Podcast Summary: Making Sense with Sam Harris — Episode #473

Title: Money, Power, and Moral Failure
Date: April 29, 2026
Guest: Lloyd Blankfein (Former CEO of Goldman Sachs, author of Streetwise)

Episode Overview

In this episode, Sam Harris sits down with Lloyd Blankfein to discuss the intersection of finance, moral responsibility, wealth inequality, government dysfunction, and societal risk. Using Blankfein's memoir Streetwise and his tenure as CEO of Goldman Sachs—especially through the 2007-2008 financial crisis—as a reference point, the conversation tackles both technical and moral questions facing contemporary society.

Key Discussion Points & Insights

1. Explaining Goldman Sachs and the Role of Financial Institutions

• What Goldman Sachs Does
  • Not a consumer-facing bank: "We're a wholesale financial institution...we finance people who are looking for capital...we also address the needs of people who have capital to invest." (Lloyd Blankfein, 02:24)
  • Acts as a bridge between capital seekers (businesses, municipalities, governments) and investors (institutions, individuals, funds).
  • Also acts as a risk intermediary: "We are also a bridge between people who have unwanted risk and people who are willing to take on the burdens of that risk and get paid for it." (Blankfein, 03:39)
• Market Making & Risk Management
  • Goldman Sachs often holds risk temporarily as it looks for counterparties, using complex mathematical tools to hedge and replicate financial exposures.

2. The 2007-2008 Financial Crisis: Lessons and Misconceptions

• Role as Market Maker vs. Fiduciary
  • Discussed public confusion about Goldman’s dual roles, particularly regarding the infamous mortgage trades (John Paulson’s short bet).
  • "It's easy...nobody ever remembers not knowing (the mortgages were bad). Everybody knows now, but at the time nobody really knew." (Blankfein, 05:06)
• Surviving the Crisis
  • Goldman was well-hedged and less exposed than others, but still vulnerable: "All companies...every company has to finance itself...during a crisis like this, everyone was suspect about the solvency of everyone else." (Blankfein, 07:54)
  • The critical issue: liquidity and trust. The "daisy chain" problem of everyone waiting to be paid, leading to market freeze.
  • Analogy to “It’s a Wonderful Life”: even solvent firms can fail due to loss of confidence (Blankfein, 08:34).
• Why Government Bailouts Were Necessary
  • Describes the role of central banks as lenders of last resort during confidence crises.
  • "No one appreciates how close to destruction it was because it was diffused. It never happened." (Blankfein, 07:44)

3. Evaluating the Government’s Response

• Did the Government Do Enough?
  • Harris asks if the response was too large, too small, or propped up the wrong institutions (10:02).
  • Blankfein: “The people at the time with what was available did very well because it was unknown and unknowable...They went into some wrong directions...but can you say that the people at the time performed badly, given what they had to work with and the speed?” (Blankfein, 10:16)
• The “Monday Morning Quarterback” Problem
  • Critiques of crisis managers are often made with information nobody had at the time.
  • Compares rapid, imprecise fixes to COVID-19 stimulus policies: sometimes you need speed over perfection (10:42).

4. Learning from Crisis—and the Limits of Regulation

• Are We Better Prepared Now?
  • Harris finds the COVID comparison depressing: society seems less fit for bigger crises due to erosion of trust (11:51).
  • Blankfein: regulation post-2008 made banks safer but can hinder necessary risk-taking and lending; powers of regulators have since been curtailed.
  • “If you prepare the world to avoid the crisis of the century...you’ll lose 79 years of growth.” (Blankfein, 13:33)
  • “Risk is risk...there's a certain inevitability that risk will get taken and we will not see it coming.” (Blankfein, 14:20)

5. Current State of the Economy & Markets

• Macroeconomic Outlook
  • Key short-term concern: Strait of Hormuz and oil prices (15:29).
  • Despite geopolitical risks, economic “tailwinds” are strong: high equity markets, likely lower interest rates, fiscal stimulus, low unemployment.
• Wealth Creation vs. Distribution
  • “The economy has to do two things. It has to grow GDP, create wealth, and then...figure out a way to distribute that wealth.” (Blankfein, 17:09)
  • Stresses that wealth inequality is a political, not just financial, challenge.
  • Harris: "It's hard to talk about a good economy when for more than half the people, it's not a good economy." (15:11)

6. Stock Market vs. Real Economy – Rationality and Speculation

• Market Disconnect & Irrationality

  • Harris expresses skepticism about the market’s connection to real-world events, noting wild swings tied to “obviously” misleading political rumors (18:01).
  • “Relief is so much greater that everybody doesn't look at it.” (Blankfein, 19:04)
  • Markets are forward-looking and sentiment-driven; a small change in outlook can enormously affect present valuations.

• Meme Stocks and Market Rationality

  • Harris: “How is it not just become a meme stock?” (19:19)
  • Blankfein: Markets discount all future information—sometimes resulting in high price-earnings ratios, anticipating explosive future growth (20:24).
  • “I'm trying to figure it out also. But when somebody has a 300 times trades at 300 times their earnings, people are thinking...next year it’ll grow 100%...that’s the element of growth.” (20:24)
  • Harris: "It seems...it used to be that 30 was high, right?" (20:05)
  • Blankfein: “There's nothing positive you can say” about meme stocks, but there is “bleed through” of speculative behaviors into broader market sentiment (21:12–21:14).

Notable Quotes & Memorable Moments

• On the unpredictability of risk:
  "Every time somebody tells me they know something, I ask them about something that's current." — Lloyd Blankfein (05:33)

• On the subjectivity of hindsight:
  “Anything that's resolved, nobody ever remembers not knowing it.” — Lloyd Blankfein (05:06)

• On market sentiment and speculation:
  "The market is...sentiment." — Lloyd Blankfein (19:19)
  "There's nothing positive you can say about [meme stocks], right?" — Lloyd Blankfein (21:12)

• On the challenge of distribution:
  "We were in a pretty good economy from a macro point of view, but now the economy has to do two things...create wealth and...distribute that wealth created according to the values of society." — Lloyd Blankfein (17:09)

• On Government Crisis Response:
  “Can you say that the people at the time, the decision makers, performed badly, given what they had to work with and the speed...? No.” — Lloyd Blankfein (10:42)

Important Timestamps

• [02:24] — What Goldman Sachs actually does and the nature of financial intermediation.
• [05:06] — Explaining the firm's role in the lead-up to and during the financial crisis.
• [07:44] — Why even solvent firms faced existential danger during 2008.
• [10:16] — Evaluation of government response, and the problem of judging with hindsight.
• [13:33] — Why prevention-focused regulation can stifle growth and risk-taking.
• [15:29] — Current major economic risk factors (oil, geopolitics).
• [17:09] — The persistent problem of wealth inequality and the division of policy responsibilities.
• [19:19] — Markets, meme stocks, and the challenge of justifying current value.

Conclusion

This wide-ranging discussion illuminates the complexities of financial markets, institutional risk, and government intervention, as well as the deeper issues of wealth inequality and societal trust. Both Harris and Blankfein balance technical explanation with moral inquiry, drawing connections between past crises and present challenges—including the phenomena of meme stocks, market irrationality, and the interplay between wealth creation and social stability.

For the full conversation, including deeper dives into finance, morality, and public trust, listeners are encouraged to subscribe to Making Sense at samharris.org.