Get Shameless About Money

#256: Inflation Part 1 - Where does inflation come from?

October 06, 2022 Brunch & Budget Season 2 Episode 9
Get Shameless About Money
#256: Inflation Part 1 - Where does inflation come from?
Show Notes Transcript

Featured Song - Inflate (Live)
from Catallabs (Live) by sonny miles
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Featuring an interview with
Dedrick Asante-Mohammad the chief of membership policy and equity at NCRC
Follow him on Facebook and Twitter.
NCRC Website

Season 2 of the Brunch & Budget podcast will share 3 part arcs of big topics:
Part 1 is KNOW - what are the key things you need to understand about the topic, the bigger systemic picture around it, and where the racial wealth divide fits in
Part 2 is FEEL - how do you integrate the topic into your personal relationship with money and unpack the behaviors, reactions, and habits around it
Part 3 is DO - we take you through Brunch & Budget’s 5 Stages to Financial Legacy so you have clear action steps for what to do at every stage of your finances

Hosts - 

Pamela Capalad is a Certified Financial Planner™ and Accredited Financial Counselor™ and has been in financial services since 2008. She founded Brunch & Budget to help people who felt ashamed or embarrassed about money have a safe place to make real financial progress.  Pam has been featured in the Washington Post, Teen Vogue, Huffington Post, Vice Magazine, and was named New York Magazine’s Best financial planner of New York 2019.

Brian "Dyalekt" Kushner has been a hip-hop MC, theater maker, and educator for nearly 20 years. He’s the director of pedagogy at Pockets Change, where he uses hip-hop pedagogy to demystify personal finance and help students take control of their relationship with money. He is the recipients of Jump$tart’s 2022 Innovation in Financial Literacy award. He’s rocked (performed/taught/keynoted) everywhere from conferences like AFCPE and Prosperity Now, to stages like SXSW and the Oregon Shakespeare Festival, to classrooms that range from Yale to your cousin’s living room.

Pam & Dyalekt host the Brunch & Budget podcast and cofounded Brunch & Budget's group financial planning program for POC called See Change. They regularly keynote on how art, culture, and media are used to perpetuate racial wealth inequality.

For services check out our website 

https://brunchandbudget.com/seechange/
Follow us on Instagram @brunchandbudget

Thanks for listening to the Brunch and Budget podcast. Please feel free to rate us, debate us, hate us, on Apple podcasts or anywhere that lets you subscribe. Add us to your archives and feel free to share an episode you think can help somebody out. If you've got questions, corrections or a song about money financial systems or how you feel about either please send it to letsbrunch@brunchandbudget.com We'd love some indie artists. Don't forget to SUBSCRIBE to our newsletter by texting BRUNCH to 33777. 

Dyalekt:

When inflation got you pushing all these boulders up bigger hills and you're looking at the future tuitions giving you the chills but they're all frills on social you're looking for something real. Don't break down let's break it down over a meal. This is the Brunch and Budget Podcast with your host Pamela Capalad, a certified financial planner and accredited financial counselor, founder of Brunch and Budget, Pockets Change and See Change. She's here to take the bite out of your budget

Pamela Capalad, CFP, AFC:

and your other host Dyalekt, the director of pedagogy at Pockets Change and co-founder of See Change. He's here to change the way we talk about finance

Dyalekt:

recorded live is from Green House studios deep in the heart of planet Brooklyn. You gotta know when to brunch it. Know when the budget know when to walk away? I don't know. We'll double down I didn't have I didn't have an ending for that. What's going on y'all? Budget podcast.

Pamela Capalad, CFP, AFC:

Hello. Hello, I am Pam. And today we are talking about I kind of want to timestamp today because the numbers that we are sharing may be old when you listen to it. But the concepts are the same. So we recording this in September 2022. The inflation report for August 2022 just came out?

Dyalekt:

Yeah, we're all excited about it worried about what's good, what was gonna be the number. It's a whole thing. There

Pamela Capalad, CFP, AFC:

was a lot of optimistic economists out there who were like, Whoa, inflation has hit its peak. We're good. We're good. We're good. It's gonna go down next month,

Dyalekt:

folks, we're waiting for that. Like it was the new MBA salary cap, you know? Remember when like sports stuff was the only stuff that we like were stressed about when it came into like finances. That was the only guys you heard talking about? Were like movie stuff, stuff that didn't have to do with you like, Oh, you heard this movie had a $200 million budget? Oh, wow. Hope it makes us budget back. And now we're like, I hope the country can make its budget back.

Pamela Capalad, CFP, AFC:

Oh, my God, I hope I hope the inflation rate is going to

Dyalekt:

remember when you didn't care about inflation like that, like only you know this? Well.

Pamela Capalad, CFP, AFC:

Just to give you the news, the inflation rate in August was 8.3%, which went up point 1% compared to July. So it was 8.2%. In July, it's 8.3% in August, and folks

Dyalekt:

are freaking out because the projections right, it was supposed to be going down. Yeah,

Pamela Capalad, CFP, AFC:

because we were seeing gas prices go down. But what they didn't take into account were food prices and rent prices were still going up. And inflation is calculated by this thing called the Consumer Price Index, which takes into account all of the common things that people spend money on, and then sees if the prices are rising. So what is inflation? Right? Let's start there. Because

Dyalekt:

what you like you're talking about an aggregate score now and gas prices aren't the thing and like, oh, and

Pamela Capalad, CFP, AFC:

it's really bad. So inflation is the basic basic basic concept of inflation is that a refers to prices increasing over time, and there's many reasons for that, we're going to talk about a couple of them in a little bit. But what that basically means is if inflation goes up 2% Then basically, if you needed to buy something for $1, then next year with inflation going up 2% It would cost $1.02 Yeah, I remember in the movie half baked Willie Nelson was like I remember when a dime bag cost the time they go. It's it's it's a weird thing that feels like it's natural, right? Like, well, as there are more people in the world, money is generating value. It's expensive. Yeah. And you know, there are some aspects of it that are probably natural. And there are some aspects of it that are definitely created by the Economist, some GMO going on, there's some GMO going on. I shouldn't say by The Economist, there's like, you know, the Fed. The other thing that's coming out that we were doing this podcast before the actual fed rates come out, but the way that the Fed tries to control inflation, is to increase interest rates. So basically, the Fed the Federal Reserve is the bank's bank, right. And what happens is the Federal Reserve lends money to banks, so banks can lend money to you, right? But the Fed lends money to banks at a certain interest rate. So if the interest rate is low, if the lending rate is low for the Fed, then the banks will turn around and give you a lower interest rate to buy a car to buy a house to take out a credit card, all that stuff, right banks to love you. Yeah, but only only if the Fed rate is low, right. But the one of the ways that the Federal Reserve tries to curb inflation is to increase their interest rate that they lend money to the banks on. And so the banks as much as they love you pass the increased interest rate on to the consumers.

Dyalekt:

So I mean, the whole thing is supposed to, well, it does sound a little natural, like an ebb and flow right.

Pamela Capalad, CFP, AFC:

Yeah. So it gets what's natural and you know, there are there are there are levers in place to control it when it feels like it's getting uncontrollable right, and the interest rate for the Fed is one of the ways. Now the problem with that is because the costs get passed up. The costs get passed on to the consumer. The people who always get screwed in the end are us is really the The end game, right, you still get to collect their interest rate, the Fed still gets to collect their interest rate. But it might be too expensive for you to be able to borrow money for a car or to get a mortgage. Because when interest rates rise, everything costs more. And so they're saying, well, if everything costs more than maybe people will stop spending as much money, and that will curb inflation. That's not how stuff works.

Dyalekt:

Like, you know, what, if we make these groceries more expensive, they just won't buy these frivolous groceries?

Pamela Capalad, CFP, AFC:

Yeah, if we if we make borrowing a car, more bank borrowing money to buy a car, and more expensive, then you know, maybe people will buy less cars.

Dyalekt:

They think that oh, man, I'm so tired of folks think that we only spend money for silly side things rather than I need to get to work, I need to wear some clothes, I need to wear the clothes that the job told me that I need to wear and I need to eat enough stuff to get there and back.

Pamela Capalad, CFP, AFC:

Yep, yep. And what's truly shocking about it the how quickly inflation has risen just over the last several months, right? Like if we weren't even thinking about it at the beginning of the year. And then around March, I remember the interest rates for mortgages, like went up by like, pretty quickly by maybe a couple percentage points, it went from like 3% to like now, banks weren't lending unless it was 5%. And then it just escalated from there. And the reason why it feels so shocking is because since 2008, the average inflation rate has been 1.57% per year between 2008 and 2019. If you go to in 2013 dollars.com, you can find the inflation rate. So that means that $100 in 2008 is equivalent to $118.02 1020 19. Right? So it's not a huge amount, we have not experienced a significant inflation rate, which means that like prices were rising incrementally here and there at kind of that natural way that you were talking about dialect. But now we're really seeing like the effects of you know, there's so many reasons people are coming up with supply chain, the war on Ukraine, you know, all of these things, a lot of

Dyalekt:

stuff that feels like I think the reason why we're so late to figuring it out that in these individual areas, we're like, oh, we know the reasons why, oh, this is a supply chain problem here. Oh, there's a worker shortage here or there's something that's specific to the industry, not realizing that all of these are increasing the aggregate

Pamela Capalad, CFP, AFC:

what and then if you see the headlines on the other side, gas companies have made record profits in the last couple of quarters. So why is inflation affecting us? Why are the prices getting passed on to us the higher prices, but they're not showing up in lower profits for the gas companies. It's

Dyalekt:

a time where we have more communication about this stuff than ever. I feel like in the 50s, they could have done it and we wouldn't have found out for 30 years. Right,

Pamela Capalad, CFP, AFC:

exactly. But now you're seeing it, you're seeing it every quarter, you're seeing the profits and you're seeing the headlines. But really so much of the focus, and I will tell you when like press call me and when they ask questions. They're always asking what can the individual do?

Dyalekt:

This is why we don't have to worry about whose fault it is and checks and balances because at the very least the journalism stuff is not on our side. Maybe in the 50s there were some intrepid folks who were doing some checking and balancing so they couldn't just jack it up and not tell anyone.

Pamela Capalad, CFP, AFC:

Today's episode is sponsored by us, French and budget. French and budget is not just a podcast. It's a financial planning practice with a team of certified financial planners and accredited financial counselors, ready to work with people who need a safe space to talk about your finances. Many of our clients come to us because someone or something made them feel bad about their money. We're the antidote to that. We do all our financial planning and coaching through a racial wealth equity lens and we'll use our very own five stages to financial legacy to show you how far you've come and where you're headed. go to brunch and budget.com to learn more.

Dyalekt:

Now you've heard us talking a lot it's time to bring in a little bit of expertise I guess other than our expertise This is the preach to the choir segment if you've been listening for a while you know that preach to the choir. So you know what to sing is not only our motto, but it's been entire episodes that we've worked with Diedrich Asante. Mohammed, the chief of membership policy and equity at NCRC. He's wonderful, intelligent, powerful cat who has been able to give a lot of perspectives on the racial wealth divide angle to all of the economic concepts that we're talking about. So let's listen to a Diedrich got to say and we're back with our favorite Diedrich Asante Mohammed there might be other DJ because I don't know how was your favorite of the Diedrich Asante Muhammad's you know it's just like how people have to choose between you know Selena continue and Selena Gomez right you're even if there are other districts out there, you're your rd chick, you're our favorite. I'll tell you

Dedrick Asante-Muhammad:

I'm good. I'm good. I'm glad to be a top Diedrich though my mom named me after Dietrich Bonhoeffer might have me as number two Dietrich Bonhoeffer a German theologian died fighting against the Nazis, but you know, I'll take one or two either one.

Dyalekt:

I didn't know that That's your named after that's a pretty cool and that's it that is also a pretty good Diedrich.

Dedrick Asante-Muhammad:

Yeah, yeah. famous quote about being that, in his analysis to be a Christian require you to be a spoke in the wheel. I think I've been justice or something like that. And yeah. Blow Up. Hitler, though was unsuccessful in that. So a man of action so interesting.

Dyalekt:

Yeah, that's that's how being spoken the wheel without just speaking. Today we're just gonna do some speaking No, no, not the explosions going on. Unless you blow and folks minds with the stuff. We're talking about inflation today, right. And inflation is? Yo. So I know, we bring you in to talk about the race stuff with stuff. And I want you to discuss the overall but the Fed recently, or I guess someone from the Fed had said that we need to bring down wages as one of the things to stop inflation. And I don't know about you, but that felt racial, to me. You know, people joke online of like, what's one of those things that isn't technically racist, but feels like I was like, Yeah, I felt Mm hmm. So I'm sure there's that's just the tip of the mountain. So what is racial or racist or discriminatory about inflation? Is it an inherent thing? Is that an excuse that people use to do other stuff? What's going

Dedrick Asante-Muhammad:

on? Yeah, well, and just to jump on your concern, I mean, you know, we saw, I was looking at, I think, the poverty rates and 1980 for African Americans. And notice how they really skyrocket it was trying to figure out what that was about, and then actually enter and pointed out that, you know, he thinks and it looks right, it corresponds, at least that the kind of great big change in the economy tried to deal with the recession of the late inside the recession, the inflation of the light of the late 1970s, you know, really had a strong impact on the African American community. And I have been concerned that as we get so concerned about inflation, that that is, again, what we're gonna do. And you know, when people started saying, We got to bring wages down, the economy is roaring, I was like, well, the economy's roaring for, you know, black people, Latino people, median household income for blacks around 45,000, Latino, maybe 48,000. As I've said, before, median wealth for blacks, 9000, Latinos, 14,000. That's not a roaring economy for these people. And the idea is that in order to get a grasp on inflation, we have to raise unemployment rates and lower wages. And for those who already have disproportionately high unemployment rates, and lower lower income, I have great concerns that this is going to be something that, that that that maintains the racial economic inequality, that's been a part of our system, you know, and again, no inflation does have also in some ways, disproportionate negative effects on working class people, black Latino people in that, you know, you have gas is going up 30%, and your salary hasn't gone up or even for salaries gone up 10%, and you're only making$46,000 a year for your household, you know, gas going up 50 cents a gallon, takes a much larger proportion, away from your day to day spending than it does for high income people. So I think inflation is an important issue, I just do get concerned about the way they want to address it is to probably have a disproportionate impact on employment rates and lowering income for working class folks. So So I do have that concern, I think it could have an impact on maintaining racial economic inequality.

Dyalekt:

Now, I wanted to ask about this. Yeah, thank you for reminding me to because I forgot that they were also talking about like, higher unemployment, which never seems like a good thing for anyone. It baffles me that there's like an economic system where we're gonna go, we need some people to not be at work in this system where everyone has to work, or they have no value. But the thing that you bring up, and maybe I'm getting a little too abstract, but I think it's one of the issues is percentages versus real numbers, right. And if the economy, you know, inflation is causing this stuff to rise to this percentage, and other things of that percentage, but hey, you make under 50 grand a year, so $1 More in gas, just in real numbers, who cares about percentage or anything, it just causes too much of a crunch. And when we have to deal with these real numbers, making it so the percentages don't really matter? How do we keep our head above ourselves and not get lost in the forest so

Dedrick Asante-Muhammad:

that yeah, no, I think it is, you know, I think it is hard to not get lost in the numbers. Maybe economics is a field dedicated to ensure that you get lost in the numbers. There's just one other point I want to bring up about inflation. And I'm definitely contrarian in this is that there is a story out there that the reason we're having such inflation is because the government spent too much money helping regular people get through the COVID recession. And I am I don't buy into that theory. And with that, I don't buy into the solution that the way to get a hold of inflation is to punish middle income working class people by because they have too much money. So we have to make them less employee, we have to bring down their wages. I do you know, there is inflation. But I do think it is much more about supply chain COVID, maybe a bit of Ukraine that I think the reason, you know, we're having such a challenge, and, you know, getting cars, car parts, chips for cars, these types of things isn't because all of a sudden, and particularly lower income or median income people have so much money, and we're buying so many cars, like I don't think that's the that's the issue, I think there was a an increase in buying used cars, because public transportation used to public transportation went down because of COVID. And there were, you know, not many affordable cars. And that caused that up to go a bit. But I think, particularly for newer cars, I think the bigger issue is that factories are shutting down because of COVID. And there's kind of this up and down, and even transportation costs are continue to go up. So I also, you know, critique the way that that the system wants to handle, it always seems that they want to blame working class people for inflation, and then punish working class people to deal with inflation. And I just don't believe that the primary problem is that working class people have too much money and have too much job opportunities, and we need to take it away. And so you know, that's also a profound difference I have and what is generally put forward as, here's the way to deal with inflate, every all the time, it seems like the way to deal with economic issues is, oh, well, let's punish working class people. And that'll help the economy. And I, you know, I just disagree with that.

Dyalekt:

Yeah, you're the word that you're using, I think it's really important that punish people, whenever we're hearing about needing to raise unemployment, or you need to lower the wages, it's talked about as an overall good that we're doing for folks, and that this is going to help the economy as if the economy is a person or an entity and rather than just a collection of us. And I think it's really important that we're able to understand like, could you break down like, what is what is this In practical terms, the folks who like I don't understand what you mean by by punishing folks even like trying to make this connection, that not having jobs? What does it mean to punish poor people for doing slightly better?

Dedrick Asante-Muhammad:

Well, well, the question is, did poor people even do that much better? I mean, I think poor class people didn't get destroyed during the COVID recession, and maybe, you know, maintain themselves and maybe did a little bit better in that, instead of only having $100. In their savings account, they had 400, or 500. But I don't see that as something we want to change. I think that is good. If the issue is there's too much money in the economy. I don't think the issue is to take money away from households making between 40 to 80,000 households that individuals households, because I don't think there bits of money is what is really raising up prices, like, hey, there's too much money in the economy, let's raise taxes on those on households who make over $250,000 a year like and because that is where a lot more of free consumer spending is done. Like that's never even brought up. Hey, let's, you know, let's tax let's take out of the economy, those who spend the most let's take some of that money out and bring down inflation. It's more like, oh, no, let's raise unemployment on those who have the least. And so, you know, and I would love to hear I've even heard this, this approach debated, you know, and I would love to kind of engage more economists and those who study the economy in this but again, you know, that's my space is I never think that a working class people are generally having too much money, particularly as it relates to black and Latino people and Native Americans.

Dyalekt:

Okay, you hear that? versus people The Economist, Diedrich once a battle we're gonna get into VS space with Diedrich Asante. Mohammed and the economist are the editors of the economist, right some writers Yeah.

Dedrick Asante-Muhammad:

And I'm gonna try to do better than Dipset did against the locks. I'm gonna try to do better than Dipset Wow. But they did not do well.

Dyalekt:

I mean, you know, a lot lots is pretty classic as to why Oh, allow the full effects of stuff that we're saying a little more practically? You did you gave me a really good answer about like what the punishment is. And I just want to make it clear for heads. The idea that people are not living paycheck to paycheck becomes the problem. And a problem that must be extinguished. I don't mean to sound too conspiratorial with it. But when you're saying, right, the gains are being exaggerated, like, oh, everyone's out there buying yachts, when really, like you said, they're having that 500 more in their savings, which you know, people who listen for a while they know that's like the average amount that an emergency may cause. So people are now at the place where they can maybe handle one emergency where they can maybe splurge on one thing, or they have a little bit of breathing room so they don't feel stressed. And this is the thing that seems like it must be abolished, so that we can continue having the system where people are so beholden, they can't go on strikes, they can't do all this stuff, where they're like, we demand fair wages were unionized, and doing all this stuff.

Dedrick Asante-Muhammad:

That's right up to the idea that, but yeah, that that by helping the masses, we're weakening the economy. And again, I didn't quite answer your question. And the way they tried to control this, and say we're going to punish is by saying they're going to raise interest rates right within, and we got to slow down the economy, right. And the idea of raising interest rates is that it will, you know, if you're buying a home, it'll cost more and so less people will buy a home, but more so for companies, if they were thinking about expanding their business, they're going to take out a loan to do that, businesses would be less able to do that. And so they're going to hire, you know, less, it's, it's actually going to take money out of people's pockets, and so they don't spend as much and so again, there won't be as strong a job market. And so, you know, those are the ways that that the Fed and other and it's interesting because the Fed has a mandate to control inflation and to maximize employment. And I think the Fed was doing a better job with this, as they were funneling money in to help people during the Great Recession, I mean, sorry, during the COVID recession, but I think now, they historically have been much more concerned about, quote unquote, inflation than they have about full employment. And I would like them to keep a full employment at their as their top target.

Dyalekt:

Wow, that's the way you broke that down, messes me up. Because we always think about capitalism, as and I know, we got to wrap up. But we always think of capitalism as this thing that's supposed to grow and expand. That's the stock market, it's always supposed to grow and expand the investments like housing and stuff like that. It's always supposed to grow and expand, and we're supposed to have a free market. And whenever harmful things are being done by big corporations, there's always this argument, the free market needs to be able to be free and do what it wants. Because if we stop expanding, we're gonna die like we're a shark swimming in the water. But here we are with like little things. The things that are we know are the engines that run the economy, but really small numbers, folks feel like we've got to stop or slow down the economy so that its health can be maintained. I don't even have a like a good question. I thought that Yeah.

Dedrick Asante-Muhammad:

And just in general, so oftentimes, the economy is separated from how people are actually living, right. So the economy might be growing great detail, but it's just the people who are suffering, right. And to me, I care about the economy only in how it allows to strengthen the the socio economic living conditions of people and the majority of people as a whole, and particularly those who have been historically economically marginalized, Black, Latino, and Native American. And I think we're in a space where a little bit of the progress we saw in how money was being invested more equitably, during the COVID recession. I think we're going to see a retreat from that and almost a punishment for it.

Dyalekt:

I appreciate that. Thank you. The economy is meant to be a tool for the people rather than the people being a tool for the economy. Thank you. We've got Diedrich Asante. Mohammed a top to top to me. Yeah, thank you. We'll check you next time.

Dedrick Asante-Muhammad:

Thanks for having

Dyalekt:

we want to get practical. So what are the things that make it happen? I know that there's like the the two main drivers of inflation's can be rapid about those and see how that goes. Yeah. And again,

Pamela Capalad, CFP, AFC:

this is the Motley Fool article that really talks through really just like two simple ways this happens. One is called cost push inflation. And this is when production costs go up to make certain things right, so the example they use is if the price of lumber goes up, then that leads to an increase in home prices that leads to an increase in repairs and renovations and you know, building costs and things like that. So it'll cost more for to produce a lumber, it'll cost more for the builder to build a home and then they'll pass the additional cost on to you. That's the traditional

Dyalekt:

stuff that we know about. Like oh, There's a shortage or scarcity of something. So now this thing is more valuable. It's more expensive. The other stuff that comes from it more expensive.

Pamela Capalad, CFP, AFC:

Well, what's, what's interesting about this is it's the source of the inflation is at the beginning of production. Right? The other kind of inflation is called demand pull inflation. And that's where the demand for goods increases. So basically, more more people want homes. Right. So it's not that the lumber costs have gone up. It's not the cost of build has gone up. But more and more people want to buy homes. And so there's more people who want to buy homes than there are available homes. And that's demand pull inflation. Hmm, yeah. Yeah. So it comes from one end, or the other comes from either consumers wanting to buy more of something, or it comes from on the beginning and production costs going up.

Dyalekt:

It's so wild, because they feel like very different things. But they both mixed up cost more.

Pamela Capalad, CFP, AFC:

Yeah, yeah. And so right now, we might be seeing both and this might be why inflation is going up is the cost of goods is going up, right? We keep we've been hearing about the supply chain for like two freakin years, I didn't even know what the supply chain was until the pandemic, right. And so the cost to produce goods is going up. And also, the demand to buy certain goods, especially homes is also going up.

Dyalekt:

That's what I'm saying. People know about supply chain metrics, the way they remember the the trade deal for their favorite.

Pamela Capalad, CFP, AFC:

I'm like, Oh, my God, why do we know the inflation rate right now?

Dyalekt:

Right? push pull inflation? Yeah,

Pamela Capalad, CFP, AFC:

yeah. So inflation did go up in August. We'll see what happens in September. You know, I think that economists tend to be optimistic because they don't want to see the stock market drop. We also did see a huge drop in the stock market when the inflation report came out. Yo,

Dyalekt:

what was it the the Dow dropped really hard? Yeah, that's the one that always freaks out. That scares the boomers. Right? It's like when the Dow Jones dropped, those are the three companies I know, it's not three companies

Pamela Capalad, CFP, AFC:

30.

Dyalekt:

Close, it's the three old

Pamela Capalad, CFP, AFC:

1000s of companies. But the Dow was only 30 of them. But anyways, that

Dyalekt:

people trust. It's like it was it's IBM, it's the wheel, fire, you know, all the old stuff. But they're like, that stuff is going down, we're in trouble. It's just this this wild thing where it's like it's point 1% increase, I get that we're expecting things to go down. But like the thing that freaked out was the stock market. And that's what caused a million think pieces about how everything is going to heck, you know,

Pamela Capalad, CFP, AFC:

that is truly that's great perspective, right? Because it's not like inflation increased or doubled in the last month, it's gone up a little bit. Right, and we are seeing gas prices go down. The thing that is really difficult, though, is we're not seeing food prices go down or housing prices go? Well.

Dyalekt:

So let's start getting into I think what's really real of this is is like inflation is going up and going down and doing this thing and moving around. But it doesn't feel like relief to us at all, because of a lot of factors, like you're saying at the top. And at the bottom. Like one thing I'm gonna bring in this study to talk about in a minute. But like one thing that all of the stuff we've been reading about has been saying, we have less unemployment going on right now. People are getting jobs, and people are getting higher wages. But that's at the bottom. It's not at the middle. So those of y'all who were like in abject poverty below the poverty line, really not being able to take care of themselves, there were a number of people who are now more able to take care of themselves. And that's great. They're doing better and these situations have increased. But if you're already making more than minimum wage, but not enough, your rate isn't increasing. They're raising the minimums. They're not raising the median of stuff.

Pamela Capalad, CFP, AFC:

So and they're not wages are not increasing with inflation, either. I mean, where do you think those record profits from the gas companies came from? They didn't increase wages, they cut expenses. Right. And they were collecting more money. Yeah,

Dyalekt:

it's rough. You know, a next thing about it is a lot of the tertiary markets are also been affected really heavily. It wasn't just the Dow Jones that went down, but the Dow Jones for the young folks, Ethereum and Bitcoin also fell off the cliff. All of the crypto markets are having a lot of trouble right now. And it's this weird disconnect, where there's a big fear of these things, but little is actually changing for most of us.

Pamela Capalad, CFP, AFC:

Yeah, yeah. Especially from month to month, like yes, the big shock, like I said earlier was that inflation went up so dramatically over the next several months, but right now, it's like, you know, it's inching along and we don't know what's going to happen next month. So I feel like that. Let's talk about this politico article that you found.

Dyalekt:

Yeah. Well, I wanted to get into this is the one of the big things that's stressful right now about you know, I don't see things changing in my life, whether it's good or bad, and you know, we're hearing all the stuff is that there It is an inflation wealth divide. And this is something that goes along racial lines. A lot of this stuff is mad new, we read this political article that has. It's got some research, there's this cat David Argento from Penn State University. I'm prefacing that a lot of this is been brand new in terms of their research. So they're not super sure about their findings. And

Pamela Capalad, CFP, AFC:

I think that's amazing, though, because I know what you're about to go into.

Dyalekt:

I know you've read the show notes,

Pamela Capalad, CFP, AFC:

I read the show notes. Like, you know, the consumer price index is an average, right? It's a kind of glomeruli of all of these things. And everyone was so shocked to see inflation go up because gas prices went down. But other costs didn't go down.

Dyalekt:

Yeah. And so what David and I guess this team that was working on this, I found that when you look at inflation, certain populations have a different level of inflation based on the goods that they're buying. So like you're saying, gas prices, they start going down. So the people who use the car more often, things are going better for them. But rent prices didn't go down, grocery prices didn't go down. So for the people who spend a higher percentage of their money on rent, it still a terrible place for them. And that goes very directly along racial lines. In the findings, black and Latino households are spending a lot more money. I mean, you know this that, in general, black and Latino households spend more money on rent, it also showed the rural versus City divide, because in the cities, you're paying a higher percentage, I mean, that's kind of increasing everywhere. But those places where that's happening, that's still been a huge problem for people. And

Pamela Capalad, CFP, AFC:

the other aspect of it right is that homeownership for black and Latino families is lower than white and Asian families. And so your mortgage payment doesn't go up if inflation goes up, because your mortgage payment is fixed. But your rent does go up.

Dyalekt:

Another interesting aspect of this inflation wealth divide is the financial literacy of it all, where people are like, well, you know, you're not making as much money. So just buy the cheaper product, buy things online, if you can. Well, for people who are already at the margins, they're already buying the cheapest version of stuff, there is no cheaper thing to downgrade to. So they're asked out in that regard. Yeah, you can't get the cheaper online thing if it doesn't deliver to your area. Or if the general obstacles of getting online and being able to do that are too much for you your life, your schedule in the way that you do things. So there's another area in which there is a divide amongst demographics, even though it seems kind of like it's the same for everybody. Today's episode is sponsored by us buckets change at pockets change, we offer in person and virtual workshops for students from grade school, to grad school professional development for educators and administrators and jams for the whole family to learn, unlearn and unpack. We use Hip Hop pedagogy in the classroom to meet students where they're at and hip hop performance in the communities to dispel myths and create new common sense around money. For some free resources, go to pockets change.com/toolkit. And sign up for our newsletter, let's change the way we talk about finance. One of the positive things that's been going on lately, and I think this has a lot to do with the social programs that people have been enacting is that there has been a shortening of the employment divide. There have been more and more black and Latino folks been getting jobs, and I've been able to compete with white and Asian workers. So there's been more parity on that end. Now, if you're familiar with hiring practices amongst black people, there's the familiar phrase of last hired first fired. And there's this concern that if we do this thing that the Fed is suggesting that you know, have less jobs, less jobs available, that's going to destroy all of those gains that are made, that's already starting to happen in some industries, and there's fear that it's going to become more widespread. So to talk a little bit more about like the the wages and the things at the bottom, there's some great quotes from this cat, William sprigs. He's the AFL CIO, chief economist. I know, you know, economists and all, but I thought this was really interesting and useful stuff. He says, The wages at the bottom have been going up the most. So if anything, the real wages for people at the bottom have been doing better than the real wages for people at the bottom. Black people, low income people, they need both. We need to keep striving for full employment, because the unemployment rates for black people are higher than the aggregate, but also low income, particularly black people need goods and services that are affordable. So the way that we get inflation down as you lower demand, the way you lower demand is you kick people out of work, you lower their income. If that happens if you happen to be one of those people who keeps their jobs, then you're a winner. And if you're one of the ones who we decide the rest of us need lower prices, you lose and what frightens him in this he says what frightened me in this drumbeat about inflation is you're admitting that this is how inflation gets fought. and this isn't his quote, but with sacrifices.

Pamela Capalad, CFP, AFC:

Yeah, the sacrifice ratio. And also, we're turning the economy into a zero sum game.

Dyalekt:

Are we turning the economy into a zero sum game? Or has it been always been a roller ball out there?

Pamela Capalad, CFP, AFC:

I mean, capitalism has always been a zero sum game, right? And at the end of the day, yeah,

Dyalekt:

this is the stuff that really lays bare. How inequitable and unsustainable the system is,

Pamela Capalad, CFP, AFC:

and how manufactured it is, yeah, man,

Dyalekt:

talk about some GMO type stuff. We're like, Yo, the way that we're gonna make it okay and affordable is by cutting out people's jobs. I, I've been going through the stories about this and the data, and I completely cram to understand it does not make sense to me that the way that we make a stronger economy is by having less people have jobs. Yeah.

Pamela Capalad, CFP, AFC:

So um, there's this really great Axios article. And this is like dialect was saying this is all very early. But people haven't looked at the inflation rate in verticals before. And when I say verticals, I mean, between gas prices, food, and rent, and then across racial lines, they thought through inflation, not as an aggregate right, the consumer price index is like, on average, like has inflation gone up or down across like all industries across all sectors, just like people spending money, right? Has it gone up or down? And so while that number is high, right now, it doesn't tell us the full story. And so what we saw in the article was that they not only divided it across, like different types of goods, right? We're talking about gas prices, we're talking about food and groceries, we're talking about rent, we're talking about housing, right, but they also divided it across racial lines.

Dyalekt:

So the verticals are kind of the stuff that we've already been talking about, where we mentioned that if your population spends more money on gas, then when gas prices rise, then it's going to affect you. That's people who are in rural areas, who are drivers and those ones who are dealing with that,

Pamela Capalad, CFP, AFC:

yeah, or lower income people who work in a city but can't afford to actually live in that city.

Dyalekt:

Exactly. And I think if we're going to figure out what we're going to do about inflation on a systemic level, and even like what we can do about this on a personal level, is making sure that humans are able to get employment are able to get what they need. So that means in big businesses we need to raise wages. That means in the smaller area and to my artists, I know a lot of artists get down with us, we need to make industry out of the things that we're doing and not allow folks to bully us into this idea that creation of art the education that helping our fellow person is just a hobby.

Pamela Capalad, CFP, AFC:

Yeah, and for anyone who's like oh, well the free market we'll just figure it out. Everything will work itself out when people start throwing around terms like sacrifice ratio, there needs to be intervention there to actually prioritize the worker and to prioritize humanity over sacrificing for profits

Dyalekt:

Yeah, again remember sacrificing nothing but a murder we don't need a free market we just need free people then we can go to market

Pamela Capalad, CFP, AFC:

now we should go to a song

Dyalekt:

now let's go to a song right now I feel much better now. We're gonna go to Winston Salem North Carolina little southern vibes for you for artists names Sunday miles with song called inflate with I liked the album cover has egos with the Ghostbusters slash in front of it we're not inflated egos were inflating our prosperity I love it I love it

Unknown:

spotless almost yes sir Yes sir. Reading in my eyes spilling stellato fact that boy just didn't do it day couldn't slag it's another pain another track other track north south cities to illustrate I'm chilling in the clear on the plate. Oh, I've been walking plenty more to step two now I'm really keeping what I left and seeing how they reach they have gone deaf around here basically deep dream in the kitchen drifts tips just maybe need our car let's watch the clock and shifts to the bars free booklet another clip makers This wall was ours and we're gonna need that quick browsing session to start getting bald slow niggas need that issue good pages to be that bitch. My mom I'm not a fake just to beat out. weights you see this which is in play in play badminton played the 61 overs. You use and you know that it's true you know all day in play, baby and play have a baby in play just to get one over you. Whoa, wait until I wait until I wait. I will now the premiere was to do is to buy daddy's dad's jeans I'll be shipping away say homies limousine and I learn why they bought and played in the scenes these armies been watching like I mean it's a funny game and he's like can't afford no scene we just trying to be free freedom metal cries Donald won't go to Sky Turning my eyesight sessions into something saying leave ain't nowhere else to hide. Some time come in He's rising tide and his job and my heart DPB Geez to get by he's heard as a baby in a sea that is played baby in play just to get one open. Namaste. And you know that is true. Oh, and they gave in and they met in play just to get one over you. Whoa.

Dyalekt:

Thanks for listening to the brunch and budget podcast. Please feel free to rate us debate us hate us. Data's in love infatuate us something that means you'd like us but rhymes with eight. Say what's up? Tell us we make great stuff on Apple podcasts or really anywhere that lets you come at Reddit YouTube, I don't know just tell somebody like just knock on your neighbor's door. Subscribe add us to your archives. Feel free to share any episodes that you think will help somebody out help us expand our circle so we can bring the real to more communities. If you got a song about money, financial systems or how you feel about either please send a link or mp3 to dialect dialect.com. Figuring out how to spell it is your only real obstacle. We love some informational intentional, influential songs from indie artists.