The Pomp Podcast - #508: Karen Petrou on the Federal Reserve & Wealth Inequality

Episode Date: March 9, 2021

Karen Petrou is the co-founder and Managing Partner of Federal Financial Analytics, Inc., a privately-held company that since 1985 has provided analytical and advisory services on legislative, regulatory, and public-policy issues affecting financial services companies doing business in the U.S. and abroad. In this conversation, we discuss the Federal Reserve’s role, COVID-19 response, asset inflation, deflationary environments, interest rate decisions, and what the Fed should do.  ======================= Own crypto in multiple exchanges and wallets? Sync them to CoinStats so you track and manage them from one place. Track 8000+ coins and 300+ exchanges all from the Coinstats platform. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription. ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com ======================= Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains.  =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Karen Petro is the co-founder and managing partner of the Federal Financial Analytics Incorporated, a privately held company that since 1985 has provided analytical and advisory services on legislative, regulatory, and public policy issues affecting financial services companies doing business in the US and abroad. In this conversation, we discussed the Federal Reserve's role, the COVID-19 response, asset inflation, deflationary environments, interest rate decisions, and what the Fed should do moving forward. I really enjoyed this conversation with

Karen, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is CoinStats. CoinStats is one of those businesses everyone to know about. If you own crypto in a lot of places like me, you know how difficult it can be to keep track of it all. That's why CoinStats is one of my favorite apps. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. You can see all of your transactions and profit loss history and get advanced analytics on your portfolio's performance. Try it for free or go to coinstats.app and get 40% off your premium

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So go to UnstoppableDomains.com today and register your domain. Once somebody buys a name, no one else can have it. No one can buy Pomp.Crypto because I have it. So head on over to UnstoppableDomains.com and buy the domain that you want to have. First come, first served, UnstoppableDomains.com. Go get it today. All right, let's get into this episode with Karen. I hope you guys enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek

Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I hope everyone is doing well. I have Karen here with me. Thank you so much for doing this. Thank you. For sure. Let's just jump into your background. We're going to have a great conversation today about the Federal Reserve, its role in society, and all the chaos that's been going on in markets over the last year or so. But maybe just start with how you started your career and then

what you've done over the last couple of years. Well, as anyone watching this can tell, I am what people politely call a woman of a certain age. So I started my career in the way back. And I was finishing my PhD in political science at UC Berkeley when I realized, much as I really enjoyed what I was doing and what I was studying, that I didn't want to be an academic. That was back in the day where the UC Berkeley Political Science Department had 45 professors and the one woman who of course was not a professor, was just an adjunct lecturer.

And it became pretty clear to me that that was not going to be a great way to go. So for a variety of just complete coincidences, I got offered a job to be the first and only political scientist because I was getting my PhD in poli sci at Bank of America. And that's how I got into finance. I knew nothing about banking,

but I got quickly involved by my boss and by the bank in very interesting financial policy questions at the time in terms of what was Congress and the administration and the bank regulators doing. And then I got moved to Washington and I've stayed here ever since doing pretty much the same thing. I started my own company in 1985 when the then chief executive officer of the bank said he didn't feel good about making a young woman a senior vice president.

Now, damn, that's happening all over again, just like academia. So I thought maybe I was 32 at the time. I thought I'll try starting my own company because if I can make it go, now is the time to try it. And I did. And it's been great ever since. You have this amazing story, and you're just a wealth of knowledge. So I want to start with the most important question, which is what the hell is the Federal Reserve's role in the economy

and in the American system? I think that everyone knows, obviously, the Federal Reserve exists. They hear people talking about it all the time. There's a smaller group of people that understand maybe it's not so federal. Maybe there's not so many reserves. But how do you describe what the Federal Reserve's role in the economy is? Well, I call my new book Engine of Inequality, The Fed and the Future of Wealth in America, Engine, because the Fed does have an enormous role powering or reversing inequality, economic inequality in America. And the reason for that is fundamental to what central banks like the Federal Reserve do. No agency in the United States drives money as powerfully as a central bank. That's what central banks do. It's called monetary

policy. And money is really the fuel of economic inequality, as economic inequality is determined by who has what percentage of income, who has what percentage of wealth. And the Fed is critical to that. It sets interest rates. It holds a huge portfolio. It intervenes in the financial markets, and it writes a lot of rules, as well as it actually, it's very importantly, it operates the payment system and then determines who has access to the plumbing, to the rails on which the financial system operates. So it's hugely important, even if it's often invisible. And so when you think about kind of the Fed's role, and I love that you call it the engine of wealth inequality, I think a lot of people don't understand how that works, right? And so when you look at the structure of a market, maybe walk us through how wealth inequality is driven from monetary policy.

So just forget the United States for a second, just anywhere in the world, how monetary policy and wealth inequality actually interact with each other. Now, if nations started as equal, then the central banks wouldn't have that much of a role. Because if each of us had, we might not have the same amount of money, but if we had our wealth distributed in the same kind of assets and funded those with pretty much the same amount of debt, then central bank policy would move neutrally through the economy. So think about it this way. If we all had 10% of our wealth in the stock market, whether or not that 10% of the wealth was $10 million or $10,000, every time the market goes up, we would be proportionally richer. it would be an equitable distribution. But that's not the way it works. In the United States now, people have what wealth they have in different assets. Wealthy people have the majority of their assets in the financial markets, in stocks and bonds. Middle-class people have the majority of their wealth in their home prices, even though often that's very highly leveraged,

they don't actually own much of their house because they've got a big mortgage. The amount of equity they have in their houses is relatively small. And low and moderate income people don't own stocks, don't have equities, often don't even have little bits of 401ks. And if they own a home, they're often in even more debt, and most of them are renters, often also saddled with lots of student debt. So you see that wealth isn't equally distributed in terms of where we get it. And so when the Fed supports financial markets, and as it has since 2010, the Fed has taken numerous actions to ensure that the financial markets, particularly the stock market, just go up, up, up, up, up. And then it's taken other actions that make it essentially impossible to

saved by putting your money in a bank, wealth ends up very inequitably distributed because rich people had a lot of stock and now they've got a lot more value in that stock. And middle class, moderate and low income people had very little stock, a whole lot of debt, and they can't even save because the money in the bank, as I said, in terms of inflation adjusted rates, you lose money When rates are as low as they are right now, even with little bits of only a little bit in inflation, the money you put in the bank is worth less a year from now. Inflation is higher than interest rates. And that's a recipe for real inequality.

And I think we are seeing that play out in a major, major way. One of the things that I continue to tell people is essentially the government, whether they're trying to or not, is playing kingmaker and determining who is wealthy and who is not. And it's a feature of the system. It's not a bug, right? This is not something where, oh, no, we're doing something wrong. The system is working as it is designed. And so what that ultimately leads to is a lack of financial education, right? Many of the people you just described, they don't understand how the dollar works. They don't understand how inflation works. And therefore, they end up saving because that's what their parents or somebody told them to do.

but in reality, what they should be doing is after they've put away a little bit of money for the rainy day fund, actually investing, right? Kind of saving is for losers and investing is how you build real wealth in the country, given in the macro environment that we live in. Well, it's true, except savings is often the only way lower income households have, because investing, if you don't do it carefully, is very hard to do if you have barriers by English, by education. And you can be very badly led astray. And of course, even now in the zero commission environment going into the market, it's easier to do. But it can be tremendous risks because there's investing for the overnight types of gains we saw in the game stock. And we keep

seeing in some corners of the market. And the old days, people held their stock. It really is amazing. Going back about 15 years, most people, when they bought stock in the markets, they held onto it for at least five years. Now, people are day trading and going in and out of it in minutes. It's speculation in a lot of ways, not really long-term wealth accumulation. I think savings is really critical. When you think about what's played out over the last 12 months, I want to dig into kind of the Federal Reserve's response, right? About 13 or 12 months ago, we saw this public health crisis start to play out. It led to kind of mid-March of 2020, a massive liquidity crisis. Investors were selling every asset they possibly could find to get dollars. Asset prices

sold off aggressively. And the Federal Reserve, you know, kind of as predicted, had to step in and kind of save the day in some way. They've outlawed bear markets. And so when they stepped in. They went ahead and they started to manipulate interest rates with the two emergency rate cuts. And then they went ahead and started to conduct quantitative easing in a historic and unprecedented way. Let's start just with the initial action. Like what was your take about a year ago when they started to be so aggressive in their response to the public health crisis? I think the thing that stunned me the most was the facilities the Fed established. established because the last time the Fed looked at financial stability, it puts out a report

twice a year on how stable the U.S. financial system is. And it said he thought the financial system was just fine, was quite safe because banks, because of all the rules after the last crisis, banks were much safer. And I've long opposed, I think it's fine. The banks should have the kinds of tough rules they have. But when you have only one part of the financial system heavily regulated, guess what? Money moves. And other parts of the financial system that are unregulated get much bigger. And in November, when the Fed said the financial system looked great because banks were so safe, I said publicly at the time, I don't think so. This is very asymmetric. And that's what happened in March of 2020. And if you look, the Fed not only used

its monetary policy tools, ultra-low rates, and quantitative easing, its big portfolio. But it's established a series of facilities for the non-bank parts of the sector, relying on banks to help the Fed. Banks became agents of the Fed. And we bailed out money market funds. We bailed out corporate bonds. We bailed out junk bonds. We bailed out hedge funds. That's an astonishing fact. The Fed did that in 2008 and promised it would never do it again. And we clearly don't need financial crises, but we don't need bailouts. We got bailouts. It feels like a lot of the bailouts, too, went to the zombie companies, right? Companies that were just bad businesses. They were bad capital allocators. And when you prevent the market

corrections from occurring, the bad businesses get to stay in business for longer. And so you don't get the redistribution of those resources, whether they're capital resources or intellectual resources. And so is that a systemic kind of risk moving forward, is that there's just a lot of these zombie companies that are laden with debt, the government continues to bail them out, and it just creates a lot of drag on the system? Absolutely. And those zombie companies are not hiring. Typically, they're using their low-cost debt to pay back old debt and to reward shareholders, investors, private equity companies. You see zombie companies with tremendous leverage and they're using that money, but they're not using it for economic growth.

When you bail out borrowers, very high risk borrowers, who wouldn't? In my business, it's called moral hazard because you literally, you can do anything and it has no consequence. It's crazy. Absolute insanity. As we continue to see the Fed through 2020, them and elected officials in cahoots with each other decided that their initial interest rate manipulation down wasn't enough. The first kind of creation of money through quantitative easing wasn't enough. And then we saw just an onslaught in markets, whether it was through various vehicles they set up, trillions and trillions of dollars in quantitative easing, or the suppression of interest rates for a prolonged period of time. And when all this was going on, asset prices took off. Not only did they recover from the drawdown, but basically as the meme became, stocks only go up, right? Every asset only goes up.

And the crazy part is, it seems like there's truth to that, given the macro environment and given the monetary policy. Of course, they're only going to go up because the Fed is committed to continuing to devalue and weaken the dollar. And so therefore, asset prices are essentially have to go up across all asset classes, not just stocks. Is that kind of your read on the situation? Well, I don't think I would. The Fed is not devaluing the dollar. I think there you have to look to fiscal policy. With our tremendous debt, ultra-low interest rates do have an impact on the value of the dollar. But because the United States Treasury was still the reserve currency in the world and viewed as a flight to safety, flight to quality, the Fed has more scope than most central banks to lower rates. where I really disagree with the Fed is that from 2010 to 2020, it bailed out the markets. Every time markets got a little spooked by efforts by the Fed to normalize, like to maybe

taper its portfolio or raise rates a little bit, the Fed stepped in. There was something called the taper tantrum in 2013 when the Fed said, you know, we don't want to have this huge portfolio. Back then, it was about, I think, $1.5 trillion. We think we should get out of the market. The bond market, which was being propped up by the Fed's all those purchases, said, oh, oh, no, no. And the Fed said, oops, sorry. Even though the losses at that point were relatively small and not in any way systemic,

the Fed got spooked. And then same thing happened in 2018. The Fed said, raised rates just a little bit. Stock market went down a bit. It corrected. Feds are, oh, we can't have that. The fundamental mistake the Fed has made, and that's why I think, as I said, I call it an engine of inequality in my new book, is that it's confused financial markets with

the real economy. And it can prop financial markets up, but that does not mean robust economic growth, let alone shared prosperity. It's got its eye on the wrong ball. And so when you think about the spending and the debt, one of the most fascinating stats to me, I think it's since 2011, the federal income revenue, federal income tax revenue has gone up every single year, right? So we continue to collect more and more federal income tax revenue, but also every single year from 2011, the inter-year deficit continues to get wider and wider and wider. So it seems like it's not a revenue problem, it's a spending problem. I think it's both. It's a spending problem and it's combined by who pays taxes. It's not just

on the federal income tax proportionally. And this is in my book. I have a long discussion of exactly this issue of who pays taxes. And poor people pay a lot more in taxes than wealthy people. We have a very regressive tax system. So the more we spend, the more the tax burden goes up on low, moderate, and middle-income households. This is fiscal policy. It's not the Fed's fault, but it is certainly a part of the inequality equation. For sure. And so the Fed has now committed to higher levels of inflation for a persistent amount of time, right? I think when Jerome Powell, the chairman of the Federal Reserve, was asked if they were thinking about raising rates, he literally said, we haven't even thought

about thinking about raising rates. So, you know, there's no way that's happening anytime soon, according to them. But on top of that, continued quantitative easing and basically pulling every lever they can to get to those higher levels of inflation. One, do you think that that commitment is genuine? Like, are they actually going to try to do it? Or is that more kind of lip service of it sounds good, but actually, they're not going to attempt to accomplish that? No, they mean it. They really do. I think the Fed means well, and it means what it says. Now, it may be called out. The bond market right now is pushing inflation. Rates are going up outside the Fed, and it may not be able to honor its commitment. But it means what it said, that it

will keep rates, as you said, they won't even start thinking about it till maybe 2023. I strongly disagree with that, because if the economy takes back off in the second half of this year, should normalize. The Fed should not run every feature of our economy. It's good at what it does, but it's not perfect. For sure. And so when you think about if they're able to do it, so they have a commitment. They're saying that they're going to do it. They want to do it. Let's give them the benefit of the doubt and say they're trying to do it. They have a limited set of tools in order to accomplish higher levels of inflation. There's one argument that says, hey, if you print what is going to end up being five plus trillion dollars through quantitative easing, then you're

likely to get higher levels of inflation. We see that people fear the inflation. They're moving capital and capital is flowing to inflation hedge assets, whether that's real estate, precious metals, Bitcoin, et cetera. But also there's another argument and a pretty strong argument that no, we are in a deflationary environment. Technology is deflationary. And so the Federal reserved no matter how hard they try, it will be nearly impossible for them to actually accomplish higher levels of inflation for a persistent amount of time. Where do you come out on those two schools of thought? The Fed generally doesn't try to create inflation or deflation. What it does is it tries to affect growth. And when you have a lot of, it's my, for example, stoking demand.

is if back in the old days and i'll because america is now so unequal this old theory doesn't work part of the reason again the fed's an engine of inequality but if you lower rates so the thinking goes at the fed to say even below zero in turn on real terms after taking inflation into account what happens what's supposed to happen is that people go out borrow more money buy more stuff so demand goes up when demand goes up that does two things generates employment because people want more stuff somebody's got to make or sell or service the stuff and demand for a limited supply of stuff because supply will lag demand leads to inflation you know all of a sudden everybody wants to take out a car loan goes gets a car car prices go up

and that's inflationary. So the Fed tries to balance how much borrowing it supports with ultra-low rates versus how much demand it stokes that then results in inflation. The problem, again, as my book really lays out, is that because we're such an unequal country, higher income, higher wealth households, they have all the stuff they need. So the Fed can lower rates as low as it wants. They're not going to go out and buy another car or another house. they're going to do exactly what you've said anthony and invest in the markets and some of the investments will be in equities and some of them will be in more speculative assets like bitcoins lower income people middle class people already have more debt and their debt costs them

a lot more than the low rates the fed charges because the markets often incorrectly think they're risky they may be buying stuff but they're they're not generating growth it's it's a very screwed up system because again, we're so unequal and the Fed is continuing to set policy as if we're the same United States we were in 1975. We're not. For sure. And so when you think about this, if you were a chairperson of the Federal Reserve, chairwoman of the Federal Reserve, what would you do? What is kind of the solution or what can they do if you were in charge that you think could help remedy some of the situations that they face? I think the first thing is, I love the Office of the Federal Reserve. I think I might redecorate

it a little bit. And if it's winter, I'd light a gorgeous, great big fire. And then I'd get to work and normalize. I think, and I know it's not easy. I think the Fed should do, and my book has several fixes for the Fed, and if I were a queen, I'd do them. One is I'd see America as it is. The Federal Reserve, when they talk about unemployment, they're only looking at one number that misses many people who are only working part-time, who are earning low wages, trying to get more wages, working more hours. People who have left the workforce, not because they don't want to work because they've just given up. Unemployment is very different than the way the Fed measures it. Net worth is very different. The Fed looks at

averages and says, hey, look, America's more wealthy. Well, the top 1% of the United States in 2019 owns as much, if not more wealth than the bottom 50%. You can't look at averages. You have to look at distributional data. I do that to understand America as it is. Then I would tell the markets, particularly, get ready. We're going to normalize. Rates will rise gradually so that we give households a living return on their savings accounts, that investors have safe assets and other choices. We're not all running around speculating in GameStop or Bitcoins. People will put their money into assets over the long term because they get a living return. And then I would gradually and but very significantly reduce the Fed's portfolio so that the economy

isn't always chasing the Fed. The economy is working for workers. We're not doing that right now. Yeah, and it's very unfortunate. What would you say to people who are middle class or live below the poverty line, kind of anyone who's in that, let's call it, you know, bottom 60% of Americans, either they own very, very few stocks or own no stocks or other investable assets. What do they do? What's kind of the best thing that they can do in the given environment that we're living in? I'm not a household financial advisor. I'm afraid that if I gave people advice, it would be wrong. I do think it's really difficult. Watch your debt. And I know it's really hard to do because most people don't even have rainy day funds.

Forty percent of the United States can't handle the equivalent of a blown tire. So build in a small cushion, even if, unfortunately, saving money doesn't reward you the way it should. None of us can operate without safeguards. And I think just as much as you can put some money away, at the very least, is a rainy day fund. For sure. And so when you think about kind of looking forward, what do you think happens, right? We talked a little bit about what you would do if you were in charge. We talked about what's already happened. How does this play out? Do we get the higher levels of inflation and we get everything kind of back to normal?

Is there some other scenario that you see? Just like what's your kind of prediction, if you will, moving forward? I work nights and weekends to write my book. I didn't need to write my book. I have a thriving company and a happy home life and lots of better things to do nights and weekends than write my book. But I think if we don't reverse the engine of inequality so that the Fed's role in the future of American wealth is better calibrated, we're going to have slow growth, low inflation,

and more and more inequality. And you know what? That's going to mean more and more anger. We have seen a very angry country the last five, six years. And one of the reasons I wrote my book, I was thinking about these economic equality issues and the role of monetary policy. and then in 2015 2016 then we had the 2016 election and what i saw then was that hillary clinton took the feds line the economy was in a quote good place and millions of americans didn't agree african americans stayed home this isn't a good place for me and millions of high school educated white men came out and they voted for donald trump this is he said i'll make it a good place for you. I know you're suffering. He said that in lots of ways I didn't agree with,

but he heard that. And we fought that out again in 2020. This is a very angry, let alone on January 6th. This is an angry country because people don't think the system works for them. And right now, economically speaking, it doesn't. That we can fix. The really important thing about Federal Reserve policy is that we don't need new law. We just need the Fed to understand its role and revise it. That's among the easiest solutions I see in making America less unequal. Sure. And so when you think through this, it just feels like the world has shifted psychologically. And people believe that investable assets only go up. It feels like the federal government will step in at any point and kind of address any market correction.

Does this change the way that investors allocate capital over a long period of time? Or do you think that there will be some sort of market correction at some point and we'll kind of get back to normal, if you want to put normal kind of in air quotes in the sense of, I don't know what normal is anymore, but is risk completely removed from the market or is this just a temporary thing over the last 12 months? Oh, I mean, it's not a temporary thing. We've had it since 2010 when the Fed decided that it would support the markets. it was so spooked by any instability in the financial markets that it stepped in and adjusted

monetary policy. So we won't have normal until the Fed normalizes, takes its hand off the economy, and lets markets discipline themselves. I mean, why wouldn't you speculate? Markets indeed have always gone up. Now, can that last forever? I don't think it can because reality has a nasty habit of catching up with all of us. We can't keep eating as much as we want without something. Maybe there's magic food that doesn't make us fat, but instead we just all have heart attacks. I mean, it's just discipline. Somehow that's going to happen. And if we don't get it soon, I think market crashes will only continue to get worse. I tend to agree. It's like the analogy of we are addicted to monetary intervention and monetary stimulus the same

way a drug dealer or a drug addict is addicted to drugs, right? You just got to get a bigger and bigger hit to get the same high. And unfortunately, it feels like that's where we are right now. I am afraid that's right. But I think it can change. Again, I wrote my book trying to lay out. It's got solutions in it. We can change. I hope we do. Yeah, I'm there with you. And I was super excited to talk to you because there's not very many people who understand that one of the greatest causes of wealth inequality right now literally is the very system that we all rely on. And it's unfortunate. It's sad. There's ways that we as people can address it in terms of getting people financially educated. but ultimately I think that there has to be some systemic changes and the way that we approach some of this stuff to, uh, to help people just feel like they are not constantly falling behind. Right. And it feels like it's a bigger and bigger group of people who just constantly feel like

they can't fall behind and, uh, and they're upset. They're angry. And frankly, uh, they're in a position where they're fairly helpless, which is not a position. I think that the greatest country in the world wants to be in. Oh, no, absolutely not. All right. I got three questions for you to finish up and then you get to ask me one uh to end us the first is what is the most important book you've ever read you warned me about this i've been the equivalent of muttering in my brain and obviously other than you know the the big books like the bible which has helped to guide me through my life i think i would say war and peace by leo tolstoy i have actually read it alone and then with a group of my friends in a reading group three or four times. And I always

get more out of it each time as a guide to thinking about our lives and the role we each play in history. It's a really profound book as well as quite a good read. I love that suggestion. That's a great suggestion. Second question, sleep schedule. I used to sleep five or six hours. Now I sleep eight or nine. Our good friends over at Eight Sleep, they are the ones who convinced me to sleep on this thermoregulated bed. Basically, I make it freezing cold and fall asleep like a little baby and have completely changed my life. What's your sleep schedule and how has that evolved over the years? I don't have anything fancy. I'm blind, so I have a guide dog who I need to get out uh particularly on days when i'm just spending all my time um typing and talking

which he thinks is just really boring and says what are we going to do so my husband and i try very hard to get out first thing in the morning and um walk um three four miles uh and we live very close to a beautiful park in washington dc and we try to get out there at sunrise and then that makes it really easy to get to sleep at night. So it's, it's old school. Absolutely. I love that. Uh, last question, aliens, are you a believer or a non-believer? I am a, um, open to suggestion. I do think it's hard to believe given what I know about people as I've gotten older, that if we're at the best God could do for the universe, that's a very sorry thing to expect. I hope there are others and I hope we can find them and they can help make us

better. I tend to think that there's intellectual life somewhere or intelligent life somewhere, but we are unlikely to come in contact with them over any sort of time frame where you or I are alive, unfortunately. That's why I keep my focus on things. I can try to do something about the the Fed. We can put the engine of inequality into even a slow reverse. That would be really worthwhile. Absolutely. You get to ask me one question to finish up. What do you got for me? I think when you're in Miami now, Anthony, you tell me, how are you seeing the economic inequality play out in that city? It's a real city where there are very wealthy people living down on the ocean and large amounts of immigrants. What's it like? So I'll speak more to New York,

where I spent most of the pandemic, more so than Miami, and mainly because it's more egregious there, right? So Miami, basically, they still believe in American freedom and they've got restaurants, bars, businesses are open. You have to be smart in terms of the virus and wear a mask and social distance and kind of all the things that we know are positive. But in New York, they basically shut everything down. And so I remember literally there was one day during the pandemic, I spoke to a friend of mine. He's incredibly wealthy. He's done very, very well for himself financially over the years. And the conversation was he was basically trying to figure out how he could time the market so that he could buy a much bigger place in New York City, even

though he lives in London. And he was watching the real estate prices crash. And he was there with a bunch of cash. And he was going to go in and kind of jump on the opportunity to do an all cash offer. And he was going to make out like a band. And so that's kind of a financial conversation with a very, very wealthy person. That night, I went to dinner with my wife at a restaurant down the street. And we kept going to this one place because it's a small little hole in the wall Spanish place. Uh, and the restaurateur told me, uh, that he was struggling and he was struggling bad and asked him, you know, what do you mean? And he said, uh, every day for lunch, uh, it's near the UN building. He said, I used to have 80 tables, right? Meaning that I would flip the

tables over and in terms of throughput. And so I would serve 80 meals at those tables during lunch. He goes, now I do six. And so what you realized was he probably was actually pretty lucky. It's him, his brother, and he's got one employee. He cooks the food. He helps do service. It's very much a family-owned type business with not a large staff. And so his cost structure is relatively consistent. But when you get that pressure, you can see this guy's probably not going to make it. He's doing the best he absolutely can to try to make it. But the dissonance between a conversation with somebody who was incredibly wealthy, who was basically looking to capitalize on the opportunity, not because they're greedy, not because they are a malicious or nefarious person,

but just because they have the wealth to do it. Right. And so buy things at a low price and sell them at a high price. Like that is how you make money. And so this person was well-versed in that, but comparing that to a restaurateur who, you know, really, really was in trouble. I think it just struck me like there's two worlds right now, right. Two Americas, if you will. And I think that that is unfortunately just playing out in cities around the country. And hopefully that'll kind of get mitigated here quickly and we can kind of get back to as close to full employment as we can and we can start to get back in a better environment. But it's definitely not a good situation when you see that type of stuff happening. Yeah, I hope so too.

Absolutely. All right, Karen, where can we send people to find you on the internet, find the book, or find more about your other work? You can find it by the book is called Engine of Inequality, The Fed and the Future of Wealth in America. You can find it on any of the bookstore sites, Amazon, Barnes & Noble, on the web. You can Google me and go to my company's website. We have a book page. And I think it's going to be pretty easy to find. Yes, you are. Listen, I really, really appreciate all your time today. This was a lot of fun for me. I think that you were way ahead of the curve on a lot of this stuff and hopefully people learned a ton today.

They'll go read the book and that wants to just get in the future. Thank you so much, Anthony. I've really enjoyed this.