Featured Session: A Conversation with Andrew Ross Sorkin on the 1929 Financial Crash — and Today's Economy

Speaker 1 00:00 I now was because it took me eight years. It's not because I thought that somehow we were on the precipice of another crisis. And a lot of people right now, especially given where we are in our economy, they feel better. I really, the truth was, I really felt too big to fail back after the crisis 2008 and people invariably would come up to me and ask me, you know, how does that compare to 1929 and the truth was, I didn't have good answers to that. Unknown Speaker 00:31 I didn't know the answer. I didn't really understand Speaker 1 00:34 or know exactly what happened next week on my conception was something very bad happened question, and that was about some total of my knowledge. And so about a decade ago, I started reading about it, and I became a manner I could be told by the period. But more importantly, the characters, which is the one piece of the story that I do think had been really told I love books like Barbara ducasi and Dennis thieves group were books room, and you can, like, feel the people and understand their incentives and their motives and who's trying to screw over who and what's really happening. And that was the book that I said I was right. And then very the class I was writing the book, maybe this is the scary part about it. I've either on television or writing articles in the paper about where we were in our economy, and I go, Ah, yeah, that seems very familiar. This is Speaker 2 01:29 a freaky thing about reading your book is how many times that's similar? Oh, yep, that certainly sounds, Speaker 1 01:35 feels like now. And so that, yes, that did happen, but that was not it was unintentional. Speaker 2 01:41 Do you think setting aside like, say, the strictly stock market comparisons or strictly economic comparisons? Do you feel like everyone you talk to is sort of walking around with a sense of impending duty is about something like no one knows exactly what it is, but whether it's AI or whether it's geopolitics or whatever. Do you think there's just this pervasive sense of like something bad is going to happen in the not too distant future? Pretty much, Speaker 1 02:14 I don't know if that's because this is a side we are sort of handwritten and we're always sort of looking for something to worry about, or if there's something demonstrably different this time, I do think that this moment, both in terms of the technology I have a friend of AI, and the geopolitical moment that we're politically and everything else certainly lends itself more towards that. And it's true in the 1920s by the way, we were going through an extraordinary revolution technologically, whether it was automobiles or radio, and people were excited like crazy. By the way, they were not bringing their names. There were very few people back then. There were a couple of Cassandras, but not many compared to now. And maybe it's because now it was even more complicated. Right? On one end, there's a sense that, you know, are we in the AI bubble, and is it going to pop? And it pops, is it going to destroy the economy? And on the other end, it's like, if it works, yeah, it's also going to destroy the Unknown Speaker 03:14 economy. And Unknown Speaker 03:16 so that, that is the double edged sword, Unknown Speaker 03:18 I think, right of now, yes, touch us the radio. Because this was literally the company was radio. Speaker 1 03:28 It was the ticker the ticker symbol was radio. The company was RCA, video. Speaker 3 03:32 At the time, this was like a meeting stock, Yeah, completely. Speaker 4 03:36 And everybody was enamored and in love with this stock. They believe this was the future, by the way, they were not launched. They had the patents, interestingly, for television as well. Yeah, so this was, this was not a bad stop today on the only problem Speaker 1 03:51 back then, which is a little bit different than now, is that people were able to buy stock on margin of levels that were extraordinary. So you would go into a brokerage house and literally put down $1 and the broker would lend you $10 and that really, that was more of the problem than just a handy because people were basically getting far beyond their own means and even understanding of what that meant. So that when the market dropped in October, November 1929, about 50% and you couldn't hang on. Yeah. I mean, the broker called you and said, you know, we're taking your house. We're taking the mortgage, whatever it was. And interesting about the end of 1929 and this was something that I had no conception of. The stock market was only down Unknown Speaker 04:39 by 17% but Speaker 1 04:41 we would have had to hold on to even get there, and most people couldn't. Speaker 2 04:47 When I think of a ball or when I think of times like this, there's really two elements that I think are important. One is okay, perhaps the price of various securities get way out ahead of what they're, what they're, what they're going. Of things. But then the other element is the sort of degree to which trading becomes part of pop culture, which we actually are in now. Everything talk to us about like the degree in which trading the stock market in the late 20s had become just a Speaker 1 05:19 part of everyday culture. Oh, it was everything in the same way. Today we would see Elon Musk or Sam Altman on the cover of magazines that really started, by the way, in the 20s, you know, used to be Babe Ruth or political politician or an athlete would be on the cover or a celebrity on cover magazine, and also became the financial house, the Titans and industry. Yeah, that was the first time that it ever really happened. Then you have the public. And there was this phrase, by the way, same phrases today, we need to democratize finance. Everybody wanted an opportunity at the lottery Speaker 2 05:58 ticket and like, platforms, because tomorrow, like, how hard is it for you to not to avoid rolling your eyes Speaker 1 06:09 on camera? Because I don't, but yes, a whole and other that's what's very similar now. There was a whole sort of launch of all sorts of new products. If you were financial products in the market, you had another folks here who spent time in New York City. There's a hotel, famous hotel, called the Plaza Hotel. And in the Plaza Hotel was something called the oak room. It's a famous bar. Well, back then, maybe just to indicate, sort of how finance taken over. Everything the bar had been turned into an EF Hutton, which was a brokerage house. And you literally, they were brokers on the brokerage houses coming up on the corners of streets the way there are Starbucks. I mean, they were everywhere. And people would go in. And you would the thing with those issues, people sort of signed their life away without realizing they were signing their life away. It's because this was the first time that people had ever done it, and because the market was Unknown Speaker 07:09 going up and up and up. And to Speaker 1 07:11 give you just a sense of it, from the beginning of 2019 28 to September 1929 the stock market went up 90% and just think about that. And so I don't think the phrase promo existed back then, but that was the feeling. And you had all of these people from all over the country coming to big cities, seeing people getting wealthy, and thinking, I need, I need to get on the train before the training is the station. Speaker 2 07:37 Yeah. You know, one of the things that striking aspects of your book is, and why, why we did executive another 1929, book, some of the characters, so it's like Winston Churchill. You know, it sounds like the kids today would call it. He's a Gen who's like a gender gambler. Talk to us about some of the people who we only know, maybe in political or pop culture context, who's really into the market. Speaker 1 08:05 So he wasn't, he wasn't to generate so Houston Churchill, this is before he's the Prime Minister. He's basically out of money, and shows up in New York to give a lecture series because he needs to make some money travel around the country to try to make some money on the sort of lectures, lecture circuit, and realizes, because he meets all of these wealthy financiers who are sort of enamored with this British politician, thinking he might also know what they want to know. And he gets totally taken by the butt of trading. He really makes millions of dollars, makes millions and then loses millions of dollars during the fall 1929 happens to be Worcester happens to be at the New York Stock regime Unknown Speaker 08:49 on October 24 Black Thursday, 1929 Speaker 1 08:53 because he's that crazy about what's happening in stock market. And so many people just literally try to go down there to check out what was happening. The people would think this on the floor, and that was also the beginning of that. And there's a guy, Mike Mehan, who actually traded RCA. He was the specialist on the floor. People would go, just to take that deal, take a picture, where they were to see him like he was a celebrity. There was a woman in the Evangeline Adams who I actually made a camera role in this book, but she's sort of my favorite character. Evangeline Adams was an astrologer in New York. She had an office at Carnegie Hall. Every banker, including JP Morgan, used to literally go visit with her to find out whether they should be Unknown Speaker 09:37 buying or selling stock. You know, Speaker 1 09:41 she had a newsletter. I had deal with. She had a kid, a newsletter with 100,000 subscribers. People gave her $50 an hour just to get her her views on what was going to happen. And that sort of gives you a sense, I think, how crazy things they got in at that point. Speaker 2 09:59 One of the. Things in contemporary stock market trading. Maybe you hear about a little bit less these days, but it was this hot thing of like, you know, foods would try to have the shortest distance between them and the exchange, right? It's like the microwave water so they could trade fast. It's in like, millisecond order. What were the technological things that investors or traders are trying to do, because Speaker 1 10:25 we all have now, basically, you know, your either fidelity or Robin or whatever you got in your pocket, and you have these socks moving, you know, at crazy speeds back then, and by the way, back then, part of the problem, what actually led to the crisis and led to the crash, was the technology was so bad that the stock prices that you would see, even on the board inside near soccer Speaker 5 10:51 change, were often two or 345, hours behind what the actual Speaker 1 10:56 price was. In fact, when you see those things, I haven't even thought about this, when you see those famous or black and white rainy pictures by 1000s of people during the crash, standing around the outside the earth after you probably seen some of those pictures, if you ever like, spend some time getting yourself. Why are they there? What are they doing? They had gone down there to find out what had happened to their attorney because they couldn't get Unknown Speaker 11:22 the information even Speaker 1 11:23 up at a brokerage house, you know, Uptown, or, frankly, across the across the country, so that that one can solve those problems. As a result, a lot of people have sold their stops willy nilly because they were like, I don't understand what happened there. I didn't get out of this craziness. But the real sort of fancy traders, the ken griffins of their time, if you will, get out the same Citadel today, create this elaborate computer system, perfect computer system like Lucas, next to their statutory information as fast as possible. There's kind of Jesse Livermore, who's a famous short seller, a bit of an emotional record. We talk about what happens to it later. But Jesse used to pay his people, staff that he would pay to be on the floor of the exchange to physically call him to tell him exactly what the numbers were at that moment, so he could Speaker 6 12:15 effectively get an advantage over others back all the frankly, a lot of the Speaker 1 12:19 wealthy investors, they teamed up. Sometimes today, we would say it's clearly illegal to create these sort of political pool operations where they were almost basically running pump and dump schemes because they had people on the floor and other people Speaker 2 12:36 didn't look this is actually another interesting element, which is they were very transparent about these schemes, right? In the sense that you could just read about them in the paper. I hear that there's an organization, you know, there's a group, they're gonna pump this stock. Speaker 1 12:52 It's a little bit like a stock, if you remember that whole experience, we all knew, in our sort of diamond hands this way, that something was happening, and there were people who then thought, you know, I gotta get in and I gotta get out before the whole thing falls to pieces, right? I know there's probably some people who are investing getting shot, who are upset with me now, but back then, you would know, you would know that there was an operation, what they called an operation in RCA. So these wealth agencies would be paying off the journalists, by the way, to talk up the stock. You knew for the next two weeks they were going to be pushing up the stock. And part of it was the public knew this and wanted to they needed to basically get on board and then get off before the rug was built. They never knew when the rug was first. Speaker 2 13:48 Today, for a second, it's like Bernie Madoff, it occurs to me, like these days they added to take and I'm curious to say, I believe we're sort of living in this bureau of financial like, it seems to me like if people knew about a Ponzi scheme underway right now. There's many people thinking, I want to get on it. I mean, I'll get out before everyone else does. Or rather than seeing it as like a first day right side down the state, as far away as possible, I think the thinking right now is like, Oh, that's really exciting. And I'm one of the smart ones that draws early, so Speaker 1 14:27 I found you had this experience as a journalist. So post 2008 you know, I think there's a lot, a lot bigger point. Other people were very similar. Finger pointing. Was a journalist definitely arguing? Look, our job is to blow the whistle that their argument wasn't even both loud. I didn't go pretty loud, and they were Unknown Speaker 14:45 hard hearing. But Speaker 1 14:49 I found during like a stack phrase of 2021, or even some like the H stuff, but I would be on television or writing my articles. In a somewhat paternalistic way, suggesting, like, hey guys in this movie, I know how the movie ends. I'm telling you not to go to this movie like, this is a bad movie. And you, you know, if you pulled up x back into where there's so many people who like sorting, stop trying to protect me, protected. And by the way, you're not protecting me, you're protecting the man. Speaker 2 15:29 That's right. Yeah, that's really interesting to mention. You know, the other thing, when you talk about people going to the exchange to get quotes, I think it's easy to forget how modern, like, really modern it is. Look, in the late 90s, it was a big deal that, like some of the online brokerages, like you can get real time quotes like that was actually like a sort of that was like a status symbol, very recently in history, that anyone can get real time data on the market. Well, most people were, I mean, there were a couple of people back Speaker 1 16:02 then were like, looking at the trades really, but most people were trading almost like a tree back then. They weren't necessarily looking for the database. There really wasn't the first mutual funds really start. Were tried to be started in 1929 John rascal. John, rascal characters. I think the most, most intriguing, intriguing character that whole period John rascot was, was the Elon Musk of that era. He he changed, he really changed credit in America. So he was running General Motors prior 1919, taking out a loan or getting credit, getting a mortgage, was considered sort of a moral sin. It was assuming people didn't do and his big theory was running GMC, how can I sell more cars? I will lend people money so that they can buy my cars and let people go buy the cars. So he comes up with this idea, and it really changes the culture. I mean, really change the culture, because then you have to see the robot. Up do the same things. You can buy appliances and then, and then Wall Street caught on and started doing it. Interesting. In 1929 rascal was going to start a mutual fund company with with the same Speaker 2 17:14 idea, stay my stocks on LEGO. Buy stocks on LEGO. Speaker 1 17:18 That that was his big his big idea, by the way, he ultimately creates what was ended by the SpaceX at the time, he builds the Empire State Building, and he is responsible. Doesn't get enough credit for this. The reason we all work only five days a week, though, I know a lot of people here are true, true hustlers, but back then, everybody worked six days a week. In fact, the stock market was open six days a week, and rascal had an idea in the fall of 29 that we should move to a five day a week labor market, and that all national holidays, except for Christmas, should move to Monday, so we get a three day weekend. And he didn't do this because he was nice guy. He did this because he thought he would actually create a bigger consumer economy. People buy more cars because they have more time to go places on the weekends, they would buy different clothes. They would do all sorts of things. He just he was, he was one of those sort of philosopher kings that every journalist was just hanging on his every word. He got involved in politics. He tried to undermine the reputation of Hoover. I mean, I can't imagine what brascock would do next. This is Speaker 2 18:25 interesting, because I've always heard you, like the weekends, thankfully the labor movement, you're saying we have to thank the capillaries. There's a lot of perverse things in the late 20s. Lot of Speaker 2 18:45 development. One of these cliches in marketing is they don't ring a bell. That's true and Speaker 2 18:58 but then afterwards, was there alone in your view, that was like the bell? Is there a day? Today. This was, this was the crazy. This is the craziest thing you couldn't have. Speaker 1 19:12 This is the problem with with markets and figuring out the bell. So back in 2018 Charles Merrill, co founder of Merrill Lynch as well known Merrill Lynch, he actually came out publicly and told people to get out of Unknown Speaker 19:25 market. He hated him. Hated Unknown Speaker 19:29 him in the market that went up 90% Speaker 1 19:32 and so that's sort of the problem with deciding when to bring the Bill Carter class, who was a senator in Virginia, the name of Glass Steagall. This is a bill that ultimately breaks up the banks in 1933 Unknown Speaker 19:45 in the spring, he was trying to put in a short term trading tax to slow down the market. Speaker 1 19:52 Even the Federal Reserve back then knew that things were out of control and wanted to do something about it, but they were so scared that they raised the. Interest rates too much to try to tamp down all this speculation that they would tip over the economy. And given that the Federal Reserve was so new, it was born in 1913 if you read some of their diaries, they literally thought they would get all of our Congress and Congress would end the Speaker 2 20:14 Federal Reserve. You know, this conversation, I have to say, between me and it makes me feel a little bit better about being a journalist in the sense that, like, if we miss the bubbles, we don't worry about the thing, it's okay. Because people would have hated us for saying it's Speaker 1 20:34 it's okay diversity of even being a professional money manager, meaning, this is why we have a bird mentality. Because if you are a paid money manager for today, hedge fund, whatever it is, the incentive is to beat the index. It's to beat everybody else. If you get out early and say, Oh, I'm just so conservative, you get fired for that way earlier and more quickly then you'll get fired for following everybody else you know down to death to down off the cliff. Absolutely. Speaker 2 21:07 So you and I talked, I think it was October when your rebel came out. We did an episode of the podcast. And I've been thinking about like, there's, there's something very big that's changed since October tonight, which is as recently as then, the big story in markets was these stocks are insanely overvalued. AI is a bubble. Maybe it'll be a big deal. But, like, none of this makes any sense today, and the story of 2026, so far has been almost the exact opposite. AI is so powerful that, not only, like, it's going to wipe out all these domestic industries. We're not in software as we know it. We're not going to have, you know, investment banks as we know it. It's so hard. This is a little different, right? Because if we're thinking about sort of the radio bubble, like, I don't think people are thinking radio itself is going to destroy Unknown Speaker 22:00 every estimate. What do you Speaker 2 22:01 think about just reflecting back on the last few months and the people that you talk to on your show and so forth, there has been some shift in terms of just how everyone is starting to buy into it, the capabilities when a lot of delegates seem to be going on. Speaker 1 22:16 So I agree that there's been a shift. I always worry that we sort of over rotate from one end or the other. There definitely was a, you know, the question mark back in the fall of 2025 was, you know, what's the depreciation schedule for all of these Nvidia chips? For example, are these chips? You know, we're going to need these chips? Are they going to need to buy new chips constantly? How's this all going to work? Are we over building the data centers? Are all of these Now, interestingly, the are we over building the data centers, and are these private credit facilities that are paying for this is going to go under? Now we shifted to the private credit facilities which are facing finance to software companies. Are they going to go under for a different reason. So I do think things have moved, and we're now moving more to a conversation about I think every month we're gonna see unemployment numbers. The new question is gonna be, how much of a function of AI, but I also still think that there could be some kind of mismatch between the hundreds of billions of dollars that are invested in AI right now and the revenue potential on the other side, so that we could sort of not to say that there's going to be a long term problem in that regard, but that there could be this sort of moment where the math doesn't math, yeah, and that that could be something we have to think about when that happens. I think this is think is harder to know. And I also don't think we also think of pessimistically, oftentimes, about sort of, maybe there's not going to be enough demand. I don't think we spend enough time thinking about whether the technology is going to evolve so quickly then maybe some of the technology prior won't matter anymore. So for example, you think AI moves to the edge, so it moves onto your laptop, or to your your your phone. Well, then the whole data center story is a different story. So I think there's, there's sort of, there's so many ways to get to a problem. And here we are talking about problems. The truth is that, at least over time, and this is the hardest part. As a journalist, you're supposed to be a professional skeptic. The truth is, it's always paid to be a professional optimist over time. This time actually is different or not, it Speaker 2 24:38 feels a little different, but I'm sure it's all different. Here. I'm sure it's spelled differently every one of those other times too. What did the crash New York? Speaker 4 24:47 Well, so the interesting part about the crash itself was, as I said, it dropped the market dropped 50% it wasn't preordained that the crash in 1929 had to turn into what Ultra. Indicated Great Depression. Speaker 6 25:01 Faculty was a slow rolling movement that started late 1930 and 1931 Speaker 4 25:09 3233 like 1932 we had 25% unemployment in America. And what the crash really did Speaker 1 25:16 was it was the initial domino to suck the confidence half of the system. And then in the aftermath of all that confidence being sucked out, we did the opposite of what we're supposed to do, which is really throw money into the system. We sort of went through a period of austerity. Then you had a President and President Hoover who layered in tariffs. You can see some of the parallels. Trade dropped, by the way, 60% in the course of 12 months after he did that, despite every economist in America telling him that he shouldn't, by the way, he did that because back in 28 when he was trying to get himself elected, he was running around the country so desperate at farmers to vote for him that he basically pledged him. He said, Look, if you vote for me and I will implement tariffs to try to protect that was his whole argument. And even though everyone told him not to do it, when it came time to do it, he thought he needed to do it to Unknown Speaker 26:09 sort of maintain the pledge sure to the voter class. Speaker 1 26:13 A combination of all those things the Federal Reserve did very little they should have done a lot more. Magical lessons we learned by the voted 2008 Ben Bernanke had done his college thesis the Princeton Great question is, when you have a crash, you need to, basically, literally just, just inject money into the system. Very keen to and that's the way we did was politically unlocked in 2008 by the way, we did it again during the pandemic, by the way, then there's obviously very popular, yeah, very few people during the pandemic get upset about but that might be everybody got money. Speaker 2 26:48 The interesting thing is, and I think this, you know, the next one, I mean, the interesting thing is now 2023 we injected all this money. The economy roared back incredibly fast. That's what any economist would have predicted in April 2020 and, like, April 2022, everyone hated it. So it was like we had, like, full employment. I mean, obviously we had the largest inflation in 40 years, but everybody hated it. I mean, everyone hated it more than, like, everyone hated it more than the fact that we had 10% or 8% unemployment until 2010 like, the response to the pandemic, aggressive response strikes me is, you think the American hated the response by 2022 they actually do. Result of it. They're like, Oh, you spent all this money, etc. Like, it Speaker 1 27:39 strikes me to this day, so happy, Unknown Speaker 27:43 it lasted about five minutes, so that people Unknown Speaker 27:45 like, well, that's because they went on, but back then to Daniel and spent it Speaker 2 27:55 so, you know, I started this conversation, everyone has just walked around with a sense of doom, and AI is part of it, but it also just strikes me this is like extraordinary thing is the last six years, one thing after another, so covid, the trade war, multiple actual wars ongoing around the world. And now, of course, this tremendous level of anxiety about how AI is going to reshape society, and then, including, you know, the covid was a huge supply chain shock. So now we have the closure of the straight from Lucas, the mother of all, the mother of all oil shocks. We've been through a lot. Speaker 1 28:41 We have been through a lot, and shockingly, I think we've been quite resilient, which, by the way, I imagine is what gave the president some kind of sense that we could go off and do this, that, and probably Madeira and Venezuela as easily as he did. I wonder whether this next couple months, with the street being closed, and how quickly we can reopen that, if you can reopen that, yeah, is going to actually be the first sort of true test of the economy. Because when you do have sort of a true energy shot that actually has, can have profound impacts across the world totally. Speaker 2 29:21 And also, I would say the response to the tariffs, which did not take the economy the way many economists would have. Speaker 1 29:27 But can I say one thing about that? Because I think there's this is, I don't know what. There's lots of people with different political stripes in this room. There's a lot of people who say, ah, all of the journalists, they got it so wrong, because their hair was on fire when he announced the tariffs. And look at what happened. Unknown Speaker 29:46 Look at what happened. Speaker 1 29:48 He changed the tariff policy. I think it's very important that we understand what actually happened. He came out with tariffs at astronomical levels. People's hair went on. Fire, the bond market went on fire. And he said, Oh, okay, we're not going to do it that way anymore. And so there's a reason why the markets didn't go crazy in the end, because he shifted, I mean, this gets to the whole, I'll be polite to the President, the Speaker 2 30:17 whole taco, yeah, speaking of being polite to the president, polite to the President, you, I'm sure in private, you probably talk to them more than I do in private. We know that CEOs tariffs are insane, right? Or the vast Unknown Speaker 30:37 majority, I know very few of the Speaker 2 30:39 interconnected Yeah, and a bunch of other stuff. And policy is chaotic, and they probably think it's the same. It was a subpoena filed against General Powell, and they think that essentially independent, Unknown Speaker 30:54 they don't say it Speaker 2 30:55 publicly very much. They don't say it probably very much because they're scared. Yeah, and do you think the dam could have, could break down that at some point where, at some point, because the President is not popular. Do you think at some point that could have a break of this, like all disability? Speaker 1 31:09 Look, I think that this President is unusual in that he has, he has power. He has an unusual amount of power because he because Republicans support him across my house, Senate House, and more importantly, he's used that power, whether it's against law firms or media companies or other companies. We've seen mergers, all sorts of things. I give you a great example. Just happened. Just happened. So for those of you following this battle, that's a public battle that's taking place between the Pentagon and anthropic around the clock, and this idea that's going to be a supply chain risk of removing it. And maybe you would look at that and also suggest that that might be a political situation. Get into the details of it. Microsoft interestingly fought in an amicus brief, which is effectively a friend of the court opinion to support anthropic in this case, it's very unusual. It's the first time we've seen a major company to such a thing. I happen to be on telephone with the CEO a major technology company the day after the Microsoft piece, who you would think would have a view, and does have a view about what's happening in the entropic scenario, and might even not just have a view, but have a stadium, one way or the other. Key staple, there's a lot of others, a lot of stakeholders, in the future event driver, and this person said that there was no incentive. I said, I can't believe it. Why don't you file the amicus brief too? And they said, Andrew, I got to keep my head down for the next two and a half, three years. That's I can't there's no upside to saying something. This person thought that they could have, you know, their government contracts hold could have huge impact on their business. I think that they don't think this particular company didn't think that they were as immediate. One of the reasons Microsoft might have been willing to do it is because it's not clear that the government can pull out Microsoft Word and Excel, but some of these other technologies, which are not as big, yeah, might have business that's in danger. And this person, there's just no incentive for me to do that. They said they want to. They think it's crazy what's happening, but they're sort of fighting just to get to another day. Speaker 2 33:43 It is the reason I think about this all the time after Trump, the Speaker 1 33:47 one thing that this person did say at the same time that they were criticizing the president or the administration over this particular issue, said the other thing to recognize the interest this president has been better for business over the last couple years, despite the tariffs and all the sort of different issues that keep popping up. On the whole this person has been more supportive of business. They the CEO has more access to them, and this person was talking about how, you know, when the Biden administration, they would just, they would just hit their head all the time, and say, What are these people doing? And he says, I hit my head in a different way. Speaker 2 34:31 Yeah, there's a question from the audience, and it's about implementation, the impact from Ai, which is a question. And also, I'll ask you a question related to that, which I ask almost every guest in your day to day work life right now, have you found a way to, I assume, maybe use AI to prep for guests? I do, but like, if you found a way to, like in your production, we implement AI in a way that. Speaker 1 35:00 Makes your life easier. So yes and yes and no, and I'll explain it. So in the context of the journalism that I produce at the New York Times, we do not use AI for writing. I think the view is that there's still the possibility that they're a hallucination, or, you know, obviously occasionally will still have it still it can make up a quote or what happens? Yeah, you can't. I think you have to be super careful about that. In the context of journalism, I totally used it to redo calendar stuff, email stuff, any internal things, I'll find myself talking to my phone now, effectively, sometimes writing like a memo, like, I would use it in that context, and it has saved me an extraordinary amount of time I talked to, like, I mean, my wife, yeah, because I'm having some kind of relationship with with either chat, GPT or Claude or whatever it is. So yes, I think it is, and I'll ask it all Speaker 3 35:59 sorts of competitive, personal questions. I will give you any health, health information. Maybe I shouldn't have Speaker 1 36:07 other way. I told this story on a podcast, but when I was working on the book and I right before we come out, I had to guess I'm like a little small business, there were a couple of contracts I had to sign different things, not high stakes stuff Unknown Speaker 36:26 at all, like review the layup, review language Speaker 1 36:29 contracts for different vendors and things. And in one case, I was on a plane, I put it into chat. GPT, I said, Tell me everything that's good or bad about the contract, I probably, I probably would normally send it to my lawyer, who would probably charge me, I would say, 500 bucks. But it found, it found the three things that I thought were bad and maybe a couple others that were worse, and then it said, Would you like me to revise the contract and a red line contract? I said, Sure, it did that. Yeah. He then said, you know, would you like me to write a cover letter back to these folks? I said, Yes. He wrote me the most lovely letter. I mean. He said, you know, thank you so much for all the thought you put into this agreement. And, you know, I've noticed there's a couple of provisions in here that I'd love to adjust so that, you know, in the spirit of our working relationship, I made a couple of changes to it. I sent it back. 45 minutes later, they said the thing back and said, Sure. And so there. And that happens on mass. Yeah, that's a problem for the legal community. Speaker 2 37:41 Oh, yeah. You know, there's this view, and many journalists such as US generally share this view. It's like aI writing is still kind of bad, you know, like it has that sort of sickly sweet, right? But when you consider the fact that most people don't place a comma like it's actually better than it's better. Than it's better writer than, like, 99% Speaker 1 38:05 of human rights I could see it being used. I would see it now, I'm not using it this way, but I could see being used as a copy of it, by the way, just to clean things up. Yeah, and that. And we probably should at some point start, start thinking about doing that. But I think we're still in a moment where you need not just a human in the loop, but for journalism. I think you need eyes on it, but it could change the dynamic of reporting. Because the real value of reporting, I think, is the time that you're spending on the telephone or in person, doing a sort of shoe that they call shoe level recording the old days, where you're actually back and forth learning stuff, but the actual new information, but every article that you've ever written has some background, some backstory, some relationship, and explaining the context and this and that. So I can see it a period of time where you go out do a recording, and you effectively Speaker 6 38:55 put the recording into AI. And it doesn't mean that that story the Speaker 1 39:01 amount of time you were taken to actually write the rest of the story is done in a minute. Just going back to the book Unknown Speaker 39:08 process for a second, Unknown Speaker 39:10 it was true. I took, took me too long to Speaker 2 39:12 I started the book before. Must have been like certain things that, especially during archival work doing, I assume a lot of things read a lot of documents that had never been digitized. That's nothing must have been like there must have been things that today would have been a lot easier about that process had you had them. Speaker 1 39:30 Oh, wow, I do know that all the time. So I would go to libraries across the country to collect diaries and memos and letters and all sorts of materials that had not been digitized. By the way, I was effectively digitizing myself. I used to take my iPhone and take pictures of all the pages, and so I had a PDF of 10s of 1000s of pages that I looked at. Oftentimes I couldn't even get the computer to OCR them right, but I couldn't get them to get that optical character. Recognition. So like, even, like, copy and paste the sentence I would be typing. Yeah, I imagine today you could take that sort of corpus of for sure, of files, put it into an AI model. A would be able to read it, and B made it. Tell me your research. Create connections between things. Come in context, but I didn't know. I would think that would be hugely, hugely valuable. I think that someone who's a historian today would probably do that Speaker 2 40:28 absolutely, absolutely. You know, we can sit here forever and just sort of doom out about all of the bad things. What are you optimistic about? Well, so Speaker 1 40:42 I so. But I actually am optimistic that while I do think there's going to be a painful transition for people who are not AI native, and for people who whose job will go away, I'm excited because I have 215 year old boys and a nine year old daughter, and my 15 year old boys have become almost like mini entrepreneurs already. They're, they're, they're, they're programming things, they're building apps, they're coming up with all sorts of wild projects that could, they could never get done. And so I do think there is an opportunity that almost every person in this room is going to become their own entrepreneur of sorts. And you will have the ability to have this idea, that we'll have 1000 agents or 100 employees working for us without actually having to have them, and then we can then become, you know, expand ourselves. It took me eight years to write that book. Could I write a book a year? Could I write a book every six months? That's as good in the future? Maybe now? Then the question is, is there enough people who pay can consume it, want to consume it, or they just can have their agents consume it? And if that's the case, and they're having to summarize it, then the whole model is going to break down completely. Those are sort of the big questions Speaker 2 42:05 that I have in your mind. Do you have an expert right now? Speaker 1 42:10 So I always have like, five books in my mind. My wife is obliterated. She's not mine, but we have a deal at the moment that I'm not allowed for, like, another one. Unknown Speaker 42:22 That I'm Speaker 1 42:25 not allowed to write another book. He told my, my book, my boy. Okay, so we got about three three years. So I knew him on a lot of things, everything from from other interesting points in histories to novels to textbooks to all sorts of things. I'm always trying to come up with, with new five mentions. You know, after to Victor fair, I ended up CO creating millions, and that was a joy for for many, many years. So I'm always maybe, as I said, maybe non fiction space. In the fiction space, sometimes I think about even self help books, Speaker 2 43:11 knowing what I know about your schedule. And, you know, two full time jobs, basically like I would definitely bring the anger of sort of cell phone. I mean, actually, I don't know that's something that most people, most people, I think, probably need help turning the dial in the other direction, something that's the last book that you should be writing, but there's simply something inspirational there. Oh, the cell phone. Yeah. Well, I think how we turn the dial more towards work and Speaker 4 43:39 how to work even harder? Well, no, so I think that all Speaker 1 43:43 I suggest on that is, I think the impression at least of our colleagues, that they think that there's I'm working all the time, which is true. I do this job. I love to work anything. So I don't suggest I don't, but I actually think that the definitely out of town, because I don't think I don't think I had it to begin with. The thing I learned was about both compartmentalizing things, like a lot being a compartmentalize and also actually saying no, a lot more than you think. I actually think that I don't do as much as you could give a weird way, and sort of knowing, knowing not just when to say no, how to say no, I think, is actually huge and valuable. Speaker 2 44:26 You alluded to this earlier. I want to talk a little bit more about contemporary trade culture, because you touched Speaker 6 44:31 on prediction marketing. Yes. What do you think Speaker 1 44:37 about I have very mixed views. I'm actually curious what you think about them, my sense is that they're valuable in the context of political polling, for example, or things of that sort and so. And I think people should be able to participate in that respect. I think it becomes much more complicated when you're betting on what. The first song that bad bunny is going to play at the Super Bowl Halftime Show is because, invariably, the camera person and the cheerleaders and the other people who happen to be in the stadium five hours before the game, who are there while they were doing the rehearsal already know what song is being played, and they have no fiduciary duty. I don't think, to add money or whoever is putting this trade on. So that, to me, is the great conundrum. We tried to create sort of fair markets, by the way, post, post 1929 we implemented something called the SEC in 1934 and insider trading, in the idea of these sort of pool operations and other things became illegal, ostensibly. And I just wonder how we're going to regulate this world, especially if you can bet on anything, if you could bet on by the way we're going to talk about during this conversation, which ostensibly you could have, right if anybody is at this moment, that, to me, could be a problem, because maybe I don't know. We've had some nice people who were backstage and they overheard us talking about our conversation. Maybe they would know. Speaker 2 46:10 I think it's going to have the effects like, essentially, people are going to close off their circles of trust even tighter, right? Like people share information about all kinds of things. The Nobel Prize Committee, there's a certain handful of people that are involved in writing the press release or updating the website when the winner is if that all just suddenly becomes monetizing all the information. It strikes me that one negative effect is you really have to tighten the circle of who knows anything, and it's annoying, because who wants to have to worry about that when you're just like, Oh, you're the person who's going to update the website and get a picture of the Nobel Prize when we're going to announce tomorrow. Suddenly, that's monetizable information. Three people get to know about it. The thing Speaker 1 46:56 I can't figure out about about prediction markets is, on one hand, I actually the information can be extraordinary valuable. So for example, on CNBC, CBC now has partnership, and we're using a lot of that you can on screen. And so knowing you know that there are people betting on Iran? Is actually pretty interesting, but maybe it's interesting because insiders are participating, and so we're looking for the signal, right? We're all looking for the signal. So the feed might be very valuable. The question is, how the feed is created and what it does for society is a whole other question. Yeah. Speaker 2 47:39 I mean, like, it strikes me as like, a very useful thing, because, you know, if your lawn markets or something like that, or natural gas, okay, what is the market implied probability of this straight hormone reopening up, right? This is information that people want, and it used to be like, infer that from the oil price. You might infer that in the shape of the Oil Futures Curve, or something like that. Now that is just in theory. There's quite a bit of liquidity on these markets. There's a fair amount of volume. Maybe you could get a direct price then and say, Well, does this actually align with where oil prices are? Could there be a mismatch? Speaker 1 48:17 And that's where you think information is valuable. The thing that I worry about it. There's two pieces that I worry about. I do wonder whether the information gets polluted in the following way. I know a number of professional investors who are now using prediction markets to hedge bets that they're making in other markets. Well, it is a great use case, except if we're all looking at information as a signal of what's actually happening, it pollutes the signal, because they might be betting against something because they bet for something in a different market. That's one piece of it. The other piece, which is the most social. Societal piece, is how much people using credit to make these bets. Now, I don't know if people still appreciate this point in most states in America today, you can't buy a lot of your ticket with a credit card. It's illegal. They don't allow you to buy credit card by cash or a debit card. And the reason, when you have that those states have that policy is because they don't want society basically making these gambling bets that are likely to lose in some, in most cases, and letting themselves out. Speaker 2 49:25 This is the other thing too, which is that, and I know you've had these conversations, talk to the production market executives, really great. We're going to get these. You know, this is, this is wisdom, distilled information about all this stuff. Fine. They're basically used for sports training right now. I mean, the dominant volume on these markets is not actually sort of like politically or economically interesting data. It's basically a way for anyone who's over 18 to bet on sports in states where that's not even allowed. I mean, like that is really the dominant thing that's happening. I don't know Speaker 1 50:05 if you follow this. So years ago, Chris Christie, who was former governor of New Jersey, he was responsible for really opening up and making a states rights issue to allow people to demo sports. Sports was not something that you could, you could do nationally. And so here we have this sort of very interesting, almost arbitrage, where some states, most states, now have their own betting laws and allow betting on sports. And it is true, most people are betting on sports. I always highly thought that the couches and poly markets and manuals and graphic things would ultimately just become one thing, yes, but the other piece of this is the arbitrage is that now the claim is, these are not actually, this is not sports betting. These are commodity trades, effectively, and that's a little bit harder to wrap your head around. Speaker 2 50:56 I interviewed Michael Seiler, the chairman of the CFTC, and I asked him, would you do because you can improve that on the points of the Super Bowl, right? And I said, What if you just, you have one of these places, just live stream or let me go, and then you could commodity contracts on whether it's red or black? Would that be loved? I'm still a little on. What did he say? He said a lot of words, and I don't remember what the answer was. Essentially, to your point, though, all of these instruments can be used in any one of the ways. I mean, this is the other strange thing about markets right now. Period is you could have them. You could tokenize them. The series of tokens could go into an ETF, like there is period where any financial instrument can essentially be repackaged into Speaker 1 51:47 anything well, and maybe this will take you back to politics. You know, all this really couldn't have happened even a couple of years ago, right? Because the regulators just weren't allowed even during the first Trump administration, when Jay Clayton was the head of the SEC if you recall, they didn't even put certain rules into place. Everybody always thought like Garrett Gensler or Clayton or others, whether it's crypto tokenization, some of these other rules, there really weren't rules. Because there really weren't rules. There was a sense that you couldn't do it, because at any moment, the regulator could sue you into oblivion. And now we have moved into a much more permissive, some would say, even promiscuous place, as it relates to sort of new products in the market. And I think it's not just these products. I think it's, you know, we're seeing private equity, private credit, venture capital, all this is going to be available today, any instrument people have been tokenized stuff at a baby with 401, K plan. And the big question, we keep talking about crises and what could go wrong? That, to me, ultimately, long term, at some point, these products, whenever you get a series of big products, without all the transparency and without all the white rules, they go, you know, they go too far, and something bad happens, and then we pull it back. That seems to Speaker 2 53:18 be the American big cycle, I mean, you mentioned during the conversation, is the aftermath of the 1929 crash that gave birth to the SEC right, like, and I love the view that, you know, there's probably a little bit of incentive trading exists, etc. But by and large, if you look around the world, the US has, like the most transparent, least manipulated, Unknown Speaker 53:46 hybridial market. I hear that in the world, Speaker 2 53:48 and it seems to me that we're possibly in the process adding the fact, like our company's making a have to report early data anymore, which we know the President has loaded relaxing some of the requirements on that. Are we going to sort of do the big cycle in reverse, where, by and large, aren't Speaker 1 54:09 really rules? I think that's what we're seeing. The drift is coming, if it hasn't started. Speaker 2 54:15 Yeah, when you talk to people both, either on camera, privately, do they feel this sense that, like if that, like, more or less get away with anything. I haven't had somebody Speaker 1 54:27 put it that way. I do think there's a sense, though, that we are in a place where you can just try a lot more, and that, you know, interestingly, I had interviewed the head of the SEC in the records, talking about some of these very interesting instruments that have developed around tokenization. People are tokenizing private companies, yes, and affecting making them available to investors that historically, we didn't allow to invest in these things and begin a debate about whether we should all be allowed. Again to buy robbery ticket or not, the view was always you need to have a million dollars or more. Because the view was, if you walk, if you did have a million dollars and you lost it, the social safety net of America was going to have to support you. And that, therefore, there was a reason that we wanted to sort of keep a line, maybe doing a journalistic way. Here's the answer, though, about I said, are you gonna allow this stuff, even though, to me, It's patently legal, yeah, just was, no, no. We just need to make IPOs great again. So I think that I always say that the mother maybe will, but I think in terms of stuff that's going on that sort of questionable, I don't think you know, I don't think you're gonna have the police on the beat in Speaker 2 55:41 the past. So just have a few minutes left. One of the questions that people asked me from time to time was like, What are you going to cover on the podcast this year? Obvious stuff. We're going to talk about AI, and now we're going to talk about the ramifications of the war in Iran, and we're going to talk about the trade war and industrial competition with China doing fresh ideas. Do you have any fresh ideas? Do you have any stories that right now are not the obvious ones that more people should be paying attention to or talking to talking about Speaker 1 56:13 putting on the spot here to come over? No, it's a great question. I think is not focused on enough. Here in Austin, actually, given that Elon is here, they do spend a lot of time thinking about it, but I don't think the rest of the world is which is space. I am completely fascinated by what the world will be like in five or 10 years from now. We talk about transformational stuff. I mean, you're on the planet with AI and jobs and this and that, you know, to me, having really put both people in space manufacturing, in space data centers, in space things on Mars. I mean, there's wild ideas about energy, the idea that you could have a satellite in the sky that could effectively point a mirror of the sun down to the ground, so that you could actually have solar on the ground in sun 24 hours a day. I mean, there's some wild I don't know if you think that that's ultimately impossible. There are people in the industry who think that something happened, that stuff could change everything. Speaker 2 57:29 Yeah, you know what? You're going to plug something. We actually have an episode of our podcast coming out. We interviewed NASA's first chief economist, which I didn't know they ever had a chief economist. So I'm glad you said that, because they had a bad episode beyond a couple of weeks or something. It got me really excited about space. Unknown Speaker 57:44 They may think about politics in space. Speaker 2 57:47 Yeah, you know, there's all kinds of laws about Moon properties. Apparently, you've agreed that there would be no private property on space. But whether anyone Speaker 1 57:58 obliged by those right control, the military decides that there's going to be wars in space over planets, right? It's gonna be fascinating. That's the exciting part. You asked me what's began. And I think about that, whatever that is, I want to be around to see. Unknown Speaker 58:19 It's a great it's gonna be a great template. We're long haul in our business, and I'm not worried about picture Unknown Speaker 58:28 cover this. The sad part is is, and I know if you feel this way, bad stuff is good stuff. Speaker 2 58:39 I have very mixed people. And it should be just to it's not that like it just will give people the two men, it's Speaker 1 58:50 complicated stuff. Yes, complicated stuff doesn't be bad. Complicated stuff is interesting stuff. This is one of these kind of rooms. I can feel it. And these guys is we all are trying to grab. Yeah, plenty of Unknown Speaker 59:03 questions asked. All Unknown Speaker 59:06 right. Andrew Lucas, that was blast. That was a ball. Unknown Speaker 59:28 Boom, boom.