Money Talks: Risk-Maxxing

Summary

Slate Money – Money Talks: Risk-Maxxing

Host: Felix Salmon (Bloomberg)
Guest: Scott Smith (Futurist, founder of changest)
Date: May 12, 2026

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Episode Overview

This episode of Slate Money dives into the concept of “risk maxing”: the growing appetite for extreme risk-taking in finance, politics, and personal life, especially among young men in the US. Host Felix Salmon is joined by Scott Smith, the futurist who coined the term. Together, they unpack what risk maxing is, its origins, its presence in today’s economic and social landscape, and how it might shape our collective future.

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Key Discussion Points & Insights

1. Defining “Risk Maxxing”

• Origin and Definition
  • Scott Smith coined the term in summer 2025, inspired by observing “a timely way to frame the term... a kind of transgression of accepted risk frameworks and boundaries in the pursuit of something greater.” (04:09)
  • Definition: “Willingness to push traditional or understood risk boundaries... socializing the risk to others but also cornering all of the value in a particular pursuit.” (04:58)
  • Felix Salmon contrasts the “get rich slow” past with today’s “get rich quick” lottery logic: “Everyone was like, ‘fuck that, that’s not going to work for me. I want to get rich quick. The best way to get rich quick is basically to buy lottery tickets.’” (05:24)

2. How and Why Risk Maxxing Emerged

Not just about personal finance—bleeds into politics, behavior, and tech ambition.

• Exploded after 2021’s meme stock mania and NFT fervor, but Smith notes the trend escalated across diverse domains:
  • “Geoengineering concerns... put aerosol injected into the atmosphere to change the climate.” (06:36)
  • “It’s definitely not just personal wealth.” (07:08)
• Felix: High-risk behavior rose in non-financial areas—e.g., increased fatal car crashes among young men (07:08).
• Smith: “Is there an end game... other than YOLO?... For some, it’s an intentional strategy. For others, it’s nihilism, a mood that comes and goes.” (08:10)
• Felix draws on the example of Sam Bankman-Fried: “If there’s a 51% chance of winning a coin flip, then I will take that bet and I will bet all of my money... It worked. Until it didn’t.” (08:35)
• The dynamic between stated philosophies (e.g., effective altruism) and actual behaviors is examined. (09:41)

3. The Social and Economic Context

• YOLO, TINA, FOMO, ZIRP:
  • They unpack acronyms representing mindsets and policy:
    • TINA (“There Is No Alternative”)
    • YOLO (“You Only Live Once”)
    • FOMO (“Fear Of Missing Out”)
    • ZIRP (“Zero Interest Rate Policy”)
  • Felix: “All of these things that have nominal boundaries around them being transgressed...” (07:53, 11:16)
• Current risk maxing vs. 2021:
  • Today’s risk maxing is “worse” because people are gambling with money they don’t have, rather than “house money.”
  • “When you’re risk maxing in a sort of negative wealth situation, that is much, much worse than when you’re just playing with free money, which is a positive wealth situation.” (13:24)
• Valorization of Risk in Culture:
  • The most visible US men—Donald Trump and Elon Musk—serve as models for risk-taking:
    • “They both seem to have done very well for themselves out of it.” (14:38)
  • This builds a “permission structure,” valorizing extreme risks for others down the ladder. (14:57–15:50)
  • “You want to be a baller, you take these risks. You sports bet, you Polymarket, whatever...” (14:04)

4. The Economics of Risk-Maxxing

• Is More Risk “Good” for Society?
  • Classic economics argues risk translates into innovation and growth—but the current wave may not fit this theory.
  • Smith: “It works well in a textbook. But when people sort of look around them... it kind of dissuades them from taking that kind of caution... it's almost a contagious permission structure.” (16:33)
  • Felix: “If individuals are happier to take risks with their own personal savings... should be good right?... It might be bad for their own individual finances, but it’s still good for the economy as a whole.” (17:19)
  • Smith: “I don’t think we’re talking about the same kind of risk in this situation... if the wheels are coming off the economy... those kinds of rules and modes of behavior that are accepted are no longer sufficient.” (18:53–19:58)

5. Societal Uncertainty: Covid vs. AI

• Felix posits that 2021’s risk maxing was Covid-triggered. Is 2026’s about AGI (artificial general intelligence)?
  • Smith: “Covid was a sort of rehearsal... now we’re looking at AGI, effective altruism, hyper longevity...” (20:24)
• The rise of “end-of-system” beliefs:
  • “This sort of trickle-down eschatology: the system isn’t working, so why don’t we break it?” (21:45)
  • “You have this broad valorization of risk. This is what people are doing.” (14:04)

6. Political and Economic Counter-Responses

• Anticapitalism and Socialism:
  • Increasing support for socialist-leaning politicians is “first and foremost... trying to put a floor back under society and the economy so that people don’t feel the need to take those kinds of risks.” (23:38–23:51)
• Diverse reactions in different demographics:
  • Many of Sanders’ and Mamdani’s voters are “more willing to move towards removing or minimizing the impact of those risks.” (24:34)

7. Is risk maxing unique to America?

• European Case Study
  • Social safety nets and regulatory frameworks in Europe reduce risk maxing:
    • “You probably see less of this kind of phenomenon in Europe because there are dynamics that run from... provision of a floor under society to more of a precautionary regulatory environment...” (30:08)
  • When it does emerge, risk maxing in Europe tends to channel through political movements (e.g., rise in far-right parties among disenfranchised young men). (31:02)
• Asia as counterexample:
  • In Korea, financial risk maxing exists (e.g., leveraged ETF bets) but not accompanied by political radicalism. (34:27)

8. The Endgame — What Happens Next?

• Possible outcomes:
  • “There may be limits to growth... each time we sort of see this risk maxing flex it’s pushing those boundaries a little farther and a little farther.” (36:24)
  • Felix is “not too worried” so long as speculative assets are “small enough to fail.” But if larger companies with systemic roles collapse, the spillover could be severe. (37:27)
• Existential Risks Beyond Finance:
  • Geoengineering, bioengineering, and AI pose risks outside traditional markets—potentially systemic and catastrophic.
    • “If you have actors... who are more willing to... YOLO with the atmosphere... now they’re small... but there may be actors who are more willing to... bring about an end state sooner.” (38:13–39:06)
    • On AI: “Anthropic Mythos... has the potential ability to just bring down the entire information infrastructure of the planet.” (39:31)

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Memorable Quotes & Moments

• Scott Smith (on SBF, effective altruism, and risk philosophy):
  • “His quote was like, ‘I’d rather have a 10% chance at 100 billion than 100% chance at a billion.’” (09:15)
• Felix Salmon (on meme stock gamblers):
  • “They’re just doing it for the lulz.” (10:37)
• Scott Smith (on systemic risk):
  • “There’s a small group called Making Sunsets... trying to raise money to crowdfund stratospheric injection of aerosols to change the climate.” (38:13)
• Felix Salmon (on system fragility):
  • “What was important was keeping the electronic infrastructure going rather than the physical infrastructure of humans going into office buildings. If the risks then flip... there’s no electronic infrastructure anymore because it’s all been brought down by Mythos... that is more systemically dangerous than Covid was.” (40:19)

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Important Timestamps

• 03:59–04:58: Definition and coinage of “risk maxing”
• 07:08–07:53: Risk maxing outside finance, impacts on death rates and behavior
• 08:35–09:15: SBF as the archetype of philosophical risk maxing
• 11:16–14:04: Shifts from ZIRP/freemoney risk maxing to debt-driven risk maxing
• 14:38–15:50: Trump and Musk as avatars for risk-maxxing culture
• 16:33–19:58: Economics of risk and the breakdown of classic “risk-return” paradigms
• 20:24–21:45: Covid as rehearsal, AGI as new existential uncertainty
• 23:38–24:34: Anti-risk-maxxing politics and the “safety net” movement
• 30:08–32:36: European and UK contrasts; regulation’s role
• 34:27–35:37: Is risk maxxing global or American?
• 36:09–39:06: How might risk maxxing “end”? – systemic and existential threats

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Tone & Style

The discussion is candid, sometimes playful, and often skeptical, with both host and guest weaving in pop-finance terminology, cultural references, and dark humor. There’s an undercurrent of concern about systemic risk and contemporary financial nihilism, but also an appreciation for resilience and “society’s elasticity.”

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Closing Thoughts (41:45–42:19)

Felix asks Scott for an optimistic note after a heavy conversation. Scott responds:

“One of the things that is less well understood is society’s elasticity and kind of its ability to regulate these sorts of things… we’re still here after how many ever hundreds of thousands of years… we’re reasonably resilient as people, as creatures, as organisms…” (41:45–42:19)

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Summary Takeaway

The mania for “risk maxxing” reflects deep social, cultural, and economic shifts—born of both opportunity and desperation. It’s not just about markets or finance, but faith in systems and the search for meaning amid uncertainty. Whether as a coping mechanism or a genuine strategy, risk maxxing offers little security for the average participant—even as it shapes markets, politics, and perhaps the very future of civilization.

Transcript

[Mike Townsend]

Slate Money is brought to you by Charles Schwab Decisions made in Washington can affect your portfolio every day, but what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's managing director for legislative and regulatory affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement, savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and [e-mail] WashingtonWise or wherever you listen.

[Felix Salmon]

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[Scott Smith]

Happy to be here.

[Felix Salmon]

Scott, introduce yourself. Who are you?

[Scott Smith]

I am a futurist. However you'd like to define that term. I run a company called changest out of Barcelona that helps find emerging signals of political, economic and technological change in the landscape and advise companies, governments, financial institutions on how to reckon with that change.

[Felix Salmon]

So we are not going to be talking about the future all that much. We're going to be talking about the present and the immediate past. We're going to be talking about what is going on right now with a whole bunch of people taking a whole bunch of risks that seem to be irrational. We're going to talk about what happened the last time this happened, which was 2021, and whether this is all terrifying or not, it is a super interesting conversation. So stay tuned to Money Talk. So, Scott, did you come up with this word risk maxing? Because I love this word so much.

[Scott Smith]

I did. As far as I know, it seemed like a timely way to frame the term. It sort of happened before the, I guess the most recent explosion of maxing.

[Felix Salmon]

When did you coin the word?

[Scott Smith]

I think last summer. Yeah, 2025. Last summer.

[Felix Salmon]

I am so annoyed at myself because I wrote my in 2022 and it was published in 2023, and I had two whole chapters on this phenomenon. And we went through the entire meme stock craziness of 2021 and no one managed to come up with risk maxing. We should have done it five years ago, but you did it one year ago. And for that, among many other things, I congratulate you. It's such a great word. When I wrote my book, the meme stock craziness and the NFT craziness of 2021 was fresh in my mind. Is that when this whole phenomenon started? Or maybe we should just zoom out a little bit. And let me just ask you, what is risk maxing?

[Scott Smith]

So risk maxing, I guess definitionally, is the willingness to push traditional or understood risk boundaries with the intention of both kind of socializing the risk to other people, but also effectively sort of cornering all of the value in a particular pursuit. It's a kind of transgression of accepted risk frameworks and boundaries in the pursuit of something greater.

[Felix Salmon]

The chapter title in my book was actually not Mine. It was from maybe Kevin Roose, I think, and it was From Ladders to Trampolines. It was this idea that back in the olden days, if you wanted to get rich, everyone was like, get rich slowly and Invest in an index fund and buy and hold and set it and forget it and that kind of stuff. And then everyone was like, fuck that, that's not going to work. That's not going to work for me. I want to get rich quick. The best way to get rich quick is basically to buy lottery tickets.

[Scott Smith]

Yes. I mean, I've come across the old New York and probably still the New York lottery tagline of you got to be in it to win it. And I think this is kind of looking at that dynamic, but almost at a bigger scale than just simply how can I get faster returns and grow my bag? In this case, it's often occurring on different scales simultaneously. And I started kind of at the top asking why are some actors in the landscape pushing risk in particularly strange and transgressive ways that we hadn't felt like we'd seen historically? Now, I don't know if the trigger was Covid. We were just talking about this feeling like it was kind of emerging out of meme stocks. But really when you started kind of thinking about you've got your musks and teals and Michael Saylor at strategy putting an entire strategy around, just continually maxing out ownership of Bitcoin, to what end? It doesn't make sense in normal financial management terms to geoengineering concerns who are, forget what the rules say, we'll actually put aerosol injected into the atmosphere to change the climate. All of these things that have nominal boundaries around them being transgressed in ways that are more than just how can I amp up my portfolio?

[Felix Salmon]

Right. It's definitely not just personal wealth. One of the things I wrote about was that it showed up especially among young men. And this is definitely a phenomenon that is associated with men in general and younger men in particular. But it showed up in a massive increase in death rates in car crashes and stuff like that where like they were just taking risk in a whole bunch of domains that were very non financial.

[Scott Smith]

Exactly. It started making me ask why now? And why these people? Why these particular groups? And that's, you know, still a work in progress, but trying to think about what's the end game? Is there an end game? Is there a sort of intentional outcome beyond just yolo, you know, beyond just kind of living wild because you think you can.

[Felix Salmon]

Do you think these people are consciously risk maxing? Like is this like a sort of conscious strategy they've decided to do? Because I feel like it's kind of more nihilistic than that. And that just like for a lot, a lot of the time. They're just like, life has no meaning. Fuck it. I'm just going to yolo my life away.

[Scott Smith]

I think it depends on where you are and what tier you're sitting at. I think there are, you know, like, nihilism is a mood. It's a mindset that comes and goes depending on external conditions. I think in this case, I think there are. There are definitely actors who are pursuing it as an intentional strategy, not just because it seems fun or, you know, it's going to accelerate their particular end faster, but it. But that it.

[Felix Salmon]

Yeah, the one. The guy who really thought this through most publicly was probably Sam Bankman Friedman. He. He was on the record multiple times as saying, you know, if there is a 51% chance of winning a coin flip, then I will take that bet and I will bet all of my money on that coin every single time. And you're like, that is really stupid, because within a handful of coin flips, you are guaranteed to lose all of your money. But he just seemed to be like, nope, as long as I have positive and expected value, I should take this bet every time. And as would be expected if you followed that strategy. It worked. Until it didn't.

[Scott Smith]

Yeah, I think his quote was like, I'd rather have a 10% chance at 100 billion than 100% chance at a billion. But in his case, he was kind of pursuing a higher philosophy. Not just. He didn't just figure out a different way to card count or play poker. The accumulation of those resources was in service to a philosophy. We can argue about how strong that philosophy was and how sensible it is, but he had a reason for doing it other than just getting rich.

[Felix Salmon]

Well, he had a stated reason for doing it. Then there was a really super interesting interview he did immediately after the collapse of ftx, where he seemingly just came clean and said, yeah, no, all of this effective altruism bollocks was just. He used the word shibboleth, which I love because it's such a great word. I was saying the right words to get the right people on board. This is the way that you get Michael Lewis to be, like, sympathetic to

[Scott Smith]

you, which also is following a permission structure. If you've seen other people doing this, there's a kind of established pattern of behavior, whether you mean it or not, and convincing yourself of it sufficiently. I think there are people who are probably stronger or weaker in that belief or that the range of beliefs that there is something beyond the risk horizon that is worth risking everything for, that you're Willing to go all in for. And that's less when you're younger.

[Felix Salmon]

That's not the case with people piling into GameStop. Right. They're just doing it for the lulz.

[Scott Smith]

Well, I think some of them are doing it for the lulz. I think some are doing it because they feel. Well, setting meme stocks aside, let's talk about things like prediction markets or other forms of betting. I think there's definitely a sort of tier at the general public level that may be engaging in this kind of behavior because it's that or nothing. It's that or no alternative. There's no floor, there's no economic Florida, there's no safety net that provides a sufficient alternative. And when all other options are foreclosed, it's the last thing available to you other than crime.

[Felix Salmon]

There are so many four letter acronyms here because there's Tina, There is no alternative. There's yolo, you only live once. There's fomo, the fear of missing out. There's also, which we should just mention, which is a very interesting one, zirp, Zero interest rate policy, which I felt was a huge part of the reason why things happened in 2021 and now that they're happening in 2026, I'm like, well, obviously that thesis has been considered and rejected because it's still going on with interest rates at very much not zero.

[Scott Smith]

That's an interesting issue. And I think it may be that in a ZIRP environment you've got, I don't know if you have a floor, but you've got some other financial flows that might kind of stabilize you in this environment. That window is closing quite quickly. Debt piles up faster. Access to income that's going to offset these risks is becoming much harder to come by. Debt averages are climbing, particularly for sort of Gen Z.

[Felix Salmon]

Okay, so this is interesting because it's literally the opposite of the 2021 phenomenon. When everyone got their stimulus checks and they're like, this is free money and zirp. The definition of ZIRP is free money, right? And so everyone's like, well, if we give a bunch of young men free money, guess what? They're going to blow it on something dumb. And that's exactly what they did. And they don't seem to have any regrets about this. But now you're saying it's the exact opposite. When money is expensive and hard to come by, that's when you need it the most. And when you need it the most, there is no alternative. The only thing you can do is go out and try and make money on Kalshi.

[Scott Smith]

Right. And, you know, clearly Kalshi and polymarket and those types of groups are happy about that and trying to basically figure out how rapidly they can expand the kind of scope of financialization that everything becomes a bet. And we see that with the kind of explosion of the number of kinds of bets that are available on those platforms. But that's just retail access. I think that's just the ability to not have to go to a bookie down the street might put you at even greater risk, but you can basically just keep playing this retail risk market and keep spinning the chamber and seeing what happens. You might accumulate quickly, but you also might not and end up in further financial ruin. But it's kind of like a downside yellow.

[Felix Salmon]

Yeah, but this is like, worse. The risk maxing that we see in 2026 is worse than the risk maxing that we saw in 2021. Precisely because this is money that people don't have rather than money that people do have. They're not playing with house money that they just got in a stimulus check. They're not in a ZIRP environment where liquidity is freely available. They actually are struggling with debts that they need to repay. And when you're risk maxing in a sort of negative wealth situation, that is much, much worse for you than when you're just playing with free money, which is a positive wealth situation.

[Scott Smith]

It is. And that's particularly true for those at the bottom of this pile or this pyramid. I think they're looking above them and they're seeing this kind of broad valorization of risk. This is what people are doing. This is what you want to be a baller. You take these risks. You sports, bet you poly market, whatever. You take other kinds of risks in business and personal life, going back to the auto fatalities thing you talking about. But also you're seeing people up the ladder from you also taking those kinds of risks. I think the sort of breadth of that ladder is getting. It's getting more narrow, but the payoffs are orders of magnitude.

[Felix Salmon]

We are in a country where the two most visible men in America are Donald Trump and Elon Musk, both of whom regularly, pretty much every day, take some completely stupid risk that no rational person would take. And they both seem to have done very well for themselves out of it.

[Scott Smith]

Absolutely. And so they get hordes of followers, either the tier just below them, who are, you know, kind of have a ticket on this train to go along with them, to follow as part of their coterie and also take risks with them and see what comes out of it. You know, that's Mar a Lago, right? It's everybody who kind of shows up at this haunted steakhouse to have a big payoff if they can kind of be near the right deal when it's happening. And this bleeds into foreign policy in ways that we're seeing right now. Musk, I think, is playing a slightly different game, but also has legions of people who still idolize him follow his model of activity and behavior, because they see that as the prototype. And I think, well, either one of them is going somewhere. I'm not entirely clear where they're going, but I'm going to follow with them. Musk maybe is going to Mars, but also I can get some of the windfall from these huge enterprises. Whereas, you know, Trump is a wholly different equation. I think that's far more personalized.

[Felix Salmon]

Let me ask you about how this whole activity of risk maxing fits into what you might call classical economics, because I'm old enough to remember when people would tell me that there's a positive relationship between risk and return, if not on a personal level, then on a societal level, and that it's a good idea societally to encourage people to take risks. And one of the big problems with older, sclerotic modern societies as that we don't take enough risks and that anything that causes us to take more risks on a societal level, while it might certainly cause bankruptcy here or there, it will help the country as a whole. And is going to be sort of macroeconomically a good thing. Is that still the case?

[Scott Smith]

I think it's the case when people believe that the rules obtain for most everybody. I mean, they'll always be outliers, right? There'll always be people who are bending the rules of classical economics. But it's sort of like thinking about rational economic behavior. Where is that happening now? Almost everyone is kind of forced by something else out of that mode of rational economic behavior towards a sort of survivalism, given the conditions that we live under and the fact that the amount of wealth is simultaneously exploding at the top and contracting everywhere else. And so I think it works well in a textbook. But when people sort of look around them in the world and see what other phenomenon are happening, it kind of dissuades them from taking that kind of caution, that it's sort of almost a contagious permission structure that relaxes that kind of field.

[Felix Salmon]

I guess what I'm trying to say is that, like classical economics always used to tell me that what makes sense on a personal finance level in terms of like, I have hard earned savings and I want to keep them safe is actually deleterious on a societal level. Because what you want is for those savings to be invested in high risk, high return ventures. And that's why, you know, God invented banking, right? That you do this thing called maturity transformation where you take very safe overnight deposits and you turn them into risky long term loans that you're making to small businesses or whatever. But now if the individuals are happier to take risks in their own personal balance sheets with their own personal savings, that that should be good. And it actually should mean that the banking sector needs to take risk. Less risks. You have a less fragile banking sector and you can have risky ventures being financed directly by individuals in a way that never used to be possible in the past. And you can bring that massive store of household wealth to bear on a whole bunch of crazy things like Tesla stock or whatever, which no rational person would normally invest in. But there doesn't seem to be any shortage of people willing to invest in. So that phenomenon there is a case to be made. And I hasten to add that I do not personally subscribe to this, but insofar as individuals are feeling themselves to be forced into taking more risk, it might be bad for their own individual finances, but it's still good for the economy as a whole.

[Scott Smith]

I don't think we're talking about the same kind of risk in this situation. How do we kind of split that hair? You're right. If this was a kind of gentle relaxing of the risk tolerances of the average investor and saver, and we might kind of push more money around the economy. That may be a side effect of this, But I don't think we're talking about the same kind of risk where you believe that the economic engine is continuing to turn over in that sort of fair and balanced way and that risk is a positive behavior in that equation. One of the things that I feel like is kind of in play here is almost a sort of end game eschatology that says, look, if the wheels are coming off the economy as we understand it, or society, for whatever reason, culture, civilization is headed for a sort of phase change transformation, then those kinds of rules and modes of behavior that are accepted are no longer sufficient. That if you want to maximize resource accumulation to carry you through the phase change to whatever's on the other end, that sort of sets risk up differently in this equation.

[Felix Salmon]

That's interesting. So would you say here's A thesis for you. If the 2021 meme stock NFT explosion was Covid related, which I wrote a whole book about how it was, I'm going to stick to that one. Would you say that the 2026 version is more sort of AI singularity related and that people are worried about this sort of AI phase change from the AGI?

[Scott Smith]

I think that's part of it. And it may be when you kind of look back, that Covid was a sort of rehearsal. You know, you had this massive disruption that wasn't just an economic disruption. It also was for a short period at the beginning, a sort of open ended massive uncertainty for many people and probably a rehearsal of that scale of uncertainty and risks of fatality. Seeing people close to you dying, et cetera, changes something about someone's psychology, I think, and it probably set the table a little bit. For now we're looking at things that range from AGI, effective altruism, hyper longevity, civilizational jump to other worlds, all of these kinds of jumps through various kind of conceptual portals or civilizational steps into something else.

[Felix Salmon]

But that's. I mean, those kind of sci fi visions have always been around, right? And they don't seem any more realistic today than they did 20 years ago.

[Scott Smith]

I guess it depends on how well you can convince people that they are a possibility. And it's the madness of crowds.

[Felix Salmon]

I mean, it's true that Elon seems to have done a surprisingly good job of persuading people that not only can he build data centers in space, but also that he can colonize Mars. And you're like, no, but, well, you.

[Scott Smith]

And I say no. I think there are people who are like, well, that sounds fantastic. Why would you support a political leader that was agitating for the destruction of the current democratic system?

[Felix Salmon]

Oh, I would definitely do that. I'm so over the current democratic system. You have no idea. It is doing nothing for me. Scott?

[Scott Smith]

Yeah, no, I think that kind of belief that sort of trickles down to the point where you're like the number of people you see in surveys saying, well, democracy doesn't seem to be serving us that well. So maybe let's try something else that seems. Seems completely nuts, except it creeps into being a kind of broader belief state that on some level higher up, instrumentalized, it kind of serves particular people in power, but it also kind of flows downhill. So this sort of trickle down eschatology of the system isn't working, so why don't we break it? That can be small things like, well, let's get Rid of the income tax for people who make less than a million dollars. Or that can be a really big thing, such as let's throw representative democracy in the garbage can and try something else. And if you look around, you see these kinds of proofs that, well, maybe there's something out there, maybe I can snatch a country on my border, maybe I can attack other nations, that there's a full transgression of existing security frameworks and accepted international norms, or maybe I can.

[Felix Salmon]

I did make the case in my book that Putin would not have invaded Ukraine without. There are weird sort of connections there. But even if you believe in representative democracy, I mean, one of the other phenomena is that is well documented, especially among younger Americans and indeed around the globe, is a very conscious move against capitalism, an anti capitalist stance that more often than not manifests in some flavor of socialism. I mean, I guess my question for you is if you look at the crowds that greet the likes of Bernie Sanders and AOC and Soran Ramdani, would you think of them as riskmaxing in some way or not? Is that a different phenomenon?

[Scott Smith]

I think first and foremost I see them as trying to put a floor back under society and the economy so that people don't feel the need to take those kinds of risks. So in a way it's almost a kind of counter.

[Felix Salmon]

So it's anti risk, Max.

[Scott Smith]

I think in some ways it is. Now, it depends on how far to the left you want to go. Probably farther than most of the left exists in the US who might be looking for a complete reconstruction of government and society. But I think that's an edge case. I think in most cases this sort of, if you look at New York City, you've got this massive concentrations of wealth and people who are making bags by taking enormous risk. But you've also got a lot of people who came out and voted for Mamdani. I think in part because they see this sort of bifurcation happening and want some kind of safety net or floor put back under society locally, at least that.

[Felix Salmon]

And to be fair, New York City has a. A large number of voters, especially in Manhattan, who fall into both camps.

[Scott Smith]

Yeah. And it wasn't necessarily the most poor and downtrodden who voted for Mamdani in that election. They're the people who are more willing to kind of move towards the risk and potential opportunity. There are people who are more willing to move towards removing or sort of minimizing the impacts of those risks. And then there probably is a third party that just are Exeters who decide to go somewhere else completely.

[Felix Salmon]

We need to stop for some ads, but when we're back, we're going to talk about whether risk maxing is a purely American phenomenon, or whether it is seen in Europe and around the world.

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[Felix Salmon]

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[Scott Smith]

No, we see that. I think that's one of the reasons that you probably see less of this kind of phenomenon in Europe because there are dynamics that run from the sort of provision of a floor under society to more of a precautionary regulatory environment that tamps down on that kind of risk. Now there are a lot of people who point fingers and say, well that's exactly why Europe doesn't have these trillion dollar unicorn companies, et cetera. And that may be the case, but as a broader regulatory and probably social environment, it has more, I think, breaks on that sort of behavior than you might see in other places.

[Felix Salmon]

So tell me about this. You currently live in Barcelona and before this you were in Berlin, I believe.

[Scott Smith]

Amsterdam.

[Felix Salmon]

Amsterdam, that's right. So as a. Now that Europe is your adopted continent, tell me about risk maxing from a European perspective. Is it something that you see in Europe at all?

[Scott Smith]

It's starting to, I think, find its way in mainly through the political channels. For example, here in Spain there are poll after polar research that's done that shows, for example, that sort of neo Francoism is on the rise amongst young males who feel disenfranchised and disconnected from normal social structures, normal gender relationships, et cetera. And I think, you know, clearly you see that kind of thing in the uk, we've just seen Orban shuffled out of office. But there are various aspects of it, Germany, adf, sorry, afd, where there are, I think groups of society primarily probably leans towards young males who don't feel they have a future in the current system and that the elites have failed them. Therefore they're willing to take more and more political risks and embrace these kind of transgressive, what would have been previously transgressive positions politically, whether they actually truly embrace them or not.

[Felix Salmon]

So I want to ask in that case, is there a correlation between right wing maga esque politics and financial risk maxing in the United States? And secondly, the same question for you, do these young men who are supporting the AfD, are they also opening up prediction market accounts and dabbling in crypto and all the rest of it?

[Scott Smith]

I mean, as far as the last examples, part of that's regulated in such a way in parts of Europe that it's not that accessible, certainly not the way that is in the US if you look at the uk, which you can argue is not continental Europe and operates by different.

[Felix Salmon]

It's a small island off the coast of Europe, but it's in the direction of the United States.

[Scott Smith]

It is. And it's, you know, there you definitely see a more pronounced embrace of things like crypto, particularly among younger men in urban environments. And this goes back you know, I think five, seven years, you know, towards.

[Felix Salmon]

And that would correlate with support for reform in the uk?

[Scott Smith]

I don't know that it would directly correlate with support for reform. I think it probably. Well, sort of a multi sided picture. Right. I mean, to your initial part of the question about the sort of alignment between people who are taking those kind of financial risks and MAGA in the U.S. yes. I think the light bulb went off coming into the second administration that aligning these two things was really smart because it kind of created a virtuous treadmill of people who were willing to be drawn into taking additional risks, effectively inoculated at upper levels from that risk through things like pardons, et cetera. They see examples of some of the kind of larger figures in Trump's circle being given an out for, not to

[Felix Salmon]

mention thousands of the smaller figures on from the January 6th convictions.

[Scott Smith]

Well, yeah, I mean, January 6th is a whole other vignette in all of this. And now talking about pardoning everybody within 200ft of the Oval Office. Again, it's that permission structure thing of saying, go on, take risks. We're all in this together. Haha. We're not really, but what you do will benefit me. So let's all take risks and try to break the system. But I think there's a bit more of a separation between the financial and the political risk elements in Europe that probably comes from more of the regulatory side and sort of the lack of access, lack of easy access, as well as probably the lack of easy capital to invest in it. I think the UK example is different because you're talking about a group of younger men who are disenfranchised in parts of the country who probably would follow along with reform. Certainly more than some of the other options.

[Felix Salmon]

I do think there are counter. I think Korea might be an interesting counterexample where you do have a lot of that financial risk maxing and the young men like buying Tesla 3X ETFs on their apps or whatever. But you don't see that. You don't see the same degree of sort of political radicalism.

[Scott Smith]

And I think there's a unique dynamic in each country. Each country in each region is going to have both regulatory differences and also kind of cultural differences in what represents virtue, risk, et cetera.

[Felix Salmon]

But you do see risk maxing as being a global thing, or is it still mainly an American thing?

[Scott Smith]

I think there's some unique conditions in America that make it, make it function. Part of that is the sort of perpetual promise of everyone is a temporarily embarrassed, well, now I'll be billionaire, not millionaire. But that no matter who you are, there's a route to the top for you if you make the right moves. It's much more of an individualist culture. So I think it sets itself up for that kind of dynamic, that kind of structure. But also clearly some of the people who are making these end of civilization bets, even if quietly, tend to also be the type that gravitate to capital markets that provide them enormous amounts of fuel to execute that plan.

[Felix Salmon]

So how does this end? Assuming that civilization continues and doesn't end, assuming we don't hit some kind of singularity, does the money just run out at some point? Because I do feel that there was this period in sort of 23, 24 where the risk maxing kind of died down and then it definitely kind of built back up again after Trump was reelected. Does this maybe come to an end once Trump has gone for a second time?

[Scott Smith]

I've thought about this and I think I don't personally put any stock in the sort of the civilizational phase change argument, but that doesn't mean that's not possible. So there's one outcome that the most

[Felix Salmon]

extreme one outcome is we all get eaten by Skynet. Okay, exactly.

[Scott Smith]

Or no, well, we all become Skynet it solid beams of light. So that's one outcome. I think there is probably the stretching of the envelope in terms of what society will tolerate that may snap back. We may be seeing the early stages of that at the larger scale. Maybe we decide to somehow start taxing billionaires and people with these kind of civilizational dreams will have to go elsewhere. One example of this was, and one of the stories that kind of got me thinking about this last year was Michael Saylor and Microstrategy and sort of this hoarding of Bitcoin. And one of the comments I think that he made, or someone else made in the FT video where Katie Martin interviewed him was if this goes wrong, we have bigger problems. If our bets fail, it's past too big to fail into structural annihilation. I think there may be limits to growth, to borrow a phrase that may constrain this. It's just that each time we sort of see this risk maxing flex, it's pushing those boundaries a little farther and a little farther. Which, yeah, my.

[Felix Salmon]

The reason why I'm not too worried. I historically have not been too worried about any of this is that GameStop and Bitcoin and all of these other fun places where people are risk maxing are all small enough to fail and continue to be small enough to fail. And that Saylor or whoever it was is completely wrong about this. If Bitcoin goes to zero like, like the sun rises the following morning and everyone else is basically fine. I do worry however, in a world where 30% of the stock market is bizarre, companies like OpenAI and SpaceX go public and Nvidia and all of this kind of craziness, that if those guys go to zero then that could be big enough to have systemic consequences.

[Scott Smith]

And I think all of that may be true within the financial realm. I think there are other realms here that we haven't touched on as much that are probably potentially more problematic. And some of those things are things like geoengineering which I would also kind of consider falling under this larger framework, right. That if you have actors and there already are small, there's a small group that called Making Sunsets that sounds really friendly, but they're out there both trying to raise money to crowdfund stratospheric injection of aerosols to change the climate. But they're also have been known to do it in non regulatory compliant way. Again sort of saying, you know, yolo with the atmosphere now they're small and they're only releasing a few other balloons of aerosols at a time. But up the ladder again there may be actors who are more willing to, what's the old phrase, Eminentize the eschaton that are more willing to bring about an end state sooner. And that could be if only there

[Felix Salmon]

was some event within the past five years that had made us alert to the dangers of aerosolizing things.

[Scott Smith]

You know, if only. I think there's that, I mean there's biology, you know, the sort of people taking either very specific acute risks around things like, like bioengineering. These are things that keep national security experts up all night because it is absolutely within the capabilities.

[Felix Salmon]

And now of course just the news hook here of course is Anthropic Mythos, which has this great name, which has the potential ability to just bring down the entire information infrastructure of the planet. Perhaps we don't know, no one knows. But if it can't today, maybe it can tomorrow. These things are advancing pretty quickly.

[Scott Smith]

Yeah, and I think those are places where there is systemic fragility that exceeds what markets can backstop or cushion. Again, we saw this with COVID was a kind of dress rehearsal, but certainly isn't the only, or wasn't the only possible system breaking threat out there. And the question is whether People who are, you know, have the ability to trigger these threats in pursuit of some particular end, are not willing to do it or are willing to do it. Yeah. And what there is that can control that. So, yeah, I.

[Felix Salmon]

One of my theses when it comes to Covid is that in a weird way, the timing was incredibly fortunate that we all had to stop and start working remotely at exactly the point at which working remotely was actually technologically possible. If it had happened 10 years earlier, it would not have been. The entire banking system just could not have functioned without people coming into the office in the way that it did in 2020. And that, you know, what was important was like keeping the electronic infrastructure going rather than the physical infrastructure of humans going into office buildings. If the risks then flip and everyone's perfectly capable to get into their office building, but at that point, there's no electronic infrastructure anymore because it's all been brought down by Mythos. Yeah. That is more systemically dangerous than Covid was. And Covid, as people don't really remember well enough, was already very systemically dangerous.

[Scott Smith]

Absolutely. And I think, you know, we're only sort of scratching the surface of existential risk and that's where this moves from being, well, you know, such and such has spent too much money on Kalshi to a completely different scale of risk maxing and risk taking in a way that accelerates somebody's idea of phase change.

[Felix Salmon]

Well, on which pleasant note, Scott, thank you for coming on Money Talks. We're all just going to go out and, I don't know, drink ourselves into a stupor tonight. Do you have something vaguely optimistic for us to go out on?

[Scott Smith]

I do. I think going back to the point we were just talking about a minute ago, one of the things that is less well understood is sort of of society's elasticity and kind of its ability to regulate these sorts of things.

[Felix Salmon]

And we just saw that in Hungary.

[Scott Smith]

Yeah. And, you know, we see that politically. We may be seeing that in terms of regulation, what comes after Trump might be a strong swing in the other direction. Who knows? We're still here after how many ever hundreds of thousands of years because we're reasonably resilient as people, as creatures, as organisms, but there's always the change chance.

[Felix Salmon]

Well, Scott, thank you very much for coming on. Thank you all for listening. Thanks for your emails. Sleep Money, slate.com Thanks to Jess and Molly and also Merit Jacob for producing. And we'll be back on Saturday with a regular Slate.

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[Scott Smith]

Foreign.

[Mike Townsend]

Is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's managing director for legislative and regulatory affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and [e-mail] WashingtonWyse or wherever you listen.

[Felix Salmon]

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