Valuetainment - July 23, 2026


“Give Every American $100,000” – Economist’s Radical Plan to WIPE OUT Household Debt

Topics
private debt deregulation of the financial sector banks and entrepreneurship
Hosted by
Patrick Bet-David
Mentioned
Alan Greenspan Trump Clurdsson Ben Bernanke Roger Shiller Irving Fisher Family Feud Paul Romer Tuscaneiro Menschkin Vokula Warsh Glass
Pessimist Economist Why He Think Future Looks BLEAK “Say Yes” - Chipotle COO’s Advice For Future Leaders

Episode Stats


Length

18 minutes

Words per minute

185.45

Word count

3,510

Sentence count

211

Harmful content

Misogyny

6

sentences flagged

Hate speech

5

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, we discuss the impact of Alan Greenspan and Bernanke on the economy, the current Fed chair, and what a candidate for the position of Fed Chair would do if he was in charge of the US Federal Reserve.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
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00:00:30.000 What do you think about Alan Greenspan?
00:00:31.340 He just passed away at the age of 100.
00:00:33.420 What do you think about Alan Greenspan's legacy?
00:00:37.220 Very negative.
00:00:38.900 The one thing we should remember Greenspan for is he rescues the finance sector when it causes crashes.
00:00:43.360 That's the Greenspan put.
00:00:44.460 When the stock market fell 20% in 1987 in one day, he basically guaranteed that all the financial firms would be rescued.
00:00:55.480 And that basically led to encouraging financial instability and financial irresponsibility.
00:01:01.000 I think he did a very negative contribution to the American economy.
00:01:07.680 Which American economist do you think or a Fed chair do you respect that did a decent job in America?
00:01:17.220 Who would you say that person was decent?
00:01:18.940 All the Fed chairs have come from the same school of thought, which is called neoclassical economics.
00:01:23.520 like Clurdsson Ben Bernanke, for example.
00:01:26.400 They have, in my opinion, totally,
00:01:29.420 they have a model of the economy
00:01:30.820 which is, to use a great American satirist, Menschkin,
00:01:35.160 their theories are neat, plausible and wrong.
00:01:38.240 And the only people that get considered for a position at the Fed
00:01:41.620 are conventional economists.
00:01:43.440 They don't even understand how money is created.
00:01:46.060 So you've got, there's not a single one
00:01:48.500 I would take particularly seriously.
00:01:50.380 If you wanted to ask me a mainstream economist
00:01:52.080 that I have some time for,
00:01:53.520 I'd mention Robert Schiller and Paul Romer.
00:01:55.700 That's really about it.
00:01:57.300 Got it.
00:01:57.960 How hard of a job do you think the most recent chair has, Warsh, that he got the job with being pressured to lower rates versus keeping him that way?
00:02:08.880 And if you were given that job, let's just say if you were given that job, this is your world, you follow it.
00:02:13.720 What do you think would be the right move for him to make in this state of affairs that were in America?
00:02:18.800 Well, I think the main problem in America is too much private debt.
00:02:21.620 It's not the government debt that matters, and that's what all the mainstream economists
00:02:25.860 obsess about.
00:02:27.020 What causes financial crises is too much private debt, booms and busts and the rate
00:02:32.040 of growth of private debt.
00:02:33.580 So I'd be using the government's capacity to create money to cancel household debt,
00:02:37.660 which is what we used to call a jubilee.
00:02:40.220 That's what I'd be doing.
00:02:41.580 And in terms of the interest rate, again, it's a very fallacious theory of economics
00:02:46.280 that says the rate of interest controls the rate of investment.
00:02:49.320 That's the basis of, or the rate of consumption, in fact, is what modern, so-called modern
00:02:53.660 economic theories argue, the rate of interest controls.
00:02:56.720 They're completely fallacious.
00:02:58.520 They don't work.
00:02:59.820 And at the moment, if I was in charge of America's interest rates policies, I'd be reducing them
00:03:06.160 because we're about to see a huge shock for the American economy coming out of the closure
00:03:10.360 of the Strait of Hormuz.
00:03:12.260 The impact of that on productive, the capacity of the economy to produce goods and services,
00:03:18.200 which will mean people can't service their debts anymore.
00:03:20.480 And you're going to start seeing bankruptcies coming out of the inability to pay the debt levels people currently have 0.60
00:03:25.980 because of the destruction of the productive capability of the economy from the war against Iran.
00:03:32.520 So your position would be to lower rates.
00:03:35.280 So you would agree with Trump because Trump wants to see also the rates being lower?
00:03:38.620 In this particular point, yes, I do.
00:03:39.940 Can you unpack that?
00:03:41.640 Because some people push back on the president on lowering rates and they're concerned if you lower rates, you know, inflation may continue versus keeping it kind of where it is right now for things to level off.
00:03:57.460 What is your position and the reasoning for lowering rates?
00:04:00.640 Well, inflation is not controlled by interest rates in any effective sense.
00:04:04.440 If you want to reduce the rate of inflation, whether using interest rates, you have to do something like Vokula did and cause a recession.
00:04:09.920 Put rates up that much.
00:04:11.040 That's what actually – that's the only control mechanism is when you cripple the economy and therefore push inflation out that way.
00:04:17.000 That's what happened under Vokla.
00:04:18.840 I believe you can fine-tune it using the interest rate, which is the belief that conventional economists have.
00:04:24.100 I think that's completely wrong.
00:04:25.740 Now, what conventional economists don't look at is the level of private debt.
00:04:29.420 They have no idea.
00:04:30.660 Even though they collect the data, they really have no idea of how high the level of private debt is.
00:04:34.640 As you put up the interest rate, you make it harder to service that debt.
00:04:38.220 and that's what can cause a downturn.
00:04:42.680 What worries me about the current situation for the economy
00:04:45.860 is that people are comparing it to the 70s
00:04:48.320 when the oil price rose and that led to rising wages
00:04:52.780 and that gave you a wage price spiral.
00:04:54.820 Back in the 70s, you had strong unions, relatively speaking,
00:04:57.840 certainly stronger than they are today.
00:04:59.680 So when the price of petrol went up at the petrol pump,
00:05:02.080 unions could go and lobby the firms to say,
00:05:05.000 we want a higher level of wages
00:05:06.240 and you've got what's called a wage price spiral.
00:05:08.220 This time round, unions are so weak and workers, generally speaking, don't dare go and bargain with their wages.
00:05:15.060 They're happy to hang on to their jobs.
00:05:17.560 What you will get from the increase in the oil price, which is coming courtesy of the straight-up-formals closure,
00:05:23.200 is that workers won't be able to afford to pay their petrol costs.
00:05:28.600 They will have to reduce what they do elsewhere, so there will be less consumption coming out of the economy.
00:05:33.840 That will cause a bit of a slump.
00:05:35.700 And rather than getting a wage price spiral,
00:05:37.660 you'll get increase in prices
00:05:39.320 courtesy of the Strait of Hormuz.
00:05:42.100 And that means workers will not get the wage rises they want.
00:05:45.800 So I expect instead is to see a deflationary crisis
00:05:49.180 coming out of this.
00:05:50.580 Initially inflation from the increase in oil prices
00:05:53.060 and increase in cost of production of so many goods
00:05:55.800 courtesy of the other things
00:05:58.220 which are blocked by the Strait of Hormuz.
00:06:00.140 And then workers being unable to pass those costs
00:06:03.600 in terms of their wages, a collapse in demand,
00:06:06.740 and then you will have a deflationary crisis.
00:06:10.140 In that situation, the last one you would think you want
00:06:12.120 is a high rate of interest.
00:06:14.640 Got it.
00:06:15.480 It's funny because you and the president agree on that.
00:06:17.760 That is a part where they think that's the right move.
00:06:23.820 I'm not sure if I'm there with you and the president.
00:06:25.540 I know you guys agree on that part of it, 0.98
00:06:27.720 whether lowering the race is the right thing to do or not. 0.99
00:06:30.440 The economy, a lot of people in America would love to see that happen. 0.99
00:06:33.600 By the way, going back to the personal debt side, how much of that, and I'm curious from your standpoint, how much of that personal debt challenge happened the moment we got off the gold standard?
00:06:44.180 Is that where you are with it or do you have a different position?
00:06:46.320 No, no, no.
00:06:48.220 What actually caused the growth in debt was deregulation of the financial sector.
00:06:52.640 You used to have – if you go back and look what happened after the Great Depression, what Roosevelt realized and Irving Fisher realized was the financial sector caused both the bubble of the 1920s
00:07:02.800 and the crash of the 1930s.
00:07:04.860 And so we have to restrain the tendency of the financial sector
00:07:07.660 to get involved in irresponsible behaviour in Ponzi schemes.
00:07:10.960 So things like the Glass-Steagall Act,
00:07:12.980 reduction in the level of margin leverage,
00:07:15.660 so margin debt used to give you 10 to 1 leverage,
00:07:17.900 now it only gives you 2 to 1 leverage.
00:07:19.700 All those things came out because the attitude of the people
00:07:23.380 who experienced the Great Depression was the financial sector
00:07:26.140 will lead to speculative bubbles and we have to restrain
00:07:29.380 that tendency of irresponsible behaviour by the financial sector.
00:07:32.800 When we got conventional economists dominating their profession starting in the 1970s, they basically thought everything is better as a free market, let the banks do what they want to do.
00:07:42.660 And their belief was that if you deregulated the financial sector, there'd be more money for investment.
00:07:48.360 In fact, there was more money for speculation.
00:07:50.900 You had some, obviously, banks provided money investment funds for telecommunications and internet and all that sort of thing.
00:07:59.680 But they also did the subprime bubble.
00:08:01.180 And the whole idea of the subprime bubble was borrow money, buy a house and sell it to somebody else for more money, which only worked if somebody else borrowed more money than you did.
00:08:09.500 So you got this exponential increase in the ratio of household debt to GDP, which reached a peak and then crashed in 2006.
00:08:17.180 That led to the crisis.
00:08:18.940 So the banking sector has a tendency to be irresponsible and it just runs with the nature of banking.
00:08:25.900 So I blame that on deregulating the financial sector.
00:08:29.260 I'd bring back regulations to make sure that the financial sector predominantly provide working capital for corporations rather than providing funds for gambling and speculation in casinos, which is what they do at the moment.
00:08:41.380 How do you do that? How do you do that? Because what opened up, we talked about it earlier with China, what opened up the market in China is when they started having more banks lending more money to small business owners.
00:08:51.700 You and I both know when the big banks were bailed out in 2008 and they got all those billions of dollars, the money didn't go to the business owner.
00:09:00.100 They kind of kept it to themselves and didn't.
00:09:01.900 So what can we do?
00:09:04.900 Like how do you force them?
00:09:07.200 Like what do you create for that money to go to small business owners?
00:09:10.920 Well, one thing I do is rule out making it possible to make a profit out of funding a Ponzi scheme.
00:09:15.500 So my favorite one there, of course, is the housing scheme, housing bubbles.
00:09:19.360 and I've done empirical work to show that what causes rising house prices is accelerating
00:09:24.480 household debt and that's what's that's caused the booms and busts you've seen in America and
00:09:29.120 everywhere else and what that means with that comes about because banks will claim to be giving a
00:09:35.660 borrower an amount of money based on their income but they'll fudge the numbers you know the idea
00:09:40.180 what do they what do they have expression for it no ninja loans no income no job no assets that's
00:09:44.360 right okay okay they're willing to do that i would make it uh i would put a limit on the amount of
00:09:50.500 money that can be provided to buy a property based not on the income of the buyer but the
00:09:56.140 real or prospective income of the asset itself so if you buy if you you know you build a house for
00:10:02.420 rent then i would say the maximum amount of you could borrow to buy a house for rental purposes
00:10:07.640 would be 10 times the annual rental income of the property the same sort of thing applies for owner
00:10:12.280 occupied. That would mean that it was no longer profitable to lend into bubbles. You wouldn't get
00:10:18.100 runaway amounts of debt. The amount of money being lent would be related to the rental income
00:10:25.280 of the property, which doesn't have the bubbles you see elsewhere. I'd also make it possible for
00:10:29.920 banks to take an equity position when they made a loan. At the moment, there's a very good reason
00:10:34.920 for banks not to lend to entrepreneurs, and that is that most entrepreneurs fail. And if a bank
00:10:40.600 lends to, say, six entrepreneurs, then five fail. So the bank loses its money on five of them and
00:10:46.120 only makes an interest earning out of the sixth. I would have banks having passive emphasis on
00:10:52.340 passive. I've got enough entrepreneurs who tell me the last thing I want is a banker making
00:10:56.200 decisions on their board, but a passive position where they take an equity stake. And if they have
00:11:02.280 six, five companies that fail and one that succeeds, the one that succeed could be Amazon.
00:11:06.700 So you make up for the losses elsewhere. So I call those that idea.
00:11:09.720 kind of like a private equity model? Similar, but it's money creation rather than private equity
00:11:15.220 tends to pool existing money. Banks create money when they lend. This is one thing mainstream
00:11:19.740 economists do not understand. They simply don't want to know that that's the case. But when a bank
00:11:24.760 makes a loan, it also creates money. So I want to limit that for money being created for productive
00:11:30.880 purposes, not for speculative ones. And I want to encourage getting money to entrepreneurs.
00:11:35.740 So that idea of banks make loans to entrepreneurs and get an equity stake rather than a loan position, I call those EELs for entrepreneurial equity loans.
00:11:47.840 So you can make changes like that that change the behavior of the banking sector and get back from the days when the banking sector dominates the physical economy to the days when the banking sector was a servant of the physical economy.
00:11:58.820 That's what we need.
00:11:59.500 Do you think there almost needs to be a massive shakeup for them to make that kind of an adjustment?
00:12:05.540 Because, you know, if somebody wanted to go that route and somebody got elected and they wanted to propose your idea, real estate valuation in America would probably take a 25 percent hit overnight if that would have happened.
00:12:18.760 Yeah.
00:12:19.180 Right?
00:12:19.660 And I've come up.
00:12:20.560 Yeah.
00:12:20.820 And you'd like to see that happen.
00:12:22.700 Yeah.
00:12:22.960 I have no doubt my ideas will never get tried.
00:12:26.320 OK, so I'm aware that I'm putting through the hypotheticals that won't happen.
00:12:29.760 But in the case of trying to reduce the level of household debt, which is like running at about 100 percent of GDP, it should be about 30 percent of GDP at most.
00:12:39.460 It's scary, by the way. It is truly a concern that I don't care who the president is on the left or the right.
00:12:46.260 They have to know that's a real issue with affordability, because if the average guy, say 28 year old man, cannot afford to get married, buy a house and have kids.
00:12:54.840 We have a very big problem in America.
00:12:56.720 Yeah, and that's the situation you're in.
00:12:58.340 And it's a global phenomenon.
00:13:00.660 House prices used to be roughly three times household income
00:13:04.720 when you had a single income owner back in the 50s, the male income owner.
00:13:08.700 And the male breadwinner could support a wife and three kids
00:13:11.140 and buy a house at the same time.
00:13:13.740 That's the so-called American dream. 1.00
00:13:15.900 Women's liberation, I think, actually contributed negatively here 0.99
00:13:18.680 because women got into the workforce, and it's now three times two incomes.
00:13:21.960 the finance sector benefited more from women so you think the idea so because in 1970 we had i
00:13:30.780 think 1970 we had a record-breaking most kids born in america it was a 3.59 you know how we
00:13:37.400 were at 1.58 right now i don't know what it was in 1950 1970 can you look up when was the highest
00:13:43.040 birth rate in america the year it was one of the highest birth rates in america steve 0.80
00:13:47.580 only 35% of women were in the workforce.
00:13:52.640 Today, it's 70% in America. 0.98
00:13:54.180 So you think that wasn't a good thing for the economy?
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00:14:54.900 apply. Now, the benefit of that went to the finance sector rather than individuals. If you
00:15:02.460 basically thought if you had two people working, you've got twice as much income, you have a more
00:15:06.460 comfortable life. That was the fantasy of, you know, getting expanding women's role in the 1.00
00:15:12.380 workforce and the women and the families will benefit. Instead, it meant that when you went 0.94
00:15:18.520 to get a housing loan, they took two incomes in, double the amount of money to let you borrow,
00:15:24.960 and you end up servicing that debt. And in fact, the increase in incomes ended up causing an
00:15:31.040 increase in house prices, making houses unaffordable. So I've gone from the days, it's not as bad in
00:15:35.880 America as most of the rest of the world, I might add, but the ratio of house prices to income used
00:15:41.360 to be about three and a half. Now it's about 10. And that just means enormous rate. That's a scary
00:15:46.640 side. Yeah. So we need to get out of that. But the thing is to do it, you've got to reduce the
00:15:51.220 level of household debt and reduce house prices. Now, as you said, if you do that, you'll make
00:15:56.320 many people who think they're currently asset rich, make them asset poor. So I came up with
00:16:00.600 a proposal that I call a modern debt jubilee. And the idea with a modern debt jubilee is the
00:16:04.820 government can create money and it creates that money and gives every American adult a hundred
00:16:09.940 thousand dollars and says if you have debt you must pay the debt down so if
00:16:14.320 you have a two to two income family they got two hundred thousand dollars
00:16:18.160 they've got a mortgage of two hundred and fifty they've got to pay that two
00:16:21.280 hundred thousand dollars off they end up with a mortgage of fifty thousand so
00:16:24.280 they benefit in that sense so you the cash injection in the first place can
00:16:29.540 cover the fact that the price of the house might fall and of course most
00:16:32.440 people think they're asset rich when they've got an expensive house but to
00:16:35.980 get benefit from that house they've got to sell it this would be a way you hang
00:16:38.980 onto your house, you have a lower level of debt, and we get you out of the debt squeeze you're in
00:16:43.240 right now, and then we limit how much banks will lend in the future so we don't have the same
00:16:47.500 ridiculous level of household debt to buy a house in the first instance. So in other words, let me
00:16:53.280 restate what I think you're saying, and correct me if I'm wrong, a form of a quantitative easing
00:16:58.180 for individuals, not corporations. That's a reasonable way to put it. That's a reasonable
00:17:01.820 So that makes sense.
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