GDP, monetary policy and the status quo effect. June 5, 2026

24:33Or, you know, I just think it's a difficult ask for that to be an ongoing conversation in any meaningful way. Except without pity ourselves, welcome to our podcast. But, you know, not just about this, about everything. So I think that's probably the one thing because the other part of the answer is, you know, what are the current – what do the changes mean – what do the changes in the current system mean to the outcomes is an ongoing conversation. I think, honestly, that's the very unsatisfying answer, in my view, to your question, which is why we're talking about the 0.25, because it happened and it causes things, and those things it causes are worth talking about.

25:08Could we replace it with something else? Yes. What is that thing? It's this. Okay, good. You've told me. Now let's move on. Yeah, yeah. It doesn't play to - But that doesn't answer my question. You're just saying it's not interesting to talk about. No, no, no. You're asking about why we're not talking about it. My point is, once you've made the statement, other than just walking down the street with a sandwich board. The statement's been made. It's in the public domain. It is what it is. Then we kind of move on to, okay, that might be true, but this is the same we're in now. What's happening to it and how is it changing and what is that impacting?

25:37It's all I'm saying. So the conversation changes, I think. But you can't, okay. So it's kind of like. But no, I promise when you ask the question. That's a really unsatisfying answer, man. Yeah, totally. That's what I'm saying. That's a little short point. That's really unsatisfying. What you're saying is like, well, what do you do? You make the point. So let's continue to talk. When I say let's, like the entire financial reporting establishment, let's continue to talk about this one thing without ever, without questioning it, without scrutinising it. That's what I'm saying. Like you do the scrutiny.

26:11You say, I play soccer. Rugby League's a better game. Let me tell you why. Okay. Soccer game's still being played. What's happening to soccer? No, no, I don't want to talk about the score. Let me tell you about Rugby League. No, no, but soccer, but soccer. It's like, no, Rugby League. So it's kind of like once you say, here's the better thing, someone says a goal was scored. Well, that doesn't matter. They should be scoring goals anyway. Haven't they heard of an oval-shaped ball? You kind of – I get – unsatisfying is the right word, mate, and I get it because you're kind of like, I know the truth, and over there they're doing something entirely different, and they keep doing that thing, and I'm screaming from the sidelines, let me tell you about the truth again.

26:43It's like, no, we heard you. We just ignored you. We're going to do our thing over here. That's not wrong. It's not a value judgment at all. But that's fine, but then it's like it's still very hard for me to legitimise it when it's so comical. I get it. So it's not that I don't want to talk about it. I've got nothing to say. I don't mean to veer the conversation in this, but when you ask the question and you frame it out the way that you did, it's kind of like I don't know how to answer it because I reject the premise of the question. And maybe it's wrong to reject the premise of the question, but if it is wrong to reject the premise of the question, you've got to explain to me why it's wrong.

27:19You can't explain to me why it's wrong, but let's still try and answer the question even though it doesn't fit in a coherent, rational framework. So it's an impossible task. It's either accept it and just go along with it and just talk about it as if it is, let's just assume that it's all legitimate. It's like, well, I've just never been able to just assume. I want to don't trust Verify, right? Like I want to know. And it might well be. It's like, Andrew, you are taking some kind of weird mushroom because that is not even close to true. And it's not like I'm trying to argue a point for the side.

28:00I want to win an argument. It's like, no, I want to understand things here. And just the answer of, yeah, but that's just how it is, so that's just how we have to deal with it is, to me, it's just very unsatisfying. And I might not change the world, but I just, I don't want, it's just like I can't give it any credibility unless, credibility is earned, right? And it's not just demanded. And I think that's where we are at this point where it's just sort of like, we know better than you, Barbara the hairdresser and Ted the cleaner. You know, you can't, you just keep doing, going about your life and we will just influence all of this stuff behind the scenes in your name and we will tell you that sometimes you will have to lose your job and we will do this and knowing full well all of these things are going to happen and if you were to ask why, it's just trust me, bro.

28:53It's trust me, bro. And that is sort of like, as I said, extraordinary claims require extraordinary evidence and I haven't seen any of it. I haven't seen any of it. I'm not saying you shouldn't raise it at all. Just so I wasn't misunderstood. You were asking that why aren't we talking about it? And I think I'm just trying to answer that part of your question. I mean, not you and me. I mean, we the people. No, but I mean that too. That is my point. It's like you and I are talking about it because you're raising it regularly and it's a really useful conversation. Why isn't it being talked about every time there's an RBA decision?

29:20Because the Bible isn't rewritten every month but the new RBA decision and for whatever reason, I think I would probably say there's a point between your two arguments, which is either it's fine to reject the premise as a theory but we then have to live in the world that we're in and say what happens. And I think that's where you can say they shouldn't move the price of money but even when they do, here's the impact. Here's what matters. Here's how it changes things. Well, let's do that. No, it's both. It's not either or. I'm making the point that it's both, right? That's where we started, right?

29:49They raised the price of money. Yeah. And we went, that sucks, most of us, right? That sucks. Don't worry. We're going to do it because, you know, that cost of living thing that you hate? You know how when you put petrol in the car or you go to the super, you know how it's like really expensive? Yeah. Actually, funny you say that because I did notice that. I did. It occurred to me. Actually, that has occurred to me before. The APS prices have gone up. Yeah, no kidding, Sherlock. Why? Oh, there's too much demand. What? Yeah, you're demanding too much. Am I? Okay. All right. So we're going to make you pay more on your mortgage, and if you're renting indirectly, we're going to make you pay more on your rent, so everything slows down.

30:32Wait, I don't. That doesn't sound good. No, it's good. It's really good because then the cost of living will come down. Like, right. Okay. Okay, cool. The increase in the cost of living, I should say, you would make that point to me. The cost of living is not coming down, so the increase in the cost of living is reducing. Absolutely. Okay, yeah, because you've got to – things have to get more expensive because that's progress. Apparently. Oh, my God, these mushrooms are kicking in hard at this point. Like, do you hear what we're saying? We need you. Anyway, so let's back off the ledge. We are going to do this and it's going to slow the economy, not as an unintended consequence, as a deliberate targeted consequence of our actions.

31:23We are going to slow the economy down. Now, Andrew would reject all of it or at least ask for a possible explanation. Fine, fine. That doesn't seem right. let's put that to one side however it's like and now i open up the papers and it's like oh the economy's slowing and this and that like but i'm just going off what you told me man you you said you said that's what you wanted to happen and now it's bad or like this is why this is i'll come back to my my my usual so what this is why interest rates are not going up to a significant and sustained degree. They can't because GDP was still positive, by the way.

32:03We should get to some numbers in a second. It's like this is what we're freaking out about and they're like, you know, and this is what we designed and engineered. It's like the second things get real in any real, any actual sense in the economy, they're going to cut like bandits. Like absolutely they will because they're just pinging, They're going to ping between these two specific data points, absolutely incapable of any holistic wider view or second, third order consequence to these decisions with each new intervention being necessitated by the previous intervention, which didn't work. And it's just a very bleak roundabout that we're on.

32:54And so I'll accept it if that's how it has to be. You don't have to accept it at all. I was not thinking you should accept it. You were asking about why are we talking about it? Why are we talking about the system itself? And again, not you and I, but the broader conversation. And I think the answer is just that. It's like, you know, Bitcoin saying it's written once. I know it's an acne example and it's not the world's best book on Bitcoin, but it's pretty good, other than some of it, which you have to take with a grain of salt. But that kind of, it's like, it's written already, right? That's like, okay.

33:23And so the rest of the world keeps going. And there is simply a, there's a cause and effect to be understood. And I think. You mentioned the Bible, right? Yeah. That was written 2000 years ago, dude. Yeah. Do you think people stop talking about like, go on any street corner, there's someone there trying to tell you about it. Like you got to preach, man. You got to preach that you got to preach the gospel, you know? And I disagree. Except at a news level, no one's reporting. Hey, it turns out the Bible was written 2000 years ago. Let me tell you about it. It's like, do we know that story? We've read that story.

33:51That's my point. We're not discussing every time we have a conversation about changing a law. Why are we talking about the Bible and the Ten Commandments again? Well, because we either agree with them or we've accepted them or we've left them behind or whatever. This is the thing that's happening right now. Is it good or bad? Here's the implication. I guess I'm just not disagreeing with you at all. I'm trying to maybe unnecessarily give you an answer, which is the system that we're in, maybe it should be overthrown, but while we're in it and there are changes being made, those changes are consequential.

34:19That's why we're having a conversation, I reckon. Well, let me flip it around. What's your take? What's your take on the decision? Oh, sorry, on the GDP number. I should go back. We'll do both, actually. We'll do both. Because that's kind of why I started by saying I would prefer a recession to five years of high inflation. As long as it's not your job, though. I just make that point, right? No, no. You would happily lose your job if it was good for the country? Not happily, no. But I accept that if it is better for the country and some people whose jobs are one of them is me, That sucks for me, but it's the right thing for the country.

34:52I think you can have those two thoughts at the same time. I'm not happy about it, but do I think the rest of Australia should be poorer to save my job? No. I mean, I would like to keep my job, but go on. Do you think losing your job is actually going to help the country? I think if losing my job is a consequence of policy that means we have 30 % compound inflation over the next five years, that the country is better off in five years' time. Yeah, absolutely. I think it's unquestionable. Doesn't it matter more about what your job actually is and what you're actually doing and whether or not people don't, like, you know, it's sort of like.

35:26You ask the same question, mate. My job, I just sit and punch things on a keyboard. If I lost my job tomorrow, nothing changes. Well, people pay for it for better or worse. And they do voluntarily. So, I mean, it feels like a facetious point, but it's kind of like I think what it is is whether we can argue it's good or bad, but it is an artificially induced distortion that otherwise wouldn't happen, right? And you're saying, I'm happily, I'm happily. The artificial loss wouldn't happen. That doesn't mean the cycles wouldn't necessarily happen to some degree. So again, the counterfactors are important.

35:55Yeah, but that's different though, isn't it, right? No, not necessarily. Because if there were rooms and bus anyway, I lost my job anyway, then I'm not really, there's no world in which I keep my job because the RBA doesn't do its thing, potentially, right? There's a difference for you to lose your job because no one likes what you do versus you lost your job because the government made a decision that made it hard for people who otherwise would like to pay for your services can no longer afford to pay for your services. They're different in quality, right? Except if and when we had the bust anyway, in theory, people's view of my value of my job wouldn't be any different no matter how that bust was caused.

36:28So whether it's an economic boom and bust it happens naturally or whether it's an induced recession because of higher interest rates, people are going to cut back on a preferential basis and get rid of the things they value least. And so in both cases, if my job, if the what we're full services are in the 100th percentile of things that people prioritise, they will go first. And so no matter how the drama is caused, I'm not defending the actions of the RBAs per se, by the way, right now. I'm just making the point that in either case, public jobs are separate because they are deliberate decisions of policy, so that is an entirely different group of people, and we can argue about the size and value of different parts of the public service.

37:08But broadly, if people are... It's probably like the clappers, just quietly. Right? Just from the data, but that's, yeah. But if people are making that, but even then, I mean, that's kind of, you mentioned government doing stuff, right? If it's growing because people want those jobs to have those services, then we're electing to choose those things. Now, whether we are, there's plenty of people voting liberal right now who are yelling at the screen and people who might vote one nation next time we're doing the same thing. But it's kind of a tangent on a tangent. I'm just making the point that if there is a slow, if economic slowdown, either natural or artificial, and my services are in the 100th percentile, they go regardless.

37:39And there are some circumstances where the way the bust is created or allowed to happen is different, and so you prefer investment services in one version of the world and street-sweeping in the other version of the world or something. So there's no perfect all else being equal, as we know from economic theory, or we don't know from economic theory, we know from economic practice. The economists will pretend it's all the same thing. I think that's true, right? So I'm just making the point that at a national interest level, I don't think it's controversial to say the best outcome for the country is what should be preferable.

38:09And there are going to be inevitable consequences for individuals which just suck, but are still true. I mean, I don't want to draw too dark a line, but it's kind of the job of, you know, defence forces, right? They put themselves in harm's way. Yes, they get paid. Yes, it's some adventure. But in theory, at some level, they're doing it because they say, well, I might lose my job, but the country might lose my life, but the country might be saved. It's kind of, I mean, no one's making, you know, life-level consequences, choices with job losses. But that idea of the needs of the many, needs of the few kind of has to be there at some point.

38:38Particularly because, to your point before, if I'm going to protect my job, then that has consequences on somebody else. There is no world in which I get to keep my job and the economy gets to be wonderful, I guess is what I'm saying. It's like saying I broke my nose and it's saying whether I trip and fall over and break it or someone punches me in the face, what's the difference? I've still broken my nose. I'm like, I would say it's very different. I get what you're saying. I don't think so. So let's say in your - What? No, dude. Are you serious? Yeah, because the outcome's the same. Falling on your face accidentally is the same as someone coming up and punching you in the face.

39:14The outcome's the same, absolutely. Okay. No, because just think about it. But in the two circumstances can never be against the right. I'm going to go punch you in the face next time I see you and go, well, dude, you could have easily just fallen and it would have been the same outcome. That's the thing, right? Exactly that's the thing, but you didn't, right? So there's a world. But you will. If the government steps aside and there's a bust, the nose gets broken, right? I think pretending that somehow – I fear your concern comes from an ideological preference to have an inaction and therefore there's a justification for one rather than the other.

39:46No, ideology is the wrong way to paint that. I'm trying to draw a line between action and consequence and I'm trying to do it in an open – in a curious, prove me wrong, like what am I missing kind of way. It's not that I'm saying it must be this way. I'm just saying that it's just as easy for me to say, no, the ideology is on the other side because we've got to do it because it's not what's the difference because it's going to happen anyway. No, I'm not saying it will happen anyway. I'm not saying we've got to do it. What I'm saying is if the outcome is the outcome, if we're saying, well, let's let it happen anyway because that's better than making it happen, I think that's ideology in either case, mine or yours or both.

40:26Is it going to happen anyway? Yeah, unless you think there's no booms and busts in economies without central banks. That's a bloody hard argument to make because that's when life, right? I'm not saying that. Right, so it's going to happen anyway. But you asked the question, so I'm saying if the outcomes happen anyway. But how it happens, the degree to which it happens, where the pain is born is going to be very different. If one is a consequence of just no one liking what you do or just for whatever reason, broader, I mean, there is one that is a consequence. Not just choice. Yeah, but it's an organic consequence of millions and millions of people making lots of individual decisions and choosing their own preferences.

41:06And then there's another one, which is a very, very tiny percent of the population, 0.00001 % of human beings making very deliberate decisions that affect the other 99.999%. Like that's qualitatively different, very different. Ones, both suck. I'm not saying that, you know, there would never be any economic cycles. I'd be very confident that they would be more common and far more shallow rather than, you know, every now and again we just blow everything up massively and then spend decades trying to clean up the mess. But so I'm certainly not saying that, but I'm saying one is sort of a natural consequence and the other is a artificial consequence.

41:45Not trying to put baggage on those terms, but just by what those words mean. I think that's my point. Maybe ideology is the wrong word, but you're saying that natural is better than artificial. but for some value-based reasons. I don't mean it's supposed to be pejorative, Matt, by the way. Ideology wasn't supposed to be pejorative. It was more just a kind of – I think it – my argument is – there's probably some philosophical terms for the way you and I are approaching it. I don't know any of them. But my argument is that I genuinely don't think – I'm trying to be a pragmatist where I can rather than ideologue.

42:17So I kind of – I care about the outcomes. I think it's – is it utilitarian? I don't know. Anyway, if it's natural or artificial – I'm trying to tell myself that way. Isn't that funny? But if the outcome is the same, why would it matter other than for theoretical, ideological, value-based, whatever preference you choose? Why is artificial less or more preferable than natural? But why is the outcome the same? All you can say is that broadly there are still cycles, but that's very different to the same. You know, like would there be incredible cost of living and housing crisis without rampant money production?

42:54I would say probably not. Would there still be economic cycles and would some people be losing their jobs? Yeah, but that's just the natural to and fro of people interacting with one another. The other has been very deliberate policy choices. So it's – You're making the point that you're using one is okay and one is not okay as a starting point rather than an outcome. You're saying, well, that's natural and that just happens and we can't do anything about it. these are these are artificial choices that's bad and we could stop it i'm just making the argument that there's no that that's not in my mind that's neither good nor bad i don't care whether artificial or natural i have no there's no in my mind you're welcome to have a different view there's no different there's no there's no value difference in that for me at all because all i care about and you care about the outcomes too i'm i'm not saying you don't again i'm just explaining my thought process not contrasting it i don't care how the outcome happens i care what the outcome is and whether that outcome as a whole for everybody is better or worse.

43:45So I don't care whether it's 12 people or whether it's the actions of the market. It makes no difference to me whatsoever. I don't have an ideological preference for one or the other. You're saying that either way it would be the same outcome. I'm saying no, the outcome would be different. I don't think we know that. Okay, put it this way. Put it logically. If the outcome is not different, then why the F are we doing it? If it's not going to make any difference and the outcome is the same, why am I paying Michelle Bullock a gazillion dollars a year to screw around and things, and then you go, yeah, but it would have been the same either way.

44:12It's like, okay, bunker off then. I'm not saying it would have been the same either. I'm saying we don't know. You just said it would be the same. No, I'm saying if it was the same. I don't care how it's caused. Okay, but it wouldn't be the same. But that's what you said. I just said we don't know. I agree with you. We don't know because we don't know the counterfactual. But we can't then determine one would be better than the other. We can theorise about which one would be better and which one would be worse and why it might be better or worse. But I don't think we can kind of draw that straight line and say, well, if they're going to have any way, it should be the market rather than the individuals doing it.

44:43If it's not going to be the same, then we're having that conversation about what's better. But we started because we've got miles off the track, I think. Ted losing his job is the key, right? So if Ted loses his job or I lose my job under either scenario, my only argument here, I believe as far as we've gone, is the national interest is more important than the individual interest. It has to be. I don't think there's any – you give up government at that point. When you start to say there's no outcome in which someone having a negative outcome as a result of government action is tolerable, then you can't have government.

45:09So the only thing governments can ever do is say we will try to, well, again, governments, politicians and whatever, but let's go with the theory rather than the practice. We think the national interest is more important than Ted or Andrew or Scott or Jane or whoever's listening. Our job is to maximise the overall living standards or outcomes or whatever. How do you frame that? That's kind of the starting point. So I think if Ted loses his job because of central bank action, that in itself is not a problem. It's not for - It is for Ted. Yeah, right. But at a national level, it's not - And again, suspend your disbelief for a second.

45:45In a world where central banks were better than the natural market, let's assume that's possible, Ted would still lose his job. And if Ted losing his job was better for the country than Ted keeping his job, then that is the right decision for a central authority to make. I think the only way collectivism or democracy or society can work. Yeah. But it's the same, the exact argument you laid out is the exact argument that I would put against it. In other words, if you're going to say, listen, whether we just, we need, what you're actually saying is we can't actually tell who would even know. And so it's like, well, then the burden of proof is on the person wanting to do the thing.

46:23So I disagree. This is where I disagree because the burden of proof is on the person deciding whether to do a thing or not do a thing. In other words, leaving in action has the same burden of proof as taking in action is my argument. Yeah, yeah. I don't think you can say you have to prove central banks are right. You have to prove that having central bank is good or bad, but not having a central bank is equally good or bad. I think the burden of proof is the same on both groups, in my opinion, not just those ones who make the change. I think it depends on the starting point. I think if we happen to live in a world where it was, well, which we actually did for the majority of human history, where there wasn't central banks, and then someone rocked up and said, actually, we need to do this.

46:58Yeah. Now, remember that this is a new concept to us, right? Like it's like my dad used to say if motorbike was invented today, it wouldn't be allowed on the road. And he's right. Chainsaws, right? Right, chainsaws just wouldn't be. But there's a path dependence to where it was. And so it feels like such a radical thing to even talk about because, well, we've always done it this way. And I'm really just sort of saying if you're going to rock up and then say, well, this is just how it is, it's the same, but actually we can't really know. It's not a very satisfying explanation for all of us. And even if we put away, okay, look, it is what it is and this is just how it is.

47:37It's like, okay, then. But you've still got to give me some assurance that these decisions that you're making within this framework that we're just going to accept is good and better because that's all we're doing. We're just assuming, right? I'm just as bad as the other side. But we're the ones that are here. So we're assuming that it's better. But even with that assumption put aside, we are still going to assume that this action is going to have the exact consequence that we expect it to do. When like a three-minute Google search is going to, I mean, just go back to every RBA statement over the last 20 years and then fast forward three years and go, how did those forecasts work out?

48:16How did they work out? Not great. But this time they're going to work out. Yeah. and I just go okay at a point I just cannot legitimise or take it seriously or if you want me to you've got to give me something more than well how could we possibly know you know and that's the best argument people can know absolutely it goes both ways but why is it only on me to have to accept it and no one is like well you know you see what I'm saying I can't tell you, I know, but we're back to the same thing. The argument's been put forward. I don't know what, I don't know how you would want that argument to be resolved.

49:00Do you know what I mean? You say, I want people. It's like, well, that's kind of the system, right? I want to not have my savings and purchasing power and quality of life impacted by an extraordinarily tiny group of people in the name of my interest, my broader interest and the interest of my fellow countrymen, when empirically you've not got a great track record. And that's all I'm saying, right? And it's just like, yes, I can then go the extra step and say, maybe there's some other ways we could sort of think about this. But at the very least, it's just very hard for me to treat it with any kind of seriousness, or not seriousness in the word, any kind of credibility when, as I say, the empirical evidence there is just so scant.

49:52And there's like, okay, but this time, right? So let's just focus on the conversation here. So cost of living crisis, rapid increase in interest rates, three quarters of 1 % from historic all-time lows, and the economy is slowing down. That's how this whole thing started, right? Yep. and and it's like so what do we think of that and it's like i think that's the exact predictable outcome of what you wanted and now it's here yeah totally yeah right and now it's here we're worried about it but also to your point like we've got to stick the landing this isn't it isn't sort of the general direction in this kind of case there's a there is a uh the the example of over overstepping the boundary is is like oh we want to slow it down oh crap we slowed it down too much.

50:38We want to stimulate. Oh, crap. We stimulated too much. Every single time. Every single time. So just to focus on this particular thing, it's like, what do I think of the GDP numbers, which are pretty aneming? It's like, I think that's about right. I think it's about right because there's a whole, as we've talked on many pods, I think there's a great section of the economy that's doing very, very tough. Whether or not we want to go to a standard definition of what a recession is. I mean, I just, again, I just point to the political landscape and how that's changing that's all the proof you need that a lot of people are doing it tough that's like full stop right that's that's the data point that that kind of matters yeah and it's like and again this was all done in the name of of the national interest and it's not there and now you want me to sort of get behind this or or to treat you with the retreat them with some kind of seriousness i i can't i just can't i i can't do it other than other than to just laugh or at the very least say, you've got to give me something more than a trust me, bro, because you had my trust and you've completely eroded it.

51:43Not, and then, you know, by just not delivering on what you said was going to happen and then gaslighting me as to why it didn't happen. It's just, you know, and this is what I think the establishment misses and they go, why are these people angry? And they're, no, no, they're all, it must be, they're racist or they don't like our democracy and it's just like you're so blind to it and it's like even if these people are wrong in their in in in their they're wrong to feel yeah hard done by yeah yeah yeah it's just like that's not it's like they feel hard done by then they feel hard done by that's just how it is right and for you to go no you shouldn't feel hard done by yeah exactly you know it's just like okay hey, you know, and it's just a hell of a thing.

52:37And I think so much in our society is just the way it is because it's the way it is. Like that's it. It's just like, well, it's how we do it. And yet you can go, but I've got this thing called the internet. I can actually see what life is like in other countries that have slightly different ways of doing it. Well, you know what? Every time people do it sort of this way, things tend to get better in aggregate for most people. No one, no one, it's not like someone doesn't lose their job or there are economic cycles, but it's like there are clearly differences, right? So you're going to manage it in a particular way.

53:12Give me something to believe in that this is going to be for the greater good when everything you've done to date is not evidence to that. And is that cynicism? Is that ideology?

53:29I think it's just critical thinking and demanding some kind of evidence. Isn't it? Yeah. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

53:49I just feel as though you're very quick to defend it when and then when I say, okay, defend it for me, like in good faith. and I have not found a satisfying answer. Okay. So, no, I don't want – I reject the premise of your question. I don't get pressed into defending it as a thing, right? I think that's what we do too. I know you're not trying to do this. I'm avoiding doing it myself, which is a statement is made and you have a different view about the statement and then it becomes a bit of us versus them, red versus blue. It's kind of what happens with our politics, right? So it's, you know, elbow's always right or elbow's always wrong rather than actually this policy might be good, that might be bad.

54:27So the question is what are you – what am I going to defend or not defend? I wouldn't print money. You and I have talked about that before. I'm not going to defend the status quo because I don't think it is in its entirety worthy of defense. So I would start there. I do take your point broadly about money printing and pricing being the same thing, and I think it is at the – not even the extreme – at the – I don't know. At a very practical level, right? No, but I'm saying on the edges, I think it's absolutely true. I think a movement of the price of money from within a range will have impact on the amount printed, but that's different from AQE or something different where they're kind of – so they're not – you can't divorce them entirely.

55:12I don't think it's one for one right through the continuum. I think at the extremes it's far more impactful, to your point, and when Centrum Bank's having to push further and further and further by more and more and more bonds because the rate is so far from reality, the extremes, it's magnified at the edges on the standard deviation, right? So if we stick to the middle of the curve, I don't have a strong view, but I would happily never print another dollar. I don't think that necessarily means that a change to demand... I'm telling myself not trying to be clever, I'm trying to be clear. And so I don't agree with you that there should be no effort made by society.

55:58And that's government slash central bankers. But again, I'm trying to be abstract, not to be weird, just to kind of the individual mechanisms don't matter as much as the approach. So I think there is value. Let's take it back. You don't talk about deficit budgets and surplus budgets before, right? They are effectively, to the extent that I believe in them, I think you do too, as long as you're not printing money, I think is your view. but again, I want to put words in your mouth. I think running those is effectively demand suppression and demand support at different parts of the economic cycle because when you run a deficit budget, you're adding to demand.

56:30When you run a surplus budget, you're taking demand out and done properly on a structural basis, that would help to moderate extremes of the economic cycle. I think we're aligned there so far at least or no still? I mean, theoretically, although I just quickly add that that's what the MMT crowd, they say, Well, if we did it properly, that's what communism said. That's right using taxes, though. That's right using taxes. I mean, so you're not wrong. Like, in theory, if done properly, then yes. Let's review capitalism too, though. You've said that about capitalism. At some point, no one lives in an ideal world, right?

57:02But you asked me to defend it, so I am. I'm saying what system would I – you would blow up the central bank? I am not sure. I would just let people decide if you've got some money and you want to lend, I think it's up to you as to what you lend it out of. And if you want to borrow money, I think it's up to you to decide whether the offer on the table is worth your while or take. I think that is how prices are always set in a very, in the only way possible, right? Like that's just how it is. And for you to sort of say actually no, you, the person who has saved up money, must lend at this amount is, or you must borrow at this amount.

57:41It just feels, well, it's not, it feels, it is. it is manipulation, whether it be good or bad. It is very much manipulation against the desires of the two parties, that is the lender and the borrower. And I'm okay with that. So that's where we differ, right? So I think governments manipulate all the time. They set rules and laws and minimums and maximums, and you and I will agree on some with each other and we'll disagree with each other, also disagree with what government are doing in some other areas and co. I would do that. I would do less of that, more of that, and that's okay. So I think demand, again, I'm not going to defend the current system or defend the current people or defend the current structure because that becomes a holistic kind of conversation.

58:26I have no issue with a process of demand support and demand suppression at extremes of, or I don't have extremes, as we moved up and down those curves to mitigate the excesses that would make things worse. So as a philosophical starting point, I'm in favour of that as an approach. Now, maybe we get to the point, to your point, where we can never do it at all, and so we have to abandon it because we'd like to, but we can't, and that's a reasonable view to get to. I would argue that the one thing I don't think we... I'm probably too generous. I'm very generous, I'm very generous. I'm probably too generous in terms of giving benefits of the doubt, right?

59:07And I think that's probably because I have no really strong, firm views on what things should be in an absolute sense.

59:18I understand the criticisms of the central bank in terms of missing their forecasts. I think that's too literal a criticism. It's absolutely spot on, but it's 100 % right. I don't think that is a sufficient evidence to say that their actions were not beneficial compared to a counterfactual. And we can't know. So I'm not saying they were either. So let's just trust me, bro. That's a fancy way of saying you said we can't possibly know, but I'm just going to assume that it's okay. Because taking it away, we can't possibly know it's going to be better either. So I don't think that's what I'm saying about the proof.

59:48The standard proof is in both directions. I don't think we can say central banks must be gotten rid of until you can prove otherwise, or I can say the same to you. But I can't prove otherwise without actually doing it. So my point is that you can't. We're going to keep doing it regardless, no matter what, because we can't ever know. No, I'm saying we shouldn't remove them because we can't know. I think we have to, in anything where the outcomes are uncertain, we owe it to ourselves to apply our best judgment and choosing the least worst solution we can think of to go forward with. I don't know what will happen if I do this or that.

1:00:18Based on my intellect and ability and experience and education, all those things, I'm going to choose a path. And so we do. And that's, I don't think we, that's absolutely, trust me, bro. It's like, I don't know what the outcome is going to be here. Which option do I think is likely to give me the best option? I think it's option A or option B. I don't think we can say option B is currently in play, and unless you can prove option B, it'll still always be better. We have to throw it away in favour of option A. And I'm saying, again, I'm not saying the opposite either. I'm really not. I'm just saying I think the standard of proof is too easily started with what do we think now.

1:00:48You know, you mentioned the proof of we didn't have central banks. Would we do it? The same as we do have central banks, should we get rid of them? It's the same question without a satisfying answer because you can't know what happens next. And we can't know what the last 20 years would have been without a central bank. Maybe it would have been spectacularly worse, spectacularly better, a bit of both, all the same. We just don't know. And so you have to at some point say, I just think. So I guess we'll just keep doing it. No, not at all. I'm saying, but it's the same other way. There's also not sufficient reason to get rid of it on the same basis.

1:01:14So I'm making the point that the status quo effect shouldn't apply. I'm not saying we should keep doing it because we are at all. What I am saying is we have to look at both and say, which do we think is better? And I think that's not an unreasonable starting point as a discussion starting point. It's like we have to admit we can't know, so let's work out which we think is going to give us the better outcomes over the long term. That's all I'm saying. And I'm not saying it is necessarily central banks, but I'm not saying it's not. I'm not going to defend it because I'm not going to say we should definitely keep doing it.

1:01:40But I think we can't just say we're not sure it is being beneficial, so let's get rid of it. I think both standards of proof on both outcomes are the same, or should be. You've made the argument with UBI before that we can't know, so let's just try it. Yes, but trial it rather than try. so I wouldn't implement it across the board, no. But to your point, I agree with that. For the same reason, we could try some money if we're convinced that's a better option as well. That's what I'm saying. I'm not supporting the central way against the slightest. I'm saying, if you look at UBI and line them up and go, here's what could happen, here's what could happen on a new scenario, here's the good stuff that could happen, here's the bad stuff, what do we reckon?

1:02:15If the thought is, ah, pretty good chance it'll work, don't know, it could go really badly, do you sit in paralysis and never try something new because it might go badly? No. But do you keep the existing because it is going well? No. There's always that choice. UB is a great example. I don't know the answer. No one can. So you've got to say at some point, does it feel like it's a worthwhile change, basically imperfect information and inability to forecast the future? That's all we can do. Every tax change is what we've done just now. That's my stance. I think it could be done better. I actually think there's an incredible historical precedent to give us a lot of confidence that it would at least be worth a crack.

1:02:53So that's where I'm at. It's your exact point. And that's why I advocate for what I advocate for because it feels like it seems to align with reason and logic for one, but also historical expertise. But it's just that my lament and my frustration is always that when I say that, it's like, well, how can we know? So we can't. So we just do it. And I just point that all in the slightest. No, but that is the general response from almost everyone. And it's like, and you go, yeah, you get really frustrated and worked up. I was like, well, yeah, because it's really, it's not good thinking. It's all it is.

1:03:28And I'm the first to admit that if someone can give me a good argument or point to something that actually shows this, at least casts doubt on us, like I'm all ears. I'm all ears. But the best that, and it's why I asked you, it's not to have an argument or anything like that. No, it's a great confession. It's really just to sort of say, what am I missing? and, you know, the response is... I don't think you're missing anything, mate. I think you're not missing anything. I think the... We can't know, so, I mean... Yeah, no, that's true. So I would say, well, I think we can know and I think at the very least it's just like if we can't know, that's no argument for keeping it either.

1:04:08That's just as bad for not... As bad as an argument is just throwing it all in the bin, it's just as bad as an argument for keeping it. No, no, no, the arguments are fine. The arguments are perfect. Our job is to weigh the probabilities because we can't know. That's why I'm not saying for a second your argument is not valid. I'm saying it's absolutely a valid argument. I just – we can't – I don't think we can say the outcomes haven't been perfect of central banking, therefore it's obviously bad and obviously an alternative would obviously be better. And you're not saying that necessarily, but I just think that's – we've got to hold that tension of the unknown with this feels like some – we've had some bad outcomes the last 20 years, right?

1:04:43Yeah, okay. Would that have been worse without it? Don't know. It's not possible to know. And I think to some degree, I think the current orthodoxy will default to, well, of course, it would have been worse because of this reason. And those who want change, of course, it would have been better for these reasons. And I think that's reasonable views. But I think I'm just trying to hold – maybe I'm being too generous across the board with the benefit of the doubt. I don't think it's as obvious as either group would hold, that it would obviously be better, again, at a total economy level, at a total society level for all those reasons, than where we are now.

1:05:17And again, remember, I'm not saying either. I know it's a very unsatisfying position for me to have where you're kind of trying to push your course. I'm not going to argue with you. I don't know you're wrong, but I don't know you're right. I don't know. The current central banking is wrong or right. That's not a reason to keep it, but it's not a reason to junk it either. And it's all true and it's very unsatisfying, but I think that's got to be the starting point of the conversation is we can't know. And it's tempting to say things aren't as good as I would like. Let's throw it out and start again.

1:05:42And that might be absolutely worthwhile. Or it might actually be we throw it outside again. It's like, oh, bugger. That was a bad choice. Can we have the old one back now? Or maybe there's a third option. And not an excuse not to change, Matt. I hate the status quo effect. I hate the idea that the people who want change have to prove the change and the people who support the current – not about central banking, by the way, in general. Status quo shouldn't hold any extra position of anything. Arguably, if something is clearly obviously working, arguing against gravity is tough, right? I think gravity is a fair presumption because we kind of, you know, that's not one where the status quo effect needs to be reinvestigated or re-prosecuted.

1:06:21But I do think in a lot of the areas where the outcomes are not obviously causal, the status quo effect is really dangerous because it means we don't, I mean, the earth going around the sun, right? How long did it take for that to be overturned? There were a couple of burnings at the stake and eventually we got there. So I don't think we should take the status quo effect. So I'm with you, mate. I don't think we should say, well, we've already got it, so, you know, there's nothing to do. What can we do? We can't change it. you're 100 % right, which takes the fact of where you started. I completely agree.

1:06:46I don't think, though, there's enough evidence, obviously, or unquestionably, to say, obviously, we should junk it because it's not working, because I don't think we know the counterfactual, so we have to then live in that uncertain world of let's put them side by side, let's try and work out under which scenario we think there would be better outcomes. And you have a very clear view, and you're absolutely entitled to that view, but I don't think it's a question of unless you can prove central banking is quotes working, it must be junked. I don't think that's the – that can't be the starting effect either.

1:07:18It's got to be the least worst or the most probable or some other framework of thinking. This is the challenge of soft science is always this. Yeah, totally. It's only science. It's art really, right? Yeah, well, exactly, you know, and it's like gravity is easy because we can just do experiments. And, you know, I always love that idea that if you were to burn every science book on the planet, in 50 years' time, they'd be rewritten exactly. Exactly, because we would be able to figure it all out, right? Whereas if we burnt down every political institution, what would emerge? We don't know. It might be various flavours of things that we already have, but it would almost certainly be very, very different.

1:07:59God, that's a fascinating thought process, though, because human nature is human nature, right? So you kind of think we probably tend towards the same sorts of things, but the combination of experience and what's the right word? I'm not trying to use the legal word of precedent, but effectively precedent, not a legal sentence, just like that. What do we learn? What do we think we learn? What do we, you know, which left and right turns do we take? I mean, the world doesn't look like this without World War I and World War II, right, in all the ways because that drove borders. It drove like, you know, we kind of think we do it the same way, but maybe we kind of tend to that, but I don't know.

1:08:34it's a it's a back to sapiens right which is such a great book um you wonder how much would be the same it's such a fascinating idea well and i think but so it is it is it's a soft science so it's hard to do experiments but i think yeah when you say proof it's we've got to work in that context proof doesn't exist in the same way as it does for quarks and new ones and stuff like that yeah nevertheless i i don't think therefore it it it automatically comes down to well what we can never know. I think we can still look at history and evidence and say, gosh, human beings have been around for a long time.

1:09:11We've tried all kinds of different things. Let's have a look. Where's, where are some really prosperous, wealthy places without a massive wealth divide? You know, there's always someone losing their job or having a hard time of it, but you know, in the aggregate where, where have things generally been good? You know, would you rather live in Latin America or Western Europe. I'm like, well, that's interesting. I think everyone would, you know, no offence to Latin America is a beautiful place, but the political and institutional regime is crap. And the first person to say that is someone from Latin America.

1:09:45Yeah. We've talked before about things like The Wealth of Nations, the book. Yeah. What's the other one? Oh, there's so many good ones. Why Nations Fail. uh another one that's but but it's it's one of the bigger questions you can ask like why now it's either it's either it's like well you just guys lucked out you just got natural bounty everywhere it's like but actually the evidence doesn't support that we can find all kinds of exceptions to that rule so that doesn't work out it's like well turns out that people of a certain creed are just far more creative and hard-working than others like well actually that's not borne out by the evidence as well.

1:10:23P.S. you're a racist bastard. That's uncomfortably prescient right now. Right? By the way, a lot of people think that way. It's like, okay, but it doesn't bear witness to the evidence. And so you go, okay. But then again, so I guess what I'm trying to say is without going too far into the weeds is that we can look around and do it. So when you say you can't prove it, it's like, well, well, I can't give you a piece of paper with a formula on it that makes it. It's like that bit in The Simpsons where Homer gets really smart and he gives Flanders the proof that God doesn't exist. And he goes, well, that solves it.

1:10:59You know, you can't do it. That level of proof does not exist. But I would argue that there is a lot of, at best, and it's all it can be, circumstantial evidence that at the very, And like even if you can say, well, it doesn't, nothing's conclusive, it's not so radical as to be like, oh, that's just laughably, demonstrably wrong. It's like there is credibility. There is legitimacy. There is sort of like that is interesting. It is interesting how Singapore went from a swamp to one of the most richest places on the planet. It is interesting how Hong Kong did a very similar thing. It is interesting how South Korea did, like, it is interesting how at the Industrial Revolution that England was the center of power.

1:11:51It is interesting that the US grew to be the world dominant superpower. What were they doing that was different? Why isn't North Korea ruling the planet right now? Why isn't Cuba or East Germany the dominant? Like, that's interesting to me. And it's just like that doesn't like you and I, I don't think, would have any, wouldn't waste two seconds on trying to debate communism, right? Yeah, correct. And the reason we wouldn't is we'd go, well, because look. Yeah. Because look. And then people would go, yeah, but that's ideology. It's like, is it though? At what point is it ideology and what point is it just a sensible reflection on the facts at hand?

1:12:31And I guess that's where I would push back a little bit is to sort of say, I hear what you're saying, but I don't know if it's so unprovable in the sense that you think it is. I think it's, I think at the very least, and again, it depends on how ardent you want to argue a particular standpoint or a particular viewpoint, but I think at the very least, this is the alternate, the current status quo is legitimately questionable. I guess I would say that as a minimum. is a minimum standpoint. Which is what we're... There's no proof that it's the best solution, right? So I think that's right. I think what I don't...

1:13:11And you're right, I don't mean to suggest that there's no evidence for a return to sound money. We've had this conversation, again, I know it's a question of degrees and maybe it's all or nothing, maybe it's not. But I guess I'm just making the point that when we sit in 2026, we can point to the bad stuff. And the bad stuff is sometimes objectively bad. I think the amount of debt held by the US government is objectively bad. I think the last five years of inflation is objectively bad relative to where we were five years earlier. I don't know that I feel comfortable. Again, I'm not arguing against you, Matt.

1:13:41I'm not arguing for it. I just literally, if someone said the last 50 years, which is kind of nice, 55 years, I suppose, it's the gold standard kind of formally, you know, was effectively dumped, would things be better in 2026 had we not done it than we've done it that they are now? And I don't honestly think I feel, obviously, you can't or others can't believe it. I am not sure I can make a conclusive or a comfortable claim to either. So I'm not saying that what we might move to can't work or can't be done at all. I didn't mean to imply that if I did. It was more just am I sure things would be worse off under – am I sure things would be better off now under that framework over the last half century?

1:14:22And my answer is no, I'm not. And you may be, and that's completely cool. Part of the – part of your frustration is that other people, You know, we all want people to think like we do. I don't really – I guess if I'm honest, I probably – I think we all have a status quo bias probably as much as I said before. So maybe I am giving central banks subconsciously more justificational credit because they are here and things are okay and maybe that's comfortable. So there's probably – maybe it's just a fear of change thing, mate, honestly. I don't know that to be true. I don't think it is. I don't consciously think it is, but it might be.

1:14:51It's probably part of it. I guess it has to be, right? We're humans. So there's that. But I'm not saying – so I'm not saying your version can't work. I'm just saying I don't know that we know that this isn't less worse or better or, again, not to load up there. Yeah, and I'm not trying to drag it into a hard money argument. That's a broader, more all-encompassing kind of thing. But just in the context of our conversation, which is the economy's slowing, what should we do about it? Yeah. And it's like, so I'm not trying to hijack it and divert the conversation, but it's just like, if I take that question seriously, and I am taking it seriously.

1:15:27I'm taking it deadly serious because the stakes are so bloody high. Right, exactly. Because living – like, again, the wealth divide is growing rapidly. The haves and the haves not. People are feeling miserable and populism is on the rise. All of these things, right? All of these things are happening. And in an effort to fix this, we have taken – we as representatives have taken certain actions and now the economy is slowing down. And so the question is, is that good? What should we do about it? And it's just like my honest answer is it's like I wonder if it's a framing problem. I wonder if trying to find a solution within a set of assumptions that are flawed is even a – does that even make sense to do?

1:16:11Right? So it's sort of like it's trying to, you know, let's go fly to another planet. There's a Bronze Age civilization. They're trying to invent flight and they're doing it with aircraft made out of bricks. Yeah. And it's just like they're having big arguments as to where the bricks should be placed and should we put the bricks at the front here? And you'd look at it from the outside of that lens and you go, there is no manipulation of the bricks that's ever going to work. And so someone comes out and goes, hey, guys, try balsa wood and paper. And they're like, whoa, we've never done it like that.

1:16:44I don't know if we could say the counterfactual. It's sort of it's not being an annoying pedant, you know, for the sake of it. It's kind of like in taking the question extremely seriously, it's sort of like, I just don't want to talk about the bricks because I think there is no configuration of the bricks that is going to work. Or if there is, let's hear it. Let's hear it. I guess that's what I'm saying. And so, yeah, it's frustrating because you try and have these sensible conversations and I derail them. But it's kind of like, I don't know how else to approach it in good faith without assuming that, okay, this is actually a perfectly sensible framework to operate within.

1:17:28And if it is, then here is what we should do. And if you go on Twitter and you open up the paper, there is every single mainstream economist in the world, well, we should do this and the RBA should now and the next quarter point rise of this, and then we're going to talk about the bond market and how that's predicting this and that. It's a theatre. It's a complete theatre that it's either, it's like, well, well, none of these divinations have ever really proven accurate, but can you participate in it? And I'm like, if I have to, but I don't know what I would do, right? And so that's why I'm being difficult.

1:18:06You're not being difficult. It's a really great conversation. It's a fantastic conversation. It is. I love these conversations. I think there's room for, I really do think, because let's say all that's true, right? And an hour and 18 minutes in, we've, you know, so the question though, and I take your point about the plane, I'm going to slightly change it, right? Only in the sense of there's a plane with paper and balsa wood or there's a plane with super lightweight aluminium or whatever they make planes out of these days. And I think that's probably a more useful analogy. And we can make the central banks of the balsa wood and paper plane where the lightning strikes and it rains and the whole thing crashes if you want.

1:18:41That's cool. But I think there's two. The question is, hey, Orville's just pulled the joystick to the left. What's going to happen? And we can start with, and again, I'm not for a second validating your comments. We can start with, well, it's a stupid plan. I'm not going to talk about that plan. It's like, well, let's just pull the joystick, dude. What happens next? I think there is a real world, and not that yours is not real world, I'm really trying hard to stay away from the majority of this and whatever. The central bank has done a thing and the economy has responded. and there is a natural implication and consequence to all the stuff that's happening.

1:19:16And there is a – and within the framework. And once we know the framework is the framework, the question is, okay, well, that's the plane Orville's flying. He just pulled the joystick left. What should he do next? And we can absolutely say, dude, land the plane, get a better plane for the love of God, you know. Get out of the plane. But at the same time, there's just the plane is still the plane. And I think – and again, I'm not for a second saying you can't have the other view. We shouldn't discuss it at all. Like I'm really, really, really – we've just spent time doing it. So hopefully it's – I've been clear about that.

1:19:44It's more kind of – and I think to your point, you know what I wasn't clear about as we literally kicked off was the – I think actually the conversation about the RBA did a thing. They got what they wanted. Now we're saying what the hell. I think the we thing is really interesting in that conversation. because there's really interesting different groups, right? So the RBA is probably like, that's good. We're actually happy about that. In our world where we think this is happening, we got what we wanted, we pulled the joystick, the joystick worked, and we're banking to the left. Again, I won't talk to the plain metaphor.

1:20:17Who's round for champagne? Who's buying the Moe? Oh, the taxpayer. But equally, I'm not... I'm not... No, I'm not going there. No, you've laid it out very well like that. So I'll answer it in that framework. So Orville's got the joystick. He's gone left. Dude, get out of the plane. All right, you're not going to. Fine. I'm going to try and land the sucker. What do I do now? It's a good framing. So you've helped me. So under that scenario, what's going to happen? Well, the economy is going to continue to slow because you've designed it that way. And it's going to slow to a point where it becomes uncomfortable.

1:20:57and then you're going to have to say, well, that's okay because now inflation is under control so we can relax things a little bit, in which case you will. Or you can say actually things are getting worse in case we need to instill some more pain, in which case you will. So it's kind of like it's going to be what's going to happen. It will depend entirely on those two things. Or the third one, which is my base case, which is I suspect you will slow things down, but we won't meaningfully dent the cost of living crisis. I think that inflation, I've made the argument for a long time, I think it's a stagflationary.

1:21:35People get too hung up on the exactitudes here, but I think we are in a world where we are having structurally higher inflation for longer, much like we did in the 70s. I'm not saying it's here forever, but it's here for a while. You just, you can't, you can't increase. Last year, the last 12 months, the global money supply increased by double digit rates, like 11 % or something, right? You cannot pump ungodly sums of money into the economy and not have an impact, right? And so that's where we are. And that's going to take time to work through. So that's where it is. At the same time, you've got a lot of, because of a lot of the distortion, you've got a lot of economic activity.

1:22:16This is not viable. That's why we're bailing out every company left, right, and center, right? So we cannot legislate our way to a stronger economy. We can help. We can nudge potentially if we get it all right. But I think we are in a situation right now where, although I would just stop manipulating things, okay, put that aside, they're going to do what they're going to do because that's what they're going to do. The man with the hammer is everything's a nail. and so they are going to be led by the data, that old, you know, what's the word? Data dependence is what you're looking for? Yeah. Oh, sorry, that was sore.

1:22:57We're going to be data dependent, which is just the way it's going to say, we've got no clue but we're just going to be completely reactionary to what it is. And we are going to ping between a sluggish economy and an out-of-control inflationary environment. and neither is great, but whatever is the most unpalatable is the one that we will focus on. And the one that is always, always the most unpalatable, as pernicious and as damaging and as horrible and as evil as inflation is to any degree, they will always choose the economy. So they will keep pushing until something breaks or it gets worse than they expect.

1:23:34And again, history would suggest that that's a 90 % odds over the next five years, and then they will rapidly cut. That's why I've often said it's just like I wouldn't be worried that much if I was a borrower, besides I'm not on the absolute limit of my borrowing capacity and presuming that you're able to sustain some kind of income. I wouldn't be too worried about it because they can't. And I just come back to mathematics here. It's like, okay, all right, inflation's too high. You could kill it tomorrow. Put interest rates up by 3 % at the next meeting. Inflation is gone. Oh, we can't do that.

1:24:09So is the rest of the economy, yeah. Yes, exactly. Exactly. You can't do that then. It's like, well, so what you're going to do is a triple tuck, reverse flip, and you're going to land it perfectly. That's it to your point, right? Like we've got to engineer the soft landing. which is have we ever engineered a soft language just quite like ever has any is that ever has anyone ever attempted that and it worked out so i so i'm so yes i am i am cynical but i i would say i would say with not without precedent that that is the that is given the plane that we're flying i think that's the outcome that what it is and we're going to see and and what does that mean And the other thing is as well, when we say what does it mean, we have to hold two ideas in our mind at the same time.

1:24:56What does it mean in aggregate and what does it mean for individual people? And I think on, again, generalising to some degree, I think if you've got a bunch of assets, you're laughing because I tell you what, monetary debasement is a gift from heaven for you. And if you're not, sorry, you're screwed. So what do you do? Well, you bang the table and you say there's got to be a better way. No one listens to you. And so when, you know, no one even wants to have the conversation, that's fine. So what you then do is you go, I tell you what, I'm going to own as much assets as I possibly can because that's the only way to protect myself from a broken monetary regime.

1:25:39It's not even a big, I know there's words here that get associated with that, but this could be in a world that doesn't exist, you know, and I would still be advocating for it. Like, well, let's just – can you just stop bloody manipulating with all of this kind of stuff? Because these are the inevitable and predictable consequences of these kinds of actions, and that's the path we're going down. I have a hypothesis. We're late in the podcast, but I do want to cover it because we talked about GDP. And the one that I wanted to bring up was GDP per capita was down. We talked about that before. We've talked about it, I think, in a prerecord actually.

1:26:08So you'll hear a bit more from us on that in the next little while. But GDP per capita was down. I think it's the ninth out of the last 11 or something quarter whether GDP per capita has been down and it's not the best metric. That's a recession in my mind, by the way. Right. I know people go, oh, yeah, but it's got to be too consecutive. It's like, okay, bro. But you say, I mean, nine out of 11 we've gone backwards. Right, exactly. Right. And by the way, we've been in a per capita recession on and off through that period for long periods of time. So we actually had even the one you talk about, not necessarily right now, but even another traditional definition on a per capita base at least, we've been there a lot.

1:26:43Yeah. But I wanted to – I actually wanted to – we'll do a little bit on it. We won't have to talk too long, mate, because it's late in the pod. But the productivity number I thought was one that really jumped out at me. And I have a suspicion. I don't want to necessarily reopen the wound on money printing, but I have a suspicion that. Always comes back to money printing. Well, no, no. Well, here's my thing, right? I suspect that we got away with more of it more often. And it wasn't as much of it, so that's part of the story as well. But while productivity is growing, it kind of covers a heap of sins.

1:27:11Oh, goodness. We talk about valuation and we talk about growth. Growth covers a lot of valuation sins. And I suspect the issue is, yes, it's absolutely about the volume of money being printed and the velocity, and that's absolutely increased. So I don't for a second want to de-emphasise that. But I kind of suspect that why this isn't working the way it might have worked in the past, and not even QE, but as you say, mate, bank money printing, when credit is issued, money is printed, money is created, I suspect that works okay in a world where productivity is increasing because it kind of soaks that up.

1:27:39I don't want to say it works. I'm not saying it's perfect or it's justified. It masks the damage. Right. Thank you. I'm drinking. a cask of wine a day, but I'm also eating very well and I'm exercising. So I was like, but you're okay. You're like, yeah, I am. I'm a functional alcoholic. You could be better without the four litres of goon. You don't need to drink that every day. It's like, yeah, but I'm still okay. That's the argument. That's the exact argument. But I think that's the thing. We've stopped exercising. To talk to your analogy, we've stopped exercising and now we're just drinking the goon.

1:28:11I just thought that was really interesting, mate. And I don't... I, this gets ideological, it gets ideological and value laden pretty hard, pretty fast. And not even in a monetary policy sense at all. I'm going different direction here. We have chosen as a country to be less productive as traditionally measured. And I've got to say, while you and I talk about it's unproductive to be retired and that's not the world's worst problem. at an economy-wide level, if it's done it at scale en masse and in a short period of time, it's super disruptive. And I suspect you mentioned, you kind of mentioned in passing the number of jobs in Canberra, the amount of non-market jobs, and that's even too much of a cliche, the number of new jobs that aren't adding to economic output has grown meaningfully.

1:29:00And I don't even mean government spending or taxes the percentage of GDP, that's kind of the same, but it's not directly because it could have been spent on other things that were more productive. And you asked the question very early, when I was talking about me losing my job, but it depends what job you lose. I think on productivity, the reverse is also true. And I suspect at some level, we've kind of masked the economic weakness of the last little while, not just with money printing, but with meaningful amounts of jobs being added in the non-market sector, in the public sector, in the kind of...

1:29:29And frankly, NDIS is a huge one. Health in general is bigger again. NDS is a portion of health, so kind of it's Russian doll. That combination, I kind of feel like maybe GDP wouldn't have been as good, and that may still be a worse outcome overall, but I think we're paying now for an economy that's spent money on less productive, not saying it's not valuable or worthwhile at a human level, so please don't, no one's listening an hour and a half in, but for our two mothers and no one else, I'm not saying it doesn't matter or it's not valuable or it's not worthwhile or not that we shouldn't do it.

1:30:05What I am saying is there are just, as you said, mate, there are no solutions, there are only trade-offs. It's a well-worn line. I think that's what we've done. We've said, okay, we will trade this off. We have deliberately made decisions. Maybe we didn't deliberately imagine the outcomes, but I don't think we should be surprised that if the economy is growing and most of the GDP growth that's coming from money being spent on non-economic outputs, that productivity falls. It's almost axiomatically true. The algebra is kind of, you mentioned there's no laws and economics has none, but maths does.

1:30:39It's kind of like, it's not hard to do the maths and go, more money being spent overall, more money being spent on public services that aren't adding to economic output should equal lower productivity. GDP per hour has worked. It must be thus, right? Yeah. Yeah. Yeah. It's also, it's also the issue that caused it is not the issue, is not the remedy for it at the same time. Yes, that's true. So, so why is all of that? And, and I think people who run a business will tell you, I mean, it's, it seems top to, I've yet to find an exception to this rule. I'm sure there is, but it's just sort of like, you know, the amount of bureaucratic red tape and licensing and regulation.

1:31:20And it's hard to, I cringe when I say it because I hear myself and I, And I know the reaction to it because it tends to be the reaction of, oh, so we shouldn't do anything. And it's like it's a silly argument. I'm not saying that. Got a libertarian in any state. Yeah, exactly. Do you know what I mean? Like there's two ends of the spectrum and there's no gray area in between. So I feel like, you know, you've got to sort of say it every time for fear of being misunderstood. But I think as a general direction, it's just not been handy. And yet when we look at it, we go, well, I guess we'll just regulate our way to more productivity.

1:31:54It's like, how does that even work? Like, it doesn't make any sense. And I always come back to it's just like I think a 12-year-old would understand this point. I'm sorry for repeating myself, but oh, my God, you don't. People want to be more productive. People want to be more productive. In fact, we don't want to be productive. Not for the country. We don't know it's that. We just want to do less and get more. Can I just do less and get more? Can I do that? Oh, it's a good thing. I'm going to pass a law for that. Okay. It's like, I'm going to pass a law that everyone should breathe in and out a few times a day.

1:32:26It's like, I've got it, bro. I've got that one. I'm going to do that anyway. And it's like, even if I didn't. We have a round table so we can tell people they should work less than them all. Just like, stop saying the word. Like, you idiot. What does that even mean? You don't know what it means. You just know that it sounds good. And even if I didn't, for some reason, I was more than content to get less with the same or not have productivity, I'm forced to do it because the people that I compete with will do it. So if I value my job and my livelihood, you know, and not living under a bridge, I'll probably try to be more productive to get ahead.

1:33:04And if I'm more productive, then actually everyone wins because now it's cheaper for you to take the thing that I buy, the good or service that I provide. This is not something – we don't employ a government bureaucracy to stand on the top of the mountain each day and shout at the horizon until the sun comes up. We don't do it because we don't need to do it, right? I'm sorry. What kind of thing is that actually need – yeah, QMN will do its own thing. We don't need to get in the way of that one. One more conversation on productivity, I'm going to lose it. And it's not like I disagree. Accept that.

1:33:40Right, right. I mean, I agree. I agree. We've talked before about things like, I mean, actually could do. So that's kind of, you say one more conversation. I know what you mean. You mean if they kind of talk the same way they have been and expect something to change, that's madness, right? But I think you, I'm sure you would agree that the conversation about productivity are actually really vital, but a proper conversation, which is how do we help people do what they already want to do rather than how do we make them do things that they already do want to do, which defeats the purpose. So you don't need to - Stop giving them 50 forms to fill out every time they want to scratch themselves.

1:34:10There's a start. Easy. You don't need to tell someone to be productive. You've worked at how you get out of the way, how you set the settings. We talked about education before. We've talked about regulation before. And I just think that's – but also I do think it's still that spending thing, mate. I think – well, here's the other thing, by the way. If we stop growing the public sector, productivity probably recovers by itself just because the trajectory of that is up anyway. And to your point, no one told someone to invent the computer or the wheel or harness fire. It just happened. So I suspect if we just stop growing the public sector – and again, not for ideological risk, just mathematically, if that was to happen, productivity would improve because the market sector will find ways of doing more with the same or doing more with less or doing the same with less, whichever way you define it.

1:34:48That will happen by itself. So we're in that world already. And it's not to say you don't intervene. Let me backfill a little bit here as well because there'll be some, again, I know right now, I've had these conversations too many times to not know what some people are thinking. And it's like there will absolutely be a lot of examples where it's like, no, we actually don't want as much productivity we can in that space. Like, you know, the classic is I could rapidly increase productivity if I could just dump all my sludge into the river. It's like, well, come on, man, you can't do that. That's, you know.

1:35:24So that is fine. But what it advocates for is that if you are going, it's like money printing, right? If you are going to do the thing, you want to have a bloody good reason as to why you want to do it. It's either, of course, you're solving or mitigating a very large problem over here and that we just, you know what, we're just going to have to make peace with the fact that we're going to be slightly less productive here, but for the greater good, I'm on board, sign me up, I'm all over that. But when you're layering more and more and more onto stuff that actually doesn't really make any difference whatsoever, you know, we're going to run out of time, but it's not a mile away in terms of how we've approached cigarette smoking, bad, we should disincentivise that.

1:36:05Yeah. Let's not go down the rabbit. but smoking rates have increased, black markets exploded and tax revenues collapsed. But smoking's bad. Yeah, I get it. Oh, so we should just not tax it. What? Oh, my God. Like, can we just be adults for half a second here and realise that there are shades of grey and all we're really advocating here for is if you have to do something, have a bloody good reason for it, right, and recognise the trade-off. Okay. Not only a degree of doing something, good reason for choosing specifically what to do and how far to push the lever. Yeah. Because we talk a lot about the Laffer curve, right?

1:36:44The Laffer curve, for those who don't know, is the idea that at some point you increase tax rates, the tax revenue falls because people stop doing the thing. Which makes it's logically – it's bizarre that it had to be given a name, but the name lets people talk about it. What is fascinating about Laffer curve, those who promote it never talk about the left-hand side of the Laffer curve, where you put tax rates up and revenue increases, and then it gets to a maximum point, and then it starts to fall. And the life of a curve has two halves. And I get it all the time from people on – again, you mentioned tobacco, mate.

1:37:11Honestly, we should have exercise because the life of a curve exists. It's like, dude, we had decades where it actually worked because we're on the right side of the curve. We just tipped over the edge of the curve. And so it's not only do something or nothing. I mean, you won't say this either. But it's not just do something or nothing. It's like what is the right amount to do? The right amount to do is when we maximise – and we talked before about least worst in different contexts. That's always the job of policy. There is no perfect. It is just which range of interventions or rules should we apply from zero to all of them so that we maximise the output, wellbeing of the country or whatever subset of outcomes you're measuring.

1:37:46That's the job, right? So is the right amount of tobacco exercise zero? Almost certainly not. Is the right amount the current amount? Almost certainly not. Is there a point between those two which is actually revenue and health outcome maximising? Yeah. How about we try and find where that is rather than just saying, no, I'm going to charge headlong right down the laugh a curve until we hit zero just so I can say I'm serious about this thing. It's like, do you care about outcomes or do you care about motherhood statements? Because if you care about the latter, keep going, guys. If you care about the outcomes, this is broken.

1:38:15This is a burning platform. This is a dumpster fire. You're like, no, we could put it out, but we don't want to waste water. It's like, oh, guys, jump me out here. I used the word natural before. I think it's why there is a natural dimension to economics and markets. It is. And the fact that the market, in this case the black market, routed around it and solved it without any central planning and just natural coordination of people who have proper incentives is such a potent example of the power of it. It's the same with prohibition in the US when they tried to ban alcohol. It's like, you know, people, it doesn't take me or anyone to sort of moralise what people should or shouldn't do.

1:38:57People do it. People smoke. They want to smoke. Right? You know, is it good? Is it bad? Should we do things? I don't know, maybe. But the reality is they want to do it. And if you push it too hard, then they will find a way around it. Why? Because humans solve for pain. That's what we do. And in solving for pain, we tend to cooperate. And when we cooperate, we sort of tend to, you know, we are coordinating our actions to a mutually beneficial outcome. The mafia gets a little bit of extra coin. I get my cheapest, I get my cheap ciggies, you know. And it's just sort of like you just can't deny that reality of human incentive and human action.

1:39:37And I think that is fundamental, whether it be productivity or Laffer curves or any of this stuff, I think that's, or money printing, I think that's where we get in trouble is when we start denying that economic reality. And though it be a soft science, I think those kinds of things just point to the fact that people will rat around when given the proper incentives to kind of do so. And back to the point, just to make it full circle here, people will find their ways to be productive. Yeah. And those that don't will fall by the wayside. Those that do will gain success. And even that, that's funny, because I say things like that, it triggers people.

1:40:20It's like, oh, it's unfair. It's like, well, A, the world is unfair. But isn't it unfair to punish the person who is providing things that other people want in a better quality or cheaper fashion because Gary over there doesn't know how to do his job? Like, you know, do you know what I mean? Like it's a very slippery kind of slope argument. But my point is it's just like life will find a way, as they said in Jurassic Park. And I think I just want, as a general rule, and it is a generalization, I think although we are talking about very real problems with very, very real ramifications, I lament that in Australia in 2026, the solution to every problem is the government should do something about it.

1:41:09which basically means if we boil it down, they should continue to spend more money than they actually have, throwing it at things that patently don't work by any empirical objective measure. You know, it's just sort of – we've got to push back. And when I say push back on it, like, just at least demand more than a trust me, bro. And if people don't get that, well, welcome to populism, everyone. So that's, you know, there's a reason for all of this kind of stuff. And it is in denial of some of these sort of broader economic realities that you just can't rat around. So what am I saying? I'm just saying is you can have a problem and you can have a solution for it, but if that solution denies certain economic realities, it is destined to failure.

1:41:55That's all I'm trying to say. So also, I mean, you mentioned the politics, man, just to kind of take that full circle as well. Governments will promise us what we want them to promise us. And so we can always blame the government and pollies and absolutely with, you know, it's their choice, right? So it's absolutely on them. But if we say we want a government who'll do the things and the government says, well, I'll do the things for you. They won't do the things. So we'll have the things. Thank you very much. That kind of communal self-delusion, the mutual self-delusion is kind of, to your point about, that's where we get to that point of like, well, I will fix the rust melt in the US.

1:42:25I will fix the bad people coming to the UK. I will fix the, you know, immigration problems in Australia. So that idea, and to your point very early on, absolutely coming from a place of I thought things would be better by now. And I think that's – you know, we're talking about worse off and how bad it is and how reasonable it's people to have that view. I think a really common, simple way we can all, I think, coalesce around this is not even is it objectively bad or objectively good? Is it worse than you had it or worse than other people have it or worse? I think the – honestly, mate, I think the best framing of this, and you may disagree, and if you do, give me a better one because I love it, is I thought things would be better by now.

1:42:59I think that objectively, whether you're better off or worse off than you were or whether you just feel like it or whether you thought things were going to keep getting better and they didn't or whatever combination of those views you hold, whether they're true or not, it's almost irrelevant. You made the point earlier. I was like, I thought things would be better by now and they're not. And someone else is promising to make them better. Well, that's, you know, Make America Great Again. That's literally, this is no flash of insight, right? It's about, you know, I thought it would be better. I want to be great again.

1:43:27And the past wasn't great. and the future is not great, but if I believe that things could or should be better and someone promises, I'll take it. And you're right about populism, right? This is exactly where it is. It's precisely where it is. And, again, on one hand, I blame the governments entirely because they've got the choice of saying, I'm not going to promise you that. It's a stupid thing to promise. But you don't get voted on that. So it's kind of the old line we get, the pollies we vote for. I hate it because it's really cynical and really kind of giving up. But it's also not untrue, right?

1:43:54So that's the point at which they meet is the ballot box. And we have a choice. We've got to make better ones. Yep. And that's why you've got to call out the BS, you know, or at least demand better answers from it. It's the other great point of frustration. Like, you know, everyone knows. Well, you're just saying, you know, like politicians being useless. Yeah, and self-interested. Yeah, it's not a newsflash. Fair, sorry. Everyone kind of knows it. But the great frustration is that the fourth estate that's meant to hold that to account goes, hey, what about this? And they go, oh, here's a bunch of words.

1:44:29Okay. And I keep asking. Like, you've got one job. Like, do the job. Don't just take it. I feel as though that's a big part of the issue as well. And that's probably a consequence of the broader challenges in the sector. There just isn't the resources to do it. You notice that every journalist seems to be at 23 these days. Is that just me? We're getting old, mate. We wouldn't have realised it 20 years ago. Maybe that's, yeah. Perfectly normal. That's right. I still look at young people in my head, I'm their age. And I think about it, looking back at me, it's like, hey, old man. It's like, oh, no.

1:45:06I'm that person. But, yes, you're right. No, mate. We're already way deep. The fourth estate hollowing out has been so bad for democracy. So bad. And as the business model fell over, I mean, you think about things that you can blame the internet for. I mean, the rise of the classifieds website just has absolutely decimated media. The rise of YouTube and social media has decimated free-to-wear TV. And I don't care about the businesses as in the entities, the organisations, but man, the stuff that were cross-subsidised and it doesn't get cross-subsidised anymore in terms of journalism specifically, we are so, so, so much poorer for it.

1:45:40And I don't want to be that guy. It's not nostalgia and rose-coloured glasses. And yes, the proprietors always had their views and all of the things. I'm not an anti-social media in that sense. It's just the hollowing out of investigative journalism of, you know, one story a week, do the research, do the work, get informed, give a view rather than, well, it's 10 o 'clock, another story due, what can you write about now? It's like, oh, bash out another 600 words. It's brutal, mate. I think it's partly why podcast present company excluded are so popular. Are you saying we're not popular or we're popular for different reasons?

1:46:17I'm not sure where to go. Let's go with that ladder there. So people give Joe Rogan a lot of crap, right? And like, he's a whole thing, right? Again, you've got to be careful because people just hear what they want to hear. But I mean, that long form podcast format is something. There's a reason why it's so sort of successful, where he might be talking about aliens or whatever he's talking about, you know, and it's whatever. But it's like, I think in a world of incredible abundance and instant access to any kind of information that you want, and it's particularly in the rise of AI, like the world craves change.

1:46:50genuineness. Yeah. And to have an unfiltered three-hour conversation is super potent, right? And I don't know what my point is here other than I certainly don't think I'm going to get it by a very tightly rehearsed three-second soundbite that gets put on the Channel 9 News from Albo who's, you know, probably spent$50 ,000 on a focus group to get the answer that he wanted. You know, it's just like it's just such a nonsense. And I've said to you off air, I feel as though you kind of at a point now where you need someone with good arguments, but also with a very strong personality, you can carry people with them.

1:47:29And that's an easy thing to say, right? We should just have someone like that. Well, I don't know who that is. It's certainly not me. And I don't know who I could point to. But we've got a marketing problem is what we've got. And people are, we are, one of the downsides of an explosion in human knowledge is that it's impossible to be across everything. Right? It just is. Yeah. And so when we start talking about some of these issues, they're so hard to wrap your head around. I'm just trying to keep up with everything else, you know? And it's sort of like, but it's all you can do is, I guess, have the conversation, is ask the questions, is demand better answers.

1:48:11I don't know what it is. And then someone hopefully who can, I would hope we just get someone here and in the broader Western and the wider world who can sell it, who can articulate it, who can say, you know, this is what we're going to do. This is why we're going to do it. And it's probably going to be a little bit of pain for all of us, but it is actually going to be a much fairer, brighter world on the other end of it. It's still going to be all of the problems. There's still going to be problems, you know, like, don't get me wrong. is not going to solve every conundrum that human beings face, but it's probably going to be better than letting a very small group of people make very consequential long-running decisions that tend to disadvantage one group more over another.

1:48:53Which takes us beautifully full circle at what I'm sure is a record for this podcast. So we will probably finish it there. Thank you for your passion and your interest. Thank you, everyone who's still listening, both of you. We really appreciate you spending some time with us. We hope it's made you think. We hope you've enjoyed some robust conversation. disagreement and agreement, but at the end of the day, in the hopefully long-term national interest, which is all we can really ask of each other and ourselves. Until we speak again on Sunday morning, answer some of your questions. Enjoy your weekend and Fool on.

1:49:20Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.