Kind: captions
Language: en
why are you a single issue voter when it
comes to our national debt um right now
the US is a car driving into a wall with
our foot all the way down on the gas we
are proposing uh the federal
Administration is proposing a$7 trillion
budget next year we have $33 trillion of
national debt um that number has swelled
since covid and in the Years following
due to the launch of new programs and
other stimulat effects spending by the
federal government and the
problem with having too high of a
national debt relative to national GDP
is the way that a government pays their
debt is by taxing their economy taxing
their GDP and there's a natural limit to
how much economically you can actually
tax the economy once you increase taxes
too high investment declines once you
tax Investments too too high on
individuals people leave we saw this
with the launch of the wealth tax in
France there's an attrition of capital a
hiding of capital all of these factors
aren't necessarily about people being
bad and doing bad things they're just
natural economic forces that we've seen
play out many times in the past so
there's a certain natural limit to how
much debt a government can actually take
on do we have a sense of what that limit
is well it some people would argue it's
somewhere between 100 and 150 to you
know maybe up to 200% of GDP but 100 and
150% is really where things are
sustainable now the US is a very unique
outlier in you know the history of
global economies but there has been and
you know I talked about this on our
podcast years ago um a set of studies
and Ray doio kind of captured a bunch of
data together in his book uh about the
changing um uh World Order and the
economic cycles that we've seen
historically six times in the last 500
years we've seen these sorts of things
have you had Ray on your show yeah a
couple times so you know the story so um
so I think the thing that that makes me
worried is at some point spending at the
federal level gets so high and debt
levels get so high that there's it's
really hard to come back from that money
printing that's needed to support paying
that interest and paying that debt and
right now inflation is being fueled by
the stimulatory effects of these
programs and because things are
inflating the government feels like
there is a need to help make things
easier for people so they put more money
and launch more programs to try and
reduce inflation and in doing so they
increase inflation and then as inflation
goes up the interest rates on the debt
have to go up when the interest rates on
the debt go up it becomes harder to pay
down the debt and so our $33 trillion of
debt a good 50% of it is getting
refinanced now where the interest rate
moves from an average of about 3% to 5%
and when that happens you know 2%
increase in interest on $15 trillion
that's another $300 billion of interest
payments a year and this this year we're
already paying a trillion dollars just
in interest on the debt that the federal
government owes to its um Bond holders
to the people that own treasuries so
we're getting to a point that it becomes
really difficult to actually stop the
spending pay the interest and or reduce
the debt levels and that's how these
spirals kind of have played out
historically and every time it's played
out whether it was the Dutch or the
English or you know whomever you want to
kind of look to there was always this it
can't happen here this is the the
leading global economy this is the
reserve currency of the world it's not
going to happen here and every time the
natural forces of arithmetic played out
and I'm that's why I'm so worried I
think that the US needs to
um the US voting population needs to be
really thoughtful about voting for one's
individual self-interest and voting
versus voting for the safety of the
Union of the United States
over the long R can we create a
circumstance in this country where
people recognize that we need to reduce
spending and that people are going to
lose benefits they're going to lose
things that they've otherwise had for
some period of time and that is a nearly
impossible thing to make happen in a
democracy where individuals get to vote
and that's where we see these sorts of
things start to reel so that's why I'm
so worried and that's why I am a
single-issue voter I want someone to
show leadership like Bill Clinton had
those poster boards back in the day
where he said here's how we balance the
budget here's how we cut things back
down to break even I think we need a
degree of Simplicity and Leadership
around that being the key point and the
key objective of the next Administration
and unfortunately I don't think we see
either you know candidates standing up
and saying we're going to do that um
yeah if we get either Trump or Biden uh
both of them increase the debt massively
so yeah we we certainly have four years
on both counts of what they'll do
economically I want to know that why
can't we stop spending the thing about
humans is I think we are fundamentally
driven by this concept that I think is
best uh phrased as
desire it doesn't go away humans never
stop
wanting the natural condition of a human
is to H see something that we don't have
and then create a objective of I want to
have that thing I don't have when I then
have that thing I no longer feel like
I'm unmotivated I now look for and I
naturally see the next thing I think
this is what made humans evolutionarily
successful we were able to then scout
out the next meal scout out the bigger
building scout out the better cave and
it allowed us as a species to
continuously progress expand our
population and succeed and thrive on
this planet but the unfortunate reality
is that that tuning that biological
tuning has this effect where no one is
ever actually satisfied fully satisfied
with the things they have satisfaction
comes from the change in the things that
you have the Delta and the Delta from
year toe is what drives happiness and in
a voting system in a political system it
drives how people vote that if my income
isn't going up by 10% per year I am
unsatisfied and there's a lot of good
behavioral social studies on this there
was a study done years ago which I think
has been disproven since but it does a
good job
I think of explaining this which is up
to a certain limit of of income people
are unhappy and they get happier with
more and more income after that limit of
income where all of your basic needs are
met with respect to being able to pay
for your food your housing medical and
take care of your your family your
income is no longer your predictor of
Happiness your change in income is your
predictor of Happiness so if we start
with that premise of like human
behavior the government now has an
incredible the federal government in the
United States has an incredible role in
um supporting a lot of people through
active programs that pump money into
businesses so the government is a
customer of many businesses or employing
many people that end up working directly
for the government or under government
programs and I think a study I I tried
to pull together all this data a couple
months ago but something north of like
30 or 40% of the US working force is
touched by the government as a customer
of their business the primary customer
of their business or as the employer of
those individuals so the government has
created um has been a big driving force
for economic growth in the United States
over the last 250 years but we're now
reaching um a point where in order to
sustain that system where people have
their income and their livelihoods
improved year after year because of
government intervention and government
policy it's no longer kind of
sustainable
um
so let's talk about some of the big
government programs a lot of people in
the United States are dependent on
Social Security and the income that
comes from Social Security that that
that program on its own is forecast to
go bankrupt in 2033 independent of a lot
of the issues we're dealing with in the
debt and spending in the rest of the
government the Medicare program um the
the costs continue to climb continue to
mount and a lot of people are dependent
on that program for their Healthcare
needs
so those are two very large programs um
Federal programs a very large percentage
of federal spending how do you get
voters where there are tens of millions
of people that are dependent on those
programs to vote to reduce those
benefits they simply won't and it's why
neither Democrats nor Republicans and
I'm not advocating for it at all I'm not
advocating for reducing those programs
I'm just pointing out the simple reality
of how a democracy will work in this
circumstance which is those individuals
don't want to give up those benefits
they don't want to give up that income
they don't want to give up that medical
care it was promised to them they
invested in those programs for decades
but the government and the way that the
system has been set up has now made it
um you know very difficult because we
have to take on more debt to support
those programs and then we have a lot of
other stimulatory programs a lot of
other uh systems where the government is
the customer of businesses they are
spending money to buy stuff from those
businesses Medicare is a good example
they buy a lot of pharmaceutical drugs
and
um the system is challenged
because if I'm the government what's my
incentive to negotiate for a lower price
I can go to Congress and get a bigger
budget Next Year everyone in the system
is built to make more money for
themselves so next year I want to have a
bigger budget I want to be able to spend
more I want to grow my Organization no
one ever leads an organization and says
I want to shrink this organization I
want to cut it by 50% that's my goal
let's shrink the organization that I'm
leading the natural incentive is to grow
so I think that there's a lot of like
tension in the way that the system has
evolved that both the internal
organizations are designed to grow and
the voters are not going to give stuff
up that they've gotten and I always
think about like in my junior high there
was a kid who ran for like president and
he said I'm going to make all the
vending machines free that was his
platform it was so smart and everyone
voted for him like of course I'm going
to vote for the guy that tells me I'm
going to get the vending machines are
going to be free I don't have to pay for
my chips and soda
anymore that's how people get elected in
in a democracy they they go to the
voters and they say here's what I'm
going to give you they don't say here's
what I'm going to cut back for the
survival of the Union over the next that
doesn't sell what sells is I'm going to
increase Medicare benefits I'm going to
improve Social Security I'm going to
launch new programs to support uh you
know your community I'm going to build
stuff I'm going to create new jobs those
are the things that that voters want to
hear and so there's this demand from the
voters for more stuff so I would argue
that the politicians aren't necessarily
even the cause of the problem I think
that they're more a symptom
of the system that is set up to operate
this way um not not necessarily set up
to operate this way but naturally
evolves to this point that the voters
every year want more stuff and if
they're not getting more stuff because
the economy isn't naturally growing and
their incomes aren't growing they turn
and look to the government to solve
those problems and then the government
has to grow and uh then they put people
in place who stand up and say I'll give
you all that stuff and they're like okay
great you're you're you're the guy
you're the you're the gal you go do that
we vote for you and I think that's why
it's so hard to back away from this all
right explain to people how money
printing fits into this and why so money
printing was something that I had to
discover uh quite late in life and
realize there's some pretty um the the
fundamental nature of how it works was
not at all what I thought so what is
money printing how does it play in I
want to make sure my numbers are right
and I could be wrong on this um we can
double check normally I'm on a computer
when I do this sort of thing so I can
just tell Drew what you want to look up
but I um if you look at the uh um the
balance sheet of the fed and the uh the
balance sheet of the balance of the
treasuries that they hold I think it's
about 8 trillion
now so um the Central Bank of the United
States is the Federal Reserve 7.4
trillion so about 8 trillion the federal
government needs money to pay its bills
all the stuff that it's spending money
on and the way that the federal
government does that is they tax
businesses and citizens and that tax um
allows them to pay their bills but we
spend more than we make so the federal
government has to issue bonds these are
promises to pay in the future and those
bonds are bought by people like you and
I it's bought by federal by um foreign
governments China Saudis a lot of um uh
individuals and companies around the
world like to hold us treasury bonds
right now treasury bonds are a great
yield you can get 5% interest by buying
us treasuries and the federal government
guarantees are going to give it to you
that's the word of the US Federal
um the US Treasury which is a very
historically been considered a risk-free
asset and uh and then they take those
treasuries and um they get a cash and
then they take that cash and they pay
their bills one of the buyers of
treasuries is the Central Bank of the
United States the Federal Reserve which
is overseen by Congress but it's
separate doesn't actually report up to
the the president so the Federal Reserve
has this ability to buy treasuries and
issue money issue cash that they don't
have right so the Federal Reserve has
this ability to print the US dollar and
um and so historically they've been
buyers of treasuries supporting the
market for the federal government to be
able to issue debt to pay their bills
and then as more money comes into the
system from the Federal Reserve which is
effectively created out of nothing that
money flows its way into the economy and
if you have for example you know 30
trillion floating around versus 10
trillion US dollar floating around
things are going to inflate because
there's more dollars to spend on stuff
and the cost of things will naturally go
up that's a super super duper simplified
way of kind of explaining the system so
the Federal Reserve the Central Bank of
the United States um issues money almost
on a loan basis to Banks and buys
treasuries with the expectation that at
some point the US government is going to
pay them back so that's the economic
relationship between the central bank
and the federal government and the way
that money then finds it way into the
system the federal government can't just
print the money the central bank can and
then those those uh those treasuries get
get held by the uh by by our Central
Bank and that money finds it to into the
system so at some point whether um you
can you can look at the total amount of
debt of the federal government and think
like any household how much debt can you
afford each month and at what point are
you going to go broke that's one way to
look at it and another way to look at it
is that in order to overcome that
there's going to be a lot of money
printing because the Federal Reserve can
just buy all the those bonds and issue
that money and then that money just
finds its way into the system so there's
a question at which point there's too
many dollars that get printed this is
the part that people don't understand so
there's a magic thing that happens when
the the money is made up you said I
think essentially made up out of thin
erir I'll say it's made up out of thin
err like completely fake untethered to
anything it is literally just a entry
into database that they decide to click
clack and now that money technically
exists um why isn't that awesome why
isn't it awesome that we can just make
more money just keep making more money
make the budget bigger every year let's
say let's say that you and I have $50
each and we're the only people with
money and there's a guy over
here selling sodas we know we can buy
those sodas now and he's only got four
sodas to sell and we really want to buy
all the sodas so we eventually end up
paying 25 bucks each for a soda okay
there's four sodas 50 bucks each
suddenly some guy shows up with another
100 bucks or let's say the other guy
shows up with 200 bucks now he's going
to start competing for those sodas and
the guy that's selling those four sodas
is like hey guys it's no longer you know
50 bucks of what did I say 50 bucks 25
bucks of soda suddenly the price is 75
bucks of soda because there's more
people that want sodas and there's more
cash available so that's how the price
of sodas is inflated that's what happens
when there's more money that floods into
the system is that the purchasing power
of the existing dollars in the system
goes down because there's now more money
competing for some number of assets or
services that are being sold so the
price of assets and the price of
services goes up and the value of the
dollars goes up goes down which means
that the the value of your savings the
value of the stuff you own goes down and
this is particularly true for the
majority of Americans who are not big
asset holders right they only have uh
you know more than half of Americans um
you know can't pull together $1,000 for
mercy so if the value of dollars go down
and their incomes aren't going up
they're deeply hurt by that people that
own a lot of stuff can take their assets
and they can buy inflation hedged
Securities or inflation hedged assets
like you could go buy Timberland you
could buy gold or you could buy Bitcoin
which a lot of people argue is a great
inflation hedge now and those assets
because they're fixed in Supply they
will go up in dollar denominated terms
and so wealthy people can handle
inflation
the majority of other people cannot and
inflation really hurts the economic
growth because now people spend less
they have less money to spend and
businesses shrink and things go bankrupt
so inflationary Cycles are very damaging
to um to economic Cycles okay so we have
a thing that happens where we're in an
inflationary cycle it's brutalizing
people but I would say the average
person doesn't understand it so they
don't know that it's happening I'll make
a state you tell me if you think this is
fair um money printing is legalized
theft from the government they they are
stealing not your dollars because you're
going to have the same amount of dollars
in the bank but they are knowingly
stealing your purchasing power which is
the same in effect as just taking money
from you yes and what I will change
about your statement is I will expand
the definition of government to the
people that were voted into government
by the people that voted okay and this
is what's so important to understand is
we all kind of separate out these
elitists and these politicians that are
doing bad stuff to us but the voters in
the United States have the ability to
change that they have the ability to see
this problem and make a decision about
who might be a better candidate to solve
this problem for us instead of being
myopic to getting more stuff for
themselves individually in the near term
which is an impossible ask but one
that's worth noting there's a reason
that the system there's a reason that
the voters have made that choice it's
not just that there is a bad person who
is choosing to print a lot of money and
steal our our money um I I am
very very much
about rethinking the concept of the role
of government in our lives and in our
economy that's Prime to me because I do
think that anytime the government gets
involved in uh
markets it distorts the market forces
that allow things to get better and get
make things cheaper for people and make
markets grow everything goes wrong when
governments get involved in markets
there's no scenario I can think of where
things are good but individuals will
still rationalize it the guy who owns
the defense contractor is very happy
with the government you know being
involved in markets because he gets to
make a bunch of money selling the
government turbines for his from his
from his business and because the
government is a Cost Plus model on
defense Contracting the more he charges
the more money he makes so he's
incentivized to charge more every year
so that model to change right as an
example of the things that can be
affected by the voters um so I just want
I agree with your point I just think
that the voters have a role in this in a
democracy in addressing the problem okay
and sorry I'll say one more thing which
is worth noting go back to the example
of the soda guy the guy only has four
sodas but what if he comes up with some
new fangle technology a replicator
machine like from starre and now he can
make eight sodas or 12 sodas or 20 sodas
his invention of that technology makes
the cost of soda less even as there's
more money coming in there's now more
sodas so we don't need to all compete
for fewer sodas so the productivity the
production of more stuff is good for the
economy and it gets us out of this
problem so when you hear people talk
about economic growth or GDP growth
there are two things that drive GDP
growth one is the inflation of stuff
things going up because there's more
money coming in but the other one is
improved productivity technology making
more stuff with less resources
and that has historically made the
United States so successful and for the
last 250 years has fueled our economy
fueled the United States success
globally um our Innovation our
entrepreneurship technology solves this
problem if we can get it to move quickly
fast enough there's another Point
besides just voting right and fixing
this through the voting system which is
enabling more technological innovation
and
enabling productivity gains to arise
from technology
in that sense we Face another critical
problem right now which is a very
serious negative view on technology and
I do think that the majority of
people don't necessarily think about if
you say the word
technology um there's a more negative
association with that word than
positive go back to the
1950s there were all of these crazy like
posters of about humans will go on
Rockets to the moon and we're all going
to live on Star bases on the moon we're
all going to be on monals and move
around the country and mon rails is
going to be flying cars um these new uh
materials that we were inventing we're
going to change everything we'll be able
to put on suits and go underwater and go
to our underwater cities there was this
incredible wave of innovation that
happened particularly out of the
chemical engineering Revolution that
happened in the early 20th century and
the early Industrial Revolution and then
post World War II where we were so
optimistic about technology
then what happened is that we started to
get cancer and there were meltdowns of
nuclear facilities and people got and
there was a cold war so there were these
big nuclear bombs sitting over our heads
all the time and we were doing Duck and
Cover from nuclear bomb attack training
at school and I think that the American
psyche and the psyche of the West
largely which benefited very much from
this progress that arose from
technology got really challenged in
terms of ad op in and appreciating the
upside of Technology because there was
so much downside and then we got scared
of technology and then everything became
kind of this critical anti-technology
Association in 1955 Disneyland open I've
told this story before with this ride
called
Tomorrowland and or this area called
Tomorrowland I mean you've been there
and every ride there was about the
future opportunity with technology you'd
go on a rocket ship to the moon and back
that was one of the rides um you would
go inside the the world of chemicals and
you would learn about making Plastics
and making new materials and it was like
this is going to it was like the home of
the future and they showed this really
cool home where everything was like made
of these new materials and it was crazy
because prior to that we were like hand
making wood
everything in the
1970s they started to turn over all the
rides in tomorrowand at Disneyland and
every ride got remade as a fear of
Technology ride so um uh the uh the
rocket ship to the Moon became Space
Mountain and it's all about a rocket
ship that went off course and it went
flying through the and so you're on this
crazy scary ride Star Tours was a robot
that broke down and took you the
Navigator robot broke down and you went
on a wrong course and you crash and die
Captain eio I don't know if you remember
this Captain eio Michael Jackson comes
from outer space with his clan of people
and they destroy the robotic world that
had been overtaken by robots and they
return it to an organic natural state so
everything about what appealed to people
starting in the 70s as represented out
of Disneyland and Tomorrowland was all
about technology goes AR and we have to
return everything to a natural organic
state so there's this great tension and
we see it play out all the time in
bioengineering in gene eting in AI in
all of these Advanced Technologies that
the United States is leading in and
progressing in but there is so much
trepidation and concern and fear that we
are potentially missing out on the
productivity gains and the um the Boon
that would arise from these Technologies
being more rapidly adopted and solving
this big kind of economic crunch that
we're running into so I just wanted to
highlight that important point because I
think it's really critical for folks to
to pay attention to and I'm not saying
that the concerns and the risks of
nuclear meltdowns and cancer and
chemicals all this stuff is unfounded
but what we have a tendency to do is to
take one event or one experience and
blanket the entire space or the entire
industry around that one experience and
say we need to stop all of this because
we have no margin for
loss there was a guy who died in
1997 99 I'm going to get this wrong um a
patient who was uh getting a gene
therapy treatment it was a young
guy and when he died they put a stop on
gene therapy treatments for I think
seven years they weren't allowed to do
any more gene therapy treatments and
since then we now have literally dozens
of gene therapy treatments that can cure
um dozens of human diseases saving
millions of lives but for seven years we
weren't allowed to make those things
progress because we were worried about
losing another life
and so there's a a challenging thing in
a in a wealthy Nation like
ours and I've gone on for a while but um
we worry more about loss than we care
about gain if you go to a small poor
African nation they are not worried
about the downside of putting in a
nuclear power plant that would drop the
cost of electricity and give everyone
abundant power in their homes and clean
water they would say we'll take that now
done lock it in but the United States we
don't want to have a nuclear reactor
because now the marginal cost of
electricity gets reduced by 3 cents a
kilowatt hour so it goes from 15 cents
to 12 cents uh I'd rather not have a
nuclear facility in my backyard we have
the privilege of that in this wealthy
Nation so that's the other tension that
holds us back from embracing new
technologies is our risk aversion we are
more worried about loss than we care
about gain in this this state of where
we are inflation is eating the value of
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right you're putting a lot of
psychological principles on the table
which are great I want to give people
some mile markers sorry I've gone over a
lot of stuff no this is fantastic so
this a lot of the stuff that I wanted to
lay out but I think we need to drill in
in a few places so one going back to
money printing because this is the one
that I think um everything revolves
around this and we haven't even talked
yet about how War plays into this yeah
but so money printing I think a big part
of the problem is that people do not
understand it so you can say it but they
don't understand it and it's a very
counterintuitive thing to say dear
constituent I'm going to to print some
money and I'm going to give that money
to you and it's very difficult for
people to understand that's bad for you
and it may help in like a really acute
moment like when covid happens and you
need to put stimulus into people's hands
just to calm some of the panic and make
sure everybody makes it through okay but
even that is a trade-off and you're
going to have a problem and I'll say
what the problem is very succinctly the
way that money gets put into the system
in that magical moment where the FED
creates money out of thin air is that
they're buying the bonds with it so now
if I hold that asset
class I'm going to get that money and so
that money basically just protected me
so their mechanism for getting the new
money into the marketplace was to buy
the asset that I had to give me my
guaranteed return on that money yes now
that I'm already going to have to be
educated to be doing that so most people
aren't doing that so you this starts to
create this divide between the Hales and
the Have Nots
so then people what they don't
understand in that moment is that when
they print the money they are
socializing that decline in buying power
across everybody that's right poor
wealthy everybody but the wealthy just
got a bump because they got their the
money that they put into the bond of the
treasury protected plus they got a
return on that money and they only lose
as much as the person who gained nothing
from the money printing but now only
loses and so as they just print print
print print print
if you're like oh I'm getting my Social
Security protected oh I'm getting this
funded or whatever they think oh this is
amazing but they don't realize that that
those losses are being socialized across
everybody and then the other one and
this is something that I've heard you
say really succinctly is that it also
creates an appetite for war explain why
that's true why does money printing lead
to more Wars yeah it's not simple but
we've seen it historically over and over
and and over again which is as great
nations rise their populations demand
more the government takes on debt prints
more money gives the population more and
at some point you reach this critical
natural state where the
economic condition isn't naturally
growing it's not it's not catching up to
the cost of the debt to support the
programs and the the things that the
population demanded that people demand
it so at any given moment there is the
potential for war okay at any given
moment there is someone out there
talking smack about the United States
there is someone out somewhere out there
instigating launching stuff at a base
there's always some
instigation the choice of do we make a
decision now to let Saddam Hussein
continue to be the leader of Iraq or do
we make the choice to go in and spend a
trillion dollars to remove him from his
position and go get access to those oil
fields and then put us companies in
charge of those oil fields and then tax
those companies to generate Revenue
becomes a more interesting choice a more
obvious choice and I'm not saying that
there's a conspiracy theory in why we
went to I think the America wanted to do
something bad coming out of 911 we
wanted to do
something not bad we wanted to do
something aggressive to respond to 911
well we've got temporary examples with
Russia Ukraine Israel Palestine like
there's no unfortunately no shortage of
things where this is so what are we
going to do with Y hoodies launching
stuff at cargo ships going through the
the Suez do we choose to have a
proportional response meaning send in
some SEAL Teams and take care of that or
do we move all of our military to that
region and start to instigate and
support the Israeli conflict in Gaza and
then start to fuel Iran's interest in
getting involved and eventually Force an
alliance between Russia and Iran and
China which creates a really nasty
circumstance but allows us to then move
our military machinery and our economic
forces into that circumstance because
War historically has driven a lot of
shifts in economic productivity it has
driven a lot of um growth in aspects of
the economy that need to be stimulated
and so it's not like there's a bunch of
guys sitting around in a room Illuminati
guys saying let's go to war and grow the
economy but when things are great when
the government is running a surplus when
people are happy when voters are happy
when the nation is not
divided um the economy is growing and
everyone is employed and everyone feels
good and Israel gets into it and Gaza
gets into it and they the Palestinians
and the Israelis get into it the US in
that circumstance is probably more
inclined to say you know what let's not
escalate this thing right now things are
pretty good at home let let's just can
you guys just resolve your differences
same with Russia Ukraine can you guys
please just not like escalate we're not
going to give you a lot of weapons
Ukraine go go negotiate a settlement go
figure out how to resolve this thing we
rationalize it now as in pursuit of
Liberty in pursuit of democracy there's
always a way for either side to
rationalize the decision but I'm just
saying generally speaking if people are
happy at home they're not looking for
conflict AB abroad we are not happy at
home and the economic circumstances are
deeply coupled with our unhappiness at
home and so we are more willing to
engage in Conflict abroad let's give
another 80 billion to Ukraine let's get
that thing going let's do something as a
nation I think there's a lot of aspects
to why this happens one is it brings
people together we now have a common
enemy there's an external Force this bad
guy in Russia Putin we got to go get him
let's all get behind this idea of
destroying Putin it's great great okay
good he's the bad guy Saddam Hussein
He's the bad guy you know uh is it Hamas
or Israel really not sure right now so
like there's a b there's got to be a bad
guy over there there is a bad guy some
there's a bad guy let's go get him um
and then we get to spend a bunch of
money it's stimulatory I mean you heard
uh um what's his name uh uh our uh
Senate U Majority
Leader um our Senate leader um anyway he
said all the money's coming back home
we're spending all this money on Ukraine
but we're actually buying we're giving
them money to buy weapons from us
manufacturers so that money is coming
back home it's stimulatory right it
creates economic growth it creates
revenue and now the debt is owed back by
Ukraine so we're just just taking
another balance sheet item right we're
taking a balance sheet item from the
ukrainians they now own some treasuries
or sorry they they're now owing money
back to the to the government we've
given them that resource so um so I
think there's a bunch of reasons I think
that there's the psychological
uncertainty that drives this things are
not good at home well I can feel in
control if I go beat someone up right
it's like a bully I can I can go feel
better about resolving um my issues at
home if I can go fix a country elsewhere
and get new businesses installed there
and make money there that could be good
that let's that that sounds like a
better thing to do because these
problems at home are pretty
insurmountable they're pretty hard to
deal with so I think that's why we've
seen this I don't know if anyone's
written a good set of papers on this to
to go through each of the historical
periods where we've seen external
conflict arise out of increased money
Printing and debt but it always happens
it always happens and um and I just got
really nervous you know coming out of
2020 2 or
21 21 and I was like man I think we're
going to end up in a war with Russia
like it just felt like the circumstances
were right given the deficit we were
running that year and how debt was
running up that Year little did I know
that we keep doing it for two more years
like we've been doing and it's only
getting worth $7 trillion do budget
proposal next year so I just felt like
coming out of 21 we were going to end up
in this conflict with Putin because he
was sort of making comments about hey
you know I need a commitment of not
joining NATO and I need more of this and
there was all this stuff that been going
on for a decade but suddenly you know it
seemed to be the right mix of stuff for
us to say let's get involved you know
like let's do something no one no one
will admit that and I don't think
anyone's ever going to be like very no
one will overtly design a system to do
this and I don't think that even I've
talked to leaders
in military in intelligence and no one
has this point of view that this is a
motivating factor but when things were
great everyone had this ability to say
let's not go to let's do everything we
can to avoid conflict this feels very
much like Ray Delio's thesis that uh
every time that you have a new world
power rising and you have an economic
superpower that's declining you're going
to end up in conflict and I think that
and it's not 100% of the time but it's
something like 85% of the time
historically and Ry I've talked about
this on the show many times but uh Ry
did a survey looked at the last 2,000
years but really focused on the last 500
and the rise and fall of all these
nations he said it's always tied to the
debt cycle and what ends up happening is
exactly what you've been describing
people just always want more they're
driven by desire it feels it's real fun
in the beginning and for a long time it
works and this is the problem it'll work
for between 150 and 200 250 years if you
play your cards right you can do this
and so I think the reason that we end up
in these hot Wars is the turbulence of a
rising superpower China a declining
superpower the US you're already going
to get frictions they're jockeying and
to your point war is great for business
and then there's another element to all
of this which is that and this is the
part that I am as a a born again or not
born again because I was never born but
as a late convert to understanding money
the thing that I really want people to
pay attention to is when the government
prints money they get to take your money
without asking Congress for permission
that's right so they can have as much
money as they want it steals your buying
power it is literally the same as taxing
you extra money uh but they don't have
to ask and so they just go oh cool I can
rev up my economy by going and fighting
in the Ukraine I can rev up my economy
by going into Israel Palestine awesome I
need to do that because we're in this
debt spiral where I'm I'm I want my7
trillion budget next year but to get
that I know I'm going to be running a
hotter deficit and so the only way I'm
going to be able to pay that debt off
especially as it gets refinanced that a
higher rate is I'm going to have to
print money again make it up out of thin
air which exacerbates the problem but it
also kicks the can down the road just
enough I can get elected I can have my
career I can buy time as the Empire
basically slowly declines and when
people aren't able to track like all of
the things that makes the system work I
forget who said it but you don't need a
conspiracy when all the incentives align
that's right and so it's just it it is a
perfectly aligned incentive structure
including and you've gone to um very
effective uh links to make this clear
the voters are voting for it and so
ultimately we're all a reflection of the
same sort of human desire for more more
more so if people are going to vote not
only in their sort of immediate
short-term interest but the long-term
interest they actually have to
understand how all of this stuff works
and so to your point about making
something really simple that people can
track that's what uh this feels like all
right I have an an idea that I I don't
hear many people talk about nakedly and
I'd love to get your take on it I
believe that one of the things that
ought to be added to the Bill of Rights
and I use ought to imply a moral
obligation but one of the things I think
ought to be added to the Bill of Rights
is to have access to a
non-inflationary store of wealth could
be a currency I I haven't looked far
enough to understand if this if gold or
gold still inflates Bitcoin something
like that uh or something else whatever
I don't care what it is as long as it's
a
non-inflationary place for me to store
my wealth uh I think we ought to be able
to have access that well the term
inflation reflects the inflation in some
denomination so if you had bought gold
10 years ago in US dollar denominated
terms gold has been a way for you to
hedge against the inflation of the
dollar gold prices have gone up so your
purchasing power has gone up more than
the rate of inflation but if you had
bought gold in Bitcoin denominated terms
and you Ed Bitcoin to buy your gold
you've actually not done a good job job
storing your wealth because if you had
Bitcoin before in a Bitcoin denominated
model bitcoin price relative to Gold has
gone up much faster so remember like
stores of wealth don't really mean
anything because it's all stores of
wealth they're just a paired value it's
an asset relative to another asset what
what am i counting it as so you could
own dollars and you have a non-inflation
you know you have you have something
that never you you'll always have $100
it'll never change in terms of value if
you buy gold and
you have inflation the price of gold
should go up in dollar denominated terms
so that Hedges you against the loss and
purchasing power of your of your dollars
I think from an amendment from a Bill of
Rights perspective what we could do
really well to think about is a balanced
budget amendment which means that the
federal government has to balance the
budget every year they don't have the
ability to acred debt and you could have
a balanced budget
amendment that accounts for cycles of
War and the necessary investment in
economic growth grow by creating some
features in the amendment that allow for
emergency authorization provided you
know debt to GDP levels or within a
certain range Congress has authorized an
actual War I mean there's a lot of ways
to kind of protect against the things
that everyone immediately counters with
and they're like no no no you can't take
that power away from Congress you got to
let them stimulate and I think what
we've seen historically is congress's
the federal government's attempt to
stimulate um has negative long-term
implications for uh in a lot of ways
because we don't ever reverse the
programs we don't ever get back out of
them
so I'd like to see from a Bill of Rights
perspective I'd rather see a balanced
budget amendment which I think protects
my dollars better than forcing me to put
you know creating having the government
involved in some new asset but we we
have a free market so we do have the
ability to go out and buy whatever we
want and store our well we until
recent uh mumblings have started coming
out of the SEC certainly Biden has been
very anti- crypto gendler's been anti-
crypto and so this is what got me
thinking about in terms of hold on I
should have a right to this
because you can without any checks and
balances print my netw worth away which
which when you when you answer and ask
when you ask and answer the question
what is money and you realize oh this is
a way for me to store the economic
output of my energy so this is a way for
me to say I did a thing on Tuesday and
I'm going to be able to in some way
capture the output of that effort that I
can store for effectively ever now if
you create a system like they have done
with Fiat you mean without without being
inflated without correct correct correct
so if if I have a $100 worth of buying
power in a hundred years I should have
$100 worth of buying power in in the
same day not yeah where that changes
dramatically and you know now I need
$1,000 so if you give me that now I
don't have the weird perverse incentive
to spend money today I have an incentive
to think longterm now all of a sudden
balancing a budget doesn't freak me out
because I'm like I I don't need you dear
government to be in control of all of
the systems because I can actually save
my money yeah and because my money
doesn't go down in value over time I can
just stack chips and so I can live
however I want but it has turned us and
it's always interesting having these
conversations with a poker player so
when I got first got into studying
crypto I realized it really attracts
poker players which is a gambling
mentality which so clocking Bitcoin now
because I think when I brought that up
and I said Bitcoin is a possibility and
you said well if somebody bought gold
using Bitcoin that would have been a
mistake yes but for a totally different
reason which is right now Bitcoin is
going through a period of adoption which
means it has massive volatility gamblers
like the volatility that's where they're
going to make their money but what I'm
saying is I just want an asset that is
and we can look at gold uh I want an
asset that can't be inflated now I heard
I think this was on Rogan people were
arguing why why gold why is gold the
store of value it is my understanding
the reason that gold is a store of value
is because a star has to explode and
rain gold on the earth for there to be
new gold and the only reason that it
inflates by roughly 2% a year is that's
what we can extract and as you sort of
balance out the supply and demand even
though you could probably get a little
bit more the incentive begins to break
down so anyway we end up extracting
roughly 2% more gold per year so it does
inflate by 2% but because it is super
hard to inflate hard to fake uh you
can't turn dirt into gold like diamonds
you can fake and all that stuff so
anyway gold has these properties of not
being flatable and it doesn't mold or
rot so it will carry over time so that's
the kind of thing that I'm looking for
now some people will believe in the
Bitcoin version of that but that's
irrelevant to me I just want something
that cannot fall to the whims of the
human desire to inflate it away which we
have shown over and over and over if
given a chance people will do yeah I
would say look I mean I I think that
your principle is sound I think that
some people would argue that there are
options like that but everything carries
some degree of risk you're taking on
Association socially like if everyone
gives up on gold it's gone if everyone
gives up on bitcoin it's gone the value
goes down right so there there is like a
system of trust like a um an aggregate
kind of social system that has to
continue to appreciate whatever it is
that you're holding on to but that's
already true of fiat currency so fiat
currency has the additional downside
yeah until people start saying no like I
I don't believe in it anymore that's
what I'm saying so the same
vulnerability that something like
Bitcoin or gold has you have in fiat
currency but at least with Bitcoin or
gold the governments however much they
may want to manipulate the supply all
they could do is buy it off the market
in which case there was an exchange of
value at that point uh but they can't
make more magic then you're having faith
in your government's ability to
continuously do that for the next
hundred years for you to do what protect
your asset whatever your new asset is
saying to protect my Bitcoin yeah or
whatever your new asset that you're
creating on your you know whatever the
new inflation protected asset is that
you want them to give you a right to
right the government at any point could
change the laws the government could
lose its power the government could lose
its Authority there's some risk
associated with anything for sure but
does that risk go up or down that's my
point right now I feel like we're in the
worst of all worlds where you're in a
situation where you have a fiat currency
that has no intrinsic value which I
don't mind pe