The Economy Stinks, and Dr. Doom is Not Hopeful
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On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Join Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app today and earn your spot at the festival. Learn more at globalcitizen.org.com.

On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Join Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app today and earn your spot at the festival. Learn more at globalcitizen.org.

By the way, I can't tell you how many people have asked to be set up with Brian Chesky since we ran that interview. That's funny. You want to use your Yenta skills, Cara? Yes, I'm good at it. Hi, everyone. From New York Magazine and the Vox Media Podcast Network, this is the head of Lettuce that outlisted Liz Truss. Just kidding. This is On with Cara Swisher, and I'm Cara Swisher. And I'm Naeem Arraza. You know, it's our four-week anniversary of making this show, Cara. That's like 66% of Liz Truss's

time in office. Do you think we can outlast her? I think we can. Hopefully we can. The Scaramucci weighed in. Everyone who has those time constraints weigh in. I'm tired of the lettuce. It's kind of weird. It's a little wilted, as they say. It is. The Scaramucci said she lasted 4.1 Scaramucci's. I thought that was great. He's going to do it on everything. Anyone gets fired, he's going to weigh in on how many Scaramucci's it is for the rest of his life, essentially.

Anyway, our guest today is the economist Nouriel Roubini, the NYU professor and hedge fund consultant extraordinaire who has been dubbed Dr. Doom. Yeah, he doesn't like that name, but he became famous for predicting the financial crisis of 2008. And he's here to give us a pretty dooming reality check about our economy. And one of the things is he said he didn't like the name Dr. Doom, but then was literally what's beyond doom. It was doomier. I don't know. Apocalyptic? Yeah, I guess. No, doomiest. Doomiest. Yeah. Yeah.

There you go. Doom and doomier. Yeah, doom and doomier and doomiest. Yeah. But before we get to that Debbie Downer content, and I suggest everyone here grab a blanket and some ice cream, let's talk about our newsmakers this week. Sure. Yeah. We'll talk about Sheryl Sandberg, who's got a new report out about how women in the workplace from her lean-in work. I'm not sure Liz Truss got the lean-in memo. And President Xi Jinping. Yeah, he's definitely got the lean-in memo. He's leaning into a third term. But let's start with Sheryl Sandberg.

The former Facebook slash meta COO left the company earlier this year, but she's still publishing her Women in the Workplace report. This is a partnership she has with McKinsey and Belenon Org. The key takeaway this year is that senior female executives are leaving their jobs at the highest rate seen in five years, so 10.5% of

senior women are leaving. It's usually around 8%. And the gap between men and women voluntarily leaving their corporate posts is the biggest it's ever been since they've been running this study. That sounds like a small number, but I thought this was interesting. To put it in perspective, it means for every woman at the director level who gets promoted, two women directors are choosing to exit. This is one area that people, you know, Sheryl Sandberg deserves much criticism for her

time at Facebook and also praise because she built an amazing business. But, you know, she deserves all that. But lean in has been something that I think is a little more significant than people realize. One of the things that I remember is when Meg Whitten became CEO of HP, there were so few women at the top of tech companies, really, truly, it was really something else that I said, now you're the second most powerful woman in tech. And she's like, I'd like to be the 10th.

Because she was a COO. She wasn't the CEO. And it's been a downward slide. I used to cover several women in tech who were at significant positions, and there aren't any. Vanessa Pappas is a COO. Lisa Su, a chip company. AMD. AMD. And there's some others, but very few, very, very few. Susan Wojcicki. Well, yes, but she's inside Google, right? Inside of that.

Yeah. I mean, and this isn't just women in the tech center. I think one of the things that Cheryl's study showed is that 43% of women feel burned out versus like 30% of men are saying they feel that way. But there was a conversation this summer. I think Elle ran a piece that was saying something like hustle culture is dead.

or ambition is over, particularly for women. And I did a little survey of my friends on Instagram saying, is hustle culture over? And it was about half and half. And people are feeling exhausted. I think it's interesting because at the same time, companies have never been more focused on getting female executives. And companies are under pressure to get women in higher places. And

the women are saying, no, I want more flexibility. They might be ambitious in different ways. They might want to run their own thing rather than be a director at some company, right? Yep. What do you think? Is hustle culture over, Kara Swisher? No, no. I don't like this idea of like, it's this, it's that, all these things. And so I think women, you know, women in the workplace get a lot of attention, but

And men do face pressures, similar pressures, but nothing like the caregiving burden. I was late this morning because our babysitter was sick and we had to figure it out very quickly. And I think during the pandemic, a lot of the women got most of...

the burden of the childcare burden. Absolutely. I also think it's generational. Like I'm an older millennial, so we were sold on hard work and to kind of not complain. I think Gen Z or even- So were we. Yeah, exactly. We learned from the Gen Xers and the boomers. I mean, we learned, right? But Gen Z or even younger millennials have come in with these high demands in the workplace. Yeah, that's true. I'm very curious what will happen when they are managers or leaders.

I think about this a lot. Does the equation that we were told is possible from boomers really clear? You can have a fulfilling career, happy marriage, be a present mother and have time for self-care like Gwyneth Paltrow. Like, is this possible? No, it never was possible. It's so, it's such a ridiculous, you know, there was, when I was younger, there was this sort of, she brings home the bacon, fries it up in a pan and never lets you forget you're a man. I don't know. You don't remember that, but that was- Sounds like I need to use that as my right stuff dating profile.

It was for an Angélique perfume that she can bring home the bacon. Then the woman had a briefcase and then she was cooking the bacon. Oh, my gosh. Even at like eight, I was like, this is wrong. There's something's wrong here. Yeah. So do you think Sheryl Sandberg is leaning out?

No, I think she's got enormous amounts of money and it just never got any better at Facebook. So, you know, it'd be interesting if Cheryl really did focus a lot on women things. I think she will. A couple of years ago when she gave $1 million to Planned Parenthood, I ran into her and she goes, well, what do you think? And I said, why isn't it 10? Why isn't it 100? She's rich enough, whatever.

I think you have to make a difference. And technically it was two separate $1 million donations at different times. But when I look at someone like Mackenzie Scott, I'm like, that's the way you go with the big numbers. Do you think Cheryl's going to be splashy like the Gates or quiet like Laurie and Paul Jobs and Mackenzie Scott? She'll be her own singular sensation. I have no idea. Yeah.

Singular sensation. All right. What do you think she should do next? I think she should do an interview with Kara Swisher because I was in San Francisco for two days this week and I ran right into her PR person, the guy who's great. I've known him for years and who's now handling her communications. And he was getting his dry cleaning. This is my neighborhood. And I said, when's she coming on? He goes, never. Never.

Never. He's joking to me. And I said, all roads to redemption lead through Kara Swisher. So I don't know if it'll work. Cheryl, if you're listening, you really should be talking to me. Anyway. Do you want to be branded as that, the person who's the path to redemption, Kara? Well, she has to have a tough interview. She can't be doing soft interviews. She's got to have one where she faces the music and really talks about it. And I think she's totally capable of it. Yeah, we all want to know what went down. And we want to talk more about the report, too. Yeah, absolutely.

All right, let's move on to our second newsmaker, Chinese leader Xi Jinping. Yeah, the Chinese president is set for a third term as general secretary, the head of the Chinese Communist Party, the CCP, following the country's Communist Party Congress, which they have. It was a real, quite a speech, quite a speech that he made in this term. He seems a little different, I would say. Yeah, he's been angling for this for quite some time. And he outlined a vision in his introduction to the new party Congress, saying,

of China becoming the world's superpower. And he talked about Taiwan remaining a key part of China's rejuvenation. And he was really outlining this kind of wolf and warrior diplomacy, which China has been deep in, in the Xi Jinping era. And it sounds like, okay, he's had two under his belt. And now this third one is going to turn to

global focus, not domestic focus. Well, it also sounded very different from, say, what was started by Deng Xiaoping, which was this sort of expansion and globalization and the capitalization of communism, really, essentially. And it was super aggressive. And they're struggling, too, because you're starting to see...

you know, trying to keep people in line at the same time. They don't like the shutdowns and the control. Yeah, he's been, it's kind of Teflon-y in that sense. He's had the, you know, people aren't happy with Chinese economic growth levels right now. They're not happy with the zero COVID policy. And yet he seems to be, you know, making his way through. And what you were talking about, Deng Xiaoping, he used to have this hide and bide strategy. It was like hide your strength and bide your time. Versus Xi is just, he's out and about with his clear message that

we are going to be a superpower. But the U.S. is taking notice. Yeah, the U.S. is. You know, the Secretary of State, Antony Blinken, is saying China will seize Taiwan much faster timeline or try to seize it, which explains the rush towards semiconductor controls. We do a lot of our semiconductors there in Taiwan. And Biden administration has a new rule that stops U.S. nationals from working with Chinese chip firms without a license.

bars sales of chip making equipment in China. Apple has been making changes, moving things around. We are setting up for a real, first a diplomatic war with China and a resources war, but eventually probably a much bigger one. Yeah. All of these companies are having to choose, do we want to serve China? Do we want to serve the US? And their bet they're making is that they're going to serve the US. It seems very strong policy. It also seems super late. I've lived in

and South Africa 10 years ago. And I remember flying all over. You go to Luanda and Gola and you'd have entire planes of Chinese migrant workers coming, building things, grabbing resources, right? China has been preparing for this for many years. I think they've been hiding and biting. Do you think it's too little too late or

Or do you think it's... No, no. I was all for Nancy Pelosi going there, showing our commitment to Taiwan. This is, you know, Ukraine is a very sad and terrible war, but this is the real one. Just three weeks before Russia's invasion of Ukraine, Xi basically affirmed that China's friendship had no limits with Russia. And I think he could have been testing U.S. commitment to the humanitarian response. You know, I will be curious if the U.S. actually sticks to it

It's kind of famous for saying we'll come and then we won't. So Obama in 2012 with Syria and the red line, right? Chemical weapons. Obviously, many more strategic interests in play in China. And here you do have bipartisan commitment or bipartisan support. Nancy Pelosi's trip, which you just mentioned. And then Marco Rubio is like the chief defender of Uyghur rights. He doesn't seem to care much for women's rights here, but he does seem to care. Well, I think the issue is economic, as it is always. You know, we produce most of our goods come from China and especially in the tech sector.

You know, and they have made huge inroads. So, you know, it is we have got to really think hard about what our role is in terms of development and creation of goods in the current because China is going to come on super strong. Yeah, they might be antagonized by all this also. And and, you know, the advantage they have that the U.S. doesn't have is they can they can go, go, go right away. They have you know, they have consolidation of power. We have negotiations. Yes.

Yeah. Good for living, hard for war, but we'll see what happens. Yeah. Let's take a quick break. And when we're back, we'll have the interview with Dr. Noor al-Wabini, where he is going to be doom and gloom about the new Cold War and China and much more.

Our guest today is Nouriel Roubini, who's the CEO of a global macroeconomic consulting firm called Roubini Macro Associates. But he is much better known as the nickname Dr. Doom from the 2008 New York Times piece written on him.

So he has a little doom. He kind of rose to notoriety for predicting the 2008 recession. And the criticism people have said is like a broken clock is right twice a day, though I think that's reductive. I mean, he's thoughtful. It's a very complex thought. He thinks he's a great economist and very smart. It's just that, you know, when you have one node, it's like anything else. So I want to hear about what he thinks is good about the economy or anything at all. Yeah. I read a piece in, I think it was the Times,

in the pandemic where he was bullish on the economy of New York City. And it was like, Dr. Doom is bullish. I'm like, wow, this is something I want to read. But his new book is called Mega Threats, 10 Dangerous Threats That Imperil Our Future and How to Survive Them. What's the summary? What's your takeaway? Well, first of all, it's mega threats. It's in red and in big caps. So just remember, it's designed to scare you. And my review is...

That's it. Are any of us going to survive? I feel like that's like a misnomer. He's like, how to survive them. Yeah, you know, I don't know. It's very doom and gloom. We'll see. We'll see. We'll talk a lot about this because it's a very tough economy right now with the war in Ukraine, you know, the pandemic, everything.

everything. There's so much going on. And of course, the 13-year party that's been going on in the stock market and with finance. So the party had to end. Well, the party is certainly over. And here is Dr. Doom to give it its final death knell.

So your nickname is Dr. Doom. I know you prefer Dr. Realist. So let's be realistic. Everyone knows you as Dr. Doom. Tell me why you don't like that nickname. I don't like it because I'm not a perma bear. I could give you tons of examples in which I was more optimistic than the markets on major economic and financial risk in the last decade.

When the markets were predicting Grexit, Greek exit from the Eurozone, I said, no, it's not going to happen. When markets predicted twice a hard landing of China, I said, not the case. But of course, the term Dr. Doom is more catchy than the Dr. Realist. So, you know, I'm OK if people tell me that I'm Dr. Doom. So talk about why you are thought of that way. I'd love to sort of get into it because I want to...

even though your book is called Mega Threats, which we'll talk about in a minute, you do have this idea that the economy is always overheated and that we're headed for the cliff, essentially. Well, I think that that's not the correct characterization. You know, I write pretty much every other day about what's going on in the world. And I have some of the top hedge funds in the world with a global macro.

to think about my ideas and listen. And if I was a broken clock that is right only twice a day, people would not pay for my consulting services. That's correct, yes. I'm very nuanced. I think it is important to think about the kind of things that can go wrong. And I have a specialty given my work

first as an academic doing academic research, theoretical empirical one, then two years of senior policymaking in Washington during the Clinton White House, and then spending, you know, the last 30 years meeting pretty much central bankers, finance ministers,

market participants, analysts, and you name it, and try to make sense of this very complicated world. And I don't think the characterization of me as being always a perma bear, it's correct. Okay. So do you think politicians and governments listen closely enough to the downside? You were senior advisor to Tim Geithner, Obama's treasury secretary. What was your takeaway from that time?

Well, the reality is that politicians sometimes have a very, very short-term view of things. Their economic policy are driven in part by their own popularity and the need to be reelected. And in the U.S., we have a

a cycle of two years, not even of four years. And that constrains the ability to do the right policies. In economics, reaching first best policies is almost impossible. The best you can do, and my experience in government suggests, is that if you can turn down bad ideas, and there are tons of bad ideas that are fourth and fifth best, you're already lucky. And that's the job of an economist as a policymaker. And if you reach second best policies, you're already going to be very lucky. So, but...

Politicians are not experts of economic issues and they're biased by their own electoral considerations as well. A lot of Americans blame the current president for inflation. In elections, parties do live and die by economies. Should this really be the frame? Because right now in the U.S., say, midterm elections, it's number one. It's surpassed abortion and other issues.

It does take more than two to four years to screw up an economy, but people do tend to focus on it. So should they do that? Say, oh yes, it's Biden's fault, for example, in the United States? Well, things are not black and white. The debate, for example, about the recent surge in inflation, not just in the U.S., but also globally,

almost all other advanced economies and most emerging market is the debate between those who say it was due to bad luck as opposed to bad policy. Bad luck was three negative supply shocks, the initial COVID shock, the Russian invasion of Ukraine,

And now they continue the zero tolerance policy towards COVID of China that is creating further global supply bottlenecks. But it's also true that on the bad policy side, the amount of monetary, fiscal and credit easing was too much and was too excessive.

So a number of economists, including myself, pointed out that we're doing too much on the policy side. But compared to other people, we're stressing just the bad policy. I emphasize already starting about a year ago that there were also these negative supply shock, like in the 1970s, that actually complicate further the job of central banks. The negative supply shocks that reduce potential growth increase the

cost and inflation, and therefore they make the job of central bank of controlling inflation harder because either you tighten enough to fight inflation and you cause a hard landing, or if you don't tighten enough, then you de-anchor inflation expectation. You get a wage price spiral like in the 1970s. So we're going to get your

new book in a second. I just want to ask you about your Twitter because it's really one of the spiciest economist Twitters I've ever seen. It's a low bar, of course. I want to run through your recent tweets. You tweeted, most crypto ideology is straight from lunatic right-wing conspiracies. Please explain. You're particularly bearish on crypto. Explain why. Well, first of all, I'm not bearish on crypto from the peak of

of last November, even the top two, Bitcoin and Ethereum have lost 70% of their value. The other top 10 have lost like 80% of their value. So this has been an unmitigated disaster. And by the way, these are not

currencies, calling them currencies is a joke. Anybody who knows anything about monetary theory knows that for something to be a currency has to be a native account. Nothing is pricing Bitcoin has to be a scalable means of payment. You can do only five transaction per second with Bitcoin. It has to be a stable store of value, but the price can overnight lose 20%. That's why I go to many Bitcoin conferences.

and blockchain, they don't even accept Bitcoin for payment because their entire profit margin, 10, 15% can be wiped out overnight. They're not stupid. - Yeah, you call it a commodity in other words, you're sort of calling it. - Listen, using Bitcoin or these things is going back to barter because the other characteristic of money is to have a single numerator. So you can price the relative price of goods and services. But if I need a Pepsi token to buy Pepsi Cola and a Coca token to buy Coca-Cola,

I don't even know how to compare the relative price of Pepsi to cola. Even the Flintstones had a more sophisticated monetary system than crypto. They were using shells as a single numerator so I could tell the relative price of bread to meat. This is going back to pre-barter. I mean, it's just...

doesn't make any sense. So calling them cryptocurrencies is just a total misnomer. They're not currencies. They're not even an asset. By the way, is that Flintstone economic? As I said, the Flintstone had a much more sophisticated monetary system than crypto. And it's not a joke. Also a car system. They didn't use gas. That's their feat. So that was to save the environment there. So Elon Musk, then this is your last tweet. Elon Musk is a bully. Scary,

that he will own Twitter and allow Trump to use again this bully pulpit to divide America, even on the issue of Russia, as Trump and part of the GOP are lackeys of the brutal Russian invasion of Ukraine. Why do you think Elon is dangerous? Oh, you know, he's dangerous in many ways. First of all, he takes positions like in Dogecoin or Bitcoin, and then he tweets. And he knows that if he tweets about it, the price goes up by 20, 30 percent overnight. That, in my view, is market manipulation. If I was at the SEC, I would try to

do an investigation on what he's doing. That's something that should not be allowed. And as we know, he's flaunted SEC rules over and over again because they gave him a slap on the wrist. Even a billion dollar fine for him would be spare change. So that's what he does systematically. And there are dozens of examples of that. But now he wants also to go in the space of geopolitics, but he's trying to cover his own ass. Unfortunately, Elon Musk is stuck with his big factory in Shanghai of Tesla.

And eventually the Chinese are not going to align to produce cars and collect data on the Chinese. We'll have a complete decoupling between us and China, especially on this stuff that is technologically, how to say, sensitive. I mean, suppose you had electric vehicles or autonomous vehicles from China that are using their software that are all over the United States. And China can monitor everything we do and stop it and shut it down. Would we allow it? Of course not.

We're not doing it right now. We're cutting them off completely from anything technology. So you think that the Chinese are going to allow Tesla to run their cars in China with all the data, with all the 5G, with all the information and so on? No way. So what does Elon Musk say then? Says that we should have for Taiwan...

a special administrative region like we had for Hong Kong, right? Because he wants to appease the Chinese by doing that. Such nonsense. We know what happened with Hong Kong. The idea you'll have a special autonomy for Taiwan is a joke. So he's trying to save his ass in China. That's what he's doing.

But, you know, he is a brilliant man, is a great entrepreneur, but he doesn't know anything about geopolitics. And now on top of everything else, he wants to opine about China and Russia. I mean, really, that's a bit excessive. And he's talking his book, by the way. Yeah.

It's not an interest. It's self-interest. He's talking his book. That's what he's doing. Yeah. Now I have said he doesn't have a real impact. So what's the difference? I mean, I am aware he's talking his book. So what's the difference? You know, he has a huge bully pulpit. Lots of people listen to him on Twitter and otherwise, and they believe that he's like a demigod. I don't think he can directly influence economic and other geopolitical decision of the United States, but, uh,

Maybe on China, of course, it's not going to have any impact. But literally, I mean, trying to defend his own financial interests in China and say that Taiwan should be like Hong Kong is just reckless. Yeah, reckless. Although still, what's the... I don't feel like it matters because he can just do it. It's reckless for him. I don't know if it has any effect on anybody. Well, he's got his own Twitter. Twitter.

We'll see what it's going to do. We're going to see how it's going to use this platform for other things and so on. You never know. The guy has a huge, huge ego. Maybe now he thinks I'm not just the best entrepreneur in the country, but I'm also the best political mind, the best geopolitical mind. And he can use that.

in the future that a bully will pitch for other purposes. Yeah, well, he can't run for president because he wasn't born here. He could try to change the constitution like Schwarzenegger did. That works so well. I don't think so. Okay, we'll take a quick break. When we come back, we'll talk about the book, which is, by the way, a bit bearish.

All right, let's get to the book. It's called Mega Threats. Actually, the way I pronounce it is Mega Threats because it's such a big, big font in red. There are 10 of them. They overlap and intersect, as you said. So it's a bit complex. Can you give us a quick summary of the 10 threats?

- Well, there are some traditional economic monitoring financial threats, but I think the one that I emphasize in the book, in addition to the economic financial ones are first of all, the geopolitical one. We have now a cold war between four or five revisionist powers, China, Russia,

Russia, Iran or Korea, and increasingly Pakistan, with the West, US, Europe and their allies. This Cold War is gonna lead to deglobalization, to decoupling of the global economy, to balkanization of global supply chains, to a fragmentation of the global economy. It's gonna be dangerous. It's gonna reduce growth and increase cost of production among other things. And the biggest risk is that this Cold War eventually is gonna end up into a hot war.

So the first few are your basic things that you talked about, these debt crises. These are things that the world has been through before. Explain what stagflationary debt crisis is.

- Well, stagflation means where we have rising inflation and recession at the same time. But in the 70s, we had stagflation because of these two all shock in 73 and 79, but debt ratios were very low as a share of GDP. So we did not have a debt crisis in Europe and the United States. After the global financial crisis, where the debt problem, too much mortgage debt, housing debt, bank lending to households, but we had the negative demand shock.

and we had a credit crunch, so we had deflation for a while, so we could aggressively ease monetary and fiscal policy. Today, instead, we have negative supply shocks, and in the chapter five, I identify 11 additional ones to the recent three ones. The recent three ones of Russia, China, and COVID, maybe temporary, maybe not, but there are other things that are medium, long-term, and permanent. So you have these shocks that are going to reduce growth, increase inflation,

and with loose monetary and fiscal policy are gonna lead to inflation and recession. But as I pointed out, is that in the '70s, we didn't have a debt crisis. And after the GFC, we didn't have inflation. So we have the worst of the '70s and the worst of the GFC. - All right, you write, in the book, you point out that current Fed Chair, Jay Powell and the president of the European Central Bank, Christine Lagarde, both have degrees in laws. Both have admitted they underestimated the threat of inflation. Would an economist have been a better choice for the Fed Chair?

Well, some of this trouble started with economists like Greenspan or Ben Bernanke. Ben Bernanke is named as a helicopter ban because he started aggressive QE and opening the door to very unconventional monetary policies. So even economists have done lots of policy mistakes. For which he just won the Nobel Prize, but go ahead. He did. No comment on that. Okay. No comment. Comment on that. No, no, no, no, no comment on that.

Well, as I said, you know, the beginning of, first of all, he didn't see the housing bust coming and his view in academic paper was that whenever there is a bubble, you cannot use monetary policy to break it. So his view was if a bubble occurs, then you mop up the mess by providing liquidity after. That was the wrong thing to do. You should have either monetary policy or prudential policy preventing a bubble in the first place.

And then he misunderstood the nature of this crisis. He thought it was mild and was not mild. And then eventually the policy solution was open the flood gates to stuff that maybe at that time was necessary, but we did quantitative easing and credit easing at zero rates too much for too long. - Okay, let's be future looking. What kind of economist, should it be like Larry Summers, who's also suggesting tighter policy or someone like you, would you ever want the job? - No, thank you.

I was in policy for two years. It was a great experience, but I wouldn't want to go back to policy. My view is that right now it's too late. The mistakes were done in the last 10 to 20 years. And at this point, if you fight inflation, you're going

They're gonna cause a severe recession, a financial crisis, and they're gonna feed on each other. So you're gonna have the mother of all debt crisis and the mother of all economic crisis. And if you instead decide that you want to avoid that, in the short run, you can lift markets, you can prevent a severe recession by printing money like crazy, not raising rates, but then inflation gets out of control. And once you have high inflation, eventually you're not gonna avoid the recession. You're gonna have inflation and recession, and you're not gonna avoid the debt crisis.

because you cannot fool all of the people all the time. Interest rates are going to reprice for short term debt, and then we end up into a disaster. So right now we have no solution. And we've reached the point in which the mistakes were done in the past. Damn if you do, damn if you don't.

What I make as an argument that the policymakers right now are talking tough on inflation, but faced with an economic crash and a financial crash, they're gonna wimp out, they're gonna blink, and they're gonna monetize these debts. Because the alternative, severe recession and financial meltdown in the short run is politically unacceptable. They wimped out in the past, the Fed wimped out in 2019 when there was a mild pressure

and the reverse quantitative tightening, the reverse raising rates, they're going to do it over and over again. They have no choice. So you criticize American policymakers for creating bubbles with cheap money and debt and then do nothing to deal with them. As you noted, the Chinese on their hand are actively trying to deflate their own overinflated real estate bubble, for example. Do you think that will work? And should Americans have done the same or do the same? Or is it, as you say, too late?

Even the Chinese, they literally, their model of growth was credit-fueled fixed investment. And the kind of investment they did in real estate, commercial, residential, state-owned enterprises were just usually excessive. China doesn't have enough consumption, has a lot of fixed investment, was all financed with credit and debt.

And now the debt to GDP ratio of China is 330%, only slightly lower than advanced economies. So right now they're trying to control it. But every time the economy slows down because they are worried about leverage, then they reverse themselves. This is yo-yo. They worry about leverage, then the economy slows down, then they panic about growth, then they ease again, then leverage creates again and again and again. It's like the US. It's like Europe.

is like other advanced economies. Their policies are no different. All right. Speaking of China, let's move to the global macroeconomic threats. This was the most interesting section for me and my producers. In one chapter, you say we are in a new Cold War between the U.S. and China, which you discussed just earlier, which is leading to deglobalization. Another, you write that whoever controls AI may become the dominant world power.

What's the bigger risk for the U.S.? Economic pain caused by decoupling from China or maintaining close economic ties with China and allowing them to win the AI race, which many think they already have? Well...

The issue is whether you can compete with China and prevent them from dominating the indices of the future. And all the indices of the future are going to be related directly and indirectly to AI, machine learning, IoT that allows you to collect the big data, and then 5G or 6G that are going to allow you to then use this data to create goods and services and so on.

Can you, at the same time, engage China, cooperate on some things, compete on other things, and confront China on other ones? That will be ideal world. But my view is they are moving towards a situation which cooperation is nowhere to be seen on anything. They don't want to cooperate on climate change. They didn't cooperate on pandemics. They don't want to cooperate on financial things. They want to create their own alternative international monetary, trading, financial currency system. That's what they're doing. They've given up.

on the West. So there is no cooperation. We're competing on everything, but there are now also confronting each other. From a Chinese point of view, we're trying to contain them. And from the U.S. point of view, China has used lots of tools to have unfair trade and stealing our intellectual property rights and now it's becoming a geopolitical threat, not just an economic threat. So this is a two-seated trap. Right.

And the question is only whether this cold war that's becoming colder is going to lead to a hot war or not. And when that's going to happen. Now, that's the question. I've been writing about the threat from China for years, for years and years and years, way back when, because it's very apparent that they were

moving ahead, not just as a copycat or a stealer of IP, but an actual creator of innovation and everything else. So the Biden administration, like the Trump administration, essentially gone to war with China's tech industry, something I watch very closely. They recently announced new export limits on semiconductors and related technology. That's led companies to pull their engineers from projects. Everyone's including Apple, which is, I think, one of the most ensconced companies. They're moving to India and other places.

Is it wise for Biden to go after China so forcefully? - If anything, actually, the Biden administration is tougher on China than Trump. So in that sense, the US has a consensus that China is a strategic competitor and we have to address this strategic competition. And how we do it,

is through lots of stuff, starting with technological restriction. But one point I think is important, once you restrict, say, 5G, because say, if our phones were using Huawei 5G, there will be a backdoor to the Chinese government. Tomorrow is not just our phones,

Of course, our autonomous vehicle system are based on big data, IoT, 5G, and therefore who controls that stuff can control also whether your cars are moving or not. But every piece of consumer products, even low-end ones, even your toaster, even your microwave, even your coffee machine is going to have a 5G chip.

So if your phone is a listening device, your toaster is a listening device. So decoupling on this thing implies that 10 years from now, we should not be buying even toasters or coffee machines. So a world in which you decouple technologically is a world in which every good and service in the future has some of that 5G. And therefore, you have to decouple 100% on everything. I don't think people have realized that.

what 5G decoupling implies for decoupling on the entire dimension of the trade relation between US and China. This is everything. It absolutely is. It's everything. Literally everything. It's so funny that all the focus is on TikTok when it's actually the toaster. No, I mean, beyond that. Literally, the toaster is as much of a listening device. Yeah, yeah. TikTok. I mean, they started to worry about the webcams, right? Yes. In their homes and in the government. But that's, again, every piece of anything. Your coffee mug is going to have a 5G chip in the future. Can

Can the U.S. actually win here or is it too late? Do you see a possibility? There's thoughts about returning manufacturing to the United States. We, of course, invented the Internet. Is there a way to get back and how does that happen? Well, from a point of view of innovation, I would say that the U.S. is still

head of China and the Chinese policy bashing the private sector are going to lead to a weakening of private sector confidence and command and control doesn't work very well when it comes to true innovation and so on. So you can throw a lot of money and they're doing strides on it. But I would say that we have

the right technologies, the right innovation and so on. What we don't have is manufacturing, but we have to start to think also about a new industrial policy. I mean, the Chinese know that probably they're not going to have access to our semiconductors and maybe possibly those of Taiwan, unless they take over Taiwan. But the risk is that China is going to take over Taiwan or bombs even those factories. And then we are really naked. That's why the U.S. has said,

to Samsung, I said to TSMC, why don't you start building semiconductor factories in the United States? We haven't done it for a while. So we have to think about an intelligent industrial policy, not just industrial manufacturing, also technology in general. Yes, we can still be successful. We can win that war, but we cannot just be less fair about it and think that the market is going to take care of it. If you go to the market, the market folks like Tesla and Elon Musk,

are caring about their own profits. They're not caring about national security. They're even willing to appease China and Taiwan. So we cannot rely on the Teslas and the Elon Musk of the world for having enlightened economic policy for these threats. All right. So lastly, I want to talk about global warming and environmental collapse. It's another area I've been writing about for years now. This is sort of the big deal. None of this really matters if this is happening. You write that to keep increases below two degrees Celsius.

Celsius means a carbon tax rate closer to $200 per ton of CO2 emitted. What would that do to the economy? And it's not just carbon release. It's all kinds of, I mean, there's so many different things happening. How do you look at that as probably the worst problem we face, I think?

Eventually it's the worst problem. We can still destroy each other through financial meltdown or through a war between great powers the next decade while the environment is a slow motion train wreck. But the economic damage is becoming severe. Look, just this summer where you had massive droughts in India and Pakistan, throughout Europe,

Sub-Saharan Africa, most of the US actually from Colorado, California, we have a long-term drought and one third of all vegetables and two thirds of all fruits and nuts in US are produced in California. The farms are selling their water rights to other people because that's more profitable than growing food.

That's why food prices were already spiking before the Russian invasion of Ukraine. Same thing with energy prices. I'm all in favor of decarbonizing, and we have rightly bashed fossil fuels and big oil, but they've collapsed their own capacity of new production of fossil fuels, but the rise of renewable has not been sufficient to compensate for that.

That's why Brent oil prices were already $100 per barrel before the Russian invasion of Ukraine. So we have to think about these things conceptually. And what's happened is that there's a lot of talk about net zero emissions and dealing with the environment. That's Bill Gates. And lots of talk about ESG. Yeah, but a lot of it, honestly, and I follow it closely both in the corporate sector and the financial sector, is greenwashing, greenwishing, green fig leaves.

is really talk and there is almost no action. So my worry is that all the solutions, and there are plenty of solution with current technologies are mission impossible. Mitigation means net zero implies negative economic growth with current technologies. - Yes it does. - Where the recession, the worst in 60 years in 2020, net emission fell only by 9%.

Adaptation is too costly. And geoengineering is freak science, right? Throwing dust particles in the atmosphere to reflect the sunlight. So unfortunately, those solutions are not. And carbon taxes, as I said, to achieve two, you need a carbon tax of $200 a ton. Today, the average is two. So let me just end where we started on these predictions. They're quite dire. I'm sorry to tell you, you are bearish. Maybe they're realistic, if you think about it. Okay, but you've also,

You've also made, I mean, in the interim, in March, for example, 2009, you said the S&P would fall below 600. It gained 65%. You thought there'd be... I made mistakes like everybody. I'm not perfect and I don't believe that anybody can predict things, you know, and I never claim that. So these predictions are quite dire, you know,

Why should people be confident? And what do you hope that you got wrong, you're going to get wrong here? And what do you say to people in terms of being confident in your predictions? Because right now it's grab your head and go under the desk. Listen, we think that the world is going to be like the last 75 years. What I'm arguing is that before the 75 years, between 1918 and 1945, with World War I, the Great Depression,

trade war, inflation, deflation, hyperinflation, fascists and Nazis coming to power in Germany, in Italy, in Spain, in Japan and other countries. We had World War II, we had the Holocaust, and I'm Jewish, and then we had all the other disasters. And my job is to say, we live in a very different world. We had 75 years of relative...

peace and prosperity in spite of all the economic cycle, in spite of all the mess. And we got used to actually half of humanity going from very poor to achieving less poor and then middle class. What if we go back not only to the 70s, and that's going to happen, we're going to have stagflation. What if we go back to the 1930s and 40s?

the kind of mega threats that I worry about signal that that's a possibility. Is it inevitable? Absolutely not. Are there policies that are gonna lead to prevent it? Yes. But my view is those policies are hard to achieve. The question is, are we gonna do it? And from a realistic point of view, my fear is that we don't have the consensus internally and externally to do the right thing. That's why we're guided towards a disaster. - All right. One bit of hope at all, Narelle, or not?

It's technology. In the chapter that is Utopian, I say that if, for example, it's not going to be solar panel, the revolution in energy might be fusion. If you're going to have fusion really successful fast enough before we get to three degrees, then the energy costs very little.

greenhouse emissions are zero, economic growth boosts. You can produce so much more food because water becomes cheap and you can desalinize it. You have huge economic growth. Of course, there'll be inequality because technological innovation

benefits capital and the high skill workers, everybody else is going to lose their job with AI automation, but then at least we can have a universal basic income and we can redistribute to have a future that is more sustainable, more environmentally friendly without conflicts among countries and so on. But technology has to be the solution. Technology, don't

I can't believe it. Technology is the answer. All right, last question. Your advice to Biden right now about China or inflation? Pick one and keep it short, Norel. On China, I think we have the right policy. There is a strategic competition. But I think the key is going to be when China makes a move on Taiwan...

What are we gonna do? Just give the weapons to Taiwan or we're gonna really defend Taiwan? We're gonna really defend Taiwan, we have war with China and that war from conventional becomes unconventional. So do we want to go to World War III and nuclear alienation to essentially defend Taiwan? I don't know that even Biden has the answer to that question. I think that's a key question and there's not a clear answer to it. - All right, I have one more quick question. If you're the average person, where do you put your money, Nareil?

My suggestion will be right now, you lose money on equities, you lose money on long-term bonds, and you lose money on cash because of inflation. If you want to protect yourself, your portfolio, the investment should be short-term treasuries that reprice, tips that are inflation index that reprice, gold, precious metals, and some commodities are going to go up in value when there is inflation, and

If there is moderate inflation, some forms of real estate are gonna be the right investment because they protect you against inflation. But a good third of all real estate stock in US is gonna be stranded because of climate change, flooding, hurricanes, sea rise levels, wildfires, droughts, and you name it.

half of the U.S. is going to have to move somewhere else, Midwest into Canada the next 20, 30 years. And therefore, even your real estate investment should be done in light of the coming environmental disaster. Oh, my God. I have to move to Kansas? All right, I'll do it. Okay. Or Canada, Montreal or Toronto or Ottawa. That's the plan. There's plenty of land. Okay, I'll remember that. In Canada. And it's a great country. Okay, great. So,

We'll have to merge the U.S. with Canada. I think that's likely to happen. All right. Eventually. Oh, no. The United States of North America. Nouriel, I really appreciate it. Thank you. And I guess goodbye. Oh, my goodness gracious. Well, that was depressing. Yeah. Wow. I don't know what to say.

I shouldn't have had this many children because I can't move so fast. I'm going to have to get rid of some. No, come on, Kara. You're not going to get rid of any children. Who's going to work your fields and the farm? That's true. That's true. You need them to grow the chard. Clara of the farm. While you're taking the money from your mattress to buy gold. Oh, God.

But in all seriousness, I mean, I think it's funny that he pushed back on being bearish, but he is, I mean... Are you kidding? What's worse than a bear? What's beyond a bear? Well, I mean, bearish versus bullish. I wouldn't say it was bullish. I would say not. I would say, and why own anything? Why write a book? Like, that's...

some level. I'm like, why are you even writing? What's the fucking difference, sir? That's the only thing. I mean, I think people do have to, he is correct in understanding, and it's something I've written about a lot, is the threat from China is severe. But they're clearly the next tech titan, and that's where everything's going to be controlled. That's one. Secondly, I think he's completely right that the past 75 years, we've had a pretty good

run despite all the ups and downs compared to the first part of the 20th century. I think the most interesting part was the conversation around China. I have to say, I think the Biden administration has made such headways in its China policy of late. They are being extremely aggressive. And so hearing Nouriel's take on that, I thought was interesting. Yeah. I am really depressed, Kara. So I think that we need some uplifting advice from you. Who's your unsolicited advice for today? Oh,

Oh, wow. I don't have any. I feel terrible after that interview. I think, you know, I think one of the things we have to realize is we've been in, you know, my son is a little like this. Just this weekend, he was, you know, he's sort of down on democracy. And so he's... Not the one-year-old son. No, not the one-year-old. My 17-year-old. I think it's a really hard time for young people to be thinking of hope. And I would say, you know, we have overcome a lot. Unprecedented threats from Hitler to...

There's all kinds of threats at all times. Black plague, you could go through history over and over again. And I always feel like it's moving forward no matter how we slice it. There is retrograde moments. But we have before overwhelmed them by our hope and dreams. And it's really hard in this noisy environment.

environment to do so, but you just have to push yourself. And despite the fact that I agree with a lot of what Nouriel says, I still think there are always solutions and you should be solutions based. And that's coming from someone who's been very hard on the tech industry, but there are solutions throughout, whether it's tech or political, et cetera. Hmm.

Well, two thoughts to that. One, I think the world always does survive, but it's not a given that the U.S. is going to come out on top. There's been this kind of, especially in California, I felt like the world is going to trend toward democracy and this liberal ideals. I don't think that's necessarily true. Having lived in the rest of the world, I think the Chinese model has salience for other countries, and it's something to pay more attention to. They're gaining more and more soft power over time. I agree.

Two, I don't think we should ever introduce your son to Dr. Noriel Rabini. I'm keeping the book away from him. It's a very depressing conversation. Oh, it's fine. But I want young people to have more hope. I really do. I think that's a good piece of advice. All right, let's move on to the credits.

Today's show was produced by Naima Raza, Blake Nishik, Christian Castro-Rossell, Rafaela Seward, and Andrea Lopez-Crusado. Our engineers are Fernando Arruda and Rick Kwan. Our theme music is by Trackademics. If you're already following the show, pat yourself on the back. If not, I'm shocked. Go wherever you listen to podcasts, search for On with Kara Swisher and hit follow.

Thanks for listening to On with Kara Swisher from New York Magazine, the Vox Media Podcast Network, and us. We'll be back soon, or maybe not. The world might be ending with more. I don't think we're coming back, Kara.