How Inflation Shapes Everyday Life | Carola Binder | Associate Professor of Economics at the University of Texas at Austin | Season 13 Episode 9 | #230

In this episode, I sit down with Carola Binder, Associate Professor of Economics at the University of Texas at Austin, to explore inflation not just as an economic statistic but as a political and psychological force. We discuss how inflation expectations shape economic behavior, why public perception matters for monetary policy, and how trust in central banks influences financial stability. Carola explains that inflation is not simply about prices rising, but about how households, businesses, and policymakers anticipate and respond to economic change.Our conversation moves into the mechanics of central banking, the role of the Federal Reserve, and the tension between technical policy decisions and democratic accountability. We explore why inflation becomes politically charged, how misinformation can amplify economic anxiety, and what policymakers can realistically control. Carola highlights the importance of communication, credibility, and institutional design in managing economic uncertainty.What stayed with me most is the recognition that inflation operates at both a structural and psychological level. It affects not only purchasing power but also confidence, expectations, and political stability. This episode invites listeners to rethink how monetary policy shapes everyday life and why economic trust is foundational to a functioning society.Chapters:00:00 – Introduction01:35 – Carola Binder’s Path into Economics05:20 – What Is Inflation, Really?09:45 – Inflation Expectations and Why They Matter14:30 – The Role of the Federal Reserve19:10 – Inflation, Politics, and Public Trust24:00 – Communication, Credibility, and Monetary Policy29:10 – Economic Anxiety and Public Perception34:20 – What Policymakers Can and Cannot Control39:00 – Lessons from Recent Inflation Surges42:00 – Closing Reflections