Are you seeing signs that we're in an AI
bubble and therefore a economic
collapse?
>> The classic signs and that has
implications for the economy and it's
bad for the society and everybody loses
money but we also have some other things
that are going on that happen around the
same time and I can go through these if
you want please.
>> So what I'm saying is clear because I'm
a global macro investor
>> and you were one of the few managers to
foresee the great financial crisis.
>> Yes. And so right now we're very excited
about AI and we should be very excited
because it's going to be revolutionary
changes [music] but it's creeping into
almost everything. The way I look at it
is I look at the human body and I see
like it's replacing the body and so on
and then it replaces some aspects of the
mind levels of thinking and reasoning.
But at the same time we have another
problem that's existing geopolitics. I
mean that China is a larger trading
partner with most countries than the
United States is
>> and that's a changing of the world order
>> that is one of the ingredients right and
then also you've got large wealth gaps
the government don't have enough money
and so [music] when you have the
downturn then you have people at each
other's throats
>> so a lot of people they're thinking
about how to sort of secure their future
how do they all prepare
>> let me say that history has shown that
it's not the most intelligent people
that are the most successful but the key
thing to keep in mind is
>> this is super interesting to me. My team
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>> Ray, for people that might not know who
you are, you founded Bridgewater
Associates in a two-bedroom apartment in
1975, and you grew it to the world's
largest hedge fund. What was the the
total amount of cumulative net gains
that you delivered for those investors
over that period?
>> I think it was something like 53
billion. We produced about a 12% return
with no never any significant losses and
it was uncorrelated with other
investments. And you were one of the few
managers to foresee the great financial
crisis which allowed Bridgewwater to
post positive returns of 9.5%
in 2008 while the S&P 500 plunged by
almost 40%.
>> Yeah. Let me start with the thing that
I'm most curious about because I sat
here with an investor called Jeremy
Grantham who you might know.
>> He told me that we're staring in the
face of an AI bubble and therefore a
economic collapse potentially.
>> If you look at the data, it would be
compatible with history for the peak to
be very soon. Everything is in line.
This is I think the biggest investment
bubble in American history.
>> What's your perspective on that?
>> He's right. I don't want to jump to
conclusions as much as I want to explain
reasonings that lead up to conclusions.
I'm at a stage in my life that I want to
help people understand cause effect
relationships. What they call a bubble
is when the price goes up uh a lot and
companies do very well and then it
collapses and that has implications for
the economy. It has implications for the
markets like 1929 bubble, okay? or the
2000 bubble. Okay. Which is the dot
bubble.
>> Does it impact real people as well? Cuz
you said the economy.
>> Did 1929 bubble bursting impact
[clears throat] real people? Yes. The
great depression followed because what
happens is there's a new technology that
comes along that's revolutionary. The
dotcom bubble which was 2000 all the
stuff that we have that's wonderful new
technology. People get into that
technology. They say that's miraculous.
I can bet on that. I'm I'm sure it's
going to be successful and then they bet
on it and sometimes they borrow money to
bet on it and they lose sight that the
price of it matters. So it goes up and
up and it's everybody's thing, you know,
like right now we're very excited about
AI and we should be very excited because
it's going to be revolutionary changes
and it did at the same time. So I want
to buy some of that and everybody wants
to invest in some of that and what they
do is they don't pay attention to the
price and there's a certain mechanics.
People will borrow money. Wealth is not
the same as money. So you see a lot of
people getting wealthy but you can't
spend the wealth. You have to sell the
wealth to get money because you can only
spend money, right? So what happens is
when they need money for one reason or
another taxes change or interest rates
go up and so they have to pay their debt
service and so on there is a pricking of
the bubble so that what happens is it
falls. Okay. And when that happens,
people lose money. And as they start to
lose money, the process works in reverse
because uh when they made a lot of
money, they have a lot of collateral,
right? They can go borrow money because
they're worth a lot. And that compounds
on its way up. And then when it comes
down the other way, it works the other
way. Okay? Now you got to pay your debt.
And so then you have to start to sell
assets. And then there's less demand for
things, right? So there's less demands
because if you're losing money because
you put some money in the stock market
and that company and so on, you're going
to spend less. And as you spend less,
then somebody else's income goes down,
right? You don't go to the restaurants.
The economic downturns that typically
follow a bubble like the Great
Depression. The late 20s was fantastic.
If you talk about changes and and
experiencing, this was the first time
there was electricity in houses. So it
was the first time you would have
refrigeration and you would have
lighting in houses. This was the first
time that you had um cars popular that
you could get. First time airplanes,
first time you had radio and so
everybody knew that they were going to
be great in the future and they were
great in the future. But at the same
time what happens is as they buy them
and they stock socks go up and they
borrow money to buy them and so on um
and the profits don't live up to the
price then that causes this other
dynamic and it produced the great
depression. So let's say that I buy this
and this is a unit of artificial
intelligence. So, let's say I buy one
share in one of the big AI companies
right now. Because investors are so
excited about AI, they value this at
$100. This unit that I have here, they
say it's worth $100. So, my net worth is
now $100. I go to the bank because I
have this net worth, this paper worth
$100, and I ask the bank for a 50% loan
on this thing that I own. They give me
$50. Now, I have $50. And then something
happens in the economy which means that
the investors who have invested in this
and investors generally now need money
to pay off their other debts that they
have. So this could be a war, it could
be some kind of event that takes place
and suddenly everybody rushes to sell
their assets like this one. And so when
I go to sell this, the price of it has
now plummeted to say maybe $25. But I
took a loan at the bank for $50. So I
own the bank $50. But now this thing
that I have that was worth $100 a couple
of months ago is now worth $25 and I'm
$25 in a hole. So I have to quickly
sell. And then with everybody selling
all the price of assets dropped. People
stop spending money at the restaurants.
Like you say, there's less money around
and then the bubble has burst and we're
in this sort of declining.
>> You got it.
>> Okay. Good. All right. Fine.
>> And it happens
because it must happen. I mean meaning
in these tremendous uh changes uh
there's very little that's known. So
anybody who's in the business of making
AI uh can't be precise. They don't know
exactly how much money is going to come
in. Right? So there's either one of two
things. You either don't invest enough
and then the competition runs away or
you uh invest a huge amount and you
can't be precise. Okay. And so when that
dynamic happens it's a problem. So yes,
you said it very well. So I'm going to
repeat one other thing to emphasize.
What's quite common now is you can issue
stock for uh let's say you raise $50
million
and you value the company at a billion.
>> Only [clears throat] $50 million was
actually spent on that company. But now
if you raise that, you're a billionaire.
>> Mhm.
>> Okay. Because the accounting value of
that, what do you own? You own stock
that is valued at a billion dollars.
Nobody paid a billion dollars or
whatever it is, right? And now you own
that stock. But that stock um you can't
spend because you can't spend wealth.
>> Mhm.
>> In order to spend it, you have to sell
some of that stock to get money.
>> Yeah.
>> Right. And quite often there's an
interest rate rise because that you know
let's say as there's a fever and there's
an inflation then the central bank wants
to try to put the brakes on that a bit.
Okay. What does that mean? It means
people who have debt in a sense have to
come up with more money
>> because when you own the debt hold the
debt you have to come up with money to
pay the debt and that dynamic works
between us. We've said it uh clearly I
think we understand the dynamic. So they
they have to exist. Now we have another
problem that's existing. Okay. So we're
talking about the bubble. Okay. But we
also have some other things that are
going on that happen around the same
time. A big gap between the rich and the
poor and which also means the left and
the right, the politics of it, right?
Just as we have now. When you have the
downturn,
um then you have people at each other's
throat. So if we take politics, what you
see is this that they don't have enough
money. The governments don't have enough
money. We have big budget deficits.
Okay? Where do you get the money from in
order to pay those bills? The UK has had
I think six out of the last seven years
there's been a new prime minister. And
because there's not enough money for the
government and so what you start to see
is people come in with their claims. But
there's this how do we get the money?
And then people run who have money. They
say I don't want to be in this tax zone
that's going to be and then they leave.
And so there's a domestic political
problem that is not people compromising
the same way they used to compromise.
Right? So now you have the politics
which compounds this. And and then you
have a world this is what I call the big
cycle. You have a world in which also
the geopolitics changes. By geopolitics
I mean country to country. Okay. There's
a system under normal circumstances when
there's a more dominant power, they
impose their order and that becomes more
peaceful. But when you have um uh
arguments of how things should go, those
arguments start to turn into conflicts,
right? And so those things tend to
happen together. That's why I refer to
that as the big cycle, that dynamic that
is the confluence of the money, the
internal conflict politically and the
external conflict which is what we're
going through. And and the problem is I
think that people don't know the cycle.
So every day we go to our sources of
information and you see this latest
news, but they don't connect the dots in
in understanding that cycle. Closing off
on this point of the bubbles. What is it
that makes bubbles pop? So if we are in
an AI bubble at the moment and it is
going to pop at some point, what is the
like they call it a black swan event?
There are a few of them. There are
bubbles and then the things that prick
the bubbles. Okay, the things that prick
the bubbles typically in the beginning
are something that means that I have to
sell some wealth to get money and that's
usually a rise in interest rates. It
could be something like wealth taxes,
something that means I very wealthy, but
typically the tightness of money because
during that spot there's inflation
pressures and central banks decide that
they want to tighten monetary policy and
so on. It becomes that the um amount of
money that I can get by owning that debt
at the higher interest rates is greater
than the amount of money I could get on
my equity investments. That's part of
it. Also what you see is a lot more
production of stock and what I mean by
that issuance of stock. Think of that
the supply and the demand. There's
there's demand, right? And we've been
talking about the demand that makes
stocks go up. You know how we create
this wealth. But there's also um supply.
So you can issue stock. It's very issue
there. There's almost nothing that's
easier to produce than stock. So if I
own a company, I can just uh print more
equity.
>> Yes. Today you could probably go out and
say, "I'm going to make a company and
I'm going to take it uh public and you
go to your audience and your crowd and
you can say I'm going to make stock."
>> Okay? So it becomes when there's a when
there's a market that wants stock,
>> there's a production of stock.
>> Okay? And that supply of stock together
with the other that I'm mentioning the
the need for getting money and so on um
causes the um the the bubble to pop.
>> Are you seeing signs that we're in a
bubble?
>> Yeah. Yeah. Yeah. Classic signs that
we're in. And the bubble I should
emphasize it's not a um you're in a
bubble or you're not in a bubble. It's a
degree thing. Okay. There is also that
it's in weak hands. I can look at now
who is in these companies right and is
it in strong hands or weak hands classic
strong hands is that when weak investors
not knowledgeable investors then put a
lot of money into it particularly if
that's in a leveraged way
>> way with debt
>> with debt or they can buy an op a a
leveraged version of that like there are
ETFs now that are leveraged versions of
the stock market and they and so on and
so they get into that. It's more like
they're crapshooting. Okay? And then
that's a sign of a bubble. So I I've
listed a few of those signs. Those are
the major signs of those bubbles. And so
that when it goes down, then you get the
fear. Then you get the need I to raise
cash and that dynamic works its way out
in the form of then the reverse
happening. In other words, everything
becomes cheap and everybody has um the
spending and the things you mentioned.
>> If we are in an air bubble and it is
going to bust, you know, I had a friend
of mine contact me and he said,
"Stephen, I think we're in this an AI
bubble and he's running an AI company."
So, he said to me, "I'm going to raise
lots of money now so that when the the
markets come down and investors are
fearful, they don't want to invest in
companies. People stop spending as much.
They start thinking about their
subscriptions and start canceling
subscriptions, we're going to be good
and we're going to be able to buy up
some of our competitors who are going to
be struggling." So he's just raised um
hundreds and [snorts] hundreds of
millions of dollars for his AI company,
>> right? And it's probably like that easy.
>> Yeah, it was easy now,
>> right?
>> The question here is like what should at
different levels? So like the the
average Joe on the street up to
entrepreneurs that are running
companies, how does how do they all
prepare for an economic bubble that
might burst?
>> He's such a good example. And what that
does and just following it through on
what we were saying a minute ago is that
increases the supply of AI stock.
>> Okay. Yeah. because he sold stock more.
>> Yeah.
>> Right.
>> And so as he and others do that more
this greater supply of stock comes in
and and so he wants to get ahead of it
>> in that dynamic and then you know that
contributes to the bubble but um how do
they prepare? How does the average
>> I would also say something the future is
very unknown
and people should not be timing
sophisticated investors have a real
challenge even in timing a bubble so on
uh the important thing always is to
diversify now we're going to go back to
money the basics of money management and
I by the way I personally have gone
through the cycle because I didn't have
any money and then I did then I a lot of
money and I remember uh the cycle very
well. What happens is as you start off
um I used to count how many months I
would be okay a certain amount of money
how much m I would be okay if no more
money came in if I lost my job or
whatever I did I'd mostly never I worked
two years for somebody but in other
words if money didn't come in and it
would be months and then years and so on
to build that security because I take
care of my family and so on and So what
um as we're looking at these things,
these are the choices that you have in
order to be able to say, do I buy my
house or apartment? Do I put my money
into cash? And what happens to money is
you have to put it into something
because um they'll pay you interest on
it. Okay? So that's your cash deposit
and so on. And people think that that's
the safest. It's not. It's the worst
investment over a long long period of
time because inflation will eat it away.
>> You mean putting it in a bank? Just
leaving in a bank, please in whatever
form, a money market fund, a whatever it
is that is that shortterm, I'll deposit
it and it'll give me an interest rate.
Okay.
>> Okay. And that's what they think about
as cash. You know, nobody leaves it
literally in cash because if it's
literally in cash, it doesn't earn
interest. So why shouldn't I put it
there and get some interest on it? And
so that's cash and people think that
that's the safest. It has the lowest
return guaranteed almost to have the
worst return over the longer period of
time.
>> People keep cash because it feels safer.
>> That's right. And I'm saying it's not
safer because of inflation.
>> Explain that to me in simple terms.
>> Okay. Well, if I got no interest rate,
um then what I would do is I'd lose to
to the inflation rate.
>> And what's the inflation rate? Well,
three and a half or 4%
happens to be about where it is now.
>> A year.
>> Yeah. A year.
>> So that de at least $3.5 a year.
>> That's right.
>> If I just leave it in cash.
>> That's right. Okay. Now I'll get an
interest rate on it if I put it
someplace and it'll give me maybe uh an
interest rate that's somewhere in that
vicinity similar to that.
>> Three four five four%.
>> And then I have to pay taxes on it.
>> Oh, you have to pay taxes on the gain.
>> You're Yeah. Okay. Right. Even though
you really didn't gain relative to
inflation, you still have to pay the
taxes on whatever you've earned or
something anyway over the long term it's
a lousy return because also think about
returns also come from productivity and
over a period of time people learn how
to do things better and so on. So then
you can invest in let's call this stocks
okay that we'll call that the stock
market. this is cash and then you think
on the stocks and then the stocks can go
up or down um and then they have this
dynamic that we're talking about that
creates these big cycles and the busts
and those cycles when they go down um go
down um 60 70%.
Okay, that that's what a bare market
looks like. Woo! What a what a dive.
Okay, this is gold. That's gold and the
these are bods and this is your house
and that's uh Bitcoin. Okay, so these
are the choices. They each
um change for certain reasons. I'll
digress into that in a minute, but what
happens is they go like this when gold
goes up. Uh tends to be that the bonds
will go down in value or your house and
these change in a certain way. And so
the best thing to do is to have a
diversified portfolio of that. When you
have that rather than any one, you uh
won't reduce your return, but you will
reduce your risk.
>> And diversified means having a little
bit of each,
>> right? A certain amount. And you have to
know how to balance them because of
their volatility.
This one stocks is more uh volatile than
this one. And my own recommendations are
you start first of all with what you
need. Should I uh buy a place or should
I use that money and I could travel more
and so on. One of the advantages of the
house, the apartment and whatever is
it's your environment. Your environment
is important. It produces forced
savings. Sometimes that forced savings
is good. It is a it typically is taxed
better. it's a it's a better vehicle for
tax over a period of time. But I'm not
arguing for this alone, but I'm saying
when I'm looking at this, then I think
this one gold is um very interesting
because when all of these tend to do
badly, this tends to do well. Okay. So
it's a very effective diversifying
because this was money not until u 1971
and it's still the second largest
reserve currency. Central banks hold
reserve currencies. So it has qualities
that are different from this and this
has qualities like when the value of
money goes down because of inflation.
This
>> bonds okay and bonds are basically
lending the government money.
>> That that's right. If you lend the money
at a certain interest rate and then
inflation and interest rates rise,
you're kind of locked into that interest
rate. And so it has its own problems.
The more important thing I would say is,
you know, you save up and you say, how
many years can I live if money doesn't
come in? Okay. And then you take that
and you say, how could I be secure? So I
don't want to put it into one thing that
can go down 70%. So how do I diversify
that? That's my main headline.
>> A lot of people in the comments of our
last episode um they were asking this
like how does this apply for someone who
doesn't have much money, maybe doesn't
have any asset. Say they're 30 years
old. They um have I don't know $100
disposable income and they're thinking
about how to sort of secure their
future. What is the advice for someone
in that situation?
>> Your only asset is yourself and and I
guess what you're going to get from the
government. How do you sell yourself at
at getting a better income or how much
how are you getting money from the
government?
>> Mhm.
>> You selling yourself is the main thing.
This is one of the big problems now with
artificial intelligence and other
machines uh replacing people and and
different types of jobs. It becomes more
difficult. It produces that big wealth
gap while you're having more
productivity. Everybody wants more
productivity because it means how do you
produce things more efficiently but
that's um contributes to the income gap
because your productivity equals your
income for a large extent and then you
have the and you know the political
dynamic. It's tough to get yourself out
of this position that you mentioned. You
know I'm imagining that person. Okay.
It's not easy. there is this giant
polarity. If you're in the top 10% of
talent, let's say the world's your
oyster. But nowadays, in order to be
there, okay, that's that's difficult.
Find something that uh gives you the
ability to sell your time for good
money. Is that going to be that you're
driving an Uber? Is that going to be
that you have the talent and you're
going to be able to understand AI and
contribute that understanding to a
company that values that or what is your
skill? You found this. Okay. And and you
found the way. Okay. But you need money.
Okay. And the the thing that you want to
do, what you're doing, and I'm lucky
enough to do is to make your work and
your passion the same thing. And don't
forget about the money part.
>> Yeah. I amum I one of the things that I
I think I didn't realize earlier in my
career is that whatever skills you have
will be valued differently in different
contexts or industries should I say. So
for example say that my skill here and
I'm not trying to flat on myself but say
my skill here is working
>> having conversations right? Let's say
that's what it is. there's lots of
places I could have conversations and
those places would value my ability to
have conversations wildly differently
per hour.
>> Right?
>> So I often think this and speak to my
friends about this when they they tell
me their skills I say let's look at the
different industries and how they would
value the skills you currently have
differently. A good example again you
know you could be an Uber driver or you
could chauffeur radalio.
Now I imagine those two things pay
wildly differently but the same skill of
driving a car broadly speaking.
>> I agree with all that.
>> And so I think that's one way to just
you know the other way is you go ask
your current boss for a promotion but
again they're going to value you in the
context of their other employees the
market in that industry etc. So it you
might get 10% but you're not going to
see a step change necessarily. So that's
something that I always say to people.
>> Absolutely right. And another um law of
something and I think it's almost a law
of everything. It's a law if you
um buy almost anything is those at the
top
whatever the thing you're buying. If
you're buying a painting, a piece of
furniture, a piece of clothing, a a
person's time or whatever,
command premiums that are many multiples
of the average. It's almost like if you
could invest
10% more
of your time, your effort, your skill to
go up.
>> Mhm.
>> Okay. You will get
twice as much
>> for 10% better something like that.
Okay.
>> So that's part of the formula of life
and a formula of employment. And so if I
think if you keep what you wrote up and
what I'm bringing up in mine, that helps
you position yourself and know what to
do.
>> There should be a button just down below
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Thank you so much. We didn't mention
this thing here actually, so I probably
should talk about it because people are
talking about it a lot right now, which
is uh
>> Bitcoin
>> or Bitcoin.
>> What's your perspective on Bitcoin? I
know the market in Bitcoin is down at
the moment.
>> I have about 1% of my portfolio in
Bitcoin because there's different kinds
of money and the money that you can't
print, that's one kind. This is the
other kind of money that you can't
print.
>> Gold.
>> Yeah. You cannot crack it with
technology. You can hold it, you own it.
It's there's a saying that it's the only
financial asset that is not somebody
else's liability. Somebody has to give
you something for it. It has that. So,
in my category of wanting, let's say,
make sure that I have some hard money,
which for most people should be between
five and 15% of their portfolio. I
prefer that. I'm pointing to uh the gold
bars here uh rather than um the Bitcoin.
>> Is it still in your view a gold light
asset?
>> Yes, it's it's a type of money that
can't be printed, but
there are technologies that can um hurt
it. In other words, if there's quantum
computing and it can be monitored by uh
governments and so on, it could be taxed
and digital currencies are somewhat
similar.
>> But you don't like Bitcoin as much as
gold because of privacy reasons as well.
>> And when the governments say I don't
want it, they have the power therefore
to do whatever they want with it. And
central banks will not own any
significant amount of that because of
the reason I said they they want their
transactions to be private and in their
control. Think about how different it
would be for Russia. Okay? They
confiscated these kind of other assets.
Um they didn't get these
>> gold.
>> Okay. Gold. And so um what you're seeing
even particularly in this time of
conflict is um that there's a sense that
if I'm holding this others won't get it.
>> You mentioned a second ago the impact
you think AI is going to have on the
economy broadly but also again to real
people's lives. There's lots of debate.
I mean there's been a debate over the
last 10 10 10 years or so within the
world of AI. You had the big AI CEOs
originally saying that AI would cause
job disruption and that you know you've
even had some of the CEOs more recently
saying work will become optional in a
world of super intelligence. At the same
time we have robotics coming over the
horizon. So you've got this sort of
convergence of intelligence and then I
don't know you could think of it like
muscles like physical muscles or ability
at the same time. Um we're seeing AI
accelerate and its capabilities.
What does this mean for the average
person and their job and who's going to
benefit from this AI revolution in your
point of view? It means that you will
either be cutting edge and capable and
among that top fraction of a percent
down to 10% of the population who is um
cutting edge and using it and
accelerating or uh you will if you're in
a thinking job uh be at risk of being uh
replaced. We're coming into a world
where we can automate everything. The
evolution of man
was we had the agricultural era and
there was no real inventiveness and then
man invented the machine
and that the machine did is it replaced
man's physical necessity. So men used to
be like oxen in the agricultural field
and so on and they were replaced by
tractors. And then there was we entered
the industrial age. First you had the
printing press that allowed people to
learn and then you had these inventions,
the industrial revolution, the first
industrial revolution. And what you had
is the replacing the physical that man
would do in factories then and so on.
And so the way I look at it is I look at
the human body and I see like it's
replacing the body and so on and it's
coming up higher and higher and then it
replaces some aspects of the mind that
you can computerize and it's coming up
and up and it's replacing higher and
higher levels of thinking and reasoning.
Okay. So that path is part of the
evolutionary path that is happening.
Okay. So then you start to say what do I
have to offer? And so an answer to who
benefits from it? Those who benefit from
it are those who are um the capitalists
with the ideas that replace u the
workers. And so if you look at there's
revenue for businesses. When you buy
something in a store, there's revenue.
Okay? And if you look at the share that
is going to workers, you see that share
going down. And if you look at the share
that's going to those who own that
business, that share is going up.
That's, you know, how do they share that
revenue in terms of the cost? And you
see that that's rising. And so um this
is an evolutionary process and it's true
that what happens is you get more uh
free time. Okay. So now the society has
to think how do I deal with this? So for
example, the work week which used to be
you know a 60 or 70 hour work week goes
down to less than a 40hour work week and
there's more time but there needs to be
u you know how do you create a bottom
and so we're going through this phase in
which there is this upper end that is
making incredible amounts of wealth as
we describe and then this lower end that
is um then having these challen
challenges. We've have a relatively good
economy and the um difficulty of college
graduates to uh get employment has
increased significantly. And I can tell
you that in in many businesses, it
becomes more of a pain in the neck to
have a college graduate uh let's say do
it. They you have to train them. you
have to and and many of those tasks many
of that thing can be done uh very
quickly with the AI and with
computerization and as you get into
robotics you're going to have that h
happen right the speed of the disruption
that we're seeing because of the amount
of capital that's flowing into these AI
frontier models like the anthropics and
open AI etc etc is is quite different
from anything else sort of the
historical precedences we've seen
through the industrial revolution where
it took time to build the tractors.
>> There's an element of speed. What
happens usually is the bubble bursts.
>> Mhm.
>> And now you have the cyclical dynamic of
that while the technology, you know,
evolves. But the the supply demand and
the debt problem that we just talked
about then come in. And so unemployment
is due to you typically u some sort of a
combination of a financial crisis that
like we talked about the debt and stocks
going down and people not having
collateral and then therefore not buying
uh assets and that dynamic that causes
the unemployment rate that factor that's
the sort of economic reasons but in
terms of the AI agent robotics being
able to replace you I've sat with Dar
from Uber and Dar said that he imagines
in the future the 9 million riders that
they have around the world doing
deliveries will be replaced by
autonomous vehicles, autonomous robots.
>> Those 9 million drivers careers that you
have will be out of work conceivably in
the you know talking about being honest
about the situation.
>> Yeah, I think again it goes to physical
AI as well, right? So I think 20 years
from now you can imagine that those 9
million will be
20 million uh AVs maybe but we have time
between now and then partially because
we don't operate in the virtual world
right we operate in the physical world
you have to get the regulations up you
have to build the cars you have to build
the sensor stacks the the models have to
get there so there is time between now
and then but you can imagine the
majority of our trips being fulfilled
killed by robots of some kind.
>> The unemployment rate gets very
influenced by the bubble bursting and
the economy going down. You see that
spike.
>> You certainly have the evolutionary
change that you're referring to.
>> Okay.
>> Okay. In other words, there's this
evolutionary thing in which they uh like
he says um you know the tractor replaces
the laborer or the assembly line worker
is technology is replaced and that is an
evolutionary thing that goes
continuously for you know many years and
in the way that you're describing
because you asked about the unemployment
rate. I just wanted to emphasize that
the unemployment rate is very heavily
affected by that bubble bursting.
>> So, okay, you've got two forces at once
then. You've got when the bubble bursts,
everybody, as we said, needs cash. So,
they start cutting their costs. So,
that's when they start laying people off
and they start looking around their
company and go, "Forget growth. We just
need to survive. So, we're going to lay
off that team and that team and that
team." And then you see unemployment
going up. And then you've got this sort
of underlying shift happening at the
same time which is workers are replacing
their team members with AI agents or
robotics or in the factories they're now
using robots to do factory work etc. And
that's the sort of current slow march
forward.
>> Right? So I have this chart. Okay. What
this represents this line is the um
evolution of technologies. In other
words, we have greater and greater
learning and doing things better. And
that's the evolution that we're talking
about that also machines replace people
or replace their tags over that period
of time. Then you have this big cycle
which is typically lasts for about a
lifetime on average about 80 years. Uh
we went through that the last time 1945.
There are orders. There's a monetary
order. There's a domestic political
order. There's a geopolitical order.
Okay? You have the bubble bursting.
Okay? You have this. This is what we're
talking about. Um that dive and then
when you go through that, you break down
these orders. And when they break down,
then um you would get rid of the debt
burden. So you get rid of the monetary
system as you're used to it. you um may
get rid of the domestic order. Many
countries orders, their systems end. I
mean, they all end at some point. And
so, they can break down quite often in a
time of great internal conflict. Does
the system last and that happens at that
time. And so, that's that big breakdown.
But still, what you're talking about is
and and I and I agree with you, this
keeps going up. Okay? Because learning
you don't unlearn what you've learned.
So as this goes up and and you're you
you still keep this thing going up,
okay? But you have the big cycle, the
debt, the conflict type of movement. And
these little cycles are the cycles that
we see in this roughly on average, let's
call it an 80-year period, but um uh you
see the um you see the recession and
recession has higher unemployment
and so on. Then they stimulate monetary
policy. They make money looser. Then the
economy goes up and you have prosperity.
Then you go into a bubble. Okay, that
and you run lower on capacity because
you're using up the capacity. Inflation
rises, they tighten monetary policy and
then you have the re the recession that
follows. So these movements from one
recession to the next recession, that
cycle that I've just described on
average has lasted about six years,
uh, give or take about three.
So that's the way it looks. So I'll play
this back for you to make sure I
understand it. There is a sort of bigger
macro bubble which is over 80 years
which is the changing of the world
order. Yep. You get deeper and deeper
and deeper in debt over a lifetime. So
let's say your debt capacity you have a
certain amount. So the government's debt
capacity for example it can borrow when
you wipe it out here then you can build
it up and build it up until it starts to
squeeze. debt service starts to squeeze
out
>> and that's a changing of the world
order.
>> That is one of the ingredients, right?
So, okay, we have too much debt. At the
same time, what you're building up is
you're building up great wealth gaps
because capitalism, and I love
capitalism, but it's it here's the
reality. It creates big differences in
income and wealth. And when it does
that, that also creates differences in
people's opportunities because the rich
people can educate their children well
and they can give them all the benefits.
I mean, education is a big benefit.
That's why there should be broad-based
excellent education. But all of that
happens and so you see wealth gaps build
up. So like the industrial revolution
leads into the guilded age. Okay, the
guilded age looks a lot like now, you
know, people buying expensive things and
looking very gilded. And then it leads
to the robber barons. And the robber
barons are people who are considered,
you know, the um that they're uh taking
advantage the billionaire class and it
becomes that cycle. So that's the way it
works. So you've got this 80year sort
of, you know, boom and then there's a
collapse which sort of ends in conflict
and the changing of the new world order
and then within there you have these
little um bubbles which really economic
bubbles that go up and down, recession,
people get very excited, they they they
contract, they get excited, they
contract and then you have the the
straight line here which is the sort of
techn technological improvement across
the spectrum of ideas and technologies
and all these things and
>> it keeps going
>> and it keeps going regardless of this
boom and bust because as you say people
never forget I so a couple of questions
on this then I don't even know which one
to dive into first but let's go for I
guess just closing off on the last point
that I was I was getting at is there's
this narrative that there'll be new jobs
created because of AI and robotics and
everyone will be fine. A lot of this
narrative comes from Silicon Valley
>> who is producing the technology that
doesn't want to be attacked because
they're
>> making a lot of money. they may have an
act and they're in the good
>> desire to have a certain perspective. I
think objective
um people uh in Silicon Valley and there
are a number of them would say it's
going to have a big employment but you
you you can see it um in the wealth who
owns stocks and who doesn't own stocks.
Okay. Now if you own stocks
um um you're very happy now. Okay. And
if you don't own stocks, you're not
getting that benefit of owning stocks.
So that in and of itself creates a
greater greater wealth even aside from
employment. Okay. So there are these
forces to create the greater uh wealth
gaps, right? Roughly 61% of US adults
own stock in some form and most of them
hold it indirectly through their
retirement plan. Only 20% of Americans
directly own individual stocks or shares
through a brokerage account. While over
half of Americans own stocks, ownership
is heavily concentrated. The top 10% of
households hold almost 90% of the stock.
How do you feel about this narrative
coming from predominantly Silicon Valley
that there'll be new jobs created that
we can't yet forecast and everyone will
be fine? They point to the industrial
revolution. They say, "Look, when the
tractors came, we thought everyone was
finished. When factories came, we
thought everyone was finished. But look,
we figured some other stuff out
>> because if you look at that, this is
this what um thing I'm saying that as
your body is more and more replaced with
your mind, then you can do that. But
when your mind is replaced and your body
is replaced,
uh what is it that you have to sell?
>> What is it that we have to sell as
humans once our body and our minds are
replaced? what man has
um is emotions
and has
um intuitions. There are certain things
that artificial intelligence doesn't
have. And so if you have to get down to
what those things are
um you know does the um robot give a
good massage? does uh you know what is
it that is left and so we will wrestle
with what it is that is left. Okay. But
I think that for the foreseeable future,
those who can work very well where they
have an exceptional human intelligence
and work in partnership with the
artificial intelligence
that they are going to be at the cutting
edge of all of this.
I've got 60 seconds and I'm going to
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life. So if you had kids that were 16
years old now, Ry, and they said, "Dad,
what what do you think based on
everything you know about the future?
What should I be doing?"
>> First of all, there's the question of
what what what matters most in your
lifestyle. Uh so I'm going to get
philosophical, not uh assuming that the
highest income is the best. Okay? Um
because happiness,
you want happiness and health. And so in
answering your question, there's very
little correlation between the amount of
money you have and the level of
happiness that you have past the basic
level. And so I could be answer your
question first, which the obvious way is
to say to earn the most amount of money.
And I want to start off in saying that
um you know my experiences and so on is
um like I love being in nature and it
doesn't cost me hardly anything. I mean
it depends where your pull is and so
don't lose sight of your pull and what
it's about. What you want to do is you
want to get above the level that you uh
don't have to panic. We just earlier
discussed how many months can I live and
to be able to secure that and to be
excited and have that passion or that
whatever it is the life that I want to
have. So I just want to emphasize keep
in mind of that. But then also you know
my principle is make your work and your
passion the same thing and don't forget
about the money part right so know your
nature. Um, this is what I tell my
grandkids, okay? You have a feel and you
also have a nature. It's not just your
preferences. People think differently.
Some are more adventurous, some are less
adventurous, some are more conceptual or
artistic and can think with imagination
and they love doing that. Some people
don't like that. Some people want to
make life should be more concrete and
more certain and so on. That's your
nature. You're partially you're a lot
born with that nature and you also learn
it in your earlier years. We know this
of h how neuroplasticity works and so
on. So we are all on a journey to um
find the match between our nature and
our path and you find th that path but
you can't forget about this money part
when you're pursuing that path.
>> Don't forget about the money. So if your
you know grandkids came to you and they
said I want to become a lawyer would you
say listen that's forgetting about the
money because I think AI might take that
job or would you say yes? Would you if
they said I want to be
>> I think you uh
>> I want to do a thinking job.
>> Let me say that history has shown
that it's not the most intelligent
people or the most intelligent species
that are the most successful
and it's not no necessarily those that
work the hardest although these things
are very important. It is the those who
species and and people who are also most
adaptable and and so there's going to be
great change in your lifetime. Okay? And
so yes, today it's artificial
intelligence, but if you went back um
not long ago, we didn't even know
artificial intelligence would exist the
way artificial intelligence today
exists. And the future will be like
that. So when you're nailing it down,
you know, it used to be make sure that
uh you know how to um code and then
claude code comes along and all of those
who are coding um or worry about their
jobs. Okay. So what is it that matters?
Okay, it is um it is the approach to
life in a sense that produces that um
you know the the general understanding
and also the adaptability.
I think a lot has to do with knowing
yourself. That's why in building
Bridgewater uh the personalities of the
person were very important in what
suited their jobs. And then I uh built
this uh personality profile test. Then I
made it online for anybody to go take.
It's about 30 minutes. It's free online.
It's called Principles U. That'll tell
you a lot about your nature. Okay? But
your goal is to find that nature. And
what what are the paths? And there are
several paths and they're constantly
changing to find that nature. Okay? You
experiment, you learn. Okay? But you
know, you probably uh were pulled into
this job by your nature, right? And so
and and you made it work. And here it
is. It works in all of those dimensions.
And it's like that for everybody.
>> Yeah. It's it's it's interesting because
you look forward to the future. And I I
think if I was a young person at this
stage and I was trying to set out where
to aim my career, I would be more
confused now than ever before,
especially cuz they're also contending
with this uh unemployability crisis
amongst entry levels.
>> But if you're talking about you'd be
confused because you can't anticipate
the future, that's right. That's just
the way it is, right? And and if you say
what is it that I need given that
reality, okay, I need to I need to learn
I need to know how to maximize the use
of tools like AI to be able to in
increase what I know and how do I use
that to the best of my ability to be as
useful as possible doing things that
fulfill me.
>> Mhm.
>> Okay. So that's what you need to do.
You're asking what you need to do. Uh
just get over the fact that you don't
know what the future's going to be like.
So if you're looking for an answer, is
it going to be a computer programmer? Is
it going to be this or that? No, just be
maximize your ability to know which is
so easy to do nowadays, right? So
maximize that and then maxim use that to
maximize your usefulness and in jobs
that make you happy. And that's the
thing that that's the best I can give
you in terms of more my 16-year-old
that's the best I I can give them
because I I don't want to mislead them
that it's the thing that it's the
particular job. Okay. That'll mislead
them.
You talked about this 80year cycle which
results in this new world order and it
sounded like you were saying that near
the end of the cycle you see wealth
inequality and you see the guilded age
where some people have lots of nice
things and other people at the other end
are struggling and this is a function of
capitalism. First of all, um
it's a reality
that it's not only just a um a a wealth
gap difference and if the majority
system is not working for the majority,
well, you're going to have a problem.
And yes, it is um it's contributed to
these things where one wants to create
more opportunity through education and
through other basics that there's
certain level at a floor that nobody
should go underneath
because it's bad for them and it's bad
for the society. And just to embellish
on that point, my wife and I live in
Connecticut. It's the on a per capita
income basis, I think it's the second
richest state, but 22% of the high
school students have either dropped out
of high school or are failing with
absentee rates of greater than 25%.
And as a result, a lot of it is gangs,
shootings, drugs, and so on that leads
to a lot of incarcerations.
and the bill for incarcerations
has become uh larger than the education
budget. When you have that kind of cycle
and so on, the system has to work for
most of the people and and so on. So you
um you you have that um dynamic, but it
all comes down to productivity.
And so um the way I look at it is the
government run by almost anybody can't
make these things run well. I mean,
governments do not make things run well.
So, what is it like to give them the
money and expect that they're going to
make things work well? And so, you look
at this set of circumstances and you
say, who is going to make it work well?
And and I don't know the answer. And
these are budget considerations and so
on. You have to prioritize the things
that make it work well. And and you know
what that is? That is uh educating
people to be productive and civil. We
don't talk enough about civility, you
know, how you work together to be able
to achieve a a productive result. And
the way these cycles go, it's more
likely that they're going to have a big
fight and we're going to have, you know,
a debt problem and those kinds of things
than how we're going to come together
and work out how to achieve this
environment which takes care of
wonderful education and productivity of
people and all of that to make the
society work better uh for most people.
And that's the way it looks and that's
what's happened. Capitalism leads to
inequality it seems.
>> Yeah.
>> So
>> that doesn't have to. There are some
societies
um like in in Singapore, some of the
Scandinavian countries, some some
societies there is a a floor that
everybody
can have um good education, adequate
housing and adequate health care. The
foundations,
okay? Because if you go below those
levels,
the society will pay terribly for it
because those people will become
liabilities, not assets of the society.
They'll be disruptive. So, what about
wealth taxes? Because this is the big
debate now that the big debate in the UK
at the moment is tax the rich. It's been
all over our news over the last couple
of weeks. The big debate in New York and
LA is wealth taxes and tax the rich.
Good idea, bad idea. It's a very
difficult idea in the following ways.
I'm just talking about the mechanics.
They have to sell the wealth
and and that contributes to get the
money to pay the taxes. That's one of
those things that can cause the bubble
to burst as we're talking about.
>> And then [clears throat]
um operationally
it's very difficult unlike if they did
it as um stepped up tax basis. In other
words, right now when you die, your
capital gains gets put aside and you
don't have to pay capital gains taxes,
you pay inheritance taxes. And there are
ways that you can raise taxes and not
hurt the economy. But we do have to
realize that it will lessen investment
because what wealth is mostly used for
is to put it into investment. So you
have to do this with a at the same time
the improvements in those that are going
to improve productivity like education
and so on. If you're just making
transfer payments, wealth payments and
you undermine the productivity of the
society by doing that. In other words,
you're just giving it for consumption
and so on. And the money is going from
what was capital expenditures and those
kinds of investments that make uh a
better more productive society to go to
in a sense consumption and so on that
doesn't produce that pro productivity
that's going to be a problem. So you
have to think how do you make people
productive and how do you make your
society productive for most people or
you're going to have to find a way where
you say that other group of people who
is not productive um the overall society
can have a higher level of productivity
but we're going to still establish this
bottom that I'm talking about the bottom
in education the bottom in conditions
and then you have to say who is capable
of doing
building a uh a society that will be
productive.
>> And who is that?
>> Well, as I say, you have this dynamic
problem that um um typically a
privatelyowned,
capitalist
business will do better than their
government counterparty.
>> Okay? So, a business is more productive
typically than a government entity. that
system.
>> So entrepreneurship, you need
entrepreneurship.
>> Yeah. And capitalist, in other words,
people who are capable of making the
thing they're responsible for
productive. Okay. Run efficiently. Run
efficiently. So you need those
indisputably. And if you're doing that
in government, you need that in
government in order to be able to do it.
And government has its own uh it first
of all, it doesn't attract many of those
people. And then it also has by its
nature knowing many people have gone
into it, it it is almost dysfunctional
as it causes all of this arguing and
problem. So those who want to be most
productive tend not to go there and also
um it doesn't uh distribute well. These
people do not they're not on the ground.
They don't have the direct contact. They
don't know what it's like. And as I'm
describing, I see this politicians Yeah,
the politician who says I'm u I'm going
to you know so you still have to come
back to the question who's going to make
it run efficiently.
>> This is something that I've made for
you. I realized that the direio audience
are strivvers. Whether it's in business
or health, we all have big goals that we
want to accomplish. And one of the
things I've learned is that when you aim
at the big big goal, it can feel
incredibly psychologically uncomfortable
because it's kind of like being stood at
the foot of Mount Everest and looking
upwards. The way to accomplish your
goals is by breaking them down into tiny
small steps. And we call this in our
team the 1%. And actually this
philosophy is highly responsible for
much of our success here. So what we've
done so that you at home can accomplish
any big goal that you have is we've made
these 1% diaries and we released these
last year and they all sold out. So I
asked my team over and over again to
bring the diaries back but also to
introduce some new colors and to make
some minor tweaks to the diary. So now
we have a better range for you. So, if
you have a big goal in mind and you need
a framework and a process and some
motivation, then I highly recommend you
get one of these diaries before they all
sell out once again. And you can get
yours at the diary.com.
And if you want the link, the link is in
the description below. What is the UK
currently a cautionary tale of? It's the
classic cycle. They have gotten over
indebted,
underproductive,
and they've run out of choices. In other
words, there's not enough money. Okay?
And because there's not enough money
um to to do all the things, then they've
gotten this internal political conflict
going. And you've had uh six out of the
last seven years you've had a a new pro
prime minister because somebody else
comes in and they got their promise
and and the promise doesn't pan out and
it doesn't take long to be that that I
don't believe your promise anymore. So
you bring the people in and then you
throw them out.
>> We just had a new prime minister
yesterday.
>> Yeah, I know. I'm It's all part of this
cycle. And so what happens is they don't
have the financial and the people move.
It's just logical, right? It's just when
you're heavily indebted
and you're not as productive and you've
got large wealth gaps. What are you
going to do? It's politics. Um you're
going to say, "I can't raise taxes
because if I raise taxes, besides having
great in conflict, um people are going
to leave."
Okay? So, I can't I can't cut benefits
because those who are receiving whatever
those benefits are are the ones that are
suffering. I mean, what am I going to
do? Cut those benefits? So, now uh okay,
but wait a second, I'm running a big
deficit or I don't have enough money.
So, where does the money come from? How
do I get out of not getting more in
debt? And then what does that mean for
the person who's lending to you? They
don't want to lend to you, right? So,
you're not going to get the money to
finance the deficits. It's mechanics.
>> So, what is it they have to do to get
out of that situation?
>> They're going to have to have a, you
know, a major
restructuring. You're going to have to
um
>> go bankrupt.
>> Wipe down.
>> Yeah. Well, well, the the way the
central banks work now is they do a
mixture of printing money which produces
inflation and then restructuring the
debt in some way like maybe changing the
maturity
and and in these cycles quite often they
put in capital controls because they
think people are leaving so they don't
want them to leave and take their money
with them. So they put in capital
controls that says you can't leave with
your money. Okay? And they'll have exit
taxes and that's the type of thing that
happens until you know there's period of
great turbulence. Then you um through a
combination of restructuring the debt.
Restructuring the debt means like quite
often you lengthen the maturity of the
debt. Okay.
>> I think what's needed is a strong
middle.
>> What does that mean? Right now there's a
left and right and they're extreme and
as long as they're at war with each
other that's going to make things worse.
>> Yeah.
>> If you can find that middle course so
that those at most extreme
um
are more alienated than those who say
you know we're going to have to figure
this out together. And then what I would
do that leadership that core I would
have um something like a bipartisan
commission in which smart people meaning
who understand how economics and these
things work of both parties work
together to uh come up with a small and
difficult plan. In other words, you're
going to have to make difficult changes
in order to make that um work well. But
if you can achieve that, you know, like
sometimes in history, great leaders of
opposing sides have been able to come up
with a plan. I mean, that's how the
constitution was made. You come up with
a plan for operating that way and then
you impose those difficult changes. And
that when I say this, I I say that
that's very difficult and very long
shot. But um unless you have bipartisan
support, unless you do it in a way where
the pain is shared
um and there's a sense that there is a
um we're doing the right thing as well
as not a sense just a reality of doing
the right thing to make most people
productive. That is the best path
forward. If you were a young
entrepreneur,
you know, 21 years old, would you build
a company in the UK now if you had a
choice? And if not, why not? And if so,
why?
>> I would uh exist without and try to
exist without borders.
>> What does that mean practically? In
other words, put aside all of these
things that we're talking about to a
large extent and say where are the
places in the world that are that have
the vibrancy that have the capital that
have uh the elements that are needed.
There are bright spots in the world and
I'd want to be around the most
intelligence doing the most cutting edge
terrific things and be global. In other
words, don't be just stuck in a
provincial place. Go to these places
that are what I might call almost
renaissance states that are good things
are happening and these qualities exist
that not only good education, the
civility, the vibrancy, be in those
places, but be able not just in one.
There's a Chinese, not a Chinese Hong
Kong expression, I think that a smart
rabbit has three holes. And what it
means is like if the one place that you
go to uh it may not be the place that u
remains the best place there are riskier
places. The riskier places are those
that don't have the elements I mentioned
the education the civility the
productivity all of those things.
>> So would you would one of those places
for you be the United Kingdom? Cuz me
and my friends talk about this
sometimes. you know, I've got I've
invested in lots of companies there and
the founders come to me and ask me these
kinds of questions, which is is based on
everything that's going on with this
turmoil and the big cycle. Um, what's
going to happen if I continue to build
my company here in the United Kingdom?
>> I think that um I think the United
Kingdom as it goes through these
difficulties is as a whole a more
difficult place. And then there are
pockets of it that when they're
operating are in their pockets very
stimulative um having those elements
just like in the United States there are
places and pockets that have those
however they're within a system and a
place that is um not um not healthy. The
real dominant narrative we're seeing, as
I said this week, is that because
there's this problem, you said there's
not enough money. The the most popular
narrative, which I think is supported by
about 70% of people, is that people over
10 million net worth, there's this is
something proposed by one of my former
guests, Gary Stevenson, who did a
documentary last week, should have a 2%
wealth tax.
>> My preferred way is to stop people from
hoarding enormous amounts of wealth for
enormous amounts of time. That's my
That's basically my preferred method.
There's also the wealth tax method.
There's also capital gains as a method.
There's a lot of different ways here.
There's a lot of different ways here.
But you have to deal with the problem of
if you do not do not tax very wealthy
individuals and very wealthy families,
their share of the pie will obviously
grow over time and they will and they
are as we are watching squeezing out
ordinary families.
>> And this is kind of it would raise I
think it I think they said $20 billion
or something like that but it would
raise some money. Um so the the big
debate in the country at the moment is
yeah do we one way to raise money would
be this wealth tax. Proponents of that
or I should say um people that are
against that say people will leave. If
you took all of the money of people in
the in the top,
not in other words, taxed at a 100%
you're not going to come up with enough
money because it's such a small
percentage of the population and but and
but in addition, yes, the people will
leave. Then you change the laws so that
you make them retroactive.
In other in other words, you say the law
means you're going to be taxed as of a
past date so that if you leave
um we're going to get your money or then
you put in capital controls. All of this
has happened before. Wealth taxes would
be new. Wealth taxes are
administratively difficult because how
do you value all this wealth that is not
easily valued and such things? But yes,
what you've just said is um well
recognized.
>> You mentioned earlier that this big
cycle takes place, this one here on the
front of your book, The Changing World
Order, happens roughly every every 80
years.
>> Yes. It's like health.
What I mean is it varies on average,
let's say, what is the life expectancy
of a person? But life expecties or how
long people live vary. I wouldn't uh uh
emphasize too much u the amount of time
exactly as much as I would uh look at
your condition. Where are we in this um
at the moment in terms of the symptoms
or markers of the next big
>> well we're over in this vicinity over
here um you know we're on the and when
we say that um the US the UK number of
other countries are um later in that
cycle when there's the loss of the
things that we've been talking about
overindebed is more overind
indebtedness, the loss of power.
>> So, we're in the collapse period of the
decline.
>> Yeah, the decline. I'll call that the
the decline.
>> And you've studied this for how long in
terms of
>> 500 years of the cycles for 500 years
and in a number of countries. It's in
that book. These are objective measures.
This is not subjectivity. You can
measure these things. You can measure
the level of indebtedness. You can
measure the uh education levels and the
competitiveness. You can measure all
these things in clearly measurable
numbers that show the health just like a
physical exam.
>> When there's a new world order because
of this decline through history over the
last 500 years, has there ever been two
superpowers that emerged as the dominant
superpowers or is it just tends to be
one? In the past, prior to World War I,
there was no
World War I happened and then World War
II happened because the world came
together and there was one world
essentially. Before that, there were
regions and they would have the
different powers and you could have a
powerful China or India could be very
powerful at the same time as the UK or
uh the Dutch and whatever would be
powerful and they weren't in that one
world. And the basic issue is when you
have one world and you have
disagreements,
you're always going to have
disagreements. How do you resolve those
disagreements? Cool.
>> War. Okay. It does. Maybe it's not
physical war. Maybe it's whatever it is,
but there's a disagreement. Where does
the border lie? Where does this Okay.
The rulesbased
order is a theoretical
um conception of the United States
coming out of World War II because
there's the idea of how do you govern
and you have representatives and you
have them in the United Nations and so
on and you know that's a nice theory but
the reality is when that comes and is
inconsistent with power which wins power
or of that rulebased system. So by
nature to answer your question it means
tends to be a dominant power. We will
see China and I think the United States
I think the most likely beneficial
outcome is that it becomes more
regional.
Okay. China has no desire to occupy
control other countries for for various
cultural reasons and things that I can
go into and and they their basic
objective is to not be cut off, not be
harmed and then also be as good as they
can be and and be competitive following
their approach to a system which is very
much a top-down controlled system that's
an extension of Confucianism which is
like the family and that's what they
want to do. You can possibly have this
region thing, but you're not going to
have the dominant world power. If that's
the case, you have some chance that
there's a great conflict, but I think
that um there's enough wisdom in a sense
to um not want to go there.
>> So, there's always there's pretty much
always been a superpower through
different cycles. There's been one
dominant power through these historical
cycles. You're saying that you believe
in the next decline there won't be one
dominant power which has been the US for
the last 80 odd years. There will be two
because you you can't foresee there
being a conflict at the scale that would
result in one dominant power.
>> The strength of each country will be how
they take care of themselves.
uh are they going to be strong or are
they going to be weak based on how they
educate their population, how they spend
their money, how they manage themselves,
those will determine the relative powers
of those countries, right? And so
that'll be true certainly for the United
States and China. And so as we go
forward, how will those systems deal
with those issues in the best possible
way? and that I would say as long as the
United States remains a power but it's
in it has a risk of uh of having a very
bad set of circumstances through debt
and conflict and these things that erode
it'll be from within that those things
um particularly
uh could change that relative balance of
power and similarly if China managed
itself badly that could change that
given that if they both remain powerful
entities then what you're going to see
is um I believe more the recognition
that there are regions okay just like
the there's the Americas okay and that
becomes heavily much more the region and
where that spills over and then there's
the region um around China the um AP
apac countries um and th that region and
that there would be the development
within those regions and I do believe
the avoidance of the big war that would
be very uh detrimental. There are issues
like the Taiwan issue, but the Taiwan
issue will be handled by in my opinion
most likely not militarily
in the sense that um there will be a
great war between the United States and
China over it, but in the pressures that
are going to be created so that there is
a reunification of China.
>> You mentioned conflict though. The
United States are at war with Iran and
it seems to be a war that they can't
seem to get out of.
this is going to have an impact
presumably on lots of things you've
described here, but also the feelings of
people at home as you know we we face
the prospect of the United States
sending troops on the ground into Iran
because this the straight of Husse is
going to become this choke point to
global energy and they're going to you
know and what does Trump do about that?
He can't it's like Vietnam. He can't
leave or else he is going to look bad.
Um he if he stays he looks bad. midterms
coming up.
What's your thoughts on this war in
Iran? Do you think it was a bad idea? Do
you think it was a good idea? Do you
think it was Do you think it's Does it
play a role in all of this stuff here?
The US
>> police this war in
Iran, I think it here's what's happening
internationally. I I I get speak to
world leaders and and so on and and
particularly uh in Asia. there's a a
recognition that um the United States uh
doesn't want to uh fight a war. So the
the lipmus test is uh do you who
controls the straight of Hermos and that
the United States um because the
population in the United States is
worried about uh gas prices and losing
people and and they want it to be all
over fast that uh you can't fight a war
that way. And so what you have is the
United States will not show up in Asia.
>> What does that mean? Show up in Asia.
>> In Asia, there are all these countries
who believe that the United States was
going to play an important role as a
counterbalancing
influence for power in the region
because China's the dominant power and
the others are much less power. And so
the United States being in there was
going to balance those power. And
because they have a military presence,
the idea of having bases in their
countries was believed to be that will
help that happen. Okay. Now there's a
recognition that not only they might
show up but maybe these bases can become
liabilities and that the uh Chinese have
a lot of influence and power under that
set of circumstances. For example, uh
chips come out of Taiwan. We could
imagine what would happen if they
blockaded chips leaving Taiwan. Okay,
you'd see the world stock markets crash.
you would see terrible, terrible things.
That represents a non-military power.
Just even the ability to threaten that.
Say the Chinese say for 5 days we're not
going to have it. What will the United
States literally do? Or if you go to U
countries like the Philippines, which
has a treaty with the United States
that's like a NATO treaty, how would the
American public react that we're going
to send um military, you know, aircraft
carriers and so on into the Philippines
to stop the Filipinos from being picked
on by the Chinese. I mean, so what
you're seeing is a change that is very
similar to the British Empire in terms
of um being uh weaker. I remember a time
not long ago that um the United States
would just have to almost hint to a
country that we would like this thing it
it to be this way or you would like it
to do that that and they would do it
because of the American power. not just
military power but economic power and so
on. Well, as you're seeing that power
being eroded, for example, China is a
larger trading partner with most
countries than uh the United States is
or capital turning up. So, uh these
things matter. So, you're you're seeing
that kind of a shift in power. I'm a
global macro investor and my goal is to
be as accurate as I possibly can. I
can't let biases stand in my way of
doing that. So I look at statistics and
measures and indicators and so on. So
what I'm saying is clear. It is you know
it's apparent it's mechanics.
>> So what does that mean for the Iranian
situation then? Does it mean that?
>> Well, it means that it's a very very
difficult situation. What what is all
through history and the Chinese know
this very well because their way of
having a war is conveyed in the art of
war and also the tribute system as they
call it. You cannot easily go in and
control a country for a long period of
time occupying there are you know 90
million Iranians and they will be there
no matter what happens. Now the question
is, do you have what it takes to um take
control of the straight of Hormos by way
of example and allow in other words do
you allow that to be in the hands of the
Iranians or do you not and are you
willing to pay the price to be able to
um put yourself in the position which
means take a lot of pain and then um
enforce that for the I don't know
forever and ever future because it's not
just take control today. It means okay
how is that going to go on and what does
that mean in these other locations? Does
the United States they're going to do
the same thing with the Chinese and
Asia? They're going to do the same thing
all around probably. Okay. So what does
that mean? Okay. A change in the world
order.
>> It sounds like a big mistake.
>> Oh yeah, it it was a big mistake. And
also what it did is it shown a light
on the vulnerability before it didn't it
wasn't apparent
>> vulnerability of the United States in
being able to enforce you know when
there's always the threat we'll come in
there uh the the strait is open we're
not dealing with this and there's always
the threat that the United States will
uh remain control and that would be true
in Asia and other places. Now a light
bulb goes off. In other words, the like
the British in uh the Suez Canal, we
didn't realize. Now we realize
>> that threats no longer work
>> that that power no longer exists.
>> I guess we shall see. Ray, thank you so
much for uh committing this season of
your life to being more of a public
educator because your books here that
have been read by millions, millions and
millions of people and the videos that
you produce that have been watched by
tens and tens, hundreds of millions of
people um have been so formative for so
many of us understanding the world in
simplified ways. And what I love about
the work that you do is you explain the
world through principles versus tactics
and strategies which are a little bit
more ephemeral than understanding the
underlying principles. And I think it
does two things. It helps us understand
the world in ways that are allow us to
see past the current short-term moment
that we're in. But it also helps us
think generally um from a more macro
perspective about how all these things
connect together. And I think that's
broadly applicable. The idea of like
principled thinking is broadly
applicable to all areas of life, whether
it's your relationships or your business
or your health, whatever it might be. Um
you've really written the definitive
books on this subject matter. I've got
all of them here. Um, I mean, Principles
is the first one that I ever read, but
then I watched all of your your videos
on your YouTube channel which uh explain
it in animated ways. Those are
absolutely stunning videos. They're
unbelievably stunning videos. And I It's
funny cuz, you know, I've watched a lot
of videos, YouTube videos in my life,
but there's some that I have just never
forgotten. And your book and your video
are about the book on your YouTube
channel, which I'll link to below, are a
video on YouTube that I've just never
forgotten because it suddenly helped me
understand the bigger picture.
in a way that I don't think I would have
ever understood otherwise. There's no I
didn't go I didn't go to my history
classes in school. Um I'm never going to
read history books necessarily. So um
that video you made but also the book
itself really helped me understand
there's always a bigger picture. And
funnily enough I go looking for the
bigger picture and the cycles should I
say in all the other facets of life and
psychology because when you're dealing
with humans you are dealing with cycles.
That's what I've I've come to realize
and you can find them and spot them
everywhere and then prepare for them
accordingly. So, thank you for the
wonderful work that you do in this
regard. I'll link all of these books
below. Highly recommend reading them and
they're not for buffins or super smart
people. They're for everybody and
they're written in such a way. So, I
appreciate that.
>> Thank you for saying that. I find the
videos are very digestible.
>> One, how the economic machine works.
It's I think it's 30 minutes and it's
been watched by 140 million people
>> and and people get it. So I think it's
my responsibility to try to communicate
also in a clear simple digestible way.
So I like to take a concept that's in a
book and make it into a 30 which is to
try to pass along what might be helpful
to people. So thank you.
>> Thank you for committing your the season
of your life to that. I really
appreciate it and so do many millions of
my listeners. So thank you. YouTube have
this new crazy algorithm where they know
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