Paul Krugman Podcast

Lina Khan, who chaired the Federal Trade Commission under Joe Biden, is one of the smartest and most influential thinkers about antitrust in our high-tech era, and one who has blazed new paths in policymaking. I spoke with her at a Graduate Center event back in March, and caught up with her again earlier this week for another enlightening conversation.

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. . .

TRANSCRIPT: Paul Krugman in Conversation with Lina Khan

(recorded 7/14/26)

Paul Krugman: This week, I managed to get to talk to Lina Khan, who was the incredibly influential and smart head of the FTC in the previous administration—with the current administration doing everything it can to undo her work. She played an important role in the Mamdani transition team and has had a lot of smart thoughts about technology and policy right now. And I thought we could talk for a bit about this, well, it’s always a bizarre moment these days, but this is the bizarre moment we’re in. And so, hi.

Lina Khan: Hi, great to be here.

Krugman: I want to get into technology and AI, but I wanted to just start with something that just happened. One of your special causes, which is “Click to Cancel,” which you tried to get as a national policy, just went through in New York City. Can you talk a little bit about what was achieved here and why?

Khan: I’d be happy to. So, last week, the Mamdani administration announced that they are moving forward with two consumer protection initiatives. One was the finalization of a “Click to Cancel” rule, which basically says that businesses have to make it as easy to cancel a subscription as it is to sign up for one.

This rule is responding to the fact that we’ve seen a pretty significant pivot to service-based revenue, and more and more companies are relying on subscriptions as a regular business revenue line. And that has created an opportunity for firms to create a lot of friction when people are trying to unsubscribe. A lot of people can relate to situations where it’s very easy to sign up, or sometimes you’re enrolled without even your full knowledge or consent. But then once you try to cancel, companies can make you jump through all sorts of hoops. Maybe you signed up with one click online, but to cancel you have to phone somebody, except the hours are really restricted or there’s nobody there to pick up the phone. In some instances, you may actually have to go in person.

When we were at the FTC, we got thousands upon thousands of complaints, and people shared how, even during the pandemic when they were looking to cancel their gym membership, some gyms required that they go in person even after they had left the state. So this has been a growing problem, and people lose real money from it. I mean, there are estimates that, in New York City alone, people could be collectively losing over $160 million a year. So this rule, which is going to go into effect in October, is an incredibly important step forward.

The administration also announced that they’re going to be proposing a rule to tackle junk fees. These are the fees that oftentimes show up at the very end of a transaction, even though they were not reflected in the original advertised price. Sometimes they’re called convenience fees, service fees, or amenity fees. And these are non-discretionary; people have no choice but to see them included. Companies will, again, often not advertise them on the front end, which is both deceptive for consumers but also gives them an unfair competitive advantage, because honest businesses that are marketing the all-in price then lose business to those firms that instead do pricing where they market a lower price and then add all the additional fees at the end.

So, I’m really thrilled that the Mamdani administration is moving forward on these two initiatives, especially because we have seen some very serious backsliding at the federal level, where consumer protection initiatives have either been abandoned entirely or powerful companies that have connections to the White House can basically pay their way out of legal accountability. And so it’s incredibly important to see cities and states fill in that gap.

Krugman: I couldn’t actually quite figure this out, but there’s this other initiative from Mamdani: public interest technology. Are you involved with that?

Khan: It is something we considered during the transition and wanted to set up the administration with the option. But, yeah, this is basically... they will be creating a team that is going to be laser-focused on improving service delivery—technological service delivery, digital service delivery—to New Yorkers. And so there are all sorts of online portals that people have to interact with that are not really optimized; really important city websites that are still optimized for desktop, and when people try to use them on their phones, they break down. And so there’s going to be a lean team of technologists designed to go in and make sure that across city services, people are having a good experience and that these things are easy to use and functional for people.

I would say the effort has some analogs to what was done at the federal level with the U.S. Digital Service, which was a team in the White House of technologists back in the Obama era. When I was at the Federal Trade Commission, we similarly brought in a team of technologists, and we’ve seen that, especially as more and more commerce goes online, and more and more government services go online, it’s incredibly important to have technologists on board designed to make sure that these things are easy to use and well-functioning.

Krugman: I’ve seen a couple of areas where essentially governmental functions are initially done by trying to buy off-the-shelf technologies or bring in Microsoft or whatever. And I know of at least a couple of examples where it was a huge improvement just getting their own people because they kind of knew what people actually needed. So, I don’t know if you’re thinking along those lines or where it goes.

Khan: I think you’re right that it does get to this deeper issue of what does it mean for the government to have capabilities and to actually build those capabilities in-house. I think we’ve seen various eras where the government will largely rely on outsourcing, relying on various consulting firms. And there’s a first-order question as to whether the government is really getting a good return on investment there. I think we’ve all seen the news stories about New York City having paid millions of dollars to McKinsey to produce a report saying, effectively, “Put your garbage in garbage cans.”

But beyond that, I think over-reliance on outside consulting firms can also deprive the state of building in-house state capacity, which can be incredibly important for the long term. And so, again, I think the administration, through bringing some of these functions in-house, is also going to be investing in those long-term capabilities within government.

Krugman: Yeah. I’ll give you, just quickly, my own example. There are bigger ones, but everybody doing sort of macroeconomics now is utterly reliant on this thing called FRED, the Federal Reserve Economic Data, from the St. Louis Fed, of all places. And the thing is, they did not outsource. They just asked some of their own people, who actually knew what working economists needed, to produce a website that is really optimized for people like me, and that’s just incredibly helpful. I assume that there are many, many examples where that could be done.

Khan: Yeah. I mean, the other risk that you create if you are entirely dependent on some external actor is that a single business decision can render some of those products useless or severely degrade the capability overnight, or it turns out that there’s a new subscription and so there are all these additional costs. And so, either diversifying those inputs or creating more in-house capability is…

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Transcript

The war with Iran has just reached a very scary phase, and I’m not talking about the bombs and the drones. Hi, Paul Krugman here, doing a brief podcast instead of a full post, because I actually spent the day with friends and doing other things, and this is a quicker alternative.

If you’re following the news, you know that the sort-of ceasefire with Iran has been called off. Trump has reinstated the blockade. The Iranians are back to hitting things with their drones and missiles.

The U.S. position has been wildly erratic. First, Trump said he was going to impose a 20% toll on all shipping, basically turning the Strait of Hormuz into a U.S. toll booth, which would have been wildly illegal and irresponsible, aside from being impossible. Now he says, no, he’s going to demand that countries invest in the United States, which is also actually wildly illegal. But in any case, it’s never going to happen.

And yet, this is extremely scary. The reason to be afraid is not that I think the war is going to come to America. It’s not even that I think the United States is going to seriously try to occupy Iran. We don’t have the troops. We don’t have the missiles. Trump depleted a large share of our weaponry in the course of his failed war so far. So this is likely going to be punitive strikes, maybe some war crimes along the way, but that’s all.

But what is really frightening here is that it does appear as if Trump has given up on trying to extract something that looks like victory. If we go back just a few days ago, it appeared that what was going to happen was that Trump was going to de facto pull out, give upon the project, take advantage of falling oil prices because the strait was sort of kind of open — and try to spin the story about this was truly, this was actually an American victory and the economy is great and look at the stock market.

And, you know, just it was a little bit — more than a little bit —stupid and doomed. It was also kind of amazing because a serious attempt to end the conflict would have required facing up to reality, saying, OK, this war didn’t go well, but America remains great. Sorry about that.

But that was apparently not something Trump emotionally could bring himself to do. He just cannot admit that this venture failed. He can never admit that anything failed. We’re going to be searching for the saboteurs of the reflecting pool for the remainder of his presidency.

This is a change in strategy that is ominous because what is Trump’s plan for the midterm elections? Here the idea presumably was that there would be enough economic success and people would have sufficiently short memories that they would possibly give Trump credit for opening the Strait of Hormuz, but in any case have put the gas price shock and the whole disruption surrounding the war behind them. And be ready to start admitting that this is the golden age that Trump and company keep on claiming it is.

Now that’s all off. Now it’s just we’re going to bomb Iran. No clear strategy there, but we’re not going to even pretend that things are okay. We’re going to blockade them, which actually has a little bit more leverage, but no hint that anything might be resolved in a way that would help Republican chances in the midterms. So what is going to happen?

I don’t think it’s a coincidence that just as Trump essentially gives up, not gives up in the sense of abandoning his war, but gives up on trying to achieve anything he can even spin as a positive outcome, that we now have an announcement that this Thursday he’s going to have a primetime speech, which reports say is going to be about election fraud in 2020. Some reports hinting that he might try to declare the two Democratic senators from Georgia somehow illegitimate.

Okay, that’s not going to actually work. And nobody’s going to be convinced by the claim that he actually won the 2020 election. But what is happening is that effectively he’s setting up the pretext, the groundwork for massive interference in the vote this November. That we’re basically seeing the stage set for some kind of attempt to block fair elections, maybe block elections entirely.

I don’t know how this is going to play out. But we are really now at the point where it’s pretty clear that Trump and the people around him have given up on actually winning the election. They’ve decided instead that somecombination of propaganda, misinformation, disinformation, and possibly massive illegality is their way forward.

And don’t say they wouldn’t do that. That has been famous last words every step of the way. The proposition that there were some things that even Trump and company would not do has been the best way to be wrong about everything, every step of the Trump administration.

So in a peculiar way, the fact that Trump is back to bombing Iran is really bad news, not because of the bombs. Yes, it’s terrible and all that, But not because I have any real fear that America is going to be at risk from a foreign power, but because I think it signals an enormous risk to us from our own president, our own government.

Be afraid, be very afraid.

And take care.

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With everything else going on, the ongoing demolition of financial regulation and supervision, which is raising the risks of financial crisis, isn’t getting much attention. So I spoke with Dennis Kelliher, president of Better Markets, an independent think tank that is trying to sound the alarm.

Full disclosure: my nephew works at Better Markets. But I would have wanted to talk to Kelleher regardless.

. . .

TRANSCRIPT: Paul Krugman in Conversation with Dennis Kelleher

(recorded 7/10/26)

Paul Krugman: Hi everyone. It seems hard to believe now, but the great financial crisis of 2008 and its aftermath are now in the distant past. I think, in fact, in November there will be some voters who weren’t born yet. But for some of us, it was a huge, defining event, and financial markets as a source of economic problems and instability hasn’t gone away. And I thought I would talk with Dennis Kelleher, who is the head of Better Markets, an independent think tank devoted to trying to make financial markets work better for the rest of us. And in the note, I’ll mention I do have a personal connection to Better Markets, but that’s not why I’m interviewing Mr. Kelleher. Dennis is a former Senate aide, and as you know, congressional staffers are one of the great sources of expertise in America. And we want to talk about financial markets, so hi.

Dennis Kelleher: Hi. Thanks for having me, Paul. Good to see you.

Krugman: Good to see you, too. I have a bunch of questions, but we can go wherever this goes. The first thing is, whenever I try to talk about financial market functioning, what comes up is that most financial assets are owned by a relatively small part of the population, even if you take 401(k)s into account. So why isn’t this just a fight among the investor class? Why should everyone care about this?

Kelleher: Well, it’s a great question because there’s such a lack of information about financial markets, the financial system, and frankly, as you well know, the economy. You know, one of the great services that you and many of your colleagues have provided is basically translating what’s happening in the economy and financial markets to the average Main Street American, reader of the New York Times, and consumers of news. And the truth is that the financial markets and obviously the economy impact everybody, and you’re right.

This November during the election, some of the people voting will not have actually had any awareness of the 2008 financial crash, which was the biggest crash in the United States since 1929, which caused the Great Depression. And even though they may not have been born at that time, the people who are voting in November are still living through the repercussions of the 2008 crash. We basically lost an entire generation of Americans, economically speaking, from that crash.

It took ten years for the U-6, the broad unemployment rate, to return to pre-crash levels. It was 2017 before that happened. And indeed, the Fed did an interesting study, which people can quibble with the baseline, but they did a study in 2018 that showed at the end of 2016, 90% of Americans were poorer than they were in 2007 by 17 to 35 percent. So if you think about that, at the end of 2016, the best-off American in that ninety percent bucket was 17% poorer. Now you could say the baseline of 2007 was inflated, but by and large, 90% of Americans have been doing pretty poorly since the crash for a lot of reasons.

And so in November, when those people go to vote, they might not know it but they are actually living through the continuing economic consequences, financial consequences, and actually political consequences. Because the rise of Trump and the dissatisfaction of voters, Americans, and actually voters in the UK and elsewhere—Martin Wolf from the Financial Times wrote a terrific book called The Crisis of Democratic Capitalism. It shows how if countries don’t deliver for the broad population, then democracy erodes and people look for easy answers, authoritarians, and strongmen. And we end up with Brexit, we end up with Trump.

And so you’re right. People don’t remember the crash, but the crash is incredibly important to everybody in America. And the circumstances that we find ourselves in today are unfortunately echoing many of the drivers of that crash.

Now, I didn’t answer your question about the investor class, but when you look at investors, something like 87% of the value of the stock market is owned by the top 10%. On the other hand, there are today $27 trillion worth of assets in 401(k)s and IRAs, retirement accounts. It’s overwhelmingly skewed to the top, but not only. And importantly, one of the great projects that America really needs to undertake is to democratize finance so that financial assets and the ability to grow wealth is more broadly spread out. One of the big crippling problems we have today is that the bottom 50% of Americans, about 165 million Americans, only have 2.5% of the wealth of the country. It’s astonishing, right?

And so a big part of what Better Markets does in economic and financial policy making is to try and rebalance what we see as a rigged economy that’s driven by a rigged and broken financial system. So our economy is producing very well for the top ten percent, and our financial system is structured to deliver those results. Now, part of that is wealth extraction, but a lot of it is just structural drivers put in place by policy makers in Washington that cater to the top ten percent. And that, unfortunately, Paul, as you know, is on a bipartisan basis.

Krugman: We’re gonna get into that in a bit, but let me just ask a question. I’m gonna actually kind of veer off course, although this is something I wanted to get to. Top ten percent. So basically, ownership of stock is, roughly speaking, a top ten percent activity. When you talk about skewed, I mean, I have a sense that it is actually increasingly skewed towards a fraction of a fraction. Do you have anything I should take away about how the system is rigged or skewed within the stock-owning population?

Kelleher: Well, I think the problem is that the higher up you go on the wealth scale, the greater your ability to accumulate even more wealth in a tax-free fashion, right? And then to pass it along to both use it today as if it was cash and income, not be taxed on it, use it, and then hand it off through inheritance without being taxed to heirs for multi-generational wealth concentration at the top. It’s bad for the economy and bad for democracy.

I mean, you’ve talked to Ro Khanna and there’s all sorts of people with different ideas about what to do. We’ve got a wealth tax on the ballot in California. But in terms of the structural drivers, one of the problems we see at Better Markets is that Democrats don’t pay enough attention to the financial structural drivers of the economy. So here’s just a simple example that people are often surprised by.

Community banks in the United States—there’s about a little over four thousand of them. You see them on every corner across America, particularly in “real America,” as opposed to where you and I live, Paul, which is by no means real America. But those banks lend out seventy-five cents on average of every dollar of deposit. The big Wall Street banks, they lend out somewhere less than fifty cents of every dollar of deposit. And that’s because it’s so much more profitable for them catering to the rich, mostly engaging in financial activities, trading, and capital markets activities.

And so ask yourself, why is that? Well, that’s because the rules enacted by the banking regulators and Congress and other regulators allow the profit margins on the financialized trading side to be so much greater than on the lending side. I mean, truthfully, the rules that are created in Washington actually discriminate against lending to the real economy.

And so you have community banks which don’t have cap…

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Transcript

Today i want to give you some encouraging news about the state of the heartland. Well, actually New Jersey, but you got a problem with that?

But I did something kind of different yesterday — which has prevented me from producing a usual analytical Substack post — and it was actually a very uplifting experience.

So hi, I’m Paul Krugman. What i did yesterday was participate in jury selection in Mercer County, New Jersey, where i am still a legal resident.

That is something I’ve done before: back in 2020 I spent 16 weeks on a grand jury. It was done remotely, because it was the depths of Covid.

It was a New Jersey grand jury, which is not high profile cases. It’s actually very ordinary cases in which the police want to bring someone to trial but 23 citizens must agree that they have provided sufficient evidence to bring the case to trial. You don’t have to judge guilt or innocence but you have to judge that there is sufficient evidence to warrant bringing charges.

It was enlightening. I got to see a lot of the negative side of life, obviously, but it was just it was a pretty good experience on the whole.

So I was summoned again this year. I wouldn’t have been able to do it, but I had to participate in the selection in order to explain to the judge, if necessary, why I could not be available during the period of this grand jury — a bunch of already agreed to conferences and talks in Europe.

So it wasn’t going to be something I could do, but I did the right thing and went through the whole procedure of listening to the explanation, being pronounced present, and waiting to see the judge and explain the issue.

Now, as it turned out, I didn’t even have to do that. By the time they had reached the people who had said they could not do it, including me and 77 other people, they already had filled the jury. So it ended up that it was time-consuming, okay, not a terrible thing, but it was a procedure that had to be done. And I did my citizenly duty and was released well into the afternoon.

But what was interesting about it was that those of us who had said we couldn’t do it — 78 people in a Zoom room — had a long wait while the judge did whatever she needed to do with the rest. And after a little while some people unmuted themselves and we started having a conversation. This was by definition kind of a random sample of people — of course people who have felony convictions are not part of this, people are not us citizens are not part of it, and to be fair it’s Mercer County which includes Princeton although it also includes Trenton. Still, it’s on average an affluent, highly educated county so this was not exactly typical America but it wasn’t exactly the elite either: This wasn’t a virtual room full of Princeton professors.

So conversation started. Obviously people are not fools so it wasn’t about politics, it wasn’t about current events, it started with people saying “anybody want to recommend some books that I should read?” and then turned to TV shows and movies and then somehow or other we got involved in a discussion of AI and applications and learning. Because there were several school teachers.

Not everyone spoke up — most people didn’t — but everyone was listening, it seemed fairly attentively. And it was a great conversation! People were reasonable, they were either well informed or were happy to say “I don’t know about this.” There was actually some discussion about “how should I where should I go for news now that everything is so polarized” — nobody talked politics but they did talk about the fact that news is kind of hard to parse these days.

The book recommendations, the TV and movie recommendations to the extent that I know them were pretty good. And the whole tone was, wow, it was civilized. I felt a little bit as if I was in the middle of a Norman Rockwell painting.

By the way, yes, people did recognize me and a couple said you know I read your Substack and I talked a little bit but I made a deliberate effort to step back and not play the celebrity there.

And that was good, because I got to listen to other people who were really level-headed, interesting, pretty well informed about a bunch of stuff. Oh, and just to say that this was New Jersey, so it was a very diverse group of people — a random selection of people from New Jersey, which meant that it was multi-racial and multi-ethnic. The clerk had some trouble with pronouncing everybody’s name, which was okay — I mean everybody was very forgiving of that.

So it was very much America as I see it — a country of lots of people who look very different, who sound different (except a fair number of people did have New Jersey accents.)

And it was just a far more hopeful scene — at least I found it much more hopeful —about the state of the country. It turns out that ordinary Americans — this is, again ordinary Americans from Mercer County, New Jersey, but still — ordinary Americans are a lot nicer, more thoughtful, more willing to hold interesting discussions than you might think.

And it does seem to me, given all the political news, there’s a lot of people out there, I would say primarily on the right, but not only on the right, who fundamentally hold ordinary Americans in contempt, who believe that you have to go with cheap slogans and that you can appeal to the baser instincts of everybody’s nature and that’s the way that you win.

And obviously they do sometimes win. But it’s worth going out there a little bit.

I mean I’m never going to be the kind of person who travels around and has conversations with the person in the street and reports back on what I’ve learned about the real America. But I actually did have, by accident, a pretty good selection of real Americans — because we’re all real Americans — and came out of it feeling just much lighter in mood.

You know, this country is actually okay if we can just get past some of the people who are trying to take us down a dark path. We’re not bad people — we’re mostly good people. And there’s a lot there’s a lot of uplift out here if you’re willing to see it.

For once if I say I’m ending on a happy note, I really am.

Take care.

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Transcript

Yesterday, Donald Trump ordered Scott Bessent, the Secretary of theTreasury, to cut off all trade with Spain. Bessent said “Yes, sir.” Trump also said that this is because the Spaniards had stolen his strawberries.

Okay, I made up that second part, but he did in fact order Bessent to cut off all trade.

This is not going to happen.

Presidents have a lot of discretionary authority on tariffs and trade, more than they should, but you do not have the right as president to impose tariffs on a country just because you don’t like their defense spending or you think that they haven’t been nice enough to you.

So this would not fly even in the Trump administration. Even with a supine congress and a permissive Supreme Court this is not going to happen. Also Spain is part of the European Union. So this is like Europe declaring “we’re cutting off all trade with Florida”: they can’t do that. And also, there’s a lot of U.S. business with Spain. In fact, Spain is one of those countries with which we run a trade surplus. So U.S. business would be howling.

So this is all a non-event, this is is not something that is real. Except that the President of the United States did say this.

It was completely crazy, and that’s the story that we should be taking from this. It’s not really at this point about economics. It doesn’t even make sense to talk about Trump Administration policies, let alone ideology.

What we have is President Sundowner. I mean, this this is completely insane stuff. In any kind of normally functioning political system, in any kind of normally functioning party environment we would have a massive bipartisan call across the aisle, across almost everybody except for a handful of members of congress who are themselves crazy, to say okay this guy is non compos mentis. We cannot leave the fate of the United States or the world in the hands of somebody who is completely irrational, who is making demands and believing himself to have powers that he does not.

And of course, instead, not only does everybody pretend that he’s still a rational human being, but the Republican Party, the Trump administration, is full-on engaged in trying to build a personality cult.

What this says to me is that the problem is a lot bigger than Trump. Something is fundamentally wrong with America, and at this point you don’t have to go through complicated justifications. You can just say something is wrong with a country and a system that lets this guy remain in a position of power.

Have a good day.

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Transcript

Donald Trump has distinguished himself in many ways. One of them is that he is our first pump and dump president.

Hi, Paul Krugman here. A podcast today rather than a full-on piece: I’m a little exhausted from number-crunching over the weekend. So I thought I’d talk briefly about the really extraordinary financial picture that we’re seeing under the current administration.

Obviously no president has enriched himself from office the way that Trump has. That’s common knowledge. One of the things that is really amazing about it, however, is the way in which he enriched himself — a lot of which has to do with crypto.

So the New York Times had a report just the other day on Trumpcoin, the memecoin issued on Trump’s behalf which got a lot of buyers, a lot of money came flowing into it.

It should have been obvious from the beginning that the coin was inherently worthless, and at this point it essentially is worthless. It has lost 97 percent of its value. But a lot of people did buy in at the high prices.

What was special about the New York Times story was two things. First, they put a number on how much money naive investors have lost on the coin, which is 3.8 billion dollars. And even more surprising is the number of people who were in effect suckers here — almost a million.

That’s really amazing. I mean, I was completely cynical but I didn’t think there were that many suckers out there. But it turns out there were really a lot. A few people made money off the coin — basically insiders who got to buy it early and then were able to cash in before the broader retail market realized that this was a worthless token. There’s another token, the World Liberty Financial coin — which has also crashed, although the Times had difficulty in tracking down how many people have lost how much money. There’s the Melania coin.

Okay, all of this is amazing. As Trump would say, it’s like nothing anybody’s ever seen before. I think we should say, however, that this is a bigger story than just the Trump coin, and it’s a bigger story than just Trump himself.

What we’re witnessing is or has been a really enormous pump and dump scheme, I would argue, involving more or less all of crypto.

So if you don’t know the background, Trump used to be highly critical of cryptocurrency, saying it was worthless and a scam, which was true. But then when it became clear that there was money in it for him, he reversed course. And during the 2024 election, crypto interests contributed a lot of money to Trump. They then after the election poured a lot of money into his own enrichment, into his own projects. And the administration came in with a very pro crypto stance: deregulation encouraging uses of crypto, at least talk about a national bitcoin reserve, all of that. And the price of bitcoin doubled after the election; the valuation, the market cap of cryptocurrency in general went from a little over two trillion to more than four trillion.

And then starting last fall it all came crashing down. Not all the way to zero — the price of Bitcoin right now as I record this is about what it was on the eve of the 2024 election; it’s about half what it was at its peak. That’s also true, roughly speaking for the market cap. So we’ve seen about two trillion dollars of market valuation wiped out.

Why is this a pump and dump story? Well what is cryptocurrency good for? As you know, I’ve been on this for a long time. Bitcoin was introduced in 2009 — this is a seventeen year old idea which has yet to find any legitimate use cases. Illegitimate use cases, yes. There was also a report in the Wall Street Journal about the extent to which Iran and North Korea have been making use of cryptocurrency to evade U.S. sanctions, so there is that. But it’s still not enough to justify a multi-trillion dollar asset.

Anyway, it was trendy, it was exciting, it was fashionable and particularly after November 2024 it was pushed with the encouragement of the Trump Administration. It was just a heavy marketing campaign that had the advantage of also having the authority or whatever, the credibility — such as it was but among some people real —of Donald Trump behind it. They all evaporated.

I think we can say that to some extent what happened was that Trump kind of moved on to other things. There also is some distracted boyfriend meme: the guy looking over his shoulder. A lot of the excitable, fear of missing out, latest thing money has probably moved from crypto to AI. So that might have happened even without Trump. But the basic story is that Trump guided, pushed people into a whole asset class, crypto, of which a large part is Bitcoin, but other stuff as well.

We don’t know how much, or I don’t know, how much crypto was bought during this period, but it has to be substantial. And then it crashed. And at this point, essentially anybody who bought crypto during this era, since the 2024 election, has lost money.

It’s a lot of money; we know that on paper — it’s not really paper, but anyway — in principle two trillion dollars has been lost in crypto. Now a lot of that is probably money just given back, imaginary gains that took place during the run-up. But a substantial amount of additional money was from people who did buy in during this whole episode. So this has to be many times the size of the losses on the Trump coin. And it is, I would say, at a functional level another pump and dump scheme.

In this case the beneficiaries were people who were already in crypto. Clearly some of the crypto interests that bought themselves a president probably stayed fully invested. But others must have cashed out, and a lot of innocents — well a lot of a lot of suckers, let’s not mince words here — a lot of suckers clearly lost a lot of money.

It’s an extraordinary thing. There have been pump and dump schemes forever, probably going back to the Phoenicians or something. But this is on a scale we’ve never seen, and with the president of the United States in the center of it. Which I guess given everything else comes as no surprise.

Happy 250th birthday, America.

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Lisa Graves is the author of Without Precedent, a history and analysis of the Roberts Court and the expert on how the Federalist Society has been working to undermine democracy. Yesterday this happened:

So I managed to arrange a conversation with Lisa about what is happening:

. . .

TRANSCRIPT: Paul Krugman in Conversation with Lisa Graves

(recorded 6/29/26)

Paul Krugman: Hi everyone. This is a bit of an emergency recording and podcast because today, which is Monday as we’re recording this, the Supreme Court has just handed down several decisions, of which one was really alarming. And I had talked earlier with Lisa Graves, head of True North Research, and Court Accountability who had been warning about all this stuff when I talked with her previously and on other occasions. And I wanted to get somebody who’s actually following this to weigh in. So, hi Lisa.

Lisa Graves: Paul, thank you so much for inviting me back on. I really appreciate it.

Krugman: Yeah. So, there were obviously several decisions that came down, but Humphrey’s Executor… This is absolutely mind-boggling. So why don’t you talk about Humphrey’s Executor and then we’ll talk about the background and what this says about the Roberts Court?

Graves: Yes. Today’s Slaughter case involving the FTC, is a case where the Roberts Court has overruled nearly a century of legal precedent which prohibited presidents from firing commissioners, specifically on the Federal Trade Commission, the case that you mentioned, Paul. Humphrey’s Executor was specifically about the FTC. It was about this provision that barred FDR, Franklin Delano Roosevelt, from firing someone whom Hoover appointed to that commission. When Congress created the FTC, it set a standard that required that you would have to have cause to fire someone outside of their term.

The way the FTC is set up is that it has five commissioners by statute. Three of those commissioners are appointed by the president, two from the president’s party, and two are not from the president’s party. What’s happened over the past year is since Donald Trump became president again, he fired the Democratic commissioners on that commission. And so for the last 15 months, that commission has had only two commissioners, two Republican appointees, which has meant there hasn’t been a Democrat even in the room to consider these cases that are brought to the FTC, which relate to the power of huge corporations to merge with one another or not. And so, in essence, the FTC investigates proposed mergers and other things that might be considered a restraint on trade or affect the ability of consumers to get a fair price on things, for example. And what Trump has done is that he’s basically dominated that board in defiance of the plain language of the statute.

So any legal action by Donald Trump that has been countenanced by this Supreme Court, which allowed that firing to stand, in essence, did not allow the lower courts to reinstall Rebecca Slaughter to that post while the case was pending, and then just today ruled that, in fact, under their new approach to the Constitution, Donald Trump has the power to fire anyone at any independent agency—other than the Fed, it seems—no matter what Congress has said. And this is the result of an invention of a theory from the Reagan revolutionaries back in the day to try to aggrandize presidential power through what they describe as “the unitary executive theory.”

So the bottom line is that this ruling by the Roberts Court will allow more of the corruption that we’ve seen going on by this administration in terms of people who may be donors to Trump seemingly getting out of investigations or having their mergers go through, and we will not have a commission at the FTC that has any independence—just loyalists for Donald Trump for the foreseeable future.

Krugman: And it applies obviously not just to the FTC but to any agency except not the Federal Reserve. But the FDA—if there’s an FDA official who is viewed as being too hostile to RFK Jr’s vaccine doctrine or something, then Trump can fire him. And the Supreme Court has said, “Well, yes, the president has that power. Congress cannot set any ground rules that can’t be overruled by presidential edict.” Is that a correct interpretation?

Graves: Well, that’s the broad strokes of it, but just to add a little bit of gloss to that, which is that Roberts has been pursuing this agenda for years now. And he accomplished part of it through a case called the Seila Law LLC case, where he allowed Trump to remove the head of the Consumer Financial Protection Bureau. And the CFPB also had restrictions on whether that person could be fired without cause, and Roberts already moved the ball forward on that. And that has had a cascading effect along with the terrible, unprecedented immunity decision, where the Roberts Court gave Donald Trump immunity from criminal prosecution for any of his so-called official acts, which included directing agencies like the Justice Department to do his bidding.

And so, up until now, what was left was this notion that if Congress created a board that specifically had limits on how a person could be removed from that board because of its regulatory function to implement congressional will to act in a legislative way, boards like the Federal Trade Commission or the National Labor Relations Board could not be swept of their members. But before this decision, through the machinations of John Roberts, in essence, Donald J. Trump was already exerting a power to fire anyone within the executive branch, whether they were on an independent board or not.

Krugman: The Consumer Financial Protection Bureau felt like it was a little bit different. It was basically Elizabeth Warren’s creation. It was a relatively new agency. But this now generalizes it to everything, and it goes back to the FTC, which is a very, very old institution and is where this whole Humphrey’s Executor comes from. So now that’s everything.

Graves: Yes, except for the Fed. That is correct. And I think, as you were describing it at the outset, Paul, this has enormous implications for the American people and American consumers, because, in essence, consolidating power in this way in a president is not required by the Constitution. Although Roberts is somehow claiming it is, it’s not. This is part of this invention of this so-called “structural Constitution” under this very rigid notion of separation of powers, which basically guts some of the core powers of Congress and vests those powers, in the views of this court, in the hands of the president and the president alone.

And this ignores the reality of what’s happening, which is that you have a president who’s not actually executing the laws passed by Congress; who’s thwarting those laws. When you look at Article One and Article Two of the Constitution, what you see is that the president’s primary job is “to faithfully execute the laws of the United States.” And what’s happening here is that the president is circumventing those laws, thwarting those laws, and doing so in ways that raise serious questions of corruption or potential corruption or undue influence.

And the area of trade and mergers is one of the most, you know, potentially profitable areas for people trying to curry favor with Donald Trump. And what we’ve seen over the past fifteen months is that the FTC under the control of two Trump loyalists has dismissed more than thirty-three investigations into mergers that were begun before Donald Trump took over.

Krugman: This is basically a Federalist Society thing, and when they began pushing this, they probably had in mind that we would be pursuing an ideological agenda, that this would be something that would allow a right wing president to essentially just overrule Congress when it was doing things that weren’t sufficiently right-wing, or weren’t sufficiently “Reaganesque,” since this goes …

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Note: It’s Lisa Cook, not Lisa Graves. Talking to Lisa Graves shortly.

Earlier today, the Supreme Court declared war on U.S. democracy. It also declared war, basically, on modern society, on everything it takes to function in the 21st century. And I’m not sure that people understand that yet.

Hi, Paul Krugman with a quick video update. I’ll have more on this tomorrow.

Really shocking decisions handed down by the Supreme Court. There were a couple that were not awful. Lisa Cook gets to stay at the Federal Reserve, although that in itself is a huge contradiction to the important stuff that the court did. I mean, Lisa is important and the Fed is important, but much more important is Humphrey’s Executor, which is the generations-long precedent that says that when Congress creates an independent agency, it is independent. It’s able to make decisions.

Of course, the president has some role. Typically, the president can choose the agency’s head subject to congressional approval, but the president can’t just go and fire officials that he doesn’t like for whatever reason or for no reason, because the agencies that operate the U.S. government and basically run our society are supposed to be professional. They’re supposed to be following their legal mandate. They’re not supposed to be personal tools of a dictator in the White House.

Well, the court just scrapped that. Now, lawyers, people who are legal experts, can do a better job of explaining just what went down. But what I think is important to understand is not only does this give essentially dictatorial powers to the occupant of the White House, but it also makes it extremely difficult for the economy to function. It makes it extremely difficult for society to function.

We live in a complicated world, a world of technology, where there are all kinds of spillovers, all kinds of ways in which it’s important that there be well-established ground rules. If you’re a business, take the example of medicines and foodstuffs, where we have an FDA, Federal Drug Administration, that is charged with ensuring that products that people consume are safe. We do that for very good reason. We know that not just that that there have been examples, historically, of products that were foods, medicines that were not at all safe, but also that people want some assurance.

The fact that something has been FDA approved is a bit of a warranty, that it might turn out to be very harmful, but probably not. Businesses that want to invest in developing stuff need to know that there are some ground rules that determine what they can and cannot sell.

Now imagine that all these decisions are made by political appointees who are loyalists to the president, who basically do whatever the president wants, whatever the people around the president want.

Do you want to invest in something where you have absolutely no idea what the ground rules will be, whether it will be approved or not? Do you want to invest in a whole business line when, for all you know, the White House will abruptly decide that your product isn’t safe and that a competitor’s product is, based on spurious grounds?

And what would cause those decisions to happen? Well, how about the fact that some businesses are better at the business of bribing the president and his family than others. And if you think that this is outlandish — you know, a few years ago you might have said this was outlandish, things like that wouldn’t really happen — well, as we speak, these things are happening all the time.

So you are setting up a situation in which, you know, it’s a little bit like traffic laws. Traffic laws, yeah, they can be annoying, but aren’t we all kind of glad that there are in fact rules about when you can turn and when you can go through an intersection? In order to function, in order to drive your car around you need to have a set of stable traffic rules, not a situation in which a police officer can decide you broke the law and the other guy did not because I say what the law is. And especially not where the police officer does that based upon who’s been paying him off or who he expects to be paid off.

The real world is far more complex than traffic rules but we need those rules and we need some stability and those rules cannot be specified with every letter, every punctuation mark set by Congress. The world is too complicated and changes too much. You need to have standing ethos, standing doctrine at the agencies that make modern life possible.

Now all of that is gone.

Now, it just adds to it that all of this is being done to empower a president who is the worst possible person for this job. This is not somebody you want supervising anything, everything that Trump touches turns to crud because he doesn’t care and he doesn’t actually understand or recognize that there’s such a thing as expertise as knowing what you’re doing.

So this would be terrible even if we had a temporarily competent administration. But now you’re doing all of this, the Supreme Court is doing all of this to empower the guy who brought you the Reflecting Pool, who brought you the Iran war. Utter nightmare.

Now, what will happen, hopefully, we emerge at the other end having fended off dictatorship. Then, I mean, as everybody knows, this Supreme Court is not actually empowering the presidency. It is empowering this president. And as soon as there’s a Democrat in the White House, suddenly there will be all kinds of restrictions on what that person can do.

Well, this cannot go on. This is a clear argument that says we have to one way or another disempower the Supreme Court. I don’t know enough to tell you what is the best route to do that but court packing or something else is going to have to happen. Because this has been the clearest signal yet that we have six people (there are three who are not part of it, but we have six people) who are fundamentally hostile to democracy, fundamentally hostile to the modern world and determined to put the catastrophically bad leader that we currently have sitting in the White House in charge of everything, which is a nightmare scenario on every level.

Take care, I guess.

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Transcript

It’s kind of hard to believe, but the original Borat movie was 20 years ago. It’s time for a second sequel. And I already have the title. It would be Corruption for Make Benefit Glorious Family of Trump.

I hope that some of my listeners are young enough to not remember the original Borat movie. But it was a mockumentary, a satire, in which Sacha Baron Cohen pretended to be a journalist from Kazakhstan investigating and interviewing Americans about American mores. It was not about Kazakhstan, although he did insult the country along the way.

The reason I think about it is that today’s New York Times has a piece that reports, investigative reporting, on an immense mining deal in Kazakhstan, which, what do you know, turns out to be a big profit center for the Trump sons and also the sons of Howard Lutnick, the Commerce Secretary.

Check out the investigative reporting for the details, but basically here’s another one, another big one.

It’s part of an immense series of corrupt deals, often with petrostates — which Kazakhstan is — that financially benefit Donald Trump and his family and some of his cronies and cabinet members as well and their families. It’s all on a truly epic scale.

This is a message I have been trying to get across. I don’t think many people even now understand just how much of a departure what’s happening now is from past US history. I still see people saying we might be, could be heading for another Gilded Age. But we have a level of concentration of wealth in the hands of a few people that is something like three times what it was at the peak of the Gilded Age. We’re in a super duper Gilded Age.

And I sometimes hear people say, well, could we be returning to old kinds of corruption? Might we have another Teapot Dome scandal? Well, my God. Teapot Dome was a scandal actually involving mineral rights and bribes during the Harding administration, although not bribes to the president’s family, which is, again, something entirely new. The scale of the bribes was about $500,000: adjusting for inflation, that’s something like $9 million today.

So how much has Trump enriched himself since returning to the White House about 500 days ago? The answer is certainly more than four billion dollars, almost certainly more than four and a half, maybe five billion dollars. Divide that by 500 and we basically have a Teapot Dome sized corruption scandal on an average day under Trump.

So it’s basically day after day of scandals as big or bigger than Teapot Dome. Our corrupt grandfathers, great-grandfathers were pikers compared with this, just as the Gilded Age robber barons were pikers compared with the modern-day tech bros.

This is obviously not good. It’s actually quite horrifying. How did we so quickly descend into becoming a truly massively corrupt country on a level that we used to think of as being associated only with tinpot dictators in the third world? And yet here we are.

This ought to be a political issue and it ought to be a legal issue as soon as the government is back in the hands of people who actually take the rule of law seriously. Again, without going into the details of the deal, it’s surely illegal. I mean, it’s illegal under the Emoluments Clause. Probably since there are definitely Kazakhs on the take as well, it’s illegal under the Foreign Corrupt Practices Act. This is just, it’s illegal up the wazoo.

Of course, it will not be prosecuted as long as Trump is in the White House. But forget any Democrat who isn’t promising to go after this massive corruption when they regain power. If they don’t, then none of this matters, but that should be a core part of anybody’s platform.

I’m not a political expert — sometimes I think nobody is — but my God, again, this corruption is so blatant. And it does resonate with people. It’s really clear that corruption at the top and the sense that ordinary people are paying the price while people with power enrich themselves is an effective popular issue. That is actually the issue that brought Viktor Orban down in Hungary, which is one of the hopeful signs for what may happen to America going down the pike.

So here we are, just to remind you that this scandal, it’s a huge thing. It’s page one in the New York Times, but in a way it’s actually kind of ordinary, since even this size of scandal is happening every few weeks these days.

Do not make the mistake of treating what’s going on as in any sense normal. This is hugely abnormal, and I believe that the American people will understand that it’s abnormal even if pundits get bored of talking about the corruption. So drive it home, maybe for make benefit American people instead of the Trump family.

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Transcript

For most of last year, Elon Musk was the second most powerful man in America. He was running a large part of the government’s budget. And during that time, he established a track record of evil incompetence. I mean, really evil and really incompetent on enormous scales. And why aren’t people talking about it more?

Hi, I’m Paul Krugman, doing a brief follow-on to my discussion that was posted earlier today with Ro Khanna, the Congressman from Silicon Valley, who’s a very interesting guy in many ways.

One of the things that has made him especially interesting in the last few days is that he said something entirely reasonable, which is that if Democrats retake Congress, they should hold investigations into the role of Elon Musk as head of DOGE, the sort of not exactly but effectively government agency, in destroying USAID, the agency that was the principal channel for aid to the most desperate, poorest people in the world.

That’s entirely reasonable, and Khanna went on to say that there are credible estimates that the cancellation, the destruction of Doge has led to millions of unnecessary deaths, including millions of children — which is exactly true. There are studies that say that there is both in the field evidence of widespread death as a result of the cancellation and, of course reasonable health models. Because what do you think happens when you cut away tens of billions of dollars of aid to people who are living right on the edge? So of course it’s a reasonable thing to say.

Musk, of course, responded not by saying, no, it’s not true or something like that. He did say that not a single person has died because of those cuts, which is utterly implausible. But he also went on to say that he was going to sue Khanna, though he hasn’t actually so far, and that Khanna should be in prison for saying — not even saying that Musk killed people, but that there are studies that say that he killed people.

It’s quite evil and so much for free speech. Musk is very much like Trump, somebody who can dish it out but can’t take it, can’t even handle the kind of criticism that any public figure should expect to receive. Honestly, you shouldn’t be at all in the public domain unless you’re prepared to deal with a lot of insults and accusations. When you have the kind of role that Musk did that would come with the package even if he had done a decent or non-catastrophic job.

But of course he didn’t. And so let’s talk first about the evil.

It’s not just that Musk more or less personally set out to destroy this aid agency set out to cut off healthcare, nutritional assistance, just basic necessities of life for millions and millions of extremely desperate people. But he did so callously, carelessly, he even actually tweeted out, oh, “I just fed USAID to the wood chipper and I could have gone to some great parties instead.”

What can you say? This is an extraordinarily evil act. It came in the context of somebody who made enormous promises about what he was going to do. People have kind of forgotten that Musk came into DOGE promising to find trillions of dollars in waste, which he would eliminate, none of which happened. Overall, it’s pretty clear that DOGE actually worsened the budget deficit at least a little bit.

He also made specific claims along the way, most notably his claim that there were something like 20 million dead people receiving Social Security benefits. That was because the 19-year-olds that he put in positions of great influence, the Muskrats, whatever you want to call them, didn’t understand government databases. You know, you get parachuted into an agency with access to the computer system but absolutely no knowledge of what the agency does or how it does it and then couple that with a kind of arrogance — believing that these people must all be stupid and I can just sit down for a day or two with their data and find vast waste and fraud.

Well, nobody in a position of responsibility should believe that kind of thing.

It’s possible that Big Balls and his other hench people actually believed that they knew what they were doing. But my god, if you’re put in charge of a hugely important government function, you don’t assume that everybody there is an idiot and that your neophyte attaches have somehow stumbled on things that nobody else noticed.

And of course, Social Security is so pervasive, such a large part of everybody’s life, that the idea that there could be tens of millions of dead beneficiaries and nobody has noticed it, that’s completely crazy. You even wonder, did Musk really believe that? Does he even have a notion that some things are true and some things are not?

But in any case, there you are. And so it was a total disaster. He left the government not, clearly not because Trump thought that he was too extreme, too bad a guy, but because it was so clear that he did not know what he was doing.

And the reports of alleged savings from DOGE: it was starting to get embarrassing because it was so easy for news organizations to find out that the claims were utterly false, that none of what they claimed was happening was actually happening.

So he left. and then he goes back to his companies and becomes at least temporarily a trillionaire with an enormous public offering. Why didn’t people think that his record with enormous public responsibility was somehow relevant to his financial future?

I mean, if a guy who can convince himself that there are 20 million dead Social Security recipients, who can convince himself that you can massively slash foreign aid and it’s all waste and fraud and nobody will be hurt — why would you trust that person to run a company? And furthermore, the character flaws that are revealed here — flaws is what too weak a word, but anyway — when you have somebody who refuses to acknowledge uncomfortable reality, refuses to acknowledge error, who responds to any perfectly truthful statement that reflects badly on him by saying, I want that guy put in jail. — those are not the character traits that make for an effective manager. If you can’t accept that you are ever wrong, how are you ever going to get things right?

Because things will go wrong, and you will make mistakes. We all do. So all of this seems terribly relevant, and yet it says something, I guess, about America that people piled in to SpaceX stock, although some of that has come off now. It really was clearly an early frenzy, a fear of missing out frenzy.

There are now reports that SpaceX also sold bonds, which itself is a little troubling. Why should they be needing to go into debt right away? What is that about? And those bonds have already lost some of their value, which is much more serious than the stock coming down. When bonds lose value, that’s because people think that there is now a risk that this company might default, might not be able to honor its promises. So seeing those bonds start to trade at a discount almost immediately is a pretty bad sign for the company. But again, why did anybody believe any of this?

Musk is a horrible, terrible person and has the blood of millions of children on his hands. Let’s be clear. Yes, it’s not something that has been proven, but it’s close to. It’s so overwhelmingly likely that it clearly has to be true. And he’s also a weak personality — very much like Trump again — he can’t take criticism, he can’t admit error. So what does it say ultimately about our society that so many people are willing to throw money at this guy and that they’re so willing to forgive the incredible failures that he carried out, the incredible disaster of his time in a position of public responsibility. And I don’t really know the answer to that.

There’s a real question about how it is we got at our current age of irresponsible oligarchs and with so little public backlash. And it’s starting to develop. But still, the fact that Elon Musk is still in business, let alone the world’s richest man, is in…

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