Ray Dalio: I Predicted 2008, I Know What Comes Next

0:00 Are you seeing signs that we're in an AI bubble and therefore a economic clap? The classic signs and that has implications for the economy and it's bad for the society and everybody loses money. But we also have some other things that are going on that happen around the same time. And I can go through these if you want. So what I'm saying Is clear because I'm a global macro investor. And she was one of the few managers to foresee the great financial crisis. Yes, and so right now we're very excited about AI, and we should be very excited because it's gonna be revolutionary changes. But it's creeping into almost everything. The way I look at it is I look at the human body, and I see like

0:43 If replacing the body and so on. Some aspects of my levels of thinking and reasoning. But at the same time, we have another problem that's existing. Geopolitics. I mean that China is a larger trading partner with most countries than the United States is. And that's a changing of the world order. That is one of the ingredients, right? And then also you've got large 12 gaps. The government don't have enough money. And so when you have the downturn, then you have people at each other's throats. So a lot of people they're thinking about how to sort of secure their future. How do they all prepare? Let me say that history has shown that it's not the most intelligent people that are the most successful. But the key thing to keep in mind. is Guys, I've got a favor to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show

1:41 The most shared episodes, the most rated episodes. I would love you to know. And the simple way for you to know that is to hit that follow button. But also it's the simple easy free thing that you can do to help us make this show better. And I would be hugely grateful if you could take a minute on the app you're listening to this one right now and hit that follow button. Thank you so, so so much. Right. For people that might not know who you are. You founded Bridgewater Associates in a two bedroom apartment in nineteen seventy five.

2:11 And you grew it to the world's largest hedge fund. What was the the total amount of cumulative Nett. gains that you delivered for those investors over that period. I think it was something like

2:23 fifty three billion we produced a about a twelve percent return. with no s never any significant losses. And it was uncorrelated with other investments. And he was one of the few managers to foresee the great financial crisis which allowed Bridgewater to post positive returns.

2:42 of nine point five percent in two thousand and eight, while the S P five hundred plunged by almost forty percent. Yeah. Let me start with the thing that I'm most curious about because I sat here with an investor called Jeremy Grantham, who you might know. Uh. He told me that we're

2:57 Staring in the face of an AI bubble and therefore a economic collapse potentially. If you look at The data. It would be compatible with history. For the peak to be very soon. Everything is in line. This is

3:11 I think the biggest thing. investment bubble in American history. What's your perspective on that? He's right. I don't want to jump to conclusions as much as I want to explain reasonings that lead up to conclusions. I'm at a stage in my life that I want to help people understand cause effect relationships. What they call a bubble is when the price goes up uh a lot and companies do very well, and then it collapses. And that has implications for the economy, it has implications for the markets. Like nineteen twenty nine bubble.

3:43 Okay. Or the two thousand bubble. Okay, which is the dot com Does it impact real people as well? Did nineteen twenty-nine bubble bursting impact real people? Yes, the Great Depression followed. Because what happens is there's a new technology that comes along that's revolutionary. The dot com bubble, which was two thousand, all the stuff that we have, that's wonderful new technology. People get into that technology. They say, That's miraculous. I can bet on that. And then they bet on it. And sometimes they borrow money to bet on it. And they lose sight that the price of it matters. So it goes up and up and it's everybody's thing, you know? It's like right now we're very excited about AI and we should be very excited because it's gonna be revolutionary changes. And it

4:36 Then at the same time. So I want to buy some of that. And everybody wants to invest in some of that. And what they do is they don't pay attention to the price and there's a certain mechanics. People will borrow money. Wealth is not the same as money. So you see a lot of people getting wealthy. But you can't spend the wealth. You have to sell the wealth to get money.

4:58 'Cause you can only spend money. Right. So what happens is when they need money. For one reason or another, taxes change. Or interest rates go up and so they have to pay their debt service and so on. There is a pricking of the bubble so that what happens is it falls. Okay? And when that happens, people lose money. And as they start to lose money, the process works in reverse because uh when they made a lot of money, they have a lot of collateral.

5:28 Right. They can go borrow money because they're worth a lot. And that compounds on its way up. And then when it comes down the other way, it works the other way. Okay, now you got to pay your debt. And so when then you have to start to sell assets. And then there's less demand for things, right? So there's less demands because If you're losing money'cause you put some money in the stock market and the company and so on, you're gonna spend less. And as you spend less Then somebody else's income goes down, right? You don't go to the restaurants. The economic downturst that typically follow a bubble like the Great Depression. The late twenties was fantastic. If you talk about changes and and experiencing ch This was the first time There was electricity in houses. So it was the first time you would have refrigeration and you would have lighting in houses. This was the first time that you had um cars popular that you could get first time airplanes, first time you had radio. And so everybody knew that they were gonna be great. in the future, and they were great in the future, but at the same time what happens is as they buy them and they b socks go up and they borrow money to buy them and so on, um, and the profits don't live up to the price, then that causes this other dynamic and it produced the Great Depression.

6:51 So let's say that I buy this and This is A unit of artificial intelligence. So let's say I buy one share in one of the big AI companies right now. Because Investors are so

7:03 excited about AI. They value this at A hundred dollars. This unit that I have here. They say it's worth$100. So my net net worth is now$100. I go to the bank because I have this net worth, this paper worth$100. And I asked the bank for a fifty percent loan on this thing that I own. They give me fifty dollars. Now I have fifty dollars. And then

7:25 Something happens in the economy. Which means that The investors who've invested in this and investors generally Now need money to pay off. There are other debts that they have. So this could be a war, it could be some kind of event that takes place. And suddenly everybody rushes

7:42 To sell. Their assets like this one. And so when I go to sell this, the price of it has now plummeted to say maybe twenty five dollars, but I took a loan at the bank. for fifty dollars. So I own the bank fifty dollars, but now this thing that I have that was worth$100 a couple of months ago is now worth$25 and I'm$25 in a hole. So I have to quickly sell. And then with everybody selling, all the price of assets drops, people stop spending money at the restaurants, like you say, there's less many around, and then the bubble has burst and we're in this sort of declining

8:12 You got it. Okay, good. All right, fine. And it happens. Because it must happen. I mean meaning In these uh tremendous tr uh changes.

8:22 Uh there's very little that's known. So w anybody who's in the business of making AI Uh can't be precise. They don't know exactly how much money is gonna come in, right? So there's either one of two things. You either don't invest enough and then the competition runs away, or you bet uh invest a huge amount, and you can't be precise. Okay? And so when that dynamic happens, it's a problem. So yes, you said it very well. So I'm gonna repeat one other thing to emphasize.

8:53 is um you can issue stock for Uh Let's say you raise Fifty million dollars. And you value the company at a billion dollars. Only fifty million dollars was actually spent on that company.

9:08 But now if you raise that You're a billionaire. Mm-hmm. Okay, because the accounting value of that, what do you own? You own stock. That is valued at a billion. Nobody paid a billion dollars or whatever it is, right?

9:23 And now you own that stock. But that stock um you can't spend. 'Cause you can't spend wealth. Mm-hmm. In order to spend it, you have to sell some of that stock to get money.

9:34 Yeah. Right. And quite often there's an interest rate rise. Because the you know, let's say is there's a fever and there's an inflation. Then the central bank wants to try to put the brakes on that a bit. Okay, what does that mean? It means people who have debt in a sense have to come up with more money.

9:53 'Cause when you own the debt own the debt, you have to come up with money to pay the debt. So that dynamic works between us, we've said it Uh clearly I think we understand the dynamic. So they they have to exist. Now we have another problem that's existing. Okay. So we're talking about the bubble. Okay. But we also have some other things that are going on that happen around the same time. A big gap between the rich and the poor. And which also means the left and the right, the politics of it, right? Just as we have now. When you have the downturn.

10:26 Um then you have people at each other's throats. So if we take politics, what you see is this that they don't have enough money. The governments don't have enough money. We have big budget deficits. Okay, where do you get the money? from in order to pay those bills. The UK has had, I think, six out of the last seven years there's been a new prime minister. And because there's not enough money for the government, and so what you start to see is people come in with their claims, but there's this, how do we get the money? And then people run who have money, they say, I don't want to be in this tax zone. That's gonna be and then they leave. And so there's a domestic political problem that is not people compromising the same way they used to compromise.

11:09 Right. So now you have the politics which compounds this. And and then you have a world, this is what I call the big cycle. You have a world in which also the geopolitics changes. By geopolitics I mean country to country. Okay. There's a system. Under normal circumstances when there's a more dominant power, they impose their order, and that becomes more peaceful. But when you have um

11:37 arguments. Of how things should go. Those arguments start to turn into conflicts. Right. And so

11:45 Those things. tend to happen together. That's why I refer to that as the big cycle, that dynamic. Now that is the confluence of the money, the internal conflict politically, and the external conflict, which is what we're going through. And The problem is, I think, that people

12:05 don't know the cycle. So every day we go to our sources of information and you see the s latest news, but they don't connect the dots in in understanding that cycle. Closing off on this point of the bubbles. What is it that makes bubbles pop? So if we are in an AI bubble at the moment and it is gonna pop at some point, what is the like they call it a black swan event. There are a few of them. There are bubbles. And then the things that prick the bubbles, okay? The things that prick the bubbles typically in the beginning Uh something that means that I have to sell some wealth to get money.

12:39 And that's usually a rise in interest rates. It could be something like wealth taxes. Something that means I'm uh very wealthy, but typically the tightness of money because during that spot There's inflation pressures and central banks decide that they want to tighten monetary policy and so on. It be comes that the um amount of money that I can get by owning that debt at the higher interest rates is greater than the amount of money I could get on my equity investments. That's part of it. Also what you see is a lot more production of Stock.

13:14 And what I mean by that, issuance of stock. Think of the the supply and the demand. There's There's demand, right? And we've been talking about the demand that makes stocks go up. You know, how we create this well. But there's also um supply. So y you can issue

13:32 Stock. It's very issue. Th there's almost nothing that's easier to produce than stuff. So if I own a company I can just Uh print more Equity. Yes, today you could probably go out and say, I'm gonna make a company.

13:44 And I'm gonna take it uh public. And you go to your audience and your crowd and you can say, I'm gonna make Stock. Okay. So it becomes when there's a when there's a market that wants stock, there's a production of stock. And it's okay, and that supply

14:00 of stock Together with the other that I'm mentioning the the need for getting money and so on. Um causes the um the the bubble to pop. Are you seeing signs that were in a bubble. Yeah, yeah. The classic signs that were in a and the bubble I should emphasize, it's not a um

14:18 You're in a bubble or you're not in a bubble. It's a degree thing. Okay. There is also that it's in week hands. I can look at now. Who is in these companies? Right. And is it in strong hands or weak hands? Class strong hands is that when weak investors, not knowledgeable investors, then put a a lot of money into it.

14:41 Particularly if that's in a leveraged way. Way with that. With debt. Or they can buy an op uh a leverage version of that. But like there are ETFs now that are leverage versions of the stock market and they a and so on. And so they get into that. It's more like they're crapshooting. Okay. And then that's a sign. Of a bubble. So I'm I've listed a few of those signs. Um those are the major signs of those bubbles. And so that when it goes down

15:11 Then you get the fear. Then you get the need out to raise cash. And y that diamet dynamic works its way out. In the form of than the reverse happening.

15:22 In other words, everything becomes cheap and everybody as um the spending and the things you mentioned. If we are in an AI bubble and it is gonna burst. You know I had a friend of mine contact me and he said, Steven, I think we're in this uh an AI bubble and he's running an AI company. So he s he said to me, I'm gonna raise lots of money now. So that when the the markets come down and investors are fearful they don't wanna invest in companies, people stop spending as much, they start thinking about their subscriptions and start canceling subscriptions, we're gonna be good and we're gonna be able to buy up some of our competitors. who are gonna be struggling. So he's just raised um hundreds and hundreds of millions of dollars for his AI company. Right. And it's probably like that.

15:59 Easy. Yeah, it was easy now. Right. the question here is like what should at different levels. So like the the average Joe on the street up to entrepreneurs that are running companies, how does how do they all prepare for An economic bubble that might burst. He's such a good example. And what that does in j just following up through on what we say a minute ago is that increases the supply of AI stock.

16:20 Okay, yeah,'cause he sold stock. Yeah. Right. And so As he and others do that more. The s greater supply of stock comes in.

16:30 And and so he wants to get ahead of it. In that dynamic. And then You know, that contributes to the the bubble. But um uh how do they prepare? How do they have to do it? I would also say something.

16:44 The future is very unknown. And people should not be timing. Sophisticated investors have a real challenge even in timing a bubble. So I uh the important thing always is to diversify.

16:59 Now we're gonna go back to money, the basics of money management. And I I by the way. I personally have gone through the cycle'cause I didn't have any money. And then I did then I had a lot of money. And I remember uh the cycle very well. What happens is as you start off

17:16 Um I used to count How many months I would be okay of a certain amount of money, how much mu uh I would be okay if no more money came in. If I lost my job or whatever I w did, I'd mostly Never. I worked two years for somebody, but in other words if money didn't come in.

17:34 And it would be months and then years And so on. To build that security because I take care of my family and so on. And so what it um as we're looking at these things These are the choices.

17:49 that you have in order to be able to say do I buy my house or apartment? Do I put my money into cash. And what happens to money is you have to put it into something. Because um they'll pay you interest on it. Okay. So that's your cash deposit, and so on. And people think that that's the safest.

18:10 It's not it's the worst investment over a long period of time because inflation will lead it away. You mean putting it in a bank, just leave it in a bank, it's i in whatever form. A money market fund a whatever it is that is that Short term. I've deposited and it'll give me an interest rate. Okay. Okay. And that's what they think about as cash. You know nobody leaves it literally in cash because if it's literally in cash, it doesn't earn interest. So why shouldn't I put it there and get some interest on it? And so that's cash. And people think that that's the safest and has the lowest return, uh guaranteed almost to have the worst return over the longer period of time. People keep cash because it feels safer.

18:50 That's right. And I'm saying it's not safer. Because of inflation. Explain that to me in simple terms. Okay. Well if I got no interest rate. Um, then what I would do is I'd lose to the inflation rate. And what's the inflation? Well three and a half or four percent

19:07 Yeah. happens to be about where it is now. A year. Yeah, a year. So that devi at least three point five dollars a year. That's right. If I just leave it in cash. That's right. Okay. Now I'll get an interest rate on it if I put it someplace and it'll give me maybe uh an interest rate that's somewhere in that vicinity, similar to that. Three four five four percent. And then I have to pay taxes on it.

19:31 Oh you have to pay taxes on the game. Okay, fine. Even though you really didn't gain relative to inflation, you still have to pay the taxes on whatever you've earned or something. Anyway. Over the long term, it's a lousy return. Because also think about returns also come from productivity. And over a period of time people learn how to do things better and so on. So then you can invest in let's call this stocks. Okay, that we'll call that the stock market. This is cash, and then you think on the stocks.

20:01 And then the stocks can go up or down. Um, and then they have this dynamic that we're talking about that creates these big cycles and the busts. And those cycles when they go down um go down um Sixty seventy. Percent.

20:19 Okay, that that's what a bear market looks like. Woo. What a dive. Okay. This is gold, I And it's gold.

20:28 And they these are bod's, and this is your house. And that's uh Bitcoin. Okay, so these are the choices. They each Um change. For certain reasons.

20:40 I'll digress into that in a minute. But what happens is they go like this when gold goes up uh tends to be That the bonds will go down. Uh b in value. Or your house. And these change in a certain way. And so the best thing to do

20:57 is to have a div diversified portfolio of that when you have that rather than any one You uh won't reduce your return. But you will reduce your risk. And diversified means having a little bit of each. Right. A certain amount. And you have to know how to balance them because of their volatility. This one, stocks, is more

21:19 uh volatile than this one. And my own recommendations are that You start first of all with what you need. Should I Uh buy a place.

21:30 Or should I use that money and I could travel more and so on. One of the advantages of The house, the apartment and w whatever. is it's your environment. Your environment is important. It produces forced savings.

21:44 Sometimes that four savings is good. It is uh it typically is tax better. It's a b it's a better vehicle for tax over a period of time. But I'm not arguing for this alone, but I'm saying when I'm looking at this, then I think This one gold. is um very interesting because when all of these tend to do badly

22:07 This tends to do well. Okay, so it's a very effective diversifying because this was money. Not until um nineteen seventy. One. And it's still the second largest reserve currency. Central banks hold reserve currencies. So it has qualities. That are different from

22:26 This And this has qualities which Like when the value of money goes down because of inflation. This bonds. Okay. And bonds are basically lending the government money. and then inflation and interest rates rise, you're kinda locked into that interest rate.

22:46 And so it has its own problems. The more important thing I would say is, you know, you save up And you say How many Years

22:56 Can I live if money doesn't come in? Okay. And then you take that and you say How could I be secure? So I don't want to put it into one thing.

23:07 that can go down seventy percent. So how do I diversify that? That's my main Headline A lot of people uh in the comments of of our last episode, um, they were asking this, like, how does this apply for someone who doesn't have much money, maybe doesn't have any assets. Say the thirty years old. They um

23:26 Have I know a hundred dollars. Disposable income. And they're thinking about how to sort of secure their future. What is the advice for someone in that situation? Your only asset is yourself. And I guess what you're gonna get from the government. How do you sell yourself at uh at getting a better income?

23:44 Or how much how are you getting money from the government? You selling yourself is the main thing. This is one of the big problems now. with artificial intelligence and other machines, uh replacing people and in different types of jobs. It becomes more difficult.

24:02 it produces that big wealth gap while you're having more productivity. Everybody wants more productivity because it means how do you produce things more efficiently, but that's um contributes to the income gap because your productivity equals your income. For a large extent, and then you have the and you know, the political dynamic. It's tough to get yourself out of the s position that you mentioned. You know, I'm imagining that person. Okay. It's not easy.

24:30 There is this giant polarity If you're in the top ten percent of talent Let's say The world's your oyster. But

24:40 Nowadays in order to be there Okay, that's that's difficult. Find something that uh gives you The ability to sell your time for Good money. Is that gonna be that you're driving an Uber? Is that gonna be that you have the talent and you're being gonna be able to understand AI and contribute that understanding to a company that values that or what is your skill?

25:05 You found this. Okay. And and you found the way. Okay. But you need money. Okay. Yeah. And the the thing that you wanna do, what you're doing

25:15 And I'm lucky enough to do. is to make your work and your passion the same thing. And don't forget about the money part. Mm-hmm. Yeah.

25:25 I am I one of the things that I I think I didn't realise earlier in my career is that Whatever skills you have will be valuently in different contexts or industries, should I say. So for example, Say that my skill here, and I'm not trying to flatter myself, but say my skill here is working having conversations, right? Let's say that's what it is. Yeah there's lots of places I could have conversations. And those places with value. My ability to have conversations wildly differently per hour.

25:52 Right. So I often think this and speak to my friends about this, when they they tell me their skills, I say Let's look at the different industries and how they would value the skills you currently have differently. A good example again. You know, you could be an Uber driver or you could chauffeur. Ray Dalio.

26:10 Now I imagine those two things pay wildly differently. But the same skill of driving a car. Broadly speaking. I agree with all that. And so I think that's one way to just you know, uh the other way is you go ask your current boss for a promotion. But again, they're gonna value you in the context of their other employees, the market in that industry, et cetera. So it's you might get ten percent, but you're not gonna see a step change necessarily. So

26:32 That's something that I always say to people is absolutely right. And another um law of something. I think it's a almost a law of everything. It's a law if you Um buy almost anything. Is those at the top

26:48 Whatever the thing you're buying, if you're buying a painting, a piece of furniture, piece of clothing a t a a person's time or whatever. Command premiums. That are many multiples of the average. It's almost like if you could invest Ten percent more.

27:07 Of your time. Your effort. Your skill. To go up. Mm-hmm. Okay.

27:13 You will get twice as much. Mm-hmm. For ten percent better, something like that. Okay. So that's part of the formula of life. and a formula of employment. And so if I think if you keep what you brought up and what I'm bringing up in mind, that helps you position yourself and know what to do.

27:34 There should be a button just down below here. And if it says subscribed, you're already subscribed. If it says subscribe but, that means you're not yet. And if you're not subscribed, please could you do us a favor and hit that button. It helps the show more than you know. And according to the algorithm, you're someone that watches our show, but you haven't yet hit that button. Thank you so much. We didn't mention this thing here, actually. So I probably should talk about it'cause people are talking about it a lot right now, which is uh Bitcoin. Or Bitcoin. Yeah.

28:00 What's your perspective on Bitcoin? I know the market in Bitcoin is down at the moment. I have about one percent of my portfolio in Bitcoin because there's different kinds of money. And the money that you Can't print. That's one kind. This is the other kind of money that you can print. Gold. Yeah. You cannot

28:18 Crack it with technology. You can Hold it. You own it. It's there's a saying that it's the only And financial asset.

28:28 That is not somebody else's liability. Somebody has to give you something for it. It has that. So in my category of wanting Let's say make sure that I have some

28:39 hard money, which for most people should be between five and fifteen percent of their portfolio. I prefer that I'm pointing to uh the gold bars here. Uh rather than um The Bitcoin. In your view.

28:56 A a gold light asset. Yes, it's it's a Type of money that can't be printed. But There are technologies that can

29:07 Um In other words, if there's quantum computing. And it can be monitored by uh governments and so on, it could be taxed. And digital currencies are somewhat similar.

29:20 But you don't like Bitcoin as much as gold because of privacy reasons as well. And when the governments say I don't want it, they have the power, therefore, to do whatever they want with it. And central banks Will not Um Any significant amount of that because of the reason I said they they want their transactions to be private and in their control. Think about how different

29:43 It would be For Russia. Okay, they confiscated these kind of other assets. Um they didn't get these.

29:52 Okay, gold. And so um what you're seeing even particularly in this time of conflict. Is um that there's a sense that if I'm holding this

30:04 Others won't get it. You mentioned a second ago the impact that you think AI is gonna have on the economy broadly, but also again to real people's lives. There's lots of debate. I mean there's been a debate over the last ten ten 10 years or so within the world of AI, you had the big AI CEOs originally saying that AI would cause job disruption. And that you know, you've even had some of the COs more recently saying Work will become optional.

30:28 in a world of superintelligence. At the same time we have robotics coming over the horizon. So you've got this sort of convergence of intelligence and then I don't know, you could could think of it like muscles. like physical muscles or ability at the same time. Um, we're seeing AI accelerate and it's Capabilities. What does this mean for the average person and their job and who's gonna benefit from this AI revolution in your point of view?

30:51 It means that you will either be cutting edge and capable and among that top fraction of a percent down to ten percent of the population. Who is um

31:05 cutting edge and using it and accelerating Or uh you will If you're in a thinking job. uh be at risk of being uh replaced. We're coming into a world where we can automate

31:18 Everything. The evolution of man. was we had The agricultural Era.

31:26 And there was no real inventiveness. And then Man And then did The Ma sheep.

31:35 And that the machine did is it replaced man's Physical necessity. So Men Used to be like oxen.

31:43 in the agricultural field. And so on. And they were replaced by tractors. And then there was we entered The industrial age. First you had the printing press.

31:56 that allowed people to learn And then you had these inventions, the industrial revolution, the first industrial revolution. As the But replacing the physical.

32:09 that that man would do in factories then and so on. And so the way I look at it is I look at the human body. And I see like it's be replacing the body and so on. And it's coming up. higher and higher And then it replaces

32:24 Some aspects of the mind. That you can computerise. And it's coming up and up. And it's replacing higher and higher levels of thinking. And reasoning. Okay.

32:36 So that Path. is part of the evolutionary Half. That is happening.

32:43 Okay. So then you start to say, What do I have to offer? And so in answer to who benefits from it? Those who benefit from it are those who are Um the capitalists with the ideas That replace

33:00 Uh the workers. And so if you look at There's revenue for businesses when You buy something in a store, there's revenue. Okay. And if you look at the share That is going to workers. You see that share going down.

33:15 And if you look at the share that's going to those who own that business. That share is going up. That's you know, how do they share that revenue in terms of the cost, and you see that that's rising. And so Um this is an evolutionary process, and it's true.

33:33 that what happens is you get more uh free time. Okay. So now the s society has to think How do I deal with this? So for example, the work week. Which used to be, you know. A sixty or a seventy hour work week.

33:48 goes down to less than a forty hour work week. And there's more time. But there needs to be uh, you know, how do you create a bottom? And so we're going through this phase in which There is this upper end.

34:02 that is making incredible amounts of wealth, as we describe. And then this lower end That is um then having these challenges. We've have a relatively good economy. and the um difficulty of college graduates to uh get employment. has increased significantly. And I can tell you that in in many businesses it becomes more of a pain in the neck. to have a college graduate uh let's say do it they have to

34:33 train them, you have to and and many of those tasks, many of that thing can be done. uh very quickly with the AI and with computerization. And as you get into robotics, you're gonna have that ha happen, right? The speed of the disruption that we're seeing because of the amount of capital that's flowing into these AI frontier models like the cl anthropics and open AI, et cetera, et cetera. Is is quite different from anything else, sort of the historical presidents as we've seen through the industrial revolution, where it took time to build the tractors. There's an element of speed. What happens usually

35:08 is the bubble bursts. Mm-hmm. And now you have the cyclical dynamic of that, while the technology You know, evolves. But the the supply, demand, and the debt problem that we just talked about then come in.

35:22 And so unemployment is due to you typically um Some sort of a combination of a financial crisis that like we talked about, the debt and stocks going down and people not having collateral and then therefore not buying uh assets and that dynamic, that causes the unemployment rate, that factor. That's the sort of economic reasons, but in terms of the AI agent robotics being able to replace you. I've sat with Dara from Uber and Dara said that He imagines in the future. the nine million riders that they have around the world doing deliveries will be replaced by

35:59 Autonomous vehicles, autonomous robots. Those nine million. drivers careers that you have will be out of work. Conceivably. being honest about the situation. Yeah, I think uh again, it goes to physical AI as well, right? So I think twenty years from now you can imagine that those

36:16 Nine million will be Yeah. twenty million uh A Vs maybe. But we have time between now and then. partially because we don't operate in the virtual world, right? We operate in the physical world.

36:28 You have to get the regulations up, you have to build the cars, you have to build the sensor stacks, the m the models have to get there. So there is time between now and then. But you can imagine the majority of our trips being Fulfilled. by robots of some kind.

36:45 The unemployment rate gets very influenced by the bubbsting. And the economy going down. You see that spike. You certainly have the evolutionary change. that you're referring to. Okay, so it's okay. In other words, there's this evolutionary thing.

37:04 in which they uh like he says Um you know, the tractor replaces the laborer or the assembly line worker as technology is replaced. And that is an evolutionary thing. That goes continuously for you know, many years. In in the way that you're describing.

37:23 Because you asked about the unemployment rate. I just wanted to emphasize that the unemployment rate is very heavily affected by that bubbing. So okay, you've got two forces at once, then you've got Uh when the bubble bursts, everybody, as we said, needs cash. So they start cutting their costs. So that's when they start laying people off.

37:41 Yeah. They start looking around their company and go, forget growth, we just need to survive. So we're gonna lay off that team and that team and that team, and then you see unemployment going arc. And then you've got this sort of underlying shift happen at the same time, which is workers are replacing that team members with

37:58 AI agents or robotics were in the factories, they're now using robots to do factory work, et cetera. And that's the sort of current slow march forward. Right. So I have This chart. Okay. What this represents this line. is the um Evolution of technologies.

38:16 In other words, we have greater and greater learning and doing things better, and that's the evolution that we're talking about that also machines replace people or replace their tags over that period of time. Then you have this big cycle. Which is typically lasts for About a lifetime on average, about eighty years. Uh we went through that uh the last time, nineteen forty five. There were orders. There's a monetary order, there's a domestic political order.

38:47 There's a geopolitical order. Okay, you have The bubble bursting. Okay, you have This

38:55 This is what we're talking about. Um that dive. And then you when you go through that, you break down these orders. And when they break down Then

39:05 Um you would get rid of the debt. Button. So you get rid of the monetary system as you're used to it. You um may get rid of the domestic order.

39:15 But many countries orders. Their systems. And I mean th they all end at some point. And so they can break down

39:23 quite often in a time of great internal conflict. Does the system last? And that happens at that time. And so that's That big breakdown. But still what you're talking about

39:35 is and and I and I agree with you, this keeps going up. Okay, because learning You don't unlearn what you've learned. So as this uh goes up. And and you're uh you you still keep this thing going up?

39:49 Okay, but you have the big cycle, the debt, the conflict. type of movement. And these little cycles Are the cycles that we see In this Roughly on average, let's call it an eighty year period.

40:03 But um uh you see the um You see the recession. And h recession has higher unemployment. And so on, then they stimulate monetary policy, they make money looser. then the economy goes up.

40:19 And you have prosperity. Then you go into a bubble. Okay, that then you run lower on capacity'cause you're using up the capacity, inflation rises. They tighten monetary policy. And then you have

40:33 The re the recession. That follows. So these movements from One recession to the next recession, that cycle that I've just described, on average has lasted about six years.

40:46 Uh uh give or take about three. So That's the way it looks. So I'll play this back to you to make sure I understand it. There is a

40:56 sort of bigger macro bubble, which is over eighty years, which is the changing of the world order. Yep, you get deeper and deeper and deeper in debt. over a lifetime. So let's say your debt capacity, you have a certain amount. So the government's debt capacity, for example, it can borrow when you wipe it out here Then you can build it up and build it up until it starts to squeeze. Debt service starts to squeeze out. And that's a changing of the world order. That is one of the ingredients, right? So okay, we have too much debt. At the same time

41:30 What you're building up is you're building up great wealth gaps because capitalism And I love capitalism, but it it's it here's the reality. It creates big differences in income. And wealth. And when it does that That also creates differences in people's opportunities because the rich people can educate their children well and they can give them all the benefits. I mean education is a big benefit. And that's why there should be broad based excellent education.

42:00 But all of that happens, and so you see wealth gaps build up. So like the industrial revolution leads into the gilded age. Okay, the gilded age looks a lot like now, you know, people buy expensive things and looking very gilded. And then it l leads to the robber barons. And the robber barons are people who are considered, you know, the uh um that they're uh taking advantage the billionaire class. And it becomes that cycle. So that's the way it works. So you've got this eighty year sort of

42:37 You know, boom, and then there's a collapse, which sort of ends in conflict uh and the changing of the new world order. And then within there you have these little um bubbles, which are really economic bubbles that go up and down recession. People get very excited, they they they contract, they get excited, they contract. And then you have the the straight line here, which is the sort of m technical technological improvement uh across the spectrum of ideas and technologies and all these things. And it keeps going. And it keeps going regardless of this boom and bust because as you say, people never forget. And I so a couple of questions on this then. I don't even know which one to dive into first, but let's go for

43:12 I guess just closing off on the last point that I was I was getting at is There's this narrative that there'll be new jobs created Because of AI and robotics and everyone will be fine. A lot of this narrative comes from Silicon Valley. who is producing the technology that doesn't want to be attacked because they're Making a lot of money. I think objective

43:38 Um people Uh in Silicon Valley. Yeah and there are a number of them. Would say It's going to have a big employment. But you you you can see it um in the wealth who owns stocks and who doesn't own stocks.

43:53 Okay. Now if you own stocks Um you're very happy now. Okay. And if you don't own stocks You're not getting that benefit of owning stocks.

44:04 So that in and of itself creates a greater greater wealth even aside from employment. Okay, so there are these forces to create the greater Uh wealth gaps. Right. Roughly

44:17 So sixty one percent of US adults Own stock in some form. And most of them. hold it indirectly through their retirement plan, only twenty percent of Americans directly own individual stock. Or shares through a brokerage account.

44:32 while over half of Americans own stocks, ownership is heavily concentrated, the top ten percent of households Hold almost ninety percent of the stock. How do you feel about this narrative coming from predominantly Silicon Valley that there'll be new jobs created that we can't yet forecast and everyone will be fine? They point to the industrial revolution, they say, look, when the tractors came, we thought everyone was finished. When factors came, we thought everyone was finished. But look, we figured some other stuff out.

44:58 Because if you look at that This is this w um thing I'm saying that as your body is more and more replaced With your mind. Then you can do that, but when your mind

45:10 Is replaced and your body is replaced. Uh what is it that you have to sell? What is it that we have to sell as humans once uh But

45:21 Mines are replaced. What man has Um His emotions. And has

45:29 Um Intuitions. There are certain things that artificial intelligence doesn't have. And so if y you have to get down to what those Things are Yeah, um you know, does the um

45:44 Robot give a good massage? Does uh You know, what is it? That is left. And so we

45:53 Well Wrestle with what it is that is left, okay? But I think That for the foreseeable future. Those who can work very well where they have an exceptional Human intelligence

46:08 and work in partnership with the artificial intelligence. that they are going to be at the cutting edge of all of this. I've got sixty seconds and I'm gonna show you how much I can get done because of our sponsor called Whisperflow. And for those of you that don't know what it is, it's a business I invested in that turns your speech into text in any app or device. I'm gonna post into our Slack channel, which rewards whichever team member conducted the most experiments this week. Hi, everyone. Here is this week's experimenter of the week. Congratulations to the Directo trailer team, which is Ant, Live, Dom, and Cam.

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48:14 So if you had k kids that were sixteen years old now, Ray, and they said, Dad, what what do you think based on everything you know about the future What should I be doing? First of all. There's the question of what

48:25 What what matters most in your lifestyle? V uh uh so I'm gonna get philosophical, not uh assuming that the highest income is the best. Okay. Бікоз You want happiness and health.

48:40 And so in answering your question There's very little correlation between the amount of money you have and the level of happiness that you have past the basic level. And so I could be Answer your question first, which the obvious way is to say to earn the most amount of money, and I want to start off and saying

49:01 That um You know, my experiences and so on is um Like I love being in nature. And it doesn't cost me hardly anything. I mean, it depends where your

49:13 Pull is. And so don't lose sight of your pull and what it's about. What you want to do is you want to get above the level That you uh don't have to panic. We just earlier discussed how many months can I live and to be able to secure that. And to be excited and have that passion or the whatever it is, the life that I want to have. So I just want to emphasize keep

49:38 in mind of that. But then also You know, my principle is Make your work and your passion the same thing. And don't forget about the money part.

49:48 Right. So know your nature. Uh um this is what I Tell my grandkids, okay? Yeah, you have a feel, and you also have a nature. It's not just your preferences.

50:00 People think differently. Some are It more adventurous. Some are less adventurous. Some are more Conceptual.

50:09 Or artistic. and can think with imagination and they love doing that. Some people don't like that. Some people want to make life should be more concrete and more certain and so on. That's your nature. You're partially you're a lot born with that nature and you also de learned it in your earlier years. We know this of how how

50:31 Neural plasticity works and so on. So we are all on a journey. to um find the match. between our nature And our path. And you find those that path.

50:44 But you can't forget about this money part while you're pursuing that path. Don't forget about the money. So if you're You know, grandkids came to you and they said, Uh I wanna Become a lawyer. Would you say

50:55 Listen, that's forgetting about the money because I think AI might take that job, or would you say yes? Would you if they said I want to be I want to do a thinking job. That it's not The most intelligent people Or the most intelligent species.

51:15 That are the most successful. And it's not No necessarily those that work the hardest, although these things are very important. It is the those who uh species And and to people who are also most adaptable.

51:32 And and so There's gonna be great change in your lifetime. Okay. And so yes. Today.

51:39 It's artificial intelligence. But if you went back um not long ago We didn't even know artificial intelligence would exist the way it t artificial intelligence today exists. And the future will be like that. So when you're nailing it down, you know, it used to be

51:56 Make sure that uh you know how to um code. And then C Claude Code comes along. And all of those who were coding Um, or worry about their jobs. Okay, so what is it?

52:09 That matters. Okay. Із апроч то ли. in a sense that produces that um you know the the general understanding and also the adaptability I think a lot has to do with knowing yourself. That's why in building bridge water uh the personalities of the person

52:30 were very important in what suited their jobs. And then I uh built this uh a personality profile test. Then I made it online for anybody to Go take. It's about thirty minutes. It's free online. It's called Principles U. That'll tell you a lot about your nature.

52:49 Okay. But your goal is to find that nature and what it what are the paths. And there are several paths. And they're constantly changing to find that nature. Okay, you experiment, you learn. Okay, but y you know, you probably uh were pulled into this job by your nature. Right.

53:08 And so and you and you made it work. And here it is, it works in all of those dimensions, and it's like that for everybody. Yeah, I it's it's uh it's interesting'cause you look forward to the future, and I I I think if I was a young person at this stage and I was trying to set out where to aim my career, I would be more confused now than ever before, especially'cause they're also contending with this uh unemployability crisis amongst entry levels. But if you're talking about

53:33 You'd be confused because You can't Anticipate the future. That's right. That's just the way it is, right?

53:43 And If you say what is it that I need Given that reality Okay. I need to

53:51 I need to learn, I need to know how to maximize the use of tools like AI to be able to It increase what I know, and how do I use that to the best of my ability to be as useful as possible. doing things that fulfill me. Mm-hmm. Okay, so that's what you need to do. You're asking what you need to do. Uh just get over the fact that you don't know what the future's gonna be like.

54:18 So if you're looking for an answer, is it gonna be a computer program or is it gonna be this or that? No, just be Maximize Uh your ability to know, which is so easy nowadays. Right. So maximize that and then maxim use that to maximize your usefulness and And jobs that make you happy and

54:39 That's the thing. Not That's the best I can give you in terms of more my sixteen year old that's the best I I can give them. Because I I don't want to mislead them that it's the thing. That it's the particular job.

54:55 Okay. That'll mislead them. You talked about this eighty year cycle. Which results in this new world order. And it sounded like you were saying that near the end of the cycle you see wealth inequality. And you see the gilded age where

55:10 Some people have lots of nice things and other people at the other end are struggling and this is a function of capitalism. First of all, um It's a reality. that it's not only just a w um a a a wealth gap difference and if the majority system is not working for the majority well, you're gonna have a problem.

55:35 And yes. It is um it's contributed to these things where One wants to create more opportunity through education. And through other basics that there's certain level at a floor

55:50 That nobody should go Underneath. because it's bad for them and it's bad for the society and just to embellish on that point. My wife and I live in Connecticut. It's the on a per capita income basis. I think it's the second richest state, but

56:07 Twenty two percent of the high school students have either dropped out of high school or failing with absentee rates of greater than twenty five percent. And as a result, a lot of it is gangs shootings, drugs, and so on that leads to a lot of incarcerations.

56:26 And the bill for incarceration. Has become uh larger than the education budget. When you have that kind of cycle and so on. the system has to work for most of the people and and so on so

56:41 You um you you have that. Um Dynamic. But it all comes down to productivity. And so um the way I look at it is The government run by almost anybody.

56:53 Can't make these things run well. I mean governments do not things run well. So what is it like to give them the money And expect that they're gonna make things work well. And so you look at this set of circumstances and you say, Who is gonna make it work well? And and I don't know the answer. And there's a budget considerations and so on.

57:15 You have to prioritize the things that make it work well and and you know what that is? That is uh educating people to be productive and civil. We don't talk enough about civility, you know, how we work together. to be able to achieve a p a a productive result. And the way these cycles go.

57:34 it's more likely that they're gonna have a big fight and we're gonna have you know, a debt problem and those kinds of things, then we how we're going to come together and work out how to achieve this environment which takes care of wonderful education and productivity of people and all of that to make the society work better. Um for most people.

57:57 And that's the way it looks. And that's What's happening? Capitalism leads to inequality, it seems. Yeah. It doesn't have to.

58:06 There were some societies Um, like in in Singapore. some of the Scandinavian countries, some some societies. There is a a a floor That everybody

58:19 uh uh can have um good education Adequate housing and adequate health care. The foundations. Okay.

58:29 Because if you go below those levels And the society will pay terribly for it. Because those people Will become Liabilities, not assets of the society. They'll be disruptive. So what about wealth taxes? Because this is the big debate now.

58:47 The uh the big debate in the UK at the moment is tax the rich. It's been all over our news over the last couple of weeks. The big debate in New York and LA is wealth taxes and tax the rich. Good idea, bad idea. It's a very difficult idea in the following ways. I'm just talking about the mechanics. They have to sell the wealth.

59:06 And And that contributes to get the money to pay the taxes. That's one of those things that can cause the bubble to burst as we're talking about. And then um operationally

59:20 It's very difficult. Unlike if they did it as um stepped up tax basis. In other words, uh right now When you die, your capital gains gets put aside.

59:32 And you don't have to pay capital gains taxes, you pay inheritance taxes. And there are ways that you can Raise taxes. And not hurt the economy. But we do have to realize that it will lessen investment. because what wealth is mostly used for is to put it into investment.

59:51 So you have to do this with a at the same time The improvements in those that are going to improve productivity, like education and so on. If you're just making Transfer payments, wealth payments.

1:00:07 And you undermine the productivity of the society by doing that. In other words, you're just giving it for consumption and so on. And the money's going from what was capital expenditures and those kinds of investments that make uh a better, more productive society to go to, in a sense, consumption and so on that doesn't produce that pro productivity, that's gonna be a problem. So you have to think How do you make people productive? And how do you make your society productive for most people?

1:00:41 Or you're going to have to find a way where You say that other group of people who is not productive. Um the overall society can have a higher level of productivity, but we're going to still establish this bottom that I'm talking about. The bottom in education, the bottom in conditions. And then you have to say who was capable of doing it. Building. I said uh

1:01:05 A society that will be productive. Who is that? Well, y as I say, you have this dynamic problem. That Um

1:01:15 Uh typically a privately owned Capitalist owned. Business. will do better than their government counterparty. Okay, so business is more productive typically than a government entity. That's system. So entrepreneurship.

1:01:32 You need entrepreneurship. Yeah, and capitalists in other words, people who are capable of making the thing they're responsible for Productive. Okay, Run efficiently. You knew that. So you need those Indisputably. And if you're doing that in government.

1:01:49 You need that in government. in order to be able to do it. And government has its own Uh it first of all doesn't attract many of those people. And then it also has by its nature, knowing many people have gone into it, it it is almost dysfunctional. as it ha causes all of this arguing and problem. So those who want to be most productive tend not to go there. And also, um, it doesn't uh distribute well. These people do not n they're not on the ground.

1:02:21 They don't have the direct contact. They don't know what it's like. Yeah, the politician who says I'm uh I'm going to You know, so you still have to come back to the question who's gonna make it run efficiently? This is something that I've made for you. I realize that the drivers here audience are strivers, whether it's in business or health. We all have big goals that we want to accomplish. And one of the things I've learned is that when you aim at the big, big, big goal.

1:02:51 It can feel incredibly psychologically uncomfortable because it's kinda like being stood at the foot of Mount Everest and looking upwards. The way to accomplish your goals is by breaking them down into tiny small steps. And we call this in our team the one percent. And actually, this philosophy is highly responsible for much of our success here. So What we've done so that you at home can accomplish any big goal that you have is we've made these 1% diaries, and we released these last year and they all sold out. So I asked my team over and over again to bring the diaries back, but also to introduce some new colours and to make some minor tweaks to the diary. So now we have a better range for. You. So if you have a big goal in mind and you need a framework and a process and some motivation, then I highly recommend you get one of these diaries before they all sell out once again. And you can get yours at thediary dot com. And if you want the link, the link is in the description below. What is the UK currently a cautionary tale of?

1:03:49 It's the classic cycle. They Have gotten over Indebted? Underproductive. And they've run out of

1:04:00 Choices. In other words, there's not enough money. Okay. And because there's not enough money. Um to

1:04:10 To do all the things. Then they've gotten this internal political conflict going. And you've had Uh

1:04:20 Six out of the last seven years you've had a a new prime prime minister. Because somebody else comes in and they got their promise. And the promise doesn't pan out. And it doesn't take long to be that that I don't believe your promise anymore, so you bring the people in. And then you throw them out.

1:04:39 We we just had a new Prime Minister yesterday. Yeah, I know. I'm um it's all part of this cycle. And so what happens is they don't have the financial and the people move. It's just logical, right? It's just when you're heavily indebted. And you're not as productive. And you've got large wealth gaps. What are you gonna do? It's politics.

1:05:00 Um, y you're gonna say I can't raise taxes. Because if I raise taxes Besides having great in conflict, um people are gonna leave. Uh okay. So I can't.

1:05:12 I can't cut benefits. Because those who are receiving whatever those benefits are are the ones that are suffering and what am I going to do? Cut those benefits? So now Uh okay. Uh but wait a second, I'm running a big deficit or or I don't have enough money.

1:05:29 So where does the money come from? How do I get out of not getting more in debt? And then what does that mean for the person who's lending to you. They don't want to lend to you. Right.

1:05:39 So you're not gonna get the money to finance the deficits. It's mechanics. So what is it they have to do to get out of that situation? They're gonna have to have a you know, a major restructuring. You're gonna have to um

1:05:55 Yeah. Yeah, well well the the way the central banks work now is they do a mixture of printing money which produces inflation. and then restructuring the debt in some way, like maybe changing the maturity. Well and and in these cycles uh quite often they put in capital controls because they think people are leaving.

1:06:20 So they don't want them to leave and take their money with them. So they put in capital c controls that says you can't leave with your money. Okay, and they'll have exit taxes, and that's the type of thing that happens until You know, there's period of great turbulence, then you Um through a combination of

1:06:39 Restructuring the debt. Restructuring the debt. means like quite often you lengthen the majority of the debt. I think what's needed is A strong middle. What does that mean? Right now. There's a left and right and they're extreme.

1:06:55 And as long as they're at war with each other, that's gonna make things worse. Yeah. If you can find that middle course. So that Those are most extreme.

1:07:07 Um are more alienated. Than those who s say You know, we're gonna have to figure this out together. And then what I would do

1:07:19 That leadership, that core. I would have um something like A bipartisan commission. In which smart people Meaning you'll understand how economics and these things work.

1:07:33 of both parties work together to uh come up with a small uh And difficult plant. In other words, you're going to have to make difficult Changes.

1:07:44 In order to make that. Um Work well. But if you can Achieve that.

1:07:49 You know, like sometimes in history. Great leaders of opposing sides have been able to come up with A plan. I mean that's how the constitution was made. You come up with a plan for operating that way.

1:08:03 And then you impose those difficult changes. And that when I say this I I say that that's Very difficult and very long shot.

1:08:13 But Um unless you have Bipartisan support. Unless you do it in a way where The pain

1:08:21 Is shared. Um And there's a sense. that there is a um We're doing the right thing.

1:08:31 As well as not a sense, just a reality of doing the right thing. To make most people productive. That is the best path forward. If you were a young entrepreneur You know.

1:08:45 Twenty one years old. Would you build a company in the UK now if you had a choice. And if not, why not? And if so, why?

1:08:53 I would uh exist without And try to exist without borders. These things that we're talking about to a large extent. And say where are the places in the world That are

1:09:09 That have the vibrancy, that have the capital, that have uh the elements that are needed. There are bright spots in the world. And I'd want to be uh around the most intelligence, doing the most cutting edge. Terrific things and be global.

1:09:25 In other words, don't be just stuck in a provincial place. Go to That are what I might call almost renaissance states. that are ha good things are happening. And these qualities exist that not only good education, the civility, the vibrancy be in those places, but be able not just in one

1:09:48 There's a Chinese ex uh uh not a Chinese Hong Kong expression. I think that a smart rabbit has three holes. And what it means is Like if the one place that you go to Uh it may not be.

1:10:01 um remains the best place. There are riskier places. The riskier places are those that don't have the elements I mentioned. The education, the civility, the productivity, all of those things. So would you would one of those places for you be the United Kingdom? Cause me and my friends talk about this sometimes. You know, I've got I've invest in lots of companies there and the founders come to me and ask me these kinds of questions, which is is based on everything that's going on with this turmoil and the big cycle. Um What's gonna happen if I continue to build my company here in the United Kingdom.

1:10:31 I think the United Kingdom as it goes through these difficulties. is as a whole a more difficult place. And then there were pockets of it.

1:10:44 that when they're operating are In their pockets. very stimulative um having th those elements just like in the United States there are places and pockets That have those However, they're within

1:10:58 A system and a place. That is um Not Um Not healthy.

1:11:05 The real dominant narrative we're seeing, as I said, this week is that because there's this problem you said there's not enough money. The The most popular narrative, which I think is supported by about seventy percent of people. is that people over

1:11:20 Ten million net worth. There's this is something proposed by one of my former guests, Gary Stevens, so he did a documentary last week. Should have a two percent wealth tax. My preferred way is to stop people from hoarding enormous amounts of wealth for enormous amounts of time. That's my that's basic my preferred method.

1:11:35 There's also the wealth tax method. There's also capital gains as a method. There's a lot of different ways here. There's a lot of different ways here. But you have to deal with the problem of if you do not do not tax very wealthy individuals and very wealthy families, their share of the pie will obviously grow over time and they will, and they are, as we are watching, squeezing out ordinary families. And this is kind of it would raise I think it was I think they said twenty billion dollars or something like that, but It would raise some money. Um so the the big debate in the country at the moment is yeah, do we One way to raise money would be this wealth tax.

1:12:06 proponents of that or I should say, um people that are against that say People will leave. If you took All of the money of people in the in the top.

1:12:19 Not in other words taxed at a hundred percent. You're not gonna come up with enough money. Because it's uh such a small percentage of the population and uh but And that but in addition. Yes, the people will leave.

1:12:32 Then you change the laws. So that you make them retroactive. Another in other words, you say The law means You're gonna be taxed.

1:12:43 As um A past date. So that If you leave it. Um

1:12:49 We're gonna get Your money. Or then you put in capital controls. All of this has happened before. Wealth taxes would be new. Wealth taxes are administratively difficult.

1:13:00 'Cause how do you value all this wealth that is not Easily valued in such things. But yes. What you've just said is um well recognized. You mentioned earlier that this big cycle takes place. This one here on the front of your book, The Changing World Order, happens roughly ever every eighty years.

1:13:18 Yes, it it's like health. What I mean is It varies. On average, let's say What is the life expectancy of a person?

1:13:30 But life expectancies or how long people live vary. I wouldn't uh uh emphasize too much Um the amount of time exactly. As much as I would uh look at your condition.

1:13:44 Where are we in this, um at the moment, w in terms of the symptoms or markers of the Next big Over in this vicinity over here. Um You know, uh we're on the

1:13:57 Um when we say that um US, the UK. Number of other countries. are um later in that cycle when There's the loss of the things that we've been talking about.

1:14:11 Over indebtedness, more over indebtedness, the loss of power. Yeah, the decline. I'll call that the the decline. And you've studied this for how long? Well five hundred years, uh the cycles for five hundred years and in a number of countries that's in that book. These are Objective measures. This is not

1:14:31 Subjectivity You can measure these things. You can measure a level of indebtedness. You can measure the uh education. levels and the competitiveness, you can measure all these things in Clearly measurable numbers.

1:14:46 That show the health just um like a physical exam. When there's a new world order because of this decline. through history over the last five hundred years, has there ever been two superpowers that emerged as the dominant superpowers? Or is it just tends to be one? In the past Prior to World War One.

1:15:06 There was no Mm. World War One happened and then World War Two happened. Because the world came together. And there was one world.

1:15:16 Essentially. Before that. There were regions and they would have the different powers and you could have a powerful China or India could be very powerful at the same time as the UK or uh the Dutch and whatever would be powerful and they weren't in that one world.

1:15:36 And the basic issue is when you have one world. And you have disagreements. You're always going to have disagreements. How do you resolve those disagreements? Yeah.

1:15:48 War. Okay. It th maybe it's not physical or maybe it's whatever it is. But there's a disagreement. Where does the border lie? Where does this okay the rules based Order.

1:16:01 is a theoretical Um conception of the United States uh coming out of World War Two because there's the idea of how do you govern and you have representatives and you have them in the United Nations and so on. And that you know, that's a nice

1:16:18 But the reality is when that comes And is inconsistent with power. Which wins? Power. Or of that rule based system. So by nature, to answer your question

1:16:32 It means tends to be a dominant power. We will see. China and I think the United States. I think uh The most likely beneficial Outcome. is that it becomes more regional.

1:16:46 Okay, China has no desire Two occupy control other countries. For various cultural.

1:16:55 And and they their basic objective is to not be cut off, not be harmed. And then also be as good as they can be and and be competitive. following their approach to a system which is very much a top down controlled system that's an extension of Confucianism, which is like the family, and that's what they want to do. You can possibly have this region thing, but you're not going to have the dominant world power if that's the case. You

1:17:26 Have some chance. that there's a great conflict But I think that um there's enough wisdom In a sense. to um not want to go there.

1:17:36 So there's always there's pretty much always been a superpower through different cycles. There's been one dominant power through these historical cycles. You're saying that you believe In the next decline, there won't be one dominant power, which has been the US for the last eighty odd years. There will be Two. Because you d you can't foresee there being a conflict at the scale that would result in one dominant power.

1:17:59 The strength of each country. will be how they take care of themselves. Uh are they going to be strong or are they going to be weak based on how they educate their population, how they spend their money? How they manage themselves. Those will determine

1:18:17 Oh Those countries, right? And so that'll be true certainly for the United States and China. And so as we go forward, how will those systems

1:18:28 deal with those issues in the best possible way. And that I I would say as long as the United States remains a power. But it's in It has a risk. of uh of having a very bad set of circumstances through debt and conflict and these things that erode it. It'll be from within

1:18:48 That those things um particularly uh could change that relative Balance and power. And similarly, if China managed itself badly, it that could change that. Given that the if they both remain powerful entities, we

1:19:03 Then what you're going to see. is um I believe More the recognition That there are regions. Okay.

1:19:12 Just like They there's The Americas. Okay. And that becomes heavily much more the region and where that spills over. And then there's the region.

1:19:24 um around China. The um Ape uh APAC countries. And though that region and that there would be the development within those regions. And I do believe

1:19:38 The avoidance Of The big war. That would be very uh detrimental. There are issues like the Taiwan issue.

1:19:46 But the time one issue will be handled by I in my opinion, most likely. Not militarily in the sense that um there will be a great war between the United States and China over it. but in the pressures that are going to be created so that there is a reunification of China.

1:20:08 You mentioned conflict though. The uh United States are at war with Iran and it seems to be a war that they can't seem to get out of. This is gonna have an impact, presumably. On Lots of things you've described here, but also The feelings of people at home.

1:20:21 as you know, we we face the prospect of the United States sending troops on the ground into Iran because this the Strait of Halloween is going to become this just choke point to global energy and they're gonna you know and what does Trump do about that? He can't it's like Vietnam he can't leave. Or else he is gonna Look bad. Um he if he stays he looks bad. Midter's coming up.

1:20:43 What's your thoughts on this war in Iran? Do you think it was a bad idea? Do you think it was a good idea? Do you think it was Do you think it's does it play a role in all of this stuff here? Iran, I think it Here's what's happening internationally, I I I I get to speak to world leaders and

1:21:03 And so on and and particularly uh in Asia. There's a a recognition. that um the United States uh doesn't want to uh fight a war. So the the Lipmas test is

1:21:18 Uh do you c who controls the Strait of Ormose? And that the United States Um, because the population in the United States is worried about uh gas prices. And losing people.

1:21:32 And s and they want it to be be all over Fast that uh you can't fight a war that way. And so what you have is the United States Will not show up.

1:21:44 In Asia. What does that mean, show up in Asia? In Asia. There are all these countries. Who believed that the United States was gonna play an important role as a counter

1:21:56 balancing influence for power in the region. Because China's the dominant power and the others are much less powerful. And so the United States being in there was going to balance those power, and because they have a military presence, the idea of having bases in their countries was believed to be that will help That happened.

1:22:21 Okay, now there's a recognition that not only they won't show up, but maybe these bases can become liabilities. and that the uh Chinese have a lot of influence and power a under that set of circumstances. For example Uh chips come out of Taiwan. We could imagine what would happen if they blockaded chips leaving Taiwan. Okay, you'd see the world stock markets crash, you would see terrible

1:22:51 Terrible things. That represents a non military power, just even the ability To threaten that. say the Chinese say for five days we're not gonna have it. What will the United States literally do? Or if you go to uh countries like uh the Philippines, which has a treat with the United States that's like a NATO treaty. Well how would the American public react that we're going to send Um military, you know, a aircraft carriers and so on into the Philippines to stop the Filipinos from being picked on by the Chinese. I mean, so what you're seeing is

1:23:29 A change. That is very similar to the British Empire in terms of um being uh weaker. I remember a time not long ago that um the United States would just have to Almost hint to a country.

1:23:45 That we would like this thing it it to be this way or you would like it to do that that and they would do it because of the American Power. not just military power, but economic power and so on. Well as you're seeing that power Being

1:24:01 A road and For example, China is a larger trading partner with most countries. than uh the United States is or capital turning up. So uh these things matter. So you're a you're seeing that kind of a shift in power. I'm a global macro ambassador.

1:24:19 And my goal is to be as accurate as I possibly can. I can't let biases stand in my way of doing that. So I look at statistics and measures and indicators and so on. So what I'm saying is Clear. It is You know, it's apparent. It's mechanics.

1:24:38 So what does that mean for the Iran situation then? Does it mean that it's a very, very difficult situation. What what is All through history And the Chinese

1:24:50 know this very well because their way of mo having a war is conveyed in the art of war. And also the tribute system, as they call it. You cannot easily Go in and control a country.

1:25:05 for a long period of time occupying. There are, you know, ninety million Iranians. And they will be there. Uh no matter what happens. Now the question is Do you have what it takes?

1:25:18 Two um Take control. of the straight of hormones by way of example and allow in other words, do you allow that to be in the hands of the Iranians. Or do you not?

1:25:30 And are you willing to pay the price? to be able to um put yourself in the position which means take a lot of pain And men. Um enforce that. For

1:25:43 the I don't know, forever and ever future. Because it's not just take control today. It means okay, how is that going to go on and what does that mean in these other locations? Does the United States we're going to do the same thing with the Chinese in Asia? They're gonna do the same thing all around. Probably. Okay, so what does that mean?

1:26:05 Okay, a change in the world order. It sounds like a big mistake. Oh yeah, it it was a big mistake. And also What it did is it shone a light. Um

1:26:18 The vulnerability. Before it didn't It wasn't a parrot. Vulnerability of The United States in being able to enforce.

1:26:27 You know, when there's always the threat. We'll come in there. Yeah, the the straight is open. We're not dealing that with this. And there's always the threat that the United States will

1:26:40 uh remain control. And that would be true in Asia and other places. Now a light bulb goes off. In other words, the uh like the British in s uh the the Suez Canal. We didn't realize

1:26:54 Now we realize That threats no longer work. That that power no longer exists. I guess we shall see. Ray, thank you so much for

1:27:03 Uh, committing this season of your life to being more of a public educator. Because your books here that have been read by millions, millions, and millions of people, and the videos that you've produced that have been watched by tens and tens, hundreds of millions of people, um, have been so formative for so many of us, understanding the world in simplified ways. And what I love. About the work that you do is you explain the world. Through principles versus tactics and strategies, which are a little bit more ephemeral than understanding the underlying principles. And I think it does two things. It helps us understand the world in ways that are allow us to see past the current short term moment that we're in, but it also helps us think generally

1:27:36 um from a more macro perspective about how all these things connect together. And I think that's broadly applicable. The idea of like Principled thinking is broadly applicable to all areas of life, whether it's your relationships or your business or your health or whatever it might be. And you've writ really written the definitive books on this subject matter. I've got all of them here. Um I mean principles is the first one that I ever read, but then I watched all of your your videos on your YouTube channel, which uh explain it in animated ways. Those are absolutely stunning videos. The unbelievably stunning videos. And I it's funny because you know, I've watched a lot of videos, YouTube videos in my life. But there's some that I have just never forgotten. And your book and your video are

1:28:13 About pr the book. on your YouTube channel, which I'll link to below, uh a video on YouTube that I've just never forgotten.'Cause it suddenly helped me understand The bigger picture. in a way that I don't think I would have ever understood otherwise. There's no I didn't go I didn't go to my history classes in school. Um I'm never gonna read history books necessarily. So um that video you made, but also the book itself really helped me understand there's always a bigger picture. And funnily enough, I go looking for the bigger picture and the cycles, should I say In all the other facets of life.

1:28:42 And psychology. Because when you're dealing with humans You are dealing with cycles. That's what what I've I've come to realise. And you can find them and spot them everywhere and then prepare for them accordingly. So thank you for the wonderful work that you do in this regard. I'll link all of these books below. Highly recommend reading them. And they're not for bothins or super smart people, they're for everybody. And uh they're written in such a way. So I appreciate that. Thank you for saying that. I find the videos are very digestible. one, how the economic machine works. It's I think it's

1:29:09 And it's been watched by a hundred and forty million people. And and people get it. So I think it's my responsibility to try to communicate. Also in a clear, simple digestible way, so I like to take a concept that's in a book

1:29:26 And make it into a thirty which is to try to pass along what Might be helpful to people, so thank you. Thank you for committing your your the season of your life to that. I really appreciate it, and so do many millions of my listeners. So Thank you. Oh.

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