Berry, berry, quite contrary
Jul 28, 2022
Episode 723

Berry, berry, quite contrary

We're talking GDP, China's economy, the U.S. dollar, Janet Yellen, and ... berries.

Yes, we know, the GDP numbers are in. The United States reported today a 0.9% drop in gross domestic product in the second quarter. We’ll discuss. Also, Chinese officials expect to miss economic growth targets. On today’s show, Kai Ryssdal and guest host Matt Levin discuss the “squishy” situation China could find itself in. Plus, a bold move from the Federal Trade Commission could signal a new path to regulating Big Tech. Then we’ll wrap up the show with a “berry” delicious Make Me Smile from Down Under!

Here’s everything we talked about on the show today:

Join us tomorrow for Economics on Tap! We’ll be livestreaming on YouTube starting at 6:30 p.m. Easter time, 3:30 p.m. Pacific time.

Make Me Smart July 28, 2022 transcript


Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.


Kai Ryssdal: You’re here, I’m here, Bridget’s here. Charlton, why don’t we just begin? Shall we? Wait, man, I’m just getting coffee Jesus. Hi everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart where we make today – which is I think Thursday – make sense.


Matt Levin: And I’m Matt Levin, in for Kimberly Adams, thanks for joining us. We’re going to be talking about the news today, and then end on a make me smile. Kai, you want to get started with the news fix?


Kai Ryssdal: Let us get started. I just do want to get this in before I forget, we are off next week. This podcast is off. So we’re gonna have a special surprise episode in the feed on Tuesday. But otherwise, this will not be showing up for your listening pleasure, just so we all know. Okay. So I will start with two reasonably significant items that may or may not have escaped your notice. The first one is, we obviously got US economic growth here this morning, this is Thursday morning, we got US GDP – down nine tenths of a percent, the economy shrank April to June, which is not great. And it’s even worse that it shrank 1.6% From January to March. So that’s six months in a row of a shrinking economy, which is bad. It’s arguably worse. And hear me out, it’s arguably worse that the Chinese government now says that it is going to miss its economic growth targets for the quarter. And that would be a really bad thing globally for two reasons. One is, China is the world’s – still the world’s factory. It is the world’s second biggest economy. It is the source of a huge amount of American imports, you know, tariffs. So when they slow down, that’s not good for us. That’s item number one. And item number two, is that when the national government gets worried about missing economic growth targets over there, they lean on the provinces, and then the provinces lean on the cities and the cities lean on the municipalities. And what you have is a cascading series of reasons to bump up artificially the economic growth numbers. And so that’s not great, because Chinese numbers are already squishy enough to begin with, and we don’t need them to become any squishier. So that’s sort of item one on my list of things that are not great in this economy day, because China not doing great is not doing great. Yeah, go ahead.


Matt Levin: Sorry. So, to be clear, when you say “artificially”, you mean, somewhat fabricated? Or you mean …?


Kai Ryssdal: Oh, yeah.


Matt Levin: You mean what exactly? Okay.


Kai Ryssdal: Yeah. Oh, I mean, that exactly. I mean, I mean, artificial and unreliable. And, and for all that the Chinese economy has been booming the past 30 years, you cannot conceivably tell me that they grew, you know, an average annual rate of 8.5% every bleeping year, you know. Some are up some, some are down. And we need them to be reliable, right? If they are going to be in the economic community of nations as a fully responsible member, and I know I’m getting all highfalutin here, but if they are, then we need them to have reliable economic numbers. And right now, they’re sort of, meh, a little bit, maybe, sort of don’t. So that’s item one for me. That’s item one. Item two is a thing actually that Janet Yellen was asked about at her press conference today, Janet Yellen, of course, the Secretary of Treasury, former Fed chair. She gave, she came out and gave a very political speech, which I do kind of wonder how that sits with her. I wonder how she’s adjusting to being a politician and having to say politically appropriate things, right. Because you know, what happened was somebody at the White House said, hey, Madam Secretary, we really need you to go out on Thursday after GDP comes out and give a “this economy is doing okay. Yes, there are some challenges, but … strong” speech and I wonder how that sits. Anyway, so she gave that speech, it was, frankly, lackluster. But here’s one question she was asked. She was asked by Neil Irwin at Axios, who’s been the New York Times, he’s been a guest on this podcast a couple of times. She was asked about the strength of the dollar and what she feels that portends for the global economy. And she said, she literally said, Thank you for the question, because she’s genuinely –


Matt Levin: It’s always a bad sign.


Kai Ryssdal: I know, right? Well, no, actually, I think in Yellen’s case, I actually think she did it without artifice, right. Because she’s, she’s not a political beast. And, you know, some of those stories about a month or two ago, about her getting frozen out of some of the economic conversations in the White House, didn’t surprise me at all. Because she is not an elbow thrower, right. I mean, she’s in there with really sharp-elbowed political operatives. And she’s like, No, man, I’m an economist, and I can tell you about labor and interest rates, and this is what I do. Anyway, she was asked today about the dollar. And she said, Look, she’s really worried about it for a couple of reasons. One of which is, makes it tricky for American companies to export, right, because our exports get more expensive when the dollar gets stronger. But also, a ginormous chunk of the global economy has dollar denominated debt. And when you have to pay back your debt in dollars, and you have to pay more for dollars because they’re more expensive, that is a curb on your economic growth. So a too strong dollar, or a very strong dollar as it is now, can be an impedance to global economic growth. It does not matter that the United States right now is the best-looking horse in the glue factory, right? If everybody else is troubled, then we, by association, by the transitive property of association of global economics, we will be tainted as well. And that’s not great. So there you go. Those are my two wonky-but-I-think-necessary-to-know-about things for the listeners of this podcast on this Thursday. That’s where we go.


Matt Levin: Yeah, all our Sri Lankan listeners are nodding their head in eager agreement right now.


Kai Ryssdal: That’s right.


Matt Levin: I got a question for you here. So the very, very, very strong US dollar right now, good or bad for the future of the dollar as the global reserve currency?


Kai Ryssdal: Yeah, really great question. I think it will be decades, many of them, before the dollar is supplanted as the reserve currency. The reserve currency, of course, means that everybody wants dollars. We are safe. We are globally transactionable. Much of the world’s debt and commodities are denominated in dollars, right? People want dollars. first of all, where’s the competition? Euro? I don’t think so, right? China, the renminbi the yuan? Definitely not. So where do we go from there? Right. There’s no logical successor. Number two, now and for a while, the United States will be – and I realized, I appreciate the irony of what I’m about to say right – now and for a while, the United States will be the leading capitalist democracy.


Matt Levin: Oh wow.


Kai Ryssdal: And I use democracy advisedly. Well, right, I mean, look, let’s be honest. Because it’s a challenge, right? Right now. As long as that’s the case, that we have rule of law, that we have equitable regulation, that we have, broadly speaking, equal opportunity, then the American economy is the place people will want to be and gonna want to put their money. And I don’t see that changing, unless things change, if we all know what I mean. So that’s that. Those are my thoughts on the reserve currency.


Matt Levin: Okay, gotcha.


Kai Ryssdal: The beauty of this podcast is you can say whatever you want. That’s the beauty of this podcast.


Matt Levin: Nice. I’ll keep that in mind, going forward. Just very quickly, the Sri Lankan reference. So Sri Lanka was one of the countries who I believe whose debt was denominated in dollars, had a ton of problems with that debt. And now they have either a new prime minister or a new president, I forget what the official title was. I didn’t think we’d be getting into Sri Lankan geopolitics on this podcast…


Kai Ryssdal: I think it might be a new prime minister AND a new president.


Matt Levin: Oh, all right. Totally new leadership. Okay, well, I’m a little more domestic with my news fix choice. I think this story has been buried under the are-we-are-we-not in a recession dialogue that has consumed, unfortunately, I think, most media today. But yesterday, in a federal court in San Francisco, the Federal Trade Commission, the FTC filed an injunction to block Meta, aka Facebook, from acquiring a company called Within. Within is a VR company. They make basically apps for VR. I guess they have a super super popular fitness app. Did you get to play with that in your Oculus headset?


Kai Ryssdal: I did not do fitness, there was no fitness going on. It was a lot of operating, like objects and standing around, but maybe next time.


Matt Levin: Maybe safer than a trail run. Anyway, so this was a $400 million deal – not huge by tech standards, that Facebook struck with this company Within. In October, and this was all part of Facebook’s grand strategy to pivot to the metaverse, thus the change in name right. And the FTC has said basically, uh uh uh, not so fast, we have some concerns over how this might impact consumers. And I think this is noteworthy and I’m a little upset this hasn’t gotten more attention for two reasons. One is – I’m going to itemize here. One is the obvious reason, which is, it’s been a rough few months for Facebook slash Meta, right? They came out with earnings this week, for the first time since they went public their revenue actually dropped. Tiktok is kind of eating their lunch, both Facebook’s lunch and Instagrams lunch, right? All the young kids, all the Gen-Zs are on the Tiktok. God I sound old.


Kai Ryssdal: Don’t you now? Kids, get off Matt’s lawn.


Matt Levin: I know I know. Get off my lawn, get off your phone. And digital advertising, right, we’ve done a couple of stories on this, taking a hit right now, because of fears of a recession. So this is not what Mark Zuckerberg wanted, right? This company, which is a huge, huge economic engine is facing serious headwinds. And now its big pivot strategy to the metaverse is in question because of regulatory action. Number two, the big takeaway. This is kind of uncharted territory for the FTC, right? Lena Khan, who heads the FTC, she has been not the biggest supporter, I’d say, of a big tech consolidation. And the problem from the FTC’s perspective, is conventionally when you think of monopolies, right, you think of, you know, there’s the vertical integration, Standard Oil model, right, where a company buys all the pieces of the supply chain and kind of screws over consumers that way. Or there’s the, you know, let’s just buy all our competitors, and then raise prices and screw over consumers that way. Tech doesn’t operate like that, right. Tech is just gigantic, and then kind of eats young, up-and-coming startups in tech-adjacent industries. And this is a good example of that type of acquisition, which is the type of acquisition that Lena Khan has issues with. So this is a super important case, at least from my perspective, and one that should be followed. Was that too long?


Kai Ryssdal: No no. Yes. I think you’re totally right. And Lena Khan has built her reputation and her career, both in academia and in the government, on opposing exactly these kinds of big tech mergers. So in a way, it’s not surprising that she’s going after this. I wonder, you know, what Zach & Co. are going to, you know, what posturing they’re going to do to try to get around this. And let’s, let’s remember, by the way, Facebook was the company that submitted a formal brief to the FTC, asking Kahn to recuse herself from decisions about Facebook because of her documented stand in academia … on big tech and its voracious ways. So yeah, you’re totally right. It’s a good catch.


Matt Levin: Do you think Lena Khan has a Facebook page?


Kai Ryssdal: I don’t know. She’s probably on Insta, right, she’s probably on Insta. Which is, by the way, having its own problems. Yeah. All right, Charlton.


Kai Ryssdal: Alright, you go first.


Matt Levin: All right. My make me smile. So inflation as you know, Kai, a global development. Not just here in the US, Australia has been struggling with inflation. They have about 6% inflation as of June, which I think Jay Powell would kind of kill for 6% inflation at this point, but that’s big for Australia. They haven’t had that since 2001. And it’s really hitting agricultural products. So much so that the KFCs in Australia had to switch to cabbage instead of lettuce on their sandwiches because lettuce was getting so expensive. That is not the make me smile. The make me smile is – Kai, what is your favorite berry?


Kai Ryssdal: Raspberries.


Matt Levin: Wow. Quick Response.


Kai Ryssdal: What? They’re going away favorite. Going away.


Matt Levin: Okay. I would have said strawberries, but it turns out my favorite berry is an avocado. Did you know avocados were berries?


Kai Ryssdal: You know, I did know that. I was thinking of course you know traditional berries, but yes, I did know that.


Matt Levin: This is the extensive research and prep I did for this podcast. The one bright side for Australians in the inflationary waters that they swim in are avocados, which are absolutely cratering in price, with a record low of 70 cents per avocado, which is lower than you could find it at least at the target in California. The supply of –


Kai Ryssdal: No joke, my local Piggly Wiggly is like, you know, a buck and a half, two bucks apiece.


Matt Levin: This is resulting from a oversupply, just like a great crop of avocados coming from Australia’s I guess burgeoning avocado industry. There are now 22 Avocados per Australian, which I have no context for that number but that sounds like a lot, but the very make me smile part of this, for your Australian salad eater. At trendy – probably too long, at trendy cafes in Sydney and Melbourne, this was from the Financial Times, the avocado has been reduced to a substitute for more expensive salad ingredients such as leafy greens, which for me, if someone was like, here’s your salad.


Kai Ryssdal: That’s a terrible trade.


Matt Levin: What? That’s an amazing trade.


Kai Ryssdal: That’s a terrible trade. I want avocados, I want avocados, don’t get me leafy greens. What the hell is that?


Matt Levin: No, it’s the other way around. It’s the other way around. So because avocados are so cheap, they’re taking out the leafy greens and they’re putting in avocados.


Kai Ryssdal: Oh, alright, okay. All right. Okay, all right.


Matt Levin: Even if you don’t have to order extra, you know, they usually charge you like three bucks for an avocado on your salad. And in Australia, they’re just like, here, have some avocado. So. That’s the make me smile.


Kai Ryssdal: That is the most thoroughly researched, well-told, intricate story of a make me smile I have ever heard. And because of that, we’re gonna leave it right there. I’m not even gonna bother with mine. I can’t even keep up with it. Jesus Christ. Matt Levin has been on this podcast – what, like five times tops – is beating the hell out. Alright, we’re done. We’re out of here. We are out of here. I’m back tomorrow, I think with Andy Uhler, for Economics On Tap. YouTube live stream 6:30 Eastern, 3:30 Pacific. We’ll have the discord. I think Uhler’s just gonna keep track of the discord. I don’t know. We’ll do news. We’ll do some drinks. And we’ll play a round of half full half empty.


Matt Levin: Please keep sending us your thoughts and questions. Our email is Or you can leave us a voicemail at 508-U-B-SMART.


Kai Ryssdal: Make Me Smart is produced by Marissa Cabrera, today with help from Marque Green. Olivia Zhao is our intern.


Matt Levin: Today’s episode was engineered by Charlton Thorp. Bridget Bodnar is the Senior Producer. Donna Tam is the director of on demand.


Kai Ryssdal: There you go.


Matt Levin: Yeah, yeah, the avocado berry stuff blew my mind.


Kai Ryssdal: You just went down. You went down the avocado rabbit on that one.


Matt Levin: I did. I did. Yeah, probably a little too much there.

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