Ray Dalio: Money, Power, and the Collapse of Empires #251

Transcript

00:00:00 The following is a conversation with Ray Dalio,

00:00:02 his second time on the podcast.

00:00:04 He is a legendary investor,

00:00:06 founder of Bridgewater Associates,

00:00:09 author of a book I highly recommend called Principles,

00:00:12 and also a new book called Principles for Dealing

00:00:16 with a Changing World Order,

00:00:17 that looks at the geopolitics of today,

00:00:20 especially US and China, through the lens of history,

00:00:24 providing a fascinating model

00:00:26 for the rise and fall of empires

00:00:28 that can be applied to the analysis of our world today.

00:00:32 This is the Lex Friedman podcast.

00:00:34 To support it, please check out our sponsors

00:00:36 in the description.

00:00:37 And now, here’s my conversation with Ray Dalio.

00:00:42 When you look at the history of the world,

00:00:44 as you have done in your new book,

00:00:45 Principles of Dealing with a Changing World Order,

00:00:49 what is more important, more impactful, money or power?

00:00:54 They go hand in hand.

00:00:56 They support each other and they compete with each other.

00:01:01 Those who have money have power, a certain type of power.

00:01:06 That power has to do with all that they can buy,

00:01:09 but it also has the ability

00:01:12 to influence those with political power.

00:01:17 And so you see this throughout history,

00:01:20 this symbiotic relationship.

00:01:22 You know, for example, between the royal families,

00:01:29 the nobility, and the church.

00:01:33 So you see that group of people

00:01:36 supporting each other in various ways,

00:01:39 and then wrestling around with each other

00:01:42 for the money and power among that group.

00:01:45 So the dynamic that’s quite classic

00:01:48 is you could look at the parties in power

00:01:52 back in the 16th, 17th centuries.

00:01:57 You would look at royal families, nobles,

00:02:01 and the church, if you’re in Europe,

00:02:05 and then you would look at agricultural land,

00:02:10 and there was a certain dynamic.

00:02:12 And that varies over time, it changes,

00:02:15 as those people get thrown out and technology changes.

00:02:20 So when we evolved, when the society evolved,

00:02:24 so that it would produce goods and services,

00:02:28 and you have something like the Industrial Revolution,

00:02:31 the first Industrial Revolution, you have machines,

00:02:35 and you have the talent of people that are off the farms,

00:02:40 and then you have a struggling for power.

00:02:43 You see that power mix change.

00:02:47 And so we don’t see that same power mix anymore,

00:02:50 but you still see the same dynamic.

00:02:53 You see those with money,

00:02:56 dealing with those who have political power

00:03:00 around those assets that are considered most valuable

00:03:04 to particularly the productive assets that produce money.

00:03:09 And political power is usually centered around nation state,

00:03:14 so the major locus of power is the nations.

00:03:17 Yes, in 1668, after 30 years of war,

00:03:25 there was the development of nation states.

00:03:29 Before then, it was really the development of countries

00:03:34 as we know it, that there were borders,

00:03:37 and that within those borders,

00:03:40 those who had control got to control it,

00:03:43 and there were not to be intrusions in those borders,

00:03:48 and that’s how we established the nation state.

00:03:51 And then, of course, within each country, there is levels.

00:03:56 There is a central level,

00:03:59 and then there is typically a province

00:04:02 or state level down below,

00:04:05 and then there’s a municipal level,

00:04:06 so they each have different levels of power,

00:04:10 and it’s the coordination of those

00:04:14 that determines how the country is run.

00:04:19 You write that the, quote, archetypal big cycle

00:04:23 governs the rising and declining empires

00:04:25 and influences everything about them,

00:04:27 including their currencies and markets.

00:04:30 The most important three cycles

00:04:31 are the ones you mention in the introduction,

00:04:35 the long term debt and capital market cycle,

00:04:38 the internal order and disorder cycle,

00:04:40 and the external order and disorder cycle.

00:04:44 Can you describe this big cycle?

00:04:48 There are two orders.

00:04:50 There is an order, by order I mean a system,

00:04:55 how the system works.

00:04:58 So there’s an internal order,

00:05:01 that is the internal governance system,

00:05:04 and it’s usually set out in a constitution

00:05:06 or some agreements, and then there’s the world order,

00:05:11 how the world system.

00:05:12 So for example, in 1945, at the end of a war,

00:05:18 which is basically a fight for determining the world order,

00:05:23 the winners of the fight got together

00:05:27 and created the world system as we now know it.

00:05:32 In 1944, they created the Bretton Woods Monetary System

00:05:35 that determined the money, pretty much,

00:05:38 and because the United States won

00:05:41 and had 80% of the world’s money,

00:05:44 gold was money then, and it had 80% of the world’s gold,

00:05:47 and it was half the world’s economy,

00:05:48 and it was the great military power,

00:05:51 the order was built around an American world order,

00:05:55 so that the United Nations was in New York,

00:05:58 the World Bank and the IMF were in Washington,

00:06:00 and they built that new order.

00:06:02 So classically, you have a war

00:06:05 to determine whose rules we’re following,

00:06:08 and then you have the new order being constructed.

00:06:13 After that, there is usually period

00:06:16 of extended peace and prosperity.

00:06:20 Peace suits prosperity, and so there’s not,

00:06:25 and the reason you have the peace

00:06:27 is because no one wants to fight with the dominant power.

00:06:31 You know you’re gonna lose, you’ve surrendered.

00:06:34 There’s been the surrendering.

00:06:35 They carve up the world,

00:06:36 they say what it’s gonna look like,

00:06:38 who’s gonna control what,

00:06:40 and then you come into that period of peace,

00:06:44 and then prosperity, where then there’s a working together.

00:06:50 Usually, at that point, you’ve wiped out a lot of the debt,

00:06:55 you’ve wiped out a lot of the issues,

00:06:59 the class warfare and so on,

00:07:01 and then there’s good working together.

00:07:03 So those great periods,

00:07:06 such as the Industrial Revolution in the late 1800s,

00:07:12 or what we’ve experienced in the post World War II period,

00:07:15 are peaceful and prosperous periods

00:07:19 led largely by the dominant world power.

00:07:22 Over a period of time, since really 1500,

00:07:28 and maybe before, but really 1500,

00:07:31 when the Dutch invented capitalism,

00:07:35 and what I mean by that,

00:07:37 they invented the first capital markets,

00:07:39 the first stocks and the first stock market,

00:07:43 that since then, capitalism has been an effective tool

00:07:47 for building wealth because it got resources

00:07:50 into the hands of inventive people.

00:07:54 That’s when we moved from agriculture

00:07:56 to the importance of inventiveness of people,

00:07:58 they got resources, and then they built that prosperity.

00:08:03 In that process of doing that,

00:08:06 they create wealth gaps, naturally.

00:08:09 Those who make a lot of money make a lot more

00:08:13 than those that don’t,

00:08:16 and it also produces opportunity gaps

00:08:20 because, for example,

00:08:22 those who earn a lot of money have that wealth,

00:08:26 they have the power to educate their children

00:08:29 in a way that others don’t, and the gaps grow.

00:08:34 And also, the debts grow at that time.

00:08:38 When they go around the world with their competitiveness,

00:08:43 they earn a lot of money.

00:08:46 So for example, the Dutch, the Dutch Empire,

00:08:49 learned how to build ships that would go around the world.

00:08:54 A key ingredient of this improvement in this cycle

00:08:58 is the improvement of education,

00:09:00 and by education I mean the skills that come from education,

00:09:04 but also civility, the ability to deal well together.

00:09:08 So the Dutch invented ships that could go around the world

00:09:12 and they had military power,

00:09:13 but they were also a very inventive society.

00:09:16 25% of the world’s new inventions came from the Dutch,

00:09:21 and so as they went around the world,

00:09:23 they also brought their currency,

00:09:26 and they brought their military.

00:09:28 They needed the currency, they paid for things,

00:09:31 and that currency, and then the more that happens,

00:09:34 the more that becomes a reserve currency,

00:09:37 and then they have their military,

00:09:40 so they need their military strength,

00:09:42 and so you see it evolve in all of those ways.

00:09:45 But over a period of time,

00:09:48 as they become more successful and more expensive,

00:09:53 they become more expensive,

00:09:57 and newer countries come along,

00:09:59 like the UK, then learn to build ships from a lot the Dutch

00:10:07 and could do that less expensively,

00:10:10 and also when they become more expensive,

00:10:14 so less competitive,

00:10:16 and also the work ethic begins to change.

00:10:19 They believe that since they’re richer,

00:10:20 they can enjoy life more.

00:10:22 They don’t have to work quite as hard,

00:10:25 and so you start to see the tilt.

00:10:28 Now you start to see the development of the top,

00:10:31 and when you have a world reserve currency,

00:10:34 that allows you to borrow a lot of money

00:10:37 because those who want to save want to hold your money,

00:10:41 and that means that they’ll lend you money,

00:10:44 and so those countries get deeper into debt.

00:10:47 So you see that they gradually lose their competitiveness,

00:10:51 and they get themselves into financial circumstances,

00:10:56 which are not good,

00:10:58 and they have large wealth gaps,

00:11:01 which set the stage for downturns.

00:11:04 And when they have downturns,

00:11:07 the first question is do they have enough money?

00:11:10 And traditionally, money is resources.

00:11:15 So you classically see that the coffers are bare,

00:11:20 that they’re spending more money than they are earning,

00:11:25 and they run out of money in the coffers,

00:11:28 and their granaries are empty rather than stocked

00:11:33 so that they give them the buffer.

00:11:35 And as that deteriorates, that worsens conditions.

00:11:40 And if they have a rival power that’s also challenging them,

00:11:44 they see greater internal conflict over wealth,

00:11:48 and then they have the problems internally

00:11:52 and the problems externally,

00:11:54 which usually results in an internal war or an external war

00:11:59 that leads to the change to the new world order.

00:12:03 And to you, the Dutch Empire is a good example of that.

00:12:07 The British, what are some of the key examples

00:12:11 that you think about in the book

00:12:13 of this process that followed the big cycle?

00:12:16 Well, the leading reserve currency empires,

00:12:19 but it applies to all the empires,

00:12:22 were the Dutch, the British, the American, and the Chinese.

00:12:28 But you could follow the same pattern.

00:12:32 In the book, it was very important for me

00:12:35 to not just use words and concepts

00:12:39 because that’s subjective.

00:12:41 It was very important for me to use actual measurements.

00:12:45 So as you see in the book, you can see every level of this.

00:12:49 You can see where’s the education level,

00:12:52 what is the military power, each one of those,

00:12:55 and you could see them back going over the 500 years.

00:12:59 And so you could see the arcs and the composition

00:13:03 of those arcs, and what you see is really,

00:13:07 in most countries and most dynasties, you could see that.

00:13:10 But you also can see through those numbers

00:13:13 the health of those countries.

00:13:15 Today, there are statistics that are in the book

00:13:21 that show what is the level of education,

00:13:25 what is the level of economic output,

00:13:28 what is the level of military strength,

00:13:32 what is the level of a number of different measures

00:13:34 of strength, so that you can then compare that.

00:13:38 And I think that because they’re objective measures

00:13:40 of strength that you could see change,

00:13:44 that shows the picture of where we are today.

00:13:48 And I think one of the most important things about the book

00:13:51 is that it allows people to monitor

00:13:54 how those things are transpiring.

00:13:56 I think for policymakers,

00:14:00 are your policymakers doing a good job?

00:14:03 And there’s so much subjectivity in that.

00:14:06 But I think it’s very simple.

00:14:08 If those lines on the chart are improving,

00:14:10 if your health index is improving,

00:14:13 then you’re moving toward a better life.

00:14:17 So that’s what the book works like.

00:14:19 Also, it was used to create a model for the future.

00:14:24 In other words, there are cause effect relationships.

00:14:28 Everything that happens has reasons, causes,

00:14:32 that preceded it, that made it happen.

00:14:34 And so by having all those in numbers,

00:14:38 one can see the probabilities of certain things happening.

00:14:42 So that’s what you see in the book.

00:14:46 It’s not just Ray’s interpretation.

00:14:49 I didn’t wanna make it Ray’s interpretation

00:14:51 because I don’t know if I’m right.

00:14:53 Yeah, so one of the fascinating things in the book,

00:14:56 so you have list these 18 measures,

00:14:58 and there’s like a little scorecard

00:15:01 for the countries of the world today.

00:15:04 So let’s say US, China, and Europe,

00:15:07 and what it was 20 years ago,

00:15:09 and looking at the change from 20 years ago,

00:15:11 and that’s another indicator, the change itself,

00:15:14 to see where things are headed.

00:15:17 Maybe can you comment on, from a score perspective,

00:15:21 how is US and China doing?

00:15:24 And in the 18 measures, what are some measures

00:15:26 that stand out to you as particularly important

00:15:29 to think about today for the United States, for China?

00:15:33 Well, there are a number.

00:15:35 Financially, what you see in the United States

00:15:41 is that we’re borrowing a lot more money,

00:15:44 creating a lot of debt, and we’re printing a lot of money.

00:15:49 And our capacity to do that is very much,

00:15:54 is limited, first of all,

00:15:55 because when there’s a sale of a bond,

00:15:59 when the government borrows more than it borrows money,

00:16:04 because it spends more than it takes in,

00:16:08 you have to sell a bond.

00:16:10 And the world right now

00:16:11 has a lot of US dollar denominated bonds,

00:16:14 because as the world’s reserve currency,

00:16:17 they sell, sold on them.

00:16:18 And they have very bad returns, negative real returns,

00:16:24 negative real returns significantly, and so on.

00:16:27 So that means that more bonds

00:16:31 has to be sold than are bought.

00:16:36 And that means that the Federal Reserve

00:16:40 is faced with the choice of having to raise

00:16:43 the interest rate to curtail borrowing,

00:16:47 which slows the economy and hurts the markets,

00:16:49 or by filling that difference and producing money,

00:16:55 the debt monetization, which produces an inflation

00:16:59 in goods, services, and financial assets.

00:17:03 So in that regard, that’s the United States’s position.

00:17:08 In China’s case, its balance of payments is better.

00:17:13 China has displaced the United States

00:17:17 as the world’s largest trading country.

00:17:20 In other words, more exports to other countries.

00:17:23 And as a result, it’s economically competitive,

00:17:28 but it doesn’t have the world’s reserve currency.

00:17:31 It’s a real blessing.

00:17:32 So the United States, it has the world’s reserve currency,

00:17:36 but it is risking it because of this imbalance.

00:17:40 So if you look at history,

00:17:42 you see that those go slowly,

00:17:45 but when they go eventually, they go quickly.

00:17:50 So there’s a risk of that financially.

00:17:54 Then there’s the issue of internal order.

00:17:58 So I’m just giving you the major ones,

00:18:00 but I’ll get into some of the other ones too.

00:18:02 Right now, there’s a lot of internal conflict

00:18:06 in the United States, which affects

00:18:09 how well it works.

00:18:14 In China, there’s less internal conflict

00:18:17 because it’s a more autocratic state,

00:18:20 but also they’ve created this bifurcation

00:18:24 of what is political and what is economic

00:18:29 in terms of producing that prosperity.

00:18:32 So if you stay out of the politics pretty much,

00:18:35 and then you’re seeing entrepreneurship,

00:18:39 you’re seeing the finances of new businesses and so on.

00:18:44 And so that internal working,

00:18:48 that’s subject to different people’s interpretations

00:18:51 whether they like it or not,

00:18:52 but the internal conflict in terms of those kinds

00:18:55 of measures is less.

00:18:57 Sorry to pause on that for a second.

00:19:00 So these measures, I guess you don’t want

00:19:02 to sort of romanticize any one measure

00:19:06 or something like that, overinterpret any one measure,

00:19:09 but is internal conflict always a bad thing?

00:19:13 Is it a complicated calculation?

00:19:18 Or do you kind of, the way we think

00:19:19 about these measures that you’ve presented,

00:19:21 we should be thinking like the higher, the better,

00:19:24 the lower, the worse, I mean, of course,

00:19:27 depending on the measure.

00:19:27 Well, in many cases, the conflict that produces

00:19:32 the revolution produces revolutionary changes

00:19:37 that lead to resolutions and lead to new starts.

00:19:44 And so a short term civil war is a hellacious experience.

00:19:52 And at the same time, it can be the transition

00:19:57 to a new beginning.

00:19:58 Also, there are different types of conflict.

00:20:03 Competition, which makes things, makes everything better,

00:20:08 is a productive conflict, whereas destructive conflicts

00:20:16 are not good over the short time.

00:20:20 So that’s how those go.

00:20:23 So within each measure, the story is complicated.

00:20:29 Yeah, but my measures are sort of clear,

00:20:32 meaning how much political conflict,

00:20:35 how much social conflict.

00:20:38 In other words, you can measure conflict,

00:20:40 you can measure fighting, you can measure crime rates,

00:20:44 you can measure lots of different ways of conflict.

00:20:49 So the measures are a composite of different types

00:20:53 of internal conflict.

00:20:55 What are some other interesting measures,

00:20:57 maybe if you can also mention that,

00:20:59 for me in particular, interest is education and innovation.

00:21:03 Yes, the classic cycle, the most important leading indicator

00:21:08 is the quality of education.

00:21:11 Most importantly, broad based education

00:21:16 drawn from the largest population

00:21:18 because you can never tell who the talent is going to be.

00:21:23 So where are they gonna come from?

00:21:25 So for example, if you look at the Chinese dynasties,

00:21:28 the great Chinese dynasties and the Confucian approach,

00:21:33 it was meritocratic of everybody could sit for exams

00:21:38 and so on broad base of drawing in the populations.

00:21:41 And you see that if you go across societies

00:21:45 because that draws on the largest number of population

00:21:49 to get education.

00:21:50 And it also, that creates a reality and a perception

00:21:58 that the system is fair, equal opportunity,

00:22:01 not just one of privilege.

00:22:03 And that helps to create social stability.

00:22:06 But education is not just education in understanding facts

00:22:13 and so on, it is education in civility

00:22:17 of how to behave together.

00:22:19 And so if they’re smart,

00:22:21 they understand how to be productive

00:22:23 because they work well together and they’re productive.

00:22:27 And then that leads to the next stage.

00:22:30 You could see in the lines in the charts, I plotted these

00:22:35 so that you could see in a typical cycle,

00:22:37 you could see that education is the long leading indicator.

00:22:42 And then you could see, as you mentioned,

00:22:45 that what you see is inventiveness and technology measures

00:22:49 then follow and you see then also competitiveness

00:22:54 and world markets follows.

00:22:55 For example, in the early stages of a cycle,

00:22:59 the industries that they go into tend to be very basic

00:23:04 industry because they have cheap labor,

00:23:06 something like textiles and simple manufactured goods

00:23:10 and so on.

00:23:11 But as the education rises,

00:23:13 then they move up the value chain to greater technologies

00:23:19 and so on, which raises incomes and raises productivity.

00:23:23 So yes, those and as you say,

00:23:25 there are 18 different measures like that,

00:23:28 but education and then civility and the inventiveness.

00:23:32 So you see it reflected in who’s inventing what.

00:23:38 And that corresponds then who’s trading with,

00:23:41 who’s a big trading country

00:23:43 and where’s the value of economic output

00:23:46 and what are per capita incomes.

00:23:47 They all follow those arcs.

00:23:51 Yeah, like you said, the fascinating thing about your book,

00:23:53 so there’s philosophy, there’s wisdom, but there’s plots.

00:23:58 Yeah, you can see it.

00:24:01 So it’s not just your opinion.

00:24:02 It’s kind of like you can interpret it in any way you like,

00:24:06 but you’re just giving a lot of your own insights

00:24:09 along with the numbers.

00:24:12 If you were to look at the American nation,

00:24:15 the American empire and the trajectories

00:24:18 looking into the future given these measures,

00:24:22 what is the trajectory that leads to the collapse

00:24:25 of the American empire based on these measures?

00:24:28 What are the concerning indicators

00:24:30 and if those break down further, what does that look like?

00:24:34 Well, all of those indicators are concerning,

00:24:41 maybe except for one, which is technology,

00:24:47 the technology niche, although even in that area,

00:24:51 the United States is improving at a slower rate

00:24:56 than is China for various advantages that they have there.

00:25:00 They put out about eight times as many computer engineers

00:25:03 they have free data and so on, but if you look at them,

00:25:08 so the financial is a concern.

00:25:12 The internal order, disorder is a concern.

00:25:17 Then if you look at education levels,

00:25:20 the United States is in many ways

00:25:23 is losing its educational advantage.

00:25:27 If you were to look at, compare it with China,

00:25:30 if you take general public education in the United States,

00:25:34 it’s deteriorated tremendously

00:25:37 even in comparison to developed countries.

00:25:40 There are scores, PISA scores and so on,

00:25:42 and it’s something like 38th in the world or something

00:25:45 and that was a big plunge, average public education.

00:25:48 If you look at the best universities in the world,

00:25:52 the United States is unique

00:25:54 in having the best universities in the world,

00:25:56 so there are these privileged universities

00:25:58 in the world, so there are these privileged spots

00:26:02 that are, you know, excellent, uniquely excellent.

00:26:06 So when you look at the comparison,

00:26:09 education in China is improving rapidly

00:26:13 and the quantity is a quantity of educated people

00:26:19 in the areas that they’re moving in is greater

00:26:23 and the resources that they’re putting behind it is greater

00:26:27 and so you see the results are greater,

00:26:30 but it’s sort of along the lines that I’m dealing with.

00:26:34 If you were to follow through

00:26:36 in terms of actual productions,

00:26:40 I think you know in terms of technologies,

00:26:44 there are some areas that the United States is in a lead

00:26:48 at the moment, there’s some areas that China’s in a lead,

00:26:51 but China’s gaining very quickly.

00:26:54 When I first went to China, 1984,

00:26:58 I would bring $10 calculators

00:27:01 and I gave them away as gifts to high ranking people

00:27:05 and they thought they were miracle devices.

00:27:08 Right now, in terms of areas like quantum computing

00:27:13 and AI and you know, many areas,

00:27:18 you have a race going on

00:27:20 and so if you take the trajectory of the competitiveness,

00:27:24 not just look at the current level,

00:27:26 you have a situation where they’re improving

00:27:29 at a much faster rate.

00:27:31 This is all good for the world if the world can get along.

00:27:36 And the main thing I think is,

00:27:43 how do you have a healthy world

00:27:44 and how do you have a strong economy

00:27:45 and how do you have a strong situation is be strong.

00:27:49 The United States is war is with itself.

00:27:53 That’s the main war.

00:27:55 You know, it’s very simple in history.

00:27:59 Be financially sound, earn more than you spend

00:28:04 and be strong in these ways

00:28:08 and pretty much everything will take care of itself.

00:28:13 But you make it sound simple of course

00:28:15 because there’s a momentum when things degrade,

00:28:17 when the education system degrades,

00:28:19 when you start borrowing,

00:28:21 when I mean, all of these indicators,

00:28:24 once they’re going down, there’s a momentum to it, right?

00:28:28 So it’s hard to reverse it.

00:28:30 Right and there are circumstances that you’re then in.

00:28:33 For example, indebtedness.

00:28:36 You know, it’s politically desirable

00:28:41 for those to borrow money and spend

00:28:44 because their constituencies only look at what they get

00:28:49 and when they get a lot, they don’t pay attention

00:28:51 to the balance sheet and how much debt is on the books.

00:28:55 So it’s always better to borrow, spend

00:28:58 and then leave the cleanup to the next guy.

00:29:01 And so you inherit a lot.

00:29:04 You inherit it as a new president enters in

00:29:09 or new legislators, they have a lot of debt,

00:29:13 they have a broken down infrastructure,

00:29:16 they don’t have enough money to fix that.

00:29:19 And so that’s the lay of the land

00:29:22 that the prior generations put you in

00:29:26 and there you are.

00:29:28 And so that’s right.

00:29:30 It’s difficult because when you start to think,

00:29:33 okay, what’s healthy?

00:29:34 Well, earn more than you spend.

00:29:37 Well, that’s not so easy

00:29:38 because you know, what does that mean?

00:29:41 Go earn more?

00:29:42 I mean, okay, that’s not so easy.

00:29:44 Spend less?

00:29:47 That isn’t gonna work.

00:29:49 So now what do you do?

00:29:50 Okay, you have this debt that you then monetize

00:29:54 and that’s why it’s classic.

00:29:55 So yes, that’s why these cycles occur

00:29:57 because what has created before,

00:30:00 what happened before created the lay of the land

00:30:03 that is then increasingly difficult to deal with.

00:30:06 So what can great leaders do in this moment?

00:30:08 I mean, maybe my sense is leadership is crucial here.

00:30:13 So for example, to do very large projects

00:30:16 and invest in the education system

00:30:18 that sort of try to fix the fundamentals

00:30:21 or maybe invest more and more into the innovation

00:30:25 and the development of new technologies and so on.

00:30:29 It feels like that just doesn’t happen organically.

00:30:33 So you have to have strong leaders

00:30:37 that convince the populace

00:30:41 of the importance of these ideas.

00:30:43 Well, I completely agree with your list.

00:30:46 What we have is a situation

00:30:48 where everybody has their opinions

00:30:52 and they have to sort of get them exactly right

00:30:54 and they all fight with each other

00:30:56 about whether their opinions.

00:30:58 So the most important thing is that we become bipartisan

00:31:03 so that we don’t and we get over our differences.

00:31:07 I would have a bipartisan cabinet.

00:31:10 I would draw upon both members of both parties,

00:31:15 the moderates who are going to be able to work together.

00:31:20 So as then we have one country

00:31:24 and then we deal with those in a means

00:31:27 that works for the majority of the people in the middle

00:31:30 rather than the polarity.

00:31:32 I think our greatest risk is in not being able to do that.

00:31:37 So I would say that’s a paramount importance

00:31:41 because we have the resources,

00:31:45 wealth, real wealth and science

00:31:48 and everything has never been better than it is.

00:31:51 But the notion is that it has to work

00:31:54 for the majority of people

00:31:56 and we have to keep it being productive.

00:31:59 So that group has got to calmly and knowledgeably

00:32:04 work together so that they increase the size of the pie

00:32:09 and they create broad based prosperity.

00:32:12 So that is a paramount importance.

00:32:15 Whatever they do, if they do it that way,

00:32:18 I can say I’m happy about

00:32:20 because that other alternative

00:32:23 is the really scary alternative.

00:32:28 The scary alternative,

00:32:31 the different ways it has evolved throughout history,

00:32:35 some of it has led to wars.

00:32:39 What are the future trajectories

00:32:41 that lead to a potential war with China?

00:32:44 Cold war or hot war?

00:32:46 Is this something you think about?

00:32:48 Is this something you’re worried about?

00:32:50 Yeah, I’d like to talk about both wars.

00:32:52 So the war with China, as I say,

00:32:54 there are five kinds of wars.

00:32:56 There’s a trade war, technology war, geopolitical influence

00:33:02 war, capital war, and military war.

00:33:08 As far as military war goes,

00:33:10 I think it’s only a Taiwan issue, but that’s a big issue.

00:33:16 And we could talk about that for a minute,

00:33:18 but those others, they’ll be rough competitions

00:33:22 and we’ll have that type of evolution over a period of time.

00:33:27 That’s what that war looks like.

00:33:30 Taiwan has been, for a long time,

00:33:35 a sovereignty issue to China.

00:33:40 And it has its roots

00:33:42 in what’s called the 100 years of humiliation.

00:33:47 From the 1840s to 1949, foreign powers came in,

00:33:52 took advantage of China, they had the opium wars

00:33:56 and such times, and that represented

00:34:00 the 100 years of humiliation.

00:34:03 And Taiwan represents their sovereignty

00:34:09 and their important thing.

00:34:11 And 50 years ago, starting 50 years ago,

00:34:14 there was an agreement that there is one China

00:34:18 and Taiwan is part of China.

00:34:21 And that there would be peaceful reunification.

00:34:26 The peaceful reunification hasn’t happened.

00:34:31 And in their view, that’s a very big issue.

00:34:34 And so it’s a big contentious issue.

00:34:37 And that could produce a military war,

00:34:41 could produce a military accident,

00:34:43 could produce, it’s a very tense situation.

00:34:46 And if we had a military war, God help us

00:34:49 because of the capacity in all different new ways

00:34:53 to inflict harm on each other.

00:34:56 But anyway, that’s that.

00:34:58 If you don’t have that military war,

00:35:01 you’ll have the competition between those other kinds of wars

00:35:06 and whoever is strongest in those areas will win.

00:35:11 Where do you put cyber war within the five?

00:35:14 Well, cyber war is a military war.

00:35:17 I’m assuming the type of cyber war that you’re referring to

00:35:22 is that which is used to inflict pain

00:35:24 on the other party through cyber.

00:35:26 So cyber wars, you’ll see cyber war.

00:35:29 You could see space war.

00:35:31 You can see drone warfare.

00:35:35 New types of warfare, not just the traditional

00:35:40 and nuclear type of warfare.

00:35:42 But you could see any of the above.

00:35:44 What are the defining characteristics?

00:35:48 What are the interesting things about Xi Jinping,

00:35:51 the president of China, as a leader on the world stage?

00:35:55 His father was a early leader.

00:36:01 He was himself in the Cultural Revolution in times,

00:36:09 treated brutally.

00:36:12 And during that period of time, it was very, very difficult.

00:36:17 And he came up through the ranks

00:36:21 and he’s a very intelligent man.

00:36:26 When he first came to power,

00:36:29 as you know, they have two five year terms,

00:36:32 and we’re now coming to the end

00:36:34 of the second of those five year terms.

00:36:36 When he first came to power,

00:36:38 he felt that there should be a lot of reform.

00:36:42 And reform meant moving to much more

00:36:46 of a market and open economy.

00:36:49 When that happened, him coming in,

00:36:53 I had some contact with economic policymakers,

00:36:56 but in the circumstances then,

00:36:59 were that five major banks lent to state owned enterprises

00:37:03 and local governments with implied government guarantees.

00:37:07 And so there was not control of that

00:37:10 and the movement to aim more of a market economy.

00:37:14 And the development of markets was a primary

00:37:17 and also the dealing with the corruption issue.

00:37:20 There was a lot of corruption prior to that,

00:37:24 and that was viewed as an existential threat to the system.

00:37:28 So that became the primary objective.

00:37:31 And then as time progressed over those 10 years,

00:37:36 there was a lot of changing in the world,

00:37:42 their financial circumstances,

00:37:43 opening many, many other markets.

00:37:46 They particularly getting money

00:37:48 to small and medium sized enterprises

00:37:51 and developing a lending system

00:37:52 and then establishing controls on it.

00:37:55 So right now there’s a vibrant capital markets.

00:38:00 You can raise capital, you can be an entrepreneur,

00:38:03 you can become a billionaire in the capital markets.

00:38:07 And they developed the markets

00:38:09 to be the second largest capital markets.

00:38:11 At the same time, they had to deal

00:38:15 with their rising debt issue,

00:38:18 which they began to deal with really about four years ago,

00:38:24 when the second largest capital markets

00:38:27 were about four years ago, when the second term began.

00:38:33 And then Lu He became the vice premier

00:38:41 responsible for that and to deal with those issues.

00:38:46 So you see right now that what’s happening

00:38:49 is the dealing with the real estate bubble.

00:38:53 There was a development in real estate, a bubble,

00:38:55 which produced a lot of unproductive lending.

00:38:59 And Xi Jinping said, houses are meant to live in,

00:39:06 not to speculate on.

00:39:08 And so that was wasteful.

00:39:09 So they established what they call three red lines,

00:39:12 which are financial ratios,

00:39:14 that the property developers had to live within.

00:39:18 And that is then causing the adjustments

00:39:21 that are going on now, which in my view are very healthy

00:39:25 because whenever there’s bankruptcies

00:39:28 and so on, most in the public think, okay, that’s a problem.

00:39:33 It’s in many cases really a cleaning up of bad debts

00:39:36 and bad practices.

00:39:37 And so that’s what’s going on.

00:39:40 So that’s, let’s say economically.

00:39:42 At the same time, there is the changing relationships,

00:39:48 the changing world order, the changing relationships

00:39:51 with the United States and other countries,

00:39:54 which is becoming much less cooperative

00:39:57 and much more warlike, much more confrontational.

00:40:02 Those two things, the domestic debt problem

00:40:06 and the domestic, has led to what’s called core,

00:40:11 what they call core leadership,

00:40:13 which means a leadership more around him

00:40:17 that is less challenging

00:40:21 because they believe in history

00:40:23 that during very difficult times,

00:40:26 a more centrally controlled decision making process

00:40:29 lends itself better than to a more fragmented

00:40:32 political contentious project.

00:40:35 And that’s basically what’s going on now.

00:40:39 You said it very eloquently,

00:40:42 but you mean the leadership is surrounded by yes men

00:40:46 and there’s a lot of centralized control.

00:40:50 That characterization is much more black and white

00:40:55 than it really is.

00:40:57 But it leans towards that direction.

00:41:00 Like for example, of the standing members

00:41:02 of the Politburo, four are more allotted,

00:41:07 three are less so.

00:41:09 You have to understand that it’s kind of

00:41:11 a collective leadership at the top.

00:41:14 And then of course, there’s just jockeying for power

00:41:18 in a highly political sense at the top.

00:41:22 But no one leader can be successful

00:41:25 against all those powers at the top.

00:41:30 So it’s very politically negotiating.

00:41:32 It’s very much more like if you put in the United States

00:41:37 the Democrats and the Republicans

00:41:39 and they had to be in the same government

00:41:41 and they work it out.

00:41:43 It’s kind of something like that.

00:41:45 And so that’s that struggle, but it’s an internal struggle.

00:41:49 Where do you put the importance of some of these ideas

00:41:53 at the founding of the United States

00:41:55 when now we’re talking about that at the context of China,

00:41:59 the freedom of speech, freedoms?

00:42:02 What China is doing with the central management

00:42:04 of a lot of things, it’s enabling a lot of growth,

00:42:08 but it’s also limiting people on the very basic level

00:42:12 in terms of freedom.

00:42:13 The kind of freedom that I think can lead

00:42:17 to entrepreneurship, to starting new businesses,

00:42:19 to having big dreams and chasing those dreams

00:42:21 and then creating totally new things in whatever the space,

00:42:25 maybe in technology, in business and whatever.

00:42:30 How important is that as a metric for society?

00:42:33 Well, they have a view, which is the idea of a dialectic,

00:42:38 which means that two things are at obvious,

00:42:41 that everything comes with pros and cons

00:42:43 and two opposites exist.

00:42:46 And you want the benefits of those two opposites

00:42:50 and how do you deal with the benefits of those two opposites?

00:42:54 So let’s say you want the capital markets

00:42:57 because it gets money into the hands of the entrepreneurs

00:43:02 who are motivated, they build fortunes,

00:43:04 and that drives an economy to do very well.

00:43:07 And at the same time, it produces the other problems,

00:43:12 the wealth gaps, the other problems,

00:43:15 the debt cycle that we’re talking about and so on.

00:43:18 And Deng Xiaoping, how do you reconcile communism

00:43:23 and the market economy and the capital markets?

00:43:27 And he famously said,

00:43:32 it doesn’t matter if it’s a white cat or a black cat,

00:43:34 just as long as it catches mice.

00:43:36 In other words, if it works in making the country richer,

00:43:40 then that becomes the objective

00:43:42 and then they move that along.

00:43:43 So there are these conflicts.

00:43:46 And one of the leaders described it to me as follows,

00:43:51 because it’s confusion and it goes back

00:43:53 over a period of time.

00:43:55 There’s a hierarchy and it’s an extension of the family,

00:44:00 he described it.

00:44:01 And he said, the United States is a country of individuals

00:44:06 and individualism, and that is its vibrancy

00:44:11 that we see the individual rights to speak up,

00:44:17 the individual protection of the individual,

00:44:22 individual property rights and all of those things

00:44:25 is of paramount importance.

00:44:28 And we build our organization.

00:44:29 That’s why democracy is from the bottom up

00:44:32 or even a company, we’ll get together

00:44:34 and we’ll be partners to prosper together.

00:44:37 That is the American approach.

00:44:39 He was describing that in China,

00:44:43 it’s an extension of the Confucian family, essentially.

00:44:47 And so it’s almost like there’s a hierarchy.

00:44:52 And so what they think about is the common good,

00:44:57 not the individualism.

00:44:59 So for example, if they want a high speed rail

00:45:02 to go from one place to another,

00:45:04 and that’s best in the common good,

00:45:06 then the individual protections

00:45:08 that would stand in the way of doing that

00:45:11 would be of secondary concern.

00:45:13 So that notion of controlling.

00:45:17 So for example, what they’re doing with video games,

00:45:24 they control what type of video games

00:45:28 and how many hours a day kids can be on video games

00:45:33 operating in that way,

00:45:35 because they believe that that’s good for the society

00:45:38 and that’s very controlling.

00:45:40 In the United States,

00:45:42 I think probably most parents would say, leave it to me.

00:45:45 And it’s a matter between me and my kids.

00:45:48 The same thing has to do with data.

00:45:50 In other words, in the United States,

00:45:52 who controls the data?

00:45:55 Does the company control the data?

00:45:57 Do you individually control the data?

00:46:00 And so the inclination would be to figure that out,

00:46:03 but nobody would say that the government

00:46:05 is going to control the data

00:46:07 because of our inclination of really anti government control.

00:46:11 In China, it would be that the government

00:46:14 will control the data

00:46:15 because that’s going to be best for the society.

00:46:18 And it depends who you trust.

00:46:20 But that’s, so that difference in philosophy

00:46:24 is very much at the heart of that.

00:46:28 As far as your question in terms of effectiveness,

00:46:33 it really is, in China’s case,

00:46:35 it’s how you balance the things, right?

00:46:38 So what they’re attempting to do

00:46:40 is to create a lot of freedom and creativity

00:46:44 in areas that are not political, let’s say.

00:46:50 And so you see a lot of entrepreneurship,

00:46:53 you see a lot of product development,

00:46:55 you see a lot of creativity happening in that way.

00:47:00 So the stereotype that you don’t see creativity happening

00:47:04 is an old stereotype,

00:47:06 whereas a lot of creativity is certainly happening.

00:47:09 And the system can work well

00:47:10 if they can achieve that kind of balance.

00:47:13 It’s proven to have worked well.

00:47:15 Since I started going there in 1984,

00:47:18 per capita income, real per capita income,

00:47:21 has increased by 26 times.

00:47:24 The longevity rate has increased by 10 years.

00:47:28 The poverty rate has fallen from 88% to less than 1%

00:47:33 in terms of basics like starvation and things.

00:47:37 And if you read history, Plato’s Republic,

00:47:41 he talks about the cycles, democracy and autocratic

00:47:46 and the benevolent despot and all of that,

00:47:50 each has their own vulnerability.

00:47:53 The vulnerability of democracy,

00:47:55 which has been a remarkable, remarkable system

00:47:58 and I don’t have to extol the benefits of it,

00:48:02 but the vulnerability of it has always been

00:48:07 the internal conflict that produces itself as anarchy.

00:48:13 In World War II, four democracies

00:48:18 chose to be autocracies

00:48:22 because there was internal disorder

00:48:25 and there was the belief, will somebody bring about order

00:48:30 and get control of the situation?

00:48:32 That was in Germany, Italy, Japan and Spain.

00:48:38 They were parliamentary systems

00:48:41 that turned themselves over to that.

00:48:43 So both systems have vulnerabilities.

00:48:49 I think the main thing that we need to think about

00:48:53 is those vulnerabilities.

00:48:54 Democracy is an amazing system

00:48:58 because the adherence to the rules and the system

00:49:03 and the checks and balances is quite amazing

00:49:06 and it gives it a flexibility to change without civil wars.

00:49:12 But there has to be the respect of the rules.

00:49:15 And when you see something like

00:49:18 they will not accept elections

00:49:22 or they will not accept rules, history has shown,

00:49:27 when the causes that people are behind

00:49:29 are more important to them than the system,

00:49:32 the system is in jeopardy.

00:49:34 So we have a situation that’s very much like that

00:49:38 in terms of, let’s say, the 2024 elections.

00:49:42 I believe that there’s a very high chance

00:49:46 that neither side will accept losing, for example.

00:49:51 And so we have that kind of a situation.

00:49:56 So one would hope that one could rise above

00:50:00 the disagreements and rely on the system

00:50:04 for resolving disagreements.

00:50:06 Because if that doesn’t happen, then we have our own chaos.

00:50:13 So the kind of the trend that started in 2020,

00:50:16 or I mean, I suppose it’s been there,

00:50:19 it’s been growing.

00:50:22 One representation of this internal disorder

00:50:24 has been the growing trend of being skeptical

00:50:27 about the results of the election.

00:50:29 Well, it started before that.

00:50:31 There was the emergence of population

00:50:35 before President Trump was elected.

00:50:40 He was basically elected as a populist

00:50:43 because there was a large percentage of the population

00:50:46 that felt that the system didn’t work for them.

00:50:50 And he tapped into that.

00:50:52 And he was largely elected as a populist leader,

00:50:56 first populist leader in a developed country.

00:51:00 And so populism began then.

00:51:04 And that was a battle of one group against the other group.

00:51:08 And so since then, it’s been like that

00:51:12 and it continued to grow.

00:51:17 You’ve mentioned the vulnerability of democracy,

00:51:23 that internal disorder is the vulnerability of democracy.

00:51:26 What’s the vulnerability of a system like China?

00:51:29 Maybe one way to say is put China aside

00:51:32 and look at history, look at Soviet Union.

00:51:34 What’s the vulnerability of a communist type system?

00:51:39 Well, I’ll call it both communist and autocratic,

00:51:46 depending on how much autocracy,

00:51:48 is that it lacks flexibility.

00:51:52 It lacks the ability,

00:51:57 but I should deal with them differently.

00:51:59 In other words, there’s the economic system.

00:52:02 The economic system threatens motivation and productivity.

00:52:07 So communism or socialism has to be done in a way

00:52:12 where you can threaten productivity.

00:52:16 Capitalism has, and what I mean by that,

00:52:20 I mean free markets and capital markets

00:52:24 have been an effective way of allocating resources

00:52:28 and also creating the incentives and the resources,

00:52:33 providing the resources for the inventiveness of new ideas.

00:52:37 And so if I compare that, what the Chinese have done

00:52:42 to a large extent is to recognize that

00:52:45 and have made a move.

00:52:47 That’s why the seeming dialectic or the conflict

00:52:52 between those two things exists.

00:52:53 But anyway, that’s it.

00:52:55 As far as an autocratic system,

00:52:57 rather than one man, one vote from the population up,

00:53:04 the risks of the autocratic system

00:53:07 is that there’s enough discontent that arises

00:53:12 that the system doesn’t have the flexibility

00:53:16 and that rather than bending, it breaks.

00:53:21 That’s the big risk.

00:53:24 The notion of trying to control a population

00:53:28 if there’s that, rather than giving it the flexibility.

00:53:32 So that would be the big risk of the autocratic system.

00:53:36 What’s the human, because you mentioned

00:53:39 like the top gets bigger with the empires

00:53:42 and you start to get things for granted.

00:53:45 Is some of this just human nature?

00:53:48 So the concern with China, with autocratic nations,

00:53:53 the concern with the Third Reich, the Soviet Union,

00:53:59 was that fundamentally at the individual level,

00:54:03 the humans involved at the top,

00:54:06 they start becoming, they’re starting to lose touch

00:54:09 with reality in a way that no longer makes them.

00:54:13 I guess that’s the representation,

00:54:14 the flexibility that you’re referring to.

00:54:16 Well, I mean, in a democracy, you could change.

00:54:21 You can go as far left or as far right.

00:54:23 You can change the leaders easily.

00:54:25 And so the people don’t become,

00:54:28 they pretty much only have themselves to blame.

00:54:32 And one of the problems of that

00:54:35 is they may not choose the best leaders,

00:54:39 but they have that flexibility.

00:54:42 So vote and you get what you wanted.

00:54:46 In the case of the autocratic, let’s say leaders,

00:54:49 and then the movement from democracies to autocracies,

00:54:54 what you see normally that movement

00:54:57 is that one of the systems is not working.

00:55:00 Let’s say the democracy is not effectively,

00:55:02 everybody’s arguing with each other

00:55:04 and nobody’s getting anything done.

00:55:06 You know, like Mussolini,

00:55:08 the trains are not running on time.

00:55:10 And that would be the example,

00:55:12 geez, this place has gotten chaotic.

00:55:14 Will somebody get to control?

00:55:16 And then you get the autocratic

00:55:20 and then he’s autocratic enough to boss people around.

00:55:24 And then you follow those kinds of orders.

00:55:29 And it’s like maybe a CEO in a powerful company

00:55:32 going around and that could work well

00:55:34 or it could work badly.

00:55:36 Most companies are run as like autocracies in a sense.

00:55:41 You know, there’s the hierarchy and the command economy

00:55:44 and that kind of thing.

00:55:46 And that can work well or not.

00:55:51 But then quite often when you get the populist autocratic,

00:55:56 their personality is something that they want to fight

00:56:01 and they become more nationalistic

00:56:04 and they tend to become more militaristic.

00:56:07 And human nature at that stage lends itself to fighting.

00:56:13 There’s an arc here that when we think of a country

00:56:18 and we say we, and we think of a country,

00:56:22 it’s not true, it’s not like that.

00:56:24 There are individuals who change.

00:56:26 One generation dies and another generation comes along.

00:56:30 And one of those arcs is that the one generation

00:56:35 of the ones who have been through war

00:56:39 don’t wanna go to war and are more happily willing

00:56:44 to abide by whatever the rules are.

00:56:47 As you get farther along into that cycle

00:56:50 and you get a new generation and they forget about wars

00:56:53 and the horrors of wars, then they want to fight.

00:56:59 And so you’re seeing right now the emerging

00:57:02 of fight for right and what that means

00:57:06 is you see it internally, fight where are you

00:57:10 and fight for that thing and they mean fight.

00:57:14 And then externally, fight, are you going to be

00:57:19 the strong one who will fight and win?

00:57:21 And that develops on both sides, this fight and win

00:57:26 and each side is cheering each other on into a war.

00:57:30 But that comes by those who really have not experienced war

00:57:34 because it comes in their part of their lifetime.

00:57:38 Humans are fascinating.

00:57:40 Humans are fascinating.

00:57:41 And by the way, human nature has not changed

00:57:45 over the thousands of years.

00:57:48 So it’s so interesting because like in doing this study

00:57:51 and it comes across in the study,

00:57:54 it’s like watching the same movie over and over again.

00:57:56 You know, you see the arc and you see it happen

00:58:01 over and over again.

00:58:02 The only things that seem to change are the clothes

00:58:05 people wear and the technologies they use.

00:58:07 Yeah, and then somebody probably would disagree

00:58:12 with you about the clothes.

00:58:13 Maybe there’s also cycles within fashions.

00:58:16 Maybe we’re not even creative there.

00:58:18 What do you make of Russia and Vladimir Putin?

00:58:23 What do you think about Putin as a leader,

00:58:26 as a human being on this world stage within the context

00:58:30 of the cycles of empires that you think about?

00:58:33 Well, Putin came to power at the failure

00:58:38 of Russia’s last order.

00:58:41 So there was the end of communism

00:58:45 and there was the development of the market economy,

00:58:47 the collapse of the Soviet Union.

00:58:50 And at that time, he was appointed by Yeltsin

00:58:57 who was an alcoholic and had problems managing

00:59:03 and was put into power.

00:59:05 And the conditions in the Russia were,

00:59:08 there was anarchy, there was no money.

00:59:12 It had the classic end of cycle ingredients.

00:59:15 It was broke.

00:59:16 It was people were fighting with each other.

00:59:18 It was in the anarchy.

00:59:20 And that’s when he came to power.

00:59:23 And there were not institutions.

00:59:27 The whole thing had collapsed

00:59:29 and it was not effective ministry of education,

00:59:31 ministry of anything.

00:59:34 And so the idea was that they needed 25 years of stability

00:59:41 and they needed a democracy

00:59:43 and they needed the improvement of capital markets.

00:59:47 So he’s been in that position as I guess I would call him

00:59:56 a semi autocratic leader in that from all indications,

01:00:02 he would respect the democracy and he’s very popular.

01:00:07 He’s won democratic elections

01:00:10 because he’s been a strong leader

01:00:11 and he’s brought peace and stability

01:00:16 to Russia after the breakup of the Soviet Union.

01:00:21 And he’s a strong leader in pursuit of the country’s interest

01:00:31 in a way where Russia is not a significant economic power

01:00:41 but it is a significant military power.

01:00:43 So the issues, and then there’s a strong alliance

01:00:48 between Russia and China now.

01:00:51 So that’s kind of the lay of the land.

01:00:55 And then there are sensitivities.

01:00:58 The Ukraine issue is a sensitivity

01:01:02 because of there are a lot of Russians

01:01:05 who live in the Ukraine

01:01:07 and there’s also the issue of NATO on their border.

01:01:11 So there are those kinds of things

01:01:13 and he has military power

01:01:14 and he has a strong alliance with China.

01:01:18 And I guess that’s my best summary

01:01:21 of what his position is.

01:01:24 He’s a strong leader, popular.

01:01:30 These are not subjective interpretations.

01:01:33 These are objective interpretations.

01:01:35 Yeah, it’s interesting just in this conversation,

01:01:38 you’re not sort of doing the usual criticism

01:01:43 of any one particular system.

01:01:45 You’re looking at these systems

01:01:46 from the perspective of history.

01:01:48 You’re just describing how they work.

01:01:50 It’s often times when you talk about what Russia is today

01:01:54 or what the Soviet Union was or what China is today

01:01:57 is you start to criticize.

01:01:58 Well, they do this kind of censorship

01:02:01 or they do this kind of,

01:02:02 they limit freedoms in this kind of way.

01:02:05 But you’re just kind of describing this

01:02:07 as a nation with ideas, what they think is right.

01:02:11 This is how they hope to get it to work.

01:02:13 This is why it’s working.

01:02:14 This is what’s not working.

01:02:16 Here’s metrics that show that it’s not working.

01:02:19 I think that’s a refreshing way to think about it.

01:02:21 It’s easy though, I mean, you got some criticism

01:02:25 saying that I think China is a strict parent.

01:02:30 Some people criticize these countries for doing,

01:02:33 for violating human rights.

01:02:35 I suppose there’s some people that criticize the United States

01:02:39 for violating human rights.

01:02:41 But what are your thoughts on the world stage today

01:02:48 about some of the behaviors it has governed

01:02:51 in terms of respecting the rights,

01:02:53 the basic rights of human beings?

01:02:55 You described accurately how I just tried to look at this

01:03:00 and how I just tried to look at things in a non,

01:03:05 I don’t want to impute my values on anybody.

01:03:12 I mean, there are intolerable things.

01:03:14 So I’m not saying there aren’t intolerable things.

01:03:16 But one of the great things of being an American here

01:03:20 is that I grew up with all different nationalities,

01:03:23 having all different points of view

01:03:26 and all different religions

01:03:27 and all different ways of operating.

01:03:30 And I’ve come to treasure the fact that that is,

01:03:35 what’s their business is their business.

01:03:37 And then the question is, where do you cross the line

01:03:41 under what circumstances

01:03:42 that others have got to do it my way.

01:03:45 And then when you do it internationally,

01:03:49 the issue of what is a sovereign state,

01:03:52 which as I say in the piece of Westphalia

01:03:56 and you have borders and then when do you cross the line

01:04:00 that my way of doing things

01:04:02 has got to be their way of doing things

01:04:04 or what are the various rights.

01:04:06 And so that’s a very delicate question

01:04:09 or a very difficult question.

01:04:11 And we all have responsibilities to different parties

01:04:16 and we all have different levels of knowledge

01:04:18 about those particular things.

01:04:21 So for example, as an international investor,

01:04:25 I have a responsibility to my investors.

01:04:29 Those who run companies have a responsibility to theirs

01:04:33 of how do they run that.

01:04:34 So if you’re taking Nike or Snickers and so on

01:04:39 and Americans can decide

01:04:41 whether they wanna buy Chinese products

01:04:44 or not buy Chinese products,

01:04:46 we are all faced with those types of choices.

01:04:49 So you have what do you wanna do in your constituency

01:04:52 and you have your choices.

01:04:53 And then beyond that, in many cases,

01:04:56 the issues are quite complex,

01:04:58 like there are geopolitical questions that enter into it.

01:05:02 So, and then I believe that if you disconnected,

01:05:08 if all those entities like myself,

01:05:13 the businesses doing business with China disconnected,

01:05:17 I think that that would be disastrous,

01:05:20 economically disastrous.

01:05:22 And it would also be reduce the understanding

01:05:27 that comes from working together that helps to reduce wars.

01:05:31 And so these are all complicated.

01:05:33 So what we do is, and who makes it my opinion

01:05:38 matters the most?

01:05:39 Why should it be my opinion that matters the most

01:05:41 in making that decision?

01:05:43 So I largely look at the government guidance

01:05:46 that I get not only from my own government,

01:05:49 but from the other governments and I follow the rules.

01:05:52 I’m in 40, we invest in 40 countries.

01:05:55 And we wanna do that in the best way

01:05:57 to provide the diversified portfolio.

01:05:59 And we sort of need that.

01:06:01 Every one of those countries has similar complexities.

01:06:06 There are always one issue or another,

01:06:08 and there’s only so much that we really understand

01:06:12 about all of those issues.

01:06:13 So we rely largely on the guidance that we get.

01:06:17 Yeah, you have to empathize and show respect

01:06:19 to the culture of the place, the way things are done.

01:06:23 You don’t necessarily,

01:06:26 the way you heal relationships between nations

01:06:30 is like you said, you work together.

01:06:32 And that requires kind of to listen

01:06:38 maybe more than you talk.

01:06:40 And I think people in the public sphere

01:06:44 talk a lot about China without really listening,

01:06:46 without understanding much about China,

01:06:48 though one of the things that makes me really sad

01:06:50 because I know how to speak Russian

01:06:53 and I know how much is lost in translation.

01:06:57 It makes me sad that I’ll never really get to know

01:07:00 the Chinese culture because like,

01:07:02 I’ll never really get to know the language,

01:07:04 the literature, just talk to regular people.

01:07:08 It’s not just the government or officials or scientists,

01:07:10 just regular folks, get the culture.

01:07:12 I think if you don’t understand the culture,

01:07:14 just the basics of the human nature,

01:07:18 what people love about their country,

01:07:21 about their family or the kind of hopes they have,

01:07:25 what kind of values they have,

01:07:26 without that you’re not gonna be able to

01:07:30 fully connect with them.

01:07:34 And you have to do that first

01:07:35 to have a chance of building a good world.

01:07:37 I couldn’t agree with you more.

01:07:39 I was very lucky because as I say,

01:07:41 since 1984, so for more than half of my life,

01:07:47 I’ve been going there and the common people

01:07:51 and all sorts of people, and I’ve got to meet them.

01:07:53 I don’t speak the language,

01:07:56 but a combination of through translators

01:07:59 or them speaking English and being in situations.

01:08:02 I had my son go to school, a local school,

01:08:07 and we developed those kinds of understandings.

01:08:10 I think that, but the not wanting

01:08:16 to know the other perspective

01:08:20 is the thing that’s most scary.

01:08:22 Like I’m right now in the middle

01:08:24 and all I want to try to do

01:08:27 is to help mutual understanding.

01:08:31 You’re right, if there were questions probing me,

01:08:34 asking me, what is it?

01:08:36 I’m not on one side or another.

01:08:39 I don’t want to be on one side or another.

01:08:41 I believe that each has their right within there

01:08:44 to approach their different culture in their own way.

01:08:46 So many ways you gave an example.

01:08:50 If they’re not doing harm to others, I mean,

01:08:54 but that issue of trying to understand

01:09:01 is so much better.

01:09:03 That doesn’t mean agree with.

01:09:05 If you are wanting to out clever

01:09:11 and out compete somebody,

01:09:12 it still pays to understand what they’re thinking.

01:09:16 So to achieve understanding of what they’re thinking,

01:09:20 even if you want to go to war with them,

01:09:22 that understanding is the best thing to have.

01:09:25 What we have now is a situation

01:09:28 in which there’s an enemy mentality.

01:09:31 And that means that anything that serves,

01:09:35 seems to be like understanding or conveying understanding,

01:09:39 seems to mistakenly create the notion

01:09:42 of I’m on their side in a war.

01:09:45 And that’s kind of a dangerous thing

01:09:47 because there’s a momentum here to fight.

01:09:51 Henry Kissinger praises your new book

01:09:54 and you thank him in it in the dedication.

01:09:57 What’s your relationship like with him?

01:09:59 What makes him interesting?

01:10:01 Maybe what makes him controversial?

01:10:03 What makes him such a central figure in history?

01:10:05 First, most importantly, he’s unique about seeing things

01:10:10 through all the others eyes.

01:10:14 So if you were, it’s like there’s a chess game.

01:10:18 I mean, I think geopolitics is like a chess game,

01:10:22 but with multiple chess players playing the same game.

01:10:26 So imagine there are six people around

01:10:30 playing the chess game and he could sit in each seat

01:10:34 and he could know how they see it, okay?

01:10:38 And see it in a calm way of how they see it.

01:10:42 He’s unique in that way.

01:10:43 He’s 98 years old and he’s equally able to do that.

01:10:48 And he has a background in which he’s a historian.

01:10:52 So he really understands history super terrifically.

01:10:58 He doesn’t understand economic history as much.

01:11:02 So that’s why to some extent we enjoy having a conversation

01:11:06 because he’s interested in the economic piece he doesn’t know

01:11:10 and I’m so interested in the geopolitical piece

01:11:13 that I don’t know as well.

01:11:15 But anyway, he’s able to do that,

01:11:16 but not only a historian, but a practitioner.

01:11:21 So when you go from an academic to a practitioner

01:11:27 who has that talent to see things through others eyes

01:11:31 in an objective way and to be strategic

01:11:35 rather than just tactical, that’s a very special person

01:11:38 and that’s why Henry is, to me, a very special person.

01:11:43 Yeah, he’s lived a fascinating life.

01:11:45 Just all of the world events he’s been involved in

01:11:49 is fascinating and like you said,

01:11:51 that’s such an interesting skill to have

01:11:54 to consider what are the concerns, the hope, the dreams,

01:11:57 the fears of all the people at the table.

01:11:59 What are they thinking?

01:12:01 I find that people don’t, once again, don’t do that enough

01:12:05 when it’s the obvious thing you should be doing,

01:12:07 whether it’s business deals or political negotiation

01:12:13 or geopolitical negotiation.

01:12:15 I’m often surprised, again, sorry to go to the Russian thing

01:12:18 because I hear Putin talk in Russian

01:12:23 and you start to infer certain intentions,

01:12:26 like not the trivial stuff, like the human being.

01:12:30 What is that human being hoping for himself,

01:12:33 for his country, for his close inner circle,

01:12:36 for the bigger, and I just see that

01:12:39 that’s often just lost in translation.

01:12:41 I just see American leaders talking to Putin

01:12:45 and it’s just not, there’s not a connection.

01:12:48 Absolutely, I know exactly what you’re talking about.

01:12:53 It has never failed that in my listening to a conversation

01:12:58 or even reading a speech and you see then it reported,

01:13:05 inevitably, the reporter picks some headline characterization

01:13:10 that has very little to do with what was really happening

01:13:16 but might be a headline grabber

01:13:19 that’s at some kind of distortion

01:13:20 and there’s a lack of understanding

01:13:22 of really what’s going on.

01:13:25 If it’s okay, let me ask you a couple questions

01:13:27 about cryptocurrency.

01:13:29 You’ve had a few opinions about Bitcoin over the years.

01:13:32 What are your thoughts about Bitcoin today,

01:13:34 its role in the global financial system

01:13:38 and just in human society in general?

01:13:41 Well, the evolution of Bitcoin over the years

01:13:44 is one of the things that has influenced changes in my view.

01:13:51 It has proven itself something like 10, 11 years ago.

01:13:57 Imagine the programming of this and you throw it out

01:14:01 and that’s the idea.

01:14:02 It has not been hacked.

01:14:04 It has operated, it has built,

01:14:09 it has come an amazing way over that 11 years

01:14:14 to be maybe probably the most excited topic

01:14:19 among a lot of people and has been used

01:14:23 and is now has obtained the status of having imputed value.

01:14:28 At the same time, it is one of those assets

01:14:32 that is an alternative money.

01:14:35 I think we’re entering an era

01:14:37 where there’s going to be a competition of monies.

01:14:43 Because of the printing of fiat money

01:14:47 and the depreciated value,

01:14:50 there will be a competition of monies

01:14:54 and Bitcoin is part of that competition.

01:14:57 But there’ll be many monies, not just crypto monies,

01:15:00 but there’ll be central bank crypto monies,

01:15:04 but there’ll be different kinds of monies.

01:15:08 And even monies are things that you buy and sell.

01:15:12 NFTs can become a type of money.

01:15:16 You own it and it’s an investment

01:15:18 and you could say I’d rather own it than own Bitcoin.

01:15:22 Has Ray Dalio bought any NFTs?

01:15:25 Not yet.

01:15:26 But only just because I definitely want to buy NFTs

01:15:35 to just experience them.

01:15:36 Like I think I should produce one and I should.

01:15:40 I should have asked that.

01:15:41 Have you minted an NFT?

01:15:43 You probably should just to know what it’s like.

01:15:45 Yeah, that’s right.

01:15:46 This stuff is happening.

01:15:48 This stuff is real and how it operates.

01:15:51 But like all new real things, some are gonna go

01:15:57 and some are gonna, it’s like in the internet

01:16:00 in the year 2000, pets.com could have been a great,

01:16:05 but maybe pets.com doesn’t make it and who knows.

01:16:08 That’s the beauty of the competitive system

01:16:10 that it’ll evolve and some things will be treasured

01:16:13 and some things will be trashed.

01:16:17 But when I look at it, I think we are in an environment

01:16:21 of what is an alternative money?

01:16:23 A money has two purposes, a medium of exchange

01:16:27 and a storehold of wealth.

01:16:29 And we are looking for, and it’s portable.

01:16:33 And it’s best if it’s recognized in other countries.

01:16:39 So gold is one of those.

01:16:41 So I look at it as an alternative gold,

01:16:46 but I look at a number of things as alternative gold.

01:16:49 And I think that, and gold is still my favorite

01:16:54 because of certain qualities.

01:16:56 For example, you can’t trace it.

01:16:59 In Bitcoin, you can trace who owns it,

01:17:02 where it’s going and so on.

01:17:04 Governments can’t have that ability to trace it and so on.

01:17:07 A gold piece of coin, it’s not connected.

01:17:10 I think not connected has benefits,

01:17:13 particularly in a world where maybe connections

01:17:16 can be more risky.

01:17:17 And then also gold has been for many thousands of years

01:17:25 universally recognized as a source of money.

01:17:28 And central banks, it’s the third largest source of money

01:17:33 in central bank reserves.

01:17:35 And I don’t think Bitcoin is going to serve

01:17:38 those types of purposes and so on.

01:17:40 So for various reasons, I prefer gold to the other,

01:17:44 but it’s a little bit part of my mix.

01:17:46 But then you look at it, it hit, I think 69,000 this year

01:17:50 is the high Bitcoin hit.

01:17:52 Do you think it’s possible, you mentioned gold,

01:17:55 do you think it’s possible it reaches very high numbers,

01:17:59 like one million that some people talk about?

01:18:02 I don’t think that’s possible because the way I look at it

01:18:06 is there’s a certain amount of it.

01:18:11 A certain amount of it, and there’s a certain amount of gold.

01:18:18 I’ll use gold as a benchmark.

01:18:21 The amount of it is worth about $1 trillion.

01:18:26 Total crypto is about 2.2 trillion.

01:18:29 But let’s say Bitcoin, it’s $1 trillion.

01:18:33 If you take the amount of money that is in gold

01:18:37 that is not used for jewelry purposes

01:18:42 and not used by central banks,

01:18:45 and I assume Bitcoin won’t be used for jewelry purposes

01:18:48 or central bank purposes,

01:18:51 that amount in gold is about $5 trillion.

01:18:55 So right now, if you were to have a portfolio

01:18:59 that has gold and crypto, gold and Bitcoin,

01:19:03 it’s worth about 20% of the value of gold.

01:19:07 Do I think it’s going to be worth more than gold

01:19:12 in terms of that mix?

01:19:14 I don’t think it’ll be worth more than gold.

01:19:16 But let’s say it became worth as much as gold.

01:19:21 I don’t believe it will be.

01:19:22 I think that 20% sounds kind of about right.

01:19:25 I really don’t know what the right answer is.

01:19:29 And then there’s the question of what is all of that pool

01:19:32 of money that let’s say gold and gold equivalents

01:19:36 relative to everything else?

01:19:37 Does it go from, let’s call it

01:19:41 six, seven, eight trillion to 16 trillion?

01:19:44 Maybe it could double.

01:19:46 It depends what it is in the world environment.

01:19:48 But basically, if you use gold as a measure,

01:19:54 it just makes no sense

01:19:56 that it’s going to be used that much more.

01:20:00 Am I sure about that?

01:20:01 I’m not sure about anything.

01:20:03 But logically, it seems to me that there’s a limitation

01:20:07 on its price in relationship to other things

01:20:11 that are like it.

01:20:13 Let me ask for your deep financial analysis

01:20:15 on a very important issue.

01:20:17 I just talked a couple days ago with Elon Musk.

01:20:20 He wants to put a literal Dogecoin on the moon.

01:20:23 What are your thoughts about Dogecoin?

01:20:27 And do you think it’ll be the official currency?

01:20:30 How many be reserve currency on the moon and on Mars?

01:20:35 My reaction is that’s cute.

01:20:37 I remember Elon when he first got,

01:20:40 he first got his money from PayPal.

01:20:42 I think he said to me it was,

01:20:45 he got $180 million, $90 million.

01:20:48 He decided to say, why aren’t we going to outer space?

01:20:52 And he wanted to take a spaceship that would be modified

01:20:57 using Russian technology to put a plant

01:21:05 and a watering can on the moon or on Mars, I think it was.

01:21:14 And he said, first life on Mars,

01:21:17 or first life on that as an inspiring notion.

01:21:23 And so then there’s always what’s behind it.

01:21:27 I have a lot of respect for Elon’s ability

01:21:31 to do other things behind it.

01:21:34 And so I would take that as symbolic

01:21:38 and I’d be asking him what’s behind it, what’s next.

01:21:41 And I’m also just on the topic of Dogecoin and memecoin

01:21:44 and there’s some aspect of humor and lightheartedness

01:21:48 that’s really interesting about the way we communicate,

01:21:52 what ideas become viral,

01:21:54 how to captivate people with ideas.

01:21:57 There’s something about taking things too seriously

01:22:00 that somehow slows it all down and it’s interesting.

01:22:02 You’re right.

01:22:03 That’s part of human nature somehow.

01:22:05 So like humor is part of this whole thing.

01:22:09 You’ve talked about the importance of writing ideas down

01:22:14 and you have a fascinating.

01:22:15 Principles in particular.

01:22:17 Principles.

01:22:18 And you have this really nice thing in your book

01:22:20 where you actually, I mean there’s such a brilliant way.

01:22:26 You have such a brilliant way of highlighting

01:22:28 which parts are extra important and you make them bold.

01:22:33 That’s a brilliant idea.

01:22:34 But let me just ask the high level question

01:22:36 of what’s a good system for taking notes?

01:22:42 Well, I find that almost everything happens

01:22:45 over and over again.

01:22:46 And we’re in the blizzard of these things happening.

01:22:52 And what I found is that if I’m making a decision

01:22:58 that after I make the decision usually

01:23:02 or write at the time,

01:23:03 if I pause and reflect and I write my principle down,

01:23:08 in other words, principle is sort of a recipe,

01:23:12 what would I use to, how would I make that decision?

01:23:16 And what are the criteria around it?

01:23:18 I find that I make it much more clear, it becomes clearer

01:23:23 and it applies to the next thing that comes along,

01:23:26 it’ll be that way.

01:23:28 Because everything happens over and over and over again

01:23:30 and I think people make the mistake

01:23:33 of looking at just the one like it’s the first one.

01:23:37 I don’t know, they have the first problem of this sort

01:23:40 or the first child or whatever it is.

01:23:42 And this has been happening plenty of times.

01:23:44 And so if you have the principles,

01:23:46 I found that that helped me think more clearly about it

01:23:50 and it helped me communicate better, like why.

01:23:54 And so over the years, over the last 30 years or so,

01:23:58 that’s what I’ve done.

01:24:00 I did it originally to communicate very well

01:24:02 with the people I work with.

01:24:04 I set up my company and it was very important

01:24:07 to have good communication.

01:24:09 And then we could debate the principles

01:24:11 and so that’s the process.

01:24:14 I urge people to do that.

01:24:16 There are many excellent decision makers

01:24:20 and I just wish that they wrote down their principles.

01:24:23 When this set, so for example,

01:24:27 we talk about Henry Kissinger and his new book

01:24:30 is gonna come out with a book on leadership.

01:24:33 And don’t just describe the leaders,

01:24:37 describe then what about them were the essential elements

01:24:41 to make a good leader under what circumstances.

01:24:44 And so if we think about that,

01:24:47 then also then you begin to think in a principled way.

01:24:51 And then when you start to think in a principled way,

01:24:55 life becomes, it’s so much easier to make decisions

01:24:58 and it’s so much less confusing

01:25:01 because it’s like coming up on a species

01:25:04 and you say, okay, well, what species is it?

01:25:08 Not just another, it’s a thing.

01:25:10 No, what species is it

01:25:12 and how do I deal with that species effectively?

01:25:15 And so that’s what that is.

01:25:17 And so I encourage people to write it down.

01:25:20 I wish anybody who’s successful wrote down their principles

01:25:24 or their recipes for making those types of decisions.

01:25:27 So the events of interest here happens

01:25:30 over and over and over in similar ways.

01:25:33 As you’re looking for the patterns

01:25:34 and you’re defining the process,

01:25:37 that’s right to respond to those patterns

01:25:40 and you call that the principles

01:25:42 and that allows you to deal with the future effectively.

01:25:46 So like that codifies the lessons from the past

01:25:49 to be able to deal with the future.

01:25:52 What advice do you have for young folks today?

01:25:55 In high school, in college, thinking about how to live,

01:26:00 have a career they can be proud of

01:26:02 or maybe have a life they can be proud of?

01:26:05 Know yourself, follow your passion,

01:26:09 make your work and passion the same thing

01:26:12 while considering the money part

01:26:15 because money will get you freedom and choice

01:26:18 and be able to bank that.

01:26:19 But if you know yourself, feel the pull

01:26:27 and pursue that passion.

01:26:29 And along those lines, by the way,

01:26:32 I found that using personality profile tests

01:26:36 has been very helpful.

01:26:38 I’ve used those for about 25 years

01:26:40 for people to help to understand themselves

01:26:42 and understand each other.

01:26:43 So I created a free one that is called Principles You.

01:26:49 It’s online.

01:26:51 It’s had remarkable, loving people who’ve taken it,

01:26:57 learn about themselves,

01:26:58 but also you can put in somebody else

01:27:01 and it’ll tell you about your relationship with them.

01:27:04 That’s like 30 minutes is a quick discovery,

01:27:06 but the main thing is to understand on your journey,

01:27:10 your hero’s journey that you will have mistakes

01:27:17 and you will have weaknesses

01:27:19 and to understand those, not fight those

01:27:25 because by understanding mistakes,

01:27:28 you will learn not to make mistakes again.

01:27:31 I have a principle which is pain plus reflection

01:27:35 equals progress.

01:27:37 And so that reflection is important to know yourself,

01:27:41 know your pulls, know your weaknesses.

01:27:44 And when you also know your weaknesses

01:27:46 and the strengths of other people,

01:27:48 there are people who have strengths where you’re weak

01:27:52 and you have strengths where they’re weak.

01:27:54 And to be able to work well together

01:27:57 is the most effective way of achieving success.

01:28:02 So yeah, it’s that journey.

01:28:05 And there’s a life arc and there’s a journey

01:28:08 and you wanna make it the best that you can make it.

01:28:11 And it’s like a video game.

01:28:15 It has the challenges and the obstacles

01:28:19 and the learning experiences and the temptations

01:28:22 and all of that.

01:28:24 And the maximizing learning to go where you wanna go

01:28:28 to achieve the life you want is the most important.

01:28:31 That’s kind of maybe a long winded way of saying it,

01:28:34 but to learn, I think I’ll try to say it simply.

01:28:39 There’s a five step process.

01:28:41 Step one is know your goals, know what you’re going after.

01:28:48 You could have almost anything you want,

01:28:50 but you can’t have everything you want.

01:28:52 And so you have to prioritize and you move in that direction.

01:28:56 On the way to your goals,

01:28:57 you’re going to encounter your problems and your obstacles.

01:29:01 So step two is understanding your problems

01:29:05 and your obstacles, identify them.

01:29:07 Step three is to diagnose them

01:29:10 to get at the root cause of the problem.

01:29:13 And that could be many root causes,

01:29:16 but it could also be your weaknesses or weaknesses of others,

01:29:19 but you have to be objective about them.

01:29:22 Once you diagnose them, then you go to step four,

01:29:26 which is to design a way to get around them.

01:29:29 And then after you have that design,

01:29:33 you implement that design.

01:29:35 So you have to follow through and do it.

01:29:38 And you do that, and that will then produce its new results,

01:29:42 which should be better results.

01:29:44 I call this kind of a looping process.

01:29:47 It’s the evolutionary looping process.

01:29:50 And you just keep doing that

01:29:53 and you learn over a period of time

01:29:55 and you move in the direction that you want.

01:29:57 Last question, and you only have one minute to answer.

01:30:02 You dedicate the book, quote,

01:30:05 “‘To my grandchildren and those of their generation

01:30:08 “‘who will be participants

01:30:09 “‘in the continuation of this story.

01:30:12 “‘May the force of evolution be with you.’”

01:30:15 So let me ask, where’s this force of evolution

01:30:18 taking human civilization?

01:30:20 And what in this story that evolution is writing

01:30:24 gives you hope?

01:30:26 Evolution is a direction toward improvement.

01:30:32 And the greatest force is man’s capacity to adapt and invent.

01:30:40 And so you see in the charts in the book,

01:30:42 you see that this upward movement, life expectancy,

01:30:51 health, all the things that we think are better,

01:30:55 you see there’s a chart

01:30:57 and it shows that over a period of time

01:30:59 and you barely see the downturns

01:31:02 from depressions and wars in that.

01:31:05 That is the greatest power.

01:31:08 Man’s ability to invent and adapt is evolution

01:31:13 and that’s the greatest power

01:31:15 and that is what gives me justifiable hope.

01:31:20 And a continuation of that, like we mentioned with Elon,

01:31:23 maybe we’ll become a multi planetary species.

01:31:25 So not only will we keep creating amazing things

01:31:28 here on Earth, we’ll keep expanding out into the cosmos.

01:31:31 My time horizon isn’t gonna have me analyzing that yet,

01:31:36 but I hope so and I agree that that would be

01:31:41 in the next.

01:31:42 So I’m not gonna ask you

01:31:43 for the best financial system on Mars.

01:31:46 I think we’ll focus on Earth for now.

01:31:47 Ray, thank you so much for your brilliance,

01:31:49 for the books you’ve written,

01:31:51 for the works you’ve done,

01:31:52 for the inspiration of millions.

01:31:54 And thank you for spending your valuable time

01:31:57 here with me today.

01:31:58 Thank you.

01:31:59 Thanks for listening to this conversation with Ray Dalio.

01:32:02 To support this podcast,

01:32:04 please check out our sponsors in the description.

01:32:06 And now, let me leave you with some words

01:32:08 from Ray Dalio himself.

01:32:11 Every time you confront something painful,

01:32:13 you are at a potentially important juncture in your life.

01:32:17 You have the opportunity to choose healthy

01:32:19 and painful truth or unhealthy but comfortable delusion.

01:32:24 Thank you for listening and hope to see you next time.