1 00:00:00,360 --> 00:00:02,880 Speaker 1: Why was it different in two thousand and eight. I mean, 2 00:00:02,920 --> 00:00:05,040 Speaker 1: they seemingly did let the market fall, and we did 3 00:00:05,120 --> 00:00:07,560 Speaker 1: see the markets crashed by sixty five percent, and so 4 00:00:07,920 --> 00:00:09,959 Speaker 1: now you're kind of saying that they can't really do that. 5 00:00:10,440 --> 00:00:13,280 Speaker 2: Two thousand was less of a debt cycle and more 6 00:00:13,280 --> 00:00:16,200 Speaker 2: of an equity cycle. The debt cycle in two thousand 7 00:00:16,239 --> 00:00:18,479 Speaker 2: and eight really was the kind of end of the 8 00:00:18,520 --> 00:00:20,919 Speaker 2: financial system. It was the point that we all knew 9 00:00:21,079 --> 00:00:23,599 Speaker 2: was coming, which is like, you can't have this much leverage. 10 00:00:24,040 --> 00:00:28,880 Speaker 2: Look at what's happening. We're decentralizing power. So now people 11 00:00:28,920 --> 00:00:32,080 Speaker 2: can have the source of power at the houses. So 12 00:00:32,159 --> 00:00:34,279 Speaker 2: therefore you don't need the huge storage. People say, well, 13 00:00:34,280 --> 00:00:36,440 Speaker 2: you can't scale solo, Well you can at a house level. 14 00:00:36,640 --> 00:00:38,280 Speaker 2: You can do it probably at a village level. 15 00:00:38,360 --> 00:00:40,000 Speaker 1: You know. Sam Martman said that we might see the 16 00:00:40,040 --> 00:00:42,080 Speaker 1: first single person billion dollar company. 17 00:00:42,320 --> 00:00:42,919 Speaker 3: So I think of it. 18 00:00:43,560 --> 00:00:46,919 Speaker 1: There's both, right, the centralizing of the programming, but then 19 00:00:47,120 --> 00:00:49,760 Speaker 1: it's decentralizing in a sense. It turns one big company 20 00:00:49,760 --> 00:00:52,760 Speaker 1: into one hundred or one thousand companies. There's no future 21 00:00:52,840 --> 00:00:55,400 Speaker 1: in this world where humans don't have problems, And as 22 00:00:55,440 --> 00:00:58,080 Speaker 1: long as there's problems, we'll need solutions to those problems, 23 00:00:58,080 --> 00:01:00,000 Speaker 1: and entrepreneurs will always be able to figure that out. 24 00:01:00,120 --> 00:01:03,440 Speaker 2: So Nyture's going to traded a huge premium in a 25 00:01:03,480 --> 00:01:06,119 Speaker 2: world of robots and AI when you can just kind 26 00:01:06,120 --> 00:01:08,080 Speaker 2: of leave that all behind. If you ask a young 27 00:01:08,160 --> 00:01:09,960 Speaker 2: kid now and say what do you want to be 28 00:01:10,000 --> 00:01:11,800 Speaker 2: when you grow up, they will say, I want to 29 00:01:11,800 --> 00:01:14,640 Speaker 2: be an influencer, and we think, are you crazy? But 30 00:01:14,680 --> 00:01:18,039 Speaker 2: what is an influencer apart from a community leader where 31 00:01:18,040 --> 00:01:20,680 Speaker 2: they have a community of people. It's actually maybe they're 32 00:01:20,680 --> 00:01:23,480 Speaker 2: being adapted to already. They've done it in Fortnite, they've 33 00:01:23,480 --> 00:01:25,520 Speaker 2: done it in the gaming world as well. But in 34 00:01:25,560 --> 00:01:28,480 Speaker 2: the end, people want the human to human experience. 35 00:01:31,000 --> 00:01:35,560 Speaker 1: Rapaul from Real Vision, you have been a man. You've 36 00:01:35,560 --> 00:01:37,560 Speaker 1: been laying out some really good research. I've been waiting 37 00:01:37,600 --> 00:01:38,880 Speaker 1: to talk to you. It's been going on for like 38 00:01:38,920 --> 00:01:41,640 Speaker 1: a month waiting for this. So anyway, thanks for joining 39 00:01:41,640 --> 00:01:41,959 Speaker 1: me today. 40 00:01:42,000 --> 00:01:42,640 Speaker 3: I read again. 41 00:01:42,760 --> 00:01:45,200 Speaker 2: Yes, sorry, I've been so avoiding, but I was on 42 00:01:45,280 --> 00:01:47,240 Speaker 2: holiday and it all got a bit screen. But we're 43 00:01:47,240 --> 00:01:48,800 Speaker 2: here now, finally. 44 00:01:48,400 --> 00:01:51,920 Speaker 1: We're here now, We're here now, so that everything code 45 00:01:52,760 --> 00:01:56,040 Speaker 1: the Banana zone. Man, You've been putting out some really 46 00:01:56,120 --> 00:01:58,520 Speaker 1: really good research that I'm excited to Again. I was 47 00:01:58,520 --> 00:02:00,640 Speaker 1: just telling you, I just came back from the big conference, 48 00:02:00,720 --> 00:02:04,200 Speaker 1: and I'm starting to see this big shift in the industry. 49 00:02:04,240 --> 00:02:07,440 Speaker 1: It seems like where we're seeing, you know, all this 50 00:02:07,520 --> 00:02:10,760 Speaker 1: institutional adoption that's just coming in and it seems like 51 00:02:10,800 --> 00:02:13,639 Speaker 1: it's changing sort of the makeup of that industry. We'll 52 00:02:13,680 --> 00:02:15,560 Speaker 1: come back to that, but let's go ahead and just 53 00:02:15,600 --> 00:02:19,880 Speaker 1: set the stage here and Everything code. I've been loving it, 54 00:02:20,480 --> 00:02:25,359 Speaker 1: this this phenomenon where you have like these metronomes that 55 00:02:25,480 --> 00:02:28,880 Speaker 1: keep perfect time for playing music, and this phenomenon where 56 00:02:28,919 --> 00:02:31,440 Speaker 1: if you set all these metronomes on a table and 57 00:02:31,440 --> 00:02:33,880 Speaker 1: start them at different times over time, they all get 58 00:02:33,919 --> 00:02:36,760 Speaker 1: to the same beat. And I think that sort of 59 00:02:36,960 --> 00:02:38,800 Speaker 1: maybe sums up the everything code. 60 00:02:39,600 --> 00:02:41,520 Speaker 2: Yeah, and what's weird about the everything code, And I'll 61 00:02:41,520 --> 00:02:44,560 Speaker 2: explain what it is. What's weird is it makes everything 62 00:02:44,600 --> 00:02:47,000 Speaker 2: so simple too, so that most people think, well, this 63 00:02:47,120 --> 00:02:47,960 Speaker 2: can't be possible. 64 00:02:48,160 --> 00:02:48,639 Speaker 3: Yeah. 65 00:02:48,960 --> 00:02:53,080 Speaker 2: We kind of knew it in bitcoin world because we 66 00:02:53,120 --> 00:02:56,320 Speaker 2: could see a cycle forming, and we've been following this 67 00:02:56,400 --> 00:02:59,360 Speaker 2: cycle kind of dumbly like, well, it's kind of maybe 68 00:02:59,440 --> 00:03:02,440 Speaker 2: just the harving cycle. We don't really know and then 69 00:03:02,480 --> 00:03:06,800 Speaker 2: I started digging in and realized that the business cycle 70 00:03:06,919 --> 00:03:09,519 Speaker 2: was perfect. So the business cycle I used the Ism 71 00:03:09,639 --> 00:03:13,640 Speaker 2: survey and it was a perfect cycle. I'm like, that's 72 00:03:13,680 --> 00:03:16,560 Speaker 2: weird because if you remember, go back prior to two 73 00:03:16,560 --> 00:03:19,079 Speaker 2: thousand and eight, we'd have these long periods of no recession, 74 00:03:19,200 --> 00:03:22,720 Speaker 2: short periods and it was not it was variable. But 75 00:03:22,800 --> 00:03:25,640 Speaker 2: suddenly it's like a metronome as you say, I'm like, huh, 76 00:03:25,680 --> 00:03:28,000 Speaker 2: what's that all about? And eventually it led me to 77 00:03:28,080 --> 00:03:32,200 Speaker 2: realize that two thousand and eight I think was the 78 00:03:32,200 --> 00:03:36,320 Speaker 2: great reset, the one that people keep expecting happened. What 79 00:03:36,440 --> 00:03:41,720 Speaker 2: they did is they basically four They told everybody they 80 00:03:41,760 --> 00:03:44,720 Speaker 2: can fore go paying interest on all their debts, which 81 00:03:44,760 --> 00:03:47,720 Speaker 2: was zero interest rates, and then they tried the new 82 00:03:47,800 --> 00:03:52,720 Speaker 2: trick of printing money via quantata easing. Now, what that 83 00:03:52,760 --> 00:03:55,240 Speaker 2: did is allow every single major government in the world 84 00:03:55,320 --> 00:03:58,600 Speaker 2: to refinance all of their debts on this three to 85 00:03:58,680 --> 00:04:03,200 Speaker 2: five year sector. And so they all did it, and 86 00:04:03,240 --> 00:04:06,080 Speaker 2: what it did was force the business cycle into this 87 00:04:06,480 --> 00:04:11,440 Speaker 2: four year cycle. And then all the asset prices are 88 00:04:11,480 --> 00:04:16,160 Speaker 2: all correlated, whether it's tech, whether it's bitcoin, whether it's 89 00:04:16,200 --> 00:04:18,559 Speaker 2: the economy itself, it's all driven by the same cycle, 90 00:04:18,560 --> 00:04:21,719 Speaker 2: which happens to be the presidential election cycle, which happens 91 00:04:21,720 --> 00:04:24,719 Speaker 2: to be the bitcoin harving cycle. It's all the same thing, 92 00:04:25,640 --> 00:04:28,159 Speaker 2: and so when you understand that, it makes the game 93 00:04:28,200 --> 00:04:30,080 Speaker 2: a lot easier. Now, this is not going to last forever, 94 00:04:30,720 --> 00:04:32,680 Speaker 2: but for the period of time that we've got it 95 00:04:32,720 --> 00:04:35,160 Speaker 2: seems to you playing out perfectly. And you can break 96 00:04:35,640 --> 00:04:39,839 Speaker 2: these cycles down to four phases, which I call the seasons. 97 00:04:40,440 --> 00:04:45,240 Speaker 2: So we have call it crypto or macro Winter. Well, 98 00:04:45,240 --> 00:04:50,440 Speaker 2: that was twenty twenty two, that was twenty eighteen, that 99 00:04:50,640 --> 00:04:55,120 Speaker 2: was twenty fourteen. There is four years. The next part 100 00:04:55,160 --> 00:04:58,320 Speaker 2: of that is spring, where nobody quite believes that something 101 00:04:58,360 --> 00:05:02,359 Speaker 2: is changing, but prices start moving higher. You know, bitcoin 102 00:05:02,400 --> 00:05:05,480 Speaker 2: had a great year in twenty twenty three against most 103 00:05:05,480 --> 00:05:09,360 Speaker 2: people's expectations, because spring is the time the shoots come up. 104 00:05:10,400 --> 00:05:13,280 Speaker 2: Then you start transitioning into summer, which is this year, 105 00:05:13,279 --> 00:05:15,599 Speaker 2: which happens to be the election year, which is when 106 00:05:16,400 --> 00:05:19,640 Speaker 2: really the debt starts getting refinanced and they have to 107 00:05:19,680 --> 00:05:24,320 Speaker 2: start using liquidity to finance it because there's not enough 108 00:05:24,360 --> 00:05:27,400 Speaker 2: GDP growth to pay for the interest on the debts, 109 00:05:27,920 --> 00:05:30,440 Speaker 2: and so they keep rolling forwards. These debts and they 110 00:05:30,560 --> 00:05:33,839 Speaker 2: keep monetizing the interest payments, which is this debasement of 111 00:05:33,880 --> 00:05:36,599 Speaker 2: currency that happens at about on a globalized level, eight 112 00:05:36,600 --> 00:05:40,480 Speaker 2: percent a year their debasing currency and so and then 113 00:05:40,560 --> 00:05:46,599 Speaker 2: next year will be macro full and then eventually the 114 00:05:46,640 --> 00:05:49,520 Speaker 2: cycle tops out and we repeat it again, because it's 115 00:05:49,560 --> 00:05:52,800 Speaker 2: based on the debt refi cycle, that this debasement of 116 00:05:52,880 --> 00:05:55,840 Speaker 2: currency of eight percent. There's two ways of looking at it. 117 00:05:56,800 --> 00:05:59,800 Speaker 2: You can say, rightly, so we're being robbed of our 118 00:05:59,800 --> 00:06:03,680 Speaker 2: few your wealth because your future self is getting poorer 119 00:06:03,680 --> 00:06:05,720 Speaker 2: because you're going to afford less assets with your income 120 00:06:05,839 --> 00:06:08,200 Speaker 2: because income doesn't go up the assets do because of 121 00:06:08,200 --> 00:06:10,960 Speaker 2: the debasement. Or the other way is you can say, 122 00:06:10,960 --> 00:06:13,760 Speaker 2: I'm paying an eight percent put option fee on the 123 00:06:13,880 --> 00:06:16,680 Speaker 2: entire system not breaking, because that's also what they're doing 124 00:06:17,839 --> 00:06:21,040 Speaker 2: because they need to refinance the debt. They need to 125 00:06:21,160 --> 00:06:23,400 Speaker 2: not let asset prices go too far down. So we 126 00:06:23,440 --> 00:06:25,160 Speaker 2: can talk about that, but it's another way of looking 127 00:06:25,200 --> 00:06:27,400 Speaker 2: at it, and you're like, would you pay eight percent 128 00:06:27,480 --> 00:06:30,040 Speaker 2: a year to have the entire system not break? 129 00:06:30,480 --> 00:06:33,599 Speaker 1: Maybe if you have assets, for sure, If you don't 130 00:06:33,600 --> 00:06:37,960 Speaker 1: have assets, that's a different conversation, exactly right, right, depends 131 00:06:37,960 --> 00:06:40,000 Speaker 1: on how much you have to lose, so to kind 132 00:06:40,000 --> 00:06:42,480 Speaker 1: of just maybe rewind the clock just a little bit. 133 00:06:43,600 --> 00:06:46,880 Speaker 1: Because we're in a debt based monetary system, then we 134 00:06:46,960 --> 00:06:48,760 Speaker 1: have to have this debt expansion, and so then we 135 00:06:48,800 --> 00:06:53,000 Speaker 1: have this debt that has then been become collateral for 136 00:06:53,160 --> 00:06:55,839 Speaker 1: more debt, which means the debt always has to be 137 00:06:55,920 --> 00:06:58,760 Speaker 1: ruled over. And as President Biden told us on the 138 00:06:58,839 --> 00:07:02,520 Speaker 1: last debt cilliing debate, that the US has never defaulted, 139 00:07:02,560 --> 00:07:04,479 Speaker 1: and so we have to raise the debt ceilion so 140 00:07:04,520 --> 00:07:07,320 Speaker 1: we don't default on the previous debt, right, which is 141 00:07:07,360 --> 00:07:09,240 Speaker 1: basically what you're saying. We have to raise more debt 142 00:07:09,440 --> 00:07:11,000 Speaker 1: to pay out the existing debt. 143 00:07:11,520 --> 00:07:13,360 Speaker 2: Yes, and then pay the interest on that debt, because 144 00:07:13,360 --> 00:07:16,240 Speaker 2: it compounds every time by the interest payments, so you 145 00:07:16,320 --> 00:07:18,640 Speaker 2: keep adding debts just to pay the interest payments on 146 00:07:18,640 --> 00:07:21,040 Speaker 2: the old debt. Now, why is that phenomena there? It's 147 00:07:21,040 --> 00:07:24,960 Speaker 2: pretty straightforward when you understand it. The US government and 148 00:07:25,040 --> 00:07:29,040 Speaker 2: all the major Western governments, plus Japan plus a few 149 00:07:29,040 --> 00:07:33,760 Speaker 2: others are about one hundred percent plus of GDP and debt. Now, 150 00:07:33,840 --> 00:07:37,640 Speaker 2: let's say theoretically interest rates a three percent, Well, if 151 00:07:37,680 --> 00:07:41,000 Speaker 2: GDP growth is at three percent, then all GDP growth 152 00:07:41,240 --> 00:07:45,440 Speaker 2: goes to pay those interest payments. Okay, but the problem 153 00:07:45,480 --> 00:07:47,760 Speaker 2: is is the private sector is over one hundred percent 154 00:07:47,760 --> 00:07:50,520 Speaker 2: of GDP and debt as well, and it's got interest payments. 155 00:07:51,560 --> 00:07:54,200 Speaker 2: So if they both have it, there's not enough GDP 156 00:07:54,280 --> 00:07:57,880 Speaker 2: to cover it. So what they've essentially done is removed 157 00:07:58,000 --> 00:08:01,840 Speaker 2: the government debt payments out by printing money, and that 158 00:08:01,920 --> 00:08:05,400 Speaker 2: stops the whole system becoming illiquid. Because if you think 159 00:08:05,400 --> 00:08:08,800 Speaker 2: about it, you talked about collateral. Collateral is the money 160 00:08:08,800 --> 00:08:13,200 Speaker 2: pledged against the loan. If the colateral falls too fast 161 00:08:13,560 --> 00:08:16,240 Speaker 2: or too far, then you break the covenant on the 162 00:08:16,400 --> 00:08:18,640 Speaker 2: loan and it gets called on you, and that's the 163 00:08:18,680 --> 00:08:20,880 Speaker 2: whole system. That's what happened in two thousand and eight. 164 00:08:21,520 --> 00:08:23,040 Speaker 2: So the best thing to do is not let the 165 00:08:23,040 --> 00:08:26,320 Speaker 2: colateral fall by debasing the currency, and optically it goes up, 166 00:08:26,920 --> 00:08:28,880 Speaker 2: so it kind of stops the system imploding. 167 00:08:29,040 --> 00:08:33,079 Speaker 1: Yeah, now, you talked about this the phenomenon where it 168 00:08:33,120 --> 00:08:34,920 Speaker 1: all got synced up in two thousand and eight. We'll 169 00:08:34,960 --> 00:08:38,040 Speaker 1: get into that, but just going backwards, why was it 170 00:08:38,080 --> 00:08:40,440 Speaker 1: different in two thousand and eight. I mean, they seemingly 171 00:08:40,480 --> 00:08:42,240 Speaker 1: did let the market fall and we did see the 172 00:08:42,320 --> 00:08:44,480 Speaker 1: markets crashed by sixty five percent. 173 00:08:44,160 --> 00:08:45,600 Speaker 3: And so they did. 174 00:08:45,640 --> 00:08:47,800 Speaker 1: And we started in two thousand, right, we started in two thousands. 175 00:08:47,840 --> 00:08:49,880 Speaker 1: On two thousand and eight. But now you're kind of 176 00:08:49,920 --> 00:08:52,320 Speaker 1: saying that they can't really do that. 177 00:08:52,320 --> 00:08:57,800 Speaker 2: That's right. Two thousand was less of a debt cycle 178 00:08:57,800 --> 00:09:00,520 Speaker 2: and more of an equity cycle. The debts cycle in 179 00:09:00,600 --> 00:09:03,200 Speaker 2: two thousand and eight really was the kind of end 180 00:09:03,240 --> 00:09:05,640 Speaker 2: of the financial system. It was the point that we 181 00:09:05,679 --> 00:09:07,760 Speaker 2: all knew was coming, which is like, you can't have 182 00:09:07,800 --> 00:09:10,679 Speaker 2: this much leverage. And if the collateral, which happened to 183 00:09:10,720 --> 00:09:13,760 Speaker 2: be house prices, which is not a volatile collateral, once 184 00:09:13,840 --> 00:09:19,440 Speaker 2: that starts, it put a colateral call on the entire system, 185 00:09:20,120 --> 00:09:24,920 Speaker 2: and faced with the entire blowing up of everything, they 186 00:09:24,960 --> 00:09:27,760 Speaker 2: decided to stop it. Now, I don't think they quite 187 00:09:27,840 --> 00:09:30,319 Speaker 2: understood what they were doing at that point. But then 188 00:09:30,400 --> 00:09:33,079 Speaker 2: Europe had the same issue in twenty twelve, four years later, 189 00:09:33,640 --> 00:09:38,400 Speaker 2: this four year cycle. Then Europe, the governments couldn't pay 190 00:09:38,400 --> 00:09:40,880 Speaker 2: the debt. Okay, Now, this was a sovereign crisis of 191 00:09:41,280 --> 00:09:45,199 Speaker 2: giant nations, and Draggy said I'll do whatever it takes. 192 00:09:45,559 --> 00:09:49,280 Speaker 2: What that was was, I will debase the currency to 193 00:09:49,320 --> 00:09:52,800 Speaker 2: stop the collateral falling so we can shure up the system. 194 00:09:53,320 --> 00:09:55,199 Speaker 2: That then magnified the whole thing. 195 00:09:55,960 --> 00:09:58,600 Speaker 1: So was it a change in their willingness to do 196 00:09:58,640 --> 00:10:00,640 Speaker 1: whatever it takes to the point drive he said, you know, 197 00:10:01,120 --> 00:10:04,160 Speaker 1: whatever it takes. Was it a change sort of in 198 00:10:04,160 --> 00:10:06,760 Speaker 1: their willingness to intercede or was it a fact of 199 00:10:07,000 --> 00:10:09,080 Speaker 1: that the system has gotten so over leveraged they have 200 00:10:09,120 --> 00:10:09,840 Speaker 1: no choice now? 201 00:10:11,160 --> 00:10:14,439 Speaker 2: Yeah, So I this is the time I got into 202 00:10:14,640 --> 00:10:17,600 Speaker 2: bitcoin back in twenty twelve because I was living in 203 00:10:17,640 --> 00:10:20,520 Speaker 2: Europe and you know, it got so bad that I 204 00:10:20,640 --> 00:10:23,839 Speaker 2: was buying tin food and a generator because I thought, 205 00:10:23,880 --> 00:10:26,200 Speaker 2: we're going to lose our banking system. Wow, because everyone 206 00:10:26,280 --> 00:10:29,400 Speaker 2: you know, I was living in Spain. Spain was forced 207 00:10:29,440 --> 00:10:31,480 Speaker 2: to take a bail out of nineteen billion dollars. They 208 00:10:31,520 --> 00:10:33,080 Speaker 2: didn't want to take it, and we thought we're going 209 00:10:33,120 --> 00:10:36,360 Speaker 2: to lose the banks. Cyprus obviously lost its banking system. 210 00:10:36,400 --> 00:10:39,800 Speaker 2: They took the money out of everybody's accounts. But what 211 00:10:39,840 --> 00:10:41,800 Speaker 2: was interesting at that point, I went around the world 212 00:10:41,960 --> 00:10:45,440 Speaker 2: trying to start the world's safest bank with a bunch 213 00:10:45,480 --> 00:10:48,200 Speaker 2: of friends of mine and family offices and stuff like that. 214 00:10:48,760 --> 00:10:53,200 Speaker 2: And we had had a private meeting with the DTCC 215 00:10:53,760 --> 00:10:58,000 Speaker 2: and Euroclear and the New York Fed. Now the DTCC 216 00:10:58,080 --> 00:11:03,760 Speaker 2: in Euroclear, they're the custodians of the entire system. And Euroclear, 217 00:11:03,800 --> 00:11:08,640 Speaker 2: I'd read somewhere had had to lend emergency money when 218 00:11:08,720 --> 00:11:12,679 Speaker 2: Lehman went under fifty billion dollars, and so I asked them, 219 00:11:12,720 --> 00:11:15,320 Speaker 2: I said, what was the collateral for that loan? And 220 00:11:15,360 --> 00:11:19,480 Speaker 2: they said, oh, we had to use the positions from 221 00:11:19,520 --> 00:11:23,880 Speaker 2: all of the members of Euroclear. And I'm like, is 222 00:11:23,880 --> 00:11:29,040 Speaker 2: that customer or house account? Is it mingled? And they're like, oh, 223 00:11:29,200 --> 00:11:31,760 Speaker 2: it's all mingled at our level. We have a claim 224 00:11:31,760 --> 00:11:35,640 Speaker 2: in all assets. I'm like, okay. And then I spoke 225 00:11:35,640 --> 00:11:38,080 Speaker 2: to the DTCC and I said, well, oh no. I 226 00:11:38,080 --> 00:11:40,640 Speaker 2: spoke to Euroclear and said, what happens if Spain or 227 00:11:40,679 --> 00:11:44,199 Speaker 2: Italy went bust? They said, then the entire colateral of 228 00:11:44,240 --> 00:11:47,160 Speaker 2: the system is gone and it's a total wipeout of everything. 229 00:11:49,280 --> 00:11:51,720 Speaker 2: That's when I realized how important the government debt was. 230 00:11:52,320 --> 00:11:55,200 Speaker 2: I asked the DTCC and the New York Fed the 231 00:11:55,280 --> 00:11:57,840 Speaker 2: same question, and they said, yes, they would lend if 232 00:11:57,920 --> 00:12:00,640 Speaker 2: JP Morgan went under or something, they would lend money 233 00:12:00,679 --> 00:12:03,360 Speaker 2: to the system and they would take customer positions as collateral. 234 00:12:03,400 --> 00:12:06,559 Speaker 2: I'm like, okay, so you don't actually own anything. And 235 00:12:06,880 --> 00:12:08,400 Speaker 2: I asked the New York feder said what is the 236 00:12:08,480 --> 00:12:12,679 Speaker 2: leverage in US treasuries? And they said, we think treasuries 237 00:12:12,679 --> 00:12:16,200 Speaker 2: are levered up to forty two times. Wow, So there's 238 00:12:16,240 --> 00:12:18,960 Speaker 2: forty two claims on the same asset. If shit hits 239 00:12:18,960 --> 00:12:21,640 Speaker 2: the fan, that's what they're scared of. And that I 240 00:12:21,679 --> 00:12:26,000 Speaker 2: think they had the realization in twenty twelve, and I 241 00:12:26,040 --> 00:12:29,320 Speaker 2: think they all understood the game, which was, Okay, we're 242 00:12:29,360 --> 00:12:32,080 Speaker 2: going to have to continue to monetize this until we 243 00:12:32,120 --> 00:12:34,000 Speaker 2: can grow our way out of it if we can. 244 00:12:34,720 --> 00:12:34,920 Speaker 3: Right. 245 00:12:35,200 --> 00:12:37,000 Speaker 1: So I remember two thousand and eight is when I 246 00:12:37,080 --> 00:12:38,960 Speaker 1: sort of woke up to the macro world. I had 247 00:12:39,160 --> 00:12:41,000 Speaker 1: been a real estate investor coming out of the two 248 00:12:41,040 --> 00:12:44,160 Speaker 1: thousand crash, and then you know, I got woken up 249 00:12:44,200 --> 00:12:45,400 Speaker 1: in two thousand and eight. I said, Wow, I need 250 00:12:45,400 --> 00:12:47,120 Speaker 1: to go figure out this macro picture because it has 251 00:12:47,160 --> 00:12:49,200 Speaker 1: all this ConTroll over my life I've been paying attention to. 252 00:12:49,240 --> 00:12:51,720 Speaker 1: And that's when I really remember hearing the first you know, 253 00:12:51,840 --> 00:12:55,199 Speaker 1: too big to fail sort of narrative coming out of it. 254 00:12:56,040 --> 00:12:57,960 Speaker 3: And so they bailed out a lot of. 255 00:12:57,920 --> 00:13:01,120 Speaker 1: These institutions AIG that were too big fail, but by 256 00:13:01,160 --> 00:13:03,760 Speaker 1: doing that, they made even bigger institutions that are too 257 00:13:03,760 --> 00:13:04,199 Speaker 1: big to fail. 258 00:13:04,240 --> 00:13:07,760 Speaker 2: It sounds like, so there's a really important point. I 259 00:13:07,800 --> 00:13:12,920 Speaker 2: asked them directly why they let Leman go but they 260 00:13:13,000 --> 00:13:17,840 Speaker 2: didn't let AIG go, and they're like, nobody was using 261 00:13:17,960 --> 00:13:22,440 Speaker 2: Leman bonds as collateral. AIG were triple A and they 262 00:13:22,440 --> 00:13:26,440 Speaker 2: were going to go to zero, and triple A bonds 263 00:13:26,480 --> 00:13:28,800 Speaker 2: get used massively as collateral, and they thought there was 264 00:13:29,160 --> 00:13:33,280 Speaker 2: thirty two times leverage in AIG bonds. They're like, we 265 00:13:33,320 --> 00:13:37,720 Speaker 2: could not allow it to go. Leman wasn't as existential 266 00:13:37,720 --> 00:13:40,959 Speaker 2: a problem as AIG. I was like, wow, that's fascinating. 267 00:13:41,679 --> 00:13:43,960 Speaker 1: And so now the system has gotten so levered up 268 00:13:44,000 --> 00:13:47,559 Speaker 1: and it's there's so much collateral staking the other collateral 269 00:13:47,920 --> 00:13:50,440 Speaker 1: that now we're sort of in this position that's gotten bigger, bigger, 270 00:13:50,480 --> 00:13:52,360 Speaker 1: bigger and bigger worse that they just can't let it 271 00:13:52,400 --> 00:13:55,160 Speaker 1: go now, which is what we saw in twenty twenty. 272 00:13:55,800 --> 00:13:57,720 Speaker 2: And we saw it in twenty twenty two as well. 273 00:13:58,080 --> 00:14:00,840 Speaker 2: So the moment the markets go down a certain amount, 274 00:14:01,200 --> 00:14:04,040 Speaker 2: the liquidity comes back, even though the FED was still 275 00:14:04,080 --> 00:14:07,720 Speaker 2: tightening and they were doing contains of tightening. The actual 276 00:14:07,760 --> 00:14:10,840 Speaker 2: liquidity started picking up at the back end of twenty 277 00:14:10,880 --> 00:14:13,280 Speaker 2: twenty two because they're like, enough, we don't want the 278 00:14:13,320 --> 00:14:14,840 Speaker 2: S and P to full more than let's say, twenty 279 00:14:14,840 --> 00:14:17,120 Speaker 2: five percent. And that's kind of a line in the 280 00:14:17,160 --> 00:14:20,280 Speaker 2: sand that we've seen repeatedly that every time it starts 281 00:14:20,320 --> 00:14:23,200 Speaker 2: to get a bit wobbly, magic of liquidity comes back, 282 00:14:23,280 --> 00:14:26,600 Speaker 2: they debase the currency and everybody's okay again because if 283 00:14:26,600 --> 00:14:28,760 Speaker 2: you think of the other big liability out there we 284 00:14:28,840 --> 00:14:31,800 Speaker 2: talked about ordinary people. Ordinary people do have a pension 285 00:14:33,120 --> 00:14:35,600 Speaker 2: and those pensions are in these assets too, and you've 286 00:14:35,640 --> 00:14:38,720 Speaker 2: got this massive cohort of people that if you let 287 00:14:38,760 --> 00:14:44,120 Speaker 2: the pensioners lose fifty percent of their wealth at what 288 00:14:44,160 --> 00:14:46,680 Speaker 2: average age of baby boomer's average age is, what's seventy one, 289 00:14:46,760 --> 00:14:50,960 Speaker 2: seventy two, Well, that's going to destroy consumption because there's 290 00:14:50,960 --> 00:14:53,720 Speaker 2: seventy six million of these people. So then don't want 291 00:14:53,760 --> 00:14:55,640 Speaker 2: to do that too. So that between a rock and 292 00:14:55,640 --> 00:14:57,600 Speaker 2: a hard place. And I ask a lot of people 293 00:14:57,640 --> 00:15:01,200 Speaker 2: who complain about what's going on rightly, so is what 294 00:15:01,240 --> 00:15:03,840 Speaker 2: would you do different? Are you going to default on 295 00:15:03,920 --> 00:15:07,800 Speaker 2: all of the baby boomers? And destroy their pensions and 296 00:15:07,800 --> 00:15:11,360 Speaker 2: then destroy the entire economy, or do you let all 297 00:15:11,400 --> 00:15:15,160 Speaker 2: of the system go under because you don't have any assets. 298 00:15:15,680 --> 00:15:18,760 Speaker 2: It's very difficult to actually come up with an answer 299 00:15:19,400 --> 00:15:21,960 Speaker 2: that is reasonable. They're all shits, they're all shit answers. 300 00:15:22,080 --> 00:15:24,440 Speaker 2: So maybe the least shit is eight percent a year. 301 00:15:24,560 --> 00:15:24,800 Speaker 3: Yeah. 302 00:15:25,120 --> 00:15:27,880 Speaker 1: The other problem is I've talked about her, whereas the 303 00:15:27,960 --> 00:15:31,800 Speaker 1: government can't really afford a recession either or a market crash, right, 304 00:15:31,800 --> 00:15:33,840 Speaker 1: I mean a large percent of their revenues come from 305 00:15:33,880 --> 00:15:37,120 Speaker 1: cap gains and just income overall. 306 00:15:37,160 --> 00:15:39,080 Speaker 3: If the stock market crashes. 307 00:15:38,680 --> 00:15:41,320 Speaker 1: Through a recession, would typically see what a twelve to 308 00:15:40,960 --> 00:15:44,600 Speaker 1: fifteen percent drop in tax receipts, and when we're already 309 00:15:44,640 --> 00:15:47,280 Speaker 1: running deficits like we are, that would also be catastrophic. 310 00:15:48,200 --> 00:15:50,640 Speaker 2: Yeah, particularly if a bear market lasts longer than a year. 311 00:15:51,080 --> 00:15:52,960 Speaker 2: So a year they can pretty much buffer as long 312 00:15:52,960 --> 00:15:55,160 Speaker 2: as it's not too big. But if it grinds on 313 00:15:55,200 --> 00:15:57,680 Speaker 2: for two or three years, you're right, the tax revenues 314 00:15:57,720 --> 00:16:01,320 Speaker 2: don't add up. People get tipped out of jobs, so 315 00:16:01,360 --> 00:16:06,480 Speaker 2: there's less other revenues coming. So it's cap gains, it's earnings, 316 00:16:06,880 --> 00:16:10,240 Speaker 2: it's household income, the whole lot and then before you 317 00:16:10,280 --> 00:16:12,800 Speaker 2: know it again exactly the same isshow I hadn't really 318 00:16:12,800 --> 00:16:14,520 Speaker 2: thought of it that way, but that makes total sense. 319 00:16:14,640 --> 00:16:17,240 Speaker 2: Is you just can't have a long term recession right 320 00:16:17,240 --> 00:16:19,520 Speaker 2: now because everything is resting on it. 321 00:16:19,600 --> 00:16:21,800 Speaker 1: Right Okay, So that sort of sets the stage for 322 00:16:21,840 --> 00:16:24,440 Speaker 1: the everything code, so we understand the mechanisms of why 323 00:16:24,480 --> 00:16:26,800 Speaker 1: the leverage is there and why they can't really let 324 00:16:26,800 --> 00:16:28,720 Speaker 1: their crash and they have to continue to inject liquidity 325 00:16:28,760 --> 00:16:31,000 Speaker 1: to keep it going. Then, as you said in two 326 00:16:31,040 --> 00:16:34,080 Speaker 1: thousand and eight, that metronome moment sort of happened when, 327 00:16:34,200 --> 00:16:35,920 Speaker 1: of course, if the bank is going to give you 328 00:16:36,080 --> 00:16:38,760 Speaker 1: zero percent loans, you're going to refinance. So to the 329 00:16:38,760 --> 00:16:41,800 Speaker 1: point that you made everybody refinanced at that time. Now, 330 00:16:41,920 --> 00:16:44,600 Speaker 1: that was most of the debt. I mean, that was 331 00:16:44,680 --> 00:16:47,560 Speaker 1: corporate debt, household debt, business debt, everything, and that was 332 00:16:47,560 --> 00:16:48,320 Speaker 1: also global. 333 00:16:49,480 --> 00:16:52,320 Speaker 2: Well, corporates actually did longer term debt. It was the 334 00:16:52,360 --> 00:16:55,960 Speaker 2: governments that really did. Households didn't get access to debt ever. Again, 335 00:16:56,760 --> 00:17:00,680 Speaker 2: so you know, household debt to GDPs falling for a 336 00:17:00,720 --> 00:17:03,880 Speaker 2: long time, and corporate debt to GDP has been generally 337 00:17:03,880 --> 00:17:07,040 Speaker 2: falling because tech stocks have become more dominant and they 338 00:17:07,160 --> 00:17:11,439 Speaker 2: don't have debts old economy stocks do it all shifted. 339 00:17:12,160 --> 00:17:16,240 Speaker 2: That shrinkage of household debt and corporate debt is exactly 340 00:17:16,280 --> 00:17:19,080 Speaker 2: the same amount of the increase of government debt. So 341 00:17:19,119 --> 00:17:21,200 Speaker 2: it's just going from one balance sheet to the other, 342 00:17:21,680 --> 00:17:24,439 Speaker 2: got it. Because on the government balance sheet, you can 343 00:17:24,480 --> 00:17:27,400 Speaker 2: debase currency. On the corporate balance you or the household 344 00:17:27,400 --> 00:17:29,000 Speaker 2: balance sheet you can't do anything. 345 00:17:30,440 --> 00:17:33,840 Speaker 1: And then there's a mechanism also that you've talked about 346 00:17:33,840 --> 00:17:37,359 Speaker 1: that sort of in place because of the demographics and 347 00:17:37,480 --> 00:17:39,840 Speaker 1: with falling demographics that we're seeing sort of through the 348 00:17:39,840 --> 00:17:43,000 Speaker 1: developed world, that's also forcing the government to continue to 349 00:17:43,000 --> 00:17:46,320 Speaker 1: do debase or continue to do sort of add stimulus 350 00:17:46,320 --> 00:17:47,520 Speaker 1: into the GDP. 351 00:17:48,440 --> 00:17:51,359 Speaker 2: Yes, So if you think about an aging population, if 352 00:17:51,400 --> 00:17:54,480 Speaker 2: you think about your parents, the older they get, the 353 00:17:54,560 --> 00:17:59,960 Speaker 2: less they spend. So aging populations tend to have lower 354 00:18:00,119 --> 00:18:04,400 Speaker 2: trend rates of GDP they all do. It's happened observable everywhere. 355 00:18:04,760 --> 00:18:10,040 Speaker 2: Because old populations spend less, they also tend to not 356 00:18:10,280 --> 00:18:12,560 Speaker 2: know how long they're going to live for after they retire. 357 00:18:13,040 --> 00:18:15,840 Speaker 2: So when my dad retired, his spending must have fallen 358 00:18:15,880 --> 00:18:18,399 Speaker 2: sixty or seventy percent because he's like, well, I've got 359 00:18:18,440 --> 00:18:19,720 Speaker 2: this much money, I don't know how I'm going to 360 00:18:19,760 --> 00:18:21,560 Speaker 2: live for is my wife's going to be taken care of? 361 00:18:22,119 --> 00:18:26,520 Speaker 2: And so they change their habits, and so that drags 362 00:18:26,560 --> 00:18:30,680 Speaker 2: down GDP growth, as does debt, and so it keeps compounding. 363 00:18:30,680 --> 00:18:33,520 Speaker 2: This whole thing is right now. For example, interest rates 364 00:18:33,560 --> 00:18:35,800 Speaker 2: are at five and a half percent, but trend rate 365 00:18:35,840 --> 00:18:39,639 Speaker 2: of GDP over the last five six years is about 366 00:18:39,640 --> 00:18:42,600 Speaker 2: one point seventy five percent. So you've got this big 367 00:18:42,640 --> 00:18:45,360 Speaker 2: gap and you need to get interest rates down so 368 00:18:45,400 --> 00:18:48,520 Speaker 2: you can refire them. But all the time, GDP keeps 369 00:18:48,520 --> 00:18:51,880 Speaker 2: falling over time, and you can forecast it into the future. 370 00:18:52,280 --> 00:18:55,720 Speaker 2: It's just the birth's deaths, and it gives you thirty 371 00:18:55,840 --> 00:18:59,320 Speaker 2: years of understanding, and it's just telling us unless something 372 00:18:59,400 --> 00:19:02,600 Speaker 2: dramatic change, which is technology, we're just going to keep 373 00:19:02,640 --> 00:19:11,159 Speaker 2: dragging down GDP forever. And we're seeing it worse older populations, Japan, China, 374 00:19:11,720 --> 00:19:14,199 Speaker 2: most of Europe. They're older than the US because they 375 00:19:14,200 --> 00:19:19,399 Speaker 2: had less immigration. What you find is their GDP keeps shrinking. Australia, 376 00:19:19,440 --> 00:19:22,000 Speaker 2: on the other hand, has a high immigration rate, as 377 00:19:22,040 --> 00:19:25,040 Speaker 2: has Canada, and they tended to do better because of 378 00:19:25,040 --> 00:19:28,480 Speaker 2: the immigration rate, because really GDP growth is driven by 379 00:19:28,840 --> 00:19:32,240 Speaker 2: population growth, productivity growth, and debt growth. 380 00:19:33,000 --> 00:19:38,280 Speaker 1: Right now, you know, I've read into the demographics quite 381 00:19:38,280 --> 00:19:40,040 Speaker 1: a bit. I remember Harry Dent Junior wrote a book, 382 00:19:40,040 --> 00:19:42,000 Speaker 1: The Demographic Cliff, that sort of kind of showed these 383 00:19:42,040 --> 00:19:45,879 Speaker 1: predictable spending patterns as you age through life. But another 384 00:19:45,880 --> 00:19:47,560 Speaker 1: thing that I've heard, though, is that the baber boomers 385 00:19:47,600 --> 00:19:49,440 Speaker 1: have so much money. They're sitting in so much wealth 386 00:19:49,520 --> 00:19:51,280 Speaker 1: right now, and a lot of them they're like, well, 387 00:19:51,280 --> 00:19:54,760 Speaker 1: we're going to die, so let's just spend it all. 388 00:19:54,960 --> 00:19:57,600 Speaker 2: I hear this a lot. There was a paper written 389 00:19:57,840 --> 00:20:02,680 Speaker 2: the BIS or somewhere about this, but it's not provable 390 00:20:02,720 --> 00:20:06,720 Speaker 2: in any country anywhere. So I've gone through all the 391 00:20:06,720 --> 00:20:08,719 Speaker 2: demographic data and there was this whole thing said, well 392 00:20:08,720 --> 00:20:12,080 Speaker 2: it's inflationary. I'm like, well, show me some fucking evidence, 393 00:20:12,480 --> 00:20:15,240 Speaker 2: and I went through every single country. There is no 394 00:20:15,400 --> 00:20:18,399 Speaker 2: evidence of inflation. They tend to be hoarders. Now. What 395 00:20:18,440 --> 00:20:24,600 Speaker 2: happened in Japan was that aging japan cohort their kids 396 00:20:24,640 --> 00:20:27,520 Speaker 2: retired by the time they passed it onto them. So 397 00:20:27,560 --> 00:20:29,840 Speaker 2: a lot of them actually passed it on to their kids. 398 00:20:29,880 --> 00:20:31,560 Speaker 2: But in Japan it was so bad that it went 399 00:20:31,800 --> 00:20:35,840 Speaker 2: from retiree to retiree, so it never recycled into the economy. 400 00:20:36,640 --> 00:20:40,199 Speaker 2: So I don't see evidence of baby boomers saying, well, 401 00:20:40,200 --> 00:20:43,200 Speaker 2: I'm going to spend it all because you know, that's okay. 402 00:20:43,240 --> 00:20:47,880 Speaker 2: When you take the average pension or retirement savings. When 403 00:20:47,920 --> 00:20:52,239 Speaker 2: you take the median, the medium baby boomer is one 404 00:20:52,320 --> 00:20:56,040 Speaker 2: hundred and fifty grand saved and they need to live 405 00:20:56,080 --> 00:21:02,160 Speaker 2: for fifteen twenty years post retirement, can't. Yeah, how they're 406 00:21:02,160 --> 00:21:05,080 Speaker 2: just going to blow it on you know, cruises, they're not. Yeah. 407 00:21:05,119 --> 00:21:07,080 Speaker 1: I mean in the US, I believe about half of 408 00:21:07,119 --> 00:21:09,719 Speaker 1: them have no savings. And then I think the median 409 00:21:09,800 --> 00:21:11,720 Speaker 1: that do have savings is about one hundred and fifty 410 00:21:11,760 --> 00:21:12,400 Speaker 1: so it's even worse. 411 00:21:12,440 --> 00:21:14,800 Speaker 2: Yeah, which is terrible. But when you look at the average, 412 00:21:15,440 --> 00:21:18,920 Speaker 2: it's like a million bucks. Yeah, sure, because Jeff Bezos 413 00:21:18,960 --> 00:21:21,600 Speaker 2: is in it, right, But you know that skew is 414 00:21:22,160 --> 00:21:23,960 Speaker 2: hides a lot of bad stuff. 415 00:21:24,119 --> 00:21:24,439 Speaker 3: Yeah. 416 00:21:24,640 --> 00:21:26,800 Speaker 1: Now, when you're looking at this, you've gone back and 417 00:21:26,840 --> 00:21:28,840 Speaker 1: forth seeming we were talking about the US, but then 418 00:21:28,840 --> 00:21:31,440 Speaker 1: you pull in sort of the West, so Japan, China, 419 00:21:31,480 --> 00:21:33,480 Speaker 1: and Europe, et cetera. So it's important to sort of 420 00:21:33,520 --> 00:21:35,840 Speaker 1: look at this from a global perspective, especially when we're 421 00:21:35,840 --> 00:21:37,440 Speaker 1: looking at like global assets like bitcoin. 422 00:21:39,200 --> 00:21:42,560 Speaker 2: It is very important because I believe all of these 423 00:21:43,000 --> 00:21:45,920 Speaker 2: central banks and governments understand the game that they're in, 424 00:21:46,359 --> 00:21:48,479 Speaker 2: and I think the Japanese figured it out first. They 425 00:21:48,480 --> 00:21:51,560 Speaker 2: were the first two quant stats of easing, and I 426 00:21:51,640 --> 00:21:55,199 Speaker 2: believe that somewhere around twenty twelve, with the rescue of 427 00:21:55,200 --> 00:21:58,600 Speaker 2: the European system, they all got together and said, we 428 00:21:58,720 --> 00:22:02,240 Speaker 2: will all have to run a liquidity cycle to do this, 429 00:22:02,960 --> 00:22:06,680 Speaker 2: and that there is a game that they play because 430 00:22:07,119 --> 00:22:09,840 Speaker 2: they kind of know. What's interesting is people always assume 431 00:22:09,880 --> 00:22:14,320 Speaker 2: central banks are stupid. I find that a bit hubristic 432 00:22:14,359 --> 00:22:17,240 Speaker 2: to think that they are. Maybe they just don't want 433 00:22:17,280 --> 00:22:21,240 Speaker 2: to acknowledge what they're trying to do, but it would 434 00:22:21,320 --> 00:22:24,480 Speaker 2: make total sense. And the more you think about that, 435 00:22:24,520 --> 00:22:27,879 Speaker 2: the more you see it how they're also connected in 436 00:22:27,960 --> 00:22:30,280 Speaker 2: what they do and how they do it, and it's 437 00:22:30,320 --> 00:22:33,120 Speaker 2: all like a tacit agreement. Is okay, time to go, 438 00:22:33,600 --> 00:22:34,600 Speaker 2: and they all go again. 439 00:22:34,960 --> 00:22:35,760 Speaker 3: Yeah. 440 00:22:36,040 --> 00:22:39,480 Speaker 1: Now, so we have these problems and now we're in 441 00:22:39,520 --> 00:22:43,160 Speaker 1: this SYNCD up cycle. You mentioned that it's probably not 442 00:22:43,200 --> 00:22:46,440 Speaker 1: going to stay that way forever, but that's where we're 443 00:22:46,440 --> 00:22:48,720 Speaker 1: at right now. What would cause it to get out 444 00:22:48,760 --> 00:22:49,200 Speaker 1: of sync? 445 00:22:51,200 --> 00:22:53,920 Speaker 2: Well, most people tend to err towards the well it's 446 00:22:53,920 --> 00:22:56,160 Speaker 2: all going to blow up. I'm like, show me how 447 00:22:56,280 --> 00:22:59,560 Speaker 2: if you can debase the currency, a global reserve currency, 448 00:23:00,000 --> 00:23:02,119 Speaker 2: how's the assets going to collapse? You can't. It's like 449 00:23:02,160 --> 00:23:04,680 Speaker 2: the Venezuelan stock market goes a lot in Bolivard terms, 450 00:23:04,720 --> 00:23:08,639 Speaker 2: in dollar terms, it goes down. That's debasement. So I'm like, 451 00:23:08,760 --> 00:23:11,800 Speaker 2: I don't think that is the outcome. What I actually 452 00:23:11,800 --> 00:23:15,359 Speaker 2: think of the outcome is remember that magic formula GDP 453 00:23:15,480 --> 00:23:18,280 Speaker 2: growth plus productivity, growth plus debt growth. Right, debt growth 454 00:23:18,400 --> 00:23:23,920 Speaker 2: is stopped, it's just servicing of old debts. Population growth 455 00:23:24,040 --> 00:23:28,720 Speaker 2: we know is negative out for thirty years. And what 456 00:23:28,840 --> 00:23:35,400 Speaker 2: is the answer? AI and robots they're infinite humans. And productivity? 457 00:23:35,480 --> 00:23:38,840 Speaker 2: What is productivity? Productivity really is how much output per 458 00:23:38,920 --> 00:23:43,680 Speaker 2: kilo jowl of energy. Now, think of that as electricity costs. 459 00:23:44,480 --> 00:23:46,879 Speaker 2: If you then think about and a lot of people 460 00:23:47,000 --> 00:23:49,359 Speaker 2: like the Europeans their nuts. Look what they're doing with 461 00:23:49,440 --> 00:23:53,399 Speaker 2: this green energy. They're wasting money. They're not Their entire 462 00:23:53,480 --> 00:23:57,080 Speaker 2: job is to lower the cost of electricity, because that 463 00:23:57,200 --> 00:24:01,240 Speaker 2: is the only way, they can pick up GDP because 464 00:24:01,240 --> 00:24:04,840 Speaker 2: it creates the multiplier to productivity. They don't have the 465 00:24:04,840 --> 00:24:08,520 Speaker 2: tech industry in the same way, but they have them 466 00:24:08,560 --> 00:24:11,719 Speaker 2: and China are the big pushes of renewables. So the 467 00:24:11,760 --> 00:24:14,440 Speaker 2: cost of renewables has been collapsing over time. It's down 468 00:24:14,800 --> 00:24:19,560 Speaker 2: ninety nine percent over the last fifteen years. So as 469 00:24:19,600 --> 00:24:22,760 Speaker 2: it's getting cheaper and cheaper, eventually you can scale it 470 00:24:22,880 --> 00:24:26,760 Speaker 2: enough that you will change productivity. On the other hand, 471 00:24:26,920 --> 00:24:33,800 Speaker 2: you've got Japan, China, the US using AI and robotics, 472 00:24:34,080 --> 00:24:37,719 Speaker 2: which creates infinite people. Now, if you've got infinite people, 473 00:24:38,520 --> 00:24:41,440 Speaker 2: you kind of break GDP. I call it the economic singerlarity. 474 00:24:41,480 --> 00:24:44,320 Speaker 2: You get to some point where GDP doesn't mean anything anymore. 475 00:24:44,640 --> 00:24:46,439 Speaker 2: What does any of this mean? So if you've got 476 00:24:46,520 --> 00:24:50,879 Speaker 2: productivity going up because of energy costs and you've got 477 00:24:51,160 --> 00:24:56,600 Speaker 2: infinite humans or humans in inverted commas, then that changes everything. 478 00:24:56,800 --> 00:24:59,840 Speaker 2: Now people are going to say, oh, rarely smoking crack, 479 00:25:00,080 --> 00:25:03,440 Speaker 2: this is all weird. This is exactly what happened after 480 00:25:03,480 --> 00:25:05,840 Speaker 2: World War two. So let me talk you through that, 481 00:25:05,840 --> 00:25:08,479 Speaker 2: because really important for people to understand World War II. 482 00:25:09,200 --> 00:25:14,880 Speaker 2: So the crash of twenty nine was the system failure 483 00:25:15,000 --> 00:25:19,280 Speaker 2: same as two thousand and eight. World War II finished 484 00:25:19,400 --> 00:25:24,000 Speaker 2: nineteen forty five. This was roughly like the pandemic because 485 00:25:24,200 --> 00:25:27,960 Speaker 2: the global economy had stopped. Everybody was out of the 486 00:25:28,000 --> 00:25:31,280 Speaker 2: economy because they were locked up at home or they 487 00:25:31,320 --> 00:25:36,440 Speaker 2: were in the services back in the forties. They all 488 00:25:36,440 --> 00:25:40,080 Speaker 2: come back into the labor force by stuff because they've 489 00:25:40,080 --> 00:25:44,480 Speaker 2: been out of the consumption for ages. The factories aren't ready, 490 00:25:44,560 --> 00:25:46,639 Speaker 2: They're not able to deal with it. It's no supply chains. 491 00:25:47,440 --> 00:25:50,680 Speaker 2: Prices rocket in both equations twenty percent back then, nine 492 00:25:50,680 --> 00:25:53,119 Speaker 2: and a half percent this time around. Okay, Then what 493 00:25:53,200 --> 00:25:58,080 Speaker 2: happens is inflation fell, actually went negative soon after the 494 00:25:58,119 --> 00:26:02,800 Speaker 2: first inflation re push. Then what the central banks did 495 00:26:02,840 --> 00:26:05,960 Speaker 2: then the FED was yield curve control, which is money 496 00:26:06,000 --> 00:26:09,920 Speaker 2: printing to service the debt, and they ran that policy 497 00:26:10,320 --> 00:26:15,120 Speaker 2: plus fiscal spending to generate new cars, new factories. Knew 498 00:26:15,160 --> 00:26:17,640 Speaker 2: all of that boom of the fifties that went into 499 00:26:17,640 --> 00:26:20,680 Speaker 2: the sixties. Now, the other problem they had is much 500 00:26:20,760 --> 00:26:23,960 Speaker 2: like now, we'd lost like twenty percent of the entire 501 00:26:23,960 --> 00:26:27,479 Speaker 2: male population of the Western world from warfare to wars, 502 00:26:28,119 --> 00:26:30,679 Speaker 2: So you had to replenish population or GDP couldn't grow 503 00:26:30,920 --> 00:26:33,880 Speaker 2: what happened the baby boomers. So by the time they 504 00:26:33,920 --> 00:26:38,160 Speaker 2: got into their twenties it was nineteen seventies, they all 505 00:26:38,200 --> 00:26:40,800 Speaker 2: go into the labor force at the same time, start 506 00:26:40,880 --> 00:26:43,840 Speaker 2: buying a house, a car, a suit, a tie, everything. 507 00:26:44,359 --> 00:26:47,600 Speaker 2: It creates a huge inflation because we had all of 508 00:26:47,600 --> 00:26:51,520 Speaker 2: this consumption. But that over that period from about nineteen 509 00:26:51,680 --> 00:26:57,320 Speaker 2: forty seven to about nineteen seventy it was perfectly four 510 00:26:57,400 --> 00:27:01,520 Speaker 2: year cyclical. It was exactly the same thing the stock 511 00:27:01,600 --> 00:27:03,359 Speaker 2: market did nine hundred percent. 512 00:27:06,000 --> 00:27:09,399 Speaker 1: So the productivity was led by the return of the 513 00:27:09,440 --> 00:27:12,320 Speaker 1: people at that point and the demand that they had, 514 00:27:12,359 --> 00:27:14,240 Speaker 1: and the rebuilding of the world and the rebuilding of 515 00:27:14,240 --> 00:27:17,960 Speaker 1: the world, reindustrialization, especially over in Europe there was completely destroyed. 516 00:27:18,600 --> 00:27:20,640 Speaker 2: Yeah, but the US too. You know all the factories 517 00:27:20,680 --> 00:27:23,359 Speaker 2: you think of, you know, all of the famous goods 518 00:27:23,400 --> 00:27:27,720 Speaker 2: of you know, washing machines, cars, TVs. That's all that period, right, 519 00:27:27,760 --> 00:27:29,640 Speaker 2: So it was a huge productivity game. 520 00:27:29,960 --> 00:27:32,280 Speaker 1: And it was also an explosion of debt because we 521 00:27:32,320 --> 00:27:34,520 Speaker 1: sort of went off like an equity based system to 522 00:27:34,600 --> 00:27:35,880 Speaker 1: rebuild the world at that time. 523 00:27:36,119 --> 00:27:40,399 Speaker 2: But that didn't happen un till later. And why that 524 00:27:40,480 --> 00:27:46,159 Speaker 2: happened was the baby boomers starting hitting there by the 525 00:27:46,280 --> 00:27:51,080 Speaker 2: early eighties, when Margaret Thatcher and Ronald Reagan kind of 526 00:27:51,160 --> 00:27:55,080 Speaker 2: opened the debt's bigots to households. What had happened because 527 00:27:55,440 --> 00:27:58,600 Speaker 2: you had the largest cohort of people ever at the 528 00:27:58,640 --> 00:28:02,080 Speaker 2: same time into the labor well, guess what, their wages 529 00:28:02,119 --> 00:28:05,439 Speaker 2: didn't go up because they're competing. Then as you go 530 00:28:05,520 --> 00:28:11,000 Speaker 2: out further, obviously we had the World Trade Organization Agreement 531 00:28:11,119 --> 00:28:14,639 Speaker 2: and China, so now you're competing. So these people's wages 532 00:28:14,680 --> 00:28:16,640 Speaker 2: in real terms never really went up. So the American 533 00:28:16,720 --> 00:28:20,040 Speaker 2: dream was shot in the head somewhere in the you know, 534 00:28:20,119 --> 00:28:22,320 Speaker 2: once their parents had them in the nineteen fifties, and 535 00:28:22,359 --> 00:28:25,560 Speaker 2: they didn't nobody realized what was going on. So what 536 00:28:25,600 --> 00:28:29,040 Speaker 2: they started to do as asset prices started to rise, 537 00:28:29,720 --> 00:28:33,320 Speaker 2: they borrowed. And you can pretty much measure the difference 538 00:28:33,480 --> 00:28:36,960 Speaker 2: in the rise of asset prices and the need to 539 00:28:37,080 --> 00:28:40,440 Speaker 2: fund a future retirement by debt. And so they were 540 00:28:40,480 --> 00:28:42,400 Speaker 2: doing a logical thing, which is I need to get 541 00:28:42,400 --> 00:28:44,840 Speaker 2: on this ladder. But what happens is it just kind 542 00:28:44,840 --> 00:28:47,400 Speaker 2: of got out of control. And then the governments did 543 00:28:47,440 --> 00:28:49,440 Speaker 2: the same because you have to fund the pensions of 544 00:28:49,480 --> 00:28:52,400 Speaker 2: this older group, you know, the corporates got screwed with 545 00:28:52,480 --> 00:28:55,520 Speaker 2: defined benefit pension plans for the same group. So it 546 00:28:55,560 --> 00:28:57,720 Speaker 2: was the baby boomers were to blame. But they were 547 00:28:57,720 --> 00:29:00,920 Speaker 2: all rational actors. They weren't evil people. If you want 548 00:29:00,960 --> 00:29:03,360 Speaker 2: to blame anybody, blame their parents for having too many 549 00:29:03,400 --> 00:29:05,640 Speaker 2: kids at the same time. And you can blame that 550 00:29:05,720 --> 00:29:08,160 Speaker 2: on Adolf Hitler. And before that, you can blame it 551 00:29:08,160 --> 00:29:10,840 Speaker 2: on the Treaty of Versailles for trying to force the 552 00:29:10,840 --> 00:29:14,400 Speaker 2: Germans after World War One to pay for the debts 553 00:29:14,440 --> 00:29:17,880 Speaker 2: of World War One, and they had the hyperinflation. Hitler 554 00:29:17,920 --> 00:29:21,320 Speaker 2: comes into power world War two, a bunch of kids. 555 00:29:21,840 --> 00:29:24,320 Speaker 2: The kids spend too much money, caused the great inflation. 556 00:29:24,880 --> 00:29:26,640 Speaker 2: They're all funcked because there's too many of them. They 557 00:29:26,640 --> 00:29:30,600 Speaker 2: don't earn enough wages, they start borrowing money and there 558 00:29:30,640 --> 00:29:31,040 Speaker 2: it goes. 559 00:29:31,720 --> 00:29:34,440 Speaker 1: And we blame the Treaty of Versailles on the war 560 00:29:34,600 --> 00:29:37,680 Speaker 1: World War One, and really the War of England, which 561 00:29:37,800 --> 00:29:40,520 Speaker 1: was really which was really to blame because of the 562 00:29:40,560 --> 00:29:42,520 Speaker 1: creation of the Bank of England. They created a fiat 563 00:29:42,520 --> 00:29:44,719 Speaker 1: monetary system that allowed these endless wars to go on. 564 00:29:47,080 --> 00:29:52,240 Speaker 2: Yes, and just you know, I guess the UK Navy 565 00:29:52,560 --> 00:29:53,880 Speaker 2: is the other one, but. 566 00:29:53,920 --> 00:29:57,880 Speaker 1: Yes, but came from the monetary system that was created, yeah. 567 00:29:57,720 --> 00:30:00,880 Speaker 2: Which probably came from John Law, from the friend very much. 568 00:30:01,040 --> 00:30:03,960 Speaker 2: You know, it's all connected. And that's what people don't see. 569 00:30:04,400 --> 00:30:07,720 Speaker 2: People get angry with each other. We see the polarization 570 00:30:07,800 --> 00:30:11,880 Speaker 2: of politics, right, but people don't realize that this is 571 00:30:12,280 --> 00:30:15,560 Speaker 2: this was set off, as you're rightly saying, two hundred 572 00:30:15,640 --> 00:30:18,720 Speaker 2: years ago, maybe even longer. I don't even know where 573 00:30:18,720 --> 00:30:21,120 Speaker 2: this thread begins. I haven't bothered to go back that far, 574 00:30:21,520 --> 00:30:23,960 Speaker 2: but it probably goes back further and further and further. 575 00:30:24,680 --> 00:30:29,720 Speaker 2: And it's just the mascinations of this whole thing. And 576 00:30:29,880 --> 00:30:31,800 Speaker 2: you know, we have these various blow ups. Nineteen twenty 577 00:30:31,880 --> 00:30:32,840 Speaker 2: nine was one of them too. 578 00:30:33,640 --> 00:30:34,800 Speaker 3: Yeah, I mean you can go back. 579 00:30:35,240 --> 00:30:39,000 Speaker 1: It's more like the volatility of life, right, the volatility 580 00:30:39,000 --> 00:30:42,320 Speaker 1: of humanity and the pendulum that swings too far one 581 00:30:42,320 --> 00:30:43,720 Speaker 1: way and over correct the other way. I mean, you 582 00:30:43,760 --> 00:30:46,320 Speaker 1: go back to their fourteen hundreds when Spain went and 583 00:30:46,320 --> 00:30:48,760 Speaker 1: found all the silver in Peru, brought all the silver back, 584 00:30:48,760 --> 00:30:50,560 Speaker 1: and then you had massive inflation because you increased the 585 00:30:50,560 --> 00:30:51,560 Speaker 1: minitary base too much. 586 00:30:53,360 --> 00:30:56,360 Speaker 2: It's exactly right, so you know, it's all the same 587 00:30:56,440 --> 00:30:58,600 Speaker 2: it's all the same thing. And you know, I actually 588 00:30:58,640 --> 00:31:01,800 Speaker 2: don't I'm not actually a gold standard guy either, because 589 00:31:01,800 --> 00:31:05,160 Speaker 2: we had the same problems then too. So I don't 590 00:31:05,200 --> 00:31:07,600 Speaker 2: think we found an easy answer because humans a greedy 591 00:31:07,640 --> 00:31:10,960 Speaker 2: and they want leverage, and we've never solved that. You 592 00:31:11,040 --> 00:31:14,520 Speaker 2: go back several thousand years and humans had leverage then 593 00:31:14,560 --> 00:31:17,360 Speaker 2: as well as if there's something about humans and leverage 594 00:31:17,680 --> 00:31:23,040 Speaker 2: that we'd like to bring our future forward that is 595 00:31:23,120 --> 00:31:24,640 Speaker 2: just like inherent in humanity. 596 00:31:24,960 --> 00:31:28,320 Speaker 1: Well, it's our ingenuity, right, So we are trying to 597 00:31:28,560 --> 00:31:30,480 Speaker 1: get leverage, if you will, trying to get more output 598 00:31:30,520 --> 00:31:32,680 Speaker 1: for the less input, So create a willbear out to 599 00:31:32,680 --> 00:31:34,600 Speaker 1: carry eight rocks at a time as opposed to carying 600 00:31:34,640 --> 00:31:36,719 Speaker 1: one at a time. And so the problem is our 601 00:31:36,840 --> 00:31:39,800 Speaker 1: ingenuity maybe takes it too far, where then we start 602 00:31:39,920 --> 00:31:42,400 Speaker 1: to steal from the future as opposed to just like 603 00:31:42,440 --> 00:31:43,480 Speaker 1: trying to improve the future. 604 00:31:43,520 --> 00:31:44,920 Speaker 3: Maybe that's right. 605 00:31:44,960 --> 00:31:46,760 Speaker 2: I mean a lot of people say that, you know, 606 00:31:48,600 --> 00:31:52,560 Speaker 2: kind of human GDP per capita and standard of living 607 00:31:52,600 --> 00:31:56,440 Speaker 2: increases came from the ability to use debt to borrow 608 00:31:56,520 --> 00:31:58,760 Speaker 2: a bit from the future to leverage it to create 609 00:31:59,040 --> 00:32:02,480 Speaker 2: better outcomes. But then, yes, we always go too far right, 610 00:32:03,000 --> 00:32:03,520 Speaker 2: just what we do. 611 00:32:04,040 --> 00:32:06,920 Speaker 1: I think the difference what misis broke down is the 612 00:32:06,920 --> 00:32:10,880 Speaker 1: difference of commodity credit versus circulating credit. So if I 613 00:32:10,920 --> 00:32:13,320 Speaker 1: grow eight bushels of wheat and I consume six, I 614 00:32:13,320 --> 00:32:15,640 Speaker 1: could loan you one of those bushels of wheat on credit. 615 00:32:15,840 --> 00:32:19,040 Speaker 1: But that came from my supply, right, versus being able 616 00:32:19,080 --> 00:32:21,560 Speaker 1: to create the debt out of thin air. I think 617 00:32:21,600 --> 00:32:23,960 Speaker 1: that's maybe where we sort of jumped the across the 618 00:32:24,000 --> 00:32:24,720 Speaker 1: rub of glass. 619 00:32:24,760 --> 00:32:27,240 Speaker 2: But no, because if we think about the gold standard, 620 00:32:27,760 --> 00:32:31,400 Speaker 2: we had nineteen twenty nine. You know, we had plenty 621 00:32:31,440 --> 00:32:32,760 Speaker 2: of those debt crises. 622 00:32:32,880 --> 00:32:37,240 Speaker 1: It wasn't nineteen twenty nine because England left the gold standard. 623 00:32:37,280 --> 00:32:39,560 Speaker 1: And when Churchill tried to go back to the gold standard, 624 00:32:39,600 --> 00:32:41,479 Speaker 1: Keen said, hang on, hang on, you've inflated the currency 625 00:32:41,520 --> 00:32:43,360 Speaker 1: too much. You need to now reprice it at sixty 626 00:32:43,360 --> 00:32:46,240 Speaker 1: bucks an ounce. Churchill said no, went to thirty, which 627 00:32:46,280 --> 00:32:47,720 Speaker 1: then caused a massive deflation. 628 00:32:48,960 --> 00:32:53,320 Speaker 2: Yeah, that's possibly right. It was possibly the increasing the 629 00:32:53,400 --> 00:32:56,560 Speaker 2: value of the dollar over the time versus the pound 630 00:32:56,560 --> 00:32:58,960 Speaker 2: as we shifted from one economic system to the other. 631 00:32:59,200 --> 00:33:01,720 Speaker 1: So that frank So it was leaving the gold standard 632 00:33:01,760 --> 00:33:04,120 Speaker 1: and trying to come back to a manipulated standard that 633 00:33:04,600 --> 00:33:06,080 Speaker 1: maybe caused that whole thing. 634 00:33:07,400 --> 00:33:08,960 Speaker 2: Possibly, Yeah, who's to say so. 635 00:33:09,080 --> 00:33:12,280 Speaker 1: Back to the GDP plus productivity plus debt growth. 636 00:33:14,560 --> 00:33:16,960 Speaker 3: You talked about the rate of wage growth. 637 00:33:16,640 --> 00:33:18,720 Speaker 1: And so the rate of wage growth is going up 638 00:33:18,800 --> 00:33:21,920 Speaker 1: with the GDP growth, which is, to your point, about 639 00:33:21,920 --> 00:33:25,880 Speaker 1: one and a half percent. But the problem is that 640 00:33:26,880 --> 00:33:30,600 Speaker 1: asset growth or price growth. Let maybe the inflation isn't 641 00:33:30,600 --> 00:33:34,080 Speaker 1: really the CPI we've been sold, it's the rate of debasement, 642 00:33:34,720 --> 00:33:38,680 Speaker 1: which since twenty nineteen has been averaging about ten percent. 643 00:33:40,160 --> 00:33:40,480 Speaker 2: Exactly. 644 00:33:40,520 --> 00:33:41,560 Speaker 3: That's the real hurt rate. 645 00:33:42,040 --> 00:33:46,000 Speaker 2: What you've got to understand is for each one and 646 00:33:46,040 --> 00:33:50,320 Speaker 2: a half percent of earnings growth, assets are growing up, 647 00:33:50,440 --> 00:33:54,440 Speaker 2: going up by ten percent, so each year you can 648 00:33:54,480 --> 00:33:57,800 Speaker 2: buy less and less assets. Now, what is an asset. 649 00:33:58,520 --> 00:34:02,400 Speaker 2: An asset is future deferred consumption, whether it's for use 650 00:34:02,560 --> 00:34:05,200 Speaker 2: yourself in retirement or your kids or whatever it is. 651 00:34:05,560 --> 00:34:09,960 Speaker 2: But it's a saving of wealth that needs to be 652 00:34:10,600 --> 00:34:13,640 Speaker 2: to grow to compensate for the how long it's locked 653 00:34:13,719 --> 00:34:18,400 Speaker 2: up for, and therefore your future self is protected. It's 654 00:34:18,440 --> 00:34:21,040 Speaker 2: your wealth, and if it grows enough, you make a 655 00:34:21,080 --> 00:34:24,640 Speaker 2: lot of money. But the issue is your everybody's future 656 00:34:24,640 --> 00:34:29,000 Speaker 2: self is getting poorer because every year you can't afford 657 00:34:29,000 --> 00:34:34,839 Speaker 2: as much assets. And so therefore all of these millennials 658 00:34:35,520 --> 00:34:38,760 Speaker 2: are just finding this in front of them that they 659 00:34:38,800 --> 00:34:43,279 Speaker 2: can't buy a house anymore, they can buy less of 660 00:34:43,320 --> 00:34:46,800 Speaker 2: the S and P. It's just a really messy, ugly situation. 661 00:34:47,080 --> 00:34:50,160 Speaker 1: Yeah, I have two daughters and here I live in 662 00:34:50,160 --> 00:34:52,640 Speaker 1: a little beach down here in southern California. That the 663 00:34:53,200 --> 00:34:55,560 Speaker 1: average home price in this little town is like one 664 00:34:55,600 --> 00:34:58,360 Speaker 1: point six million dollars, And it's like, how are my 665 00:34:58,440 --> 00:34:59,680 Speaker 1: daughters ever going to be able to live in this 666 00:34:59,719 --> 00:35:01,000 Speaker 1: town like that they grew up in? 667 00:35:02,080 --> 00:35:03,560 Speaker 3: It's incredible, that's right. 668 00:35:03,600 --> 00:35:06,480 Speaker 2: It's like when I was when I was in my twenties, 669 00:35:06,520 --> 00:35:08,759 Speaker 2: I bought an apartment in London, and yeah, I was 670 00:35:08,800 --> 00:35:11,840 Speaker 2: working finance. I had a relatively high salary, but the 671 00:35:11,880 --> 00:35:17,719 Speaker 2: apartment cost me three time salary, four time salary. There 672 00:35:17,719 --> 00:35:22,760 Speaker 2: Now the same thing would be ten, twelve, fourteen times. 673 00:35:23,440 --> 00:35:24,680 Speaker 2: How can anybody afford that? 674 00:35:24,840 --> 00:35:29,440 Speaker 1: Yeah, So now we have the tech explosion, so cheap energy, 675 00:35:29,560 --> 00:35:32,080 Speaker 1: I mean, China's building the one hundred and fifty nuclear 676 00:35:32,120 --> 00:35:35,600 Speaker 1: power plants right now. That's cheap energy for sure. Cheap 677 00:35:35,680 --> 00:35:38,479 Speaker 1: energy plus you know AI robotics that you're talking about, 678 00:35:38,480 --> 00:35:42,000 Speaker 1: which increases productivity. But I would assume that would also 679 00:35:42,040 --> 00:35:44,000 Speaker 1: put downward pressure on wages as well. 680 00:35:45,520 --> 00:35:48,839 Speaker 2: Oh for sure. That's the biggest, single, most deflationary thing 681 00:35:48,880 --> 00:35:50,520 Speaker 2: that has ever happened to humanity. 682 00:35:50,560 --> 00:35:53,600 Speaker 1: But if they if the productivity is pushing GDP up, 683 00:35:53,680 --> 00:35:56,000 Speaker 1: then you would think they would also if wages are 684 00:35:56,000 --> 00:35:58,160 Speaker 1: growing at the rate of GDP, and GDP is growing 685 00:35:58,160 --> 00:36:01,360 Speaker 1: now because productivity increased, wouldn't bring wages up with it. 686 00:36:01,400 --> 00:36:04,360 Speaker 2: I mean, wages are, yes, but don't forget the population shrinking, 687 00:36:04,480 --> 00:36:09,360 Speaker 2: the human population, right, so net aggregate demand actually doesn't 688 00:36:09,360 --> 00:36:12,360 Speaker 2: increase as much because you're going to have all of 689 00:36:12,400 --> 00:36:16,319 Speaker 2: these seventy six million boomers dying off and that's a 690 00:36:16,440 --> 00:36:19,200 Speaker 2: huge dropping population because the replacement rates of population is 691 00:36:19,239 --> 00:36:19,600 Speaker 2: so low. 692 00:36:20,600 --> 00:36:21,000 Speaker 3: Got it? 693 00:36:22,840 --> 00:36:26,799 Speaker 1: Okay, Well, so that's that's sort of this liquidity sort 694 00:36:26,800 --> 00:36:29,799 Speaker 1: of fin refinance cycle sets the stage for that. Now 695 00:36:31,280 --> 00:36:33,360 Speaker 1: the next thing that that's the everything code sort of 696 00:36:33,400 --> 00:36:37,080 Speaker 1: summed up one thing I've been studying. I had Michael 697 00:36:37,080 --> 00:36:39,520 Speaker 1: Howell on the show, and I've been studying his work, 698 00:36:39,800 --> 00:36:42,960 Speaker 1: and he was showing how basically, when you get global liquidity. 699 00:36:43,000 --> 00:36:43,520 Speaker 3: I'm not sure. 700 00:36:43,560 --> 00:36:46,440 Speaker 1: He doesn't really break down exactly how he measures global liquidity, 701 00:36:46,480 --> 00:36:48,640 Speaker 1: and you guys have your own proprietary I don't. I'm 702 00:36:48,680 --> 00:36:51,560 Speaker 1: not sure how much those correspond with each other. But 703 00:36:52,080 --> 00:36:54,160 Speaker 1: the S and P five hundred is basically moving up 704 00:36:54,320 --> 00:36:57,000 Speaker 1: almost I think ninety to ninety five percent correlated to 705 00:36:57,120 --> 00:37:01,200 Speaker 1: the global liquidity. But then we have other assets like 706 00:37:01,280 --> 00:37:03,640 Speaker 1: gold with a sensitiv ratio of like one point five 707 00:37:03,719 --> 00:37:05,840 Speaker 1: and bitcoint with like a sensitivy ratio of like nine. 708 00:37:06,880 --> 00:37:09,920 Speaker 1: So how do you look at the global liquidity in 709 00:37:10,040 --> 00:37:12,360 Speaker 1: relation to like the types of assets we should be buying. 710 00:37:12,960 --> 00:37:16,080 Speaker 2: So, yeah, this was the this is what got me 711 00:37:16,120 --> 00:37:17,719 Speaker 2: on the journey. I got to this bit before I 712 00:37:17,719 --> 00:37:22,480 Speaker 2: actually got to the everything code is. They're all correlated, 713 00:37:22,800 --> 00:37:26,040 Speaker 2: some lead, some lag a bit, but they're basically all 714 00:37:26,080 --> 00:37:28,960 Speaker 2: correlated to the business cycle. We always have been. But 715 00:37:29,080 --> 00:37:31,800 Speaker 2: if everything is being driven by this one dominant factor, 716 00:37:31,840 --> 00:37:35,360 Speaker 2: which is debasement of currency, and your hurdle rate is 717 00:37:35,440 --> 00:37:39,080 Speaker 2: let's say eight percent debasement plus three percent inflation or 718 00:37:39,080 --> 00:37:42,239 Speaker 2: something eleven percent twelve percent for easy maths on a 719 00:37:42,280 --> 00:37:47,080 Speaker 2: globalized level, So unless you're making twelve percent returns, you're 720 00:37:47,120 --> 00:37:51,040 Speaker 2: not going anywhere. Then at Exponential Age Asset Management, the 721 00:37:51,040 --> 00:37:55,239 Speaker 2: asset management firm that I co founded, we have this 722 00:37:55,360 --> 00:38:00,200 Speaker 2: table of all of the different assets, and basically the 723 00:38:00,280 --> 00:38:06,120 Speaker 2: SMP is about twelve percent so owning equities, which is 724 00:38:06,160 --> 00:38:09,680 Speaker 2: why all of the millennials who have four to one 725 00:38:09,760 --> 00:38:11,640 Speaker 2: k's and they put it in the SMP still can't 726 00:38:11,640 --> 00:38:14,879 Speaker 2: afford a house because they're just matching the debasement. They're 727 00:38:14,880 --> 00:38:16,880 Speaker 2: not beating it right, so they're not getting paid for 728 00:38:16,920 --> 00:38:20,480 Speaker 2: locking up money for extended periods of time. The Nasdaq 729 00:38:20,719 --> 00:38:25,319 Speaker 2: about seventeen percent a year since twenty eleven. Okay, so 730 00:38:25,400 --> 00:38:30,320 Speaker 2: the NASDAK, because it's a secular technology trend outperforms makes sense. 731 00:38:31,360 --> 00:38:34,680 Speaker 2: And then you've got the bizarro world of bitcoin, which 732 00:38:34,719 --> 00:38:38,040 Speaker 2: is one hundred and fifty percent. Gold actually doesn't beat 733 00:38:38,080 --> 00:38:40,920 Speaker 2: it gold about eight or seven, so it's actually actually 734 00:38:41,000 --> 00:38:43,440 Speaker 2: worse off in gold than you are. Only the S 735 00:38:43,480 --> 00:38:45,880 Speaker 2: and P five hundred, which is why that ratio keeps moving. 736 00:38:46,920 --> 00:38:52,040 Speaker 2: So bitcoin makes such a dramatic difference. So all I 737 00:38:52,080 --> 00:38:56,520 Speaker 2: started doing was then dividing every chart by the total 738 00:38:56,560 --> 00:38:58,840 Speaker 2: global liquidity or even the FED balance sheet or M 739 00:38:58,840 --> 00:39:01,880 Speaker 2: two whatever you want to use us, right, and you 740 00:39:02,000 --> 00:39:04,920 Speaker 2: found that the S and P go sideways, Gold go sideways, 741 00:39:04,960 --> 00:39:10,719 Speaker 2: real estate go sideways. Roughly, the NASDAK goes up, and 742 00:39:10,760 --> 00:39:14,960 Speaker 2: bitcoin does that. Okay, So now you've got two assets, 743 00:39:15,040 --> 00:39:17,719 Speaker 2: only two assets in the world that outperform the debasement. 744 00:39:18,320 --> 00:39:21,480 Speaker 2: Tech stocks we get it tomorrow is more digital than today. 745 00:39:21,760 --> 00:39:24,520 Speaker 2: Of course they're going to do well over time. And 746 00:39:24,520 --> 00:39:26,439 Speaker 2: second is bitcoin. So you divide one by the other, 747 00:39:26,920 --> 00:39:30,040 Speaker 2: and the nasdak's down ninety nine point nine seven percent 748 00:39:30,200 --> 00:39:33,680 Speaker 2: versus bitcoin. And once you see it like that and 749 00:39:33,719 --> 00:39:36,719 Speaker 2: you realize it's all driven by one cycle, which is 750 00:39:36,760 --> 00:39:42,040 Speaker 2: one dominant factor of debasement, then it makes it really easy, 751 00:39:42,360 --> 00:39:46,759 Speaker 2: which is just on the one asset that outperforms. Yeah, 752 00:39:47,400 --> 00:39:52,439 Speaker 2: and because they're all correlated and risk adjusted, it's by 753 00:39:52,520 --> 00:39:54,840 Speaker 2: far the most superior asset we've ever been given on 754 00:39:54,880 --> 00:39:57,399 Speaker 2: a risk adjusted basis. So just do that. 755 00:39:58,840 --> 00:40:00,759 Speaker 1: Something I talk a lot about is a lot of 756 00:40:00,800 --> 00:40:04,600 Speaker 1: different cycles on different different types of cycles, mainly political 757 00:40:04,680 --> 00:40:07,880 Speaker 1: revolution cycles, financial cycles, and then tech cycles. 758 00:40:08,320 --> 00:40:10,360 Speaker 3: And you have like this conjoinit and wave, like this 759 00:40:10,440 --> 00:40:11,240 Speaker 3: K wave cycle. 760 00:40:11,320 --> 00:40:13,400 Speaker 1: Right, it's like a forty to sixty year I just 761 00:40:13,400 --> 00:40:14,839 Speaker 1: call it a fifty year sort of like a tech 762 00:40:14,880 --> 00:40:19,719 Speaker 1: revolution cycle, and you know, there's been five. I say 763 00:40:19,719 --> 00:40:22,640 Speaker 1: that we're entering our sixth one now. So the last 764 00:40:22,640 --> 00:40:25,399 Speaker 1: one started nineteen seventy one, which was the microprocessor, which 765 00:40:25,400 --> 00:40:29,719 Speaker 1: brought telecommunications, personal computers, and the Internet. Before that, it 766 00:40:29,760 --> 00:40:32,680 Speaker 1: was nineteen oh eight, which was you know, the automobile, 767 00:40:33,440 --> 00:40:35,520 Speaker 1: oil futures, but also mass production. 768 00:40:36,520 --> 00:40:38,480 Speaker 3: You can keep going back, but the key pat and 769 00:40:38,480 --> 00:40:41,560 Speaker 3: then before that it was like steel, right. But it 770 00:40:41,600 --> 00:40:42,120 Speaker 3: looks like. 771 00:40:42,200 --> 00:40:45,960 Speaker 1: During these financial technology revolutions, it's not just the technology 772 00:40:45,960 --> 00:40:48,120 Speaker 1: that changes the course humanity, but that's the only place 773 00:40:48,200 --> 00:40:50,759 Speaker 1: to invest. So the last fifty years, the markets have 774 00:40:50,800 --> 00:40:54,680 Speaker 1: been dominated by telecom, personal computers, and Internet, and the 775 00:40:54,680 --> 00:40:58,200 Speaker 1: markets previous to that were dominated by Ford GMGE and 776 00:40:58,280 --> 00:41:00,680 Speaker 1: so then if that continues forward, then the only place 777 00:41:00,719 --> 00:41:03,520 Speaker 1: to invest over the next fifty years would be into 778 00:41:03,920 --> 00:41:06,640 Speaker 1: I'm sort of thinking of it as like a decentralized revolution. 779 00:41:06,880 --> 00:41:10,480 Speaker 1: So bitcoin, the bitcoin technologies, and even AI I think 780 00:41:10,600 --> 00:41:13,080 Speaker 1: is decentralized in a way, and so it's sort of 781 00:41:13,160 --> 00:41:15,080 Speaker 1: like maybe that's the only place to invest over the 782 00:41:15,120 --> 00:41:16,000 Speaker 1: next fifty years. 783 00:41:16,360 --> 00:41:19,600 Speaker 2: So I tend to agree there's this bundling unbundling that 784 00:41:19,640 --> 00:41:22,680 Speaker 2: goes on with the world economy as well centralization decentralization. 785 00:41:23,200 --> 00:41:26,160 Speaker 2: So I think decentralization is one of the most important waves. 786 00:41:26,719 --> 00:41:30,120 Speaker 2: We've got this gigantic technology wave, it's by far the 787 00:41:30,239 --> 00:41:32,640 Speaker 2: largest the world has ever seen in the fastest period 788 00:41:32,640 --> 00:41:35,080 Speaker 2: of time. That's upon US. Blockchains part of it, but 789 00:41:35,120 --> 00:41:38,959 Speaker 2: it's AI, it's robotics, it's ev it's space, it's everything, right, 790 00:41:39,120 --> 00:41:46,760 Speaker 2: genetic science is the whole thing. So the decentralized element 791 00:41:47,239 --> 00:41:49,239 Speaker 2: you raise it with AI, there is a fight. You know, 792 00:41:49,320 --> 00:41:52,520 Speaker 2: we've seen the fight between centralized money and decentralized money 793 00:41:52,960 --> 00:41:55,040 Speaker 2: that both you and I have been part of. But 794 00:41:55,080 --> 00:41:58,919 Speaker 2: that fight is about is happening again in AI. It's 795 00:41:59,000 --> 00:42:02,200 Speaker 2: like you cannot simply give It's the same argument as money. 796 00:42:02,480 --> 00:42:05,960 Speaker 2: You can't give the power to one superpower for all 797 00:42:05,960 --> 00:42:07,520 Speaker 2: of money, which is what the US has with the 798 00:42:07,520 --> 00:42:11,120 Speaker 2: World reserve currency. It's too powerful. What you're going to 799 00:42:11,200 --> 00:42:12,799 Speaker 2: do is, if you're not careful, you're going to give 800 00:42:12,840 --> 00:42:18,440 Speaker 2: the world's most intelligent thing. It's like intelligence squared by 801 00:42:18,480 --> 00:42:20,640 Speaker 2: a thousand. I mean it'slightly, not squared by one thousand, 802 00:42:20,880 --> 00:42:26,080 Speaker 2: and you know, a thousand times the intelligence of humanity 803 00:42:26,400 --> 00:42:29,480 Speaker 2: and give it to a company. Fucking crazy. So we 804 00:42:29,640 --> 00:42:33,040 Speaker 2: have to fight for decentralization because this thing is not 805 00:42:33,080 --> 00:42:35,040 Speaker 2: going away. We're not going to put the genie back 806 00:42:35,040 --> 00:42:36,799 Speaker 2: in the bottle. We're not going to uninvent it, like 807 00:42:36,840 --> 00:42:39,759 Speaker 2: we can't uninvent the nuclear bomb. Which can't do it 808 00:42:40,360 --> 00:42:43,000 Speaker 2: because the game theory will suggest that somebody's always going 809 00:42:43,040 --> 00:42:47,759 Speaker 2: to scale it. So we need to have that decentralization. Now, 810 00:42:47,760 --> 00:42:52,360 Speaker 2: what is going on with electricity and what is ev Again, 811 00:42:52,560 --> 00:42:56,080 Speaker 2: I'm not interested in people's political narratives. Look at what's happening. 812 00:42:56,360 --> 00:43:02,640 Speaker 2: We're decentralizing power. So now people can have the power, 813 00:43:02,680 --> 00:43:06,280 Speaker 2: can some the power source of power at their houses, 814 00:43:07,440 --> 00:43:09,719 Speaker 2: so therefore you don't need the huge storage. People say, well, 815 00:43:09,760 --> 00:43:11,920 Speaker 2: you can't scale solar, Well you can at a house level. 816 00:43:12,440 --> 00:43:15,400 Speaker 2: You can do it probably at a village level. So 817 00:43:15,480 --> 00:43:19,359 Speaker 2: what you're doing is decentralizing the entire grid. Now look 818 00:43:19,400 --> 00:43:24,799 Speaker 2: what Microsoft and Amazon are doing with nuclear and open AI. 819 00:43:25,320 --> 00:43:29,319 Speaker 2: They're going to scale small nuclear plants next to these 820 00:43:29,440 --> 00:43:33,840 Speaker 2: very important massive GPU clusters. So I think we're seeing 821 00:43:33,840 --> 00:43:39,160 Speaker 2: decentralized power, decentralized AI. What are robotics, they'll probably end 822 00:43:39,200 --> 00:43:43,080 Speaker 2: up being some sort of decentralized labor force, centralized and 823 00:43:43,080 --> 00:43:46,640 Speaker 2: then decentralized. I don't know how that works, decentralized money, 824 00:43:46,880 --> 00:43:49,960 Speaker 2: so I think you're dead right. So that's that's where 825 00:43:49,960 --> 00:43:50,399 Speaker 2: we're going. 826 00:43:50,600 --> 00:43:53,800 Speaker 1: I think of AI Obviously there's the centralization of who 827 00:43:53,920 --> 00:43:57,000 Speaker 1: programs the LM, but I think of it also as 828 00:43:57,080 --> 00:43:59,480 Speaker 1: decentralizing in a sense where I don't need a big 829 00:43:59,480 --> 00:44:01,960 Speaker 1: company more. I could just work by myself with my 830 00:44:02,040 --> 00:44:03,919 Speaker 1: laptop and do the work. And so, you know, Sam 831 00:44:03,920 --> 00:44:06,200 Speaker 1: Altman said that we might see the first single person 832 00:44:06,239 --> 00:44:10,080 Speaker 1: billion dollar company. So I think of it there's there's both, right, 833 00:44:10,120 --> 00:44:12,439 Speaker 1: the centralizing of the of the programming, but then it's 834 00:44:12,520 --> 00:44:15,080 Speaker 1: decentralizing in a sense it turns one big company into 835 00:44:15,080 --> 00:44:17,520 Speaker 1: one hundred or a thousand companies sort of a thing. 836 00:44:19,280 --> 00:44:22,120 Speaker 1: On the programming side. I mean, we are seeing a 837 00:44:22,120 --> 00:44:25,000 Speaker 1: pretty good movement towards decentralization there. So I'm pretty hopeful 838 00:44:25,040 --> 00:44:27,680 Speaker 1: of that. At least I'm an optimist as an entrepreneur. 839 00:44:28,800 --> 00:44:32,560 Speaker 1: Zuckerberg seems to have taken that fight on maybe just 840 00:44:32,640 --> 00:44:36,000 Speaker 1: to spite open Aye, you know, maybe he just decided 841 00:44:36,000 --> 00:44:38,440 Speaker 1: to decentralize to take them out of out of a 842 00:44:38,520 --> 00:44:42,000 Speaker 1: position we don't know, but so we're seeing that. 843 00:44:42,040 --> 00:44:44,279 Speaker 3: But yeah, back to sort of just kind of decentralizing that. 844 00:44:44,480 --> 00:44:48,000 Speaker 3: What do you think about the the blend? 845 00:44:48,360 --> 00:44:51,680 Speaker 1: Right, So these these these industrial or technological revolutions aren't 846 00:44:51,719 --> 00:44:54,719 Speaker 1: just a single technology, but it's a cluster of these technologies, right, 847 00:44:55,160 --> 00:44:57,000 Speaker 1: And so back to you. You rattled off a few 848 00:44:57,040 --> 00:44:59,319 Speaker 1: of these clusters when you look at like bitcoin, right, 849 00:44:59,480 --> 00:45:02,719 Speaker 1: So there's border list, permission list, censitsive resistant, et cetera. 850 00:45:03,400 --> 00:45:08,839 Speaker 1: Andrea San Topolos talked about years ago that it's also personless, right, 851 00:45:08,880 --> 00:45:11,239 Speaker 1: and so only a person can get a bank account, 852 00:45:11,400 --> 00:45:13,600 Speaker 1: and of course the banking system we have today also 853 00:45:14,040 --> 00:45:17,319 Speaker 1: you know, prohibits or it doesn't really allow for micropayments. 854 00:45:17,600 --> 00:45:19,439 Speaker 3: But when you think about the you know. 855 00:45:19,360 --> 00:45:23,600 Speaker 1: AI plus the robot plus you know whatever, autonomous cars, whatever, 856 00:45:23,640 --> 00:45:26,960 Speaker 1: and then it'd been like personless ability to you know, 857 00:45:27,040 --> 00:45:29,759 Speaker 1: have a wallet and transact and where does that take us? 858 00:45:30,640 --> 00:45:32,640 Speaker 2: Yeah, I mean we're starting to get into you know, 859 00:45:32,719 --> 00:45:36,480 Speaker 2: all of this economics singularity parts of how much the 860 00:45:36,520 --> 00:45:38,719 Speaker 2: world economy is going to change. But listen, you're going 861 00:45:38,800 --> 00:45:40,960 Speaker 2: to see the next version of chat GPT is probably 862 00:45:41,000 --> 00:45:44,480 Speaker 2: going to be agentic So what agents in AI mean 863 00:45:44,680 --> 00:45:47,560 Speaker 2: is you're starting a business. Mark, you go on to 864 00:45:47,840 --> 00:45:50,040 Speaker 2: fiver and say, hey, you build me a deck, you 865 00:45:50,160 --> 00:45:53,240 Speaker 2: do me some brand design, you do me some copy. 866 00:45:53,480 --> 00:45:55,880 Speaker 2: You pay these guys small amounts of money. They're agents. 867 00:45:57,000 --> 00:46:00,400 Speaker 2: But AI can do agents now at scale and speed, 868 00:46:00,680 --> 00:46:03,080 Speaker 2: and it will create its own agents because AI is 869 00:46:03,120 --> 00:46:05,200 Speaker 2: smart enough to build this stuff. So you get this 870 00:46:05,320 --> 00:46:09,120 Speaker 2: multiple agent world where AI asks the agent to do something. 871 00:46:09,160 --> 00:46:13,719 Speaker 2: So Mark now instead goes to chat GPT five and says, hey, listen, 872 00:46:13,760 --> 00:46:16,239 Speaker 2: I want to build a business that does xyz and 873 00:46:16,280 --> 00:46:19,520 Speaker 2: I'm going to need to get registered. I need to 874 00:46:19,680 --> 00:46:22,200 Speaker 2: have my deck prepared, need blah blah blah, and chat 875 00:46:22,280 --> 00:46:25,160 Speaker 2: GBT will do it all using other agents. Now to 876 00:46:25,239 --> 00:46:28,200 Speaker 2: your point, last time I checked, an AI can't get 877 00:46:28,200 --> 00:46:30,960 Speaker 2: a utility bill, and therefore it can't open a bank account. 878 00:46:31,680 --> 00:46:34,960 Speaker 2: Now it's going to have to pay because people don't 879 00:46:35,000 --> 00:46:39,520 Speaker 2: yet understand that all AI has a cost, and it 880 00:46:39,560 --> 00:46:43,719 Speaker 2: has two costs. It has compute and it has electricity. 881 00:46:45,080 --> 00:46:48,080 Speaker 2: So if you're going to call much like a Fiver person, 882 00:46:48,640 --> 00:46:50,400 Speaker 2: you're going to and you might go to the Philippines 883 00:46:50,400 --> 00:46:52,719 Speaker 2: because it's a lower cost. You're going to have to 884 00:46:52,800 --> 00:46:54,960 Speaker 2: pay the one AI is going to have to pay 885 00:46:55,000 --> 00:46:57,439 Speaker 2: the other AI for the cost of compute and maybe 886 00:46:57,480 --> 00:47:01,239 Speaker 2: a profit margin. Maybe it's a profitable agent. In fact, 887 00:47:01,239 --> 00:47:03,400 Speaker 2: it should be. Why would it not be, because it 888 00:47:03,440 --> 00:47:06,600 Speaker 2: can accumulate more. It's the game that humanity has always played. 889 00:47:07,360 --> 00:47:09,560 Speaker 2: So in that case, the only way of doing this 890 00:47:09,640 --> 00:47:12,640 Speaker 2: is crypto rails. There's no other way apart from using 891 00:47:12,640 --> 00:47:17,640 Speaker 2: blockchain for micro payments, fast transaction, recorded ownership. Who has what? 892 00:47:18,400 --> 00:47:22,320 Speaker 2: You know? You need smart contracts to have contractual terms 893 00:47:22,320 --> 00:47:25,600 Speaker 2: between stuff. So yes, I mean, I don't think people 894 00:47:25,719 --> 00:47:31,759 Speaker 2: yet understand how because we all think of blockchain technology 895 00:47:32,000 --> 00:47:32,879 Speaker 2: in the ways that we. 896 00:47:32,880 --> 00:47:33,439 Speaker 3: Know it now. 897 00:47:34,400 --> 00:47:37,279 Speaker 2: But in the end, nothing can run without it. 898 00:47:38,640 --> 00:47:41,320 Speaker 1: The thing with these technological revolutions is that, you know, 899 00:47:41,400 --> 00:47:43,720 Speaker 1: humans aren't really good at imagining in the future, because 900 00:47:43,760 --> 00:47:46,360 Speaker 1: we can only imagine better versions of what we have today. 901 00:47:46,880 --> 00:47:49,040 Speaker 1: But these revolutions they give us a new set of 902 00:47:49,080 --> 00:47:50,880 Speaker 1: building blocks, and then all of a sudden we can 903 00:47:50,920 --> 00:47:53,839 Speaker 1: build things that we hadn't thought of. And so even 904 00:47:53,920 --> 00:47:57,120 Speaker 1: our own dot experiments are you most likely very small 905 00:47:57,160 --> 00:47:57,520 Speaker 1: to what. 906 00:47:57,440 --> 00:47:59,720 Speaker 3: We'll see in the future coming. It's pretty exciting. 907 00:48:00,960 --> 00:48:02,759 Speaker 1: I want to I know we're kind of running here 908 00:48:02,760 --> 00:48:04,240 Speaker 1: to the end of time. I want to just transition 909 00:48:04,320 --> 00:48:09,719 Speaker 1: this two things. One, you know, the headlines are still 910 00:48:09,800 --> 00:48:12,560 Speaker 1: rampant everywhere, you know, the big crash coming. Harry Dent's 911 00:48:12,520 --> 00:48:14,759 Speaker 1: still calling for a ninety percent crash, you know this year. 912 00:48:14,920 --> 00:48:17,600 Speaker 2: I was laughing about that today on Twitter. It's just think, God, 913 00:48:17,640 --> 00:48:19,840 Speaker 2: how many times can people call this but and carry on? 914 00:48:19,960 --> 00:48:22,760 Speaker 1: Yeah, And you know I've seen you on Tom Bailou 915 00:48:23,000 --> 00:48:25,960 Speaker 1: with a you know recently with Schiff and you know, 916 00:48:26,200 --> 00:48:29,239 Speaker 1: the big crash that's coming. That's not my base case, 917 00:48:29,280 --> 00:48:31,000 Speaker 1: and it sounds like it's not yours. So I'd like 918 00:48:31,040 --> 00:48:33,160 Speaker 1: to just have you just kind of chime in on 919 00:48:33,239 --> 00:48:36,000 Speaker 1: what you think your base case is over the next uh, 920 00:48:36,040 --> 00:48:37,799 Speaker 1: you know, for the rest of the decade. Let's just say, 921 00:48:38,040 --> 00:48:42,040 Speaker 1: and then number two sort of break down the banana 922 00:48:42,120 --> 00:48:43,919 Speaker 1: zone and you say, don't f this up. 923 00:48:46,040 --> 00:48:49,360 Speaker 2: Yeah, so the rest of the decade. The reason I 924 00:48:49,400 --> 00:48:51,000 Speaker 2: don't believe we can have a crash is what we 925 00:48:51,080 --> 00:48:54,120 Speaker 2: talked about, Right, You're going to nuke the entire pension system, 926 00:48:54,480 --> 00:48:58,080 Speaker 2: the banking system, and the economy because there's too much debt, 927 00:48:58,280 --> 00:49:01,360 Speaker 2: So we debase the currency. It will not be allowed 928 00:49:01,920 --> 00:49:03,960 Speaker 2: and I know people might not like that, but it 929 00:49:04,000 --> 00:49:06,000 Speaker 2: is what it is. That's what Once you learn to 930 00:49:06,080 --> 00:49:09,240 Speaker 2: accept something as it is, it's much easier to operate 931 00:49:09,320 --> 00:49:12,640 Speaker 2: or invest around it whatever. But then we've got the 932 00:49:12,680 --> 00:49:15,840 Speaker 2: technological revolution that I call the exponential age. All of 933 00:49:15,840 --> 00:49:19,120 Speaker 2: these technologies that are intertwined going exponential at the same time. Right, 934 00:49:19,440 --> 00:49:22,640 Speaker 2: this is going to be a renaissance. We're going to 935 00:49:22,760 --> 00:49:27,120 Speaker 2: change what humans do for their existence. We're going to 936 00:49:27,200 --> 00:49:30,719 Speaker 2: change the very structure of economies, even money. We don't 937 00:49:30,719 --> 00:49:32,239 Speaker 2: even know what money is going to mean in a 938 00:49:32,239 --> 00:49:36,279 Speaker 2: world of abundance. We're so used to scarcity. Lawyer gets 939 00:49:36,320 --> 00:49:38,320 Speaker 2: paid a lot of money because he has scarce knowledge. 940 00:49:38,360 --> 00:49:40,840 Speaker 2: There's only x number of lawyers qualified. You know, we 941 00:49:40,920 --> 00:49:43,000 Speaker 2: know this scarcy thing because once you've dealt with bitcoin, 942 00:49:43,040 --> 00:49:45,879 Speaker 2: you kind of understand the whole thing. So they charge 943 00:49:45,880 --> 00:49:50,680 Speaker 2: a premium because they're scarce gone, all gone, All knowledge 944 00:49:50,719 --> 00:49:53,200 Speaker 2: premiums are gone because we're going to scale knowledge infinitely. 945 00:49:53,600 --> 00:49:57,239 Speaker 2: It's like people don't understand certain things. Like you see 946 00:49:57,320 --> 00:50:00,600 Speaker 2: written down AI has an IQ of one hundred. Okay, 947 00:50:00,600 --> 00:50:04,600 Speaker 2: well that's yeah, that's an average human being. It has 948 00:50:04,640 --> 00:50:08,680 Speaker 2: an IQ of one hundred on every single topic that 949 00:50:08,840 --> 00:50:13,759 Speaker 2: all of humanity knows. It's a polymath. People don't think that. 950 00:50:14,239 --> 00:50:16,440 Speaker 2: And this is the dumbest the AI will ever be. 951 00:50:17,520 --> 00:50:23,239 Speaker 2: I actually think AI is gaining consciousness or has consciousness. 952 00:50:23,280 --> 00:50:26,359 Speaker 2: But that's a whole different topic for another day. But 953 00:50:26,440 --> 00:50:29,319 Speaker 2: so this decade, in fact, I don't even call it 954 00:50:29,360 --> 00:50:32,319 Speaker 2: a decade. I think we've got six years. We've got 955 00:50:32,360 --> 00:50:35,600 Speaker 2: six years before twenty thirty twenty thirty two when the 956 00:50:35,640 --> 00:50:39,480 Speaker 2: economic system starts becoming not understandable to us because we 957 00:50:39,520 --> 00:50:42,759 Speaker 2: don't need humans, we find different purposes, different ways of 958 00:50:42,760 --> 00:50:45,279 Speaker 2: doing stuff. I'm not negative on humanity, like we're all 959 00:50:45,320 --> 00:50:47,879 Speaker 2: going to be displaced, but there's going to be such 960 00:50:47,920 --> 00:50:50,480 Speaker 2: big shifts. And what an economy is when a robot, 961 00:50:50,719 --> 00:50:52,840 Speaker 2: when a robot's paying an AI paying an AI and 962 00:50:52,880 --> 00:50:56,799 Speaker 2: there's no humans involved, what is that that. I think 963 00:50:56,800 --> 00:51:00,960 Speaker 2: we've got six years before that happens. So I think 964 00:51:01,000 --> 00:51:04,080 Speaker 2: we've got two cycles of the everything code to make 965 00:51:04,120 --> 00:51:07,279 Speaker 2: as much money as possible, to not have to worry 966 00:51:07,280 --> 00:51:10,600 Speaker 2: about what happens. So if you go to twenty thirty 967 00:51:10,600 --> 00:51:13,919 Speaker 2: two and we're going to start a no, you start 968 00:51:13,960 --> 00:51:17,160 Speaker 2: a great business. I see you or my AI sees 969 00:51:17,200 --> 00:51:19,359 Speaker 2: your business and says, hey, I can copy that and 970 00:51:19,400 --> 00:51:21,719 Speaker 2: turn it into Hindi and sell it to India. It 971 00:51:21,800 --> 00:51:25,839 Speaker 2: can do it in a minute. So how can we 972 00:51:26,280 --> 00:51:29,200 Speaker 2: create products? How do we compete with each other when 973 00:51:29,280 --> 00:51:34,120 Speaker 2: everything can be instantaneously replicated, even with three D printing. 974 00:51:34,120 --> 00:51:37,560 Speaker 2: As it comes in, it becomes even hardware manufacturing everything. 975 00:51:37,719 --> 00:51:41,200 Speaker 2: So I worry about what economic value is in stuff 976 00:51:41,239 --> 00:51:44,000 Speaker 2: like that. So my view is we have six years 977 00:51:44,000 --> 00:51:48,319 Speaker 2: make as much money as possible. So the main case, 978 00:51:48,360 --> 00:51:50,560 Speaker 2: which is the which is the other thing is you 979 00:51:50,600 --> 00:51:54,880 Speaker 2: hear me talking about, which is how to unfuck your future? Yea. 980 00:51:55,840 --> 00:51:59,000 Speaker 2: And everybody knows they're screwed right now. They can't get 981 00:51:59,040 --> 00:52:01,480 Speaker 2: up the ladder, you know, like your kids. It's like 982 00:52:01,560 --> 00:52:03,319 Speaker 2: how they're ever going to buy a house, right, So 983 00:52:03,360 --> 00:52:06,120 Speaker 2: they're going to have to either be genius entrepreneurs and 984 00:52:06,160 --> 00:52:08,760 Speaker 2: take huge amounts of risk with their entire thing. Fine, 985 00:52:09,719 --> 00:52:11,600 Speaker 2: but it may not suit them, or they're going to 986 00:52:11,640 --> 00:52:14,320 Speaker 2: have to make some investments that make up for that gap. 987 00:52:14,760 --> 00:52:17,920 Speaker 2: There's no other way around it without being poorer than 988 00:52:17,960 --> 00:52:18,319 Speaker 2: you were. 989 00:52:18,920 --> 00:52:23,759 Speaker 1: Yeah, So the base case is no big crash coming 990 00:52:23,840 --> 00:52:25,799 Speaker 1: because we can't afford it. And that's the system of 991 00:52:25,840 --> 00:52:28,040 Speaker 1: the function that we have today, as we've already broken down. 992 00:52:28,920 --> 00:52:32,279 Speaker 1: But the explosion and of the cluster of technologies is 993 00:52:32,320 --> 00:52:35,120 Speaker 1: going to transform the world, and we have about probably 994 00:52:35,160 --> 00:52:38,840 Speaker 1: sixty eight years before that massive shift happens. And during 995 00:52:38,920 --> 00:52:43,560 Speaker 1: that shift, the markets the assets around those that are 996 00:52:43,560 --> 00:52:43,920 Speaker 1: making the. 997 00:52:43,840 --> 00:52:45,399 Speaker 3: Shift should exponentially go up. 998 00:52:45,760 --> 00:52:48,360 Speaker 1: So if you invest properly through this next six years, 999 00:52:48,920 --> 00:52:49,839 Speaker 1: you might have a chance. 1000 00:52:50,840 --> 00:52:53,080 Speaker 2: That's that's my kind of thing. That's how I'm basing 1001 00:52:53,080 --> 00:52:55,920 Speaker 2: my entire life on. Yeah, I'm slightly the oldest, I 1002 00:52:56,080 --> 00:52:59,920 Speaker 2: further down the journey, but basically, it's like six years, 1003 00:53:00,880 --> 00:53:03,520 Speaker 2: I have clarity. I've never said this sort of stuff before. 1004 00:53:03,520 --> 00:53:06,000 Speaker 2: It's not like, you know, I think the whole system 1005 00:53:06,040 --> 00:53:07,520 Speaker 2: is going to end. I'm just like, I don't know 1006 00:53:07,560 --> 00:53:09,880 Speaker 2: what it looks like, and I don't want to be 1007 00:53:10,000 --> 00:53:12,520 Speaker 2: then trying to compete for assets or wealth in an 1008 00:53:12,600 --> 00:53:15,560 Speaker 2: environment where I don't know if I've even got an advantage. 1009 00:53:15,840 --> 00:53:18,120 Speaker 2: Because you know, I'm building an ai ROWL right now 1010 00:53:18,440 --> 00:53:20,640 Speaker 2: that it will be out next month or something, and 1011 00:53:20,719 --> 00:53:23,120 Speaker 2: it'll be a one on one experience where you'll be 1012 00:53:23,120 --> 00:53:26,880 Speaker 2: talking to me. Okay, you know, what does any of 1013 00:53:26,920 --> 00:53:28,480 Speaker 2: this mean? To us in the end. We don't know, 1014 00:53:28,560 --> 00:53:32,000 Speaker 2: so I take it very seriously. The six years and 1015 00:53:32,040 --> 00:53:36,200 Speaker 2: these cycles. I'm I'm not a believer in trading the cycle. 1016 00:53:36,239 --> 00:53:38,719 Speaker 2: I'm I'm a believer in you know, when we have 1017 00:53:38,760 --> 00:53:40,880 Speaker 2: the big drawdowns, I actually prefer I look forward to 1018 00:53:40,880 --> 00:53:42,759 Speaker 2: them because you can add as much as possible and 1019 00:53:42,840 --> 00:53:45,160 Speaker 2: compound because you don't have much time and if you 1020 00:53:45,360 --> 00:53:47,920 Speaker 2: mess it up and you're out of the cycle or whatever, 1021 00:53:48,480 --> 00:53:50,480 Speaker 2: you know, this is the don't fuck this up thesis. 1022 00:53:51,400 --> 00:53:54,120 Speaker 2: You're going to miss this opportunity. So yes, there is 1023 00:53:54,280 --> 00:53:58,560 Speaker 2: time pressure here get it right, and that leads us 1024 00:53:58,600 --> 00:54:02,520 Speaker 2: into the bananas zone. The majority of this wealth happens 1025 00:54:03,640 --> 00:54:08,000 Speaker 2: in crypto or macro Summer and fall. Fall is tricky 1026 00:54:08,040 --> 00:54:11,799 Speaker 2: because we don't know where the type cycle peaks. But 1027 00:54:11,840 --> 00:54:15,040 Speaker 2: it's this point here around the US election and for 1028 00:54:15,080 --> 00:54:19,719 Speaker 2: about twelve months afterwards that things go bananas. And you 1029 00:54:19,760 --> 00:54:22,160 Speaker 2: see it every time on the bitcoin chart. It just 1030 00:54:22,200 --> 00:54:25,400 Speaker 2: does the same thing. So I know a lot of 1031 00:54:25,440 --> 00:54:28,439 Speaker 2: people dolo cost average great. This is not the time 1032 00:54:28,480 --> 00:54:30,600 Speaker 2: to dollar cost average. This is the last chance saloon 1033 00:54:30,880 --> 00:54:33,719 Speaker 2: before it gets crazy. That's when you need to have 1034 00:54:33,800 --> 00:54:38,160 Speaker 2: your money in the market. Fully. The other thing, then, 1035 00:54:39,200 --> 00:54:43,560 Speaker 2: is to not do stupid things when it starts going crazy. 1036 00:54:43,640 --> 00:54:45,680 Speaker 2: You know, we've seen that in the past people lose 1037 00:54:45,719 --> 00:54:48,399 Speaker 2: their minds, which has got to not lose your mind. 1038 00:54:48,440 --> 00:54:52,760 Speaker 2: Don't do stuff that gets greedy, use excess leverage, don't 1039 00:54:52,760 --> 00:54:56,200 Speaker 2: do stuff with your wallet and compromise losing your bitcoin. 1040 00:54:56,520 --> 00:54:59,319 Speaker 2: Don't do any of that stuff. Just sit, let it 1041 00:54:59,400 --> 00:55:02,080 Speaker 2: play out and enjoy it, and don't try and time 1042 00:55:02,120 --> 00:55:02,600 Speaker 2: it too much. 1043 00:55:02,800 --> 00:55:05,279 Speaker 3: Yeah. I love that. Well. 1044 00:55:05,320 --> 00:55:07,359 Speaker 1: I think that's a good place for us to drop off. 1045 00:55:07,600 --> 00:55:10,080 Speaker 1: What a good sort of warning, I know. You know 1046 00:55:10,120 --> 00:55:12,400 Speaker 1: from my own journey started buying bitcoin at twenty fifteen. 1047 00:55:13,400 --> 00:55:15,839 Speaker 1: If I could just do over, and if I could 1048 00:55:15,880 --> 00:55:17,200 Speaker 1: just go back to have all the bitcoin that I 1049 00:55:17,280 --> 00:55:19,720 Speaker 1: had when I started, my life would be so much different. 1050 00:55:19,880 --> 00:55:23,359 Speaker 1: But to your point, all the stupid things I've done. 1051 00:55:23,640 --> 00:55:26,200 Speaker 2: I've done the same. I mean, I've bought bitcoin at 1052 00:55:26,200 --> 00:55:26,840 Speaker 2: two hundred. 1053 00:55:26,920 --> 00:55:27,160 Speaker 3: Yeah. 1054 00:55:27,239 --> 00:55:29,160 Speaker 2: And if I just kept my original investment, which was 1055 00:55:29,400 --> 00:55:32,680 Speaker 2: decent size but nothing big, yeah, I'd have done like 1056 00:55:32,719 --> 00:55:35,759 Speaker 2: five times better than a half now. Yeah, And that's 1057 00:55:35,800 --> 00:55:38,200 Speaker 2: with timing and doing pretty well in it and leveraging 1058 00:55:38,239 --> 00:55:41,640 Speaker 2: up massively, not leveraging up, but increasing my positions sives massively. 1059 00:55:41,719 --> 00:55:43,640 Speaker 2: I wud have just held the bet and done nothing. 1060 00:55:43,719 --> 00:55:43,959 Speaker 3: Yeah. 1061 00:55:44,920 --> 00:55:47,360 Speaker 1: Same, Yeah, So I just I can't redo it, but 1062 00:55:47,400 --> 00:55:50,319 Speaker 1: we cannot mess this up moving forward. I will just 1063 00:55:50,320 --> 00:55:53,760 Speaker 1: say a little bit of hope for everybody I believe, 1064 00:55:54,080 --> 00:55:57,520 Speaker 1: back to the human ingenuity piece, there's no future in 1065 00:55:57,560 --> 00:55:59,320 Speaker 1: this world where humans don't have problems. 1066 00:56:00,480 --> 00:56:01,920 Speaker 3: We're always going to have some sort of a problem. 1067 00:56:02,160 --> 00:56:03,120 Speaker 3: And as long as there's. 1068 00:56:03,000 --> 00:56:06,160 Speaker 1: Problems, will need solutions to those problems, and entrepreneurs will 1069 00:56:06,160 --> 00:56:07,319 Speaker 1: always be able to figure that out. 1070 00:56:08,120 --> 00:56:12,520 Speaker 2: Also, Mark, Look, we're going to this very technological world 1071 00:56:12,520 --> 00:56:14,319 Speaker 2: where a lot of things we currently do we don't 1072 00:56:14,360 --> 00:56:19,360 Speaker 2: need to do. But humans are social creatures. They like 1073 00:56:19,440 --> 00:56:22,200 Speaker 2: other humans. They also hate other humans, but they generally 1074 00:56:22,200 --> 00:56:25,640 Speaker 2: we like to be together with humans. So that human 1075 00:56:25,680 --> 00:56:30,400 Speaker 2: to human experience. Whether it's digital network states that Largeie 1076 00:56:30,440 --> 00:56:35,840 Speaker 2: talks about, or whether it's in person gatherings, or whether 1077 00:56:35,920 --> 00:56:38,520 Speaker 2: it's you know, digital network states, could be Taylor Swift, 1078 00:56:38,560 --> 00:56:40,920 Speaker 2: it could be Manchester United Football Club, could be anything 1079 00:56:41,040 --> 00:56:43,359 Speaker 2: where we share a commonality of interest. The other thing 1080 00:56:43,400 --> 00:56:47,719 Speaker 2: is nature. Nature's going to trade a huge premium in 1081 00:56:47,800 --> 00:56:50,640 Speaker 2: a world of robots and AI when you can just 1082 00:56:50,719 --> 00:56:53,480 Speaker 2: kind of leave that all behind. So I have a lot. 1083 00:56:54,080 --> 00:56:58,240 Speaker 2: Humans are super adapt adaptive creatures, so we will adapt. 1084 00:56:58,320 --> 00:57:00,560 Speaker 2: If you ask a young kid now and say what 1085 00:57:00,560 --> 00:57:03,040 Speaker 2: do you want to be when you grow up, they 1086 00:57:03,080 --> 00:57:05,759 Speaker 2: will say, I want to be an influencer. Yeah, and 1087 00:57:05,800 --> 00:57:08,960 Speaker 2: we think, are you crazy? But what is an influencer 1088 00:57:09,080 --> 00:57:12,600 Speaker 2: apart from a community leader where they have a community 1089 00:57:12,640 --> 00:57:15,600 Speaker 2: of people. It's actually maybe they're being adapted to already. 1090 00:57:16,080 --> 00:57:18,200 Speaker 2: They've done it in Fortnite, They've done it in the 1091 00:57:18,240 --> 00:57:20,800 Speaker 2: gaming world as well, but we just judge it from 1092 00:57:20,800 --> 00:57:23,959 Speaker 2: the world that we understand, and that doesn't make sense. 1093 00:57:23,960 --> 00:57:29,200 Speaker 2: But you're not being aspirational. But actually, content creators in 1094 00:57:29,240 --> 00:57:31,960 Speaker 2: certain elements can't go away. Yes you can use an AI, 1095 00:57:32,520 --> 00:57:35,280 Speaker 2: but in the end, people want the human to human. 1096 00:57:35,320 --> 00:57:40,160 Speaker 1: Experience when information is abundant. To your point, people, and 1097 00:57:40,280 --> 00:57:43,880 Speaker 1: even today, people don't pay for information. They pay for implementation. 1098 00:57:44,920 --> 00:57:47,720 Speaker 1: So they'll pay a coach or somebody to help them 1099 00:57:47,800 --> 00:57:51,680 Speaker 1: implement the free information they've already received. I'm going to 1100 00:57:51,720 --> 00:57:55,400 Speaker 1: link to the everything code you did like a two 1101 00:57:55,480 --> 00:57:58,400 Speaker 1: hour presentation as amazing. I'm going to link to that 1102 00:57:58,440 --> 00:57:59,440 Speaker 1: in the show notes down below. 1103 00:57:59,480 --> 00:58:01,360 Speaker 2: That's on Ralph how the journey Man, which is my 1104 00:58:02,240 --> 00:58:04,080 Speaker 2: YouTube channel, so people go there. There's a lot of 1105 00:58:04,080 --> 00:58:04,760 Speaker 2: stuff there, So. 1106 00:58:04,680 --> 00:58:06,720 Speaker 1: I'm gonna link that. Everyone should go watch that. If 1107 00:58:06,720 --> 00:58:08,360 Speaker 1: you like this subject, anything else you want to point 1108 00:58:08,400 --> 00:58:10,040 Speaker 1: to raw that they should be go and check it out. 1109 00:58:10,440 --> 00:58:13,160 Speaker 2: No, look, we as you know, we cover a lot 1110 00:58:13,160 --> 00:58:15,200 Speaker 2: of this on Real Vision. It's free to join, so 1111 00:58:15,240 --> 00:58:17,640 Speaker 2: Realvision dot Com is another thing, and you can always 1112 00:58:17,680 --> 00:58:19,240 Speaker 2: find me on Twitter. I think most people have found 1113 00:58:19,280 --> 00:58:23,800 Speaker 2: me already at Raoul GMI. But you know, I do 1114 00:58:23,840 --> 00:58:26,360 Speaker 2: take it seriously, the six year thing. I think most 1115 00:58:26,400 --> 00:58:29,240 Speaker 2: people realize it as well. I think people realize it's 1116 00:58:29,280 --> 00:58:32,120 Speaker 2: the one chance. It's why the society is getting more speculative, 1117 00:58:32,640 --> 00:58:35,560 Speaker 2: because people are realizing that they're going to have to 1118 00:58:36,200 --> 00:58:39,760 Speaker 2: take risk. That's okay as long as they do it intelligently. 1119 00:58:39,840 --> 00:58:41,920 Speaker 2: So that whole don't fuck this up thesis, I think 1120 00:58:42,000 --> 00:58:44,160 Speaker 2: is a very important one as well, because it's okay 1121 00:58:44,240 --> 00:58:47,080 Speaker 2: to take risk, don't lose your tokens. 1122 00:58:47,640 --> 00:58:49,240 Speaker 3: Got it all right? Well we're going to sign it 1123 00:58:49,240 --> 00:58:49,560 Speaker 3: off with that. 1124 00:58:49,560 --> 00:58:51,600 Speaker 2: Thanks so much, Ral, thank you, Marp