Kind: captions
Language: en
it's the same for every individual same
for every company same and you if you
understand this then you understand
there well there are three
things um the first
is look at your income your
expenses and your
savings and then do a stress
test so that you get yourself secure
if you were to lose your income or if
the income were to fall Beyond a certain
level and you play that out maybe that's
means you go get unemployment insurance
but or
whatever how long can you live in an
acceptable
lifestyle and do you have a
savings that is adequate for that okay
so what you do is you
calculate if I lived in a simpler
lifestyle and I had this amount of
earnings um how many months how many
months or years Could I Live acceptably
then you look at your what what do you
put the money in what do you save in
don't you worry though that there is a a
level of financial literacy so you're
you're saying the basics right and
there's no question like get your
blocking and tackling right before you
start trying to get fancy but uh Ray I
have legitimately started losing sleep
over like how we help the average person
through this um I'm not a guy I don't
lose sleep over much but when I stop and
think about most people I think the stat
is the average American if they're hit
with a surprise $500 bill um they're not
able to make it they are living month-to
month you've got 30 plus million people
now um out of work it's you know
it trying to figure out like um
definitely Basics right uh you've got
make sure that you're spending lesson
you make austerity first cut cut cut get
your expenses down to as low as I can
100% um what what I'm hoping for is that
there's um I don't know there's
something that we can see in in this
kind of transition where either you've
got a new Rising power um and there's
opportunity
with that I I'm trying to find that sort
of Ray of Hope for people of what they
can do to be proactive either to
generate more income if they've lost
their income or um to be more proactive
in their 401K I think about personal
finance way I think about health and
right now I worry that people are
Outsourcing everything to somebody else
to the government they're they have a
wait and see approach um and what I'm
desperately trying to figure out for
myself is what level of proactiveness of
learning about their health they can do
to try to weather this storm because
short of just saving um and cutting
expenses and maybe that's it maybe there
there isn't any more that they can do
but I guess that's my direct question is
there something uh I mean you you know
the parts right it's it's income
expenses and
savings okay now you can go get the
money maybe the money money comes in and
you say okay my unemployment benefits
are going to be this or my this is but
um those are the parts then the issue is
uh how clever are you at uh dealing with
those parts let me ask it another way
then who who should they be voting for
like when you talk about a beautiful
delever Jing which one you should
probably um Define that so you you've
looked at this stuff so many times it's
really really quite breathtaking um that
there are ways to do this well there are
ways to do this poorly uh you know we're
in an election year I consider myself
like the most apolitical human being on
the planet but when I stop and think
about okay well if I'm an average person
and let's say that I'm really doing my
best I'm doing the blocking and tackling
I'm saving what I can save I've cut my
expenses back I'm I'm earning you know
what I can let's hope that they either
have kept their job or were able to
quickly get another job um how should
they be thinking like what are what is
the right way to go through this
deleveraging at a um a political level
maybe politics isn't the right word but
like at a higher
level well I I'm you know I don't know
what you want me to say I think that uh
each person should understand there's a
certain level of basic understanding
first take care of yourself and then you
know you hope that you have uh smart
people who I think will most important
thing is that they're smart in being
able to engineer an economy that will in
increase the size of the pie as well as
divide the pi well and then also um that
this is done in a non-antagonistic
way um smart people working together in
a bipartisan way have the capacity of
managing this well so if I was giving
political advice and that's not what I
do but if I was giving political advice
the most important thing I think is um
who who can do this who's got the
intelligence to do the engineering plus
to do it um in a manner that we are not
fighting with each other that what
history has shown us is that when things
get difficult people get stressed and
they get they can get angry and they
could all fight with each other and that
produces the next leg of a terrible
economy because the economy won't work
efficiently if people are fighting with
each other the system doesn't work well
so one would have to say um you know
who's going to bring the country
together behind sensible I would say
bipartisan programs because if you don't
have that then you have a form of
Revolution and you don't have good
management and that's the greatest risk
I would say politically so looking at
the Historical perspective um who has
done this well and then what have been M
Stakes that have led to literal
Revolution when you say who has done it
well what do you mean um what countries
or what periods of time has going
through this kind of Crisis been managed
well so that we come out the other side
with as little sort of um pain and
suffering as possible well an example of
well would be the differences in um the
way Roosevelt did it um so again 1929 to
32 interest rates hit zero they print
money we had a large wealth Gap and then
they sat down and they figured out how
do we keep it orderly and how do we
change the
circumstances with um whether it's taxes
or um how do you reorganize it so that
the system works well there is a risk
also at the same time because the world
is going through that there's a risk of
conflict so in Germany Hitler came in
power in
1933 and he came in power in 1933
because there was a lot of internal
fighting as to to try to bring produce
order because the everybody the left and
the right you know the Communists and
the fascists and they're all fighting
about wealth because everybody's
fighting about wealth when you have a
downturn and then they need the they
were democracies four democracies
existed then that chose not to be
democracies because they became so
disorderly that they wanted some strong
leader to take charge and run the
country and then of course we had a
bunch of strong those types of leaders
and then they had a war that's how World
War II happened so when you look at that
uh you know th that's kind of the
political landscape but back to the
average man in terms of his finances I
would say the important thing is those
three elements to have a plan and maybe
to have a plan with uh both your family
you know um how do you get
down uh when things got tough and and
you know and then you have to look at um
you know what happens in policy well
policy um is a depends on the person
some people would understand more about
policy than other people if if you know
so it
depends on uh what they should do
depends on on what they're able to do
well as we um sort of take step back and
start taking a longer review of this
what's the role that you see education
playing in I've sort of when I grew up
it was just assumed I was going to go to
college um I did go to college and I
would have for a very long time told
everybody they should be going to
college now I've sort of cooled off on
that in terms of the debt that people
are getting into I know you and your
wife are working a lot in the school
system there and Connecticut um how do
you how do you think about that what's
the importance of Education in you know
when when we start thinking about
protecting um successive Generations how
much of that comes down to
education uh
education is is the most important thing
um I I was um raised with a very modest
economic background my dad was a jazz
musician my mom was a stay-at-home mom
um and but I was lucky to have uh
parents who cared for me and I went to a
public school and I got a good education
and I came out to a world of equal
opportunity and I believe that those are
fundamental
Necessities that um that you have to
know how to have an education of you
know facts like um you have to know how
to read WR and arithmetic but you also
um have to know how to behave well with
others to be a good citizen operate in a
civil way to be able then to go into
jobs and that those that
education um can be um anything that
works I think the big thing is you know
three big things on on what I think work
should be
um um make your work and your passion
the same thing and make it economic
if if if it works that you love your
work you'll probably be better at your
work um and then you find the um so you
you want those things and then the E
then there's the economics of it and so
it could be anything from learning um
trades um um whatever it may be
education certainly does not have to be
College college is uh
overemphasized and um having a a good
productive career when I watch the these
remarkable people who are on the front
lines of dealing with this virus
situation and I look at them the great
some of the greatest people are the
people who have the capabilities of
doing certain things that are not have
nothing to do with going to college and
they're on the front lines and they're
contributing a lot and so we H uh so in
education
and civility but that means that there
has to be equal opportunity so yes what
my wife and I have done um is um we're
particularly
um um heartbroken or
disenchanted with um poverty
affecting um children in and high school
CH students having the equal opportunity
of education so our particular focus in
Connecticut um we made a a donation a
large donation $100 million donation to
the state of Connecticut for them to
match um and are working to get those um
students uh through high school and but
it could be trade school um and into
jobs and to be able to be uh productive
so what you look at all
societies and these are the things that
matter most the society um becomes a
fairer society when there's equal
opportunity for
education and also it becomes a more
productive Society because the
opportunities when extended throughout
the whole population means that you get
more people on the basis of Merit right
now that system is not operating in a
good effective way for example people in
the top 40% of income will spend about
five times as much money on their
children's education than those in the
bottom 60% and that's not that's that's
neither Fair nor productive so I think
that these types of questions are going
to have to be examined by policy makers
in a bipartisan way as we go through
this but yes in answer to your question
you know it really starts with good
total education the good raising of
children in terms of their actual formal
education and their informal education
and then going out and having
environment of equal
opportunity so one thing that I know you
have leveraged to tremendous effect and
this is the very thing I took from
principles that changed my life is um to
stress test your ideas to put them out
there to ask how do I know I'm right so
like I said i' I've really been losing
sleep over how I can be most helpful in
um helping people navigate um all of
happening and and I have come to a
conclusion that could be pure delusion
and I would love to know what you think
it's along the lines of Education which
is why I was asking about that so my
obsession is skill acquisition I think
that so the advice that I've been giving
to people if you've lost your job or not
like we have spent probably the last 10
years maybe more in an employes Market
they've really had the election they've
been able to put a lot of pressure on
employers and now you're seeing a flip
and you're seeing this is going to be an
employer Market um there's going to be a
lot of people obviously there's north of
30 million now it's going to be a lot of
people looking for work and my thing is
if you want to get your ideal job you
want to make your passion something that
you're able to pursue you've got to be
able to outperform other people and I
would say the same thing to a kid that's
coming up somebody that's about to
graduate whatever like you've got to be
better than the next person you've got
to build a skill set that allows you to
Excel and my thing is like you you are
living proof of one simple thing if you
can outperform people there really is no
cap to how far you can go you put your
money where your mouth is when it comes
to an investment strategy obviously with
Bridgewater um you guys have just
outperformed people it's really been
quite extraordinary
and yes people need to save yes they
need to um focus on where uh you know
they're getting their income from um
they need to practice austerity measures
all of that but ultimately people can
Propel themselves forward if they're out
there learning growing getting better
pushing I would go so far as to say even
being aggressive to try to continue to
move up um but it comes down to
recognizing that skills have utility
they actually let you do something they
let you out invest somebody they let you
build a better house or a better Bridge
um and so what I want to see people do
through this time I I just think most
people will be obliterated mentally
they're going to get scared they're
going to panic they're not going to be
able to think clearly and they won't put
themselves on a path to excel um so
wonder what what am I missing there
because I know that people don't that is
not a popular thing to say right now
that's something that I get a lot of
negative feedback from people it's like
basically pull yourself up by your
bootstraps so I'd love to understand
like where the flaw is in that thinking
um where when you talk about the um they
not being equal
opportunity one what can people do to
write that ship at a personal level I
get I get at the higher up systemic the
way that we address it through policy
and things like that but at a personal
level is there is there something people
can
do well I think you're exactly right I
think that uh that uh though is short of
specifics and um you know that
particular action and the question is um
who can help them so yes um if they're
Wily and hardworking and clever enough
they still
need triangulation and help to find out
where is the training program what is
that skill they H they can't do it alone
they have to do it with the help I um
and I would recommend you know I did two
30 minute videos one is principles for
Success at 30 minute YouTube video and
it's about an approach to life that a
lot of of people something like 14 I
don't know a lot of people have seen
this and I would say um it's worth your
30 minutes I think in terms an approach
to life and then there's also if you're
interested in the economy I did a a 30
minute video how the economic machine
works and in 30 minutes and that had a
lot of views more 14 million I think and
it was liked so um I can't tell them in
this very brief interview how we're
going to exactly who will get them that
training and that capability but I think
you're right skill that you
love sell that sells is what you need
now you go to each person has their own
particular way of possibly getting that
to some case it might be a um start low
in an organization and work your way up
to some cases it may be a government
training program to some CA in some
cases it may be a relative or a friend
who can get you going and so on uh as I
said one of my main principles is
there's always a path out
there you just don't happen to see the
path now so you have to find the PATH if
you find that path and you can't find it
alone the way you find that path is to
speak to other people get many ideas by
other people and then you know you have
to keep yourself trial and error you got
to keep at it like when you're getting a
job or getting a skill it's a lot of
trying and so that requires a certain
amount of discipline and if you have a
discipline problem get help with a
discipline problem have somebody kick
you out of bed or whatever it is that um
you can get there there is a path you
just don't see the right path at the
moment I look at three major forces that
are happening
now um haven't happened in our life
times um but have happened many times in
history and those three major forces are
the
creation of a lot of debt and the
printing of a lot of money to buy that
debt because particularly because the
government is running large
deficits and so they don't have enough
money so that government has to print
that money so that creation of all of
that that debt and its financial
implications and its economic
implications is one force the second
force is um the internal conflict the
amount of conflict that's internally
largely due to the largest wealth gaps
that we've had since the 30s they
um and that produces populism of the
left and the right particularly when
there are financial difficulties the
third
Force um is the
rising uh Power the um challenging the
existing power um largely in the form of
uh China and to some extent Russia um so
it's called the great power conflict
because in 19
45 you know there's there's the cycle
you have a war then after a war you have
winners and the winners determine the
rules of the game and then there's this
evolution of others becoming more
competitive and then you have a conflict
again um for who's in control so we have
that Dynamic taking place so those three
influences the
financial
the internal conflict
external
conflict uh influences or having a
dominant um influence I learned before
that when I was
surprised um often it was because of
things that hadn't happened in my
lifetime before but happened in history
because of that reason I went back and
uh studied history the last 500 years on
these Cycles there are big cycles that
last about 75 years give or take about
50 years and of Rises and declines and I
put that out because I think it's so
important people understand that I put
it out in a book called The Changing
World Order and in a free video calling
the changing world order so when we look
at each one of those they're important I
also learned in studying history that
there were two other influences that
were very big and you could see them uh
the first was Acts of nature such as
droughts floods and pandemics the
changes over time in uh the evolution
over time of people's learning and the
Technologies they make so I'd say there
are the really five big influences that
drive everything and they are the money
and debt economic influence the internal
conflict the external conflict the
nature
uh
influence um and the let's call it the
technology influence so as we go now
into this uh it's important again um I
put it out as a free video on YouTube so
that people could see it easily and um
when we get into whatever we're going to
talk about it'll be certainly in the
context of those things and since they
each affect each other it produces what
I call the big S
the animation that you put out in
conjunction with your book uh principles
for dealing with a changing World Order
have influence my thinking around this
moment more than anyone or anything else
it it makes it seem so uh predictable
from a historical perspective when you
look at that big cycle and you see how
it repeats and so as you went through
the last 500 years one thing that you
make very clear in the book is that the
the rise and fall Empires the rise and
fall of a reserve currency they go in
this six cycle Trend and the uh the part
that I always find unnerving is phase
six is basically war and collapse and so
you have that previously dominant power
loses its position loses its status as a
reserve currency and it loses it for
pretty predictable reasons in the three
forces that you were talking about in
the beginning discounting the the fourth
Force which I don't think in every cycle
you always had and you correct me if I'm
wrong but you didn't always have a
pandemic or anything like that but the
fact that we're living in a moment right
now where we have all of them and so
we've got you know not only is is it a
moment of massive technological
disruption right now good and bad but
we've got the money printing uh the the
meme on the Internet is money printer go
Burr uh so we've got you know printing
because of covid we've got printing uh
coming off of printing because of the
2008 collapse um and now we're again
seeing this cycle repeat itself so I've
heard you say that it that we're in
somewhere in Phase five which is as the
Empire begins to decline as you have a
rising superpower as the debt bubble is
getting out of control with that
perspective was what happened with the
svb bank collapse was that something you
knew okay something like that is coming
or was that a surprise to you no I it's
it was it was obvious um look um if just
let's I want to talk about the mechanics
really I'm so eager to pass along an
understanding of the mechanics so people
themselves can do the
analysis um so one man's debts or
another man's
assets um okay so what happened
the government had to sell a lot of
debt and when it sold a lot of debt
there were a lot of entities that bought
a lot of bonds government
bonds um and money was very easy which
meant that short-term interest rates
were very low um and money was almost
being it was actually being given away
because they had interest only loans and
interest rates were less than 1% and you
didn't have to pay back principal so you
can go get money and so that
created um a lot of debt and it
created a lot of um buying of government
bonds so what happened to um Silicon
Valley Bank um is uh what happened to
what happened to many many entities
around the world not just Banks they um
what what does a bank do a bank takes in
deposits typically or dead in some way
and then it buys that it can do that in
the form of making a loan or it could do
that in the form of buying a Government
Bond buying debt and then when interest
rates went up the value of that debt
went down
the money they had to give to
depositors became more and more
expensive and also depositors wanting
them to be
competitive looked at money market rates
or other rates and withdrew money from
the bank to because they had better uses
okay so what that that leave them with
it's a banking problem that has happened
literally for thousands of years that um
that what they do is the depositors you
know want their money back and they're
holding assets that are in this case
have gone down in value so they're broke
let let me let me put a fine point on
that sorry before you move on I don't
know that people really understand this
is is this a um it seems to be a
necessary result of fractional Reserve
banking meaning that if you deposit $10
to me I own only need to keep and I
think this is actually accurate I only
need to keep a dollar and so the other
$9 I can actually put to work in terms
of loans to other people or Investments
and that puts us in a position where
okay you gave technically you're giving
the bank a loan a deposit isn't just oh
my money is in a vault somewhere I've
given the bank a loan the bank is going
to go do things with that a varying
degrees of risk in the case of svb they
thought I'm doing the least risky thing
which is I'm buying government debt the
government is going to back it the
government especially the US government
can actually print money if they had to
to cover that which they did in this
case but if a lot of people go to the
bank at the same time known as a bank
run and say I want all of my money the
bank goes whoa whoa whoa I don't have
that money and so I have all these
assets and as long as those assets
remain liquid and I can liquidate them
in a timely fashion then sure as long as
the requests for people's deposits back
are coming at at a reasonable rate all
is well but when you get a lot of people
coming at once and you have the the
Investments that they've made have gone
down in value now you get a perfect
storm exactly I think you said it very
well um you're allowed to be in the
business let's call it 1110th it's
actually less than on10th is your money
whoa uh but let's call it one10 you um
you have a certain amount of money up
they give you the deposits you invest
the money within these General
guidelines so for example government
bonds are safe from default so you buy
the government bonds you think you're
making a spread and then what happens is
the government bonds go down in value at
the same time as the People Say Hey I
want to go take my money and put it
someplace else so you don't have enough
money and Central Banking works like
that except the government can print the
money so the risk and when it's the
government is not that you won't get the
money back un Len like in this
particular case for a bank it goes down
in value so you ain't going to get that
back you're going to sell it but anyway
you described it very well you what what
happens for the economy as a whole is
then they print the money because they
don't want defaults there's a tolerable
amount of default and then you get past
a tolerable amount of defaults and it
just crushes everything and so they
print the money okay and so this thing
with the bank is not a Silicon Valley
Bank is alone issue it's not a banking
issue it is a global issue in terms of
all around the world all sorts of
entities Pension funds um um insurance
companies um all around the world uh
there was a lot of the buying of these
government bonds which have gone down in
value and if you then take it and you
say What's the value of those those have
gone down and the cost of money is high
and so the world is leverage long okay
La meaning they own
stuff and they Bor bed money to own it
and it's going down in value how
nightmarish does that scenario become so
you've got your money locked up in
something for a long time but it's
declining in value is this like a
classic moment where we can look at this
big cycle and go oh we know where this
goes like the the music has stopped
everybody or no it it's a bit harder to
judge than that I think it's pretty easy
to judge on a um you know an
intermediate or longer term basis
because there there's a choice right um
the the predominant the big issue is you
know okay the government can come in and
print the money and give money to
anybody they want to give money to but
when they do that that typically
devalues the
money so if think about it if you're
holding a bond you know you got a claim
on
money uh but the claims are too much
so um so one way or
another you're either not going to get
back that money in
full or you're going to um get back
money that's worth less because they
print the
money I've never heard anybody say it
like that so let me just make sure that
I understood that uh the government has
effectively issued too many bonds so
people have they're holding a lot of
companies and a lot of other things too
okay very good point so we're not just
buying the bonds from the government
we're buying corporate bonds municipal
bonds like anybody that wants to put
some debt out into the market uh
government of course in fact I'm
actually curious uh what's the ratio
roughly if you know this between
corporate debt and government debt well
right now I I couldn't give you the uh
you know number number exact number off
my top of my head but there's
um um household debt
um corporate debt and government debt
yeah that that's terrifying so uh even
if you took every dollar that our entire
country makes I think it it's true
globally if you took every dollar that
we made globally and tried to pay off
the debt you wouldn't be able to do
it well that's right but it's not
expected to pay it off in a year I want
to go back to my main point to make this
clear if you're holding that
debt um you are
holding something that will money will
come
back uh let's say if the and the
government can print the
money but if the money's hard if that's
going to be good money that's coming
back it's going to be hard for those
entities to pay back because it's a lot
relative to their income and cash flows
to pay
it and that means that the default risk
Rises however
because you don't you're holding that it
it means that the debt will be bad
one way or another it's either bad
because they don't pay it it needs a
haircut for them to pay it or because
they do pay it with money that is going
to be printed to come back so when you
look at that you're um and that problem
occurs when there's a lot of debt assets
and lot of debt liabilities so think of
it this way just want to make this clear
when there was the position that
interest rates got a lot below the
inflation
rate you're losing buying
power there's no good reason to own
that um and there's a change in
Psychology because um before or there
was
um I own bonds the bonds go up in value
as interest rates go
down so I'm getting a price
appreciation even though I'm getting you
know let's say a low interest rate but
inflation isn't a problem until it's a
problem then when it's a problem because
they print so much money and they put it
out
then inflation goes up and a light bulb
goes off that light bulb used to
be okay how much am I
earning okay I'm not earning much but
it's okay the price of the bond or
whatever's gone up and but heway I'm
holding it and it's safe and then people
realize it's not
safe because I'm losing money to
inflation so now you have the central
Bank wanting to rectify that
imbalance by you know real interest
rates were minus
1.7% meaning that inflation was chipping
away at your buying power yes if I look
at inflation index bonds as an
indicator um or other indicators I'm
losing percentage points to inflation by
holding that Bond and then when they and
and people realize that well you don't
want to do that and then the other side
of it was you want to buy buy and borrow
and buy stuff
because you know money's free so
companies borrow and buy stuff and
individuals B Bor buy houses because it
interest only loans on the houses I mean
like okay I can buy a house I can buy an
apartment and so but that creates the
imbalance where it's
terrible to be a
lender um and a creditor and it's good
to be a
borrower and and do that so that
imbalance takes place it produces
inflation and then when it produces
inflation and so on and then you you I
then you say I don't want to own these
things anymore and then and also um the
Federal Reserve says I better fight
inflation they change things and so by
raising interest rates to levels in
which it goes from minus
1.7% in inflation index bonds to plus
1.7% and it makes it um and it raises um
the short-term interest rates you know
real interest rates much
higher then lo and behold all the people
who did all those things get hurt okay
they borrowed they bought bought the
bonds they bought all of those things
and all of those debt
instruments um and also companies look
at the companies that are
affected because yields got so
low
um tech companies and others those who
have a
dream I'm going they don't have to
necessarily make profits
they're selling a dream and the money's
got to be invested and so you
see all of that change radically when
those that tightening of monetary policy
so now you sit there and have a low so
when you're looking at the big picture
you look at you've got it's think of it
as all like banking you're holding all
these Financial
assets what is the value of a financi
IAL asset it has no intrinsic value its
only value is what it can buy but there
are many many more financial assets out
there the most Financial assets out
there that there's ever been relative to
the value of stuff to
buy there's too many claims out there
it's it's like um musical
chairs okay if everybody said say oh
wait a second let get let me get my
stuff let me convert my debt assets you
know I wanna I want to get my stuff I
want to get real stuff um that's that's
a real problem and so that's the global
picture on on the first of those five
influences right the fact that it's
happening with the other
influences is very important because
they affect each other so this financial
picture by the way is the same as in the
1930 to 45 period and the same as they
were throughout history yeah for people
that don't know that's World War II just
to uh it started with a financial
crisis that then caused internal
conflict what do we do about the
financial crisis the populism of the
left and populism of the right in this
internal fighting and four countries
that were democracies chose not to be
democracies because of the conflicts
that were existing the PO um and those
countries were uh um Germany uh Italy uh
Spain and Japan because there's a lot of
internal conflict over wealth
and when you have that and so that
creates a lot of internal disorder lot
of fighting okay in in some ways almost
Civil War forms everywhere some form of
Civil War who wins the internal war and
of course that happens also at the same
time as there's the external conflict
first of all everybody's fighting over
resources you have populists come to
power and the populists are not
compromisers the way democracies work
yeah let's fight I'm going to fight for
you this is don't worry I'm not in the
middle I'm not going to compromise and
you've got to pick a side and so the
moderates um there's no place for
moderates you've got to pick a side and
the sides are um let's say internally in
the C country the left and the right and
externally you know on um I don't know
the Americans and the Chinese or the
American okay and you got to pick a side
and
fight and so that becomes the dynamic
that is these periods of time and these
periods of time have typically lasted
about 10 to 15
years and you and they have various
symptoms to it so in the book I I write
out yeah there's like a disease like a
cancer um you see stage 1 2 3 4 if you
have these things you could look at it
and you could diagnose and you see it
moving from stage one to two to three to
four to five and to six you could see
that taking place and each time you come
closer to um a a bad set of
circumstances bad financial
circumstances and bad fighting over
things
yeah so this is where um this gets
really breathtaking so you've talked a
lot about this idea that there are
things you even mentioned at the
beginning of this episode there are
things that have not happened in our
lifetime but they happened over and over
and over and so it is very easy for me
as somebody born in the 70s to think oh
War isn't a thing that happens in the US
it's something that happens elsewhere
populism isn't something that happens in
the US is something that happens
elsewhere but it it does happen uh we're
seeing it ratchet up right now
because of that um I heard you once say
and I think this is really important for
people to understand about the the
internal conflict in fact you and I
bumped into each other in Dubai and I
was saying you know Ry as given
everything that's going on how do I
think how do I think about where to live
whatever and you said Tom the only thing
that matters is how people are with each
other and for whatever reason it really
hit me that time what you meant by that
and I
understood the the importance of the
this conflict and what I heard you say
previously is that in the French
Revolution it was the moderates that got
the guillotine it's like you you are
forced because I consider myself very
Centrist in nature and you find yourself
as things escalate being forced to take
aide which the French Revolution one
gave me pause I was like H not not how I
would want to end up as a moderate um
really fast going back to the the this
is a global moment it's a predictable
part of the process that stage five the
debt is too much interest rates are now
going up to keep inflation from running
away we printed money like crazy you've
got the rise and conflict is is the when
we printed money when the FED printed
money to back stop uh the what looked
like it was going to be a potential
contagion from svb obviously I think
there were five banks that ended up
failing um is this now contained or is
is what the FED did just going to
Forstall something that's
inevitable um The Dominoes are uh
beginning to fall I mean okay you
know you know what the next dominoes are
and you can imagine the the nymos so for
example
[Music]
um they're not going to buy the debt and
a lot of them are not
those who are who bought the debt and
have too much debt and have debt
losses um on government debt are not
going to buy that b buy more of that
debt for example and therefore when the
government uh sells more of the
debt um there's not going to be an
adequate number of buyers for that
debt uh you know that um those who are
are hurting because they have those
losses um won't make loans and a lot of
those loan loans went to real estate
particularly commercial real estate and
you know that for various reasons in
commercial real estate that you're
[Music]
um we don't use it the same way and so
on so you're going to have problems in
commercial real estate you know that
this kind of money was also fi
financing um venture capital and private
Equity um entities that also have cash
flow problems challenges and so you know
that that funding is not going to be
there in the same way you know as a
result of these things that a number of
entities will cut costs and in their
various ways and so depending on the on
that the job market is changing and you
you know you see it for example in tech
jobs and and other you know if you're in
some of those areas that are getting
squeezed and you see the same thing by
and large you know happening
internationally so you can see also that
if you said what is the value of those
assets that are being held that that
that value has gone down a lot and
because it was bought on Leverage as you
described because it is bought on
Leverage there are bad um losses in
different places and then the question
is what are you going to do with those
losses in most cases quite often they're
um you know don't mark them to the
market and meaning don't account for
them and recognize those law
which is kind of let's say hiding those
losses and hoping in time that they'll
just over time you know it'll be fine
but that'll produce a squeeze that'll
produce a problem so I think we know
those things we know those things and um
and that's happening at the same time as
we have um an internal conflict taking
place
such as the presidential election so
we're going to come into the
presidential and and it's not just
presidential election of course it's a
number of um Senators congressmen and so
on um and who are at each other's
throats about this and who are going to
fight with each other okay and and fight
to win um not probably respect the rules
as
much um but fight to win for their side
and that's happening at the same time as
we have um the situation with China most
importantly China and Russia in terms of
the issues in terms of their things to
fight over you know for example even
there's going to be an election in
Taiwan that also have a big bearing on
this whole thing so there's you know
there we know I think pretty much that
we're going to have financial problems
at and economic problems at the same
time as we have this internal fighting
and this and external risky situation
the most important thing I think is to
know your
nature what is your nature what is what
what are your strengths and weaknesses
and your likes and your dislikes and
once you know that then you also think
what are the fits oh I would like that
job and the job could pay me well and
then you figure out okay how do you do
it how do I get to it but they're
different people in different
circumstances so I can't answer them all
now yeah um I agree with you so I want
to go back one thank you for the
feedback that I'm I was being super
vague uh I think that's really helpful
so let's start getting really specific
as much as we can knowing that people
are going to be sort of at very
different places as they're hearing this
um but I think this will be helpful so
one the video that you're talking about
and I'll speak for you and correct me
where I go astray but I watched the
video multiple times think it's really
extraordinary and basically to put it in
a really small nutshell it's basically
go out try things fail a lot learn and
keep progressing and that that's
basically if I remember right you have
like this sort of circular ascent um and
it's from the failing and the learning
that you ultimately make the progress
but if you put your head down you don't
want to see your mistakes you don't want
to see the flaws in your thinking you're
going to trap yourself at a plateau and
you're never going to be able to push
beyond that so you've got to seek out
disconfirming evidence you have to seek
out where you're weak and in fact one
thing I will I sort of disagree I get
what people mean so when you say know
your
nature I will say by
Nature before you get to that second
part let me just on the thing yes it's
the looping and learning from
mistakes but it it another part of it is
the
realization that you don't have to make
your decisions in your own
head okay that when you start to realize
that you know what you're good at and
what you're bad at that a power comes to
you when you start to know uh okay who's
the best person to give me the advice or
who's the best person to lead me through
this or when you start to know that you
can go beyond what you think and your
opinionated so that you can triangulate
I call it triangulate with others so
that you find three people who are
really capable of giving you good advice
who will argue with each other and argue
with you so you can see all sides of it
and you work yourself through so it's
not just your eyes looking for the path
but it's other people's eyes looking
with the path with you knowing that
you're going to have uh successes and
failures but that power of that
collective learning and triangulate well
with humbleness is a great power as you
go through that cycle I love that so um
I'll push that a step further and I will
say this so I'm going to be super blunt
to any body watching right now and Rey
if you think that I'm wrong I trust that
you will jump in no one is coming to
save anybody and that's the hard truth
and if I look at history and even if I
listen which I have listened to
literally every word that you've said on
this subject publicly anyway that this
is just going to suck like there is
going to be a a level of brutality that
most of us have not experienced in our
lives companies are going to go under
people are going to lose our jobs there
are going to be people that are going to
struggle to find their next meal and
what what I want people to understand
understand is just like you just said
you can triangulate you can get people
to help you think through but I want
them to understand that they can do that
in a book at a library they can do that
online if they still have access to the
internet which as of right now even just
going to the library you can get access
to being online you changed my life
before you and I ever met I read your
book I'd never I didn't even know who
you were at that point and somebody just
said hey you've got to read this book
it's got really powerful ideas on trust
and creating these hard principles out
of all your mistakes I read it
immediately recognized that this aligned
with what I call the physics of Being
Human it was so in line with removing my
blind spots getting people acknowledging
that other people are better than me at
certain things and so while I take uh a
little bit of an exception because I I
think that you can't say what you're
good and bad at until you've been at
this for a long time you've been trying
you've been pushing you're learning
you're failing because by Nature I'm
lazy I I am not very bright I think
there are people that can process raw
data far faster faster than I can but
I'm willing to admit when I'm wrong I'm
willing to admit that I don't know I'm
willing to admit when I make a mistake
and because of that because I go in that
cycle that you talk about of making a
mistake looking nakedly at it not
pretending I didn't screw up asking
people to point out my flaws and then
going and now I'm going to have to do
what is called deliberate practice to
get better at that thing and I don't
just ask and I don't think people can
afford right now to just say oh what do
I want to do we for a lot of people this
is going to be maso's hierarchy of needs
you need safety you need security you
need food shelter and I think it's going
to come to that and so recognizing there
are people out there right now that know
more than you you are going to make a
mistake but those mistakes are huge
learning opportunities you have to admit
that you made one you have to seek
people that can help you remove those
blind spots and then you have to put in
the work to get better does any of that
sound crazy no that that's totally
totally right and then um it comes from
Once you have a
fear that you might be
wrong but you have still the
audaciousness and courage to go
forward you're a lot
smarter than the person who thinks they
know there's a there's a quote that's
Jefferson said he who knows he knows not
is closer to the truth
than he whose mind is filled with
falsehoods and and so when you know that
and with and then with your character
and your determination you go forward
the smartest people I know are the most
humble it what the more you learn the
more you realize oh I'm eager to take in
so that's right um but back on your
audience I I think your audience ranges
from um you know there's a wide range
that you have in your audience
and I would say that there are many
people in your audience who can
plan for a simple lifestyle that can be
wonderful sometimes we acquire these
needs that aren't at anywhere near as
big as as we make them out to
be um you know um do you have a bed to
sleep in do you have food to eat do you
have basic health care okay if you start
to think okay what are my needs that I
really need and I'm okay and how can I
make Provisions for those
needs then once you've got that in your
mind you're you're free okay you you can
go beyond that you uh that you may say
listen oh I can do that for a year or
two years or a month or whatever but you
I think we visualized too much the
things that we're used to one of the
good things about this exercise is that
you can bring it brings you back to
basics you can be brought to Basics and
like I'm saying if you have a bed to
sleep in and you've got food and so on
and you have those Basics and and good
relationships with people who care about
you and basic health care so if you
budget for that and you figure how do
you have it maybe it isn't in the
luxurious place you're in maybe it's in
the country and so on once you visualize
that and you get that down in your head
and you say oh I can get that then your
stress will disappear because you as you
visualize that in many ways that's a
happy life it doesn't take a lot to
there's stimulation there's nature
there's relationships these
fundamental one wonderful things the
most important things can be obtained
and so for many of you I think if you
look at that and you budget for that I'm
seeing a number of people um who are um
going
broke H and and I've watched this over
many
years and really it's just the
adjustment process when once they get to
that point where ah you know they have
they get settled they're fine it's the
ambiguity it's the worry it's the stress
so if you do that from the beginning and
you have that that play out in your head
then you know everything from there you
can play with and it's your it's uh
icing on the cake so I want to emphasize
you can budget for that you can look at
that find that scenario find what that
looks like so that you know you've got
it down then you know you're safe once
you've got safe everything
beyond that is luxury I forget who the
Greek um philosopher was maybe you
remember that used to go and he would
sleep on the street like once a month or
something like that in shabby clothing
because he wanted to remind himself oh
this is what I'm afraid of and this
thing isn't that bad I mean I always
found that interesting I take a slightly
different approach I think that is
really powerful and I think that's an
important anchor for people so my wife
and I always say to each other cuz look
we have been dirt poor um and we have
now been very wealthy and All Along The
Journey we've always said to each other
look man if I have you like everything
else I'm good so literally there are
only two things I'm legitimately afraid
of there are things I don't want but
there are two things I am legitimately
afraid of brain damage because then I
cannot build my way back I can't have
the level of fulfillment and joy that I
want and losing my wife because a life
shared to me is like the the highest
importance now having said that I'm
going to set all that aside and I I hope
people heard you and I hope that they
take it to heart to paint a lifestyle
that they can love and it's beautiful
but it's simple um and you know they
don't have all this overhead hanging
over them but I know thyself as you were
saying know what you're good at what
you're not I've always told people if
you want a calm peaceful life I'm not
your guy there there is somebody else
for you to go listen to um and and
follow that Journey if if you want to be
aggressive and you want to build
something that matters to you I don't
need it to be big I don't need it to be
a business whateve