Slate Money – "Bad Vibes Economics" (June 11, 2022)

Episode Overview

In this episode titled "Bad Vibes Economics", host Felix Salmon (Axios) with colleagues Emily Peck and Elizabeth Spiers take an in-depth (and tongue-in-cheek) look at the "bad vibes" permeating the US economy in June 2022. Despite healthy jobs data, persistent high inflation—especially at the gas pump—has most Americans convinced economic disaster is nigh. The hosts unpack why perceptions feel so much worse than the statistical realities, how business leaders and media amplify pessimism, and why financial literacy initiatives often miss the mark. Later, they discuss billionaire Larry Ellison's utopian—and dystopian—ownership of a Hawaiian island, and finish with their signature numbers round.

1. What’s Driving the Bad Vibes?

[00:09–09:31]

• Main Question: If the data isn’t all bad, why do things feel so awful?
• Inflation Shock:
  • Felix confesses he was wrong that inflation had peaked at 8.5%—it hit 8.6% due to volatile energy (esp. gas) prices:
    • "...I forgot that what goes down can go up. And gas prices at $5 a gallon, we now have record inflation again at 8.6%. And not just record inflation, but record inflation driven by the most salient price in the economy, which is gas price." (Felix, 01:18)
• Disconnect Between Data & Perception:
  • Despite low unemployment and plentiful jobs (dishwashers now commanding $15/hr, sign-on bonuses), over half of Americans believe the country is in recession.
    • "People conflate their sense of financial security with a sense of overall stability..." (Elizabeth, 04:47)
    • Stock market declines add to a sense of gloom, regardless of direct personal impact:
      • "I think a lot of people equate the stock market going down with recession and bad economy." (Emily, 05:27)
• Multiple ‘Bad Vibey’ Factors:
  • 1. Rising housing costs and mortgage rates
  • 2. Gas prices
  • 3. Food prices
  • 4. General inflation ("...everything is going up except for clocks and timepieces...and televisions." Felix, 06:04)
  • 5. Stock market losses
  • 6. Interest rates (Fed’s “pulling away the punch bowl”)
  • These accumulate into a psychological recession, even if the technical definition isn’t met.

2. Self-Fulfilling Prophecies & Recession Fears

[08:15–11:58]

• The Power of Sentiment:
  • "Bad vibes can help us get to a recession. If people start really getting the bad, bad vibes, then consumer spending falls..." (Emily, 08:15)
  • It’s not just consumers—when CEOs like Elon Musk or Jamie Dimon voice pessimism, it can turn forecasts into reality by pulling back investment and hiring.
• Media’s Role:
  • Coverage often takes the CEO’s lens, e.g. Target’s inventory woes mean discounts for consumers but are framed as crises in business news.
    • "Sometimes, you know, the bad vibes get amplified because everyone's looking at this from the perspective I think of CEOs, when for real people it's very different." (Emily, 10:21)
  • Treating execs or economic forecasters as oracles isn’t necessarily useful—nobody predicted the rapid post-COVID rebound.

3. Why Is Inflation So High? Who’s To Blame?

[11:58–15:33]

• Geopolitical Impact:
  • Western measures against Russian oil over the Ukraine war drove up energy costs globally—a factor in US inflation.
    • "The Biden administration was like, Americans will understand and will sacrifice. And I really don't." (Emily, 12:23)
• Blame Game:
  • Republicans accuse Biden (often for the early 2021 stimulus), but the hosts are skeptical:
    • "It's really hard for me to understand what it is that the Republicans think that Biden did that caused the inflation." (Felix, 12:32)
  • Global inflation suggests broader causes—other OECD countries are also seeing record highs.
• Does US Inflation Infect the World?:
  • Argument about the dollar's global impact is overblown, but higher US rates do push up the dollar and make US exports pricier overseas.

4. Financial Literacy: Panacea or Red Herring?

[16:09–26:54]

• Mandating Financial Literacy in Schools
  • Michigan becomes the 14th state to require it—but what actually gets taught?
  • Felix critiques the "financial literacy industrial complex"—curricula often shaped by financial services, serve as marketing tools.
    • "I am not a big fan of how a lot of financial services firms try to wrap themselves in the financial literacy flag..." (Felix, 16:36)
• What is Taught?
  • Often basics—budgets, interest, taxes—but rarely more advanced or predatory lending practices.
    • "Are we talking about teaching 9th graders options trading or are we talking about...basic?" (Elizabeth, 18:14)
    • Felix: "It's really basic stuff like what is interest, what is like a budget in terms of income versus expenditure..."
• Danger of Blaming the Poor:
  • "Where it gets dangerous...is when people blame poverty on a lack of financial literacy." (Emily, 19:46)
  • Teaching financial literacy often becomes a way to blame individuals, not systems.
• Crypto & The "Bitcoin Academy":
  • Jay Z and Jack Dorsey’s Bitcoin Academy in Marcy Projects, NY comes under harsh critique:
    • "They’re basically going to teach you how to invest in the riskiest asset class available..." (Elizabeth, 21:49)
    • "This is just the worst...the idea...money is this terrible thing that governments can just produce at will and it’s worthless. But Bitcoin is amazing, hard, trustless, the future. And it’s a great place to invest..." (Felix, 21:02)
  • Financial literacy can morph into marketing, pushing products to vulnerable audiences.
• Who Benefits?
  • Financial services often create curriculum, subtly (or not) priming students to trust and use their products.
    • Felix shares an anecdote about a bank-sponsored kids’ program where bank fees later wiped out all the kids’ deposits—“that is a kind of financial literacy.” (Elizabeth, 24:14)
  • The system is designed to stigmatize poverty. Real fixes lie in policy (e.g., outlawing predatory lending), not just consumer education.

5. Modern Feudalism: Larry Ellison’s Hawaiian Island

[26:54–34:28]

• Tropical Utopia or Dystopia?
  • Felix imagines a "serfdom" under a benign billionaire—then the team discusses Larry Ellison’s real-life ownership of most of Lanai island.
    • "We could all live in a medieval world where we're all basically just serfs who work for a benign billionaire." (Felix, 26:54)
    • "He brought in two Nobus. And there are two Four Seasons...obviously none of the islanders can afford that." (Felix, 28:53)
• Life on Lanai:
  • Locals rent, shop, and work at Ellison-owned entities. Lose your job → lose your home; run a business → lease is only 30 days.
    • "If you get fired from your job, they can take away your housing...It really is kind of feudal system." (Elizabeth, 29:14)
• No Accountability, No Recourse:
  • Ellison is a remote landlord with unchecked power. Even records/police details remain inaccessible. Anecdotes include Tom Cruise allegedly totaling a Jeep, with reports vanishing from all records.
    • "If you are rich enough and own and control enough of the infrastructure...no one need ever know that you were even that wild." (Felix, 33:43)
• Silicon Valley’s Neo-Feudal Fantasies:
  • Elizabeth: "This is kind of what an actual privatized, you know, pseudo nation state would look like. There's an actual, you know, vein of thought in Silicon Valley right now that's neo reactionary that says that this is kind of an ideal state of affairs where instead of having a democracy, you have a fiefdom run by a CEO style executive..."

6. Numbers Round

[34:32–42:56]

Elizabeth: "$1.9 Billion" ([34:35–37:07])

• The US imported $1.9 billion in whole dried chili peppers (primarily from Mexico) in 2020—important due to a Sriracha (rooster sauce) shortage linked to drought.
• Felix notes this is an opportunity to try other chili sauces.

Felix: "5.2 Million" ([37:32–42:06])

• $5.2 million: The sum GEICO was ordered to pay a woman who contracted HPV from her boyfriend in his car, citing car insurance liability. No one on the show understands the logic or damages calculation—compares it to misunderstood cases like the infamous McDonald's coffee lawsuit.
  • "Geico is being asked for $5.2 million. And it is the weirdest story. And I need someone to explain it to me." (Felix, 38:01)

Emily: "50,787" ([42:10–42:56])

• Number of AAA “out of gas” roadside calls in April 2022—a 32% increase from previous April. Tied to higher gas prices: people buy less gas per trip, increasing risk of running out entirely.

Notable Quotes & Memorable Moments

• On Economic Pessimism:
  “If you’re never wrong, you’re never interesting.” (Felix, 01:19)
• On Vibes and Reality:
  “Bad vibes can help us get to a recession…vibes can become very real.” (Emily, 08:15)
• On Financial Literacy Curricula:
  “It is kind of hilariously laughing at the idea that in certain places in Michigan, taking this financial literacy course will count towards your foreign language requirement, because apparently finance is a foreign language.” (Felix, 17:28)
• On Cryptocurrency Education:
  “They’re basically going to teach you how to invest in the riskiest asset class available…and you’re probably the least qualified person to do that.” (Elizabeth, 21:49)
• On Modern Serfdom:
  “If you get fired from your job, they can take away your housing…It really is kind of feudal system.” (Elizabeth, 29:14)
• On Systemic Poverty Solutions:
  “You don’t fix predatory lending by teaching people not to take high interest rate loans. You fix predatory lending by making it illegal.” (Felix, 25:13)

Timestamps of Key Segments

• 00:09 – Opening; what are bad vibes economics?
• 01:18 – Felix admits inflation prediction error; US inflation and gas prices
• 02:35 – Disconnect: recession perception amid low unemployment
• 05:05 – Stock market and psychological effects
• 06:30 – Multiple causes of bad vibes (rent, mortgages, food, stock, rates)
• 08:15 – Pessimism as social contagion
• 11:58 – Who/what’s to blame for inflation? US, Biden, Putin, the world
• 16:09 – Financial literacy in US schools, critique of industry involvement
• 21:00 – Jay-Z/Jack Dorsey’s Bitcoin Academy; crypto marketing
• 26:54 – Larry Ellison’s modern feudalism on Lanai, Hawaii
• 34:35 – Numbers round: chili pepper imports, Geico lawsuit, out-of-gas calls

Tone and Style

• The conversation is lively, skeptical, and wry, with hosts poking fun at their own expertise, lampooning billionaire utopias, and expressing genuine frustration at systemic economic failures.
• Accessible and relatable—economic concepts are explained clearly, with direct links to real-world impacts.
• Quotables and references to pop culture (e.g., Cardi B, Tom Cruise, Succession) keep it engaging for all listeners.

Summary prepared for listeners who want a comprehensive recap of the episode’s content, insights, and best moments.