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Speaker 1: This is Master's in Business with Very Hults on Bloomberg Radio.

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Speaker 1: I'm Barry Ridhults. You're listening to Masters in Business on

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Speaker 1: Bloomberg Radio. My extra special guest this week is Ray Dalio.

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Speaker 1: He is the founder of Bridgewater, one of the world's

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Speaker 1: largest hedge funds. He is the author of numerous best

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Speaker 1: selling books, including Principles, Life and Work and Big Debt Crisis.

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Speaker 1: His latest is called The Changing World Order, Why Nations

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Speaker 1: Succeed and Fail. Ray Dalio are returning Champion. Welcome back

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Speaker 1: to Bloomberg. Thank you, Barry. It's always a pleasure to

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Speaker 1: be with you. So before we get into the book,

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Speaker 1: I want to give listeners who may not be familiar

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Speaker 1: with some of your work a little background. And you

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Speaker 1: first came to my attention for the work you do

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Speaker 1: on mistakes as quote, opportunities to learn and improve. The

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Speaker 1: key to success in life is learning how to fail. Well,

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Speaker 1: tell us a little bit about that. What what led

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Speaker 1: you to that? Understanding the markets? You know? Um, but

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Speaker 1: I mean it's true like pain is a great teacher,

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Speaker 1: you know. So I learned pain plus reflection equals progress.

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Speaker 1: Uh so the markets, um, you know, markets teach your humility.

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Speaker 1: You've got to be aggressive and you've got to be

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Speaker 1: defensive at the same time. So what I learned is

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Speaker 1: whatever successes I had in life had to do more

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Speaker 1: with how I dealt with what I didn't know than

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Speaker 1: what I know. And so that means taking it in

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Speaker 1: but making mistakes and reflecting on them. Hey, that's a

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Speaker 1: great way to learn, right, It certainly is. And there's

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Speaker 1: another issue that you bring up related to that, which

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Speaker 1: is hyper realism. You have to understand how reality works

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Speaker 1: then learn how to deal with it, which kind of

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Speaker 1: raises an issue. Isn't that obvious? Who gets that wrong?

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Speaker 1: Who doesn't deal with reality? Well? I think that most

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Speaker 1: people have a wish of what reality is, and they

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Speaker 1: get upset that their reality is not that, and they

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Speaker 1: get hung up in that upsetness rather than to look

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Speaker 1: at it and accept it and then say, what does

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Speaker 1: that tell me about how reality works and how I

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Speaker 1: should deal with it? Right? I think most people are upset.

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Speaker 1: They're stuck in that upset nous um and wishing something

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Speaker 1: is different, rather than thinking how do they best respond

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Speaker 1: to what is the reality? That's that's very zen of view.

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Speaker 1: Accept reality for what it is and and interact with

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Speaker 1: that as opposed to just being upset about the way

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Speaker 1: the world isn't well zen or practical. I think it's practical.

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Speaker 1: So let's talk about some things that you have helped create.

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Speaker 1: Some products treasury inflation protected bonds, tips, the US dollar

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Speaker 1: future index, risk parity, the style market of China, and

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Speaker 1: my favorite chicken McNuggets. How did you have a hand

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Speaker 1: in creating all of these products? Well, you know, you

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Speaker 1: just go along with your life and you do the

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Speaker 1: thing you do, and then you come up with the ideas.

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Speaker 1: So in my case, I was, you know, markets, since

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Speaker 1: I was a kid twelve, UM, I played around. I

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Speaker 1: mean I didn't know what I was doing in the beginning,

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Speaker 1: but I played around with markets and I encountered things.

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Speaker 1: So I used to start off with commodities. Um, I

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Speaker 1: traded commodities, grains and meats and all of those things.

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Speaker 1: And then this McDonald's wanted to have the chicken McNugget,

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Speaker 1: but they were worried that chicken prices would change a lot,

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Speaker 1: and so then I needed I worked with a chicken

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Speaker 1: processor who then made chickens and chickens or grain, and

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Speaker 1: I showed them how they could work a deal out

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Speaker 1: where they would hedge the grain and so on and

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Speaker 1: so forth. And that's how chicken McNuggets could come out

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Speaker 1: without out a fix and stay the kicks price. But anyway,

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Speaker 1: one thing leads to another, you know it. A hedge

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Speaker 1: on green prices leads to stable chicken prices and therefore

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Speaker 1: a consistent nugget price. Right, because the cost of a

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Speaker 1: chicken has nothing to do with the price of the chick.

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Speaker 1: It has to do with the price of the grain

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Speaker 1: that you feed the check and so by being able

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Speaker 1: to lock in that price with the producer, we were

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Speaker 1: able to lock in the price for the chicken for

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Speaker 1: McDonald so that they could have stable prices. But anyway

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Speaker 1: that other stuff, the world evolves and I'm trading, and

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Speaker 1: so then I come into trading um financial instruments, because

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Speaker 1: then we have the printing of money and we have

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Speaker 1: all of those other things. So monetary policy becomes thing,

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Speaker 1: and one thing learns to another. Then the idea of

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Speaker 1: risk parity is the idea of how I could balance

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Speaker 1: the portfolio well that I wanted to balance it well.

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Speaker 1: So one thing leads to another, you know interesting, So

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Speaker 1: a couple of quotes from you relate to each of

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Speaker 1: the books you've you've written, but I think they're very

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Speaker 1: revealing about who you are. One is unprecedented, question mark

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Speaker 1: big developments that haven't happened in my lifetime, but have

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Speaker 1: occurred numerous times in history. It's not so much that

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Speaker 1: they're unprecedented, it's that we just haven't experienced them recently.

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Speaker 1: Tell us about well. I learned about this um in

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Speaker 1: I've graduated UH college and before I went to business school.

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Speaker 1: In the summer um August seventy one, I'm following the markets.

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Speaker 1: I'm clerking on the floor of the New York Stock Exchange,

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Speaker 1: and President Nixon gets on the television and he explains

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Speaker 1: that money as we know it ceases to exist because

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Speaker 1: then gold was money, and paper money was what your

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Speaker 1: claim like a check in a checkbook. You could go

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Speaker 1: get your money. And he said to the world, you

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Speaker 1: can't go get your gold. And I walked onto the

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Speaker 1: floor of the New York Stock Exchange, and I thought

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Speaker 1: that this is a big deal, so there would be

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Speaker 1: a pandemonium, and and I didn't. But the pandemonium was

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Speaker 1: rather than go down a lot, the stock market went

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Speaker 1: up a lot, the most in a couple of decades,

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Speaker 1: and then I said, well, um, wow, I didn't understand

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Speaker 1: what happened. So I went back and I look at history,

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Speaker 1: and I found the exact same thing happened on March five,

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Speaker 1: nine thirty three, with Roosevelt saying, you don't get the gold,

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Speaker 1: and they print the money, and the stock market went

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Speaker 1: up and behaved that way. Then I learned about the valuations,

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Speaker 1: so I started to learn that I needed to go

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Speaker 1: back to things that didn't happen. So I studied, for example,

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Speaker 1: the Great Depression. And because I studied the Great Depression,

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Speaker 1: then in two that I was able to anticipate the

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Speaker 1: two thousand and eight financial crisis. So we made a

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Speaker 1: lot of money when others were losing money in the

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Speaker 1: financial crisis. But I wouldn't had that if I didn't

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Speaker 1: study things that didn't happen before my lifetime. Right, so

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Speaker 1: things like the pandemic. Let's think, as you start to

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Speaker 1: think about the things, there are a number of things

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Speaker 1: like right now. The reason I did that book is

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Speaker 1: because there are things that are happening now that never

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Speaker 1: happened in our lifetime before. And I want to be

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Speaker 1: like a doctor who knows many cases of those. But

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Speaker 1: I have to go back and see them in history

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Speaker 1: in order to gain that perspective. Right, there's a fascinating

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Speaker 1: discussion between I think was St. Louis and Philadelphia in

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Speaker 1: the pandemic. One of the city's was very aggressive in

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Speaker 1: shutting down schools. I think it was St. Louis and

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Speaker 1: advocating masks for everybody, and Philadelphia didn't huge difference in

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Speaker 1: the outcome for that pandemic. Man, I can learn about

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Speaker 1: that from you. You got it right, well, you sent

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Speaker 1: me recently, you know, in your book. And we're gonna

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Speaker 1: get to the Changing World Order. Um, so let's let's

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Speaker 1: talk about something from the Changing World Order right now.

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Speaker 1: One of the most interesting quotes I pulled from the

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Speaker 1: book quote, there are only a limited number of personality

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Speaker 1: types going down a limited number of paths, which lead

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Speaker 1: them to encounter a limited number of situations to produce

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Speaker 1: a limited number of stories that repeat over time. So

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Speaker 1: so you've brought that up a number of times in

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Speaker 1: in some of your previous books as well. Um, Hero

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Speaker 1: of of a Thousand Faces and and a lot of

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Speaker 1: the Joseph Campbell stuff. Tell us a little bit about

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Speaker 1: that limitation that we see the same cycles the same

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Speaker 1: stories over and over again. Well that's uh, that's it.

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Speaker 1: I mean, I think you said it very well. If

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Speaker 1: you look back in history and you read human nature

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Speaker 1: does not change much, Okay, our circumstances, it's and it's

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Speaker 1: a major driver. You put a person into a certain

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Speaker 1: set of circumstances and then you got the reaction and

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Speaker 1: you're going to have and the dynamic like you borrow

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Speaker 1: money and if markets go up to people borrow more

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Speaker 1: money to speculate on the thing, and then they get

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Speaker 1: over and debt it. And then there were wealth gaps,

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Speaker 1: and there are all these things that happen over and

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Speaker 1: over again, and but we don't think about it. Everybody's

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Speaker 1: almost dealing with um whatever is happening to them at

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Speaker 1: the moment, and they're just thinking about it. But think

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Speaker 1: about it like I mean, you could go to anything, okay,

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Speaker 1: And it happens over and over again as a life arc,

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Speaker 1: all of our life arcs. You're born at certain age,

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Speaker 1: your kids go to school, certain age, they have kids,

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Speaker 1: you move on. There are these things that repeat over

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Speaker 1: and over again, and so let's look at those things

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Speaker 1: and how they repeat. It's a remarkable. So it's almost

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Speaker 1: as though Um, the only things that change pretty much

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Speaker 1: are the closed people where and the technologies they use.

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Speaker 1: The truth that sure, and a lot of the clothes

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Speaker 1: are based on the technology. You know, they're not uh,

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Speaker 1: they're not just old flax and cotton and what have you. Right, So,

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Speaker 1: what you see you see evolution. If you decompose it,

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Speaker 1: you see that there's a force of evolution that moves

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Speaker 1: things toward improvement. Okay, And then around that there are

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Speaker 1: cycles and give the same circumstances around that they repeat

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Speaker 1: over and over again. And that's why in order to

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Speaker 1: understand today, you cannot look what happened yesterday, Okay, you

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Speaker 1: have to look at what has happened repeatedly. So you

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Speaker 1: mentioned we all go through these life cycles, both as

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Speaker 1: individuals and societies. You're at the stage of life where

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Speaker 1: you're writing books, sharing wisdom. What's the motivation for this

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Speaker 1: act of your life? Well, I think there are three

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Speaker 1: stages in life. The first stages, you're dependent on others.

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Speaker 1: You're going to school, you're learning. In the second stage,

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Speaker 1: you are independent you others are dependent on you, and

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Speaker 1: then you're trying to be successful. As you move past

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Speaker 1: that stage, your goal isn't to be successful in that

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Speaker 1: same way before you want to pass on what you've

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Speaker 1: learned and so on, and then you go into your

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Speaker 1: third stage of life, where you know you're free to live,

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Speaker 1: free to die. Okay, that that arc is basically it.

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Speaker 1: So I'm at I'm seventy two years old, and well, uh,

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Speaker 1: my joy is in being able to pass along that

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Speaker 1: which is valuable. And I'll do that for probably maybe

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Speaker 1: my one more book, which is Economic Investment Principles, and

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Speaker 1: then I'll be done with that. And but I still

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Speaker 1: love the game. But but that's where the stage of

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Speaker 1: life is. So like, I did this study because I

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Speaker 1: needed the information to know how to deal with today,

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Speaker 1: and I ordinarily wouldn't put it out as a book,

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Speaker 1: but I now figure, Okay, it's too important, and I

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Speaker 1: think it'll be helpful for people to take or leave

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Speaker 1: as they like. But that's why I'm doing it. Quite fascinating.

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Speaker 1: So let's talk a little bit about the changing world order.

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Speaker 1: And I have to start with the US dollar. It's

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Speaker 1: been the reserve currency for quite a while. Do you

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Speaker 1: see that changing anytime soon? And is that part of

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Speaker 1: the changing world or you know? It was that question

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Speaker 1: that led me to study what causes reserve currencies to

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Speaker 1: rise and fall and to go back for the five years,

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Speaker 1: because um, you need the cycles and these cycles of

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Speaker 1: long lasting cycles. So at first it was the Dutch guilder,

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Speaker 1: then it was the British pound, then it was the

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Speaker 1: US dollar, okay, and what is that dynamic? To answer

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Speaker 1: that questions? So and then it brought me into contact

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Speaker 1: with all the things that mattered. What were they doing economically,

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Speaker 1: how what percentage of world trade were they? How strong

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Speaker 1: were they militarily? The whole package. And that's what the

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Speaker 1: book then takes one through. Took me through that journey.

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Speaker 1: That was my exploration. So what you find out in

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Speaker 1: history is that there is um. The world order that

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Speaker 1: we began began in nineteen the end of the World

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Speaker 1: War two New World Order. The United States owned eight

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Speaker 1: of the world's money because the world's money was gold,

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Speaker 1: and the United States had of the world's gold, and

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Speaker 1: so that gave it the reserve currency. It was also

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Speaker 1: had all the economic power, it was more than half

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Speaker 1: the world GDP, and it also had the only military,

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Speaker 1: it had nuclear weapons and so on. There was no comparison.

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Speaker 1: Hence we began the American World Order and the US

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Speaker 1: dollar going with that, Okay, and then there's a cycle.

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Speaker 1: And I saw the cycle as those as the economy

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Speaker 1: grows and you have prosperity and so it's self reinforcing.

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Speaker 1: That's those are the good years after the war. Um,

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Speaker 1: nobody wants to fight the opposition, and you build this,

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Speaker 1: but you get into a period where then it becomes

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Speaker 1: when you have a reserve currency, others want to hold

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Speaker 1: it as an asset, so they lend to you and

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Speaker 1: you can borrow a lot of money. Wait, does this

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Speaker 1: trace back to where the Dutch the Britishish? Yes? Every time, okay,

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Speaker 1: same pattern begin. There's a war, you win a war, uh,

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Speaker 1: you become the dominant power. Also technologically and so on.

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Speaker 1: The Dutch, for example, invented chips that could go all

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Speaker 1: around the world and collect all sorts of treasures. But

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Speaker 1: in order to do that, they had to have a military.

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Speaker 1: And then when they went around, they got to pay

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Speaker 1: in their money, and it became the world's reserve currency

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Speaker 1: because they want they were trading all over and they

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Speaker 1: can do that like the United States, like the British

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Speaker 1: and so on. So heait, let me interrupt you. Technological

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Speaker 1: advancement leads to military superiority, leads to booming trade, leads

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Speaker 1: to economic dominance and reserve currency. That's right. And how

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Speaker 1: long does that tend to last? That arc It can vary,

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Speaker 1: but it's usually somewhere in the vicinity of the total

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Speaker 1: empire is like a hundred and fifty years. The Romans

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Speaker 1: were an exception because they had all of that and

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Speaker 1: they lasted much longer. That's right. They last about three

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Speaker 1: hundred and years years or something. But you can take

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Speaker 1: each of those, so there's a variation around those, um.

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Speaker 1: But anyway, you've got the pattern. And so to answer

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Speaker 1: your question about the reserve currency, then what happens is

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Speaker 1: the country gets into deeply into debt okay and um,

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Speaker 1: and then with that it runs deficits because it wants

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Speaker 1: to spend more money and wants to maintain that position.

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Speaker 1: But it does, but it's those deficits mean that it's

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Speaker 1: earning less than it's spending and it's required that that money.

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Speaker 1: And then when you get down to a zero interest

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Speaker 1: rate type of situation where like we're in, then we

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Speaker 1: need more debt because everybody wants more money, so the

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Speaker 1: government has got to send out more checks and you

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Speaker 1: as always, you either have to get that money from somebody,

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Speaker 1: which means you have to get taxes. But when people

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Speaker 1: get that get tax they get angry. So what always

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Speaker 1: happens at that point is you send out the money

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Speaker 1: and print the money, okay, and then there's the mechanics

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Speaker 1: of the printing of that money. So right now we

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Speaker 1: have a situation where there's a lot of debt and

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Speaker 1: a lot of dollar denominated debt in others foreigners portfolios

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Speaker 1: because they're holding it because the reserve currency is what

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Speaker 1: it is and there's low interest rates. Now we can

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Speaker 1: get into how that compares with other currencies, but what

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Speaker 1: happens is the dynamic that we're seeing causes all currencies

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Speaker 1: to depreciate in value. Money is being produced and so on,

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Speaker 1: and that has because more money is being produced than

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Speaker 1: goods and services are preting being produced. That causes the

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Speaker 1: value of money to go down. And that's why when

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Speaker 1: you look at what your interest rate is, you know

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Speaker 1: there's a big problem for investors because they think cash

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Speaker 1: is safe because it doesn't have the volatility, but they're

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Speaker 1: only looking at it in terms of dollars. But inflation happens. Okay,

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Speaker 1: you print money and then inflation sation happens, and it

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Speaker 1: takes your buying power away from you because you can't

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Speaker 1: increase your living standards by printing money. And so there's

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Speaker 1: a chapter in the book that shows that that is

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Speaker 1: the value of money, and it takes it over these

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Speaker 1: five hundred years. It looks at seven fifty currencies, it

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Speaker 1: shows how they all behave and the pattern is the same. Yes,

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Speaker 1: that's the pattern. So here's the pushback. And I first

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Speaker 1: thought about this with big debt crises, because there is

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Speaker 1: a smaller section about money printing and inflation in that book.

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Speaker 1: But the pushback is I've been hearing my whole adult life. Gee,

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Speaker 1: if we run deficits, inflation will get out of hand,

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Speaker 1: the FIA courency will collapse, it will crowd out private capital,

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Speaker 1: no one will be willing to lend money to the government,

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Speaker 1: and the cost of borrowing will be much higher. None

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Speaker 1: of those things have happened. But and I said that

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Speaker 1: when when I did the um UM, I put out

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Speaker 1: a video called How the Economic Machine Works, which is

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Speaker 1: which if you haven't in it, everybody should absolutely watch that.

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Speaker 1: It's both entertaining and informative UM And the main reason

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Speaker 1: I put that out. Was that right then? At that

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Speaker 1: time there was the question of whether too much money

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Speaker 1: was going to do it. If too much money make

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Speaker 1: if money makes up for credit, that the total value

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Speaker 1: of anything, the price of anything equals the amount spent

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Speaker 1: on it, and it could be money or credit divided

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Speaker 1: by the quantity of its sold. So if you look

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Speaker 1: at if I increase money or credit by more than

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Speaker 1: I increase the goods and services produced, you will have

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Speaker 1: inflation in good services or financial assets. That's the machine.

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Speaker 1: So back then I made the point intentionally at that

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Speaker 1: that it was okay to print the money to make

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Speaker 1: up for the fall in credit. Because the shortfold during

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Speaker 1: the financial crisis, if there's a contraction and credit, there

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Speaker 1: is a losing of spending power. And so if money

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Speaker 1: is produced to neutralize that contraction and credit, so the

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Speaker 1: amount of spending goes does not contract, you will neutralize that.

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Speaker 1: I called that a beautiful deleveraging. Now fast forward twelve

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Speaker 1: or thirteen years, the pandemic starts, and now instead of

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Speaker 1: monetary printing, there's fiscal there's both, right, Well, so we

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Speaker 1: look at the mechanics of it. I just want to

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Speaker 1: go with the mechanics, the amount of money and credit

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Speaker 1: created and um is much greater than the amount of

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Speaker 1: goods and services incrementally produced. And so then people decide

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Speaker 1: they get their checks, and the way they get their

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Speaker 1: checks the government sends out the checks or and and

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Speaker 1: then the federal reserve makes up for the shortage of

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Speaker 1: demand and it produces that money and credit. And so

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Speaker 1: then people decide do I buy a financial asset, do

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Speaker 1: I buy this thing? Do I buy that thing? But

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Speaker 1: that produces the reflation that we have seen along those lines.

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Speaker 1: So the difference between that is that the total spending

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Speaker 1: power and the total amount spending increases much greater than

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Speaker 1: that which is needed to make up for the contraction

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Speaker 1: and credit. So from O eight O nine, we saw

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Speaker 1: the short fill fall filled by the federal reserve. In

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Speaker 1: we saw the short fall in demand filled by Congress

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Speaker 1: and the federals. But then here we are a year later,

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Speaker 1: when things seem to be a lot better than they were,

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Speaker 1: and now there's a ton of cash circulating through the system,

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Speaker 1: and we're seeing signs of inflation. Yes, mostly goods, but

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Speaker 1: also services and financial assets and for sure everything because

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Speaker 1: think about it today. Right now, there's an enormous amount

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Speaker 1: of liquidity if you haven't, and so nobody's got got liquidity.

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Speaker 1: And in addition, it costs nothing to borrow because the

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Speaker 1: interest rate that you're going to pay on it is

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Speaker 1: as as negative in real terms as much below below

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Speaker 1: nominal GDP. And you can even get interest only loans.

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Speaker 1: That means you don't have to pay the principle. So

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Speaker 1: you don't have to pay the principle. And there is

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Speaker 1: no interest practice. Okay, that's the point, right, And so

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Speaker 1: you're given an unlimited amount of buying power and so

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Speaker 1: on and money. Therefore, that purchasing power, the amount of

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Speaker 1: money and credit is now coming through to produce What

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Speaker 1: do you do with the money? You buy stuff? You

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Speaker 1: buy okay, you buy financial good services and financial assets,

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Speaker 1: and so it goes up relative to the value of money.

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Speaker 1: It's not complicated, but that's what's going on, right, and

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Speaker 1: that's what people have got to understand. And chapter I

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Speaker 1: think it's before we leave this though, I want to

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Speaker 1: ask you, so how long does this go on for?

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Speaker 1: Is this transitory, as we've been hearing so often in

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Speaker 1: kind of fades when well supply chain on tangles, or

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Speaker 1: is this going to persist. First, it is not a

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Speaker 1: supply chain issue. It's a very simple thing. Take the

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Speaker 1: amount the increase in the amount of money and credit

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Speaker 1: and divide it by the amount of goods and services increased,

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Speaker 1: and you're going to get a good indicator of the

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Speaker 1: amount of monetary inflation. So we have a high GDP

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Speaker 1: and a high cp I. Well you have in g

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Speaker 1: DP terms, the real goods are a bit higher than

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Speaker 1: they were. But yes, that's people were stuck at home

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Speaker 1: and they couldn't go to the movie theater or the gym.

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Speaker 1: So we've caught up to where we were above the

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Speaker 1: COVID level, but we're approaching our limits in terms of

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Speaker 1: hiring people, in terms of getting stuff done. There's a

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Speaker 1: demand that's pressing up as the supply, but there's also

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Speaker 1: this monetary inflation going up. And that's why in that

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Speaker 1: chapter in the book, like if I didn't see this

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Speaker 1: happen over and over again, I never would have seen

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Speaker 1: zero interest rates and how this dynamic work. But this

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Speaker 1: dynamic happened over and over again, and it is I

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Speaker 1: think it's chapter three or four in the book. Um

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Speaker 1: it goes through the value of money and you could

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Speaker 1: see the mechanics of it. So does it make you

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Speaker 1: crazy when you hear people say we've never had zero

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Speaker 1: interest rates before, and you go, no, We've had it

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Speaker 1: hundreds of That's right, just and look at the dynamic.

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Speaker 1: So so let's talk about um cycle disorders. And you

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Speaker 1: specifically refer too. So we talked about debt, you talked

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Speaker 1: about internal cycle disorder and external cycle disorder. Let's start

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Speaker 1: with external because I find that more fascinating. For the

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Speaker 1: first time, since the US has been a dominant superpower,

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Speaker 1: we've encountered a true rival. Yeah, the Soviet Union was

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Speaker 1: a military rival, but they never were a true economic rival. China,

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Speaker 1: on the other hand, is becoming a rival in power

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Speaker 1: in the United States economically, militarily, and strategically. Is China

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Speaker 1: the biggest external threat to the US hegemony? Yes, um,

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Speaker 1: of course. And I'm saying it's not. It's just history

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Speaker 1: happening over and just the okay, and the United States

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Speaker 1: is the next one. Okay, there is a world water,

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Speaker 1: it's you have a war. Somebody's dominant. They have the currency,

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Speaker 1: they have all of that, they have the power, they're

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Speaker 1: the largest trader. So like you can, the United States

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Speaker 1: was the largest share of world trade, and it brought

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Speaker 1: its currency and you have that. Okay. Now China is

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Speaker 1: the largest share of world trade and financially it has that,

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Speaker 1: so it has become an economic competitor. There are four

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Speaker 1: there are really four types of wars um. Well, particularly

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Speaker 1: there's a trade war, there's a technology war, there is

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Speaker 1: a geopolitical war, and there's a capital war. Okay, competitions

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Speaker 1: we can call the wars are competitions, trade competition, and

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Speaker 1: then there could be a military war number five. And

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Speaker 1: we are certainly in those competitions or wars for trade um, technology, UM, geopolitics,

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Speaker 1: influence around the world, and then capital in terms of

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Speaker 1: capital markets. We are in that kind of war or

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Speaker 1: that kind of conflict. You have a real competitor. So

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Speaker 1: think about it this way. If the population of China

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Speaker 1: is more than four times the size of the U.

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Speaker 1: S population, so if per capita income is half the

430
00:25:56,160 --> 00:25:59,120
Speaker 1: size of the United States, it will be twice as

431
00:25:59,240 --> 00:26:04,680
Speaker 1: large as the United States. And it's developing competitions all around.

432
00:26:05,000 --> 00:26:08,440
Speaker 1: So yes, there is a competition, and then how that's

433
00:26:08,440 --> 00:26:11,120
Speaker 1: dealt with is most important. There you could look at

434
00:26:11,119 --> 00:26:14,520
Speaker 1: it as a conflict between those two entities The most

435
00:26:14,600 --> 00:26:18,919
Speaker 1: important thing to learn about is don't even focus so

436
00:26:19,000 --> 00:26:22,960
Speaker 1: much on that conflict as focusing on being strong yourself,

437
00:26:23,560 --> 00:26:27,959
Speaker 1: because the lessons from history show that if you are strong,

438
00:26:28,240 --> 00:26:31,520
Speaker 1: if you're strong in these fundamental ways, you earn more

439
00:26:31,560 --> 00:26:35,280
Speaker 1: than you spend, you work well together, and you are strong,

440
00:26:35,880 --> 00:26:40,400
Speaker 1: then all threats, whether they are pandemics or Chinese competition

441
00:26:40,720 --> 00:26:44,280
Speaker 1: or whatever it is, you can handle. I'm really concerned

442
00:26:44,280 --> 00:26:48,960
Speaker 1: about the internal conflict and the financial conditions that mean

443
00:26:49,040 --> 00:26:51,520
Speaker 1: that we are less strong in dealing with that kind

444
00:26:51,560 --> 00:26:55,000
Speaker 1: of um A competition. So so let's move to the

445
00:26:55,080 --> 00:27:01,320
Speaker 1: internal threats. We we have political ups, we have wealth gaps,

446
00:27:02,200 --> 00:27:04,720
Speaker 1: arguably a lot of our values around the country no

447
00:27:04,800 --> 00:27:08,400
Speaker 1: longer line. At least the media seems to be emphasizing

448
00:27:09,280 --> 00:27:13,560
Speaker 1: the difference. What does the discord in the United States?

449
00:27:14,280 --> 00:27:18,160
Speaker 1: In some part driven by social media, but just generally

450
00:27:18,200 --> 00:27:21,320
Speaker 1: the emphasis on differences instead of similarities. What does this

451
00:27:21,400 --> 00:27:24,200
Speaker 1: mean for the strength of the country. Uh? In my book,

452
00:27:24,720 --> 00:27:28,080
Speaker 1: at my research, it was so important to put numbers

453
00:27:28,080 --> 00:27:32,560
Speaker 1: and actual measurements to be able to see things like discord.

454
00:27:32,800 --> 00:27:35,480
Speaker 1: So I put together a conflict gauge. I put together

455
00:27:35,720 --> 00:27:39,560
Speaker 1: not lots of gauges that therefore give objective readings to

456
00:27:39,640 --> 00:27:44,600
Speaker 1: that we now have the largest political gaps and the

457
00:27:44,720 --> 00:27:50,439
Speaker 1: largest wealth gaps and largest income gaps since nineteen hundred. Okay,

458
00:27:50,720 --> 00:27:54,280
Speaker 1: and and if you measure the conflicts that we're encountering,

459
00:27:54,600 --> 00:27:57,479
Speaker 1: we have a system that's we are at each other's throats,

460
00:27:57,640 --> 00:28:02,040
Speaker 1: right and um, they Basically what I've seen through history

461
00:28:02,240 --> 00:28:05,080
Speaker 1: is if the causes that people are behind are more

462
00:28:05,119 --> 00:28:09,000
Speaker 1: important than the system, the system is in jeopardy. So

463
00:28:09,359 --> 00:28:13,399
Speaker 1: you have a situation right now that we forget about history.

464
00:28:13,440 --> 00:28:16,760
Speaker 1: You can see it, but it also repeats throughout history.

465
00:28:17,160 --> 00:28:20,520
Speaker 1: You can see how we're going to more and more extremism,

466
00:28:20,560 --> 00:28:25,560
Speaker 1: and we're approaching an environment in which no side will lose. Okay,

467
00:28:25,640 --> 00:28:28,480
Speaker 1: it's win at all costs. And so we're seeing in

468
00:28:28,520 --> 00:28:31,840
Speaker 1: the primaries you're going to see more movement to the extreme.

469
00:28:31,880 --> 00:28:36,480
Speaker 1: Each each party is putting on candidates to be more

470
00:28:36,520 --> 00:28:39,920
Speaker 1: extremist candidates in that fight. So now when we set

471
00:28:40,000 --> 00:28:43,000
Speaker 1: up for the presidential election, we are going to have

472
00:28:43,160 --> 00:28:46,360
Speaker 1: a fight. And and and it's win at all cost

473
00:28:46,880 --> 00:28:49,760
Speaker 1: It's not going to be that Okay, I lost, And

474
00:28:50,320 --> 00:28:52,800
Speaker 1: you know, we can interpret it like in some past

475
00:28:52,880 --> 00:28:56,760
Speaker 1: elections when we had closeness and okay, how you count

476
00:28:56,840 --> 00:29:03,320
Speaker 1: chits and how many hanging chats? Very different? Okay, and

477
00:29:03,360 --> 00:29:06,360
Speaker 1: so on, and and we're in a win at all costs.

478
00:29:06,800 --> 00:29:10,960
Speaker 1: So the causes that people are behind are more important

479
00:29:11,000 --> 00:29:13,920
Speaker 1: to them than the system to work out that. And

480
00:29:14,000 --> 00:29:17,440
Speaker 1: so we have a jeopardy. And that also that jeopardy

481
00:29:17,480 --> 00:29:20,640
Speaker 1: that we're in is affecting a lot of things. Um,

482
00:29:20,760 --> 00:29:25,000
Speaker 1: we see this. My my wife works in helping um

483
00:29:25,120 --> 00:29:29,880
Speaker 1: the poor school districts in Connecticut. Um, with disadvantage of this,

484
00:29:30,640 --> 00:29:34,040
Speaker 1: the amount of the circumstances that are existing for those

485
00:29:34,120 --> 00:29:37,840
Speaker 1: kids in those education in the richest state in the country,

486
00:29:38,320 --> 00:29:42,680
Speaker 1: Um is, uh, you'll pay. I live in Greenwich, Connecticut.

487
00:29:42,760 --> 00:29:45,920
Speaker 1: At the school districts like four thousand dollars per students

488
00:29:46,080 --> 00:29:49,200
Speaker 1: down the road it's fourteen thousand. And there's a problem.

489
00:29:49,400 --> 00:29:53,400
Speaker 1: So there is a There is conflicts, justifiable conflicts in

490
00:29:53,440 --> 00:29:57,680
Speaker 1: many cases, not equal opportunity not you know, and and

491
00:29:57,720 --> 00:30:01,040
Speaker 1: the system is so we have those things going on.

492
00:30:01,520 --> 00:30:05,040
Speaker 1: And the most important thing, as I say, the three

493
00:30:05,040 --> 00:30:08,800
Speaker 1: most important things. First, how are your finances, right down

494
00:30:08,800 --> 00:30:11,800
Speaker 1: to whether it's the individual or the company, how are

495
00:30:11,840 --> 00:30:14,600
Speaker 1: your finances are you earning more than you are spending

496
00:30:14,840 --> 00:30:19,080
Speaker 1: and you have savings more than liabilities. Second is how

497
00:30:19,120 --> 00:30:22,760
Speaker 1: are you with each other? Is that productive or are

498
00:30:22,800 --> 00:30:25,240
Speaker 1: you going to fight with each other? And that repeats

499
00:30:25,240 --> 00:30:27,600
Speaker 1: throughout history. You see it over and over, and our

500
00:30:27,720 --> 00:30:31,520
Speaker 1: ratings are not good now. So so there are some

501
00:30:31,560 --> 00:30:34,800
Speaker 1: folks who have been saying a lot of what we

502
00:30:34,960 --> 00:30:39,280
Speaker 1: see in terms of the divide are sort of the

503
00:30:39,320 --> 00:30:45,080
Speaker 1: outrage industrial complex that between certain cable channels and certain

504
00:30:45,120 --> 00:30:48,640
Speaker 1: social media they feed off and their algorithms feed off

505
00:30:48,640 --> 00:30:51,920
Speaker 1: this anger. But when you actually sit people down and

506
00:30:52,000 --> 00:30:55,840
Speaker 1: ask them questions, there's a lot more that we have

507
00:30:55,960 --> 00:30:59,000
Speaker 1: in common than we want a safe place to raise

508
00:30:59,040 --> 00:31:00,320
Speaker 1: our kids and we want to send them to a

509
00:31:00,360 --> 00:31:05,240
Speaker 1: good school, and we want opportunities to improve our financial circumstances, etcetera.

510
00:31:05,800 --> 00:31:09,719
Speaker 1: When when you take up part the screaming on cable

511
00:31:09,760 --> 00:31:14,239
Speaker 1: TV and Facebook, there's more that holds us together than

512
00:31:14,280 --> 00:31:19,240
Speaker 1: takes us apart. The statistics don't show that. Just explain

513
00:31:20,880 --> 00:31:23,960
Speaker 1: uh well, um, so I mean there are just lots

514
00:31:24,000 --> 00:31:31,480
Speaker 1: of statistics. Um. If you take um uh um voting

515
00:31:32,320 --> 00:31:36,080
Speaker 1: and the voting of the Senate and the House, and

516
00:31:36,120 --> 00:31:42,320
Speaker 1: you take Republicans and Democrats UM, the UH, the Republican

517
00:31:42,440 --> 00:31:46,920
Speaker 1: voting records, This goes down to nineteen back to d UM.

518
00:31:47,040 --> 00:31:50,720
Speaker 1: And you measure how conservative that is, um, it's the

519
00:31:50,720 --> 00:31:54,320
Speaker 1: most conservative since nine hundred. And then if you measure

520
00:31:54,400 --> 00:31:59,040
Speaker 1: how liberal UM the Democrats, it is, UM the Democrats

521
00:31:59,040 --> 00:32:01,360
Speaker 1: are the most level. So the gap and values is

522
00:32:01,400 --> 00:32:05,239
Speaker 1: greater than UM it's ever been in terms of that.

523
00:32:05,360 --> 00:32:09,560
Speaker 1: And if you measure the voting across party lines, the

524
00:32:09,640 --> 00:32:14,160
Speaker 1: capacity to compromise, it's the least it has ever been. Okay,

525
00:32:14,240 --> 00:32:17,600
Speaker 1: So what we have are irreconcilable differences. If you take

526
00:32:17,720 --> 00:32:21,960
Speaker 1: survey results of what Democrats think of Republicans and what

527
00:32:22,000 --> 00:32:27,040
Speaker 1: Republicans think of Democrats, you see I might have got

528
00:32:27,200 --> 00:32:29,680
Speaker 1: I don't know whether it's the Republicans of the but

529
00:32:29,840 --> 00:32:35,320
Speaker 1: fifteen percent of Republicans wish that Democrats would die and

530
00:32:35,360 --> 00:32:38,960
Speaker 1: ten percent of Democrats with And I might have gotten

531
00:32:38,960 --> 00:32:41,760
Speaker 1: that backwards, but you get there. But it's a substantial

532
00:32:42,600 --> 00:32:46,760
Speaker 1: and a significant number wish that would not want their

533
00:32:46,840 --> 00:32:51,200
Speaker 1: children to marry another. Uh. Okay, and then if you

534
00:32:51,280 --> 00:32:54,920
Speaker 1: deal with irreconcilable differences, I want to tell you that

535
00:32:54,960 --> 00:32:58,440
Speaker 1: I've had a conversation I won't mention who with but

536
00:32:58,920 --> 00:33:03,959
Speaker 1: somebody who's very high in government and a general and

537
00:33:04,000 --> 00:33:08,760
Speaker 1: so on. And we were talking about um enforceability of

538
00:33:08,800 --> 00:33:18,640
Speaker 1: what will the federal governments uh mandates like on sanctuary cities, Um,

539
00:33:18,720 --> 00:33:22,080
Speaker 1: what happens as we go through those scenarios. We are

540
00:33:22,120 --> 00:33:26,120
Speaker 1: playing out the notion that the federal will say you,

541
00:33:26,400 --> 00:33:29,480
Speaker 1: I need you to do this, and the state or

542
00:33:29,560 --> 00:33:32,600
Speaker 1: the local government will refuse to do that, and you

543
00:33:32,640 --> 00:33:36,800
Speaker 1: are now having a power power. How does and then

544
00:33:36,800 --> 00:33:40,000
Speaker 1: we played the we played through that scenario that like

545
00:33:40,440 --> 00:33:43,480
Speaker 1: does the police have more power because the police will

546
00:33:43,520 --> 00:33:46,040
Speaker 1: follow that than the national guard? And how will the

547
00:33:46,120 --> 00:33:49,040
Speaker 1: national guard? The fact that we are talking about those

548
00:33:49,080 --> 00:33:52,160
Speaker 1: things and that we're looking about those things, if we

549
00:33:52,280 --> 00:33:55,160
Speaker 1: if we look at what's actually happening measured in the

550
00:33:55,200 --> 00:33:59,920
Speaker 1: statistics are noting in the news, we are at irreconcilable

551
00:34:00,120 --> 00:34:03,400
Speaker 1: differences on many things. And if you just even deal

552
00:34:03,440 --> 00:34:08,399
Speaker 1: with masks okay, and anger that exists with people doing

553
00:34:08,440 --> 00:34:11,560
Speaker 1: harm to each other and how they're behaving, and that

554
00:34:11,760 --> 00:34:15,600
Speaker 1: is and if you look at history and you watch

555
00:34:15,680 --> 00:34:18,320
Speaker 1: the trends, the arcs, and you watch how it's evolved

556
00:34:18,680 --> 00:34:21,319
Speaker 1: in almost all of these cases you can. It could

557
00:34:21,360 --> 00:34:24,280
Speaker 1: be the French Revolution, the Russian Revolution, the Chinese Revolution.

558
00:34:24,600 --> 00:34:27,440
Speaker 1: You find that there are moderates, but then it becomes

559
00:34:27,520 --> 00:34:30,680
Speaker 1: increased polarity, and they say you have to make a choice,

560
00:34:31,320 --> 00:34:34,280
Speaker 1: which side are you on, and you can't be moderate.

561
00:34:34,640 --> 00:34:38,680
Speaker 1: The moderate will then get hung. There's a certain dynamic

562
00:34:38,800 --> 00:34:42,239
Speaker 1: that happens, and it depends where you're living. You will

563
00:34:42,280 --> 00:34:45,239
Speaker 1: see it whether you're if you're Many of us might

564
00:34:45,320 --> 00:34:47,680
Speaker 1: live in an environment and we say we don't actually

565
00:34:47,760 --> 00:34:50,640
Speaker 1: see this, but you could start to see it encroaching.

566
00:34:50,760 --> 00:34:53,319
Speaker 1: You start to see the movement, for example, from one

567
00:34:53,360 --> 00:34:57,160
Speaker 1: state to another state, um and not just for tax reasons,

568
00:34:57,360 --> 00:34:59,960
Speaker 1: but because they say my values are different here and there.

569
00:35:00,320 --> 00:35:03,120
Speaker 1: And then that has economic effects because let's say the

570
00:35:03,239 --> 00:35:06,200
Speaker 1: rich moved with the rich two states that favor the

571
00:35:06,320 --> 00:35:08,959
Speaker 1: rich by way, and then it produces a following out

572
00:35:09,280 --> 00:35:12,000
Speaker 1: of the tax base that is lost there, and that

573
00:35:12,040 --> 00:35:15,680
Speaker 1: creates a worst set of circumstances. That is a dynamic

574
00:35:15,760 --> 00:35:19,560
Speaker 1: that is going on now that has not existed. But

575
00:35:19,800 --> 00:35:22,200
Speaker 1: if you read history, you will see that that's happened

576
00:35:22,239 --> 00:35:24,839
Speaker 1: repeatedly over and over again. So let me push back

577
00:35:24,880 --> 00:35:27,319
Speaker 1: a little bit. And I had to think hard to

578
00:35:27,360 --> 00:35:30,760
Speaker 1: find something to push back on. So we had civil

579
00:35:30,840 --> 00:35:34,960
Speaker 1: unrest in the sixties. We had economic problems. Remember Japan

580
00:35:35,120 --> 00:35:37,759
Speaker 1: was going to take over the world. We had inflation

581
00:35:37,840 --> 00:35:41,280
Speaker 1: in the seventies, the rise of Japan as a power,

582
00:35:41,760 --> 00:35:45,360
Speaker 1: and then the United States somehow managed to overcome it

583
00:35:45,440 --> 00:35:49,759
Speaker 1: through entrepreneurship and technology and blah blah blah. That was

584
00:35:49,800 --> 00:35:53,080
Speaker 1: one cycle. How do we know that the current environment

585
00:35:53,160 --> 00:35:56,279
Speaker 1: is in a similar cycle. Well, let's go through what

586
00:35:56,400 --> 00:35:59,959
Speaker 1: that cycle looked like. First of all, to say, okay,

587
00:36:00,040 --> 00:36:03,680
Speaker 1: if that's your optimistic scenario, Okay, let's take a look

588
00:36:03,719 --> 00:36:07,400
Speaker 1: at what that cycle looked like. Okay, And then say

589
00:36:07,600 --> 00:36:10,080
Speaker 1: and then and then I'm explaining that certain of the

590
00:36:10,120 --> 00:36:12,840
Speaker 1: circumstances now are worse. But let me get let me

591
00:36:12,840 --> 00:36:17,640
Speaker 1: take that cycle right. Nineteen sixty six, nineteen sixty seven,

592
00:36:17,719 --> 00:36:22,520
Speaker 1: sixty eight, Martin Luther King is shot, Um, JFK is shot,

593
00:36:23,560 --> 00:36:28,200
Speaker 1: riots in watts um the dollar then UH spending on

594
00:36:29,520 --> 00:36:33,160
Speaker 1: big deficits got buttons and butter um, and then we

595
00:36:33,360 --> 00:36:37,480
Speaker 1: then um devalued. In other words, n seventy one, I'm

596
00:36:37,480 --> 00:36:39,680
Speaker 1: clerking on the floor of the New York Stock Exchange

597
00:36:39,719 --> 00:36:41,799
Speaker 1: and they and they had the value and they break that.

598
00:36:42,280 --> 00:36:46,040
Speaker 1: And then we went through the seventies, and the seventies

599
00:36:46,160 --> 00:36:52,000
Speaker 1: caused um um a decade of very large inflation and

600
00:36:52,320 --> 00:36:56,040
Speaker 1: the negative returns in the stock market from nineteen sixty six,

601
00:36:56,360 --> 00:36:59,160
Speaker 1: which is the first time the yield curve inverted until

602
00:36:59,239 --> 00:37:02,840
Speaker 1: n E D four, you had negative real returns in

603
00:37:02,920 --> 00:37:06,840
Speaker 1: the stock market. In fact, it went down in real

604
00:37:06,960 --> 00:37:09,640
Speaker 1: terms and so on. And then you get a restructory.

605
00:37:09,719 --> 00:37:13,360
Speaker 1: Then you have the reaction of Paul Boker nine or whatever.

606
00:37:13,719 --> 00:37:16,759
Speaker 1: You have the debt crisis, which brought the unemployment rate

607
00:37:16,840 --> 00:37:19,920
Speaker 1: up to double digit and so on, and then you

608
00:37:20,120 --> 00:37:22,560
Speaker 1: and you, and then you broke the back of inflation

609
00:37:22,719 --> 00:37:25,960
Speaker 1: and it ended in a D two. That's your optimistic

610
00:37:25,960 --> 00:37:31,680
Speaker 1: scenario that you're referring. Good, Okay, Okay, So that's but

611
00:37:31,800 --> 00:37:35,359
Speaker 1: that's your optimistic scenario. Okay, Okay. So you're looking at

612
00:37:35,360 --> 00:37:38,200
Speaker 1: the sevenies. I'm trying to okay, but I'm just saying,

613
00:37:38,200 --> 00:37:41,879
Speaker 1: we can't. Okay, it happens one you know, the things

614
00:37:41,880 --> 00:37:44,040
Speaker 1: happened one day at a time or one period of time.

615
00:37:44,080 --> 00:37:46,600
Speaker 1: And okay, I remember the seventies, okay, And it was

616
00:37:46,680 --> 00:37:49,840
Speaker 1: bruised and that that was but that didn't have the

617
00:37:49,880 --> 00:37:52,120
Speaker 1: same sort of things that are happening now in the

618
00:37:52,200 --> 00:37:54,960
Speaker 1: same sort of degrees. My only point is I'm not

619
00:37:55,000 --> 00:37:57,200
Speaker 1: trying to fork it. Let me tell you, I believe

620
00:37:57,239 --> 00:38:00,040
Speaker 1: it's a choice. So there was a data point that

621
00:38:00,200 --> 00:38:02,960
Speaker 1: I was really impressed with from the book that I

622
00:38:03,000 --> 00:38:07,600
Speaker 1: had no idea, And I want to ask you this

623
00:38:07,680 --> 00:38:10,000
Speaker 1: question as a follow up of what we were talking

624
00:38:10,000 --> 00:38:13,680
Speaker 1: about earlier. Ten great nations going back a few hundred years.

625
00:38:13,760 --> 00:38:17,600
Speaker 1: Since nine d seven out of ten of these nations

626
00:38:17,600 --> 00:38:21,799
Speaker 1: sow their wealth wiped out at least once. That that's

627
00:38:21,800 --> 00:38:25,120
Speaker 1: a pretty astonishing data point. The wealth of an entire

628
00:38:25,200 --> 00:38:27,680
Speaker 1: nation wiped out? How does that happen? And what is

629
00:38:27,680 --> 00:38:33,560
Speaker 1: the aftermath? Like, Uh, it's so good that people can

630
00:38:33,640 --> 00:38:38,880
Speaker 1: see these cycles. Um. Starting when we start like a

631
00:38:39,640 --> 00:38:43,239
Speaker 1: dred our perspective does not include these things, and when

632
00:38:43,239 --> 00:38:46,560
Speaker 1: you start to see it at the cycle, it's quite something.

633
00:38:47,040 --> 00:38:53,520
Speaker 1: So what happens is UM, there's the here's how it works. UM.

634
00:38:53,560 --> 00:38:57,919
Speaker 1: Capitalism and a capital market is a fabulous system for

635
00:38:58,040 --> 00:39:02,200
Speaker 1: getting resources in the hands of entrepreneurs and inventive people,

636
00:39:02,680 --> 00:39:07,080
Speaker 1: and it raises living standards, particularly after a war, when

637
00:39:07,120 --> 00:39:10,480
Speaker 1: there's a peaceful period and you've done the restructuring and

638
00:39:10,640 --> 00:39:14,600
Speaker 1: things improve. And so if we go back, let's say

639
00:39:14,680 --> 00:39:18,480
Speaker 1: to the eighteen hundreds and take eighteen fifty and so on,

640
00:39:18,680 --> 00:39:22,080
Speaker 1: we have the industrial revolution that the power of the

641
00:39:22,120 --> 00:39:25,880
Speaker 1: individual and so on and and arises that. But what

642
00:39:26,040 --> 00:39:30,560
Speaker 1: happens is it also creates wealth gaps, and it creates

643
00:39:30,960 --> 00:39:34,960
Speaker 1: opportunity gaps because those who have more money can educate

644
00:39:34,960 --> 00:39:38,760
Speaker 1: their children better, can do certain things. And it also

645
00:39:38,920 --> 00:39:43,040
Speaker 1: creates greater levels of indebtedness because as the cycle goes on,

646
00:39:43,320 --> 00:39:46,680
Speaker 1: everybody bets on it increasing and so on, and they

647
00:39:46,680 --> 00:39:49,680
Speaker 1: get more in debt and so on. And you turn

648
00:39:49,440 --> 00:39:53,520
Speaker 1: the hundred, you come into nineteen hundred, and then you

649
00:39:53,560 --> 00:39:56,719
Speaker 1: start to see the conflict begin to emerge. This is

650
00:39:56,760 --> 00:40:01,720
Speaker 1: when um the bad treatment of worker and workers rights,

651
00:40:01,800 --> 00:40:07,239
Speaker 1: and then child labor, and then also uh um um

652
00:40:07,400 --> 00:40:10,840
Speaker 1: taxes start to rise. Okay, we didn't have an income tax,

653
00:40:11,120 --> 00:40:13,640
Speaker 1: and then they start to rise. But there's also an

654
00:40:13,680 --> 00:40:17,440
Speaker 1: anger and and that begins to emerge. And then there's

655
00:40:17,239 --> 00:40:21,160
Speaker 1: the conflict, and there's economic pain and conflict. I mean,

656
00:40:21,200 --> 00:40:24,400
Speaker 1: it's when you have a big wealth gap and you

657
00:40:24,520 --> 00:40:28,640
Speaker 1: have economic problems, you have a conflict. That's a that's

658
00:40:28,640 --> 00:40:32,319
Speaker 1: a classic set of ingredients. Particularly then if you have

659
00:40:32,360 --> 00:40:35,640
Speaker 1: too much debt, you're gonna have a problem. So what

660
00:40:35,719 --> 00:40:38,440
Speaker 1: we see is then you come into that period and

661
00:40:38,480 --> 00:40:42,480
Speaker 1: the pendulum swings the other way that people get angry.

662
00:40:42,600 --> 00:40:44,759
Speaker 1: You go. You saw that in two thousand and eight,

663
00:40:45,080 --> 00:40:49,360
Speaker 1: the anti capitalist. You can certainly see the anti capitalists.

664
00:40:49,960 --> 00:40:53,200
Speaker 1: In other words, the billionaires. Um not no longer the

665
00:40:53,239 --> 00:40:55,839
Speaker 1: inventive person who gets what they deserve kind of thing.

666
00:40:56,080 --> 00:40:59,240
Speaker 1: They're really more okay, the greedy and and they're living

667
00:40:59,560 --> 00:41:02,120
Speaker 1: sort of decadent lives what at the same time as

668
00:41:02,200 --> 00:41:05,520
Speaker 1: people are not getting educated, and so people get angry

669
00:41:05,600 --> 00:41:08,560
Speaker 1: and so you see that kind of an our cap

670
00:41:08,600 --> 00:41:12,520
Speaker 1: and repeatedly. Right. So that's the nature of the beast

671
00:41:12,600 --> 00:41:16,280
Speaker 1: in terms of that cycle. So here's the big question.

672
00:41:17,000 --> 00:41:20,520
Speaker 1: Are these cycles inevitable? Is our fate sealed? Or is

673
00:41:20,560 --> 00:41:23,720
Speaker 1: there something we as a nation can do to break

674
00:41:24,000 --> 00:41:29,799
Speaker 1: what sounds like a very self destructive cycle of external competition,

675
00:41:30,080 --> 00:41:33,920
Speaker 1: excessive debt, and internal strife. Yes, no, it's in our

676
00:41:33,960 --> 00:41:37,600
Speaker 1: ability to deal with that is as a society. Because

677
00:41:38,560 --> 00:41:43,840
Speaker 1: in the book, I show the five major determinants, but

678
00:41:43,880 --> 00:41:49,760
Speaker 1: I also show um eighteen determinants and they are predictors

679
00:41:49,800 --> 00:41:54,239
Speaker 1: of the next ten years growth rates and conditions there

680
00:41:54,440 --> 00:41:56,440
Speaker 1: um and so you could see them. That's like a

681
00:41:56,520 --> 00:42:02,000
Speaker 1: health index. So it's education, innovation at tech, analogy plus competitiveness,

682
00:42:02,080 --> 00:42:05,480
Speaker 1: military strength, trade, etcetera. Right, And what I did is

683
00:42:05,520 --> 00:42:07,600
Speaker 1: I put numbers on that so you can see the

684
00:42:07,640 --> 00:42:11,680
Speaker 1: graph and are they improving, are they deeproof um worsening

685
00:42:12,000 --> 00:42:14,600
Speaker 1: and so on. So that's a health index that I

686
00:42:14,680 --> 00:42:17,560
Speaker 1: hope everyone would look at it and even judge their

687
00:42:17,640 --> 00:42:21,720
Speaker 1: leaders by are we getting better or are we getting weaker?

688
00:42:22,200 --> 00:42:24,719
Speaker 1: And what is the conflict? But if I'm going to

689
00:42:25,080 --> 00:42:27,279
Speaker 1: not take you through the all the eighteen in the book,

690
00:42:27,520 --> 00:42:29,360
Speaker 1: I just want to say that, like there are two,

691
00:42:29,520 --> 00:42:33,719
Speaker 1: there are a few basic ones. Okay, most importantly, can

692
00:42:33,760 --> 00:42:38,040
Speaker 1: we earn more than we spend? I mean, can we

693
00:42:38,360 --> 00:42:44,280
Speaker 1: have not increase the amount of indebtedness um and and

694
00:42:44,280 --> 00:42:49,279
Speaker 1: and GP is greater than the expansion of national debt?

695
00:42:49,640 --> 00:42:53,759
Speaker 1: That's right, if the io use continue to build up,

696
00:42:53,800 --> 00:42:56,920
Speaker 1: and what you can't raise living standards by producing credit

697
00:42:57,080 --> 00:42:59,759
Speaker 1: and money. And it's a basic thing. However you do

698
00:42:59,840 --> 00:43:04,040
Speaker 1: the counting, whatever monetary system happens, Barry, you can't sustain

699
00:43:04,120 --> 00:43:07,799
Speaker 1: yourself or your family or you a country cannot do

700
00:43:07,880 --> 00:43:10,160
Speaker 1: that by spending more than your earning. It won't go

701
00:43:10,200 --> 00:43:12,239
Speaker 1: on for long in one way or another. How every

702
00:43:12,280 --> 00:43:14,200
Speaker 1: much you want to print the money whatever, it's not

703
00:43:14,200 --> 00:43:17,719
Speaker 1: gonna work. So you have you have to get there.

704
00:43:17,719 --> 00:43:21,600
Speaker 1: So we need to both we need to be productive

705
00:43:22,120 --> 00:43:25,439
Speaker 1: and we need to expand the pie and we need

706
00:43:25,480 --> 00:43:28,880
Speaker 1: to divide it well so that it works for most people. Okay,

707
00:43:28,920 --> 00:43:31,880
Speaker 1: that's just that we need to do that, Okay, and

708
00:43:31,920 --> 00:43:35,200
Speaker 1: we need to do that in a way where we're cohesive,

709
00:43:35,680 --> 00:43:38,439
Speaker 1: that we're not at each other's throats, and we could

710
00:43:38,440 --> 00:43:41,840
Speaker 1: do this, um, I believe, like, but you need to

711
00:43:41,880 --> 00:43:45,520
Speaker 1: be bipartisan. I mean, in other words, you can't fight

712
00:43:45,560 --> 00:43:48,359
Speaker 1: and kill each other. That's a basic kind of thing.

713
00:43:48,400 --> 00:43:51,560
Speaker 1: You've got to resolve your differences and grow in the

714
00:43:51,600 --> 00:43:54,600
Speaker 1: same direction. And you've got to do that in a

715
00:43:54,680 --> 00:43:59,120
Speaker 1: financially sound way. Right now, All the other components that

716
00:43:59,160 --> 00:44:02,000
Speaker 1: I mentioned, all those eighteen are really to try to

717
00:44:02,040 --> 00:44:04,799
Speaker 1: get at that. How do you get a better education?

718
00:44:05,840 --> 00:44:09,520
Speaker 1: And part of the education is not just the uh,

719
00:44:09,560 --> 00:44:11,000
Speaker 1: do you know the facts and do you know how

720
00:44:11,040 --> 00:44:14,080
Speaker 1: to do calculations? It's also do you know how to

721
00:44:14,120 --> 00:44:17,240
Speaker 1: behave civilly with each other, How do you raise children

722
00:44:17,480 --> 00:44:20,200
Speaker 1: to behave civilly with each other? And that kind of

723
00:44:20,400 --> 00:44:24,920
Speaker 1: education workes us work together in a smart, harmonious way

724
00:44:25,000 --> 00:44:27,919
Speaker 1: if we can do that. But that's the chat. There's

725
00:44:28,000 --> 00:44:30,799
Speaker 1: enough money to go around, and there's enough ability to

726
00:44:30,880 --> 00:44:32,920
Speaker 1: do this. And I would say, like if I was

727
00:44:33,000 --> 00:44:35,920
Speaker 1: president of the United States, by way of example, what

728
00:44:35,960 --> 00:44:39,160
Speaker 1: I would do is I'd have a bipartisan cabinet or something,

729
00:44:39,239 --> 00:44:43,000
Speaker 1: and I would i would take representatives from both sides,

730
00:44:43,040 --> 00:44:48,080
Speaker 1: and I'd have the equivalent of a a Manhattan Project

731
00:44:48,200 --> 00:44:50,280
Speaker 1: or something, and say you go away for six months

732
00:44:50,680 --> 00:44:53,880
Speaker 1: and you figure out what you're going to agree on, okay,

733
00:44:54,320 --> 00:44:57,959
Speaker 1: and and we'll do that. But number one, it's got

734
00:44:57,960 --> 00:45:01,279
Speaker 1: to be productive and it's got to the harmonious. And

735
00:45:01,320 --> 00:45:04,600
Speaker 1: if it's productive and harmonious, we can do that. And

736
00:45:04,640 --> 00:45:07,279
Speaker 1: so or you can look at however you get to

737
00:45:07,680 --> 00:45:11,400
Speaker 1: those ingredients, you get a better infrastructure, you get a

738
00:45:11,440 --> 00:45:16,280
Speaker 1: better education, you have those eighteen ingredients. That's the beauty

739
00:45:16,320 --> 00:45:19,440
Speaker 1: of those ingredients. Though I'm gonna be updating that on

740
00:45:19,480 --> 00:45:22,120
Speaker 1: the website all the time. So for those who care

741
00:45:22,160 --> 00:45:24,160
Speaker 1: to watch that, tell us what The website is by

742
00:45:24,160 --> 00:45:29,200
Speaker 1: the way um Economic Principles dot org. So so I'm

743
00:45:29,239 --> 00:45:32,040
Speaker 1: fascinated by the principles dot com and I forgot what

744
00:45:32,360 --> 00:45:34,120
Speaker 1: but it's easy enough to google and you can find

745
00:45:34,120 --> 00:45:37,000
Speaker 1: Economic Principles. I'll include it in the right up so

746
00:45:37,080 --> 00:45:40,080
Speaker 1: people can click on that. So I'm kind of fascinated

747
00:45:40,120 --> 00:45:44,600
Speaker 1: by the discussion of China as a threat and as

748
00:45:44,640 --> 00:45:48,400
Speaker 1: a rising world power. But there are two again a

749
00:45:48,440 --> 00:45:52,719
Speaker 1: little pushback. First, over the five thousand year history of China.

750
00:45:53,120 --> 00:45:56,160
Speaker 1: Most of that history they were very inward looking. They

751
00:45:56,200 --> 00:46:01,319
Speaker 1: weren't expansionary, they weren't um challenging. They kind of did

752
00:46:01,360 --> 00:46:05,920
Speaker 1: their own thing and ignored the West. That seems to

753
00:46:05,920 --> 00:46:09,320
Speaker 1: be a substantial change now. Even though they were rising

754
00:46:09,360 --> 00:46:13,520
Speaker 1: technology country and arising military power thousands of years ago,

755
00:46:14,040 --> 00:46:18,560
Speaker 1: what's different today that's changing the way they see their

756
00:46:18,680 --> 00:46:20,960
Speaker 1: role in the world. I'm glad you answer the question.

757
00:46:21,040 --> 00:46:24,600
Speaker 1: I'm going to give you a few things. First, Back then,

758
00:46:25,760 --> 00:46:29,000
Speaker 1: the world was a much more enormous place. It took

759
00:46:29,239 --> 00:46:32,960
Speaker 1: um in an you could travel twenty five miles in

760
00:46:33,000 --> 00:46:38,080
Speaker 1: a day. Today you can travel on the other side

761
00:46:38,120 --> 00:46:41,560
Speaker 1: of the world in a day. Okay, so we're all

762
00:46:41,719 --> 00:46:46,040
Speaker 1: intertwined in so many many different ways. So that's a

763
00:46:46,080 --> 00:46:48,800
Speaker 1: big difference in terms of that was a big space

764
00:46:48,840 --> 00:46:51,880
Speaker 1: back then, and they had an ocean on one side

765
00:46:51,880 --> 00:46:54,160
Speaker 1: and mountains on the other side, and a big open

766
00:46:54,200 --> 00:46:58,000
Speaker 1: plane like the United States then was a big open

767
00:46:58,480 --> 00:47:01,360
Speaker 1: plane and so on. And we also we're not involved

768
00:47:01,360 --> 00:47:03,440
Speaker 1: then in other countries. Weren't because the world was a

769
00:47:03,560 --> 00:47:07,920
Speaker 1: much more gigantic place. But just as we today, the

770
00:47:08,000 --> 00:47:12,040
Speaker 1: United States is in has a military basis in seventy countries,

771
00:47:12,440 --> 00:47:15,680
Speaker 1: and so we are around the world and the world

772
00:47:16,000 --> 00:47:19,600
Speaker 1: is like that, and it's much more intertwined, military trade,

773
00:47:19,719 --> 00:47:24,160
Speaker 1: everything is along those lines. That's a change. Okay, um Um.

774
00:47:24,160 --> 00:47:27,040
Speaker 1: Now I'm lucky because I spent I've spent a lot

775
00:47:27,080 --> 00:47:29,879
Speaker 1: of time in China and I've gotten to learn from

776
00:47:30,360 --> 00:47:33,120
Speaker 1: um Chinese leaders and so on, the perspective and so on.

777
00:47:33,560 --> 00:47:36,919
Speaker 1: But it is a kind of an evolution of an

778
00:47:36,920 --> 00:47:39,799
Speaker 1: opening up. They do not want to be aggressive. There

779
00:47:39,880 --> 00:47:43,759
Speaker 1: is a Taiwan issue. Okay, Okay, that's a whole other thing,

780
00:47:44,160 --> 00:47:48,360
Speaker 1: but by and large that but there let me finish

781
00:47:48,360 --> 00:47:52,000
Speaker 1: answer to your question. Okay that there is um but

782
00:47:52,160 --> 00:47:56,719
Speaker 1: the notion of expansion and and being in trade and

783
00:47:56,800 --> 00:48:02,160
Speaker 1: being there um um is part of their evolution. And

784
00:48:02,239 --> 00:48:07,239
Speaker 1: so when we look at mechanically the great rivalries that

785
00:48:07,280 --> 00:48:11,279
Speaker 1: have happened, great empire rivalries, they even back for a

786
00:48:11,320 --> 00:48:14,200
Speaker 1: long long time, even though they were closer together, they

787
00:48:14,239 --> 00:48:18,080
Speaker 1: bump into each other. And then how do they resolve disagreements.

788
00:48:18,120 --> 00:48:20,200
Speaker 1: There's no world court that you go to when you

789
00:48:20,239 --> 00:48:23,080
Speaker 1: say that you're going to do it. You have conflicts

790
00:48:23,080 --> 00:48:25,440
Speaker 1: and then it's a test of power, and that is

791
00:48:25,480 --> 00:48:29,719
Speaker 1: the dynamic that we're um experiencing. So so I want

792
00:48:29,800 --> 00:48:33,000
Speaker 1: to ask you about Taiwan because it's not that hard

793
00:48:33,040 --> 00:48:38,240
Speaker 1: to see how China engages in a military action around

794
00:48:38,520 --> 00:48:42,120
Speaker 1: Taiwan and the US and and the EU get involved,

795
00:48:42,200 --> 00:48:46,000
Speaker 1: and that could spiral very quickly into something pretty awful.

796
00:48:46,480 --> 00:48:50,960
Speaker 1: You're suggesting they're not trying to force a military conflict

797
00:48:50,960 --> 00:48:53,319
Speaker 1: around Taiwan. No, I I just want to be clear.

798
00:48:53,360 --> 00:48:57,719
Speaker 1: I said Taiwan is I think the biggest risk. Okay,

799
00:48:57,760 --> 00:49:02,160
Speaker 1: because um um Okay. There's there's two views about Taiwan,

800
00:49:02,400 --> 00:49:07,000
Speaker 1: right um. Their view was since Henry Kissinger started the meeting,

801
00:49:07,040 --> 00:49:09,680
Speaker 1: and for a long time, um there was the saying

802
00:49:10,080 --> 00:49:14,640
Speaker 1: that there is one China and Taiwan as part of China, okay.

803
00:49:14,760 --> 00:49:17,680
Speaker 1: And and they have a history in their mind of

804
00:49:17,719 --> 00:49:21,000
Speaker 1: what they call the hundred years of Humiliation that began

805
00:49:21,520 --> 00:49:25,120
Speaker 1: around eighteen forty and then that point in time they

806
00:49:25,160 --> 00:49:28,719
Speaker 1: were weak and other foreign countries came in and then

807
00:49:28,719 --> 00:49:31,400
Speaker 1: they had they sold the mopium, you had the Opium

808
00:49:31,400 --> 00:49:34,040
Speaker 1: Wars and all of that, and then they had the collapse,

809
00:49:34,480 --> 00:49:38,440
Speaker 1: and they view that as taking away their sovereignty. And

810
00:49:38,480 --> 00:49:43,839
Speaker 1: so they view Taiwan as part of China and that sovereignty.

811
00:49:44,040 --> 00:49:47,760
Speaker 1: And and that's something like just we don't we can

812
00:49:48,120 --> 00:49:50,680
Speaker 1: argue with it or not, but you just have to

813
00:49:50,800 --> 00:49:54,359
Speaker 1: understand that that would be like I don't know, more

814
00:49:54,560 --> 00:49:59,399
Speaker 1: more more than uh, more than Alaska or Hawaii, kar

815
00:49:59,440 --> 00:50:02,560
Speaker 1: in America and okay more than that, Okay, that kind

816
00:50:02,600 --> 00:50:06,719
Speaker 1: of thing. So it becomes one of those uncompromisables. I

817
00:50:06,719 --> 00:50:08,799
Speaker 1: can tell you stories like when they went to the

818
00:50:08,880 --> 00:50:11,920
Speaker 1: Korean War. They thought in the Korean War that they

819
00:50:11,960 --> 00:50:14,520
Speaker 1: would lose the Korean War because they basically didn't have

820
00:50:14,600 --> 00:50:17,400
Speaker 1: hardly any weapons. We had nuclear But when it comes

821
00:50:17,400 --> 00:50:20,920
Speaker 1: to the element of sovereignty, that is something that is

822
00:50:20,960 --> 00:50:23,160
Speaker 1: a big deal and that they will fight for and

823
00:50:23,200 --> 00:50:25,120
Speaker 1: so the other side of that is what does it

824
00:50:25,200 --> 00:50:27,760
Speaker 1: mean for the United States and so on in terms

825
00:50:27,760 --> 00:50:30,279
Speaker 1: of you know, um, okay, how is that going to

826
00:50:30,360 --> 00:50:34,399
Speaker 1: be dealt with? That's what Taiwan is. Um now, how

827
00:50:34,440 --> 00:50:37,560
Speaker 1: that's resolved, you know, I don't know. But it is

828
00:50:37,600 --> 00:50:40,560
Speaker 1: a big issue and it is a big risk. That's

829
00:50:40,640 --> 00:50:43,080
Speaker 1: that's uh uh you know, and when and I you know,

830
00:50:43,120 --> 00:50:45,520
Speaker 1: we all have our scenarios of how that is. But

831
00:50:45,680 --> 00:50:51,040
Speaker 1: that's that is one beyond that. Then there's the evolution

832
00:50:51,600 --> 00:50:56,520
Speaker 1: and the basic evolution, like one company competes with another company, um,

833
00:50:56,600 --> 00:50:59,799
Speaker 1: one country competes with another country for World chairs and

834
00:50:59,800 --> 00:51:01,960
Speaker 1: so on, and then how do you play the rules

835
00:51:01,960 --> 00:51:03,920
Speaker 1: of the game. And everybody's gonna argue over how you

836
00:51:03,960 --> 00:51:05,759
Speaker 1: play the rules of the game. But the thing is

837
00:51:05,800 --> 00:51:08,000
Speaker 1: there is no real rule book. Right when we had

838
00:51:08,000 --> 00:51:10,319
Speaker 1: a world trade or it's not like when they had

839
00:51:10,320 --> 00:51:12,879
Speaker 1: a trade dispute, they went to the World Trade Organization

840
00:51:13,080 --> 00:51:16,279
Speaker 1: and said, I'd like you to adjudicate it. Okay, we

841
00:51:16,360 --> 00:51:19,280
Speaker 1: don't have a world court. When you leave a country

842
00:51:19,360 --> 00:51:22,960
Speaker 1: and you see how the world operates, countries operate, it

843
00:51:23,080 --> 00:51:25,520
Speaker 1: is more of a power game than it is a

844
00:51:25,680 --> 00:51:28,160
Speaker 1: let's follow the fair rules kind of game, and that

845
00:51:28,239 --> 00:51:30,799
Speaker 1: creates the dynamic for the world that we have. So

846
00:51:31,120 --> 00:51:34,680
Speaker 1: the pushback about the rise of China that I've heard

847
00:51:34,680 --> 00:51:38,640
Speaker 1: from others is something like this. It's essentially planned economy.

848
00:51:39,080 --> 00:51:43,360
Speaker 1: Free market capitalism is a much better system. And eventually

849
00:51:44,000 --> 00:51:47,600
Speaker 1: China's central planning is going to make some mistakes which

850
00:51:47,640 --> 00:51:52,719
Speaker 1: will allow the more competitive and open economies to to

851
00:51:53,560 --> 00:51:56,839
Speaker 1: not allow them to pass. And besides, how can they

852
00:51:56,840 --> 00:52:00,120
Speaker 1: ever become the reserve currency? Look what they just with

853
00:52:00,160 --> 00:52:03,919
Speaker 1: Ali Bob, But no one's gonna trust them. Who's gonna say, sure,

854
00:52:04,000 --> 00:52:07,320
Speaker 1: let's make the one the reserve currency. We totally trust

855
00:52:07,360 --> 00:52:11,040
Speaker 1: the central leaders in China. What's the response to that?

856
00:52:12,200 --> 00:52:17,000
Speaker 1: Two things? First, um, it's an uninformed response, and I

857
00:52:17,040 --> 00:52:20,680
Speaker 1: can respond to really what it really is like okay.

858
00:52:20,760 --> 00:52:23,839
Speaker 1: But second, let's assume that's all right. Then we don't

859
00:52:23,880 --> 00:52:27,879
Speaker 1: have to worry because our system will be better than

860
00:52:27,920 --> 00:52:31,640
Speaker 1: their system and will outcompete them. And that's the most

861
00:52:31,680 --> 00:52:36,919
Speaker 1: important thing. Right with the Russians, you could you could

862
00:52:36,960 --> 00:52:41,040
Speaker 1: take that for granted, or you can see the reality

863
00:52:41,120 --> 00:52:46,239
Speaker 1: since I started going there, in per capita incram has

864
00:52:46,320 --> 00:52:51,160
Speaker 1: increased by twenty six times. The life expectancy has increased

865
00:52:51,160 --> 00:52:53,680
Speaker 1: by ten years. The poverty rate went from over eighty

866
00:52:53,719 --> 00:52:56,600
Speaker 1: eight percent to list than one percent. Okay, and if

867
00:52:56,640 --> 00:52:59,840
Speaker 1: you look at history through China, it's a hell of

868
00:52:59,880 --> 00:53:03,439
Speaker 1: a track record. Okay. So now you could we could

869
00:53:03,440 --> 00:53:07,399
Speaker 1: sit there and say, hey, no problem because those those

870
00:53:07,440 --> 00:53:12,920
Speaker 1: system doesn't work, or you could look more and say, okay,

871
00:53:13,080 --> 00:53:15,600
Speaker 1: how is that working? And I would say, when you

872
00:53:15,640 --> 00:53:18,400
Speaker 1: look at that, no, No, there's capitalism. There's plenty of

873
00:53:18,440 --> 00:53:22,600
Speaker 1: capitalism in China, okay, the second largest capital markets. They're

874
00:53:22,600 --> 00:53:27,040
Speaker 1: printing billionaires, they are having the the inventiveness in terms

875
00:53:27,120 --> 00:53:31,560
Speaker 1: of their technologies and all of those things. Those are realities, Okay,

876
00:53:31,640 --> 00:53:35,320
Speaker 1: that notion of how it works. When Dan Chelping dank Ping,

877
00:53:35,600 --> 00:53:38,640
Speaker 1: you know, the idea is this, here's a communist party.

878
00:53:39,000 --> 00:53:41,840
Speaker 1: And then and he's got all this capitalism coming around

879
00:53:42,040 --> 00:53:44,960
Speaker 1: and he's encouraged it. He said two things, it's glorious

880
00:53:44,960 --> 00:53:48,000
Speaker 1: to be rich. And then when asked about this, he said,

881
00:53:48,320 --> 00:53:51,840
Speaker 1: it doesn't matter if if if it's a cat, it

882
00:53:51,880 --> 00:53:53,840
Speaker 1: doesn't matter if it's a white cat or a black catch,

883
00:53:53,880 --> 00:53:56,520
Speaker 1: as long as it catches mice. In other words, if

884
00:53:56,520 --> 00:53:59,280
Speaker 1: it makes money, if it works, okay, if it raises

885
00:53:59,360 --> 00:54:04,359
Speaker 1: living standard. So there's a practicality, that's a practicality that

886
00:54:04,520 --> 00:54:06,759
Speaker 1: is existing there now. If I was to take the

887
00:54:06,840 --> 00:54:10,799
Speaker 1: individual moves that are happening now in China and at

888
00:54:10,800 --> 00:54:15,080
Speaker 1: which people are characterizing them as something, and I'm saying

889
00:54:15,160 --> 00:54:17,879
Speaker 1: from I could explain what they are and what they're

890
00:54:17,880 --> 00:54:22,920
Speaker 1: really thought about. But they're not as they are stereotypically characterized.

891
00:54:23,160 --> 00:54:26,200
Speaker 1: And I'm not trying to argue pro China or anti China.

892
00:54:26,440 --> 00:54:30,040
Speaker 1: I'm just saying, don't misunderstand China. But anyway, if you

893
00:54:30,080 --> 00:54:33,040
Speaker 1: think it's gonna happen, then don't worry just because your

894
00:54:33,080 --> 00:54:36,439
Speaker 1: system is our system will be fine. Okay, we'll work

895
00:54:36,520 --> 00:54:38,880
Speaker 1: well with each other. How are we doing on the

896
00:54:38,920 --> 00:54:41,440
Speaker 1: things that I'm mentioning? How are we doing on earning

897
00:54:41,440 --> 00:54:44,120
Speaker 1: more than we are spending? How are we doing on

898
00:54:44,360 --> 00:54:48,200
Speaker 1: we are working well together and our system is good. Okay.

899
00:54:48,239 --> 00:54:54,160
Speaker 1: But anyway, um, the most importantly, we're at war with ourselves. Okay.

900
00:54:54,200 --> 00:54:57,000
Speaker 1: If we can do our if we can be strong,

901
00:54:57,640 --> 00:55:00,759
Speaker 1: and we can do that, that is the best antecdote

902
00:55:00,760 --> 00:55:06,680
Speaker 1: to everything, to tow uh pandemics, to ops adversaries of

903
00:55:06,680 --> 00:55:09,719
Speaker 1: any form. Just get to let's get to focus on

904
00:55:09,719 --> 00:55:13,640
Speaker 1: on us being strong. I think quite quite interesting. Let's

905
00:55:13,680 --> 00:55:16,680
Speaker 1: talk a little bit about the state of the economy today.

906
00:55:17,360 --> 00:55:20,120
Speaker 1: One of the questions I enjoy asking you, and I

907
00:55:20,120 --> 00:55:24,040
Speaker 1: think I've asked this several times. What macro trend do

908
00:55:24,160 --> 00:55:29,319
Speaker 1: you think is not getting the attention it deserves? Uh,

909
00:55:29,600 --> 00:55:39,200
Speaker 1: the decline in real rates and real returns and the

910
00:55:39,239 --> 00:55:47,720
Speaker 1: supply and demand of debt and money. Okay, I think

911
00:55:48,760 --> 00:55:57,000
Speaker 1: that people think, um that they look at their amount

912
00:55:57,160 --> 00:56:03,080
Speaker 1: of money and in nominal terms and not in real terms.

913
00:56:03,560 --> 00:56:06,920
Speaker 1: And they look at their wealth in nominal terms, not

914
00:56:07,080 --> 00:56:11,880
Speaker 1: in real terms. So when they are holding cash or

915
00:56:12,040 --> 00:56:18,360
Speaker 1: holding a bond and there's saying that is stable, that

916
00:56:18,719 --> 00:56:23,600
Speaker 1: they are not paying attention to the depreciated value. When

917
00:56:23,680 --> 00:56:26,480
Speaker 1: everybody else in other ways is getting rich around them,

918
00:56:26,640 --> 00:56:29,520
Speaker 1: they're losing the side of that. So they look at

919
00:56:29,520 --> 00:56:31,919
Speaker 1: a nominal terms and they look at it in their

920
00:56:32,120 --> 00:56:35,560
Speaker 1: currency eyes. If the number of dollars I have is

921
00:56:35,600 --> 00:56:39,800
Speaker 1: greater than it was the day before I or the same,

922
00:56:40,000 --> 00:56:43,759
Speaker 1: I feel good. Okay, that's that's that's not enough. They're

923
00:56:43,800 --> 00:56:48,120
Speaker 1: not paying enough attention to that. And also the supply

924
00:56:48,480 --> 00:56:52,279
Speaker 1: and the demand for money and how that affects inflation

925
00:56:52,480 --> 00:56:57,040
Speaker 1: and so on. In other words, the calculation that the

926
00:56:57,160 --> 00:57:00,759
Speaker 1: US government will have to sell a number certain number

927
00:57:00,800 --> 00:57:04,440
Speaker 1: of bonds, and then to look at who are the

928
00:57:04,520 --> 00:57:08,560
Speaker 1: buyers of those bonds, who owns how much, and what

929
00:57:08,640 --> 00:57:13,719
Speaker 1: are their motivations and will they buy those bonds? And

930
00:57:14,000 --> 00:57:18,200
Speaker 1: if they don't buy an adequate amount of those bonds,

931
00:57:18,240 --> 00:57:21,040
Speaker 1: so that the Federal Reserve is faced with a choice

932
00:57:21,640 --> 00:57:25,600
Speaker 1: of interest rates rising and shutting the economy and the

933
00:57:25,640 --> 00:57:31,280
Speaker 1: markets down, or printing more money, what will they do? Well,

934
00:57:31,320 --> 00:57:34,400
Speaker 1: they'll print more money, and what will that do for

935
00:57:34,480 --> 00:57:40,520
Speaker 1: the value of money? That those perspectives are not well known,

936
00:57:40,800 --> 00:57:44,560
Speaker 1: well understood, and yet they're the most important perspectives. So

937
00:57:44,560 --> 00:57:49,080
Speaker 1: so let's talk about something that has been pretty significant

938
00:57:49,120 --> 00:57:53,280
Speaker 1: since the financial crisis, which has been the rise of

939
00:57:53,440 --> 00:57:58,240
Speaker 1: defy and cryptocurrencies and blockchain. In a lot of ways,

940
00:57:58,960 --> 00:58:02,840
Speaker 1: some people are present positioning that new asset class as

941
00:58:02,840 --> 00:58:08,920
Speaker 1: a response to exactly what you're describing, centrally controlled money

942
00:58:08,960 --> 00:58:13,120
Speaker 1: supply and the printing presses running. What what are your

943
00:58:13,120 --> 00:58:18,040
Speaker 1: thoughts on on crypto generally and defy. Well, first of all, Um,

944
00:58:18,360 --> 00:58:24,040
Speaker 1: good idea, I mean, don't trust the governments, No matter

945
00:58:25,040 --> 00:58:29,160
Speaker 1: no matter which one. It's been such a history. Um,

946
00:58:28,400 --> 00:58:32,840
Speaker 1: but almost always before there's a devaluation, there's a promise

947
00:58:32,880 --> 00:58:37,000
Speaker 1: that I will never devalue. I mean, I've there's been experienced.

948
00:58:37,680 --> 00:58:39,560
Speaker 1: And so when it comes down to what are you

949
00:58:39,640 --> 00:58:43,120
Speaker 1: gonna do in the end, every currency has either been

950
00:58:43,160 --> 00:58:46,920
Speaker 1: destroyed or devalued, okay. And so when that's what they

951
00:58:46,960 --> 00:58:49,960
Speaker 1: do in the middle of when you're in a crisis

952
00:58:50,080 --> 00:58:52,200
Speaker 1: or do you have a depression, that's the choice. And

953
00:58:52,280 --> 00:58:53,919
Speaker 1: you don't want to have the depression, so you print

954
00:58:53,960 --> 00:58:57,040
Speaker 1: the money to make it easy to pay back the debt. Okay.

955
00:58:57,080 --> 00:59:00,640
Speaker 1: So that set of circumstances your rise and things. UM

956
00:59:00,680 --> 00:59:04,120
Speaker 1: and the development of crypto. First of all, UM, the

957
00:59:04,280 --> 00:59:08,320
Speaker 1: blockchain technology is revolutionary in many many ways and and

958
00:59:08,560 --> 00:59:12,720
Speaker 1: so that's I think fabulous. And then it's really quite

959
00:59:12,760 --> 00:59:17,880
Speaker 1: amazing that the programming of it and everything has stood

960
00:59:17,880 --> 00:59:21,560
Speaker 1: the test of time in terms of not being hacked materially,

961
00:59:21,760 --> 00:59:26,600
Speaker 1: so far, so good, and it um and being um

962
00:59:27,320 --> 00:59:31,200
Speaker 1: a store of value now at the one But there

963
00:59:31,200 --> 00:59:33,840
Speaker 1: are stable coins as opposed to everybody looks a bitcoin,

964
00:59:34,200 --> 00:59:38,240
Speaker 1: but there are stable coins that are tied to specific currency. Yes,

965
00:59:38,280 --> 00:59:42,000
Speaker 1: but that will be the problem what about but I

966
00:59:42,120 --> 00:59:44,520
Speaker 1: just wanted to I just want to finish that that

967
00:59:44,520 --> 00:59:47,439
Speaker 1: that answer. So it's come a long way and it's

968
00:59:47,480 --> 00:59:52,200
Speaker 1: a new generations alternative to gold. I think the new

969
00:59:52,240 --> 00:59:56,600
Speaker 1: generation is making a severe mistake to think that um

970
00:59:56,640 --> 00:59:59,320
Speaker 1: it should be all bitcoin kind of thing and not

971
00:59:59,480 --> 01:00:04,400
Speaker 1: get the bat it's maybe just like the um meaning

972
01:00:04,480 --> 01:00:07,320
Speaker 1: well there's what what are the things that are like

973
01:00:07,440 --> 01:00:09,360
Speaker 1: money that are gonna work like money, that you can

974
01:00:09,400 --> 01:00:12,000
Speaker 1: carry them around in your pocket, go from one place

975
01:00:12,040 --> 01:00:15,120
Speaker 1: to another, and and that they're recognized all around the

976
01:00:15,120 --> 01:00:18,520
Speaker 1: world as an alternative currency. Gold is one of those things, right,

977
01:00:18,760 --> 01:00:23,160
Speaker 1: So it's an alternative gold and so on the diversification properly,

978
01:00:23,360 --> 01:00:26,960
Speaker 1: central banks won't use it. Um it will not be

979
01:00:27,400 --> 01:00:31,959
Speaker 1: the same, but and it will be a threat when

980
01:00:32,000 --> 01:00:37,440
Speaker 1: when stable coin, if it's a transactional thing, is not

981
01:00:37,600 --> 01:00:40,040
Speaker 1: and it remains in the currency so the government can

982
01:00:40,080 --> 01:00:43,960
Speaker 1: control its currency and deal with that issue. Will be

983
01:00:44,200 --> 01:00:47,480
Speaker 1: functionally okay, but it won't get you around the risks

984
01:00:47,520 --> 01:00:49,560
Speaker 1: that we're talking about in terms of the debasement of

985
01:00:49,600 --> 01:00:52,520
Speaker 1: the currency. So that's why when you're dealing with the

986
01:00:52,560 --> 01:00:54,880
Speaker 1: other But if it gets you around that, it becomes

987
01:00:54,880 --> 01:00:57,840
Speaker 1: a better currency, and when that becomes a better currency,

988
01:00:57,880 --> 01:01:01,520
Speaker 1: it's a threat to the government's and like the currency,

989
01:01:01,560 --> 01:01:05,000
Speaker 1: the ability to print currency and to operate that way

990
01:01:05,280 --> 01:01:08,520
Speaker 1: is the greatest power almost that a government can have,

991
01:01:08,960 --> 01:01:12,720
Speaker 1: and so that so something like bitcoin success will be

992
01:01:12,760 --> 01:01:16,160
Speaker 1: dependent on that. It also, of course has its dynamics

993
01:01:16,200 --> 01:01:19,800
Speaker 1: because speculative market all that, and that dynamic is one thing.

994
01:01:20,120 --> 01:01:22,720
Speaker 1: If I start to look at how much how it's priced,

995
01:01:23,280 --> 01:01:26,040
Speaker 1: you know, the way I look at it is if um,

996
01:01:26,200 --> 01:01:28,560
Speaker 1: since the supply is not going to change much, you

997
01:01:28,560 --> 01:01:31,600
Speaker 1: can just look at the demand, and right now, the

998
01:01:31,640 --> 01:01:35,480
Speaker 1: total value of bitcoin, which is uh, you know, let's

999
01:01:35,880 --> 01:01:39,640
Speaker 1: roughly a trillion dollars, let's say um is and if

1000
01:01:39,680 --> 01:01:43,520
Speaker 1: you take the total value of gold um excluding what's

1001
01:01:43,600 --> 01:01:47,280
Speaker 1: used for jewelry and excluding what used for stuff um

1002
01:01:47,680 --> 01:01:51,320
Speaker 1: central banks, it's about five trillion. So that would mean

1003
01:01:51,600 --> 01:01:53,840
Speaker 1: that it would be if you had a portfolio, would

1004
01:01:53,880 --> 01:01:56,520
Speaker 1: be sort of an eight twenty portfolio. And so that's

1005
01:01:56,560 --> 01:01:58,200
Speaker 1: kind of like when I look at it and will

1006
01:01:58,240 --> 01:02:03,280
Speaker 1: it be a larger lesser has been changing, but that's

1007
01:02:03,280 --> 01:02:05,320
Speaker 1: what I'm saying it. So, but if you would have

1008
01:02:05,320 --> 01:02:08,960
Speaker 1: said step back, and you'd say, okay, um, is it

1009
01:02:09,080 --> 01:02:14,320
Speaker 1: going to increase by five times as some people that

1010
01:02:14,720 --> 01:02:19,080
Speaker 1: I can't it can't imagine because but maybe if you

1011
01:02:19,200 --> 01:02:22,280
Speaker 1: moved into a world where all those kinds of assets

1012
01:02:22,320 --> 01:02:25,160
Speaker 1: were the rush to maybe it works that way. It

1013
01:02:25,360 --> 01:02:28,320
Speaker 1: like gold is also a dead asset. There's no there's

1014
01:02:28,320 --> 01:02:32,920
Speaker 1: no inventiveness in it, there's no no income station. But

1015
01:02:33,040 --> 01:02:35,520
Speaker 1: when we look at other assets, as we're taking a

1016
01:02:35,520 --> 01:02:40,560
Speaker 1: look here, um, they're also an inflation hedge asset. Is

1017
01:02:40,600 --> 01:02:44,800
Speaker 1: also great productivity. Okay, stocks in the right kind of stocks,

1018
01:02:45,200 --> 01:02:50,120
Speaker 1: when there's inventiveness, the stock will get redonominated whatever it is,

1019
01:02:50,160 --> 01:02:53,560
Speaker 1: it goes high and then it has productivity in it.

1020
01:02:53,600 --> 01:02:58,760
Speaker 1: And productivity is a fabulous resource. So so that's important

1021
01:02:59,000 --> 01:03:02,240
Speaker 1: the old but always in all of those assets, like you,

1022
01:03:02,360 --> 01:03:04,440
Speaker 1: what you would want to do is say how expensive

1023
01:03:04,520 --> 01:03:07,160
Speaker 1: is that productivity? So then you get down down to

1024
01:03:07,200 --> 01:03:10,320
Speaker 1: your calculations. You know, you get back Okay, if I'm

1025
01:03:10,400 --> 01:03:14,920
Speaker 1: having a fabulous growth stock that because fabulous inventiveness and

1026
01:03:14,960 --> 01:03:18,480
Speaker 1: they're doing wonderful, wonderful things, then I have to look at, Okay,

1027
01:03:18,480 --> 01:03:21,320
Speaker 1: how much is that discounted? Because the other thing about

1028
01:03:21,360 --> 01:03:26,200
Speaker 1: investing is that's important to understand that um, it's um.

1029
01:03:26,240 --> 01:03:29,040
Speaker 1: It's like horse races and and and betting on the

1030
01:03:29,080 --> 01:03:32,800
Speaker 1: winning horse the best horse, UM is not necessarily the

1031
01:03:32,840 --> 01:03:35,520
Speaker 1: best bet at horse race because of the way it's

1032
01:03:35,560 --> 01:03:38,840
Speaker 1: discount and the odds, you can just as likely win

1033
01:03:38,960 --> 01:03:41,760
Speaker 1: by we're betting on the worst horse in the horse

1034
01:03:41,840 --> 01:03:44,440
Speaker 1: race because the odds reflect that. The markets are like that,

1035
01:03:44,560 --> 01:03:48,080
Speaker 1: So you can't just pick the best companies. You you

1036
01:03:48,120 --> 01:03:50,800
Speaker 1: have to look at what's discounted. The worst companies at

1037
01:03:50,840 --> 01:03:53,040
Speaker 1: the right price could be a much better investment than

1038
01:03:53,040 --> 01:03:55,640
Speaker 1: the best companies. That has to do with then how

1039
01:03:55,680 --> 01:03:58,840
Speaker 1: you're looking at such things. But anyway, that's probably a

1040
01:03:58,920 --> 01:04:01,479
Speaker 1: too long winded to your course. No, no, it's great,

1041
01:04:01,520 --> 01:04:03,760
Speaker 1: and it's made me think of three questions I have

1042
01:04:03,840 --> 01:04:08,080
Speaker 1: to ask about. The first is CBDCs the central bank

1043
01:04:08,160 --> 01:04:12,400
Speaker 1: digital currencies? Is that a likely possibility that will see

1044
01:04:13,360 --> 01:04:15,400
Speaker 1: the Federal Reserve or the Bank of Japan, or the

1045
01:04:15,400 --> 01:04:21,120
Speaker 1: Bank of England or the Chinese Central Bank issue digital currencies?

1046
01:04:21,760 --> 01:04:27,880
Speaker 1: And then second, if the current trend continues with the

1047
01:04:28,000 --> 01:04:32,040
Speaker 1: rise of China and the US flowling, and there's a

1048
01:04:32,120 --> 01:04:35,200
Speaker 1: potential shift from the dollar as the reserve currency to

1049
01:04:35,240 --> 01:04:38,280
Speaker 1: the one, might it not go to the one. Might

1050
01:04:38,320 --> 01:04:42,000
Speaker 1: it go to some basket of crypto currencies or something else.

1051
01:04:42,480 --> 01:04:45,520
Speaker 1: If people don't trust governments no matter what their elk,

1052
01:04:45,680 --> 01:04:49,640
Speaker 1: is possible. Okay. So I think the environment that we

1053
01:04:49,680 --> 01:04:53,080
Speaker 1: want to emphasize is that we will come into an

1054
01:04:53,200 --> 01:04:58,480
Speaker 1: environment in which there will be more competition for currencies.

1055
01:04:59,040 --> 01:05:01,960
Speaker 1: So it's not just so China versus the US. It's

1056
01:05:02,000 --> 01:05:05,000
Speaker 1: even bigger than that, right, but even today, think of

1057
01:05:05,080 --> 01:05:08,680
Speaker 1: that where that takes us. We're today in a dollar world.

1058
01:05:09,640 --> 01:05:12,880
Speaker 1: How much do you think and how much does the

1059
01:05:12,920 --> 01:05:17,160
Speaker 1: average American think, here's my menu and what do I

1060
01:05:17,200 --> 01:05:20,440
Speaker 1: want to select from that menu as regards the currency?

1061
01:05:20,680 --> 01:05:27,080
Speaker 1: Not much? Okay, not much? And they will okay because digitally,

1062
01:05:27,280 --> 01:05:30,880
Speaker 1: and this is a threat to central banks because if

1063
01:05:30,960 --> 01:05:33,680
Speaker 1: you could digitally go on and buy a bit going

1064
01:05:34,000 --> 01:05:39,360
Speaker 1: or a digital yu Want or whatever there whatever those

1065
01:05:39,400 --> 01:05:42,680
Speaker 1: are at and gold and all of that menu, the

1066
01:05:42,800 --> 01:05:47,400
Speaker 1: world changes, Okay, the competition changes, and we are moving

1067
01:05:47,680 --> 01:05:54,320
Speaker 1: toward that. And and you mentioned productivity. I have to

1068
01:05:54,360 --> 01:05:57,680
Speaker 1: bring that back to the inflation question. What we've seen

1069
01:05:57,760 --> 01:06:01,360
Speaker 1: over the past three decades has been massive uptick in

1070
01:06:01,440 --> 01:06:07,240
Speaker 1: individual productivity, enabled primarily by technology, which has led not

1071
01:06:07,360 --> 01:06:12,000
Speaker 1: to an inflationary environment, but a deflationary environment which seems

1072
01:06:12,040 --> 01:06:16,520
Speaker 1: to have these periodic spasms of inflation. So could we

1073
01:06:16,680 --> 01:06:20,600
Speaker 1: stay ahead of inflation if we enhance our productivity. We

1074
01:06:20,760 --> 01:06:23,920
Speaker 1: just have to look at the mechanics and the attribution

1075
01:06:24,000 --> 01:06:28,640
Speaker 1: of that. Absolutely right, we as I say there are five,

1076
01:06:29,040 --> 01:06:32,360
Speaker 1: these five major forces on the financial the how we

1077
01:06:32,400 --> 01:06:34,320
Speaker 1: are with each other internally, how we are with each

1078
01:06:34,320 --> 01:06:37,560
Speaker 1: other externally. Then there are these acts of nature that

1079
01:06:37,640 --> 01:06:41,200
Speaker 1: come along, the once at a time um pandemic, or

1080
01:06:41,200 --> 01:06:43,800
Speaker 1: the once in a lifetime storm and so on. And

1081
01:06:43,840 --> 01:06:48,520
Speaker 1: then number five is a man's inventiveness and the inventiveness

1082
01:06:48,520 --> 01:06:52,440
Speaker 1: of technology. And it is the greatest single power. If

1083
01:06:52,480 --> 01:06:54,680
Speaker 1: you look at history, and I show your charts in

1084
01:06:54,720 --> 01:06:59,120
Speaker 1: the book. The other things don't matter much over the

1085
01:06:59,200 --> 01:07:02,880
Speaker 1: long term, They don't matter much. They produce the big cycles.

1086
01:07:02,920 --> 01:07:05,760
Speaker 1: But that improvement and that force is the best that

1087
01:07:05,960 --> 01:07:10,600
Speaker 1: it has ever been, because we have developed how our

1088
01:07:10,640 --> 01:07:14,479
Speaker 1: ability to think in better ways, because we've used technology

1089
01:07:14,560 --> 01:07:18,520
Speaker 1: to use our brains in a complementary way with technology,

1090
01:07:18,800 --> 01:07:21,840
Speaker 1: so our capacity to invent and come up with greater

1091
01:07:21,920 --> 01:07:26,320
Speaker 1: productivity and adaptations to these risks is greater than ever.

1092
01:07:26,760 --> 01:07:31,480
Speaker 1: And so that force is phenomenal, that is a deflationary force.

1093
01:07:31,600 --> 01:07:35,560
Speaker 1: In other words, inventiveness and productivity is a deflationary force.

1094
01:07:35,680 --> 01:07:39,400
Speaker 1: And that's exactly right. However, at the same time, the

1095
01:07:39,480 --> 01:07:43,440
Speaker 1: capacity to print and produce money and credit, if it

1096
01:07:43,560 --> 01:07:47,480
Speaker 1: is greater that that that deflationary force, will produce an

1097
01:07:47,520 --> 01:07:51,400
Speaker 1: inflationary consequence. So both are at work, and you have

1098
01:07:51,480 --> 01:07:54,000
Speaker 1: to follow each one of them. Take a look at

1099
01:07:54,120 --> 01:07:57,919
Speaker 1: each one of those. At what rate do we change productivity?

1100
01:07:58,040 --> 01:08:00,840
Speaker 1: And then at what we're a doing are we changing

1101
01:08:01,160 --> 01:08:04,000
Speaker 1: the amount of money and credit and existence. That's what

1102
01:08:04,080 --> 01:08:06,640
Speaker 1: you have to look at when judging inflation. And this

1103
01:08:06,720 --> 01:08:10,560
Speaker 1: is why I think you mentioned the external competition, but

1104
01:08:10,680 --> 01:08:14,400
Speaker 1: this is very much an internal competition. Forces of deflation

1105
01:08:14,400 --> 01:08:17,840
Speaker 1: and technology on one side, forces of inflation and money

1106
01:08:17,840 --> 01:08:20,920
Speaker 1: printing on the other. That's right, and certainly that productivity

1107
01:08:20,960 --> 01:08:23,360
Speaker 1: is going to help us a lot. And and you

1108
01:08:23,360 --> 01:08:26,599
Speaker 1: you discussed that extensively in the book. And I just

1109
01:08:26,640 --> 01:08:29,280
Speaker 1: have to share some quotes about the book before we

1110
01:08:29,320 --> 01:08:33,160
Speaker 1: start running out of time. Two in particular just left

1111
01:08:33,240 --> 01:08:38,080
Speaker 1: out Hank Paulson, former Treasury Secretary and chair of Goldman.

1112
01:08:38,240 --> 01:08:40,880
Speaker 1: After reading this book, you probably won't see the world

1113
01:08:41,280 --> 01:08:45,400
Speaker 1: the same again, and then Jamie Diamond inspiring and thought

1114
01:08:45,520 --> 01:08:49,120
Speaker 1: provoking experience that that has to be incredibly gratifying to

1115
01:08:49,160 --> 01:08:51,800
Speaker 1: put all this time and effort into writing the book

1116
01:08:52,200 --> 01:08:54,400
Speaker 1: and getting that sort of response. And by the way,

1117
01:08:54,720 --> 01:08:57,679
Speaker 1: it's not just I. I just happen to pick two

1118
01:08:57,680 --> 01:09:01,000
Speaker 1: people from finance, but Henry Kissing Joe Dahlia has a

1119
01:09:01,040 --> 01:09:05,120
Speaker 1: special talent for identifying key questions of our time. His

1120
01:09:05,200 --> 01:09:09,240
Speaker 1: sweeping new book is a serious contribution and an urgent warning.

1121
01:09:10,320 --> 01:09:12,360
Speaker 1: What's your response when you get that sort of stuff?

1122
01:09:14,960 --> 01:09:20,559
Speaker 1: You know, we've had conversations and I was and they

1123
01:09:20,600 --> 01:09:23,920
Speaker 1: believe the same things. I don't want to put words

1124
01:09:23,920 --> 01:09:29,120
Speaker 1: in the mount, but I say, okay, speaking up. There's

1125
01:09:29,120 --> 01:09:35,000
Speaker 1: a reluctance to speak up. Why is that? I think

1126
01:09:35,840 --> 01:09:41,920
Speaker 1: things are controversial and and and there's an environment of

1127
01:09:42,360 --> 01:09:44,840
Speaker 1: you know, stick to your lane, do your job and

1128
01:09:44,880 --> 01:09:50,240
Speaker 1: so on. UM, And I think that now you're going

1129
01:09:50,280 --> 01:09:53,519
Speaker 1: to hear a lot more speaking up about these kinds

1130
01:09:53,520 --> 01:10:00,599
Speaker 1: of issues. Um. They viewed that, you know, like one

1131
01:10:00,640 --> 01:10:02,439
Speaker 1: of the joys are one of the ways that I

1132
01:10:02,479 --> 01:10:06,320
Speaker 1: can learn so much is by being able to speak

1133
01:10:06,320 --> 01:10:11,240
Speaker 1: to different people, leaders in different countries, and those scholars

1134
01:10:11,280 --> 01:10:13,840
Speaker 1: and and so on, and I learned a lot through

1135
01:10:13,840 --> 01:10:17,680
Speaker 1: that particular process and then we got to okay, what

1136
01:10:17,920 --> 01:10:22,000
Speaker 1: is true and how does it work? And that book

1137
01:10:22,240 --> 01:10:26,040
Speaker 1: operating that way and laying it out with not opinions

1138
01:10:26,120 --> 01:10:29,599
Speaker 1: but numbers so that you can objectively measure what's happening.

1139
01:10:29,640 --> 01:10:31,920
Speaker 1: You could look at the graphs and so on. All

1140
01:10:31,960 --> 01:10:36,880
Speaker 1: of that, Um, we agreed was helpful approach to know

1141
01:10:36,960 --> 01:10:43,240
Speaker 1: where we are and what the patterns are. And so, yeah,

1142
01:10:43,439 --> 01:10:46,679
Speaker 1: it's gratifying, but more important than gratifying. I'm not sitting

1143
01:10:46,720 --> 01:10:50,719
Speaker 1: here being gratified. Um, I'm saying I really do believe

1144
01:10:50,760 --> 01:10:54,960
Speaker 1: it's important, okay. And the fact that they believe it's important,

1145
01:10:55,439 --> 01:11:01,400
Speaker 1: and the fact that they are saying pay a nine, Okay,

1146
01:11:01,720 --> 01:11:06,240
Speaker 1: you're moving the needle it is, that's gratifying. If it's valuable,

1147
01:11:06,880 --> 01:11:10,320
Speaker 1: it's gratifying, and they think it's gratifying. So today we're

1148
01:11:10,400 --> 01:11:14,360
Speaker 1: talking about it, and that's gratifying. There there's a book.

1149
01:11:14,439 --> 01:11:16,400
Speaker 1: You reminded me of a book. I'm trying to remember

1150
01:11:16,439 --> 01:11:18,439
Speaker 1: the name of it. It might be Black Box Thinking

1151
01:11:18,880 --> 01:11:21,360
Speaker 1: where they talk about First of all, the black box

1152
01:11:21,400 --> 01:11:24,760
Speaker 1: and commercial aircraft is orange, so you can spot it

1153
01:11:24,880 --> 01:11:27,640
Speaker 1: underwater in the dark, but we still talk about it

1154
01:11:27,680 --> 01:11:33,080
Speaker 1: in black box at terms. But there were certain Unlike

1155
01:11:33,080 --> 01:11:37,080
Speaker 1: a lot of areas, the aviation industry is very much

1156
01:11:37,320 --> 01:11:41,360
Speaker 1: into your cycle of a mistake occurs, Why, what can

1157
01:11:41,400 --> 01:11:43,479
Speaker 1: we learn from it? How can we fix it? Now?

1158
01:11:43,560 --> 01:11:46,799
Speaker 1: Let's let's try the next level. And I recall reading

1159
01:11:47,280 --> 01:11:51,960
Speaker 1: about a crash in this book. The co pilot knew

1160
01:11:52,000 --> 01:11:55,519
Speaker 1: something was wrong, but the culture was such that you

1161
01:11:55,520 --> 01:12:00,599
Speaker 1: didn't challenge the pilot and you didn't upset the eating order,

1162
01:12:01,000 --> 01:12:05,200
Speaker 1: and literally the plane would go down until people figured

1163
01:12:05,200 --> 01:12:07,720
Speaker 1: this out and said, as a co pilot, you have

1164
01:12:07,880 --> 01:12:11,519
Speaker 1: to step up and say there's a problem here. We

1165
01:12:11,600 --> 01:12:14,960
Speaker 1: can't just continue. And here's what it is. You're you're saying,

1166
01:12:15,000 --> 01:12:19,000
Speaker 1: that's a similar issue. We don't raise this because Ray,

1167
01:12:19,040 --> 01:12:22,720
Speaker 1: you're a money manager. Stay in your lane. Um, what

1168
01:12:22,840 --> 01:12:28,040
Speaker 1: you've just described is how life works. We all have challenges.

1169
01:12:29,080 --> 01:12:32,680
Speaker 1: Sometimes they pile up, and we have a number of

1170
01:12:32,720 --> 01:12:36,280
Speaker 1: those challenges, and it's a test of how we can

1171
01:12:36,600 --> 01:12:40,200
Speaker 1: learn and adapt and then that, you know, then those

1172
01:12:40,240 --> 01:12:43,320
Speaker 1: who do that better survive and those that don't do

1173
01:12:43,360 --> 01:12:46,080
Speaker 1: that as well don't. And you don't just mean individuals,

1174
01:12:46,120 --> 01:12:52,080
Speaker 1: you mean countries and societies. That's right, individuals, country, society, species. Okay,

1175
01:12:52,120 --> 01:12:56,120
Speaker 1: it's the it's so let's say we now, how prepared

1176
01:12:56,160 --> 01:13:01,400
Speaker 1: are we for are we financially prepared? How you have

1177
01:13:01,560 --> 01:13:05,680
Speaker 1: pandemic comes along? And how are you financially how are

1178
01:13:05,680 --> 01:13:08,759
Speaker 1: you prepared? How are you operating? Can you work together?

1179
01:13:08,960 --> 01:13:12,479
Speaker 1: Can you do the things? There's basic things and and

1180
01:13:12,520 --> 01:13:16,240
Speaker 1: then can you adapt? There was I forgot who made

1181
01:13:16,240 --> 01:13:18,479
Speaker 1: the quote, but it's a quote that sticks in my mind.

1182
01:13:19,080 --> 01:13:24,920
Speaker 1: Um that, um Man. Superiority is not in being able

1183
01:13:25,000 --> 01:13:30,160
Speaker 1: to be smarter or working harder, it's in the capacity

1184
01:13:30,200 --> 01:13:34,280
Speaker 1: to adapt that those species and those who adapt well.

1185
01:13:34,600 --> 01:13:36,879
Speaker 1: When you look at the virus, isn't it an interesting

1186
01:13:36,920 --> 01:13:40,519
Speaker 1: thing when we think about here is a species. It's

1187
01:13:40,560 --> 01:13:46,320
Speaker 1: a good comparison of no brain versus a brain and

1188
01:13:46,360 --> 01:13:51,200
Speaker 1: a lot of thinking. And this species, the virus is

1189
01:13:51,240 --> 01:13:55,639
Speaker 1: adapting and is modifying, and it's in a competition with

1190
01:13:55,760 --> 01:13:59,040
Speaker 1: this other species that is thinking and trying to figure

1191
01:13:59,040 --> 01:14:02,479
Speaker 1: it out. Part the species is thinking, part not so much. Okay,

1192
01:14:02,520 --> 01:14:06,400
Speaker 1: but I'm saying, okay, now talking about and so when

1193
01:14:06,400 --> 01:14:10,639
Speaker 1: we understand let's say, evolution, the capacity to adapt well,

1194
01:14:11,240 --> 01:14:14,160
Speaker 1: to make those changes and how do you do that

1195
01:14:14,439 --> 01:14:17,760
Speaker 1: because you get feedback and if you don't adapt, if

1196
01:14:17,800 --> 01:14:20,040
Speaker 1: you go, if the plane goes down because you don't

1197
01:14:20,040 --> 01:14:21,800
Speaker 1: want to talk about it and you don't want to

1198
01:14:21,880 --> 01:14:26,240
Speaker 1: challenge it, that's part of natural selection and that's a problem.

1199
01:14:26,320 --> 01:14:29,360
Speaker 1: So so one problem we we here. It is ninety

1200
01:14:29,400 --> 01:14:33,120
Speaker 1: minutes later, we haven't even brought up a looming problem

1201
01:14:33,320 --> 01:14:36,839
Speaker 1: that we haven't addressed. And I know it's an interest

1202
01:14:36,920 --> 01:14:43,680
Speaker 1: of yours. Um is global warming the environment, the oceans? Uh,

1203
01:14:43,880 --> 01:14:46,639
Speaker 1: what do we do as a species to make sure

1204
01:14:47,160 --> 01:14:52,160
Speaker 1: that we don't make ourselves extinct? Are we cooperating? Are

1205
01:14:52,240 --> 01:14:57,240
Speaker 1: are we adapting to the changing environment? Or are we

1206
01:14:58,080 --> 01:15:01,280
Speaker 1: heading down a dangerous path? So man is about two

1207
01:15:01,680 --> 01:15:05,200
Speaker 1: thousand years old, and the history of species the world

1208
01:15:05,400 --> 01:15:08,639
Speaker 1: is three point nine billion years old, and so Man's

1209
01:15:08,640 --> 01:15:11,920
Speaker 1: a relatively new species. In the history of species is

1210
01:15:11,960 --> 01:15:16,360
Speaker 1: that they either change and adapt or they go extinct.

1211
01:15:17,160 --> 01:15:21,680
Speaker 1: And the interaction with what we're producing with the environment

1212
01:15:22,280 --> 01:15:28,120
Speaker 1: is having not only implications for the hospital, the hospitability

1213
01:15:28,160 --> 01:15:31,200
Speaker 1: of the environment that we're in and so on, but

1214
01:15:31,320 --> 01:15:35,599
Speaker 1: it will have a lot of implications, big implications, um,

1215
01:15:35,840 --> 01:15:39,280
Speaker 1: And we're seeing it not it will be costly, but

1216
01:15:39,400 --> 01:15:42,360
Speaker 1: it will also um, you know, it's a big challenge.

1217
01:15:42,760 --> 01:15:47,160
Speaker 1: It affects diseases as well. Pandemics are associated with the environment.

1218
01:15:47,200 --> 01:15:52,479
Speaker 1: And so it's a test of man's It's a test, okay,

1219
01:15:52,560 --> 01:15:57,200
Speaker 1: a man's adaptability, the ability to work and solve problems.

1220
01:15:57,360 --> 01:16:01,840
Speaker 1: I remember when UM in the nineteen seventies, the Club

1221
01:16:01,880 --> 01:16:05,280
Speaker 1: of Rome, and I remember when the world was we

1222
01:16:05,320 --> 01:16:08,679
Speaker 1: was we would say that we were running out of food.

1223
01:16:08,760 --> 01:16:13,280
Speaker 1: There was starving in India and UM, and the population

1224
01:16:13,360 --> 01:16:16,080
Speaker 1: growth was greater than the resource thing. And they had

1225
01:16:16,080 --> 01:16:19,760
Speaker 1: this Club of Rome that brought everybody together UM in

1226
01:16:19,880 --> 01:16:21,840
Speaker 1: order to deal with that issue. And there were two

1227
01:16:21,840 --> 01:16:26,120
Speaker 1: schools of thought that which is, disaster will happen and

1228
01:16:26,200 --> 01:16:28,439
Speaker 1: unless we met the radical changes. And then there was

1229
01:16:28,439 --> 01:16:31,040
Speaker 1: the other school of thought that we may that we

1230
01:16:31,080 --> 01:16:34,559
Speaker 1: have a capacity to adapt and change. And now Indias

1231
01:16:34,560 --> 01:16:37,320
Speaker 1: and that exporter of grain and this isn't the So

1232
01:16:37,479 --> 01:16:43,160
Speaker 1: the question is really the adaptability. Man has a great adaptability,

1233
01:16:43,280 --> 01:16:49,160
Speaker 1: but but by neglecting it then there are consequences and

1234
01:16:49,240 --> 01:16:52,439
Speaker 1: so and they're big consequences. So it's certainly were beyond

1235
01:16:52,600 --> 01:16:56,360
Speaker 1: the point of the fact that there will be big

1236
01:16:56,760 --> 01:17:00,080
Speaker 1: damages okay, And there will be big consequences to that

1237
01:17:00,520 --> 01:17:06,679
Speaker 1: sea level changes, many crop changes and that, but how

1238
01:17:06,720 --> 01:17:09,560
Speaker 1: far it goes will be a test of man's ability

1239
01:17:09,680 --> 01:17:12,679
Speaker 1: to adapt to it. So you mentioned sea level changes.

1240
01:17:12,720 --> 01:17:16,800
Speaker 1: I know a passion of yours is the ocean, and

1241
01:17:16,920 --> 01:17:21,240
Speaker 1: you recently outfitted a new ship to explore the ocean

1242
01:17:21,280 --> 01:17:24,479
Speaker 1: to do scientific research. Tell us what's going on with that.

1243
01:17:24,640 --> 01:17:27,760
Speaker 1: I know that something is coming up with that, and

1244
01:17:27,880 --> 01:17:33,760
Speaker 1: Disney give us a preview. Yeah, ocean exploration. Um, yes,

1245
01:17:33,800 --> 01:17:36,280
Speaker 1: it's been a passion of mine. I think the ocean

1246
01:17:36,400 --> 01:17:39,960
Speaker 1: is our greatest assets, our biggest assets. Seventy of the

1247
01:17:40,040 --> 01:17:44,760
Speaker 1: world surface is is the ocean. And when you look

1248
01:17:44,800 --> 01:17:48,479
Speaker 1: at it, the area above that is all the continents combined,

1249
01:17:49,280 --> 01:17:52,799
Speaker 1: is less than half of all that's going on underneath

1250
01:17:52,840 --> 01:17:56,120
Speaker 1: the ocean. And it's such so important to us, and

1251
01:17:56,160 --> 01:17:59,320
Speaker 1: it is also the most exciting, fascinating place to be.

1252
01:17:59,720 --> 01:18:02,120
Speaker 1: There's just the sheet over it, we don't go into it,

1253
01:18:02,160 --> 01:18:04,599
Speaker 1: and so on, and it's very valuable. So for all

1254
01:18:04,640 --> 01:18:08,280
Speaker 1: those reasons, for last eleven years, I've done that exploration.

1255
01:18:08,400 --> 01:18:12,879
Speaker 1: So ocean X you can, if you're interested, go on

1256
01:18:13,479 --> 01:18:17,639
Speaker 1: YouTube or something and or google ocean X that's the

1257
01:18:17,640 --> 01:18:21,400
Speaker 1: the ship and the endeavor. So I support um this

1258
01:18:21,720 --> 01:18:26,559
Speaker 1: it's a ship, but it's also we're supporting philanthropically, uh,

1259
01:18:26,600 --> 01:18:30,320
Speaker 1: scientists research and so ongoing it and we want to

1260
01:18:30,360 --> 01:18:35,840
Speaker 1: make I was inspired by Jacques Cousteau. Okay, so and

1261
01:18:35,880 --> 01:18:38,160
Speaker 1: that brought me closer to the ocean and excited me.

1262
01:18:38,520 --> 01:18:41,679
Speaker 1: And so, um, that's what this show that you're talking

1263
01:18:42,240 --> 01:18:48,559
Speaker 1: um agreed. Uh. Jim Cameron Avatar Titaniction so is a

1264
01:18:48,600 --> 01:18:51,960
Speaker 1: great ocean explorer. So um, he's he agreed to be

1265
01:18:52,000 --> 01:18:54,800
Speaker 1: a thought partner on the media part. So he's executive

1266
01:18:54,840 --> 01:18:58,599
Speaker 1: producer and we're going to show the exploration these people

1267
01:18:58,640 --> 01:19:00,280
Speaker 1: who are going down there, we're gonna show owe it.

1268
01:19:00,520 --> 01:19:04,120
Speaker 1: And right now it's being shown. You can on streaming.

1269
01:19:04,160 --> 01:19:08,040
Speaker 1: There's media Ocean X Media is putting out lots of

1270
01:19:08,080 --> 01:19:10,400
Speaker 1: stuff that is going on on that and so you

1271
01:19:10,439 --> 01:19:13,360
Speaker 1: can watch it. But that we estimate, because it will

1272
01:19:13,400 --> 01:19:18,000
Speaker 1: be on um um Natural Geographic on Disney and Disney

1273
01:19:18,040 --> 01:19:21,840
Speaker 1: plus uh, we estimate that it will be between a

1274
01:19:21,840 --> 01:19:24,320
Speaker 1: half a billion and a billion people will basically be

1275
01:19:24,400 --> 01:19:27,880
Speaker 1: watching it. And I'm excited about that because I think

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01:19:27,920 --> 01:19:32,240
Speaker 1: that that's very important. If you want to see um aliens.

1277
01:19:32,920 --> 01:19:35,120
Speaker 1: You're not going to see them in outer space. You

1278
01:19:35,240 --> 01:19:38,680
Speaker 1: gotta go on the water. It's valuable, it's exciting, and

1279
01:19:38,720 --> 01:19:42,240
Speaker 1: it's important. And so that's what that's about. So I

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01:19:42,280 --> 01:19:44,879
Speaker 1: want to leave on a little bit of a hopeful question.

1281
01:19:45,000 --> 01:19:50,080
Speaker 1: You set up a lot of scenarios where looming civil strife,

1282
01:19:50,680 --> 01:19:55,719
Speaker 1: external competition, potential loss of the reserve currency, all sorts

1283
01:19:55,760 --> 01:20:00,040
Speaker 1: of terrible things. What should we be hopeful about? What

1284
01:20:00,040 --> 01:20:04,840
Speaker 1: what is a good outcome for the United States and

1285
01:20:04,920 --> 01:20:08,479
Speaker 1: for humans as a species. Well, we can do this.

1286
01:20:08,600 --> 01:20:13,000
Speaker 1: We have the ability to to do these things. One

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01:20:13,000 --> 01:20:15,640
Speaker 1: of the reasons I UH put out the book is

1288
01:20:15,960 --> 01:20:19,360
Speaker 1: I have a principle which is if you worry, you

1289
01:20:19,439 --> 01:20:22,040
Speaker 1: don't have to worry, and if you don't worry, you

1290
01:20:22,080 --> 01:20:26,200
Speaker 1: need to worry, because if you worry, then you won't

1291
01:20:26,280 --> 01:20:29,120
Speaker 1: We'll take care of the thing you're worrying about and

1292
01:20:29,200 --> 01:20:32,240
Speaker 1: it won't happen to you. Okay. So when I look

1293
01:20:32,280 --> 01:20:37,920
Speaker 1: at that, if we have the capacity to do that too,

1294
01:20:38,040 --> 01:20:42,720
Speaker 1: not only resolve our internal differences in our economic problems,

1295
01:20:43,040 --> 01:20:47,120
Speaker 1: but resolve the global potential threats that we have, all

1296
01:20:47,160 --> 01:20:50,680
Speaker 1: of that potential with us. And I think that if

1297
01:20:50,720 --> 01:20:55,560
Speaker 1: we understand the patterns of history and understand the junctures,

1298
01:20:55,680 --> 01:20:59,040
Speaker 1: and that you look at that and you imagine what

1299
01:20:59,160 --> 01:21:02,559
Speaker 1: a civil war war of sorts would take place, because

1300
01:21:02,600 --> 01:21:05,400
Speaker 1: we can have a civil war of sorts or an

1301
01:21:05,400 --> 01:21:08,760
Speaker 1: external war, or we can have a financial crisis, and

1302
01:21:08,800 --> 01:21:12,880
Speaker 1: if you visualize that, you won't want that. And maybe

1303
01:21:12,920 --> 01:21:18,120
Speaker 1: that drives people together to work to overcome that common

1304
01:21:18,280 --> 01:21:21,599
Speaker 1: challenge that we have and if they do, we have

1305
01:21:21,640 --> 01:21:26,040
Speaker 1: the capacity to do to handle that well. Right, It's

1306
01:21:26,080 --> 01:21:28,439
Speaker 1: always a delight to sit and chat with you. I

1307
01:21:28,520 --> 01:21:33,000
Speaker 1: always find these conversations endlessly fascinating. I have another four

1308
01:21:33,040 --> 01:21:36,960
Speaker 1: hours of questions, but I think ninety minutes is about

1309
01:21:36,960 --> 01:21:39,920
Speaker 1: as much time as I can ask from you. We

1310
01:21:40,040 --> 01:21:43,000
Speaker 1: have been speaking to Ray Dahio. He is the founder

1311
01:21:43,080 --> 01:21:47,280
Speaker 1: of Bridgewater and the author, most recently of The Changing

1312
01:21:47,320 --> 01:21:51,360
Speaker 1: World Order, Why Nations Succeed and Fail. If you enjoy

1313
01:21:51,479 --> 01:21:54,080
Speaker 1: this conversation, well, be sure and check out any of

1314
01:21:54,080 --> 01:21:58,519
Speaker 1: the previous four hundred discussions we've had prior to today.

1315
01:21:58,600 --> 01:22:01,720
Speaker 1: You can find that at i Tunes, Spotify, wherever you

1316
01:22:01,800 --> 01:22:05,640
Speaker 1: get your podcasts. We love your comments, feedback and suggestions

1317
01:22:05,760 --> 01:22:09,240
Speaker 1: right to us at m IB podcast at Bloomberg dot net.

1318
01:22:09,880 --> 01:22:12,519
Speaker 1: Check out my daily reads at Rid Halts dot com.

1319
01:22:12,600 --> 01:22:15,920
Speaker 1: Follow me on Twitter at Rid Halts. Follow Ray at

1320
01:22:16,160 --> 01:22:19,479
Speaker 1: ray dahio dot com. You've been listening to Masters in

1321
01:22:19,520 --> 01:22:21,960
Speaker 1: Business on Bloomberg Radio.