Slok challenges the argument that globalization, Amazon, and technology will permanently suppress inflation. Goods represent only about one-third of CPI, while services such as housing, healthcare, and education represent roughly two-thirds and are less exposed to global price competition.

Goods carry about one-third of CPI weight
Services carry about two-thirds
Housing is not globally tradeable
Healthcare and education costs can rise despite cheap imported goods
Goods deflation can coexist with overall inflation

“the weight in the CPI two goods is about a third, and the weight in the CPI to services is about two thirds.”
Torsten Slok · 16:52

“deflation in the things we want and inflation in the things we need.”
Barry Ritholtz · 18:36

#inflation#cpi#services#globalization

Hot Take· 1

Hot Take24:04

Central Banks Broke an Old Rule—and Now Must Unwind the Distortion

Slok recalls that the IMF once warned countries against central banks buying their own government debt, yet major developed-market banks later did exactly that through quantitative easing. He argues that these purchases distorted asset prices and that normalization will reveal the consequences.

Central-bank government-bond purchases were once considered dangerous
The Fed, ECB, and Bank of Japan normalized large asset purchases
Quantitative easing distorted market prices
The exit may unwind those distortions unevenly

“I used to work at the I m F where we would fly to two countries and say, don't buy your own government bonds. That's…”
Torsten Slok · 24:18

“markets are distorted by the very significant amount of asset purchases or que”
Torsten Slok · 24:38

#quantitative easing#monetary policy#bonds#asset prices

Explainer· 5

Explainer20:30

Why Political Turmoil Did Not Stop the 2017 Market Rally

The discussion contrasts intense political volatility with unusually calm and rising equity markets. Slok argues that global monetary support from the Fed, ECB, Bank of Japan, and China was a more powerful market force than day-to-day political conflict.

Political volatility and market volatility can diverge
Central banks supplied sustained global liquidity
Foreign easing mattered even as the Fed tightened
Money leaving fixed income helped support equities

“It could be that the dominating force for many, many years has actually been the FIT and the ECB and the b o J”
Torsten Slok · 22:29

“we have seen significant money printing that needed to find at home outside of fixed income”
Torsten Slok · 22:49

#central banks#liquidity#politics#equities

Explainer27:27

Japan's Shrinking Tax Base Is More Than a Demographic Statistic

Slok identifies demographics as a crucial structural difference between Japan and the United States. Japan's shrinking workforce reduces the number of taxpayers supporting an aging population, pressuring both public finances and economic dynamism.

Japan has an aging and shrinking labor force
The United States still has population and labor-force growth
Fewer taxpayers increase pressure on transfers and public finances
Demographics help explain different inflation and growth outcomes

“the amount of taxpayers in Japan is falling, whereas in the US the amount of taxpayers is still growing”
Torsten Slok · 28:03

#japan#demographics#labor force#public finance

Explainer33:54

How More Treasuries Can Crowd Out Credit and Mortgages

A large increase in government borrowing expands the supply of risk-free assets available to investors. Slok argues that attractive Treasury yields can draw demand away from investment-grade credit, high yield, loans, collateralized loan obligations, and mortgages.

Fiscal expansion requires more Treasury issuance
Risk-free assets compete with spread products
Higher safe yields can reduce demand for credit risk
The effect can tighten financing across fixed income
Recession would further increase government financing needs

“the more that the amount of risk free assets is expanded, the higher ist the risk that investors will start to pick risk free as…”
Torsten Slok · 34:38

“there will be a crowding out of other spread product fixed in commem asces”
Torsten Slok · 35:09

#treasuries#credit#fiscal policy#crowding out

Explainer38:36

Globalization Lowered Prices but Concentrated Job Losses

Slok explains the political backlash against globalization as a distribution problem rather than a mystery. Consumers and emerging-market workers gained from cheaper goods and open trade, while specific industrial communities in the United States and Europe absorbed severe employment losses.

Consumers benefited from cheaper imported goods
Workers in China, Mexico, and other emerging markets gained jobs
Industrial communities in the West suffered concentrated losses
Political systems struggled to compensate those who lost
Aggregate gains did not erase local economic damage

“there were certainly some people in West Virginia and in Pennsylvania and Ohio who basically lost out because they didn't produce these goods anymore”
Torsten Slok · 39:07

“How do we compensate those who lost out in the shame of globalization”
Torsten Slok · 39:54

#globalization#trade#labor#inequality

Explainer49:04

Why Trade Wars Hit Stocks More Than Interest Rates

Trade uncertainty can make companies delay hiring and investment because future input prices, sales prices, and retaliation remain unclear. Yet the aggregate tariff amounts discussed were small relative to total US imports, explaining why individual equities reacted more strongly than rates or currencies.

Tariffs create uncertainty about input and output prices
Retaliation makes corporate planning harder
Companies may delay hiring and investment
Specific industries face sharply different outcomes
The macroeconomic impact may remain modest relative to the equity impact

“they're holding back with a little bit with hiring, holding back a little bit with investment as a result of uncertainty.”
Torsten Slok · 50:00

“it makes sense in my view in summary, that equities are not liking trade walls, whereas you're not really seeing much movement on the rates…”
Torsten Slok · 51:00

#trade war#tariffs#equities#interest rates

Story· 1

Story02:54

From Months of IMF Research to Twenty-Seven Client Questions

Slok describes the culture shock of moving from institutions where researchers could spend months investigating a problem to Wall Street, where clients expected useful answers in a few sentences. He found the urgency stimulating because it forced him to translate deep technical training into concise decisions.

The IMF and OECD allowed long research cycles
Wall Street clients demanded rapid answers
Brevity became a practical analytical skill
Technical sophistication still had to produce usable conclusions

“getting to Wall Street, of course, was quite a turnaround where you suddenly have clients asking twenty seven questions that you have to answer in…”
Torsten Slok · 03:49

#career#wall street#research#communication

Tool· 1

Tool53:25

The Overnight Team Behind Slok's Daily Charts

Slok reveals that a five-person economics team in India turns his evening research ideas into charts while he sleeps. The time-zone handoff allows drafts to be ready when he wakes, creating a fast and efficient daily production rhythm.

Slok develops chart ideas in the evening
He emails instructions to a team in India
The team includes highly trained economists
Time-zone differences enable overnight production
Most charts are ready for final review by morning

“When I go to bed every evening, I think about what should the chat be, what should I write about tomorrow? I send an email…”
Torsten Slok · 53:45

“Five people on our team and they have master's degree in economics.”
Torsten Slok · 54:13

#delegation#workflow#research#time zones

Takeaway· 2

Takeaway1:01:00

Even an Economist Who Loves Inflation Needs to Stop Talking About It

Slok describes excessive work as a career failure and emphasizes the need to reserve time for family, friends, exercise, and enjoyment. Weekly soccer gives him distance from the constant global stream of market emails and refreshes his mind.

Professional enthusiasm can still become overwork
Relationships and recreation need protected time
Exercise creates psychological distance from work
A balanced life supports sustained performance
Constant connectivity otherwise fills every available hour

“It's very important and one very important lesson that has taken me some time to learn. Is that you've gotta have a balanced life.”
Torsten Slok · 1:02:25

“I play soccer once a week on Brooklyn Bridge Pre five.”
Torsten Slok · 1:02:49

#work-life balance#burnout#exercise#career

Takeaway1:05:02

The Post-2009 Lesson Slok Wishes He Had Learned Earlier

Looking back, Slok says he underestimated how strongly central-bank action would drive stocks, interest rates, and exchange rates after the financial crisis. The unprecedented scale of easing mattered more than conventional textbook analysis and makes the eventual exit especially consequential.

Central-bank action dominated post-2009 asset pricing
The scale of monetary easing was historically exceptional
Traditional economic textbooks underweighted this force
Stocks, rates, and currencies all responded
Policy normalization is therefore a central market question

“asset prizes for the last since two thousand nine, for the last nine years in particular, including also equities, but rates in particular have been…”
Torsten Slok · 1:05:27

“the sheer size of money printing that central banks were winning to throw at the system just happened to be absolutely, by far the most…”
Torsten Slok · 1:05:55

#central banks#financial crisis#asset prices#monetary policy

Frameworks in this episode

Continuous Forecast Revision Loop

Customer-Useful Research Compression

Three-Imbalance Business-Cycle Diagnostic

Insights & moments

⚡Myth Buster· 1

Why Cheap Goods Do Not Eliminate Inflation

◆Hot Take· 1