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 By a world order, I mean the system that's in place run by the people who have the power and then they determine what the system is like.
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You change orders usually by wars.
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And what do you believe will happen if we don't prepare for the changing world order then?
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I think that there's better than even chance of
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 I'm bad.
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Welcome to the School of Greatness.
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My name is Lewis Howes, a former pro athlete turned lifestyle entrepreneur.
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And each week we bring you an inspiring person or message to help you discover how to unlock your inner greatness.
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Thanks for spending some time with me today.
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Now let the class begin.
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Welcome back, everyone, to the School of Greatness.
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I am very excited about our guest, the inspiring Ray Dalio is in the house.
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Ray, good to see you, sir.
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So good to be here.
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 You have this incredible new book out, Principles for Dealing with the Changing World Order.
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And I want everyone to get this because it is full of such rich information and context to really your predictions of the future based on what has happened in the past.
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 And you have been dealing and understanding with the ideas of wealth, money, management, investing, and really how nations have been shifting this wealth over many years.
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And you've been analyzing this for a long time.
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And all the content you've been putting out there lately has been blowing people away.
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Some people, it's exciting them.
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Some people, it's terrifying them because they're not sure what is coming.
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 But you really share that there's three main things that we should be paying attention to right now.
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And one of them is that the printing, the abundance of printing with money right now.
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And you talk about this concept that cash is trash.
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Can we start with kind of this first principle that you've been talking about and what we should be aware of that's coming?
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Sure.
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To put that in context before we get into the cash part,
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 Yeah, I'm I'm a global macro investor and economics, markets and politics and geopolitics all matter.
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And there were three things that are happening.
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You pointed them out.
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Three things that are happening in our lifetimes that never happened in my lifetime.
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 or our lifetimes and that I learned before I have to study past periods.
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And those three things, as you point out, are the creation, a lot of debt and money.
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The second is the amount of internal conflict that we're having over money and values and what that's like.
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And the third is the changing world order with countries like China and Russia
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 competing with the United States in a way that didn't exist before.
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Back to the point that you're making about that money, it's a basic thing.
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Everybody agrees we need more money and we need more spending.
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But if you spend more than you earn, you have to borrow, and that creates debt.
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 But that at first it's credit.
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So it gives you buying power.
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Right.
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But you have to pay it back.
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And that becomes depressing.
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And so in order to avoid that.
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 Central banks can print money and buy it back, right?
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But when they do that, that depreciates the value of money.
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So what we had was a lot of money and credit go out to a lot of people, a lot of buying power.
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Everybody, when they got it, they thought, oh, that's great.
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And somehow they seemed surprised that when they spend it, the prices of everything go up.
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 OK, but the truth is that if you divide the amount of money and credit that's used for spending by the quantity of goods produced, you can calculate, well, the prices will change.
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And so that's what's going on.
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And that's what went on in a giant wave, the Federal Reserve and the government together, a giant wave.
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 And that produced a giant amount of inflation, a giant amount of inflation.
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Is it eight and a half percent right now?
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Is that what it is?
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Yeah.
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Well, it depends.
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I mean, if you, it depends which number you're using.
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It's, um, uh, between seven and a half, if you use year over year, or if you take, um, the core inflation rate, it's closer to 12.
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 And it's rising.
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There's some temporary influence, but it's basically because of the amount of spending.
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You can measure the amount of spending, not because of the bottlenecks.
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And for people that maybe are hearing this inflation and have been hearing this recently before we finish the first point,
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 For a lot of people, when I grew up, I never understood what inflation even meant.
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They didn't teach this to me in school.
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They weren't teaching this to me in high school, college.
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It really wasn't a thing that I learned.
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I just heard it and knew that people were worried about the cost of things increasing.
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Can you explain what that actually means to us?
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For someone who's making $70,000 a year in the Midwest, what does that mean to them?
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 Buying power is what matters, right?
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And so what happens is when inflation goes up faster than your other sources of income, you lose buying power.
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But what happens is somehow that seems more acceptable sometimes to people.
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 than if it was just taken out of your pocket.
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You see, if they, let's say, raise taxes or take it out of somebody's pocket, everybody complains whoever's had the pocket taken out of.
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But if it comes through printing of money and everybody gets checks, it's more acceptable.
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But what happens is those who are holding
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 money like money market funds and bond funds lose the buying power of that.
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So think about those bond funds.
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Those bond funds are like down about 10% and inflation is up over, let's call it 8%.
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So they lost 18% of the buying power.
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So it releases, it relieves debt.
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 We think of it as meaning higher prices, but to some extent, that's a rich man's perspective because they say, oh, now I have to pay more.
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But the reality is you don't get more stuff from that higher inflation.
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And so it bids it out of the hands of some people.
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 And that hurts the people who don't get it.
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So that's what's going on.
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You lose buying power.
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And so we're seeing a time now where you're going to lose buying power to inflation.
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And now you're going to see the Federal Reserve also tighten money, tighten money and credit, and raise interest rates.
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 And when they do that, that creates less buying power, because when they you know, they say, OK, now you can't spend as much money and the prices are going high.
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But they do that in their crude way of trying to reduce inflation.
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But you get it from both ends, the higher prices and then the higher interest rates you have to pay.
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And
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 And also, and the higher debt service costs, and also less availability of money.
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So it's a squeeze, like the squeeze that happened in the 1970s.
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So does that mean, I mean, if someone is hearing this and they're thinking, okay, inflation is going up, the buying power is going down, there's a squeeze.
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 Is this going to happen for five years, 10 years?
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Is it eventually going to level out?
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What should we be expecting, do you think?
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 a relatively long time because everybody's mindset is in a paradigm shift.
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Everybody's mindset is in a certain place and they're doing certain things.
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For example, investors think that cash is safe and they don't pay much attention to inflation.
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 And then what happens is they get inflation and they realize that if I'm holding cash, I'm losing buying power.
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So then they shift, they sell out their cash or they sell out their bonds and they put that into other things.
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And when they do that, that also contributes to inflation.
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Changes like that also happen in a lot of ways.
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Like,
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 Cost of living increases in compensation.
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Where in the past, when they don't worry about inflation, then they don't think about, do I have an inflation-linked contract for my worth?
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 or do I have enough inflation assets?
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It might be, oh, do I need to buy, I'm gonna store my money in a house or I might store my thing.
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And so that pendulum swing from one mindset and one positioning to another mindset and another positioning in the early stages tends to be self-reinforcing.
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Those actions produce more inflation and more inflation psychology.
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 until that goes to the opposite extreme.
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 You know, like in the 1970s that people were surprised about what happened because they weren't used to inflation much.
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Then you had the inflation.
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And in the beginning, it swung.
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And then at the end of it, they said inflation will never end and everybody's position for it never ending.
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And then, of course, what happens is it's so bad that then the central bank goes the opposite extreme and then they get surprised.
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 And so the 80s was a period which was the exact opposite of the 70s, where you have falling inflation, high real interest rates, and so on.
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And so the worst assets to own in the 70s were bonds, and the best assets to own in the 80s were bonds.
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So you see these pendulum swings that way.
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So what would you say are the best assets to own in this decade?
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 Well, the best assets to not own, that's the most important thing, I think, is cash.
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 and quoted cash is trash.
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There will be a tightening here for the time being, and that tightening will have an effect.
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It'll hurt asset prices and so on.
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But cash is not the asset to hold, and bonds are not good to hold, in my opinion, because it's debt.
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It's owning somebody's debt.
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And you won't get a return.
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Think of it, the interest rate will not,
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 reach the inflation rate.
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So that's the problem.
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So you'll have that along.
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Then what you have to have, I think most importantly, is a well-diversified portfolio of other assets.
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Diversification is a very powerful tool because it can reduce risks without reducing expected returns.
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 Now, there's lots of ways of getting what you think good investments are.
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They might be things you know about and local businesses and so on, or they might be stocks or they could be maybe a little gold or maybe a little bit foreign investing.
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Diversification is very important to do that in a balanced way.
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So I would generally say that that would be what I would recommend.
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 And for most people that really don't have that much savings yet, maybe they're, again, at the early start of their career, they haven't really saved that much.
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SPEAKER_00
Maybe they're in a little bit of debt even.
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SPEAKER_00
 Is now the time to start investing or is it more just save up some reserves for six months to have some cash to live your life before you start investing?
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SPEAKER_00
Or is it important to build the discipline and the habit of investing 50 bucks a month, 100 bucks a month in a diversified portfolio, no matter how much you're making?
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I remember going through this.
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 I didn't have any money.
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And when was this?
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Right.
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Oh, this was 1982, 83.
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I didn't.
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I had to borrow four thousand dollars from my dad to help to take care of my family bills.
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So but so I remember thinking,
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 How many weeks could I live if I lost my income?
0
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And I started counting in weeks and I would try to go out because if I got hit.
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So I think I think that's the way to do it.
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You know, you start to count how many weeks.
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SPEAKER_01
 Can it be a month?
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Can a year?
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Can I get up to a year?
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I didn't like that because of the fact that there's an obligation.
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And it's like, oh, if I get that, I'm going to be drowning.
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I'm trying to keep my head against water.
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This is just my own bias.
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But anyway, count how many you can and then assume that it's buying power over the next number of years can fall by
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SPEAKER_01
 3% or 4% a year, or if you put it in a risky investment, like stocks or something, it can probably buy more.
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So cut that number maybe in half and have twice as much, because you have to understand that that's your freedom.
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That is your safety.
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So that first band you must take care of, that first band, take care of that.
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 Once you get past that and you feel, okay, I could take care of my family and I could take care of mine in a worst case scenario, then you have the freedom to then take other kinds of risks.
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But when you're building that portfolio, it's the same thing as when you have a lot of portfolio past that, just you want to diversify well, because you could see what happens to the markets.
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Every market
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 stock market, bond market, most markets have had times where they've gone down over an extended period, 60 or 70%.
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So in buying power.
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So I think diversify, count that and build it and realize that's your saving.
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One thing I do for my clients,
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 for my kids and grandkids and always did, or as long as I could start to afford it, was for every holiday, like Christmas or their birthday, I would give them a gold coin.
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And I said,
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 I never want you to sell that gold coin until there's an emergency, a real emergency, never because you want to buy things.
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And the reason I did that, and they'll build over a period of time.
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 That'll that'll build something.
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And I said, don't even sell it.
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You pass it to your kids unless there's an emergency.
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OK, and so you're building that savings because I think we so easily spend so much money on junk.
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 You know, so anything that I would give them, whatever it would be, I don't know, a piece of clothing, a thing of a jig, a toy or something will probably be gone in a year.
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OK.
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And so the power of staving and, you know, and that resource, the relief it gives you and the power it gives you is so great.
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So, yes, save it, diversify it.
0
SPEAKER_00
 I want, I'm going to, I'm going to continue to stay on this topic, but also go off a little bit because you mentioned how, I guess it was 40 years ago, you, you lost your money and you had to borrow 4,000 from your father to just kind of survive and pay your bills.
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SPEAKER_00
How much money had you built before then, before losing it?
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Uh,
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SPEAKER_01
 I don't remember.
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It wasn't like it was a ton.
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SPEAKER_01
I was fairly early in my career.
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I had a small investment business.
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SPEAKER_01
I don't remember what it was exactly, but it wasn't a ton.
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SPEAKER_00
I'm curious how you, from having some money to losing it, how you then went on a 40-year, four-decade run of
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SPEAKER_00
 getting to where you're at now, was there something in your mindset that allowed you to believe in yourself still?
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That didn't say, oh, I've lost it all.
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SPEAKER_00
I don't believe in myself anymore because I just ruined my finances.
0
SPEAKER_01
That extremely painful experience
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 was probably the best experience of my life.
0
SPEAKER_01
Really?
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And it changed my way of thinking in ways I'll describe.
0
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But let me say, before that, I didn't have much money.
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My dad was a jazz musician.
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My mom was a stay-at-home mom.
0
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And I felt, of course, rich.
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I had two parents who loved me.
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I went to public school.
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And then when I was a kid,
0
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 I did odd jobs and I caddied.
0
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And so when I put in the stock market when I was 12 and I got hooked on the game, so I never had much money.
0
SPEAKER_01
But then I built up some and then had that experience.
0
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And so that experience, which was also a very public experience, was very painful.
0
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But it changed my approach to decision making in really a profound way.
0
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First,
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 It gave me the humility and fear of being wrong that balance my audacity to double check myself and, in fact, try to find the smartest people I could who disagreed with me to have them stress test my thinking.
0
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 So I'm never sure if I'm right.
0
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Like my track record of being right is probably 70 or 75 percent ish somewhere in that 70 percent, let's say something like that.
0
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And I'm I'm used to being wrong sometimes and and it's painful.
0
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So the stress testing of my opinions gave me an open mindedness to learn a lot.
0
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 And also diversification.
0
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I learned how to diversify without reducing my risks.
0
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If I could take a lot of uncorrelated bets, the return will equal the average of those bets, but the risk can be up to 80% less.
0
SPEAKER_01
And it changed my, it really caused me to reflect because I remember thinking to myself, it felt like, you know,
0
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 I was sitting next to a jungle and I could sit on the safe side.
0
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There's always risk in return.
0
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And and what would I do?
0
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Would I have a less great upside and be safe?
0
SPEAKER_01
 Or would I go through crossing this jungle at which things could kill me or whatever in an attempt to have a great upside, a great life, a great upside?
0
SPEAKER_01
And so that puzzle led me to do the things I described, but also I knew that I had to go have the great upside.
0
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 and not be constrained by the risk.
0
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And so I did the two things that I've described.
0
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But going into the puzzle, I found that it was great that to find people who could see things that I couldn't see, and vice versa, so that we were on the mission together, because people see things differently.
0
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 I learned how people see things differently.
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Somebody will spot this or that.
0
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And then that back and forth helps you make better decisions.
0
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And if you're on the same mission with them.
0
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So one of the things I wanted was this meaningful work and meaningful relationships.
0
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 And I found that that was so good that when I, you know, sort of got to the other side, like, you know, I had enough money and upside or whatever, I still wanted to stay in the jungle.
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SPEAKER_01
And I still wanted to do this because the act of of of doing that with people that I was doing this meaningful work and meaningful relationships with was rewarding in and of itself.
0
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 as well as success.
0
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So one of the things that you can learn is that you can see through other people's eyes.
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That doesn't mean you accept what they say blindly.
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It's that you think about their reasoning.
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And if you do that, that's good.
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It also gave me a principle, which is one of my fundamental principles, which is pain plus reflection equals progress.
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Okay.
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 We have this pain, whatever it is.
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And OK, the reaction is a negative reaction and can almost be, why did that thing happen to me?
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And and so on.
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If instead, when one calms down from the pain, there is a lesson there about how reality works.
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SPEAKER_01
 Okay.
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SPEAKER_01
It happened.
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It reality works that way.
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And then, um, there's a thought, how do I deal with it better to produce better?
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What's my lesson.
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 And if you acquire that, I used to acquire, I would acquire that.
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I still acquire that.
0
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And then I wrote them down as principles in my books.
0
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That's why the collection of principles, it's like a journal, pain plus reflection equals that.
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SPEAKER_01
And then you write down the principle like a, and that's what the collection of principles came from.
0
SPEAKER_01
That has, so that event, that painful event was the basis of going from, you know, where I was, which was broke,
0
SPEAKER_01
 um, to, you know, where things, uh, where I am and where I'm transpired, which is trying to pass along my wealth and, and my advice to others now.
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SPEAKER_00
And your wisdom.
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SPEAKER_00
Yeah.
0
SPEAKER_00
I'm curious, how long did it take for you to intrinsically not be afraid to take those actions again, or, you know, build again?
0
SPEAKER_00
I'm faced with the choice.
0
SPEAKER_01
 OK, like I mean, literally at the time, was I going to, you know, put on a suit and tie and get on the railroad and go down to Wall Street and do a job?
0
SPEAKER_01
Or was I going to do something else?
0
SPEAKER_01
And with that job, what will that job be like?
0
SPEAKER_01
What would that mean?
0
SPEAKER_01
So as you face, we always face the choice, right?
0
SPEAKER_01
The choice is a puzzle.
0
SPEAKER_01
 Okay.
0
SPEAKER_01
Like I said, you know, um, risk and return go together.
0
SPEAKER_01
Um, I don't want to get punched in the face this again.
0
SPEAKER_01
Um, but, um, but I want the return.
0
SPEAKER_01
 And how do I do that?
0
SPEAKER_01
So that's the reflection that taught me these other things, the diversification, finding the smartest people disagree with me, working on the mission with others who could see things that I can't see and so on.
0
SPEAKER_01
And that's what worked.
0
SPEAKER_01
So you have to solve your puzzle.
0
SPEAKER_00
 Yeah.
0
SPEAKER_00
Cause a lot of people say, you know, no, uh, if you want big rewards, you got to take big risks.
0
SPEAKER_00
But what I'm hearing you say is there, that's not true.
0
SPEAKER_00
Then what is the truth then?
0
SPEAKER_01
The truth is that if you find individual bets, um, that, uh, that are diversifying,
0
SPEAKER_01
 that your return will equal the average of those returns, but your risk can be cut by 80%.
0
SPEAKER_00
 Did you, were you making individual, I guess, investments or individual bets back in the day?
0
SPEAKER_01
Well, by a bet, I mean, like if you say I'm gonna invest in the stock market.
0
SPEAKER_01
Yes, yes.
0
SPEAKER_01
You can see whatever the bet is, you can see, look back in history, it gives you a pretty good idea of how it goes up and down, what your risks are.
0
SPEAKER_01
Do that by looking at it in inflation adjusted terms is the best way, but it goes up and down and you can see how your buying power is.
0
SPEAKER_01
 And if you say if the worst case happened, what would that look like?
0
SPEAKER_01
And I'm telling you, like I'm saying,
1
SPEAKER_02
 The worst case is when you look at that is something like 60 or 70% in buying power, whether that's stocks or bonds.
1
SPEAKER_02
Okay, that's what the risk looks like.
1
SPEAKER_02
However, if you do that with uncorrelated investments,
1
SPEAKER_02
 when one goes up, you know, like when commodities go up, uh, bonds go down or, you know, that kind of thing.
1
SPEAKER_02
And you balance things, then you find some part goes up and another part when the other part goes down.
1
SPEAKER_02
And by doing that, you can reduce, uh, uh, the risk without reducing the return.
1
SPEAKER_02
 You know, it's in my books.
1
SPEAKER_02
I explain it and I show it.
1
SPEAKER_02
In my first book, Principles, there's a chart that explains a couple of pages and I call it the holy grail of investing.
1
SPEAKER_02
Holy grail means if you follow this path, this will be the key to your riches.
1
SPEAKER_02
And what that is, is 10 to 15 good uncorrelated return streams.
1
SPEAKER_00
Gotcha.
1
SPEAKER_00
 You mentioned debt as well.
1
SPEAKER_00
What's your view on debt these days?
1
SPEAKER_00
Because you mentioned how you didn't want debt back in the day, but is that still something you don't want?
1
SPEAKER_02
Like, I always have to think about what's the worst case scenario.
1
SPEAKER_02
Can I handle the worst case scenario, whatever that is, right?
1
SPEAKER_02
Because it's also, you can be a great investor, you can be great at anything, and it'll only be one time that knocks you out.
1
SPEAKER_02
Right.
1
SPEAKER_02
One time will kill you.
1
SPEAKER_02
 So you have to think about that.
1
SPEAKER_02
Now, it's often the case that I believe I can produce a significantly higher return I have than the cost that I pay for debt.
1
SPEAKER_02
So it's a logical thing to do it, and I still don't do it much.
1
SPEAKER_02
 Right.
1
SPEAKER_02
Because because of that.
1
SPEAKER_02
And like and and there's one thing about debt for consumption and debt for investment.
1
SPEAKER_02
Yes.
1
SPEAKER_02
Like debt for consumption.
1
SPEAKER_02
Is it really bad?
1
SPEAKER_02
OK, because it goes away, the asset goes away and you're left with this obligation.
1
SPEAKER_02
And, you know, that's risky and it's stressful.
1
SPEAKER_02
 And it piles up.
1
SPEAKER_02
You're living above your means.
1
SPEAKER_02
Don't do that.
1
SPEAKER_02
It's not a good idea.
1
SPEAKER_02
Whereas if you have debt for investment, you better be pretty sure that the returns on that investment will be higher than you have to give back in money in the form of both interest rates and the principal repayments.
1
SPEAKER_00
What are the best, I guess, investments in your mind to use debt with?
1
SPEAKER_02
 Well, if you fund it to its term, the best investments are typically those things that you're closest to and they fall into two types.
1
SPEAKER_02
Those that affect your living standards.
1
SPEAKER_02
Like I think owning a house or an apartment or your residence, it affects your life a lot.
1
SPEAKER_02
 And the cost of it is not the cost of it.
1
SPEAKER_02
In other words, you buy it at a certain price.
1
SPEAKER_02
It's not like the thing that goes away and you consume, so you'll sell it at a certain price.
1
SPEAKER_02
 And probably you'll modify it over a period of time.
1
SPEAKER_02
You'll make things and it produces kind of a forced savings that also brings you joy and brings you a better environment, generally speaking.
1
SPEAKER_02
So like I was just recently asked by a young couple, should they should they buy that?
1
SPEAKER_02
 I forgot if it was a little house or apartment, or should they not?
1
SPEAKER_02
And then they sort of say, you know, if I don't do that, I can travel more.
1
SPEAKER_02
Okay.
1
SPEAKER_02
But the travel will go away.
1
SPEAKER_02
 as an asset.
1
SPEAKER_02
Okay, so just be mindful where that will save and think about also the joy that the house brings you.
1
SPEAKER_02
So I sort of think that that's generally a good thing to do, thinking about the total return.
1
SPEAKER_02
And then the other thing is things that you might know really, really well, but you could still take the cycle.
1
SPEAKER_02
You know, is it your own little business?
1
SPEAKER_02
 You know, how do you do that?
1
SPEAKER_02
And then can you ride the cycle?
1
SPEAKER_02
You know, the cycle, the worst case scenario.
1
SPEAKER_02
So those are the two things that I think that are good for.
1
SPEAKER_02
And one thing that isn't good for is consumption.
1
SPEAKER_00
 Right, exactly.
1
SPEAKER_00
The whole changing world order, for people that don't know what the changing world order is or why we should be prepared for it, is it really these main three things we've talked about the first one, is that what it is or is it something bigger that we should be worried about or concerned about?
1
SPEAKER_00
These produce
1
SPEAKER_02
 big things like financial crises or civil wars or external wars.
1
SPEAKER_02
So we should be concerned about those things.
1
SPEAKER_02
 So we talked about the financial.
1
SPEAKER_02
The second one that's happening in a way that never happened in my lifetime before is the way we are with each other in terms of internal conflict.
1
SPEAKER_02
 that has created a polarization, which is a win at all cost mentality.
1
SPEAKER_02
Is this nothing that you saw when you were growing up?
1
SPEAKER_02
Oh, no, no, no, no.
1
SPEAKER_02
It was not like this.
1
SPEAKER_02
And I measure in the book a lot of measurements.
1
SPEAKER_02
OK, I could tell you that the amount you'll see in there, the amount of political polarity
1
SPEAKER_02
 and the amounts of compromise.
1
SPEAKER_02
The amount of political polarity is the greatest since 1900.
1
SPEAKER_02
The amount of compromise is the lowest it's been.
1
SPEAKER_02
It's measured by how people will cross voting across party lines.
1
SPEAKER_02
Right.
1
SPEAKER_02
There's it's there are two monoliths.
1
SPEAKER_02
 And they're at war with each other.
1
SPEAKER_02
OK.
1
SPEAKER_02
And we have populism, which is you have to get on one side or the other.
1
SPEAKER_02
OK.
1
SPEAKER_02
And so when the causes that people are behind are more important to them than the system, the system is in jeopardy.
1
SPEAKER_02
 So you see this reflected right now in the politicalization and and ideologies at a war, you know?
1
SPEAKER_02
Yeah.
1
SPEAKER_02
And I'll give you lots of examples or I'll give you a few.
1
SPEAKER_02
The risk of neither party accepting losing the elections is high, is significant.
1
SPEAKER_01
Right.
1
SPEAKER_02
Right.
1
SPEAKER_02
 How does that work if they don't accept losing the elections?
1
SPEAKER_02
OK, the move toward power dynamics.
1
SPEAKER_02
Let's say a good example.
1
SPEAKER_02
Will be there is a couple of Supreme Court rulings that are coming out related to abortion and gun rights.
1
SPEAKER_02
It would not be surprising to me if those Supreme Court rulings are not.
1
SPEAKER_02
Followed by some states.
1
SPEAKER_02
 Mm hmm.
1
SPEAKER_02
Or the good another good example would be so.
1
SPEAKER_00
So essentially saying we're passing a law, but then the state saying we're not going to abide by the law.
1
SPEAKER_00
Right.
1
SPEAKER_02
And and you're seeing it's hardball.
1
SPEAKER_02
It's hardball.
1
SPEAKER_02
It's like, you know, Governor DeSantis of Florida and Disney.
1
SPEAKER_02
You know.
1
SPEAKER_02
 Ordinarily, there is, okay, we do it by fighting each other and what kind of power, testing each other's power, almost to hurt each other.
1
SPEAKER_02
And so the idea of democracy is compromise.
1
SPEAKER_02
 and reaching costs that the law and the rule is of a higher purpose than anything else.
1
SPEAKER_02
But when you get other things that are more important to people that they're willing to fight for, then you get greater and greater.
1
SPEAKER_02
And it's self-reinforcing because moderates are people who want to work across party lines and so on and compromise are through history, through the
1
SPEAKER_02
 French Revolution, Russian Revolution, Chinese Revolution, or these are civil wars.
1
SPEAKER_02
In all of those cases, the moderates are either they're hurt or they they're disposed of and you have to pick a side.
1
SPEAKER_02
Really?
1
SPEAKER_02
Well, but you're seeing this now.
1
SPEAKER_02
You're seeing right now that the political parties
1
SPEAKER_02
 are united in one way or another.
1
SPEAKER_02
There's not much.
1
SPEAKER_02
And you better pick a side, because that's what it's like.
1
SPEAKER_02
So that can have important consequences in terms of conflict.
1
SPEAKER_02
In other words, it's power.
1
SPEAKER_02
And that's happening not just internally, and it's certainly happening internally,
1
SPEAKER_02
 but it's happening externally too.
1
SPEAKER_02
But internally, there's a dynamic that is going on in which the ideologies, rather than normal economics that we're used to, normal politics and normal economics, rather than that, the ideologies are dominant.
1
SPEAKER_02
So for example, you think about that, when Elon Musk buys Twitter,
1
SPEAKER_02
 The decisions he will make regarding Twitter.
1
SPEAKER_02
Will probably have a greater effect on our society than the decisions the Supreme Court makes.
1
SPEAKER_00
Wow, that's crazy.
1
SPEAKER_00
Right, what's your thoughts?
1
SPEAKER_00
What's your thoughts on that?
1
SPEAKER_00
Him him buying Twitter and.
1
SPEAKER_00
And.
1
SPEAKER_02
Doing what is it that that it's a reflection?
1
SPEAKER_02
That it's one of the symptoms.
1
SPEAKER_02
 like DeSantis and Disney, like tax president, like the Supreme Court, whatever.
1
SPEAKER_02
It's one of the symptoms that the ideology that I'm fighting for, the power that I have, that it's not normal economics in the usual way.
1
SPEAKER_02
You know, there used to be normal economics was it's all just, you know, kind of almost you don't care about ideologies or something.
1
SPEAKER_02
 you're just getting an ROI and that the system will be better off if we allocate resources that way and so on.
1
SPEAKER_02
Now it's that the system is better off if we ideologically choose the things we want.
1
SPEAKER_02
 and put the resources in that and that there's a power game.
1
SPEAKER_02
So it's a different game that people should be aware of.
1
SPEAKER_00
Mm hmm.
1
SPEAKER_00
Yeah.
1
SPEAKER_00
I mean, you said one of your quotes is a nation's greatest war is within itself over whether or not it can make the hard decisions needed to sustain success.
1
SPEAKER_00
 Is there even a way we can unite behind a common purpose in the United States in your mind?
1
SPEAKER_00
Or is it the power dynamics and human psychology is so strong that people are going to be making these decisions and not want to unite over the next few years and decades?
1
SPEAKER_02
 I have a principle, which is that if you worry, you don't have to worry.
1
SPEAKER_02
And if you don't worry, you need to worry, because if you worry about things like if you worry because you get yourself into too much debt and you've got that, then you'll do you won't do that.
1
SPEAKER_02
If in our particular case, if you read about the consequences of what it's happened in history,
1
SPEAKER_02
 about that and you look at the likelihood and you say, OK, we can have this kind of a conflict or we could have that kind of a conflict, external conflict.
1
SPEAKER_02
And boy, these conflicts are terrible.
1
SPEAKER_02
Maybe that sort of brings us more together because we have the power together.
1
SPEAKER_02
 we don't fight each other in that way and we can compromise and so on.
1
SPEAKER_02
We have the power to produce incredible great results because we have more resources than we ever did.
1
SPEAKER_02
There's more by any measure.
1
SPEAKER_02
Life expectancy is a lot greater, GDP is greater, technologies are greater, and so on.
1
SPEAKER_02
 So, in a sense, our riches and our intelligence is greater than ever before.
1
SPEAKER_02
The biggest risk is how we are with ourselves.
1
SPEAKER_02
And so there are just basic things like, do you earn more than you spend?
1
SPEAKER_02
OK, if everybody strove for that, are you being productive and earn more than you spend?
1
SPEAKER_02
 Are you good with other people?
1
SPEAKER_02
OK.
1
SPEAKER_02
So you look at so that it's and we're not fighting.
1
SPEAKER_02
 We can compete in a healthy way, but we're not doing each other harm.
1
SPEAKER_02
We can have win-win relationships.
1
SPEAKER_02
We have a great power, but we're going to have to make a big adjustment because we're spending a lot more than we're earning, producing a lot of debt and money.
1
SPEAKER_02
It's devaluing.
1
SPEAKER_02
And we are at each other's throats.
1
SPEAKER_02
 And I think that we don't do a good job of taking care of each other, even by comparison, and especially by comparison with a lot of other countries, because we don't create a bottom, a level that you don't let certain people fall below.
1
SPEAKER_02
I'll give you an example.
1
SPEAKER_02
My wife and I, particularly my wife, we live in Connecticut and she works to try to help
1
SPEAKER_02
 are called disengaged and disconnected high school students.
1
SPEAKER_02
In other words, those in the poorest neighborhoods who the education is failing and they'll drop out of school.
1
SPEAKER_02
So in this state, which is one of the richest states in the country on average per capita income,
1
SPEAKER_02
 22 percent of the high school students are either disengaged or disconnected.
1
SPEAKER_02
Disengaged means 22 percent, 22 percent of the high school students are either have an absentee rate that's greater than 25 percent and failing classes or have dropped out of school.
1
SPEAKER_02
One in five, more than one in five.
1
SPEAKER_02
So what does that mean about living in neighborhoods?
1
SPEAKER_02
 Wealthy neighborhoods, right?
1
SPEAKER_02
Well, no, no.
1
SPEAKER_02
The thing about it is I live in Greenwich, Connecticut, and up the road is Bridgeport, Connecticut, not far up the road.
1
SPEAKER_02
And that's a poor neighborhood.
1
SPEAKER_02
 OK, because there's not much income in that neighborhood.
1
SPEAKER_02
So what in Greenwich, Connecticut, you spend twenty four thousand dollars on average for a student in school, public schools.
1
SPEAKER_02
There they spend fourteen thousand.
1
SPEAKER_02
And there are and there are guns in their shootings.
1
SPEAKER_02
And of course, if a kid grows up in that kind of an environment where one in five, where are they going to be?
1
SPEAKER_02
 You know, where is their income?
1
SPEAKER_02
Their society is gangs and their income is selling drugs or crime and that.
1
SPEAKER_02
And we've allowed that to happen.
1
SPEAKER_02
We've allowed them the bottom and it's perpetuated.
1
SPEAKER_02
So what's happening is that that's growing and it's encroaching.
1
SPEAKER_02
You could see how crime is changing.
1
SPEAKER_02
OK, and you could pick cities.
1
SPEAKER_02
 You it could be it could be New York.
1
SPEAKER_02
It could be Connecticut.
1
SPEAKER_02
It could be Chicago.
1
SPEAKER_02
It could be San Francisco and so on.
1
SPEAKER_02
Los Angeles.
1
SPEAKER_02
It's encroaching.
1
SPEAKER_02
And so people are going to smaller and smaller enclaves, which might be terrific.
1
SPEAKER_02
OK, you know, like but it's it's that's what's going on.
1
SPEAKER_02
And it's costly.
1
SPEAKER_02
The in the state of Connecticut, it costs six hundred million dollars a year for incarcerations.
1
SPEAKER_02
 Because where do those people go?
1
SPEAKER_02
OK, it's crime and then you're trying to do it.
1
SPEAKER_02
That kind of a thing has a terrible cost.
1
SPEAKER_02
When I think about what my generation has left the other generation.
1
SPEAKER_02
 It's terrible.
1
SPEAKER_02
I was just in Singapore, and what they had is they had savings, a lot of savings.
1
SPEAKER_02
And because they have a large savings, the income from that savings covers 20% of their budget.
1
SPEAKER_02
 Wow.
1
SPEAKER_02
So one generation is giving the other generation a savings, a good education, and civility.
1
SPEAKER_02
And this happens in certain places.
1
SPEAKER_02
What we have left our generation with is debts,
1
SPEAKER_02
 a broken down infrastructure and fighting.
1
SPEAKER_02
So, I mean, the answer is if we're all good with each other and we're productive and we earn more than we spend, we won't have a problem.
1
SPEAKER_02
We've got to get there.
1
SPEAKER_00
 I mean, when I was growing up in Ohio in the 80s and 90s, I remember my dad never locked the door.
1
SPEAKER_00
I don't know if that was stupid or wise, but we always felt, you know, safe because we knew our neighbors.
1
SPEAKER_00
You know, we're in a neighborhood close to the small downtown of Delaware, Ohio.
1
SPEAKER_00
And he was of the mindset, everyone is welcome.
1
SPEAKER_00
So people come and knock on the door, they're welcome to stay the night.
1
SPEAKER_00
You know, that type of mentality.
1
SPEAKER_00
And we had people stay with us who were complete strangers often.
1
SPEAKER_00
 And so I kind of grew up in this mindset that, hey, the world is safe.
1
SPEAKER_00
And now it seems like if you don't lock your doors, you're kind of crazy, no matter if you're in a small town or in a big city.
1
SPEAKER_00
So what would you say if you could make the decisions on three things to change moving forward with the debt crisis, with the internal wars and conflicts from people, and the bottom that needs to rise up, what would you do if you could kind of snap your fingers?
1
SPEAKER_02
 I would say bipartisanship.
1
SPEAKER_02
If I was president of the United States, I would have a bipartisan cabinet to try to bring moderates from both sides because moderates from both sides together.
1
SPEAKER_02
I'd have an economic program
1
SPEAKER_02
 that was put together by like a Manhattan Project type of thing in which they would people from those both sides, not the extremes of both sides, but smart people from both sides.
1
SPEAKER_02
 would make changes.
1
SPEAKER_02
I have my own changes that could happen, but in which they would both increase the size of the pie and divide it well.
1
SPEAKER_02
And when I say divide it, I mean move much more toward equal opportunity in which people are productive.
1
SPEAKER_02
Like, for example, to have a return on investment if you provide good education.
1
SPEAKER_02
 If you do that well, but and I can give you many, if you provide good infrastructure, like it's really uneconomic to not have and everybody can not have connectivity anywhere.
1
SPEAKER_02
You know, there's certain things you could.
1
SPEAKER_02
So so I would want to have a program that increases the size of the pie and divides it well, particularly to productive.
1
SPEAKER_02
 product productive people and those who in some way or another can't be productive because they're handicapped in one way or another in that productivity to provide them the assistance.
1
SPEAKER_02
So you have a civil society, but with still great opportunities to make do great things and, you know, acquire wealth and distribute wealth.
1
SPEAKER_02
I mean, that's it.
1
SPEAKER_02
You do need
1
SPEAKER_02
 it to benefit most of the people.
1
SPEAKER_02
You need the system.
1
SPEAKER_02
So that's what I would do.
1
SPEAKER_02
Then what would happen is I'd have that middle each deal with its extremes.
1
SPEAKER_02
So I think on each party, there are extremists.
1
SPEAKER_02
And now what's happening is the moderates are dropping out of the political system.
1
SPEAKER_02
 So because the moderates are dropping out of the political system, we're getting more and more hardened extremists who won't won't lose.
1
SPEAKER_02
They you know, they'll fight to the death with each other and laws and that.
1
SPEAKER_02
So that scares me.
1
SPEAKER_02
Where if we were in it together and we did that in a bipartisan, smart way that, you know, not everybody's going to love, but everybody does something.
1
SPEAKER_02
That would be the most important thing I would do.
1
SPEAKER_00
 Yeah.
1
SPEAKER_00
You're a wise man.
1
SPEAKER_00
And the third part of this, you talked about the changing world order, is how really all empires rise and fall at some point in what you call a big cycle.
1
SPEAKER_00
Can you explain more what this big cycle is and what part of the big cycle the USA is in and also China is in right now?
1
SPEAKER_02
Okay.
1
SPEAKER_02
 Yeah, I'll describe the cycle by an order.
1
SPEAKER_02
I mean, like a world order, a domestic order.
1
SPEAKER_02
I mean, the system that's in place run by the people who have the power and then they determine what the system is like.
1
SPEAKER_02
 And so you change orders, usually by wars, because you have a conflict.
1
SPEAKER_02
And then, OK, how do you resolve the conflict?
1
SPEAKER_02
They have a war.
1
SPEAKER_02
So World War II ended in 1945.
1
SPEAKER_02
 The United States won World War Two dominantly.
1
SPEAKER_02
It became rich, the richest country in the world, having 80 percent of the world's money.
1
SPEAKER_02
Money was gold then.
1
SPEAKER_02
It had 80 percent of the world's gold and a dominant military.
1
SPEAKER_02
It had a monopoly on that and accounted for half the world's economy.
1
SPEAKER_02
 And so it was it set the rules.
1
SPEAKER_02
It's the reason why the United Nations is in New York and the IMF and the World Bank in Washington, D.C.
1
SPEAKER_02
It was the American world order because it was dominant power.
1
SPEAKER_02
Now, when you have it, when you are in a dominant power, also these wars are sort of great equalizers.
1
SPEAKER_02
People come back from the war.
1
SPEAKER_02
It's not like some are rich and some are poor in the same way.
1
SPEAKER_02
 There's a restructuring and you don't have the same wealth gaps and resentments and so on.
1
SPEAKER_02
And then that usually means that you have a period of peace and prosperity.
1
SPEAKER_02
Peace because nobody wants to fight the dominant power.
1
SPEAKER_02
And then they work together and they produce peace and prosperity and that happens.
1
SPEAKER_02
 And that's really does best in the capitalist system in which capitalism capital is provided to those who have good ideas because they say, we'll invest in you and you'll be productive and so on.
1
SPEAKER_02
But what capitalism does at the same time is it has two challenges to is it creates wealth that creates large wealth gaps and it also creates higher levels of indebtedness.
1
SPEAKER_02
 So it creates the large wealth gaps because it distributes that unequally.
1
SPEAKER_02
And then that can be self-perpetuating because those who get power, like if you have more money, you can educate your children better.
1
SPEAKER_02
 then if you don't, the situation we're talking about in Connecticut, you know, those parents are not going to be able to provide the education for the kids or the benefits that the others can.
1
SPEAKER_02
And so gradually you lose equal opportunity.
1
SPEAKER_02
And that.
1
SPEAKER_02
 And you produce wealth gap and you produce resentments.
1
SPEAKER_02
And you also then create larger amounts of debt quite often.
1
SPEAKER_02
That means that that's a problem down the road.
1
SPEAKER_02
Now, what happens when you become the world's largest power?
1
SPEAKER_02
This is also always the case.
1
SPEAKER_02
It happened with the Dutch.
1
SPEAKER_02
It happened with the British.
1
SPEAKER_02
 that because you're so powerful and production, you go all around the world and you are the largest trading country in the world.
1
SPEAKER_02
You get more exports than other countries and more transactions are in your currency.
1
SPEAKER_02
And so everybody uses your currency, which becomes the world's reserve currency because everybody's using it.
1
SPEAKER_02
And because it's the world's currency, those who are those want to save in it.
1
SPEAKER_02
 And so different countries save in it, which means that they lend to you in it.
1
SPEAKER_02
And that increases your debt to foreigners because they're when they hold a bond or they hold cash in that they're lending it to you to get the dollars back in the future.
1
SPEAKER_02
And so that is also one of the ingredients of making a top.
1
SPEAKER_02
They're the wealth gaps.
1
SPEAKER_02
There's that.
1
SPEAKER_02
And then there's also a change in generations and generation psychology.
1
SPEAKER_02
 You know, it's like the story of the three generations, you know, from, you know, whatever it is, from, you know, rags to riches to rags again or something.
1
SPEAKER_02
The greatest generation, in a sense, are those who fought through the war, appreciate basic things, you know, that kind of a thing.
1
SPEAKER_02
And then what happens is you become, when you're on top,
1
SPEAKER_02
 you become more expensive and quite often more decadent.
1
SPEAKER_02
And what I mean by decadent, I mean that you might spend on things that are not good investments and don't last very long or whatever, you know, for entertainment at the sink of buying.
1
SPEAKER_02
So, for example, in the United States, I remember when we had a per capita income, which was 40 times China's and we started borrowing from China.
1
SPEAKER_02
 So anyway, these are the ingredients.
1
SPEAKER_02
And then you start to see that they cause problems, the financial problem, the internal conflict problem, and so on.
1
SPEAKER_02
And then the type of fighting that we're talking about, where some moderates say, well, we need to
1
SPEAKER_02
 make things, reform things and make them better.
1
SPEAKER_02
Each is in their extremes.
1
SPEAKER_02
So you classically have the populace of the left and the populace of the right who are individuals who will just fight for that side.
1
SPEAKER_02
And then you come down and you have that conflict and you have
2
SPEAKER_00
 that internationally as well.
2
SPEAKER_00
So when you have, let's say, a country like the United States, if you take the United States' percentage of world GDP or the United States' percentage of world trade, we used to be the largest trading, exporting country in the world, but China replaced that.
2
SPEAKER_00
And where are we now?
2
SPEAKER_00
 Yeah.
2
SPEAKER_00
So and the GDP thing.
2
SPEAKER_00
So now we have a rivalry and you have different approaches to life.
2
SPEAKER_00
And then you say, oh, maybe you're going to have a conflict.
2
SPEAKER_00
And so everybody prepares for a conflict, which almost makes itself fulfilling.
2
SPEAKER_00
So when you have this dynamic, which we're seeing, you know, the world starts to split.
2
SPEAKER_00
 because countries want to align themselves with who's going to help them financially or militarily.
2
SPEAKER_00
The ideology, if you look at history, is not as been as much an important determinant.
2
SPEAKER_00
Let's say the United States and Saudi Arabia have been allies for a long time, having nothing to do with whether the system is democratic or not.
2
SPEAKER_00
It has to do with whether their interests are aligned.
2
SPEAKER_00
 And those are economic and and military.
2
SPEAKER_00
And so we're seeing when I go around from country to country and they and people say, OK, the leaders say, should I be on China's side or should I be in the United States aside, whichever they say?
2
SPEAKER_00
Well, if it's economic, it China's more important to me if it's military.
2
SPEAKER_00
The question is, will the United States be there when we need them to be operate that way?
2
SPEAKER_00
 And it's those kinds of calculations that produces the cycle that traditionally, if unless you rectify it, like we all come back together again somehow and we're all good with each other, ends up causing the fight to find out who is more powerful.
2
SPEAKER_00
And then it's the war or whatever.
2
SPEAKER_00
And then there's a winner and a loser and a new world order begins.
2
SPEAKER_00
And that's what the cycle looks like.
2
SPEAKER_01
 So is there a world where we will never have war?
2
SPEAKER_01
Or is it always going to be some type of war happening so that power dynamics shift and this just continues?
2
SPEAKER_00
It's so interesting because in the mid-1600s, this is interesting, in the mid-1600s, there was 30 years of war.
2
SPEAKER_00
They called it the 30 Years War in Europe.
2
SPEAKER_00
 And they just kept beating the daylights out of each other.
2
SPEAKER_00
And that is when they invented countries as we know it.
2
SPEAKER_00
Before then, there were no boundaries.
2
SPEAKER_00
 Hmm, it was winner takes all it was kind of it was just, well, yeah, it was like, there were no boundaries.
2
SPEAKER_00
And if you want what mattered was power.
2
SPEAKER_00
And if you wanted something that the other guy had, you'd go get it.
2
SPEAKER_00
And he'd do the same with you.
2
SPEAKER_00
And there was this constant fighting about things.
2
SPEAKER_00
And then
2
SPEAKER_00
 In the 1600s, they were fighting about religion, too.
2
SPEAKER_00
You know, there's the religious reformation and the others, which also had to do with power because the church was powerful.
2
SPEAKER_00
But anyway, so they invented countries as we know it with boundaries.
2
SPEAKER_00
And you determine what goes on in your borders and so on.
2
SPEAKER_00
And of course, we've and that reduced for the next hundred years.
2
SPEAKER_00
There were hardly any wars.
2
SPEAKER_00
 Interesting.
2
SPEAKER_00
And and but they when the time comes.
2
SPEAKER_00
There's no universal legal system.
2
SPEAKER_00
Mm hmm.
2
SPEAKER_00
You know, there's no universal policeman.
2
SPEAKER_00
So if you don't have a universal legal system, they've been attempts of that with the United Nations or what before that, the League of Nations, they attempted that.
2
SPEAKER_00
But power rules.
2
SPEAKER_00
 And so you're going to have tests of power.
2
SPEAKER_00
It all come down to tests of power, right?
2
SPEAKER_01
You've come up with a template for assessing the health of a country and what leads them to success or, or failure.
2
SPEAKER_01
What are the main metrics that you've come up with to, to assess?
2
SPEAKER_01
And where's the USA at right now in that assessment?
2
SPEAKER_00
Um,
2
SPEAKER_00
 I have, I want everything that I do to not be opinionated.
2
SPEAKER_00
I want everything that I do to take measurements of health.
2
SPEAKER_00
So, and there were different, 18 different measurements of health that you can see in the book.
2
SPEAKER_00
So you could look at it as a health indicator.
2
SPEAKER_00
 And then you could see with those, like a health indicator, what does that create the next 10 years prognosis for that?
2
SPEAKER_00
Because if you're healthy, then you'll have a better prognosis if you're not healthy.
2
SPEAKER_00
And so there are 18 of them.
2
SPEAKER_00
I won't take you through them, but anybody who cares to go through them, you can see them.
2
SPEAKER_00
But there are basic things like, first, are you financially healthy?
2
SPEAKER_00
 Do you, what's your income statement and balance sheet look like?
2
SPEAKER_00
Do you spend more than you earn or do you earn more than you spend?
2
SPEAKER_00
Are you saving?
2
SPEAKER_00
What's your income statement and balance sheet look like?
2
SPEAKER_00
A very big leading indicator is the relative level of education.
2
SPEAKER_00
 And those that have a more educated population, and you could see the numbers rise, you could see education levels in one country or another rise or decline in these charts.
2
SPEAKER_00
So you could see how is the United States in its education and how are other countries and is that gap
2
SPEAKER_00
 And is it improving or worsening?
2
SPEAKER_00
Because education levels are very indicative of well-being and economic behavior.
2
SPEAKER_00
Related to education is civility.
2
SPEAKER_00
Civility is not.
2
SPEAKER_00
So you learn education like facts and how to do calculations and things.
2
SPEAKER_00
That's one type of education.
2
SPEAKER_00
 But you also learn how to behave with each other, the civility, the idea of respect and so on.
2
SPEAKER_00
So you have a civilized society of behaving well.
2
SPEAKER_00
That's part of it.
2
SPEAKER_00
And that usually happens in the home as well as in the school system.
2
SPEAKER_00
School can't do everything.
2
SPEAKER_00
 And there are and you could see these numbers and there are a problem, OK, in terms of these kinds of numbers, civility.
2
SPEAKER_00
And and we have we have challenges as there's some often single families that are having financial problems and don't have, you know, those circumstances.
2
SPEAKER_00
And and so and then you have an opiate problem.
2
SPEAKER_00
 You have other things that stand on OK, rule of law, countries that have rule of law and respect for the law that keeps order and effectively loss of when crime rates go up, it's probably a very good indicator.
2
SPEAKER_00
 is corruption levels.
2
SPEAKER_00
There's a corruption index that countries, that all countries have, that you can get for every country.
2
SPEAKER_00
You can see how it changes.
2
SPEAKER_00
And as it goes up, there's a negative 52% correlation with the growth of a country and its corruption over the next 10 years.
2
SPEAKER_00
Okay, so it's- Where's the USA at right now?
2
SPEAKER_00
The USA is reasonably good.
2
SPEAKER_00
 Reasonably good on the corruption element.
2
SPEAKER_01
Where is Mexico, I guess?
2
SPEAKER_01
Bad.
2
SPEAKER_00
Russia is bad.
2
SPEAKER_00
You know, it's interesting because these are predictors of the future.
2
SPEAKER_00
And what you find out is like, if you look at Russia, I'll give that as an example.
2
SPEAKER_00
 It's blessed with the greatest natural resources of any country in the world.
2
SPEAKER_00
The value of its natural resources are 40 percent higher than the next highest country, which is the United States.
2
SPEAKER_00
And it does a pretty good job of having an educated population.
2
SPEAKER_00
But it's cultural issues.
2
SPEAKER_00
It's not heavily indebted.
2
SPEAKER_00
 And and so on.
2
SPEAKER_00
But it's cultural issues in terms of these things like corruption.
2
SPEAKER_00
Also, there are measures of.
2
SPEAKER_00
Lots of measures of bureaucracy versus efficiency, lots of measures of attitude.
2
SPEAKER_00
Can I.
2
SPEAKER_00
 start a business and make my dreams happen.
2
SPEAKER_00
You can see the differences between countries on just that attitude.
2
SPEAKER_00
OK, and also you could see it in the bureaucracy.
2
SPEAKER_00
How many how long does it take to set up a business?
2
SPEAKER_00
There are statistics like that.
2
SPEAKER_00
So you see a bunch of them in the book.
2
SPEAKER_00
Gotcha.
2
SPEAKER_01
 Sure.
2
SPEAKER_01
I know when a big part of your mission is to, is bridging the educational gap around economics for people and really people understanding about money, how to use money effectively and just understanding in general.
2
SPEAKER_01
If you could, you know, again, I'm sharing kind of hypothetical scenarios, but if you could share some, change some things around about how we learned growing up about money.
2
SPEAKER_01
 two to three key things, whether it be in the school system or what you wish parents knew that they would all teach children from the ages of five to 15.
2
SPEAKER_01
What would be those three things that you wish children just knew more about around money?
2
SPEAKER_00
Well, I. I think you said it.
2
SPEAKER_00
If there was education and experience from the age of five to 15, that would change everything.
2
SPEAKER_00
 We learn differently.
2
SPEAKER_00
Scientists have shown prior to puberty, we learn in an internal way.
2
SPEAKER_00
And you'll find that a number of people had their passion at around age 12, because that has to do with how the brain changes.
2
SPEAKER_00
But if you take that five to 15 and you incorporated it in the education system and the practice,
2
SPEAKER_00
 of saving, spending and so on.
2
SPEAKER_00
We.
2
SPEAKER_00
You know, you don't need a Ph.D.
2
SPEAKER_00
in this thing.
2
SPEAKER_00
It's a the money thing is kind of very basic, you know, if if I can buy it for less than I sell it.
2
SPEAKER_00
Right.
2
SPEAKER_00
That's a good thing.
2
SPEAKER_00
The more volume I could do, the better it is.
2
SPEAKER_00
 then there are fixed costs and there are variable costs.
2
SPEAKER_00
So if I'm going to build a stand, a lemonade stand, okay, what's that going to cost me?
2
SPEAKER_00
Okay, that's a capital expenditure.
2
SPEAKER_01
Okay, sure.
2
SPEAKER_00
It's all the same stuff that you could learn
2
SPEAKER_00
 you know, at those ages, and, and, and you don't.
2
SPEAKER_01
And is there a good game?
2
SPEAKER_01
I mean, I feel like you should your next thing should be a game that kids can learn to play.
2
SPEAKER_01
I don't know if that's the new monopoly.
2
SPEAKER_00
My that is I have a son, which is in his passion is ed tech, educational technology.
2
SPEAKER_00
 And he wants me to do that with him.
2
SPEAKER_00
And maybe, I hope one day.
2
SPEAKER_01
Please, please, Ray, please.
2
SPEAKER_01
We need a game where to make it simple, you know?
2
SPEAKER_00
Yeah.
2
SPEAKER_00
Lois, it ain't like I'm not busy, you know?
2
SPEAKER_01
I gotcha.
2
SPEAKER_01
I understand.
2
SPEAKER_01
So where is, to go back to the US and China, the big cycle, where is China at in the big cycle?
2
SPEAKER_00
Well, China's in this stage where
2
SPEAKER_00
 I've spent a lot of, let me phrase it this way.
2
SPEAKER_00
I spent a lot of time in China, starting in 1984, not to earn money, because they didn't have any money, but because I was very curious, and then I got to know and like the people, and I was able to help them develop their stock markets and things and so on.
2
SPEAKER_00
And that was, I like meaningful work and meaningful relationships, that's my thing.
2
SPEAKER_00
And so I watched, since I came, since 1984, when I first started,
2
SPEAKER_00
 Per capita income has increased by 26 times.
2
SPEAKER_00
The poverty rate measured by hunger went from 88% to less than 1%.
2
SPEAKER_00
And life expectancy increased an average of 10 years.
2
SPEAKER_01
Wow.
2
SPEAKER_01
So the poverty used to be at 80% in 84.
2
SPEAKER_01
You said it was 80% back in 84?
2
SPEAKER_01
Hunger was 88%.
2
SPEAKER_01
Hunger.
2
SPEAKER_01
Wow.
2
SPEAKER_00
 that type of poverty, not to have a square meal.
2
SPEAKER_00
And I watched how they do that.
2
SPEAKER_00
I think that there's.
2
SPEAKER_00
And so what has happened is that they have become a roughly comparable power of the United States in some ways, a bit ahead of some ways, a bit behind and so on.
2
SPEAKER_00
And that's in most things.
2
SPEAKER_00
 OK, if you were if that list of 18, if I was going to go down that list.
2
SPEAKER_00
Yes.
2
SPEAKER_00
And I would say, OK, do they have better educated people than we do?
2
SPEAKER_00
Well, it depends on what it almost goes.
2
SPEAKER_00
It depends.
2
SPEAKER_00
And we talk about public education.
2
SPEAKER_00
We talk about on average, do they have more?
2
SPEAKER_00
Whatever.
2
SPEAKER_00
If you talk about a military,
2
SPEAKER_00
 It depends.
2
SPEAKER_00
Is it in that region?
2
SPEAKER_00
Is it of that type?
2
SPEAKER_00
Or is it another type or something?
2
SPEAKER_00
But it's comparable.
2
SPEAKER_00
 If you talk about technology, OK, when I first went to China, I would give ten dollar calculators to people and they thought they were miracle devices.
2
SPEAKER_00
Wow.
2
SPEAKER_00
Now, if you take it in artificial intelligence and most technologies there depends on the one there may be ahead in some and and not.
2
SPEAKER_00
So they what that means is that they've come up
2
SPEAKER_00
 to be a leading competitive power.
2
SPEAKER_00
There's no other competitive power like that.
2
SPEAKER_00
Now, a lot of countries now, which is scary, are roughly comparable in military, meaning if you have a war, if we have a war with Russia,
2
SPEAKER_00
 It's not like the United States is militarily dominant or so.
2
SPEAKER_00
More countries have become that way.
2
SPEAKER_00
We spend more and we have bases in 70 countries, but at the same time, that means we're overextended or extended.
2
SPEAKER_00
And it doesn't mean that you'd win a war.
2
SPEAKER_00
If there was a war in Europe,
2
SPEAKER_00
 Everybody be a loser.
2
SPEAKER_00
So and there are different types of wars, cyber wars, as well as military wars and the like.
2
SPEAKER_00
OK, so what we're now having is a situation where there is that rivalry.
2
SPEAKER_00
 That could be good, healthy confrontation.
2
SPEAKER_00
However, history has shown when you deal with who's going to set the rules of the game, there might be disagreements.
2
SPEAKER_00
And if there are disagreements, how are they resolved?
2
SPEAKER_00
Like the trade dispute.
2
SPEAKER_00
 It's not like we took the both sides, took it to the World Trade Organization and say, we're going to plead our cases and then you make a decision.
2
SPEAKER_00
They didn't even think about that.
2
SPEAKER_00
Right.
2
SPEAKER_00
They go to I'm going to do this if you do this.
2
SPEAKER_00
And that's that's where we are sort of.
2
SPEAKER_00
So the world is breaking up.
2
SPEAKER_00
 into these parts where there are two sides, kind of.
2
SPEAKER_00
If you look at World War II, by way of example, there are the Allied powers and the Axis powers, and then they're in Europe and in Asia.
2
SPEAKER_00
 And there are different alliances in Europe than there are in Asia, because each has their own interests.
2
SPEAKER_00
And it's developing that way.
2
SPEAKER_00
So when you take the Ukraine and you look at the Ukraine and that, that's more aligned with the other side, let's call it the Axis powers, which are the challengers
2
SPEAKER_00
 to the United States and to some extent the NATO powers.
2
SPEAKER_00
And you have that conflict.
2
SPEAKER_00
And you could see in a number of statistics or actions how the sides are lining up.
2
SPEAKER_00
Like, for example, when they just ask, are you going to apply the sanctions or not?
2
SPEAKER_00
Are you going to do this and that?
2
SPEAKER_00
 In the United Nations, did you vote against Russia or not?
2
SPEAKER_00
And so on.
2
SPEAKER_00
And you could see all those things and you could see how the sides line up.
2
SPEAKER_00
For example, India lined up with Russia.
2
SPEAKER_00
And so you could see how this is lining up.
2
SPEAKER_00
And you could see that we're coming into this.
2
SPEAKER_00
There's no conversations and communications that's
2
SPEAKER_00
 even polite between the two countries right now and those things.
2
SPEAKER_00
And that's where we are.
2
SPEAKER_00
And if you look at history, that's a dangerous place to be.
2
SPEAKER_00
Yeah.
2
SPEAKER_01
And what do you believe will happen if we don't prepare for the changing world order then?
2
SPEAKER_00
I think that, take our three things.
2
SPEAKER_00
I think that there's better than even chance of
2
SPEAKER_00
 a bad stagflation, a very bad stagflation because of the dynamics.
2
SPEAKER_00
I think I'll say one in three chance, but I think it's actually probably higher than that, that we have a type of civil war, internal conflict,
2
SPEAKER_00
 Really, in which let me the rules are not followed.
2
SPEAKER_00
The compromises are not made.
2
SPEAKER_00
That may be the those who.
2
SPEAKER_00
They find they don't accept losing an election.
2
SPEAKER_00
That there's movement of people to different states.
2
SPEAKER_00
That they believe represent them better, and there's a polarity developing and they're going to different states.
2
SPEAKER_00
 and that there's not obeying the central government.
2
SPEAKER_00
So now it becomes a power game.
2
SPEAKER_00
I don't I don't think that to be a mom in the business, I need to be objective.
2
SPEAKER_00
Right.
2
SPEAKER_00
 because accuracy is my thing.
2
SPEAKER_00
I have to be as accurate as possible.
2
SPEAKER_00
I'm not saying that's accurate, but I'm saying, when I look at that, I don't think, my assuming that's a one in three, I think it's actually probably higher than that, that there will be that kind of a situation.
2
SPEAKER_00
And I think it's better than, higher than a one in three, I think might be significantly higher, that you get into the same conflict in the power.
2
SPEAKER_00
For example,
2
SPEAKER_01
 Hmm.
2
SPEAKER_00
Internationally, for example.
2
SPEAKER_00
Yeah.
2
SPEAKER_00
Does does Russia or the West win the war in the Ukraine?
2
SPEAKER_00
I'll define Putin winning the war as three things he he controls against control of the eastern part of the Ukraine.
2
SPEAKER_00
Russia's economy is not devastated by sanctions.
2
SPEAKER_00
 And he remains in power.
2
SPEAKER_00
Wow.
2
SPEAKER_00
And and let's say, for example.
2
SPEAKER_00
He can attend and Russia attends the next G20 meeting.
2
SPEAKER_01
Hmm.
2
SPEAKER_00
OK, so that's him winning the war.
2
SPEAKER_00
That that for him, that's him winning the war, because in the beginning of that, it was worth his cost.
2
SPEAKER_00
I mean, once more than that.
2
SPEAKER_00
 He wants a neutral Ukraine or an aligned Ukraine.
2
SPEAKER_00
But he's not going to probably get that.
2
SPEAKER_00
But that's the minimum.
2
SPEAKER_00
Now, that's him winning the war.
2
SPEAKER_00
That's also kind of the West losing the war.
2
SPEAKER_00
Now, but if he loses the war, if he loses that, he will probably escalate.
2
SPEAKER_00
 OK, because what war is now being played as a on the ground armies, armies and with sanctions.
2
SPEAKER_00
But he has other weapons.
2
SPEAKER_00
And rather than go down, he will probably escalate.
2
SPEAKER_01
Hmm.
2
SPEAKER_00
OK, that's a game of chicken.
2
SPEAKER_00
But it's a very dangerous game.
2
SPEAKER_00
 Yeah.
2
SPEAKER_00
Okay.
2
SPEAKER_00
And there are other issues globally.
2
SPEAKER_00
For example, you're seeing these alliances work out and you're seeing the United States, for various reasons, sort of pull out of the Middle East and you're seeing China more move in.
2
SPEAKER_00
And so these tensions
2
SPEAKER_00
 exist and power exists.
2
SPEAKER_00
There are more countries that have nuclear weapons now than there were.
2
SPEAKER_00
And, you know, there's even talk of joint military operations between China and Iran.
2
SPEAKER_00
And so you see these sides begin to align.
2
SPEAKER_00
So if I say that there's a one in three chance of some kind of a military
2
SPEAKER_00
 confrontation, that scares the hell out of us over there, that is extremely, I don't think that sounds too high.
2
SPEAKER_00
I think it's larger than that.
2
SPEAKER_00
So that means I think we're headed for some risky times, because any one of those things is really, is not normal.
2
SPEAKER_00
Any one of those things is not what we're used to, it's pretty bad.
2
SPEAKER_00
 But again, I mean, if you if you if everybody worries, they don't have to worry.
2
SPEAKER_00
Mm hmm.
2
SPEAKER_00
You know, if both sides think about what that's like and say, I can't you know, we must come together and make sure that that does not happen.
2
SPEAKER_01
 Yeah, that would take us being rational human beings, right?
2
SPEAKER_01
And having some inner wisdom and consciousness.
2
SPEAKER_00
Well, that's one of the reasons I'm trying to pass along.
2
SPEAKER_00
You know, I passed along the book, which was a study for my own benefit.
2
SPEAKER_00
But I also did an animation and to try to pass it along.
2
SPEAKER_00
So so to help people understand this, the animation, I put it out a month ago.
2
SPEAKER_00
It's got 11 million views.
2
SPEAKER_00
People.
2
SPEAKER_00
It's very digestible.
2
SPEAKER_01
 We'll have that linked up in our description on audio and on YouTube for people to watch.
2
SPEAKER_01
It's really powerful.
2
SPEAKER_01
I'm curious, again, you've seen a lot in the last four or five decades of being in this industry and this business and in the financial world.
2
SPEAKER_01
 With everything that's happened over the last couple of years, not just pandemic, but stock markets going up and down, wars, inter-conflict of countries, all these different things, cryptocurrencies coming in, the decentralization of money, all these different things, what do you even think's going to happen in the next 10 years?
2
SPEAKER_01
With the whole 2030 agenda being talked about, what do you see happening over the next 10 years?
2
SPEAKER_00
I should say that one thing,
2
SPEAKER_00
 When I did that, I discovered the three forces that I mentioned.
2
SPEAKER_00
I discovered a fourth and a fifth that are very important and big.
2
SPEAKER_00
One is that
2
SPEAKER_00
 Interestingly, acts of nature in the form of droughts, floods and pandemics have had a bigger impact than the things I've been talking about in terms of cost more lives or toppled more civilizations, those acts of nature.
2
SPEAKER_00
So I think
2
SPEAKER_00
 That's something probably that we have to be concerned about.
2
SPEAKER_00
But number five, over long periods of time, 10, 15, 20, 30 years, the most powerful force is man's ability to adapt and invent.
2
SPEAKER_00
 Tremendous capability of adapting and inventing.
2
SPEAKER_00
So you'll see charts in the book and you'll see here's a Great Depression and here's a war.
2
SPEAKER_00
And as you see those things, they look like blips on the chart of life expectancy per capita income and so on.
2
SPEAKER_00
 And so there's a tremendous capacity for dealing with all the other stuff.
2
SPEAKER_00
If man can adapt to it, well, and, and, and inventiveness during this period of time, um, should be kind of, I think really great because what we're using more and more is types of technology, artificial intelligence and so on.
2
SPEAKER_00
 The ability to think and collect data and use the computer to help us with that is a very, very powerful force.
2
SPEAKER_00
Now, like any forces, it's also a risky force because it can be used for bad as well as for good.
2
SPEAKER_00
But I think the world will evolve.
2
SPEAKER_00
We will have these cycles.
2
SPEAKER_00
 in the world.
2
SPEAKER_00
So that's what you see.
2
SPEAKER_00
You see these cycles and then you see evolution through those cycles and adaptation.
2
SPEAKER_00
And so I expect that, but I would say there's the probabilities I gave you before, you know, that concern me.
2
SPEAKER_00
So, you know, a lot will be unknown, but I'm, you know, we have a lot of potential and a lot of things to worry about.
2
SPEAKER_01
 If you were in your – you've created so much wealth for yourself.
2
SPEAKER_01
You've been building so much and you're still very busy.
2
SPEAKER_01
It's not like you're done by any means.
2
SPEAKER_01
You're still growing.
2
SPEAKER_01
But if you were – you're late 30s, early 40s at this time.