We Study Billionaires - The Investor’s Podcast Network - TIP305: The Structural Impact w/ George Gammon & Clips from Ray Dalio & Jeff Gundlach (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. On this week's episode of the Investors podcast, we have real estate expert and macroeconomist George Gammann. During the show, George and I talk about the structural impact that COVID is having on the American real estate market and infrastructure. In the second half of the show, we bring you important clips from billionaires, Ray Dalio and Jeff Gunlock. Ray talks about the limits of central banking intervention and how people might want to

Starting point is 00:00:25 position themselves based on those extreme policies. And then billionaire Jeff Gunlock talks. about his opinions on the potential for a V-shaped recovery. As a final note, Stig was out of town and wasn't able to join me for the interview, but he'll be back with us again next week. So we're covering a lot of territory on today's show, so let's go ahead and hop to it. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

Starting point is 00:00:58 Hey everyone, welcome to the Investors podcast. I'm your host, Preston Pish, and with me, George Gammon, George, welcome to the show, thrilled to have you, been watching your Twitter feed and your videos from afar, so it's kind of exciting to have you here. Yeah, Preston, I am super, super excited. I'm a huge fan of the podcast, so I cannot wait to dive in and give your viewers or your listeners as much value as possible. Well, George, where I want to start off, and I think We can talk about infrastructure. We can talk about real estate and kind of what the implications are in this COVID world that we're dealing with and this central banking, printing bonanza. So as a person who has quite a bit of experience dealing with real estate, not only in the U.S.

Starting point is 00:01:52 but internationally, I saw a video that you recently posted where you were saying that the prices that the real estate market is at today is very similar to a bubble that we saw in 2008. what is your what's your basis for that sure well it's really one chart and it's a chart for home prices adjusted for inflation and size going back to 1900 and if you look at that chart you see how dramatic of a bubble we were in in 2006 in fact from 1900 to the late 1990s, the housing prices in the United States were flat, adjusted for size and inflation, and which makes a lot of sense if you think about it, because housing should be tied to wages, among other things, and wages are loosely tied to inflation. But then in the early 2000s,

Starting point is 00:02:46 you just see it just go parabolic this chart straight up, you know, until we hit a peak in 2006, and it comes crashing all the way down to 2012. But now, in a lot of those, in fact, in many markets were higher than we were in 2006. So I don't know that there's anyone that would say we weren't in a housing bubble back then. So if we're in one back then, then how are we not in one now if prices even in real terms in a lot of markets are higher? And then you look at the price to income ratios and a lot of other metrics like that. And it's just, I mean, it's staggering.

Starting point is 00:03:26 But keep in mind that real. estate is local and it's very inefficient and that's the that's the benefit of real estate where gold as an example or stocks if gold is selling for $1,500 an ounce you can't get someone to sell it to you for 900 it's not going to work that way but with real estate if you find a motivated seller you could find someone to sell you their house for a 2012 price especially if you know what you're doing And then you take that to an extreme when you get into markets like Columbia that doesn't have an MLS or any of the Zillow or anything like that. And the market just gets even more inefficient. So the more inefficient the market is, the more that's going to benefit the people who understand and know what they're doing.

Starting point is 00:04:16 But the more it's going to really hurt people that really don't have a lot of experience. Yeah, I think a lot of people forget that you can't arbitrage the price like you can call it. gold where you can you can physically move it with real estate you're not physically moving anything it's stay in there and so you know that's such a huge component of it that you that you're hitting at the downside to real estate for sure and one of the things i've been thinking about recently is chris cole's paper the allegory of the hawkins serpent where he outlines his dragon portfolio and i've you know everyone always asked the question well okay i totally get it but how do you go long volatility. And if you don't understand options or doing all those things. So I've really been

Starting point is 00:05:03 trying to think through how to go long volatility. But I think some types of real estate could be kind of long volatility. I don't know if you heard the interview that Hugh Hendry had with Rao Paul's real vision, but it was fascinating to me because Hugh looks at real estate from a macro, you know, as a macro hedge fund manager, really. And that's, he bought this. villa, all his property in St. Bart's, and his rationale there was kind of to go long volatility. And Raoul, same thing with his place in Little Cayman. And so I think that, I guess my point is if you're trying to construct that type of portfolio, if you get outside the buck, there could be some ways to do it through real estate. But to your point, if you don't know what you're doing,

Starting point is 00:05:51 and you buy it in the wrong jurisdiction, you don't have diversification, you've got problems. Well, one of the interesting things that we have going on right now, and I don't know if this is a long-term trend, and I'm curious to hear your opinion on this, we've had an exodus from major cities. Call it New York, L.A. We're seeing the prices for rent just drop significantly. Is this short-term? Is this a long-term trend? What are your thoughts on that? My buddy Jason Hartman's a real estate expert, and I'm always talking to him. In fact, I'm going to grab breakfast with them in the morning. And he called this a few months ago. He says, I think people are going to leave these high density urban areas and really start moving out to the suburbs. And we've seen that play out. And I think that just with my little YouTube thing that I'm doing is kind of a side hobby,

Starting point is 00:06:46 when we first started, I had all my employees or editors and whatnot working out of a central office. But then when COVID came, we went into lockdown. I was in Medellin, Columbia. They had to work from home. So we figured out how to do that. So now I'm in Fort Lauderdale. I'm going to the Caribbean next week. We just keep going right where we left off because everyone's accustomed to working from home.

Starting point is 00:07:10 We'll never go back. Even if I'm in Medellin, we'll never go back to working in an office. It's like, it's pointless. And we figured out how to do it and do it potentially even better through the internet. And I think a lot of businesses in the United States are going to do the same thing. The businesses that are able to adjust, another thing, Preston that I just heard the other day, is how many universities aren't going back to school in the fall. A lot of them are just going to, I forgot, maybe one month in,

Starting point is 00:07:47 and then they're just saying, okay, the rest of the year is just online. So a lot of these students are moving out of these college towns like Tucson as an example where they got U of A. And they're just moving back in with their parents. They're just moving out of the cities or just going back to wherever they have a lower cost of living. They don't have to worry about COVID or whatever. And they're just doing their classes from home. So that's just going to have a massive economic impact on those local communities from the standpoint of the rents, the restaurants, all the services, the bars, the cafes, the shops.

Starting point is 00:08:26 And I think that is something. It's like the Titanic, right? Once it starts, you might be able to move it, but it's going to take a long time to turn that boat around. Yeah, no, I'm with you. I'm thinking of like, and you get to some of these schools that are downtown and some of these really big cities. And you think of that population of the student body not being there, really having no

Starting point is 00:08:48 incentive to come back. The fact that these schools are, if they force the students to come back, they now have a liability on their hands that if these students would then catch COVID and let's just say, God forbid, some of them die or whatever the circumstances, even the medical expenses, if they are able to kick it, they could turn back to the school and hold the school liable because they're saying, well, you forced me to be here when I didn't, when you clearly demonstrated last semester that I didn't need to be here. And so I think what we're seeing all these schools that are now making it optional. And I mean, come on, if you're a student and you don't want to live in downtown, downtown D.C. or downtown New York, I mean, I'm not paying for that room and board anymore. I'm not trying to. So now these schools are stuck with this infrastructure. So talk to us like, what do these schools do with this infrastructure?

Starting point is 00:09:41 What do these businesses do with this infrastructure? I think the businesses, I think you're going to have a lot of problems. I mean, there's going to be bankruptcies. There's going to be foreclosures. It's going to fall potentially on the banks. I mean, I think inevitably the Fed will bail them out. Yeah. But see, there it goes back to the same argument that Brent's been having,

Starting point is 00:10:04 Brent Johnson has been having with the swap lines. And that it doesn't really bail out these countries or these entities because it's not a liquidity problem, solvency problem. Yes. And it's the exact same thing what we're talking about. But it's not the fact that the Fed can just give them some sort of main street, whatever, four-letter alphabet soup program will give them a loan or even a loan they didn't have to pay back. But it's that those students aren't coming back. That business isn't going to come back next year, the year after.

Starting point is 00:10:37 So that's a cash flow issue. That's a solvency issue. And if you don't have the cash flow coming in, you're just throwing good money after bad. And I don't see how that fixes itself anytime soon. Also, too, when you have a lot of social unrest, I mean, I've been out of the United States, thank goodness, for almost a year. So I've just kind of been watching from afar what's been happening with these riots and looting. But I mean, if you're someone that's living downtown New York or in Chicago or any of these high-density urban areas, people I think will most likely start moving out suburbs and maybe even a little bit further

Starting point is 00:11:21 because there you know maybe it's time I should move to someplace where if I had to I could grow some of my own food I could have just an RV and you might see a big transition towards that type of lifestyle I think we're kind of already moving there with a lot of the mill ails and this might just this might just bring it on that much faster and we've talked to numerous guests about similar ideas and how all this is playing out with these central banks. And the thing that our audience just screams for is like, well, where do I go? Where do I go with my money? And the answer always comes back to something scarce, gold, you name it, right? But when I look at how some stocks have performed for this year 2020, the NASDAQ is making new all-time highs. And when we really

Starting point is 00:12:11 peel into that and dig into, well, what companies are actually driving that? And you, It's Fang. It's the Fang stocks that are driving all this. So talk to us about your opinion on people that are investing in some of these Fang stocks. Well, first of all, I think there are some things that are cheap. I think commodities are very cheap right now. And I think that's interesting. And if you get outside of the United States, I think there's some opportunities for value investors

Starting point is 00:12:37 and just traditional types of stocks. But you've got to do some homework. So it goes back to starting with. the question of, is it cheap, is it expensive? And this is what I preach nonstop on my channel, in the comments, on my Twitter feed. I see so many people, well, their starting point is asking the question, is it going to go up or down in price? Or is the market going to go up or down? That's their starting point. And when they start with that, they just try to figure it out. But think about it. I mean, you know this as well as I do, that no one can time the market.

Starting point is 00:13:16 market. And no one can predict tops and bottoms. Nobody. But for some reason, as human beings, were just driven to start at the question. So as an example, going back to the Fangstocks, people would say, well, my gosh, I've made a killing in Facebook or in Netflix, whatever. And so I made the right decision. But that takes me back to my days playing blackjack. And that's what I did when I first started off as an entrepreneur. And it really, really helped me. But just using an example that I think most people can understand. It's like you and I, Preston, are at a blackjack table. And, you know, we've had a few drinks.

Starting point is 00:13:55 We're playing there. I know what I'm doing. You might not know what you're doing. And you get a 19. And you say, you know, I've had a few drinks. I'm feeling lucky. I'm going to hit on this 19. And I say, whoa, whoa, Preston.

Starting point is 00:14:08 I wouldn't do that. I wouldn't do that. The odds are not in your favor. And you say, oh, forget you, George. you're just too conservative. Have some fun. Live a little. And the dealer hits, you get a two, you get blackjack.

Starting point is 00:14:21 And you turn around and look at me and say, see, if I would have listened to you, I would have missed out on all these gains. It's like the people that buy the fang stocks or buy Tesla or something like that. Well, if I, you know, look at, you're crazy. Tesla's at 1,200 a share. And if I wouldn't have bought it, I would have missed out on all these gains. Right. But you're going against the probabilities.

Starting point is 00:14:43 and although you may have made money, if you continue to do that long term, over the next 10 years, over the next 20 years, you will go bust. It's inevitable. So it goes back to the question and some people have different answers for this. So going, excuse me, going back to the blackjack table, did Preston, in our example, do the right thing? Did he make the right decision? He got blackjack. You see, some people would say, yeah. And, and, and, and, and, everyone that's saying that you should have bought fang stocks would say yes. He should have hit because he made money. He made the rightness. Where I would say, and I think Ben Graham and Warren Buffett, every other value investor out there, would say no. He should not have hit on 21. Even though Preston won, he made the wrong decision. And if people could just remove the outcome from their decision-making process, I think they would be so much better investors.

Starting point is 00:15:49 In Blackjack, you don't care if you win or lose a hand. It's irrelevant. You have to divorce yourself from even having an emotional attachment to that. You just make sure that you play every hand correctly based on the probabilities. I personally would rather lose money on a stock. knowing that I made the right decision from a probability standpoint, then make money on a stock knowing that I just got lucky. Let's take a quick break and hear from today's sponsors.

Starting point is 00:16:21 All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas.

Starting point is 00:17:06 These are tools real people. are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedom Forum.com with patron passes

Starting point is 00:17:46 offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs

Starting point is 00:18:34 while making fast AI-powered decisions with confidence. And now with the Netsuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, Netsuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide demystifying AI at netsuite.com slash study. The guide is free to you at net suite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting,

Starting point is 00:19:20 but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful AI tools that write product descriptions, and even in a new online store

Starting point is 00:19:56 enhance her product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing... Sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify. com slash WSB.

Starting point is 00:20:24 All right. Back to the show. So, George, we've talked a little bit about just they're not really being a sound money right now and that the central bankers are printing like crazy around the world. There's just total debasement. Do you think that what we're seeing in Fang stocks is a result of market participants looking at those companies and saying these assets that these companies own are not going to be impaired? These things are going to be around for decades because they're and they're also intangible in many cases where they don't have a lot of capital. expenses like the infrastructure stuff we were talking about earlier, they definitely have infrastructure, but not to the tune of like tangor outlets and things like that on a revenue per tangible asset basis. So when they're looking at these Fang companies and they're saying, hey, these are a lot of intangible assets sitting on their balance sheet, their companies that are going to be around for a while, they're highly technical, they're at the forefront of artificial

Starting point is 00:21:24 intelligence, why don't I just treat that like sound money? And why don't I just own that and bid the price and they just keep piling into it? Do you think that that's what market participants are doing by bidding those fang stocks? Is that how they're viewing it? Or do you think it's just total exuberance? No. I think you're giving them way too much credit. I don't think there's any relationship whatsoever in the stock market today and fundamentals

Starting point is 00:21:52 or the real economy. I think they're completely removed. And it's sad to say that, but it's all about liquidity. It's all about capital flow. And I think that the reason these fang stocks are going up is because these pension funds have to get yield. And the Fed has starved them of yield for so long that, I mean, put yourself in the position of a pension fund manager. But what are you going to do? You're 50% underfunded, like Cal,

Starting point is 00:22:23 as an example, and you've got to somehow come up with a 7% return, and that's just to meet your original obligations if you were 100% funded. I mean, they've got to make, like, who knows, 10, 15% compound returns over the next, you know, 10, 15 years, I'm not sure, but that forces them to go further and further out the risk curve, and it's not just with the fang stocks. I mean, they're levering up to go into the fang stocks. They're levering up to go into private equity. It has nothing to do with fundamentals. They're just looking around saying, how on earth can we possibly achieve this objective?

Starting point is 00:23:07 And this is the only way we can do it. So we might as well just throw a hail, Mary, and just pray for the best. And then hope the Fed bails us out. We have a Fed put. I think now we have a government put and they're just hoping, man, maybe if they do so many stimulus packages and we get all these day-by-day traders that take their stimulus checks and start a Robin Hood account and going to the stock market, lifting up the fang stocks, maybe that'll bail out the pension funds.

Starting point is 00:23:36 I think that's their only game plan. Well, so that's what we've seen to date. And when we look at what I expect them to do moving forward, I'm real curious to hear what your expectation for them moving forward is. it seems like we're just going to have more of the same, which would cause it to just keep going up, I guess, right, for these fang stocks. What are your thoughts on how much more money are they? I mean, globally, the number I've seen is around $5 trillion globally and it's still accelerating. How much more do you think we're going to see by year's end? And then what impact is that going to have on the equity market if they would do another $5 to $10 trillion before the end of the year? Yeah, well, I want to be clear for everyone. It's not that I'm really a stock market bowl or bear. I mean, fundamentally, obviously I'm a huge, huge bear.

Starting point is 00:24:24 But I can argue for the stock market going up. I can, on one day, the next day I can argue for it going down. Same thing with a dollar. So if you're asking me to argue for the stock market to go up, I think you've got to look right at the TGA. And Luke touched on this in your interview with him and Grant the other day. And I thought that was fantastic. and I talked to him about it the other day on my show.

Starting point is 00:24:46 And I think he said it was 1.6 back a few weeks ago when he was talking to you. And now it's up over 1.7, I believe. And that's the bazooka that I think the administration is going to come in and spend into the economy through, call it a second round of stimulus packages. And that's going to increase M2 money supply. That's the one thing that Fed can't do by printing bank reserves is directly affect M2. So the TGA, the Treasury, can spend that money into the economy.

Starting point is 00:25:18 That increases M2, and it increases bank reserves, which is basically like doing $1.6 trillion of quantitative easing, but in a matter of two months. And if we go back to the last round of stimulus checks, CNBC did a study that showed that the income bracket between $35,000 and $75,000, their levels of trading increased 90% the week after they got their stimulus check. So everyone's looking at this and seeing all these people, all these quote-unquote gurus on YouTube, making all this money with their rented Lamborghinis,

Starting point is 00:25:57 and they're just playing with the house's money. Say, well, why not? Why not buy, you know, hurts when it's bankrupt. I can get a pennies when I think the Fed's going to come and bail them out. Why not just take a flyer? It's almost the same type of mentality that you have with the, with the pension funds, right? But the Fed is shooting them out.

Starting point is 00:26:15 But another thing that I think people need to realize about what's proposed for the next round of stimulus, they're going so far as to giving people $4,000 tax credit just for taking a vacation. Yeah, the TRIP, of course, obviously you can't think of a, only the government could think of a name like that, you know, just trying to use some sort of PR to push it through. but yeah, they're giving people or they're proposing to give people a $4,000 tax credit to take a vacation and they're giving their kids $500 ahead. This is part of this potential stimulus package.

Starting point is 00:26:54 So could it be $9 trillion? Can it be $10 trillion? I mean, who knows how big this thing is, especially when you add in the fact that I think the new, this latest round of unemployment and stimulus is just going to turn into UBI. I think it's going to turn into a permanent UBI for sure. Yeah. And so you combine that with the TGA from now until the election. And you know darn well that any administration is going to try to buy votes by boosting the economy and the stock market prior to the election.

Starting point is 00:27:26 But I think the Trump administration for sure is going to be willing to do that. So you got 1.6 coming in from the TGA. you got who knows how much coming in from additional spending from this next stimulus round. And what percentage of that flows into the market? Another problem here, too, Preston, is humans have recency bias. And they think that whatever has happened over the past couple months is just going to happen indefinitely. And all of their buddies got rich by, quote, unquote, buying the dip back in March. So if we have another dip that goes down slightly prior to, let's say, all of this quantitative ease and all this liquidity come in, everyone is going to think that, oh, my gosh, all my buddies got rich back in March.

Starting point is 00:28:19 I can't miss the boat this time. And they're just going to pile all of that money into the market. And you could see it going to 40,000. And again, I'm not saying that it will. It's always about probabilities. There are no certainties whatsoever. And I'm not saying that's my base case, but I could, I think you could argue for it for sure. Well, and even if we would, so you just walk the dog on the market going even higher, which I think is a very real possibility.

Starting point is 00:28:50 And I think if we would talk through the market going lower because they hadn't added enough stimulus to keep this thing propped up and it starts to go through that bust, I think undoubtedly, the government stepping in and printing double, triple, whatever they did back in the March, time frame, March, April timeframe, right? Like, you, I don't know how they could possibly let it go into a deflationary spiral like we had in the 1920s, 1930. Yeah, but they might not have a choice because if you look at Japan, Japan is, I mean, they own 60% of the bond market. They were kind of Japan 2.0 and their market still went down. So it's definitely possible. And Jeff Snyder points that out all the time. Another thing, too, the Fed can do quantitative easing infinity. They can commit a trillion a day in the repo market. They can do all of these programs, but they still kind of rely on a third

Starting point is 00:29:46 party to get the money into the real economy. The government doesn't. The government can spend it directly into the real economy, but still, they need people to take an action. If people just saved the money or if people didn't go into stocks, then the market could crash. So until the government, and I would not put this past them, but until the government and the Fed start buying stocks directly, there's still having to rely on the commercial banking system, on the public, in order to do their bidding. So we kind of have built up a Pavlovian response to the Fed doing quantitative easing, that means the market goes up. But it doesn't necessarily have to do that. And again, I would encourage people to look at Jeff Snyder's work on this, where he shows the Fed's

Starting point is 00:30:43 balance sheet going back to 2008 and compares that to the stock market. And there's not a direct correlation there at all. It's more of a psychological approach. And that's why the Fed always tries to talk the market higher and they they don't have that many tools to do it directly. That said, I definitely think in the future if the market went down by called another 20, 25%, they would come in and start buying equities. And who knows, the government might as well. Last question for you, George. Who are two or three people that you just follow like a hawk on Twitter or any type of

Starting point is 00:31:28 platform that you really capture a ton of value from. Well, maybe not on Twitter, but it's definitely going to be Milton Friedman, Thomas Soul, and Jim Rogers. That's for sure. But there's so many people present. I mean, I would throw your podcast in there, macro voices. Jeff Snyder and Emil Kalinowski, two of my real good buddies. They just came out with a new show on YouTube, making sense that they turned into a podcast.

Starting point is 00:31:54 There's so much content out there that's absolutely. amazing. And I think we're going into a time right now that regardless of what your belief system is on the Fed or value investing, anything like that, it's, it's, we're going into uncharted waters, that's for sure. And I think that people can either be educated or they're going to be a victim. And I would just much rather have your entire audience and try to encourage people to be educated because there's no reason not to be right now with all of the amazing content that's out there. But as far as some of the books, too, of course, intelligent investor, all your listeners, I'm sure read that. But also the Market Wizard's books really, really helped me. And that's the first thing that turned me on to Jim Rogers was his interview that he had with Jack Schwager in the original Market Wizard's books where he talks about buying Germany and he talks about all of these things that he did back in the 60s, 70s, and 80s that really help you understand that mindset of buying things when they're unloved.

Starting point is 00:32:59 And right now, the only thing that I think is unloved in the United States, really, is commodities. George, give folks a handoff to where they can learn more about you. Sure. You can just type in my name to Google. It's George typical spelling, G-A-M-M-O-N is the last name. You can find me at Twitter. You can find me on YouTube, Georgegammon.com. anything like that, and I'll pop up.

Starting point is 00:33:24 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 AI-powered platform.

Starting point is 00:33:46 So whether you're prepping for a SOC 2 or running an enterprise GRC program, Vanta keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, Vanta gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Riter spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at vanta.com That's vanta.com slash billionaires.

Starting point is 00:34:25 Ever wanted to explore the world of online trading but haven't dared try? The futures market is more active now than ever before and plus 500 futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments, the S&B 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for.

Starting point is 00:35:03 See a trading opportunity, you'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus.

Starting point is 00:35:37 Billion dollar investors don't typically park their cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors. private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the fundrise income fund in just minutes. Fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%.

Starting point is 00:36:24 Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund fund's prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Well, we really appreciate you taking the time to come on the show today. Love the chat. Hopefully we can do this again in the future, George.

Starting point is 00:36:56 I look forward to it. Okay, at this point in the show, I want to transition over to two renowned investors. Ray Dalio and Jeff Gunlock, both of them are billionaires. Many people will tell you that Ray Dalio is one of the best investors alive today. And so the first clip that I'm going to play for you was Ray talking about how far central banks are willing to go? Like, what are their limitations? How are they going to respond based on this scenario we're seeing right now?

Starting point is 00:37:24 This response was recorded in July of 2020. So give this a listen. Central banks are willing to go and need to go as far as it takes in order to keep the system afloat. And because we're in the late stages where we have a lot of debt. you are going to see central banks balance sheets explode. They have to because the choice is the sinking chip. I've studied the rises and decline of reserve currencies because I think we're at a key moment. I studied the rise and decline of the Dutch Gilder, the rise and decline of the British pound,

Starting point is 00:38:11 the rise and decline of currencies throughout history. And the track record is a perfect track record. When the time comes where you're faced with political disruptions, is there enough money? There will be enough money. The question will be what the value of the money is and how far they can go. What are the limits to that? The limiting factor has to do with the demand for that money and debt. In other words, what debt is, a bond, is a promise to receive a lot of currency.

Starting point is 00:38:51 And so when it gives no good return or bad return, and there's a printing of a lot of currency, clearly it's not desirable relative to other things for private investors. However, the central bank can buy it too. And so the limit has to do with the limit of demand. And that limit of demand has to do with the central bank's purchases of that because they could buy it and hence there's no problem. So you look at periods of time of where in history, where was the most of it that has ever taken place and to try to define the limits. And the war years was an example. I think the most analogous period we're in now.

Starting point is 00:39:41 was 1930 to 1945. I'll explain the various ways that it was analogous, but more importantly, I'd like to deal with the question of the limits. And so you first had the depression, and in that depression, and when you hit zero interest rates, you had the printing of money and the buying of financial assets, and then you had a lot of mock fiscal policy, so programs that produce large deficits,

Starting point is 00:40:07 which then were monetized by more of that. And then you went into the war years. And the war years, very similar to now in terms of the need for a lot of money and credit, produced an enormous amount of money and credit. But it was managed by the central bank in a way where they were de facto taking that on. And it produced it, it was a good example of testing the limits of that. Now, we went into periods where, you know, what is an alternative. source of wealth. And as I say, it could be stocks, gold, it could be other assets. Those became

Starting point is 00:40:46 the boundaries. What would happen in terms of this limit is if something transpired where the dollar as a reserve currency, the holders outside, made another market that was a better market. It could be gold. It could be stocks. Or it could be an alternative currency. currency, like in the earlier session, which I listened into, China as a reserve currency, there will need to be an alternative process. When that happens, and I think it will happen, then it looks like a currency defense. What I mean by currency defense is if money leaves that asset if those who are holding bonds don't want to hold the bonds because they have lousy returns and they're printing a lot of money and they want to go to something else. And that starts to

Starting point is 00:41:46 accelerate should that happen. Then what that does is as money leaves, it puts the central bank in the position of having to decide whether it buys more bonds in order to fill in that gap or it lets interest rates rise. Well, they can't let interest rates rise. There's too much debt. And then also, interest rates rising means that the asset prices all go down. And it's too vulnerable. So like all currency defenses, what it means is that they then have to accommodate that. And the act of accommodating that in and of itself is a big problem. Should that happen, that would be terrible for the United States. Earlier I heard about the discussion of the privilege.

Starting point is 00:42:39 That's right. The United States dollar is a tremendous privilege, and we are certainly pushing the limits of that. And if we were to think that the dollar was to be any other currency because of us pushing the limits, if that were to happen, it would be probably the biggest, disruptor not only to the markets, but to the whole world geopolitical systems. All right. So Ray discussed a lot of other things in this particular interview that he was doing.

Starting point is 00:43:12 One of the things that I found interesting is the question came up, well, where do you go with your money? How do you invest? Where do you put it? And this is how Ray responded. Think of it this way. You don't want cash because, as, as, you. And I don't think you want bonds because you get no interest rate. You get a negative real rate. So you get taxed at that negative real rate. And then so from a holding point of view, it's got no return. And then the central bank's going to print plenty more of it and produce its supply.

Starting point is 00:43:52 So there's a move to what is a storehold of wealth. You know, think about it. you know, like all of us, what is a good storehold of wealth? And if you look at history through times, it's basically almost the reciprocal of the value of money. And we see that from financing. You know, when you think a company or an individual thinks I can borrow money at this level and I can lend it at that level or I could buy my stock back at that level, you see that kind of movement. And so through history sees that there are different storeholds of wealth that are basically almost the mere image or the reciprocal of the value of money. And so that storehold of wealth is equities.

Starting point is 00:44:40 In other words, if you were to think about certain types of equities that are not, let's say, economically sensitive, but if you just buy a company and so on, and you think it's the reciprocal of that, and you think that the, and you realize that they have to put liquidity in the system, then it's equities, it's gold, it's, it is what is the thing that is the reciprocal of the value of money that you have to hold, you know, your wealth in. All right, so that's the comments that I wanted to play from Ray Dalio. Now I'm going to play some comments from Jeff Gunlock. Jeff's specialty is fixed income, as many people are aware.

Starting point is 00:45:23 but he was asked a question about whether we were going to have this V-shaped recovery that everyone keeps talking about. And this was Jeff's response. Well, my baseline scenario is that V-shaped recovery, so-called, is highly optimistic. And I don't think really plausible. What it basically implies is that you can take 20% of the entire workforce, the labor force, the United States, and put them in jeopardy, put them on unemployment. employment benefits have produced nothing and instead receive money that's being lent by the

Starting point is 00:45:58 Federal Reserve to buy the bonds and that you could do that and nothing bad happens and nobody gets hurt. It just doesn't seem very likely to me that you can have that type of hardship a roll over the economy and you just, it's like nothing happened. It's like a surf pro economy like it never even happened. And I just don't believe that. So when I was, when I finally started, well, I shouldn't say funny, when I first started worrying about the COVID-19 being a real thing, which was in March, in like the first week of March, I did an interview and I was asked, what do you think about this virus thing? And I said, you know, I don't know what the consensus viewpoint is about how bad this is going to get and what the damage is going to be to the system.

Starting point is 00:46:46 But whatever that consensus view is, I want to take the over, that it's going to be worse than that. When it comes to the economic outlook going forward here from July 1st, by the way, welcome to the third quarter in the second half of 2020. I'm glad the first half is over. I think that whatever the consensus is on the so-called shape of the recovery, I'm taking the under. I think that you cannot have this type of economic disruption and fear that has been instill in people's psyches. I don't think there's a good appreciation for how much economic fear there is. I can well imagine the people that were making, you know, $70,000 a year, and they suddenly got furloughed or laid off, and they look in their bank account, and they're hoping to see something

Starting point is 00:47:32 there, but unfortunately, there was no magic genie that showed up in deposit money, and their balance is still $5. And so they suddenly are looking into an economic black hole. And I think that's a really major jolt to the psyche of those people. And I have a feeling that there's going to be more of that that goes on. As I said, these programs roll off. So some of the people are going to start getting economic angst about that. But beyond that, I believe that the people who are making $100,000 to maybe $150,000

Starting point is 00:48:04 might be at risk also in another wave of layoffs because those people also don't really have any savings by and large. But also, the government is unlikely. I think, to come to the rescue for those types of people quite as readily as they did for people who are living more paycheck to paycheck in a real literal kind of a sense. And it just seems to me that this economic situation from a jobs and wages perspective is fundamentally deflationary. We have all of these people that are working at our risk. And you might decide through work at home and other things that there's more.

Starting point is 00:48:47 efficient ways of doing things in what we did prior to February of 2020. And I could see that there could be a round of middle management layoffs that come around because people might be revealed for not being that productive when you're doing work at home. It's more easy actually to tell, this for me, it's more easy for me to tell who's really doing work because who's responding to the emails, who's really contributing to the teens meetings and all that sort of thing. And I just think that companies will realize that they could right size with the knowledge they've gained through this pandemic. And so we could see people who are making $120,000 a year and have to minimum savings. If they get rich pink slips, they're going to be in a real panic because there's

Starting point is 00:49:37 not a lot of jobs open. They'll probably have a lot of company in people that are in that position. And that will put downward pressure on these wages. Also, we also know that the, economy is going to be unevenly affected. We know that big cities are likely to suffer in exodus. We know that prices on apartments and homes in the San Francisco area of declining. You know, that's also happening relative to Manhattan real estate. And that means that other parts of the country are going to start to see perhaps inflow of population. We've been tracking at double-eye kind of the showings, the request for showings of homes in various parts of the country, and it's very uneven.

Starting point is 00:50:18 There are parts where they're more suburban-like, I mean, it's a reversal of the trend that we had a decade ago. And so there'll be an uneven type of effect to the economy. The other thing's going to happen that hasn't been talked about nearly enough is the states are really in trouble. The tax revenue from the states has completely collapsed, and it's unlikely to improve. And so a lot of these states are going to be looking for, or some of them already asked for more government bailouts. So there's a long queue of entities that want or need government

Starting point is 00:50:53 bailouts, and that's just going to keep further pressuring the situation. So I think the economy is going to feel the effects of the recession that we're in now for quite some time to come. I think it's very unlikely that we'll get back to our peak economic growth, even in 2021. All right. Well, that's all we have for the. this week's episode of the Investors podcast. I really appreciate everyone joining us and hopefully some of the comments that George Gammon and I had and then some of the things we played from billionaires, Jeff Gunlock and Ray Dalio have helped you guys piece some of this very complex and very confusing puzzle together. So with that, we look forward to seeing you guys next week.

We Study Billionaires - The Investor’s Podcast Network - TIP305: The Structural Impact w/ George Gammon & Clips from Ray Dalio & Jeff Gundlach (Business Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.