Factually! with Adam Conover - If the Economy is Good, Why Do We Feel So Bad? with Kyla Scanlon

Episode Date: October 30, 2024

On paper, the economy is doing great—the stock market is strong, unemployment is low, and inflation has dropped significantly. So why does it still feel like everything is awful? Economic commentator Kyla Scanlon coined the term "vibecession" to describe this very disconnect. This week, Adam sits down with Kyla to talk about the vibecession, why the basics of economics can be so hard for most people to understand, and her new book, In This Economy?: How Money & Markets Really Work. Find Kyla's book at factuallypod.com/booksSUPPORT THE SHOW ON PATREON: https://www.patreon.com/adamconoverSEE ADAM ON TOUR: https://www.adamconover.net/tourdates/SUBSCRIBE to and RATE Factually! on:» Apple Podcasts: https://podcasts.apple.com/us/podcast/factually-with-adam-conover/id1463460577» Spotify: https://open.spotify.com/show/0fK8WJw4ffMc2NWydBlDyJAbout Headgum: Headgum is an LA & NY-based podcast network creating premium podcasts with the funniest, most engaging voices in comedy to achieve one goal: Making our audience and ourselves laugh. Listen to our shows at https://www.headgum.com.» SUBSCRIBE to Headgum: https://www.youtube.com/c/HeadGum?sub_confirmation=1» FOLLOW us on Twitter: http://twitter.com/headgum» FOLLOW us on Instagram: https://instagram.com/headgum/» FOLLOW us on TikTok: https://www.tiktok.com/@headgum» Advertise on Factually! via Gumball.fmSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This is a HeadGum Podcast. Hey everybody, listen up. The 2024 election isn't just another political event, it is a turning point for our country's future. There's a plan out there called Project 2025 aiming to drastically reshape our government and potentially limit personal freedoms that we hold dear. Policies affecting your privacy, freedom of expression, and personal rights could be at risk and that is why it is vital to vote like your rights depend on it because they do.

The Freedom From Religion Foundation is a free thought association dedicated to protecting the separation of church and state and ensuring that our government respects the personal freedoms of all citizens. So visit FFRF.org slash vote to learn more about Project 2025, to register to vote and discover how you can take a stand. Don't let others decide your future. Your vote is your power. So use it to protect your rights, paid for by the Freedom From Religion Foundation. I don't know the way. I don't know what to think. I don't know what to say. Yeah, but that's all right.

That's okay. I don't know anything. Hello and welcome to Factually. I'm Adam Conover. Thanks for joining me on the show again. You know, if you ask most Americans what the most important issue is to them this election season, they will tell you it's the economy. But, you know, when it comes to the economy,

it can often be hard to know what we're even talking about, much less to assess whether it's doing well or poorly. You know, there's a lot of factors out there, objective numbers, that tell us the economy is doing pretty good. Unemployment is low, the stock market is doing great, and inflation is way down from its pandemic highs. The Economist just released a cover story about how America's economy is the envy

of the world, believe it or not. But when you ask actual Americans how they feel about the economy, more than half in a recent poll said that they were better off four years ago. So is this disconnect a reflection of politics? Is it something caused by the media? Or is it something else? Does it really reflect an economic reality that is not captured by those numbers?

On top of that, the concepts and technical details that actually guide and structure the economy are just fundamentally fucking confusing. Like what is inflation, and who is to blame for it? How exactly does the Federal Reserve work, and what in the ever-loving Christ is the deal with interest rates? I have tried to understand these things, and I am just barely starting to understand them, despite the fact that my entire deal is getting a rudimentary understanding of a complex issue, so I can explain it to you with jokes. That is what I do and even I struggle with economics.

So, as we get closer to election day, we are going to devote this episode to trying to figure out what is actually happening with the economy. Is it good or bad? How is it different from the economy of five years ago? And actually, you know what? What the fuck is economics to even begin with? Those are the questions we are going to answer. We have an incredible guest to help us do so. But before we get into it, I just want to remind you that if you want to support this show,

you can of course do so on Patreon. Head to patreon.com slash Adam Conover. Five bucks a month gets you every episode of this show ad free. We have an online community we'd love you to join as well. And if you like standup comedy, oh my God, I hope you come see me on the road. Coming up soon, I'm headed to Portland, Oregon,

Seattle, Washington, Denver, Colorado, a lot of other fine cities as well. Head to adamconover.net for tickets and tour dates. And of course, please watch my new standup special, Unmedicated, out now on Dropout. And now let's get to this week's guest. I am so thrilled to have her on the show because she does an incredible job

of explaining how the economy works in her newsletter, on social media. She's an absolutely incredible communicator. Her name is Kyla Scanlon. She's an author, a TikToker, and an economic communicator. And her most recent book is called, In This Economy, How Money and Markets Really Work. Please welcome the amazing Kyla Scanlon.

Kyla, thank you so much for being on the show. Thanks for having me. I'm thrilled to have you. I love your economic analysis on social media. It is like always brings me something insightful every time I'm watching one of your TikToks or read your newsletter. You helped me make sense of the economy.

And I feel like economics is something that we're surrounded by and yet something that almost nobody understands. I myself have listened to hundreds of hours of podcasts trying to explain the economy, and I still feel like I have a very rudimentary understanding of it. But it's the most, people say it's the most important issue

to them right now in the election season. And yet no one can really agree on whether the economy is good or bad. People feel that it's bad. All the numbers, or many of the numbers are good. So I guess, where should we start? Is the economy, or many of the numbers are good. So I guess where should we start? Is the economy good or bad? I don't, well so this is like what I've spent

the past couple years working on, because there is a disconnect between how people feel, so consumer sentiment and the economic data, so like GDP, the labor market, inflation, and sort of the conclusion that I've come to is that the economy is quite personal, right? And so everybody has their own inflation rate, everybody has their own experience at the labor market,

everybody has their own experience with economic growth. And so the economy can be good on average and that's how we tend to talk about it, but it can still be bad for people, right? Because it's so personal. And I think there's also this component of structural affordability where housing is in a total state of disarray.

It's basically impossible to afford a home. Elder care is through the roof, child care is through the roof. And that's going to impact how people feel about their economic circumstances, even though that's not reflected in broad economic data. Yeah, we've talked about on the show before circumstances, even though that's not reflected in like broad economic data. Yeah. We've talked about on the show before how some things in America have gotten very

cheap. Flat screen televisions are cheap. Technology of almost all kinds is cheap. Food is cheap as a share of household income, I believe in America. But other things, housing, medical, higher education, elder care, stuff that is really, really essential has gotten enormously expensive. And then when you combine that with interest rates going up, I imagine, people who are trying to move

from one home to another are suddenly going, oh, I can't afford the home that I, if I tried to move into the home I currently live in, I wouldn't be able to afford it. Yeah, totally. Those are people who are trapped by golden handcuffs, is what it's called. So they got in at a 2% mortgage,

like probably during the pandemic, and then the fed started raising rates in order to battle inflation, and then all of a sudden it's like, I can't move out of this house. And so that's the double problem with housing, is like people are trapped in, they can't move, but then also people can't move in.

So people like me, who'd want a house, can't do that, right? Because not only have home prices gone up so much, but mortgage rates are quite high. The Fed is starting to cut rates, so we'll see a little bit of relief. So it's like musical chairs where nobody is standing, people don't stand up in musical chairs,

the metaphor is breaking down. Like people aren't moving from one home to another, and so therefore there are not vacancies for other people to move into, so then inventory is even lower, and so prices are even higher, and right, something like that. And we're not building.

We don't build enough homes. Like, that's a massive, massive, massive, massive issue, and there's a lot of policy being passed to help accomplish that, but it's very expensive to build homes. Like, labor is expensive, home supplies are expensive. Zoning is a whole nightmare within itself. In California specifically, nightmare to build a house.

And so that's also part of the problem is that the vacancies are not coming out to market as quickly as one would hope, especially because buyers are like, I don't know what to do about this. And then there's also just not supply in general. Like, no. Yeah, and we just did a whole episode

with a really wonderful housing writer named Jerusalem Desmas that people can check out. Oh yes, she's amazing. She was amazing, really great. We covered this in really great detail. So I don't wanna spend too much time on housing specifically, but it's a really good example. You coined the term vibe session to describe,

and you're asked about this on every podcast, I'm sure. Everyone's like, I gotta know about vibe session. It's in the dictionary. Is it in the dictionary? Wait, is it in Merriam-Webster? It's in dictionary.com. Oh, okay. All right.

Merriam-Webster. That's easy. Oh, it's in Urban Dictionary, sure. It's in the Slangopedia. Call me when Merriam- It's on Know Your Meme. Okay. Okay. no it's. It's on Know Your Meme. Okay, okay, that's legit, it's on Know Your Meme. So this describes how people feel that the economy is bad,

even though it might actually be good. Tell me more about that. Yeah, so Derek Thompson has another similar idea where everything is bad, but I'm fine, essentially. It's like that dog that's sitting in the burning house. He's like, I'm okay, but that meme, very familiar. Yes, and so it's like that, essentially. But wait, that dog, hold on,

I don't know if I agree with this metaphor, because that dog is about to die. He's like, this is fine, everything's fine, and he's in a burning house, he's about to die. He's not like, I'm doing okay when everything else is burning down around me. He's ignoring that he's about to die Yes, that's how I read that meme. That's true. The vibe session is more like people like I'm doing okay Like I'm making a living but all the economy is terrible. Yes, but I'm doing okay, but the economy is really bad Yeah, right. Thank you for the correction on my misunderstanding of the meme

is really bad. Yeah, no thank you for the correction on my misunderstanding of the meme. No, you could be, this is just how I read it. No, but getting back, yeah, so Vibe Session is this disconnect between consumer sentiment and economic data that we were talking about earlier. And it is this idea that people are feeling bad about the economy despite the economic data

saying that things are relatively okay. And what Derek Thompson is pointing out is that people, there's like surveys that chart this. Like 73% of Americans feel totally fine about their own financial situation, but only I think like 18% feel good about the economy at large. And so that disconnect is concerning because it becomes impossible to develop policy around that. If like three quarters of the country is like, I feel okay, they're not going to want any sort of policy to be passed that would change their personal circumstances. And so that's kind of the tough situation

of the VOB session is that it becomes very difficult to number one, talk about the economy because people are like, it's really bad no matter what you say. And then number two, to develop any policy that would change the economy. So I mean, what is responsible for that disconnect? I could theorize about it,

but do you have any specific reason that people would, people say, I'm doing fine. The numbers generally are pretty good. We have like relatively low unemployment, yada, yada, yada. Interest rates are like one thing that are abnormally high, but other numbers are okay. So why do people have the impression that the economy is bad?

Yes, so I will say, like with interest rates being so high, the fact that the labor market is still as stable as it is, we're starting to see some deterioration, but the fact that it's so stable is like quite surprising. So we really do have a resilient economy. And the reason that there's this disconnect is for two main reasons. Number one, structural affordability,

what we were talking about earlier, housing, elder care, child care, there's like these forces that are impacting people. And then the second one. But let me just ask, if people were having those structural issues, I would think they would say, I'm not doing okay. If they're like, hey, housing is unaffordable

and I can't pay for my mom's elder care, then they would say, I'm not doing well. But if they're saying, I'm doing well economically, I would think that they would have been okay with the structural forces. So there's a couple of things with the VAB session. Number one is like a lot of people will say that they're doing okay on these surveys,

but then consumer sentiment has been quite low. And so that's kind of the weird thing that a lot of scholars have spent a lot of time trying to figure out is like, people are reporting that their personal financial situation is okay, but when you ask them sentiment wise how they're feeling, they normally say quite negative.

Ah, so it's like they're not literally starving or struggling, but they feel bad about their situation. Like they're maybe not thriving or something. Well, and that's the thing with the US is that we have a lot of wealth, but not a lot of prosperity. And so all of that is being captured in this like weird data zone that's going on.

And it is confusing. What's the difference between wealth and prosperity? So wealth would be like the U.S. is an incredibly rich country. Like we have a ton of money, we have a ton of billionaires. We have a ton of very nice cars that drive around, but the average American is like very tough to afford healthcare. We have a ton of very nice cars that drive around. But the average American is very tough to afford health care. You have student loan debt.

You have the elder care, child care, housing situation that we were talking about earlier. And so a prosperous country, ideally a citizen, would be able to have all of those things. And considering how wealthy the United States is, that's kind of the concern. Somebody, Brian Portnoy over at Shaping Wealthy than the United States is, that's kind of the concern. Somebody, Brian Portnoy over at Shaping Wealth calls it the paradox of prosperity.

Kind of like, what the heck? Why don't we have all these things? This is like what Bernie Sanders is yelling about, is like we have a millionaires, a billionaires, but like the average person cannot afford to do the thing. Yes, yeah. Got it, okay. So I cut you off like two or three times.

Please go back to one of your many earlier points that I can't wait to hear. Well, no, no, it's all good. Cause it is like a kind of a, how do you say, like a windy conversation. Yeah. But yeah, so the other point to this, like, okay, so people are like my personal financial situation, good,

but I'm feeling worried and bad and scared. The other part of that is media, which I don't think comes as a surprise to you. Media sentiment has trended negative over time. This is captured in a lot of research. The headlines are negative. The stories are negative. There's a lot of distrust.

The spring Harvard Youth 2024 poll, it has, you know, the kids don't trust in institutions at all, especially the media, especially Wall Street, the president, the government in general. And so all of that is captured and sort of the decline in media sentiment. We just don't trust. And that's part of the reason for the vibe session as well.

Oh, it's because we don't trust the media. That's why I thought you were gonna say is that the media is saying that the economy is worse than it is, which I thought would be kind of like a superficial explanation for the five session. Oh, the media is just pumping up the idea that things are bad when in fact they're okay.

But is it, what is it? No, no, no, yeah, I mean, you're right. Like the media has sort of had misleading headlines like Bloomberg, you know, good reporting in general, but Bloomberg had this piece back in October, 2022 that had a headline that said, a hundred percent chance of recession by year end. We did not have a recession in 2022.

And if you see that headline, you're gonna freak the heck out, right? Yeah. Yeah. No, I remember like, you know, I, you know, my extra money that I make every year, normally I put that in like a Vanguard retirement account. And like, I remember that year I was like, I'm gonna hold back on that a little bit cause it sounds like there's gonna be a recession or something, you know what my extra money that I make every year, normally I put that in like a Vanguard retirement account and like I remember that year I was like, I'm gonna hold back on that a little bit

cause it sounds like there's gonna be a recession or something, you know what I mean? I like kept it in whatever. And then like a year later I was like, oh, that was stupid. I should have, the stock market did fine and whatever. Like people make decisions based on that. And I do remember that for a full year it was like,

there's about to be a recession, there's about to be a recession, things are about to get really bad, hunker down, don't take risks or whatever. And that was my own personal small response, it was not a big deal, but other people probably, took larger actions that were maybe not great. And at the very least, that would really affect sentiment,

is if people are saying for a year. Exactly. Yeah, and a lot of media headlines will still say that, Bloomberg still publishes a couple of stories saying that like a recession is coming, recession is coming. It's like the town cryer just being like, recession.

Yeah. And that impacts how people feel, obviously. Like if you're reading something, and the average person has been so disserviced by economics education and financial literacy that when they see a headline about a recession, they're gonna internalize that and be like, oh my gosh, this is a very bad thing.

I don't know what to do in general. So I'm not gonna do anything like what happened to you. Like if you had invested in the stock market, you'd probably have a couple more thousand dollars because the stock market has just skyrocketed since. So that doesn't always happen. But that's a big part for the Bob session is like media will report very negative things.

And because media has been so extraordinarily negative, people just don't trust in it like they used to for a variety of reasons. Well, it's interesting because I feel like part of the reason the media is negative and part of its ideological right, like we have, you know, political ideal, ideological media that like, you know, when when their party is out of power, they want to paint everything is going bad. And but setting that aside, just like the media in general,

appeals to what people already think. I know as a broadcaster, you can tell people what's going on a little bit, but you also need to cater to what do people already, what are they interested in, and how do they already feel? So, and people have a general cynicism about the economy in this,

if you just say to people like, things are bad out there, I think, oh, it's horrible. Yeah, things are really bad. It's just, that's the vibe. I mean, like, you know, liberals have been saying the world's gonna end since 2016, right?

It's just like, I've noticed all my friends go, you know, you ask them about their future plans, they're like, ugh, are we even gonna be alive then? You know, like this apocalyptic sort of cynicism, which I'm like, I always try to push back against, I'm like, the world is gonna go on whether or not bad things happen. You're gonna be alive, most likely, in a little bit,

you should plan ahead, but people have this, you know, belief that everything is going down the tubes that's sort of based on nothing, right? It's just, that's their default. And so the media ends up appealing to it. Sure, absolutely. It's a business model. You're driven by clicks.

And so you're gonna, you know, create what people click on, which is negative news. And our brains are animals, like, you know, we're little animals at the end of the day. And so we're gonna be driven towards negativity because that's what we respond to at an animal level. And so I think that's like part of it as well. And I think to the point of like the overwhelming pessimism, yeah, I think it's almost arrogant

to say that the world is going to end. I think we have a lot of variables that can make it so like World War, whatever ends up happening. But it's we've lived this long. And to think that we would be the people who are powerful enough to destroy it, like, come on. Well, and even if there is a world war, which could happen and be horrible,

the world will go on. If you look at the, I mean, look at the history of the 20th century, is it's people surviving world wars and then going, now what do we do? You're still gonna be, unless you're one of the people who dies, which it could be you, but likely won't be, because there're one of the people who dies, which it could be you,

but likely won't be because there's a lot of people out there, you're gonna be like, climate change isn't gonna be the end of the world, it's you gonna be going, shit, all my stuff is wet, I need to move. You know, it's like, you're gonna be alive for it. And you're gonna need to like deal with that.

And that's just a strange. It's so passive. Not to like beat up on, I get it. I really do. Like it's scary. And like, I think that AI is scary. Like climate change is scary. Like the hurricanes are devastating

and like it's really scary. And so, but I think a passive answer to the scariness is to be like, ah, the world's ending rather than being like, well, how do we make the world better? How do we get out of this sort of situation? Yeah, because you always have the, I learned this from a really wonderful,

I call him a climate philosopher named Dale Jamieson, who I had on the show and on Adam Rood's Everything years ago, who wrote a wonderful book, I'm blanking on the name of the book, but about like what to do with the knowledge that climate change, and he wrote this like eight years ago, but that we missed so many goals, right, in terms of reducing climate change and what do you do?

And basically his conclusion is, look, you always, always have the opportunity to do something today to make a better tomorrow. Like you live in a world, there is a today, there will be a tomorrow, you can always do something and it's sort of incumbent upon you to do it every day. Otherwise you're just giving up, right? It's never too late.

You can always get started, which is a very annoying message to spread, I feel like, because it asks a lot of people. But- It does. And then you have to be careful that you're not getting up on a soap box and being like, hey, everybody, get out there and change the world.

And nobody really wants to hear that. But like sometimes you do need to hear it. And I think that's kind of the point that we're at with climate, with the economy, with politics, whatever. Like clearly like something's brewing and we just need more people who are willing to take a stand versus passively accept a ending world. Folks, today's episode is brought to you by Alma.

You know, a lot of people don't give themselves enough credit for handling everything that life throws at them. There's anxiety, family dynamics, relationship stuff. Sometimes it just feels like living your life is a full-time job, and that's before whatever is actually stressing you out at your real job. That is exactly why therapy can be such a powerful tool.

It's a chance to hit pause, take a breath, and get the assistance of a professional to sort through everything. Personally, therapy has been an enormous help in my life. And if you are considering getting some expert license support, I cannot recommend Alma enough. Alma helps connect you with not just any therapist, but your therapist.

Their directory of professional therapists let you search for exactly what matters to you, whether that's a shared background, specific areas of expertise, or preferences like gender, sexuality, or faith. And Alma makes it a breeze to find someone who takes your insurance. Over 95% of their therapists accept major providers

like Aetna, Cigna, UnitedHealthcare, and more. And getting started couldn't be easier. You can browse their directory without needing to create an account or share any payment info. And when you find someone who seems like a great fit, you can book a free 15-minute consultation call to see if you really click.

Alma can help you find the right therapist for you, not just anyone. So visit helloalma.com slash factually to get started and schedule a free consultation today. That's helloalma.com slash factually. So you all know how critical I am of the tech industry's overhyped promises about AI. There are a lot of things that those CEOs have been saying

that will probably never happen, but there are a couple of companies out there focused on building practical tools that they are calling AI. And one of those you can go try out is the new Notion AI. What Notion says they've done is to create a powerful productivity tool

designed to streamline your workflow and keep you organized. It pulls info from multiple apps to help you handle various tasks all within your Notion workspace. Notion says a standout feature is a direct connection to your Slack and Google Drive. You can ask Notion to summarize documents,

give you a rundown of all the product updates since you last checked in, or build priority to-do lists. Did you miss a long-winded but crucial conversation in Slack? Well, Notion can catch you up with a quick recap. They say it can also analyze file and image attachments like PDFs from clients, and recommend your next steps for moving forward with the project. And if you need to redraft something,

it can rework the text in your personal style, your brand's voice or whatever fits the moment. And here's something I really appreciate, Notion prioritizes privacy. It only pulls info from platforms you specifically give it access to so everything stays private and contained. And plus they do not share your data for AI training purposes, which is huge.

So get started with Notion for free and unlock their new features for only $10 a month using my special link in the show description. Staying on vibes for a second more, a comparison that just leapt to my mind is with crime. You know, that there's a perception that crime is on the rise and there are bad crime statistics since the pandemic, right? There was a rise of certain crimes in certain areas. You know, you could break it down by state or et cetera,

or by nation, by the nation if you want. But, you know, the vibe of crime being on the rise has like really far outstripped the actual numbers. And what I often think about is, I feel like there are signals that people get from the world around them that make them feel like crime is high that are not related to crime itself. Like here in Los Angeles, homelessness is a massive problem.

And when people say, crime is crazy, I don't wanna ride the subway because of crime. Well, I ride the subway all the time. I don't see a lot of crime on the subway. I see a lot of homelessness on the subway and that feeling of society breaking down. There are people who are sleeping in this public space that gives you a bad feeling that I think translate to people as crime, right? They feel less safe and so they feel like crime is around me and I can look at this and say, look, homelessness is an economic issue, it's not a crime issue, but at that point,

I'm arguing against the person's feelings, right? So I'm sort of looking, I can look at it and go, it was caused by something else, it's not really related to crime, but it is a real thing, and I wonder if economically, if there's something similar going on, where people are seeing bad stuff, and they're saying the economy is bad,

even though it's not actually bad in the way that they are taking away. Does that make sense? Yeah, yeah. I mean, a lot of it's media headlines, right? Like they're absorbing news of people not being able to afford homes, you know, news on immigration, news on people

maybe not being able to get jobs. But then when they go and talk to their communities, it usually is a different story. Of course, it doesn't apply to everybody. But yeah, I mean, I think there's a lot of confounding variables where you can conflate a rise in crime with a rise in homelessness, which are two very, very different issues. So yeah, I would say that's definitely a big part of it. Let's talk about inflation, which has been something that has obviously been on the news

a ton and that people have Individually felt that there's been like some of the products most subject to inflation have been the ones that people you know Buy the most right the things that people actually take off the shelf What was the cause of the inflation that we saw and how did that affect the vibes? Yes? Yeah, that is the question of the century. I guess It's quite interesting. It's really quite interesting because that's an important question. And the fact that we're like, hmm, what was it? Because some people will be like,

oh, it's the companies raising prices. Like Dr. Isabel Weber has led sort of the charge on that, calling it seller's inflation, like a lot of price gouging by companies. I'm in the camp that it's supply chain breakdown. So a lot of the inflation that we saw, especially in like 2021 and 2022, was simply because the camp that it's supply chain breakdown. So a lot of the inflation that we saw, especially in like 2021 and 2022, was simply because the pandemic made it

so nobody could go to work, or a lot of people couldn't go to work, the boats couldn't move, like things couldn't be shipped around the country, and that becomes highly inflationary. And then energy is another big issue that was highly inflationary. Housing is another big issue, highly inflationary,

a mismatch between supply and demand. And so there's a lot of different sources of inflation. And I think the supply and demand breakdown was the beginning of it. And it kind of compounded since then. We got a CPI print, which is consumer price index, last week. And the primary driver of inflation was motor vehicle insurance. And so insurance has really increased for automobiles because there's been a lot more accidents, but also the cars are fancier. And so it just costs more to insure and to fix them.

Wow, wait. So literally the price of insurance has gone up, A, because cars have gotten more expensive. So your premium is higher because the liability for the insurance company might be higher. Okay, that makes sense That itself is a weird indicator because cars have gotten more expensive I read recently partially because loans were so cheap for a while So people were able to buy more expensive cars except now loans are expensive because interest rates have gone up Yeah, so there's all these weird lagging things where-

Well, that's kind of the issue with the way that we measure inflation, especially with housing, is that there's a lag. Like with housing specifically, there's about a one-year lag for the way that we measure it. And so the inflation numbers that we get don't always reflect the inflationary reality. But inflation has been going down,

which means that things are not going up in price as fast. We're experiencing a lot of disinflation, what it's called, is what it's called. But when people hear that inflation is going down, they think it's deflation. They think it means that prices are going down, and that's not what that means. It's the rate of inflation is going down. Yeah, not the level.

So it's like it's going up, it's only going up by 2%, not 10% or whatever, the actual numbers are. Right, yeah. And then the Fed's goal is 2%. And so we're getting closer and closer to that number. Got it. So I have to go back for a second. 2%, not 10% or whatever the actual numbers are. And then the feds goal is 2%. And so we're getting closer and closer to that number. Got it.

So I have to go back for a second. Why are there more car accidents than there used to be? So there's a lot of questions on this too. And part of it is like the pandemic kind of boggled everybody's brain up. And so we don't really know how to drive maybe how we used to. Yeah. And then also the vehicles have gotten very big.

Like some of these trucks, you know, just massive. Yeah. And you can't see out of them and they just sort of pulverize anything that they touch. Pedestrians. Yeah. It got me the other week. Yeah. Oh, yeah. I know. I saw you chipped a tooth on TikTok. And by the next TikTok, it was fixed again. Yeah. New chin. Thank goodness for dentists, yes. Yeah, absolutely.

My teeth are ground down from years of Adderall use and I cannot get that fixed. Oh, do you grind? I do grind. I wear a night guard now. Yes, yeah, that's good. I talk about this extensively in my standup special. Unmedicated out now on Dropout.

Sorry, what were you gonna say? No, no, that was, I'm not talk about this extensively in my standup special, unmedicated out now on dropout. Sorry, what were you gonna say? No, no, that was, I'm not gonna interrupt that. I gotta do my little plug. Always promo, always promo, yes. So how much of inflation and all of the other economic pressures that we've had over the past couple of years, how much of them were just caused by the pandemic?

Like, because to me it looks like when people blame Biden or even blame Trump, I'm like, but the pandemic seems to be the large disruptive event that changed everything. And then a lot of it's just been the boa constrictor swallowing the possum or whatever. Like, it's taken a while for all of the effects of it to like move through the economy. That's my general sense. What is- That's a great metaphor. Yeah.

No, but so this is a great question because like before the pandemic happened, the Federal Reserve had a hard time getting inflation to 2%, which is their goal. We actually had inflation that was running a little bit too low. And the goal of 2% is kind of arbitrary. It's just basically like,

that's what they want the economy to be running at. If inflation is kind of around there, it means the economy is growing, things are going okay. And so that was their goal. And they were having a hard time getting inflation out. Because if it's at zero, the economy is not growing, which is bad. Yeah, yeah, basically, essentially, very reductive.

But yeah, so that's kind of the idea. And so once the pandemic happened though, inflation went through the roof. And so the Fed had to raise rates in order to battle inflation, make it more expensive for everybody to be alive. So they stopped spending money. So the economy slows down.

So ultimately inflation slows down, right? And so inflation really did become a problem of the pandemic. Supply chain breakdown was like 70% of the inflation that we saw. And then other people are trying to figure out why it's remained so sticky. Part of that was under investment during the pandemic,

but also a lot of stuff is beginning to catch up to us. So during 2008, right? We just stopped building houses for the decade that followed 2008. And so now housing inflation is kind of a big issue. And then corporations did, a lot of people, a lot of economists don't agree with this, but corporations did take advantage of the opportunity

to raise prices. Kroger is getting in a bunch of trouble for this right now. Kroger is, funnily enough, they're about to try and merge with Albertsons, which is another, and they're like, we could do $1 billion of price cuts if you let us merge. And it's like, okay, clearly there's some room here. You know? And you know, margins have remained relatively steady

for companies. And so it's a lot of different factors, but if we hadn't had the pandemic, no way would we have had the inflationary episode that we had. No way. And the main reason in your view was because of supply, supply chain breakdown because of the pandemic. I mean, I remember specific supply chain breakdowns where it was like,

the chips in cars and stuff like that. Right. And that's specifically like international supply chain. How much of this is the supply chain, you know, getting too complex, right? And too brittle that, you know, one little thing breaks down and suddenly there's a, there's a crazy ripple effect. Well, part of the issue is just in time.

And are you familiar? I think I am, but explain. Yeah. So it's basically like everything has to arrive at the exact moment that it's needed. And everybody needs to be at the exact spot that they need to be at exactly when everything happens. And this started in Toyota. I don't remember what year it started,

but Toyota was the company that kind of pioneered this and ended up applying to the rest of the supply chain. This is the most efficient. You don't overorder anything. You get, you're like, we need this many of this thing, so we'll get exactly that many and we'll have them show up on exactly the day we need it. Yeah, and it just wasn't that resilient.

And so unfortunately, a lot of people couldn't go to work and they had to stay home and, you know, do their part during COVID because it was a pandemic. And that just meant that people weren't able to work the way that they used to work at the supply chains or to function with the supply chains. And you had trucks not being able to drive where they needed to go. Boats were stuck at the ports. I don't know if you remember the pictures of like all the containers that were piled up at the Los Angeles and the Long beach ports. But yeah, that was a big part of it. It's stuff got stuck. Yeah.

It's really funny thinking about, you know, just to bring it to the election for a second, thinking about, you know, Trump hammering the Biden administration on the economy, right? As obviously they would when if you look at the cause of so much of the economic disruption, it's specifically the COVID lockdown, which happened during the Trump administration and was the right thing to do, right? But it also ended up handing Trump a political cudgel that he is now using because all of the fallout happened during the Biden administration, which is like, I think, typical of how economics

and politics interact. Like it's always sort of, the president is always dealing with the economy that the previous president created, right, because there's like a couple years lag between policy and economic outcome. And it just, if you look at, I don't know, I've been following elections since, I don't know, Bush v Gore, it's like that,

you see that pattern happen over and over again. Yes. Yeah, no, it's never just one president's economy. You know, it's everybody's economy. The decisions that Obama made, you know, impacted everything up until this point. The decisions that Bush made, et cetera. Reagan, for example, huge impact that guy had.

And so, yeah. It's easy to be like, it's that guy's fault. And I think that's kind of why we have a president so we can be like, it's his fault, and her fault. You know? And so, yeah, it's just, but I think that the, and I get, there's this clip, I went on MSNBC, and there's this clip of me that went viral

where I said, Biden has had an objectively good economy because he has. You know, getting the amount of regulatory reform that he has had passed, getting the number of bills, the IRA, the IJA, the CHIPS Act, like getting all of that through is really impressive. And the fact that we've been able to invest so much from a fiscal policy perspective is massive. Like that has saved us from a recession.

That has made us not have a similar situation that Europe is in where they're still dealing with the impact of inflation, but their economy is basically stagnant. And so I think that is like one thing that's important to remember is like, yes, policies from previous presidents matter, but also the policies being passed also matter. And it's just not true to say that this is not a good economy. Yeah. But it's, we, we might feel the economy being good more over the next couple of years, right? Because the policies haven't like the IRA, not all the money has been spent, you know, et cetera, right? It's gonna,

it's gonna come out over the next couple of years. Yeah. There's this really good article called pool party progressivism. And it talks about how the Biden administration really focused on manufacturing, right? Like the Chips Act, the IRA, et cetera. Like a lot of it is infrastructure. And they put a lot of money towards infrastructure, towards these kind of hidden things in the American life

that we have the luxury of not paying attention to, most of us. And this article was arguing that the Biden administration really actually, and now they are starting to do this, but they needed to do more from like a social policy perspective, like childcare, elder care, housing, and they're doing a lot of this right now. But that was the main argument and why people

might not be feeling the effects of the incredible policy that was passed, objectively speaking. Yeah, because the policy is sort of buried, hidden under layers of supply chain versus sending people checks with your name on them, you know, is like the canonical example of what how Trump handled it during the election. Let's talk about, you know, the pandemic causes inflation because the supply chain breakdown,

the Fed raises interest rates as a result. This is something that I feel like interest rates I've been paying more attention to in the last couple years than I ever have in my life. And I still only half understand like what the fuck they are and the relationship between them and inflation. So can you give us, I'm sure you've explained this a million times,

but please give us the 101 explanation of like why does that cool down the economy? Yeah, so basically it's the cost of money. So it's the cost of borrowing money as an interest rate. And the Fed nudges around something called the Fed funds rate, which basically nudges all the other interest rates in the economy, auto loans, mortgage rates, you know, bank situations. And so when

the Fed is like, oh, the economy is really hot, they're going to raise rates because they're like, okay, we need to cool things down. People are out there spending too much money. We need the banks to not be lending out so much money. We need people to not get so many auto loans, stop buying the houses, like just chill out everybody. And so they make the cost of money more expensive so people chill out a bit. And that's kind of where we were for the past few years. And then the Fed held rates steady. And that was primarily because they really, we, everyone, you know, we need to kind of gather our bearings and figure out what to do next. The economy was doing okay. We were at a pretty restrictive level, meaning that rates didn't really need to go higher, inflation was coming down, and they could

kind of figure it out from there. They recently cut rates, and the reason that they're cutting rates is because the Fed has a dual mandate of price stability and maximum employment. And so they're in charge of managing inflation and managing the labor market, which is like a really, really hard job. Yeah. And they're managing the labor market by changing the interest rate, which is like, it's kind of, it's like a whole metric. They just have one lever they move up and down. And then the interest rate goes through

a bunch of other economic signals and then eventually changes the labor market, right? By making money cheaper. I want to ask a very basic question first, goes through a bunch of other economic signals and then eventually changes the labor market, right? By making money cheaper. Well, I want to ask a very basic question first, because I want to make sure I have this right. My understanding of why the Fed changing its interest rate changes general interest rates is because like the Fed

or the federal government, this is the rate at which I can borrow money from the federal government, right? Or I can invest in the what? What the fuck is it? It's I'm sorry like I feel like I'm losing my mind. I had a sense of what I was trying to say But I have not I I should take ten minutes and read the book My like it's it's But I have not I I should take 10 minutes and read the book It would take about 10 minutes

My like it's it's the the the Fed is like the most conservative lender in a way or something and so every lender of last resort the lender of last resort so everybody else is going to try to like beat that interest rate. And so when the Fed changes it, everybody else adjusts their interest rates to accommodate. Yeah, exactly. Okay. Yeah, so then they affect something called the prime rate,

which is kind of like the base lending rate in the economy. And this basically they're nudging with the banks too. And it's quite complicated. So don't feel bad for being confused. And it's like kind of hard to visualize too, just like through words, it's good kind of hard to visualize too, just like through words, it's good to see pictures. But yeah, that's kind of how they do it is they nudge interest rates. They also have a balance sheet and then that can affect that

does affect things as well. Expanding the balance sheet, putting more money into the economy, contracting their balance sheet, taking money out of the economy. And yeah, that's kind of how they do stuff. But basically the main idea and the main takeaway is that they make money more or less expensive and that slows the economy down or speeds it up. Got it, so they make it a little bit more expensive and then everyone else makes their rates more expensive because they are competing with the Fed

for that business in a way or? Sort of, like they kind of set that base rate and then everybody else responds to that. Got it. So how does that then change the employment rates? Like how do we get, what's the flowchart? Yes, so essentially the way that they affect the labor market is like if companies

feel comfortable hiring, right? And so like if companies are like, okay, it's easier to get money, like we're going to feel more comfortable hiring, et cetera. And so like the Fed would cut rates if they wanted to make money easier. And then ideally companies will respond to that, be like the economy, money's free flowing, we're gonna get into it, we're gonna hire more people,

raising rates, the opposite sort of situation. Got it. So, but the odd thing to me is you said they have a dual responsibility of keeping prices stable and like trying to achieve full employment basically, trying to make sure a lot of people are employed or no. Maximum employment. Maximum employment.

So essentially what that means is anybody who wants to be employed can be employed. Full employment is a similar concept, yeah. But interest rates also affect a million other things in the economy, right? And so it's very odd that, again, they have one lever that affects a million things, but they're only trying to manage two of those things.

Yes, it's a very blunt tool. And the reason that, so I think the hard part about the Fed is it is a really blunt tool, and they're going after two really tough things, which is the price of things and people having jobs. And so they're affecting everything in the economy through interest rates, because money is the foundation of everything that we interact with.

And so if it's more expensive to get a loan, that's gonna impact how you make decisions. If it's less expensive, gonna impact how you make decisions, if it's less expensive, gonna impact how you make decisions, yeah. What a strange system by which to manage a country. Well, there's monetary policy and there's fiscal policy. Monetary policy, I mean, the whole history of the Federal Reserve is kind of crazy.

Basically, there was all these earthquakes in the early 1900s, and there was an earthquake that wiped out all of these little banks. A financial earthquake. No, an earthquake. A literal earthquake. Yeah, and so this was like, in the early 1900s, you didn't have online checking, right?

And so there's all sorts of bank runs after these disasters. Got it. And this was also in the era preceding, or after Wildcat Banks, where you had a bunch of different, and I talk about this in the book too, but you have a bunch of different currencies, like everybody's like, I'm gonna have my own money

and blah, blah, blah, blah, blah. And so JP Morgan of JP Morgan Chase, the man himself, he was like, I'm really sick of bailing everybody out. He was so rich. And he was like, I'm really sick of this. We need like an entity in place who's going to manage the money because I don't want to be in charge. I don't want to be bailing people out. There's all these bank runs happening. It's really tough to grow an economy with all these bank runs. And so that's when the

Federal Reserve kind of came into existence in 1913. They were like, we're going to get this thing going. And then it took them a while to figure out their toolkit and how that would work and it's still evolving. A big part of their toolkit right now is forward guidance where they come out and talk. So you might've heard Jerome Powell, who's the chair of the Federal Reserve, he holds a press conference whenever they do anything

with interest rates, which happens about every six weeks. And that's a big moment because he'll sort of tell markets where he thinks the economy is headed and that will actually move things because markets are so powerful at this point that they can actually do some of the Fed's job for it by making things more or less expensive. And those statements are like so carefully parsed.

Like I remember, I forget forget which how long ago it was It was in the last couple months I was reading a Bloomberg piece about the word choice that the Fed used in or maybe that Powell used in an announcement of You know, they said there is there is compelling reason versus there is substantial reason or some you know Just like these these strange word choices. Ah, we take that to mean that in the next few months, they will do XYZ instead of ABC. Like this sort of very strange signaling

that's done through subtlety in the English language, which is very strange for such a hard-nosed discipline as economics to see. Yeah, I know. It's kind of funny. Trump said something funny where he was like, the Fed essentially does a coin flip and then everybody treats them like they're God. And like, number one, it's wrong.

Like it's not a coin flip. It's very, you know, it's a big decision. But there is like this deification of some of the stuff that they do. And it is because they are the primary decision makers of what happens with money. And for a lot of people, a lot of people have all sorts of conspiracy theories

about the Fed, like the shadowy cabal, I think it's called. But yeah, people will look at the color of Jerome Powell's tie and be like, that's what he's thinking today. It's pretty crazy. So, but there's, this sort of gets to the general weirdness of economics, right? Because economics runs our lives in so many ways, it's so important that the chair of the Fed

is this guy who's sort of separate from the US government, sort of the sacrosanct position. Trump kicked down a lot of sand castles, but he put Jerome Powell in place because the very powerful people, other very powerful people in our country, country's economy presumably were like, do not fuck with this, right?

This is extremely important, hard-nosed stuff. It's, and it's often treated as like a very hard social science, right? As far as social sciences go in my experience. And yet there is also like once you drill down and really start talking about this, you're like, there's this person who this organization's only existed for about a hundred years. You know, they have this toolkit that they use. We parse their language very carefully, but like, what are they actually doing?

And you start to become aware that like, hold on a second, economics is not physics, right? We're describing a system that we created that could be created differently. And I've started to see a general criticism of economics coming from largely the left, but is that like, hey, we treat economics as though it were physics, right? Something that experts really can have

objective knowledge in, rather than as, hey, it's a system of thought that we could have an alternate economics, right? Oh yes. Very easily. And when we perhaps sometimes ignore the ideological underpinnings of the people who are running the economy, or we fail to question them

because of their expertise, does any of that track for you? Oh, yeah. I mean, like even Milton Friedman, for example, Austrian, has a completely different view on what causes inflation. And he think it's he thought it was the money supply. He thought it was purely the Federal Reserve that was causing inflation. And I I disagree with that. And, you know, Keynesians will think that government spending is the way forward. That's the way that we get out of certain situations. So

there's a bunch of different schools of economics. And right now we seem very Keynesian in this current society. But all of them could be quite different. And I think economics is really interesting because the way I think about it, it's a philosophy of money, right? But you also have this huge variable which is impossible to control for which is human behavior And economics has this assumption that people are entirely rational Right, and I was sort of brought up I think my you know economics 101 classes in college sort of had that presumption that people are rational actors. And then a couple of years ago, I started reading more writing for people going,

well, that's obviously not true. People are not in fact rational. They don't make their purchasing decisions rationally. They don't, people don't do anything rationally. People fuck up all the time. We're idiots, you know? Or, and we're selfish and we're, but sometimes we're wrong about

what's in our best interest, you know? And so that's, that's odd, right? Because so much of the underpinnings of the field is the idea that people are acting in their best interest. But they're not. Yeah, yeah. That's a lot of the research. And a lot of people are like going in a different direction. There's a lot of amazing like academic work being done.

But yeah, a lot of people are kind of like, hmm, maybe people aren't rational and like the research should probably reflect that. But monetary policy is just difficult in general because you are trying to control an economy. And the only way that you can really do that is through, it seems, managing interest rates and then managing that balance sheet like I was talking about. But the Fed has taken an increasingly larger role in economic circumstances, like, you know, making sure that the banks, like Silicon Valley Bank,

like, making sure they're okay. And they're taking a bigger role in people's lives too. Like, I asked a survey, I already gave a survey to my audience, and people are more interested in monetary policy than anything else, which is not what I thought the answer would be when I asked them what they were most interested in. And so, yeah, it's becoming a really big thing

and the toolkit, I mean, to be honest, people are like, did interest rates actually stop inflation? Did higher interest rates actually do anything? Was it just, and there's papers being like, it's just because supply chains normalized, right? And what's really interesting about the United States is we have these 30 year mortgages and so people are locked in

and they're like ready to go at that house for 30 years. So you had like this whole group of people that's kind of insulated from any fluctuation and the cost of money. Like if they're getting a new car, sure, but like it just doesn't impact them. It's not really gonna impact their spending. And I think it's over half, I can't remember the exact statistic,

but over half of people in the US are homeowners. And so like that's over half of people who might be insulated from the decisions that the Federal Reserve is making. Because if they wanted to buy a new house, or if they were forced to buy a new house, they would have to deal with the higher cost of money, because oh my god, it's now much more expensive to buy,

it's like twice as expensive than it was a couple years ago. But they can just chill out in their current house. A lot of people can, and it doesn't really matter to them that much. So the interest rates maybe are not affecting as much as we thought they would. That's, Kyla, that's kind of fucked up.

Because again, this is like the underpinning of, you know, you go read any news site every single day. It's like interest rate, interest rate, inflation, inflation, you know, job market, job market. There's a very clear story that we're told about how these things are interrelated. And I guess it makes me queasy about economics because look, I, I got a B.A. in philosophy.

I've said many, Tony, my producer's laughing because I say this one out of every three episodes. My only, my only academic qualification, right? One of the weird things about philosophy is it never advances. Nobody ever agrees, right? No one ever says, we figured out that, you know, okay, Descartes was right or Descartes was wrong. We're moving on to the next question, which is what happens in physics, right?

Or math or a lot of other fields. And I had the philosopher Quill Kukla on the show years ago, incredible conversation. I posed this to them and they were like, well, really the comparison you should make with philosophy is, rather than to physics is to art, right? That it is a sort of way of thinking and a way of being that helps you move through the world.

It doesn't need to be definitive to be of value, right? I'm completely butchering their point, but it was something along those lines, it was very beautiful. What you're describing in economics kind of sounds a little similar to me that, you know, hey, there's Keynesians, there's Freedman's, there's Marxist economics, there's Freedman's, there's Marxist economics,

there's all of these different points of view. And you know what? Maybe we're never gonna have a clear answer on which one is right and which one is wrong because we're describing something as loose as human behavior that changes constantly. And I'm like, okay, that's very cool. That's fine for a field of human endeavor

and study to be that way, except this is the one that we're running our economy with. It doesn't matter what people think about Descartes for our day-to-day lives. We're not making policy based on that that affects homes and jobs and et cetera. And so that's an odd thing, right? Yes, yeah, people get in the way.

Yeah, because even like, you know, some of the economic policies that are being proposed by Trump, tariffs, right? Blanket tariffs, very bad, horrible. Every economist ever would tell you that. And so like, that's kind of something, this is the only thing I think all economists agree on is like tariffs are bad.

And that is something that is potentially going to happen. And so like people just kind of get in the way sometimes with economics and there's a saying, economics is an art and not a science. And I think that's true is because you are dealing with the psychology as much as some economists might not like that. You are dealing with people.

And that's like something I've tried to do in my work and why I'm so focused on consumer sentiment is like, hey, like the GDP numbers can be saying one thing but but if people are saying something entirely different, we should probably be listening to them because that's going to decide where the economy goes. Like if GDP is perfect, great, good, but there's this like self-fulfilling prophecy with consumer sentiment. If people are worried, they're not going to spend money and then the economy just doesn't go in the direction we want it to go. And so it is not perfect, and it is kind of queasy, and it is sort of hard to explain a lot of the times

because there are these really mechanical aspects to it, like interest rates that are very real, and then you have humans in charge of them, and that makes it difficult. Yeah, and I guess it's a matter of embracing the humanity. Cause I hear what I'm doing and what I'm saying to you, and I guess it's a matter of embracing the humanity. Cause I hear what I'm doing and what I'm saying to you, which is that I'm saying,

I'm irritated by the queasiness and I wish we could do without it, right? But you can't in the same way that, a lot of people hate politics. They're like, why does politics get in the way? Well, politics is humans making decisions together. And as long as humans live in a society, there's gonna be politics and you need to embrace it.

That's my perspective on politics. I should probably have the same perspective on economics. You are trying to describe how people behave and understand how people behave so we can make the world work a little bit better. And it's gonna be that messy. And you're gonna end up with theories that are incommensurate with each other.

Oh yes, and yeah, I'm not an academic researcher by any means, but the academics are always disagreeing. Like even the Nobel Prize winners, who basically the winners, they had a paper that was like institutions are good. And everyone was, there's not everyone, but a lot of people are like, I disagree.

These people disputed them and they didn't address that dispute. And so there's always going to be that that combat versus like something like math Which is a little bit more straightforward, but an object. Okay. I'm sorry I'm just tripping out on how weird economics is as a discipline right now. This is my entire life Okay, because on the one hand I would look at and say okay This is a it's a social science is describing how humans interact in the same way sociology or political science might be. You might ask, why did the economy of this country do better than this country? Same as asking, why does this country have a stable democracy and this one doesn't?

And you'd want to embrace the messiness of human behavior and try to understand it, right? The odd thing about economics is that we try to control the economy based on what we've learned. You know, that we're that literally it's like, okay, according to economics, we should do XYZ and Jerome Powell should pull that lever and not that lever. Um, and so I think it's odd that, you know, a field of the study of humanity, which about which we understand so little still, um, that's fine for us to not understand that much, for our study to be incomplete, yet we are trying to make decisions

based on our understanding of economics that affect everyone's lives in a way that we don't really, for sociology or political science in the same way. Well, what else do we do? Yeah. Right? Like we have to have an economy. We have to have some sort of structure.

Do we? Yeah. No, we do. If you want coffee in the morning, you gotta have a supply chain, you gotta have labor, you gotta have people organized. And so economics is just how we think the best way to organize people might be and the best way to have money flowing might be the best way to do global trade.

But all of it's imperfect because yeah, humans are at the root of it. And one thing I say a lot in the book is people are the economy. And do global trade. But all of it's imperfect because yeah, humans are at the root of it. And one thing I say a lot in the book is people are the economy and it's true. And that's why it is so imperfect is because like people are just not perfect no matter how hard we seem to try.

Like we're prone to error and that error shows up in economics. Yeah, and our economic system was not invented by a couple of people who were like, this is a good way for it to go. It grew organically out of like centuries and centuries of human practice, right? And so it's also like descriptive to a certain extent

of like, this is like the system that we ended up building. Yeah, and like people disagree with the system too. Like a lot of people advocate for communism or socialism, and that's not what we have. And so I think it is kind of a natural experiment at all times. And the pandemic was another natural experiment that showed us, hey, we have to have

more resilient supply chains. Things can get inflationary. Money is real in the sense that it's collective belief, and therefore it really matters. And so it's kind of like, there's a quote where it was basically like, life is a game, but it's a very serious game. And I think that's how economics works too. Like all of it is silly if you zoom out really, really far,

but you can't do that. You have to zoom in. Yeah, it's a thing that makes you want to, once you become aware that we created all of this, makes you want to go we could just do it better Oh my goodness. Yes, absolutely like housing for example I know you had drew Zaman and I'm sure she talked about all of that But how saying is a big part like elder care child care like there's so many different things where it's like Why don't we just do this better? Right? Like why are we so silly?

But then you're like, oh, it's people and people are silly. Yeah. And it's inertia and all of that. Are there times that, you know, you look at our economic system and you're like, this is a bad, this is a bad system. It's, you know. I mean, I think I'm just so disappointed. And I truly believe we could have more than we have.

Like earlier today, I was asked, so basically for mothers, the World Health Organization says, hey, you should probably breastfeed your kid for six months. And so you can kind of extrapolate and be like, maternal leave should be about six months so moms can fulfill that. And I was asked earlier today, I was like,

well, how would we pay for that? How would we make sure a mother, and it's like, that's the next generation, right? Like that child really deserves to be around their mother. And like, if we're a rich country, we should be able to provide that. And so I think that's like what I just get really bummed about is like, okay, clearly we need to invest in the kids,

but there's all sorts of weird things where we don't invest in the kids. Like there's an unequal distribution of resources in a very big way, childcare being a very big part of that, underfunding of education, and that's quite disappointing to me. It doesn't make sense to me at all. It's really mind boggling.

I mean, there's a real push-pull when you start to understand an issue like that. I mean, for instance, the last 20 years of debate around single-payer healthcare, it comes from, as soon as you start reading anything about healthcare, you're like, that's the best way to pay for it. Just like on a basis that makes it cheaper, right?

Makes it more effective, like there's problems everywhere, but that is the better system. Our system is bad. You can look at the numbers, right? And then it drives you insane. Cause you're like, just have the better version. But then if you actually want to do that, you're confronted with, well,

we live in a society that has this system that has so many vested interests, some of which are real and not just greedy. Some of which are just, people are used to what they have and it's disruptive and disruption is hard. And so how do you get there from here? And you try to answer that question. And then you start lowering your sites and you say,, okay, well, I wanna make the world better,

but maybe we don't get all the way to the perfect system, we just try to make it a little bit better, right? And then someone reminds you, no, hold on a second, if we went all the way, that would be the best, you know? And then you end up raising and lowering your sites over and over again when trying to figure out how to make the world better. No, and I talk about this at the end of the book,

like the abundance agenda, which was developed by Derek Thompson, which is the idea of like, how do we make the world better? And it's like green energy and investment in infrastructure and investment in infrastructure and investment in education, healthcare, et cetera. And it is on the margin. Like all we can do is just move forward

a little bit with everything. A lot of it does begin with education and talking about this stuff and like making it clear to people how interest rates work in my opinion. Like just like those little things. And I think another very good thing that's happening is the FTC with LinaCon.

They just did click to cancel where it's now all you have to do to cancel something is click like so easy. And I think that there's all these like mild inconveniences that come with being an American. And if we can get rid of some of those, I think we can actually make a lot of progress on some of the bigger stuff that we've been talking about.

Like if we can kind of remove the cloud from people's head on like these minor, minor small issues, then we can kind of focus on the bigger issues. But there's all these like a death by a thousand paper cut things. Yeah, where like I need to cancel a subscription, but they made me call and I had to wait on hold. You have to go in person.

Yeah. I quantum, I don't know if I can say their name on the, quantum fiber. I've been, so my wifi, I've been trying to cancel it and I've been on the hold for like four hours. And so I just can't get through and I can't cancel my wifi. Yeah. And so it's like little things like that,

which are just these minor inconveniences. And if we can free people up, I think we can begin to like make progress towards the bigger stuff as well. If we do, it's almost like the broken windows theory of the economy. It's like if we get rid of the small problems and the pains.

And you see that that's interesting because it has been a focus of the FTC and like the Biden administration, junk fees and things like that. And the airline fee one was a big one. Although again, when I see those announcements, I'm like, okay, that seems helpful, but is that gonna make the difference

for how people feel about the economy? Is that gonna make the difference for people voting? I mean, I care about what the FTC does because I care about Amazon. But is that going to make the difference for how people feel about the economy? Is that going to make the difference for people voting? You know, I mean, I care about what the FTC does because I care about antitrust for, you know, a number of different ways. And I think antitrust should be like a project that unites a whole lot of people in the economy, like libertarians. Some libertarians could get along with, you know, like progressives, right, on antitrust, you know, for example. But that animates me because I'm a wonk about it,

you know, or airline fees, because I travel all the time. But is that going to fix the vibe session? You know what I mean? Or is it small potatoes? I don't know what will fix the vibe session. I've spent a lot of time thinking about it. You need to hang some string lights up in this motherfucker. You know what I mean? Like just fix the vibe session. I've spent a lot of time thinking about it. And you need to hang some string lights up in this motherfucker.

You know what I mean? Like just fix the vibe. Wait, yeah, but geez. I mean, the vibes are influenced by so many things. And like right now it's so tense with the election coming up and understandably. And we're so polarized and we don't trust each other and we're mad all the time.

And I don't know. I mean, I think it's like things like the loneliness crisis too, the phones, social media, attention economy. Like there's all of these little things that make the Bob session the Bob session. And I think what the FTC is doing on the margin is important. I think even just saying to the big tech guys like,

hey, you all can't be doing what you're doing is also a good thing. What are they doing that you? They're just too big. They're so big. And it really makes it difficult for smaller players to get in the space. Like Apple, oh my goodness.

It's like ridiculous. Go off, tell me more. No, I mean. No, do it. Like the app store fees, for example. 30%. Yeah, come on. Come on.

Like if you're really gonna foster an environment of innovation, you're not gonna be taking so much from people. And I think we're kind of at this diminishing returns point for a lot of the big tech companies where they've made so much money, where it's like, well, how, like, what would another bazillion dollars do for you?

Like really, right? What if we helped people open up a small business and made it so you're not taking 30% and in sort of just thinking a little bit differently about stuff. And so yeah, that's how I think about antitrust is it's just good the conversation is happening Yeah, because I think a lot of people just feel trapped underneath the weight of big tech. Yeah, I certainly do

I mean, there's no choice but I have no choice but to be on Instagram right for I need it for work I have the I have no choice but to post in all these places and deal with them I have no choice but to buy an iPhone if I wanted if I wanted another choice I could buy an Android. Great, some choice that is, you know? And yeah, I mean, people really feel it. And yeah, if there was, the promise of the early internet, right?

The exuberance of, oh my God, anybody can do anything in this place is like gone now. And that would be a better vibe, right? Yes. Yeah, there be a better vibe, right? Yes. Yeah, there's a good article called The Money Isn't All the Wrong Places. It's talking specifically about Hollywood

and how Sydney Sweeney has had a hard time making money. This article's incredible. What's the name of the writer? Defector. For Defector. But I can't remember the name of the author. I like DM'd her. I love this article so much.

It was a very good article. Yeah, and it was about how, yeah, even Sydney Sweeney was talking about how she sort of feels compelled to take jobs and stuff like that because she didn't come from money. And a lot of people turn their nose up at that because they're like, oh, she's a big movie star, isn't she?

But actually, she's a working actor and life for a working actor is worse than you think it is because all the money is being hoarded by the people at the top. Yes, exactly. Yeah, and she feels like she can't even take six months off to have a baby, right? And so I think that's another good example of the influence, not specifically a big tech.

Well, sort of a big tech is like, there is sort of this concentration of wealth that's happening and it's quite disappointing. There's a chart that I talk about in the book also, it's called the distribution of financial assets, it's from the Federal Reserve. And you look at the top 1% and all of their wealth is tied up into business ownership and equities,

so stock ownership. So they own stocks and they own businesses versus the bottom 50%, all of their wealth is in their house. And so like that's another clear example of like, okay, we need to help people figure out a different way to build wealth. Number one, because like home house as a wealth tool is probably not going to be a sustainable path forward

because homes are so expensive. And then number two, we can clearly look at what works and figure out that we have to help people invest. We have to help them think about small business ownership or employee stock option programs. Because if that's happening to Sidney Sweeney, where all the wealth is being hoarded, we should probably think about the average person too,

who isn't a movie star, but is probably experiencing that exact same thing at a much larger scale for them. There's also a lot of distorting impacts of the bottom 50% having all their wealth in housing because we've talked about if we see, if housing is an investment vehicle that is in conflict with our need to have places for people to live.

Yes, a speculative asset and a home. Yeah, I mean, housing prices in LA for home ownership have gone up in like 60, 70% in less than 10 years. And I'm like, if you own a house, oh wow, I'm wealthy, until you try to fucking move. And then every other place is also that much more expensive, right? That's like not, it's good on paper.

It's not like, it's not good for, you know, your local community. But there also must be something strange about the top percentage of people in the economy having all of their wealth in stock. They have a different incentive than everybody else, right? In terms of what they're trying to maximize. And I have noticed that, you know, at the same time, since 2008, right, there's been

a lot of financial hardship for a lot of people, right? The economy has not gone well for a lot of people. The one thing that has consistently done well is the stock market. It seems like, right, in that time we've had pretty much an unbroken run-up since 2008, with the exception of going down since the pandemic. So it seems like, hey, the one thing the people running the economy know how to do well is to make sure the stock market always goes up. That doesn't benefit, that benefits them, it doesn't benefit, you know, the broad slice of America

because that's not what most of us are told to invest in. And they should be told. I think that's the disappointing thing is like more people should be invested in the stock market and have that wealth generation opportunity. And that's how you build wealth in the long run. It is a better tool than a house to build wealth because it is liquid.

And the companies are doing quite well. And then of course you play devil's advocate and be like, well, if you want the antitrust stuff to work, then the big companies are gonna be broken up and that won't be so good for your stocks. But I think if you're bullish on the United States as a country, like the stock market is a good thing to invest in Not investment advice, but for a lot of people they just don't do it

And it's not their fault. Yeah, why why don't they do it? It's confusing. Yeah, it's really confusing and you're like, well, what do I buy? What do I do? Yeah, okay downloaded Robin Hood. What's next? Well, so I got the lesson and by the way, we could wrap up at any point, but I really wanna dive into this. I got the lesson when I started working in TV and I had a little bit of extra money. I got the lesson of find an index fund and put your money in it and leave it there.

And there's various robo advisors that will help you do that. And I ended up going at Vanguard because that's what my parents used. And it's like, okay, they're owned by the people who own the stuff. So it's sort of a different kind of company and whatever. And Vanguard has real PBS vibes, you know what I mean? It's like really just like, it's sort of chill there,

you know, whatever, et cetera. But it was like a lot of work to get that set up. And it was like a little bit strangely difficult, you know? And I've really noticed that to the extent that stock, I can recommend it to somebody, but I have to sort of go, hey, sign up for this website. And the website's a little confusing. And then you have to get the advisor and that. That's your bank account. Yeah. Or you can tell someone to do, you can go on Reddit and like read, you know, r slash Bogle heads or whatever, and like learn how to do it yourself if you want your hobby to be buying fucking index funds. But that almost nobody wants to do that, right? So what ends up being popularized is it's like

the app Robinhood, which is essentially encouraging people to like day trade Tesla stocks, right? It's like that is not really stock market investing. And so a lot of people I know don't pay any attention to the stock market because they are like, that's gambling. And they are right because what is being presented to them is gambling. And I also know people who are like basically

doing stock market gambling. They're like, oh yeah, I invested in this and I sold it. Yada, yada, they're doing like fan duel for, you know, for stocks. But it's, so the public, a lot of them think that the stock market is a form of gambling because they never got the message of, hey, there's a way to do it that is,

that is actually the most reliable way to invest. I know, yeah, I know, it's really disappointing. A lot of my friends are like, well, stocks are gambling. Like, why would I invest in that? Like, that doesn't make any sense. Cause GameStop kind of scarred the industry. Yes. That was a big one.

And then you kind of see the rocket emoji guys being like, to the moon and that feels bad too. And I think for a lot of people, they're like, I just don't want to think about it because it is confusing. And there is that kind of that internal resistance to it, where it's like, I don't know where to start. So I'm not going to start. And I do this with stuff all the time where I'm like, I don't know how to do it. I'm just going to not focus on that right now. And the thing is, like compound interest is your friend. And I think so many people

are missing out on building wealth because of that, because of that internal fear and because of the messaging on stocks maybe not being for them. But in reality, it would be really helpful, I think, for the average person, non-investment advice to invest. You know? I love how often you say non-investment advice. It would be helpful for you,

non-investment advice to invest. All right, mixed messages. No, I just don't want to get in trouble To invest, all right. Mixed messages. It's not advice, yeah. Well, no, I just don't wanna get in trouble. Yeah, of course. Yeah, but I think it's so important. And it's something I try to talk about in some of my videos, is like, how do you invest? How do you do it?

I don't spend a lot of time on it, but I should spend more, because my theory is, number one, people have to understand the economy. I get a lot of pushback on that from my friends too, where they're like, I'd rather think about other stuff. But I think if you're a part of a system, you have to understand the system in order to improve it. And the economy is everything.

It's buying a cup of coffee, it's driving, it's buying a book, buying a book, for example. It's everything. And I think the stock market is a reflection of the economy. Like the stock market is not the economy, but it's kind of like, if you think the economy is gonna grow, if you're a citizen of a country,

like you should probably have a stake in that stock market somehow. And we just have to give people the tools they need to understand that. Well, also a lot of people, and I'm getting in before people write this in our YouTube comments, because I know they will. They will say, I can't invest

because I don't have any fucking money, Kyra. Sure, sure, sure, sure. I am paying for housing and medical care and I have nothing left. And we don't wanna be saying, oh, well, just don't have the Frappuccino avocado toast bullshit and put your money in an index fund instead. It requires sacrifice.

Yeah, I started investing when I was in high school and my dad like set me up with an account and it was all my own money, but he set me up with like a children's account and I traded options and it was insane. But basically like I just. You were to the moon. You were 14 years old.

I took like 50 bucks and I did what I could. And that's all it takes. And I know it sucks. Like it really sucks to be like, oh, $25 just do this instead of something cool. But I think that's the power of compound interest is like the money will grow over time because that's like what compound interest does, right?

And the stock market does trend upwards over time. There's like monster energy. For example, if you invested, I think $10,000 in that in like 1993, you'd have, I believe a couple million now. Yeah, but you wouldn't advise people to put $10,000 in any company, right? It's like, it's about putting it in the entire,

putting it in the entire economy. Yeah, and that's why ETFs and indexes and retro funds, like those, that's why those are so great. But it just, there's a reason that rich people talk about the stock market all the time and it's because it does a good job. Yeah. But returning to whether or not people are actually have, are able to invest, right? If they're able to afford to invest and returning to the vibe session, like, and you said the difference between wealth and prosperity, you know, is, is part of the problem, just that a huge amount of the country is simply not being paid enough money to live.

The country as a whole is doing well, and yet we have huge inequality. Massive. And if you average, the average person is having trouble paying their bills kind of all the time. Yes, absolutely. And I think we just have grown. They have kind of kept the time. Yes, absolutely. And I think like, we just have grown. Like they have kind of kept up with inflation. Like we've actually seen relatively strong wage growth

that's starting to stagnate now. But- Over the last couple of years, not over the last couple of decades though. No, God, they were stagnant for decades and decades. It's only been since the pandemic where companies were like, oh geez, we gotta pay people a little bit more because they're getting absolutely toasted by inflation. And so that's been really the only time that we've got to pay people a little bit more because they're getting absolutely toasted by inflation.

And so that's been really the only time that we've seen it. But I think wages definitely should be higher. There's a good conversation about productivity gains and how wages have not kept pace with productivity gains. So like basically since the 1970s, there's been a huge gap between productivity and what we would expect wages to do relative to productivity. And so if wages kept pace with productivity, I think the minimum wage would be like $24 an hour.

Yeah. And meanwhile, you've got, you know, workers, the fight for 15, right? And now we've got a $15 minimum wage in some states. Yes. And in some states it's still seven. Which is crazy. Yeah. And it is, yeah, it is, um, it's not very, uh,

mindful to be like, invest your money when that's the case. Well, there's a cohort of people who do need to hear that message, right? But then there's also a cohort of people who like, what they need is for the rest of us to get them to be paid more than $7 an hour. You know? So let me tell you what I'm a big fan of, is bonds. And I'm not talking about like, treasury bonds, I'm a big fan of, is bonds. And I'm not talking about like treasury bonds, I'm talking about care bonds and baby bonds.

So care bonds would be like basically a financing instrument to expand childcare worker pay, to invest in childcare facilities. It's basically a bond that companies can buy, help finance all that stuff, they get paid a little bit, whatever, and then baby bonds would be a bond. This used to be something that we did, is we would give like a bond to a baby

and then that would mature as the baby aged. And I think that would be a great way to set people up for success. Because right now we have no social safety net. We're kind of like, go figure it out everybody ever. And that's just, I don't think sustainable. Yeah, we've got a GoFundMe economy. Yes, oh God, yeah.

But these are things that don't currently exist, these bonds that you think should exist. I think they should exist or bring them back. Yeah. Private credit has been like an expanding industry, which is a sister to private equity. And so it's these companies doing like basically private bond deals and they invested, there's this big new story about them investing in this company that's making the money and helping them finance a dividend for a company that's not making any money.

And it's like, well, what if that private credit money went towards like care bonds or baby bonds or something else? Like what if we just kind of put the money that's in the wrong places, in the right places a little bit more? Yeah. And I mean, that's why, you know,

that's when I start to go, I think something is wrong with our economic system, right? Cause when you let it run sort of by itself, you end up with those misallocations and you need like, I don't know, a democratically elected government to like, you know, fuck with them a little bit, you know, put the finger on the scales and make sure things go

in the right place a little bit. You don't believe in the invisible hand? I mean, look, I don't put isms or ists on myself. I just observe the world around me and say, it sure seems like, I don't know, it sure feels like a new Gilded Age. Seems like we could use a new deal. You know what I mean?

In terms of having, you know, intervention by people who are actually trying to make the lives of average people better, because you know, the excesses of capitalism, when it runs amok, you know, the things that have been happening happen. The companies buy each other, the money gets centralized among a few people

who, you know, spend it all on, I don't know, building rocket ships or whatever, while everyone else starves. You know, the whole world gets enshitified, products get worse, you know. And I think it's bad for the economy generally, right? Because like when people are doing so poorly and they're not able to buy shit,

then the people at the top also can't, they have no one to sell their shit to. Like it ends up being, I don't know, sometimes it seems like the Marxist view that like capitalism contains the seeds of its own destruction, you know, you just walk around the economy and go like, yeah, I kind of see that happening in a lot of places.

And like, maybe we need some corrective action. Yes, absolutely. And that comes in the form of investment, right? And from different policies being passed, but also reallocation of resources. Have you ever read Octavia Butler? Oh yes, yeah. She's incredible.

I love her. I'm afraid that's what we're skyrocketing toward if we don't sort of get it sort of. Towards which? The Parable of the Sower? The Parable of the Sower. Okay, I thought you were gonna say Dawn, because that's, have you read that one?

Not yet. Okay, so that's one where like aliens Kidnap humans and then they fuck them and I hope we're not skyrocketing towards that it is It's a that they keep on messing with space We could find those really fucking pervy aliens that book is insane Oh is it yeah, it is so good Oh, is it? Yeah. I haven't read it yet. It is so good. It is the first book of hers I ever read.

And it is one of the most. Oh wow, what an introduction. One of the most unsettling books I have ever read. She's an unsettling author. She is. She's great. She does not give a shit what you think. No, no. Yeah. But like in Parable of the Sower is like so intense, right? And like that would be an extreme worlds intern too.

But kind of that, you know, you have the street poor as she calls it and everybody's kind of the other people are hidden behind these walled places and it's just because we hadn't taken care of each other. There's drugs on the street and there's not enough water and water is now regulated. There's a fee for calling the police and calling the firemen. Like that's, we just have to be careful. Like fiction, I think is oftentimes a great predictor. Art is a good predictor of the future because those people are attuned at a level that I can't even imagine being attuned at, you know?

Yeah, she wrote that book in the 70s and it was, she had a wonderful sort of, long after her death, career resurgence of people rediscovering her work. But a lot of that was based on people reading Parable of the Sower and saying, wait, we're halfway there. Like she wrote that in the 70s,

but now 50 years later, I've, yeah, she was right about a bunch of this stuff. So to round this out, to prevent us from entering that future, right? If you, and bring it back to the election, if you were running for president, or if you were putting together the economic agenda for a presidential campaign,

like what would you like to see happen to prevent some of this bad future, to correct some of the ills of our economic system? Well, I've been so excited to hear the talk about housing coming from the Harris campaign. I think that's great. The Biden administration has already done a lot of great work with housing. I think that's super duper important. You know, I think talking about expanding Medicare is also important and thinking about in-home care, I don't, that's going to be quite expensive to finance, but that's another great thing.

I think there needs to be a huge focus on public education, improving schools, paying teachers more, stuff we've been talking about forever. There was this interview with like Johnny Cash and Chris Christopherson from 1990 and they were saying basically everything I just said. And so nothing I'm saying is new, but yeah, I think, you know, expanding education, thinking about green energy investment. And that's actually happening from the private sector with Amazon and Microsoft being like, we have to fuel the AI machine. So we'll invest in nuclear, which I think is still good. We have to invest in infrastructure, especially climate resilient infrastructure. The hurricanes are devastating. And if we can build homes that are more resilient to that and office buildings, et cetera, that are more resilient to

that, that's going to be extraordinarily important in healthcare. I think I already said that, but yeah. Yeah, something I, a theme we come back to a lot on the show is we have so much electronic technology, or that technology has gotten really advanced. Our social technology has not caught up, where we have not put things in place in our economy, in our democracy, et cetera,

that will make everything run better for everybody. Like we have literally discovered new things about how to make the world better. And like, we just have trouble implementing them. It's harder than building an iPhone, but we're in this world where like the streets are crumbling and people are living in tents, but we're walking around with, you know,

incredibly advanced cell phones that are like shockingly cheap for, I mean, they're expensive, but they're cheap compared to what you fucking get in them. You're holding a space shuttle in your hand, and yet walk around Los Angeles and you'll see how nothing has improved. And so you're talking about a lot of that, just like this is like basic.

Social investment, yeah. And I think that's just what we need. Like I think the computers are so important and very important to how we probably get out of some of this mess. But like we have to think about people and like clearly people are not doing well in a lot of ways and we can't move forward

if everyone can't come along. Yeah, well a good step in that is as you say, getting educated to how the economy works, which is why you wrote this book. In this economy, you can of course pick up a copy at our special bookshop, factuallypod.com slash books. We always sell a couple copies, so hopefully you'll get some nice royalties off of that,

but where else can people find your work on the internet? Yeah, so I'm on Instagram, I'm on TikTok, I'm on LinkedIn, I'm on- You're on LinkedIn? Oh yes, YouTube. I have a sub stack, kyla.substack.com. I have a podcast called Let's Appreciate it and my username is at kyla.scan.

At kyla.scan. We went long because I love talking to you so much. Thank you for being here. I hope you'll come back again in the future. Oh yes, thank you for having me. Well, thank you once again to Kyla for coming on the show. If you wanna pick up a copy of her book, again, that URL is factuallypod.com slash books.

When you buy a book there, you'll be supporting not just this show, but your local bookstore as well. Please check it out. I also wanna thank everybody who supports this show on Patreon, especially those of you who support at the $15 a month level. This week, I wanna thank Rick J. Nash, Birdie Cote,

GD Cillia Howard and Kevin, Fati Merkan, Michael Luru, Cam Darren Kay, and Angeline Montoya. If you'd like to join them, head to patreon.com slash Adam Conover. Thank you so much for supporting the show and helping keep it free for everyone who listens. Of course, if you wanna come see me do standup comedy in Portland, Seattle, Denver, Colorado, after that,

a lot of other great cities, Batavia, Illinois, Austin, Texas, bunch of places. Head to adamconover.net for all my tickets and tour dates. Of course, my new standup special, Unmedicated, is out now on dropout.tv. If you use the code ADAM33, you'll get 33% off an annual subscription. Go check it out. I wanna thank my producers, Tony Wilson and Sam Roudman,

everybody here at HeadGum for making the show possible. Thank you so much for listening and we'll see you next week on Factually. I don't know anything. That was a HeadGum podcast.