In this episode, Mike Green argues that many of the frustrations people experience today aren’t isolated problems. Instead, they’re symptoms of a deeper failure in how the economy measures, communicates, and allocates value.
When the signals that are supposed to coordinate markets no longer reflect lived reality, households, businesses, and policymakers begin making decisions based on distorted information.
This conversation challenges you to reconsider whether today’s affordability crisis is primarily about rising prices, or whether it reveals something more fundamental about the way the modern economy functions.
Read the transcript below.
Transcript
Monetary Metals
Hello everyone. I am Dixon Buchanan with Monetary Metals. I’m here with Mike Green of Simplify Asset Management. Mike, thank you so much for taking the time with me today.
Mike Green
It’s a pleasure to be here. Thanks.
Why “My Life is a Lie” resonated with millions
Monetary Metals
I want to start with what may be obvious to everyone at this point, but you wrote a deeply resonant paper, My Life Is a Lie.
Mike Green
It sounds deeply resonant, doesn’t it? Yeah.
Monetary Metals
And talking about how to participate, right? The cost to be a participatory member. In the economy is quite high, much higher than I think most people would have thought. My question is this: where are we today? Are we moving in a direction that is making that easier or harder? And what are the main drivers behind that?
Mike Green
Well, so, you know, one, I only wrote the piece last November, so nothing has meaningfully changed in that short amount of time. But it has been very interesting. I mean, it’s weird to write something and then see the president refer to the affordability crisis as a made-up concept. Clearly resonated.
I was told by members of the government that I was viewed as—I think the technical term is pain in the ass—for writing that piece, which is frustrating because in many ways, like, I do a lot of advisory work with the U.S. government. I’m actively involved in some of these debates and discussions. And candidly, I was shocked. That’s why I wrote it as My Life is a Lie. Like, I’d never thought to evaluate the concept of the poverty line. One, I’d been distinctly separate from it.
I’ve been very fortunate. But more to the point, it seemed like it was something that had had significant thought put through it, you know, particularly when you think about the institutions been built up around dispensing the benefits. Your assumption is, is that there’s actually somebody at home, right, doing some logical thinking about it.
The fake poverty line vs real family budgets
Mike Green
And, you know, the frustration I think that people are feeling, and the reason the piece was so resonant, was that the U.S. government tells us that the poverty line is somewhere around $32,000 a year for a family of 4, 2 income earners, 2 children at home.
My math suggested that number in my initial calculations. I was referring to an earlier conversation I had. I did it for Caldwell, New Jersey, which actually turns out is a relatively expensive place even that would have been highlighted by an earlier commentator as an affordable place to live if you wanted to make that choice.
You know, it was around $136,000 a year for that family in Caldwell, New Jersey. In the most demographically or statistically typical city in the United States, Lynchburg, Virginia, it turned out that it was about $97,500. So that spread between $32,000 and $97,500 is the experience that so many American families are going through where they’re told you’re well off. And yet they can’t save a dime. Mm-hmm. Right?
And we have this weird dichotomy where simultaneously commentators will come out and tell us we’ve never been richer, more Americans are succeeding than ever before, the poverty level according to the official statistics is lower than it has ever been. Step beyond that is what’s called the supplemental poverty measure, which actually incorporates the benefits that are provided to the government that raise the income from people who are struggling near that poverty line.
“You’re fine” on paper, broke in reality
Mike Green
Those benefit individuals up to about $55,000. That suggests that poverty rates are less than 1%. And yet simultaneously, We’ll get reports saying that over 59% of US households can’t afford an unexpected $1,000 expense. Resolving those two is really what that piece was about. You know, this is why it feels like people are being gaslit. They’re told they’re fine. They’re told everything is okay, that the problem is them.
And when you have that spread, when that is that large and the metric for poverty metrics barely includes anything for things like childcare, for example, which for that family with two income earners and two children at home, childcare actually turns out to be the largest single expense that many people encounter. I’m sure that any number of people watching this who have two income earners are like, hell yeah, I know it’s the single largest expense because I pay it.
Monetary Metals
Yeah, right.
Mike Green
And that’s completely missing from the metrics that are officially reported by the government because the data set was established in the 1960s when childcare in a formal category really wasn’t a thing. Your neighbor watched your child or you watched your neighbor’s child. It was an informal complex. I actually experienced it firsthand. I grew up on a farm. My family was not well off. My mother, in order to stay home, opened a daycare center. And so we had of young children stayed in our home and I participated in taking care of them.
It’s one of the reasons I love babies and children so much. They’re delicious. You can cook them. That’s a Jonathan Swift allusion. And by the way, Jonathan Swift had a similar experience in Ireland in the 1790s in which he was writing about the experience of the Irish under the UK and saying, look, we’re being told everything is fine. Why don’t we just start cooking our babies? Right. You know, clearly if we have more than enough babies, if that’s what we’re being told, you know, in a Malthusian type concept, Malthus didn’t exist then, Malthus was later, but the right answer is we should just start directly feeding our children to the English.
And by the way, I’m going to propose a number of recipes. That was a very powerful essay in part because it exposed the absurdity of effectively the Irish contributing their children to the consumption of those who existed in England. And that power to actually speak truth is really what I was trying to do, was to say, wait, this is the experience that people are having. And it was an incredibly profound experience for me on an individual basis. I had people, you know, the article was read over 2 million times. We have an unbelievable number of comments.
I had well over 10,000 emails sent to me, most of which had some variant of, thank God somebody actually said this in a way that I could understand. Like, now I understand what is going on, and it makes me angry and I’m frustrated, but I also feel relief that somebody actually sees it. Yeah, right. Maybe we can get better. And that really was the point, was to say, if you’re going to treat a disease, if you’re going to treat a problem, the very first thing you got to do is diagnose it.
Prices vs inflation: What the data misses
Monetary Metals
Yeah. So you’ve articulated the diagnosis, right? You’ve discussed various symptoms of it. Where are we on the cure side?
Mike Green
We’re starting to get there. I mean, you’ve noticed that now we’re talking about subsidizing childcare, etc. Now, I personally think that’s part of the problem is that, you know, the way capitalism is supposed to work— and this is actually very frustrating. It’s something that I’m sure your audience will scream at me for— we should actually celebrate prices changing because prices are information in a capitalist economy. It’s how we convey we need more of something, right? The price of childcare is very high because we need more of it.
Monetary Metals
It is in a way, isn’t it the most like dynamic information signal?
Mike Green
It’s kind of like the heartbeat of the direct quote from Adam Smith is price is the mechanism of information exchange in a market economy. It’s how you convey and coordinate under the invisible hand, right? One of the challenges is, is that price and inflation are not the same thing. Prices going higher can be a signal of need. And prices going higher can be a signal of manipulation. Yeah, inflation metrics are actually designed to calculate what the increase in the general price level is.
What are the distortions that are created by things like debasement, by things like inappropriately low interest rates or credit provision that increases the supply of money, increases the competition for goods and services on a generalized basis? And so unfortunately, that distorts the planning process. I, as an individual evaluating an increase in prices for the goods and services that I’m consuming, don’t know if it’s due to increased demand, and therefore I should be capable of demanding a higher wage, or if it’s due to distortions that are created by the government debasing coinage, etc.
That’s why we study inflation, is we’re trying to identify not the change in prices, we’re trying to identify the change in prices that’s being caused by the distortion. And that’s very frustrating to people to hear in a lot of ways, because they’re like, well, inflation, the government says it’s 2.5% or 3.6% right now, and clearly my purchasing basket is going up much more than that. Well, that is also telling you something about your individual purchasing basket.
How housing policy punishes young buyers
Mike Green
You happen to exist at a point in the curve, effectively, of the distribution of demand for goods and services where you’re competing with a lot of other people who either don’t want to sell it to you or don’t want to provide it to you. Housing would be a great example. Right now, we’re in a very unfortunate circumstance where we hiked interest rates after having kept them low for an extraordinarily long time period. That actually causes two things to change. It causes the price of buying a new home or buying a home if you’re going to finance it has risen dramatically for the new buyer.
It also means that the people who bought houses in 2018 through, give or take, 2021 experienced very low costs of carrying their houses. They have low incentive to move. And so they are unwilling to sell their houses in part because the mortgage that they issued, right? You borrowed that money. You’ve effectively issued a bond. That bond is now trading at $0.50 on the dollar. If I sell my house, that mortgage has a clause that says I have to pay back that mortgage in whole.
Why in the world would I pay back something at par when it’s trading at 50 cents on the dollar? So there’s an unwillingness from people to sell, which is actually holding prices higher. Likewise, the cost for new entrants in terms of mortgages is extraordinarily high. If you’re a young person trying to enter the world of buying homes, you’re competing both with those who are unwilling to sell because their mortgages are so deeply discounted and those who would very much like to buy. And at the same time, because prices are so high, there’s not a lot of new construction.
Particularly in the areas that people would like to buy those homes. So you create these perverse components that can be caused by government interference, for example, cutting interest rates and then hiking interest rates. That contributes to that sort of volatility, but it’s not what people think it is. It’s not a giant conspiracy, right? We can understand why this is occurring, and once we understand why it’s occurring, we can take steps to address it, right?
Monetary Metals
Previous comment you made, just in terms of like trying to disentangle what’s really causing the inflation. It reminds me of actually something our CEO wrote where he was talking about monetary and non-monetary causes of inflation. I think one of the examples he used was like tariffs, right? Like tariffs is not part of the Federal Reserve monetary policy, but that can show up in the underlying price level, right? What other like examples when it comes to the things that distort prices either from like more government or non-government or monetary, non-monetary?
Mike Green
Well, the most, the most The most obvious one that causes price distortion, at least relative to a competitive base, is monopolization and rise in monopoly power. And that, unfortunately, we actually have very strong evidence is contributing a significant fraction of the price increases that people are seeing.
Monopolies, grocery bills, and hidden price power
Mike Green
When you go to the grocery store, it’s hard for people to comprehend this, but almost all of the products that you buy at the grocery store are now produced by basically 5 companies. When they hear inflation, what they’re actually hearing is, “Aha, I get to raise prices and blame it on somebody else.” It’s not that Jiffy decided to raise prices of peanut butter. It’s inflation. What are you going to do?
Monetary Metals
It’s like the rationale for raising the price is kind of like handed to them on a silver platter.
Mike Green
That is actually exactly what happened. So Robert Hall won the Nobel Prize in Economics, wrote a paper in 2024 called Price Volatility and Expectations for Price Setting. Very catchy title. I read most all the most interesting stuff.
Monetary Metals
Real page turner.
Mike Green
And yeah, for me it was. I thought it was amazing. But he actually identifies that this is what occurs when you are able to blame inflation. It becomes easier to raise prices. Prices. And people will push back less because they say, well, I don’t actually know what the price of eggs is supposed to be, right? For years and years and years, we watched eggs at $1.99 a dozen. All of a sudden, due to shortages that were created by COVID and the bird flu—we actually did have a bird flu that reduced the flocks of chickens.
Fortunately, chickens have a very quick production cycle, and so they reproduce, not quite like rabbits, but darn close to it. And as a result, we were able to increase the number of egg-laying hens and increased production of eggs. And now I go to the grocery store and surprise, surprise, eggs are back towards $1.99. They’re actually about $2.49 at my grocery store. And by the way, for those of you who wonder, I do all the grocery shopping in my household. I cook. I love to cook. I pay attention to all these things. I will follow them very, very closely.
That wasn’t inflation, right? It feels like inflation. I know it feels like inflation. I know that it meets this, this component. I’m sure your audience is screaming at me, but what it was actually telling you is, is that there was a shortage of egg supply. Yeah, relative to demand. And by the way, eggs, interestingly enough, do have some monopoly components to it. A firm called Cal-Maine International is the consolidator of eggs and has actually been able to push through pricing power. I would actually argue that’s why it’s at $2.49 instead of $1.99.
But we also saw simultaneously a rebirth of eggs as a good food source. Right. For years we were told they raise cholesterol and that they were bad for us and we should reduce our egg consumption. And all of a sudden we were told, wait a second. they’re a fantastic protein source and we all should go keto. I went keto after the pandemic when I put on the—well, it’s not the freshman 15, but maybe the COVID 15.
Yeah, yeah, it was a little bit more than 15. But, you know, that caused me to be very—to be very closely associated with an increase in demand for protein, which we’ve actually seen broadly throughout our economy. That’s a signal to the market to increase production.
We get it. People are, of course, now saying, well, yeah, but what about beef prices? They’re going crazy. Well, you know, unfortunately, cows don’t reproduce at the same rate as chickens. And as a result, we are currently going through a shortage in cattle, primarily as one, a byproduct of increased demand that’s come through, as well as restrictions on supply. We had scares in terms of both the costs associated with grain and feed for cattle that during that inflationary period made it unprofitable to grow and raise cattle. And so a disproportionate number of our cattle herds were actually sent by ranchers who could no longer afford to raise them to slaughterhouses.
That temporarily depressed beef prices. Now we’re seeing the costs rise, the prices rise in response to that relative shortage. That should be sending you a signal as a capitalist and a participant in the economy that you should substitute pork, which, by the way, if we run through the cycles, chickens are replaced in about 6 months, pigs are replaced in about 18 months, and cows aren’t replaced for a period of about 40 months.
So when you think through these components, they’re playing through exactly as you would expect on the signals that we should be receiving. But at every step in the process, we’re getting reinforced from social media or elsewhere that this is a sign of a giant conspiracy.
They want you to eat bugs. Well, you know, again, I’m going to take flak for this. You know, people are going to hear this, but bugs are a source of protein for many cultures. I personally have no interest in them. I’m sure none of your audience has any real interest in them other than as a novelty. We all like, you know, the worm in the mezcal. But what substitution sends is another signal. I am willing to trade off from beef to pork. And by the way, I love pork. I think bacon is amazing. It’s currently on sale at my grocery store for $4.99.
Monetary Metals
That’s why you’re on a keto diet, so you can have as much bacon as you want. Maybe not as much as you want.
Mike Green
Not as much as you want, but yes, you do get a lot more than you are told under normal healthy conditions. Conditions.
Monetary Metals
So those are great examples of non-monetary drivers of inflation, correct?
Mike Green
Or of price change. I want to be very clear on that.
Monetary Metals
That’s, that’s—
Mike Green
inflation itself tends to be a monetary phenomenon, either because we’ve seen a dramatic expansion in the extension of credit, right? We are willing to lend people more money today to buy things with the expectation that they’re going to have higher productivity or higher incomes to pay us back in the future. That can be a very thoughtful process, right?
We can discover that we need to do that, as we did in the early 1970s when the surging population generation of young people, the baby boomers entering the labor force, needed additional sources of credit in order to be able to obtain housing, be able to obtain cars, to be able to obtain dishwashers, etc., so that they could participate in the economy at that point in time. But that was a legitimate outward shift in the aggregate demand curve. This is economics terms, right? Aggregate demand means everybody all together buying things.
When the labor force is growing, as it was in the 1970s, between 3% and 5% in any given year, that actually means there’s more people who are buying stuff and we have to increase production in response to that. You can also get terrible policy responses in response to that because we didn’t understand that that was what was actually happening in the 1970s. We hiked interest rates, which prevented the production response. It made it more difficult for new capital formation, it made it more difficult to build new factories, etc.
And because we failed to do that, because we sent those false signals, It was also, by the way, touched off by the transition of the United States to an oil importer from an oil exporter. That meant that we suddenly had to tap in the global supply for oil, causing oil prices to surge. And about a third of US production at the time was run off of diesel generation. Prices for that surge, that production goes offline. We have to replace it by importing. That causes the US dollar to fall because we are now suddenly importing.
These are the components that actually drove that inflation in the 1970s. 1970s, and most of them were a legitimate outward shift in the aggregate demand curve and a simultaneous inward shift in the aggregate supply, primarily tied to the higher oil prices as the U.S. shifted to an importer. We saw almost none of that in this cycle. What we did see was we saw the consequences of the stupid policy of shutting the economy down in response to a novel respiratory virus.
We actually had the plans for how do you handle a novel respiratory Terrorists. We’ve known how to do this for 200 years. You isolate the vulnerable and you keep the economy going and you keep people participating, and those who are going to get sick are going to get sick and they’re going to recover. And that builds herd immunity. And you’re able to—
Monetary Metals
I don’t think that was the playbook.
Mike Green
That was not the playbook. The playbook was everybody stay home, do absolutely nothing, and make sure you stay 6 feet away from people because, well, just because.
Monetary Metals
Unless you were deemed essential, which was its own—
Mike Green
Unless you were deemed essential or sitting at a restaurant as compared to standing at a restaurant or whatever. I mean, it was just It’s just absurd. And it is unfortunately a byproduct of a society that is largely uneducated in science and largely uneducated in vulnerabilities and largely uneducated in these components. And that’s not their fault, by the way, for the most part. It’s largely the fault of a really crappy educational system at this point.
The K-shaped economy: Why young families get squeezed
Monetary Metals
I want to go back to the affordability question. Talk to me about the K-shaped economy and how those two ideas relate, because they seem like they’re kind of touching on the same thing. They are.
Mike Green
And it’s actually really important. And it’s not just the K-shape. You might even think of that K as being multidimensional.
Monetary Metals
If it’s not K, would it be E? You’re talking about the multiple different—no, no, no.
Mike Green
I’m actually talking about within even the lower income segment, there are those who are doing relatively well. If you are older and you’ve already bought your house and you’ve already paid for many of those expenses and you don’t have children to raise, etc., then you’re much better off than somebody who makes the exact same income level who is younger and facing the increase in expenses associated with the life choices that you make in your 20s into 30s as you become become an adult and take on responsibility for other people.
Yeah, those other people, we call them children, don’t bring income with them, right? Right. You don’t magically start making more money because you have a kid, although teenage pregnancy sometimes used to lead to that through government subsidies. But the reality is you don’t make more money, you actually incur more expenses. And it would be absurd for us as a society to look at those expenses and say, boy, those really should be avoided.
But that’s what we’ve done. And so it’s those at the younger end of the spectrum, particularly those that want to face the change in life where they move from being a child to being an adult and becoming responsible for other people that they bring into this world, who we desperately need because of the future workers and taxpayers and participants in our society. The joy that comes from fantastically produced music comes from people. We’re not going to get it if we don’t have them. So we know that this is actually something that we should be celebrating and subsidizing. And instead we’re penalizing it.
Monetary Metals
When I hear you say that, that has like profound demographic implications.
Mike Green
And it is playing out as profound demographic implications across the Western world. This is not a unique scenario for the United States. We’ve seen precipitous declines in fertility. People are choosing not to have children because they can’t afford to participate when they do.
That cost, when you decide to have your children, when you are faced with the prospect of both parents needing to work to being able to afford the slightly larger house in a reasonably good school district, when both parents have to work for that, you can’t avoid the childcare. If you leave your young child at home with nobody to care for them, that’s called child abuse. You go to jail for that. That also generates its own costs. So people are rationally looking at this and saying, we’re choosing not to participate.
Monetary Metals
It sounds pretty dire. Yeah.
Mike Green
You know, the frustrating thing to me is, is it’s both dire and it’s opportunistic. Like the—
Monetary Metals
Talk to me more about the— Yeah, I’m kind of ready to move into solutions.
Mike Green
The solutions are actually there. And unfortunately, many of your audience Audience are now going to start throwing things at the screen.
Monetary Metals
You’re already racking up a lot of comments.
Mike Green
Exactly. The reality is that we need to understand that part of subsidization, if we’re going to subsidize having children, we actually do have to transfer income in our economy. We have to say it is a good thing for people to be educated well. It is a good thing for children to be taken care of. It is a good thing for children to be brought into this world and have adequate housing and adequate nutrition, etc.
FICA taxes and why workers fund everyone else
Mike Green
And that does require an element of us saying we need to stop penalizing those and overly taxing those who are starting out and the most important tax that most people pay in the income strata for workers is actually not income taxes. And you’ll see many wealthy individuals point out the disproportionate share of income taxes they pay.
But that conveniently ignores what are called FICA taxes. Those are the taxes that pay for Social Security, Medicare, et cetera. They actually represent a similar size of the total US government take to income taxes in total. Those are exclusively paid by households that make less than $168,000 a year. I think maybe it’s $180,000 now. It is the cap at which FICA taxes eventually just disappear. Right? And so what we are doing is we’re basically saying to people who are towards the lower end of our income distribution, you have to pay these taxes first.
Before anything else happens in your life, we’re going to make sure that those who are older and reliant on Social Security and Medicare are funded by your contributions. Rich people, it wouldn’t be fair to ask them to participate. Participate, right? That would be terribly unfair. We want to tax their success because we don’t want to remove the incentive for you to become successful just like them. There is absolutely no evidence that that is actually what is preventing people from obtaining those outcomes and becoming rich and wealthy. In fact, the evidence is actually directly in the opposite direction. The lower tax rates that are paid by the wealthy really only contribute to effectively wealth hoarding.
That wealth becomes relatively unproductive. It is less invested in the type of infrastructure and choices that people need, like housing, for example. A rich person may want to have 10 homes, but they’re going to be 10 unique homes in places like West Palm Beach, etc. For the young person living in Caldwell, New Jersey, or Lynchburg, Virginia, I’m not aware of many billionaires that are drawn to those particular areas and looking to build in those regions.
So we’re seeing underinvestment in the areas that actually matter to most individuals, and that’s by and large a byproduct of how we’ve chosen to structure our society. I wrote a much less well-read follow-on piece called The Summer Slide that actually walks through these components and highlights this. And all of these are available for free on my Substack.
Most of my social writing is available for free. Market commentary tends to be reserved. But it basically points out that we actually have been through this process before. We’ve been through wealth consolidation. We’ve been through periods of tremendous inequality. We called that the 1920s and the Gilded Age. And we arrived at solutions that by and large contributed to the most egalitarian and productive society the world has ever seen in the 1940s and 1950s. Were those societies perfect? Not by any stretch of the imagination. The ability of women and minorities to participate in the economy was dramatically lower back then.
With that said, the tax code that we actually had facilitated people largely behaving in a much more cohesive framework. Wealthy individuals had a high incentive to donate to charity because it reduced their overall taxes. A high tax rate makes donations more attractive A low tax rate makes donations less attractive, and we have actually seen exactly that flow through. So instead of by lowering taxes and giving wealthy people more money, we haven’t seen an increase in donations.
We haven’t seen an increase in community responsibility. Instead, we’re increasingly seeing an elite class that views themselves as globalists first. They’re not really tied to the United States. They don’t have ties to the local community. They don’t participate. They don’t experience the decay in the airport that you experience because they’re taking a private flight. They’re they’re totally stepping out of the public spaces, which is the polar opposite of what we have historically experienced.
Usually it was the wealthy individuals who we relied on to say, you know what, we should actually have pride in our local community. This theater, this, you know, community center was built and funded by donations by X. We celebrated that sort of stuff. That has precipitously declined. We’ve increasingly encountered an environment in which the infrastructure that creates community is increasingly disappearing from our our society.
Monetary Metals
I hear that, and I don’t disagree. And obviously you’ve touched on kind of the economic drivers behind that, but aren’t there other drivers behind that kind of fracturing or fragmenting of society? I mean, I think of just the digital transformation that we’ve—
Mike Green
Well, the digital transformation has, has been substantive on a couple of fronts. One, it has actually increased the ability to coordinate, and as a result, the scale of organizations have grown, right? And so we have much larger—enabled a lot of the globalization—right, right. It simultaneously allows me to ship capital. Capital now has mobility that labor does not. So when we take a job from—when we take a factory producing furniture in North Carolina and we take the designs of that furniture and we ship it to China and we send workers from North Carolina to train the Chinese on how to build this stuff, the capital benefits from it, but the labor doesn’t move.
Nobody moves from North Carolina to China. And so the worker is the one who’s ultimately left behind in that framework. And that is unfortunately what we’ve seen, a dramatic decrease in the fraction of GDP that’s flowing to incomes and a dramatic increase that’s flowing to capital, labor incomes versus capital. This is—
Monetary Metals
I mean, this is a broader, multi-decade shift where you— one way to think of it would be— curious to hear your take, but like hollowing out the manufacturing base in favor of, you know, banking or not maybe bank accounts, but assets rising.
Mike Green
No, I think that’s exactly what we’ve done. And I think part of it is a byproduct of exactly that. Process. In the 1970s, we increasingly moved from a retirement system that was based on a pension that you received from the work that you contributed. That pension wasn’t an asset that you could sell. It was a source of income that would last through your life and potentially your spouse if she survived you or he survived you, but it was not something you could gift to your children, right?
Monetary Metals
Not a stock you could sell.
Mike Green
It’s not a stock you could sell or pass through an inheritance. And in the period of the 1970s, 1980s, we made radical changes to our tax structure to actually facilitate and separate those two, including in the way that we save for retirement. We moved from a collective system in which we said it’s an income system that benefits across all the workers at the company or all Americans, as continues to exist in some forms of public pensions where it is broadly distributed.
Retirement shift: From pensions to “everyone must be an investor”
Mike Green
And instead, we actually turned it into a system in which each individual was expected expected to hoard capital to finance their own retirement. There’s been recent academic work, a paper in this year in February of 2026 by an economist named Coimbra came out and that evaluated the impact of the shift from defined benefit to defined contribution. And it found exactly as you would expect, that it’s contributed to the financialization of the economy because the demand for financial assets, that which we save for retirement, has exploded.
And we’ve forced more and more people into that system, the holders— this is the Cantillon effect, which I’m sure that many of your listeners are very familiar with— those who hold the assets first, those who own the capital, are the ones that benefit from the repricing of the demand of those securities.
Monetary Metals
That gets into your shtick, for lack of a better word, of the passive structure.
Mike Green
Oh, I thought you were talking about my carnitas.
Monetary Metals
Isn’t that part of the structural issues that drive a lot of this? There’s this constant, almost like the foreguard straw, right?
Mike Green
The, like, that’s actually exactly what it is. It’s an analogy I hadn’t thought to use, but that’s exactly what’s occurring. I describe it as a mindless bid, right? Yeah. So the decision to move to a defined contribution plan in which every individual has to invest, of course, created conditions under which many individuals confronted those investment questions and said, I have no idea what I’m doing.
Candidly, most professionals don’t know what they’re doing. And so we had to adopt a process. We to make selections for people that ultimately made that very easy. And the easiest answer is, well, just buy it all. And that’s what passive investing is. Now, the theories on which passive investing are built, we now know are largely false. Right. In particular, the idea that the market can absorb almost anything we send to it is deeply untrue.
And so this process of mindlessly investing under a systematic algorithm that simply says, did you give me cash? If so, then buy. Did you ask for cash? If so, then sell. At what price? I don’t care. Whatever the price they tell me it is, right? That’s not my job. My job is simply to invest or to sell. That has contributed to the inflation in assets that any number of people will tell you, well, it didn’t show up. You know, the money printing didn’t show up in inflation. It showed up in asset price inflation. That’s just wrong. That’s not what actually happened.
Monetary Metals
Yeah, I think one of the challenges for me is like there’s so many things here that are very big, that are very systemic. They’re kind of all interrelated. They’re, they all kind of conjoin. Yeah. And so I think with our listeners in mind, right, with our audience in mind, like, what’s the simple one-sentence, two-sentence version to describe all of these things, problem and solution, right? So we’ve talked a little about both, and I’m just curious if you could distill it down.
Mike Green
I think simultaneously, the way I would actually describe it is that much of the 20th century were— was about the triumph of the scientific revolution. Okay. The idea that we could actually formulate a hypothesis, that we could build a controlled experiment, and that we could then deploy it in a meaningful way. Atom bomb, for example. Right. Yeah. Unimaginable power and destructive capability versus any prior time can only be created by a mind that is operating and working under scientific principles and testing things.
We simultaneously allowed that belief belief to effectively percolate to every aspect of our society, that we could just apply scientific approaches to the economy, that we could do all this stuff under the same sort of framework, right? We’re going to build a theoretical model for it, and then that theoretical model actually becomes the way that we think about the economy. So the efficient market hypothesis shifted from a hypothesis of how information was actually shared and reflected in security prices that somewhat accurately described a system in which each individual was formulating a hypothesis on any individual company and creating the phenomenon that we call the wisdom of crowds.
But the minute you actually start deciding, well, the crowds automatically know, you start losing this. I did a Twitter experiment earlier this year in which I recreated the experiment of Francis Galton, which is the genesis of the wisdom of crowds. Okay. So I’m just going to tell the story very quickly and then we can move on from it. I believe it was 1896, Francis Galton, who was a trained statistician, is observing a county fair in Oxfordshire, England, and there’s a competition to see, you know, can people guess the weight of an ox carcass?
And lo and behold, his assumption was there were experts there, but that their, their assessments were going to be polluted by the crowd. And yet the actual result from the survey that was collecting and averaging out all of the contributions that came from all of the participants came within a pound of the roughly 1,700-pound ox. Remarkable, the wisdom of crowds. So I asked people on Twitter, you can do a poll on Twitter, and I’m fortunate to have a relatively large Twitter following, what’s the weight of an adult ox? And the answer actually recreated Francis Galton’s experiment. It came, the results actually centered almost directly on £1,700, which is roughly the adult weight of an ox.
I then asked them how much does an adult Higgendorfus weigh? And people immediately said, well, what’s a Higgendorfus? And I’m not answering it. That’s part of the objective, is to see what they think in adult Higgendorff’s ways.
And instead, what you actually get is instead of the normal distribution that coalesces around the center, you actually get a bimodal distribution in which the two extremes are what people arrive at. And that’s really part of the process, is that the wisdom of crowds actually requires an element of wisdom in each individual person. In Oxfordshire, England, rural England in 1896, people knew what an ox was. They knew it wasn’t as small as a mouse. They knew it wasn’t as big as a blue whale. They roughly knew what an ox was.
Monetary Metals
There was some fundamental kind of knowledge that they— correct— they came to the auction with. Right. And that has completely disappeared from today’s markets.
Mike Green
Correct. When you think about that in today’s markets, the most extreme version of this was Dave Portnoy in 2021 during the extreme stock market move. You know, if you remember, he actually made a game of it. He would pull Scrabble tiles out and buy stocks that were picked by Scrabble tile. And they would go up. That type of lack of knowledge where you’re literally just buying tickers.
The number of people who have told me, oh, I buy this company, VOO or SPY, or in 2017, some of your listeners may know I was involved in 2018 in the event called Volmageddon, the collapse of the XIV. I was actually in a taxi cab in which a taxi driver told me that he was investing in this company XIV. And I said, well, what do they do?
He said, I don’t know. They just make money. Money. When you’re faced with that type of ignorance, the results are effectively that bimodal distribution. How much is Nvidia worth? I don’t know. How much is Bitcoin worth? I don’t know. I don’t even know what a Bitcoin is, man. I just know it makes money. Right.
Monetary Metals
But that sounds very discoordinating.
Mike Green
It is discoordinating. That’s exactly the point. Prices are meant to coordinate information. They require an element of knowledge and understanding behind them. And that’s not me as an expert saying, boy, you should really pay attention to what I’m saying, because I know what the right prices are. I don’t know what the right prices are, but I have a directional approach that actually gives me some idea of what they’re worth.
Monetary Metals
So I want to tie this all the way back, right, to what we started with. And we even said earlier, you quoted Adam Smith, that prices are the thing, the coordination mechanism of information exchange. Yeah. So wouldn’t the solution be, or at least part of the solution, to be to unharness and kind of free up prices to do their thing? Because what I heard earlier is we need more intervention through subsidy or like—
Mike Green
square that circle for me. Yeah, so what I would actually suggest is that I don’t want to actually subsidize childcare. I want to subsidize the incomes of young people having children and let them make the choice how they want to deploy. Do they want to have the wife stay home, the husband stay home? That’s a better form of childcare.
That’s a choice that they can make if they receive an element of subsidy in their incomes. I’m not actually saying the right thing for them to buy is childcare. I’m saying that’s a choice that I’m giving them. And people who don’t have the ability to make choices, who are constrained, they’re the ones that most experience inflation.
As a wealthy individual, when I’m confronted with prices being too high, my car is relatively young, my house is in good shape, I can put off the expenses, I can delay them. But if you’re an economically stressed individual and you’re driving your car to the point where the tires are bald and the brakes are about to fail and the transmission is improperly you feel the full effects. Correct. You are suddenly put into a position in which you no longer have a choice. Your child becomes sick, you have to go to the emergency room. Right. That’s not freedom.
That’s actually, again, part of the participation component. If you want to actually give people the ability to send information about what’s valued, you can’t always have them in exigent circumstances. I like to use the example sometimes from the Bible of the transaction between Jacob and Esau, where Jacob sold— or Esau sold his birthright for a bowl of lentils. Stew because he was starving, right? Now there’s two ways of interpreting that.
One is, wow, Jacob’s really good at negotiating. The other is that was really terrible, and he actually knew it which is why he was afraid to meet with Esau later in life, and Esau had fortunately been successful despite Jacob’s depredations, and forgave his brother, and it was a joyous greeting. At some point we need to recognize that we as a society need to give people better choices, and access to better choices, choices.
It’s not enough to simply say, well, you make bad choices. Well, if I can’t take care of my car because I simply can’t afford to participate because I’m being gaslit that the actual poverty line is $32,000 and it’s really $97,000, then I’m lying to people and I’m feeling— receiving false information. When I have monopolies that are able to restrict supply, because that’s really what a monopoly does— a competitive market, Adam Smith’s genius, was that free market competition would cause people to compete to the lowest possible price that they could.
Marginal revenue equals marginal cost. The economic expression of a monopolist is somebody who produces not to marginal cost but to average total cost, the point at which they maximize their profits. Right. They benefit from constantly undersupplying society. Mm-hmm. And that is what we’re seeing more and more in our society. And it is by choice. We’ve chosen not to enforce antitrust activity. Or anti-competitive activity through antitrust actions. We’ve chosen to favor capital over labor. These are choices that we’ve largely made because we are increasingly subject to a loss of community in which people fantasize that they individually are responsible for their outcomes.
Now Obama, who I did not vote for, I want to be very clear, inelegantly articulated this as “you didn’t build that.” Right. And there’s an element of truth to that. There’s also an element of bullshit. To that. The truth is you could not have built the factory had the road not been built. You could not have built the factory had the power systems not been deployed. You could not employ those people had they not been educated in public schools or brought to the United States in a form of immigration.
When you remove yourself from that equation and say, “I’m not responsible for any of that. I’m only responsible for the profits that emerge from the outcome,” then you basically are condemning the rest of society in a very unfortunate manner., and that has been lost. It has been lost in our discussion. It’s been lost in the morality that we try to attach to these things.
If you’re poor, you’re obviously amoral. If you’re rich, you’re obviously chosen by God in a neo-Calvinist framework. What’s the evidence you were chosen by God? Well, I’m rich. What’s the evidence that you’re rich? You know, why are you rich? Well, because I was chosen by God. It’s a circular argument. There’s a lot there. There is a lot there.
Gold as opt-out money vs real wealth creation
Monetary Metals
There’s a lot there. I’m not sure where to take it next. I mean—
Mike Green
Well, what I would I would argue, and I think your audience in particular, if you think about gold, gold is effectively a statement that you want to opt out. It is a modern expression of the screw you, I’m going to America. Screw you, I’m going to enter into an agreement, into an asset that has no productive capability. All it does is allow me to retain my wealth. Now, that is a really important financial instrument. And I own it myself. I want to be very clear on that. It’s not that I’m anti-gold. But I am anti the message of—of “it’s money, it’s the answer, it’s magic,” etc., because it’s not.
That’s not what it is. Gold existed as money because it was a state-sponsored component. If you look at the periodic table—again, scientific education—you’ll see that all the Monetary Metals—nickel, tin, silver, gold, platinum, copper— they all sit grouped together because they are alike in their chemical properties. They are uniquely suited to coinage. Coinage is a mechanism that’s used for canceling debts to the government and to other individual It’s why your paper dollar says, “This note is legal tender for settlement of debts, both public and private.” Sure.
That’s what money is all about, is settling obligations, and it facilitates the settlement of those obligations. The idea that gold is the answer can be the answer on an individual basis, but far more important is what you’re going to do with that resource once you’ve actually managed to liberate yourself a little bit. And I would encourage people to start thinking and looking at their communities and saying, “Man, this is not going to go on.”
And the answer to that is not for me to individually up, although I do think it’s actually important that a subset of society does that because it does build robustness. And so I’m not going to criticize any individual for doing it. But when we all decide that we’re going to hunker down in our bunkers and we’re not going to participate in society and we’re going to check out and we’re going to all be individualistic, well, then our society can’t support nearly as many people and it can’t provide the resources and improved outcomes that we’ve expected.
Monetary Metals
You know, I’m not going to try and debate you on the gold is money question. I’m smart enough not to get into that.
Mike Green
I would hope you agree. You know you’re gonna lose that one.
Monetary Metals
What I do want to circle back to though is I think you’re right that gold has that connotation. It’s the opt-out asset. Absolutely. I see our business as changing that because with us you own gold productively. It’s not merely a deep freeze asset, it’s not just a prepping asset, it’s an asset that we are using in the real world to finance real productive companies. So I think at the very least ICS is trying to change that narrative in some small way, like it’s the dent, as it were, in that narrative.
I do think we’re making progress on that front. The other thing I want to go back to is what you said earlier about these dynamics, tectonic plates, whatever you want to call them, impacting the most marginalized in our society the most. It’s the least of these that feel it the most. I view what we’re doing as part of the solution. We’re giving more options to people to accumulate capital, accumulate wealth. That’s the very basic way you get out of poverty, right? You’re accumulating, you know, you’re spending less, your assets buy more. Like, this is how you work your way up.
So I don’t know, I’m just curious to hear like your response to that. Am I wrong? I mean, these are—
Mike Green
Yeah, I think you’re broadly wrong. But, you know, the evidence that people actually save their way out of poverty is basically zero. Typically what gets people out of poverty is investments that they make in their own human capital. I become educated, I become trained, become a skilled employee. That skill translates to domain-specific knowledge that then allows me to form my own company. Every part in that process requires discipline and savings so that you’re accumulating resources that can be deployed. But almost nobody becomes wealthy by buying gold. You can retain wealth by buying gold.
Monetary Metals
But what if gold earns a yield? And it compounds over time.
Mike Green
It doesn’t matter.
Monetary Metals
And it compounds over time.
Mike Green
It’s not enough. You’re not going to become rich by buying gold. You can retain your wealth when other people lose it. Plays a very valuable role, right? It’s the equivalent of somebody who decides that I’m going to take an element of my seed corn and set it aside while everybody else is deciding that they’re going to turn it into bourbon, right?
Yeah. Bourbon is more delicious. Sure. It’s certainly more fun. Yeah, right. But it can’t actually be planted and grow more bourbon. Right, right, right. Seed corn is required. And so an element of saving is really critical to it. But that’s not actually what creates the wealth. What creates the wealth is the ability to plant the corn and to—
Monetary Metals
Which is the human ingenuity.
Mike Green
That’s the human capital.
Monetary Metals
The human capital. Okay. Okay. I think we’re really close. I’ve enjoyed the conversation. I really appreciate it. Thank you so much.
Mike Green
My pleasure.
Monetary Metals
Yeah.
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