Patrick Bet-David, Lynn Alden, and Rob dissect the Strait of Hormuz blockade, where Britain and France refuse to join Trump's plan despite Iran costing its regime $400 million daily. They analyze "RAMageddon," where AI data centers drive memory chip prices up 700% and electricity costs soar, while 65% of consumers feel inflation outpaces income at 3.3%. With housing shortages hitting 10 million units and home prices at $534,000, the hosts argue that deficit spending and NIMBYism fuel crises ranging from Molotov cocktail attacks on Sam Altman to parents spending $50,000 on career coaching, revealing a K-shaped economy where wealth concentration exacerbates societal fractures. [Automatically generated summary]
Transcriber: CohereLabs/cohere-transcribe-03-2026, sat-12l-sm, and large-v3-turbo
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Sweet Life and Bright Future00:06:47
Did you ever think you would make it?
I feel I'm so pissed.
I could taste sweet, bitch, dirty.
I know this life meant for me.
Adam, what's your point?
The future looks bright.
My handshake is better than anything I ever signed.
It's right here.
You are a 101?
I don't think I've ever said this before.
All right, so Wednesday Business Podcast, lots going on.
Probably the biggest story to a lot of people here.
Apparently, I'm sitting down talking to all our guys.
I'm saying, Tell me the biggest story that you're most concerned about.
And Humberto says his biggest concern is the fact that a bag of Doritos right now is seven bucks.
And I said, Look, I mean, all this other substrate of Hormuz blockade, you know, gold, Bitcoin, who cares?
Doritos is seven bucks, guys.
So we have to talk about it.
And as usual, we bring some smart people here.
Lynn Alden, it's great to have you here with us.
Great to be here.
Thank you.
Yes, I've seen your work.
You're brilliant.
You're very smart.
Macroeconomics.
So we're looking forward to getting your insight as well on Wednesdays.
When we started doing this, I don't know what it was, Tom, a few months back.
It's purely business, economy, numbers, and we'll do some politics as well.
But let me go through some of the stories that we have going on.
So, tariff refunds unlikely to benefit consumers.
CNBC CFO Council survey says Trump declines to say which countries would help the U.S. with Hormuz blockade.
The one thing we do know is that NATO allies refuse to join Trump's Iranian port blockade, according to Reuters.
The U.S. begins blockade in the Strait of Hormuz.
Trump warns Iran attack ships to stay away.
The U.K. not supporting the U.S. Iran blockade.
As Francis Macron confirms multinational talks on the Strait of Hormuz, I believe Vance, Tom, when is Vance meeting for part two tomorrow, right?
Tomorrow, Thursday, we heard there'll be very early U.S. time because it's in the afternoon over there, but supposedly tomorrow.
Yeah, I wonder what some people are saying.
Sending Vance, was it a strategic thing to send an anti non interventionist to go and negotiate?
Was it a way?
Because typically it should have been Marco Rubio, but you're sending Vance, are you setting him up for failure?
Are you setting him up for success?
Is this almost like a tryout to see how well you do on the bigger scale of going out there negotiating something this massive?
You know, typically, vice president, you make them the czar of the border and you never have to show up to it.
You know, we know a couple guys in the past.
If you don't even know where it is.
If you don't even know where it is.
Yeah, you think it's in Europe.
But so, U.S. Iran wing new talks on January 2nd.
We'll talk about that venue.
Vance says U.S. acquired some knowledge about Iran talks.
China says it's ready to play a constructive role for peace in the Gulf.
BlackRock raises views on U.S. stock on belief that war is over profits.
are up.
Major US cities offer cash incentives to spark growth, attract newcomers.
I got a bunch of numbers I want to talk to you about with the market and the economy and gold, which we'll get to.
And Lynn, I want to get your thoughts on that because I know you talk about gold and Bitcoin.
US hospitals are emerging from bankruptcy only to falter again.
Look at these parents here.
Anxious parents, according to Bloomberg, are spending upwards of $50,000 to land their kids a job.
It now costs $300,000 to raise a child in the US.
Really daunting situation for parents.
So, if you want to have five kids, that's one and a half million dollars you need over a span of 18 years for each one of the kids.
Americans say their incomes cannot keep up with rising prices, they're cutting back on groceries, ride shares, and alcohol.
Late payment rising for buy now, pay later loans, survey says.
We'll talk about that.
Will gold reach $6,000 by the end of the year?
Multiple companies are saying by the end of the year, it's going to be $6,000.
And wait till you hear which one of them said it's going to be $6,300 by the end of the year.
Housing shortage is at least $10 million.
They said it was $2.5 million a few years ago.
Then they said $4 million.
Now it's $10 million shortage.
So, what kind of a cost?
Is that good?
Is a lot of jobs?
Is a lot of, if they do it in the right areas, what are the right areas?
Some areas is not a good area, you know.
Then it goes into the blue, red state because of taxes, because a lot of people are thinking about taxes.
These eight U.S. housing markets favor buyers.
And then Sam Altman, I think we need to address that.
And probably on the conversation with Sam Altman, another story is about AI chatbots misdiagnosed in over 80% of early medical cases.
And then a couple other things that we'll get into here.
Nearly 40% of Americans have less than $500 in cash savings.
That is scary.
40% of Americans have less than $500 to their name.
Amazon to buy satellite firm Global Star in an $11.57 billion deal to take on Musk's Starlink.
So, having said that, with all the stories that we have going on, for those of you guys that follow the content closely and you see all the other stuff that we do, whether it's the business, the sports, the PBD podcast, the interviews that we do, on the back end, we are hiring aggressively in ways we've never had before.
For some of you that maybe are looking for a job or you're at a company, you're winning, you're doing great things, but you want to find a different opportunity of a company that maybe is growing that's got a big upside for you opportunity wise.
You want to learn more, Rob, if you want to play the clip of what's going on here on Valutamen.
For some of you, this is more than just a podcast.
Go ahead, Rob.
Many times when people think about Valutainment, all they think about is a podcast, but it's a lot more than that.
It's nine companies working together on an 11 acre campus.
If I was to give you a virtual tour here, you'll see the HR department hiring, talent acquisition.
We have full stack developers that are working on MNEC and Higher Metrics.
We have a full fledged events team that puts together events with thousands of people.
We have a merch department designing the latest product.
We just launched the FLB shoes made in Italy.
We have a marketing department.
And if you go to the complete opposite side of the building, 50 60 people making calls working for BitDavid Consulting, sales, setters.
And then on the complete opposite side of the campus, there's a full on production company with editors, shooters, creating content, doing podcasts.
Then you can drive down a couple miles and go to our private boardroom cigar lounge with members only.
Regardless of what it is, working at Valutamin every day is a surprise.
You could be walking into work, and right next to you is a governor, is a billionaire, is an athlete.
We are hiring aggressively, but Valutamin isn't for everybody.
For the right person, this could be the last company you ever.
NATO Pressure and Global Gamesmanship00:15:12
Workforce.
So if you're watching this and you want to learn more, go to vt.com forward slash careers and apply now.
There you go.
Whether it's for yourself or somebody else, go to vt.com forward slash careers, apply.
And if you know some very qualified, qualified people that are currently working that want to do something bigger, share it with them.
We are paying reload for people that are coming here from New York and California, as well as Austin, Dallas.
I think nearly 50% of our guys that are working here are not from here.
They moved here to want to be part of the team.
So, all right, with that being said, let's get right into it.
First thing I want to talk about, guys, is NATO allies refused to join Trump on the Iranians' port blockade.
Now, this is big news because at first it was like it's Spain.
Well, you know, the Spain president, he's a socialist.
Even he says his family is progressive.
So, hey, I want to make you work with America, but you guys can't come and land over here.
And he says, look, we don't need you.
We're going to do it by ourselves or not.
Then it was Starmer.
I don't want to be a part of this.
Now it's the whole NATO allies refuse to join Trump's Iranian port blockade, according to Reuters.
Ally said on Monday they would not get involved in U.S. President Trump's plan to blockade Iranian ports, proposing to intervene only once fighting ends in a move likely to anger Trump and increase strains in the alliance.
Trump said the U.S. military would eliminate any Iranian ships that came near the blockade that began on Monday after the weekend talks failed to reach an agreement to end the six week conflict with Iran.
Trump initially said the U.S. would work with other countries to block ships passing through the Strait of Hormuz, but the U.S. military later specified that the blockade would only apply to ships going to Or from Iranian ports.
Since the war started February 28th, Iran has largely blocked the waterway for all ships, but its own.
It has been seeking to make its control of the strait permanent and possibly collect levies from ships that use it.
The blockade will begin shortly.
Other countries will be involved with the blockade.
Trump said in a post on Truth Social on Sunday, but NATO allies, including Britain and France, have said they would not be drawn into the conflict.
So he did say they will.
They're not so far.
Tom, what do we know about this?
Especially now that crude oil is at what, 91.37?
The market's reacting somewhat positively.
SP at 7,000.
So Wall Street, like you said earlier, is doing good.
Main Street's maybe taking a hit, but walk us through what you think is going on here with the blockade.
So there's a lot of gamesmanship going on in the world.
So right now, Britain and France have a problem, and I dove into this.
Macron and Starmer have large Muslim populations, you know, 8, 10, 12, 15%.
That's a population you have to deal with, and they are a very loud population.
And so publicly, they're saying, we will not join the blockade.
Well, what does that mean?
I will not put my ships next to your ships, so I won't join the blockade.
But what was interesting, Britain and France, through NATO, said we are working on an initiative to open the strait.
Pat, that's what they said.
You know what that initiative is?
Negotiating behind the scenes with the United States.
So we won't join the blockade, like put our boats out there.
And they say that for the headlines in their own countries.
But behind the scenes, they are working with us, trying to negotiate and find a way out of it.
And it's because they have to speak out of both sides of their mouth because they're there.
And what that is doing is that's upsetting Trump, because if you're not with me, you're against me, tremendously upsetting him.
And it's also kind of undermining the historical importance of NATO.
I mean, looking back and asking, Hey, do we still need this?
This was created at a time where we had a Cold War.
We thought there was a bunch of missiles pointing at us, pointing back.
Reagan put Pershing missiles in Germany, which caused the Russians to flip out.
But that was all part of the NATO chess game.
And a lot of people are asking, you know, what does NATO do and what are they necessary for?
And Trump is playing that card in the middle of it.
Okay, you're not with me, you're against me.
Boom, maybe I'll leave NATO.
But make no mistake, Britain and France have a two faced thing going on here public and private.
Len, where do you stand with this?
So, I think a lot of it is symbolic, and it's obviously political in the sense that no one really doubts the U.S. Navy can do this blockade indefinitely if they want to.
There's no world where the U.S. Navy has trouble stopping ships from going through.
Obviously, the U.S. Navy is limited in terms of getting the strait open because of all the asymmetric aspects to it, but actually blocking it is fairly simple for the U.S. Navy to do.
So, trying to get NATO involved is more of that symbolic coalition effort rather than because the U.S. actually needs their ships in any material way.
And so, their refusal doesn't, of course, impair the U.S.'s ability to keep the strait closed.
But it does signal, like Tom mentioned, all the domestic political aspects they're dealing with.
And it does ongoing kind of show the weakening of NATO over time, which is relevant in it.
It's increasing multipolar world.
And we have fractures in our own backyard, let alone the world conflict.
Rob, can you run a poll?
And I want the poll to be what's more likely to happen?
U.S. leaves NATO, NATO supports U.S. versus Iran, and versus neither.
Okay, just run that same poll on the podcast.
Let's see what happens with it.
Here's JD Vance when he's talking to.
Brett Baer and Brett Baer's asking a question to see where he stands because we remember JD Vance was a non interventionist.
It's kind of like, why are they sending him to negotiate?
You know, is it intentional?
Because if you send Rubio, you know where Rubio stands.
Rubio and Wyckoff, we know what they've been doing.
That's right.
So do you send JD to kind of get him to be a bot in and say, I didn't know these people are this extreme?
So here's what JD had to say to Brett Baer yesterday.
As soon as it can.
It's being reported that you had real skepticism about this at the beginning and that you expressed that.
To the president.
Is that true?
Well, Brett, you know, I give my advice to the president of the United States, and we all do, and I expect that when I give advice to the president of the United States, that it's going to be private because the president should rely on his senior advisors without them then running to the media.
What I will say, Brett, is that I 100% agree with the president on the fact that Iran can't have a nuclear weapon.
I've seen that just in the negotiation that we've had over the last couple of days, that these are tough negotiators, but they're fundamentally the kinds of people where them having a nuclear weapon.
Would impose terrible costs on the entire world.
If they're willing to engage in economic terrorism on the entire world, what would it mean?
What leverage would they have if they had a nuclear bomb in Tehran?
That's not an outcome that is acceptable to us or really should be acceptable to anybody.
So I 100% support the president's goals here to keep nuclear weapons, to keep the worst weapons of war out of the hands of the Iranians.
What do you think about what he said?
Yeah, I mean, he's saying the right things.
And I hit NATO real quick, though.
Yeah, of course.
I mean, have we all lost sight of the fact that the UK and France wouldn't be a country if it wasn't for America?
And I mean, with NATO, what's a positive thing that NATO has done or a positive impact NATO's had in the last 30 years?
I mean, nobody remembers that Russia wanted to be part of NATO.
Bill Clinton rejected that.
Bill Clinton didn't reject that.
No, Bill Clinton.
Or he didn't answer him back, right?
No problem.
He called somebody and then he called back and said, not now.
So, wasn't he reject that?
I don't know if I put that on Bill Clinton.
Bill Clinton was a gamer that he wanted to do it.
Somebody he called, said no.
And a lot of people speculate who it is, but we don't know who that was.
That's a good point.
And I mean, the defense contractors led the committee to expand NATO.
So, I mean, the way I always see NATO is that we needed something to throw money at after the Cold War ended, right?
Because we just threw all the military money at NATO.
And like the audacity of these guys, we give them all these weapons, we have all of our military troops in their bases there, and like the whole point is to.
Deter Russia from aggression.
But I would say that our expansion of NATO is what encouraged Russia to go into Ukraine.
So I think we should pull out of NATO ASAP.
You think we should pull out of that?
Yeah, 100%.
What's a positive thing that NATO's done?
They did a hell of a job at Bosnia Herzegovina, didn't they?
Wow.
They got in there, stopped that.
Not.
That was NATO's back.
So if you're saying that, that means you're agreeing with them that we should leave NATO.
I'm not saying we should leave NATO, but I'm saying you asked the question what have they done in less than a year?
Right.
And I'm like.
He asked the question.
I'm just wondering.
I'm making the point.
Yeah, they've done a terrible job.
They let that go on in Bosnia until what?
Until I think it was Clinton finally agreed to drop tomahawks on enemy positions to see if they could break the back of the rebel general that was committing the genocide in the fields.
What do you think?
Well, my focus is on finance and tech more than geopolitics.
I don't really have a firm opinion on that topic, other than I think that years ago it made sense to pressure NATO to put at least 2% of their GDP into the military, basically meeting all their ends of the bargain.
Because for a long time, obviously, the U.S. is like the bulk of NATO.
So the rest of NATO is kind of that longer tail of other support compared to the U.S., which is almost all of it.
At this point, there's obvious fractures.
I wouldn't necessarily support going out of it because it's kind of a temporary decision that can have permanent ramifications, but I'm certainly no expert on.
Well, maybe think about it from the economic side because you watch how the market reacts to certain things, right?
How would the market react if all of a sudden, say things are not going the right way, say the Thursday negotiation gets nasty and behind closed doors, the president's not happy with the way NATO's supporting him, hypothetically?
He announces, because you know he's capable of announcing anything.
He announces we're out.
How do you think the market reacts?
My guess would be more muted than one might think.
I mean, I think the market could have a sell off that day.
I don't think it would be particularly catastrophic because.
When the market says, okay, what does this mean over the next, let alone weeks, what does this mean over years?
Are we worried about any of those NATO members getting attacked more than they might otherwise, especially if the rest of NATO stays intact?
So some of the smaller members are still defended by some of the bigger members.
You know, I mean, multiple of them are nuclear powers.
So I don't think anyone would seriously increase, worry about the safety of NATO countries just because the US was out in any sort of multi year timeframe.
Obviously, that has long term implications for deterioration between the US and Europe in particular.
But probably the market would just look through that, kind of like how it's been surprisingly resilient looking through all the current energy shortages.
Yes, it's interesting you're saying that because I don't know if you guys saw that or not.
Zelensky the other day said in a press conference, he's been kind of quiet.
He says, UK should come back into NATO.
I don't know if you saw that or not.
Tom, did you see that with Zelensky saying, hey, UK should come back and you should rejoin?
Is that it?
We don't want anyone's locked.
I think the EU and NATO can partner all the military.
I don't know if this is it or not, but it was one of the ones where we're just asking for UK to come back in.
And rejoin NATO.
I mean, not rejoin NATO, EU.
My apologies.
EU, not NATO.
You know what he's looking for?
He's looking for a pocket.
Of course he is.
Yeah, of course he is with that taking place.
But yeah, I don't know.
I wonder do you, how likely it is that Trump is capable of using that card to say we're pulling out Tom?
Give me a percentage.
Because right now, the poll we ran, here's what the poll looks like 3,000 votes, five minutes.
What's more likely to happen?
51% say the U.S. leaves NATO.
That's the listeners.
And we have some, our listeners are business owners.
These are people that, you know, run businesses, you know, are watching the market to see what's going on.
51% thinks U.S. leaves NATO.
15% think NATO will support U.S. versus Iran.
34% say neither.
Tom, do you agree with them?
Yeah, I think it's 50 50 because look at what will happen.
We have bases in the Philippines.
We have bases in Japan.
We have bases everywhere.
We would still have bases in Germany.
We still have bases in the UK, on the south coast of the UK, where we launch all the B 1 bombers from.
All of that we would still have.
So we would have regional defense alliances.
So you leave NATO as a group at the middle, Pat, but we would still have all those bases and all of our military presence over there.
And if something happened in Germany, we're going to be there to back them up.
Mm hmm.
So, I think it's 50 50 to leave NATO, but it would not change our deployment of resources in each country the same way we've got resources deployed all around the world.
You know what it would change?
It would change the fact that none of those countries have invested in their militaries in a big way since NATO got put in place because they've all been hollowed out.
They just rely on us that we'll have their back if they ever needed us.
So, they've gotten fat and happy and casual, and they would immediately stop that, I think, if we pulled out of it.
Because, I mean, and we don't have to pull out of it, but that's our leverage.
If we want them to do something, we.
Have all the means at our disposal to encourage them to.
The benefit, this is the benefit of having an unpredictable leader that's also predictable.
That's the benefit of it.
He keeps everybody on their toes and they don't know what's going to be happening.
And by the way, a couple clips, Rob, if you want to play it.
One of them is the clip where the president says he won't let Iran blackmail and extort the world by shutting down the Strait.
If you can play this clip.
We can't let a country blackmail or extort the world because that's what they're doing.
They're really blackmailing the world.
We're not going to let that happen.
And, you know, the amazing thing is we don't – can you believe this?
We don't use this trade.
We don't need this trade.
We have our own oil and gas, much more than we need.
We have more oil and gas than Saudi Arabia.
Think of this.
We produce more.
Saudi Arabia and add Russia to it, substantially more.
And by next year, we'll have double that amount.
So we don't need it.
That's what the world needs it.
And many ships are heading to our country right now as we speak to load up with the best really, I guess you could say, somebody said the best and sweetest.
I don't know exactly what sweet is, but when it relates to oil, it's a good thing.
But they're coming to our country right now.
There are many boats coming to our country.
Now, it could very well be this is going to be settled before that.
Now, you can pause this right here.
Rob, go to the clip about what this is costing Iran on a daily basis and how long they can afford for this to happen, whether it's water.
You know, their revenue coming in.
This right here is a phenomenal clip by Jesse.
Go ahead, Rob.
The Iranian oil blockade is probably the knockout punch.
The Iranians are trying to outlast us.
The longer the war goes on, the longer their regime can hold off a revolution.
But their economy is experiencing a crippling depression.
This blockade is costing the regime almost $400 million a day.
That's $13 billion a month.
Plus, the Iranians can only store oil for about two weeks.
Before they have to start shutting off wells, the Iranians can't outlast us.
The world's turning to us for energy.
Over 120 empty oil tankers are on their way to the Gulf of America.
Many ships are heading to our country right now.
If you want to go a little bit further out to see when Jesse comes back, let him keep going.
Okay, keep playing it.
Keep playing it with Jesse.
The oil and petrochemical industries have been wiped out.
Without oil revenue, all they can sell are pistachios to Pakistanis.
It could get worse.
Texas AI Data Center Boom00:14:53
The president's still weighing limited airstrikes, saying a number of additional targets are very easy to hit.
The Iranians are losing their cards here.
And Vance, who just spent 20 hours negotiating with them, says that we're in the driver's seat.
Tom.
Economically speaking, we're in the driver's seat, but only if it's a rational Iran leader negotiating on the other side.
When you have irrational leaders that just want to wait you out, then anything that you would do for them I mean, look at the rebuilding of Japan after World War II.
Look at the rebuilding of South Vietnam.
And look at all that happened.
You don't want these guys to be rebuilding the weaponry and what they do.
And so, yeah, it's hitting them and it's hitting them hard.
And yes, you've got this.
And yes, drill baby drill and the renewed relationship with Venezuela and all that Venezuela oil coming out and benefiting the people of Venezuela, hopefully more and more next year than this year.
That's all good.
But I look at it, yeah, it is.
Are they going to break?
Are they going to negotiate?
Are they going to give up the nuclear option?
And so a rational player would, but you have to remember these are irrational players that would allow their own people.
They'd allow 90% of their own people to die before they give up the card because it's a theocratic, it's a suicidal theocracy that believes in that endgame.
And so, in that way, they're not a rational actor.
So, Lynn, I'll give you this last thought on here.
And I know it's more, you're more economy than some like this.
But have you thought about what would be an ideal situation where the market's going to sit there and Trump comes out the winner?
What could happen where Trump comes out the winner in this issue with Iran?
I can certainly see an agreement like years ago where Iran agrees to kind of defer any sort of nuclear program and has observers in in exchange for letting off the attacks and things like that.
That's kind of a possibility here.
There's also just, I mean, they can declare themselves a winner.
The U.S. can declare themselves a winner and kind of back out and, you know, see how the optics go.
I think, you know, with that clip we saw, there's some simplification of talking points because even though the U.S. does produce a lot of oil and gas, it's not as though we have just a bunch of spare capacity sitting around.
We extra.
We import a lot.
We import a lot.
Not all oil is the same because it has to be matched to certain types of refineries.
And so we've seen pretty clearly, obviously, gasoline prices and other energy prices have spiked here in the U.S., just like many other parts of the world.
We're not the most vulnerable in the world.
That's mostly going to be the poorer per capita developing countries that have to import a lot and are now being outbid by all the wealthy nations in the East and elsewhere.
But we are impacted.
And right now, obviously, Iran's on a clock.
I mean, they've hyperinflated, not for the first time.
They've got severe economic issues, they've got all sorts of issues.
Um, you know, but as Tom points out, they're ideological more so than they're pragmatic.
Um, the U.S. is also on a less severe ticking clock, but I mean, just politically speaking, there's the midterms coming up right now.
Consumer sentiment is a record low, lower than 2008, lower than the peak of COVID, lower than the late 70s.
Those were kind of all other low points.
We hit new lows, and that's partially because I mean, gasoline prices at the pump are up, and then even things we don't see directly, all the transportation costs.
I mean, you mentioned seven dollar Dorito bags, crazy.
That part of that, I mean, going forward, all these things that have to move around the country that's impacted by transportation costs, five dollar diesel.
Yeah, exactly.
And so the U.S. consumer is being squeezed.
And then that, of course, has, you know, the polls are already shifting pretty greatly toward the midterms.
So I think that the Trump administration has an incentive to try to get this wrapped up sooner rather than later.
And then it's a force of wills between, obviously, you know, the average Iranian is a lot more impacted than the average American here.
But they are a very resilient ideological type of regime there.
They are.
Way more than Venezuela.
There's no question about it when you look at where they're at with this.
But you said something about the U.S. economy.
I want to kind of go through with this and come to you guys.
So, Americans on Wall Street, you look at the numbers, like, you know, the wealthy is getting wealthier.
It's not like they're being impacted by it.
You know, they're happy.
You're watching CNBC.
It's like, oh, let me tell you, I was wrong.
The market's doing great.
We just crossed.
So it's like, okay, the rich are getting richer, but the poor are getting poor, and the middle class is getting their asses handed to them.
Let me read some numbers here to you.
Americans are broke on paper.
Incomes can't keep up with prices.
This is a JD Power survey, Bureau of Labor Statistics.
And I want to share this with you.
This is for the SurveyMonkey Quarterly Money Survey Q2 2026.
Here we go.
65% of American consumers say prices are rising faster than their income, per JD Power survey of 4,000 U.S. adults.
Conducted February of 2026.
This is pre war.
56% of Americans say everyday life has become less affordable over the past year, per the CNBC Survey Monkey quarterly money survey.
Inflation in March 2026, 3.3% annualized, up from 2.4% in February.
Gasoline prices are up 21.2% in March alone, for nearly three quarters of the entire inflation increase.
Real hourly earnings rose by only 1.4% over the past year.
Prices are up 16% cumulatively over the past four years.
49% of Americans have reduced discretionary spending.
Due to rising costs, 40% have dipped into their savings to cover daily expenses.
39% have used credit cards to pay for groceries or housing essentials.
30% are taking extra work, a side hustle, or a second job.
40% of buy now pay later borrowers have paid late on at least one installment in loan in the past year, up from 34% just two years ago, a 13% point jump per lending tree.
54% of buy now pay later users say they couldn't make ends meet without these loans.
29% of buy now pay later users are now using loans for groceries, up from 14%.
54% of Americans think the economy.
Will decline over the next year.
Only 28% expect improvement.
And we saw a story that came out saying 40% of Americans have less than $500 in savings.
40% of Americans have less than $500 in cash in the bank, that number.
So, one, how did we get here?
You can't put it on this administration, this has been building up for a while.
And how do you address it?
What do you do if you're going into midterms?
You're seeing a Mondani winning.
And I'll play the clip here in a minute about the free groceries.
It's going to only cost us $60 million to build seven of them.
And now it's costing $30 million to build one of them.
But the average middle American is watching this message here saying, hey, who's going to fix this?
Someone's got to fix this.
How do we address this?
Yeah, obviously a very difficult question.
I mean, this really has been building since the global financial crisis.
You know, we had the big financial implosion, banks were more supportive than the average homeowner.
So, we got the rise of the Tea Party and Occupy Wall Street, kind of the right and left flanks of kind of populism and pushback against what they perceived as a pretty corrupt system.
Throughout the 2010s, you had some rebuilding, but you had that kind of growing divide.
And under the Trump administration, I mean, the first one, he did tax cuts that were primarily aimed at the wealth, even though we already kind of had that concentration.
And I think we're continuing those policies, even during COVID.
Everyone kind of focuses on the STEMI checks and child care tax credits.
But the biggest You know, bailouts went to the PPP loans that turned into grants for many wealthy business owners that weren't, you know, really planning on even laying off anyway.
There are people in the software industry or the, you know, investment industry that got big, big bailouts that didn't really need it.
Massive bailouts.
Massive bailouts and billions for certain corporations.
We had a board meeting that, Tom, you may remember this, where one of the board members was like, Hey, you know, we can get a few million dollars on a PPP.
I said, We just had our biggest month in the history of the company.
We don't need a single penny from PPP.
We refuse to take it.
And then we announced that we didn't take a single penny of it.
I cannot tell you how it was received by our guys in the company because we didn't go take a single penny from anybody on the PPP.
And that's powerful because a lot of companies in that position that didn't need it, they weren't in a restaurant.
They weren't.
They needed it.
Restaurants needed it.
Those guys were getting crushed.
Exactly.
But there are a lot of others.
I mean, I know software companies that basically said, if we don't take it, our competitors are going to take it.
And that's how they justify taking it.
Same thing with investment companies and just companies that weren't really planning on laying anyone off.
So all that just drops to the bottom line to the owners, which are on average pretty wealthy.
When you look at the whole kind of COVID stimulus, it comes out to something like $50,000 per household.
And you go to the average median household and you say, I mean, did you get anywhere near $50,000 in support?
Of course not.
That diffused more opaquely through, unfortunately, kind of the higher end of the income stack.
And then since then, I mean, obviously, the inflation from all of that money printing has primarily impacted the lower two thirds of the economy.
We're in a very firm, K shaped economy.
I mentioned consumer sentiment before.
Consumer sentiment's at record lows while the stock market is roughly at record highs.
That's pretty unprecedented.
The only time it was even close to that was kind of the late 70s.
And so, you know, that's that more stagflationary environment.
I don't really see relief anywhere on the way.
I mean, I think obviously the energy shortage is not helping.
I'm on the record not really viewing tariffs as being helpful because normally in this type of environment over the past several years, you had service costs going up.
That's where a lot of the inflation was.
It was generally offset by lower goods prices.
But over the past year or so, I mean, the Fed's done analysis of this, Cato Institute's done analysis on this.
We've had something like a 2% to 3% Unusual boost in goods prices, largely attributable to the tariffs.
So the median person's looking around and saying, I thought this was America first, and we have wars, we have energy shortages, higher goods prices.
There hasn't really been a lot of programs supporting them, either with tax cuts or any sort of refinement.
Here's a question, Tom, and I'll come back to you guys as well, but Tom, specifically you, is the solution to address this not winnable at the ballot?
Meaning, to be able to fix this, there's no way in the world a person gets reelected if we wanted to find a way to fix this.
I think it's very difficult right now, but I'm going to go solution based.
We've talked about all the numbers, don't need to go through them again.
There are two that I will mention quickly that are the most horrifying to me, and they're really horrifying it's $1.3 trillion in consumer credit card debt and the balance of BNPL loans, which were taken out because they didn't have enough credit card credit left.
And now seeing that 45%, as you pointed out in the stats, people have, there's only supposed to be the average BNPL is 3.5 payments.
Remember, you bought the TV 200, 200, 200, and now you paid for your $600 TV that you bought in September so you could watch college football.
Guess what?
45% have missed one.
So that means it's 33% miss rate.
That's horrible.
So that is on the back of the consumer.
The consumer has more debt when everything else.
There is one category where the government and the president can come together and help at the ballot box, and it is oil and energy, excuse me, electricity and oil.
Oil meaning jet fuel to bring down air fares.
Gasoline for your car, diesel, which is going to be shipping all those goods and services and Amazon Prime to your doorstep, diesel.
And then heating oil from the Northwest.
We always forget about heating oil being such a critical part of the budget for people that live in the Northeast.
And praise God that we had a pretty mild winter this year.
Less heat heating oil per home was used this winter because it wasn't a severe winter in the Northeast.
Then you get down to gasoline, and guess what?
Natural gas, and there's a lot of natural gas that are in U.S. electric power plants.
This doesn't touch coal power plants.
But if you get oil and you get all of those things down in a hurry, you can help the consumer in all those categories.
And that helps them today in their budget.
How do you do with Electricity Town, with all the AI data centers we're building?
I mean, when you look at the AI data centers, numbers wise, do you know how many AI data centers we had 10 years ago in America?
Zero.
Zero.
You know how many we have right now?
4,000.
And we showed this stat yesterday of the ones that haven't been built yet.
1,500 of them.
Because people are now protesting and coming to City Hall, like we covered the Missouri protest.
Good citizens, six billion dollars.
Yep, exactly.
So that was part of a no, but wait a minute.
This is where I'm trying to go with you, Tom.
How do you fix the electricity issue when we've committed to build all these AI data centers?
The only state is that saying don't come and touch us is Maine.
You have already 1500 of them that's going out.
You have a Arizona that I believe they build a new plant, a TSMC plant.
What is it, Taiwan Semiconductor Manufacturing?
Company that they said was going to be an $11 billion project became a $60 billion project.
Now it's a $165 billion project in Arizona.
And then in Texas, I think Oracle, OpenAI, and one of the banks, it could have been SoftBank, I don't know which one it is, they committed to an AI data center that's $100 billion that they're thinking is going to go to half a trillion dollars all across the state of Texas that they're building.
I think Microsoft is building one in Wisconsin for $7 billion.
And every place they go to, Electricity prices go up.
By the way, this whole Ramageddon war that you hear about.
We've heard the Ramageddon, Ramageddon, where.
AI chips, but then the basic memory chips, RAM chips.
That's right.
So the DDR5, which is the latest model RAMs that you consume electronics.
You have it in your computer, you have it in your PlayStation.
Those things that we would buy for $30, $40, prices have skyrocketed 200% to 300% to 700%.
Then they came out and built these new chips called the HBM chips, which is.
15 to 20 times more effective than the DDR5.
And so these companies are sitting there saying, wait a minute, we need this stuff, bring it to us.
You know, 70% of all the chips now that they're producing is all going to the AI data centers.
70% of these chips.
10 years ago, that wasn't the case.
So these chip companies are like, wait a minute, priority, who do I sell it to first?
Do I sell it to cars?
Do I sell it to TVs?
Do I sell it to PlayStation?
Or do I sell it to a Sam Altman that went to, what were the two companies Sam Altman went to?
Uh, Hynix, am I saying it properly?
What is the company?
SK Hynix, right?
If I'm saying it correctly, they he goes to SK Hynix and one other company and he says to them, Hey, I want to ramp up of needing these chips up to 900,000 a month by 2029.
And they're sitting there saying, This is pretty amazing.
So it's a non binding commitment he makes behind closed doors that's not public.
All of a sudden, it leaks last month to the world.
And now he's saying, I don't know if I want to do it or not because the latest uh, uh, Google came out with a new project.
If you guys have been following the Google story.
That came out.
Google's Electricity Supply Crisis00:07:35
It's called, they wrote a paper just a couple weeks ago.
Have you followed the story?
I'm familiar with what you were talking about.
Yeah, Google just came out with a project that they wrote out saying, hey, we don't have to buy these chips.
We can save 600% and make it more effective.
So some of these companies are sitting out there saying, hey, do I keep going through these TSMCs?
Do I keep, yeah, the TurboQuand redefining AI efficiency with extreme compression?
They leaked this.
So this changed Sam Altman's decision to kind of pump the gas, pump the brakes, and say, Do I go through these companies and buy these chips or not?
But here's the reality of it where I'm going to, and I want to kind of get your thoughts because this is what you guys follow closely.
So, capitalism is capitalism.
Who's going to say no to massive orders?
Who's going to say no to $100 billion orders?
Who's going to say no to a $50 billion order commitment?
Your commitment is to your shareholders.
Okay, so now let's go buy a bunch of lobbyists who are going to help us create these data centers, who we can sell it as we're bringing jobs to a local community.
But the middle income guys' electricity prices are not going.
We're not yet at a point with China that we have nuclear power.
We're still relying on the old way of getting energy.
They're deciding to change the wafer that, by the way, the king of wafers is apparently Japan.
Japan makes most of these guys and these RAMs that they make it the two different ways because the DDR5s are kind of flat.
And apparently, with the HPMs, you can build it up to 8 to 16 stack, go up like a very interesting when you look at the difference between the two.
But capitalism's not going to say no to that money.
So, how are you going to control electricity prices?
The oil prices I get stop the war.
Let's figure it out.
Let's get out of it.
But how do you address the electricity prices?
Well, I guess I have it.
So, the two things that I say the president has his pen, and we can get oil and all those things we've talked about that have an immediate economic benefit to an average consumer's budget.
Now, electricity guess what?
On the demand side, it just happened, and I've been calling for it on a program that you put.
Put on Valutainment here, Numbers Scream.
We've been covering this and we've been talking about the Rate Player Protection Pledge, RPP.
It was done by the White House on March 4th and he wanted a pledge from people to go just up Rate Player Protection Pledge, Rob, Whitehouse.gov.
I sent you the link.
And they put that out as a pledge.
It needs to be not a pledge, it needs to be legislation that says if you build a data center, you have to invest in the offsetting.
Electricity needs.
You have to be part of that.
Oracle and Google went to the government and said, hey, will you support us, Gen 5, Gen 6, micronukes that we will put right next to our data center?
And guess what?
In a natural disaster, tornado, and everything, we will divert that power to the grid to help citizens.
So we will make our own power.
And if there is any excess, we'll put it on the grid at times of need.
This is a rate player protection pledge, which was a PR.
You know, event by the White House.
The reason I call it PR, it was positive PR trying to get everybody together to pledge we're going to keep electricity down.
Now turn this into legislation that says you're building a data center, then you have to build to offset the electricity so it doesn't affect the consumer.
Oh, Tom, you're talking about price controls.
No, I'm not.
I'm talking about supply of electricity.
These two things on the president's pen and all of this, now you go to the ballot box with a positive message of things that you can do.
Here's what you can't do.
Touch.
You're not going to bring down food.
You're not going to bring down milk.
You're not going to bring down a lot of things.
You're not going to bring on home insurance, car insurance, all those.
You're not going to touch those on the inflationary scale, but you will touch this and it will give you a fighting chance at the ballot box.
But the clouds are dark.
And that was your original question is what do you do for the election?
Yeah.
One of them, you have to stop the war.
The other one, you got to go get capitalism to say you got to help out the consumers as well locally.
Brandon.
Yeah.
The biggest mistake he's making with this is acting like it doesn't exist.
I mean, it's a You know, undeniable fact that people are getting crushed with it, especially the middle.
You mean affordability?
Yeah, with affordability.
I mean, you know, he's talking like constantly about what his plan is for the war, what the, you know, it's almost over, this and that, but he keeps saying the inflation is gone.
You know, we got past it, but the University of Michigan consumer consent report was the worst of all time, like worse than 2008.
You know, that lines up with the $400 per person thing.
So, I mean, first thing is acknowledging it.
I think like that, like even more so than the war, the fact that he's going out saying inflation is dead, I think that's his biggest pain point for the election.
In terms of addressing it, I mean, The deficit spending, I think that's what's propped up not just the stock market, but inflation for the last 10, 20, 30 years.
When we got off the gold standard, that enabled us to do the deficit spending.
And I think why not invest this excess money that we've been pumping into the military industrial complex or pumping into the healthcare system or social security?
Why haven't we been investing that into nuclear energy?
We've built, I think, three nuclear reactors in the last 30 years in America.
So we got unexpectedly hit with this massive demand for energy from the AI data centers.
We already were in a delicate place from an energy demand standpoint, but now we're Caught off guard for it because we had this massive demand that we weren't expecting.
So, I and the thing about oil too is that when that gets cheaper, I think that actually makes inflation go up in some things because it gives people excess disposable income.
So, there's an argument that could be made that oil going up might actually make inflation and other things go down.
Yeah, so I mean, I think with the electricity issue, we can kind of think of it like zoning more so than price controls, like much like how residential and industrial things are generally separated at the local level.
There can be these agreements, like all these protests against data centers and stuff, and the local politicians decide and let that project go forward.
Now, a lot of that can include agreements about how they're going to secure their own electricity.
That when they build the data center, they also have to build the energy infrastructure around it so they don't just come in and double everyone's electricity prices in the region and kind of benefit from the subsidies and other things that are already there.
I think that's a huge factor.
A lot of the data center companies that I would consider best of class are advantaged because they've already secured a lot of their own energy infrastructure.
Many of them, some of them were Bitcoin miners before.
They've kind of shifted.
It's funny, a lot of people years ago were concerned about Bitcoin miners coming in and driving up prices.
That was never a very rational concern, or at least over any sort of multi year period, because Bitcoin miners need super cheap electricity.
The problem with AI data centers is they actually can bid pretty high prices for electricity, they can outbid local retail buyers.
They also want pretty low latency, so they want to generally be closer to population centers.
They don't want to be out in the middle of nowhere like Bitcoin miners are fine to be.
So I think basically we are seeing this is a pretty real issue.
I think getting energy prices down is one of the nearest term fixes here.
The more structural issues for how to make things more affordable, I think obviously tackling healthcare is a big area because the US spends by far the most per capita on healthcare in the world without necessarily better outcomes in many categories.
But that's not a multi month issue.
That's more of like a second half of term issue or You know, the next administration, whoever that might be.
But I think that getting, you know, doing steps to kind of get healthcare costs down is more structural, one of the big structural things for this kind of K shaped economy.
But in the near term, it's more about putting out the fires, it's more about putting out these immediate issues.
Rob, can you run a poll and ask the question how much has your electricity bill increased?
And you can put stayed the same, up 10 to 20 percent, you know, maybe what should the tiers be?
What should the tiers be, Tom?
Up what?
Housing Market Structural Decline00:14:57
Up 10 to 20 percent?
Yeah, I think you need to do under 10, 10 to 20, 20 to 30, 30 to 40.
Yeah, just put 30 plus.
Okay, under 10, you know, 10 to 20, 20 to 30, 30 plus.
Curious to know how much that's happened.
Now, while this is going on, here's the other story that comes out, which is kind of interesting.
White House, America's short 10 million homes.
And we remember we read this article a couple of years ago that was saying 4 million homes.
And a few years prior to that, 2.6 million homes, right?
But the White House comes out saying 10 million.
The White House estimates of how many single family homes the U.S. is missing.
Per the Council of Economic Advisors annual economic report of the president, this dwarfs prior estimates.
Freddie Mac, November of 2024, said 3.7 million.
National Association of Realtors, in June of 2021, said 5.5 million.
Now they're saying 10 million.
If home building had continued at its historical pace of 6,000 new homes per million people per year, The pace had held steady for decades before 2008.
The U.S. would have had 10 million more homes today.
The 2008 financial crisis essentially cut the home building grade in half and it never fully recovered.
The median home price right now is $534, up $534,000, up 52% from Q1 of 2020.
According to the Federal Reserve Bank of St. Louis, 40% of Americans don't own a home, believe buying one in the future will be impossible, according to CNBC.
Only eight of the 50 largest U.S. metro areas are currently buyer markets.
Half of those eight are in Florida.
The rest are Atlanta, Austin, Nashville, Riverside, and the U.S. Senate passed a bill last month, an 89 to 10 vote, but its fate in the House is uncertain.
So when you look at a number like this, they're saying if we don't use the number 534, we just assume it's $450,000 per unit at 10 million unit shortages, represents $4.5 trillion in housing wealth that could enter the market, could create jobs, could be good for some people.
So when you see a story like this, Tom, how do you react to it?
So, there's a supply and demand issue in housing, and I'll give you two case studies.
The first case study is Austin.
During the big run up in prices in 2022, we were about to come out of COVID.
We had inflation hit the asset.
The underlying assets were hit by the inflation of printing money.
So, assets prices went up everywhere, such as stock market and homes, real estate.
So, number one, all those went up.
But in Austin, Austin was in a gold rush of construction that started in 2018.
They were going nuts.
Who was going to?
Put their headquarters in Austin.
Remember this, Pat?
Everybody, Oracle, I'm going to Austin.
SpaceX, I'm going to Austin.
All these Silicon Valley companies on the strength of South by Southwest and a favorable high tech and startup environment in Austin, Texas.
Hey, we're all going to Austin and we're going to have low state income tax, by the way, and it's going to be pretty cool to live there.
Guess what happened?
They built, supply, supply.
Right now, rents are moderating in Austin and there is an excess supply.
Of rental housing available, which is making Brandon it actually affordable for people to find very affordably priced rentals in the near town areas, not downtown, but in the near town.
Like you don't have to live in, you know, in Round Rock and commute all the way down to Austin for your job.
So there's the supply coming together.
And that's exactly what they're talking about when you flash back on a national basis and say, not everybody was building like that.
So everyone else has a shortage of rental homes, which is why they're coming to this 10 million number.
Number one.
And so, how do you get all that built now?
Because now you're dealing with inflated materials.
Austin was built since 2018 with the old material costs that started going up in 22.
So now you start building homes on inflated copper, inflated concrete, inflated plywood, inflated labor costs, shortage of labor.
So you have to pay construction guys more.
Boom.
Now, to build out the supply, it's going to cost you more to do it.
And the pressure, and Rob just put the chart up look at the gap between sellers and buyers right now.
Interest rates are back up to 6.4, 6.5.
There's an estimated 1.359 buyers in America and 1.9 sellers, a gap of 600,000.
So people on the existing homes can't afford to buy them.
So there's the two problems.
You got to build more homes, but it's the inflated cost to do it.
And the homes that are out there right now haven't come down enough.
And if we all had done what Austin did back in 2018 and got too excited and built a bunch of supply, our citizens would have more affordable housing.
Lynn.
Yeah, I think there's two main factors here.
One is NIMBYism.
So many, many areas don't want a lot of new supply because their existing homeowners are worried about their price disruption.
Places like Austin are kind of the model to do it correctly, which is to allow new supply to come on the market when it's incentivized to do so.
And so that's one factor that's very region specific.
And the other one is this more structural issue that for about 40 years, from 1980 to 2020, you had structurally rising home prices, both in nominal terms and as a percentage of average incomes.
So the multiple of home value to income.
Kept increasing.
But for 40 years, that was roughly offset by structurally declining interest rates.
So you have higher housing costs, but you have kind of decreased financing costs.
So the monthly amount that they have to pay was kind of held in check, at least relative to their incomes.
The issue is that once we hit zero rates and we started to get this more of an inflation wave, we don't really have that tailwind behind us anymore.
And I don't think it's coming back.
I mean, the best we can hope for is just interest rates kind of chop around in a sideways pattern here.
Up and down during boom years and bust years.
But we don't really have that structural decline anymore, which means, and we still have those very high multiples of income value to housing value to income value.
And a lot of that's because as you have decades of money supply growth, it finds its way toward the scarcest things, right?
So things that we can get much better increasing the supply of, their price is still under control.
You know, grain prices, manufactured goods out of China, Moore's law, anything, any electronic with Moore's law and software and all that, all of that can be kept very low because there's not really much scarcity to it.
But whether it's the best financial assets, the best stocks, gold, Bitcoin, top tier housing, but then even kind of just normal median housing, there's obviously a scarcity factor to that.
And so that's where we get more and more just people using their buying second homes as their piggy bank for lack of wanting to hold the money.
And we're kind of at the phase where this really impacts the consumer because there's no structural decline in interest rates anymore.
Even if the Fed does cut rates going forward, it's not necessarily going to impact the long end and therefore mortgage rates.
They have extreme tools they can do, like yield curve control, but they're not very popular when you have high inflation.
And so I think a lot of it's going to come down to getting out of the way of builders, letting them build when the incentives are right to do so.
But then stepping aside from that, it is just a structurally hard problem with no longer falling interest rates.
And sellers are kind of locked in.
They don't want to sell because they had locked in a 3.5% mortgage.
But over time, more of them just become forced sellers anyway, and they have to bite the bullet and sell.
So eventually the market can clear, but it can take quite a while.
Rob, go back to that chart that you had sellers and buyers.
I mean, look at that.
Look, we've never had this big of a gap on sellers above buyers.
Like, if you go look at 2021, that was the worst time.
Like, if you look at the buyers' market at that time, look what it was like.
Go to the difference.
If you go a little bit prior to that, all the way to the top right here, look at that.
It was 10% interest rates, and those buyers were buying.
That's right.
Go a little bit to the right, Rob.
Go a little bit to the other peak.
Keep going, keep going.
Right there.
Look at that.
Look at the peak between the buyers and the sellers.
But if you go prior to that with the sellers and buyers, you have to go to 2015, 2016.
That gap is not keep going back, keep going back a little bit, Rob.
Keep going back, Right there.
No, a little bit to the front, right there.
One back.
Okay, right there.
Look at the difference between that.
And that's still not as bad as it is today.
So, this has to be a horrible time to be a realtor and a loan officer.
I mean, if you're still a realtor making money, you know, you have outlasted a lot of guys that have probably quit and left.
I think, you know, we used to run our events.
This last event that we had, Tom, the Sales Leadership Summit, every year I would ask and say, raise your hand if you're in the mortgage industry.
Four years ago, it was 40% were all in mortgage and real estate.
We had 403 people in the room, attendees.
I asked them, raise your hand if you're in a mortgage business.
How many people raised their hand?
A guy named Phil.
No, he's not kidding.
One guy raised his hand.
And five years ago, when he would talk to these guys, they had three Rolls Royces, two Ferraris, three homes, vacation homes, 17 Rolexes.
It's a very different ballgame for some of these guys that they're going through it.
Brandon, your thoughts on the story?
Yeah, this makes me think of something that absolutely blew my mind and made everything make sense a couple weeks ago when you had Richard Werner on.
So I remembered when the Fed changed the role for the banks that they didn't have to have a reserve requirement in 2020.
You know, it used to be 10%.
They dropped it.
I thought it was that they dropped it quick and they brought it back, but I didn't realize that they never brought back a reserve requirement for loans because, you know, when money creation is commercial banks lending money.
So I was always wondering I know we printed a couple trillion or did a couple trillion in debt from the Treasury during COVID, but I'm like, man, that's really lasting.
Five, six, seven years out into the future.
But no, it seems it's probably more the lack of a reserve requirement because that's infinite money that could be created.
So that's what's pushing up the real estate market.
That's what's pushing up everything else in a big way, I bet, is the fact that there's no reserve requirement for the banks for how much money they can issue out to borrowers.
But that's one side of it.
The other side is we need to get these commodity prices down.
And I mean, we do have the levers to do that.
So, commodity prices, zoning, I mean, any of these places that are trying to restrict home building for just the sake of keeping the prices up, that's something that needs to be fought against viciously because your home as your number one asset, I don't think that's like a healthy place for society.
I think it's more important for the younger generation to be in a position of strength rather than the older generation to maintain their number one asset.
There's a quick caveat on that that sometimes gets lost in discussion.
So, even though it is true that reserve requirements have been eliminated, when you actually look at banks in aggregate, they have pretty high reserves relative to their total assets and relative to deposits right now.
So, even though the requirements are gone, it doesn't mean that the reserve ratios actually went down in any material way.
In fact, in the kind of the whole post global financial crisis era, they're actually pretty high.
The lowest they ever got was actually right before the whole subprime mortgage.
That's when they really were extended, had tiny reserves.
The regulations were very low at that time.
Instead, what they have is kind of risk adjusted capital ratios.
So they actually still have a lot of regulations for how much kind of like low risk or no risk capital they have to hold, whether it's reserves, whether it's T bills and things like that.
And actually, their ratio of those kind of like low risk or nominally no risk assets is actually a pretty high percentage of their assets.
So I don't really view banks as making aggressive loans as kind of the issue here in a similar way that it was leading up to 2008.
I think it's those other factors we discussed the fact that interest rates are not going down.
The house that was affordable at 3% rates is not affordable at 6% rates, unless we start to see more exhaustion from some of these sellers that say, My house has been on the market for two years.
I keep trimming prices, but I'm not getting any bites.
I'm going to have to bite the bullet and materially reduce the price in order to get buyers back in and say, This house that I bought for $700,000, I'm trying to resell for $700,000, I might have to sell it for $600,000 just because the buyer's market's different now with higher rates.
If it gets to the point, that's good if we get to that point.
But if you listen to CNBC today, yesterday, if you listen to everything they're talking about, well, hopefully the new guy that can, you know, they're trying to sue Jerome Powell.
Are you seeing this?
Are you seeing the possible conversation of Jerome Powell?
Are you following that story?
Yeah, over the.
Not a bad idea.
The build out of the Fed and did he oversee a construction project to beautify the Fed that just, you know, was a ripoff to American taxpayers?
That's kind of the White House angle.
Yeah, but they're kind of trying to force him out.
Earlier, and he's not flinching.
They're saying the new guy is going to come and change the rates and all this other stuff.
So, who knows what their reaction to the market is going to be with that?
But, can we go ahead, Tom?
I'll just put one thing is what we have to keep in mind.
It's fashionable to pick on interest rates, it's fashionable to pick on the Fed, it's fashionable to pick on boomers.
I'm looking at you.
Yeah, I know.
But you have to remember what percent increase has homeowners insurance gone up since 2021, since the middle of COVID to today?
Five years.
A lot.
46%.
What has homeowners' HOAs gone up?
A lot.
28%.
So, you have to remember, those are also chasing the consumer down the street when they're trying to do this.
And by the way, that's not the greedy insurance companies.
Insurance companies are pointing to the price of copper, lumber, and concrete.
Why?
Because they have to pay for that when they rebuild your home.
If it burns down or you have a hurricane or a tornado.
So, the insurance rates go up because of replacement costs, not necessarily because of greedy insurance companies, which is also fashionable.
So, all of it comes together to be this perfect storm in housing.
I just wanted to add those, Pat.
Well, I will tell you this as we're going through this topic with affordability, and people are like, well, you know, nothing's going to happen.
You know, the conservatives are still going to win.
Economy is going to be fine.
Momdani beats everybody in New York City.
And he came out, he's a socialist, Islamist that came out and he won New York City, financial capital, the world.
And then he said he's going to have grocery stores that he's going to build free, free for folks who are having a hard time and all this other stuff, you know, eggs, the main essential stuff that they're going to do.
People still don't know exactly what the system's going to be.
And he said, for 60 million, we'll be able to build in five different.
Burroughs and all this other stuff, and they just launched their first.
The first one's going to cost roughly 30 million bucks, Rob.
If you want to pull up the one, uh, the video of him announcing this of Momdani with the new grocery store that's coming out, is that the one, Rob?
You just had it.
Uh, is that the one?
Go for it.
The first of your grocery stores will open next year.
SNAP Program Cost Overruns00:05:50
Why is it taking so long?
I feel like a bodega opens every other week across New York City in every neighborhood.
Why, why take so long to start this?
I think for a few reasons.
The first is that we are talking about building something from the ground up.
We're talking about this city's first city run grocery store in Manhattan that we need to both design, that we also need to construct.
We're also going to be constructing it using prevailing wages.
And it's also one part of a larger ecosystem, not just in terms of La Marqueta, but also here on this strip.
We've seen the MTA has just completed their work in this very area.
This requires a lot of interagency and intergovernmental coordination that we're going to be seeing.
The store that will be open next year in 2027 and the additional stores that will be open by the end of 2029 will not require this same scale of production.
The reason that we're announcing this is so that we can get started on this.
So there you go.
So 30 million.
Tom, you look very excited about this.
Lynn, do you foresee this, one, working successfully?
And two, will other markets follow his lead?
I'm not particularly optimistic on it.
When you look at the major grocery stores worldwide, at least the ones that are publicly traded, we have the financials on, grocery stores run at low single digit average profit margins.
No one goes in the grocery business to get rich.
You go into finance, you go into tech.
Running a grocery store is not the most lucrative thing.
These companies have refined their supply chains for years and decades.
They have all the incentive in the world to run those as efficiently as possible because when you have multiple grocery stores in an area, if you try to overcharge, your competitor is going to come in and say, Well, you're charging seven bucks for Doritos, we're going to charge six bucks for Doritos.
They're all under pressure.
It's all the food that goes to it, it's very logistically challenging to run a grocery store.
A lot of those obviously have quick turnover times in terms of their expiration.
You need a lot of employees, which is more expensive in this labor environment.
It's a very challenging business.
I'm not very optimistic that they're going to come in and just miraculously run this cheaper than all the commercial operators.
I think, like most things today, like you mentioned, the cost overruns on Taiwan semiconductor manufacturing facilities in Arizona.
I think these are going to come in with cost overruns, just like almost, even in the private sector, that would happen, let alone them doing it.
You're foreseeing more of this stuff happening.
Well, I see New York continuing with their path, probably getting some of these stores online.
We'll see how long it takes.
As the data comes in, I'm not optimistic that a lot of others are going to want to copy that because unless they just run at massive losses and therefore subsidize food, It's not really fundamentally addressing the issue, in my opinion.
Tom.
Look, say what you will about SNAP.
SNAP, the problem with SNAP is we didn't regulate who received it, and the wrong people received it that didn't really need it.
SNAP is a subsidy so you can buy groceries.
It would be far cheaper to have a very tightly controlled, fraud filtered SNAP program to let people who are in challenging economic situations.
Have a subsidy and just go into Costco than it would be to do this.
This is going to be a disaster.
Ladies and gentlemen, Mandami's rail.
There it is.
You've got Gavin Newsom standing under the bridge of a partially built rail that looks like the price of oil last week 128, 127, 131, 141.
It's just going up and up and up on overruns and it's billions.
Is going to be Mandami's rail.
We're going to go back and look at this, and somebody is going to put the real dollars out to build all these.
And as Lynn has correctly pointed out, government doesn't do this without overruns.
It's just going to happen.
You've got contractors take advantage of government.
There's all these things are going to happen.
This is going to be a disaster.
It's going to look back and they're going to close it.
And they're saying, I can't wait for this.
Maybe they should just.
You know what I mean, Pat?
We have SNAP at the federal level.
We have SNAP.
We just need to put a tighter collar on SNAP so it doesn't.
Get defrauded so that the people that really need some economic assistance maybe can get it and they can go to Costco and they can get food and live.
But trying to do it this way oh, capitalism didn't work and there's too many poor people, government will do it.
Oh, yeah, that's you know what?
It's all the memes on Twitter where the guy flips out the folding chair and says, Here we go, or the guy walks up with the popcorn.
We have those memes everywhere.
Guess what?
Here they come.
Yeah, I mean, this is the way that it goes.
It's the journey that the middle class goes on when it goes from being the middle class to you get inflation, bad inflation, then the middle class becomes the lower class, and then they get socialist because a lot of people don't understand what's actually happening.
And then somebody comes along and gives the nice sounding message of, oh, you're being ripped off by greedy business owners.
Don't worry, I'm going to come in and I'm going to make things free and make things fair.
And a lot of people will buy that because a lot of people don't understand what's happening.
So, I mean, New York's a small case study of that.
California, in other ways, is a case study of that.
Yeah, I know we're talking about anticipating somebody crazy becoming the president because of that type of situation.
I think that's what this cost of living situation is going to facilitate potentially, right?
So that's the scary thing.
And then people never end up understanding what's actually happening.
That's the unfortunate part.
You know, like 80% of the population will never understand why it's actually happening, why things are getting unaffordable, and, you know, the impact of things like this, which is going to make things more expensive.
Yeah, I mean, listen, though.
I'm telling you right now, this is why I say, There is the chances in my eyes, if this continues, and AOC is a bigger chance of winning in 2028 if affordability becomes a top issue.
Central Banks Move to Gold00:06:44
Because she's going to hit this nonstop, and she has more credibility in this topic.
At least she's been honest with this for her career.
She is a socialist.
Some would call her a communist.
I don't know if she's a full blown communist.
I think she is a socialist through and through, but this topic won't be going away.
Let me get to the next one here, which.
It's very interesting.
Will gold reach 6,000 this year?
Top three prediction about gold prices.
Okay.
So, one, gold will surpass 6,000 this year.
I think that is by JPMorgan Chase.
They're assuming that gold will hit $6,300 in 2026.
Of course, it's been very volatile, Rob.
Can you find out what it is right now?
Exactly right now, what's gold prices as you're going through?
So, what drives gold prices?
Inflation is one, the change in prices, according to Yahoo Finance.
Goods and services, one of the most significant drivers for gold prices.
Instability, geopolitical issues affect gold rates, even like wars, higher tariffs, trade disputes can trigger surge in gold prices, economic uncertainty, recession, stock market fluctuations, and higher unemployment.
And while we're going through this and we're looking at these numbers, More stuff came out.
I want to kind of read this to you because, you know, to find out what percentage of Americans own gold, I was surprised by the number.
Gold rose 64% in 2025, one of the greatest single year performances for any major asset class.
It set 53 new all time highs in 2025, surprised, surpassed 5,000 in central bank holdings.
The annual price of gold in 2025 was at 34.31 ounce, up 43%.
Right now, I think it's at 48.49.
The high it hit was 54.19.
14% drop in three days is what it had recently.
JP Morgan said it's going to hit $6,300.
UBS says $6,200.
Deutsche Bank says $6,000.
Morgan Stanley says $5,700.
Goldman Sachs says $5,400 as you're looking into this.
And only 10.8% of the U.S. population currently invests in physical gold, bars, bullions, and coins versus 62% who own stocks.
Do you think it's going to hit $6,000 this year?
That's a little bit above my base case, but I wouldn't be shocked if it did.
I mean, I've been structurally bullish on gold since 2018.
But even as a bull, I would not have guessed we would have seen 5,000 as quickly as we did.
I think this consolidation has been healthy.
I started getting pretty nervous when it's going vertical, even as a bull.
There's a number of factors here.
I'm not as bullish at these levels as I was when gold had a one in front of it, the 1,300, 1,500 back then.
But I don't view it as a bubble currently because I think what we've basically gone from structurally undervalued to right about a level that makes sense.
I mean, it can grind higher from here.
Surprise if it corrects a little bit, but I think it's more reasonably valued now.
And there's a number of factors.
One is when you print a ton of money, it finds its way eventually into the kind of the scarcest assets.
Like I mentioned before, some things were way better at making the supply of when there's a big mismatch.
With gold, almost no matter what price it goes to, overall production doesn't really grow by more than like 2% a year, based on most estimates, compared to the amount of refined gold we have.
So you can pour a lot of money into it, and that supply angle is still very, very slow to change.
And two, we have seen over time more and more kind of central bank interest in gold.
We had this long period where they were, for decades, they were buying less gold, more treasuries.
We started to see that kind of bottom out.
And while they're not going out there rapidly selling the treasuries, but around the margins, they're saying, instead of adding to my reserves and treasuries, I'm going to add some ton of gold because that's money they can hold in their own jurisdiction.
It can't be frozen or sanctioned with a stroke of a pen.
It's got that inherent debasement protection.
They don't want to have T-bills earning 4% when money supply is growing at a much higher rate than that.
They'd rather have gold, at least as a higher percentage than they did at the bottom.
So, I think, yeah, there's a structural bid, and I think it's going to grind higher over time.
You know, 6,000 is a little bit above my estimate, but it can always move faster than people think.
As you know, I'm not a deep gold guy like Peter Schiff.
I recognize it as an inflation hedge.
But what I look at is, I look at why are people putting the estimates.
I don't just look at the headline numbers, which get put out there for people to snack on.
I really read into them.
And JP Morgan made a very, very compelling case that Lynn just kind of touched on on one of her sub points here.
And that is central banks buying creates demand for the scarce asset.
And that's going to drive the price.
Because central banks tend to be more long focused.
So, they're not as sensitive to the inflation of price that they're creating by their demand as maybe the others in the market would be that are short term trades in and out.
So, if central banks go to gold because of the dollar and the euro and global currencies having issues and uncertainties in the economies that support those, then I could see it going to 6,000.
But if it goes to 6,000, I don't like what the rest of the economy and the rest of the world looks like.
If it goes to 6,000, because I would assume that central banks are reacting to a difficult situation.
But I'm not as structurally deep on gold as she or Shift.
Yeah, I think a lot of it too is that they just classified gold as tier one capital.
The only other thing aside from treasuries, it was treasuries for a while.
So central banks have been collecting it for that reason.
I think China's been hoarding a lot of it too because they're trying to make a move as the next reserve currency.
I don't think that's possible because I don't think people would trust them enough for that.
But, uh, You know, with all the economic instability, the question of the dollar and the petrodollar, I think that's being put in question too.
I don't think it's a coincidence that this started happening when the tariffs were going into effect, when we started having problems in the Middle East.
And when it happens, it happens fast because there's such a small amount of gold in the world that, you know, just the sheer narrative of it going up fast creates the reinforcing effect of it.
But I mean, the M2 money supply grows like 8% every year.
So I think that's like, however much the M2 money supply has grown since we got off the gold standard, like, that's probably where gold should be.
Which is much higher than it is right now.
Even much higher.
So you're thinking higher, even more than 6,000?
If we were to match it up to the amount of money that's been put into the economy, it's probably higher than it is today by a lot.
But that would be unstable.
This is an interesting poll.
Rob ran a poll.
Where are the majority of your investments?
Gold, silver, crypto, stocks.
You know what percentage is gold?
10.
14%.
M2 Money Supply vs Gold Price00:03:15
Excuse me.
8% silver, 16% crypto, 62% stock.
So some people's majority is crypto and gold.
Silver is the lowest.
It's interesting.
It's interesting seeing what's going on with some of the people out there when it comes down to that much in gold.
I have gold, I have hard asset gold.
Like I like the bars.
I like.
Having that set aside, and every year pick a few up and set it aside, and you don't know what's going to happen purely long term.
If you're doing short term investments, you want to time the market, it's the wrong investment.
You're buying gold the similar way you buy life insurance, right?
It's a different kind of an asset you're picking up.
All right, let me get to the next story here.
Next story I want to get to, I got a couple directions to go to, but I'm going to go to this one here.
Sam Altman's attack, suspect charged with attempted murder.
This is Wall Street Journal story that comes out.
Rob, I think you have a video on it, so if you want to go to the video first, then I'll read the rest of the stuff.
I think, uh This 20 year old Daniel Moreno Gamma was carrying an anti AI document that included the names and addresses of parent board members and chief executives.
Is this the clip, Rob?
Yes, sir.
Go for it.
Spring, Texas.
That's a suburban community just north of Houston.
Brooke.
Hi, Harris.
Well, Fox News exclusively here right now as FBI agents literally just swarm the home of that 20 year old suspect accused of trying to kill the CEO of OpenAI by throwing a Molotov cocktail at his house.
Now, we have the Harris County Sheriff's Office here and again, the FBI.
I want to say over a dozen federal agents and law enforcement officers.
You could see his garage is open here.
Now, sources tell me the suspect.
Was driven by strong anti AI views, and he was arrested in San Francisco carrying a document that he wrote attacking AI.
That document is a three part series and includes a list of names and addresses of other AI CEOs and investors.
So, by the way, when you're hearing this guy, 20 years old, two counts of attempted murder, he's going to face five plus to 20 years mandatory minimum at 3 37 a.m. Friday, the time he allegedly threw a lit Molotov cocktail style incendiary device at Altman's San Francisco home,
igniting a fire at the exterior gate three miles the distance he then walked from Altman's home to OpenII headquarters, where he retrieved a chair and smashed glass doors, then told security guards he'd come to burn it down and kill anyone inside.
Found on Mirono Gamma at arrest, incendiary devices, a jug of kerosene, a blue lighter, a handwritten AI document described by the FBI.
The FBI raided his home, potential domestic terrorism charges.
U.S. Attorney Crick Misakian stated that if investigations show the attack were executed to change policy or coerce officials, federal prosecutors would treat them as domestic terrorism.
Joker Mindset and Economic Desperation00:05:03
Tom, your thoughts on this?
So here we go.
You have somebody that has a bit of a screw loose and a vendetta, and then you get this.
And You've got low tech, a Molotov cocktail is basically gasoline in a jar with a lid on it and some sort of a fuse or a flame.
And so it doesn't take much to be a domestic terrorist.
And I think you've got a lot of people out here where, and I'm just leaving out the whole trans discussion because so many of these young men have been trans and had mental issues, perhaps interrelated to that.
I'm talking about you have men that are troubled.
That are reaching out to lash out and believing that to go out and commit murder, it's kind of like Luigi and United Healthcare.
It's like, what led you to be so upset and so compelled and so touched that you could go out and commit something like this?
I think it's part of a wider issue.
What do you think?
Yeah, it's a tragedy.
Obviously, I haven't dived into that person's specific issues.
But yeah, the broader trend, as we have more kind of wealth concentration, as we have more of this polarization that's happening, Unfortunately, these things are likely to increase.
People generally feel the social contracts broken, they don't, and then mental health issues kind of take over.
And so I think security is going to be a really big factor.
I mean, living in a polarized economy makes everyone feel unsafe, ironically, even those that are benefiting from it.
Because what is wealth if you just have trouble being safe moving around?
There were some statistics a while back that are still true, even before this whole kind of current AI wave, which is that young men in particular, basically men in their young 20s, They were some of the most dislocated from employment at the current time, generally speaking.
Dislocated?
Yeah, although we have overall pretty low unemployment levels, it was young men in particular that were kind of becoming a more problem area where there's this pocket of unemployment showing up.
It's not really affecting young women, it's not really affecting older men, but that pocket of young men was kind of impacted.
That's where some of these issues are forming.
You know what I would call it?
I'd call it like the Joker mindset.
Remember that nasty Joaquin Phoenix joker?
Hated the movie.
Yeah, terrible message.
But that's what this is, though.
Like this guy, Luigi Mangione, they have that victim nasty mindset where it's like somebody's oppressing them and they need to be the hero and take somebody out because of that.
But I mean, that's what I think of when I think of this.
But do you think it's them or do you think it's the teachers, the society, the streamers that are injecting that hate in them for them to want to take action like this?
What do you think it is?
Yeah, no, I definitely think that guys, I guess, who are like unexceptional guys, have like a tougher time, especially with being influenced by certain things in society, especially if they're dealing with pain.
So I think that people in certain situations are like more susceptible to being influenced like that.
And like if they get enough of like a nasty, hateful message, then they could be influenced to do something like that.
So yeah, definitely society, but then certain people are more susceptible to it than others.
Yeah, I mean, you know what is big business right now?
Executive protection.
It's a very big business right now.
Guys are spending money on executive protection like never before because they're seeing stuff like this.
Like, look, I got to protect myself.
So they're setting aside a cost.
Just look at this guy.
Look at him.
Walks up with a chair, throws it against the glass, says he's going to kill anyone he sees inside.
Now, he looks like he's 5'3.
So I think it's going to be hard because, you know, he's going to need some stuff to.
Is this guy really 20 years old?
He looks like he's nine.
Yeah, he looks, he looks, and he needs to do some legs.
Well, you know, we've spoken to.
Prof. G. Galloway.
Yeah.
And he has written some very insightful articles on the state of men in society.
And when you have isolation, indoctrination in the school, you know, all these people are bad, you're a victim, you're a victim, you're a victim.
And then you have isolation through what Galloway correctly points out is a lack of dating.
And it's not just about guys going out getting laid, but it's a lack of natural relationships being formed with other people.
People and then economic desperation, they feel economic desperation.
Yep.
You take indoctrination, isolation, economic desperation, you know what you get?
This guy.
And, you know, we could do a longer podcast with people like Galloway and others and just talk about this, along with the FBI profiler that you talk with, Pat.
You know, this is what aims the gun.
This is what pulls the trigger.
This is, you know, there's a sequencing.
Yep.
Genetics loads the gun.
Personality aims the gun, experiences pull the trigger.
Coaches Fixing National Security Careers00:14:53
Life experiences.
So, what do we know about this kid?
What do we know about his parents' upbringing?
What facts do we have on him?
Well, you know, who is he?
What does his mom do?
What does his dad do?
What do we know about this guy?
Is there anything we know about the guy?
Because the reports so far, I'm not seeing anything that's telling me what this guy's all about.
Did he go to a specific school?
Is he a UC Berkeley guy?
You know, there's indoctrination.
If it was that.
Well, I mean, I'd want to know, you know, what.
What other things are tied to somebody like this to get to this point and make a decision like this?
Okay, let me get to the next story here and then we'll wrap up here fairly soon.
Let me get to the next one.
Okay, we already talked about this, but I'm going to get to it anyways.
Anxious parents are spending $50,000 to land their kids a job.
Okay, landing your kids a job, spending $50,000.
Let's talk about it courier wise.
So, business is brisk for coaches like Beth.
Is this the coach, Rob, or what is the.
Bloomberg video about this.
About this.
Go forward.
It's tough out there for the class of 2026.
Hiring has slowed overall, and companies have pulled back on entry level hiring as AI takes on more tasks, leaving many recent graduates stuck in their parents' basements.
How to avert that fate?
The answer for many parents is to hire their kid a career coach years before they even have a career.
Most of these packages run a few hundred to a few thousand dollars, things like application strategies, interview prep, that kind of thing.
But some coaches charge upwards of $50,000 for intensive support and subject matter expertise.
For coaches, business is booming.
In 2019, about 5% of career coaches focused primarily on college students or new grads, according to the International Association of Career Coaches.
More than a quarter now consider that group a core segment, according to its latest surveys.
For parents who have already spent years paying for SAT tutors and college admissions consultants to get their kid into school, these services feel like a natural extension.
And for those that are paying six figures for tuition, a few thousand for coaching can feel like a rational investment if it helps the kid win that first job.
Can you pause?
Is this an AI video or is this real, Rod?
Oh, it's real.
This is from Bloomberg News.
Tom.
Oh, my gosh.
Where's my long?
Oh, my gosh.
Well, how do you process this?
I'll tell you how I process this.
You know what?
They're connecting dots here that are being intentionally, I think, warped.
And I'm not saying that about this particular writer, but I don't think there's correct interpretation here.
When you enable your kids and you let them grow up in a limited consequence, like, Special Olympics, and I'm not criticizing children, the sweet children of Special Olympics.
I volunteered there.
I am not besmirching them.
But when you take that attitude that everybody gets a medal and I'm going to prevent you from failure by giving things to you, you end up at the end with a kid that doesn't have the life skills.
And where are the parents in all this?
You know what this reminded me of?
Remember Operation Varsity Blues?
It happened in 2019.
33 parents took $25 million.
To bribe their way to get their kids into USC and other schools.
And there was a lot of celebrities, the most famous, what I think was William H. Macy and Felicity Huffman, that ended up doing time and to falsify scores, bribe coaches to say, oh, I need this kid to be a scholarship here.
And so parents are now, it's all coming home to roost, Pat.
If you are going to be a parent that doesn't seek to get your kid fully prepared for life, get ready to keep writing checks.
And by the way, She says, well, after the tuition that they've paid for, you know, 50,000 more doesn't seem like such a crazy example.
What did you pay tuition on?
Did you get a liberal arts degree in something, you know, unusable like European art history?
Or did you get an English degree and say the child wants to be a teacher or something?
You know, not all degrees have to be STEM to be really useful for jobs.
But I just get revved up, Pat, because I feel like, where are the parents?
Why aren't you equipping your kids to be ready to go out there?
And it may be a tough job market.
Yes.
And you may have to go to New York or somewhere else for the job compared to your hometown or where your school is.
But good Lord, you know, paying a coach to instill the things that already should be instilled, it just flips me out.
And it kind of reminds me of all those imprisoned parents on Operation Varsity Blues had to pay their kids way into school because they weren't ready to get in the regular way.
Earn it.
What do you think?
I graduated college during the global financial crisis.
So I was looking for jobs at that time.
Where'd you go to?
Where were you?
Penn State.
Really?
Yeah.
Sick.
And then I had to go back.
What year was it?
I graduated in 2010.
So you were there when the culture was going through the mess?
Yes.
Wow.
Was it a strange time to me?
It was a strange time.
My God.
Yeah.
It really changed culture there.
But the point is, I mean, I was in that kind of group that just had a grind for everything.
And we see everything from kind of like some of these really elite child care centers that have lower acceptance rates.
Than like Harvard, for example, that are super expensive, and then going all the way up to tutors, going all the way up to now, like these coaches.
It's just part of this very complex, you know, kind of way to spend money.
And I mean, right now, obviously, the catalyst is AI has come in.
We don't see like mass layoffs or anything.
Obviously, some companies report layoffs, but in general, companies are slower to hire because they said, let's figure out first how we can do more with less before we just bring on more people.
Yeah.
And so, whenever you have a rapid tech change like that, there are these people that have a lot of student debt, they invested in a A degree that will give them a historically what has been a pretty lucrative white collar job.
And now AI comes along and says, well, maybe we only need half as many people doing that job because each one has all the support from AI going forward.
And how can we optimize for that?
So I think part of it is just this rough transition that's happening.
But then some of it goes back to that other factor that when you have that kind of widening wealth divide, people will invest almost anything to try to get to the higher end.
And it doesn't always pay off.
I mean, if anything, like Tom pointed out, sometimes it can come back and hurt you.
I think obviously there, There are pockets of time where getting a tutor or getting a coach can fix a problem.
But nothing really beats just grinding and having that motivation.
And part of what motivated me at that age was I came from a very poor family.
So everything was on me.
It was like the fact that there was no safety net.
Where'd you grow up?
I grew up around Philadelphia.
When I was young, I was actually homeless for a little while.
And then I grew up in a trailer park.
So I kind of had this no safety net.
It's kind of like in Dark Knight Rises where you have to make the jump without the rope.
Obviously, not that extreme, but it was a similar situation.
What did mom and dad do?
My mom, I mean, she had challenging issues.
My dad was a cop for a long time, he was a detective, and then he worked in an alcohol rehab center.
He was first helping people detox and then managing a lot of it.
And, you know, he was an elderly single father when I was raised by himself at that point.
Your father raised you, your mom was in the picture.
After age seven, yeah.
Siblings?
I have, my father has siblings from an older marriage.
They're all old enough that they could be my parents.
So I have four half siblings.
Got it.
So effectively a single child.
But, yeah, the whole point of that is that a lot of times the strongest motivator is need.
Sometimes all these other things are bandages where students just either not super motivated, not grinding at the age that they're able to grind.
But I'm not a sociologist.
It's not my area of focus, other than just relying on personal experience and seeing some of these inflated numbers.
It's actually, we've seen kind of similar dynamics out in East Asia, where they're obviously a very hyper competitive market, and you'll have a lot of parents really push their kids super hard.
To a way that he even gets unhealthy at times.
Yeah, I agree.
I think there's a part of it, Tom, that my thoughts are different.
What I would say to you is I think any parent who wants to find a way to get their kids perform better in school ought to enact you.
I think any parent, and I'll tell you why.
I think this money is actually good money spent if the coach is the right coach.
I watched Tom with his daughters.
Your daughter got a 1560 on her SATs.
She got 1530, no, 1530 on her SATs.
Am I saying it correctly or 1560?
1560.
By the way, she had a 1515 the first time, and they were like, Yeah, we got to go improve the score.
I'm like, What the hell are you talking about?
Okay, 1515, you want to?
Yeah, we got to improve the score.
I think we can do better.
And then she goes and takes it.
I don't know where we were when we got the score.
We were somewhere in the world.
We were celebrating.
We were in Bermuda.
We were in Bermuda.
And then his youngest daughter's got a 5.12 GPA.
By the way, do you think it's worth to know how they raise their kids that gets them to perform the way that they do?
Probably.
And then, if you're going through college planning, like right now, if your kid wants to play professional soccer one day and finding out the route to go through IMG, to go through university, to go through MLS, to go through Premier, I think that's a business model.
I think there's a lot of value to that.
I think for somebody that doesn't make those investments for the right people, I actually would be the one for my career.
I paid for people to go and ask these types of questions.
I paid so much money for my sons for their career with soccer, with sports, with politics.
Because I want to find out what you want to pursue.
So, number one is what is a kid most interested in?
What are their talents that they naturally are interested in?
And then from there, pursuing it and getting hacks and strategies from different people.
I'll never forget, first time I was 29 years old, Tom and I met at a restaurant in Topanga called Black Angus, which by far the worst name for a restaurant in the history of mankind.
And he told me you should go do an executive health testing.
So, what are you talking about?
He says, it's one day you go, you meet eight doctors and they check everything on you.
I said, You're serious.
He says, Yes.
So, how much does it cost?
I don't know what it was at the time.
Four or five, $6,000 UCLA.
I went to it.
And you literally, a nurse comes at six o'clock and she takes you, takes you, you get your eyes checked out, heart, cancer, skin, throat, everything.
One day.
I said, I'm going to do this for the rest of my life.
I can't tell you how many times I've done this.
And then they give you a book.
Yeah.
So, that is the benefit of having.
Consultants that are proven track record.
Like, if you want to find out somebody that's raised $2.2 billion in his career and sold a business for $680 million, how valuable is that to you?
That's Tom Ellsworth.
So, to me, I don't know.
If somebody's kid right now wants to get a national security major, a bachelor's, and a master's, I would say go ask this guy to see if it's worth doing it or not, because now he's in business.
He may give you better feedback.
We can't be cheap on advice.
I'm actually going to support it.
I just thought that commercial.
The way they put it was a little bit of a weird commercial.
And I'll get to this last one.
We'll wrap up.
The average cost of raising a kid right now is $300,000.
We saw the numbers.
The average cost of raising a kid right now is $300,000.
Okay.
And it used to be a lot less, apparently, according to the story.
So, Rob, if you want to play this clip, go for it.
It's expensive to raise a child.
How expensive is it?
It's gone up 30%, actually, nearly 30% over the past three years.
It costs more than $300,000 to raise a child in the United States.
Nowadays.
So apparently, it's all about where you live.
And the most expensive places are Hawaii, Maryland, and Massachusetts.
Of course, the South, you get a break.
$17,000 in Mississippi, Alabama, $18,000, and South Dakota, $18,000.
So that's over the course of 18 years, right?
For the first five years.
Right.
But since 2023, they say the cost of raising a kid is up 27%.
So, just so you know, just keep track.
They will pay you back.
Right.
If you just keep that invoice.
Do y'all think that most of this, though, is coming from the child care costs that is impacting?
Gosh, everything is so expensive.
Go back to that number one.
Hawaii was 40K a year.
No longer are you buying things.
Go back a little bit.
Hawaii was 40K a year, Maryland 36, Massachusetts 34, and the lowest is what?
South Dakota?
That's what?
18,000 first five years?
This is the first five years that they're saying the cost is.
Yeah.
40k.
So, first five years, $200,000 if you want to raise them in Hawaii.
Tom, what do you think about this when you see these numbers?
I think that we've got a definite crisis in America.
That is one of the most joyful things you can have in life is having a child.
And as I like to say, you want to raise them and watch the flower bloom.
And I don't put weights on the shoulders of my girls.
I told them, it says, look, if you do good and you work hard, you can have the choices in life.
If you want to choose anything, Any university, then you got to go get your SAT and you got to have things.
And I put it in terms of choice, not in terms of, you know, your grandpa was a doctor, I'm a doctor, you're going to be a doctor.
I don't put that weight on my kids.
Some people do, you know, tiger moms and things like that, which we're not.
But when I see this, you know, it makes me sad because one of the most wonderful things in life is to have a child.
It's the one thing that a very good friend of mine said that when you're just really, really good at it, they all go to school and they wish you had had more kids.
Because you get really good at it after the first one or first two, I'm like raising them, and then you wish that you had just, you know, kind of had a bigger family.
And I think it's tragic that it costs this much.
And most of the first five years is not medical.
Most of the first five years' cost apparently is in daycare because the assumption is that mom and dad both work.
So, really, what they should be talking is the daycare cost to raise a kid, incremental daycare cost, because diapers and everything else are going to be nominal because the price of diapers in Hawaii is marginally.
Higher than Los Angeles, Pat, but at Costco, they're very close.
So there are regional differences to food and clothing, but they're not huge.
Instead, this is really the daycare cost.
And so, how do you get the daycare down so that the parents can have the child, get proper care for them before they go to school?
That's what I sit there as an entrepreneur saying.
How do you figure that part out, Lynn?
Daycare Costs and Family Shifts00:02:13
So, some of it is going back a long time, a lot of it's structural.
The historical arrangement is you kind of have these more multi generational families.
Where the grandparents can help more directly with all the experience that they get from the prior generation.
And in the kind of the, you know, for decades now in the U.S. environment, people move for jobs, they end up kind of isolated.
And so a lot of that has to go into expense.
As you have two income households with no parents, no grandparents around, like the parents' parents, the only option is childcare, which is extraordinarily expensive, and it's only getting more expensive over time.
And so a lot of that is that, you know, over the course of many years, Especially as these kind of economic pressures continue, all the stuff we talked about with housing, all the stuff we talked about, how expensive it is to raise a kid, you'll probably see a gradual shift a little bit more toward that multi generational house for largely from economic reasons.
The more optimistic side of that is that as remote work from home or kind of remote work or just kind of like flexible working environments can allow some of these more customizable options to kind of allow someone to work while also keeping an eye on the kids.
But there's no doubt about it.
I mean, that's a very challenging structural problem.
It's an issue in the US, but it's also an issue globally.
Yeah, you know, child care is interesting.
And I mean, you guys are totally right that that's the biggest expense with it.
But I mean, it's fascinating that there's such a huge supply of it and there's not child care facilities popping up left and right if there's an infinite supply and very scarce demand.
I think it's a tough thing with margins because it's kind of restricted on how many kids you could watch based on how many people are there as caretakers.
And then it's like regulated.
But maybe with technology, though, there'd be some loosening up with that.
I mean, that's definitely the biggest thing with that is the scalability of it.
You know, it's crazy with life, like, For me, when I see what's going on right now with the youth, nothing is more important to me than making sure the youth grows up having a chance to have their dreams become a reality, whatever that may be, whatever you want to do.
If one of my kids wants to go in the military, guess what?
I'm supporting you if you want to go in the military.
If one of my kids wants to play sports, go into business, go into sales, start a bakery, do whatever you want to do, I'm going to support you.
Of course, you want to encourage them to get in the right direction.
Mental Toughness and Supporting Kids00:02:45
You're going to give your feedback.
Here's what I suggest.
Consider this, consider that.
But.
I remember when nothing was going right for me financially, and it's interesting when you're sharing your story.
Typically, it's the other way around, right?
Mom raises, dad's not in the picture.
And dad's in the picture, not mom.
And I'm working on a book right now with fatherhood because eventually the publisher got me to be thinking about it for the last five, six years.
I'm like, you know what?
I'll think about it.
I put 30, 40 pages of notes, and so interesting.
Seeing the data of what not having a mother does to a young boy.
Or a young girl, the impact of it versus not a father being in the picture.
It has very different reactions, right?
And everybody has their own stories of what they're going through.
You don't have any.
We had a guy in our church, Tom, if you remember this guy, we had a guy in our church who his testimony was you can say his first name, I don't remember the whole thing.
He was raised to lesbian mothers and he became a pastor.
You can say his first name.
Oh, yeah, because he wrote a book.
His name is Caleb.
And we can say his whole name.
Oh, you say so.
He wrote a book that bioed it.
He wrote a book called Messy Grace and his pastor, Caleb Kaltenbach.
Yeah.
Nice guy, funny guy, edgy, a little bit awkward, but he was a great storyteller.
This guy right here, Messy Grace.
And he's a pastor now.
And he had lesbian parents growing up.
That's not your fault.
Mm hmm.
You were born in a family that you were born in, and it is what it is.
And from there, you got to figure out a way to make it work.
But I remember coming up thinking to myself, man, what am I going to do?
What's going to happen with me?
Do I have a shot?
Do I just go back in the military and do 20 years?
I don't know.
But for me, the one thing that was a saving grace for me till today, as crazy as it sounds, you know what book is sitting on his desk right now?
It's called Selling Microsoft.
So I still order books that are older books.
This is a book written by a guy.
I'm not recommending it.
You're not going to be able to find it because it's not.
Publish them or you can't.
No, literally, you only buy them used.
It's called selling Microsoft.
You know what was my saving grace?
Reading books.
I'm like, man, I got to find a skill set.
I got to find, I didn't have, I didn't go to Penn State, so I didn't have the grades you had.
You seem like you're brilliant when I'm listening to you speak.
You guys, Tom as well, Tom went to a CSUN and he got his MBA and eventually became an adjunct professor at Pepperdine and Biola and a couple different places.
Yes.
So, but for me, it was, I'm going to put my head down.
There was so much negativity around.
I said, I'm going to pick up books and that's going to be my edge.
And every time I read books, I'm like, man, what if I tried this?
Selling Microsoft as a Saving Grace00:02:53
And you know what?
I wasn't good in sales.
I'm going to sell like this and negotiate.
I'm going to go learn.
I'm going to become mentally tough.
I'm going to become emotionally tough.
I'm going to start a business.
I'm going to do this.
And then, next thing you know, the rest is history.
So, because eventually we do have to get to a point where our youth believe that their dreams can become a reality, getting married, having kids, putting them in schools, if public or private.
Buying a house, traveling the world, enjoying the small things in life.
And I'm not talking about being a millionaire or a billionaire and any of that stuff.
Just being able to live a good life where you feel you're bringing value and experience what it's like to have a child that calls you mommy, that calls you daddy.
There's something very special about the juice of life.
And naturally for me, I am always optimistic about the future.
Guy asked me a question.
He says, Did you really tear your ACL?
I said, Yeah.
Why are you walking, running, and not having the crutches and not complaining about it?
I said, My entire life, I've been telling people to stop bitching and making excuses and feel sorry for yourself.
I'm not gonna start feeling sorry for myself right now.
Indeed.
It is what it is.
I gotta go out there and figure it out.
And we got the surgery scheduled and I gotta go get it done.
And the right doctors are out there.
There's so much advancement and everything that's going on.
But at the end of the day, if you join the community of being a victim, And feeling sorry for yourself and making excuses, just so you know, that is a massive community.
You're gonna make a lot of friends that are gonna agree with you and they're gonna say, Me too, it's unfair, it's all this person's fault and that person's fault and the government and the pa But if you can find that smaller minority community of people that don't wanna make excuses that makes you a little bit uncomfortable, challenge you a little bit, you're kinda like, Man, I feel like I gotta do more.
And if you can hang around that community long enough, then eventually good things can happen.
In your life as well.
Lynn?
One optimistic thing I would add is that obviously the topic of AI is concerning a lot of people today.
We even had that story about the person attacking the AI CEO Altman.
Yeah, Altman.
But the doomerism aspect is all that's going to steal all their jobs.
Whereas the optimistic aspect is that as it makes us way more productive in a lot of things, it kind of reduces the complexity and the cost of multiple services, it frees up labor.
Like you mentioned, the supply and demand mismatch.
Child care.
If there's all this demand for it, there's these low acceptance rates.
Why aren't we bringing on more supply?
And part of it is that as technology frees us up from certain types of work, obviously raising children is a very human type of work to be doing.
It's something we want some of our best people doing it.
And so I think that over time, that's the optimistic side of technology that can reduce a lot of the burdens and allow us to shift more resources to things that are one, hard to automate, two, we wouldn't really want to automate, and three, that we freed ourselves up to put more resources there.
Thank You for the Deep Conversation00:01:06
Yeah, great feedback there.
I'm with you.
And by the way, for those of you guys that want to learn more about Lynn, we have Lynn's latest book here, Broken Money Why Our Financial System Is Failing Us and How We Can Make It Better.
Click on the link below.
Support Lynn's book.
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Lynn, again, thank you for your time.
Thanks for coming out here.
Amazing to get your perspective.
Thank you, everybody.
Tomorrow, we have a podcast going up of Sadhguru.
If you guys know Sadhguru, the guy who gets billions on top of billions of views, who is from South India and very, very interesting guy.
We had a deep conversation together yesterday for a couple hours.