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The State of State Finances

The State of State Finances

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.

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And now, a look at how state finances are weathering the COVID-19 Pandemic.

Imagine governing a state right now.

The best positioned public schools, parks departments, and police forces are merely contending with unprecedented times.

For most, they are unpredictable as well.

And neither condition is helped by a near-universal problem: there is not enough money.

America’s national government can deficit spend thanks to the Federal Reserve’s money printer, which famously goes “brrrrr.” But forty-six states and the District of Columbia have balanced budget requirements. So in the face of falling tax receipts, each must contend with an unpleasant question: how much spending to cut?

This is a classic no-win scenario.

In a time of economic scarcity, forced austerity is perhaps the worst thing that can happen. Without a spender of last resort, the snowball effects of recession roll on unchecked. And as mentioned earlier, that is bad.

We called Tobias Read for a practitioner view of the crisis. He’s the Treasurer of Oregon State, which means he’s responsible for debt management, economic policy, investment management, and acting as a central banker for the state’s agencies.

We’ve seen requests for state-level aid packages that range from a billion to a trillion dollars, so we started by asking him to clarify what is needed and the creative strategies Oregon has been using to raise funds.

Then, as you might expect, we started talking about pensions.

We went through what the state has done to steer its ~$111 Billion investment portfolio through the COVID crisis, including organizational changes and a potential new emerging manager program.

We also talked about why he hates his Ford Focus and loves #FAnon, the evidence-based conspiracy theory popular among Free Money listeners which involves wide-ranging deep state efforts to design effective policy and serve the interests of ordinary citizens.

You can check out the transcript here or click above to listen in your favorite podcast app.

We also touched on the lovely goods available at the Free Money Atelier. And as usual, we answered questions from listeners:

  1. I've interviewed at some public pensions over the years, and my impression has been that (at least for mid-career/non-CIO investment positions) there is a pronounced preference for promoting from within. Just curious if this impression is accurate, and if is it another manifestation of the organization-wide risk aversion? What are the characteristics of plans that seem to have a greater willingness to hire from outside the organization?

  2. There's some contention over whether having operations in the west bank - a contested region claimed by both Israel and Palestine - is an ESG issue. What's your take? 

  3. The federal reserve has decided to allow inflation to go higher than the fed's 2% target during a boom period, which effectively means rates will be lower for even longer. Would enough inflation effectively solve the student loan and debt crises? 

If you’d like us to answer a question from you on an upcoming show, write to

Thank you for reading & listening!

Nothing contained in this website or podcast should be construed as investment advice.

Free Money
Free Money with Sloane and Ashby
Sloane Ortel and Ashby Monk explore what's holding the world back from investing in progress, answer the questions on the minds of people in the know, and deliver the Brooklyn-Bay Area consensus about institutional investing that you desperately crave.
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Sloane Ortel