WEBVTT 00:00:00.000 --> 00:00:02.879 OK, so let's just jump right into this. Let's 00:00:02.879 --> 00:00:06.120 do it. Because it is the morning after Wednesday, 00:00:06.280 --> 00:00:10.419 February 25th, 2026. And, you know, if you were 00:00:10.419 --> 00:00:12.919 anywhere near a screen last night, you definitely 00:00:12.919 --> 00:00:16.059 saw the spectacle. Oh, absolutely. You had President 00:00:16.059 --> 00:00:17.859 Trump's historic State of the Union address. 00:00:18.100 --> 00:00:21.320 You had the Democratic rebuttal. Yeah. All the 00:00:21.320 --> 00:00:23.559 pomp, the circumstance. And I mean, just the 00:00:23.559 --> 00:00:25.079 sheer length of the thing. Yeah, it was actually 00:00:25.079 --> 00:00:27.100 the longest state of the union on record. It 00:00:27.100 --> 00:00:30.440 really felt like a marathon. But. And here is 00:00:30.440 --> 00:00:31.960 the thing we really want to get into for this 00:00:31.960 --> 00:00:34.259 deep dive. While all the cameras were trained 00:00:34.259 --> 00:00:37.880 on Washington, something much quieter was happening. 00:00:38.560 --> 00:00:40.399 Right. Something I'd argue is actually much more 00:00:40.399 --> 00:00:43.020 significant. People were in voting booths in 00:00:43.020 --> 00:00:45.420 Pennsylvania and Maine. And that is exactly why 00:00:45.420 --> 00:00:47.859 we are looking at this today. Because, you know, 00:00:47.859 --> 00:00:50.079 you can listen to the speeches, which gives you 00:00:50.079 --> 00:00:52.799 the rhetoric of the moment, or you can look at 00:00:52.799 --> 00:00:55.479 the actual votes and the underlying money, which 00:00:55.479 --> 00:00:57.600 gives you the reality. Right. So that is our 00:00:57.600 --> 00:00:59.950 mission today. We are not just going to recap 00:00:59.950 --> 00:01:02.609 the applause lines from last night. We are going 00:01:02.609 --> 00:01:06.129 to connect the dots between the president's what 00:01:06.129 --> 00:01:08.609 he called the golden age rhetoric and the cost 00:01:08.609 --> 00:01:10.670 of living reality that the Democrats are hammering 00:01:10.670 --> 00:01:13.629 on. Exactly. And then we are going to look under 00:01:13.629 --> 00:01:15.829 the hood at the economic engine driving all of 00:01:15.829 --> 00:01:18.739 this. Yeah. Why do these two realities feel so 00:01:18.739 --> 00:01:20.519 completely different depending on who you are? 00:01:20.739 --> 00:01:22.659 Yeah, we are going to get into the K -shaped 00:01:22.659 --> 00:01:26.819 economy and specifically there is this fascinating 00:01:26.819 --> 00:01:29.659 financial maneuver involving blue chip art and 00:01:29.659 --> 00:01:32.760 tax loopholes. It really explains how the very 00:01:32.760 --> 00:01:35.519 top just keeps winning while everyone else is, 00:01:35.519 --> 00:01:37.799 you know, stressing over the grocery bill. The 00:01:37.799 --> 00:01:40.260 buy, borrow, die strategy. That's the one. I 00:01:40.260 --> 00:01:42.120 can't wait to get to the math on that. But first, 00:01:42.420 --> 00:01:44.120 we have to start with the main event from last 00:01:44.120 --> 00:01:46.519 night, the State of the Union. Right. So the 00:01:46.519 --> 00:01:48.280 big word being thrown around by pundits this 00:01:48.280 --> 00:01:52.799 morning is restraint, which honestly feels like 00:01:52.799 --> 00:01:55.400 an odd word to use given the usual history here. 00:01:55.640 --> 00:01:59.120 It does sound odd, but surprisingly, yes. If 00:01:59.120 --> 00:02:01.500 you look at the structure of the speech, the 00:02:01.500 --> 00:02:04.280 tone was notably disciplined last night. Very 00:02:04.280 --> 00:02:06.620 disciplined. I mean, we are 13 months into the 00:02:06.620 --> 00:02:08.620 second term. There has been a lot of volatility 00:02:08.620 --> 00:02:12.400 recently. Think about the whole Greenland annexation 00:02:12.400 --> 00:02:15.259 idea that caused so much chaos just last month. 00:02:15.319 --> 00:02:17.659 Oh, yeah. Or the massing of forces near Iran. 00:02:18.360 --> 00:02:21.050 But last night... He didn't touch the Supreme 00:02:21.050 --> 00:02:23.389 Court. He didn't attack his critics within his 00:02:23.389 --> 00:02:26.069 own party. Which is usually a staple of these 00:02:26.069 --> 00:02:28.090 addresses. Normally we get at least five or ten 00:02:28.090 --> 00:02:30.650 minutes of just airing grievances. Exactly. But 00:02:30.650 --> 00:02:33.250 this was a total pivot. It was what some are 00:02:33.250 --> 00:02:35.949 calling a patriotic projection. Right. He focused 00:02:35.949 --> 00:02:38.870 heavily on the upcoming 250th anniversary of 00:02:38.870 --> 00:02:42.069 1776. The whole theme was that the Golden Age 00:02:42.069 --> 00:02:44.550 is upon us. It was very aspirational. Yeah, it 00:02:44.550 --> 00:02:46.509 felt like he was strictly trying to build a legacy 00:02:46.509 --> 00:02:49.210 argument. But it is really interesting what he 00:02:49.210 --> 00:02:50.979 did. deliberately left out, don't you think? 00:02:51.439 --> 00:02:53.240 I mean, you mentioned Greenland earlier. Complete 00:02:53.240 --> 00:02:55.800 silence on Greenland. It just vanished. Vanished. 00:02:56.060 --> 00:02:58.319 That was the biggest foreign policy noise of 00:02:58.319 --> 00:03:01.879 the entire last month and nothing. Also, there 00:03:01.879 --> 00:03:04.520 was absolutely no mention of housing affordability 00:03:04.520 --> 00:03:06.740 or health care. Which are huge for voters right 00:03:06.740 --> 00:03:10.300 now. Right. And notably, no mention of the Jeffrey 00:03:10.300 --> 00:03:12.300 Epstein scandals that have been consuming so 00:03:12.300 --> 00:03:14.960 much oxygen in Washington lately. Not at all. 00:03:15.139 --> 00:03:17.300 And despite the military buildup we just talked 00:03:17.300 --> 00:03:19.919 about, he offered no specific policy clarity 00:03:19.919 --> 00:03:22.300 on Iran. He really just stuck to that winning 00:03:22.300 --> 00:03:24.099 narrative. Right. He even had that line where 00:03:24.099 --> 00:03:26.240 he said, people are telling him, Mr. President, 00:03:26.639 --> 00:03:28.360 we're winning too much. We can't take it anymore. 00:03:28.520 --> 00:03:32.199 A very classic Trump line. Very. But the restraint 00:03:32.199 --> 00:03:34.180 didn't actually last the entire night. There 00:03:34.180 --> 00:03:37.020 was some unscripted friction. You could really 00:03:37.020 --> 00:03:39.740 feel the tension in the room when he pivoted 00:03:39.740 --> 00:03:42.120 to immigration and the Democrats. Yeah, that 00:03:42.120 --> 00:03:44.400 is where the script seemed to fray. He called 00:03:44.400 --> 00:03:46.800 the Democrats crazy for not standing up for crime 00:03:46.800 --> 00:03:49.840 victims. But the real flashpoint came when the 00:03:49.840 --> 00:03:52.060 room reacted to the recent events in Minneapolis. 00:03:52.560 --> 00:03:55.270 Right, the shooting of Alex Prettie. Yes. For 00:03:55.270 --> 00:03:57.370 a little context for you listening, Priddy was 00:03:57.370 --> 00:03:59.449 a nurse who was killed by federal agents during 00:03:59.449 --> 00:04:03.069 an ICE raid last month. So when Trump started 00:04:03.069 --> 00:04:05.729 talking about aggressively supporting ICE, things 00:04:05.729 --> 00:04:08.009 got very heated. Members of Congress actually 00:04:08.009 --> 00:04:10.289 shouted at him. Right. Representatives Rashida 00:04:10.289 --> 00:04:13.169 Slave and Ilhan Omar shouted back. Omar specifically 00:04:13.169 --> 00:04:16.040 yelled, Alex wasn't a criminal. which is a massive 00:04:16.040 --> 00:04:18.899 breach of usual protocol, but it shows just how 00:04:18.899 --> 00:04:21.779 raw the nerve is right now. And how did he respond? 00:04:22.060 --> 00:04:24.459 He essentially just dismissed the entire party 00:04:24.459 --> 00:04:26.040 right from the podium. He said, these people 00:04:26.040 --> 00:04:29.180 are crazy. Wow. So for all the talk of a golden 00:04:29.180 --> 00:04:31.980 age and unity for the 250th anniversary, the 00:04:31.980 --> 00:04:34.079 deep divisions over immigration and policing 00:04:34.079 --> 00:04:36.720 were right there on the surface. It was a reminder 00:04:36.720 --> 00:04:40.300 that the restraint is largely stylistic. The 00:04:40.300 --> 00:04:42.740 substantive conflict is very much alive. And 00:04:42.740 --> 00:04:45.500 that dynamic set the stage. perfectly for the 00:04:45.500 --> 00:04:48.240 Democratic rebuttal. Because talk about a contrast. 00:04:48.399 --> 00:04:51.040 You have Trump talking about 1776 in glory. And 00:04:51.040 --> 00:04:52.839 then you immediately cut to Virginia Governor 00:04:52.839 --> 00:04:55.639 Abigail Spanberger. Who has really become a rising 00:04:55.639 --> 00:04:58.019 star for the Democrats. And her strategy last 00:04:58.019 --> 00:05:00.480 night was fascinating to watch. Completely different 00:05:00.480 --> 00:05:03.319 tone. Totally. She completely ignored the Golden 00:05:03.319 --> 00:05:05.939 Age rhetoric. She didn't engage with the culture 00:05:05.939 --> 00:05:08.220 war elements at all. She went straight for the 00:05:08.220 --> 00:05:10.899 wallet. Her opening line was just brutal in its 00:05:10.899 --> 00:05:13.819 simplicity. Yes. She asked, is the president 00:05:13.819 --> 00:05:16.019 working to make life more affordable? That was. 00:05:15.949 --> 00:05:18.290 her entire thesis. Right. While Trump was up 00:05:18.290 --> 00:05:20.649 there touting tariffs and stock market highs, 00:05:21.430 --> 00:05:23.709 Spanberger focused entirely on the cost of living. 00:05:24.509 --> 00:05:27.089 She set up the central conflict of the midterms 00:05:27.089 --> 00:05:30.459 right there. Exactly. She is betting that while 00:05:30.459 --> 00:05:33.220 voters might enjoy the idea of a golden age, 00:05:33.379 --> 00:05:35.560 they actually vote based on the price of milk 00:05:35.560 --> 00:05:38.019 and rent. And that brings us perfectly to the 00:05:38.019 --> 00:05:40.740 second part of our deep dive, because while Spanberger 00:05:40.740 --> 00:05:43.319 was asking that affordability question on television, 00:05:43.720 --> 00:05:45.839 voters in Pennsylvania and Maine were actually 00:05:45.839 --> 00:05:48.100 answering it in the voting booth. And the answer 00:05:48.100 --> 00:05:51.259 was a very loud yes for the Democrats. This is 00:05:51.259 --> 00:05:53.620 the blue pulse that political insiders are whispering 00:05:53.620 --> 00:05:56.060 about this morning. Let's break down Pennsylvania 00:05:56.060 --> 00:05:58.759 first. Special elections, they're always a huge 00:05:58.759 --> 00:06:00.899 bellwether. They are massive. And the stakes 00:06:00.899 --> 00:06:03.720 yesterday were incredibly high. Control of the 00:06:03.720 --> 00:06:06.040 Pennsylvania House of Representatives was literally 00:06:06.040 --> 00:06:08.779 on the line. Because the margins are razor thin. 00:06:08.959 --> 00:06:12.579 Razor thin. We are talking a 100 to 98 majority. 00:06:13.319 --> 00:06:16.259 If Republicans had flipped just one seat, the 00:06:16.259 --> 00:06:18.939 entire balance of power shifts. And that affects 00:06:18.939 --> 00:06:21.819 everything in a key swing state. So let's look 00:06:21.819 --> 00:06:24.579 at House District 22. This is in the Lehigh Valley, 00:06:24.800 --> 00:06:27.300 basically Allentown? Correct. This is a bell 00:06:27.300 --> 00:06:31.079 leather district. It is about 62 % Latino, relatively 00:06:31.079 --> 00:06:34.480 low income. It is exactly the kind of demographic 00:06:34.480 --> 00:06:36.879 that analysts say has been shifting toward Trump 00:06:36.879 --> 00:06:39.439 over the last few years. Right. And get this. 00:06:39.800 --> 00:06:42.560 Recently, Democratic voter registration in this 00:06:42.560 --> 00:06:46.819 specific district dropped by 17 points. 17 points. 00:06:47.000 --> 00:06:49.399 That is a collapse. If I saw those numbers as 00:06:49.399 --> 00:06:51.779 a campaign manager, I'd be terrified. It is a 00:06:51.779 --> 00:06:54.569 massive statistic. So on paper, this looked like 00:06:54.569 --> 00:06:57.269 a prime opportunity for a Republican upset. The 00:06:57.269 --> 00:06:59.149 narrative lately has been that working -class 00:06:59.149 --> 00:07:01.029 Latinas are living the Democratic Party. But 00:07:01.029 --> 00:07:03.329 that is not what happened yesterday. Not even 00:07:03.329 --> 00:07:08.209 close. The Democrat, Ana Tabercio, she is a school 00:07:08.209 --> 00:07:10.529 board member. She owns a local business called 00:07:10.529 --> 00:07:14.910 A &M Tax and Services. She won decisively. She 00:07:14.910 --> 00:07:18.389 crushed it. She won over 67 % of the vote against 00:07:18.389 --> 00:07:21.360 the Republican, Robert E. Smith Jr. Wait. Let's 00:07:21.360 --> 00:07:23.459 reconcile that for a second. Registration hangs 00:07:23.459 --> 00:07:26.100 by 17 points, which suggests people are walking 00:07:26.100 --> 00:07:28.639 away from the party label. But the Democratic 00:07:28.639 --> 00:07:31.339 vote share stays huge. What does that actually 00:07:31.339 --> 00:07:33.959 tell us? It tells us that party identification 00:07:33.959 --> 00:07:36.199 might be fading, but when push comes to shove, 00:07:36.500 --> 00:07:38.459 these voters are still pulling the lever for 00:07:38.459 --> 00:07:42.569 Democrats locally. Tabrisio ran hard on affordability 00:07:42.569 --> 00:07:45.550 and education. Those are Spamburger's exact themes. 00:07:45.970 --> 00:07:48.069 Right. So despite the Golden Age talk from the 00:07:48.069 --> 00:07:50.189 top of the ticket, the ground game in Allentown 00:07:50.189 --> 00:07:52.870 held firm. It really suggests the much talked 00:07:52.870 --> 00:07:55.250 about realignment might be more about labels 00:07:55.250 --> 00:07:57.970 than actual voting behavior. That is a crucial 00:07:57.970 --> 00:08:00.629 nuance. Just because someone drops their Democratic 00:08:00.629 --> 00:08:02.529 registration doesn't mean they are suddenly voting 00:08:02.529 --> 00:08:05.230 Republican. Exactly. And it wasn't just Allentown. 00:08:05.329 --> 00:08:07.389 Right. There was another one. Yes. In Allegheny 00:08:07.389 --> 00:08:10.269 County, House District 42. Democrat Jennifer 00:08:10.269 --> 00:08:13.470 Masoko won her race. She is a teacher and a union 00:08:13.470 --> 00:08:16.149 leader. So the Democrats preserved their effective 00:08:16.149 --> 00:08:19.529 majority in the statehouse 100 to 98. So the 00:08:19.529 --> 00:08:23.029 Rust Belt firewall held. But we also saw something 00:08:23.029 --> 00:08:24.930 really interesting in New England. Let's move 00:08:24.930 --> 00:08:27.850 up to Maine. Right. Maine House District 94 up 00:08:27.850 --> 00:08:30.430 in Lewiston. Another special election yesterday. 00:08:30.529 --> 00:08:33.190 Democrat Scott Harriman defeated the Republican 00:08:33.190 --> 00:08:35.750 Janet Bowdoin. Bode wants one who's in the news 00:08:35.750 --> 00:08:37.629 recently regarding the flags, right? That's her. 00:08:37.809 --> 00:08:40.210 She was known for trying to ban pride flags. 00:08:40.730 --> 00:08:43.389 Harriman is a city counselor. But there is another 00:08:43.389 --> 00:08:46.409 very important layer to this Lewiston race. The 00:08:46.409 --> 00:08:50.110 ICE raid. Yes. Lewiston was the site of a recent 00:08:50.110 --> 00:08:53.309 highly publicized ICE raid. They actually called 00:08:53.309 --> 00:08:55.830 the operation Catch of the Day. Catch of the 00:08:55.830 --> 00:08:57.809 Day. That sounds like a restaurant special, not 00:08:57.809 --> 00:08:59.830 a federal law enforcement operation. It really 00:08:59.830 --> 00:09:01.490 does. But that was the official name. And going 00:09:01.490 --> 00:09:03.309 into yesterday, there was a lot of speculation 00:09:03.309 --> 00:09:06.289 that An aggressive enforcement action like that 00:09:06.289 --> 00:09:09.610 might mobilize Republican voters or perhaps suppress 00:09:09.610 --> 00:09:11.850 turnout in certain communities. But Harriman 00:09:11.850 --> 00:09:14.679 won comfortably anyway. He did. Which suggests 00:09:14.679 --> 00:09:18.100 that the heavy culture war approach banning flags 00:09:18.100 --> 00:09:20.620 aggressive border style raids in New England 00:09:20.620 --> 00:09:24.000 might not be playing as well with voters as the 00:09:24.000 --> 00:09:27.440 GOP hopes. So if we synthesize all of this data 00:09:27.440 --> 00:09:29.860 from last night the president is on television 00:09:29.860 --> 00:09:31.679 saying everything is great we are in a golden 00:09:31.679 --> 00:09:35.740 age but the actual voters in Pennsylvania and 00:09:35.740 --> 00:09:38.570 Maine are saying We are voting for the local 00:09:38.570 --> 00:09:40.429 candidates talking about our schools and our 00:09:40.429 --> 00:09:43.169 grocery bills. It is a total split screen reality. 00:09:43.409 --> 00:09:45.529 The red energy was dominating the speech, but 00:09:45.529 --> 00:09:48.690 the blue ground game won the actual night. But 00:09:48.690 --> 00:09:51.169 why is there such a massive disconnect? Why does 00:09:51.169 --> 00:09:54.049 the economy feel like a golden age to the president 00:09:54.049 --> 00:09:56.529 and his supporters, but a daily struggle for 00:09:56.529 --> 00:09:58.490 the voters in Allentown? Well, this is where 00:09:58.490 --> 00:10:00.149 we have to look under the hood. We have to look 00:10:00.149 --> 00:10:02.789 at the actual shape of the economy. Economists 00:10:02.789 --> 00:10:05.409 are increasingly referring to our current situation 00:10:05.409 --> 00:10:09.149 as a K -shaped economy. OK, so visualize the 00:10:09.149 --> 00:10:11.450 letter K. Right. The vertical line on the left 00:10:11.450 --> 00:10:14.149 is the past. That is when everyone's economic 00:10:14.149 --> 00:10:16.110 fortunes were generally moving together. Then 00:10:16.110 --> 00:10:18.389 the arms branch off. The top arm goes sharply 00:10:18.389 --> 00:10:21.470 up. That represents the wealthy. The bottom arm 00:10:21.470 --> 00:10:24.590 angles down. That is everyone else. And the data 00:10:24.590 --> 00:10:27.190 actually supports this visual. Overwhelmingly, 00:10:27.190 --> 00:10:29.470 look at the stock market. The top 20 percent 00:10:29.470 --> 00:10:32.029 of income earners now own nearly 90 percent of 00:10:32.029 --> 00:10:34.629 all corporate equity and mutual funds. 90 percent. 00:10:34.789 --> 00:10:39.009 Yes. And the top 1 percent alone holds a 39 .1 00:10:39.009 --> 00:10:42.399 percent share. They are soaring. So when the 00:10:42.399 --> 00:10:44.840 stock market hits record highs, which the president 00:10:44.840 --> 00:10:47.659 is celebrating as proof of a golden age, that 00:10:47.659 --> 00:10:50.419 financial benefit is almost entirely captured 00:10:50.419 --> 00:10:52.720 by the top arm of the K. Well, the bottom arm 00:10:52.720 --> 00:10:54.080 is dealing with a totally different reality. 00:10:54.279 --> 00:10:56.700 Exactly. The bottom half of households and even 00:10:56.700 --> 00:10:59.120 the middle class are stagnating. Their share 00:10:59.120 --> 00:11:01.379 of wealth is declining. For them, the golden 00:11:01.379 --> 00:11:03.600 age is just inflation. They see the Dow Jones 00:11:03.600 --> 00:11:05.860 go up on the news, but their rent goes up faster. 00:11:06.240 --> 00:11:08.000 But here is where it gets really fascinating. 00:11:08.740 --> 00:11:11.159 It is not just that the top arm has more money. 00:11:11.480 --> 00:11:13.539 It is that they play by a completely different 00:11:13.539 --> 00:11:16.039 set of mathematical rules. Yes, they do. We found 00:11:16.039 --> 00:11:18.519 this incredible case study about how the ultra 00:11:18.519 --> 00:11:20.899 wealthy actually access their wealth without 00:11:20.899 --> 00:11:23.940 triggering any taxes. This is the buy borrow 00:11:23.940 --> 00:11:27.000 die strategy. And a recent disclosure from the 00:11:27.000 --> 00:11:30.259 Epstein files gave us a perfect, concrete example 00:11:30.259 --> 00:11:33.639 of exactly how this mechanism works. Right. This 00:11:33.639 --> 00:11:36.000 involved the billionaire Leon Black. He was the 00:11:36.000 --> 00:11:38.360 CEO of Apollo Global Management. Correct. So 00:11:38.360 --> 00:11:40.220 in the files, it was revealed that Black took 00:11:40.220 --> 00:11:43.220 out a massive loan from Bank of America. We are 00:11:43.220 --> 00:11:48.740 talking a $484 million loan. Nearly half a billion 00:11:48.740 --> 00:11:51.299 dollars. Now, if you or I go to the bank for 00:11:51.299 --> 00:11:53.519 a loan, they want to see our W -2, our credit 00:11:53.519 --> 00:11:56.110 score. to give us an interest rate that is, well, 00:11:56.389 --> 00:11:58.289 not great right now. No, not at all. But Leon 00:11:58.289 --> 00:12:00.590 Blath didn't use a paycheck as collateral. He 00:12:00.590 --> 00:12:03.009 used exotic collateral, he used his art collection, 00:12:03.230 --> 00:12:06.110 blue chip paintings by Picasso, Giacometti, Titian, 00:12:06.250 --> 00:12:08.409 and Matisse. He essentially pawned his Picasso. 00:12:08.549 --> 00:12:11.220 In a sense, yes. But the terms are nothing like 00:12:11.220 --> 00:12:13.700 a pawn shop. This loan was taken out in 2015, 00:12:14.039 --> 00:12:16.100 but the underlying principle is exactly the same 00:12:16.100 --> 00:12:19.360 today. The interest rate on his $484 million 00:12:19.360 --> 00:12:23.840 loan was only 1 .43%. 1 .43%. That is basically 00:12:23.840 --> 00:12:26.460 free money. It is. And here's why this strategy 00:12:26.460 --> 00:12:29.200 is so critical to understand. Why take a loan 00:12:29.200 --> 00:12:31.580 at all? Why not just sell a Picasso if you want 00:12:31.580 --> 00:12:34.000 some cash? Because if you sell the asset, you 00:12:34.000 --> 00:12:37.120 trigger a huge tax bill. Precisely. Let's walk 00:12:37.120 --> 00:12:39.080 through the math. If you sell a piece of art, 00:12:39.220 --> 00:12:41.960 you have to pay capital gains tax. For collectibles, 00:12:42.000 --> 00:12:46.980 that is about 28%. Plus, there is a 3 .8 % net 00:12:46.980 --> 00:12:49.919 investment income tax. So you are already at 00:12:49.919 --> 00:12:54.379 31 .8%. Right. So on a $100 million sale, you 00:12:54.379 --> 00:12:57.799 are losing nearly $32 million straight to the 00:12:57.799 --> 00:13:00.519 government. But if you borrow against that painting 00:13:00.519 --> 00:13:05.009 at 1 .43%, you pay zero tax. Zero. Zero. You 00:13:05.009 --> 00:13:07.929 get the cash entirely tax free. And you can use 00:13:07.929 --> 00:13:10.110 that cash to invest in private equity or hedge 00:13:10.110 --> 00:13:12.450 funds that yield a return way higher than the 00:13:12.450 --> 00:13:14.649 1 .43 % interest you are paying the bank. So 00:13:14.649 --> 00:13:16.789 you keep the painting on your wall. you literally 00:13:16.789 --> 00:13:18.750 still get to look at the Picasso and you get 00:13:18.750 --> 00:13:20.970 half a billion dollars in tax -free cash. Yes. 00:13:21.230 --> 00:13:23.070 But wait, eventually you do have to pay the loan 00:13:23.070 --> 00:13:24.950 back, right? You can't just hold the debt forever. 00:13:25.370 --> 00:13:28.230 And that brings us to the die part of buy borrow 00:13:28.230 --> 00:13:30.830 die. A little morbid, but go on. When an ultra 00:13:30.830 --> 00:13:34.330 wealthy individual passes away, their heirs inherit 00:13:34.330 --> 00:13:38.000 the assets. Under U .S. tax law, those assets 00:13:38.000 --> 00:13:40.919 receive what is called a step -up in basis. Meaning 00:13:40.919 --> 00:13:43.600 what? Meaning the official taxable value of the 00:13:43.600 --> 00:13:46.700 Picasso is reset to whatever it is worth on the 00:13:46.700 --> 00:13:49.360 exact day of death. So all that gain in value 00:13:49.360 --> 00:13:52.419 over the decades? It is wiped out for tax purposes. 00:13:52.809 --> 00:13:55.169 If the heirs sell the painting the very next 00:13:55.169 --> 00:13:58.029 day, they pay zero capital gains tax, the bank 00:13:58.029 --> 00:14:00.429 loan gets paid off from the estate, and the cycle 00:14:00.429 --> 00:14:03.029 just starts all over again for the next generation. 00:14:03.289 --> 00:14:05.149 That is just a completely different economic 00:14:05.149 --> 00:14:07.330 universe. It really is. And it's not just one 00:14:07.330 --> 00:14:10.129 guy doing this. The art finance market is absolutely 00:14:10.129 --> 00:14:12.879 booming. It is estimated to be between 38 and 00:14:12.879 --> 00:14:16.159 45 billion dollars right now, and it is expected 00:14:16.159 --> 00:14:20.500 to top 50 billion by 2028. Wealth advisors literally 00:14:20.500 --> 00:14:22.779 call art the most under -leveraged asset on the 00:14:22.779 --> 00:14:24.879 planet. The most under -leveraged asset, which 00:14:24.879 --> 00:14:26.940 is just a banker's way of saying they haven't 00:14:26.940 --> 00:14:28.500 squeezed enough loans out of these paintings 00:14:28.500 --> 00:14:32.620 yet. Exactly. Now, compare that reality to the 00:14:32.620 --> 00:14:35.139 voter we talked about in Allentown. If you earn 00:14:35.139 --> 00:14:37.720 a high wage through your labor, just working 00:14:37.720 --> 00:14:41.379 a job, you could be paying roughly 45 % in combined 00:14:41.379 --> 00:14:45.039 taxes. Between federal, state, and payroll. Right. 00:14:45.139 --> 00:14:47.779 You cannot borrow against your future labor at 00:14:47.779 --> 00:14:51.320 1%. You have to sell your time, pay the tax immediately, 00:14:51.620 --> 00:14:53.679 and try to live on what is left. That is the 00:14:53.679 --> 00:14:56.340 K -shape right there in action. The top arm is 00:14:56.340 --> 00:14:59.299 borrowing against a tition at 1%. The bottom 00:14:59.299 --> 00:15:02.200 arm is paying income tax and carrying high interest 00:15:02.200 --> 00:15:04.980 on their credit cards. And that completely explains 00:15:04.980 --> 00:15:07.440 the political disconnect we saw last night. When 00:15:07.440 --> 00:15:09.419 the president talks about a golden age, he is 00:15:09.419 --> 00:15:11.539 looking at asset prices. He is looking at the 00:15:11.539 --> 00:15:13.940 value of the portfolios and the collateral. And 00:15:13.940 --> 00:15:16.779 he is right. If you own assets, life is golden 00:15:16.779 --> 00:15:19.220 right now. But when Governor Spanberger asks, 00:15:19.419 --> 00:15:22.000 is life more affordable? She is talking to the 00:15:22.000 --> 00:15:24.340 people who don't have exotic collateral. She 00:15:24.340 --> 00:15:26.539 is talking to the people whose wages are flat. 00:15:26.840 --> 00:15:29.000 And the election results in Pennsylvania and 00:15:29.000 --> 00:15:31.259 Maine heavily suggest that, at least for now, 00:15:31.360 --> 00:15:33.500 the affordability argument is winning over the 00:15:33.500 --> 00:15:36.480 golden age argument at the ballot box. It really 00:15:36.480 --> 00:15:39.639 puts the upcoming 250th anniversary into a strange 00:15:39.639 --> 00:15:42.519 perspective. Yeah. You know, life, liberty and 00:15:42.519 --> 00:15:44.740 the pursuit of tax -free liquidity. That is one 00:15:44.740 --> 00:15:47.419 way to put it, but it does create a serious structural 00:15:47.419 --> 00:15:49.940 problem for the GOP narrative heading into the 00:15:49.940 --> 00:15:52.940 midterms. You simply can't tell someone who is 00:15:52.940 --> 00:15:54.879 drowning in grocery bills that they are living 00:15:54.879 --> 00:15:57.529 in a golden age. just because corporate equities 00:15:57.529 --> 00:16:00.289 are up, the metrics of success have completely 00:16:00.289 --> 00:16:02.509 decoupled. So synthesizing everything we've looked 00:16:02.509 --> 00:16:05.549 at today, we have a split -screen country, you 00:16:05.549 --> 00:16:08.029 have a president projecting success by relying 00:16:08.029 --> 00:16:10.549 on the top of the K shape, and an opposition 00:16:10.549 --> 00:16:13.149 successfully mobilizing the bottom of the K shape 00:16:13.149 --> 00:16:15.629 by focusing entirely on the cost of daily life. 00:16:15.840 --> 00:16:18.419 The State of the Union was the Air War. Big themes, 00:16:18.759 --> 00:16:22.100 patriotic visuals, looking back at 1776. The 00:16:22.100 --> 00:16:24.019 special elections were the ground war, checking 00:16:24.019 --> 00:16:27.179 accounts, local issues, looking ahead to 2026. 00:16:27.659 --> 00:16:29.740 And historically, the ground war usually dictates 00:16:29.740 --> 00:16:32.519 the midterms. If the Democrats keep holding swing 00:16:32.519 --> 00:16:34.419 districts like we saw in Pennsylvania, winning 00:16:34.419 --> 00:16:36.799 over working class voters on economic issues, 00:16:37.340 --> 00:16:39.419 that golden age narrative is going to hit a wall 00:16:39.419 --> 00:16:42.350 of reality in November. The economics of 2026 00:16:42.350 --> 00:16:45.230 are very complicated if you don't have a Matisse 00:16:45.230 --> 00:16:48.269 to leverage. That is the absolute takeaway for 00:16:48.269 --> 00:16:50.610 me. Yeah. The Golden Age depends entirely on 00:16:50.610 --> 00:16:53.029 where you sit on that K curve. If you're on the 00:16:53.029 --> 00:16:56.289 top arm, the view is spectacular. If you're on 00:16:56.289 --> 00:16:58.590 the bottom arm, you are wondering what everyone 00:16:58.590 --> 00:17:00.389 is celebrating. Exactly. And the real danger 00:17:00.389 --> 00:17:02.370 is what happens if those two arms get too far 00:17:02.370 --> 00:17:05.990 apart. Well, that is where we are going to wrap 00:17:05.990 --> 00:17:08.230 it up for today. But we'll leave you with a final 00:17:08.230 --> 00:17:12.019 thought to mull over. As we approach this big 00:17:12.019 --> 00:17:15.059 250th birthday for the country, and the rhetoric 00:17:15.059 --> 00:17:17.519 about this golden age gets louder, ask yourself 00:17:17.519 --> 00:17:20.259 this. If the top arm of the K -shape becomes 00:17:20.259 --> 00:17:23.119 completely untethered from the daily economy, 00:17:23.720 --> 00:17:25.799 if they're essentially operating in a tax -free, 00:17:26.059 --> 00:17:28.400 asset -backed universe of their own, do we even 00:17:28.400 --> 00:17:30.500 share a single currency of political reality 00:17:30.500 --> 00:17:32.920 anymore? Or are we basically two different countries 00:17:32.920 --> 00:17:35.079 just sharing the same birthday cake? That is 00:17:35.079 --> 00:17:37.500 the defining question of the decade. Keep looking 00:17:37.500 --> 00:17:39.730 at the numbers, not just the headlines. Thanks 00:17:39.730 --> 00:17:41.589 for diving in with us today. Thanks for listening.