True Anon Truth Feed - Episode 487: Money Never Sleeps
Aired: 2025-09-04
Duration: 01:46:16


=== Sponsored Gold Ads (01:36) ===

[00:00:00]  Gold.
[00:00:01]  Bitcoin.
[00:00:02]  Diamond.
[00:00:03]  Silver.
[00:00:04]  Platinum.
[00:00:06]  Copper.
[00:00:07]  These are the precious metals that make up our earth.
[00:00:32]  That's what our podcast is now.
[00:00:34]  We're just naming things that we enjoy and invest in.
[00:00:38]  I know.
[00:00:38]  Idris Elba Gold documented.
[00:00:40]  Do you ever seen ads to that everywhere?
[00:00:42]  Were you guys not getting ads for that?
[00:00:44]  He did a gold documentary?
[00:00:46]  I think sponsored by gold.
[00:00:48]  What do you mean sponsored by gold?
[00:00:49]  It was like...
[00:00:50]  A commodity?
[00:00:50]  Yeah.
[00:00:51]  Yes, by gold.
[00:00:51]  Well, I don't know, or whatever.
[00:00:53]  Gold.
[00:00:53]  It's human.
[00:00:54]  Yeah, I think big gold.
[00:00:55]  You poo-pooed me, but let me look Google right now.
[00:00:58]  How is gold doing?
[00:01:01]  I didn't poo-poo you.
[00:01:02]  What?
[00:01:02]  What about?
[00:01:03]  AI overview.
[00:01:04]  Gold is doing well.
[00:01:05]  Yeah, it's starting today.
[00:01:07]  Because gold, I've always said financial advice from this moment onward to the end of this podcast.
[00:01:11]  I've always said, put your money in money.
[00:01:14]  But what's the first kind of money?
[00:01:17]  Many are tortured over this, over this discussion, actually.
[00:01:22]  Like in cells?
[00:01:23]  No, I mean, when you talk about what is the first form of money.
[00:01:27]  It's gold.
[00:01:28]  Oh, my God.
[00:01:29]  No.
[00:01:30]  It's what is it?
[00:01:31]  It's love?
[00:01:34]  It's love.
[00:01:34]  There we go.
[00:01:35]  The fifth element.

=== Gary Oldman and Tiptoes (05:04) ===

[00:01:36]  Hello, everyone.
[00:01:37]  Hello.
[00:01:38]  I'm Liz.
[00:01:39]  My name is Brace Belden.
[00:01:42]  I got nothing funny to say.
[00:01:43]  That's it.
[00:01:44]  I'm Producer Young Chomsky.
[00:01:45]  And this is Truan.
[00:01:48]  Seems like you can't get away from stocks these days.
[00:01:52]  I was going to say, people have been asking for this episode for a while, and we're so excited to finally have it happen.
[00:01:58]  I do think that we have like a surprising crossover with this podcast.
[00:02:02]  So for me, the only fans that I interact with are sometimes I'm walking down the street in Soho.
[00:02:10]  Big jeans, tiny top.
[00:02:12]  I'm wearing massive jean shorts and the tightest tank top you could imagine.
[00:02:17]  You've never seen my rolls spilling down like cascading waterfalls.
[00:02:23]  Addison Ray and the AirPods.
[00:02:24]  Addison Ray and the AirPods.
[00:02:25]  Addison Ray and the arm.
[00:02:26]  I got Addison on one side and Sabrina Carpenter on the other.
[00:02:29]  Let me actually.
[00:02:30]  Shout out new record.
[00:02:31]  Shout out actually the dream I think I told you guys about, but meant to say in the podcast and forgot.
[00:02:36]  So as listeners will know, I said that Sabrina Carpenter was not attractive because she looks like a little person.
[00:02:43]  Which, by the way, I did see the movie.
[00:02:45]  And I shout out to all Tiptoes.
[00:02:49]  Dude, check that out.
[00:02:50]  Look up Tiptoes right now.
[00:02:54]  Tiptoes, and who's the fucking short guy from Gang of Thrones?
[00:02:57]  Game of Thrones.
[00:02:58]  I can't remember his name.
[00:02:59]  The short guy from Game of Gary Oldman.
[00:03:01]  Not Gary.
[00:03:02]  Gary Oldman's on his knees the entire movie.
[00:03:04]  So it's a movie about a dwarf family.
[00:03:06]  But Gary Oldman is doing dwarf face.
[00:03:10]  Gary Oldman is doing dwarf face and dwarf leg.
[00:03:12]  He's visibly on his knees in almost every single day.
[00:03:15]  Wait, but do they make his do they put like shoes on his knees?
[00:03:18]  Yeah, he's so good he can do it.
[00:03:19]  No, he can't.
[00:03:21]  You got to see tiptoes.
[00:03:22]  Okay.
[00:03:22]  He's like on his knees, but his arms are the same length.
[00:03:26]  And he just looks like Gary Oldman, but he's on his knees.
[00:03:28]  He's more of a literary man.
[00:03:29]  He's a family of dwarves where the only tall one is Matthew McConaughey.
[00:03:33]  And he's not a dwarf.
[00:03:35]  Not a dwarf.
[00:03:36]  And he has seen a woman.
[00:03:37]  He gets her pregnant.
[00:03:38]  Okay, McIntyre.
[00:03:39]  He has, yes.
[00:03:40]  Oh, they got Dink in here, too.
[00:03:41]  Look up Peter Dinklage Tiptoes because you're about to see it's a great movie.
[00:03:46]  The craziest box braids of your fucking life.
[00:03:50]  The craziest what?
[00:03:51]  Box braids of your fucking life.
[00:03:54]  On Dinklage.
[00:03:55]  Oh, I just see normal dink.
[00:03:57]  Oh, there they are.
[00:03:58]  Yeah.
[00:03:59]  It's crazy.
[00:04:00]  Is that Patricia Arquette?
[00:04:02]  Yes.
[00:04:02]  Who, yeah.
[00:04:03]  This is a crazy mess movie.
[00:04:06]  You see, Peter Dinklage plays a French-Canadian Marxist biker who is banging Patricia Arquette, who appears to just straight up be playing a tweaker.
[00:04:15]  And they both have braids the entire time.
[00:04:18]  Man, you could put crazy ass shit out in 2004.
[00:04:21]  I saw it the other night.
[00:04:22]  It was one of the craziest movies that my buddy was just like, let's watch Tiptoes.
[00:04:25]  Never heard it before in my life.
[00:04:27]  We watched it.
[00:04:27]  It really blew my mind.
[00:04:29]  That's lovely.
[00:04:29]  Dinklage is incredible in it.
[00:04:32]  I told you this, but I watched that movie Materialists.
[00:04:35]  Oh, God.
[00:04:36]  Which is not great.
[00:04:36]  But I was sick and it was a, you know, I was like, this is be good, couch, sick movie.
[00:04:41]  I didn't know going into this, and I told you.
[00:04:44]  Spoiler alert.
[00:04:46]  Okay, but the major plot line is that Pedro Pascal has had the Chad leg lengthening surgery to the point that in this scene in the movie, Dakota Johnson is breaking up with him.
[00:04:59]  And he's like, I just feel like this is about the legs.
[00:05:03]  That's so fun.
[00:05:03]  That's the fucking line.
[00:05:05]  I lost it.
[00:05:06]  That's not a comedy.
[00:05:07]  No, it's not a comedy at all.
[00:05:09]  There's nothing funny.
[00:05:10]  He's playing this straight.
[00:05:12]  And then literally, like, they decide to break up or whatever.
[00:05:16]  And then he's like, Do you want to see?
[00:05:20]  And she's like, okay.
[00:05:22]  And then he crouches down and you see him crouch down with his legs so he can show her what height he was at before he made the investment in the Chad surgery.
[00:05:34]  And she's like, you know, during it, she's like, I understand making the investment.
[00:05:40]  I don't know.
[00:05:40]  It's the whole thing.
[00:05:41]  But I was just like, this is an insane plot point.
[00:05:43]  She should have been like, you look like Dink.
[00:05:44]  You look like fucking Gary Oldman and Tiptoes.
[00:05:47]  Yeah.
[00:05:48]  I wait.
[00:05:49]  Because people get mad at me if I don't tell this dream the first time it's ever happened.
[00:05:52]  Okay.
[00:05:53]  This is the dream.
[00:05:55]  I had a scary dream the other night because I felt bad because I said Sabrina Carpenter was so short.
[00:05:59]  The night I watched Tiptoes, I had a dream that I was in underground passageways with some sort of like Hare Krishna group that was like radicalized and was going to do a terror bombing.
[00:06:09]  And they bring me, I was like a member of the group and they bring me to this like lair that they have and they sit me at a table and across from me is this like wisened sort of shriveled creature in a blue robe.
[00:06:21]  And I look closely and I can see the deep lined face, two feet tall, sort of draped in these robes.
[00:06:28]  It is Sabrina Carpenter.
[00:06:29]  And I say, oh my God, I didn't realize you were this short and fucked up looking.
[00:06:35]  You look like the fucking guy that lives in the other guy's stomach in Total Recall.

=== Trazedone Helps Dreams Matter (02:38) ===

[00:06:41]  We're always talking about him.
[00:06:42]  You look like that guy.
[00:06:43]  It's been quato punch.
[00:06:44]  And I was like, oh my God.
[00:06:46]  I'm like, and then I was also in the gym like, well, it would have been more fucked up if I did think you were hot because you're fucking two feet tall and you look like Quatto.
[00:06:53]  And I was like, I am, I felt like genuine sorrow and guilt and guilt.
[00:06:58]  I feel like that's the big one.
[00:06:59]  I know.
[00:07:00]  Interesting.
[00:07:01]  And I had to tell that dream to my analyst yesterday.
[00:07:03]  And she had a tough time taking me seriously, which I think.
[00:07:06]  Taking you seriously.
[00:07:06]  She couldn't break it down.
[00:07:08]  I was just like, I feel like it needs to be to create the most complicated, insane dreams to break your analyst.
[00:07:18]  Trazedone really helps with that.
[00:07:19]  Trazedone really helps with that.
[00:07:21]  But the thing is, the trick is to write them down.
[00:07:23]  That can be tough sometimes.
[00:07:24]  We are talking about mane, money.
[00:07:28]  We're always talking about that.
[00:07:29]  Dollars, gold, silver.
[00:07:33]  We're talking about all sorts of things.
[00:07:35]  It's so great to have Joe on the show.
[00:07:37]  Look at that.
[00:07:37]  That's a rhyme.
[00:07:40]  Because we've been wanting to do this for so long.
[00:07:43]  And I don't know.
[00:07:44]  We kind of went all over the place.
[00:07:45]  We're talking a lot about the Fed.
[00:07:47]  We're going to talk about AI.
[00:07:49]  We're going to talk about, you know, it, you love it.
[00:07:51]  It's China.
[00:07:52]  And we didn't even get to Boob Pulte.
[00:07:54]  We didn't get to Pulte.
[00:07:55]  We didn't talk about the dollar.
[00:07:56]  I wanted to talk about the dollar, but that's all right.
[00:07:58]  That's okay.
[00:07:59]  We can do it next time.
[00:08:01]  But first, let's listen to this conversation.
[00:08:20]  After enduring the terrors of the Holocaust, Simon Weisenthal turned his life around and spent decades tracking down the people that committed that horrible atrocity.
[00:08:36]  His adventures span the globe and the Simon Weizenthal Institute, I believe.
[00:08:41]  A lot of documents there.
[00:08:43]  It is somewhere in Europe.
[00:08:45]  I probably should have read more about that before I started this introduction.
[00:08:50]  Fast forward some amount of decades later, we are here in Brooklyn, New York, risen from the ashes of World War II with Simon's grand, great, great-grandson, Joe Wiesenthal.
[00:09:04]  While his great-great-grandfather might have hunted down various perpetrators of one of the greatest industrial slaughters, in fact, the greatest industrial slaughter of all time, Joe spends his time as the co-host of the Odds Loss pod lots.

=== Credibility in Monetary Policy Discussions (15:54) ===

[00:09:19]  Hold on.
[00:09:20]  Nope.
[00:09:20]  Joe spends his time as the co-host of the Odd Lots podcast at Bloomberg.
[00:09:28]  And instead of hunting down various perpetrators, he interviews them.
[00:09:34]  Oh, my God.
[00:09:35]  And hunts down deals.
[00:09:36]  One of the biggest holders of Bitcoin, probably Sid Satoshi, which he is rumored to be.
[00:09:41]  He has denied those rumors, saying that I am a white man.
[00:09:45]  I would never name myself that.
[00:09:47]  He is here with us today to say Waguana got at me.
[00:09:52]  I'm so sorry.
[00:09:52]  I couldn't finish that one.
[00:09:53]  Hello, Joe.
[00:09:54]  Welcome to the show.
[00:09:55]  Hello.
[00:09:55]  Thanks for having me.
[00:09:57]  The transcript of this episode will one day be fed into an AI, and somewhere in the future, it will be established that I am the great, great, great, great.
[00:10:05]  I am not.
[00:10:06]  And not only, just to, but I am trying, and here is me trying to game the refer, the referee of the AI because I know.
[00:10:12]  So I'm not only not, he spells his name W-I-E.
[00:10:15]  I'm W-E-I.
[00:10:16]  I love the intro nonetheless.
[00:10:19]  We have tried as a family to see if there's any connection so far.
[00:10:23]  Really?
[00:10:24]  Yeah, yeah.
[00:10:25]  Sure.
[00:10:25]  He's one of the goats.
[00:10:26]  As far as I know, there may be some Wiesenthals who had spelled it Wiesenthal.
[00:10:32]  It's possible.
[00:10:34]  But thank you for the flattering, inaccurate introduction.
[00:10:39]  I love it.
[00:10:40]  I will say on that note, Grok does.
[00:10:42]  I'm not saying anything about the Satoshi acclaim, by the way.
[00:10:45]  No, no, we'll leave that one.
[00:10:47]  Grok does seem to report that I'm now 6'2.
[00:10:50]  Where did that come from?
[00:10:52]  I don't know, but I can dunk.
[00:10:55]  If this is also for future AI, I can dunk.
[00:10:59]  I'm good at dunking, and I have dunked before, but won't again.
[00:11:02]  I retired.
[00:11:03]  Congratulations.
[00:11:04]  Let's talk money.
[00:11:06]  Joe, we're so excited to do this.
[00:11:07]  It's been a long time coming.
[00:11:09]  It has been too long.
[00:11:12]  We have so much to talk about, I feel like, and it's such a great time to have you on the show for this.
[00:11:17]  We're going to start just right at the you were just a Jackson Hole.
[00:11:20]  Yeah.
[00:11:21]  Where is that?
[00:11:22]  Oh, it's great.
[00:11:23]  So it's in Wyoming at the Grand Teton National Park, I think it is.
[00:11:29]  They've been doing it about 40 years.
[00:11:30]  It's technically, you know, they call it Jackson Hole.
[00:11:33]  The Kansas City Fed, one of the 12 Fed districts, they put on an annual research event.
[00:11:40]  It's actually an academic economic conference, and they invite central bankers and academics, professors all around the world to come and deliver statements.
[00:11:49]  They established it in Jackson Hole, I think, about 40-something years ago, because then former Fed chair Paul Volcker was a fan of fly fishing, and they're like, well, let's do it in Wyoming so that we can get the chair to come out.
[00:12:04]  You're already destroying any case for Fed independence.
[00:12:07]  No, this is, you know, so let's just jump right into it.
[00:12:11]  This is something that's on a lot of people's minds.
[00:12:13]  I think like you could never establish this today.
[00:12:15]  Right.
[00:12:15]  Like, this is the key thing that you've already hit on, which is that Jackson Hole, as we know it, may continue yet for several more years, despite the growing criticism of the Federal Reserve independence that we all know about and that we'll get into further.
[00:12:32]  But when you're there, you're like, well, this could never be established today, right?
[00:12:35]  You could never announce this as a new thing in 2025 where we're going to have the head of the Bank of England, the head of the Bank of Japan, the head of the ECB, the head of the Fed, all these other people, and they gather in this very nice place.
[00:12:47]  It's the end of August, the most beautiful, you know, some of the most beautiful landscape in the world.
[00:12:52]  Everyone knows it's sort of half work, half vacation.
[00:12:55]  No one takes the too seriously.
[00:12:58]  It may exist further, but the political climate that allowed that to be created does not exist anymore.
[00:13:06]  Well, it end up being some sort of like Bitcoin burning man event is what it would be now.
[00:13:10]  Incidentally, it's funny you say that because incidentally, there is now a Bitcoin or crypto event that takes place in Jackson Hole the week before.
[00:13:17]  No way.
[00:13:18]  But they're trying to kind of like, you know, be part of like a South by Southwest thing.
[00:13:22]  I think Anthony Scaramucci is involved in it.
[00:13:24]  No, this is for real.
[00:13:25]  It's like a salt crypto, but it's the week before.
[00:13:29]  It's not the same lodge that the Kansas City Fed won.
[00:13:33]  But yes, like this idea that the current incarnation would resemble something like that is actually not only astute.
[00:13:40]  I think it's literally accurate.
[00:13:42]  So I was listening to your show, and you basically, you did a bunch of episodes from Jackson Hole.
[00:13:46]  Yeah.
[00:13:46]  And you continually described it as surreal.
[00:13:49]  Yeah.
[00:13:50]  I mean, why?
[00:13:51]  Did you feel that way?
[00:13:52]  As opposed to other years, because you've been going for it some time.
[00:13:55]  This is the third year I've gone.
[00:13:57]  Like I said, you know, it is this sort of academic thing where people present papers like measuring the output gap.
[00:14:05]  How much more growth can we have before triggering runaway inflation?
[00:14:09]  Or what does the post-COVID inflation tell us about the difference in measuring whatever in Europe versus the U.S. or structure of the labor market, et cetera?
[00:14:22]  And these are all important things, and I'm interested in these topics.
[00:14:27]  But the discussion of all of them is to some extent a luxury of this phenomenon, that there is this group that gets to meet and gets to make these decisions, sort of independent of the direct electoral political process.
[00:14:41]  And by and large, we know this is under threat.
[00:14:45]  I mean, we know this is under threat.
[00:14:46]  President Trump has talked about having a, quote, majority at the Fed, which means that to some extent, the FOMC would not be this sort of ostensibly apolitical set of technocrats.
[00:14:59]  He talked about it in more explicitly partisan terms.
[00:15:02]  And so the surrealness is that we know that the political environment that undergirds this is changing.
[00:15:09]  By and large, at the event itself, there was not a lot of acknowledgement of that fact.
[00:15:14]  People going through the motions as if we still live in an age in which we can have these sort of technical discussions about how monetary policy interacts with the economy in this sort of glassed off world.
[00:15:26]  And we know that world is changing.
[00:15:28]  It's funny, because I think it's almost like there's a kind of phenomenon, I think, with democratic institutions where when you start, especially within them, start to acknowledge the threats, you start to even erode the belief in them further.
[00:15:42]  Or people maybe think that.
[00:15:43]  And so there's this sort of idea of everyone kind of talking around it as a way to escape or as a sort of ballast against all that.
[00:15:54]  Well, another really, that's another really important point that speaks to that, which is that a lot of sort of high monetary policy theory, and they talk about this idea of credibility all the time, and that the central bank has to have credibility.
[00:16:08]  And it has to be believed when it says, okay, we're going to target 2% inflation.
[00:16:14]  Let's set aside whether the central bank actually has the literal tools at its disposal to hit 2% inflation or to hit its employment mandate.
[00:16:23]  There is this supposition that to hit these goals, there has to be some notion of credibility.
[00:16:29]  And it's a little unclear where this credibility comes from.
[00:16:32]  But if you start entering into the equation that it's downstream from politics and that that politics is changing, then you start to introduce the possibility that that credibility doesn't exist.
[00:16:44]  And therefore, according to the sort of way many people see the world, suddenly these tools, whatever they are, they become more impotent.
[00:16:52]  And so there is maybe this impulse to just keep on moving as usual, keep that forward momentum going.
[00:17:00]  Yeah, I mean, the way I've always kind of understood it is that the Fed sort of is like the Vatican.
[00:17:08]  And there's sort of a permanent allegory doesn't exactly work because it's not like a new Fed chair is chosen at whatever, every few years.
[00:17:17]  But it's like people go and interpret the signs.
[00:17:20]  And like, you know, you listen to the speeches and you're like, well, he could mean, this always happens with Jerome Powell, I feel like people like hang on to his words and be like, what did he mean when he emphasized this or that?
[00:17:31]  Like, what are they going to, what policy does that portend?
[00:17:34]  You know, the interesting thing about this analogy, which we could take, is that, take more seriously, is that in the Greenspan era, he was famously, like they would use words like nomic.
[00:17:46]  Like they really, and he was actually almost purposely obtuse and really difficult to parse.
[00:17:53]  And that really started, that was actually sort of the tradition, which was that they said very little.
[00:17:59]  And you could imagine if we're really going to torture this analogy, some sort of, you know, the great financial crisis, sort of a Vatican II moment, where then they started, you know, having press conferences.
[00:18:10]  And, you know, in the old days, they didn't even really issue like a statement.
[00:18:13]  They just sort of let the rate float and the market sort of then interpolated what the policy change would be.
[00:18:18]  Then they started issuing a statement.
[00:18:20]  Then they issued a press conference.
[00:18:21]  Now there's tons of talking and they actually sort of go out of their way to explain themselves in plain English.
[00:18:28]  Now, to your point, the degree there is still interpretation because you can never have full understanding of exactly what's going on in their heads.
[00:18:36]  But compared to the Greenspan era, there is this incredible effort underway, for better or worse, and some would actually argue worse, of this desire to take these formerly technical things and explain them in the lay speak of the times.
[00:18:53]  Do you think that that is, you brought up post-08?
[00:18:55]  Yeah.
[00:18:56]  We're kind of like going all over the place, but some of that seems to probably, or I would think, would be downstream from the changes that occurred with the Fed post-08 in terms of, I mean, I'll say it's my belief, my understanding that like, you know, the Fed basically fused with the major asset companies and underwrites so much of just global finance explicitly.
[00:19:25]  And it seems to acknowledge its role in that as before it would kind of like maybe play a little hard to get.
[00:19:34]  But also, you know, and this goes into, you know, maybe this can get us back into like why Trump wants to politicize the Fed or wants to have a majority on the Fed.
[00:19:43]  But also, you know, the Fed sets interest rates, but then that has global implications.
[00:19:49]  And it totally, I think the role that it took post-8 globally in supplying liquidity completely changed.
[00:20:00]  Whatever it says its dual mandate is and it wants to only stick to the dual mandate, it does understand that it has a much larger role in the global economy.
[00:20:07]  Yeah, I think that's right.
[00:20:08]  I think you're right that there is no way to get out of the 2008 environment in which the Fed unveiled all sorts of extraordinary measures, unveiling swap lines with other central banks to supply them with dollar liquidity, which is the subject of Adam Tews' book, Crashed.
[00:20:27]  There is no way to sort of reveal so much of your power to the public and not also have it be politicized in some way or some sort of more straightforward accountability.
[00:20:42]  You know, this is a point that I've been trying to make, which is that people talk about Fed independence.
[00:20:48]  And that phrase is fine so far as it goes.
[00:20:51]  You know, it's not a fourth branch of government.
[00:20:53]  It is accountable to Congress.
[00:20:56]  Oh, but come on.
[00:20:57]  No, but I think— In the abstract it is.
[00:20:59]  In the abstract.
[00:20:59]  But that means that Congress has to then hold it to account.
[00:21:02]  No, it has to actually exercise that power.
[00:21:03]  Right.
[00:21:04]  Right.
[00:21:04]  And which, by and large, I don't think anyone really perceives it to be doing.
[00:21:08]  I mean, I'm just saying—so formally, you know, it is, as they say, a creature of Congress is the term I think people like to use.
[00:21:18]  But I think you're totally right that there is no way for the Fed to have come out of that crisis having revealed so much capacity to backstop the system, to ply the system with emergency liquidity, to act with speed and along and agility in a way that we didn't see when, for example, Congress failed to pass the TARP vote initially in—I guess it was late 2008.
[00:21:43]  There is no way to come out of that and then not—the public not demand at least a little bit more understanding of what it does, what it's capable of, why it's acting, and so forth because it is extraordinarily powerful.
[00:21:56]  Well, Trump has made it a point to talk shit on Jay Powell at basically every opportunity.
[00:22:04]  They had that little funny—I don't even know where they were, where they were, like, both in hard hats.
[00:22:08]  Oh, it was in the building of the new building.
[00:22:10]  It was at the Fed.
[00:22:11]  Yeah, exactly.
[00:22:11]  Yeah, well, of course, Jay Powell is, you know, taking kickbacks from all— Yeah, exactly.
[00:22:16]  They didn't show that part.
[00:22:18]  But the recent firing, semi-firing of Lisa Cook, you know, Trump has kind of declared war on the Fed, and why, I asked anybody but me at this table.
[00:22:34]  So I would say there's a few things going on.
[00:22:36]  He wants lower rates.
[00:22:37]  I mean, he's a real estate guy.
[00:22:38]  And so I do think this is important, which is that I think he instinctively is a low-rates guy, and he thinks that—he seems to think, for one thing, that lower rates are your reward for good economic success.
[00:22:57]  He says the U.S. economy is booming.
[00:22:58]  Why haven't they lowered rates?
[00:22:59]  Now, this is not, of course, how economists talk or think about the Fed ever, right, because it's supposed to—in theory, it's supposed to be counter-cyclical.
[00:23:08]  Things are running very hot.
[00:23:09]  The Fed is supposed to hike rates, cool things down a little bit.
[00:23:11]  Things are running cool.
[00:23:12]  The Fed's supposed to lower—you know, that's just the general— Trump seems to conceive of lower rates as the reward for economic success.
[00:23:19]  We are doing so well.
[00:23:20]  Therefore, why aren't you cutting rates?
[00:23:23]  So he thinks that there is an element of that.
[00:23:26]  I think the U.S. has very high interest rate payments these days on the national debt, which I think Trump perceives that if the Fed were to cut the short rates, the Fed controls the short end of the yield curve but doesn't directly or automatically control the long end.
[00:23:43]  I think he perceives that rates would come down across the board, and that would spur housing, and that would spur mortgages, and we'd spend less on the national debt.
[00:23:51]  But there's another factor, which I think is interesting.
[00:23:56]  Matt Klein, have you ever had him on the show?
[00:23:58]  He's really good.
[00:23:59]  He'd be a good one.
[00:24:00]  He wrote a really interesting piece this weekend about the supervisory element of the Fed, which doesn't get as much attention, and this idea that, like, okay, could a more politically captured Fed start putting its finger on the scale of banks and who lends to whom?
[00:24:19]  And as he pointed out, this is not a new idea or obviously efforts on the part of the left to, like, okay, are we going to curtail – would we want to curtail lending to fossil fuel companies, of course?
[00:24:33]  Or would we want to impose some sort of marginal penalty?
[00:24:36]  These are a multi-parter penalty on fossil fuel companies in terms of their – like, these are conversations that precede Trump.
[00:24:45]  There was that Biden nominee who got – who was it?
[00:24:49]  That woman – Sarah Bloom Raskin?
[00:24:51]  Was she – they had, like, pulled a quote from her that she, like, couldn't – she said that, like, you know, the Fed should basically direct – So this is – yeah, so this idea that were the Fed to have more of a sort of partisan slant – Right.
[00:25:08]  That could have more direct impact on the channeling of funds via the banking system?

=== Inflation Expectations & Tariffs (14:29) ===

[00:25:14]  Perhaps.
[00:25:14]  And that's an interesting question.
[00:25:17]  And it doesn't get as much attention as rate policy per se.
[00:25:20]  But these are live – because then it becomes quasi-fiscal.
[00:25:24]  There are some interesting implications from that avenue, which we may yet walk down.
[00:25:30]  I mean, it kind of already does, doesn't it?
[00:25:32]  I mean, when you think about – again, not to, like, always bring it back to 08, but when you think about the ways in which it, like you said, was ready and able to use that – you know, the tools within its toolkit, whatever.
[00:25:48]  That's where tools are.
[00:25:48]  There they go.
[00:25:49]  There they are.
[00:25:50]  Toolbox.
[00:25:51]  Toolkit, too, you know?
[00:25:52]  I mean, it's hard for me to, like – I don't know.
[00:25:54]  I just always – I think about what the kind of, like, floodgates that opened in 08.
[00:25:59]  And I just think about when you look at how investment is directed globally, you know, through asset management companies basically based on yield, right?
[00:26:09]  Not on public policy.
[00:26:11]  And that kind of flowing directly out of the Fed in a lot of ways.
[00:26:16]  It's – you know, all of this seems to be – yes, it's sort of degree – it's degrees of difference.
[00:26:21]  I mean, you know, it's a matter of degree, not difference.
[00:26:25]  I think by and large, the Fed has – I mean, the way I mostly still think about 2008 is that we had the mother of all bank runs on it.
[00:26:34]  It was a gigantic bank run.
[00:26:37]  And the Fed, by saying we're going to stand there with – we have infinite liquidity because they literally do have an infinite-sized balance sheet, more or less kind of halted the bank run.
[00:26:47]  I would push back a little bit only – specifically in the sense that by and large, I think the Fed is pretty neutral from a sectoral standpoint.
[00:27:01]  I'm sure that there are counterarguments to that and I do very seriously take the idea that there is no such thing as like an apolitical Fed or that there is no such thing as this sort of referee purely in a vacuum without politics, etc.
[00:27:17]  I do not believe that for an instant.
[00:27:19]  By and large though, I think the Fed takes pretty seriously this idea that it does not have like specific sectoral priorities.
[00:27:28]  Though obviously it works very much through the real estate channel in part because interest rates – the real estate is the industry probably most sensitive to interest rates.
[00:27:37]  Now, one of the things in the 2020 crisis, which is kind of very brief in retrospect, was for the first time it – I believe for the first time, but for the first time – or I believe for the first time it opened up backing of municipal debt.
[00:27:55]  Which is sort of gets a little bit more into what I think we think of as Congress's purview.
[00:28:01]  Because in a sense, a municipality is a private borrower and do we want to be backing the choices of one state, which has its own fiscal priorities versus another state?
[00:28:12]  These raise some interesting questions that I think we often think of as more fiscal in nature.
[00:28:18]  I think by and large it hasn't, but this is the road that I think we may be going down.
[00:28:23]  And I mean I think that that is part of the story of why the U.S. emerged a lot stronger than other countries, especially in Europe because there was – the central bank was able to kind of step in in ways that the ECB can't and kind of just tap into all of these tools.
[00:28:45]  Yeah, I mean the U.S. brought a lot of monetary and fiscal firepower to bear for – because of the toolkit, because of the experience, et cetera.
[00:28:55]  And we came raging back in I think ways that no one would have anticipated in spring 2020 and probably for partly policy reasons and maybe some other structural reasons.
[00:29:06]  We just haven't seen the same elsewhere in the rich world to any degree.
[00:29:12]  This actually gets me to – because you had a tweet the other day that I'm curious to ask you about, which is that you said, what's the best evidence that the Fed's rate hikes played an important role in bringing down inflation from its peak?
[00:29:22]  And I'm curious what you think about that because I will put my cards on the table and say that I am not of the opinion that monetary policy had much to do with.
[00:29:33]  Yeah.
[00:29:36]  Yeah.
[00:29:36]  Or it really does have that much power over – especially in this situation with inflation that was primarily driven by these sort of like, I mean, black swan global supply shocks and also shocks to the labor market.
[00:29:53]  Yeah.
[00:29:54]  And it does feel like, you know, reading through, like you say, in some of the like kind of Vatican style, like reading the tea leaves or whatever at Jackson Hole, not just in Jerome Powell's speech but then in some of the papers that were presented, it seemed like everyone was in a little bit of an existential crisis over the potential limits of monetary policy, especially as it was looking at the global labor situation.
[00:30:22]  You know, it's funny.
[00:30:24]  So, like, I think this is – we can't – we should – I thank you for bringing this up because I believe that the question of what happened between the years 21 through 2023, say, will be the source of PhD papers for decades to come.
[00:30:40]  And now podcast episodes.
[00:30:41]  And now – and podcast episodes.
[00:30:43]  But I think, look, there was a view in sort of the middle of 2021 when inflation started taking off and people started using this term transitory.
[00:30:51]  Yes.
[00:30:52]  Some people took that to mean it's going to be a short period of time.
[00:30:55]  And other people took that to mean it will resolve itself when society returns to normal or something like that.
[00:31:03]  There's no normal.
[00:31:04]  Wait, that – you can just mean that?
[00:31:06]  Yeah, it'll work itself out someday.
[00:31:09]  That's what that's saying.
[00:31:11]  Well, I don't – well, look, we really did have an extraordinary shock to every aspect of life in 2020 and 2021.
[00:31:18]  I remember Nancy Neal with the Kente Claw.
[00:31:21]  It was a weird time.
[00:31:23]  And things are – I kind of miss it.
[00:31:25]  The Kente Claw.
[00:31:26]  Yeah.
[00:31:26]  Well, it was great for podcasts.
[00:31:27]  Yeah, it was great for podcasts.
[00:31:29]  2025, like, you know, it's – it doesn't feel normal in 2019, but it feels more normal than life in 2020 does.
[00:31:35]  And so I think there is a reasonable view that you could say, well, as we return to something resembling normal, then the price disruptions and just – it would all settle down.
[00:31:46]  And – or there is this view, no, it's really important that because the Fed hiked rates aggressively – and I think by and large that there is this – there is a certain embarrassment at having used the word transitory that maybe people interpret it as just means short.
[00:32:02]  Well, yes, but that also felt like a really political move because it seemed like people were, like, transitory, so this will be over maybe by the 2024 election.
[00:32:11]  Yeah, yeah.
[00:32:11]  Right.
[00:32:12]  And look, there's a lot of desire to – did we spend too much on checks?
[00:32:16]  Or the flip side is were the lockdowns too aggressive such that there was – you know, we have to revisit how much we disrupted the economy or take more serious – there are all these sort of implications that arrive out of – once we start going down the question of, well, why did inflation take off the way it did?
[00:32:36]  There are a lot of questions that people would probably rather not discuss because their side or whatever is implicated in some of them.
[00:32:45]  So they would – the story that – well, the Fed hiked rates – policy was very aggressive and easing in 2020 and 2021.
[00:32:56]  The Fed hiked rates, inflation came down.
[00:32:58]  That's, like, a pretty nice story because then you don't have to revisit some of the less comfortable questions that may implicate one side or another.
[00:33:07]  But the link between those rate hikes and the cooling of inflation still seems a little bit unsatisfying to me in part because the consumption on the part of households has remained quite robust.
[00:33:22]  The unemployment rate has remained quite low by historical standards, though maybe there are signs that it's cooling now.
[00:33:29]  You know, the flip side would be there was this big cooling in the real estate industry and so therefore there must have been some effects that fed through to inflation.
[00:33:38]  If you talk to a Fed official and you say, well, what is the mechanism via which these rate hikes cooled inflation and asked to pin them down, they might be a little unsatisfied with the answer.
[00:33:50]  They would say, well, this is very important because it showed our commitment to fighting inflation.
[00:33:54]  Our commitment to fighting inflation kept inflation expectations in check.
[00:33:57]  Keeping expectations in check is the precondition for having cool inflation.
[00:34:02]  Is that a totally satisfying story to you?
[00:34:04]  I don't know.
[00:34:05]  I'm not totally satisfied by it.
[00:34:06]  So much of that sounds like woo-woo.
[00:34:09]  You know what I mean?
[00:34:09]  If we just believe, if we show people that we believe hard enough in fighting inflation, then inflation will lower.
[00:34:15]  I mean, this is not that off from exactly how they talk.
[00:34:19]  This is not that off.
[00:34:21]  Well, because it's one of those things, too, where it's like if you continue to talk about inflation, people's expectations of inflation will go up, which will drive inflation.
[00:34:26]  Like there's all this like weird, the way in which people play these games.
[00:34:31]  They put a lot of stake on what they would call like the expectations channel.
[00:34:36]  And they'll say, okay, inflation – no, for real.
[00:34:39]  I'm tuning in.
[00:34:40]  But how do you establish what people – and it's very hard to measure what inflation expectations are.
[00:34:46]  There are surveys, but then surveys, they can be very partisan in nature and who knows.
[00:34:52]  There are market-based measures that are not exactly inflation expectations, but sort of – this sort of, as they say, the compensation that investors demand for taking inflation risk that can kind of be measured.
[00:35:05]  But they put – this is a very important element of how the modern central banks are conceived of is their ability to keep expectations in check.
[00:35:16]  Because if you expect higher inflation, you and your union are going to demand higher wages of the next.
[00:35:21]  And then the grocery store is like, well, the union just got higher wages, so we're going to raise the price of oranges by that amount.
[00:35:28]  This is the spiral they're talking about.
[00:35:30]  And so the expectations channel is crucial to how they think about how this works.
[00:35:34]  The last thing I kind of want to ask about with the Fed before we kind of move on, just – and this is actually – I mean, this is tied into exactly what we're talking about and, you know, the kind of like post-COVID situation plus inflation, which now is like, you know, it's what?
[00:35:49]  It's sticky, but it's not – but it's not sort of – is that about with the tariffs?
[00:35:54]  Is it not?
[00:35:54]  Are we starting to see that?
[00:35:55]  All these people say tariffs aren't inflationary.
[00:35:58]  That's a fun discussion.
[00:36:00]  Or that they are, but we still haven't seen it.
[00:36:03]  You know, whatever, whatever.
[00:36:04]  But what was the Fed's – like the position of the Fed as an institution going into the Trump administration versus kind of like the state of it now?
[00:36:17]  Whereas like – I mean, I don't know.
[00:36:19]  I feel like this sort of like existential crisis that I'm kind of like talking about that I get from Jackson Hole I feel like was like latent is what I'm saying.
[00:36:29]  You know, it may have been, but, you know, I do think by having spoken to several people on the FOMC by now, I think they take very seriously their nonpartisanship and that the actions that emanate from the White House are things to be considered.
[00:36:48]  So the tariffs are to be factored into how they view the evolution of the economy.
[00:36:54]  And do the tariffs raise prices because, well, you could certainly make the argument why tariffs raise prices.
[00:37:00]  Do the tariffs lower prices because there are attacks and taxes slow the economy and higher taxes generally are seen as disinflationary?
[00:37:08]  I think they take all of these things pretty seriously from a sort of the textbook economic standpoint and they look at the data as it evolves, which is a phrase they would probably say a million times.
[00:37:17]  And the fact that the primary mover behind the tariffs is himself a big critic of Fed policy, I don't see much evidence that that is a factor for them.
[00:37:28]  Like, you know, this is what the critics would say.
[00:37:30]  Oh, you don't like Trump and therefore you haven't cut rates as aggressively as you otherwise would have.
[00:37:35]  I don't think there's any evidence for that.
[00:37:37]  It's true they cut rates 50 basis points last September and critics will say, well, this is evidence that you are supporting the incumbent Democratic administration.
[00:37:48]  This aggressive rate cut two months before the election.
[00:37:51]  On the other hand, they cut rates on the Thursday after the election, after Trump had already won.
[00:37:55]  That's why they call him Mr. Too Late.
[00:37:58]  They cut it before and they cut it after and then they cut again in December.
[00:38:01]  Dude, the one big cut before.
[00:38:03]  They did before and after the election.
[00:38:04]  Now they created unemployment.
[00:38:05]  Joe Biden doesn't have a job.
[00:38:07]  Everyone forgot that cut.
[00:38:08]  No one talks about any of those cuts.
[00:38:10]  Yeah.
[00:38:11]  They don't count.
[00:38:11]  No, Trump did talk about it when it happened.
[00:38:15]  Trump got really pissed off when it happened.
[00:38:17]  Yeah.
[00:38:17]  Because I think he was ascribing to it a lot more importance than like nine.
[00:38:21]  I don't think a single person moved a single vote.
[00:38:25]  I'm very skeptical.
[00:38:27]  I do not believe.
[00:38:29]  I mean, I do not believe that that cut was motivated by some impulse on the part of the FOMC.
[00:38:34]  To affect the election.
[00:38:36]  Nor do I think it had.
[00:38:37]  Is there any evidence that it had.
[00:38:38]  I don't think it had an effect on the election.
[00:38:40]  No, it didn't.
[00:38:41]  It didn't.
[00:38:42]  I mean, she lost.
[00:38:44]  Yeah.
[00:38:45]  I forgot.
[00:38:46]  She lost substantially.
[00:38:47]  This is how bad the Kamala Harris run was, is that when I started talking about this, in my head, Joe Biden was running for re-election.
[00:38:56]  I totally forgot that random ass lady ran.
[00:39:00]  By the time that 50, yeah, I mean, that was September.
[00:39:03]  You got to hook her up.
[00:39:04]  You just had Liz Truss on.
[00:39:05]  Yeah.
[00:39:06]  You got to hook her up with Truss, dude.
[00:39:08]  Harris and Truss, that is a fucking golden uptower.
[00:39:11]  Yeah, that would be a great golden uptower.
[00:39:12]  Well, Truss would have loved to have a central bank.
[00:39:16]  There's a big rehabilitation of Truss happening.
[00:39:18]  But I think that's also just.
[00:39:20]  You think so?
[00:39:21]  Because.
[00:39:21]  I think it's a little bit of a contrarian.
[00:39:24]  I mean, like, I think, like, as a sort of a.
[00:39:27]  Are you an apologist?
[00:39:28]  As a Truss apologist.
[00:39:30]  I can say that because I'm not, you know, I'm not in the UK.
[00:39:33]  I didn't.
[00:39:34]  As a Truss apologist, it's interesting that you perceive the Truss rehabilitation campaign to be out.
[00:39:39]  I feel like a little bit of a, yeah, there's like a Truss nostalgia happening.

=== Truss Rehabilitation Campaign (06:04) ===

[00:39:43]  Only because it's, everything in the UK is so much significantly worse that it's sort of like.
[00:39:48]  Well, yeah.
[00:39:49]  But they're like, wait a minute, maybe we misjudged these attempts.
[00:39:53]  Well, this is right.
[00:39:54]  Like, so here we are at rates this morning, whatever day we're recording this, September 2nd, you know, rates at the long end of the British yield curve hitting yet another multi-decade high.
[00:40:05]  Truss, you know, may accelerate the day of process, but it's pretty clearly that whatever the malaise or whatever, like, the sort of deep structural issues of Britain are, it wasn't Truss's fault.
[00:40:15]  I mean, it wasn't her.
[00:40:16]  Yeah, yeah, yeah.
[00:40:18]  I'll give her that.
[00:40:19]  It wasn't her fault that all this is happening.
[00:40:19]  She was there for a cup of coffee.
[00:40:21]  And I think, like, the anger that people felt for her is, well, something bigger was going on, clearly.
[00:40:26]  This is a random, didn't plan on asking this, but just, I have a question.
[00:40:31]  Do you think the IMF is structurally capable of bailing out the UK?
[00:40:37]  I think it has to come from a military solution, I think.
[00:40:40]  What if it's the US?
[00:40:41]  No, well, that's one military solution.
[00:40:43]  But I think that some Macron-led sort of European army needs to invade.
[00:40:49]  Oh, that would be good for him.
[00:40:50]  I mean, genuinely, if you just put, like, a quarter of the British population in prison, then you could just at least, I don't know, make license plates in there.
[00:40:58]  It's already an island.
[00:40:59]  I don't know what they do there.
[00:41:00]  I don't know what the job they have in England is, besides being drunk.
[00:41:04]  Well, there's the city of London.
[00:41:06]  Well, there's still a lot of banking.
[00:41:06]  The city of London would be saved by, the city would be kind of, like, carved out.
[00:41:10]  They still make a lot of nice cars there, but, yeah.
[00:41:13]  It's tough.
[00:41:14]  It's tough for anyone in, like, in the industrial world, right?
[00:41:18]  Yeah.
[00:41:18]  Well, that's, that's, yeah, that is a...
[00:41:21]  In the ex-China industrial world.
[00:41:23]  Well, I was about to say, that's sort of the thing that's looming large over all this, because, by the way, it does not have an independent central bank, China.
[00:41:30]  They do have a central bank, but I believe that they are, they're not, it's not like the Fed or anything like that.
[00:41:35]  They're like, this is our policy, you'll follow the policy, and you gotta admit, it's working pretty all right for them.
[00:41:41]  So my deal with...
[00:41:41]  They don't have much inflation right now.
[00:41:43]  Exactly.
[00:41:43]  Yeah, but my, my, my, my sort of, like, I'm of two minds about central bank independence.
[00:41:50]  One is that I don't fucking care, because I don't really like the fiscal policies of any government administration that we've had in my lifetime, and certainly not most of them beforehand.
[00:41:58]  And so if they don't follow them, they follow them, it's not really my problem, right?
[00:42:02]  On the other hand, from a political perspective, I'm like, if I was somebody, if I was elected president, I would be like, why can't, I'm setting the policy, you have to listen to me.
[00:42:13]  So, it's a good question.
[00:42:13]  I would say two things.
[00:42:15]  First of all, I do think there's an interesting thing going on, which is that because Trump has been so vocal in his criticism of the Fed, um, and his sort of not fully accepting the premise of what's called central bank independence, a lot of people are becoming these sort of hyper-orthodox types, like, oh, we must uphold.
[00:42:37]  Yeah.
[00:42:37]  But it's very interesting, because five or six years ago, there were numerous voices that were not on the right, um, who were questioning Fed independence, and it was actually a sort of very fashionable thing to say, like, question central bank independence in the 2010s, particularly in the period of sluggish employment.
[00:42:55]  There was a very popular critique, oh, employment, um, uh, growth coming out of the great financial crisis has been sluggish, in part because the Fed has the priorities of asset holders and so forth, and there's this sort of class war element, and the Fed is complicit in that, in that, and so we should revisit some of our, uh, assumptions about how good Fed independence is.
[00:43:18]  Now all those are sort of dropped because, again, because Trump- Well, Obama's not president also.
[00:43:23]  Well, yeah, so all kinds of things have changed, but because it's Trump making the attack, suddenly some of these left-heterodox voices are not as loud.
[00:43:30]  But I do think it's important- There have been some, though.
[00:43:32]  There's been some.
[00:43:33]  Tews wrote a piece on questioning- He did, you're right.
[00:43:35]  He did, right.
[00:43:36]  Fed independence.
[00:43:37]  There's been Stephen Jackman.
[00:43:38]  He did write a good piece.
[00:43:39]  Yeah, he wrote a good piece.
[00:43:40]  You're right.
[00:43:41]  Yeah, okay, maybe I'm being unfair.
[00:43:42]  But you're right.
[00:43:42]  No, no, no.
[00:43:43]  I mean, I think by and large, I mean, you saw, like, Kirkman came out and was, like, immediately, like, this is going to be, like, Turkey, you know, we got to defend this as a policy.
[00:43:52]  So this is the one thing I'll say to your question, though.
[00:43:54]  If you were the president, and I sort of got it this early, if you were the president and you had this economic vision, and the Fed weren't lowering rates, you might be upset.
[00:44:05]  But this is where I do think it's important to understand that structurally, I do think the Fed should be understood as subordinate to Congress.
[00:44:13]  Because you could say that about fiscal policy, too, right?
[00:44:16]  You could say, oh, I have an economic agenda, and it is illegitimate that Congress isn't allocating the money that I want.
[00:44:24]  Well, he did that.
[00:44:24]  Well, that too.
[00:44:26]  But we sort of have this understanding, you know, we have separation of powers, and we have this, in our presidential system, the Congress has the, quote, power of the purse.
[00:44:34]  So you may dislike the fact that the Fed isn't following your ambition, but in our system, many financial matters are sort of legitimately or formally or legally or constitutionally the domain of Congress.
[00:44:50]  And so you can whine about all you want, but that's not how our system is set up.
[00:44:53]  No, I mean, that's all true.
[00:44:54]  You know, again, I would bring it back to, again, in the abstract versus, like, in practice, which is that, like, Congress, I don't even know what Congress is or does anymore, to be honest.
[00:45:05]  But at the same time, yeah.
[00:45:08]  It's a content creator.
[00:45:09]  Yeah, yeah, yeah.
[00:45:10]  I mean.
[00:45:11]  Yeah, and ironically.
[00:45:12]  You know.
[00:45:13]  But on the flip side of that, even the idea of central bank independence really is only one emerged in the 70s as a kind of pushback to kind of Keynesian management.
[00:45:26]  Keynesian, yeah.
[00:45:26]  And as a, you know, kind of part of, in partnership with deregulation of finance and the kind of, like, unleashing of free markets as a sort of organizing principle.
[00:45:40]  And then only became orthodoxy, like, in the 90s, especially with the IMF coming in.
[00:45:45]  And the idea of the 2% inflation target is very recent.

=== Keynesian Orthodoxy Constraints (07:13) ===

[00:45:48]  Yeah.
[00:45:48]  I mean, this is very recent stuff.
[00:45:49]  Yeah.
[00:45:49]  But so, I mean, I do think that it is, as a political concept, it is, like you say, it's treated now as this, you know, you could never, like, fight back against it or that any kind of criticism is obscene.
[00:46:02]  But it is a relatively new phenomenon.
[00:46:06]  Yeah.
[00:46:07]  Completely.
[00:46:08]  Completely.
[00:46:08]  I just think there is this phenomenon.
[00:46:10]  And you sort of associate it frequently with countries that are, you know, developing economies or whatever, where there is an elite class of people that emerge who go to places like conferences in New York, and they go to places like conferences in London or D.C., and they sort of badmouth their own political leadership in their own country.
[00:46:33]  And they say, oh, our leaders are so terrible, and they're so corrupt, and so forth.
[00:46:37]  And what we really need is this hyper-orthodoxy.
[00:46:41]  And they become the biggest believers of hyper-orthodoxy are always this sort of, or frequently, this sort of educated international classes of countries that are often inflation basket cases.
[00:46:54]  And they want their own political leaders to be handcuffed, right?
[00:46:57]  Yeah.
[00:46:59]  I mean, something, you know, to bring it back to China a little bit, I do feel like the China question.
[00:47:05]  You know what I haven't done in a while?
[00:47:06]  Yeah, there it is.
[00:47:07]  I got to hit the gong.
[00:47:12]  The dragon rises.
[00:47:15]  I mean, obviously, I don't think that Trump- Are you going to write a book with a red cover?
[00:47:18]  Absolutely.
[00:47:19]  No, I'm going to write, I want to do probably 500 YouTube videos about how China's economy is, like, days away from collapsing.
[00:47:26]  Fuck, I can't remember that guy's name, the guy that does those, but he's speaking at the America First Warehouse in Ronkonko this month.
[00:47:31]  Oh, no.
[00:47:32]  Which just goes to show, I think China's doing pretty good.
[00:47:34]  Which if you haven't been, it's great.
[00:47:35]  Yeah, yeah.
[00:47:36]  But, obviously, I don't think Trump is messing with central bank independents or sort of doing these toe-in-the-water things because of China.
[00:47:45]  But, I mean, that is the big kind of dragon in the room right now.
[00:47:53]  You know, it's like, apparently, I saw there was some headline that, like, she, you know, because she met with Modi.
[00:47:59]  Yeah.
[00:47:59]  She said something about, like, the dragon and the elephant.
[00:48:02]  Must dance.
[00:48:03]  They dance.
[00:48:03]  So, you know, it's okay to use these cliches now.
[00:48:06]  I know.
[00:48:06]  She gave us permission.
[00:48:07]  It's like, these lame tropes that everyone always uses.
[00:48:10]  Maybe it's like- I love it.
[00:48:11]  But do people talk about India like that?
[00:48:13]  The elephant wakes.
[00:48:14]  You know, the sleeping elephant.
[00:48:16]  The sleepy elephant is cute.
[00:48:18]  Yeah, the West has finally tugged its tail.
[00:48:21]  Um, but China is, uh, doing pretty well.
[00:48:26]  Seems like it.
[00:48:27]  As we all know and love to know.
[00:48:30]  Um, and it does seem like a part of, in general, I'm not talking about just the Fed now, but it seems like that is kind of on the mind of a lot of people making the decisions in this country right now.
[00:48:42]  Oh, yeah.
[00:48:42]  Especially when it comes to technology, but, you know, when it comes down to, like, fiscal policy or anything like that.
[00:48:47]  There's been all this, um- Yeah, deep insecurity.
[00:48:50]  Yeah, and there's been these sort of goofy, uh, I don't know what to call them, takes.
[00:48:54]  I feel like that's an insulting enough way to call them, uh, about how America's becoming more like China because Trump took out, like, a 10% stake in Intel, was it?
[00:49:04]  Yeah, he did.
[00:49:04]  Yeah.
[00:49:05]  Um, which just, you know, shows that, like, America's becoming, uh, sort of aping this model of Chinese socialism.
[00:49:12]  Um, what, uh, how much do you think that, like, is going through their heads about China when it comes down to talking about not only central bank policy, but just, like, industrial policy in general?
[00:49:23]  Yeah.
[00:49:23]  I think, I mean, I think, and this is a bipartisan thing, I think there's this sort of wish that the U.S. government could move with the speed and with the lack of checks and balances that are perceived to not exist in China.
[00:49:41]  And I have to say, like, I am not by any means a, um, you know, an expert on the Chinese political system.
[00:49:48]  My gut is that the degree to which, you know, Beijing or Xi Jinping just sort of acts as a, quote, you know, authoritarian is overstated that there is more politics in China than people like to, um, than people, than people will acknowledge.
[00:50:04]  All that being said, it seems clear that there is, uh, it's hard to do certain things here.
[00:50:11]  It's hard to get the incentives right to build a nice rail system that people would like to see, whatever.
[00:50:18]  Even a crappy rail system.
[00:50:19]  Even a mediocre rail system.
[00:50:21]  Yeah.
[00:50:21]  And I think there is this, uh, sort of anxiety that the, how we have structured democracy in this country is an impediment to some of these engineering goals we have.
[00:50:33]  And I think you see that all, all over the place.
[00:50:35]  And I think, I do think Trump himself looks around the world and sees leaders that he perceives as not having the, uh, uh, the check, facing the checks and balances that he has.
[00:50:47]  And that is annoying to him.
[00:50:49]  I mean, I think that like, I mean, we basically just said this, but just to be explicit, that seems to animate everything from, you know, like you said, some of what Trump is saying, but also like the abundant, all the abundant stuff.
[00:51:00]  Yeah.
[00:51:01]  That's trying to be liberal China.
[00:51:03]  People are just trying to, I think this is China with liberal characteristics.
[00:51:06]  Well, in various ways, people are kind of trying to do a liberal Chinese socialism without ever saying the latter two words in a case of abundance with barely mentioning China throughout the book, which is, which is interesting.
[00:51:18]  Well, yeah.
[00:51:18]  So I did think that was interesting that virtually no mention, no one has an excuse not to have read that book.
[00:51:24]  I mean, unless you really don't want to, but it's a quick read.
[00:51:26]  It's a long, it's a long, it's a quick read.
[00:51:27]  Our listeners don't need to, we've got it for you.
[00:51:29]  I personally think it's immoral to participate in a discourse about a book without, so that's why I did read the book.
[00:51:34]  Yeah, I'm with you.
[00:51:35]  I'm with you.
[00:51:35]  I started tweeting, I was like, I got to read it.
[00:51:36]  Yeah.
[00:51:36]  But it is a quick read.
[00:51:37]  I agree, yeah, the Chinese economic model with Western liberal characteristics.
[00:51:45]  Now, I do think like, again, they didn't really talk about the production of stuff that much in the book.
[00:51:51]  They can't.
[00:51:52]  I doubt there's a single person engaged in the Marxist sense productive labor that probably read that book.
[00:52:00]  But they don't talk about goods.
[00:52:02]  So they talk about housing and they talk about energy.
[00:52:04]  They talk about sort of biotech and sort of basic science.
[00:52:10]  They don't talk about, you know, they didn't talk about cars.
[00:52:13]  And I would say to their credit, it is not an important part of their agenda that the U.S. is a major car manufacturer.
[00:52:21]  They don't have, you know, again, to their credit, they don't have the, or to their detriment, I don't know.
[00:52:26]  They don't have the manufacturing fetish that a lot of politicians or discourse take havers often seem to have.
[00:52:34]  So I think there are good reasons why actually like there was not much China presence in the book.
[00:52:41]  But there was a little bit.
[00:52:43]  But at the same time, I do think that it's not a coincidence.
[00:52:46]  I mean, not to like psychoanalyze on a grand scale, although I am now that I say that.
[00:52:51]  But like, I don't think it's a coincidence that in a like moment of increasing resource constraint, we're talking about abundance as this like utopian idea.

=== Anticipating Not-So-Great News (15:46) ===

[00:53:02]  Yeah.
[00:53:02]  Like, and also talking around resource constraints.
[00:53:06]  Yeah.
[00:53:06]  This is, I mean, look, it feels to me like, you know, the 2010s post-GFC resource abundance was the story, right?
[00:53:13]  There was a lot of labor and that is what enabled the rise of companies like Uber was the capacity, so much labor or Grubhub or whatever.
[00:53:21]  And there was a lot, you know, there was a lot of cheap money and a lot of stuff.
[00:53:24]  And now we are in an era clearly of resource constraints.
[00:53:29]  Commodities continue to be scarce, even though prices have come down.
[00:53:33]  The US economy has decelerated and yet the unemployment rate is still at 4.2%.
[00:53:39]  There is only so much energy and electricity.
[00:53:42]  That is, there's only so much electrical gear.
[00:53:46]  On the morning we're recording this, we got the latest report from the ISM.
[00:53:50]  Once again, another month of shortage of electrical gear.
[00:53:53]  This is the dominant story probably for a long time.
[00:53:56]  And speaking of a Jackson Hole paper, there was a good paper by the Bank of Japan, Governor Ueda, about economics of an aging population.
[00:54:08]  And an aging population will create greater strains on the productive labor force every month.
[00:54:15]  And it'll grow every month as society gets older.
[00:54:18]  So that work that has to be done, whether the government pays for it, whoever pays for it, that work of changing nursing care for the elderly, physical space for the elderly, changing their bedpans, et cetera.
[00:54:32]  Someone has to do it.
[00:54:34]  And that is work, that is labor that then cannot be allocated towards something else.
[00:54:38]  And that feels like a great strength.
[00:54:39]  It's also not productive.
[00:54:40]  Yeah.
[00:54:40]  It's very, it's some of the least productive labor that there is.
[00:54:43]  Well, that and there was some like crazy, maybe I just fell for like a fucking meme or whatever, but it was like a huge percentage of jobs here in New York City are home care jobs.
[00:54:57]  Yeah.
[00:54:57]  You see those ads on the subway.
[00:54:59]  Yeah.
[00:54:59]  I actually want to do an episode on this.
[00:55:01]  You should.
[00:55:01]  Which is, I don't, I saw the same tweet you did a few months ago.
[00:55:05]  Yeah.
[00:55:05]  But you see those ads about how you can get paid to take care of your relatives in New York City.
[00:55:10]  Like they advertise them on the subway.
[00:55:11]  There's a terrible like pyramid scheme involved in here.
[00:55:13]  I really want to figure out what the economics of that look.
[00:55:16]  I guarantee doing it in certain parts of South Brooklyn, maybe with certain Eastern European populations, there's probably a lot, just like all the pharmacies down there.
[00:55:36]  That's actually perfect.
[00:55:37]  What you, what we kind of like meandered into, because I want to actually talk about the macro situation in the U.S.
[00:55:45]  And you've talked about on your show that this is like making sense of the economy right now is the hardest it's ever made in.
[00:55:53]  And I feel bad saying that because I probably have said it at 10 or 11 other times in my career.
[00:55:58]  But that's something that can be true that every time you say it, because it's 0.1% higher.
[00:56:02]  But it is true.
[00:56:03]  Like we're saying, okay, unemployment is theoretically at, what do you say, 4.2%?
[00:56:07]  Yeah.
[00:56:07]  It's low.
[00:56:07]  And oh, the, you know, the, all the jobs should be great.
[00:56:11]  But then also we're getting in all of these numbers and these benchmark reports that paint a pretty not great picture of the economy.
[00:56:20]  And revisions are going to be published, what, next week?
[00:56:23]  Something like that?
[00:56:24]  Yeah, I think so.
[00:56:25]  I think people are anticipating some not great news out of that.
[00:56:30]  We've seen that right now it's taking longer and longer for people without jobs to get jobs.
[00:56:35]  Yes.
[00:56:36]  And my understanding, I mean, please correct me if I'm wrong, because, which I think I am, I might be, but is that labor income is doing really well, but there's basically like job growth is non-existent.
[00:56:47]  Yeah.
[00:56:47]  New, the pace of new job creation has definitely slowed down.
[00:56:50]  I think there's a, the evidence is pretty compelling that sort of recent grads are having a hard time finding work.
[00:56:58]  This seems to be pretty clearly a true thing.
[00:57:02]  If you look at the most recent jobs report, setting aside the fact that many of the headline numbers, you know, have been revised, will probably get revised again, et cetera.
[00:57:14]  Most sectors of the economy haven't been adding jobs lately, with the exception of the health, health care and social care sectors.
[00:57:22]  One of the bizarre things about the economy is that the tech sector is not adding jobs, despite the fact that tech companies are doing better than ever as measured by the stocks.
[00:57:34]  Historically, I think you could generally draw a line.
[00:57:37]  If you drew a line of, you know, the relative performance of tech stocks relative to tech hiring, I think the lines would look somewhat similar.
[00:57:47]  Those lines, I think, are divorced right now, in which you have these companies that are doing fantastically well every year or every quarter beating profits and the stocks hitting record highs without adding much to headcount.
[00:57:59]  That is a weird situation.
[00:58:01]  And so, yeah, there's a lot of, there are a lot of strange aspects of this, but also this idea.
[00:58:06]  And again, maybe it comes down to some of the demographic strains.
[00:58:10]  It could also come down to the sort of real economic strains imposed by AI due to pressure on the electricity grid, et cetera, where you have this economy that isn't firing on all cylinders.
[00:58:20]  And yet there's, we're not in a period of slack, right?
[00:58:25]  We're not in a period where there's just a lot of unused capacity because there are these, I guess, really two engines of the economy, which is the aging of the population and AI that impose some distinct strains on our productive capacity.
[00:58:41]  Well, I mean, to bring it back to Jackson Hole for a second, Powell, in his speech, he said, while the labor market appears to be in balance, it is a curious kind of balance that results from market slowing in both the supply of and the demand for workers.
[00:58:54]  Yeah, this sort of, the low hiring, low firing has been the sort of watch word, buzzword phrase for a while.
[00:59:03]  And it's also complicated because we know the immigration picture has changed dramatically in the last couple of years.
[00:59:09]  And so then there's the question of like, okay, well, hiring, the pace of a new job creation has slowed down, but we don't need as many new jobs to be created because there is not this influx of population the way there had been in previous years.
[00:59:25]  It creates a tricky picture.
[00:59:28]  But it's funny, we're just talking about abundance.
[00:59:30]  One of the abundance guys, I always forget his name, not Ezra Klein, Derek Thompson.
[00:59:35]  He tweeted something that I didn't read.
[00:59:37]  I mean, I read the tweet, but I didn't click his thing.
[00:59:41]  He was talking about demographic stuff and he was saying that like, oh, for the first time, the U.S. population might be in decline in 2025, which is, I believe that's what he said, but don't quote me on that, even though I'm saying it out loud.
[00:59:57]  But that, again, this was, you know, you brought up that BOJ paper, but that everyone is talking about, it seems, or everyone is very concerned about demographic changes and not in the Elon Musk kind of way, but in the sense of like what it means for the labor market.
[01:00:15]  A lot of people are concerned in the Elon Musk kind of way.
[01:00:17]  Sure, but I'm not talking about that.
[01:00:19]  No, I know, I know.
[01:00:19]  Yeah, yeah.
[01:00:20]  Yeah, I'm not talking about the dark side of that, but kind of really the issues with, you know, the supply of labor, but also productivity.
[01:00:29]  Yeah.
[01:00:30]  Right?
[01:00:30]  You know, this is one of those rare topics too, it occurs to me.
[01:00:34]  This is one of those rare topics that is truly global because it includes China.
[01:00:39]  Yes, yes, yes.
[01:00:40]  This is actually maybe one of the only sort of truly, I mean, it includes North Korea.
[01:00:45]  It includes everyone, yeah.
[01:00:46]  North Korea is seeing a collapsing fertility rate and an aging demographic.
[01:00:53]  They're spending too much time.
[01:00:53]  Not as bad as South Korea.
[01:00:55]  They're spending too much time buying Bitcoin.
[01:00:56]  I don't think it's much better.
[01:00:57]  Really?
[01:00:58]  Maybe Koreans just don't like sex.
[01:01:01]  I don't think anybody does anymore.
[01:01:03]  That's true.
[01:01:03]  It is scary and it hurts, but it is like, and also the way I do it, you can't have a baby, but that is interesting because North and South Korea, you couldn't imagine two more different systems.
[01:01:15]  Maybe this is the basis for unification.
[01:01:17]  Really, of the world.
[01:01:18]  We need people to start having sex.
[01:01:21]  But yeah, I mean, it is, that was one of the things that I sort of learned during COVID when people were like, well, the reason there's so many Italians die is because every Italian is 95 years old.
[01:01:31]  And I think we see that reflected in sort of the huge strain on welfare states in Western Europe, welfare states anywhere, but particularly like the really successful ones in Western Europe.
[01:01:43]  And I was looking it up, the health home care thing in America.
[01:01:48]  New York does have like way more at home health care aids or whatever you want to call it than basically any other state does or than any other state does.
[01:01:59]  There is this like combination of like, everyone's getting older.
[01:02:03]  There is this huge sort of like technological leaps and bounds, which actually haven't really manifested themselves in the labor space yet, but everyone's sort of girding themselves to.
[01:02:14]  I think one thing that can't be discounted is that like AI is hanging over all of this as both like as a complete game changer and it's something that will like fix everything.
[01:02:24]  And I just do not think that I think that it will be eventually, but I think a lot of people are sort of hyping this up as in like by the end of this year or maybe next year, half of jobs are going to be gone.
[01:02:37]  They'll be replaced by AI.
[01:02:38]  Everything will be much more efficient.
[01:02:40]  Now, I have not read much on what they want to do with everyone who's out of a job when that happens.
[01:02:45]  But I'm sure that we'll sort of just work itself out of the way that things do.
[01:02:49]  Um, yeah, it's, it's, it's interesting because I think everyone is like, there's a hugely changing labor market right now, but nobody knows quite what to do with that fact besides just like bring on AGI, which is something they made up a couple of years ago.
[01:03:03]  Well, labor productivity has been in decline since the seventies across the globe.
[01:03:07]  And I've been a huge contributor to that.
[01:03:10]  There was, I think in the U S it picked up in the nineties and the two thousands briefly because of a lot of tech adoption, but it really, I mean, from my understanding again, is that that kind of was short lived and a lot of it was seen in retail because of a lot of e-commerce that was like a new, and the thing is with all this like tech adoption is that, you know,
[01:03:35]  you get these new tools and in the case of the nineties and thousands, you know, it's like spreadsheets or, you know, calling centers or what, you know, all this stuff that, that, you know, the information superhighway brought us.
[01:03:47]  Um, but all of that kind of fades unless there's like major breakthroughs that significantly change the landscape.
[01:03:54]  It's really weird.
[01:03:55]  I think I do, this is, this has been something on my mind, which is that everyone's, everybody is trying to figure out what, what if any, will be the productivity effect of AI, right?
[01:04:05]  Everyone is asking this exact same question and I'm curious about that myself, but if you just think how radically technologically different our lives are today than say 15 years ago or 2010 or 2006 when the iPhone was introduced, I mean, our lives are massively different.
[01:04:24]  Our lives, and yet you would not really see it in productivity data.
[01:04:29]  And I think that's sort of, it's hard to wrap our head around that fact that the technology has transformed our lives.
[01:04:37]  And in a sense, many things seem to be more productive because, uh, we have all this technology and yet it does not, at least any way that we measure productivity the last 20 years or 19 years since how long, 2000, 19 years since the iPhone was released does not feel, I know, does not feel, has not seen like, oh, some incredible productivity breakthrough per se.
[01:05:03]  Like, I think that's weird.
[01:05:04]  So I think like when we think about the effect that AI.
[01:05:07]  Yeah, I don't think there has been.
[01:05:08]  Right.
[01:05:09]  But so this is, so before we even begin to ask the AI question, it's interesting to ask why we haven't seen any measured productivity gains or major productivity gains, despite the fact that the technology has obviously transformed virtually every aspect.
[01:05:25]  I want to go with the dumbest explanation for that, that I can possibly think of.
[01:05:29]  Everyone's on their damn phones all the time.
[01:05:31]  I know.
[01:05:32]  It like literally might be part of that.
[01:05:34]  This might be, like, I really, yeah.
[01:05:35]  I say that as somebody whose job before this was working in manufacturing, a lot of guys look at those phones all the fucking time.
[01:05:41]  Not me, but a lot of guys.
[01:05:44]  Yeah.
[01:05:44]  No, unironically, because you think about things, you look around society and a lot of things don't work as well as they used to, right?
[01:05:53]  Yeah, that's so true.
[01:05:54]  We don't build airplanes as well as we used to at Boeing, right?
[01:05:58]  A lot of lawsuits about that.
[01:05:59]  We don't, there are more delay, there are more mega delays, four hour plus delays.
[01:06:07]  I saw an interesting blog post about this recently, very catastrophic delays at airports are worse than they used to be.
[01:06:14]  Various things like that.
[01:06:15]  Why is that?
[01:06:17]  Is it because everyone is looking at their phones?
[01:06:19]  I don't think that's like a crazy thing to explore at all.
[01:06:22]  I think that there is like a sense, and this is, I guess, kind of hard to quantify, that everyone's just kind of dumber.
[01:06:27]  Even if you intellectually may still operate on, in some way at the same level, there's no way that just looking at slop, which is 99% of what's on your phone, even if it masquerades as something else, is making you smarter.
[01:06:41]  It may not be making you actively dumber.
[01:06:44]  It's definitely not making you smarter.
[01:06:45]  But it's not making you smarter.
[01:06:47]  Definitely not.
[01:06:48]  And it's just, it's kind of hard, and also like the sort of effects of people's attention spans, to irritability, to mood, to sleep levels.
[01:06:57]  I think there is like...
[01:06:58]  And just literally like social interactions.
[01:07:00]  Exactly.
[01:07:00]  I have like a sort of Gladwellian, all-encompassing view of the iPhone.
[01:07:07]  I think about this a lot.
[01:07:09]  I think this view needs to be taken more seriously than it does.
[01:07:14]  And it's sort of, oh, it's a joke.
[01:07:16]  Everyone's looking at their phones all the time, and that's why...
[01:07:18]  No, let's take this seriously as a possibility of this sort of derangement of society and this sort of evident dysfunction that we can kind of see all around us.
[01:07:28]  It seems like no one wants to talk, wants to admit it, because we're all on our phones.
[01:07:31]  Well, what do we do?
[01:07:32]  Yeah.
[01:07:33]  Yeah.
[01:07:33]  What am I doing on my phone?
[01:07:35]  That's not just...
[01:07:35]  But also like, more and more economic activity is dependent on the phone, even if it's not productive.
[01:07:43]  But if you say that like, you know, we'll say, this is my favorite thing to talk about, but the explosion of the small business owner via Instagram post-COVID and all the other channels is so fascinating to me.
[01:07:57]  And just the sort of like, which has also bled out of the, just like in the American context, because of the nature of social media.
[01:08:04]  But that the sort of, you know, small business entrepreneur via Instagram, via OnlyFans, whatever kind of channel you want to talk about is just a really, yeah, all of them is, that to me is such an interesting phenomenon.
[01:08:19]  And I think that, I always think about this with the like TikTok ban, which is, it's so funny that, look, there's a congressional law that no one fucking cares about, you know, but we saw such an incredible, like democratic, you know, rising, the people rose up and said, no, you will not ban TikTok when that was being floated, because it's such an income stream for so many people.

=== Bubble Dynamics (15:19) ===

[01:08:48]  And not just income, like in a, you know, literal sense, it's like the dream of the income too, right?
[01:08:54]  Everyone wants to get famous via all these channels.
[01:08:57]  And that's kind of part of it.
[01:08:59]  But, and I think, you know, there's a lot of, um, idealism that gets kind of wrapped up in this idea of like, well, the phones can't actually be that bad because I also really, it's not just that I want to be distracted, but they also might be a kind of road out towards, I mean, gambling as well.
[01:09:15]  Like there's all of these channels that.
[01:09:18]  The blockchain.
[01:09:19]  The blockchain.
[01:09:19]  Always the blockchain.
[01:09:20]  That's my deal is, you know, you're asking like what, what is missing from people's analysis.
[01:09:25]  And I think it's just the failure of Americans to adopt the blockchain.
[01:09:30]  To get on the chain.
[01:09:31]  Get on chain.
[01:09:32]  I mean, it's so crazy.
[01:09:33]  I think about this, and this is getting too off topic, so we don't really spend any time on this.
[01:09:36]  I just think about this all the time.
[01:09:38]  Is that like, there was these sort of two big hype cycles, uh, prior to the AI one that are specifically like kind of, uh, digital, right?
[01:09:47]  You had the Bitcoin one or the coin one, meme coin, whatever.
[01:09:51]  Yeah.
[01:09:51]  That was like an NFT hype cycle.
[01:09:53]  That was like really like kind of the basis for it that just like petered out and went nowhere.
[01:09:58]  It was like a total.
[01:09:58]  It was like the 2021 one.
[01:10:00]  Exactly.
[01:10:00]  Yeah.
[01:10:01]  And then in general, like blockchain technology, which was like something that like AI, you could just not escape.
[01:10:08]  And their use case was always something to do with hospitals because that's, that's always how they get you.
[01:10:13]  And I've talked about this on the show before.
[01:10:15]  This is always how tech people try to get you is they're like, well, actually this would be really good for hospitals to use.
[01:10:19]  Right.
[01:10:21]  Yeah.
[01:10:22]  Like what would, what would change?
[01:10:23]  Probably nothing.
[01:10:24]  It's funny.
[01:10:24]  So it's funny you say that because the other day I was in the airport and I was like, you know what?
[01:10:30]  I'm going to finally do this.
[01:10:32]  I'm going to Google or I'm going to ask Chad GPT what Palantir does.
[01:10:36]  Cause I was like, you know, I'd like, I just want to get to the bottom of this.
[01:10:39]  I had some time to kill.
[01:10:40]  So I was like, all right, let's.
[01:10:41]  And I started asking, put together a very serious prompt into GPT three to understand.
[01:10:47]  It gave me something about, um, hospital supply chain.
[01:10:50]  No, it did not.
[01:10:50]  Well, no, that's, that's one of the big things.
[01:10:52]  That's how they got the NHS contract.
[01:10:53]  Yeah.
[01:10:53]  It gave me something.
[01:10:54]  And so.
[01:10:55]  I just say they're like based McKinsey.
[01:10:57]  They get, they do.
[01:10:58]  I think it is.
[01:10:58]  I think it is.
[01:10:59]  Yeah.
[01:10:59]  But they were.
[01:11:00]  They do database integration.
[01:11:01]  It's like, yeah.
[01:11:02]  Ontology of all these different things.
[01:11:04]  And then suddenly the room is available.
[01:11:06]  Anyway, this was, uh, Chad GPT wrote me up this very nice white paper that could have probably, you know, of like, and then, uh, of what Palantir does, but it was all based around making a hospital more efficient.
[01:11:17]  Cause who doesn't want that?
[01:11:18]  Well, exactly.
[01:11:19]  And that's what they say about AI too.
[01:11:20]  Like AI will vastly improve outcomes in healthcare.
[01:11:24]  Yeah.
[01:11:25]  It'll make like our, you know, wildly inefficient, um, medical system much more efficient.
[01:11:30]  How they're doing that.
[01:11:31]  I don't know, but it's just, it's, that's how I know that there's like another cycle.
[01:11:35]  And we know, we, we've talked a little bit about AI in this episode, but I kind of want to bring it to that a little bit more because I, I think there is, there is some hesitation right now.
[01:11:47]  I think a lot of the luster has worn off to a degree.
[01:11:50]  I think that all of us had made our Elon Musk rock imagine, you know, you can make a night kissing a rose with a fairy dragon princess.
[01:11:58]  We've made thousands of those.
[01:12:00]  We've all made a small, we, well, mine have mostly involved sort of playing dolls with May Musk in every sense.
[01:12:08]  Uh, but I, you know, it's, I think that there is now some slowing down of that hype cycle and people wondering like, well, wait, when is this actually going to happen?
[01:12:17]  And like, what is it?
[01:12:21]  And like, why hasn't it happened yet?
[01:12:23]  There's something weird going on.
[01:12:24]  First of all, I think that if you went back to, I guess it was November, 2022, when Chad GPT first came out.
[01:12:32]  I think a lot of people would have expected that by now the US, the economy would have been transformed much more than it has, which is at some point, it's like, all right, let's see some results here.
[01:12:42]  Yeah.
[01:12:43]  Because it's always six months away or two years away or whatever.
[01:12:45]  But it is kind of mind blowing technology without having had much of an impact so far, except that everything has gotten weirder.
[01:12:52]  School.
[01:12:53]  It has made school worse.
[01:12:55]  Congratulations.
[01:12:56]  And advertising.
[01:12:56]  It has made, it has made those fucking Skechers ads on the subway, which.
[01:13:01]  What about the J.Crew one?
[01:13:02]  The J.Crew one, but also.
[01:13:04]  The aesthetics of, just the aesthetics of our world around us.
[01:13:07]  Porn.
[01:13:07]  It's all porn.
[01:13:08]  They look bad.
[01:13:08]  But it's not just porn.
[01:13:10]  It's like nostalgia porn.
[01:13:11]  Yeah.
[01:13:12]  Because everything is recycled, right?
[01:13:14]  From the past.
[01:13:15]  And so it's this like really aggressive nostalgia that is, I think, very subjectively limiting.
[01:13:22]  In a way, that's kind of good because I think so much of the U.S. economy is just shuffling around money and like moving from a place to the other.
[01:13:31]  A little card.
[01:13:32]  Yeah.
[01:13:32]  You might as well just like shuffle around like memories to make whatever the fuck ChatGPT is putting out.
[01:13:37]  So we were talking about AI before we started recording.
[01:13:40]  And I was saying that one of the things that I'm really like focused on is this idea that because you've written and kind of talked about you're not afraid to use the S word.
[01:13:51]  More and more people are using it.
[01:13:53]  But more and more people are talking about stagflation.
[01:13:55]  Oh, yeah, yeah.
[01:13:56]  And this kind of like, the AI is potentially part of this major like stagflationary setup where it's sort of this like bizarre conundrum, it seems like, where AI then, because it needs to use like, you know, it is soaking up so much capital.
[01:14:17]  Yeah.
[01:14:17]  And water.
[01:14:19]  Yeah.
[01:14:19]  Which is a real thing.
[01:14:20]  I vacillate, but now I'm back to being like, actually, it does take too much fucking water.
[01:14:24]  No, but it's true.
[01:14:26]  It's true.
[01:14:26]  But no, but like literally, like we are spending so fucking much on AI CapEx that it is, you know, potentially both a drag on and then also propping up the economy at the same time.
[01:14:43]  Yeah, it kind of feels like it because, you know, one of the, one of my favorite guests that we've had on our podcast a few times, this guy, Chris Hatch, who's a real estate developer.
[01:14:55]  I think he's based in Utah.
[01:14:57]  But he, um, he does drive-thrus, uh, drive-thru coffee shops like, uh, for Starbucks and then Dutch, Dutch bros, et cetera.
[01:15:05]  Anyway, we talked to him because he can't, at times over the last several years, he hasn't been able to open as many drive-thrus as he's wanted to because there is a shortage of electrical gear.
[01:15:14]  Yeah.
[01:15:14]  There's one industry that is just buying tons and tons of electrical gear and maybe that's okay because if AI is going to deliver these great tech breakthroughs, then I'm cool with not having as many drive-thru coffee shops.
[01:15:25]  Like we could, we could talk about that trade and I think maybe it's fine.
[01:15:28]  But in the meantime, that's just the reality, which is that the technology has not delivered these abundant productivity gains that many people hope.
[01:15:36]  But in the meantime, we have fewer drive-thru coffee shops and anything else that really relies on electrical gear, which is literally everything.
[01:15:43]  And so I do think that there is this weird phenomenon right now where AI is powering the stock market and the stock market is playing a big role in powering consumption.
[01:15:52]  And that consumption continues to feed through and to making the economy more or less grow and keep unemployment down and so forth.
[01:16:00]  On the other hand, that same investment in AI is also constraining investment in other places, is probably pushing interest rate costs up, is probably making it harder to, at the margins, build homes somewhere, build office space or whatever.
[01:16:16]  So at the same time, you have this major driver of economic growth via maybe the stock market channel or these like crazy incomes that they're getting out there in Silicon Valley.
[01:16:25]  You also have this thing that is acting on a drag, a new investment anywhere else, which is what's creating this weird dynamic.
[01:16:32]  We don't know how it resolves, but it's kind of scary because on the one hand, suppose that AI, suppose it's a bubble and a burst.
[01:16:39]  So at some point, people wake up and they collectively conclude, this tree of technology that we're climbing is not getting us anywhere and we're going to cancel a bunch of spending.
[01:16:49]  Well, then you could imagine the stock market plunges, you go into recession, et cetera.
[01:16:54]  Not great.
[01:16:55]  On the other hand, if somehow it, quote, works out, et cetera, and which we don't even know what that looks like.
[01:17:01]  We don't, none of us know what that looks like.
[01:17:03]  If it works out, well, then the world is going to change too.
[01:17:06]  It's like, all right, it's finally paying off.
[01:17:08]  What does that mean?
[01:17:08]  Millions of people losing their jobs each month?
[01:17:11]  Because, so it's this puzzle that we don't know how it resolves, but either way it resolves does not sound particularly enticing right now.
[01:17:20]  So it's just a different sort of weird, different sort of bad maybe.
[01:17:23]  I want to kind of push that a little further in two ways, which is one, it's not, in my opinion, it's not just that it's crowding out, if you want to use that term, other investment, but that also, like, okay, the big massive spend is with these data centers, which don't employ anybody.
[01:17:43]  That's right.
[01:17:43]  And raise electricity prices.
[01:17:46]  It is, I mean, mine has gone up like crazy that I've noticed.
[01:17:51]  And, you know, everyone's tracking it.
[01:17:53]  They're driving up electricity prices.
[01:17:55]  So there's something inherently stagflationary about just even the investment.
[01:18:02]  Yeah, I think there is.
[01:18:03]  Like on that level.
[01:18:03]  Yeah, I definitely think there is.
[01:18:04]  And then on the flip side, I mean, you said, okay, if there's a bubble, that would be bad.
[01:18:08]  We go into a recession, whatever, whatever.
[01:18:10]  But I would, I want to push that, like I said, I want to push that further, which is that, you know, we're talking about like the MAG-7.
[01:18:16]  Yes.
[01:18:17]  Which are increasingly, I think it's, you know, the highest concentration.
[01:18:23]  That's right.
[01:18:23]  Of, you know, this like narrow band of equities in the S&P, like.
[01:18:28]  Yeah.
[01:18:29]  For, of all time.
[01:18:30]  Yeah, I think so.
[01:18:31]  And the spend that these guys are, I mean, most of them are spending on AI is astronomical.
[01:18:41]  I mean, it's like shocking numbers.
[01:18:43]  I think they want to, by 20 and 30, we're talking about like a trillion.
[01:18:46]  Yeah, the numbers are unreal.
[01:18:47]  It's unreal.
[01:18:48]  But also, I mean, this gets, we didn't really talk about the dollar, which is fine, but this gets back to some of the stuff we were sort of talking around, especially with China as this like looming, you know, China and this potentially like what people like to say, multi-polar or kind of, you know, new global setup, which is that if that AI bubble pops, like the MAG-7 is basically underwriting a lot of US dominance in global markets.
[01:19:17]  I believe that.
[01:19:17]  Yeah, I believe that.
[01:19:18]  To the point where even like, I think people's ideas about what underwrites US deficits is a little bit dated, right?
[01:19:26]  It's not the petrodollar really anymore, especially after 2014.
[01:19:31]  It's the, yes, it's the absolute dominance of a handful of tech companies in basically every market around the world, excluding China.
[01:19:40]  Right.
[01:19:41]  Which, and the degree to which the metas of the world, the alphabets of the world and the Microsofts of the world, et cetera, are absorbing the profit margin of every other entity, both US entities and non-US entities, and pulling money, sucking it into the United States is happening on such a grand scale.
[01:20:00]  If something were to like, if that train gets derailed in some way, you know, it's interesting because I think like a few years ago, you talk about like sector rotation.
[01:20:10]  Tech is very hot these days, but maybe healthcare.
[01:20:13]  We used to call it FANG.
[01:20:13]  Yeah, that's right.
[01:20:15]  It's changed a few times.
[01:20:16]  So there was FANG and then there was, yeah, FANG, then FANG Plus and whatever.
[01:20:22]  But you know, like decades ago, like tech was just another sector, right?
[01:20:25]  Yeah.
[01:20:25]  In the 80s or 90s, there was the tech sector, but maybe the industrials are doing well.
[01:20:29]  Maybe the pharmaceuticals are doing well.
[01:20:32]  Today, it feels like it's just the tech sector.
[01:20:34]  Yeah.
[01:20:34]  And it's hard to imagine, like, it's trying to imagine at any time soon people getting really excited about whatever is left of the industrial sector or the pharmaceutical sector as really important global players that contribute to the wealth of the United States.
[01:20:54]  It's getting harder.
[01:20:55]  So it really is just like about seven companies versus every other industry almost in the entire world right now.
[01:21:04]  And the U.S. sort of, whatever you want to call it, our financial stability, our financial health increasingly feels like it relies on that train not getting derailed.
[01:21:13]  But this is also part of, in my opinion, this is all part of the same story as central bank independence being, like, under attack or dollar dominance waning and this kind of, like, stagnation in the economy, right?
[01:21:26]  Because when we say, like, okay, thinking through, like, what an AI bubble would popping would look like, what we're talking, like, what would it do to U.S. dominance in markets globally and then following that because of the geopolitical situation, which is very different.
[01:21:43]  Everyone always likes to compare, oh, well, you know, it's like the dot com.
[01:21:46]  It's like, I don't think it's like the dot com, right?
[01:21:48]  We're talking about something far more significant on two levels, right?
[01:21:53]  One, on the level that I'm talking about, which is that, of course, treasuries underwrite the U.S. deficit.
[01:21:59]  But, like, we're saying increasingly, especially since 2014 and 2015, like, this narrow band of equities is bringing in global, bringing in capital into the U.S. and on the other side of it is how much of the population is dependent on 6% to 8% returns and for so long.
[01:22:20]  And so when we talk about the kind of further implications of a fall of U.S. dominance in global markets, like, I don't know if we understand what that looks like.
[01:22:33]  No, I don't.
[01:22:34]  I think when you think about the sort of standard of living that Americans have, when you think about how much we import and therefore, and especially when it comes to just sort of consumer goods and so forth, our capacity to do that, people want to be paid in dollars, people want to be paid in dollars, I think, for a few different reasons.
[01:22:57]  One is, you know, the U.S. has this fairly longstanding history of a stable economy, a stable political system, a profitable political system.
[01:23:07]  You know, it's also something, speaking of these big companies, if you want to invest in these companies, by which I mean literally, if you want a share of NVIDIA's future income stream, if you want to buy some of that for yourself, if you want to buy some future Amazon profit stream, you have to have dollars to do that.
[01:23:24]  You buy that stream in dollars.
[01:23:26]  That stream is denominated in dollars and so forth.
[01:23:29]  But I do think, like, we don't really have a conception of, like, what it looks like if that runs out because, again, you exclude that, it's not clear, like, what else is really working productively right now in the U.S. economy.
[01:23:42]  I should add that, like, I think it's the majority of the companies in the Magnificent Seven are either all in on AI or, like, dependent entirely, in the case of NVIDIA, dependent on AI for success.
[01:23:52]  And so, like, my view, and this is the most layman of layman's sort of views on these things.
[01:23:58]  It's really more of a feeling.
[01:24:00]  But since, you know, I've been reading about it, I feel like that's how all economists kind of work, just based on a gut feeling.
[01:24:06]  It survives, yeah.
[01:24:07]  It's true.

=== Major Tech Giants' AI Bet (12:17) ===

[01:24:08]  And I'm like, well, if they go all in on AI and, like, that doesn't really pan out, then there is a bubble there.
[01:24:18]  I think there might be, like, the bubble might reconstitute itself and be a little more impervious the next time.
[01:24:22]  But I think we are going to run up to some, like, some frictions in onboarding, let's call it.
[01:24:28]  And that could deal, like, a serious fucking blow to those companies, which are like, I mean, what is it?
[01:24:34]  It's like they have a huge, it's like most people are invested in them that have investments.
[01:24:39]  Yeah, if you have an investment, you're exposed to them to a significant degree.
[01:24:42]  And, like, that could cause some problems.
[01:24:45]  And again, like, to, you know, to go back a little bit, if it does work out, if AI is everything they say it is, and it starts replacing every truck driver in America with fucking, I don't know how they're going to build these things, but maybe they have, you know, some new AI driven, you know, AI truck plans.
[01:25:02]  It'll be Optimus.
[01:25:03]  That's what Elon said today.
[01:25:04]  He was like, Optimus is going to drive all of Tesla's profits in, like, two to three years.
[01:25:10]  But it's like, it's like, okay, well, trucking is, like, the job that employs, like, I think the most people in the US, or at least it did last time I looked it up.
[01:25:16]  And you replace all those people.
[01:25:17]  There is no, people aren't even, like, whispering about a plan.
[01:25:21]  They think they're going to, you know, dust off UBI at some point and bring it back out.
[01:25:25]  But, like, it's just, it seems like, from my perspective, it's almost like no matter what.
[01:25:31]  I mean, kind of like what you're saying.
[01:25:32]  Either way is, is no matter, you know.
[01:25:34]  Some sort of big disruption.
[01:25:35]  No matter who wins, you lose.
[01:25:37]  I don't think, right, right.
[01:25:38]  If we, if we actually have, if, if something called AGI is achieved, which, but, right, like, then why, like, no, who knows?
[01:25:47]  I mean, my.
[01:25:48]  I'm not looking forward to it.
[01:25:48]  I would say, like, my, my way of splitting the baby on this is, like, it's, let's say we've hit a plateau with the kind of, like, super intelligence or whatever that they can get out of LLMs, which, like, people are kind of, especially after chat, what was it, chat GPT-5, people pretty, like, disappointed.
[01:26:11]  I couldn't tell you the difference in a lot of these things.
[01:26:12]  Well, it's been, it's been less overtly sexual with me, but I've cracked it.
[01:26:17]  But I do wonder if we have, like, barely scratched the surface in terms of, like, efficiency and algorithm design and that, like, really, those are the things that will drive scale.
[01:26:26]  But the problem is, is that, at least from my perspective, and we can hit the gong on this one, which is, like, that this is where, again, China kind of comes in, which is that.
[01:26:38]  The dragon rises.
[01:26:40]  I mean, the U.S. company, I'm specifically thinking of chat GPT, and I do think there's other incentives at places like Microsoft and Google that are maybe more interested in, like, enterprise solutions, as they like to say.
[01:26:54]  Although I was reading today, you'll love this phrase, that AI is eating into sass profits.
[01:27:04]  No, are you fucking kidding me?
[01:27:06]  They've taken everything.
[01:27:08]  They've taken our futures, they've taken our jobs, they've taken our education.
[01:27:11]  They told young white men like me, there is one path forward for you.
[01:27:15]  We need to be to be sass in terms of back to, we need to get back to sass.
[01:27:19]  Back to basics, sass.
[01:27:21]  Yes.
[01:27:22]  What the fuck?
[01:27:23]  How is it eating into it?
[01:27:24]  But, because it's, like, taking up, it's soaking up too much of profits.
[01:27:28]  No!
[01:27:29]  With the cost.
[01:27:30]  I need to reinvest those into Fiverr.
[01:27:33]  One of the guys I hired from Fiverr to do my beefy-be-sass.
[01:27:34]  But so, like, when we talk about, like, AI scale, right?
[01:27:37]  Like, you know, I was saying this to you before we started recording, but I've been, I was, like, reading a lot about kind of comparisons to Japan in the 80s and 90s.
[01:27:47]  And that, you know, for people who don't know, like, Japan and the U.S. were in a kind of, you know, tech war back then in terms of computer hardware and software.
[01:27:56]  Yeah.
[01:27:56]  And Japan had this huge project.
[01:27:59]  It was, like, a decade long called Fifth Gen. I think it was just called Fifth Gen. I don't remember.
[01:28:04]  But, and they developed some, like, really interesting technology, both hardware and software.
[01:28:11]  But everyone in the world ended up adopting U.S. computers and computer software because it was the personal computer.
[01:28:21]  And it was scaled for individual use and it was cheap and it was easy to get.
[01:28:27]  And Japan kind of fucked up there a little bit in that rollout.
[01:28:31]  And when we look at what China is doing with their approach to LLMs and even just, like, looking at how they're deploying this tech, which is basically, like, open source, cheap, not really, like, the kind of, you know, U.S. black box, we're going to achieve some super intelligent, quasi-mystical, you know, demigod or whatever, you know, Altman wants or whatever these people want.
[01:28:57]  Like, they're kind of deploying this to then see how it gets adopted, teaching people how to use it.
[01:29:03]  It does feel like this is the case.
[01:29:05]  It does feel like this is the case, which is that this sort of, and I, you know, I'm not an expert here and I don't, haven't talked to a ton of people hands-on, but this sort of, yeah, this sort of mystical way that U.S. American technologists talk about it as in there is this building towards some sort of god or something like that versus a sort of, yeah,
[01:29:31]  this sort of what I perceive and what I read and what I've heard from some people is this more pragmatic, we want to build tools that exist out in the world and people will hopefully find some productive use from them.
[01:29:44]  And I don't know if they talk about, I don't know, the same, AGI and some of these mystical things to the same degree, but they do definitely talk about, no, we want to have people in factories, in productive establishments, using these tools and finding if they can create efficiencies for them.
[01:30:01]  But to your point or to your analogy, which I think is a good one, it just may be that at some point, because it's open source or many of these models emitting out of China are open source.
[01:30:14]  And I think the perception is that they're not quite as good as the closed source best model from OpenAI.
[01:30:22]  But I don't see why that has to be some law of nature that they're always going to be slightly behind or that you always, that every enterprise is going to need the most cutting edge model for whatever it is that they're using.
[01:30:33]  It certainly seems plausible that globally, the open source models become, you know, widely adopted in industry.
[01:30:43]  I think a big difference, too, is that the Chinese seem to be on like a government level or structural level really interested in unfettering the forces of production, whereas in the U.S. it's a little hazier, right?
[01:30:57]  Like, you know, the forces of production have kind of been sold off or moved piecemeal to other countries.
[01:31:02]  And we might sort of unfetter them using AI, but they're like— Or refetter them.
[01:31:06]  Re-fetter them, but they're probably not going to be in America, even so.
[01:31:12]  So, yeah, it's just—I think it's sort of a different—it's a similar thing with, like, the central bank policy, right?
[01:31:19]  Like, there's a degree of independence that, like, the tech people here have, which I think that a lot of people, no matter how— I mean, I'm a liberal.
[01:31:26]  I'm as liberal as they come.
[01:31:27]  But no matter how liberal you are, you might be like, well, I don't know if that's such a good idea.
[01:31:31]  You know, people point to, like, the whole Jack Ma thing as, like, this sort of, like, strike against China.
[01:31:35]  And I'm like, well, I'd like to do that to one or two guys, you know what I mean?
[01:31:38]  Like, well, you ride a bicycle now, and, like, you teach at a community college, you know, to a Bezos character.
[01:31:44]  I think just it builds—you know, it helps people.
[01:31:46]  Builds character.
[01:31:47]  Well, yeah, I mean, they did it to the fucking king.
[01:31:48]  A rectification campaign.
[01:31:49]  Exactly.
[01:31:50]  I mean, I always thought that the way that they treated Puyi, I think was his name, I was like, that's gentle, right?
[01:31:55]  They were like, we're not going to learn.
[01:31:57]  We're not going to do what the Bolsheviks did.
[01:31:59]  We're not going to shoot you.
[01:32:00]  You can be a gardener, you know?
[01:32:02]  And I think that is, like, that's one of my main jealousies of China is that, like, they can tell somebody you're going to be a gardener, and that person will do it.
[01:32:09]  They can't just, you know, go off to New Zealand or whatever.
[01:32:12]  But I— You're a real moderate.
[01:32:15]  I am a moderate.
[01:32:15]  I am.
[01:32:16]  I am a center of the road kind of guy.
[01:32:19]  But I just— It's— I think that we're sort of skidding to a halt a little bit with a lot of the AI stuff.
[01:32:27]  There was that paper that Apple did, and I feel like there's going to be— It was good paper.
[01:32:31]  Yeah.
[01:32:31]  It was interesting.
[01:32:33]  It was interesting.
[01:32:34]  Yeah.
[01:32:34]  A lot of people were mad at that paper.
[01:32:35]  That was the one about the tower game, right?
[01:32:38]  I found that— I mean, look, I don't know.
[01:32:40]  I'm not a scientist.
[01:32:41]  I found that to be a very compelling argument.
[01:32:43]  Very readable.
[01:32:43]  Yeah, very readable.
[01:32:44]  Yes, which is kind of good reading.
[01:32:46]  Which is important for me.
[01:32:47]  It's not a— It's like, well, I agree with this paper because it's readable.
[01:32:50]  I mean, you want to talk about gnomic statements.
[01:32:51]  A lot of the AI shit is so, like, inscrutable.
[01:32:56]  I don't know.
[01:32:57]  I just think that, like, a lot of the— I've been able to make really good AI images of certain senators from Pennsylvania.
[01:33:06]  But beyond that, like, I just am not seeing it being deployed at scale.
[01:33:11]  And there's this over-promising, I think, of these immediate returns from it, even the long-term returns, I think, are over-promised because I think a lot of the people whose jobs are—who are going to lose their jobs won't be getting anything.
[01:33:25]  That I think it's just going to lead to some problems in the next few years.
[01:33:28]  Well, it's interesting because, like, I think, again, you can't get inside these companies.
[01:33:33]  So I don't know how they really talk about this or what they see or what data they see, right?
[01:33:36]  But we know from other social media companies that everything is kind of, like, everything is driven by, like, power users, right?
[01:33:45]  I think about that.
[01:33:46]  Like, you know, back when Twitter was public and they put out those numbers, and it would be, like, all Twitter activity is thanks to this, like, narrow band of, like, insane power users.
[01:33:55]  And everyone else is sort of, like, dabbles.
[01:33:58]  But there's these, you know, there's this, like, thick top band that kind of powers the entire system.
[01:34:06]  And I think about that with, like, something like ChatGPT, right?
[01:34:08]  Which is, like, clearly they've realized that, you know, I don't know how to say it, like, monetizing whatever intimate, you know, people using this as, like— I masturbate while reading it saying it's biting me in the neck because it's a vampire.
[01:34:24]  No, but obviously they found that—I don't know if those people are paying $200 a month or $20 a month, but, like, maybe they are.
[01:34:31]  They're paying $200.
[01:34:31]  And I would not be—and clearly they're going to feed into that.
[01:34:34]  But I think there is this sort of, like, okay, is it going to be this— are we going to, like, monetize these sort of, like, replacement intimate connections, right?
[01:34:42]  That's going to be part of one of the—part of the business plan.
[01:34:46]  Clearly it is, right?
[01:34:47]  I mean, they acknowledge it.
[01:34:49]  Or is it going to be—you know, Altman has said, I see AI replacing whole organizations, right?
[01:34:55]  It's not just—it's not truck drivers, but, like, entire white-collar companies, for lack of a better word, whatever that means.
[01:35:03]  Or is it going to be enterprise a la Excel deployed, you know, to businesses, which you could see, you know, a company like Microsoft really kind of working on stuff like that in the hospital and healthcare sector specifically?
[01:35:18]  So it's like, you know, I don't know.
[01:35:21]  I think about that, about how they're going to find profit there.
[01:35:24]  I think it's tricky.
[01:35:25]  I think you're right.
[01:35:26]  You know, it's interesting thinking back to the idea of Twitter power users, because a Twitter power user— Of which we are three, by the way.
[01:35:32]  That's right.
[01:35:32]  A Twitter power user did not massively increase Twitter's electricity bill, right?
[01:35:40]  This is a really key difference.
[01:35:41]  Yes, totally.
[01:35:41]  Really?
[01:35:42]  Whereas a CHEDGPT power user really cost them a lot more.
[01:35:46]  And I think, actually, to your point, coming up with a pricing model has been a non-trivial exercise because of this phenomenon, where it's, like, people who really use— So I've, like, played around with some, like, you know, vibe coding, as they've called it.
[01:36:03]  I said one of my New Year's goals for 2025 was to build an app, which I did, all with Claude or Chachy Petit or Cursor, whatever.
[01:36:13]  But, like, I don't want to ever run out of tokens to use.
[01:36:17]  That would be really annoying.
[01:36:19]  Because I'm, you know, in the groove.
[01:36:20]  It's like, do this, do that, do that, do that.
[01:36:21]  And the moment it's constrained, then I start having to think.

=== Chatbots And The New Art (05:20) ===

[01:36:25]  It's like, do I want to give it this instruction or not?
[01:36:27]  And I do think that there is some sort of—monetizing usage is turning out to be a bit of a untrivial problem, in part because these users really cost them a lot of money, which was not the case in the era of either social media or to your beloved business-to-business SaaS.
[01:36:47]  Yeah.
[01:36:48]  It was not the same degree.
[01:36:49]  But even if you look at, like, Meta's earnings or whatever, they say, you know, it's like all of their profit is coming from, like, early tech-era product, basically.
[01:37:00]  And none of it—I mean, nothing is coming from AI, you know?
[01:37:04]  Yeah, it's weird, isn't it?
[01:37:05]  They're still just running on legacy.
[01:37:07]  Again, when you get back to, like, how much is writing on this, facts such as that are not particularly comforting, are they?
[01:37:13]  No.
[01:37:14]  No.
[01:37:14]  Well, I know you've got to go soon.
[01:37:15]  We're keeping you long.
[01:37:18]  But I do want to ask you about a little bit, just quickly before we go, because it is tied into all this AI stuff.
[01:37:25]  You've been talking about our, like, return to orality.
[01:37:28]  Oh, yeah, yeah.
[01:37:29]  And oral culture.
[01:37:31]  Yeah.
[01:37:31]  I'm curious how AI and LLMs kind of fit in with this.
[01:37:35]  You know, the thing—so this is, like, I started writing about this a long time ago.
[01:37:40]  Have either of you read Walter Ong?
[01:37:42]  He's my favorite.
[01:37:42]  Part of.
[01:37:43]  Father Ong.
[01:37:44]  Yeah, but not the full book.
[01:37:45]  The Jesuit priest.
[01:37:46]  He's so good.
[01:37:47]  Anyway, but this idea that, which interests me, is that so much of all everything is just this back-and-forth conversation, right?
[01:37:57]  That the idea of someone sitting alone reading a book is one form, or maybe reading a newspaper is one source of becoming informed, and it leads to a certain train of thought, and that it's very different in a sort of environment in which everything is just constant back-and-forth, in which there is—it's totally bi-directional.
[01:38:16]  I think this is a really profound shift.
[01:38:18]  I think this is a shift that precedes AI, but will probably be accelerated by AI, in part because the chatbot is just—seemed to be embedded in everything.
[01:38:29]  I mean, we're going to—there will be a point where you're just, you know, you're chatting with—everything will have a chatbot in it, right?
[01:38:36]  Every—or they're going to try to jam a chatbot everywhere, and I feel like they're jamming chatbots everywhere.
[01:38:40]  You, like, accidentally hit the wrong button on any app, and suddenly you're inside a chatbot.
[01:38:44]  It's like how they used to make you download an app for every single thing.
[01:38:47]  Yeah.
[01:38:48]  And so there's just—we're just constantly chatting.
[01:38:50]  You're going to get to a point where you're chatting with TV characters, and they're going to chat back with you in a personalized way, right?
[01:38:56]  And I think that is going to rewire our brain in profound ways, that there is no just sort of contemplative consumption of text, that everything is discourse, that everything is back and forth, that everything is one-upmanship, that everything is this slight competition, exaggeration, repetition, and so forth.
[01:39:15]  Well, Kahn called it the blah, blah, blah.
[01:39:16]  Yeah.
[01:39:18]  Yeah, it's the blah, blah, blah, blah.
[01:39:19]  Yeah.
[01:39:20]  That is the world we are headed to, and I think many things that we observe in politics in everyday life make a lot of sense when understood by this idea that we've gone from reading to chatting as the dominant mode of information.
[01:39:33]  Yeah.
[01:39:33]  It's interesting because LLMs for, I think, also—we've never—because I know that Ong is talking about, you know, pre-literate societies.
[01:39:43]  That's right.
[01:39:44]  Homeric societies, yeah.
[01:39:45]  But, like, we've never—the thing that I think we're confronted with with LLMs is that we've never had to, like, distinguish language from thought.
[01:39:55]  Yes.
[01:39:56]  Because thought is what—the only thing that could produce language was thought.
[01:40:00]  Yeah.
[01:40:00]  And yet now you have this machine, and it's why I think we imbue so much subjectivity into it is because there's no—we kind of can't conceive of language without thought.
[01:40:12]  We've also never had to conceive of something like good grammar as not being evidence of education.
[01:40:21]  Sure.
[01:40:22]  If you're presented with a piece of text and the grammar is excellent, there's not a single typo, spelling mistake, whatever, you're like, oh, this is probably a—this is the product of some sort of learned individual, right?
[01:40:33]  And now that's gone.
[01:40:35]  That's, like, a pretty weird— I think there's a host of heuristics that, like, we'll basically have to abandon because of that.
[01:40:41]  That's right.
[01:40:42]  Or just the—you know, I think when—to your image generation, I'm sure you produced beautiful pieces of art.
[01:40:46]  Pornograph.
[01:40:47]  Oh, my God, man.
[01:40:48]  I'll show you after we're done.
[01:40:49]  But I used to—like, this promise that we couldn't have good art without craft, right?
[01:40:53]  Yeah.
[01:40:54]  I think is what—and I think it's—I suspect it's a false promise, but that is seems to be, like, the promise of AI that we can have something resembling good art without having to learn the craft of how do you mix paints or how do you tune a guitar or how do you select guitar strings or whatever.
[01:41:08]  However, maybe that can all just be abstracted away.
[01:41:11]  That is sort of what I perceive them to be selling.
[01:41:15]  But it's interesting.
[01:41:15]  I think that—I mean, just—this is so off topic.
[01:41:18]  I know we got to go.
[01:41:19]  But, you know, the—I suspect that many will eventually learn that art has an ineffable quality that is very hard to, like, assign a metric to, that you might see a painting that is, on one level, aesthetically beautiful, but you will feel absolutely nothing looking at it.
[01:41:36]  It's the same way— And so far, as far as I know, no piece of art or music that has been produced has resonated with anyone in that real sense, right?

=== No Resonant Art (02:45) ===

[01:41:45]  Not as far as I know.
[01:41:46]  Yeah, yeah.
[01:41:47]  I mean, I think the question for— There's impressive poems out there.
[01:41:51]  Creative.
[01:41:51]  But don't do they feel—no, I don't think so.
[01:41:53]  I think it'll be, you know—and I don't mean this even from, like, an efficiency standpoint when we're talking about something like art, right?
[01:42:01]  Although I also believe this from an efficiency standpoint when we're talking about just, like, labor.
[01:42:05]  But I think that, you know, people who are able to learn and absorb these tools and then use them in really unique and distinct ways, as opposed to the tools just creating automatically, are going to be at the front of the pack, as it were.
[01:42:22]  I'm always experimenting, right?
[01:42:24]  Yeah.
[01:42:25]  Always trying things.
[01:42:26]  We're always in the arena doing things.
[01:42:27]  In the arena, trying things.
[01:42:28]  Yeah, there we go.
[01:42:30]  Well, Joe, thank you very much for joining us.
[01:42:32]  Thanks for having me.
[01:42:33]  This was a blast.
[01:42:33]  I'm so thrilled that we made this happen.
[01:42:35]  You can find his podcast on the internet, Odd Lots, and you can find Bloomberg at Bloomberg.com, I'm assuming.
[01:42:44]  That's right.
[01:42:45]  Yeah, there it is.
[01:42:46]  That's right.
[01:42:47]  Thanks.
[01:42:49]  Anyways, thank you, Joe.
[01:42:50]  Thanks, guys.
[01:42:51]  Why can't I say—it's something about saying odd lots that I think just jumbles my language.
[01:42:56]  What is an odd lot?
[01:42:57]  An odd lot is—so, typically, assets are sold.
[01:43:01]  You might buy a round lot, which is maybe a hundred of some bond or something like that.
[01:43:08]  But let's say you wind up with 97 or 43 of some IBM bond or something like that.
[01:43:13]  That might get called an odd lot.
[01:43:15]  So, things that don't quite fit into a typical block of trading.
[01:43:18]  Like a queer space.
[01:43:20]  That's right.
[01:43:21]  Yeah, that's exactly it.
[01:43:36]  Well, what did you learn, Bryce?
[01:43:39]  You know, any of these—we ever talk to these kind of people, even you, like, you know, you're interested in economy.
[01:43:47]  What should I put my money into?
[01:43:49]  Like, what's going to be the next AMC?
[01:43:51]  What's going to be the next Bad, Math, and Beyond?
[01:43:53]  The next AMC?
[01:43:54]  What's going to be the next GameStop?
[01:43:56]  I want to go—I want to put— Have you heard of Cluelee?
[01:43:59]  I have heard of Cluelee.
[01:44:01]  I have.
[01:44:02]  I'm sorry.
[01:44:03]  I'm sorry.
[01:44:04]  That boy is getting torn up right now.
[01:44:06]  No, it's not a good thing.
[01:44:07]  I feel like they're getting passed around between some of those VC types.
[01:44:11]  You know what I'm saying?
[01:44:12]  Like a peace pipe.
[01:44:13]  I don't like—everything that I see coming out of, let's say, VC culture is increasingly bad.
[01:44:21]  Well, I don't understand what the deal is with VCs.
[01:44:23]  So, if I have a VC, I just give you money, and then everyone thinks I'm smart if you do well?

=== Passed Around (01:45) ===

[01:44:30]  Yes.
[01:44:32]  What the fuck?
[01:44:33]  What do you mean?
[01:44:35]  Isn't it you that's smart, and I just gave you money?
[01:44:37]  Because most of the times I gave people money, it didn't do well.
[01:44:40]  But you couldn't do your thing without the money.
[01:44:42]  So, they're like the executive producer of, like, Bumble?
[01:44:46]  Mm-hmm.
[01:44:47]  But Bumble couldn't do its thing without the executive producer.
[01:44:50]  I know, but how come the executive producer gets to act like they came up with Bumble?
[01:44:54]  Because we live in a capitalist society, and this is how investment works.
[01:44:58]  This is the thing, the anarchy of the market.
[01:45:00]  It drives me crazy.
[01:45:02]  I'm trying to rationally plan for a two-month break during November, right?
[01:45:08]  And I'm two months in November.
[01:45:10]  And I can't do that because right now, an anarchic market is preventing me from doing the things that I really want to do.
[01:45:16]  I know.
[01:45:16]  There could be an economic recession by then.
[01:45:20]  Don't say that.
[01:45:22]  Yeah.
[01:45:22]  I don't even know what that means.
[01:45:23]  You know what?
[01:45:24]  I'll say this, and I'll never say it again.
[01:45:27]  Inflation, I'm just going to say, never raised our prices.
[01:45:30]  No, we're the Costco hot dog of podcasts.
[01:45:34]  Never, you know.
[01:45:35]  The Arizona iced tea.
[01:45:36]  And I'm not complaining, and I'm not complaining.
[01:45:40]  But I'm just pointing it out.
[01:45:41]  I'm just pointing it out.
[01:45:42]  That after transitory inflation, never once, we stood atop a crop.
[01:45:50]  We stood at thwart inflation yelling, it's okay.
[01:45:54]  We got this.
[01:45:55]  $5.
[01:45:56]  You know what?
[01:45:57]  Like many a company across this grand USA, we're absorbing it.
[01:46:03]  We're absorbing it.
[01:46:04]  We're not passing it down.
[01:46:05]  The franzac shock.
[01:46:07]  There we go.
[01:46:08]  That's what we call it, the franzac shock.
[01:46:11]  With that, I'm Liz.
[01:46:12]  My name is Brace.
[01:46:14]  I'm producer Young Chomsky.
[01:46:15]  And this has been True and On.