TFTC: A Bitcoin Podcast - #141: Charles Marohn

Episode Date: March 17, 2020

Join Marty as he sits down with Charles Marohn, Author of Strong Towns: A Bottom-Up Revolution to Build American Prosperity, to discuss: - How America has been very wasteful with resources for the last five decades - The problems with top-down decision making - Why centralized economies "on the bike" don't work in the long-run - The morality of Fed policy - Parallels between modern day America and the Weimar Repulic - How small towns can start over and stand on their own two feet - Value per acre - Creating community - Bringing design thinking to city building - Activating unused spaces - much more Follow Charles on Twitter Buy the book Check out the Strong Towns podcast Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app.

What's up, freaks? It's Marty here to introduce this episode of Tales from the Crypt. I have the immense pleasure of sitting down with Charles Marone, author of Strong Towns, a bottom-up revolution to build American prosperity, host of a podcast by the same name, and founder of a nonprofit media company by the same name, Strong Towns. You freaks have probably heard me writing, or you haven't heard me writing, you've probably been reading my writing about the book and listening to my words about the book on the podcast over the course of the last couple of months. It's an incredible book and podcast.

Go listen to the podcast if you haven't already. Again, Strong Towns. Then go buy the book, Strong Towns as well. Really, really incredible book that helps put things in perspective and puts our current condition in perspective. Like I said on this podcast many times, we have a lot of central planners

attempting to micromanage complex systems. And Chuck does a great job of diving into how central planners have tried to micromanage cities and towns, particularly, and how that's led to a lot of waste and a lot of infrastructure debt, which is a big problem. We've got a lot of big problems to solve here. So Chuck and I dive into that. This is a very timely podcast considering the market conditions of our time with everything taking a downturn. Um, we sort of get to the crux of a lot of the problems that we're, we're experiencing right now. So I think you guys are going to love this podcast, uh, and it actually ends on a positive

note. That's the one thing I like about Charles book, uh, is that it gives a lot of actionable advice of what you could do. He doesn't have all the answers, but there's a blueprint of, of ways in which we can slowly, but surely begin to fix the problems that we've brought over the last five decades this episode of tales from the crypt is brought to you by the cash app you freaks already know all about them cash app is letting you do many things all right i said it yesterday for the rabbit hole recap ad i was trying to think of how you could use your boost in these these quarantine times they have

a door dash boost so if you don't want to go to a local merchant and touch their pos system with all the germs on it what you do is you you go to door dash you touch your phone with all your germs on it you order some food you put your door dash boost on you save some money using the boost card and cash app's gonna let you do that on top of that they're letting you stack sats or you stack sats send sats receive sats sell sats if you so please right on the app extremely easy to buy and sell sats uh and on top of that they're letting you send it to hardware wallets to wasabi whatever wherever you so please make sure you're sweeping funds on a regular cadence uh and i believe they're going to make stats stats sats the standard uh very soon seen seen miles suitor

tease it on twitter uh i've i've heard some rumblings that it's coming with an auto dca feature we shall see hopefully they drop that soon and then on top of that they're letting you stack slivers of stocks if you're buying the dip right now uh if your favorite stock was just a little too expensive last week and still a little too expensive this week uh cash app investing is allowing you to buy slivers of stocks you can buy as little as one dollar of these stocks if you so please all right uh and because cash app is directly connected to your bank account there's no four to five day waiting periods you can start investing today all right cash app investing is He's a subsidiary of Square and member SIPC.

As always, make sure you use the code STACKINGSATS. That's one word, STACKINGSATS. And you're going to get $10 if you haven't downloaded the app yet. And $10 is going to go to our good friends at Owls Lacrosse. Use the code STACKINGSATS. Go to your local app store. Download the Cash App today. I think you guys are really going to like this episode

If you do, make sure you smash subscribe On whatever platform you guys listen to this podcast on Give us a rating if you so please If you're willing to And you're liking the stuff, give us a rating Every little bit helps Trying to blow this up We're going to be putting a lot more content out

As people are living the quarantine life Going to try and give you guys some quality information In these trying times And I hope you guys like it I think you guys are going to love this episode with Chuck Enjoy you've had a dynamic where money's become freer than free when you talk about a fed just gone nuts all all the central banks going nuts so it's all

acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. What is up, freaks? Welcome back to Tales from the Crypt. It's your boy Marty Bent here from my quarantine zone. Very excited for today's interview, sitting down with somebody who I've been writing and speaking a lot about in the newsletter and on this podcast. Somebody who's written a book that I've been rereading, first book I've reread in quite a while. uh over the last few weeks i'd like to introduce you freaks to chuck marone uh author of strong

towns a bottom-up revolution to rebuild american prosperity host of a podcast by the same name and co-founder of a media organization by the same name chuck welcome to the podcast thanks man it's a lot of fun i've uh i've listened to uh to the show quite a few times and it's it's pretty cool to be here thank you that's uh very flattering that when you said when you said you you were a fan of tftc over email was my jaw dropped immediately started blushing uh well our conversation you know crosses a whole lot of areas and uh i think it's funny because you know we're sitting here today on a day when and i just shut the ticker off to save my bandwidth but um you know the the dow has had has hit one or two breakers and is down like 10 or something

like that um it's interesting because the i think what you would call the far out you know financial fringe the uh in in some cases like the perma bears or the you know predicting apocalypse people who have kind of been laughed at for a decade now um i'm pretty plugged into them and uh not not necessarily that i count myself among them but i think everybody else would count me among them so maybe i maybe i should just stand up and join the ranks huh uh yeah if you want to individuality is uh is fine you don't have to be painted yeah with a wide brush but i do no i'm very happy that we're sitting down today particularly because as everybody's worried about what's going on in the markets and what the reaction uh from the fed and the federal

government is going to be on a day-to-day basis uh for the next couple weeks i think what you focus on what you've written about and what your life's work is about really gets to the core of of the problems that we're experiencing today and i think uh to sum it up uh in the sentence it's central planners trying to micromanage complex systems and you focus on towns and cities and how these uh these these complex systems have been built over time and how uh they've been sort of bastardized over the last five six decades since world war ii um so i think for the freaks who are not aware of uh strong towns your podcast or the book uh i think we should just jump into uh the the problems that uh the post-world war ii era uh particularly around

expanding suburban areas and not building cities in a very incremental fashion for quite a while has put us in a very precarious situation. Well, this is often looked at as a social issue. It's also looked at as a planning issue. The one thing that kind of struck me back you know almost 20 years ago now was how deeply this is a mess in our finances and by the time we got to 2008 and ben bernanke stands up and says you know the housing market is the stock market i mean the housing market is like the u.s economy um he was not joking he was not joking at all um you know 25 of our economy is directly related to essentially the building of america the physical building of America. And pretty much everything else is like a derivation of that. We've actually

created an economy now, which is essentially like building itself. And for us, the conversation really, and I get into this in the book a little bit, the conversation really starts with the problem we were trying to solve in the Great Depression. And I try to outline this as being rational. In the Great Depression, you had this demand side destruction. You had people who could afford to pay their mortgage getting kicked out of their house because they would have three-year, five-year, seven-year loans with a balloon on the end because that's what local banks did. Local banks didn't issue 30-year loans. And so the loan would come up for repayment. The balloon would trigger. The bank would look and say, well, your house is worth half as much as

it was the last time we did this. And so you've got to come up with the capital. And people couldn't come up. They could continue to make the payments, but they couldn't come up with this big amount of capital. So the federal government stepped in and said, you know, we can solve that problem. We can solve that problem by extending out the life of these loans, ensuring the mortgages, basically like settling down the system. And in a sense, stop that deflationary spiral. The problem is that worked great during the Great Depression. I mean, it stopped things cratering. But after the Great Depression, we found that, you know what, we can really juice the economy by doing this also during, you know, so when things are good, when things are normal,

if we go out and have, you know, create a secondary market for mortgages, and if we juice the housing market and lower payments and lower interest rates and make it easier for people to get into homes, you know what, we can really, really juice the economy. And we can create these cultural stories we tell ourselves about the American dream and prosperity and what it means to live in a great country. And we can kind of associate that with success. And what we found is that for decades and decades and decades, if we just poured money into infrastructure, if we just poured money into housing, if we just poured money into essentially building, we could create a lot of economic growth. And that made us all feel really great.

The problem is, if you look at the foundation of that, the foundation of that is, and we can just call it our cities, we can call it our local governments, we can call it our neighborhoods, the foundation of that is functionally insolvent. When you look at the taxes that you pay at the local level, and I'm not going to sit here and suggest that they are low, they are in many cases, bizarrely high. But you look at those taxes compared to what it actually costs to provide you the services, the paved roads, the sewer, the water, the drainage, the police protection, the fire protection. You start adding that all up, and it's a fraction of what that cost is. The majority of that cost is being paid for by, essentially, the transactions off of growth.

The more quickly we can grow, the more of this we can do. as we find cities struggling more they start to take on more and more debt cities that slow down and their growth rates start to crumble and fall apart we all see this happening all over the place the big story in texas right now is that texas is not california because we're growing so crazy um yeah texas is like 20 years behind california um texas will be california in 20 years california has slowed its growth rate And what you see is the cities financially starting to buckle under that. This is a story we see repeated over and over and over again.

We have exchanged the stability and the strength of our cities, towns, and neighborhoods for short-term growth. And now that we're sitting here on the precipice of seeing that illusion that all that growth kind of dissipated in like one big stock market flame off here, what has revealed are cities that at their core are functionally insolvent. No matter how you value the dollar or how you value, you know, if you just look at resources in versus resources out,

we do not have the wealth, however you measure it, to sustain the investment that it takes to keep our cities running. And there's no one there to bail us out now. I mean, we're kind of in a sense on our own at the local level. and uh you know we've been saying this for years and years and years uh there's a core group of

people i mean thousands of people who who are part of our movement part of our conversation but it's like today as we see kind of these you know the the the uncle sam that we expected would bail us out kind of floundering now too you look around and go well who's here to rescue us um and that list is pretty small that's it's very small that's something i actually tweeted out earlier today is uh you work hard you pay your taxes year in a year out and you expect uh that when shit hits the fan that uh that will that will pay off and the government will step in and help you and the last three weeks is really proving that uh that's that's not gonna happen it doesn't seem like that's gonna happen especially from the federal government well i

remember sitting around in hurricane katrina back in what was it 2004 yeah i think my that was the year my daughter was born, I remember sitting there just watching this going, why are we so incompetent? Like, why can't we just do basic things? And, you know, I'm not one of these people who buy into like, you know, oh, George Bush was incompetent, therefore FEMA was incompetent, therefore like the whole federal infrastructure response was incompetent. I'm kind of like, you know, George Bush, the president, was kind of like the figurehead of this big bureaucratic system that is designed to operate like, I don't know, okay during normal things, but when things really go bad, which is when you need them, they're really not set up to respond

well. And you see the same thing now with the CDC. We've kind of been at a top-down level denying that anything was a problem. We've been, you know, kind of inching along like, well, if we just kind of pretend the problem's not there, it'll take care of itself. And what you're starting to see now is the same thing you saw during Hurricane Katrina. Basically, the void left by incompetence and just, you know, inability to be flexible and adapt is being filled now by state and local leadership. In my hometown, you've got people out arranging like lunches to feed to people and kids are home from school now and you've got ways to get people food and get people medical care and get people brought to different places. This is all stuff that we're doing for

ourselves in the absence of like any competent people to do it. And I think if you grasp that, what you will recognize is that the strength of this country any country any civilization is built off of the strength of the block the local level it's not the other way around because we've got the greatest military in the world because we've got the biggest economy in the world because we've got the biggest i don't whatever at the federal level it doesn't translate into strength at the local level. It's actually the opposite. When you're really, really strong at the core,

then you're projecting like a greater strength at the other end of the spectrum. And I feel like since World War II, we flipped it around. We've got it backward. So you started this with the Federal Reserve. And I feel like that's the whole, like the whole vibe here has been,

if we can just make the stock market look like it's awesome, if we can just paper over all this and and basically pump up asset prices we can pretend we have an economy that is functioning and you know the reality is the opposite we we need an economy that is actually functioning with painful feedback and corrective action and riddiness of malinvestment and and and making like good solid strong investments at the very base level and that's how you build a strong economy and we've gone now we've got 12 years of of paper phony illusion covering up what was prior to that you know a decade or more of paper phony illusion and you know is this the final burndown meltdown it kind of feels like it might be i don't

know they shocked me last time yeah i well i've been saying like i find it hard to believe at this close after 2008 and i really think those scars are still um very raw for a lot of people i think just 12 years later for having to do something even more drastic the crisis of confidence in these institutions is going to be massive um but then going back to the long i actually i actually hope that's true right no i hope that's true the crisis of confidence because i i think you know for so long we've just allowed ourselves to be passive observers of the system and and in a sense it's been a a i think a desire and i i understand it i mean there's this desire to say well i can continue to invest the way i've been investing i can

continue to live the way i've been living i can continue to do whatever because there's somebody out there who's going to take care of this the federal reserve will fix it the banks have got this the treasury department's got it the president has got it um and you know whether you're a trump fan or not or whether you were obama fan or not the idea was that there was you know there's always like a a a system if nonetheless that has got your back and you know the the analogy we've been talking about here internally lately has been if you ever if you fly in an airplane they always go through that pre-flight pre-flight briefing where they show you you know when the when the oxygen mask comes down put your own mask on before you put someone you know your kids on um because you've

got to be stable and taken care of before you can help someone else. And the reality is when 40% of Americans have a negative net worth, cannot make it past the next, if they don't get their next paycheck, they don't eat. That's not a country where we're prepared to, in a sense, put on our own mask first before we help someone else. And how can you call that? I mean, that is not a strong economy that is not a strong country when you have that as the case so i do think that we hopefully the big immediate lesson from this is that large institutions are great when they're the byproduct of us doing collective things together from a position of strength but when they are a proxy for us actually doing something productive for ourselves they are the most

destructive thing we can create yeah and that's i've been trying to decide whether these policies are just outright evil right because the fed policy particularly since 2008 has i don't think it's even arguable i think it's definitely driven a wedge in inequality and the cantillan effect has come into play where the people closest to the spigot of money creation have had uh undue success simply because of the way money is created while the bottom half or bottom 90 percent of america has struggled greatly and and that's and that's what i liked about the end of your book particularly as you talked glowingly about your mother-in-law and how the importance of family and starting from the family and working out is imperative and that's one thing these

policies have done over the course of the last five decades has really destroyed the nuclear family in the 50s you were able to live off of one income um but slowly as inflation hidden inflation started to take over you had both uh both parents entered the workforce and that leads to stress money stress and as you just described 40 of americans are living paycheck to paycheck and that is a huge mental stress uh on the country and and so i think like how do we get away from that like how do you how do you incentivize more localism and and creating stronger towns and families like you said in the book there's no panacea to this there's you don't have like the correct answers or an exact answer for everybody but something has to be done and

one of the favorite one of my favorite analogies that i've actually been bringing up a lot uh from your book was the question proposed by um tomas what's his last name sedlicek sedlicek the czech economist yeah yeah so which question do we want to be an economy on the bike or are we going to be oh yeah two feet yeah and it's how do we get how do we get off the bike that's the question i guess exactly exactly um it's it's it's funny and i think we can say this today with with credibility based on like what's happened in the last two weeks um you know there's there's been a whole like weimar germany thing in my like flipping around in my mind for the for the last 15 years really and the thing is like you mentioned the the inequities of the current system and how

we basically and you can say this in a bernie sanders way or you could say this in what i think would be my way of saying it which is not a a bernie sanders populist way but like we we've rigged this system so that like as you said the people closest to money benefited disproportionately from the flows of capital. When I explain to my family, my friends, how money is created, how the treasury has to buy money from the banks and how this system works just to give them risk-free billions of dollars every year, no one believes me. They're like, no, we can set it up like that. I'm like, yes, yes, that's exactly how we set it up. And no one wants to believe that. The Tomas Sedlicek analogy, I think, is really powerful.

He says, we can have an economy that is like a person standing. And a person standing can run forward, or they can stand still, and they're stable in both situations. So you can make forward progress, or if you have to, you can stand in one spot for a while, and things don't collapse, Things don't fall apart. Our economy today is more like someone riding a bike. And when you're riding a bike, if you stop, you fall over. It collapses. You must keep moving forward at ever accelerating rates or you start to see instability. The fascinating thing about 2008 was that if you look at housing prices going into that, a lot of people think it was housing prices started to drop and then the economy crashed. And the reality was that's not the sequence of events. What happened

was housing appreciation started to slow. So houses weren't gaining astronomical amounts every year. And that slowing of the price increases actually forced the resets or made it so you couldn't cash out every reset. And it basically took the froth off of that housing market. And when that happened, the whole thing came down like a house of cards because it was like a bike. You had to keep moving. And if you were going to stand still, if you're going to have two or three years where housing didn't go up by 5%, 10%, 20%, but only stayed at its current rate, you didn't lose money, but you didn't gain money in your asset. The whole thing came down like a house of cards. That's a messed up system. And it's a messed up system when you get down to

the human level. So here's the, here's the Weimar part of this. If you look at the hyperinflation of Weimar and, and I think sometimes it's caricatured by, and I'm a, I'm a hard money guy. So like I, my portfolio right now has a lot of gold and, and silver and precious metals. Like I'm a, I'm not a Bitcoin person. I told you that before we went on, like, I'm not, and we could talk about that later, but, you know, I'm a hard asset person. When you go, when you look at the Weimar episode, I think a lot of times the hard asset people caricature it as they merely printed money and what a bunch of idiots, they've destroyed their economy. And it was actually more complicated than that. It was a essentially debate or tug of war between keeping people

employed. So you can think of that as like social unrest. You know, how do we keep people busy and doing things? And the instability of having people not gainfully employed versus the instability of having a currency that was, you know, running at high rates of inflation. And so it was this battle. And it was basically like a political battle. You can think of it today in terms of like, you know, do we cut taxes? Do we deficit spend? And you kind of go back and forth and back and forth, you know, or, you know, do we do huge amounts of social spending or do we cut corporate taxes? How do we, you know, get the economy going again? And it's this debate over kind of the yin and yang. But the thing that they both agree on is they both agree that,

you know, like deficits don't matter, keep growing, you know, I know quotes don't do well on the radio, but let me just read this one really quick because it kind of draws to the end what happened in Weimar. Its prospective consequences of inflation became more frightening. The conflicting objectives of avoiding unemployment and avoiding insolvency ceased to conflict when Germany had both. So in a sense, like you say, how does this resolve? It resolves when there's no other course of action. And, you know, Weimar Germany had to, in a sense, fix their economic system. When trying to avoid inflation, trying to avoid unemployment, they essentially wound up with both. So they didn't have to choose one or the other evil. They wound up with both evils.

And I kind of feel like, you know, what we have been trying to avoid here is this reset in our style of living, our pattern of development, our economic model, the people who have largely benefited from it sitting at the center, essentially saying like, here's your options. You know, option A is I get rich. Option B is, you know, what is it? The heads I win, tails you lose kind of scenario. And, you know, ultimately, I think that what is going to happen is our economy will, again, start to relocalize. We are going to see a lot of these big systems break down, and you're going to start to see a relocalization economy.

And the question for me today becomes, how chaotic is that transition? yeah and that's the one thing that worries me the most is is how how much are people going to freak out and again going back to people really expect the government to step in and help them throughout the situation but there are um there are positive cases of people actually making it happen like the the forward to your book um absolutely santa cruz yes yes santa cruz um you know it's it's it's uh you you have people and i i think the extraordinary thing about michelle martinez who wrote the forward of the book um she's an extraordinary person and the whole homeless situation i mean her backstory is amazing but the whole way that they've dealt with homelessness

uh there in the city um you know and really been proactive it santa cruz is not right it's santa anna yes i was i was thinking in my brain like because i we're also doing something with santa cruz which is also right now kind of on the front lines of the coronavirus thing at the local level but it was santa anna and the thing they did to deal with homelessness uh just very proactively is amazing um here's the thing that is extraordinary about michelle martinez there's nothing extraordinary about her. There are Michelle Martinez's in every city, all over the place. And what we have done by, in a sense, deferring our agency to others and centralizing things and basically not empowering the brilliant people like Michelle Martinez at the local level is we've robbed

them of their capacity to do good and to make these kinds of things happen. I think one of the One of the really dark sides of what I think is like the progressive experiment side of the suburban experiment, you know, the kind of progressive side of it, the side that has, you know, if we replace the family with a welfare check, people will be better off side of this, is that you really, by centralizing these responses, I get the immediate compassion side of this. I'm not denying that. And I don't want to go back to the Charles Dickens sweatshops and child labor. I mean, obviously that is absurd and no one wants that. But I talk in the book about my Catholicism and there's a big part of Catholicism that deals with subsidiarity, the idea that we all have an obligation to each other at the local level. And I can say that has a religious component, but I would go a step further, and I think it has just a human component to it. I think whether you are religious or not, whether you're Christian or Jewish or Muslim or, you know, Buddhist or whatever your faith may be, or if you don't ascribe to a faith, I think there's a deeply human thing in most people that is compassionate. it. And if it's given, in a sense, the capacity to fill that void, lots of people do. There's a great book by Rebecca Solnit called The Paradise Built in Hell. And it is all about how people react in the absence of large government systems during natural disasters. And she goes back a couple hundred years and looks at old examples. And then she looks at something like Hurricane

Katrina. And we hear the terrible stories of chaos and mayhem in Katrina. But the reality is for every one of those, there are dozens and dozens and dozens of really human stories of people organizing rescues and organizing food and organizing all these things on the fly, not to benefit themselves, but to benefit everybody around them, people they don't even know. Humans have an amazing capacity for generosity and kindness. And in a sense, our system has crowded it out and reduced it to a caricature of Adam Smith. You know, the greed is good is actually a caricature of, you know, the invisible hand, which I don't think can be read without reading the theory of moral sentiments, which really talks about the human relationship that

we have in these transactions. So I'm with you. No, there's plenty of examples of the institutionalization of dehumanization where people try to go to parks and hand out food and they get arrested for not having permits and stuff like that. And it seems that the system doesn't want this but to touch on um the point you were just making i'm seeing this play out right now i know i'm currently not uh with my parents or my uh my in-laws right now but uh we're my wife is obviously very worried and wants them to come join us where we are soon but they are getting taken care of they they live on a on a block in on the outskirts of philly and chestnut hill where uh they the neighbors have decided to every day at 5 p.m come out on their porches and

have a social distance happy hour make sure everybody's okay the young neighbors on the block are promising to go food shopping for um for my in-laws and other people who are of the age that is perceived to be more at risk so it seems like even now during this crisis at least there's one anecdote of that um which is good right it it's it's interesting because you see the uh the videos from italy which kind of you know inspire the people out singing on their decks and stuff and you're like what a beautiful culture and what beautiful people um we have the same thing here um i wrote in the book about how we uh shovel each other's sidewalks in the winter and it it's it's uh it's amazing because you know the closest thing we really have

to natural disasters here that occur regularly we're not in like tornado alley we don't get earthquakes we don't get hurricanes but we do get the occasional blizzard and we're set up to handle it but the way you handle it is you know everybody kind of goes out and helps everybody someone is stuck in the street you push them out someone's car can't start you give them a jump and there's kind of like a, I think, you know, a formal way to put it, but I think there's just a humanness that we all have where, you know, everyone has been in a situation where they've needed their car jumped. You know, everyone has been in a situation where they've been stuck and someone bailed them out. And so in a sense, we all empathize or see ourselves as the other and

And everybody here jumps out just immediately to go help everybody else. And it's very beautiful. I think the way we not only get through this immediate challenge we have in front of us, but actually emerge from it stronger and better positioned is if we can create these bonds. At Strong Towns, this is what we've been telling people for years. like if you want to do one thing to become a stronger place uh go get to know your neighbors as as like you know uh maybe difficult for some people as that is or as as maybe like you know odd or um awkward as it might be um get to know your neighbors because when you need them you

need to know you need to have some bond already established and you know your parents sound like they're surrounded by beautiful people who are going to help them through this yeah no and as somebody who has lived in brooklyn in new york city for the last uh shit six years now yeah yeah and lived lived in like a compartmentalized ant farm like i there's i know in a building of probably hundreds of apartments i probably know three of my neighbors here's a fascinating thing and tell me if i'm tell me if i'm wrong because i'm from small town minnesota so my city is is 14 000 people um you know half of them named marone not not that many but a a disproportionate number i'm related to around here so i just i know a lot of people and it's a

it's a tight-knit community um i think the caricature that most of my neighbors would have of new york of brooklyn is some like nameless faceless place where people just flip each other of the bird all the time and yell at each other for budging in line or whatever. And there's certainly some of that. I mean, I've spent plenty of time in New York, but I do remember distinctly after 9-11 that there's a very, you know, New York aspect of togetherness. And there is a certain, you know, you see it on the subway and you see it in other places. I feel like New York is in many ways, more of a city or more of a human place than even where I'm from. Because where I'm from, most of the people here are very separated by distance on a day-to-day basis. It's very easy

for me to go months and months and not physically run into someone who lives a block away because they will go everywhere by car and I will go a lot of places by car as well. And we'll just never encounter each other and in new york you're kind of you know rubbing up against humanity for better for worse at all times i think there's something more human about that yeah there's definitely examples of that i think one of my favorites recently is is sometimes i think it was celine dion was in town recently um and all the people who just attended that concert were going home when the subway just break out and Celine Dion songs like yeah yeah yeah but that I've seen many videos of that through many different concerts that's one example um yeah no I think it's it's

a double-edged sword right there's a lot of transients in in New York too um I would include myself true as somebody who I consider myself from Philadelphia and that's where my heart lies but no you do see um see the city come together when uh when it's necessary and a great example that was actually sandy hurricane sandy right i was still living i was still living in chicago at the time but uh was uh in town visiting my wife it was actually like one of the first times we did like the long distance trip and i wound up getting stuck with her uh oh no way in her two-bedroom apartment during sandy but no that was she lived uptown on the upper east side um and that was if you don't if you recall the the lower half of manhattan the power went out

and everybody on the the upper end was yeah and everybody was offering uh people to come in and charge their phones and use electricity so yeah there definitely are examples i'm probably more cynical um just because i've been in it for too long i'm getting sick of it yeah yeah no i hear you it's um it's interesting because we've spent a lot of time in our movement in our conversation um telling people that you know the the craziness that they see around them can't continue and so part of there's a red pill blue pill part of our conversation i mean it's like do you do you're uncomfortable like something's not working about the community you live in something doesn't make sense, we can explain it to you, but then you're never going to see it the old way again. You can't

go back. Once I explain to you why this strip mall is bankrupting your city, once I show you the math behind why your big box store is just financially this albatross that you can't escape from, once I show that to you, you can't unlearn it. And then you will always see it and it will always bother you. It will be deeply disturbing to you. The reason we go through that with people and as part of this process of helping people understand what's going on in their community is because we say, hey, you've got to be there and be ready when people need you. Because at some point, there will be a dislocation. At some point, this illusion, this facade is going to come crashing down. And then we need people of sound mind to step forward and say, look,

we're not going to go to crazy land to try to prop all this you know i can swear on your show right yes we don't swear on my podcast but i'll i'm a minnesota and i try not to swear too much but we're not gonna we're not gonna crazy land to prop all this shit up again right it's not we're not gonna do that we did that in 2008 it got us here it got us to a worse place we're not gonna do that again and so we're gonna be like the adults in the room that are gonna step forward and say, look, now's the time that we're going to do this differently. And, oh, by the way, here's some people in our community that are doing it differently already.

Let's copy them because they're smart. They got it figured out. They're stable. Like, look, they're the ones who kept their heads about them during this panic. Let's follow these people. These people got it figured out. And I'm hoping, you know, you look,

and I've read all of Jim Rickards' books. Was Jim, I feel like there's a Venn diagram that includes your conversation here and Jim Rickards. I don't know. Is that true? A little bit. So Jim Rickards, The Death of Money, and he's got this four-part series.

They're very interesting, but they're very good. His thesis that I find very interesting is that the next bailout will be essentially like the world bailing out the economy. So it'll be the IMF. and the World Bank coming in. And so the Federal Reserve bailed out the banks and the government.

The next iteration will be, in a sense, the world bailing out the Federal Reserve and the system. And then after that, it will have to be Mars or something else bailing out the earth. And he doesn't say that that's going to happen, but he just says like the next bailout will be this. And I struggle to see that. You know, I feel like we're in, to use 2008 speak, we're like 100% correlated.

It's like saying, you know, in 2008, Florida was going to bail out California. Well, no, they were both screwed for the same reason. And when you look around, I mean, it's not like your, you know, Italian bonds that were selling below, you know, the 10-year Italian bond was selling at interest rates below the 10-year U.S. Treasury three weeks ago, four weeks ago. I mean, first of all, that is insane even without this thing hanging over our head. That's insane. The rate of interest was insane given the debt levels and the risk involved and all this.

And now all of a sudden, you're looking at this going, okay, who is the world that's going to bail out Italy, China, India, Russia, Europe, South America, and the United States? who who is this i i don't see it i don't see it happening no you know the imf doesn't have a great track record either um no well and you know the only the the only way and i think this is a little bit of rickard's point too i think the only way that this works is if we all want to believe in it i mean this is this gets to i think what the best argument is for for crypto in a sense is that you know, money is money in dollars, money in euros, money. And it's, it's just a religion. It's like a form of belief. Like I believe in this. And when you go through something like this, at what point do people stop believing in it? And what, at what point do people stop buying the

story? And when you have the federal reserve over the weekend, fire, like the monetary bazooka, You know, like we're going to go to zero interest rates. We're going to ramp up QE again. We're going to start printing, you know, whatever it takes. At what point do people lose faith in that story? And I think when there's no toilet paper on the shelves and there's no food in the aisle and there's no, you know, whatever, they can give you as much money as you want. but like the story starts to become unbelievable and i think the question really is are we going to want to believe the imf story so badly that we will buy into it and i think what rickards has said is that yes we will ultimately like all collectively want to believe that story and so we will and i i don't know if that's true i i really don't know if that's true now i don't feel like it is but i've been wrong either i was wrong in 08 i mean i in 08 i i thought this is the end like this is what we've been looking at like this i never dreamed that the fed would step in

and print trillions of dollars and i want to go okay you know like that that makes sense well i think there's a number of different factors between now and 08 i was a senior in high school when 08 went down so that that is like seared in my mind uh yeah very strongly and i sort of went to college with a know your enemy type mentality like how the fuck they've messed up the economy like this right uh and between now and then we've had the the information age speed up so the the avenues through which people can communicate these problems have become bountiful and people are starting to use them more so i think just with the nature of communications technology now compared to 08 i think it is a lot easier to communicate that hey this is not the

right path to go down i think more people are are being uh are open to that message and and then again the the proximity uh of the crises is such that's like all right if we do this again do we only have another 10 years of runway before it happens again but but that's happening on both sides because there's a, you know, for every conversation like this going on, there's a, you know, a group talking about modern monetary theory and how, you know, we can print our way out of this. And basically it's immoral to not spend up to our capacity every year to alleviate suffering and get people working and get people resources they need. And the thing is like people really want? Let me give you the thing that's been going around in my brain about modern

monetary theory right now. Because the idea is that the way you control it, you print as much money as you need to keep things going. And if inflation starts to appear, the way you deal with inflation is you tax and you tax the money back out of the economy. And the advocates of modern monetary theory say it should be a very progressive tax like we should be taxing billionaires at like really really high rates and people who are lower in the wage spectrum at very low rates um tell me like look around now you've got pandemic you've got stock market crashing you've got you know we will very soon have pension funds defaulting you know like grandma's pension is gonna is the only reason grandma's pension has not been in foreclosure yet is because those places were

taking enormous risks to stay 70% funded. Their projections were, we can stay 70% funded if we have an 8.5% annual return on grandma's pension fund. That means grandma is in a lot of risk right now and is getting creamed. So, you know, these things all go away. Imagine that circumstance and then you know what? Inflation starts to spike. So you know what we're going to do? We're going to go put a huge tax on the economy. Like who the F is going to do that? Like what policy, what Congress is going to say, you know, oh, that's really good economic policy now in the depths of this huge financial dislocation where because of all the money printing, inflation's running crazy. You know what we're going to do? Just a massive tax to get all that money out of

the economy so we can stop this inflation like that. In a real world, what politician would propose that and which one would approve it? I don't see that ever happening. And so again, you're back to the Weimar thing I read earlier. They're going to have conflicting objectives of avoiding employment and avoiding insolvency until they have both. Yeah. It seems like we're getting very close to that and it's it's scary it's scary it i think i think people should legitimately be you know i'm not saying panic because i i don't think panic is a is a really a good i don't think panic as like a physical reaction is a helpful reaction but if you're not a little bit like fearful and nervous about what the future is um you're not paying attention you know i i

you're not paying attention now and going back to the ability of uh these politicians to enact these laws i think this weekend particularly showing that that's probably not likely they can't even come together right now during this this virus this pandemic to to uh give the markets what they want and it's been pretty it's been laid out pretty clearly by the fed and people in the finance world like hey the fed's not gonna be able to do this by themselves they need some fiscal fiscal stimulus to go in conjunction with the monetary stimulus that they're going to put out there if they go out there by themselves things are only going to get worse and it's been a week and a half since the first emergency cut or a week since the first emergency cut

additional repo another emergency cut additional repo and obviously we've been having this conversation may have happened while we're here i doubt it did but it doesn't seem like the Democrats and the Republicans, particularly during an election year, are coming together to seems like ego is getting in the way. I think there's a way to look at this that is helpful. Because a lot of times we lament gridlock. And if you actually listen to, and just for the record, I have people who assume I voted Democrat in the last presidential election. I have people who assume I voted Republican. It just depends on the lens you look at strong towns through. I voted neither. I voted third party last time and I'm going to vote

third party this time. I think the way to look at gridlock at the federal level is that the things that they agree on are the things that are broke. And so they're part of the lie, the underlying narrative, the lie that we want to believe as a country. Those are the things that they agree on. So let's list them. Economic growth, you know, annual increases in economic growth solves problems. It makes life easier. Like Tomas Sedlicek, you know, if you're moving ahead, everything becomes a lot easier. But if you can't survive a period without it, you are incredibly fragile. and the reality is is that both both parties up and down the line from every politician they all agree on a consensus that next year we must grow more robustly than this year and the year after that more robustly and more robustly and more robustly that there's no backup strat there's no plan b to that and so in a sense like everything will be sacrificed on that altar

and i'm i'm here to tell you i am very pro-growth like i think pro-growth policies are wonderful but i would look at the local level and say at the local level if we can have a sunny day uh that's a good day but if it rains tomorrow the whole city shouldn't collapse and implode and we've set up a scenario where every city's set up to implode on a rainy day and so you know that's to me that's not a pro-growth strategy that is a that is a foolhardy strategy um they all agree on you know american uh foreign policy in a sense um you know our our pre the the the idea the concept and they lean into it in different ways and with different intonations but like of an american empire you know america's role in the world um these are the um kind of core

beliefs that are, in a sense, they're part of the big not viable lie that we like to buy into, that we've kind of culturally bought into. And I think where you see gridlock is, to me, not them disagreeing as much as them coming to grips with the fact that the underlying consensus does not work and they don't know what to do because and i'll say this and i talk about this in my book i don't think there's anything they can do i mean i i wrote this piece a few years ago about um i use the analogy of of dinosaurs staring at the meteorites you know coming in and you know the idea is that well how do dinosaurs survive this you know asteroid collision. And the reality is they don't. But if you're a dinosaur and you care about like the

future, you should be trying to like seed mammals, you know, like seed the next generation of like something that will work. And I think that if our, you know, national centralized politicians really cared about America, what they would be doing is they would be trying to strengthen cities, towns, and neighborhoods right now. They'd be trying to seed local leaders who can fill those gaps and step up and be the people in place when they need them. Instead, it's about centralizing power and centralizing the levers of power. And if you vote for me, I can do these things from a top-down level. Oh, no, no, no, no. If you vote for me, I will do these things from a top-down level. And the reality is we need to get bottom up and we need to get bottom up really quick.

And I think this is a good sort of transitional end topic here is the actionable things you can do and one thing i like about strong towns the book particularly is it does seem like even though you'll say you don't have all the answers it does seem like there is uh at least some some guiding principles in there and one thing that really stuck out to me as somebody who has uh my parents recently opened up a coffee shop in our in our small town outside of philadelphia and it reminded me of jimmy's pizza and high point and how you break down uh value per acre and that's sort of a metric that we've gotten away from where big stores like Walmart and Kmart may come in and be on the outskirts of town. Big corporation may seem good for a town, but if you really look at

the value per acre provided by those companies compared to the smaller companies in the small towns, the small companies really, really outperform them significantly. It's absolute. And this is something that I think, again, let's give people the red pill. So shut this off now if you don't want to know this, because once we tell you this, it will change the way you look at things. So if I look at my hometown, we've got the Walmart out on the edge of town. It's worth $6 million. It's a big, expensive building. They pay a lot of taxes.

There's a lot of sales tax that are collected every year. um and when when the when the city council puts together their annual budget and their annual report and then it shows up in the newspaper there's like homage paid to the big box stores because look at look at all the wealth that they're creating um and it's very true if you line up all the creatures on earth uh the elephant the dinosaur will be the biggest most impressive one and you'll be you'll be like oh wow you know that's that's really amazing um but if you go to the downtown and you start to look at the ma and pa shops, the little chocolate shop, the little coffee shop, the little bakery, these little places that we overlook and we discount. Yes,

it's very true. They're not generating anywhere near the big dollar amount that the Walmart is. They're generating much smaller amounts. But you have to look at it in a return on investment. that Walmart on the edge of town not only has a couple million dollars of pipe and road and sidewalk and drainage systems circling the property, right? So we've got a $6 million property with about a million and a half dollars of infrastructure investment. But in order to get that too, we had to upsize lift pumps and do all kinds of stuff to provide that service way, way out there in the middle of nowhere. In the downtown, this little coffee shop, this little chocolate place has like 15 feet, 20 feet of frontage. It's nothing. It's like a tiny,

tiny investment for our community. Even though it's paying much less in taxes, the return on that investment is huge. It's huge. It would be like, okay, what if you were going to go out and invest in company A a million dollars, but next year you were going to lose $2 million. Okay. Well, the million dollar investment is a big investment. Now instead go out and invest $50,000. And the next year you're going to make a hundred thousand. Well, the way cities do it is they look at the big investment. It's like, oh, it's a million dollar investment. Yeah. But you're losing a million. Look at the small, add them all up, do it in aggregate. And what you find is that the Walmarts, the big box stores, the malls, the strip malls, the suburban subdivisions,

the windy cul-de-sac streets, all these things have huge top line numbers. It's like when you just look at the revenue it's like yeah great awesome but if cities look at their expenses and they look at their costs and they they they chart it out over time and they look at what this stuff is costing them every one of these investments is just sucking the wealth out of the place they're losing money over the long term on every single one of these go to that old downtown go to that poor neighborhood where the poorest people in town live the place that was around 120 years ago that now the you know the the houses are in disrepair and and the no one's taking care of the sidewalks and the streets are all rutted start doing the math on that place and what you'll find almost

always we find this exact same thing in those neighborhoods is that they're the ones actually subsidizing the wealthy neighborhoods those places that are paying more revenue per foot and cost less per foot to provide service than all that fat flashy new stuff out on the edge And so cities have the growth narrative correct. We can grow by just simply adding more and more and more stuff. What they have wrong is the wealth narrative. They have wrong the productivity narrative. If you don't build wealth, if you don't actually create more wealth than you're creating expenses, you can grow for a long time and you can take on a lot of debt in the process and you can extend things out and make them look great.

But just like the insolvent company, just like the insolvent family, you will eventually go broke. And when you go broke, everyone in your community is going to suffer and suffer big time. And this is the story literally of every city in North America.

We have sacrificed our stability and our wealth and our strength in order to have that short-term growth. And that Walmart is a horrible investment. And add on top of that, the coffee shop where your parents are at, the one in Milo core downtown, that building, that actual building that they're in has been there 120 years. It was not a coffee shop five years ago. It was something else. And 10 years before that, it was something else. And 20 years

before that, it was something else. And a hundred years ago, it was something else. And I don't even know what it was. And it doesn't matter because that building can be adapted to different changing conditions over time. You look at that Walmart building, there's only one thing that thing will ever be. It'll be a Walmart. And in 15 years from now, when Walmart has a new location up the road, which by the way, has happened once in my little town already, or when Walmart decides, you know, amid this market sell-off that, you know what, we're going to retrench and pull back and only be in places where our profit margins are so much, that Walmart will close and that property will be dead and we'll be paying no taxes. But you know what? We got a million and a half dollars of road

and pipe and drainage and stuff we got to maintain all around it and we have to maintain it because people live beyond it so if you stop maintaining that road what are all the kids who ride the bus who live half a mile up the road from that going to do if you stop providing fixing the water pipe what are the you know 50 families that live up the street that require that pipe going to do this is the disaster that we've created out on the edge of our cities and it's a it's a financial ponzi scheme and you know the only thing that's kept it going is this illusion of wealth this you know big how do we prop up this whole system um you know i i think just wait because the the thing that will come here and you'll know how desperate everything is based on how quickly

it comes is the big huge infrastructure package here's two trillion dollars for infrastructure go build more shit out there. And it's an attempt to prop up this Ponzi scheme. And I think at the city level, it's breaking down big time. You can't grow fast enough to take care of everything you promised to take care of. And that's ultimately the thing that is choking our cities. You know how I think would have loved your book and your whole mentality? who someone has probably said this to you george carlin i couldn't stop thinking yeah that's that that's probably true i couldn't i couldn't stop thinking about his uh america's one big strip mall joke uh the whole time i was reading the book yeah yeah it's funny because

you you look at that and i think his humor is good because it taps into something visceral right like we it it's not hard um let me let me put it this way when we talk we tend to be we tend to attract people from all over the political spectrum and we tend to attract them because it's not hard for people who are progressive oriented to hate on the suburbs it's like oh you're affirming my gut belief but it's also very easy for people who tend to be on the conservative side of the spectrum, to hate on the centralization and the top-down and the way that those systems, without the feedback, without the ability to adapt and change over time, really messes up systems. And so what happens is we have an entry point for everyone on the

political spectrum, pretty much. And then what our challenge is, is to introduce the other half of the equation to them and that's always the that's always the fun part you know we have a lot of progressives who love strong towns and think the answer is uh you know the federal government funding more transit more big transit systems and more big projects we've got a lot of conservatives who love strong towns and think you know the answer is uh build you know have the market build more mcdonald's and build more walmart it's like well dude that's not really the market you know that's that's not like a natural byproduct of like this competitive landscape no i think what you really get hit on in your book which i think more people need to come to realize is the best

way to get out of this is to get out and fucking talk to people uh you you use the redevelopment of small towns you you bring a design iterative process to it which i really like to somebody who did some ux design back back in the day getting out and talk to people learning what their problems are and then quickly iterating on those problems with small little projects if they don't work abandon them go to the next one yeah the tech people have really loved our stuff and it's funny because it it it it was not intuitive to me why until i started to ask like what would and they're like oh we love the iteration like that's how we work we do everything this way why don't cities work this way the idea of go out observe where people struggle uh ask

yourself, what's the next smallest thing we can do to address that struggle? Go do that thing and then repeat the process and just keep doing that over and over and over. And the amazing thing is that one of the best places in the country for doing this is actually New York. Jeanette Sadek-Khan and the Bloomberg administration, this was a big part of how they operated. Let's go out and let's just iterate and try things. And you can see where they were active with very modest budgets, particularly by New York standards. They were able to make massive transformations in places that have really improved quality of life so this is something you know it's having having been trained as an engineer and then worked as an engineer and a

planner so basically work as a private consultant but work for government this was always like the bizarre thing to me um is why governments had to act in you know why we tended to do everything in these big, huge, top-down, like there's no small steps. Everything's got to be a big leap. When the reality is, is like everything in business school, everything in the rest of the world, Steve Jobs is one I talk about all the time. You know, Steve Jobs said,

if I would have asked people what they wanted, they would have told me they wanted a better Walkman. He said, I looked at how they struggled to use their Walkman and I came up with the iPod. You know, like that was the answer to their problem. and at government we we often look at local government particularly as being particularly incompetent like unable to do things and the reality is is government at the local level in particular has some of the smartest most innovative people but they're handcuffed by a

system that forces them to look up this food chain of governments and to position themselves at the bottom of it, in a sense, responsive to what the state does or what the county does or what the federal government does or what the big developer coming in with Wall Street Capital can do. When governments look at themselves in the proper role as a collection of us and they orient themselves to actually look at their citizens and pay attention to what is going on in the neighborhoods. There's an infinite amount of tiny investments to be made, all of which are high returning and all of which actually make people's lives better, like make the city work better. This is not a hard switch and the places that we've seen do it have seen enormous gains

from it. I think it's really powerful. No, I do as well. And as a Philadelphian, I'm happy to see examples of what you talked about in the book come into play, particularly activating unused spaces so in the spring philly will start uh activating unused spaces and make them beer gardens where people can meet after work and talk and right my cousin actually worked at the horticultural society and spearheaded that for for quite some time and it was incredible to see that come to fruition and and how it made people in the city happier and you had people coming in from out of the city just to go to these beer gardens and uh it really developed the sense of community within philadelphia and it still lives on to this day right right yeah

it's funny because once your eyes are open to this none of this is hard i mean that's the thing you've said a couple times and i do say this book like i i don't i can't tell you the answers like i'm not going to give you a five-point plan to fix your city i'll tell you how to think about it i'll tell you how to go about figuring it out and in the sense that that's a plan it's a um but the reality is is like your city is going to be different your opportunities are going to be different the nuances and the culture and all this is going to be different you need to get out and actually with intention look at your place in a different way and i think you know that's a thing that we have struggled with for a long time and i hope that with this transition we're going through

with this reset that is being in a sense forced upon us i feel like it's an opportunity for us to look at this anew i agree and i think we should end it there because that was a positive note let's end it there it's a positive it's a hat because this is a happy you know what it's funny because i do think that there's a part of strong towns that is um reflected in the current angst you know like these systems are an illusion this thing's gonna break it's a big ponzi scheme it's not going to be fun but there's another part of it that is like deeply hopeful like hey if we get off this you know this hamster wheel like if we stop doing these really stupid things and squandering all of our resources on stuff that is making us poorer and worse off not only are we going to be

stronger and financially more successful but we're going to lead better lives we're going to be happier people we're going to have better places like you know we we actually will could we actually will be in a much better place. So I wake up every day, not pessimistic, but optimistic. Even today, I wake up and I'm like, all right, how do we make this? How do we bring people along and help them make their place awesome? Yes. And I'm very much appreciative for you getting out there and spreading your message, writing your books, doing your podcast. It's very important work, especially in today's day and age. Thank you. And thanks for doing this podcast. It's a lot of fun um you know tales from the crypt i'm uh i'm uh i i like the uh i like the whole concept

and uh we didn't talk bitcoin at all but um i'm uh you know i'm uh i'm we'll just we'll just say that i've i've always been bitcoin curious but too innately uh conservative to actually uh to actually do that so maybe we can have a follow-up show where you can shoot me your bitcoin questions and i'll try to answer them as best as i can well we we should do that i i have a bet with a friend of mine um and we had this bet a couple years ago but we renew it every year uh gold and bitcoin and then what's the percentage change every year and then based on that we one of us has to buy each other a drink so um we'll see we'll see a year from now who's buying i've to buy a couple times so i i think uh a lot of a lot of the bitcoin gold conversation tends to pit

bitcoiners and gold bugs against each other but i think we're really after the same thing at the end they sound money actually yeah i actually feel like there's the venn diagram has a lot of overlap um it's just you know i i think your faith in technology i mean i'm 46 i'm not that much older than you, but, but enough older than you were, you know, you were graduating from high school in 2008. I was watching my company go broke in 2008. You know, so, so my view of it is, is less technology rosy than yours. And that's, that's fine. You know, I, I, I, I, I would never say that people investing in Bitcoin are wholly, are irrational or doing something silly. It's just not uh i just can't hold it in my hand and so i i struggle and uh i will help you get over

that hurdle at some point thanks man well i don't know i'm i'm bunkered in here now with the with my kids are off from school and i've got um what we're calling the strategic mountain dew reserve um in the other room because i'm uh i don't i don't do my wife drinks coffee and coffee is very easy to store um i'm not a coffee fan i do a little bit of tea but i'm really a mountain i like diet mountain dew that's my drink so um i had to create i've been over the last month like building up a stockpile of strategic uh we call it the strategic diet mountain dew reserve and um so if you need one you know where to find me i got plenty to share i will be hitting you up if i if that Mountain Dew craving ever comes back.

Chuck, thank you for your time today. Really appreciate it. You bet. Take care. Peace and love, freaks. Take care.