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Welcome back to Live from the Compound. I am your host, Downtown Josh Brown. This summer's Democratic primary for the New York City mayoral race shocked the nation as a candidate who is an unabashed socialist managed to capture the voters from the mainstream of the Democratic Party and win the nomination to run this fall in New York City. My guest today says we need to look at the results of the last 15, 20, or 30 years worth of monetary policy to try to understand why so many young people and even middle-aged people are willing to listen to an anti-capitalist message from political candidates, particularly in large US cities. Uh my guest today is Garrett Baldwin. Garrett is an economist, financial writer, and mathematician. He has an extended history of financial analysis, journalism, public relations, and consulting experience in hedge funds, private equity, blockchain, housing policy, supply chains, and public equity coverage. His Substack blog, Me and the Money Printer, has become one of my favorite reads this summer, and I'm so excited to be introducing him to you. Garrett, welcome back. How are you, sir?
>> Josh, thanks so much.
>> I say welcome back. Welcome on the show for the first time.
Yes, it is the first time. Thank you so much. I'm really excited to be here. It really is a great opportunity to chat with you today. And I know that you're seeing the shock value up in New York. It's it's it's uh it's it's quite a it's quite a time to be alive.
>> It that's one way of putting it. Um, let's start here. With the stock market at new all-time record highs and tens of millions of new brokerage accounts having been opened by young people over the last 5 years, you would think people would be celebrating capitalism, but that's not exactly what's going on. Um, give us your give us your overview of what we need to be thinking about to understand this moment.
Yeah, I think that the one of the big challenges here and you know I think I want to just point out off the bat like you can't just say hey Jerome Powell is the reason that Adams is is the is the going to be mayor but instead you have to really kind of do a little bit of an archaeology of of Federal Reserve policy and monetary policy and if people are anti-Fed you know they'll start back in 1913 and they'll start talking about Jekyll Island or they'll talk about coming off the gold standard in 1971 or the start of quantitative easing in '08 or what happened post COVID. COVID I go back to 1993 and I think there were six things that happened in 1993 that really lead us to where we are now and I think the most important one.
>> Candlebox.
>> Pardon?
>> Candlebox.
No.
>> Candlebox. Yeah. Uh, Alice in Chains.
Was that Wu-Tang Clan that came out that year?
>> Sorry for stopping your flow. By '93, tell us.
So, so 1993 you had the Clinton tax cap which basically there was a lot of um, you know, CEOs were paid in income and now all of a sudden they're going to be paid in stock and options because of the the change in the policy. You had something called Executive Order 12866 which put Al Gore in charge of supply-side policy. Bob Rubin joined the economic council. We know how that ended. Andrew Cuomo joined the H joined HUD. He was obviously, you know, heavily involved in what happened with Fannie and Freddy. We had the first passive investing ETF ever with the Spy. But the big one for me is Jackson Hole. Uh, Jackson Hole in 1993 is where the Fed really starts pushing the idea of inflation targeting. And what happened in 1993, there were three major deflationary events all transpiring at the same time. You had the fall of the Berlin Wall, you had China's ascension into the global uh global markets, and then you had the deflation of the internet. And the Federal Reserve has, through that policy of 2% inflation targeting, helped contribute to the debasement of the dollar by roughly 55% since then, just on that alone. Um, but if you look at what happened from the 1990s, just look at a very simple CPI chart since 1998, hospital services are up 200%. That's just from 1998 to 2018.
>> The prices, right? CPI, the things that matter. Technology goes down in price. The Federal Reserve's that job then is to create this inflation and ultimately what we have seen is a dramatic amount of costs go through real assets. Housing goes up, food goes up, electricity goes up, food and beverage goes up, but the price of a cell phone and a TV, all that stuff goes down. And the continued push on this. Every time you see these markets um, you know, have a have a significant sell-off, a significant drop, the central bank steps in or we see accommodation uh policy to help prevent deflation and help prevent a debt spiral and as a result, it ends up we just end up pushing the markets higher. So at the same time, you have this entire system built on the back of constant inflation targeting, lots of leverage, asset prices continuing to rise, and a group of Americans who have never been able to partake in that asset price boom. And they look around, and I think the thing we were pointing out was there was a $29 sandwich in New York. And everybody turns around and says, "You know what? My my housing's up. My my rent's up. I went to college. I'm not able to get this job that I wanted."
"Let's burn it down." And they're looking they're looking at Adams saying, "Hey, you know what? At least your rent's going to be frozen and your and your buses are going to be free." Now, we know what happens when the government runs grocery stores. It doesn't end well. But at the end of the day, you know, you have a you have a generation of people who are looking around saying, "I can't afford this, and I'm I'm willing to just blow the whole thing up as a result."
>> Yeah. I actually think it's multiple generations. I think uh so you have a stat where you point out that post that 1993 moment and as a result of uh uh one of the changes that you mentioned, CEO to worker pay went from 100 to one to 400 to one in six years, correct? So that's stock-based compensation, that revolution where um the whole economy became about the stock market. Um, you don't mention directly uh the the centrality of 401(k) as the nation's uh new retirement scheme and the sunsetting of all of the uh of the um defined uh benefit plans and the and the kind of like uh the the pensions and that kind of fading away and companies switching over. But basically, like sometime in the '90s, we decided the stock the stock market is the future. And if you're and I don't think this was deliberate, but the way it turned out is we now have stock market Americans.
>> And everyone else.
>> Stock market Americans work for companies that are publicly traded. They invest all of the money that's not in their house in the stock market, and many of them are being compensated uh via stock options and they are living in their own world. They're able to um afford things and plan for the future and not worry about retirement as much. And uh if you're not a stock market American, you're looking around and it's what the right.
>> How much does this cost, right?
>> Like how am I how am I supposed to live? And again, I don't think that was the the exclusionary part of that was deliberate.
>> But it's it's also undeniable. And I think that's really like this a summation of where all of this has gotten us. And for some people, it's great.
>> Um, myself, my clients, probably yourself.
>> And for a lot of people, uh it reminds me of um the Pink Floyd song. Uh, "Time."
>> Yes.
>> "You've no one told you when to run, you've missed the starting gun." Uh, I I think if you went back in time and told people in 1995, dude,
>> Fund the 401(k) or find a company to work for that offers one.
>> You you could have saved a lot of people um a lot of uh a lot of difficulty.
I think it goes back to some other elements of this. I mean, look, we can talk about you can talk about treasury policy as well, and I I've written about that extensively and like the impact of T-bills and how that's led to more leverage in the financial markets and basically like we now live in an environment, Josh, where we're having these like one big significant event a year in the financial system, like a significant one, not just COVID, but the Gilt crisis, you had the Archegos event, you had what happened with Silicon Valley Bank, you then had um, you know, the the Nikkei move last year, which for some reason we we don't even talk about that, which is crazy. You know, just the Nikkei falls the furthest since 1987 and we don't even mention it. That was a year ago, like today.
>> And the funny thing about this is every time that you see these flare-ups in the bond market, what happens? Two things are occurring at the same time, every every time. First, you have this accommodation that is, I I don't want to use the word bailout, but the accommodation that comes, it might not be quantitative easing, but it's leading to quantitative easing outcomes like the bank, the bank lending, the bank lending support was not QE, but it aimed to achieve the outcomes of what QE does. And the the efforts on the yield.
>> Which is what? Which is what? Stifle volatility.
>> Stability.
>> And reintroduce stability. But stability, the outcome is the rich getting richer.
>> Yes, because two to so if you, there's an article that I wrote called "The 1% Pattern," and it basically is just about how the market will sell off and then you have this period where there's no no buying. Market pops. We get up to like the 20-day moving average and then funds sell right back into that. And then we get this big move down that happened April 7th. And people start talking about the Great Depression on April 7th. Well, two days later, we get a policy accommodation. And there's always a policy accommodation. And what does that accompany? Massive levels of insider buying at the corporate level. The insiders have called the bottom of every single downturn since 2008, '08, '11, '15, '18, '20, '22, '23, '24, and now '25, and they're stepping in and they're buying their own stocks and they're benefiting from it, while everyone else who thinks that this stock market is some like beautiful wealth machine, they're panicking and they're selling on April 7th. And then the president comes out and says, "Great day to buy," and everybody buys at the same time the policy is accommodated. And now all of a sudden the market, you know, rips back to all-time highs within a period of 2 months.
>> April 7th to me stands out because it's not really a policy accommodation.
>> Sure.
>> It's a softening of the rhetoric that had scared everyone starting at the end of March.
Mhm.
>> And I but I but I do see I do see your point. Like a really great example of all of this for me is the uh the early 2023 bank panic revolving around Silicon Valley Bank and a couple of other banks that basically there was like an internet-driven run on these banks.
Um, but the end result is the FDIC, no act of Congress, no one votes on this. The FDIC just decides, remember when there was a $250,000 limit for for us to insure deposits? It turns out there is no limit. No one's deposits will be affected, right?
>> We're going to resolve three or four of these stupid banks. We'll punish a couple of crypto banks while we're at it.
>> Who's going to stop us, right?
>> And then all of a sudden it's like, oh, why would I panic? The FDIC just said everyone's good. That's like a really obvious. That's not the central bank, that's the FDIC, but it's the same kind of.
>> It's the same kind of idea where like if you're wealthy in this country, you're probably not going to get screwed around with.
>> True. And and you're going to have a K-shaped recovery every single time. And the the thing about this is, you know, in in the there was there was this period of time where um I believe it was around the 7th or the 8th where Janet Yellen comes out and she says she's still she's still doing her tour and she's over in Australia and she is asked about inflation and she blames supply chains, not the fact that they printed 40% of all dollars in existence after COVID, but she said, "Well, we had a number of hedge funds, leveraged hedge funds that were unwinding bond positions." And no one asks, "Wait, why are all these why are all these hedge funds loading up on the safe asset?" And that's the one thing about this. It seems like every single crisis that we have is always around a safe, the safe haven asset. It's the Gilt bonds. It's the it's the 10-year Treasury. And you know, it it nobody nobody had the forth, you know, the forthright to to forward thinking to say, hey, why why is this basis trade there in the first place? Because you need $850 billion to ensure that we keep yields suppressed. Um, why are we doing all this stuff with the CHIPS Act in order to ensure that we have, you know, this buying on these short-term bills? No one asks these questions. And the reality is that yes, you're I believe you're right. You know, this was not a similar type of policy uh move that they did say post-COVID or during 2008, but it certainly was enough to provide that stability and get people to stop freaking out about all the unwinding that was happening and having all correlations go to one where bonds and stocks are falling at the exact same time.
>> Is the CHIPS Act, is the CHIPS Act that by promoting this stablecoin ecosystem, we're introducing millions of new buyers for the T-bills that are supporting the stablecoins and comprising the portfolios of the stablecoin issuers? Is that is that what you're getting at?
>> I I I think that's exactly what the end goal is here, right? To provide.
>> Sounds like a win-win.
>> It does. Sure. There was a period of time and I I don't remember I don't know if you remember this though, in like 2014, so I almost took a job with the USDA and I went and I talked to them about it and you know that like every the most serious insider insider uh buying scandal is you know involving the lamp involving the shades in the uh USDA and people were giving out price signals ahead of it and that's.
>> I don't even know. I don't even know about that one.
>> Oh, it's a wild story. Basically like at some point in the '20s or '30s uh before the farm prices would come out, they were people were like moving the the uh the curtains up and down effect and and legit and like the USDA is still they're still like panicked about it and I I didn't want to take the job because one, I couldn't talk about markets anymore because I was going to be focusing on farm prices, but the other side of it was I said, well, you know, what's my retirement? What's my retirement? You know, what kind of stocks can I own? And they said none. Uh, they said you basically have to invest in 30-year T-bills or or 30-year Treasury bonds. And there was a period of time where like the United States government, Obama wanted to create something called like the MYRA where basically like they were going to create retirement accounts for everybody, but it was only in like long-term, long-term US uh treasury debt.
>> So this, it's it's crazy, right? But but the point of that is that like they're constantly looking for ways to ensure that there is ample demand for the currency uh or or for for our debt and they're getting more and more exotic with it each time. And the CHIPS Act does that. That the basis trade is a method to, you know, ensure that there's persistent demand at a time that China and other foreign countries are diversifying away from US debt.
Garrett, is it a conspiracy or is it just um the system doing what's best to prolong the system?
>> I I think I think the the thing that I always say is when you are looking at a system, judge it by its outcomes, right? So if if the outcomes of the market are persistently to ensure stability and to bail themselves out, that's what the system is designed to do. And I think I don't think that it's a conspiracy. I I just think that people in Washington really are political animals who are constantly looking to survive and advance and once once they're out of the Treasury Department or once they're out of the Fed, it's no longer their problem. We have data indicating that the number of millionaire households in this country is absolutely exploding in the current era. And it is not fair to say that the stock market is uh deliberately excluding the middle class or holding the middle class back from becoming the upper middle class or the upper class. Like that's happening all the time. We just saw last week a situation where Figma, which is a software startup, former former software startup, now a software giant, this is a company that had a deal on the table to be acquired by Adobe for $20 billion. The UK regulators, uh, antitrust regulators said no. Adobe was forced to pay a billion dollar breakup fee. And now 3 years later, Figma comes public, triples on its opening day. It's worth $71 billion. I was on the New York Stock Exchange when it opened on Thursday. And I was surrounded by what looked like thousands of Figma employees, all of whom, I'm guessing, were very generously compensated with shares in Figma pre-IPO.
>> Right?
>> You I watched thousands of millionaires being created in real time 3 days ago. It's so hard for me. And now I understand it's only thousands of people, not millions. But it's hard for me to square these two ideas. Like young people have never thought of the economy as being less affordable.
But meanwhile, you've got armies of young people at thousands of companies who are compensated in stock and their net worths, at least on paper, are rapidly advancing. So, like what is the what is the tension between those two ideas or is it just different groups of people and um they don't necessarily have to overlap?
>> I mean, I think I think it's just different groups of people and you go back to the fact that you know we.
>> They're all college educated, I guess, the people that are for the exchange.
>> Yeah. But like college, but college education is a is a unique thing as well, right? Because the colleges' cost of tuition went up 180% between '98 and 2018. I did a piece for Modern Trader a couple of years ago where I was analyzing return on investment of colleges and there's something called FreeOop and they basically go through like all of the any university, any of the any of the uh any of the degrees that you want to see, you you could see your return on investment. Who who does very well? Engineers, economists, people who studied like journalism at certain universities. The people who don't do well, right? Business degrees. But the people who don't do well, gender studies, acting, drama. There's I went to college in Chicago. Um.
>> Isn't that isn't that intuitive?
>> Right. Sure. But but I don't think that these things are even explained to people early on. Right. So it can create a sense of being bitter about it. If you if you go to a university and you pay a half a million dollars and the return on investment of your of your university is negative $500,000 and you're in this level of debt. Yes, you can make the argument that you did this to yourself, but the reality is the United States government will, you know, won't let a kid, an 18-year-old have a beer, but they'll give them $250,000, no questions asked, to go study at a university. And now they're on the other side of this. And that's that's a serious issue that has not been addressed um at the university level and certainly won't because of the incentives that are tied to it. And again, I think it it really comes down to who you know, how you get in, how you get into some of these places. There's a, you know, one person down the street's making a million dollars and the other person's barely, you know, above water. And, you know, maybe there's 10 people who who are are barely above water and can't pay their rent. Well, guess what? Those 10 people have 10 more votes than that person making a million dollars. And that's how you end up in the situation, I believe, like you are in New York where you're seeing this in the boroughs.
>> So, walk me through this. Uh, if if in fact Adams wins, which I, you know, I don't I don't have any edge on that.
>> Sure.
>> First, he won't be he won't be the only socialist mayor of a major New York City, uh, of a major uh US city.
This so this is something that you see repeating itself all over the country. Talk a little bit about some of the other examples of this.
>> Yeah, I mean, look, it's happened in LA with with Karen Bass. She's she's a um, you know, has praised Castro in her lifetime. Um, uh, you have uh the mayor in in Chicago, and Chicago's a downright mess. Um, you know, fiscally, I think that city's relying on a bailout at some point and they continually will demonize. It's funny, you know, I I used to work and live in Chicago for a number of years. They wanted to go and create a uh a tax just on every single transaction at CBO and CME, like basically to the point that the tax was more than the actual spread was. And they just said, you know what, screw you. We're going to move to we're going to go to Kansas City. We're going to go to Miami. We don't need this.
>> Go to the cloud.
>> Right. Or the cloud. You don't need it. So, um, you know, this phenomenon, I think the issue is you're you're seeing it in these cities. And I I think there's one important point that I didn't point out. You can go back to this concept of the Cantillon effect, right? So, whenever new capital is created, it always benefits those who are nearest to it. Well, where does capital, when capital is created, where does it go? It goes to our financial centers. It goes to New York. It goes to Chicago. It goes to these places where that money is going to be introduced into the system. And the benefits go to the shadow banks, to the hedge funds, to the private equity groups, to JP Morgan, all of these institutions. And what does that money end up doing? It goes into real assets. It drives up the price of real estate. It drives up, you know, costs of everything else. And everyone else who is in that ecosystem is now looking around going, "Why the hell did this sandwich just get to $29?" And I don't, look, I'm not sitting here advocating for socialism. I'm I'm I'm the furthest furthest from that in the world. But I think it's important to take a step back and try to assess and understand the mindset of a person who would follow that type of political.
>> All right. So let's try to do that. So let's try to do that. Um, this is not the mayoral election. This is the Democratic primary, which is a subset.
>> Of the a very small subset of the people who will actually go to the polls to vote for the mayor.
So even if you think directionally, it's like you, you know, we don't we don't really elect a lot of Republican anything in in New York City, obviously.
>> Sure.
>> Um,
>> So so he's sort of in pole position just given like the popularity of Mayor Adams right now, or I should say the unpopularity of of Mayor Adams right now. And, uh, Cuomo may or may not run again as an independent. We don't know what exactly is going to take place. It'll be I think it'll be wild uh no matter what. But here we have somebody who's got 16,000 historical tweets.
>> Right?
>> Many of which are saying things like "defund the police," which he doesn't say anymore. Um, are talking about freezing prices, controlling rents, um, starting uh starting uh municipal supermarkets, which I, you know, is kind of like a throwback to one of uh to to, you know, Moscow and and Soviet Russia.
Can I can I can I just say one thing about that? Because look, the one thing I will say, if you have friends who are from Europe or you have anyone who comes to the United States for the very first time, take them to a grocery store and watch their eyes. They it uh my friend from Switzerland just came over and he's like, he said, we went to a Wegmans. He's like, I've never seen anything like this. There's just the abundance of food. It's one of the things that people who come here the first time in the United States notice right away. And the ballet of a of a supermarket is unlike anything. You walk through a supermarket, all the boxes are taken care of. You have all these reps who go around who are taking care of their little space and it's a very slim margin business. And it's a.
>> It's a 1% business.
>> Right. Right. So, so then all right. Well, let's let's let me tell you, I mean, I've spent enough time in Buenos Aires to have, you know, been in an environment where the government is heavily involved in the food in the food.
>> Yeah.
>> It's not good. There's shortages of everything. And I have a very hard time believing that, you know, you're going to have this you're not you're going to have that type of ballet. It it's just going to be it's unfortunate and um, you know, it'll it'll be great for the first six weeks as as all of these programs are, and then all of a sudden it will have decay because there won't be any profit incentive whatsoever to improve it.
>> To play devil's advocate, what's the big, what is my this is actually I'm not playing devil's advocate. This is my actual opinion. Who gives a.
>> Right? Let them let them let them open some some lower cost, lower-fee supermarkets in areas that um the people living there need them, quote unquote, need them, and let's see what happens. Why is it like like of all the of all the crazy things we spend money on in New York City? Is that really the biggest risk we're going to take? We're not what we're not saying is that all the Whole Foods have to convert.
>> Right?
>> We're saying I think they said there are 16 uh neighborhoods that are screaming out for affordable food.
>> Right.
>> It, do it. I don't care.
>> Sure. Sure. But but there has to be there has to be a mechanism in place to make it to to make it sustainable. I think that's the key thing. Like no doubt about it. I mean, you have food deserts all around the country and I I live in B I live north of Baltimore and you know, people rely on like the Dollar General for for food. That's that's a problem. But at the end of the day, like it it's not going to be my my my thesis is yes, it'll be a big it would be a big announcement and then at the end of the day, you know, it's just going to be there's there's not going to be a a motive in in place to keep this thing sustainable.
>> I think the extreme right, the performative Twitter active right is rooting for these supermarkets to be robbed. That's really like that's what what they really want to see is uh the supermarkets get looted so they can say, "See, told you so. These places are food deserts for a reason. They don't deserve to have nice things." Taxpayer-supported.
All right. So that's that's some ugliness that I just wanted to get out of the way.
>> No, no. I I and I I firmly agree with you. I mean, I you can see that already. I'm I'm just viewing it from the perspective of, you know, the sustainability of the concept. So, um, no, you're right.
>> Okay. Um, it's wild that the same city that contains Wall Street could also contain so many people who think the best thing that could happen is for all of that money and financial activity to be driven to Florida. Um, what are people when people pull the lever for somebody espousing the policies that Adams espouses, what are like what are they what are they thinking? They like they can't actually believe that uh we should abolish um all all of this financial activity that has made New York City in many respects, not all respects, the envy of the world. They can't actually think that that's going to make things more affordable.
>> Sure.
>> Or or give them cheaper apartments or a better quality of life. Can they actually? Is it not drive it out but just tax it enough that it stays but that there's more money to distribute? Like what what do you think is going through these people's minds?
I I I honestly think that at the end of the day, it's a it's an ugly world in terms of how things have shifted and I don't think it's just financial and I'm I'm not saying that all Adams supporters think this way, but you've seen the you've seen the rise of like the the the cheering of what happened with uh United Healthcare and now most recently, you know, the the murder in New York uh Blackstone where people are legitimately saying like, well, this is a this is a a company that exploits people in housing and things along those lines. I think those people are still I know that those voice those events get amplified on social media.
>> I think that's still fringe. I I don't.
>> I don't think those are commonly held beliefs that the United Health CEO had it coming.
>> But but it but it certainly is it certainly.
>> Has has trickled into the into the world of the the mainstream party. Uh, Elizabeth Warren said something along the lines of, you know, violence is never the answer, but and, you know, then said something along the lines of, people can only be pushed so far. And, you know, this is this is where you you get into these bigger and broader conversations that are uncomfortable. But the reality is that people look around, they see the economic policies that are that are in play. They see that they're not getting ahead, and they they view it through the lens of there's got to be something different. Let's just try something different.
I agree with.
>> And that there there were people in there were, you know, they were interviewing a woman in New York and they said to her, do you think that these are good ideas? Do you think that government-run grocery stores are ideas? She goes, no. Then she said, do you think that socialism would work in New York? And she said, no. And then they said, well, why did you vote for them? And she said, I just wanted to try something different.
Which.
>> Yeah.
>> You know that and that and that that's just a that's just a human reaction of just, hey, let's try something different, even in the event that it ends up being worse. It's just, you know, people are throwing their hands up.
Garrett, part of me feels like this isn't this is it's it's a new version, but it's nothing new. The the so the advent of the suburbs in in during the Cold War in the '50s and '60s, the age of Eisenhower, there were very deliberate policy choices um that were were meant to push people, middle-class people out of the cities into the suburbs. They built the suburbs, they built the interstate highway system, and one of the big ideas behind all of that investment and and policy was that once you own property, you're less susceptible to becoming a pinko. They want they wanted people, they wanted people to be property owners because renters are more susceptible to the message that um capitalism is is bad. I mean, this is like this is well-documented. It's not my theory. Um, and they largely accomplished this and uh, unfortunately, they did this along racial lines, which is a whole other conversation that we don't have time for, um, but important. But um, the cities having young people who are not owners of anything, that as a result have Marxist leanings. This is not like a 2025 phenomenon.
>> Sure.
>> It's just come roaring back, I think, because of the inflation. And so I want to get back to the Fed's culpability here.
>> Right?
>> Um, I think missing the moment in 2020 and 2021 and dismissing the rising costs of goods and services as being transitory.
>> Is one of the all-time gaffes.
>> And and the Fed's had many. And and uh, you know, it's not 100% on Powell, but he's the guy in the seat.
I really think that I really think that that's um the uh the approximate cause of the Adams phenomenon now. It's not that long ago um that we had the highest rates of inflation in 50 years. I I I think you'd agree with that.
>> No, I I I certainly agree. I I think that some I think something fundamentally changed. Look, we had we had post-2008, you had QE, you had the strong relationship between the influence of quantitative easing and the performance of the S&P 500 from 2008 to 2020. I think the social contract drastically changed after 2020 and once again, the idea that you have massive levels of inflation that once again, like, you know, do you necessarily believe that um, you know, that that CPI, the CPI calculation, there's something called the Chapwood Index, for example, which is a private inflation measurement. I don't know if they do it anymore, but they were measuring it post-COVID and basically all the Chapwood Index does is they went into they go into major cities and they look at the price of the top 250 things that people buy. And the Chapwood Index shows that in the city of New York, the things that people buy have been increasing and compounding by at least 12% since 2017.
>> I I actually I believe it.
>> Right? I believe it. So, so you know, this is exactly the point is that you hear people saying, hey, you know, inflation's not as bad as as it is, or it's the result of supply chains, or it's, you know, whatever, whatever the excuse is. There is no ownership for what the Fed does. And the other thing that I think is really critical, there was a there was a a survey done. Only 6% of Americans actually understand what the Fed's job is. They actually understand the dual mandate. And then I would say that there's probably an even smaller percentage that would include you and I that know that the Fed is also responsible for providing a backstop to global markets with liquidity swaps and things along those lines to ensure the stability of of of the US dollar internationally. So people don't know what the underlying thing is. They don't understand monetary policy because monetary policy is one, boring, and two, complicated. And as a result of that, they're going to look around and they're going to blame their neighbor. They're going to blame somebody else, or they're going to listen to somebody say, "Hey, this is corporate greed. It's only corporate greed."
Um, it's not.
>> I think the Fed does not have control over things like the availability of how many apartments are being built in a city.
>> Sure.
>> Think the Fed can't do anything about the housing supply or or lack thereof in 2022 and 2023 when everybody wanted to buy a home. Like I I do think that there are huge components to the cost of living that fall outside of the purview of monetary policy, at least directly.
>> So so there's one dimension of that that I think we should at least mention. I also think New York and Miami are extremely unique.
>> Given to the financialization of of the societies of those places. And when you put overnight interest rates at 5.5%, you actually introduce a new wealth effect into um into these upper, let's say the top 20% of households.
>> Now their cash is earning them more cash.
>> Right? So, so now they have cash balances that they're the cash they're holding in the bank or in money market funds in a brokerage account. It's like a geyser spitting out more cash, and that's the risk-off portion.
>> Correct.
>> Let alone what their stock portfolios are doing. And the middle class owns houses and cars. That's their that's the that's where their wealth is concentrated. The the upper class owns the stock market and has a lot of cash. So, so higher rates from the Fed actually were counterproductive in Miami, in New York. You're worried about the cost of, you're worried about housing affordability. You're giving people who have millions of dollars in cash millions more dollars.
>> 100%.
>> So, I don't even know if higher rates or the Fed being more aggressive is actually the answer.
>> Um, to to to your point.
>> To these price uh increases in the cost of living.
Two things, two things to to your point. One, um, there was a study that was done, I believe, by Freddie Mac, maybe it was Fannie, and it was a couple of years ago. There are 25,000 regulatory bodies in the United States that oversee the zoning of housing. So, municipal, local, state, county, federal, all the way up, 25,000. So, there's your first issue. Um, secondly, I completely agree with you. There are things outside the Fed's control. And I've talked about Executive Order 12866, which basically Al Gore got put in charge of anything that was significant in the United States, you have to run through this lens of like whether or not it was environmentally viable. And then when Obama got into it, it then became about like, you know, is this is this roadway or is this new big refinery, this big project, is it equitable? Like the it's it kind of got a little a little silly. But then you have, you know, the elements like passive investing. How many how many stocks, how many ETFs is Tesla in? Like 500. And, you know, that provides a little a floor of support for a lot of these equities. So, you know, price discovery has long been out the window for me since at least 2008, but definitely post-2020. And if we look at this kind of broader environment, um, you know, it just it it goes back to the fact that a lot of this a lot of capital has been pushed into the financial system um over the last 15 years. And there is a direct relationship between the amount of quantitative uh support and easing that the Fed has done and the assets of the uh top 1%.
>> Or the or the or the intentional policy-driven quelling of volatility.
>> Correct.
>> It's just it's Yeah. So we're right. So here we are at 22 times earnings on the S&P 500. Every sell-off is a V-shaped recovery, an opportunity for the rich to get richer and insiders to capitalize on the fears of um lesser aware people and do that over the course of 15 years and you end up where we are and uh we'll have a we'll have a communist running uh the city that contains Wall Street. And all right, Garrett, we've uh we've gone long. You you've got a gigantic brain and I'd love to pick it. I'd love to have you back sometime. I want to tell people where they can um get your insights on a You're writing at a furious pace, by the way. What are you What are you daily now?
>> Uh yeah, so I write I I I write a lot. Um I write a I write a morning piece that's a a market breakdown. So just real quick, just to give you a recap. Yeah.
>> I focus on three things at a at a very macro level. Um, one is liquidity. Uh, and the way that that I focus on that is um Michael Howell's work uh and Pausner's work. A lot of focus on the shadow banks and how that has been a real driver of equity markets for the better part of the last 15 years, and uh I highly recommend that. Then I focus on momentum. So momentum is a is a basically a math equation of uh breakout stocks versus breakdown stocks. And when that goes negative, uh that that reading, that's where I start to pay attention to what's something called the FNGD uh which is an inverse ETF around FANG debt. And whenever this thing breaks out above its 20 and its 50-day moving average, be aware. Uh nothing really good happens when that happens. Uh, and then I start looking for the opportunity to for like a short-term bottom or or, you know, a reversion.
>> Um, I look at when the insiders step in and they buy, and those are the three major things that I focus on each day.
>> Where can people uh where can people subscribe?
>> So Me and the Money Printer is the daily free, and we have a we have a paid letter called The Capital Wave Report, which covers those three specific things. I'm also on The Trade. Um I do a morning show on The Real Estate Trade at 8:45 every day as well. So I I stay very busy. Um I I love the markets. I I view the.
>> Are you having fun?
>> I love it. Yeah. I mean, again, the story of the world's told through markets. So that's that's why that's why I do what you I do, and I think that's why you do what you do as well.
>> 100%. Um, it's been great talking with you and uh we'll do it again sometime. Ladies and gentlemen, this has been Garrett Baldwin. Um, thank you so much for watching. Please go ahead and smash that like button. Make sure you're subscribed to the channel or the audio podcast, and we will talk to you soon.