1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:07,200 --> 00:00:11,320 Speaker 1: This week on the podcast, I have an extra special guest, 3 00:00:11,520 --> 00:00:16,120 Speaker 1: and yes, this week's extra special guest is extra extra special. 4 00:00:16,480 --> 00:00:18,840 Speaker 1: His name is Ray Dalio and he is the founder 5 00:00:19,239 --> 00:00:23,120 Speaker 1: of Bridgewater Associates. Ray is a fascinating guy. We've had 6 00:00:23,160 --> 00:00:27,160 Speaker 1: him on the show a couple of times, one for Principles, 7 00:00:27,160 --> 00:00:30,160 Speaker 1: the second for Big Debt Crises, both of the books 8 00:00:30,160 --> 00:00:34,120 Speaker 1: he's written previously as well as Ray did the initial 9 00:00:34,840 --> 00:00:38,000 Speaker 1: Master's Business Live, which we would be doing but for 10 00:00:38,560 --> 00:00:41,000 Speaker 1: the pandemic and lockdown, we would have continued that into 11 00:00:41,080 --> 00:00:45,240 Speaker 1: this year. This is really quite an intriguing conversation. Ray 12 00:00:45,360 --> 00:00:48,919 Speaker 1: has done a deep dive into the history of the 13 00:00:49,040 --> 00:00:52,640 Speaker 1: rise and fall of currencies, of great powers of debt. 14 00:00:53,440 --> 00:00:57,400 Speaker 1: He really brings an analytical approach, not just a global 15 00:00:57,440 --> 00:01:00,760 Speaker 1: macro and investing, but how to think about the world, 16 00:01:00,800 --> 00:01:03,320 Speaker 1: how to think about the variables that we deal with. 17 00:01:03,760 --> 00:01:09,360 Speaker 1: I am completely tickled by the idea of Ray at 18 00:01:09,400 --> 00:01:13,000 Speaker 1: home in Connecticut with the ability to pretty much get 19 00:01:13,040 --> 00:01:16,440 Speaker 1: whoever he wants on the phone and basically having a 20 00:01:16,480 --> 00:01:20,200 Speaker 1: podcast of just him and somebody else because he's interested 21 00:01:20,240 --> 00:01:25,919 Speaker 1: in a particular subject matter, such as currencies or pandemics 22 00:01:26,040 --> 00:01:29,920 Speaker 1: or monetary history. And when you're Raid Dali or you 23 00:01:29,959 --> 00:01:32,080 Speaker 1: could pick up the phone and get whoever you want 24 00:01:32,560 --> 00:01:35,959 Speaker 1: on the other hand to basically give you a crash 25 00:01:36,040 --> 00:01:41,360 Speaker 1: course in that area. And he's endlessly um curious. He's 26 00:01:41,400 --> 00:01:44,480 Speaker 1: one of these people whose intellect is always hungry for 27 00:01:44,600 --> 00:01:48,800 Speaker 1: figuring out what happens. I'm fascinated by the way he 28 00:01:49,040 --> 00:01:53,280 Speaker 1: views the world and the economy as this big mechanical 29 00:01:53,320 --> 00:01:56,680 Speaker 1: contraption that you can understand if only you take the 30 00:01:56,720 --> 00:02:00,000 Speaker 1: time and effort to dive into it. And pretty much 31 00:02:00,160 --> 00:02:02,000 Speaker 1: that's what he's done. And I find him to be 32 00:02:02,120 --> 00:02:05,960 Speaker 1: just a really fascinating guy to talk to. I think 33 00:02:06,000 --> 00:02:09,000 Speaker 1: you'll find this to be an intriguing conversation. So, with 34 00:02:09,040 --> 00:02:13,800 Speaker 1: no further ado, my interview with Bridgewater Associates Ray Dahio. 35 00:02:15,400 --> 00:02:19,960 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 36 00:02:20,480 --> 00:02:23,760 Speaker 1: My extra special guest this week is Ray Dalio. He 37 00:02:24,040 --> 00:02:27,720 Speaker 1: is the founder of the world's largest hedge fund, Bridgewater. 38 00:02:28,280 --> 00:02:32,560 Speaker 1: Bridgewater has generated the most amount of profits for its 39 00:02:32,639 --> 00:02:36,360 Speaker 1: clients of any hedge fund in history. He is the 40 00:02:36,440 --> 00:02:41,639 Speaker 1: author of several books including principles life and work, big 41 00:02:41,680 --> 00:02:46,799 Speaker 1: debt crises, and the upcoming the changing world order, Why 42 00:02:46,960 --> 00:02:52,520 Speaker 1: nations succeed and fail. That will be out January, Ray Dalio, 43 00:02:52,760 --> 00:02:56,560 Speaker 1: welcome back to Masters in Business. Thank you Berry, glad 44 00:02:56,600 --> 00:02:59,560 Speaker 1: to be here. Well, I'm glad to have this opportunity 45 00:02:59,560 --> 00:03:02,839 Speaker 1: to have a conversation with you. I know that you're 46 00:03:03,000 --> 00:03:07,080 Speaker 1: a student of history and market cycles, and you're a 47 00:03:07,080 --> 00:03:10,160 Speaker 1: big macro guy looking at the world from a thirty 48 00:03:10,200 --> 00:03:14,960 Speaker 1: thousand foot perspective. I wanted to talk to you about 49 00:03:15,000 --> 00:03:18,520 Speaker 1: really what is going on in in what can only 50 00:03:18,840 --> 00:03:23,760 Speaker 1: be described as a fairly unique moment in history. Well, uh, 51 00:03:23,840 --> 00:03:26,120 Speaker 1: it isn't it isn't. You know. The one thing that 52 00:03:26,160 --> 00:03:30,880 Speaker 1: I learned about early on, particularly when the dollar in 53 00:03:31,919 --> 00:03:36,480 Speaker 1: one was broken from gold, is that many things that 54 00:03:36,600 --> 00:03:39,880 Speaker 1: surprised me had never happened in my lifetime before, but 55 00:03:39,920 --> 00:03:44,360 Speaker 1: they happened many times in history before. And the three 56 00:03:44,440 --> 00:03:49,200 Speaker 1: things that are happening now that are the big backdrop situation. 57 00:03:49,320 --> 00:03:55,320 Speaker 1: Before we had the covid um our first, the debt cycle, 58 00:03:55,440 --> 00:04:02,440 Speaker 1: monetary creation of debt, and monetizing debt. The last time 59 00:04:02,520 --> 00:04:06,760 Speaker 1: that happened was in nine thirty three when interest rates 60 00:04:06,800 --> 00:04:10,640 Speaker 1: is zero, and central banks printed a lot of money 61 00:04:10,760 --> 00:04:14,400 Speaker 1: and so on, and that's a big factor because we're 62 00:04:14,440 --> 00:04:17,120 Speaker 1: dealing with the question of the value of money and 63 00:04:17,160 --> 00:04:21,120 Speaker 1: how that happens. So that's number one. The second is 64 00:04:21,720 --> 00:04:27,960 Speaker 1: the large um wealth and political and social gaps that 65 00:04:28,000 --> 00:04:30,440 Speaker 1: are causing us to be at each other's throats and 66 00:04:30,480 --> 00:04:36,119 Speaker 1: also giving very different choices in terms of the left 67 00:04:36,160 --> 00:04:40,640 Speaker 1: and the right and capitalism and socialism. And the third 68 00:04:41,640 --> 00:04:45,159 Speaker 1: is the rise of a great power to challenge the 69 00:04:45,240 --> 00:04:50,200 Speaker 1: existing great power UM, the rise of China to challenge 70 00:04:50,279 --> 00:04:55,080 Speaker 1: the United States in many areas UM. And we're seeing that, 71 00:04:55,279 --> 00:04:59,800 Speaker 1: and one has to go back to the period to 72 00:04:59,800 --> 00:05:01,880 Speaker 1: look at it. And then when I felt that I 73 00:05:01,920 --> 00:05:06,560 Speaker 1: needed to understand it better, I went back five years 74 00:05:06,600 --> 00:05:09,080 Speaker 1: because I needed You know, these cycles, they go on 75 00:05:09,200 --> 00:05:12,000 Speaker 1: like a hundred years, and in order to follow a 76 00:05:12,080 --> 00:05:15,520 Speaker 1: world order arise in a decline of empires and all 77 00:05:15,560 --> 00:05:18,119 Speaker 1: of those things, one has to go back a number 78 00:05:18,160 --> 00:05:20,599 Speaker 1: of cycles. So that's what I did. So we have 79 00:05:20,839 --> 00:05:25,919 Speaker 1: those as the backdrop. And then we had COVID, and 80 00:05:26,040 --> 00:05:29,839 Speaker 1: COVID is the stress test, and the world had COVID 81 00:05:29,960 --> 00:05:33,200 Speaker 1: and the stress test, and that's the moment we're in. 82 00:05:33,320 --> 00:05:36,520 Speaker 1: So when we look at today, we have to see 83 00:05:36,520 --> 00:05:40,040 Speaker 1: it in that um in that light because when we 84 00:05:40,120 --> 00:05:44,160 Speaker 1: think about where do we get money from the creation 85 00:05:44,240 --> 00:05:47,120 Speaker 1: of debt and the printing of money, and where do 86 00:05:47,160 --> 00:05:49,880 Speaker 1: we get to support when we're talking about the next 87 00:05:50,080 --> 00:05:53,680 Speaker 1: bill that might or might not past next stimulative it 88 00:05:53,760 --> 00:05:58,279 Speaker 1: has big implications to the economy, to the markets, and 89 00:05:58,320 --> 00:06:01,360 Speaker 1: so on. And so that's the dating, all right. So 90 00:06:01,480 --> 00:06:05,640 Speaker 1: working within those three big frameworks, let's start out talking 91 00:06:05,680 --> 00:06:12,159 Speaker 1: about monetizing debt. So normally Congress can't agree on renaming 92 00:06:12,200 --> 00:06:15,760 Speaker 1: a library. But back at the end of the first quarter, 93 00:06:15,960 --> 00:06:19,360 Speaker 1: in the midst of the panic, they passed a three 94 00:06:19,520 --> 00:06:23,960 Speaker 1: trillion trillion with a t three trillion dollar Cares Act, 95 00:06:24,000 --> 00:06:28,520 Speaker 1: a giant stimulus plan. Was that the right call back then? 96 00:06:28,760 --> 00:06:32,400 Speaker 1: And what was its impact on the national economy? It 97 00:06:32,480 --> 00:06:36,200 Speaker 1: was it was the necessary call. But it's a reflection 98 00:06:36,279 --> 00:06:39,560 Speaker 1: of where we are in the cycle, and so it 99 00:06:39,640 --> 00:06:44,320 Speaker 1: has consequences. It's the necessary call because if you don't 100 00:06:44,480 --> 00:06:49,279 Speaker 1: give money to those that they gave money to money 101 00:06:49,279 --> 00:06:52,320 Speaker 1: and credit, we would have had an implosion and we 102 00:06:52,360 --> 00:06:57,279 Speaker 1: would have probably had a great deal of social problems. UM. 103 00:06:57,320 --> 00:07:02,200 Speaker 1: But it's not real money in the sense that the 104 00:07:02,320 --> 00:07:06,880 Speaker 1: real money would have required taxation or it would have 105 00:07:06,920 --> 00:07:11,320 Speaker 1: required cutting spending. And so the easiest way to give 106 00:07:11,400 --> 00:07:17,160 Speaker 1: money throughout history, we've seen this. The easiest way is 107 00:07:17,200 --> 00:07:22,120 Speaker 1: to create government debt and have the central bank purchased 108 00:07:22,200 --> 00:07:27,560 Speaker 1: that government debt and and and provide other loans because 109 00:07:27,640 --> 00:07:30,960 Speaker 1: it's not taking money away from anybody and it's not 110 00:07:31,600 --> 00:07:36,360 Speaker 1: cutting spending, both of which are intolerable. And that move 111 00:07:36,600 --> 00:07:40,520 Speaker 1: is very much analogous what happened on April nine. That 112 00:07:40,680 --> 00:07:44,240 Speaker 1: was the announcement to the same thing that happened on 113 00:07:44,680 --> 00:07:50,040 Speaker 1: March five three, except then we had an exchange rate 114 00:07:50,040 --> 00:07:52,360 Speaker 1: which was tied to the dollar, but they are tied 115 00:07:52,400 --> 00:07:55,640 Speaker 1: to gold. But they needed to sever that tie in 116 00:07:55,800 --> 00:07:58,480 Speaker 1: order to do the same type of policies. And if 117 00:07:58,520 --> 00:08:02,240 Speaker 1: you look at throughout history, that's what happens. And then 118 00:08:02,640 --> 00:08:06,679 Speaker 1: that's what makes the market go up. Okay, the value 119 00:08:06,720 --> 00:08:11,120 Speaker 1: of money, because all investments compete with each other, and 120 00:08:11,200 --> 00:08:17,080 Speaker 1: so that brought down nominal and real interest rates. We 121 00:08:17,120 --> 00:08:21,280 Speaker 1: can talk about multiples, stock multiples and bond multiples, I 122 00:08:21,320 --> 00:08:24,640 Speaker 1: think might help to convey the concept. But the decline 123 00:08:25,280 --> 00:08:29,000 Speaker 1: in real interest rates and the decline in nominal interest 124 00:08:29,120 --> 00:08:33,280 Speaker 1: rates pushes asset prices higher in and of itself, and 125 00:08:33,360 --> 00:08:38,920 Speaker 1: the putting of money into our loans for companies and 126 00:08:38,960 --> 00:08:43,480 Speaker 1: so on. They drew the line at investment grade, and 127 00:08:43,559 --> 00:08:46,520 Speaker 1: those that were the fallen angels just past that and 128 00:08:46,800 --> 00:08:50,080 Speaker 1: they would buy those things. Those guarantees or even knowing 129 00:08:50,480 --> 00:08:55,199 Speaker 1: that those purchases would take place created the financial support. 130 00:08:55,600 --> 00:08:59,800 Speaker 1: So we saw an expansion in multiples. When we think 131 00:08:59,800 --> 00:09:03,880 Speaker 1: of multiples, you know, we we think of multiples that 132 00:09:04,040 --> 00:09:07,480 Speaker 1: stocks and bonds compete with each other. But when we 133 00:09:07,520 --> 00:09:12,000 Speaker 1: look at stocks, we think of multiples multiples times earnings, 134 00:09:12,080 --> 00:09:15,679 Speaker 1: and we look at bonds we think of yields, and 135 00:09:15,760 --> 00:09:18,720 Speaker 1: they're just the inverse of each other. So one could say, 136 00:09:19,240 --> 00:09:23,200 Speaker 1: you know, what is the multiple on a bond and 137 00:09:23,280 --> 00:09:27,160 Speaker 1: the multiple on a bond now, with interest rates being 138 00:09:27,880 --> 00:09:31,800 Speaker 1: close to zero uh low in the United States and 139 00:09:31,920 --> 00:09:36,280 Speaker 1: below zero in Europe and Japan, is a very high multiple, 140 00:09:36,400 --> 00:09:39,719 Speaker 1: almost in you know, an infinite multiple, more than a 141 00:09:39,800 --> 00:09:45,120 Speaker 1: hundred times. And because stocks and bonds compete on yield basis, 142 00:09:45,160 --> 00:09:48,880 Speaker 1: that also drove up the yield and so you're seeing 143 00:09:48,920 --> 00:09:54,240 Speaker 1: the movement of money out of cash and bonds and 144 00:09:54,480 --> 00:09:57,920 Speaker 1: moving to asset class, and that has been the main driver, 145 00:09:58,400 --> 00:10:02,080 Speaker 1: and it's been a world phenomena because the Europeans have 146 00:10:02,160 --> 00:10:06,880 Speaker 1: done an analogous version of that the Japanese have because 147 00:10:07,200 --> 00:10:12,960 Speaker 1: there is a void. The void is for every individual 148 00:10:13,120 --> 00:10:16,560 Speaker 1: or a company or country, there's a certain amount of 149 00:10:16,720 --> 00:10:20,320 Speaker 1: revenue that comes in a certain amount of expenses and 150 00:10:20,600 --> 00:10:25,000 Speaker 1: a certain balance sheet. And if your income is less 151 00:10:25,160 --> 00:10:29,320 Speaker 1: than your expenses and you don't have a good balance 152 00:10:29,320 --> 00:10:32,040 Speaker 1: sheet and you look all a lot of money, you're 153 00:10:32,040 --> 00:10:34,080 Speaker 1: going to have a bankruptcy. You're gonna have a problem 154 00:10:34,120 --> 00:10:38,080 Speaker 1: unless you get that. And so it was necessary, and 155 00:10:38,320 --> 00:10:41,400 Speaker 1: but it changes the value of money. So let's talk 156 00:10:41,440 --> 00:10:45,240 Speaker 1: a little bit about the value of money. Let's discuss 157 00:10:45,280 --> 00:10:49,840 Speaker 1: a little bit about America's exorbitant privilege. We own the 158 00:10:49,920 --> 00:10:54,559 Speaker 1: reserve currency of the world. What does all this continuing 159 00:10:55,160 --> 00:11:01,120 Speaker 1: debt monetization mean to the US maintaining that reserve currency status? 160 00:11:01,800 --> 00:11:04,520 Speaker 1: And uh, what might it look like if the U 161 00:11:04,640 --> 00:11:08,560 Speaker 1: s would lose that reserve currency status. Well, as you 162 00:11:08,640 --> 00:11:12,680 Speaker 1: point out, that is the greatest power because the United 163 00:11:12,720 --> 00:11:15,600 Speaker 1: States as a whole, which is just the aggregate of 164 00:11:15,640 --> 00:11:20,839 Speaker 1: the individuals, is buying more from the rest of the world. 165 00:11:20,880 --> 00:11:24,120 Speaker 1: Spending more than it is selling to the rest of 166 00:11:24,160 --> 00:11:27,199 Speaker 1: the world. We just had another large trade deficit number, 167 00:11:27,960 --> 00:11:32,920 Speaker 1: and it is doing that by selling credit, by selling 168 00:11:32,920 --> 00:11:37,520 Speaker 1: our bonds. And so when we look at that dynamic, 169 00:11:37,720 --> 00:11:42,160 Speaker 1: there's a certain amount of UM bonds out there UM. 170 00:11:42,200 --> 00:11:46,720 Speaker 1: And the world always wants to hold a reserve currency 171 00:11:46,840 --> 00:11:50,000 Speaker 1: because that's what you save in. If you want to 172 00:11:50,040 --> 00:11:54,439 Speaker 1: save in something UM, you know you're not going to 173 00:11:54,640 --> 00:11:58,400 Speaker 1: save UM, You're gonna save in the world's reserve currency. 174 00:11:58,600 --> 00:12:01,720 Speaker 1: And that has been the exorb of and privilege. However, 175 00:12:03,000 --> 00:12:06,280 Speaker 1: what we're two things are happening that are threatening that 176 00:12:07,200 --> 00:12:11,000 Speaker 1: a bond is a currency or a currency is a bond. 177 00:12:11,080 --> 00:12:14,320 Speaker 1: What I mean by that is when you own a bond, 178 00:12:15,160 --> 00:12:20,240 Speaker 1: that is a promise to receive currency, and that when 179 00:12:20,280 --> 00:12:22,840 Speaker 1: you have a central bank that can print currency without 180 00:12:22,840 --> 00:12:25,360 Speaker 1: a boundary, that means you have to sell a lot 181 00:12:25,400 --> 00:12:28,440 Speaker 1: of bonds. So when we run large deficits, and we 182 00:12:28,520 --> 00:12:31,400 Speaker 1: will in the future, no matter who the president is, 183 00:12:31,920 --> 00:12:36,439 Speaker 1: we will run large deficits, we will have to sell 184 00:12:36,520 --> 00:12:39,840 Speaker 1: bonds to the rest of the world. And if you 185 00:12:39,960 --> 00:12:43,800 Speaker 1: look at the owners of those bonds UM, and most 186 00:12:43,800 --> 00:12:47,600 Speaker 1: importantly I would say it's a combination of central banks, UH, 187 00:12:48,280 --> 00:12:53,160 Speaker 1: sovereign wealth funds, and of course some other investors. But um, 188 00:12:53,240 --> 00:12:56,640 Speaker 1: they are overweight in bonds and they're gonna have to 189 00:12:56,679 --> 00:12:59,800 Speaker 1: buy more US bonds than they have to buy. And 190 00:13:00,200 --> 00:13:03,840 Speaker 1: that's coming at a time when the rewards of those 191 00:13:03,880 --> 00:13:08,440 Speaker 1: bonds are bad. In other words, there's now a negative 192 00:13:08,600 --> 00:13:12,439 Speaker 1: real interest rate of about one percent and no nominal 193 00:13:12,520 --> 00:13:15,960 Speaker 1: interest rate. And it's coming at the time when there 194 00:13:16,160 --> 00:13:21,400 Speaker 1: is a large production of debt and large monetization. So 195 00:13:21,559 --> 00:13:26,720 Speaker 1: we are testing the limits of how we can how 196 00:13:26,760 --> 00:13:30,800 Speaker 1: far we can go in a fiat monetary system, and 197 00:13:31,040 --> 00:13:35,560 Speaker 1: nobody knows exactly over the short run, let's say, over 198 00:13:35,600 --> 00:13:38,000 Speaker 1: the next year or two and so on. We know 199 00:13:38,120 --> 00:13:41,560 Speaker 1: that everybody wants buying power and dollars. There's something that's 200 00:13:41,600 --> 00:13:44,040 Speaker 1: received all around the world, and you create a squeeze 201 00:13:44,080 --> 00:13:47,240 Speaker 1: in those and there's also a lot of dollar denominated 202 00:13:47,320 --> 00:13:50,960 Speaker 1: debt that has to be paid, and that's a supporting 203 00:13:51,040 --> 00:13:54,520 Speaker 1: because they need dollars to pay those debts. That's a support. 204 00:13:55,000 --> 00:13:59,640 Speaker 1: But those supports are are are failing, will will diminish 205 00:13:59,679 --> 00:14:03,200 Speaker 1: with and so we're testing the limits. Now you ask 206 00:14:03,320 --> 00:14:06,959 Speaker 1: what would happen, what would happen would be if you 207 00:14:07,800 --> 00:14:14,040 Speaker 1: don't own bonds, um. And that's not only Americans, but foreigners, 208 00:14:14,480 --> 00:14:18,040 Speaker 1: because they might say pension funds might say pen h 209 00:14:18,600 --> 00:14:23,200 Speaker 1: bonds don't do me very much good. And and if 210 00:14:23,240 --> 00:14:26,520 Speaker 1: you started to see their interest rates rise at all, 211 00:14:26,720 --> 00:14:28,760 Speaker 1: then you see bond prices go down and you see 212 00:14:28,800 --> 00:14:32,160 Speaker 1: stock prices go down, which would be intolerable. So if 213 00:14:32,200 --> 00:14:35,960 Speaker 1: you have that movement, that would require the Federal Reserve 214 00:14:36,800 --> 00:14:40,320 Speaker 1: to then buy more to fill in that gap, which 215 00:14:40,360 --> 00:14:45,720 Speaker 1: would be monetization, and that could create a spiral. But 216 00:14:45,840 --> 00:14:49,120 Speaker 1: the answer to your question of what would happen is 217 00:14:49,160 --> 00:14:55,480 Speaker 1: that you would have to then um pay um. You're 218 00:14:55,560 --> 00:15:05,240 Speaker 1: you have to cut your buying two exceed um your earning. Um. 219 00:15:05,320 --> 00:15:08,880 Speaker 1: You'd have to go to surpluses to pay down your 220 00:15:08,920 --> 00:15:11,560 Speaker 1: debt or you at least have to go to balances 221 00:15:12,200 --> 00:15:15,760 Speaker 1: that would require That would be tough, and it would 222 00:15:15,800 --> 00:15:19,320 Speaker 1: also mean that you would have a depreciation in the 223 00:15:20,000 --> 00:15:23,600 Speaker 1: in the value of the dollar, which is changes America's 224 00:15:23,680 --> 00:15:27,240 Speaker 1: purchasing power in the world. So when you look at history, 225 00:15:27,520 --> 00:15:33,360 Speaker 1: you've seen throughout history, Um, I've gone back a number 226 00:15:33,400 --> 00:15:35,280 Speaker 1: of years. And by the way, if everybody wants I 227 00:15:35,360 --> 00:15:39,080 Speaker 1: wrote this up on LinkedIn um changing World Order. You 228 00:15:39,120 --> 00:15:43,800 Speaker 1: can see seven cases of different currencies and the value 229 00:15:43,920 --> 00:15:47,160 Speaker 1: in currencies and what what triggers them. But all currencies 230 00:15:47,240 --> 00:15:51,640 Speaker 1: at one time or another have been devalued or destroyed. 231 00:15:52,360 --> 00:15:56,200 Speaker 1: And uh and so that's that is a risk that 232 00:15:56,400 --> 00:16:01,800 Speaker 1: one has to watch very closely. So, Ray, let me 233 00:16:02,200 --> 00:16:05,200 Speaker 1: refer back to something you said earlier. You mentioned in 234 00:16:07,280 --> 00:16:11,440 Speaker 1: the government did a lot of fiscal stimulus. They basically 235 00:16:11,480 --> 00:16:15,920 Speaker 1: issued a lot of bonds of which the Federal Reserve 236 00:16:16,240 --> 00:16:20,400 Speaker 1: ended up um using as a basis for lending. Basically, 237 00:16:20,440 --> 00:16:24,080 Speaker 1: the Fed was funding the government. That that sounds an 238 00:16:24,080 --> 00:16:29,240 Speaker 1: awful lot like modern monetary theory is MMT not all 239 00:16:29,320 --> 00:16:33,280 Speaker 1: that modern, that's right, that's right. Uh. Mm T is 240 00:16:33,320 --> 00:16:38,200 Speaker 1: a version of what I call monetary policy. Three. So 241 00:16:38,440 --> 00:16:43,840 Speaker 1: what I mean is monetary policy one is interest rate policy, 242 00:16:43,920 --> 00:16:47,640 Speaker 1: cost of funds when interest rates at zero, and you 243 00:16:47,720 --> 00:16:51,560 Speaker 1: can't use that policy anymore, you go to monetary policy. 244 00:16:51,680 --> 00:16:57,520 Speaker 1: To monetary policy too means the central bank essentially prints 245 00:16:57,600 --> 00:17:02,760 Speaker 1: money and buys financial ass it. That causes financial asset 246 00:17:02,840 --> 00:17:06,520 Speaker 1: prices to go up, but it doesn't trickle down very much. 247 00:17:06,640 --> 00:17:09,359 Speaker 1: It widens the wealth gap, and it doesn't get it 248 00:17:09,560 --> 00:17:13,120 Speaker 1: into the hands of those who need it, it gets 249 00:17:13,160 --> 00:17:18,200 Speaker 1: it into those who have financial assets. Monetary policy three 250 00:17:19,119 --> 00:17:22,840 Speaker 1: is when there's a need to get it into specific hands, 251 00:17:23,400 --> 00:17:27,160 Speaker 1: and the federal government, the central government, is the only 252 00:17:27,200 --> 00:17:30,920 Speaker 1: one who can direct where it goes. So a lot 253 00:17:30,960 --> 00:17:33,640 Speaker 1: of the spending that we've seen in terms of its 254 00:17:33,680 --> 00:17:39,480 Speaker 1: direction required the Federal Reserve to require the government to 255 00:17:39,640 --> 00:17:44,440 Speaker 1: borrow the money. That's Federal Reserve lent it the money, 256 00:17:44,520 --> 00:17:47,280 Speaker 1: and that as a result, got it to go into 257 00:17:47,320 --> 00:17:52,040 Speaker 1: the hands of those who needed it the most. Um. 258 00:17:52,119 --> 00:17:56,760 Speaker 1: And that's monetary policy three. So I would say, um, 259 00:17:56,800 --> 00:18:00,760 Speaker 1: I think you should focus on on monetary policy three 260 00:18:00,960 --> 00:18:04,560 Speaker 1: rather than the more narrow definition of modern monetary theory 261 00:18:04,800 --> 00:18:07,960 Speaker 1: because it's the but it's it's basically that we are 262 00:18:08,080 --> 00:18:14,600 Speaker 1: now in a government controlled capital markets. So the government 263 00:18:14,880 --> 00:18:22,200 Speaker 1: will allocate resources through fiscal policy that will be monetized, 264 00:18:22,280 --> 00:18:24,840 Speaker 1: and so it's going to be a much more government 265 00:18:25,000 --> 00:18:31,640 Speaker 1: controlled fiscal and monetary coordinated monetary policy, and that will 266 00:18:31,680 --> 00:18:36,680 Speaker 1: affect all the markets, it will affect us in many 267 00:18:36,680 --> 00:18:40,120 Speaker 1: many ways. Let's talk a little bit about what's going 268 00:18:40,240 --> 00:18:44,800 Speaker 1: on with wealth and income inequality. A number of people 269 00:18:45,280 --> 00:18:49,720 Speaker 1: have made the case that the mostly monetary response to 270 00:18:49,800 --> 00:18:53,280 Speaker 1: the Great Financial Crisis without a whole lot of accompanying 271 00:18:53,880 --> 00:18:58,119 Speaker 1: fiscal response lead to a lot of widening income and 272 00:18:58,200 --> 00:19:02,960 Speaker 1: wealth inequality. What your view on that, Ray, Well, it's 273 00:19:03,000 --> 00:19:07,879 Speaker 1: it's certainly true. Although the ingredients of the widening wealthcap 274 00:19:08,680 --> 00:19:12,600 Speaker 1: we're a you know, a number of ingredients, um, and 275 00:19:12,640 --> 00:19:17,080 Speaker 1: I we should talk about the widening wealthcap. But yes, 276 00:19:17,320 --> 00:19:22,439 Speaker 1: the purchases of financial assets helps those who have financial 277 00:19:22,480 --> 00:19:27,040 Speaker 1: assets more than it helps those who don't have financial assets. 278 00:19:27,080 --> 00:19:31,240 Speaker 1: And what we saw, of course is those purchases caused 279 00:19:31,280 --> 00:19:36,200 Speaker 1: financial asset prices to rise up um and didn't trickle 280 00:19:36,359 --> 00:19:39,240 Speaker 1: down in the same way to others, and so it 281 00:19:39,280 --> 00:19:41,960 Speaker 1: widened it other Fay, let me interrupt you there for 282 00:19:42,000 --> 00:19:43,639 Speaker 1: a second, Ray, And I want to just put some 283 00:19:43,720 --> 00:19:47,240 Speaker 1: meat on the bone. So about half of Americans don't 284 00:19:47,280 --> 00:19:52,240 Speaker 1: own any stocks, and of the Americans that do own stocks, 285 00:19:52,280 --> 00:19:56,520 Speaker 1: about half of those equities are owned by the top 286 00:19:56,560 --> 00:20:01,439 Speaker 1: ten of m of the country economics. So when you 287 00:20:01,560 --> 00:20:07,160 Speaker 1: say stimulus of financial assets doesn't trickle down, I'm assuming 288 00:20:07,680 --> 00:20:10,920 Speaker 1: that's more or less what you're referring to. Yes, you've 289 00:20:10,960 --> 00:20:14,960 Speaker 1: said it very well and for a variety of reasons. 290 00:20:15,760 --> 00:20:21,800 Speaker 1: It's a self perpetuating cycle because as you have more assets, 291 00:20:22,600 --> 00:20:27,760 Speaker 1: like right now in terms of wealth, the top one 292 00:20:27,800 --> 00:20:32,720 Speaker 1: tenth of one of the population has slightly more than 293 00:20:32,760 --> 00:20:40,600 Speaker 1: the bottom combined in wealth. And when wealth is those assets, 294 00:20:40,640 --> 00:20:46,080 Speaker 1: those financial assets that the central bank buys, that perpetuates 295 00:20:46,160 --> 00:20:48,600 Speaker 1: the cycle. And there are other things that relate to that. 296 00:20:48,640 --> 00:20:53,080 Speaker 1: For example, I did a breakdown of the economy and 297 00:20:53,119 --> 00:20:58,080 Speaker 1: the financial positions by Quinto, and I really wanted to 298 00:20:58,119 --> 00:21:02,440 Speaker 1: look at the bottom and relationship to the top to 299 00:21:02,920 --> 00:21:07,159 Speaker 1: see these different economies. And um, what I saw, for 300 00:21:07,200 --> 00:21:11,600 Speaker 1: example is that on education, those in the top forty 301 00:21:12,160 --> 00:21:15,240 Speaker 1: on average spend about five times as much money on 302 00:21:15,320 --> 00:21:19,600 Speaker 1: the children's education than those in the bottom six. And 303 00:21:19,640 --> 00:21:23,880 Speaker 1: it's a natural cycle that um. You you know when 304 00:21:23,920 --> 00:21:26,520 Speaker 1: you we all want to take care of our kids 305 00:21:26,960 --> 00:21:28,960 Speaker 1: and we want to educate them well and so on. 306 00:21:29,080 --> 00:21:32,439 Speaker 1: But we see it. I see it here in Connecticut, 307 00:21:32,480 --> 00:21:34,760 Speaker 1: which has a large wealth gap. We can get into that, 308 00:21:34,880 --> 00:21:40,199 Speaker 1: but I mean, um, a total absence of resources, and 309 00:21:40,280 --> 00:21:44,480 Speaker 1: it becomes self perpetuating because it then becomes better educated 310 00:21:44,520 --> 00:21:48,120 Speaker 1: people then earn more money and so on, and that's 311 00:21:48,160 --> 00:21:52,679 Speaker 1: becoming more and more true also as technology is playing 312 00:21:52,880 --> 00:21:58,960 Speaker 1: a greater role, because as technology is replacing people, including 313 00:21:59,000 --> 00:22:03,159 Speaker 1: now more and more elements of thinking, you are getting 314 00:22:03,160 --> 00:22:06,800 Speaker 1: into an environment of those who are designers of the 315 00:22:06,880 --> 00:22:11,359 Speaker 1: technology and so on doing better and better. Because it 316 00:22:11,640 --> 00:22:16,680 Speaker 1: is the process of capitalism to do things most efficiently 317 00:22:16,920 --> 00:22:20,280 Speaker 1: in pursuit of the profit. That then leads to those 318 00:22:20,359 --> 00:22:25,160 Speaker 1: changes which means rely less on people, rely more on machines. 319 00:22:25,520 --> 00:22:28,639 Speaker 1: So there's a monetary component to that, There is a 320 00:22:28,720 --> 00:22:32,960 Speaker 1: technology component to that widening yellow of gap. And then 321 00:22:33,000 --> 00:22:37,359 Speaker 1: of course there's also globalization. It's more efficient for the 322 00:22:37,359 --> 00:22:41,720 Speaker 1: whole to have globalization to produce things in where they're 323 00:22:41,760 --> 00:22:44,959 Speaker 1: most efficient, of course. And but what you see is 324 00:22:45,040 --> 00:22:48,760 Speaker 1: within countries you have a widening wealth gap. Between countries 325 00:22:49,080 --> 00:22:51,920 Speaker 1: you have a narrowing wealth gap. In other words, those 326 00:22:52,480 --> 00:22:56,119 Speaker 1: who are less lower income, they learn more and they rose. 327 00:22:56,800 --> 00:23:00,720 Speaker 1: And so if you happen to be in the country 328 00:23:00,760 --> 00:23:03,399 Speaker 1: that's rising less quickly and you happen to be on 329 00:23:03,440 --> 00:23:07,000 Speaker 1: the bottom end of that, that globalization hurt you in 330 00:23:07,000 --> 00:23:12,480 Speaker 1: incomes too. And so those three things have produced the 331 00:23:12,640 --> 00:23:16,920 Speaker 1: disparity that we see, and at the same time that 332 00:23:17,040 --> 00:23:21,359 Speaker 1: is what has led to the political consequences that we're experiencing. 333 00:23:21,640 --> 00:23:25,240 Speaker 1: In other words, the rise in populism across the world, 334 00:23:25,280 --> 00:23:28,520 Speaker 1: but of course it would come in the United States, 335 00:23:28,880 --> 00:23:32,879 Speaker 1: particularly because of the disparity. So let's get into that 336 00:23:32,920 --> 00:23:36,479 Speaker 1: a little bit. You've written about the hollowing out of 337 00:23:36,720 --> 00:23:42,200 Speaker 1: cities and regions and indeed society as a whole. How 338 00:23:42,320 --> 00:23:45,920 Speaker 1: is that manifesting itself and what can we as a 339 00:23:46,040 --> 00:23:50,520 Speaker 1: nation do about it? Well, again, I'm describing the mechanics 340 00:23:50,560 --> 00:23:54,760 Speaker 1: of this. I'm not ideological, I'm just mechanical. There's a formula, 341 00:23:54,840 --> 00:23:58,679 Speaker 1: simple formula. If you've got a lot of debt and 342 00:23:59,160 --> 00:24:02,320 Speaker 1: you have a big well gap, and you have an 343 00:24:02,400 --> 00:24:06,800 Speaker 1: economic downturn, you have a fight over how to divide 344 00:24:06,800 --> 00:24:11,639 Speaker 1: the pie. That can be dealt with either through printing 345 00:24:11,680 --> 00:24:16,160 Speaker 1: money or you have to deal with it with If 346 00:24:16,160 --> 00:24:18,359 Speaker 1: you don't print the money to finance the deficits the 347 00:24:18,359 --> 00:24:21,800 Speaker 1: way we're talking about, then you have to either raise 348 00:24:22,040 --> 00:24:27,800 Speaker 1: taxes or cut spending. Now, in states, they don't get 349 00:24:27,840 --> 00:24:31,159 Speaker 1: to print money. I mean, the main difference between the 350 00:24:31,200 --> 00:24:35,080 Speaker 1: federal government and the state governments has to do with 351 00:24:35,160 --> 00:24:39,520 Speaker 1: this printing of money and monetizing debt thing. So if 352 00:24:39,560 --> 00:24:44,520 Speaker 1: you're in a state like Connecticut, New Jersey, Illinois and 353 00:24:44,560 --> 00:24:48,399 Speaker 1: so on that has large debts, a large wealth gap, 354 00:24:49,320 --> 00:24:53,840 Speaker 1: and you know, experiences a downturn. Then you create a 355 00:24:53,960 --> 00:25:00,080 Speaker 1: dynamic where either raising taxes or cutting spending makes a 356 00:25:00,160 --> 00:25:03,760 Speaker 1: place more difficult to be in. Those with income don't 357 00:25:03,840 --> 00:25:08,880 Speaker 1: want to experience the tax increases, and when you cut expenses, 358 00:25:09,240 --> 00:25:13,800 Speaker 1: those expenses are for the people who are really the poor. 359 00:25:13,840 --> 00:25:18,560 Speaker 1: People in those states are intolerable and so and they 360 00:25:18,600 --> 00:25:22,080 Speaker 1: also reduce services, and so it makes it a less 361 00:25:22,119 --> 00:25:25,720 Speaker 1: hospitable place to be. So you've seen that hollowing out 362 00:25:25,800 --> 00:25:29,680 Speaker 1: dynamic like Captain in places like Detroit or the rust 363 00:25:29,680 --> 00:25:33,160 Speaker 1: Bell places and so on, where those moved, they move 364 00:25:33,240 --> 00:25:37,800 Speaker 1: from one place to another place that's more hospitable for them. 365 00:25:37,840 --> 00:25:40,359 Speaker 1: And when they move, those who move and have the 366 00:25:40,440 --> 00:25:45,119 Speaker 1: higher income, they bring their taxation. Their tax money is 367 00:25:45,200 --> 00:25:50,880 Speaker 1: with them, and it begins a self perpetuating cycle because 368 00:25:51,119 --> 00:25:54,280 Speaker 1: then services go down. It becomes a more antagonistic kind 369 00:25:54,280 --> 00:25:58,680 Speaker 1: of environment, which creates a motivation. So I think that 370 00:25:58,880 --> 00:26:02,120 Speaker 1: when we're looking at add this is gonna be there's 371 00:26:02,119 --> 00:26:05,680 Speaker 1: gonna be a big issue after the election, um, how 372 00:26:05,720 --> 00:26:08,800 Speaker 1: those states are going to be dealt with and those 373 00:26:08,840 --> 00:26:13,000 Speaker 1: deficits quite interesting. I know a number of people have 374 00:26:13,240 --> 00:26:19,760 Speaker 1: proposed various cures for this. One concept is baby bonds. 375 00:26:19,800 --> 00:26:24,000 Speaker 1: Everybody gets a small set of bonds at birth, or 376 00:26:24,160 --> 00:26:28,719 Speaker 1: theoretically a small account which could compound over time. I 377 00:26:28,760 --> 00:26:32,480 Speaker 1: know you've studied universal basic income. I was kind of 378 00:26:32,520 --> 00:26:36,040 Speaker 1: surprised to see what you learned. Tell us a little 379 00:26:36,040 --> 00:26:40,480 Speaker 1: bit about that. Well, first of all, I think that 380 00:26:41,160 --> 00:26:47,960 Speaker 1: the basic necessities of educating children well must be done. 381 00:26:48,359 --> 00:26:52,879 Speaker 1: It's inexcusable. It's the greatest cost to our country, and 382 00:26:53,119 --> 00:26:57,119 Speaker 1: it's the most unfair not to educate children in some 383 00:26:57,760 --> 00:27:01,919 Speaker 1: analogous way. I think the basics what is needed, um, 384 00:27:02,040 --> 00:27:07,000 Speaker 1: also basic healthcare, basics, certain basics. UM. I was lucky 385 00:27:07,080 --> 00:27:09,199 Speaker 1: to have, you know, two parents who care for me. 386 00:27:09,240 --> 00:27:11,440 Speaker 1: I went to a public school, and I came out 387 00:27:11,480 --> 00:27:13,800 Speaker 1: to a world of equal opportunity, and that's all that 388 00:27:13,880 --> 00:27:17,159 Speaker 1: anybody needs. But they need those things, and then the 389 00:27:17,280 --> 00:27:20,840 Speaker 1: question is how to best give that. They also have 390 00:27:21,040 --> 00:27:25,760 Speaker 1: to be productive, because you can't just give income income 391 00:27:25,840 --> 00:27:29,560 Speaker 1: money has no intrinsic value. And so if you keep 392 00:27:29,600 --> 00:27:33,200 Speaker 1: giving income and money to people and you don't make 393 00:27:33,240 --> 00:27:36,440 Speaker 1: them be productive, that's not gonna work. What you eat 394 00:27:36,640 --> 00:27:40,080 Speaker 1: and what you consume is going to be based on 395 00:27:40,119 --> 00:27:43,720 Speaker 1: what you produce, so you have to make people productive 396 00:27:43,920 --> 00:27:46,600 Speaker 1: and so on. So now you deal with the question 397 00:27:46,680 --> 00:27:49,080 Speaker 1: of how would you bring that about, how would you 398 00:27:49,160 --> 00:27:52,639 Speaker 1: engineer for that? And what is the role of university 399 00:27:52,680 --> 00:27:57,200 Speaker 1: basic income? Which has pros and cons But let's say, um, 400 00:27:57,880 --> 00:28:01,080 Speaker 1: you can't just you can't do every thing. So if 401 00:28:01,160 --> 00:28:06,520 Speaker 1: you go to universal basic income, which can be very expensive, 402 00:28:07,359 --> 00:28:11,840 Speaker 1: it has the benefits of being efficient. If apparent handles 403 00:28:11,880 --> 00:28:15,040 Speaker 1: that money well and has the greatest notion of how 404 00:28:15,080 --> 00:28:18,000 Speaker 1: to best use that money. Well, uh, you know, that 405 00:28:18,040 --> 00:28:20,439 Speaker 1: could be very good. You don't have a bureaucracy to 406 00:28:20,560 --> 00:28:24,719 Speaker 1: administer it and so on, and that that's the problem. However, um, 407 00:28:25,080 --> 00:28:29,720 Speaker 1: the usage may very you know, you put money in 408 00:28:29,760 --> 00:28:34,359 Speaker 1: the hands of some people, um, and and that money 409 00:28:34,440 --> 00:28:37,920 Speaker 1: may not go to the best uses for their children 410 00:28:38,520 --> 00:28:42,800 Speaker 1: and and beyond. And so when you think about does 411 00:28:42,840 --> 00:28:48,719 Speaker 1: it go at the expense of let's say, certain education programs. 412 00:28:48,840 --> 00:28:51,560 Speaker 1: I'll give you an example in Connecticut, where the wealth 413 00:28:51,600 --> 00:28:58,040 Speaker 1: gap is large and we're intimately involved, twenty two of 414 00:28:58,080 --> 00:29:01,920 Speaker 1: the high school students want five. In other words, are 415 00:29:02,000 --> 00:29:07,600 Speaker 1: disengaged or disconnected. Disengaged means when they're attending school, they 416 00:29:07,640 --> 00:29:12,040 Speaker 1: have an absentee rate or more and they're failing classes. 417 00:29:12,160 --> 00:29:16,400 Speaker 1: That's disengaged. Disconnected means they don't come to school anymore 418 00:29:16,920 --> 00:29:20,200 Speaker 1: and they don't know where they are one in five 419 00:29:20,560 --> 00:29:23,480 Speaker 1: And if you look at the finances of that and 420 00:29:23,600 --> 00:29:27,920 Speaker 1: how you could change that, they end up in uh, 421 00:29:28,880 --> 00:29:32,840 Speaker 1: detriments to the society because they're they're in at the 422 00:29:32,880 --> 00:29:37,080 Speaker 1: cost of incarceration. All these things are terrible. So there 423 00:29:37,160 --> 00:29:42,320 Speaker 1: has to be that usage and money. I would say, 424 00:29:42,320 --> 00:29:47,560 Speaker 1: through our philanthropics um efforts, we get windows into some 425 00:29:47,680 --> 00:29:51,280 Speaker 1: of these things, and they're so cost effective to use 426 00:29:51,360 --> 00:29:55,080 Speaker 1: the money right in programs. So the question is do 427 00:29:55,160 --> 00:29:58,200 Speaker 1: you want to find do you want to give checks 428 00:29:59,000 --> 00:30:01,720 Speaker 1: or do you want to give programs because you can't 429 00:30:01,760 --> 00:30:05,560 Speaker 1: do both, And so that's the real question. I think. 430 00:30:05,640 --> 00:30:09,320 Speaker 1: I don't think there's a question of the need to 431 00:30:09,400 --> 00:30:12,920 Speaker 1: do take care of children well and educate them well 432 00:30:13,480 --> 00:30:17,520 Speaker 1: and those types of things even there, you know, so anyway, 433 00:30:17,600 --> 00:30:20,320 Speaker 1: it's a priority question. So we're going to talk more 434 00:30:20,360 --> 00:30:23,480 Speaker 1: about your philanthropy a little later, but I just have 435 00:30:23,560 --> 00:30:27,640 Speaker 1: to ask a very basic question about the role of government. 436 00:30:28,120 --> 00:30:33,160 Speaker 1: What should Americans expect from their state and local and 437 00:30:33,280 --> 00:30:38,040 Speaker 1: federal governments? What level of service is reasonable in a 438 00:30:38,120 --> 00:30:43,080 Speaker 1: modern somewhat civilized society. Well, there are two ways I 439 00:30:43,120 --> 00:30:47,200 Speaker 1: could answer that question. What a modern civilized society should 440 00:30:47,240 --> 00:30:53,920 Speaker 1: provide and what you can expect given the structure. There 441 00:30:53,960 --> 00:31:01,000 Speaker 1: are two different things I think everybody should expect. That 442 00:31:01,920 --> 00:31:04,720 Speaker 1: the basics and that I dealt with before, that I 443 00:31:04,840 --> 00:31:07,640 Speaker 1: experienced when I was growing up. I was born in 444 00:31:09,200 --> 00:31:11,640 Speaker 1: and I went to and there was the American dream 445 00:31:11,640 --> 00:31:15,080 Speaker 1: and we're all in it together, and I wow, that 446 00:31:15,200 --> 00:31:17,200 Speaker 1: was great. I got went to a public high school, 447 00:31:17,720 --> 00:31:20,520 Speaker 1: public school all through my life, and parents who took 448 00:31:20,560 --> 00:31:23,160 Speaker 1: care of me, and that and and if they have 449 00:31:23,320 --> 00:31:26,680 Speaker 1: health care, basic health care and so on, that's pretty much. 450 00:31:26,720 --> 00:31:29,720 Speaker 1: And then you come out have an equal opportunity. Everything 451 00:31:29,760 --> 00:31:33,560 Speaker 1: has shown that that is that should be expected, that 452 00:31:33,720 --> 00:31:36,080 Speaker 1: it is. If you don't do that, it's not fair 453 00:31:36,680 --> 00:31:41,160 Speaker 1: and it's not productive because you cut a large percentage 454 00:31:41,200 --> 00:31:44,760 Speaker 1: of the populations of people who could be productive. As 455 00:31:44,800 --> 00:31:49,920 Speaker 1: you narrow that group that has opportunities, you exclude those 456 00:31:50,040 --> 00:31:53,720 Speaker 1: who might be the most creative and capable people, and 457 00:31:53,800 --> 00:31:56,760 Speaker 1: so you suffer in both of those ways. So I 458 00:31:56,800 --> 00:32:01,719 Speaker 1: would think that basic civility and basicness essity would require 459 00:32:01,840 --> 00:32:06,040 Speaker 1: those things. Then when you ask what can you expect, 460 00:32:06,560 --> 00:32:10,840 Speaker 1: somebody can't just demand something. We have to understand how 461 00:32:10,880 --> 00:32:15,800 Speaker 1: the system works, and the system works mechanistically. So you know, 462 00:32:15,880 --> 00:32:19,680 Speaker 1: let's say you're in a state, and so you're going 463 00:32:19,720 --> 00:32:22,440 Speaker 1: to get money from taxation, where's the money come from. 464 00:32:22,720 --> 00:32:26,360 Speaker 1: You're gonna have taxation, and you don't have enough money, literally, 465 00:32:26,960 --> 00:32:29,400 Speaker 1: and so you can't just say I'm in the state 466 00:32:29,440 --> 00:32:34,280 Speaker 1: and I'm expecting it. You have almost a constitutional challenge 467 00:32:34,680 --> 00:32:37,800 Speaker 1: to provide that money, because let's say it's education money. 468 00:32:37,800 --> 00:32:42,640 Speaker 1: For example. By the constitution, education is a state issue, 469 00:32:43,040 --> 00:32:45,480 Speaker 1: like in the state of Connecticut, about eight percent of 470 00:32:45,520 --> 00:32:48,160 Speaker 1: the money comes from the federal government and the rest 471 00:32:48,200 --> 00:32:52,480 Speaker 1: comes from within the state. And so if if taxpayers 472 00:32:52,520 --> 00:32:55,880 Speaker 1: move and states operate that way, you can sit there 473 00:32:55,920 --> 00:32:58,960 Speaker 1: all you want and say I need these basics, and 474 00:32:59,840 --> 00:33:02,320 Speaker 1: you won't get those. And one of the big things 475 00:33:02,440 --> 00:33:07,320 Speaker 1: is that people actually really don't have much contact or 476 00:33:07,480 --> 00:33:11,360 Speaker 1: knowledge of what it's like to be in each other's shoes. 477 00:33:11,520 --> 00:33:16,480 Speaker 1: I live in Greenwich, Connecticut, and um and up the road. UM, 478 00:33:16,520 --> 00:33:19,080 Speaker 1: you know, it could be fifteen twenty minutes away is 479 00:33:19,120 --> 00:33:22,160 Speaker 1: another world. And I wouldn't have the exposure to this 480 00:33:22,240 --> 00:33:24,800 Speaker 1: if it wasn't from my wife kind of living in 481 00:33:24,840 --> 00:33:27,440 Speaker 1: that world to be helping helping this and so on. 482 00:33:28,000 --> 00:33:30,760 Speaker 1: And I can understand it as as I walked down 483 00:33:30,800 --> 00:33:33,880 Speaker 1: Greenwich Avenue and and so on, where you know, these 484 00:33:33,880 --> 00:33:36,080 Speaker 1: are normal people who want to take care of their families, 485 00:33:36,120 --> 00:33:40,680 Speaker 1: and they have that and the awareness and the um 486 00:33:40,720 --> 00:33:43,360 Speaker 1: and the acting on that awareness, you know, is a 487 00:33:43,480 --> 00:33:46,120 Speaker 1: structural is a structural problem because at the end of 488 00:33:46,160 --> 00:33:49,720 Speaker 1: the day, you know, everybody's trying to do the best 489 00:33:49,720 --> 00:33:52,960 Speaker 1: they can, and so it's a problem. So those things, 490 00:33:53,040 --> 00:33:55,120 Speaker 1: what are you gonna do. You're gonna say, we expect it. 491 00:33:55,120 --> 00:33:58,560 Speaker 1: But it's sure that health case to me that you 492 00:33:58,640 --> 00:34:01,520 Speaker 1: need to provide those based six makes sense to me. 493 00:34:02,320 --> 00:34:04,840 Speaker 1: Let's talk a little bit about some of your recent 494 00:34:04,920 --> 00:34:12,160 Speaker 1: writings about China. You have discussed the confluence of longstanding 495 00:34:12,239 --> 00:34:17,000 Speaker 1: economic trends and big shifts in the political environment. How 496 00:34:17,080 --> 00:34:20,760 Speaker 1: much of a collision course is China and the United 497 00:34:20,800 --> 00:34:25,520 Speaker 1: States on? Well, there are five main areas of conflict, 498 00:34:25,600 --> 00:34:31,840 Speaker 1: five or six, and they're a manifestation of history repeating itself. 499 00:34:32,239 --> 00:34:36,200 Speaker 1: So just to take a second on that. We began 500 00:34:37,120 --> 00:34:43,160 Speaker 1: the existing world order in ninety world War two ended, 501 00:34:43,480 --> 00:34:46,880 Speaker 1: we began a new monetary system, Brenton Wood's monetary system 502 00:34:46,920 --> 00:34:51,120 Speaker 1: in forty four, and we set the rules, and the 503 00:34:51,200 --> 00:34:55,600 Speaker 1: United States then accounted half of the world economy. It 504 00:34:55,719 --> 00:34:59,680 Speaker 1: had of the world's gold stocks and gold stock and 505 00:34:59,760 --> 00:35:03,160 Speaker 1: the words gold and that and gold was money. And 506 00:35:03,200 --> 00:35:07,399 Speaker 1: we built a dollar denominated system and an American world order, 507 00:35:07,719 --> 00:35:12,120 Speaker 1: which is why the United Nations, the I M f M, 508 00:35:12,200 --> 00:35:14,560 Speaker 1: the World Bank a roll in the United States, and 509 00:35:14,640 --> 00:35:20,200 Speaker 1: that that happened, and then as a psycho happens. If 510 00:35:20,200 --> 00:35:25,000 Speaker 1: you look at history, China over the last two thousand years, 511 00:35:26,040 --> 00:35:29,160 Speaker 1: but has always been like one number one or two, 512 00:35:29,400 --> 00:35:32,879 Speaker 1: one of the most powerful countries. And then starting from 513 00:35:32,920 --> 00:35:37,200 Speaker 1: eighteen forty until Ninette had a collapse and then it 514 00:35:37,320 --> 00:35:43,480 Speaker 1: began to emerge in and then in nineteen seventy eight 515 00:35:43,800 --> 00:35:49,960 Speaker 1: dankshall Ping came to power and they he tapped into capitalism, 516 00:35:50,000 --> 00:35:55,800 Speaker 1: state capitalism. He created state capitalism and since then till now, 517 00:35:56,480 --> 00:36:02,040 Speaker 1: the average real income has in reached by twenty two times. 518 00:36:02,680 --> 00:36:08,040 Speaker 1: It's been very productive and it's becoming very capitalist. In um. 519 00:36:08,160 --> 00:36:11,560 Speaker 1: It's uh, there are billionaires being formed, their ideas, their 520 00:36:12,000 --> 00:36:16,239 Speaker 1: um um I p o s um. There's creativity and 521 00:36:16,239 --> 00:36:19,719 Speaker 1: there's that competition. And so when you get a rising 522 00:36:19,800 --> 00:36:23,480 Speaker 1: power challenging and existing power, there are different ways of 523 00:36:23,520 --> 00:36:26,839 Speaker 1: doing that. And so there are five types of we 524 00:36:26,960 --> 00:36:31,800 Speaker 1: call them wars conflicts, and they are the trade war, 525 00:36:32,880 --> 00:36:41,000 Speaker 1: the technology war, the geopolitical war, the capital war, and 526 00:36:41,120 --> 00:36:44,560 Speaker 1: you could have a military war. The trade war we 527 00:36:44,600 --> 00:36:46,799 Speaker 1: know very we know a lot about and that's the 528 00:36:46,840 --> 00:36:51,560 Speaker 1: most minor of those. Um it's really the overall conflict 529 00:36:51,600 --> 00:36:55,640 Speaker 1: that matters. The technology war, you see it um anything 530 00:36:56,160 --> 00:37:00,400 Speaker 1: from Huawei, TikTok and so on, and who going to 531 00:37:00,480 --> 00:37:04,279 Speaker 1: produce what technologies in this world. That's something we can 532 00:37:04,320 --> 00:37:08,400 Speaker 1: talk about if you want to. The geopolitical war is 533 00:37:08,400 --> 00:37:13,359 Speaker 1: a very important thing, but I want everybody agrees has 534 00:37:13,360 --> 00:37:16,200 Speaker 1: been agreed that Taiwan is part of China and there 535 00:37:16,200 --> 00:37:20,640 Speaker 1: should be peaceful unification. And there's a region around there 536 00:37:21,080 --> 00:37:24,600 Speaker 1: and that includes Hong Kong, and they have historical meanings 537 00:37:24,640 --> 00:37:26,600 Speaker 1: because they used to be part of China. Then in 538 00:37:26,640 --> 00:37:29,040 Speaker 1: the wars they were taken away from China and then 539 00:37:29,040 --> 00:37:31,920 Speaker 1: they've been promised back and they are big issues. And 540 00:37:31,960 --> 00:37:36,120 Speaker 1: then there's influence in the world as they've become competitor, 541 00:37:36,280 --> 00:37:41,080 Speaker 1: and so there's that gel political world war capital war 542 00:37:41,200 --> 00:37:45,560 Speaker 1: is a very important thing. History is shown that when 543 00:37:45,600 --> 00:37:49,360 Speaker 1: you get into wars, this is very interesting even before 544 00:37:49,560 --> 00:37:54,319 Speaker 1: their awars, that they foreign powers cut off to the 545 00:37:54,360 --> 00:37:56,960 Speaker 1: other They cut them off for capital, and they cut 546 00:37:57,000 --> 00:37:59,960 Speaker 1: them off for needed items like in World War two 547 00:38:00,920 --> 00:38:04,520 Speaker 1: Japan Um when we when there was the rise of 548 00:38:04,640 --> 00:38:08,200 Speaker 1: Japan in there, Um they were cut off from oil, 549 00:38:08,239 --> 00:38:11,719 Speaker 1: they would cut off from rubber, um, and they were 550 00:38:11,920 --> 00:38:15,959 Speaker 1: men cut off from capital. We could we did say 551 00:38:15,960 --> 00:38:18,280 Speaker 1: that we wouldn't pay their debt, and the United States 552 00:38:18,320 --> 00:38:22,200 Speaker 1: today could do that with the bonds they owned. China 553 00:38:22,360 --> 00:38:26,279 Speaker 1: owns about a trillion dollars worth of bonds, and the 554 00:38:26,320 --> 00:38:29,719 Speaker 1: president unilaterally can say, um, you know, we're not going 555 00:38:29,760 --> 00:38:33,160 Speaker 1: to pay those bonds or cut off capital in different ways, 556 00:38:33,200 --> 00:38:36,640 Speaker 1: and so you see the development of capital markets and 557 00:38:36,640 --> 00:38:40,279 Speaker 1: so on. And then of course, um, there's the military 558 00:38:40,400 --> 00:38:44,080 Speaker 1: question because at the end of the day, it's a 559 00:38:44,080 --> 00:38:48,520 Speaker 1: test of power. So if you look at the geopolitical 560 00:38:48,680 --> 00:38:53,960 Speaker 1: part of this in the region, militarily, China has developed 561 00:38:54,160 --> 00:39:00,400 Speaker 1: what military experts tell me is a military actual superior priority, 562 00:39:00,440 --> 00:39:02,920 Speaker 1: and about two thousand MILEAR eight and I don't know 563 00:39:03,200 --> 00:39:07,200 Speaker 1: anyway would be very bad. That includes the Taiwan area 564 00:39:07,200 --> 00:39:11,120 Speaker 1: and so on. And because the world doesn't have a 565 00:39:11,200 --> 00:39:15,440 Speaker 1: World Court to plead your case, it is always a 566 00:39:15,560 --> 00:39:19,560 Speaker 1: testing of each other's limits and boundaries, and that would 567 00:39:19,600 --> 00:39:23,720 Speaker 1: have big implications for the United States stature in the world. 568 00:39:23,840 --> 00:39:28,160 Speaker 1: So those issues are all wrapped up together. In other words, 569 00:39:28,160 --> 00:39:31,319 Speaker 1: there's a lot to argue about. At the end of 570 00:39:31,360 --> 00:39:36,680 Speaker 1: the day, though, the most important determinant of power is 571 00:39:36,719 --> 00:39:39,680 Speaker 1: how we are with ourselves. I should say, you know, 572 00:39:39,719 --> 00:39:43,520 Speaker 1: we've got these conflicts with China, and those conflicts also 573 00:39:43,640 --> 00:39:47,120 Speaker 1: mean that we're having separation. Um we can get into that. 574 00:39:47,200 --> 00:39:50,480 Speaker 1: I don't want to ramble too long, but the decoupling 575 00:39:50,680 --> 00:39:54,280 Speaker 1: is a necessity and would be part of our environment 576 00:39:54,800 --> 00:40:00,680 Speaker 1: head now when we talk about decoupling. Over the past years, 577 00:40:00,760 --> 00:40:06,080 Speaker 1: it feels like we've become much more integrated with China's economy, 578 00:40:06,160 --> 00:40:11,520 Speaker 1: their manufacturing prowess. I hate the phrase frenemies, but we 579 00:40:11,680 --> 00:40:16,320 Speaker 1: certainly have aligned our interests together in a lot of ways. 580 00:40:16,520 --> 00:40:21,160 Speaker 1: Our entire supply chain comes very much runs through China. 581 00:40:21,440 --> 00:40:26,359 Speaker 1: How easily can these two nations decouple. It seems like 582 00:40:26,400 --> 00:40:30,880 Speaker 1: we're both fairly dependent on the other, of course, because 583 00:40:30,920 --> 00:40:34,160 Speaker 1: we lived in an environment when you have globalization and 584 00:40:34,239 --> 00:40:37,960 Speaker 1: you took it as an assumption, particularly the Chinese took 585 00:40:37,960 --> 00:40:40,759 Speaker 1: it as an assumption that they could build on the 586 00:40:40,800 --> 00:40:44,759 Speaker 1: American technologies and they'll be there. Chinese are more vulnerable 587 00:40:44,800 --> 00:40:49,080 Speaker 1: than Americans are to a technology war at the moment. 588 00:40:49,680 --> 00:40:54,160 Speaker 1: They know that, and as a result they're initiating ways 589 00:40:54,520 --> 00:40:58,480 Speaker 1: um semiconductor chips and many other ways so that they 590 00:40:58,520 --> 00:41:02,640 Speaker 1: can become self to efficient because you know, classically in 591 00:41:02,680 --> 00:41:06,120 Speaker 1: a conflict, you're cut off, you're cut off from capital, 592 00:41:06,160 --> 00:41:08,680 Speaker 1: you're cut off from what you need, and it is devastating. 593 00:41:09,080 --> 00:41:12,960 Speaker 1: And because it has to exist as a possibility that 594 00:41:13,000 --> 00:41:15,919 Speaker 1: you can have war, I mean history is shown when 595 00:41:15,920 --> 00:41:19,920 Speaker 1: there's a rising power challenging existing power. That's happened sixteen 596 00:41:19,920 --> 00:41:22,080 Speaker 1: times in the last five years. Twelve of them are 597 00:41:22,120 --> 00:41:26,640 Speaker 1: actually shooting wars. That possibility certainly exists, which means there 598 00:41:26,760 --> 00:41:30,279 Speaker 1: must be decoupling there, or said another way, there must 599 00:41:30,280 --> 00:41:34,880 Speaker 1: be self sufficiency so that one cannot be cut off 600 00:41:34,960 --> 00:41:39,319 Speaker 1: from what one needs. And that means that there's a 601 00:41:39,360 --> 00:41:43,520 Speaker 1: process over the next five years you're going to see 602 00:41:43,560 --> 00:41:48,520 Speaker 1: a lot of decoupling. It creates inefficiency for the world 603 00:41:48,560 --> 00:41:51,120 Speaker 1: as a whole. However, you know it's not going to 604 00:41:51,640 --> 00:41:55,799 Speaker 1: change the world. That those efficiencies are almost luxury by 605 00:41:55,840 --> 00:42:00,160 Speaker 1: comparison to the necessity of surviving. And so you will 606 00:42:00,160 --> 00:42:04,960 Speaker 1: see that kind of decoupling. And the real question is, 607 00:42:05,239 --> 00:42:07,680 Speaker 1: um you know what it will look like. Two systems, 608 00:42:08,000 --> 00:42:11,800 Speaker 1: how do they operate in parallel? Can we have harmony 609 00:42:11,920 --> 00:42:14,560 Speaker 1: or are we going to get something else? But it'll 610 00:42:14,960 --> 00:42:19,400 Speaker 1: it's happening, and it's a pressing thing on both countries 611 00:42:19,440 --> 00:42:22,120 Speaker 1: to make it happen fast. So you mentioned there was 612 00:42:22,200 --> 00:42:27,560 Speaker 1: sixteen examples of a rising power challenging the existing order. 613 00:42:27,760 --> 00:42:31,560 Speaker 1: Give us a few dates and places. Where else have 614 00:42:31,719 --> 00:42:35,960 Speaker 1: we seen situation similar to the rise of China challenging 615 00:42:35,960 --> 00:42:39,480 Speaker 1: the United States? What's parallel? Well, I think the I 616 00:42:39,520 --> 00:42:45,080 Speaker 1: think the period is the most analogous period I touched on. 617 00:42:45,640 --> 00:42:49,160 Speaker 1: You know, that was the when interest rates at zero, 618 00:42:49,239 --> 00:42:51,319 Speaker 1: when there was a lot of printing of money and 619 00:42:51,640 --> 00:42:54,320 Speaker 1: changes and so on and so forth, when the wealth 620 00:42:54,400 --> 00:42:57,239 Speaker 1: gap was the same as it is now and so on. Well, 621 00:42:57,320 --> 00:43:00,960 Speaker 1: during that period, there was a depression and there was 622 00:43:01,000 --> 00:43:04,000 Speaker 1: the rise of Germany, and there was the rise of 623 00:43:04,120 --> 00:43:09,000 Speaker 1: Japan to challenge the existing world powers and sort of 624 00:43:09,000 --> 00:43:12,560 Speaker 1: out of necessity. And there was a lot of conflict, 625 00:43:13,200 --> 00:43:19,640 Speaker 1: internal conflict in those cases because during such times people 626 00:43:19,760 --> 00:43:26,240 Speaker 1: become more extreme. The right becomes more right, the left 627 00:43:26,280 --> 00:43:30,200 Speaker 1: becomes more left, and they fight with each other more 628 00:43:30,800 --> 00:43:35,040 Speaker 1: and when they fight, um it becomes more disorderly. You know, 629 00:43:35,120 --> 00:43:39,040 Speaker 1: in that period there were four countries that were democracies 630 00:43:39,040 --> 00:43:45,560 Speaker 1: that chose to have autocratic systems. You know, that was Germany, Italy, Japan, 631 00:43:45,920 --> 00:43:51,080 Speaker 1: and Spain in terms of trying to have autocratic system 632 00:43:51,160 --> 00:43:55,840 Speaker 1: to bring order to disorder. And so that period was 633 00:43:56,040 --> 00:44:00,000 Speaker 1: very analogous, and if you go down to the particular 634 00:44:00,000 --> 00:44:05,000 Speaker 1: alers of Japan, it's analogous in many ways, even because 635 00:44:05,520 --> 00:44:09,040 Speaker 1: the geography of the place is in many ways similar. 636 00:44:09,440 --> 00:44:11,840 Speaker 1: You know, to get oil, you know, you have to 637 00:44:11,840 --> 00:44:14,200 Speaker 1: go through the Straits of Malacca, and you've got to 638 00:44:14,600 --> 00:44:18,680 Speaker 1: you know, you bring resources from there, and you have 639 00:44:18,880 --> 00:44:21,920 Speaker 1: bonds and and you know, all of those things. In 640 00:44:21,960 --> 00:44:26,640 Speaker 1: many cases, the evolution that led up to Pearl Harbor 641 00:44:27,600 --> 00:44:30,760 Speaker 1: when they were cut off of resources, and the idea 642 00:44:30,760 --> 00:44:33,719 Speaker 1: of that been if they cut off of resources, they 643 00:44:33,760 --> 00:44:38,440 Speaker 1: respond those things seem very much analogous. I think, though 644 00:44:38,680 --> 00:44:41,920 Speaker 1: the difference this time is that we are dealing with 645 00:44:42,360 --> 00:44:47,960 Speaker 1: a more powerful country and Germany or Japan relative to 646 00:44:48,160 --> 00:44:51,799 Speaker 1: the United States. To put that in perspective, China has 647 00:44:51,840 --> 00:44:54,840 Speaker 1: a population that's four times the size a little bit 648 00:44:54,880 --> 00:44:57,640 Speaker 1: more than four times the size of the United States. 649 00:44:58,480 --> 00:45:02,920 Speaker 1: That means if it's capital income is half the United States, 650 00:45:03,280 --> 00:45:06,480 Speaker 1: then its size will be twice that of the United States. 651 00:45:06,480 --> 00:45:10,799 Speaker 1: And so it's an economic power, and it gained economic 652 00:45:10,920 --> 00:45:16,120 Speaker 1: power by following a lot of capitalist policies to create 653 00:45:16,200 --> 00:45:21,720 Speaker 1: the inventiveness and allocate resources. So it's a anyway, it's analogous, 654 00:45:21,760 --> 00:45:26,640 Speaker 1: but bigger. So we have an election coming up November three. 655 00:45:27,200 --> 00:45:30,839 Speaker 1: The president gets elected, the new president, or I should say, 656 00:45:30,960 --> 00:45:35,919 Speaker 1: whatever new administration comes in, and that particular president picks 657 00:45:36,000 --> 00:45:39,240 Speaker 1: up the phone and says, Ray, you're a China expert, 658 00:45:39,280 --> 00:45:42,960 Speaker 1: and you're an economic expert, I'm concerned that the United 659 00:45:43,000 --> 00:45:47,400 Speaker 1: States is slipping in terms of our world leadership. What 660 00:45:47,600 --> 00:45:51,040 Speaker 1: sort of advice would you give him? Well, there's internal 661 00:45:51,360 --> 00:45:56,920 Speaker 1: and there's external. The most important thing internally, as measured 662 00:45:56,960 --> 00:46:03,239 Speaker 1: by leading indicators of well being are things by what 663 00:46:03,400 --> 00:46:06,440 Speaker 1: is the education level of the population. What is the 664 00:46:06,520 --> 00:46:11,480 Speaker 1: financial condition? Are you producing more than you are consuming? 665 00:46:11,520 --> 00:46:14,160 Speaker 1: And do you have a balance sheet in which you 666 00:46:14,200 --> 00:46:17,080 Speaker 1: have more assets relative to liabilities. You've got to go. 667 00:46:17,200 --> 00:46:20,000 Speaker 1: So you've got to get productivity going, You've got to 668 00:46:20,040 --> 00:46:22,719 Speaker 1: get education going, and so on. So you have to 669 00:46:22,760 --> 00:46:28,640 Speaker 1: have internally You've got to become internally also more aligned. 670 00:46:29,160 --> 00:46:32,720 Speaker 1: You have to have the population rowing in the same 671 00:46:32,760 --> 00:46:36,920 Speaker 1: direction rather than fighting with each other, and so um 672 00:46:36,960 --> 00:46:42,080 Speaker 1: I would say, you know the ways of achieving those things. 673 00:46:42,120 --> 00:46:47,880 Speaker 1: How do you achieve a bipartisan American dream and rowing 674 00:46:47,880 --> 00:46:50,560 Speaker 1: in the same direction? How would you achieve that? And 675 00:46:50,600 --> 00:46:54,239 Speaker 1: then make clear about productivity and how how you would 676 00:46:54,280 --> 00:46:56,360 Speaker 1: achieve that. It's a big it's a big order. But 677 00:46:56,400 --> 00:46:58,879 Speaker 1: if you're going to get strong, those are the things 678 00:46:58,880 --> 00:47:01,960 Speaker 1: you have to do into eternally to get strong and 679 00:47:02,040 --> 00:47:07,840 Speaker 1: protect your financial system externally. There are there's the realization 680 00:47:08,800 --> 00:47:11,799 Speaker 1: that we have these issues and there has to be 681 00:47:11,840 --> 00:47:16,000 Speaker 1: a plan, a strategic plan. And I think that both parties, 682 00:47:16,320 --> 00:47:19,399 Speaker 1: I would say internal people who fight with each other, 683 00:47:20,040 --> 00:47:25,520 Speaker 1: and I wish they can visualize what civil wars have 684 00:47:25,680 --> 00:47:28,560 Speaker 1: been like, what fighting with each other can be like? 685 00:47:28,800 --> 00:47:31,960 Speaker 1: This This could be nothing by comparison with what we 686 00:47:32,440 --> 00:47:36,160 Speaker 1: good experience. We can't take this for granted, so if 687 00:47:36,160 --> 00:47:39,879 Speaker 1: we it's the issue is most importantly how we are 688 00:47:40,040 --> 00:47:44,359 Speaker 1: with each other, both internally and externally. Externally, I know 689 00:47:45,440 --> 00:47:49,320 Speaker 1: um that the Chinese leadership and I believe the American 690 00:47:49,400 --> 00:47:54,880 Speaker 1: leadership realize that if you slip into one of those 691 00:47:54,960 --> 00:48:00,440 Speaker 1: unacceptable um wars, that the ways that we've invented for 692 00:48:00,560 --> 00:48:03,840 Speaker 1: hurting each other are, you know, greater than ever before. 693 00:48:03,880 --> 00:48:06,640 Speaker 1: World War two cost more lives than any other war 694 00:48:06,760 --> 00:48:09,440 Speaker 1: before it, and World War Three in its various ways 695 00:48:09,800 --> 00:48:12,640 Speaker 1: is so horrible. So one hopes that there's a fear 696 00:48:12,680 --> 00:48:16,440 Speaker 1: with that, and so that each would have to find 697 00:48:16,520 --> 00:48:20,560 Speaker 1: the way of defending the others. There's a concept called 698 00:48:20,560 --> 00:48:24,440 Speaker 1: the prisoners dilemma, and basically what it means is if 699 00:48:24,480 --> 00:48:28,160 Speaker 1: there are two people or two countries and each could 700 00:48:28,280 --> 00:48:32,920 Speaker 1: kill the other or they could cooperate, what should each do. 701 00:48:33,640 --> 00:48:36,120 Speaker 1: And the answer to that is kill the other a 702 00:48:36,239 --> 00:48:38,920 Speaker 1: stasis that they can because if there's some risk and 703 00:48:38,960 --> 00:48:42,239 Speaker 1: you don't know what they're gonna do, it's an existential risk. 704 00:48:42,360 --> 00:48:44,680 Speaker 1: So you just get rid of the other. And so 705 00:48:45,280 --> 00:48:47,960 Speaker 1: the only way that you're going to be able to 706 00:48:48,000 --> 00:48:50,640 Speaker 1: deal with that is to go to the higher level 707 00:48:51,080 --> 00:48:54,399 Speaker 1: and say, how can you protect each other. The more 708 00:48:54,800 --> 00:48:59,359 Speaker 1: that it's done with a tip for tat and you know, 709 00:48:59,480 --> 00:49:02,719 Speaker 1: an exchange range of hurts um, the more problem is, 710 00:49:02,840 --> 00:49:05,880 Speaker 1: and that problem is gonna worsen over time for the 711 00:49:05,960 --> 00:49:10,320 Speaker 1: United States position because time is on China side. It's 712 00:49:10,360 --> 00:49:14,160 Speaker 1: growing faster. A lot of things will mean it will 713 00:49:14,200 --> 00:49:16,840 Speaker 1: be more independent five years from now than it is today, 714 00:49:17,239 --> 00:49:20,440 Speaker 1: and so on. So there has to be the thinking 715 00:49:20,600 --> 00:49:24,680 Speaker 1: through both domestically and internationally of how you have win 716 00:49:24,840 --> 00:49:28,080 Speaker 1: win relationships. And that's a lot to ask for people 717 00:49:28,080 --> 00:49:31,640 Speaker 1: who want to fight with each other. Fascinating stuff. Ray 718 00:49:31,680 --> 00:49:36,160 Speaker 1: Over the three topics we've been discussing, there there's one 719 00:49:36,360 --> 00:49:40,320 Speaker 1: overarching theme and it's something I know you've written about 720 00:49:40,320 --> 00:49:46,719 Speaker 1: extensively and I find obvious and yet so widely ignored 721 00:49:46,800 --> 00:49:51,120 Speaker 1: by so many people. You have written the most important 722 00:49:51,120 --> 00:49:54,040 Speaker 1: thing for an investor to do is to confront reality 723 00:49:54,120 --> 00:49:58,240 Speaker 1: how it is, as opposed to wishing it is something else. 724 00:49:59,080 --> 00:50:02,840 Speaker 1: Explain why that even has to be discussed. Isn't it 725 00:50:02,920 --> 00:50:05,239 Speaker 1: just a given that we all have to deal with 726 00:50:05,280 --> 00:50:07,160 Speaker 1: the world as it is and not how we wanted 727 00:50:07,239 --> 00:50:12,280 Speaker 1: to be well neurologically, I mean, we um one would 728 00:50:12,280 --> 00:50:15,480 Speaker 1: think that logically, but there are you know, a couple 729 00:50:15,480 --> 00:50:20,959 Speaker 1: of impediments. There are subliminal emotional things that enter into 730 00:50:20,960 --> 00:50:25,160 Speaker 1: our decision making. You know, like when an investment goes up, 731 00:50:26,160 --> 00:50:29,439 Speaker 1: one falls in love with it. Investors had to fall 732 00:50:29,480 --> 00:50:32,680 Speaker 1: in love with it rather than and think, wow, that 733 00:50:32,760 --> 00:50:36,680 Speaker 1: was a great investment, rather than thinking that's more expensive. 734 00:50:36,760 --> 00:50:40,520 Speaker 1: And so there are those kinds of things. And then 735 00:50:40,560 --> 00:50:44,200 Speaker 1: there's also that many of the things that have happened 736 00:50:44,360 --> 00:50:47,560 Speaker 1: over time have not happened in our lifetime before, even 737 00:50:47,600 --> 00:50:51,960 Speaker 1: though they repeat, So those lessons from history, we each 738 00:50:52,080 --> 00:50:55,640 Speaker 1: learned them differently. I remember my dad, Um, you know, 739 00:50:55,800 --> 00:51:00,120 Speaker 1: he went through depression and then war and then you 740 00:51:00,120 --> 00:51:03,760 Speaker 1: know in the nineteen fifties, you know, he wanted to save, 741 00:51:04,400 --> 00:51:06,319 Speaker 1: he wanted to secure that, he didn't want to go 742 00:51:06,360 --> 00:51:09,200 Speaker 1: into the stock market and so on and that. But 743 00:51:09,239 --> 00:51:12,719 Speaker 1: there was another part of that cycle when you know, 744 00:51:12,840 --> 00:51:17,080 Speaker 1: booms come after depressions and wars because people don't want 745 00:51:17,080 --> 00:51:19,000 Speaker 1: to fight with each other and they work together. And 746 00:51:19,480 --> 00:51:21,960 Speaker 1: he missed out on the stock market, and then you 747 00:51:22,040 --> 00:51:25,719 Speaker 1: have through the full cycle that it's common knowledge you 748 00:51:25,719 --> 00:51:28,319 Speaker 1: know to borrow and to buy stocks, and so one 749 00:51:28,320 --> 00:51:32,920 Speaker 1: of these things have cycles to them, so they're understandable. Also, 750 00:51:33,239 --> 00:51:37,480 Speaker 1: the nature of the mechanics of markets lends itself to that. 751 00:51:37,600 --> 00:51:41,360 Speaker 1: It's a funny thing. Let's say the concept of long 752 00:51:41,560 --> 00:51:47,360 Speaker 1: term security produces short term volatility. What I mean is 753 00:51:47,360 --> 00:51:51,359 Speaker 1: the concept of duration. So let's say I give the 754 00:51:51,480 --> 00:51:56,960 Speaker 1: absolutely certain return for the next twenty five years, like 755 00:51:57,080 --> 00:52:00,919 Speaker 1: a bond or inflation index bond or whatever. That will 756 00:52:01,000 --> 00:52:06,520 Speaker 1: produce greater near term volatility because the duration of that 757 00:52:06,640 --> 00:52:11,840 Speaker 1: asset produces a volatility as the discount rate for that changes. 758 00:52:12,280 --> 00:52:16,520 Speaker 1: So all those things drive people to those I think 759 00:52:16,760 --> 00:52:19,840 Speaker 1: bad behaviors are referring to. So let's stick with the 760 00:52:19,880 --> 00:52:25,799 Speaker 1: concept of bad behaviors. Very low rates have sense investors scrambling, 761 00:52:26,360 --> 00:52:28,919 Speaker 1: and as we saw in the mid two thousands, there's 762 00:52:28,920 --> 00:52:32,880 Speaker 1: a tendency for them to chase yields and assume a 763 00:52:32,920 --> 00:52:36,920 Speaker 1: lot more risks than perhaps they should. What sort of 764 00:52:36,960 --> 00:52:40,879 Speaker 1: advice would you give investors who are looking for more 765 00:52:41,040 --> 00:52:44,959 Speaker 1: yield without having to embrace an exorbitant amount of risk. 766 00:52:45,920 --> 00:52:51,160 Speaker 1: Right now, yield difference is to start with interest rates, 767 00:52:51,160 --> 00:52:53,920 Speaker 1: but we could also deal with things like earnings yield 768 00:52:55,120 --> 00:53:03,160 Speaker 1: are very small in relation to the volatility. So if 769 00:53:03,200 --> 00:53:07,120 Speaker 1: you look at a bond, you get very little interest, 770 00:53:07,239 --> 00:53:10,080 Speaker 1: right less than one percent. What depends what bonds you're getting, 771 00:53:10,080 --> 00:53:13,320 Speaker 1: but basically, if you have a secure bond, secure of default, 772 00:53:13,640 --> 00:53:16,799 Speaker 1: you have no hardly any interest rate, even almost a 773 00:53:16,800 --> 00:53:21,200 Speaker 1: negative interest rate. And because all assets compete with each other, 774 00:53:21,600 --> 00:53:24,640 Speaker 1: that's true in inflation and exponse, it's true in all 775 00:53:24,800 --> 00:53:28,480 Speaker 1: asset classes. Some of them don't let you know what 776 00:53:28,640 --> 00:53:32,319 Speaker 1: the exact yield are. But because there's so much liquidity 777 00:53:32,440 --> 00:53:35,440 Speaker 1: chasing them and they compete, they all in the future 778 00:53:35,640 --> 00:53:41,200 Speaker 1: have low meal. And so those who are looking for 779 00:53:41,320 --> 00:53:47,000 Speaker 1: yield have to realize that price changes are more important 780 00:53:47,160 --> 00:53:53,080 Speaker 1: than yield. Okay, one day's price change is greater than 781 00:53:53,160 --> 00:53:57,839 Speaker 1: one year's yield, and so you have to go away 782 00:53:57,960 --> 00:54:02,560 Speaker 1: from looking for the field. And and any time there's 783 00:54:02,840 --> 00:54:07,480 Speaker 1: something yields more than something else, people are not just 784 00:54:07,640 --> 00:54:11,720 Speaker 1: giving away free money, free yield. There's always an element 785 00:54:11,800 --> 00:54:14,520 Speaker 1: of a risk, of the fault risk or something otherwise 786 00:54:14,600 --> 00:54:17,560 Speaker 1: the world would arbitrage that. And you know, you make 787 00:54:17,600 --> 00:54:19,520 Speaker 1: a ton of money by buying the one and selling 788 00:54:19,560 --> 00:54:21,799 Speaker 1: the other, and all the people try to do that, 789 00:54:22,040 --> 00:54:27,319 Speaker 1: it's a problem. So be careful about yield in terms 790 00:54:27,360 --> 00:54:29,600 Speaker 1: of those things. And that's why you have to think 791 00:54:29,640 --> 00:54:33,880 Speaker 1: of price changes. And then when you think of price changes, 792 00:54:34,560 --> 00:54:39,520 Speaker 1: I think it's important to think about the value of money. 793 00:54:39,920 --> 00:54:43,640 Speaker 1: We started to talk about that, and so um, with 794 00:54:43,840 --> 00:54:50,160 Speaker 1: interest rates being where they are and um there think 795 00:54:50,200 --> 00:54:54,239 Speaker 1: of that as risky. You know, most investors think the 796 00:54:54,280 --> 00:54:59,040 Speaker 1: safest investment is in cash because cash doesn't have as 797 00:54:59,120 --> 00:55:03,600 Speaker 1: much volatil city to it. But cash is going to 798 00:55:03,640 --> 00:55:08,920 Speaker 1: be the worst investment, particularly in this environment, because it's 799 00:55:08,920 --> 00:55:12,920 Speaker 1: it's attacks, it doesn't have the volatility to it. But 800 00:55:13,120 --> 00:55:16,640 Speaker 1: what it does is like now it's like a negative 801 00:55:17,360 --> 00:55:22,239 Speaker 1: two percent a year, So um, it's this non volatile 802 00:55:22,320 --> 00:55:25,279 Speaker 1: hidden tax. At two percent a year. You look at 803 00:55:25,320 --> 00:55:29,560 Speaker 1: the compounded effect of one or two or three percent 804 00:55:29,880 --> 00:55:32,600 Speaker 1: per year on your life and your and so on, 805 00:55:32,840 --> 00:55:37,720 Speaker 1: and it is enormous. So cash, you can't you cash 806 00:55:37,920 --> 00:55:41,200 Speaker 1: no in this environment, and bonds in this environment, in 807 00:55:41,280 --> 00:55:45,080 Speaker 1: my opinion, are not sort of good asset classes. And 808 00:55:45,160 --> 00:55:48,800 Speaker 1: so get away from yield and you have to start 809 00:55:48,840 --> 00:55:52,240 Speaker 1: to think of what are the other store holds of wealth. 810 00:55:52,640 --> 00:55:56,200 Speaker 1: Give us some example. I'm I'm gonna assume you're gonna 811 00:55:56,239 --> 00:56:00,319 Speaker 1: talk about gold or you're gonna talk about preferreds or 812 00:56:00,719 --> 00:56:05,680 Speaker 1: dividend yielding stocks, all of which have different degrees of volatility. 813 00:56:05,760 --> 00:56:08,640 Speaker 1: So if you don't want to sit in cash, if 814 00:56:08,680 --> 00:56:12,600 Speaker 1: cash is trash, and if bonds aren't yielding much of anything, 815 00:56:12,800 --> 00:56:16,920 Speaker 1: where should a prudent investor put their money. Well, two things, 816 00:56:17,040 --> 00:56:22,480 Speaker 1: I'd say. First of all, stocks has always been a beneficiary. 817 00:56:22,520 --> 00:56:24,720 Speaker 1: So I want to be as a store hold of wealth. 818 00:56:24,800 --> 00:56:30,799 Speaker 1: Because if back to that March three evaluation, or we've 819 00:56:30,840 --> 00:56:34,680 Speaker 1: had one in August one and so on, Yes you 820 00:56:34,719 --> 00:56:38,440 Speaker 1: saw a gold, but you saw stocks, and so in 821 00:56:38,480 --> 00:56:42,239 Speaker 1: other words, things real things, income streams, and so they 822 00:56:42,239 --> 00:56:45,359 Speaker 1: don't have to be those the most stable. They can 823 00:56:45,400 --> 00:56:47,640 Speaker 1: have growth to them. I just want to be clear. 824 00:56:47,920 --> 00:56:50,920 Speaker 1: Multiples go up and so on. And then there are 825 00:56:50,960 --> 00:56:54,520 Speaker 1: the assets that you refer to. But balance is the 826 00:56:54,600 --> 00:56:59,160 Speaker 1: most important thing. So you don't want cash, I think, 827 00:56:59,360 --> 00:57:02,400 Speaker 1: I don't think you want bonds, and I do think 828 00:57:02,680 --> 00:57:07,560 Speaker 1: that you want alternative storels of wealth, but diversified well, so, 829 00:57:07,719 --> 00:57:12,480 Speaker 1: and when I say diversification, I mean diversification not just 830 00:57:12,600 --> 00:57:16,200 Speaker 1: of stocks and stock sectors. But yes, I want some stocks. 831 00:57:16,320 --> 00:57:23,080 Speaker 1: Um so diversification of asset classes, diversification of currencies, and 832 00:57:23,160 --> 00:57:27,640 Speaker 1: diversification of countries in order to achieve balance. If you 833 00:57:27,760 --> 00:57:32,160 Speaker 1: balance well, you don't give up any return in order 834 00:57:32,200 --> 00:57:35,600 Speaker 1: to reduce your risk, because all assets compete with each 835 00:57:35,600 --> 00:57:38,840 Speaker 1: other and so on. So I think that my own 836 00:57:38,920 --> 00:57:41,960 Speaker 1: view would be I don't want cash, I don't want 837 00:57:42,000 --> 00:57:45,280 Speaker 1: much in the way of bonds. I want a diversified 838 00:57:45,320 --> 00:57:49,080 Speaker 1: portfolio of assets that tend to diverse each other, first 839 00:57:49,080 --> 00:57:51,560 Speaker 1: by each other. Those are the ones we mentioned, and 840 00:57:51,600 --> 00:57:55,360 Speaker 1: I want them in other countries. And do pay attention 841 00:57:55,440 --> 00:58:00,480 Speaker 1: to the currency, because there is a currency risk. We 842 00:58:00,640 --> 00:58:04,960 Speaker 1: have gotten used to looking at everything through the lens 843 00:58:05,200 --> 00:58:09,080 Speaker 1: of our currency. So when we say the dollar, you know, 844 00:58:09,200 --> 00:58:11,160 Speaker 1: how how are you doing, and you say, well, the 845 00:58:12,000 --> 00:58:14,920 Speaker 1: stock market, I'm doing great. The market is you know, 846 00:58:15,160 --> 00:58:19,160 Speaker 1: my portfolio is increased by ten percent this year because 847 00:58:19,160 --> 00:58:22,400 Speaker 1: you're measuring it in a currency, and those currencies that 848 00:58:22,520 --> 00:58:27,000 Speaker 1: depreciate the most often have than not that price rise. 849 00:58:27,080 --> 00:58:31,840 Speaker 1: But you can lose money in buying power because you're 850 00:58:31,880 --> 00:58:34,520 Speaker 1: not you're viewing it through that lens. It's a little 851 00:58:34,560 --> 00:58:37,160 Speaker 1: bit like being in in a boat in the water 852 00:58:37,240 --> 00:58:39,720 Speaker 1: that's going up and down. And you look at land 853 00:58:39,720 --> 00:58:43,120 Speaker 1: and you think land is volatile, the asset classes that 854 00:58:43,160 --> 00:58:45,840 Speaker 1: you're looking at through that lens is something. So you 855 00:58:45,880 --> 00:58:52,080 Speaker 1: need currency diversification too. Well, let's stick with that concept, because, um, 856 00:58:52,160 --> 00:58:56,480 Speaker 1: the old weather portfolio, which which has a pretty successful 857 00:58:56,520 --> 00:58:59,880 Speaker 1: track record, has a lot of exposure to fix thing. 858 00:59:00,040 --> 00:59:04,200 Speaker 1: Come if you were creating that from scratch in how 859 00:59:04,320 --> 00:59:09,040 Speaker 1: might that look different than it has historically? Well, it's 860 00:59:09,440 --> 00:59:14,640 Speaker 1: fixed income exposure has declined a lot as interest rates 861 00:59:14,720 --> 00:59:19,440 Speaker 1: approach zero because of the mechanics of what zero interest 862 00:59:19,560 --> 00:59:22,439 Speaker 1: rates means. So maybe it's worth touching on that. When 863 00:59:22,520 --> 00:59:27,080 Speaker 1: you get interest rates low enough, not only don't they 864 00:59:27,120 --> 00:59:32,880 Speaker 1: provided a return, but they don't provide a diversification benefit 865 00:59:33,480 --> 00:59:37,400 Speaker 1: because there's a limitation of how much interest rates can 866 00:59:37,440 --> 00:59:40,439 Speaker 1: go down, which means a limitation of how much those 867 00:59:40,480 --> 00:59:45,680 Speaker 1: assets can rise in price. And so the way that's 868 00:59:45,720 --> 00:59:48,520 Speaker 1: a problem for the central banks too. I mentioned that 869 00:59:48,560 --> 00:59:52,400 Speaker 1: there's monetary policy one, two, and three. Monetary policy one, 870 00:59:52,520 --> 00:59:57,360 Speaker 1: you can't cut the interest rates, and so historically then 871 00:59:57,520 --> 01:00:00,520 Speaker 1: what you get is the printing of money, buying of 872 01:00:00,560 --> 01:00:03,920 Speaker 1: financial assets, buying of government assets, and so on. The 873 01:00:04,120 --> 01:00:08,320 Speaker 1: reflationary type of policies that we have here, and so 874 01:00:08,520 --> 01:00:14,120 Speaker 1: if you're seeking diversification when interest rates are close to zero, 875 01:00:14,280 --> 01:00:17,280 Speaker 1: bond yields are close to zero, you won't get it 876 01:00:17,280 --> 01:00:21,920 Speaker 1: in bonds. The diversification and the way monetary policy works 877 01:00:22,040 --> 01:00:28,440 Speaker 1: to produce an easing is to have reflation assets, such 878 01:00:28,480 --> 01:00:32,440 Speaker 1: as that which happened on April ninth when they did 879 01:00:32,520 --> 01:00:35,520 Speaker 1: fiscal and monetary policy moves. So let's talk a little 880 01:00:35,520 --> 01:00:38,439 Speaker 1: bit about gold, which has seen a pretty good run 881 01:00:38,520 --> 01:00:42,480 Speaker 1: over the past decade, although certainly not as strong as 882 01:00:42,600 --> 01:00:45,840 Speaker 1: as stocks have seen. What are your thoughts about heart 883 01:00:45,880 --> 01:00:49,880 Speaker 1: assets like gold and how important is it to either 884 01:00:50,640 --> 01:00:55,840 Speaker 1: all whether or risk parity approaches to asset allocation. Think 885 01:00:55,880 --> 01:01:00,520 Speaker 1: of gold as an alternative cash next to a dollar 886 01:01:01,280 --> 01:01:06,160 Speaker 1: and the euro and twice as much as the Japanese 887 01:01:06,240 --> 01:01:11,160 Speaker 1: yend is gold in central bank reserves, and it used 888 01:01:11,200 --> 01:01:14,400 Speaker 1: to be the world's money, and it is viewed as money, 889 01:01:14,520 --> 01:01:17,400 Speaker 1: which and there are reasons it is. It's there's a 890 01:01:17,440 --> 01:01:20,640 Speaker 1: limited supply of it, it's storable, it's transferable, and it's 891 01:01:20,720 --> 01:01:24,760 Speaker 1: universally accepted as a medium of exchange and a storehold 892 01:01:24,760 --> 01:01:28,760 Speaker 1: of wealth pretty much. But like cash, it's not a 893 01:01:28,800 --> 01:01:34,680 Speaker 1: good returning asset it normally over time, very different in 894 01:01:34,800 --> 01:01:38,040 Speaker 1: debt cycles. In the early part of a debt cycle, 895 01:01:38,280 --> 01:01:43,000 Speaker 1: when there's not much debt and you get a higher 896 01:01:43,200 --> 01:01:48,320 Speaker 1: interest rate by holding cash or cash deposits, it pays 897 01:01:48,400 --> 01:01:53,200 Speaker 1: to own cash instead of gold. But what happens in 898 01:01:53,240 --> 01:01:59,520 Speaker 1: the debt cycle is that basically debts rise relative to 899 01:01:59,600 --> 01:02:03,400 Speaker 1: the amount of money there is. Money used to be 900 01:02:03,520 --> 01:02:08,040 Speaker 1: gold up until and then there's the claim, and so 901 01:02:08,200 --> 01:02:12,000 Speaker 1: late in a debt cycle you get to have hardly 902 01:02:12,160 --> 01:02:14,920 Speaker 1: any interest rate, so you don't get much of an 903 01:02:14,960 --> 01:02:19,520 Speaker 1: interest rate benefit of opening cash relative to gold. They 904 01:02:19,600 --> 01:02:23,880 Speaker 1: both the yields are are not much, and you're getting 905 01:02:23,880 --> 01:02:28,760 Speaker 1: the production of the other kind of money relative to that, 906 01:02:28,880 --> 01:02:32,320 Speaker 1: and that's why you see the movement in that direction. 907 01:02:32,360 --> 01:02:35,600 Speaker 1: You also see as real interest rates decline, which central 908 01:02:35,600 --> 01:02:39,040 Speaker 1: banks have to do by increasing the supply of money. 909 01:02:39,200 --> 01:02:43,560 Speaker 1: That causes the real interest rate, causes the goal to 910 01:02:43,600 --> 01:02:46,200 Speaker 1: go up because gold think of gold as being something 911 01:02:46,240 --> 01:02:49,760 Speaker 1: that's steady, and so if if you're taking the present 912 01:02:49,960 --> 01:02:54,400 Speaker 1: value of money now in the future, and the discount 913 01:02:54,480 --> 01:02:57,680 Speaker 1: rate for that, the interest rate that you're discounting goes down, 914 01:02:57,720 --> 01:03:00,880 Speaker 1: the real interest rate it goes up. In value. So 915 01:03:01,080 --> 01:03:07,160 Speaker 1: gold historically has been an effect of diversifier at certain 916 01:03:07,240 --> 01:03:11,360 Speaker 1: times in history when there's kind of that breakdown of 917 01:03:11,440 --> 01:03:15,240 Speaker 1: the monetary system, um, when you have you know, the 918 01:03:15,280 --> 01:03:18,480 Speaker 1: excessive printing of money and so on. So it is 919 01:03:18,560 --> 01:03:21,760 Speaker 1: a think of it that way, and it is, and 920 01:03:22,000 --> 01:03:26,000 Speaker 1: it's an effect of diversifier. UM. So I would say 921 01:03:26,080 --> 01:03:30,640 Speaker 1: instructuring a portfolio, there's it's important to have a piece 922 01:03:30,800 --> 01:03:33,720 Speaker 1: into gold that doesn't have a big, big piece. But 923 01:03:34,720 --> 01:03:39,360 Speaker 1: you know, I think almost everybody is pretty much underweighted 924 01:03:39,360 --> 01:03:42,080 Speaker 1: to that. Whether that's ten or fift or something I 925 01:03:42,080 --> 01:03:44,760 Speaker 1: don't I don't know, but so that's part of it. 926 01:03:44,800 --> 01:03:48,720 Speaker 1: But there are other storeholds of wealth. Again, I would 927 01:03:48,720 --> 01:03:51,360 Speaker 1: want to sort of break them into you know, are 928 01:03:51,480 --> 01:03:55,960 Speaker 1: they liquid, can you transact? Can you move them? As 929 01:03:56,000 --> 01:04:00,480 Speaker 1: distinct from some other assets, Let's say like real estate, 930 01:04:01,080 --> 01:04:06,160 Speaker 1: which is very much situational and and and not very liquid. 931 01:04:06,200 --> 01:04:08,360 Speaker 1: You know, you could change the picture of you have 932 01:04:08,840 --> 01:04:11,360 Speaker 1: I don't know, commercial or residential real estate in a 933 01:04:11,440 --> 01:04:14,880 Speaker 1: location New York, San Francisco and or X y Z London, 934 01:04:15,240 --> 01:04:20,360 Speaker 1: and the circumstances can change. It's not as effective as um. 935 01:04:20,400 --> 01:04:23,920 Speaker 1: You know, as a form of storehold of wealth. Liquidity 936 01:04:24,000 --> 01:04:27,680 Speaker 1: and diversification and rebalancing are very important. So let me 937 01:04:27,720 --> 01:04:30,280 Speaker 1: ask you a question that I have no idea what 938 01:04:30,360 --> 01:04:33,520 Speaker 1: your answer is going to be, although you just mentioned liquidly, 939 01:04:33,600 --> 01:04:37,000 Speaker 1: so maybe that's a factor. What are your thoughts about 940 01:04:37,040 --> 01:04:42,600 Speaker 1: cryptocurrencies like bitcoin? I think that at the end of 941 01:04:42,640 --> 01:04:46,160 Speaker 1: the day, we hasn't They have a number of problems, 942 01:04:46,240 --> 01:04:51,360 Speaker 1: but so three big problems. First is as an alternative 943 01:04:51,400 --> 01:04:54,360 Speaker 1: currency of purpose of the currency is a medium of 944 01:04:54,480 --> 01:04:58,240 Speaker 1: exchange and a store hold of wealth. And number three 945 01:04:58,680 --> 01:05:02,040 Speaker 1: is it has to them in order to be viable 946 01:05:02,360 --> 01:05:07,000 Speaker 1: not objectionable to the government. Uh, those are the three problems. 947 01:05:07,360 --> 01:05:10,480 Speaker 1: You can't go easily transact with a lot of things 948 01:05:10,480 --> 01:05:14,680 Speaker 1: with cryptocurrency. Can't go in and put the cryptocurrency on 949 01:05:14,800 --> 01:05:17,520 Speaker 1: my credit card and buy in the same way as 950 01:05:17,560 --> 01:05:20,720 Speaker 1: a store hold of wealth, it has enough. It has 951 01:05:20,760 --> 01:05:24,680 Speaker 1: its own volatility. To that lie Bro was going to 952 01:05:24,760 --> 01:05:27,360 Speaker 1: be something that would have been more viable in other words, 953 01:05:27,360 --> 01:05:30,959 Speaker 1: of stable value alternative. But as a store hold of wealth, 954 01:05:31,000 --> 01:05:34,280 Speaker 1: if it has a volatility, because it has so much speculation, 955 01:05:34,360 --> 01:05:36,479 Speaker 1: it's tough to say I want that as my store 956 01:05:36,520 --> 01:05:38,560 Speaker 1: hold of wealth. So it has a little bit of 957 01:05:38,560 --> 01:05:41,560 Speaker 1: a chicken and egg problem. And then at the end 958 01:05:41,600 --> 01:05:45,320 Speaker 1: of the day, governments are if it had any viability 959 01:05:45,440 --> 01:05:47,520 Speaker 1: or going to object to it, and in one way 960 01:05:47,560 --> 01:05:50,400 Speaker 1: or another will make it. You'll have to be a 961 01:05:50,440 --> 01:05:53,320 Speaker 1: criminal to use it. In other words, they will outlaw it. 962 01:05:53,480 --> 01:05:57,880 Speaker 1: They'll simply say they'll outlaw it, and then you have 963 01:05:58,400 --> 01:06:03,160 Speaker 1: real problems with it. I don't think, and central banks 964 01:06:03,160 --> 01:06:05,840 Speaker 1: don't use it in the same way. That doesn't mean 965 01:06:05,920 --> 01:06:10,800 Speaker 1: digital currencies. In other words, China will have a digital 966 01:06:10,960 --> 01:06:14,400 Speaker 1: rem embee or lawn at Europe will and we will 967 01:06:14,440 --> 01:06:18,720 Speaker 1: have digital currencies, but they're controlled by central banks. They're 968 01:06:18,760 --> 01:06:22,760 Speaker 1: not an alternative storreld of wealth that the governments will tolerate. 969 01:06:22,800 --> 01:06:25,640 Speaker 1: And history shown that. You know, why did they outlaw 970 01:06:25,800 --> 01:06:28,920 Speaker 1: gold around the world and you know in the United 971 01:06:28,960 --> 01:06:32,800 Speaker 1: States and so on, because they don't want those alternative 972 01:06:32,840 --> 01:06:36,480 Speaker 1: currencies and digitally, so the medium of exchange, even between 973 01:06:36,520 --> 01:06:39,680 Speaker 1: central banks is not going to be digital. Quite interesting. 974 01:06:40,040 --> 01:06:42,919 Speaker 1: Let me change this up on you. I know you've 975 01:06:42,960 --> 01:06:46,520 Speaker 1: been practicing meditation for a long time. How does that 976 01:06:46,560 --> 01:06:51,040 Speaker 1: factor into your decision making process? Does it have any 977 01:06:51,200 --> 01:06:57,760 Speaker 1: impact on the way you actually allocate capital? Analyze companies 978 01:06:57,840 --> 01:07:00,800 Speaker 1: think about the world. Meditation has given me and it 979 01:07:00,840 --> 01:07:06,160 Speaker 1: gives other people and equanimity what it means. What I 980 01:07:06,200 --> 01:07:11,680 Speaker 1: mean is I feel that I can look at things 981 01:07:11,880 --> 01:07:16,440 Speaker 1: in a less emotional way. I can accept realities as 982 01:07:16,640 --> 01:07:20,880 Speaker 1: as what they are. Basically. Mechanically, what happens is you 983 01:07:20,880 --> 01:07:23,479 Speaker 1: you go from your conscious brain to your subconscious brain. 984 01:07:23,760 --> 01:07:26,920 Speaker 1: You repeat a mantra and now work. It's a word, 985 01:07:27,080 --> 01:07:31,040 Speaker 1: that's a sound basically, and it therefore cleans your mind 986 01:07:31,120 --> 01:07:34,520 Speaker 1: of thoughts. And then when you repeat that sound, it 987 01:07:34,600 --> 01:07:39,000 Speaker 1: eventually disappear and you're in a subconscious state pretty much, 988 01:07:39,560 --> 01:07:42,720 Speaker 1: and that's very peaceful, but you're not conscious and you're 989 01:07:42,720 --> 01:07:46,080 Speaker 1: not unconscious. You're in your subconscious mind. That helps to 990 01:07:46,120 --> 01:07:49,320 Speaker 1: connect the subconscious and the conscious mind. And it also 991 01:07:49,400 --> 01:07:53,320 Speaker 1: helps to people to become more creative because a lot 992 01:07:53,400 --> 01:07:57,640 Speaker 1: of creativity comes from the subconscious and it allows me 993 01:07:57,880 --> 01:08:00,360 Speaker 1: and other people who do it to sort of do 994 01:08:00,560 --> 01:08:03,960 Speaker 1: things with a calmness, accepting the world as it is 995 01:08:04,040 --> 01:08:05,800 Speaker 1: and thinking the world is a puzzle and you have 996 01:08:05,880 --> 01:08:09,640 Speaker 1: to solve it. So meditation, uh, you know, has helped 997 01:08:09,680 --> 01:08:13,080 Speaker 1: me in those ways. And you've been you've been practicing 998 01:08:13,120 --> 01:08:16,920 Speaker 1: this for quite a while haven't you since nine that's 999 01:08:17,000 --> 01:08:20,040 Speaker 1: quite amazing. So I have to ask you about what's 1000 01:08:20,080 --> 01:08:25,400 Speaker 1: going on with this election depending on the outcome, is 1001 01:08:25,400 --> 01:08:27,920 Speaker 1: there anything that might happen that would force you to 1002 01:08:28,040 --> 01:08:31,400 Speaker 1: rethink your views on the economy or how you would 1003 01:08:31,400 --> 01:08:35,719 Speaker 1: allocate assets or is it really just a temporary blip 1004 01:08:35,840 --> 01:08:40,680 Speaker 1: and things continue on afterwards. No, I think it's very important. 1005 01:08:40,800 --> 01:08:44,560 Speaker 1: Um Let's say, if I was to take both parties 1006 01:08:45,200 --> 01:08:50,599 Speaker 1: will have um large deficits and and monetization. Both parties 1007 01:08:50,640 --> 01:08:55,080 Speaker 1: will have an aggressive China policy, I think, but one 1008 01:08:55,200 --> 01:09:01,839 Speaker 1: party will be more capitalist and say favor asset holders 1009 01:09:01,880 --> 01:09:05,799 Speaker 1: and so on, than one will be more um left 1010 01:09:05,840 --> 01:09:09,640 Speaker 1: and favor the redistribution. That doesn't mean let's say if 1011 01:09:09,680 --> 01:09:12,760 Speaker 1: you have a Biden election and you look at the 1012 01:09:12,760 --> 01:09:16,880 Speaker 1: particular policies, I think it would look more like the 1013 01:09:17,000 --> 01:09:22,959 Speaker 1: Roosevelt years in that you will have larger deficits, probably 1014 01:09:23,080 --> 01:09:27,360 Speaker 1: larger spending, larger stimulation and the like, but you will 1015 01:09:27,400 --> 01:09:31,280 Speaker 1: have more of a monetization of that, and that will 1016 01:09:31,320 --> 01:09:35,120 Speaker 1: be quote the stimulation for the policy. But at the 1017 01:09:35,160 --> 01:09:39,800 Speaker 1: same time, you're going to have the rise of tax rates, 1018 01:09:39,960 --> 01:09:46,400 Speaker 1: in particularly eliminating the tax changes the corporate tax changes, 1019 01:09:46,720 --> 01:09:50,320 Speaker 1: changing capital gains rates and so on, and those those 1020 01:09:50,439 --> 01:09:54,360 Speaker 1: rate changes will have an impact, and you'll have specific 1021 01:09:54,520 --> 01:10:01,000 Speaker 1: policies that will stimulate certain areas of the economy, like 1022 01:10:01,040 --> 01:10:05,719 Speaker 1: the green policies. You know, it's roughly targeted to nearly 1023 01:10:05,760 --> 01:10:08,240 Speaker 1: two trillion dollars. Anyway, we don't know how much will 1024 01:10:08,240 --> 01:10:10,639 Speaker 1: come of it exactly, but that will be a very 1025 01:10:10,880 --> 01:10:14,360 Speaker 1: big area. I think you'll see more infrastructure and so on, 1026 01:10:14,720 --> 01:10:18,719 Speaker 1: and so you'll see particular areas of the economy benefit 1027 01:10:18,880 --> 01:10:23,920 Speaker 1: and other areas of the economy are not benefit. And 1028 01:10:23,920 --> 01:10:26,679 Speaker 1: and so there's you know, you get into the which 1029 01:10:26,760 --> 01:10:29,680 Speaker 1: sectors and all of that would would benefit on you know, 1030 01:10:29,720 --> 01:10:33,560 Speaker 1: and how much of the discounting thales will have implications. 1031 01:10:33,760 --> 01:10:37,960 Speaker 1: I think the most important issue will be whether the 1032 01:10:38,080 --> 01:10:43,480 Speaker 1: country can be brought together. And I'm worried that capitalists 1033 01:10:44,479 --> 01:10:47,040 Speaker 1: know how to increase the size of the pie. They 1034 01:10:47,120 --> 01:10:51,679 Speaker 1: understand the profit system, they understand productivity and so on, 1035 01:10:52,400 --> 01:10:54,880 Speaker 1: but they don't know how to divide the pie that well. 1036 01:10:55,200 --> 01:10:58,559 Speaker 1: And socialists or those that are more of the left, 1037 01:10:59,080 --> 01:11:03,479 Speaker 1: have a problem for using as much the increase in productivity. 1038 01:11:04,000 --> 01:11:08,120 Speaker 1: And so if you know, my my hope My dream 1039 01:11:08,760 --> 01:11:13,400 Speaker 1: would be that you have and all encompassing that brings 1040 01:11:13,439 --> 01:11:19,120 Speaker 1: together smart people who understand the mechanics of economics, UM 1041 01:11:19,160 --> 01:11:24,479 Speaker 1: and policy and UM and but represent different points of view. 1042 01:11:24,479 --> 01:11:27,479 Speaker 1: It can be brought together to get us to be 1043 01:11:27,640 --> 01:11:30,479 Speaker 1: productive and do the right things, whether they're education and 1044 01:11:30,600 --> 01:11:33,360 Speaker 1: be productive and all of those things and move in 1045 01:11:33,360 --> 01:11:36,800 Speaker 1: the right direction. And I think whether that happens or 1046 01:11:36,840 --> 01:11:40,800 Speaker 1: not will be of paramount importance. It's a difficult um 1047 01:11:41,080 --> 01:11:43,799 Speaker 1: situation to be because of where we are in the cycle. 1048 01:11:44,200 --> 01:11:47,040 Speaker 1: In other words, every day is not a brand new day. 1049 01:11:47,400 --> 01:11:52,839 Speaker 1: So we whoever inherit the presidency, whatever party, whatever president, 1050 01:11:53,360 --> 01:11:56,920 Speaker 1: will inherit an income statement and a balance sheet that 1051 01:11:57,280 --> 01:12:01,000 Speaker 1: is what it is today, and will inherit certain circumstances, 1052 01:12:01,320 --> 01:12:03,799 Speaker 1: and that's going to be tough. So the real question 1053 01:12:03,920 --> 01:12:05,800 Speaker 1: is how we're going to be with each other, I think, 1054 01:12:05,840 --> 01:12:09,400 Speaker 1: and that's the most paramount important question. I think you 1055 01:12:09,439 --> 01:12:12,840 Speaker 1: mentioned the Green Deal that the Biden camp has been 1056 01:12:12,840 --> 01:12:18,040 Speaker 1: talking about. I know that you've been very interested in oceans, 1057 01:12:18,120 --> 01:12:22,559 Speaker 1: and your Blue Ocean project has been very successful. So 1058 01:12:22,640 --> 01:12:26,080 Speaker 1: let's use that as an excuse to dive into your 1059 01:12:26,280 --> 01:12:29,439 Speaker 1: philanthropic works. Tell us a little bit about what you've 1060 01:12:29,479 --> 01:12:33,880 Speaker 1: been doing in Connecticut with schools and buying computers for kids, 1061 01:12:33,960 --> 01:12:37,679 Speaker 1: and what you've been doing in terms of the Dahio 1062 01:12:37,800 --> 01:12:42,080 Speaker 1: Center for Health Justice. You know, I'm very lucky also 1063 01:12:42,160 --> 01:12:46,240 Speaker 1: to have a wife who who shares my concerns, and 1064 01:12:46,320 --> 01:12:49,160 Speaker 1: she really were We live in a state which is 1065 01:12:49,200 --> 01:12:54,600 Speaker 1: the highest per capita income, has the greatest gap in incomes, 1066 01:12:54,640 --> 01:12:56,800 Speaker 1: and owes a lot of money. So it's a it's 1067 01:12:56,800 --> 01:12:59,800 Speaker 1: a terrible thing and that we feel like, you know, 1068 01:13:00,000 --> 01:13:03,040 Speaker 1: as our community and we see see those things and 1069 01:13:03,280 --> 01:13:07,719 Speaker 1: so it's you know, it's bad and basic. So COVID 1070 01:13:08,120 --> 01:13:12,280 Speaker 1: highlights this, but the difference in education. So we encountered 1071 01:13:12,320 --> 01:13:16,439 Speaker 1: the fact that um, sixty kids in the state of 1072 01:13:16,479 --> 01:13:21,400 Speaker 1: Connecticut didn't have any computers. Well normally you should have it, 1073 01:13:22,000 --> 01:13:25,559 Speaker 1: and they don't have connectivity. I'm not having computers. Not 1074 01:13:25,600 --> 01:13:28,320 Speaker 1: having connectivity is you know, it's not it's like not 1075 01:13:28,400 --> 01:13:32,679 Speaker 1: having toilets and not having running water in your house today. Um. 1076 01:13:32,720 --> 01:13:36,840 Speaker 1: And when we had education as an issue, you know, 1077 01:13:37,040 --> 01:13:38,880 Speaker 1: what what are you going to do just just not 1078 01:13:39,160 --> 01:13:42,439 Speaker 1: educate the kids? And the state didn't have the money 1079 01:13:42,720 --> 01:13:46,680 Speaker 1: and um so anyway, we uh, we bought you know, 1080 01:13:46,720 --> 01:13:50,519 Speaker 1: sixty computers, and we're trying to deal with you know, 1081 01:13:50,560 --> 01:13:54,240 Speaker 1: the connectivity and partnership with the locals. We the people 1082 01:13:54,360 --> 01:13:57,400 Speaker 1: on the ground really like the teachers. We have the 1083 01:13:57,560 --> 01:14:02,560 Speaker 1: utmost respect for are the teachers who are in these positions. 1084 01:14:02,600 --> 01:14:05,440 Speaker 1: They know the best and we and my wife particularly 1085 01:14:06,160 --> 01:14:09,160 Speaker 1: works with them, and so we try to help in 1086 01:14:09,240 --> 01:14:11,840 Speaker 1: those ways. And and you know, other ways. We're bringing 1087 01:14:11,880 --> 01:14:16,200 Speaker 1: micro finance to here, to the state, and we're doing 1088 01:14:16,240 --> 01:14:19,400 Speaker 1: other things to try to help in our small ways. 1089 01:14:19,680 --> 01:14:22,639 Speaker 1: We're still you know, dropping the bucket related to that. 1090 01:14:22,800 --> 01:14:27,000 Speaker 1: And then you're asking about the health. So education is 1091 01:14:27,600 --> 01:14:31,640 Speaker 1: a fundamental right and so on, and I feel with 1092 01:14:31,800 --> 01:14:34,719 Speaker 1: my wife and I feel very blessed and so we 1093 01:14:35,160 --> 01:14:38,400 Speaker 1: feel um that that's something we want to do. Education. 1094 01:14:38,520 --> 01:14:42,360 Speaker 1: And then this health justice thing, yes, we've created with 1095 01:14:42,840 --> 01:14:47,920 Speaker 1: New York Presbyterian. We initiated Health Justice Center because there's 1096 01:14:47,960 --> 01:14:52,760 Speaker 1: such a big difference in poverty rates, you know, particularly 1097 01:14:53,000 --> 01:14:56,639 Speaker 1: among black and brown communities. I mean, it's just so 1098 01:14:56,840 --> 01:15:01,920 Speaker 1: difficult the poverty, the a number of people together in 1099 01:15:02,000 --> 01:15:07,519 Speaker 1: the places, the rates of contracting, COVID, all of these things, 1100 01:15:07,520 --> 01:15:11,680 Speaker 1: and even attention to how the bodies work differently and 1101 01:15:11,720 --> 01:15:14,280 Speaker 1: all of that has been neglected, and I think it 1102 01:15:14,360 --> 01:15:17,960 Speaker 1: must be. It must be very difficult to be in 1103 01:15:17,960 --> 01:15:22,040 Speaker 1: those circumstances and not receiving it any health So we um, 1104 01:15:22,200 --> 01:15:24,479 Speaker 1: you know, we just made a donation of fifty million 1105 01:15:24,520 --> 01:15:27,839 Speaker 1: dollar donation to set up that Center for Health Justice. 1106 01:15:28,200 --> 01:15:31,600 Speaker 1: You know, we're lucky philanthropically that you know, we have 1107 01:15:31,680 --> 01:15:35,360 Speaker 1: those resources and we have a certain perspective because you know, 1108 01:15:35,400 --> 01:15:37,720 Speaker 1: we've come from not having much to having a lot, 1109 01:15:37,760 --> 01:15:40,800 Speaker 1: and we see these things. So anyway, that's what we're 1110 01:15:40,880 --> 01:15:43,600 Speaker 1: lucky enough to do. And I know you've done a 1111 01:15:43,640 --> 01:15:46,720 Speaker 1: couple of projects on the oceans with Mike Bloomberg, and 1112 01:15:46,800 --> 01:15:50,719 Speaker 1: you've done a number of projects. And I do recall 1113 01:15:50,800 --> 01:15:54,160 Speaker 1: reading you say something about the giving pledge. Am I 1114 01:15:54,400 --> 01:15:57,080 Speaker 1: am I recalling that correctly. Yeah, my wife and I 1115 01:15:57,160 --> 01:16:00,000 Speaker 1: decided to give away more than we're going to get 1116 01:16:00,080 --> 01:16:03,639 Speaker 1: away a lot of most of our network and then 1117 01:16:04,040 --> 01:16:06,919 Speaker 1: Bill Gates asked me about that, and we were delighted 1118 01:16:06,960 --> 01:16:09,680 Speaker 1: to do it. We we learned from each other. Uh 1119 01:16:09,840 --> 01:16:12,920 Speaker 1: doesn't change the amount of money that we would donate, 1120 01:16:12,960 --> 01:16:15,680 Speaker 1: but we I learned a lot and we learn a 1121 01:16:15,680 --> 01:16:19,040 Speaker 1: lot through that process. And yes, you know you touched 1122 01:16:19,080 --> 01:16:22,840 Speaker 1: on ocean exploration, which is also a sort of a 1123 01:16:22,880 --> 01:16:25,960 Speaker 1: passion which I could get into. But we we do 1124 01:16:26,000 --> 01:16:28,880 Speaker 1: a number of things micro finance. We make it a 1125 01:16:28,960 --> 01:16:35,120 Speaker 1: family activity. Um, so we have four sons and daughters 1126 01:16:35,120 --> 01:16:37,519 Speaker 1: in law and so on, and so we view the 1127 01:16:37,520 --> 01:16:42,280 Speaker 1: philanthropy as pursuing each other's philanthropic passions and that's how 1128 01:16:42,280 --> 01:16:45,160 Speaker 1: we do it. Sounds interesting, So I know I only 1129 01:16:45,200 --> 01:16:49,280 Speaker 1: have you for a few minutes more. Let me jump 1130 01:16:49,360 --> 01:16:52,639 Speaker 1: to our speed rounds, our favorite questions we ask all 1131 01:16:52,640 --> 01:16:56,760 Speaker 1: our guests, and um, let's plow right through these. So 1132 01:16:57,080 --> 01:17:00,160 Speaker 1: everybody under lockdown these days is streaming a lot out 1133 01:17:00,200 --> 01:17:02,799 Speaker 1: of media. Tell us what you're either watching or listening 1134 01:17:02,800 --> 01:17:10,640 Speaker 1: to these days. Well, by and large, I'm so um 1135 01:17:10,680 --> 01:17:14,120 Speaker 1: targeted to try to learn about the things that I want. 1136 01:17:14,200 --> 01:17:17,200 Speaker 1: And I'm very lucky to be able to speak to 1137 01:17:18,120 --> 01:17:22,240 Speaker 1: almost speak with almost anybody that I can speak with, 1138 01:17:22,360 --> 01:17:25,559 Speaker 1: and so, um, it's not general media that I'm doing, 1139 01:17:25,920 --> 01:17:28,400 Speaker 1: it's it's what I do or podcasts and so and 1140 01:17:28,520 --> 01:17:32,479 Speaker 1: although there's so many fabulous ones that I'm that I 1141 01:17:32,520 --> 01:17:36,040 Speaker 1: feel I'm missing out on. But if I can get 1142 01:17:36,160 --> 01:17:39,640 Speaker 1: the person and I can ask them questions and do 1143 01:17:39,760 --> 01:17:42,280 Speaker 1: the research. That's what I've been doing a lot of it. 1144 01:17:42,439 --> 01:17:45,760 Speaker 1: And because I can do it so easily, I can 1145 01:17:45,760 --> 01:17:49,599 Speaker 1: go from one to the other and anywhere in the world. Um, 1146 01:17:49,960 --> 01:17:53,120 Speaker 1: I've been like a kid in a candy store doing that. Well, 1147 01:17:53,200 --> 01:17:56,400 Speaker 1: everybody is stuck home, just waiting for the call from Ray. 1148 01:17:56,439 --> 01:18:00,200 Speaker 1: That's that's pretty funny. Tell us about tell us about 1149 01:18:00,240 --> 01:18:05,200 Speaker 1: your early your early mentors who helped shape your career. Well, 1150 01:18:05,720 --> 01:18:09,640 Speaker 1: you know they were they were mostly um, just like 1151 01:18:10,000 --> 01:18:15,599 Speaker 1: individuals who cared about me. UM. I remember I started 1152 01:18:16,040 --> 01:18:22,280 Speaker 1: um don stock. I caddied and I was at a 1153 01:18:22,360 --> 01:18:25,400 Speaker 1: twelve I bought my first stock and I would walk 1154 01:18:25,439 --> 01:18:30,519 Speaker 1: around UM and this nice man UM who was a 1155 01:18:30,560 --> 01:18:33,960 Speaker 1: specialist on the New York Stock Exchange floor, was just 1156 01:18:34,040 --> 01:18:37,760 Speaker 1: a great guy and talked and we talked about markets 1157 01:18:37,760 --> 01:18:43,519 Speaker 1: and things. UM and his kindness and his insights and 1158 01:18:43,560 --> 01:18:46,640 Speaker 1: so on helped to get me, you know, hooked on 1159 01:18:46,720 --> 01:18:50,760 Speaker 1: the game. And so he had a fit and a fact. 1160 01:18:51,040 --> 01:18:53,639 Speaker 1: You know, I remember, you know a teacher of mine, 1161 01:18:53,680 --> 01:18:57,760 Speaker 1: a particular teacher, UM I remember. And then as I 1162 01:18:57,840 --> 01:19:04,240 Speaker 1: got older, let's say Paul Boker, Um I UM not 1163 01:19:04,560 --> 01:19:09,360 Speaker 1: since before vente when was the breakdown? Of Monetary System 1164 01:19:09,600 --> 01:19:14,880 Speaker 1: UM nine seventy seventy one. I first got exposure to 1165 01:19:14,920 --> 01:19:17,640 Speaker 1: Paul Boker, and then over a period of time I 1166 01:19:17,720 --> 01:19:20,160 Speaker 1: was lucky enough to get to know him and have 1167 01:19:20,280 --> 01:19:24,080 Speaker 1: him become a good friend of mine. And uh, he 1168 01:19:24,240 --> 01:19:28,719 Speaker 1: was definitely UM a role model. And I think role 1169 01:19:28,760 --> 01:19:32,640 Speaker 1: models and heroes. UM. I think we're in an environment, 1170 01:19:32,680 --> 01:19:35,400 Speaker 1: by the way I'm digressing a little bit UM, in 1171 01:19:35,439 --> 01:19:39,840 Speaker 1: which where there's so much criticism it's fashionable to criticize 1172 01:19:39,880 --> 01:19:43,400 Speaker 1: and bring down, and we don't have any agreed upon heroes. 1173 01:19:44,400 --> 01:19:47,439 Speaker 1: But he was. He was a hero of mine. UM. 1174 01:19:47,520 --> 01:19:50,120 Speaker 1: And then UM, and then there was there was a 1175 01:19:51,000 --> 01:19:55,320 Speaker 1: from my son's there was a scout master and well, anyway, 1176 01:19:55,360 --> 01:19:58,800 Speaker 1: I can go on and on UM. Of those different people. 1177 01:19:58,880 --> 01:20:03,439 Speaker 1: The personal in my life had the biggest effect. But also, 1178 01:20:04,080 --> 01:20:08,160 Speaker 1: you know, seeing what heroic characters were had an effect 1179 01:20:08,160 --> 01:20:10,720 Speaker 1: on my life. And then I would say for markets 1180 01:20:10,800 --> 01:20:14,200 Speaker 1: it was don start quite fascinating. I know you're a 1181 01:20:14,200 --> 01:20:17,120 Speaker 1: big reader. Tell us what you're reading these days, and 1182 01:20:17,200 --> 01:20:20,760 Speaker 1: give us some of your all time favorite books. I 1183 01:20:20,800 --> 01:20:24,840 Speaker 1: don't read as much as I hunt in books. In 1184 01:20:25,000 --> 01:20:30,400 Speaker 1: other words, I'm like I'm going after something and so 1185 01:20:30,840 --> 01:20:36,200 Speaker 1: I have many books that I then drill into, but 1186 01:20:36,320 --> 01:20:39,280 Speaker 1: I do it in a certain way where I can 1187 01:20:39,400 --> 01:20:42,000 Speaker 1: almost get to the part of the book that is 1188 01:20:42,040 --> 01:20:45,920 Speaker 1: the part that I need to understand. And so for 1189 01:20:46,000 --> 01:20:50,799 Speaker 1: the last year and a half, I wanted to study, 1190 01:20:51,120 --> 01:20:54,439 Speaker 1: um the rises and declines of reserve currencies then, which 1191 01:20:54,520 --> 01:20:59,480 Speaker 1: led me to the rises and declines of empires, and 1192 01:20:59,479 --> 01:21:05,120 Speaker 1: and that led me to study, you know, a whole 1193 01:21:05,160 --> 01:21:08,719 Speaker 1: bunch of books and then speak to the people, Paul 1194 01:21:08,800 --> 01:21:12,640 Speaker 1: Kennedy's Rising of the Empires. I mean, I can go 1195 01:21:12,720 --> 01:21:15,760 Speaker 1: on and you know, on list those, um. If you're 1196 01:21:15,880 --> 01:21:19,879 Speaker 1: asking for good books, I would say three good books 1197 01:21:20,120 --> 01:21:24,920 Speaker 1: that I recommend as um Lessons from History by will 1198 01:21:25,000 --> 01:21:28,040 Speaker 1: and Ariel Durrant, which is like a hundred and four 1199 01:21:28,160 --> 01:21:31,679 Speaker 1: page book, I think, and it's a summary of these 1200 01:21:31,680 --> 01:21:36,719 Speaker 1: great historians who um wrote five thousand pages on something 1201 01:21:36,760 --> 01:21:39,960 Speaker 1: like five thousand years of history and sort of distilled 1202 01:21:40,000 --> 01:21:43,240 Speaker 1: the themes down to that. I would say, Uh, Paul 1203 01:21:43,320 --> 01:21:47,120 Speaker 1: Kennedy's Book of Rising client Great Empires or Great Powers 1204 01:21:47,680 --> 01:21:52,519 Speaker 1: is a great book. I would say on evolution, I 1205 01:21:52,560 --> 01:21:55,840 Speaker 1: think evolution is very interesting in it so it's humanity 1206 01:21:55,840 --> 01:21:59,360 Speaker 1: and how uh and goes beyond humanity to all the species. 1207 01:21:59,800 --> 01:22:04,080 Speaker 1: I would say I really liked Richard Dawkins A River 1208 01:22:04,320 --> 01:22:09,960 Speaker 1: from Eden. My son gave me um Joseph Campbell's Hero 1209 01:22:10,120 --> 01:22:13,559 Speaker 1: of a Thousand Faces, which I think is just you know, 1210 01:22:13,560 --> 01:22:18,440 Speaker 1: it's an arc life arc and very very practical, very interesting. 1211 01:22:18,760 --> 01:22:22,160 Speaker 1: These are the books I suppose. I think some good 1212 01:22:22,200 --> 01:22:27,439 Speaker 1: books that are just recently came out. Uh. Read Hastings 1213 01:22:27,479 --> 01:22:33,360 Speaker 1: and I believe about organizational culture. Read Hastings, Netflix founder 1214 01:22:33,400 --> 01:22:37,719 Speaker 1: and running of Netflix, and we believe in certain culture 1215 01:22:37,760 --> 01:22:40,479 Speaker 1: things in our organizations. He wrote a good book. H R. 1216 01:22:40,680 --> 01:22:44,920 Speaker 1: McMaster's book that just came out is a very good one. 1217 01:22:45,400 --> 01:22:48,719 Speaker 1: Richard Hans just came out with who Authory. I can't 1218 01:22:48,760 --> 01:22:52,519 Speaker 1: remember the exact names, but it was the history of 1219 01:22:52,560 --> 01:22:54,920 Speaker 1: the world or something that gave a good overview. Those 1220 01:22:54,960 --> 01:22:58,559 Speaker 1: are a bunch that I all think are are good 1221 01:22:59,000 --> 01:23:01,760 Speaker 1: that'll key people busy for a couple of days. If 1222 01:23:01,840 --> 01:23:05,240 Speaker 1: a high schooler or a recent college graduate asked you 1223 01:23:05,360 --> 01:23:10,640 Speaker 1: for advice about beginning a career in the world of finance, 1224 01:23:11,640 --> 01:23:14,559 Speaker 1: what would you tell them You couldn't have picked a 1225 01:23:14,600 --> 01:23:18,679 Speaker 1: better area to do it. Markets. I love I love 1226 01:23:18,760 --> 01:23:24,160 Speaker 1: markets because particularly global macro because you cover almost everything 1227 01:23:24,160 --> 01:23:25,880 Speaker 1: in the world and you can bet on it and 1228 01:23:25,920 --> 01:23:29,000 Speaker 1: test how good you are, and you could go short 1229 01:23:29,160 --> 01:23:32,160 Speaker 1: or along and and so it's great exposures you to 1230 01:23:32,200 --> 01:23:35,400 Speaker 1: the world. But I would say, you know, play the game, 1231 01:23:36,200 --> 01:23:39,360 Speaker 1: and that you don't know what you're doing, So be humble, 1232 01:23:39,880 --> 01:23:43,960 Speaker 1: get beat up, and learn your lessons. What you will learn, 1233 01:23:45,000 --> 01:23:48,040 Speaker 1: I think is that what you don't know and how 1234 01:23:48,080 --> 01:23:52,000 Speaker 1: you deal with not knowing is even more important than 1235 01:23:52,040 --> 01:23:58,000 Speaker 1: anything you know. So the power of diversification, the ability 1236 01:23:58,120 --> 01:24:02,960 Speaker 1: to gain humility, it'll teach you humility, and it will 1237 01:24:03,000 --> 01:24:06,320 Speaker 1: teach you open mindedness, and if you're curious, it'll be 1238 01:24:06,439 --> 01:24:10,040 Speaker 1: it'll be great, and it will give you a measurement 1239 01:24:10,200 --> 01:24:12,719 Speaker 1: you know of every day of how you're doing. That's 1240 01:24:12,720 --> 01:24:16,639 Speaker 1: an objective measurement that's terrific. And if you get good 1241 01:24:16,680 --> 01:24:19,360 Speaker 1: at it, um you know, it's one of those careers 1242 01:24:19,479 --> 01:24:22,599 Speaker 1: that's rewarding. I mean, I did it because I love 1243 01:24:22,680 --> 01:24:24,760 Speaker 1: to play the game, and I just happen to be 1244 01:24:24,840 --> 01:24:27,240 Speaker 1: lucky that it made money. I didn't, you know, I 1245 01:24:27,240 --> 01:24:31,280 Speaker 1: could have been something an architect or something else and 1246 01:24:31,680 --> 01:24:34,400 Speaker 1: wouldn't have been the same. So it's got those benefits, 1247 01:24:34,960 --> 01:24:39,760 Speaker 1: but it it's a lifelong journey and it's it's expect 1248 01:24:39,760 --> 01:24:43,280 Speaker 1: the ride. Learn your humility. I have an expression, pain 1249 01:24:43,760 --> 01:24:48,520 Speaker 1: plus reflection equals progress. And how you make your mistakes 1250 01:24:48,680 --> 01:24:52,280 Speaker 1: and how you learn from those mistakes, how you learn 1251 01:24:52,840 --> 01:24:57,120 Speaker 1: how reality works, and how to deal with reality, and 1252 01:24:57,200 --> 01:25:01,760 Speaker 1: to then write down your principles that you learn and 1253 01:25:01,840 --> 01:25:04,479 Speaker 1: learn and build on them. That that's, you know, it's 1254 01:25:04,479 --> 01:25:07,839 Speaker 1: a great path, really good answer. And our final question, 1255 01:25:08,640 --> 01:25:11,360 Speaker 1: what do you know about the world of investing today 1256 01:25:11,400 --> 01:25:14,760 Speaker 1: that you wish you knew forty years ago or so 1257 01:25:15,040 --> 01:25:19,000 Speaker 1: when you were really ramping up. Well, what I learned 1258 01:25:19,000 --> 01:25:21,760 Speaker 1: over and over again is that, you know, let's say 1259 01:25:21,800 --> 01:25:25,040 Speaker 1: forty years ago, I thought I I just learned from 1260 01:25:25,080 --> 01:25:28,439 Speaker 1: my experiences, and I was arrogant enough to think I'm 1261 01:25:28,439 --> 01:25:30,519 Speaker 1: going to go in there and just pick the things. 1262 01:25:30,800 --> 01:25:35,600 Speaker 1: And what I learned along the way was how to systemize, 1263 01:25:36,240 --> 01:25:39,880 Speaker 1: how to convert look back in time and the same 1264 01:25:39,920 --> 01:25:42,800 Speaker 1: thing happens over and over. To look at reality as 1265 01:25:42,800 --> 01:25:46,240 Speaker 1: a machine, to understand how the machine works, and then 1266 01:25:46,240 --> 01:25:51,160 Speaker 1: to convert that learning into algorithms so that it works 1267 01:25:51,200 --> 01:25:54,280 Speaker 1: in parallel with my brain. Because my brain is limited 1268 01:25:54,320 --> 01:25:57,840 Speaker 1: in its capacity to juggle a lot of things and um, 1269 01:25:58,040 --> 01:26:01,519 Speaker 1: and then you know, to keep learning that humility and 1270 01:26:01,560 --> 01:26:05,080 Speaker 1: finding out, you know, what's the next new thing that's 1271 01:26:05,120 --> 01:26:07,400 Speaker 1: going to happen that I might have missed. I missed 1272 01:26:07,400 --> 01:26:11,360 Speaker 1: the pandemic. The pandemic took me by surprise. I figured 1273 01:26:11,360 --> 01:26:13,680 Speaker 1: I didn't have an edge on the pandemic, and that 1274 01:26:13,760 --> 01:26:17,120 Speaker 1: was stupid, because you know, you read history and you 1275 01:26:17,160 --> 01:26:20,719 Speaker 1: see that these acts of nature could be pandemic, could 1276 01:26:20,720 --> 01:26:24,200 Speaker 1: be endwat diseases and so on of had big impacts 1277 01:26:24,280 --> 01:26:30,040 Speaker 1: and so um, you know, I guess I learned that 1278 01:26:30,120 --> 01:26:32,040 Speaker 1: I you know, what's going to hit me in the 1279 01:26:32,080 --> 01:26:36,439 Speaker 1: head to worry about that, and so um, I wish 1280 01:26:36,640 --> 01:26:39,000 Speaker 1: you know. And that's something I think I've learned, and 1281 01:26:39,040 --> 01:26:43,599 Speaker 1: the markets will teach that new young investor um that 1282 01:26:43,760 --> 01:26:47,080 Speaker 1: pretty quickly. So I learned it then, and I wish 1283 01:26:47,120 --> 01:26:49,720 Speaker 1: I knew more about the things like I wish I 1284 01:26:49,760 --> 01:26:53,439 Speaker 1: knew more about pandemics before uh this year. But anyway, 1285 01:26:53,640 --> 01:26:56,439 Speaker 1: that's kind of my answer. Thanks Ray for being so 1286 01:26:56,479 --> 01:27:00,559 Speaker 1: generous with your time. We have been speaking with A. Dahio, 1287 01:27:00,800 --> 01:27:05,160 Speaker 1: the founder, chairman and co c i O of Bridgewater Associates. 1288 01:27:05,600 --> 01:27:08,800 Speaker 1: If you enjoy this conversation, be sure and check out 1289 01:27:08,840 --> 01:27:13,720 Speaker 1: all our previous conversations. We have over three hundred interviews 1290 01:27:13,720 --> 01:27:20,519 Speaker 1: and you can find that wherever Finder Podcasts are sold iTunes, Spotify, Overcast, Stitcher, 1291 01:27:20,680 --> 01:27:25,479 Speaker 1: a cast. We love your comments, feedback and suggestions right 1292 01:27:25,560 --> 01:27:29,240 Speaker 1: to us at m IB podcast at Bloomberg dot net. 1293 01:27:29,520 --> 01:27:32,920 Speaker 1: Give us a review on Apple iTunes. You can check 1294 01:27:32,920 --> 01:27:36,839 Speaker 1: out my weekly column on Bloomberg dot com slash Opinion. 1295 01:27:37,800 --> 01:27:40,800 Speaker 1: Sign up for our daily reading list at rid Haltz 1296 01:27:40,840 --> 01:27:43,800 Speaker 1: dot com. Follow me on Twitter at rit Halts. I 1297 01:27:43,840 --> 01:27:45,840 Speaker 1: would be remiss if I did not thank the Crack 1298 01:27:45,920 --> 01:27:49,639 Speaker 1: staff that helps put these conversations together each week. Michael 1299 01:27:49,680 --> 01:27:53,240 Speaker 1: Batnick is my head of research. Michael Boyle is my producer. 1300 01:27:53,760 --> 01:27:57,519 Speaker 1: Nick Falco is my audio engineer. Atika val Brunn is 1301 01:27:57,520 --> 01:28:02,200 Speaker 1: our project manager. I'm Arry Results. You've been listening to 1302 01:28:02,320 --> 01:28:05,160 Speaker 1: Master's in Business on Bloomberg Radio.