The National Debt Question

0:00As a small business owner, you're the CEO, the marketing team, and the customer service rep all at once. I was recently talking to a shop owner who told me their worst nightmare isn't a slow day, it's the vanishing act. It's that moment you're inches away from a deadline and the Wi-Fi just disappears. We've all felt that pit in our stomach when the connection flares up right when it matters most. Your business is only as strong as your connection. AT &T Business is the reliable provider built for that exact brand of hustle. so you can stay focused on the work that builds your legacy. Powered by AT &T Business.

0:34Built to work. Get AT &T Business at business.att.com.

0:40Mary Childs: Your team just added its 67th AI tool and also your 67th security blind spot. The good news? The Vanta agent works like a GRC engineer in the background, finding every app your team uses, scoring the risk, and drafting fixes for you. Vanta is the platform used by over 16 ,000 fast-moving companies like Ramp, Cursor, and Harvey, who are shaping the future with AI and staying ahead of AI risk. Get started at Vanta.com.

1:19Mary Childs: Hello! Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon. I'm here with Elizabeth Spires of the New York Times. Hello. I'm here with Emily Peck of Axios.

1:34Felix Salmon: Hello, hello.

1:35Mary Childs: And oh my God, do we have a show for you this week. This is a particularly frabbious week because we have the one and only Mary Childs back on the pod. Mary, welcome. Hi, thank you so much for having me. Mary, for those poor benighted few who don't know who you are, who are you? I'm your future friend, co-host of Planet Money, author of a book called The Bond King, person who loves to talk about financial markets and who loves to come on Slate Money. And you don't just love to talk about financial markets. You like to write about financial markets. And you have written about the treasury market in a massive piece for Harper's, which is still a thing.

2:19Harper's is great, actually. A little drive-by by Felix. I'm not just saying that because they published my work.

2:24Mary Childs: Go check out Mary's Harper's piece on treasuries, but we're going to talk about the treasury bond market and whether we should be worried about it. We're going to talk about American statistics and whether we should be worried about them. We're going to talk about Elon Musk's pay package and whether we should be worried about it. We are going to have a whole slate plus segment with Mary on NPR and public radio and whether we should be worried about it. So if there's a theme coming on here, I think you might be able to tell it but it is a fun and information rich podcast it's all coming up on since you're here mary let's start with your magnum opus in harper's let me try and see if I can summarize it as fiscal deficit, something we should care about all of a sudden.

3:22Yeah, I think that's right.

3:24Mary Childs: I feel like I've spent the past God knows how many decades listening to people with their hair on fire going, the deficit, the deficit, everything's going to end in tears. And then the sun rises the following morning and nothing ends in tears. So you and I guess Jared Bernstein had a piece in the New York Times, R is greater than G, something, something. And basically, you're like, there is something different this time. This time is different. This time is different. And I'll tell you why. So I actually agree with his framing that there are kind of three things that you want to look out for that make this moment different.

3:58That it's like where the deficit starts to matter. And it's I think it's like the absolute level of debt and the relative level of debt, like how much debt you actually have. That matters. The interest expense. So how much you are paying on that debt and paying every single time you come to market, which is all the time. And then how hot your economy is. If your economy is growing and your interest expenses are low and your debt is growing, that's fine. Everything's fine. And that's the condition that we had for so long. And that's why everyone was like, bro, chill, you don't have to worry about this right now.

4:29The deficit is not a big problem because our debt is cheap. We can just keep issuing it. Nobody seems to care. We can rack up more and more debt. And we're basically getting it for free because our economy is growing faster than all of that. And so the fact is that those conditions have changed. We are paying more in interest on our debt. Everyone's favorite fact, the one that just really stings, is that we now pay more in interest expense than we do on defense, which is, you know, you don't have to be like a defense head to think that's a little crazy. And yeah, it just it suddenly starts to matter.

5:00And I was just talking to someone earlier today about the Greek debt crisis in 2011, 9 through 11, if you recall. And 9 through forever is actually how it felt. And it went on for like literally 10 years. It took forever to get out of. But it was funny because they were like, yeah, our debt to GDP ratio at that time, it was pretty bad. It was 120%. And I was like, oh, and he's like, yeah, that's what y 'all are today, actually. And I was like, that's a really good point that you make.

5:27Elizabeth Spiers: And we have similar political and fiscal conditions that are emerging. Yeah, emerging conditions that might be troubling with respect to government and debt and data. So yeah.

5:37Mary Childs: So let me ask the first big question, which people like the more sanguine crew always say. And I understand there was a lot of moving parts here. But if you just look at that big headline debt to GDP number, you're like 120. That seems high. Talk to me a little bit about Japan, which has gotten way north of like 250 ish. And tell me why it's OK to have those kind of numbers in Japan, but not anywhere else. Well, Japan is in some ways like a look into the future for us, right, where they have a demographic shape that we're headed for. They have a lot more old people than young people. It's an inverted triangle, as they say.

6:16And that creates a lot of strain on your economy because you have fewer young workers contributing to pensions. And so you have it just like the economic situation kind of breaks down in that way. And there's like a big interaction with like retirees and pensions and government debt markets. And the thing that like is sort of edifying about Japan is it's you can kind of keep going with these government policies of keeping rates low. Like we've had our central bank buying debt, kind of helping to keep rates suppressed, if you will. This is sort of a political opinion. So I don't know. Take this as you will.

6:48There's been some interesting research that does suggest that like the ability to buy so much from our central bank and from central banks around the world have helped to suppress interest rates that we pay on our debt in this country. and because our debt is like very popular around the world with so many buyers. So people are kind of still happy. But if our central bank keeps buying and other central banks keep buying, then we still have this kind of like friendly buyer that's helping us pay less in interest. And that keeps rates sort of artificially, close quote, low. And that's kind of to some degree like Japan invented a lot of the moves, the central bank moves that we have been making in the US.

7:22And that's helped to keep rates sort of suppressed there. And it's been sort of a remarkable experiment. What you're saying is the absolute debt to GDP number in Japan is very high, but the deficit to GDP number is relatively low and the interest to GDP is relatively low because interest rates

7:42Mary Childs: are artificially low because the central bank is buying up a lot of debt. Yeah, I think you laid it out in a nice orderly way. Thank you. Yeah, it's like you can kind of fiddle with that mechanism if the market lets you. And the market kind of lets Japan. Like, it's just a curious question because there's so many other dynamics at play for us where we are the reserve currency of the world. There are a lot of people, there are a lot of institutions, buyers in our debt that are in some ways not marginal buyers. Like, in some ways, they're not that discretionary. They like kind of have to hold treasuries and dollar products, if you will.

8:14like that's where someone like Stephanie Kelton would be like it's fine like it's this is not the thing to worry about like go look elsewhere we have an enormous base because we are the reserve currency of the world these people aren't going anywhere like they're going to keep buying treasuries because they need to put their dollars somewhere and I think that's true to an extent but I think where Stephanie and I might differ is that like I have this is sort of on brand and perhaps I over index here but like I think that the marginal bond buyer of treasuries like is kind of powerful and can make a different choice.

8:45Like, I think that's more fragile than it looks.

8:47Felix Salmon: So, okay, no one cared about Jared Bernstein. And I think he talks about this. He's a liberal guy, I think served in the Biden administration. Didn't care about deficits during the Biden administration when we spent a lot of money, borrowed a lot of money. It really seems quite political now that everyone, not everyone, but lots more people who didn't care before suddenly care now Right. That Donald Trump is president and is spending, blah, blah, blah. It just, it's hard not to view this through a political lens. Totally. And I do think you're right. Like it is sort of, I actually didn't realize the timestamp on his like New York Times op-ed.

9:25I've been working on my Harper's piece for like, frankly, years. And with Harper's since like, I started with Harper's in January, but like I've been ruminating. Yeah. And he just tweeted it out. Exactly. But there, I was expecting it canceled, you know, like rhetorically, there's this feeling that like to talk about the deficit is to be a fool, is to be a political tool, is to let Republican puppet masters, you know, like tell you what to think and care about. And like, this is a spurious thing to care about. It's only something that like, you know, fiscal conservatives and like the Peterson Foundation care about.

9:53And like feeling that change in me was weird. Like I was like, I suddenly think that I care. And this for me, it started in 2023. Like I say this in the Harper's article, too. It's like I was watching the shenanigans around the debt ceiling and like that just seems expensive like it doesn't have to show up in the market right away or maybe it shows up and goes away and everyone thinks it's okay but there it just felt to me like there are these unseen costs to their behavior to this like political i feel like it's kind of immaturity that we keep doing all this grandstanding and like forcing each other to the brink and it's so dramatic and i'm like this stuff is kind of for

10:30Mary Childs: real like this is serious i have this theory that debt ceiling standoffs are terrifying because it's a repeat game and every time we've played this game in the past we've managed to you know the correct side has blinked in time and we've managed to you know get away with it but if you play it enough times, eventually that side is not going to blink. And then we enter Armageddon. There is no mechanism to stop us playing it basically infinite number of times. And if you play a game an infinite number of times, at some point you're going to lose. The way to stop us playing it an infinite number of times is obviously to abolish the debt ceiling, but that's not going to happen.

11:18Mary Childs: And that is the thing that worries me about the sovereign debt dynamics in America. And that is completely orthogonal to what worries you in this Harper's piece, which is like the sheer quantity of debt. Like, it doesn't matter what the quantity of debt is, as long as we have a deficit, we are going to run up against these debt ceiling issues. And it strikes me that the real thing to worry about the thing that causes a crisis and that causes Armageddon is like a big, like unexpected shock, is some kind of fuck up with the debt ceiling, and not some kind of, you know, slow building up of interest expense over time.

11:57Yes, but maybe you think that because it just hasn't happened before. So like, I agree with you. And that's where I was coming from, too. But the more the debt numbers go up and the interest numbers go up, I mean, they're shocked. Like, have you looked at a chart lately? It's crazy. It just goes straight up. And it goes straight up during the Biden administration. Like, to be fair, it does like 2021 are like actual borrowing numbers are just like, it's pretty vertical. and then our interest expense follows on, right? So we had kind of a period where we were like Wile E. Coyote over the cliff. There's like a moment where he's kind of just hanging out for a second and he's like, that's my favorite.

12:30I know, right? And then he falls. So like not saying that we've like fought, I don't want to like sound too, you know, like I'm ringing alarm bells here, but like you always have that lag. People can get really sanguine about it, can get, people get just so comfortable, like you're saying, with all the debt ceiling shenanigans, the market has learned to shrug it off. The market, which like, you know, You don't really think of them as like super complacent. But with debt ceiling political brinkmanship, as S &P put it, it's just like they're like, I'll figure it out. Like, call me when it's a thing.

12:58Elizabeth Spiers: Do you think there is a particular inflection point where this sort of vibe change, where buyers were sort of went from thinking about U.S. debt as the, I think, as you put it, best house in a bad neighborhood to maybe even that's not good enough. Maybe this is still a problem.

13:13Mary Childs: I mean, it is the best house. I mean, there is to this day. Let's be clear about this. in the entire universe of debt in the world, U.S. Treasury bonds are the most liquid, the safest, the benchmark against... Nothing trades through Treasuries, right? And there is no foreseeable future that anything out there will trade through Treasuries. There is no contender. That's right. Yeah. That's right. And the diversification away from the dollar that you've seen largely among central banks is into other, like, Australia. Like it's not, they're not, they're doing like a basket of other things instead of like, oh, I'm going to sell my dollars and buy, you know, Redmond B or something.

13:53There isn't that one-to-one trade because there isn't a single contender that actually makes sense to replace.

13:57Felix Salmon: In some ways that's scarier because it's like if something does go wrong, there's no natural contender like you're saying. So then what then? Then that seems even more chaotic.

14:07Elizabeth Spiers: I think that's the apocalyptic scenario that Mary is sort of thinking about, right? Yes, of course. It's a multipolar world, which is both less controllable and therefore like maybe less stable. But I don't know. I don't know.

14:22Mary Childs: But Mary, let me just jump in because I think there's this sort of premise that we're talking around here that I want to just make a little bit more explicit. You mentioned Greece, which was a credit crisis. Yeah. Greece could not afford to service its debt. One of the reasons it could not afford to service its debt was that it didn't have the ability to print euros because, you know, euro reasons. Right. Didn't have the lever available. So you're suggesting we inflate away our debt? In general, like given that the U.S. government can print as many dollars as it wants, the risk of an outright default, political brinkmanship notwithstanding, is basically zero.

15:07Mary Childs: This is what everyone has understood about the dollar is that the Federal Reserve can print dollars and does and buys up debt and it works. And there are monetarists out there who worry that that action is inflationary. There are, you know, modern monetarists out there who say that that action is not inflationary. But putting aside the question of whether or not that action is inflationary, the thing that people seem to agree on is that it does kind of get rid of the credit risk. So what is the crisis that you're worried about? Well, I don't know that you can entirely get rid of the credit risk.

15:45Like, I hear you, and I think you're right. But we have enjoyed a sort of parallel or like a suspended reality in a way where people consider the U.S., people in the market consider the U.S. government to be risk-free. And I'm sorry, but that is funny. You know that's not true. Everything has risks. There's no such thing as risk-free. so we know we're already in a fictional world well i mean no i know i sound like an old man

16:13Mary Childs: i just want to say that let's be clear what that means right it just means within like the four corners of the bond if the if i buy a 30-year treasury bond and the u.s government promises to pay me a thousand dollars in 30 years time plus interest along the way perfectly good about the fact that they're going to do it right they're going to do that whereas campbell soup like are they going to adjust to ai i don't know where campbell soup is going to be in 30 years so i feel much less good lending to them i think that's right and so just just in terms of like the technical meaning of what risk-free means in the bond market yeah they will pay that money back even if there's you know and i don't have to worry about that quadrant that's right so what is the crisis that you're worried about as you sort of noted i sort of worry about like a hundred things in this Harper's piece.

17:01There's a delicate market structure thing. There's absolute relative amounts of debt, just the sheer volume of debt, which I only really worry about because of expense, interest expense and relative to the economy and the economy's trajectory. And then, I mean, there's kind of like the post-Liberation Day. I mean, Elizabeth, to your question about like, when did it change? I think it was Liberation Day. I hate using that framing, but I can no longer remember if it was April 2nd or 3rd. It was second, right? Second. Okay. So we think it was April 2nd when, and I don't want to overstate this because it's not like everybody went running for the exits and it's all over and blah, blah, blah.

17:38But it was truly, if you talk to people in the market, it's the moment people were like, oh, well maybe I do got to worry a little bit. Like maybe this is a different paradigm.

17:47Felix Salmon: The one thing I worry about, and Mary, forgive me, I don't remember if this is in your piece, but from time immemorial, from the time I was a wee girl in the 80s, the worry of the deficit was used as an excuse to cut spending, particularly for poor people, middle class people. That's the go-to move of the Republican. It's like, we could spend more on this or that, but this debt, you can't just have it hanging out there.

18:14Mary Childs: Or Clinton said the same thing.

18:15Felix Salmon: Or Clinton, everyone. And for a brief shining moment in the pandemic, we talked about it, Everyone was on board. Issue more debt. Whatever it takes. This is an emergency. And that's generally the vibe is like you have an emergency, you spend more money, you go into debt. FDR did it. You figure it out later. When the later comes and things are good, you stop spending so much money. That mechanism appears to be broken now. Now I'm concerned to go back to my question before, like, oh, now the liberals are finally worried about the deficit. And so we're all going to talk about it. You're going to write a big piece.

18:47Felix Salmon: At a time when we have a White House that is just like frantically cutting spending however it can for poor people, for the press, we'll talk about later, for basically everything liberals like and a lot of other people like. So you foment fiscal panic. And then that really opens the door for a lot of scary stuff that I think the White House is now like moving into place, like entitlement cuts, especially because those are the things we spend the most money on. But then when you like zoom out and you think about things for a minute, you see that Congress just passed tax cuts for people. This is a problem that actually has a solution.

19:28Felix Salmon: And I hate to say it, but you just raised taxes a wee bit, a wee bit. It's not even a lot. And like if we're reading Ray Madoff's book, she's a professor. Her book is about taxing the rich and how we don't really do it so much anymore. Yeah, we've lost the habit. Text the fucking rich. I know it sounds like a cliche, but like really, this is a problem that has solutions that there is zero political appetite for. So it's like we're drawing attention to what may or may not be this fiscal issue, but I wonder what the attention is going to wind up doing to the country. Totally. And I hear you. I have sort of a wrongheaded attitude about a lot of this where I love talking about nuanced things, and that's wrong.

20:14No, it's right. No, it's wrong because, like, rhetorically, you're right. Like, I want to talk about things outside of the political sphere. Of course. The political sphere in general annoys me, and I don't like being used as a tool, and I don't like being, like, an audience in someone's game. It's not a nuanced place. It's not a nuanced place. But then when you're trying to have a nuance and Ken Rogoff gets to this in my Harper's piece, I quoted him talking about how it's like impossible to have this conversation because the second you talk about it, it gets like weaponized and twisted and it goes through this transformation where it becomes a blunt instrument used in ways you didn't intend it.

20:45So like I'm over here trying to have a multifaceted conversation about various different ways in which the treasury market is stress inducing. And I tried to kind of package it like, you know, I have the like fiscal conservative like, oh, no, I'm worried about the deficit levels and the debt levels and the market structure, which is typically more the home of liberal thinkers. You know, the levels don't matter, but the structure matters and the regulation matters. And so those are the two kind of traditional, as I understand it, politically, the two camps that I'm pretty well familiar with at this point.

21:17I mean, I think like both of those have their merits. And I dislike the machine that the information gets funneled into because it's really not productive, I think.

21:27Elizabeth Spiers: You think it's partly because people are just very interested in prescriptive solutions and it's kind of hard to think about these problems without acknowledging that, you know, we are in a political system where incentives are a little bit misaligned in terms of getting politicians to spend less and, you know, not run up the debt. No, totally. I mean, I think all politicians have always had this problem where it's much more fun to spend and much less fun to unspend. Like, raising taxes is never a popular—like, all of the things that you have to do to rein in a deficit suck. No one wants to do them.

21:58All of the things to run up a deficit rule. You want to do them. so it's really like that's and it was really nice for so long to get that kind of like olivier being like this might be free like we might be able to issue all the debt that we want and have no real public cost it's amazing that that worked and we probably could still be living in that time we've made some different decisions and the world has changed but yeah i don't know that i actually answered either of your questions but it is sort of personally i'm like allergic to the political

22:25Mary Childs: rhetoric but like it's unavoidable i really like this distinction that you're drawing between like Like the way that the political discussion always goes, it's like, well, let's say you're right and there's a problem with the debt. Then the only way to solve this is to either spend less or to tax more. Which one do you want to do? What is the solution? And then the answer to that, there is no good answer to that without sounding like a politician or being a politician. Meanwhile, here's like Mary Childs talking about market structure. And I go back to one of the things I think we've all forgotten, partly because it was so profoundly boring, was the way that the money market seized up in like March, April 2020, at the beginning of the pandemic.

23:09Mary Childs: Adam Tooze wrote an 8 million page book about it. And everyone went, oh, yes, this is very important. And then memory holder, he did to forget all about it. But there was this moment when everyone was like, oh, shit, everything is about to fall apart, because these, you know, plumbing questions and architecture questions become much bigger and much more urgent than the sort of grand like deficits are bad questions like none of that was caused by deficits it was caused by you know the pandemic and various other things velocity yeah and i think that when you say that like your kind of moment of radicalization was liberation day it was like april 2.

23:49no no i was well radicalized before then no no no i was radicalized

23:53Mary Childs: in 2023 or maybe the market started taking this stuff seriously on it on liberation day yeah what What I look at on that day is the significant and lasting decline in the dollar. And as you and I know, but I think Joe Q public doesn't really understand, the Treasury bill market and the dollar are basically the same market. And when the dollar declines, that bespeaks a sort of lack of faith in some kind of American hegemon. Yes. And so it's something to worry about. And then what you do is you sort of zoom back on your US dollar chart to encompass more than about six months. And you're like, well, the dollar is actually still quite strong.

24:36Mary Childs: And maybe there isn't that much to worry about after all. And we kind of got through the 2020 crisis and we fixed a little bit of plumbing and architecture problems. Plumbing problems, you can nearly always like call in a plumber and fix it somehow. And so maybe I shouldn't be that worried.

24:52Felix Salmon: But so wait, if I understand the worry, and I'm sure Felix will interrupt me if this is wrong. But the worry is - It's nice to have that. It is. Investors stop buying treasuries and then everything just falls apart, basically, TLDR. And then if investors stop buying treasuries, they don't want them anymore for whatever reason, because they don't like Donald Trump or whatever, then typically the Federal Reserve would step in. But then the danger right now is that Jerome Powell is going to leave and who knows which Kevin could run the Federal Reserve. Any number of Kevins, right? Any number of Kevins could step in.

25:27Felix Salmon: And perhaps even... Britney Spears' ex-husband? We don't know. That would be catastrophic. That would be. Peter Navarro also, not just Kevins. I think Trump casts a wider net. Well, that's... But anyway, that person could be in charge. And like, who really knows what happens then? If we have another like 2020 situation and someone at the Federal Reserve is not a more traditional type, chaos could... There is room for chaos. There is room for bad things. Totally.

25:53Mary Childs: I would basically completely agree with that framing, with the single exception of the idea that it is presumptively caused by some kind of investor strike and people don't want to buy treasuries anymore. I think there are lots of things that can go wrong in the treasury market that cannot be boiled down to investors don't want to buy treasuries. And I think that's exactly what we saw in 2020. It wasn't that there was suddenly no appetite for treasuries. It was just, it was really, there was just a bunch of market

26:25Felix Salmon: dynamics and leverage cash yeah didn't want to buy treasuries they wanted dollars insofar as

26:31Mary Childs: there's a difference and like you know and this is where it becomes incredibly nerdy right and you can't talk about this stuff without talking about like the way that you buy treasury bills because then you know 90-day treasury bills coincide with the coupon payments on the 30-year treasury bond and you use the bill to pay the bond coupon and all of this kind of stuff and And there's all these big hedge fund trades. And then you get crowded trades and yada, yada. So there are really nerdy, boring, technical things that can cause a disruption. Not boring, exciting. Thrilling. Exciting, nerdy, technical things.

27:01Mary Childs: Don't say boring on the pod. Consequential. Enormously consequential. Enormously consequential. Thank you, Felix. I do want to talk about the hedge fund trade because I think that's like a part. It's confusing how much to care about this one. I was moderating a panel a couple weeks ago about this specifically. And some guys were on the panel who do this trade that we're about to dive into. And they were so just like chill about everything. I felt all my worries collapse. I mean, it wasn't permanent, of course, but I just was like, oh, maybe there's maybe everything is actually fine. So the hedge fund trade, and this is what started to stress people out really in 2020.

27:39The basis trade. The basis trade. Now, real structured finance people know that a basis trade is actually just a trade between a derivative and its underlying. the basis trade is like calling this is a joke that i'm going to use on planet money in a minute so like maybe don't use maybe i shouldn't ruin it here but it's like if you're like going to the grocery but you call it target you call every store target because you just like target's really big and so you're just like i'm gonna go to target right now and like you're going to like a shoe store like the how they call soda coke in some places yeah that's so much better you can use that thank you take it to planet money so so it's this like because it's gotten so big and because it's about treasuries and because it's like broken containment it's called the basis trade so the basic idea is that like they because of various structural forces that are kind of complicated and long there's like a seller of treasuries some people like just don't want to hold them okay fine that makes them very like a little tiny little bit cheap and hedge funds are great.

28:39Thank you. I'll take it. And then elsewhere, the other buyers, other players in the market want exposure to treasuries, but maybe in a slightly, you know, easier to manage way. And so they're using the derivative. And so they want to go long treasuries in the derivatives market. And so the hedge funds for every long bet, there has to be a short. So the hedge funds go short. So they have the physical cash treasuries and they've sold them short at the same time, thereby capturing that little teeny weeny difference in value in price then they lever it up a whole heck of a lot and so that they can actually make money on it this is a little bit of a clumsy explanation but basically that means that we have outsourced holding of treasuries to hedge funds and we're just like hoping that they're going to stay in a good mood and like the reason i don't have to worry about this is because the fed can just cure it like if you just get a little comfortable with bailing out hedge funds because we're we've outsourced this dealer role to them well then it's fine so i i maybe it's okay and we saw this in 1998 this is

29:43Mary Childs: this is basically we've seen this movie i just want to take a moment to acknowledge emily's face what happened to emily's face when i said that it was okay to bail out hedge funds could anyone describe emily's facial expression during that time it was it was twisted i her facial features went in a circle.

30:00Felix Salmon: I just, I was just worried again about politics. I just don't know if there's going to be, if people are going to want to do that.

30:06Mary Childs: But let's just be clear about, again, like, and this becomes a political problem, right? In 1998, you get a bunch of technocrats at the New York Fed who get a bunch of banks together and they decide to bail out LTCM, which is a hedge fund, and the great systemic financial crisis that people were worried about as a result of LTCM failing didn't happen because there was a bailout. And so well done, you know, Tim Geithner and everyone else who had kind of orchestrated that, right? They did that in the full knowledge that it looked very clubby. And that was a private bailout, though. Well, I mean, private in that the New York Fed was involved.

30:43But yeah, the New York Fed simply babysat the process. They were just the adult in the room being like, you have a mess. I need you to clean it up. Y 'all figure it out. I don't know who drew on the walls, but make it undrawn on and we can talk when you're done. So it was more like that.

30:59Elizabeth Spiers: If we were to agree that bailing out hedge funds was the correct thing to do, how would you have to change the plumbing for that to actually work? Because even with LTCM, it was kind of a one-off. It wasn't a big structural collapse.

31:12Mary Childs: What you need to do, as Mary was explaining, the problem here is that there are a bunch of investors who do actually want to buy treasury bonds. They do want that exposure, but they just want it in a slightly different form. And what you need to do as a long-term solution is kind of mess with the plumbing a little bit to address their concerns and either make the form they prefer treasuries in less attractive or make treasuries more attractive and thereby take those real money investors and move them back into the real market where they belong rather than the derivatives market where they cause this basis rate to spring up.

31:50That's funny. I was going to say, just build a facility at the Fed that can bail out hedge funds. That was what I was going to say. Sorry. It seems simple. That's what I assumed. Yeah. Yeah, you're right. Because they don't really, you know, like they typically try to deal with banks. Yeah.

32:04Felix Salmon: Like what they did with Goldman in the crisis, right?

32:07Mary Childs: Just make the hedge funds a bank. Reclassify them as a bank and problem solved. Too big to fail.

32:11Felix Salmon: Boom. It's not that hard. Yeah. So anyway, that's all this is made up, right? It's all just choice. We're just making money out of nothing.

32:32Mary Childs: Slate Money is sponsored by Monarch, which is an app that helps you with your finances. I was just reading a wonderful research study basically saying that the peak of our financial decision-making lifetime normally comes in your early 50s, which is exactly where I am. I'm pretty sure that the reason we early 50-year-olds are good at money is because we've learned the hard way. We know how hard it is. We just know what we don't know. We don't have all of that overconfidence and the mistakes that comes from it. This is where Monarch comes in because Monarch will actually give you advance warning of when things are going wrong.

33:12Mary Childs: All you need to do is connect your bank accounts, connect your credit card accounts to Monarch via Plaid, and then it will just work out how much you spend on this and that and the other every month. And then that little note saying, do you realize how much money you've spent on restaurants can help you sort of take a read and go, oh, good point. I should do something about that. Monarch is basically like having a financial advisor in your pocket, one who knows how much you're spending on a day to day basis, knows how much you have in investments, knows how much you have in savings, and who can just give you the peace of mind to not need to check those things on a regular basis, because if something important happens, it will let you know.

33:52Mary Childs: So write your own money story with Monarch. Use code SLATE at Monarch.com to get your first year of Monarch Core half off at just$50. That's 50 % off your first year at Monarch.com with code SLATE. Slate Money is sponsored this week by Upwork. If you want to scale your business, you need the right expertise at the right time. That's where Upwork comes in. It helps growing teams quickly bring in specialized freelancers so that you can move faster and take your business to the next level. Upwork is a one-stop platform that allows you to find, hire, and pay expert freelancers across web and software development, data and analytics, marketing, business operations, you name it.

34:42Mary Childs: And with Upwork Business Plus, you can access the top 1 % of talent on Upwork. And with AI-powered shortlisting, you'll get matched the right freelancer in less than six hours. No endless searching required. Visit Upwork.com right now and post your job for free. That is Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com, Upwork.com. Summer's supposed to be the easy season. So why are so many people quietly Googling a therapist between summer Fridays? Because more daylight doesn't fix the hard stuff. Sometimes it just turns the volume up. Grow does therapy differently.

35:27Grow connects you with thousands of high-quality, licensed therapists across the U.S., offering both virtual and in-person sessions, nights and weekends. There are no subscriptions, no long-term commitments. You just pay per session. Grow helps you find therapy on your time. The therapist you want takes your insurance on Grow. Grow accepts over 125 insurance plans. Sessions average$21 with insurance, and some pay as little as zero dollars depending on their plan visit growtherapy.com slash a cast today to get started that's growtherapy.com slash a cast growtherapy.com slash a cast availability and coverage vary by state and insurance plan this is actually the perfect segue to the news of the week Okay, yeah.

36:48Mary Childs: you know cacophony of outrage from every single economist statistical association and the rest saying but statistics are very important and reliable statistics are very important and what you're made doing is you're making the reliable statistics that's reliable and that's going to reduce faith in and then the minute you start using that word like reduce faith in everyone kind of they stopped listening at that point you can kind of see it in the dollar but at that point it becomes like a plumbing thing. And it's just like, oh, you know, do we care? How does faith affect me? That's plumbing? Isn't that credit risk?

37:24Mary Childs: Well, no, it's not credit risk. It doesn't affect the ability of the Treasury to repay its debt. It just affects the size of the error bars on the models that economists use to estimate the trajectory of the economy.

37:40Elizabeth Spiers: But the Fed uses that data.

37:41Mary Childs: Yeah. Many of those economists are at the Fed. Yes.

37:45Felix Salmon: Are you saying that it doesn't matter that the president of the United States didn't like the unemployment data and thus fired the messenger?

37:53Mary Childs: 100 % not. It really matters because I am a, you know, good neoliberal to my boot soles. And I believe in the importance of reliable statistics. And I think that, you know, certain countries, including the United States, have historically had really good national accounts, really reliable statistics, and that has helped them in innumerable ways. It's part of, honestly, it's part of the soft power that has helped cement U.S. hegemony over the past century. And it's very important. And like Canada, Statistics Canada is a really good statistical organization. New Zealand has really good statistics.

38:34Mary Childs: These countries punch above their weight financially a lot of the time, precisely because people really trust the data that those countries are putting out.

38:43Felix Salmon: So the other thing people are talking about is setting aside, just don't fire the person in charge of the statistics when you don't like the statistics, because that ruins everyone's trust in the statistics. And that's really bad for everyone, blah, blah, blah argument is that going underneath that, as we've talked about, the response rates to BLS surveys have been plunging the data, though everyone said when they were freaking out about this on Friday, And then this week, everyone said unemployment stats from the BLS are gold standard. They are, in fact, not really. The gold is tarnished.

39:16Mary Childs: The gold is less gold than it used to be.

39:17Felix Salmon: The percentage of gold is lower. Yeah. Yeah. And the same is true, apparently, in the UK. I was reading in the FT today. One of my colleagues brought it up at Axios, Courtney Brown.

39:26Mary Childs: It's actually a global phenomenon, right? Which is that most of these statistics are produced with surveys. Survey responses across the board have fallen significantly. And the lower the survey response, the less reliable the statistic. Statistical agencies have been in a crisis. I wrote a piece in Axios in 2020 talking about the crisis of statistics, and it's only got worse since then.

39:50Felix Salmon: Yeah, and it's not just the response rates, which has to do with the way people engage with technology and also the way people do or don't trust the government anymore, whatever. But it's also spending on the agencies has decreased. headcount keeps getting lower and lower and lower. Going back to our first conversation, there's less appetite to spend on the government, on statistics, especially with this, again, with this administration. So there is actually, not to say that Trump has a point, but maybe as a point, BLS data could be better.

40:22Elizabeth Spiers: It's a problem that he has exacerbated because now there are certain things that BLS just data they can't collect because they don't have the staffing. and also I just don't think that he fully understands that you know particularly when they have to do these downward revisions that in a lot of cases it's because of that

40:39Mary Childs: the survey problem we just discussed yeah yeah I think what we're all agreeing on here is that you know the reason we saw the biggest revision since 1968 it's probably related to the fact that the quality of the statistics is lower than it has been in many decades and in order to keep the quality of the statistics as high as it has been in past decades, you would need a massive increase in funding to the BLS. And instead of having a massive increase in funding to the BLS, we're having a massive decrease in funding, not only to the BLS, also to the Census Bureau. And then we're surprised when the quality of the data deteriorates.

41:15Mary Childs: And then when you get like a big revision, which is what happens when this quality of data goes down, then he like shoots the messenger and it's like, this is, you know, it's like, come on, dude, like you caused this.

41:27Felix Salmon: Yeah. The appropriate response would just be like, we have a data problem. The BLS is underfunded. Like let's sell more treasuries and give them more money and get better data. One thing that I was thinking a lot, like I can kind of trace my emotional journey this year by like what I've been muttering while I wander around my own house. Like I'm like shuffling my, I'm a million years old now. But the thing that I was muttering to myself in the beginning of the year was like, we underappreciate in this country, I think, the extent to which our capital markets are as deep and liquid as they are, treasuries, but also everything, because our courts are orderly and because people do trust our institutions and our open data.

42:06We're one of the biggest providers of open data in the world, and we did that on purpose. And that was a bipartisan thing and has been for decades. That was a political choice that everyone agreed on. And business certainty, being able to predict, to project into the future, to be able to make informed choices, like all of that is virtuous, right? Like all of that self-perpetuates and makes businesses feel comfortable. So then they build a plant. So then they're a job. So that, so it's all like generative. And when you attack each of the planks, you know, of this trust and whether that's on purpose or not, whether they're just like, I want to defund and then like sort of by accident, I didn't think this through.

42:41And the data quality has been declining the net effect. And again, this is a slow thing. So like, maybe it's not going to show up for a while, but the net effect is that you get less and less investor confidence. And that means everything costs more. That's just friction. That's just more basis points left, right, center.

42:58Mary Childs: So there were two related questions. And I think Emily is right that we have a slight disagreement on this one. I was like, Emily is right. Oh, no, no, no, no. So a slight disagreement between Felix and Emily. I just want to make sure I hear the, where am I? Am I in the game or no? I'm about to ask you to be like the referee. Okay, I'm nervous. Okay. Me too. Rolling up my sleeves. I think we all agree that the quality of the statistics has been going down. Like the error bars are high. There are big errors off of like some kind of conceptual platonic ideal of what the truth is. And those errors are getting bigger.

43:38Mary Childs: So then the next question is, have we now started off down the path of politicized data where not only are the statistics unreliable in the sort of like LIBOR way where you don't know what the truth is and it might be higher and it might be lower, but they're actually being massaged in a certain direction to make the government look better? Yeah, good question. What's the disagreement? I think we are not there yet. Felix says no, you say yes. Yeah, so I mean, Emily, I think, Emily, is it fair to say you're saying yes?

44:17Felix Salmon: Yeah, we're on the road. It's happening. I'm not saying right now, today, anyone at the BLS is like furiously like... Futzing around. Futzing, making up numbers. I'm not saying that. No.

44:29Mary Childs: Okay, so what is happening?

44:30Felix Salmon: Phase one. fire the messenger and then send the message, you, the president, the messages. I want the numbers to look good, people. That message has now been sent and how the bureau does or does not react is now, even if they don't react, it's still a question. Okay.

44:50Elizabeth Spiers: So in April, I did a blue sky thread about what would happen if the labor numbers came back badly. And I have a post that says my prediction is in that scenario, he blames the BLS, which puts out employment data, calls them corrupt, run by Democrats out to get him, fires people there, insists that their numbers can't be trusted, and then the White House puts out some proxy, its own fictitious data to make things look good. And I was thinking about that directionally because if you understand anything about Donald Trump, he can't admit that he's ever done anything wrong and he always looks for a scapegoat.

45:21Elizabeth Spiers: So if employment numbers are down, what's this obvious scapegoat? It's the BLS. But whenever I asked people about this, One of the things that they said was enough of the data is transparent. It would actually be very difficult to manipulate the numbers that much within the BLS, given its current structure. Do you think that's true?

45:41Mary Childs: Honestly, I think both of you are right. I think that it is hard. I'm so happy to be here for this moment. Can we just pause? i think elizabeth you're right that practically speaking there is actually incredibly little that any individual in the bls can do to massage the numbers and make them look better like the numbers fall out of models that are hard if not impossible to futz with that does not to be clear reassure us that the quality of the statistics isn't declining the quality of the statistics is declining because you have a geigo problem garbage in garbage out so yeah if if you just have bad data going into the bls you're going to get bad statistics coming out but the idea that the statistics coming out are going to be sort of massaged by humans within the bls is 100 percent a worry i've seen this worry i and i think that you emily is exactly right that trump has created an incentive structure for that to happen i just don't know in practice how it happens but emily

46:43Elizabeth Spiers: One way it could, though, that I just thought of, I wrote a column for Fortune a million years ago about the Boskin Commission, which revisited the way that the BLS calculates inflation. And this was when people were accusing Bush of, you know, politically manipulating inflation numbers or doing maybe not directly, but trying to politicize inflation numbers. and there were, you know, techniques of measurement that could be altered, you know, like the way we sort of think about substitution for goods in the basket, stuff like that. Methodological choices, like how does actually matter? And there are a thousand teeny little choices that you can make differently.

47:23I guess the net effect of all of those choices, if you keep going one direction with all of them, maybe you could move the need.

47:30Mary Childs: And I think it's harder to do that in labor than it is in prices. It feels tedious, yeah.

47:46Felix Salmon: This episode is powered by AT &T Business. For every small business owner, there's a moment they remember when they realized they wanted to start their own business. It can be a life-changing moment, but those first steps are never easy. Figuring out the right building blocks, your goals, your schedule, your mindset. You have to think about an entire ecosystem. Not just the big stuff, but the little bits too. In this day and age, a major point for any successful business is strong connectivity. Spotty internet has led to some terrible work calls in my life, but when you're running a business, connectivity can make or break you.

48:14Felix Salmon: AT &T Business has the tools, team, and expertise you need for a reliable network you can depend on. They make connecting easy, and that's the main thing you want in a provider. Less time stressing, so you can focus on the million other things on your plate. Can I hire more people? Should we get a bigger office space? Don't lose sleep over the small stuff. Keep focusing on the big things. AT &T Business built to work. Get AT &T Business at business.att.com.

49:04and weekends. There are no subscriptions, no long-term commitments. You just pay per session. Grow helps you find therapy on your time. The therapist you want takes your insurance on Grow. Grow accepts over 125 insurance plans. Sessions average$21 with insurance and some pay as little as$0 depending on their plan. Visit growtherapy.com slash ACAST today to get started. That's growtherapy.com slash ACAST. growtherapy.com slash ACAST. Availability and coverage vary by state and insurance plan.

49:42Mary Childs: But let's move on just to the other big$30 billion news of the week, which is that a special committee of Tesla's board comprising precisely two members. That's my favorite part of the whole thing. The special committee. stuck their finger in the air and said$30 billion. That sounds about right as for how much we should pay Elon Musk. You know, he's a valuable chap. Tesla's worth a trillion dollars, probably more than 30 billion of that is due to the fact that Elon's here. He said he wants more stock. He says he wants us to pay him more. So let's pay him$30 billion. And bish bosh, that happened.

50:20Felix Salmon: So great. Isn't that good? I mean, Elon Musk is a singular character. I can't imagine that Tesla could find a CEO like him to replace. I mean, there is only one Elon. He is a flight risk, right? That's why they did this, because they want to make sure Elon pays attention to the company he is in charge of.

50:37Mary Childs: Realistically, he's not a flight risk. We have to be very clear about this. Elon is very rich, but like in terms of liquidity, in terms of having money to play with, all of the money he has to play with is due to the fact that he has liquid Tesla stock that he can borrow against.

50:52Felix Salmon: He needs this job.

50:53Mary Childs: If he quit his job, Tesla stock would go through the roof. He would face massive margin calls. He would have a liquidity crisis. Through the floor. It would go through the floor. Through the floor. Yeah, the margin calls would go through the roof. He would face this massive liquidity crisis. And basically, there are a lot of sticks preventing him from leaving Tesla. But the Tesla board is like, never mind the sticks. We'll give you a carat as well. Or 30 billion carats. No one ever does this for me. My take on this, because this is taxable income. Right. He has to pay income tax on all of this.

51:23Mary Childs: And so finally, we have a multi-billionaire paying like a real amount of income tax. So I like that. And so then he's going to have to sell Tesla stock to pay that income tax. And then it's going to start the cascade that they were seeking to avoid in the first place.

51:35Elizabeth Spiers: I'm just kidding. I also love that there are apparently no conditions on this pay package where, you know, nobody's like, well, could you for maybe 12 months or so restrain yourself and not do unhinged things that will drive the stock down? They're like, just show up to work.

51:49Mary Childs: There are two conditions. Number one, he has to show up to work for two years.

51:53Felix Salmon: There's no performance goals or anything?

51:56Mary Childs: No, but the whole point of this pay package award is that it's supposed to replace the pay from 2018 that he already earned out on and then that Delaware nixed. And so the idea is that if you add extra performance goals, then you're not really just rewarding him for what he already did between 2018 and 2023. So I can kind of see the logic there. And in fact, Tesla is saying we don't expect to pay him any of this 30 billion because we expect that pay award from 2018 to be reinstated. And if that pay award from 2018 is reinstated, then the 30 billion goes away.

52:33Felix Salmon: No double dip. Wow. They're pretty tough on him. It sounds like. Horrible. Wow. So like he shouldn't spend the money in case he has to give it back or something.

52:44Mary Childs: If he loses the 30 billion, he gets 58 billion. so he'll be fine.

52:49Felix Salmon: It's a different kind of deal than we get. It does seem different where I have to meet the goals and get the performance review and then maybe I get like the 2%.

52:56Mary Childs: But what's more, if he loses the 30 billion, just to be clear about this, if he loses the taxable 30 billion, he gets 58 billion that is not taxable because of reasons. So he should seek to lose it. I mean, he is. Yeah, he really wants to lose the 30 billion. It'd be very good for him to lose the 30 billion.

53:12Felix Salmon: So the 30 billion isn't even real. So even like, why are we even talking about it? Just a little, it's like a thank you note.

53:18Elizabeth Spiers: It's just a sweet little note from your besties on the board. It's a little safety net.

53:22Mary Childs: I think it is real because it all depends on the Delaware Supreme Court. And if the Delaware Supreme Court upholds the ruling of Kathleen McCormack, the top judge in Delaware, then he doesn't get his$58 billion back and he has to make do with$30 billion.

53:38Felix Salmon: But meanwhile, the companies move to Texas, right? They will not have any more business before this Delaware court going forward. No more. and in Texas you have to own what like 2 % of shares 3 % of shares to file a shareholder lawsuit so it's less likely that he'll have to face something like this again because really the

53:58Mary Childs: only person who owns 3 % of shares is Elon and he's not going to sue himself I mean he could and that

54:03Felix Salmon: would be fun but I would like that I could see that happening anything's possible don't rule it out did you see that Linda Yaccarino who quit her job as CEO of x.com because I mean she definitely Definitely quit it. Yep. She definitely quit and just announced on Tuesday that she's the CEO of a GLP-1 telehealth company. Oh, good. I just want to let you guys know that.

54:25Mary Childs: So if I want some like a Zen pic easy without having to go to my doctor, I just phone up Linda and be like, here. Yeah. Text Linda. Yeah, text Linda. Panned over a wad of 20s.

54:36Felix Salmon: You could maybe DM her on x.com. I don't know if she's still checking us. If you're premium. I mean, if you're premium. Right. Of course. Which there's a 30 % off sale ending now. jump on it just re-logged in you guys i just i got locked out for months i just re-logged in

54:50Mary Childs: and they're like 30 percent or how much and you know what that can be your number mary what is your number wait i have to see if it's still standing let me check it was a limited time offer oh limited time offer limited ending today 30 premium and premium plus annual you got to get so i could unlock free ads ad free scrolling higher visibility monetization Super Grok and 20 more exclusive benefits. I am not going to do it, but that is my number. That's an offer that was made available to me. How much? It's only$4.90 a month. That's only a little bit more than a bodega coffee.

55:29Mary Childs: I just did an interview, which you will hear on this here podcast in a couple of months with Doug Woodham, former Christie's executive who just wrote a biography of Jean-Michel Basquiat. And And he was complaining as he walked through the offices of Slate in Brooklyn that his bodega coffee, a small bodega coffee, cost$4. And I have to say, I am with him on this one. A small bodega coffee should not cost$4.

55:53Felix Salmon: Has he seen the prices of things that sell at Christie's? And he's complaining about bodega coffee? You want personalized pricing for him on bodega? You're like, that's a$50 coffee for you, sir. Yes, algorithmic pricing should kick in. To each according to his ability. Exactly.

56:26Mary Childs: Elizabeth, what's your number?

56:28Elizabeth Spiers: My number is 212 ,000. And that's approximately how many women over the ages of 20 who've left the workforce since January. And the biggest culprit is apparently a return to office mandates, which I find 0 % surprising because my personal situation is that we have a two-income household and now my husband is probably going back into an office every day and we have a child. Men love going into offices. I miss the office. But there was an economist from the University of Kansas who said the most normal situation here is that it's ordered by some old white male person with what I call care privilege, which means they have someone who cooks their meals, who irons their clothes, and who picks up the kids.

57:12Elizabeth Spiers: And I think that is a big chunk of what's happening. Did you read that Time Magazine article about this? Yeah. I should write that up.

57:19Mary Childs: Is the 212 ,000 from the highly unreliable BLS report?

57:23Felix Salmon: That's a fair question. because the trend had been going in the opposite direction for the past few years or more moms

57:31Mary Childs: are working yeah i mean 212 000 in the context of the u.s workforce is not enormous but directionally it's worrying my number is 250 what's that oh sorry 250 is the number of dollars that number

57:51Mary Childs: yeah it's the number of dollars the visitors to the united states are going to have to pay in a visa fee if they want to come here to watch the world cup or the olympics or something if they're not coming from a country with a visa waiver scheme and that's like a non-refundable fee that you need for any kind of visitor visa to the united states and this 250 dollar fee by the way is signed into law. It was part of the big, beautiful act. Then on top of that, there is now talk of taking certain other countries. And then if you apply for a visa, you need to put up a bond of$5 ,000 or$10 ,000 or even$15 ,000.

58:28Mary Childs: And you only get that money back when you leave the US because they're worried that you might overstay your visa. And it is astonishing to me the degree to which absolutely no one in the Trump administration cares about tourism or actually wants to completely destroy the tourist infrastructure of this country. Because first, it's all of the headlines about, you know, tourists are getting jailed at the border and put into these nasty jails for weeks at a time and then deported and all the rest of it. Then you get faced with a$250 fee for a tourist visa. Then you get asked for a$15 ,000 bond. Like, who is going to come to this country anymore?

59:06Mary Childs: And I think secretly, that's what they want. They want no one to come to this country anymore. Yeah.

59:11Felix Salmon: Yeah. Good news for Times Square, I guess. Or bad news for Times Square. Honestly, I was there in April and it was like so love. I stayed just off Times Square in a hotel and it was like great. I didn't get swarmed. I didn't get like a panic attack. Everything was great.

59:24Mary Childs: They've done a good job with the Elmos. They've got rid of most of the Elmos. Yeah, the Elmo streamlining has been great. Yeah, there's a little like painted triangle in Times Square. And if you're an Elmo, you have to stay within the triangle and then you get unaccosted by Elmo's if you manage to avoid that triangle. Emily, what's your number?

59:43Felix Salmon: My number is 24. That is a percent. That is the percentage increase in the stock price of American Eagle on Monday after Who Said It? Go get them, Sydney. Who said it? Our president. He tweeted or he truthed or whatever about American Eagle, which is the subject of controversy that I suggested we speak on on this podcast, but probably the better angels said don't. But there is a controversy, Mary, I'm sure you know about it, where Sydney Sweeney has an ad. She talked about her genes that get passed down and traits that get passed down on genes, but it was a little double play on, you know, genes with a G versus genes with a J.

1:00:28Felix Salmon: And the upshot was she has the good genes going in both directions, American Eagle genes, although I've read some commentary that suggests they're not very good genes, but I won't speak on that. Yeah, but I have some hand-me-downs from, anyway, it doesn't matter. Yeah, okay. So, yeah.

1:00:43Mary Childs: Were they handed down from your mother from generation to generation?

1:00:46Felix Salmon: Handed up, I guess. We don't want to speak of my genes because then I could be, they could come for me if I speak of my genes, but I would only speak of my J genes, not my G genes. But what happened was Sydney Sweeney spoke about both her G genes and her J genes in this ad. People got upset. They were like, that seems a little white supremacist to be talking about your jeans and your blue eyes, whatever. There's a lot of commentary, but the conservatives made a lot of hay out of it. All the liberals are crazy and they're freaking out over an ad, which I don't think is true. But that's what happened.

1:01:18Felix Salmon: And then it got to Donald Trump, who tweeted or truth, not tweeted, truth, his support for Sidney Sweeney, initially spelling her name incorrectly, but then deleting that post and then reposting it, spelling her name correctly, which that's good. People correct there. I make mistakes in spelling as well. And then when that happened, yes, then American Eagle's stock shot up to around like 13-ish dollars. And the subsequent day is the day we're taping Tuesday. It has come down a little, but it's still elevated from where it was prior to the truth. And apparently it's one of the rare times that the president has truth or tweeted about a company and the stock has gone up.

1:01:55Felix Salmon: In previous cases, it has gone down.

1:01:57Elizabeth Spiers: Does that kind of count as meme stock behavior even if it doesn't say a meme stock because there's no underlaying i think it does

1:02:03Mary Childs: i and it is a kind of amazing story insofar as i'm quite sure that when they put this ad campaign together featuring you know a buxom young lady making a dumb pun about jeans they were not expecting to dominate the discourse about you know eugenics and yet this is what happened that wasn't the market they were going for no and normally when you like and everyone was like oh, those dumb fucks at VaynerMedia who came up with the ad, they were just too stupid to realize that this would blow up in their faces. But then, amazingly, it managed to blow up in their faces in a positive direction. And they did a great job for the stock.

1:02:41Mary Childs: And they're all running to the bank. And it's just like, wow, we are truly living in the dumbest timeline.

1:02:46Elizabeth Spiers: I think most culture war issues start with just some random thing happening. And then maybe one person on the internet goes, that's a little creepy. And if they happen to be liberal, the right goes, oh my God, liberals are outraged. and then the reverse happens in the reverse direction. And you can't predict that. That's what I'm saying, the machine. It's not a useful machine. I mean, it is. A lot of people make a lot of money off of it, but I don't think it's a societally productive machine.

1:03:09Mary Childs: Still, all I'm going to say is that I hope that Sidney Sweeney gets her$30 billion bonus for goosing the stock because, you know. Yeah, was that tied? That's an interesting question, if she had some kind of compensation tied to the stock price.

1:03:20Elizabeth Spiers: Well, there were also reports that she's a registered Republican. Which is okay.

1:03:24Felix Salmon: You can be that. It's okay.

1:03:28Elizabeth Spiers: Well, I mean, that's why people were saying like she did it because that message is supposed to be there. Like she was in on it. She was in on it. It's an inside job.

1:03:37Mary Childs: Oh, yeah. Because obviously the whole ad was her idea. I'm sure she wrote the whole script and everything.

1:03:41Felix Salmon: I don't have American Eagle jeans. I just want to be clear. The jeans I was thinking of were from Hollister. Wow. Yeah.

1:03:48Elizabeth Spiers: I think of those as brands as sort of tween jeans.

1:03:51Felix Salmon: They're mall brands. Yeah. No offense. They're mall jeans. Yeah. None taken. I just want to submit for consideration a different number. because my other one sucked. And mine is$1.7 trillion, you guys. I wanted also to have the biggest number.

1:04:05Mary Childs: Congratulations, you now have the biggest number. Thank you. Thank you. My dreams are coming true. It's the private credit market. And this is because the chief executive of Apollo, they've been working with Goldman and some other major banks to trade private credit. Which is a contradiction in terms. Right. It's so funny because we have public debt markets. We have public credit and the whole difference, the only remaining difference really, because it used to be maybe the loans were smaller in private credit and bigger in, you know, in public, it's not really called public credit. It's called syndicated credit where you go out and sell it to a bunch of big investors.

1:04:39But the difference was size. Okay, no, it's actually like it's clubbed. Okay, no, there were like, there are no differences functionally. This is the last remaining difference is that there's no like public trading of these things. And now they're going to do it, which like you just invented the same thing. it's the same thing tell me what's different i like it because because now all the private

1:04:59Mary Childs: credit is going to become syndicated loans and that's going to create a whole new gap in the market for really private actually private credit untradably private credit ultra private credit double secret private yeah yeah you need to be a member of a very exclusive club to get our credit you actually need a fully different computer to look at this credit you can't look at it on your work computer. That would be fun. And I think we've just innovated. And that is what the American economy is all about. And we'll put it on the blockchain. There we go. And if that happens, we'll have you back to talk about it.

1:05:32Mary Childs: Oh, my God, Mary, can you just come back all of the time? Because we love you so much. I would love to. It's so much fun to get to hang out with y 'all. It has been so much fun having you on this show. Thank you, Mary, for coming on. Thank you to everyone for emailing on slatemoneyatstate.com. Thank you to Jessamyn Molly and Shana Roth for producing. And yeah, we'll be back next week with yet more Slate Money.

1:06:04Hi, this is Paige from Giggly Squad, and today's episode is brought to you by McDonald's. Honestly, Caesar sauce and a Diet Coke at McDonald's might be the perfect girl dinner. And McCrispy strips dipped in Caesar sauce, no notes. Right now, at participating McDonald's, the$2.99 Caesar snack wrap is making me rethink my entire go-to order. Caesar sauce is at participating McDonald's for a limited time, so go try it before it's gone. Prices and participation may vary.

1:06:32Felix Salmon: This episode is sponsored by HeyGen. HeyGen turns a script, photo, or presentation into a polished video of you. In minutes, no camera or crew required. It's how real estate agents, financial advisors, attorneys, and creators show up consistently on every feed and build a brand that brings in clients. without spending their whole week making content. Rated the number one AI video platform for small businesses on G2 with the most realistic AI avatars in the industry. Trusted by a community of over 30 million people and 85 % of the Fortune 100 and built to work in over 175 languages so you can reach your audience in theirs.

1:07:06Felix Salmon: Here's the wild part. Record yourself for just 15 seconds and HeyGen builds an AI avatar that makes professional videos for you on demand so you can post everywhere your audience is, as yourself, without filming every time. Your first three videos are free at heygen.com slash pod. That's H-E-Y-G-E-N dot com slash P-O-D.