Welcome to ask fear and greed when we answer questions about business, investing, economics, politics, and more. I'm Michael Thompson and hello Sean Aylmer. Hello Michael, Sean I reckon. This one is going to be right up your alley because you love educating me on the economy.

Welcome to ask fear and greed when we answer questions about business, investing, economics, politics, and more. I'm Michael Thompson and hello Sean Aylmer. Hello Michael, Sean I reckon. This one is going to be right up your alley because you love educating me on the economy.

Yes, do you retain any of it? Yes?

Yes, do you retain any of it? Yes?

Sorry. If you were to test me one day, if you were to sit down in high school style put out a test, I reckon, I would I would ace it.

Sorry. If you were to test me one day, if you were to sit down in high school style put out a test, I reckon, I would I would ace it.

What happens to yields when bond prices rise?

What happens to yields when bond prices rise?

So the question today, Sean, the US economy teetering on the edge of stagflation. What is stagflation and why is it so bad?

So the question today, Sean, the US economy teetering on the edge of stagflation. What is stagflation and why is it so bad?

Right? So the premise is probably not quite right. We're not tear. I don't think the US is teetering on the edge of stagflation, but there's a chance of it.

Right? So the premise is probably not quite right. We're not tear. I don't think the US is teetering on the edge of stagflation, but there's a chance of it.

Where is your sense of theater? Where is the sensational.

Where is your sense of theater? Where is the sensational.

They're talking about it rather than teetering on it? Fine, basic stag plation is the worse of everything. So you're getting no economic growth, you're getting inflation, and you're getting rising unemployment. Normally, in most economic cycles you get one but not the other. And then the gold of wax economy, which Australia is pretty close to at the moment. You've got low unemployment, low inflation, and economic growth. Now at the moment Australia we haven't got a lot of economic growth, but we've got the other two.

They're talking about it rather than teetering on it? Fine, basic stag plation is the worse of everything. So you're getting no economic growth, you're getting inflation, and you're getting rising unemployment. Normally, in most economic cycles you get one but not the other. And then the gold of wax economy, which Australia is pretty close to at the moment. You've got low unemployment, low inflation, and economic growth. Now at the moment Australia we haven't got a lot of economic growth, but we've got the other two.

And we talked about that previously as being the sweet spot. For the sweet spot, if you're able to kind of nail all of those, which is very hard to do, then that's that's ideal.

And we talked about that previously as being the sweet spot. For the sweet spot, if you're able to kind of nail all of those, which is very hard to do, then that's that's ideal.

Yeah, And so the anti sweet spot, the sour spot, sour spot, thank you very much. The sour spot is when you're getting rising unemployment, you were getting rising prices and growth has slowed. Last month, US FED Reserve chair Joam Powell mentioned it, not by name, but he talked about weak growth and rising prices. That's why people are talking about stack placient again. It was a real nineteen seventies, nineteen eighties phenomenon. Now, some of us went to high school in the nineteen eighties. My economics teacher, I'm going to call him Bob Cochran, mostly because that was his name.

Yeah, And so the anti sweet spot, the sour spot, sour spot, thank you very much. The sour spot is when you're getting rising unemployment, you were getting rising prices and growth has slowed. Last month, US FED Reserve chair Joam Powell mentioned it, not by name, but he talked about weak growth and rising prices. That's why people are talking about stack placient again. It was a real nineteen seventies, nineteen eighties phenomenon. Now, some of us went to high school in the nineteen eighties. My economics teacher, I'm going to call him Bob Cochran, mostly because that was his name.

I was gonna say that's a very specific suitonym.

I was gonna say that's a very specific suitonym.

He was the economics teacher, and he used to wear shorts all the time.

He was the economics teacher, and he used to wear shorts all the time.

Yeah, economics and maths teachers. It seems to be a thing. And as socks, yeah, walking on walking socks. Yeah, absolutely absolutely.

Yeah, economics and maths teachers. It seems to be a thing. And as socks, yeah, walking on walking socks. Yeah, absolutely absolutely.

And he used to say I remember him saying, if you could solve the stag fation problem of the nineteen eighties, you could be a millionaire. Not but I did just how I remember staate plation.

And he used to say I remember him saying, if you could solve the stag fation problem of the nineteen eighties, you could be a millionaire. Not but I did just how I remember staate plation.

He didn't solve it.

He didn't solve it.

I mean the will solved it. Really. It was of seventies and eighties seeing sort of partly because of the old price shocks, so prices went through the roof and economies couldn't keep But we kind of got a sense of it with the Ukraine War, where we had the rising energy prices. Economic growth was quite slow and labor market wasn't particularly strong. The problem with stagflation really is it builds on itself. If you've got higher prices and people haven't got jobs, that's going to slow the economy down and it kind of becomes this dreadful spiral that they get into. Australia is not going to have stack equation. That's my confident prediction. Yeah, look for the US isn't so good the reason there, this is a tariff's discussion. You put tariffs in US, consumer spending has to sorry, inflation increases. Consumers already are the consumer sentiment has fallen already, so we're seeing higher prices. The economy is slowing. Employment will start unemployment will start rising. You're actually looking at stagflation sort of. Companies like Coca Cola, the car manufacturers that have come out and just said we've got to put up our prices but demand is weaker. That is stagflation when it's on the way to stakeflation at least. So it's quite a scary thing.

I mean the will solved it. Really. It was of seventies and eighties seeing sort of partly because of the old price shocks, so prices went through the roof and economies couldn't keep But we kind of got a sense of it with the Ukraine War, where we had the rising energy prices. Economic growth was quite slow and labor market wasn't particularly strong. The problem with stagflation really is it builds on itself. If you've got higher prices and people haven't got jobs, that's going to slow the economy down and it kind of becomes this dreadful spiral that they get into. Australia is not going to have stack equation. That's my confident prediction. Yeah, look for the US isn't so good the reason there, this is a tariff's discussion. You put tariffs in US, consumer spending has to sorry, inflation increases. Consumers already are the consumer sentiment has fallen already, so we're seeing higher prices. The economy is slowing. Employment will start unemployment will start rising. You're actually looking at stagflation sort of. Companies like Coca Cola, the car manufacturers that have come out and just said we've got to put up our prices but demand is weaker. That is stagflation when it's on the way to stakeflation at least. So it's quite a scary thing.

It sounds like it is teetering on the edge of stack plation. I'm now trying to redeem the headline that I.

It sounds like it is teetering on the edge of stack plation. I'm now trying to redeem the headline that I.

Use soon to be teetering.

Use soon to be teetering.

Yeah, yeah, so we're just getting in slightly early.

Yeah, yeah, so we're just getting in slightly early.

Yeah yeah, so it could look good.

Yeah yeah, so it could look good.

Oh man, yeah, let's go for good. I think I think that all makes sense. I mean, it's one of those terms that you hear a lot, but until someone just sits down and just explains exactly what it is, it kind of just is a little bit opaque.

Oh man, yeah, let's go for good. I think I think that all makes sense. I mean, it's one of those terms that you hear a lot, but until someone just sits down and just explains exactly what it is, it kind of just is a little bit opaque.

Yes, I mean, you basically end up in a recession if you have stagflation.

Yes, I mean, you basically end up in a recession if you have stagflation.

Okay, all right, but Australia sweet spot, US not.

Okay, all right, but Australia sweet spot, US not.

So sweet spot, sweet spot at the moment sweetish Yeah, okay, all right.

So sweet spot, sweet spot at the moment sweetish Yeah, okay, all right.

That was a good question, great answer. I reckon. Bob Cochrane would be proud of you. Thank you very much.

That was a good question, great answer. I reckon. Bob Cochrane would be proud of you. Thank you very much.

Sure, thank you. Michael.

Sure, thank you. Michael.

Remember, if you have your own question that you would like us to answer, it can be as outlandish as the suggestion that the US is teetering on the edge of stagflation, or it can be something very very straightforward business economics, politics, nothing, relationships, nothing is off limits. Send it on through via the website, go to fearangreed dot com, dot a you, or you can go to any of the social media platforms as well, LinkedIn Instagram, Facebook, send us a message and we will pop it on the listen answer it very very quickly. I'm Michael Thompson and this ask beer and Greed.

Remember, if you have your own question that you would like us to answer, it can be as outlandish as the suggestion that the US is teetering on the edge of stagflation, or it can be something very very straightforward business economics, politics, nothing, relationships, nothing is off limits. Send it on through via the website, go to fearangreed dot com, dot a you, or you can go to any of the social media platforms as well, LinkedIn Instagram, Facebook, send us a message and we will pop it on the listen answer it very very quickly. I'm Michael Thompson and this ask beer and Greed.