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Six Dumb Misconceptions About The Economy (that the Politicians Want You To Believe)

Well, it looks like we’re here in another US election year already. 

As Advanced Mustachians, we already know that the ongoing battle of Harris vs. Trump should not be consuming much of our time.  Sure, we do our research and cast our votes but after that we move right on to focus on other things within our own circle of control.

But out of all the things the politicians like to bicker about, there’s one area where MMM does need to set the record straight, and that area is of course money. Your money, the economy in general, and the overall wealth of the nation. 

Politicians are already not known for being the sharpest tools in the shed when it comes to technical stuff like science, technology, or economics. But this year the discourse has become particularly dumb, as our candidates try to manipulate undecided voters in swing states with ideas that are based on irrational emotions rather than sound economic sense. 

For one particularly funny example, you may have noticed that the competing party (Trump in this case) is attacking the incumbents (Biden/Harris) over the “bad economy.” When in fact the US economy is stronger than it has ever been, with the lowest unemployment we’ve ever seen as well. 

It’s hard to imagine a better situation than we have right now, and in fact the recent bout of higher inflation is a sign that things have been going too well, and we needed to step on the brakes with the help of higher interest rates

But somehow the people still seem to believe that we have a “bad” economy. Take a look at this Gallup poll showing that while most people (85%) are doing really well right now, they assume that it’s just their own good fortune – only 17% believe the economy is doing well. 

This is mathematically impossible, because if most people are doing well, that’s the definition of a good economy! And suspiciously enough, this widespread wrongness correlates quite nicely with the rise of social media misinformation.

So the politicians and the news have been doing the opposite of what they should be doing in an ideal situation (sharing accurate information). And sure, we can always just ignore their speeches and go on with our lives. But when it comes to economics, knowledge is power (and money). The more accurately we understand how things really work, the wealthier we will all become.

So with all that in mind, I hereby present you with my list of the… 

Top Dumb Things Politicians Want You To Believe About The Economy

1: The President Controls the Economy

If there’s a recession, the opposition party likes to blame it on the current president. If the economy is booming, the current president likes to give himself (or possibly soon herself) credit for all of that success. But really, the US economy is way too big – and thankfully way too free – for the president to control or really even influence all that strongly. 

In reality, our economy is a gigantic machine which converts labor and materials into things like iPhones, hospitals and pumpkin pies. And although we’re the biggest economy at 26% of the planet, we are still heavily influenced by that much bigger 74% of economic activity that the other 7.6 billion people on Earth are busy producing everywhere else.

When we have our inevitable little boom and bust cycles, they are mostly caused by the normal cycle of irrational exuberance (and greed) like the 2007 housing boom, followed by brief periods of extreme fear and pessimism like the 2008-2012 financial and housing crash. 

The government does play a role too, by setting tax rates and other rules. But the effects of these policies are usually so delayed and unpredictable, that you can’t draw a straight line between today’s president and today’s economy. In other words, the government does its best to adjust the rudder on our giant ship, but in the short term our economy lurches around on the waves and storms of the ocean.

2: The President Controls Interest Rates

This one is especially funny to me, as our candidates feign sympathy for the hard life of middle class Americans, who now face higher borrowing costs on their credit cards and car loans and mortgages. They claim they will fight to bring the interest rates down. Trump even goes as far as bullying our Federal Reserve board members (who can only do their jobs if we allow them to function as independent experts) and suggesting that he would take over the whole department, if elected.

The real story is that while monetary policy would be a terrible tool to leave in the hands of a sitting president (see Argentina), it does function as an excellent set of gas and brake pedals for the economy if used properly. When things slow down and unemployment gets too high, a cut to the interest rates will produce a boost in everything from new jobs to stock prices. But if things get too hot, you get rapid inflation which can mess up the system.

3: Inflation has Made Life Harder for Americans (and the President Can Magically Reverse it)

This line of reasoning is even dumber than the last one. For a couple of years after the Covid era, we had rapid inflation. It was caused by a rare combination of a goods shortage caused by things like factory closures and remote work, plentiful demand from government stimulus spending and low interest rates. These factors have since ironed themselves out, and inflation is back down to an ultra-low 2.4%.

Steve Ballmer explains the inflation vs wages debate in his useful new video series called USA Facts (see note below)

But most significantly, wages have still risen faster than inflation so we are all better off than before! Since 2019, overall prices are up 19% and our wages are up 21%. So even after all that inflation, we are still doing just fine. But the candidates are still bickering over inflation as if it’s an actual problem, and even worse promising to “bring prices back down”. And they’ve managed to convince the electorate that “higher wages and prices” is the same thing as “a bad economy”. Which is just plain wrong.

Bonus dumbness: politicians also occasionally blame “greedy corporations” for increasing prices to hoard profits. While price increases are totally acceptable in a market system (as a business owner you are free to set prices wherever you like), in reality it doesn’t usually happen because our markets are too competitive. For example, a recent deep analysis from NPR showed that no, grocery stores haven’t made any windfall profit at all off of this recent bout of Covid-fueled inflation.

4: The President Controls Housing Prices

One important thing that has changed over the past ten years is that US house prices and rents have both risen much faster than general inflation and even wages. On the positive side, interest rates have also risen which tends to make houses feel more expensive and is supposed to help bring house prices down. But it hasn’t happened yet which means we have the double whammy of higher prices and higher interest costs for mortgage borrowers. 

The dumb part is that our candidates are proposing things that would make the problem even worse, like subsidies for first-time homebuyers or schemes to reduce the interest rates. When really the solution is to increase the supply of housing, which I personally think will happen if we stop putting up roadblocks for homebuilders (myself included) to build housing. 

Things like faster and cheaper permits, less onerous and expensive building codes, eliminating suburban-style zoning and setback and car parking rules, and changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.

5: The President Controls Gas Prices, and They Are Currently “High” and We Want Them Lower

Ahh, gasoline! The most ridiculous of things to worry about and the fuel for many of MMM’s rants since 2011. 

First of all, on an inflation-adjusted basis, gasoline is still about the same price as it was in 1950: in the $3-4 range per gallon, in today’s dollars. 

Secondly, it is so cheap that even with our huge inefficient American vehicles, the average household is still only spending 2.5% of their disposable income on the stuff! (The funny part is that they spend many times more on the rest of the car ownership experience while thinking gas is the part that is expensive)

Third, gasoline has been obsolete for almost a decade now. You can get a used electric car for less than the price of a comparable used gas car, or if you’re a fancypants money waster like me, new EVs are also cheaper than their gas counterparts. You get a faster, nicer car that almost never needs maintenance OR gasoline, and save money.

So why are we even still talking about this antique fuel of a previous era? Why aren’t the candidates also arguing over the price of Kodak film or typewriters or fax machines?

6: The Economy is Something We Should Even Worry About

The funniest part about all this economic talk is that we’re focusing on the wrong thing. While hard work and business and advancing the frontiers of human knowledge are all fun things, the reality is that we passed the point of having “Enough” decades ago. When the American middle class complains about how hard we have it these days, it’s like a bunch of overfed people at a buffet wishing they could just have one more flavor of donuts stacked onto the table.

Yes, we have income and wealth inequality so that the rich tend to get richer more quickly. And yes, we should keep that in check with a somewhat progressive tax system because a more equal society tends to be a more peaceful and happy one. 

But have you noticed that as the rich people get richer, they don’t get any happier? It’s because after you pass the point of “Enough”, adding more money doesn’t really help much. 

And “Enough” is much more defined by your mindset (and your collection of life skills) than your paycheck. So if the politicians really cared about improving our happiness and wellbeing, they’d be preaching the Principles of Mustachianism rather than pandering to the specific requests of coal miners or billionaires.

But alas, winning an election is a very different thing than proposing stuff that is actually best for the country. And for that reason, we cast our votes for the best party and then tune back out until the next election.

Happy voting!

In the Comments: Has the election season been getting you down, pumping you up, or just giving you a thorough dose of “Meh”?

Further Reading/Watching: 

While researching economic stats for this article, I came across a quirky but informative series of videos called USA Facts by none other than Microsoft co-founder Steve Ballmer. It seems that he had the same frustration as me: Americans are fighting over a bunch of opinions and misinformation without even bothering to look up the actual facts. So he made a well-produced series of videos that just share the facts without the baggage of political hype on top of them. I wish our politicians could do the same thing!

Bonus Podcast based on this article!
Thanks to the magic of AI, you can direct the wizardry within Google to generate a custom-made podcast on almost anything on the Internet. A reader just emailed me this take on this episode – remarkably human-like and even entertaining!
https://notebooklm.google.com/notebook/0e1d0af8-8888-466c-abe4-8b1da8986773/audio

  • Tasse October 15, 2024, 1:56 pm

    Voting isn’t the only thing in your circle of control! Working a polling place, volunteering for a local candidate, or writing letters to encourage voter turnout (https://votefwd.org/) are all great ways to actually HELP SOLVE PROBLEMS rather than just whining about them!

    Reply
  • Marie Gordon October 15, 2024, 3:23 pm

    There is no mention of healthcare here. Mine doubled in cost in an employer sponsored plan (HDHP of course, and salad, barbell, bike), plus the benefits shifted from coverage for ED to 20/80 cost share.
    Is healthcare part of the CPI?
    Definitely worse than 2019 for me.

    There is also insurance home and car which also increased sharply and I doubt will decline in price next year.
    For many families this represents several grand of necessary expenditure.

    Reply
    • dandarc October 28, 2024, 3:23 pm

      This seems like something to take up with your employer. Unless you’re hoping for single-payer, which while would be a great improvement is not a thing that’s likely to happen in the near term.

      Reply
  • Gary Grewal October 16, 2024, 12:05 pm

    A very thoughtful and timely post. I hope your message reaches more people and they can be educated and not just focus on the powers they think the president has!

    Agree on costs of gas, many electric cars are much cheaper now, even more so than gas cars, yet some people “need” a gas car or a truck.

    On housing, I agree that supply needs to be increased, but what about restrictions on corporations and overseas investors buying up homes? What about the amount of homes that sit empty most of the time as vacation homes or those that sit as AirBnBs? I know some cities have restrictions, but it seems in California at least, a new development of homes is quickly bought up, but some rarely have the lights on and the yard is overgrown.

    I love and agree with this 110%: Things like faster and cheaper permits, less onerous and expensive building codes, eliminating suburban-style zoning and setback and car parking rules, and changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.

    Reply
  • Jim Van Cura October 16, 2024, 12:09 pm

    MMM, you forgot one…. No tax on tips. That new roof will cost you $100 with a mandatory $20,000 gratuity. This one is too easy to game, too difficult and expensive to enforce, and will make the wealthy more wealthy by driving down wages increasing their profits while the poor who work for tips will lose out on real wages and benefits, which would also negatively impact their Social Security benefit as they would show no earnings come retirement.

    Reply
    • Mr. Money Mustache October 18, 2024, 7:53 am

      Yeah, I must admit that while I try to stay tuned out of the shit the candidates throw around on the campaign trail (because most of it never makes it into law), I did hear about that one. And I disagree with it. In fact, tips shouldn’t even exist at the big scale they do now!

      I’d rather just have a reasonable minimum wage that keeps up with inflation – for example the regional experiments with $15 minimum wages seem to have gone pretty well and I think we should try it out on a bigger scale (https://www.cbo.gov/publication/55681).

      But as a business owner who sometimes has employees, I think we should also make it WAY EASIER TO HIRE AND PAY PEOPLE! Right now, there are insane bullshit rules about payroll deductions, medicare, pension, worker’s comp, unemployment and so on where you have to thread this needle of very powerful and angry organizations who will FINE YOU if you don’t do all the paperwork perfectly.

      And then they go after employers who rightfully want to just pay people as contractors in order to avoid all this nonsense!

      Just stop it. Any person should be able to give money to another person for work performed, and it needs to be frictionless. If that means creating a national payroll deductions system where they handle all their own complicated shit in the background, so be it. But for me as the employer it needs to be as simple as saying “Joe did $1000 of work for me this week so here’s his thousand bucks.” Then I click submit and it’s done.

      Reply
      • April October 22, 2024, 7:54 am

        MMM, welcome to the over regulated world. Not to say some places require layers after layers of references (especially in healthcare and academia where direct supervisors’ letters are required, and good luck to those with the asshole boss!). You do your work, you get paid. But when the G and the Lawyers get in the way, anything becomes additional processes to generate revenues, only not for the people directly involved. And I don’t think any candidate could change that.

        Reply
  • MrColton October 16, 2024, 1:32 pm

    I have to say I really miss the old MMM who wasn’t afraid to really weigh in on politics. MMM of old used to talk firmly about higher taxes, funding education, and a societal focus on addressing climate change. Old MMM articles have a nearly full throated endorsement of Obama policies and reasons for why. Even if I disagreed on certain pointsI appreciate someone who believes in something much more than someone who fence sits. These days it’s just “stop worrying about politics, whatever happens happens!” The apathy and hand waving support for the status quo (which includes blasting past the 2.0C “upper barrier” for climate change before it goes catastrophic at exponential speeds) just feels hollow. One party is investing in renewables (though not enough), one is threatening to tariff imported solar and “drill baby drill”. It’s sad that this is no longer something MMM seems to care about. I haven’t seen him mention climate change, education, or making a better world for our children then the one we have now in a while. It’s just “my stocks are up, stop complaining everyone else!”.

    The second thing is that if the economy feels bad but actually isn’t the solution can’t just be “just get over it!”. Telling people to get over it has never worked. If people are feeling bad there has to be something to it and it has to be addressed. I think there are things that are more and less legitimate here that are making people feel bad about the economy.

    Some legitimate things. The absolute essentials: food, healthcare, education, child care, home maintenance, and more have all seen inflation higher than the base rate and higher than wages. This in particular affects lower earners and responsible mustachians, who spend a higher portion of their income on essentials. Yes, enormous flatscreen TVs only cost a few hundred dollars now, and that’s cool and all, but that basically drags the CPI down while essential costs go up. Anxiety about climate change is real and deserved. 12 years ago when MMM wrote about how markets were solving climate change I felt very inspired. I felt very optimistic.

    But now we release more CO2 every year than the last. Fusion is still 20 years away. Attempts to eliminate single family zoning have mostly failed. We’re getting double hurricanes in October and it is clear we need to care more about climate not less. This has an effect on people, even if they are locked in a 2.8% mortgage and save 50% of their income. Raising children knowing that temperatures are increasing exponentially is really fucking scary. Women and Doctors have lost rights. If you live in certain states you can be charged with a crime unless you carry your rapist’s baby to term. Can we pause and just think about that? Can we move past all the “everything is always getting better” rhetoric and take note of the fact that, factually, objectively, in our first world super-giga-economy women are being forced to give birth to already dead fetuses and dying from it?

    There’s plenty of irrationality that needs to be corrected as well. Keeping up with the Joneses has reached staggering levels of insanity on the Gen Z internet. Everyone follows someone who pretends to have a private jet and then goes into CC debt to buy Ballenciaga because the influencer told them it would make them appear more serious and the raise they got would make up for it. People buying crypto meme stocks instead of VT because they saw a tiktok that said SHIB was going to the moon. Yeah, these are people hurting themselves. But if people are systematically hurting themselves we need systematic solutions. Support for personal finance in public education, especially in disadvantaged zip codes where they are unlikely to get that from their home life. More funding for public education in general. We need policy to suppress the cost of college which has become outrageous.

    One of the parties is openly trying to gut public education, ban books, force religious “teaching”. Our very own MMM owes much of his blessings to a state subsidized public university education in Canada. In the past he championed this model and talked about how weird and crazy education costs were here. It seems like this is lost on him now. Is this a case of “F you I got mine?”

    I really want to drive this home: systematic anxiety and insecurity can’t be solved by just telling people to feel better. There has to be a source, rational or irrational, and it needs to be addressed.

    And I’ll add that I’m not some crybaby in credit card debt trying to blame others for my problems. I’m a mustachian with an ultra high savings rate, frugal grocery bills, no cable TV, a healthy amount of stocks, etc. I could FIRE now if I wanted to. But it’s important to look outside the bubble and see how people really live. Read the stories and meet the people buying fish antibiotics because they can’t afford real ones because their deductible is $18,000 and they make $20,000. Read the stories of corporate landlords ignoring mold that is making people sick and the tenants being unable to find any other place to live because everything else would cost 60% of their income. Software engineers, who make up so much of this FIRE movement, have never been more precarious. Lots of people in my network, great engineers, can’t get a call back from a single position they apply to.

    I agree this election is a shitshow, but let’s stop acting like everything is perfect and everyone should just shut up and ignore what’s happening.

    Reply
    • Mr. Money Mustache October 18, 2024, 7:40 am

      Man, there’s a lot in there Colton! I appreciate the call-out and don’t worry my values and reasons for writing this blog are still the same as ever. And I’ll be coming back to your blog-post-comment for some ideas for upcoming blog posts!

      Some of your points I would still label as complainypants and I would like to see some links and citations along with some of those claims.

      We don’t need FUSION to solve our energy needs for example – solar and storage are now here and cheaper than fusion was ever forecast to be and they have already solved the energy crisis – it’s just a permitting issue to get all the abundance hooked up to the grid, but check back in five years and let’s discuss the graph.

      But I’ll always choose optimism when it comes to my writing perspective. And in the case of this blog post – I felt that misinformation on the economy was one of the barriers to helping people make accurate choices in their votes. So I’m optimistic that a focus on stats will be helpful yet again in this election.

      Reply
      • THorton October 22, 2024, 7:35 am

        MMM Please bring back more posts shitting on cars & in particular the idiocy of ICE cars. Drilling oil with expensive equipment that often can leak into and destroy the local environment. Burning some of that oil to refine that oil, burning more oil to transport the refined oil. Relying on the mercy of international cartel organizations like OPEC to move the price of oil. All so that you can convert at most 40% of that oil into usable energy that propels a vehicle, while the rest is burned off as heat. Fueling these idiotic contraptions with oil still costs 2-10x as much as electricity for charging EV’s, and the grid charging these EV’s gets cleaner every day.

        Reply
  • JackOnRocks October 16, 2024, 2:47 pm

    Honest question: Why do you think so many people think the economy is not doing well? Do you think those people are just misinformed about the money they have and money that they’re spending? What do you think is convincing these people that the economy is not doing well? Inflation feels way different at the bottom than it does at the top or in the middle.

    Reply
    • Mr. Money Mustache October 18, 2024, 7:31 am

      That is a really good question. It’s super weird to me, because when I want to judge anything in a country, I don’t look at my personal situation or that of my friends. I look at the stats from the census bureau and the department of labor and so on!

      Just like when I’m trying to learn about health or science or heck even what are the most reliable cars, I’m not going to walk into the local tavern and see what’s the word on the street. I’m going to go to the library or the online equivalent thereof and read up on that shit!

      So, the situation we’re in now where our populace is not all that well informed of reality isn’t anything new. There have always been news bubbles and misinformation bubbles. But I do think it’s getting a bit worse now – the TV news (which is a business rather than a public service) keeps pushing the boundaries of sensationalism in order to fight for ratings. Politicians (Trump is notable for taking this to a whole new level) have realized that you can just make shit up and their followers don’t bother to fact check at all. And social media has allowed dumb stuff to spread with even lower journalistic standards.

      Reply
  • Bryan October 17, 2024, 4:21 am

    So glad I earned my Mustachian PhD years ago that all of this is second nature to me. Rock on MMM!

    Reply
  • Ben Dotzel October 17, 2024, 5:18 pm

    Once again, MMM cuts through the noise with his usual clarity. While I don’t agree with every point in his analysis, he’s absolutely nailed the big picture, as always. Mark my words—check back on this in four years, and you’ll see what I mean. For context, just take a look at his takes on the COVID frenzy (https://www.mrmoneymustache.com/2020/03/03/coronavirus-stock-market/) or inflation (https://www.mrmoneymustache.com/2022/01/11/inflation-should-we-be-worried/). The key takeaways are simple: don’t panic, focus on what you can control (a nod to ‘The 7 Habits of Highly Effective People’), and prioritize educating yourself rather than parroting other people’s opinions. Speaking of opinions, it seems The Economist feels that ‘ America’s economy is bigger and better than ever’. To the moon, USA! 😊”

    Reply
  • Mick October 18, 2024, 6:22 am

    Thanks for the reminder that I should devote less brain bandwidth to following the election. Amen to that!
    One serious quibble: while I agree that increasing housing supply by easing regulation makes some sense, I question the libertarian zeal I sense in promoting the claim that “changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.”
    Really, property owners should get complete say over what they do with their property?
    So, MMM, if I own the land next to your beautiful park side home and want to build a cement factory there that will operate 24/7, generating noise and noxious dust, are you ok with that? By your reasoning, you have to be.
    But I sure as hell want some zoning that protects me from that.
    Thoughts?

    Reply
    • Mr. Money Mustache October 18, 2024, 7:19 am

      Yeah, I admit that my rants on housing can lose some nuance sometimes because I’ve seen SUCH STUPID SHIT like my own city council blocking one really great development after another, even when they actually *want* more housing, just because the rules are so ridiculous!

      What I’d really do is have super strict rules only on externalities – like noise and pollution. And I’d also gradually fix the roads so there’s no such thing as traffic noise or pollution from obsolete gas cars as well. Car traffic jams are fine however – as long as they are on small roads and we have alternative ways to get around that aren’t personal cars. Like kickass bike paths and lanes!

      But the current rules on zoning where some cities aren’t even letting people use their own house for Airbnb income? Fuck that. And I should also be able to tear down a house on a big suburban lot and make it into a duplex or 4-plex or whatever.

      And if you want control over the lots around you, you can have that too – you can work hard, spend less, save and invest, and BUY THEM!

      Reply
  • Figuy October 18, 2024, 8:38 am

    Home ownership rates haven’t budged despite the higher prices.
    Sure the high prices/interest rates are frustrating for the very small minority of people looking to buy a home right now, but for everyone else, getting a huge discount when rates dropped to 2% was wonderful.

    People that are looking for homes are adapting to the situation, maybe getting slightly smaller houses/yards than the oversized ones that their parents bought in the last 40 years which I would argue is a good thing.

    Anecdotally, two young growing families I know gave up their large car centric newer home with 2% mortgage to DOWNSIZE to our mustachian friendly walkable tightknit neighborhood.

    Reply
  • PG October 19, 2024, 7:44 am

    In general, I think we should value science, and I’m trained as a scientist. I just want people to not use the word “science” like it is the absolute truth. Science is an approximation of reality or nature based on models and experiments and on how we analyze and interpret the data from them. Models and experiments are not perfect and sometimes our interpretations of the data (even if the data are correct) can be wrong. So, science is continuously being perfected with new theories, models, and interpretations. I often see now when people use the words scientific or science-based, they use them to shut down discussions. “It’s based on science, so you have to accept my viewpoint.” What if your “science” is selectively choosing what models, studies, data, and interpretations to consider. What if that selection is politically or financially motivated? These are the things we should consider when debating “science.”

    Reply
  • TrueNorth October 19, 2024, 10:15 am

    Just stumbled on USAFacts last night. Such a welcome and timely resource for those of us sifting through all the garbage online. It skew slightly left, which you can see in the videos they share (but not in the facts shared though). Another great resource I have appreciated lately is AllSides.com, which gives you details on news articles from both sides. So appreciate the work they do!

    Most important things we can do: control what we can control, save more than we spend, help things go right by making ourselves useful to our friends, families, and community. When watching all the politics within the US and internationally, just remember, people follow incentives, not advice.

    Reply
  • samanil October 19, 2024, 10:53 pm

    Informative and succinct article! I’d love to hear more of your thoughts on how the supply of housing could be increased. It seems like there’s a glut of so many things (phones, twinkies) while there just isn’t enough housing. What gives? maybe an article idea?

    Reply
  • Jon October 20, 2024, 5:51 am

    Hey MMM! Long time reader, love the article and always interested in learning how to focus my energy on the things that matter (AKA not politics).

    However, I was surprised that you, Mr. “Muscle over Motor”, is using AI art and promoting an AI-voice version of your article. Creativity is a muscle too, and I’m sure there are tons of super-talented artists and narrators in your community who would be happy to work for you! Even discounting the possible issues of art theft, voice misappropriation, and overwhelming energy usage that comes with AI, I would have thought you weren’t the type to take the “easy” way just because it was there.

    Reply
    • Mick October 21, 2024, 5:11 am

      “Creativity is a muscle, too”. So true!

      Reply
    • Mr. Money Mustache October 21, 2024, 1:04 pm

      Haha, my son just won a gentleman’s bet because of you! (As a musician and artist himself, he warned me that there is a small but vocal community out there that are highly opposed to the use of Generative AI as a tool, even for a fellow creative like myself who just happens to be a writer)

      I appreciate the thought and I’m definitely keeping an eye on the development of this amazing technology, but I’m also against the scarcity mentality rejection of new things just because they shake up the way things currently are.

      Throughout history there have been strong objections to things like steam engines, conveyor belts, robots, computers, automated bank teller machines, and the Internet.

      AI is just the latest of those things, and while you can say “it’s different this time” because there has never been anything that can compete with the logic and creativity of Human brain until now, the truth is that nobody knows. I personally think everything is an experiment, especially a new form of intelligence that we get to increase our own joy and productivity.

      That Eagle with glasses gives me a good laugh, as does the fake podcast discussing this article. I think it’s not only harmless, but beneficial for MMM readers to be exposed to stuff like this (as well as other places) since that is the way the world is headed. Best to be aware of what’s out there and let it inform your living and investing decisions.

      p.s. When I wrote that Muscle over Motor article I was thinking more about physical activity and health, but I still really appreciate references to campy old MMM Classics, and applying them to new situations!

      Reply
  • Ed Grozalis October 20, 2024, 8:50 am

    Thanks for the logical, concise, unbiased article.
    Please write more often!

    Reply
  • Renee October 21, 2024, 9:54 am

    Thank you MMM! You should be on Fox and every other news media outlet shouting this from the rooftops!

    Reply
  • April October 22, 2024, 8:28 am

    Another reason why people are so dissatisfied and mad at others is that they don’t feel safe around people holding different views, especially when the people holding different views are generalized and dehumanized as a group not as individuals. As a woman of color, when I see my group of people and country of origin is blatantly targeted, and so many others resonate with those vile views, it feels scary. That is a sentiment that MMM and a lot of his followers are unlikely to experience. However, in my community, when I actually talk to my neighbors who hold signs of both sides, they appear to be fellow human beings who share similar joys, sorrows, complaints and etc. Humanity is what we share but usually placed at the bottom of the list when we are stuffed with the information from different media. That is a paradox because most FIRE people benefit from index funds heavy on tech stocks, and the tech stocks increase so much in the last 15 to 20 years by making people more polarized using algorithms to feed things they want to hear and see.

    Reply
  • Bill Karoshi October 22, 2024, 8:26 pm

    Another Great article.
    I have found that people that don’t understand the Economy also have a bad personal economy.

    Reply
  • Wade October 23, 2024, 1:06 pm

    If I’ve learned anything, come election result day, it won’t really matter who wins. The Uniparty will continue piling up unlimited debt.

    Maybe it won’t matter, maybe it will matter. It is outside the scope of my control. Even with a vote, it is a drip in the ocean.

    Do the right things, save up a pile. Buy less stuff and things. Control spending and right size your house and car spending.

    Gnashing of teeth over either side winning or losing is wasted enamel.

    Reply
  • Dan G October 24, 2024, 10:44 am

    MMM
    I am a longtime reader of your blog and appreciate the knowledge that you share. This article goes right into the heart of one of my favorite topics – how little the president can impact the economy and how productivity and business are more impacted by technology, business cycles etc than politics.
    I do want to point out something about inflation though. While most things in this article are true in a ‘general’ sense, Economics being a statistical discipline rather than a hard science, you ought to mention that the tails do NOT follow the same rules as the average. So while most of the times government spending or ‘printing of dollars’ is fine, when done to extreme and especially fast, the usual rules will break down. This is especially true because the unit used to measure the economy is also the USD. When you have reducing amount of goods and services (due to Covid) measured in a hugely increased amount of dollars, the price of those goods and services will be higher, and that is inflation. That’s what people saw in higher prices, and that is a correct observation. Here the economy has NOT actually improved – we don’t have more goods and services – we just changed the numbers on the price tags. If we had the exact same amount of goods and services produced but they were worth 2 trillion dollars instead of 1 trillion dollars, would you say the economy is doing better?
    May be GDP in PPP could tell us a better picture, but I am not really sure. Would love to hear your take on it.

    Thanks,
    Dan

    Reply
    • Mr. Money Mustache October 24, 2024, 8:56 pm

      Hey Dan,

      I think we agree – the Covid era was indeed inflationary because of more dollars chasing fewer goods. There was inflation, but there was ALSO a temporary spike of much higher profits for the companies offering the things in short supply (for example US-based automakers).

      But shortly thereafter, not only did the trade routes reopen but the higher profits triggered higher production of everything. This is what got the inflation rate down so quickly and why some categories are now seeing *deflation* which may continue for a while (hopefully in housing but I know that’s kind of a chronic shortage!)

      Also, as the economy sprung back from the Coronacrash, there was also an increasing shortage of workers, which is why wages have risen even faster than inflation.

      As I stated in the article, the net effect after all of these events is something like 19% higher prices and 21% higher average wages. Also, substantially higher real GDP, productivity, and employment levels.

      As a side note, I’ve been surprised by the number of comments coming in saying, “This article is BUNK! MY wages only went up 3% in the past year and my utility prices doubled! You’re being GASLIGHTED MMM!!! ”

      This is so far off from the point that I almost just tossed my keyboard into the trash and gave up writing altogether.

      Because, once again, when we’re judging the economy or any other situation we DO NOT JUST LOOK AT OUR OWN PERSONAL SITUATION OR THAT OF OUR FRIENDS AND NEIGHBORS!!! Big data and national spreadsheets that show DECADES of data are your friend – only with that perspective can you really understand what’s going on in the world.

      And once you understand the world better, you can make wiser and less emotion-based decisions, which means more wealth and a more peaceful life.

      Reply
  • Katie October 24, 2024, 10:16 pm

    I think this just goes to show that when it comes to economics, perception is reality and the vibecession mentality has a vice grip on many. Politicians know this and use it to their advantage.

    Reply
  • Jon October 25, 2024, 2:58 pm

    The wonderful yester years when we didn’t have to have politics in every facet of our lives. It would be nice if we could shrink the government down to the point where not everyone has to feel like they have comment on it.

    Reply
  • Todd October 26, 2024, 12:44 pm

    Normally I’d agree, but in this election one candidate wants to give us a wealth tax, taking unrealized cap gains on “billionaires” (in lefty math, that means households worth $100mm). It would force sales of stock and crash the market, and ultimately like all such taxes it will hit the middle class through inflation (they’re never indexed) and policy changes. Harris’s own endorser Mark Cuban called it an “economy destroyer,” and he’s right.

    Reply
    • dandarc October 28, 2024, 3:30 pm

      And the other wants to impose massive tariffs, which will create a lot of that terrible inflation the right pretends to care about.

      Reply
  • Debbie October 27, 2024, 6:15 pm

    Maybe its not your wheel house, MMM, but I would love to see an article on international monetary policy – tariffs, national debt, effects of war, currency values. Or I would love some unbiased (or at least less biased!) readable resources in understanding these.

    Reply

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