Ray Dalio on AI, Job Loss & the Future of the Economy | EP #148

Summary

Highlights

• Peter Diamandis interviews Ray Dalio about the economic implications of AI and robotics. 🤖
• Discussion on how AI could both boost productivity and trigger job displacement. ⚙️
• Dalio discusses the impact of geopolitical tensions, especially with China. 🌏
• The importance of understanding economic cycles to anticipate financial trends is emphasized. 📈
• A discussion on the potential breakthroughs in human healthspan due to technological advances. 🧬

Key Takeaways

• AI and robotics are set to be major forces in the economy but could exacerbate job displacement and economic challenges. ⚙️
• The potential economic downturns and geopolitical tensions, especially with China, will demand strategic navigation. 🌏
• Ray Dalio's insights highlight the need to understand economic cycles to navigate future financial landscapes. 📈
• Future technological advances could significantly impact human healthspan and longevity, reshaping societal structures. 🧬
• Gold remains a preferred asset for Dalio over Bitcoin, due to its historical stability and lesser susceptibility to governmental control. 🏆

Overview

Chapters

• 00:00 - 01:30: Opening Remarks and Book Discussion Introduction The chapter opens with a discussion on the economic impact of AI and Robotics, highlighting concerns about potential financial disruption due to technological advancements. The speaker expresses a strong sense of dynamic energy and progress in the biotech and AI industries. AI is identified as a significant driving force, akin to a 'Tailwind' for economic growth. However, the balance between the positive momentum ('Tailwind') and challenges ('headwind') is questioned. The speaker adopts an optimistic view, portraying themselves as someone who sees potential and abundance, with an 'overflowing glass' outlook.
• 01:30 - 03:30: Impact of AI and Robotics on Economy The chapter discusses the potential impact of artificial intelligence and robotics on the global economy, focusing on the possibility of economic downturns and market volatility in the near future.
• 03:30 - 06:30: Ray Dalio's Global Macro Investing Journey The chapter delves into Ray Dalio's perspectives on global macro investing, covering various topics such as the reasons behind holding gold instead of Bitcoin, and the impact of AI and Robotics on both the global and US economies. Dalio also shares advice for entrepreneurs who are establishing tech companies, particularly within the next couple of years. The discussion extends to include insights on China's role and the broader future of the world. The conversation is anchored around his latest book, which analyzes how countries reach financial ruin.
• 06:30 - 13:00: Overview of the Five Major Forces The discussion begins with an introduction from a speaker who is in Santa Monica, greeting another speaker based in Abu Dhabi. The conversation is part of a 'moonshots' series, hinting at a forward-thinking or ambitious dialogue possibly related to innovation, entrepreneurship or major global trends. The focus seems to be on understanding the impact of certain forces on entrepreneurs, particularly from a U.S. perspective. Both speakers have a history of meeting in various international locations, suggesting they are experienced and well-connected in global business or technology sectors.
• 13:00 - 16:30: Internal Order Disorder Cycle In this chapter, the discussion revolves around the economic challenges faced by countries, particularly focusing on how nations experience financial collapse. The narrative ties this into the broader theme of a changing world order, highlighting the impacts on individuals and entrepreneurs who are engaged in advancing fields such as AI, robotics, and longevity. Amidst these advancements, the underlying desire for a stable world to support growth and aspirations is emphasized.
• 16:30 - 21:30: Technology's Impact on Economy and Society The chapter begins with an emphasis on understanding the cycles that humanity and countries undergo. This knowledge helps predict future trends. The speaker modestly accepts the challenge to discuss these cycles to the best of their ability. The chapter then hints at the introduction of 'five major forces' impacting these cycles, setting the scene for a deeper exploration of technology's influence on the economy and society.
• 21:30 - 31:00: Discussion on Inflation, Debt, and Economic Cycles The chapter titled "Discussion on Inflation, Debt, and Economic Cycles" begins with a brief introduction to the speaker's extensive background in global macro investing. Over a span of 50 years, the speaker has gained insights into various economic systems and their operations across different countries. The narration touches upon a systems mechanic perspective focusing on cause and effect which is indicative of the speaker's approach to understanding the complexities of economic cycles, inflation, and debt.
• 31:00 - 45:30: Role of Technology and AI as a Force The chapter discusses the transformative role of technology and artificial intelligence as a driving force. The narrative explores how historical events, which were surprising at the time because they were unprecedented in the narrator's lifetime, were actually part of a broader historical pattern. These events, occurring approximately five to six years ago, exemplify the ongoing impact of technology and AI beyond individual lifetimes, highlighting their historical and future significance.
• 45:30 - 58:10: China and Global Geopolitical Dynamics The chapter discusses the cycles of rise and decline of reserve currencies, countries, and empires, highlighting economic patterns. It starts by acknowledging the speaker's initial understanding of the debt, money, and market cycles, and mentions encountering the first three cycles before realizing two more. Emphasis is placed on the short-term cycle characterized by recession and inflation.

Ray Dalio on AI, Job Loss & the Future of the Economy | EP #148 Transcription

• 00:00 - 00:30 our country is going to go broke faster because of AI and Robotics that is likely to happen there's going to be great disruption I can vibrantly feel the energy in the biotech world in the AI World technology and AI is going to be a force and it's a Tailwind the question is is the Tailwind greater than the head wind listen I'm the guy who not the Glass isn't half full the glass is overflowing I'm Mr optimism abundance
• 00:30 - 01:00 but reading your book it's got me thinking a lot as we take 1 2 3 4 5 years do you think you're not going to have an economic downturn do you think you're not going to have a bare Market really how do you think about China we are at war with China and you cannot lose the war everybody Welcome to moonshots today my guest is none other than Ray doio the founder of Bridgewater the world's largest hedge fund with $130 billion
• 01:00 - 01:30 under management I asked Ry about why he holds gold over Bitcoin the impact of AI and Robotics on the global economy and on the US economy his advice for entrepreneurs building tech companies over the next one to two years we'll talk about China and we'll talk about the world ahead uh it's a fascinating conversation with one of the smartest thinkers ever particular on his new book how countries go broke and being in the
• 01:30 - 02:00 United States I want to know what's the impact on me and you as an entrepreneur right let's dive in Ray good evening uh you're on the other side of the planet I'm in Santa Monica you're in Abu Dhabi right now is that correct yeah well welcome to moonshots my friend uh it's a pleasure to see you I I I normally run into you in in Riad or in in the Emirates sometimes in New York and I have to say I've been so looking forward to this conversation uh I think the work
• 02:00 - 02:30 that you have been doing recently uh and and writing about you know how countries go broke will dive into that really on the back of the uh the changing World Order uh as individuals as entrepreneurs who are really focusing on AI and Robotics and Longevity or think about of course the future uh a lot of us really want to have a stable World in which to build our dreams uh and
• 02:30 - 03:00 I think it's important for folks to understand the cycles that humanity and countries go through to help them get a sense of where things are going uh so no one better than you well I don't know about that but I'll do my best all right well let let's jump in I and in particular I you've charted what you what you describe as sort of the five major forces that are
• 03:00 - 03:30 driving uh the health and wealth of Nations uh could you give us an overview of those um yeah and I will also uh just touch on how I came by them please um I'm a global macro investor and I've been for over 50 years a global macro investor and that's taken me to all different countries and seeing how the systems work and I'm also very much a systems mechanic person cause effect how
• 03:30 - 04:00 does the machine work kind of person and what I learned through my experiences is that um sometimes when I was really surprised I was surprised because the things that happened to me didn't happen in my lifetime but they happened in history MH so there were three things about five or six years ago that didn't happen in our lifetimes and um
• 04:00 - 04:30 let me go back and find the cycles of Rises and declines of Reserve currencies and countries and Empires and uh the first three and then I discovered really the other two or realized the other two the first was um of course I I knew about the debt money um economy market cycle right and we we know that there's a short-term cycle uh we know what that's like you have a recession inflation is down they
• 04:30 - 05:00 put Credit in credit is buying power they buy uh things go up financial markets go up everything goes up um you get to uh limited capacity inflation Rises they raise interest rates but then okay we've been through 13 of the we're in the 13th of those Cycles but there's also a a big long-term debt cycle that takes place over 80 years give or take about 30 debt
• 05:00 - 05:30 Rises relative to incomes and then there's a limitation to that so we're going to get into that in a minute the second cycle it very much goes with that is the political or also the internal order disorder cycle so when you go through that cycle there are larger wealth and values gaps that um increasingly create greater and greater conflicts the left and the right
• 05:30 - 06:00 populism of the left populism of the right and a um a a fight between the two and is that is that typically also an 80-year like cycle um it's um they coincide they don't necessarily have to be but they are usually together so for example uh this cycle the last cycle began they they have wars and that's what uh ends the cycle and so World War II was also
• 06:00 - 06:30 accompanied by many breakdowns of domestic orders and new Waters new systems that came into Power um sometimes they were just total revolutions sometimes they did not break in in the case of the United States and the UK we didn't have a new order new domestic order but there was a lot of internal fighting and you came out but in most other country's cases they
• 06:30 - 07:00 happened at the same time there was a total breakdown of the order and new orders came about I'm G to at some at some point later I want to get into the conversation how tied is this to human life lifespan um there's um there is um an um I I believe an important element that's tied to the human lifespan because these things only happen once in a lifetime typically so we don't learn the lessons about war and
• 07:00 - 07:30 those things you know it's something like also you know the idea of three generations to rag Leafs the rag Leaf kind of thing um but um it is definitely the case by all measures that we say why don't we learn well because we never experienced it before and so I remember my my parents used to you know they were born during the Depression effectively or the tail end and it changed the way they're W they
• 07:30 - 08:00 were wired that's right yeah my dad my my dad um and almost everybody at the depression came out of that wanting to save turn the lights off son eat that food right because the power of saving and the security and he never could buy stocks and uh and so and if you looked at the yield it was very interesting the yield on stocks the
• 08:00 - 08:30 dividend and earnings yields um were were both um about twice the yield on bonds so from a investment point of view they had to go down in order to provide the same Total return made no sense but that was their mindset was a reflection of the I don't want to own those risky things I want to save work hard and so on and that's part of the cycle
• 08:30 - 09:00 so so the third so that's the second this internal order disorder which as you point out is they're all all these parts of the cycle are related so that M mentality affected the how we saved and spend and and so on so forth the third part of the cycle uh what I call the big cycle is um the international World Order who is the dominant power so in
• 09:00 - 09:30 other words you have a war and then you come out of the war and you say who sets the rules well the winner sets the rules and that is the New World Order and so the United States set the rules that's why the dollar is the reserve currency that's why the World Bank the IMF uh the uh United Nations yeah United Nations they're all in the United States right because that was the New World Order and we created a
• 09:30 - 10:00 a an order is a type of system okay in which there's collaboration the idea was anyway that was that order when then when you have a rising power challenging an existing power uh uh you know there's no world court that you plead your case to and then they say okay you win and we're going to go by your rules or something there's no International Constitution or something might is right and so then you have who has the might
• 10:00 - 10:30 and you have the war so that's the third Major Force tending to follow that same Arc the the fourth which isn't the same doesn't have the same 80-year kind of cycle to it big cycle to it but it but it's a big force and it's a bigger Force um than the first three because it's killed more people and it's toppled more world and domestic orders and that is climate and and acts of nature acts of nature droughts floods and
• 10:30 - 11:00 pandemics have killed more people and Chang toppled more World orders okay and certainly it's a big deal now you know when you when you speak about climate most people go to you know the current climate crisis but you're really talking about the long cycles of climate causing drought causing starvation basically just ending ending Nations yes yeah and then um and then there's number
• 11:00 - 11:30 five um which I which is um is man's inventiveness in all of its various ways particularly technology but that inventiveness and so it looks something like this right which I mean what I mean is technology inventiveness you don't lose it you you rise
• 11:30 - 12:00 build on itself upward force and it's a great upward Force now and then there are these Cycles like the business cycle and the political cycle left right left you know we um we had the left and now we have the right now we have the left and so on and these economic Cycles are those and then there's the big cycle which is like that to GDP and that those kinds of things so that's visually how it looks to me and everything that we
• 12:00 - 12:30 talk about um although there is one other Force but almost everything that we talk about uh is one of those five and that you drop down so whenever you're asking me anybody we will go into one of those five and you could almost see where you are in the cycle and they all relate to each other right so tariffs relates to economics relates to you know geopolitics oh the six Force which I didn't mention but it's also very very
• 12:30 - 13:00 destined is demographics of course yeah we have a silver tsunami we have an aging populace uh and we have uh growing I mean it's interesting right because these are uh the the age demographics uh are I think I'm thinking they play a much bigger role today than they ever have and will and will yeah everybody Peter here if you're enjoying this episode please help me get the
• 13:00 - 13:30 message of abundance out to the world we're truly living during the most extraordinary time ever in human history and I want to get this mindset out to everyone please subscribe and follow wherever you get your podcasts and turn on notifications so we can let you know when the next episode is being dropped all right back to our episode I want to get into something and then get into the uh the five um uh the five stages of the of the big dead cycle you write about
• 13:30 - 14:00 and I want to dive into something instantly here which has been bothering me I I did not get a good night's sleep thinking about this last night uh as we get ready which is our country is going to go broke faster because of AI and Robotics so if I understand this correctly right the federal reserve's mandate is basically to juggle jobs and inflation right uh provide maximum jobs maximum employment stable prices moderate long-term interest rates and
• 14:00 - 14:30 and traditionally you lower interest rates that boosts employment because companies can borrow cheaply that expand operation that hire more work more workers and that's been the game up until recently now you've got uh Optimus humanoid robot and figure you know the prediction right now is we'll have billions of them by the mid 2030s you
• 14:30 - 15:00 know elon's prediction when I interviewed him at uh uh at fi in Riad it was you know 10 billion by 2040 you had Sam wman tweet out yesterday that their 03 Mini model um and their deep research Tech will start displacing singled digigit uh employee you know white collar workers right away I interviewed uh mark benof on this podcast I don't know two weeks ago he said listen with uh with salesforce's
• 15:00 - 15:30 new agent technology we're 30% more productive and are hiring no new engineers and so the question becomes you know as we're marching forward here if a company has access to lower interest rates wouldn't they just buy more robots and hire more AI agents and thereby you know reduce labor and sort of create this massive decoupling compared to what had been the the
• 15:30 - 16:00 process yeah uh um it is I think virtually certain but that's even that's debatable but it is virtually certain that it will replace a lot of people and that uh what we've been seeing in the form of a wealth impact of technology in which there's um small population that has unicorns and it's the most most wonderful world that we
• 16:00 - 16:30 can possibly imagine to be in um also we have a population in the United States where 60% of the population has below a sixth grade reading level and and is pretty broke and so that is likely to uh happen there's going to be great disruption and then the question and the question for all of these things is how are we going to deal with each other I mean the number one
• 16:30 - 17:00 question on all five of these and demographics is how do you and I and we deal with each other so that um we're not just dealing with in a greedy way of our of our own self because you can have a great civil war or a conflict due to not managing such social issues and those social
• 17:00 - 17:30 issues um are difficult to manage because everybody has a polarity regarding those social issues I I'm going to go a step deeper here because traditionally you would hire workers that would get money in their pockets they would start consuming that would fuel demand they would pay down corporate and government debts and the challenge again is again in coming from
• 17:30 - 18:00 your recent work uh you how governments go broke um if workers aren't seeing wage growth and aren't getting jobs then who's driving consumption and then how does that drive uh our economy I guess the question is well is it going to accelerate uh your predictions on the challenges well the techn the
• 18:00 - 18:30 technology advances are a two-edged sword the way I think it is it's going to raise productivity it's going to raise output for manh hour sure okay um and that's a good thing and that power of that good thing you know means you have you don't have to work as much or you anyway or you get more out of that uh result and um then it becomes what do you do with the
• 18:30 - 19:00 distribution of that right yeah so um so it becomes a how are you like with each other to deal with these incredible disruption effects I would say I just also I want to say uh something I um I think that we all think we're optimizing for the things that those
• 19:00 - 19:30 Technologies get us in other words wouldn't it is it'll be wonderful our life expectancy Rises um we become smarter all of these wonderful things who could argue about their life expectancy rising and so on and sometimes we lose sight that that may not even be the most important things in a world that's in
• 19:30 - 20:00 Conflict um and so on so if you look I did a I did a study of the well-being of 24 top countries using a lot of Statistics it's by the way it's online anybody could see it it's a great Powers measures and it's very interesting that um I measure different measures of power income military power education power different types of power um and then I measure happiness MH and I
• 20:00 - 20:30 measure health and past a certain basic level there is no correlation between um per income and happiness and health yeah I I remember that that number was around $70,000 or thereabouts for H for happiness um it's it actually is considerably less than that number I don't know what it is but I know like
• 20:30 - 21:00 for example Indonesia I was thinking for the United States yeah yeah has a much happier uh population and in terms of per capita income and in terms of health it's much lower but they have a much happier population um I I I don't I I I would have to go back and check sort of how but it's more mostly above um that which is needed to have to be out of pain you know
• 21:00 - 21:30 to right and the United States in terms of health has a fiveyear lesser life expectancy than Canada and comparable income countries you know in other words the developed countries yeah so and and if we think back in time were your parents that we knew my parents MH were they less happy or well off and then think about what the hell of wars and things are so there it's it's not just
• 21:30 - 22:00 optimized by technology and okay I get more life we have to pay attention to these other things too so so part of the question becomes is there is there going to be a new type of social contract that's going to have to be created I mean I do believe and and I write about this and I think about this a lot that technology is a force that turns whatever was scarce into abundance right we've created massive energy abundance and
• 22:00 - 22:30 food abundance to the point where where o obesity is thing you issue abundance of information abundance of all the entertainment you could possibly want abundance of almost every there's very little that if you pushed me I couldn't paint a picture of increasing abundance even life uh the amount of things you can do per unit time um per second dur today so the efficiency of the of how we spend our time
• 22:30 - 23:00 uh but even with that increasing abundance uh if people are unhappy and it turns us towards civil Strife then we've got real issues yeah I think um I think that we can agree um on the fact that the technology and AI is going to be a force and it's a tailwind and then we also have to realize that the other four or five
• 23:00 - 23:30 forces are big headwinds and the question is is the Tailwind greater than the headwind in the appropriate time and oh so so when I think about that um we'll we'll get into the debt problem okay we're going to have an an immediate we're going to come into budget season um and we will over the next several months and if they don't do something we're going to have a major debt problem and we'll talk about that
• 23:30 - 24:00 in a minute but it's a headwind yeah the internal conflict is a headwind the external geopolitical conflict is a headwind the climate thing is a headwind the demographic thing is a headwind so now when I think of the Miracles that I've experienced when I'm when I let's say um and you've experienced I remember when I used to do charts that I would literally do charts with a
• 24:00 - 24:30 ruler and colored pencils and graph paper sure and I remember when the calculator came along and I remember when spreadsheets came along and I remember the computer really that came along and so when we think of digitalization and devices and so on they were pretty amazing let's say over a really let's say a 35e
• 24:30 - 25:00 period and so on so when we think about I mean they were revolutionary right and connectivity instantaneously wow and then we live our lives we're born we get older we die we live right yes okay um and so then I think okay what force will this be this AI Revolution t as a multiple of the force that we
• 25:00 - 25:30 experienced from uh rulers and colored pencils and and going to spreadsheets and being able to do models what what factor will that force that that was one hell of a force and when I look at the Industrial Revolution and I look at these things now I think it's going to be a bigger Revolution yeah but when we actually say okay what is its magnitude I'm sort of like I don't know if it's 1.2 25 or or
• 25:30 - 26:00 1.5 what the other one was cuz man it it when you look back on it it may not look big when you're in it and you imagine the future like this is and then we have the headwinds and we have a timing issue okay because that baby better come on and we better get there in time so I think about what the 20s were like the 20s was the most patents the most Innovation and then we came to 29 in the Great Depression I think of the bubbles
• 26:00 - 26:30 that have been in quite often they were matched also with the greatest Innovations so we cannot just simply say that these Innovations will necessarily quickly and in time create such a productivity miracle that the others don't matter demographics and you know okay there's going to a lot of be a lot of people who go from working to needing you know and and and so on who ain't going to be productive and and are going to be needing so I don't know how that works exactly I
• 26:30 - 27:00 am impressed with it but I don't know exactly yeah I I had this conversation with Neil degrass Tyson who was saying we're having the conversation exactly that every generation feels like they're at the most extraordinary period of technological and societal growth ever right it it it feel it feels it feels that way I mean the the stuff that is coming Ray that is I think I have to believe it's transformational and the question is is it unlike what it was in
• 27:00 - 27:30 the past in terms of the level degree of transformation right I um okay let me give you what it was for me I computerized all my decision making I have artificial intelligence decision making data comes in um criteria are specified orders get placed analysis is done uh my decision making is um all
• 27:30 - 28:00 programmed um in ter literally in terms of markets data comes in act things get no people it's like one of those uh factories that has just a few people looking after it and everything happens okay that came to me from the old world way of thinking which I think most people are still in which is I'm a smart guy and I will make my decisions okay we are still a a long way from you turning it over to
• 28:00 - 28:30 the AI okay that decision there there is there is debate there is debate but the question what is what is a long way is it is a long way three years five years years I find I find it so interesting that so many people are users of AI but they do
• 28:30 - 29:00 not follow AI okay and if you ask it like if I ask it um okay should I buy the um okay tariffs came in and should I do this this and this I get okay I okay what would you do okay I get bullsh because it still comes back to understanding cause effect relationships you still have to it better understand
• 29:00 - 29:30 it and the question Human Relationships Human Relationships sorry this this is human emotional relationships well but even even the relationship between do you understand the mechanics of how the tariffs affects this this this and the other thing explain it to me and make your would you how you run your company or whatever you're a long way from actually that decision making okay of having the criteria and the cause effect and that's even more so in the markets
• 29:30 - 30:00 because the markets are are are zero sum game so in other words I have to be better than the consensus to beat the markets and so I'll get the consensus or whatever it is I'll get that knowledge but how do I get better anyway all I'm saying is when we say we're going to turn you know I'm going to turn it over to there I I do believe that the idea of it's an a partner and a an associate and so on and it boy
• 30:00 - 30:30 it could teach you and it could do wonderful things but as it but you need this as a partner so I um and then we we see where we go exactly but there's um we we'll see I don't know anyway but that's AI we agree a super plus for productivity we agree a s super uh probably divider in who benefits and who doesn't and that it becomes a social
• 30:30 - 31:00 question as to how we deal with that not just don't also assume that it is in an environment of law because laws are local laws are within countries laws do not exist between countries and so there are competitions between countries to win at all cost so I don't think it's going to be regul ated or controlled and we also
• 31:00 - 31:30 have to look as it as a weapon because it it can be a very important weapon too and we'll get to that conversation about us and China which I think is the dominant conversation in that realm right now before we get there um I want to talk about this concept of abundance I wrote a book 12 for let see 13 years ago now called abundance the future is better than you think um and the argument for increasing I know the book it's a good book thank you uh the
• 31:30 - 32:00 followon age of abundance is going to come out in 26 but the the detail looking at access to Food Water Energy Health Care education almost every particular factor and the demonetization and democratization has been just off the charts and accelerating um you know we're on the verge of fusion potentially you know the the Chinese just had uh held a fusion reaction for 18 minutes um
• 32:00 - 32:30 you know you've got helon and many others looking at Fusion by turn of the the decade here um solar exploding onto the scene um and energy of course drives everything else um so I guess the question is when you think about abundance as a concept for America and Americans and for the world um how do you how do you I'd like to
• 32:30 - 33:00 know how you think about that is it a world of increasing abundance are there factors that are going to basically shut that down um the factors that could shut it down are the factors that shut it down before um and they are in the um conflict I mean if you look at how it was shut down before the Industrial Revolution or the great revolution of the 19 20s when there were more patents than any time and all of those times it
• 33:00 - 33:30 was a combination of an economic and um and a war and and conflict but you showed that you showed the technology is a continuous Force that's right building on itself despite the up and down Cycles yes but the chart that you we see looks like looks like that and that and that life that life expectance if you look at life expectancy it looks like that if
• 33:30 - 34:00 you look at per GDP it looks like that okay what we upward arcing that that upward arcing what you don't see ironically when you look at all of these things and you see The Wiggles okay that's World War II and so you hardly pay any attention to it but it mattered okay you know it these wars last maybe three years typically they
• 34:00 - 34:30 have and and so on and so you don't stop that unless you destroy mankind yes but you and you won't stop that so when I say stop it I'm assuming like what happened in the 30s slow down yeah yeah so you have yeah you because you don't forget you still have it you don't go backwards um and then you build on that but that upward movement um is slow like
• 34:30 - 35:00 if you had a bust now MH okay you could imagine how that would change allocations of money how that would change Innovations and so on uh to some extent I mean I think that uh we're in a position that might be somewhat analogous to 1998 or 1999 where um um you know I'm digressing but um just to
• 35:00 - 35:30 complete bu right well yeah what happens is assets become more and more expensive and then there's a universal view that that is a great miraculous company and that's a great miraculous thing and they're right it's great miraculous company and a great miraculous thing but um the question is how much do it cost and is it expensive and so what happens
• 35:30 - 36:00 is actually if as an investor um you'd be much better off to buy bad companies at good prices than good companies at bad prices yeah when when my mom starts telling me should I buy this stock or my Uber driver starts telling me about that you know you're in trouble and and so if you look at pricing and who is the owners and so on I'm not saying we're there it looks more like maybe
• 36:00 - 36:30 98 but you also have a situation if you have that together with if you have an interest rate change and we'll get into the interest rate discussion in a minute I suppose um you then have expensive and you have interest rates and then you can have what we had in 2000 you know and pets.com and there's a sword all you know and and things change and also so we we get so um used
• 36:30 - 37:00 to that the disruptors don't get disrupted like that's funny isn't it I mean like everybody they all get disrupted of course it was interesting when Jeff Bezos at one of his earnings call said yeah Amazon might not exist in 30 years uh I mean it it shocked people for him to say that and but that's I mean like how wake up up like the Dow 30 you know go back 30 years go that back
• 37:00 - 37:30 20 years you know they didn't exist they they don't exist any longer and the ones that are on top do exist and that's the nature of this evolutionary process the structure am I'm still impressed that Microsoft is is doing as well as it's done for the last 50 years crazy or 40 years yeah U let's let's get into the big dead cycle and the five stages you break it down into and
• 37:30 - 38:00 again the the lens I'm coming at this from is we have a lot of entrepreneurs who are building companies and um and when time is good you know we just entered a new Administration where we've got a pro technology Pro m& uh you know mindset minimized regulation and I'm just I vibrantly feel the energy in the biotech world in the
• 38:00 - 38:30 AI world people are building building building capitals beginning to flow again um and and people are not looking at what's likely to be coming in the next two to five years they're just like the time is good now borrow build go go go um so H what's your advice to entrepreneurs right now and and let's do that in the
• 38:30 - 39:00 context of your of the five stages we're in and I'd like to understand where you think we are in the United States what's the impact of that elon's having and Doge you know can we can we hold off uh these dead Cycles is there any chance for that or is it just too far gone it's a lot of questions but let's take it no no um and I'll and I'll um uh I'll I'll give you my thoughts on them I want to emphasize before I do that that
• 39:00 - 39:30 study th this is the draft of my book and it's free online so that people can read about the cause effect relationships because the re I'm 75 years old I'm in a stage of my life that I want to pass along things that are valuable I'm not earning money and that's not my goal anymore uh any of that and um I want to uh everything is cause effect
• 39:30 - 40:00 relationships there's mechanics to it and if I give you less than I'm able I'm not in this conversation going to be giving you enough and so uh it's free online go get it and and you'll see I know it's on LinkedIn is it is it just Google uh yeah you can go um Google how countries go broke the principles NAA get to you yeah yeah yeah um what is so amazing to me because I've
• 40:00 - 40:30 experienced it throughout my life is everyone pays attention to how they feel at the moment and how they feel at the moment and they don't see the changes and the the changes the cycles and everything are so important and and there are certain classic things of
• 40:30 - 41:00 euphoria um and and yet so there two classic things of euphoria first where we are in the economic cycle right there's an economic cycle there's always been an economic cycle and there always will be an economic cycle so to so we are about 65 70% through the the E economic cycle that we're in judging by measures
• 41:00 - 41:30 I won't digress into all of them though though I can if you want but in other words there are it will the the cycle will go on and in the political cycle we are in the classic first hund day honeymoon of the new Administration which is a time of euphoria and is a time that the new beginning begins okay so we so we're at a
• 41:30 - 42:00 unusually good moment that if you see it in the psycle the in a cyclical sense and you say what is likely okay our aspirations are high because we have um capitalism business free markets combined with technology to produce that and the United States is on top of the
• 42:00 - 42:30 world and we should be very optimistic and so on okay but first of all you're not looking at the pricing okay so if you look at the pricing of Assets in the United States relative to other countries right now it's expected that that will improve relative to the United States so there's a hurdle rate you always have to keep in mind like it's a horse race you have to bet on that you have to keep in mind the handicap so and and then if you take the
• 42:30 - 43:00 cycle I I I bet you um that as we take one two three four five years do you think you're not going to have an economic downturn do you think you're not going to have a bare Market do you think that everybody's going to be as enthusiastic about how things are going with how the government is handling it do you think you're not going to have any of those other
• 43:00 - 43:30 problems really and it's the I mean the challenge of an entrepreneur is you've got to be especially a moonshot entrepreneur you've got to be super optimistic even to get into the game uh and but people are not don't see the long-term writing on the wall so how do you properly capitalize yourself how do you protect against the downside how do you not over um burden yourself with with debt or to Rapid growth um I mean
• 43:30 - 44:00 this is what I I this is the message I want folks to be listening to I'm listen I'm the guy who not the Glass isn't half full the glass is overflowing I'm Mr optimism Mr abundance but uh I as I said reading your book it's got me thinking a lot so I want to pass on I want to pass this well I I I I think um I think first of all one of the great things about the United States and our system is that you can fail and
• 44:00 - 44:30 you could start again yes it differentiates us from most of the world that's right it's a so okay then you think okay whose money is it failing and how does that work and am I straight and upright and honorable with people but you know okay in this world of you you know you got to go for it you want to go for it and then you'll be straight upright and and and and and and you and and and and you go for it um
• 44:30 - 45:00 and you could fail um just don't get permanently knocked out of the game you you know um there's a there's a great there's a there's a great uh talk that bill gross not the economic Bill gross Bill gross my day lab gives about what's the single most important aspect for a successful company and it's timing it's living long enough to live forever if you can if you can live through the downturn and
• 45:00 - 45:30 be there at the upturn um then in my case I never raised a dollar of debt or a dollar of equity I built the largest hedge fund in the world and if end did very well but I never and now I'm not saying that's the right thing but the don't die uh Mantra was my Mantra and I always and I did certain things like I would always say is my
• 45:30 - 46:00 profitability X relative to that how much do I have in this way and so on so I I I I constructed the finances in which it couldn't die yeah it could contract but it couldn't die um so now I'm not sure that that's even the smartest way I'm saying that's how I did it but I'm not saying it's the smartest because it's also sometimes it's okay if you die and people will understand it and that because of what you're like so invest in your character
• 46:00 - 46:30 okay your reputation you can damage you can kill your reputation but you're you know U if you if the company dies and you do it the right way that's and your op right that that's that's almost allowed in our system but be what you know be of like be of good character and be of good capability it was about 13 years ago I had my two kids my two boys and I
• 46:30 - 47:00 remember at that moment in time I made a decision to double down on my health uh without question I wanted to see their kids their grandkids and really you know during this extraordinary time where the space Frontier and Ai and crypto is all exploding it was like the most exciting time ever to be alive and I made a decision to double down on my health and I've done that in three key areas the first is going every year for a fountain
• 47:00 - 47:30 upload you know Fountain is one of the most advanced Diagnostics and Therapeutics companies I go there upload myself digitize myself about 200 gigabyt of data that the AI system is able to look at to catch disease at Inception you know look for any cardiovascular any cancer any neurod degenerative disease any metabolic disease these things are all going on all the time and you can prevent them if you can find them Inception so super important so Fountain is one of my keys I make that available
• 47:30 - 48:00 to the CEOs of all my companies my family members because you know health is in you wealth uh but beyond that uh we are a collection of 40 trillion human cells and about another 100 trillion bacterial cells fungi VAR and we you know don't understand how that impacts us and so I use a company and a product called viome and viome uh has has a technology called metatranscriptomic it was actually developed uh in New Mexico
• 48:00 - 48:30 at the same place with the nuclear bomb was developed as a biod defense weapon and their technology is able to help you understand what's going on in your body to understand which bacteria are producing which proteins and as a consequence of that what foods are your superfoods that are best for you to eat or what food should you avoid right what's going on in your oral microbiome so I use their testing to understand my
• 48:30 - 49:00 Foods understand my medicines understand my supplements and viome really helps me understand from a biological and data standpoint what's best for me and then finally you know feeling good being intelligent moving well is critical but looking good when you look yourself in the mirror saying you know I feel great about life is so important right and so a product I use every day twice a day is called one skin developed by four
• 49:00 - 49:30 incredible PhD women that found this 10 amino acid peptide it's able to zap scile cells in your skin and really help you stay youthful in your look and appearance so for me these are three Technologies I love and I use all the time uh I'll have my team link to those in the show notes down below please check them out anyway I hope you enjoyed that now back to the episode let's get into the into the big dead cycle and the five stages and give us
• 49:30 - 50:00 understanding of where we are in that process if you would um okay so there are these cycles that are you know the short-term debt cycle or the business cycle that um years we know what those look like and then they rise debt keeps Rising relative to income
• 50:00 - 50:30 okay um and the income is needed to service the Deb okay so the way I the way I view it is um after the war debts are basically written off you've got you know that you you start with my parents didn't have yeah they didn't have any debt they didn't have any much um and and and then they begin the and it's almost what we talked about earlier they don't want to
• 50:30 - 51:00 spend money you know they don't want to get and and in the early stage of the mar the cycle it's the sound money stage and the sound money stage can be um measured by um first does the debt create more income then it's needed to pay it back I mean that's that's basic it's it's a good use of capital right it
• 51:00 - 51:30 makes everybody happy yes I got I lent you the money I got pidb with my interest rates I'm happy you got borrowed the money you Ed the money in a way that allowed you to move forward you came up with the good ideas and so on productivity increases and debt is not Rising fast relative to income confidence is high Financial systems are stable yep the confidence being high starts to be a red flag ah okay you see so what happens is um
• 51:30 - 52:00 you're at that stage and by the way the monetary systems at that stage are hard in other words at the world at when we came out of World War II this is the beginning of the new debt cycle the new cycle um gold was there you couldn't lend more than gold because they had it back and and so on so you had sound money and sound finances okay and then time goes
• 52:00 - 52:30 on and by the way I want to speak about Bitcoin at some point as a as an alternative to Gold but not right now great um and um and confidence builds and everybody those who are doing it are make making money the prices go from cheap to
• 52:30 - 53:00 expensive like I told you the uh earnings yield on stocks were twice the bond yield I mean like wow you could just take the dividends you know but everybody was worried about going down and then it changes the prices go up the optimism and you know they say uh Peter what you're not in the market I mean come on what's wrong with you man you start your house and put it in the marketplace yeah yeah okay and and you
• 53:00 - 53:30 go in there and then you come um really to um getting invested asset prices uh become expensive you borrow money to do it and so you have um a debt bubble in other words you get to the point where the income produced doesn't service the debt and then you begin a
• 53:30 - 54:00 dynamic of very simple uh is that where we are today um we're as I say it looks to me like we're in 1998 you know these all become how extreme okay and so I have measures I have indicators like that give it and it looks like 98 okay which means we still have a year and a half of Good Times ahead I don't it's not so prise it's a thing that goes like this and you know I know that we're over here
• 54:00 - 54:30 and then what happens is that goes on and you see unsustainable uh debt growth now the unsustainable debt growth that we're seeing right now is particularly the government the government is going to be in financial trouble and I'll get into that in a minute yeah um but um what happens is you see that debt growth and then you see a rise in interest rates is
• 54:30 - 55:00 the classic and a tightening of monetary policy be put some breaks on and that pops the bubble and then you go through the um debt liquidation phase and Ray can I just ask a question here which is these Cycles have been over and over and over again there are there are historians and printed books
• 55:00 - 55:30 and so forth is is it the politicians are just unable to um uh to make hard decisions in order to keep in political power is this just yeah FAL in human nature that we can't both both of both of those things you're asking why in these Cycles um you you
• 55:30 - 56:00 know if you look at let's say debt to income it goes like this and why we keep going wh why does this thing exist um and and why don't we sort of keep it a debt income more the same and um and there were um the reasons uh politics and human nature you you touched on um that that uh first of all
• 56:00 - 56:30 um credit creates buying and stimulation and everybody everybody wants up but but that's that's historically because the credit employed people that then consume when you spend if you I mean the Govern govern when they say I'm now going to give you money they're going to give you money
• 56:30 - 57:00 and credit it's mostly credit and they make credit available and then you you you go take credit that's how when they lower interest rates and they make credit more available um you go that's you get your car you get your house on credit yeah okay but credit creates debt yeah and debt yeah okay so what happens is every time you get one of
• 57:00 - 57:30 these then a local D they want to give you credit but it's like giving an uh you know an alcoholic a shot or to get him out of the you know or or an addict okay you give them a dose um and okay and you and you get that and politicians like credit because what credit comes before debt payments so I give you credit we get in
• 57:30 - 58:00 debt you love me you know that's why they want the Federal Reserve and the central government to be separate you know to try to do that but still what happens is and that human nature wants the credit you know so it so so that's why debt to incomes go like that you know and
• 58:00 - 58:30 so you know show you in this in this this book you know this is the government and this is the the cycle and that and then this is The Debt Service payments that we're going to have going forward so yeah human nature we all want up
• 58:30 - 59:00 we're all betting on up okay all the time up betting on up unless to buy things that'll go up yes um so the the party ends the bubble pops yeah uh that's right um You have the debt problem and then
• 59:00 - 59:30 what historically what they would do is then they would give more credit so uh um except when you hit it zero interest rate you had a problem and I mean I found that incredible to get into negative interest rates even right why do I think that's incredible no I said right right yeah okay yeah um seems I was with Central Bankers you know I'm I'm in that group sort of and uh
• 59:30 - 60:00 when they had uh zero interest rate negative interest rates and they were calculating uh they said how negative can we make interest rates and they calculated um they estimated for a very short period of time uh it could be up to 400 basis points and the way that they calculated that is by how much paper money that you could store in storage because your
• 60:00 - 60:30 Arbitrage if you had the paper money you wouldn't have to have a negative rate you know that why not hold the paper rather than to hold something that has negative rate and so how much negative rate could you have and that what and that was the essentially the Arbitrage well anyway when that happen and it happened in history by the way it happened 1933 same thing wow and what they do is then what
• 60:30 - 61:00 they do is they print money and they buy the bonds so like in in 2008 uh excuse me uh they did that in two th starting in 2008 and then 2020 when there was covid they had to send out checks so the government had to send out checks checks the government doesn't get to print money where do they get the money
• 61:00 - 61:30 to send out the checks they borrowed so they send out the checks and the Central Bank lends them the money and prints the money and lends them the money so everybody gets all this money and there's like a surprise that there's inflation everybody gets all these checks and all this money and there's a surprise that there's inflation I mean there were other things going going on too but disruption and supplies and things like that but mostly it was the
• 61:30 - 62:00 amount of money going in so there are two things that happen at that deleveraging point those so I I want to make that clear that here are the here are the things that cause the deleveraging [Music] um Supply demand and and Debt Service okay so let's take the
• 62:00 - 62:30 government Supply demand the government is going to have to sell a lot of bonds to owners because there's so much debt around one man's debt and another man's assets so because they are all the world is holding all these debt assets that actually for various reasons they don't want to add to it a big way because it's already such a high percentage of their portfolio and there are geopolitical
• 62:30 - 63:00 issues going on okay um that the am the huge amount that will be sold will likely over be substantially greater than the demand for it and so people start selling their debt and when they start seeing that it's going to be bad because they know it could be one of two things either you have a problem paying and interest rates go up and and you have that dynamic or the Central Bank comes in and buys the debt which prints the
• 63:00 - 63:30 money and devalues the value of money okay either way when there's too much debt and a supply and demand imbalance you don't want to own debt which is where I think we are unless there is a change it's what I call my 3% solution but we won't get into that now I assume uh um but you know there is a path here to deal with this uh but um if they
• 63:30 - 64:00 don't deal with it you're going to have a supply demand problem I believe and then in addition to that what happens in debt service when Debt Service fill uh the way I think about it is um the credit system is like the circulatory system in our body and the blood uh which is the credit brings nutrients all through the system but what happens is that when it accumulates debt it's like accumulating
• 64:00 - 64:30 plaque in the system because you have more and more Debt Service that constricts um the um that amount that can pass through the system like the government Debt Service payments are grow and then you hit a part of it which in in markets uh is called and this this is
• 64:30 - 65:00 usually for uh private creditors is called it a death spiral a debt death spiral and the debt death spiral what happens is as Debt Service payments rise so that you have to borrow money to pay the debt and then the Creditor sees that so they pull back and the credit spread Rises and as the credit spread Rises you have to borrow more money that
• 65:00 - 65:30 is the death spiral and that's when you see that Dynamic um that's and that's close to where we are in the government debt but for a company that will drive a bankruptcy in the United States that drives what it D it it it it drives the um Central Bank to come in and buy the debt and depreciate the value of money
• 65:30 - 66:00 that's what a monetary inflation is yeah you know a a lot of people think I when I started I think why do you have an inflationary depression in other words how can you have when demand is depressed how do you do it you have uh money money production and then I say well why don't they just stop producing the money well because if
• 66:00 - 66:30 they stop producing the money the debt they'll have a deflationary debt problem that's the dynamic that's the mechanic and I want that's why I want to explain these mechanics in this book yeah you know so people could see it because I show it in the book and everybody thinks uh you know I'm a genius my house prices are going value of my house is going up the value of my stock portfolio is going up but it's all in massively inflated dollars I I I know like it's so funny because people think they get
• 66:30 - 67:00 richer if the price of their houses and the price of things that they're owning in a sense go up but it's a same house it's the same stuff right it when when it goes up in price because of inflation I mean buying power is what matters not price a dollar what can a dollar value today um which is why I still like the meme you know one Bitcoin equal one Bitcoin uh unfortunately one1
• 67:00 - 67:30 does not equal $1 uh any yeah uh so we're in this this these five stages uh of the Dead cycle and just to to wrap this up we're in the deleveraging stage and well the government you mean now well no no I'm saying in in your five in your five stages in your and then that the leveraging stage uh typically if the debt is denominated in
• 67:30 - 68:00 the currency that the central bank can print you always get the printing yes and you always get the devaluation of money and then what happens is then the debt becomes so cheap that it's easy to pay it off so if you're watching like like Japan is a good example if you owned a Japanese Bond you would have lost about 80% of your money relative to something stable
• 68:00 - 68:30 like let's say gold and you would have lost about 60% of your money relative to a US Bond because you got 3% less interest rates and the currency depreciated by almost 4% a year and that 7% a year is what you would lose and then what happens is if you're in Argentina take it to the extreme you take that debt and you pay it off because it's worthless with barrels of pesos or whatever it might be
• 68:30 - 69:00 yeah where where are we in term I mean let me ask the question I started with which is uh we're in this Administration Elon jumps in the department of government efficiency is created the goal is cut back uh government waste uh try and get us more towards a a uh a balanced budget I mean clearly had we uh not done anything there is no hope we're we're heading towards disaster is
• 69:00 - 69:30 there any do you think that Doge can make an impact on this um I honestly um I honestly don't know the consequences the realities of of that I I I I'm I'm I I can't answer your question it's it's too complicated for me I'm not at the nitty-gritty of being
• 69:30 - 70:00 able to say if you shut this thing off what are the repercussions of that and how that works I would need to have a much more I need to have not only a much more detailed um but I would also need to be able to anticipate um you know there's an action or reaction and what the reaction is um it's something like the tariffs you know
• 70:00 - 70:30 um if it's very difficult for me to answer your question okay I appreciate that but you are clear if we're doing nothing um there's a there's a definitive wall we're racing towards yes I'm this goes back to my 3% solution okay let covered it's covered in there under the existing budget if there's not a rolling forward
• 70:30 - 71:00 of if there is a rolling forward of the Trump tax cuts from before the size of the uh deficit will be about 7 and a half% of GDP you're going to need about 3% of GDP to stabilize it um uh so I call this my 3% three-part solution okay so first get
• 71:00 - 71:30 3% in your mind okay can we get the deficit down to 3% of GDP and there are three things that can do that we we know the first two uh is spending taxes and by the way when I mean taxes I mean tax revenue which isn't the same as tax rates mhm uh spending taxes and interest
• 71:30 - 72:00 rates because the interest rate on the debt is such a big factor now I've gone through the calculations and have and have studied this and and in that study you can you can read it and you and whatever if um if one way or another I don't care how how you do it that the the how you do it is almost an ideological question
• 72:00 - 72:30 the fact that you need to do it is important so it's like you know the patient that has too much plaque and they're eating and they're not exercising I don't care whether you eat greens or you exercise or I don't know but you got to get that plaque you've got to get that um going the other way and um and so that's the 3% and you could do it from some mix now in my studying
• 72:30 - 73:00 these um if you do it with the Right Mix so that it's not too much of anything it's not traumatic um and if you do that you will get a fall in race naturally okay because the market will be better off less risk and um if there was any weakness due to the fiscal stimulate uh fiscal restraint the central bank will Le's
• 73:00 - 73:30 monetary policy and that's always been the case I show I don't know how many cases like 20 cases there of around the world this happened in from 1991 to 1998 in the United States so there's a way the real issue like I don't really care they I think all the policy makers should make this 3% ledge because you're going to whoever it is I they're going to argue over the way
• 73:30 - 74:00 yeah and they won't do it that's my worry okay um there's a there's a few uh uh highflying Solutions out there and I want to throw one towards you uh Rey you know my passion about longevity and extended Health span uh uh Dario who's the CEO of anthropic I don't know if you know Dario um no was at Davos and saying
• 74:00 - 74:30 something that's been discussed and asserted by a number of other individuals that in the next 5 to 10 years we will see fundamental breakthroughs in human health span and Longevity uh that we may see his words not mine a doubling of the human lifespan uh you know we have $101 million Health span X prize going on right now to add 20 healthy years and
• 74:30 - 75:00 so one of the factors I find fascinating is the notion of if people are vibrant have uh the cognition and the uh the fortitude the Vitality to keep functioning so that at you know 80 or 90 you've got the wherewithal you had in your 50s or 60s uh I have to imagine that would have a fundamental uh impact on the economics
• 75:00 - 75:30 here um I'm not uh here's my confusion I'm not I don't have the answer um a number of those uh studies I've seen studies that said that extending life span is going to raise the cost um the cost of heal Health huh okay you would know this
• 75:30 - 76:00 better than I so I'm not um um but um and and then there becomes the retirement age question which is very much a political question so the question is are you productive or are you an a consumer of productivity yeah okay I would say that if you're watching around the world extending working
• 76:00 - 76:30 years you um you don't see it I mean you see um the fight against it almost political it's a political nonstarter s of fight so you have to ask yourself does the um working years get extended let's say and then um ma ma the the what I had read was you have more years that you have to take
• 76:30 - 77:00 care of that person and so on so it's not like you go to become young again well now I I'm not arguing that that's the case yeah I'm saying I don't know the answer today in the US the life average lifespan is around 79 the average Health span is around 63 meaning you're you're spending the last you know 16 17 years of your life in some level of of pain and decrepitude
• 77:00 - 77:30 and I think the goal is can we actually change that so that you're healthy uh initially and then extend the two two you've got it engineered beautifully but I suspect you know longevity because you were just talking about longevity not Health in those years you know I mean like the one thing we got this baby boom and and these people these old
• 77:30 - 78:00 people of my generation and um and you got a lot of them living and then when they die they're not a burden okay so dying from Actuarial tables or financial tables can be good remember Logan's Run the movie oh yeah yeah you were you were supposed to be you know knock yourself off at age 35 and turn yourself into a food supply anyway that's a different story um all
• 78:00 - 78:30 right let's I I believe that if a person uh is got the energy and uh the drive and is not in pain uh and is not restricted by regulation that at the peak of your capability you're going to want to keep in the game and that's the hope that's at least the work well I I would say um if you actually look at what happens in countries your hope is not consistent
• 78:30 - 79:00 with the reties in other words when people come to their working their retirement age they will fight and and for that retirement age we're going to find out soon enough what I keep on telling people is you know we're alive during the 99th level of gameplay and a lot of these questions are I want to be alive I'm with you keep me alive keep me alive favor I you know even if I get to decrepit in my years that I wouldn't
• 79:00 - 79:30 have been in live yeah Tony Tony Robbins who's a mutual dear friend and I both invite you to come and and join us at Fountain life and uh let us well you know I will thank you I appreciate that let's talk to bitcoin let's talk about Bitcoin a second um I know you're a Bitcoin holder but you're still more excited about gold uh if I remember correctly how do you think about Bitcoin uh you know Mike sailor uh was my roommate fraternity brother at MIT um
• 79:30 - 80:00 and he's probably one of the most outspoken individuals if if you I'm sure you've heard Michael speak about Bitcoin are you sold by his his vision let me tell you um what I think about it um because I could I'll speak for myself and um I think these things are accurate um first thing is [Music] we agree on anti-money we agree on anti-
• 80:00 - 80:30 debt okay that's important when you say anti-money Define anti-money please that there are two purp purposes of money um and that is as a storeold of wealth and a medium of exchange medium of exchange it'll exist store holder wealth you store it in a bond okay you're yeah money and debt are
• 80:30 - 81:00 the same thing because when you're holding money you're holding it in a debt instrument you anything you're going to put your money your dollars you're going to be in debt instrument otherwise you know you lose 5% a year or something that you know um and so money and and debt are the same because debt is a a promise to get the money so they're the same we have a supply demand problem with this money in debt okay so I don't
• 81:00 - 81:30 want to own money and debt and so we're aligned anybody who's going to want to say it as a stor hold of wealth is because the quantity of it cannot be increased other than through the mining activity BL you know but with that restrictions okay and that's that that so the first thing I want to emphasize is are you there is that part of you or there and then how much should be in
• 81:30 - 82:00 your portfolio of that thing or those things so I'm a kind of those things guy that prefers gold for the reasons I'm going to explain okay but I but I have some Bitcoin but I've got uh much more gold and um and uh and the amount that I uh I I think is a prudent amount if you look at correlations and the systems and all sorts of things the the
• 82:00 - 82:30 least risk amount to have in terms of maintaining your buying power is somewhere between 10 and 15% of a portfolio so I think they should be% should be Bitcoin or gold anti-money anti-money and you're putting the two together in that bucket okay yeah yeah now on the Bitcoin versus gold um here's the thing um Bitcoin is not a private asset any uh
• 82:30 - 83:00 the government's watch it they know what you're going to have they know where you are they can tax it they can take money away from it it exists uh uh at their pleasure and they can do anything they want with you their comfort of you being in Bitcoin is better than their comfort of you being in Gold let's say uh well I I agree the fact that it's that it can be monitored the movement of it can be monitored uh as but it doesn't exist at
• 83:00 - 83:30 their pleasure uh are you saying that the government could shut they could if they wanted to uh under regulation and so on tax you yes as a matter of fact like I was saying I was with the central Bankers who said um the the reason that we um when negative interest rates how much could it if they had a digital currency there was no floor on the negative interest rates because they could tax you okay so okay they you don't have the
• 83:30 - 84:00 Privacy you can get taxed and and so on um um whereas the saying of gold is you know it's it it's the only asset that you can have that's not somebody else's liability meaning you have it in your possession and um and that's that's somewhat different the second thing is um central banks holding it as reserves I'm watch watching the
• 84:00 - 84:30 um periods of conflict and so on um they go to Gold even in terms of their enemies because like um what governments do in periods of conflict or whatever is they print money they make bonds and that's not good and they don't want to hold each other's bonds nobody wants to hold the bond and um and that's why they hold gold they don't trust each other and um um
• 84:30 - 85:00 that wouldn't work that way for Bitcoin because governments can uh control it we we do we do inflate gold every year what percentage is mind every every year infant a pittance okay um I don't know like 1% or so of the stock of gold yes [Music] um uh and consumption for jewelry and
• 85:00 - 85:30 that's um anyway the um and it has been for thousands of years in all different places so and another thing is I can understand price changes in Gold mhm in other words if prices change I can if this changes and that changes I can make
• 85:30 - 86:00 sense why the gold price change that way I have a problem doing that with Bitcoin it it it still very much moves in a way that it wouldn't be necessary it's a supply demand speculative Market that's tougher for me to nail down yeah I I I am curious um by the way I just asked uh anthropic here and it's uh we inflate gold about 1 .5 to 2% per year um yeah that makes sense the uh uh you
• 86:00 - 86:30 know I am still i' I would expect uh Bitcoin to go up when there is uh International Strife or instability or uh you know difficulty predicting what's coming next but uh we're seeing swings that are not related to anything that's really explainable today that's that's right so when I go down that list of things I say I favor gold for that reason those
• 86:30 - 87:00 reasons could you imagine changing your mind if some sure if some thing came along that tell me why I I also um some people have said and I'm not sure if this is right it's been quite amazing but that with Quantum Computing and so on there's a good chance that you can break it yeah I don't know if that's true I'm not an expert I'm I'm just throwing another thing in there where I'll give you
• 87:00 - 87:30 another answer to that R just so you have it in your uh in your quiver if if quantum Computing were to allow us to uh to break encryption on bitcoin we have a lot bigger problems that same uh that same Quantum decryption would give us the nuclear codes would allow anybody to enter your bank accounts allow us to we we you know we need to go to the some Island Paradise you know
• 87:30 - 88:00 like it was so funny I uh I was in um I was in Bali in this paradise and um um then I fly up to China and um you know um in in val there was uh this spot Off the Grid you know find and they have this food plot I'm like I
• 88:00 - 88:30 didn't even know how much land produces how much food and I didn't realize that you can have a plot of of land that's not very big and you could live you know wonderfully and everybody's in peace and they're going to their meditation and they're doing this and they'll enjoying life and I get up and I go fly to Beijing and I go and um with leaders in Beijing and then I go to U there and they're fighting for control of the
• 88:30 - 89:00 world you know and you know you're on the first okay yeah the grd and they're going to get me and I you know they'll get they'll take my phone and they'll do you know I'm almost you know I mean we do have to you know reflect on some of these things let Let's uh two final subjects uh if you've got the uh I know
• 89:00 - 89:30 it's getting late there but I want to talk about China and I want to talk about what your 2025 predictions might look like so uh there's a lot of conversation right now about China versus us we've got a new Administration coming in um you know I'm my concern of course is we've seen recently with deep seek we've seen with nuclear fusion you know while while the US is vibrant in terms of an entrepreneurial and Technology ecosystem
• 89:30 - 90:00 and engine um China should never be misjudged as someone who is uh is pushing across the board uh how do you think about China how should we how should an entrepreneur think about China we are at war with China and it is a um it it hasn't turned to a military war but it's actually turned to very much a subversive war in which each with you know with overthrow
• 90:00 - 90:30 the government and do all sorts of stuff um and it's not going to go back it's going to be that way the two countries fight Wars differently um a leader in in China one of the top leaders in China was describing um the Chinese way of fighting War and the Western Way which he calls the Mediterranean way of fighting War um the
• 90:30 - 91:00 Mediterranean way is that you go in and you fight and you fight to win and you kill each other and you do that um the Chinese way of fighting is so that your opponent doesn't even know you're they're fighting you wi if you're not smart enough to win the war without actually fighting you not stop be very smart so it's a war of deception it's a war of um anyway so there are these
• 91:00 - 91:30 different um Wars going on the different mentalities um and um and and so that's where we are I think um and then there's this uh desire to have these separate parallel universes in technology I don't believe that you're um you're going to be able to Main maintain control of intellectual property that is something that is publicly used I mean maybe if
• 91:30 - 92:00 you go inside your your spot and you have sandboxing and whatever it is and and you never bring it out and you never look at it then maybe you can intellectually protect it and that's sort of how the atomic bomb was built you know and maybe you can do some of that um and by the way both countries are trying to secretively build the weapon that the other one can't um fight against because if they show the the way
• 92:00 - 92:30 you really win is you build the weapon that the other one can't fight against secretively you show it to them they find out that they can't win and then you win without uh fighting um that's the that's the best way and um so but um we um we've changed the world order um and it's been very clear by uh Donald Trump um that we have gone from a
• 92:30 - 93:00 multinational multilateral environment to a um unilateral each country for for their own uh might is right kind of environment and so we are in that unilateral might is right if if I can exert pressure on you to get what I want to you know that's that's the way it is which is historically what most of
• 93:00 - 93:30 History's been like and so um and we have actually done that because we've had a few Wars we had um the um the Ukraine Russia War which I think will come to some kind of a ceasefire which will be temporary probably you've had um the
• 93:30 - 94:00 Israeli um Iran and proxies Iran's proxies war that uh Israel won okay and you've had a conflict between the United States and China that um the United States did much better and did much worse than they would have expected um that and particularly let's
• 94:00 - 94:30 say the Chinese and the Chinese have domestic issues we have domestic issues we will have our domestic issues but they have domestic issues and I think it's like you've you know you've got you you've banged things around and you're sort of surprised that the Chinese probably are a bit and nobody wants to go to worse War so I think that probably over the near term you're going to have this behind
• 94:30 - 95:00 the scenes subversive kind of War you're going to but in terms of economics and Technologies look the winner of the techn you cannot lose the war yeah in the in the technology war and and by the way that's also something that's economically like I I think in terms of let's say the super scalers and you must win the techn not only countries must win the technology War those companies must win the and
• 95:00 - 95:30 profit may not be the number one thing and you I think the opportunities are in the applications and the usage of it by the way and China is doing a lot better than that in terms of actual applications we're we're doing we're we're Advanced on the chips and you know by how much but in terms of actual usage of it and and betting a Chinese so we have this
• 95:30 - 96:00 Dynamic going on and and China has its own set of issues so I think that probably over the near term um you'll have a lot of pushing the pushing the edge and that kind of stuff but probably not going over the edge um and so but that's not a permanent set of circumstances but that would be my take yeah you said a few
• 96:00 - 96:30 things I think are are really important to hit on here uh number one um you know any kind of restrictions we put on China for AI like chips from Nvidia and so forth all that does is force them to basically uh start building capabilities internally um and you know with huawe chips right now the second thing and forces them do is to become a lot more efficient so deep seek was an example of
• 96:30 - 97:00 okay we don't have the the chip resources so how do we change the algorithms and just do it a lot more efficiently so intell you know bringing a new you you sort of darwinian evolution have a constraint Evolution will find a way find a way around it so I think we've been seeing we see that um also I'm a bit concerned I'm curious what your thought are you know you mentioned that 60% of the US doesn't read above the sixth grade level uh
• 97:00 - 97:30 which is kind of shocking um we do have a leveling of the education playing field happening very soon when this device becomes a polymath in your pocket right where in a conversation with your with your AI agent you're able to deduce or learn or create or serve anything that you need both in China and the US I mean so we've got an augmented
• 97:30 - 98:00 population you don't think so well I I just go back to my experience I I happen to have a son um whose passion is edtech okay and he's gone into the third world and gone to the poorest areas um to make this connected to make it like computers and all of that and the the the original theory was and the expectation was why
• 98:00 - 98:30 shouldn't they not only get educated by this um and he can he founded he made a device so that it's it connects to TVs and makes computers and all of that and why shouldn't they do that and then if they do not only do you educate those um but you have them have different kinds of jobs that they can do remote remotely and so on and so when I look at the wealth gaps or the M these gaps and so
• 98:30 - 99:00 on um I was surprised that that didn't happen so I'm hesitant to LEAP to the notion you know a lot has to do with parenting a lot has to do with you know who who's giving the guidance you know what is it like you know uh um so and and we have an issue of parenting even we have an issue uh you know okay why
• 99:00 - 99:30 does the 60% of the population have less than a sixth grade education that they're there's almost a leap that those people are going to take this and they're going to be productive and so on so forth well I was surprised that it didn't happen and I can kind of see maybe why it might not happen is at least my I'm I'm not assuming it necessarily will fair enough um 2025 year ahead what are you
• 99:30 - 100:00 what are you seeing what are your predictions for the what's the best we're going to see in this year right um obviously 2025 is a year of great great great uncertainty I I think that uh I I I think honestly the first big issue that we're going to deal with is the budget issue right now it's not the issue and everybody thinks of it not as the issue um in the first half of the year um it's going to be the issue and
• 100:00 - 100:30 how they deal with that is very important to me um in terms of the supply demand because let's remember that the treasury market is the basis of all markets okay it's the foundation of all markets and if you create a reverberation for Supply demand then it changes all that Capital raising and that's funding this thing or that I mean the world gets disrupted
• 100:30 - 101:00 okay so it's very important so um that's the first thing that I'm sort of then we're going to actually see um um I the first 100 days of a new Administration is a time of great optimism and also is a time when you have what priorities have got to be it's got a you know it's real world time now okay it's game time so the theories
• 101:00 - 101:30 are going to be put to the test and the consequences you know does you know does the cost cutting happen does the is that realistic you know how many numbers can you do that um and not only because of you know its secondary consequences um but and then there has to be prior PR ization I think the prioritization is also going to be um smartly on energy for data
• 101:30 - 102:00 centers um and the building of AI and so on to win because the techn whoever wins the tech war is going to win the military war you know with with China and so on and so but how that game goes it's going to be a tough game um so when I look at that I think um we're not going to be as happy a year
• 102:00 - 102:30 from now as we think we're going to be and and because also there's that cycle things are pretty expensive if you have interest rates Rising you know there are these issues we can't get so ignoring those that we um be in the face of the AI thing um and then you have to do it within two years and it's got to stick because
• 102:30 - 103:00 midterm elections will swing um are going to be harder for the Republicans because they have more seats up so uh so um so it's going to be interesting um you're an entrepreneur or I'm an entrepreneur you're your advice looking forward thinking about you know planning
• 103:00 - 103:30 your business for the next year or two years uh what's your wisdom you're at a you're at a time of relatively um good Capital markets credit spreads are narrow there's a lot of money um um plan on Surviving droughts as well
• 103:30 - 104:00 as um the difficult time you know the good times fill your Equity cers yeah don't take on too don't take on too much debt plan for realistic growth and and um make great partners with the investors that are in
• 104:00 - 104:30 it um ultimately it's going to be and not only your numbers but it's going to be your character and um you know don't be overly greedy but um so have the relationships as well as the money that is your foundation yeah I think that's beautiful wisdom Ray uh grateful for you thank you for making
• 104:30 - 105:00 uh your research available and and writing these books and I I I sure wish uh we humans uh were a bit more intelligent or a bit more uh uh had longer memories um you know I I do wonder sometimes whether AI can help us get out of these repeated cycles and support us in uh in in more uh logical planning and growth um I guess we're
• 105:00 - 105:30 going to find out maybe if we ask it the qu right questions H oh good to see you my friend thank you again for your time grateful for you it's always a pleasure thank you Peter thank you buddy [Music]