AI Insiders Keep Saying We’re In Danger — Where’s The Evidence?

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Now, over here at Mintmobile, we're seeing sunny skies and dropping prices every plan to just $15 a month. Give it a try at mintmobile.com/switch. Up from payment of $45 for three months, $90 for six months, or $180 for 12 month plan required $15 per month equivalent to taxes and fees extra. New customer offer for initial plan term only greater than 50 gigabytes may slow when at work is busy. See terms. I'm Aina Garten. I have a new podcast called Happy Hour with Aina. Every week I'm inviting a really interesting guest to join me for a drink and a fun conversation at my kitchen table in New York City. I'll be getting personal with actors, chefs, comedians, musicians, and writers I admire. So grab a snack, pull up a chair, and join us. You can watch by searching for Happy Hour with Aina on YouTube or listen wherever you get your podcasts. Don't we only need to have more fun? [Music] Money, market, metal, if money is evil, then that building is hell. [Music] Welcome to Prof. G. Markets. I'm Adelson. It is September 16th. Let's check in on yesterday's market vitals. The major indices fell ahead of the Federal Reserve's interest rate decision, which comes out later today, Brent Crude topped $109 per barrel, the yield on 10-year treasuries climbed to its highest level in almost two decades, and finally Bitcoin fell after the Senate blocked the Clarity Act, which proposed definitions and regulations for digital assets. Democrats said the bill did not do enough to address the ethics of President Trump's crypto business. Okay. What else is happening? Two months ago, a Google DeepMind safety researcher quit, and this week, he told everyone why. In a post on X on Monday, Bill Al Chogtai announced his resignation from DeepMind where he worked on safety and alignment research. He also wrote, quote, "I earnestly believe that AI has the potential to kill us all, and that we might be running out of time to avoid this outcome." Chogtai is now at blue.impacting nonprofit that trains people in AI safety. He is now the second safety researcher to go public about the risks this month following Jacob Coxen's viral resignation from anthropic last week, meanwhile, the AI labs are responding with the development of a new regulatory body themselves. Anthropic, OpenAI, and Google DeepMind have discussed building an industry coalition to test frontier models before release. OpenAI is also reportedly urging Washington to move forward with a federal AI framework, however Trump does not appear to be open to that idea in the slightest. So here to discuss all of it, we are speaking with Ed Zitren, host of Better Offline and author of the Wears Your Ed@ Newsletter, Ed, good to see you. I want to just get your reaction to this whole debate in its entirety, going from the beginning where we had this tweet from Jacob Coxen, which went mega, mega viral saying that he will, he believes that AI might kill us all by the end of the decade. Then of course another anthropic researcher co-signed that statement, said that there was a 10% likelihood of it happening. And now here we are, it's become a national debate, a sensation around the world. What is your take? What do you make of all of this? We've now heard at least 11 of these guys say they want a slowdown. We've heard exactly zero of them say what that means. Donald Dario Amadez spelled out what he would do, it mostly came down to having METR, which he claims is an independent research organization, despite it being basically funded by anthropic itself, being an internal auditor, and then some vague stuff about China. These companies not slowing down none of this safety stuff matters to them. All of it is lip service to a media industry that doesn't actually think for itself. Let's start with Jacob Coxen though, and why he is the way he is. It could be a cynical grift, it could be the, because you'll notice that he doesn't actually explain what it is. He's scared of what is the anthropic or open AI did that was so scary. And indeed when describing the hugging face attack, for example, anthropomorphizes it and never holds the AI labs accountable. It's always, oh, AI is this unknowable thing. But it starts with the rationalists and effective altruists. These are, while they will describe themselves as people that are rationally thinking about the dangers of superintelligence, what they actually amount to is a kind of religious cult. These people are a large part of the AI labs, and they spread this idea that AI will inevitably foregone conclusion definitely kill us all unless we stop it, but stopping it always involves giving a specific corporation they like money and power. So there is a section of these people who truly believe this. They believe it on very flimsy terms. They don't really have any evidence for it other than going, look, I think we vaguely predicted kind of work kind of happened not exactly the way. And also we've been talking about recursive self-improvement, which is AI that trends itself. That's kind of happening and so everything is true. So there are those people who genuinely believe it's happening and like any good religious cult will take any proof to prove it. And also the media buys their hype every time. And then there's the other side, which are the cynical people by put Sam Altman in this category. Dario Amade to an extent who are like, yeah, AI safety is good, AI is so scary, but maybe don't stop us training our models. They've been doing that for years, the cynical AI safety griff, the thing of, oh, I'm a little bit scared of what the AI models can do. That Sam Altman's been saying that since 2023. Dario Amade has been saying it's since 2019 with GP2 when he still worked to open AI. And all of this is to say, despite all of the noise, despite all of the endless hand-granging, no one can actually describe what it is we're scared of, what should happen, what a slowdown means, what AI safety means, or indeed how we hold the people accountable, because in my mind, arrests need to happen at open AI and anthropic, because felony hacking took place with a hugging face. But none of this stuff about safety actually seems to result in accountability. There are so many different voices here saying surprisingly different things. As you say, you've got Jacob Cox and then the question is what his incentives are. I think a lot of people might just think, well, maybe he wanted to be famous by putting out this tweet. Maybe he wanted to be sort of this viral philosopher on what it means to live in a world of AI. Or maybe it's genuine. Maybe he genuinely is very scared about this and maybe a lot of people genuinely are scared about this. Then there are the questions around what are Dario Amade and Sam Altman going after. And one person, I mean, a popular belief is that they are creating this level of concern either to one, draw up enough hype about the product that they can go out and have a successful IPO and raise a lot of money, or maybe it's because they want to inject a level of regulatory capture so that they as the now kind of incumbents in frontier AI can win that, win that world. But someone who thinks that it's a lie, thinks that it's a hoax in his words is the president who called Jensen Huang this week while Jensen Huang was on stage doing a live podcast with all in guys, I'm set as much, I want to play you this clip and see what you make of it. It's all on hoax. The data centers are great and they make people wealthy and they make states wealthy and it's the oil of the next 20, 25 years, it's bigger than the internet and the AI, you know, much more so. And they're just playing right into the hands of a lot of people that don't want to see it happen and that could be political people and it could also be China. And we're not going to let that happen. So it's a hoax and you're right, we're not going to let that happen, sir. Now we're not going to let it happen. So I guess I should add to that there are other accusations in there, which is maybe the incentives are aligned with people who don't like AI and want to shut the whole thing down or maybe China, I mean, so many different accusations flying in different directions. What do you make of his comments? It feels op adjacent because when Jacob Coxon posted a bunch of AI safety people quote it immediately. So people are like, oh, this is an industry-wide plan. I have another suggestion. This is a burn off the reading situations, Cohen Brothers-esque. You've got all of these different people who kind of operate on the same page. They're all like, we love AI, but you have the rationalist EA types who are like with terrified of this and we will, but also we need to divert the money to our organizations. You've got AI boosters who are like, well, I've been saying this stuff is crazy, bananas and going to kill us all and so powerful, but maybe we're getting a little head of ourselves and you've got Jensen Huang who's just like, no, no, no, no, no, no, no, no, no, it's cloud software. Please stop saying this. We need to sell GPUs, but a week ago, Jensen Huang said that we'd reached AGI, so I don't know what to tell you. What it is is a bunch of very selfish people all with their own agendas that have said they like AI, but none of this is to do with AI. None of this is to do with AI software. None of this is to do with anything. It's a bunch of people trying to get attention and power and money without any kind of plan. If there was a plan, they would actually have something they're suggesting. If we had smarter fascists, we'd be in real trouble. Instead, we have various grades of deal weed who are saying, well, okay, I love AI, but when I say AI, I mean, LMS, which are so powerful, but also not as scary as you say. You've got the EAP people who say, this is just one step towards sky now. And then you've got the ultra-capitalist who are like, it's nothing, please stop talking about this. It's AGI, but not that. And the thing is, this is all the result of how the AI industry is marketed itself for the last three years. It's all about distancing what the product can do from reality. And modern journalism has failed. You yourself have made the point that we have this cult-like worship of the wealthy. And especially of credentialism. So the media has just, yum yum yum, eat this up. AI's scary. Oh, it's going to kill us. Even though the evidence for that is that a guy told them. And when asked for further evidence, they say, well, a guy told me Jacob Coxen to why it's said, oh, yeah, people are anthropic say this. These are direct quotes about end game. That is not enough to say anything. So a bunch of people said something. What happened? Can you point to a thing? Well, we're near recursive self-improvement. What does that mean? Why are you actually there? They're not. But they all want to say they are because without recursive self-improvement, they have to admit the AI industry is kind of slowing to a crawl. So in this very bizarre situation, that honestly is kind of the AI industry's undoing. Because the media failed. They failed to call BS on these companies for years. They have bought into every narrative that LLMs are super powerful autonomous AI, even though it's not true. And now, when a little Harry Potter looking like Goblin pops up and says, oh, I'm going to, I'm scared of the computer. They fall for it. They fall for it because they've been building this hype for years based on nothing, not based on using LLMs, not based on anything. And it's just a very bad situation and Donald Trump coming out and going, actually, AI is the biggest thing. We love it. It's better than oil. Yeah. Bet you wish it was mate. Bet you wish it was the new oil. That was really help right now, wouldn't it? If it was the new oil, right? The truth is, this is just an escalation around the technology nobody is actually. Keep describing with accuracy. It's talking about hugging face like it was something that happened accidentally versus poorly run cloud software, run in a volatile and reckless manner by a company with unlimited resources. Basically, what appears to be felony hacking run on the infrastructure owned by the largest companies in the world, but it's being described as old rogue agents when I did this. I didn't. It's LLMs prompting LLMs with a coding harness on top, telling them what to do, trying to solve a vulnerability benchmark and not having the right security practices, but because the media has failed to hold the AI industry accountable, describe anything with any realism, the AI industry has actually caused a real problem for themselves. Because now everyone's like, well, AI is going to kill us, what are you going to do about that? Every goddamn conversation about AI now, which is fun for me, I'm having a ball. These people do not have an answer, because how do you pull back this narrative? How do you convince people that actually the thing you have been describing in terms of a software that doesn't exist is actually not what that is? And so these companies are kind of looking one way and the other looking at each other going away. What are we doing right now? And they'll claim, oh, we want to slow down, but we're still going to train the models, I guess. What if this is to say this could all lead to nothing or it could lead to owner's regulations or just a slow down in the building of new models that would actually be fatal to the industry? Yeah, it seems as though no one even has any understanding of what they're actually arguing for, whether it's Trump, whether it's Altman, whether it's Armour Day, whether it's David Sacks, or the people who don't like AI. I mean, it seems to me to have been a profoundly stupid conversation that has taken over the world because, as you point out, it is rooted in almost nothing. It is rooted in a tweet for which there was no evidence or no investigation into what was actually being said, what was actually being claimed. And to your point, there is something missing here, which, as you say, is accountability. Accountability for what any of this actually means. And something that I've been saying, and I wonder if you would agree with that, I mean, a lot of me believes that our government really should be calling the AI lab's bluff here and saying, okay, if you believe that your technology actually has a 10% chance of destroying our society, well, then here's a subpoena, show us all of the evidence, show us all of the proof as to why you think that's happening. And if you have created a technology that is actually going to do what you say it's going to do, then you have to shut down or you have to live whatever the consequences or whatever the legal ramifications of killing people would be, which is to go to prison. But for some reason, not having that conversation and the conversation remains in this sort of ethereal space of conjecture about what the future of humanity or AI might actually look like versus actually grounded in truth, facts, evidence, and ultimately the law. And so I guess my question to you is, you say that the media hasn't been responsible enough in their reporting of it, would you also agree with my position, which is that the government hasn't been holding them accountable enough either? One hundred percent. So Lena Khan, I paraphrase here, made the point that we have laws in place for unsafe products. I also don't see a single story other than my own bringing up the multiple suicides driven by chat GPD, the multiple mass shootings, the murder suicide that happened. None of that. That's a harm. I can point to that right now. I brought it up on a podcast at recently to an AI Duma and they went, oh, that was six people. And it's like, this is how the world operates. Just this disgusting growth focus capitalism. But yeah, we already have reasons to shut them down. Open AI and anthropic and it sounds like metter and Google as well did have like their models in their testing hacked. That is felony hacking. There is prison time associated. We should at the very least have some people in handcuffs being talked to by the FBI. It sounds like that we actually probably international courts depends on where the service were. We don't have any of that. We don't even have journalists who are bothering to ask those questions. Instead, it's this wobbly nonsense about the dead stewards of our AI future. It turns my god damn stomach. We're doing it again with Jacob Coxen despite the fact that he will not say what he's scared of. And when he describes Ella Lems, he does so by anthropomorphizing them. This is all to distance the lab's responsibility. The reason I hold the media, so accountable, is because the media is the one that drums up this nonsense. The media is the reason that everyone believes that AI is more than is Ella Lems and more than they are. And yes, the governments are also failing here, but governments don't regulate tech. Let's be completely honest. Governors don't touch tech. If they did, we'd have an EPA for notifications. We would have an FDA for tech writ large. The whole social media trials wouldn't have happened because we'd actually have something in law around regulating social networks. Really, I know this sounds extreme, but we should regulate notifications like exhaust. Because they are used to manipulate people, algorithms, same deal. We don't do any of that because it might get in the way of capital. This time, it's even dumber though, because it's, how would you regulate this? How would you actually regulate this? Also, what's this? Because no one can actually seem to say what's going on. To be fair to the media, it's hard to not cover a story about a company whose employees are telling you that their technology will kill everyone. But that's part of the strangeness of the whole situation because you would hope that maybe at some point there would be a more thorough investigation into whether we should actually take it seriously, validate whether that is true or not, and then if it is not true, move on. Don't care anymore, but we're still lingering on it. Yes, we should cover this. But the way to cover it is how we are, which is saying, "Hey, what are you talking about? What are you scared of?" And when they don't answer, go, "That's pretty vague. You seem very, like not even me just be like, you seem very scared about something that you don't have much information about. You seem extremely anxious. And if the answer is, "Well, some smart people told me," say, "Okay, but what did you see? What did you see that scared you?" Just before we let you go, this is interesting timing because anthropic is, of course, set to go public very soon and what could be the largest IPO ever. Sam Altman said that he will not be taking open AI public this year. He will be delaying that after this all broke out. It would be ill-timed. I'd like to just get your thoughts on your presentation. preliminary thoughts on the Anthropic IPO and especially your reactions to a recent financial times report on Anthropic. Supposedly Anthropic has told investors that it has achieved operating profitability for two straight quarters. They say adjusted operating profitability, which it's probably doing some work there. But what do you make of that news? Because it would imply, if it's true, that the AI business model is more sustainable and more profitable than many were concerned about. Well, that 80% gross margin to be clear did not include training costs or stock-based compensation. So it's kind of like saying, I'm profitable if you don't include my costs. Here's the thing, people are suggesting that our slowdown could mean they train models less. I would buy that as a way of getting out of compute commitments and as a way of reducing costs, except they've explicitly said they're not going to stop releasing models. Is your view that when the S1 comes out, we will see that they are still an immensely unprofitable company? Yes. Unless they do some really weird stuff with capital expenditures, unless they try and capitalize R&D costs, it's funny. They won't break out inference costs, but we're going to find out whether it truly is the gym model with subscribers, whether it's just the most of them don't actually use it that much. But here's the thing, training costs aren't going away. I also cannot wait to see their sales and marketing costs. I cannot wait. Oh, also another thing about the 80% gross margins that doesn't include the amounts of money they send to Amazon Google and Microsoft in the revenue share, which they use to inflate their revenues. So I don't know. It sounds like some accounting shenanigans to me. I can't wait to read the S1 because I think it's going to be a laugh ryan. Asitron is host of Better Offline and author of the Where's Your Ed at Newsletter Ed. It's good to see you. We always love having you. Thanks so much. After the break, the bond sell-off continues. And for even more markets insights, you can subscribe to my weekly newsletter Simply Put at edridelsen.substac.com. Support for the show comes from hymns. Weight loss can be frustrating, but with weight loss by hymns, you can take the gastric out of the process. Weight loss by hymns gives you access to a range of affordable FDA-approved GLP-1 medications, including the Wigovie pill and Wigovie pen, along with support to help you stay on track. 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Just use the code PropGia Checkouts. Remember to time-off her rules and restrictions apply see Blinds.com for details. So like any good millennial, I have a love-hate relationship with Gen Z. It's the phenomenon rattling millennials. They just look at you. They want something bigger themselves, lifestyle's a priority. Motivation is being inspired. But regardless of how you feel about Gen Z, it's undeniable that they're changing national politics. Generation Z is increasingly showing less loyalty to traditional political parties. Many now more likely to identify as independent. So what is going on with the kids? I think the biggest misconception about Gen Z's politics right now is that all of a sudden they're all socialists. That is just not the case. They are embracing candidates who are offering new bold ideas in the absence of those ideas from establishment Democrats. This week on America, actually, Gen Z researcher Rachel Jamfaza joins us to separate Gen Z fact versus fiction. It's not rocket science and this is, you know, I keep saying like, young voters aren't that complicated after all. It's pretty simple. Catch us every Saturday on YouTube or wherever you get your podcast. We're back with Profty Markets. The 10-year U.S. Treasury yield rose above 5% yesterday, hitting its highest level since 2007. The 10-year help set borrowing costs across the economy from mortgages to corporate debt and 5% is considered a concerning threshold for markets. The move was driven in part by surging oil prices. Brent crude spiked to $109 a barrel after drone attacks disrupted an important pipeline in Saudi Arabia. And that comes on top of an August CPI report, which showed that U.S. inflation remains well above the Fed's target. Inflation held at 3.4% year-over-year for the second month in a row. All of this is putting pressure on the Fed, which announces its next interest rate decision later today. On Cal State traders are now pricing in an 88% chance of a rate hike up from 60% before the August report. Joining us to discuss yields and inflation and the macro economy. We are speaking with Mark Zandee, Chief Economist at Moody's Analytics. Mark, thank you for joining us. Good to see you. We should stop probably with yields, which are rising, which breached 5%, which many consider to be a pretty concerning thresholds for U.S. treasuries, for government issue debt. What do you make of those yields? What are they telling us about the economy right now? If you look at the CME Futures, which is where folks put also money on the line on the Fed's funds futures, it's at 95% probability. So it looks like the Fed's locked in here. They're going to have to raise interest rates. But fundamentally, it's driving this is a bunch of stuff, but at the root is the Iran war and the pick up of energy prices and the inflation that's fanned. I mean, in fact, if you go back to February 27th, the day before the U.S. started bombing Iran, the 10-year yield was sitting below 4% and here we are at 5% and it's been straight up since. And of course, if you go back to before the war, the thinking, hard to believe, but the thinking was the Fed was going to cut interest rates. We're pricing in a couple of rate cuts. Of course, the war has come along. The inflation has kicked in and now we're talking about, for sure, one rate hike, but if you look at futures, we're talking about two, three rate hikes, quarter point each into next year. So that's the fun amount of reason. And providing lots of other reasons, but I mentioned one other, one other ed. And that is just our abysmal fiscal situation. I mean, we've got a massive deficit, even excluding interest payments, it's massive. All the trend lines look very disconcerting, even under current policy, assuming we do nothing and under kind of sanguine economic assumptions. And that's, the Treasury's borrowing a lot of money. And interest rates are the cost of money because it demands up to our interest rates. I can go on, but those are at the root of what's going on. What do you make of the inflation report that we saw as well? 3.4% did that surprise you to the downside or the upside? And what is your outlook on inflation going forward? Yeah, it surprised me to the upside. It was a little on the hot side, not a lot. And there's a lot of noise in the data, a lot of moving parts. And so it's not surprising that I was surprised. Let's put it that way. But it was hot. And if you're just looking at the inflation statistics, you know, right now they would argue for rate increases. And obviously one of the key reasons why long term interest rates are up. And going forward, do you think that we are dealing with a longer, more systemic inflation problem? I mean, 3.4% was reflecting a world where oil prices were a little bit lower. We're up to more than $100 a barrel on Brent crude oil prices in America rising gas prices are rising. We obviously saw the most expensive gas prices for a Labor Day weekend ever, this Labor Day. Should we expect that to funnel through to overall prices going forward? Yeah, I'm more saying one on this, you know, my sense is, you know, we're obviously going to be paying more for gas and groceries because of the higher prices. the cost of diesel, if you want to get on the airplane, I was just buying a ticket to London, and it's just craziness. And a lot of that goes to the cost of a jet fuel. So that's gonna happen. But the question is, is it being passed through to the rest of the economy? And more importantly, is it getting into inflation expectations? Because if it does, then it becomes more entrenched and more persistent, and that's a big problem. We don't want that to happen. But I don't see that yet. I mean, if I look at, and there's a lot of different ways of looking at inflation expectations, my favorite is kind of break evens. Those are looking at treasure inflation protected securities and kind of backing out what investors are thinking about future inflation. And it's not saying anything untoward. They're right where you would want them to be. So my sense is inflation, it's definitely a problem. It's gonna be a problem in the near-term given what's going on in the middle east and the higher energy prices. But I don't think it's becoming entrenched. And so if I were sitting at the Fed, I'd be arguing for a hold, in part because of that logic, but also, I actually think the economies on the soft side here, not AI-related, the economy is struggling a bit. We're not creating a whole lot of jobs. Wage growth is decelerating. And inflation's now above the rate of wage growth. And it's a real purchasing power is declining. I think policymakers really need to be focused on that part of their mandate. But that's not what's gonna happen here. They're gonna raise rates. - Yeah, you tweeted that where the odds of a serious Fed policy mistake are and comes to be high and rising. I assume you are saying that if we were to raise rates, then that would be the mistake in this Fed decision. - Yeah, one rate, hike. Okay, and we were already basically digesting it because everyone expects it. So it's kind of embedded in what's going on in bond yields. One reason why we're up to 5% is that expectation. Stock markets come under a lot of pressure and that's partly because of all that. But if it's signaling a series of rate increases down the road, if the futures markets are right, two, three, four rate, more for rate increases. And on top of that, the thing that makes me nervous when I talk about the Fed in a misstep is the communication strategy. Obviously that's changed with the new Fed Chair, Kevin Warsh. And he's articulated a view that the Fed should not be providing a lot of transparency or that feels pretty untenable at this point. You've got to explain what's going on and why you're doing what you're doing. But if you don't, then that raises the odds that there is going to be a mistake a misstep and thus the ex-posts that I put up over the weekend. - I'm a little surprised to hear you say that because when we think about the dual mandate here, there's the job market and then there's inflation. And you mentioned that real wages aren't growing. But when I look at what's happening to real wages, I look at the problem being inflation that the prices are going up, which is eating into wage growth and therefore causing real wage growth to go down and turn negative. But you don't see inflation to be the biggest problem on the table for America right now. You see it as something else? - No, I see it as a huge problem. I just don't think Fed policy entry higher interest rates are going to solve that problem, right? I mean, this is due to the fact that we're raging a war in the Middle East, you know? No higher, you can hike interest rates tenfold. It's not going to make any difference on that. We're paying higher prices because of tariffs. Monetary policy isn't going to help you with that. We're paying higher prices because of immigration policy and higher interest rates are going to pay for that. And the other thing is, the economy is just growing at its potential, 2%. That's a real GDP growth. That's what we grew last year. That's what we grew in the first half of this year. That's what we're going to grow the second half of the year. And 2% is, if you want to get inflation down through higher interest rates, that means you've got to grow below potential. What does that mean? Well, that means you're going to start losing jobs. Layoffs are going to start kicking in. And then you get into this kind of very self-reinforcing negative cycle, which ultimately potentially lands in recession. Do we really want to go down that path when raising rights? What's it going to do to combat the reasons for why inflation is high? Now, again, just to make it clear, if all these things were leading to higher inflation expectations, if it was pushing up wage growth, because workers thought they're going to have to pay more for energy and business to say, OK, I'm going to give you the higher pay, because I think I can pass those on to consumers and so forth and so on. Then, yeah, I think we need to break the back of that. And that would be a higher interest rate. But that's not what I'm deserving. At least not what I'm saying. Are we entering into a world in which monetary policy is sort of our traditional tools for addressing economic issues? I'll just no longer viable. Because, basically, your description, that is kind of what it seems like is happening here, where you have an administration that's using its executive powers to such an extent that it is actually making it almost impossible for the Fed to do what it's supposed to do, which is set monetary policy and address that dual mandate. And you're saying, it can't really do that right now. Yeah, you make an excellent point. It's not that Fed policy monetary policy has loosed its efficacy, I mean, we can debate that and argue that. But on the whole, it's still very effective. But the question is, the Fed is now spending most of its time responding to the fallout from fiscal policies or economic policy more broadly. The war, the tariffs, the immigration policy, all those things are contributing. And this is not a surprise. We've been having these conversations for a while. This is like textbook. I mean, when we talked about tariffs back in the day, when they first came out or when we talked about immigration policy or the war, it's a negative supply shock. It means weaker growth. And it means higher inflation. It makes life very difficult for the Federal Reserve. What do they do with that? And that's where we are right now. So this is-- it's not like this was unpredictable. This was very predictable. It's macro 101. Final question, Kevin Walsh, if he raises rates, and it appears he will, based on what traders believe, he will be defying the president. And he'll be defying Treasury Secretary Scott Besson. Trump, of course, was blaming Jerome Powell for a lot of our problems, telling him to bring interest rates down. He didn't do it. That turned into a blowup. A lot of people thought that Kevin was going to be the guy who would come in and do what the president wanted. That's apparently not going to happen. Do you think that this could evolve into something similar to what we saw between Trump and Jerome Powell? Well, boy, could you imagine if Kevin Walsh dissented tomorrow? There's going to be a lot of-- I've watched a lot of FOMC meetings over my 35 years as an economist, professional economist. And there's been drama. But there's a lot of drama at this particular one. Actually, all of itself made kind of drama. It's not that we're suffering a financial crisis or a pandemic, I mean, we got here on our own. But there is a lot of drama. But I suspect the chair is going to have to go along with the rest of the committee. It's all about credibility. His own credibility going forward. And he's going to have to vote for a rate increase. I can't imagine that's going to make anyone happy in the executive branch. But at the end of the day, look, Kevin Walsh was appointed chairman of the Fed, not for a particular rate decision. He was made chair of the Fed because the president trusted his judgment. And if his judgment is a success that we should raise interest rates at that point, I think that's the appropriate step to take. And the Fed chair is going to have to take whatever comes down the pike as a result. Mark Sandi is chief economist at Moody's Analytics. Mark, always appreciate your time. Thank you. Thanks, Ed. OK, let's end with a quick check in on the housing market. As you probably already know, home prices in America are more expensive today than ever before. The average home now costs more than seven times the average household's annual income. That number has never been higher, not even during the housing bubble. And that is a function of the fact that while home prices have kept going up, average wage growth has remained relatively stagnant. In fact, over the past several months, average wages have gone down. And that is a result of the runaway inflation that was, of course, prompted by our seemingly forever war with Iran. But that is all old news when it comes to housing. Here is the new news. As of last week, the average 30-year mortgage rate rose above 7% for the first time in 15 months. In other words, not only are home prices rising, but so is the rate at which you would need to borrow in order to buy a home. Now, why is that rate rising? Again, because of the war. With oil prices soaring, inflation is showing no signs of slowing down, which has resulted in a global bond sell-off, which is causing long-term treasury yields to rise as we covered. And of course, it is those yields that mortgage rates are largely anchored to. So when yields go up, so does your mortgage rate. And that is exactly what is happening. So what do we have? Historically expensive home prices combined with historically high mortgage rates resulting in the most unaffordable housing market in the history of America. Now, is anyone going to do anything about this? Might our president possibly solve this problem? I don't want to drive housing prices down. I want to drive housing prices up. I wouldn't count on it. [MUSIC PLAYING] Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Chalon, Cristino Donacu and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Prof. G. Markets from Prof. G. Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.