Kind: captions
Language: en
Our latest video on the things that
happened right before a collapse is
going crazy. You guys asked, we are now
here to answer. Without further ado,
Drew, what do people have to say about
this video?
>> Let's jump into the comment section. Jim
Dryer one, like your videos, Tom, and
you make very valid points, but I can't
agree with you 100% of the time. The US%
>> The US is far from a debt crisis. We may
get there in the future, but it's going
to take a while. The dollar is the
world's reserve currency and the US has
the strongest military in the world.
Those two factors give us a lot of
leeway on debt. Additionally, some
context needed. Okay. Okay. This whole
thing that it gives us leeway on debt.
They're not wrong,
>> but that is the most moronic thing to
say. So, imagine Drew that I'm racing
towards a cliff. And as we're going to
the cliff, it's like, bro, this car is
number one in like uh crash safety.
We're all going to be fine. No, no, no.
We're still going to die at the bottom
of the cliff. The car may crumple in the
most useful way possible, but that
steering wheel is still going to punch
through my sternum. So, I do not
understand what people are trying to
convince me of. Can they not see young
people been completely priced out of
home buying?
Can they not see homes are the only
asset people understand intuitively? Can
they not see that inflation robs them of
their buying power? Can they not see
that real wages have stagnated? Can they
not see that we have offshored uh so
many jobs that now the rate of deaths of
despair that men particularly die from
is skyrocketing? Like I'm What metric
are they looking at to be like this
isn't a problem?
>> Okay. Can I play devil's advocate?
>> Please push back violently.
>> Um the mafia boss who cuts off your
finger when you don't pay him. Like I'm
incentivized to pay him cuz I like my
fingers. I don't know if there's a
country in the US that's gonna come
around be like, "Hey, US, I need that
money." And we're gonna be like, "Like,
are you high?
>> We can fight China. We got a lot of
bases."
>> China. China, first of all, China's
already selling our debt. The people
that the US The US is never going to
outright default. And if this is what
people are trying to get to, fine. But
hear me when I say they will do and
already are doing what's called soft
defaulting. and they will simply reduce
the purchasing power of your dollar to
nothing. If you think I'm making that
up, over the last 100 years, they did it
by 95%. In the last 5 years, they did it
by 25%.
This is not a maybe. This is not a
hypothetical. You're adding a trillion
dollars to the debt every 100 days.
>> Every 100 days, Drew. And so when you do
that, you are now in a debt death spiral
where very soon the interest payments on
the debt are more than everything else.
They are more than Medicare, Medicaid,
defense is already more than defense,
education, ah everything. And you get to
the point where you only have money for
the debt. Now I don't even I try not to
talk about that all the time because
then you're talking about like wear
Germany hyperinflation. All I need
people to understand is when you are at
when your debt to GDP grows by six to
seven% a year, you very rapidly get to
the point where you have to print money
to keep from defaulting, which means
that you just imagine stealing 7% more
of everybody's wealth every year like
clockwork. Dude, you you can never get
ahead. And so if people are wondering,
why can't I get ahead? It's because
businesses aren't going to be able to
afford to pay you that much more every
year. So now every year you're moving
backwards. Every year you're not able to
afford things. That causes people to
become more halves and have nots because
as I have said many times, people that
own assets will be pulled up into the
upper class. People that don't have
assets will be pulled into the lower
class. And one more time, 10% of the US
owns 93% of the assets. So, you're going
to have 10% of people that spiral into
just wealth, inequality, the likes of
which people have never seen. And so, if
people need to hear that I'm just this
selfish prick, then let me just say
this. I don't want my head separated
from my body. I'm a student of history.
I look at France and I see, oh, when
wealth inequality gets too bad, people
just get so angry, they start killing
people. What did Napoleon understand?
Once people start killing each other,
they don't stop. They don't want to
stop. They get like this blood lust. So
Napoleon ends up becoming emperor
because he looks at all these uh French
people literally just killing people for
no reason, killing each other. Some of
the people that started the French
Revolution are the people that got their
heads chopped off because people don't
they don't stop at the elites, bro. They
just keep going. You annoyed me, so now
I'm going to cut your head off. So uh
Napoleon looks at that and goes, "Cool.
Uh I'm going to point all these people
at every other [ __ ] country and we're
just going to go take them over." And
bro, he's they started taking everybody
over. He makes himself emperor for life.
Wild [ __ ] And had he not ended up
losing at first to the Russians and then
finally in Waterlue. If he hadn't lost,
dude, he would have been a dictator
until the day he died. People just it
it's like they don't look at history and
they don't see how this stuff play out.
So they hear like this rant, oh I heard
about like let there be cake and there
was like some French revolution or
something. But I France is great. France
is a great country. Yes. If you don't
mind doing a hundred years of darkness,
devastation, economic backwater, anybody
can recover. Uganda is Hey, Drew,
they've only been down for 50 years.
Give them some time. They're coming
back. I can feel it. It's like the [ __ ]
What is happening? Argentina went
through a hundred year a hundred years
of madness and maybe now they're coming
back because you've got essentially a
lunatic economist who campaigned with a
chainsaw who finally got people's
attention. you want to talk about
oversimplifying things, who campaigned
with a chainsaw, uh, got back into
power, and is now whipping them into
shape with austerity, which people hate,
but when you suffer enough, you can
finally get people back on track. Money
follows physics. It's that simple. Map
the physics. I still got three more
sentences. Let's let's keep it going.
Additionally, some context is needed
when discussing our national debt. Yes,
it is way too high and growing rapidly,
but at 37 trillion, it's only slightly
more than our GDP. The US has a 30
trillion.
>> Stop. Pause.
Okay, there's three types of debt.
>> He's just talking about government debt.
So, government debt is already
more than our GDP.
Okay, that's bad. Then you've got
private debt, which is again, I mean,
some ungodly figure. Then you've got
corporate debt. You put them all
together, it's over a hundred trillion
dollars. So kids, we are so underwater.
We can get out of it.
>> Corporate and private debt is another 13
trillion.
>> Yeah. No one needs to be panicking like,
yay.
Well, if we do the right things, we can
back away from the cliff.
But first, we have to do the right
things. What's the total debt, by the
way? Like all in debt, debt, debt.
Cuz I thought it was over a hundred
trillion. See? See? Over 100 trillion.
The total US debt encompassing federal
debt, corporate debt, and household
liabilities is estimated to be over $100
trillion.
Kids, we are in way more debt than
people think. Way more debt than people
realize. And we will just keep printing
and printing and printing and printing.
Venus is going to come collect.
>> We owe money to each other. That's the
thing. We owe money to each other.
>> We owe money to China. We owe money to
Japan. We We owe money to everybody,
man. Th this is like this is one of
those, okay, I don't want people to
panic, but I do want them to wake up.
And so, I'm not trying to fearmonger.
I'm trying to be cold water. I'm trying
to snap people the [ __ ] awake.
>> And so, no, I'm I don't want anybody
panicking. Panicking is for [ __ ] if
I may be so bold. I want people to wake
up. I want people to focus. Partly
because, Drew, I was so blind to this. I
knew how to make money and I made a
whole lot of it. And then all of a
sudden during COVID, I just wanted to
help the people back at Quest because
line workers are not making a lot of
money. When COVID happened, I was like,
"Oh my god, these guys are all going to
go bankrupt. They're not going to be
able to take care of their families.
What is the tool I have at my disposal?"
A YouTube channel. Great. I'm going to
help people. I'm going to start doing
financial content, like balance your
checkbook type financial content. And
then I kept being like, "Huh, there's
something I don't understand here.
Something I don't understand here."
Because I would have another guest on,
another guest on. They would say
something. I'd be like, "Wait, what?
And the more I started researching,
researching, researching, I finally
realized the one like lynch pin in my
brain that once you removed it, my
entire worldview fell apart. And that
was I thought inflation happened
naturally. I didn't realize it was
man-made. And I thought, "Oh my god, I'm
a 40-year-old man. I'm reasonably
smart." And I thought inflation was a
naturally occurring thing. I just never
thought about it. Mhm.
>> And so then all of a sudden I was like,
"Wait, the government's taking my money
through inflation?" Because the first
time I heard somebody say, "It's an
invisible tax or it's theft." That was
so confusing to me. It's like, what are
you talking about? Like how are they
doing it consciously? And then you
realize, oh, they're doing it
consciously. It it is a very simple
system. If you are deficit spending, you
are printing money. And if you are
printing money, you just made it up out
of thin air. there. It's It's not tied
to any value creation.
Here's the problem, Drew. You want to
know why I simplify things? I can
explain to you because people, as soon
as I said that, people they don't know
what I mean.
>> There's a whole fractal right there that
I always stop myself from going down
because you can create money out of thin
air if you do it in the exact proportion
of the additional value that you create.
But people don't even know what that
means. What does he mean by value? If I
build another chair, I've just created
additional value. If I have the same
number of chairs and I print money, now
I've got more money fighting for the
same chairs. If I make another chair, I
can print a little bit more money. And
now the two stay even. And here's the
part I can never get people to like
really grasp. They'll look at 2.7%
inflation, which is roughly what it is
now at the time that we're recording
this. People think that's not so bad.
And I want to scream because what they
don't understand is
a whole bunch of new chairs are being
made.
They're printing money to match all the
new chairs that are being made plus
>> 2.7
>> 2.7%.
Your TV should cost a$145.
But instead of that, the TVs get better
in quality, but they never go down in
price. And the reason they never go down
in price is because they are inflating
the currency like mad. And so instead of
getting like real stuff getting cheaper
and cheaper and cheaper over time.
Anything that's been mass-produced
should get cheaper over time. But it
doesn't. It stays roughly the same. And
it stays roughly the same because the
government is taking all of those winds
that we should be feeling in prices. And
they have convinced people. Thi this one
is enraging. They have convinced people
that deflation is to be feared. That is
lunacy. There's two types of deflation.
There's crisisled deflation. Fear that.
>> Mhm.
>> People are panicking. They're keeping
their money. They're not spending it.
Worry. That is bad. Then there's
innovationled deflation. Your TV is now
cheap and easy to make. that you should
be excited about, but you never feel it
because the government takes it all.
>> Landing the plane on this. Um, but at 37
trillion, it's only slight more than our
GDP. The US has a 30 trillion GDP. In
that context, it's like an individual
making 100K per year that has 120K
mortgage. Yeah, they owe more than they
make in a year, but it's not by an
outrageous amount. Additionally, a fair
amount of that quote unquote debt is
owed to ourselves. So, is it a problem?
Yes, absolutely. And we should work on
reducing it. But is it at a point where
national collapse is imminent? Not even
close. Just my humble opinion.
>> I feel like I've already addressed this
is not a big deal. We don't know that
much. Uh that it's owed to each other.
Cool. Let some banks fail.
>> Jubilee comes in where like
>> dude, a bank failure is a debt jubilee.
>> Hey, sorry people that deposited your
money. The bank doesn't owe you money
anymore. Whoopsies.
Yeah, but people freak the [ __ ] out. So,
uh, what? Like, people think they're not
the one in the debt jubilee. They always
think I'm the one that doesn't have to
pay this [ __ ] back. It's like, bro, this
is wild. Th This is people that do not
understand how money works. They don't
understand that if you crater businesses
because all those businesses that you
owe money to, you just don't pay. Oh,
when they fold, sorry, we had to lay off
17 million people this week. It's like,
you don't think that's going to have a
systemic impact on the government on on
the nation as a whole? Now, listen
again, these crazy ass comments are
pushing me to like really make a point
by being bombastic. I don't think that
we're at the gate of imminent collapse.
But we are at the point where we have to
wake up and start doing like moving in
the other direction
>> because right now you're at 122% debt to
GDP. You're adding a trillion dollars to
the national debt every 100 days. Uh
your interest on the debt payment is
already more than you pay for in
defense. Aren't people a little
concerned about that? You're marching
towards Thusidity's trap with China. You
are almost certainly going to have to
arm up for a conflict that hopefully
never comes, but you're going to have to
arm up for it. That's going to cost a
fortune. So I I'm just not sure what
signals. In fact, forget all of that.
Just think about that 33 year old couple
that you know that can't buy a home.
Think about the fertility rates, the
birth rates plummeting,
what do you think's causing it? So once
people start realizing that people can't
get ahead and even though it is true,
you can be dirt poor and still have kids
and should. And so there's some cultural
thing that plays out,
>> but that cultural thing is fed in part
by the fact that people can't get ahead.
By the fact that the American dream is
dead, by the fact that we don't have
that like
>> jubilant spirit that Americans used to
have. Like the 80s felt different, man.
I'm telling you right now, they just
felt different. Like a kid from Tacoma,
Washington felt like he could
legitimately be anything he wanted. even
though my parents didn't make a lot of
money and no one in my family had a lot
of money, but it just was like, well,
that was America. It was in everything.
It was in the movies were telling me
that I could be rich. Uh books were
telling me I could be rich. TV shows
told me I could be rich. Like everything
told me that I could be rich and I saw
it. I saw people become successful. We
told those stories. We celebrated people
that were successful. Like we don't do
that anymore. We villainize success. We
look at people that have money and we're
mad. And then you start going, "Okay,
why is that?" And it's that way for a
hyperpredictable mechanistic reason. But
I'm just having trouble getting people
to to see what that mechanistic reason
is. Even if you don't think like maybe
this is like a 50-year problem,
>> but it's like it's not like everything's
fine fine fine fine fine fine fine
break. It's malaise starts setting in.
The country starts feeling like hey
maybe we should be more socialist. The
innovation begins grinding to a halt.
China continues to rise. we lose the um
dollar reserve status, all of a sudden
we can't do the things that we want to
economically
and then we're in the boat like
everybody else and we're coming to China
with our hand out and it's like people
just cannot grasp that you don't have to
collapse and be dramatic for it to
[ __ ] suck.
So, uh we're number one,
but people have actually lost the will
to remain number one. And that to me is
that's a tragedy.
And so anyway, I'm going to do my part
to push back. I'm going to do my part to
walk people through first principles,
mechanistic, how we got here, what we
need to do to get out of it.
And I find it bizarrely motivational
when people uh are like, "No,
everything's fine."
Look, look at any stat,
bro. I'm rich. Like I get some people
just think that I'm a a narcissist who
needs to hear the sound of his own
voice. There are easier things that I
could talk about. I got a lot more views
telling people uh they could do anything
they set their mind to. Right? Phase
one, baby. I was a lot bigger than I am
now. So if this was just narcissism, I
would have just looped on that [ __ ] But
I realized very quickly it's not real.
People are not doing anything with this
information.
>> And so now I'm trying to get people
really down to first principles. We'll
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back to the show.
>> SDR0505
said, "This is the usual excuse of
someone obsessed with capitalism. And
when it fails, blames it on socialism or
communism. US is a capitalist society,
yet it's still failing even when it had
the ability to print money. Why? Because
of greed. Socialist and communist
countries will survive just fine if US
and Western governments don't illegally
sanction them, create wars, coups, etc.
But they interfere with all these
countries to protect capitalism. Why?
Because that's the only way the rich can
stay rich by manipulating and
brainwashing the public to keep working
without any actual lasting benefits.
Keep them spending and stay in a debt
written, etc. While keep BSing about
free markets and and eventual
prosperity. If you are a fair and strong
government free of corruption that
regulates corporations and protects the
public's interests, things will just be
just fine.
>> First of all, let's establish some
ground rules. Uh, America is not
strictly capitalist. The problems that
we have are all caused by the parts of
the economy that aren't capitalist. The
way that the money printing works is
that it's fine in the beginning and it
moves in a really predictable cycle. The
thing that I'm trying to get people to
understand is that cycle is predictable.
It's knowable. Ray Dallio has turned
himself into the most successful hedge
fund manager of all time by being the
most educated about the cycle, by being
able to look at any country that prints
and go where are they at in the cycle
because I know what's going to happen
next. And I just place my bets based on
what I know is going to happen from this
historical trend. So I'm ironically I've
won capitalism. Like the the parts of
the economy that still work, baby, I've
won them. Uh, and I'm screaming at the
top of my lungs that you can't ever do
anything that betrays the middle class.
And so if I thought that socialism was
the thing that would help the middle
class, then I would scream for it. But
the historical record for anybody going
to bat for socialism, communism, it is
the single most murderous economic
structure the world has ever known. I
don't know what they're arguing for. I
don't know what they look at in history
and go, but see how it's working so
well. They literally don't have anything
to point at. So, I can point out 500
years of what we would now call modern
monetary theory, where people have the
ability to debase their currency and
show you exactly how it moves in a cycle
that starts fine. You have a little bit
of debt that ends up being good for
growth, but then the growth slows down.
The only tool that you know how to use
is debt, so you use more debt. You get
some growth, but not at the rate of the
accumulating debt. The debt carries an
interest burden. The interest burden,
you have to print money to cover it.
Printing money debases a currency that
eliminates the middle class because of a
very predictable known mechanism called
inflation. The only way to protect
yourself from inflation is to own
assets. So what ends up happening to the
middle class is roughly half. It's
probably less than half, but it gets
pulled up into the upper class and then
the remaining people get yanked down
into the lower class because they don't
own assets. So people get pulled up to
own assets. They get pulled down if they
don't own assets. Then it gets wealth
inequality gets rampant and then it
self-destructs. Like it's it's this
super knowable loop and it
self-destructs by the way because people
just get so angry.
>> Now the only system that has more
inequality than latestage capitalism is
socialism and communism. So it's like I
>> I obviously I worry for all of us when I
laugh at Scallow's humor. I really am
willing to spend a whole lot of my own
time and energy into just really trying
to get people back to where I was in the
80s where I really believe that if I
worked hard I could do something
incredible and then I worked hard and
did something incredible. And I want
that to be true again. But there are
when you get into that late stage five
and it might be worth us going through
the five stages but when you get into
late stage five
everything really starts to break down
and people have a reason to be mad. Like
if you can't afford housing, the vast
majority of people will just never own
assets. And so that's why we're in the
situation that we're in right now in
real life in America. 10% of people own
93% of all assets.
>> So that's the wealth inequality that
people are talking about. But like the
sort of vague nebulous um capitalists
are evil, socialists are good people.
Leave the socialists and communists
alone and everything is going to be
fine. Money has physics and
the best explanation of capitalism is
capitalism is a terrible system, but
it's the best of the terrible systems.
So,
what I hope I can get people to take
away from this video or even most of the
economic content that I do is things
feel broken now because they are.
They're broken because of inflation.
Inflation is a product of modern
monetary theory, but modern monetary
theory is a trade-off. If you reharden
the money, base it on gold or whatever,
>> that has its own trade-offs that are
going to create problems. And so, we
just have to be honest about what
happens when you print money so that
hopefully we can interrupt it and focus
on like if we were just going to focus
people on one metric, it would be debt
to GDP ratio. And so, if you can start
driving that, we're now at 122%. 130 is
a historical red line over which only
bad things happen. And then if we can
start pushing that in the right way by
being more fiscally responsible then we
can make things better. But when we have
this sort of vacuous argument it's uh
we're just going to death loop.
>> Can you break down the difference in
your opinion between capitalist,
socialist, communist?
>> There are more systems than just
capitalism, socialism, and communism.
But given that these are the three that
we see most frequently, let's talk about
them. So capitalism is meant to be a
free market system in which capital goes
to the places where people are going to
get the biggest return on their capital.
So you've got the workers and you've got
the capitalists. And the capitalists
say, "I'm going to build this factory
not because I make money today, but
because over time I think I'm going to
make money." And so as you aggregate
capital, you then deploy that into
assets that you think will make a
return. That asset could be a business,
could be a factory, uh it could be a
stock, could be a bond, could be a
treasury. like all of the things,
whatever you think is going to return
that principle plus plus plus interest
back to you. Socialism is where you
confiscate the means of production and
you say, "Okay, the state now owns all
of the means of production and we're
going to give as many things away as we
can for free to make sure that people
have um the distributed profits of the
the economic engine. So instead of going
to capitalists who are using um
intelligence, market signals, hard work,
discipline in order to figure out where
to put their capital and they sometimes
win, they sometimes lose uh and they
take a disproportionate amount of the
rewards. We're going to spread that out
across everybody. The problem is that
you lose market signal. So the state is
able to just say, well, we're going to
keep investing in that and that is what
it is. um and we're going to control
everything. And so you end up in a
situation where you don't have the
information coming from the price
signals. And so you start making too
much of certain things. Uh you start
making the wrong things. You don't have
enough of the things that people really
need. So in socialist systems, you tend
to have shortages of things. You tend to
have too much of something. And so it
just ends up being all over the place
because you're trying to centralize the
market signals. you're trying to say we
know what's best so go do this thing.
Communism is socialism
distilled. And so it's that all the way
to the extreme where the government
controls everything. Um all the
decision-m is centralized. People will
often refer to socialism as just a step
on the way to communism. And I think
that that is the right way to look at it
because what ends up happening is as you
seize the means of production, things
will start to break. They will start to
go wrong because you've removed all the
incentive structure. You've removed the
price signals. And so now the only way
to get people to do what you say is to
point a gun at them. And so and you just
slide then to communism where the
government realizes they have to control
everything to keep people in line. Now
people will often say that the Nordic
countries are socialist but they're not.
They're a social democracy. Not to be
confused with democratic socialism which
is actually socialist. They're a social
democracy. Meaning it is a democracy. uh
the state is involved in very few
industries. Typically only things like
oil and stuff like that will get put
into that but they'll have a few
industries that the state will run.
Everything else is privatized. There's
still uh price signals. So when you look
at a Denmark or a Sweden, they still
have privatized healthcare. It's just
that they have a gigantic welfare state
that makes sure that everybody has that
paid for for them. But one of the big
bridges that has to be crossed is if you
want to be a social democracy, then what
you have to do is tax the life out of
everybody. So you're going to tax the
wealthy, you're going to tax the middle
class, and you're going to tax the poor.
It's the only way to have a big enough
tax base that you can pay for all that
stuff.
>> Uh Gertie Bernat 4785, I'd like it
because he throws rocks at socialism as
he detailing the problem we have stems
from capitalism.
I feel like you address. Well, I'm
certainly happy to give a speedrun of
this. Again, people need only point to
what socialist system do they see that's
working. I will certainly drink it in.
If there's something there that will
make people's lives better, I'm all for
it. But historically speaking, socialism
is horrific. Horrific. Because you
remove incentive structures. Once
there's no incentive, the only way to
get people to do something is at the end
of a gun barrel.
>> Period. All right. And Dragon of
Paradise says, "I want a deep dive on
the Nordic model of democratic
socialism."
>> Yeah. I mean, look, that's fair. And
remember, that's social democracy.
That's not a democratic socialist.
Democratic socialist is, I think, a
largely American phenomenon. It's
absolutely terrifying. They want to do
things like abolish the family, uh,
confiscate the means of production.
Like, that that one's really like going
down a dark dark road. The kinds of
things that like even China doesn't do.
Uh, so you've got to be very careful
with that. In fact, one of the
fascinating things is the way that China
has embraced capitalism with Chinese
characteristics. Um because while they
implant government officials inside the
company and they will admittedly force
them to do things. So they'll pick let's
say they'll go um we're going to make
sure that we win in AI,
>> but then they let all the AI companies
for real compete against each other.
>> So it's very different than when people
want to seize the means of production.
Now, the reason that China ended up
there was first they tried being truly
communistic in like an old school
Russian model, Lenin Marxist, and
they'll even pay lip service to it
today. But the the fundamentals of the
way they run their economy just isn't
Lenin Marxist. Though, you're hearing
more things like that from Xihinping,
which is why people are worried about
him. Set that aside for now. Uh what
Deng Xiaoping realized was, okay, Mao
just straight told everybody, you're
going to do this. It ended up starving
millions of people to death. not because
he necessarily wanted to starve them to
death, though he clearly didn't mind,
but because he thought he knew best and
people should listen to him. And the
problem is it's very hard to know
everything about everything. And so you
end up making these catastrophic
mistakes like the one that I talk about
often is he told everybody all across
China, which has giant uh it it's spread
out over a giant geographic region. And
so the climate's different. What grows
in one area is not going to grow in
another area. And so we said everybody
plants the same thing everywhere at the
same time. And so the vast majority of
the crops failed because he just didn't
know what he was doing. And so people
starve to death. And so it's not until
you let farmers compete for who's going
to be the best that you actually have a
shot at winning. So if we were to deep
dive into the Nordic model, what we'd be
looking at is they understand the same
thing that you need the private market.
>> And so they're not trying to um make
everything public. They are trying to
make sure that the private market stays
active but the welfare state is funded
through huge tax burden across everybody
not just the wealthy. Got it. KD pen
land 87 put the deep dive into AI and he
says take it for what it's worth. I
still enjoy the the content otherwise.
I'm going to jump to point three from
the AI. This is where the thesis
overreaches. Debt equals guaranteed
collapse. The US is not directly
comparable to Argentina. Weimar, Germany
or Zimbabwe. Unlike them, the US issues
debt in its own reserve currency, enjoys
global demand for treasury bonds and has
vastly greater productive capacity.
Collapse isn't a given, though fiscal
strain is real. Red line at 130 debt to
GDP. Japan has exceeded 250 debt to GDP
for decades without collapse. Debt
stress varies depending on monetary
sovereignty, demographics, and central
bank control. Hyperinflation prediction.
The US has inflation risk, but current
Fed policies and global demand for
dollars make way style collapse unlikely
without catastrophic mismanagement.
Selective history. The video only
highlights collapses cases. Many nations
with high debt inequality or populism eg
France post World War II US adapted
rather than collapse.
Dashboard flashing red rhetoric. While
emotional compelling, it oversimplifies
complex systems and amplifi amplifies
fear. Bottom line, not pure
fear-mongering. The debt, inequatally,
and trust issues are real and well
documented, but not a guaranteed
collapse. The US still has immense
structural advantages, reserve currency,
deep capital markets, innovation engine
that differentiated from past collapses.
Best described as a dramatized but
partially grounded worstase outlook,
useful as a cautionary thought exercise,
but overstated if taken literally as
imminent do.
>> I think that there is a lot of truth in
what the AI is saying. So if you take
something like Japan, Japan has been
over 200%. I don't know that they've
been over 250%. They may have like
popped up above it, but I don't think
they've stayed there. Anyway, that's a
fact check that people could run. But
they when people say that 98% of
countries that have spent any meaningful
time over 130% debt to GDP, the reason
they say 98% is Japan is the 2%. So
there's no doubt that there are
exceptions. And there's no doubt that I
really do feel a heightened sense of
emotion. There's also no doubt that I
use a heightened sense of emotion to try
to get people's attention.
>> Uh but the reality is you're already
seeing people commit acts of um
political assassinations like this
collapse
style. I'm not saying that we are on a
guaranteed collision course with uh a
Weimar style Germany. I'm not saying I'm
certainly not saying that Trump is the
next Hitler or anything like that. or
guaranteed to have a Hitler or anything
like that. But I am saying Drew that to
uh a 100%
like it happens every time.
>> Empires stop being empires.
>> Nobody escapes it. So it used to be I
mean what Spain had an empire for a
while.
People are going to get weird about the
word collapse, but they stop being an
empire. What word would people like me
to use? Manage decline. So, uh, Spain
had a managed decline, Italy had a
managed decline, England had a managed
decline, the Dutch had a managed
decline, uh, Argentina had a managed
decline, Zimbabwe had a managed decline.
Some of the managed declines were more
bloody than others, but like, hey, let's
look at England. I think most people
feel good about England,
>> Drew. World War II was pretty bloody.
And so when you look at World War I
chipping away at England, World War II
chipping away at England, massive
bloodshed. Now, was that massive
bloodshed entirely economically driven?
Yes. Was it all economically driven by
England? No. So, did England end up
paying a huge price for the Treaty of
Versailles, which they put Germany
under? And it was Hitler pushing back
against the Treaty of Versailles that he
used to rally his own people to make
them as angry as they needed to be to go
in and confiscate wealth from the Jews,
to kill the Jews, to feel like they had
a right to Russia, which is a long
story. And anybody that doesn't think
that Hitler had his eyes on Russia from
the jump has not read Minecom. So, look,
all of this stuff gets very complicated.
There is no doubt that you could go
through line by line and give like a
really measured version for like, okay,
this is what we would have to do to pull
out of this. And I try to always end my
videos with precisely what we need to do
to get out of this. I don't want anybody
to believe that any of this stuff is a
foregone conclusion. I really don't want
anybody to feel hopeless, but I don't
know what else has to happen. You've got
men not having sex anymore. And so there
are a whole host of things that are
leading up to that, not the least of
which is uh social media, dating apps,
only fans, like just egregious amounts
of access to pornography. But I really
believe to the core of my existence that
the biggest driving factor is when young
people cannot get on the housing ladder.
They are not able to start building
wealth. when real wages don't grow,
people like begin to check out of their
uh pursuit of goals via a um working uh
through their careers. And so it's like
you've got all of these structural
things that have one underlying cause.
And I really believe that people hide
behind complexity instead of just
saying, "Look, yes, I'm giving you a
non-neuance take so that people don't
pretend that, oh, this is it's all so
complicated, Drew, we'll never what
could possibly be driving this." What is
driving it is very simple. It is debt.
And once you understand that debt forces
the government to print money, that even
when it's your reserve currency, you are
debasing the currency. And people will
react in a very predictable pattern when
you debase the currency. Now you can
export that debasement to the world when
you're the reserve currency. So you can
drag this on a lot longer than you could
otherwise. But every single empire that
has been the reserve currency has
stopped being the reserve currency.
England used to be in a position where
the sun never set on its empire. Drew,
it's now a small island off the coast of
Europe. It's like they they are not an
economic backwater. And if you live
there, I've lived there for a year. My
wife is from there. It's not like you're
crying yourself to sleep every night
because it's like a a brutal
dictatorship or you know it's a Uganda
or a Zimbabwe or something like that.
But anybody that held the pound through
the transitionary period lost like 99%
of their wealth. So uh did people
survive? Yes. But do you really want to
lose that kind of money? The US dollar
has already lost 95% of its wealth over
the last 100 years. Do you want to keep
doing that? We've lost 25% of our wealth
in the last five years. So it's like I
these same people are going to look at
the world and they're going to say we
have a screaming problem. Drew, we have
something is wrong. I know something is
wrong. And all I'm doing is saying this
is the thing that's wrong. And yes, for
the purposes of making it accessible,
I'm I'm going to simplify. But Drew, I'm
not making it up. Even the AI is like,
look, he's maybe over dramatizing, but
it's grounded. So, I'm happy to go line
by line if people want like, "Hey, give
me the nuanced read on this. Give me the
nuanced read on that." I'm more than
happy to walk people through it.
>> But the reality is you have a screaming
problem. In the last 5 years alone, the
US government has stolen 25% of your
wealth. And that's just the part they've
taken invisibly. That's not the part
that they taxed outright.
O so faced out of that uh democratic
solutions disagree debt out of control
dying middle class and society
resentment are fairly modern phenomena.
The fundamental factors have transcended
from the fall of Roman Empire to the
fall of Soviet Union. They are one the
lack of participating population on
common cause demographic change versus
disloyal migrants and immigration
problems. Low fertility rates due to
disease or social class. Unfavorable
culture change toward insensitivity to
solving nation's problems. Number two,
inflation due to dwindling supply such
as food and necessities and national
resources. Three, political instability.
Pagans versus early Christians, liberals
versus conservatives, capitalist bgeoisi
versus proletariat socialists. And
finally, four, impractical empire size
in the context of both land, mass, and
political interests. Given the army as
an instrument of political might,
supported in headcounts and financed by
the population. End of story.
Unfortunately, the US has experienced in
various degrees all four fundamental
factors that led to empire collapse.
>> Okay, so this is actually a really this
is a great comment. So all of that is
true uh including the point that America
is suffering from all of these to
differing degrees. Ultimately,
you've got to focus people on a subset
of issues. People are already checking
out. They they are at the slogan level.
They just want bumper stickers, man. And
if we can get people to focus on a thing
that they can take action on so that
they can protect themselves, we're going
to be in a much better position. Now,
everybody's going to have a thing that's
like their baywick that they really want
to bang the drum about. And so, if
somebody wants to bang the drum about
impractical empire size, go for it. If
you want to bang the drum about
immigration, go for it. I'm largely
going to be focusing on the economic
side though I find all the other stuff
very interesting and at times I'm sure I
will do videos about those things and
then when I'm talking about immigration
people going to be like but it's money
printing. So this stuff is all
incredibly complicated. But again if you
set aside the complexities for a second
and you really start looking at things
like black and white super binary uh
give me a finite number of things that I
can deal with you really can boil the
world down to a small handful of things.
Now, given that Radalio has made so much
money by paying attention to the big
debt cycle,
>> I look at that one and I'm like, "Yeah,
there's a ton of predictive validity in
terms of a thing that I can do something
about, buying assets that will reward me
financially. And then once I have access
to those resources, I'm in a much better
position to either make myself
impervious to immigration uh to if I'm
in the place that's the declining empire
and I want to go to the inclining
empire, I can do so through the
accumulation of wealth. So it's like
focusing people on don't let the
government steal your money through
inflation. Uh make sure that you can get
into housing. That's critically
important. So from a thing that I would
want people to focus from a regulatory
perspective all of that it would be
protect businesses which drive the
economy and make sure that housing is
available to the average person like
just beating that drum over and over and
over and over and over because people
can do something about those things and
it will have a massive material impact
on their lives. So, yes, that we could
drive ourselves crazy with every video
reading the comment that says this issue
is more nuanced than what you've put
into this 40-minute video. And it's
like, yes, of course. Um, I remember
once reading a biography about Churchill
and they literally talked about the
length of grass in his front yard. And I
was like, oh my god. Like, some things
are meant to be left out. So, uh, I'm
trying to make things clear for people.
And in making them clear, I am
admittedly intentionally shaving off
some of the nuance.
>> Um, for anybody that really wants the
nuance, join me for the lives in the
lives Wednesday, Friday, 6 a.m. Pacific
time. We cover all the nuance because
we've got a much longer format.
>> Hope to see you all there. Check the
Check the live out. Check the live out.
>> Uh, LMT1701
said, "Tom, we're spiraling into
authoritarianism with no help from
communism, malignant capitalism, and
runaway greed have caused this
ruination. You're surely you're surely
preemptively blaming socialism when our
destruction is imminent regardless.
>> Wow, that's bleak. Uh so one I like to
believe that this is not inevitable and
that we can pull back out of this. I
think that there are a certain set of
steps that we could take even if it's
simply to prolong the decline to uh
manage it more efficiently than others
have managed their decline. Um I I would
be very happy. So
there are definitely systemic issues
that we face, but I feel like we can
point at all of those things and say
this is what we have to unwind. There
are really two things that scare me far
more because I can teach people what to
do, how to avoid the impacts of
inflation, but men and women becoming
antagonistic towards each other is so
like that will take generations to
unwind. I fear
>> uh and also because the same things that
cause that problem are still going to be
present. It's like, man, I really feel
like that one's going to ratchet up. And
then political division. We are in a
populist moment. And so, this tends to
be a flywheel that just keeps going and
going and going and going until there's
violence. And then you finally build up
enough pain in the system either through
revolutionary conflict inside of the
country uh and then there just ends up
being enough bloodshed in a civil war
that people back off or through cidity's
trap we go to war with China there's so
much bloodshed there that people again
just they're so fatigued they just want
to go back to a normal life and they're
willing to sort of give up on almost
anything just to have normaly again.
>> Uh so yeah I I don't want to see us go
down that road. I would much rather
remain hopeful and optimistic and do my
small part to try to nudge people back
into a sensible lane. But he's listen
he's not wrong. We are getting more
authoritarian by the day. Uh I thought
both the Biden administration when you
realize that the people behind him were
calling themselves the pallet bureau
which by definition is the small group
of elites that run a communist country
and they called themselves that. Uh and
then obviously Trump has wildly
authoritarian tendencies. Uh, so yeah, I
feel their pain. Welcome to populism.
>> Many Acasta 1560. In ancient times, it
was a practice of forgiveness of debt
because they understood exactly what you
were presenting. Get debt forgiveness is
a pressure relief vow, but no one is
willing to release their valve. Everyone
wants their peace and everyone is
willing to let everyone else burn if
they don't get their peace.
>> Yeah, very well said. So, this is people
put a nice name on debt forgiveness. Uh
Ray Dalia will call it a debt jubilee.
Debt forgiveness. All sounds very
lovely. Uh but this is going, "Hey, that
money that you loaned to that guy,
you're never going to get it." And so
you're like, "Wait a second. I was
wealthy 5 minutes ago and now I'm not
and I worked my ass off to make that
money. I loaned it to that person so
they could do a thing. And now you're
just telling me that like sorry you
don't get any of it."
>> So once you understand that one person's
liability, debt is another person's
asset,
>> you realize, oh snap. like to forgive
this guy is to hurt this guy. So that's
why it's not going to be popular.
>> But Ray Dallio talks about the solution
to the debt to GDP ratio being as high
as it is and growing. It's called again
putting nice words on a horrible thing,
but he calls it a beautiful
deleveraging. Now beautiful deleveraging
requires some debt forgiveness. You are
going to tell some people sorry you get
pennies on the dollar or you get
nothing. Um, I think speaking of the
most sinister debt that we have is
student loans that can't be discharged
in bankruptcy,
that's one where I I really believe that
history will judge us very harshly for
making homes unaffordable via inflation.
And I think that they will judge us very
harshly for saddling students with I
mean 80 to $250,000
in debt for a college degree, some of
which, you know, are never going to be
able to return that lifetime. And
because the government backs those
loans, like we'll just keep giving them
and giving them and giving them, there's
no discipline that's forced into the
system. Whereas, if you let them
discharge it via bankruptcy, all of a
sudden people like, whoa, whoa, whoa,
I'm not going to lend for underwater
basket weaving degrees. Those just don't
yield the return. And I get it feels
mean because you're telling that person,
you can't go study that thing, but
that's just the the reality of money,
man. So, uh, you need people to be
disciplined. We don't want to let people
get buried under debt. That is for sure.
You're going to have to do debt
forgiveness. That is for sure. It's
going to be destructive to some people.
You have to acknowledge that. You have
to understand if you do that in
isolation because a beautiful
deleveraging is four levers that you're
going to pull.
>> If you do that one in isolation, then
you're going to um create a political
problem for you if nothing else. So, but
you do have to do debt forgiveness. You
are going to have to tax the wealthy
more. uh you are going to have to do um
austerity. So just spending less and
you're gonna have to print money. You
have to do all four of those. But they
have to be done in this insanely
delicate balance where you're constantly
pulling a lever a little bit and then
watching pulling another lever and
watching
>> and all anybody ever talks about is do
one. And so everybody picks their
favorite lever and is like yank the hell
out of it. Uh so we we hear eat the rich
all the time and it's like it just
doesn't work. Not in isolation. It's a
part of a very complicated cocktail. Uh,
but just pulling that by itself, oddly
enough, ends up giving you less tax
revenue. We'll get back to the show in a
moment, but first, here is the brutal
truth about scaling. Most entrepreneurs
don't outright fail, they plateau. And
if you're stuck right n