What to do with a lower Aussie dollar. May 26, 2023

0:07Welcome to Motley Fool Money, the podcast that despite our best efforts, did not make this year's rich list. Well, let's start as a podcast. I'm not sure. I'm going to have to check carefully because I'm not entirely sure that Straw Man has not propelled my co-host onto the AFR Rich List. Andrew Page, g'day. It hasn't. Are you sure? Are you hiding your light under a bushel here, sir? Mate, if this is all about making money, I've made a serious mistake. Let me tell you. That's very disappointing to hear. This podcast is not the Rich List. So I checked I'm not the richest either, Matt, which is not a surprise to me because I know how much I work.

0:48It's not as much as I'd like. I'm a little surprised. Strawwin didn't get you there though. I would have thought, you know, if you had a business that was a - An online investment club. That's what it is. If you have one of those, wouldn't that be enough to get you on the rich list? Well, you need to have a suffix that starts with a B, you know, and it's a pretty high bar. T is too much, is it? T, like, you know, you got to - I'd start with an M, my friend. Maybe even a T would be nice, you know? Yeah, if I get a comma in my wealth, that'd be a good start. One comma, please. Any comma would be okay.

1:25Mate, the Rich List is out this week. We are going to talk about that a little bit. We've got a heap of stuff to talk about, mate. Let's kick off. First, I should say, how's your week been? Yeah, pretty good. Pretty good. Yeah. A bit going on. Yeah, I was a bit behind the scenes here. I mean, you and I have been speaking quite a bit this week. because we record a few episodes. So I'm trying to think, well, not a lot since I last spoke to you. Exactly. Fancy talking to you again. And then we're going to not talk for four weeks. It's so well. Talk about too much and then not enough. Feast and famine.

1:54Or it depends on which way you look at it. Maybe it's too much and not enough. You're right. Mate, let's get on with it then. There's a very interesting macro story that continues to play out globally. And we're going to talk about a couple of parts of this, mate. um we're not we don't want to over focus on overseas stuff because it often doesn't impact us but we are in a very global world um money never sleeps as the uh the wall street uh sequel was subtitled um and capital tends to be pretty easily shifted across national borders just ask some of our multinationals who managed to pay no tax in australia that's a whole different thing um but you know economic circumstances do absolutely firstly impact global trade but they also impact global confidence and global expectations uk inflation was out this week recording this on thursday morning the 25th of may uh the good news and again it's a strange world when this is when 8.7 inflation is good news you know we're through the looking glass the good news is inflation in the UK fell from 10.1 to 8.7.

3:02The bad news is their core inflation went up from 6.2 to 6.8%. Now, bankers and statistics bureau have their ways of working out what core or trimmed mean or underlying, whatever numbers you want to use. But the reality is whatever metric they are using or the combination of metrics, their inflation, the core inflation is still increasing and the market expected uk inflation to fall further now we've talked a lot about inflation of the past gee 12 months probably now it's been one of those last years this to my mind well first i guess my i'll make a i'll make an observation and i'll get you to make an observation or reply to mine respond to mine i am still we've said this a lot and i but i really want to underscore it mate because there is so much rubbish in the popular media and frankly social media about the RBA.

3:52People are saying the RBA shouldn't bother, it shouldn't be doing what it's doing, all that kind of stuff. Now, you have a view on central banking generally, and I accept that. But given where inflation is at the moment, given the experience in the UK, it strikes me this should be a very, very, very clear cautionary tale for us, that if the RBA does a lot but not enough, then they end up falling, you know, the old, you can't cross a chasm in two jumps. If they don't make it to the other side here and actually properly fix inflation, we end up stuck with high rates and high inflation, which is kind of the UK problem.

4:21They didn't go hard enough. Inflation dropped and then spiked again. Now dropped a little bit, but corn inflation is still going up. I can't escape the thought that they've just been way too dovish. And while our RBA was late to the party, it seems to me at least that they're finally catching up. By the way, RBNZ has been the standout here. They went hard and very hard early to really kill it off. And it seems like it's working there. But I just wanted to highlight it for our listeners, because I think to whatever extent you are going to use monetary policy to influence the economy. And again, we've ranted long and hard about why fiscal policy hasn't been used.

4:56And that's a whole different conversation. But it is just a, I think the UK is a cautionary tarmate of what can go wrong if you don't do enough in either fiscal and or monetary policy. They've got, they're in a world of hurt compared to where we are. It's just, it's really hard to wrap your head around the magnitude of that rate of inflation, like just in what that actually means and extend that over a few years, just how much that, again, at this kind of rate in three years, you've lost a quarter of your purchasing power. A quarter. For every dollar you've now got 75 cents, it never comes back.

5:29And then if you're lucky, it'll only slow down in its devaluation by three or 4 % a year, you know? So it's, yeah, it's a really big deal. It's a generational loss of standard of living. Like I really want to, like i know i've probably said this before but i really want to underscore this we we kind of think of inflation as a thing out there you know and i've made the point before i know you kind of pulled me up on a little bit but we there's a public perception that no one makes inflation happen it just kind of happens but we can blame the rba for increasing rates and we can thank them for reducing rates but inflation somehow is is disembodied and we kind of don't see it as this real thing rates are real but inflation just happens because that's the way a lot of people think about it but like seriously a generational loss of standard of living if we have a 25 % reduction in or increase in inflation 25 reduction in purchasing power yeah effectively you can only buy three quarters of much as you did only a couple of years earlier yeah i mean you're you're back in single car black and white tv early 1980s land or maybe maybe not quite that far but not not miles often in terms of what you can buy with with every dollar i mean that's that's really really significant yeah it is and i and it's the really depressing thing is too is it it always it's the Same story throughout history time again.

6:37It's always the least capable to weather that storm that has suffered the most. You know, poo rolls downhill, as they say. And so, you know, when you're in these, when periods of high inflation generally, bizarrely enough, are good for asset values, for high asset values, property and the like. Because it might be going up notionally. in inflation terms it might more or less be just real maybe you kind of break even or even if there is a decline it's not as fast of a decline so if you're relatively wealthy and I'm not talking the rich list here I'm just sort of mean the top 40 % or something you've probably you're going to weather the storm a lot better than those that don't have assets because those that don't have assets well they're paycheck to paycheck more or less maybe a bit of cash in the bank but that's not doing you any good You don't have that natural sort of hedge that's there.

7:33So it's always – it hurts the stereotypical, the teachers, the nurses, all of this kind of stuff. And it's – yeah, it's really depressing. And look, I don't want to sort of say that there's an easy answer and what they need to do is this and this and that. Well, when it is, yeah, exactly. It's such a difficult problem. It's such a difficult problem. And there was a good article actually in the ABC, I think it was last week, Just really made the point. I know it, it, it, it, um, it echoes my thoughts. So obviously I'm going to think it's good, but it's, it's this idea that to fix this problem, what we're going to do is we're going to raise interest rates, which is going to, um, induce a demand response, which is just a fancy way of saying, we're just going to put more people out of work for the economy.

8:22And it's just like, well, you know, it is, it does like by sort of definition, I suppose there's just less, there's money out there. as people are working, but the impact there, again, is felt at the lower rungs there. So it is really, really a horrible thing, and I just despair, I suppose. What's your take? What do you do about it? Oh, I mean, well, we've said lots. Fiscal policy is what you do about it, if you're fair dinkum. If we landed on planet Earth or we landed in Australia and someone says, so Scott and Andrew, look, here's the thing. you guys can't be re-elected no matter what you do you got four years to fix the economy you know it's been re-elected you got no party to worry about you're not party loyalties you won't know any favors you don't know you don't need a post-parliamentary career in lobbying or consulting you guys are here for four years and then you're gone right we're going to kill you at the end or whatever we're going to do to you we're going to let you give you a million dollar bonus pension whatever we're going to do once you finish you're done and they said what would you do to fix these circumstances we all know and i'm not going to rant too widely because i could going for hours um we all know that there are really significant problems that the politicians choose not to fix because they ideologically or electorally don't want to and so that's that's the bottom line right you know what do you do frankly you meaningfully realign the tax code you just do right and that's not people now listening to saying no don't take my tax cuts away or don't make me pay more tax or whatever i get that i want to that that's that's a whole different thing if you're saying how do you fix this problem you say well you know we i i still will absolutely maintain i know you slightly disagree i think you do i absolutely maintain that the central banks and the government did the right thing during covid because we don't know the counterfactual as always and at the time we had house price forecasts of falling 30 which would have caused enormous economic damage some people say well i'd like a cheaper house but you probably wouldn't have a job to buy that house with because unemployment was forecast to go to 15 by treasury in the absence of anything else this was a genuine once in a century pandemic compared to all the once in a century storms happen every three years these days um and they had to they had to do something and they did it fast and big and ugly and it was wrong in a whole lot of areas but they did what they thought they had to at the time because it was it was a war footing it just literally was so i have i have again there are things i would have done differently things i should have done differently but broadly i find it hard to really significantly go at either the then government or the rba for doing what they did the challenge was that coming out of that we didn't then do what we should have done and other countries by the way i can't remember which one it is i wish i could um some countries had paid i'll get this wrong now i want to say i think it was a national disaster it might have been world war ii or something else and one country had effectively paid back three quarters of the debt taken on to deal with the the disaster the crisis before the crisis was officially over in other words they got that They got the solution in place.

11:16And they said, right, we put money on the national credit card. Now, I know the households aren't governments. I get all that stuff. Don't at me. But they already started paying it back. We should have had a COVID repayment levy on high incomes from the second half of 2021, for example, right? These things that caused... We threw a whole lot of money everywhere because we had to. So then you say, right, battle stations, maxed out the credit card, bugger. Tell you what, we're going to have to unfortunately cancel our holiday. We're going to have to work a little bit harder. We're just going to have to pay that back and then get back on a reasonable footing.

11:44and then we can move forward again. And we didn't do that. We said, great, more surpluses, cheaper money. Let's just keep the thing rolling. There might be consequences. Who knows? Who cares? Worry about it then. Well, guess what? Now is then. This is the then that we could have seen coming, should have seen coming, and did nothing to resolve. So honestly, mate, fiscal policy is the first one. We should be, we should absolutely, here's the real problem I'm going to say. And this is the ugly truth in my mind, mate, to your question. If as an economy, if you believe, and I do, but I don't know if you do entirely.

12:15If you believe that removing demand is the only, is the way you remove excess inflation, then firstly, you have to do that. Secondly, here's the ugly news. If you tax Gina twice as much, she doesn't spend any less money because she's not spending her wealth as it is, right? Or maybe she spends a little bit less money. The reality about if you want to stimulate the economy, who do you give it to? You give it are the lowest paid workers because they have the highest marginal propensity to spend. In other words, they will spend every cent of a dollar you give them because they're already on the breadline and they've got to buy clothes and heat the house and do all that kind of stuff.

12:49If you want to retard demand, what do you do? Honestly, you go with the same people. This is why it's ugly, right? This is the ugly truth. It's so ugly. I can't get behind. I mean, just by the way that you frame that out there. No, how have Alan Joyce's pay, mate? What does he do differently? He might not buy that house, but he's not giving up the caviar. He's not giving up the champagne. But isn't that an argument? Have Gina's wealth. He's not going to make any difference. Isn't that the problem? Isn't that an argument also for just like taxing them more? If they're not going to notice? Yes, it is.

13:18Of course it is. Of course it is. But my issue is not going to change demand more than a tiny, tiny, tiny fraction on the margins. It's honestly the ugly truth. If you say, how do you slow demand? You would have to tax billionaires 90 % before you stop their spending. I'm not suggesting that. Alan George's tax rate would have to be 80%. No, no. But I know you're not. My point is, that's why it's ugly, right? This is literally the ugly truth. I don't want this to be true. I wish this wasn't true. If you want a slow demand, there is nothing you can do to Alan Joyce short of taxing him at 90 % that stops him spending on consumables, which is where demand is.

13:51He can swap assets. It makes no difference. Well, there's not enough Alan Joyce's for even that to make a difference, even if you did tax him at 90%. So I hear your point. I get your point, but it's just the way it's framed there is you've said people who already can't afford the basics. Yeah, yeah. and again you have to take one for the team here for society for quote unquote the economy I don't I don't buy it I don't I don't buy it and I think and I think I think it's just it's also an assumption that this is all demand driven in other words the price of your bananas is going up because people are buying too many bananas and I feel like I reject the premise I think but it's not it's not that's it doesn't the cause and the solution aren't the same thing i agree with you it's not the cause it doesn't mean it's not the solution so let me let me go back for a second half a second we come back to this so i want to make a point really clearly because you kind of pull words in my mouth i just want to be really clear the record i don't think we should slug the person on the breadline because they haven't got a mortgage anyway but what i am saying is those people with mortgages the next next rung up if you like on the economic ladder i know you love property letters let's go the economic ladder as well um it's those people the next rung up on the on the economic ladder that really do um it's why it's why we use interest rates mate because those people we can influence ironically we have lower and lower impact on the economy overall because those people have a higher marginal propensity to spend and therefore if we can remove that spending it is the most effective way efficient way nationally it's not fair again we can go back to that but that's why i said it's ugly it's ugly and true at the same time, right?

15:29Those people have, if you tax, it doesn't make a difference, right? If you, you can't take, you can't put rates up on people who aren't paying a mortgage, so that doesn't help you either. And we shouldn't be putting tax up on people on low income, so you can't do that. So what do you do? You want to have the smallest impact nationally, economically. You want to be able to have that impact be efficient and effective, so it happens quickly and with the smallest amount of pain. So that's what you do. And again, I'm not for a second saying it's even half fair. I'm just saying mathematically, that's how it nets out.

15:59You don't, it's just, you know, so to your point about, let me say that. Then you point out bananas. Here's the thing. Are bananas going out because people are spending too much? No. But how else do you reduce demand other than reducing demand for bananas? You take money out of the economy until people buy fuel bananas. And that over time for the whole economy drags down demand that puts downward pressure on prices. Again, it's just the maths of it. It doesn't have to be right. It doesn't have to be comfortable. You don't even have to like it i just don't know any other any other combination of arithmetic mathematical factors that gets us to the same result i do i'll give you one i'll give you one there's a supply side of the equation right so i i come back i think these conversations are always difficult because you have to sort of build up a foundation of shared facts and beliefs because it gets very arbitrary and abstract very very very quickly i know it's important you're right i take i take the view, look, the money that we've got here is just a measuring stick, right?

16:53It's a global coordination mechanism for society, essentially. And at the end of the day, it translates hours worked into goods purchased. Absolutely, right? So prices going up, this is maybe a bit controversial. It's not a bad thing necessarily. It's actually a very important signaling mechanism for Adam Smith's invisible hand. I know I've gone on about this before, but that's what it does. So other people, was it Coffs Harbour? In fact, speaking of bananas, I think they had big banana industry, right? And then blueberries started to take off. And you get really good price. Remember, blueberries used to be a lot more expensive than they are today.

17:31Yeah, yeah. So a few people thought, well, wait a sec, I get a better margin, better return on this. So they started growing blueberries. And more people saw that and got on. And you play this record forward. And the price of blueberries came down dramatically. Yes, yes. Right? Excellent, right? That's what sort of happens and that's what needs to happen. I'll go even further out into the wild and weird. I would actually say if in a very, very hard money kind of system, you would actually see prices in general trend lower over time because we just get more and more productive. Each year we get better and better and better at making stuff with fewer inputs.

18:11The classic example is you and I can go out fishing. We might catch a few fish. And then the bloke next to us, he uses a net and it's like, wow, he's working just as long as we are, but he's getting a lot more. And then all of a sudden a modern industrial trawler turns up, you know, and just takes 18 tons of mackerel out of the – and it's all – all of that value in the fish and the thing that we desire has been delivered with much, much, much fewer input. And that example you can relate to so many different things. Yeah, farming is a classic. Cotton, the old spinning genie, the first serious industrial action was by sewers who didn't want this bloody, you know, spinning wheel board in, which would actually put them out of work and make their jobs easier, but mean there were going to be less of them.

18:58It's always been the case from literally the very beginning of the industrial revolution. And earlier, as you say, mate, nets weren't industrial, but yeah, that thing gets played out just across the economy. Cars being made, automation. All the time. Yep, yep, absolutely. Yep, you know, and frankly, it's not to put too fine a point on it it is exactly the reason for our wonderful standard of living the poorest of the poor today lives better than king henry the eighth you know it's just it's it's all of it's so it's so it's a really great thing and and so you have to go back to well why are the prices rising here and i would say at a zoomed out level it's very simple you touched on it before we just we just pumped a bunch of cash into the economy right and and and we had all kinds of wealth effects as properties spiked and all of this kind and we're just awash with cash and we all went out and we all spent it now i think it's part of i think there's partly the dislocation of shutting the economy down but they were they were rather they actually everyone look a lot of people said at the time this is all transitory and they were right because this is a multifactorial thing but there's there's inflation quote-unquote you can measure that a thousand different ways but but it was going up because of uh the excess money in the system and because of the supply shocks and because of probably 50 other things that we're not even thinking of but exactly that's right but but the supply side of things really i mean the container prices have have come down you know oil prices have come down you know so so all of that kind of stuff has quote unquote normalized, but there is still a lot of excess sort of liquidity.

20:33I feel, and back to my original point, money is really just a measuring stick. I think the money needs to remeasure. And it's almost like, I think that if you stop tinkering, it will kind of sort it to where we will wear the cost of all of that inflation, one way or the other, right? We have to sort of do it. And I would, I just, I feel as though So while you're mathematically right and it will absolutely work, the approach is brutally, brutally unfair. People are already wearing it because of the inflation. And now I'm going to wear it doubly so. So I'm going to have to wear inflation and then I'm going to have to lose my job for the economy.

21:17Or pay higher interest rates or both. Absolutely. Exactly. And so I would posit that we would just, as you say, it never comes back down again. It would eventually, you know, economics, like a lot of things, you reach equilibrium points and we go from there. We've just got to stop tinkering with it, you know, too much. I think the story of central banking is always, I mean, one, it's an impossible task. So I don't blame the central bankers too much because they're given an impossible task. But they're driving by looking in the rear vision mirror. They're humans. They make mistakes all of the time.

21:55and the problems that we, we solve one problem only to sow the seeds of a new problem down the track. And that's really been the story since the dot-com boom and in fact, going back further, 90s recession. It's one damn thing after another, which, you know, sort of like only, I think I made the point in a previous pod where the reality, you want to talk about hard truths. The hard truth is that we all partied a little bit too hard. Maybe party's not the right word. And there's a reckoning that has to happen there. Right? And that was my point about taking money out sooner rather than letting it go.

22:29What they did was they did what they thought they had to do. I still disagree with you. I think the tinkering is worthwhile, but we'll probably never agree on that. What I think I agree with you is at some point you say, thank God we're through that. Now let's fix things rather than let's just let things drift. Because how bad could it possibly be? The answer is 10.1 % inflation in the UK and interest rate in Australia has gone from 0.1 % to 3.85 % in 12 months. Yeah, exactly. But, you know, it's the – I know we've talked about this before too. It's sort of like if only we had really capable people in charge, then it would work.

23:01And I was like, well, you know, it's not – you can go to either extreme there, but it's just like, well, that's a pretty big sort of thing to rely on. It shouldn't be, but it kind of is given the state of politics. Yeah, exactly. So I know it's a very radical kind of idea, but I would just sort of say, do we need to tinker and do we need to do stuff as a society? Yeah, I think we do on the fiscal side of things. But we do that with our elected representatives tied to the realities of a sensible monetary system, not to a system where you guys get to create money at will and distribute it at will and rely on the blunt trauma of interest rates to do the hard job that you need to be doing in the first place.

23:49So borrow money, spend it, give support. Let's talk about taxation. Let's talk about all these government spending and let's talk about all this stuff. But if you're going to fix it, that's how you fix it. You don't fix it by a council of elders changing the price of money at whim. That to me is the really bizarre part. And I know that's a really non-conventional take, but the more I've thought about it, God, I've been thinking about it a lot lately. I just I feel as though it needs to be I think it needs to be sort of I've yet to see a really good argument for why that isn't the case why we need to have an ability to sort of create money at will and why we need to have a central authority that gets to tell everyone else how much that money costs I would I would argue like free markets pretty good at a lot of things and one of them would be setting the price of money so why why do we centrally plan money prices you know yeah i i think i've said before mate i think you're right about the absolute i the the actual price of money i think i think it's i'd be so let me let me pose you a what i think is a rhetorical question but obviously few is not is do you really think had central banks during covid done absolutely nothing we would have avoided as much pain during covid because my my straight up argument is for everything you might be right theoretically pragmatically we would have seen far worse outcomes had interest rates not been reduced i agree to allow for it so i'll square it for you yeah please i'll square it for you you're absolutely right um if they had not done anything it would have been worse however the thing that they were doing was to fix the other thing that they did before and the other thing that they did before was drop interest rates to insanely low levels and not not just like over a short period you know a decades-long structural decline in interest rates is the very thing that led to the problem so yeah they had to fix it but they created the damn thing so i would say go back further virus at the time but there was a virus oh but these are these are these are forces that have been in trend for for for a long long time and and we we were at a point when when that hit that that's that's where that that's where the settings were and that's where the reaction was but again it it's not something you can look at in in isolation if i start a fire and it spreads from one room to the other i can still try and put it out in one point but it's still you know it's kind of i shouldn't have just been doing anything there in the first place is is where i where i come down on it okay but let's say they had done nothing let's say they've never done anything let's say rates were already at the natural level going into february 2020 yep do you really think that if rates had already been natural a massive once in a generation economic social and health crisis we would have had no worse outcomes without a cheaper a forced cheaper rate of money because i think that even if let's say let's say they hadn't made problems over the last 20 years and rates were already three percent going in rather than zero point or whatever they were half a percent of what they were going in the action of reducing those rates was part of the solution without the action from whatever the level they were i agree with you by the way they were too cheap going into it whether whether we agree they should be left alone or centrally managed they were centrally managed badly again i think my i've said this before i think my take is they were so scared of another gfc that they kept rates too low for too long because they were just whatever we can do to avoid a recession is what we're supposed to do i think i agree with you they created circumstances that that made things worse absolutely but i would also posit that without a central authority with the ability to lower price lower the price of money during covid we would have had worse economic outcomes again i come back to the fiscal argument i i would say do we do nothing no we need to we need to do something in an emergency but we we the support doesn't have to come from an artificial lowering of the cost of of of money why is that worse than the artificial lowering of taxation like i what i don't get is why the cost of money is sacrosanct but taxation is not why ideologically is one able to be said oh we should use tax because that's all that's obviously something we should change money that's obviously something we shouldn't change i'm in the camp of you change both to whatever degree you need.

28:00I'm not sure why the price of money should be sacrosanct if the collection of taxation can be fiddled with. Why would we say the reverse? Tax should always be 10 % and we should use the price of money to change the way the government's right. I think you can make both arguments with no obvious to me anyway ideological framing for why one is absolutely right, the other is absolutely wrong. What am I missing? Yeah, because money is the system in which we, as I said before, we measure everything. think it's actually really important what prices do and tell us and it's how everything we we we tinker with that we tinker with the very communication system that we're all trying to use to to globally coordinate our economic activities that's exactly what money does it is why it is like as i've said before the fire or the wheel it's without money we'd be living in tribes of 500 people right we just because we couldn't trust more than that many people wouldn't know we wouldn't be able to remember that many people money is what makes it all possible so So that is something that is, I feel really important that we don't tinker with.

29:01Now, once we've got the money, which is out there acting as a medium of exchange, store of value, all of these, unit of account, all of these kinds of things, then we as a group, again, we're all living on the island. We all go about our own business, but there are some things we sort of need to sort of work out at large. So we elect some central people that look after that. And then we can decide, well, it's like, we've got this much money here. What do we do with it? Oh, there's an emergency. Well, actually, we need to sort of help people who won't be able to eat. So let's spend some money on that.

29:31Maybe we need to borrow some money to help that happen. Maybe we need to have some fiscal discipline and budgetary discipline. You know, I think a lot of positive things flow from a system in which you can't tinker with the money. Because money, when you tinker with that, everything starts to break down. And you also very preferentially treat some people over others. in, I think, very brutal and unfair way. And it's, you know what I mean? So I'm not saying laissez-faire, let it do its own thing. But I'm saying that's not the right thing to do. It's like if, I'm trying to think of a different example, you know, my computer's not working as well as it should.

30:17So rather than have a look at some of the code, I'm going to go in there and start rewiring the very base level chips of the machine. is like whoa whoa whoa you don't have to go that far and it's going to have all as we've seen time and time again unintended consequences and and all the rest of it and again i come i really do sympathize with the view because as i've made the comparison before like with communism i mean there's a lot of appealing sort of high level thoughts there there really are just doesn't work right and and i i feel as though it's the same with centrally centrally planned money it has

30:55it's a desirable idea if we've got really, really smart people, really, really ethical people, really, really, really capable people, people who are genuinely, and people who have access to really detailed, immense levels of information through this wide, complex web of thing we call the economy. So if all of those things happen, yes, okay, let's do it that way. But we don't. And that's, again, I can point to a million examples, even in the West and the developed countries, where it's just like mistake after mistake after mistake after mistake. Oh, but now there's another emergency. Oh, okay. You guys come in here and fix it, even though you're a big part of the problem in the first place.

31:36Anyway, it's - Yeah, I just, I think it comes from an ideological perspective, mate, that you have. And I'm not even saying it's wrong. I just think you started with, obviously, money needs to be free and unfitted, and we should use other tools. By the way, taxing people is changing demand for employment. It's changing demand for spending. I really don't think I'll ever get, and that's completely okay, I don't think I'll ever get the whole money must be freely asserted, but tax can be changed rather than the other way around. I don't have an ideological base that really gets, at a visceral level, your argument about why not change the price of money?

32:10Because we can. Why regulate people? Just let the chemical companies do it. If people stop buying from the chemical companies, they'll stop polluting. I mean, at some point you just say, there is a role for government involvement in the affairs of men, to use a horrible, cliched, sexist term. And I don't see why money is the thing that we say. Except that. I just really don't. I hear what you're saying. I understand that's your view. And I'm not even necessarily saying you're wrong per se. When it comes from a position of, obviously, first principle says you shouldn't touch it. I'm just like, well.

32:42oh i just don't your point you made a bit a few minutes ago probably a lot of minutes ago now um you know we start with an agreed set of facts we do but then the ideology that lays over that is well obviously for your view money should be unfettered in my view it's well within the toolkit of government to say we can use that if we choose to now is it being used well enough blah blah should fish quality be used more we're 100 aligned on that i just don't i don't get the the ideological study it's just it's not part of my makeup to go yeah obviously you're right we shouldn't touch money we should touch the other things yeah to your point they're all man-made it's a it's an arbitrary construct there's no reason on that basis the arbitrary construct should be unfettered um yeah i just and again i'm not i'm not suggesting you're going to agree with me or i'm going to agree with you it's just a fascinating conversation when you get to the crux of it after and that's why this conversation hopefully is useful for me and for you and for our listeners is yeah they just you know hopefully two reasonably smart reasonably informed blokes who've done a reasonable amount of thinking about this at some point it's just like what's the role of x money government tax you know those things and our listeners will be thinking differently first principles absolute there'll be absolute libertarians out there who are just like government should we do nothing other than what they're absolutely have to do others out there saying hey norway's pretty good let's have 80 taxes everywhere in between and on every piece that's why this is is fascinating that's why the exchange of ideas is super useful yeah yeah uh hey um can i can i let's let's uh let's move on unless you're No, I don't know where to go with it because you get to a situation really, just to put a pin in it, where it's like there's a radical overhaul which is probably practically never going to happen, at least not any time soon.

34:19Or we just try and work with what we've got but we do it better. And that's a little bit despairing as well because it's just like, gosh, I don't know. You look around the world and it's like, are the people in charge really going to be doing the best things? They've not covered themselves in glory so far. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

34:44This is partly going to support your point in broad terms, not about money necessarily, but about the supplier response and other things. Could you speculate what's happened to the oil price over the last 12 months? This is a question that knows it's not fair, but just for the fun of the audio podcast, could you speculate where the oil price is relative to where it was 12 months ago? It's probably bang on where it was. before is it do you know what 12 months ago almost so on the 30th of may 2022 a barrel accrued west texas intermediate for those keeping score at home 117 dollars a barrel now 74 dollars okay way off and you should be right so that's and i was unfair to ask you so my apologies but i thought it was a trick question which is why i went with that answer i thought right well so and the reason i raise it mate is because when things you know this is this is part of the story we when prices go up when the oil price goes up there's headlines everywhere petrol prices up oil price up it's all that's horrible and and you know that it's not they shouldn't be headlines because it matters right it matters for all the reasons we've talked about before like the your favorite that your favorite phrase the cost of living um you know but but but literally in this case you know the cost of filling a tank and and money's got to come from somewhere else to do that it's a really big deal but the headline writers don't say daily hey it's kind of just slowly drifting down and there's no there's no big spike there's no big deal there's nothing really to write home about um but i just i want to i want to mention it mate just actually exactly that reason is a you're right about the idea of um price eventually in in some cases uh you know the supply response or just the simple supply demand rebalancing finds its own level right um but the other thing by the way so i felt like i took a photo of it i'm sure i'll show you i can't show our listeners um because i went to the pump the other day a dollar 78 a litre for e10 unleaded now again no headlines but it's two dollars 40 everyone's talking about it it's fallen back from those levels and we kind of still go oh you just kind of accepted or don't really notice it or it's not remarkable or we all notice individually but it's not really a big deal i just want to make the point around sometimes the headlines and sometimes the things that we think are true but also too why we are going to see some inflation come down to some degree by itself for exactly what you just talked about which is with a combination excuse me of too much money in this case for oil probably more related to the ukraine war and supply shocks where they were contained in the wrong place as you said mate and oil tankers furloughed because you know the price of oil remember it went negative yes at one point during the worst of covid then it spiked and that's we we have a just gonna i'll say a finely tuned economic engine one of the real challenges with the way we've learned to run the economy globally is our entire economy works on a just on time just in time basis you know the japanese had this just in time manufacturing thing in the 70s and since the rest of the world's gone that's cool let's do it for everything and there's no redundancy there's no stockpile there's no not just about oil everything right we just that's why we ran out toilet paper it's why we ran out of everything like there is no backup because we've just become so finely tuned to assuming that if everything works okay we don't need any extra of this stuff and when it doesn't you go oh now what do we do so now there's not enough of it now the price goes up and the price goes up we can't afford it and all of that i think we'll go back to normal we absolutely will in my view at some point not too far away once the economy is kind of back on its two feet once the supply responses are sorted and frankly once rates have their impact fairly or otherwise um you know we'll find that we'll find a level i don't know what that level is but we'll find we'll find a level at some point and i just want to i just want to flag that because it's one of the things that doesn't get talked about you won't see it in the headlines you very well you probably won't see an article about it i don't i haven't googled oil price articles but they're probably not that many at the moment um because those things tend to just capture the public imagination and they don't we move on uh but things improve as well you know prices do come back down you've already mentioned that that over time prices do tend to come down where they can well slightly different because it's harder and harder to get to but even that they still come down i just just i don't know where it goes next.