Prof G Markets — The Fed’s September Dilemma: Is it Really Time to Cut Rates?

Date: September 15, 2025
Hosts: Scott Galloway, Claire Miller
Podcast: Prof G Markets (Vox Media Podcast Network)

Overview

In this episode, Scott Galloway and Claire Miller dissect the latest US inflation data and the mounting pressure on the Federal Reserve ahead of its critical September rate decision. They debate the reality behind “zero inflation” claims, discuss gloom around stagflation and labor markets, and explore why fewer companies are going public (and whether financial regulation is to blame). The episode pivots to the surging unemployment among Gen Z, the knock-on effects of AI-driven job loss, and wraps up with breaking news on business titans and a warning on youth dissatisfaction as a potential harbinger of instability. The tone vacillates between sharp critique, humor, and sobering macro analysis.

Key Discussion Points & Insights

1. Inflation Data & The Fed’s Dilemma

(Starts ~03:28)

• PPI and CPI Numbers:

  • The Producer Price Index (PPI) slipped 0.1% month-over-month but remains up 2.6% y/y. Consumer Price Index (CPI) climbed 0.4% m/m, and is up 2.9% y/y — the highest this year.
  • Claire Miller (03:28):
    “To read this PPI reading and say that this is proof that inflation is not happening, that is either incredibly stupid and wrong or it’s just a bold-faced lie.”

• Political Spin:

  • The Trump administration claims victory over inflation based on one off-the-mark data point, which pundits criticize for lacking nuance.
  • Direct quotations from official press, highlighting how leaders use selective stats to reinforce narratives.

• Fed Decision and Market Expectations:

  • Despite sticky inflation and a weakening labor market, investors expect a 25 bps rate cut—the market probability is essentially 100%.
  • Scott Galloway (07:24):
    “You can make a theoretical argument that begs for a rate increase, not a rate cut… But given the narrative and expectations, I don’t see an intellectual argument that’s honest to substantially cut rates.”

2. Stagflation & The Politics of Monetary Policy

(Starts ~08:56)

• Stagflation Risk:

  • Inflation remains above the Fed’s 2% target; meanwhile, jobs numbers are being revised downward steeply.
  • Worries about stagflation—where the economy faces stagnant growth and persistent inflation—become central.

• Tariffs & Price Pressures:

  • The panel points to politically-motivated tariffs as a source of slow-burn inflation, particularly in tariff-sensitive sectors, with companies openly attributing price hikes to tariffs.

• Cutting Rates for the Wrong Reason:

  • Hosts stress that the likely rate cut is to address labor market softness, not because inflation is “under control.”
  • Claire Miller (11:15):
    “We’re probably going to cut rates, but for none of the reasons we want to. We’re cutting rates because of a bad reason, which is unemployment.”

• Expert Quotes Montage: (13:43–14:15)

  • Selections from guest economists expressing caution about cutting, stating the risk of entrenching inflation.

• Galloway’s Prediction:

  • Expects a 25 bps cut—a compromise pleasing no one:
    Scott Galloway (16:03):
    “That rate cut means everybody’s upset, which probably means it’s the right decision.”

• Danger of Inflation:

  • Scott warns:
    “Unemployment is bad, but inflation is how nations collapse.”

3. Why Are So Few Companies Going Public?

(Starts ~22:51)

• Decline in Public Companies:

  • Only 3,700 public companies left in the US—half the number from 1997. Meanwhile, private equity–backed firms have exploded five-fold.

• Quarterly Reporting: Burden or Protection?

  • New stock exchanges propose easing reporting requirements (from quarterly to biannual) to entice more public listings.
  • Claire Miller (23:50):
    “All of the action is happening in the private markets… retail investors are left with fewer options.”

• Private Market’s Rise:

  • Example: OpenAI valued at half a trillion dollars, remaining private.
  • The liquidity, incentives, and perks for staying private now outweigh the benefits of public markets.

• Regulation vs. Fraud:

  • Scott recalls hedge funds hunting Chinese frauds enabled by lax reporting:
    “The lower the regulation, the reporting requirements, the greater the likelihood for fraud.” (28:59)

• Costs of Reporting:

  • Average S&P 500 company spends $2M/year on compliance, collectively $5B annually for disclosures. Reports are becoming bloated; “infantilizing” investors with obvious or irrelevant risk factors.

    Notable quote:
    Claire Miller (33:30):
    “We face intense competition” [from Amazon’s filings]—“Thanks, Captain Obvious.”

• Potential Technology Solution:

  • Scott muses on AI-generated “fraud ratings” someday reducing regulatory burdens without losing protections.

4. Access and Inequality in Private Markets

(Starts ~38:06)

• Access Problems:

  • Retail investors can’t buy into private companies—returns are sequestered for the wealthy.
  • Miller points out the absurdity: tightly controlled access to stocks, but no controls on speculative crypto tokens or betting on election outcomes.

• Potential Solutions:

  • Loosen public requirements? Expand access to private markets?
  • Galloway suggests an “AI-powered rating agency” could enable safe, lower-burden public listings.

5. Youth Unemployment & The AI Reckoning

(Starts ~49:02)

• Rising Joblessness:

  • Youth unemployment (16–24) is at 10.5%—the highest in years; entry-level postings down 35%.
  • Similar or worse trends being observed in Canada, China (18%) and India (40% of college grads unemployed).

• AI and the Youth Employment Crisis:

  • Galloway:
    “AI is coming for entry-level information age workers… The work I did over two years [as an analyst] could now be done in four to twelve weeks.”
  • Layoffs have become a sign of competence rather than a red flag.
  • Tech giants openly brag about replacing coders with AI:
    • Microsoft: 30% of code by AI.
    • Meta: Targeting 50% by 2026.

• Macro Consequences:

  • Stanford study: AI-exposed young workers have seen a 13% drop in employment.

  • Miller and Galloway foresee the only way these AI investments can pay off at current valuations is through huge cost savings—via large-scale layoffs.

    Scott Galloway (54:35):
    “We either see massive destruction in human capital across certain industries, especially at the junior levels… or we’re going to see a serious correction in [company] valuations.”

• Youth Unemployment as Recession Canary:

  • Citing labor economist Katherine Ann Edwards—youth layoffs are a “leading indicator” of impending recession.

6. AI Wealth: For the Few, Not the Many (Plus Media Industry Moves)

(Starts ~58:00)

• Media Mergers Fueled by AI Fortunes:

  • Breaking News: Larry Ellison (Oracle) set up to buy Warner Brothers Discovery after OpenAI/Oracle deal sends Ellison’s net worth soaring by $130B in one day.
  • Miller:
    “All the action is happening in the stock market and it’s all shareholder gains… The value is not being accrued in the real economy in terms of salaries and employment.”

• Generational Inequality:

  • AI gains enrich a handful—they pass wealth down to their children, who then pursue pet projects or splash out on high-profile acquisitions.
  • Miller (62:00):
    “We are seeing the inheritocracy arise as we speak.”

7. Youth Dissatisfaction and Social Stability

(Starts ~63:41)

• Rebellion and Risk:

  • High youth unemployment has historically precipitated unrest.
  • Gen Z: only 41% proud to be American, a third living with parents; the hosts warn of rising malaise.

• Potential for Upheaval:

  • Scott Galloway (65:16):
    “I would argue the thing that always ignites this dissent or revolution or anger is when young people have a lack of opportunity. I feel like we’re one real economic shock away…”

• Call for Leadership:

  • Instead of blaming, leaders should try to lower social and rhetorical “temperature,” and focus on practical solutions like sensible gun control.

8. EU Defense Stocks: The Next Surge?

(Starts ~69:31)

• Geopolitical Risk:

  • Galloway points to Russian drones flying into Poland, suggesting this will spur a surge in EU defense spending and, thus, EU defense stocks.

  “The best performing stocks over the fourth quarter are going to be EU defense stocks because you are about to see the EU really increase spending… this shit is getting real over there.” (69:31)

Notable Quotes

• Claire Miller (03:48):
  “To read this PPI reading and say that this is proof that inflation is not happening, that is either incredibly stupid and wrong, or it's just a bold-faced lie.”

• Scott Galloway (16:03):
  “That rate cut means everybody’s upset, which probably means it’s the right decision.”

• Scott Galloway (18:35):
  “When you lower rates… you put more money in people’s pockets… The problem is, is that we don’t have a demand side problem right now, right? Consumers are buying stuff. What we have is companies suffering because of high input prices because of these tariffs.”

• Claire Miller (33:30):
  “[From an Amazon risk disclosure] 'We face intense competition' — Thanks, Captain Obvious.”

• Scott Galloway (54:35):
  “We either see massive destruction in human capital across certain industries, especially at the junior levels… or we’re going to see a serious correction in [company] valuations.”

• Claire Miller (62:00):
  “We are seeing the inheritocracy arise as we speak.”

• Scott Galloway (65:16):
  “I would argue the thing that always ignites this dissent or revolution or anger is when young people have a lack of opportunity…”

Timestamps for Important Segments

• 03:28 — Aug inflation numbers and White House “zero inflation” claims
• 07:24 — Why CPI & PPI numbers matter and what they actually mean for Fed policy
• 14:39 — Debate and predictions: What should the Fed do?
• 22:51 — Why aren’t companies going public? Rise of private markets; quarterly reporting debate
• 28:59 — Fraud, regulation, and the limits of disclosure; potential for AI solutions
• 49:02 — Youth unemployment spikes: macro context, AI, and sectoral impacts
• 54:35 — The only ways AI can justify its price: mass layoffs OR market correction
• 58:00 — Breaking: Ellison, Oracle, and Warner Bros. Discovery; AI-fueled mega-deals and generational inequality
• 63:41 — Youth malaise, the “inheritocracy,” social consequences, and risk of upheaval
• 69:31 — EU defense stocks as a market prediction amid geopolitics

Memorable & Lighthearted Moments

• SeaWorld’s infamous disclosure: (35:07)
  “SeaWorld warned investors that its orca whales killed a trainer and might kill more. That’s my favorite. And might kill more…”

• Galloway’s tongue-in-cheek risk disclosure for Prof G Media:
  “Has no fear of death. Likes drugs, experiments with all sorts of substances…”

• Ellison’s text to Musk during the X/Twitter deal: (59:30)
  Musk: “Any interest?”
  Ellison: “Yes, of course.”
  Musk: “Roughly what, dollar size?”
  Ellison: “A billion or whatever you recommend.”

Conclusion

This episode blends sharp market commentary with trenchant social observation and doses of dark humor. The hosts lay bare the Fed’s “damned if you do, damned if you don’t” bind, the ongoing consequences of tariff-driven inflation, and the growing crisis for young, AI-displaced workers. They illuminate how private capital—and regulatory overkill—has locked retail investors out of the best returns, and why that matters for society as a whole. The episode concludes with anxieties over generational inequity and hints at looming political and market upheaval.

Bottom Line:
The Fed faces a lose-lose policy choice as inflation stays sticky and the labor market softens. AI’s wealth benefits flow to investors, with little reaching Gen Z. A hollowed-out public market and surging youth dissatisfaction set the stage for social, economic, and geopolitical volatility—a perfect storm for investors and policymakers alike.

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