The Bulwark Podcast - Felix Salmon: The New Not Normal Economy

Episode Date: May 9, 2023

Globalism is dead, the remote work revolution is here to stay, and more people are pursuing their big dreams in smaller cities. The Covid pandemic ushered in a new YOLO economic era. Axios' Felix Salmon joins Charlie Sykes today to discuss the upsides and the downsides. show notes: https://www.harpercollins.com/products/the-phoenix-economy-felix-salmon?variant=40694169796642 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to the Bulwark Podcast. I'm Charlie Sykes. It is May 9th, 2023. Real sense of deja vu sprinkled on our PTSD. Trump expanding his lead over his Republican rivals to the largest margin yet, leading Ron DeSantis by 40 points. This, of course, comes the day after we had that Washington Post poll, which may be an outlier, showing that Donald Trump would actually beat Joe Biden. This comes as the E. Jean Carroll trial has rested and gone to the jury, and as the United States passes 200 mass shootings this year. And we are supposedly going to be negotiating how to avoid a massive debt crisis. So things are going well, I guess. Joining us today is Felix Salmon, the chief financial correspondent at Axios and host of the Slate Money podcast. And

more importantly for today, he is the author of the just released book, The Phoenix Economy, Work, Life and Money in the New Not Normal. Felix, how are you? I'm very well. And yeah, I think you nailed it. This is not normal. None of the things you're talking about are normal, but we have to get used to that because this is just expected now that weird five impossible things are going to happen before breakfast. Well, this is one of the things that I really took away from your book is that we come out of the pandemic and, you know, there are reasons to be somewhat optimistic. You know, civilization has bounced back from worse things in the past with a sense of sort

of renewed optimism and energy. And yet there is this sense of dislocation. So let's talk about this because the title of your book, The Phoenix Economy, implies a certain level of optimism that I want you to describe that we're going to come out of the ashes. So when you say that we are the new not normal, what is the new not normal? If you remember your first year calculus class or whatever, and the idea of a normal distribution and probability, I should say, not calculus, where you have thin tails and the bell curve and that kind of stuff, the not normal is where you have much fatter tales and many more unexpected events, both to the upside and to the downside. We will have another pandemic of similar magnitude. You

know, we're not going to go another hundred years between pandemics. We are going to have crazy, unexpected things happening, whether it's Trump being reelected or a potential debt default or, you know, AI killing us all or something crazy like that. There's a whole bunch of weird outlier things that have never happened before that are going to happen for the first time and are unexpected precisely because they've never happened before. But also, at the same time, those unexpected things can be positive, right? There can be upside surprises as well as downside surprises. And in fact, a lot of the economic recovery that we've seen over the past couple of years,

the incredibly low unemployment, the relatively strong economic growth, the fact that we have inflation is a sign of so much demand in the economy. The economy is running really hot. And people did not expect that. And I think that so many things got broken during the pandemic that we found ourselves to be able to rebuild them in new and better ways. I think the way we work now is better than it was. I think the way we live now is better than it was. I think the way that we approach mental health issues is better than it was. I think the way we live now is better than it was. I think the way that we approach mental health issues is better than it was. There's a whole range of these things that have improved. And we kind of got unstuck from this local maximum that we were at. Because there were so many shocks and there were so many things that were broken. Yeah, exactly. That the crazy global economic flywheel stopped spinning. The entire economy just ground to a halt.

And then when we started it up again, there was a lot of pain, a lot of damage, six million people died. But also, we could rebuild in a better way than what we had destroyed. And that's positive. You make a compelling case about all of this, you know, the shocks to the work lives, you know, and the transformation, you know, that before the pandemic, power and creativity were congregated in dense cities, you know, winner take all sensibility. Now it is spread out. So, you know, Midtown Manhattan may feel, you know, somewhat empty, but other cities like Austin and Boulder are more crowded than ever. Things have actually changed. Businesses are more accommodating. The way we work is different. We're not going to be going back, changed our attitudes toward globalism. But let me just push back a little bit on the, you know, that things are broken and we're putting them back different. There's another narrative as well. And I was talking to

my colleague Mona Charon about, you know, some of these new polls showing that people think the country and the world is headed in the wrong direction. People seem like they're in a very, very bad mood. They seem angrier than ever. A lot of trust in institutions was destroyed. A lot of trust in stability has been destroyed. Talk to me about that, because it feels that, I mean, yes, you document in a very compelling way all of the positive things that have come out of this, but it also feels like we have this massive hangover because we don't know what's going to happen, who we can trust, or what we can rely on. I couldn't agree more. And this is the flip side of the new not normal, right? It's the big downside.

We had 70 years, basically, from 1946 to 2015 of astonishing stability, certainly in the United States and in Western Europe, but even across much of the rest of the world as well, where businesses could set apart. You could have someone like Warren Buffett just saying, I'm going to bet on America getting richer, and I'm going to make a big leveraged bet. I'm going to leverage my bet up by buying an insurance company, and the insurance company will not lose money because unexpected things won't happen. And that's exactly what happened, right? His insurer made money every year. His companies made money. He became the richest man on the planet. And it was a long, steady, incredibly successful rise in which people got used to institutions. People learned

to trust institutions. And then that started to break in 2008 with the global financial crisis. And then you had Occupy Wall Street and you had a rise of populism around the world. We have really quite scary populist governments being elected know, being elected, Brazil, Hungary, Poland, Turkey, you know, plus, of course, Trump and Boris Johnson in the United Kingdom, we had that, you know, Annas Horribilis of 2016, where we had both Trump being elected and the Brexit vote. And then things just started to break. And then you had the pandemic. And what the pandemic did was it caused what I call the epistemic COVID crisis. People didn't know what was true. People didn't know what to believe. And the only way you can cope with that level of ignorance is by changing

your mind and trying to keep up with the facts and changing your mind as the facts change. And that's not natural and that's not easy. And a lot of people just didn't do it. And they just decided at some point in the pandemic, they were going to find some set of facts about masks or vaccines or whatever you want, and they were just going to stick with them and they were not going to change their mind anymore. And they were just going to look for new stories that reinforced their briars and they weren't going to try and stay nimble. And that, as the facts continue to change, was very bad in terms of creating a world where a whole bunch of people just simply believe things that are false. We have 40% of the United States

population, by some measures, think that Donald Trump won the 2020 election. So we can't agree on facts anymore. We have a fragmentation of the global economy. We don't have the smooth supply chains that we used to have. I make the argument in the book that that's probably good for the United States because it is this like single continent sized market and other countries aren't so big or so frictionless. But it's definitely uncomfortable. It is uneasy. And it has created this YOLO atmosphere that I talk about a lot in the book,

that people are just like, I can't trust that the world is going to be better tomorrow than it is today. You only live once. I better go off and go to Paris, even though I just learned the cheapest economy class ticket from New York to Paris this summer is $1,800. People are paying that. I really like this part of your book where you

talk about this concept of, and I'm glad you called it YOLO rather than marginal rate of time preference. That's an economist speak. Marginal rate of time preference, which is expressed as an interest rate, which basically shows how willing you are to delay gratification today in order to get more tomorrow. And as you point out, for most of our lives, you know, this has been very low, right? I mean, we would defer gratification because we would rely on the future because, and now, you know, after the pandemic, but basically a perfect example you give is that, know somebody that you know keeps bottles of wine very very long time ultimate you know delay of gratification right but when the

pandemic hit felix you started opening up a bunch of the good bottles because it's like why save the good stuff for later no regrets i mean it's really weird if you talk to anyone who collects wine they will tell you the same thing that that they have too many bottles, and they never regret opening a bottle. But that doesn't stop them, you know, having this weird twinge of like, ooh, should I open this? Is today a special enough occasion? Yeah, it is. It always is. So as the, and I'm going to use the phrase again, the marginal rate of time preference as this rises, our desire to consume today rises with it. So here's just a moment of optimism here. You're suggesting that at the end of the pandemic, people basically decided, hey, let's go for it,

and that that can lead to a boom time spending as individuals reenter the world. Is that something that you would be at the hopeful end of this potential spectrum of what can happen after the pandemic? Absolutely. I mean, it's not entirely positive. It definitely helped to drive a lot of the inflation that we're seeing right now, especially since a lot of the spending that we saw during the recovery was in the services sector. And that was the sector that was most badly hit by the great resignation. That was where the really bad, crappy jobs were that everyone quit. And that was the sector that was most badly hit by the Great Resignation, right? That was where the really bad, crappy jobs were that everyone quit. And so you had massively increased demand for those services at the same time as you had massively decreased supply of those services.

And so that created a real nasty inflationary disconnect. I don't know how long that inflation is going to last, but it does basically bespeak a revealed preference in terms of the United States citizenry as a whole of like, we just want to be spending more money because we, you know, probably, as you say, our marginal rate of time preference has gone up. And I think people are going to recognize that. I mean, so in this Phoenix economy, I mean, there are some of these positive signs. You know, we have tight labor markets, entry-level service jobs have never paid so well. It's always interesting driving by a local

McDonald's and seeing, you know, starting pay $16 an hour, you know, for just your line worker. People are taking advantage of this, you know, to find out what they really want to do in life, you know, that, you know, people figured they were stuck in a rut and they're doing this. You call this reset an etch-a-sketch. People had one picture of the world, but they shook it up. I mean, that's a big thing. Yes. In fact, people are redefining their lives, their values, and the way they interact. I mean, that's something that it takes something of the magnitude of the pandemic to pull off. Exactly. And we're going to see the repercussions of this echoing for a decade. I feel already people are reading the book and they're telling me, oh my God, this was traumatic. You made me relive some of what it was like to live through the

pandemic. I try not to think about that kind of thing. And that's true. But just because you don't think about it doesn't mean that it isn't touching everything you touch. It isn't around you. It's the water that we're swimming in. And I make the case that basically those 70 years of peace and prosperity that we had after the Second World War were in large part because of the Second World War were in large part because of the Second World

War. They were a reaction to the Second World War, and often quite consciously. The United Nations, the Bretton Woods institutions were an attempt to make sure that never again would we have a war of that magnitude. And with the pandemic, I think it's less conscious. I don't think that we have a kind of like, we will never, you know, have another pandemic or anything like that. But I do think that the repercussions are going to be almost as far reaching. Well, as you point out, you know, periods of great stress and mortality often precede periods of growth and innovation. World War I gave way to the roaring 20s.

The end of World War II kicked off what the French called, you know, the 30 glorious years of global growth and prosperity. Okay, so that's one aspect of it. But let me just go back to my darker version here, this hangover that we have right now, because millions of Americans or people around the world apparently, you know, sat in their basements at home and they got themselves, you know, tattoos and they went down bizarre rabbit holes. We have this pandemic of loneliness, of real alienation. How does that play itself out? I mean, you know, the conspiracy theorists, you know, this guy that just shot up

the mall in Allen, whatever was going on with him, You have that whole incel culture where we have an entire group of people who just don't actually interact with real women. So they decide they hate them and whatever. I mean, this also seems like something we're going to be dealing with for decades. Absolutely. And that's definitely a huge part of the downside of the new normal, we had a bunch of hibernators and people who just retreated into their screens. And for some of us, it was fine. And for some of us, it absolutely was not. And I think it's fair to say that all of us saw our mental health diminish at some point during the pandemic. It was not good for any of us in terms of mental health. But again, that was not evenly distributed. And there was a fat tail of mostly men at the extreme end of the sort of mental health degradation spectrum, if you want to think about it that way,

who, yeah, became radicalized in very, very terrifying ways. We also saw a massive increase in risk appetite. And I write about this at some length in the book. And a lot of that risk appetite was positive, but a lot of it was negative. We saw an increase in smoking for the first time ever, certainly in my lifetime. We saw an increase in drinking. We saw an increase in speeding. We saw an increase in like all manner of, if you look at the mortality rate for you know 18 to 25 year olds it went through the roof and not because of covid they weren't dying of covid they were dying of like just risky behavior we're gonna die anyway might as well just enjoy it go out with a blaze of glory

something like that i don't even know if it was conscious you know smoking is a blaze of glory but they definitely started dying at a rate that was absolutely terrifying the rivaled in fact exceeded the rate that they died during the aids epidemic i mean it was really bad and the increase in violence and the increase in gun sales and the increase in gun deaths and we're seeing record mass shootings this year and by the way it's not just mass shootings it's gun deaths more broadly including suic, bespeaks a real mental health crisis in this country, which is a big problem. It's a problem we don't know how to solve. The only silver lining that I find in that is that because it affected all of us, I think we do have a little bit more

compassion these days. If you look at the outpouring of people sort of feeling for Jordan Neely, the man who got killed on the New York subway, who was struggling with mental illness, you know, people are like, yeah, we have to have compassion for him. And you're seeing that more and more,

but that on its own will not be enough. We need to find ways to reincorporate society. And I think it's going to be super hard, as I'm sure you say every single episode of your show. We live in a deeply fractured, balkanized society, and there aren't any forces that really reach across all of America to bring it together anymore. It's interesting that you would bring that up about the compassion for, say, Jordan Neely, because the flip side of that is I find a new callousness or a compassion fatigue as well. And we do have this sort of, you know, cultivated cruelty out there, which is sort of the flip side of this. So it is true that you have, you know, many Americans who are, in fact, more compassionate, more empathetic.

But I'm struck by the number who are willing to express their lack of empathy. Maybe that is part of the disconnect that if you haven't actually been interacting with human beings for three years, if you've been dealing with them through your screen, you do lose a little bit of that human touch. So I guess I'm not sure how to balance this out. And it also depends which little filter bubble you're in. I'm in my liberal Manhattan bubble, and then there's an equally large bubble of Tucker Carlson viewers. I don't know what they're up to these days, but his show was definitely not heavy on the compassion. We can agree on that. The more I think about this, you know, we're talking about the impact on the economy, is that it's impossible to understand what's happening with our politics and the polls

without understanding this as well. And going back to this question of the, you know, malaise hangover, let's talk about how the economy is doing, and the public tends to think we're in a recession. We're not in a recession. Can I just mention my favorite YouGov poll, which is wonderful, which they've been running for over two years now. They've gone to 2,000 Americans every week for two and a half years and said, do you think we are currently in a recession right now? And every week for the past two and a half years, a majority of Americans have said yes. Well, they're stuck on that, aren't they? I don't know if anyone thinks that we've literally been in a recession for two and a half years, but there is this general feeling that, yeah, things are really bad right now. And I don't understand it given, you know, the job market, you know, how can you think we're in a recession when unemployment is at three and a half percent? Come on, Felix, you do understand because you wrote this. I'm learning this from you that

people basically think the terrible stuff that happened with the start of the pandemic just kept going, right? I mean, it's mentally, you're stuck, like, things are really bad, things are falling apart, I don't know who I can trust, I don't like other people, and therefore, I'm going to be in a bad mood, and I'm going to be in a bad mood about everything. Yeah, do you remember that brief period in 2020 when everyone was talking about a k-shaped recovery oh yeah and yeah and that was the thing and i think a lot of people really glommed onto this idea of a k-shaped recovery and i think a lot of people on the left are very committed to this idea of things are terrible and need to be fixed and so they find it hard to get their head around well things

actually aren't very terrible and inequality has come down and the poor earning more money than ever and they're richer than ever and they've got fewer debts than ever. And those are uncomfortable facts for the left, you know, in a weird way. And inconvenient for, say, Joe Biden or the Democrats, because, you know, on the one hand, they want to say, see all the great things we've done, how well things are going. If you're the incumbent, you want to be able to do that. But you have folks on the left who are like, no, no, no, we have all of these terrible problems. And even though economic inequality is going down, obviously, they're never going to claim victory. So you have basically both sides of the political spectrum explaining that things are really craptacular, but from slightly different angles.

Yeah. And I don't know if you remember last year, there was a lot of talk about this thing called a vibe session. I have no idea what a vibe session is, but people talked about it a lot. And yeah, I think that's it. There is a sort of malaise that doesn't show up in spending, doesn't really show up in individual activity. People themselves generally feel quite good, but they think that everyone else is feeling really bad. So let's go back to the not normal economy, because, you know, it strikes me, you know, that we need to expect the unexpected. That's always been true. So what's different now is I think that people now kind of are a little bit more on edge, that the unexpected, which has always been possible, rattles them a little bit more. So let's talk about some of the things that are

rattling people. We have the debt problem. Let's talk about the banking crisis. Why did these banks, Silicon Valley Bank, First Republic, Signature Bank, why did they fail? Because, and again, for people who are on edge, not knowing who to trust, there's a certain like little echo there, like, oh, we're going to go through this bank shit again? Right. Right. This is super interesting. A bunch of moving parts in that question, which is a really good one. The first thing I should say just straight off the bat is if you are a depositor at a bank, you have nothing to worry about. End of story. Like if you want to worry about AI killing us all, if you want to worry about the debt ceiling, like all of those are rational things to worry about. If you want to worry about another pandemic,

you go ahead. If you want to worry about, my bank is going to fail and I'm going to lose my money, don't. Even if it does, you'll be fine. I was actually a customer of First Republic Bank, and I was fine. I still have the same account number, the same routing code, nothing has changed.

So there's not a rational thing to worry about there, but the banking system as a whole is in trouble. It is based on trust. And as you say, we have a crisis of trust, a crisis of legitimacy in all institutions, including banks. It has become very easy to move money out of banks and into places where your money earns a lot more interest, like money market funds or treasury direct. And people worry that the banking crisis is going to be a replay of 2008, because we remember 2008. And 2008 was a banking crisis that turned into a global economic crisis. This banking crisis is not going to turn into a global economic crisis. But more generally, I think it's the case that because we've had two spectacularly bad recessions, the last two recessions in 2008 and 2020 were historic in their magnitude. Most recessions aren't anywhere near that bad. And the lesson

that we've learned is that recessions are terrible. And so whenever anyone says something like, oh, you know, there's a banking crisis, interest rates are going up, the Fed needs to break the back of inflation and is willing to drive us into recession to do so, everyone's like, oh my god, recession, that would be really, really bad. That's going to be like 2008 or 2020. Not necessarily. A recession can be mild, it can be short-lived, it can be no big deal. It can be like the 2000 recession, but no one remembers the 2000 recession. But politically, given that psychology, even a mild recession will be greeted by most Americans as a catastrophe.

Yes. Yes. I'm just thinking in political terms. So can you explain this to me? Because apparently nobody else can understand what exactly is going on with this economy? You know, the Fed is raising the interest rates, trying to cool down the economy. And yet we just keep creating these jobs. Inflation will not come down. Is this part of the new not normal of the unexpected? It's like, wait, these things are supposed to happen and it's not happening. They're pressing the buttons and it's not working the way it used to. Right. It's like the transmission function from monetary policy to inflation. No one really understands whether it's working or the degree to which it's working. Certainly, inflation is lower than it was. It's come down from 9% to 4%, thereabouts. But was that because the Fed raised rates? Would it have done that anyway, even if the Fed hadn't raised rates?

The higher rates were meant to result in higher anyway, even if the Fed hadn't raised rates? The higher rates were meant to result in higher unemployment, and they haven't. So, you know, it's not obvious what the higher rates have done in terms of helping the Fed bring inflation down. They don't really have any other tools, so they're just going to have to stick with that one. What is clear is that they've really hurt the banks, right? The deposits have all fled the banks in search of higher yield sales swear, and that's left the banks much less profitable than they used to be. They have much more expensive funding

than they used to have, and interest rates broadly are higher, so people don't want to borrow at high interest rates anymore. And so, yeah, that's made bank profitability go away, and that's going to probably be a headwind on the economy as banks lend less. So probably that will help to reduce inflation.

But yeah, as I say, we're in the new not normal. And does slower economic growth mean lower inflation? Historically, according to economic theory, yeah, it does. But right now in this particular economy, who knows? Okay, does Jerome Powell know? Who knows? Does Jerome Powell, the head of the Fed, do they know what they're doing? Jay Powell, I mean, he's pretty honest about what he doesn't know, right? He's pretty honest about saying, I don't know whether this is going to work. If it doesn't work, I'm just going to do

even more of it and hope that that works because I have no choice. Tina, you know, there is no alternative. The only thing he can do to try to bring down inflation is raise interest rates. There is no other knob he can twiddle, no other lever he can pull. So that's what he's going to do. And people are hoping that this last rate hike that we just saw is going to be the last. But if inflation stays high, I'm not sure it will be. So let's just pull back a little bit, because you have a really interesting discussion in your book about how the pandemic helped kill globalism. And that's been a theme of our politics now for the last eight years. And as you point out, before COVID, China and Russia were deeply vested in a single global economy to a degree never before seen in the

history of the world. But with the zero COVID policy, China shut itself down. Russia's been cut off from the West since the invasion of Ukraine. So how does this all play out? I mean, you also describe how we had this really well-oiled machine of the global economy with all the supply chains and everything. And so that was broken as well. So have we killed globalism? Does globalism come back? What is the phoenix that rises from the ashes of globalism? So we have killed globalism. It is not coming back. I know a lot of economists and political scientists who would dearly love for it to come back, and that is wishful thinking, frankly. It is not coming back.

I think it is well and truly dead at this point. If it wasn't killed by 2016, it was killed by 2020. And, you know, lovely trading relationship between the U.S. and China where they both benefited has now become politically extremely fraught. It is entirely possible in the new not normal that we're going to see another major invasion. After Russia invades Ukraine, we could see China invading Taiwan, and that would be catastrophic. We have a general mistrust of sourcing everything that we need from China. And so what we are seeing is, you know, this horrible word friend-shoring, but more broadly, just an attempt to build in resilience by creating regional

economies, regional manufacturing, and that's good for the United States. One of the things that we really learned with the manufacturer of the COVID vaccine was that if you made the vaccine, that country that made the vaccine got first dibs on the vaccine. So the Indians, because they had the Serum Institute, managed to get the vaccine when other countries didn't. The United States was manufacturing the vaccine. And so we got it really early. Canada was not manufacturing the vaccine. And so they got it really late. And that kind of vaccine nationalism was incredibly unfair. You can't manufacture that vaccine in every country in the world. It's really expensive, and it doesn't make any sense from a production point of view.

But it does create these incredibly unfair distributional effects. Ask anyone in Africa, right? So we have created this kind of unfair set of regional economies of which the United States is arguably the strongest. Certainly the United States and China are the two strongest. And so that's probably good for the United States. And when I say regional, I don't just, you know, I'm saying like a lot of the Midwest, as you said, the places like Austin and Boulder and Boise are growing strongly and looking like real economic bright lights. And maybe that kind of resurgence of regional American economic growth is what's going to replace the attenuated supply chains that we saw in the 2010s.

And that seems to be one of the most dramatic results of all of this is the way that remote work has just changed the world. It's changed cities. It's changed the way that people interact with their work. It's hard for me to imagine going back to the pre-pandemic, nine to five in the office in downtown Manhattan lifestyle. What do you make of some of these major companies, though, that are telling people you have to come back, you have to come back to the office? What kind of pushback are they going to get? And who wins that push pull? So it depends a little bit on the industry. The first thing I will say is that the remote work revolution is here to say there's a large number of people who really like working from home, who prefer it to working from an office,

and who are going to seek out the employers who will let them do that. And so there is going to be this sort of reshuffling, another big reshuffling of the workforce, where people who want to work remotely are going to find the employers who are happy with that. And the employers who don't want their workforces to be remote are going to have to find the people who are okay going into offices. There's also going to be a large amount of hybrid work. And most of us, I think, are probably going to be somewhere in the middle. But it does have interesting consequences in terms of how remote you can be, right? One of the super interesting things that we've seen in the first phase of remote work is that there's a lot of remote work within the United States, but very few people actually leaving the United States and working remotely from the Maldives or Portugal or name your foreign country.

I can tell you that my own employer is perfectly happy for people to work from wherever they like, so long as it is within the 50 states. And they basically won't let you work remotely for HR reasons. And we've seen this with Twitter, when Elon Musk fired a whole bunch of European employees. And they were like, actually, no, we work in Europe, we live in Europe, and we have job protections by being European, and you can't just do that. And there was tension there. So that's part of the deglobalization. That's part of the nationalization that's happening. The remote work is making the American economy

just as American as ever, but more evenly distributed across America, which is a good thing. And then you have, as you say, a few boomer CEOs who are like, we need to get everyone back into the office. And some of them will succeed and some of them will fail. And I think it largely depends on how old their workforce is. The younger your workforce, the less willing they are to just follow those kind of orders.

Yeah, I think you can really see that generational strain, you know, particularly with the people with young families who have been working for companies where you have obscene real estate prices and they suddenly realize, wait, if we don't have to stay here, if we don't have to be in New York or we don't have to be in Seattle, maybe we could move someplace and get a house that we can have kids in the yard. You know, possibilities that never existed before. So, I mean, obviously that's going to have, you know, as you say, a long tail, because I have a hard time imagining many of them moving back or going, yeah, I'm going to prioritize having to go into the office every day, as opposed to this lifestyle choice that I've made. And this goes back to the not wanting to defer gratification for 40 or 50 years to have it now. And what we did see over the past couple of years, it's worth mentioning, is the largest spike in homeownership ever that a single generation has ever seen in such a short amount of time. The millennials went from maybe 30% of them owning houses to like 65% of them owning houses in just a couple of years. It was so fast. It was astonishing. And you're right. A lot of those houses were not

within easy commuting distance of an office. Was that also because of low interest rates? I mean, what happened there? Yep. It was because we had that brief window of housing affordability, and it was partly the way that they felt that they had a little bit more opportunity in terms of where they could buy. I have a friend who worked out of the New York office of Axios, and she was like, you know what? I'm going to buy a house in Nashville. And she did, and she could. And that would have been unthinkable pre-pandemic. So let's talk about my least favorite topic of the day, which is the whole debt ceiling debate. You pointed out earlier this week that, you know, I wish more people would actually say the obvious thing, which is this whole idea of having to vote on the debt ceiling is insane.

This debt ceiling shouldn't exist. It should be abolished. But nobody wants to say that. So we go through this incredibly self-destructive kabuki dance. To put it more accurately, everyone wants to say that except for the people who matter, which are the elected politicians. It's almost like completely received opinion among anyone I talk to that the debt ceiling makes no sense and it should be abolished and it shouldn't exist, right? I mean, that's completely obvious. I have yet to hear a single good argument on the other side. The weird thing that I don't understand is the

degree to which elected politicians refuse to say that. Especially because we have a constitutional obligation, right? I mean, it's in the Constitution. 14th Amendment. Yep. You know, I think you made the point. We have this constitutional obligation to ignore the debt ceiling, but nobody wants to say that. Yeah, Lawrence Tribe has recently come out in the New York Times and said, yeah, made the 14th Amendment case and basically said that the executive branch has a constitutional obligation to pay its debts as they come due. And if Congress tries to pass a law about a debt

ceiling saying that you can't do that, then that law is unconstitutional. I am down with the 14th Amendment thing. I am down with the platinum coin thing. I am down with anything that avoids the default because the default is clearly the worst case scenario. Okay, how does the platinum coin work? Explain the platinum coin to me. So there's this wonderful thing where the treasury can mint a platinum coin

of any denomination it likes. So it goes along to the U.S. mint, and it says, I would like to mint a trillion-dollar platinum coin. And the U.S. mint goes, here you go. Just make it up. It mints a little coin, maybe just like an inch and a half in diameter, something like that, and it puts $1 trillion on the front of the coin in very small letters because, you know.

That seems like Rwandan monetary policy. And what that does is it's not debt, right? Coins are not debt. If you mint a quarter, you have not increased the national debt by $0.25. You've increased it by zero. You've just minted a coin. And so the treasury can then go along to the Federal Reserve

and deposit that platinum coin in its account at the Federal Reserve and then use that money in that account to pay all of its obligations. It's quite clever. Yeah, okay. But I have this, I said Rwanda before, I'm trying to remember what country, I actually have this bill, this $100 trillion bill from some African nation. Probably Zimbabwe. Okay, yes, I'm sorry. It is Zimbabwe. Yes. It is a Zimbabwean hundred trillion dollar bill. And I'm just not sure that the trillion dollar coins sound like sound monetary policy to most people.

I mean, it's, it's a gimmick. Yeah. Yeah. Are they going to be in circulation? No, it's not like anyone's using the trillion dollar coin to pay for anything. It's just, we's using the trillion dollar coin to pay for anything. It's just... We just make up money. Isn't that how bad things happen when governments just make up money? Just make it up.

I have a chapter of my book about that, which is that what we did over the pandemic is we realized how much of a societal fiction the dollar really is. When we basically vaporized all of the foreign reserves of first Afghanistan and then Russia, we made it clear that that wasn't real. That was something we could just click our fingers and make go away. When most Americans woke up in the one morning and discovered $1,400 in their bank account that hadn't been there the previous day, that made them realize that money is a fiction that the government controls. It always has been, but it's more obvious now. And the government is more willing to use the powers that flow from its fictional status. And doing stimulus checks is one of the things they can do.

Printing trillion dollar coins is another of the things they can do. But in terms of adding to this sort of uncertainty and distrust in the structures and institutions of society, not knowing how long you're going to live, not knowing whether you can trust institutions, not knowing whether your money was real or not are all factors that you identify as part of this pandemic dislocation that's put us in a pretty bad mood at the moment. Yeah, I think that's right. And I think that if we did wind up going down the trillion dollar coin path, then that would definitely send a lot of people spinning out of control and saying like, what even is real anymore? Which is a rational question,

you know? I mean, it's hard to find shared truths. It's hard to find anything that Americans can agree on these days. And, you know, a dollar is worth a dollar should be one of those things. But even that seems to be fading away. So the book is The Phoenix Economy, Work Life and Money in the New Not Normal. So I want to circle back to the beginning because you have this very, very kind of the potential for this huge optimistic rebound. What will it take to get us out of the funk we're in? Because I do think we're in a funk or at least, well, you can challenge that. I just, I mean, I'm just looking at the, at the number of people who think the country is headed in the

wrong direction. And I'm just off the top of my head thinking that it's a greater number than we had even during the really, really shitty 1970s. So what is it going to take to get us over this, to actually say, hey, we are coming back. We are rising from the ashes. This is good. Yeah. Or maybe we will rise from the ashes and come back and no one will admit it. You know how they say the stock market climbs a wall of worry, right? When everyone is pessimistic, that's when stocks go up. That could be what we wind up with. We've had two and a half years of funk and misery, and those two and a half years have seen impressive economic growth and

incredibly low unemployment and lots of things going in the right direction. So it could be that we will continue to be put on edge by the weird, new, not normal, unexpected downside risks that are going to materialize every other week. And that in the face of all of that agita, we are actually as an economy going to do quite well. And that good economy is not going to feed through into happy vibes and good feelings among the populace as a whole. Just fascinating. Felix Salmon is chief financial correspondent at Axios and host of the Slate Money podcast. And his new book, The Phoenix Economy, Work Life and Money in the New Not Normal is out today. Felix, thank you so much for spending time with us today.

Thank you. This is fantastic. I enjoyed it very, very much. Thank you all for listening to today's Bulwark podcast. I'm Charlie Sykes. We will be back tomorrow and we'll do this all over again. The Bulwark Podcast is produced by Katie Cooper and engineered and edited by Jason Brown.