Can You Govern the Economy Like a Reality TV Show? (ft. Kyla Scanlon)
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What makes the economy feel like a reality TV show?
welcome back to the rundown interview edition today we are talking to fan favorite kyla scanlon kyla has been on the show multiple times and she's joining us again at a very interesting time in the market so in today's episode We talk about macroeconomics. We talk about how the bond market is acting as the fourth branch of government, why gold prices keep going higher, why the Japanese bond market is freaking out, and why that matters. It was a wide-ranging conversation, and I think you guys will really enjoy it. All right, let's get into it. All right, Kyla, welcome back to The Rundown. Really happy to have you back on today. I feel like every time you come on, there's always something big happening.
Yeah, it sure feels that way. It's good to see you.
Yeah, you as well. Well, obviously, I want to talk about this piece. I want to dive right into it. You wrote an awesome article on your Substack. Long, detailed, highly recommend everyone checking it out. It's called The Great Entertainment. And the premise of the piece is that you talk about how...
How is the bond market acting as a check on political power?
It feels like the world is being run like a reality TV show, right? That's like the premise of your piece. So I'm just going to kind of turn it over to you. How did you come up with this? And can you kind of dive into like, what do you mean by the world is being run like a reality TV show?
Yeah, so I had the opportunity to interview Mary Daly and Tom Barkin, so the president of the San Francisco Federal Reserve and the president of the Richmond Federal Reserve. And President Daly started talking about the end of the Great Moderation or what she felt like was maybe the exit of the Great Moderation, which is this period of the past 40 years where we've had relative macroeconomic stability because we've had independent central banks, we've had globalization. We've had technology that's enabled us to predict business cycles a little bit better. Central banks have gotten better at communicating so the markets have more insight into what's going on. And so there's kind of this removal of all the volatility that preceded us from like the 1980s and before.
And then President Barkin started talking about how he feels like the persistence of uncertainty is kind of the biggest issue that we could be facing in 2026. And so after that interview, I was like, wow. And I just became obsessed with this idea of the great moderation that, you know, we study in school and we learn about economics. But I never had really thought about the fact that we might be exiting it. And a lot of people thought that we exited the Great Moderation after 2008 when we had the Great Financial Crisis. We perhaps entered this era called the Great Stability, where the 2010s were almost like an ambient period, more or less, until Donald Trump came along and introduced a fair amount of volatility to markets, but nothing like we've experienced in the second term so far, just objectively.
And the goal of this piece was to sort of look at the great moderation and then talk about what I think we might be headed into, which is the great entertainment. And so I tried to trace the beginning of the United States as an entertainment first country, of course, beginning with Ronald Reagan, who was the entertainer president, the great communicator. And then tying it into what is now the second Trump presidency, where he is a reality TV star. And I think the way that he does social media, the way that the White House is doing social media, it just really all feels like we're a part of some version of The Apprentice, some version of a show that he's having a lot of fun and not a lot of people are other than him.
So the goal of the piece was just to illustrate that.
So I want to touch on a follow up on a couple of things that you mentioned. There's a great moderation. It really kind of started when Paul Volcker. So we actually covered some of the stuff in our deep dive that we did on the podcast last week where we talked about the history of the Federal Reserve. And so the great moderation kind of started after Paul Volcker tamed inflation right in the late 80s, where he kind of hiked up interest rates to 20 percent or something.
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Chapters
6 chapters
1
What makes the economy feel like a reality TV show?
0:00–1:02
2
How is the bond market acting as a check on political power?
1:02–8:14
3
What does the end of the Great Moderation mean for the economy?
8:14–16:42
4
What are the implications of Japan's fragile bond market?
16:42–24:03
5
How does the yen carry trade impact global capital flows?
24:03–26:52
6
What role does China play in gaining soft power through energy and AI?
26:52–27:33
Speakers
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