Morgan Housel on the Psychology of Money [Ep.44]

Welcome to the new retirement podcast. Today we're going to be talking with Morgan Housel, a writer, former columnist at the Motley fool and the Wall Street Journal, and a partner at the Collaborative Fund. He has a degree in economics from USC and is a student of history. Morgan was also the fourth guest on our podcast, where we discussed the pending $30 trillion generational wealth transfer. Morgan and I met in person a couple of years ago at a conference in Southern California, and we're going to dive into his new book, the Psychology of Timeless Lessons on Wealth, Greed, and Happiness, and his perspective on 2020. So with that, Morgan, welcome to our show. It's great to have you back.

Thank you for having me. I didn't realize I was guest number four. I didn't realize I was one of the very early ones, but I enjoyed it last time, so I'm happy to be back.

Yeah, no, I really appreciate you coming on. Actually, it was when we started the podcast. You kind of start with your nowhere, and then it's all about who will actually come on your show. So it did help us get established, which I really appreciate.

Yeah, there's always a chicken and egg thing with podcasts.

Yeah, exactly. So before we jump into the book, I'd love to just kind of catch up with you a little bit on. I know you moved to Seattle. I was curious why you moved and kind of how life has changed. I think when we first talked, you were in Virginia, is that right?

That's right. Yep. Yep. Lives in D.C. for about eight years. We just moved back to Seattle two months ago. My wife is from here. She grew up here and she and I lived here after college. So it's just. It's not. It's not new to us. We're coming back, be closer to. Closer to family. It was always our plan. We had no reason to be in Virginia. We went out there for my wife's grad school and we had just ended up staying for several years after. But it's always been our plan to get back here. Now we picked May of 2020 to move us and our kids across the country. I always joke I've been alive for like 400 months and I picked May of 2020 as the month to like. He couldn't have been worse. We planned the move well before COVID of course, but it all worked out well. Now we're happy to be out here. Summers in Seattle are unbeatable, weather wise. I would have a different response if this were in January, but things are.

Going great so far, so, yeah, Just in terms of your career and kind of how you got here. So I went to usc, Motley Fool, Wall Street Journal, your venture partner at a fund. You know, did you have kind of a plan for how you thought your. Your life was going to go?

No, there was zero plan. There still is no plan for better or worse, because how everything pan out. And I know this is not unique to me. This explains so many people's career, but I had a plan, and it all fell to pieces. And I ended up doing something that I never in a million years would have imagined. My plan, all throughout college studying economics, was to be an investment banker. That's what I wanted to do. That was my dream. And I had no plan B. That was everything to me. I was like some kids want to be basketball players. I wanted to be a partner at Morgan Stanley as an investment banker, everything. And I ended up hating it. I had an internship, investment banking. Hated every moment of it. Wanted to jump out the window. Like, it was awful. I couldn't stand it. So I actually fell into writing just on accident. I needed something to do. This was like a summer of 2007. So no one was hiring in finance because the world was falling to pieces and the Motley fool was hiring financial writers. I had a friend who was there at the time, and I thought, maybe I'll give this a try, see if it works. Who knows what's going to happen? But I ended up loving it. And I never had any interest in writing whatsoever. I would say I had, like, a negative interest. Like, writing repelled me. It thought I didn't do it, so I wasn't good at it. It didn't interest me. So doing it as a career, like, absolutely not. And if you would ask me at the time when I wanted to be a big, powerful investment banker, what I thought of journalists, right. Which I don't know if I am one now, but I would have been like, what? No, no. So. But I couldn't love what I do more. Just getting to learn about things, read about things, and then write about it, share it with the world. To me, it's like an absolute dream to get to do. But I know so. And then also going forward, I really have no plan either because I've. I think I've been, as many people have just kind of humbled about how their plans went astray in the past, which makes you a little bit more hesitant to forecast the future.

Yeah, it's pretty interesting hearing your evolution there. I mean, it feels like maybe you're at the Tail end of the people who aspired to be bankers. So my brother was an investment banker. He graduated from college. He got into JP Morgan's program back in the day. That was a big deal. I remember once he flew across the country on a private jet and like their corporate jet. And that was like he was in his early 20s, and that was a huge deal. And people did. It's like, yeah, let's become Titan of Wall street, whatever. And now I think younger people, they aspire. Well, for a while it was like, hey, let's be a tech founder. Let's do this or that. It's interesting how these things kind of change generation to generation, like what you want to be.

In the 60s, it was NASA. Let's go work for NASA. And then I think for a while it was like ge. If you graduated from Harvard's business school, you're like, I'm going to GE or Procter and Gamble. And then it became Goldman Sachs, Morgan Stanley, and then it became Google, Facebook. I actually don't know what it is today. It's probably still Google and Facebook, but it's fading. That's definitely fading. Like the allure of working. If you went to Stanford business school in 2014, then if you got a job at Google, that was like, you won, you made it, you won. I don't think it's that way anymore. I think that's fading, but I don't know who's going to take the baton next. I don't know.

All right, so let's jump into the book. So why'd you write the book?

For 15 years now or so, I've been writing about the intersection of investing history and behavioral finance. That's kind of been my zone, my beat. How do investors think about money? How do people think about money and investing? And what is the history of what they've done? What can we learn from the history of what they've done? That's always what I've written about. So about three years ago, I wrote a long form post called the Psychology of Money that just outlined 20 of these little quotes, quirks that I've seen people fall for over time, historically, and what we can learn from them. The post did really well. About a million people read it. It was 8,000 words or something, which is a really long blog post. And I knew that there was. Even though it was long, I was being so cautious to truncate what I wrote, to keep everything as brief as possible because there was already so much in there that I knew when it was done. And it caught on. Like, the structure of it caught on that I could turn it into a book. So the post is 8,000 words. The book is 55,000 words. Expanding on. And there's. I actually use some different topics, some different points. It's not like a mirror of the book at all. It's not a copy of the book at all, of the article at all, I should say. But it's just kind of. I would describe it as like, the highlights of what I've learned, the most important things that I've learned after writing. Thinking about this topic and writing about it for 15 years. So it was really fun to put together. There's this weird thing with books where it's like, I've written thousands of articles, but if you put a couple articles between two pieces of cardboard, people take it more seriously. But it's fun to write a book. I actually just got the first copies of it myself a few days ago. It's cool to see it come to fruition.

Yeah, that's awesome. From watching you, I was always wondering when you would write a book. Have you been thinking about writing a book for a while? Was that. I was like, hey, this is kind of coming up in my career, or was it really spurred on by. You wrote this article. You saw the traction. You're like, okay.

And then a little of both. I never felt that much pressure to do it because I was writing every week, twice a week. So it was like, it's not like I'm not getting my thoughts out to the world. I'm still doing it in the blog. And it didn't seem that relevant to me to say, well, I'm going to put them between two pieces of cardboard. And then it's different. But there is like an arc of a writer's career where I was like, okay, I should write a book. But I never wanted to force it. I didn't want to say, like, I'm going to write a book because I'm due for one. I never wanted that. I really wanted to wait until it was like, okay, this. Like, I know I could turn this into 55,000 words. And it wasn't until I wrote the post a couple of years ago, I was like, okay, now I have something that I know I can work with. I think a lot of. I've seen a lot of writers in their career, their journalists and whatnot, fall for that. Like, I'm due for a book, and they kind of force something out because it's due. Or a publisher offered him some money to do it. And sometimes it works out and sometimes it does. So I really just wanted to be patient until I could write something that I felt like I was going to feel good about.

Yeah. So with regard to what are the key things or some of the key things that you think people should take away from the book, where you think they can add value to people across the spectrum of less literate to more literate, financially literate.

To me, I think that the main thrust of the book is that the way that we are taught and generally think about money is that it is a math based field, that it's numbers and formulas that give you a precise answer that will tell you what to do. And to me, everything I've learned about money, whether it's personal finance or investing or running a business, is that it's not a math based field. It's a soft social sciences based field. It's closer to psychology and sociology and history. And what's going to separate the good from the bad in finance? People who do really well, People who do really bad is not your intelligence, it's not your education, it's not your iq. It's whether you keep control over your emotions. It's about your relationship with greed and fear. It's about who you trust and who you seek information from. All these like soft topics that are easy to get swept under the rug. If you think about finance like it's something like physics where there's just like firm, hard, immutable truths. If you think about it that way, I think a lot of those people go astray. Like there's no other field in which someone with the best education, someone who went to Harvard Business School and works at Goldman Sachs and then goes to work for Bridgewater, one of the best hedge funds, that that person can underperform. Like someone who didn't go to college and knows nothing about investing, but just dollar cost average and do a bunch of index funds. There's no other field where someone with no training and experience can outperform someone with the best training and experience. But it happens all the time in investing. And the reason that's the case is because it's a soft, behavioral, psychological based field that has very little to do with your intelligence or iq. That's the main argument of the book. And I use a bunch of stories and examples and kind of different points that tie into that to kind of show how we can do better at money. Thinking about it from a psychological point of view versus a math point of view.

So what do you think the most important psychological attributes are for someone to be successful.

I think in a broad sense, it's knowing yourself and knowing that how you think about risk is different than I think about risk, which is different from anyone else. Because we've had different experiences in life. We've seen different things, we have different circumstances, we have different goals. And therefore, there is not one right answer that is right for me and right for you and right for anyone else. And I think that's kind of like. It's kind of discouraging for people. It's hard for people to accept that. And people want to think that there was a one right answer. They want to think like we're debating, you know, like this is algebra, like there should be a right answer. And if we're coming to different answers, it's because one of us is wrong. I just don't think it's like that whatsoever. So there's a chapter in the last chapter of the book is called Confessions, where I write about what I do with my own money. I don't give any numbers, but other than that, I open up the kimono and here's what I've done with my own money. And there are things that I do with my money that you cannot justify rationally. They don't make sense on paper. That if someone looked at this and said, you're not doing this efficiently, like on a spreadsheet, this is wrong. And my response is like, I know it's wrong. I know it's not efficient, but it works for me. It helps me sleep at night, which is my only goal. So I think the more that people can embrace that, that this is a messy field with no right answers. And your only goal should be to find something that works for you and helps you sleep at night. Not what maximizes your returns, but just helps you sleep at night. I think once people embrace that, then a lot of the problems that they face in money and investing become a lot clearer.

Yeah, I think that the thought that this is such a being successful with your money is so much tied up in your head and how you view it is a great insight and different. And also I do think that there's some of it can be super simple. So live below your means. So you save money and ideally save as much as you can, like 10 or ideally 50% of your money. Invest it in a broad index fund, keep fees low, rebalance on some regular basis, or automate it. Do that for 10 or 15 years and you're going to be financially comfortable, maybe financially independent. That's the end of the story.

And people want to think it's a lot more complicated. Because if you asked a NASA scientist, how do I get to the moon? That's a complicated answer. And people look at how big finance is and all the flashing lights on Wall street and. And how much money you can make, and I think it's intuitive to think, well, it must be complicated. The fact that there are hedge fund managers that make a billion dollars a year means that it must be complicated. Right. So that's the intuition that is so easy to think about. But I'm the same way you explain to people, how do you do well in investing? It's like, live below your means, diversify, be patient. And that's it. I don't have anything else to tell you. That's it. So I think if you understand the psychology of why that is hard to understand, that's the puzzle piece we're trying to fix. For it's not like, do you need to write a book telling people how to invest? No, but you need to write a book telling people what happens inside of your head when you try to think about that simple solution. So that's the thrust of the book.

Yeah. So I think there's a. So just to elaborate this, it's like, for people, it's one kind of understand the base concept. There's no easy way to get rich. I mean, yeah, maybe you buy Bitcoin at $0.20 or something like that, but mostly it's like you got to grind it out. You got to just do the right things. But I think the other big thing that you're pointing out is you need to know yourself and understand your weaknesses, which is for many people, it's super hard. It's like, okay, now I understand the right things to do, how to actually do it. And if you can't do it yourself, you should get a coach or a financial advisor. You have to pick the right one because there's a lot of people preying on you and your money that are misaligned with you. Right. So that's the hard part. But knowing recognizing that early on can make a huge difference for you.

And the other thing that's so different about investing that throws people off on this topic is that there's no other field that I know of where effort does not correlate with results. Like, if you want to be the best basketball player in the world, you should go to the gym 12 hours a day. There are stories about Tiger woods who go out and hit 1,000 golf balls at the range, Michael Jordan. You're practicing 12 hours a day. That's what correlates with success in those fields. And it's easy to think that if you want to be the world's best investor, you should be sitting in front of your computer crunching numbers 12 hours a day. And look, there's going to be some quant hedge funds that do it and do well, but by and large, for the huge majority of people, it's the opposite. The way that you're going to do better is to stop trying. The way that you're going to do better at investing is to close your computer, close down your, you know, you know, shut down your brokerage account and go for, go do something else with your life and leave it alone and let compounding work. And that's not intuitive because like I said, there's no other field where that's the case. Imagine if the way that you become a better doctor was to not pay attention to med school. There's no other field that works like that. But there's so much evidence that the people who do the best in investing on average, particularly not just individual investors, but professionals as well, are the ones who leave it alone. Here's one example for that. Even for professional investors, the s and P500 has 500 companies. And there's actually some. It's not just the same companies over time, each year some companies are being pulled out. Other companies are being pulled in from the standard enforce committee that does it. Sometimes because those companies are doing really poorly or going out of business, they take them out, put new ones in. If you look historically, what would happen if those changes were never made, rather than the weak companies being pulled out and then the committee picking new companies to go in. When it started in 1957 with 500 companies, if you just left it alone, some of those companies died and you just let them die. And now you hold 400 companies. The S&P 500 would have performed 2 percentage points annually better under that scenario, which is massive.2 percentage points better if you just left it alone. So this is even in a passive index, the little activity that takes place in it is still in anchor over time. So it's hard to look at something like that and now come to the conclusion that the hands off approach for most people, I'm not talking about Renaissance technologies, of course there's going to be examples of people that have extreme activity and lead to extreme results. But for 98% of investors or more, maybe the fewer knobs you have to fiddle with the fewer levers you pull, the less effort you're putting into it, the better you're probably going to do over time.

That's right. Well, I think it's important to recognize where you are in that ecosystem. You know, I agree with you. Listen, I'm a, I'm a believer in passive low, you know, low cost index funds is the way that 99% of the world should operate. But on the other hand, you know, I'm sitting here as an entrepreneur taking a massive amount of risk with my own personal, you know, human capital and time. Right. And, and, and I look at people like Patrick o' Shaughnessy and, you know, Jim o', Shaughnessy, and these guys are active and. But I'm like, these guys are so smart and I, you know, listen to his podcast and it's like they have great insights. And so there is this. You do need the animal spirits and the entrepreneur people taking risk, innovating, people identifying that and investing in that. So you kind of have to figure out where you play and how you want to play in that space.

Totally. Yeah. Look, there's always going to be a huge group of people who are active investors, and I don't look down upon that at all. I think that's great. And really smart people who I admire and whatnot are successful active investors. I just think if you're looking at this from a probability standpoint, where what are the. Like, how do you maximize your chances for success? How do the greatest number of people maximize their chances for success? It's hard to argue anything other than maybe not a purely passive strategy because there's rebalancing and whatnot. So I'm not, I've always said I'm not a passive zealot in any ways, in ways some people are. But I just think the probability is that it is the best answer for the most number of people.

Yeah. And I think also if you zoom out and you look at your whole portfolio, which includes not just your savings and investing, but like your home equity, which is like a bond, but primarily your human capital. For most people, their human capital is like how they generate all their income. Right. And where they're going to generate their wealth, that's essentially one giant active bet, super concentrated in whatever particular company or thing that you're spending your time on. So the. A great argument to say, hey, all your savings should be passive. All your time is essentially this big concentrated bet and there's a ton of risk associated with it.

There's also these other philosophies that I don't do with my own money, but I think makes so much sense. One that I've always loved is from Taleb, who says, I think the way he invests, or he talks about this in his book. I think this is from Antifragile, where he says, puttin. I'm paraphrasing this. He said, Put 90% of your money in treasury bonds, and then the other 10% in really risky puts and calls. And that's how you should invest. And then you're basically like, look, the most you can lose, the most you can ever be down is 10%, but you're basically betting on black swans. There's ways that people have active investing strategies that I look at, and I'm like, that makes sense. That makes sense to me, even though I don't use it myself. So I. 100% against any sort of activity or effort. It's just the way that I lean.

Right? Yeah. So this is good. One other thing that jumped out at me in the book that I thought was cool was you kind of talk about risk and the price that has to be paid and that there's a price for everything. And I think some of your stories, especially on the personal side of it with entrepreneurs, it's like, hey, Warren Buffett, he's super successful. He's had time, but he's also spends, like, an enormous amount of time doing what he does at the expense of relationships, family, and other stuff. Do you have kind of stories that kind of, you know, resonate for you in that. In that space?

I just think there's always, like, you know, there's a. What's it. Scott Adams, who is the publisher of the Dilbert comic, he writes in one of his books that, you know, good advice for a lot of things. The key to a lot of things in life is just figure out what the price is and then pay it. Be willing to pay it. Really simple, obvious idea, but it goes really far. And people need to understand in investing, what is the price of investing? You can do really well over time. The rewards are obvious, but what is the price? Nothing's free. What is investing going to take out of you? What's the cost of admission? To me, if you think about it in those terms, it's obvious what the cost of admission is in investing. It's uncertainty and volatility, and you have to be willing to pay that price. If you are not willing to pay it, you're basically trying to sneak in. You're trying to jump over the fence and not Pay the admission price and it's not going to work out well. So I think you have to. To me, as an investor, it's been looking at and saying, okay, volatility and uncertainty is the price of admission. It's worth the price of admission, the fee is worth it. But I just need to be willing to pay it and put up with the volatility, not try to avoid it, not try to sneak in without paying the price. I just need to put up with it and endure it and deal with it and situate my finances so that I am able to endure it and deal with it. And once you view it as a price worth paying rather than a fine, that's the difference. I make the distinction in the book, the difference between a fee and a fine. A fee is something that you are willing to pay, that you pay $100 to get into Disneyland, but it's worth it. You're happy to pay it to get in. A fine is something that you should avoid. A fine is like, you screwed up. And a lot of people view volatility as a fine. Like, oh, my portfolio was down 20%, I did something wrong. I was fined, and I should try to not do that again. And I just. That's not how I view it. I view a 20% decline as the fee. That's the cost of admission. And if you view it as like, look, I'm not happy about this. I wasn't thrilled in March of 2020. But if you just change your mindset to view it as a fee, then it's like, okay, this is the price that I pay for getting to double my money every decade on average.

Right?

And I think that subtle shift is really important in investing.

Right. I think so many people have a hard time, like, you know, getting their head around that and framing that up and really getting someone to appreciate it. This is what professional investors do. They know this is going to happen, right? You know the next downturn is going to happen and you're going to lose money. But most investors, they just. They live in fear of it. They're like, just always hoping it's going to go up and to the right consistently. And then when it turns down, they're like, oh, this is terrible. It could be in the world. I need to get out. And that's why the average retail investor does terribly. I think their net return is like 2% or something. If they're in the market, it underperforms every asset class.

I would even take it a step further than saying they live in fear of It I say they're just complacent about it. They by and large live with the assumption that it's not going to happen. Like the general assumption that the market should not fall 30%. Because a 30% decline in a lot of people's eyes means that something is broken, the economy is broken. It's like the equivalent of, I think most people view a market like they're flying in an airplane. If you're flying in an airplane, your tolerance for a malfunction is zero. If the engine goes out, not good, not good, not good. This is a big problem. And they view the investing the same thing. So if a market falls 30%, not good, the airplane's going down, get out, get out, jump out of the plane with your parachute on. And it's just, it's not that at all. Like, if you're, if you realize that a 30% decline is normal, historically happens about once per decade on average, then when it happens again, it's not fun, but you're like, okay, like, I knew this is, I knew this was going to happen. I expected this to happen. It's not fun, but it's okay. It's just part of the process, right?

Yeah, I think it's, you have to be going into it. So say, even said, like our users, you know, they, the average user is kind of 50 to 65 years old and due to the kind of wealth concentration, has a million bucks. So the median is 600,000. But they have a fair amount of money, right? So if you walk into the world and you're like, hey, I have a million dollars and it's invested and there's a decent chance that it could go down 250,000 bucks this year. If you know that and accept it. And like, hey, if that happens, I'm going to still invest and, you know, I can survive that, then that's one thing. But I think so many people, they're like, you know, I've got my million bucks. I just hope it goes up 50,000 bucks a share, that'd be great. And they don't think about the other side of it and they can't deal with it when it hit them, when it happens, that's when it's also lose it.

And when the market is going up, it's easy to kind of try to imagine what it would be like in a bear market. So when everything's going well and you ask investors, how are you going to feel if the market declines 20%, it's easy for those people to be like, oh, that'd be fine. Because they're living in a great economic moment and they're optimistic, and they can't really contextualize what is going to happen to the world that is going to drag the market down 30%. It's going to be something like COVID 19 or 2008 that fundamentally shifts your ability to be optimistic about the world. So that's why people's perception, even when they try to be cognizant of what's going to happen, of what might happen, how they might feel if the market declines, tends to not actually map out to how they actually act when it does decline. And therefore, the best way to think about your own risk tolerance is not asking yourself when things are going well, not asking yourself how you would feel if things turn south. It's to look at your past behavior and realize that if you sold in March of this year or in 2008 or in 2001, that is probably indicative of how you are likely to behave in the future. And that's fine. You shouldn't be ashamed of that. You should just embrace that with both hands. You have a lower risk tolerance, and you should probably have a less aggressive asset allocation than you have in the past.

Yep, that's a great insight. It's so interesting about the market and the economy is that it's always something new. We've seen the Depression, the Great Recession, you know, we've seen these things. And so you're always like, okay, well, we lived through that, right? What, you know, what could knock, you know, what can make this market go down, right? And then we have Covid, and we're like, oh, yeah, we haven't had a freaking pandemic in a hundred years. No one's seen it, Right? That's alive. And you're like, this is a brand new thing. And even that, you know, what's so interesting about what's happening now is economy's down. It's in the toilet. Right. It's like unemployment's through the roof. You know, so many people, you know, it's like the economy's not functioning very well. The Fed is printing money, the market has come roaring back. And you're kind of like, all right, you know, everyone's like, what's happening? You know, how's this going to play out?

Yeah, no, it's. I mean, not only was the decline, you know, not something that we could have foreseen, but the rally since that, I mean, the s and P500 is up year to date. Yeah. It's Insane. So that rally has been equally unpredictable as well. So it's like even if you had a crystal ball that you could have seen March of 2020 coming, unless you saw the subsequent rally that's taken place since then, once you realize how difficult that would have been, those two series events would have been to predict you again. I think just start leaning more towards a passive, how can I endure volatility and just have an investment plan that lets me just set it in place and then go about the rest of my life? Whatever happens is the best way to go for most people.

Yeah. I mean, so just as an aside, as an entrepreneur, one thing I've done is I've always been pretty risk averse with my capital and personal capital and I've been sitting on the sidelines for a long time and I've been kind of gearing myself. I'm like, all right, the next time this thing goes down, I'm going to dump money in. And I did do that. So the market was tanking and I was like, every time I went down 5%, I was like, I'm in. And I kept putting money in. And lo and behold, right now I look like a freaking genius because it's come roaring back. I'm like, hey, it's working. All these things I've been writing about and talking about. But you're still like, but what we were talking about earlier, I'm also in my head, I'm like, hey, you know what? This thing could get chopped in half again and willing to live with that. And that's how it is. Right?

Right. I mean, if it fell by 30% once, of course it could happen again in the future. There's this great quote from Daniel Kahneman, the psychologist who says the correct lesson to learn from a surprise is that the world is surprising. So when you are surprised, the lesson is not, oh, what did we learn about market dynamics? What did we learn about. No, what we learned from 2020 is that the world is surprising. The future is going to be as surprising as, as the last four months have been. That's the lesson. That's the takeaway. The next four months can be as unpredictable as the past four months have been. Of course that's the case. It's disheartening to think about it like that. But it's like, well, of course that's true. We could have a bigger surprise during the rest of the year than we've had so far this year.

Yeah. No, I agree with you. I think that from saving money, risk assessment, I Do think that it's interesting. So the pain, the surprises are coming. The downturns are quicker, it feels like. And I think it's also interesting how yet from the social safety net perspective, really what we're doing, I mean there are kind of socialist, I'm not a socialist, but there are definitely flavors of that happening. Like, hey, we're shipping people money. So to back up in previous things. There was in previous downturns was the Greenspan put right. The stock market kind of learned that, hey, things go sideways, the Fed's going to start shipping us money now in this downturn. It's like people are learning, oh, you know what? I'm going to get better benefits. Companies are like, oh, I can get ppp. It's like essentially my entrepreneurial friends, our company didn't take it, but lots of companies did take it and it's been good. I mean, it's like, hey, let's not have these. The. If the options are 25% of like all small businesses are just completely destroyed and they're 50% right. And then we get a vaccine and they're all blown up. Well, they're all gone. That's not good now. That's. That's better to keep them kind of around, right. And kind of on life support. But I think it's interesting how quickly that happened. Even in kind of a conservative, Republican controlled environments. Like, look, people recognize it's more destructive to kind of blow all this stuff up.

The CARES act, the $2 trillion kind of first round of stimulus that we have, I'm 90% sure this is right. I apologize if I'm getting this wrong, but I'm pretty sure that passed the Senate 96 to 0. When is there ever unanimous voting from both parties? And this is a $2 trillion deficit financed socialist bill. That's not my phrasing, but you could frame it as that. And the fact that every Republican senator I'm fairly sure voted for it is like, look, when, when things hit the fan like this. It's not, it's not. It's kind of like, you know, there's no atheists in foxholes. It's like there's no, there's no partisans during a depression. It's like, just get the money in there, let's do this, come on. And once you set the bar higher, it's hard to go back on that. I don't think the CARES act would have been possible unless we had the 2009 stimulus package and we showed like, look, no, the government can come together and spend a trillion dollars. And it helps. If that precedent wasn't set, it would've been harder to do this. What Jay Paulson is doing in the Federal Reserve right now would not have been possible unless Ben Bernanke set the precedent for it in 2008. When Ben Bernanke started blasting money through the economy in 2008, it was in many ways unprecedented. And people were like, what is the risk of this? He's being reckless. And now in 2020, since Bernanke, it was just assumed that Jerome Powell was going to do that. It was like, well, of course he's going to do it. And if he doesn't do it, he's reckless. In 2008, they said Bernanke was reckless for doing it. Now they would say Jerome Powell was reckless for not doing it. That's like the, that's a massive shift that took place in one decade.

Yeah. Well, it's also interesting, however. It's kind of, a lot of people are getting educated on how the economy works, what is possible. Like you're saying, you know, what, what the US can do, and we can, we can clearly do it a lot. We have 13, $14 trillion economy. Can we stick $2 trillion in? You know, it's like, hey, if I made 100 grand a year, would I take 20,000 and debt to like, kind of keep my household going? Sure. But if you stay unemployed as an individual for two years and you kind of lose your ability to get credit, I mean, the government's the same way. Right. We could do this a few more times, but at a certain point, like if we dump $10 trillion, you know, then the wheels could come off. But if the wheels come off, the whole world is like getting crushed.

I think the limits of what the treasury could do right now are, are pretty high. I think there's a lot that it could do. Right now, the Fed is buying the treasury bonds in which this money is coming from a large chunk of them. And when the economy is incredibly depressed and there's so much excess capacity in the system as there is right now, the idea that the Fed buying Treasury bonds is going to spark some degree of hyperinflation now, I think is hard to imagine someday when the economy gets back going, if there's a vaccine and then you have pent up demand and all these hotels and restaurants are shut down, that could spark inflation among some industries. But I think it's difficult, it's not impossible, but it's difficult to make the argument that there's not substantially More that the Fed and Treasury could do without taking risks that exceeded the benefits that they're getting out of it.

Totally. I mean, for inflation to happen, we'd have to have both an inflated money supply and a rapid increase in velocity of money. I actually, you know, I did hear one interview with a guy who lived through the pandemic in 1918, and he was like, you know what, it was really like three or four years before people got super comfortable going back to restaurants and stuff like that. So it did come back, but I think it can take a little bit longer. And, you know, another podcast guest, he's invested in hotels and he's like, yeah, you know, these hotels are shut down. They're going to come back, you know, when this comes, bill or travel. But, like, you got to still spin up all the conferences. People got to plan their trips. You know, it's like, it's all this capacity, isn't you? We all may flood back into bars and restaurants locally, but are we going to be cranking back and forth across the country and doing all this stuff? It's going to take a couple of years for this to back up, I think, for sure. Okay, awesome. So, any last things? I mean, I always like to ask who you've been reading and you see has kind of been doing good thinking in your space or just kind of in general. Any other closing thoughts for you?

Not much else. I mean, who have I been reading lately? This is not a new book, but I'm reading Ron Chernow's biography of Ulysses S. Grant, which is fascinating. As someone who I like to pride myself as being a student of history, I know so little about the Civil War other than the absolute basics that you learn about it. So it's fascinating to dig through the social dynamics, the causes, how the war played out, and what life was like after the war when Grant became president. It's so such a good book that I've learned a lot from lately.

Nice. Awesome. Well, this has been great. So, you know, I appreciate your time and I'm looking forward to reading the book and, you know, so for, you know, for our audience, it is the psychology of money. Timeless lessons on wealth, greed and happiness. So definitely check it out. There'll be a link in the podcast notes and just to wrap it up. So thanks, Morgan, for being on our show. Thanks, Dotto Robeson for being our sound engineer. Anyone listening? Thanks for listening and your time and hopefully found it useful. Our goal at New Retirement is to help anyone plan and manage their retirement so they can make the most, their money and time. And, you know, if you can, we have a Facebook group that, where there's ongoing discussions. And also, we're. We're definitely interested in reviews for this podcast because it helps get the word out. So that's it. Cool.

Thank you for having me.