Rana Foroohar - Author, Journalist, Financial Analyst

Welcome to the Puck Venture Capital and Beyond, a show that examines the changing landscape of our world. We'll have candid conversations with VCs, entrepreneurs, and thought leaders grappling with our current challenges and providing solutions to key problems we face as a nation. I'm Jim Beer, president of CMBG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately to how they got to where they are today. We spent forty years using all this easy money that we could have put into building infrastructure, revamping education, fixing what's wrong with our country.

Instead, we put it into the stock market, and we put it into share buybacks. And now we've created enormous asset inflation, and we're trying to do some productive things, but it's not so easy anymore because money isn't cheap. And that hurts poor people more than anybody else, and that's where we are. Today, I have the pleasure of speaking with Rana Foruhar, business columnist, associate editor at the Financial Times, author and global economic analyst with CNN. Her newest book, Homecoming, the path to prosperity in a post global world, examines the era of globalization and today's growing movement towards economic localization.

We discuss the decades of easy money giving birth to asset inflation, and we take a deep dive together into the challenges ahead for future generations as we navigate a tighter economy. So, Rona Foruhar, welcome to the Puck. We are excited to have you. And before we jump in, because we do have a lot to cover today, can you take a moment and tell us a little bit about your background? Yeah.

Absolutely. Well, thank you so much for having me. I am a career journalist. I've been a journalist for most of my thirty two years working. I had a brief foray into venture capital actually for a couple years, and then I realized it was a lot easier to write about companies than to try and create them.

So hats off to you all. I started my career at Forbes magazine. That's where I really got my business chops. And then I was a foreign correspondent for about half of it, working in Europe, The Middle East, Asia, China, Came back to The U. S.

Just in time for the housing crisis in 2007. I ran economics and business for both Newsweek and Time magazine. At that point, I wrote my first book, Makers and Takers, which was about the financialization of America and why the financial markets were incentivizing short termism and really hurting American business. I then went on to do another book after I joined the Financial Times as their global economic business columnist. I did another book on monopoly power and big tech.

I also became an economic analyst for CNN. And now I've written my third book, which is called Homecoming, The Path to Prosperity in a Post Global World. And it's really about what I think is going to be the economic change of our lifetime, which is from unfettered globalization, neoliberal globalization, to something that is much more about regionalism and localism and about getting back to what I believe is a more balanced and healthy kind of growth, one that is based less on creating asset bubbles and more about creating real income growth, innovation, and prosperity. Now that's terrific. And let's come back to that a little later.

But as the world is watching further meltdown in kind of the cryptocurrency space, I know you've talked about comparing cryptocurrency to gold during the Weimar Republic. What are you seeing now in terms of cryptocurrency and and what should our listeners take away from that? Yeah. So it's great. Crypto is just a fascinating topic.

You know, a few years ago, I started looking at both gold and crypto, and my starting point was, look, we have just come out of an unprecedented period of easy money. This is like nothing we've ever seen. Not only after the financial crisis, but after COVID, of course. And that's gotta have some impact. Right?

And at the time, a few years back, when I started looking at it, it seemed like there were kind of two bets, high level bets in the market. And one was the Fed is still the only game in town, double down on risk and on US stocks in particular. The other bet was gold and crypto. And people a lot of people were starting to think about in the digital economy, could crypto be a kind of a gold proxy? I was always rather skeptical about that, to be honest, because as one of my editors at Forbes told me, if you don't understand something fundamentally, don't invest in it.

And I never really understood private crypto. I will say that I do think understood private crypto. I will say that I do think sovereign backed digital currency have some advantages. I think the Chinese are doing some very interesting experiments with that. But private crypto always seemed very risky to me.

And in fact, I got more worried about it when I began to break down, well, who's really investing in this stuff? And so, you know, on the one hand, you had a lot of the usual suspects, kind of speculative traders. On the other hand, you had a lot of people of color, a lot of younger people, you know, folks that maybe had felt kinda disconnected from the financial markets and from prosperity in general. And so they were looking at the traditional financial system and saying, I'm not invested in this. I don't trust this.

What am I getting out of business as usual? Hey, let me try this totally new asset that's billing itself as some kind of radical alternative to the normal financial system. That worried me a lot because to me, that had echoes of the run up to 2007 when you had the most vulnerable, the least wealthy, youngest, most vulnerable people getting into subprime mortgages. And I thought it would end in tears, and I think it is. Yeah.

It certainly seems to be the case. So when we look at what the Federal Reserve has done with quantitative easing, at the Puck, we've had Chris Leonard on who spoke about his analysis of what Tom Hoenig did when he voted against what the Fed did in 2010. But you've described what's going on in the past decade is kind of the saccharine high or a sugar high. I've had some people say trying to get out of what we've created is like landing a seven forty seven on an aircraft carrier. How do you think this ends?

And will the Fed continue to print money as the next few years as this economy comes down? Will the Fed turn back to quantitative easing? You know, that's a great question. I mean, it might be worth just for listeners going back and looking at the history of how we got where we are, you know. And I looked at this carefully in my first book because I just could never understand looking at two, three decades of how our economy is structured.

At every turn, you saw politicians of both stripes when they were faced with really tough choices between interest groups, you know, what we call the guns and butter choices. That's a reference to the Vietnam War. Are we gonna spend on military or are we gonna spend, on social programs at home? No politician wants to make those choices. And so it's no accident that in the late nineteen seventies, you've got deregulation of the markets in such a way that the fed was given more leeway to be able to start manipulating the money supply.

And, again, no accident that at every turn, politicians didn't wanna say, guess what? There is a limited amount of finance out there. You know, we do have to make choices. Otherwise, at some point, there's gonna be runaway inflation and devaluation of currency, which is what always happens when you get money being just printed like there's no tomorrow. Now sometimes it takes a long time to get there and it also helps to be the reserve currency.

But I thought, frankly, when I published my first book in 2016, I thought we were there. I was praying that the Fed would raise rates sooner than they did. I thought that you can argue that the first round of QE post financial crisis was useful, maybe the second round, third and fourth rounds. The gains were so minuscule, and yet the asset bubbles being created were enormous. And you just lost all sense of price discovery, which made it very, very difficult to be an investor.

You know, I mean, smart active managers at that time, like, you know, who needed them? Just stick your money in the S and P. It's all going up. Everything's going up. So to go to your question now, boy, the jury is really out because, you know, there was an interesting paper published at Jackson Hole this past year that looked at the interplay between monetary policy and fiscal policy.

And he kind of basically just mathematicalized and quantified what every central banker has been saying for the last few years, which is help politicians. There's only so much we can do. You know, Ben Bernanke said that. Janet Yellen said that. They've all been calling for fiscal policy.

Now, I do think that the Biden administration, particularly given how polarized things are, did a pretty darn good job getting about as much fiscal policy through. It helped that we were in a pandemic. You did get a certain amount of things passed that you might not have. I think the Inflation Reduction Act was great, but let's not kid ourselves. Putting CapEx into the economy, even if it's productive CapEx, will also be somewhat inflationary.

So what does that do to the economy? Well, I think that the Fed and to finally get around to your question, are they gonna reverse courses? I think they would very much like to reverse course. I think you're beginning to see some glimmerings of, oh, okay. You know, the latest report wasn't as buoyant.

You know, maybe we can pull back. Maybe we can have smaller rate hikes. Maybe we can turn around. But I just don't think that given the regionalization that's going on in the economy, the rise of reindustrialization, the CHIPS Act in The US, CHIPS and transition to clean tech in all parts of the world, I don't see inflationary pressures abating. And I think that we're just in a really tough position now where I think we're gonna have to have an honest to God, kinda come to Jesus narrative moment where we say, yeah.

You know, guess what? We spent forty years using all this easy money that we could have put into building infrastructure, revamping education, fixing what's wrong with our country. Instead, we put it into the stock market and we put it into share buybacks. And now we've created enormous asset inflation, and we're trying to do some productive things, but it's not so easy anymore because money isn't cheap. And that hurts poor people more than anybody else, and that's where we are.

I'd like to see us starting to have that narrative. Of course, that's a narrative that no politician wants to lay out. Yeah. Absolutely. So when you look at these issues, I know you've written this new book, Homecoming, The Path to Prosperity in a Post Global World.

In writing that book, how do you address some of these systemic problems and what are some solutions that we should be talking about? Yeah. Well, so let me just say that I do believe that this is a once in a lifetime pendulum swing that we're going towards. And I'll go back again and I'll just put it in historical context because I think that's always helpful. Economic paradigms, you know, they work until they don't work.

So you could go back to the eighteenth century and look at mercantilism. It worked until it didn't. And then there was conflict, and then you saw more of a shift to kind of laissez faire markets. That worked until it didn't, and you needed certain amount of government intervention. And then you saw the rise of Keynesianism and the New Deal in the post war period.

And then by the seventies, you know, you could argue that maybe unions were too powerful. Maybe you had too much government regulation. Maybe you need to cut some of that red tape and unleash animal spirits, and then you get the Reagan Thatcher revolution. But then by the nineties and the early part of the February, you start to see trade deals being cut that bring together both western liberal democracies and state controlled economies, and those don't necessarily play by the same rules. And so that neoliberal paradigm stops working.

So I think we are at that pendulum shift now. We don't have a new unified field theory, I would say, as to what this new paradigm that we're heading into is gonna be called, but let me sketch out what I think some of the characteristics of it will be. I think that everything from the financial crisis to COVID to the war in Ukraine have convinced people that hyper efficient supply chains, unfettered globalization, it may be efficient, but it's not always resilient. And this isn't just about geopolitics. It's not just about, oops, if you get your all your gas from an autocrat, maybe that's a problem when that person decides to invade the country next to them.

Hey. Maybe it's not a great idea to have 92% of high end semiconductor chips in one very contentious island, Taiwan. I think everybody kinda gets that we need a little more redundancy in the system now. So that's something that's happening. And, you know, my friend Barry Lynn, who runs the Open Markets Institute, has something that he calls the rule of four, which I really like.

It's kind of a simple way of thinking. If you've got a really crucial supply, PPE, semiconductors, energy supplies, Make sure you have four places, four companies, four countries to get that from. Don't put all your eggs in just one basket. So that's one of the things we'll see. You're also seeing, you know, the end of a cheap.

We had cheap capital for a long time. We had cheap labor for a long time coming out of Asia. We had cheap energy from Russia into Europe. All the cheaps are changing. Fed has changed directions.

China is saying, you know what? We wanna ring fence our own supply chains. We're gonna be a dual circulation economy. We're gonna both produce and consume regionally. They're doing that.

We're doing that. Europe's doing that to a certain extent. And now we're looking at energy and we're saying, okay, gosh. We're gonna have to make this transition to clean, but we need to pump more in the meantime. And both of those things are gonna be somewhat inflationary.

So there are going to be inflationary headwinds for a while. Now I would say the one underexplored and and possibly positive black swan, let's call it, is technology. We are going through a technological revolution in the business sector that could make everything from 2007 onward look like, you know, child's play. I mean, if you think about the rise of the iPhone, which came out in 2007, the app economy that developed all the productivity that we're all holding in our phones, all that is now coming into the business sector via IOT, the Internet of Things, and decentralized technologies like additive manufacturing, which is just booming, and decentralized farming. And, I mean, there's just so many things that are happening, and those things are going to be very, very deflationary because they're going to reduce friction.

In some cases, they're going to allow workers to do more with less, but they're also probably gonna reduce labor costs to a certain extent. That raises challenges because it means that we're gonna have, I think, more job disruption higher up the middle class food chain. And that is something that we are gonna have to cope with as a country. I was talking the other day to the head of the Communications Workers of America, which is the labor union that represents, you know, a lot of white collar work, digital work. They started out doing call centers, but now they do, you know, health care, digital health care, media.

They're, you know, the Feet, the New York Times are all part of this union. They say they are fielding calls now from jobs and companies higher and higher up the food chain because there's a sense of, well, if you can do the job in Tahoe, you can do it in Bangalore. So it is gonna be great for bringing down prices, all this technology, but it's gonna present new challenges on the human development side that we'll have to deal with. When you look at some of the issues you brought up in the past relating to focusing on investment return as opposed to, quote, building things, and you talked about kind of stock buybacks and these other things. You know, the fed went out of its way with zero interest rates, right, to keep interest rates down.

And we hear a lot about that interest rates are down because we have aging populations down. There's all this capital. But lower interest rates mean you can value companies based on revenue and not based on EBITDA. You can go into riskier assets. You you can have zero covenant loans.

All of these ramifications of these low interest rates. Has the Fed learned its lesson such that they're not gonna keep rates at these artificially low levels because they do create these, what I would call, imbalances in our economy? God. It's such a good question. You know, Jerome Powell is supposed to be talking in about an hour at the Brookings Institute.

And, when we're off this podcast, I'll be tuning in and I'd like to be hopeful, but I'm not really hopeful because in some ways I think that our presumptions, even in asking that question is that we're giving the Fed more control than they actually have. I mean, what can what can central bankers do really? They can increase the money supply and they can bolster asset prices. They can't change the political economy of an entire country. They can't make the progressive Democrats realize that, yeah, it's gonna be painful for working people if interest rates go up.

I mean, they feel that immediately in their food prices and in their auto loans, but that it's not actually helping them longer term to live in an economy in which the price of all the things that make you middle class, education, housing, health care are rising at just exponentially greater amounts than that tiny bit of wage inflation that Democrats really fought for with low rates to push up that end. I mean, part of just to go back, and maybe your listeners are aware of this, but, you know, the fight for 15 was very much the folks that were fighting for that, understandably, the unions were also very much in favor of easy money because they wanted those low rates to create pressure at the lower end of the job market and to help people in the service sector be able to, say, have a little more choice and to be able to, you know, get $15 an hour. And you have seen that. You did start to see that at the bottom end. But is $15 an hour?

Is $20 an hour? Is $30 an hour gonna help you with the fact that the last figure I saw, I think, you know, a couple of weeks ago with the interest rate hikes and the housing bubble, the average mortgage carry is up 51% year on year. This isn't helping us. You know, propping up service jobs by $5 an hour is not helping anybody. And I say that with a total understanding of the pain and justified pain that is felt by working people when all the finance folks, all the asset rich folks, you know, people like me that have a comfortable set retirement fund are like, yay, go up asset prices.

And then, oh, we get worried when things start getting risky and then we wanna pull the plug. And working people are like, but wait a minute. The trickle down only just started dribbling down to us. And now you wanna pull you know, it's a very hard conversation to have, but we have to be honest. Easy money is not helping us change our economy to compete with state run countries like China.

They're looking not for the quarter, but for the fifty years. And the other thing I think you've touched on in the past, but I still wanna hammer home is that when you have easy money and when you increase the money supply, you do have inflation. And we we call it asset inflation and not, let's say, wage inflation on the manufacturing front. But when you look at asset inflation and you look at, again, inflation in general, those goods that there are limited supplies of, I e colleges, I e health care, I e houses. Those things have gone up disproportionately.

And so to say that we haven't had inflation in the last twelve years, I think is lying to the American people. I agree. And for them to truly understand quantitative easing, it's that there are these unintended consequences. And again, when we have all this student loan debt forgiveness, we understand it, but we're treating the symptom, not the cause. You are so right.

And it's funny, I was literally just up this past weekend in Boston taking my son to see colleges. The sticker price for frankly, not even the top colleges, but the, you know, the b level colleges, if you include tuition, $60,000 plus, housing and food, you're looking at $80 for a mid level school. I mean, it's nuts. I am a fairly affluent person and I have had to work three jobs to put away this money. And I feel like such a chump during this tour.

I was thinking to myself, looking at all these fancy new buildings and the dorms that look like, you know, they're nicer than my third apartment. You know, it's like, what are we doing here? Yeah. That's the discussion that I think is important for people to have is that, you know, again, as you call it a saccharin high, it's like it gives people the impression that this is a party that can go on forever. And typically, what goes up comes down.

You talk about the everything bubble. Do you think the bubble has popped yet or do you think it still got a ways to go? Well, it's interesting. So I think if all things had been equal and we had not moved into the kind of geopolitical environment that we are in, I think the bubble would have we that we in America would have felt the popping a lot more. Now we have seen, and you've mentioned when we were, speaking before taping, you mentioned about what's happened in The UK.

I mean, this is a perfect example of here's a government that comes in and says, you know what we need to really get the economy going? We need tax cuts for the richest people, and we need to spend more. You know? It's like, what? And immediately, the country falls apart.

So, you know, if you have any doubt that that that was the apex of neoliberalism and that we're now shifting to something different, I think that might have been it. You could look at what's happening in crypto as another example of, oh, we're starting to see the dominoes fall. Now, I think that one reason yeah. You know, we've had corrections in US asset prices, but I think one reason we haven't had a really much bigger collapse, and in particular, a housing collapse where people are just like, this is nuts. And, you know, looking at these second and third tier markets with hugely inflated prices.

I think it's because The US still enjoys this sort of prettiest house on the ugly block or cleanest dirty shirt or whatever metaphor you wanna use advantage in a world that is in a difficult place. So if you look at what are all our alternatives at the moment, Europe is a mess. They're getting ready to go through what's gonna be an incredibly difficult winter. The war is not ending anytime soon. China is in the middle of its own epic debt bubble.

It's gonna be interesting. We may start to see some more ripples actually in the next couple months on that because Chinese New Year comes a little earlier than usual this year and that's a time in which provincial governments have to pay out workers so that they can go home and spend a couple weeks with their families. And so they're gonna be under financial pressure at a time when there's this enormous debt bubble that Beijing has been trying to tamping down. And I'm gonna be watching, are they gonna let some of those provincial bonds go bad? Are they gonna let these regional governments start to, you know, kinda go it alone?

Or are they gonna continue to blanket over the problem? I think that'll be a bit of a tell as to what's happening in China. But bottom line is The US is still, like, not a bad option. That doesn't mean that we're in a fundamentally healthy place. It just means that everybody else is in a more hot crisis at the moment.

So let me ask you this. When you look at savings rates right now and how much money got put into savings rates, if you look at trying to predict what the Fed's gonna do in terms of are they gonna continue to shrink the balance sheet or are they gonna increase it? If you look at the percentage of credit in our country, there are people that talk about creditism that you need credit growth to be greater than inflation in order to having a growing an economy. If the Fed was contributing, give or take, $10,000,000,000,000 to our $100,000,000,000,000 credit economy, If they really stay out of the credit market for a period of time, a year or two, don't we have to adjust to that? And when you look at earnings per share, and again, looking at the companies that I restructure or shut down for a living, as that cash comes out of the system, doesn't that mean we have a ways to go on the downside?

I think it does. I mean, at some point, you have to take the pain. Right? The other thing is it's sort of tangential to what you're saying, but I think it's related. We've all gotten so used to the business cycle being stretched out.

Right? I mean, I can remember, I'm 50, almost 53, but I can remember my dad ran businesses and like, things seem to happen in faster cycles back then. And you look back in the seventies and even the early eighties, the business cycle was like three years, five years, maybe seven years. If you put aside the blip of COVID, which was quickly papered over, it's been over a decade since we've really had a proper recession and correction. And it's strange to me, you know, the language that the media uses about this.

Maybe we won't have a recession. We don't need to have a it's like, guys, did like, what goes up eventually does come down. You know? That's the way it works. But it's it's just strange.

It's been so long since there's been a proper correction. I do worry a bit about how people are going to manage, although I'm slightly comforted by the fact that individuals still have a lot of money on in savings. I think individuals could probably be Okay, even with a hard landing in next year because I don't think they would fully run down savings. So in your own experiences being an author now versus working as a journalist for Time and Newsweek, I mean, what's been the biggest difference for you? Oh, gosh.

Well, you know, I'm still on staff at the Financial Times, so I have my column every week. I have my newsletter that I put out once a week. I try to read a lot. I try to think longer term. I boy, I try to stay off social media.

You know, it's funny. Years ago, I became friendly with Nassim Tahlab, who I don't know if you've ever had on your show. But I was asking him. I said, what do you read? What do you like?

He's like, you know, I don't look at anything in the news. I just read books. I think long term. And it's really hard, but I think that's what people should be doing right now. I think that they should be reading about history.

They should be, you know, really putting their own fingers to the wind and just looking around them and seeing, does this make sense? I mean, here I am. I'm out looking at really middling colleges that are charging $80,000 and have fancy new buildings. And I'm thinking, this doesn't make sense. I'm seeing a crush in some Some middle market schools are gonna gonna go out of business at some point.

You know, I'm looking at still, I think, corrections to be had in the tech space. I think, on the other hand, and I have some of these stories in my book, there's a lot that's good in this economy that is underexplored. In some ways, I hesitate to talk about it because I don't want, like, you know, Blackstone to come in and, like, sweep up all the all the good middle market industrials that are out there in The US. But there are a lot of private businesses, a lot of family run businesses that have basically stayed out of this paradigm of easy money and Wall Street pressure and have done very well. And in some cases, have been almost sort of like Darwinian case studies of how to run businesses because they've had so many headwinds of, you know, competing with cheap labor countries or competing with European nations that offer more subsidies to strategic industries.

And so there's, I think, still a lot to be invested in, a lot of opportunities out there. When you talk to other economists and people that study this and as you said, read books and really look at history, where from a historical perspective, I mean, is the pendulum starting to to switch back? In other words, you talk about how we're gonna have regionalization and this kind of decoupling. That makes sense. But when you talk about our tax system, for instance, and how we tax corporations, and how we tax wealthy people, and inheritance tax, and the deregulation that's taken place.

Yeah. Do you think that the pendulum is gonna move back in the area of, for instance, social media regulation, antitrust? Where do you see those broader trends? Yeah. Those are great questions.

So a few different things. Something that happened in July 2021 that I think was extremely underreported, president Biden put out an executive order basically saying, you know what? Milton Friedman trickled down price as the only arbiter of what's good, be it share price or consumer prices going down. That's done. We're now going to look at the real economy.

We're gonna look at a mixture of corporate well-being and corporations of all sizes, community well-being, labor, the civic society, and we're gonna start to push regulatory bodies to think in that direction. And so two or three of those regulatory bodies are already very much moving in that direction. I would say chiefly the FTC under Lena Khan, they are really paving the way of an entirely new philosophy. Some people call it the new Brandeis school of antitrust. And this is based on the idea that, okay, the way that Robert Bork, who kind of was the arbiter of monopoly theory over the last decades, would have looked at, is there a monopoly problem in the in the economy?

He would have said, as long as prices are going down, there's no problem. But if you think about the nature of the digital economy, a lot of deals are done in barter. So when you and I are using Google for a search or even when we're buying something on Amazon, the basic rules of a transparent marketplace are not in fact, you know, that we don't have equal access to data. We don't necessarily even have a shared understanding of what the transaction is. We're certainly not working with a shared moral framework.

I mean, this is this is a very different kind of a market. And so similar to the trust busting that was done, the turn of the century trust busting that was done by Brandeis, he was busting up the big steel corporations and the big conglomerates that had monopolized not only raw materials, but transport and retail outlets. And he was saying, look, there's not one metric that tells me that these companies are too big. There is a system of power here, you know? And it was funny.

There's a wonderful case study of I believe it was Standard Oil who they had literally bought a politician to vote for some sort of bit of legislation that was supportive of their business and then had him paid him to ride on a railroad that was owned by them all through the country doing this like victory tour. And so Lena Khan at the FTC is saying, look, this is about power. We have to start talking about power in the economy. And I agree with that. I think that one of the things that really concerns me about America is money politics in general and the way in which we have become kind of this open air bizarre for influence buying, be it by our own companies, be it by foreign governments.

And that starts to erode trust, erode trust in our market system, erode trust in liberal democracy. And when trust goes away, that's when you start to see currency collapses and government collapses. And so I am hopeful that this new batch of regulators, and it's a younger batch in many cases, millennials that really wanna reset the system. I think that we are heading towards that. I'd also just add, I think the SEC is doing a great job despite some of the heat Gary Gensler has come under recently.

I think he's done a great job at starting to put some meat on the bones of, alright, if share prices aren't the only metric, then what is the metric? You know? Because we all remember a few years back when Larry Fink was like, you know, it's not just about shareholder capitalism, it's about stakeholder capitalism. And then all the CEOs were like, okay, but what's the metric? Well, Gary is saying, you know, here's the environmental metric.

Here's some labor metrics. Here's some metrics about, you know, disclosure. And he's he's, I think, pushing that ball forward. So I'm encouraged. Yeah.

And that's great to hear because I think it's certainly long overdue. I mean, I was an SEC lawyer for my early career and was very familiar with a guy named Frank Lee. He was one of my mentors that wrote the Wheat Report dealing with kind of the 33 act and the 34 act. And I watched from the eighties and the nineties with the repeal of Glass Steagall, this movement away from kind of the SEC really having teeth on things, the way they've approached cryptocurrency. Yeah.

And when I was a young lawyer, there were these reverse mergers people looked down upon. And now, we've got SPACs, and we've got private markets of options for these tech companies trading in public marketplaces. And so this notion that you have fair disclosure, there's this risk reward, that there's accountability. I think we've created this situation where anything can happen. And the question is, are we gonna wait for the crisis to clean up start regulating things?

Or it sounds like you're saying there is some movement towards tougher regulation currently going on. I think there is, but you're getting at something important too, and I don't wanna underplay it because there's actually two competing trends. There is the ability of companies in this country and governments to lobby through our very porous system. And I'm talking not even just Citizens United and some of the big things, but all of the ways in which influence can be bought have corrupted the system. They have made it kind of like a Swiss cheese hole.

And you saw this actually, you know, you saw it frankly post Dodd Frank, you know, where it wasn't a perfect piece of regulation because all the banks and all the financial interests came in and turned it into Swiss cheese, and that's kinda how the system works. But I also see this group of younger regulators and younger voters that are saying, no. Power exists in the economy. We can't pretend that power doesn't exist. And we need to address that head on.

I think you're gonna see more push for actual human beings, CEOs, to be sent to jail when bad things happen. You know, it's funny. This is a little bit of a a stretch, but I think you'll appreciate it. I often look at China and The US, and I think, like, who's got the best model? Who's gonna be ascend it in the future?

And I think the country that is going to win out ultimately is gonna be the country that figures out how to curb their elites, you know, and stop excesses while still allowing innovation. I think we're not doing well enough yet with that. And, I mean, I look around, frankly, at some of the rooms I'm in, and I think, yeah, you know, the system is kinda rigged. I think there are people that get a leg up and get to go into the backroom and play poker and those that don't. And we've gotta fix that.

Yeah. We interviewed a person on the Puck that was a coauthor of the Upswing and the whole progressive movement back in the late eighteen hundreds and kind of moving into the twentieth century and how we went from kind of being in this kind of narcissistic I to we, and then the books about how do we do it again. And I'm also optimistic looking at young people today who were saying, you know, that the boomers kinda screwed this up, and they have to make room for the young people to kinda come up. And what I'm hoping is that the dialogue is one where we don't throw the baby out with the bathwater. So again Yes.

We can talk a little about MMT. The issue is, how do we come up with something that doesn't make it worse? Right? How do we come up with a win win and talk about this where the young people have legitimate issues, but by the same token, why can't we just throw more money at the middle class to get out of this and so forth? How do you think you bring kind of the boomers and the younger people together to come up with a win win strategy to deal with some of these elite issues you're talking about?

It's a great question. And I think you're framing it just right because at a time when we've just been through a boom 40, you know, in some ways and things are gonna be tighter. And so you've got the shrinking pie and yet you've got two big voting blocks, boomers and millennials that are gonna be fighting for a smaller piece of it. So what do you do? I mean, some progressives are saying, hey, we need MMT because, you know, the middle of the rotors or the conservatives wasted all the easy money allowing these asset bubbles to be built.

But we're gonna use the easy money to do good things. You know, we're gonna build some roads. To me, I don't I mean, yes, I'm for infrastructure building and reform of education, but I just don't think you fix an illness with the same poison. And I worry, frankly, that if we let that go on, then it'll be even easier for conservatives to blame the inevitable crash that will come on Democrats. What I would love to see actually, and you mentioned you didn't quite say austerity, but kind of a sharing, a going from I to a we.

One thing we could use in this country, I think, is a national year of service. Boy, would that be a good way to get a lot of young people who are underemployed and over indebted, put them to work. I mean, the same way the Israelis do, like, get everybody together. You can't buy your way out of it and get them working on all the projects that we know need to be done at a national level, at a state level, at a local level. And I think that would be a fantastic way to move forward.

I also see just at a at a organic level. I think we're gonna go back to more communal housing. I think that, you know, the boomers are living longer. They're not doing the wealth transfer but they've got these enormous homes, right? In part because of our zoning laws, there's not enough smaller homes for millennials to move into.

So, you know, I think we're gonna see just as I'm looking out the window in my neighborhood in Brooklyn. I live in a brownstone, and it used to be back in the day in the 1950s. Grandma was upstairs. The patriarch and the wife were in the middle, and the son may be in the basement apartment. Maybe we'll go back there and maybe that's a good thing.

Yeah. I completely agree with you. And I think that is a good thing. And I've got a much older mother and and I've got millennial children or you know, I made the mistake once of seeing one of them. Well, you know, you may have to have a smaller house.

And they looked at me like, well, how would you have felt if somebody had said that to you? You know? And so I don't think they're quite ready to give up on it. The other thing I think needs to be talked about is I've listened to people like Ezra Klein ask the question, you know, which is for so long, we did quantitative easing and we created these asset bubbles and it was good for the wealthy. And now we're saying just when it's time, we're pulling up the ladder on the young people.

And I think the reason it's so important to address that issue is to say, look, you're absolutely right. It was a shortcut that we did, and it did not work. To double down on stupid but then the question is, okay, how do you unwind it in a way when you look at it, it becomes fair? And, you know, when you look at Thomas Piketty's book, it's easy to point out these challenges. But going to the elites and simply saying give up half your wealth and give it to the millennials is probably not an easy transition.

And so the question is again, how do we actually sit people down and have those constructive discussions about how do we build a fair character based capitalism? Well, there's so many ways to approach that question. I mean, a couple of things I'm thinking of, one at a company level and then one more at an individual level. I do think that starting to put some real restrictions or qualifications on companies that are getting federal subsidies and getting easy money. You're seeing that in the CHIPS Act.

We took a start at that, but I think we need to have a much more broader rethink of the public private compact for this new age. There's gonna have to be some sharing of the pain. You cannot have the private sector having benefited so wildly from the easy money bubble and then not putting back into the coffers. And that's why when you're seeing the government start to incentivize things like chip building, that there's gonna be clawbacks for companies that don't do the right thing. I would like to see, you know, any company that is spending money on buybacks at this point, I don't know.

There's gotta be some kind of carrot and stick methodology to get capital where it is needed. That's the whole point of the financial sector. It was supposed to sit in the middle of the hourglass and mediate, you know, between savings and capital productively. It's not doing that. At a more individual level though, thinking about your millennial kids and my I have a 16 and a 20 and, you know, my daughter was very depressed like many of her.

I mean, she's going to the University of Chicago. She's got a lot of opportunities, but she's like kind of existentially depressed, like most of her cohort. And they they just look out and they just don't see the way of being so easy in the path that I felt I had coming out of even in the middle of the recession in 1992. I was like, hey, you know, I I can get a job. No problem.

The the world is my oyster. They don't feel bad. And so I think that that's gonna require a conversation about shifting educational systems, training for the jobs, the future, looking at the demographic systems. I mean, at a very, very macro level, when do you ever in history have big productive shared booms of growth? It's when you have a brand new technology that is underwritten by the public sector and gets commercialized by the private sector, railroads, Internet.

That to me today is clearly in clean tech and health care, biotech. So let's start to get some of those floors, and then let's start to rethink education to funnel these kids into these professions that frankly, we're gonna have a lot of old people. They're gonna need a lot of health care. We need to make these good jobs. I mean, those are some ideas, but I don't mean to say that there's not gonna be bumps along the road.

I also think just to, you know, and I shouldn't I'm talking against my own book here, but I think that there's gonna have to be some rethinking about land and housing taxes and oldest housing wealth and land wealth hanging out in the hands of older people. I can't see that staying the way it is next twenty years as younger politicians take over. Yeah, it's gonna be interesting. And I wonder, do you think that there's also a way to shift the way that we view conspicuous consumption? I mean, again, when I grew up, there was this notion of new money and old money.

The old money was much more conservative in how they spent their money, less flashy. People were not building thirty, forty, 50,000 square foot houses. Right. There was a certain shame almost and a humility and a responsibility that came along with wealth. Do you see any hope or discussion going in that direction in terms of the elites?

And there isn't, should there be? There absolutely should be. I mean, it's funny. I once spoke to a I was in, Stuttgart in Germany doing a a little trip to look at the Mittlestock companies there. And I asked a CEO of a company there, like, why don't you all have the big wealth gap that we do?

Or why are you not making, like, 400 times what your average worker is? And he's like, are you kidding me? Like, I couldn't walk into the local diner and hold my head up if that was what we had. So that's a cultural thing. I mean, we used to have more of that culture and clearly in certain parts of the country we do.

I grew up in the Midwest and I think that there is still some of that in the business community. But there's also a glamour elite, you know, a kind of a social media society of spectacle. We're all looking at the Kardashians. And I mean, Donald Trump is our, you know, former president. This is all sort of part and parcel.

I do think we probably are headed back to something of a new age of austerity. And without putting it too strongly, I would look at, look at the way that younger people shop. They're very interested in the circular economy. You know, I don't want to underplay the fact that there's still a lot of influencers selling crap on the Internet. But I look at my kids and I think their expectations are different.

I think they want more time. They want freedom. They're definitely willing to give up money for more freedom. That's going to require companies to think in different ways. I don't know.

I'm hopeful. I'm married to, an old line wasp who has sweaters from the 1950s with holes in them. So we're we're living austerity here in our house. I try to repair things and not throw them away. I mean, you get so used to it, like, throwing away the plastic bottles.

And there's something about taking pride in things and not just throwing things away, but actually taking care of them and so forth. I actually think it ties into this broader theme of asset bubbles because we have created an economy in which there's a few of us in high level, high paid knowledge jobs, and there's people serving, and there's nothing in the middle. And so the idea of a vocational training program that gets you $150,000 job in plumbing or in machining, those things went away. And I think we need head jobs. We need jobs you can do with your hands.

We need jobs that focus on the heart. You know, that's about a balanced economy. Yeah. There is some talk like, again, about how Germany has like these better trade schools and focuses on on practicality and that not everybody needs a liberal arts education, so to speak. I'm really hopeful coming from the rural Midwest.

You know, my dad was a Turkish immigrant. My mother comes from a Swedish and an English immigrant family. Like, I grew up as a kind of a stranger in the rural Midwest, and yet I had a great upbringing. I think that there are a lot of places in America where there is still that kind of diversity and comfortableness with difference, and I think that we get way too focused on the things that push us apart. There's a lot more that pushes us together, and we should really treasure that.

That is a wonderful, wonderful way to end, and I appreciate this one. It's been a wonderful discussion. Thank you for joining us on the Puck today. Thank you. The Puck Venture Capital Beyond is produced by CMEG Advisors.

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