Is The American Dream Dead? w/ Raoul Pal

macro investing is a journey join me ralph powell as i go on a journey of discovery through the macro landscape this is how i build my macro framework by talking to the smartest people in the world [Music] so i've got a real treat for you guys this is something uniquely different normally on my journeyman it's me interviewing people but this time it's somebody interviewing me good friend of mine robert breedlove who has the what is money show podcast and youtube channel incredible thinker in the crypto space reached out to me and said listen i'd love to a long form interview a really long form interview about your kind of whole macro framework and picture i'd never been able to do this before i've done it in the crypto journey but not my entire how i thought the world comes together why we are where we are today where we're all going what really mattered what are the parts of the journey that people don't really understand why don't we have inflation when people think we should do why is inflation different than we measure it why we've got populism all of these things this whole journey of discovery that i've been on for 30 years is all in this interview it's literally my entire brain dump robert does an expert job picking my brains and all of this moving the conversation a lot along so enjoy this you might need a glass of wine or two or a few coffees to get through it because it's pretty long but i think you're gonna love it and look do rob at the honor as well of going to his youtube channel the what is money show um or his podcast he's got some incredible interviews 17-part interview with michael saylor is super interesting it's the home of the deep dive really really intelligent conversations sorry thank you robert for this thank you for allowing us to share it with the real vision audience and enjoy [Music] hey everyone welcome back to the what is money show i am thrilled and honored today to be sitting down with mr raul powell raul welcome to the show great to see you my friend it's been a long time but it's good it's been a while it's great to see you again um and as we were just talking offline it seems like you may have found the golden thread that connects this whole history of human action and un unintended consequences perhaps yeah and it's it's it's all about money it's all about people it's about society it's about why did we get to where we are where we're going it's everything and it's something that i it took me years to realize i mean i've been in this business for 30 years and i was always focusing on bits of the big story and never asking well why did it get there and then when you ask that it takes you back further in the story and then you go well why do we get there and then before you know it this whole thing pans out and you're like oh my god you just don't realize the law of unintended consequences and how the big they can be right and most of the time we like to blame politicians but most of the time we're all to blame right and not for any fault of our own but just by something that happened so that's a little prequel to the story yeah this is a great way to look at it because you know i'm drawn back to taleb's writing and he says essentially every time human beings intervene in a complex system we're trying to do accomplish a but we end up creating unintended consequence b c d e g so it's every time we're trying to fix one thing we're creating these other problems that we don't often understand the connection between until there's a lot of retrospect so where do we start do we start so we start with the peak of the british empire which kind of feels a bit weird but at the end by the turn of 1900 britain's power had begun to wane it was the largest empire the world had ever seen the sun never never set on the british empire but as all with all empires they're almost impossible to keep hold of long because it collapses on the middle because of debt and the issues of trying to run all these different people across a global system and they're not unified people so it becomes an impossible situation so towards the late 1800s the british started a series of wars with the germans and the germans were the rising power in europe and were clipping at the heels of the british you know the british had defeated the french and the spanish and were you know the global dominant power and the dutch and with the global dominant power but the germany was rising and britain was struggling to be able to meet this new rise of germany then what happens is one of the greatest unintended consequences of all time was the shooting of archduke franz ferdinand and suddenly a world that was still relatively gentlemanly where we had gentlemen's warfare turned into the biggest bloodbath in all recorded history which was world war one world war one was when britain and germany finally fought it out with the french in the middle it was also the collapse of the ottoman empire so the ottoman empire was one of the biggest empires the world had ever seen and that been in place for multiple hundreds of years if not a thousand years in various guises world war one saw the end of the ottoman empire and a complete power vacuum of which germany was filling and 20 million people died the world has never seen warfare of that sort because of the rise of technology tanks planes stuff like this and it kind of shocked everybody europe was used to kind of gentlemanly warfare where we'd fight on the battlefields and then have you know drinks on the polo field that kind of stuff but that world had gone the kind of innocence of that world had disappeared forever so what happens after world war one was where it really all began it began in something called the treaty of versailles in france all the nations the uk the us who was the rising superpower germany and france got around a table and negotiated the peace terms for world war one in that was a war representation payment for germany and the british and the french against the americans advice was to impose a historically gigantic offset for the damage done to europe because they were still trying to think in those terms of being a gentleman you should be fined for what you did i mean christ 20 million people died so they reached this agreement and in modern day money it's kind of half a trillion dollars but economies were smaller you know this was a unpayable amount of money so germany in the 20s starts trying to pay this and simply can't so they decide to debase their currency and that is the german hyperinflation you know people confuse debasement with inflation all the time but they're not the same thing it was a debasement of currency to pay this debt so they couldn't pay the debt so they debase their currency and germany collapses and out of the collapse of germany rises hitler right so the debt was denominated in the mark is that right i think it was denominating marx i'm not entirely sure yeah um but that was that's how they decided to try and pay it off right which is the age-old government thing right of course you can't pay your debts you debate your currency until you can of course yes yes so just okay so british empire was dominant in the world uh a lot of this had to do with i mean they were just an imperialist force right they had created a huge navy he who controls the waves controls the world but then germany's rising as an industrial power correct that's threatening the dominance of the british empire and to your point industrialization played such a role in this right it was the first industrialized warfare i guess you would say correct and this was this is a battle of technology much like cyber warfare is now right that was a battle of technology and the germans had technology and the british had technology and and they all fought it out yes that's why so many people died because we weren't prepared for anything like that right and the technology of money played a critical role as well in that fiat currency was used to fund warfare and also led to uh germany's approach to repaying their debt and if we're talking about money over that period the british i think were the first to leave the gold standard over that period the french left the americans left pretty much every country in the world 80 odd countries so many people defaulted because of the cost of war right that's another typical thing that destroys currency is the cost of warfare it's the most expensive thing governments ever spend on it's one of the features of today and why we've got so much debt is the cost of wars that we fought that we could never pay the bills for right so you know all of the precedents are all there so then what happens is world war ii and this is where the story really starts so the collapse of the british enfire leads to world war one which leads to the rise of hitler which re leads to world war ii 70 million people die i mean it's unprecedented three and a half times the size of the number of people who died in world war one [Music] and again that was the shock that brought the next thing which is the unexpected thing those things were kind of expected because you know geopolitics they they they trend in certain ways yes there was unintended consequences of the shooting of artichoke ferdinand for world war one but the collapse of the rich empire leads to vacuums of power much like when the u.s pulls out of the middle east it leaves a vacuum of power in the middle east and before you know it you create warfare and eventually everything settles down once people figure out their new role in in that in that new in in the region so world war ii finishes and here's the bit where humans made a mistake what do they do they're euphoric and they go and have sex and they create the largest population boom the world has ever seen and what happens in america is 78 million people were born in a 20-year period the population grew by 40 percent in 20 years and the global population grew by 30 percent wow in 20 years can you imagine if the us opened its borders and the population was allowed to increase by 40 from immigration what would that do right okay and everybody thought they were doing it rational because what had happened after world war ii was the new deal and the new deal was this fiscal stimulus and this will become relevant when we get much later in the story was this fiscal stimulus where they basically again impose financial repression by capping the yield yields yield curve control allowed inflation to run relatively hot it wasn't super hot but it was hotter than bond yields to lower the burden of debt but then they fiscally stimulated in an unprecedented manner never seen before in world history that stimulus and and the marshall plan of rebuilding germany and rebuilding japan that stimulus created the boom of the 1950s and the 1950s and 1960s were probably the last golden age we ever saw where real wages were rising people's standard of living was going through the roof as the technology that got developed during warfare turned into consumer goods like washing machines and cars right and everybody had access to it labor was still relatively inexpensive so that's what part of where there is the politics of nostalgia so typically on the left on the right of the political spectrum um whether it's the uk or whether it's the us they look back at the 1950s as the golden era the golden era where life was simpler now it was very different longevity of life was very different and all of those things but there was this boom period because of the end of world war ii the rebuilding of global economies things that can almost never be replayed but may get replayed in the future because of things that are going on now so that goes on and this the world also retools its entire global infrastructure and becomes globalized so as opposed to being empire based it becomes this rules-based global order system right so 1944 was bretton woods which is the tying of all the currencies together to the gold standard pegged to the us dollar 1946 was the united nations 1947 was the general agreement on tariffs and trades 1949 was nato 1957 was the eu so these are the super infrastructure of the world that we've all grown up in this is the the centralized power of globalization and that was put in place to avoid what had happened in the past [Music] so go on so well so we had the post war tech and demographic boom so a lot more people and then to your point a lot of the technology developed in wartime is now being converted for peacetime utility so we had all the manufacturing as well right all the manufacturing has been in place so there's this huge technology led economic growth boom effectively with fiscal stimulus in massive science right right um and then you have so i guess bretton woods and these other agreements and arrangements you've described does that all fall under kind of pax americana is that it is kind of pax americana because america was instrumental in setting all of this rules-based global order system up right you know with the british and the other larger powers to say look we need a system in place that we can't go back to world war ii yes that we need a rule system of which global order can be kept right so so the at least ostensible purpose of this was to increase economic interdependence among the nations so that we didn't have world war three and this is also the transition from the dominance of the english empire or the british empire to the rise of america is the dominant superpower exactly right yeah and and um you know america was the epicenter of that golden age and all of these this rules-based global order architecture was built around america and its globalized ambitions so now you've got you've gone from an empire organizing the complex adaptive society of you know the british organizing the complex adaptive society of empire to the americans organizing the global compact complex adaptive society using this rules-based global order system and because it was pretty non-threatening yes america had military might and exercised it in first link in the suez then in korea then in vietnam and you know ongoing as america's done because it is the superpower and that's kind of its job rightly or wrongly or deemed to be its job um that that that's what sets it up so the u.s is now the epicenter of the system controls the rules and that's fine that works pretty well so meanwhile let's go back to these baby boomers 1967 the first of them start entering the workforce so they just you know hit their 20s and they start entering the workforce great for the first of those guys amazing then by 1975 the average baby boomer is now in the workforce so you've got the highest increase in people in the workforce ever and two things happen firstly prices explode because if you think when you first got your first job what do you do you rent an apartment or you know you you have to buy in the old days a suit and tie you have to buy tables and chairs you have to you buy yourself a car your marginal rate of consumption explodes yep when you're doing that on a global basis it explodes beyond anybody's comprehension right it's the largest demand shock the world has ever seen and will ever see we will never repeat anything like that again so obviously supply can't catch up with demand so the oil price goes through the roof all commodities go through the roofs everything goes through the roof right and so everybody's scrambling to catch up america can't deal with running twin deficits and being pegged to gold it's losing its gold supplies yep its currency is too strong and in 1971 nixon walks away from the whole thing yeah and we go to the fiat money system because it's unmanageable with this population boom going on and the rising inflation and all of the other pressures that are going on by 19 by 1986 the baby boomers entered the workforce uh sorry the last baby boomer enters the workforce so you've got this period which we refer to as the great inflation which most people think of as being a monetary phenomena i think is a demographic phenomenon i can prove it every chart that i look at proves that it was demographics right the monetary side of course played a role but the reality was if you were to put the same setup anywhere in the world regardless of what you're pegged against you've got the same demand shock right and the world can't keep up right now as we're talking we've got a supply shock so you know the demand has has has risen to normal levels but supply is massively contracted so prices rise that tends to be it tends to be offset quite quickly because as things come on the general level of prices stabilizes again sure the price doesn't fall it never goes back um you know but but it kind of stabilizes so the other part of that equation is not the inflation the really big story is the one that nobody understands is that wages stopped going up [Music] so in real terms obviously if you add a record number of people like if you added record immigrants into the us right now what happens wages don't go up right and in fact they never went up again in real terms since 1975 wages haven't gone up they've gone up 0.3 percent a year right for the median american and this is the infamous decoupling from productivity growth right correct yeah exactly because gdp grew yeah because of financialization i'll come on to that in a minute um but this is where the real crux of the issue starts so you pull these people in the workforce and like you compete with each other so they start competing for wages so guess what nobody needs to pay higher wages right and so these people have been promised the american dream that was the dream of the 50s yeah they saw their parents have that and the baby boomers never got any of it they got something entirely different they got suddenly they got this weird world where fiat currency was being gradually debates not like we have these days but gradually debased by inflation and to you know money supply issues stuff like that and asset prices start to rise and their wages don't and this is the key thing is if your assets rise and your wages don't your future self is poorer because an asset is a way of storing wealth for future consumption but within this is an uglier picture as well is the fact that that if you split the population down but sweet with kind of percentiles the lower percentile saw zero increase in wages complete zero so you know the worker working in a you know flipping burgers you know production a factory worker zero increase the average the median as we said okay the medium worker saw about a 33 increase in real wages in 50 years which is incredible compared to what happened to gdp and productivity this is from 70 to 20 20 you're saying 70 yes yeah 70 73 74 something like that okay today yeah and then the average guy because it takes into account the really wealthy skew well their wage would go up 100 over those 50 years so you're already seeing that bifurcation in people so then if you think of that and we'll come on a lot more about this in a bit but if you think of politics now right you think of the left and the right and the extremes of left and right talking about not the you know the middle ground but the extremes of left and right are both really [ __ ] angry because they've been left behind right and nobody knows why so they they blame it on politics but the reality is it's people having too many kids right so they are really angry because both those parties have this base of the poor but in different parts of the country and those guys lives never improved they were promised a dream that never happened they live in the world's richest nation and they never got any of it right and then all they're bombarded with is the imagery of the beautiful rich getting richer and how great america is and they're like well well um to us of course you're gonna cause populism makes a ton of sense so you're making the case here that at least to some extent the political polarization we are witnessing today is a reflection of this widening wealth disparity this economic divergence and that question and that divergence itself as you're saying is driven largely by demographics but there's also a significant monetary component here which i'm sure you're going to go into but this i think this is a important thing for people to understand is that politics is downstream of economics all almost always so it's not like you can go solve problems in washington and fix this polarization this polarization is symptomatic of a deeper economic divergence yeah and we'll get into that towards the end when we're trying to figure out between the two of us how can we solve some of this because it it's going to require not doing things that we've done in the past thing that feel crazy or wrong to us are going to have to be tried and tested because we cannot simply keep flipping from well we're going to support people in certain ways on the left or we're going to hope we can get rich people to trickle down their wealth to poor people i mean we've done the same [ __ ] thing now right for 40 years and it doesn't work right these people's wages have never gone up their standard of living has not gone up yes it's gone up because their longevity no the the median americans longevity of life is barely risen as well because of you know diet and all of the issues that has come but the where it gets really ugly is and this is where the money part comes in and a whole bunch of other stuff globalization is reagan and thatcher come along and it was really thatcher who drove a lot of this she figured out something really clever and it seemed a good idea but it had unintended consequences as everything does thatcher's idea was in england we had what's known as council houses free housing for um low-income families they were you know one of the benefits like the national health service that came out of world war ii where we're like we need to help people you know part of that big fiscal stimulus that came in the restructuring of the of the political landscape so people are living in these houses for free and margaret thatcher decides okay what makes a conservative voter in the uk a conservative voter is generally a house owner because they are more tied to the economy right so and labor voters the left side of the spectrum in the uk tend to be tend to prefer state support okay fine the same left right divide we're talking about so margaret thatcher is a piece of genius political genius and i'd have said economic genius initially which was we're going to sell them these houses at ridiculously underpriced rates and we're going to free these people and that was a great idea and the conservatives won a lot of votes obviously because you're giving away assets for nothing and people who couldn't afford housing now can afford housing and et cetera and it wasn't great quality housing but it was it was an asset but the issue is is you turned all of these people into debtors and they were creditors before because they didn't have access to debts because they had no assets and now you've turned all of the poor people into debtors and they've now become slaves reagan sees the same thing and realizes that credit is his solution so there's a massive deregulation goes on in the credit markets and the rise of wall street happens so the world starts financializing at a unprecedented rate both reagan and thatcher start and then others afterwards start freeing up the pension system as well and start driving things like 401ks [Music] so now people can invest in their in the markets but that has another counterbalance which is stock prices go up and people can afford less of them with their hourly wages right property starts going up because people can now get access to debt and then we can afford anything so everyone's on the hamster wheel now running and running and running and nobody can catch up and their wages aren't going up so what do they do well humans generally are pretty rational or they make rational choices that appear rational and then become irrational in due course humans are pretty good at that so they start thinking well if i borrow money i can make up the difference my wages aren't going up but the asset goes up so i'll borrow a bit more yeah and so i think i've got the numbers here so if you look at the asset prices over this period if you look at it per hour worked in terms of income gold is now all-time highs equities all-time highs well you're purchasing powers at all-time lows basically versus every asset except these variable assets like oil where you can produce more of it so what happens is this process is slow at first but it starts accelerating as more people buy equities because of the pension system it becomes harder to then make sizable investments these start going up they make it easier create index funds it creates more of a loop meanwhile everyone's like [ __ ] need to put money in my 401k i can't afford healthcare and healthcare starts exploding why 78 million americans are in the health care market at the same time yeah duh obviously so then that goes that whole thing explodes so they just borrow more money to fill the gap and what i did is i took basically household um um i took household income real household income an added debt component and it basically then starts to mirror what happened to prices in assets so they were doing what they thought was the right thing is to maintain my standard of living i need to borrow money and that creates this financialization bonanza in the 80s right that leads to the 87 crash because everybody is now piling in to everything by borrowing money to be able to do this to be able to participate because they've got the american dream he's like i want to be rich i should be rich yeah but they're not being rich because they're in debt people confuse right right so so in pursuit i mean basically the american dream was just a horizon that was receding faster than they could catch it and so and this is the root of fiat currency right is that it incentivize and incentivizes indebtedness clearly you want to borrow a money that's depreciating and put it in something that's appreciating and make up the difference very clear what i had not seen before that i think is interesting is that you've tied in the electoral incentives related to politicians to this as well and that they now are creating policies to get people into homes to get them to vote conservative i think you said is all of this i mean i assume a lot of this is unintended consequence but it seems like government would not mind citizens being more in debt either because then this would justify further future currency debasements or other policy interventions i don't think they think in terms of currency debasement they're not like the roman emperor sitting there thinking it happens in a way that kind of they delude themselves self-destruct nobody yeah they don't want to admit to what they're doing and my guess if you went to well we've seen it with central bankers like when mervin king was at the bank of england he'd never accept any of this and then when he left you know he was on real vision talking about you know i'm worried about what they do to money alan greenspan was the same they kind of see it right but you know within all of that then so we're into the 80s now right and we're now in the credit boom has started and the cult of stock market has started and the culture property started these things were not cults before but with debt and this potential future i could be the billionaire that ridiculous mentality that drives humans and creates more desire for debt ends in ends in the the liberalization of wall street the great free market what we should do is open everything up to the free market what that actually meant is you're putting the power in the hands of wall street and wall street became the epicenter of the us and global economy and the city in the uk and all the financial centers and manufacturing didn't matter anymore it was irrelevant so then the mid-90s no 1990 the next big shock the berlin wall falls and the fall of communism starts china starts opening up realizing it has to change the world can take russia coming onto the market yes we had a lot of immigration issues in europe because it was a huge movement of people and you know it was a kind of golden age being the commodity markets because those guys got really really rich because they gave the commodities away like the council houses for free to a bunch of people who became billionaires until putin didn't like them put them in the gulags and replace them with other people who got really really rich because russia owns more of the world's natural resources than all the other world all the other countries combined i think roughly staggering how rich russia is in natural resources um so by about 1996 they want to change the general agreement on tariffs and trade which if you remember was one of those rules-based global order things they want to change it to something called the wto the world trade organization this was again a great idea let's globalize let's liberalize markets let's let's all trade with each other with no tariffs obviously no tariffs doesn't actually exist because everybody still imposes tariffs on each other but they start this idea and now once you make that agreement the worker in america who's already in excess supply is now competing against the global worker who's cheaper because america is the richest society in the world so you've now double [ __ ] everybody and they're triple [ __ ] because in the 80s comes the rise of the silicon chip and the computer and moore's law explodes and technology starts replacing jobs at every level so these poor baby boomers who are now up to here in debt by the mid 90s are now facing a globalized workforce of cheaper more effective more productive labor the rise of technology and a debt burden all at the same time and too many of them okay that is a really bad signal and there's a fantastic interview there was a famous famous english french american billionaire called james goldsmith he was like this gun slinging you know m a corporate raider typical 80s kind of figure one of the world's most famous investors now he's a free market capitalist and he comes on charlie rose in i think about 96 and said we should not sign these free trade agreements and all of the free market capitalists are in uproar what do you mean why this is ridiculous this we're going to pull all the emerging markets out of poverty blah blah blah blah this is going to be a great period of growth which it was for many he said you have no understanding what you're about to do to your own populace he said you're creating an ability and all the incentives to offshore your entire manufacturing industry and what's going to happen is the rich are going to get super rich because they're going to have the lowest cost of wages in the world to manufacture goods that they sell to your population in the u.s and europe and your wages are never going up again and this is going to lead to populism and it's going to lead to massive societal disrupt and you've broken the social contract do not do this and they're like but you're a free market capitalist he says this is not free markets this is labor arbitrage and you're creating perverse incentives what you actually should do was say if you're an american company you can manufacture in china and sell to china if you're a chinese company you can manufacture in america and sell to america free but you cannot manufacture in vietnam china india and sell it to the us yes the consumers will get lower prices in most of those goods and that's proven to be true in fact everything he said has proven to be true it's a stunning interview the guy's ultra intense it's it's like it's amazing prophecy and it stopped me in my tracks i kind of completely was against the narrative of what people thought and i was a big free trade guy and stopped me in my tracks thought yeah we really [ __ ] this up because he was everything he said was going to happen happened i mean everything um so that destroyed all of the middle of all of these countries the interesting so people i mean i guess we one thing that comes to mind here is that we kind of get locked into a recency bias to some extent where stocks are going up real estate's going up people are just gonna keep taking on more leverage so long as you know things keep progressing but then two that there's this unintended consequence i suppose where all of our industrial economy in the us at least gets eviscerated and pushed offshore by virtue of uh really being the global reserve currency right this is one of those negative aspects of the you know quote 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left off with there's this dark side to the exorbitant privilege which is and perhaps this is related to triffen's uh they often call it dilemma but it's actually a trilemma um you can't have it all right you can't have your cake and eat it too and one of the consequences of being the global reserve currency is that your industrial economy gets priced out in other marketplaces so is is that related to uh i forgot the gentleman's name but uh the prediction goldsmith goldsmith james goldsmith um no because he saw this as a global issue for the developed world which is what it was um so all of these countries that had strong reserve currencies doesn't have to be the global reserve currency we're all going to be killed the global reserve currency with the biggest power obviously gets killed the most mm-hmm and the u.s didn't have a social security network um safety net for anything while europe did so europe managed to stop the worst of this because it had some sort of safety net now americans are not fans of this but i'm a european and grew up with it i grew up with free health care and certain types of state support and they're just different systems and that's fine but what happened is the workers in germany and italy did okay until the eu then they repeated the same mistake all over again and then china became so dominant so let's go back into the money system now so so what happens now is that wages are never going up again so everybody keeps saying inflation's coming inflation is in the old terms of inflation of demand-driven cpr and never ever coming back in our lifetimes right and in fact it's provable because you take the births deaths ratio and put it against cpi at least by 30 years exactly as i said you hit your peak spending in your 30s that's inflationary power and it exactly follows it and i'll share this chart and you'll be able to see it but also what happens in 1987 alan greenspan did something that we haven't done before which was as a stock market crashed he hit the panic button and cut interest rates to stabilize the panic the unintended consequence of that is it suddenly became a tool in the central bankers box is huh there was no recession in 1987 maybe interest rates can stop the business cycle because that's really what we want to do if we can stop the business cycle then we can probably reach our employment mandate and if we're lucky we can reach our inflation mandate because demographics mean it's actually pretty hard to to generate inflation in that way currency debasement different type of inflation not measured right as we all know i'd just like to point out here revisiting this point of self-deception where you have the central bank thinking they've identified a policy pool policy tool to put an end to the business cycle that they themselves are creating and that's going to come back again in later on in our discussion yeah so then the next big event is like the 90s we have you know a few crises here and there we have a bond crisis blah blah blah but that's all okay until 1998. in 1998 we've now started building up gigantic leverage but the leverage is in emerging markets it's in the u.s it's in the uk it's in europe it's in japan but the emerging markets have taken on too much versus their income so they start blowing up first with thailand and then it keeps going around nation after nation stock markets in dollar terms start falling 90 completely hauling out the whole asian tigers you know the feature of the 80s and 90s was taiwan south korea indonesia all of these things malaysia hong kong they got decimated by too much leverage lent in dollars to nations that don't earn dollars right this is which is the exorbitant privilege of being the us right as you and the currency i was just typing up the question to ask you what was the imf and world bank's role in these emerging market debt blow-ups well first they encouraged the capital flows and then they had to bail them all out [Music] but in the ugly disgusting world of geopolitics that obviously plays into the advantage of the us right because you've now got them by the throat right slaves once again yeah and so what happens is those growth economies don't become the growth economies yes they all do fine over time but the south korean stock market took 20 years before it hit a new time high taiwan took 20 years i mean it was a big deal but in that something close to home happens we're starting to speculate in assets wildly and the growth of the hedge fund industry has happened households are picking up leveraged steem for the reasons we talked about is asset prices keep going up so they have to keep raising their leverage and house prices look um so household income as a percentage of household debt keeps falling so it's now 0.4 of the debt yeah so it shows you how leverage they are you know it's 20 something 25 times levered is a u.s household now now asset yeah they've got assets but to in terms of income right the income coverage so we've now financialized wall street because let's go back we've got this record number of people who've now been encouraged to start investing in the stock market by their 401k this is deemed to be a good thing because when they retire they've got money what wall street does is take all of that and then they leverage it so they leverage it for their own benefits because that's where they get um that's where they get all their benefits from so banks are making record margin goldman sachs goes public i was working for goldman sachs at the time you know we've got the highest roi of any bank in the world you know people are printing money and the financial system is the center of the world and then long-term capital management blows up and i was at the absolute epicenter of that too and i saw it firsthand and i was involved in both them putting on their trades and then helping all the banks take off their trades to unwind that but greenspan cuts rates twice in the asian crisis because of this suddenly there's not enough dollars in the world right the dollar the world is now suddenly record short dollars and they're like [ __ ] the dollar's exploding higher and uh nobody can pay their debts and therefore there's less money at home i mean you know this is a big problem george soros actually writes a book about it called the crisis of global capitalism that says this is going to spread to the core meaning the developed countries and everyone kind of poopooed and said no it's an asian thing so greenspan cuts rates twice the world stabilizes the banking system saved you know many of these european banks almost went under then it was a big deal and then the central banks have basically said we've got your back so now everyone goes you did it to us in 87 and now you've done it for us now let's all go in the scene was established and the largest stop market bubble in all recorded history begins and nobody wants to invest in these emerging markets so all the money gets sucked into the united states basically and that boom happens so the boom in the united states stock market was unprecedented so we then hit the bust of that and many of us at the center of the financial system were thinking is this going to be the end is this the one that blows up the debt bubble and lo and behold interest rates get cut cut cut cut and it stabilizes and the system is saved so it was an equity problem and not a debt problem and so you've saved one side of the balance sheet so the world recovers pretty quickly but what happens then is these baby boomers lose faith in the stock market for a while for a decade so they think how the hell are we going to retire and so it starts again and it's the property market and the only way to buy it is with leverage right but in the meantime something ugly is going on and it's the labor force participation rate so that peaks a couple of years after all the baby boomers are in the labor force also adding to the baby boomers in the labor force the double shock of the demographics was women came into the labor force too in record numbers right why because the household they had to because the cost of the cost of all this stuff had gone up so you had to put women in the workforce and pay nannies to look after your kids you know it was a complete change now i'm not saying it wasn't the right thing to do of course it was but people were forced to whether they wanted to or not right so you had to have these double income households yeah because of the indebtedness right exactly because the indebtedness and the rising asset prices so your future self is getting poorer so you're like [ __ ] [ __ ] [ __ ] i need to catch up i need to catch up we both need to get a job but need to work two jobs labour force participation rate eventually starts falling after 2000 as people start kind of just falling by the wayside as their jobs are gutted so this is the globalization and technology problem we talked about earlier is in the end people just can't get jobs so you get this labor force participation rate falling and then it starts happening as the boomers start retiring which is they start they hit their 50s in 2000 so the ones who are lucky enough to remember the ones at the beginning of this full cycle were the ones that were lucky those are the ones who get to retire those are the ones who managed to do that labor force participation rate falls why do i keep talking about the labor force participation rate because it exactly maps velocity of money so a velocity of money collapses because of demographics because the older the population get the less the money circulates right yeah you see your parents how do they spend compared to you it's very different right and when you retire you spend even less you know i saw my dad go through retirement problem is you get a fixed pool of money and an undefined age that you're going to live to right so the natural human behavior is to be cautious so you collapse your spending because the last thing you ever want to do is be 85 years old and destitute right it's just normal human behavior so aging populations always have lower growth fact and that is provable via the labor force participation rate or the births deaths rate it's exactly mirrors it as you'd imagine so cpi velocity of money gdp growth are all a function of demographics but the other shocker is what happens next so the next part of the story and it's all interrelated and it all comes back from that world war one and the collapse of empires and all comes is we've now hyper financialized and the weakest balance sheets in the world are the households and behind that is the banks so you start wiping out the household balance sheet by property prices falling and you have the biggest financial collapse in all history pretty much maybe since the 1930s so that's the debt burden so the central bankers know the trick now right we've learned this from 87 and 97 is cut cut cut cut rates go to zero oh we need to do something else will print money and call it quantitative easing because printing money sounds bad right because everyone kind of knows if there's too much of something it becomes valueless so we'll call it quantitative easing and we'll kind of express it like a amount of quantitative easing kind of equates to the number of percentage points rate cuts you could have and we can pretend they're fungible things the sleight of hand the magic sleight of hand okay why they do that is because in a debt crisis you can't have the collateral go to zero right that's why half of the banking system was going bust because they were using mortgages as collateral right so you need to stop that happening so you have to bid the collateral you have to bid the collateral and what their idea was and i don't believe they thought they were debasing the currency they kind of thought it's not going to debase the currency and nobody really noticed because they were looking at the wrong thing because everyone's looking at cpi it's going to be inflation it never happened yeah no because it went in asset prices because the denominator was falling in value right every time they did it you know most assets have not got back to their prices versus the fed balance sheet or m2 or however you want to measure it because the denominator has fallen so much and never get back there some of them have and we'll talk a bit about that in a bit but so monetary printing becomes a new thing so going back to the labor force participation rate when you overlay labor force participation rate you can actually forecast into the future because it's based on demographics and i've been doing this for seven or eight years now and it exactly shows you where the fed balance sheets going so four years ago saying well it's gonna go to uh to uh eight trillion in 2021 that's where we are just follows it because what the fed are doing are papering in the craps the cracks of the demographics it's all demographics because the demographics is what built the debt to make up for the wages that were caused by the demographics right and so it's all trying to offset an aging population it's why japan is the same and europe has the same and australia has the same and canada has the same and europe has everybody has the same problem and they're doing exactly the same thing which is trying to rebalance the balance sheet of the overall economy by printing money to offset this issue so let me ask question so the indebtedness is embedding this growth obligation effectively so people need to work more or leverage or anything to produce more return and then you so and you're saying that the death birth ratio is uh presaging the central bank balance sheet by eight to ten years labor force participation rate with the birth death rate as a as the future predictor gives it about i think we we can go out about 10 years 20 years okay so does we know where cpi is going we know where it's all going does it ever unwind though because i have a hard time seeing a world where the central bank balance sheet actually starts to decline well we'll talk a bit about the future but that's a great question it's what i want to dig in with you about because this is the unknown stuff we're going to get into in a bit so now we've got this monetary printing and it's offsetting the demographics and you know you'll see all the charts and people are watching it we'll see i mean it's kind of spooky and once you see it you can't unsee it and you realize okay i get this now it's all the same thing but out of 2008 comes the rise of asset prices and the collapse and wages don't go up for the wages right so now it's become even harder for anybody to catch up and now they can't get access to credit either um not for a long time not for seven or eight years before people start borrowing again because the banks wouldn't lend it to them because regulations said well the banks you screwed up so we're going to stop you lending right good thing probably but it meant that people get poorer but the debt didn't make them richer anyway so nobody's winning here nobody is winning and then the monetary printing without people realizing people think at first and i think most people still think today that the money goes into the banks it gets lent out and assets go up because people buy assets it's simply not true if you look at the volume of the s p it hasn't risen it's the fall in the in the denominator that is causing all of this to rise i.e the debasement is making you poorer and you know i've talked about this on twitter and people don't get it i think i'm being ridiculous but this is not you know when i show those simple charts divided by the balance sheet right this is not some random chart this is this whole thread that has got me to understand why this has happened yeah and it took me a long time and bit by bit to build on this understanding so just to explain that real quick so you're saying when you denominate the s p growth in growth of central bank balance sheet or gold i think you basically see it's flat right or everyone thinks well so what's interesting what got me to get to this point so i understood all of this i understood the balance sheet was a function of demographics and debt and debt was a function of democrat it was all kind of all part of the same picture i and everybody else start shouting it's an everything bubble how does that work if it's an everything bubble why is nobody getting rich apart from the very rich you've got access to capital i then start thinking well i lived through and worked through and invested through 2000 and that was a bubble because equities decoupled from gold from real estate from everything right and assets have a relative valuation always have in history so basically gold versus real estate is a trade-off everybody will make at a certain point if real estate is crazy expensive versus gold at some point the flow of capital goes the other way because it's an asset so what's got the higher expected return in the future right it's very logical behavior and equities work the same they all have this long term range the only thing that doesn't which catches everybody out is is industrial commodities and um industrial commodities and agricultural commodities why because technology you can get more out of the ground right right at cheaper prices or you grow more bushels of wheat per hectare so those things get cheaper so cpi gets cheaper because of technology computing power all of this stuff but the actual assets don't get cheaper so i looked at all of these and and like the s p versus gold's kind of in line nothing wild like one standard deviation expensive for equities you know nothing crazy and real estate the same so i'm like what happens if it's something else why don't we just looking at the wrong denominator and then i thought well if the fed balance sheet is a function of demographics and it is the putting the missing layer in are they actually debasing the currency and therefore if we were to denominate it basically to discount the dollar by the amount the fed balance sheets grown right would that show us the truth and suddenly the charts became really bloody logical because everyone kind of feels like you didn't get richer the average person definitely did not get richer off to 2008 and when you look at it that assets didn't perform in line with the balance sheet so therefore they didn't perform in line with the debasement so the s p basically just about made up since 2008 not over 2008. we lost that it's never coming back well it might do but it'll take another 20 years and you know goals real estate none of these really recovered they just basically follow the balance sheet so then i thought i'd head check myself on that too because you know everyone was calling me an idiot for saying this so then i took the uk property prices and divided by the bank of england balance sheet flatline german property prices flatline swedish property prices flatline canadian property prices flatline australian property price flat line i'm like yes this is it this is debasement and debasement makes it look deceptively like the value of the assets is going up right it's not it's the value of the denominator falling there were two assets that beat that significantly beat the balance sheet and is above 2008 and they're bloody obvious what they are one is bitcoin and the other is the nasdaq because technology yeah and this this you know network effects business model the digital age is relentless and destroying everything in its path so all profits are crew we get that and that became amazing to me to realize what is now going on so that 2008 is what gives rise the final rise the final push off the edge of the cliff to populism everywhere because i was in oh sorry then europe had 2012 where europe almost went almost lost its entire banking system and the whole of europe and the euro you know it got really scary and i was living in spain i had to buy tinned food and a generator because i thought we might lose power i mean cyprus took all money out of people's bank accounts above a hundred thousand dollars so if you're a gas station operating on like two percent margins on on the gas you pump they took the million dollars out of your bank account which is your float to to buy the gasoline for each month right and took it and paid the [ __ ] creditors of the bank right and it was your deposit yeah i'm sorry you didn't own shares in the bank how dare you do that mm-hmm in spain they were converting like grandmother's um savings accounts and turning them into preference shares so you've got a high yield wow and then guess what they default on payment preference shares and they've got nothing and they force them into it so this was happening on mass in europe and i'm like okay i know where this is going occupy wall street explodes and then in spain the indignados everyone's in the streets rioting and it's like the people against the state because people are angry they don't know why they're angry and then what happens after the people become angry phase it then splits into left and right because they want to blame somebody right because they can't blame themselves because they are to blame so they blame each other and the internet comes out of it and there we are given facebook and facebook is the perfect place to divide everybody and you throw in the russians who understand this and they start using bots to drive apart people people who are logically centrists they could have been left and right but they could have a discussion over over dinner now they absolutely hate each other and think it's intolerable and one's a communist and the others are fascist that's where we got to and that came out 2008. because people now realize that they were never going anywhere that social contract the contract of the government and the people had failed and i don't think the government could ever have met it don't forget over in europe we've got another system issue that we haven't yet faced based on this is how the hell are we going to pay for the health care it was a lovely idea to give free health care but that's a bill we we can't pay when these baby boomers go through death in the u.s you've got the other problem everyone is like raging against the health insurance why is health insurance high because the baby boomers are going into their aging phase where they kept becoming ill so you're drawing on your health benefits so obviously it's if you if you rep report a robber at your house you know five months in a row guess what your house insurance is going up so it's a function of demographics and the other one that killed people was the millennials got killed by s education costs you know i grew up in a world of free education but they took that all away because the baby boomers have got too much debt so they couldn't pay for you know the governments couldn't pay for all of this anymore so they force everybody else to pay for their own bloody education at ridiculous rates and adding the student loan debt on top of that which is non-dischargeable and bankruptcy so it's almost like they took a complete zig from the zag there with the complete opposite direction from free education to indentured servitude for education yeah so what you've then done is force up education costs education cpi has been falling now for a while because guess what the 86 million millennials have now left university yeah and the gen z is smaller so it's cheaper right it's demographics again but two other things go on one is because it makes those companies rich they start lobbying to protect their monopolies which makes people angry again the food lobby the oil lobby the um uh the health care lobby you know all of these people have the financial lobby clearly want to protect their power now because they've they've made the most money out of this but around 2010 another catastrophe happens the baby boomers can't afford to retire only the rich can so they're leaving the labor force participation rate and others are being marginalized so they're still in the labor force and now that bloody 86 million kids are they had too many kids so now you've got the two largest demographic bulges in all recorded history in the labor force at the same time and technology is exploding what do you think is going to happen to society do you think this is a smooth thing no this is the fourth turning right and the fourth turning is the transition of power for one demographic to the other wow and that is what we're playing out now and that is going to be the destruction of the rules-based global order system and a rebuilding from scratch that is the rise of crypto that is the rise of blockchain that is the wholesale change and what is going to come in politics maybe not what people want to hear but it's coming and you can't almost avoid it so that's the next part of this story but the whole story so far has kind of been built on this this whole demographic boom that came out of world war one that led into world war ii and nobody realized this was coming and everybody's kind of been rational in the process and become wildly irrational and now we're at a state where we hit the pandemic now in the pandemic remember there's always a debt bubble somewhere so after 2008 that was the end of the household debt bubble we still have the student debt bubble because the millennials hadn't left so that's going on but what we get is the new one which is the corporate debt bubble so corporate debt explodes because they've got they do access the credit because it's easy for them to get and so you end up with a bunch of companies that basically zombies like general electric and att that are ridiculously in debt but they can continue to pay the debt because interest payments are almost nothing right so you do that and you ignore ignite a corporate debt bubble so we go into the pandemic and the fed figure this out very fast they're like we cannot if we've got a government debt bubble a household debt bubble and a corporate debt bubble and a financial debt bubble we no nothing nothing in collateral can go down if it goes down too long for the mark to market we're all done this is the game we're now in so there can be no default we we've left the world of supply and demand economics and moved into a world driven predominantly by central bank policy that's what you're saying well yeah and what they're doing is the rational thing yeah is if we if we don't do this everything's gone and everybody's out of a job and all wealth is destroyed and the pension systems everything is gone yeah it's gone too far it went too far in the 80s right so it's we can't look back now and change this whatever we want to be however austrian we want to be it can't happen because everything is gone ultimate rock and a hard place right that's right so what they end up doing deflate or they just continue down this path towards crack up boom or some other social upheaval yep and they could have probably got away with it as late as 97 98 at the asian crisis but they didn't and i understand well i don't understand why then they should have let whatever banks over levered lending to emerging markets get into trouble merge let the free market take care of it that was probably the last unforced error where they didn't have to do it the others were kind of logical because everything got too far so we go into the pandemic the market collapses the world stops and the fed and the government cross a rubicon which is they shake hands and say okay we're out of bullets it has to be fiscal stimulus and we will stop anybody defaulting so they and the government said and we will stop the households defaulting so the government underwrote every household balance sheet renters anybody nobody's going to default nothing we'll give you money you cannot default and it's you know it's because it's a pandemic it's not your fault whatever but the point being is you couldn't allow it the fed across the rubicon bought corporate bonds that wasn't to put money into the system that's because if they had gone fast it's all over right because that's the collateral for the system as well so it's like this is a horror story but it worked world saved yeah now we're talking about the the self-deception right yeah so we come back to it so now janet and jay look at each other and they're like kind of worked right two month recession whole world shut down asset prices record highs high five until you divide it by the fed balance sheet and none of it went up yeah virtually none of it went up and so they now because we've learned this incentivize even further to do more because it works optically right nobody understands as we've talked about why they're getting poorer yeah because they see everybody else getting rich they think they're stupid something that they're making mistakes something's wrong or politics or whatever right yeah so now the money element of this is becoming the larger driver where nobody can get onto that ladder of making their money and the time is ticking for these boomers to be able to retire the household balance sheets look great because the the because that was the other big thing we couldn't let the pension system go bust right because then we break a promise to all of these 76 million boomers yeah so they basically delivered this to the boomers and screwed the millennials [Music] the thing what's jumping out of me here is the utter destruction of feedback loops so we're debasing and you know using the currency supply this is destroying entrepreneurial feedback loops in in terms of price signals but then you're making the point that even jay and janet themselves are emboldened in their own action they think what they did was effective and worked so they are more likely to take similar and even more extreme actions next time so there's this total divergence between economic reality and perception driven by debasement of the money yeah exactly so the other thing that happened is basically everybody's capped bond yields even if we have a period of inflation bonds are not going up in yield because they will do what they did in the 1940s which is cap them yield curve control which is another way of financial repression which is this is what this is all a story of right it's financial repression used to pay the issues caused by the population boom so financial repression is trying to run inflation hotter than bond yields for an extended period of time because you deflate your debt away so bonnie's are never going up so they're pinned around zero or what you know between zero and or call it negative one percent and up two percent because negative interest rates are another part of this whole financial repression equation right and it's all about the same thing nothing is out of that out of whack with that so that whole financial repression has left bond yields flat there's no return to be had but it's basically like cash right so you can you must just hold in a bank account but that gets eroded by the basement of the currency so that doesn't really work the other thing that's happened if people notice is there's been a lot of people screaming the dollar's going to collapse and the dollar's going to rally and and what's happened is the dollar in defined by the dxy the dollar index is traded sideways for seven years currency volatility is gone because every central bank is doing the same thing it's not a story of the united states it's a story of every developed country on earth so all of their currencies are in line with each other because all the way the old world of looking at relative currencies that's basically nothing so you don't have a currency market that operates you don't have a bond market that operates you don't have a credit market that operates so what you've created is free capital and that's created a technology boom great except that's going to destroy the jobs of these millennials and there's nothing you can do about it and so it is a big big mess and it's been in the making for a hundred years almost well almost exactly 100 years that's the issue with these demographic things because it's you can never turn them you can't change it you cannot change the fact that china's population is now shrinking you just can't change it so china's trend rate of gdp is going to collapse and they're going to be stuck with this massively indebted society and a smaller population and japan has the same japan has household savings at least china's got debts up to its eyeballs so we're all in this boat together and the answer if you or i will put in to the central bank we can all scream about it on twitter all day [Music] but nobody's going to press the new button now he can't do it right it just simply can't do it because that's like the argentinian crisis that's a total wipeout of household corporate government net worth okay so the one pattern i'm detecting here is this debasement was blowing bubbles into equities as we saw on the run up to 2001 then we saw it in real estate in 2008 where we are today it looks like they're just directing this into government bonds aren't we blowing a bubble into u.s treasury no i don't think i don't believe so because as we mentioned demographics defines cpi and gdp growth bonds are basically gdp plus inflation long-term inflation so what bonds are telling you is gdp plus inflation is going to be is going to average out over the next 10 years at 1.7 sounds about right to me call it you know 75 basis points inflation 75 basis points gdp growth that'll be in line with japan yeah whichever the mix is going to be because you can't demographics is the truth right it doesn't check you can't change that you can't change any of this so once you've got this we need to figure out what we can do so what i've explained is i think bonds are actually rational and i because of these demographic factors and i think they're rational around the world they look like they're manipulated they can't spike in these cyclical phases but the secular phase they continue but what i've actually laid out for you is my entire macro framework the framework i've been building for 30 years and it was only in this last recession that i realized that one part of my framework was wrong which was that i thought i thought the insolvency could happen i thought that the pension system the equity market could fall and that that would be the phase as the boomers sold out that it would bring the equity market lower there is a possibility you're going to get periods of sideways you know um as people sell and there's no central bank excess printing going on so you get these sluggish periods but it's almost impossible to allow the asset side of the balance sheet full right they would basically annihilate the currency through debasement before they would let that happen is what you're saying what other choice do you have right in the current construct the choice they have made is interesting and we'll come on to that which is fiscal stimulus and that could work it worked in the 1940s and 50s based on very similar debt types but not as big but the high debt burdens give it a 20 year period stimulate the economy run up government debt but the economy stimulated enough because of the baby boomers to rise gdp growth enough that the debt became much less in percentage of gdp terms that trick's not going to come again now right but fiscal does help or where it's going does help fiscal is a blunt tool much like monetary policy because it kind of sprays to everybody but what we're getting is something different which is going to be behavioral incentives driven by fiscal policy using central bank digital currency rails programmable money and we'll come on to that in a bit as well but if you go back then so 2008 another you know era defining thing happens which is the satoshi white paper right that's all a function of this it's all a function of the same thing and i think this whole thing ends with a whimper and not a bang if it was going to end with a bang it would have done it last year that would have that should if there was no intervention by government it was the end of everything but it didn't happen that way so they've got the trick that they know is debasement hides the reality so what's interesting is people start to figure this out they've started to figure out they're getting screwed and the figuring out getting screwed drives just look for answers the traditional answer was gold hasn't done great it's done okay it's done its job but the problem is is the millennials can't generate wealth if gold defends your wealth right there's nothing to do nothing to defend yeah so it becomes incredibly difficult to generate wealth bitcoin comes along it changes the equation it takes a long time for people to see it but you know these things this adoption takes a while but people realize okay here is a construct technological construct that has ubiquitous global scarcity and therefore if we all perceive it to have value then it shall be so and so the migration begins and i think of it as a migration to this parallel financial system that's being built in front of your eyes the rise of defy was the other huge thing that happened people haven't got their heads around what this means yet but it is gigantic because basically people don't trust financial intermediaries any longer again they want to blame somebody support the banks wasn't the bank's fault they just did the rational thing this is rational again too right if you can get a financial product of any kind with less counterparty risk that renders the same services of course you're going to opt for that of course of course and you know that's that was the first thing i saw it very fast when i saw bitcoin 2012 after europe i realized okay yeah i get this totally this is the future of everything because i'd learnt some shocking things in 2012 i went around the world to try and start the world's safest bank and at the time my idea was it should hold all deposits in treasury bonds of whichever country it was going to be um and they would be default risk free pretty much so you know and i tried to do it but it's very hard to start a bank and you know i had some kind of pretty wealthy people well-regarded people with me on that journey it was just too hard and then somebody showed me bitcoin and i thought okay this is interesting and then i was at somebody's branch i can't i won't name them and we had a meeting with the dtcc who clear and custody all u.s securities right the new york fed i'd read a book i can't remember what it's called about the european side of the equation 2008 and euro clear is the european equivalent of dtcc when lehman went under everyone stopped paying into euroclear this is the clearing and settlement of all bonds equities everything because nobody knew what collateral there was then 2012 come so so what happens is is over that period the ecb lends euro clear 50 billion dollars on the day lehman goes under [Music] and what was shocking in the book is as collateral they took the bank's positions hmm at euro clear level they're not segregated with customer and house positions so basically had it got worse had aig gone under which was a triple a credit the whole system would have had taken a haircut and it would we wouldn't have known so what we think is segregated and safe is actually not segregated and safe right so then when europe almost went under we almost lost a sovereign state that is the collateral of the system that is the bottom of the pile that is everything and that is why europe could not go because if it went then that's the end because then the collateral layer is gone the safest clatter of all the government bond layer so then i'm in this room with the dtcc in the new york fed when i say to the dtcc i'm like no i said to the fed first i said so let's say the dtcc has a huge default and jp morgan defaults yeah there's a problem goes under and there's a big hole because nobody's paying anybody anything the system freezes up what do you guys do so that oh we'll end the money you know they can't go under great dtcc at that level what do you pledge as collateral and they said the same thing that the ecb did and i said is there a segregation at your level between customer and house no i'm like okay so nobody's safe so the point being what bitcoin saw to me was that blockchain allowed the secure recorded ownership of everything where it was traceable to who owns what right that was the problem that we had because nobody knows who the hell loans what in that over leveraged financial system so these are the dtcc and euro clear they're effectively the property layers of these financial systems where instead of holding your own stock certificate or bond that would be presumably a bare asset redeemable to the issuer these systems hold all property rights and all stock certificates all bonds everything but they're not segregating them mapping them to specific owners so they are they are until it's the dtc themselves who are on the hook gotcha okay then all bets are off and it's each man for himself got it so this becomes another mechanism through which they're socializing losses from economic shocks they would do it's never happened yet okay but the fragility is there right the other fragility was obviously the derivative market that nobody can figure out because there's one quadrillion of those outstanding right so they start centralizing that as well putting it into the cme and the other exchanges ice and stuff to try and have some way of figuring out how the hell to stop it when it all goes wrong but blockchain changed that because i saw it immediately and thought well every single security on earth is going on blockchain now how decentralized it needs to be for that open debate but it needs to be decentralized enough and it needs to be on a blockchain that you can prove it so this is where a lot of people start waking up and going okay we need a different way of doing things and so the big dynamic sort of interrupt is this shift from a top-down model and the dtcc or euro clear to something a consensus that is more distributed and transparent for market actors correct okay so if if if you're if you're the base layer of collateral your equity or whatever it is that's been relent and reused and whatever it is when it all goes wrong the blockchain has full recorded every transaction so it's not hidden somewhere i mean half the bloody swaps contracts were in bits of paper and drawers because derivatives was exploding in the market and nobody had the technology to onboard all of this stuff into a system that could record it right you know the same is true probably of insurance if california has an earthquake you know who's double insured who's single insured who's claiming what nobody the hell knows you know nobody knows any of this stuff in the in the current system it's got itself into a mess so all of this becomes interesting so the rise of crypto becomes an obvious thing and it becomes a migration so what i think you're going to see and there's a lot more to come on this what you're going to see is a ongoing gradual debasement and an ongoing gradual migration so more people opt out yeah yeah and the people who see it last are the ones who get hurt the most or maybe it's just the rich who see it last because they got the least lose because they're getting access to the money and they can make the money and they're buying equities and they think all is fine you know rich people can buy real estate on leverage and you know all of this stuff yeah um but maybe maybe they're the last to see it some see it obviously and others probably don't because they're all okay and you know their s p portfolio has gone up and their gold looks fine and but they don't realize that they're probably getting net poorer i mean one of the conversations i've had with corporate treasurers um was that i presented some of the biggest corporate treasures in america i'm like guys what do you use your cash for and they're like well we use it for share buybacks m a and you know cash cushion and um [Music] we've purchased real estate fantastic great okay so your cash you'll earn what you know maybe they're great treasurers maybe they get three percent on their cash i'm like great look at the price of assets they're going up about 15 a year 20 a year in line with a balance sheet so next year you can buy less of your shares back or less of another company or less of um real estate real estate so this is why you need bitcoin on your balance sheet because it actually helps offset it because it's got the two benefits of it's got that kind of exponentiality the call option on the future the network effect and it's got the the other side of the equation which is it offsets the basement so it's got this kind of double feature gold doesn't have the double features got the one feature right bitcoin has the two features so i'm like this is what you need and this is how it's going to work so okay let's look a little bit into the usual answers and why they're not going to work and then you and i can maybe brainstorm some of the potential things once we free ourselves from our political ideology and our economic ideology we have to get pragmatic right there's no other answer and i'll show you why so the answer from the right is trickle down economics and tax cuts on corporations right but that has never worked right just does not work and it's proven time and time again that it does not work raising taxes on the rich that's the left's great argument well the rich simply aren't rich enough to pay for anything because there's 200 odd million of that lower income bracket so how is this going to help yes i understand rich people don't pay their fair share of taxes um in certain respects because there's more loopholes available fine but generally this is not going to answer your question this is not going to solve the world's problems it's not going to pay off the com the government debt the other one is well cut interest rates that's the usual answer well we kind of know that doesn't work right no and that makes the rich richer the people with access to the capital have more capital and more leverage ability and they make more money and everybody else gets screwed then there's deficit spending the fiscal stimulus fiscal stimulus does put money in the hands of poorer people but you debase the currency right so their assets go up and they don't get anywhere it's okay if you do it but living improvements like healthcare because that's a that's probably a net benefit you probably would don't mind being slightly poorer in the future but healthier that's a trade-off that's an okay trade-off you may want to take it you may not want to take it it's up to the individual the austrian approach is let it all [ __ ] burn well it's way too late yeah you know everybody's an austrian economist until it happens to you and you know i you know i'm a business cycle guy i get it but we lost that that train left the station in 1997. yeah i would argue that a lot of these i mean all roads lead back to this austrian world view though because so we've got wealth redistribution if you tax the rich you're going to incentivize the rich to hold their assets in something that's untouchable right that road leads to bitcoin trickle down economics more debasement that road leads to bitcoin cut rates more debasement that road leads to bitcoin or you can have this deficit spending fiscal stimulus also creates debasement which leads to bitcoin so i have a very hard time seeing how this doesn't end in a more austrian world yes but the austrian view can't prevail right now in terms that's right it has to blow itself up or i agree with you the answer is itself out yes yes instead of step back and let it burn this thing is gonna gas its own fire until there's nothing left of bitcoin it's gonna it's gonna play out yeah um however that plays out and there are potential things that can save this the other thing is the other approach is extending the working age um even further to push out the payments of pensions and the offset the demographics it you know it doesn't help there's too many people in the workforce as it is as we've kind of proven in this discussion so those are the the normal ways of doing it okay i'm going to ask you a question here is there an incentive embedded in all this for population reduction of course there is why do you think the population is reducing everywhere as americans had the smallest and here is the self-balancing mechanism of humanity because what is about to happen is the exponential age where technology takes over everything every lower income job every middle-income job and half the high-end jobs and this is the problem we have to solve and so this whole that whole thing comes and if you get it right and here's the optimism your gdp per capita explodes because the population shrinks so millennials are not having kids in the same numbers and nor will gen z and we've seen it in japan we've seen it in europe every aging country same so all of the eight i think we'll probably peak at about nine and a half billion people 10 billion people globally and then we're probably likely to decline for however long a few hundred years whatever it may be because robots gonna replace humans so we don't need humans so humans on a simple level will just say i can't afford to have kids which has been partly what's going on that's what happened particularly in europe and then it becomes well i don't know what job i've got and poorer countries don't need as many humans to look after family units for income and all that kind of stuff so that whole equation changes with technology but technology is going to change a lot of this and within that i think is where some of the potential optimism can lie and i think the optimism comes for me for two things one is the formation of online nation states which i think are communities you see me talking a lot about community tokens and all of this stuff you know if you think of bitcoin as an online nation state that would be true and other there will be other nation states the moment that facebook tokenized even with dm they have their own system of money they have their own rules organization mission that's a complex adaptive society and that's a nation state three and a half billion people's the largest nation state on earth how powerful is that this is why everybody's bloody terrified of facebook having their own currency right so they have to pay it to the dollar right because that's a nation state so but we've created the foundations for nation states and where this is all going is the metaverse the metaverse is discovering the americas again or even a new solar system what you're doing if you think of the world as construct constrained by its own gdp because of humans productivity resources the metaverse has none of that so there is a possibility that the metaverse allows us people to earn incomes in a world free of the constraints free of the debt shackle in this new world of crypto that allows us to create our own worlds in the way that we want it and they i kind of if you go to its logical conclusion it's kind of we create our own fake world however we want it to be and you can live in whatever world you want like you and i will live in different online worlds you'll be on you know one social media site i'd be in the other we'd be reading different articles we live in different worlds already right you know our world's overlap quite a lot but we live in different worlds yeah but sooner or later i can be in a room with different people right and they can be all around the world and they can all be all like-minded which creates all this splits and a realignment of what states are and this whole thing of this fourth turning is we're going to a very very different world much like the post-british empire world was very different to that right you know earl here you're speaking to my soul actually because ever since i started playing massive online multiplayer games when i was 13 you know i was 20 25 years ago i was 11. i had this deep intuition that this was going to be where the world was going it's like it was there were just so many factors that could be economized in the digital world that you can't do in the real world there's there's a lot of advantages and now that we see tech becoming increasingly immersive too like right now we're still talking through a screen you know i'm looking at a laptop you know or yeah but this don't forget if we've done this two years ago would have done it in studio together right exactly we've already transitioned to this is normal yes so there's been this accelerant on the use of digital technology but now the immersiveness of digital technology is also growing in tandem so this my long-standing thesis for the world is that the the real world is becoming a video game and so to hear you say that everything's headed into the metaverse that resonates with me very loudly so the question you and i need to think about is okay a full immersive metaverse experiences 15 20 years away now the messenger is not one place it's not one thing like i think it's like this digital fluidity where we can move around we do our things we live in the real world in this digital world augmented reality virtual reality that's all coming we know that how the hell do you stop this holing out of people in the meantime and this is the story now of i think and this is really contentious i think the central bank digital currencies are going to give governments an opportunity to fiscally stimulate in a way that's more fair because i think they can therefore put money in the right people we're going we have to go towards a ubi world whether we like it or not until we can replace that income by metaverse and other income we're seeing people earning money in axiom infinity there's stuff going on yeah we're just not there yet how do we get through this next 15 years right that's what i'm really worried about this next 15 20 years is about as hard as it comes we're going to have deflationary forces on a gigantic scale jobs are going to be replaced we've got debasement of currency going on we've got the battle of getting crypto mainstream that governments don't over regulate it and you know all of the things we've got that's we've got 20 years of a battle here yeah and bitcoin too the more it's succeeding in this process the more pressure is being put on governments to debase further right they're they're losing reservation demand for fiat currency by people seeking out alternative stores of value so that creates even more inflationary pressure and more economic disposition well because if we all take our money out the system which is the collateral of the system there's no money in the system right exactly and there's no velocity of money in the old system it's all in the new system and we're seeing the velocity of money in the new system by the rise of nfts right that's pure velocity of money going on right right that's a vibrant economy where people would speculate take risks do stuff because it's you know people spending money selling things buying things fine in the regular world it's not the same we've got the velocity of money that's falling because of this demographic and the debt and all the other stuff so i do think that you can you don't have a choice but to change how you stimulate because let's assume as you and i have the debasement is accepted that is the only answer they've got and it's going to keep going right so how do you stop the people revolting right you have to give them money or opportunity redirecting the flow of the cantion effect or the redistributive um quality of debasement away from asset owners and towards the working class capital to wages to yeah it's capital to labor that has to happen right right and this is why the progressive left is going to be hard to beat because regardless of your political affiliation or your economic affiliation populism you've got 86 million millennials who are pissed at what's happened and they tend to be more progressive in their attitude right and they want the rights that their parents got which is the right to the american dream the baby woman's never got it in the end they kind of destroyed it all but so they are going to force by voting power progressive policies and again whether anybody likes it or not because the nostalgia of the 1950s of the current structure of the right doesn't play to the young right the 1950s is like talking about the 1920s boom time to you and i mean nothing something we see in films or reading a book like the great gatsby doesn't mean anything while the baby boomers they were in their teens it was elvis presley and rock and roll and the beatles and they want to go back to that of course everybody wants to go back to their teams right um so so i think that is likely to come and i think that's the big fourth turning change that happens that everybody shifts left let me ask you a question about this so i the metaverse if this emerges in the way that you're describing it becomes something that's much more let's call it mainstream i guess isn't this also simultaneously awakening people from the illusion of the nation-state to a large extent because you're moving into this alternative reality that has its own money has its own rules has its own system and then you start to look at the system you inhabit in the physical world in a very different way as a result whereas right now it seems like people are largely blind to this it's kind of hidden in plain sight do you think that's going to contribute to changes in perceptions attitudes the way we organize ourselves i think it's a layer on top of the nation state the nation state ends up being your foundation layer and you can move and you'll be less nervous of moving because that passport doesn't mean everything in the end mm-hmm um so i don't just think we'll think about it very differently we'll think of and you could see it forming online partic particularly around crypto and nfts and these communities is people are forming communities of people right whatever that end state ends up being irrelevant the point being is this is where it's going and fast and i think you're right how will people think about nations can nation states survive in this is facebook the nation state right will epic games be the nation state are nation states distributed are they i don't know but it's fascinating because and how our nation states when robots or the kind of if you're heading towards a singularity obviously in all of this yeah what is a nation state he holds the power i i i don't know and there's a dystopian version of this and there's a right there's a utopian version of this and humans will probably walk the middle line as we always do yeah and we'll flip between one and the other um but you know that's it's all it's this period of the 20 years that i'm worried about but the sooner we all start migrating which you and i did a while ago the easier it becomes to say that the emperor's got no clothing the easier it is to realize stop waiting for the big bang understand what the game is the game is not what you want it to be the game is what it is and you have to play the game you're given too many people spend so long angry that the game is not being played as they wanted to be right nobody cares right you know this is why everybody imposes their politics on everything nobody cares the game is what's being served to you you deal with that play the hands you dealt i mean it's excellent advice and it's just occurring to me by just denominating yourself in bitcoin you are able to see the truth of what's going on like to your point this boom in the equities market like it goes away when you denominate yourself accordingly it also lets you participate in this price deflationary reality of the new digital universe right if you're just denominating yourself in bitcoin things are getting cheaper life's getting easier so it's funny to me like it really does seem like we've diverged from truth significantly by with all these economic machinations and now the digital world is just kind of throwing water over it and it's like revealing truth again yeah i think that's that's right i'm not sure what a deflationary world does to other aspects of being a human because it almost stops all spending because your money becomes the savings the asset now right if your money is the asset then you don't buy anything you invest maybe right so you trade off from consumption to investment why invest if your money goes up you don't do anything velocity of money could go to zero if you're not careful that's the only thing i can't get my head around is how do you stop velocity of money going to zero which is what happened in japan yeah so i guess the general theory in bitcoin elise is that if it reaches a maturity it's only appreciating whatever your number two three percent a year in tandem with global gdp or equivalent and so you would want to invest outperform that yeah the problem is between here and there oh yeah from here to there probably goes to zero and bitcoin eats everything and you know that's actually quite problematic because right now as you know i keep saying is why would i invest outside of crypto i cannot see anything that's going to give me that rate of return so my money's not coming back into the financial system yes i have a few lifestyle things that i do yeah you know derpy house and buy a new car and stuff like that but on balance i'm not even investing in the regular economy nobody's getting my money well i mean that's interesting nobody's thinking that through right what happens to all this capital that's sloshing around for you know startups and everything else well the exponential age does mean that that there is a chance that that stuff performs extraordinarily all of these technologies from genetic sciences to um to ai to space to all of this stuff they're all network effect businesses and they're all gigantic so there is a chance that you can still continue to to earn supernormal profits that will at times compete with with the you know with bitcoin and will exceed it at certain points in time and that's great that drives innovation but you're going to starve the capital to anywhere else which is why the central bank keeps printing money because somebody needs to provide capital to general electric and at t right [Music] it's incredible you have this collision of a the vicious cycles surrounding central banking with a virtuous cycle of something like bitcoin that's right the other thing that i'm thinking through because i don't know any of the answers and i'm also trying to free myself of my opinion and think about what is most likely which is why you know the shift in politics and and central bank digital currencies and how stimulus works and all of that because that's the trick that they've learned um and i spoke to the the monetary authority of singapore two days ago just interviewed somebody um programmable money they're all gonna do it and it will get used nefariously and it'll get used for good and we'll we'll see and it depends whether democracies hold up enough to keep power in check or not again we don't know humans have the history of one way or the other yeah and swinging wildly so we will see the other thing i'm particularly interested in is owning our own identity online so digital identity i think is going to become important because we're about to move into this metaverse world and right now we're being exploited right as almost farm workers were exploited in the past by the use of our identity to generate revenues for monopolies and i think that needs to be shared and i think that's a great way of generating a capitalist version of universal basic income yeah makes all the sense in the world right you your digital footprint generates revenue for you correct and sure share it with the company because they give you the opportunity but you share it right and then okay now we've done this and the other thing you know i talk a lot about is tokenization of communities that allows you to invest in culture and earn different forms of income all of this i think is some of the solutions that are going to help people because digging stuff out of the ground making stuff including food and experiences is all going to be digitized the other thing i'm trying to get my head around is also within my macro framework is everything digital goes to zero in cost of production yeah oh electricity it's going to get a zero that's what's going on that is what the ev revolution the the green revolution is green energy revolution technology is going to drive the cost of energy to zero what does that mean for the world well clearly it powers the metaverse but what productivity does that unleash that's a hell of a shock i mean that is if you remember oil has been roughly the same versus wages blah blah blah inflation adjusted terms forever yeah it got a bit cheaper in recent years because of fracking because that was technology blah blah blah but electricity is going to go to zero however you generate it in the end that's a that's a that's a shock to a positive shock to the world of which i can't get my head around i mean that's global prosperity like we've never seen before right because energy is fundamental to everything else if you've got free energy everyone's filthy rich yeah and you've got a lower smaller population wow so by the time the baby boomers die for the next 20 years the us population starts shrinking as europe says japan's is china's ears etc so electricity costs go to zero over the next 30 years let's say and you've got less population and your gdp per capita has probably gone up because the robots are doing the work if you can share some of that with the population and not to just give it all to elon musk or whoever you know builds out these things that's the problem here is do you create super super ridiculous wealth um how do you make sure that it's not even labor anymore how people as humans can participate in an economy right your cost of living may go close to zero but i still don't know you know if you've got bitcoin and your cost of living you know electricity collapses cost production collapses great so the cost of goods keeps falling it's very deflationary so that's that's all good but the problem is if somebody owns all the robots they have all the power and all the money so that equation still has to be solved somewhere in this because the free market ain't going to solve it it's going to solve it the wrong way it's going to solve it with a total accumulation of wealth so that's that's the utopian dystopian dial here is the more decentralized this transition is the better it is um from an equality i want to say equality that word is so loaded from a more uh fair outcome standpoint versus all of this wealth and power being accumulated into the hands of whoever uh provides the tech yeah but how do you stop that yeah i don't think these are the these are the hard problems right because the technology is coming and nothing can stop it capital is now free and it's not going up the cost of electricity is going to collapse and it's not ever going up again yeah i'm sure it goes up because of the price of oil and the supply shocks but over time we know what's happening so somebody's going to get immensely rich now we can all invest in the exponential age we can all have crypto with the things we can do i i can't get my head around where the power goes here i get it in the metaverse if we get tim sweeney's world it's a nicely distributed you know place where everybody has a sharing of it yeah if it's zuckerberg's world and there will be many of these worlds well facebook has the power yeah but who owns the ai and the robots this is what nobody's figuring out because if they've replaced all mankind's productivity how do humans get money well we've figured they can earn it on the metaverse but don't forget ai works in the metaverse too right so there's going to be an arms race there it's it's a tough old place for humans yeah i mean presumably this far into the digital age we've seen the open network out compete closed networks and that the internet outcompeted intranet so presumably the open network would continue to out-compete which would mean a lot of this value would flow into something like bitcoin but there is that issue of i guess capturing the value that's created in this transition is very unclear to me yeah and this is the thing i've got so bitcoin fine we use that as a layer we've got it right it's there it's working so we've got that we've got the fallen electricity we've got the uh um the accelerating technology so these are net good things generally we've got the lowering of population which means gdp per capita can begin to rise again into some point so that all feels okay we've got the metaverse but this bit in the middle is like you know if the world is being run by ai can that be distributed i i don't know how does that work how does and the how do the robots work because in 20 years time yeah we've got robot vacuum cleaners in 20 years time we've got robot [ __ ] everything who owns them this is where it gets so confusing to me because if it is this ai running the world again presumably that would be something that's hopefully open source i mean i guess if it was fully closed source and it's ai running the world whoever owns that source code is the dictator of this metaverse or digital world it's an arms race then so anybody who creates the best ai like renaissance capital did it in financial markets yeah they take they take all the supernormal profits yeah even if the ending result is distributed right network there are going to be parts of that network which is we're seeing in in the internet now where winner takes everything yeah when it takes everything for periods of time yeah i mean the very concept of ownership and property gets called into question here too because if there is some kind of super dominant ai does it does it own itself does that mean what does that even mean yeah it doesn't own itself which is the singularity because if it owns itself then it wins because as we know the horrible thing and people are warning us and nobody's listening is it will understand violence and so we start again right that is because violence is power power is state and control and profits yeah oh scary do you man do you think that um so you mentioned id identification being a big deal so that we can actually earn revenue with the the digital uh and also we can remain anonymous and move around yes we can have multiple identities hidden behind with zero knowledge proofs right with our identity behind all of that stuff that's what i wanted to ask you is do you see a decoupling here of identification where you have a state id do you have a non-state online alias you may have an i think you have your we talked about these different nation states i think they all require id yeah now whether your state id is the verifier or not irrelevant right because with zero knowledge proofs you don't need to show it to anybody right so i can exist in three parts of the metaverse with different personas i can be a man a woman i can be a animal and nobody needs to know but when you come to me and say are you real can i you know can i trust you with something you can prove it yeah i can prove it without showing that's incredible i mean this is going to have such profound impact on i mean the even idea of identity nationalism every it's going to change us so much yeah and this again just plays so well into that fourth turning that book just kind of changed my life yeah i must have read it eight times wow the last few chapters because it's like it was written in 96 god damn it and demographics is the future and there it's all laid out and why and it's playing out almost exactly wow you've not read it no i've read the sovereign individual a few times and i've heard the fourth turning as the other must read but i've also heard that there's some there's some overlap there so and i've not read the sovereign individual which is i must do but the fourth turning is amazing and it explains what it it doesn't explain it explains what's going on but it also makes you fear it less because you kind of accept okay we've got a societal change underway so let's look at the future and if we get the future right a we can invest in it make money from it yeah and we cannot fear it a lot of what you see online is fear of change the anger yeah right people are angry with each other people are angry at kathy woods how can you be angry with kathy wood why because she is somebody who's suggesting change and people don't want it people hate elon musk why yeah he's got kind of dodgy accounting and all that stuff but but basically it's because we're going behind the 1950s idea of your ford mustang v8 and it's a world of something different and we fear it why the energy the fear of green energy and it's all fear of change all of it right why do half the people hate bitcoin it's rational it's fear of change fear of technology fear of technology because we're going through the largest technological advance in all human history at the fastest pace we've ever seen and it's only going to accelerate as we go through this exponential age so that is going to shake society's foundations to its core and you know we don't know how that's going to play out necessarily but it's going to get ugly for a while because people just fear all this stuff yeah so these these are cases of people shooting the messengers effectively right they're saying this is happening here's how i'm going to invest around it and build for it but we i mean this reinforces for me the importance of open-mindedness and humility at this point in history too because i mean clearly you've laid out a very in-depth look at how we got to here but when we turn the lens and look forward both you and i are like i mean this could go i don't know the possibility spectrum has just exploded yeah and it can be terrible it could be amazing yes we have no idea how this plays out generally what i've learned is humans tend to go from one to the other but we end up usually in the middle path but what that middle path is when we've got such a massive change i robots ai people can live to 150 years old what the [ __ ] does that all mean that's an interesting one too we didn't mention that but yeah the idea of life life expectancy doubling or something like that yeah well if you read david sinclair's book life span i don't know if you've read it yet unbelievable so he's probably the leading age genetic scientist in the world he's at harvard runs one of the teams at harvard wrote the book about it and he's basically well from their work ages of disease and it's solvable wow so he just thinks humans have a much longer lifespan than anybody realizes so well i think we're going to see an exponential what his view is is yet another exponential this one in human life also that means that you're less likely to have kids again for the same reason yeah and then demo what happens to demographics then i mean i don't know i don't know how do they earn money i don't know i mean you know what else is funny is if the if cost of energy goes towards zero like you're describing finance and money and wealth and occupation all of these things fall away is uh such an important component of our identity because you just won't need to work as much like in that world of near zero energy it's you're working a couple hours a week to make ends meet so then you know this is another thing that many people actually in silicon valley are thinking through because they they saw this years ago none of us believed it they're like humans gonna have to have a purpose because right now our purpose is our work right and we're going to be deprived of work so what the hell are you going to do for people we don't know that's not been solved it's a lot to digest it is it is and it's all a function of demographics wow because demographics drove down the cost of capital which accelerated the pace of innovation right so we've caused the seeds of our own demise or accelerated it right because our demographics lowered the cost of kappa it's it's an unbelievable story to the point where innovation now has the potential to fundamentally change the nature of demographics through all of these things we're describing and the nature of humanity yes and society and nation states everything wow because it's already changing money yeah if we can change money it's going to change nation states humanities society demographics and everything yeah now this that's a great way to look at it too is i've used the analogy of money being the base layer operating system so if you swap out you know the kernel of your computer or whatever it changes everything above it and that's what's happening right we're swapping out money and then all of these other applications and protocols that we're accustomed to like nation states institutions they're all being revisited i guess in terms of how they're structured and people are braver because they can see in a distributed network they can change things yeah they couldn't change in a democratic-based society it's fascinating right yeah so even more operating as a hive mind yeah more democratic than democracy correct absolutely correct wow and that's the rise of dows as business models they're more demographic democratic than democracy itself yeah because there is no leader now does that work in the i don't know but we're going to try it because that's where the world is going and we're going to give that whole game a look and humans being humans we'll screw everything up again and we'll have to rebuild everything all over again but you know that that's probably another hundred years time yes i'm reminded of that quote um humans have paleolithic emotions medieval institutions and god-like technology so that's why we're so damn confused that's dead right and i think the most profound thing i ever heard and i'm still finding it more profound by the every time i look at it again is mark andresen software is eating the world oh yeah yeah that essay and just that phraseology none of us realized right none of us how big that statement was yeah because we're just as we know eating money with technology and now look at what we're talking about we're going to change everything and that software completely changed everything because once you've built the computational power the software on top was the ability to use that power yes yeah it's a brilliant point i think to echo what you said earlier i think we're only i mean march 2020 really seemed to be the inflection point like we thought digital technology had changed the world a lot up until that point but i think now is we're really at the beginning of this acceleration phase and so if if 2008 was the beginning of the acceleration phase for the digitization of money we need new money right yeah 2020 is like we need a new world that's how big a event i think it will be you don't have a global pandemic of that magnitude with that much of an economic shock and it not changed things for decades right we just can't see it yet yeah it has to change everything it's just the effects have been too pronounced in every dimension of human life you know exactly in every way whichever way it's affected you it is accelerated everything raul this has been a mind-blowing discussion uh i think people are going to love this i have so much to chew on now intellectually um thank you i mean that's this is the first time i've ever actually fully laid it out even in global macro investor i've been writing this stuff for quite a long time piecing it together yeah as i'm kind of going through my own learning journey and i put whole swathes of it down this is the first time i've gone for the entire full framework of what's in my head we you know there's a lot we could talk about in the future stuff because that's what i'm spending my time thinking because i've gone through the acceptance and given up the fight yeah the fight the fight most people are going through is it shouldn't be like i don't want it nobody cares what you think should or not you can vote do what you want to or you can try and do things that change the world and we have these new distributed networks that allow you to do that very powerful use that but accept where it's going because that path when you put humans together in distributed networks they're going to go that way yeah same as ai so it's all going one way you just have to accept it and make the most of it yeah play the hand that is dealt as we said earlier so um thanks again for doing this please if you just tell my audience where to find you they probably know but just in case they don't yeah if they don't look i'm active on twitter and i'm very approachable at raul r-a-o-u-l-g-m-i or the other thing is look um we have a whole channel which is free about krypto the idea is to educate people about all of these things i talk a lot about all of this i bring as many people on about the metaverse and all of this stuff so everybody can learn right it's a learning journey as you and i have talked about like we don't know where it's all going we can just make some bets and have some ideas but that's where this is we're really playing out on real vision and it's free for everybody to just join it real real vision.com forward slash crypto or realvisioncrypto.com in your email and there's a whole world of of knowledge journeys there it is a fantastic resource um well you're on it all the time as well so i've both been a uh i guess asset and a consumer on on on your platform and yeah and you've been a interviewee and an interviewer that's right yeah yeah kind of learned the ropes of interviewing actually on real vision but marty uh i was interviewing marty benton he got caught in the rainstorm yeah i love that one of the great moments of the crypto gathering yeah all right well thanks so much man yeah brilliant my friend [Music] macro investing is a journey join me rael powell as i go on a journey of discovery through the macro landscape this is how i build my macro framework by talking to the smartest people in the world [Music] hey there since you got to the end i'm guessing you liked the video and that's probably because we don't just turn on a camera and film we work really hard on getting the narrative flow just right and that's why many finance companies are actually now hiring realvision to make videos for them one of our recent client videos just hit a hundred thousand organic views on youtube and there were no kittens in sight so if you want to find out how real vision can make a video for your company just email us at customvideo realvision.com you

Channel: Real Vision

Views: 305,444

Keywords: Finance, Markets, Economy, Stock Market, Investing, Trading, Education, Financial Literacy, Recession, Interview, Conversation, Strategy, Insight, Analysis, Facts, Thesis, Short Seller, Real Vision, Equities, Robert Breedlove, what is money, Raoul Pal, American Dream, is the american dream dead, death american dream, Bitcoin analysis, bitcoin price, ethereum price, ww1, ww2, century of debt, europe debt, usa debt, macro trends, bitcoiner, bitcoin maxi, podcast, fourth turning, metaverse, web3, nft

Id: O1_LrREYQ8c

Length: 145min 48sec (8748 seconds)

Published: Wed Nov 24 2021