Make Me Smart March 30, 2022 transcript

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Kai Ryssdal: Alright, Drew, if you’re ready, we’re ready. Right? Are we ready?

Kimberly Adams: Yeah, I’m ready. Yeah.

Kai Ryssdal: Yeah, I’m ready. Hey, everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart making today make sense is what we do.

Kimberly Adams: Yep. I’m Kimberly Adams. And this is Whaddya Want to Know Wednesday. Thank you very much for sending in your questions that our listeners contribute over the last week. And we will try to answer a few of them today. And if you have questions that you think that we should answer, or at least attempt to leave us a voicemail at 508-827-6278, or send us an email, please and thank you at – it’s makemesmart@marketplace.org. Did the at in the wrong place. Let’s get going. First question.

Josh: Hi, this is Josh in Dayton. On the Wednesday 24 March episode, you mentioned that the Fed really doesn’t have good tools for countering the root causes of this inflation. They can only try to dampen demand with raising rates. Should the Fed be given additional powers to address other causes of inflation? Should another government agency get a tool such as Treasury? Or is the answer something else that doesn’t rely on the federal government? Thanks.

Kimberly Adams: Love that 24 March.

Kai Ryssdal: Yeah, no joke, right? That’s very specific. So there’s, I figure I’ll grab this one. There’s, there’s a lot in those questions. First of all, it’s like three questions, Josh. Hello. But that’s okay. So, so I’ll go as quickly as I can.

Kimberly Adams: Don’t be mean.

Kai Ryssdal: I’m really sorry. I’m sorry. I’m sorry. So number one, yes, that is true. In this particular recession, the Fed does not have the specific right tools, because this is a supply driven inflation period, right? That’s what’s jammin’ things up. It’s not actually too much money. Yes, there’s a lot of money out there. Don’t get me started on that one. But the the root cause, or the supply chain congestion problems that we’ve been talking about for l these past two years. And the Fed really has a tool, a tool to deal with inflation. That tool is interest rates. It’s got a lot of buttons and dials and levers that it can push behind the scenes, the details of which are incredibly boring. But the main tool is interest rates, right? So it can make money more expensive, or it can make money cheaper. That’s its tool. And that’s what it’s trying to do right now. So that’s answer question number one. Question number two, should the Fed be given additional powers to address other causes of inflation? You know, I don’t I don’t necessarily think so – that. I don’t necessarily think so. Because the Fed is pretty remarkably powerful as it is. And here’s an example of that. In the 2008 financial crisis, the Fed using what’s called 13 (3) powers, it’s the number 13, with parentheses, three, it’s a clause of the Federal Reserve Act of 1913. Started doing quantitative easing, and started buying all these bonds and building up its balance sheet and buying the bonds and the mortgage backed securities and taking those off the market and putting cash into the economy. Okay. That’s an example of its extraordinary powers. Th Feds got a lot of powers. It just I don’t think we wanted to have too much power, because concentration of power is really tricky, right? There are reasons that the government set up the way it is, you got the Federal Reserve in charge of the monetary policy in this economy. And you got the administration and Congress in charge of fiscal policy, taxing and spending. So that’s the answer. The second part. Treasury’s got some tools, Treasury’s got some tools? The administration has some tools. Congress has some tools. And we’ve seen President Biden try to do this right. He brokered a deal to keep ports open, he wants to work on supply side parts of these things, right? He wants to get more truckers on. He wants to get more houses built all of those things that will in theory, relieve some of the inflationary pressure, but none of which are going to help tomorrow. Okay, all of those things are going to take a long time as is, by the way, whatever the Feds doing with interest rates, it’s going to take 18 months or two years for all of that to wind through this economy. So short answer is Feds got plenty of power. Government has kind of power but this is a one off right. Let’s think about how this happened. And then I’ll stop. We turn the economy off.

Kimberly Adams: No go ahead, this is interesting.

Kai Ryssdal: We turned the American economy off in March of 2020. Global economy too. We shut it down. Pull the plug We were done. The problem was we had never done that before. And there were no instructions. And so as we started ramping it up, it all tried to come back at the same time, consumer demand, supply chain things, all of those things, and we don’t know how to do that. And what we’re seeing now is the residue of that, like three week period two years ago, still working its way through this economy.

Kimberly Adams: I mean, I think it was longer than the three weeks. It was then until now, in some ways.

Kai Ryssdal: I mean yeah, well, well, yeah, but but we shut we shut the economy down over the course of about three weeks. Right. We just stopped.

Kimberly Adams: Oh, you’re saying that’s how long it took to shut down the economy, not how long the economy was shut down. Yeah, no.

Kai Ryssdal: We just stopped. Trade stopped, shipping stopped, airlines stopped. Working stop – all that businesses stopped. It just stopped.

Kimberly Adams: Ground to a halt.

Kai Ryssdal: And we’re still trying to yea, unscrew it. Anyway, crypto mining. Here we go.

Larry: Hi, this is Larry from Torrance, California. My question is about crypto mining. How does it work? And please make me smart. Thanks.

Kimberly Adams:  So Marketplace’s Matt Levin has done a bunch of reporting on this too. And he has a really good explanation of what crypto mining is. And he says it’s basically a competition.

Matt Levin: The miners have to solve this very complex mathematical puzzle with these souped up kind of like mini computers, they’re basically just guessing random numbers as fast and as fast and as fast as they can soaking up a lot of electricity, a lot of energy, a lot of time to do it. And then the first winner of that mathematical puzzle wins. And what do they win? They win Bitcoin.

Ward: And Bitcoin happens to be quite valuable at the moment. So that’s what makes it worth their while to be in this competition. However, doing all of that, you know, he said with mini computers, but they need lots and lots and lots of mini computers in order to increase their odds of winning this competition. And so you end up with these giant like farms of computers, sometimes a whole shipping container full of them, and then rows and rows of shipping containers, and it’s incredibly energy intensive. And so China, for example, decided it didn’t want any more crypto mining happening, because it was such an energy drain. And last year, the New York Times even found that Bitcoin mining took up more energy than was used by some countries. So it’s a bunch of computers running formulas to try to get bitcoin. Really bad for the environment. All right.

Kai Ryssdal: I don’t I don’t see how it’s sustainable by the way. They have – they have to figure out and look don’t at us with the whole, you know, bitcoins going green, and we’re using energy when nobody else is in the off hours. It’s not sustainable. We got to figure out a better way to do it. That’s all I’m saying.

Kimberly Adams: Okay, Kai, a few shows ago you told the listeners to look up the Jones Act, and somebody obviously did and sent in this question.

Fred: Hello, this is Fred, from Escondido, California. Could you please explain the Jones Act, which is a federal regulation from like a century ago. With all the energy problems, we’ve got gas prices, we’ve got food prices we’ve got. Why are we making it so hard to ship goods by ship from one US port to another? Thank you make me smart.

Kai Ryssdal: Such a good question. So look, here’s the deal. Fred’s right. It’s a law from 102 years ago, that required goods shipped from one American port to another American port be transported on a ship and this is the great part right in terms of protectionist legislation, which is what this is American-built ship. American-owned ship and crewed by US citizens or permanent residents. Right. And let’s think about the 1920s. Huge protectionist wave back then look up Smoot Hawley. Anyone anyone? Smoot Hawley? Okay. Look it up. Anyway, that’s that’s that’s sort of an example of those kinds of legislation. It increases the cost of shipbuilding increases the cost of crewing those ships, right because the market is limited, and it becomes a buyers market. And it just it’s a mess. So it gets waived every now and then right in hurricanes and natural disasters. But here’s the energy part of this right. Most of our energy, most of our oil refinery is centered in the Gulf of Mexico. Okay. And while we have a lot of pipelines, we don’t have enough pipelines to move all of that oil out of the Gulf of Mexico region, the Gulf Coast, to the east and west coast of the United States. And so that is why we have been for a very long time now, importing by ship among other nations, Russian oil and gas right, because the Jones Act will not let us in a cost effective way, ship that stuff from the Gulf of Mexico to say Los Angeles or to say the Port of Baltimore, right? It’s just and forget like Hawaii, right. So that’s it. That’s the whole deal. Now, why is it still in effect for 102 years? Cruise ships, shipbuilding industries, lobbying, they have a very, very nice gig. And they don’t want to see that applecart upset. That’s why the Jones Act is still in effect.

Kimberly Adams: Yeah, I should mention that. There have been some attempts to repeal it. I’m looking at, Marissa included this bill submitted by Mike Lee of Utah to try to – it’s called the Open America’s Water. Open America’s Waters act to try to repeal this. But to take your line Kai, what’s getting through Congress?

Kai Ryssdal: Yeah, I mean, this part of the whole “Buy America” thing, right. And and the law that presidents Republican and Democrat, including Biden, and Trump, by the way, have regulations that they put into place at the beginning or in various points of their administrations, right, that says, “We got to buy American, we have to keep American businesses strong.” And that’s great. Except for this. It makes everything more expensive. It shelters American businesses from actual competition. Okay, and it doesn’t actually serve the ends that we want. See also The Jones Act. Okay, sorry, rant over. Next.

Kimberly Adams: Rant away.

Gabriel: Hello, everyone. This is Gabriel from Raleigh, North Carolina. Since it is spring time, and gas prices are high, more people are using public transportation, the infrastructure bill signed last year also seem to be somewhat promising to further expand public transit. Do you think that is possible that we’ll get some actually good public transportation in the next 10, 20 years?

Kimberly Adams: Okay. Yes, potentially. So the infrastructure law that he’s talking about, it’s so funny. Everybody still calls it the infrastructure bill. Because we’re so used to like these things never going anywhere that like to call it infrastructure law is weird. The infrastructure law included. So it was $1.2 trillion, and included 284 billion in new spending on transportation, which is like, I think an 80% increase. However, according to Marketplace’s Matt Levin, him again, a majority of that spending is still going to roads and highways. But public transportation advocates love all this new money, but not that it isn’t going to public transportation, at least not enough of it. And so with all of this going to highways, and kind of prioritizing private transportation, they feel like it’s not necessarily going to make a huge difference. And I’ve got some bullet points here about why Matt thinks that we should focus on the next five years versus the next 10 to 20. Nobody knows where the public transit agencies are going to be. Bus and subway rider numbers went way down during the pandemic, and lots of people are doing remote work. So if you’re commuters I mean, D.C. is a classic example of that. The subways are way more empty, now, the metro, but that also has to do with the fact that all a whole bunch of the trains broke, and the top wait times are really long. And then, yeah, losing all these riders hurts the systems financially, and then those systems can’t afford to maintain themselves, which makes public transportation worse. However, I’m going to go counter to Matt and give a couple of reasons of why I think there might actually be some movement towards better public transportation, because I was actually talking to a transportation person a little while ago, and we were we got deep in this. And if gas prices stay really high, it might continue to push people to use more public transportation. So that’s one thing and it might increase local advocacy, because it’s taking a while for these infrastructure dollars to get to the states, it has to move through all these hoops. Each state wants to have a commission on how they’re going to spend the money. And these commissions and these discussions are going to be happening, while a lot of people are seeing these high gas prices, which might change the discussion on where those priorities should be. So that’s one thing. Another thing is the shortage of workers in many industries, means that companies and industries might have to go further afield to get workers. And especially if you’re talking about industries that maybe don’t pay people a lot, they are going to want a robust public transportation system in order to make operating their businesses in certain cities and communities worth it. Because if they need to be able to get their employees to work, and she was giving the example of some, you know, companies actually just hiring buses their own to get workers from one community to come to work, you know, not like fancy Google buses, but you know, other bus – buses. Yeah. So anyway, it’s it’s a, it’s a possibility. Yeah, I think that’s probably all we have time for.

Kai Ryssdal: We’ll do last one real quick.

Kimberly Adams: Yeah, let’s do the last one.

Ward: Hi, this is Ward in Bethesda, and I have a question for what do you want to know, Wednesday, particularly for Kai. I have listened to the podcast pretty much every day for several years now. And I watched it on YouTube for the first time. And I was wondering how come you only wear your headphone on your left ear and that you leave your right ear open? That looks really uncomfortable. And I would love to understand the story behind that. Thanks. And thanks for making us all smart. And welcome to Kimberly, just a super permanent addition to Make Me Smart.

Kimberly Adams: Aw thank you.

Kai Ryssdal: Props, where props are due.

Kimberly Adams: So why are you weird?

Kai Ryssdal: Well, that’s a whole different podcast, I wear only one headphone on my ear, on my ears. Because I want to hear myself, when you wear headphones, you don’t actually hear yourself, you hear an electronic representation of yourself. It can vary in volume and whatever. And I just find it very artificial. But I need to be able to hear what’s going on in program I need to be able to hear Kimberly, I need to be able to hear the director in my ear when we’re doing the live show. So I have one on and one off, and I listened to myself in my right ear and I use my left ear for all the other stuff that I need to be able to pay attention to. But why do you wear both? That’s my question to you, Miss Adams.

Kimberly Adams: Um, it’s because I so – I did go through a phase of one ear on, one ear off, particularly when I was working in the field in Egypt. And I also needed to know what was going on around me all the time. But now I use both headphones all the way on because I really want to seal in the sound because that allows me to have the volume lower. So that hopefully I’ll have my hearing still in a decade after all these years of working in radio. So yeah, so that I can operate with the lowest possible volume but still hear everything that’s going on. So yeah, that’s my story.

Kai Ryssdal: There you go. Those are good, good questions Ward. Good questions, good questions. And a good one on the way out on Whaddya Want to Know Wednesday? Thank you for coming along with us. And thank you for sending your questions. If you’ve got more by the way you know how to get them to us. Email us make me smart@marketplace.org Leave us a voicemail if you’d like 508-UB-SMART.

Kimberly Adams: Make Me Smart is produced by Marissa Cabrera and Marque Greene with production help from our intern Tiffany Bui.

Kai Ryssdal: Today’s show was engineered by Drew Jostad. Ben Tolliday and Daniel Ramirez composed our theme music, our senior producer is Bridget Bodnar. I think Bridget should tell us how she wears her headphones.

Kimberly Adams: Now I’m thinking about like, is the voice I hear in my headphones really my voice at all? Or is it all some like mystical not real thing? Like wait, what do I actually sound like?

Kai Ryssdal: That’s right. That’s right.