Felix Salmon: The New Not Normal Economy

Welcome

to the Bulwark Podcast. I’m Charlie Sykes. It is May nine two thousand twenty three, real sense of Deja vous sprinkled on our TTSD. Trump expanding his lead over his Republican rivals to the largest margin yet, leading Ron DeSantis by forty 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 Carol trial has rested and gone to the jury and as the United States passes two hundred masks 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, feel like Sam and the chief financial corresponder to Axios and host of the Slate Secret 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. Well, 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 we had five impossible things are gonna happen before breakfast.

Well, he 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. No, civilization has bounced back from worse things in the past with a 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 gonna 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, you know, first year calculus class or whatever. And the idea of a normal distribution in probability, I should say, not calculus, where you have thin tails and the bell curve and that kind of staff, the not normal is where you have much fair details 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 gonna 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.

You know, there’s a whole bunch of weird outlier things that have never happened before that are gonna happen for the first time and 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 prices. 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.

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 the shocks to the work lives, you know, and the

the transformation know that before the pandemic, your 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 but other cities like Austin and Boulder are more crowded than ever. Things have actually changed, you know, businesses are more, you know, 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, the things are broken and we’re putting them back different. There’s another narrative as well. And I was talking to my colleague Mona Charen about, you know, some of these new, you know, polls showing that people I 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 instability has been destroyed. Talk to me about that because it feels that I mean, yes, and 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 gonna 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 normal. Right? It’s the big downside. We had seventy years basically from nineteen forty six to twenty fifteen 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 gonna bet on America getting richer and I’m gonna make a big leveraged bet. I’m gonna leverage my bed 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. Mhmm. 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 two thousand and eight 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, you 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, Anif humidness of twenty sixteen 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 epidemic 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 gonna stick with them and they were not gonna change their mind anymore and they were just going to look for new stories that reinforced their prayers and they weren’t going to try and stay nimble And that, as the facts, continued to change, was very bad in terms of creating a world where a whole bunch of people just, you know, simply believe things that are false. We have forty percent of the United States population by some measures think that Donald Trump won the twenty twenty 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 gonna 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 eighteen hundred dollars. People are paying that. I really like this part of your book where you talk about this concept of I’m

glad you called it Yolo rather than marginal rate of time preference. That’s that’s that’s an economist. Big marginal rate of time preference, which is depressed 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, Well, basically, the perfect example you you give is that, you 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 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, oh, should I open this as today a special enough occasion

Yeah. It is. It always is. So as the and I’m gonna use

the phrase again, the marginal rate of time preference as this rises our desire to consumed today, rises with it. So here’s just a moment of optimism here that 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, you know, a boom time spending as individuals reentered the world. Is 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 helps 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. 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 wanna be spending more money because we, you know, probably, as you say, a marginal rate of time preferences gone up. Then

I think people are gonna 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 local McDonald’s and seeing, you know, starting pay sixteen dollars an hour Yep. You know, for just your your line of worker, people are taking advantage of this, you know, to find out what they really wanna do in life, you know, that, you know, people who figured they were stuck in a rut and are doing this.

You 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 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 gonna 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. I you made me relive some of the 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 it isn’t like around you. It’s the water that we’re swimming in. And I make the case that basically those seventy years of peace and prosperity that we had after the Second World War were in large part because of the Second World War. They were a reaction to the Second World and often quite consciously, you know, the United Nations, the Bretton Woods institutions were an attempt to make sure that never again would be 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 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 and you point out, you know, periods

of great stress and mortality often precede periods of growth and innovation, World War one, gateway to the roaring twenties, the end of World War two kicked off with the French called, you know, the thirty 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 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 at self out. I mean, all, you know, the the conspiracy theorists, you know, this guy that just shot up the mall in Alan —

Yeah. —

whatever was going on with him, you have that whole in cell 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 gonna be dealing with for decades.

Absolutely. And that’s definitely a huge part of the downside of 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 fact tail of mostly men at the extreme end of the sort of mental health degradation spectrum, if you wanna 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 or 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, eighteen to twenty five 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 blazing glory. Something like that. I don’t even know if it was a conscious, you know? Sure.

Smoking is a blazing glory, man.

But they definitely started dying at a rate that was absolutely terrifying. The rivals, in fact, exceeded the rate that they died during the AIDS epidemic. 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 suicides. The Speaks 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 for Jordan Neely, the man who got killed on the New York subway who was struggling with mental illness.

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 gonna be super hard. I’m sure you say every single episode of your show. You know, we live in deeply fractured, vulcanized 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, you know, the

compassion for, say, Jordan Neely because the flip side of that is I find a a new calousness 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 the disconnected.

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 I guess I’m

I’m not sure how to balance this out, you know. And it also depends like which little filter bubble. Yeah. You know, I’m in I’m in my, you know, liberal Manhattan bubble. And then there’s an equally large bubble of Tuck yourselves and viewers who don’t know what they’re up to these days.

But, you know, his show was definitely not heavy on the compassion. We can agree on that.

We’re all juggling life, a career, and trying to build a little bit of wealth. The Brown Ambition podcast with host Man and Tiffany the budget needs to can help. How can I protect myself from identity theft? I think the first thing that’s to be aware of what fishing attempts look like. So check that email address.

And now it’s coming to your text. Are you guys fishing texts now? Girl, yes. I’m talking about this IRS. I’m like, girl, also, you text it out.

Alright. With your lack of funding. I hate the crown ambition. Wherever you listen.

The

more I think about this, we’re talking about the impact on the economy is that it’s impossible to understand what 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 in the public tends to think we’re in a recession. We’re we’re not in a recession. Can

I just mention my favorite YouGov poll, which is wonderful? They’ve been running for over two years now. They’ve gone to two thousand Americans every week for two and a half years and said, do you think we are currently in a recession right now? Mhmm. 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 inerous session 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 marks You know, how can you think we’re in a recession when unemployment is at three and a half percent? Come

on. Feel like you do understand because you wrote this. I’m learning this from you that people basically think the terrible stuff happened with the start of the pandemic just kept going. Right? I mean, it’s mentally — Yep.

— your stuff. 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 gonna be in a bad mood about everything.

Yeah. Do you remember that brief period in twenty twenty when everyone 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 they’re 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 to the left, you know, in a weird way.

And inconvenient for say Joe Biden of the Democrats because, you know, on the one hand, they wanna say, see all the great things we’ve done, how well things are going. If you’re the incumbent, you wanna be able to do that. But you have folks on the left were, like, no. No. No.

We we have all of these terrible problems. And even though economic and quality is going down, Obviously, they’re never gonna claim a victory. So you have basically both sides of the political spectrum explain that things are really craptacular, but from slightly different angles.

Right? No.

Yeah. And I don’t know if you remember last year, there was a lot of talk about this thing called the vibe session. I have no idea what a five 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 the not normal economy because, you know, it strikes me as 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 unexcused expected, 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 Senior 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 gonna go through this bank shit again.

Right.

Right. This is super interesting. A bunch of moving parts to that question, which is a really good one. The first thing, I should say, just straight off the bat, is if you are a depository or a bank, you have nothing to worry. About.

Understood. Like, if you wanna worry about AI killing us all, if you wanna worry about the debt ceiling, like, all of those are rational things worry about. If you wanna worry about another pandemic, you go ahead. If you wanna worry about my bank is gonna fail, I’m gonna lose my money. Irrational.

Don’t it. Like, even if it does, you’ll be fine. Like, I was actually a customer first Republic Bank, and I was fine. I still have the same account number, same routing code, like 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 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 gonna be a replay of two thousand eight because we remember two thousand eight.

And two thousand eight 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 two thousand eight and twenty twenty 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, there’s a banking crisis. Interest rates are going up. The Fed needs to break the back of inflation and it’s willing to drive us into a session to do so. Everyone’s like, oh my god, recession, that would be really really bad.

That’s gonna be like two thousand eight or twenty twenty. Don’t necessarily. A recession can be mild. It can be short lived. It can be no big deal.

You know, it can be like the two thousand recession. But no one remembers the two thousand recession. But politically, given that psychology, even a mild a session 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, you know, what exactly is going on with this economy. You know, the Fed is raising interest rates trying to cool down the economy and yet we just keep creating these jobs and inflation will not come down. Is this part of the new not normal or 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 nine percent to four percent. Thereabouts. But Was that because the Fed raised rates? Would it have done that anyway, even if 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 gonna have to stick with that one. What is clear is that they’ve really hurt the banks. Right? The deposits of all fled the banks in such of higher yields elsewhere, 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 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 gonna 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 gonna 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, you know, 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, and you also described how we had this really well oiled machine of the global economy with all the supply chains and everything. And 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 called 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 it is well and truly dead at this point.

If it wasn’t killed by by twenty sixteen, it was killed by twenty twenty. And, you know, lovely trading relationship between the US and China where they both benefited late has now become politically extremely fraught. It is entirely possible in the new not normal gonna see another major invasion after Russia invades Ukraine, we could see China invading Taiwan. And that would be catastrophic. We have 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 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 or certainly the United States and China are the two strongest. And so that’s probably good for the United States. And when I say recently, I don’t just you know, I’m I’m saying, like, a lot of the Midwest, as you said, the places like Austin and Boulder and Boise, 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 twenty tens.

And that seems to be one of the most dramatic results of all of this is the way that remote work has just changed at 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, you know, nine to five in the office in downtown Manhattan lifestyle. What do you make of some of these major 70s, though, that are telling people you have to come back, you have to come back to the the office.

What kind of pushback

are they gonna 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 will be mean, 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 gonna be this sort of reshuffling, another big reshuffling of the workforce, where people who want to work remotely are gonna 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 gonna 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 for very few people actually leaving the United States and working remotely from the Maldives or Portugal or, you know, name your foreign country. I can tell you that my own employer is perfectly happy to for people to work from wherever they like.

So long as it is within the fifty states. And they basically won’t let you work remotely for, you know, HR reasons. Mhmm. 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 baked into being European, and you can’t just do that. And there was tension there. So that’s part of the de globalization. That’s part of the nationalization that’s happening is that the remote work is making the American economy just as American has ever 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 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 some place and get a house that we can have kids into in the yard, you know, possibilities that never existed before. So I mean, obviously, that’s going to have, you know, as you Sarah Longwell tail because I have a hard time imagining many of them moving back or going, yeah, I’m I’m gonna 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 a gratification for forty or fifty 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 home ownership ever that a single generation has ever seen in such a short amount of time. The millennials went from maybe thirty percent of them own earning houses, like sixty five percent of them earning 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 the easy commuting distance of an office.

Was that also because of low interest rates? I mean, what happened there? Yep. It was because, like, 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. You know, my I have a friend who worked out with the New York office of Axios since she was like, you know what?

I’m gonna buy a house in Nashville. Mhmm. And she did. And she could and that would have been unthinkable prepayment. So

let’s talk about my least favorite topic of the day, which is the whole debt ceiling debate that you pointed out this week that, you know, I mean, I wish more people would actually say the obvious thing, which is this whole idea of having to vote on the death ceiling is insane. This debt ceiling shouldn’t exist. It should be abolished, but nobody wants to say that. So we go through this in credibly 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. Yeah. It’s almost like completely received opinion among anyone I talk to. The 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 under stand is the degree to which elected politicians refused to say that. Especially

if we have a constitutional obligation. Right? I mean, it’s in the constitution. The fourteenth amendment. Yep.

Know, I think you made the point, we have this constitutional obligation to

ignore the debt ceiling, but nobody wants to say that. So, yeah, Lauren’s tribe has recently come out in the New York Times and said, yeah, that, you know, made the fourteenth amendment case and basically said the the Executive branch has a constitutional obligation to pay its debts as they come due. And if Congress tries to pass the law about the debt ceiling, saying that you can’t do that, then that law is unconstitutional. I am down with the fourteenth 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? It’s one of 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 US Mint and it says I would like to mint a trillion dollar platinum coin and the US Mint goes, here you go. Make it up. Yep. It mince a little coin, maybe just like an inch and a half in diameter or something like that.

And if it’s one trillion dollars on the front of the coin in various small letters because, you know, that

seems like

a rewarded Mona Charen policy. And what that does is it’s not debt. Right? Coins are not debt. If you meant a quarter, you have not increased the national debt by zero point two five dollars.

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 hundred trillion dollar bill from some African nation. That’s, like, probably Zimbabwe. Okay. Yes. I’m sorry.

It is Zimbabwe. Yes. It is 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 a is it a gimmick? Yeah. Yeah. Are they gonna be in circulation? No.

It’s not like anyone’s using the trillion dollar coin to pay for anything.

It’s just oh, we just, like, make up money. Isn’t that how bad things happen when governments just make up money? Just pick 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. Yeah. 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 them one morning and discovered one thousand four hundred dollars 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.

Plinting 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 or 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 extend a lot of people spending out of control and saying, like, what even is real anymore? Which is a rational question. You know? I mean, it it’s hard to find shared truths.

It’s hard to find anything that American 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 Bulwark life and money in the new not normal. So I wanna 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 even challenge that. I just I mean, I’m just looking at the 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 than we had even during the really, really shitty nineteen seventy.

So what is it gonna 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? It is Like, 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. And we wind up with we’ve had two and a half years of funcon mystery. 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 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, gonna 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 by the Axios and host of the slate Secret Podcast in his new book The Phoenix Economy Bulwark 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 Secret Podcast. I’m Shirley Sipes. We will get back tomorrow, and we’ll do this all over again. Secret Podcast is produced by Katie Cooper.

And engineered and edited by Jason Brown.

Dissecting politics with exclusive interviews, commentary, and humor, useful idiots. With Katy How and Aaron Mate.

I really don’t like sharks, and I think we live in a very sharky gandistic world. Quote, one thing to keep in mind is sharks for not out there trying to eat surfers and swimmers. They’d much rather eat fish, but in many cases they mistake us for their actual prey. When they do bite, they usually move on. That’s supposed to make us feel better?

Useful idiots. Wherever you listen.