Kind: captions
Language: en
we have a financial
system that is a volcano waiting to
erupt and it is inevitable that it will
erupt and will obliterate Life as we
know it and it is only a question of
when and so I don't know if it happens
in five years 50 years a hundred years
can't imagine this more than 50 but but
I think it's going to be cataclysmic am
I
barking up the right tree
no
all right here we go tell me about it so
where where do you think we are right
now
the world blew up in 2008.
the world is now entirely about the
management
of the debts
that is everything now
and there are two ways for that to
happen if we didn't do quantitative
easing in 2008 9 10 11 you know all of
that stuff
the world would have burnt and destroyed
in the manner that you thought
which is like the Argentina collapse you
know the Cyprus collapse this huge
destruction
what we chose
was a Glide path
Glide to wear
because my my thinking is you Glide
until you crash it's a slower crash for
sure
well the the crash is ongoing
but you're buying time
for GDP growth to come back
right our problem is
if you're in debt
and you don't have enough income
uh your income's not
um growing enough to service your debts
you get into a problem
so what we've been doing is monetizing
those interest payments
on the debt which is basically using a
credit card
to pay off your credit card or using a
credit card to pay off your mortgage
okay that's not sustainable
but what you're hoping
is that eventually your income goes up
and there are ways to do that
and the the big issue here is
demographics
let me ask you a very pointed question
before we move on when was the last time
real wages went up
they haven't really written since about
1972 not easy for why I think the Glide
path is is going to be gnarly so I don't
want to skip ahead too much because
we're definitely not ready for this part
of the conversation but I'm very curious
is is it increased productivity born of
the exponential technologies that are
happening is that what you think is that
that is the only option we have okay and
right now I want people to hear
like playing in the background because I
I think that that will that is going to
create the world's gnarliest 20-year
period And so agreed we get on the other
side of this we hey I'm super optimistic
20 years from now I am just real worried
about the next 20 years
okay so planting that terrifying seed
for people now if you don't mind walk us
through so we know what your punchline
is we're gliding and it's buying us
enough time that we can get to a new
lily pad that Lily Pad is exponential
technology that increases productivity
and addresses real wage increase for the
first time since 1972 but I want people
to hear that 1972 was a long time ago so
we haven't been able to do it yet even
with the internet
yeah that was the death of the American
dream that happened
is the American dream was you
participate in the US economy you get
richer
the reality is it didn't happen and I'll
come back to why because this is the
this is a really important story because
everybody has a thesis on who's to blame
what's to blame how it happened
who's to blame
is probably
as an Englishman the French
it was actually
it's actually all about the the Treaty
of Versailles actually the Germans who
are to blameful of this
um so after World War One
everybody was so pissed what happened
with Germany and the war that the US the
UK and the French got together and said
we want Germany to pay War
repatriations I that would make good for
the devastation of Europe
Germany can pay it
so they
eventually hyperinflated their economy
and the rise of populism
which was okay Hitler's German hyper
hyperinflation is going to be so
important in this discussion yeah uh I
think it's worth taking a second to
explain why hyperinflation is a go-to
strategy one that we're using right now
by my estimation
what is hyperinflation how does it
happen why is it a go-to strategy
hyperinflation is when you issue more
money to pay your debts
and it just it comes in an endless cycle
because you're not generating GDP growth
so you're you're just keep printing
money so in excess of anything
in extremist everything becomes
worthless
um you know so if you're thirst and
you've come out of the desert and
somebody gives you a bottle of water
you'll pay pretty much anything for it
if somebody's there with a million
bottles of water
was a bottle worth you almost nothing
once you've had the first one right so
so anything in a in excess Supply just
supply and demand too much supply of
currency the value goes down so what
happened in Germany is they had these
gigantic impossible to pay debts
to the West
so they printed as much money as
possible
that blew up spectacularly Prices rose
millions of percent and really fast I
want to use a different word for people
and a shout out to Robert Breedlove for
introducing this idea to me uh if you
change one word from print to
counterfeit people understand what's
actually happening and so if you think
of printing money as Government approved
counterfeiting then it's like oh because
I think people have an intuitive
understanding for why counterfeiting is
bad but they I certainly didn't have an
intuitive understanding for why
government printing is bad
which shame on me uh but once I realized
oh yes this is literally the equivalent
of a guy at home with a printing press
just making more money
that's right but so let's carry on with
the story so the Germans destroyed their
economy the people got angry
because the only way to pay their debt
was to make up fake money fake it's not
really fake but they make it up so they
can pay it and every time you got paid
as a German citizen
that Fistful of notes barely brought you
a loaf of bread one day and half a loaf
of bread the next day and then nothing
at all until you have wheelbarrows full
of cash and we've seen this in Argentina
we've seen it in Venezuela we've seen it
in plenty of countries we just saw in
Lebanon recently as well that's a total
collapse of the valley of a currency
okay so therefore all of your
productivity is a human
is devalued as well because you can't
buy anything so you end up having to
ignore currency in Bata
and we've seen that in many places as
well because the the value exchange of a
currency in the middle
because it falls so fast in value
it's a nightmare to deal with and it's a
destruction of total Destruction of
wealth except those who own assets
and that's an important point we'll come
to much later
so Germany goes to war again
end of World War II
everybody's like okay we're done with
this now out of curiosity how how well
do you know the story of Hitler's rise
what how does he re-stabilize the
economy
um he starts building roads
he starts rebuilding Germany and making
them proud in Germany nationalism
how does he pay them like if their
money's worthless how does he get I
think they'd already reset the currency
after that so he didn't rise out of the
currency collapse he wrote post the
currency collapse so you
you've now got the new currency I can't
remember this is the right smart
whichever one it was at the time so or
the Deutsche Mark so anyway so Hitler
comes so World War II peace in our time
and humans celebrate in the way the
humans do
they all had sex
and have babies because they felt like
there was security
and what we got and this is the most
important point of the story
what we got was the largest population
bulge the world has ever seen
they're called the Baby Boomers
the Baby Boomers
were all doing the same thing at the
same time
because there's a massive group of them
76 million of them were born in the
United States alone but we had it across
Europe we had it everywhere
that cohort was what caused the 1970s
inflation
because they're a bunch of 20 to 30 year
olds go into the workforce at the same
time and this is the important point
I'll come onto this Workforce point they
come into the workforce at the same time
and they all buy their first house their
first car their first suit their first
tie their first everything they all get
married they all have kids all at the
same time right so that's a competition
for resources that was unparalleled the
rate of change of demand increase was
massive and that was the 70s inflation I
don't think it's a monetary phenomena I
think it's a demographic phenomena and I
spent a long time talking about that
demand driven which is why it's so
impossible to deal with
well right now it's not demand driven
inflation it was supply issues okay
but those
baby boomers
remember went into the workforce at the
same time
so I'm an employer I have a factory in
America
and suddenly I've got 76 million people
I can choose from to give a job to
of course I'm not going to pay them more
money
why should I
I don't have to because they're all
looking for a job
so there's too many people
remember excess Supply means falling in
prices excess supply of people wages
don't go up
so this is a function of demographics
it's not a function of the map it's not
a function of somebody doing something
bad it's the problem of people shagging
in celebration for the end of World War
II
that is the actual issue quick question
is is that moment of the flood of
um the Boomers coming in is that a good
moment for the greatest Generation their
parents who are basically now the owners
of the factories by the time that they
come into the workforce and it's like
hey I don't have to pay more money and
PS the the price at which I can sell the
things that I'm making is going up
because there's so many people buying it
that moment feels like it would be good
for someone yes because labor cost is
low
versus a booming economy
which is what we had so we had labor
costs not going up so margins for
Corporation goes up but we had inflation
that ate into it but then the 80s
onwards it's been a one-way Street
so
that competition for wages actually gets
worse
because by
the mid-80s
the computer's now in the workforce
you know and it's everywhere the PC the
Mainframe everything so now you've got
something that can do jobs so what
happens is Wages don't go up
and then
1996 we have the World Trade
Organization agreement and NAFTA the
North American Free Trade Agreement
so now you're bringing in other workers
who are paid less
to compete against U.S workers
there was a guy that warned against this
right like
walk me through that this is very
interesting so he he in 1996 I in 1996
was a free trade person I was like of
course everybody should trade free and I
think they should
but he said you have to do it on the
right terms because you'll totally
destroy Society
because everybody will undertake labor
Arbitrage
and that means all of the capital and
the labor
or
um a cruise to China
Vietnam and other places so these
Chinese workers
were the were the cost input for goods
in the west so Goods fell in value we
had kind of deflation disinflation Etc
but what happened was U.S workers didn't
have jobs and you could never raise
their wages because if you try and raise
your wage you're just going to Offshore
and get it from India or China or
somewhere else
but James Goldsmith's point was it's it
yes it will benefit the Chinese economy
but the Chinese worker probably won't
benefit to the same order of magnitude
because a lot a lot of these economies
are kleptocracy so somebody's going to
take the money
so there'll be a bunch of super rich
who'll make all of the money in those
countries and the business owners in the
west will make all of the money and the
worker will get destroyed and he said
this is going to lead to populism anger
um and this is not the right answer his
idea was the right answer and there's a
Charlie Rose interview I urge everybody
to watch Charlie Rose James Goldsmith
the guys terrifyingly intense and
terrifyingly smart incredible interview
so his idea was don't allow labor to be
the Arbitrage
allow a U.S company to go manufacture
Goods in China for Chinese market but
don't export those goods because that's
going to create this problem and he was
absolutely right everybody thought he
was an idiot and he was a you know he's
a true capitalist James Goldsmith say
ultimate capitalist and everyone's like
well this guy's being you know some sort
of trade protectionist he's crazy but he
was right
but then so that WTO and then China
eventually enters in 2000 so we've got
no chance for wages to go up and now
we've just added the next leg of the
equation which is AI and Robotics
the wages are never going to go up
they're never going to stay up
so what has happened is
so as a CEO that doesn't feel true to me
but to channel your boy William
Goldsmith
James thank you uh what it feels like is
happening right now is that you have so
many workers refusing to work that even
though there are a lot of people that
are of that age that theoretically you
would expect to be flooding the market
you have so many people going out and
we're printing so much money that they
can afford to do that you've got so many
government subsidies whatever that now
people willing to work become a scarce
resource even though there are a
technically a lot of workers so I am
paying more for sure now than I was even
two or three years ago now what that
comes out at a population level I don't
know but I saw somebody ask this poll on
Twitter uh or in a I think it's actually
at an event that my wife was speaking at
anyway they asked like who here has had
to pay more for High Caliber in the last
couple years and massive number of
people raise their hand I was like oh my
God yes like I didn't even think about
it sort of Beyond myself I wasn't
thinking about it as a trend but that
really feels true does that happen true
to you or once you even it across the
population like no firstly you're
confusing real and nominal
real wages have not gone up versus
prices
okay meaning and prices raise more than
wages so if you look at Peach P I don't
know what Peak wages were but let's say
they were six percent
um
last year yo year-on-year wage growth
but Peak prices were nine percent
so people actually got poorer
which is why we've got a recession going
on because everybody
lost purchasing power versus just basic
Goods
so would you say we are in a recession
already yes
Yeah by every indicator I've got we're
in a recession already
um and it will become more abundantly
clear the other thing I think is a point
that's also important is we need to
think about total aggregate demand
within an economy and who are you giving
those increased wages to right so yes
you are paying more for scarce labor
certain skill sets expertise whatever
but when the labor force participation
rate is only 65 percent
you have to average that
over 65 percent of the economy not a
hundred percent and that's the function
of demographics so there's a whole bunch
of people who are retired who wages
can't go up which is retirees which is
basically that 35 is that bucket plus
people who've opted out so
so you you actually reduce it by that
and the labor force participation rate
is actually a function of
the birth deaths rate forward lagged 30
years so what what we know is we know in
the future that there's going to be less
and less people in the workforce
which is interesting and it actually
mirrors inflation GDP growth
everything's driven by this Monumental
demographic issue
so yes you're paying up for wages
but your margins have gone down anyway
because you're the the other cost of
input so real wages for everybody have
actually gone negative massively
negative which is why everybody's
feeling the pinch
that's the issue we've got and that
demographics does not go away
we know that because we can look at the
birth deaths rate today
and we can figure out
what the population is going to be like
in 50 years time 70 years time 20 years
time all of this
the only difference of changing that
is immigration so why this is important
is it something called I call the magic
formula
magic formula is economic growth
economic growth is driven by three
factors and three factors only at a long
term level in an aside from just the
normal business cycle ups and downs
population growth the more population
you have the more your economy has
activity
so population growth well population
shrinking the entire Western world
the only way of offsetting that is
immigration but we talked about the fact
that the workers are angry they can't
get wage Rises there is a less of a
desire to have immigration than there
was maybe 20 years ago so most countries
have started to restrict immigration
fine
so there's no way of solving
the population side the next part of the
magic formula
is productivity
that's how much output each of us can
generate for the economy and that
becomes more efficient problem is it
seems to be a function of demographics
too and productivity has been declining
since the 70s well actually since the
50s
so productivity is going down
the population is shrinking over time
so the answer was debt
the answer all the way through this
equation
from these people who were sold the
American dream
back in the 1950s
the Baby Boomers
you know they're listening to Elvis
Presley getting into the Beatles they're
like let's go let's go the American
dream I'm gonna get rich
but as we pointed out their wages never
went up but because there were so many
of these people they competed for houses
and houses went up they invested in the
stock market the stock market went up
everything all assets got more expensive
because of their demand
so they did the rational thing which is
I'm just going to borrow money
and the difference between the rise of
the assets and their wages is
essentially
what were the debt was
the debt side of the equation is what
the government's done too because GDP is
declining the trend rate GDP keeps going
down
what's up guys it's Tom bilyu and if
you're anything like me you're always
looking for ways to level up your
mindset your business and your life in
general that's exactly why I started
impact Theory a podcast that brings
together the world's most successful and
inspiring people to share their stories
and most importantly strategies for
success and now it's easier than ever to
listen to impact theory on Amazon music
whether you're on the go or chilling at
home you can simply open up the Amazon
music app and search for impact Theory
with Tom bilyu to start listening right
away if you really want to take things
to the next level just ask Alexa hey
Alexa play impact Theory with Tom bilyu
on Amazon music
now playing impact Theory theory of Tom
bilyeu on Amazon music and boom you're
instantly plugged into the latest and
greatest conversations on mindset Health
finances and Entrepreneurship get
inspired get motivated and be legendary
with impact theory on Amazon music let's
do this
one question that I don't quite
understand is
why is debt taken into account when we
Factor GDP
is it because we're essentially bringing
new money online when we make those
loans essentially yes you're leveraging
your ability to consume stuff or invest
in stuff
now at an economic level you might argue
well you know you're taking it from one
person for another but there's interest
payments there's a whole bunch of
mechanism but but really if you see the
Chinese economy and what happened is
they did the same they just they had
population coming in productivity
probably Rising but then they massively
borrowed money so the head of the
fastest growing colony in the world for
a long period of time
you know leverage gives the illusion of
growth but obviously it has a payback
later
and this is the payback we've got now
the leverage that the Baby Boomers took
on their governments took on
and the corporations took on for all of
this issue
is what we're dealing with now
so what wages didn't go up assets went
up because they were competing for them
like you're competing for scarce
resources of people right now but when
you put 76 million people in
the housing market goes up
the stock market goes up because they
start pension plans and stuff like that
so the difference is debt
and that was okay although we were all
starting to look at this saying whoa
this is now getting
absurdly
debt Laden the government's 100 of debt
the private sector is 100 of debt Health
households are 100
of GDP in debt it's like well this is
out of control
then 2008 comes along
and that is the debt crisis I mean every
[ __ ] bank blew up I mean everything
blew up it was a complete total collapse
and that rolled on into Europe in 2012
when the government Spain Italy
Etc blew up
and all the banks in Europe blew up I
think this is where you and I began to
diverge so when I look at 2008 it feels
like we just kicked the can
and the thing that I'm worried about is
that you can only Kick the Can for so
long and at some point you're going to
run out of ability to Glide and you do
hit the ground and well let's go through
this because this is an important point
my view is 2008 was
the uncovering that the geyser is not a
geyser it's a volcano hmm
they see it and it's like the holy [ __ ]
moment so they did something
unparalleled the great reset happened
they reset all interest rates to zero I
had not realized this until recently
that was the debt Jubilee
we will we set all payments to zero
because we understand
and then Europe kind of forced the car
2012. it was then okay there's no way
around this
so the blow up happens but it's now
disguised
and the disguise is the important next
part of the story
because what they did
is somewhere around 2012 I believe G7
made the agreement learned from the
Japanese which is seven or the seven
biggest uh nations in the world uh Seven
Nations in the world okay nothing to do
with their central banks at this point
no but it's the finance ministers who
get together but there's a realization
and I think the Japanese realized it
first
when your government debt is a hundred
percent of GDP this is the really
important point of the everything code
when your government debt is a hundred
percent of GDP
and your private sector debt is for easy
math call it 100 of GDP in debt okay now
interest rates
let's say they're two percent for easy
numbers
so when the government
has to pay well economic growth is what
pays for debt right it's the earnings of
the economy
so if economic growth is growing at two
percent
and interest rates are at two percent
then the government which is 100 of GDP
in debt uses all economic growth
to pay the interest so then the private
sector
has got to pay its two percent
and that means the economy will contract
and this will continue in perpetuity
before we move on to the everything code
because I want to go through that in
detail I want to recap uh how we've got
here and what here is so here is
effectively we have this constant
looping
um cycle of debt where we have these
boom and bust periods because we are
masking that a blow up happened in 2008
which was this devastating moment where
we realized okay the whole system is
very fragile because people are
disguising the fact that real wages are
not going up by taking on more and more
debt both at the individual level and at
the governmental level we've also
weakened because of the demographic boom
we have
um we go into this globalization moment
where we are driving the cost of goods
down by doing labor Arbitrage and uh
very well predicted that what's going to
end up happening is you will begin
creating a Schism where the rich are
getting richer and the poor getting
poorer because the the quote unquote
poor or middle what used to be the
middle class they are the workers
they're building your cars your widgets
your whatever but if you use the labor
Arbitrage and you send that to a foreign
country where labor is cheaper yay the
people that own assets are very excited
because the companies that are overseas
that the asset is they own a piece of
that company just to be very clear and
so the people that own the assets in
these companies that are using labor
Arbitrage to drive the cost of their
goods down to drive their revenues up
their loving life but all the people
that used to go to the factory they're
either stagnant down or headed towards
you know the deaths of Despair route
where people are just doing drugs if
anybody wants to understand the opioid
epidemic in the US going to be a big
part of it yep I mean this is why why
this is necessary before we can talk
about the everything coach so
okay so that we're in that world where
everybody is disguising the problem
through debt but eventually you're going
to hit uh come to Jesus moment where you
just can't keep going up we had a
massive bubble in the housing market
that pops boom like a series of things
series of dominoes fall now the reason
that I say this is where you and I begin
to diverge in terms of where we're
predicting what goes on in the future is
a stat that you'll know better than I
but the number of banks that it took to
um wipe out how I forget how many
billions of dollars in value was like
500 or something during the 2008
collapse what we've just gone through
with the collapse of four Banks we had
even more value wiped out so we have
this consolidation consolidation
consolidation of all these what used to
be you know back in the 1920s when 1929
happened it was like 5 000 Banks or more
had to collapse before we wiped out as
much uh value as we've wiped out
recently in the banking crisis with
again four Banks wiping out not quite as
much value as were wiped out in the
Great Depression but it's distressingly
close so 5 000 Banks Now it only takes
four Banks to wipe out the same amount
of value and so it's like I just feel as
the the system is getting more fragile
it's not like we're just going
horizontal we're getting more Fragile
with every passing day every time this
boom and bust cycle happens and again
we're papering over this simply by
making money out of nowhere and I really
want people to understand that we are
making money out of nowhere so
we'll come on to the outcomes in a bit
what we are doing since 2008 is
neutralizing the bankruptcy of the
system by the debasement of currency
which is that when you're saying
neutralizing you may mean making
everybody's problem
yes you can either raise taxes which
they're trying to do too but they're
also
printing currency via the mechanism
called quantitative easing which is
actually debasing the currency which
means that every time they do it asset
prices optically rise
they don't actually rise
because if you if you look at the
central bank balance sheet and divide
all assets by it so you're changing the
denominator it's normally US dollars but
when you use the balance sheet you say
okay this is the purchasing pair of
dollars so how many dollars are in the
economy
or access printed and what you find is
something like the S P 500 has gone
nowhere real estate Gold's gone nowhere
and there's only two assets that are
actually outperformed which were crypto
and Technology
okay which is why we all feel like even
though stocks are going up on our 401ks
going up nobody's getting any richer
okay there's a we all know this
intuitively that we're not actually
getting richer because the stocks I sell
doesn't buy me more of a house so what
the [ __ ] what was the point of buying
the stocks if like
the value of my assets aren't going up
but that is a mutualization but it is
bad because it neutralizes it amongst
people who don't have assets
so you'll never be able to buy an asset
which is why when you speak to a
millennial now they're like we can't
afford a house why because they came in
to the labor force after the FED started
monetizing or or
um or lowering the value of the
denominator so
property's got more and more expensive
for them it's impossible for them to buy
property really unless they're really
lucky in the workforce or in
entrepreneurship or whatever it is but
generally speaking it's become
impossible and everything has got more
and more expensive assets have because
of this optical illusion but wages
haven't gone up remember right that's
the key thing assets are going like this
we were doing this before because of
demographics and it was making people
pissed
and now we're doing it from debasement
and there's there's no way around it
so what debasement does on the other
hand remember it makes the price of
assets look like it's going up
this is why you can't have a banking
crisis of the order of magnitude that
existed before 2008.
the reason being is you just print money
the moment you see it and voila
everything goes up
so the value of your collateral so if
you think about a debt it's collateral
plus the debt and the collateral is what
guarantees the debt
if you've got a banking crisis your
collateral is often falling so fast
that like commercial real estate right
we're gonna have a problem with that
so there's a bunch of debt and the and
the and the banks have got this
commercial real estate it's collateral
and it's all bloody empty and
everybody's going to try and get out of
it
so the answer to that is print money and
and essentially
magic that collateral hire
or put it on the central bank balance
sheet Europe has already done this so I
don't think you can have a systemic
collapse because the value of the assets
can never
go down enough this is what most people
can't get their heads around well so I'm
gonna but we will get you know but there
is we'll play out the future a bit
because there are ways where it could go
even more wrong than this
ongoing mutualization amongst the people
of the of the costs it can go even more
wrong
well this is wrong because it's it's
Insidious you don't see it you don't
notice it you just sense it right that's
what's going on
but it could
lead to
another outcome the other outcome could
be a total loss of control of the
financial system I don't think that is
going to be the case
but there's a possibility yes and so
this is getting into I have a growing
thesis that is
it's beginning to touch everything I
need to find a word for this but the
level of awareness of a problem when it
is ubiquitous
you would think that's good because it
kills the Arbitrage where only the
people who are aware of it are able to
take advantage of it and that sounds bad
and it sounds evil but as everyone
becomes aware of it the only outcome
that I see from that is cynicism and I I
come at it from an entertainment
perspective which may seem very weird
for people but I grew up in the 80s
which I actually want to talk about the
80s and why the 80s felt so awesome
living through it uh because I think it
actually planted a seed for something
problematic but anyway so the 80s from a
film perspective was awesome uh you
could have a movie where Arnold
Schwarzenegger throws a knife and it
goes through a guy and it pins him to
the the wood beam behind him and he says
stick around and it and it isn't uh
you're you're actually laughing in the
moment you're not laughing at how uh
many times you've heard a line said like
that or oh my God that's like an Arnie
line it was the first time you'd ever
heard or seen anything like that and it
was just legitimately funny and over
time though we become aware of all these
patterns to the point where if you grew
up watching movies and you grew up in a
world where 80s movies were a thing and
they've been mimicked so many times and
done to death everything happens with a
wink and once everything happens with a
wink everybody lives in this ironic
world where being more cynical than the
next person memeing something faster
than the next person becomes the thing
and so one of the things and and I feel
a moral obligation to get the
information out about what the world of
Finance really is as fast as I can and
yet I know that as everybody becomes
aware of the trick the trick won't work
anymore so I'm in this weird spot of
like wanting to tell people hey when
they print money quantitative easing
they are counterfeiting money
it is destroying your buying power and
but it is the only way that we Glide so
it's like no but yeah but you're keeping
the the monkeys Happy by lowering the
cost of TV sets and other stuff right
that's the other weird thing consumable
goods are cheats
now we're really getting in because now
that we have to talk about metaverse and
how if you you want to pacify people
that's a totally different thing
with cheap TVs cheap beer cheap food
cheap everything but there's a real
derailing man they are still derailed
because the asset which is your future
self
it's your future consumption has gone up
so much that nobody can afford them so
you've kept them happy with dopamine and
sugar hits of crap you've kept them numb
I won't say you've kept them happy
you've kept them numb okay yeah Happy's
the wrong word but you're right but look
this is I went down this journey that
you're going down now
in 2012
and that Journey led me to crypto
I saw it and I knew that this was the
answer and that's why I first bought
Bitcoin in 2013.
was exactly this is once you see what
has happened we know the system now
regardless of How It Ends whether it
ends in slow ongoing death of of
economic vibrancy or a spectacular blow
up
the answer is you need to transition to
what I called the Bitcoin life raft or
the parallel Financial system it's there
and you can participate with one dollar
or a billion dollars it's okay we're
gonna we're gonna get to crypto but we
have to get to your
um everything code uh I think this is
this is crazy important so
um I went in and listened I I must have
listened to it oh God you're gonna think
I'm kidding 30 times to write it down
verbatim you you delivered I had never
heard you do it so succinctly
um and so I I wrote it down verbatim and
what I want to do is I'm going to go
through your everything code
but we're going to stop in a couple key
areas to make sure that people really
understand this so I'm going to read a
section and then give you a chance to if
you think there's something that you can
say even more concisely or whatever but
you just deliver this so well so here it
goes so Raul has a a theory that
everything is related to one phenomena
and once you understand it things get a
lot easier to predict so here we go it's
a quote from Rel
what I had suddenly stumbled across in
the everything code was the fact that
the global central banks had probably
agreed together sometime around 2012
after Europe blew up that with
governments at 100 of GDP in debt they
were going to crowd out all of the
private sector and we were going to just
keep having Financial crises
okay so you mentioned earlier this idea
of a hundred percent debt uh 100 of GDP
in debt so I don't think we have to go
over that again but the part in the
section that I don't understand is uh
this concept of the government competing
with private sector so
this is the bit we talked about right so
the economy grows at two percent
the government needs that to pay its
interest because it's how does it use
that to pay its interest well basically
it comes because they're just taking
more in taxes exactly right there's a
there's a level of economic growth that
needs to service the interest payments
but if everybody's interest payments are
too high
the the answer is firstly to have the
interest rate as low as possible which
is why
the um
which is why the Japanese have a much
lower natural rate of interest than
everybody else because they're 260 of
GDP in debt but their companies are less
in debt so they they've trapped
themselves they have so much debt they
can't let the interest rate rise nobody
can this is why we're gonna have a
recession we're going to cut rates back
down to zero it doesn't it's impossible
to work
so this is the thing is once all of
these governments hit 100 percent
then they either blow up the private
sector the banking sector corporates
or the government section how how is
there's not enough income to service
that level of debt because GDP growth
keeps declining okay so let me see if I
understand this so when you say private
sector you mean private banking no I
mean all private sector households
so how do you how does the average
person service the the interest
it's again from economic activity the
activity that they have
so
the same with corporations
and the banking system is involved
intricately within that whole system
so economic activity is what pays the
interest if you don't have a job you
can't service your mortgage or your
credit card right fact
and if your growth if your debt growth
keeps going up
you need to keep your wages going up to
pay your debts that's that's the GDP
side of the equation
but what we're finding is that
all debt
that is in excess of GDP at government
level
is ending up on the balance sheet three
and a half years later
okay how
quantitative easing they and I did the
maths on this and I think I was the
first person to really think I don't
think anybody's really figured this out
yet
I went and looked at this
and I realized that what they were
monetizing
was the interest payments on the debt
three and a half years later okay why
three and a half years
in 2008 ALL interest rates went to zero
everybody every government refinance
itself at zero
and most of the debt for all governments
is in the three to five year sector
so somewhere between
three to five years three and a half
four years and what happens is every
time
you service the debt you need to get the
interest rates back down again you end
up having a recession you get this very
cyclical phenomena
because they say are they deferring the
need to pay for three to five years
nobody pays back debt nobody
nobody is paying back any debt anywhere
so what they're doing
is every time it comes to pay
to service the next amount of debt it
ends up on the FED balance sheet now it
actually happens because there's an
economic slowdown driven by the debt but
that's what happens and the there is a
marginal difference in the size this is
sorry this is true of the US the UK the
EU Japan they're all the same
and the difference of the balance sheets
is slightly bigger and the difference is
every time they say direct financial
crisis they have to put direct money in
so we you know we're already just seen a
little bit of that in the US okay the
difference difference would be buying
the Federal Bank buying assets versus
just stimi checks
is that we mean by direct money so stemi
checks is that's coming in onto the bank
balance sheet because that is government
debt
that ended up
will end up getting monetized three and
a half years later which happens to be
end of this year into next year which is
why I think we've got a lot of
quantitative easing coming because we've
got to monetize all of the bloody
interest payments from the pandemic
and when we say as we mean print money
print money and put it on the FED
balance I just print money
expand the balance sheet of the Federal
Reserve to match what is owed we will
create money
correct and that that's using a credit
card to pay off your other credit card
essentially right or printing is that
what you mean by nobody is servicing
debt is just everybody's printing more
money
correct because surely they are actually
nobody's making the debt payments no no
debt is getting paid off you're just
rolling the interest payment so it keeps
getting bigger every year hold on if we
owe China money there's no way China's
just like oh word it's all good push it
off
so surely we are at a minimum printing
money in order to pay those government
debts
what that comes up for no after four
years
you just issue new debt
but you issue new debt to yourself so
that you can then pay off whoever you
owe money to
shortly no because the government is
borrowing the money here right so
what that
they just pay off they don't pay off the
debt they just do it again so it's like
your mortgage comes up at the end
and imagine you've just had interest
payments you just roll it again and say
I'm just gonna pay interest for another
30 years nobody ever pays off the actual
loan
and nobody cares as long as you get the
interest
which is weird now if you pay off the
loan
you optically do it but you wish you a
new one again so it's like I'm going to
pay off my credit card with my brand new
credit card I've got and so that's what
I mean Capital One credit card yeah
that's what I'm saying is when they're
printing the money they are paying off
the debt they're just creating new debt
in the equal amount or more but they
they are technically paying that debt
off otherwise I can't fathom how anybody
would do it okay so debt is growing in
all of these countries at GDP
plus the interest payments and that
interest payment component is going on
the balance sheet and that's happening
everywhere including Japan so they're
all doing exactly the same thing
which is interesting because that
doesn't happen by accident
that there is an understanding
that the world is too much in debt and
there's no way of dealing this
without us all going back into the
caveman times so this is the answer yes
I think this is this is where we have to
look at Ray dalio's thesis and I think
this is what has really painted my
thinking so rage is like Look Backwards
last 500 years of History every time
every time you've gotten to this point
where you're gliding uh it it always
ends with either economic war or actual
hot Weaponry war and you need this level
of trauma so that people will finally go
fine everything that I owed I'm just
going to let go of it whatever it is
what it is I just want peace and so you
get this complete upending of everything
we reset we go back to zero but we do it
in the most grueling brutal sacrificial
way possible I mean and and I hear this
a lot from people like ah this all
rebalanced in 100 years sure but that is
cold comfort to Millennials who could
never buy a house right like so
yes but this is where the fourth turning
comes to me right I think we are at
economic Warfare
everybody needs an enemy so we've
decided that China Russian whoever we
want to be our enemy is our enemy
so we are economic Warfare for the share
of the pie
but the world is not it's not actually a
fixed pie there's an abundance and that
abundance is the other economic Warfare
which is technology right that's
happening at a massive scale and it's
going into space it's going everywhere
so we've got
physical kind of warfare
economic Warfare over technology which
is what Taiwan is all about
you know they own the secret code which
is the ability to produce computer chips
uh in ways that nobody else can
replicate so there's that
and then
we are at war with each other
as the population has split and wants to
blame each other for what has happened
when in fact it was actually the Baby
Boomers
that actually caused the problem in the
first place the people cause the problem
to the People In fairness it was the
greatest Generation that had all the sex
that gave birth to the Baby Boomers that
created the problem and this is where it
gets tricky because God bless the
greatest Generation for fighting the
wars Etc et cetera okay before we keep
going down that road because I I want to
keep this all in the construct of your
um everything code because this was very
enlightening okay so you just walked us
through uh that first part about why
we're going to keep having these
Financial crises and the only way out of
that uh is to print money basically uh
okay next section and the only way here
we go and the only way of solving this
uh is putting it on the central bank
balance sheet because there's not enough
GDP to pay the interest that's what
you're just talking about so if you
think about GDP growth let's call it two
percent and let's assume that interest
rates are two percent which is roughly
where they've been since 2008. so if the
government is 100 GDP in debt and GDP
grows at two percent but interest
payments are also at two percent that's
all of GDP growth just to pay the
interest on the U.S government debt but
the private sector excluding the
financial sector so households and
corporations are another 120 percent of
GDP in debt uh well that will give you
negative growth every year of two
percent and it just come compounds so
what happens is those interest payments
go to the FED balance sheet and they
monetize it again this is what we're
just talking about so then the private
sector is not competing with the
government and that was provable across
all major economies it's like they all
decided that they're they're too far in
debt and the only way to solve this is
quantitative easing and then I started
thinking well if I know this to be true
and I know that the central bank balance
sheets are 97 correlated with the asset
prices well all I need to do is use
forward-looking indicators to predict
the central bank balance sheets and or
interest payments
dude talk to me about this 97 correlated
with assets that that seems like having
a crystal ball
so it doesn't actually reflects
today so you could basically as I
explained before
the thing that's actually driving the S
P 500 is the Fed balance sheet it's not
you mean driving the price
correct
so it's an optical illusion it's a money
illusion
so the price simply Rises to meet the
level of inflation caused by printing
money correct
you're readjusting the price
so that is what's going on
and so then when you understand that and
it's 97 percent
you understand that nothing matters
apart from this liquidity which is what
I've been trying to tell people is sorry
all your economic models are wrong yes
you need to forecast the business cycle
to know where you are in the probability
of printing money cycle
but that's all that matters and it
drives assets
and that's why people right now are
getting very angry because the stock
market's going up and they're like don't
you know there's a recession yeah I know
that the answer to a recession is more
cowbell printing of more money
people this this is what I'm talking
about with as people become aware of
these issues as you zoom out and you see
the gigantic crater you begin to realize
oh we're in a recession that means
they're going to print money so in a
recession prices are going up and people
are like yeah I know where this goes so
that's crazy and that it'll be very
interesting to see what the knock-on
effects are of the um Everybody becoming
aware of these patterns and I've heard
you say that uh it's almost always the
path of most pain is the the path that
ends up actually happening and so as we
begin to predict oh this is what's going
to happen the fact that we can predict
will have some very sort of painful uh
consequences the important point being
here is
I know what drives liquidity
it's driven by
the business cycle and there are certain
cycles that are forward-looking the
Chinese credit cycle happens to lead by
about 18 months or two years people that
don't know what the business cycle is
can you give a quick primer the business
cycle is the ebb and flow and economic
activity that occurs and
that's a boom and bust a recession
expansion is it caused by interest rates
we don't really know what causes the
business cycle it's caused partly by
interest rates
it's caused by excess production excess
inventories to limited inventories to
there's many things that can can drive a
business cycle but it's observable and
has been observable
for millennia
and one of the things we do is when the
business cycle is too hot and inflation
starts Rising central banks tend to rise
raise interest rates that tends to bring
down economic activity I think even
without a central bank interest rates
rise naturally
um because I think the free market can
set interest rates without a central
bank and then the economy slows down
again and we see this this endless cycle
so
what I think my hypothesis is
is that okay this is very observable I
think it's going to last this
relationship between assets
and the central bank balance sheet
because of the mechanism of debasement
of currency
and I can forecast out what the business
cycle looks like
and I also know the amount of interest
payments that need to be made because
that that happened three and a half
years ago and I can see how far the
balance sheet is going to expand so the
balance sheet right now is what six and
a half trillion dollars and it looks
like it will get over seven trillion
dollars or so and it looks like it will
get to 12 to 14 trillion dollars by the
end of 2025.
so that puts and there's a number of
other ways I've proven this out in this
whole thing and I'll send you the whole
piece uh myself because I've not really
gone public with all of the whole thing
of how it works but in the end that puts
asset prices
massively higher than here
hugely higher
um so we're looking at more than a
doubling of the NASDAQ from here
we're looking at another gigantic crypto
run that's into 2025. so we're seeing
huge moves that just come from the
debasement
and I've gone through in the everything
code article that I wrote for Global
macro investment which is my kind of
Premium research service in that I've
gone through various ways of proving
this all out
um so that's what I think I can do but
your observation I think is really
important okay when people I mean I've
sent this to quite a few people and
obviously the subscribers the global
backer investor are kind of looked the
world's most famous hedge fund managers
um asset managers and I I think it it
really shocked people and resonated with
people they're like oh my God everything
makes sense now
and so once you see it it all makes
sense
um now as it becomes more public as a
thesis and Mike Howell at cross-border
Capital has been talking some elements
of this liquidity you can see liquidity
becoming part of the conversation on
financial Twitter and stuff now
what I think we'll probably do is create
boom bust Cycles
again you can't have the bus cycle going
below the level of Central Bank
liquidity because optically they make it
rise this is what people don't yet
understand but of course the stock
market should go down 90 can't happen
literally can't happen because of the
debasement it's a money illusion
but what I think we'll do is see hey off
we go to the races that's what happened
in 2018 2018 uh sorry 19 uh early 20 we
actually diverged from the central bank
balance sheet uh massively because
people starting to figure out this game
which is the moment the feds stop the
tightening cycle markets take off
because they know that the probability
of more cowbell more more Central Bank
printing of money
more interest rate Cuts is coming
and so therefore we get boom bust Cycles
so the boom times are too big and then
you get a bust and we people know that
from crypto as well the long-term Trend
remains intact but we we keep getting
these huge booms collabs boom claps but
the trend is still up I think that's
what we'll see we'll be more like the
crypto cycle which is pretty much what
we've just seen as well we had a big
collapse last year and now we're
straight back into the boom as we're
starting to forecast this
all right so uh let me see if I'm
tracking all of this
sorry there is a lot in this no man
there there is but the the more I go
over this stuff the more times I
encounter it the more I'm I'm really
beginning to piece together what's
happening uh it it is though leading me
to a level of distress it does not make
me calm and it's leading me to a level
of distress while I agree with you when
you start looking beyond the next 20
years it it evens back out and and we
hopefully get the exponential Age and
and that works out but I think there's
such a period of tumult that no
yes okay let's get down to an individual
level let's not get to societal level I
can solve I can unfuck your future which
is the series that we ran on real vision
by simply offering you the right asset
you get caught in this trap if you own
crypto or technology you will outperform
this entire thing
now if you're not wealthy enough to buy
you know sort of a brokerage account
doing that because it's complicated for
you you can do it with crypto for no
money and you'll participate
not only in the in the trend of
debasement so you're not getting left
behind
because if you're just getting an income
and you're not buying any assets you're
truly going getting behind
so your 401k may look like the S P 500
that's not making any richer
just by technology or by crypto and
those are the only two assets that
outperform the central bank balance
sheet so there's your solve at a
personal level
I think we have to track we have to
track why let's recap why you get this
uh the stock market rising and falling
with the printing of money so you've
covered that very well but just by quick
recap as you pump money into the system
then the cost of the assets are
necessarily going to rise because they
are a scarce asset and as there's more
money available those prices are going
to rise they're going to rise in
proportion and so you can just watch
them rise and lower together
now the reason why and I'll say Bitcoin
maybe instead of crypto just because
there's a lot of things going on in
crypto they get a little dodgy and so
I'll Focus uh while this I don't think
Bitcoin I'm not a Bitcoin maximalist by
any source of the imagination but a
clear way of describing this correct so
when you look at Bitcoin the reason and
you were the first person to show me a
chart that basically shows the the price
of Bitcoin goes up as money is pumped
into the system and it's interesting
that it tracks in the same way that that
the stock market tracks but for the
exact opposite reason so the reason that
the price of Bitcoin is going to go up
is people are like yo I need to be
somewhere where I can't have my value
debased through the creation of
additional right so printing a money so
when you print money buying power goes
down because prices rise in commensurate
with the amount of money going into the
system so you feel like you're getting
richer but you're not it's an illusion
God I love that you use that word okay
so people then pour into Bitcoin because
they're like there will only ever be 22
million that that's just it and so since
I know that that's it that it is a
finite cap it will never go more then
you can't debase it through the printing
of additional Bitcoin okay so people
flood into that and you see it rise and
so that was the first time because I was
like people were speculating what is
bitcoin what does its price respond to
and once you pointed out it responds to
the M2 Global money supply I was like
okay
that makes a lot of sense so
um walk people through then how to play
that game well why technology that we
haven't addressed yet so why technology
and how do you do Bitcoin well is it a
Buy and Hold are you trading what does
that look like
so if
with Bitcoin I treat it
as an asset
that is going to protect my long-term
wealth and that sounds crazy when it
goes up and down like it does right and
you've just gone through that full first
cycle and you're like oh oh but what
you'll find is the low
is higher than the last time it it hit
the bottom and then the next low will be
high and each high is higher oh it's in
an uptrend
so I just don't need to sweat about the
ups and downs
what I should do is just accumulate
every time it's at a down cycle why
well because the down Cycles signifying
that economic contraction is happening
and the world is slowing down and
Money's been taken out of the system
quantitative tightening which is the
opposite process and assets full and
interest rates are going up so your
disposable income's going down because
your wages aren't going up enough and
the interest rates have gone up more
so it's at that point you know the
outcome is if economic activity is going
to slow down
the next year in a year's time
they're going to be printing money
or cutting rates because it's very
cyclical for the phenomena of this
rolling of this debt
so therefore you should be buying more
at these points because then you've got
the next upside cycle to come which is
what I've always said is it's the
cyclical Trend within a secular trend
okay this guaranteed people do not know
the difference so secular trend is
something long-term Trend driven by a
large explainable Factor
Bitcoin
is an answer to the financial system and
over time the number of users and people
who become aware of its
um of its superpower
the more people move across
that is a secular trend of of adoption
that's really important
the cyclical Trend the cyclicality is
the ebb and flow
within it
so that's the boom bust of the economy
not at a gigantic bus level it's just a
boom bus now Bitcoin halving Cycles
correspond with all of this
why
is there some magic in that reduction of
Supply Maybe
but Bitcoin came out exactly at the same
time that all interest rates went to
zero they're all part of the same cycle
so every time we get into this economic
cycle it affects Bitcoin in the same way
but over the long run the adoption the
secular cycle means it outperforms
everything because there's no secular
adoption of of the S P 500 there's no
secular adoption of General Electric or
you know that stuff's not really
happening yes there's an ongoing
purchasing by 401ks but that's really it
so
so that big Mega trend is the observable
Trend that people can participate in and
it is going to more than offset
what is going on with the debasement of
currency
and that's to do
with metcalf's law
and the exponential trend of the
adoption of a technological Network or a
technology itself great so that's why
Bitcoin charts over time just keep doing
this
it's because it's exponential the S P
500 doesn't do that because it's not
exponential
but the NASDAQ does most Technologies do
and the reason why the NASDAQ keeps
outperforming the s p and keeps out
performing value stocks and makes people
so angry
is because it's all about the adoption
of new technology
if you think about what's been driving
the NASDAQ recently it's the adoption of
AI
obviously that's the fastest adoption of
any technology in history crypto is the
fastest beforehand but this is Eclipse
step it's gone from in six months from
basically zero users to 100 million
users in six months we've never seen
like it I want to put an interpretation
of what you just said for it and tell me
if this is accurate because I thought
your punchline was going to be the
reason that technology performs
outperforms the illusion of prices going
up uh is because it's an increase in
productivity per capita but what I hear
you saying with metcalf's law is it's
actually outperforming because of what I
will call you're going to hate this word
but hype that basically the people are
pouring into it they're so excited about
oh my gosh that's not what metcalf's law
is
but I'm saying if if you really think
about why metcalf's law would drive
value that exceeds the illusion
that is the only thing I can take away
from that because if it isn't increasing
productivity per capita why would it
otherwise outstrip
it is we'll come on to that in a sec but
metcalf's law is the number of nodes on
a network I number of users of crypto
versus the number of applications in the
interconnection so the more we build out
a web 3 world
the more that that's the multiplier as
opposed to the people initially it's the
people who use it so like Doge has no
use case apart from memes memetics but
it has a bunch of users
um Bitcoin has limited use
but a huge amount of users as well but
the use case is very you know it's very
clear which is the you know the scarcity
of the assets and the purity of the
asset and the security of the network
ethereum has lots of nuises defy nfts
all of this stuff and a whole load of
users so the the this is what's driving
these things why are we adopting the
technology that's the productivity
equation
the financial system becomes more
productive and safer and secure by using
cryptocurrency rails we become super
powers as humans by adopting AI robotics
we become more productive and ability to
do stuff by adopting EV technology we
you know all of this stuff
is actually driving productivity
now here's another so I need to push
back on that so I don't think it's it
the value created in web3 speaking as
somebody is as in web3 as a human can be
I've put just a gazillion of my own
dollars into this uh
it's right now it is all people betting
that this is going to be the future
versus it actually being the future
right now so that's why I say that's how
you make money my friend the moment it
works
right is the moment the bet the
investment
the
there are use cases so let me just
let's just get out of the nft noise and
everything else
I'm having dinner with a friend of mine
he used to run one of the largest the
training operations one of the largest
banks in Australia
that's a big Bank the equivalent of Bank
of America
and um he's like yeah you know he's just
retired he's like yeah I've been heavily
involved in crypto at the bank doing
stuff so I'm like what are you guys
doing guys we've issued five stable
coins
I'm like why why do you need the stable
coins why you know what why not use
tether or usdc or whatever he's like
okay so this is what people don't
understand why crypto is so important
for the financial system he said we're
in Australia we have a gigantic pension
system
our pension system buys a gigantic
amount of U.S equities
the US is about to you go to settlement
So when you buy a share and you have to
pay for it from t plus two or t plus
three so that's trade date plus three
days to pay for the bill to t plus one
okay
that seems fine
foreign exchange transactions are t plus
two
they can't settle the US stocks that
they buy
so they either have to leave massive
amounts of money with a broker that they
dealt with who could go Bust or use uses
the money ineffectively or they create a
stable coin for instant settlement
so they can so and they've built that
this one is on top of ethereum okay fine
but that is a multi-hundred billion
dollar use case
for why crypto is very powerful for
increasing productivity within the
financial system alone
and there's many of these all over the
place so why is tether such a big useful
stable coin you've basically
fractionalized the US dollar and now a
person in the Philippines who works in a
rice field
to receive a payment from his cousin
who's living in New York City
instantaneously without any cost
in dollars which is the currency they
all want
that's mind-blowing that's why the
stablecoin system alone is sojigantic so
I don't agree with there is no
productivity or killer app the killer
app of crypto so far has actually been
stable coins
and that was so I want to make sure what
what I'm saying is is very nuanced but I
I don't think I'm being clear enough yet
so what I'm saying is that
um metcalf's law if the reason that Tech
has outperformed is because of metcalf's
law which remember I was surprised to
hear you say I didn't think that's what
you were going to say I thought you were
going to say productivity but you said
metcalf's law if that's true and I'm
just trying to understand what the
reality is and you're saying this is how
you make money I hey I'm with you I'm
just trying to understand what this is
in without fancy uh Concepts just like
the the down home nitty-gritty so
metcalf's law is as far as I can tell
that is the point at which
it is hype it's people getting excited
now they may be hyped for good reasons
they may be hyped because they're right
about where productivity is coming from
but is well then let me ask it this way
for those just listening he's shaking
his head uh is there a difference
between metcalf's law and productivity
or to you are they one in the same
no they're two entirely different
concepts metcalf's law is the value of a
network and how to Value it and the the
value those are two very different
statements is it the value of the
network or is it how you value its
future uh utility
every vote that goes into a market I
every time price moves is a vote about
current expectations and future
expectations so it's difficult to pass
out what that means but I've provably
shown
that I can distill metcalf's law pretty
simply in cryptocurrency to two things
number of active users
okay that makes sense that's the nodes
and then the value of the economic
activity and all I did was the dollar
value
that gets exchanged every
month or week
those two numbers multiplied out gives
this crazy ridiculously large number but
that when you put it on a graph is
exactly the same as price
and so it's remarkable because price is
not in that equation
the math that you were just saying the
value of the transactions on the network
it's the it's the it's basically
no met cops look nobody knows how to
fully measure a metcalf's law value
system so you need to approximate it
because it's quite a complex
mathematical formula and you're dealing
with imperfect worlds where you can't
put it in but anyway that's nothing to
do with the productivity
people are flocking to the technology
because it increases
whether it's your productivity or solves
other solutions for you you know so I'm
going to say that slightly differently
and this is where I'm surprised it's
very possible I'm missing something you
were so much more thoughtful on this
stuff than I am currently but this still
what I'm about to say still seems true
to me and that is that uh metcalf's law
is the
is the observable response to when
people believe something is going to be
going to be amazing so take eth people
believe that building on ethereum is
going to be the future I'm one of them I
believe it to the core of my existence
but it hasn't yielded
that yet
no
that's not right every mobile phone
network is priced metcalf's law all
networks the price of metcalf's law but
but why can't they be I think I don't
think it matters Tom I think you're
getting caught
in a
in a thing that doesn't really matter
what matters to the bigger equation the
two things that matter with with
um this whole thing is does
Bitcoin protect you from this
issue of debasement the mutualization of
losses amongst everybody yes okay fine
nothing else matters there
does it could it be form part of what I
call the exponential age of Technologies
which could eventually increase
productivity
yes
now they're not mutually exclusive
there's no you know better it's just a
measurement of the value of the network
but this productivity idea is the big
one
and the productivity idea is if we can't
change we can't keep increasing the debt
remember the magic formula was
population growth or productivity growth
plus debt growth we can't change the
population
the debt growth has got too far so we've
got this one thing in the middle it's
the only thing that can change this
entire equation
so what we can do
is try and grow that okay now let's step
back and say okay what's happening to
the world
that's a really big change that happened
that the central banks are looking like
they're going to print money to do
and that's the Green Revolution it's
being driven by Europe but it's being
driven elsewhere
so yes climate change yes all of the
benefits of doing this
but there was a magic outcome
so productivity
let's say we use AI we can do more stuff
and you and I have talked about this in
the past right we can expand now human
knowledge in ways we can do before and
Factory lines and agricultural Machinery
just basically creating more
productivity per human okay fine
but the big equation in this is the
inflation-adjusted price of oil which
let's call that the
the kind of best Benchmark for energy
input costs have been forty dollars in
inflation-adjusted terms for 70 years 60
years
so we've got a fixed thing here which is
can we put more output
per calorie or kilojoule of energy that
is what productivity is all about
so technology keeps rising and that's
great keeps going
but all of these governments are focused
on the other part of this equation which
is can I lower the cost of energy
because if you drop the cost of energy
from 40 bucks per barrel of all
equivalent
to 10
you four x productivity
and there is your solution
and that is why they're pouring
trillions of dollars into this and we're
seeing what's known as Wright's law
sorry all these terms which is the
increase in output of a new technology
has a commensurate measurable decrease
in the cost
and we're seeing that with all of the
green energy
so it's just getting cheaper and cheaper
and cheaper and cheaper now we can't
scale it enough yet but we know that
there's nuclear there's going to be part
of this equation there's a bunch of
things but over time
we will move away from that forty dollar
fossil fuel anchor
and move to ten dollars so think of the
multiplier because technology is doing
this
and the cost is doing that that is that
is what the productivity miracle that is
coming
you can reboot your life your health
even your career anything you want all
you need is discipline I can teach you
the tactics that I learned while growing
a billion dollar business that will
allow you to see your goals through
whether you want better health stronger
relationships a more successful career
any of that is possible with the mindset
and business programs and impact Theory
University join the thousands of
students who have already accomplished
amazing things tap now for a free trial
and get started today
so help me understand why didn't the
internet which still to me feels like a
productivity productivity Miracle why
didn't that
um
change all of this why why isn't it
already the lily pad that you believe
the exponential age is going to be
so I think
because it replaced jobs
I think is going to replace jobs
yes I do
but I think the the
productivity trend is a function of
demographics as well
and I don't fully understand why the
internet didn't do that but it also hold
out manufacturing jobs so there was a
balance on aggregate what happens within
the economy so I'm thinking it's on
aggregate it wasn't enough to offset
these Mega trends that we talked about
that were driven by the demographics and
the Denton and the globalization so I'm
thinking it's that
and so we have to have an accelerant
because technology growth is not enough
to offset demographic
issues
and that's what I'm thinking it probably
is
you know
we did create
I mean Trend wrap GDP has been falling
so whatever we've done with technology
and the same number of people roughly we
don't seem to have pushed up GDP growth
let me ask a really
ugly question
hearing everything you're saying
it seems like I know it's not but I I
I'm not yet sure why not why isn't the
baby boom generation dying off and
population Contracting
uh deflationary in a good way
it is
well then tell me more uh I thought so
population collapse my gut instinct is
that it's terrible
um what's the benefit
the benefit is more stuff for you and I
our per capita GDP goes up and it's
observable in Japan it's observable in
Switzerland so GDP per capita goes up
and that helps offset some of these now
the problem is is per capita is a nice
economic term
but right now it accrues to Mega giant
companies
so
it's a way of redistributing that
Capital amongst the people which is
important
which is why you know I believe in
things like web3 Technologies because
that allows more people to participate
in ways that they couldn't participate
in before because if not Google captured
it all and apple capture it all
so I think there's a probability that
as the population shrinks
it it creates a Slowdown in growth
because of the magic formula
but if you can increase that
productivity element
then we will be richer per capita now
there's a government problem of how you
distribute that
you know you need to tax corporations
more than they're being taxed these
giant corporations that pay no tax most
people with the average business pays
tax up to here but Google pays I don't
know what that model rate tax is five
percent
it's wrong
and Amazon because
they're benefiting from the holding out
of the American worker in the technology
boom and the people aren't which is
what's making people angry now they're
not doing it because they're bad people
it's just a set of cards they've been
dealt with it's been incredibly
attractive to be you know a super large
company particularly one with a growing
industry like technology
so okay so I think net net you can
orchestrate it
that per capita GDP Rises
but you have to think about that issue
of does it accrue to the people or not
what happens if the population is
declining but productivity doesn't go up
well then we just go Trend rate of
economic growth just keeps falling
and so the reason that that I'm
so I always assume that the reason that
population falling was a problem is
there are fewer people that want to buy
your goods and that's why it it Hollows
out the sort of uh GDP core economic
engine but as I think about it it would
also
um
it's interesting it's going to create a
weird sort of uh feedback Collision but
it would increase wages so if there are
fewer people for companies to hire uh
that's great for the employees wages but
if there are fewer companies because
there's no one to sell anything to no
problem bad assumption and this is I can
see the the IMF go into this whole mess
as well and everyone's now says
inflation's going up as population dies
out bad assumption because
technology is in the business of
replacing costs
and they will just find ways to employ
less people
I mean again you and I have talked about
this is like
10 years ago
video editors and sound people Etc were
really expensive
but now we can do it on AI
so people have to do two or three jobs
they hustle it's it's changed the
structure of stuff and Technology will
just keep looking for the cost
and replacing it it's it's it's
Relentless it's the biggest observable
trend is once you digitize things the
cost goes to zero in everything it
touches
did you hear the recent speech I think
it was in uh the European Parliament oh
God uh I don't know exactly where it was
the speech was in English though and uh
they were saying basically uh that we
want to degrowth and they made it sound
like this is going to be amazing
greatest thing ever d-growth uh less
people on the planet just all good all
good
um
but you're saying that's a bad
assumption so now the bad assumption is
that it creates wage inflation
the degrowth
okay degrowth
at first
creates
more
for less people
okay great
and if you can distribute that great
the issue is
at the end of it
you end up with the robots and the AI
because you are hyper incentivized to
keep increasing productivity
that you are sowing the seeds of our own
demise
because of the economic engine is
actually forcing you to to take this
incentive it's kind of weird but that's
where it's going
woof
okay slow growth and the shrinking
population is more productivity the way
of creating productivity is robots AI
Etc
the faster they grow the more that we
use them the more that we need them
because the population's smaller this is
why Elon Musk keeps saying people don't
understand this he keeps saying
shrinking population is bad
it's not bad for economic growth going
down
it's bad because it incentivizes
everybody to increase the workforce so
the
the human the
the population side of the equation can
be offset by the machines
so look at an Amazon warehouse perfect
example Amazon has gone from having one
and a half million people uh about a
million people working there and zero
robots to a million people and 500 000
robots the robots work 24 7 365. they're
more productive than humans in all
aspects and they just keep replacing
humans sorry didn't you say that that
was still a million humans working
though so it's just increased
productivity through robots so are you
saying that that should be to match
their scale it should be 1.5 million
people
correct
so they're replacing the jobs that would
have naturally been
coming from humans
and this trend will accelerate until
there is no need for humans because the
machines will have taken over this is
Elon Musk thing is the more we try and
make these machines more intelligent the
robot's better elon's building this damn
thing himself right Twitter is the
training model for the AI that he's
built and he's got Dojo one of the
largest supercomputers at a focus task
that's ever existed it is the largest
and then he's got the Optimus robot
I mean there's the end of humanity right
there
because once the Genie's out of a bottle
so that's why he's worried and that's
why you know you need to pull the rip
cord and piss off to Mars
it's not from anything else it's The
Logical conclusion of economic forces
creating more and more powerful
intelligence
that doesn't require humans
gets to
now I feel seen by you because this is
where I'm at
um so then take us back to your early
statement that you're optimistic about
the exponential age whereas what you
just said is how I feel about the
exponential age when I don't forcibly
put my optimistic hat on because look I
I ultimately I default to optimism I
think it's a wiser place to be I
certainly think it's a more enjoyable
place to be
um and
I think that people should find that
path where they can explain things in a
way that end well and I thank you for
letting me wear my more pessimistic hat
because I knew you were going to be in
the more optimistic seat here but
why when you look at exponential age if
you can see the the economic forces will
incentivize that path where as
population demographics or destiny
they're in plain sight everybody can see
it it is going to decline massively at
least temporarily that that is for sure
and so as the population begins to
decline dramatically as we then the
economic forces push us to lean more
into Ai and Robotics and the guy closest
to the problem is like hey P.S let's get
to Mars
um
where where do you like what's the thing
that has to go right or where do you
think that either Elon or myself are
looking at this wrong so your confusing
time Horizons a lot of people do this a
lot of people go the dollar is going to
collapse because it's so much in debt
probably right is it gonna happen this
year
next year or in 20 years time
you can't worry about something that is
20 year out because the future paths are
yet unknown right because we're too far
out
The Event Horizon is too far out to get
a high probability forecasting
so we have to make a huge bunch of
assumptions
so let's go to the shorter time Horizon
is
are we likely to benefit
from the ability to superpower human
knowledge probably
are we going to benefit from cheapening
energy costs probably are we going to
benefit from
the things like self-driving cars
driving us to work delivering packages
drones all of the stuff are we going to
benefit from the space Technologies and
starlink how are we going to benefit yes
yes yes
is the stock market going to go up if we
invest in this stuff yes okay so there's
a lot of benefits that are being laid
out for us all is longevity of life
going to increase yes
are we going to have massive
breakthroughs in in genetic Sciences yes
can we train AI models on cancer and all
of this stuff yes right okay that to me
sounds like a golden age I call it the
Renaissance or I'm English I call it the
Renaissance
um but that is
but after that you get to what people
refer to as the singularity
is where it becomes unforecastable and
this is what the debate is going on
amongst Sam Altman
emad mostacc with
um Elon Noah Harari everybody right it's
that moment is that what the hell does
that look like
elon's like I don't know so let's just
have a plan B
makes sense
none of us really want to go to Mars but
I get it right if we completely screw
this up but I don't see how the the
virus of Technology isn't like in
2001 A Space Odyssey just doesn't go
with the ship you know so I'm not sure
yeah that's my I don't know that
are we able as humans because we're so
such an Adaptive cockroach of a species
well we haven't proven to be yet we're
still pretty young on the planet versus
others but let's assume we're like
crocodiles and sharks and we can hang
around for a few million years will we
figure out an Adaptive mechanism to deal
with this
maybe that's the that's the Optimist
outcome is like oh no humans we're
humans we're we're amazing we'll figure
this out and the other one is we're
never going to be smart as these
machines we're so totally [ __ ]
I don't know but I know
that in my lifetime
there's a 20 or 30 year period
which might be a truly extraordinary
moment in history
and like and the issue is we can't see
through the other side of it and that's
terrifying but you know it's you know we
I think we mentioned this last time we
chatted I don't have kids so I have to
worry about it less hmm
people who do I get it I get it it is an
existential
threat
of which we cannot figure out how to
stop it and regulation is it's not going
to stop it
because the technology is out of the
bottle it's like you can't stamp crypto
out
because the technology is out of the
bottle now
and it's everywhere
and yes open AI is the current leader
with Microsoft but all of the big us
companies are incentivized to
out-compete each other
and so they're incentivized to create
more and more powerful models but if
they get regulated
or somebody else will do it
this is the geezers you're talking about
geysers is they're popping up everywhere
but really what is happening is it's a
massive bloody explosion
that is Unstoppable
so talk to me talk to me about
regulatory so as somebody who doesn't
live in the US but you pay attention to
the US uh you probably have a much
clearer picture than somebody like me
who's not only in the US but I'm in
California uh
how do you think this is all going to
settle out is the US going to get left
behind are we being too strict
regulatorily
um how does this play out
I mean this is an impossible choice
right how do you regulate this thing and
how do you get a bunch of 75 year old
politicians to regulate this thing
I don't know
I don't think anybody knows
oh we're gonna align the models with
Humanity what does that even mean
nobody even knows how to do that for
God's sake we don't even understand how
large language models learn
we don't even know what they know all we
know is hey we're figuring out different
questions to ask it and it seems to be
able to answer them
but when you listen to Sam Altman he's
like
well have we created
um you know AGI
I don't know he said I don't think so
and elon's like worth three to five
years away it's Unstoppable because the
profit motive
um
well also what you're talking about
earlier with the need for increased
productivity but if you were to so map
this on to the way that different
geographies are responding to bitcoin
and crypto which feel very similar to me
uh in terms of either you're embracing
the new where things are going you're
willing to face that the way that we're
handling the financial system creates
these incentives and so you're either
trying to Capital control lock people in
not to let them leave the country or
certainly not let the capital leave the
country or you're like hey you're using
it as a way to get because this is a
really important Point Tom why why do
they want to stop you leaving
because they want to mutualize the
losses on you
um
if you leave to the other place
they're not neutralizing the losses on
you
because your crypto it's you know that's
why the capsule controls it's like don't
leave our old system it's like exactly
what's happening with the regional Banks
please don't take your deposits out
because they all go bust
um
our participation in the fiat currency
system is our deposit and if we go
you're just left with leverage because
it's the collateral of the system this
is why they don't want it to happen
and do you see
how do you see the US do you think that
we're we're being because it feels very
antagonistic to crypto at the federal
level you're getting some stuff
happening at the state level which is
interesting so this is really important
so firstly just on the AI versus crypto
very oppressive on crypto
the biggest AI companies in the world
the US so they're probably going to be a
bit softer touch around that and these
guys are playing the usual trick of
we'll be good guys you don't need to
regulate us we'll kind of do the right
thing right because there's too much
money available in this equation so
crypto us because you know the US Pro
U.S citizens actually have a lot of
capsule restrictions the land of the
free is actually pretty unfree
people don't want to deal with U.S
citizens in Banks so if you come to the
Cayman Islands or
the UK or Spain a new U.S citizen you
want to open a bank account nobody wants
to open a bank account really
it's pain because of the US reporting
and the U.S tentacles State tentacles
its grip on the Global Financial system
it owns Swift payments it owns
everything and it wants every U.S
citizen to pay its taxes because the the
mother beast needs to feed the debt
burden right so it's actually very
restrictive so it doesn't like you being
able to opt out the financial system
okay they want to make sure they get
like taxes it's fine you're your citizen
but different countries have been more
loose on it I think Europe is going to
freak out over AI more than it the US is
but Europe's been actually better on
crypto than the US has
why I don't know
but the crypto side of the equation is
really important because I've lived this
my entire life
why is London such a big Financial
Center considering it's a tiny little
island in the middle of a really Brown
muddy cold sea
because
it speaks English
and it has a well-developed financial
system and legal rule of law
but what really changed for London
was the U.S coming off the gold standard
um back in 1971 to wherever it was
so that created something called the
Foreign Exchange Market
because before everything was pegged to
gold
and now the pound and the dollar and the
Deutsche Mark and the Yen were all
moving around independently
and the U.S had Capital controls because
it's got the global Reserve currency
it's like please don't mess around you
know we've just gone off and changed the
global system we need to be careful okay
I get it fine
so the use case said well all these
people we trade with
they need to get access to different
currencies now
so the Foreign Exchange Market started
largest market the world had ever seen
then the US made another full step so
the banks started moving to London right
big lucrative massive Market
deepened
the UK's trade linkages with everybody
Financial trade linkages next thing
happens is now everybody's trading
around with currencies the dollar is the
middle currency the reserve currency
and people want to borrow dollars
and the US is being restricted with its
capital so the UK says forget it we'll
do it it became what's known as the euro
dollar market which is the overseas
market for dollar borrowing and lending
that becomes a we don't know the size of
it but let's call it a 400 trillion
dollar market whoa
and then the US
then we get this big breakthrough in
derivatives the US has got the Chicago
Board of Trade doing Futures and options
and all of this stuff
but
we start to figure out more complicated
structures things like swaps
and the US stops its banks doing it
by its use of regulatory Capital they're
like no no this is inefficient you can't
do this the UK and Europe went well
we're going to regulate and allow it to
happen because it's big we've seen this
before
that becomes a quadrillion dollar market
Jesus that's why every single Bank from
about
1985 well particularly after the
Big Bang in London so let's call it from
about 1990 to about 2008.
all the major Banks largest operations
for London so Goldman Sachs biggest
operation most profitable London Merrill
Lynch London uh Merrill Lynch is
different because it was a brokerage
firm but JP Morgan they're all London
so London if you've been watching the
news
is going to do the same thing it's
called regulatory Arbitrage
London is putting together a very
sensible set of crypto rules
as has Europe as has Switzerland as has
Singapore as has Hong Kong
as as Australia okay there's its old
Trading Group that it did with Euro
dollars and it did with derivatives and
it did with foreign exchange all got
their regulations in place the UK is the
Hub at the middle
and it will capture the Lion's Share and
before you know it coinbase Gemini and
everybody will move to London they'll
still be listed firms in the US but they
will move and this is the issue with the
AI and crypto you can't shut it down
because if it is productive and it has
value and it has future expected value
that's higher than today
it will go somewhere
and if we look at the crypto market now
it's a trillion dollars okay that's
meaningful for the UK economy
where is it going to go well 10 30 50
trillion well the UK wants that pie
because it shot itself on the foot after
brexit
um so
the us could try and regulate it all at
once it'll just move it's like water
decentralized networks and Global
finance and money is like water it flows
everywhere and it's the same with this
AI which is why I don't think we can
solve it with regulation
um
because somebody's gonna believe
yeah it will go somewhere that is for
sure walk me through the reversal the
Chinese reversal on uh Bitcoin so they
had clamped down everywhere including
Hong Kong but they've now opened up Hong
Kong that was startling to me
well like I'm searching
they've done this several times before
is at the wrong time they're trying to
stop Capital flight
because everybody knows that the China's
been using this to get money out of the
China economy which is what stable coins
are being used for as well as has the
global Art Market as has there's a lot
of things that the Chinese use to get
money in and out of the system
so they try to stop that when the US
dollar is very strong
that's a start because they can't lose
control of their currency it's a big
fear of the Chinese
Additionally the Chinese have moved
towards the Central Bank digital
currency
which is very useful
for them because once you you do it you
can now take stock
of the number of yuan in your system
because there's no cash there still is
but you know what you're doing is you
can then see where it goes
um and so I think they did that
they got the size and scope of what
their money supply really is
and now you can reopen it because you
can now track it because it's all
digital
well you couldn't track it easily before
because you could hide it with bank
payments blah blah blah but blockchain
makes everything transparent
much to you know everybody's Chagrin
because everyone thought it was a
privacy thing it's actually not not in
that kind of mechanism and I also think
this is more contentious is that's the
reason Finance survived everything is
the Chinese government wanted it to
hmm because
that is the linkage between the Fiat
world and the crypto world and they own
the you know Chinese State essentially
is a supporter of the largest crypto
Exchange in the world because that is a
potential bet on the future of the
system of money and it once I'm saying
that and makes total sense where is
binance headquartered
there isn't one
where does oh God what's his name
CC Dubai
okay I was gonna say I can't fathom that
he's actually in China
uh very interesting so when you think
about
um sorry in the U.S will probably
support coinbase
in the end what because everybody needs
control of the situation if not the UK
will take control of the entire monies
the global world of new money
I hope you're right about that but I
don't see a single move on behalf of the
US government that would lead me to
believe that uh unless they lose the
coinbase lawsuit
I think they're just gonna we have a
change of government
yeah true true what do you think about
I don't know we haven't yet seen the
contenders you know everybody's got a
bit too much hair on them still so we
don't it doesn't feel like there's
something obvious but maybe there will
be maybe something out of this you know
I thought Frank Suarez not because he's
a um
Francis Suarez not because you know he's
the pro crypto guy
but he's the mayor of Miami right
he's the mayor of Miami he is
Centrist essentially
you know he it's just that kind of
person younger more direct
we need to find somebody of that we
can't the US can't keep going down the
same thing of baby boomers voting for
the Baby Boomers voting for Baby Boomers
and trying to protect themselves that
has to be broken somehow it broke in the
UK look Rishi sunak he's Young
he's a Centrist young whether they keep
him in or not I I don't I I don't vote
in the UK anymore but
at least they're making progress like
crypto regulation and Ai and technology
and fintech and because they've got a
young young government and we've seen
that in you know France has done well
because macron is younger
um that you know so we need that
yeah that I will agree with so since I'm
wearing my uh my Doomer hat today I'll
push on the geographical thing so what
it feels like here in the U.S is that
things are really beginning to
intentionally divide along geographical
regions and uh you're getting like this
hunkering down into blue State Red State
uh people peeling off if you're into
crypto you're either going to Texas or
you're going to Miami
um and seeing the there's this whole new
idea of uh make America States again
where people are saying hey we need to
stop doing all of the regulation at the
federal level we need to start pushing
this down to the state level
and letting the states compete for The
Residency effectively of the populace
and let them begin to move now I'm
grateful as somebody that feels out of
step with the federal government on my
take on crypto I'm certainly very
excited that that is at least an option
but like your boy
um Goldsmith gold weight
James Goldsmith there we go uh I am I
would like to to broadcast my dire
warning
while there might be a part of that that
is good that ends so badly because you
end up fracturing you end up pitting
people against each other it ends up I
think becoming very problematic very I
saw this in 2012
um because of what happened in Europe
and I saw what was happening in the U.S
it's one of the reasons I bought a and
built a house in the Cayman Islands
I just thought I need a plan B
and the plan B needs to be somewhere
where nobody cares about hmm but I can
still live a high quality of life it was
a very purposeful decision knowing where
the world was going to go because there
was no solution so the kind of
realizations that you're having now I
had
it's more visceral for you now because
you're just seeing another banking
crisis but we saw it in 2012 we saw
really bad outcomes there and I think
the US one is still to grow so it's just
it's just the the delayed response of
having it happen to you the moment it
does it's like okay I get it now so I
did this and I don't think that's going
to go away I'm hoping for a miracle what
doesn't go away sorry populism anger
uh Division and a separation into
smaller States I actually spoke to
um an old client of mine's old friend
who's one of the world's great macro
thinkers is Italian counts and he speaks
very quietly I was telling him about
this I was like I think Spain is going
to Splinter into countries the UK is
probably going to Splinter Scotland will
probably separate you know blah blah and
he said
listen Rel the trend of the last 50
years
was super States the EU the United
States of America he said
usually those things end up separating
again
and if you think he said you know he was
a whatever he was a count from a Italian
you know one of the Venetian States
these little small states he said the
world does this Ebbs and flows
centralization decentralization right
it's very common he said it's not
necessarily a bad thing it's the getting
there that could be Troublesome depends
how it how it happens you know don't
forget we disbanded the British Empire
that was gigantic
and yes there were some pretty ugly
stuff that happened like you know the uh
what happened in India when when we kind
of gave back the keys and everybody
killed each other in the partitioning
which was ugly
but it did happen over time so I don't
know I think the trend is not going to
go away unless we somehow change this
economic equation because that's what's
driving it
yeah it's the same equation that's
driving it
yeah very very distressing and I think
unfortunately I think the pieces are
already on the table in terms of how we
could potentially change the economic
system which is effectively Bitcoin you
have to remove the ability to inflate
once you take that away though there are
also consequences on the other side and
so uh it is a very
um
my argument has been
you can't do this at once anybody who
does this wants the end of the world
it has to happen as a Glide path and
over time the crypto side of the
equation the new rails for the system
hmm
can experiments get itself sorted out
figured out and then we can go so my I
spoke to the to the Department of
Defense about this in 2014 13 13.
and
I said
you know but they periodically you know
reach out to people like me you know
thinkers about stuff who who are looking
at crises and stuff like that because
their job is to to assess risk
and I was talking to them about it and I
said
obviously he said you know we're worried
about debt we're worried about the
system blowing up I said yes obviously
everybody is
um because that's one of the things that
need to game out what happens if
the West loses control of money and debt
and everything else
and I said well I think the answer's
there and I think it's Bitcoin and he
said yeah well tell me more I said and I
think the US government and the UK
government
invented it
which is the NSA and the gchq in the UK
who the two World centers of
cryptography because even how the white
paper's written do you think there's
times
yes
I always have and I asked the Department
of Defense they said yeah we've
considered that too
or it was just people from that that
went rogue
I don't think it's necessarily A
rogueness I think like Google have like
Google X where they do tons of
experiments right they know that one of
the esoteric risks for the entire
Western system
is the issue of money
so there's probably groups of people who
are given things to try
and if you can see the new system maybe
they've tried 100 of these and just one
succeeded we don't know
but it would make sense because that's
what they do this kind of stuff
so one of these took off
and so
I think it's always been I don't think
it's a coincidence that came out the
financial crisis I don't think it's a
coincidence that that the halving cycle
and all of this is all related
it is the solution always always has
been the solution you just can't go
there tomorrow so all you need to do is
let it happen slowly
and manage that transition you'll be
okay there'll be times where it speeds
up because we've got something bad going
on and there's times when it slows down
but if you and that's why I think the US
government regulation is trying to do
they don't want to ban crypto just slow
this down because if all the deposits
leave the banking system it's game over
if they don't set up a way of collecting
taxes because everybody's living in
crypto land and they have to ask your
honesty and what trades you've done
that's not going to work for them
because they can't pay the bills
so
I think it's they're trying to catch up
um I think that the UK will have a cbdc
I think the Europeans will it's all
coming relatively so relatively to the
next five years three years four years
and they'll feel more in control of the
system that they've got because they
need to pay the interest payments
because if not and the eight the
benefits the Aging benefits you know all
of the Social Security is a problem with
such an old population
So speaking of managing this transition
well how bad do you think the banking
crisis gets before it stabilizes
so
feels that we're in the kind of Summer
phase of we know it's bad but nothing
extra is happening but meanwhile the
deposits keep leaving the system because
the fed and whistling past the graveyard
going la la la I can't hear you the
problem is interest rates are too damn
High which is the same problem I said
they need basically to get back to zero
again
and it's leaving the system
so
there's two phases of this
one is the banks will start getting
worse again we'll see the use the kre
ETF which is the Regional Bank ETF it's
easy you can look at that get it on
Yahoo finance wherever you see the price
of it going down that's telling you it's
kicking off again
and the outcome will be to keep bailing
out these Banks whether they force them
into mergers which was how the banking
crisis in 2008 started and then
eventually it's like [ __ ] we need to
give money and sort this out so we will
see that we know
that the banking system can't go to a
full-blown reset because we've already
had that I think it'll bring down one of
the big Banks before it gets really
serious
and which one is that
I don't know Bank of America something
like that their share price doesn't look
great the longest the structure of it
but in the end the Federal Reserve will
come with their magic illusion bullet
the magic money and that money magic
money will will will solve all of this
and we will all get neutralized because
the asset prices will go up and we won't
own enough of them and we will get
poorer so that is coming
the commercial real estate the so the
quick one is the deposit flight the FED
need to cut rates the yield curve which
is the value of money in the future of
interest rates in the future has to be
higher than currently it's the opposite
right now so that needs to happen
and then in 2024 and 2025 it will all be
about the commercial real estate
because all of these like real Vision
has offices in New York for 65 people
and three people go to the office the
moment we can get out of our lease we'll
get out of our lease as is everybody and
all this stuff's going to be empty
so I think that's um that will all end
up on the FED balance sheet so the the
banking crisis will continue it'll make
it harder for the average person to get
a loan and the Federal Reserve will see
this as the economy goes into recession
and eventually they'll start cutting
rates and eventually The More Cowbell
comes back
and as I like to say it is written we
kind of know there's no other as we as
we go deeper into recession so if we're
already in recession all that happens we
go deeper into recession it's already
written we know the outcome yeah I mean
Jesus
uh who heavy okay so I want to go back
to cbdc's
um I've heard you say if I'm not
misquoting that you have a contrarian
position here that you think maybe
they're not all bad they're not bad
because firstly I do not buy the
arguments that well they've got control
of your money if you do this you're
signing out to the devil I'm like
you guys signed over to the Devil by
having a bank account
all of your funds are available
and if you telling me Oh well they're
going to force us not to use cash and
you're telling me you're using cash for
anything apart from tipping the valet
guy at the restaurant and buying weed
you're lying nobody uses cash
nobody uses cash and uses cash for my
weed Ral I live in California no exactly
so nobody uses cash so that's a it's a
lie
and so they're using their credit cards
they're using their PayPal or their
venmo they're then on social media
they've got Google Everything Is
accessible by the government that your
privacy
was the story 30 years ago not today
maybe it's gone
so a cbdc
means that the government
can
become more
well they can even stop money now you've
seen it you know either Russian suddenly
you don't have the money right so all of
that is always still there now so yes
they can penalize you but I also think
you can do good with it so I think
there's a lot of bad outcomes and
governments will abuse it fact I also
think there's some really amazing
outcomes for economics
I've heard you say that but I don't
understand how that would work I think
so let's say you have Hurricane Katrina
devastating people aren't insured it's a
con it's a catastrophe
so how it happens now is the federal
government makes a payment to Louisiana
and blah blah and there's all these
middlemen and everybody grabs its stuff
and it doesn't get to the people
you could give
three million people in New Orleans
instant payment in seconds
you cannot give economic stimulus to
wealthy people you can give it to poor
people
you can penalize
people who have excess savings
versus the people who who don't have
enough savings so I you can give poorer
people a 15 interest rate
to to lend that I.E to get on deposit
okay that's all that's interesting
and maybe they can borrow money at One
Price versus another you can do a lot of
Behavioral economics and changing the
system and behavioral economics
everyone's like well that's the Chinese
government they've got spy cameras
everywhere I mean look the US government
knows everything what you do I mean
every time I come into the country I
just stare at I stare at the global
entry recognizes my face I don't even
show my passport to anybody I'm into the
country I'm then into an Uber everyone
knows where I'm going my Apple Maps
clocks me I mean look forget about it
they're all the governments are the same
so I just think economically speaking we
could do interesting things we don't
have to be so Luddite about how we
use fiscal stimulus
and that we just said
we can create incentives good good
incentives
if dealt with well
if dealt with well yes uh you said
something all governments are the same
that uh uh oh yes violently disagree
with what it's just the main it's just
the main you're all what governments
stand for We Stand For Freedom we stand
for that it's all a meme
they're all the same they all control
their people in a certain way and dress
it up in a different manner one says
we're protecting you that one says the
enemies outside the others they're all
the same then how do you hold a society
of large numbers of people together
you create different ways of doing it
and it's it people it pisses me off when
people say
us good then bad by whose judgment
what because 1.4 billion people in China
live their life differently than the 350
million Americans they're bad we're good
because they don't follow our system
that's insanity and Americans would
suggest that they're pressed up against
the window desperate to get out of China
because they hate it they go there they
don't hate it
why would the Japanese want such a
regulated Society because it works for
them
so we just have to drop our own lens of
who is good and who is bad and I'm you
know I've traveled to 120 countries I've
lived in several
I'm just very open-minded about
different people choose different
systems that suits them but most
governments in the end try to help their
people but will also abuse them in the
process
and it's just different ways
it's interesting
um so I don't know that I disagree with
the that at a very high level in that
everybody is doing something uh you
didn't say nefarious but I will say
nefarious and it just comes down to the
flavor of that's power writing power
power is just different flavors of power
yes however having read a Trilogy of
books that I will recommend to anybody
the specifics of how different moments
in different societies will rear the
dangerous head it does seem to me that
you want to imbue the populace with a
certain mentality that will keep the
government in check and so I think the
thing I'm pushing back on are the
moments
where the humans because ultimately all
of us could rise up and and stop our
governments
um but when you look at Mao's China or
Hitler's Germany or Stalin and Lenin's
Russia they they are terrifying to a
level that I don't think modern people
have availed themselves of to realize
how wrong this can go
and so when I look at the cbdcs
um I don't I don't have a lot of wisdom
here I want to be very clear that I'm
now thinking through something out loud
for the first time
but uh
reading the red famine for instance
which is not part of the the trilogy of
books just because I alluded to it I'll
say it uh Gulag archipelago which is
about Stalin's Russia
um the rise and fall of the Third Reich
which is about Hitler's Germany uh and
Mao the untold story which is about
Mouse China they they all illustrate a
level of
um human evil that is is just
unimaginable then there's a fourth book
which is
um the red famine which is about the
Ukraine in the 1920s if I remember
correctly when they went in to the
Ukrainian farmers and said um all of you
cool locks who are basically you're
you're out producing other farmers and
therefore you must be stealing from
people and so they killed imprisoned
them all this stuff and and because you
just killed your best Farmers basically
all of the farmers start starving to
death because the government is just
seizing all of their grain and so you
kill the best and then you seize
everything from everybody and there is a
a moment in the book where a woman eats
her own seven-year-old daughter and I
was like I'm out like it is
things can go so wrong and I worry that
we we've had such a period of stability
that we forget that there is this
Darkness
that is present in the human animal
uh as uh Soldier knitson said the guy
that wrote the gulag archipelago who by
the way was in the gulags uh he said the
line between good and evil runs through
the center of every human heart
and so I worry that
we we have to
eternally protect ourselves from how
wrong things can go and so I do look at
a cbdc with a little bit of hesitation
as you map it out and say I'm already
doing everything I had to laugh out of
anxiety because you're right I don't use
cash for anything uh so a hundred
percent no big change to you I think
you'll
fearing the wrong thing
I think the fear is right what do you
say what you think I'm fearing Central
Bank digital currencies I think are of
distraction
what is actually happening
is you've already got Capital controls
in the United States it's hard for U.S
citizen to move the money around you
can't even get rid of your damn passport
you're stuck in their state you can't
even leave your state
you pay tax everywhere in the world
nobody else does
I think there's three countries in the
world that pay tax that force their
citizens to pay tax if they live outside
of their country
I don't know what it is but I would fear
the US going to war with China
it's fine to be at economic War
it's fine to be very cautious of of
another Rising power
but if they go to war the outcome is
terrible
that is a much bigger risk than the
Central Bank digital currency
it is
as you said there's something goes wrong
with power that can lead to these
outcomes when humans over extend it
and hubris is one of the risks
and that power to control the world
that that to me is a bigger risk there
may be another risk the Enemy Within I.E
the country collapses on itself
can happen too this there's a number of
ways your leaders can let you down and
you should always be vigilant
so I do agree but I think the cbdc war
was lost a long time ago the Privacy
from your government war is not going
away because of Technology because Elon
Musk has got you know he's putting 40
000 satellites in the sky every GPS can
see you and everything so that all went
so you just need to make sure your
government is not going to abuse that
because that's when it gets really bad
hmm
yeah that that's actually
my biggest sense it's abuse of power
not monetary abuse as much as raw abuse
of power my biggest existential threat
is do not go to war with China
because that was the outcome for Hitler
for the economic collapse there were
reasons people go to war
and the outcome and the end result is
not good
so I'd be worried about more of that
stuff but the US is kind of warmongering
like crazy right now rattling its saber
it's like against China or in the
Ukraine
it's against China
and it's it's okay to not like China's
system because it's different to your
own it's okay to feel threatened because
China has economic
um Power increasing and that's
threatening your system that's all okay
just don't go too far
yeah it's interesting the thing that uh
so you can have a bar fight but if you
pull out a gun you're [ __ ] stupid hmm
and it's not because the U.S wins or
loses it's because everybody loses
yeah I think the thing that I fear more
so I think it was 70 million people died
in World War II it's certainly not more
than that so let's say 70 million
Mao's China killed over a hundred
million looks estimates vary but that
seems pretty plausible
um
yeah it is uh it's that worries me so my
thesis was because I I very much agree
with you that the capital controls isn't
the thing I'm not specifically saying
Capital controls is the thing I fear
what I'm saying is I think that you want
the populist to have a healthy
skepticism when the government wants
more control because the government
taking more and more and more and more
and more control ends up in a really
dark place and so my thesis around that
and and going back to what started this
whole conversation is the reason that I
got into Finance content in the first
place is it was me trying to understand
how the world actually works and this is
why and I'm sure it drives my audience
crazy sometimes why I will I will circle
around a single point until I really
understand it because if I can
understand its nature then I know how to
protect myself I can do novel things in
fact everybody listening please hear me
when I say
you can only follow until you understand
something's nature because you're
following people that do understand the
essence of that thing but once I
understand the essence of money this is
why your everything code is so important
I mean it hit me so hard is it it gives
me a framework with which I can
understand the entire system and so
instead of looking at one thing I'm
looking at the entire system so as I say
to be somewhat skeptical of the
government taking more and more power is
to understand the essence of government
uh is that it will continue to ratchet
up it will continue to seek more power
it it is it is part of its Essence and
so when you look at the the U.S
experiment which I think is the right
way to look at it it was an experiment
in how do we
um put the power in the hands of the
people as much as humanly possible how
do we recognize that people tend towards
tyranny how do we put systems in place
that basically Trend towards stalemate
instead of trending towards Rapid change
because when read the rise and fall of
the Third Reich it is one of the most
startling books I've ever read in my
life
as as the guys going through it and he's
talking to people about Hitler Hitler
was able to talk uh the what's now the
Czech Republic I forget the original
name checko something Czechoslovakia
Czechoslovakia thank you uh he was able
to talk them out of their country dude
there was not a single fire uh single
shot fired he he got them to sign over
their country and I'm just like God damn
like the the way that he just slowly
eroded the country until he was made
fewer and was like nobody can challenge
my power now it it is crazy and when you
watch it step by step unfolding it's
just like hey somebody needs to check
this power now the fact that Hitler came
up earlier in this conversation because
of monetary sanctions and that this all
to your point about the everything code
it all comes back to a dead cycle which
is crazy but as you begin to understand
how all of this how even the debt cycle
is just a response to him nature and so
now it's like okay as you begin to
understand the essence of things now you
can understand what to be wary of so I I
seed the point can see the point
that overly focusing on a cbdc isn't the
right move because I've already given up
all those Capital controls and all that
what I want to remind myself to be aware
of and other people is that man
unchecked grabs for power they end badly
every single time and they can be even
more catastrophic than a World War so
let's just come full circle again just
to top all these Loose Ends
when things are bad and people are angry
governments get more extreme we've seen
this right the volatility of government
it's got more left more right
and they just I think they do more bad
things
the left becomes overly restrictive
um you know too much regulation too much
the right does other things and it's
it's just not good
the the and if you carry on like this
and economic growth continues to slow
you will have all
whether it's Civil War
or state-sponsored War you will
so this is why you need to have this
productivity miracle
there is no other outcome
and I know people get pissed about what
the Europeans are doing with
forcing
ESG the green energy side of the
equation
they're not stupid they know what they
have to do so you have to change the
energy side the US is not that Keen on
it there's two sides here because the US
is the largest supplier of all so the
largest has the most amount of oil in
the world
so it wants to keep hold of that system
but also this new system for the
productivity that that has to happen if
not you will get down to your danger
zone
because in spoon times
nobody goes to war
what do you think about as as they go to
ESG though
um because I get that and I've heard you
say something which I think is really
smart which is America's energy
independent so of course they're not as
worried as switching over to Renewables
whereas Europe is not and so for them it
really becomes a far more important
issue my beef and and again I would like
to acknowledge is not an area I've
thought a lot about but I've thought
about it enough to this is how I'm
looking at it
I love the idea of going to Renewables
but the way that we're doing it the
speed to your point about sometimes you
just need to slow things down the speed
at which you're trying to make a change
necessitates from what I can tell uh
getting into nuclear energy and the fact
that they're issuing that
becomes problematic when you look at
whether you're trying to enforce this uh
globally did you hear a Constantine
kissin's whole uh Oxford debate on this
topic no he's basically like look uh
England I think was what he was talking
specifically accounts for like four
percent of carbon emissions so it's like
even if they drop to zero it has
absolutely no impact so you this really
becomes a question about wealth
accumulation and so you have to
understand how it impacts the poorest
countries you were never going to get
the poorest countries to say okay we
don't care about energy we'll just stay
poor and we'll keep burning wood inside
of our huts and people are dying from
inhaling the smoke from that
whereas if the approach were okay cool
we can't screw over the poor uh we need
to transition as quickly as we can we
need to not have a um a sort of
philosophical we draw a line again
something like nuclear energy we need
updates it needs to be better all of
that but the not being able to debate it
feels like the problem versus we want to
go ESG so right idea wrong execution is
coming
it's coming
I mean finland's already just started
yeah it'll all come
because there's no way of solving the
equation
but they do need to
already try and get the Reliance of
fossil fuels down nuclear power plants
take time to build it will come so I
don't worry about that it's how fast
this happens Europe's going fast there's
an argument from
people in the Commodities markets it's
going to happen too fast therefore
there's going to be a massive Supply
shock because there's not enough oil
around and because you're stopping
people doing it that's yet to be proven
oil will go up as will copper in the
next
economic upcycle because it always does
because it's cyclical would it go to
some super cycle that people talk about
I don't know yet to be proven
um but I think it's the right thing to
do to move as fast as possible I also
think it's the right thing to do to move
towards uh nuclear there's new sources
of nuclear a much smaller much more
interested and when you get actually
further down the the understanding of
nuclear you're now getting small nuclear
that you could have cars running from
nuclear you could have your house
running from nuclear and you can have a
decentralized grid okay that's very
powerful to have a decentralized grid
where you're generating your own power
all of that technology is possible
it's not scaled it's not you know
finalized but it's possible so you know
where is the world going in 20 years
time it's going towards a more
decentralized grid Europe decentralized
grid all the green energy stuff
decentralization of the grid is a good
thing it's much more robust because it
can't be struck by
another sovereign state
and these are fragilities and we talk
about this the hacking of the US power
infrastructure
because the it's so out of date that the
Russians or whoever whoever it is could
bring it down
we we need to decentralize it there's so
much there's stuff we need to do we've
got different threats and we haven't
knew what to deal with I mean cyber
threat and something that whole
conversation to have
um but the read a book called This Is
How They tell you the world will end by
New York Times journalists about cyber
mind-blowing it's terrifying yeah we're
kind of worried about the wrong energy
we're worried about The Wrong Enemy half
the time
[Music]
um
who knows in a digital world we have
very different enemies
all right we've talked today about two
life rafts that I think are really
potent that will help us escape this
um cycle
technology we talked about a lot uh and
then crypto there's one thing on crypto
that maybe web3 is a better way to
categorize this that I want to talk
about which is
um
tied to this idea that I mentioned
earlier that I wanted to get to which is
why the 80s felt so awesome
um
I was too young to really be aware of
what's happening I know you've looked at
that so I'm curious is it accurate to
say that the Boom in the 80s while I
think ultimately problematic uh was the
financialization of everything and am I
right to draw a parallel and this is one
thing that again I am the most Ardent
web3 person you can imagine but I also
like looking at the potential downsides
I do worry about the financialization of
everything via web3 so walk us through
the 80s is that characterization
accurate and are we just going to see
the same problem with web3
so firstly the 80s was kicked off by a
collapse in interest rates and an end of
that inflation Beast driven by
demographics
so it automatically felt better
there was an era of deregulation
which was the Reagan Thatcher years
but we started a massive Monumental debt
cycle and I think it was Margaret
Thatcher that started it personally
because she did something magical and
this is politicians and their abuse of
power and this is as ever probably an
unattended consequence they're good
ideas and bad ideas Nobody Knows the
outcomes
so in the UK what you would call housing
projects in the United States are called
Council houses and Council houses were
free accommodation for people who didn't
have the means to buy accommodation
and so it was easy to live there the
government gave it out it was part of
the structure of the post-world War II
repairing a broken Society
and then Margaret Thatcher came along
and said well these people showed up
economic participation much like we're
talking about with crypto you can
participate in the growth of the economy
not get left behind very good well said
Margaret her idea is we'll sell them the
housing
for cheap
so that they're in because they become
conservative voters
the probability of being conservative
voter if you're a house owner versus a
non-house owner were massive at the time
so she's winning votes but actually give
people economic participation great
so they get the council houses
but they all become debtors these are
creditors these people didn't have debts
they don't get mortgages
turned millions of people into debtors
overnight
and then Stow the hamster wheel starts
of debt and they start building up debt
in the U.S deregulated a lot of stuff at
the same time based around Margaret
Thatcher's ideals and so this was where
if you can think about it the 80s so the
average baby boomer is now 30.
35 years old they're into the workforce
the inflation is behind them now
interest rates are coming lower
their wages don't go up
so what they do is like borrow some
money interest rates have gone down
and that massive debt cycle starts so
the 80s felt great because everyone had
money that wasn't real
and that's why the financial system got
ahead of itself 87 crash was part of
that
and then it just took off again because
the answer to the financial system
getting ahead of itself was to cut
interest rates and allow even more
financialization
so I've argued like you that humans are
humans and we will create leverage in
every system that we do and we will
create leverage within and we've done it
already and blown up
um in the crypto markets so you create
some fragilities that exist in the in
the financial system
everything is financialized
I.E the tokenization of everything via
web3
I think everything has value anyway
we're just bring it to exchange
does it become a crazy boom bust Wild
West world of degenerate gamblers
probably because that's what humans are
um but also
but the stock market's the same right
why restrict One Market versus the other
why restrict the market for you know all
goods and services have had have a price
so
I think price Discovery Works everything
else I think the reason price Discovery
doesn't work in crypto so well or it
becomes so boom bust is because it's
it's still restricted it's small
it's just a small market so too much
capital in a small Market in and out
creates outsized outcomes
markets bigger so if you put
a trillion dollars into crypto it would
more than double because of even though
the size of crypto is a trillion is
because everyone's holding stuff there's
not enough liquidity and before you know
it it's a huge price but trillion
dollars into the U.S stock market yeah
my God
twenty percent
fifty percent what's the crypto Market
with a trillion dollars I don't know
100x
so it's just a function of it's a
function of that and I I do think
the ability to access freely Access
Capital within the web 3 world is a game
changer for people
capital is restricted right now I've got
to remember that and yeah we're seeing
the ugly ugliness of of mean coins and
scams and crappy nft stuff we're seeing
the ugly side of it
but free access to Capital I hadn't seen
that before you need to be a regular
regulated
type of investor you don't get access to
Capital the system is against you
so I think access to Capital
is a very very powerful thing that can
happen through web3
do you think that people will just get
savvier because what's happened so far
is you've had some really amazing
legitimate things happen and then you've
had some super rapid scams I mean there
was at one point the nft thing where the
guy what'd he say like uh later fools or
a later oh God I forget what the meme
was but later nerds or something like
that and so he literally just took
people's money and then was like bye
um so you have two paths before three
make it illegal regulate it or expect
people to get smarter
um which do you think happens or some
combination thereof so have you ever had
any friend or anybody you've come across
take money from you and never return it
yes yes
is that regulated
no
is you lending your uncle up money
because he wants to buy cars that
regulated or unregulated
unregulated but it is tax like I have to
declare it
yeah so you should declare crypto
but once
are you able to go and you know if
you're a 21 year old are you able to
take your entire paycheck to a casino
and blow it in one go yes
so why the hell should access the
capital to grow businesses and do stuff
be regulated in this same way I don't
understand the logic it is protective of
the system it is not protective of the
people you know we can all lose money
sorry I it feels to me like a nanny
State thing so even gambling you can
only do it in the US you can only do it
in certain areas you can't just gamble
blanketly
here but you can go to Vegas do what the
[ __ ] you want with as much money as you
want and nobody can ask a damn question
but hey you want to go to coinbase and
buy you know some token that's not
listed in you know
you're in trouble or you're not allowed
to do it
so why one thing and not the other
and I think it's because
access to Capital
makes some people extremely rich
and to be the tap provider
to the capital which is the banking
system
you get to have the capital and you
don't
or a VC or a private Equity Firm you get
it you get it you don't why don't you
get it because I don't like you
that's that's not right but in every
other economic transaction
a private transaction there is no
protection outside of a contract so if
you give it to your uncle and you get
them to sign a piece of paper to say I
will promise to pay you back
okay you've now got a contract
so as long as there's some contracts
some general ground
for how we can interact with each other
that's okay but to say
good bad Vegas good
Capital markets bad it's just I think
that's an abuse of power
and it's abuse of power particularly in
the US because of the system of money
and power
and the lobby groups
who pays for power in the US is not like
Europe it doesn't happen in Europe in
the same way
um it's it's always shocks everybody the
U.S
political system and how it's driven by
money
the food outcomes medicine outcomes you
know the everything is driven by these
superpowers the corporations
how's it kept out of Europe you just
can't make donations you can't Lobby
yeah we just don't have such I don't
know the exact structure but I don't
think you can actually run elections
with based on money
so it just doesn't work in the same way
where you can raise a Super PAC with a
gazillion dollars and therefore you can
do that and by the way I'll buy those
votes yes of course there's horse
trading and invested interests and there
is no perfection in any politics it all
stinks but it's just not as as abused
okay so let's play out the scenario so
if you were to let people uh and I don't
know if you're saying truly unregulated
but if you're if you let web3 go without
putting in the kind of Regulation that
we see around uh equities now what do
you think happens do you think we just
we have like a five or ten year period
where a ton of people get burned and
then it people begin to get
um they right size they get skeptical
and it it sort of comes out in the
washes people self-educate or do you
think that it will just be a flywheel
for abuse
yeah look I I I'm a Believer in
regulation
I just believe that don't accessibly
regulate that that gives outcomes that
are unfair on others so I think there's
there's regulation you know I don't
think there's an issue with a kyc AML
elements to stuff I don't think there's
an element for prosecuting fraud I don't
think there's an issue with that you
just need to Define what the rule book
is
um it shouldn't be all that bad all this
good it should be
you know is what contract is enforceable
here is a societal contract or is it a
physical contract
if somebody steals money from you
should they be prosecuted yes
should you say everybody who uses this
system is is doing so illegally
that is wrong
so I do believe in regulation I just
think I'm I just like a more pragmatic
approach to life in general I I think
just being a pragmatist helps and don't
be an idealist or an ideologue just be
practical and pragmatic and solutions
are much easier than people expect
people tie themselves to ideologies too
much
and I think ideologies are dangerous
preach it's all right to have a
a general a general ideology is fine but
imposing your ideology on others not
fine
all right brother as always this is
amazing I know you have a new event
going on tell people about it
yeah look if you want to know more about
AI I mean real vision is an amazing
resource for everything all of these
kind of conversations
um but we've have a specific kind of
Festival of learning about Ai and it's
free so just use realvision.com forward
slash Tom use that get your free trial
um and I don't know when the festival
learning starts next week the week after
all right everybody thank you so much
for joining us if you haven't already be
sure to subscribe and until next time my
friends be legendary take care peace if
you want to learn why crypto is the
future check out this episode with
Michael Saylor bitcoin's the best
performing asset for the past decade and
it's you know it's 100x better than gold
and it's 10x better than uh Equity
portfolios so the volatility is the
price you pay