BREAKING: UMICH Consumer Sentiment Hits Lowest Point EVER | Receipts LIVE

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Hello everyone, this is JVL here with my very close friend, Catherine Rampell, author of the receipts newsletter at thebullwork.com to talk about the latest economic news and surprise. It's not great. Not great. We got an inflation report this morning, Catherine. I'll just read off the headline, consumer prices rose 3.3% in March as energy prices spiked due to Iran conflict. 3.3% sounds like a lot. Yes? It's not a little. Line go up. Yes, line go up. Exactly. That red line at the end. To be clear, the thing that the Federal Reserve pays more attention to is a version of the blue line, which is when you strip out food and energy prices, not because the American public does not care about those things. Obviously, people very much care about what they're paying at the pump, for example, but because they tend to be volatile. The thing that the Fed pays attention to is slightly better than the thing that the general voter pays attention to, but at some point, they may converge in being both bad. That's the red line. Yes, because for now, they can strip out energy prices or energy price growth, but energy is an input into almost everything else, right? Like the baseball glove you get or whatever, like any goods you get shipped around the world using energy. If the war continues, if we're at the very least, if there are disruptions in oil markets, we will start to see even the thing that the Fed pays more attention to get more bad as well. It's not just transportation and shipping. It's also packaging, which is heavily dependent on petrochemicals and the energy needed for production. All of these inputs wind up. Yes. Eventful entering in. Yeah, you mentioned packaging, but that's because plastics are made from petrochemicals. And so lots of plastic is getting disrupted because of these supply chain problems. Likewise, a thing that I did not know about until recently, helium. So a huge portion of the world's helium also transits through the Strait of Hormuz, because it's a byproduct, I guess, of making natural gas. And there are very few helium deposits of their own kind around the world. So lots of it comes through the Strait, through the Middle East. And helium, it turns out, is an input not only in your children's birthday party balloons, but also semiconductors. Very important for semiconductors. MRIs. Helium is used to administer MRIs. So there are a lot of these other things that people may not think about that are also going to get more expensive as a result of this war. What if we, I'm just spitballing here, shipped the helium by using it to float helium containers in big balloons, like balloon boy, like up or lots of little balloons like up, right? We use that and we use the helium to ship the helium and just leap frog the Strait. Maybe that's something we could look into. Yeah, you should mention it to the White House. I bet Donald Trump wanted to inject bleach into the, yeah, shine the light. I hear that if you, I hear that he wanted to nuke, uh, hurricanes, right? So like he said outside the box thinker like you. So this is all not all, but this is largely due to the highest, give me what is the exact stat on gas price jump. Is this the largest month on month gas price pump on record? Yeah. Do we have a graphic on that? Well, this is just, yeah, this is guess, this is guess prices, uh, which go up very much. So I'm sure this is not news to anybody watching us talk about it. The thing that is the superlative is if you look at how much line has gone up in the past month, it is at an all time record high. So like the exact dollar amount of gasoline, I believe has been higher, but it's that growth, that very rapid recent growth. Dxdt, yeah. Yes. Thank you. Thank you for the calculus reference. Um, yes. So that is what is new, that it's the highest, the fastest increase in gasoline prices since the government began keeping records of monthly gas prices back in 1967. So, uh, yeah, that's that's the chart. It's like it's much messier to look at, but this is month over month and you can see the line go up at the very end and it goes up a little more than the prior spike, which I think was like in 2008 or something. Yeah. Yeah. That's a, well, that seems bad. Does, I mean politically, hey man, keep it in the ground. All those climate people maybe could be happy except we can talk about why they're, why, why the climate is doomed to because of this. But yeah, not great for general consumers at the very least. Now, uh, we have a ceasefire-ish, which is to say that the Trump administration is pretending there's a ceasefire, even if Israel and Iran are not. Supposedly the strait was opened immediately, even though it does not seem to be, uh, the Lloyd's List, which shows, uh, I, Matt, you may be able to find something, a graphic on this, I just saw one a little while ago, but there was a Lloyd's List, which just shows number of ships transiting the strait per day. Uh, and it still seems to be like, like that. Yeah. One, so I was optimistic is not the, the right word exactly, but I, I had thought, okay, uh, we got our, you know, Trump promised his genocide and then he gave us his very predictable ceasefire and the terms of it are, are very bad for America and quite good for Iran. But all things equal, this is still probably the best of all the bad possible off ramps. Um, for instance, because we are, we are approaching some gates in timing where, uh, the costs do not like no longer increase linearly, right? So as you approach the spring planting season, that all of a sudden, uh, the disruption in fertilizer, uh, precursors becomes like really, really important. Um, if we don't get like, if the ceasefire doesn't actually hold and the strait does rain, oh, that's the, thank you, Matt. Look at, I mean, that's, uh, right? Yeah. Um, so, uh, like, I don't know, like how can, I mean, there are lots of questions here, but one of the one is how concerned do you think people should be about whether or not the ceasefire turns out to be real ish? And is the market pricing in the ceasefire? Cause is the stocks sort of look flat in all of this? And yeah, last I looked they were the market seems to think like, don't worry, everything's in hand. We don't have any more distance. The market seems to think there isn't a lot of uncertainty. Yeah. It's confusing, particularly if you look at spot prices in recent days, I don't know what they are today, but spot prices for those watching are what it would cost if you wanted a barrel of oil right now. A physical barrel of oil, not a piece of paper saying that you own a barrel of oil. Right. Usually when you hear people talking about oil prices, they're talking about oil futures prices. So how much you would pay for a barrel of oil three months from now, let's say. And the number three months from now is usually more expensive than the number today because there's a bit of uncertainty, you know, prices go up, et cetera. Right now, or at least the last I had looked, it was the opposite where the price of oil you talk, search for either oil crude oil spot prices or there's a specific term. I'll think of it. Okay, sure. Sure. Sure. Anyway, normally the future price is higher than the current price. Recently, it's been flipped. And at least as of a day or so ago, spot prices were at their highest level on record, which reflects the fact that it is really hard to get oil right now today because of that chart that you just saw showing that there are very few ships transiting through the strait. So there's this air gap, as I've heard other people use that term, meaning that the stuff that it was already pumped and got through has been shipped to its final destination. And now, we're dealing with this period where stuff isn't getting through, stuff isn't getting pumped, oil and natural gas, for that matter, are not being produced because countries are running out of storage, et cetera. So it's really hard to get your hands on a barrel of oil today, a physical barrel of oil today, so it's gotten very expensive. But if you look at prices, they suggest that markets think that it'll get easier in a few months. And so that's why the future price is lower than the current price, which, as I said, is not normally how it works. Now, the question is, are traders making the correct bet on that, that things will normalize pretty soon? If you listen to things like what I think it was the CEO of Chevron has said, it's that maybe markets are being a little too optimistic. And the reason why the futures price is not higher is that markets are making a bunch of assumptions about what's going to happen between now and June that may not be based in reality. Now, you mentioned JVL that there is a ceasefire deal, there's a toll, maybe, that ships are having to pay in order to go through, which is also a new cost that companies have to deal with, which, off the record, oil executives and traders will complain about, but they're too chicken shit to talk about it on the record, of course. So, there is this toll thing that's going through. So, maybe stuff will loosen up, maybe we'll start to see more traffic go through on the condition that tolls are paid, on the condition that the transactions are done in crypto instead of your favorite topic, the petrodollar. But even that is really not going to solve the problem right away, because like I said, there's this air gap where it's like you have this period, this like we're soon going to be dealing with a period where stuff wasn't getting produced, stuff wasn't getting through. And so, even if everything went back to normal with the straight today, that doesn't mean prices at the pump are going to go back to normal anytime soon. Maybe they will eventually, but if you look at forecasts for like how much will oil cost, how much will gasoline cost, they may not be as high as like the worst case scenario, but they're still a lot higher than people thought before the war began. So, it's like somewhere in- We have the spot price. Oh yeah, what is it? Jasmine, thank you. So, we're like 130 in a bit, down from when it was like 144 last year. Yeah, that was the record high. But you can see the divergence between the futures and the spot prices starting. Like as people started getting their head around the actual disruptions. And that's why I said, like it does sort of, you know, we've got this Schrodinger-Seachs fire that maybe works or maybe it doesn't. I have just sort of assumed that it would because I think it's in Iran's interest for it to work at this point unless they just want to play for more. Well, I mean, they have a lot of leverage right now because now that the straight has been blocked, they can always threaten to block it again. So, I mean, obviously Iran has sustained a lot of damage and the Iranian people have sustained a lot of casualties as well as a result of our war. Not a thing the Iranian regime typically cares a lot about, civilian casualties. Yes, they have, yes, committed plenty of their own, certainly, protester killings earlier this year. But in terms of like their actual influence, their actual power over the region, in many ways, it's actually grown quite a bit because they can always threaten to like put down the toll booth or to block ships, tankers, other commercial vessels in the future. And so like everybody has to do what they say or at least, you know, they have a lot more leverage than they used to. This is the difference. The analogy I've made is this is a difference between North Korea saying that they have a nuclear weapon and North Korea doing two nuclear weapons tests that everybody can say. Right. And so it is one thing for a country to claim to be a nuclear state which changes your strategic calculus in dealing with them. But there is also the uncertainty, maybe they're bluffing, maybe they're not. Once they demonstrate they have, and Iran has always threatened to close the straight, but nobody really knew if they could do it. And now it's clear not only can they do it, but they can do it and the American Navy can't stop them. Yeah. And they can do it kind of on the cheap. Yeah, they can do it on the cheap. I forget what the exact numbers were, but the missile defense systems, the technology that we have to block the drones costs like orders of magnitude more than the actual drones themselves. It's like $30,000 versus a couple of million or something like that. Yeah. So yeah, they can do it on the cheap. Yeah. Well, the asymmetry of this is that in order to block the straight, you don't have to be able to stop 100% of traffic. You need to be able to blow up a couple ships. Like if you can hit a couple ships, that's enough. Yeah. And so, and things that the Trump administration does not seem to have thought through. So to go along with all of this, we also have some consumer sentiment data. Yeah, that was ugly. So this brings to, one consumer sentiment is one of my least favorite things because I spent the Biden years setting myself on fire saying, why do people think that this is 2008? During the Great Recession, some meaningful percentage of all homes in America were foreclosed on. The unemployment rate was very high. It was bad. And what we had was record low unemployment with some uncomfortable inflation. And we had mortgage rates going up to something that, again, in 1990 would still have been seen as an incredibly cheap mortgage rate. We're now down, US consumer sentiment down to 47.6, lowest it's been on record. Yeah. And I can kind of get that now. Like this is, and I think you and I had a conversation about this like three months ago during one of these, we got consumer sentiment numbers and you and I both said, it's kind of like the Biden administration again. Like the economy is not good. The economy is shaky and weak, but people are acting like the sky is falling. This like with the war going on and prices spiking and like the US ability to influence the world around us and the prospect of losing control of free navigation of international waterways, now I'm finally willing to say like, okay, this makes sense. Okay. Yeah. I mean, I think this I understand. Yes. So I have many thoughts about all of this, which is I actually still don't think it's nearly as bad as the deepest, darkest depths of the financial crisis. And the great recession because you don't have double-digit unemployment. You don't have gazillions of foreclosures. You don't have this sort of like earth cratering below you feel that we were all going to be in free fall that we had back then. So I do not think it is bad. It is as bad in concrete hard data terms as it was then part of what has changed since then to today is that the responses to surveys like this have gotten a lot more partisan. This was the case under the Biden administration as well as the Trump administration. And it was the case to some extent under George W. Bush and Obama as well, but it's gotten like magnified a gazillion fold in the sense that when if you are a Republican, if there's a Democrat in the White House, you think the economy sucks kind of no matter what and vice versa if you are a Democrat and there's a Republican in the White House. So everything like kind of gets looks worse in terms of averages, but what matters right now is what's happening with like independent voters and also what's happening with Republican voters. Because like I said, Democratic voters are going to say that the economy is bad right now while Trump is in the White House kind of regardless of what the data show. What's interesting is that Republicans have soured much more on the economy as have independence. So you have to kind of take these numbers with a grain of salt, but they are reflecting real problems as you mentioned. They are reflecting real concerns about rising prices and in fact the University of Michigan little research center that puts out those data said that when they asked people about whether their finances are getting better or worse, people volunteered when they said they were getting worse concerns about gasoline prices and other indicators of rising inflation. So that's clearly an issue here. There's also a fair amount of worry about what the job market will do right now on employment is relatively low. Not a lot of people are getting laid off. Also not a lot of people are getting hired. We're kind of in this stasis right now. There's just not a lot of churn period. We've had a few months where on net we did lose jobs and over the past year I think we're we are close to flat. If the Fed thinks that like it's overstating things that actually over the past year maybe we have lost jobs, but it's not like the massive widespread layoffs that we saw again in 2008-2009 let's say. But there's worry that because things feel kind of easy and because no one is hiring if I lose my job what are the chances that I can find a new one and what happens if all of these factors that we've been talking about including rising input costs because of higher energy prices will that affect my employer? Will they be looking for cost savings? Will they let me go? And then there are other risks in the economy too. You know like we've talked about this before but AI is to a large extent propping up. The overall US economy this was true even before the war and AI there's a lot of bad money going after good and so what if what if things blow up there? What if as we as I said like helium prices go up and you wouldn't think that would affect AI but it it actually does because it raises the cost of semiconductors. So there are a lot of different lot knock-on effects that I think some of them people are aware of and can articulate some of them just translate into this general uneasiness about where the economy is heading, where the United States is heading and what that means for people's job security and general financial security. Yeah I mean when I said that I understood it for the first time I again hard to agree with you not as bad as it was in late 2008 but we do have like all of a sudden a great deal of uncertainty. Yes. And it's not just like tariffs which can be imposed and then unimposed like it's like actual logistical and so well shit how are we going to get this stuff from point A to point B and who's going to can we do free trade if all of a sudden waterways are not sort of free and open and anyway. Yeah and you know we're we're also helping a bunch of our adversaries at the same time again I don't know how much of this your typical consumer is really aware of. The great good American people are very sophisticated Catherine they are they're they are dialed in trust. Look it's not their job to pay attention to like big geopolitical changes in the world and what's happening to the petrodollar. How can you possibly ask them to be citizens who are tuned to how the world functions around them you know what you and I have different views on this. Are exactly right about this. It's true. It's true. We could never ask people to understand how the world works. That's that's asking too much. Listen we have to do something fun. I'm going to show you guys a live beatdown on TV courtesy of Beep Buttigieg in a minute. First quick word from sponsors. It takes a sponsor by soul. 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He promised it would go down in years over four years. It was 21 and a half percent. It would go down. Democrats own the affordability. Listen to me. Period. Why did the president fail. You don't think Democrats. We can Aaron Russell in the background. Why did the president fail to keep his promise to lower prices in your opinion. I'm laughing because this is this this piece of it is basic. The president did say that he was he wanted to be in office to bring inflation down and he has not brought inflation down. That's all. He drove it up. He not only failed he drove it up. Mr. Secretary let's talk about having had a minimal a minimal of you tell a family where I live that a thousand dollars per household is minimal. Stop the fight. Oh no. You love it. You know how it's a I I do love it. It is interesting as a political question that the the response from Republican hacks like Joe is shifting into actually it was worse under Biden. Right. Like they've given up the things are great. This is the new Golden Age. They've given up things are going to be even better in just a minute. Just you wait and they're now well things were worse. How does that work as a it doesn't seem likely to me to be a winning political slogan. And I actually don't think that they've given up on the things will get better. The Golden Age is around the corner. We could have a whole montage of all of the times that like Lutnik has said next quarter things are going to be awesome. Let me tell you two weeks and two weeks. Kevin Hassett. I don't know if we have the video of it but Kevin Hassett was on CNBC. I believe it was yesterday. Maybe it was Fox Business. Anyway and promise that we were going to get four or five percent GDP growth this year for context pretty much every other every independent economic forecaster from the Congressional Budget Office to the OECD to blue chip surveys of Wall Street economists who are by the way not exactly like you know red commie liberals. They're just paid to get things right. All of these forecasters are predicting now like somewhere around two percent growth one point nine two point one percent growth somewhere like so like basically less than half. Let me let me fix this for you. Yes. Let me fix this for you. Those people are predicting inflation adjusted GDP growth. If you unadjusted firm inflation I bet five percent. I bet Kevin was really talking about nominal growth. Could be. I think you may have figured it out. I'm just solving problems left and right. I know. I know. You're like yeah all of these outside of the box ideas. Matt has it. Let's let's let's play it. Let's listen to my Kevin. What would you say the impact is on the U.S. economy so far. I mean we know Kevin that we just came off of the worst quarter for stocks in several years. We know that oil prices have risen 50 percent. What would be your expectation for the impact on economic growth in the coming quarters. Well I mean absent this event then when you and I talked about this last time I said that because A.I. is creating so much productivity because President Trump's policies the D.R.A.G. and the taxes are causing an investment boom and investment boom that considers or continues right to this this day. You know we just got advanced Erbil's numbers that said that orders for capital goods and shipments of capital goods are at an all time high. All of that is happening because of optimism that President Trump not only will resolve this in the short term but in the long term his policies are going to create a golden age. And so I began the year with a guess that we'd probably be in the four to five range for economic growth because of all this. And I'll stick by those numbers. I think this is a temporary distraction that will very very quickly go away. You saw that when you saw the market celebrate yesterday when they when they thought that this would be over. I think our excellent negotiating team will will finish the job and then we'll be back on track to one of the best years ever. Wow. So you still look for four to five percent growth for this year. Yes that's right. That's right because productivity is already giving us two and a half. And so if we get a little out of everything else then you can get way north of three. Look you can get way north of three after saying four to five. OK. Hey directionally that is correct. Four four to five way north of three. Will it happen. Look it would be nice. I am not someone who is rooting for a recession. I have been pretty clear and consistent on that. Only bad people do that. Because the people who suffer are terrible broken people. For a recession. Catherine the people who suffer the most from recession are the most vulnerable. You know it's like the rain falls on the just and unjust alike. It'll fall harder on yes on the poor people in any event in any event. Yes like I said the forecasts from pretty much everyone else are for much lower growth than that. And there are a lot of things that are boosting the economy like sort of artificially including we have a big fiscal stimulus that's coming through this one big beautiful bill. You know those are tax cuts. Tax cuts are a fiscal stimulus. So that's that's a tailwind for the economy. But Donald Trump keeps on jumping in the way and finding new ways to stress the economy to make things worse through tariffs through politicizing the Fed or attempting to politicize the Fed through the war through deporting a huge portion of our agricultural labor force pretty much every major economic thing that he has done has hurt the economy. And that is why you see these sort of like modest they're not terrible numbers like 2% growth 1.9% growth what the you know the Fed and and CBO and Goldman Sachs or whatever the things that they are predicting that's not terrible. It's not a recession. It does not imply a recession. But without the tailwinds it might be. We had just done the big tax cut. Yeah exactly. I mean I think I think things would be worse. And like I said that some of the things that are boosting the economy propping up the economy look a little tenuous on their own including AI like you just heard Kevin Hassett talk about how AI is creating this productivity boom and in some ways yeah it is boosting productivity and will probably continue to do so at least in certain industries. But there's also a lot of data center building a lot of investment that's going into the development of AI that is probably not going to stick around because it's like all of these companies having arms raised for who can develop the best product in the end and not all of them can. So some of them are some of them are going to be losers in what may be a winner take all market and they're going to pull their investment. And so then what happens then right you're going to potentially have a lot of layoffs you're going to at the very least not have that big boost that we've been having from this industry and none of that is taken into account in any of these forecasts. So look maybe it's possible that we get that much more polyanna-ish outcome that Kevin Hassett is predicting of course one might be a little bit skeptical of his optimistic predictions in general given other infamously bad optimistic predictions he has made in the past. 35,000 36,000 36,000 sorry don't undersell it. Dow 36,000 yeah he said that the stock market was going to go to 36,000. Right eventually. He was like it like decades later yes that was true. 20 years later he was right. Actually my favorite wrong Kevin Hassett prediction is from COVID which is the infamous cubic model. Do you know what I'm referring to? I do remember this yeah. Yeah so he predicted in like spring maybe like late April early May of 2020 that COVID cases were going to drop to zero by mid-May of 2020 and he did that by plugging some data into Excel and then saying press the button and Excel come up with every single regression model you can and one of them was the cubic line of best fit which most people would never bother with and that happened to you know produce a little nice arc like a little parabola of cases go up cases go down which was coincidentally exactly the number that they were looking for and he was like mocked mercilessly. You talk to any economist about Kevin Hassett and you mentioned the the cubic model and you know you will immediately get a laugh because for nerds this was a very damning example of like he's just trying to reverse engineer the results that Donald Trump clearly wanted him to do regardless of like how embarrassing it would be when that forecast did not materialize but that's Kevin Hassett's job it's Peter Navarro's job it's to say Peter Navarro even says this explicitly his job is to come up with the evidence that supports Donald Trump's intuition that is literally what he has said that's not how economists researchers in general are supposed to operate but that's how the people surrounding Donald Trump operate and as a result you get often very implausible comically implausible predictions about COVID about the stock market and about GDP. No price no price for Kevin Hassett for being wrong it's funny I mean we talk about incentives often Kevin Hassett is where he is in life precisely because he was willing to go out and say things which would obviously turn out to be wrong. Yes. Had he been doing good modeling and good predicting he'd just be another dude to think tank that's great all right I want to switch gears and talk about prediction markets you wrote a great piece for your newsletter receipts about a bunch of insider-ish trading things that have happened recently I just want to let you give like the the 92nd version of that and then I have some fairly puritanical questions that I'd like to ask you because I think these things are the devil. So the top line is that if you are making any kind of trade or investment decision based on anything that Donald Trump touches and you don't have inside information you are a chump because the people who do have a direct line to the president are getting information about military strikes maybe about jobs numbers basically about anything that they can bet on and make money off of so if you do not have if you are not privy to that information somebody is going to take advantage of you and it's like I don't even understand why anybody would participate in prediction markets with anything that Donald Trump touches knowing that he's probably blabbing to his friends and donors and kids and Mar-a-Lago members about what he's going to do and so again it's not just about prediction markets there have been a bunch of suspicious trades around oil for example when was this a couple of weeks ago on one of the many times when Donald Trump said something market moving that turned out to be bull it was something like our talks with Iran are very productive and coincidentally just before he said that huge 17 minutes 17 minutes yeah yeah any literally minutes before he said that there was a you know a bunch of huge trades in oil markets I think it was like half a billion dollars worth or something 500 million there you go so and and it's not like maybe people got lucky certainly it's possible to bet on Trump always chickens out taco and that therefore you know maybe people thought like high oil prices were not sustainable because he was going to back down in some way or he was going to have productive talks with the Iranians but the timing was just uncanny and so you have a lot of examples like this where people just happen to like create a poly market account immediately before we invaded Venezuela and only make bets on whether we were going to invade Venezuela and other Venezuela related topics you can see the records actually of of various users of poly market they're under pseudonyms you know they have a handle so you don't know who they are but you can see when was the account created what did they bet on and did they have a perfect record and lo and behold there are a bunch of accounts for whom this is true about Venezuela it's true about Iran you know people making bets on whether the Iranian supreme leader the Ayatollah was going to leave office they happen to make that bet on exactly the right day and maybe it's coincidence maybe people got really lucky but it certainly looks like somebody had some inside information and are making money off of it which is odious in its own right it also means again that they are making money at somebody else's expense this is a zero sum market somebody wins the bet and somebody loses the bet and you know there's also the fear of course that people are not only using information that they have on decisions that have already been made but are not yet public but maybe shading their decisions based on what will make them the most money and we don't know that it's happening but we wouldn't we might never know if it were happening and I think there are a bunch of reasons why again this is morally odious suggests that we have political leaders who may not be putting our national security in in their you know prioritizing our national security when they're making decisions about military strikes or whatnot but they're also like robbing a lot of people blind particularly when it's things like what's happening in oil markets or in equity markets you know there I think we can talk about like who participates in prediction markets which are a new ish way to gamble but there is a lot of money that changes hands in oil markets and in the s&p 500 that normal people may not even realize like this is affecting your 401k when somebody is front running you because they have inside information about our military action or some you know market moving economic indicator or what have you they are making money off of you so I think we have to disaggregate the the prediction markets from like the stock market in the futures market because you can legislate that stuff like you can legislate hey if you work for the Pentagon and you are involved in the planning of a strike you are not permitted to go and purchase oil futures the day before something like that now you would have to have an sec that was functional we don't have one of those right now we can talk about that theory like that that's that's a thing yeah you're also in your piece the prediction markets are separate and I guess I would ask you is there any reason that prediction markets should be legal because they are I feel like crypto they don't really have any use case except to engineer wealth transfers and like with crypto I mean and they they sort of invite criminal activity right I mean crypto invites criminal activity it invites people to use cryptocurrency for illegal activities it also invites corruption and graft where people stand up coins for the sole purpose of allowing people to bribe them by buying their coins which are worthless right it's it's just like legalized or to get oil through the straight of hormones or to get oil through the straight of hormones but I I think that's basically the same for prediction markets and it's not clear to me why poly market or calcium should be legal in America I think I'm less puritanical maybe than you are on this point that's not hard okay I I don't think that they are I think they are a tool a tool that can be used or misused and there actually are use cases for prediction markets that I think are helpful like oftentimes they're actually helpful in looking at who's going to win elections for example because people are putting skin in the game and they are making predictions not based on what they want to happen but what they believe will happen and to some extent actually inside information can be useful to the public right if you know what these these markets are pricing a particular outcome at there's like you know in in regular markets we talk about price discovery here you're you're talking about like potentially helping people understand the likely outcome I mean we do forecasts for similar reasons right this is a form of a forecast but it's sort of like a crowdsourced forecast so I don't think it's like on its face bad it's a form of gambling we allow a lot of other kinds of gambling including in a lot of thoughts about that too okay I mean again I think this is one of these things where it's like I'm not a gambler I I don't I've been to Atlantic City I've been to Las Vegas and like the idea of gambling stresses me out I know other people like it it's a hobby um and but but I don't think I don't think we should ban it I think that there need to be guardrails certainly for prediction markets particularly if we're talking about like using I mean probably using classified information is already illegal I think there have already been arrests for things like that in the past although I don't know the law on it so I I don't object to these industries existing or you know like I don't think we should ban all sports gambling even if it's not something I'm into but I think you want to have like I also don't think we should ban alcohol even though people abuse alcohol so you know I think it's like things in moderation and and have some guardrails um it's a hobby and can yeah I tell me this is a larger conversation okay but I would say the the thumbnail version of my my views on this are that activities that carry with them enormous economic risk and risk which ultimately gets borne by society right it is I mean people who get involved in gambling are risking themselves but also then the economic damage that they can do winds up having that tab gets picked up by everybody else like with smoking and you know you get a lot of people smoking all the time and getting cancer well that shows up in like Medicare costs um these things do get socialized and so to the extent you want to allow some of these things I understand that but they need to have a lot of friction to them in order to mitigate the larger costs and what we have had especially just with the mobile computing revolution is the expansion of activities which once carried a lot of friction to being totally frictionless and not just frictionless but predatory so you have your sports gambling app it is in your phone in your pocket with you at all times and if you stop gambling the company that is using all of your data knows how to lure you back in by saying hey we'll give you $25 for free and you know just do this bet here's a three team parlay that we know you we know you're a bills fan and so here's a good bet don't come bet on the bills right and that when you have not just like frictionless but also then big data allowing the companies which conduct the gambling um to be really predatory in in the pursuit of their customers bad you want to sell tell people that they've got to get on a bus and go to Atlantic City to a sports book to gamble for a day I can live with that right and but that this is different and I think we're starting to get some pretty good societal data based on like you know state by state where states which have legalized sports gambling versus not and the outcomes especially for young men are quite bad and with sports gambling and so that's well I mean I hear you um I think as I said I think there's a common any state guy yeah I was gonna say I mean I uh I guess I'm more libertarian than you on on these kinds of issues uh I mean the other thing that I would mention which is not about like what is the right thing to do but what is the politically advantageous thing to do is that it's going to be very hard to outright ban a lot of these things right now in part because which is again a different question on about the merits but because it is disproportionately young men for example who are participating in these kinds of betting markets and in you know whether it's sports gambling or prediction markets I think it's going to be really hard to crack down on it unless you want to drive away those voters who are right now up for grabs so that's it I'm sure that is part of the calculus for politicians in both parties like do they want to be the nanny state on this and piss off all of the mannisfur listeners because they are cracking down on um Calcio who'd want to stop tech billionaires for making more money by siphoning dollars out of unsuspecting people who are getting fleeced on their platforms yeah I mean well like we do we we already have laws against fraud as you alluded to before we do not enforce them we we we last year actually last fiscal year we had the lowest number of white collar prosecutions at the federal level on record going back to the 80s and that's partly a long-term thing that white collar prosecutions have been trending downward but it's also largely a donald trump thing um and so and again this is so like there were prosecutions of I don't know people in crypto who were defraud you know rug pulls people defrauding unsuspecting users I don't know about in prediction markets per se but in a lot of these other ways that are essential ways that democratize gambling um financial gambling those kinds of things there have been intermittent efforts to enforce the law on you know more traditional laws not things written necessarily specifically for these markets and that was always going to be a difficult battle because the technology is going to just like the people working in tech are going to be like ahead of the people trying to regulate tech but there were there were at least efforts to crack down on this stuff and then this administration has stopped enforcing um and has been pardoning you know the the president has been pardoning people like uh cz from finance uh for defrauding people so there are a lot of ways in which I think there are more there are going to be more chumps out there essentially um because a the people on the other side of the bet who have aligned to the president are going to have you know have inside information and they can use that against you be if you know if there is actual funny business going on nobody's going to crack down on it um c people who have cracked down on it are getting i mean people who have been prosecuted or pled guilty are getting pardoned uh d more people want to cheat right because nobody wants to be the one chump who's not cheating this is true when it comes to tax compliance and it's true when it comes to market manipulation to the extent people can uh you know get get aligned to the president uh donate money to the president more people are going to do that um and I don't know how many letters I'm up to at this point but e I would say that the administration is trying to encourage more risky financial behavior from the public you know we're talking about things like uh prediction markets but also there was this 401k rule that the administration just proposed like a week ago that basically yeah that makes it possible for normal people to invest their retirement savings in really risky assets where here I am more of a nanny state person um why not right uh you know they're basically making it easier and encouraging people to invest their 401ks in crypto in private equity in private credit right as private credit is maybe going to blow up you know this is a way of like if you don't you know there's this idea of the greater fool theory do you know this term that there are you know that like you can have a bubble a speculative bubble of some kind because even everybody knows it's a bubble because it's like well there'll always be someone dumber than me to buy this worthless bag of shit essentially and I can pass it along and that's sort of what happened with the housing bubble like everybody kind of knew things or not everybody but a lot of people sophisticated traders knew that home prices for example were inflated were overpriced but it's like I can sell it on to somebody dumber than me in this particular case um when you run out of greater fools who are willing to buy the bag of shit uh for example a bad private credit loan if you expand the universe of people more unsophisticated potential buyers more fools you can you can continue the chain of of the greater fool and you can keep the bubble going for a little bit longer until it eventually bursts and that's basically what this administration is doing what could possibly go wrong what could all right katherine thank you we'll be back next friday probably with more fantastic economic news everything's going great and uh the new golden age will start then good luck america oh it's bad what what would the people do it may thought you'd be into it some what me no that's deeply offensive harry you're wearing socks and sandals in public come on I travel in style you don't it's a new low they're the mullet of footwear and what's wrong with mullets sharing moments you'll never live down on the train you can