We Hate the Inflation

0:10Hello and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg with Elizabeth Spiers of New York Times.

0:21Felix Salmon: Hello. With Emily Peck of Axios. Hello, hello. And we are going to talk about inflation too, the return of the inflation. It's happened, people. Have you seen prices going up? You haven't imagined it. It's real. They're up 4.2 % year on year. We are going to talk about Social Security and the insolvency thereof. We are going to talk about the iPhone and whether it is single-handedly responsible for the decline in global fertility. We have a Slate Plus segment on business rivalries up to and including OpenAI versus Anthropic. And we are not talking about SpaceX. We will talk about SpaceX next week because as we record this, we don't actually know what happened because it hasn't started trading yet.

1:06It's all coming up on Slate Money.

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2:04Felix Salmon: But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes, and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio.

2:43Felix Salmon: Download the latest episode and follow at schwab.com slash Washington Wise or wherever you listen. It's Inflash colon return of Inflash. It's okay. Inflash 2, the return. How scary is this movie? I think for your everyday American, It is quite frightening. Filling up one's tank is a horror show. It's you running, you're looking over your shoulder, you're panicking, you're stumbling and falling.

3:17Elizabeth Spiers: There's something in the basement that needs to be checked out.

3:20Felix Salmon: Yes, it's your oil meter. So Inflash One was the blockbuster movie that we saw in the wake of the pandemic, which had the tagline from Che Powell, transitory. That tagline became almost as famous as the movie itself. And it took a while for the transitory nature to become a baron. It was inflation for much longer than we, than I think he anticipated, but it did eventually come down. Inflash too, I think we've learned our lesson. No one is calling it transitory. But also, I want to say that the factors that went into the transitory call, everyone basically saying, oh, there's a whole bunch of pandemic-related idiosyncratic reasons why inflation is high and those are going to roll off and then it won't be here anymore.

4:08And you could sort of understand that intellectually. And none of that applies so much with inflation too. There's one obviously transitory factor, which, you know, assuming this war ever ends, will go away at some point, which is the war. But the inflation has been around since before the war started. And if you sort of strip out the energy component of it, it's still looking pretty bad, right?

4:34Elizabeth Spiers: It's multifactorial, but they all sort of trace back to policy. So it's immigration policy plus tariffs plus the war are all contributing.

4:43Felix Salmon: And don't sleep on artificial intelligence. No conversation today can be had without mentioning AI, and that is true for inflation. It is also pushing up prices. My new co-author on Axios Markets had a chart earlier in the week about thumb drives, of all things, flash drives. The chart skyrockets up now because there's so much demand for these storage devices that I guess data centers use that the price has gone up for that too. So that's also contributing. Flash drives, people, they're the new Mac minis. But that's all, I mean, that has part of the backdrop and is contributing to inflation. But the 4.2 % number that was reported earlier in the week, that's the year over year number for CPI.

5:25Felix Salmon: That's like mostly the oil. And I guess the big question I'm asking, Felix and Elizabeth, my big question is, will that oil, that higher energy prices, then trickle into prices for everything? Because that is a thing that happens. Like I'm seeing people say it's just the energy, but it's like energy is an input. Yeah, that's already happening, I think. So one of the things that the Fed likes to do is it likes to talk about something called core inflation, which excludes food and energy. And energy directly is a price in CPI. So like the amount we pay for our electricity at home and our gas at home and our gas in our cars.

6:02And then it is indirectly a major input into food because of the Haber-Bosch process. And, you know, food is a very energy intensive thing. But if you strip out food and energy, what you're left with, sure, like energy is like, you know, if you're making widgets, then your factory runs on electricity. And so some tiny component of the widget is an energy cost.

6:24Felix Salmon: You got to drive the widgets to the widget store. Exactly. Broadly speaking, the energy component of prices is low outside food and energy. And so I think that if you start looking at inflation x food and energy, I think you can make a reasonable sort of first order assumption that is inflation x energy. It's not just inflation feeding through via other channels. Right. But for a lot of people, especially the lower earners, you can't strip out the energy and the food is a bigger component of their spending month to month and it's painful. You know. Oh, sure. And that's and I think this is also something which is worth framing, I think, of this whole conversation about inflation, which is that there are two profoundly importantly different ways of thinking about inflation.

7:15One is the way that the financial markets think about inflation, which is, you know, if I have a fixed income security, how much of my coupon and my principal is going to get inflated away by the time it matures. Inflation is a way of reducing the real value of financial assets. And then the other one is inflation as in the day-to-day difficulty of living and affording to be able to live. And inflation as a kind of constant pain point in the way we live today. And that is, as I wrote in Axios a couple of years ago, that is a real thing. But economists kind of hate it when people call it inflation because really it's less inflation and more high prices.

8:00like inflation is the first derivative and what people are really complaining about is shit is expensive and you know gas is expensive this is expensive and then what they want in many cases is for prices to come down you know and become cheaper which is a you know if you translate that into economics that's something called deflation and deflation is the only thing that's worse than inflation so there are these two sort of competing narratives about what inflation is and why it's bad. And they are closely linked, but they're not the same. And they're interestingly different. When we talk about, you know, inflation as a political phenomenon, we're mostly talking about the second one.

8:37And when we're talking about like the Fed and monetary policy and stuff like that, we're mostly talking about the first one. But you know, obviously, they overlap.

8:45Elizabeth Spiers: This also speaks a little bit to incoming Fed chair Kevin Warsh's view on things, you know, he would prefer to use a measure called trimmed averages, which would strip out all of the biggest points of volatility, the big outliers, when you see giant price swings, and use what's more of an average. And that would make inflation seem quite a bit lower than it is right now. But he has some political incentives to kind of to orient himself that way, because he's under a lot of pressure to cut rates. And if he can make an argument that inflation is actually not as bad as it seems, that is advantageous for him.

9:18I don't think he can really make that argument. even with trimmed averages, inflation is well above the Fed's target. And it does kind of look like especially this last most recent rate cut in December was the Fed kind of getting ahead of itself. And the thing about Fed cuts is you think they're only a quarter of a point, you know, how much difference does it make? But it's a quarter of a point that kind of exists in perpetuity, unless you do something. And now, you know, there's a pretty strong case, especially given and where inflation is to be made, that monetary policy is too loose right now.

9:52And that if you want to bring it back to where it really wants to be, you need a great hike to do that. And of course, politically, Kevin Walsh hiking rates by a quarter point looks much worse for him than if Jay Powell just hadn't cut in December and then Walsh just keeping them wherever he hadn't cut them to. You know what I mean?

10:14Felix Salmon: I know what you mean. Just to get back to the T word, transitory, the word we do not say anymore, but everyone still says. And not to be an apologist for the Trump administration, but this week, our president said that he loves the inflation. And then he said a bunch - I love that. This was a little bit like Bloomberg saying, I love the billionaires. It's a sign that the economy is firing on all cylinders. It means that things are working, you know, on some weird kind of way. Maybe that's what he meant. We can't really know. He's already backtracked it a little bit.

10:48Elizabeth Spiers: He said, oh, no, I just meant it could have been worse. That's what he said to the Times.

10:52Felix Salmon: I thought his between the lines was like, once we get this oil situation handled, the inflation will go away. That seemed to be what he was saying. And he's not wrong. The price of oil, as we tape Brent, the benchmark, is below$90 a barrel. When his war started, the analysts were like, oil is going to cost 200 a barrel, 300 a barrel. We might not be able to even have any oil. There will be such a crisis, said the oil analyst. It's going to be insane. It is not. The largest oil shock of all time, even bigger than the oil shock in 1973. First, it's not. Second, didn't happen. And no one wants to believe that this is true.

11:32Felix Salmon: I have been sort of following the conversation on X. Sadly, I'm there following it. And like your colleague, Javier at Bloomberg saying like, look, oil prices are pretty low, actually. They're actually falling. Like, look at this. It's not so bad. And then everyone gets mad at him. And they're like, it's going to go up to 200. We're going to run out. It's going to get really bad. It's going to be the apocalypse. Anyway, my point is, it might actually be transitory.

11:57Elizabeth Spiers: I think there's a happy medium between apocalypse and... Yeah, but again, your point is that the oil component might be transitory.

12:06Felix Salmon: Which is the biggest component of it. Which is the biggest component. But my point is that even if you strip out that, what you're left with is inflation that is running too hot above target. And monetary policy looks like it's too loose. And this is why I think no one's really talking about transitory. Because even if you lose the frothy war-related inflation, what you're left with is core inflation. you know what elizabeth was saying strip out the outliers and already all the rest of it you're left with something that is still worrisome on a sort of first order basis of year-over-year price rises right in just about any sector you care to mention whether they're energy related or not prices are going up faster than most people are comfortable with and you know and i think elizabeth is absolutely right a lot of this is policy related from you know congress and the executive branch, but all the blame winds up on the Fed.

13:01The Fed, it has many fewer tools it can use here to like address this problem. Congress doesn't seem to care about it. Trump, as you said, doesn't seem to care about it. All the Fed can do is hike rates. And that's kind of what it has to do because there's nothing else it can do. And there's only one person in America's job is to bring down inflation. And that's Kevin Walsh.

13:20Felix Salmon: Can I say one more thing? You can say as many things as you like. Economists and you just a few minutes ago like to explain how like we don't want deflation. We want inflation. That's true broadly. We don't want deflation broadly, but we do want it narrowly. Like deflation narrowly has been amazing for the past 30 years. Enter China making clothes cheaper. Clothes have deflated. Clothing prices have deflated, right? The price of televisions I've definitely talked about much lower now than they used to be computing power chips like actually that's a bias i mean certainly for like solar panels yeah that is what's known as productivity gains right and we want like it's good for things certain things especially technology to get cheaper over time that's fine but if you look at the greenspan miracle you know a lot of what he was doing was keeping interest rates lower than they really needed to be and sort of keeping his foot on the gas more than was necessarily warranted and then relying on cheaper imports from china to keep overall inflation down and what that did was it wound up creating you know the big asset bubble of course the financial crisis and so like you know there are a lot of different moving parts here the question i have been kind of struggling with a little bit in terms of like inflation versus inflation too is we're at you know call it 4%.

14:47And you can think about 4 % in two different ways. You can think about it as it's literally double the Fed's target of 2%. Or you can think about it as it's literally half, you know, the 8-9 % that we peaked at during inflation one. I think it means that, you know, this is still bad and worrisome if you are a policy wonk at the Fed. But politically, it doesn't feel as flammable as inflation.

15:13Elizabeth Spiers: Well, to your earlier point, though, people don't necessarily distinguish politically between affordability and inflation. So if you look at the polling and how people think the economy is doing now and who they blame for it, it's worse than it was under Biden. And I think it's because people already felt like they were struggling with affordability. So even a small increase of inflation on top of that makes them feel like things are more expensive than they were under Biden.

15:37Felix Salmon: I think on top of what Elizabeth's saying is just the income situation is not as good as it was in 21. That was like a worker's paradise. Like, and now we're not in that world. Real incomes were rising for most of the early months, year or so of the pandemic. Real incomes have come down in the past couple of months because inflation. And I think that is making things feel worse. But there's still, apropos what, you know, the chart that you ran in Axios, they're still higher than they were when Trump took office. But as we discussed ad nauseam during inflation one, people don't think of prices in terms of their incomes.

16:18They think of just how much prices are. And if I get a raise, that's not something that is meant to go into just higher prices. That's meant to be a raise for me and get me more money. So if my income goes up and I don't get any more spending power, that makes me feel even worse.

16:34Felix Salmon: That's what I think about when you talk about how inflation is good for people who have debts. because it inflates away the value of your debt. If you're like a working person with a mortgage and there's inflation and the inflation erodes the real value of your mortgage, your payment stays the same, but your income hasn't changed, who cares? You still, you know what I mean? This is, by the way, a massive gift that has been given to, you know, all the people who wound up locking in 3 % mortgages, you know, are feeling kind of smug because they locked in that 3 % mortgage and now mortgage rates at 6%.

17:12They're like, haha, I get this cheap mortgage. But then quietly, they have also saved an absolute fortune just in terms of the way that the value of their debts has been inflated away. And the real value of their mortgage payment has gone down. And I mean, the real value of your mortgage payment always goes down over time. That's what fixed mortgage payments do. As long as inflation is above zero, they go down. But the real value of that mortgage payment that you make every month is so much lower now than the bank anticipated when it gave you that loan in the first place. You are winning a lot compared to the bank, and people should be happier about that than they are.

17:47Felix Salmon: Well, I don't feel happier because the income situation is basically the same, so it doesn't feel any better. You know what I mean?

17:54Elizabeth Spiers: Well, that's because you're a journalist. Also, the people who are the most vulnerable are not really homeowners. They're renters.

18:00Felix Salmon: Yes, that. Yeah, but 65 % of Americans are homeowners, right? And they are the people who are responding to your polls and saying how miserable the economy is. And you would think that with all of this inflating away of their mortgage debt, they would be happier about that than they are. The psychology of money is wacky. That's all. It is. That's the bottom line.

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21:08Elizabeth Spiers: Certified to operate by Shev.

21:15So yeah, so the other big psychology of money thing, we want security in terms of owning our home. That's why 65 % of Americans own their homes, because it gives them security. And in the other place where we feel insecure is just okay i have a place to live if i own my home when i'm retired but do i have any money to be able to buy groceries and you know live on and that is where social security comes in and this idea that you spend your entire working life paying into social security so that you then get a government pension at retirement is central to the new deal and has been a central part of the sort of social compact in America for most of the past century.

22:02And the big question now is, is it going to survive the next century? And Emily, you have been reading the latest report from the Social Security trustees. What's the news hook here, Emily?

22:14Felix Salmon: That's the news hook. Every year, the Social Security trustees and the Social Security actuary come out with a report on the state of the trust fund. That's the money that they have. In addition to the payroll taxes coming in every week from hardworking Americans, they have a bunch of money also that they use to supplement those payroll taxes to pay benefits. They've never missed a payment. They've never missed a payment of benefits to any of the millions and millions and millions and millions of retirees and survivor spouses and so on and so forth. So we've known for about, I think, 20 years, maybe longer, that this trust fund is going to fall short.

22:54Felix Salmon: And the date of that falling short date kind of bumps around. The latest news is that the falling short for Social Security specifically is going to happen at the end of 2032. Last year, the report said it would happen in 2033. So that's, you know, it's symbolically a big deal because it's a new calendar year and it means that whoever becomes president in 2028 has that hanging over their head. The reason for the change is because of White House policy and because of changes in projections. It's very fiddly. Projections are, you know, they're not real. But the change was basically there's lots less immigration.

23:34Felix Salmon: So that's bad in two ways because it means fewer workers coming in and instantly starting to pay into the system, even if you aren't eligible to receive Social Security, you have to pay your payroll taxes if you work into the system. That's really good. Immigrants are super good for the health of the system. They also tend to have higher birth rates. So that means they're making more workers for tomorrow to pay into the system. So it's like this double hit from we had negative net immigration last year. So that happened. And then also the White House put through this, it's called the Big Beautiful bill.

24:05Felix Salmon: They put it through cutting taxes. They made it so old people don't have to pay taxes on their Social Security benefits within some limitations. So that also depletes revenue for the system. So those both put kind of pressure on it. As I've been thinking about it more this week since the report came out, there are like bigger macro factors that are creating this shortfall. And the last thing I'll say, I liked a Paul Krugman sub stack on this, but Felix had some like quibbly wibblies. But his basic point is like, we treat this as some kind of problem from on high. Like there's a literal shortfall.

24:41Felix Salmon: Oh no, we are out of gold or whatever, but it's a political problem. Policymakers could fix it. And they've known about it for decades that could have been fixed. Every year that goes by, they don't fix it. It becomes a harder problem to fix. Like they were saying on one of the calls I listened to, if we had dealt with this, I think like 10 years ago, we could have fixed it with a 1 % tax increase on payroll taxes. But now because we waited, it would be like a 4 % or 5 % tax increase, which would be like a lot and like people would feel it. So it's a political problem more than a fiscal one, in my and Paul Krugman's opinion.

25:15Elizabeth Spiers: There are so many ways to kind of attack it. And the problem is every single one of the potential solutions alienates some constituency. And there's always going to be a portion of Republicans who want to get rid of Social Security entirely. And so that's a little bit of pressure against the whole thing. But there was a good op-ed this morning from Jason Furman that sort of went through what the options are, and all of them are unpalatable to somebody. You could index retirement age so that people have to wait longer to receive benefits, or you could tweak the formula to reduce payments to people with higher incomes, or you could just expand the base by raising payroll taxes or including all forms of compensation instead of just income up to a certain point.

25:56Elizabeth Spiers: And nobody really loves any of these solutions. There's two big ways to do that. One is by increasing the maximum cap on which you pay payroll taxes.

26:06Felix Salmon: Lift the cap. Anyone who makes more than a certain amount of money knows that their paycheck goes up, their take home pay goes up in some month because they've reached, you know, they've maxed out their payroll taxes for the year and then they get to keep all of that tax up thereafter. Or you apply them to other forms of income and specifically like capital incomes if you're getting dividends or coupons and that kind of stuff then you have to pay payroll taxes on that even though obviously it's not payroll that's one way of raising taxes the fact is though it's they're all just various ways of raising taxes and paul's point which is on some level true is that we made a promise to american workers to pay them a certain amount in retirement and that's the beginning and the end of it you You know, in other countries, there is just like a state pension that you get when you reach a certain age.

26:59And what happens in America is that the size of that pension is linked to the amount that you earn of your career, which is OK. That's I mean, OK, fine. But then because of that linkage, we create this whole thing called the Social Security Trust Fund. And there's this, you know, Al Gore lockbox thing with a bunch of treasury bonds in it, where the US government owes money to itself and it's considered to be like, you know, whatever. It gets really confusing. And so people think of Social Security as both being part of the government and also separate from the government. And so then the questions start, the debates start happening, like, how do we fund Social Security as like a separate thing from the government where the government needs to raise the money and give the money to Social Security and then Social Security gives the money to the old folks?

27:46Right. Rather than just being a bigger fiscal question of like, how much tax do we need to tax in order to be able to give the old folk the amount of money that we need to give the old folks?

27:57Felix Salmon: Right. It's like you wouldn't say like, we're running out of money to fund the Defense Department. Like, oh, no, what are we going to do? The Defense Department has a shortfall. No, you just raise the money to fund the war and go on with your life. That's how it works everywhere else. But for this, different. Why? And the reason goes back to, you know, the New Deal and how the whole thing was set up in the first place. And so I think that the deeper question that is sort of worth asking is like, does it actually make sense for Social Security to be a thing? If Social Security was not a thing, then we wouldn't be having this debate.

28:34It would just be like the government owes various stakeholders certain amounts of money every year. You know, it gives money to, as you say, the Defense Department gives. You know, there's lots of different places where the government spends its money each year. Social Security is a large chunk of that. And government just needs to fund that like it needs to fund everything else. What happens if you do it that way is then government can cut it. You know, it's less of a sort of fixed obligation.

28:59Felix Salmon: Yeah, they'll monkey with that. I mean, look what they do to all the other stuff. By the same token, you know, the olds are the most important voters in America. They vote in much higher numbers. And, you know, if you threaten their social security checks, they become single issue voters really fucking quickly. I think it still is pretty politically dangerous to cut social security. And this is why, at the end of the day, I'm like more than 90 % certain that there will be some last minute kludge in 2032 and social security will continue we won't see like a 17 percent fall in social security checks come january 1st 2033 because really 85 percent of

29:42Elizabeth Spiers: congress doesn't want that possibly more yeah and it's you know the new deal architects really assume that congress would the fund needed to be topped off that congress would you know without a lot of debate figure out a way to do it and that you know has not happened as much as they would have anticipated. But right now, the Trump administration and Republicans in general don't have the political capital to make that not happen. If people, even if they keep kicking the can down the field, if people start to feel that those benefits are imperiled, it really costs them.

30:10Felix Salmon: I guess we'll see in the next administration, which has to deal with it, in the next Congress, right? Well, I mean, no, it doesn't. This is what I'm saying. It doesn't actually need to be dealt with until 2032. Yes, that's the next president, whoever's elected in 2028. Oh, the next president, but not the next Congress. Yeah. Or the next Senate.

30:27Elizabeth Spiers: I mean, I think it's a potential midterms issue. This midterms? That's what it's worth. Yeah. Nah, it's too far away. It's not even a potential presidential election issue in 2028. It's far enough away that they can continue to ignore it just like they have done for the past 15 years.

30:42Felix Salmon: Maybe it's a 2032 presidential election issue because if the 2028 president like kind of cocks it up, then it can become salient for 2032. Yeah, I think in 2032, that's when the big debates are going to be happening in Congress. And that's where both presidential candidates are going to have to come out and say, do you support continuing Social Security or not? The question is, will we be talking about it on Slate Money? What is more likely, that Slate Money still exists in 2032 or that Congress works out a way to kick this can down the road even future?

31:16Elizabeth Spiers: We'll just be beaming all the information directly to your Neuralink.

31:20Felix Salmon: Wait, can I run one more thing by you? Because I was thinking about writing about it, thinking about this some more, because, you know, the White House kind of did rosy projections. It's the immigration projection is maybe worse than they're saying. The economic growth projection may be worse, blah, blah, blah. And I was like, well, maybe I'll write about that. Then I was like, that's just political, like at the edges. This is what any administration would do that. OK, fine. Then I was looking at it, and the problem really isn't immigration this, fertility that. I mean, that is a problem. But apparently what happened was after we fixed Social Security the last time, they're like, we're going to be good.

31:54Felix Salmon: This trust fund is going to be totes chill until 2070. What happened? What happened was rich people, rich income earners got a lot richer than everyone else. They kind of zooped up faster and left the Social Security tax base in the dust. There was lots of inequality. Rich people, not only the highest income earners, their income growth was higher, so they didn't have to pay. The tax base shrank that pays into Social Security and like lots more people, the wealthy are now wealthy because of stock. So it's this like underlying inequality issue that's really causing this like deep problem for the program.

32:31Felix Salmon: And really the way to fix it would be to do something of what the progressive slash leftists say and tax wealth or figure out a way to tax rich people a little bit more because there aren't enough working people to support it the way they used to be. But there's plenty of money. What do you think about this idea of means testing social security, basically? We do have this social security system, as I say, where the more you earn, the more you receive. And it's like literally the opposite of a redistribution welfare state where you give the most money to the poorest, we're giving the most money to the richest.

33:05Do you think that should remain? I don't know.

33:09Felix Salmon: I mean, other countries, like it's supposed to be an insurance against, some people argue, it's supposed to be insurance against poverty. It's not a way for like a relatively upper middle class person to get like a nice top off on their 401k. But if you do the means testing, I mean, there's a reason people love this program. And there's a reason politicians pay attention to the people who love the program. it's because of those higher earners, right? The ones getting the most money that would be the most hurt by means testing. If you do something like that, do you then destabilize the political support for the program?

33:44Felix Salmon: That would be my question.

33:44Elizabeth Spiers: Also, just means testing is very expensive. It adds an entire other layer of administrative burden and it's not clear that it would save enough to make it worth implementing. I mean, you know, we're talking trillions here. I think we can afford a means testing program. We'll just get ChatGPT to do it. It'll be fine.

34:00Felix Salmon: Well, it wouldn't have to be like what they do with Snap and stuff. They could probably do something more elegant. Yeah, yeah. No, the idea is that you start phasing out Social Security benefits. So they start going down, you know, once you have like a six-figure income in retirement, maybe you don't need Social Security. You're filing your income taxes when you're retired, right? So you have a known income and you can just be like, oh, I need to give back some of my Social Security benefits because I was making$200 ,000 this year even without them. We actually have been doing that. People who get Social Security benefits pay taxes, just like you said.

34:32Felix Salmon: But what happened last year is the Trump administration was like, that's not fair. And got rid of or scaled back that level of essentially means testing, where people who got earned higher income in retirement had to pay higher taxes. They were actually going the other direction. And there's a lot of support for that.

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37:17here we have a lovely natural experiment that we did in the world in 2007 to determine what is causing this massive decline in global fertility and the answer is emily the iphone obviously obviously and the experiment design here is so elegant which is just that when the iphone was released in the united states unlike pretty much any other country but america was great there was this whole deal that steve jobs made with this telecommunications company called singular that later became at &t and one of the big things he wanted to sell on the iphone was this thing called visual voicemail where you could like see your voicemails in the voicemail app this was revolutionary back when the iphone was released and none of the carriers could support it except for singular so he's like you can only buy an iphone if you have a singular contract and so for a while there, you needed to be on Singular to have an iPhone.

38:16And it turns out that Singular had very good, strong, universal coverage in various counties in America and very weak coverage in various other counties in America. And there wasn't a huge amount, obviously, of difference between those counties. And so they looked at birth rates in the counties with Singular versus birth rates in the counties without Singular. And they discovered that a huge difference in the decline in birth rates was a function of the fact that birth rates declined much more quickly in the counties with the iPhone, basically. I love this. I love this paper. It's so great.

38:48Elizabeth Spiers: I had a question I couldn't find the answer to. There's sort of explanation for why this might have happened is that, you know, teenage pregnancies went down. And because the argument was that the teens are spending a lot of time on their iPhones and not interacting in person as much, or maybe in places where they didn't have great sex ed, they're learning these things on the internet, and so on. But I also was trying to remember, you know, when the iPhone came out, I seem to remember it was one of the most expensive smartphone options available. The most expensive smartphone. I mean, there was no smartphone before the iPhone.

39:21So, yeah.

39:22Elizabeth Spiers: Birth rates and income, though, are correlated. There's not necessarily, we still don't know. You're absolutely right. The kind of teen who is likely to get pregnant is not the kind of teen who is likely to be able to afford$400 for an iPhone in 2007. Yeah. Yes.

39:36Felix Salmon: They did go 2007 to 2010. if that's any consolation there. I don't know if it is. Whether it had a massive effect on, you know, they did see big declines in teen pregnancy. And I do think that the big declines in teen pregnancy continue to be a mystery and no one exactly knows what it is. Yeah. And someone pointed out, I think in the time story that the teen pregnancy decline predates the iPhone, like it was already starting. All of this is like an accelerant to the decline in birth rates. There's no, the decline in birth rates has been going on for decades. It will continue to go on for decades.

40:07It is happening globally. You know, smartphones got rolled out globally at a different pace in different countries. But the decline in birth rates is regardless of any of that. So you can't just sort of point to the iPhone as being this like, oh, now I have my one explanation, which explains everything. Obviously, it doesn't.

40:23Felix Salmon: But I wish there was. It did have a much bigger effect than most people, I think, anticipated.

40:29Elizabeth Spiers: Yeah. It always kind of gives me the ick, though, when people talk about declining teen birth rates as if it's a problem. And I understand that it's the fact that the headline is iPhones are causing fertility. It's kind of fascinating though, right? Which is that like, on the one hand, declining teen birth rates was a major policy goal for decades in many, many countries. And declining teen birth rates were a massive policy win, even if no one knows what policy caused them. And on the other hand, without these teen births, the whole like total fertility rate has been plunging. and we're like, oh shit, maybe we needed these teen birth rates after it all in order to keep the national fertility up.

41:09Elizabeth Spiers: Or we could just, you know, loosen immigration standards.

41:12Felix Salmon: If you go back to like, I don't know, the 1950s or 60s, the whole concern back in the day was like too many people. Too many people. We're going to be so crowded and the planet will be so crowded. You'll be standing in your house surrounded by other people somehow. It's going to be that bad. It's going to be crazy. It'll be the black hole of Calcutta. No one's happy. No one's ever happy, you know.

41:50all right let's have a numbers round elizabeth you have a number my number is tangentially

41:56Elizabeth Spiers: related so my number is fifty thousand dollars and that's how much a matchmaker named blaine Anderson charges at the tie-in to match high-income, successful men with much younger, conservative, religious women who want to be trad wives. And so she described one of her clients' description of what he wanted was a younger woman who prioritized getting married and having children, okay, from the Midwest, even though he's not from the Midwest. And he wanted her to work in caregiving, but she couldn't be a doctor because that would mean that she was too focused on her career. And he wanted her to be conventionally beautiful with requests about the specific degree to which her eyes were sloped.

42:35Elizabeth Spiers: What else? How many centimeters her nose should be from her upper lip? This is just mind boggling to me, but this is the, you know, the sort of trad wife glorification. Part of that is the big insistence that the trad wives be very young. And these are mostly men in their forties because they want their wives to be in their whatever prime childbearing years, but they don't

42:56Felix Salmon: mind if that's you know 18 they're trying to bring up the fertility rate they don't give them iPhones I mean like you have to charge obviously need to charge a lot for this because number one it's an insane job trying to find such a person but also clearly the distaff side of this whole equation is not going to be paying anything to this matchmaker right they don't have fifty thousand dollars to spend on anything so you have to make all of your income from half of your clients. Well, you could you could be paid in like bread and sourdough starters.

43:29My number is 8 trillion, which is the value of all of the US government debt that is coming due in the next 12 months, which is a bonkers record high. I remember when it went past 1 trillion, and that was only like 10 years ago. It is insane how much what's known as rollover risk there is in the treasury market right now. And for the time being, it seems to be fine. And, you know, these things get rolled over, but it's like a huge systemic risk that there is no way of hedging or doing anything about. It's just going to have to be like swinging over our heads like a sword of, like a Damoclean sword forever now because it's not going to go down.

44:13Felix Salmon: They could just raise taxes a little, right? Yeah, I don't think it would make much of a difference though. Take Elon's money. I mean, again, like the national debt is a little bit like the consumer price index. You can reduce the rate at which it goes up, but it's never going to go down. Wow, sad. Emily, what's your number? My number is$950. That's how much it costs per month to live in St. Agnes residence on the Upper West Side of Manhattan. $950 a month. That's very cheap. The median rent now in Manhattan is like$3 ,600 or something. I got this number from the Wall Street Journal, which has an article out this week entitled, Rent is so high New Yorkers are living with nuns.

44:52Felix Salmon: Apparently, and I didn't know this, you can board at a convent in New York City if you're looking to save money. There are all these residences in Manhattan. It sounds like mostly young women go and they live there and they provide you a room that It looks very clean and normal. And they provide a full breakfast as part of your monthly payment. It sounds amazing. It sounds like - Sounds delightful. Are you allowed to have overnight guests? Can have, there's curfew. You have to be home most of the places by, I think it was like 11 p.m. and then midnight on the weekends. And in one place, the nuns stay up until everyone gets home is a thing that happens.

45:32And if you don't get home in time, you're locked out. No, they'll open the door.

45:35Felix Salmon: There was one example where she was like, I came back late one time and the nun was like, I stayed up and I opened the door for her. But so I don't know if you get fully locked out or not. It sounds a lot like the boarding houses that were popular like in the 20th century, like Mary McCarthy, is that the woman I'm thinking, the writer I'm thinking? I had a friend who lived in something. I don't know if there were nuns, but it was a situation quite similar on 13th street. And yeah, I was not allowed in the building. Yeah. No boys past the ground floor. One of the nuns was like, we meet the boyfriends, we don't always like them.

46:08Felix Salmon: But it sounded kind of nice. I mean, the free breakfast, they said pancakes, fruits, sausages. Pancakes? Pancakes. Oh my God. Yes. Amazing. Glorious. Okay, on that note, I think that is it for us this week. Thank you very much for listening. Thank you for sending in your emails to sleepmoneyatsleep.com. Thank you to Jessamyn Molly for producing. And a special thanks to anyone out there, all of you who are Slate Plus listeners. You also get the added bonus of listening to our Slate Plus segment on corporate rivalries. Other than that, we'll be back next week with more Slate Money.

46:59Felix Salmon: Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

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