Economic Reset: Ray Dalio's Warning On Money, Power, Chaos, WW3 & The Upcoming Financial Crisis

Tell me about the three forces you see influencing right now. We have banks collapsing. US dollars under attack. Imminent recession. What's going on? How do we step back and think about this moment? I look at three main forces that are happening. Now, um, it hasn't happened in our lifetimes, um, but it has happened many times in history and those three main forces are the creation of a lot of debt and the printing of a lot of

money

to buy that debt because, particularly, because the government It's getting big. deficits and so they don't have enough

money

so that the government has to print that money so that the creation of all that debt and its

financial

implications and its

economic

implications is a force, the second force is internal conflict, the amount of conflict that there are Internally, largely due to the larger wealth gaps we've had since the 1930s, um, and that produces populism from the left and the right, particularly when there are

financial

difficulties.

The third force, um, is the growing

power

, um, that challenges the existing

power

. largely in the form of China and to some extent Russia, so let's call it the great power conflict because in 1945 you know there is a cycle, you have a war and then after a war you have winners and the winners They determine the rules of the game. and then there's this evolution where others become more competitive and then you have conflict again, over who has control, so we have that dynamic taking place, so those three influences, the financial, the internal conflict, the external conflict, uh , influences or having a dominant influence, I learned.

Before that, when I was surprised, it was often by things that had not happened in my life before, but happened in history, for that reason I went back and studied history for the last 500 years in these cycles, there are great cycles that last about 75 years or so, about 50 years and of rises and falls, and I published it because I think it's very important for people to understand that I published it in a book called The Changing World Order and in a free video that calls the changeling world order like that. When we look at each of them, they are important.

I also learned from studying history that there were two other influences that were very big and could be seen. The first were acts of nature, such as droughts, floods and pandemics. Over time, the evolution over time of people's learning and the technologies that they create, so I would say that there are actually five big influences that drive everything and they are money and debt,

economic

influence, conflict internal, external conflict, nature, influence. and let's call it the influence of technology, so as we move forward in this, it's important again. I posted it as a free video on YouTube so people can easily watch it and when we get into whatever we're going to talk about.

It will certainly be in the context of those things and since each affects the other, it produces what I call the great cycle. The animation you published along with your book. The principles for dealing with a changing world order have influenced my thinking. around this moment more than anyone or anything else, it makes it seem so predictable from a historical perspective when you look at that great cycle and see how it repeats itself and, as you went through the last 500 years, one thing you do very clearly in the book is that the rise and fall of empires, the rise and fall of a reserve currency, go in this six cycle trend and the part that I always find disconcerting is that phase six is ​​basically war and collapse, so you have that previously dominant power it loses its position, it loses its status as a reserve currency and it loses it for quite predictable reasons in the three forces that I talked about at the beginning, discounting the fourth Force, which I don't think always happens in every cycle.

You had and correct me if I'm wrong, but you didn't always have a pandemic or anything like that, but the fact that we're living in a time right now where we have all of them and that's why we have them, you know. not only is it a time of massive technological disruption right now, good and bad, but we have money printing, uh, the meme on the internet is moneyprinter, see, Burr, uh, so we have, you know, printing because of covid , we have print uh coming out of print because of the 2008 crash um and now we're again seeing this cycle repeat itself so I heard you say that we're somewhere in Phase Five, which is when the Empire starts to decline as that you have a rising superpower as the debt bubble is getting out of control with that perspective was what happened with the svb bank collapse was something you knew well something like that is coming or was it a surprise to you no , it was, it was obvious um look um if I just want to talk about the mechanics I'm really eager to convey an understanding of the mechanics so that people themselves can do the analysis um so that one man's stats are another man's assets um well , so what happened? the government had to sell a lot of debt and when it sold a lot of debt there were many entities that bought a lot of bonds government bonds um and money was very easy which meant that short term interest rates were very low um and money was almost being given away. because they had interest-only loans and the interest rates were less than one percent and you didn't have to pay the principals to be able to go get money and that created a lot of debt and it created a lot of government bond purchases, so they did it.

What happened to Silicon Valley Bank is what happened to many entities around the world, not just banks, what does a bank do? A bank usually receives deposits or dies in some way and then buys, it can do it through a loan or it could do it by buying a government bond, buying debt and then when interest rates went up, the value of that debt went down. The money they had to give to depositors became more and more expensive and also depositors who wanted them to be competitive looked at money market rates or other rates and withdrew money from the bank because they had better uses.

Well, then, what do you have left? It's a banking problem that's been going on for literally thousands of years and what they do is the depositors, you know, want their money back and they have assets that, in this case, have gone down in value, so they're in bankruptcy, let me leave you. I want to make a fine point on that, sorry before I move on. I don't know if people really understand this. It seems to be a necessary result of fractional reserve banking, which means that if you deposit me ten dollars, I only need to keep and I think this is really accurate, I only need to keep one dollar, so the other nine dollars I can put to work in terms of loans to other people or investments and that puts us in a position where, technically, you gave it.

I am giving a loan to the bank a deposit is not just oh my money is not a vault somewhere I have given a loan to the bank the bank is going to do things without varying degrees of risk in the case of svb they I thought I was doing the least risky thing, which is that I'm buying government debt, the government will back it, the government, especially the US government, can print money if necessary to cover what they did in this case, but if a lot of people go to the bank at the same time, which is known as a bank run and says: I want all my money, the bank goes whoa, whoa, I don't have that money, so I have all these assets and as long as those assets are established.

They remain liquid and I can liquidate them in a timely manner, so as long as people's deposit return requests come in at a reasonable rate, everything is fine, but when a lot of people come in at once and you have the investments that they have dropped from courage now you have exactly a perfect storm. I think you said it very well. You're allowed to be in the business, let's call it 110. In reality, it's less than a tenth of your money, but. Let's call it a tenth, you have a certain amount of money, they give you the deposits, you invest the money within these general guidelines, so for example the government bonds are safe from default, so you buy the government bonds and you think you are earning a differential. and then what happens is the government bonds go down in value at the same time people say, Hey, I want to take my money and put it somewhere else so you don't have enough money and Central Banking works like that, except the government. "You can print the money, so the risk, and when it's a government, it's not that you won't get the money back, like in this particular case, for a bank, its value goes down, so you won't get it back." I'm going to sell it, but you described it very well anyway.

What happens with the economy as a whole is that they print money because they don't want failures, there are a tolerable number of defaults and then a tolerable number is exceeded. of defaults and it just crushes everything and that's why they print the money right and then this with the bank it's not a Silicon Valley bank it's a lending issue it's not a banking issue it's a global issue in terms of the whole world of all kinds of entities Pension funds um um insurance companies um around the world uh there were a lot of purchases of these government bonds that have gone down in value and if you then take it and say what is the value of those? the cost of money is high and that's why the world is under the law of leverage, okay, which means they own things and they borrowed money to own them and their value is going down.

How nightmarish does that scenario become if you have your money locked up in something for? It's been a long time, but its value is declining. It's like a classic moment where we can look at this big cycle and say, oh, we know where it's going, like whether the music stopped everyone or not, it's a little bit harder to judge. I think it's It's pretty easy to judge in the medium or long term, you know, because there is a choice, right, the predominant problem is that you know, okay, the government can come in and print the money and give money to whoever they want. . but when they do that, that usually devalues ​​the money, so if you think about it, if you have a bond, you know you have a claim on the money, um, but the claims are too many, so, one way or another, or it is not.

You are going to recover that money in full or you are going to recover money that is worth less because they print it well. I've never heard anyone say that like that, so let me make sure I understand that the government has effectively issued too many bonds, so people have a lot of businesses and a lot of other things. Okay, very good point, so we're not just buying government bonds, we're buying corporate bonds, municipal bonds, whatever you want. to put some debt on the market, government, of course, in fact, I'm curious, what is the relationship roughly if you know this between corporate debt and government debt?

Well, right now, I couldn't give you the number, you know, exact number. of them above my head but there's um um home that um corporate debt and government debt yeah that's scary so even if you took every dollar that our entire country earns I think it's true globally if you take every dollar we earn worldwide. and you tried to pay the debt, you couldn't do it well, that's true, but you're not expected to pay it off in a year. I sure want to get back to my main point to make this clear if you're holding that back. debt, um, you have something that will make the money come back, uh, let's say if the government can print the money, but if the money is difficult, if it's going to be good money that will come back, it will be difficult for those entities to pay it. because it is a lot relative to their income and cash flows to pay it and that means the risk of default increases, however, if they don't maintain it, it means that the debt will be bad in one way or another, or it is bad because they don't do it. pay, he needs a haircut to get paid for it or because they pay for it with money that's going to be printed to come back, so when you look at that you're um and that problem happens when there's a lot of debt assets and a lot of debt liabilities, so think about it this way, I just want to make this clear when there was a position that interest rates were way below the inflation rate, you're losing purchasing power, there's no good reason to own that, um and there's a change in the psychology because, before there was, I own bonds, bonds go up in value as interest rates go down, so I'm getting price appreciation even though I'm getting, let's say, a low interest rate , but inflation is it's not a problem until it's a problem then when it's a problem because they print a lot of money and they turn it off then inflation goes up and a light bulb goes off that light bulb used to be good how much am I earning?

I don't make much but that's okay, the price of the bond or whatever has gone up and anyway I hold it and it's safe and then people realize it's not safe because I'm losing money due to inflation, So now the Central Bank wants to rectify that imbalance knowing that real interest rates were minus 1.7 percent, meaning that inflation was eroding its purchasing power. Yes, if I look at inflation index bonds as aindicator, or other indicators, I am losing percentage points against inflation by holding that bond. and then when they and people realize that, well, you don't want to do that and then the other side is you want to buy, buy, borrow and buy things because you know money is free, so the Companies borrow and buy things and individuals are bombarded by houses because they only care about loans on houses, I mean, okay, I could buy a house, I can buy an apartment, etc., but that creates the imbalance where it's terrible. to be a lender and a creditor and it is good to be a borrower. and do that so that an imbalance occurs that produces inflation and then when it produces inflation, etc., and then you, you, I, then you say, I don't want to have these things anymore and then and also, um, the Federal Reserve says what better fight inflation, they change things and, therefore, by raising interest rates to levels where they go from minus 1.7 percent on inflation index bonds to plus 1.7 percent and that makes which um and increases short term interest rates, you know, real interest rates a lot. higher than behold all the people who did all those things get hurt okay they borrowed they bought they bought the bonds they bought all those things and all those debt instruments um and also the companies look at the companies that are affected because the yields increased both low technology companies and others.

Those who have a dream. I'm going to say that they don't necessarily have to make a profit, they are selling a dream and the money has to be invested, so you see that whole radical change when they tighten monetary policy, so now you're sitting there in Avalos, like this that when you look at the big picture, you see it as something similar to banking, you have all these financial assets, what is the value of a bank? asset has no intrinsic value its only value is what it can buy, but there are many more financial assets out there, the largest amount of financial assets that has ever existed relative to the value of things to buy, there are too many claims out there, it's like um musical chairs, okay, if everyone says oh, wait a second, let me get my stuff, let me convert my debt assets, you know, I want, I want to get my stuff, I want to get real stuff, um, that's a problem. real, etc.

That is the global panorama of the first of those five influences. The fact that it's happening with the other influences is very important because they affect each other, so this financial picture, by the way, is the same as in the period from 1930 to 1945 and the same. As they were throughout history, you can restart your life, your health, even your career, anything you want, all you need is discipline. I can teach you the tactics I learned while growing a billion-dollar business that will allow you to achieve your goals, whether you want to. Better health Stronger relationships A more successful career All of this is possible with the mindset and business programs at Impact Theory University Join the thousands of students who have already achieved incredible things.

Take advantage now to get a free trial and get started today. Yes, for people who don't. I don't know, that's World War II, it just started with a financial

crisis

that then caused internal conflict. What do we do with the financial

crisis

? Left-wing populism and right-wing populism in this internal struggle and four countries that were democracies chose not to. be democracies because of the conflicts that existed in the survey um and those countries were uh um Germany uh Italy uh Spain and Japan because there are a lot of internal conflicts over wealth and when you have that and that creates a lot of internal disorder There are a lot of fights, somehow , almost Civil Wars form everywhere some form of Civil War, who wins the Eternal War and of course that also happens at the same time there is the external conflict, sir, first of all, everyone is fighting for resources, The populists are coming.

There are no compromises to power and the population, the way democracies work, yes, let's fight, I'm going to fight for you, that is, don't worry, I'm not in the middle, I'm not going to make concessions and you have to choose a side and then the moderates um there is no place for moderates you have to choose a side and the sides are um let's say internally in the country the left and the right and externally you know um I don't know the Americans or the Chinese or the Americans are fine and you have to pick a side and fight and that becomes the dynamic that these periods of time are and these periods of time have generally lasted between 10 and 15 years and you and they have various symptoms, like that in the book.

I write, yes, there is like a disease like cancer. You see stage one, two, three, four, if you have these things, you can look at them and diagnose them, and you see it go from stage one to two, three, four, five and to six you can see that that is happening and every time you you approach a bad set of circumstances, bad financial circumstances and bad fights over things, yeah, this is where this gets really awesome, so you've talked a lot about this idea that there are things that you even mentioned at the beginning of this episode, there's things that haven't happened in our lifetime, but happen over and over again, so it's very easy for me, as someone born in the '70s, to think, "This isn't war." What happens in the US is something that happens in other places, populism is not something that happens in the US, it is something that happens in other places, but it happens, we are seeing that it is increasing right now because to that.

I heard you once. I say and I think this is really important for people to understand internal conflict. In fact, you and I met in Dubai and I was saying you know Ray, given everything that's going on, how do I think? How do I think? where to live whatever and you said Tom the only thing that matters is how people are with each other and for some reason I really realized what you meant by that and I understood the importance of this conflict and what I heard you say earlier is that in the French Revolution it was the moderates who got the guillotine, it's like you're forced because I consider myself very centrist by nature and you find yourself as things escalate being forced to take a side, which the French Revolution did to me dude.

It was like, ah, no, that's not how I'd like to end up as a moderate, um, real quick, going back to this is a global moment, it's a predictable part of the process, at stage five the debt is too much, the interest rates now they are rising to prevent inflation from escaping we print money like crazy you have the increase in conflict is when we print money when the FED printed money to support uh what seemed like it was going to be a potential contagion of svb obviously I think There were five banks that ended going bankrupt Is this already contained or is this what the FED did just to prevent something that is inevitable?

The dominoes are starting to fall. I mean, okay, you know, you know what the next dominoes are and you can. Imagine the other Anonymous, so for example they are not going to buy the debt and many of them are not the ones who bought the debt and they have too much debt and debt losses. Government debt is not going to buy that, buy more of that debt, for example, and therefore, when the government sells more debt, there will not be an adequate number of buyers for that debt, you know those who are suffering because they have those losses won.

We don't make loans and a lot of those loans were for real estate, particularly commercial real estate, and you know for various reasons, in commercial real estate, we don't use it in the same way, etc. If you're going to have problems in commercial real estate, you know that this amount of money was also financing venture capital and private equity entities that also have cash flow problems, so you know that financing is not going to be there in the same way . So, you know that as a result of these things, various entities will reduce costs and in various ways, and depending on that, the job market is changing and you know you see it, for example, in technology jobs and others.

If you are in some of those areas that are being restricted and you see the same thing generally, you know it happens internationally, then you can also see that if you say what is the value of the assets that are held, that value has gone down a lot and because it was bought with leverage as you described, because it is generated with leverage, there are serious losses in different places and then the question is what are you going to do with those losses in most cases, quite often they are um, you know , don't mark them in the market, I mean, don't account for them and recognize those losses, that is, hide those losses and hope that over time they will recover, you know that they will.

It will be fine, but that will produce a pressure that will produce a problem, so I think we know those things, we know those things and that is happening at the same time that we have an internal conflict, like the presidential election. We're going to get to the presidential elections and it's not just presidential elections, of course, it's various senators, congressmen and so on, who are fighting each other over this and who are going to fight each other, okay? fight to win um probably don't respect the rules as much um and fight to win for your side and that's happening at the same time that we have the situation with China, the most important thing is China and Russia in terms of the problems in terms of their things. to fight, you know, for example, there will even be elections in Taiwan that will also have a big influence on this whole thing, so you know, we know that I think we are going to have financial problems and economic problems, at the same time we have this internal struggle and this external risk situation, you're at a stage in your life where you really want to help people understand the mechanisms of how to think about these things from a framework perspective so that we can apply it, you know, God forbid in the post-Ray Dalio era, um, let me explain how I'm thinking right now, the questions I'm asking myself, and then if you don't mind, help me correct the approach. which I'm taking this, so every time we get to a point where there's actually um, we're at what I see is the end of stage five.

I don't know if you would agree with that, so this is where just again to reiterate, so we're over our debt problems, uh, the FED is going to try to print their way out of this, all it does is create inflation, They try to break the back of inflation with high interest rates, but many people ran out of money. they went into debt in the good times with variable interest rates or they bought a bond that they bought long term, where it devalues, uh, based on what happens to the interest rate, so that as interest rates they go up, people just can't do it. their interest rate payments or the debt that they had goes down in value, then you have this moment where a lot of people are about to lose money and a lot of people are going to be very uncomfortable and you have the The political divide that continues to escalate in Escalade we saw The last election cycle here in the US, where people stormed the capital, was a very disconcerting time and now it's like things aren't as bad then as they are now. 2024 election, so I'm starting to think, what's the safe move?

The way I think about the world or start to think: Do I become a more globally mobile citizen? Is there something I should be thinking about? I have a lot of my cash and then one thing we did. Let's not talk about what we should probably mention. He mentioned the word hard money and so hard money. I'll give the definition to my laymen and then if any of this is inaccurate let me know, but hard money is something that has intrinsic value, so, gold. Precious metals become something I'm starting to think about more seriously now. I'm what I'll call a digital native, so I think Bitcoin is something on my radar.

I know you may not be a fan, but that's how I am anyway. I'm thinking about the world I'm trying to be in cash I'm not trying to be in anything for long I have Ray Dalio I don't have leverage I don't play with leverage even when the money was free I would Basically, I didn't take advantage of any leverage because that's what The only thing that scares me, so security, security, security is what I think about things now. I don't know exactly how to diversify well, but that becomes another part of my look. In this, you have the all-weather strategy that I know you've tried to articulate for people, so safety first.

If I had to summarize my position, everything you said is beautiful and very similar to the way I think and I'm going to add a couple of things, but when we think about security, we have to think of that as purchasing power because a lot of people think that if I put my money in a treasury bill I obtain security. Those look at whether that gives you a return that compensates for inflation, so I just wanted to modify what you said, it's a very important adjustment and now you're getting to the point where I feel uneducated, so how can we think about that before going there? say um and also here's the other advice and maybe we're all wrong maybe there's nothing wrong.what to worry about um okay so how do I deal with that?

I like what this guy Dalio is saying that he is very crazy and you know. who knows if he's right or wrong and you know he's been wrong in the past and who knows if he's right and I'm right and at the same time so right that's exactly what you said, that's the way I see it, but you said and if I was going to paint the world I painted the world the way I did, okay and I have those questions and then beyond that I say, um, you as an individual should think about Total Security, including maybe that terrible scenario does not happen.

Okay, that's what I'd like you to do. Do that is what I would like you to do and if you do that you will come to a better balanced, better balanced position. I want you to achieve a balance. Alright. I want you to do certain things. I want you to have enough savings. Whatever you know. that it is okay to have security to build the first level of I think investing in investing which is the same as saving that comes in tears level one level two level two three at risk and the first level is if everything goes wrong I am fine and everything could be inflation, depression, whatever, whatever it is, I lose my job, I, I, you know whatever, I have that thing covered, so your next level is fine, what am I going to get the highest returns?

What is my best bet? Okay, but start at that level. and then you said the other thing too, that it's not just about the investment, it's about where I am. I'm in the middle of a fight like I don't want to be in the middle of a fight. Okay, how will it be? it has geographic implications you know I don't know maybe it's the state or the state you go to or the city you go to or the country you go to or whatever you know like um and there are certain things you can do to saying this is going to be better than that um, let me give you an example that there are three things you could do based on these three influences.

Are you going to be in a place and surrounded by people and circumstances that are financially sound? In other words, the income is better, meaning they earn more than they spend and they have a good balance sheet because that means stability, if you can get through that and you have stability, places that are like that are better off at number two. They have internal conflicts at Country Place and, you know, is it a hospitable environment for me? Okay, that's the second one and then the third one. Are they at risk of an international war? No, um, you know I don't want to be safe and stable, etc., so this is a time to look for those things, yeah, okay, although it's deeply disconcerting, I think it's incredibly important to think through, let's talk about diversification and do it good. you talk about uncorrelated assets and I don't know how much you talk about this publicly, but I would love to understand that it seemed appropriate for people who don't know your background.

You've got a meteoric rise you're on. Your 30 years on top of the world, incredible success, you make a big bet on something that coincided with your previous point, you have the humility to know that you could be wrong, you made a big bet on collapse, um, and it didn't work out and term. that the market went up and you lost a lot of money, uh, you almost lost. Bridgewater managed to keep it together, you came up with a new strategy that I think is known as pure Alpha, uh, it ends up being tested several times in the market and you guys, you fall in love when other people struggle, which leads to them being for people who They don't know the biggest hedge fund that we make money with and 28 of the last 32 years we never had a really bad year, you know, that did, I think.

It was uh during my time there, I ran it um 11.8 percent a year without the worst year being, I think it was down, I don't know 10 or 12 types of things and that and the next year with a drop value like a one per hundred. and um um and we did that by simultaneously looking for opportunities and assets with good returns that were not correlated with the diversification of the good, you know, and just as you point out, what happened was um and by the way, those returns are not correlated with stocks. . market or whatever, so they were a fan of the stock market, the bond market are not correlated, so they were a fact effective diversifiers in portfolios that almost all go up and down together and this would be diversification, so which was loved by investors, institutional investors, etc. the thing and as you point out what I learned from uh you know, basically this punch in the face mistake okay, this painful mistake um is that I learned how to make a lot of money without taking a big loss.

I knew that I learned how to improve my return relative to my risk and I learned that the Holy Grail of investing is 10 or 15 good uncorrelated return streams, like, okay, you get it and you'll have it. I don't know, you will have a similar path to the one I have been lucky enough to have and that's it. What I want to convey to the people you know, like uh, you go into the Cove video, the year we lost, I don't know, it's from the 10th to the 13th or something like that, but it was in 2022 because the coven showed up.

He had no greed. in our system we had other things that that's how everything was and um and then um, there's uh, you know, something shows up all the time for anything, there everything has its time, so you put your money on anything that you know you can think of. . oh, okay, movie theaters are good and then they covet you or cruise lines are good and then you get covid and you know, oh, whatever it is, it's good, well, sometimes it's good, but there's always something that will always ruin things, so you don't want, in my opinion, you don't want more than 10 percent of your money on anything and you want to know that you probably don't want more than seven and a half percent of your money on anything and they They want to be good and different things and that's the message I'm trying to convey right now.

One of the things that has me most nervous is the attack on the dollar, so you have the BRICS nations, for people who haven't heard that. acronym before Brazil, Russia, India, China and South Africa, they are meeting and I know this has been going on for quite some time, so I don't know if I should be too paranoid about that right now or not, but back to those indicators that they point to a trans position from phase five to phase six. Do you think there's anything we can prepare for as we look at the big cycle, as we look at this particular moment with the assault on the dollar?

Is there something in the great cycle? cycle that can educate us on how to deal with this moment simply happens over and over again, the fall of sterling as a reserve currency and before that the fall of the Dutch Guild or as a reserve currency all happen for the same reasons. First of all, they are holding all these dollars and the things we talked about are happening and then there is also the militarization through sanctions of the dollar, in other words, the United States. The best weapon that the United States can use, as opposed to its military weapon, is its sanctions, so sanctions mean that other assets are frozen, assets are frozen, those assets are bonds and, um, that happened with Russia and There are threats of it with other countries, China and so on and there is a kind of thinking, well, if I have the bonds, could that happen to me? and then why am I transacting in this other third currency instead of transacting directly, for example, United States, share in the world?

Trade has decreased and China's share of world trade has grown to become larger and so if two countries are trading, let's say Saudi Arabia is trading a vagina, why do they buy, why do they turn to dollars to to do that? You know, there's no good reason to turn to dollars and you know they don't know that, so they're worried about holding onto the dollars because they could be sanctioned, so you see more of those transactions being done in other currencies and then the usefulness of the dollar as a store of wealth changes. It's like thinking about it in the most fundamental way.

Everyone wants a medium of exchange and a store of wealth. In other words, if everyone uses the dollar and World Trade, then. you want to save in dollars because you say, well, that's what I spend on and I and I save in dollars, but over time, as the share of World Trade decreases, why don't they be denominated in who, like China, traditionally the countries that have the world reserve currency have the largest share of world trade and the largest share of global capital flows and because the United States has declined and there is also concern that the keep due to sanctions.

I mean, imagine how the Chinese must feel having a large amount of money in treasury bonds. You know, I would be worried if they treated me like they would treat Russia. It's not something I would like to have. As you already know, it is a safe asset. and what other countries might feel that they can be sanctioned and for all those reasons, they are less inclined to maintain and when we call dollars, what we are really calling is dollar debt because it is not maintained, it is maintained. debt in dollars and that is an advantage, what is a debt?

It is a promise to actually receive currency. Okay, now getting out of those things and transacting in other currencies seems to be the safest thing for those countries and that's the dynamic that's taking place. So it's not an attack on the dollar, it's like it doesn't want to hold on to those things and, very similar to the pound sterling, you know, what happened is that the British had the war and were the most powerful empire of all time. in the world and then World War II and they came out of World War II uh financially in debt, a lot of debt and who had who had the debt, all these countries had the debt because that was the residue of that, but they had a problem.

They had a debt problem and they needed to print more money because it was too tight and then it deteriorated and then, you know, they said please hug my dad, please hug my dad, they went to Commonwealth countries. part of those that were in the old British Empire and then you had the Suez Canal incident where, um, there's some kind of war and everyone realizes, well, wait a second, that the British Empire is not the British Empire and they're deep in debt and then they say I don't want to be in that debt and there went the sterling that's how the mechanics work so looking at the US and um I don't want to be cheeky and say talk directly to uh, you already know. the US government, but if it were so bold, if this is that predictable moment where okay, there are actions that we can take as a country that will help us maintain global reserve currency status and there are actions that we can take. that will make us lose that status more quickly it seems that it is okay eh, you have the BRICS Nations that are moving away from the dollar it seems that that card has already been played I don't know if you think there is anything we can do to make it easier, but certainly speaking of print, one thing that I heard recently and this is a really fascinating concept is that when there are other nations that have their currency and they have debt like you said uh, they're not like hoarding cash, but they have a lot of debt.

If we print money, what we are essentially doing is externalizing inflation, so we are causing a devaluation of that debt for all the countries that owe us. Now we're in a time with rising interest rates that makes us need to print, uh, but creating this really strange and difficult time where as we print, we have the need to increase interest rates, but the reason why the one we have to print is because We are raising interest rates, so it's a very difficult time, but if we could go back to your idea, this is how we are with each other, if we could get people to come together in the middle, it would be one of the things we would like to do. convincing the US government to be very cautious about devaluing the dollar is that an important idea is more basic than that and is simpler, but also more difficult, the reason cycles exist is that The next stage has been determined. because of what already happened in the previous stage, so hmm, we are in a lot of debt, you can't change that we have a lot of debt and if you say what could you do, I mean, two things come to mind: what could you do.

You might be financially strong and you can't use financial sanctions as a weapon to scare the holders of those bonds, but to be financially strong requires that you not spend more than you earn, that means you have to cut your expenses or increase your profits, OK? Okay, that's not easy, okay, so let's cut our spending, um, uh, okay, now look at it, what are you going to do? Infrastructure programs, I don't know, poverty transfers, defense spending, okay, what are we going to cut? um, the governments of the world have the same basic economy as people, except for the fact that they can take money from one person and give it to another and they can print money, that's it, and when you look at this, um, okay, you have that gap. you can eliminate the gap by taking money from some and eliminating others and not spending much.

Okay, that's not easy. OK OK. What are you going to do? Most governments now don't think about how much money I have to spend and then how I do it. They prioritize that they think I need to spend on this I need to spend on that andI need to spend on that and they spend on it and then they produce it, they produce a deficit and then you have to pay it back with hard money or printed money and that's the situation, so when you say what could we do well, you have to strengthen yourself financially in an environment politically fragmented in which everyone wants more and you and you know, to be a higher percentage of World Trade. so that everyone wants to use their currency and um, um and not threaten the holders of those bonds with freezing their assets, it's uhIt's a difficult task right now.

It has become very clear to me in the last month since you and I saw each other. The important thing is that the reason you keep coming back to this comes down to how people treat each other. Right now, I don't want to be a Debbie Downer, but I feel like the die is a bit cast. I don't see how we can get off the cliff because, to your point about being fiscally responsible like us. We would have to get to a position where we are earning more than we are spending. I want to turn around something while you were talking, you mentioned infrastructure and it made me think about what things we would need to do right, so I think. everyone is aware and I have heard you say that it will be necessary to make changes in capitalism to recover a prosperous middle class and the importance of the prosperous middle class and you have defined the things that I know again staying with the theme of principles here of the three things we must do to be strong as a country or for any country to be strong and you said two parents in the home, excellent public education and then equal opportunity where Where do you see us in those?

Are we moving in the right direction, moving in the wrong direction? Well, again, you know, maybe I aspired too much to have two parents in the home. It is certainly better if you have two loving parents raising a family. well, but maybe that's too much to ask for, um, but in other words, good parental guidance, you know, okay, you were raised well, you were educated well, you can go to a public school that educates you well and you have good guidance , so well raised in a healthy environment and not only do they learn skills and all that, but they also learn to behave well with each other so that they learn civility and um and um so that they come out capable and civilized um of a land. of opportunities where you can know how to work and have a good environment um and really that's all you need if a society does that well um and I think you know where we are you know the things that are happening you know um education in a lot of education. public is um it's deteriorating it's a real problem um my wife works to help um the poorest school districts the poorest people uh in the state of Connecticut um and uh the state of Connecticut as normally it's always one two or three in In terms of the highest per capita income, the truth is that achieving your professional goals is not easy.

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Alright, my friend, let's go back to today's episode and the state of Connecticut from the past. survey, 22 percent of high school students have dropped out of high school or have absenteeism rates above 25 in our failed classes. So living in the population, they live in areas that don't have the things that I'm talking about parental nutrition and so on um and there aren't adequate resources for them, for example during covid um, we found out that sixty thousand students don't they had computers or connectivity to take classes and the government was not We're going to provide it so philanthropically that we bought 60,000 computers and we give them to the kids in one, but we can't, you know, we can't do that, so our society is , when you look at this, you see drugs, drug problems. um you see how cities are changing um you know the cleanliness of the cities the education levels of the cities mental illnesses um crimes and so on um you're not seeing you know you're seeing people fighting a lot with each other um not all the time are wonderful places in the America, you know education, some of the best universities, their pocketbooks, some of them you know their neighborhoods, but there's an invasion, so you see the infrastructure crumbling, school shootings, you know, okay, so decide how We do it um I think we're doing it pretty bad um I don't know I mean look it's not going to be popular but I think going back to what you said about parents and maybe asking for two people is too much I get it , I think everyone is doing the best they can and God knows any single parent has my love and respect, that seems like a tough job when there are two let alone one, so I.

No, I'm not throwing shade, but in terms of cultural impulse when I look at people, no, they don't get married before having children, but incentives that end up driving people to places where it's actually more economically advantageous to have a child when Single, uh, doesn't seem like a great idea to me, uh, and to try to reverse that trend, I think is going to be really important, to really put a lot of time and energy into making sure that we look at ourselves on a global stage. from an educational standpoint and understanding that we're competing against, I mean, just to make it really Stark, we're competing against China.

Now I have employees who grew up in China, in fact I have some contractors who are in China currently and when I see the discrepancy between the demands that the education system places on them when they are young and the demands that we place on our students when they are young creates a ripple effect as they enter the workforce in terms of the expectations they have. They have within themselves the drive, the desire to excel, so things seem really problematic to me. I'd love to talk to you about Singapore, since we're talking and I haven't studied Singapore very closely, but when I think about Um, you know how they've created something that seems really amazing recently that came out of nowhere, are those three principles? more than you know earn more than you spend be well educated to help you earn more juice and then be civil with each other be productive you know, when you date equal opportunities and it's not just like in Singapore, but it's true that in other countries there is a level below which no one should go, certainly children should not do well, how can you have an environment in which there are children?

So there should be housing and healthcare basics, certain basics because otherwise you build a cycle, you know? when they become when children become adults you might say oh it's up to them to do it, but if you screw up children early they become adults who can't do it then you have the cycle you know where you have to do it. take care of the people you know, you walk around and you look at it, you can see the gaps, the opportunity gaps, you can see the mental illness gaps, you know, you walk down the street and you know downtown Manhattan or a lot of places and you see the gaps, okay and some. that adult that's screaming uh you know and homeless and whatever that came from a place a reason that you know that's what made them that way and um, you know, so it's like, you know, why don't they know? you give the computer to the child who doesn't I don't have a computer so we can learn, think about how difficult it is for the child who doesn't have learning and has a parent and that parent may be in poverty and may have drug problems and all that, I mean the kid can't attend, so the kid will become an adult, okay, what kind of adult is he?

It's going to be a problem, so I know a lot of people are going to say, "Okay, we'll raise taxes." money for all that um, that doesn't seem to be how things work, but I'm open to being wrong about that, there's a book coming out that I'm really interested in reading called taxes have consequences that I don't think people think about. There's a lot to it, but I could very well be wrong, so if we look at someone like Singapore, do they just have really high tax rates and distribute them in a way that makes sense?

What they did was, um, they needed savings, they need it. requires savings an employee um I think I think it works like this um the employee gives um 12 of their income an employer gives 22 percent 10 percent of the income so they saved um um something like 22 percent of their income is in Savings are fine, they do others. Things also have a fiscal balance but they have savings and as a society they earn more than they spend. Well, then, in terms of housing, for example, they have public housing that is subsidized and the person can take the savings from it. uh with the use to buy that public housing, that's a savings through that savings, so everyone has good housing, good public housing, and they own it, so if it goes up in value, they can sell it and therefore , they have it, so does the housing. it creates a good environment, they invest a lot of money in education, equal education, they are not people there, they don't have to go to a private school to get a good education, they have good education and then they have people who work. hard and they are civil to each other and that's how it works and you forget about Singapore if you look through history these are basic fundamental things so wherever they have happened in history they have worked and you can go back through the whole the story, if you know these basics, you earn more than you, even though it's been, you know, be well educated, be civilized, be productive, you know those kinds of things that, those fundamentals work, what is it about the human personality that does That it's so common for people to not implement those things is very interesting to me because I found that when people get richer, societies get richer, they usually go into more debt, which seems the other way around, so For example, I saw it the first time.

It happened when the United States started borrowing money from China, the United States had income that was 40 per capita income 40 times that of China and they are borrowing money from China so I wonder how that actually happens and there is um when you don't You don't have a lot of money and you're at a stage in life where you know you value the money you want to save, so there's a psychological thing: you don't have a lot of money, you get some money, you want to save it and save. means you have to lend it to someone, then what happens is, ironically, when everyone makes more money and it's easy to borrow, people go into debt and society goes into debt or the government goes into debt and also then very big gaps become of wealth and people are basically interested in taking care of their own, so you never have to fight over taxes or anything, so you have a society that goes into debt, just think about the cycle of the political system that people pay if you are um, a new politician and you run a state or you run, let's say, a state and it's before the elections, it's in your best interest to borrow and spend because no one pays attention to the loans where the money comes from, they pay attention to the expense, so give them those things, you know, a ghost band, give them things, have a party, it's like having a debt party and there's the myopia, it's like, you know, raising children, they call it the marshmallow test , you know, uh, you know, you ask an early child.

Uh, at a young age, I can give you one marshmallow now or I can give you two marshmallows in 15 minutes, which would you prefer? And, okay, the smart one says, I can delay my gratification for 15 minutes and get to the marshmallows, we have plenty. of society that wants the brand now, so is it fun to take their money and spend it on better infrastructure? or let's take the educational system, the educational system under the Constitution is a state decision, so it is not federal, it is not primarily federal money. then you get to the state and it's primarily a tax district, if you're in this neighborhood through property taxes and such, you're going to get the money to educate your kids in that tax district, so naturally the richer tax districts they'll have better money and So I'm in Greenwich Connecticut and the last numbers I looked at, I'm sure they're higher than this now, but not long ago, in Greenwich Connecticut, it was twenty-four thousand dollars per student in um uh.

Bridgeport Connecticut, which is like 10 minutes down the road, costs fourteen thousand dollars per student and they need more money because they're poor, so if you take it's not just education, how do you dress the child? How do you feed the child? Boy, how do you give them the computer that doesn't come through school and all that? They need more, not less budget, so those are the mechanisms first, you have to go to the bipartisan ship, like if I were president, I would have a bipartisan cabinet and then if I was dealing with economic problems, I would get smart people from the rightand smart people on the left who would like to make this work and would put them in a kind of Manhattan project in other words put them in six months in which they have to agree on a system that will work, bring them together and force them to be okay and come out with that and have them gain control over the extremists who are going to fight like me.

I don't really care exactly how it works as long as you know if smart people on both sides can come together and make it work and then you go back to these basics, you know well, how do you spend more, make more money than you spend? Do you educate your children well, whether you know and deal with those project problems that way, together, you will get the best result, if you don't, you will not get the best result, yes, I think this is really brilliant and for the people who have done it. You hadn't heard me talk about our company culture before, it's very much in line with this and these are things that I learned from reading the principles in your book, so when I read the principles it really changed my life, uh, it was before that you and I had I did an interview because what I liked about the book is exactly what you're talking about right now: this idea of ​​a bipartisan cabinet, so in my own company I'm not looking for people who agree with me, I'm looking for people who challenge my ideas I'm looking for disconfirming evidence I want to attract the smartest people I can attract to what we're doing and say, "Okay, we need to disagree with each other so we can identify the right answer to your question." previous question".

You're going to be wrong so often that if you do something thinking that I'm infallible, that I'll have all the right answers, you're just headed for disaster, so my question is how can we create a situation where people may not agree? okay, well, what is that structure? I think it starts with worry. I have a director. If you worry, you don't have to worry and if you don't worry, you should worry, because if you worry, you will drink. Take care of the things that worry you in the best way possible, if you don't worry and jump headlong into these things you will have a real problem, so I think you have to have people first.

Realize what that picture looks like if we don't do these things if we don't do it if we don't have bipartisanship if we don't solve these problems together if we fight you know you have to see the clarity of those two paths and make people choose the good path, you know, okay, we'll figure this out intelligently to do the best we can, challengingly and together, okay, start there, it's not a structure, where does the structure come from? It comes from the people, that's fine, and it comes. Since people have a need to create structure in a way of being, then how do we get people to care?

Well, what maybe we are doing? I mean, I think they have to worry on two levels first. Many of us care that uh vote for it or you know we use our vote and each other's vote to say let's vote together and compromise and have smart people do these kinds of things um or and that's caring about society as a whole and then worry as an individual if they don't do those things, how do I take care of myself? Those are the two types of concerns or two types of impacts that you can have, so I think they need to think about both for people who are not familiar with Lincoln. um, how much have you researched it?

Your idea of ​​a Team of Rivals sounds very similar to what you're saying about having a bipartisan cabinet. Is this someone you've looked at or do I know a little about Lincoln? I wouldn't call myself an expert and I know that about him and yeah, and I think that's really cool, so when, whether it's in Bridgewater or somewhere else, how do you facilitate people who disagree? Well, because let's say you have an intern. against your investment director, for example, how would you do it? Would you take that person seriously? He has little to no experience. How do you set it up so you don't waste time but at the same time get the best ideas first and foremost?

Explain it to people and you will understand how important thoughtful disagreement is, so you eliminate it, you minimize it so that it is not something that people see as a fight and get upset about it. You have to change the attitude about this agreement so that you know if you disagree, um and then one of you is probably wrong, how do you know that the wrong person is not you? And then they also have to resolve the disagreement somehow, so first they have to take into account what they know. an understanding and intellectualization of that so that you don't get carried away emotionally and think because I don't agree, that's equivalent to a fight, okay, so you have to change that psychology and then once you do that, you have to have protocols in place. to do it. that now you know uh in my book you know uh principles life at work at work part of the principles I have outlined those things those techniques that can be done um repeatedly um so you have to have a system for that and you know and so Let me give you very simple examples of that, if you and I don't agree and we want to try to get to the truth, what you can do is mutually agree on a mediator, so, okay, you could go out. of your argument and say, okay, this isn't working, how should we resolve this disagreement?

Maybe we mutually agree on a mediator, as if we both agree that this person knows something we can trust and do. Okay, so that's a good step. While you're doing it, you can also say, are you taking the other person's thinking into account and responding to that or are you just blocking and are there techniques you can do to show that you've taken it in? uh like repeating the other person's point and so on and then responding to the other person's point and then doing certain things like not interrupting or in other words I have a rule, I call it the two minute rule, someone says okay, can you give me both? minute rule, that means that for the next two minutes I can talk uninterrupted, so there are techniques that you can use to first understand that it's not a big fight, that there are protocols, okay, so how do you do that in a hierarchy?

Okay, there are different ways you can do it. Do it in a hierarchy, but anyway there are a lot of them and you know we're not going to have time to go over them, but they are described in my book, the principles of life and work, they are in the work. Principles are part of this, yes, that's something we find really effective here, meaning Rules of Engagement is how we refer to it, whether it's the two-minute rule or something else, but ultimately, doing so that people understand, I say it in the context. from someone who is trying to figure out how we got there.

We know that the great cycle has a high degree of predictability and I am willing to accept that perhaps the United States cannot remain the reserve currency forever, perhaps we will not be. is going to be the dominant world superpower forever, but I want to handle that transition as best as possible and usually phases five to six end with literal bloodshed and things have to get very painful before people can correct course and therefore try to give people a chance. framework I know you're saying maybe I'm looking at the structure too much, but I think in the framework, so what is that rubric that people can come in, if it's the 2024 election, uh, if I think right now we are?

I'm still stuck on the budget or the debt ceiling, whatever, giving people ways to navigate through this well, so my thing is it all starts with the goal, so what's your goal and even get any group to agree on what the goal is now? Once we know what the goal is, we can start to say, "Okay, what people or ideas are most likely to get us there." They first have to agree on how they want to be with each other before there is a structure. I mean, I can, we can have a structure, I can create a structure and we can do all kinds of things, we can have a bipartisan cabinet, we can have the um, uh, the um.

Go out for six months and do the project and we can do everything. There are a lot of things we can do, but first you have to change the mindset from "I want to win at all costs" to wanting that, so all I'm saying is. when you say I want structure and I'm a structured guy, I want structure and I'm also a structure guide, but it takes people who want something and then what's the goal? Like you say, the goal you start with the goal Okay. , we are not going to fight among ourselves in a dysfunctional way.

Okay, we'll work together to overcome our differences. We will be good to each other. Okay, if you put those things out there and then you judge them and kind of then say how are we going to do that, okay, so you do it for fun or some structure or whatever you know, bipartisan cabinet, blah, blah, blah. , blah, all those other things, then you can get to it, but you have to do it if you're in a I'll fight at all costs way nothing, the structure of the Constitution is not going to work. I'll give you my hypothesis on the only way to achieve this and you'll let me know if you see another option.

God knows, I hope there is one. uh, I've thought a lot about how to convince people to do something that's more advantageous. I usually think about that for them, so what is most advantageous for them and ultimately it comes down to having a leader or a group of people that you are trying to gain the respect of and by earning their respect. you do the right thing, so I'll summarize it on a national level: we would need a leader who can really bring the two sides together, someone who has a very clear Vision, you've winced for anyone listening to this.

Ray Delia just grimaced hard, so Grimace explained Ray. It's like wishing for the Tooth Fairy or something. I mean, it's like you don't go to this root. Why don't you have that leader? Yes, okay, if you look at history, this is one of the great challenges of a democracy and when it comes to everyone fighting for their own cause with populism Pat um, they know it and then You know Mussolini comes to power to make the trains run on time because it's mismanaged and so on, then someone says give me the dictator, give me the dictator and then I'll do it and I want that dictator, so that's where we're at, um okay, how?

Do you understand that leader well and more and more I'm just dealing with the mechanics so I'm so how do you get the leader and what do you do with the opposition? Well, it's almost like, well, you have this fight of sorts and you agree to lose and then the opposition stays and undermines everything you're trying to do, so it's almost like the mafia rules, that's why dictators come to power, okay, that's just history and all of that is understandable if not. desirable, it's still understandable that that's the mechanics, so wishing and saying "okay", we need a strong leader who is in control and makes everything go well sounds a little like wishing the Tooth Fairy that this is how dictators get to the top. power, that's very It's very much the scenario that I would like to categorically avoid, so do you see that just like that is inevitable because right now, to your own point, we are not being good to each other from what I can see there?

There is certainly a broadcast signal and maybe this is a social media distortion, but I don't think so, certainly not, given the recent election, there is a broadcast of a signal of mass division, in a time of mass division, there are people fighting at a time when there are people fighting. a winner takes all scenario, that is the path to dictatorship, so while my path may be to wish the Tooth Fairy wants someone who is inspiring and can bring people together, I will ask you clearly: do you see it as inevitable that we are heading towards dictatorship?

When you say "have a leader that way" you are not dealing with the mechanistic determinants to say how a society that is dividing and operating in the way I describe can be made to have a leader to lead and people to follow the problem, are you? OK? You're skipping that, you can't skip that, do you see a way? Other than because the natural way this plays out, the only path I can see is what I'm talking about if you care about the alternative, okay? and I'm fine, if you're worried, see what it is, you shouldn't have it.

If the more people care about it, the more likely you are to not have it, in other words, if you want to tip the odds on all the different ones. ways I don't know how to take out the ads have conversations like this do whatever and say I'm worried about what's going to happen so we shouldn't have that and we really should have this other alternative I really want to accept that other alternative and you have someone arguing for it that other alternative like: will you follow me? and I'll tell you, I'll tell you, um, the Prime Mario draghi in Italy, let me tell you very quickly the story of Mario draghi in Italy.

Mario Draghi used to be the head of the European Central Bank, which was like being head of the Federal Reserve for several years and he and I got to know each other because he completed that and is very respected. He is Italian, an Italian has um Italy.It has a crazy anarchy as if they had an average of one prime minister a year and so chaotic and so bad that all the political parties got together and said: we will be united under Mario Draghi, we will let him lead, we will hand it over to him. Well, he's dead.

I will do it only as long as all the political parties remain united because if they do not remain united we are going to enter into this dysfunctional fight and I know that it is not going to work for a period of 18 months. He was prime minister of Italy and very dear people loved him and then one of the political parties quit because they didn't agree with his approach because I think it was the handling of Ukraine and said, "Okay, now I'm going to resign." although everyone overwhelmingly wanted him to stay, but he said, "I can't govern in that kind of fragmented environment" and, in other words, he knew where he was going to go, so he resigned and in the period between his resignation and actually hand it over to the new prime minister um we had lunch and um and we were talking about these things and what he was describing and what exists is the problem that we are talking about the inability of a leader to be able to lead when there is so much fragmentation and if you look at history of democracies, um, and you go back to Plato, to Plato's Republic, he wrote Plato, you know, a lot of people think that Americans invented democracy, it existed a long time ago, you know, in Roman and Greek times. times and all that um and then he looked at the cycles and what he said was that there is a cycle of these different systems, one leads to another like this, where what happens is the biggest risk of democracy is an anarchy because the fragments they become uncontrolled.

Everyone has their interests, they fight and they tear things apart and then what happens after that is you get the dictator and ideally you get the benevolent dictator, in other words, the one who really knows how to make good things happen and he cares. about the country, he doesn't care about his personal wealth and that kind of thing and that, and they create that and it's okay to create the order that arises from that and then in that cycle, after a period of time, it inevitably appears the incompetent or selfish dictator. and then you have a revolution and then you move to a democracy and so on and these things go in cycles and when you ask the question you know the leader you know you're saying okay, let's create a leader and um and and make them lead, you can't ignore the fragmentation and the inability to lead in that set of circumstances.

I agree with that, but if even in your own example, what you had in Mario is someone who is able to earn the respect of all the different factions now I understand that he eventually broke up, but he is the Tooth Fairy that I'm talking. You need someone that people can rally around, but it didn't work because people behaved around each other and it won't. works well, yeah, okay, so if we know that people are not going to stay together for a long time, what you're saying is that the time that people can stay together is the time that you can have that kind of peace and prosperity. and the second in which, how long does that duration last here?

Let me, let's see the situation. I mean, it doesn't exist, much less has a duration. Yes, Ray, you say very worrying things in a very calm way, which I think is probably the only way to say it. They, um, okay, so I step back and say, okay, cycles are cycles. You said something earlier that I think is really important and I want to re-emphasize that what's happening now is a determination of something that happened before and so, to some extent, you're in a better position to deal well with the way things are. things, reality. I've heard you talk a lot about reality being what reality is, you need to be awake, you need to pay attention to it. that reality and then you need to base your action plan based on the truth of that circumstance to do so, although one thing that I think is incredibly important is that people have to be able to strip their emotions away from this, uh, I know you're a Los Big proponents of meditation are how people become good at removing emotions from the equation so they can see reality accurately.

Well, meditation is a huge benefit for that, so it really gives one calmness and clarity and gives one an ability to almost go above everything and look down at it and say "it's okay", that's how they work. things and uh and an acceptance of reality is like this Serenity Prayer God, give me the serenity to accept what I can't control, give me the power to control what I can and give me the wisdom to tell the difference and you know, just to be able to approach things and an open minded way as we talk uh you ask the question about um disagreement, how can I address the disagreement?

I fight emotionally about it or I handle it well. Meditation and that kind of thing. Calm down by seeing everything more as it is. Do you know what it is. Think of reality as if it were a concert, like a game of chess. Okay, calm down, okay. This happens and what is your next move and how does it work? Very fascinating. So if you take a chess grandmaster or someone who is really proficient at chess and you put a chess board on them, they look at it and they don't have to analyze it each. individual piece, they know that pattern on the board very well, they know where you are in the game and that's a huge amount of information, it feels like a very similar approach to the way you look at financial markets, global movements, the big ones. . cycle in that oh, I can put you in a scenario where you would look at some key pieces of information and know where we are in the cycle, so I mean start with the three forces that we talked about at the beginning, hey, tell me.

Yo, where are those three forces, you expanded it to five, but tell me where we are with those five forces, that's the piece on the chess board that I need, boom, now I know how to make the next move, what I want to try to give to people. Okay, that's why I have the animated video um on YouTube, that's why I have the book, because it's like watching the same movie happen over and over again. You can see it and understand the cause of the factual relationships, so you can understand it when you ask questions. like um, you know how to get better and then we deal with the mechanics of that, like, okay, how can you get better financially and how to be good to each other and not be threatened?

I mean, it's only if you look. looking at it that way and understanding the mechanics, that's how reality works and then how to deal with it makes a lot of sense, okay, in terms of fragmentation in terms of understanding where we are in the cycle, um, one thing. What I'm thinking a lot about is as we get closer to the 2024 elections. I've heard credible people say they believe China is going to take action on Taiwan in the kind of

chaos

of division we have here in the current global superpower. , do you see that a logical move on the chess board for China is something that seems plausible to you?

I'm very well connected so I have close contacts on both sides and so I just want to say it rather than just expressing an opinion. My view is that there is a political situation in the United States and it is really a question of how much the United States is pushing the issue in Taiwan. That makes it risky because there is a movement to uh from let's say Hawks or um something to um defend uh Taiwan or so let me give you the facts if there is a I'm going to tell you a little bit of history okay please um Taiwan was part of China um and Around 1840, foreign powers came to China and they wanted to trade and do things with China and China didn't want to do that, so around that time they had the Opium Wars.

You may have heard that in the story where, um, the Chinese at the time said, I don't want to trade, you don't have anything I want and then they brought the opium that the Chinese wanted so they could have this trade and what either and then militarily and took over much of China. and took control of that and in 1895 um it was many foreign powers and in 1895 Japan took Taiwan um okay, fast forward um you enter World War II and after World War II the winners of the war divide the world and They said who gets what and Taiwan was returned to China that's 1945.

Then they have a civil war um oh like always the left and the right fight each other and then the communists throw out the capitalists and go to Taiwan and controlling Taiwan is OK, so everyone agrees that China is part of Taiwan is part of China, but they argue about who controls China, those in Taiwan say oh, we control China, and those in Beijing say we control China, but they all agree with that. 50 years ago. So it's a big problem in their minds because it's part of China and they've been told it's part of China, Taiwan, part of China, but they, the capitalists, uh, called Guam and Dunk, live in Taiwan and they don't. they're controlling, so Henry Kissinger first gets them together, he goes to China and deals with reunification and then Nixon follows him and there's this argument and they reiterate that Taiwan is part of China, everyone agrees on that. and that there should be a peaceful unification of China and that continues for 50 years and brings it to where we are today.

Well, then a red line for China is if the United States or Taiwan says that Taiwan should be an independent country that would produce a war and everyone knows that everyone in government would know that that would produce a war. This is something very important to them. In other words, they call that period one hundred years of humiliation. Their promise was withdrawn and whatever it was, in their minds it is an indisputable reality. Now we're in a situation where the United States and particularly some congressmen who are more uncomfortable are saying, "How likely are they to say we're going to defend Taiwan militarily and then." Go ahead and sell them more military equipment, then you're very, very close to saying, I'll do it, it's a separate state, so we're very, very close on that particular issue, so what's coming?

I don't think China is going to start a move to take over China from Taiwan, um, unless the United States crosses that line, pushes that line now the way they understand it and just different parties, um, the Chinese understand which is the way I describe it. It's been promised, it's here, you know, I mean, no, no, that's kind of uncompromising and the Americans, um, I think of this communist dictatorial bully that's trying to take over a free country, a free people and um, in a um , you know, um aggressive. way to seize them and that we have to defend freedom and protect them from that, okay, I just want to emphasize that it is more complicated than the way I said and it is also like, from the Chinese point of view, it is part of the system US. containment strategy, which means you know China has grown and become a higher percentage of the world economy and so on and so on and it's expanding and it's like Taiwan is the lid on this boiling pot so that's my best description of what the situation is so no I hope I said um if you want to know what's really going on uh look at it as I describe it in other words if it's unprovoked or it's provoked in the way that I just described now again.

I am a very realistic person. I am not an ideological person. I'm not trying to be okay. I'm just saying how reality works and what the step is and what the next step is and I'm just trying to describe that reality. I'm not taking sides. and it's like two sides on a chessboard and I'm just looking at the chessboard, what are the things that you think people need to understand about the world to navigate it well? And I ask it now at this moment because listening to Even how you answer China's question, if I had to guess what you were going to say to my question, uh, I would say it would be that people need to understand human nature, people need to understand um, finance people need to understand, I think you're making it too complicated oh give it to me um I think people need to understand um the basics, the fundamentals and the history that repeats itself over and over again and why the history happens oh, it's well, yes, and understand the cause of the factual relationships in it correctly. no one, you can't expect anyone to understand all the things about finance and you don't need to, you don't need to understand all the things about human nature and psychology, you don't need to understand it, it all comes down to something pretty.

There are many simple basic things that are repeated in a cycle for certain reasons, that's why I try to do it right in these simple and entertaining videos. I put together three videos on how the 30 minute money machine works, 30 minute success principles, and change. World Order and it's in 40 minutes and these are just basics if you understand you know what makes a healthy society, you know we summarize it, you don't need to know a lot of complexity to understand it, you know how to do it. you raise your children, do you hurt more than you spend?

You know it all comes down to those kinds of basic concepts and therefore you need to understand them. I think we'll link to those three videos in the show notes, but where can people follow along? along with you and what you are doing. I'm on LinkedIn, but I also post to all the major publications, and sometimes if it's deeper, it's on LinkedIn. Guys, if you haven't already, make sure to subscribe and eventhe next. my friends, be legendary, take care, peace, if you want to know why saving money is the surest way to lose purchasing power, be sure to read this interview with Robert Breedlove, oxygen is very important for human life, it is priceless, because that is not it.

Something scarce like diamonds is still not that important to human existence.