Ray Dalio on the Key to Success: Failing Well (Podcast)

to Bloomberg. Thank you, Barry. It's always a pleasure to be with you. So before we get into the book, I want to give listeners who may not be familiar with some of your work a little background. And you first came to my attention for the work you do on mistakes as quote, opportunities to learn and improve. The key to success in life is learning how to fail. Well, tell us a little bit about that. What what led

you to that? Understanding the markets? You know? Um, but I mean it's true like pain is a great teacher, you know. So I learned pain plus reflection equals progress. Uh so the markets, um, you know, markets teach your humility. You've got to be aggressive and you've got to be defensive at the same time. So what I learned is whatever successes I had in life had to do more with how I dealt with what I didn't know than what I know. And so that means taking it in

but making mistakes and reflecting on them. Hey, that's a great way to learn, right, It certainly is. And there's another issue that you bring up related to that, which is hyper realism. You have to understand how reality works then learn how to deal with it, which kind of raises an issue. Isn't that obvious? Who gets that wrong?

Who doesn't deal with reality? Well? I think that most people have a wish of what reality is, and they get upset that their reality is not that, and they get hung up in that upsetness rather than to look at it and accept it and then say, what does that tell me about how reality works and how I should deal with it? Right? I think most people are upset. They're stuck in that upset nous um and wishing something is different, rather than thinking how do they best respond

to what is the reality? That's that's very zen of view. Accept reality for what it is and and interact with that as opposed to just being upset about the way the world isn't well zen or practical. I think it's practical. So let's talk about some things that you have helped create. Some products treasury inflation protected bonds, tips, the US dollar future index, risk parity, the style market of China, and my favorite chicken McNuggets. How did you have a hand

in creating all of these products? Well, you know, you just go along with your life and you do the thing you do, and then you come up with the ideas. So in my case, I was, you know, markets, since I was a kid twelve, UM, I played around. I mean I didn't know what I was doing in the beginning, but I played around with markets and I encountered things. So I used to start off with commodities. Um, I traded commodities, grains and meats and all of those things.

And then this McDonald's wanted to have the chicken McNugget, but they were worried that chicken prices would change a lot, and so then I needed I worked with a chicken processor who then made chickens and chickens or grain, and I showed them how they could work a deal out where they would hedge the grain and so on and so forth. And that's how chicken McNuggets could come out without out a fix and stay the kicks price. But anyway,

one thing leads to another, you know it. A hedge on green prices leads to stable chicken prices and therefore a consistent nugget price. Right, because the cost of a chicken has nothing to do with the price of the chick. It has to do with the price of the grain that you feed the check and so by being able to lock in that price with the producer, we were able to lock in the price for the chicken for

McDonald so that they could have stable prices. But anyway that other stuff, the world evolves and I'm trading, and so then I come into trading um financial instruments, because then we have the printing of money and we have all of those other things. So monetary policy becomes thing, and one thing learns to another. Then the idea of risk parity is the idea of how I could balance the portfolio well that I wanted to balance it well.

So one thing leads to another, you know interesting, So a couple of quotes from you relate to each of the books you've you've written, but I think they're very revealing about who you are. One is unprecedented, question mark big developments that haven't happened in my lifetime, but have occurred numerous times in history. It's not so much that they're unprecedented, it's that we just haven't experienced them recently.

Tell us about well. I learned about this um in I've graduated UH college and before I went to business school. In the summer um August seventy one, I'm following the markets. I'm clerking on the floor of the New York Stock Exchange, and President Nixon gets on the television and he explains that money as we know it ceases to exist because then gold was money, and paper money was what your claim like a check in a checkbook. You could go get your money. And he said to the world, you

can't go get your gold. And I walked onto the floor of the New York Stock Exchange, and I thought that this is a big deal, so there would be a pandemonium, and and I didn't. But the pandemonium was rather than go down a lot, the stock market went up a lot, the most in a couple of decades, and then I said, well, um, wow, I didn't understand

what happened. So I went back and I look at history, and I found the exact same thing happened on March five, nine thirty three, with Roosevelt saying, you don't get the gold, and they print the money, and the stock market went up and behaved that way. Then I learned about the valuations, so I started to learn that I needed to go back to things that didn't happen. So I studied, for example,

the Great Depression. And because I studied the Great Depression, then in two that I was able to anticipate the two thousand and eight financial crisis. So we made a lot of money when others were losing money in the financial crisis. But I wouldn't had that if I didn't study things that didn't happen before my lifetime. Right, so things like the pandemic. Let's think, as you start to think about the things, there are a number of things

like right now. The reason I did that book is because there are things that are happening now that never happened in our lifetime before. And I want to be like a doctor who knows many cases of those. But I have to go back and see them in history in order to gain that perspective. Right, there's a fascinating discussion between I think was St. Louis and Philadelphia in the pandemic. One of the city's was very aggressive in

shutting down schools. I think it was St. Louis and advocating masks for everybody, and Philadelphia didn't huge difference in the outcome for that pandemic. Man, I can learn about that from you. You got it right, well, you sent me recently, you know, in your book. And we're gonna get to the Changing World Order. Um, so let's let's talk about something from the Changing World Order right now.

One of the most interesting quotes I pulled from the book quote, there are only a limited number of personality types going down a limited number of paths, which lead them to encounter a limited number of situations to produce a limited number of stories that repeat over time. So so you've brought that up a number of times in in some of your previous books as well. Um, Hero of of a Thousand Faces and and a lot of

the Joseph Campbell stuff. Tell us a little bit about that limitation that we see the same cycles the same stories over and over again. Well that's uh, that's it. I mean, I think you said it very well. If you look back in history and you read human nature does not change much, Okay, our circumstances, it's and it's

a major driver. You put a person into a certain set of circumstances and then you got the reaction and you're going to have and the dynamic like you borrow money and if markets go up to people borrow more money to speculate on the thing, and then they get over and debt it. And then there were wealth gaps, and there are all these things that happen over and over again, and but we don't think about it. Everybody's almost dealing with um whatever is happening to them at

the moment, and they're just thinking about it. But think about it like I mean, you could go to anything, okay, And it happens over and over again as a life arc, all of our life arcs. You're born at certain age, your kids go to school, certain age, they have kids, you move on. There are these things that repeat over and over again, and so let's look at those things

and how they repeat. It's a remarkable. So it's almost as though Um, the only things that change pretty much are the closed people where and the technologies they use. The truth that sure, and a lot of the clothes are based on the technology. You know, they're not uh, they're not just old flax and cotton and what have you. Right, So, what you see you see evolution. If you decompose it, you see that there's a force of evolution that moves

things toward improvement. Okay, And then around that there are cycles and give the same circumstances around that they repeat over and over again. And that's why in order to understand today, you cannot look what happened yesterday, Okay, you have to look at what has happened repeatedly. So you mentioned we all go through these life cycles, both as individuals and societies. You're at the stage of life where you're writing books, sharing wisdom. What's the motivation for this

act of your life? Well, I think there are three stages in life. The first stages, you're dependent on others. You're going to school, you're learning. In the second stage, you are independent you others are dependent on you, and then you're trying to be successful. As you move past that stage, your goal isn't to be successful in that same way before you want to pass on what you've learned and so on, and then you go into your third stage of life, where you know you're free to live,

free to die. Okay, that that arc is basically it. So I'm at I'm seventy two years old, and well, uh, my joy is in being able to pass along that which is valuable. And I'll do that for probably maybe my one more book, which is Economic Investment Principles, and then I'll be done with that. And but I still love the game. But but that's where the stage of

life is. So like, I did this study because I needed the information to know how to deal with today, and I ordinarily wouldn't put it out as a book, but I now figure, Okay, it's too important, and I think it'll be helpful for people to take or leave as they like. But that's why I'm doing it. Quite fascinating. So let's talk a little bit about the changing world order. And I have to start with the US dollar. It's been the reserve currency for quite a while. Do you

see that changing anytime soon? And is that part of the changing world or you know? It was that question that led me to study what causes reserve currencies to rise and fall and to go back for the five years, because um, you need the cycles and these cycles of long lasting cycles. So at first it was the Dutch guilder, then it was the British pound, then it was the US dollar, okay, and what is that dynamic? To answer that questions? So and then it brought me into contact

with all the things that mattered. What were they doing economically, how what percentage of world trade were they? How strong were they militarily? The whole package. And that's what the book then takes one through. Took me through that journey. That was my exploration. So what you find out in history is that there is um. The world order that we began began in nineteen the end of the World

War two New World Order. The United States owned eight of the world's money because the world's money was gold, and the United States had of the world's gold, and so that gave it the reserve currency. It was also had all the economic power, it was more than half the world GDP, and it also had the only military, it had nuclear weapons and so on. There was no comparison. Hence we began the American World Order and the US dollar going with that, Okay, and then there's a cycle.

And I saw the cycle as those as the economy grows and you have prosperity and so it's self reinforcing. That's those are the good years after the war. Um, nobody wants to fight the opposition, and you build this, but you get into a period where then it becomes when you have a reserve currency, others want to hold it as an asset, so they lend to you and you can borrow a lot of money. Wait, does this trace back to where the Dutch the Britishish? Yes? Every time, okay,

same pattern begin. There's a war, you win a war, uh, you become the dominant power. Also technologically and so on. The Dutch, for example, invented chips that could go all around the world and collect all sorts of treasures. But in order to do that, they had to have a military. And then when they went around, they got to pay in their money, and it became the world's reserve currency because they want they were trading all over and they can do that like the United States, like the British

and so on. So heait, let me interrupt you. Technological advancement leads to military superiority, leads to booming trade, leads to economic dominance and reserve currency. That's right. And how long does that tend to last? That arc It can vary, but it's usually somewhere in the vicinity of the total empire is like a hundred and fifty years. The Romans were an exception because they had all of that and they lasted much longer. That's right. They last about three

hundred and years years or something. But you can take each of those, so there's a variation around those, um. But anyway, you've got the pattern. And so to answer your question about the reserve currency, then what happens is the country gets into deeply into debt okay and um, and then with that it runs deficits because it wants to spend more money and wants to maintain that position.

But it does, but it's those deficits mean that it's earning less than it's spending and it's required that that money. And then when you get down to a zero interest rate type of situation where like we're in, then we need more debt because everybody wants more money, so the government has got to send out more checks and you as always, you either have to get that money from somebody, which means you have to get taxes. But when people

get that get tax they get angry. So what always happens at that point is you send out the money and print the money, okay, and then there's the mechanics of the printing of that money. So right now we have a situation where there's a lot of debt and a lot of dollar denominated debt in others foreigners portfolios because they're holding it because the reserve currency is what

it is and there's low interest rates. Now we can get into how that compares with other currencies, but what happens is the dynamic that we're seeing causes all currencies to depreciate in value. Money is being produced and so on, and that has because more money is being produced than goods and services are preting being produced. That causes the

value of money to go down. And that's why when you look at what your interest rate is, you know there's a big problem for investors because they think cash is safe because it doesn't have the volatility, but they're only looking at it in terms of dollars. But inflation happens. Okay, you print money and then inflation sation happens, and it takes your buying power away from you because you can't

increase your living standards by printing money. And so there's a chapter in the book that shows that that is the value of money, and it takes it over these five hundred years. It looks at seven fifty currencies, it shows how they all behave and the pattern is the same. Yes, that's the pattern. So here's the pushback. And I first thought about this with big debt crises, because there is a smaller section about money printing and inflation in that book.

But the pushback is I've been hearing my whole adult life. Gee, if we run deficits, inflation will get out of hand, the FIA courency will collapse, it will crowd out private capital, no one will be willing to lend money to the government, and the cost of borrowing will be much higher. None

of those things have happened. But and I said that when when I did the um UM, I put out a video called How the Economic Machine Works, which is which if you haven't in it, everybody should absolutely watch that. It's both entertaining and informative UM And the main reason I put that out. Was that right then? At that time there was the question of whether too much money

was going to do it. If too much money make if money makes up for credit, that the total value of anything, the price of anything equals the amount spent on it, and it could be money or credit divided by the quantity of its sold. So if you look at if I increase money or credit by more than I increase the goods and services produced, you will have inflation in good services or financial assets. That's the machine.

So back then I made the point intentionally at that that it was okay to print the money to make up for the fall in credit. Because the shortfold during the financial crisis, if there's a contraction and credit, there is a losing of spending power. And so if money is produced to neutralize that contraction and credit, so the amount of spending goes does not contract, you will neutralize that.

I called that a beautiful deleveraging. Now fast forward twelve or thirteen years, the pandemic starts, and now instead of monetary printing, there's fiscal there's both, right, Well, so we look at the mechanics of it. I just want to go with the mechanics, the amount of money and credit created and um is much greater than the amount of

goods and services incrementally produced. And so then people decide they get their checks, and the way they get their checks the government sends out the checks or and and then the federal reserve makes up for the shortage of demand and it produces that money and credit. And so then people decide do I buy a financial asset, do I buy this thing? Do I buy that thing? But that produces the reflation that we have seen along those lines.

So the difference between that is that the total spending power and the total amount spending increases much greater than that which is needed to make up for the contraction and credit. So from O eight O nine, we saw the short fill fall filled by the federal reserve. In we saw the short fall in demand filled by Congress and the federals. But then here we are a year later, when things seem to be a lot better than they were, and now there's a ton of cash circulating through the system,

and we're seeing signs of inflation. Yes, mostly goods, but also services and financial assets and for sure everything because think about it today. Right now, there's an enormous amount of liquidity if you haven't, and so nobody's got got liquidity. And in addition, it costs nothing to borrow because the interest rate that you're going to pay on it is as as negative in real terms as much below below nominal GDP. And you can even get interest only loans.

That means you don't have to pay the principle. So you don't have to pay the principle. And there is no interest practice. Okay, that's the point, right, And so you're given an unlimited amount of buying power and so on and money. Therefore, that purchasing power, the amount of money and credit is now coming through to produce What do you do with the money? You buy stuff? You buy okay, you buy financial good services and financial assets, and so it goes up relative to the value of money.

It's not complicated, but that's what's going on, right, and that's what people have got to understand. And chapter I think it's before we leave this though, I want to ask you, so how long does this go on for? Is this transitory, as we've been hearing so often in kind of fades when well supply chain on tangles, or is this going to persist. First, it is not a

supply chain issue. It's a very simple thing. Take the amount the increase in the amount of money and credit and divide it by the amount of goods and services increased, and you're going to get a good indicator of the amount of monetary inflation. So we have a high GDP and a high cp I. Well you have in g DP terms, the real goods are a bit higher than they were. But yes, that's people were stuck at home and they couldn't go to the movie theater or the gym.

So we've caught up to where we were above the COVID level, but we're approaching our limits in terms of hiring people, in terms of getting stuff done. There's a demand that's pressing up as the supply, but there's also this monetary inflation going up. And that's why in that chapter in the book, like if I didn't see this happen over and over again, I never would have seen zero interest rates and how this dynamic work. But this dynamic happened over and over again, and it is I

think it's chapter three or four in the book. Um it goes through the value of money and you could see the mechanics of it. So does it make you crazy when you hear people say we've never had zero interest rates before, and you go, no, We've had it hundreds of That's right, just and look at the dynamic. So so let's talk about um cycle disorders. And you specifically refer too. So we talked about debt, you talked about internal cycle disorder and external cycle disorder. Let's start

with external because I find that more fascinating. For the first time, since the US has been a dominant superpower, we've encountered a true rival. Yeah, the Soviet Union was a military rival, but they never were a true economic rival. China, on the other hand, is becoming a rival in power in the United States economically, militarily, and strategically. Is China the biggest external threat to the US hegemony? Yes, um,

of course. And I'm saying it's not. It's just history happening over and just the okay, and the United States is the next one. Okay, there is a world water, it's you have a war. Somebody's dominant. They have the currency, they have all of that, they have the power, they're the largest trader. So like you can, the United States was the largest share of world trade, and it brought its currency and you have that. Okay. Now China is the largest share of world trade and financially it has that,

so it has become an economic competitor. There are four there are really four types of wars um. Well, particularly there's a trade war, there's a technology war, there is a geopolitical war, and there's a capital war. Okay, competitions we can call the wars are competitions, trade competition, and then there could be a military war number five. And we are certainly in those competitions or wars for trade um, technology, UM, geopolitics, influence around the world, and then capital in terms of

capital markets. We are in that kind of war or that kind of conflict. You have a real competitor. So think about it this way. If the population of China is more than four times the size of the U. S population, so if per capita income is half the size of the United States, it will be twice as large as the United States. And it's developing competitions all around. So yes, there is a competition, and then how that's

dealt with is most important. There you could look at it as a conflict between those two entities The most important thing to learn about is don't even focus so much on that conflict as focusing on being strong yourself, because the lessons from history show that if you are strong, if you're strong in these fundamental ways, you earn more than you spend, you work well together, and you are strong, then all threats, whether they are pandemics or Chinese competition

or whatever it is, you can handle. I'm really concerned about the internal conflict and the financial conditions that mean that we are less strong in dealing with that kind of um A competition. So so let's move to the internal threats. We we have political ups, we have wealth gaps, arguably a lot of our values around the country no longer line. At least the media seems to be emphasizing the difference. What does the discord in the United States?

In some part driven by social media, but just generally the emphasis on differences instead of similarities. What does this mean for the strength of the country. Uh? In my book, at my research, it was so important to put numbers and actual measurements to be able to see things like discord. So I put together a conflict gauge. I put together not lots of gauges that therefore give objective readings to that we now have the largest political gaps and the

largest wealth gaps and largest income gaps since nineteen hundred. Okay, and and if you measure the conflicts that we're encountering, we have a system that's we are at each other's throats, right and um, they Basically what I've seen through history is if the causes that people are behind are more important than the system, the system is in jeopardy. So you have a situation right now that we forget about history. You can see it, but it also repeats throughout history.

You can see how we're going to more and more extremism, and we're approaching an environment in which no side will lose. Okay, it's win at all costs. And so we're seeing in the primaries you're going to see more movement to the extreme. Each each party is putting on candidates to be more extremist candidates in that fight. So now when we set up for the presidential election, we are going to have

a fight. And and and it's win at all cost It's not going to be that Okay, I lost, And you know, we can interpret it like in some past elections when we had closeness and okay, how you count chits and how many hanging chats? Very different? Okay, and so on, and and we're in a win at all costs. So the causes that people are behind are more important to them than the system to work out that. And so we have a jeopardy. And that also that jeopardy that we're in is affecting a lot of things. Um,

we see this. My my wife works in helping um the poor school districts in Connecticut. Um, with disadvantage of this, the amount of the circumstances that are existing for those kids in those education in the richest state in the country, Um is, uh, you'll pay. I live in Greenwich, Connecticut. At the school districts like four thousand dollars per students down the road it's fourteen thousand. And there's a problem.

So there is a There is conflicts, justifiable conflicts in many cases, not equal opportunity not you know, and and the system is so we have those things going on. And the most important thing, as I say, the three most important things. First, how are your finances, right down to whether it's the individual or the company, how are your finances are you earning more than you are spending and you have savings more than liabilities. Second is how are you with each other? Is that productive or are

you going to fight with each other? And that repeats throughout history. You see it over and over, and our ratings are not good now. So so there are some folks who have been saying a lot of what we see in terms of the divide are sort of the outrage industrial complex that between certain cable channels and certain social media they feed off and their algorithms feed off

this anger. But when you actually sit people down and ask them questions, there's a lot more that we have in common than we want a safe place to raise our kids and we want to send them to a good school, and we want opportunities to improve our financial circumstances, etcetera. When when you take up part the screaming on cable TV and Facebook, there's more that holds us together than takes us apart. The statistics don't show that. Just explain uh well, um, so I mean there are just lots

of statistics. Um. If you take um uh um voting and the voting of the Senate and the House, and you take Republicans and Democrats UM, the UH, the Republican voting records, This goes down to nineteen back to d UM. And you measure how conservative that is, um, it's the most conservative since nine hundred. And then if you measure how liberal UM the Democrats, it is, UM the Democrats are the most level. So the gap and values is greater than UM it's ever been in terms of that.

And if you measure the voting across party lines, the capacity to compromise, it's the least it has ever been. Okay, So what we have are irreconcilable differences. If you take survey results of what Democrats think of Republicans and what Republicans think of Democrats, you see I might have got I don't know whether it's the Republicans of the but fifteen percent of Republicans wish that Democrats would die and ten percent of Democrats with And I might have gotten

that backwards, but you get there. But it's a substantial and a significant number wish that would not want their children to marry another. Uh. Okay, and then if you deal with irreconcilable differences, I want to tell you that I've had a conversation I won't mention who with but somebody who's very high in government and a general and so on. And we were talking about um enforceability of what will the federal governments uh mandates like on sanctuary cities, Um,

what happens as we go through those scenarios. We are playing out the notion that the federal will say you, I need you to do this, and the state or the local government will refuse to do that, and you are now having a power power. How does and then we played the we played through that scenario that like does the police have more power because the police will follow that than the national guard? And how will the

national guard? The fact that we are talking about those things and that we're looking about those things, if we if we look at what's actually happening measured in the statistics are noting in the news, we are at irreconcilable differences on many things. And if you just even deal with masks okay, and anger that exists with people doing harm to each other and how they're behaving, and that is and if you look at history and you watch the trends, the arcs, and you watch how it's evolved

in almost all of these cases you can. It could be the French Revolution, the Russian Revolution, the Chinese Revolution. You find that there are moderates, but then it becomes increased polarity, and they say you have to make a choice, which side are you on, and you can't be moderate. The moderate will then get hung. There's a certain dynamic

that happens, and it depends where you're living. You will see it whether you're if you're Many of us might live in an environment and we say we don't actually see this, but you could start to see it encroaching. You start to see the movement, for example, from one state to another state, um and not just for tax reasons, but because they say my values are different here and there.

And then that has economic effects because let's say the rich moved with the rich two states that favor the rich by way, and then it produces a following out of the tax base that is lost there, and that creates a worst set of circumstances. That is a dynamic that is going on now that has not existed. But if you read history, you will see that that's happened repeatedly over and over again. So let me push back a little bit. And I had to think hard to

find something to push back on. So we had civil unrest in the sixties. We had economic problems. Remember Japan was going to take over the world. We had inflation in the seventies, the rise of Japan as a power, and then the United States somehow managed to overcome it through entrepreneurship and technology and blah blah blah. That was one cycle. How do we know that the current environment is in a similar cycle. Well, let's go through what

that cycle looked like. First of all, to say, okay, if that's your optimistic scenario, Okay, let's take a look at what that cycle looked like. Okay, And then say and then and then I'm explaining that certain of the circumstances now are worse. But let me get let me take that cycle right. Nineteen sixty six, nineteen sixty seven, sixty eight, Martin Luther King is shot, Um, JFK is shot, riots in watts um the dollar then UH spending on big deficits got buttons and butter um, and then we

then um devalued. In other words, n seventy one, I'm clerking on the floor of the New York Stock Exchange and they and they had the value and they break that. And then we went through the seventies, and the seventies caused um um a decade of very large inflation and the negative returns in the stock market from nineteen sixty six, which is the first time the yield curve inverted until n E D four, you had negative real returns in the stock market. In fact, it went down in real

terms and so on. And then you get a restructory. Then you have the reaction of Paul Boker nine or whatever. You have the debt crisis, which brought the unemployment rate up to double digit and so on, and then you and you, and then you broke the back of inflation and it ended in a D two. That's your optimistic scenario that you're referring. Good, Okay, Okay, So that's but that's your optimistic scenario. Okay, Okay. So you're looking at the sevenies. I'm trying to okay, but I'm just saying,

we can't. Okay, it happens one you know, the things happened one day at a time or one period of time. And okay, I remember the seventies, okay, And it was bruised and that that was but that didn't have the same sort of things that are happening now in the same sort of degrees. My only point is I'm not trying to fork it. Let me tell you, I believe

it's a choice. So there was a data point that I was really impressed with from the book that I had no idea, And I want to ask you this question as a follow up of what we were talking about earlier. Ten great nations going back a few hundred years. Since nine d seven out of ten of these nations sow their wealth wiped out at least once. That that's a pretty astonishing data point. The wealth of an entire nation wiped out? How does that happen? And what is

the aftermath? Like, Uh, it's so good that people can see these cycles. Um. Starting when we start like a dred our perspective does not include these things, and when you start to see it at the cycle, it's quite something.

So what happens is UM, there's the here's how it works. UM. Capitalism and a capital market is a fabulous system for getting resources in the hands of entrepreneurs and inventive people, and it raises living standards, particularly after a war, when there's a peaceful period and you've done the restructuring and things improve. And so if we go back, let's say to the eighteen hundreds and take eighteen fifty and so on, we have the industrial revolution that the power of the

individual and so on and and arises that. But what happens is it also creates wealth gaps, and it creates opportunity gaps because those who have more money can educate their children better, can do certain things. And it also creates greater levels of indebtedness because as the cycle goes on, everybody bets on it increasing and so on, and they get more in debt and so on. And you turn the hundred, you come into nineteen hundred, and then you

start to see the conflict begin to emerge. This is when um the bad treatment of worker and workers rights, and then child labor, and then also uh um um taxes start to rise. Okay, we didn't have an income tax, and then they start to rise. But there's also an anger and and that begins to emerge. And then there's the conflict, and there's economic pain and conflict. I mean, it's when you have a big wealth gap and you have economic problems, you have a conflict. That's a that's

a classic set of ingredients. Particularly then if you have too much debt, you're gonna have a problem. So what we see is then you come into that period and the pendulum swings the other way that people get angry. You go. You saw that in two thousand and eight, the anti capitalist. You can certainly see the anti capitalists. In other words, the billionaires. Um not no longer the inventive person who gets what they deserve kind of thing.

They're really more okay, the greedy and and they're living sort of decadent lives what at the same time as people are not getting educated, and so people get angry and so you see that kind of an our cap and repeatedly. Right. So that's the nature of the beast in terms of that cycle. So here's the big question. Are these cycles inevitable? Is our fate sealed? Or is there something we as a nation can do to break what sounds like a very self destructive cycle of external competition,

excessive debt, and internal strife. Yes, no, it's in our ability to deal with that is as a society. Because in the book, I show the five major determinants, but I also show um eighteen determinants and they are predictors of the next ten years growth rates and conditions there um and so you could see them. That's like a health index. So it's education, innovation at tech, analogy plus competitiveness,

military strength, trade, etcetera. Right, And what I did is I put numbers on that so you can see the graph and are they improving, are they deeproof um worsening and so on. So that's a health index that I hope everyone would look at it and even judge their leaders by are we getting better or are we getting weaker? And what is the conflict? But if I'm going to not take you through the all the eighteen in the book, I just want to say that, like there are two,

there are a few basic ones. Okay, most importantly, can we earn more than we spend? I mean, can we have not increase the amount of indebtedness um and and and GP is greater than the expansion of national debt? That's right, if the io use continue to build up, and what you can't raise living standards by producing credit and money. And it's a basic thing. However you do the counting, whatever monetary system happens, Barry, you can't sustain yourself or your family or you a country cannot do

that by spending more than your earning. It won't go on for long in one way or another. How every much you want to print the money whatever, it's not gonna work. So you have you have to get there. So we need to both we need to be productive and we need to expand the pie and we need

to divide it well so that it works for most people. Okay, that's just that we need to do that, Okay, and we need to do that in a way where we're cohesive, that we're not at each other's throats, and we could do this, um, I believe, like, but you need to be bipartisan. I mean, in other words, you can't fight and kill each other. That's a basic kind of thing. You've got to resolve your differences and grow in the same direction. And you've got to do that in a

financially sound way. Right now, All the other components that I mentioned, all those eighteen are really to try to get at that. How do you get a better education? And part of the education is not just the uh, do you know the facts and do you know how to do calculations? It's also do you know how to behave civilly with each other, How do you raise children to behave civilly with each other? And that kind of education workes us work together in a smart, harmonious way

if we can do that. But that's the chat. There's enough money to go around, and there's enough ability to do this. And I would say, like if I was president of the United States, by way of example, what I would do is I'd have a bipartisan cabinet or something, and I would i would take representatives from both sides, and I'd have the equivalent of a a Manhattan Project or something, and say you go away for six months and you figure out what you're going to agree on, okay,

and and we'll do that. But number one, it's got to be productive and it's got to the harmonious. And if it's productive and harmonious, we can do that. And so or you can look at however you get to those ingredients, you get a better infrastructure, you get a better education, you have those eighteen ingredients. That's the beauty of those ingredients. Though I'm gonna be updating that on the website all the time. So for those who care to watch that, tell us what The website is by

the way um Economic Principles dot org. So so I'm fascinated by the principles dot com and I forgot what but it's easy enough to google and you can find Economic Principles. I'll include it in the right up so people can click on that. So I'm kind of fascinated by the discussion of China as a threat and as a rising world power. But there are two again a little pushback. First, over the five thousand year history of China. Most of that history they were very inward looking. They

weren't expansionary, they weren't um challenging. They kind of did their own thing and ignored the West. That seems to be a substantial change now. Even though they were rising technology country and arising military power thousands of years ago, what's different today that's changing the way they see their role in the world. I'm glad you answer the question. I'm going to give you a few things. First, Back then,

the world was a much more enormous place. It took um in an you could travel twenty five miles in a day. Today you can travel on the other side of the world in a day. Okay, so we're all intertwined in so many many different ways. So that's a big difference in terms of that was a big space back then, and they had an ocean on one side and mountains on the other side, and a big open plane like the United States then was a big open plane and so on. And we also we're not involved

then in other countries. Weren't because the world was a much more gigantic place. But just as we today, the United States is in has a military basis in seventy countries, and so we are around the world and the world is like that, and it's much more intertwined, military trade, everything is along those lines. That's a change. Okay, um Um. Now I'm lucky because I spent I've spent a lot of time in China and I've gotten to learn from um Chinese leaders and so on, the perspective and so on.

But it is a kind of an evolution of an opening up. They do not want to be aggressive. There is a Taiwan issue. Okay, Okay, that's a whole other thing, but by and large that but there let me finish answer to your question. Okay that there is um but the notion of expansion and and being in trade and

being there um um is part of their evolution. And so when we look at mechanically the great rivalries that have happened, great empire rivalries, they even back for a long long time, even though they were closer together, they bump into each other. And then how do they resolve disagreements. There's no world court that you go to when you say that you're going to do it. You have conflicts and then it's a test of power, and that is

the dynamic that we're um experiencing. So so I want to ask you about Taiwan because it's not that hard to see how China engages in a military action around Taiwan and the US and and the EU get involved, and that could spiral very quickly into something pretty awful. You're suggesting they're not trying to force a military conflict around Taiwan. No, I I just want to be clear. I said Taiwan is I think the biggest risk. Okay, because um um Okay. There's there's two views about Taiwan,

right um. Their view was since Henry Kissinger started the meeting, and for a long time, um there was the saying that there is one China and Taiwan as part of China, okay. And and they have a history in their mind of what they call the hundred years of Humiliation that began around eighteen forty and then that point in time they were weak and other foreign countries came in and then they had they sold the mopium, you had the Opium Wars and all of that, and then they had the collapse,

and they view that as taking away their sovereignty. And so they view Taiwan as part of China and that sovereignty. And and that's something like just we don't we can argue with it or not, but you just have to understand that that would be like I don't know, more more more than uh, more than Alaska or Hawaii, kar in America and okay more than that, Okay, that kind of thing. So it becomes one of those uncompromisables. I can tell you stories like when they went to the

Korean War. They thought in the Korean War that they would lose the Korean War because they basically didn't have hardly any weapons. We had nuclear But when it comes to the element of sovereignty, that is something that is a big deal and that they will fight for and so the other side of that is what does it mean for the United States and so on in terms of you know, um, okay, how is that going to be dealt with? That's what Taiwan is. Um now, how that's resolved, you know, I don't know. But it is

a big issue and it is a big risk. That's that's uh uh you know, and when and I you know, we all have our scenarios of how that is. But that's that is one beyond that. Then there's the evolution and the basic evolution, like one company competes with another company, um, one country competes with another country for World chairs and so on, and then how do you play the rules of the game. And everybody's gonna argue over how you play the rules of the game. But the thing is

there is no real rule book. Right when we had a world trade or it's not like when they had a trade dispute, they went to the World Trade Organization and said, I'd like you to adjudicate it. Okay, we don't have a world court. When you leave a country and you see how the world operates, countries operate, it is more of a power game than it is a let's follow the fair rules kind of game, and that creates the dynamic for the world that we have. So the pushback about the rise of China that I've heard

from others is something like this. It's essentially planned economy. Free market capitalism is a much better system. And eventually China's central planning is going to make some mistakes which will allow the more competitive and open economies to to not allow them to pass. And besides, how can they ever become the reserve currency? Look what they just with Ali Bob, But no one's gonna trust them. Who's gonna say, sure, let's make the one the reserve currency. We totally trust

the central leaders in China. What's the response to that? Two things? First, um, it's an uninformed response, and I can respond to really what it really is like okay. But second, let's assume that's all right. Then we don't have to worry because our system will be better than their system and will outcompete them. And that's the most

important thing. Right with the Russians, you could you could take that for granted, or you can see the reality since I started going there, in per capita incram has increased by twenty six times. The life expectancy has increased by ten years. The poverty rate went from over eighty eight percent to list than one percent. Okay, and if you look at history through China, it's a hell of

a track record. Okay. So now you could we could sit there and say, hey, no problem because those those system doesn't work, or you could look more and say, okay, how is that working? And I would say, when you look at that, no, No, there's capitalism. There's plenty of capitalism in China, okay, the second largest capital markets. They're printing billionaires, they are having the the inventiveness in terms of their technologies and all of those things. Those are realities, Okay,

that notion of how it works. When Dan Chelping dank Ping, you know, the idea is this, here's a communist party. And then and he's got all this capitalism coming around and he's encouraged it. He said two things, it's glorious to be rich. And then when asked about this, he said, it doesn't matter if if if it's a cat, it doesn't matter if it's a white cat or a black catch, as long as it catches mice. In other words, if it makes money, if it works, okay, if it raises

living standard. So there's a practicality, that's a practicality that is existing there now. If I was to take the individual moves that are happening now in China and at which people are characterizing them as something, and I'm saying from I could explain what they are and what they're really thought about. But they're not as they are stereotypically characterized. And I'm not trying to argue pro China or anti China.

I'm just saying, don't misunderstand China. But anyway, if you think it's gonna happen, then don't worry just because your system is our system will be fine. Okay, we'll work well with each other. How are we doing on the things that I'm mentioning? How are we doing on earning more than we are spending? How are we doing on we are working well together and our system is good. Okay. But anyway, um, the most importantly, we're at war with ourselves. Okay.

If we can do our if we can be strong, and we can do that, that is the best antecdote to everything, to tow uh pandemics, to ops adversaries of any form. Just get to let's get to focus on on us being strong. I think quite quite interesting. Let's talk a little bit about the state of the economy today. One of the questions I enjoy asking you, and I think I've asked this several times. What macro trend do

you think is not getting the attention it deserves? Uh, the decline in real rates and real returns and the supply and demand of debt and money. Okay, I think that people think, um that they look at their amount of money and in nominal terms and not in real terms. And they look at their wealth in nominal terms, not in real terms. So when they are holding cash or holding a bond and there's saying that is stable, that

they are not paying attention to the depreciated value. When everybody else in other ways is getting rich around them, they're losing the side of that. So they look at a nominal terms and they look at it in their currency eyes. If the number of dollars I have is greater than it was the day before I or the same, I feel good. Okay, that's that's that's not enough. They're not paying enough attention to that. And also the supply and the demand for money and how that affects inflation

and so on. In other words, the calculation that the US government will have to sell a number certain number of bonds, and then to look at who are the buyers of those bonds, who owns how much, and what are their motivations and will they buy those bonds? And if they don't buy an adequate amount of those bonds, so that the Federal Reserve is faced with a choice of interest rates rising and shutting the economy and the

markets down, or printing more money, what will they do? Well, they'll print more money, and what will that do for the value of money? That those perspectives are not well known, well understood, and yet they're the most important perspectives. So so let's talk about something that has been pretty significant since the financial crisis, which has been the rise of

defy and cryptocurrencies and blockchain. In a lot of ways, some people are present positioning that new asset class as a response to exactly what you're describing, centrally controlled money supply and the printing presses running. What what are your thoughts on on crypto generally and defy. Well, first of all, Um, good idea, I mean, don't trust the governments, No matter no matter which one. It's been such a history. Um, but almost always before there's a devaluation, there's a promise

that I will never devalue. I mean, I've there's been experienced. And so when it comes down to what are you gonna do in the end, every currency has either been destroyed or devalued, okay. And so when that's what they do in the middle of when you're in a crisis or do you have a depression, that's the choice. And you don't want to have the depression, so you print the money to make it easy to pay back the debt. Okay. So that set of circumstances your rise and things. UM

and the development of crypto. First of all, UM, the blockchain technology is revolutionary in many many ways and and so that's I think fabulous. And then it's really quite amazing that the programming of it and everything has stood the test of time in terms of not being hacked materially, so far, so good, and it um and being um a store of value now at the one But there are stable coins as opposed to everybody looks a bitcoin,

but there are stable coins that are tied to specific currency. Yes, but that will be the problem what about but I just wanted to I just want to finish that that that answer. So it's come a long way and it's

a new generations alternative to gold. I think the new generation is making a severe mistake to think that um it should be all bitcoin kind of thing and not get the bat it's maybe just like the um meaning well there's what what are the things that are like money that are gonna work like money, that you can carry them around in your pocket, go from one place to another, and and that they're recognized all around the

world as an alternative currency. Gold is one of those things, right, So it's an alternative gold and so on the diversification properly, central banks won't use it. Um it will not be the same, but and it will be a threat when when stable coin, if it's a transactional thing, is not and it remains in the currency so the government can

control its currency and deal with that issue. Will be functionally okay, but it won't get you around the risks that we're talking about in terms of the debasement of

the currency. So that's why when you're dealing with the other But if it gets you around that, it becomes a better currency, and when that becomes a better currency, it's a threat to the government's and like the currency, the ability to print currency and to operate that way is the greatest power almost that a government can have, and so that so something like bitcoin success will be

dependent on that. It also, of course has its dynamics because speculative market all that, and that dynamic is one thing.

If I start to look at how much how it's priced, you know, the way I look at it is if um, since the supply is not going to change much, you can just look at the demand, and right now, the total value of bitcoin, which is uh, you know, let's roughly a trillion dollars, let's say um is and if you take the total value of gold um excluding what's used for jewelry and excluding what used for stuff um

central banks, it's about five trillion. So that would mean that it would be if you had a portfolio, would be sort of an eight twenty portfolio. And so that's kind of like when I look at it and will it be a larger lesser has been changing, but that's what I'm saying it. So, but if you would have said step back, and you'd say, okay, um, is it going to increase by five times as some people that I can't it can't imagine because but maybe if you moved into a world where all those kinds of assets

were the rush to maybe it works that way. It like gold is also a dead asset. There's no there's no inventiveness in it, there's no no income station. But when we look at other assets, as we're taking a look here, um, they're also an inflation hedge asset. Is also great productivity. Okay, stocks in the right kind of stocks, when there's inventiveness, the stock will get redonominated whatever it is, it goes high and then it has productivity in it.

And productivity is a fabulous resource. So so that's important the old but always in all of those assets, like you, what you would want to do is say how expensive is that productivity? So then you get down down to your calculations. You know, you get back Okay, if I'm having a fabulous growth stock that because fabulous inventiveness and they're doing wonderful, wonderful things, then I have to look at, Okay,

how much is that discounted? Because the other thing about investing is that's important to understand that um, it's um. It's like horse races and and and betting on the winning horse the best horse, UM is not necessarily the best bet at horse race because of the way it's discount and the odds, you can just as likely win by we're betting on the worst horse in the horse race because the odds reflect that. The markets are like that, So you can't just pick the best companies. You you

have to look at what's discounted. The worst companies at the right price could be a much better investment than the best companies. That has to do with then how you're looking at such things. But anyway, that's probably a too long winded to your course. No, no, it's great, and it's made me think of three questions I have to ask about. The first is CBDCs the central bank

digital currencies? Is that a likely possibility that will see the Federal Reserve or the Bank of Japan, or the Bank of England or the Chinese Central Bank issue digital currencies? And then second, if the current trend continues with the rise of China and the US flowling, and there's a potential shift from the dollar as the reserve currency to the one, might it not go to the one. Might it go to some basket of crypto currencies or something else.

If people don't trust governments no matter what their elk, is possible. Okay. So I think the environment that we want to emphasize is that we will come into an environment in which there will be more competition for currencies. So it's not just so China versus the US. It's even bigger than that, right, but even today, think of that where that takes us. We're today in a dollar world.

How much do you think and how much does the average American think, here's my menu and what do I want to select from that menu as regards the currency? Not much? Okay, not much? And they will okay because digitally, and this is a threat to central banks because if you could digitally go on and buy a bit going or a digital yu Want or whatever there whatever those are at and gold and all of that menu, the world changes, Okay, the competition changes, and we are moving

toward that. And and you mentioned productivity. I have to bring that back to the inflation question. What we've seen over the past three decades has been massive uptick in individual productivity, enabled primarily by technology, which has led not to an inflationary environment, but a deflationary environment which seems to have these periodic spasms of inflation. So could we stay ahead of inflation if we enhance our productivity. We just have to look at the mechanics and the attribution

of that. Absolutely right, we as I say there are five, these five major forces on the financial the how we are with each other internally, how we are with each other externally. Then there are these acts of nature that come along, the once at a time um pandemic, or the once in a lifetime storm and so on. And then number five is a man's inventiveness and the inventiveness of technology. And it is the greatest single power. If you look at history, and I show your charts in

the book. The other things don't matter much over the long term, They don't matter much. They produce the big cycles. But that improvement and that force is the best that it has ever been, because we have developed how our ability to think in better ways, because we've used technology to use our brains in a complementary way with technology, so our capacity to invent and come up with greater productivity and adaptations to these risks is greater than ever.

And so that force is phenomenal, that is a deflationary force. In other words, inventiveness and productivity is a deflationary force. And that's exactly right. However, at the same time, the capacity to print and produce money and credit, if it is greater that that that deflationary force, will produce an inflationary consequence. So both are at work, and you have to follow each one of them. Take a look at each one of those. At what rate do we change productivity?

And then at what we're a doing are we changing the amount of money and credit and existence. That's what you have to look at when judging inflation. And this is why I think you mentioned the external competition, but this is very much an internal competition. Forces of deflation and technology on one side, forces of inflation and money printing on the other. That's right, and certainly that productivity is going to help us a lot. And and you

you discussed that extensively in the book. And I just have to share some quotes about the book before we start running out of time. Two in particular just left out Hank Paulson, former Treasury Secretary and chair of Goldman. After reading this book, you probably won't see the world the same again, and then Jamie Diamond inspiring and thought provoking experience that that has to be incredibly gratifying to put all this time and effort into writing the book

and getting that sort of response. And by the way, it's not just I. I just happen to pick two people from finance, but Henry Kissing Joe Dahlia has a special talent for identifying key questions of our time. His sweeping new book is a serious contribution and an urgent warning. What's your response when you get that sort of stuff? You know, we've had conversations and I was and they believe the same things. I don't want to put words in the mount, but I say, okay, speaking up. There's

a reluctance to speak up. Why is that? I think things are controversial and and and there's an environment of you know, stick to your lane, do your job and so on. UM, And I think that now you're going to hear a lot more speaking up about these kinds

of issues. Um. They viewed that, you know, like one of the joys are one of the ways that I can learn so much is by being able to speak to different people, leaders in different countries, and those scholars and and so on, and I learned a lot through that particular process and then we got to okay, what is true and how does it work? And that book operating that way and laying it out with not opinions but numbers so that you can objectively measure what's happening.

You could look at the graphs and so on. All of that, Um, we agreed was helpful approach to know where we are and what the patterns are. And so, yeah, it's gratifying, but more important than gratifying. I'm not sitting here being gratified. Um, I'm saying I really do believe it's important, okay. And the fact that they believe it's important, and the fact that they are saying pay a nine, Okay, you're moving the needle it is, that's gratifying. If it's valuable,

it's gratifying, and they think it's gratifying. So today we're talking about it, and that's gratifying. There there's a book. You reminded me of a book. I'm trying to remember the name of it. It might be Black Box Thinking where they talk about First of all, the black box and commercial aircraft is orange, so you can spot it underwater in the dark, but we still talk about it

in black box at terms. But there were certain Unlike a lot of areas, the aviation industry is very much into your cycle of a mistake occurs, Why, what can we learn from it? How can we fix it? Now? Let's let's try the next level. And I recall reading

about a crash in this book. The co pilot knew something was wrong, but the culture was such that you didn't challenge the pilot and you didn't upset the eating order, and literally the plane would go down until people figured this out and said, as a co pilot, you have to step up and say there's a problem here. We can't just continue. And here's what it is. You're you're saying, that's a similar issue. We don't raise this because Ray, you're a money manager. Stay in your lane. Um, what

you've just described is how life works. We all have challenges. Sometimes they pile up, and we have a number of those challenges, and it's a test of how we can learn and adapt and then that, you know, then those who do that better survive and those that don't do that as well don't. And you don't just mean individuals, you mean countries and societies. That's right, individuals, country, society, species. Okay, it's the it's so let's say we now, how prepared

are we for are we financially prepared? How you have pandemic comes along? And how are you financially how are you prepared? How are you operating? Can you work together? Can you do the things? There's basic things and and then can you adapt? There was I forgot who made the quote, but it's a quote that sticks in my mind. Um that, um Man. Superiority is not in being able to be smarter or working harder, it's in the capacity to adapt that those species and those who adapt well.

When you look at the virus, isn't it an interesting thing when we think about here is a species. It's a good comparison of no brain versus a brain and a lot of thinking. And this species, the virus is adapting and is modifying, and it's in a competition with this other species that is thinking and trying to figure

it out. Part the species is thinking, part not so much. Okay, but I'm saying, okay, now talking about and so when we understand let's say, evolution, the capacity to adapt well, to make those changes and how do you do that because you get feedback and if you don't adapt, if you go, if the plane goes down because you don't want to talk about it and you don't want to challenge it, that's part of natural selection and that's a problem.

So so one problem we we here. It is ninety minutes later, we haven't even brought up a looming problem that we haven't addressed. And I know it's an interest of yours. Um is global warming the environment, the oceans? Uh, what do we do as a species to make sure that we don't make ourselves extinct? Are we cooperating? Are are we adapting to the changing environment? Or are we

heading down a dangerous path? So man is about two thousand years old, and the history of species the world is three point nine billion years old, and so Man's a relatively new species. In the history of species is that they either change and adapt or they go extinct.

And the interaction with what we're producing with the environment is having not only implications for the hospital, the hospitability of the environment that we're in and so on, but it will have a lot of implications, big implications, um, And we're seeing it not it will be costly, but it will also um, you know, it's a big challenge. It affects diseases as well. Pandemics are associated with the environment.

And so it's a test of man's It's a test, okay, a man's adaptability, the ability to work and solve problems. I remember when UM in the nineteen seventies, the Club of Rome, and I remember when the world was we was we would say that we were running out of food. There was starving in India and UM, and the population growth was greater than the resource thing. And they had this Club of Rome that brought everybody together UM in

order to deal with that issue. And there were two schools of thought that which is, disaster will happen and unless we met the radical changes. And then there was the other school of thought that we may that we have a capacity to adapt and change. And now Indias and that exporter of grain and this isn't the So the question is really the adaptability. Man has a great adaptability, but but by neglecting it then there are consequences and

so and they're big consequences. So it's certainly were beyond the point of the fact that there will be big damages okay, And there will be big consequences to that sea level changes, many crop changes and that, but how far it goes will be a test of man's ability to adapt to it. So you mentioned sea level changes. I know a passion of yours is the ocean, and you recently outfitted a new ship to explore the ocean to do scientific research. Tell us what's going on with that.

I know that something is coming up with that, and Disney give us a preview. Yeah, ocean exploration. Um, yes, it's been a passion of mine. I think the ocean is our greatest assets, our biggest assets. Seventy of the world surface is is the ocean. And when you look at it, the area above that is all the continents combined, is less than half of all that's going on underneath the ocean. And it's such so important to us, and it is also the most exciting, fascinating place to be.

There's just the sheet over it, we don't go into it, and so on, and it's very valuable. So for all those reasons, for last eleven years, I've done that exploration. So ocean X you can, if you're interested, go on YouTube or something and or google ocean X that's the the ship and the endeavor. So I support um this it's a ship, but it's also we're supporting philanthropically, uh, scientists research and so ongoing it and we want to

make I was inspired by Jacques Cousteau. Okay, so and that brought me closer to the ocean and excited me. And so, um, that's what this show that you're talking um agreed. Uh. Jim Cameron Avatar Titaniction so is a great ocean explorer. So um, he's he agreed to be a thought partner on the media part. So he's executive producer and we're going to show the exploration these people who are going down there, we're gonna show owe it. And right now it's being shown. You can on streaming.

There's media Ocean X Media is putting out lots of stuff that is going on on that and so you can watch it. But that we estimate, because it will be on um um Natural Geographic on Disney and Disney plus uh, we estimate that it will be between a half a billion and a billion people will basically be watching it. And I'm excited about that because I think that that's very important. If you want to see um aliens. You're not going to see them in outer space. You

gotta go on the water. It's valuable, it's exciting, and it's important. And so that's what that's about. So I want to leave on a little bit of a hopeful question. You set up a lot of scenarios where looming civil strife, external competition, potential loss of the reserve currency, all sorts of terrible things. What should we be hopeful about? What what is a good outcome for the United States and for humans as a species. Well, we can do this.

We have the ability to to do these things. One of the reasons I UH put out the book is I have a principle which is if you worry, you don't have to worry, and if you don't worry, you need to worry, because if you worry, then you won't We'll take care of the thing you're worrying about and

it won't happen to you. Okay. So when I look at that, if we have the capacity to do that too, not only resolve our internal differences in our economic problems, but resolve the global potential threats that we have, all

of that potential with us. And I think that if we understand the patterns of history and understand the junctures, and that you look at that and you imagine what a civil war war of sorts would take place, because we can have a civil war of sorts or an external war, or we can have a financial crisis, and if you visualize that, you won't want that. And maybe that drives people together to work to overcome that common challenge that we have and if they do, we have

the capacity to do to handle that well. Right, It's always a delight to sit and chat with you. I always find these conversations endlessly fascinating. I have another four hours of questions, but I think ninety minutes is about as much time as I can ask from you. We have been speaking to Ray Dahio. He is the founder of Bridgewater and the author, most recently of The Changing

World Order, Why Nations Succeed and Fail. If you enjoy this conversation, well, be sure and check out any of the previous four hundred discussions we've had prior to today. You can find that at i Tunes, Spotify, wherever you get your podcasts. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Check out my daily reads at Rid Halts dot com. Follow me on Twitter at Rid Halts. Follow Ray at

ray dahio dot com. You've been listening to Masters in Business on Bloomberg Radio.