Episode Transcript
[00:00:00] Speaker A: In this episode, we discuss how little spending power Gen Z has compared to the baby boomers at the same time in their life. And consider whether this says more about Gen Z or maybe more about the baby boomers.
Hello, welcome to the Call. Like I see a podcast. I'm James Keys and joining me today is a man whose takes are powerful enough to create butterfly effects all over the Internet. Tunde. Ogonlana Tunde, are you ready to go into your sicko mode and drop some insight today?
[00:00:43] Speaker B: Yes, sir. Let's do it. Let's see what I create on the Internet.
[00:00:48] Speaker A: All right. All right.
Now before we get started, if you enjoy the show, I ask that you subscribe and like the show on YouTube or your podcast, appreciate doing so really helps the show out. And recording on March 31, 2026. And Tunde, we've all seen discussions about the struggles young people are having with really getting their life started, you know, post college or you know, when in their twenties and so forth. Whether it be finding career type jobs and not gigs or anything like that, or buying a home or just even moving out.
But you shared something with me really recently that really drove home the point about how difficult things things may be with Gen, you know, how difficult they may have it with Gen Z and particularly compared to the baby boomer generation at that same time. Like according to a study that Consumer affairs did, Gen Z members in their 20s have 86% less purchasing power than baby boomers had in their 20s, which is, I mean that's a shocking number, you know, 86% less. So what stands out to you most about the statistics that show how much more spending power baby boomers had in their twenties relative to the Gen Z does right now?
[00:01:55] Speaker B: Good question, man. Because what stands out to me actually are those statistics which I want to go over. Because if you think about it, wages have increased since the 1970s by 80%.
But the consumer Price Index, which is the measure of which we measure inflation generally in the United States, has increased by 500% since the 70s. So there's one imbalance there that wages haven't kept up with. The cost of living, which we see
[00:02:24] Speaker A: across the board, by the way, like that's affecting working class people generally of all generations. That's been an issue that working people wages have not kept up with costs across the board.
Yep.
[00:02:38] Speaker B: And I'll go next, I'll just give the inflation adjusted numbers here to make it equal and not get into too long of a read here, but Gen Z is paying about 100% more for homes, the average house in Recent stats is $309,400 in the United States, adjusted for inflation. In the 1970s, it was 185,000.
Rent is also higher.
Today. The average is 2,000amonth. And in the 70s, adjusted for inflation, it was equal to $800 a month in today's dollars.
[00:03:12] Speaker A: I could say the same inflation. Well, let me say this. That's inflation adjusted, meaning fair at dollar for dollar, what you could buy then versus what you could buy now, all stated in terms of dollars today. So that's not correct. That is adjusting for the, for the, you know, the change in money value.
[00:03:28] Speaker B: And that's why I wanted to say. And then the last two, which I won't read the stats, but just to finish off is college costs and include, I'll include that also, you know, K through 12. And then, and then the, and then the energy prices, gas prices adjusted for inflation are about 50, 60% higher. So if you take all that into account, that's when I started saying, okay, there is a difference here. I can see why. I think you and I, honestly, James, as you know, we're in our late 40s.
We are probably the last group that escaped what the younger people are feeling, you know, people under 40 now that are having a much tougher time than we did.
[00:04:01] Speaker A: I feel at the tail end of Gen X.
So the millennials coming after us and then Gen Z. Exactly.
[00:04:08] Speaker B: And I feel like I at first would hear some of those people in the recent years, younger people complaining, and I would feel like, hey, you know, just shut up, you're young. I was being an older person now, reading these stats, I can appreciate that they do have a much different experience than baby boomers or like you said, even us on the tail end of Gen X did.
[00:04:24] Speaker A: No, I mean, to me the stats really drive home the point. Now I didn't, I wasn't skeptical when people were saying that because I had been looking at charting, just kind of the real wages, the decline in real wages, so to speak, inflation adjusted earnings and saying, hey, that's a problem. You know, what's going on here. And that's not something that's happening to us that is policy driven, you know, monetary policy, tax policy, all those things that's driven by that. What really stands out to me about this actually is the way that baby boomers were set up by the generations prior to them. Like baby boomers basically hit this sweet spot where post Depression time, post New Deal, and you had the greatest generation created this world for them. Where they didn't have to pay for college, where there, there's a housing boom, there's plentiful housing, there's plentiful jobs, there's union jobs where, you know, one earner can. So they were set up on third base, basically, and by. By the efforts of the previous generosity generation to resist the, the, the, the. The being selfish to resist, you know, to the idea of making sacrifice and stuff like that. So the previous generation set the baby boomers up. And what it seems like to me is that just those efforts stopped with the greatest generation. Like, the idea of setting up the next generation to succeed, you know, it just ended, you know, when the baby boomers got in control. Basically, free college gone. Hey, we're going to stop building houses so our housing prices can go up. Like, we're going to create all these factors so we can benefit the most. And I'm saying generationally, again, not individuals, but we're going to try to benefit the most. And whatever happens to, you know, the people coming after us, you know, so be it. You know, we'll just live with that. Like it wasn't a mindset. Unlike the greatest generation or generation before that, there was no mindset amongst the baby boomers that, hey, I want my kids. I want to set up a world where my kids can do better than me. So that's actually what stands out to me more than anything, is not, yes, what's going on now is terrible. But when you break down all those individual things, the, you know, whether it be housing prices, gas prices, education costs, all that, those things weren't like that just because those things didn't just come down from heaven. Gas prices were low just coming down from heaven. Those were efforts that were made by the prior generation to really set their kids up. And somewhere along the line, the idea of setting up your kids to succeed in the world just kind of lost its. Its footing in. In. In American culture.
[00:06:51] Speaker B: Yeah, that's a very good, you know, kind of way you put that. Because I think that last piece you said, I think comes down to what happened maybe in the civil rights era, the 1960s, and the cultural fracturing we saw after that politically, where a lot of Americans got into the mindset of individualism that we saw by the 1980s, and I would say, personified by Gordon Gekko's character in the movie Wall street, the whole quote of greed is good. And this idea that. And with Ronald Reagan in the early 80s when he was campaigning, saying, government is the problem.
And so one of the things you Said James, which I think is very important for us to tie some of this together, is you mentioned fiscal and monetary policy. And I think there's a lot going on in what we're talking about culturally and all that when we talk about the 60s, and we're not gonna be able to get into all of this in this discussion, but by the 1980s, again with maybe things that happened in the prior decade or so, a lot of Americans were then ready for what was presented in the early 80s that became policy. And a lot of that, to the point you made about fiscal and monetary policy, came under the Reagan administration. The early 80s, from 81 to about 86 with tax reform. It's hard to imagine today these numbers, but if you think about it, in the early 80s, the top tax rate was 73% for personal taxes and the top corporate tax rate was 46%. Yeah, I'm not here in this discussion to advocate whether that was good or bad. That's a whole separate discussion. But what I'm gonna say is what the greatest generation, what they set up and basically the New Deal that paid for the life that you described that the baby movers grew up in, which is a GI bill for their parents. So their parents, 10 million Americans that fought in World War II were educated in college. So those were the parents of the baby boomers. Then you had things like constructions of the highways, all these projects. Right. That gave people jobs that allowed you to have the one parent household in the 50s and early 60s and which created things like cheap and free colleges around the country. Right. And so I'll finish here, James.
[00:09:07] Speaker A: Created. These were efforts that were made on the great.
[00:09:11] Speaker B: The New Deal created these colleges for free.
[00:09:13] Speaker A: You know, it wasn't that they were like this just happened. The greatest generation.
[00:09:18] Speaker B: Well, that's what I'm saying.
Let me just finish this point because I don't want to hand it back with you because I was done there, which is. So my point was just saying that the New Deal created all this wind at the back of that generation.
But that's what I'm saying, James. Somewhere in the 1980s, that generation decided, we're not going to pay for this anymore. Because that's where I was getting to. James. That's not free to do a GI Bill. It's not free to that meaning to the society that people, kids can go to college at a low or no cost. Those were investments made through the tax code. And so when you lower taxes, you're not paying for that. And it's no surprise that we've had a dismantling of the New Deal and massive debt since the early to mid-80s.
[00:10:01] Speaker A: It's worse than what you're saying because actually, the baby boomers did still want to spend, use the government to spend, and it just wasn't on things that were for the collective good. It was on things that would enrich their friends or themselves.
Remember with Reagan, they didn't stop the spending, they just cut the taxes. Reagan is what would set off the unending borrowing. So not only will they not set up the world so that their kids can thrive and do better than them, they're actually gonna borrow a bunch of money on their kid's name to then continue to use the government to spend for this and that, not collective good stuff, so that they can continue to use the government to live this kind of lifestyle that they want to live. You know, so then we have corporate subsidies instead of university subsidies. So it's. It. I think that there's something going on here, and it might be because, like you said, there's something maybe generationally going because they were handed so much. There may have been a psychology that developed that they were entitled to so much. And versus, if you. I can't get the comparison between the greatest generation out of my mind, because that's the generation that saw society fall apart, you know, with the Great Depression, like, they saw, like, it all fell apart, and they decided to build it back in a way where people could thrive, not just the 1% or the 0.1% where people in general could thrive. And yes, that brought about changes in society as people thrived. But the baby boomers decided, as, you know, were convinced or however you want to say it, or they were conditioned because of the way things were. Like, hey, all of this stuff is just the way it's supposed to be, so to speak. How this affects future generations, though, is what we get into now. So now it's about how the baby boomers have configured society in a way that their wealth continues to grow. And that's where we see all these statistics. Baby boomers own all these houses, yet, you know, the younger generations can't buy houses and so forth. So we were in a situation where they are double dipping, triple dipping in ways. And this isn't really to. To. And we'll get. As the conversation goes, you'll see that my goal isn't here to say that the baby boomers are evil or all bad, you know, like. But I do want to try to make sense of this. Like, what in the world happened, do you think, with the baby boomers? And I know, like, you've talked and we've done a show before on social cycles and different types of generations and how their experience, you know, can affect a large number of people in a single generation. So do you make, how do you make sense of this, though? Do you. Look, this is, is this because the baby boomer generation, admittedly was huge. It was such a big generation. You know, you're looking 1946 to like the mid-60s, 1964 or something like that, you know, do you, I know you, you, you buy the social cycle conversation much more than I do. You think it's that? Do you, do you tie in the social technological change? I know you mentioned that already, that the social change may have made people, you know, opening up the society to more people may have made some in the society, some in the majority say, well, screw this, I'm just going to be about me. Like, what do you pin this on?
[00:12:57] Speaker B: I think there's probably a little bit of all these ingredients that influenced it. I don't think we can look at one thing. But I will say this because you made a comment about the size of the baby boomers, which are correct. At the time, the baby boomer generation was the largest generation in the United States, let's say, I think that the exact years are 1946 to 1964.
So by the mid-60s, when that generation had done kind of being created, they were the largest group of people in the United States. But in preparation for today, I looked up, I just, I was curious and I wanted to look and see how many, what is the number of millennials and Gen Z, who basically will be their grandkids and great grandkids.
And that is 145 million people in this country. And I've heard estimates that we have somewhere between 320 to 330 million people in America.
So you're talking now that the descendants, the offsprings of the baby boomers, it makes sense, are now more than around double the size of the baby boom generation. And as we mentioned, the earliest baby boomers are now turning 80. So over the next decade to two decades, they'll be dying off. And I think that is where this is a bit unique, I think in human history, where we have people in their 80s now, like we said, that are still, and this is probably a function of medical science and technology and all that, where people at this age are still able to show up and go to work and do things like be president or be a Senator or be a CEO or be the head of a religious organization or whatever. And so I think part of our cultural maybe anxiety between the generations comes with some of that.
In prior eras of human history, just people just aren't still active in their 70s and 80s into these complex parts and roles in society. Younger people would have taken over already.
[00:14:49] Speaker A: I think that what we're seeing here is a couple of things. One is that the knowledge that was earned in the 30s and the 40s in terms of how not to build a society and what will happen if you get a society that's too top heavy, where people are too self centered and not enough and a collective, hey, we gotta build something here. But that knowledge wasn't transmuted to the baby boomers. You know, like that was old school like you mentioned earlier. By the time they come into power it's like no, we don't need unions. You know, unions are innovated. They didn't earn the knowledge of what happens without a counterbalance to corporate power. They didn't earn that knowledge. And so they tossed that stuff overboard. They didn't earn the knowledge of the benefits of a well educated society and, and the benefits of not sending young ambitious people who want to go to college into skyrocketing debt. They didn't earn that knowledge. The greatest generation earned that knowledge. Hey, we can create social mobility, we can create more innovation. So they valued that stuff. The baby boomers didn't value the things, many of the things that were put in place that allowed them to be born on third base and thought that they hit a triple. But you mentioned something interesting with the numbers though as far as how now Gen Z or Gen Z and millennials greatly outnumber the baby boomers even though baby boomers are still in these top positions. So it's harder to dislodge them and you know, technology or whatever science has allowed them to stay vibrant enough to not just fall out. You know, I think actually a key piece that happened here, and I'm going to point the finger directly at us, is that the baby boomers, it's not just the baby boomers that are, that have created this kind of oppressive system. They, the Gen X was co opted into this as well. And so Gen X didn't look at what the baby boomers was doing and say oh no, this is crazy you guys, you know, you got, Gen X was, was seduced by the allure of the greed is good too, you know, and it was like, hey, you know, we, we like this greed is Good too. So what ends up happening is that you then have. Now Gen X is not a very large generation, but when you put them together with the, with, with the, the, the, the baby boomers, then you have like a 40 year, you know, 35, 40 year group of people.
Not everyone. Again, I don't subscribe to this type of, this thing. There are many baby boomers who do not subscribe to this type of thinking. So there are many other Gen X people who do not. But you got a large block of people that look at all of the things that can be used to build a society constructively and where we can use our resources to work together to build things up so that many people succeed not in a way that everybody gets a handout, but just in a way that hard work is rewarded and so forth. And you're not setting up a game to prey on people, setting up a system to prey on people. You got two generations back to back that signed up, that fell for that, where they had that allure. And so as a result, the millennials come in and when they're finding themselves and remember, the first generation that they really came out of college was like, hey, this is a terrible deal. I took all this debt on because the Gen X, a lot of them were able to get in, get through college before the debt exploded, before the tuitions exploded and all that. So it's really the millennials in Gen Z that have faced the consequences more. So Gen X was able to slide through before a lot of these things really got crazy. So I think that's a big part of this as well. And so no, I'm not pointing the finger only at baby boomers. I'm saying Gen X is culpable as well for the direction that we've gone in, where you cannot simply just work a job and live a middle class lifestyle. Even though the greatest generation took careful or the careful planning, careful policy to try to make that the case, you know, so it's been taken apart. But you can't just point the finger at the baby boomers. Cause Gen X saw what was going on. And unlike the baby boomers who saw what the greatest generation put in place and was like, screw this, Gen X saw the greed is good. Like, yeah, let's roll. Which I don't think is a good thing, so to speak. But we can talk later about how, whether it's understandable and what's coming next. But I know you got something that you want to.
[00:18:47] Speaker B: Well, yeah, no, I mean, you just ruined my whole experience on the show today because I was all happy Bastion.
[00:18:54] Speaker A: You thought we were just throwing stones from this house, huh?
[00:18:56] Speaker B: Now you're gonna say that us Gen Xers are part of this problem too. You know, how can I, you know, how can I look at myself in the mirror, man? You're messing up my narcissism over here. This is crazy.
Here's the thing I want to speak to, actually something you said because it's, it's very good. And I would say this is where I do buy into the social cycles concept because as you were talking, I, I want to look something up, which I did. And, and because I remember learning about something called an event called the Battle of Blair Mountain in West Virginia. And I just want to make sure I had it right.
So this is something that took place in 1921. So just over 100 years ago.
And I'll quote from the Internet here, the largest uprising in US history where roughly 10,000 armed West Virginia coal miners fought against coal company backed lawmen. And it's a reminder, James, one thing that we don't get a good education on in school in America, for the reasons I would say conspiratorially, because the oligarchy wouldn't want us learning this stuff, is the history in America between capital and labor prior to the 1930s.
[00:19:58] Speaker A: The lessons that were learned by the great.
[00:20:01] Speaker B: Correct. That's where I'm getting at, James, and that's what I'm saying about social cycle. Because I think if you're going to have a democracy with freedom of speech and things like we have, I feel like unfortunately this is probably going to be inevitable every four to five generations that we find ourselves back in this kind of hole. Because I think you're right, the living memory of people, people were alive who were alive in the 20s and prior the first Gilded Age. From the 1870s to the 1920s, they saw this decline in labor rights, in people's ability to make ends meet, all that kind of stuff, Right? You also had the huge technological changes over that period where you had the combustion engine, the automobile, the airplane, all these things. And the industrialists, just like today, with the technology prowess, the industrialists of that time were able to make fabulous amounts of wealth in a very short period of time. So names like Rockefeller, Carnegie, Vanderbilt, within like 20 years, they were like the equivalents of Bezos and Musk and those guys today. In a very short time, they surpassed the planter class, all the agrarian wealth that had came prior to, let's say the late 1800s. And they became the captains and titans of the world and they bought the government and all. If you go look at American history, that's why.
[00:21:19] Speaker A: Yeah, so there's a key piece to this though, because at the time, because of the technological change that allowed for these mass accumulations, the society wasn't set up to say, hey, hey, hey, you can't accumulate that much that fast. And so that was one of the lessons learned. And it's one of the lessons learned the people who lived in that Gilded Age time, but then also the people who were right after it and learned and saw the aftermath of it and said, oh, this is what happened. And so you're correct. The further you get removed from that, the now we're back in the same spot because we're several generations away from the people who either observed it or who heard their parents talking about it and saw their parents getting laid off from jobs or, you know, so that, you know, another ivory back scratcher for, for, for the, the corporate titan, so to speak. You know what I'm saying?
[00:22:01] Speaker B: Yeah.
[00:22:01] Speaker A: And so it's, it, it there, that's, this is where I, I do believe you, and I mean you, you, you take this mantle more than I do as far as these cycles because I, I do see there's a living memory piece, but where you kind of got to learn the same lessons over and over again.
[00:22:14] Speaker B: Yeah, no, I agree. And that's why I think it's important and very instructive to look at that period of history in America. Meaning, you know, things like a 40 hour work week and having weekends or child labor laws, not having kids that are 10 years old going into coal mines. That'll happen because people died for that. Yeah, so, so, and I don't think
[00:22:33] Speaker A: we appreciate that that stuff again wasn't just handed down from heaven, you know, ten Commandments.
[00:22:38] Speaker B: That stuff was stuff people organized for these rights.
[00:22:42] Speaker A: Well, and let me say.
[00:22:43] Speaker B: And they are rights, you know.
[00:22:45] Speaker A: No, no, let me say one thing real quick because I like to say this from time to time in that their benefit and the reason unions are always going to be necessary. Whatever you think of a union, you have to understand that a union is organized labor in the same way that a corporation or business entities are organized capital. And so you can, if anytime you have organized capital, organized money, you have to have a counterbalance of organized labor or the labor and capital will become imbalanced in terms of power. And when that happens, you end up in gilded ages, you end up in out of control wealth. And so the biggest reason why you need unions and why capitalists do everything they can to prevent them from happening, because that's the only way to balance corporate power in a society. This lesson was learned again, but it's been forgotten right now. And everybody, oh, we union. We don't need unions, yada, yada, yada. Well, yes, as the corporations get bigger and bigger and stronger and stronger, you actually need more. You need unions more and more. And you need unions to be bigger and stronger, otherwise the working people don't stand a chance. And that's just. They balance corporate, organized labor, organized capital. You need a balance or else it's all out of whack.
[00:23:53] Speaker B: Yeah, no, I agree. And I'll turn it over to you, man. I got a question because for you, I wouldn't mind your opinion that, you know, because, I mean, we've already started talking about this, this idea of history and these imbalances when they balloon. And I know we discussed some stats at the beginning, like, you know, the cost of rent now nationally is around 2,000amonth. Cost of gas, cost of housing and all that. I. I did look up that the average salary in the United States in 2025 was $63,795. So call it rounded up to 64 grand.
[00:24:26] Speaker A: So average rent is dangerous, remember, Because. No, I know.
[00:24:30] Speaker B: I'm just making the point that if the average rent is, let's say, 24,000, remember, the 63,000 I'm mentioning is before taxes. I can appreciate that a lot of people are squeezed right now. And so looking at, if we say 100 years ago, roughly, right, the 1920s, especially then into the 30s, after the crash of 29 and the global depression, a lot of young people at that time started flirting with socialism and communism and these ideas, and really those sprung up as ideological ideas to counter the Gilded Age, you know, the capitalist class. And I was surprised in preparing for today to learn that in the 2010s. So this is way after you and I were in college, surveyed. Kids surveyed in American universities began to really embrace the ideas of socialism and all that. And I started thinking, James, I was in college in the late 90s, mid to late 90s, and nobody talked about socialism when I was in college.
[00:25:25] Speaker A: Yeah, man, that was like a joke.
Yeah, I know.
[00:25:29] Speaker B: No, seriously, I thought. Cause I was thinking about. I was like, yeah, when I was in college, we thought all that stuff ended like, what's the Soviet Union ending? And all that. So my question to you, James, is do you see a parallel and a comparison between, I guess, the response of young people after the crash of 29 into the 1930s as their own emotional and ideological response to what they felt were excesses by the kind of capital class and industrialist. Do you see a comparison? Because today that we're post 2008 great financial crisis and also the stuff that we discuss, the recent decades of work done by, I guess, the baby boomers and us Gen Xs, do you see a parallel to that, to the young people and how they're responding today?
[00:26:14] Speaker A: Well, yeah, I mean, I think it's the only rational response when things get so out of balance and so out of whack in terms of the power of the money versus the power of the people. And so that is, that is the political and structural response, so to speak, is to say, okay, hey, we gotta use the government to take away the power and the wealth and all of the resources that the individuals and the people in these corporations have accumulated for themselves and then are turning around and using to further stack and stack and stack. So that's the political, that is the political answer, so to speak. Now, the most insightful thing that I've ever heard as it relates to this is from fdr, Franklin Delano Roosevelt, when he's president and he's going through as far as putting the New deal in. And what he talked about, because he comes from the wealth class, and so what he talked about a lot of times was to the capitalists, I need to save the capitalists from themselves.
What ends up happening in our system and capitalism? I'm not a person that says capitalism can't work. I'm saying that capitalism needs guardrails, hard guardrails. Capitalism is a great engine, but if you take it off the guardrails, it'll fly off into the sky and explode. And we've seen this. That was the Great Depression, that was the great financial crisis, which by the way, when the great financial crisis happens, what do the baby boomers do? They don't take their medicine. They borrow a bunch of money to get us out, you know, but again, that's consistent with how that generation has operated, you know, and Gen X, it's like, oh, okay, well, we're not going to pay the consequences for this. We're just going to borrow. Well, we'll let somebody else, we'll borrow, you know, a few trillion dollars and let somebody else worry about it later on and let them do that. So saving the capitalism for themselves, like when you win in capitalism, you have, it affects your mind. You, you, you want to win more. You start Doing things in order to stack the deck to win more and more and more but. And you want to be a forever winner and the stat will cause the system to stagnate and to misfire and potentially explode. Concentration of wealth gets too high, everything like that. So the need to save capitalists from themselves within a capitalist system to me has been the best remedy that we've seen. That's what delivered this born on third base kind of setup that the baby boomers have. It wasn't socialism, you know, but unless you're aware of some of these nuances or can even call into something like that, like hey, we have dealt with these problems before. The answer wasn't to go socialist. The answer was to put more handcuffs on capitalism so we can harness the benefits without having the excesses spin out of control. That's really what and so hope I'm hopeful that as that the socialism piece is a starting point, a starting point in your journey of saying, hey, what do we do right now? Things are broken. What do we do? These past generations aren't going to help us. Gen X not going to help baby boomers, not going to help millennials, Gen Z, what are we going to do? So socialism is the starting point of that analysis and you hopefully you end up with figuring out what did work and that is allow the capitalisms to work, the capitalists to work, but save them from themselves by putting constraints on them that don't allow them to take over industry and take over the government.
[00:29:22] Speaker B: Yeah, no, I think that's a great point, James. And I think one of the analogies I'll throw out there for what you said was, you know, if we look at capitalism like a, like a beautiful garden, right? And so I use that term on purpose. I think capitalism is a beautiful system and it's, and it's. Until someone invents something different, I think it's one the system that mirrors the human kind of emotion and experience the most. Right.
[00:29:44] Speaker A: If you, if you want to go
[00:29:45] Speaker B: get it, you will and if you don't want to get it that much, you won't. And, and you know, people can choose how they want to behave in between with all that. But I think just like a beautiful garden, it doesn't just like you're saying the beautiful garden just doesn't appear on its own and didn't just maintain itself on its own. What do you need to do? You need to, we, you know, take weeds out, you need to prune the, the bushes, you know, and that was what keeps it healthy, right? And so. And so I feel like the regulatory framework.
[00:30:11] Speaker A: You need to go back and read Genesis, man, because I've heard about a garden that. That just magically.
[00:30:17] Speaker B: Don't get me started on that one. You're about to get me on a whole nother show with that fee of knowledge.
[00:30:22] Speaker A: I think we'll have to cover that in a future show.
[00:30:25] Speaker B: Yeah, yeah, that'll be a different show. But to finish this one, this is a different garden. This is the capital garden now, not the religious garden.
But now you messing me up. I'm going to have a whole nother show.
The.
[00:30:37] Speaker A: In my mind.
[00:30:38] Speaker B: But no, but on this capitalist garden.
[00:30:41] Speaker A: Right.
[00:30:42] Speaker B: To me, the regulatory framework is like the pruning and the weeding of the garden. And so I'll give you a very fast example for the audience because I know we got to jump out, because part of the New Deal is not just, hey, people getting a GI Bill and people going to work on highways in the Hoover Dam and all that stuff. Part of it was the regulatory framework in response to the excesses of the Gilded Age. Specifically here I'm talking about the securities laws of the 1930s. If you look at securities were unregulated, just like crypto has been unregulated in the 20s and before. 1920s and before.
And so in the 1930s, you had the 1933 securities act of 1933, securities Exchange act of 1919 34, you had a bunch of laws all the way to the Investment company Act of 1940, which created mutual funds. What did that do?
That allowed a regulatory framework which generally, not all the time, but generally kept the bad actors out, which allowed the public to gain trust in the system so that they would invest their money, which then within a few decades made the American financial system, their banks and the stock market the most profitable and the largest in the world.
[00:31:54] Speaker A: There's something you gotta add to that.
[00:31:55] Speaker B: To your point is.
[00:31:56] Speaker A: Yeah, there's something you gotta add to that. It not just kept the bad actors out. It changed the incentives from being. From being the incentives to be, hey, super risky, super loose with it, super. Or predatory to being. Or predatory to being slow and steady growth. It changed the incentives to that as opposed to the other thing. Right. And it's no coincidence that some of those regulations were taken out in the 90s and within 10 years we had another crash.
It's not a coincidence that that kind of stuff happens. And so it's not just, yes, you want to create a regulatory environment that either punishes or otherwise keeps out bad Actors, but it has to make sure the incentives aren't. And I think you said it better. Predatory aren't something that encourages people to be reckless or bad faith. You know, the incentives have to be set up. And that's the part of capitalism doesn't inherently do that. It does. The incentives get very dark the less you, you, you, you put it on a track. You got to keep it on a track to keep those incentives aligned with what also works for society. And it wasn't like nobody got rich in the 60s and 70s. People got rich, but they just maybe didn't go from $300 billion in net worth to $800 billion in net worth like Mr. Musk within a year when he didn't do anything different.
It's like maybe, maybe we're doing something wrong here. If it's wealth network can double like that doing the same stuff he was doing all along in a year. But that's neither here nor there. I know we got to wrap this up. I know I cut you off though. I did.
[00:33:22] Speaker B: No, no, just, just. I mean that, that pretty much wraps it up. I just wanted to give that example of how the regulatory framework around stocks and bonds.
[00:33:31] Speaker A: Yeah.
[00:33:32] Speaker B: Change and that changed the trajectory of America. And you make a Great point. In 1998. Let's go there was the Glass Steagall act was repealed.
[00:33:40] Speaker A: Yeah.
[00:33:40] Speaker B: Ten years later in 2008, we have a great financial crisis and a crash.
[00:33:44] Speaker A: So what directly to that.
Correct.
[00:33:47] Speaker B: So the predatory behavior. And I think this is important explain for the audience people that aren't into this financial stuff.
It's those regulations that like you said, they prevent or at least hope to prevent the incentives of the people in those positions of authority in the financial system in this example that we're talking about from behaving in ways that will collapse the system like it did by 2008, which then what we all paid for that we had to do the stimulus and we had to do the quantitative easing and all that. So now we got a $37 trillion debt. I know some of that is wars and all that, but a lot of it is based on some of these decisions and the removal of the frameworks that were built between the 1930s and 1960s.
[00:34:29] Speaker A: And I'll say it just so it's. So that it's. It's in. I know, I want to wrap it up. But essentially what Glass Steagall did was it took away previously because of what happened in the Great Depression and regulation after that. Investment banks and regular banks had to be Kept separate because you don't want the regular banks who deal with mortgages and saving, lending and regular lending and all that stuff to feel the pressure of earnings like investment banks do, which take more risky things, but that's their business. And so there was a hard separation between the two.
Glass Steagall took that away. And so what happens right after that is normal banks who do the lending and for mortgages and stuff like that started doing very risky stuff because they, their incentives then were, hey, we got to make more money. We got to make more money how you make more money, do more risky stuff. And then that blew up in people's faces.
They're doing all types of crazy stuff with the mortgages that they're only doing because they then had to compete with investment banks in terms of delivering return and all this other stuff. So it's. It's crazy in the way that it happened so quickly, but ultimately there has to be some impetus coming from somewhere to, hey, we got to get this system back under control. And so I'm hopeful that the excesses that we're seeing today will lead the generations, the younger generations now who are seeing this or living through this and say, hey, we have to do something to get this back under control and that they find the right solutions, though, because the solutions have been found before. And so hopefully, hopefully we find them and so forth. So. But yeah, I think we can wrap this topic from there.
[00:36:02] Speaker B: So we can't just blame baby boomers. You're saying I gotta apologize to the young people, too.
[00:36:07] Speaker A: My generation. Yeah, I saved that, man. I didn't want to tell you I was going to do that, but I wanted to get you real time, so. But no. We appreciate everybody for joining us on this episode of Call. Like I see it. Subscribe to the podcast, rate it, review it, tell us what you think, send it to a friend. Till next time. I'm James Keys.
[00:36:22] Speaker B: And I guess I'm sorry to the uncle people.
Thanks.
[00:36:27] Speaker A: We'll talk soon.
