We Study Billionaires - The Investor’s Podcast Network - RWH062: Bubble Warning w/ Jim Grant

Episode Date: October 26, 2025

William Green chats with Jim Grant, famed editor of Grant’s Interest Rate Observer. Here, Jim warns that a major market top is forming as exuberance inflates stocks, Bitcoin, and gold. He says it echoes past bubbles and urges extreme caution. IN THIS EPISODE YOU’LL LEARN: 00:00:00 Intro 00:10:40 Why Jim Grant is fiercely skeptical about Bitcoin. 00:19:25 Why you should be wary of all the hype about Private Equity. 00:35:50 Why Jim expects the AI boom to end in “a panic & a crash.” 00:44:13 Why even the shrewdest speculators never know when it’s time to sell. 00:49:50 What the Federal Reserve is likely to do with interest rates. 00:57:53 Why the dollar seems poised to continue losing value. 01:04:28 Why inflation will persist, fueled by perennial flaws in human nature. 01:09:50 Why Jim loves gold but is starting to worry about its meteoric rise. 01:19:01 Why he owns some bonds, despite his grim prognosis for this asset class. 01:23:39 How bull markets attract sleazy salesmen & bear markets clear them away. 01:25:56 What inspired him to write a new book about two 18th-century heroes. 01:59:34 How studying history helps him appreciate some benefits of modern life. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Inquire about William Green’s ⁠⁠Richer, Wiser, Happier Masterclass⁠⁠. Jim Grant’s website for Grant’s Interest Rate Observer. Subscribe to Almost Daily Grant’s, a free (almost) daily commentary on financial markets. Check out Grant’s Current Yield Podcast, which is co-hosted by Jim & his colleague Evan Lorenz. Emanuel Derman's book, My Life as a Quant. James Grant's book, Bernard M. Baruch: The Adventures of a Wall Street Legend. Jim Grant's book, Friends until the End. William Green’s book, “Richer, Wiser, Happier” – ⁠⁠⁠⁠⁠read the reviews of this book⁠⁠⁠⁠⁠. Follow William Green on ⁠⁠⁠⁠⁠⁠⁠X⁠⁠⁠⁠⁠⁠⁠. Related ⁠⁠⁠⁠⁠books⁠⁠⁠⁠⁠ mentioned in the podcast. Ad-free episodes on our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Check out our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠We Study Billionaires Starter Packs⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance Tool⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our sponsors: HardBlock Human Rights Foundation Masterworks Linkedin Talent Solutions Simple Mining Plus500 Netsuite Fundrise Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hi, everyone. I'm delighted to be back with you again on the rich or wise a happier podcast. Today's episode is an important, timely, and extremely thought-provoking conversation with Jim Grant. Jim, who's a cult figure in elite investment circles, is the renowned founder and editor of Grant's interest rate observer, a bi-weekly publication that he's edited since 1983. These days, it costs the best part of $2,000 a year for a subscription, so it's not cheap, but it's widely recognized as an invaluable source of unconventional insights for sophisticated investors. Nassim Taleb, who's not an easy man to impress, has written that Jim Grant thinks outside the box. Please read him,

listen to him. David Swenson, who ran Yale University's endowment with huge success for decades, once remarked that Grant's interest rate observer is on the must-read list of every serious student of markets. One reason for Jim's stellar reputation is that he draws deeply on his knowledge of financial history to issue early warnings about brewing storms that many investors fail to recognize until it's too late. He's never been afraid to point out the wretched excesses of Wall Street. Those moments when speculative fads get out of hand and when unscrupulous investment firms are selling dross that's dangerous to the financial health of careless or credulous investors. In 1999, for example, at the height of the dot-com bubble, Jim warned that it was one of the most

perilous periods in investment history and that America was dangling by a thread, financially speaking. A few years later, he was one of the first people to warn about the dangerous mortgage securities that led to catastrophe in the global financial crisis of 2008 to 9. In the years after the financial crisis, he presciently warned that the Federal Reserve's monetary policies would inevitably spark runaway inflation. So what's Jim saying today? Well, as you're about to hear, he argues quite forcefully that prudent investors would be wise to exercise considerable caution at the moment, given the heightened risks and speculative behavior that he's observing.

As Jim sees it at this point in October 2025, there are many unsettling symptoms of euphoria, recklessness, folly and corruption in financial markets these days, all of which he sees as potential warning signs of what he calls a major market top. Now, the reality is, I have no idea if Jim's right and he's not sure either. After all, markets are inherently unpredictable, and it's also more or less impossible to get the timing right, even if you're smart enough or lucky enough to predict a major shift in market sentiment. This reminds me of a discussion I had with Howard Marks in chapter three of my book,

Richer Wieser Happier. Howard told me, I don't even think about the timing. In the investment business, it's very hard to do the right thing, he said, and it's impossible to do the right thing at the right time. That said, I think it's well worth listening when someone is shrewd and seasoned, as Jim Grant warns that we should be treading with extra care. At the very least, it's worth asking yourself if you're overexposed to risks that you can't afford to be taking. As Howard Mark said to me, it's not about selling everything and suddenly going to cash.

It's more about preparing for an uncertain future by asking yourself if you're pushing the envelope too far. For example, if you have too much debt or leverage or if too much of your money is tied up in speculative assets that might be dangerously overvalued. for battle-hardened survivors like Giamann Howard, I think one of the great lessons of financial history is that reckless excess and overconfidence is eventually punished, so it's important not to get too carried away during outbreaks of what seemed to be a rational exuberance. On an entirely different note,

I also wanted to take this opportunity to let you know that I'm launching a new, richer, wiser, happier masterclass on November 21st. This is a chance to study directly with me over the course of a year as part of a very small group that's capped at a maximum of 20 people. We'll meet once a month over Zoom and also at a couple of unique in-person events. Last year, the MasterClaas drew an incredibly accomplished group of 20 people from, I think, seven different countries, including some very successful hedge fund managers, wealth advisors, asset allocators, managers of single family offices, CEOs and entrepreneurs. The people who've signed up for the new

masterclass are equally impressive, and we only have a few spots left. So if you are interested, please do email my friend and fellow podcast host Kyle Greve as soon as possible and he can send you more details. His email address is Kyle, that's K-Y-L-E, at the Investorspodcast.com. The masterclass is designed specifically for people who are serious investors and, passionate learners and who are really looking to build lives that are truly rich, wiser and happier. So if that sounds like you, I'd love to hear from you and would be thrilled to have the opportunity to study with you over the coming year.

And now, back to the show. You're listening to the richer, wiser, happier podcast, where your host, William Green, interviews the world's greatest investors and explores how to win in markets and life. Hi, folks. I'm absolutely thrilled to welcome back the great Jim Grant to the Richer Wiser, happier podcast. Jim, as you all know, is a brilliant financial historian and a wonderful writer and speaker, and also the editor of Grant's Interest Rate Observer, which he founded 42 or so years ago. And it's a must-read publication for the most sophisticated and well-heeled professional investors, probably because it's so expensive, but also because it's so good.

Cheap at the price. Cheap at the price, exactly. Every time I think about getting my subscription, you put up the price again and I blanche again, but I'm finally going to stop. That's the business plan, too. It's very wise, but it's a wonderful publication. For an aspirational subscriber, we have many of them. Well, thank you so much for joining us again, Jim.

It's a real pleasure to see you. It's a delight to be here. Thank you. And, well, as Charlie Munger would say, he said, well, it's a delight to be anywhere. You know, he was just glad still to be around for as long as he was. So anyway, I'm happy to be with you. And I attended your wonderful annual fall conference yesterday.

I know. I was very pleased to see your familiar and shining and welcoming and burgeoned face of the audience. Oh, it was great. And for people who don't know, this is a very glamorous affair at the Plaza Hotel in New York City. And it attracts many of the smartest and wisest people in the investment world, not only as speakers, but actually as audience members. And you said just before we started that you wanted to tell a story about something that came up at the end of the conference. Tell us, I have no idea what this is about. I hope about the indiscreet.

What is journalism for except indiscretion with me? Exactly, yeah. So this comes from David Rosenthal, who was a speaking of confidence. And David was the number four higher at Dividea. And how is that for a credential life? He's an extraordinarily, he's a gifted computer scientist. I can't imagine what computer science is not gifted in many departments of mental acuity. But David is a standout even in that formidable crowd.

Anyway, this story has to do with a kind of reunion of founding employees of NVIDIA. And I guess it was fair to me. It takes place at an ethnic restaurant. I'm not sure what city. Can't remember. I call it a Salvadorian cooking. And there is big tables full of NVIDIA employees then and now. and Jensen Wang, the story CEO,

gets up and says, and now, you know, I'm pretty good at fundraising. And what I want you to do, ladies and gentlemen, is after your wallets and give them your cash. So they comply. It's well-won, my presence of the president. Make CEO and one's colleague. So CEO, Jensen, collects all this money

And interestingly, for a Silicon Valley crowd, there's people carrying a lot of cash. And so he has a big wad of bills, and he walks over the proprietor. Now this not four-star restaurant. And we hear a little bit about how difficult the way to start a business up. I want you to take this. It's not delightful. Wow. Isn't that something?

That's really nice. Yeah. Shouldn't we all do that once in our lives? We should. I mean, for me, the moment you mentioned David Rosenthal, what comes to mind to me is he gave a presentation that I think I only understood about one in five words because it was deeply technical. But what did you make of it that he was, he seemed to be dismantling the idea that Bitcoin was as safe and private as people imagined. And he's obviously a very gifted computer scientist who has many patents. And as he put it, not only was he the fourth employee at Navidia, but actually, given that there were three co-founders, he was actually the first hire.

So this is a very smart guy. And he was saying that basically, as I understand it, that once we get further along with quantum computing, I think he said there about 20% of the bitcoins out there are sort of lost or unclaimed that people have sort of lost their keys or they're in trash piles or whatever. and that a quantum computer might be able to actually relatively quickly figure out how to claim for oneself that missing crypto. What did you make about this is way above my pay grade? That's exactly the message, I think. As you say, it was deeply technical, certainly over my hand in many places. But he was attacking the pretensions, a technologically sophisticated to contendant death, that Bitcoin was useful and safe and somehow enured from infiltration by the likes of the Kabay-Qaeda computers.

He tried to explode that, which I gather it in. And I think there's a link to this on his blog, which I'll try to remember to include on the show notes for this episode so that people can actually track this down. something much more accessible. And I bet this is up on our blog. I don't know. There's a talk that David Rosenthal

gave to a class at Stanford University. I think it was an electrical engineering in 2012. It was just filling in for a professor. It is the most solution to attack on

on Facebook. I read it. I thought to myself, why isn't this fraud, trading it to zero. It did not go to zero. So maybe people know something that, and even David doesn't know about the coin. I thought he made a very good set of close arguments. He winds up and says,

rarely if ever in the animals of technology have the champions of Ray's breakthrough real technology on such pains to not use it. So he was questioning utility of it. So you kind of had to be there for that one. And not only you just have to be there, you had to understand much more of the technical issues that I do. But to that, you had, in your summary, it was that got most amazing. This is a very familiar feeling to me in the financial and technology world

that I'm with people who are much smarter than I am. I'm picking up crumbs as they fall from the table. I don't think smart as I think familiar or trained or something, but no doubt every shield has its vocabulary. We are all humbled in the presence of astronomers, for example. While we're at it, we should close this subject of cryptocurrencies because this wasn't in any way where I was intending to go at the start of our conversation, but since we're here, I'll ride this horse that we're on.

But you spoke at the conference of the pretense of things that are not money posing as such. And it's fair to say if people listened to our last interview on podcast three years ago, we talked about crypto in some depths. And Bitcoin now, I think, is around $116,000 per coin as we speak, despite a recent sell-off. You've written quite a lot about, as you call it, a crypto-besotted Wall Street. that's driven up valuations so that there's now, I think, more than $4 trillion in aggregate value of all cryptocurrencies. And I read on Bloomberg the other day that Bitcoin ETS now managed more than

$142 billion and that even Vanguard is now weighing the possibility of allowing its 50 million or so clients to trade crypto ETFs, whether it's Bitcoin or ether or whatever. And Jack Bogle, the founder of Vanguard, had famously warned investors to avoid Bitcoin like the plague. And so I'm just wondering what you make of what we're seeing here. Is this just standard top of the cycle, recklessness and folly? Or is this, what do you make? I mean, you've been, you've been following this world of finance for quite a long time. When you look at this phenomenon, what does it mean? Well, one is, it's forever humbled by the ways, the wilds of the market. You know, I still don't understand what people see in it. Maybe there's a divide of some kind of,

limbic system divided people say, oh, yes, Bitcoins. I want some of that. For the price of a house, you want it. What is it? Can you see it? No, no. What's it?

Now, what are you going to use it for? Well, it's going to appreciate. Oh, I see. Pay a yield, no. What's its functionality? Well, I'm not so sure about that, right? It has done well, hasn't it? Yeah.

So I'm no longer on certain cable TV stations. There used to be on later. I like, I humor myself or I try to love. I try to comfort myself by saying it's, it's not age. It's not the overfamiliarity with the argumentists that fall from my lips. No, it is my anti-Maga, Republican, you know, country-flop Republican line that grants. And it is also the last words that I spoke on with this.

particular cable channel when asked about Bitcoin. I said the most efficient price is zero. And my God, this administration is all in on crypto. I said, it's a scammy of sitting in the connection between Bitcoin and the Bitcoin promoters and the president and his family and these coins. And I began before his inauguration. You know, we had this Trump coin and that was kind of a rugpole thing. and the lost line.

I think it's shocking and contemptible. But this big, these cryptos are being heavily promoted by the administration, both overtly and indirectly by the regulatory approach. It is taken for them. And as to Wall Street, no, it's a monkey seeing monkey do, especially when that monkey is moving upward and to the right, a stock chart,

for, and, you know, Bitcoin's genesis was in, was the Sudanabas, Sudanibus, Sudanibus, right? Yeah. Yeah. So, then you can go and, and procure, you know, wherever you want to, whether there's drugs have surfaced air missiles or something a little bit more wholesome.

And, or yes, you could, if you were living into the United country, You didn't allow you to take money out. You could take your money out through the Bitcoin. It was a little more than the case. But in any case, it was off the grid and outside the pale of conventional wall sheet. Now look, Vanguard for Pete's sake, you know, it's right down the middle of the fairway. So in the establishment, which could not abide it, could be stag, a Bitcoin. Oh, God.

Now, you know, Bitcoin, it's a thing. Let's start the next ETF show. So I still think the most efficient price of quite is zero. Well, that's good. So now that we've very efficiently offended half our audience in the first 10 minutes, either politically or financially, we can, you know, we can be much. Let's get the other half. Let's get the other half.

The other half. So by the time we come around to talking about your book in an hour or so, nobody will be left except for my mother. Well, they should buy the book. They should buy the book, right? I bought the book up, and I very much enjoyed it. Although I have to say, it's 400 and something pages long, and I'm still, and I'm about 20 pages from the end, so I'm ashamed that I didn't quite finish it last night.

I'm not going to tell you how it should I wound up. Did it all end happily? So, like most of history. So anyway, we'll get to the book later. But the thing that I wanted to start talking to you about, except for the fact that both of us digressed for 15 minutes to insult half the country, is I found yesterday at the conference, your conference, it was a fascinating day and also a slightly unsecling day. And what struck me, I think, was the divergence between the current mood of euphoria in the markets and the acute skepticism and wariness in the room among your speakers who were a savvy. battled, hardened bunch. And so, for example, there was a credit investor named Victor Kozler, who manages something like $22 billion, who said markets are very bubbly, and there are lots of

problems under the surface. So, for example, he said there are entire areas of private equity that are in deep trouble and lots of companies within private equity that are defaulting on their debt and going bankrupt. Can you give us a sense for people who weren't at the conference of the mood there and what it reflects about the financial environment today. Yes, yeah, I'll be happy to do that. First of all, you have to, for the listeners, you have to understand that this is, you know, it was a self-selected group of people

and grants made its living, well, it was going to volumes and some, but we're yes, but people on G-WIS world. You know, people say, you're always bearish. That's not actually true, but we're almost invariably, skeptical. What doubting Thomas is, and this is a market of predulity and conformity, actually.

People, nothing succeeds like success anywhere, but especially at Wall Street. People, I think it was George Soros himself, said, we'll see a bubble this jump on to get there early. And, you know, you'll get in time. No, just I'll tell you when. You know, but there are so many ways to make money on Wall Street. I happen to have cultivated a following that is innately skeptical. And so there's some fear that line and link take away. People walk out of these conferences, oh, my God, I'm carrying, okay, get tomorrow morning. But it's, yeah, I felt I should go in fetal position in the bathroom at lunchtime.

It's a, it's a, yeah, we have, it was a good, fair mix of people. for example, even within credit, and you've mentioned you know, Victor Kostler. And there was a guy named who was Jonathan Lewinson diameter and manager, capital manager, who rather said,

well, things aren't so bad. Look at this. You know, the, I mean, there's much, those things are much better than you'd think by looking at a few soft spots. So there was no disagreement. And John Hughes talked about investing in great company. is not selling.

It's a fair. That speaks to the variety of ways in which people have different sensibilities and different intellectual turns, or different terms of mind, can find a place under the big tent of investing. It's kind of nice in that way, isn't it? And we had innate Copacar. We had the pure specimen of the bear.

And it's a very, to me, it's a very fetching mind set. You know, he was a perfect example of an avatar of the self-first-buyater approach to security trading, you know, an investment. He exhibited the rueful humor of someone who was prepared to be wrong about 90% of the time in anticipation of being magnificently and all by himself magnificently right. six or eight or ten percent of the time. Yeah, he said something lovely about you asked him impotently in the way that only a journalist can. Why do you do this? You know, sort of an existential question about being a short seller. And he said, well, for the 15 minutes, when you're right, it's so delicious.

It just made me think, you know, I mean, some people really, they're so smart and they make life very, very difficult for themselves by picking a particularly hard way. to play the game of investing. Yeah, he's chosen the highest degree of difficulty. And there are many left. I mean, these markets run over the skeptical mind. He said, have you read the documents? What the, you know, what's the valuation? It's going up.

That's the valuation. So, yeah, Nate has said, he has talk had to do with private equity and with AI and all the privates, private credit, and she, you think he'd be a sergeant, or when you start a corporal, and that's the next, but no, it's all privates. And he pointed out,

it was a magnificent tour to force, a tour of the horizon of what's wrong in finance, having to do with the structure of things, with the underlying, you know, underlying fragility of debt, and with the consequences of all, all those years of suppressed rates of interest, which of course, interests me. I'm still sore that interest rates were not a thing for so many years.

Publication, it's called Grants Interest Rate Observer. If you can't see them, it's not good for business. So I'm still nursing a grudge against the Fed for that. But now you have your 15 minutes. So all is well for you and Nate. He also pointed out, I mean, I thought one of the, I think it was in his, is one of the most striking things that was a recurring theme that I think is relevant to a fair number of our listeners is that we should be deeply skeptical of the world of private equity

as they try to democratize it. And I think it was Nate Kopikar said that in finance, whenever you hear the word democratizing, hide your wallet. And he said it's like Chanel marketing itself to Walmart. Can you talk about that? Because that seems like a really beautiful example of sort of this embellion time where Wall Street is dreaming out new and better ways to separate us from our money.

Well, the hypocrisy is delicious or as made to foot of news. The private equity people at first did everything they could the distance themselves to a common man. Their shoes were, spoke, resuits magnificent, you know, they've got their own membership's

extensive, you know, and they would deal with the institutional world, and not all of that. And lo and behold, interest rates did not remain at on year zero after 2021. And the evaluations that were acceptable in a regime of like nothing interest rates, suddenly it became very precarious. Indeed, those valuations went away at a time when race began to normalize. So these companies, these private equity companies, 20-something thousand of the world were capitalized for prosperity and more meaningfully capitalized for a regime of very, very easy money. So suddenly instead of paying, let me or say, three percent interest on their debt, they were now paying 8 percent or 10 or 12. It's a difference.

and so what to do well are these investors and they're not just well to do endowments well the endowments were among the the elite institutions to which the private equity people sold

so they would go around to mimicking the famous Yale University model of of David Slenson yeah yeah David and

they go around end up to these end up down this colleges, what have you in, and they're saying, you know, you know,

yielded this. And what it did was to carve out a very big niche in this portfolio for electric capital and private equity. And you won't be susceptible to adverse marks

that reflect the unreason volatility of public markets. Rather, the, the marks that they give you are virtually correct.

And marks, meaning mark to market or not. So not. Not Marx, as in the sense of a Ponzi scheme where you've identified marks. Yes. Right. Yes. I did ask Nate about Ponzi schemes. And you said that the term seemed a little bit,

it seemed unnecessarily brutal for this sophisticated audit. So, private equity sold overwhelmingly to such institutions, and now such institutions having budgeted for return of their capital, or finding that it's not being returned. Or are the dividends, interim payments they'd expected quite up to snuff. So they are being, they're being pressed by the presidents of colleges and the Illy Masonary Institution Museum, which I had to, where exactly is the money we need for the draw this year, draw on the end of the endowment funds. And they're hard pressed to cope the money. So they're, some of them are turning to the secondary market for shares.

in these private equity companies. They're being peeled off and sold like you sell a used car. And it's not what the buyers originally countered on. So private equity, I think that Nate demonstrated is in trouble. And it's in trouble because it has neglected to honestly value its assets as interest rates began. And now it's stuck with assets that are being carried at a reasonably high prices. And the assets are not returning in cash of the investors need. So what to do?

So they really go, I know. Well, the dear public, the dear public. So that's the long time to get to this. So this is where democratization comes in. Shouldn't the little guy have a piece of this marvelous asset class, private credit, private equity. Credit, by the way, is a word that has none of the overtones

of debt. It's kind of the same thing, private debt, meaning not privately traded, but not publicly traded, so not publicly market market. And you can see it in the unwavering line of capital appreciation with these

funds and these assets that are delivered to investors supposedly. Anyways, they market it to the public, as a safe and non-alcertain-inducing alternatives to sometimes tumultuous public markets. And they correctly said, I think, that this is not a sign of the benevolence of the promoters, but rather aside of their increasing desperation. I think it was also interesting that he said that they have this reputation for being super-sophisticated.

And obviously, in some cases, they really are super sophisticated. But he said, when you look at the record of many private equity firms, they've shown, as he put it, maximum aggression at periods of maximum risk. And so he said, really, they have a tremendous record of momentum chasing. And so for me, it was kind of a reminder that often we fall for the illusion that the smart money is incredibly smart and way smarter than us and is going to protect us. from turmoil that can come. Yes, well, in the audience was my friend Emmanuel Dermann. Michael Derman is a Bell Labs caliber physicist who made a career change to Wall Street.

He became a renowned practitioner of a quantitator of a finance. He called him quads, of course. And he worked at Golden Sachs for a time and other such high. ranked institutions and Wall Street read tables. And you wrote a book called My Life is a Quad, a great memoir. Dear to remind my book by David, Emanuel Derman's book, I think he's published in 2003 or four. My Life is Quat.

Anyway, at one point, Emmanuel harks back to the long-term capital management affair. In 1997, I think, 98, in the 97. It was the now fable, then frightening collapse of a hedge fund that was run by, literally by Nobel laureates. So in his memoir, Emmanuel Durson said he was on a call with other Goldman Sachs people talking with the principles after the, after the blow up occurred. And he said he was startled and deeply impressed by the depth of sophistication on the part of these so-called failed, well, they were failed, but of the authors, Leachelle Europe's long-term capital manager. And they knew much more and asked much better questions about valuation and the composition of the assets and the hedge technique. then did the Golden Sacks trainers who were trying to value this stuff.

And Emmanuel takes away from this that sheer metal power, sheer mental acuity. It's not invariably the road directions you have necessarily the equipment that gets you where you want to go. I don't think he used the word humbling

because he was, but it gave him pause for thought. A lot of times, I think a lot of times, I think a lot of times, on Wall Street, that the simple common sense, you know, I don't get it. Tell me again.

So you're telling me that you put all these subinvestment grade mortgage trotches together, slap them together. And if ones, at the 40th percent of the staff have been transmogrified into AAA securities. Is that where I'm?

And can you go again, this time more slowly. You've written a lot about artificial intelligence in grants. And obviously, this is one of the things that's been driving the euphoria in the market. And you've talked about the insatiable enthusiasm of anything related to AI. And I was looking at one of the daily newsletters that you sent out from grants the other day. Daily grants. Almost daily grants. Yeah.

And it was talking about how Amazon, Microsoft alphabet, Google, Meta, Oracle, and Corweave will splash out $382 billion in capital expenditures this year by Citigroup's count up on 50% from 2024 and triple that scene in 2023. And you said that the Magnificent 7 now accounts for 31% of the S&P 500's total capital spending up from 19% at the end of 2019. and you point out that there are these firms like Open AI and Anthropic that have raised billions of dollars every few months and are now valued at hundreds of billions. And so you wrote this piece in July about the check writing contest within the world of AI where everyone is basically racing to invest as much as quickly as possible. And I just was wondering, as a battle-hardened investor, an observer of craziness as you are, when you look at this excitement,

How reminiscent is it of previous booms, whether it's the railroad bubble that ended in disaster in 1873 or the dot-com bubble that ended in disaster in 2001, or is this really different this time? Can you put in some context what we're seeing here? I think what we are seeing is the promise of the marvelous technology with human characteristics. and those human characteristics happen to have to do with falling out line and doing what others do, if possible, doing more of it, higher, faster,

and louder. It reminds me a lot of the fiber optics contract writing contest of late 1990s. How much of the stuff you put in the ground? Is it demand for? Well, there will be. They will be. Or the, as you say, late 1800s, the railroad building contests, as it were,

a check-writing contest to the Yon-Wort track, parallel track to your competitor, but still the contest is worth it. We'll beat that. So there's a lot of redundant capital investment then, and these things end invariably with a panic in the crash.

I think that's the model for now. One of the other points that David made, David Rosenthal made this problem with the capital investment may not be so much in its size, but rather in the demonstrated fact so far that people are not willing to pay for the product of that investment.

So the extraordinary sums being laid out for data centers that are these buildings that in cases, I think Mattas keep building something in the size of Manhattan Island well and good except are you going to get paid for it? people, young people, college students go away in the late spring and they'll come back into a fall and will they go away, the demand for AI goes way down

because who else as such a deeply, deeper and persistent need for plagiarism. They have to plagiarize papers to get through the year. So the demand for AI falls off markedly and measurably come the springtime. So, you know, I hear myself saying,

I say, I'm kind of saying, I get a horse in 1903. It's cars. They stick. Look at the tires are blow up all the time. Where steamboats, steamboats explode and kill hundreds every fiscal quarter in 1840s. But, you know, I'm not even talking so much with the technology as the, you know, the very human response to great technologies and the promise thereof. And don't forget, this is still a promise.

And I think the question, what comes next? Is it the realization of the promise with the payday? Or is it the crash that precedes the realization and the payday? I perfectly wanted them see this stuff is going to do wonders for somebody. But for the time being, people seem not too willing to pay for. or what the producers of these large language marvels are laying out to achieve them and to compete in where they're achieving them. So I'm ball in on the comparisons to the bus of yesterday year. I think that's the model for now.

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slash WSB. All right, back to the show. There was a lovely quote that I don't know if I had heard before that your friend Pierre Lassonde, who's a very successful gold bug, quoted from Voltaire, where he said history never repeats itself, man always does. And I thought that was quite revealing about what happens with these deals, right? like the tendency at certain times in cycles for people to get carried away. And you had someone, I think, at your other conference, the credit conference earlier in the year,

who was saying exactly the same sort of thing that basically at times like this, there's just this sort of fear of missing out. I think it was Michael Gatto, who's head of direct lending at Silverpoint Capital. He said, when there's a lot of capital and the emotion is greed and there's fear of missing out, bad deals get done. And similarly, when there is a lack of capital and the emotion is fear, great deals get done. And so I think this is one of those areas where it's not like we can say what's going to happen with AI and all of this spending, but there's a sort of familiarity to the pattern of human behavior here. Is that fair to say? I think yes, I think it is. When Pierre said,

history doesn't repeat, he's not going to say, but it rhymes. Don't say that. I think. I Not again. So, but Pierre had Voltaire's twist on this. I guess maybe Mark Twain had the twist on. Maybe Mark Twain never said it. I don't know. I suspect Voltaire didn't say it either. Whenever you are writing a book, you look back and you check the origin of these quotes

and you discover very inconveniently that nobody said what we claim they said. He should have said it, yes. If Voltaire had been smarter, this is what he would have said. And more cynical. Exactly. It's possible. Exactly. So assuming that AI has been driving a lot of the euphoria in the current US stock market,

there is ample reason to be a little wary of what we're seeing in the US market. And you've reported recently in your newsletter that the S&P 500 is priced at more than 40 times it's cyclically adjusted price to earnings ratio. And back in the fall of 2021, it was at 38.6 times. And you said that that means it's the richest reading in history after the dot-com bubble when it was 44.2 back in 1999. Can you put in context when you look at the market at the moment, when you look at U.S. stocks? You know, this isn't a prediction of what we think is going to happen. But can you give us a sense of why it's wiser to proceed with caution than with our,

our foot, you know, as heavily on the gas pedal as possible. Yeah, well, you know, it's everyone has to be in. And evaluations show that. But apropos, there are many ways to make money heard from John Humes. So it was a renowned compounder of capital. And somebody concentrating portfolio and companies that embody the virtues he thinks are, that dispositively defined a great investment. They have to do with barriers to entry and with capital allocation and with management quality and the like.

And he holds it through thick and thin. And he's done marvelously through all manner of fins, right? And that's about the Broad Buffett's counselors too. But with respect to people who are listening, perhaps a lot of this has to do with their age and with their risk tolerance and their issue. who are starting out and you have a reasonably durrside portfolio and near the new 20s and well, I think it's entirely prudent not to pay attention to what I am now saying or to talk about.

And these macro things come and go if long term America's gray is going to be great. But say you hypothetically, you're a gentleman of a certain age and you owe a lot of stocks and you might want to pay a little more attention to move with signs of excesses. And they are at every hand, every hand, valuation, sentiment, the incidence of unmistakable corrupt promotion, the swaggering of newly empowered through wealth people who don't know only one thing, jims that markets only go up. And it's all here, the whole theater of the, not a major financial market, it's on the stage.

The theater is opened and the pageant of top making scenery and actors and script. All that is in play. Now, the question of timing. Does it have to end now? Nope. Does it have to end in two years? No, it does not? But it will.

There was a lot of legends of people who got out in timing 1929. I wrote a book about one of them, Bernard and Luke, who was a great spectator. He was a subject by my first book way back to that 40. It's 40. And the war on the legends that come down through the years that Bernard, Luke sold on the E of the crash in 1920. No, he did not.

And I had the stock market and he had his records to prove it but what he did do was take the measure of things in 1930 and get out salvaging like I don't know, I forgot now, like 60% or 70% of his capital

in a cycle that would denude the buy and hold investor by up to 95% or so it was capital. And that took 20 years to wear off that cycles Dow made a tie in 1929. It made its, oh, we captured its tie in 1954, 1954. To put that in context, that was the year the Giants were in the World Series.

It was most extraordinary. Now, it was dividends or counted that market came back before then. If you just look at the Dow, it was 20, I guess that's 25 years, right? 25, 19, 19, 29, 1954. And my mentor and boss of Barrens, Robert M. Blyberg, was a kid, he was a depression

child. And I had quite vivid memories of the crashing that's aftermath and was very, very cautious in 1954. What he did not say in 1954 is oh, there was a great markets man, very great instincts. And

what he, I went back and read his stuff in 1954. What he did not say was we are on the evening of one of the greatest errands of Harrison prosperity and investment success that you

won't be able to bloom it's all in front of us there will be up several but consider that put away those memories of the bad old days they are not humane so but yes

I think that this is a major top in formation I'm with made to a copacar and I'd done with others and with myself. I don't need anybody else to help me along with us.

But Nate did such a good job and exposing the underside of things and points with credit and private markets. So it will come unstuck. And you'll have me on the show. William. And I am not going to gloat it or you know why? Because I have been around the block.

And the important thing, as you recall, at moments like those we're able to expect of some of us, is that just recall how full of beans you were and they'd run up to the moment of crowning success. Just remember that. It's a very difficult game, right? I was listening to an interview that David Tepper, who I've never interviewed before, but he was obviously a very smart, very successful guy he had done on CNBC when he said, we're having a really good year, and I'm so miserable because I still own the market, and I can't stand that I own the market.

But he said, he said, I'm not ever fighting this Fed with all these expectations of interest rate cuts coming before the end of the year. And he said, you've got to stay for some of the party because the punch bowl is still there. They haven't taken it away yet. So how do you... It's an approach. He is a consummate's a consummate successful specular. I'm watching him on CNBC at...

2010. I've been to Bernard, Ben S. Bernard from Ph.D. wrote the piece of Washington Post saying, we are going to Institute QE, and this will infuse the net worths of the people who have equities, and America will be growing again because the stock will be rising again. That was said to the argument. I remember David Temporary. I remember he was sitting on the

CBC as a chair who's gone like this, and nervous to go back and forth like this. He was exactly explaining how this was going to happen. And it happened exactly as he said it would. And so, you know, he's someone to pay attention to. I think if he were listening to, he'd probably say, I'm miserable, because I know full well. All the odds are against much more of this, except he's also in the business of not getting

off the train prematurely. But it's formal because he's rather too sophisticated. for that. I don't dare say as a human being, he's not immune entirely from it. But he,

he knows also that things go on so much longer that you think they would or if you're a moralist, should. Yeah. You happen to be a moralist, should.

So he's, he is getting on the shed as I said. I often bet against the fed. I can't stand this at it. Should, don't fight this at it. I'd be, I may,

I've made my life throwing left hard jabs and left hooks the fed, occasional overhang right at the Fed. And they never hit back except sometimes I feel the blow. Yeah. People will be shocked if I don't ask you very briefly about the Fed. We talked a great length about it last time on the podcast, and your lack of tremendous enthusiasm for the way the Fed is run. But if you could just give us a sense of how you expect the Fed to handle what's really a very challenging economic situation at a really important juncture with, I think Chairman Jay Powell's term expires in May 2026. And you interviewed Kevin Walsh yesterday, who served on the board of governors of the Fed until 2011 and who a lot of people are saying could be Jay Powell's replacement.

obviously there are a lot of demands for the Fed to lower interest rates and the like. And when you look at this institution and its position at this very interesting juncture, what do you see? What should we be thinking about? I think we'll be looking at administration's attempt to counter to subjugate it and to institute its own regime of ultra-loat interest rates at the Fed having having conquered it, I think. So, Stephen I. Moran, there's the advanced credit of Praetorian guard of Maga of the Fed. He came under a question by Elizabeth Warren on the Senate backing committee. He would beulming his fitness for a unique position of chairman of the council of economic providers and governor of the Supreme Court.

She said to him, tell me, Mr. Wood. Did Donald Trump lose the 2020 election? The answer. The Senate confirmed Joe Biden as winner of the election. We know that Mr. Trump, then Donald Trump moves the election. The Senate

confirmed the AISAA. So, it's the robotic response to me is a little bit concerning. You know, I, the people around Trump are, or did

some are we saying, Mr. President, you had your golf cart-sized bottom of kit in 2020. May we please move on? I dare say no one at all saying that to him now. But they also say, Mr. Brando,

the Bureau of Labor Statistics, did they fake these numbers to make the president look at? The quality of the federal economic data has been declining for something. Yes, yes, yes. Did they intentionally the quality of that like that? So it would not be as shocked to me that the president's views on interest rates,

which everyone knows, what were the better, in 2000, whatever it was, 2018, this late teen, this line was, well,

the Swiss have negative, and the Japanese have negative anomalous. Why can't we have negative? What are we paying any? What's wrong with less than zero? He still thinks that. And so, if she does subjugate the Fed,

if he manages to bring his own people in, for me, I think we could have looked for, much lower money market interest rates and a much weaker dollar and a much steeper yield curve, meaning that I, that longer dated interest rates, longer term yields, bonds, mortgages will be higher, much higher than short dated money market instruments like T bills. So I think that there's been what Maga believes would you like be right? No, I gave absurditude a long time ago, but it's Although it may not sound like that something.

But there is great hope for AI, great hope for transformation of American productivity, not after the crash that has typical occurred with excess exuberance and investment, but before. So next year and you're after, productivity revolution. No, there's going to be a crash first,

and you'll be sorry you ever heard the phrase AI. That's how sorry is something bad as can be. Yeah, that's fine. that there's hopes for a productivity revolution such that this country should hand it on much lower interest rates, a much more, a dynamic, as they use the word, credit market where people can access the credit mortgage and define as affordable mortgages. The housing market is going to take up after this long. Some people can't afford to move. That'll change. They paid a wonderful picture of what life might be like after the president finds his people and in place them with the Fed. And as Donald Trump himself often says, we'll see. Or we'll know more or four years. So while we're busy worrying, worrying everyone that we haven't already alienated, let's talk about government debt, which also was a major recurring theme at the conference yesterday. Pierre Lasson, the gold investor we mentioned before, pointed out that the world is drowning in debt,

as he put it. And he talked about the fact that there's this overstretched fiscal situation, not only in the U.S., but China, the UK, France and elsewhere. And he had some amazing statistics. He said that the total global debt has risen from $16 trillion in 1980 to $314 trillion in 2024. And likewise, he said that U.S. federal debt has risen from $1 trillion in 1980 to $37 trillion in 2024. You've also pointed out in grants. You said nothing puts the Fiat money era in stark a relief than the fact that it took the U.S. 222 years to borrow what the efforts of President Biden and Trump achieved in not quite eight years.

So we're not, I mean, we can be equal opportunity in blaming different parties for the history of recklessness here. But can you talk about, you know, give us a very practical economics lesson for people like me who don't understand this stuff. You've argued for a while that the fiscal deficit's unsustainable. Can you give us a sense of what's causing the problem, what's likely to happen, and most important, perhaps what the implications are for long-term investors like our listeners and viewers here? Let's take the contrary argument first, which I have to deal with. Very few people think about it.

There was a time when none, well, the contrary argument was upper in the minds, upper most wise to in that argument held basically that yes, debt is a thing. But so is

the income that the debt produces. And for every debtor who may be worried about over

indulgence, there is a creditor who's more than happy to buy those ions. And in the

case of a country, such as the United States whose currency is sought after and accepted

worldwide. There's no limit to what you can borrow. And that particular line of reasoning has held up into this function after this very moment. I mean, some recently speaking, the government, I guess is still shut down. It was supposed to be shut down. But, you know, the world hasn't ended. The world still seems kind of cocaine with our shenanigans and our debt, and that's because they like the dollar established, the world's reserve currency, meaning the currency that enjoys the kind of that Coca-Cola quality brand name, and people accept it as good money, even though they're

sure what is behind it, knows it's just the promise of government or is it something. Okay, so that's the argument against concern, against anxiety and morally, right? So the argument for concern is that the burden of interest and the weight of issuance will exhaust even the friends of this country and the friends of its dollar. And those are friends are both domestic and foreign. And you have seen signs of this already. You've seen in 2019 and 20, saw a little bubbly, anti-bubble eruptions concerning the market's willingness to accept what you saw in 2019 and 20 was discontinent. continuity in the supposed deepest of all security markets.

In 2019, it's concerned the money market, short-ended money market, short-dated interest rates, because suddenly there was a crisis about, in the funding market for our debt, meaning, access to short-dated loans with which to buy bombs. That was in the fall of 2019, 2019. And in 2020, there was a fright scare in March and April concerning the world's tolerance for buying more of our longer dated securities, like the 10-year and 20, and the 30-year bond. And that happened to do with the pandemic and with the Treasury's evidence plans to borrow a lot of money. feds expressed intention to buy a lot of bonds with money that didn't exist until it was ready

to print it. So those were kind of amber lights. So the question really is, what is the ultimate demand for U.S. securities at these rates of interest? You know, it's another question. Are they marketable at any rate? So if the United States which today was going to sell treasuries, a 10-year note, not at 4-something, not at 4.18, 4.1 percent, but rather at 10 percent. Wow. That'll be a little bit of all, right? Right? Or 12 percent. But consider the, also, this is not isolated, this is not isolated to the sovereign debt, because there are also the private debts that have been excited. And to be sure, private bonds, they're received the interest on those debts, right?

So it's a two-sided argument pro and con. But the U.S. economy, as resilient as it famously is, has been rendered much less so, rather vulnerable, by the years of near 0% interest rates that precipitated and encouraged the deal-making in private equity and elsewhere, these aforementioned 20-odd thousand, more than 20,000 companies that are now trying to find their footing at times.

of interest rates they can't quite handle. So what happens if the world loses its taste for Americans' securities owing to the shambolic nature of the administration of how they so characterize it? And if it fresh and, for example, comes back at an unscripted fellowship in the Fed, can't lower rates in good faith, but rather must consider raising them, how would higher interest rates play in this world of financial, fragility.

At least some of us see it. So that is, that's a kind of an attempt at an overview of what's wrong with too much debt. It's part of it is the American brand and dollars

and debt being corroded and debased by overdoing it, by over-issuans. And then there's the question of whether in the event of, say, unexpected inflation, whether the private sector is going to be

badly damaged by the need of the field to post high interest rates. So the reason that people like clean balance sheets is it affords the borrower, the would be borrower the future bar with flexibility.

That's why companies with clean balance sheets get the imprimatur of AAA or double A or double A. They're a racial table sheet. But that's clean balance sheet. That's good. It's good. And because that company can opportunistically invest

when the times are difficult. But when the times are difficult in this country, the government famously, those of its construct of the welfare state must borrow much, much more. We are borrowing heavily in a time of a 4% plus rate of unemployment, long thought to be full employment.

And we were borrowing markets and of a GDP that is rising according to the Atlanta, A rate close to 4% annualized. Wow, we need a 6% or 7% deficit to make things work. That doesn't sound like a well-managed public financial operation, a NASA operation. So these are latent problems now, as I say,

you know, I just look at the screen. The bond market is kind of okay. Credit spreads, meaning the premium of private borrowing costs over public ones is near an all-time, modern all-time low. meeting, no anxiety about private debts. So the arguments against heavy borrowing must be made rather defensively with time being. But I have no, this thing, I'm pretty confident. I think that the too much debt argument will prevail, that really will rule much of our mismanagement of the public credit and of so much private credit.

I wanted to talk a bit more about inflation. And I was reading it back. issue of grants from earlier in 2024 where you connected inflation, basically the flaws in human nature and use this as an argument for why we can expect a future of more inflation in what you've described as inflation nation, America, that is. And you quoted a German economist called Wilhelm Rukke, if I'm pronounced, or Rupka, if I'm pronouncing it right. Right. To exactly right. And I wanted to read a little bit of what he wrote in the 1950s because you've said, you wrote, has anyone said it better? And so I'm going to read a few sentences to him that maybe answer to me. So he wrote this in the 50s about inflation as the way a national economy reacts

to, quote, a tendency towards excess in every sphere and all circles to a presumptuous overconfidence in oneself, to a frivolous attempt always to draw bigger checks on the national. national economy than it can honor. And then he said, people want to invest more than savings permit. They demand wages higher than the growth of productivity justifies. They want more imports than exports can earn. And above all, the government, which should know better, raises its claims on this overstretched economy higher and higher. Thus, there is a riot of claims and an insufficiency of goods produced to meet them. And then he talks about the impact that this tendency in human nature has on money. And he writes this very elegantly. He says, just as there are organs in the

human body in which, if consistently abused, ailments slowly but surely accumulate, eventually taking their revenge. So the national economy has its own equally sensitive organ. That organ is money. It becomes feeble and ceases to resist. And it is this enfeeblement, which we call inflation, a dilation of money, so to speak, a managerial disease of the national economy. Can you unpack that a little? Because it seems- No, I cannot unpack it because it's like, can you unpack the Declaration of Independence or Lincoln's second inaugural address?

You know, it's a, all I can say is, it's, oh, man, I mean, it's just, I think the way the Republic puts us elsewhere, it's an overstraining of things, you know, it's an overstaining. And I think what you can read to impute in his writing is that some of what he was saying is the way things worked out of the gold standard.

When there was as overstrain, money would leave the country. Goal, being money, would be the country. And because paper money was unacceptable in the world, accepted within the boundaries of the nation that could print it, the departure of gold was a deflating force.

You know, you were losing the monetary things. You were losing the capacity to issue credit, gas loans, credit, debt, like that. And that was how the body politic began to protest. Now, in this age, you have a reserve currency country in America, meaning it's the kingpin, monitoring and there is to date

no real hard limit on how much it can do there are some softer limits than

the ones to which Ripka I think was referring one is the domestic

protest against too high rate of inflation but you know the fan is capable of

defying that away it's got this This press to digitation, this magician stuff. So now they are saying that 2.8% is going to a little bit of all ways. It's fine. We're going to be vigilant.

We'll also go to get away. So you watch, it's 3% is going to be a little bit less fine, but we've got this. And certainly Donald Trump is going to say, I'm not sure he's going to use the word transient, but I think he might say it's going to be the whole way. AI will wipe it from the slate. But what a beautiful succession of sentence as you wrote describing what I think is exactly the, almost exactly, this dynamics of inflation.

And notice as well that inflation under a paper money system that the dollar never gains the purchasing power loses to inflation. Now, William McChesley Martin, the longest serving headsharman, said that 1950 second. The dollar never regains the person who are at losing to inflation.

In times past, they were being prices to go up and then go down. The business cycle, not the war. So one of the things that I think health Donald Trump get elected in 2024 was that people saw inflation, even when the rate of inflation declined. Well, they should because the prices they saw, not the prices they knew in 2019 and 20. So the economists are saying confusingly, the rate of inflation was what people saw to their very eyes in the supermarket. I don't care what they're saying.

Look at this. Look at the price of what was the exosate for a time. What of the interesting features about the present day in the shed's concern or lack of their oven is the price of gold, which, you know, is kind of knocking at. Now the door of $4,000 an house. And so it was $35 until 19, it was $20.67 from basically Alexander Hamilton. There's some option down it until 1933.

And there was $35 in notes. We got up and those until 1971. There was some cut loose being cut off. the gold standard, what remained of the gold standard. And it was free to flows. We didn't take flows. But now it's just kind of gone bockers

and people who are just as worried as our friend David inside of stocks. You know, is it why? What's driving it? And is it priced

as it is only to disappoint its may somewhat bruised and calloused followers by collapsing as it did in 2011. 2011, the price got to $1,900 and something

dollars an ounce. And what followed the next three or four or five years was a return to like $1,200 an ounce. And we collapsed in gold mining shares upwards of 90%

in some of them, 95%. Oh. So everything's kind of of whack, right? The credit spreads are out of whack. Gold seems, even for the gold, people who love it, seems that, and love it is unfortunate. The word for many of us, it's a seductive asset, it's not a skinny old asset, you know, it's not boom handles. She fall all over

it or not. It was like Bitcoin, something, fall all over the point of. And you've had a long love affair with this. I mean, you bought it in January, 1980, I think, your first crew grand for, what, 850? I don't mean to brag. Wait, if I happen to living dead in it. Nice job. So you're a few thousand years old.

Good job. The total looks to see if it was I think 2300 years old. I wear that, should we say, not ten point time to purchase as a badge of honor or at least of constructive humiliation. to, I don't need to remind myself that others who might

have mistaken but in their ignorance fast in the the guru title on merely as a gold press. So, it's a hearing of the conference show this very well it did gold moves and cycles and it can

go sideways or down for 15 years and then there was, I think he puts it down to an over-issuance of the public debt and the questions about the public print. And then it just takes off, like, like a stuck pig in, you know, and it startles everyone.

As it is too much now, I think, even even fans. It's a curious kind of bull market. The place it's public participation was still rather muted and there are signs of it growing. But there isn't a frenzy we saw in Bitcoin in 2020, because we can't wait for example or common stocks today but you've been you've been pushing gold for many years right in this sort of very contrarian way and now that it's hit awfully crass sorry I'm not the commission this is touting hawking advocate peddling now now that it's hit

3,900 an ounce this week and it's up what a good 40% this this year it must be very uncomfortable for you as a someone who is always a skeptic Now are you looking at and thinking we have a speculative bubbling gold or is the run-up justified given the backdrop of all the kinds? I was, I happened to be in the presence of one of the great speculators of our age with springtime. And I said, this is what it was I could be. So that closing in on three thousand, I've lost track. It was just a hurdle, cleared some high hurdle.

And I said, you think goals of bubble? He said, of course it's a ball. Is it a anarchist it's justified by what we on Wall Street are pleased to call the fundamentals? This is where you've been struck these great, you know, metal either trying to say. You build this, this narrative for yourself about what's causing it. I remember very well in 2011. The S&P had downgraded gold, sorry,

had downgraded the treasuring from AAA, NACA2A+, and by the way, lived to rule there for the next 10 or 15 years because the authorities went after the big time for having done having had the temerity to do that. And the precious gold had been

in the mid-teenth, 1,500 years for a while. And I thought something I thought, well, now the world is catching on to the joke. and the world will demand of this country, a reform in the finances, which will entail some role for gold in the monetary system. And gold will find its place at a higher price. I'm not sure we actually use the phrase permanent high plateau, but by that, that's what a gold standard is,

is to say, it's literally a permanent plateau, is that a certainly higher low, but $20.67 for a 135 years is a high plateau, right? It's a plateau. $35 for, you know, decades was a plateau. So that was some of the thinking among the thought leaders of the gold world. It turns out that there was not any such thing as a worldwide permanent condemnation of our messy fisc, nor was there any intention in the party authorities of bringing gold back and to the world of America's monetary system. America has read out gold from its monetary shares during

in 1976 under Treasury Secretary Secretary Bill signs. Actually, say, rather than return our back on it. No more gold, period. And the IMF4 in the Treasury. Gold is a,

it might as well be scrap metal that is housed under guard to be sure than there in Fort Knox and elsewhere. But no more gold. So you can build these air castles

of narrative. You have to be careful. I mean, not my current Air Castle. So if I were to have the first one, would consist of administration that seems

valid and the Trump is unlikely will prove to be successful in taking over the central banking opposing its interesting theories of money market interest rates on the dollar and on the world that uses the dollar. It's one plank of

this, you know, cash-sull, and another would be the proclivity of the treachery to borrow much more that it takes in and the Congress to allow that. And for the fiscal dilemma, which we talked about, but never acted upon it to that one. And so that would be enough to convincely even the upside and still in front of us. But my, you can't be sure. And if you can't be sure, and if you have too much of this stuff, you have a restless night's sleep, but you don't want, as David Tepard, you don't want to miss all the upside, you know?

So that's what makes this line of work so interesting. There's no firm ass, and there's no, there's no certitude, there can't be, and people who would expect, like they have it, you know one thing about, there are two things, but I know they're not very old. I know they are not really bad thing yet. I've needed an invaluable educational experience of having their face ripped off during a bare market.

There's two things you know about, one of it should. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one,

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in terms of just being a prudent investor to position ourselves, and this is before we turn to your book, which I want to talk about next, to position ourselves sort of prudently given the backdrop. You don't much like bonds. You said basically in 2021, we entered a 40-year, well, after a 40-year bull market, we've entered a long period of bear market. I own some bonds personally, my wife and I do, because Noah's getting any younger. And I dearly love coal, but you'll notice that has deficient for one thing only, it pays no interest, which is also one of us great virtues.

It's being, it's money. It's not, you know, it's simple, it's money. It's the world regards to that way. So, bonds. So I own some kind of, not the ones you think of as, it's a fund that it ingest in special situations that yield rather more

than the ones that trade in public markets. And it's risky, but I think risk is well-marged. So that's part of our lives. At least this spot for the time. I intend to work my whole life. I don't have any intention of retiring, but approvals would dictate that there's some reasonably assured income outside of Social Security.

So that's that. So that's my connoissell in my anti-bonds stance. I own seldom. And I saw yesterday at the conference and talked to briefly, the great Paul Isaac, who we talked about last time you were on the podcast, who you'd invested with many years. I'm assuming you still have some exposure to the stock market through people like Paul. Oh, yes, I do. I do. And he's coming into his own, all these in stocks that stood still are seeped lower, of course, in the past five or ten years, between 10 years,

between the row. It seems to be a, oh, is it, by way of preface, is it, is a, it doesn't needs some deep value would nest at. They worked for special situations that he feels are protected, both the downside and that they're protection the downside. And this would have to do with the quality of the balance sheet, of the earning stream, of the, of,

of, the force of the price that to afford some protection and deep and down and ignored sufficient by law stream and some, uh, sub protection. That's very, that's very obscuring. It's not going to be a part of the,

in kind of portfolios that are we liquidated. They will pay a price during the liquidation because it's traded somewhere. And this has to do with companies. So banks, for example, in Europe, it has to do with medical device companies in this country that our kind of on the column that have been neglected because they once failed or something. He looks at this. He's a, how much of special situations is a better? description of some of his investing style than than value, but he looks for opportunities that

will not necessarily be borne aloft by a great rush into Mag 7. And they have been left behind so he was suffered by comparison with that. But he says, wow, I'm sorry. Yeah, it's brilliant. Brilliant, Matt. Unless what is happening now is every last dog is finding is it's adopter of the pound. It's like every, like the pandemic dogs. Even the most of the probable beasts get let out of the pound. So let's hope that he's not listening to this and thinking you're describing him as a three-legged pandemic hound is finally having his day.

But I think the point is that it's not like you're going to cash and crawling up in fetal position in the corner. It's about taking intelligent risk, whether it's with golden commodities or bonds or diversifying beyond the U.S. market and beyond the – so this isn't you advising everyone to panic and cash out. It's just saying be more conscious of the risks that you're mindlessly taking. Or thought – you can take them thoughtfully, even though, I mean, it's well and good to to anticipate your peace of mind come the liquidation

but you know it's like you know everyone's got a plan until it gets hit the Tyson like Tyson line

they're never under underestimate how sweaty your palms are going to be because these liquidations can seem but ending they typically don't

I think also sorry to interrupt you Jim it's also about at this you know you you I was listening to Grant's current yield podcast and you were talking about how we're in the age of decadent finance. And so part of it is about being wary of having stuff sold to you that's kind of marginal

and speculative at a time when we should be being more prudent. And there was a lovely line you said, we are grants take a rather moralistic view sometimes instead of credit being man's confidence in man in this day and age of decadent finance. it now demands man's confidence in the sagacity of his lawyer. What you were saying is, you know, you can't just be trusting at a point like this where all of the most rapacious cunning people come out to try to sell you stuff that is not net. And all of course rapacious is cunning people have done very well by their rapacity and by their guile. You know, markets, when allowed to function properly, go down as well as pup.

and the down portion serves any number of functions, one of which is to skim the bad actors off of the stage, just to flick them away. But what happens when the shed was ever good intention, I'm sure, and lends its force, his arm and strength to prolonging cycles and for stalling bear markets and to pumping up the GDP so that we never have to endure this kind of experience again. So bad conduct goes uncorrected, unchastised.

Mr. Marker is the best disciplinarian. Never mind all these only lessons that you could read, I'd reflect on Warren Buffet. He used a great corner of phrases, but Charlie Bunker, but nothing succeeds like having your headhanded to you. It's a learning tool and disbarment in the case of the bar or a D-licensing in the case of financial advisors. Just to get some of these people out where they ought to be, which is like, I don't know, work for the Fed. I don't know whether they'd go after this, get them out of the markets where they have lingered too long when they're going to get too many people in troubles. my moral with the argument.

Let's turn to your lovely book, Friends, Until the End, which is a double biography of these two magnificent 18th century orators, Edmund Burke and Charles James Fox. And it's set against the backdrop of three great events, I guess. So Britain's loss of the American colonies, the rapacious exploitation of India by the East India Company, the great dominant monopoly of its time, and also the French Revolution.

and it would be great if we could chat for half an hour about the book and the lessons therein. Early in the book, at the end of the preface, in writing about Burke and Fox, you say, I love them for what they said and the way they said it, for what they believed and for what they did. Can you give us a sense of why you so greatly admire these two figures who are in many ways giants, but also have been widely forgotten by many people, although Burke obviously is an important figure in. in the world of conservatism still. For me, at least time, great oratory is like music. I read it as I would listen to like a third moment of Brown's Third Symphony,

which I happen to love. So, may I read you a little something? I would love that, yeah. This is, this is, um, works, uh, panegyric, uh, to his friend Fox in the band, the preface to this. is that to bring the British East India Company to heal, to curtail the most abusive practices of its agents in India.

Edmundberg and Charles Schlesach together drafted a bill to revise the governance of this monopoly, the biggest company in the one of the time. And Fox, who was a frontman for this in the House of Commons of Great Britain, for a lot of abuse because if the bill went through he would command a great deal of power in that nominating

you know functionaries to serve on the new governance commissions you know and so he had all this tower awaiting him if only the bill will get through so this is this is works so they question his moment

but he has put to hazard has he used his security his interest his how even as strongly popular the dozen that of a pupil, no one as never been ever seen. This is the mode that all heroes have tried to be thought in.

He has introduced and used for his supposed loads. He will remember that obfurtly is a necessary ingredient in the composition of all true glory. He will remember

that it was not only in the Roman customs, but it's in the nature and constitution of things, but calabing and abuse. are essential parts of triumph. Now, is that not a wonderful read? So that speaks to the first,

what they said, how they said it. A book is so well-seasoned with quotations from both Bork and Fox. They're both magnificent speakers, and they both came into their prime after stenographers were at least semi-leasonologists. were at least semi-legally allowed the House of Commons to take close notes. They couldn't get all of it. It's like catching a bird or the wing, and they were right and scribbled on a short head of creation.

But witnesses to Foxx's and Brooks eloquiths content there was much better than what you'd read the page. Oh, my goodness, that's pretty good at the page. So that was what they said and how they said it. There was an amazing line from Boswell in your book, the biographer of the great Dr. Johnson, where he said watching book, if I get this right, it was something like being in this orchard where he could just pluck these apples at will like so fast. And I think one of the amazing things about their oratory was both of them. They were so brilliant and so quick speaking and quick thinking that they could be quoting

Virgil and Horace and, you know, they would be. quoting in Latin from memory. And the same with people like William Pitt, who became Prime Minister at 24, who you quote, that they could, I mean, I think there's a bit in the book where Pitt suddenly quotes Scipio in Latin from memory about some old guy who's insulted him. I think that's part of what's so amazing about the rhetoric,

the oratory that they use. Well, yes, at one point, I'm not sure how much is this isn't documented, but supposedly Lord Norris, who was the prime minister during much in the time. A little book was in the House of Commerce, as Forsburg. And Dirk was lacing into the government on Lord North. And North, this happened to be sleeping during this. supposedly and Brooke then quoted something about him

but Norse heard and misquote something about and he awakened corrected him and then failed returned sleep I had an amazing an amazing history teacher

a legendary history teacher at Eaton which is where Charles Fox went and Pitt this guy called Michael Kidson who now if he was still alive would be banned from teaching because he would say such incredibly inappropriate thing

but he was wonderfully articulate, and he would always say, they were giants in those days. And you get that sense, not only, I mean, not only from the quality of the rhetoric, of the actual use of language and hyperbole and just, you know, all from memory and all off the, well, a lot of it off the cuff, anyway, they wouldn't deign to look at their notes. And, you know, Burke could speak for 11 hours. It was very bad, it was very bad form to speak for a script. Yeah. So amazing. But then also the, and I think this is probably what you were about to get to. It's not just that it's the, it's the moral courage that they demonstrated. And I think, I mean, if you could talk a bit about that, because that certainly comes through particularly with Burke, like this sense of his humanity and his moral courage and his compassion. And there's a, there's a point where he says that he has one rule for himself, which is to act as the representative. of the people who had no power.

Can you talk about that? Because I think that's the other thing where you feel not only that you're uplifted by reading the quality of their language, but also the quality of Burke's morality and decency. He was the most, he was a difficult person, personally so many occasions, you know, but he was also most of the time,

incredibly generous and courageous and the causes he would take out, for example, one, two guys were caught making a love. And of course, it was crime, serious crime. And they were called before the bailiff and sentenced to time in the stocks and put your head and your arms and wrists

and would stand before all the worst people around and they even tossed stuff in your head. Sometimes merely vegetables, many times rocks. And these two male lovers suffered rocks. One of them was killed in the stocks. One of them was named

I'm not sure he died, didn't die either. But Burke took up their cause in the House of Commons. And of course, you can imagine a vertigo came down his head for this and all the knowing Lear is one member

or two of the other side of the House of Commons the government of the Lyrk, Lears, and this man who must have had both curious motives for taking up the cause of these two reprobates, these two offenders against the laws

of God in nature. But Burke persisted, you know, and he, and he had a newspaper libeled him, and he sued the newspaper. You want a modest symbolic settlement, which she gave away as a gift of something. That's one example.

There was a wonderful example, too, where I think you write about this poet Crabb, who's at the end of his tether, and he comes as a total stranger to Burke. And Burke not only reads his poetry, but helps him revise it, gets it published. I mean, totally transforms this guy's life, this total stranger. Yeah. Crabb is literally hungry and destitute. Sometimes, you know, sleeping on the embankment as well as showing and pulls himself together enough to knock on the door of Edmund Burke. And that Burke takes him in.

This is you say, I came to Hugh Burke as a kind of a next-door neighbor to a saint. He was a saint. Saint. I mean, he can say, Neil's saying my friend and neighbor Amity Schlaiz who read the book

saying, you know, Burke is crazy and not crazy. Because that comes across as he aged and since Bortar became

if not more not Florida exactly, but more complex and more more elegant and more heavily decorated with Shakespeare and Milton

and the Latin poets. The younger crowd The other people came in, and he became rather an old number. He had been working, and he would be greeted by, sorry, both of them speak, he had been greeted by coughs, saying they were organized coughing by the young folk. And he came to me notice the dinner bill, because when he rose, they left,

and went to the House of Commerce, against cafeteria was that point right, but they went to get themselves a dinner. One of my favorite things from him is that there's a, I mean, you were talking about his willingness to take unpopular positions and there's a beautiful thing similarly where he was often accused of being Catholic because he was a great defender of the Catholics. And there's something where he responds. And the Catholics are obviously tremendously persecuted at the time. And he's, and it says, and if Burke went on on account of such sentiments, people call me a Roman Catholic, it will give me not the smallest degree of disturbance. They do me too much. honor who aggregate me as a member to any one of those respectable societies which compose the body of Christianity. Wherever they choose to place me, I am sure to be found in extraordinary good company. It's beautiful, right? It brings tears to my arms at guns. I, um, uh, that was Bergen's best, and his best was, you know, fantastic. Anyway, what they believe? So what do they believe? So they were, These guys were, Bergen Fox were in the opposition, the whole career, basically.

Each one had a short time in government and the ministry, which meant they drew no money from the House of Commons, unpaid. So they scrambled around for money. And sometimes it takes rather gaming speculations and Caribbean land deals, of course, unsuccessful. So as members of the opposition, what do they believe? They believe that they believe that king was overstepping in his balance and that he got out too far. The king was going too far, he was going to be a tyrant. And they did what they could to stymie the king, the king's out of stymion them. So the two of them believed in the following episodes of their careers together, they believed the following. So in the American Revolution, they were both allied

with George Washington and his feeble rag-tag army and the ideals of revolution against the heavy hand of Wardenworth and King towards the third. Now, Edmund Burke was welcomed the affection of the American people, but would squash them if they had presumed to achieve power of all of England. He was not a friend of a risen and powerful American state, but he believed that Congress were in the right and their dismissive of taxation. and black fox, as was his kind of unchained wad. He wore George Washington's colors around London,

his carousing and gambling at Brooks's club, Buffin' Blue. And what did you know what some people in this took his enthusiasm for a cause with treachery. And, you know, so that was America. they both were quite stalwart members. And work would say after George Washington's round in the Battle of Long Island, let us stand by our friends in their adversity as well as in their prosperity, never abandoning people who stand for the principles of the Gloria's Revolution of 16-being meet in this country, but always support them in those ideals.

So that was one episode. The second one had to do with an overbearing, corrupt and a quite cruel regime at times, quite cruel regime of the Eastern New Company in India. And this shows Bert Adams dogmatic and a semi-crazy side involved the trial of telling Warren Hastings, who was a leader of the Eastern New Company. And I'm not sure whether Warren Hastings was quite as guilty as everything is Bert thought But the trial lasted for eight years, and by the end of it, only Edwin-Birk was interested in pursuing the case against. And again, my friend Abbasidst calls this lawfare.

But so that shows a dogmatism of and how he could seemingly be unself-aware. It's well dwelling for a moment on the East India Company, because as you write in the book, it was as well hated and well envied as any modern day technology giant. And so this was the world's largest business. And so Hastings, who you mentioned was the Governor General who got impeached. Can you talk a little bit about the misdeeds and the wars and the cruelties and the scandals and the plundering of money from India that this? I mean, it's kind of amazing because we talk about business now and the nefarious things

that we've been saying Wall Street has done. there's a level, there's a level of brutality and corruption to what they were doing that's quite astounding. Well, all you have to know about, see behind you, William, the portraits of Charlie Moffer and, I guess, Warren Buffett, yeah. And Charlie Moffir is, it's fun of saying, show me the incentive and show him to the outcome. And the East Indie company would send to India as employees of the firm. lads of 16, 17, 18, and 20th, scarcely shaving, and they would be very ill-paid. They would be ill-paid. And they were to make their way in the company by setting up shop for themselves

and by conducting their own business as a sideline. Actually, the side hustle be chandler, focus, and their main day job. And so instead of enriching their employer, they enrich themselves. and that's one thing to know about incentives. The other was the East India Company was itself a sovereign. He had its own arm and had his own Virgin fleet and its own Navy. And what would a profit-seeing company do with its own military power in search of profits?

It wouldn't wage wars, right? Well, maybe the equivalent is Musk having, you know, Starlink, and you know, maybe he's the person with the power that they had. Yeah, well, maybe that's coming. But knowing those two things, you can imagine what liberties, the agents of the East India Company took the servants of the East India Company took on their own behalf, as opposed to that interest of our stockholders, and indeed the interest of the sovereign that gave them the monopoly.

So they ravaged the country and I know you probably have a favorite episode of their misgovernance, but it was pretty steady and pretty heavy-handed. Well, Clive was amazing, Clive of India. And I used to, when I was living in Belgravey in London, I would pass this gorgeous house that would say, you know, Clive of India lived here. And you'd think, oh, this must have been some noble guy. And it's like, Ben, you read your book and you realize, no, they were just pillaging left, right and center. and then would, having plundered jewels and stuff,

they would come home with just millions and millions of dollars and buy themselves, you know, respectability? Not respectability. They would buy themselves seats in parlor. Yeah. Yeah. Power. I think social respectability was, I'm not sure anyone had enough of that, but the clive of India was the avatar, are with the return mogul.

Yeah. They turn their, their, their mupias, of lupies, I guess, into jewelry. My,

my favorite bit that you write, well, actually this is book that you quote on the East India Company who talks about these, these young men, boys almost govern there.

Without society and without sympathy with the natives. They have no more social habits with the people, than if they still resided in England, nor indeed any species of intercourse but that which is necessary to making a sudden fortune with a view to a remote settlement. Animated with all the avarice of age and all the impetuosity of youth, they roll in one after another, wave after wave, and there is nothing before the natives but an endless, hopeless prospect of new flights of birds of prey and passage, with appetite continually renewing. for a food that is continually wasting. And just that image of these new flights of birds of prey

coming in to rip off these poor natives plundering their wealth. It's just an amazing piece of writing and rhetoric. Yeah. Now you see where I wrote the book. Yeah. So I think the book, I mean, in some ways, it almost tells me as much about you as it tells me about Burke and Fox because it seems like

it's just infused with your love of language and writing and scholarship. Yeah. It is that. So then comes the, there comes the trial in Hastings to close that at Warren Hastings, the governor general of Indiana, as you noted, impeached.

It was tried off and on, mostly off, I guess, but still over the course of eight years. And this is an impeachment in the House of Lords. and he finally gets off. And it's most remarkable display. Okay, but there's more of that side of work in the death scene. And we're coming up to that now with the French Revolution.

And this is where these two friends part of the company, it was quite irreparable to Fox. The French Revolution was the best, the greatest, that never happened in this world, tossing off and throwing off the chains of the tyranny of the French crown and of the miserable

system of aristocracy and the suppression of the lives of the people. He thought it was marvelous. And, okay, there was Fox. And work saw on this. He saw chaos. He saw

the destruction of civil society, being so that structure of things, that the border of society by social rank, very important to have family, privilege, all this stuff which to him was the fabric of a functional and prospering, all this will be destroyed, the church would be destroyed, the religion itself trampled under a foot. And much of that indeed did come to pass with a terror. And Fox was rather chagrined by the terror could imagine. They put in Wall Street turns. He said, I'm really bullish on this.

And then most terrible things that happen to the company goes broken. And everyone's revealed to be literally an offender against the laws of the country, the rules of the SEC, but also criminals of most of the law. horrible sort. So that's the kind of the Wall Street analog to the call that he made

it after the full of best deal. But still, Fox clung to his view that this was a glorious moment, history of man. And of course, he had many compares in this

a romantic generation coming up and cheered him on and he'd cheer them on. And I said, okay, so that's that. And,

but Perk was, was equally unmovable in his view about not like the net evil of this, but also the grossy or the meaning, didn't see much much to come out except the end of France. So what about the friendship?

Well, it came to a tearful end in the House of Commons. And it was a debate over something happening nothing to do with France and Burke, and, um, went on about the French Revolution. Fox said, you know, you can't, this is not germane. You can't. And Fox pulled it back to Burke some of his thoughts in the American Revolution. And Fox and birth went incandescent over the inscivility of having his long words pulled it back to him.

That to him was a heinous crime against. He unwritten rules of the house and more especially against the rules of friendship. And he said, our friendship is at an end. And Fox, the outbreak and the tears said, no, it's not. And so it was, and see. So that was that. And, you know, time passed. And, and Burke's son tragically precedes him,

and that predeceases him. And Burke falls ill and falls pro. They're both of them are broke. Both are a whole lot of thing. You know, Fox lives from bankruptcy bankers. see a lurk as book at the end. And that there's nothing to look at the spirit. And as Brooke lay dying,

Fox reaches out to his wife, Mary. And writes her, may I come and see my friend? And she consults with her husband. She writes back to Fox. No doubt that's not word for word, certainly in the spirit of his retelling. No stiff reply that Mr. Burke must adhere to the views of the public known so well,

and that he was severe from them. It looked being a great hurt to the community, and too, and they couldn't do it. So three dies, Brooke does, and Fox lives a long time after many years, in declining health himself, and declining health well earned, by the way. So we're glorious and lived,

and somebody comes around to ask Fox, if you would not like to contribute to a fun in the collection to raise a monument to Braves a monument to the Great, and then we're holding down to Foxes. Well, no, I can't pretend to a spirit of, forgive it as such that I could do this without me or where I can't pretend.

I can't, can't. See, that was that. and so the book closes with the Fox having finally succeeded in putting over a long outlawing of the slave trade in Britain. That was what he wanted most of all and this statue of Fox

in Westminster Avenue depicting a nuclear a freed slave or something that's a free slave This is lying on his lap and infratitude and we called them. And so, um, so I said that the fox is a, in thousand enduring monument in marble and that, uh, Burke's, uh, collected, uh, items are a marble of another kind.

One of the things, Jim, that was so striking to me is both, both Fox and Burke were incredibly admirable and gifted in so many ways. and yet they were both absurdly bad with money. And you talk, both of them lived in debt. Both them died broke. But I think Fox was kind of extraordinary. Can you talk a little bit about his gambling? Because it, I mean, the recklessness of it is quite staggering.

And his father was absurdly rich. So it was quite impressive what he managed to achieve. Well, he comes for interesting. Why, and financially speaking, his grandfather, or Stephen Fox, pay mass for the force, which meant very briefly that you got to invest

the money that was entrusted to me for the payment of the troops until that money was needed by the king to discharge those debts. So you could, what do you think with it? And you got to keep the profits, whether it's interest on investing in government securities or prophets

from dealing college stocks. So that was Stephen Fox and Fox's own father who came to know as Lord Holland

got the same gig and he became fabulous and rich. People couldn't believe what he did was those without money.

He just, and he formed the prophets to his his little, the book now

gift an addicted gambler. Fox would play night and day at his club, Brooks's club, he played dice games of dice and cards. And he's a horse player, rather better at that than cards and dice. But he lost quite literally fortunes at gambling.

He lost 900 pounds on a single game of billiards, you write at a time when that was real money. But I mean, I think you write that in 17, 76, he had 140,000 pounds of gambling debts. I mean, that's many millions in today's money, right? Yes, and what did not speak well of his moral character, they didn't see a bother.

People would say, how can you sleep at night? All I want you do, where he's in Foxxie, well, the question is, how can my creditors sleep at night? And it's so amazing. He would go out sort of drinking all night, sleeping with prostitutes, sleeping with his mistress, and then he would come into the House of Parliament and give an amazing speech.

And I think there's a wonderful bit where Horace Walpole listens to a speech that he's just given off to basically being out, drinking and carousing all night. And he's like, this is just total genius what he could do. Yeah, yeah. So that was, and,

you know, people were astounded by it, but also they recognize that he was basically just a big sponge. He borrowed from his friends, bar from everybody, His father died the sparing of the debts that he had accumulated and what it did to his estate. But he still kept feeding him money. Burke was different entirely.

He brought a lovely estate, Began's Field. And it was, as so many lovely estates are, it was a money pit. You know, he didn't make any more money at farming that most people do today. He took him with, he was a student of scientific agriculture. But think of the productivity that he had or didn't have. I'm not at this place lost money. So he could, by hitching some oxen ahead of horses and plowing, better chance, he could plow one acre a day.

Now, today, a mechanized farmer, not so very accommodating, tilly New York farm can do 21 acres a day, mechanized plowing. So 20-fold, 20-fold appreciation in plowing. So Burke was sad. Burke had two jobs at Armitary a devil. He was a gentleman farmer.

But actually more than jail. He was a hands-on farmer. The scientific one of that. Who was the right equipment? Oxen, as well as horses, could plow all of one acre a day. Upstate New York, we can do 21 acres a day with milk machinery. So not much productivity growth there. And so, it was.

that the Tice never paid for itself. It was mortgaged. So he was primarily in debt to his friends and to his political mentor, Lord Rockingham, and with all the insecurity that entails. And so at length, Burke became a member of Brooks's club as well as Fox was towards the end of his life. And one of the documents, that my quite terrific research assistant and length intellectual partner, James Smelberson, managed to fish out of archives, was a letter from Brooks's club to Mrs. Edmund Burke about eight years after his death and dunning her for unpaid dues as Brookton's. Oh, God.

So that was the state of his ex-jecture, and both of them lived, I think that Brooke never suffered in his lifetime the indignity of diacracy more than was Foxes Foxes

of the furtage was out in the sidewalk you know because the debt collectors came and just took his stuff and once he was after a night of Brooks

was after immense losses you know one of his friends came to him concerned about what this might do to work Would he take matters and his own hands with a pistol alone, the day of night? No.

So he came, and there was Fox serenely reading some great Latin poet. His friend said, what are you doing? And Fox said, well, what do you think I ought to do? I've lost everyone chilling. There was a serenity in the face of ruin that will amaze the readers of, I hope, I want to share one last story about Fox's death and his little bit. So he fell in love with a cortizum. This is marmiston.

Not ever sure whether there was a Mr. Oversonov, but they had a genuine love affair. And at length, during one of the breaks in the polioidon of course, Fox takes his then-wife, he were leaving her at length, takes her to France, and they sent down. down with a Talleyrand, French diplomat. And Talleyrand, too, had married a cortisol. And the two ladies sat next to each other on the banquet, and they shared very interesting observations about people they had known. Oh, marvelous.

Before I let you go, Jim, one last question. You spent so much of your time studying history. and I wondered if it gives you a sense that life has improved, that we've survived these terrible periods in the past, you know, whether it's the French Revolution or civil wars and the like. And does it give you a sense that even in our strange and difficult moment now that we sort of muddle through after all?

Like, is your study of history kind of give you optimism or pessimism about the future? But a little bit of both, hence to the material side of life. It is onward and upward. Nothing like is ever seen. And we could not be having this discussion, except for advances in medicine. I wouldn't be good interlocutory. You can't get somebody else. So, you know, the marvels with which we live are just astounding.

This little thing I have in my pocket, which I forgot to put it out of airplane mode. It has the entire Canada world college. It does. And so people think, yeah, I say, yeah. What about the next edition of the Apple, whatever it is? You get jaded about these things. You get jaded about it. I find myself complaining about the pills.

I have to take it off the next round of disease and what's in rank in gratitude. So in some ways, things have never been better. And we should thank our looking stars live what we do. In other respects, we live. It's back to living in rags. in the forest, and it'll, with respect to public oratory, going back to grunting and groaning, wherever they were, have they conducted business before the perfection of writing and the arts of literacy, you know, can you compare what comes out of today's House of Commons as well as,

of course, truth social or the council representatives or the dignities, or the dignities, all dignified Senate. I mean, it's just want to lay your head down and not watch television, do something else. So it's mixed.

So all of the intellectual energy of Burke and Fox's time for a certain class of people was in literary pursuit. There's a great American chenance here called Albert Gallaghan. You know, as the Treasury Secretary, you just use a

a near successor to Alexander Hamilton. I think there was one or two between the two of the... Hamilton was a trade for secretary under Jefferson and Madison. And then he was a diplomat who helped to settle the War of 1812, when he came back with a banker and said he didn't like he retired. And the Greystone talks about... So he retired to pursue academic studies and literary Christians. Gallatin did.

and went down to the grain universally honored. But the, this is about and literary pursuits. I go over to the churchyard from time to time and read his, he had a great story at Gallant and he said, think about him. And you can tell what had by memory of the past 50 years or so years. I can't remember exactly the phrasing, but it was, it's marvelous. And so if you're a lover of the oratory language,

of so to be disappointed to not to have lived in some other times. Otherwise, just when you go, never mind, dramatic diseases of late life or commonplace, not dramatic, commonplace diseases of late life. Just go a trip to the dentist. Just thank you your lucky stars, you know. But it's pretty great on balance. Pretty great.

I'm glad to be here. On that note, Jim, it's been such a delight. And I'm so happy to have got to spend this time with you. So one of the great pleasures of having a podcast is that it gives me an excuse to hang out with you. awfully kind and what a pleasure it is to be in your company. I've written my biography mainly about people whose company I was, I wanted to have to be in. So I like your company too, will you?

Ah, thank you. That's lovely to hear. And I loved coming to the conference yesterday. So now I'm planning to become a regular. I'm looking forward to it. Thanks so much. Lovely TIET I'm with you. Okay, with you.

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