Julian Dorey Podcast - [VIDEO] - China's Collapse, Financial Crisis, Geopolitics, Javier Milei | Jared Dillian • 183

Episode Date: February 3, 2024

(***TIMESTAMPS in Description Below) ~ Jared Dillian is a writer, author, & financial guru. His latest book, “No Worries” can be purchased using the link to my Amazon Store in the “EPISODE LINKS” Section of this description. EPISODE LINKS: - BUY JARED’S BOOK IN MY AMAZON STORE: https://amzn.to/3RPu952  - Julian Dorey PODCAST MERCH: https://juliandorey.myshopify.com/  - Support our Show on PATREON: https://www.patreon.com/JulianDorey  - Join our DISCORD: https://discord.gg/JKSJtr62  JARED LINKS: - TWITTER: https://twitter.com/dailydirtnap  ***TIMESTAMPS*** 0:00 - Jared’s years at Lehman Brothers; The Financial Crisis 11:46 - Inside Lehman’s build-up to the crash 22:25 - The biggest mistake in monetary policy; The Fed 31:06 - War & US Dollar Impact; China’s Navy 37:38 - Geopolitics: China’s future economy 42:16 - Nuke at Bikini Atoll 46:00 - Behavioral Finance; Seafood Tower Theory 51:21 - The Robinhood Gamestop Stock Craze; Calling Markets; Dave Portnoy 1:02:51 - Stress & Investing; Dave Ramsey; Dennis Rodman Analogy 1:11:46 - Gold; How regular Americans can make more money 1:19:48 - Financial Stability; Money Decision Fatigue; “Mr. Money Man” 1:32:05 - Pay teachers more 1:40:35 - Geopolitics: Javier Milei & Argentina Impact; Jared’s incredible New Zealand / Jacinda Ardern Call 1:52:46 - The previous era’s impact on debt; Flat Tax 2:04:50 - The changing of politics through the years; McDonald’s & War 2:12:36 - The $4 Door Mat; Capitalism & Slave Labor 2:19:16 - Election year & 3rd Parties; The 2 Party Divide 2:28:12 - Why Jared doesn’t vote 2:35:15 - Jared’s Work CREDITS: - Hosted & Produced by Julian D. Dorey - Intro & Episode Edited by Alessi Allaman ~ Get $150 Off The Eight Sleep Pod Pro Mattress / Mattress Cover (USING CODE: “JULIANDOREY”): https://eight-sleep.ioym.net/trendifier Julian's Instagram: https://www.instagram.com/julianddorey ~ Music via Artlist.io ~ Julian Dorey Podcast Episode 183 - Jared Dillian Learn more about your ad choices. Visit podcastchoices.com/adchoices

What's up guys? If you're on Spotify right now, please follow the show so that you don't miss any future episodes and leave a five-star review. Thank you. while still keeping that job and keeping the same level you are right now to be able to follow in the path of someone making 500 grand a year. People get put into a position where they think that the only way to make more money is to cut expenses. So they cut Netflix, they cut dry cleaning, they cut expensive food, they cut going out to eat, they cut coffee, and cutting expenses blows. But you know, the personal finance experts don't really tell people another solution, which is... Jared Dillian, welcome back to the New York area. Thanks. Thanks.

How often do you get back up here these days? About five or six times a year. And you DJ too. So you usually like working around some event in the city at one. Where do you usually do it? It's called Dew Supper Club, which is in Flatiron. I think it's 26 and 6 or something like that. Good spot. Yeah.

It's right by where the PATH train gets off around here. So you're coming back. I think you were telling me you're doing something in June. Is it going to be there? Yep, yep. It's going to be there. And you're coming back i think you were telling me you're doing something in june yeah that's the plan yep yep it's gonna be there and you're coming yeah i gotta i gotta come to that you got to bring like 20 people and 15 of them have to be girls i agree i like where your head's at i hope your wife doesn't listen to this but i'm in but this is a bit of a full circle moment for me because a lot of people have asked about in the past like what I did before I did this. I talk about I worked on Wall Street in the private bank. But you were a guy who from a behavioral finance perspective was one of the best I've ever seen.

And you're somebody whose newsletter I subscribe to religiously, the Daily Dirt Nap, while I was on Wall Street because you had a way of looking at things like I don't want to oversimplify it but you would take the macro and make it micro for everyone if that makes sense and I really really appreciated that but the original way I was turned on to you was a professor of mine in college assigned your book Street Freak which I think you wrote in 2012 2011 2011 he assigned which I think you wrote in 2012? 2011. 2011.

He assigned that. I think that was my senior year of college in a class like on Wall Street operations or something like that. And it's your memoir of working not only on Wall Street as a trader during the last hurrah of the heyday of day trading, I guess you could say, but also inside of Lehman Brothers, which for people out there who don't remember, that was the main bank after Bear Stearns in February 08, when we had the actual crash in September 08. Lehman is one of the big five banks that failed, that the government also didn't rescue, and that then crashed the economy. That had to be an absolute wild time.

You're talking about the bankruptcy being wild? Oh, yeah. Yeah. So I remember – I mean it was kind of an open secret that Lehman was going bankrupt. I actually started looking for jobs in the summer. The bankruptcy was on September 15th, but I started looking for other jobs. What do you mean it was an open secret? Like our clients, our hedge fund clients were telling us that we were going to zero,

that we were going to go bankrupt. Wow. I mean, but they wouldn't short our stock at Lehman. They would short our stock at other banks like at Morgan Stanley, and we would hear about it. Everybody was short Lehman. Everybody was massively short Lehman. So like I said, I knew it was going to happen. And then I decided I was going to pursue the newsletter route. So when Lehman went bankrupt, like from a personal standpoint, if you remember from the book, like I was actually happy because I was free. I could walk away. Well, you've been writing it for a while on Wall Street. Yeah, I was writing Bloomberg messages. Yeah, yeah. So, hey guys, a lot of you have been asking me where we've been posting our shorts.

They are on our other YouTube channels. So you can get them on at Julian Dory clips. Also, best of JDP. We're going to start posting there again. And our new one, Julian Dory daily. For now, we're not posting on the main channel with shorts, but that could be happening again soon. On another note though, if you have not subscribed to this channel, please do that. It is a huge help. 60.3% of you who watched in the month of January were not subscribed. So if we could improve that

number with more people hitting the red button, YouTube will put our videos into the algorithm, which will allow us to continue to get great guests like this. So thank you to all of you who have already hit the button. And to the rest of you, please hit it right now. What's better than a well-marbled ribeye sizzling on the barbecue? A well-marbled ribeye sizzling on the barbecue that was carefully selected by an Instacart shopper and delivered to your door. A well-marbled ribeye you ordered without even leaving the kiddie pool. Whatever groceries your summer calls for, Instacart has you covered. Download the Instacart app and enjoy

$0 delivery fees on your first three orders. Service fees, exclusions, and terms apply. Instacart, groceries that over-deliver. Thank you. How did you even end up on Wall Street? You were in the Coast Guard for a long time, right? What year did you arrive, like during the tech bubble? So I graduated from high school. I went to the Coast Guard Academy, which is a service academy just like Navy and Air Force and Army, but it's smaller. Graduated in 96. I majored in math and computer science.

And then I went to sea. I was on a Coast Guard cutter out of Washington State, and I did that for two years. And then I went to PAC area, which was now Alameda, California in the San Francisco Bay Area. And I did Intel for three years. And while I was there, I was getting my MBA part-time at University of San Francisco. Also, while I was there, I got a job on the Peacoast Options Exchange as a clerk. I worked for this market-making firm, and I basically got sandwiches and stuff like that, but learned about options. That was my first job on Wall Street. And I interviewed at a bunch of banks and Lehman hired me. Were you the guy who there was a dude on the floor that you called meat? Was that in your book?

Yeah, that was. And that was the Chicago Mercantile Exchange. So I was trading futures at Lehman. I was trading S&P, NASDAQ, Midcap, Russell, and he was my clerk on the floor, and I called him Meat. I actually just talked to him last week. We still keep in touch. Love that. We had a guy in our crew in college named Meat. So I couldn't remember if it was yours or maybe Flashboy's from Michael Lewis, but I guess it was yours where there was a guy named me. I'm like, dude, you're in this book. You're on the stock exchange. I could never see him on the stock exchange, though. Somebody named Meat on the stock exchange didn't sit right. But you were down there, I guess, for the last days at first of when the Spearleys and Kelloggs were around with guys waving their

hands, offering up prices and stuff. Yeah, yeah, yeah. Open outcry. Yeah, before it's fully digitized. Yeah, open outcry. So I got there. I started working on the P-Coast in November of 99. And stocks still traded in fractions back then. That's how old I am.

I actually remember stocks trading in fractions. So it was like 3-5-8s and 2-7-16s and stuff like that. So decimalization happened a couple years – happened in 2002, I think. But there were thousands of people employed on open outcry exchanges in the country. So there was the PECOS. There was the Amex, there was the Philly, there was the SIBO plus the futures exchanges. You had the NIBOT and the CME and the Board of Trade. Like we're talking like tens of thousands of people that traded with paper tickets

and stood on a trading floor and spit all over each other's necks and farted in the pit and like like that was that was a job for a lot of people and then you know in the late 90s early 2000s stuff started to trade electronic and within five or ten years it was all gone yeah yeah we were talking right before camera that when spear lead sold had sold, I guess it was like 2002 or 2001. It was like the top ticker. They sold to Goldman for like $6 billion. They would have been worth $6 like five years later. It's crazy how fast that happened.

But this is also – I didn't realize how much until I read Flash Boys how much high-frequency trading was already starting to become a thing in say like 04, 05. I guess I always thought of it like post-crisis. That stuff started to come in. But guys were building fiber optic cabling just to trade three nanoseconds faster in 05, 06 and stuff. All the while, you now had a role at Lehman where – I mean maybe if you wouldn't mind describing it, where you're just trading all day and with proprietary money for one of Lehman's arms? Basically, I did two things, right? I was a block trader of ETFs. So I would accept block orders from customers. So let's say

250,000 shares of ExoLead, they would trade that in a block, and my job would be to hedge that risk and keep a small profit. So that's what I did. I was running ETF trading. That's what I did. The other thing that I did was I did proprietary trading. I had sort of a back book where I didn't ask permission to do this, but I started trading macro. I started trading all different kinds of stuff. I was using about $250 million in capital, and I made money over time.

Like I was pretty profitable. How many guys were on the floor with you by the time it was over? I mean there was – so the Lehman Building was 745 7th Avenue, which is on the north side of Times Square. It's the Barclays building now. And the building is a little wider at the bottom. And the second, third, and fourth floor are all trading floors. And the equities floor, the stocks floor was on the second floor. And there was probably 300 people on that floor, I guess. Now, was the setup, because I'm trying to think if it was more old-school versus

what it what things ended up moving to are you like at a cubicle with a Bloomberg terminal or is it like open floor plan everyone's screaming at each other kind of like they used to do open stock exchange open floor plan everybody's screaming at each other and actually one of the things that Lehman did was they made a rule where you couldn't have two sets of monitors. You couldn't have like an upper level of monitors because then you couldn't see across the floor. So they wanted everybody to be able to communicate. So you could only have one row of monitors at Lehman. Well, yeah. One of the quotes you had in your book, I hope I don't mess up the number, but I think it was something like you said there were approximately 20,000 people that worked at Lehman Brothers and 19,970 of them – or 19,995 of them were really good at their jobs and tried hard.

I've quoted that a lot on here, and I always just correct it and say it was probably 970, not 95. But either way, it goes to show you the company that crashed the whole world. We make this mistake on Main Street where we think of Wall Street as this monolith. But when you say Wall Street, it can mean 100 million fucking things, and you had one area of the bank that was – and I'll let you explain and refresh people what that was. But there was proprietary trading derivatives that should have never been allowed to be traded, and they crashed everyone else. And I guess you knew a couple months ahead of time. But no one at the bank – like you're not sitting at your seat in 06 seeing this coming in your seat. That's not what you did. Well, in Lehman's case, it actually wasn't really prop trading that did it in. It wasn't really derivatives.

It was real estate. Lehman Brothers had a real estate division that was, let me just put this in perspective. At the bankruptcy, Lehman had $40 billion in physical real estate, buildings and land and stuff like that. The bank with the next most real estate was Morgan Stanley and they had $2 billion, right? So basically Lehman had this guy, his name was Mark Walsh, and he was running the real estate division and they just bought everything. They bought desert, they bought condos, they bought stuff in Scotland, they bought stuff all over the world and they never even visited the properties. They would just run the numbers in

Excel and just say, okay, wave it in. I didn't realize it was that much of a spread between them and the next bank. Yeah, yeah, yeah. So one of the reasons why Lehman was not rescued was because their assets were very illiquid. And that's why the bankruptcy took so long. The bankruptcy process took like 15 years. It took 15 years just to sell off all those illiquid assets. It would have been, I actually, there's been a lot of debate about whether Lehman should have been rescued or not. And I don't think it should have. I absolutely don't think it should have. I mean, the cost to taxpayers would have been enormous. Yeah. And that gets into the phrase that became famous during that era, the too big to fail.

And I guess I always kind of wondered how fast that decision got made. I mean this was one weekend in September essentially when it all crashed. But how fast the decision was we're going to let Lehman go and we are going to commit to saving all the other ones. Because when you look at it, there's a lot of, I guess, different perspectives from people who were in the room during that time, be it from government, be it from some of the bank saying that, oh, they were always going to let Goldman be safe. But I wonder if there was a point where they're looking at this like, okay, maybe these other

banks don't have $40 million in real estate in this case, but they got $40 billion. They got $30 billion in this fucked up derivative or something, and maybe we got to let them all go. There was also some other factors. Dick Fole, the CEO, was disliked. Of Lehman. Yeah, he was disliked by all the other Wall Street CEOs. And there was... Unfortunate name too. Yeah. Do you remember the hedge fund, long-term capital management? Do you remember that? No.

All right. So that failed in 1998. It was a big hedge fund. It failed in 1998. It had some pretty big effects on the market. And it was a private sector bailout. It got bailed out, but it was basically all the banks on Wall street chipped in a few billion to bail out this hedge fund that was like posing systemic risks well dick fall didn't chip in he's like screw it i'm like i'm not paying for this and 10 years later when he was passing the hat for Lehman to get bailed out. Everybody remembered that. Yeah, he was – who was the other guy? There was a COO too. What was his name again?

Greg – Well, Joe Gregory. Joe Gregory. Yeah. That's it. So it was like the two of them had been in charge for a long time at that point, right? Yeah. I mean they started at Lehman in the 1970s.

They were commercial paper traders. They were trading short-term rates. And I didn't know either of them very well. I met Dick maybe twice. I was at a charity dinner with Joe Gregory. He sat at my table. I don't really have any strong impressions of him, but they fucked up big time for sure. How far back did they know that this was a problem? Probably at least a year. And looking at it, looking at the autopsy of it, in that, say, 11 months prior to September 2008, did they try to take any drastic internal actions to turn them around? Yeah, absolutely they did. So there were voices at the firm that were telling Dick

and Joe as early as 2006 that there was a problem. There was a guy named Mike Gelband, I forget what he's doing now, but he left the firm. Basically, he was a dissident and he left the firm. And then when Dick and Joe figured out that there really was a problem, they brought him back in 2008 to try to fix it. But it was too late. So if you had found that in hindsight, 2020 with this, but if you had found that in, say, July, August 2007, and you had been you had had your people in place, been able to take some actions. Do you think it would have been salvageable if you took the right actions? As early as a year before? Yeah. Yeah, I think so. How would you salvage $40 billion in real estate that's worth shit?

You would just have to get it off your balance sheet. You'd have to sell it at a loss, basically. But in 2007, I think that would have been possible. But you guys only found out that something was wrong when some of the hedge funds trading on Wall Street who weren't making trades with you were going short. Lehman. Yeah, I mean, there was David Einhorn, who you know who that is.

So he was one of the most vocal shorts of Lehman. He got into a fight with the CFO, Aaron Callen. So, yeah. Yeah. I'm trying to think, though. If you saw the shorts trades coming in, was there a moment where you or someone else on the floor actually looked at the balance sheet and saw exactly what was causing it? Or did you just know like, okay, we have something toxic in here?

So I was working in equities. Yeah. Right? So I was not part of any of those decisions. Nobody knew what was going on. All any of us knew was that the stock had AIDS, that it was just going down every day. The stock literally could not buy an uptick for like a year and a half. And so we'd sit there and look at the stock like, what the hell is going on?

You know, but in equities, like we were completely removed. And by the way, you know, Lehman had an equities division but it was really known as a fixed income firm you know so basically like the firm was run by the bond guys and the equities division was kind of an afterthought so so you're you're really not seeing much but did you you were looking around for jobs in the summer did you think it was going to be like a systemic thing or did you just think this is going to be we're and everyone else will fight you know i don't think anybody thought that it would be a systemic thing you know because when bear stearns failed in march of 2008 um so that wasn't really bailed out per se it was taken over by jp morgan at like two dollars a

share yeah um but that didn't really have any systemic effects. And actually, stocks rallied for like three months after the Bear Stearns collapse. So I don't think anybody thought that it would have that kind of systemic effect, but it did. Is there something that you still see today? I mean, we're going to get into some of your behavioral stuff as far as like irrational exuberance and the cycle of people's emotions and how it affects the stock market.

Human beings don't change. That always stays the same. But are there things that we're brewing in hindsight in the buildup to 08 that you see have returned back to that now? No. I mean, look, like we go through these cycles of boom and bust. And that's, like you said, like human behavior never changes. But what was different about the financial crisis was it was grounded in real estate and debt, right? Like, for example, I have a quote, okay? And it's kind of a dumb

quote, but I'll tell you the quote. It's, to err is equities. To really screw things up takes fixed income. So, you know, what's funny is in 2000, we had the dot-com bubble, right? And the NASDAQ went parabolic. It went up to 5,000, and then it went down 80%. We had this crash. We barely had a recession. GDP was down like 0.1%. We barely had a recession off of that. So there were no systemic effects from stocks going down 80%, none. Because it's just the people who were over-indexed in those stocks, they got hurt. Yeah. But when you have debt, right, when you have over leverage in the economy, like that's a completely different issue. So, I mean, above and beyond Lehman and Bayer, like you've seen the big short, I'm sure, right? Oh, yeah.

Like, I mean, you're talking about millions of people who are qualifying for mortgages that they couldn't qualify for. There was fraud. Like, it was rampant in the system. Like if somebody is upside down in a mortgage, that hurts the bank, and you multiply that by 50 million people, and it's just a collapse. Yeah, it was crazy looking at it now because I got to see the inside of far past that crisis. So when I was working on Wall Street 2017, 2018, stuff like that, you know, one of the things we did is we would do mortgages and stuff for clients. We handled everything in their financial life in the private bank. And to get a basic mortgage through,

I mean, it was brutal. Every single thing had red tape around it. And of course, it's frustrating because what happens with a lot of red tape, essentially at some point there's things that would be good for the client to be able to do that now aren't good for the client because that's just how it is. But when I would talk to guys who had been there when this all went down and they'd tell me about, dude, it used to be like three lines, sign it, sign it in the operations part of the office and someone had a house, wouldn't even look at their balance sheet. It's like, well, I now completely understand why that's the case. But it's just nuts how that got out of control so fast. I mean do you think it was – looking at the history of it, because people were so down on maybe stocks after the dot-com boom, you then have a new administration come in. Obviously, you have 9-11 and a whole bunch of things geopolitically happened but you know early on in bush's

presidency he i forget what the name of the act was but he had like the every american gets a home act is that kind of what drove this towards that attitude there were a lot of things i mean there was a law that was passed in 96, and I can't remember the details. Finney and Freddie played a big role. Also, but also I think the biggest contributor was a mistaken monetary policy. Okay. So also, remember how I said that everybody thought the dot-com crash was going to lead to like this big recession? Yeah.

Well, the Fed thought that too. So Greenspan lowered interest rates to 1% and left them there for two and a half years. So that's really what kicked off the boom in housing prices. When you can get like 4% mortgages, like everybody flooded in and housing values went up. So I think that's actually the biggest contributing factor. It was a monetary policy mistake. Yeah, and now, I mean, for people trying to buy houses at the moment, we just had, relating to today's times, we just had a really weird three, four years because pandemic hits, interest rates go really low, people buying the shit out of houses for a couple years. And now, over this past year, they spiked interest rates like crazy. And I think in 2023, I'm not going to remember the stat perfectly, but it was like the lowest home purchasing year in years that we had strictly because I mean, we don't affordability went down. Yeah, we don't think about that, you know,

on Main Street, right? Like me now, but I'm not watching when they're doing the interest rates like I used to, but that affects the entire entire economy and it feels like it's in this it's this pendulum where the people who run the Federal Reserve know that okay we're gonna no matter what we're gonna cook it too far one way one way or the other at some point there's gonna have to be some sort of people lose we have a recession let's manage it and then we'll cook it the other way make the same mistake there and then cook it back and forth over and over again. Like that's a little bit of a – what's the term? A little bit of a nonchalant way to look at it, but is that fair to say?

Yeah, I would guess so. I mean it's – like the Fed is a much longer discussion. We could do three hours on the Fed for sure. Feel free. It's 19 people who have a lot of information and make very terrible decisions for the wrong reasons. Why do you say that? The Fed is an institution that operates under the – they pursue the path of least embarrassment, right? If you look at a private company, what is the worst thing for a private company to happen?

They lose money, right? If a company loses money, that's the worst thing to happen. The Fed is a government central bank. They have a P&L, they make money, they lose money, but they don't care about that. What is the worst thing for the Fed? The worst thing for the Fed is when they're embarrassed, when they make a mistake, right? So everything they do is governed by ass covering, right? They are trying to do what looks good in hindsight, right? Which always leads to mistakes. Yeah, it's a political game. I joke about it with other things, not necessarily the Fed, but you could say the same thing. People go to get hit numbers on things so that someone looks good on a Tuesday in November at some point every other year or every four years. So I kind of

wonder though, what the alternative way to do it would be there, though, because would there be a way to do it where you don't know the people on the Fed and so they don't they can't get blowback? You don't find out when they get put on there and what they think? I think we this is a radical idea. I don't think we should have a Fed. I don't think we should have a Federal Reserve. I mean, the most important price in the economy is interest rates, not the price of eggs, not the price of meat, not the price of cars. The most important price is the price of money, which is interest rates. Why do we let 19 unelected bureaucrats determine the price of money?

Like when the price of everything else in the economy floats freely, why do we decide interest rates by committee? The market knows where interest rates should be more than 19 people do, right? It's millions of people. So just let markets determine interest rates. They would do a better job. And actually, I would argue that the market does a reasonably good job. The Fed doesn't so much drive monetary policy as much as the market does. Usually interest rates, like long-term interest rates will go up and the Fed will follow. The Fed's not, the Fed usually follows interest rates. They don't even determine it, but they should just get rid of it altogether.

So what, but what would, you would just let the free market replace it? Yeah. I'm not a fan of the Fed either. I'm just always curious what the answer is here. It's kind of like when you say in politics, well, do you want bigger government or bigger corporations? You have to have one or the other. Like is there – if the free market were determining – Dude, look at what's happening in Argentina.

With Malay? With Malay, yeah. So he wants to get rid of the central bank. He wants to get rid of everything. Yeah. But how feasible? Is he going to be able to do that? I don't know.

I'm long a bunch of stocks in Argentina. I think he's going to be able to do it. But if you don't have it, this is the question I always have. If a government doesn't – and I'm not arguing for government here. I'm just saying like I don't really know the alternative. If a government doesn't control money, what do they control? I think you arrived at the problem here. Yeah. And how would you describe that? Well, I mean, that's the most important thing.

The Fed chairman, Jay Powell, is more powerful than Joe Biden. Good argument there. You know what's funny is if you ask the average person on the street who the chairman of the Fed is, 99% of them don't know. They know who the president is, but they don't know who the chairman of the Fed is. The chairman of the Fed in the FOMC have a much better effect on your daily life than Joe Biden does. For sure. Right? This inflation that we had in 2021, all caused by the Fed. All caused by the Fed. Is there political pressure to get that, though? I mean, you saw it more openly with Trump because he would. Why do fintechs like Float choose Visa?

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trump as you know was harassing jay powell constantly to like have negative interest rates and if trump becomes president the same thing's going to happen again, like for sure. So, but Biden, you know, it's, you know, it's the interesting thing is, is that even though inflation was ramping, Biden didn't go to the Fed and say, hey, do something about it. He never did that. Like, I'm sure there were meetings in the White House and stuff like that, but there was nothing public. He never said anything public about the Fed and said you guys need to do something about inflation. I don't think he understands how the Fed works. I don't think he understands how the economy works. I just – I think he doesn't know.

Yeah, I mean I always call it the Biden administration. Yeah. Because like the lights are on. I don't know how many people are home up there. But you look at what's happened in the world and our roles within it over the past two years since we started to have this rapid inflation problem. We've gotten involved in wars, not boots on the ground, but they've been proxy wars with a lot of money flowing. And when I had Andy Bustamante on the podcast right after the Ukraine war initially broke out. Did you ever have access to, let's say, government secrets that were so big

that humanity could never find out about it? Humanity is too big of a word. So I would say I have absolutely had access to secrets that would impact how the American public would respond. What do you mean by that? Meaning the roles that I filled, the operations that I participated in, were operations that were relevant and impactful to Americans. They were relevant and impactful to other countries as well, but never humanity as a whole. He actually talked about the strategy, and I'd love to get your thoughts on if this makes sense, but the strategy of when you then create, say, like a client state in Ukraine where you're pumping money into the problem and the war is backed by, quote, U.S. dollars, over the long term, you could be fighting

against the threat to the dollars, the global reserve currency, because it's involved in intricate situations of the highest stakes. Yeah. I mean, really what happened was when Russia invaded Ukraine, the Western world put all kinds of sanctions on Russia, and Russia says, fine, like, we don't need the U.S. dollar. And now you've seen, you know, the BRICS basically trying to form a currency alliance to not use the U.S. dollar. Like, this is really, I mean, this has been overdone. Like, you've seen people on Twitter, like, talk about this,, like the dollar is going to, it's not going to disappear. But for the first time, like people are looking at the U.S. and the U.S. dollar and saying, like, why do we have, why do we, why does everybody use the U.S. dollar? So.

Is there a real, I mean, like you said, some people doomsday scenario, like it's happening tomorrow, but is there a threat, a legitimate threat within the next 25, 30 years that the US dollar actually isn't a global reserve currency? The smartest thing I ever heard about this was – and I don't remember where I heard it. But somebody said that the US dollar will no longer be the world's reserve currency when the Navy loses an aircraft carrier. I'm not following. Okay. So how do we project military power across the world? It's through the Navy. Okay. We have 12 aircraft carriers, I think. An aircraft carrier is very symbolic, right? It's a symbol of U.S. military power. If we were to lose an aircraft carrier, like in a war with China or something like that, that would be the beginning of the end of the dollar.

If you think about who had the reserve currency before the United States, it was Britain. It was the British pound pound who had the world's biggest navy the british right if you look before britain who had the world's biggest navy spain right any time that navy like ceases to become the world's most powerful navy like that's when you lose reserve currency status. Now, if it is that simple, playing the hypothetical of that argument, I feel a lot better because I feel like we're pretty far ahead in all that shit still. We love war. China now has more Navy ships than us.

Really? They do. They do. Yep. Is that like brand new? Within the last five years, I think, yeah. Is there a way we can Google that? Number of ships, China naval ships versus U.S. naval ships?

When I was in the Coast Guard, we had about 600 naval ships. Now I think we have about 300, and I think China has like 400 or 500. Wait, we actually cut some money from our government budget? Well, ships got more expensive expensive and we just didn't replace them fast enough no shit yeah how big a dumb question i should know this but like what's the range of the size of those naval carriers are they all a very similar size or are some way bigger than others they're all different sizes okay yeah And they're just around the world at any given time, be it in ports like policing or in a war zone, stuff like that. Yep.

Hmm. And that was what Japan attacked in Pearl Harbor. They were literally attacking our naval fleet. Yeah. I've never Googled how many ships they took out in that. Do you know that off the top of your head? I don't. I don't.

Can we Google that? Yeah. Because I would imagine back then we had a lot fewer ships than we do now. Maybe I'm wrong about that, but I guess from a strategic standpoint, that was the way to go. But, I mean, you and I were talking about China literally right before

we hopped on camera. I was asking your opinion on them long term and the the dichotomy I gave you was for people who obviously didn't see that conversation the dichotomy I gave you was you kind of have two camps you have that guy Peter Zion who I think you said you know a little bit who says China's fucked 10-15 years from now they're gonna have a giant famine population collapse everything's going to shit. And then you kind of have the other camp that's like the Andy Bustamante camp where he speaks on that from I guess personal experience in his job with the CIA. But he talks about how China what if Zion's right but we have 10 to 15 years on the way there with a murderous, psychotic dictator who's doing all kinds of shit around the world that could cause problems that last far beyond China actually being this power that they are right now?

From a market perspective though, how do you approach China today and what do you think is going to be the the landscape say a decade from now uh i can't predict out a decade but i will tell you that today the number one question i get in my newsletter from people is when do we buy china because if you look at the chart it's just going like this you know from the upper right to the lower left. And my answer is never. We never buy China. Like, it's a damn communist country. Like, there's no property rights. Like, companies exist at the whim of Xi.

Executives disappear. Like, the demographics are terrible. Like, Zion is right about that. And, you know know china has gotten they used to have like a little over 10 000 economic statistics they have about 1 000 left how do they get away with this they got rid of 90 of them and the ones that are left are fake like literally just a couple days ago they reported 5.2 gdp growth do you think China is growing at 5.2%? Not only are they not growing at 5.2%, they're in depression. They're in actual depression.

They do not have positive GDP growth. Do we know that? I always wonder about the information we get. Some of the statistics that we used to look at to sort of verify the data were like electricity usage right the electricity usage was going up then it meant it was growing and if it was going down it meant that it was shrinking and now we don't have that anymore so we like we just kind of have to take them at their word but you know with the stock market going down every day i doubt they're i doubt they're in expansion. But anyway, what I was going to say was, I don't think they're going to have a stock market in five years. You don't think they're going to have a stock market at all? No, I mean, he's a nationalist. He's not a capitalist, right?

He wasn't like leaders before him, which sought to increase china's economic growth he doesn't care he doesn't care and if the stock market becomes embarrassing like getting back to the embarrassing discussion like what's the worst thing for the government or like a dictator is to be embarrassed if the stock market becomes a laughing stock they'll just either they'll just nationalize everything and the stock market goes to zero so when they nationalize it they obviously the government takes possession of it so that that means that everything becomes state owned everyone in the united states they but they don't now it doesn't have any price or anything it's just literally worth zero yep so even even say the chinese stocks that are underwritten here in the

united states through like the new york stock exchange or whatever that we buy like JD.com or something like that, they would be worth in a day nothing. That's some doomsday shit. Yeah, well, yeah. So it's not that I'm bearish on China. I'm not shorting China, right? Because I think it's kind of a waste of time. But if you look around the world, like instead of being a degenerate and trying to pick a bottom on something that's like – you're catching a falling knife. Like buy India, right? Buy Argentina. Buy places with good politics where things are growing, where there's good ideas and people are flourishing. Like India has positive demographics and Modi has been in power for 10 years. What do you mean by positive demographics?

The population is growing. Yeah. Modi has been in power for 10 years. He's going to be in power for four more years. Like he's done a terrific job with the economy. Look at a chart of India. It's not doing this. It's doing this. It's going the other way. Do you think something like India, because I forget offhand the size of their population, but it's enormous, it's comparable to China, do you think a country like that could replace China in the world pecking order? Oh, for sure. Yeah. Wow. Yeah. Because it seems like the China thing is so weird because before Juneune 2022 it was like bizarre they were investing in everything

here and so when you went to talk about it on media it was like oh no we don't talk about that i mean they wouldn't even let it they weren't they weren't even letting people call it the virus when it literally came from wuhan and then something shifted these think tanks i think i want to say the first one was the hudson institute i remember i called my boy danny jones from the danny jones podcast it was like june july somewhere in there 2022 and i'm like dude all these like kind of mainstreamy think tanks are now writing open papers about china you then saw the five eyes come out like and you know that that's the english-speaking countries but also like the fbi on an international level come out and make all these hardcore statements about china

i'm like why is this like now in vogue and it seems like maybe you know i always wonder if like the attention is trying to be driven from something else does that mean that something like india growing with as you say positive politics or something right now could be viewed by the United States government in some way as an emerging threat? Oh, no. India is an ally. India is an ally. They're also a nuclear power. How many nukes do they have? Oh, I don't know, but – Can we Google India nukes? We always got to pull it up.

Because that doesn't – I mean Russia has got great nukes, but always got to pull it up. Because that doesn't... I mean, Russia's got great nukes, but they got the GDP of Italy. All right, 200 nuclear... 164 nuclear weapons and has produced enough weapons-grade plutonium for up to 200 nukes. I mean, that'll do it.

That's enough to be dangerous. I think we're... What are we at, Alessi? I want to say, like, either 700 or 1,500. 1,000. Somewhere in there. USA nukes total peak stockpile our peak stockpile was 32,000 in 1967 holy shit us all right so we're down from 32,000 to 820. God, how did we get that high?

Cold War was some weird shit, man. Oh, my God. I used to have this picture in the old studio on one of the walls that was Bikini Atoll, that island in the Pacific that we blew up using for nuclear nuclear testing and it showed one of the nukes. And then below it, I had a picture of – what's it? Michelangelo's The Hand of God and Adam. But instead of Adam or instead of God, it was like a robot. And I always looked at it because like we look at AI and stuff as something – this existential threat.

And I guess the slight optimistic thinking is we have had this shit for 80 years now and despite using it twice on Japan to end the war and despite all the geopolitical conflicts that have happened with countries around the world since then, something about every level of humanity up to and including crazy dictators who have existed has stopped us from using this stuff. And that gives me a shred of hope. Have you seen Oppenheimer? Dude, I actually still haven't. I'm embarrassed. I still haven't watched it. It's actually, I wasn't that big of a fan. Really?

Yeah. Why? Well, you know, I love Christopher Nolan movies. I love the geeky sci-fi stuff. I love Interstellar. I love Inception. I thought it was going to be a geeky sci-fi movie about nuclear weapons. It's really about politics. It's a political movie. It's about how Robert

Oppenheimer was kind of, you know, he became a peace advocate and then he was smeared by the government. And, you know, it's, I don't want to say it was boring because it wasn't boring, but it just wasn't the movie I thought I was going to see. Yeah, I mean it's so wild to think that a team of so few people was able to come up with this. And then, I mean, everyone's heard his famous line where he talks – where Oppenheimer talks about it. And it ends with like, I have become death or whatever. You have the power in your hand that if you got pissed off enough, you could turn out the lights everywhere. It's a heavy fucking thing, man.

Yeah. And then I think about all the dictators who have a button like that and they haven't used it. It's interesting. Yep. You know? What does that say about what we could do to them, though? If they haven't used it all these times, all these different regimes that have existed and never used it?

Does that say like we just got way better shit that we could just wipe them off the mat if they tried something? Well, I think there's sort of a tacit agreement among governments that if you're going to engage in conflict, you will do it through conventional means because the consequences to a nuclear attack are, you know, just annihilation. So like just, you know, if you remember, Putin was threatening to use nuclear weapons on Ukraine. And he ultimately didn't. If we, let's say we had, if we had US troops in Ukraine fighting against the Russians, it would be a conventional war. There would be no nuclear weapons used. Like I really believe that we've just sort of agreed to not use nuclear weapons.

So we've agreed to send the young sons of every country to the front line to shoot at each other and kill each other. It's more humane. Yeah. And actually they're technically right about that which is the craziest part but it's so fascinating how even today with everything we know all the global interconnectivity we still have that that war footing process it's not like you know the old days where they'd stand in line and actually just shoot each other from point blank it's not that but it's still like, all right, we're going to send our guys.

You're going to send your guys like cowboys versus eagles, and we're going to go duke it out, and people are going to die. I still – there's something about humans that blows my mind that we still do that. It's crazy. But I mentioned early on your calling card to me at least is that you're this behavioral finance guru. And so for people who aren't as familiar with that term out there, essentially you can look at what we everyday humans do and take patternistic behaviors in a way and apply that to what you think the market is going to do. You gave one example that's more technical where you talked about like, oh, if they're not using as much electricity, that tells you there's not as much going on and maybe you sell. But my favorite theory you ever gave that kind of encapsulates what you're about is that seafood tower theory. And we've talked about that on multiple podcasts throughout the history of this podcast. But I remember you wrote about that in the Daily dirt nap daily dirt nap maybe six seven years ago i never forgot it because you

said if you live in new york and rule of thumb you go to like a decent restaurant and suddenly you start seeing seafood towers everywhere these big gluttonous, huge $500, $600 things where the seafood on there actually costs about $60. It's just a show of wealth. You're like, sell everything because people are irrationally exuberant. Yeah, when did you really get into the behavior to drive your trading decisions? So you've heard of Daniel Kahneman? Yes, of course. Okay, thinking fast and slow?

Okay. I was reading Daniel Kahneman stuff way before he became famous, okay? 2003, 2004, I was going on Amazon and buying books of his academic papers with Amos Tversky. And I was reading his academic journals about behavioral finance. Because here's my theory on this. This is very important. Fundamental analysis is when you look at balance sheets and income statements for companies, and you try to figure out which ones are cheap and which ones are expensive. Technical analysis is when you look at charts. You say there's a trend line here and there's support here and there's resistance here. Both of those two things don't work. People do them

all the time, but they don't work. Fundamental analysis, if you're looking at balance sheets and income statements, you're looking at the past, right? And it's all publicly available data that everybody's looking at the same stuff, right? So nobody has an edge there. And the charts, everybody's looking at the same charts, nobody has an edge. But with sentiment, I actually call it sentiment these days, with sentiment trading, like human behavior is constant over time and it forms repeatable patterns. Okay. And that's where the edge comes from. A lot of people have come around to my point of view in the last 10 years, there are hedge funds that employ strategies on sentiment. They usually do it quantitatively. I do it qualitatively.

How would you describe that difference so um i spend a lot of time on twitter okay like in finance twitter and i look for i look for words right if somebody tell if somebody tweets that a stock is unstoppable that that gets my attention if somebody tweets that a stock is unstoppable. That gets my attention. If somebody tweets that a stock is relentless, that gets my attention, right? Because when people start extrapolating the present out into the future, like the Bitcoin people, when they say, okay, Bitcoin's a 40,000, it's going to go to 250,000, it's an extrapolation of trend, right? And when people start extrapolating the present into the future, it's an expression of confidence. It means that people are confident

that what's happening now is what's going to happen three years from now, right? And that's usually the time to sell, usually the time to sell and why is that um typically it means that everyone who could be invested already is invested and there's nobody left to buy everybody's already everybody's already long so because too many people are saying yeah i always try to picture this it's too many people are saying it so that it's like it's like a ponzi scheme idea like once there's once there's too many people on the boat the boat just sinks nobody left to buy yeah they can't get it yeah i mean i guess from so when you say that the the hedge funds are going more quantitative are are you literally talking about like some of

the stuff you mentioned earlier with the electricity and things like that where they just look at what things are trading to be able to say what the macro is they've set up algorithms to scrape twitter and look for those kinds of signals in people's tweets like for sure that's happening you know or or news articles or press releases from companies. That's another one. Like they'll program a computer to do like natural language processing to analyze a press release from a company and look for certain words. Well, I mean timing is critical to this stuff too and no one can time the market. You can time the market.

You can? Yeah. I do can time the market. You can. Yeah. I do it all the time. That's kind of what I do for a living. Yeah, but when I say time, I mean call it on the tick. That's what I mean. Call it on March 9, 2009. Oh, here's the bottom like that guy did on CNBC, which was amazing.

Right? Like you may call it on February 1st and lose money till March 9th and then boom we saw it in the picture it's hard to get it exactly right yes and when the big short all those guys were early they were super early yeah yeah Michael Burry I think lost money yep hand over fist for two and a half years spotting this stuff and barely made it and then once he made it obviously it exploded but you know getting in there right when it is can sometimes cost you. I remember because I was still on Wall Street at the beginning of the pandemic.

I was hanging on the last thread. And in April 2020, the irrational exuberance of people day trading at home was so fucking crazy. I remember getting texts from people, no offense, like some of the people who were not too bright in my phone saying, hey, what's your opinion on this stock or whatever? Just open up a Robinhood account. And I remember calling my boss like, oh my God, we got to sell everything. This is fucking crazy. But it lasted another 14, 16 months after that.

How does that happen? Like in that situation, you had everyone at home. They were all doing the same shit those first couple months. How did something like that last? Was that just because they made interest rates so easy and they're like – they artificially prolonged it? Is that it? That's part of it. Calling bottoms is a lot easier than calling tops in stocks.

Stock markets will bottom in a moment. You usually get V bottoms in stocks, but you get U tops. So if you're trying to call a top in the stock market, there's a period of time that's called distribution. And distribution means that stocks are going from strong hands to weak hands. And that process takes time. Like you never see a V top in the stock market. It's always a big rounded top. Like if you're trying to short the market, it just takes a lot of patience and risk management and basically staying put until the crash. Well, do you think people being forced home during the pandemic and getting more connected on social movements that even affected the stock market changes how we look at behavioral finance? I mean to put a perfect example on it, look at how long GameStop lasted with that whole thing. It was objectively not worth anything, but people

just got behind it and enough, it was like, oh, you don't want to have paper hands to get off. Enough people stayed on. You know, it's funny. We talked about Ben Mesrick before. Yes. And I met him out in Vegas. And in his presentation, he talked about the fact that people really weren't buying GameStop to make money. Like they weren't, they weren't trying to buy it 100 to sell it 150. They weren't trying to make money. It was a fuck you to the system. It was a fuck you to the banks. They a you to the banks they didn't care they were just trying to blow everything up so that phenomenon that we experienced with the meme stocks like it we've like we never seen that before in finance like it's never happened before and it really happened because people's concept of profit and loss and gain and loss like it just it it just became divorced from reality you know like why

else would you buy gamestop at 500 a share that's crazy like people were not trying to make money yeah i i remember talking some people off the ledge during that time we were like i'm this is a this is about the principle i'm gonna i'm gonna take out a loan against this because we have to win. I'm like, you're not going to win. It's a giant club. You're not in it. But it's amazing that all these years- And then Robinhood got rid of the buy button. Yes. Yes. I mean, but still you have stocks like AMC today that still have memers in it. I haven't checked in the last few months, so maybe I'm wrong now. I think it's like below a dollar okay so it's crashed now but that lasted for a while because you had memers in it for i guess like a couple years even there at some point which just totally changes you

know like if you were going short amc in february 2021 you probably lost too much money and not close your position which guys in gamestop some major hedge funders actually had that happen, where they, it got, like, they were right, but it didn't matter. And then they got caught with their pants down, and they had to close out their shorts because they're over-leveraged on everything. It was a wild time, but, I mean, do you get, I remember when Portnoy was doing, I was telling you this before, but I remember when Portnoy was first doing that david day trader thing and you were like oh my god this it was in that spring 2020 you're like this is a top and you couldn't stand this do you think that that's bad for the markets when like this happens that it's pop culturally fun i think it's i think

it's bad for average people i think it's bad for individual investors um if you're taking advice from people who are not serious you know what i mean like um davy day trader lost a lot of money for a lot of people ultimately in the end um and the architects of the whole gamestop stuff they lost a lot of money for a lot of people um i just like i wish that people would listen to you know there's i have a whole bunch to say about this it's crazy say it now's the time look at me right i'm wearing a t-shirt and i got tattoos and whatever and, people will listen to somebody in a suit on CNBC, got a suit, got a tie, you know, they're, they're in front of their wine fridge or they're wearing a fleece vest or something like that. And they're like, oh, this must be like a serious guy. Like how, how does an average person tell who is knowledgeable and who has good advice in the markets? It's not

necessarily the guy in the suit markets it's not necessarily the guy in the suit it's not necessarily Dave Portnoy with the green hammer like who is it you know who has the answer yeah I mean you even see that though you'll see like the famous videos of guys on CNBC in that sweater vest and everything and then suddenly they get caught with their pants down not knowing shit about the stock they're talking about and and my question is i'm almost like how is this not illegal when they do that like at least dave like listen dude if you think that was like deadly serious then you're kind of dumb because like it's dave portnoy he's having a good time but when you get these serious people who go on these channels and just say this shit over and over again

and maybe don't always tell you exactly where they are in their portfolio at that time, I know the hosts always have to do that. But I wonder like, okay, there's guys getting thrown in prison for insider trading. Like what is this shit? Like isn't that muddy water at best? I think about the ethics of what dave portnoy does right because he'll buy a hundred thousand shares of a stock and then he'll tweet about it and all these monkeys will buy the stock in it you know and he's i don't know if he's selling to them but he could he could you know there actually was um the sec went after some guys

on twitter and i do not remember the details of this um but they were they were doing pump and dump on twitter they had they all had big followings they had like 80 90 000 followers and they were mostly doing in small cap stocks where they weren't that liquid but they would accumulate a position in a small cap stock and then they would tweet about it and get everybody to run it up and they're selling it to them and those guys are they'll go to jail yeah that's that that's prison yeah that's so obvious that's like that's literally what jordan belford did you know like that was the boiler room stuff oh you got something less yeah this is it i think The U.S. government charges eight social media influencers over alleged pump and dump scheme. This is from December 2022.

All right, go down. The Securities and Exchange Commission has charged seven Twitter users and a podcaster in an alleged $100 million stock manipulation scheme run through social media, the agency said. According to the SEC, the seven twitter users also used the messaging app discord to promote certain stocks to hundreds of thousands of followers then quietly sold their positions after a run-up in the stock price yeah that's so textbook and they got they even were texting about it like yeah they can't pull that in discovery christ the podcaster named in the case allegedly also engaged in the illicit trading scheme and promoted the other defendants as expert traders according to the SEC.

Our Discord and Patreon links are in the description. We are starting to do AMAs on Discord. And we are also now releasing a new show called The Julian and Alessi Show with my producer Alessi Alamon on Patreon along with some other exclusive content from episodes that we have been putting out on YouTube that are not seen on YouTube. Well, I mean, the 500 pound elephant in the room here is crypto, right? I mean, we just saw that whole thing. And I enjoy your as someone who likes some of the ideas that are supposed to be at the forefront about aspects of crypto. I enjoy your contrarian opinions on a lot of stuff. You've also been dangerously close to calling tops and bottoms on tickers on Bitcoin. I've got to give you credit for that. But you're somebody who just said 20, 30 minutes ago you'd like to get rid of the Fed, which is right in line with what a lot of people in crypto say.

So why don't – why do you think something like crypto doesn't work? I think it could work i think it could work but it's um i mean look like a lot of people say bitcoin there's 21 billion bitcoins there can never be any more and this is this is money it's like gold or whatever um Yeah, I suppose it's possible that in 2054, we could all be using Bitcoin and maybe we don't even have phones then. Maybe in 30 years, we have something else. So that's possible. But one of the reasons I don't really like crypto, and I've traded it some is the volatility. Like I just, like I'm a more conservative investor. Anything that has a lot of returns also has a lot of risk. Okay. Bitcoin has great returns. It has a huge amount of risk. It can move around 5, 10, 15% a day,

right? This gets into my book. You were going to bring that up later. By the way, for people just right now, because we're going to be talking about this, your new book is now out. Note when this comes out. We're recording this a couple weeks ahead. No worries. I've already looked through some of it.

This goes through, this is a personal finance handbook, and I give a huge endorsement to Jari. He knows his shit inside and out. So we're going to be talking about this within the conversation, but go ahead. Yeah. So if you, like, let's say you bought Bitcoin at 10,000 and it goes to 100,000, it goes to 20,000, it goes to 200,000, it goes to 40,000, it goes to 500,000, it goes to 80,000. You're experiencing these big swings. It causes you stress. It causes you stress. The returns are great. The risk is terrible. So one of the things I talk about in

this book is how to construct a portfolio in such a way that minimizes your stress where you don't trade off much in the way of returns, right? So leave Bitcoin aside for a second. Let's talk about stocks. Stocks return about 9% a year. They have for the last 100 years. They return about 9% a year. I have something in here called the awesome portfolio, which returns 8% a year,

but it has half the risk of an 80-20 portfolio. And also, the stock market can go down 50%. The most that the awesome portfolio has ever gone down in a year is 12%. 12%. How many years did you stretch that? Back to 1971. Wow. Yep. Wow.

What does that consist of? So it's 20% stocks, 20% bonds, 20% gold, 20% cash, 20% real estate. Simple. I like that. Yeah. And you rebalance it every year. Whoa. And how much do you practice that yourself?

Is that about where your percentages are? Yeah. How long have you been doing that? Since 2005. Wow. Yeah. Okay. So basically you're giving up a little bit of returns, but you're massively reducing your risk. And the goal here is you don't want to be checking your phone every five minutes to see where your stocks are, where your crypto is. Like You shouldn't think about your money. You should not think about it at all. One of the things I miss about mutual funds, 40-act mutual funds,

is that they don't trade on an exchange. You get the NAV once per day, and you don't even know where it is until you get a quarterly statement. You get a quarterly statement in the mail, and you say, oh, I made money, or I lost money. But you don't think about it. That's the way to do it. You want to construct a portfolio in such a way that you just set it and forget it. Now, but do you think that there's been an over-emphasis within our markets on passive trading? Meaning like we have so many goddamn ETFs now that are just diversified giant instruments that there's been talk that maybe Jack Bogle, the famous Vanguard founder, his theory on that is going to blow up on itself because that's all people are doing. They're just buying broad shit. So in 1997, passive investments made up 1% of the market. Today, they make up 56% of the market.

That's almost lower than I thought it would have been. 56%. In Japan, it's 70%. Japan is 70%. Passive could go to 90%, and it's not going to blow up. It's not going to blow up. But if you think about what passive investing does, if you invest in an index fund, you're a parasite.

You're a free rider. And what you're doing is you're relying on active investors to buy and sell things and drive prices to their equilibrium levels. And you're piggybacking off of their efforts, right? So the fewer people you have that are buying and selling in order to get stock prices back to equilibrium, the more inefficient the market becomes and the more inefficient the passive investors become. So let's say we got to a point where we were 90% passive and you had 10% of active investors.

Like the market would be incredibly inefficient, but there would be nothing you could do about it because 90% of people are just on pure beta, riding the market up and down. Yeah, and I think a lot of people, like when they buy this stuff, maybe this isn't the worst thing ever either. They don't really look at what's inside of it, like you said. Like they're not buying QQQ and checking out, like that ETF, and checking out every stock that it holds or when they change the holdings, you know, and make Facebook the third highest holding instead of the seventh highest holding. When you invest in an index, you get the returns of the index,

but you also get the volatility of the index. Qs are very volatile. S&P is very volatile. Yeah, and what's the – people always talk about the value versus growth. I try not to be like the permable on stuff because market conditions obviously can change. What has happened in the past does not mean it will be the case in the future. But what about all the people out there, including me, who are so eager to just say, well, just put the money in tech because that's where all the innovation goes and that's where it's going to be. So that's where we should be.

Why the fuck are we wasting our time with value stocks and more traditional type things like a caterpillar or something like that? So two things. One, I've seen a couple of cycles in value and growth. Growth has been outperforming for the last 20 years. Now, I take that back. There's been some hiccups along the way, but growth has mostly been outperforming. It's not always going to be the case. I don't know when the turn is going to be.

I can't predict it. It's not always going to be the case. You know who Dave Ramsey is, right? Of course. Yeah. Okay. He's a ding dong. I've heard this from a lot of people. Yeah. So the investment advice he gives to people is that you should put all of your money in growth mutual funds, like aggressive growth mutual funds. Again, the returns are great those average 12 a year 14 a year but if you invest in an index you also get the volatility of the index and he's telling these christians in tennessee to put their money in qqq that's where God wants it. Like it's insane. It's insane. And he's got all these knuckleheads in Tennessee like watching their stocks every day.

Yeah. I've been trying to de-stress my life a little bit and I haven't been in a position to really look at like stocks or something to the point of building this business. It's more like how I'm managing the cash flow of this business. But when I do start being able to put money to work, I don't want to think about it. I don't want to be one of these idiots who's just like, well, I'll just put it in the basic Vanguard thing and call it a day. I understand that. You got to be a little more tactical about it. But I like that concept of being able to look at it and say, okay, you're going to actually diversify across five different asset classes.

And here's what you can expect over time. And the key is diversifying across asset classes, right? So a lot of people say, I'm going to buy an S&P 500 mutual fund. It's got 500 stocks in it. I'm diversified. You're not diversified. Like there's 30 million other people who do the'm diversified. You're not diversified. There's 30 million other people who do the exact same thing. You're not diversified. So you say, okay, I'm going to add

some bonds to my stocks. Well, bonds and stocks are positively correlated at the moment. So you're not really diversifying your risk. You're compounding your risk. And they're both financial assets. That's what they have in common. They're both financial assets.'s what they have in common they're both financial assets so then you have to diversify to hard assets like real estate and gold and commodities so gold in particular is the best diversifier in the world i call gold the dennis rodman of asset classes okay and if you think about dennis rodman you're making our sponsor happy noble gold investments If you think about Dennis Rodman he's

What he's in the Hall of Fame? He's one of the best basketball players of all time There was a lot of debate about whether he should be in the Hall of Fame because he doesn't score His he scores credit. He scores like six points a game But what does he do he He can rebound and pass to other people. If you had a whole team full of Dennis Rodmans, it would be the worst team in the world. It would never score. But when you take Dennis Rodman and you add it to four other guys that can score, it becomes the best team in the world. That's what gold does. If you had a

portfolio that was 100% gold, it would suck. Like it would suck. But when you take gold and add it to four other things, then it becomes the best portfolio in the world because it has very weak correlation to stocks and bonds and real estate and anything else. So when you add it to a portfolio, you bring down the volatility. That's the purpose of gold. What is it about gold that makes it, throughout human history, so timeless and so recognized and the ultimate traditional cultural symbol across all these different cultures of wealth and success?

Because it maintains its purchasing power over time, okay. A car right now is $40,000, which is like 20 ounces of gold. In 1970, a car was 20 ounces of gold. In 1930, a car was 20 ounces of gold. It maintains its purchasing power over time. It doesn't matter what the dollar does. And we took the, I mean, famously, we took the dollar off the gold standard at Nixon, which kind of started with FDR though with the new deal. So before that – it's something that sometimes I get confused at. Before FDR first introduced a way to get around this, in order for them to print money, it had to – tell me if I get this right. It had to be earmarked to the gold bullion that the government held. Is that what it was?

I actually don't know the history. You don't on that? But why do people complain so much about us going off the gold standard? Because it gives guys like Jay Powell the power to just print money without anything earmarking it? Yes. Yes. There's actually – I don't know if you want to bring this up. There's a cool website called WTF Happened in 1971.

And so if you go to WTF Happened in 1971, you will see a bunch of charts that show that really weird things started to happen when we went off the gold standard. Right? So this is where productivity and compensation so basically worker salaries stopped going up even though their productivity went up and that happened in 1971 that's a huge gap yeah because percentage you know i always tried to make people think in this i'm like question i would always ask a client i swear to god they never got it right was if i have a hundred dollars and i lose 50 what do i have they say 50 bucks i say

how much percentage points do i have to make up now to get back to 100 100 exactly yeah you're hurt more on the way down than you're on the way up so when i see something like this where you're like oh well one of them's up 116 but then product i think what was that the top chart alessi if you go up it was productivity was up 246 compensation up 115 you're like well it's still up one foot look at the spread there 115 verse 246 compounded over time are you fucking kidding me that's a that's monumental and that's why you know if you ever read steven pinker's stuff at all no so he talks a lot about how we are in statistically the best time in human history and how there's minor setbacks that occur you know

each decade sometimes but overall we move forward and he's he's right statistically but one of the things that's happening right now that you look at a lot is we have the wealth gap separating where we are basically nubbing down the middle class and we're getting more to this winner take all society is there a way if you had the power if you were the head of the Federal Reserve and actually wanted to keep it for a minute, is there a way we could fix that? If I was chairman of the Fed, I would get rid of myself. I would get rid of the Fed. If you think about- Assuming whatever you are, president, whatever you are. So go back to 2008. We had the financial crisis.

Yes. Right. And September, no, November of 2008, Bernanke starts doing quantitative easing. Head of the Fed at the time. Right. Yeah. So what Bernanke was worried about was deflation. Okay. Like he was a scholar of the depression.

Have you seen the movie Boys in the Boat? No. Have you seen that yet? Boys in the Boat is a super interesting movie because it takes place in 1936 during the Depression, and it kind of shows how awful it was. People didn't have food. It was terrible. So he was worried about deflation. So he actually wanted to cause inflation.

Well, he didn't cause inflation in goods and services. He caused inflation in asset prices. So stocks went straight up and real estate went straight up. Okay. All right. I follow that. And if you go back to 2008, that's when inequality really started to get bad when it first began. Because quantitative easing targeted assets and made assets price go up.

And who owns assets? It's rich people. Right. The people who maybe took a huge hit during the crisis, but they didn't go to zero. They didn't have to worry about putting food on the table so they could recover faster. That's the thing. It's like when I'm running, I try to do this math in my head. I always fuck it up.

But if you're running up a hill in a race with somebody, and they're running faster faster and they get to the top of the hill they're getting to the downhill before you and like it's supposed to be that well once they get on flat ground you're on the downhill and you catch up but in the stock market it's not really like that yeah you need money to make money it's a huge yeah i mean how do you how do you change that though with people if if i'm the average father of let's say two or – let's say three kids out there. I got a wife and three kids. I work a nine-to-five job, maybe even an eight-to-six job. I pull – let's say I live in New Jersey.

I pull 100K a year. I'm floating by, man. How would you say here's how – minus your 2020-2020-2020 portfolio, here's how you could set up a plan to be able to make yourself successful while still keeping that job and keeping the same level you are right now to be able to not necessarily keep up, but at least follow in the path of someone making $500,000 a year. Let me see the book. Slide that over to me. So I actually talk about this in the path of someone making 500 grand a year. Let me see the book. Slide that over to me. So I actually talk about this in the beginning of the book in the first chapter. The first chapter is part one is about attitude. Okay.

So I talk about, you know, a lot of people, they work at the widget factory. They make 100 grand a year year and they're like, I make what I make. So people get put into a position where they think that the only way to make more money is to cut expenses. Okay. So they, they cut Netflix. Um, they cut dry cleaning, they cut, uh, expensive food, they cut going out to eat, they cut coffee, and cutting expenses blows. It sucks. It's terrible. But the personal finance experts don't really tell people another solution, which is make more money. So what are some ways you can make more money? Well, you can ask for a raise, Maybe you get a raise. You can get a second job. You can work longer hours. You can change careers to something completely different that makes more money. You can go to school to learn something to

change careers. You can do passive income, right? You can like buy houses and rent them out, or you could start a business. Even like today, they call it a side hustle. You can sell little rings on Etsy or some bullshit like that. But the point is that you might be able to cut $3,000 a year in expenses, but if you work at it, it's called focusing on the revenue side. There's a whole chapter in here called the revenue side. You focus on the revenue side and what you can do to bring in more money. It involves more work, but it's a lot more fun than cutting expenses.

Yeah, and that's a cultural phenomenon. People are always like, okay, well, I can cut this, cut that. But you're taking away utility. It affects your mood. It affects your attitude. You're right. That's a good way to start off. Real quick, I just got to go to the bathroom.

We'll be right back though. All right, we're back. Another thing you talked about in this book is – I believe it's at the end – is the concept of stability and what that means financially to people. And sometimes I think like that's just a made-up word. We're always searching for stability, but we never really have it when we get there. How do you look at stability in managing your financial life? Well, the goal is to have a healthy relationship with money. Most people don't. I would say 80% of people don't. 20% of people do. You can either be two things. You can spend too much or you can either be two things. You can spend too much or you can spend too little.

The people who spend too much, this is what like Dave Ramsey likes to talk about. It's some asshole with a $100,000 truck and a 580 credit score and his car payment's bigger than his house payment. And he just spends like he's deep into credit card debt. Right. And we say, this person is the bad person.

Right? We don't want to be like this guy. So what we're going to do is the opposite. We're going to be the cheapest fucks of all time. Right? We're going to buy like generic canned soup, and we're going to have like one suit that's like $99 that we got at Belk and we're going to have a 14-year-old Chrysler Sebring that smells like cigarette smoke. We're just going to be like

cheap fucks. So those are the two ends of the, those are the two extremes. The goal is to be in the middle. The goal is to be in the middle. These people on the extremes don't have a healthy relationship with money. If you're super cheap, what are you doing? You're thinking about money all the time. Even if you go to the soda machine, you're like, eh, I don't know if I can afford a dollar for a soda. Basically, all your decisions are ruled by this framework that you have to save as much money as possible. Decision fatigue too. Decision fatigue. That's a good way of putting it. And on the other end, like you're always trying to make the next car payment, the next house payment, like you're in debt up to your eyeballs. So the right way to be is in the middle and have a healthy relationship

with money. And that's, you know, when I wrote that book, like, that's, that's, that's how I live my life. You know, like, I don't think about the small stuff. I think about the big stuff. It's funny. I just got a text from my wife. I'm selling my house, right? Right now. Yeah, I'm selling my house. I'm building a house 15 minutes away, and we're selling the old house. And it's been on the market for three months, and it's not selling. And we have lowered the price. We have lowered the price $250,000. Ooh. Yeah.

So now think about this. I got an Uber on the way over here, right? The Uber was like $60. Like some people would be like, I'm taking the path. I'm like, I'm taking the train. I'm taking, you know, I'm going to take the path or I'll take the ferry or something like that. And I'm like, I'm like, fuck it. It's like 60 bucks. Like who cares? Like it's small stuff. What's big is the 250,000 that I've lowered on my house. So the goal is to focus on the big things, not the little things. The little things do not matter.

And basically what we tell people in America is that the little things matter. We tell people that the little things matter. Make your bed in the morning. There was that Navy admiral like 10 years ago that gave that commencement speech about making your bed. Then he got a book deal out of it. Make your bed, right? Like it doesn't fucking matter. I don't make my bed. I don't make my bed. I just get out of bed and I leave it and I have a great day. Like it does not matter. But we tell people that little stuff matters. Susie Orman will tell you, don't buy coffee. Don't buy coffee.

But what if I like it? If you go to Starbucks, if you spend $4 on a coffee, then it's a waste of money. And so here's the math, right? I go to Dunkin' Donuts every morning in Myrtle Beach, okay? I get a $3.81 iced coffee, okay? I do it because I have to take a shit. I don't even like the coffee that much, but I got to go to the bathroom. You have to get Dunkin's to take the shit?

I have to get Dunkin's. So 225 days a year, I get a $3.80 coffee. That's $900 a year. If I save $900 a year over 40 years, that's $36,000. If I invest that $36,000 in the stock market, maybe I get like 100 grand, right? So if I give up taking a shit my entire life, if I never take a dump ever again, I will have $100,000 when I retire. What is wrong with that? What's wrong with that is we cannot give up small luxuries. If you ask somebody to give up something they love on a daily basis every day for 40 years, they can't stick with the program. They'll give up.

They'll give up and they'll just go back to spending yes so they cannot stick with the program so it's your whether you have money it's not the product of a million small decisions it's three big decisions how big of a house do you get how expensive of a car do you get and how much student loans do you have if you get those three things right coffee doesn't matter. Uber rides don't matter. Dry cleaning doesn't matter. It just does not matter. Sweat the small stuff. Don't sweat the small stuff. Oh, yeah, yeah. I'm sorry. Don't sweat the small stuff. Yeah.

Yeah. So a couple things here. First of all, we all know people like those two extremes that you pointed out. Yep. Someone spending way more than they have and someone who fucking every little thing, they're like, I can't afford that. I look at it from a strictly utility standpoint. That's why I said decision fatigue because I had heard Jesse Itzler years ago when he was on with Joe Rogan. He talked about how the average human being has to make, want to say it was 30 to 50,000 decisions a day everything from do I make a left or a right to go to the bathroom and stuff like that all the way up to am I gonna buy this thing or am I not and he's like the more

Decisions you have the more stress you have the more things you have to worry about and so with money, you know Prime example, my dad's a lawyer. He does well. My dad's never ordered delivery in the history of my life. When I would order delivery, he thought the world was going to end. He's like, why the fuck would you do that? We'll go pick it up. I said, no. We're going to drive 11 minutes that way.

I'm going to stop what I'm doing, get in my car, stand in there and wait for five minutes while someone says, get this fucking order ready because it's not ready because it's never fucking ready on time. I'm then going to drive back home here. I'm going to spend whatever it is, two, four dollars on gas and 25 minutes of my time, break my focus because you want to save seven dollars on or ten dollars on delivery. I'm like, that's worth the ten dollars and you shouldn't be

thinking about that. But so many people, especially from that area, like the boomers and Gen X, a lot of them do think that way. It's culturally baked in, like you said. Have you ever heard of Mr. Money Mustache? I don't think so. You've heard of the FIRE movement? Like the FIRE free speech movement? No.

You ever heard of this? All right. Mr. Money Mustache is a guy with a mustache who lives in Colorado, and he started this movement called the FIRE movement. It stands for Financial Independence Retire Early. Right? And basically what he tells people to do is you graduate from college age 32. This guy.

You work 15 years. You save 70% of your income. You just live in complete deprivation. You save 70% of your income, you just live in complete deprivation, you save 70% of your income, then you retire at age 35. And you live off that money for the rest of your life. And you can do whatever you have all the time in the world, you're 35 years old for for 50 years, you can just sit on your ass, and you can just live off that money. Okay. Anyway, the reason I brought up Mr. Money Mustache is because on his blog, he talks about making a pizza. He's like, I'm not going to order a fucking pizza. I'm going to make a pizza. Right. So like, okay, you're going to spend

three hours making the dough, cutting up the vegetables, like, you know, like making your own sauce. You're going to bake it three hours of your time if your time is worth 25 an hour yeah it's 75 plus the five dollars in ingredients it's an 80 pizza people people for some reason don't get the time value of money greed you know they like they don't understand it like they can't do the math you know i think about that all the time well that's also like one of the you know you you'll talk especially like the bitcoin guys they're always talking about that and it's funny because when i when i hear you talk you have a way of hitting a lot of the same notes and well-placed complaints that they do but you're not in that camp which is almost like some good self-control i guess on on

your part if if if you don't believe in that but you know we've touched on today but do you think that maybe if it's not bitcoin something like that that puts more of like a libertarian effect on society where you're more responsible for yourself do you think that that could that could fix all this too where people are so worried about every dollar and cent because there's also things that they don't – that are out of their control monetarily that they do to make a living? Everything is within our control. We all get to choose how much money we have. We all get to choose. What do you mean?

You choose how much money you have. I have no idea how much you make on this podcast, right? And obviously you want it to be as big as possible. But if it wasn't a lot of money, you could go back to Wall Street. You could do something else. Like the amount of money you're making doing this is your choice, okay? And however big or however small you want to make it, it's your choice. Same thing with my business, newsletter business.

Newsletter business, look, I told you I'm building a big gangster palace, right? Newsletter business is pretty good. But honestly, there are things I could do to make more money. I could be a strategist at a bank. I could do that. I could run a pod at Millennium. I could do that. I could be making $5, $10, $15 million a year doing a bunch of different things. I choose to do the newsletter because I enjoy it. It brings me enjoyment. I choose how much money we have. We all choose how much money we have. If you have a person, they're like, I want to be a teacher. I want to be an educator. Okay. You know how much teachers make, right? It's not very much. You're going to love your job. You're going to love

working with kids. You are choosing to make less money on purpose. That is a choice. If money was important to you, you would choose something else. Maybe you would be a real estate agent. And maybe if you're a real estate agent, that is a choice. And maybe there's something else you could be doing. We all get to choose. It's completely within our power how much money we make. Sometimes I think about this with everyone having like the dream, right? And the dream is, I don't necessarily mean the American dream. I mean where you can work preferably for yourself, doing something you love, and make a lot of money.

Even if it's not like the most you could possibly make, you do very well. You never got to think about money. But then you look at what society needs. And for example, society not only needs teachers. It needs good teachers. But they're not financially incentivized to do it So what you're saying though is also that that means that mathematically speaking there are a lot of people in this Country moving forward who we're gonna need to make maybe I'll put a word on it the dumb

Decision to take a job like that in light instead of another job that they could take so that society continues to function. You know, you're going to love my opinion on this. So I'm a pretty conservative libertarian guy. I think we should pay teachers a lot more money. I agree. I think we should pay teachers. And education is one of the few problems in the world that you can fix by throwing money at it. Literally, you just throw money at it and it gets better. If you pay teachers $80,000 a year, in South Carolina, they make like $29,000 a year. It's like insane. If you pay teachers $80,000 a year instead of $40,000 a year, you're going to get much better people who want to be teachers. It's a better incentive. You're going to get better education. There's some parts in the country, New Jersey is one of them, Connecticut,

California, teachers are paid pretty well, you know, but I would say for 45 out of the 50 states, they're paid like shit. And literally all you have to do is throw money at it, raise teacher salaries, things get better. Who throws the money? The government? Well, I mean ultimately taxpayers, but it's worth it. Right, right, right. It's worth it. I would rather spend money on education than a whole bunch of other things.

Well, it also – this is another thing I've been going back and forth with in my head recently. We're living in a time, and you talk about it in this book book where, for example, higher education costs a fucking arm and a leg. There's kids who at the age of 17 will sign their name to a document because they want to go drink and fuck for four years and have a good time and not realize what that's going to do them at 27, 37, maybe 47. They're not smart with their money. And we're also living in a time where a lot of the higher institutions right now are not having their best moment from an educational perspective. So what's forming? Well, the opinion out there is starting to form, and I've been a part of it, by the way, I have to say this, where people are like, well, maybe it's time to rethink education. We got YouTube now. We have unlimited access to things online to learn. Just educate yourself. where people are like, well, maybe it's time to rethink education.

We got YouTube now. We have unlimited access to things online to learn. Just educate yourself. And now I'm starting to wonder if that's also like – that pretty much has no precedent around country maybe on our education system to remove all trust in it so that we don't even trust grade schoolers. I mean I hear people talking about homeschooling their kids now and stuff. You know what I mean? And that in essence crashed the system in on itself. Do you worry about that from like a geopolitical power standpoint of this country? I don't know about a geopolitical standpoint, but I can tell you that we have too many people

going to college. We have too many people. And we don't have enough people not going to college. I went to a beer distributor in Wisconsin. This is like five years ago. And the guy told me he was hiring college graduates to work in sales and paying them $55,000 a year. He was hiring high school dropouts to drive trucks and making $110,000 a year. Like we have an oversupply of people with degrees and an undersupply of people without them. We need less people to go to college. So I don't know if you've ever heard about the higher education bubble, right? It's, it is a bit of a, it's like, it's almost a behavioral or sentiment concept. Like it's a

bubble. And what we believed for many years was that in order to succeed in life, you needed a college education. I can't tell you how many people I've run into in Myrtle Beach. You have a guy with a high school education. He starts working at an HVAC company. He works there for 10 years. He gets the bright idea to start his own. He grows it. He builds it. After 20 years, he sells it for 10 million bucks, and then he lives in a gated community. No college education. You have to think about what the purpose of a college education is, and there's two purposes. One is to prepare people for jobs. That is a purpose.

And the other is to educate them, make them enlightened people, right? And the colleges don't believe, if you ask any faculty member at a university, they don't believe in the first purpose. They don't believe in preparing you for a job. They're like, that's not what we're here for We're here. We're here to make you an educated citizen and that's that's where the universities are failing. That's a problem Yeah that's where the universities are failing us because The part of their purpose is to prepare people to work in the workforce for sure So I mean think about how much we talked about compounding money a few minutes ago think

about how much the difference is between a kid who gets convinced into i'll just use the most stereotypical one to go into college at 30 grand a year in loans to get a gender studies degree where then they can't use it for anything they're out of college eight years out of college they're working a job that doesn't even require a degree making 50 grand whereas the other kid who went in didn't go to college didn't take on that debt started making money from 18 to 22 they're making positive money without debt at the same time that this person this other person is in college going further into debt and then they're making to use your example with the beer distributor one they're making 110 versus 55 against that person. They are now – the chart is going like that.

Yeah. And one person is enlightened. That's not worth it. I mean it's easy to pick on gender studies. That's kind of the straw man, right? There's quite a few degrees that don't have a lot of usefulness in the real world. You have a lot of people who graduate with one of those degrees, and they have six figures in debt, and they're waiting tables. And here's what happens. 2009, Obama signed a law, okay? And it set up what was called income-based repayment

plans, okay? So if you go to college college and you have $100,000 in debt, the payment on that would be $1,200 a month, $1,500 a month, something like that. But what the government does is means test you and say, well, you're waiting tables, you're making $40,000 a year, so you can afford $300 a month, so that's what you're going to pay. But that doesn't cover your obligation. Like the interest expense that you're not paying is being negatively amortized. It's being added to the back of the loan. So I don't know how many times you've seen this on Twitter, but somebody will tweet, I graduated with $70,000 in debt, and I've been making payments for 20 years,

and now I have $100,000 in debt. Let's vote been making payments for 20 years, and now I have $100,000 in debt. Let's vote for Bernie Sanders. Right. Right. Like, how many times have you seen that? A lot. Yeah. And it's because of the law that Obama signed in 2009. If people had to make those payments, like the larger payments that they should be making, and if they knew in advance, like if somebody told them at age 18, look, if you're going to borrow a hundred grand to get this degree, you're going to be making payments of 1500 a month. They probably wouldn't do it. Right. But they're being shielded from the economic consequences of their actions through these reduced payments.

Why did he, why did we make that a law in the first place? Just out of pure altruism because, hey, let's help these people out. We're from the government. We're here to help. We're going to help these people. But it doesn't help them because it's negative amortization that gets added to the back of the loan. That's the problem. And here's a good example of the pendulum though that, I mean, if I had an answer for this, you and I wouldn't be talking right now.

But you look at that. You just said that law was 09, right? We can point to a lot of other things happening in 09, 10, 11. We can point to a lot of things that happened in 1930, 1931, 1932 where the exuberance and lack of regulation leads to this disaster. But then to fix the disaster, we go the opposite way and we regulate the shit out of everything which then eventually somehow either leads to the next disaster or gets pulled off because people get sick of it everything goes back to deregulation at some point and then leads to a disaster how do you is that just going to be human nature over and over again doesn't have to be doesn't have to be i mean there's there's people in government who understand this

you know um i keep going back to argentina javier malay is really like he's the best politician in the world i mean think of this and i don't i really didn't mean to change the subject i'm sorry no no it's great but go with it since 1946 argentina has lived under Peronism on and off really for like 70 or 80 years. What's Peronism? Eva Peron was elected in 1946. It's sort of like a combination of fascism and socialism, but it's really – it's this enlargement of the welfare state. Like Argentina has a massive welfare state. Like a huge percent of the population is on welfare, right?

So that's hard to undo, right? And things had to get bad enough in Argentina where they elected a guy who is a hardcore anarcho-capitalist to rip off the Band-Aid and just fix it. And things are not bad enough here. Like Danongino do you ever listen to him no okay you know who he is yeah okay so sometimes i'm in the car i turn on his radio show he says this a lot he's like things just aren't bad enough like people people don't change people don't change when they see the light. They change when they feel the heat. Things have to get really, really bad. So Biden tried to cancel student loans, which was denied by the Supreme Court.

I think he knew that was going to happen, and I think he did that gesture just so we could say he tried to do something yeah score political points um but the student loans are here to stay you know so can we go back to argentina yeah or not because it's this is something i gotta do a deeper dive on but this guy we mentioned earlier one of the things he wants to do is like what what is he he goes down the line goes afuera afuera afuera like every single he goes like la la destrucción uh government afuera and he just wants to cancel everything in the government okay so he's a libertarian he wants to minimize the state up the the freedom of the markets how much power as their president will he actually have to get his ideologies into place? And how's Argentina going to change on the global stage if he can?

I don't know a lot about the civic structure in Argentina, like who's in Congress, like what the makeup is. I don't really know a lot about that. I can tell you that he was popular when he was elected. He won by 56 to 44, and he's become more popular. He's become more popular. So even though he doesn't have as many members in his party in Congress, he has the will of the people behind him. They want to make these changes. So like I said, I own a couple of stocks in Argentina, and I just tell people I'm not selling them for 10 years. Argentina, here's an interesting factoid.

How long is his term? Four years. Here's an interesting factoid. How long was his term? Four years. Okay. Here's an interesting factoid. The Argentina stock market makes up 9% of their GDP. The United States stock market is like 170% of our GDP. So if you think about, if he introduces these economic reforms and how much that stock market has the potential to grow. I mean it's astronomical. Wow. What was our percentage again? I think it's like 170. Yeah. One of the – sometimes I'll have guests in here where a line rings in my head.

It changes the game for something, something different every time. But there's probably been 15, 20 times in here where someone said something that made me just go wait that's that's exactly right oh my god why did i ever think of that and one of them was when andy bustamante said the first time i had him in he said the only thing that matters on the geopolitical stage is your gdp that's it he said if you are making the most money and producing the most for the world, even if you're ranked on the list, right, you are more important than the people below you.

And it makes you think right now because we've talked about the dollar. It won't take long to tell you Nutrile's ingredients. Vodka, soda, natural flavors. So, what should we talk about? No sugar added? Neutral. Refreshingly simple. Instability, potential instability. Neutral. Refreshingly simple. geopolitical trends and how it's going to impact the world order if you will so as an example you're my favorite call you ever made was this jacinda ardern in new zealand who i believe just stepped down last year god she was a bitch man she was in there for like six seven years and i had no idea who she was until you wrote a dirt nap on it the second she won or was about to win.

It was before, yeah. It was before she won an election. Where did – how did you – basically you nailed it. You nailed what she was. She was this very hardcore left-wing movement, hardcore socialist, was going to do X, Y, and Z to New Zealand. I'll let you lay it out. But what made you be able to call the shot literally bar for bar like that? Well, I knew a little bit about New Zealand. New Zealand in the 1970s

was a very socialist country, very socialist and economically depressed. They were just a backwater. And they had a prime minister in the 70s or 80s, his name was John Key. And he was part of that whole Reagan-Thatcherite revolution in the early 80s. And John Key totally deregulated, lowered taxes, turned the country around economically, and New Zealand became a very rich country. And they had had labor governments along the way but they had been you know mostly centrist labor governments and you know along comes jacinda ardern who was far left um and you know new zealand is kind of this tiny country at the bottom of the world they're in this weird time zone they have a bunch of sheep and cows and stuff like that. Lord of the Rings too. Like nobody really pays attention to what's going on in New Zealand. You did.

Yeah. Jacinda Ardern, I don't know if you remember this, you talked about the five eyes. While she was prime minister, New Zealand was pretty much kicked out of the five eyes because she was so far left and she was aligning with China. So, yeah, I mean, I saw that article, like that was for real. Um, but anyway, it's a funny story about that Jacinda Ardern thing. And I told you

earlier, but I'll tell it again. I was, uh, I was writing for Forbes at the time and I had done this research on Jacinda and I wrote a Forbes article and Forbes doesn't have editors. Yeah, this is wild to me. Like, if you write an article and post it, nobody looks at it. And it's on the internet. Like, there's no make sense check on it. Oh, my God. So I wrote this article about Jacinda, and I basically talked about that whole history that I just told you. And I said that, and it was really about economics.

I wasn't talking about, you know, vaccines or anything like that. I was just talking about economics. Yeah, I said before all that. Yeah, and I said, she's going to fuck the place up. And I posted it, and I went to bed, and the next morning, I had Facebook messages from TV studios in New Zealand. I had Twitter messages. I had angry people in New Zealand tweeting at me.

They were Googling me and looking up parts of my background. And they're saying, oh, he's a failed author or something like that. And the TV studios wanted me to go on TV in New Zealand to talk about this. And I said, it was Thanksgiving. It was literally Thanksgiving Day. And I said, guys, it's a holiday here in the U.S. I'm not doing it. And I just never did it. But yeah, I mean, but that's, that goes to show you though, like these, this is something we've seen in recent years as it's become so-called this U.S. like China world.

You have your teammates on this side and you have your teammates on this side, and you have your teammates on that side. And for whatever reason, especially during the pandemic, Jacinda is certainly self explanatory. But then you look at the bigger one over there, like Australia, they kind of leaned towards the Chinese influence, right? Like everyone in their home have helicopters above question them when they post something on Facebook. What is it? Is it strictly the tit for tat economic relationship is so tied to China that they can then kind of, without saying, force certain behaviors? Or is it an actual adoption of ideology? No, it's really about economics. I mean Australia in particular exports a huge amount of commodities to China and they value that relationship and that's really all there is to it. By the way, the guy – so Jacinda stepped down. She didn't finish her second term and the guy that just won prime minister of New Zealand is a guy named Chris Luxon, who was the CEO of the major airline there.

I think it's New Zealand Air. And he's – if you think about this, Jacinda was so bad that they had to elect a CEO as prime minister as a complete opposition to what she stood for during her presidency. And he's great by the way. He's great. What was the reason she stepped down that she gave? What was the real reason? Well, I mean I think she was just going to spend time with her family. But really like she was like bombing in the polls.

Yeah. And she wasn't going to get reelected. So – Yeah. I mean that happened that happened fast because also like it felt like especially during the pandemic some of these governments just enjoyed it like they they enjoyed there's something about the human beings who ran these places are just like oh we love telling people what to do you know i i I don't want to sort of re-litigate everything that

happened in the pandemic. I live in a red state. I live in South Carolina. And the governor is a guy named Henry McMaster, who was a U.S. attorney under Reagan. He's not really a Reaganite. He's more of a Trump guy. He's old. He's in his 70s. Yeah, he was the lieutenant governor before, right? Yeah, he was when Nikki Haley left. Yeah. But living in South Carolina during the pandemic was awesome. Basically, the pandemic happened in February, and by May, everybody was out and about. And you had to wear a mask and stuff, but it really was not that bad. Yeah, way different than here.

Yeah. I mean, it was it really was was not that bad so yeah way different than here yeah i mean it was like shit that was when did we really start well you were down in miami so that was different i think it it it didn't even loosen up until maybe like may 2021 i mean we're talking 14 months where i mean it worked out for me i was in a studio, like building the podcast in a studio. So it didn't really affect me as much. And people still came to be on the podcast. But I mean, looking around so many people who maybe didn't have something they were building or just locked inside the damage of that.

I don't know how you reverse it. But it's crazy that that is now, the pandemic breaking out is literally almost four years ago now. Yeah. And when I think about the pandemic, I really think about the economic effects. I don't really care about the masks or vaccines. It's not my bailiwick, but we pumped $3 trillion worth of stimulus into this economy. And we didn't raise $3 trillion of taxes. We went into debt $3 trillion and just handed it out to people. PPP loans and stimulus checks and child credits.

And that's what caused the inflation. That's absolutely what caused the inflation. Can that get reversed? No, it can never be reversed. So we can't't fix that we're just going more and more into debt we have three trillion dollars more in the economy chasing around the same amount of goods the only really the only way to immunize that is for the federal reserve to continue to do quantitative tightening over a period of like 10 years and suck that money out of the economy politically they're never going to do that i think about i haven't

looked at a government debt chart in a while but it makes me sick when i do because when does it come home to roost like at what point that's the thing it had it's not bad enough yet it's not bad enough yet it has to get bad so enough yet. It has to get bad. So when I say it has to get bad, interest rates have to go up a lot in order for people to care about the debt. Like when I was a kid, I'm older, right? So fourth grade, 1984. I'm in Mrs. Cook's class, okay? And we used to have current events every week and they would take out like a film

strip and they would, we would watch current events every fucking week. They talked about the debt every week. They talked about the debt and like, you know, they were blaming Reagan. We had $180 million deficit. It was about 6% of GDP and oh my God, the debt, the debt. And that continued up until the bush one became president and he ended up raising taxes a little bit as sort of a token gesture taxes went from 28 to 31 but read my lips i will never rate the the debt continued to be a political issue all throughout the 90s, and then we eventually had a surplus in 2000, and then the debt ceased to become a political issue. And then 9-11 happened, and we started a whole new cabinet department, and then we started spending money like crazy. But the debt is not really – it's becoming a political issue, but it's not really a political issue.

People don't see how it affects them personally. How does it? If I went to a guy in the street and I said, all right, you're shopping for a house. Your mortgage is 6.5%. If it wasn't for all the debt that we accumulated in the last five years, your mortgage would be 5.5%. Government borrowing crowds out private borrowing. all the debt that we accumulated in the last five years, your mortgage would be 5.5%. Government borrowing crowds out private borrowing. The government gets to borrow first, you're second in line. So when they borrow, interest rates go up and then you have to pay higher interest rates. But even when we're doing this, just like you said, we haven't had a surplus

since fucking forever. We never have surpluses, right? So even when they're trying to fix it, they're still getting deeper into debt How does that not crash the dollar? It's it's a really long conversation We have a deficit right now of about 1.8 trillion, which is about I think 9% of GDP, which is very high We're getting to the point where entitlement benefits Social Security Medicare are becoming the biggest part of the budget. We do have discretionary spending. We can cut discretionary spending, but even if you cut discretionary spending a lot, you're not going to balance the budget because your entitlements are so big. So I don't want to say the problem is intractable,

but long term, you need to make some reforms to Medicare and Social Security in order for this to work so and yet you've had people paying into their taxes with the promise forever and now you'd be saying I'm not saying take away Social Security but there's some things you could do like right now like the the retirement age is 66 you can say okay the retirement age is 70. That helps. But then what about when people are living to 85 instead of 77? Well, life expectancy is actually going the other way. It is. You're right.

At the moment it is. At the moment it is, but what if it starts to go back the other way? Yeah. And then you kind of run into the same problem. I mean, people are living a lot longer now than they were 35 years ago. No? So that's my thing. They all feel like short-term solutions. The other thing that liberals want to do, which I disagree with, is they want to means test Social Security benefits. So basically, you get to retirement age, and you're making, like you're 66 years old, and you're making 500 grand a year. No Social Security, you don't get Social Security.

Yeah. And you don't like that idea? I don't like that idea. I believe that if you've been paying payroll taxes the entire time, if you paid into the system your entire life, you're entitled to the benefits. Because you would view it as like a redistribution of wealth.

Yep. Okay. Yeah, I mean, in in theory you look at things like socialism in theory it sounds great and you do it in practice it's never great because the the buck has to be in the hands of somebody and that's going to be the people putting all the all those regulations on everyone else the government right that's how you get communism that's how you get fascism and all that i. I do wonder sometimes about things where we still fight over it though, like a progressive tax or something like that, you know, where if you, because it's

marginal, right? So each time you go to step up, you pay a little more. Is that also something you're against? You're getting into my wheelhouse here. All right. I've written many articles about taxes. So I disagree with progressive taxation. I think we should have a flat tax, but I don't think it's politically feasible. The closest we ever got to a flat tax was in 1986 when Reagan was president. Volcker? Nope. Yeah, Volcker was – Greenspan had just become Fed chair in 1986. We had two tax brackets, 16% and 28%. That was it.

You were in one of those two tax brackets. And I want to say the income level was around $20,000. So if you made under $20,000, you paid 16%. And if you made over $20,000, you paid 28%. And if you made over $20,000, you paid 28%. Marginally or flat? Marginal. Okay. Marginal.

So and ever since then, the tax code has become a lot more complex. We have a very, very progressive tax code, okay? I don't remember all the marginal rates off the top of my head. But basically, if you're making under about $150,000 a year, you're not really paying any tax. The first bracket's 12%, the next bracket's 14%, I think the next bracket's 22%. But even if you're paying tax, you're getting most of that back in terms of itemized deductions and mortgage interest deductions and child credits and stuff like that. It's, you know, all the stuff that you've heard about the bottom 50% not really paying any income taxes is absolutely true, you know? And the reason I believe in a flat tax is because I believe we

should all, everybody, everybody in the country, we should all have a financial stake in what's going on, right? If you don't have a financial stake in what's going on, if you're paying 0% taxes or actually getting money back, then you have no skin in the game, right? This is one of Nassim's books, Skin in the Game, right? This concept of having skin in the game. If you're not contributing financially, you don't give a fuck what's going on in the country. You don't care. If you're paying $700,000 in taxes every year, then you care. So that's – and Gartman – you remember Dennis Gartman, right?

Yes. Okay. So Gartman used to talk about this all the time. He'd say the United States is going to get to the point, and this was like 20 years ago. This is like in 2003. He would say the United States is going to get to the point where more than half the people are not paying taxes, and the people not paying taxes are going to vote for higher taxes on the people paying taxes. Yeah, that's – yeah, so he was right. Yeah. yeah that's yeah so he was right yeah yeah something changed in the culture though too

where you know it used to be maybe maybe 20 years ago you pull up next to a guy in a ferrari if you like cars and you're like wow i wonder what he had to do to get that i'd love to get that to now you throw a rock at it you throw a rock at and you say i should have that too I wonder what he had to do to get that. I'd love to get that. To now – You throw a rock at it. You throw a rock at it and you say, I should have that too. Yep. The 500-pound elephant in the room though is that in the middle of that, you have an entire social reset. I'm not just talking about the global financial crisis.

I'm not just talking about the endless wars. I'm talking about all of it put together you had this perfect class warfare where people are pissed off to the point that it actually the the greatest symbolism to me of it ever was the two what should have been the two main candidates in 2016 if you know one side actually let the people pick their candidates in that case it would have been trump and sand Sanders. Trump and Sanders came at it from opposite ends when it comes to solutions, but they spoke to the same exact people. They spoke to the people who had gone the other way on that wealth gap. They spoke to the people whose jobs were getting canceled. They spoke to the people who were pissed off that a bunch of guys in suits in New York City caused the

08 crisis and cost them their whole pension. They spoke to the people that were pissed off that a bunch of guys in suits in new york city caused a caused a weight crisis and cost them their whole pension they spoke to the people that were pissed off that we spent all these money on wars and devalued the dollar and in in in the long run with that they spoke to all of these things and yet you know that anger has now morphed into maybe the younger generations especially like my generation and gen Z and everything, complaining about the system with the expectations sometimes, not everyone, but sometimes where it's like, because the system's fucked, you should pay me for it, and I shouldn't have to work to try to improve the system or improve my way up the system. Well, first of all, let me say that I'm really glad that bernie sanders was not the candidate because he had a real shot at winning yeah and then then we would all be fucked we would be we would be paying a lot more in taxes yeah he wanted to do what like 75 percent

well he wanted wealth taxes and he wanted uh wealth taxes that kicked in at I think like $8 million in wealth at a rate of like 6% or something like that. It was insane. How would that work? You know anything about wealth taxes? Not really. OK. So there's wealth taxes in like six countries in the world. They used to have them in France.

I think they have them in Switzerland. I don't remember the other places, maybe Denmark. But a wealth tax is when, let's say I have $10 million in assets, right? The IRS comes and they look at my brokerage account and they look at my house and they look at my boat and they look at my car. They look at all my assets and they say it's worth $10 million. We're taking 1% or 2% of that. Oh, shit, like an appraiser. Yeah, like an appraiser. Yeah, like an appraiser.

Yeah, yeah, yeah. What could possibly go wrong? So, yeah, I'm surprised you haven't heard about this. Yeah, that was like a big thing in 2016. I don't remember it, but. In France, France imposed a wealth tax, and two things happened. First of all, anybody who was rich left the country. They just left. And number two, they spent more money trying to collect the tax than they actually collected in

tax because anybody that was rich sued the government, right? Because basically they're doing an appraisal on their businesses, their homes and stuff like that. So they took them to court and argued the valuation. They had thousands of court cases where the government had to make their case on the evaluation. And they actually spent more money trying to collect the tax than they actually collected in tax. So wealth taxes don't work. Yeah, that sounds like a terrible idea. I just see all the ways that that would go wrong. But you point out like France, which is just one of many examples here. We've seen these movements of hard left, hard right happen. I mean, you had an election that had like Marine Le Pen in France, who was more of a hard right. And I guess Macron

is harder left. He's not like hard, hard left, but he left. And there seems to be in all different countries with different situations on the ground a uniform movement across the world that splits people like that. reset at some point here? And do you think it's going to take, like you said, the example, something extremely bad, worse than a pandemic, to get that to reset to more moderation? Well, first of all, right and left don't mean the same things today as they did 20 years ago. That's right. They mean different things. I remember when I was in college in the 90s, like people used to talk about being – I'm having a brain fart – socially liberal and fiscally conservative. You ever heard that before? People would say that, socially liberal and fiscally conservative. Well, now everybody is fiscally liberal and socially conservative. We are?

That's what people are now. Yes. What makes you say that? Well, fiscally liberal for sure, right? So, I mean, we're running the biggest deficits in history, so we're fiscally liberal. And socially conservative, believe it or not, all the stuff

about gender theory and stuff like that is actually conservatism it is all right defend that one all right I'm gonna do my best I wasn't really ready to talk about this but well we're putting you on the spot okay it's really – the word liberal means free or freedom, right? Okay. So when I say – when somebody wants to impose gender norms on me or make me use pronouns or stuff like that, they're trying to restrict my freedom. They're actually conservative. I actually view that as the opposite of – Oh, you're looking at the root definition. Yeah. I look view that as the opposite of – Oh, you're looking at the root definition. Yeah, I look at it as the opposite of liberal.

Yeah. But technically – so you're looking at the literal definition of the words. means in political parlance it's like we have these ideas that as a society are generally accepted and we want to keep it that way yep whereas liberal says no we want the freedom for these new ideas to come in inevitably you know the sides fight and they want their ideas to respectively be the actual definition not like the reason we this up, we were talking about right and left being meaning different. Okay. So in France, Macron isn't really

left or right. He's actually more centrist, but he's globalist. He's globalist. Here we go. Right? And Marine Le Pen and Melenchon, who is the left party, he was the left party, they are nationalists. That's right.

Right. So in France, left-right does not even apply. Okay. And, you know, I mean, Trump is an example. Like, Trump is a nationalist. Yes. You know, he's not a Reagan conservative. He's not really free marketed at all. And assuming he's running against Biden, Biden is, gosh, I don't even know what you call him.

He's hanging in there. I mean, it's a cultural phenomenon more than anything rather than political. It's kind of what we're getting at. It's a little bit of a broad way of putting it, but I struggle with this because I don't want to be war machine hawk around the world, world's police, that whole deal. But I also have tremendous fears about, especially in our interconnected world now, countries falling in, including us, to isolationism, right? Because that's not really feasible. Everything's connected. Multinational corporations are everywhere. Like it or not, that's not really feasible everything's connected multinational corporations are everywhere like it or not that's how it is yet the movements seem to be

okay you want to remove left and right and make it more global versus nationalist well that's what it is they're either hard one way or hard the other how do we we, can we change that? There's a, you know who Frédéric Bastiat is? You ever hear of him? He was a French economist, 18th century. He was a libertarian economist. He had a quote that said, if goods don't cross borders, armies will.

Yeah. So here's another one for you that's we have we have never been at war with a country with a McDonald's really yeah we have never been at war with a country with a McDonald's Wow so the point is so we are not at war with China. China is still a big trading partner. That is a good thing. That is a good thing. So a lot of people, like I piss off a lot of nationalists because I am really a very strong free trader. The more we trade with the outside world, the less likely it is we will have military conflict. And the fact that we still have China as a trading partner means it's very difficult for us to get into a war with them,

which is a good thing. So if you're worried about, you know, Team America, World Police, like, you know, like that, what you should really be rooting for is us to be trading a lot with the outside world. See, I agree with you. I don't think – but now people want to say, oh, so you're valuing how another country does above us. No, I think that's how you keep friends. I think that's how you innovate as well. We see all this jockeying for position that now changes things that we should be aligned on. As an example, countries should have some sort of alignment on, well, how are we approaching artificial intelligence? You don't do that being isolationist. So, I don't really

know the answer there, but I do know that there are people who have been left behind in globalism through things like the – why is the name getting away from me right now? NAFTA and some of the trade agreements that have basically canceled out full industries. Well, I can tell you how that happened. I mean basically it did away with middle class wages in the united states yes right because we during the period of globalism in the 2000s like take china as an example we said wow like chinese workers don't get paid very much we can manufacture very cheaply in china and we took the manufacturing here we moved over to china and people who made 40, 50, 60,000 a year suddenly don't have a job. Right. That's what happened. So people like Trump, they look at that and they said, well,

this is, globalism was the worst thing in the world. But what did we get as a benefit? Very cheap goods, very cheap goods. Nobody was talking about inflation in the 2000s. I'll tell you a story. This is when I moved to South Carolina in 2010. I went to Walmart. And I was in Walmart, and there was a stack of... I had to buy a doormat for the new house. I had to buy a doormat, and there was a stack of doormats. And I lifted up a doormat, and I looked at the price, and it was $4. $4 for a doormat. And I'm looking at it, and I lifted up a doormat and I looked at the price and it was $4, $4 for a doormat. And I'm looking at it and I'm like, all right, it's like rubber and it's got AstroTurf on it. And I'm thinking to myself, I'm like, all right, this was made in China. So the raw materials and the labor and the AstroTurf and the rubber, and it was shipped all the way across the country

and I'm buying it for $4 and somebody's going to make a profit on it. I'm like, that's insanity. That's globalism, right? We can get goods for very cheap. I pulled up the same doormat on Walmart like six months ago, $45. And what does that tell you? We're probably making it in the US, you know? So inflation was a function of the stimulus. It's a function of the Fed. But it's also a function of trade. If we have free trade, it brings prices down.

You also run into what goes into that, though. And I obviously don't think about it either. You see your phone sitting right there. I see Alessi's phone sitting right there. I got my phone sitting right here. There's slave labor that went into it. Slave labor in China, slave labor in the cobalt mines in Africa to get – I forget what hardware in there does that. But is that just – if I want to cancel out stuff like that, am I just being a utilitarian in your book? So when critics of capitalism often talk about exploitation, right,

that through global trade we're exploiting workers who make less money around the world, right? Well, usually what happens is the workers that made those doormats in China were probably getting paid 50 cents an hour. Now they're getting paid $10 an hour. The GDP of China, per capita GDP, has gone from about 4,000 to 20,000 over the last 10 or 20 years. So yes, there is a period of time when workers are not making very much. And you can say, wow, we're exploiting them. We have these children in the cobalt mines and stuff like that. But if you continue to trade, their standards of living improve over time. And capitalism is the best solution for people living in poverty globally.

Bono recently was talking about, he was talking to the New York Times. And back in 2002, 2003, he was hooking up with Paul O'Neill, who was Treasury Secretary, and he was going around Africa. And he was trying to get Paul O'Neill to give aid to Africa. And he said, you know what? He's like, I was wrong. He's like, I thought redistribution was the solution to all the problems of poverty. He said, what it actually is, is commerce. It's capitalism. And he says, when I go to Africa now, he says, what we want is trade with the United States. We want to do business. That is how we improve our standards of living. So I see these videos on Twitter too with these kids mining for cobalt in

the mud and stuff like that. And I don't have the same reflex as a lot of people do, where I say, you know, this is exploitation, we should, they should, it should be stopped. Because honestly, in the absence of those jobs, what would there be? You know? What do you mean? They just wouldn't have jobs? Yeah, might be dead. No matter how dangerous and how fucked up the conditions are there you're saying that those conditions and that fuck uppery is is a stepping stone is a stepping stone to something that will be better and unfortunately and correct me if i'm mistaking you here unfortunately it's a very shitty stone, but it's the only one they have. Yeah.

Yeah. I'd have to know more about the situation to give a really great argument against you. But that's fascinating. I mean, because – and again, I try not to – because I tend to have the bleeding heart with stuff. That's my first reaction to things. I try not to let that overdo it. But something – I i mean think of it this way we traded for a decade with china and their standards of living went up and their wages

went up and we don't do a lot of manufacturing in china anymore because it got too expensive right so where do we go we went to vietnam sri lanka and bangladesh wages were lower there and now we have manufacturing in those countries, and over time, their standards of living are going to come up. And then it'll have to go somewhere else. Yeah. So in that system, does there always have to be somewhere that's fucked up and has slave labor, basically?

You putting words in my mouth? I am. Actually, I am. I'm totally putting words. But is that how it is? Like, is that just – meaning it has to be a zero-sum game. Somebody's got to be losing at all times for new people to win. It's definitely not a zero-sum game. Everybody wins. Everybody wins.

The kids in the mines win? Somebody in China gets paid 50 cents an hour to make a doormat, and we get a doormat for $4. Everybody wins. It's trade. Trade is a solution. But if it's like slave labor, how's that a win? They can't even buy lo mein soup. And you're like, yeah, but I got my doormat.

You know what I mean? And I know if I had a solution on how to to fix it i wouldn't be sitting here right now i i know like it's you come with empty solutions but this is how to me when we have cycles like that happen this is how for example something like an idea of communism can suddenly only what 35 years 30 30 years after the Soviet Union fell and all these countries fell after what disaster communism was. That's how this fast we can have a comeback. I'll give you another example. We make cars in Detroit. BMW, Toyota, a couple other car manufacturers, they look at Detroit and they're like, wages are too high. We're going to do it in Kentucky, Tennessee, South Carolina. You know, this wage arbitrage that manufacturers do happens

all the time. It happens within countries. It happens internationally. And that's how we get the best prices. Yeah. Yeah. It's what's continually happened. What are you looking at with the election coming up? I keep forgetting we are literally now in an election year, so this is not that far down the road. We're talking like eight, nine months, whatever it is. But what – first of all, what do you think is going to happen, and what do you think the economic implications are either way? Well, I'll give you a take on the election that I don't think a lot of people are talking about. It's going to come down to the third parties.

Like RFK? RFK and also No Labels. Do you know about No Labels? Never heard of No Labels? I don't think so. You should pull it up. Yeah, let's pull up No Labels. No Labels is a group that was, they have a lot of money that wants to run a centrist candidate in the 2024 election. And what they're thinking about is Larry Hogan, Joe Manchin. Yeah.

People like that. And and they have said that if Trump is the Republican candidate, they will run a candidate in the 2024 election. And do you think that do you have a way you lean of who that takes more votes from? Because the options are very bad. That's the question. It's not really about Trump versus Biden. RFK is going to take away votes from Trump. You think so?

Yes. No labels will take away votes from Biden. The election comes down to who gets the most votes out of those third parties. You're certain that it'll break that way for both of them? Mostly, yeah. Why do you think RFK will take more from Trump than Biden? I don't have any empirical evidence. You know who David Stockman is? Name sounds familiar. I don't have any empirical evidence.

You know who David Stockman is? Name sounds familiar. Yeah, he used to work for Reagan. He's a very conservative commentator. He's got a newsletter. He's on Twitter. He's pumping hard for RFK on Twitter, and he's a conservative. You know what I mean?

RFK seems to attract conservatives. Yeah, and I mean he was running as a Democrat and then ended up changing to independent. Independent. Yeah. And he just – he was the guy who was questioning vaccines for a long time before the COVID vaccine was around. And so obviously people have a lot of opinions about that. I mean let me put it this way. If the election were held today with no RFK and no, no labels, Trump would win. So, so today Trump would win. We have 300 days until the election. A lot of, a lot of stuff's going to happen. Um, if you're asking me for a prediction, I don't have one because there's too many variables,

but I think it comes down to the third parties. There was a poll that came out very quietly. I want to say it was in October, October, November, somewhere in there from Quinnipiac, which is like a decent polling service. Some of these polls you got to look out. But this one blew my mind. In a three-person race, Trump, Biden, RFK, they had RFK polling at 22%. Now, that seemed high. Nonetheless, there is a real thing that's happened over the past less than a year where I have had a certain profile of individual, and I'll tell you exactly what it is, president, which tells me who are these kids? These are young voters, maybe some of the cool kids on the block, people who are looking forward in their country and what this could be and and i haven't been able to place all the politics of all these people maybe you could have done that better but that i don't think he's gonna win but it goes to show

you that our options right now are so bad that we have a guy who i think has a shot to percentage beat what ross perot did in 1992 and the forget this election i don't think he'll win but if he does that and and something like i gotta look more into this no labels thing i'm behind the game on this something like this also pulls off points and and switches away do you think that this could be a moment where we finally see a real actual crack in the foundation of the two-party system um that's something that people like to predict um actual crack in the foundation of the two-party system? That's something that people like to predict. It's one of those things that never happens.

I'm not going to say no. I'm not going to say no. I think that the thing with no labels is that they're positioning themselves as the sane people in the center. And I think if this were 1992, 1996, they would have a realistic shot at winning. But in 2024, people don't want sane people. Right. We don't want sane people. Right. We don't want sane people. Like this is a real – like Larry Hogan was a Republican governor of Maryland, a blue state, lowered taxes.

Maryland is boomed, did a great job. Headed Trump. Yeah. Like Joe Manchin has been a very successful senator, Democrat from West Virginia. If you take this party and stick them in 1996, they win. You know what I mean? Yes, and that's the thing. Bill Clinton,

not a great guy and whatever, and there were certainly some mistakes in that presidency. I'm not just talking about the blowjob, but he was a real moderate dude. Whether you like it or not, he was a really, really solid president. I have a great stat for you. 1996 like like whether you like it or not he was like a really really solid president i have some i have i have a great stat for you um 1996 election clinton versus dole right the macarena election

yeah yeah yeah yeah and uh dole was 72 by the way and people said he was too old um but you know what you know what the turnout was for that election? 46%. It was the lowest turnout election in a long time. This last election, Trump versus Biden in 2020, I don't remember the exact number, but it was like high 60s. That's crazy. Yeah. So what I hear from people all the time, usually liberals, is they say, vote, go out, vote, rock the vote, go vote. They had those fucking I voted stickers and they walk around, look at me, I voted. Voting is the best thing in the world. Yeah.

No. Don't vote. Say hope. Well, what I'm saying is that the best times are when people are disengaged from politics, right? When people don't care who's president. It doesn't matter. Republican, Democrat, they're so close together anyway. It doesn't make any difference. I'm not going to vote. And things are good.

1996 is one of the best years ever, you know? And now everybody is very engaged in politics. And, you know know people would say well that's a good thing it's civic engagement no it's terrible it's terrible everybody cares about politics and that's bad it's their god yeah yeah how can you change that though because social media is really what did that social media gave everyone a goddamn opinion i think it started in 2008 i think it started when obama was elected and you had the tea party and there was this yes you know obama was the manchurian candidate and people got all freaked out and you know so um but social media i mean obviously social media

is super polarizing so yeah i i that's what i'm saying i don't ever i try to stay away from the words like new normal. I mean that's a big problem in the stock market when you say, oh, this is our new normal. That's usually with your sentiment meter like sell or buy or whatever the opposite of it is. But I wonder when it comes to like sentiment on how we engage publicly if because we've rung that bell, we can't really unring it and people they're going to take out their frustrations online and and that's and again that's what the algorithm fuels if i make a video saying here's a breakdown on politics today no one clicks it if i make a video saying trump and biden are going to crash the world everybody clicks right we're maybe i have to come up with better title than that but you the point. Like we are so incentivized to extremism that even if politics is a circle and left becomes right and right becomes left, which I agree with you, it still ends up focusing the cycles on the extremes themselves running against each other and the pendulum swings get bigger and bigger over time.

That's right so what's what's the number one thing you're looking for in 2025 if it's still biden and what's the number one thing you're looking for in 2025 if it's still trump or if it's going to be trump well i am a first of all i don't vote at all never um i voted i think the last time I voted was 2004. Why is that? You're going to love this. So there are degrees of political participation, okay? And voting is one of the least effective ways you can participate in politics, right?

If you vote in a national election, unless you in ohio doesn't really matter like there's really only 70 000 votes that matter in the country like you're just voting to gratify your ego and like it doesn't matter right but beyond that so let's start at the bottom okay um posting a meme on facebook, a political meme, right? That actually has negative implications. You're just going to piss people off. You're not going to bring people to your cause. You're just going to push them farther away, right? Participating in a protest on the street.

That's the same thing. Doesn't do anything. Voting doesn't do anything. Um, really what you have to do is do something that gets other people to vote. Okay? So maybe this podcast. Wait, you lost me now. No.

Let's pretend this podcast was all about Trump. And we were like pro-Trump in the entire podcast. And we laid out all these reasons why you should vote for Trump. And a million people watch the podcast and they go out to vote for Trump. That is more effective than voting is getting other people to vote. So you can write an op-ed for, for like, uh, the New York times. You can write a letter to the editor. You can become a radio host. You can become a YouTuber. You become a podcaster. These are all things to do to participate in politics that are much more effective than voting. I can tell you I have influenced the votes of thousands of people for sure through my writing.

I've influenced people's votes. I have more of an impact doing what I do as a writer than I do actually going out and voting, which doesn't matter. So to amend what you're saying, maybe, correct me if I'm stating you wrong. If you didn't do what you did, under your theory, you should be someone who votes. If you can't do any of those things, then yes, then you should vote. That's so interesting. That's fucking load. I've never heard that one before.

Yeah. I mean I vote – when I go in, I vote for none of the above. I write in none of the above. Someone actually on this podcast gave me that idea because I was at a point where I wasn't voting. And they gave me a – I don't want to say like a sob story. They gave me a very legit story that really struck me about when they were serving in Iraq and the people voted for the first time and all that and how they – they're like, look, just do it. It's not for the sticker, not for that, but because it's a part of the process and there's people who would kill for that around the world, and I hear that. I just wish we actually had like good choices but that what you're talking about is like a

you you uh i can't think of the right words but like on one end i want to say like utility versus replacement something like that like you are because of what you do your vote is replaceable but because of other what people don't do their vote matters i'm kind of stating that a little wrong but you know you can also run for political office that's the ultimate in political participation yeah yeah but who the fuck wants to do that like i look at people run and i'm like all right what's wrong with you well you know what it comes down to it comes down to skin in the game, right? If you vote, you have no skin in the game. What?

Like whatever the outcome is, it doesn't matter to you. You don't care. I mean, you voted, but there's no – let me put it this way. There's no consequences if you are wrong, right? If you are – There's no consequences if you're wrong and right? If you are a media person. There's no consequences if you're wrong and then someone's like a bad governor or something? Very remote consequences. What I'm saying is if you're a media person, if you're writing or if you're on TV or whatever and you're making statements, you're accountable to those statements.

You have skin in the game. Or if you're a politician, you have skin in the game. But just voting, you have very little skin in the game. I'm going to be thinking on this one for a while you're blowing my mind with some things i don't know if i agree with all actually wrote a sub stack i wrote a sub stack called you don't have to vote we'll put the link to your sub stack down in the description as well so we'll have the link to your books in my amazon store you can go get charred's books which you also i haven't read this you wrote a novel in there all that you've done in this world. Yeah. Cause you're an unbelievable writer. Like I really enjoyed your style and street freak. And then when I was subscribed

to daily dirt nap, I can read it very easily. So highly recommend. But what, what, what made you want to write fiction? I can tell you that it was the hardest thing I've ever written. So let me put this in perspective. Street Freak was 135,000 words. I wrote it in eight months. Okay. Your memoir, basically. All the evil of this world was 70,000 words, and it took me five years.

It was very, very hard. I also picked the novel with the highest degree of difficulty. It was extremely hard. What do you mean by that? Well, it's basically seven people that are seven short stories that are all interconnected with each other. So there's kind of a lot of engineering

that goes in the book as to like, you know, so it was really complex. It was very hard. Making them fit. I gotta tell you, that is, it is the filthiest book in the world. Yeah, you were saying, what do you mean by that? I mean you're going to have to check it out.

Actually, I'll buy you a copy. I'll buy you a copy. I'll send it to you. I'll get it right when you leave. I'm not worried about it. I'll go get it. When you say – like people are fucking the whole time? Yeah.

Oh. All right. Okay. So you got something going on in your head there, some excitement. What was it? Did people do that on your Wall Street? All right. Okay. So you got something going on in your head there, some excitement. What was it? Did people do that on your Wall Street? Were people doing coke at the desk and fucking in the bathroom?

Yes. Yes. Actually, there was never coke at the desk. But there was an instance where two people went to the Starbucks across the street and went in the bathroom. In the Starbucks? In the Starbucks. One forty second? Yeah. Oh, no. Yeah. Oh oh that's a raunchy bathroom even today even oh no yeah oh yeah because when people when people talk about wall street though like like i said there's so many different ends of it so people monolith the whole culture but

there are some real cultures that are fast and loose for sure. You were closer to that than I was, I'm sure. Yeah. But anyway, your book, No Worries, will be out when this is coming out. The link is in the description in my Amazon store. Go check it out. I will put your other books in there as well.

Street Freak, I cannot recommend enough. It's fucking phenomenal. I have to check out all the evil in this world. And then you wrote a collection of essays too. Those Bastards. That was from last year. I'll put that in as well. But I really appreciate all your thoughts on breaking things down. I really enjoy

your behavioral finance, your sentiment outlook towards stuff. It's good stuff. I highly recommend your Twitter as well. So we'll put that down in the description. And thanks for finally being able to get up to new york and do this i appreciate it man yeah it was like a year before i finally got my ass out here but well see we made a seafood tower clip that i obsessed over to get right and look what happens you see that this kid made a fucking awesome clip over here so anyway jared thank you brother i appreciate it thank you all right

everybody else you know what it is give it a thought get back to me peace thank you for watching this episode guys if you haven't already please smash that subscribe button and hit that like button on the video it is a huge huge help to getting our videos into the algorithm on youtube so thank you to everyone who does that and also if you don't already follow me on instagram you can get me at julian dory podcast for daily exclusive clips that we put out from the show or on my personal page at Julian D. Dory. The links are in the description below. See you guys for the next one.