Konami's president says generative AI won't bring a significant change to game development, because the barriers to entry are already low and the most important factor is still people and creators. In Episode 050, Luke Tatum and Nicky P take that as a starting point to talk about why indie games keep winning, why big studios overexpanded and then cut, what AI really changes for small creators, and what record-low pending home sales say about who's really in control.
“You can make something that kind of looks like a game with this.”
This one goes way into my personal interest zone, so thanks to Nicky for humoring me. Konami's president, Hideki Hayakawa, said something I agree with: AI may make production more efficient, but people and creators are still what make games worth playing. The economics behind that apply well beyond video games.
What We Covered
What Konami's president said. Hayakawa said generative AI won't bring a significant change to the market, because game engines and user-generated content already lowered the barriers to entry. The chemistry of human creativity isn't easy to replace.
Indie games are already winning. Nicky's view is that we're already there. Small teams are doing incredibly well on Steam while expensive studio productions flop. Five Nights at Freddy's started as a small indie game and now has two movies.
Will AI take all the jobs? Nicky's answer is that economies exist to solve problems. When old jobs go away, people solve the next problem, and he expects more of us to become creators making niche work for audiences like ourselves.
“Creativity always wins.”
What happened to recording music. Nicky remembers going from paying for a studio in high school to recording better tracks in his dorm room in college. When the barrier to entry dropped, independent musicians got more nimble, not less.
Steam and AI disclosures. Steam requires developers to disclose AI use, and players can filter for it. In my experience, games that lean on generative AI get a very negative reaction from players.
The pandemic hiring spree. In 2020, Xbox and PlayStation bought studios and expanded payrolls as if lockdown demand would last forever. Then came the layoffs and closures. Nintendo, which avoids long-term financing and didn't overextend, came through it in far better shape.
“Nintendo has an incredibly high retention rate because they didn’t do anything unsustainable during that time.”
Game engines and Steam's $100 fee. Making a game isn't the hard part anymore. Free engines like Godot exist, and Steam charges a $100 fee to list a game. The hard part is getting a finished enough product in front of people, and AI can help small teams test whether an idea is fun before they spend months on it.
Pending home sales hit a record low. NAR's pending home sales index for September 2026 was the lowest since the index started in 2001. Nicky's point is that big players don't control everything. When nobody's buying, prices eventually come back to something reasonable.
Good news for creators. Free and open source tools keep getting better. I take my notes in Obsidian, which is just markdown files. Thinking outside the mainstream is what we do with money at Perfect Spiral Capital too.
Key Takeaway
Lower barriers to entry tend to favor small, nimble people, not the giants. The companies that overextended in good times are the ones cutting now. The same lesson applies to your own finances: avoid building a cost structure you can't sustain, and keep capital you control so you can act when things change.
Key Moments
[1:00] What Konami's President Said
[2:00] Microsoft's AI Quake Demo
[4:00] Indie Games Are Already Winning
[7:00] What Happened to Recording Music
[9:00] Steam and AI Disclosures
[13:00] The Pandemic Hiring Spree
[14:00] Concord and Studio Closures
[16:00] Why Nintendo Didn't Overextend
[21:00] Game Engines and Steam's $100 Fee
[23:00] Pending Home Sales Hit a Record Low
“When you’re smaller, you’re more nimble.”
Related Episodes
Episode 013: Is AI a Bubble? OpenAI's $7.8 Billion Loss and the Circular Financing Behind the Boom
Episode 039: SpaceX's IPO Created 4,000 Millionaires: What Valve and Microsoft Can Teach You About What Comes Next
Episode 016: How Do You Plan When Much of the Market Has No Track Record? Big Tech, Bitcoin and Gold
Want the full conversation, including what the pandemic did to the big console makers? Listen to the full episode and grab the free toolkit at PerfectSpiralCapital.com/podcast.
FAQ
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Hideki Hayakawa said he believes generative AI won't bring a significant change to the market, because game engines and user-generated content already lowered the barriers to entry. He said people and creators remain the most important factor.
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Luke Tatum doesn't think so. In Episode 050, he argues AI can help small teams try ideas faster, but making a game people want to pay for still takes human creativity. Nicky P expects it to hurt big studios more than independent creators.
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During the pandemic, Xbox and PlayStation bought studios and expanded payrolls as if lockdown demand would last. When people left their homes again, those higher costs led to layoffs and closures. Nintendo didn't overextend and avoided the worst of it.
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Steam charges a $100 fee for each game you list, and Valve takes a cut of sales. Luke Tatum calls it a pretty low barrier for small developers.
Show full transcript
Between The Lies: Episode 050 Transcript
Nicky P: So Luke and I had a great potpourri episode planned for when Rob showed up. It's gonna be late. But then we got the bad news, no Rob today at all. So we decided to go way out into our personal interest zones and talk about the future of entertainment, and by extension, the future of video games. Welcome to the Between The Lies Podcast, your weekly lesson on how to approach an uncertain world with positivity and balance.
I'm Nicky P, here with my good friend and money brain, Luke Tatum, from Perfect Spiral Capital, as he helps us navigate the snares and pitfalls in a world of trust me bro economics. Stick around to the end of the video for your free toolkit, and be sure to like and subscribe if you enjoy what we do. Luke, let's tell everyone how they are completely wrong about AI and what it means for independent creators.
AI and Independent Creators [1:00]
Luke Tatum: Yeah. Gosh, this'll be a fun one, you know, so I appreciate you humoring me and getting into the weeds on some other stuff. Those of you who didn't immediately click off the video because you have no interest in video games, welcome. Y- you're in good company here. I wanted to-
Nicky P: It's funny, Luke, I'm actually only thinking I have so much economic thought on this particular area that it might even be the driest episode we've ever done
What Konami's President Said [1:00]
Luke Tatum: Yeah, yeah. No, I'll make it fun by force if necessary. So I wanted to start with a very recent quote from the president of Konami. Konami, makers of many video games. But Hideki Hayakawa, he was talking in an interview about AI, generative AI, and all that in game development. Because Western developers, you know, they're always running victory laps.
"Oh my gosh, we're not even gonna need game developers anymore. We can just tell AI what we want." And we did an episode on this on my gaming podcast and everything, so. But Hayakawa, he said he believes that this will not bring a significant change to the market environment. One reason for this is that, quote, "Entry barriers have already been lowered by the advancements of generic game engines and the spread of user-generated content.
Even if AI use does lead to improvements in production efficiency, I believe that the most important factors in producing entertainment and innovative video games are people and creators." And he talks about how blending ideas and coming up with new ideas and all this kind of creativity and, you know, lumping that together in a human mind and, and creating something that's never been there before, he said that kind of chemical reaction is not something that can easily be replaced.
Microsoft's AI Quake Demo [2:00]
Luke Tatum: And I very much agree with that. And so this is kind of the springboard for our broader discussion. I have a bunch of other headlines and things that we can talk about. But it's... You know, we haven't seen it yet, and Corey, my co-host on the other show, and I, we did a whole episode about when Microsoft was running victory laps and saying, "Oh my gosh, look, we can make the original Quake run in a browser using Copilot."
And it's like the worst thing you've ever seen. You can't finish a level, you can't do anything, enemies disappear constantly. It's like you can't, you can't make a game. You can make something that kind of looks like a game with this. But, you know, investors love that kind of thing, but they don't understand what they're talking about, right?
It's like people who just are in the video game world to make money go, "Ah, yes, buy stock." And that's kind of the extent of it, you know? But it's like that's not making a game. No one would buy that if it was an, a for sale product. And so I don't know. Where do you want to go with this, Nick? There's a million pl- places we could go.
Indie Games Are Already Winning [4:00]
Nicky P: There are so many places to go there. And one of the, this is... Right off the bat, I kind of want to disagree with you when you're saying, "Well, we're not quite there yet," but we are quite there yet. We're watching independent games do incredibly well on Steam left and right, and we watch, how many, how many major studio productions, for whatever reason, would you consider just absolute and complete failures based on the amount of money invested versus what they actually recoup versus on, like, what people actually say and think about the games?
Like, you're playing two and three star games that are multi-million dollar productions, and guys in their backyards are making five sequence games about hiding out in a Chuck E. Cheese overnight There's two sequels-... To Five Nights at Freddy's. Okay? Two sequels. There's more
Luke Tatum: Than two. There's like, there's-
Nicky P: Well, I'm saying there's two sequel movies there's like a lot of sequels. Two sequel movies.
Luke Tatum: Yeah, right.
Nicky P: Like it made it into film, and then they made a sequel. Right, right, right. And I guarantee there's gonna be a third one, 'cause the second movie did that well.
Luke Tatum: Yeah. Yeah, yeah, yeah. Yeah.
Nicky P: But do you remember that- No... Do you know much about that game?
You remember that game?
Luke Tatum: I know the game. I haven't, I haven't played, like I'm not immersed in the lore and stuff, okay? But I very much know what it is.
Nicky P: I- i- it's not even relevant. Literally, most of the game is you sit in a closet pushing one or two buttons. Like y- you're hiding from a thing, and that's the t- the point is that creativity always wins.
Will AI Take All the Jobs? [5:00]
Nicky P: And the thing that I keep hearing over and over and over again, it- people are terrified of AI. They're terrified of it taking all the jobs. And the first thing I tell anyone who says that is, "You don't understand how economies work." The bottom line is, economies are there to move money around to solve problems, and when everybody doesn't have a job anymore, the next problem that everybody has is, "I have too much time on my hands because I no longer have a job," or, "My job has now become..."
What I imagine is actually what th- gonna be the end result of most of this is we're all creators. We're all going to be creating the niche games, the niche, like niche roller coasters, whatever, niche, like, you know, rides at amusement parks for our audience of people just like us with our minds. You're gonna see like, we already see it, like Hollywood is in a tailspin right now because it's not worth it to make the movies that they make.
Based on how much they cost to make. Meanwhile, indie films still do great. The horror genre's doing better than ever because you have original YouTubers coming in, doing the interesting and unique thing. So far, like everyone's afraid AI is going to empower all these big corporations to do things and treat us like crap, when all it has done is lower the barriers to entry for people to get in and make their own games.
What Happened to Recording Music [7:00]
Nicky P: Now, I want to liken this because I come- like I'm a musician. I've been one for my entire life, and I remember when they first started, you were first able to like when I went to college, when I was in high school, you had to go to a recording studio to record music. By the time I was like two years later in college, I was recording in my dorm room, song that sounded frankly better than some of the studio work I went and did because, you know, if the guy didn't have, he only had tape, you know, it was gonna sound kind of what it was gonna sound like via d- ADAT.
It was gonna sound different. You know, I knew guys that had, you know, they did, had CD burners and stuff at that point. Like, oh, you get decent recording stuff. But the point was is the barrier to entry to making music became so much lower. Like, the har- like the hard part of being an independent musician now is that they've screwed up our ec- economy so bad that touring doesn't make any money because gas and food and lodging is too damn expensive.
Luke Tatum: Right. It's other factors. It's not the actual internal-
Nicky P: Nothing to do with the music. Like, if I could afford gas like that, and by the way, a- and all of the major companies are feeling that the same way that independent artists do. Like staffing, what it takes to put someone on the road, unless you're a multimillion dollar artist, it's hard to do.
The point is like when you're, like when you're smaller, you're more nimble and you can, you can take things, you can get creative about how you do things And so, like, and be it music, be it video be- video games, be it film, like you're just watching everything large crumble because it can't, it can't hold itself up.
Steam and AI Disclosures [9:00]
Luke Tatum: And, and to your point too, you know, yes, there are more games than ever, like being released, like independent games on Steam, the biggest digital distribution platform for video games. And yet, the, there's, like Steam has taken certain-- As a private company, right, they're not even publicly traded, they're a privately held company and always have been, ever since they got away from Sierra.
But the safeguards that they've kind of put in place is like mandatory AI disclosures and things like that. And games that have AI disclosures, people do not want to play. Like they d- they just have abysmally bad sales. Now, there are exceptions to this. Call of Duty has used AI in some of its stuff, generative AI skins and things like that.
They look terrible, and I think that's finally starting to catch up with them. But, you know, they kind of were able to cash in on a recognizable brand name and stuff, and they'll be able to do that for a period of time before it totally falls apart. But you know, independent games, like if you're just saying, "Well, hey, I just use AI for placeholder assets and, you know, I'm making this game," people don't want to play that.
They don't want to look at it. It's viewed very negatively. And Steam, because they want to make money, have helped people to filter things out that they don't want, right? And, and by the way, Valve, you know, the company behind Steam, they're the single most profitable company per employee on Earth, right?
So take that for what you will.
Nicky P: So one of the things, like The thing that, like, makes me feel like I've been saying, I've been saying this, you know, about the way economics and time and decoupling from manual labor works. I've been saying it for 10 years and kind of getting to, like, people looking at me like I'm fucking crazy.
Luke Tatum: We've talked about it plenty.
Copying Big Software With AI [11:00]
Nicky P: What's really come across, though, is I was reading an article this past week, or maybe somebody mentioned it to me and said, "Hey, if you're in marketing, you know you can get the entire Adobe Suite free now."
And I'm like, "What are you talking about?" And so it's like, "Oh, well, somebody ran it through AI and just reverse-engineered the entire software exactly as it is, recompiled it without the DRM, and now you can just have it."
Luke Tatum: Yeah. Yeah.
Nicky P: And I'm like, "Oh, interesting." Not two days later, I'm reading an article, maybe I came up on it because I read that one, about, oh, we're getting all these interesting, like, fun little cookie, you know, cookies on the internet where, like, Super Mario is running around in Call of Duty.
Luke Tatum: Yeah, yeah, and in Elden Ring and in all these other games. Yeah. Yeah, yeah. Yeah.
Nicky P: Well, it's because, you know, people... Well, we now have a way to... S- In the meanwhile, what have all of the game companies been trying to do across the board? Make it harder for you to own software. Make it harder for you to, you know, have any part of engagement within that world.
Let you say as little as possible. You know, oh, well, we're losing backward connecti- or backward, you know, connectivity and all that stuff.
Luke Tatum: Compatibility. Yeah. Yeah, yeah. Yeah.
Nicky P: And listen to what the general consumer thinks about the companies that make their games. It's not good. They're just waiting for any excuse to jump ship.
And thanks to AI, well, they've all been given a way to jump ship, a way to leave. You know, you can try suing everybody on the planet. Look how great it worked for the music industry until they decide we have to learn how to deal with this. We have to, we have to get better or find a way to make it work.
Physical Media Is Back [13:00]
Luke Tatum: Well, CD sales are up. I mean, to your point, right? Like, physical media sales for music are up. Physical sales for video games are up.
Nicky P: I've been, I've been getting told for years, "Oh, it's nobody- physical media is out. No one likes physical media." But that's not the truth. People were trained out of liking it because they don't want you to have it around, because it makes it harder for them to do their job.
Only in the short term, though. That's the, it's the shortsightedness of these companies, forever
The Pandemic Hiring Spree [13:00]
Luke Tatum: Can we talk about shortsightedness of companies? You know, 'cause it is a pendulum swing, right? Like, all of these things have a cause and effect, and they all kind of come back to haunt. And so this is one of my favorite topics to talk about.
So whenever the pandemic happened, let's just refer to it as the pandemic, I guess. So 2020, what did the big three console manufacturers do, right? The Nintendo, Xbox or Microsoft, and Sony, AKA PlayStation. So what did they do? They... Xbox and PlayStation were buying studios, and they were expanding their payrolls and, you know, bringing on all these new people and just starting all of these huge products, projects.
Concord and Studio Closures [14:00]
Luke Tatum: And you had just astronomical amounts of money going into long-term R&D and expanding how many games they were gonna make and all this stuff. And, you know, then we end up with things like Concord. You're talking about colossal failures, the game Concord, right? $400 million in development, and it was online for less than a week. [Editor's note: Concord launched on August 23, 2024 and was taken offline on September 6, 2024, about two weeks later. The $400 million development cost is a widely reported estimate, not an official figure.] Nobody cared. Nobody cared. And so they just turned it off. And but that pendulum swing, right? It's, "Oh, my gosh, we're making so much money." Why were they making so much money? It's because everybody was locked in their house, right? Nintendo was also making a lot of money. They were selling Switch like crazy.
People were playing Animal Crossing with each other. This kind of way to socialize with your friends and family even though you couldn't go socialize with your friends and family, right? You could play Animal Crossing online together. Nintendo was making money hand over fist, you know, tens of billions of dollars in cash, in bank accounts, 'cause they don't finance things.
They don't do long-term financing for their projects, unlike every other company basically. And then, you know, the chickens come home to roost, so to speak, right? People aren't locked in their homes anymore. They aren't with a just absolute super abundance of downtime at home, right? Obviously, duh, of course this was going to happen.
Duh. But did Xbox and Sony act like it was ever gonna end? No. They com- they swelled their Their minimum costs to continue their operations so much during that time that then you had layoff after layoff after layoff, studio closure after studio closure after studio closure. You had the guys behind the Hi-Fi Rush.
They come out and ma- they make a amazing game. It's at the Game Awards. It's winning awards left and right, and just awesome. They spent no money on marketing for it, and they closed down the studio right after it launched. [Editor's note: Hi-Fi Rush came out in January 2023. Microsoft closed Tango Gameworks, the studio behind it, in May 2024.] It's like, what are you doing? What are you doing? Well, it's 'cause they can't afford it.
It's because they aren't making enough money anymore, you know? And so this kind of, like, long-term thinking... Now, by the way, Nintendo, like, I'm a big Nintendo fan. I love what they do with their way that they run their business, and I know they have anti-consumer practices sometimes, and every company does to some extent.
Why Nintendo Didn't Overextend [16:00]
Luke Tatum: But they didn't have to do that. Nintendo has an incredibly high retention rate because they didn't do anything unsustainable during that time, right? But this, like, quarterly growth addicted mindset that all of these studios based in the... Or not studios, but developers in the US and stuff, it's insane.
It's insane how they behave. And they're the ones that love the AI, right? That, that think they're gonna be able to replace game developers and put these people out of the process. You're talking about the, Creative Suite.
Nicky P: But it's funny that anyone that knows and understands AI knows that it's gonna put the developers out of business long before the creatives because it allows that creative to replace the developer.
Luke Tatum: Right. Well, you're talking about the Photoshop replacement. I can't think of what it's called right now. PhotoCraft or something like that.
Nicky P: There's a whole group of them 'cause they literally did every f- every Adobe product is available now.
Subscriptions You Don't Need [17:00]
Luke Tatum: Yeah, yeah. And so, like, it's not perfect. I've watched some people try to play with it and stuff, and it's like, oh, that doesn't really work, and oh, okay, this hot key is kind of like I would expect it to do this.
It's not doing that. You know, there's clunkiness to it, but the fact that you could get almost there with some vibe coding, that's pretty sweet. And so what does that do? It, I don't like the term democratizes, but it democratizes the playing field a little bit. It says, "Hey, you know, there's not really a reason- That we have to pay Adobe every month to use this.
I mean, I use LibreOffice for my Microsoft Office needs. I'm not gonna pay Microsoft. I mean, this is a hard line for me. I will not pay Microsoft a subscription fee every month for Microsoft Office. It's not gonna happen. I'm not gonna do it.
Nicky P: I purposely don't like working with companies if they use Slack or whatever it is there.
Luke Tatum: Oh, yeah. Slack is terrible. Yeah.
Nicky P: If you're using Slack, I just won't deal with you.
Luke Tatum: Teams, like-
Nicky P: Yeah. Oh, Teams is the worst... It's like- I used to work for a bank. They used Teams for everything, and it was just the worst.
Luke Tatum: It's like, the third and a half level of hell is Microsoft Teams or whatever.
Nicky P: Well, it's just like, hey, if you're using Microsoft products, I have no reason to work with you.
You don't, you don't know your business good enough apparently.
Luke Tatum: It's just unbelievable. Yeah, and so what can you do... You know, the answer has been, to this question, like, what can I do other than use these huge companies? Everything integrates with this. Everything connects to that. I gotta use it because it's what works.
Well, the answer has been, well, yeah, yeah, it's kinda true. You kinda have to use those things. But now, all of a sudden, it isn't Right. And I know we could talk about compute costs and everything for AI, like I think it's unsustainable at a certain point. But once the cat's out of the bag, once you have a functioning replacement for Photoshop, you don't need another one.
You know what I mean?
Nicky P: Well, that's, but so here's the thing. It's not even that, though. I mean, there will always be people making better software, better products. The issue is that everyone is trying so hard to lock in on, "Oh, we're going to own this. We're going to own the infrastructure. We're gonna own everything."
When the bottom line is, nah, it's m- more likely that you and me and 10 of our buddies are gonna build our own server farm. A- a- you know, like when the mass scale version of this all doesn't c- doesn't work because people aren't willing to... Most people aren't willing to pay or need what they have, it's gonna be small independent people that start buying those cards again.
You know? When they start, when they s- when they reach an actual market value aside from the inflated value they all have as they all build their own, you know, systems, their own ecosystems, and don't play with anyone else.
Luke Tatum: Right. Right. I mean, you know, game development is such an interesting thing specifically because...
Game Engines and Steam's $100 Fee [21:00]
Luke Tatum: You know, I started with that quote from the Konami president, right, about game engines and that kind of stuff. Like, there's a lot of game engines out there, and there's a lot of software suites and different ways that you can roll things out, and they all have their pros and their cons. And it's not to say that y- the limiting factor is not are there ways to make games?
Like, I'm learning Godot, the... It's a free game developments, environment, you know, a game engine. But the question is how do you iterate on ideas and get them out there to people, right? Steam has been an enormously positive force in this, in this sense, and, they, because they are not in your way.
You don't have a Steam subscription. You know, it costs $100 to create an account and list a game for sale. That's it. It's a flat fee. It doesn't matter how big you are. And the... I mean, it's a pretty low barrier, you know? They take a cut of sales, right? But so that problem has kind of already been solved.
Testing Ideas Faster [22:00]
Luke Tatum: The problem then that you have is, like, how do I, as someone who wants to make a game in the complex landscape of 2026 How do I get that on a platform? Like, how do I get a finished product or finished enough product that somebody wants to put money towards it? And in the past, that has meant, well, you need some very technically talented, extremely expensive talent.
You know, it's, you need to get some really, really cool people together. You need a big team of them. You need a sound engineer. You need a music composer. You need multiple programmers for systems, multiple programmers for, you know, UI. Like a whole team of people. You look at, like, Final Fantasy I.
Nicky P: There's 12-year-olds across the country doing all of those now.
Luke Tatum: I know. Right. And that's the thing. That's what's so amazing. And putting, you know, Mario into Elden Ring is... Like, that's not a game that I would buy, you know? Like, I don't care about that. But the fact that you could go, "I wonder if making a Souls-like game where you jump on people's heads to hurt them instead of doing the regular sword combat, what if that's fun?"
And you could just try it real quick, and then reverse engineer from there. You know? That's cool. That's real cool. Because then you can weed it out. You can go, "This isn't fun," without spending 150 hours trying to make a bare bones thing that has no graphics, you know, it's just some rectangles, and go, "Nope, that's not fun."
Pending Home Sales Hit a Record Low [23:00]
Nicky P: I wanna tie this in, 'cause I'm guaranteeing people are watching this and nay-saying so hard right now. And here's where, what I, we h-... One of the articles we were gonna do in the potpourri episode is US s- pending home sales plunged to record low in September. And by record low, we're talking v- we haven't sold so few houses since the dot-com bubble burst back in 2001.
Luke Tatum: Yeah. Well, that's when the National Association of Realtors started this index, is in 2001. So as long as they have tracked the data, this is the lowest. So it's bad. It's real bad.
Nicky P: The thing is it's, this is people Who are trying to manipulate the market, trying to make it... They're trying to make ho- houses be a store of wealth, and it's not a thing they were ever destined to be.
And now they've corrupted the market so much. And the reason I'm bringing this up, it'll, I hope it'll be clear, is that our generation doesn't... Well, how many people do you know our age are even thinking of buying homes? It's fuck- we just gave up. There's no point. I'm not spending a half a million dollars on a postage stamp.
And that's what so many people have been, are forced to do now. If you want a house, you're gonna pay nothing, pay out the teeth for practically nothing. So you have all these boomers that are saying, "Oh my, oh my house is worth a q- half a million dollars." Well, you keep trying to recoup that value on this thing that no one wants to pay for.
Luke Tatum: Yeah, not if you don't have a buyer it's not.
Nicky P: Yeah. So good luck. The reason I bring this up is because everyone acts like the big companies, the big conglomerates have all of the control, and they don't. Like, the bottom line is, okay, hang on to that house, boomer. You know, I'm gonna get it, I'm gonna pick it up when it's pennies on the dollar after you die and it gets shipped off to a bank, and they can't move it either So Don't ever like think that, that everything has to work one way.
Like, the bottom line is nobody's buying it, no one's paying for it's never gonna sell, and eventually when the, whoever owns it can't pay back the debt that they have on it, 'cause everything's debt-based, eventually it goes back on the market for something reasonable. And you know, it's your police auction, it's your fire auction, it's, "Hey, I have this thing that I can't get rid of, can't do anything with, so what will anyone give me for it?"
Luke Tatum: I'm reminded, this has nothing to do with anything, but I'm reminded of the amazing cult classic film The Blues Brothers. You know, "You sold the Bluesmobiles, the Bluesmobile for a microphone?" "Yeah, I can see that. Okay. Yeah. Yeah, it's like..." because that's, like, that's the worthwhile trade at the time.
You know, like, their car, their means of transportation.
Nicky P: He didn't have to go anywhere and he needed a new microphone, and that microphone meant another gig, you know?
Luke Tatum: Right. And economic data, and you have to be real careful with predictive economic data, right? Reverse-looking economic data is one thing.
You can say, "Oh, actually no homes sold." That's worth knowing and worth considering. But to say, "No homes are gonna sell," you don't know that, right? Like, is that a decision that individual people are gonna make? That's kind of what the question is. And so, you know, but this has been dropping. Like, we've had drops.
It's, year over year it's down just real far, over 11%.
Nicky P: More expensive they get, the more we keep not buying them.
Luke Tatum: Well, interest rates have been going up. You know, we talked about this recently. We talked about, you know, all the data on that, right? But the interest rates are going up. The prices of the homes are still quite elevated.
This is another thing that you could go back to 2020 and look at. And it's like, I don't know, this doesn't make sense to me, right? Like, why would, why would, why would I wanna do that? And so it's not even to say that, like, renting is necessarily the solution or whatever, but it's like, okay, maybe I should get an RV.
You know? Maybe. Like-
Nicky P: We're seeing more and more of that for the pa- you've, tiny home life, my, you know, my bus build. Those are all real fucking real places you can go and watch people living alternative housing situations.
Luke Tatum: Well, y- you know, people act like things are just trends, like trends just happen, right?
And I've been saying for years and years, like, that's not how it is. Tiny homes are a trend because of what you are already talking about, like with the housing market and all that. That's what that is.
Nicky P: I always laughed when, like, they swooped in and they were, like, trying to sell $200,000 tiny homes. Like, you didn't, you don't understand what tiny homes are about, obviously.
Why Clothing Got Cheaper [28:00]
Luke Tatum: And I mean, clothing, like the quality of clothing. I, a example I love to make is, you know, in the 1920s in the Great Depression, you had, you know, people who recently became homeless, like sleeping on a park bench in Central Park in a perfectly tailored suit, right? You know, people had real investment into, like, the way they presented themself and things like that.
And you have this gradual trend of the quality of clothing getting decreased, and it's trendy and cool to have ripped jeans and, you know, things like this. Why do you think that is?
Nicky P: Don't... We'll have my, we'll have my wife on some episode to talk about
Luke Tatum: The-...
Nicky P: Quality of clothing. I'd love to.
Luke Tatum: I'd love to have her
Nicky P: On. She, who's, she's militant about it. And so y- e- even test our denim that we have now versus the denim of the 1920s.
Luke Tatum: Well, and, and
Nicky P: So- Not even close
Luke Tatum: But why is that? It's because of the government intervention in the monetary supply, right? It's because of the much, much, much higher level decisions that are made.
The downstream effect is, hey, you got to make it look cool to have thin, cheap clothing that's gonna fall apart, 'cause if you don't, we're not gonna sell it, right? That's where it hits the marketing department. And guess what they did. I mean, what do you think, like, MTV was? Right? So-
Nicky P: I'm in, I'm in marketing.
I get it. I know how it works.
Luke Tatum: Yeah. And, and so anyway, this is a, this is a conversation that could go on and on and on. Let us know if you enjoyed this episode as a grab bag. I love it. I mean, this is something I could talk about all the time. We didn't even get to the-
Good News for Creators [30:00]
Nicky P: Well, I mean, this is a, this is a way in which, like, the real economic stuff that we talk about every episode affects real people.
You know, for the artists and the creatives out there, don't go hanging yourself yet. Like, I promise you, things change. And they tend to change quickly these days. And you're not gonna lose all of your work. In fact, it may just be easier for you to do the work that you do in the future.
Luke Tatum: Right.
Outro and Free Toolkit [31:00]
Luke Tatum: Right. I mean, there's all kinds of free and open source software out there, and, you know, it's a matter of finding the right things sometimes. I, heck, I mean, I've started to take all my notes for this show and for my other projects, I think I might have mentioned this before, but on Obsidian, which is free, and it's just markdown files, and it's just a nice way to visualize and store that data.
And guess what? AI works with markdown files. You know, connect Claude up to it. Great. It's easy. You know? So there's ways to do this stuff. And yeah, so I, as always, we want to end on a positive note. Thinking outside the box with all this stuff and kind of being willing to say, "Hey, maybe Adobe doesn't own everything," and Xbox and PlayStation and all these guys and the ending of physical disks and all that stuff.
You know, again, this could be an eternity long episode. But if you wanna like look outside of that mainstream perspective, like that's what we do with money here at my company at Perfect Spiral Capital. So if you're interested in having a conversation about that, first head over to our website and get our free toolkit, and you'll get more information than you could possibly need to get started looking at just a slightly different angle on money.
You know, seeing your pr- your financial life from a different lens, through a different lens. So
Nicky P: Get a copy of Luke's book where the bankers are wrong so often they literally have to write rules to make it worthwhile to go to them.
Luke Tatum: Yeah. And they have to tell you to use specific language so they won't sound bad and et cetera, et cetera.
Anyway, if you want a free copy of this book digitally, that is one of the many goodies awaiting you at perfectspiralcapital.com/podcast. Hope to see you soon here on the show on the next episode. Thanks so much for watching.
