In this episode, Escala Partners CIO, Tracey McNaughton, talks about the connection between community, political stability, and the size of government. We are now in an age of big government. This has implications for economic growth, inflation, and central bank independence. (0:55) Tracey, firstly, how was the ride last weekend? (1:16) I’m a cyclist but even I know you can’t ride a motorcycle without a clutch. (4:24) We saw that with the budget a fortnight ago, didn’t we? Government spending as a share of GDP has increased. (6:04) When did this shift toward protectionism start? Was it with the election of Trump in 2016? (8:21) What about Europe? Isn’t Europe China’s largest trading partner? (10:00) I suppose with so many countries going to the polls this year, the idea of placating disgruntled voters with election sweeteners puts even more pressure on government budgets. (11:53) We were talking in our Investment Committee meeting this week about why the US is so surprisingly resilient – even in the face of 11 interest rate hikes. Gerard put up a great chart that showed the relationship between increased government spending and higher economic growth. (14:22) Governments might be going their own way, but markets all seem to be going one way – and that’s up. (16:14) Turning to Australia. We had the latest inflation data for the month of April yesterday. It came in a little hotter than expected. (18:00) We have also had some activity data recently that points to a weakening outlook here.