Platypus Economics with Justin Wolfers
@platypuseconomics.bsky.social
From world events to everyday decisions, economics explains it all. Platypus Economics makes it clear, useful, and actually fun. https://linktr.ee/platypuseconomics
Trump and the G7 played hot potato with oil negotiations, and they're calling today's announcement a big win. The funny thing is they're solving a issue that never existed in the first place. We're still short on oil, regardless of who's making deals.
The G7's new 100M barrel release is mostly just catching up on the 400M they promised back in March. They only delivered on 320M, and even in full, that number barrels sounds big until you compare it to global daily use.
Measuring the economy is an immensely difficult task, and that's why we see things like the BLS updating their Aug job number. It dropped from +162,000 to +133,000 after more data came in. Updates are a good thing and a sign the process is functioning normally.
"The market produced it" is just an economics equilibrium. Whether that outcome is acceptable is a judgment call we all get to make.
Think of the economy as a pie. It gets split up between owners and workers. We're seeing owners are taking more slices than ever before.
A 2% raise sounds nice until inflation shows up with a 4% bill. Your paycheck got bigger. Your purchasing power got smaller. Sounds like a bargain for your boss
Crypto, prediction markets, stock picking are all the same type of seduction. You can beat the market. You're smarter than the rest. But the hands-down best investment is a low cost, diversified index fund
If the market hands Sam Altman the whole pie and the rest of us get crumbs, don't accept "the market decided" . You're allowed to be mad about the equilibrium, and you're allowed to do something about it.
One of the most popular questions on our YouTube videos has not been about economics. It is about Justin's Golden Pig. Here's the lore:
A "diesel export ban" can also mean "put the extra in storage tanks until the ban is over". Refineries are businesses, and they're going to keep selling to whoever pays the highest dollar.
A federal judge just granted CNN, MS NOW, and Politico access back into the White House. If you had any question about the value of TV news, consider this: Peru’s Fujimori regime bribed television owners 100 times more than it bribed judges.
We spend roughly $6 billion a year on airbags in the U.S. Not because we expect to crash every time we drive, but because small risks with enormous consequences are worth insuring against. AI safety deserves the same logic.
In September 2020, the federal SPM working group voted to add home internet to their measure. They found it to be an essential cost, which adds to the story that internet is an essential right.
The Fed’s job is basically the seesaw of the economy. Keep people employed. Keep prices stable. The problem is that helping one can make the other worse.
We analyzed thousands of comments on our recent Canada-U.S. YouTube video. No surprises here. The U.S. basically broke up with Canada over text message. https://newsletter.platypuseconomics.com/p/feelings-are-economic-data-too (with the wonderful @svaneksmith.bsky.social)
@svaneksmith has been out talking with folks about the economy. Since the pandemic, groceries are up 32%, gas 57%, energy 45%, and rent 33%. Even though wages are rising, a big part of economics is how people feel. https://youtu.be/hDhY8-Cc1jE
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You might think economists make lousy actors. Unfortunately, monetary policy requires a bit of theater. A big part of the Fed’s job is convincing everyone that if inflation gets out of hand, it will raise rates enough to bring it back down. https://tinyurl.com/FOMC-raise
The Fed’s Most Powerful Tool Is Expectations
Kevin Warsh is trying to set them.
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During the pandemic, child poverty fell sharply after the child tax credit expansion. When the credit expired, child poverty snapped right back up. Giving people money works. More on that here: https://newsletter.platypuseconomics.com/p/what-if-we-just-gave-poor-people
What If We Just Gave Poor People Money?
It’s more complicated than it sounds. Well, sort of.
newsletter.platypuseconomics.com
We learned one thing about the new Fed chair today: he's willing to tell the White House "no". Now comes the harder question: how aggressive will he be on inflation? https://newsletter.platypuseconomics.com/p/a-tale-of-three-kevins
A Tale of Three Kevins
The Federal Reserve’s first rate hike since 2023 answered the biggest question about its new chair — and raised a few more in the process.
newsletter.platypuseconomics.com
GDP, jobs, and wages can look good. But plenty of people are still wondering when the good economy is supposed to show up for them. The US poverty numbers coming out today will tell us what actually happened last year
Scott Bessent is trying to lower yields, but isn't treating the bond market like that 800 pound gorilla that it is. A $6B buyback that they announced on Wednesday needs to be more like $60B to move the needle.
Canada's geography is a gift most countries would kill for: a long border with the largest, most prosperous economy in history (one with no expansionist goals). But Carney now sees diversification away from the US as central to Canada's economic future. https://tinyurl.com/tradeescalation
Canada's consumer boycott may already be costing the US more than the actual tariffs. Not because of trade policy. Insulting your trading partners has a price. https://youtu.be/lsRhHpwZfOk
We want to remind everyone that the U.S. and Canada are still parties to a free trade agreement. About 85% of Canadian goods still enter the U.S. tariff free. But we know two siblings could fight about something as small as a pencil if they had to. https://tinyurl.com/tradeescalation
What’s Bigger Than a 50% Tariff?
Answer: An infinity tariff. No, it doesn’t make more sense if you’re an economist.
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Why do bond prices fall when interest rates rise? Imagine you own an apple that pays you $5 a year. Then someone starts selling identical apples that pay $6. Your $5 apple is suddenly worth less. https://tinyurl.com/otc-9-12
Is It Still a Bond Market If I Don’t Use Jargon?
And the betting markets say Handsome Kevin is raising rates anyway
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New inflation data just landed, and it was hotter than hoped. Federal funds futures markets now put the odds of a rate hike at the next meeting at 86%, up from 72% last night. Don't trust our opinion. Trust the market's.
Trump threatened to raise tariffs on other countries unless the Fed cuts rates. Markets don't think it'll work. It may be turning monetary policy into a test of will. https://youtu.be/RtbNyCq5ZzU
A $5,000 government check isn’t automatically $5,000 of new wealth. If the government has to borrow the money, taxpayers ultimately inherit the debt. The key question isn’t “How big is the check?” It’s “Who pays for it, and when?”
Government can mail you $5,000. It can't make the country richer by borrowing that money in your name. You get a check, the government gets debt, and you are the government.
There’s a difference between saying “I’m worried about the integrity of future government statistics” and saying “I don’t trust any government statistics.” The first is vigilance. The second throws away the shared facts we need to know what’s actually happening.