"America Is About To Crash Into A Brick Wall" | David Friedberg PT 1

Summary

Impact Theory Podcast with Tom Bilyeu

Episode: "America Is About To Crash Into A Brick Wall" | David Friedberg PT 1
Date: July 2, 2024

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Episode Overview

In this episode, Tom Bilyeu hosts entrepreneur and investor David Friedberg to dissect America’s economic trajectory, focusing on the federal debt crisis, the psychology of democratic spending, the mechanics of money printing, and the unintended consequences these forces create both domestically and globally. Friedberg offers a clear-eyed, data-driven analysis of why the U.S. is headed for a financial reckoning and explores cultural, technological, and political responses—from the challenges of reform to examples abroad like Argentina’s Javier Milei. This conversation challenges what listeners may take for granted about the sustainability of American prosperity and the deep incentives behind government action.

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Key Discussion Points, Insights, and Notable Moments

1. America’s Debt Spiral and the Limits of Democracy

• Opening Analogy and Single-Issue Voting (01:00–06:33)
  • Friedberg draws a vivid metaphor:

    "Right now the US is a car driving into a wall with our foot all the way down on the gas." (01:50)

  • The federal budget is ballooning ($7 trillion proposed) with $33 trillion in national debt; over half of debt is now being refinanced at much higher interest rates, compounding the problem.
  • Friedberg’s single-issue vote: leadership that can address and reduce federal spending and debt, referencing Bill Clinton’s emphasis on balanced budgets for clarity and leadership.
• The Inevitable Pain of Deficits in a Democracy
  • Points out the historical cycle:

    "Every time, the natural forces of arithmetic played out." (05:13)

  • Democracy makes real fiscal discipline nearly impossible because voters will not support candidates who take away benefits.

2. Why Can't We Stop Spending? (The Human Desire Problem) (06:47–13:17)

• Human psychology is hardwired for desire and constant dissatisfaction:

  "Humans never stop wanting. The natural condition of a human is to see something that we don't have and then create an objective of, I want to have that thing I don't have." (06:49)

• Major government programs like Social Security and Medicare are mathematically unsustainable but politically untouchable.
• The feedback cycle: voters demand more, politicians deliver to get elected, and bureaucracies are incentivized to grow.

  "No one ever leads an organization and says, I want to shrink this organization. I want to cut it by 50%." (11:50)

3. Understanding Money Printing and Its Impact (13:17–22:57)

• Basic Mechanics
  • The Fed enables the government to spend beyond tax revenues by issuing debt and creating money.

    "The Federal Reserve has this ability to print the US Dollar... that money flows its way into the economy. And if you have for example, US$30 trillion floating around versus US$10 trillion floating around, things are going to inflate..." (13:43–15:23)

• Inflation as Socialized Theft
  • Tom:

    "Money printing is legalized theft from the government. They are stealing, not your dollars... but they are knowingly stealing your purchasing power..." (20:30)

  • Friedberg agrees, but widens the lens to include voters as responsible for electing money-printers:

    "It's not just that there is a bad person who is choosing to print a lot of money and steal our money." (21:20)

• The Only Way Out: Productivity and Embracing Technological Risk
  • Improved productivity through technology is the only non-painful solution.
  • Illustrates with Tomorrowland’s transformation from optimism (1950s) to fear (1970s):

    "There was this incredible wave of innovation... Suddenly everything became this critical Anti Technology Association." (25:00–28:00)

  • America’s risk aversion blocks technology’s potential to solve the debt trap.

4. The Money Printing & War Connection (29:40–41:07)

• Bilyeu sets up the mechanism by which money printing entices governments into war.
• Friedberg:

  "As great nations rise, their populations demand more, the government takes on debt, prints more money... [and] at some point... the economic condition isn't naturally growing... that the people demanded." (32:08)

  • War stimulates the economy, creates enemies, justifies spending, and unites a divided nation—even if not consciously conspiratorial.
• Ray Dalio reference:
  • The cycle of declining empires, rising powers, and debt-driven conflict.

    "You don't need a conspiracy when all the incentives align." (42:00)

5. Non-Inflationary Stores of Wealth: Rights, Bitcoin, and Gold (43:13–50:47)

• Tom’s provocative proposal: a right to store wealth in a non-inflationary asset.

  "I think we ought to be able to have access to a non inflationary place for me to store my wealth..." (43:07)

• Friedberg:
  • Technical note: All stores of value are relative—“paired value”—but a balanced budget amendment would be a better systemic reform than a specific protected asset. (44:00)
• Bitcoin, gold, and trust in fiat systems are debated—the core issue is government’s power to inflate currency and seize assets, as seen in recent examples like Canadian bank accounts.

  "Right now I feel like we're in the worst of all worlds where you're in a situation where you have a fiat currency that has no intrinsic value... that is 100% in the control of the government." (50:00)

6. The Logic of Saving, Deflation, and Asset Ownership (51:26–64:49)

• Discussion of deflationary tech and how government intervention distorts consumers’ ability to benefit from productivity improvements.
• Wealthy people already opt out (timberland, gold, Bitcoin), but average Americans cannot—thus the widening wealth gap.
• Wealth taxes (as in France) historically cause capital flight and depress investment; Friedberg is skeptical they’d work in the U.S. context.

7. Argentina’s Javier Milei and Reversal of Socialist Decay (66:11–74:21)

• Friedberg and Bilyeu praise Argentina’s new president, seeing in him evidence that recovery from government bloat and inflation is possible.

  "That guy's the man. ... he's Superman ... taken the burden of spinning the world backwards on his shoulders to show us to save lives." (66:16–69:00)

• Milei as a case study in the dangers of decaying into big government, then reforming through radical leadership and honest accounting.
• Argentina’s turn toward innovation, practical budgets, and market opportunity as a roadmap for others.

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Notable Quotes & Moments with Timestamps

• On why discipline is impossible in a democracy:

  "There's a certain natural limit to how much debt government can actually take on... And that is a nearly impossible thing to make happen in a democracy where individuals get to vote."
  —David Friedberg (05:35)

• Why voters keep the system growing:

  "That's how people get elected in a democracy. They go to the voters and they say, here's what I'm going to give you. They don't say, here's what I'm going to cut back for the survival of the union over the next 50."
  —David Friedberg (12:06)

• On money printing as theft:

  "Money printing is legalized theft from the government. They are stealing, not your dollars... but they are knowingly stealing your purchasing power, which is the same in effect as just taking money from you."
  —Tom Bilyeu (20:30)

• On technology and risk aversion:

  "There's a challenging thing in a wealthy nation like ours... we worry more about loss than we care about gain."
  —David Friedberg (29:00)

• On the cycle of war and economic stress:

  "When things are great, when the government is running a surplus, when people are happy... the US is probably more inclined to say, you know what, let's not escalate this thing right now. ... We are not happy at home. And the economic circumstances are deeply coupled with our unhappiness at home. And so we are more willing to engage in conflict abroad."
  —David Friedberg (34:50)

• Javier Milei as superhero reformer:

  "He's like Superman. He's taken the burden of spinning the world backwards on his shoulders to show us to save lives. ... he acts like he has nothing to lose. He’ll stand up on any platform and he’ll speak truth to the circumstances..."
  —David Friedberg (66:23, 69:00)

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Key Timestamps

| Timestamp | Segment/Insight | |-----------|----------------| | 01:00 | Opening/federal debt spiral and Friedberg’s single-issue voting | | 06:47 | Human psychology and why democracy incentivizes overspending | | 13:17 | Mechanics and dangers of money printing | | 20:30 | Money printing as ‘legalized theft’ and why it hurts the unwealthy most | | 25:00 | The shift in American culture from embracing to fearing technology | | 32:08 | Why money printing creates an appetite for war | | 43:13 | Tom’s case for a non-inflationary asset as a right | | 50:00 | Fiat, Bitcoin, and authoritarian manipulations of money | | 58:22 | Technology’s deflationary effect is often stolen by inflation | | 64:51 | The failure of wealth taxes and risk of capital flight | | 66:16 | Praise for Argentina’s Milei, the possibility of radical reform | | 70:54 | Recap of Milei’s core message: return to budget discipline and innovation |

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Summary Takeaways

• Friedberg’s central warning: The U.S. is driving blindly into a debt wall, and without painful leadership and voter sobriety, mathematical reality will do what politics will not.
• Money printing is a hidden tax that socializes loss, further widens the gap between the asset-rich and asset-poor, and ultimately feeds a cyclical appetite for war and distraction.
• Voters’ incentives are the root problem: Politicians, even if self-interested, are products of their electorate. Widespread demand for “more” prevents any meaningful reversal of spending.
• Innovation (especially technological) is the only hopeful lever—but aversion to risk and cultural fear could blunt its effect.
• The world’s greatest empires always fall, a fate dictated by mathematical and psychological forces unless systemic reforms (like balanced budget amendments) or radical leaders (like Milei) intervene.

This conversation is an incisive, sobering look at why economic reality trumps hope, and why fixing America’s trajectory will take far more than slogans—it will require cultural, political, and personal introspection, as well as bold reform.

Transcript

[Commercial Announcer]

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[David Friedberg]

You could ask yourself, what do we celebrate? My income isn't going up as an individual, I'm not making more money, but this guy's got $200 billion. The US doesn't know pain. Like we have no idea. There's a world where we embrace technology, where we say we're not going to be fearful of loss, but we're going to embrace the risk because the upside is worth it. We can go to the moon, we can go to Mars, we can cure cancer, some people will die, but we can do it.

[Podcast Host]

David Friedberg, welcome to the show.

[David Friedberg]

Thanks for having me.

[Podcast Host]

I'm very, very glad to have you. I've been tracking your thinking for a while and while you were often quiet in the all in podcast, I'm always hanging on your every word, especially when it comes to the economy. So tell me, why are you a single issue voter when it comes to our national debt?

[David Friedberg]

Right now the US is a car driving into a wall with our foot all the way down on the gas. We are proposing the Federal Administration is proposing a $7 trillion budget next year. We have $33 trillion of national debt. That number has swelled since COVID and in the years following due to the launch of new programs and other stimulatory effects spending by the federal government. And the problem with having too high of a national debt relative to national GDP is the way that a government pays their debt is by taxing their economy, taxing their gdp. And there's a natural limit to how much economically you can actually tax the economy. Once you increase taxes too high, investment declines. Once you tax investments too too high on individuals, people leave. We saw this with the launch of the wealth tax in France. There's an attrition of capital, a Hiding of capital. All of these factors aren't necessarily about people being bad and doing bad things. They're just natural economic forces that we've seen play out many times in the past. So there's a certain natural limit to how much debt government can actually take on.

[Podcast Host]

Do we have a sense of what that limit is?

[David Friedberg]

Well, it. Some people would argue it's somewhere between 100 and 150 to, you know, maybe up to 200% of GDP. But 100, 150% is really where things are sustainable now. The US is a very unique outlier in, you know, the history of global economies. But there has been, and, you know, I talked about this on our podcast years ago, a set of studies, and Ray Dalio captured a bunch of data together in his book about the changing world order and the economic cycles that we've seen historically. Six times in the last 500 years, we've seen these sorts of things. Have you had Ray on your show?

[Podcast Host]

Yeah, a couple times.

[David Friedberg]

So you know the story. So. So I think that's the thing that. That makes me worried is at some point, spending at the federal level gets so high and debt levels get so high that there's. It's really hard to come back from that money printing that's needed to support paying that interest and paying that debt. And right now, inflation is being fueled by the stimulatory effects of these programs. And because things are inflating, the government feels like there is a need to help make things easier for people. So they put more money and launch more programs to try and reduce inflation. And in doing so, they increase inflation. And then as inflation goes up, the interest rates on the debt have to go up. When the interest rates on the debt go up, it becomes harder to pay down the debt. And. And so our $33 trillion of debt, a good 50% of it, is getting refinanced now, where the interest rate moves from an average of about 3% to 5%. And when that happens, 2% increase in interest on $15 trillion, that's another $300 billion of interest payments a year. And this year, we're already paying a trillion dollars just in interest on the debt that the federal government owes to its bondholders, to the people that own Treasuries. So we're getting to a point that it becomes really difficult to actually stop the spending, pay the interest, and. Or reduce the debt levels. And that's how these spirals kind of have played out historically. And every time it's played out, whether it was the Dutch or the English or you know, whomever you want to kind of look to. There was always this, it can't happen here. This is the leading global economy. This is the reserve currency of the world. It's not going to happen here. And every time the natural forces of arithmetic played out and I'm, that's why I'm so worried. I think that the US Needs to, the US voting population needs to be really thoughtful about voting for one's individual self interest and voting versus voting for the safety of the union of the United States. Over the long run, can we create a circumstance in this country where people recognize that we need to reduce spending and that people are going to lose benefits, they're going to lose things that they've otherwise had for some period of time. And that is a nearly impossible thing to make happen in a democracy where individuals get to vote. And that's where we see these sorts of things start to revel. So that's why I'm so worried and that's why I am a single issue voter. I want someone to show leadership. Like Bill Clinton had those poster boards back in the day where he said, here's how we balance the budget, here's how we cut things back down to break even. I think we need a degree of simplicity and leadership around that being the key point and the key objective of the next administration. And unfortunately, I don't think we see either, you know, candidates standing up and saying we're going to do that.

[Podcast Host]

Yeah, if we get either Trump or Biden, both of them increase the debt massively. So yeah, we certainly have four years on both counts of what they'll do economically. I want to know though, why can't we stop spending?

[David Friedberg]

The thing about humans is I think we are fundamentally driven by this concept that I think is best phrased as desire. It doesn't go away. Humans never stop wanting. The natural condition of a human is, is to see something that we don't have and then create an objective of, I want to have that thing I don't have. When I then have that thing, I no longer feel like I'm unmotivated. I now look for and I naturally see the next thing. I think this is what made humans evolutionarily successful. We were able to then scout out the next meal, scout out the bigger building, scout out the better cave. And it allowed us as a species to continuously progress, expand our population and succeed and thrive on this planet. But the unfortunate reality is that that tuning, that biological tuning has this effect where no one is ever actually Satisfied, fully satisfied with the things they have. Satisfaction comes from the change in the things that you have. The delta and the delta from year to year is what drives happiness. And in a voting system and a political system, it drives how people vote, that if my income isn't going up by 10% per year, I am unsatisfied. And there's a lot of good behavioral and social studies on this. There was a study done years ago, which I think has been disproven since. But it does a good job, I think, of explaining this, which is up to a certain limit of income, people are unhappy and they get happier with more and more income. After that limit of income, where all of your basic needs are met with respect to being able to pay for your food, your housing, medical, and take care of your family, your income is no longer your predictor of happiness. Your change in income is your predictor of happiness. So if we start with that premise of, like human behavior, the government now has an incredible. The federal government in the United States has an incredible role in supporting a lot of people through active programs that pump money into businesses. So the government is a customer of many businesses or employing many people that end up working directly for the government or under government programs. And I think a study, I tried to pull together all this data a couple months ago, but something north of like 30 or 40% of the US working force is touched by the government as a customer of their business, the primary customer of their business, or as the employer of those individuals. So the government has created, has been a big driving force for economic growth in the United States over the last two hundred and fifty years. But we're now reaching a point where in order to sustain that system where people have their income and their livelihoods improved year after year because of government intervention and government policy, it's no longer kind of sustainable. So talk about some of the big government programs. A lot of people in the United States are dependent on Social Security and the income that comes from Social Security. That program on its own is forecast to go bankrupt in 2033, independent of a lot of the issues we're dealing with in the debt and spending in the rest of the government, the Medicare program, the costs continue to climb, continue to mount, and a lot of people are dependent on that program for their healthcare needs. So those are two very large programs, federal programs, a very large percentage of federal spending. How do you get voters where there are tens of millions of people that are dependent on those programs to vote to reduce those benefits? They simply won't and it's why neither Democrats nor Republicans. And I'm not advocating for it at all. I'm not advocating for reducing those programs. I'm just pointing out the simple reality of how a democracy will work in this circumstance, which is those individuals don't want to give up those benefits. They don't want to give up that income. They don't want to give up that medical care it was promised to them. They invested in those programs for decades. But the government and the way that the system has been set up has now made it very difficult because we have to take on more debt to support those programs. And then we have a lot of other stimulatory programs, a lot of other systems where the government is the customer of businesses. They are spending money to buy stuff from those businesses. Medicare is a good example. They buy a lot of pharmaceutical drugs. And the system is challenged. Because if I'm the government, what's my incentive to negotiate for a lower price? I can go to Congress and get a bigger budget next year. Everyone in the system is built to make more money for themselves. So next year I want to have a bigger budget. I want to be able to spend more. I want to grow my organization. No one ever leads an organization and says, I want to shrink this organization. I want to cut it by 50%. That's my goal. Let's shrink the organization that I'm leading. The natural incentive is to grow. So I think that there's a lot of, like, tension in the way that the system has evolved, that both the internal organizations are designed to grow and the voters are not going to give stuff up that they've gotten. And I always think about, like, in my junior high, there was a kid who ran for, like, president, and he said, I'm going to make all the vending machines free. That was his platform. It was so smart. And everyone voted for him. Like, of course I'm going to vote for the guy that tells me I'm going to get. The vending machines are going to be free. I don't have to pay for my chips and soda anymore. That's how people get elected in a democracy. They go to the voters and they say, here's what I'm going to give you. They don't say, here's what I'm going to cut back for the survival of the union over the next 50. That doesn't sell. What sells is I'm going to increase Medicare benefits. I'm going to improve Social Security, I'm going to launch new programs to support you. Know your community, I'm going to build stuff. I'm going to create new jobs. Those are the things that voters want to hear. And so there's this demand from the voters for more stuff. So I would argue that the politicians aren't necessarily even the cause of the problem. I think that they're more a symptom of the system that is set up to operate this way. Not necessarily set up to operate this way, but naturally evolves to this point that the voters every year want more stuff. And if they're not getting more stuff because the economy isn't naturally growing and their incomes aren't growing, they turn and look to the government to solve those problems. And then the government has to grow. And then they put people in place who stand up and say, I'll give you all that stuff. And they're like, okay, great, you're the guy, you're the gal. You go do that. We vote for you. And I think that's why it's so hard to back away from this, Explain

[Podcast Host]

to people how money printing fits into this and why. So money printing was something that I had to discover quite late in life and realized there's some pretty. The, the fundamental nature of how it works was not at all what I thought. So what is money printing? How does it play in.

[David Friedberg]

I want to make sure my numbers are right, and I could be wrong on this.

[Podcast Host]

We can double check.

[David Friedberg]

Normally I'm on a computer when I do this sort of thing, so I

[Podcast Host]

can just tell Drew what you want to look up.

[David Friedberg]

But I am. If you look at the, the balance sheet of the Fed and the, the balance sheet, the balance of the Treasuries that they hold, I think it's about $8 trillion now. So the central bank of the United States is the Federal Reserve. 7.4 trillion, so about 8 trillion. The Federal government needs money to pay its bills. All the stuff that it's spending money on. And the way that the federal government does that is they tax businesses and citizens, and that tax allows them to pay their bills. But we spend more than we make. So the federal government has to issue bonds. These are promises to pay in the future. And those bonds are bought by people like you and I. It's bought by federal, by foreign governments, China, Saudis. A lot of individuals and companies around the world like to hold U.S. treasury bonds. Right now, treasury bonds are a great yield. You can get 5% interest by buying U.S. treasuries. And the federal government guarantees they're going to give it to you. That's the word of the US treasury, which has historically been considered a risk free asset. And then they take those Treasuries and they get cash and then they take that cash and they pay their bills. One of the buyers of Treasuries is the central bank of the United States. The Federal Reserve, which is overseen by Congress but is separate, doesn't actually report up to the President. So the Federal Reserve has this ability to buy Treasuries and issue money, issue cash that they don't have. Right. So the Federal Reserve has this ability to print the US Dollar. And, and so historically they've been buyers of Treasuries supporting the market for the federal government to be able to issue debt to pay their bills. And then as more money comes into the system from the Federal Reserve, which is effectively created out of nothing, that money flows its way into the economy. And if you have for example, US$30 trillion floating around versus US$10 trillion floating around, things are going to inflate because there's more dollars to spend on stuff and the cost of things will naturally go up. That's a super, super duper simplified way of kind of explaining the system. So the Federal Reserve, the central bank of the United States issues money almost on a loan basis to banks and, and buys Treasuries with the expectation that at some point the US Government's going to pay them back. So that's the economic relationship between the central bank and the federal government. And the way that money then finds its way into the system. The federal government can't just print the money, the central bank can. And then those, those those Treasuries get, get held by the by by our central bank. And that money finds its way into the system.

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[David Friedberg]

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[David Friedberg]

So at some point, whether you can, you can look at the total amount of debt of the federal government and think like any household, how much debt can you afford each month? And at what point are you going to go broke? That's one way to look at it. And another way to look at it is that in order to overcome that, there's going to be a lot of money printing because the Federal Reserve can just buy all those bonds and issue that money, and then that money just finds its way into the system. So there's a question at which point there's too many dollars that get printed.

[Podcast Host]

This is the part that people don't understand. So there's a magic thing that happens when the, the money is made up. You said, I think, essentially made up out of thin air. I'll say it's made up out of thin air, like completely fake, untethered to anything. It is literally just entry into database. They decide to click, clack. And now that money technically exists, why isn't that awesome? Why isn't it awesome that we can just make more money, Just keep making more money, make the budget bigger every year?

[David Friedberg]

Let's say more money. Let's say that you and I have $50 each and we're the only people with money. And there's a guy over here selling sodas. We know we can buy those sodas now. And he's only got four sodas to sell, and we really want to buy all the sodas. So we eventually end up paying 25 bucks each for a soda. Okay, there's four sodas, 50 bucks each. Suddenly some guy shows up with another hundred bucks. Or let's say the other guy shows up with 200 bucks. Now he's going to start competing for those sodas. And the guy that's selling those four sodas is like, hey guys, it's no longer, you know, 50 bucks a soda. What did I say? 50 bucks, 25 bucks a soda. Suddenly the price is 75 bucks a soda because there's more people that want sodas and there's more cash available. So that's how the price of soda is inflated. That's what happens when there's more money that floods into the system is that the purchasing power of the existing dollars in the system goes down because there's now more money competing for some number of assets or services that are being sold. So the price of assets and the price of services goes up and the value of the dollars goes up, goes down. Which means that the value of your savings, the value of the stuff you own goes down. And this is particularly true for the majority of Americans who are not big asset holders. Right. They only have. More than half of Americans can't pull together $1,000 for an emergency. So if the value of dollars go down and their incomes aren't going up, they're deeply hurt by that. People that own a lot of stuff can take their assets and they can buy inflation hedged securities or inflation hedged assets, like you could go buy timberland, you could buy gold, or you could buy Bitcoin, which a lot of people argue is a great inflation hedge now. And those assets, because they're fixed in supply, they will go up in dollar denominated terms. And so wealthy people can handle inflation, the majority of other people cannot. And inflation really hurts the economic growth because now people spend less, they have less money to spend and businesses shrink and things go bankrupt. So inflationary cycles are very damaging to economic cycles.

[Podcast Host]

Okay, so we have a thing that happens where we're in an inflationary cycle. It's brutalizing people. But I would say the average person doesn't understand it, so they don't know that it's happening. I'll make a statement. You tell me if you think this is fair. Money printing is legalized theft from the government. They, they are stealing, not your dollars because you're going to have the same amount of dollars in the bank, but they are knowingly stealing your purchasing power, which is the same in effect as just taking money from you.

[David Friedberg]

Yes. And what I will change about your statement is I will expand the definition of government to the people that were voted into government by the people that voted. Okay. And this is what's so important to understand is we all kind of separate out these elitists and these politicians that are doing bad stuff to us. But the voters in the United States have the ability to change that. They have the ability to see this problem and make a decision about who might be a better candidate to solve this problem for us instead of being myopic to getting more stuff for themselves individually in the near term, which is an impossible ask, but one that's worth noting. There's a reason that the system, there's a reason that the voters have made that choice. It's not just that there is a bad person who is choosing to print a lot of money and steal our money. I am very, very much about rethinking the concept of the role of government in our lives and in our economy. That's prime to me because I do think that anytime the government gets involved in markets, it distorts the market forces that allow things to get better and make things cheaper for people and make markets grow. Everything goes wrong when governments get involved in markets. There's no scenario I can think of where things are good, but individuals will still rationalize it. The guy who owns the defense contractor is very happy with the government being involved in markets because he gets to make a bunch of money selling the government turbines from his business and because the government is a cost plus model on defense contracting. The more he charges, the more money he makes. So he's incentivized to charge more every year. So that model needs to change as an example of the things that can be affected by the voters. So I just want to. I agree with your point. I just think that the voters have a role in this, in a democracy, in addressing the problem.

[Podcast Host]

Okay.

[David Friedberg]

And sorry. I'll say one more thing which is worth noting. Go back to the example of the soda guy. The guy only has four sodas. But what if he comes up with some newfangled technology, a replicator machine like from Star Trek, and now he can make 8 sodas or 12 sodas or 20 sodas. His invention of that technology makes the cost of soda less. Even as there's more money coming in, there's now more sodas. So we don't need to all compete for fewer sodas. So the productivity, the production of more stuff is good for the economy, and it gets us out of this problem. So when you hear people talk about economic growth or GDP growth, there are two things that drive GDP growth. One is the inflation of stuff, things going up because there's more money coming in. But the other one is improved productivity, technology making more stuff with less resources. And that has historically made the United States so successful and for the last 250 years has fueled our economy, fueled the United States success globally, our innovation, our entrepreneurship. Technology solves this problem if we can get it to move quickly, fast enough. There's another point besides just voting, right? And fixing this through the voting system, which is enabling more technological innovation and enabling productivity gains to arise from technology. In that sense, we face another critical problem right now, which is a very serious negative view on technology. And I do think that the majority of people don't necessarily think about. If you say the word technology, there's a more negative association with that word than positive. Go back to the 1950s. There were all of these crazy like posters about humans will go on rockets to the moon and we're all going to live on starbases on the moon. We're all going to be on monorails and move around the country and monorails are going to be flying cars. These new materials that we were inventing were going to change everything. We'll be able to put on suits and go underwater and go to our underwater cities. There was this incredible wave of innovation that happened particularly out of the chemical engineering revolution that happened in the early 20th century and the early industrial revolution and then post World War II where we were so optimistic about technology. Then what happened is that we started to get cancer and there were meltdowns of nuclear facilities and people got. And there was Cold War. So there were these big nuclear bombs sitting over our heads all the time. And we were doing duck and cover from nuclear bomb attack training at school. And I think that the American psyche and the psyche of the west, largely, which benefited very much from this progress that arose from technology, got really challenged in terms of adopting and appreciating the upside of technology because there was so much downside. And then we got scared of technology. And then everything became kind of this critical Anti Technology Association. In 1955, Disneyland opened. I've told this story before with this ride called Tomorrowland or this area called Tomorrowland. I mean, you've been there and every ride there was about the future opportunity with technology. You'd go on a rocket ship to the moon and back. That was one of the rides. You would go inside the world of chemicals and you would learn about making plastics and making new materials. And it was like, this is gonna. And it was like the home of the future. And they showed this really cool home where everything was like made of these new materials. And it was crazy. Cause prior to that we were like hand making wood, everything. In the 1970s, they started to turn over all the rides in Tomorrowland at Disneyland. And every ride got remade as a fear of technology ride. So the rocket ship to the moon became Space Mountain and it's all about a rocket ship that went off course and it went flying through the. And so you're on this crazy scary ride. Star Tours was a robot that broke down and took you. The navigator robot broke down and you went on a wrong course and you nearly crash and die. Captain eo, I don't know if you remember this. Captain eo, Michael Jackson comes from outer space with his clan of people and they destroy the robotic world that had been overtaken by robots, and they return it to an organic, natural state. So everything about what appealed to people starting in the 70s, as represented out of Disneyland and Tomorrowland, was all about technology goes awry, and we have to return everything to a natural, organic state. So there's this great tension, and we see it play out all the time in bioengineering and in gene editing, in AI, in all of these advanced technologies that the United States is leading in and progressing in. But there is so much trepidation and concern and fear that we are potentially missing out on the productivity gains and the. The boon that would arise from these technologies being more rapidly adopted and solving this big kind of economic crunch that we're running into. So I just wanted to highlight that important point because I think it's really critical for folks to pay attention to. And I'm not saying that the concerns and the risks of nuclear meltdowns and cancer and chemicals, all this stuff is unfounded. But what we have a tendency to do is to take one event or one experience and blanket the entire space or the entire industry around that one experience and say, we need to stop all of this because we have no margin for loss. There was a guy who died in 1997, 99. I'm going to get this wrong. A patient who was getting a gene therapy treatment. It was a young guy, and when he died, they put a stop on gene therapy treatments. For, I think, seven years, they weren't allowed to do any more gene therapy treatments. And since then, we now have literally dozens of gene therapy treatments that can cure dozens of human diseases, saving millions of lives. But for seven years, we weren't allowed to make those things progress because we were worried about losing another life. And so there's a challenging thing in a wealthy nation like ours, and I've gone on for a while, but we worry more about loss than we care about gain. If you go to a small, poor African nation, they are not worried about the downside of putting in a nuclear power plant that would drop the cost of electricity and give everyone abundant power in their homes and clean water. They would say, we'll take that now. Done. Lock it in. But the United States, we don't want to have a nuclear reactor because now the marginal cost of electricity gets reduced by 3 cents a kilowatt hour. So it goes from 15 cents to 12 cents. I'd rather not have a nuclear facility in my backyard. We have the privilege of that in this wealthy nation. So that's the other tension that holds us back from embracing new technologies is our risk aversion. We are more worried about loss than we care about gain. In this, the state of where we are.

[Podcast Host]

You're putting a lot of psychological principles on the table, which are great, but I want to give people some mile markers.

[David Friedberg]

Sorry, I've gone over a lot of stuff.

[Podcast Host]

No, this is fantastic. So it's a lot of the stuff that I wanted to lay out, but I think we need to drill in in a few places. So one, going back to money printing, because this is the one that I think everything revolves around this and we haven't even talked yet about how war plays into this. Yeah, but so money printing, I think a big part of the problem is that people do not understand it. So you can say it, but they don't understand it. And it's a very counterintuitive thing to say. Dear constituent, I'm going to print some money and I'm going to give that money to you. And it's very difficult for people to understand that's bad for you. And it may help in like a really acute moment like when Covid happens and you need to put stimulus into people's hands just to calm some of the panic and make sure everybody makes it through. Okay, but, but even that is a trade off and you're going to have a problem. And I'll say what the problem is very succinctly. The way that money gets put into the system in that magical moment where the Fed creates money out of thin air is that they're buying the bonds with it. So now if I hold that asset class, I'm going to get that money. And so that money basically just protected me. So their mechanism for getting the new money into the marketplace was to buy the asset that I had to give me my guaranteed return on that money.

[David Friedberg]

Yes.

[Podcast Host]

Now that I'm already gonna have to be educated to be doing that. So most people aren't doing that. So you this starts to create this divide between the haves and the have nots. So then people, what they don't understand in that moment is that when they print the money, they are socializing that decline in buying power across everybody.

[David Friedberg]

That's right.

[Podcast Host]

Poor, wealthy, everybody. But the wealthy just got a bump because they got their, the money that they put into the bond or the treas protected. Plus they got a return on that money. And they only lose as much as the person who gained nothing from the money printing but now only loses. And so as they just print, print, print, print, print. If you're like, oh, I'm getting my Social Security protected. Oh, I'm getting this funded, or whatever they think, oh, this is amazing. But they don't realize that, that those losses are being socialized across everybody. And then the other one, and this is something that I've heard you say really succinctly, is that it also creates an appetite for war. Explain why that's true. Why does money printing lead to more wars?

[David Friedberg]

Yeah, it's not simple, but we've seen it historically over and over and over again, which is as great nations rise, their populations demand more, the government takes on debt, prints more money, gives the population more. And at some point you reach this critical natural state where the economic condition isn't naturally growing, it's not catching up to the cost of the debt to support the programs and the things that the population demanded, that the people demanded.

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[David Friedberg]

So at any given moment, there is the potential for war. Okay. At any given moment, there is someone out there talking smack about the United States. There is someone out somewhere out there instigating, launching stuff at a base. There's always some instigation. The choice of do we make a decision now to let Saddam Hussein continue to be the leader of Iraq, or do we make the choice to go in and spend a trillion dollars to remove him from his position and go get access to those oil fields and then put US Companies in charge of those oil fields and then tax those companies to generate revenue becomes a more interesting choice, a more obvious choice. And I'm not saying that there's a conspiracy theory and why we went to I Think the America wanted to do something bad coming out of 9 11. We wanted to do something not bad. We wanted to do something aggressive to respond to 9 11.

[Podcast Host]

Well, we've got contemporary examples with Russia, Ukraine, Israel, Palestine. Like, there's no, unfortunately no shortage of things where this is.

[David Friedberg]

So what are we going to do with Yemeni hoodies launching stuff at cargo ships going through the, the Suez? Do we choose to have a proportional response, meaning send in some SEAL teams and take care of that, or do we move all of our military to that region and start to instigate and support the Israeli conflict in Gaza and then start to fuel Iran's interest in getting involved and eventually force an alliance between Russia and, and Iran and China, which creates a really nasty circumstance, but allows us to then move our military machinery and our economic forces into that circumstance. Because war historically has driven a lot of shifts in economic productivity. It has driven a lot of growth in aspects of the economy that need to be stimulated. And so it's not like there's a bunch of guys sitting around in a dark room, Illuminati guys, saying, let's go to war and grow the economy. But when things are great, when the government is running a surplus, when people are happy, when voters are happy, when the nation is not divided, the economy is growing and everyone is employed and everyone feels good, and Israel gets into it and Gaza gets into it, and the Palestinians and the Israelis get into it, the US in that circumstance is probably more inclined to say, you know what, let's not escalate this thing right now. Things are pretty good at home. Let's just. Can you guys just resolve your differences? Same with Russia. Ukraine, can you guys please just not like, escalate? We're not going to give you a lot of weapons. Ukraine, go. Go negotiate a settlement. Go figure out how to resolve this thing. We rationalize it now as in pursuit of liberty and pursuit of democracy. There's always a way for either side to rationalize the decision. But I'm just saying, generally speaking, if people are happy at home, they're not looking for conflict abroad. We are not happy at home. And the economic circumstances are deeply coupled with our unhappiness at home. And so we are more willing to engage in conflict abroad. Let's give another 80 billion to Ukraine. Let's get that thing going. Let's do something as a nation. I think there's a lot of aspects to why this happens. One is it brings people together. We now have a common enemy. There's an external force this bad Guy in Russia, Putin, we gotta go get him. Let's all get behind this idea of destroying Putin. It's great, Great. Okay, good. He's the bad guy. Saddam Hussein, he's the bad guy. You know, is it Hamas or Israel? We're. We're really, really not sure right now. So, like, there's a. There's got to be a bad guy over there.

[Podcast Host]

There is a bad guy.

[David Friedberg]

There's a bad guy. Let's go get him. And then we get to spend a bunch of money. It's stimulatory. I mean, you heard. What's his name, our Senate majority leader. Our Senate leader. Anyway, he said all the money's coming back home, spending all this money on Ukraine, but we're actually buying. We're giving them money to buy weapons from U.S. manufacturers. So that money's coming back home. It's stimulatory, it creates economic growth, it creates revenue. And now the debt is owed back by Ukraine. So we're just taking another balance sheet item, right? We're taking a balance sheet item from the Ukrainians. They now own some Treasuries or. Sorry, they're now owing money back to the government. We've given them that resource. So. So I think there's a bunch of reasons. I think that there's the psychological uncertainty that drives this. Things are not good at home. Well, I can feel in control. If I go beat someone up, right? It's like a bully. I can go feel better about resolving my issues at home. If I can go fix a country elsewhere and get new businesses installed there and make money there, that could be good. That sounds like a better thing to do because these problems at home are pretty insurmountable. They're pretty hard to deal with. So I think that's why we've seen this. I don't know if anyone's written a good set of papers on this to go through each of the historical periods where we've seen external conflict arise out of increased money printing and debt. But it always happens. It always happens. And I just got really nervous coming out of 2022 or 2121. And I was like, man, I think we're going to end up in a war with Russia. It just felt like the circumstances were right, given the deficit we were running that year and how debt was running up that year. Little did I know that we keep doing it for two more years like we've been doing, and it's only getting worse. $7 trillion budget proposal next year. So I just felt like coming out of 21, we were going to end up in this conflict with Putin because he was sort of making comments about, hey, you know, I need a commitment of not joining NATO and I need more of this. And there was all this stuff that'd been going on for a decade, but suddenly, you know, it seemed to be the right mix of stuff for us to say, let's get involved, you know, like, let's do something. No one, no one will admit that. And I don't think anyone's ever going to be like, very. No one will overtly design a system to do this. And I don't think that even I've talked to leaders in military, in intelligence, and no one has this point of view that this is a motivating factor. But when things were great, everyone had this ability to say, let's not go to war. Let's do everything we can to. To avoid conflict.

[Podcast Host]

This feels very much like Ray Dalio's thesis, that every time that you have a new world power rising and you have an economic superpower that's declining, you're going to end up in conflict. And I think that. And it's not 100% of the time, but it's something like 85% of the time historically. And Ray, I've talked about this on the show many times, but Ray did a survey, looked at the last 2000 years, but really focused on the last 500 and the rise and fall of all these nations, said it's always tied to the debt cycle. And what ends up happening is exactly what you've been describing. People just always want more. They're driven by desire. It feels. It's real fun in the beginning and for a long time it works. And this is the problem. It'll work for between 150 and 200, 250 years if you play your cards right. You can do this. And so I think the reason that we end up in these hot wars is the turbulence of a rising superpower. China, a declining superpower, the US you're already going to get frictions. They're jockeying. And to your point, war is great for business. And then there's another element to all of this, which is that. And this is the part that I am as a born again or not born again. So I was never born. But as a late convert to understanding money, the thing that I really want people to pay attention to is when the government prints money, they get to take your money without asking Congress for permission.

[David Friedberg]

That's right.

[Podcast Host]

So they can have as much money as they Want, it steals your buying power. It is literally the same as taxing you extra money. But they don't have to ask. And so they just go, oh cool, I can rev up my economy by going and fighting in the Ukraine. I can rev up my economy by going into Israel, Palestine. Awesome. I need to do that because we're in this debt spiral where I want my $7 trillion budget next year. But to get that, I know I'm going to be running a hotter deficit. And so the only way I'm going to be able to pay that debt off, especially as it gets refinanced at a higher rate, is I'm going to have to print money again, make it up out of thin air, which exacerbates the problem, but it also kicks the can down the road just enough. I can get elected, I can have my career, I can buy time as the empire basically slowly declines. And when people aren't able to track all of the things that makes this system work, and forget who said it, but you don't need a conspiracy when all the incentives align.

[David Friedberg]

That's right.

[Podcast Host]

And so it's just, it is a perfectly aligned incentive structure, including, and you've gone to very effective lengths to make this clear. The voters are voting for it. And so ultimately we're all a reflection of the same sort of human desire for more, more, more. So if people are going to vote not only in their sort of immediate short term interest, but the long term interest, they actually have to understand how all of this stuff works. And so to your point about making something really simple that people can track, that's what this feels like. All right, I have an idea that I don't hear many people talk about nakedly and I'd love to get your take on it. I believe that one of the things that ought to be added to the Bill of Rights, and I use, ought to imply a moral obligation. But one of the things I think ought to be added to the Bill of Rights is to have access to a non inflationary store of wealth. Could be a currency. I haven't looked far enough to understand if this, if gold or gold still inflates, Bitcoin, something like that, or something else, whatever, I don't care what it is, as long as it's a non inflationary place for me to store my wealth, I think we ought to be able to have access to that.

[David Friedberg]

Well, the term inflation reflects the inflation in some denomination. So if you had bought gold 10 years ago in US dollar denominated terms, gold has been a way for you to hedge against the inflation of the dollar. Gold prices have gone up, so you're purchasing power has gone up more than the rate of inflation. But if you had bought gold in bitcoin denominated terms and you use bitcoin to buy your gold, you've actually not done a good job storing your wealth. Because if you had bitcoin before in a bitcoin denominated model, Bitcoin price relative to gold has gone up much faster. So remember, like stores of wealth don't really mean anything because it's all stores of wealth are just a paired value. It's an asset relative to another asset. What am I counting it as? So you could own dollars and you have a non inflation, you have something that you'll always have $100. It'll never change in terms of value. If you buy gold and you have inflation, the price of gold should go up in dollar denominated terms. So that hedges you against the loss in purchasing power of your dollars. I think from an amendment, from a Bill of Rights perspective, what we could do really well to think about is a balanced budget amendment which means that the federal government has to balance the budget every year. They don't have the ability to accrue debt. And you could have a balanced budget amendment that accounts for cycles of war and the necessary investment in economic growth. By creating some features in the amendment that allow for emergency authorization provided debt to GDP levels are within a certain range, Congress has authorized an actual war. I mean there's a lot of ways to kind of protect against the things that everyone immediately counters with and they're like no, no, you can't take that power away from Congress. You got to let them stimulate. And I think what we've seen historically is Congress's, the federal government's attempt to stimulate has negative long term implications for in a lot of ways because we don't ever reverse the programs, we don't ever get back out of them. So I'd like to see it from a Bill of Rights perspective. I'd rather see a balanced budget amendment which I think protects my dollars better than forcing me to put, you know, creating having the government involved in some new asset. But we have a free market, so we do have the ability to go out and buy whatever we want.

[Podcast Host]

Well we, until mumblings have started coming out of the sec, certainly Biden has been very anti crypto, Gensler's been anti crypto. And so this is what got me thinking about in terms of hold on, I should have a Right to this. Because you can, without any checks and balances, print my net worth away. Which, which when you, when you answer and ask, when you ask and answer the question, what is money? And you realize, oh, this is a way for me to store the economic output of my energy. So is a way for me to say, I did a thing on Tuesday and I'm going to be able to in some way capture the output of that effort that I can store for effectively ever. Now, if you create a system like they have done with fiat.

[David Friedberg]

You mean without. Without being inflated? Without.

[Podcast Host]

Correct, Right, correct, correct. So if, if I have $100 worth of buying power in a hundred years, I should have $100 with the buying power in, in the same day, not where that changes dramatically. And you know, now I need a thousand dollars. So if you give me that now, I don't have the weird perverse incentive to spend money today. I have an incentive to think long term. Now all of a sudden, balancing a budget doesn't freak me out because I'm like, I don't need you, dear government, to be in control of all of the systems. Because I can actually save my money because my money doesn't go down in value over time. I can just stack chips and so I can live however I want. But it has turned us. And it's always interesting having these conversations with a poker player. So when I got first got into studying crypto, I realized it really attracts poker players, which is a GAMB mentality, which. So clocking Bitcoin now, because I think when I brought that up and I said bitcoin is a possibility, and you said, well, if somebody bought gold using Bitcoin, that would have been a mistake. Yes, but for a totally different reason, which is right now, Bitcoin is going through a period of adoption, which means it has massive volatility. Gamblers like the volatility. That's where they're going to make their money. But what I'm saying is I just want an asset that is. And we can look at gold. I want an asset that can't be inflated. Now, I heard, I think this was on Rogan. People were arguing why, why gold? Why is gold the store of value? It is my understanding the reason that gold is the store of value is because a star has to explode and rain gold on the earth for there to be new gold. And the only reason that it inflates by roughly 2% a year is that's what we can extract. And as you sort of balance out the supply and demand Even though you could probably get a little bit more, the incentive begins to break down. So anyway, we end up extracting roughly 2% more gold per year. So it does inflate by 2%. But because it is super hard to inflate, hard to fake, you can't turn dirt into gold like diamonds. You can fake and all that stuff. So anyway, gold has these properties of not being inflatable and it doesn't mold or rot, so it will carry over time. So that's the kind of thing that I'm looking for. Now some people will believe in the bitcoin version of that, but that's irrelevant to me. I just want something that cannot fall to the whims of the human desire to inflate it away, which we have shown over and over and over. If given a chance, people will do.

[David Friedberg]

Yeah, I would say. Look, I mean, I think that your principle is sound. I think that some people would argue that there are options like that. But everything carries some degree of risk. You're taking on association socially. Like if everyone gives up on gold, it's gone. If everyone gives up on bitcoin, it's gone. The value goes down. Right. So there is like a system of trust, like an aggregate kind of social system that has to continue to appreciate whatever it is that you're holding onto.

[Podcast Host]

But that's already true of fiat currency. So fiat currency has the additional downside.

[David Friedberg]

Yeah, until people start saying no, like I don't believe in it anymore.

[Podcast Host]

That's what I'm saying. So the same vulnerability that something like Bitcoin or gold has, you have in fiat currency. But at least with bitcoin, Bitcoin or gold, the governments, however much they may want to manipulate the supply, all they can do is buy it off the market. In which case there was an exchange of value at that point. But they can't make more magic.

[David Friedberg]

Then you're having faith in your government's ability to continuously do that for the next hundred years.

[Podcast Host]

For you to do what?

[David Friedberg]

Protect your asset. Whatever your new asset is saying.

[Podcast Host]

To protect my Bitcoin?

[David Friedberg]

Yeah, or whatever your new asset that you're creating on your, whatever the new inflation protected asset is that you want them to give you a right to. Right. The government at any point could change the laws, the government could lose its power, the government could lose its authority. There's some risk associated with anything for sure.

[Podcast Host]

But does that risk go up or down? That's my point. Right now I feel like we're in the worst of all worlds where you're in a situation where you have a fiat currency that has no intrinsic value, which I don't mind people saying that Bitcoin has no intrinsic value. Cool. It's all narrative. I'm here for that. But you've got this thing that has no intrinsic value that is 100% in the control of the government. As somebody who just has a weird pathological aversion to authoritarian rule, when I watched what happened in Canada where the Canadian government was like, oh, truckers are protesting. Say less, fam. I got you. We're gonna look at your faces, clock your bank accounts, shut them down. Insane. I literally, I cannot believe that that happened in the last couple years.

[David Friedberg]

Australia, during COVID the uk. I mean, it's all over the West.

[Podcast Host]

Dud crazy even.

[David Friedberg]

Yeah, the East 2. I'm sorry, it's everywhere. Everywhere.

[Podcast Host]

So that's the one that terrifies me. And so getting something, what, what I really want is, is the people of the United States to admit that this is important enough that we should see it as an inalienable right. We don't currently. So but the, the knock on effect. And by all means, if you think I'm out of my mind, keep pushing. But the knock on effect of this is where I think this gets really interesting. And what does the world look like where my money isn't inflating? I don't have the perverse incentive to spend today and never save because right now people that save are punished. So.

[David Friedberg]

But you're basically proposing an inflation protected asset, right? Which definitionally means you can buy the same thing in the future as you can buy today for some number of units.

[Podcast Host]

Yep.

[David Friedberg]

So Big Macs can go up in price and you can still buy one unit to buy one Big Mac and in 20 years you can buy one Big Mac with one unit. But what if the price of Big Macs has gone up way more than the price of gasoline or the price of gasoline has gone way up. So you're always indexing assets to other assets. They're always paired value. And so we use this term inflation, I think a little loosely in the sense that we assume that yes, there is generally devaluation happening with the dollars, but in some cases you can buy a lot more Brazilian reais with dollars today than you can three years ago or a couple more. It's gone up by 20% than you could have, even though our ability to buy food has gone down. And so if I go to Brazil with my ray eyes, I can buy more stuff. I can go to the UK now and buy more stuff because the value of the dollar relative to the pound has actually improved. So inflation in dollar denominated terms against food prices and energy prices and housing prices and car insurance and all the other things that we as consumers in the United States care about has gone the wrong direction. But when paired against other things around the world, against the yen, against the pound, against the reai, the dollar's actually done well. Which means that your purchasing power has gone up in those countries because you own dollars. We don't see that every day as consumers. And global trade helps solve that. By the way, we can talk about globalization at some point, but I think that it's important to understand what are you pairing against? What are you looking for protection from? Is it the price of food or the price of energy or the price of housing or the price of medical insurance, or, you know, government manipulation of

[Podcast Host]

the monetary supply, period?

[David Friedberg]

So then you shouldn't own currency, right? You shouldn't own dollars. And I think that these globally traded assets, these commodities like copper, gold, these are the sorts of Bitcoin, potentially are the sorts of things. The challenge with Bitcoin, obviously, is that there's. It's got a very anti government orientation to it, which makes it the enemy of government and so powerful government.

[Podcast Host]

Trump has come out in aggressive support, RFK Jr. Aggressive support. Now, RFK Jr. Maybe has a slightly anti authoritarian, anti government bent as it is. So take that for what it's worth. But he's a legitimate candidate for president, so I can feel something shifting. I think, to your point that what happens in the government is merely a reflection of what's going on in culture. And so you're seeing what I call the age of conspiracy. So Covid broke people's ability to trust the government. And I think that that's just continued to snowball. I think people may be letting that snowball too far. And now they're throw it all away, burn it all down, we'll start a new. That worries me far more. But I think that they really are looking at the truth, which is that you're being lied to. You're being manipulated. Even if the people lying and manipulating are doing it with the best of intentions. They're lying, they're manipulating. So what I'm trying to get is a currency that they can't manipulate, even if they think they're manipulating it for my own good, so that again, I don't have the perverse incentive to spend. I can save it, I can know what it's going to be. Now I hear you. In terms of the volatility, it's just

[David Friedberg]

an asset, a currency, think of it. And it's an asset relative that's valued against some other asset 100%.

[Podcast Host]

So let's take that head on. So you're never going to be able to, you can't and wouldn't want to try to squash the volatility in all of these things. So I would not want any protections on whatever asset class comes to be. I'll call it bitcoin for now, just because for me that is the asset class I'm treating like this. It has high volatility, we've already talked about that. In the future I think it will be low volatility and it will really be about its ability to not inflate. So okay, cool. I've got this non inflating asset. Even though I'm still in a world where stuff is all over the map, things are going up and down. One day oil is going to be this much, this many barrels per bitcoin and that's going to change. And if you're pricing your life and energy, which is probably a very wise way to think about it, then that's going to matter. I'm not saying that it won't matter. What I'm saying is at least then only half of the equation has that level of volatility. And now I have a store of wealth that I can plug into and maybe to really be effective at what I want it to be, it is a non inflatable currency. I haven't thought about it enough to know whether I think that's better or worse. But maybe, maybe that's exactly what you need. So anyway, I'm not worried about all the other volatility, but I do think that a natural knock on effect of having this store of wealth where I know $100, the buying power will be contiguous down the line, that, that will create a world where I can, as the consumer, I can benefit from deflationary things that happen in technology. So you planted a flag at the beginning of this conversation which I think is brilliant. And I think most people do not understand that the only way out of this spiral is innovation. Now history tells us that ultimately even that breaks down and you, you end up missing, you end up not being able to innovate fast enough to keep up. Which is why no empire ever in human history has lasted. People need to only think about that. Not once, not ever, in the, whatever, 25,000 years, 12,000 years, wherever you want to clock the starting of human empires, not one of them has ever lasted. They all fall away. So when you start looking at, okay, how are we going to make this work? Then it becomes making sure that you're getting a governmental structure that is not deranging because of the inflation. So if you're going to take advantage of the innovation, what you're really saying is instead of generating innovation so that the government can print more money and effectively steal the what should have been deflationary impact of that innovation, so you're about to, through Ohalo, you're about to drive the cost of potatoes down, as one example. I think you agree with that.

[David Friedberg]

Yes.

[Podcast Host]

Okay. So as a consumer, I want to take advantage of that. What I don't want is the government to let inflation run hot because they know that thanks to your breakthrough, the cost of groceries is about to plummet. And they're just going to come in and skim that off and they're going to do money printing and be like, hey, potatoes are still only X amount. But let's say the potatoes. I have no idea what potatoes cost. $8 a bag. Yay. That's probably so wrong. But they're $8 a bag. With your innovation, that drops to, let's say $4 a bag, but they keep it at 8 because they're going to skim that innovation advantage.

[David Friedberg]

The good thing is the government doesn't set price in markets, right? And when they start to, that's when things go awry.

[Podcast Host]

What they do though, is they manipulate the fiat currency. So I'm saying by printing the money, they are making that potato go from what should have been $4 go back up to 8. And so that's why we don't see prices drop over time. Like if you think technology, the price of technology should just drop, drop, drop, drop.

[David Friedberg]

Just to summarize, over the last 250 years, we've had incredible technological innovation. I'll start with the plow, the tractor. 60% of Americans worked in farming. It was an agrarian society until we got the tractor and we got hybrid seed and we got this ability to kind of mass produce food using machines and systems that we innovated, that we developed, that we built, and the cost of food went down. The wallet share of food has, has plummeted over the last hundred years. It's now coming back up. Unfortunately, because of this recent inflationary cycle, the cost of fuel that.

[Podcast Host]

Do you see what I mean? Like the cost was coming down. Inflationary cycle.

[David Friedberg]

Well, yeah. So I'm aligning because as we've had all of these technological innovations, it's given us permission to spend more because the economy grows. This is what's counterintuitive. When productivity, when the cost of making something goes down in terms of number of people involved, units of energy, units of land, units of input. Let's say I spend 15 cents to make this mug instead of 30 cents to make this mug. I can now make this mug cheaper. What you do as a consumer is you don't just buy one mug and pocket the savings, you buy two mugs and then that. So the profits that I make just went up. And your ability to do stuff with those two mugs, like you could now mix stuff, has gone up. And so your productivity goes up and that makes you make more money. So the economy, what people don't realize is when the cost of things comes down, the economy grows. Productivity gains drive economic growth. When the economy grows, the net revenue, you're making the net revenue I'm making, the net revenue that everyone else is making goes up. Everyone's making more money. And if the government taxes everyone just the same amount now the government has more money to spend. Consumers, voters have a choice. They have a choice to say tax less and spend less. But every voting cycle, voters have said spend more. And inevitably, the economic growth that has arisen from productivity gains, a percentage of it, has gone into increasing the role that government has played in our economy. And generally the role that the government has played in our economy has created inflation and distorted natural market forces. And so that's the narrative that I think captures kind of what you're saying, which is if we get continued technological progress, we can resolve some of the inflationary risks we're having, but the economy will grow and more tax revenue will be generated. And voters will say, let's do more. Let's have a new program where we all get free bus tickets. Let's have a new program where we have, you know, pick your choice, a free meal for everyone every week at McDonald's, and the government's paying for it. You know, you go down the list, like, there'll be new programs that will emerge. That's the history of the last 250, 50 years. And it started out as a place where you could be free from the tyranny of the government's involvement in your everyday life and in the economic activity that you wanted to undertake as a business owner, as a worker, as someone that wanted to. So entrepreneurs came to this country for that freedom. And it still is the most free place, the most entrepreneur friendly place the most innovative place on planet Earth by far. And it is still the bastion for that. But the natural forces are that as things go well, more programs are launched and all, you know, all the people that we elect say, yeah, I'll give you more of that stuff in your hometown, in Brooklyn or your rural Oklahoma, let's do rural broadband or in South Florida, we're going to pay for all your docs at your ports now. And suddenly it's like, let me give everyone something more from the federal level. And that's just the way it goes. You know, it's very hard to say that there's a individual or individual organization that's just a natural force of what's happened with governments over thousands of years, as you pointed out.

[Podcast Host]

Yeah. But in what I'm getting at is I think the logical conclusion of having a non inflatable asset class is that I can opt out of that madness. Because what will happen is the voters will say, or sorry, the government will say, hey, we want to tax you more to give you this. They're going to say no, the government's going to be like, cool, no worries, we'll just print more money. A word that's a tax. Just, it has better branding so people don't realize it's a tax. But if I have my assets in a non inflatable asset class, I'm, I'm opted out of that.

[David Friedberg]

Yeah.

[Podcast Host]

And so now what's going to happen is that's all going to come to a head real fast because people are going to realize, wait, wait, wait. These guys that are storing their money over here, they still get the thing, but they don't actually participate in that socialized suite cost. Yeah. Through money printing. And so then they're either going to join them or people are finally going to understand that a tax is a tax by any name. So you can call it money printing, but it's just a tax.

[David Friedberg]

I hear you. I think wealthy people have had this option. They could buy timberland, they could buy gold, they could buy other things that have kept them out of the damaging effect of inflation because they can just sell that asset when they need cash dollars to buy stuff that's denominated in dollars. So that's largely what's fueled a lot of the wealth disparity in the US in the west is because as inflation has been driven by government program spending and increase in money printing, the wealthy have had the ability to protect their assets by making investments in assets that are inflation protected. And people that don't have the ability to do that have not. And their incomes haven't risen to make up for that. So I think what you're saying is sound to give access to everyone, what the wealthy have had access to. I think the question is, are they going to have enough assets to start with? That's the big conundrum that we have is have we gotten so far ahead? And that's where all these calls for taxing the wealthy come in. Let's take their assets away now to redistribute their actual assets as opposed to redistribute their income, which is the way taxes work today.

[Podcast Host]

Would that work?

[David Friedberg]

The US Is a very hard place to leave. When this happened in France, when they passed a wealth tax, and you can look this up, there was massive immigration out of France. And so the government authorized the ability to go in and pull people's tax, pulls people's assets as a tax. Every year, some percentage of your net worth gets calculated war. Elizabeth Warren's been proposing this in the us Bernie Sanders has supported it. And again, what we've seen historically is if you start to do that, wealth taxes reduce investment. Because I am now nervous to invest, I have less incentive to take risk to grow my asset base because it's just going to be taken away from me if it grows. That's not directly true, but there's some psychological aversion to investing to some degree. So there's a reduction in investment. So the economy grows less. And then people opt out. They leave. They move to Puerto Rico, they move to Brazil, they move to Europe again. I don't know how many of my friends would do that. I think a couple of them would. I know a couple have already, but depends how far down you go and what percentage that is. But it's a popular. It's becoming a popular kind of thought amongst more kind of fringy type, you know, like politicians. That's not a mainstream for sure, because mainstream politicians are going to lose their donor dollars if they even consider proposing that.

[Podcast Host]

Yeah, it is a very interesting approach. What do you think about me Lai in Argentina?

[David Friedberg]

I love that guy. That guy's the man. I need that guy. I really want to meet that guy.

[Podcast Host]

That makes two of us, by the way.

[David Friedberg]

Yeah, that guy speaks truth to power. And what's amazing, I wonder if he is the beginning of the tipping of the policy and the systems that we just talked about and the challenges that arise from the way that we have voted and the way that we have allowed government to grow and intertwine itself. In markets and intertwine itself in individual lives in the way that we have. That Argentina's recovery from that and the voters saying, we want this guy is a way to indicate that maybe things are tipping in El Salvador, you know, they put all the cartel members in prison and made Bitcoin a national currency. I think it's a national currency now. Right. And so I think that there is maybe this moment where Milei is looked upon as the guy that speaks truth, not just to power, but to the individuals that now have access through social media and the Internet and the ability to hear these sorts of voices, clean and true on what we have done, what we have done to ourselves. And the term socialist is so deeply upsetting to people when you use that term. But. But socialized policies, policies that provide massive social programs at the cost of taxation, which ultimately inflates things because the government's involvement distorts market forces, makes things more expensive. He's shown people that there is a way to recover from that and fix it and get out of it. And now he's shutting down these wasteful bureaucracies in the government in Argentina, he's shutting down these groups that should have never been created, these programs that should have never been created because they don't create much benefit for people. There's no accountability in how the money is spending. The cost does not justify the end. And I think he's showing by example that this economy can grow, that people can prosper, that the government can run a surplus and people can be taken care of without the wasteful nonsense that's gone on the tentacles that have grown out of politicians standing on platforms saying, I'm going to make everything in the vending machine free. And what happens from that? After 50 years, 100 years, Buenos Aires was like the Paris of the West. And it was the most. I think it was the highest GDP per capita of anywhere in the world at the turn of the 20th century or early late 19th century. It was this, like, go look at photos of Buenos Aires at this time, or not photos, artistic images. It was like this metropolis, this burgeoning industrial system and social policies crept into Argentina like they did throughout Latin America in the 20th century. And there was multiple coups, multiple eradication of the free market system that allowed Buenos Aires to become what it had become, what Argentina had become in the late 19th, early 20th century. And then I think, like, this guy came along and said people were sick of it. They'd been through the pain. The US doesn't know pain. We have no Idea we could go through another 30 years of this sort of inflation to come close to what Argentina have been dealing with over the last 30, 50 years. So I think that, like, there's a breaking point where people are like, we need something different. These systems don't work. And he could be showing people the future. He's like, come from the future. I was joking with my friends the other day. I feel like he's Superman. And Superman, the movie where he flies up into Earth and remember, Lois Lane died. And then he like flies around the Earth and reverses time and he brings everything back to a happy place. He's like Superman. He's taken the burden of spinning the world backwards on his shoulders to show us to save lives. And so he feels like that, that guy, to me, he's like a superhero. And I think that the fact that he doesn't give a shit, he has. He acts like he has nothing to lose. He'll stand up on any platform and he'll speak truth to the circumstances irregardless of the, the common refrain that's used to support these decisions. It's. It's fantastic. So if anyone hasn't, I encourage them to watch his speech at the World Economic Forum.

[Podcast Host]

It was incredible, incredible, incredible. Can you recap some of it? His core message?

[David Friedberg]

Basically, he said, like the government, well, I don't want to get into the social stuff. There are aspects of liberalism in the west that he also addresses, which is that we have gone too far in trying to extend the role of government into creating equal outcomes as opposed to equal opportunity. And that plays out both in terms of social systems and in economic decisions. So in a natural market, there's a buyer and a seller, and the seller will only be able to sell if they can get a price and a product that the buyer wants. And the buyer will only pay the price they're willing to pay. When the government gets involved, the government doesn't care as much about the price because they can just print more money. So they distort the cost of stuff. They make things more expensive. That's one problem. The other one is that rather than just let the most competitive individual, the most successful entrepreneur, the hardest working person, when they're making other false choices about someone based on other social definitions of who that individual is based on race or class or income. And he's also made this point that we've created distortions by introducing a lot of these programs that are trying to drive an outcome without giving freedom of opportunity to everyone. And that that creates a Distortion in the market. So there was an element both on like the government building programs that are inefficient, that drive costs up, that destroys economic forces, that destroys markets. And in like these social policies that are very well intended, like we want to give everyone in the, in the society a good life. The problem is that sometimes that action causes destruction of the natural market force that might allow the best person, you know, the hardest working person for the call that got into college to actually go there or the best business to succeed in selling their products. So there's a lot of these kind of social policies that get wrapped up, many of which we could dissect as like, is the cost worth the trade off? And some would argue yes.

[Podcast Host]

Yeah, the watching the speech, one of the reasons I loved it so much is that he really goes hard in the paint about. Let me just tell you what happened to Argentina. We were, I don't, I don't think he said the Paris of the west, but like we were one of the great cities of globe. We were so successful that we started adopting socialist policies. We did this to ourselves. It completely destroyed our company, our country. And it had like this Ayn Rand brought to life quality about it where it was like, hey, maybe we all wish that capitalism did work, but capitalism does work. It brings more people out of poverty than any system ever that's ever been tried. And he just had one, the historical context to be like, hey, this has been tried over and over and over. It never works. Leads to death, leads to destruction. I watched it happen in Argentina. Same thing play out. And the way that we're going to get back to it is we're going to balance the budget and we're only going to spend what we make. And we're going to make sure that we are the home for innovation, that we invite the greatest minds from around the globe to come to Argentina and create and build incredible things and create the space for that. And it's interesting because you talked about it's hard to leave America because America is still the king of innovation and this is where people want to come. And there's a cultural tradition of celebrating people that do great things historically. Why do you say that? Because this, I think, is why I'm bringing it up.

[David Friedberg]

This has changed.

[Podcast Host]

Tell me about it.