Kind: captions
Language: en
right now one of the things that has me
the most unnerved is the attack on the
dollar so you've got the brics Nations
uh for people that haven't heard that
acronym before Brazil Russia India China
and South Africa uh are getting together
and I know this has been going on for
quite some time so I don't know if I
should be overly paranoid about that in
this moment or not but again going back
to those indicators that point to a
transition from phase five to phase six
do you think there's anything
that we can prepare for as we look at
the big cycle as we see this particular
moment with the assault on the dollar is
is there anything in the big cycle that
can educate us on how to deal with this
moment just all happens over and over
the decline of the British pound as a
reserve currency and before that the
decline of the Dutch guilder as a as a
reserve currency all happen for the same
reasons
which is
um you know two things are going on
first of all they're holding all of this
dollars and the stuff that we talked
about is going on and then also there's
the weaponization through sanctions of
uh the uh Dollar in other words
um the United States is greatest
weapon to use as distinct from its
military weapon is his sanctions and so
sanctions means you freeze other assets
you freeze assets those assets are the
bonds and
um so
um that happened with
Russia and there are threats of it with
other countries China and so on and
there's kind of the thinking well if I
hold the bonds can I uh be can that
happen to me
and and then why am I transacting
in this other third currency rather than
transacting
directly so for example
um
the United States
uh share of World Trade has declined and
China's share of World Trade has
increased to become greater
and
um so
um if two countries are trading let's
say Saudi Arabia is trading with
um
vagina
um
why do they buy why do they go to the
dollars in order to do that
um you know uh no good reason to go to
the dollars and you know they don't know
that then they're worried about holding
the dollars because they might get
sanctioned and so you see more of those
transactions taking place in other
currencies
and then the usefulness of the dollar as
a storehold of wealth changes it's like
think about it in
um you know the the most fundamental way
um everybody wants uh a medium of
exchange and a storehold of wealth so in
other words if everybody's using
the dollar and World Trade
then you want to save in dollars because
you say okay now that's the thing I
spend in and I and I save in the dollars
um but over time
as the share of World Trade goes down
why aren't they
denominating in who the like China has a
larger share of World Trade
traditionally the countries that have
the world's Reserve currency have the
largest share of World Trade and the
largest share of world Capital flows
and because the United States has
declined and also there's a worry about
that
um holding it because of sanctions I
mean just imagine how the Chinese must
feel about having a lot of money in
treasury bonds
you know like I would be worried that I
would like be treated like Russia would
be treated I'm it's not something I
would want to hold as you know a safe
asset and other countries like who might
feel that they can get sanctioned and
for all those reasons
uh they're less inclined to hold
and when we when we call dollars what
we're really calling is dollar debt
because you don't hold you hold dollar
debt and that's a pro what is a debt
it's a promise to really receive
currency
so okay so now getting out of those
things and transacting in other
currencies seems to be the safer thing
to do for those countries and so that's
the dynamic that's taking place so it's
it's
um it's not an attack on the dollar
it's like I don't want to hold those
things and
um so very similar to on the British
pound
you know what happened is the British
had the war
and they were the most powerful empire
ever in the world
and then World War II and they came out
of World War II uh financially in debt a
lot of debt
and who hold who held the debt all these
countries held the debt because that was
the residual from that but they had a
problem they had a debt problem
and so they needed to print more money
because it was too much of a squeeze
and then you had so it deteriorated and
then they you know they sort of said
please hold my dad please hold my dad
they went to commonwealth countries the
part of those that were in the former
British Empire and then you had the Suez
Canal incident where
um there's sort of a a war and everybody
realizes well hey wait a second that
British Empire ain't the British Empire
and they're heavily in debt
and then they say I don't want to own
that debt and there went the British
pound
so that's just how the Mechanics Work
okay so looking at the U.S and
um I don't want to be cheeky and say
speaking directly to uh the you know the
US government but if I were to be so
bold so if this is that predictable
moment where okay there are actions that
we can take as a country that will
either help us
keep
um the world Reserve currency status and
there are actions that we can take that
will cause us to lose that status more
quickly it seems like
okay uh you've got the brics Nations
they are moving away from the dollar it
seems like that has already that card
has already been played I don't know if
you think there's anything that we can
do to to make that easier but certainly
speaking to printing so one thing that
I've I've heard recently and this is a
really fascinating concept that when you
have other nations that are holding your
currency holding debt as you said uh
they're not like hoarding cash but
they're they're holding a lot of debt if
we print money what we're essentially
doing is
um
externalizing inflation so we are
causing a devaluation of that debt for
all the countries that hold us now we're
in a moment with Rising interest rates
that's causing us to need to print uh
but creating this really weird difficult
moment where as we print then we have a
need to raise interest rates but the
reason we're having to print is because
we're raising interest rates so it's a
very difficult moment
um but if if we could going back to your
idea it's how we are with each other if
we could get people to come together in
the middle would one of the things we
would want to convince the US government
to do is to be very cautious about
devaluing the dollar is is that an
important idea
it's more basic than that and it's um
more simple but it's also more difficult
um
what the reason Cycles exist
is that the next stage has been
determined by what has already happened
in the prior stage so hmm
we are in debt a lot
you can't change that we got a lot of
debt
and if you say what could you do
I mean two things come to mind what you
could do is you could be financially
strong
and you can not use
um
Financial sanctions as a weapon
to scare the holders of those bonds
but to be financially strong
requires you to not spend more than you
earn
that means you either have to cut your
spending
or raise your earnings
okay that's okay that ain't easy
okay okay so are we going to cut our
spending
um okay now you look at it what are you
gonna uh infrastructure programs I don't
know poverty transfers defense spending
okay what what are we going to cut
um the world
governments
have the same basic economics as
um people except for the fact that they
can take money from one person and shift
give it to another and they can print
money
that's it and so when you look at this
um
okay you have that Gap you can eliminate
the Gap by taking money from some and
eliminating another and not spending
much
okay
okay that's not easy right okay okay
what are you gonna
the most governments now don't think how
much money do I have to spend
and then how do I prioritize that
they think
I need to spend on this I need to spend
on that and I need to spend on that and
they spend on it
and then they either produce it they
produce a deficit
and then you either have to pay it back
with hard money or printed money and
that's situation so when you say what
could we do well you've got to get
financially strong
in a politically fragmented environment
in which everybody wants more
and you and you have to uh you know like
be a higher percentage of World Trade so
that everybody wants to use your
currency and
um the um
and not threaten the holders of that
bonds with freezing their assets
it is uh it's a tall order in this
moment
um I it has become so clear to me in the
last month since you and I uh saw each
other
how important the reason that you keep
coming back to it all comes down to how
people treat each other so in this
moment
um I don't want to be a Debbie Downer
but it does feel like the die is cast a
little bit I don't see how we pull
ourselves back from the precipice
because to your point about being
um fiscally responsible like we'd have
to get into a position where we're
making more than we spend I want to
circle around to something as you were
talking you mentioned infrastructure and
it got me thinking about okay what are
things that we would need to go right so
I think everybody is aware and I've
heard you say that there there are
changes that are going to need to be
made to capitalism in order to bring
back a thriving middle class and the
importance of the thriving middle class
and you've defined the things you know
again staying to the theme of principles
here of uh the three things that we need
to do to be strong as a country or for
any country to be strong uh and you said
two parents in the home uh great public
education and then equal opportunity
where where do you see us on those
are we moving in the right direction
moving in the wrong direction well again
uh you know maybe I aspired too much to
two parents in the home
um it's certainly better if you have two
loving parents raising a family that's
that's good but maybe that's too much to
ask for
um but in other words good Parental
Guidance you know okay you're raised
well you're educated well you can go to
a public school that educates you well
and you have good guidance so you're
well raised in a healthy environment and
not only do you learn
um you know skills and and all that but
you learn how to behave well to with
each other so you learn civility
and
um
and
um so you come out capable and civil
um to a land of opportunity
in which you can you know work and and
and have a good environment
um
and really that's all you need if a
society does that right
um and I think you know where we you
know the things that are going on you
know
um
education in a lot of public education
is
um a is deteriorating it's a real
problem
um
my wife works to help
um the poorest school districts the
poorest people uh in the state of
Connecticut
um and uh the state of Connecticut as
usually it's always one two or three in
terms of the highest per capita income
and in the state of Connecticut
as of last survey 22 percent of the high
school students have either dropped out
of high school
whoa or or have uh absentee rates which
are greater than 25 in our failing
classes
So at their living
in
pob with they're living in areas that
don't have the things I'm talking about
about parents nutrition and so on
um and there's not adequate resources
for them for example during covid
um we um
we found that 60 000 students didn't
have uh computers or connectivities to
take classes
and the government wasn't going to
provide it
so philanthropically we we bought 60 000
computers and give the kids and one but
we can't you know we can't do that you
know so our society
is
um when you look at this
um you see
um
drugs drug problems
um you see
how the cities are changing
um
you know the cleanliness of the Cities
the education levels of the Cities
mental illness
um crimes
and so on
um
you're not seeing
you know
you're seeing people fighting with each
other a lot
um not all the time there are wonderful
places in the United States
you know
education some of the best universities
their pockets
some of them that you know their
neighborhoods but there is this
encroaching so you see infrastructure
breaking down
um
school shootings I mean I don't you know
like okay so you decide how we do it to
hear more about Ray dalio's warning on
the upcoming recession which we're
almost certainly already in watch the
full episode here talk to me about the
three forces that you see that are
influencing this moment we've got Banks
collapsing US dollars under attack uh
looming recession what