Kind: captions
Language: en
A young person, a young couple in
particular, cannot afford to buy a
house. They are statistically less
likely to get married, less likely to
have kids, have higher rates of alcohol
abuse, have lower rates of mental
health, and go down the list of those
problems. A level of the population is
going to become homeless.
>> Looking at history, you will see [music]
over and over there's just a cycle where
the inequality gets to the point where
people get so resentful
>> society wakes up and says, "Screw this."
What benefited one generation 50 years
ago has by and large been stalled out
today.
>> Why do you think that housing is the
single most important social problem
that we could solve right now?
>> The first I would say is there are so
many social problems that don't seem
connected to housing, but if you
actually dig into it, they are
downstream of housing. And so at the
high level, most of the evidence will
show that if a young person, a young
couple in particular, cannot afford to
buy a house, they are statistically less
likely to get married, less likely to
have kids, have higher rates of alcohol
abuse, have lower rates of mental
health, and go down the list of those
problems. Buying a house for better or
worse socially is a very important box
to check of I am stepping into
adulthood. And if you don't, if you're
unable to do that, you feel kind of like
you are just suppressed into a lower
level of of of not yet adulthood. And it
can kind of stem from there. But you
could take this in several different
directions.
>> Almost unavoidably, if housing gets very
expensive and some people can't afford
to buy a house, you're just pushing
people on the conveyor belt of you can't
afford it. A level of the population is
going to become homeless. It's un it's
unavoidable if there's not enough homes.
Of course, that's it's how it works.
>> What do so many people home homeless
people do for a little bit of pleasure
and comfort when they find themselves
homeless? Heroin. And so, you can draw a
straight line, a straight line
>> from housing affordability to drug
crisis to fertility crisis to decline in
marriage to all of these things from
there. And I think what can be so
aggravating about this problem, most
problems in economics are very
complicated. And so if we're talking
about how do we extract more oil from
the ground, like it's a hard problem. So
there there's a lot of variables in
there and there's technological
challenges that make things much more
difficult. How to bring down housing
affordability is the simplest thing in
the world. It's we don't build enough
homes and we need to build more and
we're probably short in America.
Something like 3 to 5 million homes that
we should have right now that we could
build. We have enough money to do it. We
have the supplies, the lumber, the the
windows to do it. we could get this done
and we don't. And so it's one of these
problems that like if you really get
down to it, it's a choice that
politicians and regulators and
communities at large have made that we
don't want to build more homes.
>> Why not?
>> I think if it comes down to it, uh there
is the battle between nimbies and
yimies. Yes, in my backyard, no in my
backyard. And I think it's not too
simplistic to say that the group of
current homeowners, particularly if
you've owned a home for a long time,
like it when the value of those homes go
up, makes you feel wealthier. I'll get
into a second why they're not actually
wealthier. And if you build more homes,
the price will go down. That's basic
supply and demand. And then if the
value, if your parents, your
grandparents own a house and the value's
gone up a lot and you build a lot of new
homes and the price declines, they don't
like it. And some of them, if they
bought recently, might find themselves
underwater and and potentially owe more
on the mortgage than the house is worth.
And people don't want to go down that
route. Now, I said people feel wealthy
when the value of the house goes up, but
they're not actually wealthier. And now
I'll I'll show you what I mean. Let's
say you buy a house for 300 grand and 10
years later it's worth 600 grand. A lot
of people in that situation would say,
"I I just made $300,000. I've never seen
that much money in my life. This is
amazing." But you didn't actually make
anything because if you sell that house
for 600 grand, you have to go buy
another house and the price of that
other house also doubled in value over
the last 10 years.
>> That other house, if it's an equivalent
house, also cost 600 grand. You didn't
make anything. And so it's this illusion
of getting wealthier uh of for existing
home homeowners getting wealthier. But
if you actually dig into it, it's just
kind of a psychological trick. They're
not actually getting wealthier. The only
exceptions to that is if you sell and
you relocate to a cheaper area or you
downsize,
>> then you can make money. But most people
do neither nor. They're not actually
doing that. And so I I think if you tie
that all together, we are inflating the
values of homes almost intentionally to
keep current home owner home owners
happy in a way that gives them the
impression of getting wealthier even if
they're not. And we're doing that at the
cost of younger generations who because
home prices have risen can't afford to
take their first step into it.
>> Yeah. To me, this is the nightmare of
all nightmares for all of the reasons
that you just said, but I think it also
plays into another thing that I become
increasingly obsessed with, which is
inflation is man-made. And inflation is
simply an unbalanced budget where the
government says, "Uh-oh, we have a
shortfall." And so, we're going to print
money. I won't get into the mechanisms
right now, but certainly my audience is
used to hearing me talk about that. Uh,
we're going to print money and that
causes the value of each dollar to go
down, which creates the illusion of
asset prices going up. Now, some asset
prices really do become or some assets
really do become more productive and
therefore actually are worth more. But I
would say on balance that you're really
tracking inflation.
>> Yeah.
>> And so you put people into this position
where
>> the K-shaped economy is born out of
people don't understand assets. They
don't understand asset ownership. Full
stop. Most people couldn't even tell you
what assets are. Yeah.
>> And so they are in a position now where
there is a way to save yourself from
that unbalanced budget, from that
inflation to get into owning the stock
market or whatever. But as of right now,
10% of people own 93% of the assets. So
just the math tells you that the vast
majority of people don't put any
meaningful amount into their 401k or
whatever.
>> And the one asset that they intuitively
understand that they don't even need to
think of as an asset that their wife is
going to herang them to go buy is a
house.
>> Yes. To then it's not this nebulous
stock market thing. It's the thing you
can wrap your head around. Another
element to this, didn't mean to cut you
off and you're a great story you're
telling, but all wealth comes from
compounding and compounding takes time.
That's time is the magic sauce of
compound interest. And for a lot of
people, a house is the only asset, I'm
not going to say investment, it's the
only asset that they are willing to own
for 10 or 20 or 30 years and actually
give compounding a chance to work.
Whereas most people if they buy the
stock if if they invest in the stock
market, they're going to check it 90
days later and say, "Didn't do anything.
It's a scam. Didn't do." But they're
going to live in their house for 30
years. And if you live in it for 30
years, even if the value only goes up by
3% per year over 30 years, that's a lot.
And this is why you hear stories about
people who bought a house in the 1970s
for 70 grand and now it's worth 4
million or whatever it might be. Just
because like the average annual return
on that might not be that much, but if
you compound it for 50 years, it's a
lot. Mhm. Now, what do you think about
Trump putting a ban on investors being
able to go in or big companies being
able to go in and scoop up house after
house after house? Is it going to help?
>> No, I think it's I think it's entirely
symbolic. And no, I would from a
politician's point of view, I would not
discount symbolism that it's important
to do. But the idea that that's making a
meaningful change in supply, I I think I
think doesn't doesn't bear out
whatsoever. It's a, you know, it's a
it's a very small amount of supply
relative to what we need to create. And
if you, if you know, someone's going to
be owning those homes, whether it's an
institutional investor or a mom and pop
landlord or whatn not. So, I I I don't
think around the edges. I think the only
thing that makes a difference is that we
build more homes. And this is what
should be aggravating about it, too.
Every solution to the housing crisis is
how do we stimulate demand? How can we
lower interest rates? How can we let
people raid their 401ks for a down
payment? How can we give people housing
assistance? It's all stimulating demand
and almost nothing wanting to touch the
entire cause of the problem which is
supply. We just don't build enough
homes.
>> And that again is largely a choice. It's
I mean in lots of areas the areas where
by and large people want to live the big
cities in California and on the east
coast uh it's very difficult to build
particularly if you're a big builder and
you want to go build a hundred homes.
Well, you're gonna you're going to run
into roadblock after roadblock after
roadblock and and petition uh from from
neighbors who say it's going to hurt the
environment, it's going to hurt the
view, we're going to shut it down, we're
going to shut it down to where the
demand is there, the money is there, the
materials are there, and you can't build
a house. You can't get a permit for it.
>> We'll get back to the show in just a
second. But first, I want to talk about
energy, one of the most important things
in your life. Most high achievers run on
caffeine and willpower until their body
forces them to stop. But that is not a
strategy. It's just a countdown to being
tired all the time. Real energy comes
from cellular health. And that's exactly
what Nandica is [music] built to
deliver. This isn't another stimulant
disguises wellness. Peaks Nanda is a
ceremonial cacao neutropic built with
ingredients that actually fortify your
cells. Ceremonial grade cacao. Fermented
pooair tea from 250 [music] year old
trees. I'd heard so much about it. I
tried it myself. It is fantastic. Fullsp
spectrum reishi including spore powder.
Every ingredient is selected for maximum
bioavailability and cellular impact.
[music] The result is calm sustained
energy without the jitters or crash. Set
your longevity goals in motion. Get 20%
off at peaklife.com/impact.
And now let's get back to the show. We
know supply and demand. Like the person
on the street is going to understand
that concept at least at a high level.
Yeah. We're looking at housing. We're
grasping for solutions.
Why is it that instead of people going,
"Let's build more houses." Like even if
it's just young, disaffected people, why
aren't they banging that drum, but
instead they're gravitating towards
people like Mom Donnie who are like,
"Don't worry. I'm going to control from
the top down. I'm going to control the
prices of your rent." Why? Given that
you're the maestro of the psychology of
money and spending and all that, why do
people break in the direction of what
I'll call stupid policies instead of
breaking in the let's look at what
places do that actually have defeated
this? Whether it's Houston, whether it's
Tokyo.
>> I was going to say te Texas and Tokyo.
You're I can I can tell you've you've
dug into this topic because those are
pretty much the two major areas are
Texas and to Tokyo is an extremely large
city. There's no cities in America
anywhere near the size of Tokyo. and has
relatively cheap housing because they
build and build and build and build and
build.
>> So what's in the psychology that breaks
people towards socialism?
>> I think I think part of it just from the
psychology of politics, it's much more
appealing to people if you say you've
been screwed by that guy and I have a
fix that can help you tomorrow. That guy
screwed you and I can lower interest
rates tomorrow. That's appealing. I just
I I have a villain and I have an easy,
quick, short-term solution that you can
implement right now. It's much harder if
you say the villain here are millions
and millions of people across the
country who are by and large
well-meaning probably just didn't
understand the consequences of their
action. And the solution is even if we
start tomorrow is going to take years.
It's going to take years and years to
build homes. That's that's not very
you're not going to win any elections
with that argument, even if that's what
it is. Now, a good precedent for what
we're dealing with here was the end of
World War II when during the war, we by
and large didn't build a single house in
America because we were building tanks
and airplanes and guns and whatnot. And
so, we didn't build any homes. And then
the late 1940s, 16 million GIS come home
from Europe and and and and and
[clears throat]
Japan. And
>> the scale really is crazy.
>> I'm sorry.
>> The scale really is crazy.
>> 16 million. Huge. And and and by and
large, they were, you know, 20 to 30
years old. They wanted more than
anything stability. They had just been
in war for several years. The Great
Depression preceded that. They wanted
stability. Massive housing shortage.
Unbelievable housing shortages, more
than we have right now. And if you go to
like the late 1940s, it was that was a
top issue on everybody's minds. Uh
there's no homes. I can't even rent a
house. I'm I I came home. I I fought for
my country and served in Europe and
fought in the war and I came home and
I'm living in my mom's basement. And the
indignity of that huge issue and we
solved the issue very quickly. So late
1940s to early 1950s we built millions
and millions of hotels.
>> What does that mean though? Is it just
so my the drum that I beat to death is
leave it to the public market. So or let
let private citizens try their
entrepreneurial hand at something.
>> That was by and large what it was. And
so for example
>> regulating
>> it. It can get more complicated than
that. But I'll give you the the
well-known example. In the late 1940s,
the Levit brothers were homebuilders and
they saw this unprecedented demand from
GIS coming home and they said, "This is
the opportunity. We can make a fortune
by going out and buying a bunch of
abandoned farmland in Pennsylvania and
New York and building tens of thousands
of small cheap homes." And that's what
became Levittown.
>> And and and they were able to do that
and just throw them up very quickly. And
they had a lot of economies of scale.
They figured out how to build cheap
homes that people still liked and that a
GI and his family and his three kids
could move into and have a dignified
life and they did it very quickly. You
could never do that today. It would
never
>> because of regulations.
>> Yes. Yes. I mean, if you went to the
suburbs of Philadelphia right now and
said, "I want to build 20,000 homes in
the next year."
It it's it's going to take you five
years to try to get a permit. And then
and and your odds of even getting one
during that period are probably 50/50 at
best. and it's going to cost you
millions of dollars to get there. And so
this is why it's a and I'm not like I'm
not saying all permitting is bad. I want
to live in a world that is well thought
out. I care about the environment. So
this is I I understand this is not black
and white, but I think anyone who digs
into it knows that the pendulum is swung
so far into the area of it's virtually
illegal to build the most precious and
important asset in the world, which is
just somebody's house. Before we started
rolling, I was saying I'm always looking
for the mechanistic cause of something
like that. So, looking at why you can't
build a house right now, part of it is
uh nimism. So, not in my backyard.
People don't want to see they I won't
even say they don't want to see the
price of their house go down because it
wouldn't if you just match demand, it's
not going to go down. It's just going to
stay flat.
>> Yeah.
>> So, they want to see the property value
go up and I get that. But at some point,
you have to break the reliance on that.
Yeah.
>> Um, the other part for me is just this
increasingly psychotic nanny state
approach of we can't let anybody get
hurt.
>> And I when I say this out loud, I know
people hate it, but I'm like, you have
to create a situation where some people
can go broke. Yeah.
>> So that other people can claw their way
out of poverty. Like if you don't if you
>> if you break the conveyor belt and say
nobody can fall off the other end, then
nobody can climb on the other end. And I
don't understand how people don't see
that. So it's like uh as somebody who's
been very economically successful, I am
saying you have to make it possible for
me to fail.
>> I wonder if I agree with every word you
said, but I wonder if if you and I, and
I don't think we ever will, were
suddenly the governor of California
>> or the mayor of LA. I never will too,
but I wonder if you and I would say
>> I get it now.
>> We we So no, I I I would still believe
the principles. That's That's Oh, yes.
Let's say let's say we were magic wand.
I anoint you the mayor of LA tomorrow
and you say, "I'm going to eliminate all
zoning laws." There's probably a lot of
brick walls that you and I don't know
about.
>> There's a lot of brick walls that we
better run into because you would never
want to get rid of all zoning laws. To
your point, you want to live in a world
that is well
>> thought out. I don't want ferris wheels
next to my backyard.
>> This is one of those things where you
want to talk about a good use of
bringing people in, giving someone a
job. You get people paired up with AI to
say, "Go through the regulations. Which
ones make sense?" Put them in different
buckets. Then you have a human go
through and audit them and say, "These
ones just no longer make sense." Like,
we're going to focus on things that have
to do with safety. We're going to hold
ourselves accountable to you've got to
be able to make a certain number of
houses uh over a certain period of time.
Like, we've been building houses for way
too long not to know which things make
sense and which ones don't make sense.
What we don't have is we don't have an
incentive structure for smart people to
go, "Oh, I can get rich doing this." If
you create right now, the incentive
structure to your point about California
and New York, the incentive structure is
come in as a developer, be the guy
that's so tenacious, you'll get the
houses made. Now, you know, you have it
on lock because no one else can get in.
>> Yeah.
>> So, what you've created is regulatory
capture. You've made it so that a small
number of large, very well-connected
people come in, they become the
builders, and they know that now there's
a moat around them of regulatory
compliance. What Yeah. What drives me
crazy is people don't understand when
you create those regulatory
environments, you are making it possible
for the incredibly shrewd,
well-connected, rich, elite guy that you
hate
>> to come in and monopolize that area
because you've made it so difficult. You
you are not helping the small person.
You are hurting the small person. What
you want to do is create a system where
the upand cominging entrepreneur ankle
biter who's 23 and like sees how he can
use 3D printing to build homes faster,
better, safer than anybody else. He's
not regulated into oblivion. So, he
actually does come do the thing that
everybody else thinks is crazy. And he
3D prints your house. And you're like,
"Holy hell, this is incredible." And
then that guy becomes stupid wealthy.
And then the goal is he gets replaced by
the next 23-year-old who sees something
he misses. But what actually ends up
happening is regulatory capture plays
out in the following way. A small group
of elite people who are well-connected
to each other end up going, "Hey, you
know what? Just put this regulation in
place because they know how to deal with
it." And then slowly but surely, all
those regulations go to the people that
make the campaign contributions. And
then the world is set to make it hard.
But they know how to get over those
hurdles and they might not even mind
that it goes more slowly because then
the assets that they do have just keep
going up in value. And it's like that is
so knowable, so predictable. And yet we
still find ourselves trapped there. It
drives me mad.
>> It drives me mad. It should drive
everybody mad. I'll give you a devil's
advocate.
>> Please.
>> And it is a devil's advocate because I
think you and I are in firm agreement.
We moved houses my my my family about a
year a year year and a half ago. And our
old house, which we loved, it was
awesome. Uh the backyard was this big
green belt backed up to a forest,
beautiful trees. Awesome. Loved it. Very
soon after we sold that house, we
learned that a developer is putting up
28 homes.
>> Uh just behind what used to be our
backyard. Now I am a Yimi build. We need
we need millions of homes. And so
there's half my brain that says, "Good,
we we need more homes." The other half
of my brain that used to enjoy this
beautiful green belt and now it's going
to be a ton of homes says, "So glad I
got out of there."
>> Yeah.
>> So glad I So there's part of me that's
like, "I get it. I get why if you own a
house and you don't and you like the
quaintness of your neighborhood and you
like your view and you don't want it to
change from what it is, people say, I
don't want that." And they're going to
use whatever regulatory power they have
to protest and put their foot down to
get it. Now, uh, so I I understand like
that incentive. I still think though it
is inadvertently evil. I think most
people who do it mean well, but it is
inadvertently evil to say when if if if
you're a baby boomer, when I was in my
20s, my parents' generation permitted
the house that I was able to buy for 70
grand and raise my family in. But I'm
not going to afford that opportunity to
the next generation. you know, if if the
previous generation helped you build and
grow. And by and large, that's what we
did in the 1950s and60s. We came
together and said, "We need millions of
homes. We're going to need hundreds of
thousands of schools around those homes
and fire stations and bridges and and
highways. Let's go build it." And we did
it. And by and large, I think we have uh
by choice stopped doing that. And what
benefited one generation 50 years ago
has by and large been stalled out today.
>> I think if you look back at that time
and you see altruistic behavior, um
you're not being cleareyed about what
actually happened. What I think actually
happened was you saw an economic
economic opportunity that somebody was
like, "Oh my god, I can go capitalize on
that." Which is exactly what we should
want. The only thing you can trust any
human to do is be selfish. Yes,
>> Mother Teresa would not help people if
it made her vomit and feel badly about
herself. She did it because it felt
awesome. It was good for the soul and it
made her feel uplifted and all the hard
work felt worth it. Awesome meaning and
purpose.
>> So, I'm entrepreneurship is a certain
personality trait and when it is
unleashed, it will create new things. is
it will push progress forward and then
if you don't have certain regulations it
will go absolutely pathological and it
will consume everything for the dollar.
So you want to put these bumpers in the
alley to keep it from going pathological
because humans absolutely will do that.
But if you don't open up the regulations
enough to go, I want these selfish
people that want to like figure out how
to get rich doing this thing. But the
fastest way to get rich is to add value
to somebody else's life such that they
look at the thing that you created and
we're like, whoa, you did the hard work
of making that so that I can actually
afford it. This is incredible. So it
somewhere along the way
>> and I'm 1913. Uh, we can certainly
derail down that if we need to, but
somewhere along the way, we got to the
point where we gave the mechanism by
which the elites could entrench
themselves and continue to siphon money
off of the average person. Yeah.
>> Through something called inflation. And
that mechanism has set up this flywheel
of destruction that has made it possible
for um a small group of people to
continue to get more and more wealthy
using people's desire for safety against
them. Hey, your bank is in trouble.
Don't worry, we're going to come in and
deal with it. Hey, 2008 financial
crisis, don't worry. We're going to save
it all. Not realizing that that is just
furthering that K-shaped economy. And
for people that have never heard that
before, our economy right now is split
between people that own assets. 2025 was
an extraordinary year, people that don't
own assets. The last 5 years have been
so brutal. You've lost approximately 25%
of your wealth.
>> So if you want to know why such a small
percentage of people have gotten so
wealthy while everybody else has been
moving backwards, it is very simple. The
people that have gotten wealthy
understand assets and the people that
have gotten behind don't understand
assets. Now, the thing that I'm trying
to get people to understand is, okay,
there's only one asset that you
understand intuitively. That's a home.
Once you make that impossible for people
to afford, you you have shot entire
generations in the face because they're
just never going to be able to get
ahead.
>> And so, the other thing is that to your
point, all of these problems are
man-made. Therefore, we can unmake them.
>> Yes. This is not a this is not a a
problem of physics. Correct. That
there's a law of nature that prevents us
from doing this and are proof of that as
you pointed out areas such as Tennessee,
Texas, Tokyo that have done I I what I
think is a much more sane approach of
letting the demand fulfill itself rather
than
>> they let entrepreneurs take the risk
because if an entrepreneur can go broke
by building too many houses, it's like
yeah, tough break luck. That's how it
works 100%.
>> Do a better job next time. Part of the
issue of why I think this persists is
because the problem is out of sight, out
of mind. And I I'll I'll show you what I
mean. If you build a nuclear power plant
and it melts down in the middle of town,
>> you see that, you notice it. You don't
notice the homes that were not built.
>> You don't notice it. You don't notice
the communities that never got developed
because right now it's just a forest. It
shouldn't be a forest. It should be a
big beautiful community, but it's not.
So, you don't it's hard it's harder to
wrap your head around what wasn't done.
we pay attention to the things that were
done that we can look at and that's one
of the reasons that it persists. The
other thing I would say is I think um
back to a lot of social problems being
downstream of housing. I noticed this
that when I when I was a renter, I had
no interest in local politics at all. I
was just I'm transient. I might live
here for a year or two and then I'm
going to move to the next city. Whatever
happens, I I don't really care. I'm just
a tourist in the city basically. As soon
as I owned a bought a house and owned a
house, I felt a much more profound and I
think really good sense of being part of
the community. I'm literally invested in
this now. And I think to the extent that
there are more extreme political views
in either direction these days, at least
part of that puzzle comes from a young
generation basically feeling like
they're tourists in their own lives
without any sense of ownership of what
they have.
>> That's right.
>> And then another element of this is
look, there has always been inequality.
There's always been at times extreme
inequality if you go back to the 1920s
about equal to what it was today, but it
was much more out of sight, out of mind.
You really didn't see how how other
people were doing. And so if you lived
in uh you know, you shared a bedroom
with your three siblings in your house,
didn't have air conditioning, and didn't
have didn't have much of anything, you
still felt like you lived a great life
because by and large that's what your
neighbors were doing. But now that
person in that you sharing a bedroom
with their siblings in a very modest
house is on Instagram and Tik Tok all
day. And your view into how the other
half lives is very extreme. And that's a
very new phenomenon. I always talk about
the show MTB Cribs. We all grew up
watching it. It's a great show.
>> And that was our view into how the other
half lives. That was pretty much one of
the only views into how the other half
lives. But you knew those were not
peers. That's Master P. He's not a peer.
That's Shaq. I'm not supposed to be like
him. And so you could watch that and
you're like, "Wow, that's cool, but I
know I'm not supposed to have that." But
now with social media, you are you are
drowning in a feed of people who you
think should be peers. And so you scroll
through and you're like, "They're all
prettier than me. They're all happier
than me. They're all richer than me.
They're all having more fun than I am.
And these are supposed to be peers." And
then you immediately, no matter how well
you're doing, even if like objectively
you're doing pretty well, it's so easy
to feel like you're falling behind by
comparison.
>> Yeah. No doubt. Okay. So right now I
feel like the K-shaped economy the um
very important for people to distinguish
between inequality is um God tested God
approved like for whatever reason
whatever you believe in nature.
>> Yeah. Like it it just
>> the Discovery Channel shows on the the
Hunter Prey things. There's inequality
in nature.
>> Yeah. Not only that, look at uh Michael
Jordan's physical abilities and mine.
It's like they are very or more
contemporary LeBron or whoever is big
right now. It's like you see people that
are capable of doing things you're just
not capable of. There's no amount of
training that's going to make me as good
as Michael Jordan at basketball or
LeBron. It's there. We just all get
dealt a different hand of cards. And as
long as you have an unequal distribution
of potential, you're going to have an
unequal distribution of outcome. that
that is just people need to get over
that one cuz you create so much more
madness when you try to get an unequal
distribution of talent and potential to
have the same outcome. You crush all the
things that make us human. The desire uh
for pursuit to chase dreams to try to
become more. You've said something which
I think is incredible which is life
really is a competition for scarce
resources. Yes.
>> I think that's a wonderful admission.
The other thing is a lot of that
inequality of talent is cultural. And
China's better at manufacturing simple
items than Americans are. They just are.
They're better at it. They're much more
efficient at it. They're much more
culturally adept at doing it. America's
much better at technology and
entrepreneurism than China is. We're
just we're just better at it. It's more
in the culture. So, a lot of that isn't
even the Michael Jordan, LeBron inborn
talent.
>> That's just what it is. It's a there's a
cultural aspect to it. And New York is
better at finance than Alabama and and
Ohio is better at agriculture than than
Oregon. You know, there's a there's a
there's some of that is natural
resources, but some of it's cultural,
too. It's cultural knowhow. And my
family's been doing this for for 70
years. And so, it's kind of in the
blood. So, that exists, too. But,
invariably in that, you're going to have
differences in outcomes. When you're
going through a financial bubble, New
York's going to be crushing it. When
you're going through an agricultural
boom, Iowa's going to be crushing it.
Technology boom, California is going to
be crushing it. um at the expense at
least by comparison of other people.
>> No doubt. So if we can get people on
board with that that it is going to
happen. I also want them to understand
but there is such a thing as toxic
inequality where it gets to the point
that it is truly intolerable. Going
looking at history you will see over and
over there's just a cycle where the
inequality gets to the point where
people get so resentful.
>> A third of society wakes up and says
screw this. I I don't I I I don't care
about your talents. I don't care that
you're that you're LeBron. I don't care.
It's not fair. I'm not putting up with
it anymore. And those people in big
enough numbers can cause successful
revolts and have
>> Yeah. Successful violent revolts.
>> Violent and sometimes and sometimes less
than violent. The 1950s was by and large
that amazing inequality in the 1920s.
The Great Depression burns everything
down. Tremendous amount of anger, a lot
of it rightful. And then World War II
kind of brought everyone together with a
shared sacrifice. And in the 1950s, it
was kind of like, no, we're not going to
go back to what it was. It's it was it
was a brief era of togetherness. Now,
there was also a lot of overt racism and
whatnot. It was not perfect by any
means, but relative to what existed
before or since, there was a sense of
the pendulum had swung way too far and
on its way to swinging in the other
direction, it found a happy medium for a
period of time. I think that's that
tends to be true. And if there is any
legitimacy to people having nostalgia
for that era, I think it it it tends to
be that.
>> H that's really interesting. We will be
right [music] back to the show. But
first, let's talk about the choice
you're being forced to make in every
meeting. And I'm going to guess you're
in backto-back meetings all day. Client
calls, team [music] check-ins, strategy
sessions, whatever. One after another,
you're scrambling trying to remember
what was said, what you promised, who's
responsible for what. Plaude solves
this. It's a dedicated AI assistant for
conversations. It captures meetings and
calls without having to pull out a
notebook. Plaude records everything,
then automatically delivers transcripts,
summaries, and action items. Over 1.5
million people have already made the
jump. Right now, listeners can get 10%
off or more by using the code tom 10.
Just type p l a u d.ai/ AI/tom
into Google or simply search plaude on
Google [music] and use the code tom10 to
get started today. These things are
incredible. You can wear it, can hold
it, whatever works best for you. All
right, now let's get back to the show.
All right, so if we agree that right now
is not that moment of togetherness, that
we are in toxic inequality,
uh what do we do? So, I look at the
Democrat party being co-opted by um
left-leaning fascism. So, you've got
them headed down the socialism route and
then you've got the Republican party
being co-opted by the rightle leaning
conservative flavor of fascism. And it's
like they're just spiraling away from
each other.
>> The horseshoe theory that the extremes
of either party actually like it's a
horseshoe and they meet together at the
end of kind of very similar policies.
>> They they are both soda. They're just
different flavors of soda. So and and
sometimes it's Coke Pepsi. It's barely a
different flavor.
>> Exactly. Too true. So we're in that
reality. I will be interested to see by
the end of the interview if you I don't
think you share my level of paranoia.
>> Um so it'll be good to uh navigate
through that. But what do you see as the
way to begin backing out of that? What I
see as really increasingly racing away
from each other um getting into civil
war territory. Um, yeah. How do we back
out of it?
>> In modern American history, there have
been two distinct points where things
got real bad and real nasty. And I think
in many ways much worse and nastier than
they are right now, which are the 1930s
and kind of the 1970s era where a lot of
people, you know, you probably had
during those eras, you had a third or
more of the country waking up every
morning saying to hell with this. This
sucks. I'm really upset about this.
1930s everything collapses. Interesting
about the 1930s is that fascism was not
the dirty word that it is today. You
know, we learned that it's a dirty word
after Hitler in World War II, but back
then people are like,
>> "Let's give it a shot. Sounds sounds
good. Democracy, capitalism didn't
work."
>> In 1932, most people would have agreed
with that, even if we have a different
view in hindsight. But in 1932, most
people woke up and are like, "Fascism,
let's give it a shot. Let's give it a
whirl." And people were so upset with
the current system that they're willing
to try anything. And we tried a lot the
New Deal and I mean there was a lot of
new trying new things in that era. But I
you know but a lot of of uh extreme
views and a lot of anger and whatnot and
it would have sounded preposterous if in
1932 I said hey I'm from the future and
by the 1950s you guys are all going to
love each other and have amazing faith
in government and it's going to be very
calm and peaceful. people said, "You're
out of your mind." And in the 1950s, if
I said, "I'm from the future, and by the
the 1970s,
uh, between Vietnam and Watergate, trust
in government is going to collapse, and
we're going to be hanging on by our
fingernails to a shred of legitimate
government." And people would have said,
"What? No federal government?" That that
would have sounded preposterous. If in
the 1970s I said, "Hey, I'm from the
future. By the 1990s, we're gonna have
balanced budgets and peace and
tranquility." Said, "You're full of it."
That's but that's what happened. And in
the 1990s, if I said by 2026, we're
going to be in whatever we describe this
era as today, maybe back to hanging on
by our fingernails, that would have
seemed preposterous.
>> Pretty fair.
>> And so, I think if you become familiar
with the cycles of politics now, that's
not I I just gave you, you know, four
examples. This is not a very deep
history, so it's a small sample size,
but politics is cyclical. And this is
more of a hope than a forecast. I'm not
a forecaster, but it would not surprise
me historically on that cycle trend that
if in 20 years we look back at this era
as an era that we a generational bottom
from which we grew out of and I think a
lot of these things are self-correcting
and it stems from the fact that when
times are good you become complacent and
nobody cares about good governance. You
just think the system runs itself. You
don't really care anymore. And when
times are bad people say the hell with
this we don't have to put up with this.
This is democracy. we can we can vote
other people in to do this. We can kick
these bums out and do it. And that's
what happens. And so, look, the the
nightmare scenarios that maybe you are
more more tuned into are possibilities.
I would never discount that. And you
can't because it's happened to a lot of
countries that really went over the
edge. Uh Germany, Italy that really
latched onto it and went straight over
the edge uh and destroyed themselves in
the process. That's happened. It could
happen here, of course. It would not be
my first guess of what's most likely to
happen. I think what's most likely to
happen are
several more years of this kind of
[ __ ] However you want to define
that and whatever side you're on, you're
unhappy about it. Uh and in 20 years,
you look back and say, "Look, we
actually kind of got our act together
after that." And things calm down a
little bit. I could think of several
examples of why that would not happen.
Social media makes it much more
difficult to happen now than it did in
the 1970s, etc. In the 1970s, everybody
got their information from Walter
Kankite. Now everybody gets their
information from their own little custom
bubble. So it's a very different era,
right?
>> And so or impact theory.
>> So [clears throat] it's a very different
era.
>> But I think the general idea that it's
very difficult to foresee that the same
forces that are causing a lot of
problems plant the seeds of their own
demise, plant the seeds of pushing in
the other direction to move things in
the other direction. Uh that's a that's
a powerful trend over history. You say
that these things are self-correcting,
but every self-correcting mechanism has
a mechanism.
>> There's Yeah.
>> FDR was a mover.
>> So what when I look at this moment right
now, the thing that I would just point
everybody to is look at the debt to GDP
ratio. So every country with the
exception of Japan, Japan as we record
this is in extreme trouble. But every
country with the exception of Japan that
has spent more than I think 18 months
over 130% debt to GDP has gone into
internal strife so severe that they
basically have some sort of economic
collapse.
>> Yeah.
>> Uh or they just tear the country apart.
So
we are
123 and climbing. So given our debt,
what do you see as the mechanism for
this to self-correct?
>> It'll get to a point where I think
what's important is that in financial
markets, the stock market, and
importantly, the bond market, you can't
threaten the bond market, you can't
scare the bond market, you can't arrest
the bond market. It's it's it's its own
beast that's going to do whatever it
wants to do. Even outside the control of
the Federal Reserve, the bond market is
a very gigantic market and it's going to
react however it wants to react. The
mechan the reason why deficits have
gotten this bad and persisted for so
long is because the bond market has not
pushed back at all by and large. And so
politicians will run any deficit that
the bond market will tolerate. And I
think there's virtually no exceptions to
that. And so the correcting mechanism
will be when interest rates rise to a to
a meaningful degree and politicians are
forced. They will never act until
they're forced to do it, but they will
eventually. And so what does that mean?
It could mean catastrophe. It could mean
interest rates go to 20% and it gets
it's great depression, too. That could
happen. It could also mean that interest
rates, you know, the interest rate on
the 10-year bond if it's, you know, 4%.
If it went to 7%. That's worse. It's not
catastrophic. It'd be a bad recession.
People would lose their job. Inflation
would go up. All that's true. But
interest rates were 7 8% in the 1990s.
you know, we got and the last interest
rates have been so preposterously low
for the last 25 years that we forget
what any sense of normal is. So, right
now, I think we kind of have a view that
like if interest rates go to 5 or 6%.
That's terrible. I mean, they from the
1960s
to the 1990s, they they they were never
anywhere near that low. And the 1970s,
early 1980s, they were 15%, 17%. And it
sucked, but we survived and we had a lot
less debt than we did back then. But
there are scenarios in which you muddle
through that are not catastrophic. And
we actually did that at the end of World
War II when debt was about as high as it
is right now. I think we're a little bit
higher right now, but as a percentage of
GDP about what it is right now. And if
you go back and you read what they said
about that in 1945, 1946, they were
[ __ ] their pants about it. And true
to your your uh forecast, the prevailing
view was there's nothing we can do about
this. It's it's just it's just too much
and this is the end of the empire. That
was the prevailing view. And you mix
that with you had a tremendous amount of
stimulus from World War II that was
immediately being withdrawn. And so tons
of debt and the economy is going to slow
no matter what. Not a good scenario.
Everyone's freaking out. Well, in
hindsight, we know how the story end,
which is what the story ended pretty
well. Like there there were recessions
in 1946 and 1952. Like there were it
wasn't pure pure roses back then, but by
and large we did pretty well. And we
didn't pay the debt off. And this is one
uh you know quirk that I think people
get get wrong. Individuals have to pay
their debt off. There will come a time
in the future whether that time is death
or before that when you have to pay your
debt off. Uh countries are not like
that. Countries can be in debt for
perpetuity. They can be in debt forever.
And what matters is that you can afford
the carrying cost of that debt. You can
afford the interest on that debt. But
the US is never going to have zero debt.
They just keep issuing more to pay off
the old stuff. You know, Ford Motor has
been in debt for a hundred some odd
years and it'll it'll be in debt 100
years from now if it's still around.
It's a perpetual company. And so the way
that we did it after World War II and
the way that we could do it now, whether
we will or not, I'm not saying we will,
but the way you could do it now, I don't
want to get too technical here, but if
the the deficit as a percentage of GDP
is smaller than the growth rate of the
economy, then debt to GDP goes down. The
amount of debt you have goes up every
year, but debt to GDP goes down. So, for
example, if the economy were growing by
5% per year, the government could run a
deficit of 4% per year and debt to GDP
would go down. So, when people talk
about paying off the debt and balancing
the budget, you don't have to and we
probably never will. And you can still
come to a scenario where it gets much
more manageable. Now, it could also be
catastrophe and you mentioned there's
numerous examples of that. So you you
that's that's always the case. But all
of this is like what are the odds?
Catastrophe is a is a is a chance. Is it
the highest is it the most likely
outcome? I don't think so. I think the
most likely outcome is muddle through.
And what muddle [clears throat] through
means are periods of very high interest
rates and very high inflation that
people are sick of and tired of and
hurts a lot of people.
>> Okay. I'm going to give you my full
argument in the hopes that you can pull
me back to your side. Okay.
>> Uh so heard wonderful things you put
forward. Here's why I think they will
not work this time and we're going to
need a different solution. So after
World War II, we become the world's
reserve currency. We are among the
developed world. We're essentially the
only untouched country. So everybody
else has been thrashed. We're going to
be first of all, they owe us a ton of
money and we're going to help them
rebuild and we become the world's
reserve currency. So now we can print
our money like crazy and tax the entire
world or anybody that holds our reserve
currency through inflation. And so that
switch alone is massive.
And so we also haven't done um the waves
and waves and waves of money printing
that we have now done. So yes, we're
coming out bad debt to GDP after the
war, but the war stops. And so now
you're not having to pull all that debt.
world owes you a ton of money. They're
starting to pay that off. You start to
export inflation. Way better scenario.
Now you're in a position where the
number of transaction or the dollar
transactions
uh taking place. It used to be I think
72% in the late 90s of all transactions
globally were settled in dollars. That
number is now in the 50s. So we've been
steadily declining now for 25 plus
years. The world is actively moving away
from the dollar.
For the first time in more than 30
years, there's central banks globally
now hold more reserves in gold than they
do in dollars. And they are specifically
migrating towards that. You now have a
true competitor economically, which is
China, which we didn't have before.
Russia sort of made it look like they
did smoke and mirrors at the end of
World War II, but they obviously didn't.
They end up collapsing. China really is
a pure competitor. Um, I think you said
this on camera, but we China is better
at making things than we are currently.
So, that puts them in the position that
we were in at the end of World War II.
Yes.
>> And they are actively trying to get the
world to move away from the dollar and
move on to the digital yuan. They're
building a gold corridor so that people
can hold the gold if they don't trust
China because China understands we're
authoritarian. So, some of you guys are
going to be a little bit skeptical that
we won't confiscate your wealth. So,
we'll store the gold in your country.
We'll decentralize it. all of that. Our
goal is just to get you guys off the
dollar. So, we are we haven't lost it
yet, but we are rapidly losing the um
ability to export our inflation
>> given the wild things that Trump is
doing from an international perspective.
Maybe it all settles down, but it could
also escalate. Europe is talking about
using what they call their economic
bazooka, which is to dump the debt that
they own from America. And for anybody
that doesn't understand the whole debt
thing, it's if the US if there's no
appetite for US debt, the credit markets
freeze. That brings us to the meaning
that US can't raise money to pay off its
debt. Now you're in crisis. If the US
were to default, it's like anybody going
bankrupt. Suddenly nobody wants to give
you money. Uh where are all your
friends? Nowhere to be found. And that
brings the next thing which is we can't
raise rates. We're in fiscal dominance.
We owe so much money already that just
the interest on our debt is the second
biggest line item. It's bigger than some
entitlements. So this is a massive
number. If that number were to go up to
10, 15, 20%
it the whole system breaks. the US will
it will have to hyperinflate its
currency in order to make those payments
which will cause anybody who's on the
fence about the dollar to be like well
we're done with the dollar we're going
to move faster to gold to silver to
bitcoin to whatever but it isn't going
to be the dollar and so now you end up
in this dust spiral this is exactly why
Radalio the most successful hedgement
hedge fund manager of all time going
yeah I uh
>> move to Dubai
>> moving to I think he's more Singapore
But it's like he obviously is super
skeptical of the US. Buffett has
publicly stated, "I'm super skeptical of
what the US is doing. I'm pulling back
out of the markets. I'm sitting on this
insane pile of cash and I'm also looking
at markets outside of the US." It's
like, I agree with you that history has
these loops and some of the smaller
loops are positive. If we were going
into a recession, I wouldn't wor be
worried about it at all. a couple years
of whatever and as long as you're not
trading on margin or, you know,
underwater in debt, you're going to be
fine. You make it to the other side. But
when there is a certain point where
every single empire before us
>> has taken on too much debt and printed
too much money and then their empire
collapses. Yeah. And I'm just saying the
bad news is when you look at the
mechanisms of the economy structurally
right now we are set up for one of two
options.
Trump's crazy unhinged global policies.
He's able to bully our way to um
controlling oil and other resources. And
he deregulates so much that we grow our
way out of this. Because your point is
the only option that I see which is you
have to grow
>> right
>> uh or we are going to um
either rapidly go bust or slowly go bust
but you don't have without the growth
you don't have more than 10 years before
you cross the 130% debt to GDP and again
history says every every empire fails
for sure 100% And every country that has
ever gone over 130% debt to GDP for more
than 18 months has ended up with
internal violence. So revolution or
civil war.
And like we're just poised for that
number to snap and grow very fast if we
don't walk this insane tight rope of
somehow someway
having a president
put policies in place that allow us to
actually grow.
>> I don't I don't think I have substantial
push back to what you said, but I would
say this. If you made if you said what
you just said verbatim
to me in 2008, you know, 15 some odd
years, whatever, whatever that was, 17
years ago, uh I I I I would have agreed
with every word, too. If you said that
to me in 2004, and people were saying
this in two 2008, there was that
argument that you just said was
everywhere. It was everywhere. All that
was the most popular argument was the
dollar is doomed. Too much debt, you can
never grow your way out of it. 2007208
that was the narrative. Uh and it and it
didn't happen at least to the extent
that it did. So it's not to say that it
can't of course it can it's happened
elsewhere but I think the mechanism that
will cause it is not as obvious as it
can be made out to be. And I would say
this as recently as this year in the
last eight weeks when [ __ ] hits the fan
what do people buy? By and large it's
still treasuries and dollars. And so
people can say they don't trust the
dollar printing too much money. You
could say that all too long. They say
that. But what do they actually do with
their money? Now, will that last
forever? Probably not. But the mechanism
of
uh it we've printed too much money. It
doesn't work. Too much debt. Don't trust
the politicians. Don't trust Trump.
Whatever the narrative might be, what
people are still doing with their money
is there. The other thing I would say is
you you mentioned a very interesting
statistic, which is that in the late
1990s, the US dollars uh settled 70 some
odd percent of payments. And today it's
50 some odd percent. Uh what did
interest rates do during those two
periods? They fell like a rock. And this
is another your statistics are right.
You're you're you're not making these
up. You're saying right things that are
actually true. But what the consequence
of that I think is is less fitting with
the narrative of of of what you begin
with. Because in the 1990s when dollar
dominance all day long, interest rates
were higher than they are right now.
Right. And so it's it's it's not quite
as clear what though as faith in the
dollar
>> that that we had higher interest rates
back then
>> that people were still dealing in
dollars despite any of our distresses
because there was still a sense that
America was the stable global hegeimon
that there really were no alternatives
we did not have any peers um and so it
was like yeah there's really nothing to
do but the dollar and by the way we had
not yet gone on the 2000.com bubble
burst money printing spree, the 2008
housing crisis money printing spree, the
COVID money printing spree. 40% of all
dollars ever created in the history of
America have been created since what
2020. So it's like
>> but what did people do during the co
meltdown when it really looked like we
were on the verge of great depression
2.0 and probably should have been. We
got a very lucky outcome I think. What
did what what did global investors buy
during that period? Treasuries.
>> Yeah. But they're buying gold now.
>> They've been buying gold in the last
couple months.
>> Abolic.
>> Yes. And it did in 2010 2011 as well.
>> Even if you just look at central banks,
you're not unnerved by that
>> in terms of them.
>> I'm not unnerved by it.
>> I'm not complacent about it. Everything
that you're saying could easily happen.
And so this is not you and I debating
separate points. I just think the
economy is so unbelievably complex that
anytime you say because of A we're going
to have B and then C and then D, it
almost never works like that.
>> And there's and there's if you're
familiar with the history of economic
forecasts, it's the most humbling thing
in the world. The smartest people making
the most logical predictions wrong,
wrong, wrong, wrong, wrong, wrong,
wrong. There's it's it's the most
humbling profession that's ever existed.
Even if you're saying things that are so
unbelievably like how could that not be
the case? I was one of the people in
2008 who said dollar is doomed. Printing
way too much money because of the
financial crisis, way too much debt,
bailing out the banks, bailing out the
the auto companies. It's never going to
end. I that was me. I was that I wrote
about it. So I can you can go find those
articles. I wrote about that in that
period. Uh and I felt very confident
about that. And I think what I didn't
appreciate then that I do now is the
complexity of it. is just unbelievably
complex. It's the most complicated
system that we have in the world. You
know, there's uh you know, eight billion
people. There's 25 million businesses in
the world. Uh all interacting, different
languages, different cultures, different
wants, different needs, different time
horizons, all interacting together. New
politicians every two years, new
presidents every four to eight years. Uh
it's it's a very complicated thing. And
the and history is littered with
terrible decisions and meltdowns. It's
it's it's it's all that. It's also
littered with examples, whether it is
the end of World War II or the 1970s or
the late 1990s or 2008 or maybe today of
the obvious narrative in hindsight being
completely wrong.
>> Okay. So, you believe
>> that's less of a push back. I'm not
saying what you're saying is wrong. I'm
just saying I come from an an a a level
of pure humility when trying to figure
out what the economy is going to do
next.
>> I think that's incredibly wise. And I'm
the same. I write deep dives on these
topics and my punchline is always
remember the future is going to surprise
you in some way. So don't think that you
see it clearly. I certainly don't. Uh
but there are narratives that you feel
comfortable with. So we started with the
the idea that housing is this incredibly
important issue from which many other
problems cascade.
>> Yeah. Um, is there a a narrative or a
data point about how empires fall, about
how currencies lose their status that
you do believe in? One of the issues
with this is that when we're studying
fallen empires,
the sample size that we're dealing with
is so incredibly small and it's never
apples to apples. And if you really get
deep into it, is there is there truly
any comparison between the Roman Empire
and the United States today?
philosophically maybe but in terms of
the structure of the global economy
>> and and I mean we're you know it's it's
very difficult to make direct
comparisons well like psychologically
philosophical comparisons egoistic see
that that kind of thing too but
>> I'll give you one so tell me if this is
crazy I think there is architecture in
the human mind that says debt is
incredibly useful but it will stop
working but by then you're addicted to
the growth and so you will eventually
dilute your currency like eternally.
Everybody who's ever made money has
always started devaluing the currency by
um mixing it with another metal,
clipping the edges off so you don't
notice. Somehow someway they find a way
to inflate the currency.
>> Yeah.
>> Right now we use money printing, we call
it quantitative easing, whatever, but
it's the same idea as shaving off some
of the gold from the coin. No. Um, so
given that every uh economic system ever
in all of human history has done the
same two things, take on too much debt
and fake money for lack of a better
word. Um, that seems directly applicable
to why we have the problem now. And the
third thing that we always do, always
and forever is we resent those who have
more than us. And when those levels get
intolerable,
>> then we flip the tables. And I see those
those are the only three things that I
need people to believe in for me to say
we're in trouble. Not that I know that
we're going to collapse this year, next
year, 10 years. I don't know.
>> Uh
>> so here's maybe the difference between
you and I. Sorry, did you have to
interrupt?
>> No, no.
>> We we both agree we're in trouble.
>> It sounds like maybe your definition of
trouble is some version of collapse.
>> Yes.
>> And I think the most likely definition
of trouble is 10 years of muddling
economic growth with high inflation. And
by high inflation, I don't mean
hyperinflation. I mean maybe it's four,
five, 6%. Which sucks and pisses a lot
of people off, but this is but it's not
but but that that's not collapse per se.
Even if collapse is one of the options,
I don't think it's the most likely
option. It also hit me that I said
earlier that what you just said uh if
you told me that in 2008, I would have
said and it and it didn't necessarily
happen. It just hit me the year in which
actually what you just said was being
said by almost everybody uh was yes 2008
but more more along it was 1930 to 1932
that the most common narrative was
printing money devaluing currency way
too much debt bad politicians way too
much inequality
>> war is coming
>> war came and and and it came and by the
way if if that's the if that's the
comparison of just oh we're just going
to head into the great depression and
World War II and by By the way, World
War II by and large happened because of
the Great Depression. Those two things
are very closely linked, of course. Uh
and World War I before that. Um but if
you know, if if I'm saying that's that's
the analogy, well, that's that's not
very optimistic as well, is it? Uh and
the other period of just real shitow
economics was the 1970s. And that's
probably if I were to make what is the
most likely outcome to get out of this
which is different than a prediction
just what do I think is the most likely
it's probably something like that and
were the 1970s slow growth high
inflation a lot of pissed-off people a
lot of political revolutions if you want
to call that uh you know not terrible
revolutions but the Reagan revolution
let's say um that by and large we
muddled through and we look back at it
as a as a terrible period which is why
people don't think fondly of Jimmy
Carter president.
>> Uh, and also within that era was
Watergate and the Vietnam. So there was
just a lot in the 1970s it was just
America sucks. America sucks right now.
But we got through it. And I and I think
if we had a time machine and you and I
went back to New York in 1976, we would
not find it to be a hell hole. We might
find elements of it quite pleasant.
Here's another example of this. What
other country lost its empire because it
had too much debt and overextended in
the last hundred years and seated its
power to the next superpower? The UK.
The UK that seated its power to the
United States. But if you go back
preWorld War I, certainly the UK was the
empire, you know, the the Queen Victoria
area. That was that was the United
States of its time. And then it seated
that power, lost that power because it
had way too much debt, particularly
after World War II, way more than we
had. uh and and and several you know uh
terrible things that happened and by and
large it was a pleasant place to live
over the last 80 years and so that's why
I say
the scenarios in which this could be
there's other scenarios other than Mad
Max and that was what the UK did that
was what the UK was the UK seated its
power had high inflation had high
unemployment but it was not Mad Max it
was by and large a pretty pleasant and
quaint place to live and I think that's
that's the most likely outcome in the
United
Yeah, it's interesting. I certainly
don't project a Mad Max outcome to
America, but I look at countries that
have had a previous empire and then what
happened. Uh, yes, the UK has done well,
but there's a very dark secret from
where I'm sitting about UK's success
coming out of it is they never
relinquish control of banking. And so
now as you get into the Brussels London
of it all and you start talking one
world government,
this is conspiracy theory. This is
tinfoil hat. I want to I always tell my
audience that with this topic in
particular, but there is something
interesting about we're living through
part of the glory and the um side
effects of a hyper financialized world
right now. So, um, I try to give people,
people hate it when I say this, but I
try to get people to understand that the
stock market, while brilliant, amazing,
and has given so many wonderful things,
is best understood as a casino. And when
you understand it as gambling, that
you're betting on something uh that 20
years from now, people will value this
thing more than they do today. That's
what you're betting on. I'm not even
saying day trading. I'm saying even long
term. You're just saying my bet is that
this will be more valuable to people
than it is today. Great. Uh, and maybe
looking historically, that's a good bet.
I love it. And I'm super invested in the
stock market. I think it's very wise and
there are all kinds of wonderful things
that come from it. But it really is a
stock market. And by the way, the like
really big players that you hear about
are playing a totally different game
unless they're value investors like a
Warren Buffett. Like a lot of them are
in there betting on things going up and
down. They can make a ton of money off
the stock market doing poorly. And so
now there gets to be a lot of the
manipulation of markets and the warfare
that goes along. who thinks that they're
smarter and doing all of that kind of
stuff. And so when you look at London,
you look at this idea of one world
government. Who benefits the most from
getting a K-shaped economy? The people
that control the banks, the hyper elites
that are playing this incredibly
uh enriching or impoverishing game in
the stock markets of understanding the
flows of money, understanding the macro
movements and economies. And so if
you're a London banker and you see, ooh,
we just lost our empire. We owe all this
money to the Yanks and we know how this
game plays out. If you can hold on to
the one thing, which is if we can get
the Yanks to build a central bank, which
we did back in 1913, now all of a
sudden, if we can group up and Europe,
which is true, has like the central bank
of central banks, and then we can print
money
>> and siphon off through the worldwide tax
of inflation, we can still siphon off a
ton of wealth. And so it is like there's
a far more distressing game being played
than I think people realize. They can
feel something's wrong because of the
K-shaped economy, but they don't
understand the mechanisms of money well
enough. And to be honest, like even I
feel like I'm still early in my journey
of like really understanding how all
this stuff plays out, which is whenever
I talk about London, I say, "Look, this
is pure tinfoil hat."
>> But um it's like uh it fits the outcome
that I see a little too well. It doesn't
mean that I'm not overfitting it.
doesn't mean that there's not some other
completely innocent explanation. And
maybe people have all the good
intentions in the world. It just plays
out like that.
>> But nonetheless, there is this mechanism
called inflation and it benefits bankers
and it does not benefit the average
person. And what the average person is
dealing with right now is due to money
printing and the um knock-on effect of
inflation.
>> I think that's right. And the other
thing I would say about why the UK
analogy probably isn't isn't the best
right now is because the UK seated its
empire to a friendly rival, the United
States. And
>> after getting its ass handed to it in a
war like it was like you're going to
make different decisions when you're
fatigued. And it's it's a really
interesting thing that if you look at
Ray Dallio, Ray is just like, "Listen,
eventually you'll get in a war so bloody
everyone will just fall down exhausted
and say fine, new world order is is
acceptable." And so that's where England
was. It was like
>> didn't have a lot of choices.
>> They didn't have a lot of choices. But
when when you go from number one to
number two and you're and number one who
replaces you is a friend, your closest
friend, your best buddy in the world who
wants you to win and you want them to
win. That's different than if you seed
your power if the United States seeds
its power to China. Now this is maybe a
separate topic, but what is now very
well known and was [clears throat] in
the headlines this week is to the extent
to which China's birth rate has not
collapsed. It has just fallen through
the floor. The statistic this week was
there were fewer babies born in China in
2025 than there were in 1776.
>> Yo,
>> right. And that that's been going on for
a very long time. But the decline has
been going on.
>> Be bad when you enforce one child
policy. Yeah.
>> But even after they lifted that and
after they went out, it's a cultural
preference for fewer children. And that
decline has been going on for a long
time. And it's not it has not sped up.
It has gone supernova in the last 10
years.
>> How much worse are they than us from a
birth rate perspective?
If you look at the domestic birth rate
in the United States, it's higher than
almost everywhere else in the developed
world, it's not high and it's much lower
than it used to be in the United States,
the wild card for the United States and
almost no other country has and
certainly China doesn't have is
immigration, which goes through es and
flows, unbelievably high 3 years ago,
marching towards zero now. And so that
so that's very difficult to predict what
that will be over the next 25 years. You
brought up a point earlier that is is I
guess inarguable that any empire that
has this level of debt that has been
extended to the extent the United States
is has has collapsed. I I I would bring
up another another analogy and I would
say and I know the answer to this. This
is a rhetorical question. What country
in history has succeeded for more than
five or 10 years with a shrinking
population?
>> None.
>> None. Never. None. And China's
population is like 1.4 billion right
now. The new forecast I think it was by
2070 maybe. So this is a long-term
forecast will be down to 600 million.
>> Yo,
>> right. And what country when you know
what creates GDP growth? There's two
thing there's two ways to grow your
economy. You increase the number of
people or you make those people more
productive. That's what economic growth
is. And China took the first half of
that equation, the increase in number of
people and it didn't bring it to zero.
It put in a hurricane headwind on top of
it. And so, you know, maybe AI and
robots make us all so productive that it
makes up for that. That could be the
case because US demographics are better.
It's the cleanest shirt in the dirty
laundry bin. But it but relative to what
it was for the last century, it sucks.
It's much worse. But relative, you know,
but not just China. Japan's been a
basket case for a long time. You know,
the statistic 10 years ago, I'm sure
it's worse now where adult diapers out
sell child diapers in Japan. Like
there's your sign.
>> I've heard that before, but that's still
>> there's your sign, right? Terrifying.
just terrible demographics. But now, so
Japan was kind of the f the front runner
in this. China's terrible. Russia is
abysmal. South Korea is very bad. Italy
going down the list, Spain. Those are
they're they're all absolutely terrible
demographics. A lot of that is a very
long history of the richer countries
come, the fewer kids people want to
have, which is why you go to subsahara
Africa, they have 10 kids. You go to
Manhattan where people make $5 million a
year, they have two. So there's a very
long history of that. And I think we've
just supercharged that. back to maybe we
come first full circle to housing. Um,
you know, it's it's more expensive to
raise kids these days. And if half your
income is going to rent or a mortgage
payment, you think less. The statistic
that I started with, if you can't buy a
house, you're less likely to get married
and have kids. There's other factors
going on here, but this all kind of fits
into that puzzle, too.
>> Now, will the inevitable mortality cliff
that boomers are facing, is that going
to alleviate any of these problems?
The boomers had a lot of kids. The
millennials are a big generation in
>> Yeah. But I'm saying boomers are about
to die. So
>> and currently doing it.
>> Yeah. So is that going to free
>> alleviate the housing situation?
>> Yes. Are they going to pass down enough
money that some of this stuff starts to
equal out or no?
>> Maybe to some extent, but for the the
millennial generation, for a lot of
them. I'm I'm a millennial and I think
statistically my my parents will be
alive for another 20 or 25 years
>> statistically. So it it might I think
what you're saying is true, but it could
be the case that by the time the boomers
are actually my parents are boomers. By
the time that they their generation is
fully passed the baton onto millennials,
millennials are going to be in their
60s. And so the idea of like, well,
you'll get your house then like when
you're 65, that's not going to move the
needle too much.
Woof. Okay. So, um, what do you think
about like student loans, individual
debt, like how does that play into your
thoughts about where we are?
>> I could give you two sides of this. One,
particularly student loans. I think it's
not hyperbole to say it virtually ruined
a generation. uh kind of uh young
millennials and all of Gen Z, you know,
just really I I I think particularly
millennials, if you were uh of college
age in the mid200s, everybody told you
go into debt, it's worth it. Just just
do it. Just just pay just sign the
documents, sign the loan, your life will
be better. It doesn't matter if you go
to Jim Bob University and get a degree
in art history. It doesn't matter. Go
into 200 grand in debt. And that's what
a lot of 18-year-olds who didn't have a
prefrontal cortex developed yet were
told and did. And of course, the results
are disastrous for it. And debt, student
loan debt is one of the only debts that
will travel with you after bankruptcy.
You can't discharge it.
>> You know, you can go you could you can
go into gambling debt and real estate
debt and discharge it all in bankruptcy
and walk away like it never happened.
Student loans are with you for life.
>> What do you think about that? That feels
evil to me.
>> On one hand, I get why it happens.
Because if it wasn't like that, most
22-year-olds who graduate have no
assets. So, they have no risk to go into
bankruptcy. Just go so graduate with
your dad and go bankrupt. You have no
assets. They can't take any of your
assets. You have 20 bucks in your bank
account. That's all you have
>> loaning to them.
>> Yes, that's I think that's that's what
it is. Or make it much more contingent
on what kind of degree it is.
>> Correct.
>> So, the idea of going into 200 grand for
a medical debt because you're going to
be a surgeon, like still a lot of debt,
but okay. The idea of going into that
much debt for an art history degree or
whatever it might be. No, no, no, no
offense to the humanities, but I mean
that's the the idea that we price it the
same and by and large give the same
amount of debt for the same degree is is
is insane. And and the other thing is
that whenever you just stimulate demand
like that, it just pushes up price.
>> So let's say we lived in a world it's
it's kind of too hard to put the
toothpaste back in the tube now. We've
[clears throat] like you can't if you
just stop student loans tomorrow, this
it would collapse. But let's say we go
back and there was never government
issued student debt. There's still
private debt. You still go to JP Morgan,
get a student loan, but it's priced
differently and they want to know what
degree you're getting, but there's no
federal student debt. What would happen
is tuition at private universities
wouldn't be 75 grand today. it'd be 35
grand or whatever it would be. When you
stimulate demand, but you don't increase
supply, prices go up. It's always going
to be the case. And what a unbelievable
business model for schools. You'd be
like, we have 18-year-olds who can
barely tie their shoes. They're still
technically effectively children and
[clears throat] they can sign a document
and get 200 grand that they just funnel
to us and we can raise the price by 20%
next year and they won't even care. They
won't even amazing business model. So,
of course, they did that and they build
towers and sports centers and whatnot. I
I I I think they're all well by and
large well-meaning people, but the
incentives of it were just so
unbelievably broken. Now, I can give you
the other side of the story. If you look
at debt interest payments and debt
overall as a percentage of income, it's
very low right now.
>> It's very low right now. It peaked just
during the financial crisis 2008 910
where it was very high and it's been
being chewed down ever since. And so
those
>> new people going in, not as an average
across everybody. an average across
everybody across all households
>> has already come down
>> has has been coming down for 15 years
and is at a level now that we haven't
really seen in 20 or 30 years.
>> Okay, this is
>> I I think I think probably a lot of that
well it's a couple things.
>> Uh some of it is bad which is that the
home ownership rate among the young
generation is much less than it used to
be and so they don't have mortgage debt.
>> They would love to have mortgage debt.
The best thing in their life would be to
have some mortgage debt but they don't.
They're renting which is not debt.
>> So that's part of it. I think there's
also a um in in in in a good way
um still the aftershock scars of 2008
that made a lot of people particularly
millennials scared of debt in a great
way uh particularly credit card debt.
Yeah.
>> And so their aversion to it there's
still a trillion plus dollars of credit
card debts and it hasn't gone away but
as a share of income relative to what it
was in the late 90s early 2000s is much
lower today.
>> H that's great news. I actually didn't
know that.
>> Yeah. Yeah. Uh that's
>> and here here's another thing. I've
written about this before and this gets
a little technical but government debt
as a share of GDP has gone way up. We've
we've established that
>> household debt and corporate debt as a
share as a share of their income has
gone down. And if you average those two
things together the whole pot all
economic debt government, private,
corporate, everything, all debt as a
share of of all income it's gone up. It
has gone up, but not not to the extent
that it has because the increase in
government debt has been muted a little
bit by the decline in household debt as
a share of income.
>> That's really interesting. Um, I don't
remember if it was Greenspan or somebody
else, but there was one time
where they were leveraging like I think
they had to clamp down on treasuries and
so but they knew that they needed to get
debt into the market to keep things
humming and so they really leaned on uh
corporate debt. Yeah.
>> And so it'd be interesting knowing that
that number hasn't gone up as much. I
wonder if they're still
>> Well, the number's gone up but as a
share of income that's a different
different story. And I think what you're
referring to is in the 1990s when we had
balanced budgets and the forecast was
balanced budget and surplus as far as
the I can see and Greenspan if that
forecast came true it obviously did not.
It was almost the opposite because
forecasting is difficult in the economy.
Yeah.
>> Um if that came true his fear was that
central banking wouldn't work because
there wouldn't have been enough debt to
engage in open market operations to buy
and sell debt. And so the idea was maybe
the central bank that maybe the Fed can
start buying corporate debt because
there wouldn't be enough treasuries.
Obviously we solved that problem by
trillions of dollars of deficits. So if
we don't have that issue now,
>> well they also did buy corporate debt.
That's the more
>> during the financial crisis. Sure. I
mean all those all those acronyms PPIP
and all these vehicles that they created
in 2008 to buy it. I I would say I think
uh if we did not this this might be very
contentious. I have a feeling you're
going to disagree with this so maybe
this is a good conversation.
I think if we did not have Ben Bernanki
at the helm in 2008, we would have had
the next great depression.
>> I think we got unbelievably lucky that
the guy who ran the Federal Reserve was
the world's foremost authority on
central banking during during the Great
Depression and uh had gigantic balls
during that time.
>> It's interesting. It's one of those uh
like you were saying about I look out in
my backyard and there's a forest and how
lovely that feels and so am I
heartbroken that they didn't bow the
houses? Not really.
>> Uh I wouldn't have wanted to see us go
through a depression obviously.
>> And at the same time if you don't have
moments of failure then the bad behavior
continues. Yeah. And I would rather
>> hard balance between those two.
>> Yeah. No joke. And I'm certainly not
saying that this stuff is easy, but I
would rather we let micro failures
happen constantly. Yeah. Rather than let
these huge failures, like I would even
rather go through a depression than go
through um states seceding from the
United States, which is like the path
that it feels like we're on right now. I
would rather go through a depression
than um us succumb to Thusidity's trap
because we need some way out of the
debt.
>> Yeah. Uh the just absolute
growing hatred between the left and the
right, populism in general to me is
entirely a result of debt and money
printing. And so all of that stuff I
think ends up with some percentage
chance. I rank it high, you rank it low,
but like some percentage chance of
tearing at the very fabric of this
country. Not in a way that we're going
to disappear. I do not think that. Um,
but I do think that history shows that,
oh, no, no, no. You constantly go
through these cycles of 3 to 5 years of
catastrophic warfare inside your country
or outside uh from the outside and uh
millions of people die. Yeah.
>> And that's just how it goes. And so
would I rather go through a depression
than millions of people die in war? Yes,
I would. The one counter to that is I
think a lot of wars
>> are are initially caused. The spark is
is depression. It's economic depression
that causes the spark. What's going on
in Iran right now, I'm by no means an
expert in the slightest in that. I'm
just a tourist who reads the headlines.
But
>> what really sparked the recent protests
is when their currency collapsed versus
the dollar.
>> You know, most people can put up with a
lot of [ __ ] in government as long as
they are gainfully employed and have
full bellies.
>> Yeah. Once you take that away, there's a
great quote from a from a Russian poet
who's talking about people in the
goolags. And he said, "You can turn any
saint into a monster in two weeks. If
you deprive him of food and shelter and
and warmth and whatnot, anybody turns
into a monster in two weeks." And so I
think I think a lot of that was in in
German. How do you take one of the most
peaceful civilized countries of Germany
in the early 20th century and turn them
into the absolute monsters that they
became in the 1930s and 40s. Well, a lot
of it is very very complicated, but a
lot of it is that comp their economy
completely collapsed, utterly collapsed
in the 1920s. Hyperinflation, everything
[clears throat] went to hell in the
1920s. Um and and there's a lot of
evidence that in that situation when you
completely deprive people of any
semblance of normaly or even food in a
lot of these situations they say what
else you got let's try something else
who's this guy Adolf over here he's got
he's same let's give him a shot
>> nice and charismatic
>> and I think there there's actually many
scenarios in which it came damn close to
that in the United States the fact that
FDR was was elected and we got FDR who
was a flawed man and it was very
unpopular at the time he's become less
popular or less unpopular over time, but
at the time, especially in the 1930s,
before he became the war hero of the
1940s, in 1930s, a lot of people hated
the guy. He was he was the picture of
everything that was wrong with America
and he was going to be he was the
emperor kind of thing. He was not a not
a popular guy in the slightest. And very
interesting thing, I I think about this
a lot. There was in 1932 a very
wellorganized
plot. It was called the business plot
where a lot of very wealthy business
people in America came together and
wanted to organize did organize what was
going to be a coup and they were going
to force FDR out of office and replace
him
>> with a marine general named Smemedley
Butler who would effectively
>> Smemedley Butler great name uh and he
would effectively become dictator of the
United States. And in an era where that
happened in Germany and Italy and go on
down the list of where that was
happening and as I said earlier, fascism
was not a dirty word at that point. Um
it came damn close to happening. It
didn't obviously
>> I've never heard of this
>> because it didn't happen. And so a lot
of people don't pay attention to the
things that didn't happen. They don't
pay attention to the terrorist attacks
that were thwarted.
>> I'll take some information on near
misses if I can get it.
>> Yeah. No, it's it's a very interesting
thing because it was very well organized
and funded by a lot of wealthy people uh
to do it. And so we know the story that
happened, but there's a lot of alter
alternative histories in which the
United States wouldn't have survived the
Great Depression. And so that's why
maybe to your point of you'd rather go
through a depression than go through
that. I think go depression very often
causes that
>> that war and misery.
>> Yeah. Yeah. No, there's no doubt about
that, economics is at the base of the
pyramid. All things spring forth from
the economics.
>> Yes. And speaking of uh what do you
think about all the trade warfare that's
going on right now between us and even
historic allies?
>> Here's the analogy that I've used and I
I think I stole I stole this analogy
from someone. I I can't take credit for
it, but uh you you're actually the the
expert here on food and nutrition,
whatnot, and very debate there. There
there's a lot of debates in nutrition,
how much protein you should eat, keto,
vegan, there's there's a lot of debates.
>> The one thing the one thing, ferocious
debates. I think the one thing everyone
agrees on is that refined sugar is bad.
>> Is that fair?
>> Yeah, even that you're going to have
people that say all that matters are
calories. But yes,
>> but am I am I directionally fair in
that? on the right one.
>> Economics is very contentious. What
should we do? Should we go left, right,
and tax rates? A lot of ferocious
debates. The one thing that almost every
economist agrees on from either side is
that trade wars are self-destructive and
tariffs are terrible. It's it's one of
the only things in which there is
bipartisan both sides agreement. It's
the equivalent of refined sugar. And I
feel like what a trade war is doing is
put your fruits and vegetables away.
It's time to pound pound some white
sugar. That's effectively what we're
doing. It's self-destructive
and um and
>> do you think it happens to
>> I understand why it happens. It's smart
politically because
>> get reelected.
>> What has every company and country done
in the last year? They come graveling to
Donald Trump on their knees and say,
"Please sir, can I have an exemption?
>> Please sir, what can I do?" If you're
seeking for power, it's a wonderful
thing. It's a wonderful sword to hold
over people. But economically, it's it's
always a disaster and always has been. I
mean, we've tried it millions of times
in other countries. Every there's been
trade wars for thousands of years and
we've tried it in the United States.
We've tried we've tried it all over the
place. It never ends well. And so, I
think it's self it's self-defeating.
>> Do you think that there is a necessary
reordering of the world order that needs
to happen right now or is this just a
maniac on the loose?
>> I think it's closer to the latter. Now,
I have a lot of empathy for people who
their jobs were lost to to China in the
last 50 years. And those people are
right to be upset. Of course, I'd be
upset. You'd be upset if that was your
life and that was your livelihood and
you felt like it got shipped away and
you want to do something about it. So,
you can have empathy for that and
understand why something needs to be to
change and also say this is not this is
not the way to do it. that the way to do
it is but a I think that this is true
for a lot of things in economics that
the era in the United States from
probably about 1950 to 1980
uh when the US had virtually a monopoly
on global manufacturing where there was
a lot of peace and tranquility at least
relatively 1970s of course were kind of
a [ __ ] show but by and large a pretty
good era that was the anomaly that was
not not the norm for which we should
expect to go down to that was the
outlier that was so many crazy
confluence of events that came together
that gave the United States this
unbelievable bounty of economic
prosperity that we enjoyed. And I think
there's a lot of damage that has been
done in the last 30 years or so of
assuming that that was normal and what
we're going through right now is
abnormal when I think the opposite is
true. That what we're going through
right now historically is probably
closer to normal. And what we had back
then was this unbelievable unsustainable
advantage that we will never go back to
again. And so when people want to
recreate
that old America when we had
manufacturing dominance with much higher
wages and whatnot, that was that was
such an outlier event that I think is is
very hard to to repeat.
>> Do you think it's something that we
should be aiming for or is AI just like
uh makes it unrealistic? Well, certainly
the [snorts] reason that garment
manufacturing and plastic toy
manufacturing was sent to China and
Cambodia and wherever else is is because
we don't want to do that in America and
we shouldn't because the wages are so
low that we would not want to do it and
no and and no one would be willing to do
it. You know, if we brought garment
manufacturing back to United States and
we had a sock factory here, you know,
the people would only there's two
options. You could either pay those
people a dollar an hour or socks are
going to cost 50 bucks when you cost
them or you know, whatever it would be.
Neither of those outcomes would be would
be acceptable to anybody in the United
States. So that that's why those
factories are shipped to Cambodia. And
what we're really good at in the United
States is very advanced manufacturing,
building airplanes and rocket ships and
things like that and tech
entrepreneurship. That tends to be what
we're very good at in the United States.
And people get, I think, caught up in
the idea of a trade deficit as a symbol
of unfairness. And the example I use,
uh, if I had a leak in my sink and I
called a plumber, plumber comes over to
my house, fixes my sink, I give him a
couple hundred bucks, whatever it costs,
the plumber probably didn't buy my book,
probably. Let's let's let's say the
plumber didn't buy my book.
>> Let's hope he did, though.
>> I hope he did, but let's say he doesn't.
I have a trade deficit with the plumber.
I gave him $300. He didn't give me
anything return other than his product
that he sold me, his his skill that he
sold me. I have a trade deficit with
him. Did he rip me off? No. It's a it's
a mutual exchange for someone. He had a
skill that I don't and I benefited from
him. It was a mutually beneficial
transaction. And I think that is by and
large what happens in global trade which
is that China is better at some things
than we are. They're better at low-end
manufacturing and they're willing to do
low-end manufacturing when we're not.
>> Yes. Heard totally. But do can you
understand why if you're a country
that's like okay I buy everybody's stuff
but nobody buys my stuff. Why? At some
point they go, I'm gonna I'm not even
gonna let my people buy stuff from you
unless you start buying stuff from us.
>> I think that can be a false notion
because we have a pretty big trade
deficit in goods. We have a massive
trade surplus in services. We sell a
huge load of services to other people.
>> Makes people act like that. I think it
is a very understandable that I can
empathize with yearning to go back to an
era that for many people, not everybody,
but for many people was better than we
have it today. And a politician made a
very smart logo off this make America
great again. The yearning to go back,
which can be colored by false nostalgia,
like in many ways it it wasn't it wasn't
as great as we remembered it to be, but
in some ways it was it was better. And
the yearning to go back to that I think
is always going to be very appealing to
the people whether it was them or their
parents who benefited from that era and
they feel like on the K-shaped economy
they're on the they're on the lower end
of the K. That's always going to be a
very appealing thing to it. I think a
lot of problems in politics is that if
somebody disagrees with you it is well
you're an idiot and you're uninformed.
That's the knee-jerk reaction without
asking well what have you experienced in
life that I haven't that makes you think
that? And if I were in your shoes, would
I believe the same thing? And I think
nine times out of 10, the answer is yes.
And so I can look at that yearning for
nostalgia and I can come up with 10
reasons why it's dumb and we shouldn't
do that. And it's false nostalgia to
begin with. I can also say if I was in
your shoes, I'd probably be saying the
exact same thing with as much fervor as
you do.
>> So I think that's that's a lot of it.
>> All right. Tons of uncertainty. You're
really good at helping people figure out
how they should be thinking in any given
scenario. How should people be thinking
about this moment with the fact that I
can't see the future, you can't see the
future, but there's a lot of like, oh
god, in the air, how should people be
dealing with this uncertainty? I'll give
you two answers, one technical, one
philosophical. Technically, and this is
what I do with my own money. If you are
only saving for the risks that you can
envision,
that you can put your finger on, you're
going to be caught off guard by the
surprise 10 times out of 10. And what
does the most damage by far in history
are the surprises uh Pearl Harbor, 9/11,
COVID that nobody sees coming until they
happen and do all the damage in the
world. The solution to that for me has
always been I have a level of savings
and liquidity and lack of debt that
seems excessive. And if you were to look
at it right now, you would you might
say, Morgan, what are you saving for?
Are you s like you have all this cash?
What are you saving for? And I say, I
don't know. I'm saving for a world in
which the biggest economic risk of the
next year is something that you and I
are not talking about. It's not in the
newspaper. Nobody's talking about it
because that's always the case, always
will be the case. So save an amount that
feels like it's excessive. That is the
only way in which you have a fighting
chance to survive the risk that you
can't envision. That's the technical
answer I'll give you. The philosophical
answer is there's a great quote that I
love, which is when you haven't engaged
with history, everything feels
unprecedented.
And a lot of what we consider
uncertainty today is the idea that what
we're going through is unprecedented.
And I think if you just become a loose
amateur historian of Western history in
the last 100, 200 years, whatever you
want to do, you will see that the cast
of characters changes. The plot changes
a little bit, but it's the same movie
over and over again. It's the same
amount of uncertainty. It's the same
greed, fear, overreaching. It's the same
thing over and over and over again. That
doesn't make things better or even not
even necessarily make you an optimist.
Although I think it can, but it relieves
a lot of the uncertainty when you're
like, we've done this a million times
before. And a lot of those times it
ended bad. It ended very badly. But
let's not pretend that this is the first
time that we've been dealing with these
things. It's not. And I think for me
that's made me I think it's made me
calmer and humbler. It's made me calmer
in the sense that if you think we've
never dealt with this before, it makes
it feel 10 times scarier. Whereas if
you're like, "We've done this. We've
done this before." And a lot of times it
ended poorly, but we've done this
before. And it's made me humbler in the
sense of at every one of those episodes
where it's been the same movie in the
past, uh, nobody was able to predict
what happened next. Nobody made it. And
so rather than sitting here and dwelling
on what might happen in the next 10
years, which I think nobody can know, I
would rather try to live in the moment
and hang out with my kids and go for a
walk walk and read good books and and
enjoy it without pretending. Cuz what
what a lot of stress is is like yourself
trying to um remove the uncertainty by
trying to create a narrative of what you
know is going to happen next. It's a
false sense of assurityity that you give
yourself to remove the uncertainty. And
I I just don't even try it. I don't even
try to do it. It's there. It's always
going to be there. We're never going to
get rid of it, so I might as well enjoy
it. Uh, eat, sleep, and be merry because
tomorrow we die.
>> Cheers to that, Morgan. Thank you, man.
I love spending time with you. Uh, tell
people where they can find the latest
book and how to stay current with you.
>> My three books, The Art of Spending, The
Art of Spending Money, Same as Ever, and
The Psychology of Money. Every half
decent thought I've had about money are
are in those books. That's where you can
find it.
>> And they are excellent.
>> Thanks so much.
>> For sure. Boys and girls, if you haven't
already, be sure to subscribe. And until
next time, my friends, be legendary.
Take care. Peace. If you like this
conversation, check out this episode to
learn more.
>> The only thing that's bipartisan is
reckless spending. [music] The Trump
administration is a lot more socialist
than what Mum Donnie is proposing.
Golden share on US Steel because Donald
Trump's so good at bankrupting casinos,
he should run a steel company. Budgets
and taxes are a reflection of our
values. And our values right now uh