The Fed's Next Move, and How Couples Should Actually Handle Money

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1:40Scott Galloway:Welcome to Office Hours of Prop G. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. Anyway, if you'd like to submit a question for next time, you can send a voice recording to officehoursofpropgmedia.com. Again, that's officehoursofpropgmedia.com or post your question on the Scott Galloway subreddit. We just might feature it in our next episode. Plus, you can now call or text a question at 201-472-3656. That's 201-472-3656. Let's bust right into it. Question number one. Our first question comes from Bargers on Reddit.

2:11Hi, Scott. With Warsh coming on next week, having his first press conference on Wednesday, he's been quoted saying he's not a fan of the longer-term projections coming from the Fed. Do you think markets will become more volatile if you announce some major changes? Hmm. So in his first few weeks, Warshaz declined to submit a dot plot projection and announced a broad review of Fed communications.

2:34Scott Galloway:He did not lower interest rates, despite that being the suspected reason Trump nominated him. I don't see how he could have. If he lowered interest rates, I think markets would have crashed. They would have said, oh, fuck, here we are. We're we're Hungary or Argentina. You know, the job apocalypse that was supposed to happen has not, in fact, manifested. Job growth is actually strong. But inflation numbers are even worse than the job market is strong, coming in, I think, 4.2%. So there's no fucking way this guy could reasonably cut interest rates. There's even now, I think, a greater than 50 % likelihood he raises rates by the end of the year.

3:11Scott Galloway:Uh, his also in terms of lowlights from, um, chairman Warsh during his confirmation, he refused to acknowledge that Biden had won the election in 2020. So, I mean, uh, you know, I understand, I think he's qualified. I also think he's, he's a little bitch and afraid to actually speak truth to power, which is what you want in a fed chairman. But having said that, it's a group of, I think, 12 governors. So we overestimate the power that the chair has. But yeah, there was no way he was going to lower interest rates. The core issue with the dot plot and forward guidance, investors tend to misinterpret these as promises rather than projections.

3:50And they can make the Fed slow to respond to market changes because they feel compelled to follow through on their projections. You know, the debate around forward guidance is really a debate around anchors. In an interview with Bloomberg, Torsten Slock, friend of the pod and chief economist Apollo Global Management, described the central bank tradeoff as forward guidance being that while it helps understand where markets are headed, it can be counterproductive when conditions change unexpectedly. And concerns about, everyone is always worried about communications coming out of the Fed because the media and the markets parse over every word.

4:25Jerome Powell or Chairman Powell publicly expressed reservations about the dot plot and its tendency to be misunderstood by investors, but noted the reform effort stalled because the committee struggled to identify a better alternative. Minneapolis Fed President Neil Kashkari has highlighted that the dot plot forces policymakers to provide precise forecasts without being able to convey their level of uncertainty.

4:45Scott Galloway:The question moving forward is how does he plan to reform, if at all, the current framework and what replaces it? I find, generally speaking, once a metric becomes universally accepted, it's no longer valid or no longer doing his job. But so far, okay, he's batting 1 ,000. If he'd lowered interest rates, I think the markets would be in a state of panic. And I think once anyone gets a job, whether it's someone elected mayor, you rally around them and hope for the best. He is qualified. He worked at Morgan Stanley. Smart guy. This is a very important position. I think it's a 12-year appointment, so we're going to get some time, or we're going to have some time to get to know Chairman Warsh.

5:32Thanks for the question.

5:35Scott Galloway:Question number two comes from Reddit. Bill Category 2486 says, Hi, Scott, what do you think of saying his money is our money, my money is my money? I think that's a little bit sexist. So what you're saying is, I think what you're referring to is that sometimes in a relationship a wife will say, his money is our money and my money is my money. I don't know. Like attitudes around share finances are changing more slowly than behavior. There's some cognitive dissonance. In 45 % of heterosexual marriages in the U.S., wives bring in the same amount or more than their husbands. That's three times the share 50 years ago.

6:18That's a success. If women hadn't entered the workforce and we didn't provide certain legal protections for them in the workforce, we'd be a second-rate power to China or a second-rate economic power to China.

6:29Scott Galloway:23 % of married couples don't have a joint bank account, one in four. Two-thirds of couples in committed relationships keep some money separate from their partner. And younger couples are leading this trend. Gen Z, about 88 % keep separate accounts. accounts, millennials 70%, Gen X 59. So basically younger people, the trend is younger people are having more separate accounts. So the data would show that when men were making all the money, it was our money. That's interesting. And now that women are making as much money or more than men, then there's a separation, which I find. Look, I think there's a difference, generally speaking, in the behaviors and approaches to a lot of things between people more as men and women.

7:12Scott Galloway:Does that mean that men can't exhibit very feminine behavior and men and women can't exhibit masculine behavior? No. But in an effort not to piss off the woke middle or act as if a non-binary community isn't entitled to the same rights, which they are, we never want to talk about the 90 % that identify as male or female. And also, we don't want to have a productive conversation around the fact there are very real differences that are rooted in biology. Just get just invite 10 eight year olds over five girls, five boys, put cars and dolls in a room and see and see what happened. I find that women in general are more conservative with money because for a long time, women have been economically disadvantaged and quite frankly, more vulnerable than men.

8:00Scott Galloway:Women have kids. Women are more likely to feel fidelity and loyalty to that child, even when dad takes off. and as a result are more vulnerable. The most vulnerable point of my life, the most anxiety riddled part of my life was when my dad peaced out to Ohio with his new wife and continued his ascent up the ladder to upper middle class. And me and my mom immediately dove to the kind of what I call the upper lower middle class. And my mom felt very vulnerable. And the job opportunities available to my dad who left school in the eighth grade were a universe different than the jobs available to my mother, who also dropped out of school in the eighth grade.

8:38Scott Galloway:She could either be a secretary or a travel agent. That was pretty much it. She couldn't even be a teacher because she didn't have the credentialing, whereas my dad, who was handsome and Scottish, could be a salesperson and make a very good living. By the way, I think things have changed for the better, quite frankly. So I understand that a lot of women feel more economically vulnerable and are more prone. And is it true, are women better savers? I don't know, there's probably some good research on this. A little over 70 % of adults say it's very important for a man to be able to support a family financially, to be a good husband and partner.

9:15Scott Galloway:So the conversation between man and wife, back to the question around money, is always a delicate one. I think it's a conversation people should have before they get married. The number one source of marital strain is not infidelity, lack of shared values, it's money. And I think it's important to have an honest conversation around, one, what kind of lifestyle are we expecting? Who is responsible for the economic part of that lifestyle? What is each of our approach to spending? I know guys that control their wives with money. They get an alert every time they spend money on a credit card. And it's a constant negotiation involving money.

9:50Scott Galloway:And I think that's really unheld. At the same time, just to be an equal opportunity sexist here, I know some relationships where, quite frankly, The woman sees it as a game to see how much money she can spend or get away with. So the healthiest relationships I find are when men and women have alignment around their approach to money, who is responsible for bringing it in, what is their approach to spending. I believe in commingling money. I think if you're going to be married and you're going to share a life together and share kids, then it's kind of one account. I've never had separate accounts.

10:23Scott Galloway:I just think that's, I personally think that's strange. Having said that, it probably works for some people. I think this is a very, you know, individual thing. I don't think there's a right way. There's just your way. But one of the keys, I think, to a successful long-term relationship is alignment around money. Alignment. How much do you expect to make? What are the trade-offs? I need you to be home more. Your wife's working. I need you to be home more and help out with my kids. Maybe your husband stays at home. Well, okay. We can't afford this house in Connecticut then. We can, I can't imagine what it would be like to have one person at home and living in any of these blue cities that are crazy expensive, unless you're smart enough to have rich parents.

11:08So it's a conversation. Where are we going to live? What are our expenses? What are the tradeoffs? What are the commitments? And do we both have alignment around that? I think it's also what I do. I sit down with my partner and I go through our finances on a regular basis. I want her to know what I'm investing in, where we're making money. How much money do we have? Did we lose money last month in the market? I don't think, I think the worst thing you can have in a relationship is not difficult conversations. It's surprises, right? It's, oh, we can't afford to take a vacation because I lost money trading options or our stocks are way down or, you know, whatever it might be.

11:47Or we got a huge tax bill. Maybe it's not your fault or you haven't done anything wrong. But I think a certain level of transparency and regular conversations around this taboo topic called money, I think it's really important early on.

12:02Scott Galloway:I was getting very serious with a woman, actually a woman who was in residency to be a surgeon, and she was talking about her student debt. And I thought this was a woman that I would eventually have a long-term relationship with. And I said to her, I said, this is how much money I have. These are my stocks. This is what I'm trying to do with my business. This is how much I'm worth. This is how much money I spend. Because I wanted her to know everything about me. And as we started thinking about a long-term relationship, I wanted to be totally transparent. And she was transparent with me. She was like, I want to be a surgeon.

12:33Scott Galloway:This is how much money I'm going to spend. This is my student debt. So we could get something resembling alignment around our economic future together. Young people are really good at figuring out romantic energy. What they're not good at figuring out is how, if they have a shared vision around what the next 7 ,000 Tuesdays feel like. And part of that is the bills and the expenditures on that Tuesday and the other six days a week. So in sum, I do think that women feel more economically vulnerable for good reason based on history. I do think that it's up to you. It's clear young people want to have separate accounts.

13:10I think, quite frankly, you could argue that now that women are making more money, they've decided they want separate accounts. Okay. That's up to the individual couple. But the key is this term alignment. Have open, honest, uncomfortable conversations. It's like raising kids. Have the uncomfortable conversations now. You're being an asshole. You need to know you have to go to school. No, you can't speak to your mother that way. No, you can't behave like this. No, if it's 11 p.m., you've got to call and tell us where you are. Have those uncomfortable conversations now such that they're not assholes later in life or less of an asshole.

13:46I think it's worthwhile to have those uncomfortable conversations when you start to get serious with someone about money and try and be as transparent as possible around what your and their expectations are. Again, the key word is alignment. Thanks for the question. We'll be right back after a quick break.

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16:20Welcome back. Question number three comes from a listener who texted us. Scott, my question is, in a large organization, How do you handle situations where you take the risk early, but once that risk pays off, everyone wants a piece of it? Should you fight to protect your territory, share the credit and trust it'll come back to you or focus on the next opportunity instead? Yeah, welcome to the work world.

16:42Scott Galloway:Failure is an orphan and success has many fathers. So I would just, in as elegant but, you know, least obnoxious way as possible, whether it's providing updates on what's going on with the division or what have you. I would even say to your boss, occasionally in a review, say, it kind of pisses me off that everyone else is getting credit for this or it's disappointing. Some of that also might be paranoia, that you don't think you're getting the credit you deserve. but there was a line in law and order svu saying it's not enough to do well in politics you have to be seen doing well if you're talking about credit in terms of praise of who did a good job or who gets credit for something i find that good leaders uh share a disproportionate amount of the credit one of the things i always really respected about mayor bloomberg was whenever there was an announcement or a ribbon cutting.

17:40Scott Galloway:He was there, but he would immediately say a few words and then step back and highlight the good work of other people. It's one of the things I find most off-putting about Elon Musk. Do you know anyone else at Elon Musk coming? No one is allowed to get near a mic unless it's Elon. It's all about Elon all the time. So I find sharing credit is actually a key component of a good leader. Now, in terms of, if you're talking about economics, there's agreements in place. You know, if you're looking for justice, you're not going to find it in a cap table. Whenever I sold one of my companies and I go down and see how, you know, who is getting what, there's inequity everywhere.

18:20It's like, oh, so-and-so. I remember one person who worked part-time for us who lived in Chicago ended up getting, I think, a half a million or a million bucks in the buyout of L2. And quite frankly, she just didn't add a lot of value. And I remember thinking, well, oh, that's unfair. Okay, yeah, it's unfair. good for her. And then there were other people who had been around for years in low-level jobs, and they, for whatever reason, didn't have a lot of equity. And quite frankly, they just didn't make that much money. Now, what you can do if you're senior in a company and that happens is you can try and top them up such that they get a bigger hit.

18:56And I actually,

18:57Scott Galloway:when I sold L2, there were three or six instances where I felt people needed greater participation. And I went back to my VC's general catalyst and said, can we top these people up? And it's not free money. It means that everybody else, including General Catalyst, gets less money. And they did something I've never observed a venture capitalist do. They said yes. And they took the dilution to top up people they had never met before. So if it's sharing credit, I think the sign of a good leader is to overshare credit if and where possible. I'm constantly trying to highlight the good work of the team because I get so much disproportionate credit for what we do here.

19:35Scott Galloway:just naturally. People don't want to take selfies with the producer of this podcast because they don't know who she is, despite the fact that she is largely responsible for the success of this program. But if it's money, there's legal agreements in place. And maybe you have a chance to adjust up or down, but it kind of is what it is. And it shouldn't be really much of a discussion. It's okay. According to the agreement you signed and I signed, this is how much you're getting in this situation. So this is on you to figure out an elegant way to make sure that people understand that you're sort of the owner or the father or the mother of this project, but I can't give you specific, you know, specific tactics here.

20:15I would raise the issue and try and discern your own ego from the reality of the situation. But also, if you aren't recognized in terms of compensation or opportunities, you might want to think about looking for another job because that means the culture is not a fit for you or just not a great culture. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at prof2media.com. That's officehours at prof2media.com. Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit and we might feature it in an upcoming episode.

20:48Scott Galloway:This episode was produced by Jennifer Sanchez and Laura Janair. Kami Rieke is our social producer. Brad Williams is our editor. And Drew Burrows is our technical director. Thank you for listening to the PropGee Pod from PropGee Media.

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