Episode Transcript
[00:00:14] Speaker A: Hello, welcome to Call It Like I See it presented by Disruption. Now, I'm James Keys, and in this episode of Call It Like I See it, we're going to take a look at how government stimulus payments and the ever growing stock market seem to be illustrating a growing bifurcation in the American economic experience amongst different American citizens.
And later on, we're going to try to figure out where the line should be between convenience and privacy from a technological standpoint, particularly when it comes to video monitoring in our homes.
Joining me today is a man who lives by the credo that money talks and BS runs a marathon. Tunde Ogunlana Tune Day. Are you ready to talk about some money today?
[00:01:02] Speaker B: Yeah, Money and bs. So I've got my running shoes on. Hey, there you go. There you go.
[00:01:08] Speaker A: Now we're recording this on January 25, 2021, and this past year we've seen around 1800 or up to $1800 in stimulus payments be distributed to most Americans in response to the economic issues that have arisen due to the COVID 19 pandemic distributed. The initial payment was 1200 and then a second payment that was made was 600.
And for many, these payments have been a vital lifeline, helping to pay for necessities like food and other living expenses and so forth.
But another thing that has been observed is that after every stimulus distribution, there's been an uptick in stock market trading, particularly on lower priced stocks.
Based on the timing of everything, it's pretty clear that many people, presumably people who have not been hit as hard by the economic issues created by Covid are using stimulus money to buy stocks and play around in the stock market.
So Tunde seeing reports that government stimulus money is being spent in the stock market and this next potential stimulus payment of $1,400 that may be coming down the pipe is expected to, quote, blow up the stock market. Can you explain the theory on what's happening here?
[00:02:23] Speaker B: Yeah, I saw an interesting article that put it well, stock market boom and a human recession. Yeah, yeah, yeah.
[00:02:33] Speaker A: But how is that happening? You know, like, what in the world?
[00:02:36] Speaker B: Yeah, it's interesting. You know, obviously I think we can all point to certain things that have happened in the last 12 months. So let's point them out. One is you had obviously the pandemic which shut down global economic activity, which led to the market reacting by dropping. So the market went down 35% in about three and a half weeks, which was a record. It never dropped that much in that short period of time.
[00:03:04] Speaker A: That was Around March.
[00:03:05] Speaker B: Right around March, yep.
Then what precipitated was the first stimulus from the United States treasury and the Fed, which was around 4 trillion. And also we can't forget that both China and the European Union also had very accommodative stimulative measures for their one being a continent and the other country with the largest population in the world and about 20% of the world's population.
When you look at the trillions of dollars that they also pumped into their economies, you had trillions pumped into the global economy since March. And since that initial. I'll just go back to here. Domestic. In the US The Federal Reserve and the treasury of our government have printed more money. In a sense, you're looking at about 6, $7 trillion in under 12 months that's been pumped into an economy that roughly was doing 23 to 24 trillion in gross domestic products. So let's say that's the overall output annually and that output fell by 32% at the end of the first quarter last year with the downturn due to the pandemic. So we can assume that the GDP from, or I should say the output from economic activity on its own last year would have been probably under 20 trillion just because of the pandemic. So what I'm getting at is the representation of that stimulus that was created and put into the economy is a large portion of our output economically.
[00:04:46] Speaker A: But isn't it intended just to replace money that wasn't there because of the downturn?
[00:04:52] Speaker B: Yes, that's where it becomes. And that's a great way for me to segue into this.
Why does it work this way now that the market shoots up, but yet not everybody that, let's say, lost a job or was hit hard financially from the pandemic may have an equal experience on the rebound. And so because, you know, the way I could put it is this, I mean, obviously we could all look at how our government doles out this money once they decide to print it, let's say, and with a critical lens, and I know that we saw it well documented just in general in the media last year about, I guess, and this is all opinion now, right?
A lot of people felt that money from the PPP and ETL loans, all the stimulus benefits for businesses, that some of that went to businesses or families of means who didn't necessarily need it, that they could have kind of self funded, let's say, their stuff. An example would be, I think both Tom Brady's company and Joel Osteen, the big mega church Pastor who's very wealthy, they got money.
And some people said, well, you know, they're wealthy enough anyway, why did they need to have that stimulus help? So the way. The reason.
[00:06:11] Speaker A: I just bring that up, just to kind of. Let me say this, though, just to kind of simplify that. What it seemed was that the getting was good, basically. So everybody who could get got and whether they actually needed it, whether they, you know, whether they. It was as dire, like some people, a restaurant may have been in dire situations, we're going to close our doors if we don't get this. Whereas another company might have said, hey, are you giving out free money? Okay, we'll take some. Even though it might not have been. They're going to close their doors if they don't get it. And so it would, because it was offered relatively equally or on equal terms, regardless of how dire your situation was, that people, some people were able, and I don't even know what you say, take advantage of it. I mean, because it's the rules of the rules. I mean. And like I said, that's why I said, why the getting is good. You know, the getting was good. And so everybody's like, all right, well, free money, I'll take some.
[00:07:00] Speaker B: I look at it as when the government transfers this money from stimulus down to the population, it's a leaky bucket. And sometimes things, you know, water leaks out in areas we wouldn't want. But in the end, the transfer happened and it was successful. So I think getting back to do, I gather.
[00:07:17] Speaker A: Yeah, I was going to say just to keep it moving. So do I gather you're saying basically that because the government, when it does the stimulus payments, kind of does so not by design, not in the most targeted fashion, but just to try to get money out the door to people as quickly as possible.
Some people are able to get it that may not absolutely need it, and then therefore take it, use it for other things, use it to try to just improve their lot or their circumstances generally.
[00:07:46] Speaker B: And that's what I think we're looking at from what happened. I think the stimulus worked in the sense that we have historical precedents now, twice, if you look at the last hundred years. The first was after the crash of 29.
A lot of people think that that crash itself led to the Great Depression. That didn't lead to the Great Depression. The crash was a crash. What led to the Great Depression was at that time, the Federal Reserve tightened the money supply and they did.
[00:08:15] Speaker A: The monetary policy.
Yeah, the monetary policy following the crash.
[00:08:19] Speaker B: Yeah. And so when people were hurting and businesses needed capital and lines of credit and all that, they couldn't get them. Then you look at the second precedent, which was the great financial crisis of 12, 13 years ago now in 2008, where the powers that be at the time look back and only had the Great Depression to look at. So they said, well, let's try this.
Let's see if this works differently.
[00:08:42] Speaker A: Let's do the opposite.
[00:08:43] Speaker B: Yeah, let's do the opposite. And it actually worked. I mean, we avoided a really great Depression. We had a great recession, and you know, within two, three years we started climbing out of that hole. And it didn't take 12, 13 years like it took after the crash of 29, and it didn't take us going into.
[00:09:00] Speaker A: And you're speaking just, just for, just for, for context, you're speaking collectively, basically, you're speaking as an overall economy, correct? Yeah. Does our economy start shrinking or does our economy continue to pick up a nature of a trend of growth? Not saying that all like the issue of how the growth is distributed can be looked at separately, but you know, the. And should be in some analysis, depending on what point you're trying to argue or what you're trying to analyze would be looked at separately, but just the. Of getting on a trajectory of growth again.
[00:09:34] Speaker B: I fully would have expected what from what we saw in March of 2020, this is the first time in world history that the whole globe shut down at the same time. And then you got the globe being as populated and as big and as connected as we are today.
And we were, remember, losing 6, 7 million jobs a week in this country, and then you got the global job losses. So I really expected that we'd be in a Great Depression again and that we'd still be in it today right now. So the fact that we're not tells me that there's something in this that worked.
But I agree, but that's only looking at it.
[00:10:09] Speaker A: The metric that you're considering, and I pointed that out because I think in coming weeks we're going to actually to take a closer look at this. But the metric of growth, are we growing or are we not growing? And if growth is the target, that's the metric we've selected that we are going to serve. That's the master we're serving then. Yes, it is.
The fact that we have been able to get back into an expanding economy again means that we've had success by that metric. And like I said, we'll evaluate in another show whether or not that should be the metric that that should be the end all, be all metric that we're looking at here. Because from my standpoint, what's happening here is, yes, it may be out of necessity, but this does tend to indicate that the way that there is a issue that's been created as far as the way that this money's being distributed now maybe we decide, well, hey, that's the issue that needs to be created. Like, you gave examples of why that issue was justifiable, but I wanted to also call out the issue and then just the issue being that the government took a heavy hand, so to speak, and say, okay, our priority here is to get as much money out the door to people as possible.
How it actually happens, we're not going to, we're just not going to deal with dotting all the I's and crossing all the T's. We're just going to push it out there as quickly as possible. And so therefore, people who may not be in an absolute as dire situation as others will be treated the same as the people who are in very dire situations relative to their current positions. So as a result, while the getting is good, so to speak, people will get more money or get free money from the government. And apparently a lot of that money was making it into the stock market and creating these stock market bubbles where the asset prices, the stock prices would go up because there's just people putting more money, windfall money into the stock market irrespective of the actual performance of the company that the stock was for. It's because the money has to go somewhere. And as you've pointed out on several of our shows, as long as interest rates remain very low, it doesn't make any sense to put money elsewhere. It doesn't make any sense to buy bonds relatively. It doesn't make any sense to use other financial vehicles that you may use normally to diversify. The interest rates being low like this, stocks are the only real option. If you have windfall money sitting around and like, what am I going to do with this? I'm not going to just keep it in my pocket. I'm going to invest it or I'm going to invest it. And the stock market is the place to be because of the other conditions, other decisions that have been made by the Fed, all as a part of this stimulative policy where we're trying to just get as much, we're trying to maximize growth at all steps.
So if a significant enough portion of government stimulus money has been, and like I said, the Reason we thought about this or this really hit us was because we're reading stuff now that's saying that they're expecting another big bump in the stock market if Joe Biden is able to get this additional $1,400 stimulus payment through.
So a significant enough portion of government stimulus money has been and now is expected again, to be used to buy stocks and inflate the stock market. Are we doing something wrong?
And again, you might say no. You might say, hey, this is just the necessary consequence of keeping the ship afloat. And someone else may disagree. But I think that's the interesting conversation that I'd like to get into with you.
[00:13:38] Speaker B: Yeah, I mean that. Honestly, I don't know how to answer that question because this is so new that we're gonna have to watch it play out.
But I don't think we're doing something wrong in the sense of doing something, because I think again, going Back to the 1929 crash, we know that doing nothing and not injecting capital into the system, and this term that you've heard me use in the past, too, with this velocity of money that money needs to keep moving in our capitalistic economic system, because that's the way. It's like grease on wheels in gears. You want to keep the gears kind of well oiled and greased.
[00:14:17] Speaker A: Because I would disagree with you there, actually. I would say it's actually the motive force on the gears. Like the money moving is actually what's turning the gears.
[00:14:25] Speaker B: Yeah, I mean. I mean, and whether forests or the Greece. Yeah, you're right. The Greece might be other parts of the system, but it's all kind of. It all combines, right? Like what we don't want to do what we saw in 1929 and in the early 30s because of the lack of that, whether forest or Greece, was that the gear stopped. And that's what you kind of don't want. Because just like we've seen in other potential examples, right? Like a democracy is not easy to get going again if it gets disrupted too heavily. I mean, let's look at countries like Iran and Lebanon after the civil war and what happened in Beirut. I mean, those countries are not the same anymore. And so we don't wanna have this. Why? We don't wanna have our democracy too disrupted. Right. And we don't wanna have our economy too disrupted. Because if you have a decade or two of no grease or no momentum on those gears, those gears could begin to break down. Because then you have things like we've seen a bit after the great financial recession or great financial crisis, what do you get? You get some of the political unrest and the populism and all that. And we know what happened after the 29 crash in Europe, mainly countries like Italy and Germany. So where there are forces that are always in our society that are out there, but that seem to take advantage of and rise to power when I would say a majority of the population is unhappy. And usually that comes about through negative economic experiences.
But getting back to the kind of topic at hand here, that's why your question is good, because I think it does come down a lot to as well, the interest rate conversation. Cause, and that's why I said that this is such a big ecosystem of stuff that there's not one thing you can point in and say that's exactly the reason why. X, Y, Z.
My point of saying is that the experiment of the 2009 through 2010, let's really call it 2013, if you're talking about the full quantitative easing programs and a lot of that. And the reason I bring it up like that is a lot of people don't see that the stimulus program's actually been going on for a decade behind the scenes. But they happen in different ways, which I won't get into here. But it actually worked, right? Driving rates to zero, to your point, made it very unattractive to hoard cash and to go to safe investments like treasury bonds and all that.
And because a lot of this financial stuff goes back to human psychology. And think about it, in 09, 2010, people were still scared that we weren't out of the woods yet, just like people were scared after 9, 11 for a few years, by 2005, 2006, we still felt that we could get hit at any time, whether that was true or not.
And the same happens after stock market crashes. Right. It's a very painful, emotional experience, losing money. And so you still have this fear that it's going to happen again.
So in order to have a strategy to get people off the sidelines and get their cash moving again, to buy real estate and to buy stocks and invest in companies, the powers that be, meaning the Federal Reserve and the treasury engineered it so that rate stayed at rock bottom rates. So it's unexpected.
[00:17:49] Speaker A: That's actually where I wanted to go with this. And that is that I think that when you look at the question, are we doing something wrong? I think that you have to recognize that things are working as they're intended to work right now. And so if you want to. Yeah, if you want to point to the outcome and say that I don't think this is an equitable outcome, then actually the beef you have is with the setup of the system. Because the setup of the system right now is our system is set up to serve capital, not to serve human factors. It's set to have ever increasing growth of capital. And so that is in itself when these crises happened. The bias, the built in. We talk about human bias a lot of times in terms of all these things. You can't control how your brain works and so forth.
But systems have a bias too. And a lot of times the bias is intentional. And so the bias here right now is to serve the interest, to serve the interest of the people that can participate in those capital markets. And so when I ask, are we doing something wrong? It wouldn't necessarily be with the implementation of what we just saw with the stimulus. It would be with the approach that we're taking by and large. Like you'd have to go bigger than the actual, okay, here's what the way the stimulus bill was written is this and that and so forth. Because right now the bias in our system is going to leave human beings out. Like you said, dude, we looked at something this week, talked about it's a bear market for humans and a bull market for stocks and for capital, for assets.
And that's real, that's intentional. Because when the ship starts sinking and you have the human side is taking on water and the capital side is taking on water, and they got one pump to pump water out, you know where that pump's going, that pump's going on the capital side and it's going to pump all the water out of the capital side. And then when, you know, if we had a little time left over something, oh yeah, we'll use a bucket and knock out some water from the human side as well.
So if we're doing something wrong, which, you know, my worldview wise, I think that we can do things better. I don't think, I think that what we are, I would consider our system, the way we serve growth, the way we serve capital is an extreme. It's an extreme.
I don't think the other extreme, where we disregard capital or things like that is the right place to be either. But I definitely think we're extremists in terms of how much we serve growth, how much we serve capital. And we need to recognize that, that, hey, we're not looking at these things from a rational standpoint. We're looking at this thing as extremists. As absolutists, our textbooks teaches smart guys like Tunde that you have to maximize growth as an absolute factor without considering anything else. And so that I think is where the disconnect is. That's where we see this situation where someone loses 100% of their income and we give them a check for $1,200. Like, yeah, here, go buy some groceries. And someone is making just as much money as always and we give them a check for $1,200 and they say, hey, going to go play in the casino, that is the stock market and have some fun with that. And so I think. So again, if you look at it
[00:20:58] Speaker B: from a, you're right, that's the opposite of communism, right?
We're giving everyone the same money. But like you're saying it's.
[00:21:07] Speaker A: But I agree with you in the same.
[00:21:08] Speaker B: It is communism. I shouldn't say opposite. It's an interesting.
[00:21:11] Speaker A: Yeah, but see, I agree with you that trying to parse it out at the time of crisis is not the time to parse it out. Like we can't look with at the time that the house is on fire and say, oh well, actually we have to be very measured and careful with this. It's like, no, we got to get as much help out there as possible right now. Then once we get a chance to see how it's going wrong, we need to pay attention to this stuff. Because once we get a chance to get a handle on this, then we should try to design a better system moving forward. One that does not prioritize growth above all other factors, above whether people can eat and so forth. And so that would be where I look at it. So yes, I think we're doing something wrong, but I think that what we're doing wrong, the departure from reality, so to speak, happened well before the desire to respond to this crisis happened or even the last crisis happened because it was the same thing last time I made that point earlier just to point out like, yeah, if our intention is to save capital, then we are doing a bang up job because that's what we've done a great job with that like, and that's, I think that's what we've intended to do and you know, so go ahead.
[00:22:20] Speaker B: That's a great observation and I think you're right. We've done a bang up job with it. And you're, you're 100% right about your comments about the philosophy of growth and our culture when it comes to finance in this country and all that.
That's Why I don't get into the arguments about the Main street versus Wall street, because you're right, the plans laid out worked and I think as they were intended. Yeah. And I think it's about understanding the system. Now, what you're discussing is where then it bleeds into the political philosophical discussion, right. Where what should the role of the system be for the greater society and all that. And that's where people have a right to have their opinions. We live in a free country. And then, you know, if they feel that this system isn't set up the way to benefit, I mean, everybody or the people that they want to benefit or they believe should be benefiting from the system, then that's where you've got to, you know, you go to the ballot box and you elect different people into office.
You can't divorce the political class and the decisions of voters of who they put in office to affect economic outcomes. And without getting. I want to get back to some of the conversation here on hand about specifically the stimulus, because it all bleeds in together. And so one of the concerns that has been expressed with a lot of the money printing is that just like we're saying that it's kind of a leaky bucket when the government transfers money, I guess anytime, but definitely when it's big, these trillions of dollars things that money leaks out somewhere. And even if the bucket ends up getting to where it needs to be and there's still enough water to take care of the initial issue, we all prefer that it wouldn't have leaked so much.
The same kind of thing happens once that money is taken and to your point, by so many, and then reinvested, let's say, into a concentrated area like the stock market. Because, remember, that's why the market goes up as well, is there's still the same amount of publicly traded companies generally that there was a year ago.
It's just now we have an extra $7 trillion that a big chunk of that's just gone into the market and it forces prices up.
[00:24:30] Speaker A: Now, we've heard many times, including from the incoming Treasury Secretary, Janet Yellen, that quote, the stock market isn't the economy.
But seeing how well some of these stocks did in 2020 while so much of the economy tanked, is this dissonance something that we should look at as a threat to the overall functioning of the economy? And I know you're kind of getting to this when you were talking about how well, I know you touched around this, basically, yeah. And so, like, what's the nature of threat to the economy or is there, does this pose a threat to the economy where you have a small but a small percentage of actual entities representing so much of the growth and everyone else really struggling to make ends meet? And I ask you this because while you can point to this in the business community, you also can see this in society at large, where you have a small number of people doing very, very well and then everyone else is really, really, really struggling.
So when you look at the whole big picture, it looks like the economy is growing because the people that are doing well are doing so well. But actually the vast majority of people are not growing and not doing better.
[00:25:41] Speaker B: Yeah. No. And that's where I guess I was kind of walking down that road without realizing it with my prior comments just now, which is.
So let me just finish that because I think you've got two potential risks. One is just the straight up numbers and the economic risk through. Again, economics is like it's not a natural science, but there are things with supply and demand that just they are what they are and the patterns just will repeat without a doubt because it's also. And that's what I was going to say then that translates over to political risk, which in the end would be economic risk. For example, I saw certain international sovereign wealth funds for the first time after the insurrection on the US Capitol in January 6th of 2021 of this year, say that for the first time ever, they were going to hold back investments in the United States for a while because they for the first time see a potential for political risk in the United States.
And that's why when you're into investing, you hear terms like emerging markets. That's a nice way of saying third world countries. And they tend to be a lot riskier.
[00:26:53] Speaker A: Why?
[00:26:54] Speaker B: Because most people don't look at putting your money in Somalia or Afghanistan to go invest in real estate out there as a safe bet for the obvious reasons.
[00:27:02] Speaker A: Well, let me speak on that. Because the reason for that which really ties into what you just said is that, for example, Venezuela 20 years ago, the country might be operating one way and then you have a different set of leadership takeover, and then all of the oil companies are nationalized. And that's not to comment on whether that was on balance a good move for their people or a bad move for their people or anything, but it creates a level of uncertainty that means that people with money to invest will treat it differently than a place where they consider there to be a lot of certainty in terms of how things are going to operate. Or over the next year, 5 years, 10 years, 20 years and so forth. So that's kind of the, that's the reason when you look at emerging markets, it's not like a pure, it's not like a prejudice, so to speak. It's just saying that, hey, well, we don't know if the way things are working now will be the way that they're going to be working in five years. Here again, stripping out the moral value for the purposes of this discussion. You know, I have thoughts on the moral value of some of the decisions that may be made. But, but understanding how the system is working is a prerequisite to really being able to figure out how you can make it work better for people anyway. And so you can have these discussions without getting into whether or not something is trying to make things better or worse and so forth.
[00:28:25] Speaker B: Yeah, and that's where I think, and that's why it was a big deal for me to read that about the sovereign wealth funds. Cause I've never heard of anyone concerned about the United States that way. But that's the thought, as you just said, that whether it's United States, Great Britain, Australia, all those kind of countries, what we have are strong legal systems that make investors feel secure about things like title. That if I buy a piece of land in this country or I invest in their stock market, the title of ownership still remains mine.
And you're right, trusting that the governments won't come and seize property like the famous stories of Fidel Castro and all these things in history.
So I think that's one long term negative consequence that could happen from too much bifurcation of haves and have nots in any society because we just, whether it's the French Revolution, the Castro like I mentioned and all that, that's one risk. The other risk I would say, which is less kind of like you said, less about opinions and what do you think is right or wrong. But it's more of a kind of, this is more like the science part that you keep hearing me say about economics is supply and demand. And you've got one of the major indexes in the market that half the companies actually lost money last year, but the index itself still went up because of a few companies that drug everything else up is that that never lasts. Historically, at some point, whether it was the tulip mania in the 1600s or the stock market bubble of 1929 or the real estate bubble of the early 2000s, eventually the supply and demand, the equilibrium comes out of whack and somebody's the last person to buy at the top and can't find someone else to trade with at a greater price. And the stock market is no different.
You also now have so many retail investors who aren't used to dealing with these kind of things and really downturn. And that's where you could get a precipitation of a downward spiral in the market when people get scared and everybody starts selling at the same time. And that's where you do have negative outcomes that can come up from this.
Real financial negative outcomes and then political negative outcomes over longer periods of time.
No.
[00:30:48] Speaker A: Yeah, I mean, those are the two areas. I think you look at potential financial negative outcomes, which I think you outlined well, and how that either that can feed into or be fed from political negative outcomes.
And that is, I think that's the threat. The threat is that the way things are going right now, from everything we've learned, looking at history, it can't continue this way. Now I look at something in particular, and that is just the level of borrowing and just injecting money into the economy that hasn't been earned yet. Or there's this borrowing we're injecting. Since Bush, let's say W. Bush in 2000, our economy has been in large part sustained, or I shouldn't say in large part, in a significant part sustained by persistent borrowing.
And when I say that, I'm not even talking about consumer borrowing now, that's included as well. But I'm saying on a institutional level, what happens if tomorrow, or let's say in 2021, if our government stopped borrowing a trillion dollars a year, which it has started to do under the Trump administration, then would all of our systems collapse like I wonder to what extent we are?
Because the bifurcation means that in my view, the system is no longer self sustainable. Meaning as long as you have this divide where the haves, quote, unquote, continue to do so much better than everyone else, and everyone else is actually falling behind, they're not even maintaining their previous standard then normally the people the quote, unquote, have not. So the people who aren't the top of the top on the economic ladder, they're buying their activity, their labor is what creates a sustainable system. Well, as they're getting left behind, the system no longer becomes sustainable, which our government has responded to by borrowing large sums of money every year to make up the gap, basically. And so I just wonder how that ends up resolving itself. We did see an example with Obama, who was able to reduce how much borrowing was being done slowly over the course of his eight years, Trump shot that back up. But we saw that it could happen. If you do it slowly, you kind of wean it off, get the economy back to be more of a system where it cycles through, where money cycles through, as opposed to money keep getting injected in, and the money at the top keeps getting taken off the top.
But that's the concern I have. Basically, the big risk I see is that as long as this bifurcation continues, we need to continue to get these external injections of capital in order for things to keep working. And that, to me, is the unsustainable part. By definition. Are we just intending to borrow a trillion dollars a year forever to keep this thing going? Does that matter? In my view, I think it does. Now, some people will tell you the deficits don't matter and the debt doesn't matter and whatever, but I see sustainability and the ability to keep doing what we're doing, for it to be cyclical, to have some level of value for the reasons we talk, for the reasons of predictability, for also the reasons of making people feel like they're invested in the system. You know, if less and less people see the system as worthwhile because they get something out of it, then less and less people are gonna be wanting to go to bat for it. So, yeah, I mean, I think that it's. It's a risk, bottom line.
[00:34:08] Speaker B: Yeah.
[00:34:08] Speaker A: And then jump ahead, get one thing, and I'll get to the next piece.
[00:34:12] Speaker B: Yeah. So real quick, because you said a couple important things. The minute you started comparing Obama to Trump, I said, oh, I can see all my conservative friends starting to roll their eyes. Here we go. How is Obama different? Because the Democrats, they just tax and spend and da, da, da. And I think it's important to kind of.
[00:34:30] Speaker A: I was given facts, though, man. I wasn't talking about value. Okay.
[00:34:34] Speaker B: I just want to parse that out a bit, because you're right. That's where I think everyone has opinions and all that. And we're not here to discuss that. But the facts were that because of the financial crisis in TARP, Obama came in inheriting a $1.4 trillion budget deficit. And there's two differences. There's a fiscal deficit, which is the overall debt that the United States has, and that's all the treasury bonds that we keep hearing about. It's about 30 trillion today in 2021, that debt. That's where I agree with you that I don't even know if there's a way we can pay that off. At this point without, because you can't raise taxes. I mean, you'd have to tax everyone 100% and that would kill, you know, that would cause negative economic outcomes.
[00:35:14] Speaker A: That wouldn't work. I mean, that would work. I mean, bottom line, that wouldn't work.
[00:35:17] Speaker B: But going back to the fiscal deficit, sorry, that was physics school. Now the budget deficit side, it is a fact that when Bill Clinton left office In January of 2001, we had a $200 billion budget surplus.
Then again, this is where the political class made a decision that that was Americans money. And that's where George Bush gave a lot of that back to Americans through a stimulus in 2002. I think then we instead of, for
[00:35:46] Speaker A: example, paying down the fiscal deficit, or excuse me, instead of paying down the
[00:35:50] Speaker B: debt and also without assuming the debt. And also I think this is where then you go back to like the pandemic is similar. Without assuming we'll have a rainy day as a country. So the Rainy Day became 9 11, right. And the fact that we had an attack that led to two wars, but we still had a tax cut in 03.
And so now, and that's why forward to Obama, he inherits a $1.4 trillion budget deficit, then he's got his issues with the Congress and all that. What actually saved the budget wasn't so much Obama being a genius, but it was the sequester in 2012 when you had a repeal of the Bush tax cuts and we went back to the tax rates prior to 2003, that naturally brought down the budget deficit. So by the time Obama left office in 2017, January of 2017, the budget deficit was down to $516 billion.
And now like you said, rightfully so we're back here now four years later in January of 2021 and we now have a budget deficit of 1.4 trillion. And I'll point out that the budget deficit hit 1.4 trillion prior to the pandemic.
So that was already, By January of 2020, we had already done that level of spending and that was through a combination of additional spending and the 2017 tax cut. So again, I say that with no opinion, but it's factual. And so where do we go from here as a country? I don't know. And that's why I feel like we do have looming risks out there. But it's impossible to predict what will be the catalyst for the collapse of this type of bubble. Because this is a government debt fueled bubble. We just don't know. Just like we had a personal Debt, fuel bubble on real estate that popped in 2008 and that created an economic catastrophe. This one, unfortunately, may do something similar. We just can't predict when that is. And to your point, too, how long that lasts, because one thing I'll end with is everybody thought that Japan could never last for a long time on zero rates because they had their economic bust in 1991 and did exactly what we did, printed a bunch of money, went to zero rates. They've been at zero rates since then. And Japan, no one would say that Japan's a third world country today.
So it's been literally 30 years of them having this stimulative environment and having this massive debt to GDP ratio. And I'm not saying that they're out of the woods and that this won't end badly for them. I'm just saying that we could see ourselves do the same thing and go through this or let this run for a few decades without having a major problem, or we might have a problem sooner.
So I'll leave it at that.
[00:38:25] Speaker A: Yeah. I mean, and kind of the thing that is the concern with that is that if someone presents to the American people, hey, we have this problem, let's try to solve it. Let's tighten our belts. And the question is whether people have the political will for that type of thing now, whether people say, okay, I can sacrifice now to make my children's lives better, to make the economy work better for my children. I mean, people won't even do that for the environment. You know, they don't even want to make any sacrifices for the environment, for their children's lives to be better. So, you know, and that's, That's. I think that, though, is a part of the bifurcation. People just feel like they have less skin in the game. And in fact, they do have less skin in the game. And so if people. If you don't give people a way to feel connected to what's going on, then they're going to act more selfishly. That's kind of just the way it works. And so, like, with the right. So to wrap it up, you know, with that bifurcation, I think that's really what you end up as. That risk is a disconnect between the way people, what people see as this system that we're in and their role and their connectivity to it and what they're willing to do in order to preserve the system, if anything. Yeah. You know, so. But we can move on, you know, from that. You know, I did.
[00:39:31] Speaker B: I'll go all day.
[00:39:32] Speaker A: On topic.
Yeah, you gotta move me.
I have to forcibly move you off of that one. But we saw this week something actually you had sent me that an ADT is a security company and they, like many security companies now will offer to have to put cameras in your home and then they'll put this on the Internet and then you can see what's happening in your home at all times. From a security standpoint, presumably they got nanny cams, people, that's a thing as well, and it's very convenient. But what happened here apparently is that the ADT tech that was installing these was also putting in a back door for him to continue to access the cameras. Particularly he would target when he would install and he thought the wife was attractive, he would, he would put a back door in so that he could see in their bedroom whenever he wanted to just log on the Internet. And so he got caught. And you know, the ADT is going through an apology tour and trying to make it right with the people whose cameras were accessed by this guy.
You know, anything that happens on the Internet is forever. So they can see who, when he accessed, who he accessed and everything.
But Tunde, I saw this and I'm like, okay, I've always been very skeptical of the idea of putting anything that's going, putting any kind of recording device that is going to the Internet in my home. I've just always been skeptical of that because I'm like, well, if I can access it from anywhere, then so can anyone else. But what's your reaction to seeing this? You know, like, I don't want to make light of the issue, but is this like the most foreseeable crime of all time?
[00:41:02] Speaker B: Yeah, it is.
And it's sad, right, because I could see ADT totally getting hammered by this, both probably in the court and in the court of public opinion. And I was reading that one of the plaintiffs kind of cases against ADT is they should have seen this coming and had a two step authentication system so that when an email address is added. Because I guess the guy that did this internally in adt, what he did was adding his own email address, his personal email to the customer's account so that he had access to this thing. Yeah. So obviously this isn't something that just a random person could do to someone else. It had to be somebody deep in the inside of ATT that was in their technology, you know, in there.
Somebody that was working within the technology infrastructure of the company.
[00:41:50] Speaker A: But and just to point out, not just that. So yeah, there was, it Was something. Someone from the inside doing it. So it wasn't a hack. Now, that's not to say that this type of thing couldn't be hacked, but this case was not the situation of a hack. This was a situation of someone setting it up for someone internal in adt, setting it up for them to be able to access. That's a notable point to raise.
[00:42:13] Speaker B: Yeah.
And that's why it was.
And I think it comes into a lot of things, right. We've had so many of these discussions on air about technology and how it's changing just our society and everything. And I think this is where, right. As a consumer. As a consumer, we just assume, right. We want to trust the company. And you say, okay, it's a big company like adt, and I'm just assuming that they're watching the shop and that I could feel that this is safe. Now to your point, again, it goes back to a little bit of tie into what we talked about with the understanding the financial system, then you can better understand kind of what's going on. So if you understand technology, like, I don't trust anything. I don't trust my cell phone. I don't trust my computers at home and the computer recording the show on because I've got cameras here. I've got. And I just assume that the right person, not everybody, but the right hacker, or if somebody really wanted to get into my stuff, you know, when I hear stories about the NSA and the CIA being hacked, I figure, hey, whatever. Kind of layman retail stuff. Yeah, whatever layman retail kind of protections I have compared to them. I'm sure somebody that knows what they're doing could get. Get into my stuff. So I tend to not try and put these things in places where I feel vulnerable and I'll laugh and share a personal kind of joke. You know, my wife, because she comes from the graphic design world, she has one of those big imac computers, you know, where it's like the whole computer in one. And you know, of course a good Apple product always has a nice camera pointing right there, right. So after I read this article, it reminded me that one day when my wife and I are getting to know each other as adults, I looked over and noticed that the camera was just right there. And I just told her, I go, you know, you never covered that camera on there. And she was. Cause my wife's pretty private person. And she was so embarrassed. And I kind of was like laughing in my head. Well, I was laughing in my head. And I told her, well, at Least it's us two. So no one can ever blackmail me with this. You know, we can be embarrassed, but no one's gonna dangle me, like, if you don't do this, I'm gonna show this to somebody. Cause I could be like, yeah, well, that's my W.
And I'm a pretty boring guy. We're not doing anything too crazy that I'd be embarrassed about here, you know, so.
[00:44:24] Speaker A: But that's. That's the dilemma, though. But hold on, the joke.
[00:44:28] Speaker B: No, but the joke was about two days later, I noticed I walked in the room just walking to get something. She put a piece of tape over it. So, hey, there you go. I was laughing, thinking, there you go. If somebody was opportunistic during that time, we didn't have the tape on there. My stuff's somewhere forever, like you're saying.
And you know what else I was thinking reading this? Cause this comes back to me and you. So my birthday last year, what did you buy me for my birthday?
Google home. Yeah, the Google home thing. And somebody bought us an Alexa for the holidays.
Both of them are sitting unplugged in because I hate to say that, because I love you as a friend for buying me a nice birthday present, which wasn't cheap, but I don't trust it. So I only use it as a speaker, Bluetooth speaker. When I leave the house to go to like the dog park or something, I'm fully not in my.
Even then I think about how it's attached to my Bluetooth and the right hacker can go and rip all my blue, you know, out of my phone, all my information, if they get. So it's funny, I thought to mess with you on the show here with that. Like, damn, we're doing this kind of conversation and you bought something to put in my house. That's how we come in.
[00:45:37] Speaker A: Hey, I'm not going to say anything, but would it be wrong of me to give that to you because I wouldn't want to use it myself?
[00:45:44] Speaker B: Yeah, it would be. But of course.
So now I can re gift it. So hold on. Anybody that's a friend of mine listening to this that ever gets a Google home thing. That was a pure regift from James. So just putting it out there. So now I can't say.
[00:45:58] Speaker A: I'll tell you this.
I think the dilemma actually is created because the corporations are nameless and faceless, so to speak. Like, you see that the tech or you see whoever. But like, I think about it like this. Like, if your neighbor offered you say hey, let me put a camera in your room and I will monitor your house when you're gone. But just let me have this camera in your room so that I can, you know, make sure that you're okay when you're gone. Like, I don't think people would do that to the same degree as they're willing to do. Or let me put a microphone in your house and then I can tell when you're gone if somebody's in your house. I don't think people would do it, or at least to the same degree. Like, and that's your neighbor. Like, your neighbor. You. You wouldn't mind telling your neighbor, like, hey, we're going to be out of town for a couple of days. If you see anything on the outside of my house go wrong, you know, let me know. But you wouldn't. By and large, not everyone. And then some people have neighbors they're very close with. But I'm just saying, by and large, I think the nameless and faceless part of the corporation makes people willing to be more free with their information, with them. And so, like, from my standpoint, yeah, like, I don't have any of those type of devices in my house. I actually, I've been disappointed. Or, you know, like, the fact that TVs have to be smart now was something that I was like, oh, man, I'd rather have a separate device that I can unplug and plug up to my tv as opposed to my TV having to connect to the Internet and everything like that. Because then the tv, same thing. It's just, I'm very skeptical of not all people, but I think that amongst any group of people, there are people who would do things that they shouldn't be doing. And so when you have these things that are very indiscriminate as far as access, then I'm just very skeptical. I've always been. And I'm probably. I think I'm on the extreme as far as that goes.
[00:47:38] Speaker B: Like, let me add to that just because. And it's a great point that you make up, because this guy, it's interesting, you know, this was in the Dallas area that this gentleman, I guess, was doing this in it for ADT because he was based in that area. So he did this to roughly 200 customers and their cameras.
But it says he accessed the cameras on more than 9,600 occasions. That's what I'm thinking, too. Like, damn, this guy had a lot of time on his hands, man. I can't shoot.
And he's also Horny man like, damn, I don't want to look at other people like that. But that's obviously like you're saying that when you have an outlier like this. I'm sure most people aren't voyeurs in that way. Like they really want to take this. I mean 9,600 times. That guy spent a lot of time checking this stuff out.
So I don't think most of us in our society will spend that kind of time. But it's kind of creepy know that even if it was 1/2 of 1% of the 300 million Americans, that's still thousands of people that'll be sitting still.
[00:48:37] Speaker A: A lot of people.
[00:48:37] Speaker B: Yeah, pervin on you.
[00:48:38] Speaker A: That's the thing. Like if, but if this guy had his own company and was just walking around door to door, people like, yeah, I don't know you.
[00:48:44] Speaker B: And that's what I was gonna get at.
But that's what I wanted to just, just to address when you said about the nameless corporation. Because it's deeper than that. It's not just the corporation. Cause I see it in the financial world, but a lot of it does come down to trust. I think that's where it's. ADT is a trusted name when it comes to this stuff. They've done great branding, they've been around for decades. And it's like. And that's what I see when the financial side, I mean look, with banks, like I remember trying to help clients find just CDs and things like that and I'll come back with like Capital One bank or something else. And it's amazing, especially generational, some of the older folks, they just won't have it. And I'll sit there and say, well look, it's Capital One, they're well capitalized, they're FDIC insured.
But because they're an online bank only and they don't have the brick and mortar cost, they can afford to pay you more interest. And that's really the goal of what you want. And my job is to bring. And they'll be like, no, they have to go with a Wells Fargo or JP Morgan. And it's because of the trust. Just because they, in their mind, they don't trust it because it's not one of those old brick and mortar, just white shoe kind of old school banks. And I look at it this way because you're absolutely right. If somebody came to my door with some startup IT company and said we're going to do cameras and surveillance, I'd probably be like, dude, who the hell are you? But if ADT came to my door. Yeah, but if. Exactly. I'm calling a cop. But if ADT guy comes to my door, it's like, okay, you know, I trust you guys. And that's where it's.
[00:50:06] Speaker A: Now, you bring in something from your profession with that, and that's very true. From my profession, that's the same thing. That's the value of trademark, you know, like in terms of the branding of something and protecting that name value, because people associate trust with that name. And so therefore, that ends up being a very valuable asset for companies that are able to really associate their name with that.
[00:50:28] Speaker B: You're right. It's an interesting play. But I think that's where. When it's the big companies like this that end up having someone within their midst going rogue like that, it kind of hurts all of us a bit because you just feel like I feel the violation, you know, like I don't have. Like you're saying I on purpose won't set any of this stuff up in my house.
But that's why I bring up the joke about what happened in my own bedroom.
[00:50:50] Speaker A: Well, because a laptop, you don't have a choice with that. Let me ask you this then. And before we wrap up, I want to ask you this. How do you balance the convenience that modern tech can offer with the privacy? Because a lot of the times the convenience is based on invasions of privacy.
About you, it's a great question because
[00:51:09] Speaker B: I've thought about this a lot, and I think it's. It's getting. It's to your point about the smart tv, and you're saying you want to have certain things separate. It's becoming harder and harder for us as regular consumers to balance it. Right?
[00:51:21] Speaker A: I mean, yeah, the choices are being made for us.
[00:51:24] Speaker B: It's almost impossible, like, to get off the grid. I mean, it's, it's.
And so, yeah, I mean, it's. How do you stop it? I don't know, because it's funny. I remember.
So one of my good friends, he's at southcom here in Miami, and he's on the spy satellites and he'll remain nameless for the show, but he never would tell me anything that's not legal for him to share through. He's got the top secret clearances and all that. But I remember this was in 2010. So this is 11 years ago. He came over my house and he was a little bit late for a get together I had. And I was just like, hey, man, where you been, man? And he goes, nah, man, we had the training from Microsoft today.
And it just hit me. I'm thinking, dude, you're in the military. What the hell are you getting trained by Microsoft for? So I asked him, and I said, why are you getting. Why are you getting trained by Microsoft in the Defense Department?
And he goes, oh, man, it has to do with the Xbox Kinect.
[00:52:20] Speaker A: Oh, wow.
[00:52:21] Speaker B: That. That took my breath away. I go, yeah. And he goes, yeah, yeah. He goes, because the Patriot Act. He goes, you know the. The camera that you have there? And I have one of these cameras now on my PlayStation because we have the VR system and all that. And he says.
He says, yeah. He goes, one feed goes to Microsoft for all their marketing and all that stuff. And he goes, another feed comes to us.
You know, defense and military intelligence. Yeah, exactly. And this is 2010. Think about it.
And so. And so I go, no way. I go, what do you mean? He goes, oh, yeah, because when your kids playing the Xbox and you walk in the back of the room, he goes, we're picking that up. And he goes, and this is what he said. And this is amazing because this was a year before we caught 9 11. And this is what he said to me. We got into this whole conversation. That's why I say it took. We talked for like an hour. And during that conversation, I remember him saying to me, he goes, I don't know where bin Laden is, and if anyone does, I ain't at that level. He goes, but he goes, my knowledge from being on these spy satellites for so long, I'm assuming that bin Laden is not in a cave. Like, everybody thinks he must be in a metropolitan area, because he goes, the problem we have is there's just too much noise.
He goes, if that guy was in the cave and in the middle of some outcrop in Afghanistan, he goes, it would be easy to pick up any electronic signal. He was telling me that he's listening to conversations through bunkers underground in South America because he's in Southcom. So he listens to South America.
That's how powerful the microphone is on the satellite. He said that any. And that's what I'm saying. He's sharing with me things that aren't classified. He said that any piece of metal on a person's body, whether it be a ring on the finger or a chain on their necklace type of thing, can be used as a refractor. And the microphone is so powerful from two miles in the air, in space, that it can pick up the vibrations and turn it into audio for them to listen to. So what he was telling me was he said that if Bin Laden was in the middle of nowhere, we'd have picked up something because that guy would have had some metal around him or
[00:54:17] Speaker A: something, because there wouldn't have been a lot of other things around him.
[00:54:20] Speaker B: And that's what he said. He goes, but in the city, there's so much other noise that you can't pick it up. And it was amazing when he was caught in that kind of just suburb of Abbottabad, that's when I was like, wow, my boy was actually. He was right. And so the reason I get into this commentary here is when he was telling me about the Microsoft feed in Xbox, what he was saying was the camera picks up things like biometrics and all that. So he goes, it's not that they're watching you with what you do, because he goes, there ain't enough guys like me to watch all that. And he goes. And he goes, realistically, he goes, from my knowledge, no one wants to really see everybody. Like, the government doesn't care about what we're doing every day. He goes, but what happens is, Tunde, if your name pops up on a list and now you're suspected of doing some terrorist stuff or, you know, something illegal that they want to find you,
[00:55:04] Speaker A: that's when they'll start looking, disclosing the Defense Department secrets, man.
[00:55:07] Speaker B: Yeah, well, no, what he's saying is that's when they'll look up and say, okay, well, if we see that he bought an Xbox, when we go subpoena his bank records one day, that's where we'll say, okay, well, let's just find the serial number of his Xbox and let's go look at a camera and see if we can find, let's say, his biometrics. So if you try and flee the country and now you got a disguise on and we got all the cameras at every airport looking for, you will be able to match up, you know, the biometrics of your shoulders or your gait when you walk and all that. So I was just fascinated. And that's why it's interesting. Fast forwarding to something like the insurrection at the Capitol a few weeks ago. That's when I was thinking, man, this is the dumbest time to be involved with something like that. Because what did I just say? My friend's telling me this in 2010.
Who knows, over the last 10 years. And that's what he told me. He said, tune the next thing that's coming. This was the fascinating thing. He goes, remember that? He goes, you know that red light that's on your TV when you turn it off and it's just sitting there red? I go, yeah. He goes, that's the next thing I'm about to get trained on. Over the next year. They told us that that's now being set up to scan the room constantly.
[00:56:12] Speaker A: Oh my gosh.
[00:56:13] Speaker B: That was 10 years ago.
[00:56:14] Speaker A: That's my point.
[00:56:15] Speaker B: That's why I realized having friends like that, that know that kind of stuff, I gave up trying to beat this. That's my point of saying that I think we're already past the ability to really try and be totally off the grid and be really private.
[00:56:29] Speaker A: I don't think off the grid is the goal though, man. I think that, I mean, to me, it.
[00:56:33] Speaker B: You can't.
[00:56:34] Speaker A: For me, when I.
[00:56:35] Speaker B: Society being off the grid.
[00:56:37] Speaker A: Correct. It was. For me, balancing is just more so low hanging fruit. And it's about weighing the privacy considerations of something versus the benefit. Like, and I just do that with each thing I do, you know, with each thing that I do, I just weigh like, okay, is what's the benefit? And then what am I giving up potentially? Privacy if somebody uses this wrong way or if somebody wants to come after me or whatever. And I mean from that, you know, a lot of things.
A lot of things you'll still do.
[00:57:04] Speaker B: I'm gonna say this. I've thought about that too many times in many ways. I'm not gonna embarrass myself saying. And I've just thought to myself, I'm so happy that from, let's say. And I hate to. Not to be grabbing, but like the sexual stuff. I'm just a boring regular dude. Like, I'm so glad that I'm not into some real crazy bestiality or something crazy. I mean, honestly that if somebody were to find something on my, you know, what site I went to or my iPad of what I was looking at, that it wouldn't be something that really embarrassed me. That I'd just be like, oh man, you saw me doing, you know, Sorry, man. Actually, the plug came out probably at the right time. So we're ready to wrap. So I'm good.
I realized I don't need to. I'm glad it didn't actually record what I was saying.
[00:57:50] Speaker A: Saying,
[00:57:52] Speaker B: just wrap us up.
[00:57:53] Speaker A: Oh my goodness. Yeah.
[00:57:54] Speaker B: Yeah.
[00:57:54] Speaker A: That was a sign.
[00:57:55] Speaker B: I would tell D. I would have had a rolling.
The universe came to save my ass.
Yeah, there you go.
[00:58:03] Speaker A: Well, no, I mean, I Think if you do that, though, I mean, like, each person is going to have a different answer. You can be conscious about it or not. Basically, it's like these risks are going to be here with us forever. They're not going anywhere. And so, you know, by and large, I mean, that's part of the benefit of having 8 billion people is just that, you know, you're. You're 1 of 8 billion. And so it's not that somebody's always trying to listen to you. It's just a matter of, you know, what privacy you're willing to give up for convenience. You know, are you willing to give somebody your calendar so that they can remind you every time you have somewhere to go or present you with the directions or whatever it is? But I think for many people, the answer is yes.
[00:58:39] Speaker B: And one thing I think, too, that we might see. I mean, I don't know if it's a hope or not, but it's just. I think one natural offshoot might be we may not make a big deal anyway over time, over things that once society would have freaked out about. Right. So, you know. Yeah, I don't know if that would be a good or bad outcome, but I think that would be a necessary one for us to continue.
[00:58:57] Speaker A: Well, it seems like the direction is going. Yeah, it seems like the direction is going. I mean, less, you know, like, it's been said that, you know, when you meet people, you don't meet them, you meet their representative. But, you know, the Internet gets.
[00:59:06] Speaker B: Now we're gonna be meeting people and having, you know, there's warts on everybody, including me. You know, like, we all have something that. I'm sure that if the sunlight was on every. Every part of our life, there's parts of our lives that we'd be like, I wish everyone didn't see this, but maybe we'll all thaw out if we see everything.
And. Yeah, you know.
[00:59:26] Speaker A: Well, we're gonna wrap it up from there, man.
So we appreciate everybody for joining us and. But until next time, I'm James Keys.
[00:59:32] Speaker B: I'm Tunde Wana.
[00:59:34] Speaker A: All right. Subscribe rate review and we'll talk to you next time.
