Why is Big Business Caving to Trump? (with Andrew Ross Sorkin)

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Hey, everybody, welcome to Pod Save America.

I'm John Lovett.

I just sat down with Andrew Ross Sorkin.

He is a CNBC host, New York Times columnist.

He also has a new book that's actually really great called 1929 about the stock market crash and Great Depression and a lot of really fascinating and relevant stories from that era.

We talked about business leaders bending the knee to Trump.

We talked about bubbles and tariffs and the morality of capitalism.

We talked about the business community's response to Zoran Mamdani.

It was a great conversation.

And he's somebody that is often talking directly with business leaders, with a lot of really influential voices, and has a really great perspective on it.

Here it is.

Andrew, first of all, welcome to Pod Save America.

Good to see you.

So great to see you.

This is so exciting for me.

I'll take you a little bit behind the scenes, which is

I was excited to talk to you and I was excited about the book.

But then you have to read the book.

And to be honest, I was like, ah, fuck, that's soon.

I got to read this book.

I really got sucked into it.

It's a really good book.

Thank you.

Thank you.

So I want to talk about five things.

I want to talk about bubbles.

I want to talk about presidential power.

I want to talk about tariffs, national mood, and I want to talk about the morality of capitalism.

Capitalism, socialism.

Sure.

So let's start with bubbles.

It's the 1920s.

Yes.

People are seeing this boom, and they're nervous about it.

There had been a bubble and burst in living memory, right?

In the 1890s, there had been a big speculative crash.

A lot of people are around that remembered it.

Before the crash, can you talk about what some of the Cassandras were saying, including people like Carter Glass?

So look, in the 1920s, and I don't know if people appreciated this, this was, I would even argue, the first time that people really were playing the market, like that the ordinary person was doing this, because it was the first time that frankly, the banks, I don't want to say the banks sucked them in, but the banks were basically lending people extraordinary amounts of money to go and make your bet.

And brokerages are you know appearing on the corners of streets like Starbucks and you could just go walk in and do this and so

you have this period of time where everybody's watching the market go up and they're all thinking you know if so-and-so is making all this money I should be making the money too it's it's all this sort of psychology of I don't want to lose out the train's leaving the station I got to get on the train.

And yet the big Cassandra in the room was a guy named Carter Glass.

Carter Glass was a senator in Virginia.

He was like the Elizabeth Warren of his time.

He was frankly a racist Elizabeth Warren.

He was an ardent segregationist.

Arden segregationist, but he was screaming from the rooftops about how he believed that Wall Street, in particular a guy named Charlie Mitchell, he used to call it Mitchellism.

Charlie Mitchell ran a bank called National City, which ultimately becomes Citigroup, was upending America because of all of this speculation and lending that they were doing that was inciting just a violent upward trend in the stock market that he said was going to go wrong.

Trevor Burrus So as you just said, brokerages were opening up everywhere.

This is not an exaggeration.

They were literally opening up in like hotel lobbies.

You've been to the Plaza Hotel in New York?

Okay, so there's that the famous oak room.

The oak room, because of prohibition, had been shut down, and E.F.

Hutton had opened up inside the oak room.

But yeah, you would be getting, people would be getting tips literally from the doormen and the elevator men, you know, wherever you went.

And you would just go in and place your bet as if it was like a normal thing to do.

And so, like, some of this is seen as a moral good in the moment.

Like, this is the democratization of finance, right?

Like, the Wall Street is no longer just for the super rich and the well-connected.

We're building a world market available to the JP Morgans, but also to Groucho Marx, right?

Like, everybody can get in on it.

And Groucho Marx is playing it.

Yeah.

Yeah.

And by the way, I ended up having to mortgage his home when all was said and done.

Now, you obviously draw draw parallels to what's happening now, not just with crypto, but with companies making trading more available to ordinary investors and the Trump administration trying to lower some of the guardrails, including guardrails from after the depression, that try to protect people from

irrational exuberance.

Can you talk about those parallels and why they make you nervous?

Okay, so first of all, let me just take one step back, which is speculation we all think is, I don't want want to say we all, but a lot of people use as a dirty word.

You don't want speculation.

But there is part of me, especially actually after writing this, that thinks that speculation is almost like the twin of innovation.

You do need a little speculation in the system.

Like, you don't want no speculation in the system.

And I only say that because if you think about the great technological advances of our time, you know, the first people to invest in Tesla years ago, when it seemed like an absurd and crazy idea, effectively were speculating.

So I'm not here to say that speculation unto itself is a bad thing.

In fact, I would argue you need a little bit of it, but I think you need to do it in a way where it's not toxic.

And what was happening in the 20s is there was a toxicity to how this was all being run, which is to say that there were no rules, no guardrails.

And what's happening today is that we are taking the guardrails away.

So I think it's probably a good thing for the American public to have access and to be able to invest.

You just need to do it with transparency, without the leverage, without the manipulation efforts and the charlatans and the frauds that invariably emerge every single time we have one of these booms.

And I would say, right now, you look at what's happening in crypto, and yes, there are frauds and charlatans everywhere.

You know, there was this thing called a SPAC boom, this blank check boom, just a couple of years ago.

Everybody said, oh my goodness, I can get access to the lottery ticket early.

This is amazing.

And invariably, most of those investments went bad.

And so every time we have one of these sort of like innovative moments, if you will, I think you just need to really be super careful.

Aaron Powell, Jr.: So the Biden administration was aware of this and was thinking about how do we regulate cryptocurrency

to protect people and to protect the broader economy

from the same kind of boom and bust and hyper speculation

that happened in the 1920s.

Trump at first is extremely skeptical of crypto, doesn't get it, starts to discover there's something in it for him personally.

Next thing we know, the SEC is

kind of becomes sort of captured by crypto and he's selling it himself.

How much does that look like what was happening in the 20s?

And

how vulnerable are those of us who are staying out of cryptocurrency to its impacts if

there's a crash of some kind.

All right, two-part, almost three-part question.

First of all, I would argue that Trump's flip on crypto was almost 100% related to the fact that the entire crypto community decided to effectively back his campaign and buy him.

That's what happened.

I mean, let's just call a spade a spade.

This was a demonstrable effort by the crypto world to say, look, if we can get on this guy's good side, he will get on our good side.

And it's as transactional as anything else.

That's putting aside, that's even before you get to the issues around his family and getting involved in crypto and all of those things.

Interestingly, you know, I had a conversation with Eric Trump, this is a couple, even weeks ago, I think, about this.

One of the reasons that they got engaged in crypto or were interested in crypto beyond the money-making opportunity was because they thought, and they were probably not wrong, that they were being quote-unquote debanked, if you will, after

the election in 2020 and January 6th.

Now, I would argue they were being debanked because the banking system has rules and regulations about customers, and they were looking at what would happen after January 6th and all the investigations and trials and

everything else going on and said,

maybe we're not supposed to do business with this individual in this moment.

But as a result of that,

they then go hard on crypto because that was where they could effectively bank their money.

Aaron Trevor Brazilians

Trump comes in.

He calls off an investigation into one of

his key backers that's sort of entwined on these businesses.

What are they doing right now

to

lower the kind of guardrails that we had put in place after the depression, both on cryptocurrency, but also in the broader market?

Aaron Powell, so there's a whole move afoot in the Genius Act effectively to allow crypto venture capital investments, private equity investments, what's now called private credit investments, to go inside of your 401k plan and your retirement plan.

It's effectively going to give everybody access to invest in this whole world that's historically lived in the shadows.

And by the way, this world will partially still live in the shadows insofar as, you know, if you're not a publicly traded company, you don't have to disclose your numbers every quarter or every year.

And that's when I would argue to you, the charlatans and the frauds emerge.

You know, in those worlds, the valuations are effectively made up.

If you know about the venture capital world, basically a bunch of investors decide, okay, this is what it's worth today.

And they'll just tell you, this is what it's worth today.

But there's no like independent auditor that's going to tell you that.

But if there are $12 trillion potentially of retirement funds that could ultimately get touched by this, it gets a lot more complicated.

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So the markets are crashing.

Herbert Hoover is in the White House,

considers himself to be a man of action,

as you say.

He's trying to manage this crisis.

But then there's this really interesting

dynamic after Roosevelt is elected, but before he is sworn in.

Hoover seemed to think there needed to be some kind of bank holiday,

but didn't want to declare it.

And stepping back, it seems in the book that there's two reasons.

One is around

exercising presidential power and whether or not he had the power.

The other is almost like a spiritual aversion to admitting that there was a crisis.

So

there's this moment in the book where Hoover calls Roosevelt at 11.30 p.m.,

just before he's going to be inaugurated.

Can you talk about that conversation?

Why was Hoover calling him?

And what did Roosevelt Roosevelt take from it?

So this is sort of a, to me, one of the most fascinating conversations maybe in presidential history, which is literally right, as you described,

right before the inauguration.

And by the way, these guys were not really talking to each other.

And I should say that this phone call was preceded by a letter.

that Hoover had secretly written to Roosevelt begging him to come out in favor of the idea of what they called a bank holiday, basically shutting down the banks for a day or two or or three or four so that they could try to get a handle on the situation.

And this goes to sort of reputation, ego, and everything else, which is that I think Hoover desperately wanted this to happen because he wanted some credit for it.

He didn't want to go down as the president who left the system in this sort of state of failure.

And on the other side, you had Roosevelt, who desperately wanted to be able to start with a clean slate and didn't want to be credited with having done anything in cahoots with Hoover and wanted to be able to sort of start anew.

And so you had this sort of unique clash where Hoover's begging him to at least come out and support something like this.

And he's saying, no, no, no, no, no.

And he would tell him he's not really doing it.

But Hoover knew, Hoover knew that the second he got into the White House, that Roosevelt would go off and do exactly what Hoover should have done, effectively,

and he would get the credit for it.

And he does.

So what is going on here?

So there's a run on the banks.

Yes.

The economy is in free fall.

Hoover is president.

He's a smart guy.

Not a dumb man.

He is smart.

He was worried about the speculation all through the 20s.

He didn't seem to have paid enough attention to it, but he is very concerned about it, concerned about the possibility of it all going bust.

Why doesn't he just declare the bank holiday that he believes is necessary?

Why would he ask

his successor to do it in advance?

I think in part because he had made a pivotal mistake, which is he had told the country over and over and over again that this was somehow some kind of psychological problem, that this was not actually an economic problem, that this was like a problem in your mind, that

somehow what you were seeing was not what you were seeing.

And by the way, people didn't believe that because they could see what they could see.

And I think he didn't want to

give in to the fact that he had that his biggest mistake was not taking this on in a more meaningful way earlier.

You know, there was just so many, there was a series of mistakes that were made after the crash that really led to the Great Depression.

I think of the crash as almost just the first domino in a whole bunch of things that he did.

You know, one of the things he tried to do was raise taxes at a time when, you know, the economy was flailing.

That was a wild idea.

The other thing that he did was he decides, by the way, like now,

to

put tariffs on, the Smoot-Hawley tariffs, 1930.

He had pledged to do that during his presidential campaign, 1928, trying to get farmers to vote for him.

And he said, my goodness, I need to make good on my pledge.

Meanwhile, every economist in America is writing him open letters, by the way, the same way they're writing letters to Trump saying, I beg you, I beg you, don't do this.

The CEOs were going down into the Oval Office, getting on their knees saying, Please don't do this.

And of course, he does it.

And what happens?

12 months later, global trade is down by 60%.

By the way, meantime, you have the Federal Reserve sitting on their hands the entire time.

They're not flooding the system with money because they are worried about the politics of the moment too, which I think also, by the way, interestingly relates to now when we talk about the independence of the Fed and all of these things.

So there was sort of this

series of dominoes.

And I think at the point that we're now talking about, where Hoover is talking to Roosevelt about the banks, he would have to capitulate.

He would have to almost admit that he didn't do the right things before.

And so he was trying to put it on Roosevelt, and Roosevelt was trying to put it on him.

Meanwhile, Carter Glass, who is,

as we discussed, sort of against all this Wall Street speculation, he tells Roosevelt, I think the President of the United States had no more valid authority to close or open a bank in the United States than had my stableboy.

He just doesn't believe the authority is there.

Hoover, in that letter you mentioned,

tells him, actually, I think you do have the authority,

which is buried in an old dusty statute called the Trading with the Enemy Act.

Hey, we have this old law in the books

that you can go and grab and use to do this thing for which it had never been.

Are you seeing parallels today?

Yes.

So

sometimes you will see, and it is not the first, second, third, or fourth defense of Trump,

but it's in there, kind of a more intellectual one, which is that all these liberals that say Donald Trump is a tyrant, that he's an authoritarian, FDR comes in, fundamentally changes the role of president, takes authority that few believed or imagined a president ever having,

bullies the court, expands the welfare state, changes the government, builds a bureaucracy.

And he's one of the libs, he's one of our top three.

Right.

He's on the Mount Rushmore of

God Save America here.

Sure.

Is there some truth to the idea that what Roosevelt planned to do was basically decide the presidency was far more powerful in a way that was kind of lawless, but because it was now in history in service of getting us out of the Great Depression,

we look on it fondly in a way that's actually ignorant of its dangers?

So I don't know if there was ever like a project 1932 or 1933, but yes, I think there might have been some kind of project behind the scenes, if you will, to think through what were the levers that a president could pull that maybe hadn't been pulled before.

And you're right.

History has looked quite fondly on the powers that he ultimately took, but they look fondly upon them, I think, because they worked.

There was an effectiveness about them.

And I would also argue that it didn't seem at the, now at the time, if you go back some people thought it was a power grab but it didn't seem like it was a capricious power grab for the purposes of their own power however it was communicated to the public it it was communicated in a way that i think that the public did believe that he was doing this at their behest for them not for him and it's an interesting sort of

distinction to make.

And maybe it's a distinction without a difference.

I don't know.

I'm curious what you think.

No, I think it's a distinction that really matters.

You know, he talks about it in the 1932 convention speech that there was this concentration of economic power and we were in just an unprecedented crisis that demanded a response.

It was, I do think, ultimately

it was necessary and patriotic

and not for his own enrichment.

Also, it was not

done in concert with putting troops on American streets and crackdowns.

And, you know,

I remember when Obama, when President Obama used the most delicate of language to criticize Wall Street, and he got a lot of shit for it.

Yes.

I remember it super well.

But Roosevelt is talking about the money changers in the temple, but he doesn't villainize vast numbers of Americans.

I think part of what matters is that there was a respect and

integrity in the use of power and the understanding that it was serious and therefore required a certain amount of forbearance in how you treat people and how you talk about about them.

Well, so the other thing that I found fascinating about Roosevelt, also Hoover, to some degree, but given Roosevelt's public commentary about bankers and about wealth, and he doesn't get really into a sort of larger question about capitalism, I think the way we are discussing those questions today.

But he did have a relationship with all of these business leaders.

I mean, these business leaders, in an almost Trumpian way, were making these pilgrimages to the White House to sit in the Oval Office and to plead their case to him.

And he had

a somewhat, it seemed like, friendly relationship with the leaders of these institutions.

I will say one thing, though, about all of these bankers and wealthy individuals in the 20s and even now.

And by the way, back in the 20s,

not inflation adjusted, for real.

There were two billionaires.

And

people were making tens of millions of dollars.

There was a magazine article called Our Second Billionaire, which was Henry Ford, 1929.

One of the great lessons, at least for me that I've learned, just I think in reporting all of these years and even just reporting on the current milieu of billionaires in America, it doesn't matter how much money you have in your bank account or what title you have on your business card.

It is not emotional armor.

It just isn't.

And I think that the public, including myself,

you know, often think, well, they've got so much money.

What do they have to worry about?

You know, someone writes a nasty article about them or

the president goes after them on television.

What do they care?

They can just

go back to their yacht and they don't have to worry.

And I think there's truth to it in the sort of financial sense, right?

It's not that they have to, they're losing their home and are now out on the streets, but it's almost like anti-armor because a motor, like,

you know, I don't know if you read Us magazine occasionally, but there's the page, this is us,

they're just like us.

Like, emotionally, they're just like us.

Well, and there's something,

there is something about, well, I think there's two things.

I think one, I think something happens when

people catch the car.

You know, like

whether they've inherited or made it, they have all this money.

Yes.

And they know that because they have all this money, they're supposed to be in better shape, not just financially, but emotionally.

And they look around, it's like,

how am I so rich and so mad?

What the fuck is happening?

Right?

It's almost like if I'm this mad and I'm this rich, I'm really getting fucked.

Something's really gone wrong here.

So that's one part of it.

The other is, I noticed this in life.

I think it's true.

in ways large and small.

If you're arguing about money, you're arguing about something else.

And a lot of times when you're arguing about something else, you're really arguing about money.

And so

very interesting insight.

Sure.

I think sometimes that money can be a stand-in for value.

How valued am I, right?

That's certainly true in life.

So an attack on them, them as taxpayers and not paying enough is an attack on them as people.

Right.

So

I think that's part of it.

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I want to talk, well, let's go to mood because I think you're getting at this, which is, you know, you talked about business leaders coming in to see Roosevelt.

That had begun under Hoover.

He invites business leaders to the White House.

And after the meeting, the head of ConEd, Consolidated Edison at the time, tells someone, I was never so confused in my life.

Hoover

believes that this is just an emotional thing, that America's having a psychological issue, basically.

We're having like a mental break.

And really people just need to be buoyed.

But

he's the exact worst, even if that were the case, which wasn't, he's the exact wrong person to do it.

He's a terrible communicator.

Can you talk about both sides of this, right?

Like on the one hand, no,

this isn't just a mood.

There's a huge crisis unfolding that's based in hard numbers.

And then if it were a mood, why he was so bad at persuading people or talking to people about what was happening.

I'll take the second part first.

He was a terrible orator.

I mean, ultimately, that's the truth.

He just was, he didn't, whatever you think the it factor is in politics, he did not have it.

In that regard, it's sort of surprising that he won the election at all.

I think his ability to stir the public the way some of the great presidential presidents who have been great orators have was just not a talent that was in his,

you know,

in his talent drawer.

Like he just didn't, it was not something he had.

So I think his ability to, you know, but the other sort of psychological piece of this, and you can even think about it in the most recent decade,

even now, actually.

So, you know, we had a whole period of time in our country where there was remarkable inflation going on.

And President Biden used to tell everybody, like, there isn't inflation.

It's fine.

I mean, by the way, Biden tried to do a little bit of what Hoover was doing.

And the people were on TikTok saying, that's not true.

Have you seen the price of eggs?

I don't understand what you're trying to tell me.

By the way, I would say the same thing is happening now with Trump, which is Trump is out there saying the economy is great.

And yet if you look at some of the polls and you definitely look at some of the economic data, there's weakness there.

It's real.

It's not some of them.

I mean,

people are furious that he's not paying attention to the rising to prices.

People feel like he hasn't fundamentally addressed the main reason he was able to get in a second time.

Oh, I don't disagree.

No, no, I don't agree with you.

I'm just wondering, I'm very curious if they actually did some real polls.

I've seen only a couple polls on this where people really talk about how they feel about the economy today and for reasons that I think are inexplicable.

So I look at the economic data and what's going on with inflation and I would say

there's some underlying weakness, at least for large pockets of the country.

And you would think that they would be on TikTok screaming the way they were screaming a couple of years ago in the last administration.

And I think there's some screaming going on, but I don't think there's nearly the same kind of screaming, and I wonder why that is.

Yeah,

to the point about Biden and Hoover, there's a point in which you, that, that, that, in the book where you talk about Hoover struggling to communicate in part because he's constitutionally gloomy, just a gloomy guy.

And I just think about Biden trying to reassure the country, but his tone, certainly by the end, had become, when comprehensible, so defensive and so small.

And

the parallel that I drew is, you know, Hoover is this person that sees himself as someone perfectly suited to understand and manage a crisis, far more so than Roosevelt, who knew far less about the economy.

And yet, the country came to view Hoover as someone completely untrustworthy and put all their faith and belief in Roosevelt, believed he was the guy to solve it, even though he really had a pretty superficial understanding.

It was really going by gut.

And

I think the parallels there are pretty obvious now.

Very obvious.

And I'm so glad that you made the parallels.

You know, it's funny, when I was writing the book, I used to have these big debates with my editor about whether we should actually make the connection for the reader.

So when you read the book, you're hopefully inside this narrative and just listening or reading this almost tale of what happened.

But as you're doing that, and I'm not trying to lead you to a place, but I imagine that there are readers who are going to go, oh, well, that's like this, and that's like this, and that's like this, and that guy's like Elizabeth Warren, and that guy is like a little bit like Elon Musk.

And so, yes.

I'm glad you didn't.

We live in an era where people are afraid of subtext and they don't trust their audience to just make their own conclusions.

But great stories, you don't answer the question, you leave people with a question.

One would think.

That's at least how it used to be.

But now you go into, now this is for another conversation, but you'll like the number of movies where at about two-thirds of the way in, some character looks at the audience and says, here's the thesis of this film, it's like out of control.

It's out of control.

So I love you for saying that.

Let's talk about tariffs.

Stock market.

Right now, especially responsive to Trump's push and pull with China.

We saw last week he threatens new tariffs on China.

The Dow plunges 900 points, then bounces back the next Monday because he basically has a softer energy about it.

Lots of vibes-based market movements these days.

Does that make you nervous?

Are you like, I want to talk about tariffs as a policy, but just in the way the markets have reacted to

global

tariffs that we haven't seen since the Depression,

have you been surprised by the lack of reaction?

What's your take?

I'm no longer surprised because one of the things that I've decided I've learned is that the investor class, whatever that even means anymore, is a group of people who are effectively professional optimists.

And the truth is that actually, if you look over time,

being a professional optimist or being...

predisposed to being optimistic has actually been the right choice.

So I remember years ago, you'd hear about, you know, a war breaking out in the Middle East or something, and the market would falter and go fall to pieces.

And the truth was that if you had bought when that happened, you would have made a small fortune.

And I think over time, people have seen that most of the time it works out.

The problem is some of the time it doesn't.

And so, but as a result, I think there's always this predisposition towards there's going to be some semblance of rationality to what will ultimately happen.

And so you have President Trump out there, you know, making some grand claim about the tariffs.

The market freaks out because they're like, should I believe him?

Am I supposed to actually listen to his words?

Am I not?

I mean, this goes, but this happens every day.

And so

then you have this sort of back and forth with China.

I'm of the view that ultimately, I don't know if it's the taco trade or whatever they call it these days, which is Trump always chickens out.

Ultimately, I think he's trying to push it as far as he can push it.

But the true, and maybe it's the only governor thus far, actually, on this presidency, has actually been the markets, weirdly enough, right?

So when he announced the tariffs back in April, the sort of big shoot-in-the-moon plan, the bond market went crazy and he softened his stance.

You know, here we are again.

He's trying to figure out what to do with China.

He softens his stance.

And

they're the only people he seems to be willing to listen to.

Trevor Burrus, Jr.: So he does seem responsive to it, and yet

not so responsive as to have a comprehensible policy.

You know, you have Bessant, Scott Besson, Treasury Secretary, talking about how we need to rally Europe and our other economic partners to unite against China.

But how is that supposed to work when you spent the last nine months jerking everybody around?

It all seems idiotic, incomprehensible.

Is there anything beneath the surface that makes logic of it?

The through line in my reporting about Trump is simply leverage.

It's how can he get leverage over somebody else?

It's not about and the relationship is always going to be transactional.

He would argue to you, I think, if we were sitting at this table with the president,

that all of these quote-unquote relationships, these friendships, these special relationships we had with European countries, was never really a relationship at all.

He would say we were actually paying them all off to be our friends, frankly, and that that was our leverage, if we had any leverage with them.

And I think now he's saying we have leverage in a different way, which is that we're basically going to tariff them.

My only point is that I think what he's looking at are the numbers,

not that anybody's doing anything in a kumbaya way for the United States, nor that the United States should be doing kumbaya way things for them.

And we will see whether we we really have leverage or not.

And I think that is the ultimate question.

And I do not think we know.

And I will say, when it comes to China, I think ultimately it's going to be very hard for us to have demonstrable leverage with them given their size and their scale.

And the fact that I think President Xi is just watching this whole thing and I imagine laughing to some degree because he sees the president come out and decides announce some crazy tariff number and then the market goes crazy and what happens?

He steps down or steps away from it.

So, but then it's like leverage towards what end, right?

Like, if you really want it, like

there's no coherence to what he's doing, right?

Because leverage towards control.

Leverage towards, and look, look at what's going on with the universities in America.

Look what's going on with the law firms going on in America.

Look what's happening with the companies.

It's all there's leverage, leverage over somebody else, power over them, so that when you need to

ask for something,

the answer is yes.

That is basically what I think is going on here.

And that's what the tariffs over Europe does.

It gives him leverage to potentially what, remove them so they'll work on China.

Well, that's the, yes, I would also say they can become,

and I'm not arguing that this is a good strategy.

No, I don't, and I don't think anyone thinks you're not.

Just to be clear,

this whole thing becomes a chess piece.

They're all chess pieces on a board.

And I think he thinks to himself, I now have a chess piece over X.

They are paying this tariff now.

I'm collecting money from them one way.

At some point, if I need them in some other way, maybe I can lower the tariff.

By the way, maybe I can raise the tariff on them.

Right.

And the whole thing is just a sort of grand

leverage negotiation.

Yeah, with

like all of which could be true without first putting them on.

Anyway, it's

done by the kind of group of fucking goons.

So

you brought up the way he's sort of using leverage over corporations.

And I want to talk about this.

I want to start with Charles Mitchell

because I think it's relevant.

So you mentioned this earlier.

So Carter Glass, this

anti-Wall Street segregationist, Charles Mitchell is one of his sort of chief enemies.

Charles Mitchell leads Citibank.

He

is the kind of chief villain of this congressional inquiry

that ultimately leads to charges.

He is charged for tax fraud.

Yes.

He goes to trial.

What happens?

We're going to give away the end of the whole story.

Oh, so he goes to trial and you won't believe what happens.

Yeah.

I don't think of it.

I mean, I guess I don't think it's a spoiler.

I mean, I guess it's history.

You can't really spoil history.

You can't really spoil history.

So Charles Mitchell effectively gets indicted for tax evasion.

By the way, that case brought against him by Roosevelt, effectively, signed off by Roosevelt, who had a chip on her shoulder about Mitchell, and that was part of the politics too.

So this gets back to the strange parallels in life, Democrats and Republicans, for better or worse.

And he goes to trial.

Everybody expects that he's going to be convicted.

Everybody thinks he's going to be convicted.

He had, by the way, engaged in what was demonstrably a sham tax transaction with his wife.

And you get into, I mean, you really get to see what was going on in the moment when he's literally in in the room with his wife, you know, planning this whole tax strategy out.

And the jury comes back and finds him not guilty.

And this goes to exactly maybe what people thought about after the financial crisis of 2008.

Nobody really went to jail.

And

when people discussed this with the jurors, when you read all of the sort of articles and opinion pieces about this at the time, the view was

that he did basically what everybody else just would have done.

And

they did not consider that to be criminal.

Interestingly, he had done it with the blessing of his lawyer, which was also sort of, from a legal perspective, a very sort of interesting defense, which was that he went to the lawyer, got the lawyer to bless it, and

there it is.

Well, what's interesting about that is, as you make this point in the book, I'm going to paraphrase, but something to the effect of there are criminals and there are frauds, and that's a a big part of this.

And in any kind of moment of a bubble, there are people that will take advantage.

People are much more careful when times are tight.

But you make this point that a lot of these people did what anyone would have done.

And you've gotten some shit for saying that, by the way.

I have.

That people are like, oh, you're apologizing for these people.

But I actually want to take it at face value because

how sad it is that this is what people would have done under these circumstances and in this moment.

You know, Carter Glass is, in some sense, vindicated.

He then

writes at great kind of pain to his own health, what becomes Glass-Steagall.

Roosevelt signs it.

It is seen as a bulwark against

the excesses of the Depression.

But even that was a corrupted process.

It was a corrupted process.

By the way, that was a process.

Which I didn't know.

I didn't know.

I didn't know that.

So that was, by the way, one of the great surprises for me as I was going through the letters and archives of this period, which was, I think we all have this impression that this great Bill Glass-Deagle,

which broke up the banks, was sort of driven by Carter Glass and this idea that the banks should be broken up and this was to make the system safer.

So that basically that speculation was over here and vanilla savings was over here.

Correct.

You were dividing the casino from the actual bank.

But the truth was

that

this entire process had been corrupted.

And the only reason I would argue this bill even came about was because the Rockefeller family, which effectively owned a big chunk of Chase,

which was a major competitor to Citigroup,

wanted to break up Citigroup, but also more importantly, wanted to break up JP Morgan.

And that the Rockefeller family had it out for J.P.

Morgan.

And as a result, they went to Roosevelt, who, by the way, wasn't so excited originally about passing this bill.

This bill had been sitting around for a while and he was slow walking Carter Glass in so many different ways.

By the way, interestingly, Roosevelt was not really for the FDIC, which was also a piece of this bill, effectively insuring bank deposits.

Roosevelt originally wasn't even for that either, but there was a whole bunch of

sort of efforts afoot to put all of these pieces in place to the point where I found a letter that Carter Glass had written that actually walked through the whole thing where he was basically complaining that the bill wasn't really his and had been effectively taken over by the bankers.

And there's a section of the bill that was physically written by the son-in-law of Rockefeller.

The Jared Kushner of the day.

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There's a quote from Hoover's Treasury Secretary, Andrew Mellon,

in 1929.

The quote is, liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.

It will purge the rottenness out of the system.

High cost of living and high living will come down.

People will will work harder, live a more moral life, values will be adjusted, and enterprising people will pick up the wrecks from less competent people.

Hoover.

He's telling that to Hoover in 1929.

There's a little bit of resonance in the way some of the

MAGA industrial policy.

We've got to get back to making things.

We've got to get back to using our hands.

Carter Glass and the people that were against Wall Street speculation, they are ultimately vindicated because of what happens.

But they weren't just predicting the future.

They had a moral problem with what was happening in the economy.

Clearly, someone like Andrew Mellon, pretty callous about what would happen to farmers who don't, you know, they are people.

They don't liquidate as well as, say, dollars do.

But there's clearly something about

the way the American dream had changed in this era that made people uncomfortable.

Can you talk about that?

Well, no, first of all, Andrew Mellon was a capitalist with a capital C in just every way.

You know, if you had great success, God bless you.

If you had great failure, God bless you.

He did not, he wasn't there to pick up the pieces in any way, shape, or form.

I would argue, by the way, that the American dream shifted in the 1920s.

I actually think that the dream that shifted in the 1920s, for better or worse, is the dream that exists today in America here today, and I would argue on TikTok and everywhere else, which is, I think prior to 1920, it really was more of a Horatio Alger kind of story that people were pursuing.

And I think in the 20s, in part because of the stock market and everything else and the industrialization and going to big cities and everything else with the sort of elites that they saw, it became about the lottery ticket.

It became about, I don't know about a get-rich-quick scheme, but it became about getting rich, getting super, it wasn't just,

it wasn't just about having a better life than your parents.

It was about something else.

It was about sort of reaching for the stars in this other way.

And that was partially, by the way, a function of the media.

You know, this is the first time big magazines were all of a sudden putting CEOs on the cover of these magazines.

You know, they used to have, you know, Babe Ruth and Charles Lindbergh on the cover, and now Charlie Mitchell is on the cover of these magazines.

And so I think that we, as a culture, almost turn these people into heroes.

And here we are, close to 100 years later, and you're seeing it almost in the exact same way.

Yeah, so just for people, so Horatio Alger's stories, just for people,

these were stories about kind of hard Scrabble, people from hard scrabble roots working their way up not to like supreme wealth, but to like a classic home life, like a good family life and providing for their family, like a middle class life.

And then all of a sudden there's the possibility that everybody can get rich.

And I was thinking about that.

And

what I would say the American dream is right now, and in some sense, you're right.

It remains this idea of like, oh, you can get rich.

But the truth is, I don't know that I would say I've heard anybody really tell me what it is in quite some time, right?

People articulate the old version, but there's something kind of sad about this moment right now, which is

I don't know that people believe they'll get rich.

I don't know what people think about it, but I feel like there's an optimism that existed in the bubble that I don't know that we have right now.

Well, it's interesting because I think the modern conversation about the American dream today often is actually not probably looked back 100 years.

It's probably looked back to the 50s.

People would call it what I describe as the Leave-It to Beaver American dream.

That was a very white dream, but it meant that

you could buy a house, you'd have two kids, a dog, and everything would kind of just work out.

And by the way, this was a period where unionization was a huge part of the economy.

We were protecting labor in a remarkable way.

And I think people look back now at that period fondly.

But I also think today, again, in this sort of social media-driven universe,

you know, everybody wants to be Mr.

Beast.

They all want to be you, John.

I mean, they all want to be.

I don't think so.

Do you?

I don't think that can be right.

I don't think I make this look good.

I don't think I make this look fun.

Well, you know, it's funny because I was thinking about sort of the post-World War II era that follows, you know, the depression leads into the New Deal and into the World War II and the way that changed the economy.

And you had far higher taxes,

you had far more egalitarian economic growth it was a

heyday for uh union jobs in some sense high costs of living and high living did come down uh

in some sense people did live well at least the a more moral life the version of the american dream that people had aspired to before seemed to in some sense return values did adjust there was a different value set in that era.

We didn't live up to it and a lot of people were kept outside of it, to be clear, but it wasn't high-flying.

It was a more righteous version of America.

There was some truth to the idea that there was a version of American capitalism without the high-flying.

Okay, but I have a very unpopular explanation for why that was the case.

All right, let's hear it.

And Paul Krugman disagrees with me vehemently about this.

So just I want to posit that so you can throw your tomatoes if you like.

I worry or I'm concerned that the sort of 1950s, to call it 1980 period where we had this

sort of utopia that we think about, I don't know if it's really utopia because there was all sorts of civil unrest and other things that took place during that period too.

But

it was also a function of the fact that the U.S.

was a monopoly power in the world during that period and was able to effectively charge monopoly rents.

So effectively, the rest of the world after World War II was out of business.

We were not competing with anybody.

We were it.

We were the entire game.

And so we could charge remarkable amounts of money.

There was no competition.

And so because this sort of

period was taking place, you could charge an extraordinary amount of money.

You could afford, if you will,

to pay labor what I think we all hope that labor deserves.

But it was partially because we didn't, there was not a competitor.

It was, you know, in 1980, when you start to see how wages stagnated in America starting in late 70s, early 80s, And you go and you look, all of a sudden Germany's back, Japan's back, everybody's now competing against America.

And by the way, that competition is forcing the cost of labor down.

It's forcing the cost of everything to go down.

And that's what, to some degree, I would argue, breaks the unions, or at least makes it much harder from a, this goes back to capitalism and socialism, but from a capitalistic perspective to compete when you're effectively competing against competitors that have much lower costs.

And by the way, we're seeing this now in terms of why the president wants to implement tariffs because he's looking and saying to himself, look, BYD and China, if we let BYD and China sell cars into America today, we would have no car industry.

We just wouldn't because the cars are better made and cost less.

And you should take that fucking, that is not true.

Don't say that here.

These are forts.

These are American.

How dare you?

They are not better.

Yeah,

my car squeaks a little.

Sorry, go on.

This is like total deadpan.

And for a moment, he had me.

I'm just saying, you know, whether you want to listen to Elon Musk or not, he's always said

if you did not have these tariffs, that the American car market would be in trouble.

And I think there's truth to that.

There's truth to that.

And we actually as a country have to decide, do we want an automobile industry?

I mean, I think these are real questions.

And then the question is, if you want an automobile industry, how do you get it?

Right?

I mean, are tariffs going to help us?

I mean, right now, the way the tariffs are structured, I think it's going to become very complicated.

But I will say, I talked to a CEO of a big U.S.

car maker, and there are not a lot of them, so you can make your guess about who this is.

And they said, look, in 10 years from now, given all of the tariffs and everything else, most Americans are going to spend more for less quality cars than

much of the rest of the world is likely to get.

And maybe we should be cool with that.

Maybe we shouldn't.

I don't know.

But I think about this stuff.

Along with globalization, you also had

a shift towards regressive taxation.

You had deregulation.

You had a whole host of ways in which every policy seemed to be designed to make matters worse for the middle class.

And I agree, by the way, that part I agree with you 100% on, too.

So just thinking ahead of the comments.

In ahead of the comments.

So let's talk.

You talked about

what CEOs are saying.

I don't care.

Let's talk about what the CEOs are doing here.

Because

this gets into

the moment and sort of

the morals of this version of capitalism we have right now.

Tim Cook, smart guy,

gay guy,

not central, but it's a fact.

He's marching down to the White House bringing a bauble for Donald Trump.

That sucks.

That's got to suck.

He's got to hate doing that.

Why is he doing that?

What's the logic?

How does he defend to himself?

why you would go down there and kiss the ring and end up standing between Donald Trump and J.D.

Vance.

while I don't even remember now what it was, but it was some

like he was standing there between two of them doing some sort of disgusting diatribe.

Okay, so I am going to, I don't know if I'm going to channel him, so do not blame me.

Don't blame the messenger.

This is what I think is going on.

This is like mind reading inside Tim Cook's head, which is probably unfair to Tim Cook, but I'm going to try.

It'd be so funny if you had a really gay voice.

I will.

Do keep going.

I'm sorry.

Just trying to lighten it up at the end.

What I think is going on here is I think that he is somebody, and as I think most of these CEOs, I think they are playing trade-offs in their mind.

This whole thing is a trade-off for them.

They're saying to themselves, I could raise my hand right now and say, this is all wild and completely nuts, and I disagree with everything that's going on here.

And if I do that, what's the upside for me to do that?

And what's the downside for me to do that?

And I think right now

in this moment, the upside, in truth, is probably not a lot.

I think that a lot of people at this table and a lot of listeners would applaud

those people, but it's unclear to me, unless it's done as a collective, that it would have any real impact.

Right now, given what's happening in Washington in terms of the Republican control of the White House, of Congress, of the Senate, having even the business community come out in any meaningful way and say, excuse me, we don't like it this way,

it's unclear that that would have some kind of impact.

The downside,

I assume, is that you sit there and you say, if I don't do this, or if I raise my hand and say this, is that I'm going to be slaughtered, that we are, that that's what's happened in America.

And by the way, it depresses me to say this.

That's where we are.

It's like a mafiosa thing.

It's like, if I raise my hand and say there's a problem, I will be slaughtered.

That's what I think is, I mean, hopefully not literally slaughtered, but that's the, I think that is the calculus.

And I think the calculus is all of these people are thinking, I want to be here.

I want the company to be in

not just tomorrow, but in two and three and four and five and 10 years from now.

And can I just play this out?

Can I just stick this out long enough to get to the other side, whatever you think the other side looks like?

So there's three parts of this.

One is you mentioned, which is they're not acting collectively, which is not in their instinct.

But is there an understanding behind the scenes here that while any one short-term capitulation might be in the interest of an Apple or another major company, that in the long run,

you know, a patronage economy, like an Orban-style economy, is not good for business.

And that there is a collective interest in finding ways to head that off, especially, as you noted, the one governor of Trump has been the markets and being afraid of sinking them.

Trevor Burrus, Jr.: Right.

So I do think that behind the scenes, there is consternation and anxiety and all sorts of things about what this administration does.

No question.

I mean, I think one of the reasons they don't speak out is because they're scared.

And privately, they will tell you, I'm scared.

Again, this goes back to it almost doesn't matter how much money you have in your bank account or what's on your business card.

Emotionally,

you're still in that scared place.

And that's terrible.

And a generosity.

And a generosity to them,

though perhaps unearned, they are responsible for people's jobs.

They have real responsibility.

So I think that they think about that.

I think they think, and maybe they'll be wrong about this, that if in fact there's sort of a red line moment, and the question is, what is that red line moment?

That there's going to be some button that they're going to push, that

they will push the button if this sort of red line moment happens.

Now, there's obviously a lot of people, I imagine, who are listening to us now saying, hasn't the red line moment already happened?

Or if you think the red line moment is coming, don't you need to get in front of it before you ever get there?

Because by the time you get to that line, you won't be able to actually, you won't even have an opportunity to touch the button because you'll be so far away from it.

Because somehow you'll be in this sort of terrible place.

I don't know the answer.

And I think this is what everybody in the business community who does have these worries is grappling with.

I think they're sitting there saying, I know there's a red line at some point.

I don't know if we've gone over it.

I don't know when we're going to get there.

And I don't know when we get there, what we're going to do about it.

Yeah, well, it's hard, right?

Because

I was at a meeting recently with a number of business leaders

where

a bunch of people said, you know what?

We should write down right now

what the red line is so that the line doesn't move.

That's a good idea, because presumably one would think the government

demanding 10% of Int have been at least

a shade of maroon, a light pink line, one would think.

So that, I think, is, by the way, I think it would be very valuable for business leaders today to write down on a piece of paper, have a plan.

If you think there's going to be a day you're going to raise your hand and say, I don't like this and we've got a problem, write down what are the parameters and the metrics with which you would actually do that.

Because what keeps happening is the line that you thought nobody would cross seems to get crossed almost every day.

And

we become to some degree inerd to what's happening.

And so I think that's part of the sort of psychological question that we all probably need to face a little.

So the first part is why there isn't more collective action.

The second part we talked about, which is why they're afraid of Trump, which I think makes sense.

Third part.

When Tim Cook goes and kisses the ring, when colleges capitulate, when law firms or media companies capitulate, it's not just because they think Trump is scary.

It's because they think the people that don't like Trump aren't to be worried about even one little bit.

Now, you've had Elizabeth Warren and some other Democrats Democrats try to signal, hey,

it doesn't matter if all your friends are doing it.

These are corrupt deals.

In some form, these are bribes.

We will come after you once we are in power again.

I think that matters, doesn't seem to matter very much.

And then you have moments where Democrats or people that just don't like Trump almost organically cancel Disney Plus.

And that's noticed.

That seems to be a moment of influence.

But for the most part, it feels like if you're a CEO and you're more worried about Trump than you are the opposition to Trump, that's correct.

How does that change?

Well, it'll be very interesting to see if, in fact, Democrats come into power,

how they use that power.

And by the way, it's going to be very interesting to see now that we're in this moment where the president's going after Comey and he's going after Bolton and

whether every successive presidency, depending on which political party is in place, is going to be sort of using these powers in these different ways and whether that then either puts a stop to the politicization of all of it or whether this just becomes sort of a spiral out of control.

I'm very curious to see, but you're right that nobody in the moment right now, especially in the business community, feels pressure from the quote-unquote other side.

So they always, by the way, they always hated, you know, Elizabeth Warren.

making comments about their business, trying to raise taxes on them or implement wealth taxes or other things, but they never really took it seriously

and so here we are hey what's the money saying about mom danny now now that it's getting real

oh he's gonna i mean

the money says that he's gonna be the mayor of new york no question and and what are like the kind of uh he's done something interesting right he's gone and met with business executives that would be really skeptical of him and he's charming them a little bit.

What are you hearing behind the scenes about him?

So I think that the business leaders dislike him.

I mean, they genuinely dislike him.

Sure.

And it's not, by the way, just because they think he's,

forgetting about being a Democrat, being a socialist, or even raising taxes.

I actually don't think that that is the thing that has them up in arms.

Just to be totally transparent with you, I think that they think there's three things that

are on their minds.

I think they are worried about how he's going to approach policing in the city.

I think that's for them a big, big issue.

I think

there's an anti-Semitic question

that is definitely on their minds.

And then there is, and this gets to maybe the Democratic Socialist piece of it.

You know, I think they all believe that we need more affordability in terms of New York City, especially when it comes to rents and real estate and the like.

And I think they look at what he's, at least the plan to stabilize, rent stabilization and say to themselves, at least as classic economists, that that is not really the answer.

That the answer ultimately is what Ezra Klein would tell you, which is abundance.

We need supply.

All right.

More supply.

It has been zero days since we've talked about abundance.

Reset the sign back to zero.

Continue.

And I think that they look at all of that and say, that's a problem.

Having said that, They think he's very charming.

They recognize that he is likely to be the mayor.

And I think you're starting to see a bunch of them,

I don't want to say fall in line, but fall in line.

And so you're seeing some people come out with sort of more positive comments,

hoping, knowing that maybe, you know, if he's the mayor, that if they're friendly early, that he'll be friendly later.

I mean, I think that's, and this is fascinating because it's, by the way, this does happen on both sides of the political aisle, right?

It's a very interesting moment.

So the book is 1929 Inside The Greatest Crash in History and How It Shattered a nation.

Last thoughts on,

you know, last thoughts on this, which is, you know, you end the book talking about two things, which is humility and resilience.

We need a lot of both.

We need a lot of both.

I'm not interested in resilience right now because I sometimes feel as though we kind of rely on it.

And let's say for a moment we're not.

Let's act as if we aren't.

But humility.

If we look back on this moment

and there is some kind of a crash to come, whether it's around ai investments or or crypto or something we can't see coming that sort of the dark sides of the market finding their way into people's 401ks what are the obvious signs right now that we'll look back and say god damn it we were so fucking stupid it was staring us in the face

i think the answer is we will look at what's happening in ai which by the way i'm super excited about and think there's a it'll be like the internet it'll be a massive technological change but you'll look at the valuations of some of these companies right now and the way they're getting financed and all the debt and leverage in the system

and you'll say, this doesn't make sense.

Look at companies that don't have enough money, are not making any money.

They're making no money today.

They're losing money and yet they're making massive commitments to buy data centers, to buy all sorts of things that they can't afford to buy on a hope and a prayer and a dream that this will be the future.

Some of them will be right and they will be the future and

some of them will be Amazon, but a lot won't be.

And we will look around and we will say,

that was a mistake.

Andrew Ross Sorkin, so good to talk to you.

Great conversation.

Everybody do really recommend the book.

Really fascinating and relevant to this moment.

Thanks so much.

Thank you.

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