Welcome to the Deep Dive. Today we are tackling
a truly massive stack of source material. It's
a big one. It really is. We're looking at everything
from the very personal, like skipping a trip
to the doctor all the way up to, you know, high
-stake central bank policy and global trade.
And the thread connecting all of it is this idea
of the affordability crisis. Exactly. It's probably
the single most dominant economic issue right
now and the sources you've shared really demand
that we get past the usual political talking
points. Right. So our mission today is to uncover
the startling and sometimes frankly grim statistics
that define this crisis. The core question here
is what does affordability crisis actually mean
for you on the ground and how are these big decisions
made in boardrooms affecting your day to day
life. We want to draw that direct line from the
kitchen table all the way to the Federal Reserve.
OK, so to start, let's just establish the ground
reality. The results from this political public
first poll, they give us a really immediate and
sobering reality check. I found the health care
data here, maybe the most troubling part. It
just shows how fast financial pain becomes a
health crisis. Absolutely. The health stats are.
Staggering. Nearly one in four Americans, that's
23%, admitted they've skipped a dose of prescription
medicine. Just because they couldn't afford it.
Just because of the cost. And another 27 % have
skipped a medical checkup for the exact same
reason. That's a huge portion of the country
just deferring necessary care. It is. And it
immediately puts the stakes into sharp relief.
And beyond health, you see it with the most basic
need of all, food. Yeah, that number was shocking.
A full 50 % of people polled, half the country,
said they have difficulty paying for food. Half
the country. And when you look at the top five
areas of financial pain, it all lines up. Groceries
are number one at 45%, then you've got housing
at 38%, and health care right there at 34%. So
it's the absolute necessities, not luxuries.
Not discretionary spending, no. It's the things
you need to live. OK, so let's unpack this. When
half the country is struggling to buy groceries,
they are looking for someone to blame. Who are
voters pointing the finger at? Well, the political
fight over prices is incredibly fierce. And the
sources show that the blame shifting strategies
are really running into a wall. How so? Despite
one political camp repeatedly trying to blame
the current administration, 55 % of voters are
actually blaming former President Trump for high
food prices. That is a striking number. Why are
voters making that connection to past policies
like tariffs instead of just say current gas
prices? Well, it seems to be a successful strategy
by the opposition to frame certain policies as
having these sort of permanent inflationary effects.
And this is all happening while Trump is on the
campaign trail saying affordability is a hoax.
Right. He's claiming prices are low and the economy
is booming. He is. And he even coupled that with
this really astonishing call for austerity. He
told people to teach their children to live with
less. I saw that. He mentioned kids only needing
one or two pencils and daughters not needing
thirty seven dollars. It's a message that just
seems profoundly disconnected from the reality
of families who are already struggling. Yeah.
And you can contrast that directly with someone
like Governor Josh Shapiro in Pennsylvania. He's
explicitly saying that Trump's tariffs have dramatically
increased the cost of living. He's drawing a
direct line from those policies to prices at
the grocery store. So a very clear political
argument is being made there. But let's look
at another contradiction, this time in what people
believe about the economy. Higher education.
Yes, the education paradox. A huge majority,
62 percent of Americans, say college costs too
much and the benefits are just too small. But
that's the paradox. People are rejecting the
price of the one thing that has been proven to
raise their income potential the most. While
they feel it isn't worth it, the Census Bureau
data says something completely different. So
lay out that hard data for us. What is the actual
difference? The median household income for a
family headed by a college graduate is more than
double that of a family with only high school
diplomas. More than double. So this disconnect
really highlights how affordability isn't just
about the price of milk. It's about access to
opportunity. The latter of upward mobility is
now seen as too expensive to even try and climb.
That's a powerful way to put it. OK, let's pivot
now from those kitchen table issues to the architects
of this whole macro landscape. Let's talk about
the Federal Reserve. They just cut interest rates.
What does this quarter point cut actually mean
for you, the listener? So the Fed announced a
quarter point cut, and they suggested another
one is probably on the way next year. That brings
the benchmark rate down to a range of 3 .5 %
to 3 .75%. And the immediate effects are mixed,
right? Depends on who you are. Exactly. If you
have a variable mortgage or a lot of credit card
debt, there's a little bit of relief. Your borrowing
costs go down. But there's always a flip side.
Always. The flip side is that seniors, retirees,
anyone relying on savings accounts for interest
income, they suffer immediately. Their returns
drop. And it could spark more inflation. That's
the big fear. It could rev up the very thing
that's causing all this pain in the first place.
Now, on the macro side, the stock market loved
it. The Dow jumped over one percent. But we need
a giant caveat on that number. A giant one. That
market surge measures how well corporations and
big asset holders are doing. It is absolutely
not a measure of how the average person is doing.
Because a huge part of the population owns no
stock. Right. A large fraction, maybe even the
majority, owns no stocks, directly or indirectly.
So for them, that market jump just reinforces
this feeling that the game is rigged for people
who already have assets. Which brings us to the
deeper critiques of the Fed. There's this open
letter calling for a change in leadership, arguing
that mission creep is at the heart of the current
crisis. This is a deep historical critique. They
argue the mission creep really started back after
the 2007 financial crisis. It led to what's been
called the Bernanke Doctrine. Which was the decision
to take interest rates basically to zero, ZIRP.
ZRRP, zero interest rate policy. And what that
means for the economy is there's no safe return
on cash anymore. It forces everyone's money into
riskier investments, like stocks, because there's
nowhere else to get a return. And this was coupled
with LSAP large -scale asset purchases. Which
is often just called quantitative easing, or
QE. Right. The Fed was essentially printing money
to buy up financial assets, flooding the market
with cash. This expanded their role way beyond
just managing the dollar's buying power. And
there were warnings about this, even from inside
the Fed. Oh, yes. Jerome Powell himself back
in 2012 warned that the Fed was encouraging risk
-taking and blowing a fixed income duration bubble.
He saw it coming. He saw the signs early. The
investors were learning the Fed would always
be there to bail them out. It created a moral
hazard. So the consequence now is that the market
just assumes the Fed will always step in, that
QE is always on the table. It has fundamentally
changed market expectations, yes. And that ties
directly back to affordability through income
inequality. If the Fed's main job becomes propping
up asset prices and only a fraction of people
own assets, the wealth gap just gets wider and
wider. Which creates what your sources call an
income inequality trap. Can you explain that
concept? The argument is that the safety net
we have is designed to catch people at the very
bottom, but it sets a trap for anyone trying
to climb out. How does it do that? Because benefits
like food stamps or housing aid disappear faster
than your wages go up, especially in that middle
bracket between, say, $40 ,000 and $100 ,000.
So you get a small raise at work, but it costs
you thousands in lost benefits. You're actually
worse off. Wow. So climbing the ladder becomes
almost impossible. It makes it incredibly difficult.
OK, let's look outside the U .S. for a moment.
Our Fed is cutting rates, but the European Central
Bank is holding steady. What does that divergence
mean? It means the U .S. and European economies
are on very different paths. The U .S.'s volatile
growth forecasts are swinging wildly. Inflation
is still stubbornly high, around 3 percent. And
Europe? They're being much more cautious. They're
focused on stability. They see low but stable
growth around 1 .2 % with inflation staying near
their 2 % target. And why the caution? Well,
the ECB governs 20 different countries. That
complex structure makes them inherently more
careful about big policy swings that could destabilize
one of their members. And the immediate result
of this is in the currency markets. The euro
is rising and the dollar has fallen 12 percent
against it this year. Yes. And this is where
we see that subtle but very real move toward
de -dollarization. One study showed the euro
share of business to business payments is up
to 50 percent while the dollar share fell to
30 percent. Which matters to you the listener
if you're traveling or buying imported goods.
Exactly. Those things just got more expensive.
OK, let's bring it back to Washington. There's
a huge legislative fight brewing over the Affordable
Care Act subsidies. This could be a massive shock
for a lot of families. The stakes here are truly
existential for millions. If these temporary
ACA subsidies expire, premiums are going to spike.
We heard one example of a family's premium going
from $800 a month to $1 ,600 a month. 100 % increase
overnight. It's a financial catastrophe. So in
response, we have the Crapo Cassidy alternative
plan. What does that plan do? It's a complicated
and critics would argue, deeply insufficient
solution. It basically deposits a small sum,
maybe $1 ,000 or $1 ,500 into a health savings
account for people buying a bronze plan. But
the devil is always in the details with these
plans. It is. A bronze plan is cheap monthly,
but it comes with a massive deductible. Maybe
$7 ,500 for an individual. So the plan gives
you a thousand bucks. But if you actually get
sick, you're hit with this huge bill. The quote
from the expert in the source material really
summed it up. They said the bill amounts to offering
people a one foot rope to get out of a 10 foot
hole. It just captures how inadequate the relief
is compared to the danger. And this maneuvering
extends to trade policy, too. Let's touch on
the farmer bailouts. Right. So Trump's tariffs
on China led China to cut off purchases of U
.S. soybeans, which hurt American farmers. And
the response was to bail them out with money
from the tariffs themselves. Correct. A 12 billion
dollar bailout on top of previous ones. But the
legality of that is very doubtful. The Constitution
says Congress has to appropriate money from the
Treasury. Tariff money doesn't just go into a
presidential slush fund. Finally, we have this
controversial move on AI chips, which critics
have called TACTO time. Yes, TACO time. This
is the decision to let companies like Nvidia
sell advanced AI chips to China, reversing a
Biden -era restriction. Why is that so controversial?
Because these advanced chips are the backbone
of modern military and surveillance tech. There
was a bipartisan consensus that we should not
be helping China's military modernization. So
why the reversal? The argument is that it's a
response to powerful corporate lobbying. It lets
these huge chipmakers back into a very lucrative
Chinese market. But critics say it strengthens
China's military and raises severe national security
questions. So we have navigated a really complex
landscape today. We've seen that this affordability
crisis is not a hoax. It's skipping medicine.
It's struggling with groceries. And these very
personal crises are all tangled up with global
monetary policy. and these politically charged
fights in Washington. Right, fights that seem
to offer pretty insufficient relief. It connects
every part of the economy. But as we focus on
Washington for solutions, there is this other
critical battleground that's often overlooked,
state politics. And these local races can have
a real impact on some of these structural problems.
They absolutely can. The DLCC, the Democratic
Legislative Campaign Committee, is trying to
win back 650 state legislative seats. They're
targeting flips in places like Arizona, Michigan,
and Wisconsin. And the goal is to stop things
like mid -decade redistricting. Exactly. To stop
future shenanigans that lock in power. One state
leader even mentioned that some voters might
now have buyer's remorse, suggesting there's
a real opportunity if funding shifts to these
local races. Which raises an important final
thought for you, our listener. While we focus
so much on the federal government to fix things
like health care and affordability, so many of
those issues are profoundly affected by what
happens in your state capital. From Medicaid
expansion to tax rates to even how your vote
is counted. So if activists and donors can successfully
shift focus and funding to these local races,
how quickly might the reality on the ground actually
change for you? Perhaps much faster than waiting
for gridlock to break. in Congress. Something
significant to consider as you watch the next
election cycle unfold?