Ray Dalio: I Predicted The 2008 CRASH, I Know What Comes Next!

Are you seeing signs that we're in an AI. bubble, and therefore a economic. collapse? >> The classic signs. And that has. implications for the economy, and it's. bad for the society, and everybody loses. money. But we also have some other. things that are going on that happen. around the same time. And I can go through these if you want. >> Please. >> So what I'm saying is clear, because I'm. a global macro investor. >> And you were one of the few managers to. foresee the great financial crisis. >> Yes. And so right now we're very excited.

about AI, and we should be very excited, cuz it's going to be revolutionary. changes. But [music] it's creeping into. almost everything. The way I look at it. is I look at the human body, and I see. like it's replacing the body and so on. And then it replaces some aspects of the. mind, levels of thinking and reasoning. But at the same time, we have another. problem that's existing, geopolitics. I. mean, that China is a larger trading. partner with most countries than the.

United States is. >> And that's a changing of the world. order. >> That is one of the ingredients, right? And then also, you've got large wealth. gaps. The government don't have enough. money. And so [music] when you have the. downturn, then you have people at each. other's throats. >> So a lot of people that thinking about. how to sort of secure their future, how. do they all prepare? >> Let me say that history has shown that. it's not the most intelligent people. that are the most successful. But the. key to things to keep in mind is.

>> This is super interesting to me. My team. give me this report to show me how many. of you that watch this show subscribe, and some of you have told us, according. to this, that you are unsubscribed from. the channel randomly. So favor to ask. all of you, please could you check right. now if you've hit the subscribe button, if you are a regular viewer of this. show, and you like what we do here. We're approaching quite a significant. landmark on this show in terms of a. subscriber number. So if there was one. simple, free thing that you could do to. help us, my team, everyone here, to keep. this show free, to keep it improving. year over year and week over week, it is. just to hit that subscribe button and to.

double check if you've hit it. Only. thing I'll ever ask of you. Do we have a deal? If you do it, I'll tell you what I'll. do. I'll make sure. every single week, every single month, we fight harder and harder and harder. and harder to bring you the guests and. conversations that you want to hear. I. stayed true to that promise since the. very beginning of the Diary of a CEO, and I will not let you down. Please help. us. Really appreciate it. Let's get on. with the show. >> [music]. >> Right. For people that might not know. who you are, you founded Bridgewater. Associates in a two-bedroom apartment in.

1975, and you grew it to the world's largest. hedge fund. What was the the total. amount of cumulative net gains that you. delivered for those investors over that. period? >> I think it was something like 53. billion. We produced about a 12% return. with no never any significant losses, and it was uncorrelated with other. investments. >> And you were the one of the few managers. to foresee the great financial crisis, which allowed Bridgewater to post.

positive returns. of 9.5%. in 2008, while the S&P 500 plunged by. almost 40%. >> Yeah. >> Let me start with the thing that I'm. most curious about, because I sat here. with an investor called Jeremy Grantham, who you might know. >> Mhm. >> He told me that we're. staring in the face of an AI bubble, and. therefore a economic collapse. potentially. >> If you look at the data, it would be compatible with history. for the peak to be very soon. Everything.

is in line. This is. I think the biggest investment bubble in. American history. >> What's your perspective on that? >> He's right. I don't want to jump to. conclusions as much as I want to explain. reasonings that lead up to conclusions. I'm at a stage in my life that I want to. help people understand cause-effect. relationships. What they call a bubble. is when the price goes up a lot and. companies do very well and then it. collapses. And that has implications for. the economy, it has implications for the.

markets. Like 1929 bubble. Okay? Or the. 2000 bubble. Okay? Which was the dot-com. bubble. >> Does it impact real people as well? Cuz. you said the economy and. >> It did. 1929 bubble bursting impact real. [clears throat] people? Yes, the Great. Depression followed. Because what. happens is there's a new technology that. comes along that's revolutionary. The. dot-com bubble, which was 2000, all the. stuff that we have that's wonderful new. technology. People get into that.

technology. They say that's miraculous. I can bet on that. I'm sure it's going. to be successful. And then they bet on. it. And sometimes they borrow money to. bet on it. And they lose sight that the. price of it matters. So, it goes up and. up and it it's everybody's thing, you. know? Like right now, we're very excited. about AI and we should be very excited. cuz it's going to be revolutionary. changes. And it then at the same time, so I want to buy some of that. And.

everybody wants to invest in some of. that. And what they do is they don't pay. attention to the price and there's a. certain mechanics. People will borrow. money. Wealth is not the same as money. So, you see a lot of people getting. wealthy, but you can't spend the wealth. You have to sell the wealth to get. money. Cuz you can only spend money, right? So, what happens is when they need money for. one reason or another, taxes change or. interest rates go up and so they have to.

pay their debt service and so on. There. is a pricking of the bubble, so that. what happens is it falls. Okay? And when. that happens, people lose money. And as. they start to lose money, the process. works in reverse because. when they made a lot of money, they have. a lot of collateral, right? They can go. borrow money because they're worth a. lot. And that compounds on its way up. And then when it comes down the other. way, it works the other way. Okay, now. you got to pay your debt. And so when.

then you have to start to sell assets. And then there's less demand for things, right? So there's less demand because if. you're losing money cuz you put some. money in the stock market and that. company and so on, you're going to spend. less. And as you spend less, then. somebody else's income goes down, right? So you don't go to the restaurants. The. economic downturns that typically follow. a bubble like the Great Depression. The. late '20s was fantastic. If you talk.

about changes and and experiencing. This was the first time there was. electricity in houses. So that was the. first time you would have refrigeration. and you would have lighting in houses. This was the first time that you had um. cars popular. That you could First time. airplanes. First time you had radio. And. so everybody knew that they were going. to be great in the future and they were. great in the future. But at the same. time, what happens is as they buy them.

and they stocks go up and they borrow. money to buy them and so on. Um and the. profits don't live up to the price, then. that causes this other dynamic and it. produced the Great Depression. >> So let's say that I buy this and this is. a unit of artificial intelligence. So. let's say I buy one share in one of the. big AI companies right now because. investors are so excited about AI, they. value this at $100.

This unit that I have here. They say. it's worth $100. So my net worth is now. $100. I go to the bank because I have. this net worth, this paper worth $100. and I ask the bank for a 50% loan on. this right thing that I have. They give. me $50. Now I have $50. And then something happens in the. economy. which means that. the investors who have invested in this. and investors generally now need money. to pay off their other debts that they. have. So this could be a war, it could. be some kind of event that takes place.

and suddenly everybody rushes to sell. their assets like this one. And so when I go to sell this, the price. of it has now plummeted to say maybe. $25, but I took a loan at the bank for. $50, so I owe the bank $50, but now this. thing that I have that was worth $100 a. couple of months ago is now worth $25. and I'm $25 in the hole. So I have to. quickly sell. And then with everybody selling, all the. price of assets drop, people stop. spending money at the restaurants like. you say, there's less money around and.

then the bubble has burst and we're in. this sort of declining. >> You got it. >> Okay, good. All right, fine. >> And it happens. because it must happen. I mean meaning. in these uh tremendous uh changes, uh there's very little that's known. So. anybody who's in the business of making. AI. uh can't be precise. They don't know. exactly how much money is going to come. in, right? So there's either one of two. things. You either don't invest enough. and then the competition runs away or. you.

invest a huge amount and you can't be. precise, okay? And so when that dynamic. happens, it's a problem. So yes, you. said it very well. So I'm going to. repeat one other thing to emphasize. What's quite common now is um you can. issue stock for. uh let's say you raise $50 million. And you value the company at a billion. dollars. Only [clears throat] $50. million was actually spent on that. company. But now if you raise that,

you're a billionaire. >> Mhm. >> Okay? Because the accounting value of. that What do you own? You own stock that. is valued at a billion dollars. Nobody. paid a billion dollars or whatever it. is, right? And now you own that stock. But that stock, um, you can't spend. Cuz you can't spend wealth. >> Mhm. >> In order to spend it, you have to sell. some of that stock to get money. >> Yeah. >> Right? And quite often there's an. interest rate rise because the you know,

let's say as there's a fever and there's. an inflation and the central bank wants. to try to put the brakes on that a bit. Okay, what does that mean? It means. people who have debt, in a sense, have. to come up with more money. >> Mhm. >> Cuz when you own the debt all the debt, you have to come up with money to pay. the debt. >> So the downturn works. >> Between us, we've said it uh clearly, I. think we can understand the dynamic. So. they they have to exist. Now we have. another problem that's existing, okay? So we're talking about the bubble, okay?

But we also have some other things that. are going on that happen around the same. time. A big gap between the rich and the. poor and which also means the left and. the right, the politics of it, right? Just as we have now. When you have the. downturn, um, then you have people at each other's. throats. So if we take politics, what. you see is this that they don't have. enough money. The the governments don't. have enough money. We have big budget. deficits, okay? Where do you get the.

money from in order to pay those bills? The UK has had, I think, six out of last. seven years there's been a new prime. minister. And because there's not enough. money for the government, and so what. you start to see is people come in with. their claims, but there's this how do we. get the money? And then people run who. have money, they say, "I don't want to. be in this tax zone that's going to be.". And then they leave. And so there's a. domestic political problem that is not. people compromising the same way they. used to compromise, right? So now you.

have the politics which compounds this. And And then you have a world, this is. what I call the big cycle. You have a. world in which also the geopolitics. changes. By geopolitics, I mean country. to country. Okay, there's a system under. normal circumstances. When there's a. more dominant power, they impose their. order and that becomes more peaceful. But when you have on. uh arguments of how things should go,

those arguments start to turn into. conflicts, right? And so, those things. tend to happen together. That's why I. refer to that as the big cycle, that. dynamic. Now, that is the confluence. of the money, the internal conflict. politically, and the external conflict, which is what we're going through. And. And the problem is, I think, that people. don't know the cycle. So, every day we. go to our sources of information and you.

see this latest news, but they don't. connect the dots in in understanding. that cycle. >> Just going off on this point of the. bubbles, what is it that makes bubbles. pop? So, if we are in an AI bubble at. the moment and it is going to pop at. some point, what is the like, they call. it a black swan event? >> a few of them. There are bubbles and. then the things that prick the bubbles, okay? The things that prick the bubbles, typically in the beginning, are. something that means that I have to sell. some wealth to get money. And that's.

usually a rise in interest rates. It. could be something like wealth taxes, something that means I'm. very wealthy, but typically the. tightness of money because during that. spot, there's inflation pressures and. central banks decide that they want to. tighten monetary policy and so on. It. becomes that the amount of money that I. can get by owning that debt at the. higher interest rates is greater than. the amount of money I could get on my. equity investments. That's part of it.

Also, what you see is a lot more. production of stock. And what I mean by. that, issuance of stock. Think of that, the supply and the. demand. There's There's demand, right? And we've been talking about the demand. that makes stocks go up. You know, how. we create this wealth. But there's also. um supply. So, you can issue stock. It's. very easy to There's There's almost. nothing that's easier to produce than. stock. >> I own a company, I can just uh print.

more equity. >> Yes. Today, you could probably go out. and say, "I'm going to make a company. and I'm going to take it uh public." And. you go to your audience and your crowd. and you can say, "I'm going to make. stock.". Okay? So, it becomes when there's a when. there's a market that wants stock, there's a production of stock. >> And is there. >> Okay? And that supply of stock, together. with the other that I'm mentioning, the. the need for getting money and so on, um. causes the.

um the the bubble to pop. >> Are you seeing signs that we're in a. bubble? >> Yeah. Yeah. Yeah. The classic signs that. we're in a And the bubble, I should. emphasize, it's not a um. you're in a bubble or you're not in a. bubble. It's a degree thing. Okay? There. is also that it's in weak hands. I can. look at now who is in these companies, right? And is it in strong hands or weak. hands? Classic strong hands is that when. weak investors, not knowledgeable. investors, then put a lot of money into.

it, particularly if that's in a. leveraged way. >> And that way with debt. >> With debt. Or they can buy an op- a a. leveraged version of like the like there. are ETFs now that are leveraged versions. of the stock market and they and so on. And so, they get into that. It's more. like they're crap shooting. Okay? and. then that's a sign of a bubble. So I. mean I've listed a few of those signs. Those are the major signs of those. bubbles. And so that when it goes down,

then you get the fear, then you get the. need out to raise cash, and that dynamic. works its way out in the form of then. the reverse happening. In other words, everything becomes cheap and everybody. has. the spending and the things you. mentioned. >> If we are in an AI bubble and it is. going to burst. You know, I had a friend. of mine contact me and he said, "Stephen, I think we're in this an AI. bubble." And he's running an AI company. So he he said to me, "I'm going to raise. lots of money now so that when the the. markets come down and investors are.

fearful, they don't want to invest in. companies, people stop spending as much, they start thinking about their. subscriptions, they start canceling. subscriptions, we're going to be good. and we're going to be able to buy up. some of our competitors who are going to. be struggling. So he's just raised um. hundreds and [snorts] hundreds of. millions of dollars for his AI company. >> Right. Yeah, it's probably like that. Easy. >> Yeah, it was easy now. >> Right. The question here is like what. should at different levels? So like the. the average Joe on the street up to. entrepreneurs that are running. companies, how does how do they all. prepare for an economic bubble that.

might burst? >> He's such a good example. And what that. does just following it through on what. we said a minute ago is that increases. the supply of AI stock. >> Okay, yeah, cuz he sold stock and raised. money. >> more. >> Yeah. >> Right? And so as he and others do that more, the greater supply of stock comes in and. and so he wants to get ahead of it in. that dynamic. And then, you know, that. contributes to the bubble. But.

how do they prepare? >> How do they prepare for this? >> I would also say something. The future is very unknown. And people should not be timing. Sophisticated investors have a real. challenge even in timing a bubble. So on the important thing always is to. diversify. Now, we're going to go back. to money, the basics of money. management. And I by the way, I personally have gone through the cycle. cuz I didn't have any money, and then I.

did then I had a lot of money. And I. remember the cycle very well. What. happens is as you start off. um I used to count how many months I. would be okay I have a certain amount of. money, how much money I would be okay no. more money came in. If I lost my job or. whatever I did, I mostly never. I worked 2 years for somebody, but in. other words, if money didn't come in and. it would be months and then years and so. on to build that security cuz I take.

care of my family and so on. And so what. as we're looking at these things, these. are the choices that you have in order. to be able to say, do I buy my house or. apartment? Do I put my money into cash? And what happens with money is you have. to put it into something. Because. they'll pay you interest on it, okay? So, that's your cash deposit and so on. And people think that that's the safest.

It's not, it's the worst investment over. a long period of time because inflation. will eat it away. >> You mean putting it in a bank, just. leaving it in a bank? >> In whatever form, a money market fund, a. whatever it is that is that short-term. of deposited and it'll give me an. interest rate. >> Okay. >> Okay? And that's what they think about. as cash. You don't nobody leaves it. literally in cash because if it's. literally in cash, it doesn't earn. interest. So, why shouldn't I put it. there and get some interest on it? And.

so, that's cash. And people think that. that's the safest and has the lowest. return guaranteed almost to have the. worst return over the longer period of. time. >> People keep cash because it feels safer. >> That's right. And I'm saying it's not. safer. Because of inflation. >> Explain that to me in simple terms. >> Okay. Well, if I got no interest rate, um then what I would do is I'd lose the. to the inflation rate. >> And what's the inflation rate? >> And well, 3 and 1/2 or 4%. happens to be about where it is now.

>> A year? >> Yeah, a year. >> So, that at least $3.5 a year. >> That's right. >> If I just leave it in cash. >> That's right. >> Okay. >> Okay. Now, I'll get an interest rate on. it if I put it someplace and it'll give. me maybe an interest rate that's. somewhere in that vicinity, similar to. that. >> 3, 4, 5, 4%. >> And then I have to pay taxes on it. >> Oh, you have to pay taxes on the gain? >> You're Yeah. >> Okay, fine. >> Right? Even though you really didn't. gain relative to inflation, you still. have to pay the taxes on whatever you've.

earned or something. Anyway, over the. long term, it's a lousy return. Because. also think about returns also come from. productivity. And over a period of time, people learn how to do things better and. so on. So, then you can invest in let's. call this stocks, okay? That we'll call. that the stock market. This is cash and. then you think on the stocks. And then. the stocks can go up or down. and then they have this dynamic that. we're talking about that creates these.

big cycles and the busts. And those. cycles, when they go down, um go down um. 60, 70. percent. Okay, that's that's what a bear. market looks like. Woo, what a. what a dive. Okay, this is gold. that's gold and these are bonds and this. is your house and that's Bitcoin. Okay, so these are the choices. They each. um change for certain reasons. I'll.

digress into that in a minute. But what. happens is they go like this. When gold. goes up, tends to be that the bonds will. go down in value or your house. And. these change in a certain way, and so. the best thing to do is to have a. diversified portfolio that when you have. that rather than anyone, you won't. reduce your return, but you will reduce. your risk. >> And diversified means having a little.

bit of each. >> Right, a certain amount. And you have to. know how to balance them because of. their volatility. This one, stocks, is. more volatile than this one. And my own. recommendations are you start first of. all with what you need. Should I buy a. place or should I use that money and I. could travel more and so on. One of the. advantages of the house, the apartment, and whatever is it's your environment.

Your environment is important. It. produces forced savings. Sometimes that. forced savings is good. It is It. typically is taxed better. It's a It's a. better vehicle for tax over a period of. time. But I'm not arguing for this. alone, but I'm saying when I'm looking. at this, then I think this one, gold, is. very interesting because when all of. these tend to do badly, this tends to do. well. Okay, so it's a very effective.

diversifying because this was money. Not. until 1971. And it's still the second largest. reserve currency. Central banks hold. reserve currencies. So it has qualities. that are different from this. And this. has qualities like when the value of. money goes down because of inflation, this. >> Bonds. >> Okay. >> And bonds are basically lending the. government money. >> That's right. If you lend the money at a. certain interest rate,

and then inflation and interest rates. rise, you're kind of locked into that. interest rate. And so it has its own. problems. The more important thing I. would say is, you know, you save up and. you say, "How many. years can I live if money doesn't come. in?". Okay? And then you take that and you. say, "How could I be secure? So I don't want to put it into one thing. that can go down 70%. So how do I.

diversify that? That's my main headline. >> A lot of people in the comments of our. last episode, they were asking this, like how does this apply for someone who. doesn't have much money, maybe doesn't. have any assets, say they're 30 years. old, they. have I don't know $100 disposable. income, and they're thinking about how to sort. of secure their future. What is the. advice for someone in that situation? >> Your only asset is yourself. And I guess what you're going to get.

from the government. How do you sell. yourself at at getting a better income? Or how much how are you getting money. from the government? >> Mhm. >> You selling yourself is the main thing. This is one of the big problems now with. the artificial intelligence and other. machines replacing people and and. different types of jobs, it becomes more. difficult. It produces that big wealth. gap while you're having more. productivity. Everybody wants more. productivity because it means how do you.

produce things more efficiently, but. that's. contributes to the income gap because. your productivity equals your income for. a large extent. And then you have the. and you know, the political dynamic. It's tough to get yourself out of this. position that you mentioned. You know, I'm imagining that person. Okay? It's. not easy. There is this giant polarity. If you're in the top 10% of talent, let's say, the world's your oyster.

But, nowadays, in order to be there, okay, that's that's difficult. Find. something that. gives you. the ability to sell your time for good. money. Is that going to be that you're. driving an Uber? Is that going to be. that you have the talent and you're. going to be able to understand AI and. contribute that understanding to a. company that values that? Or what is. your skill? You found this, okay? And. and you found the way, okay? But, you.

need money. Okay? And the the thing that you want to. do, what you're doing, and I'm lucky. enough to do, is to make your work and. your passion the same thing, and don't forget about the money part. >> Yeah, I am I one of the things that I I. think I didn't realize earlier in my. career is that. whatever skills you have will be valued. differently in different contexts or. industries, should I say. So, for. example, say that my skill here, and I'm. not trying to flatter myself, but say my.

skill here is. >> is working. >> having conversations, right? Let's say. that's what it is. There's lots of. places I could have conversations. And those places would value my ability. to have conversations wildly differently. per hour. >> Right. >> So, I will often think this and speak to. my friends about this when they they. tell me their skills, I say, let's look at the different industries. and how they would value the skills you. currently have differently. A good. example, again, you know, you could be an Uber driver or. you could chauffeur. Ray Dalio.

Now, I imagine those two things pay. wildly differently, but it's the same. skill of driving a car, broadly. speaking. >> I agree with all that. >> And so, I think that's one way to just. you know, the other way is you go ask. your current boss for a promotion. But, again, they're going to value you. in the context of their other employees, the market in that industry, etc. So, it's you You get 10%, but you're not. going to see a step change necessarily. So, that's something that I always say. to people is. >> Absolutely right. And another law of something, I don't. think it's almost a law of everything.

It's a law of you. um buy almost anything. is those at the top. whatever that thing you're buying, if. you're buying a painting, a piece of. furniture, a piece of clothing, a a. person's time or whatever. command premiums that are many multiples. of the average. It's almost like if you. can invest. 10% more. of your time, your effort, your skill to.

go up. >> Mhm. >> Okay? You will get. twice as much. >> Mhm. >> for 10% better something like that, okay? So, that's part of the formula of. life and the formula of employment. And. it's so I think if you keep what you. brought up and what I'm bringing up in. mind, that helps you position yourself. and know what to do. >> Mhm. >> There should be a button just down below. here. And if it says subscribe, you're. already subscribed. If it says subscribe.

bar, that means you're not yet. And if. you're not subscribed, please could you. do us a favor and hit that button. It. helps the show more than you know. And. according to the algorithm, you're. someone that watches our show but you. haven't yet hit that button. Thank you. so much. We didn't mention this thing here. actually. So, I probably should talk. about it cuz people are talking about it. a lot right now, which is uh. >> Bitcoin. >> Or Bitcoin. >> Mhm. >> What's your perspective on Bitcoin? I. know the market in Bitcoin is down at. the moment. >> I have about 1% of my portfolio in. Bitcoin because there's different kinds. of money that and the money that you.

can't print, that's one kind. This is. the other kind of money that you can't. print. >> Gold. >> Yeah. You cannot crack it with. technology. You can. hold it, you own it. It's There's a. saying that it's the only um financial. asset that is not somebody else's. liability. Somebody has to give you. something for it. It has that. So, in my. category of wanting, let's say, make. sure that I have some hard money, which.

for most people should be between 5 and. 15% of their portfolio. I prefer that. I'm pointing to the gold bars here. Rather than. the Bitcoin. >> Is it still in your view gold like. asset? >> Yes, it's it's a type of money that. can't be printed. But. there are technologies that can. hurt it. In other words, if there's.

quantum computing and it can be. monitored by governments and so on. It. could be taxed. And digital currencies. are somewhat similar. >> But you don't like Bitcoin as much as. gold because of privacy reasons as well. >> And when the governments say, "I don't. want it." They have the power, therefore, to do whatever they want with. it. And central banks will not own any. significant amount of that because of. the reason I said. They They want their. transactions to be private and in their.

control. Think about how different it. would be for Russia. Okay, they. confiscated. these kind of other assets. They didn't. get these. >> Gold. >> Okay, gold. And so, what you're seeing even particularly in. this time of conflict is. that there's a sense that if I'm holding. this others won't get it. >> You mentioned a second ago the impact. you think AI is going to have on the.

economy broadly, but also again to real. people's lives. There's lots of debate. I mean, there's been a debate over the. last 10 10 10 years or so within the. world of AI. You had the big AI I. originally saying that AI would cause. job disruption. And that, you know, you've even had some. of the CEOs more recently saying work. will become optional in a world of. superintelligence. At the same time, we. have robotics coming over the horizon. So, you've got this sort of convergence. of intelligence and then I don't you. could could think of it like muscles, like physical muscles or ability. At the.

same time, um we're seeing AI accelerate. in its capabilities. What does this mean for the average. person and their job? And who's going to. benefit from this AI revolution in your. point of view? >> It means that. you will either be cutting edge and. capable and among that top fraction of a. percent down to 10% of the population. who is um cutting edge and using it and. accelerating, or uh you will, if you're.

in a thinking job, uh be at risk of. being uh replaced. We're coming into a. world where we can automate everything. The evolution of man. was we had the agricultural era. And. there was no real inventiveness. And. then man invented the machine. And what the machine did is it replaced. man's physical necessity. So, men used.

to be like oxen in the agricultural. field and so on. And they were replaced. by tractors. And then there was we. entered the industrial age. First, you had the printing press. that allowed people to learn. And then you had these inventions, the. industrial revolution, the first. industrial revolution. And what you had. is the. replacing the physical that that man.

would do in factories then and so on. And so, the way I look at it is I look. at the human body. and I see like it's. replacing the body and so on. And it's. coming up uh higher and higher, and then. it replaces some aspects of the mind. that you can computerize. And it's. coming up and up, and it's replacing. higher and higher levels of thinking and. reasoning. Okay. So, that path is part. of the evolutionary path that is.

happening. Okay. So, then you start to. say, "What do I have to offer?" And so, in answer to who benefits from it, those. who benefit from it are those who are. um the capitalists with the ideas that. replace uh the workers. And so, if you. look at there's revenue for businesses. when you buy something in a store, there's revenue. Okay. And if you look.

at the share that is going to workers, you see that share going down. And if. you look at the share that's going to. those who own that business, that share. is going up. That's you know, how do. they share that revenue in terms of the. cost, and you see that that's rising. And so, um this is an evolutionary. process. And it's true that what happens. is you get more uh free time. Okay. So, now the so- society has to think, "How.

do I deal with this?" So, for example, the work week, which used to be, you. know, a 60- or 70-hour work week, goes. down to less than a 40-hour work week. And there's more time. But there needs. to be uh you know, how do you create a. bottom? And so, we're going through this. phase in which there is this upper end. that is making incredible amounts of. wealth as we described, and then this. lower end that is um then having these.

challenges. We've have a relatively good. economy and the. difficulty of college graduates to get. employment has increased significantly. And I can tell you that in in many. businesses, it becomes more of a pain in. the neck to have a college graduate. let's say do what they have to train. them, you have to and many of those. tasks, many of that thing can be done. very quickly with the AI and with.

computerization. And as you get into. robotics, you're going to have that. happen, right? >> The speed of the disruption that we're. seeing because of the amount of capital. that's flowing into these AI frontier. models like the Anthropic's and OpenAI, etc., etc. is is quite different from anything. else. It's sort of the historical. precedents as we've seen through the. industrial revolution where it took time. to build the tractors. >> There's an element of speed. What. happens usually is the bubble bursts.

>> Mhm. >> And now you have the cyclical dynamic of. that while the technology, you know, evolves, but the the supply. demand and the debt problem that we just. talked about then come in. And so. unemployment is due to. typically. some sort of a combination of a. financial crisis that like we talked. about the debt and stocks going down and. people not having collateral and then. therefore not buying assets and that.

dynamic. That causes the unemployment. rate, that factor. >> That's the sort of economic reasons, but. in terms of the AI agents, robotics. being able to replace you. I sat with. Dara from Uber and Dara said that he. imagines in the future the 9 million. riders that they have around the world. doing deliveries will be replaced by. autonomous vehicles, autonomous robots. >> Those 9 million. drivers careers that you have will be. out of work. conceivably in the you know talking. about being honest about the situation.

>> Yeah, I think again it goes to physical. AI as well, right? So I think 20 years. from now you can imagine that those 9. million will be. 20 million AAVs maybe. But we have time. between now and then partially because. we don't operate in the virtual world, right? We operate in the physical world. You have to get the regulations up, you. have to build the cars, you have to. build the sensor stacks, the the models. have to get there. So there is time. between now and then, but you can. imagine the majority of our trips being.

fulfilled by robots of some kind. >> The unemployment rate gets very. influenced by the bubble bursting. and the economy going down. You see that. spike. >> Mhm. >> You certainly have the evolutionary. change that you're referring to. >> Okay, so it's both. >> Okay, in other words there's this. evolutionary thing in which they like he. says, you know, the tractor replaces the labor.

or the assembly line worker as. technology is replaced and that is an. evolutionary thing that goes. continuously for you know, many years. and in the way that you're describing. Because you asked about the unemployment. rate, I just wanted to emphasize that. the unemployment rate is very heavily. affected by that bubble bursting. >> So okay, you've got two forces at once. then you've got. >> When the bubble bursts everybody as we. said needs cash so they start cutting. their costs.

So that's when they start laying people. off. >> Yeah. >> They start looking around the company. and go forget growth, we just need to. survive. So we're going to lay off that. team and that team and that team and. then you see unemployment going up. And. then you've got this sort of underlying. shift happening at the same time which. is workers are replacing their team. members with AI agents or are or in the. factories then are using robots to do. factory work, etc. And that's the sort. of current slow march forward. >> Right. So, I have this chart. Okay? What.

this represents, this line, is the um evolution of technologies. In. other words, we have greater and greater. learning and doing things better, and. that's the evolution that we're talking. about that also machines replace people. or replace their tags over that period. of time. Then you have this big cycle, which is. typically lasts for. about a lifetime, on average, about 80. years. Uh we went through that uh last.

time, 1945. There are orders. There's a. monetary order, there's a domestic. political order, there's a geopolitical. order. Okay? You have the bubble. bursting, okay? You have this. This is. what we're talking about, um that dive. And then you when you go through that, you break down these orders. And when they break down, then um you. would get rid of the debt burden. So, you get rid of the monetary system as.

you're used to it. You um may get rid of. the domestic order. Many countries'. orders, their systems, end. I mean, they. all end at some point. And so, they can. break down quite often in a time of. great internal conflict. Does the system. last? And that happens at that time. And. so, that's that big breakdown. But. still, what you're talking about is and. and I and I agree with you, this keeps. going up. Okay? Because learning, you.

don't unlearn what you've learned. So, as this goes up and and you're uh you. you still keep this thing going up, okay? But you have the big cycle, the. debt, the conflict type of movement. And. these little cycles are the cycles that. we see in this roughly on average, let's. call it an 80-year period, but. you see the. you see the recession and.

recession has higher unemployment and so. on. Then they stimulate monetary policy, they make money looser then the economy. goes up and you have prosperity, then. you go into a bubble, okay, that then. you run lower on capacity cuz you're. using up the capacity, inflation rises, they tighten monetary policy, and then. you have the the recession that follows. So these movements from one recession to.

the next recession, that cycle that I've. just described, on average has lasted. about 6 years and give or take about. three. So that's the way it looks. >> So I'll play this back to you to make. sure I understand it. There is a sort of. bigger macro bubble which is over 80. years which is the changing of the world. order. >> Yep, you get deeper and deeper and. deeper in debt over a lifetime till till. I'd say your debt capacity. You have a. certain amount. So the government's debt.

capacity, for example, it can borrow. when you wipe it out here, then you can. build it up and build it up until it. starts to squeeze. Debt service starts. to squeeze out. >> the changing of the world order. >> That is one of the ingredients, right? So okay, we have too much debt. At the. same time, what you're building up is. you're building up great wealth gaps. because capitalism, and I love. capitalism, but it's it's here's the. reality, it creates big differences in.

income and wealth. And when it does that. that also creates differences in. people's opportunities because the rich. people can educate their children well. and they can give them all the benefits. I mean education is a big benefit. That's why there should be broad-based. excellent education. But all of that. happens and so you see wealth gaps build. up. So like the Industrial Revolution. leads into the Gilded Age. Okay, the.

Gilded Age looks a lot like now, you. know, people buying expensive things and. looking very gilded. And then it leads. to the robber barons. And the robber. barons are people who are considered, you know, the. that they're. taking advantage, the billionaire class, and it becomes that cycle. So that's the. way it works. >> So you've got this 80-year sort of, you. know, boom and then there's a collapse.

which is sort of ends in conflict and. the changing of the new world order. And. then within that you have these little. bubbles which really economic bubbles. that go up and down recession. People. get very excited. They they contract, they get excited, they contract. And. then you have the the straight line here. which is the sort of technical. technological improvement across the. spectrum of ideas and technologies and. all these things. >> It keeps going. >> And it keeps going regardless of this. boom and bust because as you say people. never forget. I guess so a couple. questions on this then.

I don't even know which one to dive into. first, but let's go for I guess just. closing off on the last point that I was. I was getting at is there's this. narrative that there'll be new jobs. created because of AI and robotics and. everyone will be fine. A lot of this. narrative comes from Silicon Valley. >> Who is producing the technology that. doesn't want to be attacked because. they're. >> making a lot of money. >> They may have an act. >> And they're in the Gilded Age. >> desire to have a certain perspective. I. think objective people.

in Silicon Valley. and there are number of them would say. it's going to have a big employment.". But you you you can see it um in the. wealth. Who owns stocks and who doesn't. own stocks? Okay. Now, if you own stocks, um um you're very happy now. Okay? And if you don't own stocks, you're not getting the benefit of owning. stocks. So, that in and of itself. creates a greater greater wealth even. aside from employment. Okay, so there.

are these forces to create the greater. uh wealth gaps, right? >> Roughly so 61% of US adults own stock in. some form, and most of them hold it indirectly. through their retirement plan. Only 20%. of Americans directly own individual. stocks or shares through a brokerage. account. While over half of Americans. own stocks, ownership is heavily. concentrated. The top 10% of households. hold almost 90% of the stock.

How do you feel about this narrative. coming from predominantly Silicon Valley. that there'll be new jobs created that. we can't yet forecast and everyone will. be fine. They point to the Industrial. Revolution. They say, "Look, when the. tractors came, we thought everyone was. finished. When factories came, we. thought everyone was finished, but look, we figured some other stuff out.". >> Because if you look at that, this is. this what um. thing I'm saying that as your body is. more and more replaced with your mind, then you can do that. But when your mind.

is. replaced and your body is replaced, uh what is it that you have to sell? >> What is it that we have to sell as. humans once our body and our minds are. replaced? >> What man has. um is emotions. and has. um. intuitions. There are certain things. that artificial intelligence doesn't. have. And so, if you have to get down to what.

those. things are, it um. you know, does the. robot give a good massage? Does. you know, what is it. that is left? And so we will. wrestle with what it is that is left, okay? But I think that for the. foreseeable future. those who can work very well where they. have an exceptional. human intelligence and work in. partnership with the artificial.

intelligence. that they are going to be at the cutting. edge of all of this. >> I've got 60 seconds and I'm going to. show you how much I can get done because. of our sponsor called Whisper Flow. And. for those of you that don't know what it. is, it's a business I invested in that. turns your speech into text in any app. or device. I'm going to post into our. Slack channel which rewards whichever. team member conducted the most. experiments this week. Hi everyone, here. is this week's experimenter of the week.

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course, cognitive benefits that might. just change your life. So, if you had kids that were 16 years. old now, Ray, and they said, "Dad, what. what do you think based on everything. you know about the future, what should I be doing?". >> First of all, there's the question of. what what what matters most in your. lifestyle. So, I'm going to get philosophical, not. assuming that the highest income is the. best. Okay? Because happiness. You want happiness and health.

And so, in answering your question, there's very little correlation between. the amount of money you have and the. level of happiness that you have past. the basic level. And so, I could be. answer your question first, which the. obvious way is to say to earn the most. amount of money, and I want to start off. in saying that. you know, my experiences is so on is. like I love being in nature. And it doesn't cost me hardly anything.

I mean, it depends where your pull is. And so, don't lose sight of your pull. and what it's about. What you want to do. is you want to get above the level that. you don't have to panic. We just earlier. discussed how many months can I live and. to be able to secure that and to be. excited and have that passion or that. whatever it is the life that I want to. have. So, I just want to emphasize keep. in mind of that. But then also, you.

know, my principle is make your work and. your passion the same thing and don't. forget about the money part. Right? So, know your nature. Uh um this is what I tell my grandkids. Okay? Yeah, you have a feel and you also have. a nature. It's not just your. preferences. People think differently. Some are uh more adventurous. Some are. less adventurous. Some are more. conceptual or artistic and can think.

with imagination and they love doing. that. Some people don't like that. Some. people want to they may life should be. more concrete and more certain and so. on. That's your nature. You're partially. you're a lot born with that nature and. you also. learn it in your earlier years. We know. this of how how neuroplasticity works. and so on. So, we're all on a journey to. um find the match between our nature.

and our path. And you find though that. path, but you can't forget about this. money part while you're pursuing that. path. >> Don't forget about the money. So, if. your, you know, grandkids came to you. and they said, "I want to become a lawyer." Would you. say, "Listen, let's forget about the money. because I think AI might take that job.". Or would you say, "Yes." Would you If. they said, "I want to be. >> I think you uh uh. >> I want to do a thinking job.". >> Let me say that history has shown. that it's not.

the most intelligent people or the most. intelligent species. that are the most successful. And it's not. no necessarily those that work the. hardest, although these things are very. important. It is the those who species and and. people who are also most adaptable. And and so there's going to be great. change in your lifetime. Okay? And so. yes, today it's artificial intelligence.

But if you went back. not long ago, we didn't even know. artificial intelligence would exist the. way it artificial intelligence today. exists. And the future will be like. that. So when you're nailing it down, you know it used to be make sure that. you know how to code. And then Claude. code comes along and all of those who. are coding. are worried about their jobs. Okay? So. what is it that matters? Okay? It is.

It is the approach to life in a sense. that produces that you know the the. general understanding and also the. adaptability. I think a lot has to do with knowing. yourself. That's why in building. Bridgewater, the personalities of the person were. very important in what suited their. jobs. And then I built this. a personality profile test. Then I made it online for anybody to go.

take. It's about 30 minutes. It's free. online. It's called Principles You. That'll tell you a lot about your. nature. Okay? But your goal is to find. that nature and what it what are the. paths. And there are several paths and. they're constantly changing to find that. nature. Okay? You'd experiment. You. learn. Okay? But you know, you probably. were pulled into this job by your. nature, right? And so and you and you.

made it work and here it is it works in. all of those dimensions and it's like. that for everybody. >> Yeah, it's it's it's interesting cuz you. look forward to the future and I I think. if I was a young person at this stage, and I was trying to set out where to aim. my career, I would be more confused now. than ever before, especially cuz they're. also contending with this uh. unemployability crisis amongst entry. levels. >> if you're talking about you'd be. confused because you can't anticipate. the future,

that's right. That's just the way it is, right? And and if you say, "What is it that I. need, given that reality?" Okay. I need. to I need to learn, I need to know how. to maximize the use of tools like AI to. be able to in- increase what I know, and. how do I use that to the best of my. ability to be as useful as possible. doing things that fulfill me.

>> Mhm. >> Okay? So, that's what you need to do. You're asking what you need to do. Uh. just get over the fact that you don't. know what the future's going to be like. So, if you're looking for an answer, and. it's going to be a computer programmer, is it going to be this or that? No, just. be maximize uh your ability to know, which is so easy to do nowadays, right? So, maximize that, and then maximum use. that to maximize your usefulness in in. jobs that make you happy, and that's the.

thing that. that's the best I can give you in terms. of more mice 16-year-old, that's the best I I can give them. Because I I don't want to mislead them. that it's the thing, that it's the. particular job. Okay? That'll mislead them. >> You talked about this 80-year cycle, which results in this new world order, and it sounded like you were saying that. near the end of the cycle, you see. wealth inequality. And you see the Gilded Age, where some.

people have lots of nice things, and. other people at the other end are. struggling, and this is a function of. capitalism. >> First of all, um. it's a reality. that it's not only just a um a. a wealth gap difference. And if the. majority. system is not working for the majority, well, you're going to have a problem. And yes, it is um it's contributed to.

these things where one wants to create. more opportunity through education. and through other basics, that there's. certain level that a floor. that nobody should go underneath. because it's bad for them and it's bad. for the society. And just to embellish. on that point, my wife and I live in. Connecticut. It's the on a per capita. income basis, I think it's the second. richest state. But 22% of the high. school students have either dropped out.

of high school or are failing with. absentee rates of greater than 25%. And as a result, a lot of it is gangs, shootings, drugs, and so on that leads. to a lot of incarcerations. And the bill for incarcerations. has become uh larger than the education. budget. When you have that kind of cycle. and so on, the system has to work for. most of the people and and so on. So,

you you um you you have that dynamic. But it all comes down to productivity. And so, um the way I look at it is the. government run by almost anybody. can't make these things run well. I. mean, governments do not things run. well. So, what is it like to give them. the money and expect that they're going. to make things work well? And so, you. look at this set of circumstances and. you say, "Who is going to make it work.

well?" I and I don't know the answer. And there's a budget considerations and. so on. You have to prioritize to the. things that make it work well. And and. you know what that is? That is educating. people to be productive and civil. We. don't talk enough about civility, you. know, how we work together to be able to. achieve a. productive result. And the way these. cycles go, it's more likely that they're. going to have a big fight and we're. going to have, you know, a debt problem.

and those kinds of things than we how we. are going to come together and work out. how to achieve this environment which. takes care of wonderful education and. productivity of people and all of that. to make the society work better. for most people. And that's the way it. looks and that's what's happened. >> Capitalism leads to inequality, it. seems. >> Yeah. >> So. >> But it doesn't have to. There are some societies. um like in Singapore, some of the.

Scandinavian countries, some some. societies, there is a a floor that. everybody uh. can have um good education, adequate. housing, and adequate health care. The foundations. Okay? Because if you go below those levels, uh the society will pay terribly for it. because those people. will be.

liabilities, not assets of the society. They'll be disruptive. >> So what about wealth taxes? Cuz this is. the big debate now. The the big debate. in the UK at the moment is tax the rich. It's been all over our news over the. last couple of weeks. The big debate in. New York and LA is wealth taxes and tax. the rich. Good idea, bad idea? >> It's a very difficult idea in the. following ways. I'm just talking about the mechanics. They have to sell the wealth. And. and that contributes to get the money to.

pay the taxes. That's one of those. things that can cause the bubble to. burst as we're talking about. And then, [clears throat] um, operationally, it's very difficult, unlike if they did. it as, um, stepped-up tax bases. In. other words, right now, when you die, your capital gains gets put aside. And. you don't have to pay capital gains. taxes, you pay inheritance taxes. And. there are ways that you can raise taxes.

and not hurt the economy. But we do have. to realize that it will lessen. investment. Because what wealth is. mostly used for is to put it into. investment. So you have to do this with. a at the same time the improvements in. those that are going to improve. productivity, like education and so on. If you're just making transfer payments, wealth payments, and you undermine the. productivity of the society by doing.

that. In other words, you're just giving. it for consumption and so on. And the. money's going from what was capital. expenditures and those kinds of. investments that make, uh, a better, more productive society to go to, in a. sense, consumption and so on. That. doesn't produce that prod- productivity. That's going to be a problem. So you. have to think, how do you make people. productive and how do you make your. society productive for most people? Or.

you're going to have to find a way where. you say that other group of people who. is not productive, um, the overall. society can have a higher level of. productivity, but we're going to still. establish this bottom that I'm talking. about. The bottom in education, the. bottom in conditions. And then you have. to say who was capable of doing it. Building. a uh. a society that will be productive. >> And who is that?

>> Well, as I say, you have this dynamic. problem that um. uh typically a privately owned. capitalist owned. business. will do better than their government. counterpart. >> Okay, so business is more productive. typically than a government entity. >> That's the system. >> So entrepreneurship, you need. entrepreneurship. >> Yeah, and capital. In other words, people who are capable of making the. thing they're responsible for.

productive. Okay? Run efficiently. Run. efficiently. So you need those. indisputably. And if you're doing that. in government, you need that in. government in order to be able to do it. And government has its own. uh it first of all, it doesn't attract. many of those people. And then it also. has, by its nature, knowing many people. have gone into it, it it is almost. dysfunctional as it causes all of this. arguing and problems. So those who want.

to be most productive tend not to go. there. And also, um it doesn't uh. distribute well. These people do not. they're not on the ground. They don't. have the direct contact. They don't know. what it's like. And as I'm describing, I. see it this way. >> Politicians. >> Yeah, the politician who says I'm uh I'm. going to you know, so you still have to. come back to the question, who's going. to make it run efficiently? >> This is something that I've made for.

you. I realize that the Diverce City. audience are strivers, whether it's in. business or health. We all have big. goals that we want to accomplish. And. one of the things I've learned is that. when you aim at the big, big, big goal, it can feel incredibly psychologically. uncomfortable because it's kind of like. being stood at the foot of Mount Everest. and looking upwards. The way to. accomplish your goals is by breaking. them down into tiny small steps, and we. call this in our team the 1%. And. actually, this philosophy is highly. responsible for much of our success.

here. So, what we've done so that you at. home can accomplish any big goal that. you have is we've made these 1% diaries, and we released these last year and they. all sold out. So, I asked my team over. and over again to bring the diaries. back, but also to introduce some new. colors and to make some minor tweaks to. the diary. So, now we have a better. range for you. So, if you have a big. goal in mind and you need a framework. and a process and some motivation, then. I highly recommend you get one of these. diaries before they all sell out once.

again. And you can get yours at the. diary.com. And if you want the link, the link is in. the description below. What is the UK currently a cautionary. tale of? >> It's the classic cycle. They. have gotten over. indebted, under productive, and they've run out of choices. In other words, there's not enough. money. Okay? And because there's not enough money.

um to to do all the things, then they've gotten this. internal political conflict going. And you've had uh. six out of the last seven years, you've. had it a new pri- prime minister. Because somebody else comes in and they. got their promise. And and the promise doesn't pan out, and. it doesn't take long to be that that I. don't believe your promise anymore, so. you bring new people in and then you. throw them out.

>> We We just had a new prime minister. yesterday. >> Yeah, I know. I'm I'm It's all part of. this cycle. And so, what happens is they. don't have the financial and the people. move. It's just logical, right? It's. just When you're heavily indebted. and you're not as productive. and you've got large wealth gaps, what are you going to do? It's politics. Um you're going to say, "I can't raise. taxes because if I raise taxes, besides. having great in conflict, people are. going to leave.".

Uh okay. So, I can't I can't cut. benefits because those who are receiving. whatever those benefits are are the ones. that are suffering them. And what am I. going to do? Cut those benefits? So, now okay. But, wait a second. I'm running a big. deficit or I don't have enough money. So, where does the money come from? How. do I get out of not getting more in. debt? And then what does that mean for. the person who's lending to you? They. don't want to lend to you, right? So,

you're not going to get the money to. finance the deficits. It's mechanics. >> So, what is it they have to do to get. out of that situation? >> They're going to have to have a, you. know, a major. restructuring. You're going to have to. um. >> Go bankrupt. >> Wipe out. Yeah, well well, the the way these. central banks work now is they do a. mixture of printing money, which. produces inflation, and then restructuring the debt in some.

way, like maybe changing the maturity. Well, and and in these cycles, quite. often they put in capital controls. because they think people are leaving, so they don't want them to leave and. take their money with them. So, they put. in capital controls that says, "You. can't leave with your money." Okay, and. they'll have exit taxes. And that's the. type of thing that happens until, you. know, there's period of great. turbulence. Then you um through a. combination of restructuring the debt.

Restructuring the debt means like quite. often you lengthen the maturity of the. debt. >> Okay. >> I think what's needed is a strong. middle. >> What does that mean? >> Right now, there's a left and right, and they're. extreme. And as long as they're at war with each. other, that's going to make things. worse. >> Yeah. >> If you can find that middle course, so. that those at most extreme. um.

are more alienated than those who say, you know, we're going to have to figure. this out together. And then what I would do, that leadership, that core, I would have. um something like a bipartisan. commission, in which smart people, meaning who understand how economics and. these things work, of both parties work together. to uh come up with a small uh and.

difficult plan. In other words, you're. going to have to make difficult changes. in order to make that um work well. But, if you can achieve that, you know, like. sometimes in history, great leaders of. opposing sides have been able to come up. with a plan. I mean, that's how the. Constitution was made. You come up with. a plan for operating that way, and then. you impose those difficult changes. And. then when I say this, I I say that.

that's very difficult and very long. shot. But, um unless you have bipartisan. support, unless you do it in a way where. the pain is shared, um. and there's a sense that there is a um. we're doing the right thing, as well as not a sense, just a reality. of doing the right thing, to make most people productive, that is. the best path forward.

>> If you were a young entrepreneur, you know, 21 years old, would you. build a company in the UK now if you had. a choice? And if not, why not? And if. so, why? >> I would uh exist without and try to. exist without borders. >> What does that mean practically? >> In other words, put aside all of these. things that we're talking about to a. large extent and say where are the. places in the world. that are that have the vibrancy, that.

have the capital, that have uh the. elements that are needed. There are. bright spots in the world and I'd want. to be around the most intelligent, doing. the most cutting-edge, terrific things. and be global. In other words, don't be. just stuck in a provincial place. Go to. these places that are what I might call. almost Renaissance states that are good. things are happening and these qualities.

exist that not only good education, the. civility, the vibrancy. Be in those. places, but be able not just in one. There's a Chinese. not a Chinese, Hong Kong expression. I. think that a smart rabbit has three. holes. And what it means is like if the. one place that you go to, uh it may not be the place that. uh remains the best place. They're. riskier places. The riskier places are. those that don't have the elements I. mentioned. The education, the civility,

the productivity, all of those things. >> So, would you Would one of those places. be be the United Kingdom? Cuz me and my. friends talk about this sometimes, you. know, I've got I've invested in lots of. companies there and the founders come to. me and ask me these kinds of questions, which is is based on everything that's. going on with this turmoil and the big. cycle, um what's going to happen if I. continue to build my company here in the. United. >> I think that um I think the United. Kingdom, as it goes through these difficulties is. as a whole a more difficult place.

And then there are pockets of it that. when they're operating are in their. pockets very stimulative. having those elements just like in the. United States there are places and. pockets that have those. However, they're within a system in a place that. is um. not um. not healthy. >> The real dominant narrative we're seeing. as I said this week is that. because there's this problem you said.

there's not enough money. the. the most popular. narrative which I think is supported by. about 70% of people is that people over. 10 million net worth. this this is something proposed by one. of my former guests Gary Stevenson who. did a documentary last week should have. a 2% wealth tax. >> My preferred way is to stop people from. hoarding enormous amounts of wealth for. enormous amounts of time. That's my. that's basically my preferred method. There's also the wealth tax method. There's also capital gains as a method.

There's a lot of different ways to. There's a lot of different ways to but. you have to deal with the problem of if. you do not do not tax very wealthy. individuals and very wealthy families. their share of the pie will obviously go. over time and they will and they are as. we are watching squeezing out ordinary. families. >> And this is kind of it would raise I. think it's I think they said 20 billion. dollars or something like that but it. would raise some money. Um so the the big debate in the country. at the moment is yeah do we one way to. raise money would be this wealth tax. Proponents of that or I should say um. people that are against that say people.

will leave. >> If you took. all of the money of people in the in the. top. not in other words taxed at 100% you're. not going to come up with enough money. because it's a such a small percentage. of the population and and but and that. but it in addition yes the people will. leave. Then you change the laws so that. you make them retroactive. In other In other words, you say the law.

means you're going to be taxed as of a. past date, so that if you leave, um we're going to get your money. Or then you put in capital controls. All. of this has happened before. Wealth. taxes would be new. Wealth taxes are. administratively difficult. Cuz how do. you value all this wealth that is not. easily valued and such things. But yes, what you've just said is um well.

recognized. >> You mentioned earlier that this big. cycle takes place, this one here on the. front of your book, The Changing World. Order, happens roughly every 80 years. >> Yes, it's like health. What I mean is. it varies. On average, let's say, what is the life expectancy of a person, but life expectancies or how long people. live vary. I wouldn't uh. uh emphasize too much um the amount of. time exactly as much as I would uh look.

at your condition. >> Where are we in this um at the moment. with in terms of the symptoms or markers. of the next big. >> Well, Chrysler over in this vicinity. over here, um you know, uh we're on the. um when we say that um. the US, the UK, number of other countries. are um later in that cycle when there's. the loss of the things that we've been.

talking about. Uh over-indebtedness, moreover-indebtedness, the loss of. power. >> So, in the collapse period of decline. >> I'll call that the the decline. >> And you've studied this for how long in. terms of. >> years. The cycles for 500 years and in a. number of countries that's in that book. These are objective measures. This is. not subjectivity. You can measure these. things. You can measure the level of. indebtedness. You can measure the. education levels and the.

competitiveness. You can measure all. these things in clearly measurable. numbers that show the health just like a. physical exam. >> When there's a new world order because. of this decline through history over the. last 500 years, has there ever been two. superpowers that emerge as the dominant. superpowers? Or is it just tends to be one? >> In the past, prior to World War I, there was no. World War I happened and then World War.

II happened because the world came. together and there was one world. essentially. Before that, there were regions and they. would have the different powers and you. could have a powerful China or India. could be very powerful at the same time. as the UK or. the Dutch and whatever would be powerful. and they weren't in that one world. And. the basic issue is when you have one. world and you have disagreements,

you're always going to have. disagreements. How do you resolve those. disagreements? >> Cool. >> War, okay. It maybe it's not physical. war, maybe it's whatever it is, but. there's a disagreement. Where does the. border lie? Where does this Okay, the. rules-based. order is a theoretical. conception. of the United States coming out of World. War II because there's the idea of how.

do you govern and you have. representatives and you have them in the. United Nations and so on. And you know, that's a nice theory, but the reality is. when that comes in is inconsistent with. power, which wins? Power or that rule-based. system? So, by nature, with to answer. your question, it means tends to be a. dominant power. We will see. China and I. think the United States I think. the most likely beneficial.

outcome is that it becomes more. regional. Okay? China has no desire to occupy, control other countries for for various. cultural reasons and things that I can. go into. And and they their basic. objective is to not be cut off, not be. harmed, and then also be as good as they. can be and and be competitive following. their approach to a system, which is.

very much a top-down controlled system. that's an extension of Confucianism, which is like the family, and that's. what they want to do. You can possibly. have this region thing, but you're not. going to have the dominant world power. if that's the case. You have some chance. that there's a great conflict, but I. think that there's enough wisdom in a. sense to. not want to go there. >> So, there's always there's pretty much. always been a superpower through.

different cycles. There's been one. dominant power through these historical. cycles. You're saying that you believe. in the next decline there won't be one. dominant power, which has been the US. for the last 80 odd years, there will be. two. Because you you can't foresee there. being a conflict at the scale that would. result in one dominant power. >> The strength of each country. will be how they take care of. themselves. Uh are they going to be strong or are. they going to be weak based on how they.

educate their population, how they spend. their money, how they manage to. Those will determine the relative powers. of those countries, right? And so, that'll be true certainly for the United. States and China. And so, as we go. forward, how will those systems deal. with those issues in the best possible. way? And that I would say, as long as. the United States remains a power, but. it's in it has a risk of of having a.

very bad set of circumstances through. debt and conflict and these things that. erode it, it'll be from within that. those things, particularly, could change that relative balance of. power. And similarly, if China managed. itself badly, it I could change that. Given that the if they both remain. powerful entities, then what you're. going to see is, I believe, more the recognition that.

there are regions, okay? Just like the. there's the Americas, okay? And that. becomes heavily much more the region and. where that spills over. And then there's. the region. around China, the. APAC countries, and though that region. And that there. would be the development within those. regions, and I do believe the avoidance.

of the big war that would be very. detrimental. There are issues like the. Taiwan issue, but the Taiwan issue will. be handled by, in my opinion, most likely not. militarily. in the sense that. there will be a great war between the. United States and China over it, but in. the pressures that are going to be. created so that there is a reunification. of China. >> You mentioned conflict there. The United.

States are at war with Iran, and it. seems to be a war that they can't seem. to get out of. This is going to have an impact, presumably, on. lots of things you've described here, but also the feelings of people at home. As, you know, we we face the prospect of. the United States sending troops on the. ground into Iran, because this the. Strait of Hormuz is going to become this. choke point to global energy, and. they're going to, you know, and what. does Trump do about that? He can't It's. like Vietnam, he can't leave. Or else he. is going to look bad. Um he If he stays, he looks bad.

Midterms coming up. What's your thoughts on this war in. Iran? Do you think it was a bad idea? Do. you think it was a good idea? Do you. think it was. Do you think it's Does it play a role in. all of this stuff here? The US Please. elaborate. >> this war in. Iran, I think it. Here's what's happening. Internationally, I. I I get I get to speak to world leaders. and and so on, and and particularly uh. in Asia, there's a a recognition.

that um the United States. uh doesn't want to uh fight a war. So, the the litmus test is uh do you Who. controls the Strait of Hormuz? And that. the United States, um because the population in the United. States is worried about uh gas prices. and losing people, and and they want it. to be be all over fast, that uh you. can't fight a war that way. And so, what.

you have is the United States will not. show up in Asia. >> What does that mean, show up in Asia? >> In Asia, there are all these countries. who believe that the United States was. going to play an important role as a. counterbalancing. influence for power in the region, because China's the dominant power, and. the others are much less power. And so, the United States being in there was. going to balance those power, and.

because they have a military presence, the idea of having bases in their. countries was believed to be that will. help that happen. Okay, now there's a. recognition that not only they would. show up, but maybe these bases can. become liabilities, and that the Chinese. have a lot of influence and power under. that set of circumstances. For example,

chips come out of Taiwan. We could. imagine what would happen if they. blockaded chips leaving Taiwan. Okay, you'd see the world stock markets crash. You would see terrible terrible things. That represents a non-military power, just even the ability to threaten that. Say the Chinese say for 5 days we're not. going to have it. What will the United. States literally do? Or if you go to. countries like the Philippines, which. has a treaty with the United States.

that's like a NATO treaty. How would the. American public react that we're going. to send. military, you know, aircraft carriers. and so on into the Philippines to stop. the Filipinos from being picked on by. the Chinese? I mean, so what you're. seeing is a change that is very similar. to the British Empire in terms of. being weaker. I remember a time not long.

ago that the United States would just. have to almost hint to a country that we. would like this thing. to be this way, or you would like it to. do that that, and they would do it. because of the American power, not just. military power, but economic power and. so on. Well, as you're seeing that power. being eroded, For example, China is a. larger trading partner with most. countries than the United States is. Or.

capital turning up. So, these things. matter. So, you're you're seeing that. kind of a shift in power. I'm a global. macro investor. And my goal is to be as. accurate as I possibly can. I can't let. biases stand in my way of doing that. So, I look at statistics and measures. and indicators and so on. So, what I'm. saying is clear. It is. you know, it's apparent. It's mechanics. >> So, what does that mean for the Iran.

situation then? Does it mean that. >> Well, it means that it's a very, very. difficult situation. What what is. all through history. and the Chinese know this very well. because their way of having a war is. conveyed in the art of war and also the. tribute system as they call it. You. cannot easily go in and control a. country for a long period of time. occupying. There are, you know, 90. million Iranians and they will be there.

no matter what happens. Now, the. question is do you have what it takes to. take control of the Strait of Hormuz by. way of example and allow and in other. words, do you allow that to be in the. hands of the Iranians or do you not? And. are you willing to pay the price to be. able to. put yourself in the position, which. means take a lot of pain and then.

enforce that for. the I don't know, forever and ever. future because it's not just take. control today, it means okay, how is. that going to go on and what does that. mean in these other locations? Does the. United States we're going to do the same. thing with the Chinese in Asia? They're. going to do the same thing all around? Probably. Okay. So, what does that mean? Okay, a change in the world order. >> It sounds like a big mistake.

>> Oh, yeah. It It was a big mistake. And. also, what it did is it shown a light. on. the vulnerability. Before, it didn't It. wasn't apparent. >> Vulnerability of? >> The United States in being able to. enforce. You know, when there's always the. threat, we'll come in there. Uh the strait is open. We're not dealing with this. And there's always the threat that the. United States will.

uh remain control. And that would be. true in Asia and other places. Now, a. light bulb goes off. In other words, the. like the British in uh the Suez Canal, we didn't realize. Now, we realize. >> That threat no longer work. >> That that power no longer exists. >> I guess we shall see. Ray, thank you so much for uh committing. this season of your life to being more. of a public educator. Because your books here that have been. read by millions millions and millions.

of people and the videos that you. produced that have been watched by tens. and tens hundreds of millions of people. um have been so formative for so many of. us understanding the world in simplified. ways. And what I love about the work. that you do is you explain the world. through principles versus tactics and. strategies which are a little bit more. ephemeral than understanding the. underlying principles. And I think it. does two things. It helps us understand. the world in ways that are allow us to. see past the current short-term moment. that we're in. But it also helps us. think generally um from a more macro. perspective about how all these things.

connect together. And I think that's. broadly applicable. The idea of like. principled thinking is broadly. applicable to all areas of life, whether. it's relationships or your business or. your health whatever it might be. Um. you've really written the definitive. books on this subject matter. I've got. all of them here. Um I mean, Principles is the first one. that I ever read, but then I watched all. of your your videos on your YouTube. channel, which uh explain it in animated. ways. Those are absolutely stunning. videos. They're unbelievably stunning. videos, and I It's funny cuz, you know, I've watched a lot of videos, YouTube. videos in my life, but there's some that. I have just never forgotten.

And your book and your video are about. the book on your YouTube channel, which. I'll link to below, are a video on. YouTube that I've just never forgotten, cuz it suddenly helped me understand the. bigger picture. in a way that I don't think I would have. ever understood otherwise. There's no I. didn't go I didn't go to my history. classes in school. Um I'm never going to. read history books necessarily. So, um. that video you made, but also the book. itself really helped me understand. there's always a bigger picture. And. funnily enough, I go looking for the. bigger picture and the cycles, should I.

say, in all other facets of life and. psychology. Because when you're dealing. with humans, you are dealing with. cycles. That's what what I've I've come. to realize, and you can find them and. spot them everywhere and then prepare. for them accordingly. Thank you for the. wonderful work that you do in this. regard. I'll link all of these books. below. Highly recommend reading them, and they're not for boffins or super. smart people. They're for everybody, and. uh they're written in such a way. So, I. appreciate that. >> you for saying that. I find the videos. are very digestible. One, how the economic machine works it I. think it's. 30 minutes, and it's been watched by 140.

million people. >> Pretty sure. >> And and people get it. So, I think it's. my responsibility to try to communicate. also in a clear, simple, digestible way. So, I like to take a concept that's in a. book and make it into a 30, which is to. try to pass along what might be helpful. to people. So, thank you. >> Thank you for committing your your this. season of your life to that. I really. appreciate it, and so do many millions. of my listeners. So, thank you. YouTube. have this new crazy algorithm where they.

know exactly what video you would like. to watch next based on AI and all of. your viewing behavior. and the algorithm. says that this video is the perfect. video for you. It's different for. everybody looking right now. Check this. video out, I bet you you might love it.