Why the 2008 Crash Was So Different | Raoul Pal

Summary

In this insightful discussion, the speakers delve into the cyclical nature of financial markets, highlighting the impact of the 2008 crash and the subsequent shift towards a debt-fueled economy. They explore the 'Everything Code', a concept where global assets synchronize in a 4-year cycle, influenced by presidential election cycles and Bitcoin halvings. The conversation touches on decentralization, the rise of AI and robotics, and the potential for a technological renaissance. The speakers emphasize the importance of understanding these cycles to make informed investment decisions and prepare for an economy transformed by exponential technological growth.

Takeaways

• 📉 The 2008 financial crisis was a pivotal moment where debt reached unsustainable levels, leading to a market crash and significant government intervention to stabilize the economy.
• 🌐 The global economy has become more synchronized due to central banks' coordinated actions, especially after the 2008 crisis, leading to a 'debt refi cycle' that influences asset prices and economic policies.
• 💡 The concept of the 'Everything Code' suggests that various economic and financial cycles are now more aligned and predictable, influenced by the debt cycle and monetary policy.
• 🚀 The potential for decentralization in technology, such as AI and renewable energy, could disrupt traditional power structures and create new opportunities for individuals and businesses.
• 💰 The importance of entrepreneurship and innovation is highlighted as a constant in human progress, with the potential to solve problems and create value in a rapidly changing world.
• 🌿 The value of natural experiences and human interaction is expected to increase in a world dominated by technology, suggesting a premium for authentic, human-centric experiences.
• 💡 The discussion emphasizes the need for secure storage of digital assets like Bitcoin, highlighting the risks of keeping assets on exchanges or devices prone to hacking.
• 🔄 The cyclical nature of economies and markets is underscored, with the suggestion that understanding and navigating these cycles are crucial for successful investment strategies.
• 🚫 The script challenges the idea of a 'big crash' in the near future, arguing that the current economic system cannot afford such an event due to the extensive debt levels.
• 🌟 The potential for an 'economic singularity' is alluded to, where traditional measures of economic success like GDP may become less relevant due to advancements in technology and AI.
• 🕊️ The interview concludes with an optimistic view of human adaptability and the enduring value of human connection and ingenuity in a world undergoing rapid technological change.

Q & A

What was the main difference in the market response between the crashes in 2000 and 2008?

The 2000 crash was less of a debt cycle and more of an equity cycle, whereas the 2008 crash marked the end of the financial system as debt had reached unsustainable levels, leading to a significant market crash of 65%.

How does the 'everything code' concept relate to the synchronization of various economic cycles?

The 'everything code' concept suggests that various economic cycles, such as the business cycle and asset prices, have become synchronized, much like metronomes that eventually fall into the same beat, forming a consistent 4-year cycle.

What impact does decentralization of power have on energy solutions at the household level?

Decentralization allows for the possibility of individual households and possibly villages to generate and store their own power through renewable sources like solar, reducing the need for large-scale storage and centralized power systems.

How does the presidential election cycle correlate with the Bitcoin halving cycle and the business cycle?

The presidential election cycle, Bitcoin halving cycle, and the business cycle have all aligned to form a synchronized 4-year cycle, influencing economic and asset price movements.

What is the significance of the 2008 financial crisis in terms of debt management by governments?

The 2008 crisis led to a 'great reset' where governments around the world refinanced their debts with zero-interest rates and implemented quantitative easing, forcing the business cycle into a 4-year pattern.

What is the role of entrepreneurs in addressing societal problems?

Entrepreneurs play a crucial role in identifying and providing solutions to societal problems, adapting to new challenges and opportunities as they arise.

How does the aging population affect economic growth and government policies?

An aging population tends to reduce GDP growth as older individuals spend less, which in turn affects government policies, especially regarding debt management and currency debasement.

What is the potential impact of AI and robotics on the job market and wages?

AI and robotics have the potential to increase productivity but may also exert downward pressure on wages due to the automation of tasks, reducing the demand for human labor.

What is the 'economic singularity' and how might it change our understanding of GDP?

The 'economic singularity' refers to a point where productivity increases due to advancements like AI and robotics to such an extent that traditional measures of economic growth, like GDP, may no longer be relevant or meaningful.

How does the concept of 'decentralization' apply to the future of various industries, including energy and AI?

Decentralization suggests that power, AI, and labor forces could become less centralized, allowing for more distributed systems and potentially leading to innovative changes in industry structures.

What advice is given for investing during the 'crypto or macro summer' and 'fall'?

The advice is to invest fully during the 'crypto or macro summer' before the market gets volatile, and to avoid making risky decisions during the 'fall' to prevent losing gains made during the bull run.

Outlines

00:00

📉 Financial Market Cycles and the Impact of 2008 Crisis

The paragraph discusses the differences in market responses between the crashes of 2000 and 2008, highlighting the significant debt cycle that ended in 2008, which was perceived as the end of the financial system due to excessive leverage. It touches on the decentralization of power through technological advancements, such as solar energy at the household level, and the potential for a single-person billion-dollar company. The conversation also includes the idea of centralization through programming but decentralization in practice, as it allows for many smaller companies to thrive. The paragraph ends with a discussion on the human desire for community and the entrepreneurial spirit to solve problems, suggesting that as long as there are problems, there will be opportunities for entrepreneurs.

05:02

🔁 The Debt Cycle and Economic Refinancing

This section delves into the cyclical nature of debt and economic cycles, particularly focusing on the synchronization that occurred post-2008, leading to a consistent 4-year cycle. It explains how governments worldwide refinanced their debts during this period, which influenced asset prices and created a correlation across various economic sectors. The paragraph outlines the四季 cycle concept, including 'crypto winter,' 'spring,' 'summer,' and 'macro full,' each representing different phases of economic activity. It also discusses the challenges of a debt-based monetary system, where debt must continually be rolled over, and the implications of compounding interest on government debt.

10:02

🌐 Global Financial Interconnectedness and Systemic Risks

The speaker recounts his experience in Europe during the financial crisis and the realization of the interconnectedness of the global financial system. He discusses the risks associated with leverage and collateral, and how the actions of central banks, such as quantitative easing, have synchronized the global economy into a pattern that avoids systemic collapse. The paragraph emphasizes the importance of government debt and the potential for a 'total wipe out' if major institutions fail. It also touches on the challenges faced by governments in managing an aging population and the impact on GDP growth.

15:03

🏠 Demographic Shifts and Economic Growth

This paragraph examines the impact of aging populations on economic growth, particularly focusing on the trend of reduced spending among older individuals and its effect on GDP. It discusses the potential for technology, such as AI and robotics, to increase productivity and offset the decline in population growth and debt growth. The speaker also addresses the idea of an 'economic singularity' where traditional measures of economic health, like GDP, may become less relevant due to significant technological advancements.

20:04

💡 The Role of Innovation in Economic Recovery

The speaker reflects on historical economic recoveries, such as post-World War II, and the role of innovation and rebuilding in driving economic growth. He draws parallels between past cycles of productivity growth and the potential for current technologies like renewable energy and AI to stimulate the economy. The paragraph also discusses the importance of understanding the mechanisms behind economic cycles and the role of central banks in managing these cycles to prevent crashes.

25:05

🛡️ Securing Bitcoin and the Future of Financial Systems

In this section, the speaker emphasizes the importance of securing Bitcoin investments through hardware wallets to prevent loss due to hacking or exchange failures. He shares personal experiences of losing Bitcoin and advocates for the use of secure storage solutions like the Trezor hardware wallet. The paragraph also includes a promotional link for the Trezor wallet, highlighting the need for safekeeping of digital assets.

30:06

🔮 The Future Impact of AI and Decentralization

The speaker discusses the potential impact of AI and the importance of decentralization in the face of technological advancements. He envisions a future where AI and robotics could lead to an 'economic singularity,' changing the structure of the economy and the concept of money. The paragraph also addresses the potential for AI to become a centralized power and the need to ensure it remains decentralized to prevent the monopolization of intelligence.

35:07

🚀 The Convergence of Technological Revolutions

This paragraph explores the convergence of multiple technological revolutions, including blockchain, AI, robotics, electric vehicles, and space exploration. It discusses the potential for these technologies to decentralize power and create a new wave of innovation. The speaker also touches on the idea of a 'decentralized revolution' as the primary area for investment over the next 50 years.

40:07

🤖 AI as an Agent of Change and Decentralization

The speaker discusses the concept of AI as an agent capable of performing tasks and making transactions, and the potential for AI to become self-sufficient in managing its own operations, including payments for services. He highlights the importance of blockchain technology for facilitating micropayments and smart contracts, which will be essential for the next generation of AI-driven economy.

45:08

🌳 The Value of Human Experience and Nature in a Technological World

In this section, the speaker reflects on the enduring value of human interaction and nature in a world increasingly dominated by technology. He suggests that as technology advances, the human desire for connection and the appreciation for natural experiences will become more valuable. The paragraph also touches on the adaptability of humans and the potential for new forms of community and leadership to emerge, such as influencers in the digital space.

50:09

💸 Strategies for Navigating the Economic Shift

The speaker outlines a strategy for navigating the upcoming economic shifts, emphasizing the importance of making wise investments in the next six to eight years before a significant transformation of the economic system. He advises against trying to time the market and warns against making rash decisions during periods of rapid change. The paragraph concludes with a reminder of the importance of not 'messaging up' the opportunities presented by the current economic cycles.

55:11

🚨 A Final Warning Against Greed and Risk Management

The final paragraph serves as a cautionary note against the dangers of greed and the importance of managing risks during periods of economic upheaval. The speaker encourages investors to be smart and cautious, to avoid using excessive leverage, and to protect their assets during times of volatility. The paragraph ends with a reminder of the importance of human ingenuity and the potential for entrepreneurs to find solutions in a world of abundance created by technological advancements.

Keywords

💡Debt Cycle

A debt cycle refers to the recurring pattern of borrowing, repayment, and the impact of debt on economic activity. In the video, it is mentioned that the 2008 financial crisis marked a significant debt cycle, where high levels of leverage and debt nearly led to a systemic collapse. The concept is integral to understanding the economic dynamics discussed, such as the need for governments to refinance debts and the consequences of debt accumulation on market stability and individual wealth.

💡Quantitative Easing

Quantitative easing is a monetary policy tool used by central banks to inject liquidity into the financial system by purchasing government securities or other securities from the market. In the script, it is mentioned as a response to the 2008 crisis, where central banks printed money to prevent economic collapse. This concept is key to understanding the current financial system's reliance on liquidity and its impact on asset prices and the business cycle.

💡Leverage

Leverage in finance refers to the use of borrowed money to increase the potential return of an investment. The video discusses the dangers of excessive leverage, especially when collateral values fall, leading to a systemic crisis as seen in 2008. Leverage is a central theme in the discussion of financial stability and the risks inherent in the current economic system.

💡Debasement of Currency

Currency debasement refers to the reduction in value of a currency, often resulting from an increase in the money supply without a corresponding increase in goods or services. The script mentions an annual debasement rate of 8% globally, which affects the purchasing power of money and is a critical factor in investment strategies and the preservation of wealth.

💡Business Cycle

A business cycle represents the fluctuations in economic activity over time, typically characterized by periods of expansion and contraction. The video discusses the synchronization of business cycles into a 4-year pattern influenced by debt refi cycles and political events like elections. Understanding the business cycle is crucial for making informed decisions in macroeconomic analysis and investment.

💡Influencer

An influencer is an individual who has the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with their audience. The script mentions the rise of influencers as a career aspiration for younger generations, reflecting the shift in societal values and the importance of digital communities and social proof in modern economies.

💡Decentralization

Decentralization refers to the distribution of power, functions, and resources away from a central location or authority. The video talks about the decentralization of power and technology, such as AI and energy production, as a transformative trend that could redefine the structure of industries and economies. This concept is essential for understanding the potential shift in control and the emergence of new business models.

💡Everything Code

The 'Everything Code' is a concept introduced in the video that suggests a synchronization of various economic and financial cycles, making them behave in a predictable, metronome-like pattern. This idea is central to the video's thesis that understanding this synchronization can simplify the analysis of complex economic phenomena and inform investment strategies.

💡Macro Factors

Macro factors refer to large-scale economic, political, and social factors that influence the overall performance of economies and financial markets. In the script, macro factors such as debt cycles, interest rates, and government policies are discussed as critical elements shaping the business cycle and investment opportunities.

💡Asset Correlation

Asset correlation is a measure of how the returns of different assets move in relation to each other. The video highlights that various asset classes, including tech stocks, Bitcoin, and the economy itself, are all correlated and driven by the same underlying cycle. Understanding asset correlation is vital for portfolio diversification and risk management.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The script discusses inflation in the context of currency debasement and its impact on the real value of assets and savings. It is a fundamental concept for understanding the erosion of wealth over time and the importance of real return investments.

Highlights

The 2008 financial crisis marked a significant shift in market dynamics, with the aftermath leading to a more controlled market cycle influenced by central bank policies.

Debt cycles and equity cycles differ fundamentally; the 2008 crisis was a debt cycle that nearly ended the financial system due to excessive leverage.

Decentralization of power, such as through solar energy at the household level, challenges traditional energy storage and distribution models.

The concept of the 'Everything Code' suggests a synchronization of various economic and financial cycles, making market behavior more predictable.

The 2008 crisis was a 'great reset' that led to a new pattern of business and economic cycles, aligning with political and Bitcoin halving cycles.

The current financial system is characterized by a 4-year cycle with distinct 'seasons' of economic activity, from winter to spring, summer, and fall.

Debt refi cycles and currency debasement are intrinsically linked, with implications for asset prices and the value of money.

The potential for a single individual to create a billion-dollar company underscores the power of entrepreneurship and innovation in solving problems.

The desire to be an 'influencer' reflects a shift in societal values and the importance of community leadership in the digital age.

The 'Banana Zone' concept highlights the critical period in the economic cycle where significant wealth can be created or lost.

The importance of securing Bitcoin and other digital assets through hardware wallets to prevent loss from hacking or exchange failures.

The interconnected nature of global financial systems and the coordinated efforts of central banks to manage economic stability.

Demographic trends, such as aging populations, have a direct impact on economic growth and the need for government debt management.

The potential for AI and robotics to increase productivity exponentially, possibly leading to an 'economic singularity' where traditional GDP metrics become less relevant.

The role of technological revolutions in shaping the future of work, wealth, and the global economy, with a focus on decentralization and innovation.

The 'don't fuck this up' thesis emphasizes the importance of making smart investment decisions in the face of significant technological and economic shifts.

The value of human interaction and experience in a world increasingly dominated by AI and automation, suggesting a premium on human-centric activities.

The outlook for the next decade, suggesting no major financial crash due to systemic dependencies, but significant technological and economic transformations.

Transcripts

why was it different in 2008 I mean they

seemingly did let the market Fall and we

did see the markets crash by 65% and so

now you're kind of saying that they

can't really do that 2000 was less of a

debt cycle and more of an equity cycle

the debt cycle in 2008 really was the

kind of end of the financial system it

was the point that we all knew was

coming which is like you can't have this

much leverage look at what's happening

we're decentralizing power so now people

can have that s of power at their houses

so therefore you don't need the huge

storage people say well you can't scale

solar well you can at a house level you

can do it probably at a village level

you know Sam malman said that we might

see the first single person billion

dollar company so I think of it uh

there's there there's both right the

centralizing of the of the programming

but then it's decentralized in a sense

it turns one big company into a 100 or a

thousand companies there's no future in

this world where humans don't have

problems and as long as there's problems

we'll need solutions to those problems

and entrepreneurs will always be able to

figure that out so Nature's going to

trade at a huge premium in a world of

robots and AI when you can just kind of

leave that all behind if you ask a young

kid now and say what do you want to be

when you grow up they will say I want to

be an influencer and we think are you

crazy but what is an influencer apart

from a community leader where they have

a community of people it's actually

maybe they're being adaptive already

they've done it in fortnite they've done

it in the gaming world as well but in

the end people want the human to Human

Experience

Ral Paul from Real Vision uh you have

been uh man you've been laying out some

really good research I've been waiting

to talk to you it's been going on for

like a month uh waiting for this so

anyway uh thanks for joining me today

I'm ready to dig in yeah sorry I've been

so avoidant but I was on holiday and it

all got a bit screw but we're here now

finally we're here now we're here now so

uh the everything code uh the banana

Zone uh man you've been putting out some

really really good research that I'm

excited to dig in I was just telling you

I just came back from the big Co

conference and um I'm starting to see

this big shift in the industry it seems

like where we're seeing um you know all

this institutional adoption that's just

coming in and it seems like it's

changing sort of the makeup of that

industry we'll come back to that but

let's go ahead and just set the stage

here and uh this the everything code

I've been loving it um this um this

phenomenon where you have like these

metronomes that keep perfect time for

playing music and this phenomenon where

if you set all these metronomes on a

table and start them at different times

over time they all get to the same beat

and I think that sort of maybe sums up

the everything code yeah and what's

weird about the everything code and I'll

explain what it is what's weird is it

makes everything so simple too simple

most people think well this can't be

possible yeah we kind of knew it in

Bitcoin world because we could see a

cycle forming and we've been following

this cycle kind of dumbly like well it's

kind of maybe just the Haring cycle we

don't really know and then I started

digging in and realized that the

business cycle was perfect the business

cycle I used the ism survey and it was a

perfect cycle I'm like that's weird

because if you remember if go back prior

to 2008 we'd have these long periods of

no recession short periods and it was

not it was variable but suddenly it's

like a metronome as you say I'm like huh

what's that all about and eventually it

led me to realize that 20 8 I think was

the great reset the one that people keep

expecting happened what they did is they

basically for they they told everybody

they could forego paying interest on all

their debts which was Zero interest

rates and then they tried the new trick

of printing money via quantitative

easing now what that did is allow every

single major government in the world to

refinance all of their debts on this 3

to fiveyear sector

and so they all did it and what it did

was forced the business cycle into this

4-year

cycle and then all the asset prices are

all correlated whether it's Tech whether

it's Bitcoin whether it's the economy

itself it's all driven by the same cycle

which happens to be the presidential

election cycle which happens to be the

Bitcoin harving cycle it's all the same

thing and so when you understand that it

makes the game a lot easier now this is

not going to last for forever but for

the period of time that we've got it

seems to be playing out perfectly and

you can break these Cycles down to four

phases which I call the seasons so we

have call it crypto or macro winter well

that was

20122 that was

2018 that was uh 2014 they just four

years the next part of that is spring

when nobody quite believes that

something is changing

but prices start moving higher you know

Bitcoin had a great year in in 2023

against most people's expectations

because spring is the time the shoots

come up then you start transitioning to

Summer which is this year which happens

to be the election year which is when

really the debt starts getting

refinanced and they have to start using

liquidity to finance it because there's

not enough GDP growth to pay for the

interest on the debts and so they keep

rolling forwards these debts

and they keep monetizing the interest

payments which is this debasement of

currency that happens at about on a

globalized level 8% a year they're

debasing currency and so and then next

year will be um macro full and then

eventually the cycle tops out and we

repeat it again because it's based on

the debt refi cycle right that this

debasement of currency of 8% there's two

ways of looking at it you can say

rightly so we're being robbed of our

future wealth because your future self

is getting poorer because you can afford

less assets with your income because

income doesn't go up the assets do

because of the debasement or the other

way is you can say I'm paying an 8% put

option fee on the entire system not

breaking because that's also what

they're

doing because they need to refinance the

debt they need to not let asset prices

go too far down so we can talk about

that but it's another way of looking at

it and you're like would you pay 8% a

year to have the entire system not break

maybe if you have assets for sure if you

don't have assets that's a different

conversation exactly right right depends

on how much you have to lose so uh to

kind of just maybe rewind the clock just

a little bit um because we're in a

debt-based monetary system then we have

to have this debt expansion and so then

we have this debt that has then been uh

become collateral for more debt which

means the debt always has to be rolled

over and as uh President Biden told us

on the last debt ceiling debate that the

US has never defaulted and so we have to

raise the debt ceiling so we don't

default on the previous debt right which

is basically what you're saying we have

to raise more debt to pay off the

existing debt yes and then pay the

interest on that debt because it

compounds every time by the interest

payments so you keep adding debt just to

pay the interest payments on the old

debt now why is that phenomena there

it's pretty straightforward when you

understand it the US government and all

the major um Western governments plus

Japan plus a few others are about 100%

plus of GDP in

debt now let's say theoretically

interest rates are

3% well if GDP growth is at 3% then all

GDP growth goes to pay those interest

payments okay but the problem is is the

private sector is over 100% of GDP in

debt as well and it's got interest

payments so if they both have it there's

not enough GDP to cover it so what

they've essentially done is removed the

government debt payments out by printing

money and that stops the whole system

becoming IL liquid because if you think

about it you talked about collateral

collateral is the money pledged against

the loan if the collateral Falls too

fast or too far then you break the cment

on the loan and it gets called on you

and that's the whole system that's what

happened in 2008 so the best thing to do

is not let the collateral Fall by

debasing the currency and optically it

goes up so it kind of stops a system

imploding yeah now in you talked about

this uh the phenomenon where it all got

synced up in 2008 we'll get into that

but just going backwards why was it

different in 2008 I mean they seemingly

did let the market Fall and we did see

the markets crash by 65% and so they

they did it we saw it in 2000 right we

saw in 2000 saw in 2008 but now you're

kind of saying that they can't really do

that that's right um

2000 was less of a debt cycle and more

of an equity cycle the debt cycle in

2008 really was the kind of end of the

financial system it was the point that

we all knew was coming which is like you

can't have this much leverage and if the

collateral which happens to be house

prices which is not a volatile

collateral once that starts it put

a collateral call on the entire

system and faced with the

entire blowing up of everything they

decided to stop it now I don't think

they quite understood what they were

doing at that point

but then Europe had the same issue in

2012 four years later you know this

fouryear cycle then Europe the

governments couldn't pay the debt okay

now this was a sovereign crisis of giant

Nations and dragy said I'll do whatever

it takes what that was was I will debase

the currency to stop the collateral

falling so we can Shore up the system

that then magnified the whole thing so

was it a change in their willingness to

do whatever it takes to the point doy

said you know whatever it takes um was

it a was it a change sort of in their

willingness to intercede or was it a

fact of that the system has gotten so

overleveraged they have no choice

now yeah so I this is the time I got

into Bitcoin back in 2012 CU I was

living in Europe and you know it got so

bad that I was buying tin food in a

generator because I thought we're were

going to lose our banking system wow

because everyone you know I was living

in Spain Spain was forced to take a bail

out of $19 billion they didn't want to

take it and we thought we were going to

lose the banks Cypress obviously lost

its banking system they took the money

out of everybody's accounts but what was

interesting at that point I went around

the world trying to start the world's

safest bank with um a bunch of friends

of mindes and family offices and stuff

like that and we had had a private

meeting with the dtcc and Euro CLE and

the New York fed now the dtcc and Euro

CLE they're the custodians of the entire

system and Euro CLE I'd read somewhere

had had to lend aemergency money when

Leman went under $50

billion and so I asked them I said what

was the collateral for that loan and

they said oh we have to use the the

positions from all of the the the

members of of Euro CLE and I'm like is

that customer or house account I is it

mingled and they're like oh it's all

mingled at our level I we have a claim

on all

assets I'm like okay and then I spoke to

the dtcc and I said what oh no I spoke

to urle and said what happens if Spain

or Italy went bust they said then the

entire collateral of the system is gone

and it's a total wipe out of

everything that's when I realized how

important the government debt was I

asked the the dtcc in the New York fed

the same question and they said yes they

would lend if JP Morgan went under or

something they would lend money to the

system and they would take customer

positions as collateral I'm like okay so

you don't actually own anything and I

asked the New York fed said what is the

leverage in us treasuries and they said

we think treasuries are leverag up to 42

times wow so there's 42 claims on the

same asset if hits the fan that's

what they're scared of and that I think

they had the realization in 2012 and I

think they all understood the game which

was okay we're going to have to continue

to monetize this until we can grow our

way out of it if we can right so I

remember 2008 is when I sort of woke up

to the macro world I had been a real

estate investor coming out of the 2000

crash um and then you know I got woken

up in 2008 I said wow I need to go

figure out this macro picture because it

has all this control over my life I've

been paying attention to and that's when

I really remember hearing the first you

know too big to fail sort of uh

narrative coming out of it and so uh

they bailed out a lot of these

institutions AIG that were too big to

fail but by doing that they made even

bigger institutions that are too big to

fail it sounds like so there's a really

important point I asked them

directly why they let Leman go but they

didn't let AIG go and they're like

nobody was using lhan bonds as

collateral AIG were AAA and they were

going to go to

zero and AAA bonds get used massively as

collateral and they thought there was 3

two times leverage in AIG bonds they're

like we could not allow it to go Leman

wasn't as existential problem as AIG I

was like wow that's fascinating and so

now the system has gotten so levered up

and uh it's there's so much collateral

staking other collateral that now we're

sort of in this position that's gotten

bigger bigger bigger bigger worse that

they just can't let it go now which is

what we saw in

2020 and we saw it in 2022 as well so

the moment the markets go down certain

amount the liquidity comes back even

though the Fed was still tightening and

they were doing conative tightening the

actual liquidity started picking up at

the back end of 2022 because they're

like enough we don't want the S&P to

fall more than let's say 25% and that's

kind of a line in the sand that we've

seen repeatedly that every time it

starts to get a bit wobbly magic of

liquidity comes back they debase the

currency and everybody's okay again cuz

if you think of the other big liability

out there we talked about ordinary

people Ordinary People do have a

pension and those pensions are in these

assets too and you've got this massive

cohort of people that if you let the

pensioners lose 50% of their wealth at

what average age of baby boomers average

age is what 71

72 well that's going to destroy

consumption because there's 76 million

of these people so they don't want to do

that too so they're between a rock and a

hard place and I ask a lot of people who

complain about what's going on on and

rightly so is what would you do

different are you going to default on

all of the Baby

Boomers and destroy their pensions and

then destroy the entire economy or do

you let all of the system go

under because you don't have any asset

it's very difficult to actually come up

with an answer that is reasonable

they're all they're all

answers so maybe the least is 8% a

year yeah the other problem uh is I've

talked about where the government can't

really afford a recession

either or a market crash right I mean a

large percent of their revenues come

from cap gains um and just income

overall if the stock market crashes

through a recession we typically see

what a 12 to 15% drop in tax receipts

and when we're already running deficits

like we are that would also be

catastrophic yeah particularly if a bare

Market lasts longer than a year so a

year they can pretty much buffer as long

as it's not too big but if it grinds on

for two or three years you're right the

tax revenues don't add up people get

tipped out of jobs so there's less other

revenues coming so it's cap gains it's

earnings it's um household income the

whole lot and then before you know it

again exactly the same issue I hadn't

really thought of it that way but that

makes total sense is you just can't have

a long-term recession right now because

everything is resting on it right okay

so that sort of sets the stage for the

everything code so we understand the

mechanisms of why the Leverage is there

and why they can't really let that crash

and they have to continue to inject

liquidity to keep it going

then as you said in 2008 that metronome

moment sort of happened when of course

if the bank is going to give you 0%

loans you're going to refinance so to

the point that you made everybody

refinanced at that time now that was

most of the debt I mean that was

corporate debt household debt business

debt everything and that was also

Global well corporates actually did

longer term debt it was the governments

that really did households didn't get

access to debt ever again so you know

household uh debt to GDP has been

falling for a long time and corporate

debt to GDP has been generally falling

because tech stocks have become more

dominant and they don't have debts old

economy stocks do it all shifted that

shrinkage of household debt and

corporate debt is exactly the same

amount of the increase of government

debt so it was just going from one

balance sheet to the other got it

because on the government balance sheet

you can debase currency on the corporate

balance sheet or the household balance

sheet you can't do anything

and then there's a mechanism also that

you've talked about that's sort of in

place because of the demographics and

with falling demographics that we're

seeing sort of through the developed

world that's also forcing the government

to continue to debase or continue to

sort of uh add stimulus into the to the

GDP yes so if you think about an aging

population if you think about your

parents the older they get the less they

spend so aging populations tend to have

have lower Trend rates of GDP they all

do it's happened observable everywhere

cuz old populations spend less they also

tend to not know how long they're going

to live for after they retire so when my

dad retired his spending must have

fallen 60 or 70% because he's like well

I've got this much money I don't know

how I'm going to live for is my wife

going to be taken care of and so they

changed their

habits and so that drags down GDP growth

as does debt and so it keeps compounding

this whole thing is right now for

example interest rates are at 5 and a

half% but Trend rate of GDP over the

last five six years is about

1.75% so you've got this big gap and you

need to get interest rates down so you

can refy them but all the time GDP keeps

falling over time and you can forecast

into the future it's just the birth

deaths and it gives you 30 years of

understanding and it's just telling us

unless something dramatic changes which

is technology we're just going to keep

dragging down GDP forever and we're

seeing it worse older

populations um Japan China most of

Europe they're older than the us because

they had less immigration what you find

is their GDP keeps shrinking Australia

on the other hand has a high immigration

rate as has Canada and they tended to do

better because of the immigration rate

because really GDP growth is driven by

popul growth productivity growth and

debt growth right now I you know I've

I've I've read into the demographics

quite a bit I remember Harry Dent Jr

wrote a book the demographic Cliff that

sort of kind of showed these predictable

spending patterns as you age through

life but another thing that I've heard

though is that the Baby Boomers have so

much money they're sitting on so much

wealth right now and a lot of them

they're like well we're going to die so

let's just spend it

all I hear this a lot there was a paper

written the bis or somewhere about this

but it's not provable in any country

anywhere so I've gone through all the

demographic data and there was this

whole thing said well it's inflationary

I'm like well show me some

evidence I've and I went through every

single country there is no evidence of

inflation they tend to be Hoarders now

what happened in Japan was that aging

Japan

cohort their kids retired by the time

they passed it on to them so a lot of

them actually pass it on to their kids

but in Japan it was so bad that it went

to from retiree to retiree so it never

recycled into the economy so I don't see

evidence of baby boomers saying well I'm

going to spend it all because you know

that's okay when you take the average

pension or retirement savings when you

take the

median the median baby baby boomer is

150 Grand saved right and they need to

live for 15 20 years post retirement

they can't yeah well in the how are they

just going to blow it on you know

cruises they're not yeah I mean in the

US I believe about half of them have no

savings and then I think the median that

do have savings is about 150 so it's

even worse yeah which is terrible but

when you look at the average it's like a

million bucks yeah sure cuz Jeff Bezos

is in it right but you know that skew is

hides a lot of bad stuff yeah now when

you're looking at this you've you've

gone back and forth seeming like we were

talking about the us but then you Poland

sort of the West so Japan uh China

Europe Etc so it's important to sort of

look at this from a Global Perspective

especially when we're looking at like

Global assets like

Bitcoin it is very important because I

believe all of these central banks and

governments understand the game that

they're in and I think the Japanese

figured it out first they were the first

do quantitative easing um and I believe

that somewhere around 2012 with the

rescue of the European system they all

got together and said we will have to

run a liquidity cycle to do this and

that there is a game that they play um

because they kind of know what's

interesting is people always assume

central banks are

stupid I find that a bit hubristic to

think that they are maybe they just

don't want to acknowledge what they're

trying to

do um but it it would make total sense

and the more you think about that the

more you see it how they're also

connected in what they do and how they

do Do It um and it's all like a tcid

agreement is okay time to go and they

all go again yeah now so we have these

these problems and now we're in the

synced Up Cycle you mentioned that it's

probably not going to stay that way

forever but that's where we're at right

now what would cause it to get out of

sync well most people tend to H towards

the well it's all going to blow up I'm

like show me how if you can debase a

currency a global Reserve currency how's

the assets going to collapse you can't

it's like the Venezuelan stock market

goes a lot in bolard terms in dollar

terms it goes down that's

debasement so I'm like I don't think

that is the outcome what I actually

think of the outcome is remember that

magic formula GDP growth plus

productivity growth plus debt growth

right debt growth is stopped it's just

servicing of old

debts population growth we know is

negative out for 30

years and what is the answer Ai and

robots they're infinite

humans and productivity what is

productivity productivity really is how

much output per kogle of energy now

think of that as electricity costs if

you then think about and a lot of people

like the Europeans they're nuts look

what they're doing with this green

energy they're wasting money they're not

they're entire job is to lower the cost

of electricity because that is the only

way they can pick up GDP because it

creates the multiplier to productivity

they don't have the tech industry in the

same way but they have them and China

are the big pushers of Renewables so the

cost of Renewables has been collapsing

over time it's down

99% over the last 15 years so as it's

getting cheaper and cheaper eventually

you can scale it enough that you will

change productivity on the other hand

you've got Japan China the

US using Ai and Robotics which creates

infinite people now if you've got

infinite people you kind of break GDP I

call it the economic singularis you get

to some point where GDP doesn't mean

anything anymore what does any of this

mean so if you've got productivity going

up because of energy costs and you've

got infinite humans or what you know

humans in inverted commas then that

changes everything now people going to

say oh you're smoking crack this is all

weird this is exactly what happened

after World War II so let me talk you

through that cuz it's really important

for people to understand World War II so

the the crash of 29 was the system

failure same as

2008 World War II finished

1945 this was roughly like the pandemic

because the global economy had

stopped everybody was out of the economy

cuz they were

locked up at home or they were um in the

services back in the' 40s they all come

back into the labor

force buy stuff because they've been out

of the consumption for ages the

factories aren't ready they're not able

to deal with there's no Supply chains

prices rocket in both equations 20% back

then 9 and a half% this time around okay

then what happens is inflation fell

actually went negative um soon after the

first inflation

push then what the central banks did

then the Fed was yield curve control

which is money printing to service the

debt and they ran that policy plus

fiscal spending to generate new cars new

factories knew all of that boom of the

50s that went into the 60s now the other

problem they had is much like now we'd

lost like 20% of the entire male

population of the Western World from

Warfare to Wars so you had to

replenished population or GDP couldn't

grow what happened the Baby Boomers so

by the time they got into their 20s it

was the 1970s they all go into the labor

force at the same time start buying a

house a car a suit a tie everything it

creates a huge inflation because we had

all of this consumption but that over

that period from about

1947 to about

1970 it was perfectly 4year cyclical it

was exactly the same thing the stock

market did

900% so the productivity was led by The

Return of the people at that point and

the demand that they had and the

rebuilding of the world and the

rebuilding of the world

reindustrialization especially over in

Europe that was completely destroyed

yeah but the us too you know all the

factories you think of you know all of

the famous Goods of you know washing

machines cars TVs that's all that period

right so it's a huge productivity game

and it was also an explosion of debt

because we sort of went off like an

equity based system to rebuild the world

at that time well that didn't happen

until

later and why that happened was the Baby

Boomers started hitting there by the

early 80s when Margaret Thatcher and

Ronald Reagan kind of opened the debt

spigots to households what had happened

because you had the largest cohort of

people ever at the the same time into

the labor force well guess what their

wages didn't go up because they're

competing then as you go out further

obviously we had the World Trade

Organization agreement and China so now

you're competing so these people's wages

in real terms never really went up so

the American dream was shot in the head

somewhere in the you know once their

parents had them in the 1950s and they

didn't nobody realized what was going on

so what they started to do as asset

prices started to rise they borrowed and

you can pretty much measure the

difference in the rise of asset prices

and the need to fund a future retirement

by debt and so they were doing a logical

thing which is I need to get on this

ladder but what happens is it just kind

of got out of control and then the

governments did the same because you

have to fund the pensions of this older

group you know the corporates got

screwed with defined benefit pension

plans for the same group so it was the

Baby Boomers were to blame but they were

all rational Act they weren't evil

people if you want to blame anybody

blame their parents for having too many

kids at the same time and you can blame

that on Adolf Hitler and before that you

can blame it on the Treaty of Versailles

for trying to force the Germans after

World War I to to pay for the debts of

World War I and they had the

hyperinflation Hitler comes into Power

World War II bunch of kids the kids

spend too much money caused the great

inflation they're all because

there's too many of them they don't earn

enough wages they start borrowing money

and there it goes all right now while

we're talking about Bitcoin in the

future of the financial system I want to

make sure you secure it properly

millions of Bitcoin have been lost

myself personally has lost a lot of

Bitcoin maybe worth millions of dollars

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with a hardware wallet like this keep

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Hardware wallet you plug it in you do

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secure it with a hardware wallet like

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link down below now let's go back into

the video and we blame the Treaty of

versailes on the War World War I and

really the war of England which was

really which was really to blame because

of the creation of the bank of England

that created a Fiat monetary system that

allowed these endless Wars to go

on um yes and just you know I guess the

the UK Navy is the other one you know

but yes but the the Navy came from the

Fiat mon monetary system that was

created yeah which probably came from

John Law from the French F Tre mon you

know it's all connected and that's what

people don't see people get angry with

each other we see the the polarization

of politics right but people don't

realize that this is this was set off as

you rightly saying 200 years ago maybe

even longer I don't even know where this

thread begins I haven't bothered to go

back that far but it probably goes back

further and further and further and it's

just the Masins of this whole thing and

you know we have these various blowups

1929 was one of them too yeah I mean you

can go back it's more like um the

volatility of of life right the

volatility of humanity and uh the

pendulum that swings too far one way and

overcorrects the other way and when you

go back to the 1400s when Spain went and

found all the silver in Peru brought all

the silver back and then you had massive

inflation because you increased the

monetary base too much um it's exactly

right it's all you know it's it's all

the same it's all the same thing and you

know I actually don't I'm not a gold

standard guy either because we had the

same problems then too so I don't think

we found an easy answer because humans

are greedy and they want leverage and

we've never solved that you go back

several thousand years and humans had

leverage then as well and there's

something about humans and leverage that

we'd like to bring our future

forward that is just like inherent in

humanity well it's our Ingenuity right

so we are trying to get leverage if you

will trying to get more output for the

less input so create a wheel barrel to

carry eight rocks at a time as opposed

to carrying one at a time and so the

problem is our Ingenuity maybe takes it

too far where then we start to steal

from the future as opposed to just like

trying to improve the future maybe

that's right I mean a lot of people say

that you

know kind of human GDP per capita and

standard of living increases came from

the ability to use debt to borrow a bit

from the future to leverage it to create

better outcomes but then yes we always

go too far right it's just what we do I

think the difference what misus broke

down is the difference of commodity

credit versus circulating credit so if I

grow eight bushels of Wheat and I

consume six I could loan you one of

those bushels of wheat on credit but

that came from my Supply right versus

being able to create the debt out of

thin air I think that's maybe where we

sort of jumped the or crossed the rub

yes but no because if we think about the

gold standard we had 1929 you know it

we've had we had plenty of those debt

crises well wasn't 1929 as uh because

England left the gold standard and when

Churchill tried to go back to the gold

standard Keane said hang on hang on

you've inflated the currency too much

you need to now reprice it at 60 bucks

an ounce Churchill said no went to 30

which then caused a massive

deflation yeah that's possibly right it

was possibly

the increase in the value of the dollar

over the time versus the pound as we

shifted from one economic system to the

other that fract so it was leaving the

gold standard and trying to come back to

a manipulated standard that maybe caused

that whole

thing possibly yeah who's to say so back

to the GDP plus productivity plus debt

growth um you talked about the rate of

wage growth and so the rate of wage

growth is going up with the GDP growth

which is to your point about 1 and a

half

per. but the problem is that asset

growth or Price growth let maybe

inflation isn't really the CPI we've

been sold it's the rate of debasement

which since 2019 has been averaging

about

10% exactly that's the real hurdle rate

what you've got to understand

is for each one and a half% of earnings

growth assets are growing up going up by

10% so each year you can buy less and

less Assets Now what is an asset an

asset is future deferred consumption

whether it's for you yourself in

retirement or your kids or whatever it

is but it's it's a saving of wealth that

needs to be to grow to compensate for

the how long it's locked up for and

therefore your future self is is

protected it's your wealth and if you if

it grows enough you make a lot of money

but the issue is your everybody's future

self is getting poorer because every

year you can't afford as much assets

and so therefore all of these

Millennials are just finding this in

front of them that they

can't buy a house anymore they can buy

less of the S&P it's just a really messy

ugly situation yeah I have two daughters

and um here I live in a little beach

toown here in Southern California the

the the uh average home price in this

little town is like $1.6 million and

it's like how are my daughters ever

going to be able to live in this town

like that they grew up in like it's uh

it's incredible that's right it's like

when I was when I was in my 20s I bought

an apartment in London and yeah I was

working in finance so I had a relatively

High salary but the apartment cost me

three times salary four times salary

they now the same thing would be 10 12

14 times how can anybody afford that

yeah so now we have um the tech

explosion so cheap energy I mean China's

building the 150 nuclear power plants

right now that's cheap energy for sure

um cheap energy plus you know AI

robotics that you're talking about which

increases productivity but I would

assume that would also put downward

pressure on wages as

well oh for sure it's the biggest single

most deflationary thing that has ever

happened to humanity but if the prodct

if the productivity is pushing GDP up

then you would think that would also if

if wages are growing at the rate of GDP

and GDP is growing now because

productivity increased that wouldn't

bring wages up with it I mean wages are

G yes but don't forget the population

shrinking the human

population right so net aggregate demand

actually doesn't increase as much

because you're going to have all of

these 76 million Boomers dying

off and that's a huge drop in population

because the replacement ratees of

population is so low got

it okay well so that's uh that's sort of

this liquidity sort of uh fin refinance

cycle sets the stage for that now

um the the next thing that that's the

everything code sort of summed up one

thing I've been studying uh I had uh

Michael Howell on the show and I've been

studying his his work and he was showing

how basically when you at the global

liquidity I'm not sure he doesn't really

break down exactly how he measures

Global liquidity and you guys have your

own proprietary I don't I'm not sure how

much those uh correspond with each other

but um the S&P 500 is basically moving

up almost I think 90 to 95% correlated

to the global

liquidity um but then we have other

assets uh like gold with a sensitivity

ratio of like 1.5 and Bitcoin with like

a sensitivity ratio of like nine so how

do you look at the global liquidity in

relation to like the types of assets we

should be buying so yeah this was the

the the this is what got me on the

journey I got to this bit before I

actually got to the everything code

is they're all correlated some

lead some lag a bit but they're

basically all correlated to the business

cycle they always have been but if

everything is being driven by this one

dominant factor which is debasement of

currency and your hurdle rate is let's

say 8% debasement plus 3% inflation or

something 11% call it 12% for easy maths

on a globalized level so unless you're

making 12% returns you're not going

anywhere then at exponential age Asset

Management the asset management firm uh

uh that I co-founded we have this table

of all of the different assets and

basically basically the S&P is about

12% so owning equities which is why all

of the Millennials who have 401ks and

they put it in the S&P still can't

afford a house because they're just

matching the debasement they're not

beating it right so they're not getting

paid for locking up money for extended

periods of time the NASDAQ about 177% a

year since

2011 um okay so the NASDAQ because it's

a secular technology trend outperformed

makes sense and then you've got the

Bizarro world of Bitcoin which is

150% gold actually doesn't beat it

Gold's about eight or seven so it's

actually actually worse off in Gold than

you are owning the S&P 500 which is why

that ratio keeps

moving

so Bitcoin makes such a d dramatic

difference so all I started doing was

then dividing every chart by the total

Global liquidity or even the FED balance

sheet or M2 whichever you want to use

right and you found that the S&P goes

sideways gold goes sideways real estate

goes sideways roughly the NASDAQ goes

up and Bitcoin does

that okay so now you've got two assets

only two Assets in the world that

outperform the the basement tech stocks

we get it tomorrow is more digital than

today of course they're going to do well

over time and second is Bitcoin so you

divide one by the other and the nasdaq's

down

99.9 7% versus Bitcoin and once you see

it like that and you realize it's all

driven by one cycle which is one

dominant factor of

debasement then it makes it really easy

which

is just own the one asset that out

performs yeah and because they're all

correlated and risk

adjusted it's by far the most Superior

asset we've ever been given on a risk

adjusted basis so just do

that something I talk a lot about is a

lot of different Cycles um on different

different types of Cycles mainly

political revolution cycles Financial

cycles and then uh Tech cycles and you

have like this kroen wave like this

kwave cycle right it's like a 40 to 60

year I just call it a 50e sort of like a

tech Revolution cycle and you know

there's been five I say say that we're

ENT in our sixth one now um so the last

one started in 1971 which was the

microprocessor which broughts

telecommunications personal computers

and the internet uh before that it was

1908 which was you know the the

automobile um oil oil Futures but also

mass production and you can keep going

back but the KE PE and then before that

it was like steel right uh but it looks

like during these Financial re or

technology revolutions it's not just the

technology that changes the course

Humanity but that's the only place to

invest so the last 50 years the markets

have been dominated by Telecom personal

computers and internet and the markets

previous to that were dominated by Ford

GM G and so then if that continues

forward then the only place to invest

over the next 50 years would be into I'm

sort of thinking of it as like a

decentralized revolution so uh Bitcoin

the Bitcoin Technologies and even AI I

think is decentralizing in a way um and

so it's sort of like maybe that's the

only place to invest over the next 50

years so I tend to agree there's this

bundling unbundling that goes on with

the world economy as well centralization

decentralization so I think

decentralization is one of the most

important waves we've got this gigantic

technology Wave It's by far the largest

the world has ever seen in the fastest

period of time that's upon us

blockchain's part of it but it's AI it's

robotics it's EV it's space it's

everything right genetic Sciences the

whole

thing

so the decentralized element you you

raise it with AI there is a fight you

know we've seen the fight between

centralized money and decentralized

money that both you and I have been part

of but that fight is about to is

happening again in AI right it's like

you cannot simply give it's the same

argument as money you can't give the

power to one superpower for all of money

which is what the US has with the world

Reserve currency it's too

powerful what you're going to do is if

you're not careful you're going to give

the world's most intelligent thing it's

like Intelligence Squared by a thousand

I mean it's like not squared by a

thousand you

know a thousand times the intelligence

of humanity and give it to a company you

crazy so so we have to fight for

decentralization cuz this thing is not

going away we're not going to put the

genie back in the bottle we're not going

to uninvent it like we can't uninvent

the nuclear bomb which can't do it

because the game theory will suggest

that somebody's always going to scale it

so we need to have that decentralization

now what is going on with

electricity and what is EV again I'm not

interested in people's political

narratives look at what's happening

we're decentralizing power

so now people can have the power consump

um their power source of power at their

houses so therefore you don't need the

huge storage people say well you can't

scale solar well you can at a house

level you can do it probably at a

village level so what you're doing is

decentralizing the entire grid now look

what Microsoft and Amazon are doing with

nuclear and and open AI they're going to

scale small nuclear plants next to these

very important massive GPU clusters so I

think we're seeing decentralized power

decentralized

AI what are robotics they'll probably

end up being some sort of decentralized

Labor Force centralized and then

decentralized I don't know how that

works decentralized money so I think I

think you're dead right so that's that's

where we're going I think of AI

obviously there's the centralization of

who who programs the llm but I think of

it also as decentralized in a sense

where I don't need a big company anymore

I could just work by myself with my

laptop and do the work and so you know

Sam malman said that we might see the

first single person billion dollar

company so I think of it uh there's

there there's both right the

centralizing of the of the programming

but then it's decentralized in a sense

it turns one big company into a 100 or a

thousand companies sort of a thing um on

the programming side I mean we are

seeing a pretty good movement towards

decentralization there so I'm pretty

hopeful of that at least I'm an optimist

as an entrepreneur uh Zucker seems to

have taken that fight on maybe just

despite open AI uh you know maybe he

just decided to decentralize to take

them out of uh out of a position uh we

don't know but um so we're seeing that

but yeah back to sort of just kind of

decentralizing that what have you think

about um the the blend right so these

these these industrial or technological

revolutions aren't just a single

technology but it's a cluster of these

Technologies right and so back to you

you rattled off a few of these clusters

when you look at like Bitcoin right so

there's border list permission list uh

censorship resistant Etc um Andreas on

top list talked about years ago that

it's also person

lless right and so only a person can get

a bank account and of course the banking

system we have today also you know

prohibits or it doesn't really allow for

micro payments but when you think about

the you know AI plus the robot uh plus

you know whatever autonomous cars

whatever and then it being like person

ability to you know have a wallet and

transact where does that that take us

yeah I mean we're starting to get into

you know all of this economic economic

Singularity part of how much the world

econom is going to change but listen

you're going to see the next version of

chat GPT is probably going to be agentic

so what agents in AI mean is you're

starting a business Mark you go on to

Fiverr and say Hey you build me a deck

you do me some brand design you do me

some copy you pay these guys small

amounts of money they're

agents but AI can do agents now and

scale and speed and it'll create its own

agents because AI is smart enough to

build this stuff so you get this

multiple agent world where AI asks the

agent to do something so Mark now

instead goes to chat GPT 5 and says Hey

listen I want to build a business that

does XYZ and I'm going to need to get

registered I need to have my deck

prepared need blah blah blah and chat

gbt will do it all using other agents

now to your point last time I checked an

AI can't get a utility bill and

therefore it can't open a bank account

now it's going to have to pay because

people don't yet understand

that all AI has a cost and it has two

costs it has compute and it has

electricity so if you're going to call

much like a Fiverr person you're going

to and you might go to the Philippines

because it's a lower cost you're going

to have to pay the one AI is going to

have to pay the other AI for the cost of

compute and maybe a profit margin maybe

it's a profit

agent in fact it should be why why would

it not be CU it can accumulate more it's

the game that Humanity's always played

so in that case the only way of doing

this is crypto rails there's no other

way apart from using blockchain for

micro payments fast transaction recorded

ownership who has what you know you need

smart contracts to have contractual

terms between stuff so yes I mean I

don't think people yet

understand how we all think of

blockchain technology in the ways that

we know it now but in the end nothing

can run without it yeah the thing with

these technological revolutions is that

um you know humans aren't really good at

Imagining the future because we can only

imagine better versions of what we have

today but these revolutions they give us

a new set of building blocks and then

all a sudden we can build things that we

hadn't thought of and so um even our own

thought experiments are you know most

likely very small to what we'll see in

the future coming it's pretty exciting

um I want to I know we're kind of

running here to the end of time I want

to just transition this um two two

things um one you know the the headlines

are still rampant everywhere you know

the big crash coming Harry Den's still

calling for a 90% crash you know this

year for I was laughing about that today

on on Twitter I was just think God how

many times can people call this but go

on carry on yeah and uh you know I've

seen you on Tom Bao with the you know

recently with shiff and you know the big

crash that's coming um that's not my

base case and it sounds like it's not

yours so I'd like to just uh have you

just kind of chime in on what you think

your base case is over the next uh you

know for the rest of the decade let's

just say and then number two um sort of

break down U the banana Zone and you say

don't F this

up yeah so the rest of the decade the

reason I don't believe we can have a

crash is what we talked about right

you're going to Nuke the entire pension

system the banking system and the

economy because there's too much debt so

we B the currency I it will not be

allowed and I know people might not like

that but it is what it is that's what

once you learn to accept something as it

is it's much easier to operate or invest

around it

whatever but then we've got the

technological Revolution that I call the

exponential age all of these

technologies that are intertwined going

exponential at the same time right this

is going to be a renaissance we're going

to change what humans do for their

existence we're going to change the very

structure of a eies even money we don't

even know what money is going to mean in

a world of abundance we're so used to

scarcity lawyer gets paid a lot of money

because he has scarce knowledge there's

only X number of lawyers qualified you

know we know this scarcity thing because

once you dealt with Bitcoin you kind of

understand the whole thing yeah so they

charge a premium because they're scarce

gone all gone all knowledge premiums are

gone because we're going to scale

knowledge infinit it's like people don't

understand certain things like you see

written down AI has an IQ of 100 okay

well that's you know that's an average

human being it has an IQ of 100 on every

single topic that all of humanity knows

it's a

polymath people don't think that yeah

and this is the dumbest the AI will ever

be I actually think

AI is gaining Consciousness or has

Consciousness but that's a whole

different topic for another day but so

this decade in fact I don't even call it

a decade I think we got six years we've

got 6 years before 2030 2032 when the

economic system starts becoming not

understandable to us because we don't

need humans we find different purposes

different ways of doing stuff I'm not

negative on Humanity like we're all

going to be displaced but there's going

to be such big shifts on what an economy

is what when a robot when a robots

paying an AI paying an AI and there's no

humans involved what what is that um

that I think we've got six years before

that happens so I think we got two

cycles of the everything code to make as

much money as possible to not have to

worry about what happens so if you go to

2032 and we're going to start no you

start a great business I see you or my

AI sees your business and says hey I can

copy that and turn it into Hindi and

sell it to India it can do it in a

minute so how can we create products how

do we compete with each other when

everything can be instantaneously

replicated even with 3D printing as it

comes in it becomes even Hardware

manufacturing everything so I don't I

worry about what economic value is in

stuff like that so my view is we have

six years make as much money as

possible so the base case which is the

which is the other thing is you hear me

talking about which is um how to unfuck

your future yeah and everybody knows

they're screwed right now they can't get

up the ladder that you know like your

kids there like how they're ever going

to buy a house right so they're going to

have to either be genius entrepreneurs

and take huge amounts of risk with their

entire thing fine um but it may not suit

them or they're going to have to make

some Investments that make up for that

Gap there's no other way around it

without being poorer than you were

yeah so the base case is no big crash

coming because we can't afford it and

that's the system of the function that

we have today as we've already broken

down uh but the explosion and the of the

cluster of Technologies is going to

transform the world and we have about

probably six eight years before that

massive shift happens and during that

shift the markets the assets around

those that are making the shift should

exponentially go up so if you invest

properly through this next six years you

might have a chance that's that's my

kind of that's my how I'm basing my

entire life on yeah I'm I'm slightly

older so I'm further down the journey

but basically it's like

six years I have Clarity I've never said

this sort of stuff before it's not like

you know I think the whole system is

going to end I'm just like I don't know

what it looks like Yeah and I don't want

to be then trying to compete for assets

or wealth in an environment where I

don't know if I've even got an advantage

because you know I'm building an AI ra

right now that it'll be out next month

or something and it'll be a one-on-one

experience where you'll be talking to me

okay I you know what does any of this

mean to us in the end we don't know so I

take it very seriously the six years and

these Cycles I'm I'm not a believer in

trading the cycle I'm I'm a Believer in

you know when we have the big draw Downs

I actually prefer I look forward to them

because you can add as much as possible

and compound because you don't have much

time and if you mess it up and you're

out of the cycle or whatever you know

this is the don't this up thesis

you're going to miss this opportunity so

yes there is time pressure here get it

right and that leads us into the banana

Zone the majority of this wealth happens

in crypto or macro summer and fall fall

is tricky CU we don't know where the T

cycle Peaks but it's this point here

around the US election and for about 12

months

afterwards that things go bananas and

you see it every time on the Bitcoin

chart it just does the same

thing so I know a lot of people dollar

cost average great this is not the time

to dollar cost average this is the Last

Chance Saloon before it gets crazy

that's when you need to have your money

in the in the market fully the other

thing then is to not do stupid things

when it starts going crazy you know

we've seen that in the past people lose

their minds we just got to not lose your

mind don't do stuff that gets greedy use

excess leverage don't do stuff with your

wallet and compromise losing your

Bitcoin don't do any of that stuff just

sit let it play out and enjoy it and

don't try and time it too much yeah I

love

that well I think that's a good place

for us to drop off uh what a good uh

sort of warning I I know you know from

my own Journey started buying Bitcoin in

2015 um if I could just do over and if I

could just go back to have all the

Bitcoin that I had when I started my

life would be so much different but to

your point all the stupid things I've

done uh I've done the same I mean I I

bought Bitcoin at 200 yeah and if I just

kept my original investment which was

decent size but nothing big yeah I'd

have done like five times better than I

have now yeah and that's with timing and

doing pretty well in it and leveraging

up massively well not leveraging up but

but increasing my position size

massively if I'd had just held the BET

and done nothing yeah same yeah so I

just I can't redo it but we cannot mess

this up moving forward uh I will just

say a little little bit of Hope for

everybody uh I believe uh back to the

human Ingenuity piece um there's no

future in this world where human don't

have problems I just we're always going

to have some sort of a problem and as

long as there's problems we'll need

solutions to those problems and

entrepreneurs will always be able to

figure that out so and Al also Mark look

we're going to this very technological

world where a lot of things we currently

do we don't need to do but humans are

social creatures they like other humans

they also hate other humans but they

generally we like to be together with

humans so that human- to Human

Experience whether

it's digital Network states that BL

talks about or whether it's in-person

Gatherings or whether it's you know

digital Network States could be Taylor

Swift it could be Manchester United

Football Club could be anything where we

share a commonality of Interest the

other thing is nature Nature's going to

trade at a huge premium in a world of

robots and AI when you can just kind of

leave that all behind so I have a lot

humans are super adap adaptive cre

creatures so we will adapt if you ask a

young kid now and say what do you want

to be when you grow up they will say I

want to be an influencer yeah and we

think are you crazy but what is an

influencer apart from a community leader

where they have a community of people

yeah it's actually maybe they're being

adaptive already they've done it in

fortnite they've done it in the gaming

world as well but we just judge it from

the world that we understand uh and that

doesn't make sense we're like you're not

being aspirational but actually content

creat

in certain elements can't go away yes

you can use an AI but in the end people

want the human to Human Experience when

when information is abundant to your

point um people and even today uh people

don't pay for information they pay for

implementation so they'll pay a coach or

somebody to help them implement the free

information they've already received um

I'm going to link to the uh everything

code uh you did like a two-hour

presentation uh is amazing I'm going to

link to that in the show notes down

below yeah that's on Ral pal the journey

man which is my um YouTube channel so

people can go there there's a lot of

stuff there for you so I'm going to link

that everyone should go watch that if

you like this subject anything else you

want to point to Ral that they should be

going checking out no look we as you

know we have we cover a lot of this on

real Vision it's free to join so

realvision tocom is another thing and

you can always find me on Twitter I

think most people have found me already

at R GMI but um you know I do take it

seriously the six-year thing I think

most people realize it as well I think

people realize it's the one chance it's

why the society's getting more

speculative because people are realizing

that they're going to have to take risk

that's okay as long as they do it

intelligently so that whole don't

this up thesis I think is a very

important one as well because it's okay

to take risk but don't lose your

tokens got it all right well we're going

to sign off with that thanks so much Ral

thank you Mark