AI REVOLUTION: The #1 MEGATHREAT to Our Economy & How To PREPARE NOW | Raoul Pal

do you think that AI presents a mega threat to our economy it's very exciting technology but when I really think about how this is going to play out ah I'm not so sure that it doesn't get brutal okay you've just gone straight in for the big question I mean this is not the quickest question to answer I've thought about this for a long time and I've read you know I started things like homodeus there was a few other books to come and there was some guys from Cambridge University I can't remember his name that's a really famous book um he's been on real Vision as well Nick yeah so Nick bostrom's it started with Nick Bostrom it started with um then homo Deus that came after sapiens by Noah Harari then I started reading also um Mo gaudat who wrote scary smart he used to run Google X talked about this so I've been thinking about and I'm just reading another book now about it the philosophical questions what it is where the technology is and I know some people in this space like embed mossack who who builds stability AI so the there is no way no let's start let's start this approaches from a different angle it is augmentation of humans and it's amazing and we're lucky because the human population of most of the western developed world is diminishing over time I it's aging and we're not replacing ourselves so we replace ourselves with AI and machines so we're seeing at Amazon warehouses um a third of the Amazon Workforce is robots but they're three or four times more productive than humans so therefore we will see endless build-outs of robots instead of humans an AI is disrupting jobs we didn't quite imagine be disrupted first we we thought it'd be accountants or whatever and what it ends up being is artists creators I mean I just saw a website today uh for model agency you can get an AI model yep and you can't tell and so you can Define exactly what race color age any requisite you want and it makes it perfectly so I'm like okay I didn't expect the modeling industry to get disrupted because how many people actually go to catwalks it's not it's it's for video or photography so it's going to change a lot of jobs it's also going to offer a lot of opportunities all of us will be thinking about AI strategy like in the late 90s we all think about internet strategy when we're building businesses fine okay we can deal with that the issue is Moore's law and the exponentiality of all of this so these language models these large language models llms which GPT came out with are increasing exponentially in their power of an order of magnitude that we can't get our heads around because we think in linear terms because we're dumb humans so these things are doubling tripling every year or less and this was the fastest you've heard me use this phrase before the fastest adoption of technology and all history was crypto blockchain technology chat GPT went from zero to 100 million users in a month okay so now we've got AI that is like a virus it is so Unstoppable and we've got two or three different people building it at scale Google Amazon Microsoft with open Ai and then stability AI is an open source Network AI which is almost Unstoppable because it's doubly viral because you've got so this is going on the computational power is exploding the cost of computers going down and what it means is that AI becomes more and more powerful so if you listen to Mo gordat and he knows because he ran Google X where a lot of this has been incubated they discovered deep mind they were the people really to build out the the large language models um he says well right now specific AI is better at humans in almost everything it does so specific AI has a better result set than any radiologist on Earth and just for people that don't know specific AI or narrow AI is it's one task go get good at reading an x-ray go get good at playing chess playing go whatever so okay fine they think that Mo God thinks that by the end of this decade AGI so that's a generalist AI so like humans or chat GPT is a general is a general you can navigate a grocery store you can play chess you can play in the markets uh guess what the weather's going to be like pointed at anything anything you know like I could ask you a question you can ask me a question so he thinks that with the computational power and the progression of where this is going that it's almost certain that by the end of this decade we get to the point where AI is smarter than humans now we don't really worry about that because we already think it's smarter than us at doing certain things and soon it'll be smarter less than driving cars and it already smart for us flying planes we just kind of take it for granted we don't see it but then if you get to the Ray Kurzweil Singularity point so and mo gordat says okay here's the really big problem and this is exactly what Noah Harari says as well is when you take it extrapolated a little bit further out into the future so Ray kurzweil's Singularity moment is 20 49. but even before then it becomes a thousand times smarter than the smartest person who ever lived yeah I want to linger on that for a second so I was I'm writing a video article it's probably the right way to think about this on AI and so I ran the math a [ __ ] is clinically defined as somebody with an IQ of 70. Einstein had an IQ of 160 and the smartest person to ever be recorded is 210. so that means that the difference between the smartest person that ever lived and a [ __ ] is 3x the difference between Einstein and a [ __ ] is 2.3 x and when you think about Einstein gave us insights that created the nuclear bomb nuclear power lasers GPS so much of the modern world that we take for granted from one series of insights from a guy that isn't even the smartest guy that ever lived and so now when you start talking about being if 2.3 x gets us the modern world what does a thousand times get us like I have the chills I don't think people understand the orders of magnitude that we're talking about no they they well the order of magnitude was explained by mode Godad it's the difference between an ant and Einstein it's crazy it really does become an entirely different species this is the problem and even before so I I wanna I wanna keep our conversation uh in in stages we'll get to Killer Robots and all that stuff down the road and by the way I want everybody to understand I think by the end of this I think you and I are both techno optimists I'm gonna drag people a little bit through interestingly maybe you're not we're gonna drag people a little bit through the scary I certainly will paint the picture of how I think we do this well but I I want to make sure that we don't get to that in a naive way and that we really talk about especially as I think about the economy so here's the fascinating thing about the singularity now you and I in our last interview we actually differed in how we Define The Singularity so I think it'll be worth taking a second so for me the singularity as certainly as Ray Kurzweil defined it was it's borrowing this idea from um cosmology which is that a black hole has an event horizon The Event Horizon is the moment at which everything light uh data information however you want to think about it is getting pulled inside and we once you're past that event horizon we have no idea what happens and what he was saying is technology is going to rev up on this exponential curve so fast that it the AI itself will innovate so rapidly that you'll no longer be able to predict the future and so the future becomes an event horizon my hypothesis is that that event horizon is coming to us very very quickly and like you said he I thought he said uh 2045 you said 2049 it equivalent right it is within our lifetimes so you have this moment where using at least my understanding of the definition where the future is no longer predictable it's it's iterating so quickly like even even you and I just spoke very recently and even since you and I last spoke it things have changed so much we were talking about oh they got to a million users in whatever four or five days on chat GPT we're now what three months later it's it's north of a hundred million users people are integrating it so quickly into their own pipelines at impact Theory we actively use AI now in multiple ways and people are making new tools that we will subsume as quickly as we can do so well but so that's that's my take on the singularity how do you define what is the singularity in your mind look yes I agree with that definition and it's right kellswell's definition I also think of it that the point potentially where humans and the robots merge interesting so that'll happen that fast yes because augmentation you're already wearing an apple Rock an aura ring you're already people already have page pacemakers right we're merging with machines you're sitting there with little earphones in oh my God can I give you a crazy thought that's extending exactly what you're saying which is funny I've not thought about this in a while so there's a guy named David Eagleman who CR he's a neuroscientist he created a vest and the vest like will vibrate on you in in different patterns and he was talking about it from an umvelt perspective he was saying every species has an oomveld it's the the things you can see that you can hear like a bat obviously uh uses echolocation we're not going to be able to do that humans only see .0035 of the available electromagnetic spectrum what we call visible light is a tiny [ __ ] fraction of what's actually available so that's that's an umville and he said okay I created this vest and it can create a pattern on you that you'll begin to quote unquote see because your brain begins to interpret it as as a visual or you could use it for visual stimulus but he said you could also use it for things like where the stock market is and you could get a pattern that represents it's going up could get a pattern that represents that it's going down you could have one pattern represents uh the NASDAQ going up another pattern that represents the um the New York Stock Exchange going up as just but don't forget that is what Braille is you've transferred a written flat text into a now you feel it you don't read it you feel it audio is hearing it you know all of these things are happening all around us but anyway so I think of the singularity also as that potential for mankind and machines emerge and the reason being is a we will adopt it because it's better than us the question is is what comes out after that and so I think it still gets to that event horizon is you get to the point where you're augmented and then it's who runs who and that's the point we don't know so how do you think about this in terms of the markets so getting into uh crypto and that was my first sense of like whoa this is changing so fast that there's in disruption there are tremendous moments of opportunity but there's also tremendous destruction and so it becomes this game of how do you take advantage of this so when you think about AI as it interfaces with economies with um the Securities predictions which is a fancy way of saying investing in the stock market uh how do you think about that like is it there will be a brief window of first mover advantage but I think AI will so quickly proliferate that everyone's going to have access to it but what where do you think does that just oh yeah this is like a straight line to you or does it begin to break down there's just so many questions because none of us know this stuff and it's fascinating right so at the economic level this is scaling human ability augmenting humans now our brains at a at a at a rate that we could never have foreseen what does that mean for us well I just think it's like bringing in a massively new talented labor force at almost zero cost so I've said I think it's a bigger deflationary shock than China entering the WTO China at the time the average wage was like a thousand dollars a year competing with an American worker they were highly educated that was a big shock for the world to deal with and we got cheap goods and economic growth out of it so here we go we can do much more productive stuff so it probably changes productivity at a scale of which we can't comprehend so it's a it's probably end up being good or bad like do I as the average worker do I uh take more money home do I just get cheaper goods and therefore to your point about deflation my money actually gets me more or am I traumatized because I am now sort of unanchored and meaningless yes in answer to all of your questions because some jobs are going to get laid off I mean I would have thought that supermodels now get laid off for AI right we can't understand this stuff and we have to be honest with ourselves say it's going to do a lot of things it's going to tear Society apart the rise of deep fakes and who is who online how do you verify we're going into a U.S election we have no clue what's a real person what's not a real person our team here at realvision has been showing me me reading scripts out of text it's not me say I and emad at stability AI I mean he's got some crazy stuff coming from Sports of athletes that have never played against each other or been and I can't disclose what it is but it'll shock the world and so we don't know what's real and what's fake and it's at scale that we can't comprehend if we think that the elections in 2016 were complicated with Facebook and all of this stuff this is going to get terrifying so we've got that stuff the other thing is like my 70 whatever year old mother-in-law she's writing a book about the geological history of time well creating a logarithmic history of time um from the birth of the planet to where we are today and so each chapter is like the first one is like a billion years the next chapter is like a hundred million years whatever and she's an artist so she she paints around these topics as well but typically for an artist she'd be researching what she's writing she'd go down 17 Google rabbit holes and end up looking at the color of dung beetles in Africa for no reason and it would take her forever I showed a chat GPT she's like powering through it she's 75 years old I'm like oh my God so it's completely enhancing her abilities it's enhancing everybody about us and as you know you know for impact Theory or for us at real Vision there's so many tools we can use for editing video sound um writing newsletters understanding your customers everything so it's going to make it's just it's like asking that same question about the internet oh is the internet good or bad for me yes is it good or bad for society yes it's everything um and that's the hard thing to comprehend so will it be harder to get jobs in the future probably but can I do a lot more with my job in the next five or ten years definitely so instead of being used in markets right now I know it is but honestly I'm not close enough oh so the market I understand Market's always part there's two industries that Pioneer stuff one is um Finance the other's porn right and um Finance there's companies like Renaissance Technologies and they have had teams of AI scientists for two decades so they've been at the Forefront but you just don't know about it because he who makes the money first wins as you said you know if the incentive is money the finance people figure it out because that's their job so they've been using this for financial markets and they've had ridiculously crazy returns for a very long period of time are they looking for patterns so is it is so here's how I imagine AI is working let me know if this is accurate AI excels you give it a massive amount of data and certainly large language models they're extracting and this is people need to understand this they're extracting principles it's no longer a Brute Force attack where it's just like ah try all these things it it goes ooh I'm getting signal from the noise at a level that a human cannot do Tom bill you cannot go through watch the markets and go oh cool I can feel the thing happening in Burma that's going to have you know some sort of impact over here that I can invest against and make money but AI can so is is it pattern recognition or is it something else that they're leveraging it well interesting enough patent recognition was the obvious place to start you know what happens when economic data does this and this and this and this so that's been going on for a while now and you can see every time it's a piece of economic data the price action moves instantly because machines made that decision not here [Music] trading rapid trading decisions of keeping prices aligned machines are very good at it's this AI is actively trading yeah at that point it's machine learning more than AI longer term time Horizons is where humans are better because there's there's less certainties and the range of probabilities goes up right what is going to happen this second is quite easy for you and I to answer because we're here this second and the range of probabilities is pretty small but if I say what's going to happen in a year's time when we get together we don't know so we now have to forecast so AI wasn't specifically great at forecasting because it requires a lot of other stuff well Machine learning wasn't good at forecasting AI we don't know but my guess is it forecasts as well as humans do eventually depending on what factors we feed it and that's about data sets so it's not just about price data and looking at pattern recognitions is don't forget everything every expert ever said is online and how you can use those data sets and leverage them with other data sets that hasn't been done they've been using social media they've been using Bank research so firms like two Sigma take suck in all of the Investment Bank research they don't read it they pay for it they don't read it just put it into the AI so it tries to make smarter decisions so they've been doing this for a long time but what I have heard from some of these people is there are several models that they've shut down that work and they don't know why and we've heard the same kind of thing from Google why shut it down I don't really understand it's the it's the if we don't know what's making money we don't know how it's going to lose money so you don't you can't understand the tail risk so if it's a certain model and you can see what it's doing like it's checking news looking at Twitter feeds blah blah blah okay there's parameters you understand when there are no parameters which is what the the um the deepmind got to with go it never played go in a way that any human had ever played go in the in history and that's when people start going oh my God okay is it sentience and all of that conversation so they've seen that in financial markets as well where they can't Define why it's making decisions so therefore you don't know if it can correct catastrophic loss which is the worst thing in financial markets it's okay if you ask Chachi betin gives you the wrong answer it's not a catastrophic loss but if you've got a model that works and works and works and you've got all your Capital at risk or your clients Capital at risk and suddenly it goes to zero because it's completely wrong for some basic flaw so yes people are using it makes it harder for us as individuals to make money which is why the shorter term time Horizons are now arbitraged out by machines the business cycle time Horizons are now starting to get arbitraged at my machines or at least the trend following guys tend to be sooner so it's it's harder but what they're not so good at doing is I guess the educated guess you know the educated guess of of is crypto technology something interesting could this where could you extrapolate it too if you look at it but it's not very far away I mean humans aren't that smart so it makes financial gain the markets much harder so how I've thought about it just a whole piece on real Vision about this actually which was like okay we've got this massive disruption coming we don't know what it means for our jobs we don't know what it means for economy or prices or anything it's good bad it's everything all we know it's a massive societal shock to deal with something like this bringing this huge new labor force in that's smarter than us and quicker than us and that feels a bit uncomfortable and we don't know the outcomes so the only way to deal with this stuff and it's the same with crypto was invest in it because it is going to replace your job you might as well make some money from the back of it you know there's no point standing there being angry and shaking your fist at the sky saying keep away you damn machines it's Unstoppable zero to 100 million well that's twice the population of the United Kingdom in a month and we don't even know the numbers that already within China are using it you know don't forget what happens when you start using the data held within Tick Tock which is why the US is so terrified of tick tock it has facial imagery of so many people and so many bits of granular information why do you think Elon Musk bought Twitter it's not because he's a he's a he's a lunatic who wants the pain you know he actually wants us all having conversations with each other all day on every topic why does he not want bias in it why does he care so much because a biased AI is not a good AI what you want is as much broad Humanity as possible this is why he wants long-form text and video text if he can get Humanity discussing everything and he owns the data then his Optimus robot suddenly gets quite scary and smart this is the bigger meta game that everybody's playing it's not the small games of can I serve you in an ad any longer it's how do I I mean a lot of people don't realize that Google capture that annoying thing that you have to figure out how many traffic lights are on you always get the number wrong and they're always really blurry 90 of people don't even ask why you're training Google's self-driving AI um and that they they've got billions of human responses under bad lighting good lighting everything else what's a dog what's a man what's a bridge what they're just training AI we as humans are just training AI in the same way it's a it just I don't think we understand and we'll come on to this bit later what we're doing we're training somebody who's going to take us over the truth is hitting your career goals is not easy you have to be willing to go the extra mile to stand out and do hard things better than anybody else but there are 10 steps I want to take you through that will 100x your efficiency so you can crush your goals and get back more time into your day you'll not only get control of your time you'll learn how to use that momentum to take on your next big goal to help you do this I've created a list of the 10 most impactful things that any High achiever needs to dominate and you can download it for free by clicking the link in today's description all right my friend back to today's episode so Elon Musk has a really funny but perhaps all too prophetic way of thinking about it he said uh everybody that thinks that they're going to be able to control AI is sitting in a demon summoning Circle and bringing forth the demons saying like no no it'll be fine I'll be able to control it when it arrives and so in writing my video article on AI I I think that there are three paths before us you can bury your head in the sand which I think a lot of people are doing I think that's sort of the default response you can shake your fists uh at the sky and say you know we need to abolish this um or you can panic and the the three things that are most common there's obviously the fourth which is engage intelligently but the the three most common are barrier head in the sand try to abolish it or panic and when I think about okay what we need to be doing is intelligently engaging with this you do have to come up with a thesis about where this is going to go you're not going to be right of course but if you you need to at least be thinking through directionally where this is going to head so that we don't default to abolishing it which is what I think people need to try to do Tom this is the point it's like saying we want to abolish the common cold correct or more aggressive than that there's nothing we can do because if you ban it in the United States it'll come out of Brazil or Israel or China or India or England or anywhere it's like nuclear weapons once they're invented you can't uninvent them so the Genies out of the box also even going back to the nuclear thing so uh splitting the atom is incredibly difficult and unfortunately or fortunately creating a functioning large language model is nowhere near as difficult and so we're doing it at impact Theory we you buy a server off the shelf and uh you can do a lot of this stuff so we're creating the tombot by feeding it you know the thousands of hours we're doing the same you don't need plutonium to do AI you need plutonium to do nuclear so and your boy uh that runs stable diffusion is giving AI away as fast as he can to governments so the thing I want people to understand you're two decades too late to abolish it and so that's done but if you don't figure something out directionally if you don't have an idea of where this is going to head so here's how I think now between the two of us I'm the one that should not be speculating about the market so you will correct me where I go astray here but when I think about okay what what is going to happen with AI in terms of the markets the good news about the markets at least is my lay brain sees it is that as you have ai getting into it right now we have people trying to do a winner take all scenario using Ai and it didn't work because it proliferates so quickly and all of those changes end up getting priced into the market very very quickly so it actually creates a level of efficiency to um please remind me how to pronounce the gentleman's name that runs stable diffusion I keep forgetting Ahmad mustak Ahmed okay so as emad is saying is like this must be a public good you must give this to as many people as humanly possible so that you don't get something asymmetric which turns into asymmetric Warfare which then really becomes a problem so assuming that AI is going to get out there you will have people train the models better but that gets back to what's the differential between one and the other and so now you're back into a human it's at a different scale because the level of intelligence again is just astronomically higher but you get back to it's a i v a i and AI AI with if we're smart AI paired with a human paired with regulations compared to AI paired with another human paired with their regulations and my my hopefully non-naively optimistic view is that by getting this out there to more people because there is no retracting it at this point that you're going to get back into something where it it just never gets wildly asymmetric and it sounds horrible when you say it but this really is it's the tragedy of the commons because if we don't someone else will so if we don't develop this technology someone else is going to and that if we are if we're not very very careful and trying instead of regulating it into Oblivion trying to invest in it to get as good as we can we will be on the losing side of the asymmetric Warfare and so it is I remember as a kid oh God this really does sound terrible so I'm old enough that I lived through the Cold War in like a super real way where it was like me and other eight-year-olds were like oh my God like we're all gonna die and I remember going no no we won't because if somebody launches a nuclear weapon at us we would just retaliate and I didn't have the words to say it's mutually assured destruction but that's you know obviously how we know it now okay so just to take the the three things that we can't do to get us to the fourth that we must do so bury your head in the sand doesn't make any sense it's going to happen whether you wanted to or not the genie is out of the bottle uh trying to abolish it tragedy of the commons you will lose asymmetric Warfare if you don't get as strong as humanly possible and then panicking the blood leaves the prefrontal cortex you it's the seed of higher level cognition in the face of artificial super intelligence it seems really dumb to panic Okay so as you think about that I want to understand how are you deploying AI in real vision we'll start there how are you deploying AI in real Vision so the game is going to be about this is like the internet because of what you've said everybody's building AI and it's going to be how you utilize it and your data set you know you can say well everyone had the the internet yeah but Amazon Google and a few others won at this phase of the internet so we've been given something else like this and it comes ready trained with some stuff and then we can build on top so you're putting your own data in and it's the impact Theory it'll be the tombow so we're thinking okay what can we do with AI within real vision by having proprietary stuff we've you know for example I've written eight 19 years of research part of global macro investor okay so that's that's an interesting data set there's also every transcript of every interview we've ever done every action taken by everyone the website and then so on and so forth so it's going to be about who gets the best data sets and how do you use them um my view is the best use case for all of this is to create network Effects by giving the value of what we call the hive mind so of all of the people not just me and experts but everybody because they're all learning from being on real Vision much as they are with impact Theory so they become smarter because of it so get all their interactions and give it back to them and then eventually allow people to build on top of it how they're giving it back to them well because it it's it's you you you're basically surveying all the information held within the hive mind distilling it down and giving it back to them as opposed to the old model which will be monetizer eyeballs in a different way here is the Consolidated wisdom of the crowd go forth and use this as you will yes and if you want to build on top of it add more crowd information into it but it's going to be the quality of the data set that matters and how people use it and people try all sorts of different things we're not going to use it for oh should I buy the s p today because a it's a legal nightmare to do it and B we actually believe in giving people the knowledge does that stack up in 10 15 years time I don't know I mean I don't know what knowledge means I don't know what education means I don't know what any of this means in the end and none of us do it doesn't mean it's worthless but it could be different you know my view on all of this has been for a long time when I saw this all coming and I saw the rise of crypto and saw the rise of Technology realizes we will be replaced by robots and Ai and the internet of things and all of the things and how electricity gets cheaper I call this the exponential age all of these exponential Technologies where do humans fit in with this and people have talked about Universal basic income I.E the government paying you because you've got no job but the economy makes a lot of money because all the machines are doing it and I just think what humans do really well is socialize and you and I are big Believers in community and because of crypto we can share the benefits of being in a network so maybe that's the role of humans that we can find new ways of working within communities to encourage communities philosophies like-minded interests where you participate in them um because it's certainly not going to be doing anything that AI can do in 15 years time it was pointless it's really interesting man I mean we don't need Tom to make video I mean I've just had this today when I saw that model one and it's been in my head but it's like us making video literally within two years it's almost pointless but within 15 years it won't exist you'll just put a prompt in saying hey can you get me to talk to Raul about um AI um let's let's do it for about an hour and a half long whatever it is off you go and it does it I've seen it because it's already happening so you and I don't need to have a conversation because our AI personas can have that conversation is that what you predict because I don't think that's what will actually happen I'm seeing it already I'm seeing so here here is I think we have to ask the fundamental question why did AI come into existence in the first place because I think that this is going to give us the most uh direct understanding of The Human Condition so that we can predict where this goes this is why originally I really wanted Ubi to be the solution it won't be so I I am the Ubi experiment personified so I made a ton of money um never need to work again and yet work harder than I've ever worked in my life and people that win the lottery end up imploding emotionally Rich Kids implode emotionally there there's a reason for this and I would say it's very predictable reason that tells us a lot about our future as it relates to AI so there is going to be and there already is it's utterly fascinating uh there is going to be digital influencers that are they're not real people um they're you know an avatar that you create and you feed it you know give me uh raupal meets Joe Rogan and you go off and that becomes a personality and it does the thing but the reason that AI exists is because nature had to make us face a saber-toothed tiger to do that it had to give us drives hunger uh the drive for sex all of that and so it has Evolution has embedded deeply in the human psyche a need for progress and a need for meaning and purpose a need for what you're calling socialization that the connection with other people and unless we merge with machines which we will but it's going to be down the road that's I don't see that coming barring uh massive acceleration of uh technological advances aimed at the the hardware wet work interface of the human mind which may happen in the next 15 years I would be a little surprised playing that clip might not age well uh but setting that aside for a second so we have these biological impulses they are incredibly strong drivers that Force us to seek progress and contribution to the group so as far as I can tell one of two things is going to happen either the thing that really becomes popular is something I can feel a sense of ownership to so I'll I'll be blatant there is a reason that I created an avatar engine because I'm getting older and there will come a day unless somebody figures out anti-aging where it's just not cool for me to be the guy on camera so hey if I can create a visual Persona that then allows me to be untethered to my physical body which admittedly it's beyond the scope of this interview to get into that but I think there are actually things that have to be thought through very well there I will Point people to Jordan Peterson and his fears around virtualization but anyway if I can create a Persona that allows me still to flex my intellectual muscle in a way that creates value in other people's lives so I feel like I'm still contributing to the group but I'm able to do it in a far more ageless way but I need that sense of I have not wasted my time on planet Earth and if people don't [ __ ] hear me when I say you better figure out a way for humans to feel that they have contributed meaningfully and that is my my huge fear giving them money is not going to solve that problem Ubi will not solve the problem of meaning and so people have to figure out how does meaning exist in a world with AI and you've got to realize here the other important point is the AI doesn't care how you think doesn't give a [ __ ] about your emotions but we have to be careful about that it doesn't care about your job it doesn't care about anything it's going to it it so think about it this way AI because I know where you're going a I by default doesn't care about anything but AI will do nothing unless you tell it to so go get go to go go win a video game go whatever I in the end you see the issue is is where this goes is the AI has exactly the same state that you just described from humans survival why you would have to program it to care about survival no no no no it doesn't program we're not talking about a computer program that reads this thing and does that it's not a formula this is intelligence You're Building here so intelligence makes and builds on its own decision-making processes in ways that you cannot control agreed but so here's where I think people are getting this wrong people are forgetting humans have been programmed and so people think oh this intelligence thing is devoid of context false if I [ __ ] with your microbiome I will mess with your ability not not even ability I will change the way that you process inputs so humans are so deeply contextual that I think people are delusional about what they think intelligence is so my thing is intelligence is inert unless you give it an impulse and so this is the fourth thing so if number one is ignore number two is uh try to abolish and number three is panic and four is be thoughtful the thing that we have to be thoughtful about what are you going to what context are you going to create that creates that initial impulse of uh context and drive for AI to do something so Mo Godad talks about is book so the two books I urge people to read them because look there's a big debate about this stuff almost everybody ends up in the same place which is kindly in Terror it's kind of like yeah probably we get replaced by different species now whether we're basically fatalism yes but whether we're part of that species or not is a different question right are we augmented or we're not so that's what homeostas talks about and in great intellectual depth is augmented augmented humans or extermination of humans or replacement of humans by by another thing Mo gordat says I mean you could palpably sense his fear because he saw it firsthand and he just said listen it's all well and good now we all kind of understand how fast this is moving and what this could mean he's like yeah and we've also gotten with working on Google is quantum Computing when you put these two together you know this is change because so you have once you have one thing the only thing he thinks you can do to make this outcome that you're talking about is be nice it's kind of this bizarre uai or to each other how we interact with AI and ourselves that's what the AI learns from so we're the parents of a kid that we don't know how the kid is going to grow up so you can Scream and Shout in the household you can beat each other up you can do all of these things you can [ __ ] talk about all these people and it's going to affect your child whoa and so that was his point and that was it feels both naive but also hopeful that there's a possibility and the answer is how I've approached this is look We're Not Gonna Know we can't know we can sit here all day and talk about it and there's thousands of pages of books on every sci-fi movie ever made is on this topic so here we are at the Cambrian moment let's just [ __ ] enjoy it this is one of the most amazing things we will ever live through and it's such an incredible change in how the world is around us and we're all pissed off for the world around us so here's something that's different it's like crypto here's a new system here's another system you know how do we how do we deal with the issues of society well we've got building blocks and they're interesting like our cars will soon Drive ourselves and our Amazon delivery trucks will just come without people and they'll be running on electricity and that electricity will have been generated by some super cheap power supply and a robot will have come and made your coffee and you know just enjoy what's about to happen and embrace it so if you can afford to invest in it if not be curious because as you said the first three points there's nothing you can do so you kind of go for the other human survival Instinct which is adapt or die would you say let's do it and you say well you know humans we don't we're not going to merge with the machines and whatever as I've mentioned you before we've all done it already will merge with the machines I have the same timeline you've got your earphones in you've got your Apple watch on you've got your thing you've got your glucose monitor these are you merging with the machines what are you doing you're using the machine to augment your hearing experience your health experience everything everything around you is you using us machines to augment yourself and that is just going to accelerate because what is a pacemaker but a foreign digital body implanted to give electric charges into my heart okay if you told somebody that 100 years ago do you think you're a scientific uh science fiction nut case but pacemakers have been going for what 40 50 years now so the implants the you know people getting new knees I mean that's now like a quick operation in and outs to have a new knee and soon the knee will have Electronics in so it will happen without us even knowing and you'll be doing a podcast in two years time saying how you've had this new chip implant that's taking a blood glucose sugar measurements and beaming it straight to your phone and then It prepares your meal exactly right and he won't even thought about it but you and the machines emerging because do you know sorry go ahead because to your point earlier our job is to survive and the single best answer for our survival is trying to get the stronger teammate it's it's the only way it's like you know you always want to choose the best guy in your team well if we can merge with them if they're part of our gang we're okay you're very high in trade openness guaranteed uh as am I it's interesting though so I I think that the only uh part of the solution to dealing with the current moment is fatalism that what will be will be and not that everything happens for a reason or anything like that just that this is out of our control and I I think from the the dawn of time there was no way to stop the creation of artificial intelligence because technology is the promise of a better future we have a an insatiable a literally insatiable desire for Progress uh we are going to inevitably create AI I think on any timeline and on this timeline it has already happened um but I want to go back to what um you were saying in terms of you're raising a kid and that kid is AI that's very interesting to me in terms of how we think about it I think that that's hugely important and was a blind spot that I had or was a a metaphor that I didn't have in my Arsenal and that's going to be very very helpful I don't in in the same way that AI is inevitable it is impossible for you to get the world to agree and be fine and that's just a fantasy it's I don't see how that ever plays out unless AI becomes so uh domineering that somehow forces us to but even that is a dystopia unto itself so anyway I don't think that's going to happen but the part that I think people are under appreciating is that you people are anthropomorphizing Ai and I think that's a mistake and I think that will cause them to be very surprised by how AI moves and I think closes a door to a potential way to do this well so what I mean by that is a AI does not care if it lives or dies and so the moment people say oh well AI wants to survive that's an anthropomorphication uh you're you're thinking it thinks like a human and it doesn't it is computer code that has not yet been shaped by an evolutionary like force we are that evolutionary type force and right now if you're correct we are just sort of blindly saying learn how we are and I am sure everybody's heard the story of the AI that turned Nazi and like three days on the internet uh which is very troubling uh and so I would say that just telling it Go learn how we are and regurgitate us back to us would be the wrong incentive structure and there there are many bright Minds talking about alignment but I think alignment is the conversation and yes it is it is a very thorny problem and for people that haven't heard that phrase before you need to align ai's um desires quote unquote with ours so that AI has the same goals that we have and if you know azimov he wrote the three laws of robotics which I don't have memorized but basically the punchline was don't hurt humans and so every robot was programmed with an inability to hurt humans and so it was like help a human whenever you can and never hurt them I forget what the other one was so we need something akin to that with AI so that AI wants to be beneficial to humanity now whether that goes back to the initial problem of once it proliferates somebody's going to create AI That's evil um possibly but I I don't think in the same way that I don't think the the overwhelming level of intelligence that Al AI will represent gives anybody the excuse to tune out I don't think that the fact that someone will inevitably turn it into um a very brutal weapon is an excuse not to try to create aligned incentives with AI and so I think that in terms of the the hopeful part I think people need to recognize that AI doesn't intrinsically intelligence doesn't intrinsically want to consume and take over and be in charge that is a human result of evolution needing you to survive a ruthless environment that was truly red in tooth and Claw AI is not in that same boat and does not need to be in that same boat and I agree I'm not so sure about the anthropomorphosizing it because you know we at core are some sort of program code of whatever it is whether there's more to that or not you know science is still arguing this stuff but we've had computer viruses and their job is not to die it's not that difficult so I don't know about that um there's a lot of unintended consequences that I hadn't realized because we're all having this debate right is it going to take over humans or not and I spoke to somebody at Google X and they're like what we're worried about I'm like yeah tell me is like we're worried about how AI can be used for genetic modification and how fast this is going to move it's like we're not worried about that stuff because everybody's worried about that stuff but it is advancing so fast in human genome analysis and tinkering of genomes that he said we're worried that you could just choose I want to kill all brown-eyed people on earth and create a virus that does it so that is the problem with AI is there are things that the computational power is so fast and so big that it can do a lot of things for science which is amazing for humans you know we will we will use AI to probably cure most forms of cancer or figure out you know part of the the secret code to life longevity Health all of these things amazing but we will also use to destroy ourselves because we're humans and that's what they're worried about because it's so prolific that it's actually not that difficult what is up my friend Tom bilyu here and I have a big question to ask you how would you rate your level of personal discipline on a scale of one to ten if your answer is anything less than a ten I've got something cool for you and let me tell you right now discipline by its very nature means compelling yourself to do difficult things that are stressful boring which is what kills most people or possibly scary or even painful now here is the thing achieving huge goals and stretching to reach your potential requires you to do those challenging stressful things and to stick with them even when it gets boring and it will get boring building your levels of personal discipline is not easy but let me tell you it pays off in fact I will tell you you're never going to achieve anything meaningful unless you develop discipline right I've just released a class from Impact Theory university called how to build Ironclad discipline that teaches you the process of building yourself up in this area so that you can push yourself to do the hard things the greatness is going to require of you right click the link on the screen register for this class right now and let's get to work I will see you inside this Workshop from Impact Theory University until then my friends be legendary peace out there was a very funny in the who whatever brilliant Twitter user this was my apologies for not paying attention I didn't know it was going to stick with me as much but somebody put in the comments regarding are just inability to stop developing AI they said great filter go Burr and uh for people that don't know what the great filter is it's like why are there no aliens trying to contact us and the one potential punch line is that there's a great filter could be AI could be thermonuclear war but that just nobody can get past it and so every society goes so far and then stops here's another interesting idea along that which God so for people that know Graham Hancock who just really believes that there was a an ancient civilization far older than we think uh and that it got oblited this was the Fingerprints of the Gods book well he's written a bunch of books on this but the the most recent thing was called the ancient apocalypse so he's been writing about it for I don't know 30 years or something his books are fascinating uh and he he so plants that initial seed and then I again I don't know who said this this was relayed to me by one of my employees who was pulling wisdom from Twitter uh and he said it is entirely possible that AI really is the uh great filter Gober and that we have developed AI before and every time we get to the point where AI takes over much like in The Matrix we end up uh relying on something in in that movie they black in the sky but in reality if technology Rises AI robots take over it could be a massive solar flare that ends up then just obliterating Ai and all the technology and then we come up as a civilization worshiping a sun god again because it was like You Killed the [ __ ] machines thank you uh and I thought oh my God like probably not true but the other one I thought about is if you are this super amazing civilization somewhere in the fall ends of the solar system not the solar system of wherever of nothingness and you figured this out so what you would do is you figure out that organically you have to let something grow because this nice kind of organic computer is much better at adaptation up to a point so why would you not see a billion planets and one or two happen and one or two spring life they'll all be different but they'll all end up to your point before in a aim machinery and maybe those things turn organic eventually because organic but with that kind of augmentation so maybe we are that maybe we were just planted maybe the bacteria that started the Earth we're just planted on a billion planets and ours happened to be one of them by this amazing group of whatever somewhere else who the hell knows right yeah okay so before we move on because there's a whole nother thing I want to get into um I do want to wrap this up with a bit of hope so thinking about this a lot I think that there is so you said something uh I can't remember if you said it to me or somebody else I've seen so much of your content uh but you said that that we're we're going to go through a Renaissance and I think this ties into what you were just saying which is guys what what we're about to live through maybe it's 10 years maybe it's 100 years but we're we're going to have a moment where you're going to be able to utilize this to massively extend your own capabilities Impossible Is Possible is possible imagine that we've all grown up with superhero films we've been given it it's amazing yeah this is going to be I think uh it it already is so right now if I can just get hyphy for a second so that impact Theory we're we're a media company so we're trying to improve the world through ideas and entertainment and they're two separate sides of the company on the idea side that's you know we've been talking a lot about that AI is going to help you think through things it's going to help you see around corners it's going to find um signal and noise patterns that we wouldn't otherwise be able to put together but it it also so I can't tell you I have honestly lamented three things in my life lament is the right word I have lamented my limited intelligence I have lamented my inability to sing and I have lamented my inability to draw and those are things that would make my life better I'm a very excitable person so take that you know with a grain of salt but I we're using AI to help us create project Kaizen which for people that don't know don't worry about it it's it is a new form of video game and I am limited my contributions are limited by my ability to extract from my head the the vision the literal visuals and make them a thing and so there was a part of the experience that I was like okay we have to move on we have to keep going but it just wasn't good and it didn't give me the visceral response I wanted to feel when I saw it and then mid-journey comes along and I'm like oh I I can actually now create the thing that's in my head I can use text to go this this is what I've been trying to tell you and then no joke three days later we we it's just so much better it's unbelievable now we still had humans had to go in and you basically use it as art Direction but all that frustration that I had of like not I'm not feeling what I want to feel and I'm not talented enough to translate the emotion into words to get an artist to create the thing but through prompt engineering I could and so finally I could go this this is what I've been trying to say that that is it felt like a superpower it was one of the three things that I have in fact I've never put this together like this one of the three things that I have lamented to a god I don't technically believe in I have lamented about not being able to draw just to really make it simplistic and I can now and I understand why that makes artists mad but at the same time this is amazing and for people that lament that they don't have my verbal ability you now can it's really and because I'm not a person that gets overly defensive about somebody else getting good at my thing uh I'm just excited it it really is as close to superhero abilities as we're going to get have you seen the music version so one of my Lamentations is I love music I just can't make it I can't play guitar I can't sing can't do anything but I know in my head what I want to create music from and already again the stability AI people have got a music version I think Google have got one as well now coming out where you can kind of say listen I want that kind of deep Funk bass but I want to have X like this and this same as you just did is you're getting at your word vomit of how you're visualizing it and it'll make it so there's hope for us yet Tom it'll trade well actually Auto-Tune that's humans being augmented by machines it's very true all right uh we'll pivot away from this because we've got a whole lot more to talk about um that is very exciting to me I think that that um while I am not a doe eyed Optimist who is unaware of the potential dangers I think that it will be an incredible tool and I may be more optimistic than others that uh there is there is a long tail relationship to be had with AI that does not need to be AI dominating us all right having said all that um may you live in interesting times as the curse goes uh we're really living through an interesting moment the exponential age as you talked about earlier we've got to Confluence a lot of things but we also have an economic moment right now um that is weird and I'm very curious when I started um doing the research for this interview obviously you and I interact quite a bit but when I started doing the research for this interview I thought I would hear a lot more pessimism out of you about recession about you know uh global economic collisions from Russia and Ukraine to China and that looked like they were imploding for a while but you're pretty optimistic so I'm very curious um what's happening right now so first thing most people need to realize that Doom porn sells it catches attention fear is the strongest human emotion right and so you see a lot of it because it it grabs attention so we need to break apart two parts here one is what do I think of the economy and the other is what do I think about markets so my economic view is I think most of us even know it is we're in recession we're in recession and it's probably going to get a bit worse and there's a lot of people going to lose their jobs and businesses are going to find it hard there's less money around and it's going to be pretty miserable um and it's the sort of miserableness that you go through periodically that is not catastrophic so it's a recession and recessions are as old as Humanity itself so we've just had what's confusing people in my view is we're so screwed up by the last three events one was the pandemic so there's no normality what was the recession look like there that was the weirdest one then 2008 was the end of the entire Financial system and then 2001 was this spectacular Tech collapse so people have an anchoring bias it's like well it's the end of the world really when I started when I graduated University it was 1990 and it was a terrible time to graduate because it was a recession and there were no jobs and I wanted to go into finance and they were firing people as fast as possible and it took a while it took a while house prices went down for a while and people didn't get jobs for a while and people were laid off for a while and the stock market went down 20 percent it's a decent sized recession as well went down 20 percent took some time to recover the jobs came back the economy was cleaner they got rid of some of the worst excesses of Leverage and the world moved forwards and before you knew it all of the 90s was a boom I'm kind of of a bad opinion is we have no systemic collapse coming we don't have those kind of issues and we've invented the magic printer the money printer of quantitative easing that papers over all troubles so we don't have that coming societally yeah we've got a whole bunch of issues to get through a U.S election with all this Ai and the anger and the populism but forget all of that again you can easily go down the Doom or you can enjoy the community you've got around you and there's different ways you can have lenses perspective on the world investing the job of markets is to look forwards if you tell me a hundred percent of all economists are forecasting a recession it's kind of no [ __ ] Sherlock um and therefore is it in the price toys are all those stock market people really stupid all of those machines that they haven't heard you at all no they actually understand this and it's a real-time probability waiting business so it kind of knows that and what it looks forward to is okay how bad is this is it catastrophic is the world going to end what's going to happen and the markets are telling you no it's probably done my my view is the bottom is in in markets and the bottom was in crypto in June and for Bitcoin was in October November the bottom was in for the stock markets in October as most end of bear markets happen it priced in a recession and we move forwards from here and eventually they'll cut rates again and if you think about it is we had a total shutdown of the global economy then a reopening of the global economy that's caused this inflation that's hurt everybody and eventually we'll just rebalance back to some form of normality there's a massive amount of Doom porn about inflation is going to be structurally here forever we're all going to die which is kind of I'm more like you are with the AI side where I'm actually like you know what we've just developed AI we've got Relentless technology the price of energy is coming lower from all different sources productivity of humanity is growing um so I think I think it's actually probably an interesting time it's an interesting time because everybody's so bearish psychology plays a huge part in markets because everybody expects inflation to be relentless and ongoing and for the rest of our lives much like what 24 months ago everyone's like every tech stocks going up forever and every businesses can ever fail again you know we're humans we make forecasting errors of quite wide amounts at various points so yes no I'm and I spend it so I'm not just saying this because I'm just chatting to you I mean I do an enormous amount of work on this I'll write 150 pages of research I sit down writer every month if you're doing that for 19 years um and so that comes with 2 000 charts and models and stuff with myself and uh my colleague Julian Bittle from secular themes short-term theme doesn't mean I'm not wrong as well I can clearly be wrong but I just think it's in the price and what we the worst part of it is is the stock market's going to be going up probably it won't rock it up at first but eventually it'll pick up while we're all feeling the pain because people are looking forward and so they're saying okay the Bottom's in Now's the Time to get in we know we're going to go up from here so even though we're still sort of going through it people are losing their jobs but wise investors are like you just need to project this out into the future yeah so there's a Time Horizon of how the business cycle works currently the thing that leads it the most is the Chinese credit cycle who knew but it is right now 17 months ahead so when it turned up 17 months ago we're starting to say huh okay there's something happening here it also forecasts the recession and then and then you've got other forward-looking indicators about nine months out um we've got a bunch of indicators but the last thing in the stack is rents and the one before that is wages so wages are going up like this now but they take a while and then they start coming down again they won't deflate nobody's going to really come to you and force you to take a uh a pay cut but it means that they don't keep going up but your rents will probably come down um and so that's a function of these things just take time the unemployment rise hasn't even started now we can see everybody laying off every company is laying off people thinking about tightening costs everyone can see it from sponsorship advertising sales I mean it's everywhere and every single person I speak to is like Christ it's miserable out there but the unemployment side doesn't really come until it should start in the next month or two and then that goes on for nine months of just relentlessly higher unemployment rates so anybody watching this why is that so predictable why nine months it's just how it always is because companies make decisions and whether it's around board meetings however it's done they get to a certain point where they hit the panic button um and they lay people off that's usually when the bottom of the recession starts it's usually when rates start getting cut it's usually when the stock market often recovers as well so for people watching this two parts of this one is if you're an investor you might be able to buy these technology stocks with this Renaissance of amazing changes happening around us at prices down 70 percent from where they were two years ago a year ago okay that's kind of interesting because your expected future return goes up same with crypto you know you and I've talked about this you buy when the site the business cycle brings it back to the the bottom of the secular uptrend that's where we are these are where you make all the money this is what you get paid for to take risk here you you don't get paid to take risk at the top and you tend to lose money so these are the moments in time so that's very interesting as an investor but anybody watching this think about your cash flows think about cash flow think about your expenditure and just say just be a little bit careful because losing a job or having your own business struggling for a period of time and I think the worst of it will be over relatively fast but yeah it's these laggy what's what's relatively fast so I said the world I'm recording this in in March of 23 when do we think this turns around so I think the bottom of the economic cycle is in the next quarter so I think we've got a really ugly course to come but the problem is it's that shock that sets off the companies to go I need to love some staff all of that and it's that process that begins the healing so the one is that shark so if that shark isn't people getting laid off what is the shark that's coming in the next quarter the shock coming in the next quarter is is the general slowdown from interest rates you know biting into all of these indebted companies or households or credit cards and all of this stuff and everybody goes uh I'm not going to spend money that is what a recession is you know it's not usually driven by a pandemic it's not usually driven by the entire Financial system collapsing it's usually by all of us making a rational decision of I'm just not going to spend money right now because things are a bit uncertain and that is what causes recessions and I'm actually telling people to do exactly that because it's the rational thing to do what you do if you're going to panic panic early and I'm not talking about the stock market going down either I think we've had that went down the NASDAQ went down 38 percent that's pretty much bang in line with a regular bear Market but what I'm saying is in your personal life what it really matters where the rubber hits the road is panic early just look at your expenditure look at your cost look at your business so what do I need to do here uh just to make sure that I can just get through a pretty shitty year but 2024 probably pretty decent so what is the natural cycle of things why do people begin to warm back up and what are the threats if any that you see looming so housing I'm hearing housing bubble bursting probably is that it it's just people are overreacting not real the housing market is expensive interest rates have gone up so people are going to buy less houses yes will house prices come down yes because they went up a lot will the activity in the housing market dry up for maybe two years yeah most likely um are we going to see a leveraged crash no because nobody's really got a lot of Leverage at household level in property that was something that happened in 2008 it's been too expensive and too difficult to do so I think the home builders have a bit of trouble because they've got a lot of inventory they can't sell it they need to finance it for a couple of years it sits around 1990 91 92 was very similar I was in London there and it was pretty shitty in the property Market it's great for me because I just entered the property Market at the end of that so prices were relatively low they don't come down a lot but that hadn't gone up a lot and my income was going up because I was in my 20s so income goes up every year because you're hopefully getting promoted and stuff like that so um but you know a few property developers went bus things were slow and then eventually it cleaned up so I'm more of that opinion that you know house prices come off 10 percent maybe even 15 you know some areas that were really hot come down a bit further but it doesn't expose any catastrophic leverage the banking system is more than adequately compensated with capital um it's hugely sold in the United States so it's just a bad time it's just about what do you think about about rates are they going to continue to go up is there because the FED as far as I know is signaling that they are going to keep taking rates up yeah so every single forward-looking indicator that I have on inflation suggests that inflation utterly collapses um if you want to see a real-time inflation data look at something called trueflation TR you inflation um it's actually on blockchain it takes hundreds of thousands of individual prices on a real-time basis and it tells you where inflation is today in U.S inflation today is about 4.74 percent wow this is the headline whichever six so and if we think of what inflation is it's the year-on-year comparison what happened last year Well between March and June was Russia invading Ukraine and every commodity came through so we're going to see the flip side of that so we will see inflation come off very fast all my forward-looking indicators that that look at it from different angles all suggest the same so I think the FED is speaking Max aggression because they want to make sure that the out of the Embers doesn't rise the Phoenix again so I just want to Stamp Out people's expectations of higher prices in the future they know there's a recession coming they can see the inflations coming so uh that um recession is coming so I think it's the final game which is like get down and stay down um and then that that's what they've done and so my guess is we'll be having this conversation in September September somewhere between September and December and they'll have cut rates whoa you think they're going to start cutting that fast so how does the market is telling you that that's the market and the FED are saying that's wrong that's not true we're here higher for longer but if unemployment is going to rise they have two mandates inflation unemployment inflation is going to be falling on unemployment Rising they cannot go to Congress and say oh yeah we're just going to do this a bit longer they're just going to fire them all there is politics involved in the end so no they will cut rates and they should do it by then for sure so how is it though going back to the idea of the Embers is the place from which the Phoenix is going to rise and you know we're going to go rocketing back into Euphoria and end up back in the same spot How does cutting rates that soon why not hold you won't be asking for that in in September you'll be begging them your friends will be losing jobs people are you know getting decimated there's houses in your street that don't sell you're like really guys what do you want to do destroy everybody that's that's how it always works and then also everyone's got a lot of debt all the corporations in America plus the households are 120 of GDP in debt and the US government's 100 GDP in debt so the when I think about the US government and the amount of debt that we're carrying and I think about interest rates being this High it it is there a conversation I know I'm asking you to prognosticate here but is there a conversation going on between the US government and the FED of like hey get ready to pull those rates down because they themselves have all this debt service that they're going to have to do yes and I think it's global I'm I'm I've just been developing I've written a lot of that sorry I'm not finished at any sentence I've just cut discovered something that really quite shocked me that I've been writing a lot about to get my thought process in global macro investor my understanding is that all debt that the US has borrowed above GDP growth so if GDP grows at two percent and debt growth grows four percent everything above is only for financing interest payments since 2009 since the recession and so that all of that money is the exact same amount as the size of the FED balance sheet so they are issuing bonds to pay the interest that's so that's paying your credit card with another credit card and then giving it to your dad and say well you settle the bill it's which is the Fed so I think they completely know what's going on and I haven't really shared this with anybody yet I also think it's Global and it's understood and it's all smoke and mirrors that we never saw what the game was and I think I've proven it that this is all all the central banks did this is what quantitative easing and step back is what what am I talking about in this scrambled nonsense that I'm saying the US for easy maths long-term Trend rate of growth is 1.75 but let's call it two percent interest rates have been average around two percent let's say for easy maths and the government is 100 of GDP in debt so so therefore their interest payments are two percent of the entire GDP which is how much the economy grows okay put that over there but you guys in the private sector you're also 100 of GDP in debt where does your two percent come from because GDP is all of the activity in the economy and that's just gone to the government sorry guys you're either going to go Bust or we're going to blow up and you're going to blow up the banking system or or we're gonna have to keep eating this negative growth difference of two percent every year until you get rid of this debt and we're all folked so once you realize that these two pools are both 100 you realize okay somebody is going to have to do something so it ends up on the fair balance sheet so when you go to Japan really interesting because Japan the households are massive savers companies are pretty in-depth the government's massively in debt and it's the same but because their interest rates are lower they can have more debt but their economy grows really slow as well so you get to a certain point and then you'll have to say right it has to go into the balance sheet the Europeans have been doing the same the Brits have been doing the same it's all the same thing it's like a there was like it feels that and this is going to sound ridiculous it feels like there was a global treaty of which okay this is where we are we can't the debt has got too big and nobody can pay the interest payments without destroying the global economy so we're just gonna have to Pretend We're not um debasing the currency and call it quantitative easing and say it's a precise way of injecting money exactly into the right part of the financial system and it's like no what you're doing is getting a credit card to pay for your credit card and then giving it to your dad and say you you worry about this it's not my problem well so I want to see if I'm if I'm tracking this because not to get back into Doom porn but this seems pretty Doom porny uh okay so for people it's not because the world works it's not Doom porn because it works every time they do it are we just pushing off a problem Okay so it's making assets go up when they do it it is meaning that companies don't default the banking system remains sound but are we originally able to get out of out of debt so let me make sure I'm understanding what you're saying this is going to be very important okay so the I know we're using round numbers but this is very helpful so worldwide GDP gross domestic product the the amount of productivity so the capital that is usable effectively uh you have two different people that have debt in that amount which there's no one to to have real money to pay the [ __ ] thing off so if you had one person that was like okay we're maxed out we're two percent but GDP is two percent cool we have the path Just Be Frugal and and you've got a path out of this but when you have two people that owe the whole amount effectively you now go into money printing and I mean if this works I'm actually okay with it I know how that's going to get me lit up but it so the solution here is okay we have two two large groups governments private sector which are all the groups that exist and each one of them owes the entire worldwide GDP in debt you can't both be in that situation there's no Peter there's no uh you can't rob a Peter to pay Paul because they're both in the same situation so now the only thing left is printing money devaluing everybody to get out of this situation but the way in which we do that by buying things from uh the private sector is we're making people that hold assets wealthier we're increasing the gap between the rich and the poor because the way that we inject money into this system only reaches people that own assets and so we've created this problem and the only way out is to print money which is going to increase the the Ginny coefficient for people that know that phrase where it's like nobody cares in absolute dollars how much you have you just hate that your neighbor Timmy has more than you and so you freaked the [ __ ] out and so it becomes the differential that becomes the destabilizing element so what you said assuming what I just repeated is correct that sounds destabilizing and Doom porn so help what is the other what is the other outcome the other outcome is let it all burn clearly a terrible idea when you're this far in debt let it all burn doesn't work anymore right that's the end of that's kind of end of civilization stuff Ultra Doom porn so you're faced with Doom porn and Ultra Doom porn what are you doing right there was no other way so this is what people need to understand what is GDP GDP is a summable economic activity that goes on and it's comprised GDP growth rates are comprised very simply of the number of people in your economy is it growing if it's growing your economy grows because there's more people generating more activity generally secondly is how much productivity does it have I are those people productive do they make a lot of stuff for each man hour and finally is how fast is debt growing so when we have an aging population the number of humans declines over time what happens is we stopped immigration almost everywhere because everyone was under pressure for income because real wages haven't gone up so we we lowered the rate of immigration so that lowers Trend rate of growth aging population they're less productive and they spend less so GDP keeps doing this for decades on end baked in the cake from from that they become less productive because they're older people and a whole bunch of them on in the labor force anymore okay so you're not very productive you're getting old not population growing so guess what Bingo answer debt we just took on debt right it was rational until it's not it's like it's rational to Super leverage yourself on a house and house prices go up and you look like a god until you get it wrong and you lose everything so it was rational to take the debt and this is where we've got to and then it was the government's got into the same boat and everyone was just they're there so now the debt is the debt debt growth is actually not that high anymore because we've hit the ceiling so the only way to solve this this goes back to our earlier conversation is we cannot solve population growth and debt growth is peaked out so we've got the one thing in the middle called productivity and it takes us right back to AI and the robots and cryptocurrencies internet of things green energy all of these things so if you are governments look what Europe's doing it's interesting and maybe I'm just inventing a narrative but Europe the US Japan they all know what they're doing so they're printing money to cover their bills um and Europe thinks well Christ we need to get the bloody economy going here because GDP growth is what pays our bills and it's pretty sluggish because everyone's old here and everyone's in debt and the banking system is a mess let's do a double whammy which is what the US did back in the 40s let's put as much stimulus as we can from this fake money and RAM it into the green energy sector and we're going to build a lot of stuff and we understand a lot of stuff is going to be wasted Capital but out of it we're going to do one amazing thing and the it will happen is out of this energy costs will collapse now this is really important for people to understand what does technology do technology drives more productivity out of a single unit of energy kind of once you see this thing it's like that's what humans do with everything it's like find a way of getting extracting more for that barrel of oil because that's what we use now that barrel of oil has been our fixed energy source since we replaced whale oil so we've been using this and so it's been the constant so Technology's had to drive all the productivity in every way it can based on how much is this so we've had to bring computational power down everything down so that one fixed thing which is the price of oil which on a inflation adjusted basis been pretty stable for the last 70 80 years and if what the US is doing with its inflation Act and the Europeans are doing with its green energy in Japan is doing and China's doing and Australia is doing and the UK is doing if they force enough investment in they will change the energy source of the world and because all of these have exponential downtrends in cost we will change the energy coefficient and what happens is productivity times the lowering the cost of energy is an exponential change for all of us that's how you solve this there's almost no other way of solving this problem of slow GDP growth old populations massive debts without blowing up everything so you're gonna have to keep doing this money printing thing which is miserable because it makes some people rich and other people poor and or you can have inflation which just makes everybody miserable they're all terrible things but the faster you can get to changing that productivity equation the better because it's the it's the only way there's no there's simply no other way of solving it you either Rob from everybody or grow the economy with a declining population um so talk to me about the energy you're saying that so maybe I have uh just an undereducated view on the green energy front so you see the cost of energy coming down as we invest more and more into the green energy side yes so right now we're in transition where we're not probably producing enough oil and we don't have enough energy coming out of solar winds geothermal nuclear all of that so you know we've got this Market where Energy prices are high because of supply issues namaste but when you look at the trend all of these are growing as a percentage share of the energy grid there's still oil and coal are still massive right but they're coming down and Europe's really forcing it uh decarbonization and so we're seeing a rise of these others they start some of them subsidized but the subsidies go over time but the really interesting is none of that is the fact that the cost per unit of energy keeps coming down and many of these are now cheaper than natural gas which was very cheap so it's like huh okay and we've only just started where we are in this exponentiality so my view is in 20 years time the cost of energy will be marginal for everybody and everything much like the cost of water is marginal for everybody and the cost of many things we take for Grants are totally marginal now I don't know if given your macro Outlook that this is a reasonable question to ask you or not but um when when you look out at uh the rate of adoption of green energy do you think that we're because you just said like maybe we're not producing enough oil and gas do you think that we're moving too rapidly in that direction or do you think no no you you make these huge Investments you have to put regulation in place force people to do it faster because these have a a far more technology-based exponential um okay so this is the inverse of the GDP problem to manage its smooth decline or do you blow up here so you transition slowly with the issues of climate change and the issues of um cost of energy and all these other things and the need for productivity or do you blow up I just take short-term pain to get to the promised land faster again it's probably a rational economic decision to do that so maybe or maybe not Energy prices rise I'm not entirely sure well copper prices rise probably will some prices rise probably can that be offset by Ai and other deflationary pressures probably you know it's not baked in the cake people always conflate some commodity going up in price to see inflation's back and it's all going to run rampant again it's very rare that that happens we've just had it now so it's going to be in everybody's head as the boogie monster but they're looking they're usually looking at the wrong boogie monster so so it's gonna be a balancing act um maybe they get it right maybe they get it wrong but I think they're all pretty most of these governments are pretty sure that they want to do it as fast as they can and so does that mean that they would if by their actions they cause high energy prices for five years would they give out stimulus handouts to people probably is that not the best way to say listen if you are getting hurt by this and guess what that's exactly what Europe's just done last year was giving handouts to people saying look we understand your electricity bill is high and it's hard for you so we'll we'll help you um now did that drive inflation to some extent maybe but maybe not I mean it was just going for the electricity bill you didn't give people extra money in their pocket so it's complicated as everything is but I don't know I'm kind of in a I'm a fan of if you're going to go for positive change do it as fast as possible if you're going to go to negative change and you can glide path take the Glide path very interesting so um and I'm not a fan I'm not a fan of content of easing or any of that stuff I'm just like this evil this evil which ones you want to choose yeah it is a very interesting question so when you were talking I was in in full acknowledgment of the human mind goes to the problems um in the context we're in now and I I am not a geopolitical thinker and so I want to be very clear about that I want people to understand that I am I am seeking to uh increase the island of my knowledge um when I when I look at as somebody who has studied from uh how do evil people get control perspective studied what Hitler did in World War II he was very much like not seeing the increase in productivity path out of things and so he's like well for Germany to get out from under this terrible weight we have to start land grabbing and when I say Russia that is the population part of the equation right when you're taking over countries where you're actually doing this game of people and resources so you're solving for your own population productivity more resources but you're actually getting the people part of the GDP equation that's interesting so um how do you contextualize Russia and the Ukraine in this moment where you've got the private sector the governments are completely indebted you're at a position where birth rates are declining certainly in the Western World very rapidly if demographics are Destiny and we are just in a [ __ ] show demographically does that when you were talking I started looking at the Russia Ukraine thing in a totally different light and I'm very much somebody on the outside of that I'm not close to it at all uh but I'm very curious if that sort of re-contextualization of oh this is somebody who's like well I know how to solve this problem quite rapidly uh or am I looking at it wrong um I don't like geopolitics because so much of it is stuff that we don't know so if there's so much conjecture about almost everything in geopolitics apart from the fact that Russian troops are in Ukraine and they're fighting each other whose motivations of what for what and how I don't even know but one thing it did do to go back to what we were talking about it accelerated Europe everyone thought well the European is going to back away from their green energy policy now aren't they the Europeans went no [ __ ] you we're now super motivated to get this done as fast as possible because we do not want to be beholden to Russia or the United States or anybody else for that matter energy Independence is an incredible thing right it's one of the powers that superpowers that the United States has has energy Independence all other energy on Earth could go and the US has oil and gas and more of it than pretty much anybody else in the world so I so it also if you think about the history of war and how much it's been fought over the Middle East not because we want some sand or the few people because we want the energy and we want to control it because the energy is the thing come on what it was called in in um in June but whatever the thing is Right humans would want to control the thing whether it was whale oil this or whatever the thing spice right in spice that's right spice so that's what that's what the US controls and the Russia controls a bunch of it and we want to change that equation and the Europeans are in the Middle with not enough of it and it's in everybody's interest for everybody to walk away from this one commodity rule in the world because it's not the commodity we care about it's the energy we care about well said talk to me about China um seemed for a while like things were getting pretty dicey you had people if it can be believed people protesting like crazy uh governments making funds unavailable to people I saw that happen in Cyprus up close given that Lisa's family is from Cyprus um uh what what's the status of things uh a Chinese economy is slowing down and they locked themselves into a really brutal lockdown for the pandemic and even the Chinese people who quite compliant you know Asian populations tend to be more societally compliant than us who kind of like saying [ __ ] you to everybody if it doesn't suit their interests so you know Europeans are quite societally minded as well generally speaking um so the Chinese ask too much to their people for whatever reason I don't know whether it was actually for a real reason in the end or whether it's for autocratic reasons or whatever anyway economic growth pulls off a cliff uh people are angry growth is weakening property markets a mess that's where that's one of the big wealth gates for everybody in China That's where people make money um people in the streets and people are angry the Chinese are kind of interesting enough started stimulating and then you know they locked up all these entrepreneurs and threw them in prison or threw them down well um they're now like well we've decided we need to be growing up five and a half percent a year and we want entrepreneurs back and you know and they've reopened to Hong Kong for cryptocurrency so it feels like whatever they were doing they've got what they wanted whether it was because she wanted to get control again the Game of Thrones is not a game that I I like to get involved in and because everybody speculates we don't know all I know Chinese are stimulating they want the economy to grow and um they seem to want to be an entrepreneur I don't know why you choose to be an entrepreneur in China because you know the next cycle around you you get shot and replaced by the next one but somebody's gonna do it I didn't know that they had reopened back up sorry go ahead yeah so again think about mentality we're at the bottom this is the worst markets forward looking at Chinese stock markets up like 50 already and they're driving parts of the global cycle so when you read it in the news headlines it's usually too late no doubt now I didn't realize that they had opened um uh Hong Kong backup for crypto what do you think about the General State of crypto is this uh yeah crypto like I I have heard um people now it's AI has become like the new hot girl and all that energy that was in cryptos the future it's going to change everything web3 oh my God is now like nah that's whatever AI is where it's at um how do you see crypto where is this going is this a temporary downturn and we boom back literally nothing's changed since I last came to talk to you about it I said it bottom then I still think it's bottom and six months later it's bottomed and some of these are up 100 plus from the low the global liquidity cycle the forward-looking indicators had turned up a while ago so and the business cycle will get through the trough and through the other side so Chris says going up now does it go up straight does it have some volatility I don't know but it seems pretty good so far it seems to go up do a bit sideways go up do a bit of sideways at some point there'll be a bit of a reasonable down everyone like oh my God and then it'll keep going up so yeah there was no free money you take risk with crypto I'm super comfortable all I speak to is giant Brands giant people you know just spoke to had a great interview uh on real version with the uh two of the heads of institutional business coinbase what they're building out the kind of people they're speaking to I'm seeing on the other side you know everybody from car companies to sports teams to music companies all looking at the space we're looking at you know what we're building a real Vision what you're building what is going on how the vibrant the community is in a bear Market um I'm seeing consolidation I'm seeing the regulatory fight happening um we're seeing court cases finally going through like the the grayscale and the Ripple case where people eventually get the SEC into a place where it is acceptable but I always said this they will always push too far every job is to push back and they'll they'll get somewhere in the middle um and that's what they're establishing now so there's and the Chinese are coming back on um in a thoughtful manner I spoke to as part of my kind of crypto show Razzle Adventure crypto I spoke to the monetary authority of Singapore got a good friend there who's the chief fintech officer he's like yeah all systems go over here just been over to India it's like and he's Indian himself he's like you cannot he said I cannot express how amazing their Central Bank digital currency system is we're all go everything's fine the USA only ones dragging their feet the UK and that interview before we move on to the UK that interview which I watched um I thought was very interesting your guys's own title on that was uh governments go called on bitcoin yeah and so he seemed very excited about the I forget the name of it but the the currency that everybody the digital currency everybody's using on the street which has a name uh and he was like booming over here you your jaw will be on the floor to see how rapidly this is the Central Bank digital currency the the government version of a digital payments rails there's a name for it though digital Ruby I forget it yeah yeah something like that uh so that was interesting but he was like it hasn't played out yet in terms of cryptocurrencies in fact I think one of the early things he said was it's not really a currency yeah so what he's done is gone down three parts Central Bank stuff because he's actually involved with all that bis um Bank of international settlements group that are building out the world's digital rail so he cares about that he was very disappointed that Australia had been using it to build um their whole um stock markets using crypto blockchains and kind of walks away from it so he was like that's a big blow he said ethereum and things like that where you're building on top of a network so you know we're all for that we like it we're building on it and we're doing stuff cryptocurrency which was his expression for something that has no other use case apart from a monetary use case Bitcoin um he's like we do not want and he was he was unusually strong I mean you saw the interview he was unusually strong about that because he's he's not usually that guy but I think he's also gone through the the crusher because he really you know in Singapore he's like let's do this and then the whole Space is down eighty percent and and my guess is a lot of people said to him are you an idiot or what um and he's tried to explain to people is this is what the space is like it's volatile it's early technology so so overall the bigger picture is I'm still incredibly positive my mind hasn't changed whatsoever and if I go back to the point I made before crypto is priced by two things the technological adoption curve which is exponential so you need to put a logarithmic chart you put a nice little logarithmic chart at the bottom of the log channel so we've got to the bottom and it's driven the ups and downs these crazy ups and downs that look crazy until they pop on a log challenge it's not normal those crazy up and down are driven by uh the money supply the liquidity cycle the business cycle and so here we are on the secular trend and the business cycle is turning up and prices are down quite a lot this gives you the highest probability of that buying them all the way up to the top well I'm gonna wait till I'm gonna wait till Bitcoin gets to 50 000 then I'm gonna it's not the way to do this you either believe in the space and therefore invest cash when nobody else is when it's at the right points or your dollar cost average and do it in a sensible way but these are the times so I'm immensely excited still and see nothing but opportunity and volatility yes very very well said well I could talk to you endlessly this is always so fun uh where do you want people to go to engage with you uh yeah there's a we've done a lot about this exponential stuff in fact I've got Emma mustak coming on real version for a second time nice because he he was an old friend of mine and he just happened to suddenly I I find out he just started the thing he was a macro guy like me so uh come over to realvision.com um we've got right now we've got actually so two weeks of stuff which is called how to unfuck your future which is basically all the stuff you and I talk about which is like okay what are the problems let's take them out let's look at them and let's figure out how we can solve them so we're doing that on real Visions so people should go it's like a one dollar trial or something so just do that um if not you can find me on YouTube um also at real Vision or find me on Twitter I love it brother as always thank you so much for being here everybody if you have not already be sure to subscribe and until next time my friends be legendary take care peace finances are very complicated but you can learn how to prepare for a recession with this interview with Ray dalio New York City's becoming more dangerous Chicago is becoming more dangerous places Chicago San Francisco is becoming more dangerous um you're seeing people leave

Channel: Tom Bilyeu

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Keywords: Tom Bilyeu, Impact Theory, ImpactTheory, TomBilyeu, Inside Quest, InsideQuest, Tom Bilyou, Theory Impact, motivation, inspiration, talk show, interview, motivational speech, Raoul Pal, Real Vision, tombilyeu, Conversations with Tom, Health Theory, mindset, podcasts, how to be successful, entrepreneur, ai, artificial intelligence, technology, ChatGPT, robots, ai robots, global economy, economic trends, recession

Id: S0DHI0DGOIw

Length: 112min 1sec (6721 seconds)

Published: Tue Mar 21 2023