Josh Barro and Jonathan V. Last: The Patriotic Cowboys Wrecking Our Economy

Hey, everybody, adventurous podcast booking on this Thursday. Yeah, we had one of our besties going to be here, couldn't had a travel issue. We got my buddy, Josh Barrow, who's on the pod today. We're doing some econ talk. We're going to get into his terrible takes about daylight savings time and other issues. But before we could do that, his internet on Fire Island just crapped out completely. Apparently, the whole island is without internet. I don't know if this is a homophobic attack from the Iranians. So the Trump administration or AI, but that's what happened there. And luckily JVL came into save the day. So you have a half a pond with Josh Barrow and then some really high level dark JVL. And so I think it turned out great for everybody. So thanks for bearing with me. Stick around. Up next, Josh Barrow. Hello and welcome to the Bullwark Daily. I'm your host Tim Miller. One note yesterday, I put in the show that it's a link to the red district, red state Democrats that I think of a puncher's chance. And it was in JVL's Triad newsletter, which is always paywalled. And I kind of forgot, you know, some of you who aren't Bullwark Plus members shame on you, you should join, but still wanted to see the candidates that you should support. So we've unpaid walled it. You can go check it out. The link to both less. I did one in June or July and one yesterday. Both are in the show notes. All right. On today's show, he's a co-host of a couple of podcasts. One serious trouble with Ken White, aka Popeap. The other one's called Central Air with Megan McCartle. My guy Ben Dreyfus. He also writes on Sub-Second. Very serious. It's Josh Barrow with a very unserious new haircut. I don't think this is unserious at all. Well, actually, people keep asking me what crisis I'm experiencing. You bleach your hair for the audio only less. Yes. You bleach your hair like. Yeah. Yeah, like Bieber kind of. I always wanted to be blonde and now I am. I'm just trying to be self-actualized. I don't know if that's true. Maybe you're not experiencing a cute crisis, Josh. But I think somewhere deep down, you're exploring something. You're dealing with a transition. You're kind of processing the linear nature of time in a way that is. I feel great. Good. You know, it's a friend of mine who had also bleached his hair when he saw that I did this. He goes, "Do you feel dumb or yet?" And I was like, "Actually, I do. It feels like a weight has been lifted from my shoulders. I'm getting to experience what blondes get to experience with not being in charge. It's quite nice." Okay. We'll do a like count on this podcast first the last time you're on. When you're in brown hair and see how much has changed. I look forward to it. We're going to start with a little shot in Florida. You know, it's very rare that I open up political playbook in the morning and get a little nugget that makes me joyful these days. But, you know, I still have to read through the tips. You don't want to know what's happening for the listeners out there. This little alert, uh, this one, this one brought a smile across my face. One of Eric Schmidt's top eights. His general counsel, Ethan Harper was supposed to leave his role tomorrow to join the White House staff secretary's office, very prime office. But his transition is now in doubt given his role in the Jack Smith gotcha gone wrong. Harper was the staffer standing behind. Schmidt holding up a board displaying the screenshots of the text messages. I got to tell you that. That's nice. That's nice to see a little accountability in Washington for once. Yeah. I mean, you know, I assume that, you know, him being the one who held up the poster board that that's somehow indicative of this, you know, being at least in part his fault. But I mean, it's interesting because the staff secretary's office, what the staff secretary does in the White House is supposed to be sort of controlling the flow of paper and information toward the president, which I don't know exactly how that works in the Trump White House. But it's exactly the sort of role where like causing someone not to receive the embarrassing incorrect document. Like, that's within the purview there. So it would make sense that they'd be like, maybe this is not the right guy for that role if he's here with that poster. It's pretty funny. Although I do feel bad for him if he just ended up being the guy holding up the poster. Like, maybe it's somewhere else. And he was the general counsel. Yeah. Why is the general counsel the poster holder? I don't know how that works. I never worked on the hell. But he's the general counsel slash poster holder. I assume that it would have been his purview. I guess it also goes to the point where even if they had it right, they had nothing. Right. Even if Jackson Smith had happened to go to C tre young in the Atlanta Hawks game in 2024, that meant nothing. Yeah. I mean, it's like that they then inferred from that that Fanny Willis was also there at the game. Like, right. And that they were plotting together against Trump. I like they had nothing. Yeah. You know, if you're having a secret meeting to plot against Trump, the thing you do is go to an extremely public arena to take in row one to row one. It's that on the tap. Yeah. So yeah, just to emanate the way you they might have reviewed. I don't know. They might have reviewed the NBA League Pass archive. Anyway, Ethan Harper, tough titties for you. Yeah. Speaking of Sean front of the Trump. This is an AP poll. It's a little bit of an outlier. But what let's just tickle ourselves for a minute. The Trump approval rating has fallen below the bush line. 31% 69% disapprove. Nice. On the economy, 26% approve cost of living 17% on Iran, 28% trade, 38% AI, 31% which is down as well. I mean, even if this is off 10 points, this is bad. Well, did they pull about superintelligence? Maybe people like the way he's handling superintelligence. That's true. Si. Yeah, yes, yes, yes, I mean, I feel like a lot of your listeners have been waiting for the shooted drop about like when will people finally realize the Trump is full of it, that he wasn't a good businessman, that he doesn't know about the economy. And for a long time, the voters have given Trump a lot of credit because the economy performed quite well for the first three years of his first administration. And then COVID. And now how many years was the first? Well, I mean, COVID is this like Deus Ex Machina that I think people mostly correctly treat as, you know, as an external force. The US actually had a better economic recovery from it than most countries did. I mean, you know, one of the things I miss about this administration is Steve Mnuchin, who did quite a good job as Treasury Secretary, including I think on the economic aspect of the COVID response in 2020. Yeah, we were maybe a little unfair to Louise Lenton. Oh, she's fabulous. That photo of her with the, we didn't know how good we had it there with Steve Mnuchin at Treasury. Yeah, that's so much worse this time around. But so, you know, there was this, that halo from like-- This is what happens when you put gays and charges of the money, you know? Yeah, no, they're never going to let us run Treasury ever again. But so, you know, there was this halo from that, that's like the last period people remember when they felt like the economy was good. Yeah. And Trump got elected on people were dissatisfied with Biden and inflation. And then he gets into office and doesn't contain the cost of living problem and demonstrably does a bunch of stupid things that cause the cost of living to go up. I mean, I think people see the price of gasoline, the price of diesel right now, and they know that that's because of this war that the president chose to fight that has gone very poorly. You know, the shine finally came off because he finally did something that was very clearly his fault that made the economy worse in a way that everybody feels. So it makes sense that he would go below the bush line. I'm sorry, I was on a plane, so I did something I do very rarely, which is I watched. I watched Scott Jennings hit on CNN. Yeah. And he was saying that that's wrong, Josh, that the diesel prices are up, yeah, because the Liberals in California are not building enough diesel refinery plants. And had we built a couple more refinery plants, things would be just fine. So I mean, were the Liberals not doing that a year and a half ago when the price of diesel was a lot lower? I mean, that's a good question, I don't know. I mean, there are actually some problems, I think, with emissions policy in California, but they're not new. What's new? We're building them in Louisiana, though. Yeah, you know, but what's new is the global disruption to the oil markets that the president caused. Yeah, this is a funny thing for Democrats. So I think people are so focused on immigration, crime, trans issues. I think they don't focus enough on energy costs and how, you know, Democrats have a track record of voting for things that make energy more expensive. This is the big-ass truck thing that Senator Ruben Gaiego likes to talk about. People wanted to be affordable to have their big-ass truck, but it's very helpful to Democrats that the Republican president took a specific action that raises energy prices in a way that people might ordinarily associate with Democrats. It's neutralizing an issue that would normally be disadvantageous for the party. Yeah, stealing this from Eglaceus, but it's true that like, well, the Democrats have had, policy platforms, white papers that would lead to higher marginal energy costs. Like, each Republican presidency now has caused an energy shock because of the mismanagement of kind of geopolitics. And so, you know, that does kind of offset the advantage there. Well, I mean, in Barack Obama presided over the fracking boom, but Democrats didn't like to talk about it very much, even though it was still bringing down energy prices and making them more stable. Take some credit for that sometimes, Dems. Let's look at the, just kind of economy globally and then get into the interest rate stuff that you wrote about yesterday. Yeah. Dow is still above 50,000, you know, shout out to Pam Bondy. Yeah. The AI stuff and the build out with data centers is propping things out like unemployment as well. Right? Like, we're kind of in a strange economic time, right? Where people are still very frustrated with the, you know, price increases. Yeah. But like, we're not hearing as much, I don't know, I think probably the last time you're on, there were, I think fears that like recession was around the corner. And that is not as much in the analysis right now. Like, what do you, how do you assess kind of what the macro situation is? Well, so I mean, there's sort of, there's two stories about why interest rates are going up. And they're going up globally. This is not just in the United States. One is that not just our government, but major governments all over the world are running budget deficits that are too large and don't appear to have political will to shrink. those. And so the government is going to go out there and demand to borrow more and more money in a way that is not easily met in the markets. You have to, interest rates have to go up so that people remain willing to lend. And that's a bearish story that should be bad for stocks. You know, it means in the future there's going to have to be tax increases and there's going to have to be cuts to government spending and it's likely to cause inflation to remain elevated because governments are unwilling to do the fiscal consolidation that would bring inflation down. So that's the bad story. The other story that's less bad is that there's tremendous demand for capital investment related to AI. And so as the AI firms go out there and try to raise capital to make investments that they think are very promising, they're competing with governments and with other companies more ordinary industries and with people who want to, you know, go get a mortgage. Everyone's trying to borrow money at the same time and that pushes rates up. But that's a story about like people, people want to get their hands on money because there are good things in the economic outlook. There are things that you can invest in that they think will be very profitable. And so I think both of these stories are true. I think those are both factors that are pushing up interest rates around the world. But the fact that the second one is there, I think helps to explain, you know, why are stocks holding up so well? It's because there are these promising AI-related business investments that increase the outlook for future profits and make it tolerable to borrow money at a higher interest rate. So I think that's how you can square that. Yeah, so it's not that capital isn't as fake, you know, you don't think. Stock market's running on memes. Like the stock market's running on vibes and memes. You know, investors could be wrong about exactly what the future profit outlook is with AI. It has happened before. We've had bubbles in the past. So if that is a bubble and it pops, that's going to be quite negative for the economy, although that also might cause some downward pressure on interest rates, which would give some relief there. Yeah, this was one of the big spoons from one of the Trump guys that was like, you just, you don't know how quickly rates can fall. Just look at 2007-2008. We're past the point where, you know, like a couple of years ago, people who were AI skeptics sort of talked about it, like it's the stochastic parent and like this isn't actually that useful. We're past that point. This stuff is definitely useful, but it's still possible that it's useful and it's going to be very important going forward. And the valuations of these companies are nonetheless too high. Yep. So that could be the sort of bubble that we have. It doesn't mean the AI companies would go away. It just means that their valuations would fall a lot and they probably invest less. And so I just want to talk about like how that is impacting kind of like regular people's due of the economy for getting to fed stuff. Because I do think that, you know, that if you are somebody who's a consumer in this kind of guy, how do you explain live proof of ratings 26%, 17% on cost of living when like the unemployment rate is significantly lower than it was, you know, around a lot of the Obama administration, for example. And to me, it's like the answer is, well, the things you spend on every day are expensive gas and food that has been exacerbated by Trump's stupid policies on tariffs in the war. And then also people feel kind of stuck if they want to move houses, change cars, et cetera, like things that they are borrowing against are much more expensive than they're borrowing cars in the past. That's kind of how I assess why people think the economy is so bad. Is that right to you or is there something another factor? Yeah. I mean, I think those things are right. I think there's also a couple of additional things. I mean, some of this is a commonality going back to sort of mid-2021. It's been a similar situation in the economy where prices keep going up and people are mad about it, but people keep buying things, which is part of why the why inflation remains elevated. And they keep buying things because, you know, unemployment is low, people I think are dissatisfied with the economy, but they're not unusually concerned about losing their jobs. And they're able to pay these high prices. They just find it annoying and upsetting. And then the other thing that has gotten worse in recent months and recalls a period that persisted for part of the later Biden administration is that because of the price spike that has happened since the war started, real wage growth has gone negative again. So people, you know, they're still employed, but they feel like the money they're earning is not going as far as it used to and they're actually correct about that. The inflation is high enough that it is outstripping the increase in their incomes. And so, of course, people are people are mad, but it doesn't mean we're in a recession necessarily. I mean, I don't think we're in a recession. Have you ever thought I should really be doing more to protect myself from stalkers, scammers, and hackers? So you're not sure what? Here's what I've been doing and what I'd recommend you do as well, go to www.joindeletemy.com/bolwork, enter code "bolwork", you'll get 20% off, delete me, delete me, remove your personal information that's being sold online. 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When you go to www.joindeletemy.com/bolwork and use promo code boorket checkout, the only way to get 20% off is go to www.joindeletemy.com/bolwork and enter code boorket checkout. That's www.joindeletemy.com/bolworkodeboork. Let's go to the Fed. You have an article about this yesterday. Obviously, they increased rates a little bit. Why don't you just talk about what the state of play is on that? So, I mean, you know, inflation has been above target since the recovery from the COVID pandemic, and the Fed was a little bit late raising rates on that in like 2022, eventually did and got inflation most of the way down. But it's never gotten quite all the way back down to 2% where it's supposed to be on a sustained basis. And then it's gotten worse in recent months because of the war. And so, you know, the Fed is supposed to balance stable prices and maximum employment. And as we discuss, the employment outlook doesn't look too bad. And it doesn't really look like we're on the verge of, you know, the bottom falling out of the job market or anything like that. And so, when inflation remains problematically high and we're not having trouble getting people jobs, that's exactly when you would expect the Fed to raise interest rates. And they sort of argued over this through much of the year, the meeting in July when the Fed met, they didn't raise rates, but there were three dissents, which is an unusually large number, three members of the 12 member Federal Open Market Committee said we should raise rates now. And then in September, they unanimously decided to raise by a core point. And so, since the Fed meeting last month, where they raised, there's been some relatively good economic data in the sense that inflation came in a little bit lower than had been expected. That's ideal. And now, you know, it's pushing that on next year. Yes. Great news. We're 0.2% lower on inflation. And Kevin Hassett, who runs the National Economic Council inside the White House, one of the top economic advisors, the president has also been pushing on, you know, hey, we've had three months now where core inflation using the measure of the Fed uses, which is called PCE, that that's run at 2%. That means inflation's, it's not too high anymore. We don't need more rate hikes. If you want to raise rates again, it's because your part isn't against the president. Now, the obvious retort to that is, you know, three months is three months, but these things move around. And they're, they're support doesn't include energy. Right. Although the thing is that if you're trying to predict what inflation is going to do in the future, what core has been doing recently is actually more predictive of that than overall inflation because they're, they're supply side things that move food and fuel prices around that don't necessarily have implications for future monetary policy. So I actually do think it's correct to look at that core measure. The problem is that it's only been stable there for three months. Right. And, you know, for most of the, you know, preceding two years before that, it has been significantly over target. And so that's what members of the FOMC are arguing about right now. We've seen different speeches from them indicating different levels of hawkishness. I think the Fed is probably not going to hike at the meeting this month, in part because of that better data. But even, you know, I mean, John Williams, who runs the Federal Reserve Bank of New York, who has a permanent seat on the, on the FOMC, he was saying, well, we don't need urgency about raising rates, but we still might need another rate increase this year, which would have to mean December if they don't do it this month. So I think it's likely that we're going to see some further interest rate hikes just because inflation has been persistent. And the job market is strong enough that it can handle higher rates. But that expectation is pushing up mortgage rates today. I saw some people, you know, I get in trouble because I follow, I follow like some econ braille accounts. You know, you get in trouble because of that? Well, no, I just, I just get in trouble because it makes me feel like I know a little more than I do. You know, yeah, you know, enough to be dangerous. Yeah, yeah, exactly. Yeah. And some of them were pointing out that, you know, what we're seeing in kind of the 10, 20, 30, particularly the 10-year yield and like how high it's gotten, like the spike has, has been so great that like the Fed has lost control a little bit, right? Essentially, like there is a lack of trust that the Fed is going to be able to keep things in control. And that's why like market rates are higher. I can see, I can see how much trouble I'm in just by your face. No, I mean, that that could be right. Although, I mean, you know, the Fed ultimately has control here. I mean, the, you know, the long rates are based on, you know, expectations of how the Fed is going to set short term rates over the period of those, of those longer bonds. And so, I mean, that is a story you can tell, but there's another story, which would be equally applicable, which is that there's no chance that Congress is going to get together and shrink the budget deficit in an appropriate manner. And that's going to continue to be inflationary, those big budget deficits. And in order to contain the inflation, the Fed is going to have to raise rates more than it otherwise would. And so that's going to push the interest rate path up. And that's not a story about the Fed being out of control. It's a story about the Fed having to assert control because Congress and the president won't. Either version of that story is a story about how there are significant inflation risks out there and how rate hikes are likely to be necessary in the future to stop that from spiraling out. I mean, you know, if the Fed acts too slowly now and lets inflation get farther out of control, that can mean the Fed will have to raise rates in the future by more than it otherwise would have. And that's why when the Fed hiked rates last month, long rates actually dipped a little bit immediately after the announcement that the short rates were going up. And the analysis, the tendency of that was basically that people see that the Fed is being proactive and responding now. And so there are expectations of how much they would have to raise rates in the future may have actually gone down slightly. Of course, in the ensuing weeks, then long rates have spiked back up a lot more than that. And there's a number of factors that can be driving that. But I'm not ready to blame the Fed here yet. - All right, let's turn to somebody who knows too little to be dangerous. It's the president. He was asked by Time Magazine about all of this yesterday. I just want to read some of the questions here. The reporter asked on me, he said that some of the Fed have suggested that you mentioned New York Fed. They may raise rates again by the end of the year. Trump, I don't think they should. Do you or Goethe nominating more since they raise rates? Trump, well, he's controlled to a certain extent by the board, you have Obama and Biden picks on there. You're too late on that, too late. We have Lisa on there. So that's the first part. I've got more, but what do you make of the president's take? - Well, I mean, this is a convenient story for people in the White House to believe about Kevin Worsh, for Kevin Worsh, right? And the people talk about it like the Fed chair controls interest rates. He doesn't. It's the federal open market committee, which has 12 members, he only has one of the votes. And so he's correct there that like the personnel at the Fed is mostly not turned over. And they have conventional views about monetary policy that suggests that rate hikes are appropriate right now and certainly- - Maybe incorrect on the part of the people that are still on there would love for the country to do badly. - Yeah, no, so I just mean that he's right that Kevin Worsh can't set interest rates wherever he wants. Like he is, he does have to come to a consensus with this board. And the president is out there saying interest rates should be 1%. Even if Kevin Worsh was willing to do that, the other people on this board are not going to be willing to do that. And so I don't know when the last time is that the FOMC took a rate action that the chair descended from. So, you know, Worsh certainly wouldn't want to be in a position where he's refusing to vote for a rate hike. But it's so obviously necessary that he gets outvoted by the board. And there's a culture of trying to find consensus there. So you could imagine that Kevin Worsh is being dragged around by the board. But I think the likelier thing based on the way that Kevin Worsh has talked about monetary policy through most of his career is that Kevin Worsh, like everyone else on the FOMC, understands that a rate hike was necessary. I mean, he said some stuff in the last few years that seemed to be positioning himself for trying to get Donald Trump to make him the Fed share. And he talked about why lower rates would be appropriate. But it was this kind of idiosyncratic thing where he was saying, well, the Fed should lower rates. And then it should also do this stuff with its balance sheet where it sells off a lot of assets. And that makes most people's eyes glaze over. But what that would do is like selling off the assets is sort of similar to raising rates in terms of the effect on the economy. And if the Fed had a very aggressive program to sell lots of its assets, then it could lower rates without actually further stimulating the economy. The Fed hasn't been able to do that yet. And there's a lot of technical reasons why it would be challenging. But I think what the president heard was, Kevin Worsh's rates can be lower. Whereas what it really is, is Kevin Worsh's rates could be lower if we do a specific thing that we haven't done. And then also the economic situation changed. The president started this war. I think that Worsh knows that they had to raise rates and that they're likely to have to raise rates again. But it's better for him if the president just assumes that that's only because his hands are tied and he wishes he could do whatever Trump wants. - Let's take a little bit of a deeper look at how while the president understands this. There's a follow-up question about Worsh. Will the reporter ask, does he still have your confidence? - Yep. - Trump starts by saying, it's become very political. I don't blame you, Kevin. As if he's talking to Kevin, Kevin's not there, actually. I think it's not too bad, it's not fair. And then he goes on, and I just, I need people to kind of buckle up here. It's hard for me to tell exactly what's happening. You study this stuff better than I do. Some of you in the president are closer to the same page. He says this, for the most part, I don't need these. I can turn it off and I have the absolute right, according to the tariff decision, which was a terrible decision by the Supreme Court. But basically they said you can get it otherwise. But it's tougher that they also said, I don't have to trade with countries. So they're willing to stop a tariff, maybe a small one, but they're willing, just think of it. They tell you to stop tariffing even small numbers, but you have the right to stop trading with the country. Think of that, it's ridiculous. It's a terrible decision for our country. Do you know if they would have written one clause any money paid does not have to be paid? I took you in hundreds of billions of dollars. We have to write it back, giving it back to people that were enemies of ours. You would have thought they would have done something about that, give back hundreds of billions of dollars. I have other forms of tariffs I can have. I just got a tariff from Lindsey Graham, Lindsey Graham, first time in 50 years. But I think it's a shame. I think that what the Supreme Court did is an absolute crying shame. Again, that was all part of the answer to just Kevin Warsh have your confidence still. So I think I know what things he was talking about there. I mean, so one of the key things in the Supreme Court decision on the tariffs was there's this law, IEPA, the International Economic Something Protection Act from the '70s. And it allows the president to act in certain ways to regulate international trade. And so one of the questions was, does that include the ability to impose a tariff? And what the court decided was that no, that was not within the scope of the law. And so one of the arguments that came from the president's side as well, if he can ban the imports, how is it that he doesn't have the authority to do something less extreme, like levied tariff? And the answer is, well, that's just what the law says. In the same way that a fire marshal can close a theater, but can't impose attacks on tickets to the theater. Because the power is for a specific purpose. So he's complaining about that. Does he think Lindsey Graham is still alive? What's he talking about there? So there's that Russia sanctions bill that passed that was Lindsey Graham's signature piece of legislation that passed posthumously. And it includes new tariff authorities for the president to try to, for countries that are doing things that we think are bad on the Russia relationship. And a reason that a lot of Democrats in the House did not want to pass that law is that they're concerned that the president would do exactly what he seems to be hinting at here, which is take the new tariff authorities that are supposed to be about Russia and Ukraine and just try to impose them all over the world pretextually because he wants to impose tariffs. So we'll see what he tries to do there about the courts allow about it, but that's what he's referring to. And how about the part about we have to give the money back, give it back to people that were enemies of ours? So that's when the Supreme Court throughout the tariffs, they said you have to refund the money. But that went back to companies, American companies. Are they the enemies? Well, the woke companies are the enemies there? He's insistent on talking about tariffs like they are paid by the country where the goods are imported from even though they are in fact paid by the importers. So I mean, that he's just wrong about. I think the other thing to tie this together, why is he talking about tariffs at all in response to this question is a threat that he made a few weeks ago was that if the Fed doesn't cut rates, then I'm going to impose new tariffs. And it wasn't clear exactly how they were supposed to be connected or why he thought that the Federal Open Market Committee would be swayed by a threat to imposed tariffs. But I think that's what he's getting at here. He's like, well, if I can't get control of a monetary policy, I'm going to do new tariff things that somehow-- Got to be great for people. Yeah, their interest rates are going up and they get a bonus tax. Yeah, new tariffs are not going to make capital more available to consumers and businesses who want to borrow in a high interest rate environment. So, I mean, it doesn't make sense. I'm not making sense of what he said here. But I think that is the reason that he even is rambling about this topic. That helps, actually. Yeah, because I gave it a few reads and I was like, who is he talking about? And the thing about the refunds, he kept saying, well, shouldn't the court have just said like, we can keep the money that came in already? Yeah. And there's other areas of law where sometimes things work like that. There's a new rule about what the police can do, but it doesn't mean everybody who's in prison, who has to be shut out where that happened. It's only going forward. But ordinarily with things to do with money because it's-- Yeah, if you've stolen somebody's money illegally, then the court rules that you stole illegally, generally, you have to pay it back. You don't get to keep it. Yeah, I mean, it's created this sort of funny situation where the importer may have been able to pass the tariff cost through to the retailer and then to the consumer. Then the importer gets the tariff refund. That doesn't mean they have to pass that through to the retailer and then to the consumer. So there's windfalls that happened here, which-- Look at you. It's-- you're sounding like a populace lefty there for a second. Well, I mean-- This is greed. You know, like-- Greedflation. A little greedflation on the tariff. Well, I mean, this is a reason not to impose illegal taxes because weird things might happen. It's good. But, you know, I don't know how you would force people to like find where the economic incidence of the tax was and give the money to that person. The solution is don't do illegal tariffs. I agree with that. Well, we're nerding out just really quick on permitting reform. Yeah. Everybody, we're going to get to fun stuff. We have a masculinity section with Newly Blonde, Josh Barrell, coming up soon. Permitting reform. We do permitting reform first. I agree. It's fun for me. But no, you're not. Everybody lessening is here for permitting reform. There's a big bipartisan deal yesterday. There's getting rave reviews from all the walks. Yeah. OK, rave reviews from the Twitter walks about, you know, where was kind of the pro-environment. Lefty's are on board, so I want to build more, you know, Green Energy. stuff faster, the neoliberal abundance crowd is very permitting reform-pilled. Some Republicans are on board with it. Give us a pit. It's something working right in Washington. It's a long way to go. It looks like they have an agreement on a deal which is very likely to pass after the election. And I think this is a good thing. For people who aren't following the Search Light Institute, maybe give them a basic breakdown of this. Yeah, I mean, there's been this conversation for a few years now about can we get it bipartisan permitting reform done? And it's because Democrats and Republicans have a set of different but related priorities here. What Democrats see is that if you want to install new renewable energy, you have to be able to have high voltage transmission lines to take the energy where it needs to be used. There are all sorts of regulations that can make it difficult to build those lines, especially if they cross multiple states. So they want reforms of that. And then also, as the Trump administration has been engaging in high jinks trying to cancel solar and wind projects, they want rules that give more clarity to basically say once something has been approved, you can't go back and cancel it. So there are things that they want to get the government out of the way of deployment of electrification and renewable generation. Republicans see that it is too difficult to build oil and gas pipelines in the country. For example, the price of heating oil is up a lot this year along with gasoline and diesel. And homes in the Northeast, especially very dependent on heating oil, in part because there's lots of places that have no natural gas service. Normally, you would be more likely to have a natural gas-powered furnace in your house. And so it's a problem that there aren't natural gas pipelines to a lot of places that we should want them in the Northeast. There was just a big fight where I am in New York about approving one to Long Island that will significantly lower energy costs here. So Republicans want to be able to build more of that kind of infrastructure. And so the idea is, hey, well, maybe we can have a bill that says, we'll make it easier to build a pipeline and we'll make it easier to build an electrical transmission line. And we will, you know, reduce opportunities for people to sue and shorten deadlines and promote these investments. All right. So the internet just fritzed on Fire Island. I don't know if it was the fumes coming off of Josh Barrow's bleached hair or whether it was some kind of cyber attack on us. But luckily, I'm bringing the big gun out of the bullpen. All right. We've got Lee Smith walking towards the mound. I haven't watched the baseball game in 25 years. So I don't know who the better references there. But for us at the bullwork, it's Jonathan V. Last out of the pen. That's right. High heat. Like Mariana Rivera, baby. Right. High heat. 102 plus from you. Okay. Yep. It's a little bit of kismet here because we've just been doing economy and yield rates and all that nonsense with Josh Barrow. Right. And your triad today is is on a related topic that we that we didn't really cover that much in depth, which is the energy price spike. Yes. And you wrote about how there is basically this built in risk premium right now on oil prices, which kind of explains why prices did not go as high as some of us were thinking they would have had summer. But why they've remained high even though the straight has somewhat opened up. So why don't you talk about that? So there, I mean, there are essentially two questions and they're related and they are why didn't oil ever get as expensive as many people feared it might. So we peaked in the spring at about a just under $113 a barrel. And a lot of people thought like crap, we could go to $125. We go to $150. There are zero ships moving through the straight today back in spring. Why isn't this going higher? And the answer was a bunch of things. First of all, the world's strategic reserves were drawn down to about zero. And I mean, not quite zero, but but down real far. In America, we are at the lowest levels in our strategic petroleum reserves since the early 1980s, following the oil shock of the late 70s. So quite bad. This is happening worldwide. And we don't know what's going on with China. So China had all by itself, we think about half of the world strategic reserves. But that that's a closely held secret. And we don't know what they actually had. We think they had about 1.3 billion barrels to be like 3X, what America's strategic reserves were. And we don't know what their consumption went to. But we do know that they cut their imports by 40%, which is stunning, right? And this suggests that either they were able to cut consumption because they've electrified everything or they were just like pumping out of the ground where they had their strategic reserves. She feels like something that Trump could have like pressed on or found out a little bit more about during the summit. But instead he was focusing on showing she the auto pen picture. And he got us two pandas. We got two new pandas. Well, also it's hard when your mouth is full. Yeah, that's true. So well, not quite full. I mean, she, that's part of it. I just assume that he is. I don't know. I sense for these things. Okay. You know, I trust you more than me. Yeah. Another part of the picture is that Trump really did manipulate the markets pretty well. And we drove people like me crazy, because I would be sitting there going, why don't the markets understand all the risk? And the reason was because he would declare war on Friday at four o'clock. And then on Sunday night at 7 p.m. he would say, we're so close to a piece deal. Ever been closer. They want it really bad. It's going to be strong, so strong. You can't even believe it. And that basically worked with the markets. Yeah. And the reason it worked was because the markets all thought this war is completely batshit. It is fundamentally irrational. And so of course, he'll stop. Yeah, right. Think about this as like an inverse bubble. Right. And so, you know, when you have a mania in economics, when you have a bubble, it is inflated by people expecting irrational returns on an investment. And this is like that. But but without the investment part, it's it's expecting that, you know, well, this this thing over here is a rational, this thing being the war. And so we're going to bet against the war, basically. And we're going to bet that this whole thing is going to have the plug pulled on it soon. And this is like the old case saying that the market can stay irrational longer than you can stay solvent. And markets have basically decided, fuck, we don't actually see an exit anymore. We don't see how he can get out of this. Right. So they've just decided, well, I guess here's the risk premium we should have had all along. And so they have bundled that in. And this is then the the second half of that question. Why is it still so expensive now even if and we think the straight is doing somewhere between like 50 and 80 percent of pre war levels of traffic. So why is why is oil so expensive? And so it's all those things in reverse. We now have the risk premium baked in because people have no idea when this is actually going to finish. China is importing oil again. People are refilling their strategic reserves again. And then on top of it, you have a huge structural cost shift upwards. And the industry group Argus, which does freight logistics, this is going to blow your mind. It cost about $3 a barrel to move a barrel of oil from the Gulf East into Asia before the war. Okay. Today it's $34 a barrel. 11x. And what does that mean? It means that you are paying a lot more for the ships themselves because of the demand. You are paying more to operate the ships because they run diesel and diesel is so expensive. You're paying a shitload more of insurance. And they are also now starting to price in tolls because everybody knows that you're eventually going to get tolls in the straight of hormones. So if the rules on the straight of hormones have changed, why shouldn't the rules on the straight of Bob Almendeb change as well? That's where the hoodies are camped out. And so you have everybody suddenly realizing shit, cost structure for moving oil out of the Middle East is about to be shifted upwards permanently. And it's not going to stay at $34 a barrel. But when it floats down, it ain't going back to $3 again. This has everybody kind of freaked out as well they should be. Yeah. You end the newsletter. By the way, if you haven't signed up for the Triad newsletter, what in the fuck are you doing? The best daily newsletter in the market. The Bullworkdeckum. You end it with this. The economy's gone from bad to worse than worse this year to stay. And that's kind of the point, right? That the risk is here to stay both in the energy market, but also with the high interest rates. Yeah. So the interest rates are all like these things are bound together like the war and the bond market and interest rates. They're all actually the same story. And a big part of it is, well, we're leaving the American led world order, right? Like that's over now. That is in retreat. We can see that sink and down beneath the horizon. And nobody knows what comes next, but it isn't going to be better. Whatever mergers is not going to be more stable, more efficient. Cheaper. I mean, with all the things we're robbing Venezuela. I think that's what tries to robbing Venezuela. And that's going to offset it. We're going to get so much liquid gold out of Venezuela and gold gold. And that's going to be so easy, right? Like just creating infrastructure and unstable, you know, environment to the victor's go to Spain, right? Can you believe he said that in front of the UN? We haven't really adequately excavated that that rape and pillage is now the stated policy. I'll be back. United States. Great. Okay. Cool. You would think that it would concern people. There's a little bit of a relationship between that and the markets, right? Yeah. We're just the slack of taking them seriously. Yeah. Right. Are you sure? I don't know. Two years left. I think maybe you might rape and pillage a couple other countries. So we might. And we don't we don't know. Do you see the AI story today where it was that where Elon showed him Grock and he was asking Grock about Venezuela, the Venezuela operation. Yeah. And Grock told him that the Venezuelan people would be thrilled because they hate the you know, they hate Maduro. And so then when he did it and then his advisors told him that the people of Venezuela were cheering in the streets. He was like Grock was a genius. So that was part of the advisory effort there. I got an Elon question for you. So you saw Pete Hegseth, who I'm poor again. Can we just let me handle it? Let me handle it. Sure. We'll get to Elon. Let's go. Let's move on to Pete Hegseth for a minute because we have a few clips for you. Boy, he gave up. He gave kind of a what's the Tom Cruise character in Magnolia? Oh God. What is he? JT? Come on. We're gonna get it. We're gonna get it. We're doing it live. Tom Cruise. Magnolia. Tom Cruise. Magnolia character is Frank T.J. Matthew. Frank T.J. Mackie. Yes. Frank T.J. Mackie. I got my guns. I got my lasers. I got my ICBMs trained on you. Little speech. We're big tough. We a man. Yeah. Let's take a look at the first club of Pete yesterday. The ideological clowns are out. The patriotic cowboys are in with testosterone testing on top. Just some gender affirming there. He was just reading this fantastic block. It's one of the key texts of the Trump era, it's by a guy who's a psychologist and analysis, a therapist and an analyst. His name is Tobias Funeke. And it's called The Man Inside Me. Pete has just been studying it up and he's ready to really affirm his gender and test everybody's testosterone. He might even go and do a little dick measuring himself for scientific purposes, just get in there on the physicals and just to check, make sure everything is five by five. I got to tell you, man, the patriotic cowboys are in. A lot to criticize about that line, right? The ideologues are out. The patriotic cowboys are in. He's that really true. And it feels like the ideologues are in. Was Jim Mattis an ideolog? Yeah. I don't believe so. He was a sec deaf under President Trump the first time, wasn't he? Yeah. So I don't think it's quite correct just on the technical terms, but just like as a matter of rhetoric, it's like we've brought, even if he was accurate, even if they really have brought in these great patriotic cowboys with testosterone testing on top. It's like, why? Why is that necessary to have to get your tea tested on top? If you just brought in a bunch of patriotic cowboys, you've got to double sure. You got to make sure they're super hard every morning when they wake up. The fact that he's talking like this while losing the most strategically significant war the America has lost in generations. And that this is happening while there is a revolution in military affairs, which is basically pushing robots into the center of the battlefield. And so the most important thing is having a defense industrial base, which can manufacture and modify quickly and on the fly and then distribute drones that are low cost that will be operated by people sitting miles away working on an iPad or on their phones to drive these killer drones. Ain't nobody needs to be doing push-ups here. It's insane. And America has become like a third rank power now in the age of drone warfare. And Pete Hankseth is walking around like, look at me new blups. Got my low teeth. Make sure you have a firm wrist. You need a lot of wrist exercises. You have a strong wrist for all the drone management. Okay. So ideological clowns like Jim Madison are out. It's also done by this country at all. He wasn't patriotic. None of these guys. You're Lloyd Austin. He didn't love this country. That guy served that entire career to it. It's black, black. Let's see what else we're doing with, you know, our readiness and our war fighters. Let's just see kind of who else we're bringing in, who else we're kicking out. But it's worth saying again that the fake news understands it. That's us. We are no longer the woke department or the weak department. Simple translation of that. No fanny. No fatties, no trannies, no beardos, no weirdos, no wimps, no radicals. No fatties or trannies. I mean, I don't, I don't, I do, I mean, I don't know. I think that there have been some people. His list of pants or his list of ones. That's fair. No, the fact that like the head of the defense department amidst this moment where I, he started one war, lost it to a bunch of guys in caves is how they described it. And where he has supposedly like the most advanced technology and the best technologist ever. And you have all these guys like Palmer Lucky and Alex Carp at Palantir, talking about how, how great, you know, all the technology that provided. You seem to provide it. Those guys look like by the way. Yeah, not tough. I mean, not tough. I don't, I don't do you have, do you have an image of Palmer Lucky that you could throw up on screen? Actually, why don't we do that? I think this is an important point. Let's throw up an image of Palmer Lucky. And then let's play one more clip from the Pete Hanks at speech. And then we'll get to it on the other side. Let's watch. See who we're bringing in. Project Meridian will be co-led by three of our nation's best minds. Elon Musk, Palmer Lucky, and Newt Gingrich, all of whom are up in the audience with us today. Please stand if you would. Let's go ahead and pull all of them up on screen. We've seen Palmer Lucky. He is very interesting facial hair. I don't know if it counts as a beardo, but is he my beardo? He's certainly a weirdo. I don't know. He's super weird. I had lunch with Palmer Lucky one time. He ate his book at the table. I ate his bookers, picked his nose, put his finger in his nose, looked at it, into the mouth, ate it, and then took another sip of his foe. Excuse me, took another sip of the foe after eating the booker. Maybe it was adding a little taste to it. So I think he would count as a weirdo. Definitely a fatty. I mean, not, I don't, I don't know. I didn't see the shirt. Gingrich. Gingrich Musk. There's a picture of Musk from the weekend. He has the weirdest formed body I've ever seen in my life. Very off-putting. I don't understand what it is, but he has like double d's and just a protruding belly, but like kind of a very thin and like lower back and waist. And like strangely, it's almost like looks like he has a jet pack on his back. I don't know what it's even happening. He looks very unnatural, impossible to imagine him doing a pull-up. I mean, Gingrich, I'm surprised he's not in a wheelchair. It's hard to imagine how he gets his belly around. This is who he turned to. So it's no fatties, no beardos, no weirdos, no wimps. And let me introduce to you Elon Musk, Palmer Lucky in Newt, Gingrich, a bunch of weird fatties with beardos and wimps. And, and by the way, I'm like, isn't, isn't Elon into like polycule lifestyle and running around like, I mean, that's a weird and radical, is anything you'll ever see. New column self-eradical. Yeah, rules for radicals, right? Yeah, now this is just. Yeah. Radical Republican revolution. 94, still like, this whole thing is preposterous. And it is just like a performative nonsense. And it's happening amidst the time. I just, I keep like, I was watching some Palmer Lucky interview this morning where he's talking about how the next frontier is going to be the core, the melt and core of the earth. Yeah, we're going to be fighting through it. You know, you might even be hollow, according to the documentary on God's level versus King Kong. It's very possible to hollow down there. And there's working on a subterranean, submarine that goes through. We're going to dominate the earth's magma core. Yeah, so he's talking about doing magma core domination. Like the panel into your guy standing in front of the lighthouse, talking about how he's saving Western civilization, being very, very weird, by the way, extremely weird. Trim, Trim, so I don't know if that counts, but I just like strange like his hands and again, talking about all these advancements. And it's like, meanwhile, like they can't even let ships through a body of water because like a bunch of guys are mining the water. I could not all of the technological advancements from Andrew and Palatir have figured out a way to stop a handful of mollus. Like, why are they getting the fucking circles run around them by some mollus? If they're so technologically skilled. Because Iran is a second rate drone power, right behind Ukraine and Russians and the Chinese. And we are a third rate drone power and drone warfare is the future. This is why, I mean, it's asymmetric economic warfare. I want to say something though. So what you are seeing happening to the world. American military is what often happens in corrupt autocratic regimes, right? Their military becomes hollowed out in a paper tiger because the guys who are able to succeed politically are the ones who run it. And then they looted for themselves, right? And this is what we saw in Russia. And this is why Russia got panced by the Ukrainians in the first year of the war. And it was because it turned out the Russian military had been totally turned inside out by Putin's cronies. Putin was never getting reliable information. The people who were there were, again, fourth and fifth rate people and they were looting the military for their own purposes. And it was only once they started losing a real big war that the fat started getting cooked away and the Russians got their act together. And they're pretty formidable right now. And America, we're losing that war right now. And instead of having the, you know, getting leaner and having, you know, the people who are ridiculous, getting fired and grownups being put back in charge, we're going further and deeper into this nonsense like totalitarian bullshit. And I mean, I just, I can't imagine what G. thinks of America looking at us. And honestly, if I was Taiwan, I'd surrender sooner or later to get whatever the best terms you can because ain't no cavalry riding to protect you. I was just going to say one more thing on the traini thing. It's like the idea that like a cabinet level secretary is just repeatedly using this law. And he used it so often that he has to preempt it by being like, Hey guys, I've said it before, but I just want you to know about to say it again, traini, you know, and it's like an eight year old. It's literally like my child, and like they learn a new bad word, you know, and it's like they get a little Cheshire cat grin, like I'm going to say stupid. Yeah. What? Okay. Ass. That's a great, great, great work, Pete, congrats. You can slur people that tried to serve the country. And we're trying to do their best and be themselves and add value to our military. Can it? It's really good. That's really good. A traini operator drone feels like it feels like they could probably do that. Yeah. I don't know. I do. Do you think it's psychologically weird that a man of access age, so obsessed with us? Is so obsessed with this stuff. I do. I think about all the makeup. I mean, he's putting on way more makeup than the transgender members of the military. I'll tell you that. I guess. Significantly more. Yeah. I don't know what it's a tell on, but it's a tell on something something. We got some feedback on the Reddit page. It was flagged for me about you, and I want to share that with you and give you a chance to reply. The post said this. The problem is JVL is unrealistically positive these days. Europe is what I'm new. Europe is more or less at war with Russia. America is too busy looting itself, and AI bio weapon is possible today. None of them care. Two years more of this. Do we make it out without a nuclear escalation or global event? Two positive, JVL. Do you feel like you've been too positive about the state of affairs? I mean, the only thing I've been positive about is the potential for 56 Democratic senators. Yeah. And it's potential, not likely, it's not where I would put my money, except to say, like, if you could get great odds, if you could get 56 Democratic senators on 100 to one shot, then that would be a great, great bet. It was 50. It was 20 to one. Yeah. Not so much, right? That's the, I mean, better odds than that. I don't know. I'm the one who says we're never going to recover from this. What am I too positive about? Yeah, I got a piece coming tomorrow about AI and Stuxnet and my concern about AI is going rogue and building Stuxnet like viruses that they insert into like industrial PLC systems. Hmm. That doesn't sound like an upper. It's not. It's not. So, I don't know, I feel like I'm pretty, pretty bearish. I concur with you. I think I disagreed with the feedback, but I just wanted to give you a chance to react to it. I do think that there is, you know, the bulwark, I mean, if we're about anything, it's Trump or Angelette Syndrome. Right. Sure. And so, I think that over a period of time where Trump is continuing to just step on his own deck over and over again, like he has over the past few months, you know, like our coverage of that is going to be, is going to might at times yield an average listener to think, man, we really think things are going well. I don't feel that way at all, and to me, I think that I'm very, very concerned. I said that any time it comes up. Like, I think that from right now, October 1 through January of 29, the risks that we face are unimaginable. So much danger. So much danger. I mean, here's a very real question. I know you guys like to make fun of me, but just from a pure probability out there. I love JVL. What do you think the odds are that somebody with the last name Trump is on the general election ballot? Do you think they are any worse than one in three? I think probably a little worse than one in three. I think, yeah, probably a little worse than one in three, but sure. I mean, I don't know. Do you think it's one in 10? Yeah, probably. Yeah, 10%. Okay. I think it's sizeably more than that myself. Like, I just, I don't know, man. Do I just, does a VP count, if it's, if the VP does account, like if it's JD Ivanka, does that count? JD on junior? Does that count in the 10th? Yeah, I would count that. Okay. And having a Trump family is a constitutionally elected member of the, I'd say a little higher than 10% then. Yeah. Yeah. I just think it's, it's possible. All right. Not great, Bob. I want to close with something to make everybody's belly warm. And that is, GVL, it's been a couple of years ago now, time flies when you haven't fun. I don't remember exactly when it was, but you got into a little bit of a tiff. We were screaming about, I believe it was no labels at the time. I believe it was Nancy Jacobson. And I don't even remember what the offense was anymore. There was so many offenses by all of these people sideling up to Trump over the years. But you were ranting about how they should be shunned. They should never be able to have a table at Spago again. And yes, that, that really upset everybody. And I'm going to tell you, I read a story this morning in the New York Times, Jodie Cantor. I've had on the show, great journalist. She was writing about John Roberts' summer life in Maine. And it seems like the people in his community have taken on kind of a JVL-ish spirit. And a Spago shunning is happening on the coast of Maine. My favorite anecdote from the story was this, calling themselves kayaktivists because they're in kayaks. The locals form flotillas facing John Roberts' island home, holding waterproof signs conveying their disappointment. John used to go to, you know, whatever, what did people do in Maine? I'm not really a Maine person, they, you know, have lobster. They have lobster. They go to the rocky shore to take their boat out, right? Yeah. But that made us people have some lobster rolls. Take some blueberries. In season. Yeah, sure. And he used to be invited to these sorts of things, and it seems like now he's not getting invited anymore to the, to the backyard lobster roll picnic and, and he's being seized at home. He has to have more security. So shunning is happening of the chief justice that's really important, is wondering, doesn't it? Yeah. The security stuff doesn't. I don't think people should face physical threats. But here's the thing. If you don't have shame, then everything in a society has to be regulated by law, and that's just not possible. And if it were possible, we wouldn't want it, right? I mean, nobody wants to live in a world where all good behavior and societal norms are carried out by law, which means that the, you know, the barrel of a gun. And so if you're going to have a society in which civic virtue plays a part in which there are a bunch of shared norms, like for instance, you shouldn't make your son-in-law the guy saddling peace talks during a war you started, or you shouldn't threaten to demolish the Kennedy Center, or you shouldn't accept a $300 million plane or your son-in-law shouldn't get $2 billion. I mean, if you want to live in a world where those things don't have the law, so to speak. No one is above the law, right? You can't legislate all those things. So there has to be a sense of shame so that people don't do those things, not because it's illegal, but because they realize, A, this is wrong and bad, and B, there will be social consequences for me if I did. And I am happy that John Roberts is getting some social consequences. Some people might say that like, you know, he's not the worst on the court and they've, they've bucked Trump on a few things. That's true. He does buck Trump on a few things. On the other hand, he did create presidential immunity. Yeah. That's kind of a mess. That's kind of a, kind of a big deal. Yeah. I don't know, man. I mean, to say that Roberts isn't Alito. It's like I guess, yeah, sure, but I'm sure he could hang out over there. I'm sure Martha and would have him over I mean nobody wants to hang out with Martha and Alito, but Unfortunately, that's kind of the consequences of your actions. All right Jonathan Mariano Thank you so much. I appreciate it everybody go reward Jonathan by subscribing to the triad newsletter and reading it and sharing What the friend share it with a friend that you think might be interested in the oil price shock or if you have a friend Who's more into kind of dystopia? Maybe wait till tomorrow's try out and share the stocks at AI one We'd appreciate that very much and I'll be back tomorrow With one of the pod bros you can guys you guys can guess which one we'll see you all that piece The world that you keep You The bowl work daily is brought to you. Thanks for the work of lead producer Katie Cooper associate producer Anzali Skipper and with video editing by Dante DeCicco and audio engineering and editing by Jason Brown