Tetragrammaton with Rick Rubin
Guest: Tyler Cowen (Part 1)
Date: October 15, 2025
Episode Overview
In this rich and fast-paced episode, renowned economist and thinker Tyler Cowen joins Rick Rubin to explore the frontiers of finance, technology, and society. The discussion dives deeply into stablecoins and financial innovation, the evolving role of AI in everything from markets to travel, philosophical musings on education and meaning, media habits, global politics, culinary adventures, and much more. Cowen’s insights are sharp, contrarian, and delivered in his signature rational, data-driven style. The episode skillfully blends big-picture trends with practical tips and personal anecdotes, engaging both crypto-curious listeners and those seeking wisdom about life in a rapidly transforming world.
Key Discussion Points & Insights
1. Stablecoins, Banking, and Global Finance
- Definition and Regulation ([00:23–03:30])
- Stablecoins are digital tokens backed 1:1 by reserves (typically dollars or safe assets like T-bills). Recent US legislation—instigated by the Trump administration—aims to legalize and tightly regulate stablecoins with 100% reserves.
- Key risk: Even with regulation, there's always a chance of financial players bending or breaking rules, as seen in past crises.
- Quote:
"If there's truly 100% reserves, the system should be stable... but, can you trust them? Companies break the law all the time." —Tyler Cowen [01:30]
- Geopolitical Impact ([01:50–08:34])
- Many countries prefer using dollars (and now, stablecoins) to avoid “Uncle Sam” interfering in their affairs.
- Cowen predicts European authorities fear stablecoins could sideline the euro, pushing them toward launching their own digital euro (likely to be "overregulated" and less dynamic).
- The rise of stablecoins may accelerate the ongoing erosion of banks’ influence, increasing the role of fintechs and non-bank intermediaries.
- Notable Moment:
"A lot of Europe would just rather use stablecoins than the euro." —Tyler Cowen [04:39]
- Banks’ Pushback & Innovation ([06:47–10:52])
- US banks are blocked from issuing stablecoins, risking a shift of deposits to fintechs like Coinbase, Visa, and Stripe, which could destabilize the banking sector.
- "Hybrid" financial products are emerging that mimic stablecoin interest, angering banks further.
- Stablecoins vs. Wire Transfers ([03:53–08:35])
- Stablecoins can be “programmed” and skirt certain regulations, making them faster and sometimes easier for cross-border transactions compared to traditional wire transfers.
2. The Shrinking Role of Traditional Banks & Rise of Shadow Finance
- Banking System Shift ([08:41–11:28])
- Banks now account for only 20% of US finance; private equity and credit are the big gainers, especially for tech and AI firms.
- Historical context: Shadow banks have caused crises before (e.g., AIG in 2008). Stablecoins are entering an already dynamic, partly unregulated system.
3. Crypto’s Future: Bitcoin vs. Stablecoins
- Differentiation ([11:24–14:41])
- Bitcoin is likened to gold—a “boring” store of value—whereas stablecoins are driving innovation and enabling new applications.
- Stablecoins may become “the money of AIs,” facilitating autonomous machine-to-machine trade.
- Quote:
"Stablecoins are the sector of crypto that by far is growing most rapidly… Bitcoin could just stay boring." —Tyler Cowen [11:28, 12:50]
- Possible Corporate Stablecoins ([15:18–18:33])
- Tech giants like Amazon and Meta could plausibly issue their own stablecoins, reflecting both financial innovation and the “gift certificate” model at scale.
4. Payments Innovation & Stripe’s Role
- Stripe as a Payments Backbone ([17:39–18:48])
- Stripe processes an estimated 1.6% of global GDP and is expanding into stablecoins.
- Users may soon interact with stablecoins without realizing it, as part of mainstream payment systems.
5. Global Organizations & Political Forecasts
- ECB vs. WEF ([20:51–21:29])
- The European Central Bank (ECB) is a real regulatory force, whereas the World Economic Forum (WEF) is “just a party” for elite networking.
- Major Political Events ([27:03–29:59])
- Cowen claims not to be surprised by recent events in the Middle East or Ukraine, which fit his earlier predictions.
- Betting Markets ([27:58–31:25])
- Betting odds often outperform expert judgment in fields with robust data, such as sports and elections.
6. Education, AI, and Cultural Change
- AI’s Impact on Education ([22:24–23:51])
- AI could bring high-quality education “everywhere,” decoupling learning from physical location, as seen with the Alpha School model.
- Flaws in Higher Education Norms ([24:09–25:09])
- Cowen calls the “everyone should attend college” mindset a fundamental mistake and critiques the current system for overvaluing consensus-driven, conscientious students.
- Mentorship & Real-Life Experience ([23:55])
- The most useful kind of education is “real life. Mentors. Experience. Failing, succeeding. All of the above.”
7. Chess, Passion, and Reason
([25:09–26:56])
- Magnus Carlsen is praised as both incredibly intelligent and articulate.
- Top chess champions share an obsessive drive and a deep-set hatred for losing, but not all are best at reasoned thinking.
8. Media, Blogs, and Free Speech
- Marginal Revolution & Blogging ([33:16–38:05])
- Cowen started Marginal Revolution 23 years ago as a kind of diary, unexpectedly growing to a huge readership.
- Substack has replaced much of the blogosphere, but Cowen prefers WordPress for his frequent, shorter posts.
- Cowen:
"I thought blogging would be a big thing and should do a blog. There wasn't like a really good economics blog at that time..." [37:48]
- Importance of Free Speech ([39:08–39:46])
- Cowen is a First Amendment absolutist, sharply criticizing UK censorship laws.
9. Cultural Evolution: Print to Oral
- From Print to Oral Culture ([40:41–42:13])
- Major cultural shift now underway: the rise of oral media (podcasts, chatbots, TikTok), diminishing the analytical depth of print culture.
- Mood Affiliation ([42:16–43:09])
- People often judge ideas based on their emotional resonance, something that oral culture may encourage more than print.
10. Fiction, Values, and Meaning
- Why Fiction Matters ([44:52–45:53])
- Fiction offers irreducible lessons on humanity, values, and context, with works like Thomas Mann’s Magic Mountain still relevant as parables for today.
- Challenging Core Values ([45:53–46:13])
- "It's part of what a human should do for intrinsic reasons is to challenge things, most of all your own values." —Tyler Cowen [45:57]
11. AI: Practical Tools, Prompting, and Models
- Generative Books ([31:25–32:36])
- Cowen’s book GOAT—the first he knows of written for and with GPT—lets readers interact and “remix” the content via AI.
- Prompt Engineering Advice ([57:18–58:36])
- Longer, more detailed prompts usually yield better AI answers—not succinctness.
- Quote:
"You want to be a bit run off on the mouth because that gives it the context it needs..." —Tyler Cowen [58:21]
- Comparing AI to training a dog: simple commands often don’t work as with humans.
- Best AI Models/Services ([62:03–64:53])
- GPT for history, music, facts. Claude for therapy and natural human-like dialog. Gemini for computational needs.
- For complex legal/medical queries, use the most advanced (and slowest) models.
- Practical Uses ([75:26–77:06])
- Cowen uses AI for trip planning, translation, and real-time information, highlighting the unparalleled breadth and personalization.
12. Geopolitics, Regulation, and AI Talent Wars
- Power & Abundance Movement ([98:13–103:07])
- Regulatory bottlenecks slow US innovation compared to places like UAE and China, where centralized power gets things done faster.
- Access to energy (nuclear, solar) is pivotal for running increasingly advanced AI.
- Chinese Advances: Deepseek ([104:52–109:19])
- Deepseek, a major Chinese large language model, was built by a surprisingly small team. Its development was hampered when authorities restricted the movement of top engineers.
- Global AI Talent Market ([112:25–118:10])
- Intense competition and “superstar” status have created massive salaries for a tiny pool of top AI engineers.
- Startups and Big Tech alike are fighting over this highly limited, transformative talent.
13. Markets, Tariffs, and Fiscal Policy
- AI and the Stock Market ([79:54–84:11])
- Companies like Nvidia have exploded in value due to AI demand. Markets are bullish on AI-adjacent firms but flat or negative elsewhere.
- Tariffs & Economic Policy ([84:11–94:16])
- Trump’s “Liberation Day” tariffs destabilized markets. Tariffs historically funded US government pre-income tax.
- VAT: A national sales tax levied at every production stage, “too efficient”—Cowen would rather have temporary pain than a permanent VAT regime.
- Possible Positive Scenarios ([96:20–97:05])
- If AI boosts productivity enough (e.g., US growth moves from 2.2% to 2.8–3%), it could bail out America financially, but Cowen estimates only about a 30% chance.
14. Life, Travel, and Culinary Adventures
- Best Eats & Authenticity ([47:19–49:07])
- For great food, find a local cab driver—40s or 50s in age—to guide you. In emerging markets, these men hold the secrets.
- Quote:
"If you are wise and careful, there will be an inverse relationship between the price you pay and the quality of the food." —Tyler Cowen [47:23]
- Exotic Places ([49:18–51:30])
- Yemen is cited as the “strangest place” Cowen has visited—a window into a dramatically different culture.
- India “makes your head spin” with its complexity and drama; crossing the street is the hardest part.
15. Meaning, AI, and Philosophy
- Meaning of Life by AI ([70:48–73:55])
- Cowen and Rubin ask GPT and discuss—AI gives a thoughtful but noncommittal answer, favoring "curiosity about others" as the guiding principle for Cowen.
- AI’s Default = Western/American ([74:18–75:11])
- AIs reflect the values and worldviews with which they're trained. To get non-Western perspectives, you need to prompt specifically.
Notable Quotes
-
On AI Prompting:
“You want to be a bit run off on the mouth because that gives it the context it needs…” —Tyler Cowen [58:21]
-
On Stablecoins:
"A lot of Europe would just rather use stablecoins than the euro." —Tyler Cowen [04:39]
-
On Fiction’s Value:
“I think what we learn from fiction we cannot express through means other than fiction. Otherwise it would not be a thing that we learned from fiction.” —Tyler Cowen [44:56]
-
On Oral vs Print Culture:
“Print culture, it’s colder— as McLuhan said— and that can be useful... oral culture excites, motivates, involves…” —Tyler Cowen [41:42]
-
On Political & Economic Surprises:
“Sometimes the anti-surprise is the surprise. Like, ‘whoa, I was right about that.’ What a surprise.” —Tyler Cowen [27:16]
-
On Markets & Betting:
“When there is data... you just look at the betting market and you’re not going to do any better than that. It’s just the best source...” —Tyler Cowen [28:06]
Timestamps for Important Segments
- [00:23] — Stablecoins: definition, regulation, risks
- [03:58] — Stablecoins vs. wire transfers; global significance
- [08:41] — Shrinking of traditional banking’s role
- [11:28] — Crypto now: stablecoins vs. Bitcoin, AI’s future currency
- [15:18] — Tech giants and the future of stablecoins
- [17:41] — Stripe’s place in global payments and stablecoins
- [27:03] — Political upheavals and forecasting surprises
- [31:25] — AI books: the GOAT project and interactive reading
- [40:41] — Shift to oral culture
- [44:56] — Fiction’s unique lessons; Thomas Mann’s Magic Mountain
- [47:19] — Culinary wisdom from taxi drivers
- [57:18] — AI prompt engineering advice
- [79:54] — Stock market and the explosive rise of Nvidia
- [84:11] — Tariffs: history and present policies
- [112:25] — AI talent wars and sky-high compensation
- [120:01] — The European Union: original ideas vs. regulatory behemoth
Memorable Moments
- Cowen’s deep dives with GPT mid-show, using the AI as an active conversational partner ([70:51], [110:13])
- Anecdote: Crossing the street in India by taxi because it’s too dangerous on foot ([51:30])
- Comparison of modern oral culture to McLuhan’s theories and its broad societal effect ([41:39])
- “The meaning of life” according to both AI and Cowen ([70:48–73:00])
- The playful, meta riff on the economics of great meals: “the best food is often outside the major cities, and extremely cheap” ([47:23])
Tone and Style
The conversation skews intellectual yet friendly, mixing the abstract with the granular, and occasionally sparking with dry Cowen wit. Rubin’s curiosity steers the dialogue, prompting Cowen’s expansive, often contrarian thought.
For Further Reflection
- Will stablecoins and private-sector digital currencies disrupt central banks and legacy financial systems?
- How should societies balance efficiency, innovation, and the maintenance of regulatory guardrails in the AI era?
- What values are encoded—consciously or not—into our most widely used AIs, and how can users navigate or reshape them?
- Is today’s information abundance (and its noise) a net positive, or has “mood affiliation” overtaken analytical reason in public discourse?
- What lessons does Tyler Cowen’s method—open, curious, relentlessly pluralist—offer for thriving in turbulent, ambiguous times?
End of Part 1. Stay tuned for Part 2.