Investment Theme: The podcast discusses the impact of monetary policy on family economics, highlighting how inflation and financialization affect household life and decision-making.
Economic Insights: The conversation emphasizes the Cantillon Effect, explaining how new money creation benefits early recipients, often leading to increased asset prices and economic inequality.
Family Economics: The book "Inflation and the Family" explores the neglected area of family economics, arguing that traditional economic models fail to account for the complexities of family dynamics.
Market Insights: The discussion touches on the financialization of the economy, noting that industries connected to central banking, like government and healthcare, are more profitable, affecting employment patterns and marriage markets.
Social Implications: The concept of inflation culture is introduced, describing how inflationary environments foster moral hazard, economic inequality, and a culture of debt, impacting family stability and societal values.
Opportunities and Challenges: The podcast highlights the challenges young people face in the housing market due to inflation and financialization, suggesting that early marriage and joint financial planning could mitigate some economic pressures.
Key Takeaways: The podcast underscores the importance of understanding the broader cultural and economic impacts of monetary policy on families, advocating for more research and awareness in this area.
Transcript
Welcome back to Radio Rothbart. I'm Ryan McMon, executive editor at the Mises Institute. And joining me today to talk about the economics of the family is Jeffrey Dgner. Now, I know Jeff, I met him at the Mises Institute. He's been one of our summer fellows, and he's just now becoming more and more one of our reliable economists uh at events that we have. And so I'm I'm thankful that I have him here today to talk about a new book that he has which on a topic I find very interesting. Uh the book is called inflation and the family and the subtitle is monetary policy's impact on household life and this is a new book put out by Paul Grave studies in Austrian economics. Uh so if you like what you hear today you might look into that. It is unfortunately priced as an academic book. >> Indeed it is. So, it's a little on the pricier side, but it just depends on how interested you are, I suppose. >> Well, if you are interested, one of the happy notes on this is that the publisher has given me permission to uh share a free PDF if you're willing to put together a review and maybe an academic sort of writing opportunity or even an Amazon review. We'll take that. And so, uh I really want to thank you for having me on, Ryan. Uh the Mises Institute has been very good to me and to our students here at Cornerstone. As you know, uh we're we're still in the afterglow of Misesu a few weeks ago and had the opportunity to bring a student there, but over the past 3 years or so, we've brought 15 or 16 students all together and it's been a tremendous experience for them. And I'm really grateful to see how students here at Cornerstone in Grand Rapids, Michigan, have taken to Austrian economics and the curriculum that we've deployed here at Cornerstone is is seeking to be distinctive in that way. And that's pretty unique in higher ed. So, uh, I'm very grateful for the position that I've been put in here to, um, really be a little bit of, uh, um, have kind of an outpost, if you will, for Austrian Econ in a, uh, in a difficult environment in the economics profession. >> Well, and I should have mentioned, of course, you are a teaching economist. You have a regular job teaching two students, the subject of economics at Cornerstone University. Is is that its full name? Okay. >> Yeah. and cornerstone here in Grand Rapids, Michigan. And I've been here for uh seven years going on my eighth year and have now moved over to a little bit of administrative role. And so get to have an impact on uh curriculum and hiring and so uh I do have my eye on a few of our uh summer fellows and those who are heading into the job market in the Austrian tradition. So we're looking to build something special here. >> Well, let's talk about your book. uh really really just uh it's got a nice forward by GTO Holman of course one of our longtime senior fellows and and Gido had written some earlier pioneering work on the social effects of inflation. It seems that this builds on that a little bit. But before we get into some of those details, uh there there is a there's a discussion early on in the book and I've noticed this of course as a researcher over the years, a graduate student, all of that stuff I had noticed, right? Economics is not known for studies about the family. Mhm. >> And so c can you talk about that a little bit about how this book talks about how was trying to fill a hole in the literature essentially really focusing on the economics of the family. What >> why is it important to study the economics of the family and why has it been neglected for such a long time? Well, I think one of the reasons that it's been largely neglected is because uh the family is frankly difficult to model and when we are in the economics profession swimming in a sea of positivism and uh the need to model everything with mathematic elegance and so forth, the family is notoriously difficult to model. And so as a Missian economist, I want to come back to what Mises has to say about the individual. Of course, we rely on meth methodological individualism, right? The individual is the economic actor, but Mises does acknowledge in the early parts of human action that each individual actor is the product of a family. They are the product of a a religious environment, an ideological environment. And this is notoriously difficult to model. I think that's the best way to describe why the approach to family economics has been very um uh uh very much in the line of scientism. So, uh, for example, if you're to read some of Gary Becker's work from the treatise on the family, really the first mainstream, if you will, or Chicago school attempt to address this, he has to make some really radical, unrealistic assumptions in order to try and model and predict family behavior. One example is that in one of his models on inheritance, he makes the assumption that parents do not change their preferences over time. I this is just a a flatly outrageous sort of claim, but the entirety of his modeling for uh inheritance behaviors is based on this assumption. And so I I think that that's one of the reasons that by and large family has been sidestepped. It's difficult to model and the assumptions that are used to model it are frankly very strong assumptions. We'll put it that way. >> Well, it's it's funny now that you mentioned that, right? I'm thinking, okay, me and Jeff, we're both middle-aged men with children, right? We we didn't get married yesterday. And so, you think about, right, what was your vision for your family 20 years ago versus now, right? Obviously, that's an assumption is outrageous. >> Yeah. And my assumptions uh were that we were going to have x number of kids. And of course, my wife has input. Now this this is a point where where economists have had a little bit of discussion but it's it's mainly about the internal power dynamics right this is kind of smacking of some of the uh uh some of the Marxist literature and so forth the power dynamics of who gets to make decisions about money and children and so forth. So you have had economists make attempts to analyze the family through that sort of lens but certainly not through the lens where we're looking at monetary policy. Uh as you're aware there have been some uh some works by people like Charles Murray and others who have looked at the implications of the welfare state but we wanted to take it a step further here and try and explain what uh those economists like Murray and others could not explain. >> Yeah. and and uh nowadays it seems that uh scholars in fields like economics and political science and stuff have never really quite been comfortable with just the the the realm of ideas that is like how does ideology affect how people do XYZ. There's always been so heavy of a reliance on the economic situation. Well, the the economic incentives, right? the monetary incentives are what guide behavior and of course they do to some extent. >> Mhm. >> But in families, right, it's not just it doesn't all boil down to money, right? >> Right. There's there is sort of this birectional effect I think we can and did demonstrate in the book where uh the economic environment, the monetary policies that are forced upon the economy do impact the way that we think about the world, the way that we think about the future. And this will impact our ideology where we might see a shift in an inflationary environment, a shift towards short- termism, consumerism, etc. But it's also the case that you can have people who adopt that ideology and then it feeds back and we ask for more of the the same policies. And so that's what I mean by a birectional relationship. one can feed into the other into what is turning out to be quite a negative feedback loop especially for families in the the middle and lower classes. >> Well, let's get to that then. Right. Right. What are some of the ways that economic policy influences the demographics of the family? Right. You you discuss lots of great statistics in your book about how families have changed over time, age at which people marry, number of children, all that sort of thing. So, what is the interplay between that and economic policy? Just just broadly speaking. >> Yeah. Well, broadly speaking, let's um if it's okay, I want to zero in on something you just mentioned because this last week on Twitter, there was a a graph making the rounds about the number or the percentage of 30year-olds who are married and are homeowners. Uh in the 1950s, it was around 50% or so. Most recently, it's been measured at about 12%. So right there, this this uh this delay in marriage is one of the one of the key statistics that people are keeping an eye on. Well, now backing out to the to the economic policy that would be impacting this. Again, we focus on monetary policy in the book here and since uh the inception of the Federal Reserve, we have been on a uh a very steady track towards the financialization of the economy. The financialization of the economy is a term that gets used a little bit in our circles. But people should understand that what this means is that uh the most profitable for the household, you know, for individual income. The most profitable industries are those that are connected to the central bank and those industries tend to be uh government and what government decides to spend this new money on. So, we're thinking of the military-industrial complex or even the green industrial complex in recent years. It's it's those firms and then the families that uh that work for them or the individuals in their households that work for them who are the beneficiaries of this newly financialized economy. But one thing I was really surprised to learn in the uh process of researching uh the dissertation which then became this book was that those financialized sectors again government uh healthc care is another one that's been impacted uh as uh as a growing area in the financialized economy uh education that these are fields where we tend to see a majority of women going into those fields. So this has had some real implications for men who are not traditionally going into those fields in in uh such great numbers and this is a this is creating a mismatch in what has been called the marriage market. Higher earning young women meeting lower earning young men and this historically speaking does not make for very good matches in the marriage market. You have fewer matches and those that are made are tending to be made later with all the implications that come with that. Yeah, that was one of the more interesting discussions I thought too was just that that comparison, right? The marriage market in the sense of my my potential spouse makes less than me or makes the same and just how much this affects uh people's thinking on it, which is actually a good argument to get married like right out of uh like really young so that you're you're all potential at that point. Uh indeed I working at a a college like Cornerstone, we uh we're a small Christian college and we have the uh the catchphrase that everyone's looking for a ring by spring. And it used to be years back that you know uh some professors would sort of finger wag at these students especially the women and tell them you're not here to get your MRS degree. I'm sort of the opposite way of thinking now where uh the plan A is, you know, graduate on May 10th and then have your wedding on May 17th, the next weekend. I mean, because there is something to be said for building something together. Uh just from a uh very basic relational strength standpoint. Uh and if you do this, you will uh automatically begin lowering your average living costs. It's not as though when you get married, you're doubling your grocery bill. Right. Right. Uh and so there are some real efficiencies. Dare I sound uh you know too much like an economist here. But there are real efficiencies to uh living together, building a life together, and learning how to do uh household finances together. Uh the earlier you can start uh the better because the older you start, right, you already have some ingrained habits and this can lead to some some real tension as um as people come together in marriage. >> Well, of course, that's just one of the many things that affects the overall situation is right. What are your ideas about the proper age at which to get married? Right? If you've been told your whole life, don't get married till you're 35, that's going to affect the situation. But of course, we're studying it, you know, or we're making the caveat of all else being equal, right? Let's look at what are the effects of monetary policy and and you talked a little bit about financialization and how that's affecting people's view of okay, what are my economic prospects? >> Yeah. >> I think one of the key ways to before we can proceed to really kind of I think uh really kind of bring it home is we got to talk about canalon effects a little bit I think so because there's this there's talk about okay >> monetary policy affects different people differently in the economy so tell us a little bit about how that plays out and what are the effects of financialization in terms of like bifurcation in the economy that sort of thing >> sure so if I were to give the bumper sticker version of the canton effect it's that new money production doesn'tffect affect everyone in the same way. So, uh that's the shortest uh response to what it is. But more specifically, if you are among the groups that are the first and earliest recipients of new money creation, you've got the ability to purchase goods and services, but most importantly, I think you can purchase assets at current prices. Now, for those folks who are the later recipients of your expenditures somewhere down the line, they are left with incomes that might be slightly elevated or maybe the same if they're contract labor or this sort of thing. Uh, but they are then left to deal with the higher prices in those goods, services, and assets that those first recipients have already purchased. And the asset that I have most in view here for our discussion are houses, right? The housing market as an asset, the earlier you get in, uh, and again, we're a little bit younger generation here, um, we certainly got in later than the boomers, but we got in ahead of the zoomers. And, uh, our friend and colleague th Bishop had a wonderful talk at Misesu talking about the challenges facing, uh, zoomers as they're looking to get into the housing market. and it's becoming an increasing struggle for them. Uh but this is just one of the practical sort of net effects of the canion effect where you have a redistribution of real wealth to the early recipients of new money production versus a decrease in real wealth, real earning potential or rather um um purchasing power for those who are later recipients. And this this relates back right to the issue of financialization in that if you are say you're a bond trader, right? You're going to get access first to that new money that's created. So, uh just for like more of our uh lower our beginning listeners, right? So, >> monetary inflation happens and just just stop me if if I get something wrong along this this line here. Uh monetary inflation happens, right? the the Fed through a variety of its different schemes. This can lead to monetary inflation through the commercial banks. It could be just straight up money printing, right? Where you have uh you're basically just trying to finance your debt with money creation. I mean, that happens in some regimes. >> Um and just generally >> monetization of debt, right? >> Yes. And so it could just be loose loose policy, loose money policy where you're having new credit, new money entering the economy. And so it's the people then who encounter that money first. And the way that money enters the economy, right, often is just in many cases it's selling government bonds >> um and and which the central bank might buy, right? So if you think about that situation, right, there are certain lines of work >> that immediately benefit from that new money. >> But if you're like an auto mechanic, you're way down the line. >> Exactly. >> Right. So the idea is that if you're first in line, you get access to that new money and you can spend that money before the prices adjust. >> But if you're lower down the line, that by the time you get the benefit of the new money, prices have already adjusted. That's that's kind of is that how it works? >> Yeah, it is. And and if you don't mind, I mean, I I don't see this happen too often on radio Rothbart, but I actually pulled um pulled my copy of Canton's essay on economic theory. And what you just described, of course, he's writing in the 1700s, if if I may. I'm just going to read a brief passage here. Yes. Because it talks he waxes eloquent about household realities. So, uh let's go here. Um uh if the increase of hard money comes from gold and silver, so this is not even an inflationary fiat system. Canton is just talking about new mining and a one-time injection of new money. All right. So, the owners of the mines, the entrepreneurs, the smelters, and all the workers will increase their expenses in proportion to their profits. And now, here he goes. Their households will consume more meat, more wine, more beer than before. They become more accustomed to wearing better clothes, having finer linens, and having more ornate houses. Read down a little bit. uh what winds up happening is that this will lead to an increase in prices and these high prices will encourage others to immigrate to look for employment elsewhere to move to greener pastures where there's less price inflation and so forth. So uh in this section of his economic theory canon beautifully walks through the household impact in a very practical way in terms that people in the 1700s would understand. But this isn't terribly far off from what we see in our world. Uh, as you might be aware, Patrick Newman and I are working on a paper. We got to get this thing across the finish line. But it's looking at the impact of household expenditures in the housing market for the first beneficiaries. And wouldn't you know it, the first beneficiaries in our system today live in and around the Washington DC area in uh, zip codes that Charles Murray has famously called the super zips. And this is where the most expensive real estate and some of the highest per capita income in the country exist. And so that's our modern manifestation uh to describe the winners in this inflationary process in and around the DC area. Well, as a final question, I I this is a big topic in your book, but I want to make sure we don't neglect this phrase. You use the phrase inflation culture and this is I think what Gita Hollesman had really pioneered was his idea of right how how inflation affects culture. So tell us a little bit about how monetary inflation affects the culture of family life and thinking about family and how people function within their families and you attribute this to inflation culture. So just yeah >> just tell us everything you want to say about that. >> Sure. So I had I had the good fortune of reading the ethics of money production which I think is really the the seedbed of where this idea comes from. So that's book's book. The ethics of money production written in 2008. I read it in 2011 and there was a line that still sticks with me and uh it said I believe in chapter 13 that fiat currency inflation is a juggernaut of economic, social and spiritual destruction. a very eloquent line, but as a a young I was young in the Austrian move at that time. I wasn't young young, but in any case, that really uh captured the picture for me because I was sort of living it. I I was understanding as a young person the difficulty of making ends meet. And so uh little did I know that eight years later I'd have the privilege of studying with him and really digging into this inflation culture idea. And so uh as I looked at some of his work and we we talked about it and thought about it together for my dissertation in the book, we came to really three general categories of what we mean by the inflation culture. So you have a monetary uh an inflationary monetary uh system and the three categories are an increase or an enhancement of moral hazard, an enhancement of economic inequality and then also a um an institutionalization the ingrainment in our culture of indebtedness of an early rush into debt. And so I I guess I could start with that and just use the debt culture example. But when we think about what it takes to get ahead, we used to say in uh generations past, well, that's easy. That's hard work. That's hard work. That's honesty. That's integrity. Uh that's, you know, doing your best and showing up every day for work. That's how you get ahead. >> And that's all low time preference stuff, by the way, too, right? Because the idea pay off eventually, >> right? Well, where do the payoffs come today? Well, Charles Murray's own language, he says that there's a bigger payoff to quote unquote brains. Well, for us, that means going to college and with various fiscal interventions that have happened in the higher ed market with uh grants and so forth, we have compounded that with credit expansion. And it is well known that high amounts of student debt as students rush into this at 17 and 18 years old to get ahead to put themselves in good position that they wind up saddling themselves with tens of thousands of dollars of debt. And this does not bode well for starting a family uh later down the road. So that that's just that's a little bit of a a chain of events, but these are linked. And when I was doing my literature review to get this project started, I was astonished that some economists were making the link between excessive college debt and delays in marriage or lowered fertility, but nobody was talking about the the policies that made this credit expansion possible. And so that's where the book really fills the gap, linking this all the way back to monetary policy. Well, and also right, there's a connection between just the it's not only are you going into debt to go to school now, but school's more expensive due to monetary inflation, >> right? >> So, there's that. >> There's I mean, does the fact that there's just so much enticement to go into debt, right, that's a product of easy money policy, too, right? >> Indeed. Indeed, it is like buy now pay later for your sandwich. I mean, that's the extreme example, right? But right >> but just in general there's an enticement to young people to get into debt now and and so how is that affecting people like socially in terms of marriage? Oh, that that's a great question and and that is sort of a subcategory of these three uh problems with the inflation culture that we just call a culture of haste and you can really see this culture of haste in some of the histories around the hyperinflations but but even so in our more moderate steady uh uh inflation in in the US you see this this pace of life that really indicates that look we've got to be chasing income the hustle culture if you will you got to have a side hustle otherwise you're not going to make ends meet. I mean this is uh this is well understood and especially among young people because they're the ones who are really regurgitating this um uh this reality and pursuing these things that in generations past were not so much of an emphasis and so that culture of haste of of speed of life is something that uh in the doctoral dissertation process GO encouraged me to write uh rather to read a book by Joseph Peeper called leisure the basis of culture. And it makes the assertion that in order to build culture, to build family, to build community, uh, uh, religious or civic or otherwise, you need leisure in the sense that we're not always chasing monetary income in the labor markets. And when we're living in an inflationary world, especially for the middle class and the poor, uh, you've got to chase the dollar either to make ends meet and or to service your debts. So this is another symptom uh or another um consequence of monetary policy that flows into our lives through the inflation culture. Well, and also the easy money policy, right? Inflationary policy. And we've we've covered this at mises.org a lot, but I it's I'm just not sure that the that the process is well known of the fact that right, not only do you have to go into debt and focus so much more on debt and paying off debt and stuff, but in a an easy money policy, which tends to go along with uh ultra low interest rates as well, >> is as a family unit, it's much harder to save, isn't it? I I mean if if you're like if you have enough money to get a hedge fund manager and that sort of thing, you could chase yield using all sorts of high-risk stuff, especially if you have uh you're already rich, you can afford to lose a lot of money, right? So you can take higher risks, >> but you when you look at how what uh savings accounts are are paying in terms of like what's the reward for saving? >> The math isn't mathing, >> right? So it's just a regular family unit. Someone who's looking for conservative saving, conservative investment, right? you have very few options in an inflationary culture, right? So that would affect family culture as well in in terms of your planning for the future. >> Yeah. And this touches on the um uh on the risk that people are willing to take on. Uh I mentioned earlier this idea of moral hazard. You take risks that you otherwise wouldn't. And in a financial sense, this can lead to greater household fragility and in excesses. And and it's astonishing to me how many young people, young men especially, you talk about all the side hustles, okay, you work your regular job, you'll do some Uber on the side, but some young men are taking even greater risks into uh sports gambling and and this sort of thing. Why? Because, you know, you get the one big payout, that's a huge return, and you've sort of beat inflation in a certain uh way of thinking, right? So that is if if you are a young man and that's sort of your financial set of habits that includes that I think most young women are going to shy away from you in the marriage market. This guy's taking too many risks. Uh he's maybe opening credit cards on the side without telling me and gambling on yeah these different platforms. And so that does not bode well for family life. And especially if these debts of course, gambling debts and and other debts are um are hidden or they come out in large amounts, they can lead to u breakup of the family. And and and that was one thing that was important in this study that I acknowledge in the book is that internal family tension and divorce around economic issues is one of the least understood areas of family life. And uh and so I think there's a lot more work to be done on that category. Of course, there are many other reasons that that marriage doesn't work out. But by and large, you look at the statistics and different qualitative interviews around what causes marriages to break up, financial tension is always towards the top of that list. And the inflation environment does not help. >> Well, there's so much more we could talk about this. And actually what I think I might go and do in the future is focus in on some specific chapters and have you come back to talk about >> some of the specifics about that because I I think our a lot of our readers are really interested in this topic because people know something's gone horribly wrong in terms of family life in America. >> Yeah, there's much to much to say there. I mean, we didn't even really address the fertility issue. So, I'd love to come back and maybe we can tackle that one or others. But, uh, I sure do appreciate the opportunity to, uh, crack open the pages and talk about this work because as I have, uh, children who are coming into a marriageable age, uh, I am I'm encouraging them with the same advice and, uh, would want to see them, uh, enjoy the joys of marriage and family and not wait until, you know, uh, they're in their 30s or or later. Yeah, this isn't theoretical stuff for you and me, right? >> Yeah, absolutely. Absolutely. >> So, the name of the book, everyone is inflation and the family, monetary policy's impact on household life. That is from our guest here, Jeffrey L. Dgner. So, uh check out the book on Amazon. Uh you can I mean, should they contact you if they're looking for a review copy? Jeff? >> Yes, please. You can catch me at my cornerstone.edu email. Uh, I don't know if we can link it in the in the notes. Uh, we could do that. We probably can. >> Yeah, we can find uh you can find me on Twitter. I'm newly on Twitter. I'm not nearly the expert or as uh pathy in my statements on Twitter as Ryan is, but uh I'm out there, so you can uh direct message me and I'll send you the PDF in exchange for a for a review. How about that? >> That sounds great. Thank you Jeff for uh for uh joining us today and uh thank you everyone out there for listening and yeah I think uh we have more to say on this topic uh in the future as well. So we will be back next time with more so we'll see you then. [Music]
Inflation and Family Economics
Summary
Transcript
Welcome back to Radio Rothbart. I'm Ryan McMon, executive editor at the Mises Institute. And joining me today to talk about the economics of the family is Jeffrey Dgner. Now, I know Jeff, I met him at the Mises Institute. He's been one of our summer fellows, and he's just now becoming more and more one of our reliable economists uh at events that we have. And so I'm I'm thankful that I have him here today to talk about a new book that he has which on a topic I find very interesting. Uh the book is called inflation and the family and the subtitle is monetary policy's impact on household life and this is a new book put out by Paul Grave studies in Austrian economics. Uh so if you like what you hear today you might look into that. It is unfortunately priced as an academic book. >> Indeed it is. So, it's a little on the pricier side, but it just depends on how interested you are, I suppose. >> Well, if you are interested, one of the happy notes on this is that the publisher has given me permission to uh share a free PDF if you're willing to put together a review and maybe an academic sort of writing opportunity or even an Amazon review. We'll take that. And so, uh I really want to thank you for having me on, Ryan. Uh the Mises Institute has been very good to me and to our students here at Cornerstone. As you know, uh we're we're still in the afterglow of Misesu a few weeks ago and had the opportunity to bring a student there, but over the past 3 years or so, we've brought 15 or 16 students all together and it's been a tremendous experience for them. And I'm really grateful to see how students here at Cornerstone in Grand Rapids, Michigan, have taken to Austrian economics and the curriculum that we've deployed here at Cornerstone is is seeking to be distinctive in that way. And that's pretty unique in higher ed. So, uh, I'm very grateful for the position that I've been put in here to, um, really be a little bit of, uh, um, have kind of an outpost, if you will, for Austrian Econ in a, uh, in a difficult environment in the economics profession. >> Well, and I should have mentioned, of course, you are a teaching economist. You have a regular job teaching two students, the subject of economics at Cornerstone University. Is is that its full name? Okay. >> Yeah. and cornerstone here in Grand Rapids, Michigan. And I've been here for uh seven years going on my eighth year and have now moved over to a little bit of administrative role. And so get to have an impact on uh curriculum and hiring and so uh I do have my eye on a few of our uh summer fellows and those who are heading into the job market in the Austrian tradition. So we're looking to build something special here. >> Well, let's talk about your book. uh really really just uh it's got a nice forward by GTO Holman of course one of our longtime senior fellows and and Gido had written some earlier pioneering work on the social effects of inflation. It seems that this builds on that a little bit. But before we get into some of those details, uh there there is a there's a discussion early on in the book and I've noticed this of course as a researcher over the years, a graduate student, all of that stuff I had noticed, right? Economics is not known for studies about the family. Mhm. >> And so c can you talk about that a little bit about how this book talks about how was trying to fill a hole in the literature essentially really focusing on the economics of the family. What >> why is it important to study the economics of the family and why has it been neglected for such a long time? Well, I think one of the reasons that it's been largely neglected is because uh the family is frankly difficult to model and when we are in the economics profession swimming in a sea of positivism and uh the need to model everything with mathematic elegance and so forth, the family is notoriously difficult to model. And so as a Missian economist, I want to come back to what Mises has to say about the individual. Of course, we rely on meth methodological individualism, right? The individual is the economic actor, but Mises does acknowledge in the early parts of human action that each individual actor is the product of a family. They are the product of a a religious environment, an ideological environment. And this is notoriously difficult to model. I think that's the best way to describe why the approach to family economics has been very um uh uh very much in the line of scientism. So, uh, for example, if you're to read some of Gary Becker's work from the treatise on the family, really the first mainstream, if you will, or Chicago school attempt to address this, he has to make some really radical, unrealistic assumptions in order to try and model and predict family behavior. One example is that in one of his models on inheritance, he makes the assumption that parents do not change their preferences over time. I this is just a a flatly outrageous sort of claim, but the entirety of his modeling for uh inheritance behaviors is based on this assumption. And so I I think that that's one of the reasons that by and large family has been sidestepped. It's difficult to model and the assumptions that are used to model it are frankly very strong assumptions. We'll put it that way. >> Well, it's it's funny now that you mentioned that, right? I'm thinking, okay, me and Jeff, we're both middle-aged men with children, right? We we didn't get married yesterday. And so, you think about, right, what was your vision for your family 20 years ago versus now, right? Obviously, that's an assumption is outrageous. >> Yeah. And my assumptions uh were that we were going to have x number of kids. And of course, my wife has input. Now this this is a point where where economists have had a little bit of discussion but it's it's mainly about the internal power dynamics right this is kind of smacking of some of the uh uh some of the Marxist literature and so forth the power dynamics of who gets to make decisions about money and children and so forth. So you have had economists make attempts to analyze the family through that sort of lens but certainly not through the lens where we're looking at monetary policy. Uh as you're aware there have been some uh some works by people like Charles Murray and others who have looked at the implications of the welfare state but we wanted to take it a step further here and try and explain what uh those economists like Murray and others could not explain. >> Yeah. and and uh nowadays it seems that uh scholars in fields like economics and political science and stuff have never really quite been comfortable with just the the the realm of ideas that is like how does ideology affect how people do XYZ. There's always been so heavy of a reliance on the economic situation. Well, the the economic incentives, right? the monetary incentives are what guide behavior and of course they do to some extent. >> Mhm. >> But in families, right, it's not just it doesn't all boil down to money, right? >> Right. There's there is sort of this birectional effect I think we can and did demonstrate in the book where uh the economic environment, the monetary policies that are forced upon the economy do impact the way that we think about the world, the way that we think about the future. And this will impact our ideology where we might see a shift in an inflationary environment, a shift towards short- termism, consumerism, etc. But it's also the case that you can have people who adopt that ideology and then it feeds back and we ask for more of the the same policies. And so that's what I mean by a birectional relationship. one can feed into the other into what is turning out to be quite a negative feedback loop especially for families in the the middle and lower classes. >> Well, let's get to that then. Right. Right. What are some of the ways that economic policy influences the demographics of the family? Right. You you discuss lots of great statistics in your book about how families have changed over time, age at which people marry, number of children, all that sort of thing. So, what is the interplay between that and economic policy? Just just broadly speaking. >> Yeah. Well, broadly speaking, let's um if it's okay, I want to zero in on something you just mentioned because this last week on Twitter, there was a a graph making the rounds about the number or the percentage of 30year-olds who are married and are homeowners. Uh in the 1950s, it was around 50% or so. Most recently, it's been measured at about 12%. So right there, this this uh this delay in marriage is one of the one of the key statistics that people are keeping an eye on. Well, now backing out to the to the economic policy that would be impacting this. Again, we focus on monetary policy in the book here and since uh the inception of the Federal Reserve, we have been on a uh a very steady track towards the financialization of the economy. The financialization of the economy is a term that gets used a little bit in our circles. But people should understand that what this means is that uh the most profitable for the household, you know, for individual income. The most profitable industries are those that are connected to the central bank and those industries tend to be uh government and what government decides to spend this new money on. So, we're thinking of the military-industrial complex or even the green industrial complex in recent years. It's it's those firms and then the families that uh that work for them or the individuals in their households that work for them who are the beneficiaries of this newly financialized economy. But one thing I was really surprised to learn in the uh process of researching uh the dissertation which then became this book was that those financialized sectors again government uh healthc care is another one that's been impacted uh as uh as a growing area in the financialized economy uh education that these are fields where we tend to see a majority of women going into those fields. So this has had some real implications for men who are not traditionally going into those fields in in uh such great numbers and this is a this is creating a mismatch in what has been called the marriage market. Higher earning young women meeting lower earning young men and this historically speaking does not make for very good matches in the marriage market. You have fewer matches and those that are made are tending to be made later with all the implications that come with that. Yeah, that was one of the more interesting discussions I thought too was just that that comparison, right? The marriage market in the sense of my my potential spouse makes less than me or makes the same and just how much this affects uh people's thinking on it, which is actually a good argument to get married like right out of uh like really young so that you're you're all potential at that point. Uh indeed I working at a a college like Cornerstone, we uh we're a small Christian college and we have the uh the catchphrase that everyone's looking for a ring by spring. And it used to be years back that you know uh some professors would sort of finger wag at these students especially the women and tell them you're not here to get your MRS degree. I'm sort of the opposite way of thinking now where uh the plan A is, you know, graduate on May 10th and then have your wedding on May 17th, the next weekend. I mean, because there is something to be said for building something together. Uh just from a uh very basic relational strength standpoint. Uh and if you do this, you will uh automatically begin lowering your average living costs. It's not as though when you get married, you're doubling your grocery bill. Right. Right. Uh and so there are some real efficiencies. Dare I sound uh you know too much like an economist here. But there are real efficiencies to uh living together, building a life together, and learning how to do uh household finances together. Uh the earlier you can start uh the better because the older you start, right, you already have some ingrained habits and this can lead to some some real tension as um as people come together in marriage. >> Well, of course, that's just one of the many things that affects the overall situation is right. What are your ideas about the proper age at which to get married? Right? If you've been told your whole life, don't get married till you're 35, that's going to affect the situation. But of course, we're studying it, you know, or we're making the caveat of all else being equal, right? Let's look at what are the effects of monetary policy and and you talked a little bit about financialization and how that's affecting people's view of okay, what are my economic prospects? >> Yeah. >> I think one of the key ways to before we can proceed to really kind of I think uh really kind of bring it home is we got to talk about canalon effects a little bit I think so because there's this there's talk about okay >> monetary policy affects different people differently in the economy so tell us a little bit about how that plays out and what are the effects of financialization in terms of like bifurcation in the economy that sort of thing >> sure so if I were to give the bumper sticker version of the canton effect it's that new money production doesn'tffect affect everyone in the same way. So, uh that's the shortest uh response to what it is. But more specifically, if you are among the groups that are the first and earliest recipients of new money creation, you've got the ability to purchase goods and services, but most importantly, I think you can purchase assets at current prices. Now, for those folks who are the later recipients of your expenditures somewhere down the line, they are left with incomes that might be slightly elevated or maybe the same if they're contract labor or this sort of thing. Uh, but they are then left to deal with the higher prices in those goods, services, and assets that those first recipients have already purchased. And the asset that I have most in view here for our discussion are houses, right? The housing market as an asset, the earlier you get in, uh, and again, we're a little bit younger generation here, um, we certainly got in later than the boomers, but we got in ahead of the zoomers. And, uh, our friend and colleague th Bishop had a wonderful talk at Misesu talking about the challenges facing, uh, zoomers as they're looking to get into the housing market. and it's becoming an increasing struggle for them. Uh but this is just one of the practical sort of net effects of the canion effect where you have a redistribution of real wealth to the early recipients of new money production versus a decrease in real wealth, real earning potential or rather um um purchasing power for those who are later recipients. And this this relates back right to the issue of financialization in that if you are say you're a bond trader, right? You're going to get access first to that new money that's created. So, uh just for like more of our uh lower our beginning listeners, right? So, >> monetary inflation happens and just just stop me if if I get something wrong along this this line here. Uh monetary inflation happens, right? the the Fed through a variety of its different schemes. This can lead to monetary inflation through the commercial banks. It could be just straight up money printing, right? Where you have uh you're basically just trying to finance your debt with money creation. I mean, that happens in some regimes. >> Um and just generally >> monetization of debt, right? >> Yes. And so it could just be loose loose policy, loose money policy where you're having new credit, new money entering the economy. And so it's the people then who encounter that money first. And the way that money enters the economy, right, often is just in many cases it's selling government bonds >> um and and which the central bank might buy, right? So if you think about that situation, right, there are certain lines of work >> that immediately benefit from that new money. >> But if you're like an auto mechanic, you're way down the line. >> Exactly. >> Right. So the idea is that if you're first in line, you get access to that new money and you can spend that money before the prices adjust. >> But if you're lower down the line, that by the time you get the benefit of the new money, prices have already adjusted. That's that's kind of is that how it works? >> Yeah, it is. And and if you don't mind, I mean, I I don't see this happen too often on radio Rothbart, but I actually pulled um pulled my copy of Canton's essay on economic theory. And what you just described, of course, he's writing in the 1700s, if if I may. I'm just going to read a brief passage here. Yes. Because it talks he waxes eloquent about household realities. So, uh let's go here. Um uh if the increase of hard money comes from gold and silver, so this is not even an inflationary fiat system. Canton is just talking about new mining and a one-time injection of new money. All right. So, the owners of the mines, the entrepreneurs, the smelters, and all the workers will increase their expenses in proportion to their profits. And now, here he goes. Their households will consume more meat, more wine, more beer than before. They become more accustomed to wearing better clothes, having finer linens, and having more ornate houses. Read down a little bit. uh what winds up happening is that this will lead to an increase in prices and these high prices will encourage others to immigrate to look for employment elsewhere to move to greener pastures where there's less price inflation and so forth. So uh in this section of his economic theory canon beautifully walks through the household impact in a very practical way in terms that people in the 1700s would understand. But this isn't terribly far off from what we see in our world. Uh, as you might be aware, Patrick Newman and I are working on a paper. We got to get this thing across the finish line. But it's looking at the impact of household expenditures in the housing market for the first beneficiaries. And wouldn't you know it, the first beneficiaries in our system today live in and around the Washington DC area in uh, zip codes that Charles Murray has famously called the super zips. And this is where the most expensive real estate and some of the highest per capita income in the country exist. And so that's our modern manifestation uh to describe the winners in this inflationary process in and around the DC area. Well, as a final question, I I this is a big topic in your book, but I want to make sure we don't neglect this phrase. You use the phrase inflation culture and this is I think what Gita Hollesman had really pioneered was his idea of right how how inflation affects culture. So tell us a little bit about how monetary inflation affects the culture of family life and thinking about family and how people function within their families and you attribute this to inflation culture. So just yeah >> just tell us everything you want to say about that. >> Sure. So I had I had the good fortune of reading the ethics of money production which I think is really the the seedbed of where this idea comes from. So that's book's book. The ethics of money production written in 2008. I read it in 2011 and there was a line that still sticks with me and uh it said I believe in chapter 13 that fiat currency inflation is a juggernaut of economic, social and spiritual destruction. a very eloquent line, but as a a young I was young in the Austrian move at that time. I wasn't young young, but in any case, that really uh captured the picture for me because I was sort of living it. I I was understanding as a young person the difficulty of making ends meet. And so uh little did I know that eight years later I'd have the privilege of studying with him and really digging into this inflation culture idea. And so uh as I looked at some of his work and we we talked about it and thought about it together for my dissertation in the book, we came to really three general categories of what we mean by the inflation culture. So you have a monetary uh an inflationary monetary uh system and the three categories are an increase or an enhancement of moral hazard, an enhancement of economic inequality and then also a um an institutionalization the ingrainment in our culture of indebtedness of an early rush into debt. And so I I guess I could start with that and just use the debt culture example. But when we think about what it takes to get ahead, we used to say in uh generations past, well, that's easy. That's hard work. That's hard work. That's honesty. That's integrity. Uh that's, you know, doing your best and showing up every day for work. That's how you get ahead. >> And that's all low time preference stuff, by the way, too, right? Because the idea pay off eventually, >> right? Well, where do the payoffs come today? Well, Charles Murray's own language, he says that there's a bigger payoff to quote unquote brains. Well, for us, that means going to college and with various fiscal interventions that have happened in the higher ed market with uh grants and so forth, we have compounded that with credit expansion. And it is well known that high amounts of student debt as students rush into this at 17 and 18 years old to get ahead to put themselves in good position that they wind up saddling themselves with tens of thousands of dollars of debt. And this does not bode well for starting a family uh later down the road. So that that's just that's a little bit of a a chain of events, but these are linked. And when I was doing my literature review to get this project started, I was astonished that some economists were making the link between excessive college debt and delays in marriage or lowered fertility, but nobody was talking about the the policies that made this credit expansion possible. And so that's where the book really fills the gap, linking this all the way back to monetary policy. Well, and also right, there's a connection between just the it's not only are you going into debt to go to school now, but school's more expensive due to monetary inflation, >> right? >> So, there's that. >> There's I mean, does the fact that there's just so much enticement to go into debt, right, that's a product of easy money policy, too, right? >> Indeed. Indeed, it is like buy now pay later for your sandwich. I mean, that's the extreme example, right? But right >> but just in general there's an enticement to young people to get into debt now and and so how is that affecting people like socially in terms of marriage? Oh, that that's a great question and and that is sort of a subcategory of these three uh problems with the inflation culture that we just call a culture of haste and you can really see this culture of haste in some of the histories around the hyperinflations but but even so in our more moderate steady uh uh inflation in in the US you see this this pace of life that really indicates that look we've got to be chasing income the hustle culture if you will you got to have a side hustle otherwise you're not going to make ends meet. I mean this is uh this is well understood and especially among young people because they're the ones who are really regurgitating this um uh this reality and pursuing these things that in generations past were not so much of an emphasis and so that culture of haste of of speed of life is something that uh in the doctoral dissertation process GO encouraged me to write uh rather to read a book by Joseph Peeper called leisure the basis of culture. And it makes the assertion that in order to build culture, to build family, to build community, uh, uh, religious or civic or otherwise, you need leisure in the sense that we're not always chasing monetary income in the labor markets. And when we're living in an inflationary world, especially for the middle class and the poor, uh, you've got to chase the dollar either to make ends meet and or to service your debts. So this is another symptom uh or another um consequence of monetary policy that flows into our lives through the inflation culture. Well, and also the easy money policy, right? Inflationary policy. And we've we've covered this at mises.org a lot, but I it's I'm just not sure that the that the process is well known of the fact that right, not only do you have to go into debt and focus so much more on debt and paying off debt and stuff, but in a an easy money policy, which tends to go along with uh ultra low interest rates as well, >> is as a family unit, it's much harder to save, isn't it? I I mean if if you're like if you have enough money to get a hedge fund manager and that sort of thing, you could chase yield using all sorts of high-risk stuff, especially if you have uh you're already rich, you can afford to lose a lot of money, right? So you can take higher risks, >> but you when you look at how what uh savings accounts are are paying in terms of like what's the reward for saving? >> The math isn't mathing, >> right? So it's just a regular family unit. Someone who's looking for conservative saving, conservative investment, right? you have very few options in an inflationary culture, right? So that would affect family culture as well in in terms of your planning for the future. >> Yeah. And this touches on the um uh on the risk that people are willing to take on. Uh I mentioned earlier this idea of moral hazard. You take risks that you otherwise wouldn't. And in a financial sense, this can lead to greater household fragility and in excesses. And and it's astonishing to me how many young people, young men especially, you talk about all the side hustles, okay, you work your regular job, you'll do some Uber on the side, but some young men are taking even greater risks into uh sports gambling and and this sort of thing. Why? Because, you know, you get the one big payout, that's a huge return, and you've sort of beat inflation in a certain uh way of thinking, right? So that is if if you are a young man and that's sort of your financial set of habits that includes that I think most young women are going to shy away from you in the marriage market. This guy's taking too many risks. Uh he's maybe opening credit cards on the side without telling me and gambling on yeah these different platforms. And so that does not bode well for family life. And especially if these debts of course, gambling debts and and other debts are um are hidden or they come out in large amounts, they can lead to u breakup of the family. And and and that was one thing that was important in this study that I acknowledge in the book is that internal family tension and divorce around economic issues is one of the least understood areas of family life. And uh and so I think there's a lot more work to be done on that category. Of course, there are many other reasons that that marriage doesn't work out. But by and large, you look at the statistics and different qualitative interviews around what causes marriages to break up, financial tension is always towards the top of that list. And the inflation environment does not help. >> Well, there's so much more we could talk about this. And actually what I think I might go and do in the future is focus in on some specific chapters and have you come back to talk about >> some of the specifics about that because I I think our a lot of our readers are really interested in this topic because people know something's gone horribly wrong in terms of family life in America. >> Yeah, there's much to much to say there. I mean, we didn't even really address the fertility issue. So, I'd love to come back and maybe we can tackle that one or others. But, uh, I sure do appreciate the opportunity to, uh, crack open the pages and talk about this work because as I have, uh, children who are coming into a marriageable age, uh, I am I'm encouraging them with the same advice and, uh, would want to see them, uh, enjoy the joys of marriage and family and not wait until, you know, uh, they're in their 30s or or later. Yeah, this isn't theoretical stuff for you and me, right? >> Yeah, absolutely. Absolutely. >> So, the name of the book, everyone is inflation and the family, monetary policy's impact on household life. That is from our guest here, Jeffrey L. Dgner. So, uh check out the book on Amazon. Uh you can I mean, should they contact you if they're looking for a review copy? Jeff? >> Yes, please. You can catch me at my cornerstone.edu email. Uh, I don't know if we can link it in the in the notes. Uh, we could do that. We probably can. >> Yeah, we can find uh you can find me on Twitter. I'm newly on Twitter. I'm not nearly the expert or as uh pathy in my statements on Twitter as Ryan is, but uh I'm out there, so you can uh direct message me and I'll send you the PDF in exchange for a for a review. How about that? >> That sounds great. Thank you Jeff for uh for uh joining us today and uh thank you everyone out there for listening and yeah I think uh we have more to say on this topic uh in the future as well. So we will be back next time with more so we'll see you then. [Music]