Latest / Words & Numbers / Episode 490: We’re Not Interested

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Episode 490: We’re Not Interested · Words & Numbers

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Coming up next on Words and numbers administration.
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Follies the illogic of the TSA. NFL Resale.
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And credit cards. And the Fed.
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All this and more coming up next on Words and numbers, the Civil
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original production. Check us out at civil.com.
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That's C ivl.com. Hi, I'm James.
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And I'm Anthony. And this is words and numbers,
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Ant what's new and exciting in your world this week?
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I ran across something over the Christmas holidays that I've had
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on the back burner. I keep wanting to get to it and
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other things were getting in the way.
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So I'm going to bring this up and this is not my doing.
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I'm stealing this from Reason. The good people at Reason do a
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lot of really interesting work. This comes from a video that
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they put out. See a logic of the TSA?
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Now understand the stuff I'm about to list here.
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This is all true things, and these are regulations coming out
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of this entity whose job it is to protect us from terrorists as
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we fly on planes. The rules An avocado.
1:10
You can take that on a plane, but not guacamole.
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It's considered a gel. Is there a second ingredient in
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guacamole of which I am unaware? I don't think it has anything to
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do with the other ingredients, it has to do with the fact that
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you smashed the avocado and it now technically qualifies as a
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gel. Right.
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Well, this this brings to mind a couple of irritants that I have
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had with TSA over the years. They have been known to steal my
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peanut butter because peanut butter is apparently a liquid.
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And when I brought up that peanut butter is not a liquid,
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they said no, no, it assumes the shape of the container in which
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it exists. And I said, so mashed potatoes
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are a liquid and they so are cats.
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Yes, yes, they are. And, and, and cats.
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I guess that's right. So I, I am, I am known to have
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words with the TSA agent about things like this.
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And as a matter of fact, when they took my peanut butter last
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time, they and I, I travel with peanut butter as the only food I
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can eat in certain places that, that I travel to, Right, right.
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I'm diabetic. I have all kinds of issues with
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this. So I just bring a jar of peanut
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butter and a spoon. And the, the woman said, is it
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OK if I take this? And I said no.
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And then nobody knew what to do. You said no to the TSA and they
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wouldn't. She said.
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She said I'm going to take this OK, and I said no.
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Not OK it. Was kind of like that time back
2:37
in the days when I was smoking and I flicked a cigarette out of
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my automobile in Utah and was promptly pulled over by a state
2:45
police officer and given a ticket that I had to go to court
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for. And I got assessed a massive
2:51
fine. And the judge said, do you want
2:53
to pay that today? And I said, no, no, I do not.
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And the entire the entire courtroom burst into laughter
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and and he sat back, having never heard a response like that
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and said, well, allow me to rephrase.
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Can you pay that today? I said, oh, yeah, sure.
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But you know, saying no to people is always an option.
3:14
You should try it sometimes. Well.
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But back let let me return to my list.
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So avocado, OK? Guacamole is not cherry pie.
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OK, Cherry filling, no. Huh.
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Crust makes all the difference. Apparently so.
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Now the fact that you could take the cherry pie on there and as
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you're on the plane, peel the crust off and you would have
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cherry filled that, no one's thought of that.
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I guess. I don't know, 4 inch scissors,
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OK, One inch pocket knife. No.
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Plastic wiffle ball bats are considered a bludgeoning weapon.
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Plastic wiffle ball bat. You know, the ones that as
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teenagers you would whack your buddy upside the head and he
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would laugh because it just bounces off and makes a noise.
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I can tell you 2 things. I have been hit in the head with
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a wiffle ball bat. I have been hit in the head with
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a a a wooden baseball bat. One of those two things is
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bludgeoning instrument, the other is not.
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Oh, it gets better. The plastic wiffle ball bat is a
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bludgeoning weapon, but a titanium tennis racket is not.
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Yeah, that, that ain't right. Yeah, Your government in action,
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people, Your government in action.
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You cannot bring a container containing more than 3 1/2
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ounces of liquid unless, and we already know this, it's divided
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up amongst a bunch of bottles. So the individual bottles could
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add up to more than 3 1/2 oz That's fine.
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But any single bottle? No, unless you label it as
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breast milk. If you write breast milk on it
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then it's OK. What if what if I I'm just just
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spitballing here. What if I took my big water
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bottle and labeled it breast milk?
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I encourage you to try that. We'll do it next, flying next
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week. We'll see how it works.
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Snow globes not allowed, but if you bring a bowl filled with
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water. No comment on the 3.5 oz here.
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Bowl filled with water is OK provided it contains a live
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fish. Interesting.
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I'm so astounded you can't bring a single canister.
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You know those little canisters of CO2?
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Yeah, can't bring a single canister.
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But if you have a life vest, you can bring four of them.
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Apparently they're used in the life vest to fill it up.
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So you float. I didn't realize you could bring
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your own life vest. I thought you had to use the one
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provided by the by the airline. This is people since the the
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founding of the TSA, they've called IT security theater, but.
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We have called it that. It's a very badly written piece
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of theater, if indeed that's what it is.
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It the stuff. It makes no sense whatsoever.
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And yet these are the rules that were required to live by.
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Because terrorism. Not even.
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It's because. Of the What do you want to say?
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I It's not even the specter of terrorism.
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It's because somebody somewhere said, oh, a terrorist might do
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X, so let's ban it. Yeah, we're all still taking off
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our shoes because somebody tried to light his shoes on fire when
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they contained an explosive, you might remember.
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Right, which was unsuccessful. But you don't have to take your
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shoes off if you're pre-check. Right.
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Because no terrorist would ever sign up for pre-check.
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I don't even know what to say about.
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This so thanks to the people at Reason, this was an excellent
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list. If you want to see it go on
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YouTube, they've got an entire video.
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They have other examples on there.
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I, as you well know, Aunt I, I have a a certain familial
6:55
affection for the people at reason, and I would encourage
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everybody to go check out what they do.
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They do all kinds of good stuff. I wanted to start Aunt by
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talking for just a moment about last week or the week before.
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I guess it was when we had such technical snafus that we had to
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run an episode into the ground. Do you remember on?
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That right? Yeah.
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We lost an episode. I got a bunch of texts and
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emails asking, wait for it, are you still alive?
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Huh. Everybody just assumed that when
7:32
we missed an episode, I was dead.
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Right. What did I not get?
7:39
Is Anthony alive? So a bunch of people I'm looking
7:45
at you Michael Jensen in in particular, but nonetheless, a
7:49
bunch of people asked me if I was alive.
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What kind of answer do you expect to get?
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If you think I'm dead, direct that nonsense to aunt from here
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on out. So I I want to having gotten
8:02
that off my chest. Even even my wife said when she
8:06
found out that we we scuttled an episode says, oh, people are
8:09
going to think you're dead. Yeah, and I looked at what?
8:11
Why? Won't Why won't people think
8:13
Anth is dead? Never.
8:15
Never even entered her mind, but I digress.
8:18
We're happy to announce that civil members can join me in
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James for a new lecture series, Words and Numbers Live.
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9:03
Clark. Neely, our good friend from the
9:04
Cato Institute, we haven't had him on for a while.
9:08
It's probably about time, but he once remarked that the only
9:11
solace he took in the Trump administration was that it was
9:15
so incompetent that it wouldn't be able to get anything done.
9:19
You remember when he said that? Yes.
9:23
Interestingly, we've got 2 semi related stories that came out
9:30
this week. The 1st is that Congresswoman
9:33
Robin Kelly has decided to serve up impeachment papers against
9:39
Christy Gnome. Christy Gnome is that horrible
9:44
woman who takes care of Homeland Security.
9:48
So it's it's on her watch that ICE operates and that we do all
9:53
the things we do in that theater.
9:57
That they ban the snow globes. That's theater too, right?
10:02
And I thought, well, isn't that, isn't that interesting that
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people are willing to say out loud, maybe Christy Gnome has
10:10
got to go now. It's a partisan issue at this
10:14
point and it's Democrats saying this, But with midterms coming
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up and people getting shot by ICE agents and depart all kinds
10:25
of other federal agents as well, how long will it be until some
10:30
Republican defectors join that parade?
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Right. And, and I don't, I don't know,
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but I suspect it's going to happen before long.
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And then add to this President Trump, who is now more or less
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openly complaining about his attorney general, Pam Bondi, who
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can't get any of the things he wants done, done, which means
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prosecuting election fraud, right?
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Things like this. There's a a laundry list of
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complaints that he has. Now, when asked on the record
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for Trump's view of Pam Bondi, administration types come back
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and say, oh, she has the full faith of President Trump.
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So the public message is one thing, but the muttering is
11:21
something completely different. And we've got all of a sudden
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two people who have seats at the big table in the administration
11:30
who are probably a hair's with away from being shown the door.
11:36
Because the minute these people become liabilities, they go.
11:40
And the minute these people can't further Trump's agenda,
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they go. And we've got one for behind
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each door here. And I wouldn't be the least bit
11:52
surprised if Bondy didn't make the next couple of months and if
11:57
Nome might have a problem soon thereafter.
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And the, the minute this becomes a liability for congressional
12:03
Republicans, you'll see a movement on this.
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And it, it won't take the, the, the shape of an impeachment.
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It'll, it'll be whispering in ears.
12:16
She's got to go. And then miraculously, she will
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just be gone. So we wait.
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And, and that's kind of a bellwether for how the Trump
12:26
administration sees how the midterms are going.
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And we'll we'll take that up next time on, on the main
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episode. But for now, I, I think that's
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enough. And, and that Ant brings us to
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the foolishness of the week. And this comes from friend of
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the podcast, David Shane, who made sure we got this.
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He he sent it in, I, I think two or three different ways.
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And it comes as a result of the Seattle Seahawks.
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That's a football team for you, telling their season ticket
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holders that if they buy season tickets with the intent of
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reselling playoff tickets, they will have their season ticket
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holding privileges revoked. So when you buy a season ticket,
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you haven't actually bought a season ticket.
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It's not yours. If it was yours, you could do
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what you wanted with it. If it if it's yours, you could
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do whatever you want with it. And this comes up with concert
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tickets all the time, right? If if I have the presence of
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mind to buy a bunch of concert tickets at $50 and the demand is
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over the top and I can sell them for $300.
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People complain about this all the time.
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That doesn't mean I can't do it, It just means that people don't
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like it. Now, if people really didn't
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like it, they wouldn't buy the tickets.
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If they buy the tickets, there's a market.
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And if there's a market, I'm well within my bounds offering
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my tickets for resale. And I wonder where this is going
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to leave the NFL 'cause when you buy season tickets for an NFL
14:05
team, you get the regular season package, which is 8 or 9 games
14:09
at home, and then you get first dibs to buy playoff tickets if
14:13
your team is fortunate enough to be in the playoffs.
14:16
But if I'm not allowed to resell those playoff tickets, maybe I
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don't want the season tickets. Or maybe I do want the regular
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season tickets, but I have no interest in going to the playoff
14:28
game. But I see it as a way to recoup
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much of my loss in buying the season ticket.
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But these are very expensive things.
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Season tickets for an NFL team. And if I could recoup half the
14:40
loss by selling playoff tickets, I'm going to do it.
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And then I'll stay home and watch the game on TV.
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But all of a sudden the the teams themselves are starting to
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pipe up and say, Nope, you can't do it.
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And they have an interesting take on it, right?
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The the fans in Seattle are known as the 12th man, right?
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They provide a real home field advantage for the Seahawks.
15:04
And every playoff ticket you sell to a non Seahawks fan
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undermines that home field advantage just a little tiny
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bit, right? Sure.
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Which is kind of an interesting argument.
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That's a way better argument. We want to give our boys the
15:18
best advantage they can have. That's a way better argument
15:22
than saying we don't want you to make any money on the sale of
15:25
your ticket. Then where this ends up I have
15:29
no idea. I think it's worth thinking
15:31
about that for a bit because people I think generally have
15:34
this knee jerk reaction of, yeah, this isn't right.
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The guy's buying the ticket for whatever.
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He buys it for 50 bucks. He turns around, sells it for
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200 and it looks like he's he's skimming something.
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He's getting money without doing any anything.
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And you don't, you don't realize the value there until you're in
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a situation like, for example, there's some game coming up that
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you, you know, you really want to, to attend or you really want
16:06
the season passes or whatever it is they go on sale at such and
16:10
such a time you have to work. Maybe you drive up an hour to
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get to your job, whatever it is. But because of that, you can't
16:17
wait in line. It's just not possible.
16:20
And now all of a sudden it looks very unfair that the people who
16:23
don't have your responsibilities are somehow able to wait in line
16:27
and get the ticket and you can't.
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But if there's a scalper, you can find him and say, OK, look,
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you know, certainly you have somebody says, yeah, I've got
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some 200 bucks. OK, fine.
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And now you have access where you didn't have it before.
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Right. And you know, there's another
16:44
layer of complexity here, too, because when you buy your season
16:48
ticket, there's no guarantee your team's going to be in the
16:51
playoffs, right? You you pay all that money to go
16:55
see the team, and then turns out they're really good.
16:59
Well, OK. Now what?
17:01
My beloved New England Patriots, over the last two years
17:05
combined, won eight games. This year they went 14 and 13
17:11
and. 4. And they made the play offs.
17:15
Well, what were the odds of that happening?
17:17
And yet there I was, each of the last six years, buying season
17:21
tickets. Now think about that same thing
17:24
in the other direction that the team is selling season tickets
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and maybe they've had, they have a good record and the season
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tickets sell for a high amount and this season is just horrible
17:38
and nobody wants to go to the games.
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But they've already sold the the team has sold the tickets for a
17:43
high price. What happens is the scalper
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takes on the risk there. Oh, that's right, the team gets
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a fixed price upfront. The scalper?
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If he makes a profit, great. If he loses, that's on him.
17:55
Yeah, that's on him. And the only I've only gone to
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one NFL game in my entire life, and it was here in Arizona to
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see the lousy Arizona Cardinals play the lousy New England
18:05
Patriots. And I got those tickets for 30
18:08
bucks apiece. That was way under the ticket
18:11
price. Way under.
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Yeah. But you know, nobody else was
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going to pay anything for them. Yep, the.
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The the season ticket owner I bought them from, he assumed the
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risk when he bought the tickets. Well, why allow the downside
18:28
risk but not allow the upside risk?
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Yep. And that doesn't, I mean, that
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just doesn't seem right at all. I don't know how this is going
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to shake out. And I'm interested to watch.
18:37
I I watch concert tickets and sporting event tickets like a
18:43
hawk and it's fascinating. And you'll see the free market
18:47
in action with Super Bowl tickets coming up in February
18:51
where you will pay 10/20/30 times the face value of the
18:56
ticket just to get in the door. Now I won't because I can't
19:01
afford that nonsense, but that doesn't mean people who can
19:04
shouldn't be allowed to. You know, and that raises
19:07
another thought, which is there's valuable information
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here that the scalpers are inadvertently providing to the
19:16
team. So the team is selling their
19:18
tickets for whatever it is. And if they observe the second
19:23
hand market, they can get information about what they
19:26
should charge in the future and. I know what their pricing should
19:29
be next year. Right.
19:31
I used to do this with my students.
19:34
You know the we happen to use the Joe Malone Cologne.
19:40
They had all these various cents.
19:43
And you no idea what that is. It's a it's a pricey Cologne and
19:48
you could go online like Amazon, I guess maybe it was even eBay
19:54
way back. But you go online and you could
19:57
buy these, the little samples, you know, like half an ounce or
20:01
something. And they were, it was second
20:03
hand things. People had collected these
20:06
samples and were reselling them. And so with my students, we
20:09
would collect information of here's this guy's offering $0.10
20:15
as SCENTS. In which sense are they and
20:19
what's he charging for the whole packet?
20:22
And this other guy is selling 5. Which ones is he selling?
20:24
What's he charging for the whole packet?
20:26
And from that information, you can run some statistics and come
20:30
up with the market price. What is the market price for
20:34
each of the individual flavors? Sense that Joe Malone's
20:38
producing, that's valuable marketing information.
20:41
And the only way Joe Malone could come up with that, that
20:46
quality of information would be to do exactly that, throw it's
20:50
stuff out there at various prices, but that's going to
20:53
undermine its market, piss off its consumers, right?
20:56
So Joe Malone is getting free valuable marketing information
21:00
just by observing the secondary market.
21:03
That's right it it's better for Joe Malone to give away these
21:06
samples and then monitor the resale.
21:09
Yeah. And watch what happens.
21:10
Yeah, yeah. So I don't know.
21:13
I don't know where all this leads.
21:14
We've been on a crusade in the US against ticket scalping for
21:18
years. It never works, right?
21:21
There's always an immediate workaround for the secondary
21:24
market, no matter what the new regulation.
21:27
Is right. So as we always say, and now we
21:30
wait and we're going to have to wait.
21:33
I think on this other thing that we're talking about today.
21:36
And because Donald Trump came out and did a fascinating thing
21:40
a couple of days ago, he, I, you can't call him tweets because
21:44
it's always on his Truth Social platform.
21:46
I don't know what are we supposed to call those things
21:48
truths? I don't, I don't even know what
21:50
they are. But he let one loose the other
21:53
day, claiming that we were going to cap credit card interest at
21:58
10% nationwide for a year. Now, where the president thinks
22:04
he gets this authority, I have no earthly idea.
22:09
He doesn't care, he gave up carrying a long time ago where
22:12
he gets the authority for anything, he just does well.
22:15
I'm, and I remember after the first Trump administration,
22:18
somebody did an analysis of how he spread the word about policy.
22:24
And it was always by tweak. The guy called it policy by
22:29
tweet. I, I wish I could remember who
22:31
this was. I, I cannot at this point.
22:33
And he said that President Trump seems to think that if he tweets
22:36
something that becomes U.S. policy, it doesn't.
22:40
And, you know, he also is of a mind that he can foist.
22:45
Is that the correct verb? Foist an executive order on to
22:49
us anytime he wants, about anything he wants.
22:53
And that's not exactly right either.
22:55
There are rules about executive orders that he doesn't really
22:59
follow. So one wonders what would happen
23:04
if he tweeted this and then turned around and put it
23:09
together in an executive order and then all the credit card
23:12
companies told him to go # sand. Right.
23:16
Which is what I would do were I at the helm of a credit card
23:21
company, because I'm not sure he could make a coherent case for
23:27
how he has the authority to demand this.
23:33
So we're going to, I think for purposes today, sort of put that
23:37
off to the side. Well, can he do this?
23:40
I, I don't think so. Maybe you've got something to
23:43
add? I agree with you putting it off
23:46
to the side, but maybe with a footnote and that is he may not
23:50
have the authority to do this, but credit card companies will.
23:55
The financial industry as a whole is highly regulated in
24:00
this country in some of those regulatory bodies fall under the
24:05
executive branch. And so if that's the case, makes
24:09
life uncomfortable for them. Well, look if if the regulation
24:13
falls. Conclusively, underneath the
24:17
auspices of the executive branch, then he can make a lot
24:21
of mischief by executive order. Because that's what executive
24:24
orders do, right? They don't give us the law for
24:28
the entire country. They take what the executive
24:31
branch is permitted to do and defines it.
24:35
Right. So all right, maybe, but let's
24:39
but again. But my maybe my.
24:40
Point is, he could make enough trouble through legitimate
24:46
channels that all of a sudden the credit card companies
24:48
voluntarily cap their rates. Well, that would be.
24:53
In keeping with American business and how it deals with
24:57
the Trump administration. And I think that happens in no
25:01
small part because they're worried about being boarded by
25:06
the administration, right? It's they could be overtaken
25:10
and, and the administration has done this, I think the 14
25:13
separate companies in various ways in to various degree.
25:20
Boy, if if you're a publicly traded company, that's the last
25:22
thing you want. So maybe you do come to heel.
25:26
But and, and here's where we're going to take this today.
25:30
If this occurs, if 10% becomes the new cap on credit card
25:37
interest rates, what happens to the credit card market?
25:42
Because it won't be. It's not as if he can wave a
25:46
magic wand and there won't be any ramifications, right?
25:50
It's not as if everybody just sees their credit card interest
25:53
rate go down to 10% or less and nothing else happens.
25:58
There will be lots of other things that happened and I think
26:01
the most obvious of which is going to be a bunch of people
26:05
are going to have their credit cards cancelled by the credit
26:07
card companies. Yeah, because fundamentally with
26:11
any price cap you you create a shortage.
26:14
And if you want examples look at rent control in New York and
26:19
California and they have a horrible time with shortage of
26:22
housing which they love to throw off onto the greed landlords
26:26
when in back to shortage of housing is precisely due to the
26:29
fact that those places have rent caps And so you'll do the same
26:34
thing here. If you put a cap of 10% then the
26:39
credit card companies are going to look around and say who is
26:42
credit worthy to the tune of 10%.
26:46
Those people get credit cards everybody else doesn't.
26:49
And let me tell you, cuz I know what the numbers are with with
26:53
perfect credit score. So 850 on the, the thing which
26:57
something like 110th of 1% of people have, those people are
27:02
still paying I believe 15 to 20% on their credit cards.
27:07
You get down to the low end and you're paying 35% plus.
27:11
But a 10% cap? It may be the case that nobody
27:13
gets a credit card. Yeah, I, I have, I'm not ashamed
27:17
to say, a very high credit score.
27:19
I think my credit cards are all in the neighborhood of 19%.
27:23
Yo-yo. And it doesn't matter to me, I
27:26
don't care. I pay it off in full every month
27:28
and have for decades. Right.
27:31
For me, a credit card is a way to get either cash back or
27:34
airline miles. Right.
27:37
But yeah, but what? It goes what will happen here
27:38
ultimately, if, if indeed this were to come to pass.
27:41
And I, I tend to agree with you, I don't think it will.
27:44
But if it were to come to pass, credit cards would likely
27:47
disappear as we understand them largely replaced by debit cards.
27:53
And you might have, you might have banks coming up with some
27:56
creative arrangement where they give you a debit card attached
28:02
to a loan account. So technically it's.
28:06
The. The card doesn't carry the
28:07
interest, it's you're withdrawing money from a loan
28:10
account that does. Yeah, it it's interesting,
28:14
right? Because really what we're
28:15
talking about here is the price of an unsecured loan, right?
28:20
Yeah, that, that that's what credit cards are.
28:23
They're unsecured loans. And it's the the, the bank or
28:26
the credit card issuer saying, all right, Anthony, we think
28:30
you're good for it. But we think a lot of people are
28:33
good for it and we end up with defaults to this degree.
28:38
So we have to cover that loss. You're going to cover part of
28:41
it, everybody else is going to cover part of it.
28:44
And in the end, we, the bank, will actually make money on
28:47
this. And you, the customer, will have
28:49
the convenience of a credit card, but there's an expense
28:53
involved. And if that expense is going to
28:56
be filtered through the market, you're all going to pay it.
28:59
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29:01
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29:04
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29:06
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29:21
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29:32
If you want to drive this home, think about next time you're
29:37
you're walking down the street, just pick somebody out at random
29:42
that you see perfect stranger and ask yourself, would you loan
29:45
that guy 1000 bucks? Would you reach your pocket
29:47
right now and give him 1000 bucks on his promise that he'll
29:51
pay you back at some point over the course of the next months or
29:54
whatever? And the answer's no?
29:56
Well, that's exactly what credit cards are companies are facing.
30:00
And yet they're managing none the less to to create loans for
30:06
people like that for complete strangers.
30:08
Why? Well, because those that do pay
30:12
at the 19% level compensate for the ones who just walk away.
30:17
Yeah, they, they have bigger accounting departments than I
30:19
have because I would never, I wouldn't loan anybody $1000 on
30:24
their handshake promise to pay me back unless I knew that
30:27
person very, very well. Yeah.
30:30
Even then, I wouldn't give most of the people I know very, very
30:34
well $1000. But now you, you might say
30:37
something like, well, yeah, but you, you wouldn't be in a
30:41
position to go after the guy for your 1000 bucks.
30:44
The bank is to which I I would reply, OK, yeah, the bank is
30:48
better suited to go after the guy for the loan, but it's not
30:51
worth it to the bank. It'd be worth it to me for 1000
30:55
bucks for the bank. It's easier just to write the
30:56
thing off. And in fact, that's what they
30:58
do. They pass they pass those loans
31:00
off to people who made made it their job to go after people.
31:07
What do you what do you call not headhunter comes to mind.
31:09
That's not right. What do you call the guys that
31:11
go after? People collection agents.
31:13
Collection agents Right, Right, right, right, right.
31:15
Right. And, and all of this is of
31:17
course dechargeable in bankruptcy, so it doesn't
31:19
exactly matter. But if you run up your credit
31:23
card bills enough and you can't pay them back, you just declare
31:26
that you can't pay them back. And generally speaking, you
31:28
don't have to. Yep.
31:31
And that adds to the cost of credit that all the rest of us
31:36
who do pay our bills end up paying.
31:40
And you know. When you and the lesson here is
31:42
you cannot magically wave your hand and say let the cost of
31:46
that be 10%. Now the cost is what it is.
31:50
And Aunt? How do you know that?
31:52
And, and this is going to make MAGA heads explode all over the
31:56
country. I, I assume, and I'll get all
31:58
the hate mail that I fully deserve for this, but how do you
32:02
know that Trump is off on kind of a whack job left wing crusade
32:08
and that's what this is. Make no mistake, this is a.
32:11
Oh yeah, this is not the kind of policy you find at A at a right
32:15
leaning administration. No.
32:17
And, and who is the 1st to jump up and grab a microphone and
32:21
say, yeah, we can probably help you with that?
32:23
Elizabeth Warren. Right.
32:26
That's who you're in bed with. So when the MAGA people say,
32:30
well, you know, you can tell the the quality of a thing by who
32:34
The Who agrees with it, Yes, yes you can.
32:38
Because now you've got President Trump and Elizabeth Warren on
32:40
the same side, and they're both working from the Bernie Sanders
32:44
playbook. You said something earlier, we
32:48
we were going to talk about this and what the pressure that
32:53
President Trump is putting on the Fed.
32:55
But whether we get to that or not is another matter.
32:57
But I think in both cases, what he's doing is seeing people in
33:03
economic pain for a variety of reasons.
33:06
And he's afraid he's going to lose the midterms because of
33:08
this. Well, his party will lose the
33:10
midterms. So he's doing everything he can.
33:13
Look, they will stop in front of us.
33:16
They're probably going to lose the midterms regardless because
33:18
that's the pattern. That's what happens.
33:20
Right. The the party in power typically
33:23
loses, I think we've said this before, 24 seats in the, in the
33:28
the House for the midterms. So that that's going to be a
33:31
problem regardless. But the administration is
33:35
convinced that the economy is doing really well.
33:39
And I think they do believe this.
33:42
They're convinced the economy is doing really well and that
33:45
people aren't feeling the pain of it.
33:47
And you and I very, I think you and I diverge on this point a
33:51
little bit because you look at the economic data and say, yeah,
33:55
I think that's about right. Whereas I have conversations
33:58
with human beings and they all say no.
34:01
I'm in a lot of pain right now. Yeah, I just wrote an article on
34:04
this today for my current employer.
34:07
And I've come to the conclusion that that we're both correct.
34:12
The economy is doing all right and people are feeling pain.
34:16
And I I think what maybe we talked about this in a previous
34:20
episode, but I think what brings those two pieces together is the
34:24
fact that when people look at their status and they they ask
34:29
themselves, am I doing well? Am I doing poorly?
34:31
How much economic pain I'm feel? Am I feeling?
34:34
They're comparing their current situation to the recent past
34:39
where economist look at the recent past is noise.
34:42
We want to see the long term trend.
34:44
The long term trend looks very good.
34:46
But the fact is in COVID, the government cut people checks.
34:50
It put moratorium on on on rent payments.
34:55
It let people get away with not paying their student loans for a
34:59
period of time. And all of a sudden most
35:02
Americans, particularly those at the middle class and and lower
35:06
middle class levels, their standards of living shot up.
35:10
And by shot up, I mean like as much as 20%.
35:13
They're economically 20% better off.
35:16
And they live that way for about a year.
35:17
They got used to it and then the rug got pulled out from under
35:21
them. I think that's the source of the
35:23
pain. Well, if only two guys could
35:26
have predicted that. Yeah, back when COVID became a
35:31
thing, 'cause we went on we. Looked around and said, who's
35:34
paying for this? Because somebody's going to.
35:35
Cause somebody's going to and when you're looking for an
35:40
answer, who's going to pay for this, the answer is always the
35:46
middle class and down because it has to be.
35:50
That's where the vast majority of the dollars are.
35:54
Well, OK. You got what you wanted, good
35:58
and hard. Now you find out you don't want
36:00
it anymore and people are angry because they have to take out a
36:04
7% mortgage when they know people who have two 2.8.
36:10
Well, you know, they also probably know people right now
36:13
who have 10. Yeah, and and that's the the
36:16
really sad part of this whole thing.
36:19
The government cuts people checks and, and I know, I know
36:23
the numbers, the the bottom 20% of Americans by income, their
36:29
after tax income shot up 22%. That's, that's, that's, that's
36:35
purchasing power from 20 from 2019 to 2020, up 22% from the
36:40
government cutting these checks. The Fed is financing this in
36:44
part with looser monetary policy.
36:48
That's what gives you inflation in 2022.
36:51
How does the Fed fight inflation?
36:53
By raising interest rates. And that gives you a 6 1/2
36:56
percent mortgage. You really can't win here right
37:00
there. There's no magic bullet to solve
37:03
all of these problems. There are only trade-offs at the
37:06
end. Right.
37:07
The best, the best you can do is hide the problem, foist the cost
37:11
on to somebody else. And this is exactly what we're
37:14
saying would happen if the president came along and imposed
37:18
a 10% cap on credit cards. That cost is going to be borne
37:22
by somebody. And let's get back to that cost
37:25
because there's something we haven't talked about that will
37:28
happen that will really, really piss people off even more.
37:35
When you come in and you say, OK, 10% Max, that's it.
37:41
You penalize the people who pay their bill every month and who
37:45
take the benefits that the credit cards offer, right?
37:48
So what do I get? I get all kinds of airline
37:51
miles, which means I fly for free all the time.
37:54
Or you can take two 3% cash back, which means you've got a
37:59
constant flow of money coming in the other direction.
38:03
If we get capped at 10%, the first thing that's going to
38:06
happen is all the people with lousy credit will lose their
38:10
credit cards. The second thing that will
38:11
happen is that every incentive will disappear.
38:14
The fact that you can have a credit card will be the only
38:17
incentive the issuer needs to offer.
38:20
We're just. Old enough to have lived through
38:25
as children, the period before credit cards became a big thing.
38:31
If you want to buy something, yeah.
38:34
If you want to buy something, you saved the money and then
38:38
wrote a check. I got my first credit card when
38:41
I was 1819 and it. Was liberating.
38:44
Yeah, yeah, same here. But but think about that for a
38:48
moment. There are a lot of people even
38:51
moving up into the middle class and maybe a bit higher who live
38:55
kind of hand to mouth of, you know, the check comes in and it
38:59
turns around and goes out. And in that kind of situation,
39:02
there's always there's always a place where you'll get caught,
39:06
that you need to cough out some money, that you don't have
39:10
credit cards or a shock absorber.
39:13
They fill that space. And they're a very good shock
39:16
absorber. Yeah.
39:18
That's good to this stop gap measure, my transmission falls
39:21
apart. I have a credit card.
39:23
Right. So now a $4000 check to cover a
39:27
transmission 5000? I don't think so.
39:29
Sometimes yes, sometimes no. But if I have a credit card, I
39:33
can always get my transmission repaired.
39:35
Yeah, now you can have a, you can have a shock absorber like
39:39
that without credit cards, but you got to build it yourself.
39:42
It's called a savings account. So you got to build up four,
39:45
$5000, whatever it is, and when some hardship hits you, you can
39:49
draw on that and hope that the magnitude of the hardship is not
39:53
exceeding the magnitude of your savings.
39:55
One of the first economics lessons I ever learned was, I
39:59
guess, at the hands of my mother.
40:01
That's not exactly how I want to put it, but it kind of is
40:05
because she took me to the bank in January and we opened this
40:10
thing called a Christmas club account, right?
40:13
Yes. Oh, there I I remember.
40:15
Those I would go to the bank every week and put a dollar in,
40:19
and at the end of the year, when Christmas came along, I had $52
40:24
to spend. Yep.
40:25
Notice I didn't get any interest.
40:28
Yeah, what a pain in the ass that was.
40:31
But she did this too, except instead of $1.00 was 20 or
40:35
whatever she put in. And this was how you got by you,
40:40
you always had to be kind of squirreling money away.
40:44
And when I was young, I used to refer to a portion of my savings
40:48
as the car account, because when you're young, you, you buy
40:52
really bad cars who need constant repairs.
40:55
And I, I always had to have two $300 in that account just to
41:00
cover basic things like brakes, tires, right?
41:05
And I didn't, I didn't have a credit card.
41:07
There was no way for me to come out ahead on that sort of thing
41:12
unless I was already ready for it by the day it happened.
41:17
And that's extraordinarily difficult.
41:18
You're really walking a tightrope there.
41:21
But if, if some bank will give you a credit card, you can still
41:24
squirrel the money away. But if you get blindsided by
41:28
something, as happens in every human life, you've got the
41:32
wherewithal to get through it. And it gets even worse,
41:36
particularly again when you're talking about middle class or
41:38
lower middle class households. You get without a credit card,
41:43
you get hit with something like that, your, your brakes are gone
41:46
and so you've got to replace and there's no credit card.
41:49
So now you got to save up to pay for the brakes or hope that
41:52
you're saving. The card to go to work in.
41:54
You have no car to go to work. So now the problem gets
41:58
compounded, right? That's right.
42:00
And you, you end up in a situation that sounds
42:03
economically so much like the one you and I had complained
42:07
about, where the government steps in to try and, and control
42:11
labor markets. And you end up with caps on
42:14
labor. And then you have work, you have
42:15
employers offering health insurance so that they can
42:18
provide more income for the workers.
42:20
And all of a sudden the health insurance is provided by the
42:23
employer. And all of a sudden you now have
42:24
a pre-existing condition because if you're sick, you lose your
42:27
job. And if you lose your job, you
42:28
lose your insurance. You can't get new insurance.
42:30
And that entire cascade of problems is it started by the
42:35
government intervening in the market.
42:37
And this is the exact same thing.
42:39
You'll have a cascade of problems brought about simply by
42:42
the statement. Let there be 10% credit cards.
42:45
It is exactly the same thing and, and just to put the finer
42:50
spin on it, this is the government saying 10% is the
42:54
maximum you can take in if you're a bank on an unsecured
42:58
line of credit. The rest follows.
43:02
People will lose their credit cards, the people who still have
43:04
credit cards will lose other credit card benefits, and we
43:08
will be left far worse off than we were walking in.
43:12
Why? Because the President of the
43:15
United States took a look at the midterms and knew he was in
43:18
trouble. Yep, And it's better to appeal
43:21
to the biases of the people than the true interests of the
43:25
people. You heard it here first.
43:29
Let me add one thing. If you are, if you don't follow
43:33
the economics, which is understandable, it can get a
43:37
little bit heady if you're cheering for the 10% cap.
43:45
And in fact, I would say the harder you're cheering for the
43:48
10% cap, the more likely it is that you'll be one of the people
43:52
that ends up with no credit card at all.
43:54
That's correct. That is absolutely correct.
43:57
And you can tell by the language people use where they're going
44:01
to land on this, right? Because I'm seeing post after
44:05
post and tweet after tweet people saying things like 30% is
44:09
usury. Well, don't take it.
44:13
See how easy that was, right? If you don't, if you think it's
44:17
beyond the pale that a company charge 30% interest on an
44:21
unsecured loan, don't take out an unsecured loan.
44:26
And for some reason, that's lost on people.
44:31
Right. So we're left with people
44:33
saying, I think I have the right to other people's money at terms
44:38
I find agreeable and yes, you do, but they also have the right
44:45
not to give it to you at those rates.
44:47
Yeah, it's their. Money and they miss people.
44:49
People miss the second-half of that equation all the time.
44:53
So I I think we're in for some very hard times here.
44:57
If we walk down this road. I don't think we're going to in
45:00
the end, but if we do, it's going to be a disaster.
45:05
Well, I mentioned the Fed and the pressure that the president
45:09
is putting on them, but we have run rather long here, so I think
45:13
our listeners will have to come back to the next episode.
45:15
Save that for a. If they want to hear about that.
45:18
And until next time, you should take care of yourself and be as
45:22
happy and aunt as you can be. But everybody else, I mean,
45:26
these are the dog days of winter now, right?
45:28
Where everybody gets a little testy.
45:30
I know for myself, I walk outside and it's only 59° out
45:34
there. It drives me crazy.
45:36
And yeah, I've, I've actually got my screen door and my screen
45:40
window open in my office right now, letting the nice air come
45:43
all the way through. I slept with my windows open
45:46
last night. So it maybe I'm not the guy to
45:48
to say this, but during these long dog days of winter, you
45:54
should be nice to each other. We, we kind of need it right
45:57
now. Everybody's a little testy.
45:58
So let's just try and notice. I'm not saying you have to
46:02
succeed, but just try to be nice to each other and I'll catch you
46:05
next time. See you next time, James.
46:07
At Words and Numbers. We spend a lot of time thinking
46:10
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46:12
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46:15
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46:21
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46:24
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