 Welcome everyone to the 28th edition of Bogleheads on Investing. Today our special guest is Roger Loewenstein. Roger is a former Wall Street Journal, heard on the Street columnist, and the author of six best-selling books about the financial industry. Hi everyone, my name is Rick Ferry and I'm the host of Bogleheads on Investing. This podcast, as with all podcasts, are brought to you by the John C. Bogle Center for Financial Literacy, a 501c3 nonprofit organization. Donations can be made at Boglecenter.net. I am pleased to bring you today Roger Loewenstein. Roger was a long-time reporter for the Wall Street Journal. His work also appeared in Bloomberg, Fortune, New York Times, magazines and other publications. But most noteworthy are his six award-winning books about Wall Street. We'll be talking about each one of those books today. So with no further ado, let me introduce Roger Loewenstein. Welcome Roger. Rick, it's a pleasure to be on the show. Well, thank you so much for being our guest on Bogleheads on Investing. I've been a big fan of yours since back in the mid-90s and actually met you one time. I know you're not going to remember, but we were at a charter financial analyst meeting in Detroit. I was reading your Buffett book and I got to sit next to you. I got there really early to make sure I got to sit next to you because I wanted to meet you. I thought that was just a fantastic book. And we'll get to all of your books in a minute. But before we get there, could you tell us a little bit of how you end up being Roger Loewenstein, the author? Sure. I was a journalist in college at Cornell. Got very into journalism then. Always was a big reader and had in mind being a writer would be a cool thing, but no idea of financial journalism or financial writing. I should say when I went to college, which was back in the mid-70s, there was very little interest on campus or anywhere as far as I could tell in Wall Street. There was so much political focus due to the Civil Rights Movement and the Vietnam War and then Watergate. And Wall Street was just something that all guys in gray suits did and didn't pay much attention to. But I got a series of jobs with small papers just because I wanted to break out into something more interesting. I went down to South America and I was working for paper, a terrific paper in Caracas, Venezuela, which unfortunately the current government finally shut down. Down in Venezuela, to supplement my income, I started stringing for the Wall Street Journal. You may have at least heard of them, because Venezuela had a lot of oil production and was interesting to Wall Street and its readers. And I discovered there that I started to notice budget stories and that economic stories could be fun. And through the medium of the journal, I realized that there was real interest and you could get to a lot of facts and also a lot of interesting stories through economic journalism. And after about two years, I was ready to come home and they offered me a job. By the time I got there, this was very end of the 70s, late 79. And the big story then were mergers and acquisitions. It was just CEOs were waking up in the morning, looking at proxy contests and discovering that they didn't run their companies anymore. It was exciting stuff. Then I just got hooked on writing about business and investing in economics. And it sort of took off from there, I guess. And then you went on to write six books so far and understand you're working on another one. I always had this desire to write more long-form, I did some magazine work, but my family, I don't mind saying, had an investment in Berkshire Hathaway. I got interested via that in Warren Buffett and thought he would be a good subject for a book. He wasn't so well-known back then. That was the first book. That's how I got into writing books. And I'm going to get to that Buffett book in a minute. Actually, the first book that I really want to talk about is your latest book, which is America's Bank, The Epic Struggle to Create the Federal Reserve. And this book was a financial history book. And what made you interested in going back and looking at the struggle to create a central bank? Well, two things. And I appreciate you bringing up that one first because it's really a personal favorite. You know, I've written a lot of contemporary histories of basically bad financial news because when the Fed gets involved, usually the Fed is like an empire. You only notice them when something goes wrong. So I was very interested in the role of the Fed and I felt that readers were interested in the role of the Fed. The history of the Fed was just remarkable to me because we had been so late in never having one. I mean, way after European nations, the Russians, the Japanese, everybody in the entire developed world realized that you had a stronger financial system if you had a lender of last resort, somebody to lend when nobody else was lending. But we didn't have one. And the reasons we didn't have one go back to George Washington, but they're really very current. If you look at the American reluctance, say what you will good or bad about Obamacare or any health care plan, every other country around the world has figured out that it makes sense to have a system, not the United States. Having something centralized, it touches a lot of raw nerves in this country. It has ever since 1776, after all that was our history of rebelling against the central government and the story of how the Fed was created, really the story of one banker who came here from overseas, from Europe, and couldn't believe that an otherwise developed advanced, financial advanced country was still living sort of in the 18th century. And so I just thought there was a very good story to tell and a very relevant story today. I didn't realize how late the U.S. was to central banking. I mean, of course, we in this country think that our central bank is big and powerful and so forth, and we probably created the whole concept. But in fact, we didn't. No, we didn't. Our central bank lived on Madison Avenue. It was a guy named J.P. Morgan. I mean, I say that tongue-in-cheek, but not completely, because we would have a periodic market crashes. And the government brought him hat and hand to get up a syndicate and rescue the government. And this was fine in an era when the government was small and the economy was small. And finally, they did some stirring before this that we really needed to modernize the system. We were losing. We want the credor behind all sorts of trade agreements. London had all that business. We didn't have a lender last resort. So there were other reasons. But in 1907, there was a market crash. It came from what we'd call the shadow banking system. It always seems to come from the edges and creep into the heart. At that point, they went to Morgan and Morgan couldn't do it this time. It was too big for one man. There were panics in banks across the New York City and then across the country. And there was increasing realization then that we needed a system, not just, you know, we were too big for big guidey war bucks to save us. There was a commission of congressmen and others who went over to Europe and studied central banks. By the way, it was still such a bogeyman that when the lead senator involved and a few bankers decided to map out how this should happen, they went in secret to an island off the coast of Georgia and wrote the original blueprint for what became the Federal Reserve, telling nobody because if the word got out that people were planning a central bank, it'd be dead in the water. It was hot stuff. That was Jekyll Island. That was Jekyll Island, yes. And now let me ask a question. In your view, and this is your opinion, has the changes that the Federal Reserve Bank been going through under first Ben Bernanke after the financial crisis and now Jerome Powell with buying assets that are traditionally not treasury bonds in order to help monetary policy? I mean, these are big changes. Well, the specifics are different. Our financial system is way more complicated. The sorts of instruments that are out there are more numerous and more complicated so that if you want the Federal Reserve, the central bank to be relevant, it's going to have to act in different ways and through different instruments. But if you look at the history of the debate around the creation of the Federal Reserve, they had these same debates, but there was all this talk then about what sort of debt instruments would the Federal Reserve purchase, which was another way of saying, what will be money? If anything that the Fed would buy would be money and farmers from the Midwest and bankers from the Midwest said they should buy a warehouse for seats. Corn should be money. And you can imagine why the farmers in the Midwest would say that. That didn't make it into the bill. So the fight over or the argument over what financial instruments should be backed by the Fed is age-old. And the basic purpose, all the instrumentalities of change is more complicated. Obviously, far bigger have changed. The idea that the Fed should rush in when there's a real systemic crisis, that hasn't changed. And that's what we saw in 2008 and 2009. And we're seeing again, of course, the economic crisis caused by the pandemic. So in that very basic sense, I think the Fed is still doing the job that Paul Warburg, the founder of before Nelson Aldrich and Carter Glass, some of the other founders, had mine. Great. Thank you for that. Let's go back to the beginning, the first book that you wrote, Buffett, the Making of an American Capitalist. You did such a fine job at this book. Now, I've read all the Buffett books before and after, and I've always come back to this as the best Buffett book in my view. Well, thank you. Tell me, in investigating this book, what did you learn that struck you as being something very different and unique about Warren Buffett? Well, one thing I learned in this date was how tough he is. You know, he's a nice guy. He's a little folksy guy. He's got that, you know, chuckling since the humor. Well, that's true. That's not invented or anything. He's extremely tough. When I say tough, if you ask him for something once, believe me, don't waste time going back and asking him three weeks later. He's enormously efficient, and one of the ways in which he's efficient is he doesn't waste a lot of time rethinking decisions. He's sort of cold-blooded about what makes sense. I remember there was a friend of his in Omaha, and he was putting together an idea for a new company. He was trying to get investment boards, and naturally he went to the richest guy in town. This is a year before the country knew about Buffett, but everybody in Omaha knew he was the big financial wheel. And he said, do you think enough of this idea to invest in it? And Buffett said no. And he said, do you think enough of me to invest in it? And Buffett said no. Just like that. And this gentleman said, this is so refreshing. There's nothing like going to a no instead of a labor explanation and excuse, and maybe I'll think about it. It freed this gentleman from having to wonder and come back and freed Buffett to go on to the next thing. He does that all the time with investments. And this is a real lesson. Some people, if they're presented with an investment idea, maybe their broker says, yeah, they're not going to invest. So they'll just go in a little bit. Buffett doesn't go in a little bit. If he doesn't like something, he moves on. But he's just very good at saying no. He does that with philanthropies too. If it's not his thing, he doesn't give a little bit just because he wants to make the person feel good even if the person is a friend. That's caused some hard feelings at times over the years. But he's very tough. He sort of follows his inner compass and is also very honest in a fundamental way. And I was struck by that. I was also struck by just how terribly quick he is just spending time with him. He's so smart. I went to all the annual meetings that he held while I was in the three or four years in the book. In these days, it was still held in the Jaws and Museum in Omaha that moved out of the hotel down on Dodge Street. But they were up kind of what was then midtown. A few people there in the Q&A, somebody says, Mr. Buffett, how good is your health? I can't afford an event risk. Buffett immediately fits back, neither can I. He really is quick. I know from first hand, his journal is coming around the corner or people trying to raise money. You might as well just hit him straight because if you have some ulterior motive or you're going to warm up to your question or your request, he's going to see it coming around the corner. When I did the book, the first thing I did when I got a contract was I wrote him telling him I was going to do it. There were all these situations I wanted to interview him in, in his office, in his home, when he was on the road, all that kind of stuff. And he just wrote back and said, no, I'm not interested. That was pretty hard. And he said something interesting. He said it'll be better for me. He didn't want to be crowded by me. He said it'll be better for you as well. At first, I thought he was just saying that to let me down easy. As I did it, not having him in the room forced me to come to my own conclusions about Warren Buffett. Plenty of material out there. You read the book. There's no shortage of information about him. This could be my book. Interesting about Buffett. A lot of people perhaps don't know this. At first it was a, call it a hedge fund or a private equity fund. And he... A hedge fund was a private partnership and since it wasn't buying mainly private, they had one whole company, but they weren't buying companies and taking them private. So it was pretty close to the hedge fund model of today. And he made his money by... Instead of taking a big salary of taking money out of the fund, he took his cut. But if I recall, it was like 20% of anything over a certain return. It might have been, it wasn't the return of the market, but it was over a certain return. It was over 6%. Over 6%. And I believe the book, I believe in the quarter of the profits, but over 6%, they took no fee. So it was in a sense a more self-confident framework than the most... Virtually every hedge fund I know set up today because today they take a cut of the profits, but they also take a fee. A percent of the assets. So if they're not making it one way, they're making it another way. Buffett took no fee. So if he didn't beat 6%, which was back then an assumed treasury rate, a risk-free rate. So he wasn't going to earn any money getting you the treasury rate. You could do that on your own. You didn't need him for that. But once he started for the profits he made above 6%, I believe it was a quarter, he took a quarter of it. And that's a generous, that's a big cut. But it only paid. His money really was where his mouth was. He wrote the beautiful, the partnership letters which were proxies of the annual letters that Buffett, Sheryl, does know today, but he just went to the small circle of people who owned his partnership. And he kept saying in these letters, someday I'm going to lose money and we're not going to lose forever. He beat it out every year. He never lost money. And he just didn't have a bad game. It was bizarre how bad he was. But this is how he made his money. He made his money by taking his fee but leaving it in the partnership. And this is how he became wealthy. In the region of his wealth, one of the stocks that they bought in the early 60s was a textile maker of wrought cloths and things like that in New Bedford, Massachusetts called Berkshire Hathaway. And he sort of got into a rocket for the guy who ran it. By then he was sort of, he was the biggest outside shareholder. He didn't like the management, he didn't even want to sell it. And so the partnership was a controlling stake that became the controlling investor. And when he liquidated the partnership at the end of 1968, he just said this is a bad market. I can't find anything. And he returned all the money to the shareholders completely called the top of the market, by the way. But there were two stocks that he owned too much of to sell. And so he just said I'm going to give you your pro-rata share. One was a retail name associated and the other one was Berkshire. And he said you can do what you want by the way I'm holding on to my Berkshire. And anybody with any brains knew that was a good advice for them too. And then he just sort of sat with Berkshire for a few years and, you know, it was a textile company and then he bought a steel mill with it and a small newspaper and then he bought his insurance company with it. And now that the textile company owned an insurance company, it had float to invest and he starts buying common stocks. And the people were following Buffett and he said, I think the guy's going to do it again. Now under corporate framework, I think from the partnership framework of his early years, he wasn't, in fact, doing it again and obviously did do it again. The stock band was $40, $60, $80 or so in those years. So if you'd gotten into it then you'd be clipping a lot of coupons. Buffett, the making of an American capitalist, I mean, you really get into the details of this, how Buffett became what it is today, how Berkshire Hathaway became what it is today. It's really a great book. Let's go to the next four books. And the next four books kind of follow a patent. And I call them crisis books. Crisis books. You had the financial crisis of 1998 that was caused by a hedge fund called Long Term Capital Management. And this is a great book. Any finance student needs to read when genius failed the rise and fall of Long Term Capital Management. It was just a real lesson to me on what goes on inside a hedge fund. Well, I just want to say first that when you mentioned those four books and they were all about a financial crisis at each juncture where I wrote each of them I thought, well, I'm really lucky because I get to write about the one and the biggest financial crisis of our generation that we'll ever see. And then like two and a half, three years later there's a bigger one. So the lesson was, the lesson doesn't get learned. John Kenneth Galbraith said they don't ask military historians what do we do to prevent another Waterloo. People sort of figure well they won't be done enough to invade Russia again. But that's not true in economics. In finance everybody wants to how can we avoid the next financial disaster because they keep happening. I still think Long Term Capital, that's the story of when genius failed story was sort of the model for what happened. Very smart guys because nobody would have been made of people that much money who weren't very smart took a whole lot of risk and you'd have to be smart enough to think you were that good and the little arrogant. They thought that they were hedged. Guess what, hedges, they were great and good times and bad times. I think there's a line in the book that the correlations go to one which means everything starts to go bad at once. Nobody wants to take any sort of risk. And no matter where you had risk it was going bad against them. And so it sort of plays out and you see these people who were truly the best and brightest and richest and watching them probably day after day as the gods of finance turned against them. The leitmotif of the book is another lesson that hasn't been learned and won't be learned. I'm convinced. They were all disciples in two cases. They were Nobel Prize winners for having written some of the textbooks of modern financial theory. The idea that you could program and feed into a computer with big enough brains a history of price movements and know exactly which you were going to come up against in the future. That works until it stops working. History books don't tell us what's going to happen in the future. They don't even tell us what could happen in the future. Lord knows we've seen that now listening to a radio show yesterday about a small business that had all kinds of insurance against floods, against earthquakes. They didn't have insurance against the pandemic, however. They're just things that we can't anticipate. Markets, they just don't always act the way they did in the past. They have to try to model for an event like the Great Depression in the year 2005. We would have said it happens once a century. After 2008, we would have had it up at the twice a century. Now it's three times. To think that somehow the computers are any smarter than the data that's fed into it and the historical data can guarantee you the future is really a fool of comfort. That was really the right motif for the book. What was interesting was who are the investors in long-term capital management? And initially, Mary Weather went out and they got outside investors but after a while and to the benefit of the outside investors they all got kicked out. Yeah, not all. The partners in the fund realized they felt they had too much capital. The reason they felt they had too much capital was over the first few years Markets had moved in their direction. So the type of trade they did there wasn't as much room to go in the future. They tried to make up for this by adding leverage. In other words if you can't make as much money you can still make the same amount of money if you're more leveraged. Which is a really nutty way you have to take what the market gives you and not be greedy. But they decided to leverage up the way you leverage up is to have less capital for each dollar you're investing. So they returned capital to their outside investors much to the joy of these outside investors. I want to spend a moment you mentioned who their investors were Merrill Lynch UBS Switzerland There's this myth that the inside guy the pro knows better. The pro doesn't know better. The average investor out there I mean your uncle there's sister in law, whoever it is knows better because what they're trying to do is they're looking for stocks to understand they're probably buying Apple they're following the Peter Lynch dictum modeling the day traders in a long term they're doing things they understand. Not with the pros who bought LTCM it was a black box they didn't understand it they weren't even allowed to see it they were mesmerized by this image of omnipotence and they got suckered not suckered willfully there was nothing nothing untoward about it but they got duped into taking the same kind of risk that the partners themselves do. Going on to the next crisis book you talk about the origins of the crash the great bubble and it's undoing and here we're talking about the tech boom the internet boom dot com bubble that occurred in the 1990s and then it blew up. A personal favor and I'm glad you brought it up. This is really a book about the character of Wall Street and the role of executive compensation in how companies will run and misrun companies like the late great MCI the late great Enron and so on also the character of speculation but now speculation on a much more mob and pop level because remember those dot com stocks those are stocks that your uncle and sister in law were buying the webvan if you remember that name and you know patch dot com and all those stocks many of them went under and this was a just a bizarre era in which companies weren't even showing profits or the forecast the profits and people couldn't get enough of them that was that era sort of merged into this era the stock profits were so great that conventional companies felt the need to get their stocks up and they began to play with their numbers or change their name to dot com or yeah I mean Enron did that Enron became an energy services company that became a new age company MCI did that Lucent, Xerox, Waste Management all these companies played terrible games with their numbers some of them failed, some didn't but their stocks all plunged and was all about enriching the executive in the short term by juicing the stock no matter the long term and really a come to Jesus moment for Wall Street people don't remember the stock market fell in half which is quite a serious downturn President Bush who was no big regulator said this has got to stop business pages shouldn't look like a scandal sheet I think those were the exact words I recall Wall Street analysts who were highly compensated in many ways by this whole era where crazy chain were the analysts of course were touting the stocks that their investment bankers were selling and you know Mary Meeker was asked about Morgan Stanley what was her justification for a very high price stock and she said bull market well that's not an analysis that's truly and that was she was anything but alone and then privately there were some emails where these analysts between each other would say I wouldn't touch this with a 10 foot pole and they put a buy on it because they were looking for investment banking business that's right I mean it was interest rates once again were very low and people were willing to take more risk because of that and they thought they discovered Galkanda especially using about the 1920s the new era this wonderland where companies could sell stock forever without any profits which you think about was really just on the scheme because the only source of paying off the first round of investments would be investments from the next round of investors as soon as they got out profits or your company's not going to survive it was the new paradigm the next one is I'm actually going to skip a book here and I'll get back to it because I want it to be my last book so I'm skipping one and going to your fourth crisis book and that was the end of Wall Street and here now we're talking about the mortgage crisis and what created it you know that course broke in 2008 the origins of it were people like Mozilla at Countrywide and Washington Mutual out in Seattle who were seeding the entire country with mortgages for 95% of the equity, 98% of the equity 100% of the equity you know just because it's not alone when you give someone 100% of the equity it's a gift then they were giving 100% loans at steeply increasing prices so you had millions of homeowners who had zero equity in their homes and who owed an amount of money that couldn't withstand even a middle school appreciation and price this was being blessed by the credit rating agencies it was being blessed by the Wall Street banks selling mortgage securities but it really was a larger version and probably the more serious version of this series we talked about when Genius failed of the LTCM it was just giant risk taking on a much more serious scale because this time the people affected were a sizable percentage of the homeowners of America and home there's something if Wall Street fat cats want to go out and play with their assets even their firms that's one thing but when you stabilize Americans' homes which are for most Americans are the great bulk of the equity they have you really get a serious problem and you remember that we went into this terrible, terrible recession unprecedented since the Great Depression when the mortgages collapsed and nobody was prepared for not the Treasury, Bernanke the Fed said that the subprime mortgages won't be a blip not only did he say it wouldn't affect the entire economy but the entire mortgage industry it would just be a minus rise in subprime default all these experts were dead wrong in fact they were playing a different version of a daisy chain game because any time someone needed refinancing someone mortgages up they just refinanced that game of papering over bad loans or more loans can only go on for so long and eventually in 2006 prices began to peak and once prices peak the game was over because the whole thing was presaged on ever rising housing prices and that was a scary time it was thrilling to write about but it was really a frightening time and I remember that Sunday night when Lieben went down well the sun was going to rise at least in the financial sense on Sunday morning one of the scariest comments made during that period of time was when Alan Greenspan said in retrospect we really didn't understand how the financial system worked or something to that effect what he said was and this comes up in one of the early books he talked about origins to crash when the lack of regulation of financial instruments was a big issue and Greenspan's you look I'm a free marketer but I believe in the highway you have to have speed limits in financial markets Greenspan said that basically any deal that private bankers make with each other since each banker is acting in their own self-interest has got to be rational and basically doesn't need to be regulated which was said in such complete ignorance of what history showed if there hadn't been a banking crisis in the past it would also overlook a fact of how banks are run if you're on the mortgage desk at Lehman and you package a lot of securities you get paid for it if they all go bust two years later you don't have to give the money back in fact you probably move on to Bear Stearns and Merrill Lynch by then it's somebody else's problem so the people making those deals didn't in many cases even have an incentive to make bad deals they had every incentive to make every deal they could, good or bad and Greenspan the comment you're referring to was he can't remember the exact word just in the book but we who had faith in the markets to operate he fasted up it was a little scary to me to hear him say something like that he was naive maybe willfully might naive but by the time he fasted up yes, that's correct he had been a disciple of Iron Rand and ultra free marketers and Bernanke at that moment and this figures in the end of Wall Street fortunately for us although he hadn't seen it coming he didn't know what to do because he started the Great Depression and he knew that you had to be that lender last resort America's Bank to Federal Reserve and he turned the Fed into the greatest rescue operation in its hundred years I find it interesting how Treasury stepped up during this crisis first with Timothy Geithner and then Hank Paulson to work with the Fed to kind of save the day in many ways Hank Paulson of course was Bush's Secretary of Treasury I gave him a couple of times to the book he and Bernanke made a very interesting team because Bernanke was Republican and Paulson was really a rib rock Republican neither he nor Bush came into office with any thought of socializing the banking system and yet when they proposed the tarp in a partial sense that's exactly what they did they had the Congress purchase equity shares the federal government in the J.P. Morgan Bank of America right on down the list of all the biggest banks and virtually all the banks some small share to stabilize the banking system in the case of the banks that were teetering to save the banks that was I think kind of heroic on the part of Bernanke and Paulson and frankly W who had no notion of wanting to do that kind of stuff but when they came to him and said you got to do it he did was not so eager when the tarp was crafted and came to a vote the house voted down and the market fell 700 points that day Representative Kyle later said he said my constituents were divided half of them said no and the other half said hell no but they thought that the Wall Street crisis would just sort of affect Wall Street the main street would just sally on unaffected and when the market then started to crash today the house was called back and the hurry approved the tarp very interesting point in history let me circle back to the third crisis book which is now in my opinion still on the table and that is while America aged how pension debts ruined General Motors stop the New York City subways bankrupt San Diego and looms as the next financial crisis to me this is still on the table yeah thank you yeah that was a different in this sense to the others the pension crisis is a slow burning crisis you know these other ones all had you know big crescendo like moments LTCM when it when it took a bail out from the banks on Wall Street the mortgage crash when Lehman went under and so on this one was published in 2008 I started working on it in 2006 and we're still talking about its current in the end of the year 2020 and the reason that's so is because the pension system isn't one system it's particularly the public pension system is thousands of individual systems teacher systems state systems municipal worker systems across the country they've each hit against hard times at different times and since that book has come out Puerto Rico stock in California Detroit small and large cities across the country have failed some of them literally in bankruptcy and some of them effectively like Puerto Rico, Chicago now there's no way to seeing how they get out of their pension the same thing with New Jersey and that's as much a political book as as a financial book because there's nothing wrong with the pension system in theory collective insurance is a very good idea if a group of people insure themselves the odds are it's going to be a sounder system if one person saves for their own retirement the problem is that when you get political actors approving benefits and these are benefits that stretch out 20 and 30 years in the future that political actor has an interest of course in awarding generous benefits because by the time the benefits come to they'll have retired certainly we don't do another job and in most cases retired and so there's just a natural moral hazard and they keep voting these benefits in and not approving adequate funding and the book was not an attack on pension funding or benefits it was just a cry please fund whatever level you decide and that's a negotiated question between unions and the government whatever level you decide you got to fund it approve benefits without funding and I'm afraid as with the others that's a lesson that we're still learning the hard way and given what the pandemic has done to municipal finance there's going to be a lot more to come and one of the big problems that I see as a financial advisor is that these areas of the country that you mentioned that have big pension holes they're losing business I mean people are leaving because they keep having to increase their state income tax and now you see an exodus of wealthy individuals of retirees of businesses from those areas of the country that have these huge pension liabilities to other parts of the country where there's the it's not as high or an onerous of a tax rate on either the corporation or the individuals and that makes it even harder for the people who stay back Sooner or later tax payers also will vote with their feet in a sense and this may sound securities but we learned a lesson the teacher's unions the sanitation workers' unions and so on and so on in jurisdiction after jurisdiction they represent a narrow interest those interests aren't society's society has a much greater interest these states have to be run compensation has to be meted out including pensions with that larger interest in mind not just with satisfying the narrow parochial interests of public sector users Roger I just want to get your parting views of how do you think America sits today in the world you know I think we've been through a very rough time but I think we're starting to see silver linings you know there were people saying and I really didn't believe this because I think it's never as dark as it looks at the darkest hour but you know Wall Street would never come back and the economy would never come back and we've now lived through the pandemic for six seven months the economies lived through it for six seven months the pandemic still with us but how the rates are dropping from it the economy has been I think you have to say remarkably resilient you know in the face of everything it's been through I think the I'm hopeful that the spirit of the country is becoming less rancorous and maybe a little more united look 2020 was a tough year but you know if I had to bet 2021-2022 and so on things will start to look better we've been through periods like the Great Depression and we'll get to this one you're working on another book and I know that you can't disclose what it's about but I just sort of made a list of three big areas where if I was to make a guess to what it might be about it might be about trade and trade conflicts could be about Medicare COVID and the last it could be about small business and how small business is changing I know you can't tell people what the book is about well I'll just say it's historical but it has great resonance today and I'll be out in a year and love to talk to you about it in depth when it comes in fair enough thank you so much for being our guest on Bogleheads on Investing we really appreciate the time today Rick it was really a pleasure to talk with you this concludes episode 28 of Bogleheads on Investing I'm your host Rick Ferry join us each month to hear a new special guest in the meantime visit Bogleheads.org and the Bogleheads Wiki participate in the forum and help others find the forum thanks for listening