This book sets out to improve the understanding of inflation, starting with a historical overview and addressing the drivers of price changes. It challenges urban myths and misperceptions about inflation, such as the veneration of gold as an inflation protection and the impact of money printing. The book is written without using economic equations or jargon, making it accessible to investors of all backgrounds. It highlights the importance of understanding inflation inequality and how different groups experience inflation differently. Donovan also discusses the limitations of headline consumer price index (CPI) statistics and provides insights into how investors can protect themselves against inflation in the modern investing environment.
Profit and Prejudice argues that the structural changes of the fourth industrial revolution will exacerbate prejudice, which in turn will be particularly damaging to economies and companies. The book emphasizes that it is not the technology itself but how it is used that will determine economic success, and that employing the right person in the right job at the right time is crucial. Donovan discusses how prejudice can lead to irrational discrimination, undermining the skills and flexibility of workers, and how diversity is essential for making informed business decisions. The book also draws historical parallels with the Luddites of the first industrial revolution to illustrate the resistance to change and progress driven by prejudice.
The book addresses the twin crises of a simultaneous financial and environmental credit crunch. It explores whether the financial credit crunch will constrain consumer behavior in a way that is environmentally supportive, or if it will hinder effective resolution of the environmental credit crunch. Donovan and Hudson combine their economic and environmental perspectives to review this issue across different economic sectors, highlighting the crucial role of human ingenuity in addressing these challenges.
In this book, Robert J. Shiller argues that economic events are significantly driven by contagious narratives or stories that spread among the public. He contends that these narratives, whether true or false, can go viral and impact economic decisions, such as investments, spending, and saving. Shiller uses historical examples, including stock market crashes, the rise and fall of Bitcoin, and the Great Depression, to illustrate how these narratives shape economic outcomes. He advocates for incorporating the study of these narratives into economic analysis to better predict and mitigate financial crises and other major economic events.
Alan Dunne welcomes Paul Donovan, Chief Economist of UBS Global Wealth Management, to this episode for a thought-provoking discussion on the global economic outlook. Together, they explore the structural challenges facing Europe and whether the current wave of pessimism is overstated. Paul highlights how data mismeasurement contributes to the gap between perception and reality while acknowledging the hurdles for productivity growth in Europe. They also consider whether comparisons between Europe’s economic trajectory and Japan’s stagnation are valid and discuss the prospects for U.S. growth under President Trump. The conversation also examines the recent inflation cycle, the potential effects of new U.S. tariffs on inflation, and the implications for Federal Reserve policy.
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Episode TimeStamps:
02:28 - Introduction to Paul Donovan
06:02 - The state of the European economy
09:19 - The notion of fairness is changing
13:55 - Can a new economic model emerge?
18:54 - Has Europe become Japanified?
22:21 - Should Europe worry about lagging behind on tech?
29:04 - An economic plague in the UK
34:02 - How can economists address the happiness of the people
38:15 - What have the cost of things stayed high?
44:32 - The potential for supply side economics
49:48 - Why tariffs are inflationary
52:21 - How bad can the tariffs war get?
56:18 - How tariffs could impact interest rates
59:00 - How will the rest of the decade look in terms of growth and inflation?
01:01:30 - Advice for other economists
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