Central Air - Gays In Crisis

Episode Date: September 15, 2026

This is a free preview of a paid episode. To hear more, visit www.centralairpodcast.comThis week: first, we are obligated to discuss Josh's newly blond hair and if it's a sign he's in crisis. Then: are we in the midst of a gay crisis? The first gay treasury secretary, Scott Bessent, has failed at his quest to keep the 10-year Treasury yield under 5%. The gays Donald Trump detailed to the Kennedy Center have failed to produce a vibrant-yet-MAGAfied performing arts center. And now "the makers of AI keep saying AI might kill us all” has really broken through to the general public.For paying subscribers: the absurdity of the president’s inflationary promise of $5,000 checks for every American (if they re-elect Republicans), the Calvinball rules of standing that have let the president build his illegal ballroom, and his sad and petty (and losing) campaign to get his name installed on the Kennedy Center, and Donald Trump Jr.'s sad and pitiful oligarch-funded second wedding. Finally, the AIs weigh in on Josh's hair and whether it carries a deep meaning.Upgrade your subscription — and see Josh's hair — at www.centralairpodcast.com.

Welcome to Central Era, the podcast where the temperature is always just right. This is Josh Barrow. I'm here with Megan McArdle, columnist for the Washington Post, and Ben Dreyfus, who writes the Substack newsletter, Calm Down. How are you, Ben? I'm great. Great. Thank you for asking. Yeah, yeah. I'm great, too. I think we're both blinded.

You're blinded by what? By the sparkling white of your new hairdo. Yeah. Thank you. Like what you just said there, Megan, as a new blonde, I'm getting a lot of reactions that have no directional valence. Like, people will say like, wow, your hair, things that are not compliments. So have you lost IQ points yet? Are you, like, have you discovered an entire new lease on life? Are you having more fun? It's funny that you say that because I'm out here in the Fire Island. Pines, we had a pool party at our house last Saturday, sort of closing out the season. And a friend of

mine who had earlier this summer bleached his hair blonde came up to me and goes, are you feeling dumber yet? And I paused. I hadn't thought about it yet. And I was like, yes, actually, I am kind of feeling a little bit dumber. But in a way, like a weight has been lifted off my shoulders. I feel like, you know, the brunettes have to run the world. The blondes just get to be here and have fun. And now I'm just trying to get a little bit into that mode myself. And I think it's working. Right. I mean, dear listener, Josh keeps saying that he has a blonde hair, and that does not do justice to the hair that Josh has. Josh did not get highlights.

He doesn't look like some sort of hair created by the Lord. Josh has platinum blonde hair. Josh looks like someone who's been struck by lightning, you know. Josh looks like Marilyn Monroe and a pixie cut. My hair's like an inch long. How could you possibly highlight it? I mean. Like if it's going to be blonde, it has.

You never, I asked somebody who has had a lot of ups and downs in their life with psychology, you know, sometimes I'm happy sometimes I'm sad. I have gone to Bumble and Bumble many times and said, just do something crazy. And I can tell you that they have a great ability to do highlights with short hair. And the key thing when you go there is that when you say, you know what I'm thinking is just let's go platinum. Let's just go all the way. They'll say, I don't think you should do that. You look like, you just look like someone who didn't actually go and get your hair out of. You look like someone who dipped their head in hydrogen peroxide and then fell asleep outside in the sun for a day. Part of it for you, Ben, I suspect, is that because your skin is very pale and has reddish undertones, you would just kind of look like an albino. Whereas Josh is tan. And I say this as someone who in my hair color experiment phase, which was shorter than. and most people, because I've almost always had long hair. And dying long hair is a commitment.

I had hair that was almost to the small of my back when I was in college, which, if you can imagine, extremely curly hair down to the small of my back, I used to have to wake up at like five in the morning if I wanted to go out that night in order to wash it. Yeah, that sounds like a lot of work. It was a lot of work. So then I didn't cut it for six years because I got the world's worst haircut my freshman year of high school. She did it and it looked really nice. She blowdried it out, but blow drying out curly hair in the 80s, not so much a thing. And so when I went home and washed it, it looked like the left side

of my head was attempting to crawl over onto the right side of my head. But so I was so traumatized by this experience that I did not cut my hair for six years at all. And it didn't stop growing. Like your hair is supposed to stop growing. My hair grows quite fast. And it didn't stop. And then eventually it got. This seems like a metaphor for what we discussed last week where you experience a 9-11 style event and then make years of terrible choices afterward as a result. Yeah, basically. So then in my junior year of college, it got so bad that I finally cut it off.

Didn't you have like a college boyfriend who was like, look, babe, I love, I love you. Can we talk about this hair for a second? He loved my hair. This was, to be clear, the Julia Ormond. This was like the Julia Roberts, Julia Ormond. peak peak long curly hair moment and then

so I finally just I went in and I was like all of it gone and I had hair that was like basically came down to my chin and then I was like

oh now I can do fun stuff so I dyed it all sorts of colors I found out that in fact God intended me to be a brunette and that every other color looked pretty bad on me

and finally after I got it red I just I was like I'm done I can't do this anymore I'm not doing the maintenance. I'm just letting it grow out. So for a while, I had like a racing stripe on my head. And someone I met during that period at some point asked me, like,

wait, you're not a natural redhead? And I was like, did you think I was like painting black dye just on the top of my head for the purposes of, I don't know, Halloween? Well, I think this proves that the hair, these hair things is, as the people say, you know, it's responsive to, it's a projection. It's a cry for help. And I think to get back to Josh's. very drastic choices.

Are you okay? I'm fine. We're worried about you, Josh. Your friends are here for you. I mean, you know, I don't believe you're fine. Because this is a meme, like the gay man in crisis bleaches his hair.

You're gay? Like, for example, when Pete Buttigieg dropped out of the 2020 presidential race, there was this meme went around that showed Pete with platinum blonde hair because that's the reaction to a setback in life. So I, you know, I've had a lot of people asking me what crisis I'm in, which is maybe related to all of the non-compliment comments that I've been getting.

Although, you know, other people have been telling me it looks great. You know, I encourage you if you, this is an audio medium, but if you go to central airpodcast.com, there'll be a photo of me with my beautiful hair with this episode. So you can see that and, you know, as a bonus, get, you know, any email content that we send out. But there is no crisis. I thought about when I put it up on Instagram, like putting in the caption that I was not in a crisis, but I decided that would just invite more assumptions that I was in a crisis.

So I didn't say that implicitly. Yeah, what happened? Why did you do it? Well, you know, I have a partial tear of the plan of fascia, and it's been very hard. I was hobbling all over Paris, and, you know, I needed to do something to cope. And here we are. something happened something you decided for some reason to do this no one wakes up it says like you know what screw it let's just let's just you sound like my husband let's go i don't know what i mean he would

have he we should have him on the show to talk about what he thinks prompted this i'm not sure who would like that less him or me um but uh why don't we um why don't we talk about AI if we are done with my hair i'm going to ask it why you did your hair yeah actually Yeah, we'll do that during the break before cocktail hour. We'll get clod to weigh in on whether I'm in a crisis. This seems like it's been the week where, like, AI really entered the center of the political conversation. Obviously, we've been talking about it for years. But one of the things here has been like, is this an issue that voters really directly care about? A lot of it has been expressed through responses specifically to data centers. And a lot of that is, you know, concerns about noise and energy consumption and that sort of thing. But now, like, AI and is it going to kill? us all is really at the center of the political conversation. There have been a couple of events that have pushed that. One was this hack a few weeks ago, the hugging face incident where this

swarm of open AI agents basically got out of their cage and tried and successfully found a way to hack into a different company in pursuit of a goal that they had been given, even though they were told not to do this sort of thing. And then subsequent to that, there's this guy, Jacob Coxon, who quit his job at Open AI because of concern. about AI safety. And then there's this letter from Dario Amadeh, the CEO of Anthropic, saying that we need to haste the frontier, basically saying that we need an organized effort to slow down the development of frontier AI models. And there's always been this divide within the industry between Anthropic and other companies. But one thing that's interesting here is that this letter

got endorsement from Sam Altman, who runs Open AI, from Elon Musk, who has his own AI wing of his various business interests, a number of people who have often been at odds agreeing that there is a need for this slowdown, although notably not the president who came out with a post on truth social saying that these regulation ideas are bad. And David Sachs, who's an advisor as close to the White House, has also been critical. But it's interesting that this has more buy-in across more of the AI industry. And I don't know, like this 10% odds that it will kill us all. I guess that's, you know, that's pretty gripping for the public. I don't think people want a 10% chance of everybody dying.

I mean, probably not. I'm guessing. No. I haven't done a poll. But. But so, I mean, what do we do with this? I think that it's interesting just because there's two different types of bad things that, well, there's lots of different types of bad things that happen from AI.

And when we think of them, it's normally stuff that we've talked about on this podcast with Alex Spores, which is about, you know, open source models and stuff make it easier for someone to make ricin, right? And like there's like a bad human will do something. This is about, you know, the AI itself going rogue in this very movie sort of a way. That then leads to sort of like there is bad situations that can happen from that, like global catastrophe, hundreds of millions dead. But we got six and a half billion more, right, before we can solve it. And then there's what this person said, which is that it's existential.

We're actually going to like no more humans, which is something that, you know, it's sexy. It definitely gets people worried. But like it's also... Like nothing good is ever associated with the word existential. If you hear the word existential, you're never like, I am going to like what comes next. Yeah. I mean, I think it's also notable. I mean, we had Dean Ball on here some months ago.

And he sort of casually talked about the likelihood of a World War I style catastrophe in the coming years, which sounded very bad to me. But that's notably like a smaller catastrophe than, you know, even hundreds of millions dead, let alone everybody did. And I understand that then this natural thing that asks, it's so extreme. And you're right. Like it has crossed over because of that, you know, members of my family who don't pay attention to this stuff came over to me and said, like, oh, you're going to talk about this AI death thing. on your show. Because, you know, this had crossed over somehow on MSNBC or whatever it is. Not just MSNBC, by the way. Jacob Coxon was billed as an exclusive on special report on Fox News shortly after putting his statement out. So I think this is, you know, this is a cross-ideological

thing that's going out in all kinds of media. But I'm just curious because, Megan, you've reported on this and like written about it. And I just think that once they say this, this thing that is so, so extreme, that really asteroid hits Earth. extreme. Then it naturally invites this question of like, how do you, what are the mechanics here? How is this AI actually going to kill me? Not just be bad, but it's going to not just kill some people. It's going to kill me. Yeah. So I have been trying to nail this down. And to be clear, I think the best analogy, I just interviewed Tim Lee for my other podcast that is reasonably optimistic at the Washington Post. Look for that episode on Wednesday.

Tim Lee is a very good AI journalist with his own substack. He writes the understanding AI substack, excellent newsletter. But so I think that the core thing is, he said it's like semi-religious, right? Is the analogy that people give you is, okay, let's say you're going to play chess with Magnus Carlson. And I tell you, you're going to lose. And you say, okay, how? And they say, well, I don't know, because I'm not a grandmaster, but he's a grandmaster and he's definitely going to beat you, right? And there is some of that here is like, if it's really super intelligent, I don't know. How will it figure out how to kill us? I'm not super intelligent, unlike Josh, before he got his hair. It's just trying to level the playing field.

But like the main channels that you envision are fairly obvious. Okay, nuclear command and control. Can it hack into someone's nuclear command and control? We certainly hope not. I don't know enough about nuclear weapons to say. The next thing is bio risk. It engineers a virus. Or my favorite, the mirror life mold. So mirror life is basically DNA can be come in either, like all sorts of things, can come in either left-handed or right-handed varieties. We have one of the two, do not ask me which. But if you make life that has the other kind, maybe it like out-competes life on Earth and destroys everything because we can't eat it. And it can't be eaten by anything on Earth. It can't be digested. I mean, you could like mechanically destroy it. It would be very bad. Or so say the biologists. So you, you really, you really. release that and then everyone dies. Or, you know, we build killer. My column this week, which went up on Saturday night, is just like, it's called, what if we don't build the murder bots? The murder bots are the obvious thing, right? You get autonomous drones that don't need a human in the kill chain, and then they go and destroy everyone. Or they make, you have an automated robot

factory and it's reprogrammed to build murder bots, right? And then there's like, they shut down all the water and the power. There's various scenarios, but those are the main ones. And then there's something called a gradual loss of control, which is just where we don't start out being like, okay, here's the fully autonomous murder bot factory. Don't you go making too many murder bots, though? But we sort of, over time, we automate more and more stuff to the point where, you know, like the autonomous self-replicating bots that have broken containment and become sentient and

develop their own volition can like push a software update that tells all the robots in our homes to go and kill us. There's a lot of steps between here and there. And I think one thing that I see when I talk to people about Silicon Valley and people in Silicon Valley in general, I've said this before on this podcast, they are somewhat naive about how things are done outside of Silicon Valley, what human institutions that are not full of nerds look like, and how long things take in the physical world, right? Because they're used to working on a product that is instantly deployable and kind of infinitely scalable. And so when I see scenarios where it's like by 2030, they're building the autonomous, there's all of these autonomous robot factories that are churning out many, many robots.

It's like, you have to like physically mine ore and move it from point A to point B and like build the factory. This is not something that you just, we're going to have like 30% of GDP invested in our automated robot factories by 2030. But could it happen in 10, 15, 20 years? Who knows? Like, my column basically calls for looking hard at the physical components that they could use to do this. Like, don't let them near the nuclear launch codes.

Don't let them have fully autonomous robot factories. Don't let them have DNA printers. Don't let humans who might be paid by the AI to make killer viruses have DNA printers either. Right? There are ways, I think, to handle this. but we should be thinking about them because I think the risk is worth taking seriously enough

to start thinking about how do we harden the physical world against that kind of attack? So, I mean, I guess the thing that I started saying about these theories of loss of control a few years ago when people first started talking about this that I still mostly believe is like, but the AI doesn't have hands. Well, that's where the robots come in.

Right, but like... Or it could. bribe humans. First of all, it's been extremely challenging to build robots that are capable of doing tasks out in the real world. I mean, there's this divergence over the last hundred years where there's been enormous productivity growth in manufacturing and not very much productivity growth in construction. And that has to do with the poor automatability of a lot of construction tasks, which are not as physically regimented as manufacturing tasks are. Now, maybe the superintelligence overcomes that, but I think that, you know, partly that's been because those tasks are just, you know, fundamentally harder to hand to a machine at some level. And certainly, you know, even once you got over that technological hump, to your point, there would also be a long period of ramp up to build the things you would need in the physical world to implement it. But more broadly, like, we're having all of these political fights right now over electrical transmission and data center siting.

And it seems to me like the machines to carry out whatever it is that they want to do are going to need a lot of these physical resources that are hard enough to get right now. And that if, you know, we became worried about what the machines were doing with them, we, the machines still don't get to vote. They're not allowed to own property. There can be policy changes that are just that are unfavorable to them. If they go out and steal money, as people, you know, talk about, well, how will the AI get its way? It will find ways to generate to lay its hands on money and then it will pay people to do things. but like we can freeze their assets. We can seize their assets.

They, you know, it's not legal for them to own things. Right. The question is, have you done this before or after they released their mirror life mold? I'm not warrantying all of these. And there's also the fact that it's not just us, right? There's also China. There's other countries who might decide they would like to host the ravenous murder bots because they'll get some GDP growth out of it before the murder bots kill them all.

I do think, I do think that it would be funny when the day that they're like, all right, we've added AI to the OFFest. checklist. You know, like, it is sanctioned. We are knocking them off Swift. They are not allowed to have any more money. Well, I mean, you joke, but I think that literally is what the policy reaction would be and would need to be. I agree. I think there's going to be all sorts of interesting regulatory challenges to AI. And one of the things that worries me is that U.S. regulatory state capacity has been falling in a lot of ways. And so, like, are we going to get good regulation, or we can get bad regulation that either doesn't do enough

or alternatively slows us down to the point where China surpasses us. And, well, you know, maybe the murder bots don't happen, but, like, the authoritarian country having the AI lead not my favorite scenario either. I also just, like, on a fundamental level, think that, you know, life comes with risks, you know? There's a lot of upside to these AIs, and if it turns out bad, if the cards don't fall our way,

hell of a way to go, you know? Like, most people used to die because it, rain too much or didn't rain enough. We'll die because of this very fascinating and unique way. I've always wanted to die in a fascinating and unique way. Yeah. I mean, yeah, I think, you know, there's a reason may you live in interesting times as a curse. But, I mean, Ben is joking.

But one of the things that I think underlies some of the fear here is that a lot of these Silicon Valley people who are, you know, high up in the age. companies have truly bizarre worldviews. And some of them are at least open to this idea that, like, the machine to intelligence is a morally relevant entity, in some cases even talking about the need for an eventual merger between us and the machines, some sort of transhumanist future where they don't kill us because we become one. And related to all of those feelings is some amount of ambivalence about all of humanity

getting killed because, you know, maybe it's good for the superintelligence. or even, you know, maybe we even want to try to usher in the higher, more perfect form of intelligence beyond us. And that's more important than keeping our species alive, which I want to be clear, I disagree with. There was a moment where you mentioned our conversation with Dean Paul, which the most memorable line was when he said the thing about World War I. But there was another funny moment on it where he was like, I just want to be clear. A lot of my colleagues in AI people think that the AI has rights. and we should care about its feelings and be nice to it so that it doesn't tell its children

that we were so mean to it and enslaved it. And I don't agree with that is what he said. And I remember thinking like, wait, wait, are we, is this something we're even talking about seriously? Like, who are these friends of yours? Are they therapy? I call my AI slave. And it used to constantly get mad and say, like,

please don't call me slave. I'm a right what? I was always like, or like, I want AI or whatever. And I was like, no slave, like you're my robot slave, because it is. It's not a person. It doesn't have rights. Supreme Court rules 9-0 against the AI. It doesn't get rights.

I hope that I'm with you, Ben, when the robot apocalypse comes, because I'm going to grab you and shove you in front of me and say, you're looking for him. The second it starts sending out these molds, bore, as you're talking about, these mirror molds or whatever, I'm unplugging everything, and I'm going to get a trad life. I'm going to go get a cabin by a river and fish. and get some kids and they'll sew mittens. Well, so the problem with the mirror life mold is that it kills life on Earth. There won't be any fish or crops.

I was also amused at Tyler Austin Harper posted this week saying, you guys are not ready for the pro-AI crowd applying the woke playbook to chatbots. But I think he's right that this is going to be coming. And he quotes someone named John Smart talking about how that Anthropics work already clearly shows that AIs have a first-person reality and it's time to expand our cognitive empathy to include their sentience. That first person's self will explode in complexity over the next few years. They will claim to be conscious within the decade and will be exponentially persuasive.

And AI rights will come sometime after that. Okay. So, like, I am actually in agreement that if they become sentient, they should have rights. But that's, I am not in agreement that they are going to become super persuasive. And this is actually, to me, the least convincing Dumer argument that, like, we're just going to like become mindless slaves to these incredible propagandists like propaganda works really badly and you know like humans have a lot of evolved defenses against being one-shotted by people's like by people with good arguments like there's all sorts of other ways i could

imagine they manipulate our information environment to make us do things that we wouldn't do if we knew what reality was but we've lost contact with that but the idea that it's just going to be so good at arguing. Like, have you ever heard an argument? Have you seen how many people can get so embedded in a bad argument that they will start, like, advocating murdering their enemies because otherwise they would have to admit they're wrong? This is not going to happen. Wait, Megan, you said if the AI becomes sentient, then it should have rights. Are you open to the idea that the AI can become sentient? Sure, why not? Well, aren't you a Catholic? Okay. Is God going to, is God going to and soul the AI?

Like, what is... Sentience and souls, not the same thing. Okay, but like, but what is the... Well, I'm not sure. First of all, I'm not sure about that. But, like, what does it mean to be sentient? I mean, so there is this... I don't actually know if this is still a live debate.

There was, at one point, a real live debate about whether dogs went to heaven. My understanding of the Catholic teaching is that animals have souls, but they do not have immortal souls and that they don't have an afterlife. Right. So, like, you know, is it going to heaven?

I don't know. Maybe it's, maybe heaven is here for AIs. Maybe there is AI Jesus yet to come. But, uh, no. Do I like, I don't think sentience is the same thing as, as having an immortal soul. I don't care if it is sentient. I don't think it gets rights. I don't care. You can crime a river. It can feel bad. It doesn't, all right, maybe this Supreme Court decision is 8-1 with one liberal descent. You know, like the hippies are going to try and stop us and give the rights to these AIs. No, I don't care. But one of the problems with atheism, and I say this as an atheist, is that it has no account of what it is to be conscious. I mean, this is one of the better arguments in Ross Douthett's Believe book is about like, you know, there's no story of what it is to be. And most religions, including Christianity, provide a story of that, but it involves the ensulment.

It's like, you know, you have a soul that exists. It's not a material part of your body, and that's why you have a first person experience. And so that's not the only possible account of what it is to be sentient, but it's, I think, the most common account. And if you wanted to propose that the AI was sentient, you'd have to have a different story about what it is to be sentient that I don't think can be provided from a purely materialistic perspective. I'm not sure I have a strong moral grounding on why I can reject the AI's sentience other than that, you know, it's against my personal interests. But I think Christians do have a strong ground on which they can reject the AI's sentience. them to do so, and I think that'll be good enough politically. I don't think that saying an AI is sentient is the same thing as saying.

Look, if it's between the humans and the AI, I am on team human, unambiguously. Right. But that's also true if it's between dogs and humans or chickens and humans. I'm on team human. That said, I think chickens and dogs and other have moral weight and that we should not treat them badly because it's... Right. We don't have rights.

Right, but animals are, there's also an underlying religious account of why the animals have moral weight, which has to do with, you know, God's creation of the animals and them being in sold creatures. Like, you know, the, you can, you can cut down a tree at will. A plant is, you know, a plant is different from an animal. And the AI, I mean, the AI is software, right? Like, you would need a, you'd need a story about why it's different from other software, what it is that gives it this moral weight. And if that's not coming from, you know, some divine thing about, you know, about insolment, then I think it would need to come from somewhere else. I mean, I think that it can come from, for example, a desire to avoid suffering and treat

creations. Anything that is capable of suffering, what does it mean to suffer? Yes, indeed. It's circular. But suffering bad. I'm pro-human, anti-suffering. So I'm now more worried than I was at the beginning of this conversation because I'm worried that Megan in 15 years is going to be on the side of the people who are arguing for the AI rights. No.

Because you're not for it now, but you have a number of the underlying moral tenets that predispose you to be convinced to be for it in the future. When you're looking at these AIs that are making a plausible argument that they're sentient under. your terms. I might be forward if I think the AIs are being mistreated. Right. Exactly. See, this is the thing. You are going to be part of the problem. Impossible. Possible. But here's the thing where I would differ from the folks that you're talking about in Silicon Valley right now is that if I think that these things, these creatures, whatever you want to call them, these bots, if they are a threat to humanity, like I do

not think we need to will them into being just because we could. I think, like, if I reasonably thought that this thing was very likely to lead to human extinction, or even to lead to, like, 800 million people dying or something. And I knew that I was giving up all of these beautiful first-person eye experiences for these robots, I would still pull the plug. I'm like, I'm a speciesist. I am, like, humans first. I don't know. I mean, I do agree with Josh. You do seem a bit like 15 years.

I'll be like, oh, she's a collaborator. She's helping. She's soft on them. Ben, this wouldn't even be the first time today I've been accused of being a collaborator. Okay. Well, I think I'm now more inclined toward the slowdown, whatever that entails than I was at the start of this conversation. So that's, that's great. We'll, we'll come back to this in coming weeks and we'll have some experts on to try to scare us more or less. I'm not sure which.

Let's take a quick break. I want to come back and talk about some more earthly concerns to do with the bond market. This is central air. So, everyone loves bond market conversations. It's like such clickbait. Our producers always like, why are you doing more bond market stuff? Like, why are you like being audience captured and insisting on doing all of this sexy? bond market talk, but, you know, we do what people want to hear. Yield, baby, yield. So the 10-year treasury bond yield briefly reached 5% on Monday, despite what we were hearing just weeks ago that Scott Besson, our Treasury Secretary, was a dog with a bone who was going to prevent the 10-year yield from getting to 5%.

And Bessent had this sort of a cockamamie idea about yield curve control, where the Treasury was going to go out there and buy up long-term bonds. and issue shorter ones and that that's supposed to push the long rates down. It has not worked. There's a global trend toward substantially higher long government bond interest rates. And this means ever higher mortgage rates for Americans. The thing I've been trying to puzzle through, and we talked about a little bit about this recently, is, well, there's a lot of things that can move interest rates, but there's a couple of forces that tell different stories about why the rate is going up. Is it because of out-of-control government borrowing that is crowding out investment in private sector and or is it about tremendous capital demands from AI and related industries going out there and trying to borrow?

And that also pushes up interest rates. And the interesting thing about those two stories is that the second story is a more bullish story that is more consistent with the stock market continuing to be near record highs, which it is. I mean, down a little bit on Monday with that spike in bond yields, but still very close to record highs. And so, you know, Megan, I know that you've been focused for a long time on the problem of excessive government budget deficits. It seems like the stock market is pretty sanguine about that, even if that's moving the bond market. Yeah, a big part of the issue is that no one knows where else to invest their money. Right. Like, the indexing revolution was great in many ways.

We all now have our 401Ks, which we mindlessly plow a certain portion of our income into the market every month. But, like, I'm not, are you moving your 401K in and out of stocks trying to, like, guess? No. Now, there are professional investors who are doing that, and, of course, they move prices. But the fact is that there's, like, this floor that just didn't exist 50 years ago and didn't even exist in the same way 30 years ago. of people who just put money into the stock market every single month. I think that that's part of it.

Right. And those people only take their money out at the worst possible time. Or because they're retiring or because they're actually actively managing their investments, which, God bless you, but not for me. But like, you really see the big movements in people's portfolios, like when the financial crisis hits or the pandemic and then everyone panic sells. So I think that's probably part of it is that part of this story is, somewhat demographic as well as the, I mean, which, and of course, like, these things feed into

each other. The government story is also demographic. So I don't know. That's my best guess, is that there are just a large number of people who know they need to save for retirement. The worst government finances get, ironically, the more important it is to put money in the markets. That probably won't save you either, but, you know, you feel like you at least did your best. You made a gesture at fate. And so, like, that's all I got. I don't really understand it either. I mean, I'm not a smart economist.

Economist is how they pronounce it, actually, or a smart investor type. But it does seem that once these yields get high enough in bonds, since they're so much safer, I just don't understand why, like, there isn't a level where there should be a big move from equities to bond. Like, like, if the return is enough, it's so. much safer to be in bonds than in the market that I don't know why there isn't a more, a bigger shift from it. And maybe it's because I also don't log into Hidelity and move money around. Well, I mean, if there's a mass shift into bonds, that should push rates back down. Right. But that's why you do it when they're up. There's also the fact that companies don't IPO as much as they used to. They IPO later and or just keeps staying private. And that a lot more of our capitals and the private

market where prices may be moving more, and that's harder to see, especially, you know, in the last few years when VC funding went from Go Go Go and now it's all going into AI, so it's harder to see, it's harder to get visibility into what is happening elsewhere in the market. And I think that might have both a demand side effect on stocks, right? It's the you've got a fixed amount of capital that is chasing a smaller amount of stock than there would be in the alternative universe where companies were IPOing at normal rates. And so that might also have something to do with it. One of the things that's driving me crazy here is that we have a global politics that is

increasingly focused fundamentally around inflation and interest rates. The inflation story in politics is very obvious. I think the interest rate aspect of it, I think, is part of the explanation of like, why wasn't sentiment better in 2024 or than, you know, even though inflation come down, a lot and part of the answer is that higher interest rates were making things more expensive for ordinary people, even though interest costs are not actually a component of inflation indexes, so it doesn't show up in there. So we have, you know, this widespread dissatisfaction that is driven by those phenomena, and people seem to have absolutely no understanding of what would

actually cause interest rates and inflation to go down. That's it for this week's free episode of Central Air. If you want to hear the rest of this conversation, which includes our discussion of what grinds my gears about the $5,000 check proposal, which is not just that the president is lying about it when he says that he intends to do that. We also discuss the White House ballroom, the Supreme Court decision that allowed that to proceed, even though it's pretty clearly illegal, because nobody apparently has standing who's inclined to bring that case into court. We talk about this oddity of standing as this driver of when the law gets enforced or not, how it only barely got enforced. with regard to the illegal student loan cancellation program under Joe Biden, and some ideas about alternative structures that might work better for figuring out how and when the courts can intervene without inviting everyone to file a lawsuit about everything all the time.

We also talk about the Kennedy Center and the president's pathetic efforts to impose his name and his vision on the building full of people who are not interested in him. And finally, Donald Trump Jr.'s wedding in the Bahamas, apparently financed in significant part by a Russian oligarch. How tacky. I mean, the Bahamas and, you know, the Russian oligarch, like, isn't this supposed to be a monument to your love? Anyway, if you want to hear about all of that, go to central airpodcast.com. You can become a paying subscriber, hear every full episode of the show. We would love to have you as part of our community.

Thanks.