1 00:00:02,200 --> 00:00:06,760 Speaker 1: This is Master's in Business with Barry Riddholts on Bloomberg Radio. 2 00:00:07,160 --> 00:00:10,400 Speaker 1: This week on the podcast, I have an extra special guest. 3 00:00:10,480 --> 00:00:15,120 Speaker 1: What can I say? Robert Schiller is a legend professor 4 00:00:15,160 --> 00:00:19,640 Speaker 1: at Yale, Nobel laureate, author of ten books, one of 5 00:00:19,680 --> 00:00:24,040 Speaker 1: the people who helped drive behavioral economics to its position 6 00:00:24,280 --> 00:00:28,600 Speaker 1: of influence today. His new book Narrative Economics tells the 7 00:00:28,680 --> 00:00:33,639 Speaker 1: fascinating story of how stories drive markets and economies, and 8 00:00:33,800 --> 00:00:38,360 Speaker 1: why some stories go viral and others don't. It's quite fascinating. 9 00:00:38,680 --> 00:00:42,240 Speaker 1: I could babble for all this time about how fascinating 10 00:00:42,240 --> 00:00:44,120 Speaker 1: it was to chat with him, But rather than me 11 00:00:44,200 --> 00:00:47,000 Speaker 1: do that, let me just say, with no further ado, 12 00:00:47,280 --> 00:00:52,400 Speaker 1: my conversation with Professor Robert Schiller. This is Master's in 13 00:00:52,479 --> 00:00:57,480 Speaker 1: Business with Barry Ridholts on Bloomberg Radio. My extra special 14 00:00:57,480 --> 00:01:01,120 Speaker 1: guest this week is Robert Schiller. He is a professor 15 00:01:01,160 --> 00:01:04,920 Speaker 1: of economics at Yale University. He won the Nobel Prize 16 00:01:04,959 --> 00:01:09,720 Speaker 1: for his empirical analysis of asset prices in He is 17 00:01:09,800 --> 00:01:15,280 Speaker 1: perhaps best known for the cyclically adjusted pe ratio, the 18 00:01:15,400 --> 00:01:19,920 Speaker 1: Case Shiller Housing Index, all sorts of works in behavioral 19 00:01:19,920 --> 00:01:24,080 Speaker 1: economics as well as the author of numerous books, most 20 00:01:24,160 --> 00:01:30,000 Speaker 1: recently Narrative Economics, How stories go viral and drive major 21 00:01:30,000 --> 00:01:34,920 Speaker 1: economic events. Bob Schiller, Welcome to Bloomberg. Very it's a pleasure. 22 00:01:35,840 --> 00:01:38,840 Speaker 1: So it's funny that you, of all people, wrote this 23 00:01:38,920 --> 00:01:43,360 Speaker 1: book when when I think of narratives in the context 24 00:01:43,400 --> 00:01:47,520 Speaker 1: of behavioral economics, I tend to think of the stories 25 00:01:47,560 --> 00:01:52,840 Speaker 1: that investors tell themselves to either rationalize buying a company 26 00:01:53,000 --> 00:01:57,400 Speaker 1: or not selling something that didn't work out. And you 27 00:01:57,480 --> 00:02:00,480 Speaker 1: seem to have taken this to a different direct. Your 28 00:02:00,520 --> 00:02:05,880 Speaker 1: thesis is narratives has a very big impact on markets 29 00:02:05,920 --> 00:02:09,320 Speaker 1: and the economy. Is that different from your prior work 30 00:02:09,440 --> 00:02:12,200 Speaker 1: or is this consistent? I wrote a book in two 31 00:02:12,200 --> 00:02:16,720 Speaker 1: thousand called Irrational Exuberance, which focused on well, I didn't 32 00:02:16,800 --> 00:02:18,880 Speaker 1: use the word narrative a lot, but it was the 33 00:02:18,919 --> 00:02:22,600 Speaker 1: effect of narratives on the stock market. I've decided it's 34 00:02:22,639 --> 00:02:26,440 Speaker 1: bigger than that. It extends to the whole economy, and 35 00:02:26,919 --> 00:02:29,760 Speaker 1: a lot of people know about the importance of narratives, 36 00:02:29,760 --> 00:02:34,160 Speaker 1: but economists mostly don't. So it's it's trying to bring 37 00:02:34,760 --> 00:02:37,200 Speaker 1: the study of narratives into economics because I think it 38 00:02:37,639 --> 00:02:40,640 Speaker 1: matters for the big events that we we see And 39 00:02:40,680 --> 00:02:44,960 Speaker 1: in the book you describe how other fields use narratives 40 00:02:45,120 --> 00:02:48,560 Speaker 1: pretty robustly as a way of either explaining what happened 41 00:02:48,919 --> 00:02:52,799 Speaker 1: or why something happened. Why why has economics been so 42 00:02:53,600 --> 00:02:56,160 Speaker 1: behind the times with this, Well, I don't exactly know 43 00:02:56,320 --> 00:02:59,120 Speaker 1: why it is so different. It has something to do 44 00:02:59,200 --> 00:03:02,880 Speaker 1: with a a spree decor and a department of economics 45 00:03:02,880 --> 00:03:08,160 Speaker 1: and finance that is built around this maximizing framework that 46 00:03:08,240 --> 00:03:11,880 Speaker 1: that people we don't describe their behavior, we describe their 47 00:03:11,880 --> 00:03:17,600 Speaker 1: objectives and assume that they're maximizing. They're expected success with 48 00:03:17,720 --> 00:03:21,800 Speaker 1: these objectives. And there's a reason for that in economics 49 00:03:21,840 --> 00:03:26,960 Speaker 1: that often people know something that we uh that that 50 00:03:27,120 --> 00:03:30,360 Speaker 1: is guiding their actions, and we better figure out what 51 00:03:30,400 --> 00:03:33,720 Speaker 1: that is. And so I think there's that is an 52 00:03:33,760 --> 00:03:39,040 Speaker 1: interesting direction that economics has taken. And uh it leads 53 00:03:39,160 --> 00:03:43,880 Speaker 1: us to things like the optimality of market solutions. UH. 54 00:03:43,920 --> 00:03:47,720 Speaker 1: And so it's become it's great, but it's also become 55 00:03:47,800 --> 00:03:51,720 Speaker 1: something of a religion. UH. And it has blocked people 56 00:03:51,760 --> 00:03:57,120 Speaker 1: seeing the obvious. So homo economists people being profit maximizers. 57 00:03:57,240 --> 00:04:00,800 Speaker 1: I assume you're not really a big believer that that 58 00:04:00,920 --> 00:04:04,480 Speaker 1: is the dominant narrative all the time. It's not the 59 00:04:04,600 --> 00:04:09,640 Speaker 1: dominant narrative all the time. And human mind is very capricious, 60 00:04:09,960 --> 00:04:13,920 Speaker 1: and it jumps from narrative to narrative, and it's socially determined. 61 00:04:13,920 --> 00:04:17,640 Speaker 1: It's not just narratives I tell myself. It's important that 62 00:04:17,680 --> 00:04:20,719 Speaker 1: I tell them to others and they can spread virally. 63 00:04:21,040 --> 00:04:25,599 Speaker 1: So that leads to the question about social media. How 64 00:04:25,640 --> 00:04:31,159 Speaker 1: important is the modern era of fill in the blank, Facebook, Twitter, Instagram, 65 00:04:31,240 --> 00:04:36,680 Speaker 1: whatever to economic and market stories going viral? Well, it 66 00:04:36,760 --> 00:04:41,200 Speaker 1: changes this the scenario, but we did have stories going 67 00:04:41,320 --> 00:04:45,200 Speaker 1: viral thousands of years ago through word of mouth, the 68 00:04:45,240 --> 00:04:48,360 Speaker 1: same way viruses go viral from person to person with 69 00:04:48,400 --> 00:04:53,040 Speaker 1: no intermediary. That's how you catch a disease. Usually you 70 00:04:53,400 --> 00:04:56,560 Speaker 1: meet someone and it spreads from one person to another. 71 00:04:56,720 --> 00:04:59,760 Speaker 1: So it's capable of producing big epidemics. Now it might 72 00:05:00,000 --> 00:05:03,560 Speaker 1: beat them up. It also allows more polarity. It allows 73 00:05:03,600 --> 00:05:07,479 Speaker 1: people to find similarly oriented people and so you might 74 00:05:07,560 --> 00:05:11,680 Speaker 1: see more diversity and views that come about because of 75 00:05:12,360 --> 00:05:14,760 Speaker 1: So I think we have to study the effect of 76 00:05:15,240 --> 00:05:21,760 Speaker 1: social media and other internet programs. But fundamentally, narratives have 77 00:05:21,880 --> 00:05:26,560 Speaker 1: been important in driving the economy. Going back Middllennia. All right, 78 00:05:26,640 --> 00:05:29,280 Speaker 1: so let's talk about some big events, and I want 79 00:05:29,279 --> 00:05:34,719 Speaker 1: to get your feedback as to how various memes impacted them. 80 00:05:34,760 --> 00:05:37,640 Speaker 1: There seem to have been a number of narratives around 81 00:05:37,680 --> 00:05:40,479 Speaker 1: the Great Recession and the credit crisis. The one that 82 00:05:40,560 --> 00:05:44,760 Speaker 1: I remember distinctly home prices never go down. It turned 83 00:05:44,800 --> 00:05:48,360 Speaker 1: out not to be the case. How important were narrative 84 00:05:48,400 --> 00:05:51,640 Speaker 1: economics to the build up to the crisis as well 85 00:05:51,680 --> 00:05:55,960 Speaker 1: as the subsequent collapse. I think home prices that was 86 00:05:56,000 --> 00:05:58,279 Speaker 1: a major cause of the crisis, but we might have 87 00:05:58,320 --> 00:06:00,240 Speaker 1: still had a recession, but it wouldn't have been so 88 00:06:00,279 --> 00:06:02,880 Speaker 1: bad without that. I want to know what I'm interested 89 00:06:02,880 --> 00:06:06,880 Speaker 1: in the big events, and often it's contributing factors that 90 00:06:06,920 --> 00:06:10,320 Speaker 1: make them big. So the idea that homes are a 91 00:06:10,360 --> 00:06:13,760 Speaker 1: great investment, it wasn't so much that people were saying 92 00:06:14,040 --> 00:06:17,200 Speaker 1: home prices never go down. It's that they didn't pay 93 00:06:17,240 --> 00:06:19,440 Speaker 1: any attention to the thought that they might go down. 94 00:06:20,000 --> 00:06:23,280 Speaker 1: I remember I was on stage and in a event 95 00:06:24,120 --> 00:06:28,280 Speaker 1: around two thousand five, two thousand six, and I asked 96 00:06:28,760 --> 00:06:31,320 Speaker 1: a businessman who was on the panel with me, what 97 00:06:31,400 --> 00:06:34,320 Speaker 1: if home piss go down in front of an audience 98 00:06:34,520 --> 00:06:37,400 Speaker 1: and He seemed perplexed. But what are you talking about. 99 00:06:37,720 --> 00:06:40,479 Speaker 1: It's not like he was just saying that they never 100 00:06:40,520 --> 00:06:43,400 Speaker 1: go down. But he said they have. They've never gone down, 101 00:06:43,600 --> 00:06:46,120 Speaker 1: not since of the Great Depression. And I said, well, 102 00:06:46,120 --> 00:06:48,680 Speaker 1: what if that happens again? And he was kind of 103 00:06:48,720 --> 00:06:52,000 Speaker 1: making me look crazy. He couldn't even conceive of the 104 00:06:52,120 --> 00:06:55,440 Speaker 1: idea that prices might fall. Well, when you haven't seen 105 00:06:55,480 --> 00:06:59,240 Speaker 1: them fall substantially since the Great Depression, maybe that's forgivable. 106 00:07:00,000 --> 00:07:03,080 Speaker 1: It didn't. We see a decrease in prices late late 107 00:07:03,080 --> 00:07:07,200 Speaker 1: eighties after the eighties seven crash, and rates had gone up. 108 00:07:07,240 --> 00:07:10,520 Speaker 1: So it's not like it's two generations ago. It was 109 00:07:10,720 --> 00:07:13,480 Speaker 1: thirty years ago. If you're a fifty something, you're a 110 00:07:13,640 --> 00:07:15,760 Speaker 1: business person, that should be in Europe. But it's not 111 00:07:15,880 --> 00:07:19,000 Speaker 1: in the narrative. It's not being talked about. We can 112 00:07:19,040 --> 00:07:23,280 Speaker 1: forget things like, for example, the stock market crash of seven. 113 00:07:23,840 --> 00:07:27,680 Speaker 1: That's a little over thirty years ago. But my students 114 00:07:27,680 --> 00:07:30,200 Speaker 1: don't know anything but never heard of it. What about 115 00:07:30,200 --> 00:07:33,400 Speaker 1: the dot com crash or the O eight oh nine collapse. 116 00:07:33,840 --> 00:07:36,280 Speaker 1: It's got to be a little fresh now. Yeah, well, 117 00:07:36,560 --> 00:07:39,000 Speaker 1: the dot com crash was in the future, in the 118 00:07:39,040 --> 00:07:44,400 Speaker 1: event that I'm describing. But people know about things that 119 00:07:44,440 --> 00:07:48,320 Speaker 1: are that are popular, and the crash is the one 120 00:07:48,360 --> 00:07:52,560 Speaker 1: that everyone remembers. Other ones more recently, how about the 121 00:07:53,440 --> 00:07:59,040 Speaker 1: six crash or yeah, well it was like one day 122 00:07:59,120 --> 00:08:02,280 Speaker 1: there was a six percent drop. Nobody remembers. I mean 123 00:08:02,280 --> 00:08:05,000 Speaker 1: maybe you remember. I don't remember that. That's before my time. 124 00:08:06,040 --> 00:08:08,800 Speaker 1: So let's talk about another big event. Let's let's talk 125 00:08:08,840 --> 00:08:11,800 Speaker 1: about the gold standard. The US for a long time 126 00:08:11,880 --> 00:08:14,880 Speaker 1: was on the gold standard, then we were off. President 127 00:08:14,880 --> 00:08:17,400 Speaker 1: Trump has talked about going back to the gold standard. 128 00:08:17,920 --> 00:08:20,440 Speaker 1: This seems to rise and fall over time. What what 129 00:08:20,600 --> 00:08:24,920 Speaker 1: drives that? Well? I think that what drives narratives is 130 00:08:24,960 --> 00:08:29,160 Speaker 1: a certain creativity that some people have at some moments 131 00:08:29,240 --> 00:08:33,480 Speaker 1: in their lives to invent a story. Uh. And this 132 00:08:33,559 --> 00:08:38,000 Speaker 1: is something that literature department studied economists don't What is it? 133 00:08:38,360 --> 00:08:42,440 Speaker 1: What is it about a story that works? Uh? You know, 134 00:08:42,600 --> 00:08:46,679 Speaker 1: often are I think our attention to ideas is focused 135 00:08:46,760 --> 00:08:50,640 Speaker 1: by the kind of stories that accompany them. Um So 136 00:08:50,679 --> 00:08:55,360 Speaker 1: I thought, for example, and it it there's something about 137 00:08:55,960 --> 00:09:03,160 Speaker 1: visual impact, imagery, something about human interest, something about emotions 138 00:09:03,240 --> 00:09:08,240 Speaker 1: being driven up, uh, something about tie into other stories 139 00:09:08,240 --> 00:09:11,840 Speaker 1: that you already liked uh that the creative art of 140 00:09:11,920 --> 00:09:17,600 Speaker 1: a writer can sometimes surmount and and use and create 141 00:09:17,640 --> 00:09:20,640 Speaker 1: a narrative that will really go viral. It's a difficult 142 00:09:20,720 --> 00:09:24,720 Speaker 1: thing to do. It's it's similar with music. Some music 143 00:09:24,880 --> 00:09:28,800 Speaker 1: goes viral and some doesn't. I think it's it's somewhat random. 144 00:09:28,880 --> 00:09:33,000 Speaker 1: Something gets started and it becomes developed certain associations, and 145 00:09:33,000 --> 00:09:36,079 Speaker 1: then everyone is talking about It has to be right time, 146 00:09:36,200 --> 00:09:39,840 Speaker 1: right place, and just a little bit of luck, uh, 147 00:09:39,880 --> 00:09:44,480 Speaker 1: and maybe requires perfection. So the most the most famous 148 00:09:44,559 --> 00:09:47,800 Speaker 1: listen in the arts, where it's not exactly is sort 149 00:09:47,800 --> 00:09:51,880 Speaker 1: of there. The ballet the Nutcracker. That's the most famous 150 00:09:51,960 --> 00:09:55,600 Speaker 1: ballet in the entire world. It's it's everywhere. But when 151 00:09:55,600 --> 00:10:00,560 Speaker 1: Tchaikovsky first wrote it in it wasn't a big success. 152 00:10:01,080 --> 00:10:04,680 Speaker 1: He had to work at it, uh. And then um, 153 00:10:04,720 --> 00:10:08,599 Speaker 1: it came over to the US and George Ballantine, the 154 00:10:08,720 --> 00:10:13,520 Speaker 1: ballet writer, the ballet director, fixed it, made it into 155 00:10:13,880 --> 00:10:18,679 Speaker 1: a really beautiful ballet, and so it has now gone 156 00:10:18,800 --> 00:10:23,320 Speaker 1: viral and it's we love this ballet. People who don't 157 00:10:23,320 --> 00:10:27,719 Speaker 1: like ballet will go to that one and repeatedly. So 158 00:10:27,720 --> 00:10:30,640 Speaker 1: so there was something about it that that Tchaikovsky had 159 00:10:30,679 --> 00:10:34,480 Speaker 1: an idea. He couldn't quite get it at first, and 160 00:10:34,559 --> 00:10:39,800 Speaker 1: it involved little details that make it somehow work eventually 161 00:10:40,120 --> 00:10:42,960 Speaker 1: be bringing the children. You have to emphasize the children, 162 00:10:43,280 --> 00:10:47,080 Speaker 1: and people love to see children blossoming on stage in 163 00:10:47,120 --> 00:10:51,400 Speaker 1: front of them. So because it's a Christmas themes and 164 00:10:51,400 --> 00:10:54,520 Speaker 1: it's also ties into anything else, and that there's an 165 00:10:54,559 --> 00:10:57,600 Speaker 1: annual prompt to do it, to see it again, so 166 00:10:57,679 --> 00:11:00,720 Speaker 1: a lot of people go every Christmas. Now this isn't 167 00:11:00,720 --> 00:11:03,320 Speaker 1: really an economic narrative. I'm doing a little bit different, 168 00:11:03,320 --> 00:11:06,600 Speaker 1: but it's the same idea that there that the and 169 00:11:06,640 --> 00:11:09,560 Speaker 1: what's so special about that story or any other story? 170 00:11:10,320 --> 00:11:14,920 Speaker 1: Something clicked in and it's just universal. Sorry, by the way, 171 00:11:15,080 --> 00:11:17,760 Speaker 1: have you seen the nutcra I recommend you go see 172 00:11:17,760 --> 00:11:21,640 Speaker 1: it if you haven't. Them. The story you're telling about 173 00:11:21,760 --> 00:11:25,320 Speaker 1: how that when viral reminds me a little bit of 174 00:11:26,040 --> 00:11:29,559 Speaker 1: Derrick Thompson writes for The Atlantic and wrote a book 175 00:11:29,679 --> 00:11:33,400 Speaker 1: How HiT's Happened, and he talks about a number of paintings, 176 00:11:34,040 --> 00:11:37,040 Speaker 1: including all of the Impressionists. It's really a sort of 177 00:11:37,040 --> 00:11:42,720 Speaker 1: fascinating coincidence how a certain group of Impressionists became worldwide 178 00:11:42,720 --> 00:11:46,960 Speaker 1: famous because one of them were collecting other Impressionists work, 179 00:11:47,679 --> 00:11:51,280 Speaker 1: left it in their estate to the French Um, one 180 00:11:51,280 --> 00:11:53,560 Speaker 1: of the French museums, and part of the will was 181 00:11:53,600 --> 00:11:57,280 Speaker 1: it how to be displayed. So suddenly just a group 182 00:11:57,440 --> 00:12:00,960 Speaker 1: of a new style of art that wasn't popular anywhere else, 183 00:12:01,400 --> 00:12:04,520 Speaker 1: and a group of seven or eight artists became worldwide famous. 184 00:12:04,840 --> 00:12:08,720 Speaker 1: Same sort of thing, very serendipitous, very random. This reminds 185 00:12:08,720 --> 00:12:11,480 Speaker 1: me of a book that influenced me a lot years ago. 186 00:12:11,880 --> 00:12:15,240 Speaker 1: It's called The Painted Word by Thomas Wolfe. It's a 187 00:12:15,280 --> 00:12:18,319 Speaker 1: similar theme. He claims that a lot of modern art 188 00:12:18,880 --> 00:12:22,319 Speaker 1: is not the quality of it isn't recognizable just by 189 00:12:22,360 --> 00:12:25,880 Speaker 1: looking at it. You have to read the reviewers, the critics, 190 00:12:26,480 --> 00:12:29,880 Speaker 1: and they will tell weave it into a story. Then 191 00:12:29,880 --> 00:12:31,520 Speaker 1: when you go back and look at it, you love 192 00:12:31,600 --> 00:12:36,280 Speaker 1: this painting. The story wouldn't have known. Quite interesting. Let's 193 00:12:36,320 --> 00:12:39,320 Speaker 1: talk a little bit about the world of economics and 194 00:12:39,400 --> 00:12:43,080 Speaker 1: some of the things that either do or don't go viral. 195 00:12:43,679 --> 00:12:46,320 Speaker 1: In the book, you write about the Laugher curve, which 196 00:12:46,360 --> 00:12:50,160 Speaker 1: I've always thought of as having an element of truth, 197 00:12:50,280 --> 00:12:53,439 Speaker 1: that there has to be some optimal tax rate that 198 00:12:53,480 --> 00:12:57,199 Speaker 1: maximizes revenues. But the way it seems to have been applied. 199 00:12:57,600 --> 00:13:01,160 Speaker 1: Is let's just call it contraindicate did It was a 200 00:13:01,200 --> 00:13:06,880 Speaker 1: disaster in Kansas. It had terrible effects. So so why 201 00:13:06,920 --> 00:13:11,120 Speaker 1: did the Laugher curve go viral? And why are people 202 00:13:11,120 --> 00:13:15,200 Speaker 1: so willing to overlook some of the downsides of it? Well, 203 00:13:15,240 --> 00:13:18,040 Speaker 1: I have only a partial understanding why it went viral. 204 00:13:18,440 --> 00:13:21,240 Speaker 1: I compare it with the Rubik's cube, which went viral 205 00:13:21,280 --> 00:13:24,520 Speaker 1: at the same time in the book during Reagan sterm Right, 206 00:13:24,960 --> 00:13:27,160 Speaker 1: and so why did Rubik's cube go viral? It's just 207 00:13:27,240 --> 00:13:30,400 Speaker 1: a puzzle, right, and it was it was the right 208 00:13:30,400 --> 00:13:34,240 Speaker 1: story was told about it. Huh, and that was thought 209 00:13:34,280 --> 00:13:38,559 Speaker 1: to be um, somehow deep and important. An obscure mathematician 210 00:13:38,600 --> 00:13:44,320 Speaker 1: had created this uh engineer, right, and that's a narrative, 211 00:13:45,600 --> 00:13:48,720 Speaker 1: just those two words Hungarian engineer at the time when 212 00:13:48,720 --> 00:13:53,600 Speaker 1: we were still had Eastern blocked countries behind the iron curtain. Right, 213 00:13:53,640 --> 00:13:57,680 Speaker 1: so all these things, Uh, it may not work again today. 214 00:13:58,440 --> 00:14:02,600 Speaker 1: Hungary has a different story about it now. But I 215 00:14:02,600 --> 00:14:05,920 Speaker 1: mean the laughter curve also, there's a little story associated 216 00:14:05,920 --> 00:14:09,239 Speaker 1: with it. It's the story of art Laugher and economist 217 00:14:09,679 --> 00:14:15,520 Speaker 1: at dinner at the Two Continents restaurant in Washington fancy restaurant, 218 00:14:16,000 --> 00:14:19,800 Speaker 1: and he drew on a napkin a diagram illustrating his theory. 219 00:14:20,880 --> 00:14:26,120 Speaker 1: Everyone remembers this napkin. I wonder that's just an irrelevant detail. 220 00:14:27,360 --> 00:14:30,360 Speaker 1: But but but somehow it presents the theory is something 221 00:14:30,440 --> 00:14:33,520 Speaker 1: that ought to be obvious. It's also this sort of 222 00:14:33,640 --> 00:14:36,200 Speaker 1: virgin birth that he whips out a pan and starts 223 00:14:36,240 --> 00:14:40,880 Speaker 1: doodling and says, here's where we optimize tax revenues. That 224 00:14:40,960 --> 00:14:45,520 Speaker 1: makes what otherwise would be a fairly dry thesis very 225 00:14:45,520 --> 00:14:49,080 Speaker 1: compelling and very visual. Yeah, it's it's almost like a joke. 226 00:14:49,200 --> 00:14:51,360 Speaker 1: I mean, it has a punchline that that diagram is 227 00:14:51,400 --> 00:14:54,520 Speaker 1: the punchline, because it says that there's always two tax 228 00:14:54,600 --> 00:14:57,560 Speaker 1: rates to reach any revenue, and one of them dominates 229 00:14:57,600 --> 00:15:00,360 Speaker 1: the other. And it's kind of something you can explained 230 00:15:00,400 --> 00:15:05,920 Speaker 1: fairly quickly. Uh. And it's pungy. Yeah, it definitely is. 231 00:15:05,960 --> 00:15:10,240 Speaker 1: So that kind of raises a question in general about 232 00:15:11,040 --> 00:15:16,040 Speaker 1: narratives and the economy, which which came first, specifically our 233 00:15:16,040 --> 00:15:19,520 Speaker 1: stories driving the economy or is the state of the 234 00:15:19,560 --> 00:15:23,960 Speaker 1: economy driving the narratives people used to explain it. Well, 235 00:15:24,000 --> 00:15:27,160 Speaker 1: I'm not an extremist on the answer to that economists 236 00:15:27,160 --> 00:15:29,600 Speaker 1: are an extremist ec I must say it goes only 237 00:15:29,720 --> 00:15:33,000 Speaker 1: one way from the economy to the story. So we 238 00:15:33,000 --> 00:15:35,320 Speaker 1: can just forget that. We don't care about the story. 239 00:15:35,440 --> 00:15:38,040 Speaker 1: That's just trivia. You look at causation a little different. 240 00:15:38,120 --> 00:15:42,560 Speaker 1: I think it goes both ways, and so uh. It 241 00:15:42,640 --> 00:15:47,160 Speaker 1: also interacts with another kind of feedback, which is the 242 00:15:47,240 --> 00:15:51,400 Speaker 1: multiple rounds of expenditure. If you mean, if the government 243 00:15:51,440 --> 00:15:55,600 Speaker 1: spends money, that becomes somebody's income, and that person spends 244 00:15:55,680 --> 00:15:59,320 Speaker 1: some of that and that becomes someone else's income. This 245 00:15:59,480 --> 00:16:03,160 Speaker 1: economy have loved this ever since John Maynard Keynes in 246 00:16:03,200 --> 00:16:06,520 Speaker 1: the thirties. But that that isn't the only kind of 247 00:16:07,200 --> 00:16:10,840 Speaker 1: feedback that's occurring. The other kind of feedback is verbal 248 00:16:10,920 --> 00:16:13,920 Speaker 1: from person to person spreading a story. And I think 249 00:16:13,960 --> 00:16:19,280 Speaker 1: these two feedbacks interact. This is something for further research someday, 250 00:16:19,320 --> 00:16:22,360 Speaker 1: but I mean, qualitatively, I can say what's happening. The 251 00:16:22,360 --> 00:16:25,200 Speaker 1: the great recession that we just went through ten years 252 00:16:25,200 --> 00:16:30,000 Speaker 1: ago was partly the result of the standard Keynesian multiplier, 253 00:16:30,480 --> 00:16:35,000 Speaker 1: but it was also just people telling stories. It resurrected 254 00:16:35,040 --> 00:16:37,720 Speaker 1: the story of the Great Depression, and you can see 255 00:16:37,760 --> 00:16:42,840 Speaker 1: that in Google trends or other other ways of I 256 00:16:42,880 --> 00:16:45,960 Speaker 1: do with various kinds of searches. There was a huge 257 00:16:46,760 --> 00:16:53,000 Speaker 1: impact of the Great Depression stock market crash that suddenly 258 00:16:53,000 --> 00:16:56,680 Speaker 1: became vivid like this is happening again. Well, that's interesting 259 00:16:56,720 --> 00:17:02,000 Speaker 1: because during the let's call it two to oh seven 260 00:17:02,000 --> 00:17:05,040 Speaker 1: early oh eight period, it seemed that a lot of 261 00:17:05,080 --> 00:17:07,560 Speaker 1: the stories were, hey, you can make a ton of 262 00:17:07,600 --> 00:17:11,679 Speaker 1: money just buying houses and flipping it, and people's greed 263 00:17:11,760 --> 00:17:14,639 Speaker 1: monster got stirred up. Hey my neighbors making all this 264 00:17:14,720 --> 00:17:17,720 Speaker 1: money buying and selling houses. I can also how much 265 00:17:17,720 --> 00:17:21,359 Speaker 1: of that is also narrative um viral e going from 266 00:17:21,359 --> 00:17:24,639 Speaker 1: one person to the next. Actually, the term flipping houses 267 00:17:25,720 --> 00:17:29,040 Speaker 1: began to appear near the end of the moon. It 268 00:17:29,080 --> 00:17:33,080 Speaker 1: was often used pejoratively it was crazy that this is 269 00:17:33,119 --> 00:17:37,400 Speaker 1: getting crazy, And it started to appear around two thousand five, 270 00:17:37,760 --> 00:17:41,040 Speaker 1: a couple of years or three years before the recession 271 00:17:41,119 --> 00:17:44,200 Speaker 1: really hit. Do you recall when some of the shows 272 00:17:44,240 --> 00:17:48,800 Speaker 1: started showing up on HDTV and those channels flipped this 273 00:17:48,920 --> 00:17:52,560 Speaker 1: house and it was a run of buy a house, 274 00:17:52,600 --> 00:17:55,400 Speaker 1: fixed up cell at television shows. I think the first 275 00:17:55,440 --> 00:17:58,800 Speaker 1: one was Property Louder in the UK, and then that 276 00:17:58,880 --> 00:18:02,760 Speaker 1: was such a success will show it's it displayed flippers. 277 00:18:03,080 --> 00:18:04,920 Speaker 1: I don't know if it called them flippers, but it 278 00:18:05,040 --> 00:18:07,639 Speaker 1: displayed people who bought a house, fixed it up a 279 00:18:07,640 --> 00:18:12,120 Speaker 1: little bit, used their interior decorating instincts, and then made 280 00:18:12,119 --> 00:18:17,440 Speaker 1: a lot of money fast. That was a powerful narrative because, 281 00:18:17,800 --> 00:18:19,679 Speaker 1: first of all, it feeds your ego. A lot of 282 00:18:19,680 --> 00:18:23,600 Speaker 1: people are decorating their own home and they think they're 283 00:18:23,600 --> 00:18:26,760 Speaker 1: pretty good. Aht it. Even Donald Trump thinks he's pretty 284 00:18:26,760 --> 00:18:33,440 Speaker 1: good decorating hotels. Um, So that's what that's the source 285 00:18:33,480 --> 00:18:38,320 Speaker 1: of ego gratification. And justifiably, some of these people are talented. 286 00:18:38,600 --> 00:18:41,520 Speaker 1: So but that doesn't mean that it's their talent that's 287 00:18:41,560 --> 00:18:45,280 Speaker 1: creating the profits. It's the housing bubble that's creating the profits. 288 00:18:45,320 --> 00:18:49,440 Speaker 1: And people find it difficult to think logically and rationally 289 00:18:49,480 --> 00:18:52,879 Speaker 1: about did I have this success because I'm smart art? 290 00:18:52,960 --> 00:18:55,480 Speaker 1: Was it just chance? Just just a little bit of Look, 291 00:18:55,840 --> 00:18:59,760 Speaker 1: let's let's discuss fake news. In the book you wrote 292 00:19:00,359 --> 00:19:04,840 Speaker 1: quote the brain over time forgets that it once deemed 293 00:19:04,880 --> 00:19:10,480 Speaker 1: stories unreliable. Explain what that means. Uh? Yeah, the way 294 00:19:10,480 --> 00:19:13,159 Speaker 1: the brain you you remember stories that you heard in 295 00:19:13,200 --> 00:19:17,919 Speaker 1: the past as a story, and you don't always have 296 00:19:18,440 --> 00:19:21,240 Speaker 1: well tied to that story in the linkages in your brain. 297 00:19:21,680 --> 00:19:24,359 Speaker 1: What is the source of this story and is it 298 00:19:24,400 --> 00:19:29,719 Speaker 1: a reliable source? So the source connection is somewhat weak. 299 00:19:30,800 --> 00:19:32,879 Speaker 1: You have to remember where you heard the story if 300 00:19:32,880 --> 00:19:34,880 Speaker 1: you're if you're gonna be telling the truth all the time, 301 00:19:35,320 --> 00:19:37,040 Speaker 1: and we try to do that, but I think there's 302 00:19:37,080 --> 00:19:39,919 Speaker 1: a human defect. So you just don't remember where you 303 00:19:40,000 --> 00:19:43,680 Speaker 1: heard a story, but you're in casual conversation with somebody, 304 00:19:43,840 --> 00:19:45,720 Speaker 1: what difference does it make? You know, I might be 305 00:19:45,760 --> 00:19:48,959 Speaker 1: telling a story that's not right, but it's a good story, 306 00:19:49,400 --> 00:19:51,159 Speaker 1: and I'm not you know, I'm not saying this in 307 00:19:51,240 --> 00:19:55,000 Speaker 1: bad faith. I'm not trying to deceive anyone. Nobody really 308 00:19:55,000 --> 00:19:58,199 Speaker 1: knows what the actual truth is. So all kinds of 309 00:19:58,440 --> 00:20:02,440 Speaker 1: untruthful stories bread, viral, e and it isn't anyone's ill 310 00:20:02,520 --> 00:20:06,280 Speaker 1: will that that accomplishes that. You You also explain in 311 00:20:06,320 --> 00:20:09,800 Speaker 1: the book that quote truth is not enough to stop 312 00:20:09,880 --> 00:20:15,040 Speaker 1: false narratives. So that raises two questions. First is why not? 313 00:20:15,359 --> 00:20:19,120 Speaker 1: And second, if truth doesn't stop a false narrative, what 314 00:20:19,200 --> 00:20:23,639 Speaker 1: does well? It does often stop false narratives, So I 315 00:20:23,680 --> 00:20:28,840 Speaker 1: don't it's not all together, but The problem with theories 316 00:20:29,320 --> 00:20:34,439 Speaker 1: are narratives that counter a false narrative is that they 317 00:20:34,520 --> 00:20:37,920 Speaker 1: might not be contagious. It's just not fun, not as compelling. 318 00:20:38,080 --> 00:20:42,639 Speaker 1: So we people can like to entertain each other in conversations. 319 00:20:43,359 --> 00:20:46,159 Speaker 1: So if if I told you dramatically that something you 320 00:20:46,200 --> 00:20:50,560 Speaker 1: believe was wrong, you might find that entertaining. But typically, 321 00:20:50,600 --> 00:20:54,160 Speaker 1: you know, you heard some stories somewhere and it's may 322 00:20:54,240 --> 00:20:58,280 Speaker 1: or may not be true. But uh, I'm not fascinated 323 00:20:58,320 --> 00:21:00,600 Speaker 1: by the story that it was wrong. It just kind 324 00:21:00,600 --> 00:21:05,439 Speaker 1: of It all depends on the exact nature of the story. 325 00:21:05,680 --> 00:21:07,800 Speaker 1: It can easily be that I don't you know, I 326 00:21:07,840 --> 00:21:10,520 Speaker 1: didn't really care to hear this correction. I had a 327 00:21:10,600 --> 00:21:13,240 Speaker 1: nice story that I was telling everyone, and you're telling 328 00:21:13,240 --> 00:21:16,520 Speaker 1: me now that it was wrong. Okay, maybe so a 329 00:21:16,560 --> 00:21:20,159 Speaker 1: little cognitive dissonance kicks in, but the entertainment value is so. 330 00:21:20,200 --> 00:21:23,159 Speaker 1: In the book, you tell the story about a British 331 00:21:23,240 --> 00:21:27,080 Speaker 1: pop singer named Lily Allen, Uh supposedly did a gig 332 00:21:27,119 --> 00:21:30,439 Speaker 1: in oh nine and turned down the opportunity to be 333 00:21:30,480 --> 00:21:33,280 Speaker 1: paid in bitcoin, And if you would have taken that 334 00:21:33,400 --> 00:21:36,439 Speaker 1: and then held onto the bitcoin, she'd be a billionaire. 335 00:21:36,600 --> 00:21:42,399 Speaker 1: So first compelling story second, was it true? Yeah? This, 336 00:21:42,600 --> 00:21:45,280 Speaker 1: uh may or may not be true. Who cares, right, 337 00:21:45,400 --> 00:21:47,960 Speaker 1: it's a nice story. I never verified whether it was true. 338 00:21:48,080 --> 00:21:50,919 Speaker 1: I mentioned it in the book. But it relates to 339 00:21:51,119 --> 00:21:54,520 Speaker 1: a basic human emotion called fomo fear of missing out, 340 00:21:55,320 --> 00:21:57,840 Speaker 1: and that that is a driving for us. So you 341 00:21:57,840 --> 00:22:03,200 Speaker 1: you also want to take investing tips quickly before you 342 00:22:03,200 --> 00:22:06,720 Speaker 1: you know, have ruminated on them for a month, so 343 00:22:06,960 --> 00:22:10,240 Speaker 1: you have to act quickly, so you fear of missing 344 00:22:10,280 --> 00:22:14,480 Speaker 1: out is an important instinct that and maybe it goes 345 00:22:14,520 --> 00:22:17,280 Speaker 1: back to our caveman days when you had the rush 346 00:22:17,320 --> 00:22:19,840 Speaker 1: to grab the food before some other caveman guys. It 347 00:22:19,920 --> 00:22:22,320 Speaker 1: was a matter of survival, not just making a profit 348 00:22:22,320 --> 00:22:25,760 Speaker 1: in the market. Quite quite fascinating. So let's talk a 349 00:22:25,760 --> 00:22:29,520 Speaker 1: little bit about markets. And if we're talking about markets, 350 00:22:29,520 --> 00:22:33,639 Speaker 1: we have to talk about bubbles. If I had to guess, 351 00:22:33,720 --> 00:22:37,600 Speaker 1: the viral nature of bubbles and the stories surrounding them 352 00:22:37,760 --> 00:22:40,800 Speaker 1: had to be a key driver in your desire to 353 00:22:40,840 --> 00:22:47,080 Speaker 1: write this book. Bubbles are perhaps what you're best known for. Um. 354 00:22:47,200 --> 00:22:51,040 Speaker 1: Your work in bubbles and behavioral economics very much student 355 00:22:51,119 --> 00:22:55,400 Speaker 1: contrast to the traditional economic thinking that markets are efficient 356 00:22:55,440 --> 00:22:59,199 Speaker 1: and people are rational. Um, how much did bubbles have 357 00:22:59,320 --> 00:23:02,560 Speaker 1: to do with the ideas behind this book. I think 358 00:23:02,560 --> 00:23:05,560 Speaker 1: that bubbles was a kind of the story that markets 359 00:23:05,560 --> 00:23:10,400 Speaker 1: are efficient is a half truth that has been mentioned 360 00:23:10,960 --> 00:23:15,560 Speaker 1: going back hundred and fifty years, but it never really 361 00:23:16,280 --> 00:23:21,000 Speaker 1: became dominant until Eugene Fama wrote his famous article in 362 00:23:21,040 --> 00:23:25,600 Speaker 1: the late nineteen when was nineteen sixties. I think and 363 00:23:25,640 --> 00:23:29,000 Speaker 1: you and Farma both shared the Nobile process. Yeah, that 364 00:23:29,040 --> 00:23:32,119 Speaker 1: was ironic. It was an interesting experience during Nobel a 365 00:23:32,200 --> 00:23:34,959 Speaker 1: week when I had to spend a week with Eugene Fama, 366 00:23:35,480 --> 00:23:37,679 Speaker 1: who who was still on the view that I was 367 00:23:37,720 --> 00:23:41,040 Speaker 1: totally wrong, But it was kind of It was kind 368 00:23:41,080 --> 00:23:43,560 Speaker 1: of nice because it turns out that we didn't really 369 00:23:43,600 --> 00:23:47,679 Speaker 1: disagree much U much that was factual. We agreed on 370 00:23:47,720 --> 00:23:50,879 Speaker 1: the fact It's like it's a different narrative. So I 371 00:23:50,960 --> 00:23:55,439 Speaker 1: like to describe people as swayed by narratives, and he 372 00:23:55,480 --> 00:23:59,000 Speaker 1: thinks of it as um, what is it? It's changing tastes, 373 00:23:59,080 --> 00:24:03,280 Speaker 1: maybe are changing risk aversion that people are different than 374 00:24:03,640 --> 00:24:06,520 Speaker 1: He's trying to incorporate these things into a theory. He 375 00:24:06,600 --> 00:24:10,520 Speaker 1: has a company called Dimensional Fund Advisors. He he works 376 00:24:10,560 --> 00:24:13,360 Speaker 1: for d f A. Yes, but he was the inspiration 377 00:24:13,440 --> 00:24:15,920 Speaker 1: I think David Booth is the founder of that. Yes, 378 00:24:16,200 --> 00:24:19,000 Speaker 1: he's been with them for what forty years something like that. 379 00:24:19,600 --> 00:24:23,399 Speaker 1: So I I was congratulating him during Nobel week for 380 00:24:24,000 --> 00:24:26,840 Speaker 1: showing decisively how he can beat the market through d 381 00:24:27,000 --> 00:24:29,399 Speaker 1: f A, and he didn't like that. That's not the 382 00:24:29,440 --> 00:24:31,359 Speaker 1: way he wants to put it. So I stopped doing it. 383 00:24:31,359 --> 00:24:34,640 Speaker 1: I was I think it was becoming unwelcome, even though 384 00:24:34,680 --> 00:24:38,159 Speaker 1: I was congratulating him. He doesn't think that he's telling 385 00:24:38,240 --> 00:24:40,800 Speaker 1: people how to beat the market. He's helping people to 386 00:24:40,840 --> 00:24:44,879 Speaker 1: manage their risks. What I find fascinating that you and 387 00:24:45,320 --> 00:24:48,760 Speaker 1: Fama won the Nobel the same year is that there's 388 00:24:48,880 --> 00:24:52,359 Speaker 1: if you draw the Venn diagrams of your separate narratives, 389 00:24:52,840 --> 00:24:56,000 Speaker 1: there's a big overlap in the middle. The overlap is 390 00:24:56,119 --> 00:25:00,160 Speaker 1: essentially markets are kind of sort of efficient, and it's 391 00:25:00,240 --> 00:25:02,840 Speaker 1: very hard to beat them. He he will admit that 392 00:25:02,880 --> 00:25:07,760 Speaker 1: it's very hard to beat that. Your narrative also adds 393 00:25:07,840 --> 00:25:10,760 Speaker 1: and people are irrational, and sometimes that leads to markets 394 00:25:10,800 --> 00:25:15,400 Speaker 1: going wildly out of off kilter before they return back 395 00:25:15,440 --> 00:25:19,480 Speaker 1: to normal normality. I don't think Farma is a big 396 00:25:19,520 --> 00:25:24,240 Speaker 1: believer that bubbles can be either identified or even defined. 397 00:25:24,880 --> 00:25:28,960 Speaker 1: It's just markets reaching extremes. That's one thing he said 398 00:25:29,040 --> 00:25:32,560 Speaker 1: during Nobel Week that I challenge you to say when 399 00:25:32,600 --> 00:25:36,400 Speaker 1: it was that someone could identify a major turning point 400 00:25:36,560 --> 00:25:39,320 Speaker 1: in the market. But I agree with that. It's hard. 401 00:25:39,680 --> 00:25:42,040 Speaker 1: It's hard to pin down when the turning point is 402 00:25:42,080 --> 00:25:48,520 Speaker 1: going to come. Uh. So, uh, maybe maybe we're not that. 403 00:25:49,240 --> 00:25:52,200 Speaker 1: By the way, I admire the man. He's brilliant. He's 404 00:25:52,240 --> 00:25:57,160 Speaker 1: done some tremendous work. Let's talk about one other narrative 405 00:25:57,680 --> 00:26:01,040 Speaker 1: that has gone viral. What do you make of negative 406 00:26:01,080 --> 00:26:07,120 Speaker 1: interest rates essentially exported here first from Japan and now Europe? 407 00:26:07,640 --> 00:26:09,679 Speaker 1: How do these happen? Are we gonna see these in 408 00:26:09,720 --> 00:26:13,639 Speaker 1: the United States? I recall, Uh, you had said a 409 00:26:13,680 --> 00:26:18,040 Speaker 1: long time ago, Well, negative rates can never happen. It violates, uh, 410 00:26:18,160 --> 00:26:21,639 Speaker 1: the basic laws of economics. Uh. Yeah, I used to 411 00:26:21,640 --> 00:26:25,880 Speaker 1: teach that an hour out of minus a half percent 412 00:26:26,000 --> 00:26:29,880 Speaker 1: in in the e EU. So that's but it never 413 00:26:30,040 --> 00:26:33,320 Speaker 1: It can't get down to minus five percent. It can't 414 00:26:33,359 --> 00:26:37,359 Speaker 1: because you would hold cash instead. And it just reflects 415 00:26:37,400 --> 00:26:42,920 Speaker 1: the difficulties of actually storying cash. Uh, and especially when 416 00:26:42,920 --> 00:26:45,520 Speaker 1: there's so many trillions of dollars of it slashing around 417 00:26:45,560 --> 00:26:50,800 Speaker 1: the system, right. So it's an interesting observation that now, 418 00:26:50,840 --> 00:26:53,720 Speaker 1: I wonder, do you know this where they're negative interest 419 00:26:53,840 --> 00:26:57,040 Speaker 1: rates fifty or a hundred years ago? They probably were 420 00:26:57,119 --> 00:26:59,879 Speaker 1: at some point. I don't recall ever reading about negative 421 00:26:59,880 --> 00:27:05,760 Speaker 1: and just rates before the nine Japan situation. Um, but 422 00:27:05,840 --> 00:27:08,119 Speaker 1: I have to imagine that at one point in time 423 00:27:08,240 --> 00:27:10,600 Speaker 1: it must have been, right. It's just it's just not 424 00:27:10,720 --> 00:27:13,879 Speaker 1: part of our narrative in the econ department. So it 425 00:27:13,960 --> 00:27:17,000 Speaker 1: must be that somebody in the nineteenth century had a 426 00:27:17,040 --> 00:27:20,040 Speaker 1: million dollars in cash and he wanted to store it somewhere, 427 00:27:20,520 --> 00:27:22,960 Speaker 1: and uh, someone said, well, I'm gonna charge you. I 428 00:27:22,960 --> 00:27:25,800 Speaker 1: don't you know, if you think about the gold standard, 429 00:27:25,880 --> 00:27:29,159 Speaker 1: that's effectively the equivalent of negative interest rates because you 430 00:27:29,200 --> 00:27:32,920 Speaker 1: have to pay for storage and security for gold bars. 431 00:27:33,400 --> 00:27:35,720 Speaker 1: How is that any different than negative interest rates for 432 00:27:35,800 --> 00:27:39,560 Speaker 1: bonds if they're effectively the same credit risk. So we 433 00:27:39,640 --> 00:27:42,080 Speaker 1: used to talk to our students about the zero lower 434 00:27:42,119 --> 00:27:45,399 Speaker 1: bound just because it's kind of cool, just like the 435 00:27:45,400 --> 00:27:47,680 Speaker 1: gold standard was kind of So I talked about the 436 00:27:47,720 --> 00:27:50,920 Speaker 1: gold standard in my book that the probably didn't really 437 00:27:50,920 --> 00:27:54,720 Speaker 1: talk about the gold standard. They were just on it, right. Uh, 438 00:27:54,800 --> 00:27:57,000 Speaker 1: it was a given, but then it became a moral 439 00:27:57,280 --> 00:28:02,640 Speaker 1: value in the particularly when there was talk of bimetalism, 440 00:28:02,960 --> 00:28:09,000 Speaker 1: bimetalism meaning oh that, uh yeah. I compare it with bitcoin, 441 00:28:09,240 --> 00:28:12,639 Speaker 1: because I think the emotional content of the narrative was 442 00:28:12,760 --> 00:28:16,439 Speaker 1: very similar to bitcoin. It was a new financial innovation 443 00:28:16,840 --> 00:28:19,800 Speaker 1: started to be talked about on the eighteen seventies. Let's 444 00:28:19,800 --> 00:28:22,320 Speaker 1: go off the gold standards, have two standards, and it's 445 00:28:22,359 --> 00:28:25,680 Speaker 1: gonna it's gonna stimulate the economy. That was a time 446 00:28:25,720 --> 00:28:28,600 Speaker 1: when they were partly right because it would expand the 447 00:28:28,600 --> 00:28:32,439 Speaker 1: money supply and that would cause inflation, and that would 448 00:28:32,440 --> 00:28:35,400 Speaker 1: wipe out the real value of debts. It would help 449 00:28:35,440 --> 00:28:40,200 Speaker 1: farmers who were oppressed by deflation. So it has some element. 450 00:28:40,640 --> 00:28:44,360 Speaker 1: But the point is it sounds like bitcoin. It was 451 00:28:44,960 --> 00:28:47,480 Speaker 1: a shocker that someone would have it would go off 452 00:28:47,520 --> 00:28:52,720 Speaker 1: the gold standard. Everything has been predicated on gold as 453 00:28:52,760 --> 00:28:55,640 Speaker 1: the real thing, and you want to put some cheaper metal, 454 00:28:55,680 --> 00:29:00,000 Speaker 1: you're debasing the currency. That's a crime. You got very emotional, 455 00:29:00,400 --> 00:29:04,080 Speaker 1: and it got an emotional in ways that were regional 456 00:29:04,520 --> 00:29:08,200 Speaker 1: that East Coast intellectuals tended to be in favor of 457 00:29:08,280 --> 00:29:12,080 Speaker 1: keeping the gold standard, and people out west, who maybe 458 00:29:12,160 --> 00:29:15,320 Speaker 1: had less college most of them didn't have college at all. 459 00:29:16,200 --> 00:29:19,560 Speaker 1: They were thinking they were pretty smart to have discovered 460 00:29:19,560 --> 00:29:23,640 Speaker 1: this new bimetalism. Was it William Jennings Bryant who said 461 00:29:23,920 --> 00:29:25,760 Speaker 1: we we don't need to be hung on a cross 462 00:29:25,840 --> 00:29:28,840 Speaker 1: of gold. I know I'm mangling that somewhat. Yeah, that's 463 00:29:28,840 --> 00:29:32,320 Speaker 1: in my book too. Turns out he did during the 464 00:29:32,680 --> 00:29:38,600 Speaker 1: eighteen nine Democratic Convention. William Jennings Bryan said you shall 465 00:29:38,680 --> 00:29:41,800 Speaker 1: not crucify us on a cross of gold. But it 466 00:29:41,880 --> 00:29:45,320 Speaker 1: turns out, and that's that it's so famous a quote 467 00:29:45,360 --> 00:29:49,960 Speaker 1: that people still remember it today. Uh. The crowd went 468 00:29:50,040 --> 00:29:52,880 Speaker 1: wild there. They thought it was the second Coming of 469 00:29:52,960 --> 00:29:56,640 Speaker 1: Christ or something like that. Uh. It turns out that 470 00:29:56,680 --> 00:30:00,800 Speaker 1: William Jennings Bryan was quoting somebody else. He didn't say so. 471 00:30:02,000 --> 00:30:04,720 Speaker 1: The other guy who said it was a congressman who 472 00:30:04,760 --> 00:30:07,480 Speaker 1: just said it from some speech, didn't get noticed. It 473 00:30:07,520 --> 00:30:11,080 Speaker 1: was it was that moment he was giving his acceptance 474 00:30:11,120 --> 00:30:14,840 Speaker 1: of the Democratic nomination for the presidency at the convention, 475 00:30:15,480 --> 00:30:19,200 Speaker 1: and there were newspaper reporters there. Uh, and the crowd 476 00:30:19,240 --> 00:30:23,680 Speaker 1: went wild. Uh. And it just became a narrative that 477 00:30:23,920 --> 00:30:27,960 Speaker 1: never got forgotten. Although we've forgotten that, we've forgotten bi 478 00:30:27,960 --> 00:30:31,120 Speaker 1: metalism pretty much. We still remember that quote. We don't 479 00:30:31,160 --> 00:30:34,560 Speaker 1: know what it means anymore. Quite interesting. We were talking 480 00:30:34,640 --> 00:30:40,200 Speaker 1: earlier about bitcoin, and of all the stories that that 481 00:30:40,280 --> 00:30:43,840 Speaker 1: have narratives around it, the bitcoin narrative seems to be 482 00:30:44,360 --> 00:30:49,680 Speaker 1: quite fascinating. I think of it as millennial libertarian gold. 483 00:30:50,440 --> 00:30:54,400 Speaker 1: It's it's a younger generation with certain political beliefs, love 484 00:30:54,480 --> 00:30:58,440 Speaker 1: the idea of this independent currency free of government restraints. 485 00:30:58,880 --> 00:31:01,240 Speaker 1: Although that really hasn't seemed to be the way it's 486 00:31:01,280 --> 00:31:04,440 Speaker 1: worked out, has it. It was a great story. Yeah, 487 00:31:04,680 --> 00:31:08,280 Speaker 1: the government is capable of taxing you. We now know 488 00:31:08,400 --> 00:31:12,160 Speaker 1: that on your bitcoining profits, so they can get at 489 00:31:12,200 --> 00:31:16,040 Speaker 1: your bitco They can as have hackers, you know, they're 490 00:31:16,080 --> 00:31:18,880 Speaker 1: they're all sorts of new telephone hacks, and they're using 491 00:31:18,880 --> 00:31:21,800 Speaker 1: it to go after people's bitcoin wallets. And on top 492 00:31:21,840 --> 00:31:24,040 Speaker 1: of that, a lot of the trades on the bitcoin 493 00:31:24,160 --> 00:31:28,440 Speaker 1: exchanges are are fake trades, just to uh, in fact, 494 00:31:28,480 --> 00:31:32,040 Speaker 1: most of on some of them, Yeah, most are you 495 00:31:32,040 --> 00:31:35,320 Speaker 1: gonna say? Most of the bitcoin trades on certain exchanges 496 00:31:35,360 --> 00:31:38,120 Speaker 1: are are fake? Are not real? They are not Well, 497 00:31:38,160 --> 00:31:40,719 Speaker 1: I've read this, so I'm sorry. Now I don't want 498 00:31:40,760 --> 00:31:45,240 Speaker 1: to accuse someone of a crime, but they're not regulated. Uh, 499 00:31:45,280 --> 00:31:48,200 Speaker 1: and they're doing the story is this is a narrative 500 00:31:48,240 --> 00:31:53,280 Speaker 1: which I'm repeating, is that they do wash trades. Uh. 501 00:31:53,880 --> 00:31:57,360 Speaker 1: They want to show a lot of volume, which makes 502 00:31:57,400 --> 00:32:01,560 Speaker 1: it more credible as a currency. Yeah, that's how you. 503 00:32:02,360 --> 00:32:04,280 Speaker 1: There has been in the history a lot of stock 504 00:32:04,320 --> 00:32:08,520 Speaker 1: manipulation too, and we have to thank the sec for 505 00:32:09,600 --> 00:32:14,160 Speaker 1: um for clamping down on that because that that would happen. 506 00:32:14,920 --> 00:32:17,520 Speaker 1: So so some of the things we've talked about have 507 00:32:17,760 --> 00:32:23,960 Speaker 1: been conspiracy theories to some degree. Why in the modern era, 508 00:32:24,280 --> 00:32:29,120 Speaker 1: with our access to all this science and technology and 509 00:32:29,120 --> 00:32:34,480 Speaker 1: and fact finding in truth sites, why have have these 510 00:32:34,520 --> 00:32:39,760 Speaker 1: conspiracy theories become so prevalent? Is this something fundamental about 511 00:32:39,960 --> 00:32:42,840 Speaker 1: human beings and the way our minds operate. I mean, 512 00:32:42,880 --> 00:32:47,400 Speaker 1: not just the moon landing hoax, but anti vaxer's. There's 513 00:32:47,440 --> 00:32:51,280 Speaker 1: even a rise of flat earthers. What what is that about? Well, 514 00:32:51,320 --> 00:32:54,760 Speaker 1: there is a First of all, there are conspiracies in 515 00:32:54,840 --> 00:32:57,640 Speaker 1: his We know that there are conspiracy so a rational 516 00:32:57,680 --> 00:33:01,080 Speaker 1: person has to be alert to possible can spiracies. But 517 00:33:01,160 --> 00:33:05,440 Speaker 1: we also know that there is a a personality type 518 00:33:06,000 --> 00:33:10,920 Speaker 1: that uh or maybe it's yeah, a personality type that 519 00:33:11,080 --> 00:33:17,520 Speaker 1: is h very UH influenced by conspiracy stories. They used 520 00:33:17,560 --> 00:33:23,040 Speaker 1: to UH in the American Psychiatric Association's Diagnostic and Statistical Manual, 521 00:33:23,520 --> 00:33:27,760 Speaker 1: they used to talk about paranoid schizophrenic people they have 522 00:33:28,000 --> 00:33:33,320 Speaker 1: hallucinations about conspiracies. But in the latest edition they've separated 523 00:33:33,360 --> 00:33:36,680 Speaker 1: it from schizophrenia and they now have something called paranoid 524 00:33:36,720 --> 00:33:41,080 Speaker 1: personality disorder. So these are the extremes, and they're they're 525 00:33:41,080 --> 00:33:44,840 Speaker 1: not schizophrenic, there's just something out about them. They're constantly 526 00:33:44,840 --> 00:33:48,920 Speaker 1: imagining conspiracies. So there are a certain fragment of our population, 527 00:33:49,360 --> 00:33:53,200 Speaker 1: and people who are who are not suffering from any 528 00:33:53,240 --> 00:33:59,840 Speaker 1: disorder but who are very inordinately focused on on conspiracies 529 00:34:00,280 --> 00:34:03,440 Speaker 1: are even more numerous. So if you find someone who 530 00:34:03,440 --> 00:34:07,040 Speaker 1: believes one conspiracy, talk to him further and there will 531 00:34:07,080 --> 00:34:10,000 Speaker 1: probably be many more conspiracies that this person. If it 532 00:34:10,760 --> 00:34:13,680 Speaker 1: goes a little bit, you can get a little bit crazy. 533 00:34:14,040 --> 00:34:18,000 Speaker 1: So the Federal Reserve has been a subject of all 534 00:34:18,080 --> 00:34:21,600 Speaker 1: manner of conspiracy theories. Um, going back to the book 535 00:34:21,640 --> 00:34:25,360 Speaker 1: The Creature from jack'l Islands, what is it about central 536 00:34:25,440 --> 00:34:29,640 Speaker 1: bankers that lend themselves to these theories? Is that just 537 00:34:30,200 --> 00:34:33,880 Speaker 1: a good narrative tale of a bunch of bankers secretly 538 00:34:33,920 --> 00:34:37,640 Speaker 1: manipulating the economy from you know, behind the curtain. What 539 00:34:37,640 --> 00:34:40,120 Speaker 1: what makes this such a compelling And there's a whole 540 00:34:40,160 --> 00:34:43,280 Speaker 1: group of people who whose narratives are they just hate 541 00:34:43,280 --> 00:34:45,120 Speaker 1: the Fed. We should end the Fed, get rid of 542 00:34:45,120 --> 00:34:48,000 Speaker 1: the Fed. What is it about central bankers that lends 543 00:34:48,040 --> 00:34:52,560 Speaker 1: itself so easily to to these theories? Well, I think 544 00:34:52,600 --> 00:34:57,120 Speaker 1: it's Uh, it sounds okay. I'm trying to focus like 545 00:34:57,160 --> 00:35:02,040 Speaker 1: a literary expert who explains why some story is popular. Uh, 546 00:35:02,200 --> 00:35:07,040 Speaker 1: it's partly because we're impressed by the monetary they's just 547 00:35:07,080 --> 00:35:10,120 Speaker 1: like we're impressed by bitcoin or bi metalism. So it's 548 00:35:10,120 --> 00:35:12,960 Speaker 1: a story about something mysterious. We have these pieces of 549 00:35:12,960 --> 00:35:16,319 Speaker 1: paper in our pocket, and why are they valuable? They're 550 00:35:16,360 --> 00:35:19,719 Speaker 1: just pieces of paper. It's kind of a mystery. It 551 00:35:19,760 --> 00:35:23,919 Speaker 1: has to do with power and feeling small. It makes 552 00:35:23,960 --> 00:35:26,880 Speaker 1: you feel bigger and more important if you discover a 553 00:35:26,880 --> 00:35:34,480 Speaker 1: a conspiracy resentment of people who maybe look more successful 554 00:35:34,520 --> 00:35:37,960 Speaker 1: than you, and it's it's it's yeah, it's a bit 555 00:35:37,960 --> 00:35:41,640 Speaker 1: of a mystery story too, that you've uncovered something that 556 00:35:41,680 --> 00:35:45,400 Speaker 1: nobody knows, right, that most people are not evely assume 557 00:35:45,680 --> 00:35:49,080 Speaker 1: isn't happening, so you can tell it's it's a good narrative. 558 00:35:49,920 --> 00:35:53,640 Speaker 1: So so, since we're talking about central bankers. Um in 559 00:35:53,680 --> 00:36:00,560 Speaker 1: the book, you reference Stephen Invests, governor of Sweden's ricks Bank, Um, 560 00:36:00,640 --> 00:36:03,920 Speaker 1: who said quote, I'm a weatherman, I'm a showman, and 561 00:36:03,960 --> 00:36:08,279 Speaker 1: I'm an economist, but above all, I'm a storyteller. I 562 00:36:08,320 --> 00:36:12,480 Speaker 1: tell stories about the future. How true is that for 563 00:36:12,480 --> 00:36:17,840 Speaker 1: for central bankers? Yeah, I think he's right. The question 564 00:36:17,880 --> 00:36:21,720 Speaker 1: to me is what's more important the actions they take 565 00:36:22,120 --> 00:36:25,920 Speaker 1: or the words they say after the of f O 566 00:36:26,040 --> 00:36:28,400 Speaker 1: m C meeting. Is it the meeting or is it 567 00:36:28,440 --> 00:36:32,440 Speaker 1: the press conference after um or or the nature of 568 00:36:32,440 --> 00:36:35,480 Speaker 1: their statement. So I like to think that when the 569 00:36:35,520 --> 00:36:39,560 Speaker 1: FED cut the lower bound to the federal funds rate 570 00:36:39,880 --> 00:36:46,360 Speaker 1: to zero and right after this the rate recession, that 571 00:36:46,360 --> 00:36:50,920 Speaker 1: that story brought up another narrative that is dangerous, and 572 00:36:50,960 --> 00:36:55,200 Speaker 1: that is the narrative of Japan in the nine nineties 573 00:36:55,280 --> 00:36:58,719 Speaker 1: when they cut their interest rate to zero, the Bank 574 00:36:58,760 --> 00:37:02,160 Speaker 1: of Japan, and they were uh, and they had it 575 00:37:02,320 --> 00:37:06,839 Speaker 1: stuck at zero or negative it still is. That's like 576 00:37:06,920 --> 00:37:10,120 Speaker 1: thirty years later and they had a lost decade. Then 577 00:37:10,120 --> 00:37:13,400 Speaker 1: it turned out to be lost decades. The story was 578 00:37:13,480 --> 00:37:16,880 Speaker 1: that Japan looked like the greatest strongest economy in the 579 00:37:16,920 --> 00:37:20,480 Speaker 1: world in the ES. They wrote lots of books about that, 580 00:37:20,960 --> 00:37:24,760 Speaker 1: and then something went wrong, uh, and then they couldn't 581 00:37:24,800 --> 00:37:27,520 Speaker 1: get out of it. So I think it was a 582 00:37:27,560 --> 00:37:31,400 Speaker 1: mistake to put ourselves into the camp of zero interest 583 00:37:31,480 --> 00:37:35,840 Speaker 1: rate countries. They could have kept it at basis points 584 00:37:35,920 --> 00:37:38,640 Speaker 1: and not used the Z word, as I call it 585 00:37:39,840 --> 00:37:43,120 Speaker 1: the zero bounty, because it then it makes the Japanese 586 00:37:43,200 --> 00:37:46,960 Speaker 1: narrative our narrative. If you look at the nick bubble 587 00:37:47,160 --> 00:37:51,600 Speaker 1: in the eighties, I believe I've seen some some analyzes 588 00:37:51,600 --> 00:37:54,719 Speaker 1: that say they were four times as expensive as the 589 00:37:54,800 --> 00:37:58,359 Speaker 1: dot com stocks. It was a giant pebble, really, so 590 00:37:58,440 --> 00:38:01,080 Speaker 1: that collapse is still in one. The cape ratio was 591 00:38:01,120 --> 00:38:05,720 Speaker 1: getting up sixty or seventy. Uh, it was really high. 592 00:38:05,920 --> 00:38:08,840 Speaker 1: And what were we in the thirties, Uh, during the 593 00:38:08,960 --> 00:38:12,920 Speaker 1: dot com collapse, So we got up to the maximum 594 00:38:12,960 --> 00:38:16,400 Speaker 1: at the dot Com peak was in the United States, 595 00:38:16,480 --> 00:38:18,480 Speaker 1: So this is almost double that engine. Yeah, it was 596 00:38:18,520 --> 00:38:22,320 Speaker 1: a lot higher. That's amazing. Let's let's talk about another 597 00:38:22,400 --> 00:38:25,440 Speaker 1: narrative that I found fascinating from the from the book 598 00:38:26,400 --> 00:38:32,560 Speaker 1: the shift from conspicuous consumption to uh, the modern frugality 599 00:38:32,680 --> 00:38:36,520 Speaker 1: and early retirement. How does something like that change over 600 00:38:37,120 --> 00:38:40,719 Speaker 1: what was it twenty years from the conspicuous consumption era 601 00:38:40,840 --> 00:38:44,160 Speaker 1: to spend as little money as possible and the fire 602 00:38:44,320 --> 00:38:48,839 Speaker 1: group they invest and retire early group. Yeah, that might 603 00:38:48,880 --> 00:38:54,719 Speaker 1: be happening. Uh, that is not. We still have a 604 00:38:54,800 --> 00:38:58,440 Speaker 1: very strong consumption demand at this point in history. That 605 00:38:58,560 --> 00:39:00,759 Speaker 1: might be something that would turn around with the next 606 00:39:00,800 --> 00:39:03,960 Speaker 1: recession even when it comes. But the big time when 607 00:39:04,000 --> 00:39:07,480 Speaker 1: it did turn around, and its legendary is the in 608 00:39:09,200 --> 00:39:13,680 Speaker 1: so in the in the roaring twenties, people were you know, 609 00:39:13,760 --> 00:39:19,239 Speaker 1: that was the great gat speed time. People loved conspicuous consumption. Uh. 610 00:39:19,560 --> 00:39:24,000 Speaker 1: And then something changed quite quickly after after the stock 611 00:39:24,000 --> 00:39:30,480 Speaker 1: market crash of October Uh. And I found that narratives. 612 00:39:30,480 --> 00:39:34,719 Speaker 1: But first of all, Christina Romer Economic History and c 613 00:39:34,880 --> 00:39:38,920 Speaker 1: E A chairman at one point showed that consumption demand 614 00:39:39,000 --> 00:39:43,239 Speaker 1: dropped immediately after the twenty nine crash, Like why did 615 00:39:43,280 --> 00:39:48,160 Speaker 1: people stop spending right at that moment? One way of 616 00:39:48,239 --> 00:39:50,600 Speaker 1: learning about it is to go to the Sunday following 617 00:39:50,600 --> 00:39:53,640 Speaker 1: the crash and listen to sermons. And they used to 618 00:39:53,680 --> 00:39:57,640 Speaker 1: report sermons and newspapers. Famous preachers would get into the 619 00:39:57,719 --> 00:40:01,880 Speaker 1: newspaper for their sermon. It doesn't doesn't happen anymore. So 620 00:40:01,960 --> 00:40:03,960 Speaker 1: I could read a little bit about what this and 621 00:40:04,000 --> 00:40:07,920 Speaker 1: the sermons were very moralizing. But where we've been in 622 00:40:07,960 --> 00:40:11,319 Speaker 1: this age of excess and now the stock market is 623 00:40:11,400 --> 00:40:16,760 Speaker 1: crashing and it serves them, right, these pretentious, rich, show 624 00:40:16,800 --> 00:40:20,239 Speaker 1: off people. So so there was something already bruin. There 625 00:40:20,320 --> 00:40:24,400 Speaker 1: was some dissatisfaction with the twenties that was developing, and 626 00:40:24,440 --> 00:40:27,319 Speaker 1: it led to a different attitude in the thirties. Um 627 00:40:27,560 --> 00:40:31,400 Speaker 1: that Winterfreed Holtby was a columnist back then, and she 628 00:40:31,560 --> 00:40:34,719 Speaker 1: said one of her one of her columns, dare to 629 00:40:34,800 --> 00:40:38,319 Speaker 1: be poor. There's so much more to I can't quote 630 00:40:38,320 --> 00:40:40,919 Speaker 1: her exactly, but there's so much more to life than 631 00:40:41,040 --> 00:40:45,719 Speaker 1: just keeping up appearances and showing off. So that attitude 632 00:40:46,000 --> 00:40:48,880 Speaker 1: came back, uh, and I think that was part of 633 00:40:48,880 --> 00:40:52,120 Speaker 1: the Great Depression. It also means the Great Depression wasn't 634 00:40:52,160 --> 00:40:57,160 Speaker 1: as altogether bad as you might think, because it relieved 635 00:40:57,160 --> 00:41:01,480 Speaker 1: you of the of the obligation the show off. You 636 00:41:01,520 --> 00:41:03,719 Speaker 1: could blame it on the recession and people would be 637 00:41:03,719 --> 00:41:07,640 Speaker 1: perfectly under. On the depression, people would be perfectly understanding. 638 00:41:08,160 --> 00:41:12,239 Speaker 1: They knew that some tragedy had fallen. Unfortunately, this was 639 00:41:12,320 --> 00:41:16,040 Speaker 1: also a self fulfilling prophecy. It kept us in the depression, 640 00:41:16,600 --> 00:41:19,920 Speaker 1: but it may have made life more livable. So that 641 00:41:20,000 --> 00:41:23,880 Speaker 1: raises an interesting question. Can can we talk ourselves into 642 00:41:23,920 --> 00:41:28,160 Speaker 1: a recession if the economy is other otherwise fine and 643 00:41:28,239 --> 00:41:32,200 Speaker 1: people are starting to get nervous about maybe it's a 644 00:41:32,239 --> 00:41:36,680 Speaker 1: manufacturing contraction, maybe it's part of the trade war, a taffs. 645 00:41:36,719 --> 00:41:41,120 Speaker 1: Can can we convince ourselves that a recession is coming 646 00:41:41,600 --> 00:41:46,640 Speaker 1: and that affects our behavior that makes a recession come? Absolutely, 647 00:41:46,840 --> 00:41:51,200 Speaker 1: That's that's what I think is at risk right now. 648 00:41:51,719 --> 00:41:55,000 Speaker 1: If you go to Google trends, you will to look 649 00:41:55,280 --> 00:41:57,560 Speaker 1: that allows you to find out what people are searching 650 00:41:57,600 --> 00:42:01,760 Speaker 1: for through time. There was a huge surge in searches 651 00:42:01,840 --> 00:42:05,800 Speaker 1: for the term recession in two thousand seven, just before 652 00:42:05,840 --> 00:42:09,920 Speaker 1: the recession began, and we see another such surge right now. 653 00:42:10,560 --> 00:42:14,240 Speaker 1: So Google trends has been used to predict influenza epidemics. 654 00:42:14,280 --> 00:42:17,360 Speaker 1: It can also be a that way of predicting economic 655 00:42:17,440 --> 00:42:21,880 Speaker 1: narrative epidemics. So somehow we are really talking about recession 656 00:42:22,320 --> 00:42:25,640 Speaker 1: and we're not in a recession. So we'll see what happens. 657 00:42:25,760 --> 00:42:28,600 Speaker 1: It may well trigger every session. Let's let's talk about 658 00:42:28,640 --> 00:42:31,160 Speaker 1: something that's been around for a long time, and it's 659 00:42:31,719 --> 00:42:35,680 Speaker 1: how technology is going to take all our jobs away. Uh. 660 00:42:35,800 --> 00:42:39,359 Speaker 1: First it was automation, then it was artificial intelligence. Now 661 00:42:39,400 --> 00:42:42,759 Speaker 1: it's robots are coming for our jobs. Why why is 662 00:42:42,800 --> 00:42:46,160 Speaker 1: this such a persistent theme throughout hundreds of years? It 663 00:42:46,160 --> 00:42:49,440 Speaker 1: goes back thousands of years actually, but not as strong. 664 00:42:49,800 --> 00:42:53,680 Speaker 1: It's it's it started with the Luddites in eighteen eleven 665 00:42:53,960 --> 00:42:57,800 Speaker 1: and then the swing riots in the eighteen twenties where uh, 666 00:42:58,040 --> 00:43:01,680 Speaker 1: common labor was being replaced by uh we you know, 667 00:43:01,760 --> 00:43:08,520 Speaker 1: fat fabric machines and factories or or agricultural devices that 668 00:43:08,640 --> 00:43:14,200 Speaker 1: simplified harvesting. Um. But it's it's so this narrative has 669 00:43:14,239 --> 00:43:18,680 Speaker 1: been around for about two hundred years, but it flares 670 00:43:18,800 --> 00:43:21,960 Speaker 1: up at certain times. It's like a disease. It mutates, 671 00:43:22,080 --> 00:43:24,600 Speaker 1: and the narrative mutates, and it flares up and it 672 00:43:24,680 --> 00:43:29,640 Speaker 1: can cause problems. Uh. It did that in the eighteen seventies, 673 00:43:30,480 --> 00:43:33,840 Speaker 1: uh and uh or in the eighteen nineties and the 674 00:43:34,080 --> 00:43:37,400 Speaker 1: ninet especially in the Great Depression of the nineteen thirties 675 00:43:37,719 --> 00:43:40,560 Speaker 1: that they were talking about robots in the nineteen thirties, 676 00:43:41,239 --> 00:43:43,480 Speaker 1: and they were worried that this is it, this is 677 00:43:43,520 --> 00:43:45,759 Speaker 1: a major this will go down in here. The year 678 00:43:45,880 --> 00:43:49,240 Speaker 1: ninety nine will go down in history as a major 679 00:43:49,320 --> 00:43:53,240 Speaker 1: turning point when people of common labor will be impoverished 680 00:43:53,560 --> 00:43:56,920 Speaker 1: from now on. That was something a lot of people 681 00:43:56,960 --> 00:44:01,040 Speaker 1: believed and discourage them from spending because they thought, I 682 00:44:01,160 --> 00:44:05,239 Speaker 1: better start saving for this feature that's coming. But then 683 00:44:05,239 --> 00:44:08,120 Speaker 1: we that's not part of our story about the Great 684 00:44:08,120 --> 00:44:12,280 Speaker 1: Depression because that was something that didn't It was something 685 00:44:12,320 --> 00:44:16,719 Speaker 1: that false theory. It didn't happen um and and so 686 00:44:16,880 --> 00:44:20,520 Speaker 1: we've just don't no longer attach that to the explanations 687 00:44:20,560 --> 00:44:25,040 Speaker 1: of that event. So what about the modern era where 688 00:44:25,239 --> 00:44:29,080 Speaker 1: we're seeing automation replace a lot of jobs. We're seeing 689 00:44:29,239 --> 00:44:33,440 Speaker 1: software and artificial intelligence. On Wall Street, half the trading 690 00:44:33,480 --> 00:44:37,920 Speaker 1: desks have been replaced with software. There's talk about accountants 691 00:44:37,960 --> 00:44:41,400 Speaker 1: and lawyers seeing a lot of their their work being 692 00:44:41,440 --> 00:44:47,279 Speaker 1: automated by software. There's even artificial intelligence writing news stories 693 00:44:47,320 --> 00:44:50,800 Speaker 1: by just identifying specific facts and and putting them together. 694 00:44:50,800 --> 00:44:53,960 Speaker 1: They have sports, they can do a sports with a 695 00:44:54,080 --> 00:44:58,080 Speaker 1: data feed. So, so is there a reason to be 696 00:44:58,160 --> 00:45:02,160 Speaker 1: concerned or let me rephrase that some of these stories 697 00:45:02,160 --> 00:45:06,520 Speaker 1: would sound silly and scary and retrospective, appear to have 698 00:45:06,640 --> 00:45:11,640 Speaker 1: some degree of truth. That technology does replace certain, at 699 00:45:11,719 --> 00:45:16,680 Speaker 1: least repetitive non creative jobs. Well, I wouldn't say, uh, 700 00:45:17,239 --> 00:45:21,839 Speaker 1: is translation a repetitive non creative Probably Well, if you're 701 00:45:21,880 --> 00:45:25,440 Speaker 1: translating poetry, not if you're translating something from French to 702 00:45:25,560 --> 00:45:29,200 Speaker 1: English or from uh, you know, Google Translate, you could 703 00:45:29,239 --> 00:45:34,600 Speaker 1: basically get a not great but usable translation of of 704 00:45:35,120 --> 00:45:38,080 Speaker 1: just about any language to any language. So I think 705 00:45:38,120 --> 00:45:40,880 Speaker 1: there is reason to worry. And it goes back to 706 00:45:40,920 --> 00:45:46,120 Speaker 1: the notion that economists have that the in an competitive 707 00:45:46,160 --> 00:45:51,680 Speaker 1: equilibrium perfect equilibrium, UM, people's wages are there equal to 708 00:45:51,719 --> 00:45:54,319 Speaker 1: their marginal product. If you have to sell for what 709 00:45:54,400 --> 00:45:59,200 Speaker 1: you can get and there's no sympathy or morality that intervenes, 710 00:46:00,360 --> 00:46:03,480 Speaker 1: then you're you're gonna get you what you can contribute 711 00:46:03,520 --> 00:46:06,880 Speaker 1: at the margin. And the problem with that is that 712 00:46:06,960 --> 00:46:10,839 Speaker 1: technology changes that. It's not your fault. So there's no 713 00:46:10,880 --> 00:46:16,040 Speaker 1: reason to think that it can't happen. It hasn't happened, um, 714 00:46:16,080 --> 00:46:19,800 Speaker 1: But maybe maybe the turning point is about to come, 715 00:46:20,400 --> 00:46:23,320 Speaker 1: or it has already started coming. Within inequality is rising. 716 00:46:23,960 --> 00:46:26,920 Speaker 1: It's partly because the problem is whether we can invent 717 00:46:27,000 --> 00:46:33,239 Speaker 1: new roles for ourselves that would value people, uh as 718 00:46:33,280 --> 00:46:38,400 Speaker 1: opposed to robots. I think we don't know. But but 719 00:46:38,800 --> 00:46:43,680 Speaker 1: nobody can speak authoritatively about the future. Uh so, so 720 00:46:43,840 --> 00:46:47,359 Speaker 1: it becomes a place for narratives. So so let's talk 721 00:46:47,400 --> 00:46:51,600 Speaker 1: about not the future but the past. How do narratives 722 00:46:51,680 --> 00:46:54,920 Speaker 1: change over time? You you mentioned the Great Depression. It 723 00:46:55,120 --> 00:46:59,560 Speaker 1: sounds like the narratives around the Great Depression have morphed 724 00:46:59,719 --> 00:47:02,759 Speaker 1: so real times, from the twenties to the thirties to 725 00:47:02,840 --> 00:47:06,480 Speaker 1: the present day. Yeah, the the if you do account 726 00:47:06,520 --> 00:47:10,919 Speaker 1: of the phrase great Depression, it has been growing ever 727 00:47:11,040 --> 00:47:14,120 Speaker 1: since it maybe the end of World War Two. They 728 00:47:14,120 --> 00:47:16,520 Speaker 1: didn't call it the Great Depression. In the Great Depression? 729 00:47:16,719 --> 00:47:21,560 Speaker 1: What then? Uh they they would call it hard times, 730 00:47:22,800 --> 00:47:26,479 Speaker 1: But it wasn't singling it out with a special name. 731 00:47:28,040 --> 00:47:30,360 Speaker 1: When did that start? There was a book written in 732 00:47:30,480 --> 00:47:33,720 Speaker 1: nineteen thirty four by Lionel Robbins at the London School 733 00:47:33,760 --> 00:47:37,400 Speaker 1: of Economics called the Great Depression, So yeah, it was. 734 00:47:37,680 --> 00:47:40,120 Speaker 1: It was a book. It was talked about. So you'll 735 00:47:40,120 --> 00:47:43,719 Speaker 1: see references to the Great Depression from nine thirty four on. 736 00:47:44,640 --> 00:47:47,040 Speaker 1: But it became kind of a story of our lives 737 00:47:47,239 --> 00:47:51,720 Speaker 1: later and it gradually grew. It was growing continually, pretty 738 00:47:51,800 --> 00:47:55,000 Speaker 1: much continually in terms of counts of that use of that. 739 00:47:55,520 --> 00:47:59,000 Speaker 1: In the nineteen fifties, John Kenneth Galbray throughout a book 740 00:47:59,040 --> 00:48:04,240 Speaker 1: called ninety nine The Crash. Uh. That was a best seller, 741 00:48:04,400 --> 00:48:07,600 Speaker 1: and I got a lot of attention. People began to worry, 742 00:48:07,600 --> 00:48:09,760 Speaker 1: are they've been worrying all that time about it possibly 743 00:48:09,800 --> 00:48:15,080 Speaker 1: coming back? But it didn't because there wasn't The narrative 744 00:48:15,160 --> 00:48:18,880 Speaker 1: was growing, but it wasn't focused on something that's about 745 00:48:18,920 --> 00:48:22,000 Speaker 1: to happen. And it came back in two thousand seven 746 00:48:22,400 --> 00:48:27,640 Speaker 1: with vengeance when uh George W. Bush gave a speech 747 00:48:27,680 --> 00:48:33,760 Speaker 1: that was later described as very much like uh Franklin 748 00:48:33,840 --> 00:48:36,600 Speaker 1: Delano Roosevelt's the only thing we have to fear is 749 00:48:36,640 --> 00:48:42,400 Speaker 1: fear itself speech. Uh So uh George W. Bush translated 750 00:48:42,440 --> 00:48:46,120 Speaker 1: that into anxiety can feed anxiety, But it was he 751 00:48:46,160 --> 00:48:49,120 Speaker 1: gave the same talk so and a lot of people 752 00:48:49,239 --> 00:48:53,640 Speaker 1: remember that. You wouldn't think that one talk from three 753 00:48:53,960 --> 00:48:57,480 Speaker 1: would still be remembered. Were very selective in what we remember. 754 00:48:57,680 --> 00:48:59,880 Speaker 1: That was such a catchy phrase, the only thing we 755 00:49:00,080 --> 00:49:02,239 Speaker 1: to fear is fear itself. You know, it's funny you 756 00:49:02,239 --> 00:49:08,120 Speaker 1: mentioned um George Bush heading into the financial crisis during 757 00:49:08,400 --> 00:49:12,320 Speaker 1: oh eight oh nine. I was calling it the financial crisis, 758 00:49:12,360 --> 00:49:15,120 Speaker 1: but it seems a few years later we started calling 759 00:49:15,160 --> 00:49:18,520 Speaker 1: it the great recession. That that name seems to have 760 00:49:18,680 --> 00:49:21,480 Speaker 1: It was a credit crisis, it was the subprime debacle. 761 00:49:21,800 --> 00:49:25,480 Speaker 1: It seemed to have changed over time. How common is 762 00:49:25,719 --> 00:49:32,759 Speaker 1: that historical revisionism with the giant uh viral events. By 763 00:49:32,800 --> 00:49:37,320 Speaker 1: the way, that the term great recession was first applied 764 00:49:37,400 --> 00:49:42,120 Speaker 1: to the seventy five recession in a book by Otto 765 00:49:42,280 --> 00:49:44,359 Speaker 1: ex Dyn, I think that was the title of his book, 766 00:49:44,400 --> 00:49:48,440 Speaker 1: the Great Recession um, and that was a giant By 767 00:49:48,440 --> 00:49:51,680 Speaker 1: the way, for people don't remember, stock market fell almost 768 00:49:51,880 --> 00:49:54,279 Speaker 1: is the same amount as it fell in Awight o nine. 769 00:49:54,320 --> 00:49:57,040 Speaker 1: It was about a fifty seven percent drop at least 770 00:49:57,080 --> 00:50:02,000 Speaker 1: the dal Jones almost serious recession are oil embargo that 771 00:50:02,080 --> 00:50:05,280 Speaker 1: whole earlier, and big inflation that was not a fun period. 772 00:50:06,000 --> 00:50:09,279 Speaker 1: And then in nineteen eighty through eighty two we had 773 00:50:09,520 --> 00:50:12,560 Speaker 1: twin recessions, the double dip. Yeah, this is the second 774 00:50:12,600 --> 00:50:16,680 Speaker 1: oil crisis now, And there were people around at that 775 00:50:16,760 --> 00:50:20,040 Speaker 1: time who called it the Great recession, but none of 776 00:50:20,080 --> 00:50:24,480 Speaker 1: those stuck and I'm not sure why. Um uh and uh. 777 00:50:24,840 --> 00:50:27,960 Speaker 1: You can't control these these narrative epidemic. So I have 778 00:50:28,080 --> 00:50:30,760 Speaker 1: to admit I now sometimes refer to the two thousand 779 00:50:31,280 --> 00:50:34,719 Speaker 1: eight nine recession as the Great Recession, because everybody knows 780 00:50:34,760 --> 00:50:37,320 Speaker 1: what I mean When I say that you lose the battle. 781 00:50:38,080 --> 00:50:42,479 Speaker 1: I'm saying, no, it's the nineteen seventy four seventy five recession. Also, 782 00:50:42,560 --> 00:50:47,239 Speaker 1: even the word recession wasn't used until ninety eight. Oh really, 783 00:50:47,280 --> 00:50:51,480 Speaker 1: what was the more common phrase depression? Really? So I 784 00:50:51,560 --> 00:50:55,720 Speaker 1: know we had a number of market crashes and economic events. 785 00:50:55,760 --> 00:50:59,320 Speaker 1: We're at the nineteenth century, before there was a federal reserve. 786 00:51:00,080 --> 00:51:03,080 Speaker 1: Those were not cold recessions. They were called depressions. Well, 787 00:51:03,239 --> 00:51:05,279 Speaker 1: there might have been some creative use of the word, 788 00:51:05,880 --> 00:51:09,520 Speaker 1: but it wasn't the name for them. So yeah, they 789 00:51:09,600 --> 00:51:14,439 Speaker 1: would talk about, um, business depression. They didn't say depression either, 790 00:51:14,520 --> 00:51:17,000 Speaker 1: They say business depression, but it wasn't clear that that 791 00:51:17,160 --> 00:51:20,279 Speaker 1: was a name for a phenomenon is just yeah, like 792 00:51:20,440 --> 00:51:23,480 Speaker 1: business downturn. I could say economic contraction. Is that a 793 00:51:23,560 --> 00:51:26,680 Speaker 1: more modern use? Have to check that one. It sounds 794 00:51:26,800 --> 00:51:29,400 Speaker 1: that sounds like it came in with Burns and Mitchell 795 00:51:29,440 --> 00:51:34,879 Speaker 1: and the book. I'm not sure, but the language does change, 796 00:51:34,960 --> 00:51:37,920 Speaker 1: but the language changes means something because different words have 797 00:51:38,120 --> 00:51:43,640 Speaker 1: different connotations on associations in our mind. Quite fascinating. Before 798 00:51:43,680 --> 00:51:46,279 Speaker 1: we get into some questions we didn't get to. I 799 00:51:46,400 --> 00:51:50,400 Speaker 1: remember you and I doing a television hit together. It 800 00:51:50,520 --> 00:51:54,720 Speaker 1: had to be like oh five or six, talking about 801 00:51:55,520 --> 00:51:58,880 Speaker 1: the house flippers and how prices had run away, and 802 00:51:59,040 --> 00:52:03,160 Speaker 1: people looked at us like we were crazy. I think 803 00:52:03,200 --> 00:52:07,960 Speaker 1: it was it was it was Griffith. His name Bill Griffith, 804 00:52:08,040 --> 00:52:11,239 Speaker 1: Bill Griffith. I mean, my memory isn't I think? I 805 00:52:11,320 --> 00:52:15,040 Speaker 1: think I remember that event, and and I just recall 806 00:52:15,200 --> 00:52:19,560 Speaker 1: that any time you anybody brought up the possibility that, hey, 807 00:52:19,680 --> 00:52:22,160 Speaker 1: you know, these things don't grow to the sky forever. 808 00:52:22,320 --> 00:52:24,920 Speaker 1: Rates are crazy low, they can't stay that way forever. 809 00:52:25,920 --> 00:52:28,520 Speaker 1: In the midst of the boom. If you bring up 810 00:52:28,680 --> 00:52:32,040 Speaker 1: the narrative that this is going to end and end badly, 811 00:52:32,800 --> 00:52:35,400 Speaker 1: people look at you like you're you know, like you 812 00:52:35,520 --> 00:52:40,120 Speaker 1: have the plague. It was an astonishing period. Yeah, I 813 00:52:40,320 --> 00:52:44,160 Speaker 1: I remember that. It was emotionally difficult the experience to make. 814 00:52:45,800 --> 00:52:50,240 Speaker 1: And although you've never been afraid of taking a unpopular 815 00:52:50,360 --> 00:52:53,600 Speaker 1: contrarian position, most of which turned out to be correct 816 00:52:53,680 --> 00:52:57,759 Speaker 1: over time. Yeah, it with some anxiety though, because I'm 817 00:52:57,800 --> 00:53:01,279 Speaker 1: basing it on things that are not leading indicators identified 818 00:53:01,400 --> 00:53:05,960 Speaker 1: by statisticians and uh, I have a sense that some 819 00:53:06,120 --> 00:53:09,239 Speaker 1: of these leading indicators became leading indicators because of a 820 00:53:09,280 --> 00:53:13,520 Speaker 1: self fulfilling Once people believe they're a leading indicator, they 821 00:53:14,239 --> 00:53:17,239 Speaker 1: they make it happen. So there's a little chicken and 822 00:53:17,320 --> 00:53:21,520 Speaker 1: egg problem with that, because they don't become resonant until 823 00:53:21,600 --> 00:53:23,759 Speaker 1: they have a track record. So some of it just 824 00:53:23,880 --> 00:53:26,560 Speaker 1: becomes a little luck as to what happened to work 825 00:53:26,680 --> 00:53:31,520 Speaker 1: once before. How important is luck to not just one 826 00:53:31,600 --> 00:53:37,000 Speaker 1: thing going viral, but something becoming a regular resource that 827 00:53:37,120 --> 00:53:40,880 Speaker 1: people use for decades. I don't know how to answer that. 828 00:53:40,920 --> 00:53:43,520 Speaker 1: I say it reminds me of a book by not 829 00:53:43,680 --> 00:53:47,800 Speaker 1: seem Toler called Fooled by Randomness, and it takes the 830 00:53:47,880 --> 00:53:51,200 Speaker 1: form of a no, it's a great fun about a 831 00:53:51,280 --> 00:53:54,759 Speaker 1: man named Nero Tulip, which is the author. Is this 832 00:53:54,920 --> 00:53:58,719 Speaker 1: a distortion of the authors? It's autobiographical? But you go 833 00:53:58,840 --> 00:54:03,239 Speaker 1: through life feeling ashamed and elated when random events made 834 00:54:03,280 --> 00:54:05,840 Speaker 1: you a success or a failure, and you just can't 835 00:54:06,560 --> 00:54:10,920 Speaker 1: believe that it's just random. Well, we have a tendency 836 00:54:11,040 --> 00:54:13,879 Speaker 1: to want to take credit for things that work out 837 00:54:14,400 --> 00:54:18,239 Speaker 1: and want to blame outside factors. Yeah, but you might 838 00:54:18,280 --> 00:54:21,360 Speaker 1: actually blame yourself. People do blame that. They won't do 839 00:54:21,520 --> 00:54:25,879 Speaker 1: it publicly, but internally they get depressed. And that's that's 840 00:54:25,960 --> 00:54:30,319 Speaker 1: because they a little imposter syndrome or or something that. Yeah, 841 00:54:31,120 --> 00:54:33,759 Speaker 1: so a couple of questions we didn't get to that 842 00:54:34,040 --> 00:54:38,399 Speaker 1: that I have to ask you about. Um. So you've 843 00:54:38,440 --> 00:54:42,160 Speaker 1: written a ton about market bubbles and investor behavior. Um, 844 00:54:42,560 --> 00:54:47,800 Speaker 1: but behavioral economics is more diagnostic than prescriptive. It tells 845 00:54:47,880 --> 00:54:51,360 Speaker 1: what could be done, rather than advise people what to do. 846 00:54:52,520 --> 00:54:54,680 Speaker 1: And that kind of reminds me a little bit of 847 00:54:54,880 --> 00:54:59,719 Speaker 1: the bias blind spot. How people, um have an inability 848 00:54:59,800 --> 00:55:05,080 Speaker 1: to see their own biases. So so what can investors do? Uh? 849 00:55:05,160 --> 00:55:08,560 Speaker 1: If we know we're all biased, but we personally don't 850 00:55:08,600 --> 00:55:13,040 Speaker 1: see our own biases. Well, UM, I don't have a 851 00:55:13,200 --> 00:55:15,520 Speaker 1: good I can tell you what books to read. How 852 00:55:15,560 --> 00:55:20,239 Speaker 1: about Danny Danny Kaneman's Thinking Fast and Slow. That's been 853 00:55:20,280 --> 00:55:23,279 Speaker 1: a best seller. Uh, And it tells you about lots 854 00:55:23,320 --> 00:55:26,040 Speaker 1: of biases that you probably have, and you didn't know 855 00:55:26,120 --> 00:55:30,440 Speaker 1: about it, um. And then two stories I had I 856 00:55:30,560 --> 00:55:34,320 Speaker 1: have to ask um from the book. One is about 857 00:55:34,360 --> 00:55:39,680 Speaker 1: blue jeans just dungarees. How has that I'm wearing. I'm 858 00:55:39,760 --> 00:55:43,120 Speaker 1: wearing stretch blue jeans, which kind of made me think 859 00:55:43,200 --> 00:55:47,120 Speaker 1: of how blue jeans have changed over time. It started 860 00:55:47,160 --> 00:55:51,200 Speaker 1: out that this was for farmers and ranchers. Well even yeah, 861 00:55:51,400 --> 00:55:54,400 Speaker 1: it's right, they were work clothes. Uh. And in the 862 00:55:54,600 --> 00:55:57,600 Speaker 1: eighteen sevent dies, I think there was a governor of 863 00:55:57,680 --> 00:56:01,840 Speaker 1: Indiana called blue Jeans Bill who would wear blue jeans 864 00:56:01,960 --> 00:56:05,560 Speaker 1: to formal occasions and that he thought he was crazy, 865 00:56:05,600 --> 00:56:08,040 Speaker 1: but he made him famous and he was just didn't 866 00:56:08,040 --> 00:56:11,080 Speaker 1: want to be pretentious. Man was it? Was it real? 867 00:56:11,239 --> 00:56:15,040 Speaker 1: Was he a man of the people governor? And man? Yeah, 868 00:56:15,040 --> 00:56:16,800 Speaker 1: a man of the people who wanted to show that 869 00:56:16,880 --> 00:56:20,120 Speaker 1: he was. And it's had that sense to it ever since. 870 00:56:20,680 --> 00:56:25,279 Speaker 1: It's Uh, I'm I'm real, I'm not the fake. Uh. 871 00:56:25,920 --> 00:56:28,960 Speaker 1: It developed in the nineteen twenties further with the dude ranches. 872 00:56:29,120 --> 00:56:32,080 Speaker 1: That was another new Uh. That's where you would go 873 00:56:32,400 --> 00:56:35,719 Speaker 1: to a ranch and you'd ride horses and lassue and 874 00:56:36,080 --> 00:56:38,520 Speaker 1: pretend to be a cowboy, pretend you were a city person. 875 00:56:38,640 --> 00:56:40,640 Speaker 1: But you could do it for a week and you'd 876 00:56:40,640 --> 00:56:43,359 Speaker 1: buy a pair of blue jeans and then and then 877 00:56:43,840 --> 00:56:46,400 Speaker 1: it kind of showed that you were into the in things. 878 00:56:46,480 --> 00:56:48,960 Speaker 1: You were doing dude ranchy things. And then in the 879 00:56:49,040 --> 00:56:52,760 Speaker 1: nineteen thirties it became fashion and that's when they started 880 00:56:52,800 --> 00:56:55,920 Speaker 1: ripping their blue jeans and making them look worn, uh 881 00:56:56,920 --> 00:57:00,520 Speaker 1: to heighten the effect. Uh. And then it got h 882 00:57:00,680 --> 00:57:07,080 Speaker 1: impetus uh from uh The Rebel without a Car James Dean, 883 00:57:08,000 --> 00:57:11,520 Speaker 1: where he fashionably wore blue jeans for the whole movie, 884 00:57:12,360 --> 00:57:15,239 Speaker 1: and it had that was a powerful narrative that that 885 00:57:15,520 --> 00:57:20,560 Speaker 1: movie was admired. Right. He died in a crash driving 886 00:57:20,640 --> 00:57:23,480 Speaker 1: a Porsche like a month before the movie came out. 887 00:57:23,640 --> 00:57:26,120 Speaker 1: Kind of that kind of made the movie go viral, 888 00:57:26,160 --> 00:57:29,040 Speaker 1: didn't it. Yeah, it depends on things like that. Becoming 889 00:57:29,080 --> 00:57:34,000 Speaker 1: assassinated helps your narrative, or murdered or or or die 890 00:57:34,040 --> 00:57:37,720 Speaker 1: in a accident that reveals your reckless side, which is 891 00:57:37,760 --> 00:57:41,160 Speaker 1: what James Dean did. He was speeding, right, and that 892 00:57:41,320 --> 00:57:46,680 Speaker 1: was part of the character in the film. Yes, Uh, 893 00:57:47,000 --> 00:57:51,480 Speaker 1: it was. It was a good movie resonated. Um. So, 894 00:57:51,840 --> 00:57:53,600 Speaker 1: So the other thing I had to ask you about 895 00:57:54,080 --> 00:57:59,880 Speaker 1: was on expectations um. Pedro Domingos is a machine driven 896 00:58:00,120 --> 00:58:05,880 Speaker 1: linguisting linguistic processing expert at Hedge Fund daw And and 897 00:58:06,080 --> 00:58:12,800 Speaker 1: his quote, emerging narratives determine expectations, and expectations determine everything else. 898 00:58:13,360 --> 00:58:18,320 Speaker 1: How important are expectations to to narratives? Right? Well, I think, uh, 899 00:58:18,640 --> 00:58:22,479 Speaker 1: this is older tradition and economics where people would ask people, 900 00:58:22,560 --> 00:58:24,760 Speaker 1: what what do you expect the inflation rate to be 901 00:58:24,920 --> 00:58:29,600 Speaker 1: this year? Uh? George Katona, who was a founder of 902 00:58:29,680 --> 00:58:32,600 Speaker 1: the Michigan Consumer sentiment Well, one of the founders of 903 00:58:32,680 --> 00:58:35,560 Speaker 1: the Michigan Consumer said that he interviewed people and I 904 00:58:35,680 --> 00:58:37,720 Speaker 1: talked to them directly, and he would ask them, what 905 00:58:37,800 --> 00:58:39,840 Speaker 1: do you think the inflation rate will be this year? 906 00:58:40,520 --> 00:58:43,560 Speaker 1: And he got the impression he said that people don't 907 00:58:43,600 --> 00:58:47,960 Speaker 1: really Uh, they looked lost, what what is the inflation rate? 908 00:58:49,040 --> 00:58:52,680 Speaker 1: I don't have any clear idea And then if he 909 00:58:52,760 --> 00:58:55,720 Speaker 1: pressed them, they'd come up with a number. So he said, 910 00:58:55,760 --> 00:59:00,360 Speaker 1: they don't exactly have expectations. But maybe a lot of 911 00:59:00,400 --> 00:59:04,720 Speaker 1: people don't. Um, but maybe it's uh, it's more like 912 00:59:05,440 --> 00:59:10,720 Speaker 1: stories about they heard that the price of something went 913 00:59:10,800 --> 00:59:16,000 Speaker 1: up over the last year and it's been doing that Uh. 914 00:59:16,120 --> 00:59:20,480 Speaker 1: And so they're upset and they're angry. Uh and uh, 915 00:59:20,600 --> 00:59:23,080 Speaker 1: they can talk like that. If you force them to 916 00:59:23,200 --> 00:59:25,520 Speaker 1: do it, then they'll just say, Okay, my expectation is 917 00:59:25,600 --> 00:59:30,080 Speaker 1: ten percent. But they didn't have it. Someone once said 918 00:59:30,200 --> 00:59:34,840 Speaker 1: that the reason oil and guessoline prices are so important 919 00:59:34,880 --> 00:59:39,680 Speaker 1: to people's expectations inflation expectations is it's the only product 920 00:59:39,760 --> 00:59:44,640 Speaker 1: you buy that the price is displayed in toll numbers 921 00:59:44,760 --> 00:59:48,440 Speaker 1: on fort toll signs, and so you everybody sees it. 922 00:59:48,520 --> 00:59:52,360 Speaker 1: You can't help but notice it. How important is that too? 923 00:59:52,560 --> 00:59:58,720 Speaker 1: Stories of prices rising or fall. Yeah, So visual images 924 00:59:58,840 --> 01:00:03,280 Speaker 1: matter for stories. Also, a sense of identity matters. So 925 01:00:03,520 --> 01:00:07,800 Speaker 1: the inflation problem became the most serious problem facing the 926 01:00:07,840 --> 01:00:11,000 Speaker 1: country according to Gallup polls in some time in the 927 01:00:11,080 --> 01:00:15,560 Speaker 1: seventies eighties, maybe say seventies. Uh. And we had a 928 01:00:15,680 --> 01:00:21,720 Speaker 1: very big bout of inflation during that era. Uh right, So, 929 01:00:22,480 --> 01:00:24,040 Speaker 1: but I think that what I was gonna say is 930 01:00:24,120 --> 01:00:30,120 Speaker 1: that it not only affected people's lives directly, but it 931 01:00:30,200 --> 01:00:34,000 Speaker 1: also made them angry. And they started blaming labor unions 932 01:00:34,240 --> 01:00:37,680 Speaker 1: for the inflation, for bidding up, for forcing companies to 933 01:00:37,760 --> 01:00:40,920 Speaker 1: wage price raise prices in order to pay the higher 934 01:00:41,000 --> 01:00:44,320 Speaker 1: wages they were paying the unionized members, and it led 935 01:00:44,360 --> 01:00:48,000 Speaker 1: to a public reaction against unions, and it led to 936 01:00:48,280 --> 01:00:54,280 Speaker 1: ultimately to Ronald Reagan and a general diffusing of the 937 01:00:54,360 --> 01:00:57,680 Speaker 1: power of unions. Now by the time the seventies and 938 01:00:57,760 --> 01:01:01,440 Speaker 1: eighties came around, hadn't unions have been fooling for for 939 01:01:01,560 --> 01:01:03,960 Speaker 1: some time? Well? I don't. Yeah, when I when I 940 01:01:04,080 --> 01:01:07,880 Speaker 1: named Ronald Reagan, I don't mean that he invented the narrative. 941 01:01:08,400 --> 01:01:12,320 Speaker 1: He was uh. He good politicians know that they can't 942 01:01:13,160 --> 01:01:16,880 Speaker 1: routinely invent there. You can you can add some um 943 01:01:18,160 --> 01:01:21,640 Speaker 1: similar narratives that strengthen it, but you have to accept 944 01:01:21,680 --> 01:01:24,240 Speaker 1: that people are onto a certain story. And to be 945 01:01:24,360 --> 01:01:28,480 Speaker 1: a successful politician, you want to, uh, you want to 946 01:01:29,040 --> 01:01:32,680 Speaker 1: repeat the story. So he fired the air traffic controllers 947 01:01:33,120 --> 01:01:35,840 Speaker 1: when they went on strike, which I believe was the 948 01:01:35,920 --> 01:01:38,840 Speaker 1: first time something like that had happened. That played right 949 01:01:38,920 --> 01:01:41,080 Speaker 1: into the we're not going to take it from unions 950 01:01:41,120 --> 01:01:45,400 Speaker 1: anymore narrative, right, So he knew how to create a 951 01:01:45,440 --> 01:01:49,280 Speaker 1: new narrative built around a emerging narrative, so it would 952 01:01:49,280 --> 01:01:53,440 Speaker 1: become part of a constellation of anti union narratives, and 953 01:01:53,640 --> 01:01:56,280 Speaker 1: and that had an impact on prices or just public 954 01:01:56,360 --> 01:02:00,160 Speaker 1: perception of that was a major turning point, now just 955 01:02:00,280 --> 01:02:02,840 Speaker 1: for the US, but around much of the world, that 956 01:02:03,040 --> 01:02:06,080 Speaker 1: the inflation rate was up in the double digit range 957 01:02:07,160 --> 01:02:11,160 Speaker 1: per year UM and that it started to come down 958 01:02:11,440 --> 01:02:16,840 Speaker 1: right from that date. So these are big changes in economics. Uh, 959 01:02:17,040 --> 01:02:21,280 Speaker 1: events that are narrative driven. So economists tend often to 960 01:02:21,400 --> 01:02:27,120 Speaker 1: be focused on predicting month to month fluctuations. Uh, and 961 01:02:27,320 --> 01:02:30,560 Speaker 1: not why did there why was there a global peak 962 01:02:30,640 --> 01:02:35,120 Speaker 1: and inflation around? And that I think has to be 963 01:02:35,240 --> 01:02:39,960 Speaker 1: understood through changing narratives. Now, I would credit Paul Vulcar 964 01:02:40,120 --> 01:02:44,440 Speaker 1: and his actions is fed chief raising rates double digits 965 01:02:44,440 --> 01:02:46,840 Speaker 1: in order to break the back of inflation. But you're 966 01:02:46,880 --> 01:02:51,720 Speaker 1: suggesting the narrative favors what Ronald Reagan did. Well, I 967 01:02:51,800 --> 01:02:55,680 Speaker 1: think they both were important. Fact isn't. It's a complicated story. 968 01:02:56,320 --> 01:03:00,720 Speaker 1: But Voker might not have had the political cap to 969 01:03:01,360 --> 01:03:06,120 Speaker 1: do that if if the public wasn't already angry about inflation. 970 01:03:06,800 --> 01:03:10,200 Speaker 1: So it was a it was a courageous thing for 971 01:03:10,360 --> 01:03:14,960 Speaker 1: him two to create the Great Recession it was called 972 01:03:15,000 --> 01:03:19,200 Speaker 1: at the time, uh in in the nineteen eighties. Uh. 973 01:03:19,600 --> 01:03:22,520 Speaker 1: But he he was judging. I think that he did 974 01:03:22,640 --> 01:03:26,480 Speaker 1: have these uh that people were angry about that there've 975 01:03:26,520 --> 01:03:30,440 Speaker 1: been all this talk about controlling inflation. Uh, and it 976 01:03:30,600 --> 01:03:33,720 Speaker 1: just gets worse and worse. And they also believe this 977 01:03:33,840 --> 01:03:36,920 Speaker 1: was part of the popular narrative then that it eats 978 01:03:36,960 --> 01:03:40,680 Speaker 1: into my wallet. They didn't. They didn't think as many 979 01:03:40,800 --> 01:03:44,360 Speaker 1: economists did that it would it would get into their 980 01:03:44,760 --> 01:03:48,240 Speaker 1: paycheck as well, even though they weren't unionized by uh 981 01:03:49,560 --> 01:03:53,680 Speaker 1: by market forces. Huh. Quite quite interesting. So now let 982 01:03:53,760 --> 01:03:56,960 Speaker 1: me get to my favorite questions that we ask all 983 01:03:57,040 --> 01:04:00,280 Speaker 1: of our guests. This is sort of our speed ounds. 984 01:04:00,560 --> 01:04:03,480 Speaker 1: Feel free to go is as short, uh as you want? 985 01:04:04,280 --> 01:04:07,400 Speaker 1: Tell us the first car you ever owned. You're making model. 986 01:04:09,120 --> 01:04:14,920 Speaker 1: My parents gave me a Rambler Ambassador in the nineties 987 01:04:15,160 --> 01:04:19,160 Speaker 1: sixties because it was a safe car. And I don't 988 01:04:19,200 --> 01:04:22,160 Speaker 1: follow my parents too much in detail, but I've been 989 01:04:22,200 --> 01:04:25,320 Speaker 1: buying safe cars ever since. I recall taking a cab 990 01:04:25,400 --> 01:04:27,400 Speaker 1: with you once and in the back seat you put 991 01:04:27,480 --> 01:04:29,760 Speaker 1: on the seatbelt. I don't know a lot of people 992 01:04:29,880 --> 01:04:34,400 Speaker 1: do that, um from a safety perspective. Not the Rambler, 993 01:04:34,440 --> 01:04:37,320 Speaker 1: by the way, not the Porsche Speedster that James Dean, 994 01:04:37,720 --> 01:04:41,120 Speaker 1: that's right, I'm not a James Dean Duke. Um, what's 995 01:04:41,120 --> 01:04:46,800 Speaker 1: the most important thing people do not know about Bob Schiller? So? Uh, 996 01:04:47,360 --> 01:04:50,160 Speaker 1: I don't know what's important about me? Uh? Is it 997 01:04:50,280 --> 01:04:54,000 Speaker 1: something about my personality? What? What do people not know 998 01:04:54,120 --> 01:05:00,240 Speaker 1: about you? Uh? Well, I okay, I'm thinking, Uh, this 999 01:05:00,360 --> 01:05:03,200 Speaker 1: is just off the wall thought. But uh, I think 1000 01:05:03,280 --> 01:05:10,160 Speaker 1: people differ in their um uh, their ability to focus attention, 1001 01:05:10,880 --> 01:05:15,400 Speaker 1: and their ability to complete projects. I think I did. 1002 01:05:15,920 --> 01:05:22,000 Speaker 1: I was a project oriented person from childhood, but distractable. 1003 01:05:22,720 --> 01:05:26,080 Speaker 1: My secretary will tell you I'm distractable, but I keep 1004 01:05:26,160 --> 01:05:30,080 Speaker 1: coming back. So I think that people like me should 1005 01:05:30,480 --> 01:05:34,320 Speaker 1: do things like write books. And this is what your 1006 01:05:34,760 --> 01:05:40,920 Speaker 1: six book? Your how it could be? I say tenth book? Um? 1007 01:05:42,360 --> 01:05:45,400 Speaker 1: Who were your early mentors who affected your career? Be 1008 01:05:45,560 --> 01:05:53,280 Speaker 1: it in academia or economics? Okay? Um in elementary school, 1009 01:05:53,360 --> 01:05:56,040 Speaker 1: I don't know his first name. Mr Keener is my 1010 01:05:56,240 --> 01:05:59,600 Speaker 1: science teacher, and he encouraged me I wanted to be 1011 01:05:59,640 --> 01:06:03,240 Speaker 1: a sign dentist. Really I am a social scientist. And 1012 01:06:04,680 --> 01:06:09,160 Speaker 1: also my high school geometry teacher, Mr Sucy I think 1013 01:06:09,160 --> 01:06:11,480 Speaker 1: it was Roger Suci and now know his first name? 1014 01:06:12,000 --> 01:06:16,480 Speaker 1: Who uh encourage me about mathematics and I wrote a 1015 01:06:17,560 --> 01:06:19,880 Speaker 1: extra paper for his course, which he didn't even ask for, 1016 01:06:20,360 --> 01:06:24,680 Speaker 1: in which I use the differential calculus to derive a 1017 01:06:24,760 --> 01:06:27,960 Speaker 1: formula for the length of a spiral, And he was 1018 01:06:28,120 --> 01:06:32,560 Speaker 1: so encouraging. You're doing original mathematics. I assume somebody else 1019 01:06:32,600 --> 01:06:35,920 Speaker 1: has already done that, but I don't know where. I 1020 01:06:36,040 --> 01:06:39,760 Speaker 1: assume I got it right. I don't know, so um, 1021 01:06:40,080 --> 01:06:42,360 Speaker 1: tell us about some of your favorite books. You've mentioned 1022 01:06:42,480 --> 01:06:46,360 Speaker 1: numerous books so far. What what books do you really enjoy? 1023 01:06:46,520 --> 01:06:50,200 Speaker 1: What do you read for pleasure or fun? See? One 1024 01:06:50,240 --> 01:06:53,439 Speaker 1: thing is that I am distractable, so I often don't 1025 01:06:53,480 --> 01:06:57,400 Speaker 1: finish them. I jump around and look for interesting places. 1026 01:06:57,480 --> 01:06:59,400 Speaker 1: Are you reading like three or four books at once? 1027 01:07:00,640 --> 01:07:04,200 Speaker 1: What I'm doing right now? It's strange. I bought in 1028 01:07:04,280 --> 01:07:09,320 Speaker 1: an antiquarian bookstore a bound volume of for eighteen forty 1029 01:07:09,440 --> 01:07:13,760 Speaker 1: nine of Little Living Age ever heard of it? It 1030 01:07:13,920 --> 01:07:18,680 Speaker 1: was an intellectual magazine like the Atlantaker Harper's from that time, 1031 01:07:19,160 --> 01:07:21,800 Speaker 1: and I thought, I'll just, you know, every night, I'll 1032 01:07:21,840 --> 01:07:25,840 Speaker 1: read one issue of it. Uh, And it just brought me, 1033 01:07:26,080 --> 01:07:28,840 Speaker 1: brings me into the year eighteen forty nine. I'm letting 1034 01:07:28,920 --> 01:07:32,360 Speaker 1: them decide what I read. Do you do you I 1035 01:07:32,480 --> 01:07:36,240 Speaker 1: make discoveries about the path. For example, I discovered that 1036 01:07:36,360 --> 01:07:40,160 Speaker 1: women's liberation was already I just read a story about 1037 01:07:40,880 --> 01:07:44,880 Speaker 1: famous women poets in that in that volume in eighteen 1038 01:07:44,960 --> 01:07:49,280 Speaker 1: forties eighty nine. Yeah, and they didn't mention Emily Dickinson. 1039 01:07:49,640 --> 01:07:52,040 Speaker 1: So then I looked it up. She was only nineteen 1040 01:07:52,120 --> 01:07:55,600 Speaker 1: years old in eighteen forty nine. What what are the 1041 01:07:55,640 --> 01:07:58,000 Speaker 1: books have you? What? What do you like to recommend 1042 01:07:58,040 --> 01:08:01,240 Speaker 1: to people? What or what book just resonated with you? 1043 01:08:01,360 --> 01:08:04,400 Speaker 1: So I don't know if I recommend books very often, 1044 01:08:04,640 --> 01:08:09,560 Speaker 1: But I like autobiographies are of diaries. So the autobiography 1045 01:08:09,600 --> 01:08:15,160 Speaker 1: of Benjamin Franklin influenced me. Uh, He's autobiography, not somebody 1046 01:08:15,160 --> 01:08:23,400 Speaker 1: else's biography life. Uh. And the diary of um uh 1047 01:08:24,479 --> 01:08:28,400 Speaker 1: the name the version wrote the like of of Samuel Johnson, 1048 01:08:28,800 --> 01:08:34,840 Speaker 1: James Boswell, Uh and uh, I just like real thing. 1049 01:08:34,880 --> 01:08:37,840 Speaker 1: I like to hear people from the past talk to me. 1050 01:08:39,400 --> 01:08:41,400 Speaker 1: That's what little the living age is doing for me. 1051 01:08:42,439 --> 01:08:44,720 Speaker 1: And having people from the past, I want to go 1052 01:08:44,920 --> 01:08:50,280 Speaker 1: back there and hear them. So James Boswell his own autobiography, Yeah, 1053 01:08:50,360 --> 01:08:52,160 Speaker 1: in fact it was written on a daily It's really 1054 01:08:52,240 --> 01:08:56,040 Speaker 1: a diary what he did today and he did a 1055 01:08:56,120 --> 01:09:00,400 Speaker 1: lot of things that were not entirely moral. He didn't 1056 01:09:00,439 --> 01:09:05,760 Speaker 1: plan to publish it, apparently from the standards of his age. Um, 1057 01:09:06,160 --> 01:09:09,360 Speaker 1: but he was an overall a nice person. Um. What 1058 01:09:09,479 --> 01:09:10,920 Speaker 1: do you do for fun? What do you do when 1059 01:09:10,960 --> 01:09:15,720 Speaker 1: you're not researching and writing your own books? Uh? I 1060 01:09:15,840 --> 01:09:20,360 Speaker 1: read things. I sit with my wife. Now I'm watching 1061 01:09:20,439 --> 01:09:24,160 Speaker 1: television more. But it's whatever she chooses. What sort of 1062 01:09:24,160 --> 01:09:27,360 Speaker 1: stuff are you watching on TV? Or things like John 1063 01:09:27,400 --> 01:09:32,400 Speaker 1: Oliver and uh oh, the PBS News Hour. These are 1064 01:09:32,520 --> 01:09:36,120 Speaker 1: her choice. But I liked them too, So that's interesting. 1065 01:09:36,479 --> 01:09:38,680 Speaker 1: Tell us about a time you failed and what you 1066 01:09:38,880 --> 01:09:43,280 Speaker 1: learned from the experience. Well, I I had a firm 1067 01:09:43,840 --> 01:09:49,120 Speaker 1: called Macro Markets that failed, but it didn't completely fail. 1068 01:09:49,200 --> 01:09:54,120 Speaker 1: It went under, it uh collapsed. It's no longer in exist, 1069 01:09:54,680 --> 01:09:58,240 Speaker 1: but it did leave a legacy, which was what well 1070 01:09:58,360 --> 01:10:04,200 Speaker 1: we We wanted to create markets for real estate, and 1071 01:10:04,280 --> 01:10:07,439 Speaker 1: there still is. The Chicago Mercantile Exchange still has a 1072 01:10:08,040 --> 01:10:11,479 Speaker 1: market that we helped them create based on the SMB 1073 01:10:11,640 --> 01:10:16,439 Speaker 1: Case Schiller home Price now Core Logic home price industry. 1074 01:10:17,200 --> 01:10:20,479 Speaker 1: So I think what we did change the world, and 1075 01:10:20,640 --> 01:10:22,720 Speaker 1: even if it didn't make us rich. See part of 1076 01:10:22,800 --> 01:10:25,720 Speaker 1: the inspiration. It's part of the pleasure. I'm living out 1077 01:10:25,800 --> 01:10:28,639 Speaker 1: my father's dream, who wanted me to be an entrepreneur. 1078 01:10:29,320 --> 01:10:34,240 Speaker 1: There's something about creativity that is rewarding even if the 1079 01:10:34,280 --> 01:10:39,360 Speaker 1: business doesn't succeed. Well, you created the cape ratio, and 1080 01:10:39,439 --> 01:10:41,559 Speaker 1: I know there are a number of mutual funds based 1081 01:10:41,600 --> 01:10:47,040 Speaker 1: on that. There are that that's fairly entrepreneurial, right. Uh, yeah, 1082 01:10:47,560 --> 01:10:51,920 Speaker 1: I I have the American it's not just American, the 1083 01:10:52,120 --> 01:11:00,040 Speaker 1: entrepreneurial spirit that I got from my father. Um, what 1084 01:11:00,080 --> 01:11:06,960 Speaker 1: do you most optimistic and or pessimistic about today? I 1085 01:11:07,040 --> 01:11:09,560 Speaker 1: don't like to be too pessimistic, and I'd like to 1086 01:11:09,640 --> 01:11:13,360 Speaker 1: do that. Uh, but I am worried about things like 1087 01:11:13,439 --> 01:11:20,760 Speaker 1: global warming and possible possible crisis in the planet. Uh. 1088 01:11:21,760 --> 01:11:23,599 Speaker 1: You know, we don't like to think about these things. 1089 01:11:23,840 --> 01:11:27,880 Speaker 1: I think we should be more concerned about making agreements 1090 01:11:27,960 --> 01:11:31,040 Speaker 1: with other countries about how we're going to handle h 1091 01:11:31,520 --> 01:11:36,120 Speaker 1: environmental crises like global warming. We might not be able 1092 01:11:36,160 --> 01:11:38,160 Speaker 1: to see them now and identify them, but we should 1093 01:11:38,200 --> 01:11:41,600 Speaker 1: have some risk sharing agreements. What are we gonna do 1094 01:11:41,960 --> 01:11:46,240 Speaker 1: if global warming gets so bad, for example, that some 1095 01:11:46,479 --> 01:11:49,840 Speaker 1: country is unlivable, where do they go? You know who 1096 01:11:49,920 --> 01:11:52,960 Speaker 1: wants to take them in. That's the problem. That sounds 1097 01:11:53,040 --> 01:11:56,559 Speaker 1: like quite the problem. Um. So, if one of your 1098 01:11:57,640 --> 01:11:59,840 Speaker 1: students came to you, or a millennial came to you 1099 01:12:00,040 --> 01:12:03,840 Speaker 1: when I was looking for career advice about working in 1100 01:12:03,880 --> 01:12:08,880 Speaker 1: the field of either behavioral economics or finance, what sort 1101 01:12:08,920 --> 01:12:11,439 Speaker 1: of advice would you give them? Well, this would be 1102 01:12:11,560 --> 01:12:16,799 Speaker 1: very general. I think that, Uh, finance is an important 1103 01:12:16,840 --> 01:12:19,200 Speaker 1: field I teach. I have an online course that's free, 1104 01:12:19,240 --> 01:12:21,479 Speaker 1: by the way. On course there are called financial markets. 1105 01:12:22,640 --> 01:12:25,639 Speaker 1: And I'm very proud of that because I have educated 1106 01:12:25,760 --> 01:12:28,519 Speaker 1: so many people, not just from Yale, but from all 1107 01:12:28,560 --> 01:12:31,640 Speaker 1: over the world who went into finance. So I think 1108 01:12:31,760 --> 01:12:36,000 Speaker 1: finance is a good field because it solves problems. Uh. 1109 01:12:36,240 --> 01:12:40,320 Speaker 1: And it's not the government solving problems, although it can 1110 01:12:40,400 --> 01:12:44,599 Speaker 1: also be. There's government finance as well. Uh. And behavioral 1111 01:12:44,680 --> 01:12:50,400 Speaker 1: finances just finance coming into reality, I think uh. Uh, 1112 01:12:51,280 --> 01:12:55,000 Speaker 1: it's not as behavioral finance is not a job category 1113 01:12:55,479 --> 01:12:59,040 Speaker 1: like finances. UH. But I think in order to be 1114 01:12:59,120 --> 01:13:01,880 Speaker 1: well rounded, when should know something about it. I tell 1115 01:13:02,000 --> 01:13:06,639 Speaker 1: my students, UH, in my course financial markets, even if 1116 01:13:06,720 --> 01:13:09,400 Speaker 1: you don't want to go into finance, you should take 1117 01:13:09,479 --> 01:13:14,240 Speaker 1: this course because finance is about making things happen realistically. 1118 01:13:14,320 --> 01:13:18,280 Speaker 1: How do you finance activities that are useful for society? 1119 01:13:19,280 --> 01:13:22,360 Speaker 1: Quite interesting? And our final question, what is it that 1120 01:13:22,479 --> 01:13:25,519 Speaker 1: you know about the world of economics and narratives today 1121 01:13:26,080 --> 01:13:33,000 Speaker 1: that you wish you knew forty years ago? Uh? I 1122 01:13:33,120 --> 01:13:35,320 Speaker 1: think I'm stalling on this one. I wish I knew 1123 01:13:35,360 --> 01:13:38,960 Speaker 1: everything that had come up. And there's so many details 1124 01:13:39,080 --> 01:13:41,959 Speaker 1: and uh one one thing. I just visited the Behavioral 1125 01:13:42,040 --> 01:13:46,920 Speaker 1: Insights team in UM the UK last week and very 1126 01:13:46,960 --> 01:13:49,640 Speaker 1: impressed with all the things. But not now. These are 1127 01:13:49,720 --> 01:13:53,920 Speaker 1: sprouting up everywhere. They're they're they're consulting groups effectively that 1128 01:13:54,080 --> 01:14:00,080 Speaker 1: help people, uh do their they're financing more effectively in 1129 01:14:00,400 --> 01:14:04,160 Speaker 1: account of of what we know, and there's so much 1130 01:14:04,280 --> 01:14:08,320 Speaker 1: not a lot of it is experimental, and uh, you 1131 01:14:08,439 --> 01:14:11,280 Speaker 1: have to try things out and see what how people 1132 01:14:11,360 --> 01:14:15,960 Speaker 1: react because how people react is not for not mostly 1133 01:14:16,040 --> 01:14:20,320 Speaker 1: predictable based on just the first theory. Quite interesting. Thank you, 1134 01:14:20,400 --> 01:14:22,840 Speaker 1: Bob for being so generous with your time. We have 1135 01:14:23,000 --> 01:14:26,720 Speaker 1: been speaking with Professor Robert Schiller of Yale University. His 1136 01:14:26,840 --> 01:14:31,000 Speaker 1: new book, Narrative Economics, How Stories Go Viral and Drive 1137 01:14:31,439 --> 01:14:35,640 Speaker 1: Major Economic Events was released on October one, If you 1138 01:14:35,840 --> 01:14:38,200 Speaker 1: enjoy this conversation, we'll be sure and look up an 1139 01:14:38,240 --> 01:14:40,800 Speaker 1: inch or down an inch on Apple iTunes and you 1140 01:14:40,880 --> 01:14:44,120 Speaker 1: can see any of our prior two hundred and fifty 1141 01:14:44,640 --> 01:14:48,080 Speaker 1: or so conversations we've had over the past five years. 1142 01:14:48,720 --> 01:14:52,400 Speaker 1: We love your comments, feedback and suggestions right to us 1143 01:14:52,479 --> 01:14:55,560 Speaker 1: at m IB podcast at Bloomberg dot net, Go to 1144 01:14:55,600 --> 01:14:58,560 Speaker 1: Apple iTunes, give us a nice review. We really appreciate that. 1145 01:14:59,120 --> 01:15:01,040 Speaker 1: I would be remin us if I did not think 1146 01:15:01,120 --> 01:15:04,240 Speaker 1: the crack staff that helps put this together each week. 1147 01:15:04,400 --> 01:15:08,519 Speaker 1: Attica val Broun is our project director, Michael Boyle is 1148 01:15:08,720 --> 01:15:14,479 Speaker 1: our booker slash producer, Caroline Ria is our audio engineer today, 1149 01:15:14,760 --> 01:15:18,960 Speaker 1: and Michael bat Nick is my head of research. I'm 1150 01:15:19,040 --> 01:15:22,360 Speaker 1: Barry Ritolts. You've been listening to Masters in Business on 1151 01:15:22,479 --> 01:15:23,360 Speaker 1: Bloomberg Radio.