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it's Tuesday February. First, I bet I Michael. You are the last time we spoke We were like in the office it felt like we were back to normal, and now I'm ones senior shirts hanging in the background J crew is beautiful. We are not in studio, we are not together, because things have changed, things have changed. Will then, when we last have that conversation in person, we talk a lot about the eye. Word inflation. It was bad, then, and I wonder, what's happened since still bad batter, less bad

it's worse, you know, I think, when we had that conversation, we talked a lot about how the economy was pretty good. Inflation was bad and people want feeling great and all of it is still true, but has even more so. Inflation in December was prices worth seven percent from a year ago. That's the worst in forty years People still feel terrible about the economy. If anything, they may feel worse about it and policymakers. The FED and in the White House are clearly at this point, paying very close attention and, I might even say, or getting worried about inflation the Federal Reserve just last week, came out and said they are in all likelihood, going to start raising interest rates in March to try to combat. inflation and the more general you're gonna get really aggressive about trying to hold down price increase.

As they continue to spiral, and that same week, where take not wasting. Then we got a sense of how this is kind of getting under the president's skin. When as an Biden was asked, way out of a at at the White House Way what about whether inflation was gonna be like already in the mid term, Sunda caught on a hot MIKE with a less than generous respond, that's happening, but

Do the fog says to us the greatest social, stupid and watching that seem play out of the White House than it feels like on some level? The answer to that report as question is pretty obvious right: nobody likes higher prices. Of course. This is a political liability for the president and for Democrats in Congress, and the question would seem to be: should it be allied ADI how much our Biden and Democrats responsible for higher prices for inflation? So I think that's a key question and the answer is really complicated. The first thing to say here is that clearly, a big part of what is happening with inflation is just the pandemic itself. Along

What we are seeing in terms of higher prices is being driven by the pandemic and all of the disruptions it has cost, and that, of course, predates present Biden and is, is another led to some measure outside of his control. So then, I guess the question is sort of to what extent have binds policies made inflation worse and to understand that you ve really got to go back to the beginning of the Biden, administration or actually, even before the beginning of the binding instruction and the debate over what Came the american rescue plan so remind me about the american Rescue plan in the context of the American Ask, so if you'd think back to dissent or of twenty twenty beginning of January of twenty twenty one,

Biden has one he's not yet taken office, we're in what is in some ways the worst moment of the pandemic. To that point, in terms of cases deaths. The economy had already have this huge aid package back in the spring, but that had really begun to fade by that point and Congress in December passes. An aid package, a nine hundred billion dollar aid package that many Democrats felt was too small. Given how serious the need was at that time, said all along this bill is just a first step: a down payment in addressing the crisis, a crises more than one ran reliable work to do and vine comes into office, saying I am going to pass something much bigger, much more aggressive. That is going to really help carry the economies through early next year to put forward to the Congress.

Plans what comes next will need more help to fully just a third stimulus. That's what he's talking a third stimulus and in particular one crucial Pisa, this is a war going to send another round of checks to basically every american House and you need to remember this the beginning of January control of a Senate is still up in the air for it we ve got these two crucial run off races in Georgia. One state can charge, of course, not just relax for years but from our generation while acting John Irreverent. You could make an immediate Virginia or all lives, and this idea for a third stimulus and important or for another round of checks will put an end to the blockade war. She gonna two thousand dollars. Travellers jack that

it will go out the door Bailey tell people were becomes a really crucial piece of that. Georgia that way, we will be able to pass two thousand dollar stimulus checks for the people next week when we win these racism, Georgia and get economic relief directly into the bank accounts of the american people who are suffering right now. The candidates, including John Ass off, are going out across the state saying if you want another round of checks, if you want more help, then elect us Democrats to the Senate, give us control of the Senate. We will pass two thousand dollars stimulus check immediately for the american people. I spoke with the President elect about that personally yesterday and it it works democratic wind, both those races CBS

projects that both Democrats have one? Those two seats, really extraordinary development given tune, and so Biden is sworn in on January, twenty used with control the Senate and about the first thing he does you set out to try to keep that promise to pass a major aid package, including checks for american households and beyond that spend what ends up in this proposal is a good question, because that we remember the checks tender. Remember when we get to you know a few thousand dollars deposit into our bank accounts, but it was not just the checks that there were really three goals to this bill. There was trying to end the pandemic as quickly possible. So it included a lot of money for the vaccine roll out and for public health assistance. They were there trying to help the people who were still really suffer

economically, so that they extend the unemployment benefits, for example? And then and there was trouble trying to set up the economy for success. As the panel, ended in an that's really where the tracks play a big role. There was sort of trying to make sure that we could, as we emerged from the pandemic, that people had money in the bank that they could go out and spend, and that could sort of propelled the economy forward coming out of the pandemic. And anyone who was going to get the Czechs and how much are they going to get

yeah, so the Czechs ended up being this round, was fourteen hundred dollars real money, her person to just about anybody, making middle class, salary or less, and, as I remember, even the Republicans had passed two stimulus bills during the trial administration. They do not sign onto this third stimulus. What were their objections? Madam speaker? There's an old country showing you can put all the perfume lipstick you want on a pig and it still pork and it still stinks. They Arthur basically didn't think that the economy still needed. That kind of how the ceo predicts our economy will grow by three point: seven percent this year without any further congressional action. This is merely social, some in sheep's clothing, redistribution of wealth through cash pay out to many who have had no financial impact whatsoever from covered by this point. The economy had begun to emerge from the pandemic

bed, and they were saying, you know we ve already given Autonoe help to people, they dont need more of it. This bill page people more to be on unemployment than Go to work? They worry lives, unemployment benefits, weren, t people out of work. They worry that the child tax credit was going to create depends. See on the government and they were read some of them that this kind of spending was going to cause inflation. Inflation is starting to pick up in this country. Gas prices or food prices are up whose wouldn't get hurt the poorest families earning get hurt. This is wrong, and workers do that in a kind of on one hundred one manner. Why would a similar especially the symbols that puts money directly in the past. Of consumers led to inflation too prices and why without have therefore been a logical thing for Republicans to fear so classic Econ one Wanna one model. If you just pure a ton of money into the economy, it doesn't leave

more production. It doesn't even really make people richer in any real way. It just makes them spend more, which leads to higher prices, and, if you think about it, this way, if there's a factory, that's all charging along making everything a cam, and you give people a ton more money than the factory can't make any more, So all that me is they raise their prices and everybody gets the same ass. They would have gotten, otherwise they just pay more for it and that guy inflation- and that was the argument that Republicans we're making- and you know a lot of people who are worried about inflation, we're making at that point and what did What did democrats have to say in response to that worry as they are, getting together and pushing this third stimulus through. Did they address it? there was a little bit of a collective. I roll sort of here we go again and what I mean,

by that is. We have been hearing these same complaints about how government spending and stimulus was going to cause inflation for years and years and years. We heard it after the stimulus efforts in the last recession. We heard it when the FED was trying to stimulate growth and in the years after that, the great recession there were people in, including Republicans, including economists, saying, oh, my goodness. If you keep doing all this, you keep spending all this is going to create inflation and it never happened. If anything. The problem before the pandemic was that inflation was too low, and you know, I think, what we learned in and what men

economists and policymakers. Sort of talk from the experience after the last recession is that the economy is dynamic, that it is stronger than we give credit for, and so that old econ. What I want All of you pouring money into which it make a raises. Prices were actually the widget maker hires more workers and makes more widgets. Maybe he innovates a new way of making widgets and makes them more efficiently And so, when you give people money in this reality, instead of getting higher prices, you actually get more widgets and were richer as a result, and- and I think that the world that we were living in, or at least that the binding ministries and thought we were living him when it passes this plan in the spring of twenty twenty one got us a Democrat collectively shrug off his fear of inflation because impatient hasn't been the result of government spending in the past and they

basically tower Republicans the buzz off the threat it passes in March, one point. Nine trillion dollars start stood flow into the economy and at first it seems to be doing its job more or less right. The vaccine start spreading businesses start reopening people start going out, they start spending money again and prices are rising. None of that is necessarily very concerning to anybody, and I think most economists at that point thought this was gonna, be kind of a blip as things reopened, and then we would settle back into something that looked a little bit more normal, except they didn't pray is kept going up and they kept going up, and by the end of the year we have the worst inflation in forty years.

All the way. Back. This time cast is supported by Santander. Private client saw Hunter Director District executive, Melissa, Merriest Burke explains how private banking delivers a new paradigm dedicated to growing, managing and protecting your assets. Every generation looks for ways to do better with its finances, and the one before my advice, the individuals is, let's ensure we have a plan in place for you to retire and make sure you're on track the. When that time comes, you have the ability to step away and enjoy every time and learn more it and my times dot com, slash Santander generations on primary

you might know me as the host of the podcast S town, I'm hums aside, you don't know me, but Brian line, we teamed up to solve a mystery, it all started. When a brown paper envelope showed up on the desk of a city council in Birmingham England, my hometown in court, may him inside the envelope was a strong letter that led out a supposed plot by mommy extremists to take over the city schools. The document exploded in the national media, the Prime Minister got involved, educators were banned, counter terror laws were tightened, but no one ever figure out who wrote this in the first place, so we tried and people were not happy, Can you give us a bit details about a situation which is particularly important that I don't from cereal production and the New York Times. It's the Trojan horse affair, a mystery and eight parts reconsider the whole thing. Reverie get your pockets, so then that brings us to.

today and to this inflationary moment that we are still very much living in and the question is the exact rolled up a third stimulus played in bringing us to this inflationary moment. So walk us through that. Some, like I told you at the beginning that it was complicated. You did and I think that what the binding ministration didn't realize when it passed that stimulus back in March with all of the ways in which the pandemic was going to still be disrupting our lives nearly a year later and the ways in which that made it harder for the economy to absorb that one point: nine trillion dollars there was pouring into it. And as a result, how those two things would come together to cause inflation, Let's start with the things that the by nutrition didn't realize we're going to be

making the economy not quite work the right way and how those give us inflation. So, if you think back to March, as the vaccines were starting to roll out, we kind of thought that we would be honoured, glide path back toward saw kind of normality, and I think for a little while it may be felt like that was happening. But then we got delta and we got all my crime. We got workers who want comfortable returning to work child care that was still disrupted. That made it harder for people to return to work global supply chain problems right because of course, the pandemic is raging not just here but around the world, led to factory shutdowns in all sorts of parts of the world to shipping delays, and all of these things should contribute to making it hard to make stuff realistic about cars

Ordinarily, when people wanna buy cars, car factories will pump out more cars, but that's pretty tough to do if you think it workers is pretty tough to do if you can't get the parts that you need- and we saw this around the world where crucial parts for cars want available for a complex. Due of reasons that we probably can't even begin to get into here, but for example, we had plants in Kansas City that were shut down for months because they couldn't get microchips and so all of the sort of normal rules that we have come to expect where ok, when there

to demand, will just make more stuff those apply of some rather than of microchips to make enough cars and the cars it exist are going to be more and more expensive. That's the very nature of inflation, as you explained earlier, that's exactly right! Ok! So how does the third stimulus factor into this while the third stimulus factored into it, because all of a sudden people had a lot more money to spend on cars and in fact we can see that really directly in the economic data that, when those checks hit people's bank accounts p? started spending, including on cars in over member at that moment in time, people had already received a couple of rounds of stimulus. Americans in the aggregate actually had managed to save quite a bit of money. Now, that's not true of every individual by any means, but in the aggregate Americans had savings they warrant necessarily in deepening.

we'll trouble, and so you get a windfall like that, and you say hey. This is a great time to go and buy a car or a couch or a new dishwasher. That thing that I had been kind of putting off and so people went and spent on exactly the set of things that are hard to produce in a pandemic. So I just a moment: Americans have this. For money to spend from a stimulus the economy has been seized up by supplying. Shoes by worker shortage issues and can't produce the things, people were to spend their money on fast enough, and so the prices of all those things are higher than anybody wants them to be, and a stimulus has played Our role and more demand for limited supply leads to higher prices than

from you can one or one still applies, so why you're describing how the third stimulus really exacerbates inflation brought on by the pandemic? It doesn't cause it. We should be clear about that at amplifies. It makes it worse yet. Look I think that there is pretty widespread agreement that the increased demand that came from giving people those checks contributed to inflation at it, worsened the problems being caused by the supply constraints. Now I think of quite a bit of disagreement about how much of that but a sign to each piece of this puzzle. Prices rose, seven percent in December from a year ago. What would they have been without that stimulus plan when they ve been up? Four percent five percent: six percent you're gonna, get disagreement among economists on that question

I think you would get pretty overwhelming agreement that inflation would have increased even without the american rescue plan, and I think you get pretty widespread agreement that prices would not have been all the way up. At that same percent increase without the american rescue plan, but we're in the middle there's gonna be allotted disagreement on that question. So clearly the binding initiation bears some level of responsibility for the inflation were now living with. Yes, but the question really is whether it was worth it whether the damage being done by inflation is worth the benefits that all of that spending, all of that stimulus brought to households and the economy. And how do you answer

well so that the binding ministration has a lot that it can point in its favour. The unemployment rate now is below four percent. If you pulled economists back in the early part of last year, they would have said it would take years to get to that point, and it got there quickly in part, because all this money poured into the economy and encouraged employers to hire and and got people back to work. We saw child poverty fall. Last year I saw incomes rise and savings rise. We saw economic growth, accelerate almost back to the path that had been on before the pandemic and so there are a lot of ways in which the economy fundamentally is stronger. Today, then, it would have been without all of that help. So, if you're a Democrat, this third stimulus is the definition it would seem of next blessing

It may have helped Democrats win control. The Senate, it may have helped Democrats put the economy on a fundamentally strong path, but it now seems to be contributing to a problem politically that could cost Democrats control of Congress in the mid term as far that's right. So then, let me ask you a completely unfair and provocative Do you think that Democrats will come to regret the third simulate or do you think they go to bed? We Now we comfortable that this was the right call. I'm gonna give you the imo and, on the other hand, answer that I always even Michael ok proceed. We, which is that time is gonna, tell. I think, the odds that this inflation problem gets resolved in time. For the mid term review is our very low, I'm not a political pandit, but it looks pretty clear

that. Americans are not happy with where they are in the economy right now, and that seems unlikely to change quickly, but over the slightly longer term. I think it's hard to say you could imagine a scenario where the pandemic really does start seed and that allows workers to come back at our allows day cares to return to something more normal. It allows factories to ramp up their production again and supply chain bottlenecks. To ease and so inflation starts to recede and now, when people up money to spend, it really does result in more cars getting made instead of just prices going up, and maybe by the time we get to the presidential election, more able to look back have this really seem like a strong economy and that inflation episode feels like a painful blip, but it is also possible that inflation contain,

is that it continues to eat into wages that people continue to feel like their fall further behind and then that's not only a problem for Biden's reelection chances. It's alright problem for the economy and for the Americans who live in it. Well, then, Thank you very much thanks for having me, what right back. remember the saying: if you love something set it free really all that saving up in building credit and you're supposed to be o k of some identity thief tries to set it free, the folks, lifelong. I don't think so. Good thing lifelike by Norton, helps monitor your info and alert you to potential identity threats. No one can prevent all

and after monitor all transactions at all businesses, but with lifelong. It's easy to help. Protect yourself, save up to twenty five percent of your first year by going to lifelong dot com, slash daily. Here's what else you need today on when the british government A highly anticipated report into a series of parties held my Minister, Boris Johnson and his staff at ten Downing Street that appeared to violate the country's health rules during the pandemic. The port found, failures of leadership and judging by Johnson's government and a culture excessive workplace drinking, but it did not directly cues the point Minister himself of wrongdoing. Firstly, I want to say sorry and I'm sorry for the things we simply didn't get right and also sorry for the way that this matter has been hand in his speech

to parliament soon after Johnson apologised to the british people, but, MRS bigger it isn't enough. to say sorry. This is a moment when this process in the mirror- and we must learn- and the? U S, government, has granted full approval to materials coded vaccine which has until now been administered. under emergency use authorization. The Madeira of action becomes the second to arms a truth which involves detailed scientific review, the coolest vaccine, from Pfizer. Biotech was fully approved in August today's address it was produced by Roma Zip Code and nuclear with help. Michael Simon Johnson, it was edited by LISA, Chow enjoin catch and was engineered by dimple in contains

Original music from Miriam was on out and Dan power. Our theme is by Jim on board and Ben landfill of wonder That's it for the daily I might go about see tomorrow. This past is supported by noon. Numerous, an award winning weight, loss program that uses psychology and personal position to help you lose weight and keep it unlike other restrictive diets or work, our programmes, New Jersey, the knowledge you need to make informed choices that fit you and help you reach our goals, sign a fair trial and get psychology based wheatless support at noon. Dot, com, slash the daily; that's an oh, oh, am dot com, slash the daily to sign up fair trial