"Econ 102" with Noah Smith and Erik Torenberg

Fiscal Dominance, the War in Ukraine's Actual Cost, and Fact Checking Rich Men North of Richmond

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Sep 5, 2023

Dive into the intriguing dynamics of today's economy as Noah and Erik compare it to the Reagan era, revealing the significant cost of the Ukraine conflict to the U.S. They tackle economic misconceptions, explore the implications of rising interest rates on banks, and discuss the end of cheap oil, all while connecting these themes to popular culture. Get insights into how technological shifts redefine work and economic power, and join them in analyzing the pressing impact these trends may have on future elections.

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INSIGHT

Inflating Debt Away

High debt-to-GDP ratios often lead to inflation as governments inflate their debt away.
This happened after World War II and is occurring now, decreasing the ratio from 135% (Q2 2020) to 118% (Q1 2023).

INSIGHT

The Magic of Cheap Oil

Cheap oil benefits the economy by directly lowering gas prices and indirectly reducing production costs.
This acts as a "magic healing balm," impacting both headline and core inflation.

INSIGHT

EVs Disrupting Oil

The rise of electric vehicles (EVs), even with a modest reduction in oil demand, can significantly impact oil prices.
Oil's elasticity means a small demand decrease leads to substantial price drops, potentially disrupting petro-states.

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Noah Smith and Erik Torenberg discuss how today’s economy compares to the Reagan-era, cheap oil geopolitics, how much the war in Ukraine is actually costing the US, and the economics of the populist anthem Rich Men North of Richmond. If you’re looking for an ERP platform, check out our sponsor, NetSuite: http://netsuite.com/102

We're hiring across the board at Turpentine and for Erik's personal team on other projects he's incubating. He's hiring a Chief of Staff, EA, Head of Special Projects, Investment Associate, and more. For a list of JDs, check out: eriktorenberg.com.

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Timestamps:

(01:13) What would a better US economy look like?

(05:59) Debt gets inflated away

(09:02) Fiscal Dominance

(09:59) Age of cheap oil

(19:05) Noah vs. Balaji Srinivasan’s bearish case that the US financial system is vulnerable.

(27:25) How the Reagan Era Compares to Today

(32:28) Economic attribution for presidents

(43:12) The surplus war in Ukraine

(49:05) Fact checking the economics of Rich Men North of Richmond

(57:47) Is the age of the nerd over?

This show is produced by Turpentine: a network of podcasts, newsletters, and more, covering technology, business, and culture — all from the perspective of industry insiders and experts. We’re launching new shows every week, and we’re looking for industry-leading sponsors — if you think that might be you and your company, email us at erik@turpentine.co.