Danielle DiMartino Booth warns of labor market strain
Former Fed insider Danielle DiMartino Booth joins the Gold Exchange Podcast to explain why the economy may be far weaker than headline numbers suggest.
She warns that layoffs are accelerating, young workers are being squeezed out of the labor market, and cracks are quietly forming across private credit and commercial real estate.
Danielle also shares her perspective on Fed independence, the political pressure surrounding Jerome Powell and Kevin Warsh, and why gold continues to signal growing instability beneath the surface.
If today’s economy feels disconnected from everyday reality, this conversation explores why—and what could come next.
Watch the episode now.
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Transcript
Danielle DiMartino Booth
Inflation is not under the control of monetary policymakers, has nothing to do with raising or lowering interest rates, especially given the FOMC minutes that were released that showed that a majority were in favor of hiking interest rates later this year if inflation didn’t tamp down. The pressure is still on the institution.
And in fact, Trump has said that if—if Warsh does not lower interest rates, that he’s going to sue him. So let’s just say that the matter remains unresolved. We continue to see an abundance of layoff announcements. Intuit just announced today that it was going to be laying off another 3,000 before it reports earnings. So the health of the labor market has not improved per se. In fact, this week we found out that teen hiring in the summer of 2026 is expected to be the lowest on record in data back to 1948.
Monetary Metals
Welcome back to the Gold Exchange Podcast. My name is Ben Nadelstein. I am joined by Danielle DiMartino Booth. She’s the CEO and chief strategist at QI Research and always always a pleasure to have on. She’s also a former Federal Reserve insider. She’s the author of the book Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America. Today, we’re going to do another deep dive on what’s happening at the Fed and the broader economy. Danielle, welcome back to the show.
Danielle DiMartino Booth
It is great to be here, Ben. Thank you for having me back today.
Jerome Powell staying on the Fed board
Monetary Metals
So, Danielle, you’ve drawn a very interesting parallel between our friend Marriner Eccles and Jerome Powell, this kind of echo of Eccles, I’d like to call it. Where is this? Where does this legacy stand for Jerome Powell, who is now maybe no longer the Fed chair but still involved in the Federal Reserve?
Danielle DiMartino Booth
Well, you know, we’re in a very big—it remains to be seen until June 17th kind of a mode. Jay Powell was extremely deferential, which is the word I’ve been using, indicating that he was going to allow Kevin Warsh the leeway and the latitude that he requires to establish himself as a leader of the Fed. And was not going to be interfering with that process and was going to go kind of fade back into the shadows of being a governor. He emphasized over and over again the importance of establishing yourself as a leader.
If, however, Powell was to dissent on the very first opportunity out of the gate, then I would have to say that there was some hypocrisy in that statement or in Jerome Powell’s tone, especially given the FOMC minutes that were released that showed that a majority were in favor of hiking interest rates later this year if inflation didn’t tamp down, even though that very inflation is not under the control of monetary policymakers, has nothing to do with raising or lowering interest rates, which Jerome Powell knows. And we continue to see an abundance of layoff announcements. Intuit just announced today that it was going to be laying off another 3,000 before it reports earnings. So the health of the labor market has not improved per se.
In fact, this week we found out that teen hiring in the summer of 2026 is expected to be the lowest on record in data back to 1948.
Monetary Metals
And going back to this position back in the ’40s with Marriner Eccles, he was basically saying, I’m going to stay on this Fed board whether you like it or not, Mr. President, because I want to make sure that the Fed is actually doing what it set out to do. I want to make sure that the Fed is independent and it has this kind of sovereignty away from this kind of more federal overreach.
Are we seeing a potential mimicry here happening where Jerome Powell says, hey, listen, I was ready to leave, I was ready to retire, I was going to go play golf with Janet Yellen and Ben Bernanke. But when I saw what’s going on politically, I think I’m going to stay on the Fed just for a little bit longer because, you know, whether that’s a personal indictment literally or because I think the pressure from the politics is seeping into the Fed. I wanna stay just a little bit longer to make sure that doesn’t happen.
Danielle DiMartino Booth
I think right now it’s a combination of, of both. Remember that we still have the fate of Lisa Cook sitting with the Supreme Court and, and should she prevail, and I think most betting markets suggest that, that she will, and should Jerome Powell choose to remain in his position as governor, there would not be another opportunity until Powell steps down in 2028. For there to be another Trump appointee nominee to the Federal Reserve Board. And that would keep, in theory, very much a balance between those who might have been appointed by Trump and want to express allegiance to him and/or those in favor of making monetary policy to spite him.
I don’t think either necessarily should be, to use your word, reflective of the sovereignty of the Fed. If it’s truly sovereign, they should simply be going, making monetary policy based on the data, and they should have no other influence in how they make that monetary policy. That was why Eccles stayed. President Truman at the time, he had his sights on Treasury playing a much bigger role. In monetary policymaking, which is a no-no. And if some kind of a, I’m going to be working very closely with Scott Bessant type of announcement came from Kevin Warsh, then it might seem even more important to stay around.
Now, Warsh has said he’s not going to be that kind of a Fed chair, that he is going to uphold the independence of the Fed. But again, Jerome Powell could stay around just in case. Even if the fullness, even if he was completely exonerated and had no threat of any kind personally about criminal charges being resurrected against him after he left, he may choose to stay on despite that. You know, after his last press conference, I think there was a meme running around of President Trump kicking Powell into a dumpster.
So it’s clear that the pressure is still on the institution. And in fact, Trump has said that if Warsh does not lower interest rates, that he’s going to sue him. So let’s just say that the matter remains unresolved and the onus stays with Jerome Powell to stick it through to the end of his term that ends in January of 2028. There is a silver lining here, and that is if Warsh succeeds in being independent and if Warsh is able to follow through with many of his plans for monetary policymaking, they happen to align with those of Jerome Powell. Before he was hit with the liquidity crisis.
But that, you know, that’s the big question.
Will Kevin Warsh handle a crisis differently?
Monetary Metals
My question is kind of a Mike Tyson moment happening where someone gets punched in the face, their plans all go awry. And yes, we’re going to maybe get rid of the dot plot and the balance sheet is going to go down. All these great things that you might have heard from a Powell or a Bernanke or even a Yellen.
But when reality hits, when a liquidity crisis hits, when something happens that’s unexpected, that’s not part of the plan, all those plans go out the window. Do you think that Kevin Warsh is really in any way different from these other Fed chairs who have had a plan going in but have had to accommodate going forward? Or do you think he’s going to really have to face market pressure for us to find out that answer?
Danielle DiMartino Booth
You know, it’s interesting that you put Jay Powell in the same bucket as Bernanke and Yellen because Bernanke and Yellen arguably— in fact, Fed transcripts reveal that in 2012 that Jay Powell was vehemently opposed to continuing QE. When Bernanke was at the helm because it had overstayed its welcome. So yes, Bernanke was— it was a true liquidity crisis.
They called it the Great Financial Crisis. Janet Yellen really wasn’t— she did not tighten monetary policy when she should have. And as a result, we were too low for too long. Monetary policy was too loose for too long. And what Jerome Powell stepped into shortly after his term began was another genuine liquidity crisis when the debt markets completely seized up and stopped functioning. And in moments like those, every bit of macroeconomic analysis, the inflation mandate, the employment mandate, all that goes out the window when you’re punched in the mouth.
Monetary Metals
Do you think that having an economist versus a lawyer in that position is going to kind of matter not only for the markets who say, hey, this guy kind of has a Fed speak to him, a lawyerly kind of tone to him versus someone who’s more data dependent, more of an economist? Do you think that matters going forward, that the actual role is filled by someone who has monetary policy kind of as a background rather than a legal policy background?
Danielle DiMartino Booth
Kevin Warsh, you know, you got to start as an investment banker. He speaks the language of the markets. And Jay Powell came from private equity. He also speaks the language of the markets. And obviously he was initially a lawyer. He has his law degree, but he went on to work in the very same world as Kevin Warsh.
So in the sense of backgrounds, you have two similar people. Who have a good understanding of the financial markets and are not pure academic economists, so to speak. But again, we have a very quiet but ever-brewing private credit situation on our hands that seems to have calmed down since the Iran war shifted market players’ focus. But it certainly hasn’t gone away.
Private credit crisis brewing
Monetary Metals
One of the points we’ve heard is that if not for this conflict in Iran, private credit would kind of be the main focus of a lot of these investors. Do you think that in a way, though, we’re asking too much of the Fed? You need to deal with an oil crisis. You need to deal with a private credit crisis.
You need to deal with inflation, with unemployment, with all these kind of large macro factors like you mentioned in the beginning that the Fed might not even really have the tools to deal with. Do you think that Kevin Warsh is going to push back and say, hey, listen, this is not our purview. As much as I’d love to help, this is something that either the Congress needs to deal with or the regulators need to deal with. Or is he going to say, hey, I’m going to try to juggle 6 balls instead of just 3?
Danielle DiMartino Booth
Unfortunately, the law was changed in 1978 and the employment mandate is a real thing. Furthermore, the Fed has always been the lender of last resort in times of crisis. Those 3 balls, at least in terms of the need to juggle, they don’t go away and they will not go away for Kevin Warsh. I do think that, that Warsh can make a difference going forward, though, if he he keeps his focus on if there’s another crisis, we’re not going to go back into mortgage-backed securities purchases because that creates housing bubbles.
So we’re just going to— the dot plot instills more confusion into markets than need be otherwise. All this Fed speak, I mean, he can make a difference in how intrusive the Federal Reserve has become as a leader. He’ll probably get a heck of a lot of pushback, but he can make a difference in some arenas. And if the Fed was to be forced into liquidity crisis simply by not creating Housing Bubble 3.0, would that— would make a difference in and of itself.
Trump vs Fed independence
Monetary Metals
And what are, in your opinion, the biggest kind of institutional constraints for Kevin Walsh? There’s obviously the inflation side, the stock market side, the Treasury market, of course, is very important to politics. But also, you know, there’s just politics by itself, which is maybe President Trump is kind of the biggest institutional thorn in his side. What do you think is the most important thing for Kevin Walsh to be fighting against?
Danielle DiMartino Booth
I think it is unfortunately the latter. I think Warsh is going to have to fight back the politics, but there are ways to do that. If he can galvanize the staff at the Federal Reserve to back a younger leader, somebody who pushes back against this idea of we have to look at backward-looking data at all times to make decisions. Hopefully he’s able to come in and as was the case during the government shutdown, institutionalize the use of more real-time data metrics. In order to make monetary policy more effectively and with much less of a lag. So there are opportunities for him.
And I actually think that because the Fed is failing on its employment mandate, which is not reflected in data with crashing survey response rates that don’t reflect what Americans on the ground are seeing, saying, or feeling, i.e., the teen unemployment rate expecting to be the highest in history back to 1948 this coming summer. He has the ability. Will he be able to harness the staff though? We don’t know.
Because if he walks into a hornet’s nest of resistance, not just on the Federal Reserve Board, not just among the Federal Reserve District Presidents who want to make monetary policy against President Trump, but also by the Fed staff, he’s going to have a a lot of work on his hands to form an intellectual coalition, people who are willing to go along with his wishes to help modernize how monetary policy is made, which I wrote a whole book about.
So obviously I’m passionate about it. So it’s— we’re well past the time of going there. Yeah, his challenge is huge. But again, he accepted this position knowing full well, being on the West Coast, seeing venture capital, being there when Silicon Valley Bank went belly up. He’s had a catbird seat to the brewing unfolding crisis that we’re now seeing in the private credit, private equity markets. So he’s a big boy. He, he knows what he was walking into.
Monetary Metals
What do you think Kevin Warsh should try to learn from Jerome Powell’s tenure, whether that’s from successes that Jerome Powell had or from the mistakes that Jerome Powell potentially made?
Danielle DiMartino Booth
I think he can certainly learn from having the knowledge as to why transitory stayed around for as long as it did. There was massive political backfighting going on at the time. President Biden back then wanted— preferred to appoint Lael Brainard to be the chair of the Fed so that climate change and all manner of inappropriate policies could be added into the Fed’s mandates.
But just his having to fight that internal war without being Fed chair proved to be very, very disadvantageous to Jerome Powell. Worse doesn’t have that. Worse right now has time on his hands, and he should look at that and look back at the experience that Powell had and know that right now, at least for the moment, time is on his side because he was confirmed by the Senate and he does not have to kowtow to the administration.
The zero lower bound debate
Monetary Metals
I want to ask you something about the zero lower bound. In one of our previous interviews, you said, you know, maybe the zero lower bound thing is going to be a thing of the past, right? That we’re not going back to a zero lower bound. Maybe we’ll hit 2% and that’s kind of the new zero. Do you think that’s still true in today’s environment where the zero lower bound is kind of hopefully a fluke or an anomaly in history? Or do you think, no, listen, when crises happen, you know, the zero lower bound is an option that’s on the table?
Danielle DiMartino Booth
I certainly think it will always be an option. But to listen to Kevin Warsh, especially some of the things that he said in the past, that QE is Robin Hood for the rich, one would hope the next crisis presents the opportunity to draw that new line in the sand. And to say, as bad as things are, it’s not good for the banking system to have no curve in the yield curve.
We are going to have a new higher floor. I repeat, we’re not going to do mortgage-backed securities purchases, even if we do have to venture into quantitative easing to alleviate illiquidity in the Treasury market. That was the Bernanke doctrine, not the Wurst doctrine. That was something that Bernanke required was before you can jump onto the next round of quantitative easing, you first have to take the Fed funds rate to the zero bound. So Warsh has a lot of opportunities to right some of the wrongs of his predecessors.
Monetary Metals
In Warsh’s opinion, what are those biggest wrongs? Obviously, the zero lower bound policy, the zero interest rate policy was a big one. Having the Fed be really intrusive into markets, maybe the kind of Fed speak, this dot plot, this constant, hey, we need to be telling the markets what’s going on. What do you think are some of the things that he’s looking and saying, hey, we got to clean this up?
Danielle DiMartino Booth
Oh, you just mentioned most of them. I mean, he quit in protest, in protest because of quantitative easing, the fact that it would not go away. That was a very public moment when he stepped down from the board. He’s got the ability to stick by his principles, which is going to be really, really hard when markets are clamoring for the medicine that they’ve grown used to. I mean, right now everything’s fine and dandy. We— passive investing continues to roll through.
And as far as we can see, we don’t need the zero bound. AI is still a miracle. And we sit around and debate whether we’re going to have rate hikes and not even rate cuts. So for the moment, he’s got a much different backdrop, shall we say, than what Jerome Powell had, because he started in February and Volmageddon blew up on him immediately.
And by the end of 2018, the first year of his tenure, He had a complete and total meltdown in the credit markets. But there’s nothing to say that, that, that same sequence of events couldn’t possibly be right around the corner for Kevin Walsh. We just don’t know. But again, he has the opportunity to handle that DEFCON 1 moment differently as long as he communicates it.
The disconnect between data and markets
Monetary Metals
And let’s talk about kind of some of the differences or the disparities between maybe the public-facing data, what we’re seeing, which is saying Hey, maybe things aren’t so great. And then maybe some of the messaging that’s coming out saying it’s the greatest economy ever. The S&P 500 index is at all-time highs. You know, everything is great. There’s really no problems. Unemployment is low. Where is that disconnect coming from where there’s data saying, hey, maybe there’s trouble brewing on the horizon and then stock markets saying, no, there’s no problems at all. We’re hitting all-time highs.
Danielle DiMartino Booth
That’s true. I mean, it’s a whole world of awesomeness for the top 10%. But the 60-plus percent of individuals, when asked by the University of Michigan, the longest-standing confidence survey in the country, if they foresee unemployment rising in the next 6 months— when you’re at more than 60% for almost 2 years, there’s something wrong. There’s something very, very wrong. And again, this is where the opportunity lies.
He can say, you know, the unemployment rate is never revised. Payrolls are revised. But the unemployment rate is never revised, even though the response rate for the unemployment rate has dropped from 90% to south of 70%. He can say those things out loud and say, therefore, we’re going to add to our analysis different gages of the labor market and just say it and then reference it going forward in a consistent manner.
Monetary Metals
I love talking to you because there’s this kind of soft science and this hard science, right? A lot of people say, oh, well, the unemployment rate is this. But then when you dig into more of the soft science, the subjective parts where you’re saying, well, how are people feeling? What are these surveys coming back and saying? What are my friends and family talking about? It feels like there’s a massive disconnect. So do you think Kevin Warsh is going to be the Fed chair to say, hey, we need to have a more soft science approach to the Fed rather than just a backward-looking kind of robotic machine type Fed?
Danielle DiMartino Booth
Yes, absolutely. I’m completely advocate for that. But there’s also this idea of not ignoring what’s in the hard data. I mean, Fed officials should be talking about the fact that there are more than 7 million unemployed Americans. So why are only 1 in 4 collecting unemployment benefits? What’s up with that? That’s hard data. And the reason only 1 in 4 are collecting unemployment benefits is because when I was born, unemployment benefits covered 66% of what you needed to just to get by. Today, they cover 33%. Of what you need just to get by.
They don’t pay the bills, literally don’t pay the bills. That’s why you see people holding down multiple jobs. That’s why you see the gig economy having exploded. That’s why you see 75-year-old Uber drivers who are not getting by.
And that’s why only 1 in 4 Americans who are reported every month as unemployed, you’re only seeing a quarter of them every week when you get continuing claims reported. So things look really good in the hard data, But sometimes you have to stop and say, okay, so we’ve only got 1.8 million or so continuing jobless claimants, but that’s only a quarter of the unemployed.
And by the way, it’s only 14% of the broader universe of those who would take a job if they could get one. And should we be discussing the labor force participation rate being at some of the lowest levels on record? I mean, this is soft survey data is important. It should never be relegated, but you also have to have an honest discussion about what is in the hard data as well. And there’s plenty that the Fed has that they can fall back on.
They can say, you know what, those revisions produced by the Bureau of Labor Statistics, they show that there were job losses in the second quarter of 2025. Every single month they show that there were job losses on average in the third quarter of 2025. Sounds like a recession. We don’t necessarily have to wait for the National Bureau of Economic Research to declare a recession for us to recognize that if we had an average of 6 months of job losses in the middle of 2025, we don’t even have the fourth quarter of data, revised data in hand. But kind of a monkey could tell you that you were in recession.
But it’s all communication. And because the Fed has been so hamstrung by politics and by Trump’s constant attacking of Powell, They haven’t even been able to have an honest discussion with the public about what’s in the hard data. Setting the soft data aside, we’re ignoring what’s staring us in the face from data out of the Bureau of Labor Statistics. Even if you just start talking about that, it would appear that there was at least one adult in the room.
AI, jobs, and the generational squeeze
Monetary Metals
And I do want to ask about you. You have children who are kind of entering this workforce in kind of a similar age bracket as I am. There’s AI, there’s, you know, unemployment maybe from AI. There’s, of course, really high prices from oil, grocery bills. Rent, housing, all of these like really difficult things for kids who are kind of in our age. And then, of course, you have the boomers who are saying, well, you know, don’t spend $9 on a Starbucks.
Where does this lead politically? Because I think a lot of people my age say, well, whether you like Trump or don’t like Trump or whether you like, you know, Democrats, you don’t like Democrats, I’m feeling pinched. And usually that means we got to change up who’s in power. So what does that mean going forward politically? When the kind of party that says, hey, you know, we’re focused on debt and inflation and getting the price of goods down has kind of failed in a lot of people’s eyes. What does that mean politically going forward?
Danielle DiMartino Booth
So again, I think you have to have an honest discussion about what the hard data are telling you. And when you know that the underemployment rate for recent college graduates— and this is the third class in a row graduating this May that’s going to be stepping into a job market where in many ways AI has chopped off the bottom few rungs of the career ladder.
Don’t talk about the productivity miracle that AI has the potential to be, which it does. There’s absolutely no doubt that it can do all kinds of great work in healthcare, in education, areas that have plagued the United States for generations. There’s so much potential in AI, but don’t call it a productivity miracle when it’s also going to show up at the polls as individuals saying, I’ve got a 4-year degree that I may as well use as toilet paper because I can’t get a job.
And I can’t get a job, therefore I’m taking a lower-paying job. And because I’m taking a lower-paying job than what my 4-year degree theoretically merited 4 years ago, the number of American teenagers expected to get hired in the summer of 2026 is going to fall to the lowest level since 1948.
Hard data. Acknowledge it. Acknowledge the plight of college graduates instead of just saying it’s going to be an AI productivity miracle in the end, dot, dot, dot.
Monetary Metals
And where do you think that goes for investors who think, listen, you know, maybe I have a portfolio, I’m part of this kind of passive boom with the stock market going up. I see my wealth increasing, but this isn’t just about me. I have kids and a family and a legacy. I want something for them. What should they be thinking about, whether it’s advice to their children or portfolio allocation? What should they be thinking? Not just about, hey, today I’m doing great, my 401 looks awesome, but for the future of not only themselves, but their legacy as well.
Danielle DiMartino Booth
So, Ben, I’m going to not answer your question because you actually asked the right question about the right demographic about your last question. And Gen Z, millennials, they make up 52.5% of the voting population. But what if their parents are angry enough to start joining them at the polls? What if their parents say, “Not my children. I co-signed on those student loans. I’m the one saddled with all of this student loan debt and my kid has no opportunities. How am I going to vote? Am I going to join my children in voting the same way?”
Gen X starts to join in this party, we got a much bigger discussion on our hands than portfolio allocation. For kids that don’t make enough money to invest. We have to have these big discussions because when the parents start agreeing with the children, the adult children living in their homes, who, by the way, studied their asses off for 4 years and now they don’t know what all that work went into, then you really start talking about the political winds shifting and not in a good way. I mention it as often as I can that I lived in Venezuela.
Before Chavez rose. And when you have that level of income disparity and when you have such low levels of opportunity to get work, peanut butter starts to hit the fan politically and you end up with bigger change than our founding fathers could have ever foreseen.
Monetary Metals
And, you know, not picking on any specific political leader or group or anything like that, but what are the kind of viable options here? I mean, having an adult conversation right now is in some ways kind of laughable when you look around the room to see who might be having that conversation.
But maybe that is an opportunity for someone like a Kevin Walsh to be like, hey, listen, I’m going to be the adult in the room and say things are bad. We got to do the right thing here and maybe lead or kind of spur a change in the kind of broader political landscape, saying we have to have some tough conversations and things might get worse before they get better, but we are trying to make things better.
Danielle DiMartino Booth
Somebody needs to say exactly what you just said, Ben. They just do. Because let’s say that there’s opportunities for AI to create all kinds of new job opportunities. Well, that discussion needs to happen today. It doesn’t need to happen after Silicon Valley has fired everybody who they overhired and used AI as an excuse to fire them. It doesn’t need to happen after that wave of layoffs has finally come and gone. It needs to happen right now.
And if it’s, you know, we’re going to open up apprentice positions for millions of Americans to become electricians or if they want to start their own electrician company. We still have an epidemic of individuals in the trades who are much too old. And therefore, every time they step over our threshold, they’re like, hey, it’s $185 because I’m standing in your hallway, in your foyer. I’m going to charge you just for walking through the door. There are going to be places, there’s infrastructure.
That needs to be repaired around the country. That can benefit from AI as well. But we need to destigmatize areas of the labor market that continue to be stigmatized. Not everybody who graduates with a 4-year degree is going to be able to use it.
Okay, what next? It sounds like we need a Plan B. Well, let’s come up with a Plan B instead of just being really angry and going to the polls and voting for universal basic income so that somebody can pay you to not work. Which in the end completely fails. Again, I lived in Venezuela. I know what failure looks like.
The K-shaped economy and political fallout
Monetary Metals
It does feel like we have not only a K-shaped economy forming where, you know, people in the top are doing really fine or much better while people in the bottom are really struggling and feeling the pinch, but also an almost K-shaped political economy as well, which is that, well, the people on the top, your options are, hey, business as usual, we’re not really changing things, you know, talk to the hand, talk to the bureaucracy.
Or on the bottom part of the K-shape, we need to just do a full-blown revolution, free everything, free busses, free groceries, free food. What is the path not only to break the K-shaped economy, but also the K-shaped political economy that we’re facing today?
Danielle DiMartino Booth
So, you know, I tell people all the time, and this is not a political statement, but we need a fiscally conservative young JFK. We need for somebody to emerge onto the political scene who speaks for the silent majority that is just, to use the title of my book, fed up with being ignored, with being relegated to the people who don’t want to be a radical on the left or the right.
It is this silent majority who needs a leader who understands that borrowing our way to kingdom come is eventually going to put the dollar at risk and we therefore have to have some adult discussions about we’re going to have to get through this, but we can get through this together kind of a thing. You need a galvanizing, strong, young, fiscally conservative leader to emerge. And wherever he or she is, if I see them in the rough, I’m going to talk them up.
Rapid fire: real estate, rates, and passive investing
Monetary Metals
Well, it won’t be me. I’m very happy with my job at Monetary Metals. But for those who are watching and inspired, please do. And we will, of course, boost that signal. Danielle, I want to take us into a rapid-fire round. I’m going to ask you questions from all over the map because you have just such a strong breadth of knowledge across multiple fields.
I want to ask you, let’s start with the real estate market, which is a lot of people said when interest rates get to 5%, the real estate market, whether it’s commercial real estate or private residential real estate, will have real problems. There’ll be a real crisis. Are we starting to see that crisis today or has that crisis peaked?
Danielle DiMartino Booth
Oh, no, no, no. We haven’t peaked in terms of real estate losses at all.
Distressed office sales last year were at a 10-year high, and we’ve seen a handful of, of headlines over the last few weeks saying those losses are finally being realized. We’re finally getting price discovery in commercial real estate. We’re, we’re finally having enough buyer’s market in residential real estate that the buyers are regaining the upper hand with interest rates as high as they are. It’s going to force home prices down. It’s kind of where we are right now in the process, and it sure as heck isn’t over.
Monetary Metals
All right, next rapid-fire question for you. We’ve talked a lot about the US, the Fed, kind of focused on the US economy, but obviously foreign countries and foreign central banks can be either in a similar pickle or potentially in an even worse scenario with their monetary policy or their economy. So do you think that the US is too focused right now on internally the problems, or could there be problems happening externally that actually end up affecting the US economy?
Danielle DiMartino Booth
Well, ignoring the truth about the state of the US economy is a very risky game to play when so many oil-importing nations’ economies are being eviscerated. So we have a much bigger problem on our hand than just pretending that the American economy is just okay if the rest of the global economy begins to slide into recession because they’re in a different position than we are when it comes to this persistently high price of energy.
Monetary Metals
All right, here’s a tough one for you. If you had to make a prediction going forward for the next few years with Kevin Warsh as the Fed chair, do you think it’s more likely that we see interest rates breaking 6% or that the Fed funds rates goes below that 2% interest rate?
Danielle DiMartino Booth
Well, if we see interest rates break 6%, then we might be forced to the zero bound. Hmm.
Monetary Metals
So maybe both.
Danielle DiMartino Booth
Well, one would certainly precede the other and break things so badly that, again, we’re starting to finally realize losses after the whole post-pandemic era avoiding that just in one sector of the economy, commercial real estate. And we’re definitely seeing realized losses in private credit as well. When that happens, lending standards tighten. And when lending standards tighten in a consumer-driven economy, things really start to break.
Monetary Metals
I want to ask about something that so far has not broken, and that’s passive investing. People say, hey, I’m going to buy and hold the S&P 500, things are awesome, it goes up and to the right, I’m just going to retire on this whole 401 thing, investing is super easy, right? What breaks that passive investing thesis, which is that, hey, you just buy the S&P 500, you fall asleep, and you wake up a millionaire? What’s going to break that passive investing thesis?
Danielle DiMartino Booth
Well, you could have the the confidence bubble in AI leverage continue to crack. It would be a confluence of factors. Private credit would continue to crack. The ability to access leverage would continue to crack. Baby boomers would keep retiring every day, not contributing to 401s every time they retire. New entrants to the job force would have to decrease. Oh wait, that’s already happening. So they’re not opening 401 plans. So it’s a real combination of the credit market conditions demographics, and the magnitude of the bubble in the public markets.
Monetary Metals
Here’s a tough one for you. Why do you think credit spreads have stayed so calm and so tight for so long? You would think in this type of environment with this conversation that we’re having today, credit spreads would be blowing through the roof and yet basically remaining pretty calm and pretty tight. What’s the story for Danielle DiMartino Booth?
Danielle DiMartino Booth
So I think you have to go back to the idea of passive investing because last time we had a great financial crisis, there was no $2 trillion fixed income passive universe. Today we do have that. And that means that when there are redemptions to the biggest high yield bond ETF or the biggest investment grade bond ETF, redemptions equate to the most liquid of the bonds in the portfolio being sold because the most illiquid ones cannot be sold.
So what you see in credit spreads is a reflection of liquidity in the biggest traded names. which is not reflective of prior cycles when you didn’t have this automated mechanism, this automated way to hold fixed income securities that you do now in a passive world. And I cannot believe I’m about to give a prop to Janet Yellen because this is a whole new realm for me.
But as the last financial crisis was approaching, she was saying, we might have a problem here with these high-yield ETFs. If the underlying assets are being requested on a real-time basis, I’m selling my ETF and the underlying security trades by appointment only. Not that she would ever use any language that logical, but that certainly could be tested.
And that’s why when we do see credit spreads move these days, we see them gap up. They get back down, but we see them gap up. It’s the same way when we see the stock market move these days. We’re not seeing small moves. We’re seeing big moves up and big moves down.
Monetary Metals
Mm-hmm. What about some of these indicators that you use, economic indicators, recession indicators? Because some people say, well, look at these indicators and they’re totally fine. Other people say, look, these indicators are totally terrible. So what are some of the indicators that you think are overhyped and people are using incorrectly? And which ones do you think are underhyped or underused when it comes to indicators of the economy?
Danielle DiMartino Booth
I have a very short list. I, I, I watch the MOVE Index, which is the volatility. It’s the sister index to the VIX Index for fixed income for treasuries. Once that crosses a particular threshold, that means it it typically is breaking into the credit markets. I follow backlogs very closely. Right now we actually have a resurgence in demand on the industrial side of the economy.
They’re trying to get in front of the fallout from high oil prices and the potential for further tariffs to be. But if you look at backlogs and employment, they’re not growing, meaning this is a panic buying moment rather than an industrial renaissance. So follow backlogs. Follow employment and backlogs together inside of regional Fed surveys. We follow them very, very closely. And then don’t take the data at face value. You were surprised.
You were visibly surprised when I told you that continuing claimants only represent 25% of what was reported as unemployed every month in the United States. Dig deeper. Don’t take the data that is, is cited by all of the perma bulls, if you will, on a daily basis because they don’t dig deep. If they dug deep, they would see something they don’t want to see.
So they’re only going to stay superficial and cite what’s most visible to the eye. It’s like, oh, the unemployment rate’s 4.3%. Fabulous. Let’s stop having the discussion there because the underemployment rate’s almost double that.
Gold and silver outlook
Monetary Metals
This is why we love having you on. And of course, if you’re not already subscribed to QI Research, you absolutely have to be. Okay, I will be absolutely fired and join the unemployment lines if we don’t discuss gold on the Gold Exchange podcast. So what is your opinion on why gold has kind of not only had this incredible spike in 2025 and 2026, but has kind of waited as the stock markets continue to hit all-time highs?
There’s a crisis in oil. There might be more, you know, Fed crises going forward. Gold is sitting kind of near a $4,500 mark, which is obviously quite high compared to what it was a few years ago. Where do you see the gold story going forward? Is this just a, hey, people are worried about the economy, they’re worried about the monetary policy, they think, hmm, maybe time to add some more gold, or is just something else going on?
Danielle DiMartino Booth
I think that central banks continue to add gold. If we’re talking about a global recession, central banks are going to continue to add gold. They’re going to continue to take gold out of the United States because global recessions at times like this can be highly problematic. And then you look for Again, at times like these, when you’re ignoring the truth that’s staring you in the face, sometimes you end up with a problem on your hand, which of course increases the value of anything that is the safest of safe havens.
Monetary Metals
And do you think that we’re going to see a splintering between the kind of two monetary metals, which would be gold? Hey, it’s got that safe haven status. People hold it. It’s kind of politically neutral. It’s just this asset that’s been around for 5,000 years. And then silver, the other monetary metal where people say, actually it’s kind of like gold, but maybe with an extra kick to it.
But it has this industrial component and the AI component. Do you think over time we’re going to see kind of a larger split between people who want gold as a safe haven asset and those kind of price exposure versus people who are looking at silver as a monetary metal as well as kind of an industrial commodity as well?
Danielle DiMartino Booth
So, I mean, I would appreciate silver if it didn’t trade like it was on steroids. Let’s put it that way. I mean, it is the ultimate retail— it behaves like a retail meme stock. And that certainly gives a lot of people who have to dye their hair roots as often as I do pause.
Monetary Metals
All right, Danielle, as we head out of the gold and silver section, I do want to ask you, what is something that you think most people are not discussing, something that they’re not talking about, something that maybe you’re not asked in an awesome interview like the one today? What’s something that people are basically missing? We’ve talked about private credit, we’ve talked about the Fed, talked about foreign countries and their central banks, gold and silver. What’s a topic you think people are missing right now?
Danielle DiMartino Booth
So I think more people should be talking about the small business bankruptcy cycle as well as the big business bankruptcy cycle. There’s simply not enough discussed there, and it’s problematic, and it’s also ignored despite the fact that it is ongoing.
Monetary Metals
Danielle, we discussed your kids today. What’s advice that you’re giving to your kids or people my age and who are thinking, wow, this is really crazy? I’m listening to these podcasts, the labor market, the Fed, all these kind of incredible things happening. And in some ways it’s incredible because there’s going to be all this future innovation. But also I’m hurting today and I kind of want some guidance. I want to kind of see the light. What does Danielle DiMartino Booth say not only to her own kids, but kind of kids in the same age category?
Danielle DiMartino Booth
I say that when you’re 20, you have all the latitude in the world to reinvent yourself because time is on your side. So don’t think about it, do it. Imagine the other person you could be. Radically act, act radically, because this is the age that you can do it. Ask anybody who’s in middle management America, white-collar worker who’s lost their position and they’re 55 years old, And they don’t feel like they can reinvent themselves. This is the time that you can self-innovate.
Monetary Metals
Well, hopefully we don’t have to have any self-innovations here on the Gold Exchange Podcast. Danielle, final question for you. What’s a question I should be asking all future guests of the Gold Exchange Podcast?
Danielle DiMartino Booth
You should be asking all future guests how AI can create new areas of job creation, not just improve productivity, not just improve current processes, but create new job markets we don’t even know exist today.
Monetary Metals
Well, hopefully they don’t take over the podcasting space anytime soon. For those who want more Danielle, more QI research, where can they go?
Danielle DiMartino Booth
So please come to demartinobooth.substack.com. If you don’t follow me on social media, please do. @DiMartinoBooth. And if you do run money at the institutional level, I’ve got a rockin’ Bloomberg chat room. Love to have you come visit me, QI Research, and become a QI Pro client as well.
Monetary Metals
Danielle, as always, it’s a fascinating conversation. We’ll have to have you back on again soon.
Danielle DiMartino Booth
Look forward to it. Thank you, Ben.