English Conversation about the United States ECONOMY -- Bear Market-Recession-Inflation-Liquidity

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If you want to talk about the US economy with American speakers then this economics conversation is for you! We discuss economic concepts like inflation, recession, liquidity, elasticity of demand, supply and demand, and stockpiling. In this Bear Market, learn about the vocabulary for English conversations!

00:00:00:09 - 00:00:42:21
Mary Daphne
Hello, everyone. Hello, Advanced English Learners. Welcome back to the Channel. Welcome back to the podcast. I'm joined today by the one and only Greg Hello. So we're going to have an interesting discussion today, as we usually do with these lovely conversations And I'd like to remind you that the point of these conversations is to give you an opportunity to, well, a few things to work on your listening comprehension so that you can keep up with the conversation and really follow along, see what's going on to to understand how a conversation naturally flows in American English.

00:00:43:00 - 00:01:11:03
Mary Daphne
And three, to get some pronunciation insights and try to match your pronunciation to our pronunciation. And that also holds true for intonation and inflection patterns and the rhythm of the language. So we're accomplishing quite a few things here. So hopefully you take that into consideration and also use that to your advantage as you are following along and listening and watching this conversation.

00:01:11:24 - 00:01:29:21
Mary Daphne
All right. So let's jump right in OK, Greg. So I think it would make a lot of sense to talk about the economy, for lack of a better word.

00:01:30:14 - 00:01:41:20
Greg
Yeah, I think it's quite topical and would be worth discussing just to get a sense of the vocab and to try and put some of this in perspective.

00:01:42:04 - 00:01:46:10
Mary Daphne
So where should we begin? Where do you think is a good launching point?

00:01:47:09 - 00:02:05:15
Greg
I mean, you know, talking about the economy is tough because everyone has a different level of mastery. Right. And understanding of the various parts of the economy. Yes. But I think there's one part of the economy that everyone is very familiar with, which is inflation.

00:02:06:03 - 00:02:13:05
Mary Daphne
Inflation. Yes. So let's maybe first define what inflation is just to make sure everyone listening is on the same page as we are.

00:02:13:19 - 00:02:41:23
Greg
Yeah. So inflation then is the increase in price of various items, right? So you can have inflation in the housing market, which would mean that the cost of housing is going up, right? When you go and buy a home that goes up and maybe even the rents eventually go up as well. So that's inflation of housing. You can have inflation of food, right?

00:02:41:24 - 00:02:45:26
Greg
So the cost of food when you go to the grocery store and you buy your eggs, your milk.

00:02:46:28 - 00:02:51:01
Mary Daphne
Right? Same product, same everything, now it's more expensive.

00:02:51:02 - 00:03:14:26
Greg
Exactly. So the cost of that goes up. You can also have inflation in commodities, right. Which are goods that that, you know, are bought and sold on a market. So something like oil. Yeah, right. Or electricity. Right. Or wheat or precious metals. Wheat. Yeah, right. All of these things. Those are all commodities and those can be inflated as well.

00:03:15:21 - 00:03:36:22
Greg
And so essentially what inflation, when people talk about inflation, they're typically referring to what's called a basket of goods. Right. So a basket of these different things that we just discussed. And you combine them together and you look at, you know, the overall sort of aggregate price increase or decrease. Right. So you can have inflation. That's when things go up.

00:03:37:03 - 00:04:01:22
Greg
And then the opposite is deflation. Exactly. When things go down, when the prices go down. So you look at this basket. And if that overall basket so the average price of items in that basket goes up as means that there is inflation, right? So the price of things are going up. Right. And so the reason I say everyone is familiar with inflation, even if they don't really know what that term means, is because at the end of the day, we all have to pay for things.

00:04:01:23 - 00:04:05:15
Greg
Right. And if the cost of things is going up, we all know about it.

00:04:06:00 - 00:04:31:28
Mary Daphne
Exactly. And for people who, you know, the housing market was super hot. Meaning, what does that mean? Well, when the housing market's hot, that means that the homes are really expensive and they'll also go like crazy. So, you know, we have a realtor friend and she was telling us how even these homes that are not even that great have been just going like crazy because people were voracious.

00:04:31:28 - 00:04:38:13
Mary Daphne
They were so hungry to buy. And so that created a lot of demand.

00:04:39:00 - 00:05:08:08
Greg
Yeah. Ever since the great financial crisis back in 2008 nine. Right. The cost of housing has dropped tremendously. Right? So there was a big crash in the market. A crash just means the price drops really fast might drop precipitously. Right. And so the price the price plummets the price of the housing market plummeted. And for years it was stayed in that depressed state.

00:05:08:08 - 00:05:17:11
Greg
Right. So it stayed this very low level and gradually over the last decade, the price has been slowly climbing, but at like a steady pace.

00:05:17:21 - 00:05:23:06
Mary Daphne
Rising crazy, crazy. Like, oh, wow. That was way more expensive. Yeah. Than it was.

00:05:23:06 - 00:05:44:03
Greg
So they were they were climbing at essentially the pace of inflation. Yeah. Right. And then all of the sudden, in the last year and a half, two years, things really went nuts. Right. The prices really went crazy. And so they went from a steady increase to a rapid increase.

00:05:44:05 - 00:05:45:00
Mary Daphne
Yeah. Crazy.

00:05:45:18 - 00:05:46:06
Greg
And part of.

00:05:46:06 - 00:05:48:23
Mary Daphne
That was an overheated environment.

00:05:48:28 - 00:06:02:07
Greg
Exactly. So you can talk about the market being hot. Yeah. Overheated. Temperature is used a lot. If it's a cold market, that suggests that things are not turning over quickly. Right. There's not much product turnover.

00:06:02:10 - 00:06:33:02
Mary Daphne
And if you go into like websites where they're selling, you know, so real estate websites, you'll see hot home, hot home, hot home meaning that home is predicted to sell within a few days. And that's not an exaggeration. Like our realtor friend was saying, how she'll show a house to like 20 people on one day. And it could easily be just just disappear from the market because people just take it right away within a matter of days.

00:06:33:10 - 00:06:57:20
Greg
That's a good point. So you have both price and velocity, right? So the prices, how much does something cost The velocity is how quickly how quickly does it get taken from a shelf? Right. So when you go to a supermarket, the velocity of some items is higher than others. Typically the velocity of things you need like eggs and milk are very high because people are buying those every day.

00:06:57:25 - 00:07:04:28
Mary Daphne
And so the demand will be high. And so all the supply so that the supply can meet the demand. Demand.

00:07:05:07 - 00:07:28:26
Greg
Yes. So supply and demand is also a super important part of the economy. Right. That that's what essentially determines the price. Right. So if you let's talk about eggs for a second, right? If suddenly everyone decided they really wanted to cook with eggs, the price of eggs would probably go up, right? Because if people want to cook with eggs, that means there's high demand for eggs.

00:07:29:10 - 00:07:40:12
Greg
And if there's high demand, the price goes up because the egg producers can only produce so many eggs. So the egg producers have essentially a fixed amount that they can produce.

00:07:40:20 - 00:07:42:04
Mary Daphne
Because they only have so many skins.

00:07:42:13 - 00:08:09:23
Greg
So with a fixed supply. Yeah. And the demand is going up, well, that means people are willing to pay more for the supply that's there. Right. And so that's why you have that relationship, right? If if supply is high, prices low because there's not a lot of buyers and there's a lot of stuff that can be bought. And when supply is low, price is high because, you know, everyone's clamoring for a limited set of goods.

00:08:09:24 - 00:08:37:06
Mary Daphne
Right. And it goes also with things that are, you know, hot commodities that are rare so if you think of something that is extremely rare and valuable, they're not that many of them in the world. Like, for example, the lithium ometer from The Golden Compass. This is a made up thing, but there's only 44 in that world. So I would imagine those are extremely expensive because there might be a lot of demand, but there's no supply.

00:08:37:21 - 00:08:49:15
Greg
Yeah, that's that's actually an interesting point, right? How much how much of something there is. And so you're right, that when supply is limited, in that case, there's only four of them. The price is very high.

00:08:49:15 - 00:08:49:24
Mary Daphne
Right.

00:08:49:29 - 00:08:53:21
Greg
But what's interesting, you brought up another concept which is called liquidity.

00:08:53:28 - 00:08:54:12
Mary Daphne
Oh, yeah.

00:08:54:13 - 00:09:06:04
Greg
Right. So in that case, you just brought up a very illiquid market, right? Liquidity typically refers to like the it refers to its sort of aqua. Aqua, right.

00:09:06:04 - 00:09:08:03
Mary Daphne
Like water, water, liquid water.

00:09:08:03 - 00:09:15:27
Greg
Right. So how fluid is it? Right. And in economics, liquidity refers to how fluid the market is, how much flow there is.

00:09:16:10 - 00:09:20:22
Mary Daphne
And in order for you to be liquid, you need to be have a cold cash. Right.

00:09:21:12 - 00:09:24:00
Greg
Well, here we're talking about the sort of liquidity of supply.

00:09:24:09 - 00:09:25:13
Mary Daphne
Oh, right. OK, OK.

00:09:25:15 - 00:09:36:07
Greg
So you're right there. That's also how it's used. But we're going to talk about that separately. But here we're talking about liquidity of supply. And so you have the ability ometer. We have four lithium emitters.

00:09:36:09 - 00:09:42:09
Mary Daphne
So basically, let's just define what that is. It's from these books. The Golden Compass has got dark materials.

00:09:42:18 - 00:09:45:06
Greg
And the TV show is called His Dark Materials.

00:09:45:13 - 00:09:58:08
Mary Daphne
Yes, his dark materials is the show, but the series, isn't it? The series called Desert Materials, maybe. Yeah. I think the series is called Historic Materials. And then the first one is The Golden Compass. So you might have heard that the show is also really good.

00:09:58:10 - 00:09:58:25
Greg
It's awesome.

00:09:59:03 - 00:10:10:27
Mary Daphne
And so anyway, so the lithium there, just think of it as a golden compass and it tells the truth. So think of any time you have a burning question about anything in the world, you could just ask the Aletha ometer again. This is a who.

00:10:10:27 - 00:10:11:20
Greg
Knows everything.

00:10:11:20 - 00:10:13:00
Mary Daphne
And it will tell you the answer we.

00:10:13:00 - 00:10:15:20
Greg
Probably should have, just like with less complicated.

00:10:15:20 - 00:10:16:23
Mary Daphne
Let's say a Ruby.

00:10:17:03 - 00:10:17:25
Greg
Find a ruby.

00:10:17:25 - 00:10:21:26
Mary Daphne
Ruby. OK, so very simple let's just, you know.

00:10:21:26 - 00:10:23:09
Greg
Know that we can stick the lithium.

00:10:23:09 - 00:10:24:09
Mary Daphne
All, let's say. Yeah.

00:10:24:20 - 00:10:45:00
Greg
OK, so we have four lithium emitters right now. That means it's a very illiquid market because if you know you want to buy an aletha ometer, you only have four that you can buy. And maybe those are concentrated in two people. So there's only two people in the world who can buy and sell the other who can sell the Aletha ometer, Jeff.

00:10:45:00 - 00:10:45:20
Mary Daphne
Bezos.

00:10:45:29 - 00:11:00:05
Greg
Business. Elon Musk. Elon Musk, exactly. So there's so few sellers that means the buyer has almost no power. And likewise, the sellers might have trouble selling it because the price is so high.

00:11:00:05 - 00:11:03:05
Mary Daphne
Well, there's a market cap too. Well, so.

00:11:03:06 - 00:11:03:23
Greg
Yeah.

00:11:03:23 - 00:11:05:16
Mary Daphne
I only sell it for so much.

00:11:05:20 - 00:11:22:09
Greg
There's a cap for, you know, how much it's worth. Yeah, certainly. And the, the seller, you know, might not be able to find a buyer. It's just not a liquid. There's not a lot of demand in the first place for these amateurs. Those who want them will pay a lot for them. Right. But there's just not much demand.

00:11:22:09 - 00:11:24:29
Greg
There's not much supply. So that market's pretty static.

00:11:25:04 - 00:11:26:08
Mary Daphne
That's called illiquid.

00:11:26:09 - 00:11:28:03
Greg
Illiquid, right? With an ideal.

00:11:28:05 - 00:11:30:08
Mary Daphne
Because not a lot of flow. It's more static.

00:11:31:00 - 00:11:37:18
Greg
Exactly. Now, let's compare that to a very liquid market like oil.

00:11:37:25 - 00:11:38:24
Mary Daphne
Yes.

00:11:38:24 - 00:11:48:24
Greg
Oil is a highly liquid market. And that's not a pun just because oil is a fluid. Yeah. It's the market itself is liquid because there are a lot of different oil producers. Yeah, right.

00:11:49:03 - 00:11:50:27
Mary Daphne
The demand is high because people there's.

00:11:50:27 - 00:12:13:04
Greg
High demand and there's also high supply. So when there's high supply and high demand, you have a very liquid market and because of that, those prices tend to be much more reflective of true demand. Yeah, right. Whereas in an illiquid market, it's very hard to pricings think about something even more liquid than in the Lethe ometer. Right. A Picasso painting.

00:12:13:05 - 00:12:19:18
Mary Daphne
Oh, yeah. Of which there might be only one. Sometimes they do a few. Like maybe Picasso did a few. Right. So you could.

00:12:19:18 - 00:12:23:14
Greg
Do. Yeah, but if you chose one specific, like The Starry Night. Yeah, right.

00:12:24:07 - 00:12:24:20
Mary Daphne
Van Gogh.

00:12:24:20 - 00:12:38:08
Greg
Van Gogh. So The Starry Night with Van Gogh, there's only one of those in the world yeah. And so, you know, it's very hard to determine what the true price of that is because there's only one, it's highly.

00:12:38:08 - 00:12:40:07
Mary Daphne
Illiquid and it's so subjective to and.

00:12:40:07 - 00:12:41:02
Greg
So subjective.

00:12:41:02 - 00:12:44:11
Mary Daphne
You can't ask, Hey, Van Gogh, what would you charge for this?

00:12:44:17 - 00:12:46:04
Greg
So do you know how they determine the price?

00:12:46:04 - 00:12:46:22
Mary Daphne
How do they.

00:12:47:02 - 00:12:47:21
Greg
Use an auction?

00:12:48:00 - 00:12:49:21
Mary Daphne
Oh, that's right. And our auction.

00:12:49:21 - 00:12:53:15
Greg
Right. So when you don't know what the price of something is, you let the crowd decide.

00:12:53:15 - 00:12:59:21
Mary Daphne
Yeah, right. You just see how far they'll go to pay for that, right? So procure it and then cough up the money.

00:12:59:22 - 00:13:07:18
Greg
Exactly. So with an auction, you basically have a group of people, you say, hey, guys, I want to sell this one thing. It's unique.

00:13:07:22 - 00:13:08:15
Mary Daphne
What would you pay for?

00:13:08:16 - 00:13:13:24
Greg
What would you pay for it? Yeah. And you let people bid on the price of the painting.

00:13:14:02 - 00:13:24:08
Mary Daphne
So I wanted to circle back to oil for a minute. Sure. One way to make the like to make oil less of a hot commodity is to, you know, I'm going to say.

00:13:25:11 - 00:13:26:24
Greg
I don't know, burn it now.

00:13:27:26 - 00:13:31:15
Mary Daphne
Is switch to electric vehicles to.

00:13:31:24 - 00:13:42:29
Greg
Yeah, to switch to renewable power and general energy. Yeah, yeah, yeah. That would help. I mean, and that's what most of the world wants to do, right? Most of the world does want to transition to renewable power.

00:13:42:29 - 00:13:56:29
Mary Daphne
Seems like the logical next step, given where we are in the world, given what's going on with our climate, given. Yeah, the economy, the state of the economy, an impending recession, it makes so much sense. It's like.

00:13:56:29 - 00:13:57:12
Greg
Yeah.

00:13:57:13 - 00:13:58:11
Mary Daphne
Hello.

00:13:58:11 - 00:14:08:13
Greg
And it'd be great. Well, yeah. And cars are part of it, right? Part of it. But really, the polluters are more like factories. Sure. Cargo ships, transportation.

00:14:08:13 - 00:14:08:21
Mary Daphne
Right.

00:14:08:21 - 00:14:11:03
Greg
Turning coal power plants.

00:14:11:03 - 00:14:12:03
Mary Daphne
Yeah, definitely.

00:14:12:03 - 00:14:50:24
Greg
Right. Yeah. All of that uses even more basically produces even more carbon. Carbon and carbon carbon footprint. Right. More of a carbon footprint than than our cars do. But the cars are important stuff too. But yeah, the problem with transitioning to the green energy paradigm is that we still don't have enough supply of renewable power. Right? So going back to this supply demand, there is sort of constant and gradually or steadily increasing demand for power, whereas renewable power sources are still very limited in supply.

00:14:50:25 - 00:15:07:19
Greg
Right. We only have so many solar panels and most renewable power also is restricted more or less to the area where it's produced. So solar panels, right. A solar panel, they say, is most effective in a desert where there's lots of sun. Right.

00:15:07:22 - 00:15:08:17
Mary Daphne
And space and.

00:15:08:17 - 00:15:24:18
Greg
Space. So great, you can power things in the desert. But guess what? Most cities aren't in deserts. So it's like how do you get the power from that? Solar, solar, panel all the way to a city far away from the desert that's hard oil. On the other hand, it's in a barrel, right? You can transport all over the world.

00:15:25:06 - 00:15:45:09
Greg
So while we really want to transition to renewable power, it's still really hard for us to do because there are a lot of unsolved problems, both in terms of the efficiency of producing it and then the ability to transport it. And so for the moment, we're kind of stuck using, you know, polluting fossil fuels.

00:15:45:19 - 00:15:47:16
Mary Daphne
It's so frustrating, though. Yeah, right.

00:15:48:00 - 00:16:03:18
Greg
And because of that demand, even though we don't want to use it, we still have to. Right? We still have to power our homes. We still have to get drive to work. And so forth. And so, like it or not, the demand for oil is still very high. Yeah. And that's why we see the price of oil so high.

00:16:03:25 - 00:16:23:24
Mary Daphne
Yeah. I mean, it's just skyrocketing yeah. But during the pandemic, it was or the beginning of the pandemic, it was extremely low because there was people were home. They weren't driving to work. They were not using their cars. And there was all this oil, but no one was using it because it's not that need at the time.

00:16:23:29 - 00:16:24:27
Greg
Demand disappeared.

00:16:25:01 - 00:16:27:19
Mary Daphne
It was super low and now it's super high.

00:16:27:27 - 00:16:37:07
Greg
And it was just oil. Right. So if we think about most, most countries suffered a lot of shortages on all kinds of different products. Big one in the US was.

00:16:37:07 - 00:16:37:19
Mary Daphne
Toilet.

00:16:37:19 - 00:16:38:09
Greg
Paper.

00:16:38:28 - 00:16:45:13
Mary Daphne
There was like a meme 20, 20. The year the toilet paper was like hoarded or missing people nonexistent.

00:16:45:13 - 00:16:46:13
Greg
Easy for toilet.

00:16:46:13 - 00:16:47:03
Mary Daphne
Paper. Yeah.

00:16:47:06 - 00:17:14:14
Greg
And the reason was there is a fear of toilet paper shortages right now. Why are there shortages? Well, first off, most producers decided it's the pandemic, you know, so demand for everything is going down. We're just going to stop producing stuff. Yeah, right. So for some product categories, things just got produced less. Yeah. On the other hand, in a category like toilet paper, the producers just didn't anticipate the increase in demand.

00:17:14:21 - 00:17:30:10
Greg
Like you said, everyone is staying at home. So in this case, demand for toilet paper at grocery stores increased right. Because otherwise, you know, if you're at the office, you're using sort of industrial grade toilet paper, which isn't sold in the grocery store.

00:17:30:11 - 00:17:34:23
Mary Daphne
Right. And they're just like huge rolls, right? You're not going to use at home.

00:17:34:23 - 00:18:00:03
Greg
Exactly. So there is tons of that, but no one wants that at home. So all the the home sort of oriented toilet paper went off the shelves very quickly because suddenly Aaron's at home. Yeah. So not only did you have changes in total demand, right? Some some things were less desirous. Some things are more desires. You also had a shift in the dynamic of demand where the category of the type of food also shifted, right?

00:18:00:03 - 00:18:06:27
Greg
Same with restaurants. Yeah. So the kinds of foods we like to eat at home grew in demand because we're all cooking at home.

00:18:06:27 - 00:18:09:18
Mary Daphne
And this is what, what our stuff, that was stuff that people like.

00:18:09:19 - 00:18:35:26
Greg
Well, like, you know, dozens of eggs. Well, just like eggs yeah. And also snacks. Yeah, yeah. Those kinds of things. And the stuff that you would get at a restaurant, big bulk items. Yeah. The demand for that went down because no one's going to restaurants. So it's very very complicated. And, you know, going back to what we were talking about earlier, this inflation problem, prices are going up now, and that's mostly because we have a high level of demand for things and the supply is reduced.

00:18:35:29 - 00:18:45:00
Greg
Yeah, right. And so because of that, you have this inflation, it's very hard to manage very hard to manage. Yeah.

00:18:45:16 - 00:19:10:26
Mary Daphne
So we were talking before just another conversation. We had the two of us about now the suppliers creating so much of a product, hoarding it effectively and just making like, let's say a lot of toilet paper. They're making a lot of toilet paper and now they have more toilet paper than they need. Yes. So what's that?

00:19:10:26 - 00:19:19:18
Greg
So that's another driver of inflation, which is the companies themselves. We just talked about people who yeah. Companies are doing that, too. They're stockpiling.

00:19:19:18 - 00:19:20:22
Mary Daphne
It's called stockpiling.

00:19:20:25 - 00:19:23:06
Greg
So and a better example.

00:19:23:06 - 00:19:27:13
Mary Daphne
Dissipation of a potential shortage where they can fill the gap.

00:19:27:14 - 00:19:33:20
Greg
Exactly right. So a very prominent one right now is semiconductors.

00:19:33:21 - 00:19:39:20
Mary Daphne
Oh, that's right. That's what you're talking about. So semiconductors are the. Well, you can explain. It's like a special chip.

00:19:40:10 - 00:19:57:00
Greg
Yeah. Semiconductors are part of an electrical component in in computer chips. Right. Processors. And we have semiconductors in all kinds of electronics. Basically, anything that's electronic these days has a semiconductor of some sort.

00:19:57:03 - 00:19:58:15
Mary Daphne
Your Nintendo switch.

00:19:58:18 - 00:20:11:20
Greg
You tend to set your TV, your car your phone. Right. All these things have semiconductors. And they're very few producers of semiconductors because it's a very specialized technol.

00:20:12:00 - 00:20:13:06
Mary Daphne
Are they difficult to make?

00:20:13:06 - 00:20:24:13
Greg
They're very hard to make, yeah. It requires a lot of very specialized technology. And so the number of semiconductor producers is very limited. Yeah. And the demand for them.

00:20:24:25 - 00:20:25:12
Mary Daphne
Very high.

00:20:25:12 - 00:20:31:10
Greg
Astronomical. Right. Which means it's so high. It's basically in the skies in space. It's astronomical.

00:20:31:11 - 00:20:32:12
Mary Daphne
Astronomical.

00:20:32:12 - 00:21:00:28
Greg
And so because of that, the, you know, the price of semiconductors has gone up. But more importantly, more so even than the price. You just can't get them. Right. They're just they're not available. Yeah. And so to prevent certain businesses from going out of business, these businesses stockpile them ahead of time. So they go out and buy way more than they need because they don't want to have a shortage down the line.

00:21:00:28 - 00:21:05:10
Greg
So they can buy it now. They can make sure they can keep delivering the products without interruption.

00:21:05:10 - 00:21:12:07
Mary Daphne
So they're creating a huge supply and demand goes down. And guess what happens to those products? They become way cheaper.

00:21:12:18 - 00:21:37:27
Greg
Right? So in the short term, what happens is the cost of things goes up. Yes. Because all these companies are stockpiling in anticipation of part shortages. So the cost goes up because they're buying way more than they need. But then what happens is, you know, demand the supply catches up with demand and eventually it typically exceeds demand. So once supply exceeds demand, the price comes.

00:21:37:27 - 00:21:38:24
Mary Daphne
Down. Exactly.

00:21:38:27 - 00:21:43:08
Greg
And so a lot of economists are saying that the world is going into a recession now.

00:21:43:11 - 00:21:43:21
Mary Daphne
Right.

00:21:43:26 - 00:22:05:29
Greg
Which means that demand for everything from cars to electronics to metal, that food we can get to that later. But a lot of things that demand will go down. And so all these companies have, you know, all this extra inventory now because they're used to high demand and then, you know, the demand goes down. So they have to get rid of all that inventory.

00:22:06:08 - 00:22:07:09
Greg
So guess what that means?

00:22:08:09 - 00:22:10:25
Mary Daphne
Discounts major discount.

00:22:10:26 - 00:22:22:15
Greg
Yeah. So right now, it's brutal, right? We're dealing with really high inflation. That's very painful. Yeah. But hopefully, you know, a couple of months from now, we'll actually have the opportunity to get discounts because of all the extra supply.

00:22:23:04 - 00:22:46:21
Mary Daphne
And, you know, things like wheat and things like that are really expensive right now. Or you can't even find wheat. So trying to come up with alternatives, maybe you can make your own bread at home that doesn't require wheat. I have a great lentil bread recipe for anyone who wants it. Yeah. I mean, being my point here is to be as resourceful as you possibly can during these very inflated times.

00:22:47:17 - 00:22:52:00
Mary Daphne
And if you can't live without wheat then I don't know how to tell you, but.

00:22:52:10 - 00:23:01:01
Greg
There are alternatives. And so you brought up another really important topic. Economists have a term for that which is called the elasticity of demand.

00:23:01:10 - 00:23:02:22
Mary Daphne
Right? I don't know. I've never heard that one.

00:23:02:27 - 00:23:06:20
Greg
So the elasticity basically means something is elastic.

00:23:06:20 - 00:23:07:14
Mary Daphne
It's flexible.

00:23:07:14 - 00:23:35:07
Greg
Right? How flexible how much you can stretch it. Right. So with something that's elastic. Yeah. It means that people have a lot of substitutes, right? So if a product is elastic, it means there's many alternatives. I would argue something like, let's see, Coca-Cola, the demand for Coca Cola is elastic. Why? Because you have many alternatives. You have Pepsi, you have Sprite, you have root beer, right?

00:23:35:08 - 00:23:37:12
Greg
You have many different other types of sodas.

00:23:37:12 - 00:23:38:02
Mary Daphne
Dr Pepper.

00:23:38:03 - 00:23:48:06
Greg
Dr Pepper. So it's a very elastic supply. If Coca-Cola decide to jack up the price of Coca Cola known to buy Coca Cola because they'd run off and buy something that's cheaper, right?

00:23:48:08 - 00:23:56:06
Mary Daphne
Are they able to make their own thing at home? Just take some sirup. I don't know what kind of sirup exactly. Yeah. Yeah. So elasticity.

00:23:56:07 - 00:24:02:27
Greg
Elasticity. Whereas something like eggs, very inelastic because there's no real good substitute for eggs.

00:24:02:27 - 00:24:35:12
Mary Daphne
I mean, the vegan friends I have swear by mixing crust, what do you call it, ground flax seed with water. And it creates sort of like that similar consistency to egg. So it doesn't have the same, it's not ISO caloric and it's not nutrient li like nutrition wise, the same profile. But if you were to bake, for example, so vegans don't typically eat eggs and if they're going to bake a cake, you usually need a binding substance like eggs.

00:24:35:21 - 00:24:40:26
Mary Daphne
So it works really well is the ground flax seed meal plus water?

00:24:40:29 - 00:24:50:12
Greg
Yeah, or chia seeds. And you put a little water and cheese seeds. So you're right, actually food these days is actually surprisingly elastic.

00:24:50:12 - 00:25:07:07
Mary Daphne
And the only reason I know so much about this is because I do a lot of baking like healthy baking. So I never use sugar, I never use hypoglycemic things. So it's very low glycemic and no sugar. And I can come up with some pretty tasty treats.

00:25:07:07 - 00:25:16:15
Greg
It's true. It's true. And so, I mean, you make a great point, which is these days food is very elastic, right? There's so many different ways milk, you can get substitutes for.

00:25:16:17 - 00:25:19:25
Mary Daphne
It's just a matter of changing your headspace about it, right? Yeah.

00:25:19:25 - 00:25:31:08
Greg
Getting creative, just Google searching for that. But I will choose something that is definitely inelastic, which is going back to oil, right? Oil is in a lot. Trillium Petroleum, right? Crude oils is actually.

00:25:31:09 - 00:25:33:03
Mary Daphne
When you say oil, I'm thinking olive oil.

00:25:34:17 - 00:25:37:22
Greg
Well, yeah, those cooking oils, there is quite a few substitutes, but.

00:25:37:22 - 00:25:38:13
Mary Daphne
Yeah, they're not.

00:25:39:00 - 00:25:56:21
Greg
But yeah, I'm talking about I'm talking about crude oil. Crude oil is sort of the base product that is used, you know, all all industry still needs crude oil. Yeah. And so no matter how high the price goes, people still need to buy it. Yeah. And eventually you just get to a point where it's so expensive that businesses can't afford to buy it.

00:25:56:21 - 00:26:17:22
Greg
And then they closed down. And that's, that's why people are anticipating a recession is right. There's no expectation that the price of oil is coming down any time soon. So eventually businesses are just going to have to capitulate and shut down, which means demand will go down. And ultimately that brings as they say, the cure for high prices is high prices.

00:26:18:08 - 00:26:42:28
Greg
Right. Essentially, at a certain point, people just stop buying things because they can't afford them. Yeah. And that ultimately brings demand down, which brings prices down. So this this situation can feel very difficult in the moment, but just know that it is temporary. And in the meantime, you know, you brought up some terrific ways to sort of find alternatives in your day to day life.

00:26:44:02 - 00:26:48:25
Greg
To avoid having to pay inflated prices for things that are in high demand.

00:26:48:25 - 00:27:05:07
Mary Daphne
Yeah. Instead of paying an arm and a leg for something that's a great expression in English to pay an arm and a leg for something is like you pay a lot. So it's astronomical in terms of prices. Yeah, just try to be creative. And so I guess we have to wait it out and. Yeah.

00:27:05:28 - 00:27:13:24
Greg
Yeah, you know, the number one thing is to, you know, be patient. Patient one should always be patient no matter what.

00:27:13:27 - 00:27:14:28
Mary Daphne
It's a virtue, right?

00:27:15:03 - 00:27:15:21
Greg
Exactly.

00:27:15:21 - 00:27:17:11
Mary Daphne
Patience is a virtue.

00:27:17:12 - 00:27:19:19
Greg
I would argue that the number one thing is to be adaptable.

00:27:19:23 - 00:27:22:23
Mary Daphne
Adaptable. I was going to say, and then try to be resourceful.

00:27:22:25 - 00:27:36:23
Greg
Adaptable and resourceful. Those are very important, right? Learning how to adjust to sort of adjust to the changing circumstances and resourceful, you know, being creative about finding alternative solutions, right?

00:27:36:23 - 00:27:39:00
Mary Daphne
Like different income streams or whatever.

00:27:39:05 - 00:27:47:14
Greg
Different income streams, alternatives for the stuff that you use daily. Switching to cheaper substitutes. Yeah. Where possible, you know.

00:27:47:21 - 00:28:14:25
Mary Daphne
Maybe being more frugal and maybe trimming the excess where there's excess because a lot of us don't even realize. But we, you know, there's like we are so fortunate in so many ways where there's a lot of actually extra that we don't necessarily need and can live without if we needed to. So, you know, thinking about that can also maybe put stuff into perspective in that regard.

00:28:15:03 - 00:28:31:06
Greg
Yeah. I mean, we could do a whole another topic on auditing. Yeah. Unnecessary expenses but that is a huge part of this is an opportunity to do that, to take a look at, you know, what are your expenses, where are the highest numbers and figure out ways maybe that you can cut back a little bit. Yeah.

00:28:32:00 - 00:28:43:14
Mary Daphne
So I think we kind of hit a lot of different points here. And again, this is not scripted, just sort of we let the beauty of conversation manifest itself and take us where it may.

00:28:43:20 - 00:28:44:03
Greg
Yeah.

00:28:44:03 - 00:28:45:00
Mary Daphne
As a flow.

00:28:45:02 - 00:28:59:10
Greg
Yeah. I mean, economics is cool because it is integrated into so many aspects of our life. And we don't really see it. It's often invisible, but it's there. And, you know, once you start talking about, you realize how relevant it is to everything we do.

00:28:59:18 - 00:29:17:07
Mary Daphne
It's true. And if you, you know, I feel like most Americans like to talk about it. Like, for example, there are a lot of different taboo topics in different cultures around the world. The economy and economics is not really one of them. Know talking about money specifically, like, oh, how much do you make? What's your salary? That's a no no.

00:29:17:07 - 00:29:45:15
Mary Daphne
That would be a taboo topic. But the economy at large, talking about the housing market, talking about the impending recession, talking about, you know, inflation, those are topics that you can easily broach. And talk about with other Americans. So if anything, if you were to take away anything from this conversation, hopefully there are some nice points there, some talking points, some dinner table conversation that you can use in your next conversation with some native English speakers.

00:29:45:25 - 00:29:46:13
Greg
Absolutely.

00:29:46:25 - 00:30:06:12
Mary Daphne
Awesome. So we're going to see you in the next Advanced English lesson in conversation. Share this podcast and the channel with anyone who wants to improve their social skills, their communication skills and their English skills. And so we are going to see you right here for another conversation. Bye for now.