Emotion might drive the economy, but it shows up in different ways for different people. Everyone experiences the *number go up* side of inflation, but that experience causes different consequences for different people.
There are two economies - one in which the increase in gas prices is a mere annoyance, an extra few bucks here or there, and another in which the increase is catastrophic, means that there is less food on the table for a few days.
Wealth inequality has only gotten worse, and the divergence in ‘vibes’ is demarcated by the widening gap between those that can shrug off inflation and those who cannot.
The Fed’s primary tool to reset the vibes has been to raise rates, which has a direct impact on consumers through higher mortgage costs, higher debt servicing costs, and just a higher cost of existence.
Now we are in this weird matrix of inflation becoming disinflationary where companies have stockpiled goods because of supply chain worries, and now they have too much, which results in discounts - and all the inflationary pressures shift into disinflationary spirals.
Our economic models don’t always consider how people feel - scientifically speaking, the vibes. What is the opportunity cost of the loss of faith in a better world?
The combination of a lack of belief with a breaking macro environment (compounded by a social media and hyperonline populace) has made it so we *can* talk ourselves into a downturn through tipping dominoes and feedback loops.
Reflexivity, animal spirits, vibes - what people feel matter. And we have to begin designing our models and theories and frameworks with that in minds.
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00:00 - Intro
00:14 - Things Are Weird
04:13 - Emoconomics
08:16 - Final Thoughts
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