← Bulwark Takes
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- [00:00]
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- [01:01]
JVL
Good morning. This is JVL from the Bulwark. I am here this morning with my colleague at the Bulwark, the great Kathryn Rampel and our friend of the Bulwark, Paul Krugman. You can find him. He needs no introduction, obviously, but you can find him over on Substack. Paul Krugman. Substack it is. My second favorite economist. Substack, first being Catherine, of course.
- [01:24]
Kathryn Rampel
Oh, I'm not an economist, to be clear. I'm an economic journalist. So.
- [01:28]
JVL
Economic journalist. So then he's my favorite professional economist, but my second favorite person who writes about economics.
- [01:34]
Paul Krugman
I hate credentialism. I know some idiotic PhDs. I know some very smart people who don't have them. So. Hi, Catherine.
- [01:42]
Kathryn Rampel
Hi.
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Paul Krugman
Hi, Paul.
- [01:43]
Kathryn Rampel
Good to see you.
- [01:44]
JVL
Thanks for being with us, Paul. So we are live this morning because we just got the big Bureau of Labor Statistics report with job numbers for January. That's interesting. But the reason we're live is because we get a full year revision for 2025, and that is fairly interesting stuff. Catherine, can you just set the table here and tell people what's going on?
- [02:06]
Kathryn Rampel
Sure. So I think the top line things to know are that the January numbers were much better than expected. 130,000 jobs. That's like, I think close to almost double what had been forecast. So that's quite good. Paul can give some more insight about how much confidence we should have in that number specifically. But, you know, headline number is good. However, there is Some bad news, which is that last year's job growth was significantly weaker than expected. So, as you mentioned, jbl, we got some major revisions. This happens once a year. It's very annoying to go through everything, but in this case, it's pretty clear what the picture is, which is that we added many, many fewer jobs than anticipated. The initial estimate had been something like looking it up, 584,000 jobs. So more than half a million jobs added in 2025. That has been sliced down to only about 181,000 jobs. So it's still positive, but, you know, quite weak if we're talking about a year's job growth. And most of the jobs have been in a couple of different sectors in health care and social assistance, which are sectors that are not really sensitive to the business cycle so much. Those have been growing and probably will continue growing because the country's getting older, and so you need more people taking care of providing health care for the elderly. Meanwhile, everything else looks either negative, pretty negative, or close to flat. Like, we lost manufacturing jobs. We lost jobs.
- [03:52]
JVL
Manufacturing jobs. What about all those chiseled young white men staring off into the middle distance in the. The.
- [03:59]
Kathryn Rampel
They're all labor.
- [04:01]
JVL
They did not do well.
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Kathryn Rampel
No. Okay, not so much.
- [04:05]
JVL
So, Paul, talk to me. What does all of this mean?
- [04:10]
Paul Krugman
Okay, so the first thing for everybody is monthly job numbers are just very noisy. I mean, it's. People react to them because it's kind of the only information out there. Or. But it's. If you actually drill into the details of the BLS report, it says that we gained 130,000 jobs, plus or minus 123,000. And that's. That's actually the. And that's just kind of the statistical noise. There are bigger questions about seasonal adjustments and models, which are not. So the truth is. Well, yeah, that was a better number than most people were expecting. The annual numbers are a lot less noisy, although still. And the annual numbers, you know, in the first year of Trump 47, the economy gained about 900,000 fewer jobs than it did in the last year of Biden. So this is not a booming job market in a lot of ways. The most interesting thing is actually one actually good piece of news. Were they violating the guidelines? And did administration officials have early access to this report? And the answer is apparently not, because Peter Navarro, Kevin Hassett were frantically spinning a terrible jobs report, which is not what they actually got. But the spin is interesting, and the spin is still an excuse for the bad annual numbers, which is they're Saying well job growth has slowed because we're deporting all of those illegal immigrants which aside from not there's a lot of factual misstatements otherwise known as lies in all of this stuff. But the real thing is that that undermines the whole theory.
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JVL
Right.
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Paul Krugman
The whole theory behind was only worst of the worst. Yeah.
- [06:02]
JVL
Whereas the Trinidad members, as Paul, I'm sorry I have to ask, do they work like 40 to 60 hour day jobs, construction services, that sort of thing and then go home to do their gang activity?
- [06:15]
Paul Krugman
Yeah.
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JVL
Is that how that works?
- [06:16]
Paul Krugman
Actually what they do, they do construction and meat packing and, and, and farm labor and especially kind of getting to the aging population and the healthcare there. You know, 40% of home health aides are immigrants.
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JVL
Right.
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Paul Krugman
Quite a few of them. You know I, when my, my parents were in their last years and my mother in law, I don't think I saw a single US born worker in the facility. So yeah, we kind of need those workers that we're busy deporting.
- [06:48]
Kathryn Rampel
Yeah. And just to add on to what Paul just said there, the message that we have been hearing from this administration is that these immigrants are taking the jobs of native born Americans. Right. And that but for those immigrants job growth for native born Americans would be much higher. So you know, the narrative to date has been there is like a set number of jobs that are out there and either go to immigrants or they can go to native born Americans. It's zero sum. And every job that an immigrant is taking is one that is not going to a native born American.
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JVL
Heritage Americans, Catherine.
- [07:31]
Kathryn Rampel
Heritage Americans, whatever. White Americans presumably is the not so subtle subtext. That's the narrative then this week as Paul alluded to Peter Navarro said. Peter Navarro and actually Kevin Hassett basically said, well actually the total job growth should be lower because we've deported all of these immigrants. That doesn't quite make sense. Right. I thought that we were supposed to be anticipating that all of these new job openings were going to come to fruition for heritage white native born whatever Americans and that we should still have the total, the same total number of jobs. They're just being reallocated and in fact they take tacitly acknowledge, no, that's not the case, that these are jobs that are probably just going begging because there are not the immigrant workers to fill them. Whether they're in healthcare as Paul mentions or in lots of other sectors. Food services, lots of other sectors are, you know, agriculture. That's not in the overall, that's not in the main jobs number. Jobs report but you know, you have food processing as well. That's, that's part of that supply chain. Yeah. So there are a lot of these industries that are very reliant on immigrant labor and may still have the same number of workforce needs, but they can't fill them because the workforce that they rely on is being kicked out of the country either. Because, you know, the administration will say it's because they're all illegal. I would say it's because largely the administration is rendering them illegal by taking away their documents. You know, they're de. Documenting a lot of immigrants who are, who have been here and working legally.
- [09:10]
JVL
Paul, I don't want to get too sidetracked on this, but it is important. Could you talk for a minute about. Because when you deport a bunch of people, these people are all economic actors. Like these people who, who have jobs. Yes. And so they take on money, but they also consume goods and services. They pay tax. Like they create economic activity. And when you just start carving out big chunks and like disappearing parts of the economy, doesn't this contribute to slower economic growth?
- [09:41]
Paul Krugman
Of course it contributes to slower economic growth. Basically one for one, you know, to a first, you know, there are details, but basically to a first approximation, if we reduce the growth of the working age population by 1% through deportations, we're going to reduce economic growth by 1%. That's, that's roughly what's going to happen and what's particularly important there is that particularly on several different things. But on the fiscal side, if you slow the growth of the economy, you do not slow the growth of the biggest demands on the federal budget. The federal government, leading aside defense, is largely an engine that collects taxes on working age people and uses them to pay for health care and retirement. And for now and for quite a while to come, health care and retirement is going to go overwhelmingly to native born heritage Americans because we're getting old and a lot of the tax revenue that we were counting on is going to come from foreign born workers. Actually in some ways illegal undocumented immigrants are actually ideal because they pay the taxes, but they don't actually, they aren't actually entitled to the benefits. But that's a kind of a side irony. But the, so if you're going to the demography, if you look at things like, you know, the future of Social Security, to an important extent, the future of Medicare, demographic projections are hugely important. The growth of the, of the working age population is the biggest single determinant. The reason those programs are in some stress is Largely because the baby boomers got older. And we've been partially making up for that by bringing in a lot of people who are eager to work in America and pay taxes. And now we're saying, oh, no, we don't want you because you like bad bunny and you have the wrong skin color and who's going to pay for our retirement? So this is all very serious. And then there's the fact that immigrants are doing a lot of jobs that heritage Americans don't want to do, whether it's elder care, whether it's meat packing, whether it's, you know, construction, particularly, it turns out the frontline construction guys, not the people in the, in the office, but the people on the scaffolding. It's a lot of immigrants there. So this is, this is very serious.
- [12:05]
JVL
All right, so how, how have markets been responding, Catherine, to, to the news? Because it seems like markets are pretty happy, which I find odd.
- [12:16]
Kathryn Rampel
I'm looking at the ticker now. I mean, they're basically flat. They're slightly up. If we're talking about equity markets now, the real question, the thornier issue will be. Sorry if I'm not looking at the cameras, because I'm looking up some, some stats. The real issue will be what happens to expectations for rate cuts and bond prices, treasury prices. So the chances of a rate cut in this coming meeting in March were already considered pretty low. You know, for those who may not remember, the Fed just met not that long ago. They also just held steady. They decided not to cut rates, which made the President very angry. The chances of a rate cut for, for April are low. The chances of, so March are low, April are low. Even January, June are down. And right now it looks increasingly like the first rate cut, the next coming rate cut will, may not be until July, which obviously is not what the President wants. Normally, we would not be privy to what the President wants because the President, for the last, however many administrations, at least since the early 80s, has been very careful about not publicly stating what they wanted the Fed to do because it was really important to not only have Fed independence, but have perceived Fed independence to not be seen as leaning on the Fed in any way or another. Obviously, that norm, like many other norms, has gone out the window. Trump has been very clear that he wants rate cuts. Trump has also, of course, recently announced his pick for the next Fed chair, Kevin Warsh. And I know Paul and I have, I think, pretty similar views of Kevin Warsh, which we can talk about. But I think in some. Today's report will put A lot more pressure on Warsh, assuming he is confirmed to dramatically slash rates at his, you know, when he first gets sworn in.
- [14:27]
JVL
First meeting right now.
- [14:28]
Kathryn Rampel
Yeah, at his first meeting, because Powell is there through May as Fed chair and it doesn't look like right now we should expect any additional rate cuts through then, at the very least, largely because the numbers were stronger in January. Right. And so when the numbers are strong, when job growth is stronger, that, that suggests that the Fed doesn't need to step on the gas as much, doesn't need to cut rates and stimulate the economy. They might be a little bit more worried, less worried about employment, maybe a little bit more worried about inflation, which is still hotter than they want it to be. All of which adds up to they may hold off cutting rates. And that's going to put pressure on Warsh, who Donald Trump recently joked that he might sue if he doesn't cut rates. So I think this is, you know. Yeah, I know. Very funny. Very, very funny. That joker. Yeah, yeah.
- [15:23]
Paul Krugman
What you need to bear in mind here is that, you know, Trump has a theory about interest rates which is that he thinks that, that he thinks of interest rates as being like a gold star that you get in third grade for, for, for doing well on a quiz. Right. He, he thinks I have a great economy, therefore I deserve rate cuts. But, and, but that's not what the, what the Fed Board of Governors or not what the Federal Open Market Committee thinks. They think that if you have a strong economy with st. Inflation, what's the case for cutting rates? And certainly this latest report is not, if anything tilts further away from them and even worse will come in in May. But he's only one vote on the Federal Open Market Committee which sets rates. And I think this makes it extremely unlikely that he would be able to bring the rest of that committee with him. Even if he does, there's a possibility that Kevin Worsh will sort of throw open his, his and reveal his costume and say I'm actually a normal Fed governor after all. But, but if he doesn't do that, he's still gonna, he's not gonna be able to do this. So this is, we're setting up the stage for a lot of storm and fury over the Fed, although there's a lot of other of the various things that have me worried about at the state of America. Polite disagreement that the Federal Open Market Committee is not high on the edge on the list.
- [16:44]
Kathryn Rampel
Well, polite disagreement, yeah, I'm not so worried about. But like the overt politicization of the Fed I am quite worried about because. Yeah, because it won't matter just for the next few meetings. It may matter for the next few decades, right, that the Federal Reserve has its credibility as a politically independent institution, but that credibility has been hard won by basically since Volcker. And it takes a really long time to build it up, but not very much time to cut it down. Particularly if you mentioned that, like, war should be only one of a dozen votes. However, if the President decides to use more of the weaponry of government to, I don't know, launch a criminal investigation of someone or, or other, or otherwise harass, persecute, prosecute them. You know, Warsh's one vote may not really feel like one vote because it's really a vote with the power of the President behind him, who can use the doj, among other strong arms of the law, to pressure the rest of the board to do what he wants, which I hope it doesn't come to that, to be clear, but it certainly looks like it's within the realm of possibility, given that they are already criminally investing Jay Powell, who, who is already on his way out. So, like, if there are you. If, if this President is already using, pulling those levers to pressure Powell or punish Powell at the very least, then what, what makes us think that he'll have any reservations about doing the same thing for the other members on the Fed board or the other regional Fed presidents? I don't know. I mean, like, it, it doesn't seem like it's beyond the pale for him.
- [18:37]
Paul Krugman
No, nothing. And by the way, to give you a sense of how weird we, the state of things is, I, I talked with Claudia Psalm, my favorite Fed expert, a little while ago, and she was pointing out that Jay Powell, you know, he's facing these, this crazy criminal investigations, but he has an advantage that we rarely think about, which is that he's personally wealthy and he is able to pay for his legal defense without much difficulty. Other members of the Fed board are not. I mean, I know that Lisa Cook, a friend of mine, had to really scramble to get help. You know, we have to get pro bono legal help. So the positive, we're completely in a different universe. We are in a situation where just thwarting Trump's will, even if it's a perfectly normal role in government, may turn out to put you at personal risk of. Risk of having your life ruined. So, yeah, and it's weird, but a good job report kind of slightly increases the chance of crazy, fundamental violations of decency in government involving The Fed, the way in which stuff kind of pinballs its way through the whole system these days is incredible.
- [19:59]
Kathryn Rampel
Yeah. And I would note that I saw Pierre Yared, who is currently the acting chair for the Council of Economic Advisors. He was on Bloomberg this morning and he said, Columbia Business School. I think normally, Paul, correct me if I'm wrong, he's like, okay, anyway, he's like at a good school. He's on the Council of Economic Advisors. He's a generally a respected guy. He was on Bloomberg basically calling for more rate cuts. And if, if he's in fact like on the bandwagon for all of this, I think that's a bad sign. Of course, they wouldn't have put him on TV if he would have, if he was going to say anything otherwise.
- [20:37]
Paul Krugman
Put him on the council. And that's the, that's in general, that's the, you know, the, there's a, we can get cosmic here, but I think, you know, there may be a tipping point given what's happening to Trump's approval rating and particularly after the midterm elections, when suddenly the ability to co opt and bully people evaporates and people start to think about their longer term professional reputations. But we're not there now. And so, yeah, it's really, Anyway, but I think the, the main thing is that, you know, we, I, I don't actually watch cable tv, but the, the, this, this, you know, one hundred and thirty thousand, which is again, the big headline number, is really telling you very little and if anything may well turn out to be a problem for Trump and his agenda.
- [21:31]
JVL
So I'm Jared and I want to, I want to put some graphics up here because I, I saw the 103rd, I saw the market sort of being like, yeah, you know, way better than expected. So Jared, can you put up our job growth numbers going back a couple years? Because again, like 130,000 better than expectations.
- [21:51]
Paul Krugman
Okay.
- [21:51]
JVL
And maybe when it's revised it holds up, maybe it doesn't. One more, Jared. Go back one more. We'll get to the others. Nope, not that one. The job growth by month.
- [22:06]
Paul Krugman
By the way, for what it's worth, the hourly earnings number is also monthly job creation.
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JVL
Jared. Sorry.
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Paul Krugman
There we go.
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Kathryn Rampel
No, that's, that's manufacturing.
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JVL
Okay. Anyway, the point is Jared will get that up.
- [22:18]
Kathryn Rampel
This is 12 months.
- [22:19]
Paul Krugman
This point. Look at it. It's all left of the.
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JVL
Yeah, there we go.
- [22:24]
Paul Krugman
There we go.
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JVL
It's still like130,000 is still much lower than we've been doing for Right.
- [22:33]
Paul Krugman
Sort of, you know, running the, the averages. It's, It's.
- [22:37]
Kathryn Rampel
It's.
- [22:37]
Paul Krugman
Yeah. First of all, you can see the noisiness there. Right, right, right. Just, you know, this is a. Yeah, you're really kind of like, like trying to play telephone with tin cans or something. This is not a clear signal that we're getting of what's going on. And. Yeah, this is not a big thing at this, you know, the. I have Wall street friends and they say, you know, I gotta trade. I'm what. I'm what the available numbers are. And this is a. A big trading thing. But it's not. It's really whatever you thought about the economy. This, this report shouldn't change your views very much.
- [23:12]
JVL
And so here's the. I want to make the case to you guys both and then have you tell me that I'm. I'm an idiot. So I look at this, the monthly job creation numbers, and then I look at the unemployment numbers, which you can pull up next. Jared, you. You had that there. And that is, you know, like, nothing catastrophic but slowly ticking up. And then look at the wage growth, which clearly there's some downward pressure on wage growth, which again, everything here tells me when you line them up. And again, don't look at the noise, just look at the trends. That what you have is a labor market getting slacker. Right. And so when labor markets get slack, that's bad. I mean, it's a bad sign about the economy. This is not like the apocalypse. This is not like, oh, the world is ending or anything. But all of these things put together look like an economy that's slowing down. Is that wrong?
- [24:11]
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- [25:15]
Paul Krugman
It's definitely slowing. Employment growth is clearly slowing, never mind one month's bl. And the general picture of the labor market is it's weird. I mean, the outright, the unemployment rate has not spiked, although it has drifted up. But sort of hidden underneath that, and you can see that in other data, is that it's a weirdly frozen labor market in which there haven't been a lot of big layoffs, but there's also historically low hiring. And so if you have your job, probably okay. But if you are looking for a job, either because you're young or because you've, you know, stuff happens in an ordinary month, a million and a half people or something like that are laid off in the United States just under normal circumstances, then you're out of luck. It's really very, very hard to find a new job. And we don't know why that's happening, but probably uncertainty. The, the craziness of policy. I mean, there was a, another headline this morning with everything else going on that floated by that said that Trump is considering doing away with the U.S. mexico, Canada, free Trade Agreement. You know, just, you know, just totally. Why not North American manufacturing? Because he's decided he doesn't like it. And, you know, they, anyway, well, which.
- [26:37]
Kathryn Rampel
Which Trump actually renegotiated in his first term and said was the best deal that the United States had ever achieved. So, yeah, now he's like, what kind of what doofus negotiated that agreement?
- [26:50]
Paul Krugman
I'm calling it the agreement formerly known as nafta. But he did, you know, change it slightly and stick his name on it. And. Yeah. And, you know, there's all this amazing stuff. The. Maybe. I mean, I'm older. I was, I was of the generation where we all read Atlas Shrugged in college, God help us. And I do remember that one of the things that radicalized the, the female protagonist was that her father's or her grandfather or somebody had to face the, the crazy socialists who, who tried to prevent him from building a railroad bridge. And Trump just said, oh, you know, that new bridge between the US And Canada, I'm not going to allow it to open because it turns out because he's got a, he's, he's close with. In other words, probably being financially compensated by somebody who owns an existing bridge. And it's like, wow, this is so much for free markets and think about the uncertainty for business. You don't know if you're General Motors. You take a look and say, my God, our whole production, our whole supply chain depends upon Canada and Mexico. Now Trump is saying, first, you know, first, that we don't know whether the Supreme Court is going to rule the tariffs illegal or whether they're rule ever, because this is getting weird now. And second, we don't know whether Trump may decide to just abrogate the whole free trade agreement. How are you supposed to plan, how are you supposed to do business? And this has got to be weighing on, among other things, on hiring. You want to hire a bunch of workers if you don't know whether the jobs they're supposed to do will still exist after the, after the next trade policy.
- [28:28]
Kathryn Rampel
Yeah. You don't know what your other costs will be because you don't know what your input costs will be. You don't know if you're going to get a big rebate from tariffs from the past year or not. You don't know if you might cross the president and he will decide to put you in his crosshairs and again turn the, the weaponry of government against you. And, and I think it's, you know, this is, I'm beating a dead horse here, but I think it is particularly distressing that the titans of industry out there are not saying all of this publicly. Right. They know that this is bad for general economic growth. They know that it's bad for their bottom line. And at best, they're staying relatively quiet. And at worst, they're groveling publicly to the president. Like I saw that yesterday. I think it was David Solomon, who's the CEA CEO of Gold. Oh, yeah, was talking about, I don't know, Paul, if you saw this, but David Solomon, I'll, I'll pull it up.
- [29:31]
JVL
So just so your popular policies are good.
- [29:34]
Kathryn Rampel
Populist policies are good for, for Goldman and for the overall economy. And I think he was, the implication was that he was referring to like the 10% credit card interest rate cap tariffs. What else was in that bucket of things that were supposed to be populist and good for the economy? I don't know. I guess the mass deportations, like a whole bunch of things that objectively we know the sign, anyway, it's a negative sign in terms of what effect they have on the economy. We can argue about the magnitude, but they're not good. They're not, presumably not even good for that. That good for Wall street unless there's like, you know, Potentially some competitor, I guess, of Goldman's that could be taken down by like the credit card interest rate cap. But these are all the kinds of things that if a Democratic president were doing them, they would be raising human cry. Right. They, they would be.
- [30:28]
JVL
It's command economy stuff.
- [30:30]
Kathryn Rampel
Yeah.
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JVL
I would say this, Paul. Donald Trump wants a command economy.
- [30:34]
Paul Krugman
Yeah. Although it's not, you know, command economy normally means that there's a central planning commission that makes plans. In this case it's just Trump decides what you do, which among other things is, you know, the given, you know, we got 160 million or so workers and, and millions of different, the idea that, that, that one man who actually has no idea what's going on can tell you what to do. But anyway. But no, the whole corporate general, the big business oligarchy, they went from greed, oh, he's going to cut our taxes to fear, oh, he might ruin me personally with no transition, no intervening period of saying this is bad stuff. So it's it. And I couldn't, I could have told them this was going to happen. In fact, I did. I'm sure that Catherine did as well that oligarchs who think that they, they're going to profit by, by helping a strong man consolidate power always end up, you know, at best finding that they're having to grovel. At worst, they find themselves falling out of windows and it's, this is history.
- [31:43]
JVL
Fingers crossed.
- [31:44]
Paul Krugman
Don't know that.
- [31:45]
Kathryn Rampel
Well, no, I mean, I'm not rooting for that outcome.
- [31:48]
Paul Krugman
I don't care about the guys falling out window. I mean, I do, but mostly I don't want to live in a world.
- [31:53]
JVL
Where it's okay, we have, we have guardrails against that. It's called ranch housing, so.
- [32:00]
Paul Krugman
Right, yeah.
- [32:01]
JVL
One floor living. And you don't have to worry about that. Final question and, and then we'll get out of here. I, I know people have things to do with their lives. Can either of you explain to me why the markets seem basically unperturbed about all this stuff? Because this has been one of my persistent things over the last 14 months where I been waiting for the markets to react to all of the craziness and to the understanding that the economy is slowing and that bad things are happening in the real world and yet the equities, markets are just like boom straight ahead. And is this a mirage because it's all just AI driven and the, you know, the, the AI companies are propping up the rest of the markets or the markets. Is it a boiling Frogs case where they are, as you say, they're making trades on what can make the money tomorrow. And so because things are going step by step, slowly, there are always monies to be made and trades to work. What explains this? Because it's driving me insane.
- [33:08]
Paul Krugman
Oh, gosh. I mean, trying to understand why the market does what it does is always kind of a mugs game, you know. Okay. My old teacher and colleague Paul Samuelson famously said that the market has predicted nine of the last five recessions. Right. It's just, but I mean, one point actually Catherine's been really good on this, is that, you know, there seem globally, for whatever reason we've been risk on people have pushed into stock markets and in fact every other major stock market is up by more than the US market. So this is really, you know, you know, to the extent that you can isolate a Trump vote from the markets, it's actually kind of a thumbs down relative to the rest of the world. And as for the rest, well, you know, it's true that, that Trump's policies are crazy and disruptive, but they're also, you know, anti populist in practice. It's very much lower taxes on rich people and corporations and reduced benefits for the, for, for all of you foolish little people out there. So I don't think you want to read too much into it. It was, you know, the, the initial shock after Trump announced his crazy tariffs went away. And that's, that's hard to, but you know, who, who, who, who knows what we're, I think in general. So another one of my teachers was very close to me was Rudy Dornbush, who's famous for his Dornbush's Law, which is that the crisis takes longer to happen than you can possibly imagine and then when it happens, happens more quickly than you can possibly imagine. So there's probably a day of reckoning out there.
- [34:48]
JVL
But when, and fingers crossed.
- [34:52]
Paul Krugman
Well, and bitcoin is lower than it was when Trump won the election, before he won. I mean, so, so anybody who's bought bitcoin because they thought that Trump's going to be great for bitcoin has lost money in many cases, a lot of money. And that's probably eventually going to happen for equities as well.
- [35:09]
JVL
Yeah, well, I mean, it was always foolish to buy bitcoin when Trump coin was sitting right there. That's true.
- [35:14]
Kathryn Rampel
Or Melania Coin.
- [35:15]
JVL
Or Melania Coin.
- [35:17]
Kathryn Rampel
Yeah, or Melania Coin. Yeah. So to add to.
- [35:20]
JVL
Katherine, you have the last word here.
- [35:22]
Kathryn Rampel
Sure, sure. So I think it is Paul is absolutely right that the rest of the world in terms of equities markets has been doing much better than the United States. I haven't looked at it today but it was like, you know, 10 percentage points higher, maybe even double the growth in the past year anyway. The rest of the world excluding the United States doing much better. And then as you point out, jbl a lot of the growth, in fact, I think historically concentrated amount of growth in earnings in The S&P 500 is because of these, is due to these AI companies or AI related stocks that the so called Magnificent 7, they are driving a lot of the growth. So the rest of the market not doing so great. But then the Magnificent Seven, these big tech companies, they are doing quite well. And yes, AI will transform the economy. In some ways we can anticipate, in some ways we can't. It will be very disruptive and probably will produce a lot of growth and at least in some sectors. But there's probably a lot of bad money chasing after good at this point. And there's, it certainly looks like a bubble within that, that world. And so if or when the bottom falls out of all of these AI investments, all of these big, you know, CapEx investments in data centers and the like, that means that it's going to drag down those stocks and drag down the rest of the market. So some of this is being sort of artificially propped up, I think by things completely unrelated to Donald Trump. And that may be offsetting some of the really destructive things that are happening due to Donald Trump and whether that can persist and how much longer it can persist. Very much an open question. But I share Paul's, I think concerns that you could see some big declines within the stock market in the United States, although we don't know on what time frame.
- [37:25]
JVL
Yep. I did think watching the super bowl with all the AI ads, it felt like the year that it was all pets.comcosmo.com and GoDaddy ads which were so.
- [37:38]
Paul Krugman
Much better, so much funnier. Looking at some of those old ads and why are the ads so dreary compared with the, you know, the Quest and, and price line, you know, or the crypto year.
- [37:50]
JVL
Right. Didn't we have like five years ago or six years ago was the crypto ad year? Everything was.
- [37:54]
Paul Krugman
Those were horrible ads though. I mean they, the, yeah, people lost a lot of money but the, the ads weren't fun. And what is, why did I want us to party like it's 1999? Those were good years.
- [38:05]
Kathryn Rampel
I, I will also Add, just as a brief footnote to all of this, that part of the reason why Crypto has been tanking may be related to the other things that were advertised ad nauseam at the super bowl, which is all of these prediction markets. Like, a lot of the dumb money that I think. Dumb. You know, young men money, young male money.
- [38:25]
JVL
It was just gambling. And. Yeah, easier and more fun to gamble on actual gambling.
- [38:29]
Paul Krugman
Hey, has anybody ever used the phrase the testosterone trade? I just came up with that on the spur. Anyway, there we are.
- [38:34]
Kathryn Rampel
That sounds like a good substance for you.
- [38:36]
JVL
Paul, I need a newsletter on that. Yeah, yeah, can you get on that for me?
- [38:40]
Paul Krugman
We'll work on it.
- [38:41]
JVL
All right. Paul Krugman, please go to his substack and sign up. Subscribe. It's fantastic. Catherine Rampel. If you guys aren't reading her over at the Bulwark, you should Her. Her newsletter, the receipts, is even better than Paul Krugman's, but in different ways, because she's not an actual economist. She's just an economics reporter. Paul Krugman's is the best. So, guys, thank you so much for being here with me and being tolerant. Everybody else, hit, like, hit. Subscribe. Follow the channel. We'll be back soon. Good luck, America.