Is the State of the Economy Really that Bad? — with Kyla Scanlon

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1:12Episode 304. 304 is the area code belonging to West Virginia. In 1904, the first subway line opened in New York City, my favorite fast food restaurant. True story. I found out that my penis is not as big as a subway sandwich. Also, I've been banned from subway. Go, go, go!

1:41Welcome to the 304th episode of the Prop G-Pod. 304? I don't remember any of this. Like, I have a sensation, I have a feeling around this, but I don't... If someone said, what happened in episode 285? I'd be like, geez, I just don't know. In today's episode, we speak with Kyla Scanlon, a writer, video creator, and podcaster who focuses on educating our audience about the economy and the financial markets. We hear all about Kyla's new book, In This Economy, How Money and Markets Really Work. I love this conversation. Kyla brings a refreshing perspective that we think you'll enjoy. I'm also just inspired by these influencers, I don't know what the word is, thought leaders that weaponize or leverage new mediums.

2:21And one of the wonderful things about these new mediums, including TikTok, which is the ultimate propaganda tool and should be divested. But having said that, you do discover a lot of fascinating people. And Kyla bubbled up in my feed. TikTok, what bubbles up on my feed? Great Danes. Chiropractors aggressively adjusting other people. Who knew I'd be fascinated by that? I didn't know. And then people talking about social justice issues who also happen to be ridiculously fucking hot. I knew that one. I knew that one. Okay, what's happening? Back in London, but I'm headed to Cannes this weekend or Cannes, whatever it's called, Nice.

2:59So Cannes Lions is the creativity festival. It's where the less cool people, but semi-cool, sort of aspirational cool people go. The true ballers go to the Cannes Film Festival. That intimidates me. I could never go to that. I'm not dialed in. I don't love movies. I would not know what to do at the Cannes Film Festival. So fortunately, no one has invited me. So the world is at peace with these decisions. Anyways, Cannes Lions used to be where ad executives would go, collect awards, and then find other jobs. And then the entire economy, of their entire ad world shifted to Google and Meta and all the new guys.

3:37And slowly but surely, they took over the beach or the croissettes and you get these amazing parties. The best parties are at Spotify. I don't get invited to the Meta parties. Go figure. Go figure. I mean, I'm hoping I can go and see Sheryl Sandberg figure out a way to, at scale, depress tens of millions of teenage girls. I think that would be a great event on the beach. Maybe they could do that with like a barbecue or something. Anyway, shocker they don't invite me. Although I will say this. I will say this. I stay at one of my favorite hotels in the world, the Hotel Ducap, which has$34 lattes.

4:11And I feel very European. And I put on a big black pair of sunglasses and I go to that Slim Aaron's like beach or that pool. And I put in an unlit cigarette in my mouth and I put on a Speedo. Not true. But anyway, so I dream of putting on a Speedo. And anytime a woman walks by me, I go, I take down my glasses and I'm like, Jackie, marry me. I make you very happy woman. That's my impression of Aristotle and Asus. Ask your parents. Anyways, what I also do for a total baller moment is I Google Zodiac or boat rental, and I find some French guy who speaks modest English for like 100 or 200 euros, which is a lot of money, but it's worth it.

4:46He comes in some Zodiac, usually almost always smoking a cigarette, picks me up at the Hotel du Cap, and then bombs me in to the croissette. and I always ask him to dump me at the pier or at the jetty, if you will, of either Google or Meta Beach. I am not invited to either of those places. They know who I am and they don't like me, but I roll in like I'm fucking James Bond in a tuxedo about to, I don't know, crash a party and kill some, I don't know, nemesis uninvited. That is how you roll at Cannes Lions. By the way, if you're at Cannes Lions and you see me, please come up and say hi. I'm desperate for other people's affirmation.

5:23I'm actually quite friendly, but I need to warn you, I'm much less impressive in person. On this show, you're not really meeting me on this show. You're meeting a representative of me that's much more charming, interesting, smart, and funny than I am in real life. But if you're looking to meet someone who's mildly depressed and angry and quite intense and actually quite quiet, please come up and say hi. Unfortunately, I will not be with my dog. I used to take Leia almost everywhere, and now it is getting just too much to kind of cart a Great Dane around continental Europe. So the dog is staying here and the big dog is headed to Ken Lyons.

5:55So stop by and say hi. OK, moving on to some news. Apple AI is finally here, but don't call it AI. No, no, no, no, no. Call it Apple Intelligence, which will be integrated throughout Apple's ecosystem, devices, software, apps to do everything that AI has promised. maybe not everything, make our lives easier and more efficient. Apple is even partnering with ChatGPT to answer user queries that Siri can't deliver. By the way, if Apple doesn't want to call it Apple AI, and we have to call it Apple Intelligence, then I'm not calling ChatGPT ChatGPT anymore. I'm calling it what it really is, Microsoft AI.

6:32Much of Apple's forthcoming features are fairly basic when you think about the grand scheme of AI, sorting through notifications, generating images, writing tools, assisting with personal tasks, meetings, schedules, etc. And as per usual, Apple is playing up its commitment to privacy. So let me share my thoughts. Let me share my thoughts. I like this. It took me a while to get here, but I've been processing here and I like this. I think this is the exact opposite. This is the zag to the zig of the mixed reality headset, which was a bunch of jazz hands. It's going to change the world. Ooh, you're going to see a train set in 3D.

7:06Who the fuck cares? Ooh, a movie, a movie. Wow, it's a 3D movie. Well, okay, do you really want to put on a headset to watch a movie and feel nauseous? I just don't get the whole headset thing. At what point does someone ring a bell and tell me I was right, that these headsets are ridiculously stupid and nothing but consensual hallucination between the market and Mark Zuckerberg, that he knew what the fuck he was doing and he was a true visionary around hardware. And in order to have a call option in case he was right. Tim Cook greenlit probably a billion dollars in spending for the mixed reality headset.

7:35They will let it die a slow death, similar to the Hermes Apple Watch. Isn't that cute? Isn't that cute? Makes no fucking sense. Big press release. And then we just kind of let it go away. We let it go away. And here's the bottom line. It's the boring shit that moves shareholder value. And I'm trying to coin a term, not generative AI, but integrative AI. What do I mean by that? You have a lot of data on your phone. You have a lot of contacts, a lot of utility, a lot of information that could be integrated into an LLM, not to enhance your media experience or answer every question, but just do the following.

8:10Make your life easier. On Sunday, I was sending my dad a video and I wanted to find this great picture of me and his grandsons at the UEFA finals. And I couldn't find the goddamn thing. And one of the things that Apple intelligence is promising is to make searching your photos much easier and also to have a huge upgrade to what is the front end of an LLM or AI, or in this case, Apple intelligence. And see above Microsoft AI, not ChatGPT, is to make it much easier and to integrate a billion people's data per their permission, right? That's a key consideration here. I mean, they've done so much right here as I think about it.

8:50First off, they've said, okay, the AI brand has gotten weird and dangerous. And, oh, it's going to kill us. Oh, it's going to save us. Oh, it doesn't know what it's doing. Oh, these answers make no goddamn sense. Oh, wait, Scarlett Johansson. There's just so much weird shit surrounding AI. Oh, this person who supposedly knows AI says it's going to kill us. It just feels kind of, oh, how am I using it? I don't know. I'm not using it, but I'll buy more NVIDIA. The whole space is getting, I don't know, it feels like you read too much about AI. You kind of want to shower or kill yourself or find a time machine and go back in time such that you can find yourself, kill yourself, and then do sort of like a murder-suicide.

9:27Is that dark? That's pretty fucking dark, isn't it? anyway anyway how do i use ai i use it to plan weekends with my 13 year old son well i said what are we doing this weekend and we type in this crazy prompt to try and find something fun to do in london and i gotta be honest i think it does an amazing job i also love adobe firefly the ai that has taken a different approach and this is smart they have licensed all of the content or it's their own content so they don't have to worry about what happened at i think it was i don't know if it was Google or Llama or Joey Bagadon's AI, where they typed in a prompt and it literally brought a verbatim of Forbes article.

10:02And I was like, well, okay, are you paying Forbes? No, they're not. They're not. So they've said, we need to get away from this brand, make it more about privacy, make it more about utility, make it more about incremental change, make it friendlier, upgrade Siri, which is arguably one of the worst brands in tech from Apple or sub-brands, if you will, and make it more, I don't know, make it more utile, so to speak. Of course, Elon Musk had to weigh in and say that he's not going to use it. Who knows? It was down 2 % and then it was up 5 % today. So I don't know exactly what that means. I think people are starting to figure out that the second mouse here or the biggest second mouse in history is Apple.

10:39What do I mean by that? Innovation is actually a terrible shareholder strategy. That's right. That's right. You heard it here. My colleague at NYU is now at Dartmouth at the Tuck School did breakthrough research that would just open my eyes that it's not the innovator that makes money. It's the second or the third company that comes in and lets them spend a ton of money and waste a ton and then says, oh, OK, you spent a ton of money trying to come up with an MP3 player. We'll now come in and make it easier to use. Oh, graphic user interface, Xerox Spark. Thanks very much. This works great. You don't know how to use it.

11:09We'll commercialize and make a shit ton of money. So that, I think, is what Apple is trying to do here. They've been thoughtful. They've been kind of laying in the reeds. And I said, OK, we're ready. This is what's good about AI. This is what's bad about AI. And they come in and said, OK, what's bad about it is the brand. what's bad about it is promising or over-promising and under-delivering. We're going to start small and go incremental, the absolute opposite of the mixed reality headset. I like this. I think it makes sense. Keep in mind, keep in mind, it's the boring stuff that makes you money.

11:36It's the mundane stuff that moves shareholder value. We'll be right back for our conversation with Kyla Scanlon.

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13:26welcome back here's our conversation with kyle scanlon a writer video creator podcaster and author of in this economy how money and markets really work kyle where does this podcast find you um i'm in new york city right now and you're at a we work with a fan in the background where's adam newman Yeah. Oh, he's not involved anymore. He's focused on real estate now, right? Yeah, I've heard he's doing flow or something right about this. Okay. So we're making an effort to bring in young influencers. I have a tendency to find people my age, boomers who are on CNBC. So you're one of our first outreach to someone we found.

14:02I think we found you on TikTok. Anyways, your new book, In This Economy, explores how money and markets really work. Walk us through what you believe are the biggest misconceptions about the U.S. economy. Yeah, I mean, I think that's the issue is that a lot of everything's kind of misconception right now. I think a lot of people have a frustration with how the economy is functioning, like the labor market, inflation, etc. A lot of people think that inflation going down means that prices should go down. But we've been dealing with the pressure of inflation, so everybody wants prices to go down.

14:32There's rolling recessions in tech and finance, so people extrapolate that to the broader labor market as well. So I think there's a lot of misconceptions. And the goal of the book is just to be a toolbox to understand the economy, everything that you need to know about inflation, GDP, like all the terminology and how it applies to you without, you know, all the theory that goes into it. What do most people get wrong about money in the markets? One of my favorite charts is the chart from the Federal Reserve. It's called the distribution of financial assets. And it shows that the bottom 50 % have all of their wealth inside of real estate and the top 10 % have their wealth inside of stocks and business ownership.

15:11And so I think a lot of people think that homeownership is sort of the path to wealth. And I think historically it could have been, but we kind of need to rethink what homeownership means, right? It's very confusing to have a house be both a speculative investment and then also a place that you need to live. And so I think that's kind of, it's not necessarily what people get wrong about the economy, but I think it's the thing that is most harmful is we view housing as the way to wealth when maybe it really shouldn't be. But it's in housing to a certain extent. I've been thinking a lot about how to build wealth.

15:45And one of the features of observations I would have is that it is very difficult for people to build wealth with anything they can get their hands on. What do I mean by that? 99 % of people, I believe, will spend everything within their grasp. And that's why these four savings programs or options where you get one big lumpy hit or you sell a company, but big hits you weren't expecting because regular cash in your hand is very hard to hold on to given all the temptations that's offered by in a capitalist society and to a certain extent isn't housing sort of forced savings because people don't want to be evicted so it forces them to make that kind of investment some of which goes into equity in the home yeah yeah i mean i think housing is definitely one path for that i think if you look at that chart though like the clear answer to how to build wealth if you just are following the path of like what retrieval have already done is some form of stock ownership and some form of building a business, whether that be employee stock option programs or just actually building your own business.

16:42So I think housing is great in terms of like the forced savings aspect, as you've mentioned. But we have this expectation that house prices always go up. But like from 1860 to 1960, home prices went up by like 0.06%. And so I think we just kind of have a messy conception. And then it creates a lot of economic foreboding when people feel like they can't achieve the quote-unquote American dream because it's the only way that they know how to build wealth. I think that's a great point. Actually, Philip Schiller, the Kay Schiller Index, says if you take into account maintenance, that the housing market has not been nearly the asset class that people claim it is.

17:20In the book, you write, people are not static entities but dynamic beings with evolving needs and aspirations, and growing economies should reflect that. But when you look at our economy, what areas do you think need the most attention right now? I mean, I think that we've done a really, really good job at focusing on manufacturing. The CHIPS Act, the IRA, the IIJA, all of those have really invested in American manufacturing and have enabled, like, you know, fab factories to be built in Arizona. But I think, like, the big thing, and you've done a very good job talking about this, is, like, sort of putting young people on a path.

17:53I think that a lot of people feel stuck in their jobs or feel like they're not able to pursue as you would say their talent. But I think that's kind of where we need help is that we have a whole generation of people that are stuck. And the labor market is sort of funny. Like there are these rolling recessions in tech and finance. And so I think it's just, it's a reallocation of capital that'll enable new jobs to come out. I think that's what needs to be done. Yeah. You coined this great term, vibe session. What is it and are we experiencing it? A vibe session is a disconnect between consumer sentiment and economic data.

18:32And I wrote this piece back in July 2022, and it turned into a New York Times opinion piece. And everybody kind of latched on to it because, you know, the economic data was really good during that time. Like GDP was improving, the labor market was strong, inflation was going down, but people were still feeling really bad if you looked at sentiment metrics. And so that term is meant to capture that idea. And since then, it's evolved to recognize structural affordability issues. We have a housing crisis. Child care costs have gone up 32 % since 2019 or something like that. Elder care is$10 ,000 a month.

19:07Education costs are sky high. And so there are reasons that people feel bad. But then there's this poll that came out sort of detailing that 55 % of people think that we're in our session. 49 % of people think that the stock market is at all-time lows or is down on the air. And that 49 % also think that unemployment is at all-time lows. And so there's this aspect of the VIBE session where, okay, yes, there is an actual disconnect between consumer sentiment and economic data. And some of that can be explained by structural affordability. And then I think another component of it is explained by a lack of media literacy.

19:42Like the stock market is up 12 % on the year. Unemployment is at a record low. We're not in a recession. I do think we are in a vibe session just because it's a rather tense time. There's a lot of uncertainty. We're going into an election. It's really hard to have quote unquote good vibes during that. I think another thing that I've been sort of thinking about is like there's this gap between online discourse and then offline discourse. So like air travel hit an all-time high over Memorial Day weekend. Like everybody's flying everywhere. People are out there spending money. You can see it in the consumer spending metrics.

20:11But if you go online, the discourse is negative. People are feeling very bad. And that's kind of the other thing, too. It's like there's this bifurcation between actual reality and then perceived reality through the online sphere. There really is a disconnect. And then I look at people's shitposting. America, you know, lowest inflation, biggest growth, the factors are strongest growth. And some of the factors that you talked about, do you think our discourse has become more coarse? Or do you think as someone who's just understands of your generation, what do you think is causing this? Is it a move to online where we have bots, trolls, a lack of civility?

20:51Do you think it's kids are more prone to, I don't know, being depressed or anxious because of helicopter parenting and social media. But what has created a situation where 55 % of people my age feel very proud to be American, but it's only 18 % of people under the age of 25? It's really sad. And I think that that pull, and of course, you always take all surveys with a grain of salt, but that pull where, you know, people think we're in our session, we're not. They think it's not going to down when it's not. I think unemployment is really high when it's not. It's just like, what's happening? And so I think a big part of it is the media that people consume.

21:27So younger people get a lot of their news from TikTok. There's a lot of surveys pointing that out, a lot of data sources. In TikTok, the algorithm totally incentivizes you to post negative things. If you are saying that the world is ending, you're much more likely to get a million views than if you're like, everything's perfect and good and you should be fine. I also think there's a pressure to be anxious. And I think like anxiousness is very normal. Like we do have a lot of information below, but if you're not freaking out, it means that you don't care. Right. And so like, there's almost this performative anxiety that comes up and that's a loaded term, but I do think that's what it is, is like, cause I get yelled at in my comments too, for, for not caring about the state of affairs, but like, there's an element of truth that you have to recognize when you talk about the economy.

22:14Like you can't say the stock market is down when it's not. But if you're saying that things are good, people are like, well, you just don't care about anything. Like you're just lying to us. And it really creates this strange environment. So I think it's media, the consumption of certain types of media, and then how you have to be perceived in the online world is in a state of anxiety. What you're talking about, I'm naturally fits me like a glove because I'm a glass half empty kind of guy and, you know, serve him from anger and depression. So I feed right into this zeitgeist. But whenever I talk about, you know, just the exceptional performance of a stock or the markets touching all time highs, I was like, well, typical boomer who, you know, most the real economy, most of us got don't don't get to invest in stocks.

22:59It's like you get shamed and you're sort of perceived as non empathetic if you're not catastrophizing all the time and talking about the worst possible outcome for everybody. Speaking of this type of, I don't know, looking through the world with gray-colored glasses, talk a little bit about dollar doomerism. Yeah, I mean, a lot of people think that the U.S. dollar is no longer going to be the reserve currency. That discourse hasn't been as popular over the past few months since the U.S. is going to be in traction and many backtracking and has been able to pass legislation finally. But yeah, people are kind of like betting on the downfall of the U.S.

23:34by saying that the U.S. dollar won't be reserve currency anymore. So you saw a lot of that kind of like post-COVID, the first few years after the pandemic. There was a paper from the IMF that refuted that. And it was like, no, like, you know, it's not going to switch over to China or Russia as being the reserve currency of the world. It's probably just going to be, if anything, a basket of mixed currencies. But yeah, I mean, it's sort of going back to like what you asked about with like why do young people feel so bad about like why are they not proud to be an American? Like you can kind of see that through people being like the dollar is not going to be the reserve currency.