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#071_ STORY INSPIRE: The Next Financial Crisis Is Coming — Here’s What You Need to Know · INSPIRE STORY

• 0:00
  Speaker 1: Are you seeing signs that we're in an AI bubble
• 0:02
  Speaker 1: and therefore a economic collapse?
• 0:04
  Speaker 2: Classic signs. And that has implications for the economy and
• 0:08
  Speaker 2: it's bad for the society. And everybody loses money. But
• 0:13
  Speaker 2: we also have some other things that are going on
• 0:15
  Speaker 2: that happen around the same time. And I can go
• 0:18
  Speaker 2: through these if you want.
• 0:19
  Speaker 1: Please.
• 0:20
  Speaker 2: So what I'm saying is... is clear because I'm a
• 0:23
  Speaker 2: global macro investor.
• 0:25
  Speaker 3: And you were one of the few managers to foresee
• 0:27
  Speaker 3: the great financial crisis.
• 0:29
  Speaker 2: Yes. And so right now we're very excited about AI
• 0:32
  Speaker 2: and we should be very excited because it's going to
• 0:34
  Speaker 2: be revolutionary changes. But it's creeping into almost everything. The
• 0:39
  Speaker 2: way I look at it is I look at the
• 0:41
  Speaker 2: human body and I see like it's replacing the body
• 0:45
  Speaker 2: and so on. And then it replaces some aspects of
• 0:48
  Speaker 2: the mind, levels of thinking and reasoning. But at the
• 0:52
  Speaker 2: same time, we have another problem that's existing. Geopolitics. I mean,
• 0:56
  Speaker 2: China is a larger trading partner with most countries than
• 1:00
  Speaker 2: the United States is.
• 1:01
  Speaker 3: And that's a changing of the world order.
• 1:03
  Speaker 2: That is one of the ingredients, right? And then also,
• 1:06
  Speaker 2: you've got large wealth gaps. The government don't have enough money.
• 1:10
  Speaker 2: And so when you have the downturn, then you have
• 1:13
  Speaker 2: people at each other's throats.
• 1:14
  Speaker 1: So a lot of people, they're thinking about how to
• 1:16
  Speaker 1: sort of secure their future. How do they all prepare?
• 1:19
  Speaker 2: Let me say that history has shown that it's not
• 1:22
  Speaker 2: the most intelligent people that are the most successful. But
• 1:25
  Speaker 2: the key thing to keep in mind is....
• 1:31
  Speaker 3: This is super interesting to me.
• 1:32
  Speaker 1: My team gave me this report to show me how
• 1:33
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• 1:35
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• 1:38
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• 1:41
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• 1:42
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• 1:44
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• 1:46
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• 1:49
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• 1:51
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• 1:54
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• 1:56
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• 1:59
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• 2:01
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• 2:03
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• 2:05
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• 2:08
  Speaker 1: Every single week, every single month, we fight harder and
• 2:10
  Speaker 1: harder and harder and harder to bring you the guests
• 2:11
  Speaker 1: and conversations that you want to hear. I've stayed true
• 2:14
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• 2:15
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• 2:18
  Speaker 3: Please help us. Really appreciate it. Let's get on with the.
• 2:22
  Speaker 4: Show.
• 2:25
  Speaker 1: Ray, for people that might not know who you are,
• 2:27
  Speaker 1: you founded Bridgewater Associates in a two-bedroom apartment in 1975,
• 2:32
  Speaker 1: and you grew it to the world's largest hedge fund.
• 2:35
  Speaker 1: What was the total amount of cumulative net gains that
• 2:40
  Speaker 1: you delivered for those investors over that period?
• 2:42
  Speaker 2: I think it was something like 53 billion. We produced
• 2:47
  Speaker 2: about a 12% return with never any significant losses, and
• 2:53
  Speaker 2: it was uncorrelated with other investments.
• 2:55
  Speaker 1: And you were one of the few managers to foresee
• 2:58
  Speaker 1: the great financial crisis, which allowed Bridgewater to post positive
• 3:02
  Speaker 1: returns today. of 9.5% in 2008, while the S &
• 3:07
  Speaker 1: P 500 plunged by almost 40%.
• 3:09
  Speaker 2: Yeah.
• 3:11
  Speaker 1: Let me start with the thing that I'm most curious about,
• 3:12
  Speaker 1: because I sat here with an investor called Jeremy Grantham,
• 3:14
  Speaker 1: who you might know. He told me that we're staring
• 3:19
  Speaker 1: in the face of an AI bubble, and therefore a
• 3:22
  Speaker 1: economic collapse, potentially.
• 3:23
  Speaker 5: If you look at the data, it would be compatible
• 3:27
  Speaker 5: with history for the peak to be very soon. Everything
• 3:30
  Speaker 5: is in line. This is, I think, the biggest investment
• 3:34
  Speaker 5: bubble in American history.
• 3:36
  Speaker 3: What's your perspective on that?
• 3:38
  Speaker 2: He's right. I don't want to jump to conclusions as
• 3:40
  Speaker 2: much as I want to explain reasonings that lead up
• 3:43
  Speaker 2: to conclusions. I'm at a stage in my life that
• 3:45
  Speaker 2: I want to help people understand cause-effect relationships. What they
• 3:49
  Speaker 2: call a bubble is when the price goes up a
• 3:52
  Speaker 2: lot and companies do very well, and then it collapses.
• 3:57
  Speaker 2: And that has implications for the economy and it has
• 4:00
  Speaker 2: implications for the markets. like 1929 bubble, okay, or the
• 4:07
  Speaker 2: 2000 bubble, okay, which is the dot-com bubble.
• 4:11
  Speaker 3: Does it impact real people as well? Because you said
• 4:13
  Speaker 3: the economy.
• 4:14
  Speaker 2: Did 1929 bubble bursting impact real people? Yes, the Great
• 4:18
  Speaker 2: Depression followed. Because what happens is there's a new technology
• 4:21
  Speaker 2: that comes along that's revolutionary. The dot-com bubble, which was 2000,
• 4:26
  Speaker 2: all the stuff that we have that's wonderful new technology,
• 4:30
  Speaker 2: people get into that technology. They say, that's miraculous. I
• 4:34
  Speaker 2: can bet on that. I'm sure it's going to be successful.
• 4:38
  Speaker 2: And then they bet on it. And sometimes they borrow
• 4:40
  Speaker 2: money to bet on it, and they lose sight that
• 4:43
  Speaker 2: the price of it matters. So it goes up and up,
• 4:47
  Speaker 2: and it's everybody's thing, you know? It's like right now,
• 4:50
  Speaker 2: we're very excited about AI technology. And we should be
• 4:53
  Speaker 2: very excited because it's going to be revolutionary changes. And
• 4:57
  Speaker 2: then at the same time, so I want to buy
• 4:59
  Speaker 2: some of that. And everybody wants to invest in some
• 5:02
  Speaker 2: of that. And what they do is they don't pay
• 5:04
  Speaker 2: attention to the price. And there's a certain mechanics. People
• 5:08
  Speaker 2: will borrow money. Wealth is not the same as money.
• 5:11
  Speaker 2: So you see a lot of people getting wealthy, but
• 5:14
  Speaker 2: you can't spend the wealth. You have to sell the
• 5:17
  Speaker 2: wealth to get money because you can only spend money, right?
• 5:21
  Speaker 2: So what happens is when they need money for one
• 5:25
  Speaker 2: reason or another, taxes change or interest rates go up,
• 5:30
  Speaker 2: and so they have to pay their debt service and
• 5:32
  Speaker 2: so on. There is a pricking of the bubble so
• 5:35
  Speaker 2: that what happens is it falls, okay? And when that happens,
• 5:39
  Speaker 2: people lose money. And as they start to lose money,
• 5:42
  Speaker 2: the process works in reverse because when they made a
• 5:46
  Speaker 2: lot of money, they have a lot of collateral, right?
• 5:49
  Speaker 2: They can go borrow money because they're worth a lot.
• 5:52
  Speaker 2: And that compounds on its way up. And then when
• 5:55
  Speaker 2: it comes down the other way, it works the other way. Okay,
• 5:58
  Speaker 2: now you got to pay your debt and so on.
• 6:00
  Speaker 2: Then you have to start to sell assets. And then
• 6:03
  Speaker 2: there's less demand for things, right? So there's less demands
• 6:07
  Speaker 2: because if you're losing money because you put some money
• 6:10
  Speaker 2: in the stock market and the company and so on,
• 6:13
  Speaker 2: you're going to spend less. And as you spend less,
• 6:16
  Speaker 2: then somebody else's income goes down, right? You don't go
• 6:20
  Speaker 2: to the restaurants. The economic downturns that typically follow a bubble,
• 6:25
  Speaker 2: like the Great Depression, the late 20s was fantastic. If
• 6:30
  Speaker 2: you talk about changes and experiencing changes, this was the
• 6:33
  Speaker 2: first time there was electricity in houses. So it was
• 6:37
  Speaker 2: the first time you would have refrigeration and you would
• 6:40
  Speaker 2: have lighting in houses. This was the first time that
• 6:43
  Speaker 2: you had cars popular. First time airplanes, first time you
• 6:49
  Speaker 2: had radio. And so everybody knew that they were going
• 6:53
  Speaker 2: to be great in the future and they were great
• 6:55
  Speaker 2: in the future. But at the same time, what happens
• 6:58
  Speaker 2: is as they buy them and the stocks go up
• 7:01
  Speaker 2: and they borrow money to buy them and so on
• 7:05
  Speaker 2: and the profits don't live up to the price, then
• 7:08
  Speaker 2: that causes this other dynamic and it produced the Great Depression.
• 7:12
  Speaker 1: So let's say that I buy this and this is
• 7:15
  Speaker 1: a unit of artificial intelligence. So let's say I buy
• 7:20
  Speaker 1: one share in one of the big AI companies right now.
• 7:22
  Speaker 1: Because investors are so excited about AI, they value this
• 7:27
  Speaker 1: at $ 100.
• 7:30
  Speaker 3: This unit that I have here. They say it's worth $ 100.
• 7:32
  Speaker 1: So my net worth is now $ 100. I go to
• 7:34
  Speaker 1: the bank because I have this net worth, this paperwork
• 7:37
  Speaker 1: for $ 100. And I asked the bank for a 50%
• 7:40
  Speaker 1: loan on this thing that I own. They give me $ 50.
• 7:43
  Speaker 1: Now I have $ 50. And then something happens in the economy,
• 7:49
  Speaker 1: which means that the investors who have invested in this
• 7:52
  Speaker 1: and investors generally now need money to pay off their
• 7:56
  Speaker 1: other debts that they have. So this could be a war.
• 7:58
  Speaker 1: It could be some kind of event that takes place.
• 8:01
  Speaker 1: And suddenly everybody rushes to sell their assets like this one.
• 8:07
  Speaker 1: And so when I go to sell this, the price
• 8:09
  Speaker 1: of it has now plummeted to say maybe $ 25, but
• 8:13
  Speaker 1: I took a loan at the bank for $ 50. So
• 8:16
  Speaker 1: I own the bank $ 50. But now this thing that
• 8:17
  Speaker 1: I have that was worth a hundred dollars a couple
• 8:19
  Speaker 1: of months ago is now worth $ 25 and I'm $ 25
• 8:22
  Speaker 1: in the whole. So I have to quickly sell. And
• 8:25
  Speaker 1: then with everybody selling all the price of assets drops,
• 8:27
  Speaker 1: people stop spending money at the restaurants. Like you say,
• 8:29
  Speaker 1: there's less money around and then the bubble has burst
• 8:31
  Speaker 1: and we're in this sort of declining.
• 8:33
  Speaker 2: You got it.
• 8:33
  Speaker 3: Okay, good.
• 8:34
  Speaker 2: All right, fine. And it happens. Because it must happen.
• 8:39
  Speaker 2: I mean, meaning in these tremendous changes, there's very little
• 8:44
  Speaker 2: that's known. So anybody who's in the business of making
• 8:48
  Speaker 2: AI can't be precise. They don't know exactly how much
• 8:52
  Speaker 2: money is going to come in, right? So there's either
• 8:54
  Speaker 2: one of two things. You either don't invest enough and
• 8:57
  Speaker 2: then the competition runs away or you invest a huge
• 9:01
  Speaker 2: amount and you can't be precise, okay? And so when
• 9:04
  Speaker 2: that dynamic happens, it's a problem. So yes, you said
• 9:08
  Speaker 2: it very well. So I'm going to repeat one other
• 9:10
  Speaker 2: thing to emphasize. What's quite common now is you can
• 9:15
  Speaker 2: issue stock for, let's say you raise $ 50 million and
• 9:22
  Speaker 2: you value the company at a billion dollars. Only $ 50
• 9:26
  Speaker 2: million was actually spent on that company. But now if
• 9:30
  Speaker 2: you raise that, you're a billionaire. Okay. Okay. Because the
• 9:35
  Speaker 2: accounting value of that, what do you own? You own
• 9:38
  Speaker 2: stock that is valued at a billion dollars. Nobody paid
• 9:41
  Speaker 2: a billion dollars or whatever it is, right? And now
• 9:44
  Speaker 2: you own that stock, but that stock you can't spend
• 9:48
  Speaker 2: because you can't spend wealth. In order to spend it,
• 9:52
  Speaker 2: you have to sell some of that stock to get money.
• 9:56
  Speaker 2: And quite often there's an interest rate rise because let's
• 10:01
  Speaker 2: say there's a fever and there's an inflation, then the
• 10:05
  Speaker 2: central bank wants to try to put the brakes on
• 10:08
  Speaker 2: that a bit. Okay, what does that mean? It means
• 10:10
  Speaker 2: people who have debt, in a sense, have to come
• 10:13
  Speaker 2: up with more money because when you hold the debt,
• 10:16
  Speaker 2: You have to come up with money to pay the debt.
• 10:18
  Speaker 3: And that dynamic works.
• 10:20
  Speaker 2: Between us, we've said it clearly. I think we understand
• 10:23
  Speaker 2: the dynamic. So they have to exist. Now, we have
• 10:27
  Speaker 2: another problem that's existing, okay? So we're talking about the bubble, okay?
• 10:31
  Speaker 2: But we also have some other things that are going
• 10:34
  Speaker 2: on that happen around the same time. A big gap
• 10:37
  Speaker 2: between the rich and the poor, and which also means
• 10:40
  Speaker 2: the left and the right, the politics of it, right?
• 10:43
  Speaker 2: Just as we have now. When you have the downturn,
• 10:47
  Speaker 2: then you have people at each other's throats. So if
• 10:50
  Speaker 2: we take politics, what you see is this, that they
• 10:53
  Speaker 2: don't have enough money. The governments don't have enough money.
• 10:57
  Speaker 2: We have big budget deficits, okay? Where do you get
• 11:00
  Speaker 2: the money from in order to pay those bills? The
• 11:03
  Speaker 2: UK has had, I think, six out of the last
• 11:05
  Speaker 2: seven years, there's been a new prime minister. And because
• 11:07
  Speaker 2: there's not enough money for the government, and so what
• 11:11
  Speaker 2: you start to see is people come in with their claims,
• 11:14
  Speaker 2: but there's this, how do we get the money? And
• 11:16
  Speaker 2: then people run. Who have money, they say, I don't
• 11:19
  Speaker 2: want to be in this tax zone. That's going to be.
• 11:21
  Speaker 2: And then they leave. And so there's a domestic political
• 11:25
  Speaker 2: problem that is not people compromising the same way they
• 11:29
  Speaker 2: used to compromise. So now you have the politics which
• 11:33
  Speaker 2: compounds this. And then you have a world. This is
• 11:37
  Speaker 2: what I call the big cycle. You have a world
• 11:40
  Speaker 2: in which also the geopolitics changes. By geopolitics, I mean
• 11:44
  Speaker 2: country to country. Okay, there's a system under normal circumstances.
• 11:50
  Speaker 2: When there's a more dominant power, they impose their order
• 11:53
  Speaker 2: and that becomes more peaceful. But when you have arguments
• 11:59
  Speaker 2: of how things should go, those arguments start to turn
• 12:03
  Speaker 2: into conflicts, right? And so those things tend to happen together.
• 12:09
  Speaker 2: That's why I refer to that as the big cycle,
• 12:12
  Speaker 2: that dynamic. Now, that is the confluence between of the money,
• 12:16
  Speaker 2: the internal conflict politically, and the external conflict, which is
• 12:21
  Speaker 2: what we're going through. And the problem is, I think,
• 12:24
  Speaker 2: that people don't know the cycle. So every day we
• 12:28
  Speaker 2: go to our sources of information and you see this
• 12:32
  Speaker 2: latest news, but they don't connect the dots in understanding
• 12:36
  Speaker 2: that cycle.
• 12:37
  Speaker 1: Closing off on this point of the bubbles, what is
• 12:39
  Speaker 1: it that makes bubbles pop? So if we are in
• 12:42
  Speaker 1: an AI bubble at the moment and it is going
• 12:43
  Speaker 1: to pop at some point, What is the like, they
• 12:46
  Speaker 1: call it a black swan event.
• 12:47
  Speaker 2: There are a few of them. There are bubbles and
• 12:49
  Speaker 2: then the things that prick the bubbles. Okay. The things
• 12:52
  Speaker 2: that prick the bubbles typically in the beginning are something
• 12:56
  Speaker 2: that means that I have to sell some wealth to
• 12:59
  Speaker 2: get money. And that's usually a rise in interest rates.
• 13:03
  Speaker 2: It could be something like wealth taxes, something that means
• 13:07
  Speaker 2: I'm very wealthy, but typically the tightness of money Because
• 13:11
  Speaker 2: during that spot, there's inflation pressures and central banks decide
• 13:15
  Speaker 2: that they want to tighten monetary policy and so on.
• 13:18
  Speaker 2: It becomes that the amount of money that I can
• 13:21
  Speaker 2: get by owning that debt at the higher interest rates
• 13:25
  Speaker 2: is greater than the amount of money I could get
• 13:27
  Speaker 2: on my equity investments. That's part of it. Also, what
• 13:31
  Speaker 2: you see is a lot more production of stock. And
• 13:35
  Speaker 2: what I mean by that, issuance of stock. Think of
• 13:39
  Speaker 2: the supply and the demand. There's demand, right? And we've
• 13:43
  Speaker 2: been talking about the demand that makes stocks go up,
• 13:47
  Speaker 2: how we create this well. But there's also supply. So
• 13:51
  Speaker 2: you can issue stock. It's very issue. There's almost nothing
• 13:56
  Speaker 2: that's easier to produce than stock.
• 13:57
  Speaker 3: So if I own a company, I can just print
• 14:00
  Speaker 3: more equity?
• 14:01
  Speaker 6: Yes.
• 14:02
  Speaker 2: Today, you could probably go out and say, I'm going
• 14:04
  Speaker 2: to make a company and I'm going to take it publicly.
• 14:08
  Speaker 2: And you go to your audience and your crowd and
• 14:10
  Speaker 2: you can say, I'm going to make stock. Okay. So
• 14:14
  Speaker 2: it becomes, when there's a market that wants stock, there's
• 14:18
  Speaker 2: a production of stock. Okay. And that supply of stock
• 14:22
  Speaker 2: together with the other that I'm mentioning, the need for
• 14:26
  Speaker 2: getting money and so on, causes the bubble to pop.
• 14:31
  Speaker 3: Are you seeing signs that we're in a bubble?
• 14:33
  Speaker 2: Yeah, yeah, yeah. The classic signs that we're in a bubble.
• 14:35
  Speaker 2: And the bubble, I should emphasize, It's not a you're
• 14:40
  Speaker 2: in a bubble or you're not in a bubble. It's
• 14:42
  Speaker 2: a degree thing, okay? There is also that it's in
• 14:45
  Speaker 2: weak hands. I can look at now who is in
• 14:49
  Speaker 2: these companies, right? And is it in strong hands or
• 14:53
  Speaker 2: weak hands? Classic strong hands is that when weak investors,
• 14:57
  Speaker 2: not knowledgeable investors, then put a lot of money into it,
• 15:02
  Speaker 2: particularly if that's in a leveraged way.
• 15:05
  Speaker 3: In a way with debt.
• 15:06
  Speaker 2: With debt. Or they can buy a leveraged version. Like
• 15:11
  Speaker 2: there are ETFs now that are leveraged versions of the
• 15:15
  Speaker 2: stock market and so on. And so they get into that.
• 15:19
  Speaker 2: It's more like they're crapshooting. And then that's a sign
• 15:24
  Speaker 2: of a bubble. So I've listed a few of those signs.
• 15:27
  Speaker 2: Those are the major signs of those bubbles. And so
• 15:30
  Speaker 2: that when it goes down, then you get the fear.
• 15:34
  Speaker 2: Then you get the need to raise cash. And that
• 15:38
  Speaker 2: dynamic works its way out in the form of then
• 15:42
  Speaker 2: the reverse happening. In other words, everything becomes cheap and
• 15:45
  Speaker 2: everybody has the spending and the things you mentioned.
• 15:49
  Speaker 1: If we are in an AI bubble and it is
• 15:50
  Speaker 1: going to burst, you know, I had a friend of
• 15:51
  Speaker 1: mine contact me and he said, Stephen, I think we're
• 15:52
  Speaker 1: in this, an AI bubble and he's running an AI company.
• 15:56
  Speaker 1: So he said to me, I'm going to raise lots
• 15:57
  Speaker 1: of money now so that when the markets come down
• 16:00
  Speaker 1: and investors are fearful, they don't want to invest in companies.
• 16:03
  Speaker 1: People stop spending as much. They start thinking about their
• 16:05
  Speaker 1: subscriptions and start canceling subscriptions. We're going to be good.
• 16:08
  Speaker 1: And we're going to be able to buy up some
• 16:10
  Speaker 1: of our competitors who are going to be struggling. So
• 16:12
  Speaker 1: he's just raised hundreds and hundreds of millions of dollars
• 16:16
  Speaker 1: for his AI company.
• 16:17
  Speaker 5: Right.
• 16:18
  Speaker 2: And it's probably like that. Easy.
• 16:20
  Speaker 3: Yeah, it was easy now.
• 16:21
  Speaker 2: Right.
• 16:22
  Speaker 1: The question here is like, what should, at different levels,
• 16:24
  Speaker 1: so like the average Joe on the street up to
• 16:27
  Speaker 1: entrepreneurs that are running companies, how do they all prepare
• 16:30
  Speaker 1: for an economic bubble that might burst?
• 16:32
  Speaker 2: He's such a good example. And what that does, just
• 16:35
  Speaker 2: following up through on what we were saying a minute ago,
• 16:38
  Speaker 2: is that increases the supply of AI stock.
• 16:41
  Speaker 3: Okay, yeah, because he sold stock.
• 16:42
  Speaker 2: Because he's going to sell more. Yeah. Right? And so
• 16:46
  Speaker 2: as he and others do that more, this greater supply
• 16:50
  Speaker 2: of stock comes in. And so he wants to get
• 16:53
  Speaker 2: ahead of it in that dynamic. And then, you know,
• 16:57
  Speaker 2: that contributes to the bubble. But how do they prepare?
• 17:03
  Speaker 2: I would also say something. The future is very unknown
• 17:07
  Speaker 2: and people should not be timing. Sophisticated investors have a
• 17:12
  Speaker 2: real challenge even in timing a bubble. So the important
• 17:17
  Speaker 2: thing always is to diversify. Now we're going to go
• 17:21
  Speaker 2: back to money, the basics of money management. And by
• 17:25
  Speaker 2: the way, I personally have gone through the cycle because
• 17:27
  Speaker 2: I didn't have any money and then I And I
• 17:31
  Speaker 2: had a lot of money. And I remember the cycle
• 17:34
  Speaker 2: very well. What happens is as you start off, I
• 17:38
  Speaker 2: used to count how many months I would be okay,
• 17:42
  Speaker 2: a certain amount of money, how much I would be
• 17:44
  Speaker 2: okay if no more money came in. If I lost
• 17:47
  Speaker 2: my job or whatever I did, I'd mostly never, I
• 17:51
  Speaker 2: worked two years for somebody. But in other words, if
• 17:53
  Speaker 2: money didn't come in, and it would be months and
• 17:57
  Speaker 2: then years and so on. to build that security because
• 18:01
  Speaker 2: I have to take care of my family and so on.
• 18:04
  Speaker 2: And so as we're looking at these things, these are
• 18:08
  Speaker 2: the choices that you have in order to be able
• 18:12
  Speaker 2: to say, do I buy my house or apartment? Do
• 18:15
  Speaker 2: I put my money into cash? And what happens to
• 18:19
  Speaker 2: money is you have to put it into something because
• 18:23
  Speaker 2: they'll pay you interest on it, okay? So that's your
• 18:26
  Speaker 2: cash deposit. and so on. And people think that that's
• 18:30
  Speaker 2: the safest. It's the worst investment over a long period
• 18:34
  Speaker 2: of time because inflation will eat it away.
• 18:36
  Speaker 3: You mean putting it in a bank, just leaving it
• 18:38
  Speaker 3: in a bank?
• 18:39
  Speaker 2: In whatever form, a money market fund, whatever it is
• 18:42
  Speaker 2: that is that short term, I'll deposit it and it'll
• 18:46
  Speaker 2: give me an interest rate.
• 18:47
  Speaker 3: Okay.
• 18:48
  Speaker 2: Okay. And that's what they think about as cash. Nobody
• 18:51
  Speaker 2: leaves it literally in cash because If it's literally in cash,
• 18:55
  Speaker 2: it doesn't earn interest. So why shouldn't I put it
• 18:57
  Speaker 2: there and get some interest on it? And so that's cash.
• 19:01
  Speaker 2: And people think that that's the safest. It has the
• 19:04
  Speaker 2: lowest return, guaranteed almost, to have the worst return over
• 19:08
  Speaker 2: the longer period of time.
• 19:09
  Speaker 3: People keep cash because it feels safer.
• 19:11
  Speaker 2: That's right. And I'm saying it's not safer because of inflation.
• 19:16
  Speaker 3: Explain that to me in simple terms.
• 19:17
  Speaker 2: Okay. Well, if I got no interest rate, then what
• 19:22
  Speaker 2: I would do is I'd lose to the inflation rate.
• 19:25
  Speaker 3: And what's the inflation rate?
• 19:27
  Speaker 2: Well, 3.5% or 4% happens to be about where it
• 19:31
  Speaker 2: is now. A year? Yeah, a year.
• 19:33
  Speaker 3: So I lose $ 3.
• 19:34
  Speaker 2: 5 a year. That's right.
• 19:35
  Speaker 3: If I just leave it in cash.
• 19:36
  Speaker 2: That's right. Okay. Now I'll get an interest rate on
• 19:40
  Speaker 2: it if I put it someplace, and it'll give me
• 19:43
  Speaker 2: maybe an interest rate that's somewhere in that vicinity, similar
• 19:48
  Speaker 2: to that.
• 19:48
  Speaker 1: 3.5%, 4%?
• 19:50
  Speaker 2: And then I have to pay taxes on it.
• 19:52
  Speaker 3: Oh, you have to pay taxes on the gain.
• 19:54
  Speaker 2: Yep. Okay, fine. Even though you really didn't gain relative
• 19:57
  Speaker 2: to inflation, you still have to pay the taxes on
• 20:00
  Speaker 2: whatever you've earned or something. Anyway, over the long term,
• 20:04
  Speaker 2: it's a lousy return. Because also think about returns also
• 20:08
  Speaker 2: come from productivity. And over a period of time, people
• 20:11
  Speaker 2: learn how to do things better and so on. So
• 20:14
  Speaker 2: then you can invest in, let's call this stocks, okay?
• 20:18
  Speaker 2: We'll call that the stock market. This is cash. And
• 20:21
  Speaker 2: then you think on the stocks. And then the stocks
• 20:23
  Speaker 2: can go up or down. And then they have this
• 20:27
  Speaker 2: dynamic that we're talking about that creates these big cycles
• 20:31
  Speaker 2: and the busts. And those cycles, when they go down,
• 20:35
  Speaker 2: go down 60%, 70%. Okay, that's what a bear market
• 20:42
  Speaker 2: looks like. Woo, what a dive. Okay, this is gold.
• 20:48
  Speaker 2: That's gold. And these are bonds. And this is your house.
• 20:52
  Speaker 2: And that's Bitcoin. Okay, so these are the choices. They
• 20:57
  Speaker 2: each change for certain reasons. I'll digress into that in
• 21:02
  Speaker 2: a minute. But what happens is they go like this.
• 21:06
  Speaker 2: When gold goes up, it tends to be, that the
• 21:09
  Speaker 2: bonds will go down in value or your house. And
• 21:14
  Speaker 2: these change in a certain way. And so the best
• 21:16
  Speaker 2: thing to do is to have a diversified portfolio of that.
• 21:22
  Speaker 2: When you have that rather than any one, you won't
• 21:26
  Speaker 2: reduce your return, but you will reduce your risk.
• 21:29
  Speaker 3: And diversified means having a little bit of each.
• 21:31
  Speaker 2: Right. A certain amount. And you have to know how
• 21:34
  Speaker 2: to balance them because of their volatility. This one, stocks,
• 21:39
  Speaker 2: is more volatile than this one. And my own recommendations
• 21:44
  Speaker 2: are you start, first of all, with what you need.
• 21:48
  Speaker 2: Should I buy a place or should I use that
• 21:52
  Speaker 2: money and I could travel more and so on? One
• 21:55
  Speaker 2: of the advantages of the house, the apartment, and whatever,
• 21:59
  Speaker 2: is it's your environment. Your environment is important. It produces
• 22:03
  Speaker 2: forced savings. Sometimes that forced savings is good. It typically
• 22:09
  Speaker 2: is taxed better. It's a better vehicle for tax over
• 22:12
  Speaker 2: a period of time. But I'm not arguing for this alone.
• 22:17
  Speaker 2: But I'm saying when I'm looking at this, then I
• 22:19
  Speaker 2: think this one, gold, is very interesting because when all
• 22:25
  Speaker 2: of these tend to do badly, this tends to do well. OK,
• 22:30
  Speaker 2: so it's a very effective diversifying because this was money
• 22:34
  Speaker 2: not until 1971. And it's still the second largest reserve currency.
• 22:41
  Speaker 2: Central banks hold reserve currencies. So it has qualities that
• 22:45
  Speaker 2: are different from this. And this has qualities like when
• 22:50
  Speaker 2: the value of money goes down because of inflation, this- Bonds. Okay.
• 22:55
  Speaker 1: And bonds are basically lending the government money.
• 22:58
  Speaker 2: That's right. If you lend the money at a certain
• 23:00
  Speaker 2: interest rate and then inflation and interest rates rise, you're
• 23:05
  Speaker 2: kind of locked into that interest rate. And so it
• 23:07
  Speaker 2: has its own problems. The more important thing I would
• 23:11
  Speaker 2: say is, you know, you save up and you say,
• 23:15
  Speaker 2: how many years can I live if money doesn't come in? Okay.
• 23:21
  Speaker 2: And then you take that and you say, how could
• 23:24
  Speaker 2: I be secure? So I don't want to put it
• 23:27
  Speaker 2: into one thing that can go down 70%. So how
• 23:31
  Speaker 2: do I diversify that? That's my main question.
• 23:34
  Speaker 1: A lot of people in the comments of our last episode,
• 23:37
  Speaker 1: they're asking this, like, how does this apply for someone
• 23:40
  Speaker 1: who doesn't have much money, maybe doesn't have any assets?
• 23:44
  Speaker 1: Say they're 30 years old, they have $ 100 disposable income,
• 23:51
  Speaker 1: and they're thinking about how to sort of secure their future.
• 23:54
  Speaker 3: What is the advice for someone in that situation?
• 23:56
  Speaker 2: Your only asset is yourself. And I guess what you're
• 24:00
  Speaker 2: going to get from the government. How do you sell
• 24:02
  Speaker 2: yourself at getting a better income? Or how are you
• 24:07
  Speaker 2: getting money from the government? You selling yourself is the
• 24:10
  Speaker 2: main thing. This is one of the big problems now
• 24:13
  Speaker 2: with artificial intelligence and other machines replacing people and different
• 24:20
  Speaker 2: types of jobs. It becomes more difficult. It produces that
• 24:24
  Speaker 2: big wealth gap while you're having more productivity. Everybody wants
• 24:28
  Speaker 2: more productivity because it means How do you produce things
• 24:31
  Speaker 2: more efficiently? But that contributes to the income gap because
• 24:37
  Speaker 2: your productivity equals your income for a large extent. And
• 24:41
  Speaker 2: then you have the political dynamic. It's tough to get
• 24:45
  Speaker 2: yourself out of this position that you mentioned. I'm imagining
• 24:48
  Speaker 2: that person. Okay. It's not easy. There is this giant polarity.
• 24:53
  Speaker 2: If you're in the top 10% of talent, let's say,
• 24:58
  Speaker 2: the world's your oyster. But Nowadays, in order to be there, okay,
• 25:04
  Speaker 2: that's difficult. Find something that gives you the ability to
• 25:09
  Speaker 2: sell your time for good money. Is that going to
• 25:12
  Speaker 2: be that you're driving an Uber? Is that going to
• 25:15
  Speaker 2: be that you have the talent and you're going to
• 25:17
  Speaker 2: be able to understand AI and contribute that understanding to
• 25:22
  Speaker 2: a company that values that? Or what is your skill?
• 25:26
  Speaker 2: You found this, okay? And you found the way, okay?
• 25:30
  Speaker 2: But you need money, okay? And the thing that you
• 25:34
  Speaker 2: want to do, what you're doing, and I'm lucky enough
• 25:37
  Speaker 2: to do, is to make your work and your passion
• 25:40
  Speaker 2: the same thing and don't forget about the money part. Yeah.
• 25:47
  Speaker 1: One of the things that I think I didn't realize
• 25:48
  Speaker 1: earlier in my career is that whatever skills you have
• 25:52
  Speaker 1: will be valued differently in different contexts or industries.
• 25:56
  Speaker 3: Should I say. So, for example.
• 25:58
  Speaker 1: Say that my skill here, and I'm not trying to
• 26:00
  Speaker 1: flatter myself, but say my skill here is having conversations, right?
• 26:03
  Speaker 1: Let's say that's what it is. There's lots of places
• 26:06
  Speaker 1: I could have conversations. And those places would value my
• 26:10
  Speaker 1: ability to have conversations wildly differently per hour. So I
• 26:14
  Speaker 1: often think this and speak to my friends about this.
• 26:16
  Speaker 1: When they tell me their skills, I say, let's look
• 26:19
  Speaker 1: at the different industries and how they would value the
• 26:22
  Speaker 1: skills you currently have differently.
• 26:25
  Speaker 3: A good example, again.
• 26:26
  Speaker 1: You know, you could be an Uber driver or you
• 26:27
  Speaker 1: could chauffeur Ray Dalio. Now, I imagine those two things
• 26:32
  Speaker 1: pay wildly differently, but the same skill of driving.
• 26:35
  Speaker 3: A car, broadly speaking.
• 26:37
  Speaker 2: I agree with all that.
• 26:38
  Speaker 1: And so I think that's one way to just, you know,
• 26:41
  Speaker 1: the other way is you go ask your current boss
• 26:42
  Speaker 1: for a promotion. But again, they're going to value you
• 26:45
  Speaker 1: in the context of their other employees, the market in
• 26:48
  Speaker 1: that industry, et cetera. So you might get 10%, but
• 26:50
  Speaker 1: you're not going to see a step change necessarily. So
• 26:53
  Speaker 1: that's something that I always say to people.
• 26:54
  Speaker 2: Absolutely right. And another law of something, and I think
• 26:59
  Speaker 2: it's almost a law of everything, it's a law if
• 27:02
  Speaker 2: you buy almost anything, is those at the top, whatever
• 27:09
  Speaker 2: the thing you're buying, if you're buying a painting, a
• 27:11
  Speaker 2: piece of furniture, a piece of clothing, a person's time
• 27:15
  Speaker 2: or whatever, command premiums that are many multiples of the average.
• 27:22
  Speaker 2: It's almost like if you could invest... 10% more of
• 27:28
  Speaker 2: your time, your effort, your skill to go up, you
• 27:35
  Speaker 2: will get twice as much for 10% better, something like that.
• 27:42
  Speaker 2: So that's part of the formula of life and a
• 27:45
  Speaker 2: formula of employment. And so I think if you keep
• 27:48
  Speaker 2: what you brought up and what I'm bringing up in mind,
• 27:51
  Speaker 2: that helps you position yourself and know what to do.
• 27:55
  Speaker 1: There should be a button just down below here. And
• 27:57
  Speaker 1: if it says subscribe, you're already subscribed. If it says subscriber,
• 28:01
  Speaker 1: that means you're not yet.
• 28:03
  Speaker 3: And if you're not.
• 28:03
  Speaker 1: Subscribed, please could you do us a favor and hit
• 28:05
  Speaker 1: that button? It helps the show more than you know.
• 28:07
  Speaker 1: And according to the algorithm, you're someone that watches our show,
• 28:10
  Speaker 1: but you haven't yet hit that button.
• 28:11
  Speaker 3: Thank you so much. We didn't mention this thing here, actually.
• 28:14
  Speaker 1: So I probably should talk about it because people are
• 28:16
  Speaker 1: talking about it a lot right now, which is.
• 28:19
  Speaker 2: Bitcoin.
• 28:21
  Speaker 3: What's your perspective on Bitcoin? I know the market in
• 28:23
  Speaker 3: Bitcoin is down at the moment.
• 28:24
  Speaker 2: I have about 1% of my portfolio in Bitcoin because
• 28:28
  Speaker 2: there's different kinds of money. And the money that you
• 28:32
  Speaker 2: can't print, that's one kind. This is the other kind
• 28:36
  Speaker 2: of money that you can't print.
• 28:37
  Speaker 3: Gold.
• 28:38
  Speaker 4: Yeah.
• 28:38
  Speaker 2: You cannot crack it with technology. You can hold it.
• 28:44
  Speaker 2: You own it. There's a saying that it's the only
• 28:48
  Speaker 2: financial asset that is not somebody else's liability. Somebody has
• 28:52
  Speaker 2: to give you something for it. it has that. So
• 28:56
  Speaker 2: in my category of wanting, let's say, make sure that
• 28:59
  Speaker 2: I have some hard money, which for most people should
• 29:03
  Speaker 2: be between 5% and 15% of their portfolio, I prefer that.
• 29:09
  Speaker 2: I'm pointing to the gold bars here rather than the Bitcoin.
• 29:15
  Speaker 3: Is it still, in your view, a gold-like asset?
• 29:20
  Speaker 2: Yes, it's a type of money that can't be printed.
• 29:23
  Speaker 2: But- There are technologies that can hurt it. In other words,
• 29:30
  Speaker 2: if there's quantum computing and it can be monitored by
• 29:35
  Speaker 2: governments and so on, it could be taxed and digital
• 29:39
  Speaker 2: currencies or something. similar.
• 29:41
  Speaker 1: But you don't like Bitcoin as much as gold because
• 29:43
  Speaker 1: of privacy reasons as well.
• 29:45
  Speaker 2: And when the governments say, I don't want it, they
• 29:48
  Speaker 2: have the power, therefore, to do whatever they want with it.
• 29:51
  Speaker 2: And central banks will not own any significant amount of
• 29:56
  Speaker 2: that because of the reason I said that it They
• 29:58
  Speaker 2: want their transactions to be private and in their control.
• 30:02
  Speaker 2: Think about how different it would be for Russia, okay?
• 30:07
  Speaker 2: They confiscated these kind of other assets. They didn't get these. Okay, gold.
• 30:15
  Speaker 2: And so what you're seeing, even particularly in this time
• 30:19
  Speaker 2: of conflict, is that there's a sense that if I'm
• 30:24
  Speaker 2: holding this, others won't get it.
• 30:27
  Speaker 1: You mentioned a second ago, the impact you think AI
• 30:29
  Speaker 1: is going to have on the economy broadly, but also again,
• 30:32
  Speaker 1: to real people's lives.
• 30:33
  Speaker 3: There's lots of debate.
• 30:34
  Speaker 1: I mean, there's been a debate over the last 10
• 30:36
  Speaker 1: years or so within the world of AI. You had
• 30:39
  Speaker 1: the big AI CEOs originally saying that AI would cause
• 30:42
  Speaker 1: job disruption. And that, you know, you've even had some
• 30:45
  Speaker 1: of the CEOs more recently saying work will become optional
• 30:49
  Speaker 1: in a world of super intelligence. At the same time,
• 30:51
  Speaker 1: we have robotics coming over the horizon. So you've got
• 30:53
  Speaker 1: this sort of convergence of intelligence and then I don't know,
• 30:57
  Speaker 1: you could think of it like muscles, like physical muscles
• 31:00
  Speaker 1: or ability at the same time. We're seeing AI accelerate
• 31:04
  Speaker 1: in its capabilities. What does this mean for the average
• 31:08
  Speaker 1: person and their job? And who's going to benefit from
• 31:10
  Speaker 1: this AI revolution in your point of view?
• 31:12
  Speaker 2: It means that you will either be cutting edge and
• 31:17
  Speaker 2: capable and among that top fraction of a percent down
• 31:22
  Speaker 2: to 10% of the population who is... cutting edge and
• 31:26
  Speaker 2: using it and accelerating, or you will, if you're in
• 31:31
  Speaker 2: a thinking job, be at risk of being replaced. We're
• 31:36
  Speaker 2: coming into a world where we can automate everything. The
• 31:41
  Speaker 2: evolution of man was we had the agricultural era, and
• 31:48
  Speaker 2: there was no real inventiveness. And then man invented the machine.
• 31:55
  Speaker 2: And what the machine did is it replaced man's physical necessity.
• 32:01
  Speaker 2: So men used to be like oxen in the agricultural
• 32:06
  Speaker 2: field and so on. And they were replaced by tractors.
• 32:10
  Speaker 2: And then there was, we entered the industrial age. First,
• 32:14
  Speaker 2: you had the printing press that allowed people to learn.
• 32:19
  Speaker 2: And then you had these inventions, the industrial revolution, the
• 32:23
  Speaker 2: first industrial revolution. And what you had is replacing the
• 32:29
  Speaker 2: physical that man would do in factories then and so on.
• 32:33
  Speaker 2: And so the way I look at it is I
• 32:35
  Speaker 2: look at the human body and I see like it's
• 32:38
  Speaker 2: replacing the body and so on. And it's coming up
• 32:42
  Speaker 2: higher and higher and then it replaces some aspects of
• 32:46
  Speaker 2: the mind that you can computerize. And it's coming up
• 32:50
  Speaker 2: and up and it's replacing higher and higher levels of
• 32:54
  Speaker 2: thinking and reasoning. So that path is part of the
• 33:00
  Speaker 2: evolutionary path that is happening. So then you start to say,
• 33:06
  Speaker 2: what do I have to offer? And so in answer
• 33:09
  Speaker 2: to who benefits from it, those who benefit from it
• 33:13
  Speaker 2: are those who are the capitalists with the ideas that
• 33:20
  Speaker 2: replace the workers. And so if you look at There's
• 33:24
  Speaker 2: revenue for businesses. When you buy something in a store,
• 33:28
  Speaker 2: there's revenue. Okay. And if you look at the share
• 33:32
  Speaker 2: that is going to workers, you see that share going down.
• 33:36
  Speaker 2: And if you look at the share that's going to
• 33:39
  Speaker 2: those who own that business, that share is going up. That's,
• 33:43
  Speaker 2: you know, how do they share that revenue in terms
• 33:47
  Speaker 2: of the cost? And you see that that's rising. And
• 33:49
  Speaker 2: so this is an evolutionary process. And it's true that
• 33:54
  Speaker 2: what happens is you get more free time, okay? So
• 33:59
  Speaker 2: now the society has to think, how do I deal
• 34:02
  Speaker 2: with this? So, for example, the work week, which used
• 34:05
  Speaker 2: to be, you know, a 60- or 70-hour work week,
• 34:09
  Speaker 2: goes down to less than a 40-hour work week, and
• 34:12
  Speaker 2: there's more time. But there needs to be, you know,
• 34:15
  Speaker 2: how do you create a bottom? And so we're going
• 34:19
  Speaker 2: through this phase in which there is this upper end,
• 34:23
  Speaker 2: that is making incredible amounts of wealth, as we described,
• 34:27
  Speaker 2: and then this lower end that is then having these challenges.
• 34:33
  Speaker 2: We have a relatively good economy, and the difficulty of
• 34:38
  Speaker 2: college graduates to get employment has increased significantly. And I
• 34:43
  Speaker 2: can tell you that in many businesses, it becomes more
• 34:47
  Speaker 2: of a pain in the neck to have a college
• 34:51
  Speaker 2: graduate Let's say, do it. You have to train them.
• 34:55
  Speaker 2: And many of those tasks, many of that thing can
• 34:58
  Speaker 2: be done very quickly with the AI and with computerization.
• 35:03
  Speaker 2: And as you get into robotics, you're going to have
• 35:06
  Speaker 2: that happen, right?
• 35:08
  Speaker 1: The speed of the disruption that we're seeing because of
• 35:11
  Speaker 1: the amount of capital that's flowing into these AI frontier
• 35:14
  Speaker 1: models like the anthropics and open AI, etc.
• 35:17
  Speaker 2: etc.
• 35:18
  Speaker 1: is quite different from anything else, sort of the historical
• 35:21
  Speaker 1: precedence as we've seen through the Industrial Revolution, where it
• 35:24
  Speaker 1: took time to build the tractors.
• 35:25
  Speaker 2: There's an element of speed. What happens usually is the
• 35:29
  Speaker 2: bubble bursts. And now you have the cyclical dynamic of
• 35:34
  Speaker 2: that while the technology evolves. But the supply demand and
• 35:39
  Speaker 2: the debt problem that we just talked about then come in.
• 35:43
  Speaker 2: And so unemployment is due to typically... some sort of
• 35:48
  Speaker 2: a combination of a financial crisis that, like we talked about,
• 35:52
  Speaker 2: the debt and stocks going down and people not having
• 35:55
  Speaker 2: collateral and then therefore not buying assets and that dynamic,
• 36:01
  Speaker 2: that causes the unemployment rate, that factor.
• 36:04
  Speaker 1: That's the sort of economic reasons, but in terms of
• 36:06
  Speaker 1: the AI agents, robotics being able to replace you, I've
• 36:10
  Speaker 1: sat with Dara from Uber and Dara said that he
• 36:13
  Speaker 1: imagines in the future that The 9 million riders that
• 36:16
  Speaker 1: they have around the world doing deliveries will be replaced
• 36:19
  Speaker 1: by autonomous vehicles, autonomous robots. Those 9 million drivers' careers
• 36:24
  Speaker 1: that you have will be out of work, conceivably. Are
• 36:28
  Speaker 1: you talking about being honest about the situation?
• 36:30
  Speaker 4: Yeah, I think, again, it goes to physical AI as well, right?
• 36:33
  Speaker 4: So I think 20 years from now, you can imagine
• 36:36
  Speaker 4: that those 9 million will be 20 million AVs, maybe.
• 36:42
  Speaker 4: But we have time between now and then, partially because
• 36:46
  Speaker 4: we don't operate in the virtual world, right? We operate
• 36:48
  Speaker 4: in the physical world. You have to get the regulations up.
• 36:51
  Speaker 4: You have to build the cars. You have to build
• 36:52
  Speaker 4: the sensor stacks. The models have to get there. So
• 36:56
  Speaker 4: there is time between now and then. But you can
• 36:59
  Speaker 4: imagine the majority of our trips being fulfilled by robots
• 37:04
  Speaker 4: of some kind.
• 37:06
  Speaker 2: The unemployment rate gets very influenced by the bubble bursting.
• 37:12
  Speaker 2: and the economy going down. You see that spike. You
• 37:16
  Speaker 2: certainly have the evolutionary change that you're referring to. In
• 37:22
  Speaker 2: other words, there's this evolutionary thing in which they, like
• 37:26
  Speaker 2: he says, the tractor replaces the laborer or the assembly
• 37:32
  Speaker 2: line worker as technology is replaced. And that is an
• 37:36
  Speaker 2: evolutionary thing that goes continuously for many years in the
• 37:42
  Speaker 2: way that you're describing. Because you asked about the unemployment rate,
• 37:46
  Speaker 2: I just wanted to emphasize that the unemployment rate is
• 37:49
  Speaker 2: very heavily affected by that bubble bursting.
• 37:52
  Speaker 1: So, okay, you've got two forces at once then. You've
• 37:54
  Speaker 1: got when the bubble bursts, everybody, as we said, needs cash.
• 37:58
  Speaker 1: So they start cutting their costs. So that's when they
• 38:01
  Speaker 1: start laying people off. They start looking around their company
• 38:04
  Speaker 1: and go, forget growth, we just need to survive. So
• 38:06
  Speaker 1: we're going to lay off that team and that team
• 38:08
  Speaker 1: and that team. And then you see unemployment going up.
• 38:11
  Speaker 1: And then you've got this sort of underlying shift happening
• 38:13
  Speaker 1: at the same time, which is workers are replacing their
• 38:18
  Speaker 1: team members with AI agents or robotics, or in the factories,
• 38:21
  Speaker 1: they're now using robots to do factory work, et cetera.
• 38:25
  Speaker 1: And that's the sort of current slow march forward.
• 38:27
  Speaker 2: Right. So I have this chart, okay? What this represents,
• 38:32
  Speaker 2: this line, is the evolution of technologies. In other words,
• 38:38
  Speaker 2: we have greater and greater learning, and doing things better,
• 38:42
  Speaker 2: and that's the evolution that we're talking about, that also
• 38:46
  Speaker 2: machines replace people or replace their tags over that period
• 38:50
  Speaker 2: of time. Then you have this big cycle, which typically
• 38:55
  Speaker 2: lasts for about a lifetime on average, about 80 years.
• 39:00
  Speaker 2: We went through that last time, 1945. There were orders.
• 39:05
  Speaker 2: There's a monetary order. There's a domestic political order. There's
• 39:08
  Speaker 2: a geopolitical order, okay? You have the bubble bursting. Okay.
• 39:13
  Speaker 2: You have this. This is what we're talking about, that dive.
• 39:19
  Speaker 2: And then when you go through that, you break down
• 39:22
  Speaker 2: these orders. And when they break down, then you would
• 39:27
  Speaker 2: get rid of the debt burden. So you get rid
• 39:30
  Speaker 2: of the monetary system as you're used to it. You
• 39:33
  Speaker 2: may get rid of the domestic order. Many countries' orders,
• 39:38
  Speaker 2: their systems end. I mean, they all end at some point.
• 39:42
  Speaker 2: And so they can break down quite often in a
• 39:45
  Speaker 2: time of great internal conflict. Does the system last? And
• 39:50
  Speaker 2: that happens at that time. And so that's that big breakdown.
• 39:54
  Speaker 2: But still what you're talking about is, and I agree
• 39:58
  Speaker 2: with you, this keeps going up, okay? Because learning, you
• 40:02
  Speaker 2: don't unlearn what you've learned. So as this goes up
• 40:07
  Speaker 2: and you still keep this thing going up, okay? But
• 40:11
  Speaker 2: you have the big cycle, the debt, the conflict type
• 40:14
  Speaker 2: of movement. And these little cycles are the cycles that
• 40:18
  Speaker 2: we see in this roughly on average, let's call it
• 40:22
  Speaker 2: an 80-year period. But you see the recession and recession
• 40:30
  Speaker 2: has higher unemployment and so on. Then they stimulate monetary policy.
• 40:35
  Speaker 2: They make money looser. Then the economy goes up and
• 40:40
  Speaker 2: you have prosperity. Then you go into a bubble, okay,
• 40:45
  Speaker 2: and you run lower on capacity because you're using up
• 40:48
  Speaker 2: the capacity. inflation rises, they tighten monetary policy, and then
• 40:54
  Speaker 2: you have the recession that follows. So these movements from
• 41:00
  Speaker 2: one recession to the next recession, that cycle that I've
• 41:03
  Speaker 2: just described, on average has lasted about six years, give
• 41:08
  Speaker 2: or take about three. So that's the way it looks.
• 41:13
  Speaker 3: So I'll play this back to you to make sure
• 41:15
  Speaker 3: I understand it.
• 41:16
  Speaker 1: There is a sort of bigger macro bubble, which is
• 41:19
  Speaker 1: over 80 years, which is the changing of the world order.
• 41:23
  Speaker 2: Yep. You get deeper and deeper and deeper in debt
• 41:26
  Speaker 2: over a lifetime. So let's say your debt capacity, you
• 41:29
  Speaker 2: have a certain amount. So the government's debt capacity, for example,
• 41:33
  Speaker 2: it can borrow. When you wipe it out here, then
• 41:36
  Speaker 2: you can build it up and build it up until
• 41:39
  Speaker 2: it starts to squeeze. Debt service starts to squeeze out.
• 41:42
  Speaker 3: And that's a changing of the world order.
• 41:44
  Speaker 2: That is one of the ingredients, right? So, okay, we
• 41:47
  Speaker 2: have too much debt. At the same time, what you're
• 41:51
  Speaker 2: building up is you're building up great wealth gaps because capitalism,
• 41:56
  Speaker 2: and I love capitalism, but here's the reality, it creates
• 42:01
  Speaker 2: big differences in income and wealth. And when it does that,
• 42:06
  Speaker 2: that also creates differences in people's opportunities because the rich
• 42:10
  Speaker 2: people can educate their children well. And they can give
• 42:14
  Speaker 2: them all the benefits. I mean, education is a big benefit.
• 42:17
  Speaker 2: And that's why there should be broad-based, excellent education. But
• 42:22
  Speaker 2: all of that happens. And so you see wealth gaps
• 42:25
  Speaker 2: build up. So like the Industrial Revolution leads into the
• 42:30
  Speaker 2: Gilded Age. OK, the Gilded Age looks a lot like now,
• 42:34
  Speaker 2: you know, people buying expensive things and looking very gilded.
• 42:39
  Speaker 2: And then it leads to the robber barons. And the
• 42:43
  Speaker 2: robber barons are people who are considered, you know, that
• 42:48
  Speaker 2: they're taking advantage, the billionaire class, and it becomes that cycle.
• 42:53
  Speaker 2: So that's the way it works.
• 42:55
  Speaker 1: So you've got this 80-year sort of, you know, boom,
• 42:59
  Speaker 1: and then there's a collapse, which sort of ends in
• 43:01
  Speaker 1: conflict and the changing of the New World Order. And
• 43:04
  Speaker 1: then within there, you have these little changes. bubbles which
• 43:07
  Speaker 1: really economic bubbles that go up and down recession people
• 43:10
  Speaker 1: get very excited they they contract they get excited they
• 43:13
  Speaker 1: contract and then you have the the straight line here
• 43:16
  Speaker 1: which is the sort of technical technological improvement across the
• 43:20
  Speaker 1: spectrum of ideas and technologies and all these things it
• 43:23
  Speaker 1: keeps going and it keeps going regardless of this boom
• 43:25
  Speaker 1: and bust because as you say people never forget so
• 43:28
  Speaker 1: a couple of questions on this then i don't even
• 43:30
  Speaker 1: know which one to dive into first but let's go
• 43:32
  Speaker 1: for I guess just closing off on the last point
• 43:35
  Speaker 1: that I was getting at is there's this narrative that
• 43:38
  Speaker 1: there'll be new jobs created because of AI and robotics
• 43:42
  Speaker 1: and everyone will be fine. A lot of this narrative
• 43:44
  Speaker 1: comes from Silicon Valley.
• 43:46
  Speaker 2: Who is producing the technology that doesn't want to be
• 43:49
  Speaker 2: attacked because they're making a lot of money. They may
• 43:52
  Speaker 2: have a desire to have a certain perspective. I think
• 43:57
  Speaker 2: objective people in Silicon Valley And there are a number
• 44:04
  Speaker 2: of them would say it's going to have a big employment.
• 44:08
  Speaker 2: But you can see it in the wealth. Who owns
• 44:12
  Speaker 2: stocks and who doesn't own stocks? Okay. Now, if you
• 44:15
  Speaker 2: own stocks, you're very happy now. Okay. And if you
• 44:21
  Speaker 2: don't own stocks, you're not getting that benefit of owning stocks.
• 44:25
  Speaker 2: So that in and of itself creates a greater wealth
• 44:28
  Speaker 2: even aside from employment. Okay, so there are these forces
• 44:32
  Speaker 2: to create the greater wealth gaps, right?
• 44:37
  Speaker 1: Roughly 61% of U.S. adults own stock in some form,
• 44:44
  Speaker 1: and most of them hold it indirectly through their retirement plan.
• 44:48
  Speaker 1: Only 20% of Americans directly own individual stocks or shares
• 44:51
  Speaker 1: through a brokerage account. While over half of Americans own stocks,
• 44:55
  Speaker 1: ownership is heavily concentrated The top 10% of households hold
• 45:00
  Speaker 1: almost 90% of the stock. How do you feel about
• 45:04
  Speaker 1: this narrative coming from predominantly Silicon Valley that there'll be
• 45:07
  Speaker 1: new jobs created that we can't yet forecast and everyone
• 45:09
  Speaker 1: will be fine? They point to the industrial revolution. They say, look,
• 45:12
  Speaker 1: when the tractors came, we thought everyone was finished. When
• 45:15
  Speaker 1: factories came, we thought everyone was finished. But look, we
• 45:17
  Speaker 1: figured some other stuff out.
• 45:19
  Speaker 2: Because if you look at that, this is this thing
• 45:23
  Speaker 2: I'm saying that as your body is more and more replaced,
• 45:27
  Speaker 2: with your mind, then you can do that. But when
• 45:29
  Speaker 2: your mind is replaced and your body is replaced, what
• 45:36
  Speaker 2: is it that you have to sell?
• 45:38
  Speaker 3: What is it that we have to sell as humans
• 45:40
  Speaker 3: once our body and our minds are replaced?
• 45:43
  Speaker 2: What man has is emotions and has intuitions. There are
• 45:53
  Speaker 2: certain things that artificial intelligence doesn't have. And so if
• 45:58
  Speaker 2: you have to get down to what those things are,
• 46:03
  Speaker 2: you know, does the robot give a good massage? Does,
• 46:09
  Speaker 2: you know, what is it that is left? And so
• 46:13
  Speaker 2: we will wrestle with what it is that is left, okay?
• 46:18
  Speaker 2: But I think that for the foreseeable future, those who
• 46:23
  Speaker 2: can work very well where they have an exceptional job,
• 46:27
  Speaker 2: human intelligence and work in partnership with the artificial intelligence
• 46:34
  Speaker 2: that they are going to be at the cutting edge
• 46:36
  Speaker 2: of all of this.
• 46:39
  Speaker 1: I've got 60 seconds and I'm going to show you
• 46:41
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• 46:43
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• 46:46
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• 46:48
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• 46:51
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• 46:53
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• 46:57
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• 46:57
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• 47:06
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• 47:09
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• 47:13
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• 47:20
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• 47:22
  Speaker 3: Hey, Juan, can I record on Wednesday at 2 p.m.? Actually, no.
• 47:25
  Speaker 2: Do you know what?
• 47:25
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• 47:28
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• 47:31
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• 47:33
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• 47:46
  Speaker 1: Over the last couple of weeks, I've been in filming
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• 47:50
  Speaker 1: two days off to get all of my work done,
• 47:52
  Speaker 1: which means there's lots of cognitive load. And so I
• 47:54
  Speaker 1: turn to ketones because I find myself more articulate, able
• 47:57
  Speaker 1: to think more clearly, able to work out better.
• 48:00
  Speaker 3: When I'm fueled by ketones.
• 48:02
  Speaker 1: And so the reason I became a co-owner of this
• 48:03
  Speaker 1: company and the reason why they now are a sponsor
• 48:05
  Speaker 1: of this podcast is because I remember one of my
• 48:07
  Speaker 1: team members called Christiana, she tried it once and came
• 48:09
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• 48:10
  Speaker 3: She goes, this is the best product ever made.
• 48:13
  Speaker 1: And I think in part, that's because she really cares
• 48:15
  Speaker 1: about those cognitive benefits as I do, as John Jones does.
• 48:18
  Speaker 1: And as I think most of my listeners probably will.
• 48:20
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• 48:22
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• 48:26
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• 48:33
  Speaker 1: that might just change your life. So if you had
• 48:36
  Speaker 1: kids that were 16 years old now, Ray, and they said, Dad,
• 48:39
  Speaker 1: what do you think, based on everything you know about
• 48:41
  Speaker 1: the future, what should I be doing?
• 48:44
  Speaker 2: First of all, there's the question of what matters most
• 48:47
  Speaker 2: in your lifestyle. So I'm going to get philosophical, not
• 48:52
  Speaker 2: assuming that the highest income is the best, okay? because happiness,
• 48:59
  Speaker 2: you want happiness and health. And so in answering your question,
• 49:03
  Speaker 2: there's very little correlation between the amount of money you
• 49:08
  Speaker 2: have and the level of happiness that you have past
• 49:11
  Speaker 2: the basic level. And so I could be answer your
• 49:15
  Speaker 2: question first, which the obvious way is to say to
• 49:18
  Speaker 2: earn the most amount of money. And I want to
• 49:20
  Speaker 2: start off in saying that, you know, my experiences and
• 49:25
  Speaker 2: so on is like I love being in nature and
• 49:29
  Speaker 2: it doesn't cost me hardly anything. I mean, it depends
• 49:32
  Speaker 2: where your pull is. And so don't lose sight of
• 49:36
  Speaker 2: your pull and what it's about. What you want to
• 49:40
  Speaker 2: do is you want to get above the level that
• 49:43
  Speaker 2: you don't have to panic. We just earlier discussed how
• 49:47
  Speaker 2: many months can I live and to be able to
• 49:50
  Speaker 2: secure that and to be excited and have that passion
• 49:54
  Speaker 2: or whatever it is, the life that I want to have.
• 49:57
  Speaker 2: So I just want to emphasize, keep in mind of that.
• 50:00
  Speaker 2: But then also, you know, my principle is make your
• 50:04
  Speaker 2: work and your passion the same thing and don't forget
• 50:07
  Speaker 2: about the money part.
• 50:09
  Speaker 1: Right.
• 50:10
  Speaker 2: So know your nature. This is what I tell my grandkids. OK,
• 50:16
  Speaker 2: you have a feel and you also have a nature.
• 50:19
  Speaker 2: It's not just your preferences. People think differently. Some are
• 50:24
  Speaker 2: more adventurous. Some are less adventurous. Some are more conceptual
• 50:30
  Speaker 2: or artistic and can think with imagination. And they love
• 50:34
  Speaker 2: doing that. Some people don't like that. Some people want
• 50:38
  Speaker 2: to make life should be more concrete and more certain
• 50:42
  Speaker 2: and so on. That's your nature. You're partially, you're a
• 50:45
  Speaker 2: lot born with that nature and you also learn it
• 50:48
  Speaker 2: in your earlier years. We know this of how neuroplasticity
• 50:53
  Speaker 2: works and so on. So we are all on a
• 50:56
  Speaker 2: journey to find the match between our nature and our path.
• 51:02
  Speaker 2: And you find that path But you can't forget about
• 51:06
  Speaker 2: this money part on your pursuing that path.
• 51:09
  Speaker 3: Don't forget about the money.
• 51:10
  Speaker 1: So if your grandkids came to you and they said,
• 51:13
  Speaker 1: I want to become a lawyer, would you say, listen,
• 51:17
  Speaker 1: that's forgetting about the money because I think AI might
• 51:20
  Speaker 1: take that job?
• 51:20
  Speaker 3: Or would you say yes? Would you, if they said,
• 51:22
  Speaker 3: I want to be, I want to do a thinking job.
• 51:25
  Speaker 2: Let me say that history has shown that it's not
• 51:31
  Speaker 2: the most intelligent people or the most intelligent species that
• 51:36
  Speaker 2: are the most successful. And it's not necessarily those that
• 51:42
  Speaker 2: work the hardest, although these things are very important. It
• 51:46
  Speaker 2: is those species and people who are also most adaptable.
• 51:53
  Speaker 2: And so there's going to be great change in your lifetime, okay?
• 51:57
  Speaker 2: And so, yes, today it's artificial intelligence. But if you
• 52:03
  Speaker 2: went back not long ago, we didn't even know artificial
• 52:07
  Speaker 2: intelligence would exist the way artificial intelligence today exists. And
• 52:12
  Speaker 2: the future will be like that. So when you're nailing
• 52:15
  Speaker 2: it down, you know, it used to be make sure
• 52:18
  Speaker 2: that you know how to code. And then Claude Code
• 52:22
  Speaker 2: comes along. And all of those who are coding are
• 52:26
  Speaker 2: worried about their jobs. Okay. So what is it that matters? Okay.
• 52:32
  Speaker 2: It is the approach to life in a sense that
• 52:37
  Speaker 2: produces that, you know, the general understanding and also the adaptability.
• 52:43
  Speaker 2: I think a lot has to do with knowing yourself.
• 52:46
  Speaker 2: That's why in building Bridgewater, the personalities of the person
• 52:51
  Speaker 2: were very important in what suited their jobs. And then
• 52:55
  Speaker 2: I built this personality profile test. Then I made it
• 53:00
  Speaker 2: online for anybody to look. Go take. It's about 30 minutes.
• 53:04
  Speaker 2: It's free online. It's called Principles U. That'll tell you
• 53:08
  Speaker 2: a lot about your nature, okay? But your goal is
• 53:11
  Speaker 2: to find that nature and what are the paths. And
• 53:15
  Speaker 2: there are several paths, and they're constantly changing to find
• 53:19
  Speaker 2: that nature, okay? You'd experiment. You learn, okay? But, you know,
• 53:24
  Speaker 2: you probably were pulled into this job by your nature, right?
• 53:29
  Speaker 2: And you made it work. And here it is. It
• 53:32
  Speaker 2: works in all of those dimensions. And it's like that
• 53:35
  Speaker 2: for everybody.
• 53:36
  Speaker 3: Yeah, it's interesting because you look forward to the future.
• 53:39
  Speaker 1: And I think if I was a young person at
• 53:41
  Speaker 1: this stage and I was trying to set out where
• 53:43
  Speaker 1: to aim my career, I would be more confused now
• 53:46
  Speaker 1: than ever before, especially because they're also contending with this
• 53:49
  Speaker 1: unemployability crisis amongst entry levels.
• 53:52
  Speaker 2: But if you're talking about you'd be confused because you
• 53:57
  Speaker 2: can't anticipate the future, that's right. That's just the way
• 54:02
  Speaker 2: it is, right? And if you say, what is it
• 54:06
  Speaker 2: that I need given that reality? Okay, I need to learn.
• 54:13
  Speaker 2: I need to know how to maximize the use of
• 54:16
  Speaker 2: tools like AI to be able to increase what I
• 54:21
  Speaker 2: know and how do I use that to the best
• 54:24
  Speaker 2: of my ability to be as useful as possible doing
• 54:28
  Speaker 2: things that fulfill me. Mm-hmm. Okay? So that's what you
• 54:33
  Speaker 2: need to do. You're asking what you need to do.
• 54:35
  Speaker 2: Just get over the fact that you don't know what
• 54:38
  Speaker 2: the future is going to be like. So if you're
• 54:40
  Speaker 2: looking for an answer, is it going to be a
• 54:42
  Speaker 2: computer programmer? Is it going to be this or that? No,
• 54:45
  Speaker 2: just maximize your ability to know, which is so easy
• 54:50
  Speaker 2: to do nowadays, right? So maximize that and then use
• 54:55
  Speaker 2: that to maximize your usefulness and jobs that make you
• 54:59
  Speaker 2: happy and That's the thing that that's the best I
• 55:03
  Speaker 2: can give you in terms of more of my 16
• 55:06
  Speaker 2: year old. That's the best I can give them because
• 55:10
  Speaker 2: I don't want to mislead them that it's the thing
• 55:13
  Speaker 2: that it's the particular job. Okay. That'll mislead them.
• 55:19
  Speaker 1: You talked about this 80 year cycle, which results in
• 55:22
  Speaker 1: this new world order. And it sounded like you were
• 55:24
  Speaker 1: saying that near the end of the cycle, you see
• 55:27
  Speaker 1: wealth inequality. And you see the Gilded Age where some
• 55:31
  Speaker 1: people have lots of nice things and other people at
• 55:33
  Speaker 1: the other end are struggling. And this is a function
• 55:35
  Speaker 1: of capitalism.
• 55:36
  Speaker 2: First of all, it's a reality that it's not only
• 55:46
  Speaker 2: just a wealth gap difference. And if the majority system
• 55:52
  Speaker 2: is not working for the majority, well, you're going to
• 55:54
  Speaker 2: have a problem. And yes. it's contributed to these things
• 56:00
  Speaker 2: where one wants to create more opportunity through education and
• 56:06
  Speaker 2: through other basics, that there's a certain level at a
• 56:09
  Speaker 2: floor that nobody should go underneath because it's bad for
• 56:16
  Speaker 2: them and it's bad for the society. And just to
• 56:18
  Speaker 2: embellish on that point, my wife and I live in Connecticut.
• 56:22
  Speaker 2: It's the on a per capita income basis, I think
• 56:26
  Speaker 2: it's the second richest state. But 22% of the high
• 56:30
  Speaker 2: school students have either dropped out of high school or
• 56:34
  Speaker 2: are failing with absentee rates of greater than 25%. And
• 56:39
  Speaker 2: as a result, a lot of it is gangs, shootings, drugs,
• 56:44
  Speaker 2: and so on that leads to a lot of incarcerations.
• 56:48
  Speaker 2: And the bill for incarcerations has become larger than the
• 56:53
  Speaker 2: education budget. When you have that kind of cycle and
• 56:57
  Speaker 2: so on, the system has to work for most of
• 57:00
  Speaker 2: the people. And so you have that dynamic. But it
• 57:06
  Speaker 2: all comes down to productivity. And so the way I
• 57:10
  Speaker 2: look at it is the government run by almost anybody
• 57:14
  Speaker 2: can't make these things run well. I mean, governments do
• 57:18
  Speaker 2: not make things run well. So what is it like
• 57:21
  Speaker 2: to give them the money and expect that they're going
• 57:24
  Speaker 2: to make things work well. And so you look at
• 57:27
  Speaker 2: this set of circumstances and you say, who is going
• 57:30
  Speaker 2: to make it work well? And I don't know the answer.
• 57:33
  Speaker 2: And these are budget considerations and so on. You have
• 57:36
  Speaker 2: to prioritize the things that make it work well. And
• 57:40
  Speaker 2: you know what that is? That is educating people to
• 57:44
  Speaker 2: be productive and civil. We don't talk enough about civility,
• 57:48
  Speaker 2: you know, how you work together to be able to
• 57:51
  Speaker 2: achieve a productive result. And the way these cycles go,
• 57:55
  Speaker 2: it's more likely that they're going to have a big
• 57:57
  Speaker 2: fight and we're going to have a debt problem and
• 58:01
  Speaker 2: those kinds of things than how we're going to come
• 58:04
  Speaker 2: together and work out how to achieve this environment, which
• 58:09
  Speaker 2: takes care of wonderful education and productivity of people and
• 58:13
  Speaker 2: all of that to make the society work better. for
• 58:17
  Speaker 2: most people. And that's the way it looks. And that's
• 58:20
  Speaker 2: what's happened.
• 58:21
  Speaker 3: Capitalism leads to inequality, it seems.
• 58:24
  Speaker 2: Yeah. It doesn't have to. There are some societies like
• 58:30
  Speaker 2: in Singapore, some of the Scandinavian countries, some societies, there
• 58:36
  Speaker 2: is a floor that everybody can have good education, adequate housing,
• 58:45
  Speaker 2: and adequate health care. the foundations, okay? Because if you
• 58:50
  Speaker 2: go below those levels, the society will pay terribly for
• 58:57
  Speaker 2: it because those people will become liabilities, not assets of
• 59:02
  Speaker 2: the society. They'll be disruptive.
• 59:04
  Speaker 1: So what about wealth taxes? Because this is the big
• 59:07
  Speaker 1: debate now. The big debate in the UK at the
• 59:09
  Speaker 1: moment is taxes. rich it's been all over our news
• 59:11
  Speaker 1: over the last couple of weeks the big debate in
• 59:13
  Speaker 1: New York and LA is wealth taxes and tax the
• 59:15
  Speaker 1: rich good idea bad idea it's.
• 59:18
  Speaker 2: A very difficult idea in the following ways I'm just
• 59:23
  Speaker 2: talking about the mechanics they have to sell the wealth
• 59:28
  Speaker 2: and and that contributes to get the money to pay
• 59:31
  Speaker 2: the taxes, that's one of those things that can cause
• 59:35
  Speaker 2: the bubble to burst as we're talking about. And then operationally,
• 59:41
  Speaker 2: it's very difficult, unlike if they did it as stepped
• 59:45
  Speaker 2: up tax bases. In other words, right now, when you die,
• 59:50
  Speaker 2: your capital gains gets put aside and you don't have
• 59:54
  Speaker 2: to pay capital gains taxes, you pay inheritance taxes. And
• 59:57
  Speaker 2: there are ways that you can raise taxes and not
• 1:00:02
  Speaker 2: hurt the economy. But we do have to realize that
• 1:00:06
  Speaker 2: it will lessen investment because what wealth is mostly used
• 1:00:10
  Speaker 2: for is to put it into investment. So you have
• 1:00:13
  Speaker 2: to do this with a, at the same time, the
• 1:00:16
  Speaker 2: improvements in those that are going to improve productivity like
• 1:00:22
  Speaker 2: education and so on. If you're just making transfer payments,
• 1:00:26
  Speaker 2: wealth payments, And you undermine the productivity of the society
• 1:00:31
  Speaker 2: by doing that. In other words, you're just giving it
• 1:00:34
  Speaker 2: for consumption and so on. And the money is going
• 1:00:37
  Speaker 2: from what was capital expenditures and those kinds of investments
• 1:00:42
  Speaker 2: that make a better, more productive society to go to,
• 1:00:47
  Speaker 2: in a sense, consumption and so on that doesn't produce
• 1:00:51
  Speaker 2: that productivity. That's going to be a problem. So you
• 1:00:54
  Speaker 2: have to think. How do you make people productive and
• 1:00:58
  Speaker 2: how do you make your society productive for most people?
• 1:01:02
  Speaker 2: Or you're going to have to find a way where
• 1:01:06
  Speaker 2: you say that other group of people who is not productive,
• 1:01:11
  Speaker 2: the overall society can have a higher level of productivity,
• 1:01:14
  Speaker 2: but we're going to still establish this bottom that I'm
• 1:01:17
  Speaker 2: talking about, the bottom in education, the bottom in conditions.
• 1:01:21
  Speaker 2: And then you have to say, who is capable of
• 1:01:23
  Speaker 2: doing it? Buildings. A society that will be productive.
• 1:01:29
  Speaker 3: Who is that?
• 1:01:30
  Speaker 2: Well, as I say, you have this dynamic problem that
• 1:01:36
  Speaker 2: typically a privately owned, capitalist-owned business will do better than
• 1:01:43
  Speaker 2: their government counterparty.
• 1:01:47
  Speaker 1: Okay, so a business is more productive typically than a
• 1:01:50
  Speaker 1: government entity.
• 1:01:51
  Speaker 2: That system.
• 1:01:52
  Speaker 3: So entrepreneurship.
• 1:01:52
  Speaker 2: Entrepreneurship.
• 1:01:53
  Speaker 3: You need entrepreneurship.
• 1:01:54
  Speaker 2: Yeah, and capitalists. In other words, people who are capable
• 1:01:58
  Speaker 2: of making the thing they're responsible for productive. Okay? Run efficiently.
• 1:02:04
  Speaker 2: Run efficiently. So you need those indisputably. And if you're
• 1:02:08
  Speaker 2: doing that in government, you need that in government in
• 1:02:12
  Speaker 2: order to be able to do it. And government has
• 1:02:14
  Speaker 2: its own– first of all, it doesn't attract many of
• 1:02:18
  Speaker 2: those people. And then it also has, by its nature,
• 1:02:21
  Speaker 2: knowing many people have gone into it, it is almost
• 1:02:25
  Speaker 2: dysfunctional as it causes all of this arguing and problems.
• 1:02:31
  Speaker 2: So those who want to be most productive tend not
• 1:02:34
  Speaker 2: to go there. And also, it doesn't distribute well. These
• 1:02:39
  Speaker 2: people do not, they're not on the ground. They don't
• 1:02:42
  Speaker 2: have the direct contact. They don't know what it's like.
• 1:02:45
  Speaker 2: And as I'm describing, I see this- Politicians. Yeah, the
• 1:02:49
  Speaker 2: politician who says, I'm going to, you know, So you
• 1:02:53
  Speaker 2: still have to come back to the question, who's going
• 1:02:55
  Speaker 2: to make it run efficiently?
• 1:02:58
  Speaker 1: This is something that I've made for you. I've realized
• 1:03:01
  Speaker 1: that the Diary of a CEO audience are strivers, whether
• 1:03:03
  Speaker 1: it's in business or health, we all have big goals
• 1:03:06
  Speaker 1: that we want to accomplish. And one of the things
• 1:03:08
  Speaker 1: I've learned is that when you aim at the big, big,
• 1:03:11
  Speaker 1: big goal, it can feel incredibly psychologically uncomfortable because it's
• 1:03:16
  Speaker 1: kind of like being stood at the foot of Mount
• 1:03:18
  Speaker 1: Everest and looking upwards. The way to accomplish your goals
• 1:03:21
  Speaker 1: is by breaking them down into tiny, small steps. And
• 1:03:25
  Speaker 1: we call this in our team, the 1%. And actually
• 1:03:27
  Speaker 1: this philosophy is highly responsible for much of our success here.
• 1:03:31
  Speaker 1: So what we've done so that you at home can
• 1:03:33
  Speaker 1: accomplish any big goal that you have is we've made
• 1:03:36
  Speaker 1: these 1% diaries and we released these last year and
• 1:03:39
  Speaker 1: they all sold out.
• 1:03:41
  Speaker 3: So I asked.
• 1:03:41
  Speaker 1: My team over and over again to bring the diaries back,
• 1:03:43
  Speaker 1: but also to introduce some new colors and to make
• 1:03:46
  Speaker 1: some minor tweaks to the diary.
• 1:03:47
  Speaker 2: So now.
• 1:03:48
  Speaker 1: we have a better range for you. So if you
• 1:03:52
  Speaker 1: have a big goal in mind and you need a
• 1:03:54
  Speaker 1: framework and a process and some motivation, then I highly
• 1:03:57
  Speaker 1: recommend you get one of these diaries before they all
• 1:04:00
  Speaker 1: sell out once again. And you can get yours at thediary.com.
• 1:04:04
  Speaker 1: And if you want the link, the link is in
• 1:04:05
  Speaker 1: the description below. What is the UK currently a cautionary
• 1:04:09
  Speaker 1: tale of?
• 1:04:10
  Speaker 2: It's the classic cycle. They have gotten over-indebted. underproductive and
• 1:04:19
  Speaker 2: they've run out of choices. In other words, there's not
• 1:04:24
  Speaker 2: enough money. Okay. And because there's not enough money to
• 1:04:31
  Speaker 2: do all the things, then they've gotten this internal political
• 1:04:37
  Speaker 2: conflict going. And you've had six out of the last
• 1:04:42
  Speaker 2: seven years, you've had a new prime minister. because somebody
• 1:04:46
  Speaker 2: else comes in and they got their promise. And the
• 1:04:50
  Speaker 2: promise doesn't pan out. And it doesn't take long to
• 1:04:54
  Speaker 2: be that, I don't believe your promise anymore. So you
• 1:04:56
  Speaker 2: bring the people in and then you throw them out.
• 1:05:00
  Speaker 3: We just had a new prime minister yesterday.
• 1:05:02
  Speaker 2: Yeah, I know. It's all part of this cycle. And
• 1:05:05
  Speaker 2: so what happens is they don't have the financial and
• 1:05:08
  Speaker 2: the people move. It's just logical, right? It's just when
• 1:05:12
  Speaker 2: you're heavily indebted, and you're not as productive and you've
• 1:05:17
  Speaker 2: got large wealth gaps, what are you going to do?
• 1:05:20
  Speaker 2: It's politics. You're going to say, I can't raise taxes
• 1:05:24
  Speaker 2: because if I raise taxes, besides having great in conflict,
• 1:05:29
  Speaker 2: people are going to leave. Okay. So I can't, I
• 1:05:33
  Speaker 2: can't cut benefits because those who are receiving whatever those
• 1:05:37
  Speaker 2: benefits are, are the ones that are suffering. I mean,
• 1:05:40
  Speaker 2: what am I going to do? Cut those benefits. So now, okay.
• 1:05:45
  Speaker 2: But wait a second, I'm running a big deficit or
• 1:05:48
  Speaker 2: I don't have enough money. So where does the money
• 1:05:50
  Speaker 2: come from? How do I get out of not getting
• 1:05:53
  Speaker 2: more in debt? And then what does that mean for
• 1:05:55
  Speaker 2: the person who's lending to you? They don't want to
• 1:05:59
  Speaker 2: lend to you, right? So you're not going to get
• 1:06:01
  Speaker 2: the money to finance the deficits. It's mechanics.
• 1:06:06
  Speaker 3: So what is it they have to do to get
• 1:06:08
  Speaker 3: out of that situation?
• 1:06:09
  Speaker 2: They're going to have to have a major... You're going
• 1:06:14
  Speaker 2: to have to write down. Yeah, well, the way the
• 1:06:20
  Speaker 2: central banks work now is they do a mixture of
• 1:06:23
  Speaker 2: printing money, which produces inflation, and then restructuring the debt
• 1:06:30
  Speaker 2: in some way, like maybe changing the maturity. And in
• 1:06:34
  Speaker 2: these cycles, quite often they put in capital controls because
• 1:06:39
  Speaker 2: they think people are leaving. So they don't want them
• 1:06:42
  Speaker 2: to leave and take their money with them. So they
• 1:06:44
  Speaker 2: put in capital controls that says you can't leave with
• 1:06:48
  Speaker 2: your money, okay, and they'll have exit taxes. And that's
• 1:06:51
  Speaker 2: the type of thing that happens until, you know, there's
• 1:06:55
  Speaker 2: a period of great turbulence. Then you, through a combination
• 1:06:59
  Speaker 2: of restructuring the debt, restructuring the debt means like quite
• 1:07:04
  Speaker 2: often you lengthen the maturity of the debt. I think
• 1:07:07
  Speaker 2: what's needed is a strong middle. What does that mean?
• 1:07:12
  Speaker 2: Right now, there's a left and right, and they're extreme.
• 1:07:16
  Speaker 2: And as long as they're at war with each other,
• 1:07:18
  Speaker 2: that's going to make things worse.
• 1:07:20
  Speaker 3: Yeah.
• 1:07:21
  Speaker 2: If you can find that middle course so that those
• 1:07:26
  Speaker 2: at most extreme are more alienated than those who say,
• 1:07:34
  Speaker 2: you know, we're going to have to figure this out together.
• 1:07:37
  Speaker 2: And then what I would do that leadership, that core,
• 1:07:42
  Speaker 2: I would have something like a bipartisan commission in which
• 1:07:48
  Speaker 2: smart people, meaning who understand how economics and these things work,
• 1:07:54
  Speaker 2: both parties work together to come up with a small
• 1:07:59
  Speaker 2: and difficult plan. In other words, you're going to have
• 1:08:02
  Speaker 2: to make difficult changes in order to make that work well.
• 1:08:08
  Speaker 2: But if you can achieve that, you know, like sometimes
• 1:08:12
  Speaker 2: in history, great leaders of opposing sides have been able
• 1:08:16
  Speaker 2: to come up with a plan. I mean, that's how
• 1:08:19
  Speaker 2: the Constitution was made. You come up with a plan
• 1:08:22
  Speaker 2: for operating that way, and then you impose those difficult changes.
• 1:08:28
  Speaker 2: And when I say this, I say that that's very
• 1:08:32
  Speaker 2: difficult and very long shot. But unless you have bipartisan support,
• 1:08:39
  Speaker 2: unless you do it in a way where the pain
• 1:08:42
  Speaker 2: is shared and there's a sense that we're doing the
• 1:08:51
  Speaker 2: right thing, as well as not a sense, just a
• 1:08:54
  Speaker 2: reality of doing the right thing, to make most people productive.
• 1:08:59
  Speaker 2: That is the best path forward.
• 1:09:01
  Speaker 1: If you were a young entrepreneur, you know, 21 years old,
• 1:09:07
  Speaker 1: would you build a company in the UK now if
• 1:09:11
  Speaker 1: you had a choice?
• 1:09:12
  Speaker 3: And if not, why not? And if so, why?
• 1:09:14
  Speaker 2: I would exist without... and try to exist without borders.
• 1:09:18
  Speaker 3: What does that mean, practically?
• 1:09:19
  Speaker 2: In other words, put aside all of these things that
• 1:09:22
  Speaker 2: we're talking about to a large extent and say, where
• 1:09:26
  Speaker 2: are the places in the world that have the vibrancy,
• 1:09:31
  Speaker 2: that have the capital, that have the elements that are needed?
• 1:09:36
  Speaker 2: There are bright spots in the world, and I'd want
• 1:09:39
  Speaker 2: to be around the most intelligent, doing the most cutting-edge,
• 1:09:44
  Speaker 2: terrific things, and be global. In other words, don't be
• 1:09:48
  Speaker 2: just stuck in a provincial place. Go to these places
• 1:09:53
  Speaker 2: that are what I might call almost Renaissance states that
• 1:09:57
  Speaker 2: are good things are happening. And these qualities exist that
• 1:10:01
  Speaker 2: not only good education, the civility, the vibrancy, be in
• 1:10:05
  Speaker 2: those places, but be able not just in one. There's
• 1:10:09
  Speaker 2: a Chinese, not a Chinese Hong Kong expression. I think
• 1:10:12
  Speaker 2: that a smart rabbit has three holes. And what it
• 1:10:15
  Speaker 2: means is like if the one place that you go to,
• 1:10:20
  Speaker 2: it may not be the place that remains the best place.
• 1:10:24
  Speaker 2: There are riskier places. The riskier places are those that
• 1:10:28
  Speaker 2: don't have the elements I mentioned, the education, the civility,
• 1:10:31
  Speaker 2: the productivity, all of those things.
• 1:10:34
  Speaker 1: So would one of those places for you be the
• 1:10:36
  Speaker 1: United Kingdom?
• 1:10:36
  Speaker 3: Because me and my friends talk about this sometimes.
• 1:10:39
  Speaker 1: I've invested in lots of companies there, and the founders
• 1:10:41
  Speaker 1: come to me and ask me these kinds of questions,
• 1:10:42
  Speaker 1: which is, is based on everything that's going on with
• 1:10:45
  Speaker 1: this turmoil and the big cycle. Um, what's going to
• 1:10:48
  Speaker 1: happen if I continue to build my company here in
• 1:10:50
  Speaker 1: the United Kingdom?
• 1:10:51
  Speaker 2: I think that, um, I think the United Kingdom, as
• 1:10:55
  Speaker 2: it goes through these difficulties is as a whole, a
• 1:11:00
  Speaker 2: more difficult place. And then there are pockets of it
• 1:11:05
  Speaker 2: that when they're operating are in their pockets very stimulative
• 1:11:11
  Speaker 2: having those elements, just like in the United States, there
• 1:11:14
  Speaker 2: are places and pockets that have those. However, they're within
• 1:11:18
  Speaker 2: a system and a place that is not healthy.
• 1:11:26
  Speaker 1: The real dominant narrative we're seeing, as I said this week,
• 1:11:28
  Speaker 1: is that because there's this problem, you said there's not
• 1:11:30
  Speaker 1: enough money, the most popular narrative, which I think is
• 1:11:36
  Speaker 1: supported by about 70% of people, is that people over
• 1:11:40
  Speaker 1: 10 million net worth, this is something proposed by one
• 1:11:44
  Speaker 1: of my former guests, Gary Stevens, who did a documentary
• 1:11:46
  Speaker 1: last week, should have a 2% wealth tax.
• 1:11:49
  Speaker 6: My preferred way is to stop people from hoarding enormous
• 1:11:52
  Speaker 6: amounts of wealth for enormous amounts of time. That's basically
• 1:11:55
  Speaker 6: my preferred method. There's also the wealth tax method. There's
• 1:11:58
  Speaker 6: also capital gains as a method. There's a lot of
• 1:12:00
  Speaker 6: different ways here. There's a lot of different ways here,
• 1:12:02
  Speaker 6: but you have to deal with the problem of, if
• 1:12:04
  Speaker 6: you do not tax very wealthy individuals and very wealthy families,
• 1:12:08
  Speaker 6: their share of the pie will obviously grow over time,
• 1:12:10
  Speaker 6: and they will, and they are, as we are watching,
• 1:12:13
  Speaker 6: squeezing out ordinary families.
• 1:12:15
  Speaker 1: And this is kind of, it would raise, I think
• 1:12:17
  Speaker 1: they said $ 20 billion or something like that, but it
• 1:12:20
  Speaker 1: would raise some money. So the big debate in the
• 1:12:23
  Speaker 1: country at the moment is, yeah, do we, one way
• 1:12:25
  Speaker 1: to raise money would be this wealth tax. Proponents of that,
• 1:12:27
  Speaker 1: or I should say, people that are against that say
• 1:12:31
  Speaker 1: people will leave.
• 1:12:32
  Speaker 2: If you took all of the money of, people in
• 1:12:37
  Speaker 2: the top, in other words, taxed at 100%, you're not
• 1:12:43
  Speaker 2: going to come up with enough money because it's such
• 1:12:46
  Speaker 2: a small percentage of the population. But in addition, yes,
• 1:12:51
  Speaker 2: the people will leave. Then you change the laws so
• 1:12:55
  Speaker 2: that you make them retroactive. In other words, you say
• 1:13:01
  Speaker 2: the law means you're going to be taxed as of
• 1:13:05
  Speaker 2: a past date, so that if you leave, we're going
• 1:13:10
  Speaker 2: to get your money. Or then you put in capital controls.
• 1:13:14
  Speaker 2: All of this has happened before. Wealth taxes would be new.
• 1:13:18
  Speaker 2: Wealth taxes are administratively difficult, because how do you value
• 1:13:23
  Speaker 2: all this wealth that is not easily valued and such things?
• 1:13:27
  Speaker 2: But yes, what you've just said is well-recognized.
• 1:13:31
  Speaker 1: You mentioned earlier that this big cycle takes place, this
• 1:13:34
  Speaker 1: one here on the front of your book, The Changing
• 1:13:35
  Speaker 1: World Order. happens roughly every 80 years.
• 1:13:39
  Speaker 2: Yes, it's like health. What I mean is it varies.
• 1:13:45
  Speaker 2: On average, let's say, what is the life expectancy of
• 1:13:50
  Speaker 2: a person? But life expectancies or how long people live vary.
• 1:13:55
  Speaker 2: I wouldn't emphasize too much the amount of time exactly.
• 1:14:01
  Speaker 2: As much as I would look at your condition.
• 1:14:05
  Speaker 1: Where are we in this at the moment in terms
• 1:14:07
  Speaker 1: of the symptoms or markers of the next big collapse?
• 1:14:11
  Speaker 2: Well, we're over in this vicinity over here. You know,
• 1:14:16
  Speaker 2: we're on the, when we say that the US, the UK,
• 1:14:22
  Speaker 2: a number of other countries are later in that cycle
• 1:14:27
  Speaker 2: when There's the loss of the things that we've been
• 1:14:31
  Speaker 2: talking about, over-indebtedness, more over-indebtedness, the loss of power.
• 1:14:36
  Speaker 3: So we're in the collapse period of the decline.
• 1:14:38
  Speaker 2: Yeah, the decline. I'll call that the decline.
• 1:14:40
  Speaker 3: And you've studied this for how long?
• 1:14:43
  Speaker 2: In terms of- About 500 years, the cycles for 500 years.
• 1:14:46
  Speaker 2: I'm in a number of countries that's in that book.
• 1:14:49
  Speaker 2: These are objective measures. This is not subjectivity. You can
• 1:14:54
  Speaker 2: measure these things. You can measure the level of indebtedness.
• 1:14:57
  Speaker 2: You can measure the education levels, the competitiveness. You can
• 1:15:03
  Speaker 2: measure all these things in clearly measurable numbers that show
• 1:15:08
  Speaker 2: the health just like a physical exam.
• 1:15:11
  Speaker 3: When there's a new world order because of this decline,
• 1:15:14
  Speaker 3: through history over the last 500 years, has there ever
• 1:15:17
  Speaker 3: been two superpowers that emerged as the dominant superpowers? Or
• 1:15:21
  Speaker 3: is it just tends to be one?
• 1:15:23
  Speaker 2: In the past, prior to World War I, there was
• 1:15:27
  Speaker 2: no World War I happened and then World War II
• 1:15:32
  Speaker 2: happened because the world came together and there was one world, essentially.
• 1:15:39
  Speaker 2: Before that, there were regions and they would have the
• 1:15:42
  Speaker 2: different powers and you could have a powerful China or
• 1:15:46
  Speaker 2: India could be very powerful at the same time as
• 1:15:49
  Speaker 2: the UK or the Dutch and whatever would be powerful.
• 1:15:54
  Speaker 2: And they weren't in that one world. And the basic
• 1:15:57
  Speaker 2: issue is when you have one world and you have disagreements,
• 1:16:03
  Speaker 2: you're always going to have disagreements. How do you resolve
• 1:16:06
  Speaker 2: those disagreements?
• 1:16:08
  Speaker 4: War.
• 1:16:09
  Speaker 2: War. Okay. Maybe it's not physical war. Maybe it's whatever
• 1:16:13
  Speaker 2: it is. But there's a disagreement. Where does the border lie?
• 1:16:16
  Speaker 2: Where does this– okay. The rules-based order is a theoretical–
• 1:16:25
  Speaker 2: conception of the United States coming out of World War
• 1:16:29
  Speaker 2: II because there's the idea of how do you govern
• 1:16:32
  Speaker 2: and you have representatives and you have them in the
• 1:16:35
  Speaker 2: United Nations and so on. And, you know, that's a
• 1:16:39
  Speaker 2: nice theory. But the reality is when that comes in
• 1:16:43
  Speaker 2: is inconsistent with power, which wins power or that rule
• 1:16:49
  Speaker 2: based system? So by nature, to answer your question, It
• 1:16:54
  Speaker 2: tends to be a dominant power. We will see. China
• 1:16:57
  Speaker 2: and I think the United States, I think the most
• 1:17:00
  Speaker 2: likely beneficial outcome is that it becomes more regional, okay?
• 1:17:07
  Speaker 2: China has no desire to occupy, control other countries for
• 1:17:15
  Speaker 2: various cultural reasons and things that I can go into.
• 1:17:18
  Speaker 2: And their basic objective is to not be cut off,
• 1:17:21
  Speaker 2: not be harmed, and then also be as good as
• 1:17:24
  Speaker 2: they can be, and be competitive following their approach to
• 1:17:29
  Speaker 2: a system which is very much a top-down controlled system
• 1:17:34
  Speaker 2: that's an extension of Confucianism, which is like the family,
• 1:17:38
  Speaker 2: and that's what they want to do. You can possibly
• 1:17:41
  Speaker 2: have this region thing, but you're not going to have
• 1:17:44
  Speaker 2: the dominant world power if that's the case. You have
• 1:17:47
  Speaker 2: some chance that there's a great conflict, but I think
• 1:17:51
  Speaker 2: that there's enough wisdom there in a sense, to not
• 1:17:56
  Speaker 2: want to go there.
• 1:17:57
  Speaker 1: So there's always, there's pretty much always been a superpower
• 1:18:00
  Speaker 1: through different cycles. There's been one dominant power through these
• 1:18:02
  Speaker 1: historical cycles. You're saying that you believe in the next decline,
• 1:18:08
  Speaker 1: there won't be one dominant power, which has been the
• 1:18:11
  Speaker 1: US for the last 80 odd years.
• 1:18:12
  Speaker 3: There will be two.
• 1:18:14
  Speaker 1: Because you can't foresee there being a conflict at the
• 1:18:17
  Speaker 1: scale that would result in one dominant power.
• 1:18:20
  Speaker 2: The strength of each country will be how they take
• 1:18:24
  Speaker 2: care of themselves. Are they going to be strong or
• 1:18:28
  Speaker 2: are they going to be weak based on how they
• 1:18:30
  Speaker 2: educate their population, how they spend their money, how they
• 1:18:34
  Speaker 2: manage themselves? Those will determine the relative powers of those countries, right?
• 1:18:42
  Speaker 2: And so that'll be true certainly for the United States
• 1:18:45
  Speaker 2: and China. And so as we go forward, how will
• 1:18:47
  Speaker 2: those systems deal with those issues? in the best possible way?
• 1:18:51
  Speaker 2: And that I would say as long as the United
• 1:18:54
  Speaker 2: States remains a power, but it has a risk of
• 1:19:00
  Speaker 2: having a very bad set of circumstances through debt and
• 1:19:03
  Speaker 2: conflict and these things that erode it, it'll be from
• 1:19:08
  Speaker 2: within that those things particularly could change that relative balance
• 1:19:15
  Speaker 2: of power. And similarly, if China managed itself badly, that
• 1:19:19
  Speaker 2: could change that. Given that if they both remain powerful entities,
• 1:19:24
  Speaker 2: then what you're going to see is, I believe, more
• 1:19:29
  Speaker 2: the recognition that there are regions, okay? Just like there's
• 1:19:35
  Speaker 2: the Americas, okay? And that becomes heavily much more the
• 1:19:41
  Speaker 2: region and where that spills over. And then there's the
• 1:19:44
  Speaker 2: region around China, the APAC countries and that region, and
• 1:19:53
  Speaker 2: that there would be the development within those regions. And
• 1:19:57
  Speaker 2: I do believe the avoidance of the big war, that
• 1:20:03
  Speaker 2: would be very detrimental. There are issues like the Taiwan issue.
• 1:20:07
  Speaker 2: But the Taiwan issue will be handled by, in my opinion,
• 1:20:12
  Speaker 2: most likely, not militarily in the sense that there will
• 1:20:18
  Speaker 2: be a great war between the United States and China
• 1:20:20
  Speaker 2: over it, but in the pressures that are going to
• 1:20:23
  Speaker 2: be created so that there is a reunification of China.
• 1:20:28
  Speaker 3: You mentioned conflict there.
• 1:20:30
  Speaker 1: The United States are at war with Iran, and it
• 1:20:32
  Speaker 1: seems to be a war that they can't seem to
• 1:20:33
  Speaker 1: get out of. This is going to have an impact, presumably.
• 1:20:37
  Speaker 1: on lots of things you've described here, but also the
• 1:20:41
  Speaker 1: feelings of people at home as we face the prospect
• 1:20:44
  Speaker 1: of the United States sending troops on the ground into
• 1:20:47
  Speaker 1: Iran because this trade of Hormuz is going to become
• 1:20:49
  Speaker 1: this choke point to global energy. And what does Trump
• 1:20:53
  Speaker 1: do about that? It's like Vietnam, he can't leave or
• 1:20:56
  Speaker 1: else he is going to look bad. If he stays,
• 1:21:01
  Speaker 1: he looks bad. Midterm's coming up. What's your thoughts on
• 1:21:05
  Speaker 1: this war in Iran? Do you think it was a
• 1:21:06
  Speaker 1: bad idea? Do you think it was a good idea?
• 1:21:08
  Speaker 1: Do you think it was, do you think it's, does
• 1:21:11
  Speaker 1: it play a role in all of this stuff here?
• 1:21:13
  Speaker 2: Yeah, this war in Iran, I think it, here's what's happening. Internationally,
• 1:21:20
  Speaker 2: I speak to world leaders and so on, and particularly
• 1:21:26
  Speaker 2: in Asia, there's a recognition that the United States is
• 1:21:33
  Speaker 2: doesn't want to fight a war. So the litmus test is,
• 1:21:40
  Speaker 2: who controls the Strait of Hormuz? And that the United States,
• 1:21:45
  Speaker 2: the population in the United States is worried about gas
• 1:21:49
  Speaker 2: prices and losing people. And they want it to be
• 1:21:55
  Speaker 2: all over fast that you can't fight a war that way.
• 1:22:00
  Speaker 2: And so what you have is the United States will
• 1:22:03
  Speaker 2: not show up in Asia.
• 1:22:06
  Speaker 3: What does that mean, show up in Asia?
• 1:22:08
  Speaker 2: In Asia, there are all these countries who believe that
• 1:22:13
  Speaker 2: the United States was going to play an important role
• 1:22:16
  Speaker 2: as a counterbalancing influence for power in the region because
• 1:22:22
  Speaker 2: China is the dominant power and the others are much
• 1:22:25
  Speaker 2: less power. And so the United States being in there
• 1:22:29
  Speaker 2: was going to balance those power. And because they have
• 1:22:32
  Speaker 2: a military presence, the idea of having bases in their
• 1:22:37
  Speaker 2: countries was believed to be that will help that happen. Okay,
• 1:22:43
  Speaker 2: now there's a recognition that not only they want to
• 1:22:47
  Speaker 2: show up, but maybe these bases can become liabilities and
• 1:22:52
  Speaker 2: that the Chinese have a lot of influence and power
• 1:22:56
  Speaker 2: under that set of circumstances. For example— chips come out
• 1:23:01
  Speaker 2: of Taiwan. We could imagine what would happen if they
• 1:23:05
  Speaker 2: blockaded chips leaving Taiwan. Okay, you'd see the world stock
• 1:23:08
  Speaker 2: markets crash. You would see terrible, terrible things. That represents
• 1:23:14
  Speaker 2: a non-military power, just even the ability to threaten that. Say,
• 1:23:19
  Speaker 2: the Chinese say, for five days, we're not going to
• 1:23:21
  Speaker 2: have it. What will the United States literally do? Or
• 1:23:25
  Speaker 2: if you go to countries like the Philippines, which has
• 1:23:29
  Speaker 2: a treaty with the United States that's like a NATO treaty.
• 1:23:32
  Speaker 2: How would the American public react that we're going to
• 1:23:36
  Speaker 2: send military, you know, aircraft carriers and so on into
• 1:23:42
  Speaker 2: the Philippines to stop the Filipinos from being picked on
• 1:23:46
  Speaker 2: by the Chinese? I mean, so what you're seeing is
• 1:23:50
  Speaker 2: a change that is very similar to the British Empire
• 1:23:55
  Speaker 2: in terms of being picked I remember a time not
• 1:23:59
  Speaker 2: long ago that the United States would just have to
• 1:24:04
  Speaker 2: almost hint to a country that we would like this
• 1:24:07
  Speaker 2: thing to be this way or you would like it
• 1:24:10
  Speaker 2: to do that. And they would do it because of
• 1:24:13
  Speaker 2: the American power, not just military power, but economic power
• 1:24:18
  Speaker 2: and so on. Well, as you're seeing that power being eroded,
• 1:24:23
  Speaker 2: for example, China is a larger trading partner with most
• 1:24:27
  Speaker 2: countries than the United States is, or capital turning up.
• 1:24:32
  Speaker 2: So these things matter. So you're seeing that kind of
• 1:24:37
  Speaker 2: a shift in power. I'm a global macro investor, and
• 1:24:40
  Speaker 2: my goal is to be as accurate as I possibly can.
• 1:24:44
  Speaker 2: I can't let biases stand in my way of doing that.
• 1:24:48
  Speaker 2: So I look at statistics and measures and indicators and
• 1:24:51
  Speaker 2: so on. So what I'm saying is clear. It is
• 1:24:56
  Speaker 2: You know, it's apparent. It's mechanics.
• 1:24:59
  Speaker 3: So what does that mean for the Iran situation? Does
• 1:25:02
  Speaker 3: it mean that?
• 1:25:02
  Speaker 2: Well, it means that it's a very, very difficult situation.
• 1:25:06
  Speaker 2: What is all through history, and the Chinese know this
• 1:25:12
  Speaker 2: very well because their way of having a war is
• 1:25:15
  Speaker 2: conveyed in the art of war and also the tribute system,
• 1:25:20
  Speaker 2: as they call it. You cannot easily go in and
• 1:25:24
  Speaker 2: control a country. for a long period of time occupying.
• 1:25:28
  Speaker 2: There are 90 million Iranians and they will be there
• 1:25:33
  Speaker 2: no matter what happens. Now the question is, do you
• 1:25:37
  Speaker 2: have what it takes to take control of the Strait
• 1:25:42
  Speaker 2: of Hormuz by way of example and allow, in other words,
• 1:25:46
  Speaker 2: do you allow that to be in the hands of
• 1:25:48
  Speaker 2: the Iranians or do you not? And are you willing
• 1:25:52
  Speaker 2: to pay the price to be able to put yourself
• 1:25:56
  Speaker 2: in the position, which means take a lot of pain
• 1:26:00
  Speaker 2: and then enforce that for the, I don't know, forever
• 1:26:05
  Speaker 2: and ever future, because it's not just take control today.
• 1:26:10
  Speaker 2: It means, okay, how is that going to go on?
• 1:26:13
  Speaker 2: And what does that mean in these other locations? Does
• 1:26:16
  Speaker 2: the United States, they're going to do the same thing
• 1:26:19
  Speaker 2: with the Chinese in Asia? They're going to do the
• 1:26:21
  Speaker 2: same thing all around? Probably. Okay, so what does that mean? Okay,
• 1:26:27
  Speaker 2: a change in the world order.
• 1:26:29
  Speaker 3: It sounds like a big mistake.
• 1:26:31
  Speaker 2: Oh, yeah, it was a big mistake. And also what
• 1:26:34
  Speaker 2: it did is it shone a light on the vulnerability.
• 1:26:40
  Speaker 2: Before it didn't, it wasn't apparent.
• 1:26:43
  Speaker 3: Vulnerability of?
• 1:26:45
  Speaker 2: The United States in being able to enforce. You know,
• 1:26:48
  Speaker 2: when there's always the threat, we'll come in there, The
• 1:26:53
  Speaker 2: Strait is open. We're not dealing with this. And there's
• 1:26:58
  Speaker 2: always the threat that the United States will remain in control.
• 1:27:03
  Speaker 2: And that would be true in Asia and other places.
• 1:27:06
  Speaker 2: Now a light bulb goes off. In other words, like
• 1:27:10
  Speaker 2: the British and the Suez Canal, we didn't realize. Now
• 1:27:15
  Speaker 2: we realize.
• 1:27:16
  Speaker 3: That threats no longer work.
• 1:27:18
  Speaker 2: That that power no longer exists.
• 1:27:21
  Speaker 3: I guess we shall see.
• 1:27:22
  Speaker 1: Ray, thank you so much for committing this season of
• 1:27:25
  Speaker 1: your life to being more of a public educator because
• 1:27:27
  Speaker 1: your books here that have been read by millions, millions
• 1:27:30
  Speaker 1: and millions of people and the videos that you produce
• 1:27:32
  Speaker 1: that have been watched by tens and tens, hundreds of
• 1:27:33
  Speaker 1: millions of people have been so formative for so many
• 1:27:36
  Speaker 1: of us understanding the world in simplified ways. And what
• 1:27:39
  Speaker 1: I love about the work that you do is you
• 1:27:41
  Speaker 1: explain the world through principles versus tactics and strategies which
• 1:27:45
  Speaker 1: are a little bit more ephemeral than understanding the underlying principles.
• 1:27:49
  Speaker 3: And I think it does two things.
• 1:27:50
  Speaker 1: It helps us understand the world in ways that are
• 1:27:52
  Speaker 1: allow us to see past the current short-term moment that
• 1:27:55
  Speaker 1: we're in. But it also helps us think generally from
• 1:27:58
  Speaker 1: a more macro perspective about how all these things connect together.
• 1:28:01
  Speaker 1: And I think that's broadly applicable. The idea of like
• 1:28:03
  Speaker 1: principled thinking is broadly applicable to all areas of life,
• 1:28:06
  Speaker 1: whether it's your relationships or your business or your health,
• 1:28:08
  Speaker 1: whatever it might be. And you've really written the definitive
• 1:28:11
  Speaker 1: books on this subject matter. I've got all of them here.
• 1:28:12
  Speaker 1: I mean, Principles is the first one that I ever read,
• 1:28:16
  Speaker 1: but then I watched all of your videos on your
• 1:28:18
  Speaker 1: YouTube channel, which explain it in animated ways those are
• 1:28:22
  Speaker 1: absolutely stunning videos they're unbelievably stunning videos and i it's
• 1:28:26
  Speaker 1: funny because you know i've watched a lot of videos
• 1:28:27
  Speaker 1: youtube videos in my life but there's some that i
• 1:28:30
  Speaker 1: have just never forgotten and your book and your video
• 1:28:33
  Speaker 1: are about the book on your youtube channel which i'll
• 1:28:36
  Speaker 1: link to below are a video on youtube that i've
• 1:28:38
  Speaker 1: just never forgotten because it's helped me understand the bigger
• 1:28:42
  Speaker 1: picture in a way that i don't think i would
• 1:28:44
  Speaker 1: have ever understood otherwise there's no i didn't go to
• 1:28:47
  Speaker 1: my history classes in school um i'm never going to
• 1:28:49
  Speaker 1: read history books necessarily So that video you made, but
• 1:28:53
  Speaker 1: also the book itself really helped me understand there's always
• 1:28:56
  Speaker 1: a bigger picture. And funnily enough, I go looking for
• 1:28:58
  Speaker 1: the bigger picture and the cycles, should I say, in
• 1:29:01
  Speaker 1: all the other facets of life and psychology. Because when
• 1:29:04
  Speaker 1: you're dealing with humans, you are dealing with cycles. That's
• 1:29:07
  Speaker 1: what I've come to realize. And you can find them
• 1:29:09
  Speaker 1: and spot them everywhere and then prepare for them accordingly.
• 1:29:11
  Speaker 1: So thank you for the wonderful work that you do
• 1:29:13
  Speaker 1: in this regard. I'll link all of these books below.
• 1:29:15
  Speaker 1: Highly recommend reading them. And they're not for boffins or
• 1:29:18
  Speaker 1: super smart people. They're for everybody and they're written in
• 1:29:20
  Speaker 1: such a way.
• 1:29:21
  Speaker 3: So I appreciate that.
• 1:29:21
  Speaker 2: Thank you for saying that. I find the videos are
• 1:29:24
  Speaker 2: very digestible. One, how the economic machine works, I think
• 1:29:28
  Speaker 2: it's 30 minutes and it's been watched by 140 million
• 1:29:33
  Speaker 2: people and people get it. So I think it's my
• 1:29:37
  Speaker 2: responsibility to try to communicate also in a clear, simple,
• 1:29:42
  Speaker 2: digestible way. So I like to take a concept that's
• 1:29:46
  Speaker 2: in a book and make it into a 30, which
• 1:29:50
  Speaker 2: is to try to pass along what might be helpful
• 1:29:52
  Speaker 2: to people. So thank you.
• 1:29:54
  Speaker 3: Thank you for committing this season of your life to that.
• 1:29:56
  Speaker 3: I really appreciate it. And so do many millions of
• 1:29:57
  Speaker 3: my listeners. So thank you.
• 1:29:59
  Speaker 1: YouTube have this new crazy algorithm where they know exactly
• 1:30:02
  Speaker 1: what video you would like to watch next based on
• 1:30:05
  Speaker 1: AI and all of your viewing behavior. And the algorithm
• 1:30:07
  Speaker 1: says that this video is the perfect video for you.
• 1:30:11
  Speaker 1: It's different for everybody looking right now. Check this video out.
• 1:30:14
  Speaker 1: I bet you, you might love it.