking about tariffs. Is its costs
that are going to have to be worn by the
overseas country or the overseas manufacturing entity. No, it's the
American companies. So honestly, think of tariffs as somebody stamping
a ticket on your way onto the train. The people
at the US Coast Guard or customs authorities are applying
(07:27):
the tariff to the US company when it hits the shores.
And Trump's Democratic rival Kamala Harris, she and other critics
of Trump's economic policies, they tried to make this point
that the cost of tariffs are going to be worn
by US families because that T shirt got more expensive,
not by the Chinese companies they're targeted at. But it's
(07:48):
not quite that simple. It does still impact those companies
in a kind of a less direct way. So I'll
give you a local example. China applied high tariffs on
the range of Australian goods during tensions around COVID in
the former Morrison government, and that made it difficult for
Australian wine makers to sell their wines into China because
(08:10):
the price of their product was so much higher for
your average customer in mainland China. And so what Trump
is hoping for here is that a company like Urban
Outfitters are not going to be as keen to get
their T shirts from China because it cost them sixteen
dollars including a tariff, and they might elect to make
the T shirts in the US for thirteen dollars, so
still more than they would have previously from China, but
(08:32):
still not as much as the tariff, and they don't
have to pay a tariff. And that's again this made
in America idea.
Speaker 2 (08:39):
So can you explain to us what that means for
us here in Australia.
Speaker 1 (08:44):
Well, let's say that Chinese T shirt making company was
about to build a factory or they were about to
buy a new T shirt making machine because they were
excited about the idea of expanding their business of exporting
T shirts to the US. Now they're a little bit
wreseried about that, and they're a little bit worried about
keeping urban outfitters happy because of this new tariff that
(09:05):
urban outfitters are going to have to pay on T
shirts when they arrive. So the Chinese company might hold
off on building the factory, it might hold off on
upgrading the machine, and they cancel an order of steel
or extra coal or natural gas or petrol that they
were going to use to power their factories. Now, where's
the steel or coal or gas or petrol going to
(09:25):
come from? It could come from, In fact, it's likely
to come from Australia.
Speaker 2 (09:31):
And all those things you just mentioned are pretty big exports.
Speaker 1 (09:34):
For US, right, Well, it's a major part of our
export puzzle. So iron ore steel accounts for twenty point
three percent of our entire export load. And the idea
here is that if there's less demand for the big
ticket items so steel, gas coal, that we export to
places like China, our economy is going to shrink. Our
(09:55):
government's going to collect less tax because those companies that
paid their corporations tax the Australian government are going to
be making less stuff. And suddenly we're feeling the pinch
of all of this. And in fact, the OECD, this
big global economic body, they said that tariffs on China
could drop Australia's GDP by one point two percent and
(10:16):
it would make us the second hardest hit economy in
the world in that scenario, and that's really going to hurt.
Speaker 2 (10:23):
Elch Okay, Sam, I've been hearing a lot about this
term called a trade war, and from what I understand,
it's not a boots on the ground type of force.
So what are they referring to, Well.
Speaker 1 (10:33):
It's just what we've been talking about. It's the way
that economists describe the use of tariffs by Trump to
try and keep jobs in the US. But also simultaneously
harm the Chinese economy. I think that's an important point
because he sees China as a threat to America's standing
as the most powerful country in the world.
Speaker 2 (10:51):
Well, that was a lot of information, but I think
the one thing that's important to remember is that it's
still early days and Trump hasn't even made it into
the White House yet officially, so it will be something
to keep an eye on. And just before we wrap
up the final t technology, tell us all about it.
Speaker 1 (11:08):
Well, this is the one that's kind of a little
bit more upbeat to those of us who might have
crypto or shares, because that big last tee of technology
is a really good thing for those who have money
in the market. It's been a pretty good week for
them since Trump was elected. So take Bitcoin for example,
that's hit a new record high and is now up
(11:29):
eighty percent in twenty twenty four. And there's a pretty
simple reason for this. The tech industry and the crypto
industry and a lot of major publicly listed companies. They
all believe Trump is going to be a president that
implements policies that are favorable to them. So Trump himself
has financial stakes in a number of crypto assets. He's
(11:50):
got people around him like Elon Musk who also have
large financial interests in that space. In fact, in August,
Trump said crypto could define the future and he wants
it mined, minted, and made in the USA. And again
we see this pattern emerging. He's even suggested that the
US government buys a bunch of bitcoin for a backup
(12:10):
fund in case of a major global conflict. So obviously,
if the US government does that, bitcoin is only going
to keep going up and up.
Speaker 2 (12:17):
Well, so basically the ones with portfolios are throwing parties
right now. But how sustainable is this growth?
Speaker 1 (12:24):
Well, this is the big question for those with portfolios,
but also people who study economies all around the world
is Yeah, there's been this big kind of you'd almost
call it a sugar hit since Donald Trump won the election.
Will it continue? We don't know, And we aren't in
the habit of giving out financial advice here at TDA.
We have no idea what the future has in store.
(12:44):
But you do have to remember that just as quickly
as the financial markets like crypto or the stock market
can go up as they have in the last week,
they can also come down just as fast and as
we've chatted through today. The way that financial markets move
is extremely complex. It's not just based on one vote
in one election. They can be responsive to anything from
(13:05):
tariffs to global conflicts, things like a global pandemic which
can't be predicted, and everything in between. So really the
only advice I can give you with certainty is to
strap yourself in.
Speaker 2 (13:16):
So I can understand why all of this would mean
major changes for those in the US, But how does
that impact us here?
Speaker 1 (13:23):
Well, I want to try and kind of bring all
the three t's together. So we had taxes, tariffs, and technology.
If we bring all that together, if the combination of
corporate and individual tax cuts happen, if there are tariffs implemented,
if we do keep seeing a boom in technology, it's
going to likely drive up the prices of everyday items
in the US. And the idea here is that the
(13:44):
more money that Americans have in their pockets because their
tax rates are lower, the more money that they have
to spend on goods and services. And that's demand. And
when demand increases, the supply so how many of those
goods and services there are available is constrained, and that
means business can put up prices on what they offer.
That means prices could rise, and that's where we start
(14:04):
to see that big word inflation start creeping in. Now.
Over the last couple of years, we've seen the impacts
of inflation all around the world and here at home.
We've also seen how governments and central banks kind of
respond to control it, and that's basically controlling interest rates,
so putting up interest rates to try and slow the
rate of inflation. I think a really helpful example is
(14:24):
to look at the global financial crisis in two thousand
and seven two thousand and eight. Now that was a
US housing issue organically, but that ended up affecting every
major economy all around the world. And I'd probably say
that in the fifteen years since then, our economy in
our world has probably gotten more globalized and more unified
in this way, especially economically, so we're really going to
(14:46):
feel the ripples of whichever way the US economy moves.
Speaker 2 (14:50):
Wow. Thank you so much for lending us your brain today, Sam,
and thank you for joining us on the Daily OS.
If you enjoyed this podcast, we'd love if you could
give us a rating on Spotify. Well Apple, your rating
really helped us climb the charts last week, and while
you're added Senda to a friend, We'll be back in
the evening with some of the headlines for you to
listen to on your way home. But until then, have
a great day. My name is Lily Maddon and I'm
(15:15):
a proud Arunda Bungelung Caalcuttin woman from Gadighl Country. The
Daily oz acknowledges that this podcast is recorded on the
lands of the Gadighl people and pays respect to all
Aboriginal and Torres s right island and nations. We pay
our respects to the first peoples of these countries, both
past and present,
Already, and this is the Daily This is the Daily.
Speaker 2 (00:04):
Ohs oh, now it makes sense.
Speaker 1 (00:14):
Good morning, and welcome to the Daily. OS is Tuesday,
the twelfth of November. I'm Sam and I'm a troll.
Tomorrow is one week since Americans overwhelmingly elected Donald Trump
as the forty seventh President of the United States, sending
him back to the White House with party control of Congress,
as well as decisive victories in all seven swing states.
As the world's government's process what the Trump presidency could
(00:37):
mean for them, much of the attention has turned to
the impact of Trump's suite of economic reforms. On today's podcast,
we're going to look at how changes in the global
economy could impact us here in Australia and why crypto
and shares have rocketed up on the news of Trump's return.
Speaker 2 (00:57):
Now, Sam, there's been a lot of conversation about how
Trump's economic policies will impact not only Americans but us
here in Australia.
Speaker 1 (01:04):
Wait with pause, first lead. Welcome to the podcast. So
good to have you on for the first time. Please continue.
Speaker 2 (01:09):
So excited to be on my first pod. Let's get
into it. So I think we feel like we're meant
to know how we change in US economic policies could
change the world, but it becomes a lot harder to
explain what it actually means. So can you break it
down for us?
Speaker 1 (01:24):
Yeah? Sure, And I think you're one hundred percent right
that it's one thing to know that a Trump presidency
will make the economy different all around the world. It's
another thing to understand why. It can be pretty confusing.
And I think the easiest way to have this discussion
would be to break it up into three key areas.
And I know we love you a little language technique
here at TDA, So let's think about it as three t's, Taxes, tariffs,
(01:47):
and tech.
Speaker 2 (01:48):
We do love a little bit of alliteration here at
the Daily Ears. So let's start with the first and
probably the most familiar to people. Taxes. Now, Trump wants
to cut corporate.
Speaker 1 (01:58):
Taxes, right, Yeah, and we we don't really know too
much about exactly how that's going to happen. He just
got elected, he's still in the process of appointing key
personnel into his office. We don't have firm policies yet,
but it is possible that Trump could lower corporate tax
rates from twenty one percent, which it is now to
fifteen percent. So the current corporate tax rate was actually
signed into law by Trump. The last time he was president,
(02:21):
he brought it down from thirty percent, and this time around,
Trump has what he describes as the America First Agenda,
and I'm going to repeat that phrase a lot in
this episode. And the idea here is that if Trump
lowers tax rates for big corporations in America, they're going
to be more tempted to keep their operations in the
US because it's going to be cheaper for them than
(02:42):
if they move everything overseas. What that means is that
more Americans could get jobs and more stuff will have
them made in America label on it. Now, you have
to remember this corporate tax policy would only apply to
companies that quote make their product in America, which is
a further entire meant to these corporations to actually do
the building on the United States soil. So I want
(03:04):
to play this out for a bit of an example
with you. Let's pick a random company nothing to do
with Donald Trump. Let's say Tesla and Ela Musk. Tesla
needs to make computer chips to put in an electric vehicle,
and currently they might do that in some way like
China or Taiwan, because it's cheaper to do it than
it is in the US. But if they don't have
to pay as much corporations tax, they might want to
(03:25):
move the computer chip production plan to a factory in
let's say Texas, which means that they would hire more
American workers and they'd keep everything within the US economy.
Speaker 2 (03:37):
So that's the major appeal for Americans who are worried
about the economy, right, that it would bring more jobs
back to the US. But what are some of the
concerns around.
Speaker 1 (03:45):
It, you're right, So for you know, somebody who's out
of work, this is a great opportunity to try and
get a manufacturing job, for example, that they might not
have available to them right now. But you have to
remember that federal governments collect taxes as a way to
find as their responsibilities, so they pay for things like
infrastructure or welfare payments or even hosting a major event
(04:07):
like the twenty twenty eight Olympics in Los Angeles through
the tax they collect. And because the US government will,
under this potential new Trump policy, collect less money via
corporate taxes and a range of a whole other tax cuts,
they've got planned. For individuals, they're going to have less
money coming into their bank account, and what that means
is that if they spend more than they are bringing in,
(04:29):
they're going to go into debt. And a debt for
a government could be very bad. And some economists have
estimated that these tax cuts are going to result in
a seven point five trillion with a t US dollars
worth of debt over the next ten years.
Speaker 2 (04:46):
So if lowering taxes will cause the US government to
go into as much debt as you say they will,
how did Trump respond to that?
Speaker 1 (04:53):
Well, it was obviously put to him throughout the entire election.
You know, he couldn't run away from the point that
lower taxes means less money coming into the government. But
the big way he says he's going to solve that
is the second T and that's tariffs.
Speaker 2 (05:05):
Okay, I've heard this word a lot. You have to
explain what that means.
Speaker 1 (05:09):
Sure thing, I'll break down tariffs, but first, here's a
word from our sponsor. Okay, we're back and a troll.
It's actually really simple. It's not a big, scary economic
term that people use when they say tariffs. It's basically
just a tax placed on imported goods or services, and
it can often be categorized by where the good or
(05:29):
services coming from, So say a tariff on all imports
from Russia, or the type of item it is. So
say a tariff on all imported red wine Russia. Is
a good example because tariffs in that case and in
many other cases, can be applied for political reasons, restricting
a country's business as a way of trying to deter
(05:49):
its government from doing certain things. So in twenty twenty two,
Russia invaded Ukraine, the US applied high tariffs to Russian
goods as a way to kind of express their co
opposition to that. And so Trump has said he wants
to put a sixty percent tariff on goods that come
from China. So right now, let's play I know you
love a shop. Let's play it out with Urban Outfitters.
(06:12):
It costs ten dollars for Urban Outfitters, a US company,
to import a T shirt and then they sell it
to consumers for twenty dollars and they make their ten
dollar profit. Now, under this system with tariffs, if there
was a sixty percent tariffs on all goods imported from China,
urban Outfitters have to pay ten dollars to import the
good because they're paying that to the Chinese manufacturer, and
(06:34):
then they have to pay six dollars to the US
government when it hits US land. So if they sell
it to consumers for twenty dollars, they're only going to
make four dollars now because ten dollars from the Chinese
importers and six dollars to the government. That's sixteen dollars
to get it on the shelf. And so what are
they going to do. They're probably going to put the
price of the T shirt up to say twenty six dollars,
(06:56):
so they can still make the ten dollars profit they
want to make.
Speaker 2 (07:00):
So just to clarify, it's the US companies that will
be paying the tariffs, not.
Speaker 1 (07:04):
The Chinese exactly. And I find that this is often
a misconception when we're talking about tariffs. Is its costs
that are going to have to be worn by the
overseas country or the overseas manufacturing entity. No, it's the
American companies. So honestly, think of tariffs as somebody stamping
a ticket on your way onto the train. The people
at the US Coast Guard or customs authorities are applying
(07:27):
the tariff to the US company when it hits the shores.
And Trump's Democratic rival Kamala Harris, she and other critics
of Trump's economic policies, they tried to make this point
that the cost of tariffs are going to be worn
by US families because that T shirt got more expensive,
not by the Chinese companies they're targeted at. But it's
(07:48):
not quite that simple. It does still impact those companies
in a kind of a less direct way. So I'll
give you a local example. China applied high tariffs on
the range of Australian goods during tensions around COVID in
the former Morrison government, and that made it difficult for
Australian wine makers to sell their wines into China because
(08:10):
the price of their product was so much higher for
your average customer in mainland China. And so what Trump
is hoping for here is that a company like Urban
Outfitters are not going to be as keen to get
their T shirts from China because it cost them sixteen
dollars including a tariff, and they might elect to make
the T shirts in the US for thirteen dollars, so
still more than they would have previously from China, but
(08:32):
still not as much as the tariff, and they don't
have to pay a tariff. And that's again this made
in America idea.
Speaker 2 (08:39):
So can you explain to us what that means for
us here in Australia.
Speaker 1 (08:44):
Well, let's say that Chinese T shirt making company was
about to build a factory or they were about to
buy a new T shirt making machine because they were
excited about the idea of expanding their business of exporting
T shirts to the US. Now they're a little bit
wreseried about that, and they're a little bit worried about
keeping urban outfitters happy because of this new tariff that
(09:05):
urban outfitters are going to have to pay on T
shirts when they arrive. So the Chinese company might hold
off on building the factory, it might hold off on
upgrading the machine, and they cancel an order of steel
or extra coal or natural gas or petrol that they
were going to use to power their factories. Now, where's
the steel or coal or gas or petrol going to
(09:25):
come from? It could come from, In fact, it's likely
to come from Australia.
Speaker 2 (09:31):
And all those things you just mentioned are pretty big exports.
Speaker 1 (09:34):
For US, right, Well, it's a major part of our
export puzzle. So iron ore steel accounts for twenty point
three percent of our entire export load. And the idea
here is that if there's less demand for the big
ticket items so steel, gas coal, that we export to
places like China, our economy is going to shrink. Our
(09:55):
government's going to collect less tax because those companies that
paid their corporations tax the Australian government are going to
be making less stuff. And suddenly we're feeling the pinch
of all of this. And in fact, the OECD, this
big global economic body, they said that tariffs on China
could drop Australia's GDP by one point two percent and
(10:16):
it would make us the second hardest hit economy in
the world in that scenario, and that's really going to hurt.
Speaker 2 (10:23):
Elch Okay, Sam, I've been hearing a lot about this
term called a trade war, and from what I understand,
it's not a boots on the ground type of force.
So what are they referring to, Well.
Speaker 1 (10:33):
It's just what we've been talking about. It's the way
that economists describe the use of tariffs by Trump to
try and keep jobs in the US. But also simultaneously
harm the Chinese economy. I think that's an important point
because he sees China as a threat to America's standing
as the most powerful country in the world.
Speaker 2 (10:51):
Well, that was a lot of information, but I think
the one thing that's important to remember is that it's
still early days and Trump hasn't even made it into
the White House yet officially, so it will be something
to keep an eye on. And just before we wrap
up the final t technology, tell us all about it.
Speaker 1 (11:08):
Well, this is the one that's kind of a little
bit more upbeat to those of us who might have
crypto or shares, because that big last tee of technology
is a really good thing for those who have money
in the market. It's been a pretty good week for
them since Trump was elected. So take Bitcoin for example,
that's hit a new record high and is now up
(11:29):
eighty percent in twenty twenty four. And there's a pretty
simple reason for this. The tech industry and the crypto
industry and a lot of major publicly listed companies. They
all believe Trump is going to be a president that
implements policies that are favorable to them. So Trump himself
has financial stakes in a number of crypto assets. He's
(11:50):
got people around him like Elon Musk who also have
large financial interests in that space. In fact, in August,
Trump said crypto could define the future and he wants
it mined, minted, and made in the USA. And again
we see this pattern emerging. He's even suggested that the
US government buys a bunch of bitcoin for a backup
(12:10):
fund in case of a major global conflict. So obviously,
if the US government does that, bitcoin is only going
to keep going up and up.
Speaker 2 (12:17):
Well, so basically the ones with portfolios are throwing parties
right now. But how sustainable is this growth?
Speaker 1 (12:24):
Well, this is the big question for those with portfolios,
but also people who study economies all around the world
is Yeah, there's been this big kind of you'd almost
call it a sugar hit since Donald Trump won the election.
Will it continue? We don't know, And we aren't in
the habit of giving out financial advice here at TDA.
We have no idea what the future has in store.
(12:44):
But you do have to remember that just as quickly
as the financial markets like crypto or the stock market
can go up as they have in the last week,
they can also come down just as fast and as
we've chatted through today. The way that financial markets move
is extremely complex. It's not just based on one vote
in one election. They can be responsive to anything from
(13:05):
tariffs to global conflicts, things like a global pandemic which
can't be predicted, and everything in between. So really the
only advice I can give you with certainty is to
strap yourself in.
Speaker 2 (13:16):
So I can understand why all of this would mean
major changes for those in the US, But how does
that impact us here?
Speaker 1 (13:23):
Well, I want to try and kind of bring all
the three t's together. So we had taxes, tariffs, and technology.
If we bring all that together, if the combination of
corporate and individual tax cuts happen, if there are tariffs implemented,
if we do keep seeing a boom in technology, it's
going to likely drive up the prices of everyday items
in the US. And the idea here is that the
(13:44):
more money that Americans have in their pockets because their
tax rates are lower, the more money that they have
to spend on goods and services. And that's demand. And
when demand increases, the supply so how many of those
goods and services there are available is constrained, and that
means business can put up prices on what they offer.
That means prices could rise, and that's where we start
(14:04):
to see that big word inflation start creeping in. Now.
Over the last couple of years, we've seen the impacts
of inflation all around the world and here at home.
We've also seen how governments and central banks kind of
respond to control it, and that's basically controlling interest rates,
so putting up interest rates to try and slow the
rate of inflation. I think a really helpful example is
(14:24):
to look at the global financial crisis in two thousand
and seven two thousand and eight. Now that was a
US housing issue organically, but that ended up affecting every
major economy all around the world. And I'd probably say
that in the fifteen years since then, our economy in
our world has probably gotten more globalized and more unified
in this way, especially economically, so we're really going to
(14:46):
feel the ripples of whichever way the US economy moves.
Speaker 2 (14:50):
Wow. Thank you so much for lending us your brain today, Sam,
and thank you for joining us on the Daily OS.
If you enjoyed this podcast, we'd love if you could
give us a rating on Spotify. Well Apple, your rating
really helped us climb the charts last week, and while
you're added Senda to a friend, We'll be back in
the evening with some of the headlines for you to
listen to on your way home. But until then, have
a great day. My name is Lily Maddon and I'm
(15:15):
a proud Arunda Bungelung Caalcuttin woman from Gadighl Country. The
Daily oz acknowledges that this podcast is recorded on the
lands of the Gadighl people and pays respect to all
Aboriginal and Torres s right island and nations. We pay
our respects to the first peoples of these countries, both
past and present,
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