ECONOMIC CRISIS: Ray Dalio's Warning For The Banking Collapse, US Dollar & Upcoming Recession

talk to me about the three forces that you see that are influencing this moment we've got Banks collapsing US dollars under attack looming recession what is going on how do we step back and think about this moment I look at three major forces that are happening now um haven't happened in our lifetimes um but have happened many times in history and those three major forces are the creation of a lot of debt and the printing of a lot of money to buy that debt because particularly because the government is running large deficits and so they don't have enough money so that government has to print that money so that creation of all of that that debt and its financial implications and its economic implications is one force the second force is the internal conflict the amount of conflict that's internally largely due to the largest wealth gaps that we've had since the 30s they um and that produces populism of the left and the right particularly when there are financial difficulties the third Force um is the rising uh Power the um challenging the existing power um largely in the form of uh China and to some extent Russia um so let's call it the great power conflict because in 1945 you know there's there's a cycle you have a war then after a war you have winners and the winners determine the rules of the game and then there's this evolution of others becoming more competitive and then you have a conflict again um for who's in control so we have that Dynamic taking place so those three influences the financial the internal conflict external conflict uh influences or having a dominant um influence I learned before that when I was surprised um often it was because of things that hadn't happened in my lifetime before but happened in history because of that reason I went back and studied history the last 500 years on these Cycles there are big cycles that last about 75 years give or take about 50 years and of Rises and declines and I put that out because I think it's so important people understand that I put it out in a book called The Changing World Order and in a free video calling the changing world order so when we look at each one of those they're important I also learned in studying history that there were two other influences that were very big and you could see them uh the first was Acts of nature such as the droughts floods and pandemics the changes over time in uh the evolution over time of people's learning and the Technologies they make so I'd say there are the really five big influences that drive everything and they are the money and debt economic influence the internal conflict the external conflict the nature uh influence um and the let's call it the technology influence so as we go now into this uh it's important again um I put it out as a free video on YouTube so that people could see it easily and when we get into whatever we're going to talk about it'll be certainly in the context of those things and since they each affect each other it produces what I call the big cycle the animation that you put out in conjunction with your book uh principles for dealing with a changing World Order have influenced my thinking around this moment more than anyone or anything else it it makes it seem so uh predictable from a historical perspective when you look at that big cycle and you see how it repeats and so as you went through the last 500 years one thing that you make very clear in the book is that the the rise and fall of Empires the rise and fall of a reserve currency they go in this six cycle Trend and the uh the part that I always find unnerving is phase six is basically war and collapse and so you have that previously dominant power loses its position loses its status as a reserve currency and it loses it for pretty predictable reasons in the three forces that you were talking about in the beginning discounting the the fourth Force which I don't think in every cycle you always had and you correct me if I'm wrong but you didn't always have a pandemic or anything like that but the fact that we're living in a moment right now where we have all of them and so we've got you know not only is it a moment of massive technological disruption right now good and bad but we've got the money printing uh the the meme on the Internet is moneyprinter go Burr uh so we've got you know printing because of covid we've got printing uh coming off of printing because of the 2008 collapse um and now we're again seeing this cycle repeat itself so I've heard you say that it that we're in somewhere in Phase five which is as the Empire begins to decline as you have a rising superpower as the debt bubble is getting out of control with that perspective was what happened with the svb bank collapse was that something that you knew okay something like that is coming or was that a surprise to you no I it was it was obvious um look um if just let's I want to talk about the mechanics really I'm so eager to pass along an understanding of the mechanics so people themselves can do the analysis um so one man's stats are another man's assets um okay so what happened the government had to sell a lot of debt and when it sold a lot of debt there were a lot of entities that bought a lot of bonds government bonds um and money was very easy which meant that short-term interest rates were very low um and money was almost being it was actually being given away because they had interest only loans and interest rates were less than one percent and you didn't have to pay back principles so you can go get money and so that created um a lot of debt and it created a lot of um buying of government bonds so what happened to um Silicon Valley Bank um is uh what happened to what happened to many many entities all around the world not just Banks they um what does a bank do a bank takes in deposits typically or dead in some way and then it buys that it can do that in the form of making a loan or it could do that in the form of buying a Government Bond buying debt and then when interest rates went up the value of that debt went down the money they had to give to depositors became more and more expensive and also depositors wanting them to be competitive looked at money market rates or other rates and withdrew money from the bank to because they have better uses okay so what that that leave them with it's a banking problem that has happened literally for thousands of years that um that what they do is the the positors you know want their money back and they're holding assets that are in this case have gone down in value so they're broke let me let me put a fine point on that sorry before you move on I don't know that people really understand this is is this a um it seems to be a necessary result of fractional Reserve banking meaning that if you deposit ten dollars to me I only need to keep and I think this is actually accurate I only need to keep a dollar and so the other nine dollars I can actually put to work in terms of loans to other people or Investments and that puts us in a position where okay you gave technically you're giving the bank a loan a deposit isn't just oh my money isn't a vault somewhere I've given the bank a loan the bank is going to go do things without of varying degrees of risk in the case of svb they thought I'm doing the least risky thing which is I'm buying government debt the government is going to back it the government especially the US government can actually print money if they had to to cover that which they did in this case but if a lot of people go to the bank at the same time known as a bank run and say I want all of my money the bank goes whoa whoa I don't have that money and so I have all these assets and as long as those assets sets remain liquid and I can liquidate them in a timely fashion then sure as long as the requests for people's deposits back are coming at a reasonable rate all is well but when you get a lot of people coming at once and you have the the Investments that they've made have gone down in value now you get a perfect storm exactly I think you said it very well um you're allowed to be in the business let's call it 110. it's actually less than one-tenth is your money whoa uh but let's call it one tenth um you have a certain amount of money up they give you the deposits you invest the money within these General guidelines so for example government bonds are safe from default so you buy the government bonds you think you're making a spread and then what happens is the government bonds go down in value at the same time as the People Say Hey I want to go take my money and put it someplace else so you don't have enough money and Central Banking works like that except the government can print the money so the risk and when it's a government is not that you won't get the money back in lesson like in this particular case for a bank it goes down in value so you ain't going to get that back you're going to sell it but anyway you described it very well you what what happens for the economy as a whole is then they print the money because they don't want the faults there's a tolerable amount of defaults and then you get past a tolerable amount of defaults and it just crushes everything and so they print the money okay and so this thing with the bank is not a Silicon Valley Bank is a loan issue it's not a banking issue it is a global issue in terms of all around the world all sorts of entities Pension funds um um insurance companies um all around the world uh there was a lot of the buying of these government bonds which have gone down in value and if you then take it and you say What's the value of those those have gone down and the cost of money is high and so the world is leverage law okay long meaning they own stuff and they borrowed money to own it and it's going down in value how nightmarish does that scenario become so you've got your money locked up in something for a long time but it's declining in value is this like a classic moment where we can look at this big cycle and go oh we know where this goes like the the music has stopped everybody or no it's a bit harder to judge than that I think it's pretty easy to judge on a um you know an intermediate or longer term basis because there's a choice right um the the predominant the big issue is you know okay the government can come in and print the money and give money to anybody they want to give money to but when they do that that typically devalues the money so if think about it if you're holding a bond you know you got a claim on money um but the claims are too much so um so one way or another you're either not going to get back that money in full or you're going to get back money that's worth less because they print them right I've never heard anybody say it like that so let me just make sure that I understood that uh the government has effectively issued too many bonds so people have they're holding a lot of companies and a lot of other things too okay very good point so we're not just buying the bonds from the government we're buying corporate bonds municipal bonds like anybody that wants to put some debt out into the market uh government of course in fact I'm actually curious uh what's the ratio roughly if you know this between corporate debt and government debt well right now I I couldn't give you the uh you know number exact number of them on top of my head but there's um um household that um corporate debt and government debt yeah that that's terrifying so uh even if you took every dollar that our entire country makes I think it's true globally if you took every dollar that we made globally and tried to pay off the debt you wouldn't be able to do it well that's right but it's not expected to pay it off in a year sure I want to go back to my main point to make this clear if you're holding that debt um you are holding something that will money will come back uh let's say if the and the government can print the money but if the money's hard if that's going to be good money that's coming back it's going to be hard for those entities to pay back because it's a lot relative to their income and cash flows to pay it and that means that the default risk Rises however because you don't you're holding that it means that the debt will be bad one way or another it's either bad because they don't pay it it needs a haircut for them to pay it or because they do pay it with money that is going to be printed to come back so when you look at that you're um and that problem occurs when there's a lot of debt assets and a lot of debt liabilities so think of it this way just want to make this clear when there was the position that interest rates got a lot below the inflation rate you're losing buying power there's no good reason to own that um and there's a change in psychology because um before there was um I own bonds the bonds go up in value as interest rates go down so I'm getting a price appreciation even though I'm getting you know let's say a low interest rate but inflation isn't a problem until it's a problem then when it's a problem because they print so much money and they put it out then inflation goes up and a light bulb goes off that light bulb used to be okay how much am I earning okay I'm not earning much but it's okay the price of the bond or whatever's gone up and but anyway I'm holding it and it's safe and then people realize it's not safe because I'm losing money to inflation so now you have the Central Bank wanting to rectify that imbalance by you know real interest rates were minus 1.7 percent meaning that inflation was chipping away at your buying power yes if I look at inflation index bonds as an indicator um or other indicators I'm losing percentage points to inflation by holding that Bond and then when they and people realize that well you don't want to do that and then the other side of it was you want to buy buy and borrow and buy stuff because you know money's free so companies borrow and buy stuff and individuals bombed by houses because it interest only loans on the houses I mean like okay I could buy a house I can buy an apartment and so but that creates the imbalance where it's terrible to be a lender um and a creditor and it's good to be a borrower and and do that so that imbalance takes place it produces inflation and then when it produces inflation and so on and then you you I then you say I don't want to own these things anymore and then and also um the Federal Reserve says I better fight inflation they change things and so by raising interest rates to levels in which it goes from minus 1.7 percent in inflation index bonds to plus 1.7 percent and it makes it um and it raises um the short-term interest rates you know real interest rates much higher then lo and behold all the people who did all those things get hurt okay they borrowed they bought bought the bonds they bought all of those things and all of those debt instruments um and also companies look at the companies that are affected because yields got so low um tech companies and others Those Who Have a Dream I'm going they don't have to necessarily make profits they're selling a dream and the money's got to be invested and so you see all of that change radically when those that tightening of monetary policy so now you sit there in Avalos so when you're looking at the big picture you look at you've got it's think of it as all like banking you're holding all these Financial assets what is the value of a financial asset it has no intrinsic value its only value is what it can buy but there are many many more financial assets out there the most Financial assets out there that there's ever been relative to the value of stuff to buy there's too many claims out there it's it's like um musical chairs okay if everybody says oh wait a second let get let me get my stuff let me convert my debt assets you know I want to I want to get my stuff I want to get real stuff um that's that's a real problem and so that's the global picture on on the first of those five influences right the fact that it's happening with the other influences is very important because they affect each other so this financials picture by the way is the same as in the 1930 to 45 period and the same as they were throughout history you can reboot your life your health even your career anything you want all you need is discipline I can teach you the tactics that I learned while growing a billion dollar business that will allow you to see your goals through whether you want better health stronger relationships a more successful career any of that is possible with the mindset and business programs in Impact Theory University join the thousands of students who have already accomplished amazing things tap now for a free trial and get started today yeah for people that don't know that's World War II just uh uh that started with a financial crisis that then caused internal conflict what do we do about the financial crisis the populism of the left and populism of the right in this internal fighting and four countries that were democracies chose not to be democracies because of the conflicts that were existing the poll um and those countries were uh um Germany uh Italy uh Spain and Japan because there's a lot of internal conflict over wealth and when you have that and so that creates a lot of internal disorder a lot of fighting okay in in some ways almost Civil Wars forms everywhere some form of Civil War who wins the Eternal War and of course that happens also at the same time as there's the external conflict sir first of all everybody's fighting over resources you have populists come to power and the populace are not compromises the way democracies work yeah let's fight I'm gonna fight for you this is don't worry I'm not in the middle I'm not going to compromise and you've got to pick a side and so the moderates um there's no place for moderates you've got to pick a side and the sides are um let's say internally in the country the left and the right and externally you know um I don't know the Americans and the Chinese or the Americans okay and you gotta pick a side and fight and so that becomes the dynamic that is these periods of time and these periods of time have typically lasted about 10 to 15 years and you and they have various symptoms to it so in the book I I write out yeah there's like a disease like a cancer um you see stage one two three four if you have these things you can look at it and you could diagnose and you see it moving from stage one to two to three to four to five and to six you could see that taking place and each time you come closer to um a bad set of circumstances bad financial circumstances and bad fighting over things yeah so this is where um this gets really breathtaking so you've talked a lot about this idea that there are things you even mentioned at the beginning of this episode there are things that have not happened in our lifetime but they happen over and over and over and so it is very easy for me as somebody born in the 70s to think oh War isn't the thing that happens in the U.S that's something that happens elsewhere populism isn't something that happens in the U.S it's something that happens elsewhere but it does happen uh we're seeing it ratchet up right now because of that um I heard you once say and I think this is really important for people to understand about the the internal conflict in fact you and I bumped into each other in Dubai and I was saying you know Ray as given everything that's going on how do I think how do I think about where to live whatever and you said Tom the only thing that matters is how people are with each other and for whatever reason it really hit me that time what you meant by that and I understood the the importance of this conflict and what I heard you say previously is that in the French Revolution it was the moderates that got the guillotine it's like you you are forced because I consider myself very Centrist in nature and you find yourself as things escalate being forced to take aside which the French Revolution one gave me pause I was like ah not not how I would want to end up as a moderate um really fast going back to the that this is a global moment it's a predictable part of the process that stage five the debt is too much interest rates are now going up to keep inflation from running away we printed money like crazy you've got the rise in conflict is is the when we printed money when the FED printed money to backstop uh the what looked like it was going to be a potential contagion from svb obviously I think there were five banks that ended up failing um is this now contained or is is what the FED did just going to forestall something that's inevitable um The Dominoes are uh beginning to fall I mean okay you know you know what the next dominoes are and you can imagine the other Anonymous so for example um they're not going to buy the debt and a lot of them they're not those who are who bought the debt and have too much debt and have debt losses um on government debt are not going to buy that buy more of that debt for example and therefore when the government uh sells more of the debt um there's not going to be an adequate number of buyers for that debt uh you know that um those who are hurting because they have those losses um won't make loans and a lot of those loan loans went to real estate particularly commercial real estate and you know that for various reasons in commercial real estate that you're um we don't use it the same way and so on so you're going to have problems in commercial real estate you know that this kind of money was also financing um venture capital and private Equity um entities that also have cash flow problems challenges and so you know that that funding is not going to be there in the same way you know as a result of these things that a number of entities will cut costs and in their various ways and so depending on the on that the job market is changing and you know you see it for example in tech jobs and and other you know if you're in some of those areas that are getting squeezed and you see the same thing by and large you know happening internationally so you can see also that if you said what is the value of those assets that are being held that that value has gone down a lot and because it was bought on Leverage as you described because it is brought on Leverage there are bad um losses in different places and then the question is what are you going to do with those losses in most cases quite often they're um you know don't mark them to the market I'm meaning don't account for them and recognize those losses which is kind of let's say hiding those losses and hoping in time that they'll just over time you know it'll be fine but that'll produce a squeeze that'll produce a problem so I think we know those things we know those things and um and that's happening at the same time as we have um an internal conflict taking place such as the presidential election so we're going to come into the presidential and and it's not just presidential election of course it's a number of um Senators congressmen and so on um and who are at each other's throats about this and who are going to fight with each other okay and and fight to win um not probably respect the rules as much um and but fight to win for their side and that's happening at the same time as we have um the situation with China most importantly China and Russia in terms of the issues in terms of their things to fight over you know for example even there's going to be an election in Taiwan that'll also have a big bearing on this whole thing so there's you know there we know I think pretty much that we're going to have financial problems at and economic problems at the same time as we have this internal fighting and this and external risky situation you're at a stage in your life where you really want to help people understand the mechanisms how to think through this stuff from a framework perspective so that we can apply it you know God forbid in the the post Ray dalio era um let me run you through how I'm thinking about this moment the questions that I'm asking myself and then if you don't mind help me correct the the approach that I'm taking to this so I whenever we get in a moment where there's really [Music] um we're at the what I see is the end of stage five I don't know if you would agree with that uh so this is where just again to reiterate so we've gotten over our skis on debt uh the FED is going to try to print their way out of this all that does is create inflation they try to break the back of inflation with high interest rates but so many people got themselves into debt in the good times on variable interest rates or that they bought a they bought long on something like a bond where it devalues uh based on what happens with the interest rate so as the interest rates go up either people just can't make their interest rates payments or the debt that they were holding goes down in value okay so you've got this moment where a lot of people are about to lose money and a lot of people are going to be very uneasy and you've got the the political divide that's continuing to Escalade escalate we saw the last election cycle here in the U.S where people stormed the capital it was a very sort of unnerving moment and now it's like well things weren't nearly as bad then as they are coming into the 2024 election so I start thinking okay what is the safe move and if I'm honest ray I start looking at where do I live so is there a move to be made within the US and so I start looking at places that feel more secure for the way that I think about the world or I start thinking do I become a more globally mobile citizen is there uh something that I should be thinking about there I've got a lot of my money in cash and then one thing that we didn't talk about which we probably should you you mentioned the word hard money and so hard money I'll give my laypersons definition and then if any of this is inaccurate please let me know but uh hard money being something that has intrinsic value so uh gold precious metals become something that I start thinking more seriously about now I'm uh what I'll call a digital native so I think about uh Bitcoin is something on my radar I know that you're maybe not a fan but anyway that's how I'm thinking about the world I'm trying to be in cash I'm not trying to be in anything long I'm I have Ray dalio I have zero Leverage I don't play with leverage even when the money was free I would basically I didn't take on any leverage because that's the one thing that scares me um so safety safety safety is how I'm thinking about things now I don't exactly know how to diversify well but that becomes another part of how I look at this and you've got the all-weather strategy that I know you've tried to articulate for people so safety first if I had to to sum up my stance everything you said is beautiful and very similar to the way I think and I'm I'll add a couple of things to it but when we think about safety we have to think about that as purchasing power because a lot of people think if I put my money into a treasury bill I get safety well those look at whether that's giving you a return that's compensating for inflation so I just wanted to tweak what you said that's that's very important tweak and now you're getting into where I feel under educated so how do we then think through that before I go there I want to say um and also take here's the other advice and and maybe we're all wrong maybe there's nothing to worry about um okay so how do I deal with that like I like what this guy dalio is saying is very crazy in it and and you know who knows he's whether he's right or wrong and you know he's been wrong in the past and who knows if it's right and I okay and simultaneously so okay that's the exactly what you said is the way pretty much I look at it but you said and if I was to paint the world I painted the world the way I did okay and I have those questions and then beyond that I say um you as an individual should think about the Total Safety including maybe that terrible scenario doesn't happen Okay that's what I'd like you to do that's what I'd like you to do and if you do that you will come to a better balanced better balanced position I want you to get balance okay I want you to do certain things I want you to have enough um savings whatever you know that okay to have security to build the first level of I think investing in investing which is the same as savings that comes in tears tier one tier two tier two three on risk and the first tier is if everything goes wrong I'm okay and everything could be inflation depression anything whatever it is I lose my job I I I you know whatever it is I got that thing covered then your next level is okay what am I going to get the highest Returns what is my best bet okay but but start at that level and then you said the other thing too that it's it's not just the investment it's where am I am I in the middle of a fight like I don't want to be in the middle of a fight okay what's it gonna be like so it it does have Geographic implications you know I don't know maybe it's the state or the the state you go to or the city you go to or the country you go to or whatever it is you know like um and there are certain things you can do to say this one's going to be better than that one um let me give you an example of that there are three things you could do on based on these three influences are you going to be in a place and around people and circumstances that are financially strong in other words the the income better that is the are they earning more than their spending and they have a good uh balance sheet because that means stability if you can go through that and you have stability places that are like that are better off number two do they have internal conflict um Country Place and is you know and is it a hospitable environment for me okay that's the second and then third are they in the risk of an international War um like I don't want to be where the fighting is I really don't um you know I don't want to be safe and stable and so on so this is a time for looking for such things yeah okay uh while deeply unnerving I think incredibly important to think through that let's talk about diversification doing that well you talk about uncorrelated assets and I don't know how much you talk about this publicly but I'd love to understand it seemed like the for for people that that don't know your background uh you have a meteoric rise you're in your 30s on top of the world unbelievable success you make a huge bet on something to your point earlier about have the humility to know that you may be wrong you made a huge bet on the collapse um and it didn't play out and it ended up that the market went up and you lost a lot of money uh almost lose Bridgewater managed to keep it together you come up with a new strategy that I believe is known as pure Alpha uh it ends up getting tested multiple times in the market and you guys Crush when other people struggle which leads you to be for people that don't know the largest hedge fund we made money and 28 of the last 32 years we uh um uh never had a really bad year um you know it made um I think it was uh during my time there uh running it um 11.8 percent a year with no with the worst year being I think was down I don't know 10 or 12 sort of thing and and that and the next worth year being like down one percent and um um and we did that by um simultaneously looking for opportunities and looking for good returning assets that were not correlated diversification of good you know and just as you point out what happened was um and by the way those returns are not correlated with the stock market or whatever so they were a fan stock market bond market they're uncorrelated so they were a fact effective diversifiers in portfolios which almost all go up and down together and this would diversification and so it was loved by investors institutional investors and so on and the thing and as you point out what I learned from uh you know basically this punch in the face mistake okay this painful mistake um is I learned how to make good money without having a big loss I knew I learned how to improve my return relative to my risk and I learned that the Holy Grail of investing is 10 or 15 good uncorrelated return streams like okay you get that and you will I don't know have a similar path to the path I've been fortunate enough to have and so that's what I want to pass along to people you know like uh you go into the Cove video the one year that I that we lost I don't know it's 10 to 13 or something but was 2022 because coven came along I I didn't have covet in our system we had out other things that so that was it and um and so um there's uh you know something comes along all the time for anything there everything has its time and so you put your money in any one thing you know you could think oh okay movie theaters are good and then you get coveted or you cruise lines are good and then you get covid and you know oh whatever it is is good well it's good sometimes but there's always something that always is gonna mess up the one things so you don't want like in my opinion you don't want more than 10 percent of your money in anything and you wanna you know probably you don't want more than seven and a half percent of your money in anything and they want to be good different things and that's the message I'm trying to convey right now one of the things that has me um the most unnerved is the attack on the dollar uh so you've got the brics Nations uh for people that haven't heard that acronym before Brazil Russia India China and South Africa uh are getting together and I know this has been going on for quite some time so I don't know if I should be overly paranoid about that in this moment or not but again going back to those indicators that point to a trans position from phase five to phase six um do you think there's anything that we can prepare for as we look at the big cycle as we see this particular moment with the assault on the dollar is is there anything in the big cycle that can educate us on how to deal with this moment just all happens over and over the decline of the British pound as a reserve currency and before that the decline of the Dutch Guild or as a as a reserve currency all happen for the same reasons which is um you know two things are going on first of all they're holding all of this dollars and the stuff that we talked about is going on and then also there's the weaponization through sanctions of uh the uh Dollar in other words um the United States is greatest weapon to use as distinct from its military weapon is his sanctions and so sanctions mean you freeze other assets you freeze assets those assets are the bonds and um so um that happened with Russia and there are threats of it with other countries China and so on and there's kind of the thinking well if I hold the bonds can I uh be can that happen to me and and then why am I transacting in this other third currency rather than transacting directly so for example um the United States uh share of World Trade has declined and China's share of World Trade has increased to become greater and um so um if two countries are trading let's say Saudi Arabia is trading with um vagina um why do they buy why do they go to the dollars in order to do that um you know uh no good reason to go to the dollars and you know they don't know that then they're worried about holding the dollars because they might get sanctioned and so you see more of those transactions taking place in other currencies and then the usefulness of the dollar as a storehold of wealth changes it's like think about it in um you know the the most fundamental way um everybody wants uh a medium of exchange and a storehold of wealth so in other words if everybody's using the dollar and World Trade then you want to save in dollars because you say okay now that's the thing I spend in and I and I save in the dollars um but over time as the share of World Trade goes down why aren't they denominating in who well like China has a larger share of World Trade traditionally the countries that have the world's Reserve currency have the largest share of World Trade and the largest share of world Capital flows and because the United States has declined and also there's a worry about that um holding it because of sanctions I mean just imagine how the Chinese must feel about having a lot of money in treasury bonds you know like I would be worried that I would like be treated like Russia would be treated it's not something I would want to hold uh as you know a safe asset and what other countries like who might feel that they can get sanctioned and for all those reasons uh they're less inclined to hold and when we when we call dollars what we're really calling is dollar debt because you don't hold you hold dollar debt and that's a pro what is a debt it's a promise to really receive currency so okay so now getting out of those things and transacting in other currencies seems to be the safer thing to do for those countries and so that's the dynamic that's taking place so it's it's um it's not an attack on the dollar it's like I don't want to hold those things and um so very similar to on the British pound you know what happened is the British had the war and they were the most powerful empire ever in the world and then World War II and they came out of World War II uh financially in debt a lot of debt and who hold who held the debt all these countries held the debt because that was the residual from that but they had a problem they had a debt problem and so they needed to print more money because it was too much of a squeeze and then you had so it deteriorated and then they you know they sort of said please hold my dad please hold my dad they went to commonwealth countries the part of those that were in the former British Empire and then you had the Suez Canal incident where um there's sort of a a war and everybody realizes well hey wait a second that British Empire ain't the British Empire and they're heavily in debt and then they say I don't want to own that debt and there went the British pound so that's just how the Mechanics Work okay so looking at the U.S and um I don't want to be cheeky and say speaking directly to uh the you know the US government but if I were to be so bold so if this is that predictable moment where okay there are actions that we can take as a country that will either help us keep um the world Reserve currency status and there are actions that we can take that will cause us to lose that status more quickly it seems like okay uh you've got the brics Nations they are moving away from the dollar it seems like that has already that card has already been played I don't know if you think there's anything that we can do to to make that easier but certainly speaking to printing so one thing that I've I've heard recently and this is a really fascinating concept that when you have other nations that are holding your currency holding debt as you said uh they're not like hoarding cash but they're they're holding a lot of debt if we print money what we're essentially doing is um externalizing inflation so we are causing a devaluation of that debt for all the countries that hold us now we're in a moment with Rising interest rates that's causing us to need to print uh but creating this really weird difficult moment where as we print then we have a need to raise interest rates but the reason we're having to print is because we're raising interest rates so it's a very difficult moment um but if if we could going back to your idea it's how we are with each other if we could get people to come together in the middle would one of the things we would want to convince the US government to do is to be very cautious about devaluing the dollar is is that an important idea it's more basic than that and it's um more simple but it's also more difficult um what the reason Cycles exist is that the next stage has been determined by what has already happened in the prior stage so hmm we are in debt a lot you can't change that we got a lot of debt and if you say what could you do I mean two things come to mind what you could do is you could be financially strong and you can not use um Financial sanctions as a weapon to scare the holders of those bonds but to be financially strong requires you to not spend more than you earn that means you either have to cut your spending or raise your earnings okay that's okay that ain't easy okay okay so are we going to cut our spending um uh uh okay now you look at it what are you gonna uh infrastructure programs I don't know poverty transfers defense spending okay what what are we going to cut um the world governments have the same basic economics as um people except for the fact that they can take money from one person and shift give it to another and they can print money that's it and so when you look at this um okay you have that Gap you can eliminate the Gap by taking money from some and eliminating another and not spending much okay okay that's not easy right okay okay what are you gonna the most governments now don't think how much money do I have to spend and then how do I prioritize that they think I need to spend on this I need to spend on that and I need to spend on that and they spend on it and then they either produce it they produce a deficit and then you either have to pay it back with hard money or printed money and that's situation so when you say what could we do well you've got to get financially strong in a politically fragmented environment in which everybody wants more and you and you have to uh you know like be a higher percentage of World Trade so that everybody wants to use your currency and um the um and not threaten the holders of that bonds with freezing their assets it is uh it's a tall order in this moment um I it has become so clear to me in the last month since you and I uh saw each other how important the reason that you keep coming back to it all comes down to how people treat each other so in this moment um I don't want to be a Debbie Downer but it does feel like the die is cast a little bit I don't see how we pull ourselves back from the precipice because to your point about being um fiscally responsible like we'd have to get into a position where we're making more than we spend I want to circle around to something as you were talking you mentioned infrastructure and it got me thinking about okay what are things that we would need to go right so I think everybody is aware and I've heard you say that there there are changes that are going to need to be made to capitalism in order to bring back a thriving middle class and the importance of the thriving middle class and you've defined the things you know again staying to the theme of principles here of uh the three things that we need to do to be strong as a country or for any country to be strong uh and you said two parents in the home uh great public education and then equal opportunity where where do you see us on those are we moving in the right direction moving in the wrong direction well again uh you know maybe I aspired too much to two parents in the home um it's certainly better if you have two loving parents raising a family that's that's good but maybe that's too much to ask for um but in other words good Parental Guidance you know okay you're raised well you're educated well you can go to a public school that educates you well and you have good guidance so you're well raised in a healthy environment and not only do you learn um you know skills and and all that but you learn how to behave well to with each other so you learn civility and um and um so you come out capable and civil um to a land of opportunity in which you can you know work and and and have a good environment um and really that's all you need if a society does that right um and I think you know where we you know the things that are going on you know um education in a lot of public education is um a it's deteriorating it's a real problem um my wife works to help um the poorest school districts the poorest people uh in the state of Connecticut um and uh the state of Connecticut as usually it's always one two or three in terms of the highest per capita income 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 um and in the state of Connecticut as of last survey 22 percent of the high school students have either dropped out of high school whoa or or have uh absentee rates which are greater than 25 in our failing classes So at their living in pob with they're living in areas that don't have the things I'm talking about about parents nutrition and so on um and there's not adequate resources for them for example during covid um we um we found that sixty thousand students didn't have uh computers or connectivities to take classes and the government wasn't going to provide it so philanthropically we we bought 60 000 computers and give the kids in one but we can't you know we can't do that you know so our society is um when you look at this um you see [Music] um drugs drug problems um you see how the cities are changing um you know the cleanliness of the Cities the education levels of the Cities mental illness um crimes and so on um you're not seeing you know you're seeing people fighting with each other a lot um not all the time they're wonderful places in the United States you know education some of the best universities their pockets some of them that you know their neighborhoods but there is this encroaching so you see infrastructure breaking down um school shootings you know like okay so you decide how we do it um I think we're doing pretty badly um it I I don't know I mean look it's not going to be a popular thing but I think going back to what you were saying about the parents and maybe asking for two people is too much look I get it I think everybody's doing their best and and God knows for any single parents out there you have my love and respect that it just seems Seems like a hard job when there's two of you let alone one so I'm not I'm not throwing shade but in terms of cultural momentum when I look at people not uh not getting married before they have kids uh incentives that end up leading people to where it's actually more economically advantageous to have a child when you're single uh does not strike me as a great idea uh and trying to reverse that Trend I think is going to be really important really putting a ton of time and energy into making sure that we're we're looking at ourselves on a global stage from an educational standpoint and understanding that we're competing against I mean just to really make it Stark we're competing against China now I have employees that grew up in China actually have some contractors that are in China currently and when I see the the discrepancy of what demands the educational system places on them when they're young versus the demands that we place on our our students when they're young it creates a ripple effect as they get into the workforce in terms of just the the expectations that they have of themselves the drive uh the desire to excel so these strike me as as really really problematic things I'd love to talk to you about Singapore so as we're talking and I haven't studied Singapore very closely but when I think about um you know how they've created something that seems really amazing very recently and and sort of born up out of nothing [Music] is it those three principles uh two parents in the home quality education equal opportunity I mean is that it or is there something else earn more than you know earn more than you spend be well educated to help you earn more of the juice and then be civil with each other be productive um you know when you come out equal opportunity and and um it's not just um like in Singapore but it's true in other countries there's a level below which nobody should go certainly children should not go right how can you have an environment that children there's so there should be basics of housing um Health Care certain basics because otherwise you build a cycle you you know I mean when they become when the children become adults you might say oh it's up to them to do it but if you mess up the children early they become the adults who can't do it and so you have the cycle you know in which you have to take care of people you know you walk around and look at it you can see the gaps the opportunity gaps you can see the mental illness gaps you know walk down the street and you know downtown Manhattan or lots of places and see the gaps okay and some that adult who is screaming uh you know and homeless and whatever came from a place a reason you know that was that made them that way and um you know so it's like the you know why isn't the computer given to the kid who doesn't have a computer so we can have learning think about how difficult it is for the for the kid who doesn't have learning and they have one parent and that parent might have in a poverty and might have drug problems and all that I mean the kid can't make it so the kid's going to come up to be an adult okay what kind of an adult is it's going to be a problem so I know that a lot of people are going to say okay well raise taxes we'll have money for all of that um that doesn't seem to be how things work but I'm open to being wrong about that there's a book coming out I'm very interested to read called taxes have consequences which I don't think people think a lot about but it is entirely possible that I'm wrong so if we look at someone like Singapore do they just have really high tax rates and they distribute it in a way that makes sense what they did was um they required savings they require it requires savings an employee um I think I think it works like this um employee gives um 12 of their incomes an employer gives 22 percent 10 percent of the income so they saved um um something like 22 percent of their income is in savings okay they do other things too they have a tax balance but they have a savings um and as a society they earn more than they spend Okay so and then um on housing for example they have um a public housing that um is uh subsidized that the person can take their savings uh with to use to buy that public housing that is a saving through that saving so um everybody has good housing good public housing um and they own it so if it goes up in value they can sell it and and so they have that so the housing creates a good environment they put a lot of money into education equal education it's not people there don't have to go to a private school to get good education they so they have good education and they so and then they have uh the people who work hard and are civil with each other and that's how it works and it forget about Singapore if you look through history um these are these are basic fundamental things so um so wherever they've happened in history um they've worked and you can go back through all history if you uh you know these Basics earn more than you though uh it's been um you know be well educated uh be civil uh be productive um you know those types of things that uh those fundamentals work what is it about the human personality that makes it so common that people don't deploy those things it's so interesting to me because I found that when people get richer the societies get richer they typically get in more debt which seems backwards like um so for example I I watched uh the first time it happened when the United States started borrowing money from from China the United States had income that was 40 per capita income 40 times those from China and they're borrowing money from China so I wonder like how does that really happen and there's um when you don't have much money and you're at a stage of life where uh you know you value money you want to save so there's a psychological thing you don't have much money you get some money man you want to save it and to save it means you have to lend it to somebody then what happens is ironically when everybody earns more money and it's easy to borrow people will get in in debt and where Society will get in debt or the government will get in debt and also then there become very big wealth gaps and people basically are interested in taking care of theirs themselves and so um you don't have you ever fight over taxes or something and so you have a society that borrows just even think the political system cycle people pay if you're um a new politician and you run a state or you run let's say a state and it's before an election it's in your interest to borrow and spend because nobody pays any attention to the borrowing where the money comes from they pay attention to the spending so give them stuff you know um ghost band give them stuff have a party it's like having a party on debt and there's the short-sightedness it's like the you know raising kids they call it the marshmallow test you know uh you know you ask a kid in early uh early early age I can give you one marshmallow now or I can give you two marshmallows in 15 minutes which would you prefer and um okay the smart one says um I can defer my gratification for 15 minutes and get to marshmallows um we have a lot of society who wants the mark it now so is it um an enjoyable to take your money and spend it on better infrastructure um or let's take the education system the education system according to the Constitution is a state decision so it's not federal not mostly Federal money then you come down to um the state and it's mostly a tax District if you're in this neighborhood through property taxes and so on you will get the money to educate your children in that tax District so naturally richer tax districts will have better money and so like I'm in um in Greenwich Connecticut and um last numbers I looked I'm sure they're higher than this now but it was not that long ago is in Greenwich Connecticut it was uh twenty four thousand dollars per student in um uh Bridgeport Connecticut which is like 10 minutes up the road it's fourteen thousand dollars per student whoa and they need more money because they're they're poor so if you just take it's not just education how do you clothe the kid how do you feed the kid how do you give them the computer that doesn't come through the school and all that they need more not less budget so those are the mechanics of it first you have to go to bipartisan ship um like if I was President I would have a bipartisan cabinet and then if I was dealing with the economic problems I'd get smart people from the right and smart people from the left who want to make this thing work and I'd put them into like a Manhattan project kind of thing in other words put them into uh six months in which they have to agree on a system that's going to work tie them together and force them to agree and come out with that and have them gain control over the extremists who are going to fight like I don't really care exactly how it works just as long as you know like if smart people from both sides can get together and make it work and then you come back to these Basics you know okay how do you spend more earn more money than you spend how do you educate your children well whether or not you know and deal with those project problems that way to in a together way um you'll get the best outcome if you don't do that you won't get the best outcome yeah I think this is this is really brilliant and uh for people that haven't heard me talk about our company culture before it's very much in line with this and these are things that I learned from reading your book principles so when I read principles it was really life-changing for me uh it was before you and I had ever done an interview because what I liked about the book is exactly what you're talking about right now this idea of a bipartisan cabinet so in my own company I'm not looking for people to agree with me I'm looking for people that will challenge my ideas I'm looking for disconfirming evidence I want to get the smartest people that I can possibly attract to what we're doing and saying okay we need to disagree with each other well so that we can identify the right answer to your earlier Point you're going to be wrong so often that if you go into something thinking I'm infallible I'm going to have all the right answers you're just headed towards disaster so my question is how do we set up a situation where people can disagree well what what is that structure I think it starts with worry I I got a principal if you if you worry you don't have to worry and if you don't worry you need to worry because if you worry you'll take care of the things that you're worrying about to the best possible way if you don't worry and you just go headlong into these things you're going to have a real problem so I think um that you have to have uh people first realize what does that picture look like if we don't do these things if we don't if we don't have bipartisan if we don't solve these problems together if we fight you know you have to see the clarity of those two paths and have people choose the good path you know okay we will figure this out intelligently to make the best possible thing to and challengingly and together okay it starts there it's not a structure where does the structure come from it comes from people okay and it comes from people having a need to create a structure in a way of being so how do we get people to worry well like what maybe what we're doing I mean I think they have to worry at two levels first enough of us worry that we uh vote for it or you know we use our voting and our others to say let's vote on together and compromise and smart people doing these kinds of things um or and that that's worrying about the society as a whole and then there's worrying of as an individual if they don't do those things how do I take care of myself those are the two types of worries or two types of impacts you can have right so I think they need to think of both of those for people that aren't familiar with Lincoln um how much have you looked into him his idea of a Team of Rivals sounds like very similar to what you're saying about having a bipartisan cabinet um is he somebody that you've looked at or I know that I know a bit about Lincoln I wouldn't call myself an expert and I know that about him and yeah and I think that's really really great yeah so when uh whether it's at Bridgewater or elsewhere how do you facilitate people um disagreeing well because let's say that you have an intern going against your Chief investment officer like how would you do you take that person seriously they have little to no experience how do you set that up so that you don't waste time but at the same time you get the best ideas first of all um you explain to people and you understand yourself uh how important thoughtful disagreement is so you remove it you minimize it from being um something that people view as a fight and get upset about you have to change the attitude about this agreement so that um you know if you're in disagreement um and then one of you is probably wrong how do you know the wrong person isn't you and then also you still have to resolve the disagreement in some way and so you have to have in place first of all you know an understanding and an intellectualization of that so you don't get emotionally carried away and thinking because I disagree that's equivalent to a fight okay so you have to change that psychology and then once you do that then you have to have protocols in place for doing that now you know uh in in my book you know uh principles life at work in the work part of principles I've outlined those things those techniques that can be done um repeatedly um so you have to have a system for that and you know and so let let me make it very simple examples of that if you and I are disagreeing and we sort of want to try to get at the truth uh things that you can do is to mutually agree on a mediator so um okay you you could step out of your argument and say okay this isn't working uh how should we do this disagreement and maybe like let's mutually agree on a mediator like we both agree that that person you know something somebody we can trust and do through okay that's a good step then as you're doing that carrying that through you can also um say are you taking in the other person's thinking and replying to that or are you just blocking and there are techniques that you can do to do to demonstrate you've taken it in okay uh like repeat the other's point and so on and then reply to the others point and then do certain things like not interrupt or in other words I have a rule I call it the two-minute rule somebody says okay uh can you give me the two minute rule that means for the next two minutes I can speak uninterruptedly so there are techniques that you can use to First understand that it's not a big fight that there's protocols okay then how do you do that in a hierarchy okay there are different ways you can do that in a hierarchy but anyway there are many of them and you know we're not going to have the time to go through them but they're outlined in um you know um my book principles life and work they're in the work principles part of it yeah that's something that we found really effective here is uh Rules of Engagement is how we refer to it so whether it's the two-minute rule or something else but ultimately getting people to understand I'm saying this in in the context of somebody who's trying to figure out how we get uh we know that the the big cycle has a high degree of predictability and I'm willing to accept that maybe the US can't Remain the um the reserve currency forever maybe we're not going to be the dominant world superpower forever but that I want to handle that transition out as well as possible and usually phase five to six ends with literal Bloodshed and things have to get so painful before people can correct course and so trying to give people a framework I know you're saying that maybe I'm I'm looking at the structure too much but I I think in framework so what's that rubric by which people can go into whether it's the 2024 election uh whether I think right now we're still in gridlock with the budget or the debt ceiling whatever it is giving people ways to navigate through this well and so my thing is everything begins with the goal so what's your goal and even just getting um any group to agree on what the goal is now once we know what the goal is then we can start saying okay what people or ideas are most likely to get us there how do you stress test an idea how do you know I just want to emphasize though as you're doing that the people have got to agree how they want to be with each other first before there's a structure I mean I can we can have structure I can create structure and we could do all sorts of things we can have a bipartisan cabinet we can have the um uh the um going off for six months and doing the project and we can do all there's lots of things we can do but you first have to change the mindset of going from a I want to win at all cost to wanting that so all I'm saying is when you say I want the structure and I'm a structured guy I'm I want the structure and I'm a structure guide too but it takes people wanting something and so what is the goal like you say the goal you start with the goal okay that we are not going to fight with each other in a dysfunctional way okay that we will work together to overcome our differences that we will be good with each other okay if you put those things there and then judge those things and you sort of then say how are we going to do that okay then you do to by fun or some structure or whatever you know bipartisan cabinet blah blah blah blah all that other stuff then you can come around to it but you have to if you're in a I will fight at all cost mode nothing the structure of the Constitution is not going to work I I'll give you my hypothesis on the only way to pull that off and let me know if you see another option Lord knows I hope there is one uh I've thought a lot about how you sway people into doing something that is more advantageous I'm usually thinking about it for them so just what's more advantageous for them and it all ultimately comes down to you have a leader or a group of people for whom you're trying to earn the respect of and by earning their respect you do the right things so I'll sum it up at the national level we would need a leader that can actually bring the two sides together somebody who has a very clear Vision you've you've grimaced for anybody that's just listening to this uh Ray Delia just grimaced hard all right so uh explain the Grimace Ray it's like wishing for the tooth fairy or something I I mean it's like um not going to this root cause of why you don't have that leader yeah okay if you look at history um this is one of the great challenges of a democracy and when it gets into everybody fighting for their own cause with Pat um populism they at you know and so you know Mussolini comes to power to make the trains run on time because it's badly managed and so on so somebody says give me the dictator give me the dictator and then I will and and I want that dictator so that's what we're um okay so how do you get that leader okay and it increasingly I'm just dealing with the mechanics so I'm uh so how do you get the leader and what do you do with the opposition okay it's almost like um well you you have this fighting of the various types and do you accept losing and then does the opposition remain and undermine everything you're trying to do so it's almost like it gets the mob rule that's why the dictators come to power okay and so that's just history and that's all understandable if not desirable it's still understandable that that's the mechanics so to wish and say okay we need a strong leader who will get control and make everything go all right sounds a little bit like wishing for the tooth fairy that that is how dictators come to power that is very much the scenario I would want to categorically avoid so do you see that just as that is an inevitability because right now right to your own point we are not being good with each other from what I can see there there is uh certainly a broadcast signal and maybe this is a distortion of social media but I don't think so certainly not given the elections of recent there is a broadcast of a signal of massive division in a moment of massive division you get people fighting in a moment where people fighting there is a winner take all scenario that's the path to dictatorship so while my path may be wishing for the Tooth Fairy to want somebody who's inspiring that can unite people um I'll ask it pointedly do you just see it as an inevitability that we head towards dictatorship when you say um have a leader that way you're not dealing with the mechanistic determinants to say how do you get a society that is splitting apart and operating in the way that I describe to have a leader that leads and people follow problem okay you're skipping over that you can't skip over that do you see a path though other than because the natural way that this plays out the only path I can see is the one that I'm referring to if you worry about the alternative okay and I'm okay if you worry look at that what is it you must not have it if the more people worry about that then the more likelihood you won't have that in other words if you want to tilt the odds in all the different ways I don't know take out the ads have conversations like this do whatever it is and say I worry of what's going to happen so we must not have that and we really must have this other alternative I really want to buy into that other alternative and you have somebody arguing for that other alternative like will you follow um and I'll tell you I'll tell you um um the Prime Mario draghi in Italy let me just tell you the story very quickly of Mario draghi in Italy Mario draghi used to be uh the head of the European Central Bank which was like being head of the Federal Reserve for a number of years and he and I got to know each other in that he completed that and he's highly highly respected he's Italian an Italian has um Italy has crazy Anarchy like they've had an average of one prime minister a year and so chaotic and so bad that all the political parties got together and said we will be United under Mario draghi we will let him lead we will turn it over to him well he's dead I will do that only as long as all the political parties remain United because if they don't remain United we're going to get into this dysfunctional fighting and I know it's not going to work so for a period of 18 months he um was prime minister of Italy and and very beloved people loved him and then one of the political parties um um uh dropped out because they disagreed on his approach for I think it was handling Ukraine um and he said okay now I'm resigning even though everybody wanted him to stay overwhelmingly but he said I can't govern under that kind of a fragmented environment and you know in other words he knew where it was going to go so so he resigned and in the period um between him resigning and actually turning it over to the new prime minister um we had lunch and um and we were talking about these things and what what he was describing and what exists is the issue that we're talking about the inability of a leader to be able to lead when there's so much fragmentation and if you look at the history of democracies um and you go back to Plato back Plato's Republic he wrote The Plato you know a lot of people think Americans invented democracy it existed way back you know um in the Roman and Greek times and all that um and so he looked at the cycles and what he said was there's the cycle of these different systems one leads to another in this way where what happens is the greatest risk of democracy is an anarchy because the fragments it becomes uncontrolled they all have their interests they fight and they tear the thing apart and then so what happens after that is then you get the dictator and um you get ideally the benevolent dictator in other words the one who really knows how to make good things happen and he cares about the country he doesn't care about his personal wealth and those kinds of things and that and they create that and okay to create order that comes about that and then in that cycle after a period of time you inevitably get the incompetent or selfish dictator and then you have a revolution and then you go to a democracy and so on and these things go in Cycles and so when you're asking the question you know of the leader you know you're saying okay let's create a leader and um and and have them go lead you can't ignore the fragmentation and the inability uh to lead in that set of circumstances I agree with that but if you even in your own example what you had in Mario is somebody that is able to Garner the respect of all the different factions now I understand that It ultimately broke apart but he is the Tooth Fairy that I'm talking about you need somebody that people can unite but it didn't work because of the people behaved with each other and it won't work okay yeah okay so if if we know that people aren't going to stay United for long what you're saying is the duration that people can stay United is the duration that you can have that sort of peace prosperity and the second that you how long is that duration here let me let's let's look at the situation I mean it doesn't exist let alone have a duration to it yeah Ray you say very troubling things in a very calm manner which I think is probably the only way to say them um all right so as I then step back and I say okay the Cycles are what the Cycles are you said something earlier which I think is really important that I want to re-emphasize what's happening now is a determination from something that happened earlier and so to some extent you're in a better position to deal well with the way things are the reality I've heard you talk a lot about that the reality is what the reality is you need to be awake you need to be paying attention to that reality and then you need to base your plan of action based on the truth of that circumstance to do that though one thing I think is incredibly important is people have to be able to strip their emotions out of this uh I know you're a huge proponent of meditation are how do people get good at removing emotion from the equation so that they can see reality accurately well meditation is a huge benefit for that um so I really it it gives one both a calmness and a clarity and it gives one an ability almost to go up above everything and look down on it and say okay here's how things work and uh and and an acceptance of reality it's like this Serenity Prayer God give me the serenity to accept that which I can't control give me the power to control that which I can and give me the wisdom to tell the difference and you know just to be able to approach things and an open-minded way like we talk about uh you ask the question about um disagreement how can I approach disagreement do I emotionally get into a fight about it or do I handle it well meditation and those types of things calming yourself down viewing everything more like it's you know it's think of a reality as being like a gig like a chess game okay calmly okay this thing happens and what's your next move and how does it work okay very fascinating so if you take a chess Grandmaster or anybody that's really proficient at chess and you put a chessboard in front of them they they look at the board and they don't have to analyze each individual piece they know that pattern on the board very well they know where you are in the game and so that that's a chunk of information uh it feels like a very similar approach to the way that you're looking at financial markets Global movements the big cycle in that oh I can drop you into a scenario you'd look at a few key pieces of information you'd know where we are in the cycle so I mean starting with the three forces that we talked about at the very beginning hey tell me where those three forces are you expanded it to five but tell me where we are with those five forces that's the Chunk on the chess board that I need boom now I know how to take that next move what I want to try to give to people okay that's why I have the um animated video on YouTube that's why I have the book because it's like watching the same movie happen over and over again you can see it and you understand the cause of fact relations so you can understand so when you ask questions like um you know how do you get better and then we go dealt with the mechanics of that like okay how do you get to get financially better off and how do you be good with each other and not be threatened I mean it's just if you look at it that way and you understand the mechanics it is what it is that's how reality works and then how do you deal with it makes a lot of sense okay so in terms of chunking in terms of understanding where we are in the cycle um one thing that I'm thinking a lot about is as we go into the 2024 election um I've heard credible people say that they think China is going to make a move on Taiwan in the sort of chaos of the division that we have here in the current Global superpower do you see that as a logical move on the chessboard for China is that something that seems plausible to you um I have um very good contact um so I have close contacts of on both sides and um and and so I'm just wanting to say it rather than just throwing out an opinion I my opinion is that um there's a political situation in the United States that that it's really the issue of how much the United States pushes the issue in Taiwan uh that makes it risky because um there's a a move for uh of let's say Hawks or um some uh to um defend uh Taiwan or so let me just give you the facts if there is a I'm going to give you a little history okay please um Taiwan was part of China um and around 1840 foreign powers came into China and they wanted to trade and do things with with China and China didn't want to do that and so around that time they had the Opium Wars you may have heard that in history in which um the Chinese at the time said I don't want to trade you don't have anything that I want and um then they brought in opium that the Chinese wanted so that they would have this trade and whatever and then militarily one and took over large parts of China and took control of that and in 1895 um it was many foreign powers and in 1895 Japan takes uh Taiwan um okay fast forward um you go into World War II and after World War II the winners of the war get to divide up the world and said who who gets what and Taiwan was given back to China that's 1945. then they have a civil war um oh as usual the left and the right they fight each other and so the capitalists get kicked out by the Communists and they go to Taiwan and they control Taiwan okay so everybody agrees um that China is part of Taiwan is part of China but they argue who who controls China the ones in Taiwan say oh we control China and the ones in Beijing say we control China but everybody agrees with that 50 years ago so it's a that's a big issue in their mind because it's part of China and it's been told to them that it's part of China taiwan's part of China and but it but they the um capitalists uh which is called the Guam and dunk they are living in Taiwan and and they're not controlling it so Henry Kissinger um first makes the um gets together goes to China and deals with reunification and then Nixon follows and um and there's this argument and they reiterate that um Taiwan is part of China everybody agrees on that and that there should be peaceful unification of China and that goes on 50 years now and brings it up up to where we are today okay uh so a red line for China is if the United States um or Taiwan says Taiwan should be an independent country that would produce a war and everybody knows that all those in government would know that would produce a war um this is a big thing for them you know in other words they call that period of time a hundred years of humiliation it was taken its promise back and whatever it's it's in in their mind an indisputable reality um now we're in a situation in which um the United States and particularly um some congressmen who are more awkish um say uh what good chance they will say uh we will militarily defend Taiwan and then go on and sell them more um military equipment um so it's very very close to saying I will [Music] um it's a separate state so we're very very close to that particular issue so what will come um I don't believe China is going to initiate a move to to take control of China of Taiwan um unless the United States crosses that line pushes that line now so the way that it is understood and just by different part parties um is it's understood by the Chinese to be the way I describe it look it's been promised it's here you know I mean don't no that's an uncompromisable thing and Americans um I think think about um this um communist dictatorial bully that is trying to take a free country a free people and um in a um you know um aggressive way take over them and that we need to defend Liberty and protect them from that okay um I just want to emphasize um it's more complicated that in the way that I said and also it's like um from the Chinese point of view it's part of the American containment strategy which means you know China has grown and it's become a higher percentage of world economy and so on and it's expanding and it's like Taiwan is the lid on this boiling pot so that's my best description of what the situation is so I wouldn't expect I would say um if you want to know what really happens uh watch it the way I describe it in other words is it unprovoked or is or is it provoked in the way I just described it now again I'm a very realistic person I'm not an ideological person I'm not trying to okay I'm just like how does the how does reality work and what's the move and what's next move and I'm just trying to describe that reality I'm not taking a side and it's just like two sides in a chessboard and I'm just looking down at the chessboard right what are the things that you think people need to understand about the world to navigate it well and I'm asking this now at this moment because hearing even how you answer the question of China if I had to guess what you're gonna say to my question uh I would say it would be people need to understand human nature people need to understand um Finance people need to understand I think you're making it too complicated oh give it to me um I think people are need to understand um the basics the fundamentals and the story that repeats over and over for and why it occurs history oh okay yeah and and understanding the cause of fact relationships in it right nobody you can't expect somebody to understand all the things in finance and you don't need to you don't have to all the things in human nature and psychology you don't need to okay it just comes down to kind of pretty much simple basic stuff that repeats in a cycle for for the certain reasons that's why I try to make it in these simple entertaining videos right I I put three videos together um how the economic Machine Works in 30 minutes principles for success in 30 minutes and the changing World Order and it's in 40 minutes and these are just Basics if you understand that like you know what makes a healthy Society you know we boiled it down you don't need to know a lot of complexity in order to understand you know like how do you raise your kids do you hurt more than you spend you know it all kind of comes down to those kinds of Basics and so you need to understand those I think we'll link to those three videos in the show notes but where can people follow along with you and what you're doing um I'm on LinkedIn but I also uh post on all the major and sometimes if it's more in depth it's on LinkedIn uh guys if you haven't already be sure to subscribe and until next time my friends be legendary take care peace if you want to learn about why saving your money is the surest way to lose buying power then make sure you check out this interview with Robert Breedlove oxygen pretty important for human life there's no price on it why it's not scarce something like diamonds not that important to human existence yet

Channel: Tom Bilyeu

Views: 3,748,941

Keywords: Tom Bilyeu, Impact Theory, ImpactTheory, TomBilyeu, Inside Quest, InsideQuest, Tom Bilyou, Theory Impact, motivation, inspiration, talk show, interview, motivational speech, Ray Dalio, Principles, Changing World Order, tombilyeu, Conversations with Tom, Health Theory, mindset, how to be successful, entrepreneur, investing, business, billionaire success, wealth, recession, svb, silicon valley bank

Id: lPYmD7CyHlY

Length: 115min 3sec (6903 seconds)

Published: Sat Apr 15 2023

Reddit Comments

[u/PontoonPatriot]

I'm not hiding any losses. They show up every time I open my Fidelity account. 😳

[u/mosheoofnikrulz]

Parkinson's?!

[u/DTPW]

He’s worth following for insights on the bigger picture - world events, leadership, finance, etc

[u/WillKimball]

25:00 we can pay all of our debts one at a time.