Fostering Financial Literacy with Kyla Scanlon

26:35public transit give us uh what are people getting wrong about public transit i mean i think people think it's like not useful to have public transit whenever i come to new york it's so wonderful because the subway is so efficient but i think a lot of people are like no we should just expand the highways but if we invested just in light rail in these cities rather than adding another lane to the highway um you could transmit so many more people and you could free up the gridlock People really love their cars in the United States because it's a place where you can go. It's an individualistic thing.

27:07But if we are able to invest in public transit, the economy will grow. People will be able to get around better. Just imagine not having to rely on a commute in order to go into work. It would expand the opportunities for so many people who right now are maybe strapped by not having a car or not wanting to do a certain commute. Right. And the data shows adding additional lanes to highways just creates additional traffic. It does not solve the problem. The other thing that's so interesting about housing is the racial divide. When you look at who's wealthy and who's not and where it comes from, African-Americans tend to own houses at a much lower percentage rate.

27:49When you look at the sources of wealth, let's call it the, we'll ignore the top quartile, like the bottom 75 percent, very often people who are middle class or above, housing wealth is a big part of it. And you just see much lower ownership rates amongst blacks in America than amongst whites has a huge impact on income inequality by racial divides. Oh, no, we have. I think I believe income inequality has improved, but wealth inequality has worsened since the pandemic. Meaning the difference between salary and your assets. Yeah, yeah, yeah. So like a lot of people, you know, didn't appreciate or didn't get to benefit from the appreciate of the rise in stock market values.

28:32They didn't have a home that was appreciating in value. Real wages did go up. But, you know, that's not quite enough, I think, for a lot of people. And it has created a lot of disparity. And I think that's going to it's really tough to navigate that. I think the candidates for the election are trying to figure out, okay, how do we sort of fix this? And one way that the government could address it is by taxing people so they have more money, so they could maybe distribute more money. But that's very unpopular. So we have to have a total rethink, I think, of these social programs or just helping people to close that inequality gap because that is going to be a massive issue over the next decade.

29:12And our last speed round question, green energy. What are your thoughts on renewable or green energy? Oh, I think it's so important. I mean, I think the thing is a lot of people think it's all or nothing. You kind of still have to have fossil fuels as you try. Natural gas is going to be a transitional fuel for decades to come. Transitional is the perfect word for that. Yeah, you have to still have all that stuff. You can't just go green right away. But solar power is becoming extraordinarily useful. you know, hydrogen, all that stuff. Solar is now cheaper than coal, and it's about to become cheaper than oil, which is a huge, like 20 years ago, that was unthinkable.

29:49I know, and it's exciting. And I think a lot of people are still stuck on, you know, oil being so important, but green energy is the only way that we can move forward as a society. We're just going to have to rely on the traditional fuels for a little longer. Tell us about, I like the way you phrase this, the abundance mindset. That's Derek Thompson's term from The Atlantic. Yeah, he's tremendous. But that is kind of this idea that we tend to think limiting, right? Like we're like, oh, we can't have all this. We can't have all this. We can't have that. We can't do this. And Derek Thompson argues like, well, we can.

30:25Like we can have abundance. Like we can focus on immigration. We can build more housing. Like we can have all these things. We can do green energy. Like we can do all of these things, right? There's a Keynes quote that's about that. About the scarcity mindset. Right, where it's like, I think if the government can pay for it, you can do it, essentially. Is that right? And why can't the government pay for it? If you think about, you know, it's ironic how often politicians ignore what Lord Keynes taught us a century ago, which is during economic contractions, the government should spend to make up the shortfall in consumer and business spending.

31:01What politicians always tend to forget is, and when the economy is expanding, Well, then you pull back and let the private sector fill that gap. The problem is we never seem to pull back. It's pedal to the metal all the time. Yeah, which is – that's going to be interesting with the insurance thing that we were talking about because the government is going to probably backstop all of that. And I don't know how that will go. Why should the government backstop that? If you move to a part of the world that is being dramatically affected by climate change, oh, and by the way, if your state governor doesn't believe it and refuses to do anything to moderate it, why do I, as someone in a different part of the country, have to bail out your bad decision?

31:43It's one thing when a hurricane hits and everybody is shocked. It's another thing when you're building waterfront property and no private sector insurer will cover you because they're like, no, the odds are you're gone in 10 to 20 years. We're not going to take that risk. Yeah. I don't think the government should backstop those decisions. But I think it's going to be really tough because there is that mindset where it's like, oh, I should be able to build wherever I want. And there's - You can build wherever you want. Well, but - You just can't insure wherever you want. And those are two very different things.

32:18Yeah, but people expect insurance. And you can self-insure if you do cash, but yeah. A bank won't finance you. So I remember during Sandy, my wife and I went for a drive along Dune Road out in the Hamptons. And it was shocking to see what essentially is a barrier island that's been there for hundreds of years, the ocean going straight through it. Like there are parts where houses were floating away and big gaps. It was crazy what had taken place there. And the Army Corps of Engineers come in and they rebuild it. The only thing that really has changed is that FEMA has mandated, I think you have to be 11 feet above high tide.

32:58And so all these houses are built on stilts. And so you could kind of drive up to like the third or fourth step. And so by the time you get to the ground floor, you're relatively safe. If we get another Sandy, the house at least shouldn't wash away. But that doesn't do any good if the rest of the barrier island washes away, right? Right. So should I know we have a shortage of housing. Do we have a shortage of housing that's oceanfront? I mean, that's a good question. It's like not only oceanfront, though, like insurers have pulled out of California, too. Because of wildfires. Because of the fires.

33:33Right. And they pulled out of Louisiana for the same worries of hurricanes. They pulled out of Florida because of the issues with hurricanes, too. And so I think it's just like there's an increase in climate risk. And that's across across the board. Right. It's one thing for politicians to argue about climate risk. But when insurers say, oh, no, we're not going to cover that because we've done the numbers. This is an opinion. They're uninsurable in that part of the world or that part of the country. It really raises some fascinating questions. Yeah, when Florida's second biggest insurer is the government, it's citizens insurance.

34:08And so that's kind of the funny situation that we're going to be in. You know, natural disasters are only increasing just because of what's happening to the environment, which is why green energy is so important. And I think that'll just be a big reckoning moment where it's like, you know, housing is so important, but we also have to have this huge conversation about how we're going to insure these homes, right? Because insurance has gone up 20 % on average, I think, since 2023 across the whole country. Like property insurance is a huge burden for a lot of people right now. And that's something that you have to consider with the broader conversation around what does it mean to own a home in the United States.

34:46Right. I recall when my mom moved to Florida decades ago, there was a fantastic arbitrage opportunity. The cost of living there was a fraction. Real estate was a fraction. Now, between taxes, problems with insurance, and all the HOA fees, the Homeowners Association fees for condos and houses have gone up because their costs have gone so much up. It doesn't feel like that it's a bargain anymore. Hey, maybe you get nicer weather when there's not a hurricane, but it doesn't seem to be the same bargain. No, I think Florida's in a really unique spot as a state because there's nothing that's being done to make the homes more insurable?

35:26Because one way that you could do that is to maybe invest in climate resilient infrastructure. No, no, it's a hoax. We can't waste money on that. Climate change is a hoax. I know. And there's other reasons why insurance has increased other than climate. You do have to talk about the reinsurance companies, the people who insure the insurers. They've raised rates. Inflation has impacted the cost of rebuilding the homes. So there's other reasons outside of climate change, but we can't live in this state of denial. Not to turn this into a climate change conversation, but yeah. But it's a factor, and I think it's more of a factor for your generation than my generation, because by the time climate change is really bad, we'll be dead and buried for a long time.

36:07You'll still be clearing up the mess that I like to blame my parents on. I'm semi-green. You're probably much greener than me. I have a hybrid. I have an electric vehicle. I also fly and my house is probably too big relative to what I really need. But that's a very generational thing. You could see how people's carbon footprints really vary with age. So what happened with the egg situation in 2022? What did people get so wrong about that? Oh, man. I think eggs were – it's funny like thinking back to it. I'm like that was so long ago now, but it was – It was a year or so ago, right. So there was a chicken flu going around that was killing millions of hens, and people lost their mind when eggs were like$7,$8 a dozen.

36:58Yeah, no, people freaked out. They were like, oh, you know, inflation is so bad. Everything is so bad. You know, the eggs, there's price gouging going on, all this stuff. And it was really just kind of like a supply and demand misbalance because of the chicken flu. And there was price gouging going on, just not with eggs. Of all the things to point out to, eggs was a legitimate, hey, you kill 50 million chickens, guess what? Less eggs. Yeah, and I remember there being egg shortage at the grocery store. People were freaking out. But it all, I mean, it all calmed down like a month. Like it really normalized quite quickly.

37:30Yeah, that's a pretty short gestation period for birds, right? Yeah, they lay a lot of eggs. Good for us, I guess, when we eat them. But yeah, that was just kind of, I think, a good example of people and how important they are for the economy. because how people freak out ultimately does impact how everyone feels about things. Because that was kind of like mass hysteria in a really big way, too, like the egg situation. I mean, I remember some of my friends were texting me about it, and they're like, Kylo, what's going on with the eggs, like economically speaking? By the way, that would take you a little 30 seconds to figure out on Google.

38:04I'm always surprised. Like, there's an acronym that I haven't seen recently on Twitter, but it used to be, let me Google that for you, LMGTFY. And it's just like, come on, why are you asking me such a readily accessible answer? Ask something more complicated, but people see higher egg prices, they lose their mind. Let's talk about something else that I found fascinating from the book. People's eyeballs are now dollar signs. Explain what you mean by that. Yeah. So this is something I talk a lot about in the presentations I give too, because the attention economy is really important. I think that our eyeballs are the most expensive things that we have because advertisers will pay so much to acquire them.

38:45And so I think that is both good and bad, right? Like it's valuable as a consumer because you kind of are the product and so a lot of products can be free, like the social networking sites. But I think there's this general sense of exhaustion where people are like, I'm really sick of being advertised to. I know how expensive my attention is and I don't want to pay attention anymore. And so I think that's kind of what we're seeing with the attention economy is people are quite tired of it because their attention is so valuable. And you mentioned advertising. The younger guys in my office, half their wardrobe comes from Instagram.

39:19They see something they like, click and buy it right from that. It's almost as if the advertisers are being removed from the middle. It's here's an influencer wearing this. Oh, I like that. bang you're you're purchasing it in real time yeah instagram shopping is extraordinarily powerful um and that's true is is people like and that's kind of i think the exhaustion too like you do see sort of this influencer pushback i wrote about this at the end of last year like the influencer apocalypse that could be upon us where people are very sick of like not knowing what's an advertisement and what's not but there's also such power in the curation that influencers provide that I think it's more just people are like, I don't want to deal with it, but I think it's really valuable.

40:03And the influencers do get paid quite a bit of money to be essentially a billboard for these companies. Right. You know, it's funny because you and I both do a lot of content marketing, which is a phrase I don't love. But anybody who pays attention to someone who does that, it's because, hey, I've been following them for a while. I understand their process. I trust their judgment. They're not for sale. And if they're telling me go read this or go look at that, it's because they've done it and they think it's valuable. Like, is that going to go away also? At what point, how far down does the influencer apocalypse go?

40:40I don't know. He asked self-interestedly. Yeah, right. Like, what do you think? Yeah, I wrote this piece in February of this year around trust. Because I think trust is a very expensive commodity, too. And I think that trust is, you know, there's not a lot of it going around. It's very difficult to gain trust. And so I think people will still have, you know, people like you where they trust your judgment. They're like, he knows what he's talking about. He's not going to try and peddle me a product. But like once you do peddle somebody a product. Now variable annuity is coming to you from, right, once that happens.

41:14Once that happens, trust is gone. So I've told this war story a million times, but it's just so perfect. the same day during the lockdown. I want to say it was like March or April, early in 2020. No, maybe it was May or June. But, you know, first half of the year, still early days. I get an email from two different companies the same day. And one was Delta saying, hey, listen, we know you're stuck at home and this sucks and everybody's really frustrated. One thing you don't have to worry about are your miles. They're going to last forever. And your silver medallion status. now platinum. Your silver medallion stylus won't expire.

41:54We'll extend it for another 18 months. You don't have to worry about it. Once you're ready, once this ends and you're ready to start traveling, Delta is ready when you are. And I'm like, holy cow, that's fantastic. And then I read the next email from Starbucks and it was, hey, your Starbucks points, which are nonsensical things that you get a free latte if you buy enough stuff, they're going to expire at the end of the month. So go out and use them right away. And it's like, are you kidding me? I don't know if it was the juxtaposition, but I know that since then I fly Delta a whole lot and I go to Starbucks a whole lot less.

42:31And I don't know if the guy from Chipotle is going to do anything about that, but it just seemed like such a petty, silly, panicky thing to do. Like, wait, your cost of food is like the least expensive part of the real estate the labor everything you do my dumb egg white whole wheat mcmuffin you're gonna just take that because we're in the middle of a pandemic nobody's going to your store wouldn't don't you don't you want to encourage i guess that was their attempt use it or lose it it that look i'm curious your thoughts on how does corporate America capture and maintain trust from people who my generation is arguably more loyal to brands?

43:18Like my neighbor's grown up. He's a Ford guy. He's a Chevy guy. I don't know if that sort of brand loyalty really exists anymore. There's a really good piece called Life After Lifestyle by Toby Shorin. And he kind of talks about this how like some parts of brands are influencing culture but it's not the traditional brands so it'd be brands like you know how your office guys go on instagram it would be like all birds all birds is now a terrible stock but that's just one example like where oh god we've had those for like seven eight years that's like mid to 2010s that they were they were kind of like the pinnacle of like forming some part of culture and some sort of brand identity but as you're saying people jumped immediately to the next thing so i don't think it's like cohesive brand stories anymore it's kind of like these brands that patch together to create like an archetype of a person right especially in fashion that changes so rapidly although these aren't warby parkers but they seem to be doing pretty okay yeah like some companies develop a relationship i love my maui gyms or my olakai shoes and at a certain point maybe this is being an old man, but it's just like, just reorder the next one.

44:31Oh, these shoes are ratty. All right, bring them, leave them out at the beach house, order another pair, get a new pair. But I don't know if that's true for your generation. No, I think it is that, you know, you sort of follow the trends. There's a really good book by Douglas Rushkoff called Present Shock, where he talks about how everything moves in a fashion timeline now. So like people just recycle, like they just to move through stuff so quickly. Literally fast fashion is what, you know, shine and those companies are all about. Yeah. Trends move so fast and you want to, you know, be on top because your whole life is, you know, on, on screen.

45:05On screen to say the least. So what were you looking at that led you to the phrase vibe session? Yeah. I mean, I think for me it was really fortunate because I had all these comments, like I was making these social media videos. So I'd get hundreds of comments a day of me talking about how GDP was going okay. And then people would be like, we're in a recession. I'm upset. Like, what are you talking about? And so I was like, what's going on? Like, why? Like, the economic data is okay. But all these people are extraordinarily upset. And so I was on a bike ride one day. And I was thinking about that.

45:40And it's kind of like this disconnect of vibes, right? Like, it's this disconnect between consumer sentiment and economic data. And that gap is really the important part. The vibe session has taken a life of its own, which is really cool, but it's been used incorrectly a couple of times. How do people use it incorrectly? They'll be like, people shouldn't be feeling bad. It's like, and that's not the point of that word. That's a generational thing, isn't it? You and I were talking earlier. My buddy Dave, our mutual friend Dave Nottig was saying, hey, people over 50 hate the five-session concept, and people under seem to get it.

46:13What is it about the way it's being misused that reflects a lack of comprehension? From my experience of having conversations, because a lot of people don't like the word, I got death threats over it. It was intense. Ah, toxic social media, right? What is better than Twitter since Elmo took it over? Oh, God. It's a nightmare right now. It was lucky this was two years ago, you know, just to make that word, because I don't know what the comments would be like currently. But we're kind of seeing a real-time social experiment with that. Like it's almost like 4chan come back to life, but none of these people are anonymous.

46:50Well, plenty of them are anonymous. And my guess is 30, 40 % of them are just bots. Yeah. Yeah. That's the foreign interference is a really big thing. Some domestic, but a lot of China, North Korea, Russia, elsewhere for sure. Arguably Iran, although I'm not as convinced of that. So you coined this phrase June 2022. Right. By coincidence, CPI inflation peaked at 9 % in June 2022. How much of Vibe Session was just utter frustration with rapidly rising inflation? A lot of it, yeah. So the way that I talk about Vibe Session now, you know, two years later, is that it is an element of structural affordability, right?

47:37Like inflation is really high. Even with inflation going down, that doesn't mean the prices are going down. Housing is unaffordable, as we talked about. Eldercare is extraordinarily unaffordable. Childcare costs are up 32 % since 2019. So there's a structural affordability that is being captured in people's vibes that doesn't necessarily show up in the broader economic data. You don't look at GDP and say, OK, people can't afford to put their mom in a nursing home. And there's also media headlines. The media has become really negative. Sentiment has decreased over time, too. And so I think it's those two things where it is unaffordable.

48:15And then also, there's a lot of stories about things being really bad. And that is creating a vibe session.

48:41global business, finance, tech news, all as it is happening in real time. And we've got complete coverage of the US market close. Gotta say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it. We also have a lot of fun doing it. Bloomberg Business Week also brings you the analysis behind the headlines through conversations with our expert guests. And we are doing this all live each weekday. And then we bring you the best analysis in our daily podcast. Search for Bloomberg Business Week on YouTube, Apple, Spotify, or anywhere else you listen.

49:11Check it out on your way home from work to catch up on the conversations that you miss during the business day. And on the weekend, check it out for a complete wrap-up of your business week. That's the Bloomberg Business Week Daily Podcast. I'm Carol Masser. And I'm Tim Stenevec. Subscribe today wherever you get your podcasts.

49:29So it's interesting you mentioned sentiment. I did a blog post around the same time, and I was kind of fascinated that the University of Michigan sentiment survey was lower than the pandemic, lower than the financial crisis, lower than September 11th, lower than the dot-com implosion. That seemed to be wildly inappropriate. What else do you think factored into that disconnect? Well, I don't know if you saw the Harris Guardian poll that like a lot, God, I can't remember the exact number, but a number that is way too high percentage of people think that now was worse than the Great Depression. And so I think that that's kind of what's going on is people are like looking at circumstances.

50:15And as we were talking about earlier, maybe not having context for what's happening right now. Like right now, we're not in a Great Depression. It's unaffordable. But we're not we're not even in a recession. We're not even in a recession. Arguably, you were expanding two and a half, three percent, somewhere in that range in the third or fourth quarters of 2024. So I have to ask you this question. I forgot. I looked up the quote, the future is here, it's just not evenly distributed by William Gibson. How much of what you described, Vibe Session, is about the abundance of our economies here, it's also not evenly distributed?

50:56I'm old enough to recall that the baby boomers are in trouble, they're never gonna pay. The wealthiest generation in history, everybody got that wrong, or a lot of people got that wrong. We see Gen X doing well, we see Gen Z kinda coming up a little bit, and now they're a new generation that's calling Gen Alpha or something like that. So how does the distribution of wealth back end loaded to the oldest people who have been working and saving and investing the longest, How does that impact the concept of Vibe Session? Yeah, I mean, I think, you know, there's so there's a couple of things there, right?

51:37Like there's a saying where America has a lot of wealth, but not a lot of prosperity. And I think that's kind of the situation where a lot of people have a lot of money and a lot of assets, but that is not evenly distributed, as you said. And I think also because people are living longer and, you know, staying in jobs longer, taking longer to retire, there isn't maybe as much upward mobility as there used to be. Will you people hurry up and die? No. Is that what's the problem here? No, I just, it isn't, I don't think people should die. But it is interesting because there's, I need to do more work on this, but there's almost kind of like a leadership slash mentorship crisis where it seems like...

52:20Certainly with remote work is giantly problematic. Yeah, absolutely. Because like, how do you train up the next generation if you're not with them? And also there is an element of resistance to training up the next generation, I think, because there's elements of ageism. Like the older people don't want to be pushed out of their jobs and they feel like that's happening. And it's tough within the generations, too. Like I think it's 43 percent of baby boomers have no retirement savings. And then some of them have, you know, a bob lunch. A ton, right. It's not evenly distributed. No doubt about that.

52:51And so I think that's totally true because in the U.S., we are very much an all or nothing society. Like you either figure it out or you don't. Right. And there's nobody who's going to help you. So you're hinting with the mentorship issue, you're hinting at something vibe session related, which is, I mean, let's talk about the 800 pound gorilla in the room. How big an impact was the pandemic, the lockdown, being forced to work remotely, not being able to have the sort of social interaction that my generation took for granted when I was your age? How big of an impact was that mess on, and let's be blunt, the pandemic was not well handled by the previous administration.

53:35You can argue that at least they got the vaccine out and was somewhat better handled by the next administration. Although both of them contributed, CARES Act 1, CARES Act 2, and CARES Act 3, that massive fiscal stimulus is a big part of the inflation spike. Like, how much did the pandemic contribute to my obsession feelings? I think a lot. Yeah. I think, you know, to the point of social interactions, like I graduated basically into the pandemic and I still don't know how to like talk in adult spaces. Right. Right. So I think that's definitely a big part of it is like the lack of social interaction.

54:13And then, too, like a lot of people ended up just consuming content all day long. And what goes viral, as you know, on social media is doomer stuff, right? And so I think that's a big thing is like people were consuming because we were stuck inside. It was extraordinarily scary. Nobody knew what was happening. And you had people telling you that the world is ending. And you're like, okay, yeah, that makes sense to me. And you just kind of keep on consuming that info even after things get better. Right. That lack of information hygiene is really important. important. Here's another generational difference, and I want to ask you how this contributed to the VIBE session.

54:51So people, I don't know, over 50, maybe even over 40, like that were already in their teens or 20s when the internet came about, the internet has always been a room in the house we would visit. Oh, I'm going to go online for a while. Whereas the 40 and under generation. The internet has always been there. Is that true? 40 and under? Let's say 30 and under, certainly since the mid-90s. And they exist in the internet. It's not like a separate thing. It's part of their virtual reality. So it raises the question, what's the impact of social media on that generation's self-identity? They, at least a decade ago, were so focused on likes and social approval, and you mentioned going viral, does that lead them to be less data-driven, more embracing of these subjective measures of reality?

55:49Maybe. Yeah, that's interesting. I think definitely, yeah, like the internet is something, it's like a room that you go into in your head, right? Like you are not with other people if you're on your phone, even if you're around them. And so I think that's something that we're like just starting to grapple with. I've noticed it within myself, where it's like once I start scrolling i'm not in the room with my friends like i'm in the room on twitter and so i think that's a big part of it too where you do everything does end up being influenced by feelings versus like quantitative measures and you kind of know how it feels in your head and you kind of extrapolate that out into the world beyond you and so maybe we do have a more subjective generation that is like well this is how i feel about stuff because look how feelings perform on the internet.

56:34Right. And listen, social media has perfected the algorithm for outrage because outrage increases engagement, even as it slowly eats away like a cancer society from the inside. You know, I have mixed feelings on the death of Twitter as it slowly circles the drain. You think it's going to die? I think it's dead already. Really? So last summer, not 24, 23, I lost, I got hacked. I call him Elmo. But Elmo decided to make you pay for two-factor authentication, which is standard security practices. It used to come with it. And I came home from dinner Saturday night. Apparently, you could send an email requesting a change of password.

57:20And those idiots would just do it. Like, if you don't object to it in 60 minutes, something silly. So that's how I lost my Twitter account. And fortunately, the folks here helped me get it back. It only took three months. And again, Dave Nottig and I, I was like lamenting this. And he's like, you're not missing anything. It's died already. This is a year ago. And I'm genuinely shocked at how the engagement has gone down, how the interaction. And half the people I know, IRL, I've met on Twitter over the past 15 years ago. So it's so terrible. And there's nothing else has come along that quite matches it.

58:02Just that. So now I'm pretty much down to just focusing on my lists. At least it used to be with your lists, you weren't seeing a lot of other junk. Even that's starting to get corrupted. Because I know I have a list on behavioral finance and a list on charts and markets and economics and a list on automobiles and a list on travel and a list on I have all these lists. And I used to be able to just go, you know what, I'm just going to spend some time learning about, you know, the hills of Southern Spain. And you could do that. And now everything is just intruded with craziness and politics. But it brings, I want to bring this back to the Vibe session question.

58:47So we've talked about the pandemic. We've talked about inflation as a driver of the Vibe session. How much of this is driven by social media? How much of this is that doomer loop of people who have been wrong since the financial crisis and yet still have a big following? Yeah, no, it's something I combat all the time with the stuff that I post on Instagram and TikTok because that's what goes viral is like not the truth, but big scary things. And that's a huge problem on Twitter, as we both know. And so I think it is definitely an issue because like, you know, we have these animal brains and they're trying to protect us.

59:27And so they're like, you know, pay attention to the big scary thing. And that's always going to be a doomer story. Right. Right. Like nobody really wants to hear, OK, the economy is going OK. It's like, no, the economy is going crazy and you're in a lot of trouble. like that's what you're going to end up paying attention to and so I think totally the vibe session has been heavily influenced by social media even when I was writing that initial piece I reached out to a lot of people in my comment section who had been commenting that they were like not feeling good and that they were very worried and there's of course like true economic pain out there but a lot of these people were like oh I read an article that things are not okay right and what's the track record of that paper and that author how how why do you assume that because it was published, it's accurate.

1:00:12I'm always, I spend a lot of time fending off nonsense that clients read and say, hey, you know, New York Stock Exchange margin debt is at record highs. So is the New York Stock Exchange. Look at the two. As long as it's at all-time highs, margin debt is also going to be at all-time highs. Why is that a problem? Back to denominator blindness, you got to look at the broader context. And yet people don't seem to ask those questions. Do you think that's an element of media literacy? There's some of that. It's also you brought up, you know, our lizard brains. Things that are good are not an existential threat.

1:00:51So, all right, it's great. Things that are bad. Oh, my goodness. This can end. Hey, I'm here to propagate my genetic lineage. If this threatens that, you know, we're hardwired to be classic risk aversion. And it's losses feel twice as bad as gains because losses are an existential threat. Yeah, absolutely. I was reading this really interesting article about the, you know, propagating the genetic lineage thing because I'm really interested in the dating apps and how they're sort of influencing the mindset of the younger generation around that. And this guy, he's a sociologist, and he's arguing that our brains are actually switching away from the desire to repopulate and they're more so becoming focused on the individual.

1:01:37And that's maybe why we're having more and more of a fertility crisis. Isn't that a global issue? Oh, yeah. Are you seeing a fertility crisis around the world? Across the board. You mentioned the quant who works in my shop, Nick Majuli. He did some stuff years ago, scraping the data from the apps. You should dig that up. I remember it was like just insane the sort of numbers he pulled out of that. that I think I'm hard-pressed to imagine that five years or 10 years of social media are going to undo two million years of evolutionary biology. Maybe I'm wrong, but is this something that it's just a novel theory, or are you fighting against a lot of wetware and hardwired aspects of the human experience?

1:02:23Yeah, yeah. I think it's definitely like paper covering the deeper need to do that, because I do think that's a genetic desire. but it's just interesting and like maybe that's like why the vibes are disconnected, right? Like why you see these high rates of depression, anxiety, etc. You know, whenever you talk about society at large you're always pulling theories and there's always gaps in them but I think it's just interesting to think about like, you know, what is the impact of dating apps? What is the impact of being on social media and seeing, you know, not real faces but edited faces? Like how does that impact how we actually exist in the real world and ultimately how we feel about everything that we're doing and the economy at large.

1:03:02Well, we know that kids have a much higher depression rate than they used to ever since, you know, the iPhone came out and all the apps. So it's having a real effect. All right. Which leads to my last Vibe Session question, which is there were a number of economists who thought a Vibe Session would be a self-fulfilling prophecy and that we would end up, negative sentiment would end up driving a recession. That didn't happen. Why? Yeah, that was good. That was actually the title of the original piece, you know, Vibe Session, a Self-Fulfilling Prophecy. And I don't think it ended up happening because the economic data has been so strong.

1:03:42Like the government is spending a lot of money and that's going to help prop up GDP and that's going to help prop up the consumer. The consumer had an incredible savings buffer post-COVID and we did see real wage gains. And so you had a resilient consumer who is ready to spend, especially on services. And so I think that helped us avoid a recession as we had a government who's spending a lot of money. And then we had a consumer that up until recently has been quite strong in a labor market that was incredibly strong. We're seeing weakness in that now. But I think that's why we were able to avoid the self-fulfilling prophecy aspect of it.

1:04:15Are we really seeing weakness or are we just seeing less strength than we did before? That's a good point. It's more lukewarm versus hot. And the crazy thing, I think people, So you talk about the abundance mindset earlier. There are a couple of areas in the economy that scarcity is taking. So we don't have enough single family homes. There aren't enough laborers. We've reduced the number of legal immigrants since 9-11. We lost a whole bunch of people to COVID. We have removed a whole bunch of people from the labor force through disability, including long COVID. Arguably, we're short two or three million houses.

1:04:54We're short a few million automobiles due to the lag and ramping up semiconductor production. And we're also short, I don't know, pick a number, one, two, three, four million laborers out of a labor pool of 162 million people. So we have all this abundance. And yet at the same time, there's scarcity in very specific areas. Yeah, absolutely. And the abundance mindset is like, we can have all these things in great numbers. and like it doesn't have to be this issue where there's not enough of things and that creates so much worry and concern for people. But yeah, I think that's kind of the issue across the board is we don't have enough and yet we have so much money as a country, right?

1:05:33Wealth but not prosperity. I love that dichotomy where if you go to, I remember being in Europe right during the dot-com implosion and everybody was so stressed out in Manhattan. You could feel like, hey, I get fired. I'm going to lose my health insurance. What is going to happen if my kid needs an operation? You go to Europe and they're in the cafes having coffee and they're smoking clove cigarettes. And nobody really seems to be bent out of shape that, hey, the technology is imploding 80%. They're all kind of just grooving life. It's a very different mindset where the focus isn't on wealth, but it's on prosperity.

1:06:14Are there that much geographic differences? Is the United States that unique compared to the rest of the world? I don't. I mean, I think there's actually a big conversation kind of happening around this right now, like why the United States sort of does this to itself. And I think the U.S. has these elements of workaholicism. Like we love the work and Europe maybe doesn't. But, yeah, we have chosen maybe not to spend so much on the social aspect of it. And you do see consequences of that. I think having a social safety net for people is a really good buffer. Once you have a sense of security, there's kind of a lot that you can achieve.

1:06:53A lot less stress also. Yeah, absolutely. Although, arguably, we don't have that safety net. We don't. And we've achieved, I think the stress is what has driven us. Because we know that we have to have a safety net. You better get off your ass and go do something. Otherwise, no one's feeding you. Good luck being homeless. Oh, gosh. Which kind of is really funny about the Wall Street bets and all the crypto bros that have fun being poor was such an interesting basic approach to, no, no, you've got to go do something. Even if it's something like NFTs or crypto, figure something out. That's a uniquely American proposition.

1:07:29Yeah, absolutely. Because there's nobody to catch you. Right. And so you have to go invest in Dogecoin. and that's like now we have this gambling issue as a society like sports gambling unbelievable gosh it's awful yeah and it is i really do believe it's because we don't have a safety net for people and so they're like i don't know what to do i'll just gamble my money that makes sense usually if i don't know what to do i'll go watch youtube but hey whatever whatever you have to do um so the vibe session did not become a self-fulfilling prophecy i have to do compare and contrast with something you wrote in the book, inflation is entirely dependent on what people expect to happen.

1:08:10I disagree, but I want you to explain why you think that is. Yes. So this is definitely an unpopular opinion. Jerome Powell actually talked about this in his Jackson Hole speech. Inflation expectations have been tempered, so people don't expect as much inflation as they used to, and that'll help the Fed. So let me just stop you right there. So after inflation has fallen from 9 % to 2%, their expectations go down. That sounds quite backwards looking and lagging. Let me also point out that when inflation was about to spike up in 2001, everybody's forward inflation expectations were pretty low. Isn't this like asking people what their risk tolerance is?

1:08:52Aren't you just getting whatever happened over the past 6 to 12 months? Yeah, usually. But I think the reason I said that in the book was like the expectations do matter and they'll ultimately influence how the Federal Reserve makes decisions. I mean, Jerome Powell 100 % agrees with that. I just think he's wrong. Because you think it's what? Like what do you think inflation is? I think people don't know what the hell they think. They certainly don't know what they're going to do. You ask them a question. They don't know. And because of the American educational experience where we're tested within inches of our lives, hey, no penalties for filling in that bubble on your multiple choice.

1:09:28So people, nobody likes to say, I don't know. So here's a made up answer. Go away. I can talk about this stuff with you forever, but we have a hard stop. So I have to get to my favorite questions that I ask all of my guests, starting with what's keeping you entertained these days? What are you listening to on podcasts or watching on Netflix, Amazon, Disney, whatever you like? Yeah. So I really like the podcast Philosophize This. Philosophize This. Yeah. That's one of my favorite podcasts. It's by Stephen West. And he talks all about the different schools of philosophy. He goes back to the very beginning, and it's just phenomenal.

1:10:11And he walks you through everything and all the different schools of thought, and I think he does a fantastic job. And then there's this series called Land of the Giants by Vox. Have you heard of that? I have heard of that, yes. Yeah, Peter Kafka has done a couple of them. He was at Business Week for a long time, and then I think it was briefly at the Times, and now he's at Vox. Yeah, I think so. I think that was his path. Unless it was backwards, Times, Business Week, but whatever. Yeah, he's a good economic writer. And he's a great podcaster. Oh, really? Yeah, I really enjoyed his dives. They talk about delivery apps.

1:10:45They talk about dating apps. They talk about Twitter and what happened with Twitter. And so I really enjoyed that. And then I've been listening. I've listened to a ton of audio books because I bike a lot. And so I'll listen to a book on the bike. And Blood in the Machine is really good. That sounds so familiar. Oh, I can't remember the author's name. So I'm going to get to specific books. So hold on for a second. So those are all podcasts. Any video? Anything you watch on video? Like YouTube stuff? YouTube, Netflix, whatever. Oh, I don't watch a ton of Netflix. I do listen to a lot of podcasts.

1:11:24And then on YouTube, I've been listening to Eddie Burback. Have you heard of him? No. He's kind of like a commentator YouTube guy, but he did this thing on AI recently. he did this funny video where he visited all the rainforest cafes in the country and he's just a very good producer uh-huh and i really enjoy thinking how many rainforest cafes are there in the car there's one like didn't that come out like 20 years 25 years ago wasn't that bruce willis and arnold schwartz and there wasn't like a crazy question i'm like they teamed up so after planet Hollywood. I don't remember. I'm getting that wrong.

1:12:04I know that they were involved. Some people were involved in Planet Hollywood and a subset of those people did Rainforest Cafe. I could be completely wrong about that. I don't know. But yeah, he walks I don't know. Maybe it's not every... Are there a lot of these left? Yeah, there are. At least one in every state, I think. Uh-huh. So, that's good. That's crazy. I'm going to share a channel with you because you brought up mass transit. Yeah. There is a guy, he's a Canadian. he moved to Amsterdam and he has a channel called Not Just Bikes. And I'm addicted. First of all, I love Amsterdam. It just barely edged out Paris as my favorite city.

1:12:41But the whole concept of, hey, what you do with your mass transit affects everything from wealth and income inequality to quality of life and why people in countries with better mass transits have higher happiness quotients and better health outcomes. And it's crazy how it just cascades. After higher education, that seems to be the next most important thing. Do you know that the average car in the United States has more space for itself than the average person does? Yeah, absolutely. Yeah. Just look at all the... Plus, to say nothing of the parking spots that... Have you read Pave Paradise? No.

1:13:19Oh, it's about parking. And it's great. This is Caroline Hyde. And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defence, AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast.

1:13:55Search for Bloomberg Tech on YouTube, Apple, Spotify, or anywhere else you listen. Join us every afternoon on your commute home and stay ahead of the tech news cycle. That's the Bloomberg Tech Podcast. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Subscribe today, wherever you get your podcasts. So let's get to your favorite books. No, let's talk about paid parking. Oh, yeah, Paid Paradise. Paid Paradise about parking. What else do you have? Yeah, it's all about parking. Blood and the Machine, which can—it's this gorgeous book. And he talks about the Luddites. And he goes into deep detail and, like, talks about what it was like in obviously a very hard time.

1:14:30But what it looks like for their lives to be impacted by the introduction of, like, the spinning machine. Right. And how AI is, like, kind of comparing to that. And it's just—it's really good historical writing. I just saw a research report this morning. I don't know who put it out. this is the problem with being a consumer of just too much junk, that AI is going to be a net positive. Oh, I know who it was. Torsten Slock looked at unemployment rates in the Philippines and somewhere else that a lot of call centers and a lot of outsourced stuff. And despite the introduction of AI, none of these places have seen an uptick in unemployment yet.

1:15:09It's kind of fascinating. Like you would think that's the canary in the coal mine. Right. And I think the way that a lot of people are thinking about AI, not this author of Blood in the Machine, but as a compliment to the human laborer, where it's not something that replaces you, but something that enhances. An augmentation, absolutely. Yeah, I've seen AI be an augmentation in my life. A hundred percent. Every time I do the prep work for this, the last thing I do is enter into perplexity and chat GBT and see what comes up. It still is occasionally wrong. You have to be very aware that it's not trustworthy, but it's getting a little better all the time.

1:15:47And every now and then it'll uncover a nugget that we miss. And I have a research team. It's not just me. And even still, those deep dives will pull stuff out. So Pave Paradise, Blend the Machine. Any other books you want to read? Oh, gosh. Yeah, I read a ton because I'm on the bike a lot. But I read this book about the founder of Glossier, which was really interesting. or Glossier, I think it's pronounced. The water company. Glossier, it's the makeup company. Oh, the makeup company. Yeah, yeah. So it's about that founder and what it was like for her to build a makeup company. And that was quite good.

1:16:22I read a lot of fiction. So right now - Those first three are all nonfiction you just gave me. Uh-huh, yeah. So that's three nonfiction. Give us three fiction that you're enjoying. I'm reading A Gentleman in Moscow right now. Have you read that? I have it on my list forever. It's always in my queue. I never get to it. It's like, so I'm probably a quarter of the way through it, and it's kind of a lot of dialogue, which I don't always enjoy. Like, I really love world building and fiction novels, like Lord of the Rings, et cetera. Are you a sci-fi or fantasy? I mean, obviously, Lord of the Rings is a classic, but.

1:16:56Yeah, like kind of. It's more of, I like settings to be very clear, so I can have it in my head as a visual. I don't know if that makes sense, but. C.J. Scherer was this, and you could tell she was a woman because it's initials, because when she was writing back in the 60s and 70s, you had to hide that. She has, if you like world building, go check out Pride of Chenure, C-H-A-N-U-R. Okay, Pride of Chenure. If you're like 20 pages into it and you're not deeply in love, just throw it away. Okay. You're done. Yeah. But I may just have sent you down a rabbit hole that will have a big impact. That's all right.

1:17:32Yeah. And she's just this amazing builder of worlds. That's wonderful. That very few writers. Like, I just remember of all the sci-fi stuff I went through as a kid. She just totally. All right. So, Gentlemen of Moscow, give us two more. I'm reading. I read Olive by, I can't remember her name, but it got turned into a TV show. But it's kind of really interesting because it's about, and she has a sequel too called Olive Again. And it's about this woman who just lives in this little town. and she has all these little stories that surround this woman and all the stories interweave really beautifully.

1:18:10And I really like that kind of like time bending stuff. Elizabeth Strout. Elizabeth, thank you. Right. And then I - Google makes a universe of information. We don't know anything, but we're knowledge adjacent. And there it is. Let me Google that. Oh, wait. Olive again. She has two. Emma Gannon or Elizabeth Strout. It's Elizabeth Strout. Okay. Yeah. There's another book called Olive by Emma Gannon from 2021. No, it's Stroud. Okay. Yeah. And then I read Trust by Hernan Diaz. Have you read that? No. Oh, you should. It's all about what this guy, I think it's a fabrication, but it's this guy that lived during the Great Depression.

1:18:51And there's actually three stories interwoven into one. And so you get the fictionalized version of this guy's life. And then that guy becomes the second part of the book, and we get to hear his actual story, not one that's fabricated by this author. And then you get another part of the book that goes a little bit deeper into his wife's life. Oh, really? And so it's really—I think I won a Pulitzer. Yeah, I'm looking at it right now. Pulitzer Prize winner. Yeah, I love when authors are like— 2023, that was last year. Yeah, it's really good. I understand the hardcover and the paperback are now the same price.

1:19:29This is a new... Books are tough. Tough industry. I guess. One of the New York Times 100 best books of the 21st century. Yeah. It's quite good. As long as they've read every book in the 21st century so they can make an informed evaluation like that. It's a big claim. I'm down with that. Yeah. I know. It's, again, more stupid media stuff for the modern era. So that's a great list of books right there. Yeah. I skipped the question to get to books that I have to ask you. Sure. But I'm not sure if you can have a good answer, which is who are your mentors who helped shape your career? Oh, because what I said about the mentor thing.

1:20:06Well, I know Jim O'Shaughnessy is obviously a big influence. Oh, gosh. I've had so many people. Like, we'd be here all day if I listed everybody. Give us one or two. So the two people that have probably been the most influential because they believed in me before I did was my two professors in college, Dr. Chachi and Dr. Labrinsky. I basically would go to them and be like, I want to start a club. I want to do research around the S &P 500. I want to, you know, go travel to this conference. And they'd be like, all right, good. And they would just help me kind of achieve all of these dreams that I had.

1:20:36And so they were phenomenal. Like, I remember I was applying to jobs and I wanted to do a PhD because I really wanted to teach. And Dr. Chachi was like, no, you should go work in industry for a little bit and then you can go and get your PhD. And so it's just kind of like that really tailored advice and support. And they were probably the most important people to me during my college time. You know, that's really interesting. Angus Deaton, who is the British economist who won the Nobel Prize, and I think he's teaching, is he teaching at Princeton? Yeah, he's teaching at Princeton. And he said, you could look across a thousand different factors and nothing impacts your life as much as a higher education.

1:21:20We see it in wealth inequality, income inequality, health outcomes, whether you go to jail, whether you get divorced, like all these social things that you would think are unrelated, your self-described happiness quotient, like deep, deep down the rabbit hole. And consistently, there is a gap between what we see on the have a college education and don't. It's pretty amazing. Well, I mean, it's kind of four, like I worked three jobs during college, but like it's four years to sort of figure yourself out. And I actually think that's really important because you learn how to socialize, you learn how to learn, you get tested.

1:22:02But in an environment where like if you fail, it's okay most of the time. Like if you fail out of college, it's not okay. But you kind of have the chance to make safe mistakes is what I would call it. Is that still true today? with it seems like some of the campuses some of that has kind of become more challenging well yeah from a political angle absolutely yeah um and i but it should but what you're describing should be true it should be a place where you can make mistakes i think so i graduated in 2019 and i think i was the last year to have that i do because of the pandemic um and because i i just like the scholarship package that I got and the reason that I went to Western Kentucky, it was a full ride and I was paid to go to school.

1:22:47And there's nothing like that unless you're like a top, top, top student. And I was a good student, but it was an in-state school. And so I had all these opportunities because I was able to have a full ride. And I just don't think that's the reality. Where else did you consider going besides in-state? Vanderbilt. I wanted to stay close to my family. So Vanderbilt, which was in Tennessee, I was in Kentucky. I was looking at Butler up in Indiana, Notre Dame. Yeah, like just kind of big schools, little schools. Yeah, you looked at everything. Yeah, I wanted like a good school because I did want to leave.

1:23:20Well, none of these are bad schools. You're talking about all good or better schools. Yes. Yeah. But I wanted to leave Kentucky and the only way I knew how to get out was like through education. And so that's why I was looking at those schools. But I ended up staying in Western Kentucky because the scholarship and it turned out to be an incredible experience. To say the very least. And our final two questions, what sort of advice would you give to a recent college grad interested in a career in either finance or investing education? So I think for me, and this is the advice I give when people ask, is to read everything and to figure out what you like to read and then try to challenge yourself to explain it, to write about it, to learn about it as deeply as you can.

1:24:06And I think the only way that you actually understand stuff is if you can explain it simply. And so that's what I'd recommend is just be a consumer, ask questions. You'd be surprised how many people are willing to just take 30 minutes to chat with you and just ask for help as much as you can. But yeah, just absorb as much as possible. But then make sure you're digesting it by repeating it back to yourself, whether through writing, videos, et cetera. And our final question comes with a little bit of a caveat. So I always share the last five questions, partly because they require a little recall with our guests in advance.

1:24:38And I asked you, what do you know about the world of investing today that you wish you knew 25 years ago? And you hilariously wrote back, 25 years ago, I was one. Don't bite the cat? I mean, I think that's so funny. I don't know if you said that or Dave Nodig said that in our back and forth. I shared your answer with him, and I think he said, don't bite the cat. Yeah, yeah. But what do you know today that might have been helpful earlier in your career? I think for me, there's so many facets to finance. Like, I was very much like, oh, there's one thing I can do, and it's portfolio management. But there's so much that you can do.

1:25:16Education. You can look into IRA space, as you all do. You can do media. And there's so many different worlds within finance. Commodities, fixed income, equities. It's really massive. And so I think the advice that I would give to my one-year-old self is to just keep on learning, similar to the advice I gave previous, but really just know that the world is so big and there's so much opportunity within these segments that are just fascinating to explore. You could spend a lifetime doing it. Well, thank you, Kyla, for being so generous with your time. I'm going to have to have you sign this for me.

1:25:49Oh, thank you. We have been speaking with Kyla Scanlon. She is the author of In This Economy, How Money and Markets Really Work. If you enjoy this conversation, well, check out any of the 500 or so we've done over the past 10 years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcasts. And check out my new show, At The Money, short 10-minute discussions about specific topics in finance, earning money, spending it, and most importantly, investing it. at The Money, wherever you find your favorite podcasts and in the Masters in Business feed. I would be remiss if I did not thank the crack staff who helps us put these conversations together each week.

1:26:34Atika Valbrun is my project manager. Anna Luke is my producer. Sean Russo is my head of research. Sage Bauman is the head of podcasts at Bloomberg. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

1:27:22We'll be right back. Prying loose government secrets. To listen early and ad-free on Apple Podcasts, subscribe now at Bloomberg.com backslash podcast offer.