The Answer Is Transaction Costs

Author: Michael Munger

"The real price of everything is the toil and trouble of acquiring it."  -Adam Smith (WoN, Bk I, Chapter 5)In which the Knower of Important Things shows how transaction costs explain literally everything. Plus TWEJ,  and answers to letters.If YOU have questions, submit them to our email at taitc.email@gmail.com There are two kinds of episodes here: 1. For the most part, episodes June-August are weekly, short (<20 mins), and address a few topics. 2. Episodes September-May are longer (1 hour), and monthly, with an interview with a guest.Finally, a quick note:  This podcast is NOT for Stacy Hockett. He wanted you to know that.....
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Regime Uncertainty: Political Risk is Transaction Cost!
Tuesday, 11 August, 2026

Send us Fan MailWe walk through the weirdly powerful math that makes a stable $10,000 profit stream worth $50,000 in one world and $1,000,000 in another. Then we apply the same present value logic to politics and show how unpredictable rules raise transaction costs, inflate the effective discount rate, and freeze long-term investment. • the discount rate as the hidden driver of valuation • why the consol bond makes present value intuitive • P = X / R as a shortcut for long-lived assets • how low interest rates mechanically boost asset prices • discount rates as opportunity cost plus inflation plus risk • regime uncertainty as political risk priced into investment • how New Deal “experimentation” can prolong a downturn • modern examples through tariffs tax policy and regulation • a listener puzzle on why Coke concentrate costs more Tell me what the answer is. If anybody knows of a recording of the George M. Cohan play, Broadway musical, I would certainly like to be able to find it. Michael Munger, "How Interest Rates Set Asset Prices: One Weird Trick," The Daily Economy, May 28, 2025 Robert Higgs, "Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War," The Independent Review, Spring 1997 Amity Shlaes, The Forgotten Man: A New History of the Great Depression (HarperCollins, 2007)Franklin D. Roosevelt, Oglethorpe University commencement address, May 22, 1932 Book o-da-week: Robert Higgs, Depresssion, War, and Cold War, (reprint) Independent Institute. If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !You can follow Mike Munger on Twitter at @mungowitz