1 00:00:02,520 --> 00:00:08,640 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. Thank you so much 2 00:00:08,680 --> 00:00:10,959 Speaker 1: for being here. I want to start with these five 3 00:00:11,080 --> 00:00:14,280 Speaker 1: forces that you see right now that are affecting markets 4 00:00:14,280 --> 00:00:17,320 Speaker 1: that are important to understand in order to understand where 5 00:00:17,320 --> 00:00:18,680 Speaker 1: we are where we are, could you just talk a 6 00:00:18,720 --> 00:00:20,160 Speaker 1: little bit about what those forces are. 7 00:00:20,520 --> 00:00:26,000 Speaker 2: Sure through history and now, there are five big forces 8 00:00:26,040 --> 00:00:30,760 Speaker 2: that are interrelated and generally transpiring cycles as I described, 9 00:00:31,400 --> 00:00:34,360 Speaker 2: and we know they exist because everything that we are 10 00:00:34,400 --> 00:00:37,120 Speaker 2: going to talk about will fall into one of those categories. 11 00:00:38,080 --> 00:00:42,360 Speaker 3: That is the. 12 00:00:40,760 --> 00:00:47,800 Speaker 2: Debt money economy cycle. Meaning credit is buying power. You 13 00:00:47,960 --> 00:00:54,320 Speaker 2: give buying power to entities like it's like the circulatory system. 14 00:00:54,520 --> 00:00:58,600 Speaker 2: You give credit and if that credit produces, it will 15 00:00:58,600 --> 00:01:01,880 Speaker 2: produce debt. But if it produce uses an income that 16 00:01:02,160 --> 00:01:06,399 Speaker 2: is good enough to pay the debt, it's a healthy system. 17 00:01:06,880 --> 00:01:11,760 Speaker 2: But when it produces more debt and more debt service payments, 18 00:01:12,240 --> 00:01:16,200 Speaker 2: that squeezes out the spending and that produces a problem, 19 00:01:16,240 --> 00:01:19,160 Speaker 2: and then there's a supply demand problem that has to 20 00:01:19,360 --> 00:01:21,600 Speaker 2: and then there are economic problems. 21 00:01:21,959 --> 00:01:23,240 Speaker 3: Okay, that's one cycle. 22 00:01:23,720 --> 00:01:27,600 Speaker 2: The second cycle related to that, because money and wealth 23 00:01:28,400 --> 00:01:33,440 Speaker 2: have political and social effects, is that there becomes big 24 00:01:33,680 --> 00:01:38,520 Speaker 2: differences in wealth and values. And so when there are 25 00:01:38,520 --> 00:01:42,959 Speaker 2: big differences in wealth and values and the people feel 26 00:01:43,000 --> 00:01:46,520 Speaker 2: that the system isn't working for them, you see greater 27 00:01:46,800 --> 00:01:50,920 Speaker 2: political polarity between the left and the right. It becomes 28 00:01:50,960 --> 00:01:54,240 Speaker 2: more the hard left and the hard right, and those 29 00:01:54,360 --> 00:01:59,680 Speaker 2: become irreconcilable differences that are not easily solved through the 30 00:01:59,760 --> 00:02:04,520 Speaker 2: US means of operating that way, such as democracies. During 31 00:02:04,560 --> 00:02:08,600 Speaker 2: the thirties, for example, four major democracies chose to be 32 00:02:08,800 --> 00:02:15,960 Speaker 2: autocracies during those periods. The third is the international geopolitical cycle, 33 00:02:16,480 --> 00:02:20,200 Speaker 2: in other words, of arising power challenging existing powers, and 34 00:02:20,560 --> 00:02:26,680 Speaker 2: the same dominance of the dominant power fades relative to 35 00:02:26,919 --> 00:02:30,400 Speaker 2: other powers, and also the order then gets challenged, and 36 00:02:30,440 --> 00:02:35,000 Speaker 2: we're certainly going through that. The fourth factor throughout history 37 00:02:35,120 --> 00:02:39,720 Speaker 2: has been acts of nature. Droughts, floods, in pandemics have 38 00:02:39,880 --> 00:02:43,720 Speaker 2: actually killed more people than wars and actually led to 39 00:02:43,800 --> 00:02:48,480 Speaker 2: more ends of the previously mentioned cycles than anything else. 40 00:02:48,960 --> 00:02:52,320 Speaker 2: So nature and certainly nature, climate change and the like 41 00:02:52,440 --> 00:02:56,840 Speaker 2: is a big force. And then fifth through history are 42 00:02:57,080 --> 00:03:01,919 Speaker 2: man's learnings of particularly developments of new techechnologies. The developments 43 00:03:01,919 --> 00:03:06,280 Speaker 2: of new technologies is what has raised living standards over time, 44 00:03:06,320 --> 00:03:09,799 Speaker 2: which you can see in terms of life expectancies per 45 00:03:09,840 --> 00:03:14,240 Speaker 2: capita GDP, and of course the development of new technologies 46 00:03:14,280 --> 00:03:18,800 Speaker 2: now is a very important influence. So those five factors 47 00:03:18,840 --> 00:03:23,680 Speaker 2: have gone evolve those of main five factors. Anything we'll 48 00:03:23,720 --> 00:03:26,440 Speaker 2: talk about will be under one of those, and of 49 00:03:26,480 --> 00:03:30,639 Speaker 2: course the inter relationships between them as are important. 50 00:03:30,760 --> 00:03:32,840 Speaker 1: It seems like we're at the cross section of a 51 00:03:32,840 --> 00:03:36,160 Speaker 1: pretty transformative moment then, because it's this cross section of 52 00:03:36,200 --> 00:03:39,280 Speaker 1: all of these things, whether it's the AI aspect, the 53 00:03:39,280 --> 00:03:43,320 Speaker 1: technological overlay, the monetary debt aspect of it. 54 00:03:43,360 --> 00:03:45,000 Speaker 4: With respect to the debt and deficit. 55 00:03:45,080 --> 00:03:48,080 Speaker 1: Can you put into perspective the fact that this has 56 00:03:48,120 --> 00:03:51,440 Speaker 1: been building up over time? Where do the tariffs and 57 00:03:51,480 --> 00:03:54,800 Speaker 1: some of the trade disputes of today fit into that? 58 00:03:54,840 --> 00:03:58,040 Speaker 1: Do they help sort of alleviate some of these imbalances, 59 00:03:58,120 --> 00:03:59,280 Speaker 1: do they exacerbate them? 60 00:03:59,360 --> 00:04:02,400 Speaker 4: Are they a simple of them? How do you understand. 61 00:04:01,960 --> 00:04:05,200 Speaker 1: Sort of that aspect of policy right now? 62 00:04:05,560 --> 00:04:10,840 Speaker 2: Well, first of all, there are great imbalances that have 63 00:04:10,880 --> 00:04:16,360 Speaker 2: to be rectified given this set of circumstances. So three 64 00:04:16,400 --> 00:04:19,880 Speaker 2: major types which relate to trade, but they also relate 65 00:04:19,920 --> 00:04:27,000 Speaker 2: to capital. The first is that The dynamic by which 66 00:04:28,120 --> 00:04:34,040 Speaker 2: Chinese export to the United States items that are cost effective, 67 00:04:34,080 --> 00:04:37,200 Speaker 2: and the Americans buy them and then they sell send 68 00:04:37,200 --> 00:04:40,159 Speaker 2: the money back and the Chinese earn the money and 69 00:04:40,520 --> 00:04:44,599 Speaker 2: take that money and invest in bonds has created a 70 00:04:45,680 --> 00:04:51,040 Speaker 2: unsustainable dynamic because as we're living in this environment related 71 00:04:51,480 --> 00:04:55,839 Speaker 2: to the next two items, where those two countries can 72 00:04:55,880 --> 00:05:02,359 Speaker 2: be in conflict military comf lit, there necessarily has to 73 00:05:02,400 --> 00:05:08,440 Speaker 2: be insecurities on both parties, Chinese having an insecurity of 74 00:05:08,480 --> 00:05:11,799 Speaker 2: whether they're actually going to be able to turn their 75 00:05:11,839 --> 00:05:14,960 Speaker 2: credit into goods and services. In other words, there's no 76 00:05:15,040 --> 00:05:18,680 Speaker 2: purpose of holding a bond or an asset unless you 77 00:05:18,720 --> 00:05:21,599 Speaker 2: can then sell it and get money and buy things. 78 00:05:21,880 --> 00:05:24,839 Speaker 2: And when that dynamic works the other way, it's quite 79 00:05:24,839 --> 00:05:27,840 Speaker 2: painful for the debtor to have to pay back in 80 00:05:27,960 --> 00:05:32,359 Speaker 2: real stuff. And then in a geopolitical conflict, that's a problem. 81 00:05:33,200 --> 00:05:36,000 Speaker 2: And then of course so and then in this environment 82 00:05:36,040 --> 00:05:42,360 Speaker 2: of conflict, that's also the problem of it's worsened because 83 00:05:42,400 --> 00:05:45,400 Speaker 2: in wars and prior times or even with Russia, then 84 00:05:45,480 --> 00:05:48,520 Speaker 2: there were freezing of assets and there could always be 85 00:05:48,600 --> 00:05:53,160 Speaker 2: that kind of issue, So that's a consideration. And then 86 00:05:53,200 --> 00:05:58,320 Speaker 2: of course there's the loss of manufacturing and the loss 87 00:05:58,360 --> 00:06:02,479 Speaker 2: of manufacturing in the United States, you know, has two problems, 88 00:06:02,520 --> 00:06:08,840 Speaker 2: which are that it's connected to self sustaining. You have 89 00:06:08,960 --> 00:06:11,719 Speaker 2: to be able to be in a risky world. You 90 00:06:11,800 --> 00:06:13,760 Speaker 2: have to be able to produce what you need, so 91 00:06:13,839 --> 00:06:16,640 Speaker 2: you need to be capable. 92 00:06:16,160 --> 00:06:17,880 Speaker 3: Of manufacturing certain items. 93 00:06:18,120 --> 00:06:21,479 Speaker 2: And then also the wealth, the loss of the middle 94 00:06:21,520 --> 00:06:25,240 Speaker 2: class has a lot to do with the loss of manufacturing. 95 00:06:25,560 --> 00:06:29,800 Speaker 2: So for those reasons that imbalance that, let's call it 96 00:06:29,880 --> 00:06:34,520 Speaker 2: trade and capital count imbalance. It's both the trade issue 97 00:06:34,720 --> 00:06:39,720 Speaker 2: and a capital issue, and raising tariffs is a way 98 00:06:39,839 --> 00:06:43,840 Speaker 2: of dealing with that. Through history, tariffs really have been 99 00:06:43,880 --> 00:06:47,160 Speaker 2: more of a tax than other tet forms of taxes 100 00:06:47,360 --> 00:06:51,480 Speaker 2: going way back, and they bring in tax revenue, so 101 00:06:51,880 --> 00:06:54,839 Speaker 2: you know, they'll probably bring in somewhere between three hundred 102 00:06:54,920 --> 00:06:58,279 Speaker 2: million and five hundred million a year something like that, 103 00:06:58,680 --> 00:07:02,039 Speaker 2: and so that's a considerate So that's the mechanics about 104 00:07:02,040 --> 00:07:02,679 Speaker 2: what's happening. 105 00:07:03,080 --> 00:07:05,080 Speaker 1: I just wonder if you think that that goes toward 106 00:07:05,400 --> 00:07:09,679 Speaker 1: alleviating concerns about debt and sustainability, certainly in the United States, 107 00:07:09,960 --> 00:07:12,240 Speaker 1: given that there will be those revenues. 108 00:07:12,880 --> 00:07:16,800 Speaker 2: Yeah, right, it is a source of revenue and it 109 00:07:16,880 --> 00:07:22,680 Speaker 2: will diminish that. However, the economics it's small by comparison 110 00:07:22,720 --> 00:07:26,280 Speaker 2: to the gap. So as I said, the mechanics of 111 00:07:26,360 --> 00:07:28,840 Speaker 2: the debt situation are really. 112 00:07:30,160 --> 00:07:31,360 Speaker 3: Have a few components. 113 00:07:31,680 --> 00:07:35,040 Speaker 2: The first is that when debt service payments add up, 114 00:07:35,400 --> 00:07:39,920 Speaker 2: they squeeze out other spending, and so that can create 115 00:07:39,960 --> 00:07:43,360 Speaker 2: the equivalent of an economic heart attack. The second is 116 00:07:43,440 --> 00:07:47,320 Speaker 2: there is a supply demand issue. In other words, a 117 00:07:47,400 --> 00:07:53,720 Speaker 2: deficit requires debt sale, and so there we have a 118 00:07:53,760 --> 00:07:57,040 Speaker 2: lot of debt sales and we and that's and there's 119 00:07:57,720 --> 00:08:02,240 Speaker 2: a lessing demand for that. And then there are the 120 00:08:02,280 --> 00:08:05,560 Speaker 2: central bank playing a role. So what we have now 121 00:08:05,720 --> 00:08:11,040 Speaker 2: is think of it as a big company or an individual, 122 00:08:11,800 --> 00:08:16,600 Speaker 2: except the main difference between a company a country and 123 00:08:16,680 --> 00:08:23,000 Speaker 2: an individual, or a company and a government is that 124 00:08:23,120 --> 00:08:25,960 Speaker 2: the government can print money. So it's the basics. But 125 00:08:26,200 --> 00:08:28,880 Speaker 2: figure it this way. The United States. Here are the 126 00:08:28,960 --> 00:08:33,320 Speaker 2: numbers the United States spends will this year spend about 127 00:08:33,360 --> 00:08:37,360 Speaker 2: seven trillion dollars and it'll take in about five trillion dollars. 128 00:08:37,800 --> 00:08:41,480 Speaker 2: So that means it's spending forty percent more than it 129 00:08:41,520 --> 00:08:45,559 Speaker 2: is taking in. Because it has run deficits and sold 130 00:08:45,600 --> 00:08:48,440 Speaker 2: a lot of debt. The total debt is about six 131 00:08:48,559 --> 00:08:51,400 Speaker 2: times the total amount of money coming in, and we're 132 00:08:51,440 --> 00:08:59,000 Speaker 2: seeing those debt service payments squeeze that out. And as 133 00:08:59,000 --> 00:09:06,040 Speaker 2: a result of what the projections are, it's likely that 134 00:09:06,800 --> 00:09:10,000 Speaker 2: those deficits will then produce lots of bond sales, which 135 00:09:10,040 --> 00:09:12,640 Speaker 2: will compound it. When you get into the point in 136 00:09:12,679 --> 00:09:17,840 Speaker 2: the cycle where debt is needed to pay debt and compounds, 137 00:09:18,160 --> 00:09:21,440 Speaker 2: it becomes a problem. It becomes a problem also for 138 00:09:21,520 --> 00:09:24,600 Speaker 2: the central banks, because the central banks, by the way, 139 00:09:24,640 --> 00:09:26,640 Speaker 2: this is not just an American problem, this is a 140 00:09:26,679 --> 00:09:32,000 Speaker 2: world problem. The central banks themselves own own the debt 141 00:09:32,520 --> 00:09:36,959 Speaker 2: and so, and they lose money on the debt. And 142 00:09:37,040 --> 00:09:40,040 Speaker 2: so when they're losing money on the debt and they 143 00:09:40,080 --> 00:09:44,960 Speaker 2: have asset liability problems, then they also not only have 144 00:09:45,040 --> 00:09:50,960 Speaker 2: to monetize essentially the other the government's debt, but they 145 00:09:50,960 --> 00:09:54,600 Speaker 2: also have to monetize theirs. And those are the characteristics 146 00:09:54,640 --> 00:09:57,200 Speaker 2: that produce a deterioration. 147 00:09:56,800 --> 00:09:58,320 Speaker 3: In the monetary order. 148 00:09:58,720 --> 00:10:01,040 Speaker 2: And that's you know, that's why what you're seeing, you're 149 00:10:01,080 --> 00:10:07,440 Speaker 2: seeing a dynamic of why countries, for example, are letting 150 00:10:07,679 --> 00:10:12,640 Speaker 2: the reserves or their assets in bonds and so on, 151 00:10:12,720 --> 00:10:16,320 Speaker 2: go down, and they're acquiring and have been acquiring gold, 152 00:10:16,440 --> 00:10:17,080 Speaker 2: for example. 153 00:10:17,360 --> 00:10:18,920 Speaker 3: So gold is a currency. 154 00:10:19,000 --> 00:10:22,560 Speaker 2: You know, we think of currencies as being the major 155 00:10:22,600 --> 00:10:25,360 Speaker 2: fea currency, but gold is a currency. It's the second 156 00:10:25,440 --> 00:10:28,800 Speaker 2: largest reserve currency. And so you're seeing changes in the 157 00:10:28,840 --> 00:10:33,160 Speaker 2: monetary order that are reflecting those things somewhat like happened 158 00:10:33,880 --> 00:10:35,439 Speaker 2: in the early seventies. 159 00:10:35,679 --> 00:10:38,800 Speaker 1: Ken Griffin yesterday of Citadel said that he sees gold 160 00:10:38,800 --> 00:10:40,920 Speaker 1: as more of a safe haven right now than the dollar. 161 00:10:41,480 --> 00:10:46,400 Speaker 3: Do you agree, Oh, certainly, I mean, you know, I 162 00:10:46,440 --> 00:10:51,240 Speaker 3: think tell you a story. 163 00:10:54,160 --> 00:10:56,680 Speaker 2: I've been trading market since I was a kid, and 164 00:10:57,000 --> 00:11:01,800 Speaker 2: between my college year and going to a graduate school, 165 00:11:01,840 --> 00:11:06,640 Speaker 2: in the summer of August nineteenth seventy one, I was 166 00:11:06,679 --> 00:11:09,560 Speaker 2: clerking on the floor of a New York Stock exchange 167 00:11:09,559 --> 00:11:16,720 Speaker 2: and I I filed markets and on Sunday night, Paul 168 00:11:16,800 --> 00:11:22,719 Speaker 2: Voger and then President Nixon really was President Nixon delivered 169 00:11:22,720 --> 00:11:25,800 Speaker 2: the message that you're not going to get your money. 170 00:11:26,240 --> 00:11:30,360 Speaker 2: Gold was money then, so we viewed things differently, you know, 171 00:11:30,640 --> 00:11:33,320 Speaker 2: like money fee up. Money as we think about it today, 172 00:11:33,920 --> 00:11:36,000 Speaker 2: was like checks in a checkbook so that you can 173 00:11:36,040 --> 00:11:38,640 Speaker 2: go get your gold. And we looked at things through 174 00:11:38,880 --> 00:11:44,800 Speaker 2: a gold lens, and I walked on the floor of 175 00:11:44,840 --> 00:11:47,400 Speaker 2: the stock exchange. I thought, this is a big crisis, 176 00:11:47,440 --> 00:11:50,200 Speaker 2: because you're not going to get your money. People not 177 00:11:50,400 --> 00:11:53,160 Speaker 2: and the stock market. I thought it was going to 178 00:11:53,160 --> 00:11:55,080 Speaker 2: go down a lot. Stock market went up a lot, 179 00:11:55,800 --> 00:11:58,320 Speaker 2: and I went and I studied history. 180 00:11:58,520 --> 00:12:00,480 Speaker 3: That's, by the way, why I studied history. 181 00:12:01,240 --> 00:12:04,120 Speaker 2: So I studied history, and I found out the exact 182 00:12:04,200 --> 00:12:08,439 Speaker 2: same thing happened in March nineteen thirty three with Roosevelt 183 00:12:08,480 --> 00:12:11,480 Speaker 2: getting on the radio and doing the exact same thing, 184 00:12:11,760 --> 00:12:13,720 Speaker 2: in other words, devaluing money. 185 00:12:14,040 --> 00:12:15,600 Speaker 3: Okay, in other words. 186 00:12:15,640 --> 00:12:18,840 Speaker 2: So when we're looking at the world now, we look 187 00:12:18,880 --> 00:12:23,200 Speaker 2: at it through our currency lens. You know, we think 188 00:12:23,280 --> 00:12:27,480 Speaker 2: things go up or down in when we're measuring it 189 00:12:27,520 --> 00:12:31,960 Speaker 2: in our currency, but in reality, the currency goes up 190 00:12:31,960 --> 00:12:36,240 Speaker 2: and down. And so as we start to think about that, okay, 191 00:12:36,600 --> 00:12:39,440 Speaker 2: think about what's happening. Yes, it's a currency, it's an 192 00:12:39,480 --> 00:12:42,200 Speaker 2: alternative currency, it's not a fiat currency. 193 00:12:42,440 --> 00:12:44,600 Speaker 1: So do you think that it actually makes perfect sense 194 00:12:44,720 --> 00:12:47,079 Speaker 1: the stock market is hitting record high after record high 195 00:12:47,080 --> 00:12:49,000 Speaker 1: at the same time that gold is hitting record high 196 00:12:49,000 --> 00:12:49,800 Speaker 1: after record high. 197 00:12:50,080 --> 00:12:53,800 Speaker 2: Yes, yes, it's very much like the early seventies. And 198 00:12:53,800 --> 00:12:58,400 Speaker 2: then the question, because what do you put your money in. Okay, 199 00:12:58,880 --> 00:13:02,520 Speaker 2: of course the stock market it has We can't speak 200 00:13:02,520 --> 00:13:05,400 Speaker 2: about the stock market as a whole, of course, because 201 00:13:05,440 --> 00:13:09,680 Speaker 2: the stock market is so bifurcated, you know, and the 202 00:13:09,720 --> 00:13:11,920 Speaker 2: world stock markets are so bifurcated. 203 00:13:12,160 --> 00:13:14,360 Speaker 3: But yes, that is the dynamic. 204 00:13:14,679 --> 00:13:18,080 Speaker 2: It depreciates the value of money and then it costs, 205 00:13:18,440 --> 00:13:22,200 Speaker 2: because everybody, it's all about a storehold of wealth. What 206 00:13:22,320 --> 00:13:24,720 Speaker 2: is your storehold of wealth? What's it going to be? 207 00:13:25,120 --> 00:13:28,800 Speaker 2: A currency should be a medium of exchange and a 208 00:13:28,840 --> 00:13:32,520 Speaker 2: storehold of wealth. But when you have so much debt, 209 00:13:33,360 --> 00:13:36,200 Speaker 2: you know, debt is money and money is debt. I 210 00:13:36,200 --> 00:13:40,320 Speaker 2: mean debt is money, meaning when you hold debt, you're 211 00:13:40,320 --> 00:13:43,600 Speaker 2: holding a promise to receive money. And when I say 212 00:13:43,640 --> 00:13:46,320 Speaker 2: money is debt, when you're holding money, you're putting it 213 00:13:46,320 --> 00:13:50,079 Speaker 2: in a debt instrument. And so for those reasons, when 214 00:13:50,120 --> 00:13:53,720 Speaker 2: you have such a supply of debt and debt instruments 215 00:13:53,880 --> 00:13:57,880 Speaker 2: and it's not an effective storehold of wealth, it's natural 216 00:13:57,960 --> 00:14:00,960 Speaker 2: to go to an alternative storehold of wealth, which is 217 00:14:01,000 --> 00:14:04,880 Speaker 2: why we're going to harder currencies, you know. And of 218 00:14:04,920 --> 00:14:08,240 Speaker 2: course gold is the most fundamental of those, not only 219 00:14:08,320 --> 00:14:12,480 Speaker 2: because of the many years but even there, it's you know, 220 00:14:12,720 --> 00:14:15,120 Speaker 2: as they say, it's the only asset that somebody can 221 00:14:15,160 --> 00:14:17,520 Speaker 2: hold that doesn't that you don't have to depend on 222 00:14:17,559 --> 00:14:19,840 Speaker 2: somebody else to paying you money for it at a. 223 00:14:19,760 --> 00:14:23,680 Speaker 1: Time of incredible uncertainty bid also potentially incredible opportunity. You're 224 00:14:23,680 --> 00:14:27,040 Speaker 1: talking about the technological advancements. Can you give a sense 225 00:14:27,040 --> 00:14:31,320 Speaker 1: of how you're thinking about allocations with gold versus bonds, 226 00:14:31,560 --> 00:14:36,080 Speaker 1: versus us versus international versus some sort of leveraging to 227 00:14:36,160 --> 00:14:38,360 Speaker 1: this story of technological development. 228 00:14:39,320 --> 00:14:43,680 Speaker 2: Well, I think, first of all, in an asset allocation mix, 229 00:14:44,120 --> 00:14:46,920 Speaker 2: the first thing you have to do is create your 230 00:14:47,200 --> 00:14:51,160 Speaker 2: neutral portfolio. What's your balance, you know, what's your beta mix, 231 00:14:51,880 --> 00:14:54,800 Speaker 2: your strategic I said allocation if you don't have a 232 00:14:54,880 --> 00:14:57,720 Speaker 2: view of the markets to make tactical mods, and then 233 00:14:57,760 --> 00:15:00,200 Speaker 2: you have to think, how do you make tactical moves? 234 00:15:00,000 --> 00:15:00,880 Speaker 3: Who's going to make those? 235 00:15:01,120 --> 00:15:03,560 Speaker 2: Because tactical moves or a zero sum game, you have 236 00:15:03,600 --> 00:15:06,640 Speaker 2: to beat the other person who's doing it on the 237 00:15:06,680 --> 00:15:11,080 Speaker 2: strategic acid allocation mix. Before I get into the tactical 238 00:15:11,160 --> 00:15:14,120 Speaker 2: though I've expressed my views on the tactical of gold 239 00:15:14,160 --> 00:15:17,600 Speaker 2: relative to bonds. I think you have to create a 240 00:15:17,720 --> 00:15:24,080 Speaker 2: very good balanced portfolio. How you do that, we can 241 00:15:24,160 --> 00:15:29,680 Speaker 2: take a long session. But I think you have to 242 00:15:29,720 --> 00:15:32,880 Speaker 2: think of that and not in nominal terms, but in 243 00:15:32,960 --> 00:15:35,840 Speaker 2: real terms. So in other words, when you're thinking you're 244 00:15:35,840 --> 00:15:39,280 Speaker 2: doing your asset allocation, what is going to protect your 245 00:15:39,440 --> 00:15:43,600 Speaker 2: real after tax returns, so you create that optimal mix. 246 00:15:44,200 --> 00:15:48,480 Speaker 2: Gold is a very excellent diversifier of the portfolio. So 247 00:15:48,560 --> 00:15:51,480 Speaker 2: if you would look at just from the strategic acid 248 00:15:51,480 --> 00:15:57,320 Speaker 2: allocation mixed perspective, you would probably have something like as 249 00:15:57,360 --> 00:16:00,880 Speaker 2: the optimal mix, something like fifteen percent of your portfolio 250 00:16:01,120 --> 00:16:05,760 Speaker 2: in gold because of the fact that if you didn't 251 00:16:05,800 --> 00:16:09,360 Speaker 2: even have a tactical because it is the one asset 252 00:16:09,400 --> 00:16:11,840 Speaker 2: that does very well when the typical parts of your 253 00:16:11,880 --> 00:16:16,600 Speaker 2: portfolio go down, because the typical parts of your portfolio are. 254 00:16:16,480 --> 00:16:18,160 Speaker 3: Also so credit dependent. 255 00:16:19,280 --> 00:16:23,400 Speaker 2: So anyway, I think all of this means that there 256 00:16:23,440 --> 00:16:26,200 Speaker 2: should be some piece in that of gold. If I'm 257 00:16:26,240 --> 00:16:30,840 Speaker 2: making tactical bets. I don't like dead assets per se. 258 00:16:31,640 --> 00:16:33,800 Speaker 2: And I would say I don't like dead assets per se, 259 00:16:34,120 --> 00:16:37,480 Speaker 2: not just government dead assets. But also if you're looking 260 00:16:37,560 --> 00:16:39,640 Speaker 2: let's say a credit or private credit, and you look 261 00:16:39,640 --> 00:16:42,360 Speaker 2: at where the credit spreads are, credit spreads are very 262 00:16:42,480 --> 00:16:47,480 Speaker 2: very low, and so for those various reasons, my tilts 263 00:16:47,480 --> 00:16:52,800 Speaker 2: would be away from those things toward gold. But again, yes, 264 00:16:53,080 --> 00:16:56,320 Speaker 2: so more than would be a normal asset allocation mix. 265 00:16:57,120 --> 00:17:00,240 Speaker 2: But I think you have to also say, you know, 266 00:17:00,360 --> 00:17:04,119 Speaker 2: start with what is a real dollar if you're a 267 00:17:04,200 --> 00:17:08,840 Speaker 2: dollar investor, a real return asset that you're going to 268 00:17:08,920 --> 00:17:11,919 Speaker 2: hold as part of that portfolio. The most of the 269 00:17:12,000 --> 00:17:16,439 Speaker 2: system is dependent on credit equities, and everything is dependent 270 00:17:16,480 --> 00:17:19,560 Speaker 2: on credit. You change credit, and you know, then all 271 00:17:19,600 --> 00:17:22,640 Speaker 2: sorts of things happen, and so it's an effective diversifier 272 00:17:22,680 --> 00:17:25,440 Speaker 2: as well as probably the timing. 273 00:17:25,280 --> 00:17:28,439 Speaker 1: Seems good going to the five tenants that you're talking about. 274 00:17:28,640 --> 00:17:32,480 Speaker 1: Given the imbalances in the deficit, in the debt load, 275 00:17:32,640 --> 00:17:34,080 Speaker 1: and the amount that people are going to have to sell, 276 00:17:34,119 --> 00:17:35,719 Speaker 1: governments are going to have to sell, do you think 277 00:17:35,760 --> 00:17:37,879 Speaker 1: it's appropriate for the FED to be cutting rates right now? 278 00:17:39,000 --> 00:17:44,679 Speaker 3: I think I think the picture on cutting rates is 279 00:17:44,760 --> 00:17:45,880 Speaker 3: slightly mixed. 280 00:17:47,520 --> 00:17:49,480 Speaker 2: So, and it has to do with the split in 281 00:17:49,520 --> 00:17:51,720 Speaker 2: the economy, and it has to do with split in 282 00:17:51,840 --> 00:17:56,679 Speaker 2: capital markets, which means you're trying to look at the 283 00:17:56,720 --> 00:18:00,240 Speaker 2: economy as a whole, but what you have is in 284 00:18:00,400 --> 00:18:03,480 Speaker 2: certain sections of the economy, you have an enormous amount 285 00:18:03,520 --> 00:18:06,959 Speaker 2: of liquidity, enormous amount of wealth. Things are like if 286 00:18:07,000 --> 00:18:09,600 Speaker 2: you're in the top one percent of anything you know, 287 00:18:10,000 --> 00:18:13,240 Speaker 2: or which is the top one percent of the income earners, 288 00:18:13,280 --> 00:18:17,639 Speaker 2: the top one percent of the stocks and AI and 289 00:18:17,680 --> 00:18:20,960 Speaker 2: so on and so forth. Wow, there's a tremendous amount 290 00:18:21,000 --> 00:18:25,600 Speaker 2: of liquidity and fantastic And so you would say, if anything, 291 00:18:25,640 --> 00:18:28,160 Speaker 2: you'd worry more about the bubble and how you start 292 00:18:28,200 --> 00:18:30,719 Speaker 2: to pull the you know, the punch bowl, that kind 293 00:18:30,760 --> 00:18:31,040 Speaker 2: of thing. 294 00:18:32,440 --> 00:18:34,520 Speaker 3: But we have a very diverse economy. 295 00:18:34,920 --> 00:18:38,520 Speaker 2: So if you're looking at let's say, the bottom sixty 296 00:18:38,560 --> 00:18:41,919 Speaker 2: percent of the population and the conditions of the bottom 297 00:18:42,000 --> 00:18:46,200 Speaker 2: sixty percent of the bottom population and labor markets and 298 00:18:46,240 --> 00:18:50,200 Speaker 2: so on, then you have a very very different issue. 299 00:18:50,359 --> 00:18:52,520 Speaker 2: I don't think monetary policy it all is going to 300 00:18:52,520 --> 00:18:54,080 Speaker 2: be able to do that. I think that there's a 301 00:18:54,200 --> 00:18:59,159 Speaker 2: strong situation where you know that the natural instinct is 302 00:19:00,119 --> 00:19:04,480 Speaker 2: if things aren't exactly like I would like and I'd 303 00:19:04,480 --> 00:19:08,200 Speaker 2: like to make them better, I should use monetary policy. Okay, 304 00:19:08,359 --> 00:19:11,480 Speaker 2: So I mean that's now what we've learned that, right, 305 00:19:11,560 --> 00:19:14,679 Speaker 2: because every time you do that and then things go 306 00:19:14,840 --> 00:19:17,760 Speaker 2: up and people are happy and so on. But there's 307 00:19:17,800 --> 00:19:20,800 Speaker 2: a cost of doing that, right. The cost in doing 308 00:19:20,840 --> 00:19:25,960 Speaker 2: that is that there's one man's debts or another man's assets. 309 00:19:26,640 --> 00:19:30,000 Speaker 2: And so when you artificially lower the interest rates so 310 00:19:30,080 --> 00:19:32,640 Speaker 2: that it is not attractive in a sense, the whole 311 00:19:32,800 --> 00:19:35,880 Speaker 2: is an asset, and it's very attractive to borrow and 312 00:19:35,920 --> 00:19:40,320 Speaker 2: buy things, that creates an imbalance. So I think that 313 00:19:41,720 --> 00:19:45,000 Speaker 2: I think that discipline is not something that anybody seems 314 00:19:45,040 --> 00:19:46,000 Speaker 2: to want, and. 315 00:19:46,000 --> 00:19:47,159 Speaker 3: Yet I think it's needed. 316 00:19:47,480 --> 00:19:50,480 Speaker 2: So when I think about the monetary policy and so on, 317 00:19:50,720 --> 00:19:53,600 Speaker 2: I think not much, if any, But I also think 318 00:19:53,640 --> 00:19:56,480 Speaker 2: it's not really dealing with the whole so well because 319 00:19:56,520 --> 00:19:57,919 Speaker 2: of the disparity in the parts. 320 00:19:58,160 --> 00:20:00,600 Speaker 1: Going back to the video that you showed for you're 321 00:20:00,640 --> 00:20:03,520 Speaker 1: talking about these two hundred and fifty year cycles and 322 00:20:03,520 --> 00:20:06,000 Speaker 1: then ten to twenty year periods where there's a transition 323 00:20:06,080 --> 00:20:09,439 Speaker 1: of a power from one to another nation, And I 324 00:20:09,480 --> 00:20:11,800 Speaker 1: just wonder if you see things the same way this time, 325 00:20:12,200 --> 00:20:16,120 Speaker 1: because it seems like globally, they're the same issues everywhere 326 00:20:16,119 --> 00:20:18,640 Speaker 1: in terms of these imbalances and in terms of the deficit, 327 00:20:18,680 --> 00:20:20,480 Speaker 1: in terms of nobody really wanting to take the punch 328 00:20:20,520 --> 00:20:25,120 Speaker 1: bowl away at a time of increasing distress in certain pockets. 329 00:20:25,560 --> 00:20:26,399 Speaker 4: Do you think it's different? 330 00:20:26,840 --> 00:20:30,240 Speaker 2: I think, and just to be clear, that's the whole 331 00:20:30,400 --> 00:20:31,800 Speaker 2: cycle of the great cycle. 332 00:20:31,880 --> 00:20:32,240 Speaker 3: In there. 333 00:20:32,320 --> 00:20:37,359 Speaker 2: There are breakdowns of orders, right, So nineteen forty four 334 00:20:37,760 --> 00:20:38,639 Speaker 2: we had the breakdown of. 335 00:20:38,640 --> 00:20:39,640 Speaker 3: The monetary order. 336 00:20:41,440 --> 00:20:47,439 Speaker 2: We had another breakdown in nineteen seventy one, so nineteen 337 00:20:47,520 --> 00:20:51,400 Speaker 2: forty five we had the breakdown of the most countries 338 00:20:51,440 --> 00:20:55,760 Speaker 2: political orders and most countries and geopolitical order. 339 00:20:55,840 --> 00:20:59,399 Speaker 3: Right, so we're really we have those. 340 00:20:59,119 --> 00:21:02,280 Speaker 2: Cycles which are part of then you know, the overall 341 00:21:02,359 --> 00:21:04,639 Speaker 2: greater cycle are worth keeping in mind. 342 00:21:05,240 --> 00:21:07,680 Speaker 3: So they look a lot alike to me. 343 00:21:08,080 --> 00:21:10,320 Speaker 2: So when I look at it and I look at 344 00:21:10,320 --> 00:21:12,639 Speaker 2: the thirties, I think there's a lot to be learned 345 00:21:13,119 --> 00:21:18,000 Speaker 2: about that particular dynamic. I think one shouldn't just believe 346 00:21:18,000 --> 00:21:21,119 Speaker 2: a cycle is going to follow. I think it's like 347 00:21:21,520 --> 00:21:24,600 Speaker 2: almost like a life cycle. You know, each person's life 348 00:21:24,640 --> 00:21:30,040 Speaker 2: cycle is somewhat different, and it's caused by symptoms and 349 00:21:30,440 --> 00:21:33,520 Speaker 2: conditions that could be measured. So you can look at 350 00:21:34,040 --> 00:21:37,800 Speaker 2: the economy, you can look at the numbers themselves and 351 00:21:37,840 --> 00:21:41,000 Speaker 2: see the health indicators. And that's what I did in 352 00:21:41,040 --> 00:21:43,320 Speaker 2: the books, the books I wrote and so on, so 353 00:21:43,359 --> 00:21:46,080 Speaker 2: you can look at them directly, you can see how 354 00:21:46,160 --> 00:21:50,400 Speaker 2: much like a doctor taking you know, a cat skin 355 00:21:50,560 --> 00:21:55,040 Speaker 2: of circulatory sense system. You could see how it's squeezing out. 356 00:21:55,119 --> 00:21:58,040 Speaker 2: You can see the supply demand. You can see this 357 00:21:58,240 --> 00:22:01,320 Speaker 2: dynamic happening. You can see see it politically, you can 358 00:22:01,359 --> 00:22:03,240 Speaker 2: see it geo. 359 00:22:04,880 --> 00:22:05,400 Speaker 3: Globally. 360 00:22:05,800 --> 00:22:09,040 Speaker 2: So you could see those breakdowns. Okay, you have to 361 00:22:09,119 --> 00:22:11,360 Speaker 2: then put them in the context I think of what 362 00:22:11,440 --> 00:22:14,439 Speaker 2: the process is. What does a country do when it 363 00:22:14,480 --> 00:22:17,840 Speaker 2: doesn't have enough money? Okay, there are a limited number 364 00:22:17,880 --> 00:22:20,000 Speaker 2: of things. In order to see that, you can go 365 00:22:20,080 --> 00:22:22,560 Speaker 2: back in history and get some understanding and also see 366 00:22:22,560 --> 00:22:25,960 Speaker 2: what's going on now. So I think it's very very 367 00:22:26,000 --> 00:22:29,760 Speaker 2: similar to that. Just to me, these all look like 368 00:22:29,840 --> 00:22:32,480 Speaker 2: watching the same movie over and over again, except there's 369 00:22:32,680 --> 00:22:36,240 Speaker 2: people use different technologies, and they have different clothes and 370 00:22:36,280 --> 00:22:38,920 Speaker 2: so on, and there are different people, but they look 371 00:22:39,040 --> 00:22:42,359 Speaker 2: so much alike. So I think that this is pretty 372 00:22:42,440 --> 00:22:45,840 Speaker 2: much looking like the typical process. 373 00:22:46,040 --> 00:22:47,600 Speaker 4: So everyone's asking how does it end? Right? 374 00:22:47,640 --> 00:22:49,280 Speaker 1: Everyone wants to know how the book is going to end, 375 00:22:49,320 --> 00:22:51,120 Speaker 1: how the movie's going to end. One thing that you've 376 00:22:51,119 --> 00:22:53,920 Speaker 1: been talking about is how China has been taking over 377 00:22:53,960 --> 00:22:56,520 Speaker 1: in a significant way that the economy there has been 378 00:22:56,560 --> 00:23:00,879 Speaker 1: growing tremendously. I just wonder whether some of the rebalancing 379 00:23:01,000 --> 00:23:05,520 Speaker 1: and the rejiggering of the trade flows in the world 380 00:23:05,800 --> 00:23:08,960 Speaker 1: are styming that progress or whether they're a speed bumper, 381 00:23:09,040 --> 00:23:12,600 Speaker 1: or how you see that fitting into the trajectory that 382 00:23:12,640 --> 00:23:15,480 Speaker 1: you've been witnessing over the past ten years. 383 00:23:16,280 --> 00:23:19,080 Speaker 2: Well, China has a number of problems that he has 384 00:23:19,119 --> 00:23:23,399 Speaker 2: to deal with, which i'll touch on. However, since I 385 00:23:23,440 --> 00:23:25,760 Speaker 2: started to go to China, which is nineteen eighty four, 386 00:23:25,840 --> 00:23:28,919 Speaker 2: and I went first for curiosity and then because it 387 00:23:29,040 --> 00:23:32,679 Speaker 2: was so interesting and I like the relationship per capita 388 00:23:32,760 --> 00:23:37,240 Speaker 2: incomes increased by twenty eight times, life expectancies increased by 389 00:23:37,240 --> 00:23:39,520 Speaker 2: ten years, and so on. It's done and remarkable, but 390 00:23:39,560 --> 00:23:44,760 Speaker 2: it now has very significant problems. There were I'll quickly 391 00:23:44,800 --> 00:23:47,440 Speaker 2: take you through four or five of those. 392 00:23:48,880 --> 00:23:50,439 Speaker 3: On its debt problems. 393 00:23:51,200 --> 00:23:54,639 Speaker 2: Its debts are all denominated in its own currencies and 394 00:23:54,720 --> 00:23:57,960 Speaker 2: among Chinese mostly speaking, but it needs a giant debt 395 00:23:58,040 --> 00:24:03,840 Speaker 2: restructuringfficult One is the local governments, because the local governments 396 00:24:03,880 --> 00:24:07,720 Speaker 2: in China account for more of the economy and they're 397 00:24:07,760 --> 00:24:08,600 Speaker 2: broke the model. 398 00:24:10,080 --> 00:24:10,800 Speaker 3: They were. 399 00:24:14,560 --> 00:24:18,199 Speaker 2: Selling off land and earning money from land sales and 400 00:24:18,280 --> 00:24:22,640 Speaker 2: borrowing money to produce to high produce high production. 401 00:24:22,920 --> 00:24:23,000 Speaker 3: And. 402 00:24:24,720 --> 00:24:27,000 Speaker 2: So not only do they have a debt, but they 403 00:24:27,000 --> 00:24:32,520 Speaker 2: have a model for those that local governments that is 404 00:24:32,560 --> 00:24:34,760 Speaker 2: not an economic model. In other words, what do you 405 00:24:34,840 --> 00:24:38,840 Speaker 2: do with businesses that don't work, that they don't have 406 00:24:38,880 --> 00:24:43,200 Speaker 2: a profit. And related to this is the rationing system 407 00:24:43,560 --> 00:24:46,919 Speaker 2: that they don't have a profit system. They've gone really 408 00:24:47,080 --> 00:24:51,639 Speaker 2: mostly after quantity. So and the quantity, you know, how 409 00:24:51,680 --> 00:24:55,600 Speaker 2: do I have maximize the quantity of production forgetting about 410 00:24:55,640 --> 00:24:57,040 Speaker 2: the profitability of that. 411 00:24:57,400 --> 00:24:59,520 Speaker 3: So when you have that, they then you have the 412 00:24:59,640 --> 00:25:00,320 Speaker 3: dynam that. 413 00:25:00,320 --> 00:25:04,600 Speaker 2: They're now describing, which is now called involution, which is 414 00:25:04,640 --> 00:25:08,359 Speaker 2: the fact of overproduction doing harm to the economy that's 415 00:25:08,400 --> 00:25:09,720 Speaker 2: going to require. 416 00:25:09,320 --> 00:25:11,159 Speaker 3: A big restructuring. 417 00:25:11,560 --> 00:25:15,280 Speaker 2: Like these big restructurings go similar to what they did 418 00:25:15,320 --> 00:25:18,280 Speaker 2: in the nineties. You run G was the vice premier 419 00:25:18,320 --> 00:25:20,560 Speaker 2: and premier at the time who did this. But the 420 00:25:21,000 --> 00:25:23,440 Speaker 2: way that they go is you have to pick which 421 00:25:23,480 --> 00:25:25,720 Speaker 2: company is going to stay and which go on the 422 00:25:25,760 --> 00:25:29,840 Speaker 2: auction block, and which get restructured and so on. Otherwise 423 00:25:29,880 --> 00:25:33,080 Speaker 2: they're going to have the problem similar to China. Okay, 424 00:25:33,240 --> 00:25:37,400 Speaker 2: because China, excuse me, Japan Japan had the same thing, 425 00:25:38,280 --> 00:25:40,800 Speaker 2: too much debt, but it was a surplus country and 426 00:25:40,840 --> 00:25:43,600 Speaker 2: the debt was in its currency and they had locals. 427 00:25:43,760 --> 00:25:46,640 Speaker 2: But you have to do that restructuring. So there's that, 428 00:25:47,280 --> 00:25:49,560 Speaker 2: and then there's a number of things that we won't have. 429 00:25:49,640 --> 00:25:54,879 Speaker 2: But certainly the world markets of the change China produces 430 00:25:55,000 --> 00:25:58,959 Speaker 2: manufactured goods is dominant. Thirty two percent of the world's 431 00:25:59,000 --> 00:26:03,280 Speaker 2: manufactured good come from China. That's more than the United States, Japan, 432 00:26:03,359 --> 00:26:07,160 Speaker 2: and Germany combined. And now their markets are being close 433 00:26:07,240 --> 00:26:08,840 Speaker 2: to them and so on, so they have to go 434 00:26:08,880 --> 00:26:09,640 Speaker 2: to the third world. 435 00:26:10,000 --> 00:26:11,200 Speaker 3: There are a number of. 436 00:26:11,119 --> 00:26:14,800 Speaker 2: These types of issues having to do with a pension 437 00:26:14,840 --> 00:26:17,680 Speaker 2: system and income tax system and so on that if 438 00:26:17,720 --> 00:26:20,840 Speaker 2: they don't deal with well, and they're very difficult to 439 00:26:20,880 --> 00:26:24,800 Speaker 2: deal with, well, that'll be a burden on China. While 440 00:26:24,840 --> 00:26:29,320 Speaker 2: at the same time, it's of course doing amazing innovations 441 00:26:29,359 --> 00:26:32,000 Speaker 2: in a number of ways that are government directed. 442 00:26:32,080 --> 00:26:35,000 Speaker 3: So I don't want to just say that it has. 443 00:26:34,840 --> 00:26:38,760 Speaker 2: Those burdens, because and has a lot of really powerful 444 00:26:38,960 --> 00:26:42,760 Speaker 2: thinking and quantity of engineers, and what can be done 445 00:26:42,800 --> 00:26:45,679 Speaker 2: is quite something. They're more advanced in the use of 446 00:26:45,760 --> 00:26:49,520 Speaker 2: AI for applications than the United States is for example, 447 00:26:49,680 --> 00:26:51,840 Speaker 2: actually using AI and so on. 448 00:26:52,040 --> 00:26:54,240 Speaker 3: Anyway, that's too long of an answer. 449 00:26:54,320 --> 00:26:56,639 Speaker 4: Prob would you rather invest in China than the US? 450 00:26:58,080 --> 00:26:59,960 Speaker 3: No, I think. 451 00:27:00,000 --> 00:27:03,200 Speaker 2: Think When I think about it, I think, how much 452 00:27:03,240 --> 00:27:06,560 Speaker 2: do I ask allocate to each market? 453 00:27:06,720 --> 00:27:06,920 Speaker 3: Right? 454 00:27:07,280 --> 00:27:10,720 Speaker 2: And I think of that first as a strategic acid allocation. 455 00:27:11,280 --> 00:27:14,359 Speaker 2: I look at things like what's the size of the 456 00:27:14,400 --> 00:27:17,800 Speaker 2: market capitalization, how is it easy for me to get 457 00:27:17,800 --> 00:27:22,200 Speaker 2: my money in and out of the country, what is 458 00:27:22,400 --> 00:27:24,200 Speaker 2: how attractive are they and so on. 459 00:27:24,600 --> 00:27:26,320 Speaker 3: So there's a greater. 460 00:27:26,119 --> 00:27:29,600 Speaker 2: Amount that I'm investing in the United States than is 461 00:27:30,320 --> 00:27:33,919 Speaker 2: that I'm investing in China, I think, And both have 462 00:27:34,119 --> 00:27:38,879 Speaker 2: their challenges and you know, and their benefits. In the 463 00:27:39,000 --> 00:27:42,760 Speaker 2: United States, if it depends what we're market we're talking about, 464 00:27:42,760 --> 00:27:45,679 Speaker 2: But if we're talking about a lot of the market, 465 00:27:46,040 --> 00:27:50,960 Speaker 2: it's quite expensive, and the nature of the flows are concerning, 466 00:27:51,240 --> 00:27:53,800 Speaker 2: and the nature of a number of circumstances are concerning. 467 00:27:53,880 --> 00:27:57,720 Speaker 2: If I'm looking at China, it's a different thing. It's 468 00:27:58,080 --> 00:28:01,880 Speaker 2: relatively inexpensive some of those assets, but at the same time, 469 00:28:02,000 --> 00:28:05,520 Speaker 2: capital flows and other issues also make it a problem. 470 00:28:05,720 --> 00:28:07,920 Speaker 2: So I think of, you know, I have my allocations 471 00:28:07,960 --> 00:28:10,560 Speaker 2: to each much greater in the United States than is 472 00:28:10,560 --> 00:28:15,680 Speaker 2: in China, and then I move tactically within those That's 473 00:28:15,680 --> 00:28:16,160 Speaker 2: how I work. 474 00:28:16,320 --> 00:28:18,400 Speaker 4: You've mentioned really tight credit spreads. 475 00:28:18,640 --> 00:28:21,879 Speaker 1: You've mentioned some of the flows concerning there have been 476 00:28:21,920 --> 00:28:25,439 Speaker 1: a lot of discussions around bubble isious conditions in the 477 00:28:25,480 --> 00:28:28,360 Speaker 1: AI space of particular, in that slice of the market. 478 00:28:28,800 --> 00:28:30,720 Speaker 1: Do you see that there is some sort of excess 479 00:28:30,760 --> 00:28:33,439 Speaker 1: building when you look at history and how this has 480 00:28:33,480 --> 00:28:35,520 Speaker 1: always played out, whether it's a dot com bubble or 481 00:28:35,520 --> 00:28:38,120 Speaker 1: whether it's the tulips over in Amsterdam. I mean, is 482 00:28:38,160 --> 00:28:40,680 Speaker 1: this something that feels frothy to you? 483 00:28:41,600 --> 00:28:43,480 Speaker 3: Yes, there's something that feels frothy to me. 484 00:28:45,520 --> 00:28:53,480 Speaker 4: How it's dratastic? I think that was brilliant. I wonder 485 00:28:53,520 --> 00:28:54,520 Speaker 4: how do you see it evolving? 486 00:28:54,560 --> 00:28:56,480 Speaker 1: I mean, because there is this great promise, right, it's 487 00:28:56,520 --> 00:28:58,760 Speaker 1: sort of the idea that the Internet did. 488 00:28:59,160 --> 00:29:03,000 Speaker 4: Come to fruition and change the world. I might change 489 00:29:03,000 --> 00:29:03,760 Speaker 4: the world. 490 00:29:03,560 --> 00:29:04,800 Speaker 3: But I certainly will. 491 00:29:04,840 --> 00:29:09,680 Speaker 2: But you're asking history on at each of the times 492 00:29:09,760 --> 00:29:15,600 Speaker 2: the greatest technological revolutions were taking place during those times. 493 00:29:15,840 --> 00:29:18,640 Speaker 2: In other words, the late twenties, for example, was there 494 00:29:18,640 --> 00:29:22,120 Speaker 2: were more patents, more inventions in the world, and so on, 495 00:29:22,480 --> 00:29:24,840 Speaker 2: and if you know, you could take two thousand or 496 00:29:24,880 --> 00:29:27,720 Speaker 2: those types of period A lot of them are dependent. 497 00:29:27,880 --> 00:29:32,680 Speaker 2: There was an interdependency between the capital markets and these 498 00:29:32,720 --> 00:29:35,320 Speaker 2: in terms of funding and those types of things. So 499 00:29:35,360 --> 00:29:40,120 Speaker 2: we have to look at valuations too, right, I would say, 500 00:29:40,160 --> 00:29:43,680 Speaker 2: in terms of let's say AI valuations and so on. 501 00:29:43,920 --> 00:29:49,440 Speaker 2: I think it's more in the areas of applications than 502 00:29:50,400 --> 00:29:54,760 Speaker 2: let's say, the superscalers themselves. I dont wouldn't want to 503 00:29:54,800 --> 00:29:59,479 Speaker 2: be short the superscalers. I just but if I'm thinking 504 00:29:59,560 --> 00:30:03,040 Speaker 2: about what's going it's going to be in the users, 505 00:30:03,560 --> 00:30:07,719 Speaker 2: either the users of those technologies becoming more effective and 506 00:30:07,760 --> 00:30:10,360 Speaker 2: so their profits will be better and so on, or 507 00:30:10,480 --> 00:30:13,440 Speaker 2: those who will provide the platforms for the effective use 508 00:30:13,520 --> 00:30:16,760 Speaker 2: of those I think that that's an area of greater opportunity. 509 00:30:16,880 --> 00:30:19,000 Speaker 1: You mentioned something about China that I think is a 510 00:30:19,000 --> 00:30:21,040 Speaker 1: subject of huge debate in the United States, which is 511 00:30:21,040 --> 00:30:25,600 Speaker 1: the way that they've sponsored certain industries and certain development 512 00:30:25,640 --> 00:30:27,880 Speaker 1: of technologies in the AI space and beyond. 513 00:30:28,320 --> 00:30:29,880 Speaker 3: And I wonder if, yeah, by the way, we're doing 514 00:30:29,880 --> 00:30:30,160 Speaker 3: that too. 515 00:30:30,360 --> 00:30:31,960 Speaker 1: That's what I wanted to go to, the idea that 516 00:30:31,960 --> 00:30:34,560 Speaker 1: the United States is now taking a stake in lithium 517 00:30:34,640 --> 00:30:36,960 Speaker 1: companies in Intel and a whole host of others and 518 00:30:37,080 --> 00:30:39,400 Speaker 1: sort of cobble together sovereign wealth fund that we're learning 519 00:30:39,400 --> 00:30:40,920 Speaker 1: about in real time. And I just wonder, do you 520 00:30:40,920 --> 00:30:43,520 Speaker 1: think that is the right approach for a country to 521 00:30:43,560 --> 00:30:44,840 Speaker 1: take at this moment. 522 00:30:45,400 --> 00:30:48,080 Speaker 2: At this moment, I again want to compare it with 523 00:30:48,160 --> 00:30:50,880 Speaker 2: the nineteen thirties because you have to look at the 524 00:30:50,960 --> 00:30:53,480 Speaker 2: times and what it's like. Right, So, this is a 525 00:30:53,520 --> 00:30:58,400 Speaker 2: period of great conflict, and if you take such periods 526 00:30:58,400 --> 00:31:01,600 Speaker 2: of great conflict often needs a direction. 527 00:31:02,120 --> 00:31:05,440 Speaker 3: You know, it can't be just consumer goods rich people. 528 00:31:05,240 --> 00:31:08,160 Speaker 2: Than buying expensive things like handbags or something, you. 529 00:31:08,120 --> 00:31:10,959 Speaker 3: Know, so it needs a direction. 530 00:31:11,280 --> 00:31:14,160 Speaker 2: If you're looking at things like data centers and what 531 00:31:14,200 --> 00:31:16,600 Speaker 2: does it mean for AI and what does it mean 532 00:31:17,680 --> 00:31:21,560 Speaker 2: in many ways in order to be competitive, there needs 533 00:31:21,600 --> 00:31:24,600 Speaker 2: to be much more guidance because it just is not 534 00:31:24,640 --> 00:31:27,520 Speaker 2: going to be adequate by itself. So yes, I think 535 00:31:27,680 --> 00:31:31,160 Speaker 2: under these types of circumstances there needs to be that. 536 00:31:31,520 --> 00:31:36,160 Speaker 2: The question is whether that is done wastefully or productively. 537 00:31:36,440 --> 00:31:36,640 Speaker 3: Right. 538 00:31:36,920 --> 00:31:41,280 Speaker 2: The problem with governments, generally speaking is it's done wastefully. 539 00:31:41,560 --> 00:31:45,120 Speaker 2: So you have state owned enterprises or state controlled that 540 00:31:45,480 --> 00:31:48,680 Speaker 2: and people in Washington are not usually really good at 541 00:31:48,440 --> 00:31:52,120 Speaker 2: this type of stuff and resource allocation. The question is 542 00:31:52,160 --> 00:31:55,320 Speaker 2: how the balance exists. But yes, I think at these 543 00:31:55,360 --> 00:31:57,680 Speaker 2: types of times there needs to be more of that, 544 00:31:57,760 --> 00:31:59,480 Speaker 2: and you hope that that's done well. 545 00:32:00,120 --> 00:32:02,720 Speaker 1: You've mentioned nineteen thirty several times and that this is 546 00:32:02,720 --> 00:32:06,080 Speaker 1: a time of conflict, and we know how that movie ended. 547 00:32:07,080 --> 00:32:08,680 Speaker 4: Is that kind of the parallel that you see this 548 00:32:08,800 --> 00:32:09,280 Speaker 4: right now? 549 00:32:09,840 --> 00:32:18,800 Speaker 2: I think it could. There's a certain dynamic that makes 550 00:32:19,040 --> 00:32:23,640 Speaker 2: it get worse and worse, you know. So there's the 551 00:32:23,720 --> 00:32:26,480 Speaker 2: debt dynamic that we're talking about, but there's also, let's say, 552 00:32:26,520 --> 00:32:32,480 Speaker 2: the internal political dynamic. Do we see people coming both 553 00:32:32,720 --> 00:32:38,800 Speaker 2: sides being able to work together at for results and 554 00:32:39,280 --> 00:32:43,440 Speaker 2: that there's going to be votes that people believe and 555 00:32:43,480 --> 00:32:46,520 Speaker 2: they believe the system is going to be fair for them, 556 00:32:46,640 --> 00:32:50,160 Speaker 2: so that if they lose, they accept losing because they 557 00:32:50,200 --> 00:32:54,080 Speaker 2: believe the system is fair and so on. You know, 558 00:32:54,240 --> 00:32:57,880 Speaker 2: history shows that that's not likely and that things can 559 00:32:58,000 --> 00:33:02,720 Speaker 2: worsen because people then and you know, you know in 560 00:33:02,840 --> 00:33:05,320 Speaker 2: history it can get bad. I don't know, one side 561 00:33:05,320 --> 00:33:07,959 Speaker 2: shoots on the other side and who knows where it is. 562 00:33:08,880 --> 00:33:11,720 Speaker 2: You know, one would hope that there would be sort 563 00:33:11,720 --> 00:33:15,840 Speaker 2: of a strong middle that would bring for most people 564 00:33:15,880 --> 00:33:18,360 Speaker 2: and that you can get back to a system that's fair. 565 00:33:18,680 --> 00:33:22,120 Speaker 2: But I think that's that's a difficult thing to do. 566 00:33:22,440 --> 00:33:25,320 Speaker 2: I think the world order, the changing world order, we've 567 00:33:25,360 --> 00:33:27,160 Speaker 2: gone from a. 568 00:33:27,200 --> 00:33:28,800 Speaker 3: Multilateral world order. 569 00:33:28,920 --> 00:33:31,880 Speaker 2: In other words, it was the American model that there's 570 00:33:32,120 --> 00:33:36,880 Speaker 2: a United Nations, a World CORT, a World Health Organization, 571 00:33:37,360 --> 00:33:41,080 Speaker 2: a World Trade Organization, an IMF, a World Bank in 572 00:33:41,120 --> 00:33:43,840 Speaker 2: all of those world so that there is sort of 573 00:33:44,240 --> 00:33:48,000 Speaker 2: an attempt to bring rules and systems into place that 574 00:33:48,080 --> 00:33:51,880 Speaker 2: are multilateral. I think that's over. That's largely over. I 575 00:33:51,880 --> 00:33:54,240 Speaker 2: don't think we're not likely to go back to those 576 00:33:54,280 --> 00:33:57,680 Speaker 2: types of things. So I don't think I think we 577 00:33:57,840 --> 00:34:01,920 Speaker 2: have to instead worry about not having such a bad 578 00:34:02,000 --> 00:34:05,960 Speaker 2: fight with each other that that's or a financial crisis, 579 00:34:06,240 --> 00:34:08,920 Speaker 2: that we make things worse than they are. 580 00:34:09,200 --> 00:34:10,040 Speaker 3: But it's. 581 00:34:11,480 --> 00:34:14,520 Speaker 2: You're asking me as a man who actually has to 582 00:34:14,560 --> 00:34:17,960 Speaker 2: bet on this and has to be as accurate as 583 00:34:18,000 --> 00:34:20,920 Speaker 2: I can. I mean, like, hope is not a strategy. 584 00:34:21,239 --> 00:34:24,120 Speaker 2: So when you ask me, I say, I really hope 585 00:34:24,280 --> 00:34:25,360 Speaker 2: that that's not the case. 586 00:34:25,520 --> 00:34:27,200 Speaker 3: But if you look at history and you look. 587 00:34:27,080 --> 00:34:31,200 Speaker 2: At the dynamics, there's more the movement toward these things 588 00:34:31,239 --> 00:34:34,279 Speaker 2: being resolved in the form of conflicts that we've seen 589 00:34:34,360 --> 00:34:34,920 Speaker 2: in the past. 590 00:34:35,760 --> 00:34:39,920 Speaker 1: On that uplifting note, we're out of time, Ray Dalio. 591 00:34:40,040 --> 00:34:42,560 Speaker 1: It has been absolutely my pleasure to speak with you. 592 00:34:42,600 --> 00:34:44,120 Speaker 1: Thank you so much for being here.