Kind: captions
Language: en
so we've gotten over our skis on debt uh
the FED is going to try to print their
way out of this all that does is create
inflation they try to break the back of
inflation with high interest rates but
so many people got themselves into debt
in the good times on variable interest
rates or that they bought a they bought
long on something like a bond where it
devalues uh based on what happens with
the interest rates so is the interest
rates go up either people just can't
make their interest rates payments or
the debt that they were holding goes
down in value okay so you've got this
moment where a lot of people are about
to lose money and a lot of people are
going to be very uneasy and you've got
the the political divide that's
continuing to escalate escalate we saw
the last uh election cycle here in the
US where people stormed the capital it
was a very sort of unnerving moment and
now it's like well things weren't nearly
as bad then as they are coming into the
2024 election so I start thinking okay
what what is the safe move and if I'm
honest
Ry I start looking
at where do I live so is there a move to
be made within the us or I start
thinking do I become a more globally
mobile citizen is there uh something
that I should be thinking about there
I've got a lot of my money in cash and
then one thing that we didn't talk about
which we probably should you you
mentioned the word hard money and so
hard money
um I'll give my lay person's definition
and then if any of this is inaccurate
please let me know but uh hard money
being something that has intrinsic value
so uh gold precious metals become
something that I start thinking more
seriously about now I'm a what I'll call
a digital native so I think about uh
Bitcoin is something on my radar I know
that you're maybe not a fan um but
anyway that's how I'm thinking about the
world I'm trying to be cash I'm not
trying to be in anything long I'm I have
Ray doio I have zero leverage I don't
play with leverage even when the money
was free I would basically I didn't take
on any leverage because that's the one
thing that scares me um so safety safety
safety is how I'm thinking about things
now I don't exactly know how to
diversify well but that becomes another
part of how I look at this and you've
got the all- weather strategy um that I
know you've tried to articulate for
people so safety first if I had to to
sum up my stance everything you said is
beautiful and very similar to the way I
think and I'm I'll add a couple of
things to it but when we think about
safety we have to think about that as
purchasing power because a lot of people
think if I put my money into a treasury
bill I get safety well Al look at
whether that's giving you a return
that's compensating for inflation so I
just wanted to tweak what you said
that's that's very important tweak and
now you're getting into where I feel uh
undereducated so how do we then think
through that before I go there I want to
say um and also take here's the other
advice and and maybe we're all wrong
maybe there's nothing to worry
about okay so how do I deal with that
like I like what this guy diio is saying
is very crazy and it and and you know
who knows he whether he's right or wrong
and you know he's been wrong in the past
and who knows if it's right and I okay
and
simultaneously so okay that's the
exactly what you said is the way pretty
much I look at it that you said and if I
was to paint the world I painted the
world the way I did okay and I have
those questions and then beyond that I
say um you as an individual should think
about the Total Safety including maybe
that terrible scenario doesn't happen
Okay that's what I'd like you to do
that's what I'd like you to do and if
you do that you will come to a better
balanced better balanced position I want
you to get
balance okay I want you to do certain
things I want you to have
enough um savings whatever you know that
okay to have security to build the first
level of I think investing and S
investing which is the same as savings
comes in
tiers tier one tier two tier two three
on risk and the first
tier
is if everything goes
wrong I'm
okay and everything could be inflation
def depression anything whatever it is I
lose my job I I I you know whatever it
is I got that thing covered then your
next level is okay what am I going to
get the highest Returns what is my best
bet
okay but but start at that level and
then you said the other thing TR
too that it's it's not just the
investment it's where am I am I in the
middle of a
fight like I don't want to be in the
middle of a fight okay what's it going
to be like so it it does have Geographic
implications you know I don't know maybe
it's the state or the the state you go
to or the city you go to or the country
you go to or whatever it is you know
like um and there are certain things you
can do to say this one's going to be
better than that one um let me give you
an example of that there are three
things you could do on based on these
three
influences are you going to be in a
place and and around people in
circumstances that are financially
strong in other words they they income
better is the are they earning more than
their spending and they have a good uh
balance sheet because that means
stability if you can go through that and
you have
stability places that are like that are
better off number two do they have
internal
conflict um Country Place and is you
know and is it a hospitable environment
for
me okay that's the
second and then third are they in the
risk of an international
War um like I don't want to be where the
fighting is I really
don't um you know and I want to be safe
and stable and so on so this is a time
for looking for such things
yeah okay uh while deeply unnerving I
think incredibly important to think
through that let's talk about
diversification doing that well you talk
about uncorrelated
assets and I don't know how much you
talk about this publicly but I'd love to
understand it seemed like the for for
people that that don't know your
background uh you have a a meteoric rise
you're in your 30s on top of the world
unbelievable success you make a huge bet
on something to your point earlier about
have the humility to know that you may
be wrong you made a huge bet on a
collapse um and it didn't play out and
it ended up that the market went up and
you lost a lot of money uh almost lose
Bridgewater manag to keep it together
you come up with a new strategy that I
believe is known as pure Alpha uh it
ends up getting tested multiple times in
the market and you guys Crush when other
people
struggle which leads you to be for
people that don't know the largest hedge
fund we made we made money in 28 of the
last 32 years we uh um uh never had a
really bad
year um you know we made um I think it
was uh during my time there uh running
it um
11.8% a year with no with the worst year
being I think it was down I don't I
don't know 10 or 12% sort of thing and
and that and the next worth year Le like
down
1% and um um and we did that
by um simultaneously looking for
opportunities and looking for good
returning assets that were not
correlated
diversification of good you know and
just as you point out what happened was
um and by the way those returns are not
correlated with the stock market or
whatever so they were fend stock market
bond market they're uncorrelated so they
were effect effective diversifiers in
portfolios which almost all go up and
down together this would verification
and so it was loved by investors
institutional investors and so on and
the thing and as you point out what I
learned from uh you know basically this
punch in the face
mistake okay this painful
mistake um is I learned how to make good
money without
having big loss I knew I learned how to
improve my return relative to my risk
and I learned that the Holy Grail of
investing is 10 or 15 good uncorrelated
return streams I okay you get that and
you will I don't know have a similar
path to the path I've been fortunate
enough to have and so that's what I want
to pass along to people you know like uh
you go into the coid year the one year
that I that we lost I don't know it's 10
to 13% or something was 2022 because
coid came
along I didn't have coid in our system
we had other things that so that was it
and um and so um there's uh you know
something comes along all the time for
for anything there everything has its
time and so you put your money in any
one thing you know you could think okay
movie theaters are good and then you get
Co or you cruise lines are good and then
you get Co and you know oh whatever it
is is good well it's good sometimes but
there's always something that always is
going to mess up the one thing so you
don't want like in my opinion you don't
want more than 10% of your money and
anything and you want you know probably
you don't want more than seven and a
half percent of your money in anything
and they want to be good different
things and that's the message I'm trying
to convey right now one of the things
that has me um the most unnerved is the
attack on the dollar uh so you've got
the brics Nations uh for people that
haven't heard that acronym before Brazil
Russia India China and South Africa uh
are getting together and I know this has
been going on for quite some time so I
don't know if I should be overly
paranoid about that in this moment or
not but again going back to those
indicators that point to a transition
from phase five to phase six um do you
think there's
anything that we can prepare for as we
look at the big cycle as we see this
particular moment with the assault on
the dollar is is there anything in the
big cycle that can educate us on how to
deal with this moment just all happens
over and over the decline of the British
pound as a reserve
currency and before that the decline of
the Dutch Gilder as as a reserve
currency all happened for the same
reasons uh which is um you know two
things are going on first of all they're
holding all of this dollars and the
stuff that we talked about is going on
and then also there's the weaponization
through
sanctions of uh the uh dollar um in
other words um the United States's
greatest weapon to use as distinct from
its military weapon is is sanctions and
so sanctions means you freeze other
assets you freeze assets those assets
are the bonds and um
so um that happened with Russia and
there are threats of it with other
countries China and so on and there's
kind of the thinking well if I hold the
bonds can I uh be can that happen to
me and and then why am I
transacting in this other third currency
rather than transacting directly so for
example uh the United
States uh share of World Trade has
declined and China's share of World
Trade has increased to become
greater and um so um if two countries
are
trading let's say Saudi Arabia is
trading with um
China um why do they buy B why why do
they go to the dollars in order to do
that um you know uh no good reason to go
to the dollars and you know they don't
then they're worried about holding the
dollars because they might get
sanctioned and so you see more of those
transactions taking place in other
currencies and then the usefulness of
the dollar as a storeold of wealth
changes it's like think about it in um
you know the the most fundamental way um
everybody wants uh a medium of exchange
and a storeold of wealth so in other
words if if everybody's
using the dollar in World Trade then you
want to save in dollars because you say
okay now that's the thing I spend in and
I and I save in the
dollars um but over time as the share of
World Trade goes
down why aren't they denominating in who
like China has a larger share of World
Trade
traditionally the countries that have
the world's Reserve currency have the
largest share of World Trade and the
largest share of world Capital flows and
because the United States has declined
and also there's a worry about that um
holding it because of sanctions I mean
just imagine how the Chinese must feel
about having a lot of money in treasury
bonds you know like I would be worried
that I would like be treated like Russia
would be treated I'm it's not something
I would want to hold uh as you know a
safe asset and and other countries like
who might feel that they can get
sanctioned and for all those
reasons um they're less inclined to
hold um and when we when we call dollars
what we're really calling is dollar debt
because you don't hold you hold dollar
debt and that's a pro what is a debt
it's a promise to Rel receive
currency so okay so now getting out of
those things and transacting in other
currencies seems to be the safer thing
to do for those countries and so that's
the dynamic that's taking place so it's
it's um it's not an attack on the dollar
it's like I don't want to hold those
things and um so very similar to on the
British pound you know what happened is
the
British had the war and they were the
most powerful empire ever in the world
and they had World War II and they came
out of World War to uh financially in
debt a lot of
debt and who hold the who held the debt
all these countries held the debt
because that was the residual from them
but they had a problem they had a debt
problem and so they needed to print more
money because it was too much of a
squeeze and then you had so it
deteriorated and then they you know they
sort of said please hold my debt please
hold my DBT they went to Common wealth
countries the part of those that were in
the former British Empire and then you
had the Suez Canal incident where um
there's sort of a a war and everybody
realizes well hey wait a second that
British Empire ain't the British Empire
and they're heavily in debt and then
they say I don't want to own that debt
and there went the British
pound so that's just how the Mechanics
Work
okay so looking at the US and um I don't
want to be cheeky and say speaking
directly to uh the you know the US
government but if I were to be so bold
so if this is that predictable moment
where okay there are actions that we can
take as a country that will either um
help us keep um the world Reserve
currency status and there are actions
that we can take that will cause us to
lose that status more quickly it seems
like okay uh you've got the brics
Nations they are moving away from the
dollar it seems like that has already
that card has already been played I
don't know if you think there's anything
that we can do to to make that easier um
but certainly speaking to printing so
one thing that I've I've heard recently
and this is a really fascinating concept
that when you have other nations that
are holding your currency holding debt
as you said uh they're not like hoarding
cash but they're they're holding a lot
of debt if we print money what we're
essentially doing is um externalizing
inflation so we are uh causing a
devaluation of that debt for all the
countries that hold us now we're in a
moment with Rising interest rates that's
causing us to need to print uh but
creating this really weird difficult
moment where as we print then we have a
a need to raise interest rates but the
reason we're having to print is because
we're raising interest rates so it's
it's a very difficult moment um but if
if we could going back to your idea it's
how we are with each other if we could
get people to come together in the
middle would one of the things we would
want to convince the US government to do
is to be very cautious about devaluing
the dollar is is that an important idea
it's more basic than that and it's um
more simple but it's also more difficult
um what the reason Cycles exist is that
the next stage has been determined by
what has already happened in the prior
stage
so we are in debt a
lot you you can't change that we got a
lot of
debt and if you say what could you do I
mean two things come to in mind what you
could do is you could be financially
strong and you can not
use um Financial sanctions as a weapon
to scare the holders of those bonds but
to be financially
strong requires you to not spend more
than you
earn that means you either have to cut
your spending or raise your
earnings okay that's okay that ain't
easy okay okay so are we going to cut
our
spending um uh o um okay now you look at
it what are you g to uh infrastructure
programs I don't know poverty transfers
defense spending okay what what are we
going to cut um the
world
governments have the same basic
economics as um people except for the
fact that they could take money from one
person and Sh give it to another and
they can print
money that's it and so when you look at
this um okay you have that Gap you can
eliminate the Gap by taking money from
some and eliminating another and not
spending
much okay okay that's not easy right
okay okay what do you going to the most
governments now uh don't think how much
money do I have to spend and then how do
I prioritize
that they
think I need to spend on this I need to
spend on that and I need to spend on
that and they spend on it and then they
either produce a they produce a
deficit and then you either have to pay
it back with hard money or printed money
and that's situation so when you say
what could we do well you've got to get
financially strong in a politically
fragmented environment in which
everybody wants
more and you and you have to um you know
like
be a higher percentage of World Trade so
that everybody wants to use your
currency and um be um and not threaten
the holders of that bonds with freezing
their assets it is uh it's a tall order
in this moment um I it has become so
clear to me in the last month since you
and I uh saw each other how important
the reason that you keep coming back to
it all comes down to how people treat
each other so in this moment um I don't
want to be a Debbie Downer but it does
feel like the die is cast a little bit I
don't see how we pull ourselves back
from the precipice because to your point
about being um fiscally responsible like
we'd have to get into a position where
we're making more than we spend I want
to circle around to something as you
were talking you mentioned
infrastructure and it got me thinking
about okay what are things that uh we
would need to go right so I think
everybody is aware and I've heard you
say that there there are changes that
are going to need to be made to
capitalism in order to bring back a
thriving middle class and the importance
of the thriving middle class and you've
defined the things you know again
staying to the theme of principles here
of uh the three things that we need to
do to be strong as a country or for any
country to be strong uh and you said two
parents in the home uh great public educ
education and then equal
opportunity where where do you see us on
those are we moving in the right
direction moving in the wrong direction
well again uh you know maybe I Aspire
too much to two parents in the home um
it's certainly better if you have two
loving parents raising a family that's
that's good but maybe that's too much to
ask for um but in other words good
Parental Guidance you know okay you're
raised well you're educated well you can
go to a public school that educates you
well and you have good guidance so
you're well raised in a healthy
environment and not only do you learn um
you know skills and and all that but you
learn how to behave well to with each
other so you learn
Civility and
um and um so you come out capable and
civil um to a land of opportunity
in which you can you know work and and
and have a good
environment um and really that's all you
need if a society does that right um and
I think you know where we you know the
things that are going on you know um
education in a lot of public
education is um a it's deteriorating
it's a real problem um my wife works to
help um the poorest school districts the
poorest people uh in the state of
Connecticut um and uh the state of
Connecticut is usually it's always one
two or three in terms of the highest per
capita income you can reboot your life
your health even your career anything
you want all you need is discipline I
can teach you that tactics that I
learned while growing a billion dooll
business that will allow you to see your
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programs in Impact Theory University
join the thousands of students who have
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today um and in the state of Connecticut
uh as of last survey 22% of the high
school students have either dropped out
of high school whoa or or have uh
absentee rates which are greater than
25% in our failing
classes so at they're
living
in po they're living in areas that don't
have the things I'm talking about about
parents nutrition and so on um and
there's not adequate resources for them
for example during
coid um we um we found that 60,000
students didn't have uh computers or
connectivities to take
classes and the government wasn't going
to provide it so philanthropically we we
bought 60,000 computers and give to the
kids and but we can't you know we can't
do the you know so our
society is um when you look at this um
you see
um drugs drug
problems um you
see how the cities are
changing
um you know the cleanliness of the
Cities the education levels of the
Cities mental
illness um crimes and so on um you're
not
seeing you know
you seen people fighting with each other
a
lot um not all the time there are
wonderful places in the United
States you
know education some of the best
universities their pockets some of the
that you know their neighborhoods but
there is this encroaching so you see
infrastructure breaking
down
um school shootings
you know like okay so you decide how are
we
doing I think we're doing pretty badly
um it I I don't
know look it's not going to be a popular
thing but I think going back to what you
were saying about the parents and maybe
asking for two people is too much look I
get it I think everybody's doing their
best and and God knows for any single
parents out there you have my love and
respect that it just seems Seems like a
hard job when there's two of you let
alone one so I'm not I'm not throwing
shade but in terms of cultural momentum
when I look at people not uh not getting
married before they have kids uh
incentives that end up leading people to
where it's actually more economically
advantageous to have a child when you're
single uh does not strike me as a great
idea uh and trying to reverse that Trend
I think is going to be really important
really putting a ton of time and energy
into making sure that we're we are
looking at ourselves on a global stage
from an educational standpoint and
understanding that we are competing
against I mean just to really make it
Stark we're competing against China now
I have employees that grew up in China I
actually have some contractors that are
in China currently and when I see the
the discrepancy of what demands the
educational system places on them when
they're young versus the demands that we
place on our our students when they're
young it creates a ripple effect as they
get into the workforce in terms of just
the the expectations that they have of
themselves the drive uh the desire to
excel um so these strike me as as really
really problematic things I'd love to
talk to you about Singapore so as we're
talking and I haven't studied Singapore
very closely but when I think about um
you know how they've created something
that seems really amazing very recently
and and sort of borne up out of
nothing is it though three principles uh
two parents in the home quality
education equal opportunity I mean is
that it or is there something else earn
more than you know earn more than you
spend be well educated to help you earn
more that you send be civil with each
other be
productive um you know when you come out
equal opportunity and and um it's not
just um like in Singapore uh but it's
true in other countries there's a level
Bel below which nobody should go
certainly children should not go right
how can you have an environment that
children there so there should be basics
of
housing um Health
Care um certain
Basics uh because otherwise you build a
cycle you you know I mean when they
become when the children become
adults you might say oh it's up to them
to do it but if you mess up the children
early they become the adults who can't
do it and so you have this
cycle you know in which you have to take
care of people you know you walk around
and look at it you can see the gaps the
opportunity gaps you can see the mental
illness gaps you know walk down the
street and you know downtown Manhattan
or lots of places and see the gaps okay
and some that adult who
is screaming uh you know and homeless
and whatever came from a place a reason
you know that was that made him that way
and um you know so I it's like the you
know why isn't the
computer given to the kid who doesn't
have a computer so he can have learning
think about how difficult it is for the
for the kid who doesn't have learning
and they have one parent and that parent
might have in a poverty and might have
drug problems and all that I mean the
kid can't make it so the kid's going to
come up to be an adult okay what kind of
an adult it's going to be a
problem so I know that a lot of people
are going to say okay well raise taxes
we'll have money for all of that um that
doesn't seem to be how things work but
I'm open to being wrong about that
there's a book coming out I'm very
interested to read called taxes have
consequences which I don't think people
think a lot about but it is entirely
possible that I'm wrong so if we look at
someone like Singapore do they just have
really high tax rates and they
distribute it in a way that make sense
what they did was
um they required
savings they require
it require savings an
employee um I think an I think it works
like this um employee gives um 12% of
their incomes and employer gives 22% uh
10% of their income so they saved um um
something like 22% of their income is in
savings okay they do other things too
they have a tax balance but they have a
savings um and as a society they earn
more than they
spend okay so and then um on housing for
example they have um a public housing
that um is uh
subsidized that the person can take
their
savings uh with to use to buy that
public housing that is a s saving
through that saving so um everybody has
good housing good public housing um and
they own it so if it goes up in BR value
they can sell it and and so they have
that so the housing creates a good
environment they put a lot of money into
education equal
education it's not people there uh don't
have to go to a private school to get
good
education they so they have good
education and they so and then they have
uh the people who work hard and are
civil with each
other and and that's how it works and it
forget about
Singapore if you look through
history um these are these are basic
fundamental things so and so wherever
they've happened in
history um uh they've worked and you can
go
back through all history if you uh you
know these Basics earn more than
you than you has been um you know be
well
educated uh be civil um be
productive um you know those types of
things that uh those fundamentals
work what is it about the human
personality that makes it so common that
people don't deploy those things it's so
interesting to me because I found that
when people get richer the societies get
richer they typically get in more
debt which seems backwards like um so
for example I I watched uh the first
time it happened when the United States
started borrowing money from J from
China uh the United States had income
that was 4 per capita income 40 times
those from China and they're borrowing
money from China so I wonder like how
does that really
happen and there's um when you don't
have much money and you're in a stage of
life
where uh you you know you value money
you want to
save so there's a psychological thing
you don't have much money you get some
money and you want to save it and to
save it means you have to lend it to
somebody
then what happens is ironically when
everybody
earns more money and it's easy to
borrow people will get in in debt or
Society will get in debt or the
government will get in debt and also
then there become very big wealth
gaps
and people basically are interested in
taking care of their
themselves and so
um you don't have you have a fight over
taxes or something and so you have a
society that
borrows just even think the political
system
cycle people pay if you're um a new
politician and you run a state or you
run let's say a state
and it's before an
election it's in your interest to borrow
and
spend because nobody pays any attention
to the borrowing where the money comes
from they pay attention to the spending
so give them
stuff you know um go spend give them
stuff have a party it's like having a
party on
debt
and there's this
shortsightedness it's like the you know
raising kids they call it the
marshmallow test you know uh you know
you ask a kid in an early uh early early
age I can give you one marshmallow now
or I can give you two marshmallows in 15
minutes which would you
prefer and um okay the smart one says um
I can refer my gratification for 15
minutes and get two
marshmallows um we have a lot of society
who wants the mar it now so is it um
enjoyable to take your money and spend
it
on better
infrastructure um or let's take the
education system the education system
according to the Constitution is a state
decision so it's not federal not mostly
Federal money then you come down to um
the state and it's mostly a tax District
if you're in this neighborhood through
property taxes and so on you will get
the money to educate your children in
that tax District so naturally um richer
tax districts will have better money and
so like I'm in um Greenwich Connecticut
and um last numbers I looked I'm sure
they're higher than this now but it was
not that long ago is in Greenwich
Connecticut it was uh $24,000 per
student in um uh Bridgeport Connecticut
which is like 10 minutes up the road
it's $114,000 per student
whoa and they need more
money because they're they're
poor so if you just take it's not just
education how do you clothe the kid how
do you feed the kid how do you give them
the computer that doesn't come through
the school and all that they need more
not less
budget so those are the mechanics of it
first you have to go to
bipartisanship um like if I was
President I would have a bipartisan
cabinet and then if I was dealing with
the economic problems I'd get smart
people from the right and smart people
from the left who want to make this
thing work and I'd put them into like a
Manhattan project kind of thing in other
words put them into uh six months in
which they have to agree on a
system that's going to
work tie them together and force them to
agree and come out with that and have
them gain control over the extremists
who are going to
fight like I don't really care exactly
how it works just as long as you know
like if smart people from both sides can
get together and make it
work and then you come back to these
Basics you know okay how do you spend
more earn more money than you spend how
do you educate your children well
whether or not you know and deal with
those project problems that way to in a
together
way um you'll get the best outcome if
you don't do that you won't get the best
outcome yeah I think this is this is
really brilliant inflation is one thing
I want to really touch on so what do you
do in an inflationary environment as
somebody who's not I don't consider
myself a Savvy investor and so I always
wanted I used to joke with my money
manager I want to be as close to my
money buried in the backyard as possible
and uh obviously for inflation reasons I
have since learned that that is a
terrible strategy um but what do you
do well first thing is you realize that
uh holding cash and dead assets is a bad
thing so a lot of um
money uh
is in cash because people think that
cash is the safest
investment but they are measuring that
in the amount of money that they get
nominal returns and they say it doesn't
wiggle much but think about it um it's
lost as of the most recent statistics 8
and a half% over the last um inflation
is 8 and a half% and they received
virtually no interest tra in cash and so
there was an 8 and half% loss of buying
power as a result of
inflation and so psychology should
change and is in the process of changing
to realize that you have to think in
terms of buying power not the number of
dollars you have and you have to think
um how much uh are your is your buying
power and so the worst thing is to be
cash like I say cash is trash and to be
into and to be out of of the bonds um
the next thing is to have a diversified
portfolio of assets um the
diversification um means um some assets
that are um uh inflation hedge prone for
example you're better off to own an
inflation index Bond than a regular Bond
um what makes something an inflation
index like what what are the nature is
that going to be gold and precious
metals tangible things like what are the
things that are resistant to
inflation um yes and inflation index
bonds because their returns are tied to
inflation
interesting I don't I don't understand
that well enough to know what how one
would do that is that worth going into I
don't know what the punchline is going
to be yeah um I think the punchline is
if you take a look at it uh it's it's
simple it's uh like a regular Bond
except um its payments are linked to the
inflation so they compensate you for
inflation so the is this a Government
Bond yeah Government Bond okay and there
are some tax advantages to them too so
look into them okay why don't people
just flood into that well I'm I think
it's it's one type of asset the flooding
into any one thing is a is an issue but
the but moving from the nominal Bonds in
which the government just says I'll give
you this amount of money and it has the
unbel UN unbelievable and unlimited
ability to print the money it gives you
um it would favor inflation index bonds
um and it can be other assets uh you
know some people would say something in
terms of cryptocurrencies or might be um
uh th those other assets um I think
what's your take on crypto so crypto is
a huge part of my portfolio I think
you'd be mortified to see uh just how
much so but yeah what are your thoughts
on crypto um I
think I think that too much PE people
pay too much attention to one uh at at
the extreme of the other you know um
that either somebody is all
crypto um or they're all gold or they're
all something and I uh I believe that
that's a challenge I think that um
crypto like gold is not a productivity
earning asset and it can be controlled
by governments uh in lots of ways it's
been outlawed in a number of places and
it also can be monitored the Privacy um
element is not not uh secure from
governments doing monitoring and and so
um and the size of crypto is about the
size of um Microsoft you know it's all
crypto combined and so to um be overly
concentrated in it in my opinion is a
mistake um but to have some of it uh is
a good is a good thing so the question
is always uh what amount of it so that's
um you know I have a little bit about it
I'd probably shock you about how little
I have you chock me about how much how
much you have uh but having some of it
um so the um and other things I would
say is that geographic location is
important in other words not just all in
us and US dollar assets um I would say
that the three things that that again
I'm looking at if I go down countries is
first um are they earning more than
they're spending do they have a good
income statement in balance sheet this
is going to be very important in the
period ahead ahead because the amount of
credit that's going to be available to
bridge the gap between spending and
earning uh cash flows and so on is going
to be quite narrower so a lot of
companies even that were were able to
raise cash um and not have good cash
flow because of maybe growth
expectations in the future we'll find it
more difficult that'll be true for
individuals it'll be true for um
countries so is it does it have a good
income statement and balance sheet will
be important the second is um places how
are they working with each other is
there civil civility or is there Civil
War on the brink of Civil War because
countries where they work well together
they're productive are going to have a
real competitive Advantage orderly
places safe places to be um are what are
countries on the rise in that so
obviously I I'm shocked to say this out
loud but the US would be in a bad place
in terms of that um what are places that
have great stability
there well um
there are Parts in the United States
that are wor better than Parts other
parts of the United States meaning like
local government bonds or something like
that well I'm I'm out talking about the
uh like where you want to be and then
that'll be but yes the it could be bonds
it could be places I'm talking now the
places the um uh for example we just had
the shooting in New York
City um on the subway
and and New York City is becoming more
dangerous Chicago is becoming more
dangerous places Chic San Francisco is
becoming more dangerous um you're seeing
people leave some places for other
places um you're seeing them leave I
don't know to Texas Texas is Austin or
uh to Florida and so on so there are
differences in um in within the United
States and differences from the United
States me people need to think about
picking up and moving and actually going
and being in a different place yeah and
those are also the better places
economically because when when um people
do leave and they do that uh those who
leave um are higher income and higher
taxpayers and as a result there's more
of a hollowing out that takes place in
that so which creates an economic
problem as well as you know a lifestyle
problem so I think you're going to
greater differentiation in places which
affects where you want to be and where
people um who can afford to be there
Wann to be and also affects what their
economies and markets are like and
that's so then the United States um so
um yeah and the third element is um so
um are they financially strong in other
words income more than expenses and good
balance sheet are they civil with each
other other so they're working together
rather than hurting each other and
number three is are they um um in a
position where they're likely to be in a
war or are they likely to be out of a
war um you know you don't want to be in
a war so and those places investing wise
history is shown um do worse because
they have to spend more money there's
more uh problems more pain that's being
exchanged neutral countries in Wars uh
do very well as it turns out uh so
elements of diversification so it's a
long-winded answer to your question but
I would not want to be in debt or cash
and and those instruments I would want
to diversify well with a bias toward uh
inflation protected assets and I would
want to uh diversify between location
countries um in terms of the investment
based on the criteria I've just
mentioned okay that all makes sense now
you've said that competing in the
markets is harder than competing in the
Olympics uh which I found funny and
distressing all at the same time you
said that you guys at Bridgewater spend
hundreds of millions of dollars on
Research alone and that somebody like me
is going to have to compete with that so
what's the advice for the average person
that isn't going to be doing that and
how often should people be reassessing I
feel like in a turbulent environment
should I be looking at this like every
week like how often and do you like if
you were managing your personal account
without
computers at least with the the you know
sort of hyper auto trading um how often
are you looking at it and how do you
avoid trying to compete against the best
of the best of the best I I think that
you have to understand what a good
strategic asset alloc ation mix is that
is how to create a good well Diversified
portfolio assuming that you don't know
how to make these buy and sell decisions
BEC uh because what happens is think of
it it's it's it's like a poker game and
you're playing against others and those
others are putting in most lose most
most buy at the highs and sell at the
lows most behave emotionally most don't
have the same
information it so it's it's a very
difficult game like I say you know you
wouldn't think I'm going to go try to
compete in the Olympics but more people
think that they can compete in the
markets they think I think the markets
are going to go up or down and the track
records there are terrible for most
people okay because of those handicaps
relative to others um so for that reason
you start off with a well Diversified
balanced portfolio because
diversification can reduce your risk
without reducing your
return if you understand how to get
equally attractive
Investments that are not correlated with
each other that diversify each other you
can build a diversified P portfolio it
would take too long for me to explain
you know how to do that right now but uh
that becomes the headline um and um I um
um I described it um in my book um uh
principles for life and work um also uh
Tony Robbins described it and uh he
asked me about it and and then described
it in um his book I forgot the name of
it money Master the game okay and and he
describes it pretty well and for the
that I'm you know I direct you there um
I'm going to be writing a book um I'm in
the process of doing it about economic
and investment principles and then I'll
describe it more completely but right
now that's the best I can do in this
interview no for sure that that already
is really helpful let's talk about um
day trading for lack of a better word so
I think about this a lot because I'm I'm
in the world of nfts as a Creator far
more than as somebody who's buying them
and as I look at web 3 the reason I
don't treat it as an investment I don't
think of nfts as an invest class even
though people are treating it like that
they're treating it like a hedge against
inflation some people treating it like a
get-rich quick scheme it's that same
idea that the vast majority of the money
is being made by I think less than 5% of
the wallets and so 95% of people are
getting beaten to death while 5% of
people make all the money and it feels
like that's a similar idea to how
somebody like myself who I know enough
to like get moving to do the research
and things like that but I don't want
want to be in there trying to day trade
so is this in some ways you you
definitely want to be thoughtful about
your mix diversifying making sure you're
going for uncorrelated asset classes uh
following the guidance that you just
gave us but is there also an element of
don't try to time the market it's time
in the market and so get my Diversified
portfolio set and forget or do I need to
be in there like constantly re-upping
rebalancing that kind of
thing um it's a little bit like um you
can start off with and I and I think
this is most important what's your
strategic asset allocation
mix and then it's like going to the
poker table and then you say what is my
angle where's my e where do I get to
take money away from others because I'm
better at it okay but you start
everybody should start with a balanced
portfolio Okay most everybody they have
careers to do and and and I think
they're arrogant they think they can go
in there and they can take money away
maybe some can but if you're going to
play that game um the first thing is um
also test your decision
rules um don't just go in and then you
say I'm G to wing it and and and and do
it and um because you won't even have
enough sample size in your decision
rules to know whether you're good at it
or bad at it what after the first five
times you're going to pronounce how you
are it's a learning experience just like
any other learning experience to develop
your expertise what I find is really
important is to take my decision rules
and test how they would have performed
in the past to at least give me my some
perspective of what might I might expect
in the future but you have to think
through a game plan and operate that way
so I buy and llarge would say first the
um the most important things you could
do are actually the simplest thing you
could do to build that strategic asset
allocation mix not to be out in there
day trading your life's Fortune
away that makes sense to me I want to go
back to the idea
of we've got the Cycles it's so far
every Global Reserve currency ever has
collapsed and been replaced and so it
would certainly be huous to think that
the US's time as uh that Reserve
currency is going to last forever but in
your video you showed a guy like holding
up the the falling line and and trying
to Forstall that effect and hopefully
you know carry it out longer or at least
make it a more gentle tapering out um
what can we be doing to Forstall some of
the internal conflict um how do we get
there's I know there's a lot of momentum
going that stops people from making more
than they spend at the government govern
level um but are there techniques like
if if I could convince you to run for
office and you got elected um what would
you do to Forstall that
inevitability well again there's those
who control the system and what should
be done and then there's what the
individuals should do to assuming that
they can control the system so your
question really is I view it and terms
of those two parts um what's necessary
is um you have to earn more than you
spend as a society and so we look at our
country as a whole um and so you have to
get financially sound this is what
people talk about with austerity right
well or
productivity in one way or
another you have it's the same thing so
productivity would be make more money so
keep spending what you're spending but
make more money that's right
okay um
and that that
opportunity has got to
be uh as much equal
opportunity across the
population
because um if it is for the averages may
be very
misleading um and if if most people are
not benefiting or have that
opportunity it is something that is um
suboptimal for the development of the
country because you don't know where the
talent comes from what's the lever we
pull to do that though well let me get
it out and then I'll get to the Le to
how I would do it okay but I'm just
saying okay what you have to do is two
basic things you've got to be um you've
got to be financially strong so you've
got to get you have to be productive so
that your income um is greater than your
expenditures and you've got to be good
with each
other you work well together you're not
destructive with each other if and
compromise if you do those two things
like you're good with each other and
you're you know so you're productive and
you're financially sound you've got to
do those things now under those things
there are a number of things you have to
end you have to
educate your population well they have
to learn how to be civil with each other
you have to provide a A system that
produces that allows productivity to be
good blah blah blah but to answer your
question and really get to the punchline
because that's what I need to do you
need to create a system that both
increases the size of the pi and divides
it well okay and most importantly
divides opportunity well not just the
output well but opportunity but also uh
the wealth well so you have to increase
the size of the pine divid well um and
the way that I would uh do that is I
would start by having a bipartisan
cabinet uh and bring together smart
moderates people who can work on both
sides because I think that the first
thing is that the P polarity is going to
kill us I I think we're going to fight
before we're going to resolve smartly
what we should do so I would want to
have a bipartisan cabinet and I would
also want to have um um a program that's
like a m Manhattan Project in which I
take the smartest from both sides and
work um to engineer a program that is
like that so that when they come out
with the program there's the moderate
left and the moderate right in a sense
who are who who are agreeing because uh
we each have our own ways of doing this
thing you know and but what what we'll
do is we'll kill each other over which
exact way we do it and I think that to
have a common uh
bipartisan program that is Raising
productivity and redistributes
opportunity and wealth well is the most
fundamentally important thing so I would
have that bipartisan cabinet and then I
would have those moderates have to deal
with the extremists on their part um
their parties because I believe that
more than likely it's going to be the
extremists who are going to um destroy
the system threaten the system um
because they won't be able to compromise
the fight will be so bad and the answers
do not lie in the
extremism
yep I would agree with that very much um
so if you were to guess what were what
are going to be some of the elements to
create that are going to come out of
that Manhattan Project like if you had
to throw some of your own ideas in the
ring uh I'm sure you've thought through
this it it you know it's it's it's kind
of like very easy you could see what
happens before um education and
infrastructure are two areas that are
fabulous in terms of um being great
Investments and not are not treated in
as great Investments I um my wife
particularly and me um peripherally uh
work in the state of educ in uh
Connecticut for education I going to
give you a picture um uh Connecticut is
usually per average per capita income
number one two or three in the country
and in
Connecticut um in high high school
students
22% of the high school students are
disengaged which means that they have an
absentee rate of greater than 25% in
their failing classes whoa
and uh or dis disconnected means they've
dropped out of school and they don't
know where they are so one in five
students more than one in five students
um education system is failing they will
be on the streets they will be not doing
good things on the on the streets they
are likely to be incarcerated there are
um gangs and gun shootings and so on and
um uh that all must end okay that all
must end that there have to be um um
there's a level of bottom to which uh
you can't let the society uh go and um
we found through uh largely h efforts
and so on um that for um $7 to $9,000
per student we could get them through
high school and into jobs and then they
become productive what is it about that
money how how do you allocate that to
break that
cycle um there are things that you can
do uh at certain points in their life
particularly between eth and ninth grade
um that you can um help them uh make
that transition and
understand how they're doing and then
work with providing supports to make
them successful some cases putting them
in a direction where there's they go
into trade
programs
um so that they'll be prepared for jobs
and so on but there are my main point is
um that's only just one example as I see
what we're operating a lot
philanthropically in different areas and
we see so many cost benefit benit um to
uh creating um improvements in great
Investments um that would have a big
effect but it starts with real education
and because you have to have an educated
population and a civility it's a very
difficult thing when the children are
raised children are raised where um you
know it's quite often a single parent in
a slum where there's drug where there's
gun guns where there's gangs who are you
going to relate to what what is your
best likelihood of an income it's
through drug dealing and it's with gangs
that's your community and so on that
cycle has got to be broken um and I'm
only giving that as as one example but
there are so many um coste effective
ways of putting in money uh
infrastructure like um to not have um
laptops and
connectivity um is uh today the
equivalent of not having uh running
water and
electricity um or the telephone and we
see it with education uh we were again
in Connecticut we found uh 60,000
students didn't have computers how are
they going to get educated so we we got
them the computers but uh and the
society that would allow that something
wrong and then connectivity so certain
basic infrastructure I mean there there
are a lot of good
Investments that are not necessarily
they don't necessarily come from um uh
the business profit seeking World profit
is uh a good but highly imperfect way of
allocating resources because in some
cases something you know building a road
may not be profitable uh but it might uh
when the United States built roads and
it built
railroads and so on it uh dramatically
increased productivity so there's
infrastructure and changes that um that
have to be made and there's great
advances on these things great advances
on how to educate um using um computer
technology that also not only helps the
student learn but it also helps the
computer learn about the student and how
they think so there's a lot of potential
think about it this way the world is
richer today we we we have more per
capita income we have more
um uh technology and knowhow um it it it
just has to be redeployed in a way where
it maximizes the efficiency and the and
essentially the equ equiv uh equality of
opportunity so that uh we pull together
and but now that's a dream you know uh
is it a likelihood it's not a likelihood
okay because people in these Cycles go
to fight and and and you know they're
focused uh more on um them winning yeah
I want to I want to put a point on that
so as you were talking about it I was
like okay how do we end up here how do
we get people out of this there's a
couple things that I see so as a kid of
the 80s um loving America was cool and
like it was just natural all my friends
loved America and recently I had a
friend who was like oh I went on
vacation and I put up an American flag
outside my door and I was like I
guarantee that's going to get ripped
down he was like oh yeah it's already
been ripped down and I was like that's
crazy like we live in LA like this is a
major American city and for that to be
considered offensive so anyway I think
about these kids so I don't know how
much you know about my obsession and why
I work as much as I do I worked in the
inner cities I worked with these kids
that you were talking about like up
close you get to know them you love them
you want them to succeed you want them
to do well so you start asking a basic
question they're really smart not
universally it's normal distribution but
you've got some really smart people in
the inner cities just being destroyed by
their zip code so I'm like okay wait how
did we end up here like what would they
have to do know whatever and for me I
came down to a lot of this is mindset
like they they've been told the world
doesn't want you to succeed so they
don't even try which if you believe that
the world is just stacked against you
and that it's impossible then of course
why would you try so I was like okay
we've got to get the right ideas in
their head so that they will take the
right actions to learn and get educated
now I didn't get deep enough to you know
learn about how many people don't have
computers and connectivity and all that
that's just stressing but when I think
about why because you said in a society
like ours something is wrong if you're
allowing that to happen and my answer to
that is you've got the civility quotient
of in some cases I just don't want to
see the other side have their way so if
the right answer comes from the wrong
side then I'm gonna fight against it if
I'm the other side then you've got we
can agree that the country is worth
loving so even just saying like hey
we've got to put aside our differences
because we're all Americans and let's
make sure that we are elevating all
Americans it's like nope like I can't
rally behind the flag I can't get behind
this idea and so now all these people
are stuck in this Purgatory of nobody's
looking at metrics to say hey we are
trying things is it actually working and
if the metrics aren't improving then we
have to change the policy but that's not
happening because of all the fighting
but I do think that it's partly because
you have that we can't even agree to
Rally around the country does that
strike you as a without patriotism I
don't know is patriotism a Force for
good evil how do you see
that I think good
produces the good type of
patriotism I so I went through the same
cycle and I'll talk about metric
too um the reason I put metrics in there
is um and I'm every six months or 12
months I'm going to update the metrics
so that everybody could look at those
objective numbers and see are we
improving or we deteriorating and I
think if the politicians the people in
government were held accountable for
those numbers so that you can
objectively see is education is the
wealth Gap Rising is there um greater
productivity these are measurable things
you can then see there and and and
they're not just measurable about
outcomes they're measurable about health
you know if you have a better healthy
income statement balance sheet you are
healthier and financially and so on so
those metrics will put out but um yeah
no I saw the cycle um United States
World Order began in 1945 I was born in
1949 and I benefited from it and I and
it was um not just an American
perspective that American dream it was a
world dream it was the only country in
the world where there was really a sense
of equal opportunity I was very lucky I
had two parents who who cared for me
they loved me took uh gave me good
guidance I went to a public uh all
public schools um and I came out to a
world of equal opportunity that's all I
needed okay that's all almost everybody
should get why should couldn't everybody
get that and it was a place where
anybody from all over the world could
come and you were not um you could be a
citizen and it was the only place in the
world where you could really be a part
of that and not considered an outsider
so all that immigration brought the best
talent and we operated in a place where
there was rule of law and everybody
respected the law there were property
protections and you could make a life
that was U the type of life that you've
had the type of life that I've had where
we're free free to free to speak free to
um do those things to have opportunity
and and so and free to free to invent
free to do what you're doing and I'm
doing and that is the American dream and
that was a beacon for people all around
the world that was what the United
States was and so on and that is good
that is good okay now we have something
different and we have a dynamic which is
going on because we all Abus that
because we had to spend so much money
because we became decadent in terms of
overspending on some things and
undertaking care of other things and so
on and now there's a fight and that that
becomes that Dynamic so yes if we could
recreate the realization of of what that
was what the is the American dream what
is fair how does that work
and rekindle then then that has a
tremendous power in being able to bring
that back but the dynamic of History
shows that it's more likely that it goes
the other way but yes if we rekindle
that the idea of Heroes you know we
don't have any Heroes uh why don't we
have any Heroes because we're tearing
people down heroes are Role Models
people who we admire there are many
people I admire you know and I've seen
in my lifetime you you know we should
see more of those Role Models as as as
examples of how to be but we yes we're
missing that we've become a decadent L
Le a decadent Society that's at each
other's throats and we're in trouble
when I read principles it was really
life-changing for me uh it was before
you and I had ever done an interview
because what I liked about the book is
exactly what you're talking about right
now this idea of a bipartisan cabinet so
in my own company I not looking for
people to agree with me I'm looking for
people that will challenge my ideas I'm
looking for disconfirming evidence I
want to get the smartest people that I
can possibly attract to what we're doing
and saying okay we need to disagree with
each other well so that we can identify
the right answer to your earlier Point
you're going to be wrong so often that
if you go into something thinking I'm
infallable uh I'm going to have all the
right answers you're just headed towards
disaster so my question is how do we set
up a situation where people can disagree
well what what is that
structure I think it starts with
worry I I got a principle if you if you
worry you don't have to worry and if you
don't worry you need to worry
because if you worry you'll take care of
the things that you're worrying about to
the best possible way if you don't worry
and you just go headlong into these
things you're going to have a real
problem so I think um that you have to
have uh people first realize what does
that picture look like if we don't do
these things if we don't if we don't
have
bipartisan if we don't solve these
problems together if we fight you know
you have to see the clarity of those two
paths and have people choose the good
path you know okay we will figure this
out in tell ently to make the best
possible thing to intelligently and
together okay it starts
there it's not a structure where does
the structure come from it comes from
people okay and comes from people having
a need to create a structure and a way
of
being so how do we get people to worry
well maybe what we're doing I mean I
think they have to worry at two levels
first enough of us worry
that we uh vote for it or you know we
use our voting and our others to say
let's vote on together and compromise
and smart people doing these kinds of
things um or and that that's worrying
about the society as a
whole and then there's worrying of as an
individual if they don't do those things
how do I take care of self those are the
two types of worries or two types of
impacts you can have right so I think
they need to think of both of those for
people that aren't familiar with Lincoln
um how much have you looked into him his
idea of a Team of Rivals sounds like
very similar to what you're saying about
having a bipartisan cabinet um is he
somebody that you've looked at or I I
know that I I know a bit about Lincoln I
wouldn't call myself an expert and I
know that about him and yeah and I think
that's really really great yeah so when
uh whether it's at Bridgewater or
elsewhere how do you
facilitate people um disagreeing well
because let's say that you have an
intern going against your Chief
investment officer like how would you do
you take that person seriously they have
little to no experience how do you set
that up so that you don't waste time
time but at the same time you get the
best ideas first of all um you explain
to people and you understand
yourself uh how important thoughtful
disagreement is so you remove it you
minimize it from being um something that
people view as a fight and get upset
about you have to change the attitude
about
disagreement so that um you know if
you're in
disagreement um then one of you is
probably wrong how do you know the wrong
person isn't
you and then also you still have to
resolve the disagreement in some way and
so you have to have in place first of
all you know an understanding and an
intellectualization of that so you don't
get
emotionally carried away and thinking
because I disagree that's equivalent to
a fight okay so you have to change that
psychology and then once you do that
then you have to have protocols in place
for doing that now you know uh in in my
book you know uh principles life at work
and the work part of principles I've
outlined those things those techniques
that can be done um repeatedly um how so
you have to have a system for that and
you know and so let let let me make it
very simple examples of that if you and
I are disagreeing and we sort of want to
try to get it the truth uh things that
you can do is to mutually agree on a
mediator so it um okay you you could
step out of your argument and say okay
this isn't working um how should we do
this disagreement and maybe like let's
mutually agree on a mediator like we
both agree that that person you know
something somebody we can trust into to
through okay that's a good step then as
you're doing that carrying that through
you can also uh say are you taking in
the other person's thinking and replying
to that or are you just
blocking and there are techniques that
you can do to do to demonstrate you've
taken it
in okay uh like repeat the other's point
and so on and then reply to the other's
point and then do certain things like
not interrupt or in other words I have a
rule call the two-minute
rule somebody says okay uh can you give
me the two-minute rule that means for
the next two minutes I can speak un
interruptedly so there are techniques
that you can use to First understand
that it's not a big fight that there's
protocols okay then how do you do that
in a
hierarchy okay there are different ways
you can do that in a hierarchy but
anyway there are many of them and you
know we're not going to have the time to
go through them but they're outlined in
um you know um my book principles life
and work the in the work principles part
of
it yeah that's something that we found
really effective here is uh Rules of
Engagement is how we refer to it so
whether it's the two-minute rule or
something else um but ultimately getting
people to understand I'm saying this in
in the context of somebody who's trying
to figure out how we get uh we know that
the the big cycle has a high degree of
predictability and I'm willing to accept
that maybe the US can't Remain the um
the reserve currency forever maybe we're
not going to be the dominant world
superpower forever but that I want to
handle that transition out as well as
possible and usually Phase 5 to six ends
with literal Bloodshed and things have
to get so painful before people can
correct course and so trying to give
people a framework I know you're saying
that maybe I'm I'm looking at the
structure too much but I I think in
framework so what's that rubric by which
people can go into whether it's the 2024
election uh whether I think right now
we're still in gridlock with the budget
or the debt ceiling or whatever it is um
giving people ways to navigate through
this well and so my thing is everything
begins with the goal so what's your goal
and even just getting um any group to
agree on what the goal is now once we
know what the goal is then we can start
saying okay what people or ideas are
most likely to get us there how do you
stress test an idea how do you know I
just want to emphasize though uh as
you're doing that the people have got to
agree how they want to be with each
other
first before there's a structure I mean
I can we can have structure I can create
St
structure and we could do all sorts of
things we can have a bipartisan cabinet
we can have the um
uh
the um going off for six months and
doing the project and we can do all
there's lots of things we can do but you
first have to change the mindset of
going from a I want to win at all
cost to wanting that so all I'm saying
is when you say I want the structure and
I'm a structure guy I'm I want the
structure and I'm a structure guy too
but it takes people people wanting
something and so what is the goal like
you say the goal you start with the goal
okay that we are not going to fight with
each other in a dysfunctional
way
okay that we will work together to
overcome our
differences that we will be good with
each other okay if you put those things
there and then judge those things and
you sort of then say how are we going to
do that okay okay then you do to B and
structure whatever you know bipartisan
cabinet blah blah blah blah all that
other stuff then you can come around to
it but you have
to if you're in a I will fight at all
cost
Mode Nothing the structure of the
Constitution is not going to work I I'll
give you my hypothesis on the only way
to pull that off and let me know if you
see another option Lord knows I hope
there is one
uh I've thought a lot about how you sway
people into doing something that is more
advantageous I'm usually thinking about
it for them so just what's more
advantageous for them and it all
ultimately comes down to you have a a
leader or a group of people for whom
you're trying to earn the respect of and
by earning their respect you do the
right things so I'll sum it up at at the
national level we would need a leader
that can actually bring the two sides
together somebody who has a very clear
Vision you've you've grimaced for
anybody that's just listening to this uh
Ray Delia just grimaced hard all right
so uh explain the Grimace Ray it's like
wishing for the tooth fairy or something
I I
mean it's like um not going to root
cause of why you don't have the that
leader okay and if you look at
history
um this is one of the great challenges
of a democracy and when it gets into
everybody fighting for their own cause
with pet um
populism they you know and so you know
musini comes to power to make the trains
run on time because it's badly managed
and so on so somebody says give me the
dictator give me the dict dictator and
then I will and and I will want that
dictator so that's what we're um okay so
how do you get that
leader okay it it increasingly I'm just
deal with the
mechanics so I'm um so how do you get
the
leader and what do you do with the
opposition okay it's almost
like um well you you have this fighting
of the various types
and do you accept
losing and then does the opposition
remain
and undermine everything you're trying
to
do so it's almost like it gets to mob
rule that's why the dictators come to
power okay and so that's just history
and that's
all understandable if not desirable it's
still understandable that that's the
mechanics so to wish and
say okay we need a strong leader who
will get control and make everything go
all right sounds a little bit like
wishing for the tooth fairy that that is
how dictators come to power that is very
much the scenario I would want to
categorically avoid so do you see that
just as that is an inevitability because
right now Ray to your own point we are
not being good with each other from what
I can see there there is uh certainly a
broadcast signal and maybe this is a
distortion of social media but I don't
think so certainly not given the
elections of recent there was a
broadcast of a signal of massive
division in a moment of massive division
you get people fighting in a moment
where people fighting there is a win or
take all scenario that's the path to
dictatorship so while my path may be
wishing for the Tooth Fairy to want
somebody who's inspiring that can unite
people um I'll ask it pointedly do you
just see it as an inevitability that we
head towards dictatorship when you say
um have a leader that way you're not
dealing with the
mechanistic
determinance to say how do you get a
society that is split splitting apart
and operating in the way that I describe
to have a leader that leads and people
follow properly okay you're skipping
over that you can't skip over that do
you see a path though other than because
the natural way that this plays out the
only path I can see is the one that I'm
referring to if you worry about the
alternative okay and I'm okay if you
worry look at that what is it
you must not have it if the more people
worry about that then the more
likelihood you won't have that in other
words if you want to tilt the odds in
all the different ways I don't know take
out the ads have conversations like this
do whatever it is and say I worry of
what's going to happen so we must not
have that and we really must have this
other alternative I really want to buy
into that other alternative and you have
somebody arguing for that other
alternative like will you
follow um I'll tell you I'll tell you um
um the
prime Mario drogy and Italy let me just
tell you the story very quickly of Mario
dragy in
Italy Mario Drogi used to be U the head
of the European Central Bank which was
like being head of the Federal Reserve
for a number of years and he and I got
to know each other in that he completed
that and he's highly highly respected
he's Italian and Italian has um Italy
has crazy Anarchy like they've had an
average of one prime minister a year and
so chaotic and so bad that all the
political parties got together and
said we will be United under Mario drogy
we will let him lead we will turn it
over to him he said I will do that only
as long as all the political parties
remain
United because if they don't remain
United we're going to get into this
dysfunctional fighting and I know it's
not going to work so for a period of 18
months he um uh was prime minister of
Italy and and very loved people loved
him and then one of the political
parties um um uh uh dropped out because
they disagreed on his approach for I
think it was handling
Ukraine um and he said okay now I'm
resign signing even though everybody
wanted him to stay overwhelmingly but he
said I can't govern under that kind of a
fragmented
environment and you know in other words
he knew where it was going to go so so
he resigned and in the period um between
him
resigning and actually turning it over
to the new prime
minister um we had lunch
and um and we were talking about these
things and what what he was describing
and what
exists is the issue that we're talking
about the inability of a a leader to be
able to lead when there's so much
fragmentation and if you look at the
history of
democracies um and you go back to
Plato back Plato's Republic he wrote The
Plato you know a lot of people think
Americans invented democracy it existed
way back you know um in the Roman and
Greek times and all that um and so he
looked at the cycles and what he said
was there's the cycle of these different
systems one leads to another in this way
where what happens is the greatest risk
of democracy is an
anarchy because the fragments it it
becomes
uncontrolled they all have their
interests they fight and they tear the
thing apart and then so what happens
after that is then you get the
dictator and um you get ideally the
benevolent dictator in other words the
one who really knows how to make good
things happen and he cares about the
country he doesn't doesn't care about
his personal wealth and those kinds of
things and that and they create that and
okay to create order that comes about
that and then in that cycle after a
period of time you inevitably get the
incompetent or selfish
dictator and then you have a
revolution and then you go to a
democracy and so on and these things go
in cycles and so when you're asking the
question you know of the leader you know
you're saying okay let's create a
leader and um and and have them go lead
you can't ignore the fragmentation and
the
inability uh to lead in that set of
circumstances I agree with that but if
you even in your own example what you
had in Mario is somebody that is able to
Garner the respect of all the different
factions now I understand that It
ultimately broke apart but he is the
Tooth Fairy that I'm talking about you
need somebody that people can unite but
it didn't work because of the how the
people behaved with each other and it
won't
work
okay yeah okay so if if we know that
people aren't going to stay United for
long what you're saying is the
duration that people can stay United is
the duration that you can have that sort
of peace prosperity and the second that
you how long is that duration here I
let's let's look at the situation I mean
it doesn't exist let alone have a
duration to it yeah Ry you say very
troubling things in a very calm manner
which I think is probably the only way
to say them um all right so as I then
step back and I say okay the Cycles are
with the Cycles are you said something
earlier which I think is really
important that I want to reemphasize
what's happening now
is a determination from something that
happened earlier and so to some extent
you're in a better position to deal well
with the way things are the reality I've
heard you talk a lot about that the
reality is what the reality is you need
to be awake you need to be paying
attention to that reality and then you
need to base your plan of action based
on the truth of that circumstance to do
that though one thing I think is
incredibly important is people have to
be able to strip their emotions out of
this uh I know you're a huge proponent
of meditation are how do people get good
at removing emotion from the equation so
that they can see reality
accurately well meditation is a huge
benefit for that um so I really it it it
gives
one both a calmness and a
Clarity it gives one an ability almost
to go above everything and look down on
it and say okay here's how things
work and uh and and an acceptance of
reality it's like this Serenity Prayer
God give me the serenity to accept that
which I can't control give me the power
to control that which I can and give me
the wisdom to tell the difference and
you know just to be able to approach
things in an open-minded way like we
talk about uh you as the question about
um
disagreement how can I approach
disagreement do I emotionally get into a
fight about it or do I handle it well
meditation and those types of things
calming yourself down viewing everything
more like it's you know it's think of a
a reality as being like a game like a
chess
game okay
calmly okay this thing happens and
what's your next next move and how does
it
work okay very fascinating so if you
take a chess grandmas anybody that's
really proficient at chess and you put a
chess board in front of them they they
look at the board and they don't have to
analyze each individual piece they know
that pattern on the board very well they
know where you are in the game and so
that that's a chunk of information uh it
feels like a very similar approach to
the way that you're looking at financial
markets Global movement the big cycle in
that oh I can drop you into a scenario
you'd look at a few key pieces of
information you'd know where we are in
the cycle so I mean starting with the
three forces that we talked about at the
very beginning hey tell me where those
three forces are you expanded it to five
but tell me where we are with those five
forces that's the Chunk on the
chessboard that I need boom now I know
how to take that next move that's what I
want to try to give to people okay
that's why I have
the um animated video on YouTube that's
why I have the book because it's like
watching the same movie happen over and
over
again you can see it and you understand
the cause effect relations so you can
understand so when you ask questions
like um you know how do you get better
and then we dealt with the mechanics of
that like okay how do you get get
financially better off and how do you be
good with each other and not be
threatened I mean it's just if you look
at it that way and you understand the
mechanics it is what it is that's how
reality works and then how do you deal
with it makes a lot of sense okay so in
terms of chunking in terms of
understanding where we are in the
cycle um one thing that I'm thinking a
lot about is as we go into the 2024
election um I've heard credible people
say that they think China is going to
make a move on
Taiwan in the sort of chaos of the
division that we have here in the
current Global superpower um do you see
that as a logical move on the chessboard
for China is that something that seems
plausible to
you um I have um very good contact um so
I have close contacts of M both sides
and um and and so I'm just wanting to
say rather than just throwing out an
opinion I my opinion
is that
um there's a political situation in the
United States that that it's really the
issue of how much the United States
pushes the issue in
Taiwan uh that makes it uh risky because
uh
um there's a
um uh a move for uh of let's say Hawks
or um some uh to
[Music]
um
defend uh Taiwan or so let me just give
you the
facts if there is a I'm going to give
you a little history okay please
[Music]
um Taiwan was part of
China
um and around
1840 foreign powers came into
China and they wanted to trade and do
things with with China and China didn't
want to do that and so around that time
um they had the Opium Wars you may have
heard that in history in which um um the
Chinese at the time said I don't want to
trade you don't have anything that I
want and um then they brought in opium
that the Chinese wanted so that they
would have this trade and whatever and
then militarily won and took over large
parts of China took control of that and
in
um there was many foreign powers and in
1895 Japan takes uh
Taiwan um okay fast
forward um you go into uh World War II
and after World War II the winners of
the war get to divide up the world and
said who who gets what and Taiwan was
given back to China that's
1945 then they have a civil
war um oh as usual the left and the
right they fight each
other and so the capitalists get kicked
out by the communist and they go to
Taiwan and they control
Taiwan okay so everybody agrees um that
China is part of Taiwan is part of China
but they argue who who controls China
the ones in Taiwan say oh we control
China and the ones in Beijing say we
control China but everybody agrees with
that 50 years ago so it's a that's a big
issue in their mind because it's part of
China and it's been told to them that
it's part of China taiwan's part of
China and but it but they the
um capitalists uh which is called the
Guan dang they are living in in Taiwan
and and they're not controlling it so
Henry Kissinger um first makes the um
gets together goes to China and deals
with reunification and then Nixon
follows and um and there's this
argument and they reiterate
that um Taiwan is part of
China everybody agrees on that and that
there should be peaceful unification of
China and that goes on 50 years now and
brings it up up to where we are
today okay uh so a red line for China is
if the United
States um or
Taiwan says Taiwan should be an
independent dependent country that would
produce a
war and everybody knows that all those
in government would know that would
produce a
war um this is a big thing for them you
know in other words they call that
period of time a 100 Years of
humiliation it was taken it's promised
back and and whatever it's it's in in
their mind an indisputable
reality
um now we're in a situ ation in which um
the United States and particularly um
some uh congressmen who are more
haish um say uh what good chance they
will say uh we will militarily defend
Taiwan and then go on and sell them more
um military
equipment um
so it's very very close to saying I will
[Music]
um it's a separate
state so we're very very close to that
particular issue so what will come um I
don't believe China is going to
initiate a
move to to take control of CH of
Taiwan um
unless the United States crosses that
line pushes that
line now so the way that it is
understood and just by different part
parties um is it's understood by the
Chinese to be the way I describe it look
it's been promised it's here you know um
I mean don't no that's an
uncompromisable thing and
Americans um I think think
about um this
um communist dictatorial
bully that is trying to take a free
country a free
people and um in
a
[Music]
um you know um aggressive way take over
them and that we need to
defend
Liberty and protect them from
that okay um I just want to
emphasize um it's more complicated than
that in the way that I said and also
it's like um from uh the Chinese point
of view it's part of the American
containment strategy which means you
know China has grown and it's become a
higher percentage of world economy and
so on and it's
expanding and it's like Taiwan is the
lid on this
Boiling
Pot so that's my best description of
what the situation is so I wouldn't
expect I would say um if you want to
know what really happened s uh watch it
the way I describe it in other words is
it
unprovoked or is or is it provoked in
the way I just described it now again
I'm a very realistic person I'm not an
ideological person I'm not trying to
okay I'm just like how does the how does
reality work and what's the move in
what's next move and I'm just trying to
describe that reality I'm not taking a
side in it just like two sides in a
chess board and I'm just looking down at
the chess board and a war is a fight for
how the system works so we'll begin
there um after the fight of how the
system works it's a it's a great leveler
it gets rid of a lot of the debts um and
it starts over and then there's a new
power um in the United States the new
world order it was an American World
Order because the United States won
World War II it had 80% of the world's
gold gold was money it had the dominant
uh military power it had nuclear weapons
and because of that we began the
American World Order we literally got
people together in a room and said hey
we're going to be entering literally a
new order and they lay things out was in
Breton Woods if I'm not mistaken yeah so
I want people to understand like this is
people they get together and they
actually decide this stuff that's right
they carve up the world here the borders
this one this group gets this piece and
so on so forth and then they begin and
juring and and by the way this has
happened repeatedly throughout history
and so they start off with those new
rules of the game and you enter a period
of peace and prosperity and it's peace
because nobody wants to fight the
dominant power the dominant power won
and you don't want to fight the dominant
power and so you're exhausted I I mean
and this is one thing you're careful to
point out the book is like war is
horrendous and so part of what creates
that period of stability is just we've
seen so many people die there's so much
destruction of Life wealth which is why
you know the stakes are high when you're
talking about this that's right and
there's a change in Psychology really
that you're dealing with because quite
often these things take place they take
a generation or more to take place a
lifetime and the people who enter the
war do so so boldly but everybody who
enters the war and then goes through the
war wish they never went through the war
because it's so terrible but they come
out as you point out and then they're
the war is over they want peace they
want productivity and so on and then
they and it's a great leveler less
wealth gaps and so on and they work well
together and they build a period of
peace and prosperity that is a long
period of peace and prosperity but
during that peace and prosperity more
and more Prosperity takes place and they
increasingly bet on that prosperity and
people get more in debt and so you see
the debt levels rise and you see the um
naturally as Prosperity comes it comes
in uh unequal ways and some get richer
than others and so wealth gaps rise and
then those wealth gaps increasingly
create opportunity gaps because the rich
people have more resources to educate
their children and give them the
benefits and so that happens over a
period of time while the economy gets
more uh indebted and of course as time
progresses other countries um also rise
those maybe that even lost the war like
Germany and Japan they rebuild and they
become competitors and so what what was
a unique power having won the war
becomes less unique as there are more as
there was more competition and then you
get a new generation of uh people who
have a different mentality they get used
to those those benefits and so on and
they are um let's say less cautious less
cautious in their financial behavior and
so on and so the classic ingredient also
is that that country that wins the war
also has the world's Reserve currency
because okay you you need a currency to
transact internationally it's like a
language you need a language to transact
internationally and the winner of the
war gets the world's Reserve currency
because everybody thinks that's the most
stable and they also want to save in it
and so when you have a world I think
that's important to to Really double
click on there's two things here that I
want to go a little bit deeper so one of
the most profound things I've ever heard
you say and this really hit me is that
there's a reason this repeats over and
over and that reason is there's only so
many personality types and so people
just are the way they are and so if you
put them into these predictable
situations they're going to react in
predictable ways which makes this whole
cycle incredibly predictable you can go
back you know you did a detailed
analysis of the previous 500 years and
you just see this same thing happening
over and over because hey the money's
coming in it's the Roaring 20s but the
roaring 20s are going to lead to the 30
style depression basically every time
because people are overextending
themselves because they're they are
making the faulty prediction that if I
look back at the history of my life
because it has always been this way it's
always going to be this way not zooming
out and seeing no no no you're in a
bigger cycle that repeats over and over
and over and the reason I want to hammer
this home is since by the end of this
everybody watching I want you guys to
know what to do uh to prepare yourselves
for this is Ray's whole point is to make
sure that people are actually prepared
but you have to buy into the fact that
this is predictable otherwise you're
going to ignore the advice and so for me
recognizing that people just are a
certain way and that thusly given
similar circumstances they will react in
similar ways and so that was I think
really important for me to acknowledge
yes and and you could see it not just in
the cycle taking place over and over but
if you deal with the cause effect
relation ships they're logical so for
example if you have bad financial
conditions as measured by if you're
spending a lot more than you're earning
and you don't have a lot of savings you
have more debt or liabilities than
savings you're not in a good financial
position that's a
fact and if you have a
downturn if the country is a whole
experiences that problem and you have a
l large wealth Gap you are likely to
have a
fight I mean so these Cycles don't just
take place as Cycles they take place as
conditions that are measurable and so in
the book it was very important to me not
to just use words and theories of how
this thing works but to actually show
the measures what is the wealth Gap
what is the amount of debt what is the
amount of printing what are the
conflicts that are taking place because
then you can monitor those things you
can reboot your life your health even
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today yeah so this is where it starts to
get a little unnerving so okay you
recognize these are patterns they happen
all over history and they repeat and
then because you're plotting all of this
and you can look at these leading
indicators that you talk about pretty
extensively in the book there's 18 that
you go into detail a couple times you
break them down into ones that maybe are
more important than others but as you
Peg so if there's six stages to this Arc
um You' said that the US is in stage
five and to give everybody an idea stage
six is
basically revolution war it's the the
violent restructuring of the economy
and whether we're in the seventh ending
of stage five or the third ending I
don't know but the fact that we're in
stage five which is obviously where
there's massive internal conflict which
Rings way too true um and the massive
disparities which you did a really cool
graph in your video where you show
income inequality and that gap between
the lines you filled in with resentment
and so you have growing resentment you
get populace on the left and the right
you get internal conflict people
fighting and then you get a potential
external power looking at you going
they're weakened by their internal
conflict and that historically is when a
rising power makes its move yeah so I
think there are three things three big
forces to keep your eye on and when you
see them in their cycle then it's clear
first are you earning more than you are
spending and do you want people to look
at this at an individual level or at a
country level well you can at
both I want them to look at it as the
country but the country is nothing more
than the aggregate of the
people and so um when you look at those
three forces I want to make sure that
they're clear and you could align them
up and you could see where you are is
the country earning more than it's
spending and building savings or is it
spending more than it is earning and
creating debt because one man's debts
are another man's assets and when
somebody is holding those assets and
they're producing a lot more of that
money in debt they go down in value
money goes down in value as they produce
it to produce that buying power and then
that gets people um bad returns bad in
it produces a higher amount of inflation
and it produces bad returns for holding
debt or B so in other words cash or
bonds and then people get out of cash
and bonds and that produces Rising
interest rates while there's Rising
inflation and that produces stag flation
so I want them to get the mechanics of
that because that's happening now you
could see it this is not controversial
we are producing a lot of debt we're
spending a lot more than we're earning
and as a result they're printing a lot
of money and the printing of a lot of
money creates a lot of inflation and
with that inflation then nobody wants to
you know cash is trash you don't want to
hold cash um and you get out of that and
that causes rates to rise and that's one
of those three factors so you can see it
happening and you could also see the
cycle of it as shown in the book the
second force that is dealing with is the
internal conflict Force how you are with
each other are you operating cohesively
common Mission and moving in the right
direction the system working or or are
you at each other's throats um on is the
system threatened because history shown
when the causes that people are behind
are more important to them than the
system the system is in Jeopardy and
that is a risky situation it's a risky
situation because it produces or
disorder and it can produce a form of
Civil War and at those times when you
have that you see greater and greater
polarity in politics it shows up at
greater and greater populism of the left
and populism of the right and populists
uh want to fight for their side they're
not moderates moderates want to work
together to try to find a compromise
that's best for the whole populists um
appeal to their Crowd by saying I am
fighting for you and they will fight
each other and that fight be at the
threat of the system so in history for
example we saw four democracies in the
1930s choose to become dictatorships as
one side fights to the other because
they become so disorderly and we have a
system right now that you could see that
it is possible in elections that one
side neither side might accept losing
and so the system becomes in Jeopardy
and you see that the moderates leave the
system
they you can't be moderate you have to
pick a side and fight and so you see
this in the French Revolution there were
moderates in the early part of it that
recognizing that there were problems and
and wanting to work together the
moderates got guility the the the
polarity began the same was true in the
Russian Revolution the same was true in
the Chinese Revolution the Cuban
Revolution and so on those polarity gets
greater and greater as there's a greater
intensity to fight and that is the
internal piece and so you could see
where we are in that internal piece
right now we see um that uh moderates
are dropping out of uh choosing not to
run for
reelection and you're seeing in the
primary system that the fight is who's
over most extreme in representing that
and you're seeing this greater polarity
and you see it reflected in many
statistics the um something like 10 or
15 % I forgot if it's 10% of the
Democrats or if it's 10% of the
Republicans I don't remember versus f um
15% wish the members of the other party
would die they don't want them to
measure their uh they don't want them to
marry their uh children I mean there is
a great polarity and you're seeing that
um lead to changes in where people live
they're moving to different areas not
just because of tax reasons but because
of different in values and so that kind
of you can see it
today happening these things but you
also can see the Arc of them in the book
because that it measures statistics it
shows these things happening so when you
have a a financial problems and you have
this kind of polarity and you have a bad
time you have a lot of fighting
internally so imagine where we are in
the economic cycle we're in the part of
the economic cycle where they have given
the government has given a lot of money
and credit to people they've put put it
out well no surprise that's leading to a
lot of inflation okay inflation takes
buying power away from people and it
also means that then there's going to be
higher interest rates and that's going
to squeeze people and so that makes that
wealth Gap and that wealth issue uh more
difficult so th that's the second force
and the third force is the rise of a
great power the
geopolitical force that's going on that
we're seeing today with China and Russia
and so on and how that's changing
because when the country when the power
of a country diminishes okay when we get
weaker financially or how we are with
each other and so on there are greater
vulnerabilities and there's always the
competitive power that learns how how to
become stronger and competition always
happens there's the establishment and
then there's the new competition and as
they get stronger they get stronger in
all ways militarily and commercially and
so on and that's the dynamic that we're
seeing yeah so we've got Taiwan looming
in the the sort of political background
you said many times in the book that
that's a an indicator that you'd really
be looking at if there was a a fourth
skirmish over Taiwan that you would get
increasingly worried we definitely need
to talk about inflation in a minute
because I want to know what people
should be doing in that environment but
first like the and I don't know if
people are like me but the thing that
got me to stop and really start paying
attention to this was how far into stage
five we are that was the thing that
compelled me that I have to slow down I
really have to look at this because I
actually don't like thinking about money
despite my long-standing pursuit of
success that's really been about
something else for me money has been a
byproduct product of that um and that's
in the book and I don't know if your
number has changed but in the book you
say that you give a 30% chance of the US
falling into Civil War I think in the
next five to 10 years and that uh a
major conflict with China at 35% in the
next 10 years and you said look it's a
guess but you lay out a lot of data
before you say that it's just a guess so
it's obviously a very well-informed
guess one do those numbers roughly hold
for you still and if they do how do we
pump the brakes on
this um I I would say those numbers
probably are a little bit higher now I
would say I was afraid to say that
things are progressing a little bit
quicker um the do you mind ballparking
me if if we're not at 30 are we 31 are
we
40 yeah let's let's say
um let's say 35 to 40%
um on on each let's say and who and I'm
not I'm not being precise but the events
that happened in the
Ukraine um and that is is um bringing
all this development internationally up
um at a little bit quicker Pace it's the
same Dynamic there is there are two
sides and there'll be neutral countries
just like in the war there was the
allies and the Axis powers and there be
neutral countries and so that part is
developing um the US uh conflict part is
probably progressing a little bit
quicker um so I mean the let's say the
odds of that um on the on the youu um on
the world order um the developments in
the Ukraine maybe I should put those in
perspective would you like me to do that
pleas absolutely uh um okay
um there is a a very close
relationship a common objective of the
Russians and the Chinese so um there is
a
um a competition in the world and
there's a dominant world power which um
is perceived as being overly controlling
so the Chinese believe that the the
policy of
containment of the United States um in
other words just right within their
borders that there isn't a
region uh that's suitable for them um
much the same way as uh the United
States there's always a geographic
region that is an area of influence uh
the United States in the area uh like
the Cuban Missile Crisis um Cuba um when
there's a threatening power um in Cuba
we reacted to that those that kind of
geopolitics um they believe that the
United States is sort of containing them
and they are growing in power so that
there's that dynamic in Russia uh has
the same kind of view and so that
there's a common let's call it enemy uh
comp competitor and there are five types
of Wars uh there's a War there's a
technology War there's
a geopolitical influence War there is a
capital war and then there's a military
shooting War um and we are in the first
four of those
Wars um in uh in this
competition with China or with Russia
with
China well we're not in a shooting war
with
China we are in um a shooting war of
sorts in Russ with Russia and the
Ukraine we're providing arms and so
they're shooting and so there's a
military war going on and and we're in
it in our way so we're at those
particular uh spots um and the capital
War um is sanctions we hear the notion
of sanctions and what that means is
they're economic and the way they work
is to shut off um to produce economic
Pain by either
um not letting them get at their money
or um not letting them get to Goods that
they can import and these have happened
through time um in Japan that was what
set us up for uh the bombing of Pearl
Harbor because the United States
cut off Japan's oil supply was in the
process of doing that and also
confiscated its uh bonds much the same
way is happening now and that put them
into a corner that led them to um bomb
Pearl Harbor and then we went to a
military war so that's where we are now
and that also is risky because it
threatens the value of the dollar
because um the right right now debt is
dollars any currency the way you hold it
is you hold it in the form of debt you
don't hold it just in paper and um uh
because it there's a rising inflation
and because there's a lot of printing of
money and because there's also a greater
fear on a number of countries that they
too could be sanctioned there is a
selling of dollar denominated debt so
you're seeing that the bond market is
going down and interest started
escalating recently yeah that's right
and so there is that that Dynamic that's
going on the capital Wars um are the
ones that accelerate immediately before
um the uh the military Wars usually the
coffers are empty they're printing a lot
of money and then they're trying to use
uh econ ICS as a weapon so we're we're
in that part of the cycle now um in
terms of how this will
transpire I think there are um there are
three big questions that we're going to
learn about and get answers to pretty
quickly um the first is does uh Putin
and Russia uh win or lose um I'll
describe win as um what he wanted at the
outset which is when for Russia would be
to have um the Ukraine H um be some not
non-threatening position such as a
neutrality a guaranteed neutrality and
for Russia to have control over Eastern
provinces and for Russia not to be um
economically
devastated um instead to be maybe have
it something like 10 or 12% decline in
GDP and for Putin to be in power if
those four things
happen then the cost of his actions will
have been worth the uh what was obtained
from that and that would be viewed as a
win um it would be then also a loss from
the Western countries the world is
looking at the power of American
sanctions
um because American sanctions are the
greatest power the United States has if
it was a military power it the world has
uh come to the position that a number of
countries have had um an equal ability
to do harm to the United States
militarily as the United States was have
have to do to them and so we don't have
a dominant military power anymore but we
do
have a uh dominant um sanctions power so
if we're still ahead of
China um in the United States ability to
influ have economic sanctions is much
ahead because it controls the world's
Reserve currency that's a biggest asset
but in weaponizing the dollar um it is
leading those to get around and not want
to hold dollars because they get worried
that they're going to be
confiscated so so we will see if that
dollar um sanctions power we'll see how
powerful it is if it isn't very powerful
that's going to be a problem um because
others will perceive our weakness well
and they'll also realize then
um uh then you only have military power
I mean think about this way if this war
is not a difficult War for the United
States and Europe for the most important
it it produces higher oil prices in the
like but um while Russia is throwing in
military we are throwing in sanctions
and these sanctions don't cause LI cost
lives um it's not a military war uh so
we're fighting it with sanctions and
they're fighting it with um with
military if you didn't have that how
would you fight this
war it would be a much more difficult
situation and the third thing that we're
seeing is how the world is lining up the
world is lining up uh which you know
there are in Wars typically a axis and
ex uh and allied
powers and you could see by the actions
that are taken by as to which are lining
up um who voted in favor of what at the
United Nations who is allowing what
rules uh who is trading with the other
party who um Russia actually put out a
list um who are friendly and adversarial
countries um you'll see at the next G20
meeting uh who will be in favor of
Russia attending that meeting and who
will be in favor of it not attending and
that's making clear how the sides are
lining up so you're seeing those sides
line up and all sides are in preparation
for war there's like almost a distrust
now of people that strive for Success
there's a distrust of science to some
extent there's
um I feel like and maybe I'm crazy
because the stats will bear this out but
it feels like we used to be the place
everybody would want to come if you you
had that entrepreneurial dream and you
wanted to build something and you wanted
to generate wealth and innovate
something this is where you would come
and then I look at somebody like Elon
Musk who honestly man just seems like an
alien I don't know how he's pulled off
everything that he's pulled off it's
absolutely bananas and yet there are
people who just can't have it they can't
have the level of success that he's had
and aren't necessarily even looking at
it from the lens of the innovations that
he's created do you think that that's a
a predictable change in attitude that
people have and they they lose the
desire for Innovation is it is it just
being decadent or is there uh a
rebellion against um education I don't
know I don't I was so shocked to hear
that there are people that aren't
inspired by what he's doing but instead
are like just
opposed um I think
it's I think everybody's got these
opinions and they're so
critical and um not you know if if
everybody could just take care of
themselves you know it's it's like
um start with with
oneself um the
aspiration and I think the reality
should be to be self-sufficient plus
okay here here's my view um uh
success doesn't have to be making the
most money or the most
contribution success for a successful
life is that um you have the life the
type of life that you want for
you um but you earn more than you spend
so that you're self-sufficient and And
if every individual could do that you
would have self-accountability
and and a successful
Society um and so it's not a bad thing
it's it's a good thing uh when people
produce things that others
want um uh and they end up making in
many cases billions of dollars it
doesn't have to be the billions of
dollars to be successful but let's not
resent that like I think uh when we
think about uh um the Prejudice the
Prejudice of either against the
billionaire or against the poor person
um that that that prejudice um I think
supposing um we didn't we eliminated the
the billionaires most of the
billionaires one thing is inheriting the
billions the another thing is creating
the billions um most of that comes from
coming up with something that people
wanted and then they and people spent a
lot of money on that thing and I think
if you were to take those items that
they created and you say the society's
not going to have those items would you
have rather not had them I think it it
it's all a matter of
um stop the fighting be productive have
the life that you
want um you know not
um not the not all this fighting and
critic ISM that is going to tear down
each
other yeah one thing that I've heard you
talk about that I really resonate with
is the idea of leading with
understanding listen first try to figure
people out um I know your stance on
China has become uh controversial I
guess but when I hear what you say it's
basically understand them even if they
end up becoming our enemy to understand
them would be incredibly
important if is that a life strategy you
have of trying to understand people are
you somebody who sees yourself as as
somebody bringing people together what
what do you think is that importance in
terms of understanding others well uh
just just from really just seeking
understanding is a very practical thing
and it's interesting as could be and
then um and then it has a lot of really
good results because with that
understanding you can understand how to
trade things to have win-win
relationships rather than lose lose
relationships so um yeah I think that um
most people are operating in their
perspective of uh you know what's good
for them and and then um the best are uh
operating with a concept of win-win
relationships that they understand that
um if I have win-win
relationship um I can you know like I
have principle one and one equals
three um if you if there are two of you
and you can trade things and you can
help each other um that's a win-win
relationship and and that is the best
but in order to do that efficiently you
have to understand their perspective and
also their perspective is not um uh as
much like a characterization of Good and
Evil it is them doing what they believe
is in their interest now that may do you
harm and you might call that evil but
you know it's almost that back and forth
so um so when you have that
open-mindedness so you can understand
understanding somebody else's
perspective is not the same as um
believing that what they're doing is
right you may have a choice but if you
have somebody who has a different
religion or a different way of doing
things um to at least have an
understanding of that to see it through
their eyes right um You don't you can
reject it you could say I don't want it
or but even then you have the capacity
to deal with it in a much more informed
way than if you don't understand it so
understanding I think is is um and is
important and then of course the world
World Works in a real in a in a way
where it's the reality that they will
move in a certain way and then you move
in a certain way in in those
interactions and if you don't have that
understanding of the reasons why you're
never going to be able to play the game
whether that's a playing a game against
them or playing a game with them to try
to produce the best possible outcome
you're never going to be able to do that
well and so yes I see this tremendous
misunderstand standing because there's a
tendency to demonize the other side okay
and that's you know and so it becomes a
distorted reality in which there's an
inclination to go fight and there's
misunderstandings well even if you're
going to go fight make sure you've got
understanding yeah so I um when I I was
introduced to dosm when I was probably
16 and so that gave me when I was young
I really had an obsession with China and
Chinese philosophy and I studied lza
janga and just really became enamored
with uh the East and Eastern thought and
so for me it's been almost strange to
watch China take on a very different um
tenor in terms of the way the US
perceives China right to see this stuff
escalating and getting darker and darker
um what I find interesting is like you
said to understand them is not the same
as to agree with them and I think that
that's very important first of all I'm
not a scholar on it so I don't know um
but what I when I take that what you're
saying and I apply it to the US of okay
lead with understanding lead with trying
to figure out where they're coming from
lead with recognizing that if you don't
and you encamp into this US versus them
it is inevitable that you conflict and
so when I look into the future I have
whether I like China or think they're
out of their mind I have no interest in
going to war with them just the loss of
life is just too catastrophic to even
contemplate so I started thinking okay
like how do we bring these together and
you had a key Insight in the book that I
thought was really powerful and you said
look no matter what you think about
China you have to understand that they
believe they're doing what is right
you're not going to convince them to do
it the American way anymore than they're
going to be able to convince us to do it
the Chinese way and I found that Insight
very compelling because you go into this
ideological battle when you think oh we
can convince them we can win when you
think that you can draw them over to
your side that's one thing but if you
can't then it becomes a very different
game of okay how do we negotiate this
relationship if I'm not going to be able
to convince them and so in the book you
bring up another idea which is the idea
of dialectical two opposing Force coming
together and and in the friction is the
superior
answer so I know that China looks at
themselves that way and they use
dialectics I think that the US given the
the conflict between the left and the
right has to start doing the same thing
of saying hey we actually need to Value
this friction that it's not I'm not
trying to convince somebody on the other
side to think like I think I'm trying
not to even think of myself as having a
side if I'm completely honest but I
understand that they personality types
they see the world differently they're
never going to persuade each other but
hopefully we can let go of some of that
the the Warfare mentality and bring
people back to a table of
compromise am I understanding that the
dialectical nature of those two opposing
forces correctly and do you think that
that is a useful way to instead of
trying to get the other side to agree to
to find the the strength in in that Push
Pull yeah
yes and that yes
totally
unequivocally and in addition to
understand the cost of L lose
lose
and
additionally the issue of
sovereignty um you know
um the the invention of countries which
came in the uh late 17th century after
the 30 Years War was one of the Great
Inventions they were not
countries there were no
borders amazing thing there were no
countries there were no
borders um the way it worked as most
countries were run by families because
they were royal
families and um there was a constant
fighting like I want to go take more or
they would take more and there was
constant fighting and they had a war 30
Years War they called it and at the end
of this 30 Years War they were so sick
of war that they came up with this idea
of countries so countries that had a
border and that you would determine
those inside those countries would
determine what went on in those
countries back then they F fought
whether it should
be um Catholicism or protestantism or
whether it was the pope or whether it
was they fought about a lot of things
but when they had that they said okay
that's what we're going to do it is
we're going to do it within borders so I
think that's interesting so the idea is
is that by and large if you have a
domain and it's in your border that you
have control of that that that's one
element then there's win-win uh
relationships versus lose lose
relationships and the things that you
were talking about the
dialectic um recogn forces one to
recognize the pros and the cons and to
try to get into an equilibrium level I
think that that all all of that is right
none of these things work works
perfectly so the question of um you know
what is it uh can anything go on within
those borders and it's okay maybe there
are common rules that the system as a
whole agrees can or can't or something
but those kinds of rules um I think are
important so as we go down the
checklist um you know kind of um Live
and Let Live uh win-win is better than
lose lose
understand each other where they're
coming from so that you could do good
trades and don't misunderstand you know
lose lose Wars are are are you know are
terrible types of things there that
doesn't mean there are not things worth
fighting for but if you operate within
the parameters of borders and it then
it's largely your own
business and and then we come to
ourselves and the most important thing e
whether there's International or
domestic issues is be
strong like if it's like be
healthy if you're strong and healthy you
don't have to worry domestically and you
don't have to worry
internationally and it's just basic
things of what's strong and healthy you
earn more than you spend you're good
with each other you know you educate
your population you're productive those
a
Basics be that take responsibility for
yourself doing that
the United States should take
responsibility for itself doing that
like every other country can and if it
does that it will be strong and it'll be
healthy and it'll be
fine yeah yeah Ray I um I really want
to be in a positive place about where
all this is going I'm such an optimistic
person by nature but there's something
about watching that breakdown that you
did of the last 500 years I think I told
you this when we were doing the preall I
couldn't I couldn't listen to the book
first thing in the morning because it it
was like putting me in this
really um almost stressed out state of
like man we're go ahead I uh but I have
a principal please if you worry you
don't have to worry and if you don't
worry you need to worry because if you
the thing that I could give you is this
worry about realistic things that you
can worry about that's what I want to
give the people uh that's why I did the
video by the way the video you you you
could skip the whole book the video is
an animated video 10 million people have
watched it in no time it's something
that's very digestible and it carries
the picture um if um because if you
worry then you'll do something to
prevent those worries if you worry about
going to World War II if you worry about
those
and if we could get enough people who
believe in these things then we will
have a different choice right there'll
be less likelihood of us fighting with
each other and doing us doing each other
harm and instead doing more good things
that'll raise ourselves and raise our
living standards because we have the
resources to be doing those things so um
uh
yeah the the the greatest danger for
most people is failing to look at um the
things that could be harmful to them
because they don't like to look at them
it's like some people would rather not
know that they have a serious disease or
something yeah okay look at it deal with
it and then um you're most likely to be
able to deal with it effectively and
minimize problems or take advantage of
opportunities there's a lot of potential
here for us to do amazing things
Technologies the ability to think
I mean we've seen uh amazingly wonderful
things the capacity for you have a
pandemic and we come up with vaccines
the capacity to get around the uh fact
that we can't get out of our houses um
all of that uh could all raise living
standards if we could all work well
together if you really want to
understand the complex Financial
landscape we all face watch this
conversation with bology shason the
problems go all the way to the Bedrock
of the financial system in terms of
treasuries being the new toxic waste
it's going to be at least as bad as 2008
but probably worse than
that