Speaker 1: This is Master's in Business with Very Hults on Bloomberg Radio.
Speaker 1: I'm Barry Ridhults. You're listening to Masters in Business on
Speaker 1: Bloomberg Radio. My extra special guest this week is Ray Dalio.
Speaker 1: He is the founder of Bridgewater, one of the world's
Speaker 1: largest hedge funds. He is the author of numerous best
Speaker 1: selling books, including Principles, Life and Work and Big Debt Crisis.
Speaker 1: His latest is called The Changing World Order, Why Nations
Speaker 1: Succeed and Fail. Ray Dalio are returning Champion. Welcome back
Speaker 1: to Bloomberg. Thank you, Barry. It's always a pleasure to
Speaker 1: be with you. So before we get into the book,
Speaker 1: I want to give listeners who may not be familiar
Speaker 1: with some of your work a little background. And you
Speaker 1: first came to my attention for the work you do
Speaker 1: on mistakes as quote, opportunities to learn and improve. The
Speaker 1: key to success in life is learning how to fail. Well,
Speaker 1: tell us a little bit about that. What what led
Speaker 1: you to that? Understanding the markets? You know? Um, but
Speaker 1: I mean it's true like pain is a great teacher,
Speaker 1: you know. So I learned pain plus reflection equals progress.
Speaker 1: Uh so the markets, um, you know, markets teach your humility.
Speaker 1: You've got to be aggressive and you've got to be
Speaker 1: defensive at the same time. So what I learned is
Speaker 1: whatever successes I had in life had to do more
Speaker 1: with how I dealt with what I didn't know than
Speaker 1: what I know. And so that means taking it in
Speaker 1: but making mistakes and reflecting on them. Hey, that's a
Speaker 1: great way to learn, right, It certainly is. And there's
Speaker 1: another issue that you bring up related to that, which
Speaker 1: is hyper realism. You have to understand how reality works
Speaker 1: then learn how to deal with it, which kind of
Speaker 1: raises an issue. Isn't that obvious? Who gets that wrong?
Speaker 1: Who doesn't deal with reality? Well? I think that most
Speaker 1: people have a wish of what reality is, and they
Speaker 1: get upset that their reality is not that, and they
Speaker 1: get hung up in that upsetness rather than to look
Speaker 1: at it and accept it and then say, what does
Speaker 1: that tell me about how reality works and how I
Speaker 1: should deal with it? Right? I think most people are upset.
Speaker 1: They're stuck in that upset nous um and wishing something
Speaker 1: is different, rather than thinking how do they best respond
Speaker 1: to what is the reality? That's that's very zen of view.
Speaker 1: Accept reality for what it is and and interact with
Speaker 1: that as opposed to just being upset about the way
Speaker 1: the world isn't well zen or practical. I think it's practical.
Speaker 1: So let's talk about some things that you have helped create.
Speaker 1: Some products treasury inflation protected bonds, tips, the US dollar
Speaker 1: future index, risk parity, the style market of China, and
Speaker 1: my favorite chicken McNuggets. How did you have a hand
Speaker 1: in creating all of these products? Well, you know, you
Speaker 1: just go along with your life and you do the
Speaker 1: thing you do, and then you come up with the ideas.
Speaker 1: So in my case, I was, you know, markets, since
Speaker 1: I was a kid twelve, UM, I played around. I
Speaker 1: mean I didn't know what I was doing in the beginning,
Speaker 1: but I played around with markets and I encountered things.
Speaker 1: So I used to start off with commodities. Um, I
Speaker 1: traded commodities, grains and meats and all of those things.
Speaker 1: And then this McDonald's wanted to have the chicken McNugget,
Speaker 1: but they were worried that chicken prices would change a lot,
Speaker 1: and so then I needed I worked with a chicken
Speaker 1: processor who then made chickens and chickens or grain, and
Speaker 1: I showed them how they could work a deal out
Speaker 1: where they would hedge the grain and so on and
Speaker 1: so forth. And that's how chicken McNuggets could come out
Speaker 1: without out a fix and stay the kicks price. But anyway,
Speaker 1: one thing leads to another, you know it. A hedge
Speaker 1: on green prices leads to stable chicken prices and therefore
Speaker 1: a consistent nugget price. Right, because the cost of a
Speaker 1: chicken has nothing to do with the price of the chick.
Speaker 1: It has to do with the price of the grain
Speaker 1: that you feed the check and so by being able
Speaker 1: to lock in that price with the producer, we were
Speaker 1: able to lock in the price for the chicken for
Speaker 1: McDonald so that they could have stable prices. But anyway
Speaker 1: that other stuff, the world evolves and I'm trading, and
Speaker 1: so then I come into trading um financial instruments, because
Speaker 1: then we have the printing of money and we have
Speaker 1: all of those other things. So monetary policy becomes thing,
Speaker 1: and one thing learns to another. Then the idea of
Speaker 1: risk parity is the idea of how I could balance
Speaker 1: the portfolio well that I wanted to balance it well.
Speaker 1: So one thing leads to another, you know interesting, So
Speaker 1: a couple of quotes from you relate to each of
Speaker 1: the books you've you've written, but I think they're very
Speaker 1: revealing about who you are. One is unprecedented, question mark
Speaker 1: big developments that haven't happened in my lifetime, but have
Speaker 1: occurred numerous times in history. It's not so much that
Speaker 1: they're unprecedented, it's that we just haven't experienced them recently.
Speaker 1: Tell us about well. I learned about this um in
Speaker 1: I've graduated UH college and before I went to business school.
Speaker 1: In the summer um August seventy one, I'm following the markets.
Speaker 1: I'm clerking on the floor of the New York Stock Exchange,
Speaker 1: and President Nixon gets on the television and he explains
Speaker 1: that money as we know it ceases to exist because
Speaker 1: then gold was money, and paper money was what your
Speaker 1: claim like a check in a checkbook. You could go
Speaker 1: get your money. And he said to the world, you
Speaker 1: can't go get your gold. And I walked onto the
Speaker 1: floor of the New York Stock Exchange, and I thought
Speaker 1: that this is a big deal, so there would be
Speaker 1: a pandemonium, and and I didn't. But the pandemonium was
Speaker 1: rather than go down a lot, the stock market went
Speaker 1: up a lot, the most in a couple of decades,
Speaker 1: and then I said, well, um, wow, I didn't understand
Speaker 1: what happened. So I went back and I look at history,
Speaker 1: and I found the exact same thing happened on March five,
Speaker 1: nine thirty three, with Roosevelt saying, you don't get the gold,
Speaker 1: and they print the money, and the stock market went
Speaker 1: up and behaved that way. Then I learned about the valuations,
Speaker 1: so I started to learn that I needed to go
Speaker 1: back to things that didn't happen. So I studied, for example,
Speaker 1: the Great Depression. And because I studied the Great Depression,
Speaker 1: then in two that I was able to anticipate the
Speaker 1: two thousand and eight financial crisis. So we made a
Speaker 1: lot of money when others were losing money in the
Speaker 1: financial crisis. But I wouldn't had that if I didn't
Speaker 1: study things that didn't happen before my lifetime. Right, so
Speaker 1: things like the pandemic. Let's think, as you start to
Speaker 1: think about the things, there are a number of things
Speaker 1: like right now. The reason I did that book is
Speaker 1: because there are things that are happening now that never
Speaker 1: happened in our lifetime before. And I want to be
Speaker 1: like a doctor who knows many cases of those. But
Speaker 1: I have to go back and see them in history
Speaker 1: in order to gain that perspective. Right, there's a fascinating
Speaker 1: discussion between I think was St. Louis and Philadelphia in
Speaker 1: the pandemic. One of the city's was very aggressive in
Speaker 1: shutting down schools. I think it was St. Louis and
Speaker 1: advocating masks for everybody, and Philadelphia didn't huge difference in
Speaker 1: the outcome for that pandemic. Man, I can learn about
Speaker 1: that from you. You got it right, well, you sent
Speaker 1: me recently, you know, in your book. And we're gonna
Speaker 1: get to the Changing World Order. Um, so let's let's
Speaker 1: talk about something from the Changing World Order right now.
Speaker 1: One of the most interesting quotes I pulled from the
Speaker 1: book quote, there are only a limited number of personality
Speaker 1: types going down a limited number of paths, which lead
Speaker 1: them to encounter a limited number of situations to produce
Speaker 1: a limited number of stories that repeat over time. So
Speaker 1: so you've brought that up a number of times in
Speaker 1: in some of your previous books as well. Um, Hero
Speaker 1: of of a Thousand Faces and and a lot of
Speaker 1: the Joseph Campbell stuff. Tell us a little bit about
Speaker 1: that limitation that we see the same cycles the same
Speaker 1: stories over and over again. Well that's uh, that's it.
Speaker 1: I mean, I think you said it very well. If
Speaker 1: you look back in history and you read human nature
Speaker 1: does not change much, Okay, our circumstances, it's and it's
Speaker 1: a major driver. You put a person into a certain
Speaker 1: set of circumstances and then you got the reaction and
Speaker 1: you're going to have and the dynamic like you borrow
Speaker 1: money and if markets go up to people borrow more
Speaker 1: money to speculate on the thing, and then they get
Speaker 1: over and debt it. And then there were wealth gaps,
Speaker 1: and there are all these things that happen over and
Speaker 1: over again, and but we don't think about it. Everybody's
Speaker 1: almost dealing with um whatever is happening to them at
Speaker 1: the moment, and they're just thinking about it. But think
Speaker 1: about it like I mean, you could go to anything, okay,
Speaker 1: And it happens over and over again as a life arc,
Speaker 1: all of our life arcs. You're born at certain age,
Speaker 1: your kids go to school, certain age, they have kids,
Speaker 1: you move on. There are these things that repeat over
Speaker 1: and over again, and so let's look at those things
Speaker 1: and how they repeat. It's a remarkable. So it's almost
Speaker 1: as though Um, the only things that change pretty much
Speaker 1: are the closed people where and the technologies they use.
Speaker 1: The truth that sure, and a lot of the clothes
Speaker 1: are based on the technology. You know, they're not uh,
Speaker 1: they're not just old flax and cotton and what have you. Right, So,
Speaker 1: what you see you see evolution. If you decompose it,
Speaker 1: you see that there's a force of evolution that moves
Speaker 1: things toward improvement. Okay, And then around that there are
Speaker 1: cycles and give the same circumstances around that they repeat
Speaker 1: over and over again. And that's why in order to
Speaker 1: understand today, you cannot look what happened yesterday, Okay, you
Speaker 1: have to look at what has happened repeatedly. So you
Speaker 1: mentioned we all go through these life cycles, both as
Speaker 1: individuals and societies. You're at the stage of life where
Speaker 1: you're writing books, sharing wisdom. What's the motivation for this
Speaker 1: act of your life? Well, I think there are three
Speaker 1: stages in life. The first stages, you're dependent on others.
Speaker 1: You're going to school, you're learning. In the second stage,
Speaker 1: you are independent you others are dependent on you, and
Speaker 1: then you're trying to be successful. As you move past
Speaker 1: that stage, your goal isn't to be successful in that
Speaker 1: same way before you want to pass on what you've
Speaker 1: learned and so on, and then you go into your
Speaker 1: third stage of life, where you know you're free to live,
Speaker 1: free to die. Okay, that that arc is basically it.
Speaker 1: So I'm at I'm seventy two years old, and well, uh,
Speaker 1: my joy is in being able to pass along that
Speaker 1: which is valuable. And I'll do that for probably maybe
Speaker 1: my one more book, which is Economic Investment Principles, and
Speaker 1: then I'll be done with that. And but I still
Speaker 1: love the game. But but that's where the stage of
Speaker 1: life is. So like, I did this study because I
Speaker 1: needed the information to know how to deal with today,
Speaker 1: and I ordinarily wouldn't put it out as a book,
Speaker 1: but I now figure, Okay, it's too important, and I
Speaker 1: think it'll be helpful for people to take or leave
Speaker 1: as they like. But that's why I'm doing it. Quite fascinating.
Speaker 1: So let's talk a little bit about the changing world order.
Speaker 1: And I have to start with the US dollar. It's
Speaker 1: been the reserve currency for quite a while. Do you
Speaker 1: see that changing anytime soon? And is that part of
Speaker 1: the changing world or you know? It was that question
Speaker 1: that led me to study what causes reserve currencies to
Speaker 1: rise and fall and to go back for the five years,
Speaker 1: because um, you need the cycles and these cycles of
Speaker 1: long lasting cycles. So at first it was the Dutch guilder,
Speaker 1: then it was the British pound, then it was the
Speaker 1: US dollar, okay, and what is that dynamic? To answer
Speaker 1: that questions? So and then it brought me into contact
Speaker 1: with all the things that mattered. What were they doing economically,
Speaker 1: how what percentage of world trade were they? How strong
Speaker 1: were they militarily? The whole package. And that's what the
Speaker 1: book then takes one through. Took me through that journey.
Speaker 1: That was my exploration. So what you find out in
Speaker 1: history is that there is um. The world order that
Speaker 1: we began began in nineteen the end of the World
Speaker 1: War two New World Order. The United States owned eight
Speaker 1: of the world's money because the world's money was gold,
Speaker 1: and the United States had of the world's gold, and
Speaker 1: so that gave it the reserve currency. It was also
Speaker 1: had all the economic power, it was more than half
Speaker 1: the world GDP, and it also had the only military,
Speaker 1: it had nuclear weapons and so on. There was no comparison.
Speaker 1: Hence we began the American World Order and the US
Speaker 1: dollar going with that, Okay, and then there's a cycle.
Speaker 1: And I saw the cycle as those as the economy
Speaker 1: grows and you have prosperity and so it's self reinforcing.
Speaker 1: That's those are the good years after the war. Um,
Speaker 1: nobody wants to fight the opposition, and you build this,
Speaker 1: but you get into a period where then it becomes
Speaker 1: when you have a reserve currency, others want to hold
Speaker 1: it as an asset, so they lend to you and
Speaker 1: you can borrow a lot of money. Wait, does this
Speaker 1: trace back to where the Dutch the Britishish? Yes? Every time, okay,
Speaker 1: same pattern begin. There's a war, you win a war, uh,
Speaker 1: you become the dominant power. Also technologically and so on.
Speaker 1: The Dutch, for example, invented chips that could go all
Speaker 1: around the world and collect all sorts of treasures. But
Speaker 1: in order to do that, they had to have a military.
Speaker 1: And then when they went around, they got to pay
Speaker 1: in their money, and it became the world's reserve currency
Speaker 1: because they want they were trading all over and they
Speaker 1: can do that like the United States, like the British
Speaker 1: and so on. So heait, let me interrupt you. Technological
Speaker 1: advancement leads to military superiority, leads to booming trade, leads
Speaker 1: to economic dominance and reserve currency. That's right. And how
Speaker 1: long does that tend to last? That arc It can vary,
Speaker 1: but it's usually somewhere in the vicinity of the total
Speaker 1: empire is like a hundred and fifty years. The Romans
Speaker 1: were an exception because they had all of that and
Speaker 1: they lasted much longer. That's right. They last about three
Speaker 1: hundred and years years or something. But you can take
Speaker 1: each of those, so there's a variation around those, um.
Speaker 1: But anyway, you've got the pattern. And so to answer
Speaker 1: your question about the reserve currency, then what happens is
Speaker 1: the country gets into deeply into debt okay and um,
Speaker 1: and then with that it runs deficits because it wants
Speaker 1: to spend more money and wants to maintain that position.
Speaker 1: But it does, but it's those deficits mean that it's
Speaker 1: earning less than it's spending and it's required that that money.
Speaker 1: And then when you get down to a zero interest
Speaker 1: rate type of situation where like we're in, then we
Speaker 1: need more debt because everybody wants more money, so the
Speaker 1: government has got to send out more checks and you
Speaker 1: as always, you either have to get that money from somebody,
Speaker 1: which means you have to get taxes. But when people
Speaker 1: get that get tax they get angry. So what always
Speaker 1: happens at that point is you send out the money
Speaker 1: and print the money, okay, and then there's the mechanics
Speaker 1: of the printing of that money. So right now we
Speaker 1: have a situation where there's a lot of debt and
Speaker 1: a lot of dollar denominated debt in others foreigners portfolios
Speaker 1: because they're holding it because the reserve currency is what
Speaker 1: it is and there's low interest rates. Now we can
Speaker 1: get into how that compares with other currencies, but what
Speaker 1: happens is the dynamic that we're seeing causes all currencies
Speaker 1: to depreciate in value. Money is being produced and so on,
Speaker 1: and that has because more money is being produced than
Speaker 1: goods and services are preting being produced. That causes the
Speaker 1: value of money to go down. And that's why when
Speaker 1: you look at what your interest rate is, you know
Speaker 1: there's a big problem for investors because they think cash
Speaker 1: is safe because it doesn't have the volatility, but they're
Speaker 1: only looking at it in terms of dollars. But inflation happens. Okay,
Speaker 1: you print money and then inflation sation happens, and it
Speaker 1: takes your buying power away from you because you can't
Speaker 1: increase your living standards by printing money. And so there's
Speaker 1: a chapter in the book that shows that that is
Speaker 1: the value of money, and it takes it over these
Speaker 1: five hundred years. It looks at seven fifty currencies, it
Speaker 1: shows how they all behave and the pattern is the same. Yes,
Speaker 1: that's the pattern. So here's the pushback. And I first
Speaker 1: thought about this with big debt crises, because there is
Speaker 1: a smaller section about money printing and inflation in that book.
Speaker 1: But the pushback is I've been hearing my whole adult life. Gee,
Speaker 1: if we run deficits, inflation will get out of hand,
Speaker 1: the FIA courency will collapse, it will crowd out private capital,
Speaker 1: no one will be willing to lend money to the government,
Speaker 1: and the cost of borrowing will be much higher. None
Speaker 1: of those things have happened. But and I said that
Speaker 1: when when I did the um UM, I put out
Speaker 1: a video called How the Economic Machine Works, which is
Speaker 1: which if you haven't in it, everybody should absolutely watch that.
Speaker 1: It's both entertaining and informative UM And the main reason
Speaker 1: I put that out. Was that right then? At that
Speaker 1: time there was the question of whether too much money
Speaker 1: was going to do it. If too much money make
Speaker 1: if money makes up for credit, that the total value
Speaker 1: of anything, the price of anything equals the amount spent
Speaker 1: on it, and it could be money or credit divided
Speaker 1: by the quantity of its sold. So if you look
Speaker 1: at if I increase money or credit by more than
Speaker 1: I increase the goods and services produced, you will have
Speaker 1: inflation in good services or financial assets. That's the machine.
Speaker 1: So back then I made the point intentionally at that
Speaker 1: that it was okay to print the money to make
Speaker 1: up for the fall in credit. Because the shortfold during
Speaker 1: the financial crisis, if there's a contraction and credit, there
Speaker 1: is a losing of spending power. And so if money
Speaker 1: is produced to neutralize that contraction and credit, so the
Speaker 1: amount of spending goes does not contract, you will neutralize that.
Speaker 1: I called that a beautiful deleveraging. Now fast forward twelve
Speaker 1: or thirteen years, the pandemic starts, and now instead of
Speaker 1: monetary printing, there's fiscal there's both, right, Well, so we
Speaker 1: look at the mechanics of it. I just want to
Speaker 1: go with the mechanics, the amount of money and credit
Speaker 1: created and um is much greater than the amount of
Speaker 1: goods and services incrementally produced. And so then people decide
Speaker 1: they get their checks, and the way they get their
Speaker 1: checks the government sends out the checks or and and
Speaker 1: then the federal reserve makes up for the shortage of
Speaker 1: demand and it produces that money and credit. And so
Speaker 1: then people decide do I buy a financial asset, do
Speaker 1: I buy this thing? Do I buy that thing? But
Speaker 1: that produces the reflation that we have seen along those lines.
Speaker 1: So the difference between that is that the total spending
Speaker 1: power and the total amount spending increases much greater than
Speaker 1: that which is needed to make up for the contraction
Speaker 1: and credit. So from O eight O nine, we saw
Speaker 1: the short fill fall filled by the federal reserve. In
Speaker 1: we saw the short fall in demand filled by Congress
Speaker 1: and the federals. But then here we are a year later,
Speaker 1: when things seem to be a lot better than they were,
Speaker 1: and now there's a ton of cash circulating through the system,
Speaker 1: and we're seeing signs of inflation. Yes, mostly goods, but
Speaker 1: also services and financial assets and for sure everything because
Speaker 1: think about it today. Right now, there's an enormous amount
Speaker 1: of liquidity if you haven't, and so nobody's got got liquidity.
Speaker 1: And in addition, it costs nothing to borrow because the
Speaker 1: interest rate that you're going to pay on it is
Speaker 1: as as negative in real terms as much below below
Speaker 1: nominal GDP. And you can even get interest only loans.
Speaker 1: That means you don't have to pay the principle. So
Speaker 1: you don't have to pay the principle. And there is
Speaker 1: no interest practice. Okay, that's the point, right, And so
Speaker 1: you're given an unlimited amount of buying power and so
Speaker 1: on and money. Therefore, that purchasing power, the amount of
Speaker 1: money and credit is now coming through to produce What
Speaker 1: do you do with the money? You buy stuff? You
Speaker 1: buy okay, you buy financial good services and financial assets,
Speaker 1: and so it goes up relative to the value of money.
Speaker 1: It's not complicated, but that's what's going on, right, and
Speaker 1: that's what people have got to understand. And chapter I
Speaker 1: think it's before we leave this though, I want to
Speaker 1: ask you, so how long does this go on for?
Speaker 1: Is this transitory, as we've been hearing so often in
Speaker 1: kind of fades when well supply chain on tangles, or
Speaker 1: is this going to persist. First, it is not a
Speaker 1: supply chain issue. It's a very simple thing. Take the
Speaker 1: amount the increase in the amount of money and credit
Speaker 1: and divide it by the amount of goods and services increased,
Speaker 1: and you're going to get a good indicator of the
Speaker 1: amount of monetary inflation. So we have a high GDP
Speaker 1: and a high cp I. Well you have in g
Speaker 1: DP terms, the real goods are a bit higher than
Speaker 1: they were. But yes, that's people were stuck at home
Speaker 1: and they couldn't go to the movie theater or the gym.
Speaker 1: So we've caught up to where we were above the
Speaker 1: COVID level, but we're approaching our limits in terms of
Speaker 1: hiring people, in terms of getting stuff done. There's a
Speaker 1: demand that's pressing up as the supply, but there's also
Speaker 1: this monetary inflation going up. And that's why in that
Speaker 1: chapter in the book, like if I didn't see this
Speaker 1: happen over and over again, I never would have seen
Speaker 1: zero interest rates and how this dynamic work. But this
Speaker 1: dynamic happened over and over again, and it is I
Speaker 1: think it's chapter three or four in the book. Um
Speaker 1: it goes through the value of money and you could
Speaker 1: see the mechanics of it. So does it make you
Speaker 1: crazy when you hear people say we've never had zero
Speaker 1: interest rates before, and you go, no, We've had it
Speaker 1: hundreds of That's right, just and look at the dynamic.
Speaker 1: So so let's talk about um cycle disorders. And you
Speaker 1: specifically refer too. So we talked about debt, you talked
Speaker 1: about internal cycle disorder and external cycle disorder. Let's start
Speaker 1: with external because I find that more fascinating. For the
Speaker 1: first time, since the US has been a dominant superpower,
Speaker 1: we've encountered a true rival. Yeah, the Soviet Union was
Speaker 1: a military rival, but they never were a true economic rival. China,
Speaker 1: on the other hand, is becoming a rival in power
Speaker 1: in the United States economically, militarily, and strategically. Is China
Speaker 1: the biggest external threat to the US hegemony? Yes, um,
Speaker 1: of course. And I'm saying it's not. It's just history
Speaker 1: happening over and just the okay, and the United States
Speaker 1: is the next one. Okay, there is a world water,
Speaker 1: it's you have a war. Somebody's dominant. They have the currency,
Speaker 1: they have all of that, they have the power, they're
Speaker 1: the largest trader. So like you can, the United States
Speaker 1: was the largest share of world trade, and it brought
Speaker 1: its currency and you have that. Okay. Now China is
Speaker 1: the largest share of world trade and financially it has that,
Speaker 1: so it has become an economic competitor. There are four
Speaker 1: there are really four types of wars um. Well, particularly
Speaker 1: there's a trade war, there's a technology war, there is
Speaker 1: a geopolitical war, and there's a capital war. Okay, competitions
Speaker 1: we can call the wars are competitions, trade competition, and
Speaker 1: then there could be a military war number five. And
Speaker 1: we are certainly in those competitions or wars for trade um, technology, UM, geopolitics,
Speaker 1: influence around the world, and then capital in terms of
Speaker 1: capital markets. We are in that kind of war or
Speaker 1: that kind of conflict. You have a real competitor. So
Speaker 1: think about it this way. If the population of China
Speaker 1: is more than four times the size of the U.
Speaker 1: S population, so if per capita income is half the
Speaker 1: size of the United States, it will be twice as
Speaker 1: large as the United States. And it's developing competitions all around.
Speaker 1: So yes, there is a competition, and then how that's
Speaker 1: dealt with is most important. There you could look at
Speaker 1: it as a conflict between those two entities The most
Speaker 1: important thing to learn about is don't even focus so
Speaker 1: much on that conflict as focusing on being strong yourself,
Speaker 1: because the lessons from history show that if you are strong,
Speaker 1: if you're strong in these fundamental ways, you earn more
Speaker 1: than you spend, you work well together, and you are strong,
Speaker 1: then all threats, whether they are pandemics or Chinese competition
Speaker 1: or whatever it is, you can handle. I'm really concerned
Speaker 1: about the internal conflict and the financial conditions that mean
Speaker 1: that we are less strong in dealing with that kind
Speaker 1: of um A competition. So so let's move to the
Speaker 1: internal threats. We we have political ups, we have wealth gaps,
Speaker 1: arguably a lot of our values around the country no
Speaker 1: longer line. At least the media seems to be emphasizing
Speaker 1: the difference. What does the discord in the United States?
Speaker 1: In some part driven by social media, but just generally
Speaker 1: the emphasis on differences instead of similarities. What does this
Speaker 1: mean for the strength of the country. Uh? In my book,
Speaker 1: at my research, it was so important to put numbers
Speaker 1: and actual measurements to be able to see things like discord.
Speaker 1: So I put together a conflict gauge. I put together
Speaker 1: not lots of gauges that therefore give objective readings to
Speaker 1: that we now have the largest political gaps and the
Speaker 1: largest wealth gaps and largest income gaps since nineteen hundred. Okay,
Speaker 1: and and if you measure the conflicts that we're encountering,
Speaker 1: we have a system that's we are at each other's throats,
Speaker 1: right and um, they Basically what I've seen through history
Speaker 1: is if the causes that people are behind are more
Speaker 1: important than the system, the system is in jeopardy. So
Speaker 1: you have a situation right now that we forget about history.
Speaker 1: You can see it, but it also repeats throughout history.
Speaker 1: You can see how we're going to more and more extremism,
Speaker 1: and we're approaching an environment in which no side will lose. Okay,
Speaker 1: it's win at all costs. And so we're seeing in
Speaker 1: the primaries you're going to see more movement to the extreme.
Speaker 1: Each each party is putting on candidates to be more
Speaker 1: extremist candidates in that fight. So now when we set
Speaker 1: up for the presidential election, we are going to have
Speaker 1: a fight. And and and it's win at all cost
Speaker 1: It's not going to be that Okay, I lost, And
Speaker 1: you know, we can interpret it like in some past
Speaker 1: elections when we had closeness and okay, how you count
Speaker 1: chits and how many hanging chats? Very different? Okay, and
Speaker 1: so on, and and we're in a win at all costs.
Speaker 1: So the causes that people are behind are more important
Speaker 1: to them than the system to work out that. And
Speaker 1: so we have a jeopardy. And that also that jeopardy
Speaker 1: that we're in is affecting a lot of things. Um,
Speaker 1: we see this. My my wife works in helping um
Speaker 1: the poor school districts in Connecticut. Um, with disadvantage of this,
Speaker 1: the amount of the circumstances that are existing for those
Speaker 1: kids in those education in the richest state in the country,
Speaker 1: Um is, uh, you'll pay. I live in Greenwich, Connecticut.
Speaker 1: At the school districts like four thousand dollars per students
Speaker 1: down the road it's fourteen thousand. And there's a problem.
Speaker 1: So there is a There is conflicts, justifiable conflicts in
Speaker 1: many cases, not equal opportunity not you know, and and
Speaker 1: the system is so we have those things going on.
Speaker 1: And the most important thing, as I say, the three
Speaker 1: most important things. First, how are your finances, right down
Speaker 1: to whether it's the individual or the company, how are
Speaker 1: your finances are you earning more than you are spending
Speaker 1: and you have savings more than liabilities. Second is how
Speaker 1: are you with each other? Is that productive or are
Speaker 1: you going to fight with each other? And that repeats
Speaker 1: throughout history. You see it over and over, and our
Speaker 1: ratings are not good now. So so there are some
Speaker 1: folks who have been saying a lot of what we
Speaker 1: see in terms of the divide are sort of the
Speaker 1: outrage industrial complex that between certain cable channels and certain
Speaker 1: social media they feed off and their algorithms feed off
Speaker 1: this anger. But when you actually sit people down and
Speaker 1: ask them questions, there's a lot more that we have
Speaker 1: in common than we want a safe place to raise
Speaker 1: our kids and we want to send them to a
Speaker 1: good school, and we want opportunities to improve our financial circumstances, etcetera.
Speaker 1: When when you take up part the screaming on cable
Speaker 1: TV and Facebook, there's more that holds us together than
Speaker 1: takes us apart. The statistics don't show that. Just explain
Speaker 1: uh well, um, so I mean there are just lots
Speaker 1: of statistics. Um. If you take um uh um voting
Speaker 1: and the voting of the Senate and the House, and
Speaker 1: you take Republicans and Democrats UM, the UH, the Republican
Speaker 1: voting records, This goes down to nineteen back to d UM.
Speaker 1: And you measure how conservative that is, um, it's the
Speaker 1: most conservative since nine hundred. And then if you measure
Speaker 1: how liberal UM the Democrats, it is, UM the Democrats
Speaker 1: are the most level. So the gap and values is
Speaker 1: greater than UM it's ever been in terms of that.
Speaker 1: And if you measure the voting across party lines, the
Speaker 1: capacity to compromise, it's the least it has ever been. Okay,
Speaker 1: So what we have are irreconcilable differences. If you take
Speaker 1: survey results of what Democrats think of Republicans and what
Speaker 1: Republicans think of Democrats, you see I might have got
Speaker 1: I don't know whether it's the Republicans of the but
Speaker 1: fifteen percent of Republicans wish that Democrats would die and
Speaker 1: ten percent of Democrats with And I might have gotten
Speaker 1: that backwards, but you get there. But it's a substantial
Speaker 1: and a significant number wish that would not want their
Speaker 1: children to marry another. Uh. Okay, and then if you
Speaker 1: deal with irreconcilable differences, I want to tell you that
Speaker 1: I've had a conversation I won't mention who with but
Speaker 1: somebody who's very high in government and a general and
Speaker 1: so on. And we were talking about um enforceability of
Speaker 1: what will the federal governments uh mandates like on sanctuary cities, Um,
Speaker 1: what happens as we go through those scenarios. We are
Speaker 1: playing out the notion that the federal will say you,
Speaker 1: I need you to do this, and the state or
Speaker 1: the local government will refuse to do that, and you
Speaker 1: are now having a power power. How does and then
Speaker 1: we played the we played through that scenario that like
Speaker 1: does the police have more power because the police will
Speaker 1: follow that than the national guard? And how will the
Speaker 1: national guard? The fact that we are talking about those
Speaker 1: things and that we're looking about those things, if we
Speaker 1: if we look at what's actually happening measured in the
Speaker 1: statistics are noting in the news, we are at irreconcilable
Speaker 1: differences on many things. And if you just even deal
Speaker 1: with masks okay, and anger that exists with people doing
Speaker 1: harm to each other and how they're behaving, and that
Speaker 1: is and if you look at history and you watch
Speaker 1: the trends, the arcs, and you watch how it's evolved
Speaker 1: in almost all of these cases you can. It could
Speaker 1: be the French Revolution, the Russian Revolution, the Chinese Revolution.
Speaker 1: You find that there are moderates, but then it becomes
Speaker 1: increased polarity, and they say you have to make a choice,
Speaker 1: which side are you on, and you can't be moderate.
Speaker 1: The moderate will then get hung. There's a certain dynamic
Speaker 1: that happens, and it depends where you're living. You will
Speaker 1: see it whether you're if you're Many of us might
Speaker 1: live in an environment and we say we don't actually
Speaker 1: see this, but you could start to see it encroaching.
Speaker 1: You start to see the movement, for example, from one
Speaker 1: state to another state, um and not just for tax reasons,
Speaker 1: but because they say my values are different here and there.
Speaker 1: And then that has economic effects because let's say the
Speaker 1: rich moved with the rich two states that favor the
Speaker 1: rich by way, and then it produces a following out
Speaker 1: of the tax base that is lost there, and that
Speaker 1: creates a worst set of circumstances. That is a dynamic
Speaker 1: that is going on now that has not existed. But
Speaker 1: if you read history, you will see that that's happened
Speaker 1: repeatedly over and over again. So let me push back
Speaker 1: a little bit. And I had to think hard to
Speaker 1: find something to push back on. So we had civil
Speaker 1: unrest in the sixties. We had economic problems. Remember Japan
Speaker 1: was going to take over the world. We had inflation
Speaker 1: in the seventies, the rise of Japan as a power,
Speaker 1: and then the United States somehow managed to overcome it
Speaker 1: through entrepreneurship and technology and blah blah blah. That was
Speaker 1: one cycle. How do we know that the current environment
Speaker 1: is in a similar cycle. Well, let's go through what
Speaker 1: that cycle looked like. First of all, to say, okay,
Speaker 1: if that's your optimistic scenario, Okay, let's take a look
Speaker 1: at what that cycle looked like. Okay, And then say
Speaker 1: and then and then I'm explaining that certain of the
Speaker 1: circumstances now are worse. But let me get let me
Speaker 1: take that cycle right. Nineteen sixty six, nineteen sixty seven,
Speaker 1: sixty eight, Martin Luther King is shot, Um, JFK is shot,
Speaker 1: riots in watts um the dollar then UH spending on
Speaker 1: big deficits got buttons and butter um, and then we
Speaker 1: then um devalued. In other words, n seventy one, I'm
Speaker 1: clerking on the floor of the New York Stock Exchange
Speaker 1: and they and they had the value and they break that.
Speaker 1: And then we went through the seventies, and the seventies
Speaker 1: caused um um a decade of very large inflation and
Speaker 1: the negative returns in the stock market from nineteen sixty six,
Speaker 1: which is the first time the yield curve inverted until
Speaker 1: n E D four, you had negative real returns in
Speaker 1: the stock market. In fact, it went down in real
Speaker 1: terms and so on. And then you get a restructory.
Speaker 1: Then you have the reaction of Paul Boker nine or whatever.
Speaker 1: You have the debt crisis, which brought the unemployment rate
Speaker 1: up to double digit and so on, and then you
Speaker 1: and you, and then you broke the back of inflation
Speaker 1: and it ended in a D two. That's your optimistic
Speaker 1: scenario that you're referring. Good, Okay, Okay, So that's but
Speaker 1: that's your optimistic scenario. Okay, Okay. So you're looking at
Speaker 1: the sevenies. I'm trying to okay, but I'm just saying,
Speaker 1: we can't. Okay, it happens one you know, the things
Speaker 1: happened one day at a time or one period of time.
Speaker 1: And okay, I remember the seventies, okay, And it was
Speaker 1: bruised and that that was but that didn't have the
Speaker 1: same sort of things that are happening now in the
Speaker 1: same sort of degrees. My only point is I'm not
Speaker 1: trying to fork it. Let me tell you, I believe
Speaker 1: it's a choice. So there was a data point that
Speaker 1: I was really impressed with from the book that I
Speaker 1: had no idea, And I want to ask you this
Speaker 1: question as a follow up of what we were talking
Speaker 1: about earlier. Ten great nations going back a few hundred years.
Speaker 1: Since nine d seven out of ten of these nations
Speaker 1: sow their wealth wiped out at least once. That that's
Speaker 1: a pretty astonishing data point. The wealth of an entire
Speaker 1: nation wiped out? How does that happen? And what is
Speaker 1: the aftermath? Like, Uh, it's so good that people can
Speaker 1: see these cycles. Um. Starting when we start like a
Speaker 1: dred our perspective does not include these things, and when
Speaker 1: you start to see it at the cycle, it's quite something.
Speaker 1: So what happens is UM, there's the here's how it works. UM.
Speaker 1: Capitalism and a capital market is a fabulous system for
Speaker 1: getting resources in the hands of entrepreneurs and inventive people,
Speaker 1: and it raises living standards, particularly after a war, when
Speaker 1: there's a peaceful period and you've done the restructuring and
Speaker 1: things improve. And so if we go back, let's say
Speaker 1: to the eighteen hundreds and take eighteen fifty and so on,
Speaker 1: we have the industrial revolution that the power of the
Speaker 1: individual and so on and and arises that. But what
Speaker 1: happens is it also creates wealth gaps, and it creates
Speaker 1: opportunity gaps because those who have more money can educate
Speaker 1: their children better, can do certain things. And it also
Speaker 1: creates greater levels of indebtedness because as the cycle goes on,
Speaker 1: everybody bets on it increasing and so on, and they
Speaker 1: get more in debt and so on. And you turn
Speaker 1: the hundred, you come into nineteen hundred, and then you
Speaker 1: start to see the conflict begin to emerge. This is
Speaker 1: when um the bad treatment of worker and workers rights,
Speaker 1: and then child labor, and then also uh um um
Speaker 1: taxes start to rise. Okay, we didn't have an income tax,
Speaker 1: and then they start to rise. But there's also an
Speaker 1: anger and and that begins to emerge. And then there's
Speaker 1: the conflict, and there's economic pain and conflict. I mean,
Speaker 1: it's when you have a big wealth gap and you
Speaker 1: have economic problems, you have a conflict. That's a that's
Speaker 1: a classic set of ingredients. Particularly then if you have
Speaker 1: too much debt, you're gonna have a problem. So what
Speaker 1: we see is then you come into that period and
Speaker 1: the pendulum swings the other way that people get angry.
Speaker 1: You go. You saw that in two thousand and eight,
Speaker 1: the anti capitalist. You can certainly see the anti capitalists.
Speaker 1: In other words, the billionaires. Um not no longer the
Speaker 1: inventive person who gets what they deserve kind of thing.
Speaker 1: They're really more okay, the greedy and and they're living
Speaker 1: sort of decadent lives what at the same time as
Speaker 1: people are not getting educated, and so people get angry
Speaker 1: and so you see that kind of an our cap
Speaker 1: and repeatedly. Right. So that's the nature of the beast
Speaker 1: in terms of that cycle. So here's the big question.
Speaker 1: Are these cycles inevitable? Is our fate sealed? Or is
Speaker 1: there something we as a nation can do to break
Speaker 1: what sounds like a very self destructive cycle of external competition,
Speaker 1: excessive debt, and internal strife. Yes, no, it's in our
Speaker 1: ability to deal with that is as a society. Because
Speaker 1: in the book, I show the five major determinants, but
Speaker 1: I also show um eighteen determinants and they are predictors
Speaker 1: of the next ten years growth rates and conditions there
Speaker 1: um and so you could see them. That's like a
Speaker 1: health index. So it's education, innovation at tech, analogy plus competitiveness,
Speaker 1: military strength, trade, etcetera. Right, And what I did is
Speaker 1: I put numbers on that so you can see the
Speaker 1: graph and are they improving, are they deeproof um worsening
Speaker 1: and so on. So that's a health index that I
Speaker 1: hope everyone would look at it and even judge their
Speaker 1: leaders by are we getting better or are we getting weaker?
Speaker 1: And what is the conflict? But if I'm going to
Speaker 1: not take you through the all the eighteen in the book,
Speaker 1: I just want to say that, like there are two,
Speaker 1: there are a few basic ones. Okay, most importantly, can
Speaker 1: we earn more than we spend? I mean, can we
Speaker 1: have not increase the amount of indebtedness um and and
Speaker 1: and GP is greater than the expansion of national debt?
Speaker 1: That's right, if the io use continue to build up,
Speaker 1: and what you can't raise living standards by producing credit
Speaker 1: and money. And it's a basic thing. However you do
Speaker 1: the counting, whatever monetary system happens, Barry, you can't sustain
Speaker 1: yourself or your family or you a country cannot do
Speaker 1: that by spending more than your earning. It won't go
Speaker 1: on for long in one way or another. How every
Speaker 1: much you want to print the money whatever, it's not
Speaker 1: gonna work. So you have you have to get there.
Speaker 1: So we need to both we need to be productive
Speaker 1: and we need to expand the pie and we need
Speaker 1: to divide it well so that it works for most people. Okay,
Speaker 1: that's just that we need to do that, Okay, and
Speaker 1: we need to do that in a way where we're cohesive,
Speaker 1: that we're not at each other's throats, and we could
Speaker 1: do this, um, I believe, like, but you need to
Speaker 1: be bipartisan. I mean, in other words, you can't fight
Speaker 1: and kill each other. That's a basic kind of thing.
Speaker 1: You've got to resolve your differences and grow in the
Speaker 1: same direction. And you've got to do that in a
Speaker 1: financially sound way. Right now, All the other components that
Speaker 1: I mentioned, all those eighteen are really to try to
Speaker 1: get at that. How do you get a better education?
Speaker 1: And part of the education is not just the uh,
Speaker 1: do you know the facts and do you know how
Speaker 1: to do calculations? It's also do you know how to
Speaker 1: behave civilly with each other, How do you raise children
Speaker 1: to behave civilly with each other? And that kind of
Speaker 1: education workes us work together in a smart, harmonious way
Speaker 1: if we can do that. But that's the chat. There's
Speaker 1: enough money to go around, and there's enough ability to
Speaker 1: do this. And I would say, like if I was
Speaker 1: president of the United States, by way of example, what
Speaker 1: I would do is I'd have a bipartisan cabinet or something,
Speaker 1: and I would i would take representatives from both sides,
Speaker 1: and I'd have the equivalent of a a Manhattan Project
Speaker 1: or something, and say you go away for six months
Speaker 1: and you figure out what you're going to agree on, okay,
Speaker 1: and and we'll do that. But number one, it's got
Speaker 1: to be productive and it's got to the harmonious. And
Speaker 1: if it's productive and harmonious, we can do that. And
Speaker 1: so or you can look at however you get to
Speaker 1: those ingredients, you get a better infrastructure, you get a
Speaker 1: better education, you have those eighteen ingredients. That's the beauty
Speaker 1: of those ingredients. Though I'm gonna be updating that on
Speaker 1: the website all the time. So for those who care
Speaker 1: to watch that, tell us what The website is by
Speaker 1: the way um Economic Principles dot org. So so I'm
Speaker 1: fascinated by the principles dot com and I forgot what
Speaker 1: but it's easy enough to google and you can find
Speaker 1: Economic Principles. I'll include it in the right up so
Speaker 1: people can click on that. So I'm kind of fascinated
Speaker 1: by the discussion of China as a threat and as
Speaker 1: a rising world power. But there are two again a
Speaker 1: little pushback. First, over the five thousand year history of China.
Speaker 1: Most of that history they were very inward looking. They
Speaker 1: weren't expansionary, they weren't um challenging. They kind of did
Speaker 1: their own thing and ignored the West. That seems to
Speaker 1: be a substantial change now. Even though they were rising
Speaker 1: technology country and arising military power thousands of years ago,
Speaker 1: what's different today that's changing the way they see their
Speaker 1: role in the world. I'm glad you answer the question.
Speaker 1: I'm going to give you a few things. First, Back then,
Speaker 1: the world was a much more enormous place. It took
Speaker 1: um in an you could travel twenty five miles in
Speaker 1: a day. Today you can travel on the other side
Speaker 1: of the world in a day. Okay, so we're all
Speaker 1: intertwined in so many many different ways. So that's a
Speaker 1: big difference in terms of that was a big space
Speaker 1: back then, and they had an ocean on one side
Speaker 1: and mountains on the other side, and a big open
Speaker 1: plane like the United States then was a big open
Speaker 1: plane and so on. And we also we're not involved
Speaker 1: then in other countries. Weren't because the world was a
Speaker 1: much more gigantic place. But just as we today, the
Speaker 1: United States is in has a military basis in seventy countries,
Speaker 1: and so we are around the world and the world
Speaker 1: is like that, and it's much more intertwined, military trade,
Speaker 1: everything is along those lines. That's a change. Okay, um Um.
Speaker 1: Now I'm lucky because I spent I've spent a lot
Speaker 1: of time in China and I've gotten to learn from
Speaker 1: um Chinese leaders and so on, the perspective and so on.
Speaker 1: But it is a kind of an evolution of an
Speaker 1: opening up. They do not want to be aggressive. There
Speaker 1: is a Taiwan issue. Okay, Okay, that's a whole other thing,
Speaker 1: but by and large that but there let me finish
Speaker 1: answer to your question. Okay that there is um but
Speaker 1: the notion of expansion and and being in trade and
Speaker 1: being there um um is part of their evolution. And
Speaker 1: so when we look at mechanically the great rivalries that
Speaker 1: have happened, great empire rivalries, they even back for a
Speaker 1: long long time, even though they were closer together, they
Speaker 1: bump into each other. And then how do they resolve disagreements.
Speaker 1: There's no world court that you go to when you
Speaker 1: say that you're going to do it. You have conflicts
Speaker 1: and then it's a test of power, and that is
Speaker 1: the dynamic that we're um experiencing. So so I want
Speaker 1: to ask you about Taiwan because it's not that hard
Speaker 1: to see how China engages in a military action around
Speaker 1: Taiwan and the US and and the EU get involved,
Speaker 1: and that could spiral very quickly into something pretty awful.
Speaker 1: You're suggesting they're not trying to force a military conflict
Speaker 1: around Taiwan. No, I I just want to be clear.
Speaker 1: I said Taiwan is I think the biggest risk. Okay,
Speaker 1: because um um Okay. There's there's two views about Taiwan,
Speaker 1: right um. Their view was since Henry Kissinger started the meeting,
Speaker 1: and for a long time, um there was the saying
Speaker 1: that there is one China and Taiwan as part of China, okay.
Speaker 1: And and they have a history in their mind of
Speaker 1: what they call the hundred years of Humiliation that began
Speaker 1: around eighteen forty and then that point in time they
Speaker 1: were weak and other foreign countries came in and then
Speaker 1: they had they sold the mopium, you had the Opium
Speaker 1: Wars and all of that, and then they had the collapse,
Speaker 1: and they view that as taking away their sovereignty. And
Speaker 1: so they view Taiwan as part of China and that sovereignty.
Speaker 1: And and that's something like just we don't we can
Speaker 1: argue with it or not, but you just have to
Speaker 1: understand that that would be like I don't know, more
Speaker 1: more more than uh, more than Alaska or Hawaii, kar
Speaker 1: in America and okay more than that, Okay, that kind
Speaker 1: of thing. So it becomes one of those uncompromisables. I
Speaker 1: can tell you stories like when they went to the
Speaker 1: Korean War. They thought in the Korean War that they
Speaker 1: would lose the Korean War because they basically didn't have
Speaker 1: hardly any weapons. We had nuclear But when it comes
Speaker 1: to the element of sovereignty, that is something that is
Speaker 1: a big deal and that they will fight for and
Speaker 1: so the other side of that is what does it
Speaker 1: mean for the United States and so on in terms
Speaker 1: of you know, um, okay, how is that going to
Speaker 1: be dealt with? That's what Taiwan is. Um now, how
Speaker 1: that's resolved, you know, I don't know. But it is
Speaker 1: a big issue and it is a big risk. That's
Speaker 1: that's uh uh you know, and when and I you know,
Speaker 1: we all have our scenarios of how that is. But
Speaker 1: that's that is one beyond that. Then there's the evolution
Speaker 1: and the basic evolution, like one company competes with another company, um,
Speaker 1: one country competes with another country for World chairs and
Speaker 1: so on, and then how do you play the rules
Speaker 1: of the game. And everybody's gonna argue over how you
Speaker 1: play the rules of the game. But the thing is
Speaker 1: there is no real rule book. Right when we had
Speaker 1: a world trade or it's not like when they had
Speaker 1: a trade dispute, they went to the World Trade Organization
Speaker 1: and said, I'd like you to adjudicate it. Okay, we
Speaker 1: don't have a world court. When you leave a country
Speaker 1: and you see how the world operates, countries operate, it
Speaker 1: is more of a power game than it is a
Speaker 1: let's follow the fair rules kind of game, and that
Speaker 1: creates the dynamic for the world that we have. So
Speaker 1: the pushback about the rise of China that I've heard
Speaker 1: from others is something like this. It's essentially planned economy.
Speaker 1: Free market capitalism is a much better system. And eventually
Speaker 1: China's central planning is going to make some mistakes which
Speaker 1: will allow the more competitive and open economies to to
Speaker 1: not allow them to pass. And besides, how can they
Speaker 1: ever become the reserve currency? Look what they just with
Speaker 1: Ali Bob, But no one's gonna trust them. Who's gonna say, sure,
Speaker 1: let's make the one the reserve currency. We totally trust
Speaker 1: the central leaders in China. What's the response to that?
Speaker 1: Two things? First, um, it's an uninformed response, and I
Speaker 1: can respond to really what it really is like okay.
Speaker 1: But second, let's assume that's all right. Then we don't
Speaker 1: have to worry because our system will be better than
Speaker 1: their system and will outcompete them. And that's the most
Speaker 1: important thing. Right with the Russians, you could you could
Speaker 1: take that for granted, or you can see the reality
Speaker 1: since I started going there, in per capita incram has
Speaker 1: increased by twenty six times. The life expectancy has increased
Speaker 1: by ten years. The poverty rate went from over eighty
Speaker 1: eight percent to list than one percent. Okay, and if
Speaker 1: you look at history through China, it's a hell of
Speaker 1: a track record. Okay. So now you could we could
Speaker 1: sit there and say, hey, no problem because those those
Speaker 1: system doesn't work, or you could look more and say, okay,
Speaker 1: how is that working? And I would say, when you
Speaker 1: look at that, no, No, there's capitalism. There's plenty of
Speaker 1: capitalism in China, okay, the second largest capital markets. They're
Speaker 1: printing billionaires, they are having the the inventiveness in terms
Speaker 1: of their technologies and all of those things. Those are realities, Okay,
Speaker 1: that notion of how it works. When Dan Chelping dank Ping,
Speaker 1: you know, the idea is this, here's a communist party.
Speaker 1: And then and he's got all this capitalism coming around
Speaker 1: and he's encouraged it. He said two things, it's glorious
Speaker 1: to be rich. And then when asked about this, he said,
Speaker 1: it doesn't matter if if if it's a cat, it
Speaker 1: doesn't matter if it's a white cat or a black catch,
Speaker 1: as long as it catches mice. In other words, if
Speaker 1: it makes money, if it works, okay, if it raises
Speaker 1: living standard. So there's a practicality, that's a practicality that
Speaker 1: is existing there now. If I was to take the
Speaker 1: individual moves that are happening now in China and at
Speaker 1: which people are characterizing them as something, and I'm saying
Speaker 1: from I could explain what they are and what they're
Speaker 1: really thought about. But they're not as they are stereotypically characterized.
Speaker 1: And I'm not trying to argue pro China or anti China.
Speaker 1: I'm just saying, don't misunderstand China. But anyway, if you
Speaker 1: think it's gonna happen, then don't worry just because your
Speaker 1: system is our system will be fine. Okay, we'll work
Speaker 1: well with each other. How are we doing on the
Speaker 1: things that I'm mentioning? How are we doing on earning
Speaker 1: more than we are spending? How are we doing on
Speaker 1: we are working well together and our system is good. Okay.
Speaker 1: But anyway, um, the most importantly, we're at war with ourselves. Okay.
Speaker 1: If we can do our if we can be strong,
Speaker 1: and we can do that, that is the best antecdote
Speaker 1: to everything, to tow uh pandemics, to ops adversaries of
Speaker 1: any form. Just get to let's get to focus on
Speaker 1: on us being strong. I think quite quite interesting. Let's
Speaker 1: talk a little bit about the state of the economy today.
Speaker 1: One of the questions I enjoy asking you, and I
Speaker 1: think I've asked this several times. What macro trend do
Speaker 1: you think is not getting the attention it deserves? Uh,
Speaker 1: the decline in real rates and real returns and the
Speaker 1: supply and demand of debt and money. Okay, I think
Speaker 1: that people think, um that they look at their amount
Speaker 1: of money and in nominal terms and not in real terms.
Speaker 1: And they look at their wealth in nominal terms, not
Speaker 1: in real terms. So when they are holding cash or
Speaker 1: holding a bond and there's saying that is stable, that
Speaker 1: they are not paying attention to the depreciated value. When
Speaker 1: everybody else in other ways is getting rich around them,
Speaker 1: they're losing the side of that. So they look at
Speaker 1: a nominal terms and they look at it in their
Speaker 1: currency eyes. If the number of dollars I have is
Speaker 1: greater than it was the day before I or the same,
Speaker 1: I feel good. Okay, that's that's that's not enough. They're
Speaker 1: not paying enough attention to that. And also the supply
Speaker 1: and the demand for money and how that affects inflation
Speaker 1: and so on. In other words, the calculation that the
Speaker 1: US government will have to sell a number certain number
Speaker 1: of bonds, and then to look at who are the
Speaker 1: buyers of those bonds, who owns how much, and what
Speaker 1: are their motivations and will they buy those bonds? And
Speaker 1: if they don't buy an adequate amount of those bonds,
Speaker 1: so that the Federal Reserve is faced with a choice
Speaker 1: of interest rates rising and shutting the economy and the
Speaker 1: markets down, or printing more money, what will they do? Well,
Speaker 1: they'll print more money, and what will that do for
Speaker 1: the value of money? That those perspectives are not well known,
Speaker 1: well understood, and yet they're the most important perspectives. So
Speaker 1: so let's talk about something that has been pretty significant
Speaker 1: since the financial crisis, which has been the rise of
Speaker 1: defy and cryptocurrencies and blockchain. In a lot of ways,
Speaker 1: some people are present positioning that new asset class as
Speaker 1: a response to exactly what you're describing, centrally controlled money
Speaker 1: supply and the printing presses running. What what are your
Speaker 1: thoughts on on crypto generally and defy. Well, first of all, Um,
Speaker 1: good idea, I mean, don't trust the governments, No matter
Speaker 1: no matter which one. It's been such a history. Um,
Speaker 1: but almost always before there's a devaluation, there's a promise
Speaker 1: that I will never devalue. I mean, I've there's been experienced.
Speaker 1: And so when it comes down to what are you
Speaker 1: gonna do in the end, every currency has either been
Speaker 1: destroyed or devalued, okay. And so when that's what they
Speaker 1: do in the middle of when you're in a crisis
Speaker 1: or do you have a depression, that's the choice. And
Speaker 1: you don't want to have the depression, so you print
Speaker 1: the money to make it easy to pay back the debt. Okay.
Speaker 1: So that set of circumstances your rise and things. UM
Speaker 1: and the development of crypto. First of all, UM, the
Speaker 1: blockchain technology is revolutionary in many many ways and and
Speaker 1: so that's I think fabulous. And then it's really quite
Speaker 1: amazing that the programming of it and everything has stood
Speaker 1: the test of time in terms of not being hacked materially,
Speaker 1: so far, so good, and it um and being um
Speaker 1: a store of value now at the one But there
Speaker 1: are stable coins as opposed to everybody looks a bitcoin,
Speaker 1: but there are stable coins that are tied to specific currency. Yes,
Speaker 1: but that will be the problem what about but I
Speaker 1: just wanted to I just want to finish that that
Speaker 1: that answer. So it's come a long way and it's
Speaker 1: a new generations alternative to gold. I think the new
Speaker 1: generation is making a severe mistake to think that um
Speaker 1: it should be all bitcoin kind of thing and not
Speaker 1: get the bat it's maybe just like the um meaning
Speaker 1: well there's what what are the things that are like
Speaker 1: money that are gonna work like money, that you can
Speaker 1: carry them around in your pocket, go from one place
Speaker 1: to another, and and that they're recognized all around the
Speaker 1: world as an alternative currency. Gold is one of those things, right,
Speaker 1: So it's an alternative gold and so on the diversification properly,
Speaker 1: central banks won't use it. Um it will not be
Speaker 1: the same, but and it will be a threat when
Speaker 1: when stable coin, if it's a transactional thing, is not
Speaker 1: and it remains in the currency so the government can
Speaker 1: control its currency and deal with that issue. Will be
Speaker 1: functionally okay, but it won't get you around the risks
Speaker 1: that we're talking about in terms of the debasement of
Speaker 1: the currency. So that's why when you're dealing with the
Speaker 1: other But if it gets you around that, it becomes
Speaker 1: a better currency, and when that becomes a better currency,
Speaker 1: it's a threat to the government's and like the currency,
Speaker 1: the ability to print currency and to operate that way
Speaker 1: is the greatest power almost that a government can have,
Speaker 1: and so that so something like bitcoin success will be
Speaker 1: dependent on that. It also, of course has its dynamics
Speaker 1: because speculative market all that, and that dynamic is one thing.
Speaker 1: If I start to look at how much how it's priced,
Speaker 1: you know, the way I look at it is if um,
Speaker 1: since the supply is not going to change much, you
Speaker 1: can just look at the demand, and right now, the
Speaker 1: total value of bitcoin, which is uh, you know, let's
Speaker 1: roughly a trillion dollars, let's say um is and if
Speaker 1: you take the total value of gold um excluding what's
Speaker 1: used for jewelry and excluding what used for stuff um
Speaker 1: central banks, it's about five trillion. So that would mean
Speaker 1: that it would be if you had a portfolio, would
Speaker 1: be sort of an eight twenty portfolio. And so that's
Speaker 1: kind of like when I look at it and will
Speaker 1: it be a larger lesser has been changing, but that's
Speaker 1: what I'm saying it. So, but if you would have
Speaker 1: said step back, and you'd say, okay, um, is it
Speaker 1: going to increase by five times as some people that
Speaker 1: I can't it can't imagine because but maybe if you
Speaker 1: moved into a world where all those kinds of assets
Speaker 1: were the rush to maybe it works that way. It
Speaker 1: like gold is also a dead asset. There's no there's
Speaker 1: no inventiveness in it, there's no no income station. But
Speaker 1: when we look at other assets, as we're taking a
Speaker 1: look here, um, they're also an inflation hedge asset. Is
Speaker 1: also great productivity. Okay, stocks in the right kind of stocks,
Speaker 1: when there's inventiveness, the stock will get redonominated whatever it is,
Speaker 1: it goes high and then it has productivity in it.
Speaker 1: And productivity is a fabulous resource. So so that's important
Speaker 1: the old but always in all of those assets, like you,
Speaker 1: what you would want to do is say how expensive
Speaker 1: is that productivity? So then you get down down to
Speaker 1: your calculations. You know, you get back Okay, if I'm
Speaker 1: having a fabulous growth stock that because fabulous inventiveness and
Speaker 1: they're doing wonderful, wonderful things, then I have to look at, Okay,
Speaker 1: how much is that discounted? Because the other thing about
Speaker 1: investing is that's important to understand that um, it's um.
Speaker 1: It's like horse races and and and betting on the
Speaker 1: winning horse the best horse, UM is not necessarily the
Speaker 1: best bet at horse race because of the way it's
Speaker 1: discount and the odds, you can just as likely win
Speaker 1: by we're betting on the worst horse in the horse
Speaker 1: race because the odds reflect that. The markets are like that,
Speaker 1: So you can't just pick the best companies. You you
Speaker 1: have to look at what's discounted. The worst companies at
Speaker 1: the right price could be a much better investment than
Speaker 1: the best companies. That has to do with then how
Speaker 1: you're looking at such things. But anyway, that's probably a
Speaker 1: too long winded to your course. No, no, it's great,
Speaker 1: and it's made me think of three questions I have
Speaker 1: to ask about. The first is CBDCs the central bank
Speaker 1: digital currencies? Is that a likely possibility that will see
Speaker 1: the Federal Reserve or the Bank of Japan, or the
Speaker 1: Bank of England or the Chinese Central Bank issue digital currencies?
Speaker 1: And then second, if the current trend continues with the
Speaker 1: rise of China and the US flowling, and there's a
Speaker 1: potential shift from the dollar as the reserve currency to
Speaker 1: the one, might it not go to the one. Might
Speaker 1: it go to some basket of crypto currencies or something else.
Speaker 1: If people don't trust governments no matter what their elk,
Speaker 1: is possible. Okay. So I think the environment that we
Speaker 1: want to emphasize is that we will come into an
Speaker 1: environment in which there will be more competition for currencies.
Speaker 1: So it's not just so China versus the US. It's
Speaker 1: even bigger than that, right, but even today, think of
Speaker 1: that where that takes us. We're today in a dollar world.
Speaker 1: How much do you think and how much does the
Speaker 1: average American think, here's my menu and what do I
Speaker 1: want to select from that menu as regards the currency?
Speaker 1: Not much? Okay, not much? And they will okay because digitally,
Speaker 1: and this is a threat to central banks because if
Speaker 1: you could digitally go on and buy a bit going
Speaker 1: or a digital yu Want or whatever there whatever those
Speaker 1: are at and gold and all of that menu, the
Speaker 1: world changes, Okay, the competition changes, and we are moving
Speaker 1: toward that. And and you mentioned productivity. I have to
Speaker 1: bring that back to the inflation question. What we've seen
Speaker 1: over the past three decades has been massive uptick in
Speaker 1: individual productivity, enabled primarily by technology, which has led not
Speaker 1: to an inflationary environment, but a deflationary environment which seems
Speaker 1: to have these periodic spasms of inflation. So could we
Speaker 1: stay ahead of inflation if we enhance our productivity. We
Speaker 1: just have to look at the mechanics and the attribution
Speaker 1: of that. Absolutely right, we as I say there are five,
Speaker 1: these five major forces on the financial the how we
Speaker 1: are with each other internally, how we are with each
Speaker 1: other externally. Then there are these acts of nature that
Speaker 1: come along, the once at a time um pandemic, or
Speaker 1: the once in a lifetime storm and so on. And
Speaker 1: then number five is a man's inventiveness and the inventiveness
Speaker 1: of technology. And it is the greatest single power. If
Speaker 1: you look at history, and I show your charts in
Speaker 1: the book. The other things don't matter much over the
Speaker 1: long term, They don't matter much. They produce the big cycles.
Speaker 1: But that improvement and that force is the best that
Speaker 1: it has ever been, because we have developed how our
Speaker 1: ability to think in better ways, because we've used technology
Speaker 1: to use our brains in a complementary way with technology,
Speaker 1: so our capacity to invent and come up with greater
Speaker 1: productivity and adaptations to these risks is greater than ever.
Speaker 1: And so that force is phenomenal, that is a deflationary force.
Speaker 1: In other words, inventiveness and productivity is a deflationary force.
Speaker 1: And that's exactly right. However, at the same time, the
Speaker 1: capacity to print and produce money and credit, if it
Speaker 1: is greater that that that deflationary force, will produce an
Speaker 1: inflationary consequence. So both are at work, and you have
Speaker 1: to follow each one of them. Take a look at
Speaker 1: each one of those. At what rate do we change productivity?
Speaker 1: And then at what we're a doing are we changing
Speaker 1: the amount of money and credit and existence. That's what
Speaker 1: you have to look at when judging inflation. And this
Speaker 1: is why I think you mentioned the external competition, but
Speaker 1: this is very much an internal competition. Forces of deflation
Speaker 1: and technology on one side, forces of inflation and money
Speaker 1: printing on the other. That's right, and certainly that productivity
Speaker 1: is going to help us a lot. And and you
Speaker 1: you discussed that extensively in the book. And I just
Speaker 1: have to share some quotes about the book before we
Speaker 1: start running out of time. Two in particular just left
Speaker 1: out Hank Paulson, former Treasury Secretary and chair of Goldman.
Speaker 1: After reading this book, you probably won't see the world
Speaker 1: the same again, and then Jamie Diamond inspiring and thought
Speaker 1: provoking experience that that has to be incredibly gratifying to
Speaker 1: put all this time and effort into writing the book
Speaker 1: and getting that sort of response. And by the way,
Speaker 1: it's not just I. I just happen to pick two
Speaker 1: people from finance, but Henry Kissing Joe Dahlia has a
Speaker 1: special talent for identifying key questions of our time. His
Speaker 1: sweeping new book is a serious contribution and an urgent warning.
Speaker 1: What's your response when you get that sort of stuff?
Speaker 1: You know, we've had conversations and I was and they
Speaker 1: believe the same things. I don't want to put words
Speaker 1: in the mount, but I say, okay, speaking up. There's
Speaker 1: a reluctance to speak up. Why is that? I think
Speaker 1: things are controversial and and and there's an environment of
Speaker 1: you know, stick to your lane, do your job and
Speaker 1: so on. UM, And I think that now you're going
Speaker 1: to hear a lot more speaking up about these kinds
Speaker 1: of issues. Um. They viewed that, you know, like one
Speaker 1: of the joys are one of the ways that I
Speaker 1: can learn so much is by being able to speak
Speaker 1: to different people, leaders in different countries, and those scholars
Speaker 1: and and so on, and I learned a lot through
Speaker 1: that particular process and then we got to okay, what
Speaker 1: is true and how does it work? And that book
Speaker 1: operating that way and laying it out with not opinions
Speaker 1: but numbers so that you can objectively measure what's happening.
Speaker 1: You could look at the graphs and so on. All
Speaker 1: of that, Um, we agreed was helpful approach to know
Speaker 1: where we are and what the patterns are. And so, yeah,
Speaker 1: it's gratifying, but more important than gratifying. I'm not sitting
Speaker 1: here being gratified. Um, I'm saying I really do believe
Speaker 1: it's important, okay. And the fact that they believe it's important,
Speaker 1: and the fact that they are saying pay a nine, Okay,
Speaker 1: you're moving the needle it is, that's gratifying. If it's valuable,
Speaker 1: it's gratifying, and they think it's gratifying. So today we're
Speaker 1: talking about it, and that's gratifying. There there's a book.
Speaker 1: You reminded me of a book. I'm trying to remember
Speaker 1: the name of it. It might be Black Box Thinking
Speaker 1: where they talk about First of all, the black box
Speaker 1: and commercial aircraft is orange, so you can spot it
Speaker 1: underwater in the dark, but we still talk about it
Speaker 1: in black box at terms. But there were certain Unlike
Speaker 1: a lot of areas, the aviation industry is very much
Speaker 1: into your cycle of a mistake occurs, Why, what can
Speaker 1: we learn from it? How can we fix it? Now?
Speaker 1: Let's let's try the next level. And I recall reading
Speaker 1: about a crash in this book. The co pilot knew
Speaker 1: something was wrong, but the culture was such that you
Speaker 1: didn't challenge the pilot and you didn't upset the eating order,
Speaker 1: and literally the plane would go down until people figured
Speaker 1: this out and said, as a co pilot, you have
Speaker 1: to step up and say there's a problem here. We
Speaker 1: can't just continue. And here's what it is. You're you're saying,
Speaker 1: that's a similar issue. We don't raise this because Ray,
Speaker 1: you're a money manager. Stay in your lane. Um, what
Speaker 1: you've just described is how life works. We all have challenges.
Speaker 1: Sometimes they pile up, and we have a number of
Speaker 1: those challenges, and it's a test of how we can
Speaker 1: learn and adapt and then that, you know, then those
Speaker 1: who do that better survive and those that don't do
Speaker 1: that as well don't. And you don't just mean individuals,
Speaker 1: you mean countries and societies. That's right, individuals, country, society, species. Okay,
Speaker 1: it's the it's so let's say we now, how prepared
Speaker 1: are we for are we financially prepared? How you have
Speaker 1: pandemic comes along? And how are you financially how are
Speaker 1: you prepared? How are you operating? Can you work together?
Speaker 1: Can you do the things? There's basic things and and
Speaker 1: then can you adapt? There was I forgot who made
Speaker 1: the quote, but it's a quote that sticks in my mind.
Speaker 1: Um that, um Man. Superiority is not in being able
Speaker 1: to be smarter or working harder, it's in the capacity
Speaker 1: to adapt that those species and those who adapt well.
Speaker 1: When you look at the virus, isn't it an interesting
Speaker 1: thing when we think about here is a species. It's
Speaker 1: a good comparison of no brain versus a brain and
Speaker 1: a lot of thinking. And this species, the virus is
Speaker 1: adapting and is modifying, and it's in a competition with
Speaker 1: this other species that is thinking and trying to figure
Speaker 1: it out. Part the species is thinking, part not so much. Okay,
Speaker 1: but I'm saying, okay, now talking about and so when
Speaker 1: we understand let's say, evolution, the capacity to adapt well,
Speaker 1: to make those changes and how do you do that
Speaker 1: because you get feedback and if you don't adapt, if
Speaker 1: you go, if the plane goes down because you don't
Speaker 1: want to talk about it and you don't want to
Speaker 1: challenge it, that's part of natural selection and that's a problem.
Speaker 1: So so one problem we we here. It is ninety
Speaker 1: minutes later, we haven't even brought up a looming problem
Speaker 1: that we haven't addressed. And I know it's an interest
Speaker 1: of yours. Um is global warming the environment, the oceans? Uh,
Speaker 1: what do we do as a species to make sure
Speaker 1: that we don't make ourselves extinct? Are we cooperating? Are
Speaker 1: are we adapting to the changing environment? Or are we
Speaker 1: heading down a dangerous path? So man is about two
Speaker 1: thousand years old, and the history of species the world
Speaker 1: is three point nine billion years old, and so Man's
Speaker 1: a relatively new species. In the history of species is
Speaker 1: that they either change and adapt or they go extinct.
Speaker 1: And the interaction with what we're producing with the environment
Speaker 1: is having not only implications for the hospital, the hospitability
Speaker 1: of the environment that we're in and so on, but
Speaker 1: it will have a lot of implications, big implications, um,
Speaker 1: And we're seeing it not it will be costly, but
Speaker 1: it will also um, you know, it's a big challenge.
Speaker 1: It affects diseases as well. Pandemics are associated with the environment.
Speaker 1: And so it's a test of man's It's a test, okay,
Speaker 1: a man's adaptability, the ability to work and solve problems.
Speaker 1: I remember when UM in the nineteen seventies, the Club
Speaker 1: of Rome, and I remember when the world was we
Speaker 1: was we would say that we were running out of food.
Speaker 1: There was starving in India and UM, and the population
Speaker 1: growth was greater than the resource thing. And they had
Speaker 1: this Club of Rome that brought everybody together UM in
Speaker 1: order to deal with that issue. And there were two
Speaker 1: schools of thought that which is, disaster will happen and
Speaker 1: unless we met the radical changes. And then there was
Speaker 1: the other school of thought that we may that we
Speaker 1: have a capacity to adapt and change. And now Indias
Speaker 1: and that exporter of grain and this isn't the So
Speaker 1: the question is really the adaptability. Man has a great adaptability,
Speaker 1: but but by neglecting it then there are consequences and
Speaker 1: so and they're big consequences. So it's certainly were beyond
Speaker 1: the point of the fact that there will be big
Speaker 1: damages okay, And there will be big consequences to that
Speaker 1: sea level changes, many crop changes and that, but how
Speaker 1: far it goes will be a test of man's ability
Speaker 1: to adapt to it. So you mentioned sea level changes.
Speaker 1: I know a passion of yours is the ocean, and
Speaker 1: you recently outfitted a new ship to explore the ocean
Speaker 1: to do scientific research. Tell us what's going on with that.
Speaker 1: I know that something is coming up with that, and
Speaker 1: Disney give us a preview. Yeah, ocean exploration. Um, yes,
Speaker 1: it's been a passion of mine. I think the ocean
Speaker 1: is our greatest assets, our biggest assets. Seventy of the
Speaker 1: world surface is is the ocean. And when you look
Speaker 1: at it, the area above that is all the continents combined,
Speaker 1: is less than half of all that's going on underneath
Speaker 1: the ocean. And it's such so important to us, and
Speaker 1: it is also the most exciting, fascinating place to be.
Speaker 1: There's just the sheet over it, we don't go into it,
Speaker 1: and so on, and it's very valuable. So for all
Speaker 1: those reasons, for last eleven years, I've done that exploration.
Speaker 1: So ocean X you can, if you're interested, go on
Speaker 1: YouTube or something and or google ocean X that's the
Speaker 1: the ship and the endeavor. So I support um this
Speaker 1: it's a ship, but it's also we're supporting philanthropically, uh,
Speaker 1: scientists research and so ongoing it and we want to
Speaker 1: make I was inspired by Jacques Cousteau. Okay, so and
Speaker 1: that brought me closer to the ocean and excited me.
Speaker 1: And so, um, that's what this show that you're talking
Speaker 1: um agreed. Uh. Jim Cameron Avatar Titaniction so is a
Speaker 1: great ocean explorer. So um, he's he agreed to be
Speaker 1: a thought partner on the media part. So he's executive
Speaker 1: producer and we're going to show the exploration these people
Speaker 1: who are going down there, we're gonna show owe it.
Speaker 1: And right now it's being shown. You can on streaming.
Speaker 1: There's media Ocean X Media is putting out lots of
Speaker 1: stuff that is going on on that and so you
Speaker 1: can watch it. But that we estimate, because it will
Speaker 1: be on um um Natural Geographic on Disney and Disney
Speaker 1: plus uh, we estimate that it will be between a
Speaker 1: half a billion and a billion people will basically be
Speaker 1: watching it. And I'm excited about that because I think
Speaker 1: that that's very important. If you want to see um aliens.
Speaker 1: You're not going to see them in outer space. You
Speaker 1: gotta go on the water. It's valuable, it's exciting, and
Speaker 1: it's important. And so that's what that's about. So I
Speaker 1: want to leave on a little bit of a hopeful question.
Speaker 1: You set up a lot of scenarios where looming civil strife,
Speaker 1: external competition, potential loss of the reserve currency, all sorts
Speaker 1: of terrible things. What should we be hopeful about? What
Speaker 1: what is a good outcome for the United States and
Speaker 1: for humans as a species. Well, we can do this.
Speaker 1: We have the ability to to do these things. One
Speaker 1: of the reasons I UH put out the book is
Speaker 1: I have a principle which is if you worry, you
Speaker 1: don't have to worry, and if you don't worry, you
Speaker 1: need to worry, because if you worry, then you won't
Speaker 1: We'll take care of the thing you're worrying about and
Speaker 1: it won't happen to you. Okay. So when I look
Speaker 1: at that, if we have the capacity to do that too,
Speaker 1: not only resolve our internal differences in our economic problems,
Speaker 1: but resolve the global potential threats that we have, all
Speaker 1: of that potential with us. And I think that if
Speaker 1: we understand the patterns of history and understand the junctures,
Speaker 1: and that you look at that and you imagine what
Speaker 1: a civil war war of sorts would take place, because
Speaker 1: we can have a civil war of sorts or an
Speaker 1: external war, or we can have a financial crisis, and
Speaker 1: if you visualize that, you won't want that. And maybe
Speaker 1: that drives people together to work to overcome that common
Speaker 1: challenge that we have and if they do, we have
Speaker 1: the capacity to do to handle that well. Right, It's
Speaker 1: always a delight to sit and chat with you. I
Speaker 1: always find these conversations endlessly fascinating. I have another four
Speaker 1: hours of questions, but I think ninety minutes is about
Speaker 1: as much time as I can ask from you. We
Speaker 1: have been speaking to Ray Dahio. He is the founder
Speaker 1: of Bridgewater and the author, most recently of The Changing
Speaker 1: World Order, Why Nations Succeed and Fail. If you enjoy
Speaker 1: this conversation, well, be sure and check out any of
Speaker 1: the previous four hundred discussions we've had prior to today.
Speaker 1: You can find that at i Tunes, Spotify, wherever you
Speaker 1: get your podcasts. We love your comments, feedback and suggestions
Speaker 1: right to us at m IB podcast at Bloomberg dot net.
Speaker 1: Check out my daily reads at Rid Halts dot com.
Speaker 1: Follow me on Twitter at Rid Halts. Follow Ray at
Speaker 1: ray dahio dot com. You've been listening to Masters in
Speaker 1: Business on Bloomberg Radio.