Kind: captions
Language: en
so Ray is just like Look Backwards last
500 years of History every time every
time you've gotten to this point where
you're gliding uh it it always ends with
either economic war or actual hot
Weaponry war and you need this level of
trauma so that people will finally go
fine everything that I owed I'm I'm just
going to let go of it whatever it is
what it is I just want peace and so you
get this complete upending of everything
we reset we go back to zero but we do it
in the most grueling brutal sacrificial
way possible mean and and I hear this a
lot from people like ah this all
rebalanced in 100 years sure but that is
cold comfort to Millennials who could
never buy a house right like
so yes but this is where the fourth
turning comes to me right I think we are
at economic
Warfare everybody needs an enemy so
we've decided that China Russia whoever
we want to be our enemy is our enemy
so we are economic Warfare for the share
of the
P but the world is not it's not actually
a fixed Pi there's an abundance and that
abundance is the other economic Warfare
which is technology but that's happening
at a massive scale and it's going into
space it's going everywhere so we've got
physical kind of
warfare economic Warfare over technology
which is what Taiwan is all about you
know they own the secret code which is
the ability to produce um computer chips
uh in ways that nobody else can
replicate so there's
that and
then we are at war with each
other as the population is split and
wants to blame each other for what has
happened when in fact it was actually
the Baby Boomers that actually caused
the problem in the first place the
people caused the problems of the People
In fairness it was the greatest
Generation that had all the sex that
gave birth to the Baby Boomers that
created the problem and this is where it
gets tricky because God bless the
greatest Generation for fighting the
wars etc etc okay before we keep going
down that road cuz I I want to keep this
all in the construct of your um
everything code this was very
enlightening okay so you just walked us
through uh that first part about why
we're going to keep having these
Financial crises and the only way out of
that uh is to print money basically uh
okay next section and the only way here
we go and the only way of solving this
uh is putting it on the central bank
balance sheet because there's not enough
GDP to pay the interest this what you're
just talking about so if you think about
GDP growth let's call it 2% and let's
assume that interest rates are 2% which
is roughly where they've been since 2008
so if the government is 100% GDP in debt
and GDP grows at 2% but interest
payments are also at 2% that's all of
GDP growth just to pay the interest on
the US government debt but the private
sector excluding the financial sector so
households and corporations
are another 120% of GDP in debt uh well
that will give you negative growth every
year of 2% and adjust com compounds so
what happens is those interest payments
go to the FED balance sheet and they
monetize it again this is what we were
just talking about so then the private
sector is not competing with the
government and that was provable across
all major economies it's like they all
decided that they're they're too far in
debt and the only way to solve this is
quantitative easing and then I started
thinking well if I know this to true and
I know that the central bank balance
sheets are 97% correlated with the asset
prices well all I need to do is use
forward-looking indicators to predict
the central bank balance sheets Andor
interest
payments dude talk to me about this 97%
correlated with assets that that seems
like having a crystal
ball so it doesn't actually reflects
today so you could basically as I
explained before
the thing that's actually driving the
S&P 500 is the Fed balance sheet it's
not companies getting more say driving
you mean driving the price correct so
it's an optical illusion it's a money
illusion so the price simply Rises to
meet the level of inflation caused by
printing money correct you're
readjusting the
price so that is what's going on
and so then when you understand that and
it's
97% you understand that nothing matters
apart from this liquidity which is what
I've been trying to tell people is sorry
all your economic models are wrong yes
you need to forecast the business cycle
to know where you are in the probability
of printing money cycle but that's all
that matters and it drives assets and
that's why people right now are getting
very angry because the stock market's
going up and they're like don't know
there's a recession yeah I know that the
answer to recession is more cowbell
printing of more money which is why
explain people this this is what I'm
talking about with as people become
aware of these issues as you zoom out
and you see the gigantic crater you
begin to realize oh we're in a recession
that means they're going to print money
so in a recession prices are going up
and people are like yeah I know where
this goes so that's crazy and that it it
it will be very interesting to see what
the knock on effects are of the um
Everybody becoming aware of these
patterns and I've heard you say that uh
it's almost always the path of most pain
is the the path that ends up actually
happening and so as we begin to predict
oh this is what's going to happen the
fact that we can predict will have some
very sort of painful uh consequences the
important point being here is
I know what drives
liquidity it's driven by the business
cycle and there are certain cycles that
are forward-looking the Chinese credit
cycle happens to lead by about 18 months
or two years for people that don't know
what the business cycle is can you give
a quick primer the business cycle is the
EB and flow and economic activity that
occurs and that's a boom and bust a
recession expansion is it caused by
interest rates
we don't really know what causes the
business cycle it's caused partly by
interest
rates it's caused by excess production
excess inventories to limited
inventories to there's many things that
can can drive a business cycle but it's
observable and has been observable for
Millennia and one of the things we do is
when the business cycle is too hot and
inflation starts Rising central banks
tend to rise raise interest rates that
tends to bring down economic activity I
think even without a central bank
interest rates would rise naturally um
because I think the free market can set
interest rates without central bank and
then the economy slows down again and we
see this this endless cycle so what I
think my hypothesis is is that okay this
is very observable I think it's going to
last this relationship between assets
and the central bank balance sheet
because of the mechanism of debasement
of currency
and I can forecast out what the business
cycle looks like and I also know the
amount of interest payments that need to
be made because that they happened three
and a half years ago and I can see how
far the balance Sheet's going to expand
so the balance sheet right now is what
$6 and a half trillion dollars and it
looks like it will get over7 trillion or
so and it looks like it will get to 12
to4 trillion by the end of
2025 so that puts and there's a number
of other ways I've proven this out in
this whole thing and I'll send you the
whole piece uh myself I've not really
gone public with all all of the whole
thing of how it works but in the end
that
puts asset prices massively higher than
here hugely higher um so we're looking
at more than a doubling of the NASDAQ
from here we're looking at another
gigantic crypto run that's into 2025 so
we're seeing huge moves that just come
from the debasement
and I've gone through in the everything
code article that I wrote for Global
macro investor which is my kind of
Premium research service in that I've
gone through various ways of proving
this all out um so that's what I think I
can do but your observation I think is
really important okay when people I mean
I've sent this to quite a few people and
obviously the subscribers of global bank
investor are kind of L the world's most
famous hedge fund managers um asset
managers and I think it it really
shocked people and resonated with people
people they're like oh my God everything
makes sense now and so once you see it
it all makes
sense um now as it becomes more public
as a thesis and Mike Howell at crossb
Capital has been talking some elements
of this liquidity you can see liquidity
becoming part of the the conversation on
financial Twitter and stuff
now what I think we'll probably do is
create boom bus
Cycles again you can't have the bus
cycle going below the level of Central
Bank liquidity because optically they
make it rise this is what people don't
yet understand but of course the stock
market should go down 90% can't
happen literally can't happen because of
the debasement it's a money
illusion but what I think we'll do is
see hey off we go to the races that's
what happened in 2018 2018 sorry 19 uh
early 20 we actually diverged from the
central bank balance sheet uh massively
because people starting to figure out
this game which is the moment the FED
sto the tightening cycle markets take
off because they know that the
probability of more cowbell more more
Central Bank printing of money more
interest rate Cuts is coming and so
therefore we get boom bust Cycles so the
boom times are too big and then you get
a bust and we people know that from
crypto as well the long-term Trend
remains intact but we we keep getting
these huge booms collaps boom collaps
but the trend is still up I think that's
what we'll see we'll be more like the
crypto cycle which is pretty much what
we've just seen as well we had a big
collapse last year and now we're
straight back into the boom as we're
starting to forecast this all right so
uh let me see if I'm tracking all of
this sorry there is a lot in this no man
there there is but the the more I go
over this stuff the more times I
encounter it the more I'm I'm really
beginning to piece together what's
happening uh it it is though leading me
to a level of distress it does not make
me calm and it's leading me to a level
of distress while I agree with you when
you start looking beyond the next 20
years it it evens back out and and we
hopefully get the exponential Age and
and that works out but I I think there's
such a a period of tumult that
no yes okay let's get down to an
individual level let's not get to
societal level I can solve I can unfuck
your future which is the series that we
ran on real Vision by simply offering
you the right
asset you get caught in this trap if you
own crypto or technology you will
outperform this entire thing now if
you're not wealthy enough to buy you
know set of a brokerage account doing
that because it's complicated for you
you can do it with crypto for no money
and you will
participate not only in the in the trend
of debasement so you're not getting left
behind because if you're just getting an
income and you're not buying any assets
you're truly going getting behind so
your 401k may look like the S&P 500
that's not making you any richer just bu
technology or bu crypto and those are
the only two assets that outperform the
central bank balance sheet so there's
your solve at a personal level all right
so level before we can get into that I
think we have to track we have to track
why uh let's recap why you get this uh
the stock market rising and falling with
the printing of money so you've covered
that very well but just by quick recap
uh as you pump money into the system
then the cost of the assets are
necessarily going to rise because they
are a scarce asset and as there's more
money available those prices are going
to rise they're going to rise in
proportion and so you can just watch
them rise and lower together uh now the
reason why and I'll say Bitcoin maybe
instead of crypto just because there's a
lot of things going on in crypto that
get a little dodgy and so I'll Focus uh
while I don't think Bitcoin I'm not a
Bitcoin maximalist by any stretch of the
imagination but bitcoin's a clear way of
describing this correct so when you look
at Bitcoin the reason and you were the
first person to show me a chart that
basically shows the the price of Bitcoin
goes up as money is pumped into the
system and it it's interesting that it
tracks in the same way that the stock
market tracks but for the exact opposite
reason so the reason that the price of
Bitcoin is going going to to go up is
people are like yo I need to be
somewhere where I can't have my value
debased through the creation of
additional right so printing of money so
when you print money buying power goes
down because prices rise in commensurate
with the amount of money going into the
system so you feel like you're getting
rich but you're not it's an illusion God
I love that you use that word okay so
people then pour into Bitcoin because
they're like there will only ever be 22
million that that's just it and so since
I know that that's it that it is a
finite cap it will never go more then
you can't debase it through the printing
of additional Bitcoin okay so people
flood into that and you see it rise and
so that was the first time because I was
like people were speculating what is
bitcoin what does its price respond to
and once you pointed out it responds to
the M2 Global money supply I was like
okay that makes a lot of sense so um
walk people through then how to
play that game well why technology I
that we haven't addressed yet so why
technology um and how do you do Bitcoin
well is it a Buy and Hold You trading
what does that look
like so if with Bitcoin I treat
it as an
asset that is going to protect my
long-term wealth and that sounds crazy
when it goes up and down like it does
right and you just gone through that
full first cycle and you're like oh oh
but what you'll find is the low is
higher than the last time it it hit the
bottom and then the next low will be
higher and each high is higher oh it's
in an uptrend so I just don't need to
sweat about the ups and downs what I
should do is just accumulate every time
it's in a down
cycle why well because the down cycle
signifying that economic contraction is
happening and the world is slowing down
and money is being taken out of the
system quantitative tightening which is
the opposite process and assets fall and
interest rates are going up so your
disposable income's going down because
your wages aren't going up enough and
interest rates have gone up
more so it's at that point you know the
outcome is if economic activity is going
to slow down the next year in NE in a
year's time they're going to be printing
money or cutting rates because it's very
cyclical for the phenom of this rolling
of this Deb so therefore you should be
buying more at these points because then
you've got the next upside cycle to come
which is what I've always said is it's
the cyclical Trend within a secular
Trend okay this is guaranteed people do
not know the difference so secular trend
is something long-term Trend driven by a
large explainable
Factor cryp uh Bitcoin is an answer to
the financial system system and over
time the number of users and people who
become aware of its um of its superpower
the more people move
across that is a secular trend of e of
of adoption that's really
important the cyclical Trend the
cyclicality is the EB and flow within
it so that's the boom bust of the
economy not at a gigantic bust level
it's just a boom bu
now Bitcoin harving Cycles correspond
with all of this why is there some magic
in that reduction of Supply maybe but
Bitcoin came out exactly at the same
time that all interest rates went to
zero they're all part of the same
cycle so every time we get into this
economic cycle it affects Bitcoin in the
same way but over the long run the
adoption the secular cycle means it
outperforms everything
because there's no secular adoption of
of the S&P 500 there's no secular
adoption of General Electric or you know
that stuff's not really happening yes
there's an ongoing purchasing by
401ks but that's really it
so so that big Mega trend is the
observable Trend that people can
participate in and it is going to more
than
offset what is going on with the
debasement of currency and that's to
do with meta's
law and the exponential trend of the
adoption of a technological Network or a
technology itself great so that's why
Bitcoin charts over time just keep doing
this it's because it's exponential the
S&P 500 doesn't do that because it's not
exponential but the NASDAQ does most
Technologies do and the reason why the
NASDAQ keeps outperforming the S&P and
keeps out performing value stocks and
makes people so angry is because it's
all about the adoption of new technology
if you think about what's been driving
the NASDAQ recently it's the adoption of
AI obviously that's the fastest adoption
of any technology in history crypto was
the fastest beforehand but this is
eclipsed it it's gone from in six months
from basically zero users to 100 million
users in six months we've never like it
to put an interpretation of what you
just said forward and tell me if this is
accurate because I thought your
punchline was going to be the reason
that technology performs outperforms the
illusion of prices going up uh is
because it's an increase in productivity
per capita but what I hear you saying
with meta's law is it's actually
outperforming because of what I will
call you're going to hate this word but
hype that basically the people are
pouring into it they're so excited oh my
God that's not what that's not what
Met's law is I know what's law is but
I'm saying if if you really think about
why meta's law would drive value that
exceeds the
illusion that is the only thing I can
take away from that because if it isn't
increasing productivity per capita why
would it otherwise out strip it is we'll
come on to that in a sec but meta's law
is the number of nodes on a network I
number of users of crypto versus the
number of applications in the
interconnection so the more we build out
a web 3
world the more that that's the
multiplier as opposed to the people
initially it's the people who use it so
like Doge has no use case apart from
memes mimetics but it has a bunch of
users um Bitcoin has limited use but a
huge amount of users as well but the use
case is very you know is very clear
which is the you know the scarcity of
the asset and the purity of the asset
and the security of the network ethereum
has lots of newses defi nfts all of this
stuff and a whole load of users so the
the this is what's driving these things
why are we adopting the technology
that's the productivity
equation the financial system becomes
more productive and safer and secur by
using cryptocurrency rails we become
superpowers as humans by adopting AI
robotics we become more productive in
ability to do stuff by adopting EV
technology we you know all of this stuff
is actually driving
productivity now here's another so I
need to push back on that so I don't
think it's it the value created in web 3
speaking of somebody is as in web 3 as a
human can be I've put just a gazillion
of my own dollars into this uh it's
right now it is all people betting that
this is going to be the future versus it
actually being the future right now so
that's why I say that's how you make
money my friend the moment I'm not is
right is the moment the be the
investment
the there are use cases so let me just
let's just get out of the NF noise and
everything else I'm having dinner with a
friend of mine he used to run one of the
largest the trading operations is one of
the largest banks in
Australia it's a big Bank the equivalent
of Bank of
America and um he's like yeah you know
he's just retired he's like yeah I've
been heavily involved in crypto at the
bank doing stuff I'm like what are you
guys doing goes we've issued five stable
coins I'm like why why do you need the
stable coins why you know why not use
tether or usdc or whatever he's like
okay so this is what people don't
understand why cryp cryto is so
important for the financial system he
said we're in Australia we have a
gigantic pension system our pension
system buys a gigantic amount of us
equities the US is about to you go to
settlement So when you buy a share and
you have to pay for it from T plus2 or t
plus3 so that's trade date plus three
days to pay for the bill to
t+1 okay that seems
fine for exchange transactions are T
plus2 they can't settle the US stocks
that they buy so they either have to
leave massive amounts of money with a
broker that they've dealt with who could
go Bust or use uses the money
ineffectively or they create a stable
coin for instant
settlement so they can so and they've
built that this one is on top of
ethereum okay fine but that is a multi
hundred billion dollar use case case for
why crypto is very powerful for
increasing productivity within the
financial system alone and there's many
of these all over the place so why is
tether such a big useful stable coin
you've basically fractionalize the US
dollar allowed a person in the
Philippines who works in a rice field to
receive a payment from his cousin who's
living in New York City instantaneously
without any
cost in dollars which is the currency
they all want that's mindblowing that's
why the stable coin system alone is so
gigantic so I don't agree with there is
no productivity or killer app the killer
app of crypto so far has actually been
stable coins and that so I want to make
sure what what I'm saying is is very
nuanced but I I don't think I'm being
clear enough yet so what I'm saying is
that um meta's law if the reason that
Tech has out performed is because of
metaps law which remember I was
surprised to hear you say I didn't think
that's what you were going to say I
thought you were going to say
productivity but you said metaps law if
that's true and I'm just trying to
understand what the reality is and
you're saying this is how you make money
I hey I'm with you I'm just trying to
understand what this is in without
fancy uh Concepts just like the the down
home nitty-gritty so meta's law is as
far as I can tell that is the point at
which it is hyp it's people getting
excited now they may be hyped for good
reasons they may be hyped because
they're right about where productivity
is coming from but is well then let me
ask it this way for those just listening
he's shaking his head uh is there a
difference between meta's law and
productivity or to you are they one and
the same no they're two entirely
different concepts mea's law is the
value of a network and how to Value it
and the the value with those are two
very different statements is it the
value of the network or is it how you
value value it's future uh
utility every vote that goes into a
market I.E every time price moves is a
vote about current expectations and
future expectations so it's difficult to
pass out what that means but I've
provably shown that I can distill meta's
law pretty simply in cryptocurrency are
two things number of active
users okay that makes sense that's the
nodes MH and then the value of the
economic activity and all I did was the
dollar
value that gets exchanged every month or
week those two numbers multiplied out
gives this crazy ridiculously large
number but that when you put it on a
graph is exactly the same as price and
so it's remarkable because price is not
in that equation
so law take in the the math that you
were just saying the value of the
transactions on the network it's the
it's the it's
basically no meta's nobody knows how to
fully measure a meta's law value system
so you need to approximate it because
it's quite a complex mathematical
formula and you're dealing with
imperfect worlds where you can't put it
in but anyway that's nothing to do with
the
productivity people are flocking to the
technology because it in
increases whether it's your productivity
or solves other solutions for you you
know so I'm going to say that slightly
differently and this is where I'm
surpris it's very possible I'm missing
something you are so much more
thoughtful on this stuff than I am
currently but this still what I'm about
to say still seems true to me and that
is that uh meta's law is
the is the observable response to when
people believe believe something is
going to be going to be amazing so take
eth people believe that building on
ethereum is going to be the future I'm
one of them I believe it to the core of
my existence but it hasn't
yielded that yet no that's not right
every mobile phone network is priced of
Metal's law all networks are priced at
metars law but but why can't they be I
think I don't think it matters Tom I
think you're getting caught in a in a
thing that doesn't really
matter what matters for the bigger
equation the two things that matter with
with um this whole thing is does does
Bitcoin protect you from
this issue of debasement the
mutualization of losses amongst
everybody yes okay fine nothing else
matters there does it could it be formed
part of what I call the exponential age
of Technologies which could eventually
increase
productivity yes now they're not
mutually exclusive there's no you know B
is just a measurement of value of a
network but this productivity idea is
the big
one and the pro productivity idea is if
we can't change we can't keep increasing
the debt remember the magic formula was
population growth or productivity growth
plus debt growth we can't change the
population the debt growth's got too far
so we've got this one thing in the
middle is the only thing that can change
this entire
equation so what we can do is try and
grow that okay now let's step back and
say okay what's happening to the
world that's a really big change that
happened that the central banks are
looking like they're going to print
money to do and that's the Green
Revolution it's being driven by Europe
but it's been driven
elsewhere so yes climate change yes all
of the benefits of doing this but there
is a magic
outcome so
productivity let's say we use AI we can
do more stuff and you and I have talked
about this in the past right we can
expand now human knowledge in ways we
couldn't do before and Factory lines and
agricultural Machinery just basically
created more productivity per human okay
fine but the big equation in this is the
inflation adjusted price of oil which
let's call that
the the kind of best Benchmark for
energy input costs have been $40 in
inflation adjusted terms for 70 years 60
years so we've got a fixed thing here
which is can we put more output per
calorie or kilog je of energy that is
what productivity is all
about so technology keeps rising and
that's great keeps
going but all of these governments are
focused on the other part of this
equation which is can I lower the cost
of energy because if you drop the cost
of energy from 40 bucks per per barrel
of oil equivalent to
10 you 4X
productivity and there is your Sol ution
and that is why they're pouring
trillions of dollars into this and we're
seeing what's known as rights law sorry
all these terms which is the increase in
output of a new technology has a
commensurate measurable decrease in the
cost and we're seeing that with all of
the green energy so it's just getting
cheaper and cheaper and cheaper and
cheaper now we can't scale it enough yet
but we know that there's nuclear there's
going to be part of this equation
there's a bunch of things but over time
we will move away from that $40 fossil
fuel anchor and move to $10 so think of
the multiplier because technolog is
doing
this and the cost is doing that that is
that is what the productivity miracle
that is
coming you can reboot your life your
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today so help me understand why didn't
the internet which still to me feels
like a productivity productivity Miracle
why didn't that um
change all of this why why isn't it
already the lily pad that you believe
the exponential age is going to be so I
think because it replaced
jobs you don't think AI is gonna replace
jobs yes I
do but I think the the the productivity
trend is a function of demographics as
well and I don't fully understand why
the internet didn't do that but it also
hold out manufacturing jobs so there was
a a balance on aggregate what happened
within the economy so I'm thinking it's
on aggregate it wasn't enough to offset
these Mega trends that we talked about
that were driven by the demographics and
the debt and and the globalization so
I'm thinking it's that and so we have to
have an accelerant because technology
growth is not enough to offset
demographic issues
and that's what I'm thinking it probably
is you know we did create I mean Trend
rate of GDP has been falling so whatever
we've done with technology and the same
number of people roughly we don't seem
to have pushed up GDP
growth let me ask a really ugly
question hearing everything you're
saying
it seems like I know it's not but I I
I'm not yet sure why not why isn't the
baby boom generation dying off and
population
Contracting uh deflationary in a good
way it
is well then tell me more uh I thought
so population collapse my gut instinct
is that it's terrible um what's the
benefit benefit the benefit is more
stuff for you and I our per capita GDP
goes up and it's observable in Japan
it's observable in Switzerland so GDP
per capita goes up and that helps offset
some of these now the problem is is per
capita is a nice economic
term but right now it acres to Mega
giant
companies so it's a way of
redistributing that cap Capital amongst
the people which is important which is
why you know I believe in things like
web 3 Technologies because it allows
more people to participate in ways that
they couldn't participate in before
because if not Google captured it all
and apple capture it
all so I think there's a probability
that as the population
shrinks it it creates a Slowdown in
growth because of the magic formula but
if you can increase that productivity
element
then we will be richer per capita now
there's a government problem of how you
distribute
that you know you need to tax
corporations more than they're being
taxed these giant corporations that pay
no tax most people with the average
business pay tax up to here but Google
pays I don't know what their marginal
rate attach is 5% that's wrong and
Amazon because they're benefiting from
the holing out of the American worker in
the technology boom and the people
aren't which is what's making people
angry now they're not not doing it
because they're bad people it's just the
set of cards they've been dealt with
it's been incredibly attractive to be
you know a super large company
particularly one with a growing industry
like
technology so I think net net you can
orchestrate
it that per capita GDP
Rises but you have to think about that
issue does it ACR to the people or
not what happens is if the population is
declining but productivity doesn't go up
well then we just go Trend rate of
economic growth just keeps
falling and so the reason that that I'm
so I always assumed that the reason that
population falling was a problem is
there are fewer people that want to buy
your goods and that's why it it Hollows
out the sort of uh GDP core economic
engine but as I think about it it would
also um it's interesting it's going to
create a weird sort of uh feedback
Collision but it would increase wages so
if there are fewer people for companies
to hire uh that's great for the
employees wages but if there are fewer
companies because there's no one to sell
anything to Now problem bad assumption
and this is I can see the the IMF got
into this whole mess as well and
everyone now says inflation's going up
as population dies out bad assumption
because technology is in the business of
replacing
costs and they will just find ways to
employ less people I mean again you and
I have talked about this is like 10
years ago video editors and sound people
Etc were really
expensive but now we can do it on AI so
people have to do two or three jobs they
hustle it's it's changed the structure
of stuff and Technology will just keep
looking for the cost and replacing it
it's it's it's Relentless it's the
biggest observable trend is once you
digitize things the cost goes to zero in
everything it touches inflation is a
generalized rise in prices the price of
eggs goes up the price of gas in your
car goes up you know the cost of
employing people goes up
Etc the basement of currency is this
really weird little
trick things have fixed Supply or
relatively F fixed
Supply go up immensely optically because
the price of the currency
Fallen things of variable Supply like
wages corporate earnings don't and they
don't go as much so what you find is
after quantitative easing what happens
stock market goes up gold goes up
cryptocurrencies go up housing goes up
binart goes up all of that stuff assets
so assets are a way of storing wealth
that's what an asset really is so in
relative terms they've held their price
and the currency's Fallen makes them
look like they've gone up in price it's
not and this is what everybody gets
confused with this is why price earnings
ratios have gone up so much because the
earnings doesn't move as much as the
price of the asset because it's a small
fraction of it so pees keep going up the
more we debase currency if you want to
see another example you look at chart of
the Venezuelan stock market in
Venezuelan bolevard and it goes straight
up if you put it in US Dollars it's
actually down
99%
so so it doesn't create a generalized
rise in prices this is what everybody
confused because they think it they
thought it was an increase in the money
supply in a way that you and I could get
it we can go buy more stuff it doesn't
work that way all right so would
inflation happen though if you didn't
have de basement I am not a monetarist I
don't believe inflation is always and
everywhere a monetary
phenomena interesting I think it is a
supply demand phenomena Above All Things
some people claim it's a supply and
demand for money phenomena I don't
believe that because of the 1970s
inflation is as provable as it possibly
can be was driven by
demographics the Baby Boomers all hit 30
at the same time bought their first
house their first car their first blah
BL blah blah blah blah and that what was
CA that's what
caused the inflation of the 70s we've
never had inflation like that before or
since because guess what we've never had
such a big cohort of 25 to 30 year olds
all at the same
time buy things that have a limited
Supply correct or buy anything because
they used to live with their parents and
before you know it they're buying
duplicate stuff because you live with
your parents there's one car or two cars
whatever it is right you leave there's
now another
car and you meet a girlfriend or a
partner there's another car so you've
now doubled the cont oh and you bought a
house so that's a second house that
didn't exist before that's why
demographics are deflationary and
inflationary depending where you are in
the demographic cycle okay this whole
idea of demographics as Destiny is
really interesting here's a question
that I've never thought of before would
we run into a problem if you could so
one I let's put a finger on uh debase
the basement is the government creates
money out of nowhere and so they
literally just make it up so if we were
back in the days of printing you would
just turn the printer on that's why they
call it printing money though now it's
just a database entry but if we were
back in the printer days you would print
more would we run into a problem if we
couldn't create more money because more
people are being born the population is
going up if money like I I think about
this sometimes with Bitcoin the very
that's what a depression is a depression
is when there's not enough money for the
demands like literal money so what
happens is the opposite of the
debasement assets get devalued and
currency which is the thing that's in
scarce
Supply but the money is the thing that
everybody desperately
needs when that is Extreme that's a
depression what we're seeing now is the
opposite so we've got
inflation
but they've reduced liquidity to try and
cool the
demand and okay people want preferring
to try and get hold of money as opposed
to assets and the price of assets has
gone down so they've actually done the B
the opposite quantitative tightening is
the opposite of quantitative easing so
theoretically if quantitative easing
causes assets to go up then quantitative
um tightening should make asset prices
go down because you're making currency
scarcer simple okay so one I I've asked
this question before but I forget the
answer how do they quantitatively
tighten how do they get money out of
Supply because they're not going around
burning paper dollars so how are they
doing it they're just buying it so
they're buying bonds from Banks or other
participants wouldn't that put money
into the system because at that point
they're buying something so sure they
sorry they're selling off their Bond
inventory so they're doing the opposite
right so they give people something but
they take the money and then they hold
it correct so that I wrote that down as
you were talking about a depression a
depression really isn't that the money
goes away a depression is that the money
is now locked in people's wallets bank
accounts whatever they still have it
they're just not moving it is that
correct and you can't get it For Love or
Money you just you want the money and so
the depression is is what all the assets
fall in price you know it's that it's
the it's the it's it's all supply and
demand in certain ways yeah it's all
psychology I mean this is the the
utterly fascinating thing that I'm sure
we'll keep looping back to okay so money
isn't moving during a depression and so
I was talking to Robert Breedlove about
this and I still have a naging feeling
as much as I don't right now with my
limit
understanding I don't like that money's
being inflated right now with my limited
understanding I absolutely love Bitcoin
because I see how it's going to hold my
wealth over time but there is a part of
me that keeps asking the question am I
actually mad at them using this cycle
because if this game really is
psychology and we get all of the
Innovation and everything that we get
because
of
innovation and to get people people to
innovate and I'm remembering now how
Robert uh swatted this down but I'll be
curious to hear your thoughts so I keep
my default position is that people
innovate because money is moving so you
make something and people don't think
that their money will be worth more over
time if they hold it so it is not a good
asset in that sense they think it'll be
flat that's how I think most people
think of it I think inflation is sort of
invisible no most people don't account
for it until you get into a higher
inflationary environment and so they
think of their money as being flat in
truth their money is actually declining
in buying power because of inflation but
they think of it as flat or at least I
always have so I think of my money as
flat people think of their money is flat
so ah if I want a Kit Kat bar today I'm
just going to give you money for it and
I'm gonna eat the Kit Kat but if I think
this is like the the joke that people
make about the guy that bought a pizza
for you know 20 Bitcoin or whatever it's
like bro that's $67 million you know or
whatever at the hype and so what a fool
you were
that is when your money is depreciating
instead of inflating or deflating excuse
me instead of inflating so you've got
this trick that happens psychologically
when the banks put money into the system
you feel like your money is going to be
worth the same tomorrow that it is today
and so you don't have a problem spending
it does that seem crazy to you no
so it's all about this marginal
propensity to consume or to save or
whatever and that's your expected future
value of money the reason there's not a
lot of velocity of money in Bitcoin
there's a lot of
hodlers is that the general view is well
I'm going to be better off if I just
hold
it right which is why nobody's going to
use Bitcoin as a transaction layer apart
from lightning because it's just the
blockchain rails but why would
you because nobody wants to be the
Bitcoin pizza guy
so you don't so it's actually kind of
deflationary in that
respect
and all of this is a game it's a game
of who are the other competitors in this
game who
the the rules as you would call them
right okay we got the central banks they
want to do one thing to us we've got the
asset prices and they can do another
thing based on whatever's going on there
you know if you're investing Commodities
or equities or
whatever and I need to navigate that to
get to where I want to get
to and I have this base assumption that
my cash is going to be
flat so I put 10 grand in a bank I'm
assuming my 10 grand is worth 10 grand
we know it's not but in a oneye Time
Horizon we don't really care if it's
worth 2% less because we we don't notice
that so then we're looking at the other
levers and saying okay what is going to
deliver what Tom wants which is I want
my money to offset
debasement not inflation because
crypto's done a terrible job of that as
as everything including gold I mean
virtually nothing offset this inflation
we've just had so that kind of took us
all by surprise but the debasement well
I just in divide all of these assets by
the FED balance sheet that's really
interesting the& kind of goes nowhere it
kind of it's right at the bottom now
since
2008 so as they started using the FED
balance sheet debasing the currency the
stock market has just accounted for that
the FED balance sheet has been doing
that the stock market's done that but
actually they' netted each other out you
haven't got any
richer um gold fails you've actually got
poorer versus the FED balance sheet so
the big gold narrative failed I don't
know because probably because of crypto
so I people just had a less marginal
propensity to use it in a digital age
gold is not actually that
useful the NASDAQ did actually pretty
well we still went back up to 2008
levels 2007 levels but it's been going
up why technology technolog is a secular
Trend the S&P 500 does not have a
secular Trend behind it so and then when
you put crypto crypto is the only thing
that's really outperformed because what
you've got there is you've got
technology and this kind of whole
network adoption
model and it works really well for
debasement of assets because it's scarce
technology companies aren't scarce
really you can just keep building them
but you can't do it here so it works
phenomenally well so you're taking the
bet that future Tom wants to not screwed
up and therefore future Tom wants to
choose the asset that he thinks best
represents the set of risks that he sees
being played at the table in the game
and that risk to you is debasement of
currency which I think is probably the
larger risk um and therefore Bitcoin or
crypto is the best bet to take but it
depends what future you is depending who
who's watching this and what they need
because some people want to protect some
people want to
grow some people want to yeah there
there's different motivations but
generally it's protect what you've got
so you can maintain your level of your
who you are because nobody wants to
ratchet
down the reality or their expectations
of themselves there's psychology again
so velocity of money this is a very
interesting concept and I hope everybody
takes me as you would take somebody who
is learning something every time I get a
new piece of this puzzle it does feel
like the emotional ups and downs are
easier to deal with I won't say that I
feel that I'm better at predicting and I
do want to talk at some point before we
go about looking forward 18 months and
what that looks like but first I want to
contend with this idea of velocity of
money so the rate at which money moves
seems to be the thing that the FED is
trying to influence because they
understand the psychology so Roaring 20s
if I had to guess hi velocity of money
uh 1930s I know because you said earlier
that a depression is when the money
stops moving so depression low velocity
of
money I think it was Jerome Powell that
said recently I want to keep cranking up
rates because it will slow the economy
yes and if I go too far and I break a
bone that's okay because I have tools
that I know how to use to fix a broken
bone I don't have tools basing your
currency exactly so but goes back to the
velocity of money and so okay I'm I'm
put putting this all in context of a guy
who has a a a meaningful not a scary but
a meaningful part of my net worth in
Bitcoin because I believe in The
Narrative of it will hold value over
space and time there's an interesting
note there to be made about did Bitcoin
just inflate gold which is an utterly
fascinating thought and that 50 years
from now will there still be gold and
big coin anyway so I I believe in
Bitcoin I believe in its ability to hold
that but I also have this feeling
especially now sitting in the soup of uh
all this madness has happened in crypto
with fraud yes it happens everywhere
cool but my punchline is that regulation
I'm always tempted by the libertarian
notion of just like don't tread on me
let me do my thing then I'm like uh
humans like they'll find the edges there
are psychopaths among
even if SPF didn't mean to be a a just
absolutely ruinous psychopath like
that's what ended up happening and I can
only imagine the the human Agony expense
of nine whatever billion dollars that
ends up getting lost like whoa that just
absolutely devastating okay so sitting
in that soup I find myself going I'm
actually okay with a certain amount of
government I pay a lot of taxes I do
have a break point where I start to get
really annoyed and feel like it's being
overstepped and misused let me try to
put all the context on the table here
but I don't feel like just ah no
regulation is the right answer we need
some regulation to all of this to keep
people from going crazy but God is it my
ignorance that's telling me that the
central banks may not be the worst thing
ever oh I know how people that know more
than me are going to have a seizure but
I can't help but think given that this
is a game of psychology given how easy
it is to sort of nudge humans in a
direction that they could clamp down on
their money be too paranoid to spend it
and that it isn't necessarily a bad
thing that we do have this tool to nudge
it now conspiracies the beast from
Jackal Island like I understand all of
it and so it's like it's all sort of
bad
but on
balance I come down on I don't know the
system
seems reasonably functional
how crazy does that sound from your far
more knowledgeable perspective so
there's a few things first velocity of
money is as you say but it's a
demographic phenomena so velocity of
money has been super low since 2000 so
not influenced by the FED no interesting
whoa okay shocking you're you're
smacking my worldview around they have
not been able to interesting
because
psychology who is hoarding Money Baby
Boomers the same people who cause the
inflation are causing the deflation or
disinflationary Trend because they're
hoarding money because they're now 75
years old and all you want to do is make
sure you don't die destitute at 85 or 90
right imagine if you're homeless at 85
right so so you are driven by one of the
strongest psych psychological factors
you have is I cannot get any worse than
I am
today right so you're hard stop so you
won't spend so the baby booms have
stopped velocity of money and I've
proven this with charts over time that
that's what's causing it that's why
we've got this disinflationary trend in
the world even though we we're in a
temporary inflationary Trend and it's
been that that the FED have debased
currency try and offset the Baby Boomers
have and I did this whole long two and a
half hour thing that people should watch
on the real Vision YouTube channel with
Robert breed love about why we got here
it's a very long two and a half hour
video and I can't tell you how important
it is but the Baby Boomers with the
debasement of currency over time found
that their income didn't go up but the
assets did because there was two many of
them competing for these assets this is
before the basement and so they borrowed
money to fund the gap when we started
the big debt boom it was all driven by
this demographic so yeah go and check
out that video it's I think it's pinned
to the our YouTube channel that that
that's a big issue here it's a bigger
issue with this demographic game because
that's one of the rules of the game that
you can't change so what happens over
the next 15 years as Boomers start dying
they will get firstly
more propensity to not spend so when my
dad
retired dad used to quite like spending
money you know he he was reasonbly you
know he was a middle class reasonably
did reasonably well not phenomenally
well and what happened the moment he
retired he's like [ __ ] this is a fixed
sum of money I don't know how long I'm
going to live for and my wife's probably
going to outlive
me so his spending pattern probably in
two years fell 65% W you know he was the
guy Buy Champagne he'd go out for dinner
with friends buy a bottle of champagne
whatever blah blah blah you know by the
time he hit
76 he'd be on
the 5 special at the
supermarket because he just didn't want
to not run out of money the worst thing
for him is him to die which he did and
leave my mom with no
money because then his whole sense of
self is tied up in so anyway so it's
really strongly driven by these kind of
things so I think as they get older get
actually gets worse but they are going
to die so we've got I'm gon to guess
15ish years and then they start dropping
like flies that's right and that's so
then we've got the other issue right
which is depopulation of the world right
that's coming at
scale but this gets offset by technology
so if you look at Amazon warehouses
Amazon is employing robots at a faster
rate than humans and the robots there's
now half a million of them and one and a
half million people work for Amazon but
the robots work three times as many
hours and are probably twice as
productive so and they never have a
holiday nothing
right so that's going to happen at scale
and replace the Baby Boomers but what's
going to happen when the Baby Boomers
money floods into the system I mean
that's I heard some crazy number about
how much money Baby Boomers have locked
but they're going to give that I mean
charity kids whatever but it's it's
going to come in in a pretty I've heard
this story before there's one economy
that's LED everything that's
Japan the issue was is that people start
living longer the Japanese actually
passed on the
wealth to their retired
kids whoa that was the
problem because if you had your if you
lived to 90 and you had your kids at 20
your kids are 70 by the time you die wow
and so they didn't get the wealth
effect of the part change over in wealth
now not every economy's as long living
as Japanese and the Americans are 40c
longest living it's
inexcusable um you know considering GD
how much they spend on Healthcare as a
percentage of GDP it's inexcusable what
happens in the US but you just can't eat
like that I'll just say it yeah you
can't eat like that and you can't have
the the drug companies involved as far
as they are um so I don't know if
there's a big wall of money coming Tom
that's almost more scary and I think
people's jobs get replaced by technology
but I think there is a productivity boom
which we've not had for a long time
because of this retired population and
debt I think this what I call the
exponential age this rise of
Technologies may give us more wealth per
GDP so it'll manifest itself in ways
that we don't know now it doesn't matter
if it's stuck right because as long as
it's in a pension fund that's investing
in VC that's driving technology it's
okay I mean the worst things that happen
is for you spend it on bags of chips and
cans of drink because then you're
creating food inflation what you
actually want is it to create GDP growth
so by Pension funds lending it or giving
it investing in companies VC companies
you're
fueling new technology New Wealth new
GDP pay okay so that brings me back to
uh velocity of capital people putting
funds into the market if you could snap
your fingers and make central banks go
away would you probably not I'm kind of
like you I'm actually quite Centrist in
most things I can see the absurdities of
of everything but given the basket of
stuff I asked many people who were like
I hate the fed I'm like okay 2008 what
would you have done well I wouldn't have
got there in the first place I'm like
okay but they did and how do you get
there in the first place well and again
watch that video with with Robert breed
love I'm like well that was a factor of
of um of globalization would you have
stopped that and foreseen the outcome of
that and then that was a function of the
Baby Boomers in World War II and there
was so many factors it's like no they're
doing the best that they can now nobody
wants the debasement of currency
but if you don't what is the outcome
that's what I ask
people if you don't buy the
debt if you allow the collateral of the
system because the US is the most
indebted economy in the history of the
world as a percentage of world GDP whoa
it's over a 100% of world's GDP in
debt that's a lot and that's not just
that's the country the people the
corporations right it's the whole law
the total
debt so what do you want to
do what do you want to do do you want to
let all of that collateral go to zero
the whole system Burns to the ground and
a complete destruction of Lifestyle even
whether we're living in a fantasy
lifestyle driven by debt and other stuff
do you want to destroy all of
that I don't think you would I don't
think anybody would so in which case you
need the central Banker to try and just
juggle the bloody Bulls in the air and
yes we get angry because it kind of gets
the rich gets richer because it keeps
driving those assets up and the poor get
poorer so we have to focus somehow on
that but America doesn't like the idea
of helping poor people I think it seems
to be you're a communist it's ridiculous
you know why would you not have a
welfare state if you've destroyed the
ability for wages in real terms to rise
over the last 50 years they've not risen
at all so you need to think about this
and this is why technology people are
thinking about Universal basic income
because these same people in the
workforce are going to compete against
robots they have no chance zero chance
so there is a lot of structural issues
here and I don't think you can do this
without government and I don't think you
can do it without central banks and I
don't think central banks they've made
some mistakes some big mistakes they
made a mistake in
1997 which was cutting interest rates to
defend the stock market The Leverage
hadn't built as big by
then and we could have had a clearing
event and The Leverage wouldn't build up
that's what's happening in crypto right
The Leverage can't build up it just
cannot do it because it keeps getting
blown out why because there's no
counterpart but look at how vicious the
Cycles are so do you want the whole
economy to go through the crypto
cycle well you can do that that's not
having a central
bank there's so many tradeoffs as you as
you suggest so I think for a generalized
population you would
trade smoothness
and some level acceptable level of
debasement or inflation whatever you're
looking at some acceptable
level versus an economy that does this
and you can't you don't know when to
save or how to invest because the weal I
don't even think we would get there I
think people would Turtle up so fast
you would just be in protect mode man
even just looking at so I as somebody
who this is gonna make us really hated
this video Tom by because we're both
saying the same thing and people are
gonna go how dare
you they're doing I get it and that's
the thing I wanted people to know like
hey the beast from Jackal Island the
conspiracies like I they may even all be
true let's just assume for now that they
are true all of it is still born out of
the nature of the human animal and
they're having now been in uh I'll say
blockchain instead of crypto because the
part that I function in is very much not
a currency looking at that and going hey
I I'm totally down for some rules I
would just like to know what those rules
are I don't want to have to guess at
what the rules are and then you come
later and you're very angry so I like to
just let's have what the rules are we
can debate the rules we can fight about
the rules all that
but now we can move forward in a a far
more reasonable way but I don't think
that things settle on stability if you
have the ability for the more powerful
that could be physical could be
intellectual like I I really think Sam
bankman
freed has a talent for being able and
and it could be just of this moment
where that sort of He's Got The Geek
Chic look he's I've never
I actually haven't even seen an
interview with him but I will assume
that what I hear is correct that he's a
very smart guy he's certainly able to
convince people that he's a smart guy so
he understands something about this that
he was able to leverage against other
people and I think that will always
happen and what governments are is
basically and this is going to sound
terrible but governments are the weaker
people saying well we're going to get
our asses handed to us physically
intellectually so let's come together
together as a collective and as much as
like that can spiral into tyranny I'm
well aware as somebody who runs a
business in California let me tell you
how aware I am of that there is a
pathological side on that side but I
think there's a pathological side on
this side and if we're going to find a
real path forward I think people need to
understand the rules of the game I think
we have
to stabilize the rules of the game I'm
going to add some complication to this
too please of course so one of the
arguments about the FED that people have
is they're not elected
officials and therefore we should have a
say how much our currency gets debased
or
whatever but the crowd is not always
very good at making these decisions
either and brexit is a great
example brexit the unintended
consequences have been enormous I don't
know anything about it so what have been
the second and third order consequences
so there was you all these Brits love to
go on holiday to Spain France Italy they
had all their holiday homes they got to
retire they wanted to spend you know six
months a year in one country and now
they're finding they're not allowed to
and they have to
leave and they're like what but we're
British how dare you and we're like no
no you're not part of the EU anymore you
have no rights you have no rights over
the Health Care System there and they're
like well this is not what we agreed to
at the Border in France you can drive a
a car from France to Spain to Italy to
Austria do anything you want you don't
even go to passport control Brits at the
Border in huge long lines getting in and
have to produce all the right papers
they're like but we're British how dare
you like you've You' voted
out so normally
speaking that should have been done not
as a referendum
it should have been done as a political
process and that was going on as a
process that takes years of debate and
discussion and voters can say we like
that party because they're against
leaving or for leaving and that's fine
but it gets debated properly over an
extended period of time what we did was
say you make decision instantly and
everyone's like well okay completely not
given the
tools and they screw up so do we want to
give the same tools to everybody with
interest
rates do they even know what drives the
economy now I don't think the FED are
particularly good with that either I
think they do a terrible job on
forecasting the economy and that's why
you know finwick gets so angry with them
is like it's bloody obvious we're going
into recession and you won the battle on
inflation but you're going to keep
fighting and you're going to make it
worse people and then people are going
to lose their jobs and going to be angry
at you again and this and so on and so
forth but nobody's ever managed to make
the business cycle flat
nobody it's a degree of what volatility
you'll accept when I started um doing
the research for this interview
obviously you and I interact quite a bit
but when I started doing the research
for this interview I thought I would
hear a lot more pessimism out of you
about recession about you know uh global
economic collisions from Russia and
Ukraine to China and that looked like
they were imploding for a while but
you're pretty optimistic so I'm very
curious
um what's happening right now so firstly
most people need to realize that Doom
porn
cells it catches attention fear is the
strongest human emotion right and so you
see a lot of it because it grabs
attention so we need to break apart two
parts here one is what do I think of the
economy and the others what do I think
about markets so my economic view is I
think most of us even know it is we're
in recession we're in recession and it's
probably going to get a bit worse and
there's a lot of people going to lose
their jobs and businesses are going to
find it hard um there's less money
around and it's going to be pretty
miserable um and it's the sort of
miserableness that you go through
periodically that is not
catastrophic so it's a recession and
recessions
are as old as Humanity itself so we've
just had what's confusing people in my
view is we're so screwed up by the last
three events one was the
pandemic so there's no normality what
was the recession look like there that
was the weirdest one then 2008 was the
end of the entire Financial system and
then 2001 was this spectacular tech tech
collapse so people have an anchoring
bias it's like well it's the end of the
world really when I started when I
graduated University it was
1990 and it was a terrible time to
graduate because it was a recession and
there were no jobs and I wanted to go
into finance and they were firing people
as fast as possible and it took a while
it took a while house prices went down
for a while and people didn't get jobs
for a while and people were laid off for
a while and the stock market went down
20% Which a decent size recession as
well went down 20% took some time to
recover the jobs came back the economy
was cleaner they got rid of some of the
worst excesses of Leverage and the world
moved forwards and before you knew it
all of the 90s was a
boom I'm kind of of that opinion is we
have no systemic collapse coming we
don't have those kind of issues and
we've invented the magic printer the
money printer of quantitative easing
that papers over all
troubles
so we don't have that coming Society
yeah we got a whole bunch of issues to
get through a US election with all this
Ai and the anger and the populism but
forget all of that again you can easily
go down the Doom or you can enjoy the
community you've got around you and
there's different ways you can have
lenses perspective on the world
investing the job of markets is to look
forwards if you tell me 100% of all
economists are forecasting recession
it's kind of no [ __ ]
Sherlock um and therefore is it in the
price or is are all those stock market
people really stupid all of those
machine that they haven't heard you at
all no they actually understand this and
it's a realtime probability waiting
business it kind of knows that and what
it looks forward to is okay how bad is
this is it catastrophic is the world
going to end what's going to happen and
the markets are telling you no it's
probably done my my my view is the
bottom is in in markets and the bottom
was in crypto in June and for Bitcoin
was in October November the bottom was
in for the stock markets in October as
most end of bare markets happen it
priced in a
recession and we move forwards from here
and eventually they'll cut rates again
and if you think about it is we had a
total shutdown of the global economy
then a reopening of the global economy
that caused this inflation that's hurt
everybody and eventually we'll just
rebalance back to some form of normality
there's a massive amount of Doom porn
about inflation is going to be
structurally here forever we're all
going to die which is kind of I'm more
like you are with the AI side where I'm
actually like you know what we've just
developed AI we've got Relentless
technology the price of energy is coming
lower from all different sources
productivity of humanity is growing um
so I think I I think it's actually
probably an interesting time it's an
interesting time because everybody's so
bearish psychology plays a huge part in
markets
because everybody expects inflation to
be relentless and ongoing and for the
rest of our lives much like what 24
months ago everyone was like every Tech
Stock's going up forever and every
businesses can never fail again and
we're humans we make forecasting errors
of quite wide amounts at various points
so yes no I'm and I spend a Hu so I'm
not just saying this because I'm just
chatting to you I mean I do an enormous
amount of work on this I write 15 pages
of research I sit down write it every
month been doing that for 19 years um
and so that comes with
2,000 charts models and stuff with
myself and uh my colleague Julian bitt
from secular themes short-term them
doesn't mean I'm not wrong as well I can
clearly be wrong but
I just think it's in the
price and what we the worst part of it
is is the stock market is going to be
going up probably it won't rock it up at
first but eventually it'll pick up while
we're all feeling the
pain because people are looking forward
and so they're saying okay the Bottom's
in Now's the Time to get in we know
we're going to go up from here so even
though we're still sort of going through
it people are losing their jobs but wise
investors are like you just just need to
project this out into the future yeah so
there's a Time Horizon of how the
business cycle works currently the thing
that leads it the most is the Chinese
credit cycle who knew but it is right
now 17 months ahead so when it turned up
17 months ago we're starting to say huh
okay there's something happening here it
also forecasts the recession and then
and then you've got other forward
looking indicators about nine months out
um we've got a bunch of
indicators but the last thing in the
stack
is rents and the one before that is
Wages so wages are going up like this
now but they take a while and then they
start coming down again they won't
deflate nobody's going to really come to
you and force you to take a uh a pay
cuts but it means that they they don't
keep going up but your rents will
probably come down um and so that's a
function of these things just take time
the unemployment rise hasn't even
started now we can see everybody laying
off every company's laying off people
thinking about tightening costs everyone
can see it from sponsorship advertising
sales I mean it's everywhere and every
single person I speak to is like Christ
it's miserable out there but the
unemployment side doesn't really come
until it should start in the next month
or two and then that goes on for nine
months of just relentlessly high
unemployment rates so anybody watching
this why is that so predictable why nine
months it's just how it always is
because companies make decisions and
whether it's around board meetings
however it's done they get to a certain
point where they hit the panic button um
and they lay people off that's usually
when the bottom of the recession starts
it's usually when rates start getting
cut it's usually when the stock market
often recovers as
well so for people watching
this there's two parts of this one is if
you're an investor you might be able to
buy these technology stocks with this
Renaissance of amazing changes happening
around us at prices down 70% from where
they were two years ago a year ago okay
that's kind of interesting because your
expected future return goes up same with
crypto you know you and I have talked
about this you buy when the Cy the
business cycle brings it back to the sub
the bottom of the secular uptrend that's
where we are these are where you make
all the money this is what you get paid
for to take risk here you you you don't
get paid to take risk at the top and you
tend to lose money so these are the
moments in time so that's very
interesting as an
investor but anybody watching this think
about your cash
flows think about your cash flow think
about your expenditure and just say just
be a little bit careful because losing a
job or having your own business
struggling for a period of time and I
think the worst of it will be over
relatively fast but yeah these lagy me
what's what's relatively fast we're
recording this in in March of
23 when do we think this turns around so
I think the bottom of the economic cycle
is in the next quarter so I think we got
a really ugly quarter to come but the
problem is it's that shock that sets off
the companies to go I need to L some
staff all of that and it's that process
that begins the healing so what is that
shock so if that shock isn't people
getting laid off what is the shock
that's coming in the next quarter the
shock coming in the next quarter is is
the general slowdown from interest rates
you know biting into all of these
indebted companies or households or
credit cards and all of this stuff and
everybody goes uhuh I'm not going to
spend money that is what a recession is
you know it's not usually driven by a
pandemic it's not usually driven by the
entire Financial system collapsing it's
usually by all of us making a rational
decision of I'm just not going to spend
money right now because things are a bit
uncertain and that is what causes
recessions and I'm actually telling
people to do exactly that because it's
the rational thing to do what you do if
you're going to panic panic early and
I'm not talking about the stock market
going down either I think we've had that
it went down the NASDAQ went down
38% that's pretty much bang in line with
a regular bare Market but what I'm
saying is in your personal life what it
really matters where the rubber hits the
road is panic
early just look at your expenditure look
at your cost look at your business so
what do I need to do here uh just to
make sure that I can just get through a
pretty shitty year but 2024 probably
pretty
decent so what is the natural cycle of
things why do people begin to warm back
up and what are the threats if any that
you see looming so housing I'm
hearing housing bubble bursting problem
Doom is that it it's just people are
overreacting not real the housing market
is
expensive interest rates have gone up so
people are going to buy less
houses yes will house prices come down
yes because they went up a lot will the
activity in the housing market dry up
for maybe two years yeah most likely um
are we going to see a leverage crash no
because nobody's really got a lot of
Leverage at household level in property
that was something that happened in 2008
it's been too expensive and too
difficult to do so I think the home
builders have a bit of trouble because
they got a lot of inventory they can't
sell it they need to finance it for a
couple of years it sits around 1990 91
992 was very similar I was in London
then it was pretty shitty in the
property Market was great for me because
I just entered the property Market at
the end of that so prices were
relatively low that had come down a lot
but that had gone up a lot and my income
was going up because I was in my 20s so
income goes up every year because you're
hopefully getting promo and stuff like
that so um but you know a few property
developers went bust things were slow
and then eventually it cleaned up so I'm
more of that opinion that you know house
prices come off 10% maybe even 15% you
know some areas that were really hot
come down a bit further but it doesn't
expose any catastrophic leverage the
banking system is more than adequately
compensated with capital um it's hugely
solv in the United States so it's just a
bad time
it's just a bad do you think about about
rates are they going to continue to go
up is there because the FED as far as I
know is signaling that they are going to
keep taking rates up yeah so every
single forward-looking indicator that I
have on inflation suggests that
inflation utterly
collapses um if you want to see a
realtime inflation data look at
something called true flation TR U
flation um it's actually on blockchain
it takes hundreds of thousands of
individual prices on a real-time basis
um and it tells you where inflation is
today and US inflation today is about
4.74% Wow versus the headline which is
over six so and if we think of what
inflation is is the year on year
comparison what happened last year Well
between March and June was Russia
invading Ukraine and every commodity
going through the roof so we're going to
see the flip side of that so we will see
inflation come off very fast all my
forward-looking indicators that the that
look at it from different angles all
suggest the same so I think the FED is
speaking Max aggression because they
want to make sure that the out of the
Embers doesn't rise the Phoenix again so
they just want to Stamp Out people's
expectations of higher prices in the
future they know there's a recession
coming they can see the inflation's
coming so uh that um recession is coming
so I think it's the final game which is
like get down and stay down um and then
that that's what they've done and so my
guess is we'll be having this
conversation
in
September September somewhere between
September and December and they'll have
cut
rates whoa you think they're going to
start cutting that fast so how does and
the market is telling you that that's
the market and the FED are saying that's
wrong that's not true we're here higher
for longer but if unemployment is going
to rise they have two mandates inflation
unemployment inflation is going to be
falling and unemployment Rising they
cannot go to Congress and say oh yeah
we're just going to do this a bit longer
they're just going to fire them all
there is politics involved in the end so
no they will cut rates and they should
do by then for
sure so how is it though going back to
the idea of the Embers is the place from
which the Phoenix is going to rise and
you know we're going to go rocketing
back into Euphoria and end up back in
the same spot
How does cutting rates that soon why not
hold you won't be asking for that in in
September you'll be begging them because
what's gonna happen your friends will be
your friends will be losing jobs people
are you know getting decimated there's
houses in your street that don't sell
you're like really guys what do you want
to do destroy everybody that's that's
how it always works and then
also everyone's got a lot of debt all
the corporations in America plus the
households are 120% of GDP in debt and
the US government's 100% of GDP in debt
and they have that's the one I want to
talk about so the when I think about the
US government and the amount of debt
that we're carrying and I think about
interest rates being this High it it is
there a conversation I know I'm asking
you to prognosticate here but is there a
conversation going on between the US
government and the FED of like hey get
ready to pull those rates down because
they themselves have all this debt
service that they're going to have to
do
yes and I think it's Global I'm I'm I've
just been developing I've written a lot
of that sorry I'm not punishing any
sentence I've just cut discovered
something that really quite shocks me
that I've been writing a lot about to
get my thought process in global macro
investor my understanding is
that all debt that the US has borrowed
above GDP growth so if GDP grows at 2%
and debt growth grows at 4% everything
above is only for financing interest
payments since 2009 since the
recession and so that all of that money
is the exact same
amount as the size of the FED balance
sheet so then are issuing
bonds to pay the interest that's so
that's paying your credit card with
another credit
card and then giving it to your dad and
say well you settle the bill whoa It's
which is the
Fed so I think they completely know
what's going on and and I haven't really
shared this with anybody yet I also
think it's Global and it's
understood and it's all smok and mirrors
that we never saw what the game was and
I've think I've proven it that this is
all all the central banks did this is
what quantitative easing and step back
is what what am I talking about in this
scrambled nonsense that I'm
saying the US for easy
maths long-term Trend rate of growth is
1.75% but let's call it
2% interest rates have been average
around 2% let's say for easy
maths and the government is 100% of GDP
in
debt
so so therefore their interest payments
are 2% of the entire GDP which is how
much the economy grows okay put that
over there but you guys in the private
sector you're also 100% of GDP in
debt where does your 2% come from
because GDP is all of the activity in
the economy and that's just gone to the
government sorry guys you're read going
to go Bust or we're going to blow up and
you're going to blow up the banking
system or or we're going to have to keep
eating this negative growth difference
of 2% every year until you get rid of
this debt and we're all
[ __ ] so once you realize that these
two polls are both
100% you realize okay somebody is going
to have to do something to ends up in
the fair balance sheet so when you go to
Japan really interesting because Japan
the households are massive savers
companies are pretty in debt but the
government's massively in
debt and it's the same but because their
interest rates are lower they can have
more
debt but their economy grows really slow
as
well so you get to a certain point and
then you have to say right it has to go
the balance sheet the Europeans have
been doing the same the Brits have been
doing the same it's all the same thing
it's like a there was like a it feels
that and this is going to sound
ridiculous it feels like there was a
global treaty
of which okay this is where we
are we can't the debt has got too
big and nobody can pay the interest
payments without destroying the global
economy so we're just going to have to
pretend we're not um debasing the
currency and call it quantitative easing
and say it's a precise way of injecting
money exactly into the right part of the
financial system and it's like no what
you're doing is getting a credit card to
pay your credit card and then giving it
to your dad and say you you worry about
this it's not my
problem whoa so I want to see if I'm if
I'm tracking this because not to get
back into Doom porn but this seems
pretty Doom porny uh okay so for people
it's not because the world works it's
not Doom porn because it works every
time they do it or are we just pushing
off a
problem okay
so it's making assets go up when they do
it it is meaning that companies don't
default the banking system remains
sound but are we actually able to get
out of out of debt so let me make sure
I'm understanding what you're saying
this is going to be very important okay
so the I know we're using round numbers
but this is very helpful so
worldwide GDP gross domestic product the
the amount of productivity so the
capital that is usable
effectively uh you have two different
people that have debt in that amount
which there's no one to to have real
money to pay the [ __ ] thing
off so if you had one person that was
like okay we're maxed out we're at 2%
but GDP is 2% cool we have the path Just
Be Frugal and and you've got a path out
of this but when you have two people
that owe the whole amount effectively
you now go into money Printing and I
mean if this works I'm actually okay
with it I know how that's going to get
me lit up but it so the solution here is
okay we have two two large groups
governments private sector which are all
the groups that exist and each one of
them owes the entire worldwide GDP in
debt you can't both be in that situation
there's no Peter there's no uh you can't
rob a Peter to pay Paul because they're
both in the same
situation so now the only thing left is
printing money devaluing everybody to
get out of this situation but the way in
which we do that by buying things from
uh the private
sector is we're making people that hold
assets wealthier we're increasing the
gap between the rich and the poor
because the way that we inject money
into the system only reaches people that
own assets and so we've created this
problem and the only way out is to print
money which is going to increase the the
the jinny coefficient for people that
know that phrase where it's like nobody
cares in absolute dollars how much you
have you just hate that your neighbor
Timmy has more than you and so you freak
the [ __ ] out and so it becomes the
differential that becomes the
destabilizing element so what you said
assuming what I just repeated is correct
that sounds
destabilizing and Doom porn so help what
is the other what is the other outcome
the other outcome is let it all
burn clearly a terrible
idea when you're this far in debt let it
all burn doesn't work anymore right
that's the end of that's the kind of end
of civilization stuff Ultra Doom porn so
you're faced with Doom porn and Ultra
Doom porn what are you
right there is no other way so this is
what people need to
understand what is
GDP GDP is a sum of all the economic
activity that goes on and it's comprised
GDP growth rates are comprised very
simply of the number of people in your
economy is it growing if it's growing
your economy grows because there's more
people generating more activity
generally secondly is
how much productivity does it have I are
those people productive do they make a
lot of stuff for each manh hour and
finally is how fast is debt growing so
when we have an aging
population the number of humans declines
over
time what happens is we stopped
immigration almost everywhere because
everyone was under pressure for income
because real wages Haven gone up so we
we we lowered the rate of immigration so
that lowers Trend rate of growth aging
population they're less productive and
they spend less so GDP keeps doing this
for decades on end baked in the cake
from from that they become less
productive because they're older people
and a whole bunch of them aren't in the
labor force anymore okay so you're not
very productive you're getting old not
population growing so guess what Bingo
answer debt ding ding ding ding ding we
just took on
debt right it was rational until it's
not it's like it's rational to Super
leverage yourself on a house and house
prices go up and you look like a god
until you get it wrong and you lose
everything so it was rational to take
the debt and this is where we've got to
and then it was the government's got to
the same boat and everyone was just the
debt so now the debt is the debt debt
growth is actually not that high anymore
because we've hit the
ceiling so the only way to solve this
this goes back to our earlier
conversation is we cannot solve
population
growth and debt growth is peaked out so
we got the one thing in the middle
called productivity and that takes us
right back to Ai and the robots and
cryptocurrencies internet of things
green energy all of these
things so if you are governments look
what Europe's doing it's interesting and
maybe I'm just inventing a narrative but
Europe the US Japan they all know what
they're doing so they're printing money
to cover their bills um and Europe
thinks well Christ we need to get the
bloody economy going here because GDP
growth is what pays our bills and it's
pretty sluggish because everyone's old
here and everyone's in debt and the
banking systems are
mess let's do a double whammy which is
what the US did back in the
40s let's put as much stimulus as we can
from this fake
money and RAM it into the green energy
sector and we're going to build a lot of
stuff and we understand a lot of stuff
is going to be wasted Capital but out of
it we're going to do one amazing thing
and the it will happen is out of
this energy costs will
collapse now this is really important
for people to
understand what does technology do
technology drives more productivity out
of a single unit of
energy kind of once you see this thing
it's like that's what humans do with
everything it's like find a way of
getting extracting more for that barrel
of oil because that's what we
use now that barrel of oil has been our
fixed energy source since we replaced
whale oil so we've been using
this and so it's been the constant so
technolog had to drive all the
productivity in every way it can based
on how much is this so we have to bring
computational power down and everything
down so that one fixed thing which is
the price of oil which on a inflation
adjusted basis been pretty stable for
the last 70 80
years and if what the US is doing with
its inflation Act and the Europeans are
doing with its green energy and Japan is
doing and China is doing and Australia
is doing and the UK is
doing if they force enough investment
in they will change the energy source of
the
world and because all of these have
exponential downtrends in cost we will
change the energy
coefficient and what happens is
productivity times the lowering the cost
of energy is an exponential change for
all of us that's how you solve this
there's almost no other way of solving
this problem of slow GDP growth old
populations massive
debts without blowing up everything so
you're going to have to keep doing this
money printing thing which is miserable
because it makes some people rich and
other people poor
and or you can have inflation which just
makes everybody miserable they're all
terrible things but the faster you can
get to changing that productivity
equation the better because it's the
it's the only way there's no there's
simply no other way of solving
it you either Rob from everybody or grow
the
economy with a declining population um
so talk to me about the energy you're
saying that so maybe I have uh just an
under educated view on the green energy
front
so you see the cost of energy coming
down as we invest more and more into the
green energy
side yes
so right now we're in transition where
we're not probably producing enough oil
and we don't have enough energy coming
out
of solar winds geothermal nuclear all of
that so you know we've got this Market
where energy price are high because of
supply issues and other stuff but when
you look at the
trend all of these are growing as a
percentage share of the energy grid
there still oil and coal are still
massive right but they're coming down
and Europe's really forcing it uh
decarbonization and so we're seeing a
rise of these others they start some of
them subsidized but the subsidies go
over time but the really interesting
thing is none of that it's the fact that
the cost per unit of energy keeps coming
down and many of these are now cheaper
than natural gas which was very cheap so
it's like huh okay and we've only just
started where we are in this
exponentiality so my view
is in 20 years time the cost of energy
will be marginal for everybody and
everything much like the cost of water
is marginal for everybody um and the
cost of many things we take for granted
are totally marginal
now I don't know if given your um macro
Outlook that this is a reasonable
question to ask you or not but
um when when you look out at uh the rate
of adoption of green energy do you think
that we're because you just said like
maybe we're not producing enough oil and
gas do you think that we're moving too
rapidly in that direction or do you
think no no no you you make these huge
Investments you have to put regulation
in place force people to do it faster
because these have a a far more
Technology based exponential um okay so
this is the inverse of the GDP
problem do you manage its smooth decline
or do you blow
up here do you transition slowly with
the issues of climate change and the
issues of um cost of energy and all
these other things and the need for
productivity or do you blow up I do you
just take short-term pain to get to the
promised land
faster again it's probably a rational
economic decision to do that so maybe or
maybe not Energy prices rise I'm not
entirely sure will copper prices rise
probably will some prices rise probably
can that be offset by Ai and other
deflationary pressures probably you know
it's not baked in the cake people always
conflate some commodity going up in
price to see inflation's back and it's
all gonna run rampant again it's very
rare that that happens we've just had it
now so it's going to be in everybody's
head as the boogie monster but they're
looking they're usually looking the
wrong boogie monster
so
so it's going to be a balancing act um
maybe they get it right maybe they get
it wrong but I think they're all pretty
most of these governments are pretty
sure that they want to do it as fast as
they
can and so does that mean that they
would if by their actions they cause
high energy prices for 5
years would they give out stimulus
handouts to
people probably is that not the best way
to say listen if you are getting hurt by
this and guess what that's exactly what
Europe's just done last year was giving
handouts to people say look we
understand your electricity bill is high
and it's hard for you so we'll we'll
help you um now did that drive inflation
to some
extent maybe but maybe not I mean it was
just going for the electric bill you
didn't give people extra money in their
pocket so it's complicated as everything
is but I don't know I'm kind of in a I'm
a fan of if you're going to go for
positive change do it as fast as
possible if you're going to go to
negative change and you can glide path
take the Glide
path very interesting so um and I'm not
a fan I'm not a fan of conative easing
or any of that stuff I'm just like this
evil this
evil which one do you want to
choose yeah it uh is a very interesting
question so when you were talking I was
in in full acknowledgement of the human
mind goes to the
problems
um in the context we're in now and I I
am not a geopolitical thinker and so I
want to be very clear about that I want
people to understand that I am I am
seeking to uh increase the island of my
knowledge
um when I when I look at as somebody who
has studied from uh how do evil people
get control perspective studied what
Hitler did in World War II he was very
much like not seeing the increase in
productivity path out of things and so
he's like well for Germany to get out
from under this terrible weight we have
to start land grabbing and when I see
Russia that is the population part of
the
equation right when you're taking over
countries what you're actually doing is
getting their people and resources
so you're solving for your own
population productivity more resources
but you're actually getting the people
part of the GDP equation that's
interesting so um how do you
contextualize Russia and the Ukraine in
this moment where you've got the private
sector the governments are completely
indebted you're at a position where
birth rates are declining certainly in
the western world very rapidly if
demographics are Destiny and we are just
in a a [ __ ] show
demographically does that when you were
talking I started looking at the Russia
Ukraine thing in a totally different
light and I'm very much somebody on the
outside of that I'm not close to it at
all uh but I'm very curious if that sort
of recontextualization of oh this is
somebody who's like well I know how to
solve this problem quite rapidly uh or
am I looking at it
wrong um
I don't like
geopolitics
because so much of it is stuff that we
don't know so there's so much
conjecture about almost everything in
geopolitics apart from the fact that
Russian troops are in Ukraine and
they're fighting each
other whose motivations of what for what
and how I don't even know but what thing
it did do to go back to what we were
talking about it accelerated Europe
everyone thought well the Europeans are
going to back away from their green
energy policy now aren't they the
Europeans went no [ __ ] you we're now
super motivated to get this done as fast
as possible because we do not want to be
beholden to Russia or the United States
or anybody else for that matter energy
Independence is an incredible thing
right it's one of the powers that
superpowers that the United States has
has energy Independence
all other energy on Earth could go and
the US has oil and gas and more of it
than pretty much anybody else in the
world
so I so it also if you think about the
history of war and how much has been
fought over the Middle East not because
we want some sand or the few
people because we want the energy and we
want to control it because the energy is
the thing can't remember what it was
called in in um in Dune but whatever the
thing is Right humans want to control
the thing whether it was whale oil or
this or whatever the thing spice right
in spice that's right spice so that's
what that's what the US controls and the
Russia controls a bunch of it and we
want to change that equation and the
Europeans are in the Middle with with
not enough of it and it's in everybody's
interest for everybody to walk away from
this one commodity ruling the
world because it it's not the commodity
we care about it's the energy we care
about well said talk to me about China
um seemed for a while like things were
getting pretty dicey you had people if
it can be believed people protesting
like
crazy uh governments making funds
unavailable to people um I saw that
happen in Cyprus up close given that
Lisa's family is from Cyprus
um what what's the state of things
uh a China's economy was slowing down
and they locked themselves into a really
brutal lockdown for the pandemic and
even the Chinese people are quite
compliant you know Asian populations
tend to be more Society compliant than
us who kind of like saying [ __ ] you to
everybody if it doesn't suit their
interest so you know Europeans are quite
Society minded as well generally
speaking um
so the Chinese AR too much of their
people for whatever reason I don't know
whether it was actually for a real
reason in the end or whether it's for
autocratic reasons or whatever anyway
economic growth falls off a cliff uh
people are angry growth is weakening
property markets a mess that's where
that's one of the big wealth gates for
everybody in China That's where people
make money um people in the streets and
people are angry the Chinese have kind
of interestingly enough started
stimulating and then you know they
locked up all these entrepreneurs and
threw them in prison or threw them down
a well um they're now like well we've
decided we need to be growing up five
and a half percent a year and we want
entrepreneurs back in you know and
they've reopened to Hong Kong for
cryptocurrency so it feels like whatever
they were
doing they've got what they wanted
whether it was because she wants to get
control again the Game of Thrones is not
a game that I I like to get involved in
and because everybody speculates we
don't know all I know Chinese are
stimulating they want the econ to grow
and um they seem to want to be an
entrepreneur I don't know why you choose
to be an entrepreneur in China because
you know the next cycle around you get
shot and replaced by the next one but
somebody's going to do it that's
interesting I I didn't know that they
had reopened back up sorry go ahead yeah
so again think about mentality we're at
the bottom this is the worst markets
forward looking I Chinese stop market up
like 50%
already and they're driving parts of the
global cycle
so when you read it in the news
headlines it's usually too late did you
hear the recent speech I think it was in
uh the European Parliament oh God uh I
don't know exactly where it was the
speech was in English though and uh they
were saying
basically uh that we want to
degrowth and they made it sound like
this is going to be amazing greatest
thing ever degrowth uh less people on
the planet just all good all good um but
you're saying that's a bad assumption so
no the bad assumption is that it creates
wage
inflation the
degrowth okay
dth at
first
creates
more for less
people okay great and if you can
distribute that
great the issue
is at the end of
it you end up with the robots and the
AI because you are hyper incentivized to
keep increasing
productivity that you are sewing the
seeds of our own
demise because of the economic engine is
actually forcing you to to take this
incentive it's kind of weird but that's
where it's
going woof okay
growth and the shrinking population is
more productivity the way of creating
productivity is robots AI
Etc the faster they grow the more that
we use them the more that we need them
because the population's smaller this is
why Elon Musk keeps saying people don't
understand this he keeps saying
shrinking population is bad it's not bad
for economic growth going down it's bad
because it incentivizes everybody to
increase the workforce so the the hum um
the
the population side of the equation can
be offset by the machines so look at an
Amazon warehouse perfect example Amazon
has gone from having one and a half
million people about a million people
working there and zero robots to a
million people and 500,000 robots the
robots work 24/7 365 they're more
productive than humans in all aspects
and they just keep replacing humans
sorry didn't you say that there's still
a million humans working now so it's
just increased productivity through
robots so you're saying that that should
be to match their scale it should be 1.5
million people
correct so they're replacing the jobs
that would have naturally been coming
from
humans and this trend will accelerate
until there is no need for humans
because the machines will have taken
over this is Elon mus thing is the more
we try and make these machines more
intelligent the robot's better elon's
building this down thing himself right
Twitter is the training model for the AI
that he's built and he's got Dojo one of
the largest supercomputers at a at a
focus task that's ever existed it is the
largest and then he's got the Optimus
robot Ian there's the end of humanity
right
there because once the Genie's out of a
bottle so that's why he's worried and
that's why you know you need to pull the
rip cord and piss off to
Mars it's not from anything else
it's The Logical conclusion of economic
forces creating more and more powerful
intelligence that doesn't require
humans okay now sity gets to now I feel
seen by you because this is where I'm at
um so then take us back to your early
statement that you're optimistic about
the exponential age whereas what you
just said is how I feel about the
exponential age when I don't forcibly
put my optimistic hat on cuz look I I
ultimately I default to optimism I think
it's a wiser place to be I certainly
think it's a more enjoyable place to be
um
and I think that people should find that
path where they can explain things in a
way that end well and I thank you for
letting me wear my more pessimistic hat
because I knew you were going to be in
the more optimistic seat here um
but why when you look at exponential age
if you can see the the economic forces
will incentivize that path where as
population and demographics or destiny
they're in plain side everybody can see
it it is going to decline massively at
least temporarily that that is for sure
and so as the population begins to
decline dramatically as we then the
economic forces push us to lean more
into Ai and Robotics and the guy closest
to the problem is like hey PS let's get
to Mars um
where where do you like what's the thing
that has to go right or where do you
think that either Elon or myself are
looking at this wrong so you're
confusing time Horizons a lot of people
do this a lot of people go the Dollar's
going to collapse because it's so much
in
debt probably right is it going to
happen this year next year or in 20
years
time you can't worry about something
that is 20 year out because the future
paths are yet unknown right because
we're too far out the Event Horizon is
too far out to get high probability
forecasting so we have to make a huge
bunch of
assumptions so let's go to the shorter
time Horizon
is
is are we likely to
benefit from the ability to superpower
human knowledge probably are we going to
benefit from cheapening energy cost
probably are we going to benefit from
the things like self-driving cars
driving us to work delivering packages
drones all of the stuff are we going to
benefit from the space Technologies and
starlink are we going to benefit yes yes
yes is the stock market going to go up
if we invest in this stuff yes okay so
there's a lot of benefits that are being
laid out for us all is longevity of life
going to increase
yes are we going to have massive
breakthroughs in in genetic science is
yes can we train AI models on cancer and
all of this stuff yes right okay that to
me sounds like a golden age I call it
the Renaissance or I'm English I call it
the Renaissance um but that
is but after that you get to what people
refer to as the
singularity is where it becomes
unforecastable and this is what the
debate is going on amongst Sam mman
emad mosac with um Elon Noah Harari
everybody right it's that moment is like
what the hell does that look like elon's
like I don't know so let's just have a
plan B make sense none of us really want
to go to Mars but I get it right if we
completely screw this up but I don't see
how the the virus of Technology isn't
like in 2001 A Space Odyssey just
doesn't go with the ship you know so not
sure yeah that's my I don't know that
are we able as humans because we're so
such an Adaptive cockroach of a species
well we haven't proven to be yet we're
still pretty young on the planet versus
others but let's assume we're like
crocodiles and sharks and we can hang
around for a few million years will we
figure out an Adaptive mechanism to deal
with
this maybe that's the that's the
Optimist outcome it's like I know humans
we're humans we're we're amazing we'll
figure this out and the other one is
we're never going to be smart these
machines we're so totally [ __ ] I don't
know but I know that in my
lifetime there's a 20 or 30y year period
which might be a truly extraordinary M
moment in
history and like and the issue is is we
can't see through the other side of it
and that's terrifying but you know it's
you know we I think we mentioned this
last time we chatted I don't have kids
so I have to worry about it
less people who do I I get it I get it
it is an
existential threat of which we cannot
figure out how to stop it and regulation
is it's not going to stop
it because the technology is out of the
bottle it's like you can't stamp crypto
out because the technology is out of the
bottle now and it's
everywhere and yes open AI is the
current leader with Microsoft but all of
the big us companies are incentivized to
out compete each other and so they're
incentivized to create more and more
powerful models but if they get
regulated well somebody else will do
it this is the geers you're talking
about
geysers is they're popping up everywhere
but really what is happening is it's a
massive bloody
explosion that is
Unstoppable so talk to me talk to me
about regulator so as somebody who
doesn't live in the US but you pay
attention to the US uh you probably have
a much clearer picture than somebody
like me who's not only in the US but I'm
in
California uh how do you think this is
all going to settle out is the US going
to get left behind are we being too
strict
regulatorily um how does this play
out I mean this is an impossible choice
right how do you regulate this thing and
how do you get a bunch of 75y old
politicians to regulate this thing I
don't
know I don't think anybody knows oh we
can align the models with Humanity what
does that even mean nobody even knows
how to do that for God's sake we don't
even understand how large language
models learn we don't even know what
they know all we know is hey we're
figuring out different questions to ask
it and it seems to be able to answer
them but when you listen to Sam Alman
he's
like well have we
created um you know
GI I don't know he said I don't think so
and elon's like well that's 3 to five
years away it's Unstoppable because of
the profit
motive well also what you talking about
earlier with the need for increased
productivity but if you were to so map
this on to the way that different
geographies are responding to bitcoin
and crypto which feel very similar to me
uh in terms of either you're embracing
the new where things are going you're
willing to face that the way that we're
handling the financial system creates
these incentives and so you're either
trying to Capital control lock people in
not them let them leave the country or
certainly not let the capital leave the
country or you're like hey you're using
it as a way to get people to come to you
this is a really important Point Tom why
why do they want to stop you leaving
because they want to mutualize the
losses on
you if you leave to the other
place they're not
because your crypto it's you know that's
why the capital controls it's like don't
leave our old system it's like exactly
what's happening with the regional Banks
please don't take your deposits out
because they all go
bust our participation in the F currency
system is our deposit and if we go
you're just left with leverage because
it's the collateral of the system this
is why they don't want it to
happen and do you see how do you see the
US do you think that we're we're being
because it feels very antagonistic to
crypto at the federal level you're
getting some stuff happening at the
state level which is interesting so this
is really important so firstly just on
the AI versus crypto very oppressive on
crypto the biggest AI companies in the
world the US so they're probably going
to be a bit softer touch around that and
these guys are playing the usual trick
of we'll be good guys you don't need to
regulate us we'll kind of do the right
thing right because there's too much
money available in this equation so
crypto us because you know the US Pro
uh US citizens actually have a lot of
capital restrictions the land of the
free is actually pretty
unfree people don't want to deal with US
citizens in Banks so if you come to the
Cayman Islands or the UK or Spain and
you're a US citizen you want to open a
bank account nobody wants to open your
bank account really it's pain because of
the US reporting and the US tentacle
State tent IAL it's grip on the Global
Financial system it owns Swift payments
it owns everything and it wants every US
citizen to pay its taxes because the the
mother beast needs to feed the debt
burden right so it's actually very
restrictive so it doesn't like you being
able to opt out the financial system
okay they want to make sure they get the
taxes it's fine you're US
citizen but different countries have
been more loose on it I think Europe is
going to freak out over AI more than it
the US
is but Europe's been actually better on
crypto than the US
has why I don't know but the crypto side
of the equation is really important
because I've lived this my entire
life why is London such a big Financial
Center considering it's a tiny little
island in the middle of a really Brown
muddy cold sea it's
because it speaks
English and it has a welldeveloped
Financial system and legal rule of
law but what really changed for
London was the US coming off the gold
standard um back in 19712 whatever it
was so that created something called the
Foreign Exchange Market because before
everything was pegged to gold and now
the pound and the dollar and the deut
mark and the Yen were all moving around
independently and the US had Capital
controls because it's got the global
Reserve currency it's like please don't
mess around you know we've just gone off
and changed the global system we need to
be careful okay I get it fine so the UK
said well all these people we trade with
they need to get access to different
currencies
now so the Foreign Exchange Market
started largest market the world had
ever
seen then the US made another false step
so the banks started moving to London
right big lucrative massive Market
deepened the UK's trade linkages with
everybody Financial trade linkages next
thing happens is now everybody's trading
around with currencies the dollar is the
middle currency the reserve
currency and people want to borrow
dollars and the US is being restricted
with its capital so the UK says forget
it we'll do it it became what's known as
the euro dollar market which is the
overseas market for dollar borrow
growing and lending that becomes a we
don't know the size of it but let's call
it a $400 trillion Market whoa and then
the
us then we get this big breakthrough
in derivatives the US has got the
Chicago Board of Trade doing Futures and
options and all this
stuff
but we start to figure out more
complicated structures things like
swaps and the US stops its banks doing
it by its use of regulatory Capital
they're like no no no this is
inefficient you can't do this the UK and
Europe went well we're going to regulate
and allow it to happen because it's big
we've seen this before that becomes a
quadrillion dollar market Jesus that's
why every single Bank from about
1985 well particularly after the big
bang in London so let's call it from
about
1990 to about 200 8
2010 all the major Banks largest
operations were London so golden sack's
biggest operation most profitable London
Mar Lynch London Mar Lynch is different
because it was a brokerage firm but JP
Morgan they all
London so London if you've been watching
the
news is going to do the same thing it's
called regulatory
Arbitrage London is putting together a
very sensible set of crypto rules
as has Europe as has Switzerland as has
Singapore as has Hong Kong as has
Australia okay there's its old Trading
Group that it did with Euro dollars and
it did with derivatives and it did with
foreign exchange all got their
regulations in place the UK is the Hub
at the middle and it will capture the
line share and before you know it
coinbase Gemini and everybody will move
to London there still be listed firms in
the US but they will move and this is
the issue with the AI and crypto you
can't shut down because if it is
productive and it has value and it has
future expected value that's higher than
today it will go
somewhere and if we look at the crypto
market now it's a trillion dollars okay
that's meaningful for the UK
economy where is it going to go well 10
30 50 trillion well the UK wants that
pie because it shot itself in the foot
after brexit um so
the US can try and regulate it all it
wants it'll just move it's like water
decentralized networks and Global F
finance and money is like water it flows
everywhere and it's the same with this
AI which is why I don't think we can
solve it with
regulation because
somebody's voted yeah it it will go
somewhere that is for sure walk me
through the reversal the Chinese
reversal on uh Bitcoin so they had
clamped down everywhere including Hong
Kong but they've now opened up Hong Kong
that was startling to me well they've
done
this they've done this several times
before is at the wrong time they try and
stop Capital
flight because everybody knows that the
China has been using this to get money
out of the China economy which is what
stable coins are being used for as well
as has the global Art Market as has
there's a lot of things that the Chinese
use to get money in and out of the
system so they Tred to stop that when
the US dollar is very strong that's a
start because they can't lose control of
their currency it's a big fear of the
Chinese Additionally the chines have
moved towards a central bank digital
currency which is very useful for them
because once you you do it you can now
take
stock of the number of yuan in your
system because there's no cash there
still is but you know what you're doing
is you can then see where it goes
um and so I think they did that they got
the size and scope of what their money
supply really
is and now you can reopen it because you
can now track it because it's all
digital well you couldn't track it
easily before because you could hide it
with bank payments blah blah blah but
blockchain makes everything
transparent much too you know
everybody's shag GM because everyone
thought it was a privacy thing it's
actually not not in that kind of
mechanism and I also think this is more
contentious is that's the reason binance
survived everything is the Chinese
government wanted it
to
because that is the linkage between the
fat world and the crypto world and they
own the CH you know Chinese State
essentially is a supporter of the
largest crypto Exchange in the world
because that is a potential bet on the
future of the system of money and it
wants a saying that and makes total
sense where's where's binance
headquartered there
one where does oh God what's his name CZ
Dubai okay yeah I was going to say I
can't fathom that he's actually in China
uh very interesting so when you think
about um sorry and the US will probably
support coinbase in the end what because
everybody needs control of this
situation if not the UK will take
control of the entire money the global
world of new
money or the I hope you're right about
that but I don't see a single move on
behalf of the US government that would
lead me to believe that uh unless they
lose the coinbase
lawsuit I I think they're just going to
we have a change of government yeah true
true what do you think about
2024 I don't know we haven't yet seen
the contenders you know everybody's got
a bit too much hair on them still so we
don't it doesn't feel like there's
something obvious but maybe there will
be maybe something out of this you know
I thought Frank Suarez not because he's
a um Francis Suarez not because you know
he's the pro crypto guy but he's Young's
the mayor of Miami right he's the mayor
of Miami he
is Centrist
essentially you
know just that kind of person younger
more D we need to find somebody of that
we can't the US can't keep going down
the same thing of baby boomers voting
for Baby Boomers voting for Baby Boomers
and trying to protect themselves that
has to be broken somehow has to it broke
in the UK look rishy sunak he's young
he's a Centrist young whether they keep
him in or not I I don't I I don't vote
in the UK anymore but at least they're
making progress like crypto regulation
and Ai and technology and fintech and
because they got a young young
government and we've seen that in you
know France has done well because macron
is
younger um you know so we need
that yeah that I will agree with so
since I'm wearing my uh my Doomer hat
today I'll push on the geographical
thing so what it feels like here in the
US is that things are really beginning
to intentionally divide along
geographical regions and uh you're
getting like this hunkering down into
blue State Red State uh people peeling
off if you're into crypto you're either
going to Texas or you're going to Miami
um and seeing the there's this whole new
idea of uh make America States again
where people are saying hey we need to
stop doing all of the regulation at the
federal level we need to start pushing
this down to the state level um and
letting the states compete for The
Residency effectively of the populace
and let them begin to move now I'm
grateful as somebody that feels out of
step with the federal government on my
take on crypto I'm certainly very
excited that that is at least an option
but like your boy um gold smith gold
weight James James gold smith there we
go uh I am I would like to to broadcast
my dire warning while there might be a a
part of that that is good that ends so
badly because you end up fracturing you
end up pitting people against each other
it ends up I think becoming very
problematic very fast I saw this in
2012 um because of what happened in
Europe and I saw what was happening in
the US it's one of the reasons I bought
and built a house in the Cayman
Islands I just thought I need a plan B
and the plan B needs to be somewhere
where nobody cares
about but I can still live a high
quality of life it was a very purposeful
decision knowing whether world was going
to go because there was no solution so
the kind of realizations that you're
having now I had it's more visceral for
you now because you're just seeing
another banking crisis but we saw it in
2012 we saw really bad outcomes there
and I think the US one is still to grow
so it's just it's just the the delayed
response of H having it happen to you
the moment it does it's like okay get it
now so I did this and I don't think
that's going to go away I'm hoping for a
miracle what does go away sorry populism
anger uh Division and a separation into
smaller States I actually spoke to um an
old client of mine old friend who's one
of the world's great macro thinkers this
Italian counts and he speaks very
quietly I was telling him about this I
was like I think Spain is going to
Splinter into countries the UK is
probably going to Splinter Scotland will
probably separate you know blah blah
blah and he
said listen R the trend of the last 50
years was superstates the EU the United
States of America he said usually those
things end up separating again and if
you think he said you know he was a
whatever he was a count from a Italian
you know one of the Venetian States
these little small states he said the
world does this es and flows
centralization decentralization right
it's very common he said it's not
necessarily a bad bad thing it's the
getting there that could be Troublesome
depends how it how it happens you know
don't forget we disbanded the British
Empire you can reboot your life your
health even your career anything you
want all you need is discipline I can
teach you the tactics that I learned
while growing a billion- Dollar business
that will allow you to see your goals
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today that was
gigantic and yes but there was some
pretty ugly stuff that happened like you
know the uh what happened in India when
when we kind of gave back the keys and
everybody killed each other in the
partitioning it's ugly but it did happen
over time so I don't know I think the
trend is not going to go away unless we
somehow change this iic equation because
that's what's driving
it yeah it's the same equation that's
driving
it yeah very very distressing and I
think unfortunately I think the pieces
are already on the table in terms of how
we could potentially change the economic
system uh which is effectively Bitcoin
you have to remove the ability to
inflate once you take that away though
there are also consequences on the other
side and so uh it is a very um man it's
a very which my my my argument has been
you can't do this at once anybody who
does this wants the end of the
world it has to happen as a Glide path
and over time the crypto side of the
equation the new rails for the
system can experiment get itself sorted
out figured out and then we can go so
might I spoke to the to the Department
of Defense about this in
2014 13
13 and I said you know they periodically
you know reach out to people like me you
know thinkers about stuff who who are
looking at crises and stuff like that
because their job is to to assess risk
and I was talking to them about it and I
said obviously he said you know we're
worried about debt we're worried about
the system blowing up I said yes
obviously everybody is um because that's
one of the things they need to game out
what happens if
the West loses control of money and debt
and everything
else and I saidwell I think the answer
is there and I think it's Bitcoin he
said yeah tell me more I said and I
think the US government and the UK
government invented it which is the NSA
and the gchq in the UK who the two World
centers of cryptography because even how
the white paper's written
yes I always have and I asked the
Department of Defense they said yeah
we've considered that
too they official or it was just people
from that that went rogue I don't think
it's necessarily A rogeness I think like
Google have like Google X where they do
tons of experiments right they know that
one of the esoteric risks for the entire
Western system is the issue of money
so there's probably groups of people who
are given things to try and if you
concede a new system maybe they tried a
hundred of these and just one succeeded
we don't
know but it would make sense because
that's what they do this kind of
stuff so one of these took
off and so I think it's always been I
don't think it's a coincidence that came
out of the financial crisis I don't
think it's a coincidence that that the
Haring cycle and all of this is all
related it is the solution always always
has been the solution you just can't go
there tomorrow so all you need to do is
let it happen slowly and manage that
transition you'll be okay there'll be
times where it speeds up because we've
got something bad going on and there's
times when it slows down but if you and
that's what I think the US government
regulation is trying to do they don't
want to bang crypto just slow this down
because if all the deposits leave the
banking system it's game
over if they don't set up a way of
collecting taxes because everybody's
living in cryptand and they have to ask
your honesty in what trades you've
done that's not going to work for them
because they can't pay the
bills
so I think it's they're trying to catch
up um I think that the UK will have a
cbdc I think the Europeans will it's all
coming relatively soon relatively next
five years three years four years and
they'll feel more in control of the
system that they've got
because they need to pay the interest
payments because if not and the a the
benefits the Aging benefits you know all
of the Social Security is a problem with
such an old population people have
talked about Universal basic income I
the government paying you because you've
got no job but the economy makes a lot
of money because all the machines are
doing it and I just think what humans do
really well is
socialize and you and I have big
Believers in community
and because of crypto we can share the
benefits of being in a
network so maybe that's the role of
humans that we can find new ways of
working within communities to encourage
communities philosophies like-minded
interest where you participate in them
um because it's certainly not going to
be doing anything that AI can do in 15
years time was
pointless it's really interesting man I
mean we don't need Tom to make video I
mean I was just had this today when I
saw that m one and it's been in my head
but it's like us making
video literally within 2 years it's
almost pointless but within 15 years it
won't exist you'll just put a prompt in
saying hey can you get me to talk to R
about um AI um let's let's let's do it
for about an hour and a half long
whatever it is off you go and it does it
I've seen it because it's already
happening so you and I don't need to
have a conversation because our AI
personas can have that conversation
is that what you predict because I don't
think that's what'll actually happen I'm
seeing it
already I'm serious so here here is I
think we have to ask the fundamental
question why did AI come into existence
in the first place because I think that
this is going to give us the most uh
direct understanding of The Human
Condition so that we can predict where
this goes this is why originally I
really wanted Ubi to be the solution it
won't be so I I am the Ubi experiment
personified so I made a ton of money um
never need to work again and yet work
harder than I've ever worked in my life
and people that win the lottery end up
imploding emotionally Rich Kids implode
emotionally there there's a reason for
this and I would say it's very
predictable reason that tells us a lot
about our future as it relates to AI so
there is going to be and there already
is it's utterly fascinating uh there is
going to be digital influencers that are
they're not real people um they you know
an avatar that you create and you feed
it you know give me uh Ral Paul meets
Joe Rogan and you go off and that
becomes a personality and it does a
thing but the reason that AI exists is
because nature had to make us face a
saber-tooth tiger to do that it had to
give us drives hunger uh the drive for
sex all of that and so it has Evolution
has embedded deeply in the human psyche
a need for progress
and a need for meaning and purpose a
need for what you're calling
socialization that the connection with
other people and unless we merge with
machines which we will but it's going to
be down the road that's I don't see that
coming barring uh massive acceleration
of uh technological advances aimed at
the the uh Hardware wet work interface
of the human mind which may happen in
the next 15 years I would be a little
surprised uh playing that clip might not
age well uh but setting that aside for a
second so we have these biological
impulses they are incredibly strong
drivers that Force us to seek progress
and contribution to the group so as far
as I can tell one of two things is going
to happen either the thing that really
becomes popular is something I can feel
a sense of ownership to so I'll I'll be
blatant there is a a reason that I
created an avatar engine because I'm
getting older and there will come a day
unless somebody figures out anti-aging
where it's just not cool for me to be
the guy on camera so hey if I can create
a visual Persona that then allows me to
be untethered to my physical body which
admittedly it's beyond the scope of this
interview to get into that but I think
there are actually things that have to
be thought through very well there will
Point people to Jordan Peterson and his
fears around virtualization but anyway
if I can create a Persona that allows me
still to flex my intellectual muscle in
a way that creates value in other
people's lives so I feel like I'm still
contributing to the group but I'm able
to do it in a far more ageless way but I
need that sense of I have not wasted my
time on planet Earth and if people don't
[ __ ] hear me when I say you better
figure out a way for humans to feel that
they have contributed meaningfully and
that is my my huge fear giving them
money is not going to solve that problem
Ubi will not solve the problem of
meaning and so people have to figure out
how does meaning exist in a world with
AI and you've got to realize here the
other important point is the AI doesn't
care how you think doesn't give a [ __ ]
about your emotions but we have to be
thoughtful about that it doesn't care
about your job it doesn't care about
anything
it's going to it it so think about it
this way AI because I know where you're
going AI by default doesn't care about
anything but AI will do nothing unless
you tell it to so go get good at go go
win a video game go whatever in the end
you see the issue is is where this goes
is the AI has exactly the same state
that you just described from humans
survival why you would have to program
it to care about survival no no no no it
doesn't program we're not talking about
a computer program that reads this thing
and does that it's not a formula this is
intelligence You're Building here so
intelligence makes and builds on its own
decision-making processes in ways that
you cannot control agreed but so here's
where I think people are getting this
wrong people are forgetting humans have
been programmed and so people think oh
this intelligence thing is devoid of
context false if I [ __ ] with your
microbiome I will mess with your ability
not not even ability I will change the
way that you process inputs so humans
are so deeply contextual that I think
people are delusional about what they
think intelligence is so my thing is
intelligence is inert unless you give it
an impulse and so this is the fourth
thing so if number one is ignore number
two is uh try to abolish and number
three is panic and four is be thoughtful
the thing that we have to be thoughtful
about what are you going to what context
are you going to create that creates
that initial impulse of uh context and
drive for AI to do something so Mo Gat
talks about this his book so the two
books I urge people to read them because
look there's a big debate about this
stuff almost everybody ends up in the
same place which is kind scream in
Terror it's kind of like yeah
probably we get replaced by different
species now whether we're basically
fatalism yes but whether we're part of
that species or not is a different
question right are we augmented or we
not so that's what homo talks about and
in great intellectual depth is augmented
augmented humans or ex um extermination
of humans or replacement of humans by by
another thing moat says I mean you could
palpably sense his fear
because he saw it firsthand and he just
said listen it's all well and good
now we all kind of understand how fast
this is moving and what this could mean
he's like yeah and we've also got we
working on Google is quantum Computing
when you put these two together you know
this is changed because so you have one
you have one thing the only thing he
thinks you can do to make this outcome
that you're talking
about is be
nice it's kind of this bizarre to AI or
to each
other how we interact with AI and
ourselves that's what the AI learns
from so we're the
parents of a kid that we don't know how
the kid is going to grow up so you can
Scream and Shout in the household you
can beat each other
up you can do all of these things you
can [ __ ] talk about all these people and
it's going to affect your
child whoa and so that was his point and
that was it
feels both naive but also hopeful that
there's a
possibility and the answer is how I've
approached this is look we're not going
to know we can't know we can sit here
all day and talk about it and there's
thousands of pages of books and every
sci-fi movie ever made is on this
topic so here we are the Cambrian
moment let's just [ __ ] enjoy it this
is one of the most amazing things we
will ever live
through and it's such an incredible
change in how the world is around us and
we're all pissed off with the world
around us so here's something that's
different it's like crypto here's a new
system here's another system you know
how do we how do we deal with the issues
of society where we've got building
blocks and they're interesting like our
cars will soon Drive ourselves and our
Amazon delivery trucks will just come
without people and they'll be running on
electricity and that electricity will
have been generated by some super cheap
power supply and a robot will have come
and made your coffee and you
know just enjoy what's about to happen
and embrace it so if you can afford to
invest in it if not be
curious because as you said the first
three points there's nothing you can
do so you kind of go for the other human
survival Instinct which is adapt or die
we just say let's do it and you say well
you know humans we don't we're not going
to merge with the machines and whatever
as I mentioned you before we've all done
it already you've got we will merge with
the machines I'm say timeline you've got
your earphones in you've got your Apple
watch on you've got your thing you've
got your glucose mon these are you
merging with the machines what are you
doing you're using the machine to
augment your hearing experience your
health
experience everything everything around
you is you using your machines to
augment
yourself and that is just going to
accelerate because what is a pacemaker
but a foreign digital body implanted to
give electric charges into my heart okay
if you told somebody that a hundred
years ago they think you're scientific a
science fiction nutcase but pacemakers
have been going for what 4050 years now
so the implants the you know people
getting new knees I mean that's now like
a quick operation in and out to have a
new
knee and soon the knee will have
Electronics in so it will happen without
us even knowing and you'll be doing a
podcast in two years time saying how
you've had this new chip imp plant
that's taking your blood glucose sugar
measurements and beaming it straight to
your phone and then It prepares your
meal exactly right and you w have even
thought about it but you and the
machine's emerging because do you know
sorry go ahead because to your point
earlier our job is to survive and the
single best answer for our
survival is trying
to get with a stronger
teammate it's it's the only way is like
you know you always want to choose the
best guy on your team well if we can
merge with them if they're part of our
gang we're
okay you're very high in tradeit
openness guaranteed uh as
Ami it's interesting though so I I think
that the only uh part of the solution to
dealing with the current moment is
fatalism that what will be will be and
not that everything happens for a reason
or anything like that just that this is
out of our control and I I think from
the the dawn of time there was no way to
stop the creation of artificial
intelligence because technology is the
promise of a better future future we
have a an insatiable a literally
insatiable desire for Progress uh we are
going to inevitably create AI I think on
any timeline and on this timeline it has
already happened um but I want to go
back to what um you were saying in terms
of you're raising a kid and that kid is
AI that's very interesting to me in
terms of how we think about it I think
that that's hugely important and was a
blind spot that I had or was a a
metaphor that I didn't have in my
Arsenal and that's going to be very very
helpful I don't in in the same way that
AI is inevitable it is impossible for
you to get the world to agree and be
fine and that's just a fantasy it's I
don't see how that ever plays out unless
AI becomes so uh domineering that
somehow forces us to but even that is a
dystopia unto itself so anyway I don't
think that's going to happen but the
part that I think people are under
appreciating is that
you people are
anthropomorphizing Ai and I think that's
a mistake and I think that will cause
them to be very surprised by how AI
moves and I think closes a door to a
potential way to do this well so what I
mean by that is a AI does not care if it
lives or dies and so the moment people
say oh well AI wants to survive that's
an anthropomorphic
uh you're you're thinking it thinks like
a human and it doesn't it is computer
code that has not yet been shaped by an
evolutionary like force we are that
evolutionary type force and right now if
you're correct we are just sort of
blindly saying learn how we are and I
sure everybody's heard the story of the
AI that turned Nazi in like three days
on the internet
uh which is very troubling uh and so I
would say that just telling it Go learn
how we are and regurgitate us back to us
would be the wrong incentive structure
and there there are many bright Minds
talking about alignment but I think
alignment is the conversation and yes it
is it is a very thorny problem and for
people that haven't heard that phrase
before you need to align ai's um desires
quote unquote with ours so that AI has
the same goals that we have
and if you know azimov he wrote the
three laws of robotics which I don't
have memorized but basically the
punchline was don't hurt humans and so
every robot was programmed with an
inability to hurt humans and so it was
like help a human whenever you can and
never hurt them and I forget what the
other one was so we need something akin
to that with AI so that AI wants to be
beneficial to humanity now whether that
goes back to the initial problem of once
it proliferates somebody's going to
create AI That's evil um possibly but I
I don't think in the same way that I
don't think the the overwhelming level
of intelligence that ai ai will
represent gives anybody the excuse to
tune out I don't think that the fact
that someone will inevitably turn it
into um a very brutal weapon is an
excuse not to try to create aligned
incentives with AI and so I think that
in terms of the the hopeful part I think
people need to recognize that AI doesn't
intrinsically intelligence doesn't
intrinsically want to consume and take
over and be in charge that is a human
result of evolution needing you to
survive a ruthless environment that was
truly read in tooth and Claw AI is not
in that same boat and does not need to
be in that same boat and I agree I'm not
so sure about the anthropomorphizing it
because you know we at core are some
sort of program code of whatever it is
whether there's more to that or not you
know scien is still arguing this
stuff but we've had computer viruses and
their job is not to die it's not that
difficult so I don't know about that
um there's a lot of unended consequences
that I hadn't realized cuz we're all
having this debate right is it going to
take over humans or not and I spoke to
somebody at Google X and they're
like what we're worried about I'm like
yeah tell me is like we're worried about
how AI can be used for genetic
modification and how fast this is going
to move he's like we're not worried
about that stuff because everybody's
worried about that
stuff but it is advancing so fast in
human genome analysis and tinkering of
genomes that he said we're worried that
you could just choose I want to kill all
brown eyed people on Earth and create a
virus that does
it said that is the problem with
AI is there are things that the
computational power is so fast and so
big that it can do a lot of things for
science which is amazing for humans you
know we will we will use AI to probably
cure most forms of cancer or figure out
you
know part of the the secret code to life
longevity Health all of these things
amazing but we will also use it to
destroy ourselves because we're humans
that's what they're worried about
because it's so prolific that it's
actually not that difficult there was a
very funny and the whatever brilliant
Twitter user this was my apologies for
not paying attention I didn't know it
was going to stick with me as much but
somebody put in the comments regarding
our just inability to stop developing AI
they said great filter go Burr and uh
for people that don't know what the
great filter is it's like why are there
no aliens trying to contact us and the
one potential punchline is that there's
a great filter could be AI could be
thermonuclear war but that just nobody
can get past it and so every society
goes so far and then stops here's
another interesting idea along that
which God so for people that know Graham
Hancock who just really believes that
there was a an ancient civilization far
older than we think uh and that it it
got obliterated the Fingerprints of the
Gods book well he's written a bunch of
books on this but the the most recent
thing was called ancient apocalypse so
he's been writing about it for I don't
know 30 years or something his books are
fascinating uh and he he so plants that
initial seed and then again I don't know
who said this this was relayed to me by
one of my employees who was pulling
wisdom from Twitter uh and he said it is
entirely possible that AI really is the
uh great filter go Burr and that we have
developed AI before and every time we
get to the point where AI takes over
much like in The Matrix we end up uh
relying on something in in that movie
they black in the sky but in reality if
if technology Rises AI robots take over
it could be a massive solar flare that
ends up then just obliterating Ai and
all the technology and then we come up
as a civilization worshiping a sun god
again because it was like You Killed the
[ __ ] machines thank you uh and I
thought oh my God like probably not true
but other one I thought about is if you
are this super amazing civilization
somewhere in the far ends of the solar
system not solar system of wherever of
nothingness and you figured out so what
you would do is you figure out that
organically you have to let something
grow because this nice kind of organic
computer is much better adaptation up to
a point so why would you not seed a
billion
planets and one or two happen I mean and
and one or two spring life they'll all
be different but they'll all end up to
your point before in a Ai and machinery
and maybe those things turn organic
eventually
because organic but with that kind of
augmentation so maybe we are that maybe
we were just planted maybe the bacteria
that started the Earth we just planted
on a billion planets and US happen to be
one of them by this amazing group of
whatever somewhere else who the hell
knows
right yeah okay so before we move on
because there's a whole another thing I
want to get into um I do want to wrap
this up with a bit of hope so thinking
about this a
lot I think that there is so you said
something uh I can't remember if you
said it to me or somebody else I've seen
so much of your content uh but you said
that that we're we're gonna go through a
Renaissance and I think this ties into
what you were just saying which is guys
what what we're about to live through
maybe it's 10 years maybe it's 100 years
but we're we're going to have a moment
where you're going to be able to utilize
this to massively extend your own
capabilities The Impossible Is
Possible The Impossible Is
Possible imagine that we've all grown up
with superhero films we've been given
it it's
amazing yeah this is going to be I think
uh it it already is so right now if I
can just get hyy for a second so at
impact
Theory we're we're a media company so
we're trying to improve the world
through ideas and entertainment and
they're two separate sides of the
company on the idea side that's you know
we've been talking a lot about that AI
is going to help you think through
things it's going to help you see around
corners it's going to find um signal and
noise patterns that we wouldn't
otherwise be able to put together but it
it also so well I can't tell you I I
have honestly lamented three things in
my life lament is the right word I have
lamented
my limited intelligence I have lamented
my inability to sing and I have lamented
my inability to draw and those are
things that would make my life
better I'm a very excitable person so
take that you know with a grain of salt
but I we're using AI to help us create
project kaisen which for people that
don't know don't worry about it it's it
is a new form of video G
and I am limited my contributions are
limited by my ability to extract from my
head the the vision the literal visuals
and make them a thing and so there was a
part of the experience that I was like
okay we we have to move on we have to
keep going but it just wasn't good and
it didn't give me the visceral response
I wanted to feel when I saw it and then
mid Journey comes along
and I'm like oh I I can actually now
create the thing that's in my head I can
use text to go this this is what I've
been trying to tell you and then no joke
three days later we we it's just so much
better it's unbelievable now we still
had humans had to go in and you
basically use it as our Direction but
all that frustration that I had of like
not I'm not feeling what I want to feel
and I'm not talented enough to translate
the emotion into words to get an artist
to create the thing but through prompt
engineering I could and so finally I
could go this this is what I've been
trying to say that that is it felt like
a superpower it was one of the three
things that I have in fact I've never
put this together like this one of the
three things that I have lamented to a
god I don't technically believe in I
have lamented about not being able to
draw just to
really make it simplistic and I can now
and I understand why that makes artists
mad but at the same time this is amazing
and for people that lament that they
don't have my verbal ability you now can
it's really and because I'm not a person
that gets overly defensive about
somebody else getting good at my thing
uh I'm just excited it it really is as
close to superhero abilities as we're
going to get have you seen the music
version so one of my Lamentations is I
love music I just can't make it I can't
play guitar can't sing can't do anything
but I know in my
head what I want to create music from
and already again the stability AI
people have got a music version I think
Google have got one as well now coming
out where you can kind of say listen I
want that kind of deep Funk base but I
want to have X like this and this same
as you just did is you getting at your
word vomit of how you're visualizing it
and it will make it so there's hope for
us yet Tom it'll train well actually
autotune it could even true true true
that's that's humans being augmented by
machines because you look forward as a
macro guy and you have to like try to
make some sense of this I know it's to
be true that the only answer to a Deb
Laden aging
population is what I refer to as more
cowbell stimulus stimulus is the status
quo that's why you like Bitcoin because
you can sense that stimulus is the
status quo the debasement of currency
it's the only way because GD if GDP
growth doesn't grow as fast as debt
growth your income is not covering your
payments right that's it's as simple as
that and the only way of juing GDP
growth in that formula is debt so debt
needs to grow the economy needs to grow
fast enough that it pays it off but now
each unit of debt lowers the the uh each
unit of debt gives you less GDP than it
did so it's now $3 of debt gives you $1
of GDP growth and it's been going like
this okay so if that is the construct
within which we live the
truth
then at some point if I look at the
future and say I'm going to live in nine
months in the future
is the Central Bank raising interest
rates there's almost a zero
chance
really well because we've already got to
the Tipping Point where inflation is
starting to fall just the extrapolation
of interest rates mean that they will be
below the FED funds rate by about March
or April next year so therefore and what
the FED going to go to what 10% what's
left Rubble people rioting in the
streets right you can't do it so you've
got to the point you're getting close to
the point where the rate of change
changes and in six to nine months time
the FED are likely to have stopped and
probably
cut because stimulus is the only way the
world works so they raise rates just to
lower them again correct so they lower
the rate of inflation but then it's like
oh [ __ ] we need to bring up GDP growth
because if not we all go bust right and
we need asset prices to rise because you
can't let the collateral go bust that's
what's just happened in crypto the coll
ft token the Luna token all this stuff
went bust end of game all the leverage
gets blown up so they can't allow that
so does that work in the same way so
what happened for people that don't know
what happened with uh FTX there were
people that wanted to sell their ftt and
get their money out and they couldn't
and so they just paus sorry or whatever
you had on their exchange because they
were off gambling it so you wanted to
get that back you couldn't because they
had used it somewhere else now I'm
assuming
that we have that same problem of the
government always has to be able to buy
the people that want to cash out is that
the issue no it's even a bigger issue
than that Tom if you borrow money to buy
a house and the value of your house goes
down
50% you're insolvent only if I want to
sell though if I don't need to sell I'm
fine yes that negative
equity means that the banks then become
massively proactive in not doing any
more lending that was 2008 the
collateral went down so where what else
do we borrow against we borrow against
our future our
jobs I you go to the bank or use a
credit card it's because you got income
right you lose that that's your asset
your income that you generate right you
can't borrow money the whole system
blows up you can't pay any of your other
debts if
you're if the the stock market in the
financial markets people borrow against
bonds and they borrow against stocks and
they borrow against all sorts of other
elements of
wealth if those things go down too
much then people start asking for their
money back because the the collateral
doesn't cover the
loan and that's the
issue that the society faces so it's at
every level
here um it can't happen so if your share
price goes down too much you probably
can't borrow money if you're a public
company because people then worry can
you pay them back if your income goes
down all of this stuff so therefore I
think that as I said this is how the
world works is stimulus now in this
particular phase of the world and
therefore looking out nine months the
probability is knowing what we know
about debt and demographics that the
central bank has not only stopped
raising rates but it's probably easing
rates to try and balance out as you
talked about this is what you want them
to do right you want them to just stop
the worst part of the collapse and the
worst part of the boom so they'll be
doing that the probability is is that
they will also be trying to inject money
into the economy because there's no
velocity of money because these old
people so that's quantitative easing
what does that do asset prices go up
again so all roads lead to asset prices
going up over
time it's a trick because it's a they're
devaluing the value of the currency it's
a trick but then you
got you've taken the BET and I've taken
the BET which is like we well we like
crypto because we think it not only
offsets this whole mechanism because
it's a fixed asset but it also is a
technology that we think unlocks a whole
bunch of other opportunities and
therefore it's valuable so that's
becomes a superior bet and I can't get
to a more Superior bet than I've tried
and I've gone through everything I just
wrot a huge
long 60 page article about all of this
in global macro investor and I still
can't get to a position where in this
construct of the
world that Bitcoin ethereum just just
don't become even more and more dominant
and valuable how much do you think that
it's because sorry Tom just to go just
to clarify that for people one of the
reasons it's so valuable is like what
you're doing you're building this whole
kind of nft metapos projects all
involved in blockchain right you're
building an applications layer on top of
the of the ecosystem whether it's
ethereum or whatever you're using right
but basically you've realized that you
want to build in this ecosystem that's
making ethereum or whatever you're doing
more
valuable and so it goes on yeah and I
that's one of those things that uh
especially right now there's real
opportunity for Builders for sure I'm
actually really glad I'm heartbroken for
all the people that have lost but I'm
very glad that in my corner of the
blockchain world that the gamblers and
the people that were just there for the
money have been wiped out it no longer
feels like a Sound Investment for them
which is good because it shouldn't be
treated like an investment it should be
treated like you would treat uh an
interaction with Disney right it should
be emotion based it should be connection
with the IP anyway so that is very
interesting but even I like I'm
ultimately I'm chain agnostic so right
now we're building on ethereum so I
wonder is it Bitcoin or is it some that
mimics digital gold is it ethereum or is
it some other thing that has the same
kind of properties but better adoption
you know I don't know and I don't care
is the answer like you because you'll
move as you see it happening yeah I'm
ignostic too you know just because I
think that eth has the superior benefits
because you're building on eth and we at
real vision of building our nft
community on eth now whether you use
polygon in the middle or not don't
really matter but you know I see people
doing it on salana okay that's
interesting there's not a lot of people
doing it on some chains and Bitcoin
nobody's doing it on at all because you
can't cuz no smart contracts at scale
but Bitcoin has this other value
proposition that's cool too but um yeah
I'm I'm agnostic but you know our game I
want to manifest My Future Self my game
is to back the right horse which is what
you're exactly doing with your Bitcoin
bets you're saying you know what this
probably adds to my real estate and the
businesses that I'm building and will
help me deliver to myself my promises
now what do you think about what
Zuckerberg is doing with meta do you
think that's just insane the amount of
cash flow that he's pouring into it or
do you have a different take he didn't
have a
choice human interaction is going into
the
metaverse what that means to different
people is different things but it's
going to be a more immersive 3D like
experience doesn't have to be VR could
be ar could be even just more 3D render
browser rendering kind of stuff that
ability to interact with humans in this
new very digital age I mean this is a
very 2D experience for
us and if there was a way that was a
little more 3D and we can have people
gathered around us listening in the same
room and we could see their faces um or
their pfps okay feels more
human even though it sounds nonhuman
it's actually more humanistic
I think he realized
that that you are going to adapt or die
so he has to go through the S curve
moment and take the big bet I think
he'll pull it off what does that mean
because people again immediately jump to
this dystopian Black Mirror Mark
Zuckerberg owns this whole metaverse
world it's not you know you and I will
have probably calls like this maybe in
his version of the metaverse or another
one and it it's like you use one email
server I use another I don't know what
you use I don't really care you you
might use Gmail and I use Outlook you
know it's we will just use whatever is
suitable and they will make tools that
are going to work really well for large
corporations people at scale people in
third world countries that don't get
access and so I think the probability of
success for him is is high and I think
the market is mispricing that
probability because what they've done is
taken cash flow out now to invest in the
future later
and the investors like I don't know if
this is going to work Amazon went
through the same when they did AWS
everyone's like what the [ __ ] are you
doing you're doing Cloud Server when you
you're a
retailer and they're like not really you
know we think there's a big opportunity
and they were right so um Apple's doing
the same bet with ar we just don't see
it yet but they've been plowing money
into it and Google have been doing this
forever with AI you know they've all
played they're all taking a different
path for this exponential Aid
and placing their bets at scale um
because if not they're out of the game
yeah I agree with that what what'll be
very interesting to see is given
sentiment given going back to what you
said at the beginning of the episode
that you've never seen a sentiment like
this and seeing how negative people are
on crypto when FTX blew up I was like oh
my God like this is really like
sentiment was already bad but this is
really G to get people just screaming
that this is all a scam and all that and
I was like okay as a builder I just keep
coming back to my thesis on what the
technology allows me to do and every
time I look at that I'm like part of me
is excited that so few people believe in
it because I'm just going to keep going
keep building and as long as we can
cross the chasm because you need to find
ways to invite people into that world
and if they're like you so averse to it
that you can't even get them to look at
you you have a problem I think that will
be short term measured in call it three
to five years but long term I agree that
I think that this is where people are
going it is the most logical outcome
knowing what I know about humans and
what the technology is going to be able
to do and watching Mark navigate this
will be really interesting because he's
getting pummeled by Wall Street they
don't like what he's doing he's lost a
tremendous amount of value but he has
voting control so it's a question of is
he gonna stay that course and keep
building and is somebody building in
that same space I am so grateful for
what he's doing and I don't other people
in the space I mean I suppose it's what
you're saying about they're worried
about a black mirror version of the
world where you know some big there a
really noticeable thing and I see it
because I was the macro guy who was
always looking for the downside because
I just make money out of it and I
changed my my my thesis based on what I
was seeing in technology and all of
these things and this is probably the
solution and what I got back was a
response that I did not expect which was
anger h
not debate not yeah I'm not sure if
you're right anger and it took me by
surprise and I realized that change is
happening too
fast and it's happening too fast for the
investors in Facebook they can't assess
it so they either turn they you either
do what we're doing which is like we're
just going to embrace it we're just
going to move forwards let's see where
this crazy journey goes and others look
back and go I want those white picket
fences and my Mustang with 18 lit
Mustang and I want
that because I can't deal with this they
are angry because their American
dream again it's the psychology of human
self has been
shattered they're still saying my future
is lies ahead but so if remember we
talked about at the peak and at the
bottom humans overe extrapolate
with emotion I'm now totally Bast on now
I'm the richest man in the world and so
this societal change is doing the same
thing and people just think this is the
end of the society that they understood
the American dream that they were given
and they don't want anything to do with
it and the rest of us are going actually
maybe that's a new exciting place and I
could both make money out of it and
enjoy it and go along for the ride and
see that and that is played out in
Twitter all day every day but it's it's
an amazing emotional
anger that I think is based on around a
mentality of a fixed Pie versus a
growing pie an infinite p and those of
us who have started to look forward and
now firm Believers in the pie is
probably infinite depending how you
address it yeah talk to me more about
that I have a guess that this is going
to go back to what you're were saying
about Robotics and Ai and that you're
getting more energy or more GDP out of
uh each kilog or I forget the exact way
that you said it okay so let me let me
go through this the fix versus the the
growth mentality the fixed mentality is
if you dare use another source of energy
you're going to rob us of the fossil
fuel jobs and stuff that we
have and that is bad as opposed to oh
well if it evolves we can probably get
more
energy than we you per Kil we can get
more kogs out of a unit of energy if we
don't use fossil fuels that's probably
net big for society because you could
build more stuff and do more stuff with
it the fixed mindset is no you can't
replace fossil fuel with solar it
doesn't work the equation doesn't work
and I'm like you don't have to replace
it all we can have both but if it's not
such a large part and we can create
cheaper or more efficient energy
elsewhere net net the P grows is it I
mean the central banks don't like like
to see their P changing and their pie is
well there crypto it's a whole new
system of money so no no no no our pie
was this you can't just come in with
this new pie and we have it's exactly
what's happened yeah 2022 feels like the
rate of change has really accelerated
and I've started telling people hey
plant the flag in your mind 2022 was the
year that AI became really usable in
like a day-to-day person's life have you
seen the interview I did with Ed MC no
on real Vision tell me more oh my God
it's probably the best interview I've
ever
done um he's an old mate of mine he was
a global macro investor subscriber hedge
fund manager macro
guy he had done some other stuff and
he's been on real Vision a few times and
his old guys I saw him on Twitter
talking about AI so I'm like what the
[ __ ] are you up to come and talk to me
on real vision and then he releases he'
been private what he was doing and he's
just built stability diffusion and
stability AI which is the large and
Source open AI project in the entire
world because I've seen some of the uses
of that it's crazy so he compressed
every image that ever
existed on the internet down to a 2
gigabyte file
what and he's doing it with music he's
doing it with video he's doing it the
written word
so open AI is one of them Google has got
their other version Deep Mind and his is
the open source version which is
terrifying because it means it's
Unstoppable but it's it's mindblowing so
you've got to watch the interview
because like you I kind of thought I had
a handle on how fast this is moving my
whole
interview mad e m a d mustac m o St t a
qu e he said Brit hedge fund manager not
the guy you'd imagine is going to do
this he's just raised his first hundred
million
round he's only been going for two years
Tom wow he built his own
supercomputer he wasn't the richest dude
in the world he was just an ordinary
guy in two
years and even Sergey Brin and everybody
went to his launch and everyone's Jaws
to the floor saying holy [ __ ] this has
just changed
everything yeah so obviously I follow
what people are using Ai and Med 4 we've
actually started using it here at impact
Theory to amazing results and I've
started seeing people showing oh we're
using stable diffusion here's what we
got but I didn't even know what stable
diffusion was I didn't know I knew it
was AI but that's all I know about it
and the results are astonishing and as a
creative What it lets you do dude when I
think back even 10 years let alone 20
years bro when I was in film school we
edited on steenbeck it was a gigantic
metal contraption that you cut like with
uh basically scissors and taped it back
together like I'm not that old so the
fact that we've come that far to now
seeing people do stuff with stable
diffusion and turn literally instantly
turn like a person moving into an
animated cartoon it's
unbelievable so as a creative I love it
point about the ren two years old Tom
he's like we barely started and what he
did the cck trick that he did that the
others didn't do the others all went
this is too powerful of Technology we're
not going to give it out to everybody so
we'll give bits of it out like
gpt3 and he's like it's too fat powerful
of Technology not to give it to
everybody so then You' got 10,000 people
building already on top of what he's
built so it's just going to be like a
virus now it's just going to explode wow
and now to think through that one is we
are this is what I've been begging on
Twitter we are in urgent need for
digital ID blockchain driven digital ID
because this interview can be done with
by AI just inest all of your interviews
all of my interviews and say hey get Tom
and R to talk about societal collapse or
whatever it is right I've already did
you hear the Rogan and St jobs interview
I mean look it's obviously early days
but how well they captured the vocality
especially of Rogan where when he would
be like trailing off the AI would Trail
off now my only beef with AI in its
current Inception is that they always
feel like they're about to make a point
but they never quite make the point but
I mean if that's where we're at now
where are we going to be in 20 years
it'll be insane
insane and so think of societal stress
when you don't know a single thing what
is true and what is not right and that
is not happening in five years time or
10 years time that's happening next year
you know GPT 4 comes out next year and
gpt3 is so powerful anyway I hate to
think what GPT 4 is
like so nothing we read nothing we watch
nothing we
hear is verified from it source of Truth
any longer so we so urgently need a
system of authentication so anything
that appears with you will have the
token that I can scan or do whatever
check in my browser to know yes this is
authentic Tom or this is AI Tom and
maybe you've got your own AI Tom and
that's okay but you need to know what's
authentic Tom and what's AI Tom in two
years time we're going to break Society
unless we do this because we need to go
through the elections in the United
States with
AI dude so this to your point the other
day Lisa came over my wife and I was
showing her my Tik Tok feed and I was
like hey do you think this guy's
attractive and she's like yeah and I he
was probably like 25 something like that
and I said ould you believe me if I said
that he was 35 years old and she's
looking closely and she's like I guess
and I said would you believe me if I
said that's not a human that's Ai and
she was like what she had no idea she's
looking right at him trying to like
judge his age and had no idea he's not
real and this was a video man it wasn't
even a still it was a video of him
speaking and she didn't realize that it
was AI I was like oh my God like this is
yeah to your point we're going to need
something to authenticate and also it's
just as again somebody that builds a
media company the thought of being able
to create characters where I can like
give them backstory motivation all that
and then another character backstory
motivation all that and then put them
together and they will react in a way
that surprises me now it's like you can
get into creating these very rich
surprising experiences yeah but you know
where that leads to right you give a
character of backstory and it lives now
of course it right now we're not at the
point where it's conscious but it lives
enough that it writes its own story yeah
and all the characters write those
stories where does that story go we
don't know we've already seen that
Microsoft AI that they tried to put on
Twitter and it became a Nazi within a
week and they were like oh dear we need
to stop so it's just
it's it's fascinating right so what
you're creating now literally could have
a life of its own yeah I mean look as a
writer that's always the fantasy now do
I want them to become conscious beings I
don't know about that but for them to be
able to surprise me that would be I mean
that dude what if they get their own
followers they don't have to be
conscious they just have to be
Ai and they have their own followers and
they start developing a political
opinion based on their interaction with
followers and before you know it they're
they've now got a million followers
they're more powerful than Tom and
they're now trying to influence
elections yeah it's crazy it's crazy I
mean so I think sounds crazy but it's
it's gonna happen right it will you'll
be able to put guard rails in and so
this is where now of course some people
aren't going to and they're going to
have ai That Goes Bananas 100% there's
no doubt and there are going to be some
people that like that they're AI so it's
not even like oh well people know it's
Ai and they will ignore them no they
won't so for sure there's no doubt but
to the double-edged side of that sword
as a creative somebody thinking about
making immersive worlds it it I I am now
completely in your Camp I've never
thought about it as a Renaissance but
you're absolutely right before this all
the counter Peg explodes it's gonna be
pretty amazing so here's another thing
for you is my strong belief is that Elon
Musk did not buy Twitter because he
wants to own social media
once you see AI you cannot unsee it once
you see the robots you cannot unsee them
so he has built cars with self-driving
AI right and it's still obviously
developing but it's developing fast he
then is developing the Optimus robot yet
again everyone's saying it's never going
to happen of course it's going to happen
things this guy have to do before people
go wow he's really capable of pulling
things off and even if he doesn't do it
somebody else
will so what is the next step right your
character that you're building your
characters right how even
personality the biggest way of having a
robot that can make you tea or do
whatever or you send to Mars and it can
be building up civilization in
Mars is by feeding it
Twitter because you've got all of
humanity losing its mind loving hating
scamming all of Humanity's there and
then the next thing he says is what I'd
love to do is add video well because Tik
Tok has been doing this they've been
scraping the AI for the Chinese state so
it appears for facial recognition and
human understanding and AI tools and the
other thing he talked about was I'd love
to get long form content we like all of
those things video long form content
short form what he gets is all elements
of
humanity to train AI
from I'd pay if you were the richest man
in the world world and you're building
Ai and you're building robots and you're
building all this stuff would you pay 44
billion for the largest proprietary data
pool in the world should you want it if
you know how to monetize it for sure
well and I think he's he's gonna go even
farther than that he's I mean this is
one of those when people tell you what
they're doing it's probably best to
believe them especially when they have a
track record like that he's I'm going to
create the ultimate payment platform I'm
going to make the WeChat of the West and
if he can pull that off it becomes so
much bigger than what it's been thus far
it would be very interesting to watch
this happen and also the um the other
thing is that
he has just fired got rid of about 90%
of the staff yeah people don't realize I
can see people saying well well Twitter
won't be here tomorrow it's not like
Twitter is people pedling behind the
scenes it's technology it actually
doesn't need the humans to run it on a
day-to-day basis apart from to fix a few
bugs but it's not like it bugs every day
so he gets to rebuild it to hear more
about Ray Delio's warning on the
upcoming recession which we're almost
certainly already in watch the full
episode here talk to me about the three
forces that you see that are influencing
this moment we've got Banks collapsing
US dollars under attack uh looming
recession what