Slate Money – "Rolling Dice"

Date: August 29, 2020
Host: Felix Salmon (Axios)
Co-hosts: Emily Peck (HuffPost), Anna Szymanski (Breakingviews)

Episode Overview

This episode of Slate Money, titled “Rolling Dice,” covers significant economic developments, notably the Federal Reserve's landmark shift in monetary policy announced during the (virtual) Jackson Hole conference. The hosts also dig into direct listings as an alternative to IPOs, discuss the rise of SPACs, and close with an engaging listener response segment on a thought experiment about risk-taking, betting, and probability. As always, the conversation is lively, humorous, and rich in both detail and debate.

Key Discussion Points

1. Federal Reserve Changes Its Policy Framework (00:30–14:29)

• Monetary Policy Shift Announced at Jackson Hole
  Traditionally a sleepy August event, Jackson Hole produced real news this year. The Fed introduced two big changes:

  • Average Inflation Targeting (AIT):
    • The Fed will now allow periods of above-2% inflation to "make up" for previous years of undershooting.
    • Quote: “So, yes, and we've had inflation for many years. I mean, we've undershot 2%... which means, according to this new framework... we should at some point overshoot 2% for many years, and they will be fine with that.” – Felix Salmon (03:43)
    • Skepticism remains over whether the Fed can actually generate more inflation after failing to hit targets for years.
  • Rethinking Full Employment:
    • No longer will low unemployment automatically trigger rate hikes.
    • Focus shifts toward minority and lower-income employment, explicitly acknowledging the racial and class implications of monetary policy.
    • Quote: “...the last people to get jobs are black folks, basically. And so the Fed starts saying, oh, we have more or less full employment, we can start raising interest rates exactly at the point the black folks are about to start getting jobs. …they’re quite explicitly now saying, we're not gonna do that anymore. We are very happy keeping rates low until everyone, even the black folks, get jobs.” – Felix Salmon (08:09)

• Mixed Opinions on Effectiveness

  • Emily is optimistic, appreciating focus on real people’s job prospects.
  • Anna counters that the Fed’s influence on employment and wages today is limited, doubting that low rates alone will drive wage growth or more equitable outcomes.
    • Quote: “To me right now, what the Fed is very good at is pumping up asset prices. And that is essentially the only thing the Fed is very good at.” – Anna Szymanski (10:07)
  • All agree that fiscal policy (i.e., Congressional action) is needed, beyond central bank measures.

• Will We Ever Get Inflation Again?

  • Anna notes globalization, technological efficiency, and persistent competition as structural dampeners on inflation.
  • If supply chains move home and competition drops, inflation could pick up, but not the kind central banks easily control.
  • Quote: “If those kind of things cause price increases and inflation, that's the kind of inflation that the Fed raising interest rates doesn't prevent and doesn't stop.” – Felix Salmon (14:29)

2. Direct Listings vs. IPOs vs. SPACs (15:21–23:36)

• What’s a Direct Listing?

  • Unlike a conventional IPO with investment bank set prices and allocations, a direct listing allows shares to simply start trading on the open market.
  • New SEC rules will allow companies to raise money via direct listing — previously not possible.
    • Quote: “From here on in, companies are going to be able to raise money in a direct listing. I love all of this, Anna. Do you love it as much as I do?” – Felix Salmon (16:24)

• Benefits & Downsides

  • More options, more market-driven mechanisms.
  • Fewer advantages for investment banks; direct listings minimize their influence and fees.
    • Quote: “Now in which choice are the investment banks losing out the most direct listings? Okay, so that's good in my opinion.” – Emily Peck (19:47)
  • Downsides include uncertainty about how much capital will be raised.
  • SPACs are the farthest on the spectrum: They offer even more certainty and are attractive when companies want to guarantee money upfront.

• Current Trends

  • Companies like Asana and Palantir have announced direct listings — neither has made a profit, highlighting how the current market rewards anticipated growth over fundamentals.
  • Quote: “Palantir has lost $580 million in each of the last two years. Asana has said in its prospectus that, like, yeah, we might never make a profit. …How are you going public?” – Felix Salmon (21:52)

3. Listener Risk/Reward Thought Experiment: The Dice Game (23:36–38:34)

• The Problem Recap (24:57)
  You can roll any number of dice; any die showing 6 means you lose everything. Each non-6 doubles your money. How much do you bet and how many rolls?

  • Median response:
    • Amount to bet: $1,000
    • Dice to roll: 3 (people prefer > 50% chance of survival; coin-flip logic).
    • Quote: “The median number of roles was three... in terms of the amount, the median was $1,000.” – Anna Szymanski (25:40)
  • Bimodal distribution: Some treat it like a "poker bet," others like a "stock market bet."

• Analysis

  • Despite extremely favorable risk-reward math, most people are far more risk-averse in this setting than with traditional investing.
    • Quote: “Already I am seeing Emily shaking her head, scrunching up her nose. So, Emily, come in here.” – Felix Salmon (28:32)
    • Emily: Key difference – you can be totally wiped out in the dice game, whereas with the stock market, total loss is unlikely.
  • Real-world risk tolerance varies greatly; hosts’ answers reflect personal risk attitudes:
    • Anna: $1,000–$5,000 on three or four rolls — “I see a little bit of my risk aversion. I would probably do like three or four rolls.” (31:31)
    • Emily: About $6,700 on two rolls, targeting a kitchen renovation.
    • Felix: Larger, potentially life-changing bet (e.g., $30,000 on nine rolls to try for $20 million). “...for me, this is a once in a lifetime opportunity to make a completely life changing amount of money.” (32:49)

• Broader Implications

  • The experiment exposes how investment decisions are framed; when risk of total loss is explicit, people are far more cautious.
    • Quote: “When the downside is made incredibly salient... people become very risk averse.” – Felix Salmon (36:03)
    • Most investment marketing emphasizes upside, rarely highlighting loss potential.

4. Numbers Round (COVID-19 Vaccine Attitudes, Mask Sales, Walmart's Digital Spending) (38:46–44:21)

• Anna: 30% – The proportion of Americans polled who say they will not take a COVID-19 vaccine if available. Concerns include both anti-vax sentiment and skepticism about a rushed process (esp. under Trump).

  • Quote: “About 30% of Americans say they will not take a COVID 19 vaccine if it becomes available.” – Anna Szymanski (38:46)

• Emily: $130 million – How much Gap made selling face masks in a single quarter. Mask sales are now “the bright spot in retail.”

• Felix: $3.3 billion – What Walmart paid to buy Jet.com, an e-commerce competitor to Amazon that was ultimately shut down. Raises questions about their latest rumored tech investments (TikTok, etc.).

Notable Quotes

• On the Federal Reserve and Employment:
  “We are very happy keeping rates low until everyone, even the black folks, get jobs.”
  – Felix Salmon (08:09)

• On the Power (and Limits) of Central Bank Policy:
  “To me, right now, what the Fed is very good at is pumping up asset prices. And that is essentially the only thing the Fed is very good at.”
  – Anna Szymanski (10:07)

• On Direct Listings and Investment Banks:
  “Now in which choice are the investment banks losing out the most? Direct listings? Okay, so that's good in my opinion.”
  – Emily Peck (19:47)

• On Risk Aversion in The Dice Game:
  “It's really not the most rational thing in the world, but I know myself enough to know that in the real world, that's probably what I would do.”
  – Anna Szymanski (31:35)

• On the Nature of Investing and Gambling:
  “Yeah, I guess that's true. Like investing and all the jargon around finance is meant to obscure what it is, which is just rolling dice and gambling.”
  – Emily Peck (38:21)

Timestamps for Important Segments

• 00:10: Opening & Hosts' Introductions
• 00:30 – 14:29: Federal Reserve's Framework Change (Jackson Hole)
• 15:21 – 23:36: Direct Listings, IPOs, and SPACs
• 23:36 – 38:34: Listener Dice Game Results & Risk Discussion
• 38:46 – 44:21: Numbers Round: COVID Vaccine Hesitancy, Mask Sales, Walmart’s Tech Deals

Tone & Style

Conversational, witty, and thoroughly analytical—the hosts trade jests while grappling with core economic issues, bringing an accessible, human perspective to finance.

Final Thoughts

This episode highlights how the biggest monetary policy shift in years may prove more symbolic than effective, given the structural realities of today’s economy. It also surveys how new financial market mechanisms (direct listings, SPACs) are challenging old models and who stands to win or lose. Finally, through a risk experiment, the hosts illuminate the psychology behind personal and national investment decisions.

For listeners interested in the intersection of economics, policy, market structure, and human behavior—with plenty of practical examples and sharp humor—this episode delivers.

Listener feedback and participation remain core to the show's depth and relatability. For follow-up or to join the next experiment, write to slatemoneypod@slate.com.