June 13, 2023 • 8 mins
China is facing deflation while the US deals with inflation. Also, why is the US housing market so impossible to navigate?
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Episode Transcript
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Speaker 1 (00:00):
Oh, speaking of inflation, I found this so interesting. Like
so many stories, the reality is much more interesting than
the oft parroted mainstream media version of it, like the
China is going to eclipse our economy and it's China's century.
Bah blah blah blah. As Western central banks continue to
jack up interest rates in an effort to douse stubbornly
high inflation, rights to The Wall Street Journal, China faces
(00:22):
a growing risk of the opposite. Deflation. Price is charged
by Chinese factories tumbled in May at their steepest annual
price in the pace rather in seven years, while consumer
price is barely budged, fresh signs of the challenges faced
by the world's second largest economy, both at home and abroad.
Economists say the absence of any inflationary pressure means China
(00:43):
could experience a spell of deflation widespread fallen prices if
the economy doesn't pick up soon, and if you're an economy,
if you're I'm sorry a consumer paying a price for
eggs that seems like you're buying diamond rings or something
that sounds good. Persistent deflation tends to throttle growth and
(01:04):
can be difficult to escape well. A pro long period
of falling prices probably isn't in the cards. Chinese policy makers, nonetheless,
need to do more to stave off that risk, get
the economy motoring again, perhaps by dropping interest rates, weakening
the currency. You're offering cash or other spending inducements to
households and businesses. So the opposite of everything we're doing
(01:24):
right now to try to cool off the economy and inflation.
Speaker 2 (01:27):
Interesting.
Speaker 1 (01:28):
Yeah, yeah, Deflation's a funny thing. It stops consumer spending
in its tracks. I've only witnessed it a couple of times,
like in a housing market, where you think, why would
I spend one hundred dollars today if it's going to
be ninety bucks tomorrow, right, And that just crushes the economy.
Speaker 2 (01:46):
I had a businessman friend say to me the other day.
He said I, He said, I think we almost need
a recession. We need to reset. Everything's just out of control,
too hot. It wouldn't be pleasant to go through. But
maybe we do need that.
Speaker 1 (02:03):
Carlos Casanova, who has so much cooler a name than
I do.
Speaker 2 (02:08):
Asia, Good God, that's a cool name. It might be
the best name, Carlos Casanova. See, I couldn't live up
to the name. I think i'd introduce myself and people
say you're Carlos Casanova. I don't think you are. I'm
gonna call you Jim Smith. You look like a Jim Smith,
not a Carlos Casanova.
Speaker 1 (02:26):
You absolutely have a mustache with that name. You're wearing
a white linen suit. Well, you got your choice of chicks, right.
You're wearing very expensive shoes and probably two or more rings.
Speaker 2 (02:39):
Very expensive shoes, no socks.
Speaker 1 (02:41):
Carlos Casanova, great Scott. Anyways, the senior Asia Asia economist
at a giant bank in Hong Kong. Quote. In a sense,
China is already exporting deflation to the world as their
prices fall of exports and that sort of thing, which
is an interesting way to look at it all I
cared about. The only reason I mentioned that is the
(03:01):
guy's name, which I just found amazing. In fact, when
I travel, well, you can't do that anymore. You can't
use a fake name when you travel, can you? Or
can you just leave it at the front desk, because
since nine to eleven you have to show your ID
and you can't do business as a different name. So
can you still use the phony name at hotels?
Speaker 2 (03:24):
I thought of a funny name for the hotel name
the other day. I was going to use I got it,
but I forgot it. It's too bad.
Speaker 1 (03:29):
Well, I get Carlos Casanova, so you can go with
what was the great one? That? Who is that? I
don't remember any aspect of this story, which makes it
harder to tell some Was it a basketball star? I
had the world's greatest fake name for hotels. I can't remember.
(03:55):
That's a good story, trust me if I had any
of the facts.
Speaker 2 (03:59):
The thing with the current economy world economy too, is
it so there are so many weird moving parts. With
all the trillions of dollars that went out the door,
and so many people living off stemmy money and unemployment
at record lows and open jobs at record highs and
(04:22):
all these different things, anything could happen and it wouldn't
be shocking. Yeah, I mean, anything could happen. The economy
could roar forward for the next decade. Okay, I guess
that's what happened. Or we could go into the worst
depression we've ever had, and my reaction be Okay, I
guess that's what happened. After all that, I mean, nothing
(04:44):
would be no.
Speaker 1 (04:45):
Way pushing wheelbarrows of cash around like it's the Civil War, right,
I would hate that, but I wouldn't be How did
this possibly happen?
Speaker 2 (04:54):
Because there are so many weird things going on. Yeah,
I agree, it's frightening.
Speaker 1 (04:59):
Yeah it is. I like it.
Speaker 2 (05:02):
I like when I hear the people say, no, look
look at these numbers. The US economy is strong, it's robust.
There's no reason why this isn't going to go this
way for years. I hope they're right. Okay, I'll grant
you that. I won't argue with you.
Speaker 1 (05:15):
What's going on with the housing market?
Speaker 2 (05:17):
Man, No kidding. You know another I'm looking to buy
a house and I just can't make myself do it
because it seems so insane. Every house i'm in, regardless
of like you know how it is you look at
this price level and you think, oh, maybe i'll look
at that price. Ah, should I do it? But every
house I'm in, I think there's no way this house
should cost us much. This is crazy. Yeah, I can't
(05:40):
adjust my head to what houses cost currently. And then
you throw in the interest rates, which haven't been this
for a long time. But anyway, somebody's thrown out the
idea of all these foreign investors, like all the Hong
Kong super rich that are trying to put their money
in the United States because they're afraid the Communists are
going to take their money, so they're buying like property
and rent them ount or whatever they're doing. And a
(06:03):
friend of mine said that ought to be illegal a
lot of countries, it's illegal for foreigners to come in
and buy your land or buy your properties. What's the
thinking on that.
Speaker 1 (06:11):
That's a great question. I've actually not debated it, but
tossed that back and forth probably a couple of years
ago with Tim Sandifer, who's a great free market libertarian.
My point of view is similar to what we were
talking about earlier with we have offshored so much of
our manufacturing. We no longer have the national you know,
(06:32):
industrial strength to fight and win a war. We have
allowed so much foreign investment in our real property. Our
citizens can't afford to live places, and housing costs are
brutal right now, especially for young people. And the libertarian
answer would be, well, you've got to get rid of
(06:53):
so many restrictive you know, building codes and zoning ordinances
and stuff like that. If there's a market build ten
thousand new houses. Let the market build ten thousand new houses.
That will drive down the costs, and then the foreign
investment won't matter nearly as much. But there's something about
allowing foreign nationals to buy up your country, the land
(07:17):
of your country, when your people can't afford houses. It's
just it troubles me.
Speaker 2 (07:22):
Yeah, I'm not smart enough to have a good political
angle on this, but it is troubling the idea of
I can't I'm competing with some Chinese conglomerate for this house.
Speaker 1 (07:33):
You absolutely are multiple and Saudi funds and whatever else. Yeah.
Speaker 2 (07:37):
Wow, I mean that just feels different than a family
across town wants it also and is bidding on it,
versus a Chinese conglomerate.
Speaker 1 (07:46):
Right right now, I'm not an expert in Mexican real
estate law. I know only Unpoco and not El Grande.
But you can't really buy property there. You lease the ground.
You can get a ninety nine year lease, which is
more than I need, but you can't buy it. And boy,
(08:09):
I would love to hear a debate among the learned
and smart. I would just sit there with my mouth open,
a little bit of drool escaping. But I think that's
a great question.
Oh, speaking of inflation, I found this so interesting. Like
so many stories, the reality is much more interesting than
the oft parroted mainstream media version of it, like the
China is going to eclipse our economy and it's China's century.
Bah blah blah blah. As Western central banks continue to
jack up interest rates in an effort to douse stubbornly
high inflation, rights to The Wall Street Journal, China faces
(00:22):
a growing risk of the opposite. Deflation. Price is charged
by Chinese factories tumbled in May at their steepest annual
price in the pace rather in seven years, while consumer
price is barely budged, fresh signs of the challenges faced
by the world's second largest economy, both at home and abroad.
Economists say the absence of any inflationary pressure means China
(00:43):
could experience a spell of deflation widespread fallen prices if
the economy doesn't pick up soon, and if you're an economy,
if you're I'm sorry a consumer paying a price for
eggs that seems like you're buying diamond rings or something
that sounds good. Persistent deflation tends to throttle growth and
(01:04):
can be difficult to escape well. A pro long period
of falling prices probably isn't in the cards. Chinese policy makers, nonetheless,
need to do more to stave off that risk, get
the economy motoring again, perhaps by dropping interest rates, weakening
the currency. You're offering cash or other spending inducements to
households and businesses. So the opposite of everything we're doing
(01:24):
right now to try to cool off the economy and inflation.
Speaker 2 (01:27):
Interesting.
Speaker 1 (01:28):
Yeah, yeah, Deflation's a funny thing. It stops consumer spending
in its tracks. I've only witnessed it a couple of times,
like in a housing market, where you think, why would
I spend one hundred dollars today if it's going to
be ninety bucks tomorrow, right, And that just crushes the economy.
Speaker 2 (01:46):
I had a businessman friend say to me the other day.
He said I, He said, I think we almost need
a recession. We need to reset. Everything's just out of control,
too hot. It wouldn't be pleasant to go through. But
maybe we do need that.
Speaker 1 (02:03):
Carlos Casanova, who has so much cooler a name than
I do.
Speaker 2 (02:08):
Asia, Good God, that's a cool name. It might be
the best name, Carlos Casanova. See, I couldn't live up
to the name. I think i'd introduce myself and people
say you're Carlos Casanova. I don't think you are. I'm
gonna call you Jim Smith. You look like a Jim Smith,
not a Carlos Casanova.
Speaker 1 (02:26):
You absolutely have a mustache with that name. You're wearing
a white linen suit. Well, you got your choice of chicks, right.
You're wearing very expensive shoes and probably two or more rings.
Speaker 2 (02:39):
Very expensive shoes, no socks.
Speaker 1 (02:41):
Carlos Casanova, great Scott. Anyways, the senior Asia Asia economist
at a giant bank in Hong Kong. Quote. In a sense,
China is already exporting deflation to the world as their
prices fall of exports and that sort of thing, which
is an interesting way to look at it all I
cared about. The only reason I mentioned that is the
(03:01):
guy's name, which I just found amazing. In fact, when
I travel, well, you can't do that anymore. You can't
use a fake name when you travel, can you? Or
can you just leave it at the front desk, because
since nine to eleven you have to show your ID
and you can't do business as a different name. So
can you still use the phony name at hotels?
Speaker 2 (03:24):
I thought of a funny name for the hotel name
the other day. I was going to use I got it,
but I forgot it. It's too bad.
Speaker 1 (03:29):
Well, I get Carlos Casanova, so you can go with
what was the great one? That? Who is that? I
don't remember any aspect of this story, which makes it
harder to tell some Was it a basketball star? I
had the world's greatest fake name for hotels. I can't remember.
(03:55):
That's a good story, trust me if I had any
of the facts.
Speaker 2 (03:59):
The thing with the current economy world economy too, is
it so there are so many weird moving parts. With
all the trillions of dollars that went out the door,
and so many people living off stemmy money and unemployment
at record lows and open jobs at record highs and
(04:22):
all these different things, anything could happen and it wouldn't
be shocking. Yeah, I mean, anything could happen. The economy
could roar forward for the next decade. Okay, I guess
that's what happened. Or we could go into the worst
depression we've ever had, and my reaction be Okay, I
guess that's what happened. After all that, I mean, nothing
(04:44):
would be no.
Speaker 1 (04:45):
Way pushing wheelbarrows of cash around like it's the Civil War, right,
I would hate that, but I wouldn't be How did
this possibly happen?
Speaker 2 (04:54):
Because there are so many weird things going on. Yeah,
I agree, it's frightening.
Speaker 1 (04:59):
Yeah it is. I like it.
Speaker 2 (05:02):
I like when I hear the people say, no, look
look at these numbers. The US economy is strong, it's robust.
There's no reason why this isn't going to go this
way for years. I hope they're right. Okay, I'll grant
you that. I won't argue with you.
Speaker 1 (05:15):
What's going on with the housing market?
Speaker 2 (05:17):
Man, No kidding. You know another I'm looking to buy
a house and I just can't make myself do it
because it seems so insane. Every house i'm in, regardless
of like you know how it is you look at
this price level and you think, oh, maybe i'll look
at that price. Ah, should I do it? But every
house I'm in, I think there's no way this house
should cost us much. This is crazy. Yeah, I can't
(05:40):
adjust my head to what houses cost currently. And then
you throw in the interest rates, which haven't been this
for a long time. But anyway, somebody's thrown out the
idea of all these foreign investors, like all the Hong
Kong super rich that are trying to put their money
in the United States because they're afraid the Communists are
going to take their money, so they're buying like property
and rent them ount or whatever they're doing. And a
(06:03):
friend of mine said that ought to be illegal a
lot of countries, it's illegal for foreigners to come in
and buy your land or buy your properties. What's the
thinking on that.
Speaker 1 (06:11):
That's a great question. I've actually not debated it, but
tossed that back and forth probably a couple of years
ago with Tim Sandifer, who's a great free market libertarian.
My point of view is similar to what we were
talking about earlier with we have offshored so much of
our manufacturing. We no longer have the national you know,
(06:32):
industrial strength to fight and win a war. We have
allowed so much foreign investment in our real property. Our
citizens can't afford to live places, and housing costs are
brutal right now, especially for young people. And the libertarian
answer would be, well, you've got to get rid of
(06:53):
so many restrictive you know, building codes and zoning ordinances
and stuff like that. If there's a market build ten
thousand new houses. Let the market build ten thousand new houses.
That will drive down the costs, and then the foreign
investment won't matter nearly as much. But there's something about
allowing foreign nationals to buy up your country, the land
(07:17):
of your country, when your people can't afford houses. It's
just it troubles me.
Speaker 2 (07:22):
Yeah, I'm not smart enough to have a good political
angle on this, but it is troubling the idea of
I can't I'm competing with some Chinese conglomerate for this house.
Speaker 1 (07:33):
You absolutely are multiple and Saudi funds and whatever else. Yeah.
Speaker 2 (07:37):
Wow, I mean that just feels different than a family
across town wants it also and is bidding on it,
versus a Chinese conglomerate.
Speaker 1 (07:46):
Right right now, I'm not an expert in Mexican real
estate law. I know only Unpoco and not El Grande.
But you can't really buy property there. You lease the ground.
You can get a ninety nine year lease, which is
more than I need, but you can't buy it. And boy,
(08:09):
I would love to hear a debate among the learned
and smart. I would just sit there with my mouth open,
a little bit of drool escaping. But I think that's
a great question.
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