684. He Helped Clean Up the Last Crash. Does He See Another One Coming?

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29:42I spoke with Gary Gensler on July 10th. The markets have been a bit choppy since then, but the larger trends are still holding true. By whatever index or measure you want to look at, U.S. stock market valuation is at an all-time high relative to our GDP. I think roughly two and a half times GDP. It's hovering right around 235 % of our economy. It's called the Warren Buffett Index. He just simply takes the value of the stock market and divides by our economy. That's an all-time high depending on the day. You can look at price earnings ratios in the rearview mirror where we're about 30 times. You can look out in front of us, the predicted price earnings ratios, not quite the highest.

30:29We have been a little higher at times. Or there's a famous economist named Schiller that does a Schiller index, which takes an average of 10 years. We're pretty much at the high there as well. Regardless of all that, what we're having right now in our stock market, everybody would agree is this investment boom in artificial intelligence. Think data centers, think chips, not just computational chips like the graphic processing units of NVIDIA, but think memory, Micron, Samsung, this SK Hynix out of Korea. All of that spending has gone up nearly five-fold in three years, from about$140-ish billion to$750 billion.

31:17To scale it in terms of our economy, just this year in 2026, that$750 billion is about 2.5 % of our gross domestic product. It's estimated next year to go to a little over a trillion. All of a sudden, it'll be 3 % of our gross domestic product. That's more than we've done on nearly any of our general purpose technologies. I'm curious to know the degree to which that concerns you and for whom especially. For instance, Citadel has data showing that the bottom half of U.S. households now own more than $600 billion in equities and mutual funds, which is an all-time high. And that is, to a lot of people, really good news because one complaint for a long time has been that the stock markets were mostly an opportunity for middle and upper income people.

32:07But when new investors get into a market, whether it's the stock markets or crypto or whatever it may be, that is often one of the preconditions for a bubble. Talk to me about your assessment of full absolute risk of the markets and for whom? It's a risk for the entire economy. Right now, our economy is driven by and large by two things, both related to AI. One is the actual capital expenditure. When you move from the numbers I mentioned,$140 billion to$750 billion, that's$600 billion of more spending in just three years for capital expenditures on these data centers and the like. Secondly, the stock market itself creates a wealth effect generally for the upper income Americans.

33:01I like the figure that Citadel puts out there, but I'd note in aggregate, the U.S. stock market is hovering around$80 trillion. So if the bottom 50 % of households hold$600 billion, it's less than 1 % with all respect. So when someone like Citadel puts out a number like that, is it marketing essentially? As we say in politics, it's messaging. You're going to find the political consensus, and then you figure out the analysis. Look, I would say this. The economy is at risk because if the capital spending just plateaus, that takes off growth. If this capital spending goes to a trillion next year and then declines just to a modest 500 billion, that's a shrinking construction, electricity provisions, all the data chips, all of that shrinkage starts to go the other way.

33:59And so right now we have this abillion valuation in the stock market. We have it pushing price pressure up from every laptop you want to buy, any iPhone you want to buy. Even your automobile has in it memory chips. There's only three big memory companies, one of whom just tapped the U.S. market, SK Hynix. And it's pushing pricing up. Pick your favorite general purpose technology. Stephen, there's a question back to you. 200 years. You could start with canals in the 1830s or the internet just 20-some years ago. I have mine. I'm ready to go. All right. All right. Electricity. Ah, good one. I think it's wildly overlooked generally.

34:44Electrification, it's a good and wild story, and it's one of those things that we totally take for granted now. Yeah. It was 1880 when Thomas Edison created Edison Electric and built that first electric plant here in Manhattan where I'm recording. And what happened to the stock market? And did we have a recession in the 1890s? I would guess yes. Yeah. And what happened in the 1920s when we really had big utility and all the utility companies were starting to electrify rural America as well? I'll say yes again. And I'll say yes to every single one. There's booms and busts. Right, right. I'm glad you picked electricity because in electricity's case, we weren't spending 3 % of gross domestic product on the capital spend.

35:27Railroads, a lot of people pick because it spent so much. After the Civil War, we were just building those railroads and government policy had made a difference to giving away land for building the railroads. That big boom, we were peaking at 6 % or 7 % of our gross domestic product spending on railroads. And then the 1870s, we just washed out the economy. Sometimes we peak at two, two and a half to three percent of gross domestic product like we did in the late 1990s on the internet. I think a lot of it has to do with leverage, how much borrowing is in the system. There's a book I'm guessing you know, Ken Rogoff and Carmen Reinhart, just after the global financial crisis where you were heavily involved.

36:12On the cleanup crew. The Cleanup Crew, right. And their book was called This Time is Different, Eight Centuries of Financial Folly. They were talking about that financial crash. Let's use that term now for AI because there are, as with any big new technology that's getting a lot of investment, there are people who claim this time is different. This technology is fundamentally different. The investment around it is different. The consequences, if or when parts of it don't go well, are also different. I'm guessing you don't feel that way about AI, but I'd love to know. Look, I'm an identical twin.

36:46I would say Rob and I are different, but we're also a lot similar. So let's just give you context. What's similar is that we have a set of technologies that come along every 20 to 40 years, the last being the internet, maybe before that you would say the computer and general electronics and so forth. before that, automobiles and the highways and the great highway system, all the way back to canals in the 1830s. What you usually have, history tells us, is this investment phase, big capital expenditure phase. We're having that right now. It's in the data centers and the chips and the memory and the like.

37:30And revenues do not match it. Right now, we have, give or take,$750 billion of spend. And we might have native revenues, if we're being generous this year,$150, maybe$200 billion. So we know something. It's not in equilibrium right now. And we knew that when the internet was building all those cables in the late 1990s as well. It's never been the case with a big new technology that it is in equilibrium only because a new technology needs an awful lot of startup investment, or am I wrong there? You're correct, but it's also the nature of financial markets, and it's a nature of human incentives.

38:13Think about the chief executive officers in any one of these eras. They said, oh, my God, they're building a canal. I got to build a canal. They're building a railroad. I got to build a railroad. And now Mark Zuckerberg can't help himself, right? I mean, he spent$80-plus billion on the metaverse, those goggles. And so Google rightly is saying, if I don't do this spend, I could lose my ad revenues to open AI. So there's a fear of missing out, FOMO, but there's also defensiveness. I've got to protect my high profit margins I have currently. And so you get an overinvestment that comes from the actual incentive systems right in the moment, financial incentives and FOMO incentives.

39:01And you get this enthusiasm and the capital markets support it over and over again. decade after decade, we support these booms. And then at some point in time, it plateaus. And all of a sudden, it's a little bit like that cartoon. You're watching the character run, and all of a sudden, they ran off the cliff, and their feet are still moving, and there's not the revenues to support where they are. The difference that a lot of people point to is two. One that I think is right, and the second one I worry about. One is they say, listen, there's not as much debt borrowing because a lot of this build is from these big tech companies, the so-called hyperscalers, the Microsofts, the Googles, and they're using their own cash flow.

39:50They're not using capital. They're already public. They've been public a long time, and they generate a lot of cash, yeah? And they don't have a lot of debt yet, though they're now tapping the debt markets, right? All of them are doing things that are off balance sheet financing. They're also having a lot of other companies called neocloud companies like CoreWeave and others lease or buy the chips, and then they lease from them. There's a lot of interconnected finance that if we have a crisis, people will look back and say, where's that Freakonomics podcast with Gensler? He mentioned that. But wait a minute.

40:25Sorry to interrupt, but let me ask you this. How do you like that style of ramping up? I'm just trying to gauge your level of concern. I think that we have a stock market that is highly valued by any measure. We have a boom in the capital expenditures that will plateau and maybe even decline in the next few years. So when that comes, that's a reversal that you see will happen for all of these chip manufacturers, construction, and so forth. But something has to give. If AI is successful, it's also going to lead to a lot of disruption. It's going to be significant disruption. The S &P 500, a couple hundred of those companies, their valuations kind of need to go down because they've been disrupted by somebody.

41:14I'm not predicting which one, but it could be software as a service or other service companies and so forth. But so somewhere AI's got to really work out. And I'm an optimist that it will over time work out, but not in the next several years. It will be much slower, I think, in terms of really changing productivity growth. Let's talk about who loses out in the AI transition, especially when it comes to employment. We saw this with the so-called China shock when U.S. manufacturing jobs were sent overseas. Some predictions say that the net job loss from AI will be much larger, but it strikes me that nobody really knows yet.

41:55AI needs to be thought of, and I say this to these great students at MIT. I say you've got to look at the task level, not the job level. What are the tasks of the producers of Freakonomics that they can offload to AI? There's still going to be a human asking the questions. I think for a while, Stephen, I think you're not an AI agent, are you? I am not an AI agent just yet. I do find AI helpful in my research, but I'm just using it essentially as a better version of a search engine or maybe a talented and smart assistant who also makes a lot of mistakes. Correct, correct. You have to be dubious.

42:34You have to really challenge it. You can't offload too much because they'll tell you something that's just not correct. But what tasks will be automated? And then later, subsequently, what whole processes will be transformed? Like Henry Ford transformed the factory floor and did that whole assembly line. And then extending that metaphor, when you create the car, you add mobility, and that leads to billions of opportunities that didn't exist. So that's the creative destruction argument that the people that I hang out with, the economists like. But when I raise that argument to AI skeptics, younger and older, they see it more in the this time is different way.

43:14There's no way that that's going to happen. So what do you say to that skepticism? I feel it. I understand it. There's been skepticism about a lot of different technologies for centuries. There's that old story of the Luddites in the United Kingdom about weaving and millwork. This is more challenging in some ways because to the extent that you concentrate on a winner-take-all or a winner-take-most model, if the scaling goes that way, then a lot of the profits and revenues go to that one or two main central models. And if companies, law firms, consulting firms, software firms are offloading and automating tasks, then the worry is, well, does everybody else get paid lower for what they're doing?

44:08There's going to be a lot of disruption in the 2030s. I think there'll be a lot of political angst and changes of coalitions around this throughout the 30s and maybe the 40s. I was hoping you were going somewhere positive with this, but you're saying that what we've got now in terms of uncertainty, let's say political partisanship, let's say angst, as you put it, you're predicting at least 10, maybe 20 more years. I think that we're in a transitional period of time, and we've seen this at other times. In the industrialization of the late 19th century, it was a little bit about electrification.

44:44It was a lot about the railroad, a lot about industrialization, moving from the farms to the cities. But that was a period of time we had the progressive era. It was one of the most dynamic periods of time that we actually broadened the franchise to vote to women by 1920. We did some heinous things on race, though. We went backwards and we even stalled the Jim Crow era. But the progressive era was one that we did antitrust laws. We set up the Federal Reserve and the Federal Trade Commission. I think the 2030s and 2040s will be a challenging political time. I think that the American public is going to rise to the challenge and say, we need to change some of the imbalances that are in society.

45:29And I hope you ask me about China. Coming up after the break, what about China? I'm Stephen Dubner in conversation with Gary Gensler, and this is Freakonomics Radio. We will be right back.

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48:23Gary Gensler is former chair of both the Securities and Exchange Commission and the Commodity Futures Trading Commission. Before that, he was a partner at Goldman Sachs, and now he is a professor at MIT. We're talking about how the AI boom may play out, and that depends on who wins the AI race. China and the U.S. are in the lead right now. Now, China and the U.S. have different approaches. We're spending really significant. We're spending probably seven times as much as China this year on building those data centers. And yet, their models are only maybe four to nine months behind us. There's a lot of price pressure in the U.S.

49:04Our companies in the U.S. are saying, well, if you want to use OpenAI or Anthropic, we have to charge you. And at some point in time, we have to pay our bondholders and our stockholders. China might be four or nine months behind, but it's good enough. Like when you do your searches for Freakonomics, I don't know if you're looking at the budget for how much it's costing you. But if you thought, I can do almost as good a search for half the price, you might say, I'll use a DeepSeek model from China or a Moonshot model or Alibaba-Quinn model. we're in an interesting time where we may have put a lot of cards on this thing as a nation but we'll have the Maseratis and the Ferraris of AI and they're going to be building the Volkswagens and the Volkswagens will sell a lot well just think about it in China they have a pretty darn good electronic vehicle they do it's taken over most of the world except for the US yes Yes, BYD.

50:09And so is that where we're going to be on this AI front in two or four or five years, where we get some commoditization of good enough AI for most tasks? China's also ahead on industrial robotics. So I think that's going to play out significantly as well. Have you ever heard of an exercise called a premortem, Gary? This was invented by a guy named Gary Klein, who's a psychologist. He's got a great first name. I agree. So the premortem asks, let's say you work at a firm and you're launching a new product. You're the CEO and you say, I think we're doing great. I want to make sure it succeeds. But I also want to take out an insurance policy.

50:58Let's get together everybody who knows really what's going on here. and imagine that our product came out and failed. And let's try to identify the causes right now. And if you can successfully do that, then maybe you can amend them and the launch can be successful. So if I were to ask you, Gary Gensler, to conduct a pre-mortem, imagining that there's a massive market correction in the US, let's just call it 20%, what would be the causes? We've got private credit looking wobbly. It could be an AI collapse. I'll let you fill in the rest. But if you had to face that dark scenario, what would be the causes?

51:39And then let's say, what would be the consequences too? My friend, 20 % is not the dark consequence. There's a lot of room between us right now at a stock market that's 236 % of gross domestic product. And the average of the last 25 years is maybe 110 or 120%. Okay, you want to take it to 50 % then? I'm just saying that what did you want to do a premortem on? Look, the consequential underpinning of the economy and the capital markets right now is this AI investment. I don't think many people will disagree with that. Where there's debate is how that's going to play out. But on your premortem, if the market had a correction, so to speak, and it was off, whether it's your 20 % or more, it's likely to be that folks look at this and say, the revenues and the profits aren't there.

52:41The companies are still there, but the revenues and the profits. When you think some of these tech companies have profit margins, that's the gross profits divided by their revenues, but profit margins in the 50 % to 80 % range. I mean, the memory companies and NVIDIA are in that 70 % to 80 % range. And a number of them have moved their pricing for their chips, particularly the memory companies, up four and fivefold over the last year. This is not like four or 5 % inflation. It's like 300%. There's remarkable innovation going on. There's remarkable technological advances going on. Your premortem, it would be, well, gross margins collapse at these companies.

53:31Their pricing pressures right now are going on because there's this huge demand factor. And then you see the chip companies, the data centers are rushing to build new factories, new plants, new laboratories. Your premortem would say, well, there's not enough revenues to support all that. And there's an adjustment. And how does it spill through to the private credit field? how does it spill through to these neocloud companies? There would be some breakage. And I go back to Warren Buffett. He says, you really find out who's been swimming with their trunks off when the tide goes out. We'd find out who was swimming with their trunks off, but it would be, where is the leverage?

54:17Which companies not just have to retrench, but actually go into some bankruptcy. There will be some somewhere. I think for the economy writ large, the spending, the consumption would come off a bit. The high net worth individual consumption would come off. One last thing I think is if AI continues to be successful and if the anthropics and the open AIs can charge more, the Googles and Metas can charge more, more and more US companies are going to turn to the Chinese models and say, I'm going to go to the good enough model. I'm going to go to the Volkswagen of AI, not the Maserati of AI. Most of our economy does not buy the frontier desk, chair for their office.

55:10The automobile, whatever you name it. You live in a place like New York City, you think everybody drives a BMW. But that's not what all the Uber drivers are driving, You need the production model of AI mentality. Hundreds of companies in 2026 are already turning to their technology buy and they're going, look, we've got to lean into AI, but we've also got to manage the costs right now. Let's do what the technologies call orchestration. I don't want vendor lock in. I don't want to be dominated by somebody that can charge a lot more. Before AI was all the rage, especially in the markets, crypto was not all the rage, but there was a lot of rage, positive and negative rage, let's call it.

55:57And you, when you were running the SEC, were very involved in crypto regulation. You declared the industry the Wild West and you launched enforcement actions against a bunch of firms, Coinbase, Binance and others. I'd love you to talk about the work that you did toward crypto regulation during the Biden administration. And then what to me as a layperson would appear to be a pretty total washout by the Trump administration, overruling and undoing. I've also got a question here from someone who's been on the show before, Brendan Ballou. Brendan wrote a book about private equity a couple of years ago, former DOJ.

56:35He said,

57:05by the Trump administration, and Trump personally benefiting from his own crypto adventures. That's kind of one part of it, whether you want to talk about that as a grift or not. But I'm also curious to hear you talk about what happens when well-constructed regulation gets undone in a heartbeat when there's a new administration. I think there's a mix of questions in there, my friend. I'm sorry, I have a wandering mind. One is we live in a functioning democracy, and I think it's a really positive thing that when the American people speak and they elect a new lead, a president, a new Congress, that policy can shift.

57:44That's the American public's right, and that's a good thing. You also asked about the courts and how does it feel. I think the courts have shifted, and that's a market in itself. I used to say to my colleagues, we have to think about not where the puck is, but where the puck is going, that famous Wayne Gretzky quote. In the courts, the puck was moving, very much so during the Biden administration, really for the last 20 years, but it's shifted a fair amount in terms of constraining what the administrative state and the executive branch can do in terms of using the laws to promote public good. I think Brendan is a little bit unfair, if I might say this.

58:29I think that of the 40 or 45 or so regulations that we did while I was proud to be chair of the SEC, while a handful of them were challenged in court and we did lose a number down in the Fifth Circuit, it's a handful and I would not have wished to have lost them, particularly as it relates to transparency and private equity. which I think you mentioned, the private capital markets, we were trying to get more transparency to those pension funds and endowments that were investing in private alternative investments like private equity. And the Fifth Circuit down in Texas and Mississippi said, no, they didn't think that we had had that authority under the Dodd-Frank Act to just provide transparency to the limited partners, there were two or three other cases that unrelated to those crypto fields.

59:25The last part that you asked about, look, I say this, all the capital markets since antiquity, now, and into the future trade on a mix of fundamentals and sentiment. But now you get to some markets that feel nearly entirely sentiment and not much fundamentals. those are usually those markets that are not sustained in valuation you might think i was going to go to tulip bulbs i didn't need to go to tulip bulbs i could go to meme stocks of some sort so what is it that supports the valuation of thousands upon thousands of crypto assets if you're an investor you really have to think long and hard well what supports the valuation Maybe there's one or two of these things that persists for some time because there's nearly 8 billion people in the world.

1:00:20And Satoshi Nakamoto, who wrote that seminal paper, the Bitcoin white paper, whomever Satoshi Nakamoto was, came up with an interesting ledger system. That's what it is, a database system called blockchain technology. But I would note, I don't know of any financial firm, I don't know of any crypto firm that uses the blockchain technology to keep their books and records. It is used to move this asset in a permissionless way around the globe. And in some cases, that creates an economic benefit of avoiding sanctions. It creates an economic benefit to some who want to avoid any money laundering laws and gun running.

1:01:04Its advocates say it also prevents friction and profiteering from the banking system. I assume you're not sympathetic to that argument. I think that it hasn't proved out to be that beneficial. Are there frictions in the banking system? Yes. All you have to do is look at the stock market and say, what's the valuation of Visa and MasterCard and why are they trading somewhere between$400 and$700 billion of market cap each? So there's economic rents. There is market concentration in the U.S. payment system and the Chinese payment system. The Indian payment system are cheaper to do commercial payments than in the United States.

1:01:47But we have a very efficient payment system when it comes to paying our mortgages, being paid. I'm guessing, Stephen, you're not paid in bags of gold, are you? Only in December. The rest of the year, I'm getting regular crypto payments. Oh. No, no, no, no, no. Yes, I'm not paid. I've never been paid in a bag of gold. I'm open to the possibility. I assume that you get paid in digital dollars, bank account dollars. I do. I love them. They spend really well. They're clean and easy and they go everywhere. Yeah. They go everywhere. It's a very efficient system. They're the type O of currencies. We have seen this debate and Jamie Dimon has gotten some publicity recently on it.

1:02:32And I think he's right to raise these points if you have something that is purportedly backed by U.S. dollars. Stable coins, if they're well-regulated, maybe will be backed by U.S. dollars. In the case of Tether, I'm not sure. I think close to 20 % of its backing is not dollars, but it's Bitcoin and investments and alternative investments and things. But this debate, well, what happens if you have a US dollar backed digital dollar that doesn't have the same rules and doesn't comply with any money laundering laws and the like? Will that destabilize the US banking system and will it disintermediate the banking system?

1:03:16That's playing out right now, and it's a fascinating political debate. But I think as an economic point of view, I would say if that three or so hundred billion dollars of stable coins grew, as Secretary of the Treasury Scott Besson said, to two trillion, it's going to take something away from the U.S. banking system. And the person who would be signing that legislation has his own financial stake in crypto. When you've got that kind of behavior coming out of the White House itself, what does that do to public trust? Well, you have challenges in terms of public confidence in their elected leaders, Congress, the executive branch, the president themselves, and the president and elected leaders, families and colleagues.

1:04:01we have serious enough differences on policy. We have serious enough differences on how to take our great nation forward. And what we were talking about earlier about how do we do that in a world that has so much inequality and polarization. And then you layer onto it an additional sense that some individuals, and in this case, the president himself and his family are taking economic gains out of it. Whether it's insider trading or not, you just think about the disclosures that you referenced earlier about the very large gains. The numbers are publicly reported,$1.4 billion of profit to the president as disclosed on his financial disclosure forms in crypto.

1:04:50Crypto alone. And we should say there's someone on the other side of those bets. Look, I mean, most of the field doesn't have fundamentals. Let me ask you two questions, though, about insider trading. First of all, I don't understand why elected officials in D.C. and elsewhere who may have access to private information based on their job and who may have the ability to influence market moves, why they are allowed to buy and sell stocks the way they are. Does that make sense to you? And did you ever try to do anything about that? I think it would be a good thing if Congress moved ahead to build greater confidence in our governance system and democracy and said individual members and their staffs not be able to buy and sell individual stocks.

1:05:41I mean, to me, that sounds like a no-brainer. I would note, Stephen, that it is against the law for a member of Congress or their staff to trade on material non-public information. That's against the law. It is a challenge. Where does the blurry line go? If you have a member of Congress or their staff who's working on an investigation and they have material non-public information, they know, okay, I can't trade on that. But what if they're just meeting with executives of a company, if they're working on legislation that might influence the profits of that sector or that company? It would just be positive for the American public to say, aha, I have better confidence there.

1:06:27I think it would be a good thing to have a law that's all three branches, judiciary, executive, and legislative, plus their staffs, not be trading in prediction markets. I saw recently that Goldman Sachs said that their staff can't trade in prediction markets, except for sports, apparently. One argument in favor of prediction markets historically, this comes from the academic side. Robin Hanson, in particular, at George Mason University, has been making this argument for a long time, which is that stock markets typically prohibit insider trading. But prediction markets, if you can set it up in a way that allows and even exploits insider trading, it makes the market more efficient, that it gets better information into the markets for everybody.

1:07:15What do you make of that argument in defense of prediction markets? I have heard it. It's been debated in one form or another for decades. I think that it fails to recognize that there's a big cost to that. Robin's argument and those that make that argument, they are saying the markets will incentivize people to get information out there faster. An insider at Apple or Google will get that information out there because they will profit from it. But what I think is the cost, and a very real serious cost, is trust in the markets. There's a concept in economics around public goods? How do you create a broad public good?

1:07:57In this case, I'm talking about trust in the market that if I participate in the market, it's a somewhat level playing field. I know that others might spend more money on their research, even you, Stephen, you're running a media company. So you might have more information than I, but you don't have an inside look inside those companies. those that say let's financialize information and let's say there's no prohibition on insider trading they fail to take in that that will have a cost to our overall capital markets and our overall capital markets will have less trust in them and then everybody trying to raise money in those capital markets will probably get a slightly lower price earnings ratio literally the cost of capital will go up.

1:08:51Now, for individuals, it's also like a raw deal. You mean somebody else is going to have an inside scoop as to whether the president's going to bomb Venezuela tomorrow? That just, to me, undermines capital markets. I recently spoke with an economist who runs an institute that's focused on what he calls bringing the economy to the people. He argues essentially that an economy that generates wealth mostly for the upper end of the income distribution just isn't a good economy. Do you feel that the economy is either unbalanced or too strongly weighted against what people used to think of as accomplishing the American dream, rising up?

1:09:33Do you think that's in danger? The United States is still one of the most innovative, dynamic economies of the world, but it's shifting. The inequality issue that you just raised is a real challenge. It influences the power dynamics in our political decision-making. And if you keep tipping towards the elite or the people that have more wealth and they can change the rules of the game, then that tips more towards It's their favor, and you get more polarization in society. We've seen this as a nation. We went through the Gilded Age in the late 19th century, and then we had a progressive era. And even Teddy Roosevelt, a Republican, said, aha, I've got to be a bit of a populist.

1:10:21The current president, President Trump, I think in part got elected both terms by tapping into some of those concerns of the broad public. Now, I think his policies have not aligned with his rhetoric, but I think that he understands that the public feels the system isn't working for them. If in the future there's need for a big cleanup and let's say there's maybe a Democrat in the White House, are you up for another round of cleanup duty or have you had your turn? Oh, God. It's a big, great country of 350 million people. They can find somebody else. I would say this for anybody listening. If you have a chance in your country, your city, your state to serve, it's a remarkable thing to feel that you can do something for your community.

1:11:13It could be at your church or your synagogue or your mosque as well, your local school. I think there's just something remarkable about it.

1:11:25That, again, was Gary Gensler. His podcast with Nobel laureate Simon Johnson is called Power and Consequences. And Gensler just added one more title to his resume, Friend of the Court. In his first ever amicus brief, Gensler urged a court to reject the legal position of the CFTC, the agency he once ran. This will end up debated and discussed amongst nine individuals in a small conference room in Washington, D.C., and that's called the Supreme Court. None of us will be in the room. What is this controversial case? It involves the prediction market Kalshi, which argues that the CFTC has the authority to allow what is essentially sports betting.

1:12:07Gensler says it doesn't. We are working on an episode about prediction markets. So you will hear from Gary Gensler again sometime in the next month or two. We'll also hear from the CEO of Kalshi, Tarek Mansour. Every time there's a new financial instrument, it's like, oh, gambling in the stock market. People used to call grand futures gambling. That is coming up soon on Freakonomics Radio. Until then, take care of yourself. And if you can, someone else too. Also, I hope you'll check out the new TV talk show we're making. It's called Better in Person, and you can find it on the Freakonomics YouTube channel, also on Apple Podcasts.

1:12:45Freakonomics Radio is produced by Renbud Radio. You can find our entire archive on any podcast app. It's also at Freakonomics.com, where we publish transcripts and show notes. This episode was produced by Tao Jacobs. It was edited by Pete Madden and mixed by Jake Loomis, with help from Jeremy Johnston. The Freakonomics Radio Network staff also includes Augusta Chapman, Dalvin Abouaji, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, and Elaria Montenacourt. Our theme song is Mr. Fortune by The Hitchhikers, and our composer is Luis Guerra. As always, thank you for listening.

1:13:22I appreciate it. We'll sit down there one day. Just let me know. You just have to go through my book or that's me.

1:13:33The Freakonomics Radio Network The hidden side of everything

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