← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
This Is Why You Can’t Afford a House — The Truth About Inflation, AI, and Why Everything Feels Unfair | Daniel Priestley PT 1
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- [00:01]
Tom Bilyeu
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- [00:32]
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- [00:45]
Tom Bilyeu
If you've ever looked around and wondered why things feel broken, even when you're doing everything right, the story sounds simple enough. The rich are hoarding money and everyone else is getting screwed. But what if that's not even close to what's actually happening? The explanations we're being fed might feel good, but they don't hold up. Today's guest, Daniel Priestley is here to expose what's really behind the economic freak show that is devouring young people. This episode is going to shock and validate. You strap in because I bring you Daniel Priestley. The debate that you did with Gary Economics, it really showed a thing that's happening. The resentment that young people have for the economy.
- [01:28]
Daniel Priestley
Yeah.
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Tom Bilyeu
What on earth has happened to build up that kind of anger?
- [01:32]
Daniel Priestley
The economy is dividing in two. So what's happened is that we've gone from a very much a bell curve economy where if you're an average person, then life's pretty good. Take the 90s, for example. It was probably the best time in history to be average. If you're average, you get a house, you get a car, you get travel, you get everything. All resources have moved towards the middle. And then the thing that technology does, technology creates inequality. So we've got to have a look. Why is economic inequality driving so hard and fast in the last 20 or 30 years? And to me, it's obviously technology. And I start with an analogy. And the analogy is if we were to run a marathon and we had 50 people who were running on foot, and then we gave some bicycles to a few people, and then we gave some cars to a few people, it would be completely obvious why there is a massive inequality in the time because a couple of people are leveraging technology and a couple of people are not leveraging, leveraging technology. So I've personally experienced this because I've grown up in a small town where everyone had very normal jobs that didn't really leverage technology. And then I've ended up as a software entrepreneur and I've built a global business where we have clients in 150 countries. And all of that just happens magically, like, just magic. And then people might talk to our customer success team and it's an AI agent and they may not even know they're talking to an AI agent. So I'm seeing that companies and people that invest in tech and that are leveraged by tech have this huge advantage. So what's now happening, especially since COVID is that we've got an acceleration happening in the USA. Over 18 million people describe themselves as digital nomads now.
- [03:14]
Tom Bilyeu
Whoa.
- [03:14]
Daniel Priestley
Yeah, it's huge. And millions, millions more describe themselves as work from anywhere. So we are seeing this group of people who are on a bicycle, they're using YouTube channels, they're using automation, they've got software companies, they're no coding or vibe coding, you know, custom built applications that make their life easier. And then you've got this majority of the population that are just playing by the rules that the school system gave them. The school system says, hey, don't form a team because that's cheating. You know, don't be a disruptor, that's cheating. Don't be an attention seeker, that's cheating. And the school system basically says what you're meant to do is become skilled component labor and find an office or a factory or construction site and go out and plug yourself into somebody else's machine and become a cog in their machine. And if you do that, you'll get well looked after. And of course those rules have changed.
- [04:10]
Tom Bilyeu
Okay, when I look at the economy, while I concede all of the points that you just made, when I look at the economy, I say the problem is debt and money printing. So it's interesting that you're stacking another problem on top, but one is debt, money printing, inflation, is that anywhere on your radar?
- [04:32]
Daniel Priestley
Problems? Totally. So capitalism is such an incredibly powerful system and it gets better and better and better, but then it gives birth to two children. So child number one is technology and it creates technology that's awesomely powerful and it creates a disadvantage to those who don't use it and a massive advantage to those that do. The second child is called finance. Now, finance is different to capital. So capital is money accumulated from the past and finance is money brought back from the future. So up until 1970, the capitalist system ran on capital. So imagine a scenario. I want to invest in something, a business. I go to my dad and I say, dad, can I borrow $10,000? Cause I'm going to start a business. He looks at the business plan and he says, oh, it's a bit risky, but I do have $10,000 saved up. I'm going to lend you the money. I've evaluated it based on the risk and the reward, and it's from the past. I saved this money up and now you can take a risk with my capital. Finance works differently. So finance. Imagine you go to a business coach and you say, how much is it to get business coaching? And the business coach says, I charge $10,000 for business coaching. You say, I can't afford $10,000. So the business coach looks at your business and says, with my help, you'll be able to afford to pay me a thousand dollars a month for 11 months. So I'm going to lend you my business coaching now on the condition that we create an agreement that you will continue to pay me into the future. So what the business coach has done is brought money from the future back to the present to get you what you want today by accessing future cash flows. So that's finance. So what we had in 1970s was a dominance capitalist system running on capital. And what we've had ever since is a capitalist system running on finance. We figured out how to finance everything. The other switch is the ability to forecast. So it was incredibly difficult to come up with cash flow forecasts and assumptions prior to things like Excel spreadsheets and all of that. Once we created the technology to look further forward into the future, once we collected enough data, the smart people at the world of finance could say, oh, wait a second, we've got a spreadsheet that says that we can get you to afford this car. We've got a spreadsheet that says we can get you to into this house. We've got a spreadsheet, especially for governments, where we go, oh, you've got this many taxpayers paying this much tax. Oh, we can bring forward all of that money through a banking license, and we'll actually just print that based upon the future forecast and bring it forward. And initially it frees up a huge amount of productivity. So in the early days of central banking and bringing money forward from, from the future, all of that money hits an economy that's starved of productivity, all sorts of things could have happened that weren't happening. And suddenly There's a productivity boom, however, very rapidly we burn through all the productive investments that you could make and suddenly it's all just consumption driven stuff. So initially a productivity boom, then a consumption boom by bringing money from the future, and then we run out of productivity and consumption needs and we go, oh, now the economy is stagnant, so should we stop bringing money from the future or should we slow this process down? No, we can't because we need to need interest payments as well. We better pile money back so that we can make these payments. And that's where you spiral out of control.
- [07:58]
Tom Bilyeu
Was there anything in Gary's approach that surprised you?
- [08:03]
Daniel Priestley
I'd be a little bit rude. I was surprised that when I talked about the differences between different taxation, for someone who's an economist and someone who's wanting to advise the country on tax, he had a very low resolution view of the differences between taxing profits, revenues and wealth. And he almost just cycled between profit, revenue and wealth without distinction. Even when I talked to him about, when I was trying to explain about inheritance tax versus the taxes trusts pay, periodic taxes, he didn't understand that there were just multiple types of taxes. He just kept obsessing that this number is smaller than my income tax. I wasn't prepared for for him to just have such a very low resolution view of it. I know that's so rude to say. I mean, it's hard to say when he's not here in the room to defend himself, but. But yeah, that, that surprised me.
- [09:00]
Tom Bilyeu
The more that I learn about the economy, the more that I learn about how the economy actually works, the more shocked I am that this is how things go. But, but then the more that I look at the way that the next generation is responding to it, I really am surprised by how much they're leading with emotion rather than going into problem solving. What's the solution? And so the popularity of Gary's message I both get because I think he has his finger on something and I will do my best to steel man it and really represent it in good sense and maybe have him on the show for sure. I would literally have him on in a second. But in the meantime, I'll do my best to represent where I really think they're coming from. But I have been surprised by that. They're getting caught up in the what he says feels right and therefore I don't care if it is right.
- [09:56]
Daniel Priestley
That doesn't surprise me. He's a mirror of, of the anger that is in out there.
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Tom Bilyeu
Exactly.
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Daniel Priestley
So I was I was prepared for that because I'm connected to so many people who are angry and upset. And I'm angry and upset. There's no part of me that wants an unequal society.
- [10:12]
Tom Bilyeu
What, but what are you angry and upset about? Specifically technology?
- [10:16]
Daniel Priestley
No, I'm angry and upset that young people who work hard are told, oh, it's because you're having too much avocado on toast, or it's because, you know, you're not entrepreneurial enough. I feel annoyed that it's been so obvious for 20 to 30 years that we need to change the schooling system, that we need to provide different opportunities, that we need to prepare our economies for this stuff. And we, we've done none of those things. And we've got a generation of people who've been prepared for an economy that just doesn't exist anymore. So I'm upset about that. I'm upset that the government just seems to make really short term, knee jerk decisions. We're not playing a big picture strategy game. We're not thinking 100 years into the future and what, you know, what it means today. And now we have this group of people who think I'm the bad guy because I've built some technology companies that have scaled up, I'm on a panel having to defend creative entrepreneurship and not and to basically say it's a bad idea to overly tax entrepreneurs because they are going to be the engine room of the economy and they can do this from anywhere in the world. One thing that I really wish the whole world could understand is something called the clinical method that was created in the 1700s. And it basically distinguishes clearly between symptoms, causes and treatments. And it basically says, what are your symptoms? What are you experiencing? What's the pain? And then it says, let's keep an open mind about what might be causing that. Let's have a look at the potential things that are causing that pain. And then only when we understand the symptoms and the causes do we then assign a treatment plan. And then we test and measure to see if the treatment plan is different. Now, when you see a debate between someone who has, you know, a view that's perhaps left leaning and a view that's right leaning, it's often the case that the left leaning and right leaning person can identify the same problem and agree on the problem, and then they're looking at what's causing it, and they might disagree on what's causing it, and they certainly disagree on how to treat it. What is really upsetting is that a lot of people would look at me and my response to Gary's comments. I say, oh, he doesn't care about people. He doesn't recognize that there's a problem. He doesn't recognize that people are hurting. Of course I recognize all of those things. Of course, in. In that experience, I totally agree there's a huge problem, but I just massively disagree on the causes and the treatments of that problem.
- [12:44]
Tom Bilyeu
More with Daniel Priestley after this short break.
- [12:48]
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- [13:50]
Tom Bilyeu
All right, we're back. Let's get into it. Okay, so it seems like a pretty reasonable reaction if technology, money, printing, debt, all of it is splitting the wealth and so that you get ultra haves and ultra have nots that you would just go tax the life out of the billionaires, Literally tax them out of existence. I hear that said a lot. Billionaires shouldn't even exist. Why is that flawed thinking?
- [14:16]
Daniel Priestley
There's a couple of reasons. Socialism and that sort of thinking sounds like the right thing to do. It sounds like a great idea and it's not new. You know, Karl Marx came off the back of something called the Engels pause. It was 50 years of inequality caused by the Industrial Revolution. From 1790 to 1840, we had all sorts of massive inequality, people on the streets. Charles Dickens was writing about that particular time, Oliver Twist, all of those.
- [14:45]
Tom Bilyeu
And same idea. Industrial revolution as technology, the people that use it, massive advantage.
- [14:50]
Daniel Priestley
Exactly. Same idea. So new technology comes in, the industrialists booming in wealth. And then you've got a disenfranchised peasantry that have come off farms and agriculture and have been displaced off their farms. They're now in the cities They've got nothing to do. They don't have the skills. They're lining up for food and factories, slums and squalor and all of this sort of stuff. So the, the issue is that when socialism is tried, it builds a large state government to administer larger and larger amounts of money. And that creates an even bigger compounded problem. I mean, wouldn't it be nice if a computer system perfectly reallocated capital to different people and that. And then those people had productive things to do with that capital and all of that sort of stuff just reorganized? But it doesn't work like that. You have to then extract the wealth from the billionaires. So you've got to identify what is their wealth, where is it? You've then got to extract it. That poses its own problems because billionaires, in the same way that I say, oh, the way to beat Roger Federer at tennis is just slam the ball really hard. It's like, yes, but he also knows how to play tennis and he can return the serve. So he knows how to return the serve really well. So billionaires also know how to move their money out of jurisdictions. They know how to play the game. So identification is an issue, extraction is an issue, and then you need to administer it. So you now take this money on what is going to happen with a government that actually gets a new income stream? They're going to go to the central bank and they say, we have a new income stream. And the central banker says, well, this is how much you can leverage that up. You can leverage that up 20 times. So if you're collecting another 10 billion from these billionaires, now, you can get 200 billion worth of more debt. So we've built a system where if you do that, you're going to compound the problem, but on, in addition to that, you're going to fundamentally change the system so that there's almost no benefit to winning. There's no, there's no benefit to innovation. Now, capitalism does actually have a really good answer to this. And the answer is not that you just simply take everything off the billionaires. The answer is that you enforce competition, you break up their empires, and to break up their empires. In the industrial age, an empire was based on just nothing other than scale. It was all about big scale. So we took Standard Oil and we said, hey, we can break that up into, I think, 30 different companies. And they said, once we destroy that scale and you all have to compete with each other, then the markets get restored. The modern monopoly is based on ecosystem, not scale. So let's Take Amazon for example. You've got the shopping side, you've got aws, you've got content, you've got Whole Foods, supermarkets, you've got all these different types of businesses that, that sit together and it makes it extraordinarily hard to compete with any one of them. If you were to attack the retail stores with competition, then they can be supported by the online retail. If you were to attack the AWS business, it could be supportive of the other businesses. So you end up with this ecosystem like a ginormous bouncy castle that you bump into one side and it does nothing because the other side absorbs it and returns the favor. And so it's, it's a very difficult problem. Now the way you handle this problem is you recognize that the nature of Monopoly has changed and you break up ecosystems. So you take Google and you say Google, you guys gonna have to float YouTube and it's gonna have to stand on its own two feet and it's gonna have to compete as its own business. And you're also gonna have to break off Google mail and that's gotta compete on its own.
- [18:34]
Tom Bilyeu
This all sounds good for the entrepreneur, but for somebody who's like, bro, I can't afford a house, like break up Google into a gazillion pieces and that does not allow me to buy a house.
- [18:46]
Daniel Priestley
Got it.
- [18:47]
Tom Bilyeu
So where, where are people going wrong?
- [18:50]
Daniel Priestley
The issue with affording a house is that we do have a. In the UK especially, we have a housing traffic jam. We actually have 9.4 million big family homes with two people living in each of them. So we have 9.4 million homes that have two or more spare bedrooms. So we actually have big family homes, but there's no incentive to sell down. In fact, there's a disincentive. We have a tax called stamp duty. That actually means that if you do sell your big family home and buy another smaller, more appropriate house, you're going to pay taxes on that. So the vast majority of people who have a big family home, they bought it in the 90s, they've paid it all off. They can live there very, very cheaply. The kids come back for Christmas. It makes total sense. But we just have this housing traffic jam. The only, the only buildings that we build for housing now are like apartments and flats. So you end up with all these people living in condos because there's plenty of those that are affordable. And then no one gets a big family home because those are stuck with the baby boomers. There are some countries that Had a baby boom earlier than our baby booms. Japan, Germany, Italy. And what's actually happening now that their baby boomers are just that little bit older is you can't give property away. So if you go to Japan outside of like super urban. Have you seen this?
- [20:04]
Tom Bilyeu
Yeah. How cheap the houses are.
- [20:05]
Daniel Priestley
Yeah. There are houses that you can buy if you pay the taxes on the houses. So outside of the super urban Tokyo, obviously that's a bubble, it's its own thing. But if you go outside of there, there are beautiful homes in Japan that, that you can get if you pay off the taxes that are owing. You can buy a village in Italy. In Italy for a million.
- [20:26]
Tom Bilyeu
A village? Yeah, a village.
- [20:27]
Daniel Priestley
A village? Yeah. You want a village?
- [20:29]
Tom Bilyeu
I thought for sure you were going to be like, sorry, sorry, not a village.
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Daniel Priestley
No, no, no. A village. You can buy multiple houses with a church and a town hall and. Yeah, like little villages in Italy. In Italy, yeah.
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Tom Bilyeu
Okay, I didn't see that one coming.
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Daniel Priestley
Italy is now trying to get people to go there by offering €200,000 a year flat tax. And that's all the taxes you will.
- [20:52]
Tom Bilyeu
One of the points that Gary made in the interview, again, Gary as a proxy, I think he really does represent something that people are going through. So I don't mean to, I'm not trying to pick on him or over index, but he said something in the debate that went by really quickly and nobody said anything about it, which was, I don't want to redistribute, but I do want to force the rich. I don't remember what exactly if he said billionaires or wealthy or whatever, but I want to force them to sell their assets so that the assets go down in value, so that the average person can buy the assets.
- [21:23]
Daniel Priestley
Yeah.
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Tom Bilyeu
Is that the right goal?
- [21:26]
Daniel Priestley
I love how simple sounding solutions to complex problems make me feel like. I feel really good when someone says, hey, here's a simple sounding solution to a really complex problem. I'm like, ah, that makes me feel a sense of relief. But then you look closer. So what happens when the assets within a country come crashing down is that foreign buyers, massive private equity funds from around the world come in and buy those assets cheap and then there is no asset ownership within the country. Then you begin, then you. Then you walk down the path of being a completely closed economy. The USA can be more exclusive than other economies. The USA is a special case. There is US exceptionalism built into the system and for multiple reasons, mostly geography. But for most countries, they have to be free and open Trading countries, we just don't allow people to do this. This, this, no foreign investment. You can't have intellectual property cross border intellectual property rights. We're going to do tariffs, we're going to make it illegal, we're going to do all of that sort of stuff. That is a race to the bottom. You are now basically moving in the direction of North Korea versus South Korea. So if the goal say more about
- [22:43]
Tom Bilyeu
that, why would that be true? I, I'm the government, I'm really trying to be deft. I understand what through I want to do this with a scalpel. Why am I on the wrong path?
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Daniel Priestley
Let's go back to the. The first principle of why this is all happening is that we built a system on the industrial age. And the industrial age. The operating system of the industrial age is geography. Geography is the most important thing in the industrial age. It's all about geography. Land borders and, and geographical part trading partners. And the first thing that's written into every government is the geography of that government. You know, so you have the London City Council and the British government which covers this territory and you know, the Californian state government which is here's the borders. So we're dealing with a fundamental operating system called geography. The digital economy. The cloud economy doesn't respect geography at all. So if I have a digital business, I can be, I can have my company in one place, I can live in another place, I can have my team in 30 other places, I can have my customers in 150 other places and none of that slows me down at all in a geographically unlimited place. As soon as you start making a geography undesirable for productive people and making a geography undesirable for investors and, and for, you know, highly productive creators, then essentially you almost freeze it in time in the industrial age while the rest of the world's moving on. You know, for example, if those sort of draconian laws and taxes continue in the uk I'll just leave. Like I will leave. And it's very easy for me to leave. And there are plenty of countries that will give me amazing deals to go.
- [24:29]
Tom Bilyeu
This is such a natural instinct that needless to say this has been tried before. So what, what can we see by looking through history when you start just ratcheting up taxes on the wealthy, what actually happens?
- [24:42]
Daniel Priestley
Well, we, yeah, so some great examples would be Argentina, North Korea versus South Korea is a classic example. East Berlin versus West Berlin was. It would be another example. The USSR versus Western Europe. Ultimately these are all examples of what
- [24:57]
Tom Bilyeu
High regulation versus lower regulation.
- [24:59]
Daniel Priestley
Big government, big tax, high regulation, closed borders, you know, all of those kind of policies. They're all examples where that, where we've had A versus B testing. So we've actually done an A versus B test. We've got South Korea that said we're going to trade aggressively with the world and we've got North Korea that said we're going to be completely insulated. Which one would you rather live in? Now, North Korea has great, great scores for income inequality. Everyone earns nothing. Right. So it's, it's nice and equal society. So if your primary goal is equality, is it.
- [25:36]
Tom Bilyeu
I mean, there is always going to be an elite.
- [25:38]
Daniel Priestley
Oh, there's one starving, there's one family that's not starving to death. But if you take the millions of people, the vast majority of the population, they have equality, they've got equally. Got nothing. And then you go to Singapore. Singapore has income inequality, but it also has the, like, the best economic conditions of Southeast Asia. It's the place where people are dying to get in there. Like, like, you know, like, it's the best thing in the world if you can get yourself into Singapore if you're in Southeast Asia. You know, there was, it was very clear which way people ran when the fall of the Berlin Wall happened. You know, there weren't, there weren't people living in free markets who were trying to get themselves desperately into.
- [26:21]
Tom Bilyeu
Is it that people think it can be handled more deftly this time? Because when you look at history and the examples that you gave are great, and I don't know how familiar people are going to be with them. People I think will know North Korea, South Korea. You can see it on a map at night. North Korea is just black.
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Daniel Priestley
There's not, there's nothing.
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Tom Bilyeu
South Korea is vibrant. I think people go, that's a cartoon. Like, don't give me that example. But then, okay, cool. Then let's look at East Berlin and West Berlin. It's literally the same city.
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Daniel Priestley
Yeah.
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Tom Bilyeu
Divided in half. Same idea.
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Daniel Priestley
Another great example is Poland. So Poland was part of the USSR and part of like the Eastern European thing. Low productivity, you know, low, like poverty, like high poverty, low productivity, you know, really desperate situation. People trying to get out of Poland. And about 10 years back, they start aggressively going towards free market capitalism and, you know, making sure that they can trade. 10 years ago is around that. Yeah, well, that obviously it's 50 years since they were in the USSR but then around 10 years ago, they really said, hey, where we're going to go rule of law. Really big on rule of law. We're going to go, like, double down on entrepreneurship. Lower, lower taxes, better conditions for starting companies. And they're the fastest growing economy in Europe.
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Tom Bilyeu
I don't know this story.
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Daniel Priestley
Yeah, Poland, Poland's a great story. Then you get Germany, one of the most talented, productive, respected manufacturers in the world. They go down the socialist route and, you know, they get the Green Party in there and it's all about, hey, we're gonna be, you know, making sure that we can push for equality and we're going to, you know, remove the incentives and high tech, really high taxes and all this sort of stuff. And they've just flatlined, like completely or they're dropping precipitously.
- [28:13]
Tom Bilyeu
From what measure? Gdp.
- [28:14]
Daniel Priestley
GDP per capita. The levels of poverty are rising. Crime is going up. All the things that you don't want to happen are happening.
- [28:27]
Tom Bilyeu
Stay tuned. We'll be back with more from Daniel after this. If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from H vac and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win. Call 1800 GRANGER visit granger.com or just stop by Granger for the ones who get it done. All right, we're back. Let's get into it. You and I are both. I think we might be mad as hell for different reasons, but you and I are both mad as hell and we're not going to take it anymore. Gary's mad as hell. He's not going to take it anymore. Millennials, mad as hell, not going to take it anymore. But we're going to have to map out why I think we're all mad. So, okay, you broke down the three things. Maybe we're all mad for the right reasons. We see that the income equality is widening inequality.
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Daniel Priestley
Yep.
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Tom Bilyeu
It's really becoming hard to move from lower class to upper class. Obviously.
- [29:36]
Daniel Priestley
Yeah.
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Tom Bilyeu
It's actually not true. I was about to, I think, make a false statement. Maybe you know the data better than I, but certainly people that are upper class have a hard time generationally keeping it. They lose it. I think the rate's like 60, 60 drop out. Yeah. But I think we've had more people join the upper class.
- [29:52]
Daniel Priestley
The upper classes at an all time high.
- [29:54]
Tom Bilyeu
Yeah. So fascinating. We're hollowing out the middle class.
- [29:57]
Daniel Priestley
Okay.
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Tom Bilyeu
So if we're going to put our finger on that.
- [29:58]
Daniel Priestley
If you actually have a look at the middle class, the middle class is kind of like drifting down, but it's caused by people going up to the upper class.
- [30:07]
Tom Bilyeu
So down though, right.
- [30:08]
Daniel Priestley
And then there's a slight increase in, in poverty.
- [30:11]
Tom Bilyeu
So it's mostly.
- [30:12]
Daniel Priestley
But it's actually, if you look at the data, it's actually that a lot of people are joining this one. There's, there's a very big frustration that when you and I were kids, we did not have any insight whatsoever into how other people lived. There was maybe a TV show called Lifestyles of the Rich and Famous. There was a few tabloid magazines that showed houses that people lived in, but it was not in your face occasionally. Like me growing up, I saw, I probably saw one Ferrari on the road in my entire like life up until age 20. And I remember it going past and going, wow, I just saw a real life Ferrari in the wild. So there just wasn't, there just wasn't the same exposure to Lifestyles of the Rich and Famous today. You are just bombarded with, oh, here's a 17 year old who floated his company on the Nasdaq and here's a 23 year old who has 16 cars in the garage. And you know, so there's also a sentiment, this is amplified.
- [31:11]
Tom Bilyeu
Is it just that people are now able to see it or is there really a problem?
- [31:16]
Daniel Priestley
No, there's going, well, even if there wasn't a problem, there's going to be a problem. This problem is going to get big, really big with AI coming in. Like AI is going to really accelerate the difference.
- [31:26]
Tom Bilyeu
We're going to spend a lot of time talking about AI but before we get there, I want to make sure that people really understand what's happening now so that they know how they can get out of the biggest.
- [31:36]
Daniel Priestley
Let's stay at this problem level. The biggest problem, the number one problem is I can't get a house. That's the biggest problem. If you benchmark your life by your ability to buy a house, this is the worst time in the last hundred years to or 80 years to be able to try and get on the housing ladder. It is disgusting.
- [31:53]
Tom Bilyeu
Why?
- [31:54]
Daniel Priestley
Well, because the government inflated currency and anyone who owned fixed assets like houses, the, the houses inflated alongside the currency and the, essentially the value of labor is dropping because of automation and technology. So you get a double whammy of labor. Kind of like the value of your time and labor and skills going drifting down. At the same time, the government's inflating up and the houses are keeping pace with inflation. So what those two things have done is they've said it used to be that your income times four is how much the house is that you would live in and now it's your income times nine.
- [32:31]
Tom Bilyeu
Woof.
- [32:31]
Daniel Priestley
Right, that's the big one. So. And that just feels completely unattainable. So for example, the house that I live in in London, it's a massive seven bedroom house, beautiful garden, all that sort of stuff. It would have been a house that I pretty like. If you look at all the people who've owned that house, I don't necessarily think that you would have to be a global entrepreneur, super like winning entrepreneur of the year or being a best selling author to get that house historically. Whereas it now feels like if you're going to live in a big house or if you're going to buy a big house, you better have sold a company. Like you have to have done something really extraordinary to get what would have been a big family home not that long ago. You know, it probably would have been a doctor's house or it probably would have been a dentist's house or it probably would have been someone who was, you know, a senior manager in a factory that employed 100 people or something like that. Maybe it would have been, you know, someone who worked at a senior level of a newspaper, I don't know. But it wouldn't have, it wouldn't have felt like impossible. Because if you were to take the historical value of that house, maybe, you know, you earn 100 grand and it costs 400 grand. Well now if you earn 100 grand, you're going to pay 900 grand for that, right? All right, so this anyway, this housing problem, getting on the housing ladder, trying to get on the housing ladder while it's still inflating.
- [33:59]
Tom Bilyeu
I'm going to give you my breakdown on the money printing side and how we end up here. If you think I'm going wrong, let me know. But I think it's very important that people understand this. So every time somebody gets the privilege of being the reserve currency, they abuse it. And they abuse it by bringing on debt. And the reason that they can bring on debt is because they know they can print money out of literal thin air counterfeit money to pay off that debt or the interest if they need to. Certainly what the US has done, this is exactly why we're $36 trillion in debt. Because we know that we can print money to cover things like the 2008 housing crisis. When banks fail the auto industry at one point, I mean, just on and on and on and on and on. We can print our way out of it. People mistake the buying power of the dollar going down for asset prices actually going up in value. There are times like Austin's usually the example that I use, where you have a massive influx of people because Austin just got cooler and so people are like, oh, I want to be in
- [35:09]
Daniel Priestley
Austin and lower tax.
- [35:10]
Tom Bilyeu
Right. And so people flock in. Low tax got cultural energy partly because of low tax attracted people. And now those property values begin to go up, like actually go up. There are fewer properties and so they're worth more. Now most of the time your house isn't actually going up in value unless something like that has happened to your neighborhood. What's actually happening is that what your dollar buys is going down. And so the price of the asset goes up in order to match the amount of lowered in value dollars, you would need to buy that same thing. Because people understand a house as an asset in a way that they'll never understand shares in a company. Because you can't live inside of a share in a company. Not going to make cool memories, your kids with the shares in the company. But man, you can like raise kids in a house and like you really attach and people just get it.
- [36:03]
Daniel Priestley
Yeah.
- [36:04]
Tom Bilyeu
And so when that, when the buying power of the dollar plummets and the house holds steady at like purchasing power, essentially it seems to be going way up in value. So people think, oh my God, like we've got to push people buy a house, man. This is the greatest way to make money. When in reality it's basically just a for savings account that costs you a fair amount of money to upfront taxes.
- [36:26]
Daniel Priestley
Long period of time, a long of time, houses were just seen as utility. Like they were just like my grandparents never thought about housing as something that would make money. It was. Housing was just utility. You, you live in a house because you need to live in a house. It was not an investment vehicle.
- [36:42]
Tom Bilyeu
And it probably would have more of that vibe if it wasn't for money printing.
- [36:48]
Daniel Priestley
Exactly.
- [36:49]
Tom Bilyeu
And so getting people to understand this, this is my hobby horse. My audience will have heard me talk about this a gazillion times. But money printing becomes the problem. Money printing is immoral in my opinion. The government ought not be doing it. Federal banks probably shouldn't exist. I'm doing a much deeper dive on that now. But like the, the fact that people do not understand money printing, to me, even though I buy into what you're saying about technology, I get that that feels like another nuanced piece to the puzzle. But like, the big offender in all of this from where I'm sitting, is the UK took the sterling when they had the reserve currency and knocked out 99.9% of its value. The US is rapidly doing the same. Over the last 100 years, the dollar's gone down well over 90% value. And so that creates this illusion that the asset prices are going up.
- [37:39]
Daniel Priestley
Yeah, and there are also good reasons that people fire up the money printer, because when money is fixed in fixed supply, you run out of it. So, for example, if we did have just gold coins, as your economy becomes super successful and you're producing all sorts of new value in the economy and incredible innovations happening, you actually just run out of gold coins and it becomes this real problem. The market forces money printing in one sense, because it starts creating IOU notes. So, for example, if we ran out of gold coins and you and I wanted to trade, and neither of us actually had physical gold coins, we would of course, create a trusted IOU note out of thin air, in which case we can, like, you know, do that, and then a small circle around us start to say, oh, yeah, I trust Tom's IOU note, so if you've got one, I'll start trading it. So I think before the Greenback, there were 300 US currencies, and they were basically IOU notes because we ran out of physical products to trade.
- [38:43]
Tom Bilyeu
The history of money is crazy. Most people do not understand it at all. But that PSA is merely me trying to get people to understand. Your dollar's declining in value, your house isn't going up.
- [38:54]
Daniel Priestley
But it's also important to understand it's not like some evil, you know, boogeyman comes along and says, well, very evil.
- [39:02]
Tom Bilyeu
Okay, I'm happy to, like, have this debate, but know that I become wildly unhinged.
- [39:07]
Daniel Priestley
So. So yes, so yes, the evil guys get in a room in Jekyll island and they come up with the plan.
- [39:14]
Tom Bilyeu
However, he means that literally. Jekyll Islands, the whole thing. Read the book.
- [39:17]
Daniel Priestley
Yeah, so. So yes, the evil guys show up and do that, but it's unavoidable. It doesn't know. Evil guys will show up and, and they'll, you know, if you, if you put food down in ants are going to come to it. When you hit this particular problem, then the evil guys have to come along and come up with some additional plan. Right. And the issue is, is that you can't have a fast Growing economy. It's very, very hard to have a, to have a sound money approach because you, your economy grows so fast with capitalism that you eventually run out of the actual trading mechanism. So there are, there are inheritance inherent problem, inherent problems in the, in the mix. It's not like a, oh, let's just go back to sound money. Sound money is also a problem.
- [40:05]
Tom Bilyeu
Okay, so, man. Dear, dear audience, we're going to drag you into some of the complexities here for a second. Uh, if for no other reason, then I'm, I was very impressed with how many of the details you actually understand about this. And so we'll, we'll find out where each of our edges are of what we actually understand, because I certainly do not understand it all. And truly, as the island, I feel
- [40:26]
Daniel Priestley
like you're down this rabbit hole more than I am.
- [40:28]
Tom Bilyeu
I'm way, way, way down.
- [40:29]
Daniel Priestley
You love this.
- [40:29]
Tom Bilyeu
We'll see what happens. But I am hyper aware that as the island of my knowledge grows, so has grown the shore of my ignorance.
- [40:37]
Daniel Priestley
Interesting.
- [40:38]
Tom Bilyeu
So, unfortunately, the deeper you go, the more you realize, oh my God, like this spirals and spirals.
- [40:42]
Daniel Priestley
It's a complex, it's a compl.
- [40:44]
Tom Bilyeu
Wildly complex. When America was founded and Alexander Hamilton effectively invented the modern economy, the modern version of capitalism that has justly rewarded so many people. He knew debt was the problem and they were trying to break away from England and the abuses of money that England was doing, because England was the
- [41:04]
Daniel Priestley
reserve currency before reserve currency.
- [41:05]
Tom Bilyeu
Yeah, yeah. So you guys went down the same path. And he was like, okay, this is a human nature thing. You put the picnic out, the ants are going to come. He was well aware of that. And he said, okay, look, you need the ability to use leverage, AKA debt, in order to pull some of that future gain forward, to actually make something now. So I will often tell people, hey, look out my window and you can see downtown Los Angeles. That is what aggregated capital looks like when you either have saved and you apply it or you pull it forward through finance. But either way, when you aggregate capital, you can build incredible structures. Yeah, architecture is just an easy way to see what it looks like when you can pool a lot of capital.
- [41:47]
Daniel Priestley
That's a great point.
- [41:48]
Tom Bilyeu
So aggregating capital is incredibly powerful. Alexander Hamilton looks at that and he says, okay, we need a mechanism for leverage, so we need a mechanism for debt, but we need a countervailing weight. And the countervailing weight was whenever you're pulling money forward, you have to have a repayment plan. Plan. And you have to say, this is how I'm going to pay for it. This is when I'm going to pay for this buy. And he said, if you don't do that, you get inflation spiral and you have to print and you get inflation. And we just didn't listen.
- [42:19]
Daniel Priestley
Yeah.
- [42:20]
Tom Bilyeu
And so the very thing that the man who invented the U.S. treasury warned us about is exactly what's come to pass, which is debt that just spirals out of control. And you mentioned this earlier, that you run into an interest problem. And right now in the US the interest on the debt is larger than we spend on defense, and it will rapidly become larger.
- [42:47]
Daniel Priestley
It's twice what we spend on defense.
- [42:49]
Tom Bilyeu
Oh, my God.
- [42:50]
Daniel Priestley
Yeah.
- [42:51]
Tom Bilyeu
So this is exactly how this madness spirals out of control.
- [42:54]
Daniel Priestley
The interest problem is another problem a lot of people don't understand. And I love to tell what I call the 11th marble story, which is essentially, if you've got a brother and a sister, and the brother says, I've got 10 marbles. And the sister says, I want to borrow those 10 marbles. And the brother says, okay, but you got to pay back 11, right? You have to have the 11th marble has to be paid back to me, and then I'll borrow you, lend you the 10. So the sister has the 10 marbles and then pays 1, 2, 3, 4, gets close to having the 10th marble. I've got one marble left, but I owe 11. Right. And then the brother says, hey, you've been so responsible in paying back. Why don't I give you back these nine marbles as a new loan, but now you owe me 12. Right. Because the 11th marble doesn't exist. Yeah, right. So there is no 11th marble. So what actually happens if you keep playing that game? Eventually the sister owes the brother 20 marbles. And then the brother says, oh, you're so irresponsible. Here I am. I've been lending you all this money. You're bankrupt. And the poor sister saying, but like I've been, I've been paying as much as I can and I just got myself spiraled into debt. The 11th marble never existed. When we lend money into the economy, we lend it with the condition of interest. So we lend 100 billion into the economy on the condition that we pay back 110 billion. But the 10 billion doesn't exist. So the only place that you get that 10 billion is out of massive productivity increases. You have to have huge problems increases in productivity, or you have to pull it out of the ground in oil and gold and those sorts of things. And, and, and, or actually food. You create productivity.
- [44:32]
Tom Bilyeu
And just to really make it problematic, if you pull those things out of the ground too fast, it causes deflation.
- [44:37]
Daniel Priestley
Yeah.
- [44:37]
Tom Bilyeu
And you have another problem on your hands. Sorry, you.
- [44:42]
Daniel Priestley
Well, just saying eventually, inflation in price.
- [44:44]
Tom Bilyeu
But you have an inflation in currency
- [44:46]
Daniel Priestley
because that, you end up hitting this point where the. There, there is no 11th marble. So when, when central banks keep lending. So what they do is they lend and then this is the evil part, they lend them and then lend and then when you run out of your marbles, they go, so irresponsible. Now we have to put a vat. Now we have to put a sales tax on everything. And then if we do that then we'll, then we'll reset things and then you play the game again and they go, so irresponsible. Now we want to put death taxes in. Now we want to put inheritance tax. Oh, you know, you guys are so irresponsible. Now you have to give back all those buildings that the government owns. Right.
- [45:24]
Tom Bilyeu
Keep going.
- [45:25]
Daniel Priestley
Yeah.
- [45:25]
Tom Bilyeu
Because eventually you hit drumroll please. War.
- [45:30]
Daniel Priestley
Yeah.
- [45:30]
Tom Bilyeu
And the, the crazy thing is this has been given the worst name in the world. It's called a debt jubilee. When you get to the point where you realize, oh, no one's ever going to be able to pay back this debt. It is too much. And people just say, I'm not going to pay you back. I'm not giving you the 8,000 marbles that I own you. You or owe you. You only gave me 10.
- [45:47]
Daniel Priestley
Yeah.
- [45:48]
Tom Bilyeu
And end of the Monopoly game. Yeah.
- [45:52]
Daniel Priestley
Monopoly always ends the same way. I'm not playing anymore. Yeah, I'm done. You win. I'm done. I'm not, I'm not going to keep going around the board. And what we're seeing now is end of Monopoly game. With Gen Z, they're just sitting there going, there's no way to get a house, there's no way to go on holidays. There's nowhere to live like the Instagram influencers. There's no great jobs going, I'm done. You know, Gen Z turns up to the job interview and says like, what's the work life balance situation here? I want to, I want to, I want to work remotely and I want to do as little as possible. I'm going to lay flat. Yeah. So that's the end of the Monopoly game. Yeah.
- [46:32]
Tom Bilyeu
I'm going to paint a way darker picture of the end of the Monopoly game. It is Russia invades Ukraine.
- [46:39]
Daniel Priestley
That happened.
- [46:39]
Tom Bilyeu
Yeah. Israel levels Gaza. Iran gets the Houthis. To bomb things. China and us are locked in what's known as Thucydides trap. It is. It's not the only way out, but it is by far the most common. So this is a loop that repeats. It's known as the big debt cycle.
- [47:04]
Daniel Priestley
Yeah.
- [47:04]
Tom Bilyeu
And at the end of the big debt cycle, at the end of the Monopoly game, people usually go to war or revolution, but blood flows, it. It's the only way to get people to be okay with, hey, all that money I owed you, I'm never paying you back. The only way to make people okay with that is you just kill so many people that people like, I don't care anymore. Fine. And I accept what's known as a debt jubilee, where all the debt is forgiven and we start over. And then whoever comes out the other side of that gets to be the reserve currency and they will do it again. And it takes somewhere between 150 and 250 years. And it's happened in the last.
- [47:42]
Daniel Priestley
Happens over and over 500 years.
- [47:44]
Tom Bilyeu
Happened almost five times.
- [47:45]
Daniel Priestley
Well, this is uplifting.
- [47:46]
Tom Bilyeu
This is, this is not uplifting. This is the thing that. I know you're kidding, but this is the thing that absolutely terrifies me. And for the first time in my life, listen, I'm wealthy and I don't think anybody escapes this.
- [47:56]
Daniel Priestley
Yeah.
- [47:56]
Tom Bilyeu
And so that's the thing that freaks me out, is where do we go from here? So I watch the debate with you and Gary. I'm tearing my fucking hair out because I'm like, you're saying all the right things, but he's beating you on emotion.
- [48:12]
Daniel Priestley
Yeah, totally.
- [48:13]
Tom Bilyeu
His feels right.
- [48:14]
Daniel Priestley
Yeah, yeah.
- [48:15]
Tom Bilyeu
Like I find myself wanting to be on his team just because. Yeah, yeah, yeah. Like those guys, like, get my money back. Like, what the fuck?
- [48:21]
Daniel Priestley
Yeah.
- [48:21]
Tom Bilyeu
But literally, as I go down the path of finance, the more I'm like, the. The game itself is. It's fundamentally rigged. And no one has shown me. Which is what you're here for, Daniel.
- [48:40]
Daniel Priestley
Yeah. All right.
- [48:41]
Tom Bilyeu
No one has shown me the bloodless way out of this.
- [48:45]
Daniel Priestley
Let's explore something. For most of human history, the backdrop of the economy didn't change massively across a 250 year cycle. And like, we had the agricultural age, which lasted thousands of years, and we had the feudal system which emerged as the main system of government, which was essentially kings, queens, lords, dukes, viscounts, all of those sorts of people. And then the professional class who surrounded them and protected their, you know, their future. And then the peasantry, serfs, who, like, so you. The deck of cards is based on this. You've got king, queen, jack, and then you've got 1 to 10, which is the peasantry, the faceless masses. And they're, they're very different.
- [49:29]
Tom Bilyeu
We're going to look at cards the same way again.
- [49:31]
Daniel Priestley
I'll, I'll go deep on the cards if you want to know what's hit more hidden in the cards. Well, okay. Well, the cards represent four types of power, three types of. So there's, there's clubs which represent strategy. Hearts which is relationships. Spades which is hard work. Diamonds which is refinement, insights, data. You've got. Jack is trading, Queen is virtue or institutions. King is dominance and military and government. So you've actually, it's the ace. The ace represents the very bottom of society. The ones in society who, when they get pissed off, they become elevens and overthrow the whole king.
- [50:06]
Tom Bilyeu
Right, so in the chills, really? Or is this like.
- [50:10]
Daniel Priestley
No, it's. No, it's built into the system. No, it's. This is. There are, there are 50, 52 cards, 52 weeks. There are four seasons, four suits. There is 13 cards per suit, 13 weeks per season. All the cards add up to 364, plus the joker is 365. So you've got an axis of time, then you've got an axis of society and how society structured.
- [50:31]
Tom Bilyeu
This was done on purpose.
- [50:33]
Daniel Priestley
They said. Well, the elite created games and simulations to try and teach their children how to run society. So you have chess and you have playing cards as the two tools that we still have today from that time, which are training simulations as to how to run society. And essentially it's all baked into those simulations. So chess and you know, you know, you've got your pawns and then you've got your elite. The king, queen and the bishop and the, you know, the castle sitting there behind. And there's, there's a.
- [51:06]
Tom Bilyeu
Why then are you trying to capture the queen?
- [51:08]
Daniel Priestley
Queen? Oh, you're not trying to capture the queen. You try and capture the king. But isn't it. The queen is checkmate.
- [51:13]
Tom Bilyeu
I don't know anything about.
- [51:15]
Daniel Priestley
Oh, no, no. Capturing the king is checkmate. The queen is one of the most powerful positions. She can go anywhere. The king can only move one step at a time. Yeah. So there's, there's a lot baked into this and it's a, it's a strategic way of thinking. But the deck of cards is a very ancient system for training an elite understanding of society. If you know how, if you know how to interpret it. You've got to understand what they tried to bake into it.
- [51:42]
Tom Bilyeu
That's so interesting.
- [51:43]
Daniel Priestley
And the four energies are really important. I actually use this with business. The 4 energies is big picture strategy which is clubs, brand culture, community hearts, hard work, execution, day to day, task management, spades and refinement, data improvement, diamonds. So like those four things are really great lenses. And then there's a kind of a natural cycle that you go from one to the next and then the joker is the, the fun, the purpose, the why, why are we doing this in the first place? The joke that we're all in on. So anyway, where was I before that?
- [52:21]
Tom Bilyeu
We were going to give me a much less dark view of how we get out.
- [52:25]
Daniel Priestley
Okay, so we have, so we have a. So we've never had a society where. So we've had the feudal system which lasted thousands and thousands of years. And then technology changed things and we had the industrial age which was, call it from 1800 to 2000. So a couple hundred years, probably a little earlier, maybe 250 years when you kind of depending where you want to start the clock. So what we have that's different this time is that we're going through an extremely fast paced reordering that is very, very similar from going from agricultural age to industrial age. We're going from the industrial age to the digital age. So we've actually got one system in decline. So the entire system that you and I went to school for, which is offices, construction sites, manufacturing plants, the most efficient use of time was to organize skilled labor under one roof and to create a, like a set of cogs that pass value to each other to within an AI world. Being a high agency generalist would be far more valuable than being a high skilled specialist. So we're going through a huge reorganizing where we're now seeing teams of 10 people who can do tens of millions. We're seeing people who've never met or been in the same room physically, who can work together for years at a time and feel like they have a connection. We're seeing products where small businesses launch a product and they have 150 countries that they share that product with. We have people like yourself who have permission free access to the media and have built millions of subscribers. So we now have this digital age which fundamentally tips all the rules of economics from the industrial system on its head. And we have the industrial age which is a geographically limited system based on these limitations around factories and workplaces places. And this system's in decline and this system's meteorically rising. And you can just simply see this. If you look at people who work in, in and around intellectual property, media, data and tech versus people who work in traditional jobs, people in traditional jobs are experiencing decline and they're miserable about it. People who work in intellectual property, media, media, data and technology are in meteoric rise and they're pretty happy about it. So we have one system in decline and one system increasing throughout all of history. We have a big reason to go to war, which is that we, number one, we don't know who would win. Right. That's a good reason to go to war. Number two, that's. I'm not.
- [54:56]
Tom Bilyeu
If people don't take it when I
- [54:57]
Daniel Priestley
say it's a good lord. When I say it's a good reason. If, if people are absolutely certain about the outcome. Outcome, no one goes to war. Right.
- [55:05]
Tom Bilyeu
Mutually short people that are going to lose anyway.
- [55:07]
Daniel Priestley
Mutually assured destruction, ironically, was one of our greatest peace strategies. Having nuclear weapons on both sides of the fence meant that no one went to war because they knew the outcome. So when the outcome is uncertain, then you have a hot war. People went to war because it was very, very hard to communicate. You know, so how do you, you know, how do you interpret these languages and all of this sort of stuff? It was very, very hard to understand what was what, what resources were available and shareable and all of those sorts of things. Technology solves a lot of those problems, you know, so people, you know, people who went to war from Britain with German soldiers were very easily able to dehumanize and, you know, other. The people on the other side of the trench. Whereas we're now having a different situation where a lot of people have lived and worked in Germany. They've, you know, Brits and Germans are very close. There's easy, you can easily interpret. You can actually just have an AI that simultaneously translates a conversation. You can talk to anyone.
- [56:13]
Tom Bilyeu
This does not feel true to me, but I don't want to derail us here just because Russians and Ukrainians are killing each other en masse, World War I style. Absolutely.
- [56:20]
Daniel Priestley
Yeah. But you'd be, you'd be shocked at how, like, compared to previous wars, how like ineffective a Russian invasion has been in Ukraine. Like historically, Russia would have steamrolled through and taken. Not by now, three years in, they would, they would have had 12 countries by, by this point, you know, this has been largely contained to the Eastern front. And that really hasn't moved, you know, like, so. And it hasn't.
- [56:57]
Tom Bilyeu
Do you Think that's because there's emotional connection. I mean I'll move us over to Israel, Palestine. And they are just hammering them hammer, hammer, hammer.
- [57:07]
Daniel Priestley
Yeah.
- [57:07]
Tom Bilyeu
Technology has not brought them together, much to my dismay.
- [57:10]
Daniel Priestley
No, I'm not saying technology or what like technology isn't a cure all for everything. I'm just saying this time there are some differences. I am, I am saying that we do have a system in decline at the same time as a system in, in the rise. These are two very incompatible systems. We are going to see the breakdown of this system and the, and the, and the increase of this system.
- [57:31]
Tom Bilyeu
Let's go back to the house though. So totally buy system in decline rise system. That is a great way to think about this. But is it going to lower the cost of a house so that people. Because until money printing isn't a thing, you must own assets. It, it is, it is a non negotiable. You will get eaten alive by inflation if you don't own assets.
- [57:53]
Daniel Priestley
So this is going to make a lot of people angry. What I'm about to say, we largely have to respond to the times that we're in and say every generation gets its opportunity and those opportunities are going to be different. Our younger generations have different opportunities that our ancestors would trade their arms and legs for. That is, we have incredible opportunities that are the opportunities of our time. And our parents and grandparents had an opportunity of their time. So the opportunity of the post second World war era was to get cheap property and to have it massively inflated by government.
- [58:34]
Tom Bilyeu
Oh God.
- [58:35]
Daniel Priestley
Right.
- [58:35]
Tom Bilyeu
I feel where this is going.
- [58:37]
Daniel Priestley
The opportunity of our time is not that.
- [58:39]
Tom Bilyeu
Yeah, right.
- [58:40]
Daniel Priestley
The opportunity of our time is like if you, if you were to take an ancestor, your ancestor, my ancestor, pick an ancestor from any period of time and bring them forward to today, how would they view the world? They would probably say, why are you worried about owning a house? You can own your own YouTube channel, you can own your own business. You can have a global business selling to a global audience. You could travel the world and actually be in all sorts of places at any given time. You could rent a place here for three, three years and then change needs and rent a place here for three years and then change your needs and go here for. And change needs.
- [59:15]
Tom Bilyeu
Daniel, I love you. That's mad madness. That's madness. This is, this is why people are going to chew through the wall when they hear this. So let me tell you why I think you're headed in the right direction. But that is. You're right. People are going to hate that one. But this one I think they have a reason to hate. Inflation is real and if you don't own assets, your dollars are depreciating over time and it's fast.
- [59:39]
Daniel Priestley
Okay, let me talk about owning assets. Then. You, you can. So at every level there are certain assets you can get on the housing ladder with, you can get on, on an asset ladder with. So Bitcoin is obviously an easy one that anyone can get even with a small amount of money and that tends to be ahead of inflation. Same with gold. Then there is, then there is actually smaller houses that you can rent out to other people. Right? So every time you buy a house not to live in, but to rent, it comes with an income stream. So you can actually access the capital to buy that based on the income stream with a small amount of commitment, small amount of deposit. You might say, oh, I can't afford. Like I might say, hey, I earn a couple of hundred grand a year. Let's say the house that I would be comfortable with would be several million, couple of million. All right, nine times what I earn. However, I can't afford that house, but I can afford a few smaller houses where I am actually holding my wealth in those houses, accessing finance and all of that as a protection strategy from inflation. So I can own properties that have tenants, but I can't own a big house that I would personally live in right this minute. So there are different assets. You know, this is the greatest time in history to own shares in big companies, right? There's never been a better time to just index into shares. My, my grandparents and parents wouldn't have had any awareness of how on earth they would buy shares in the US market and, and hold those shares. You know, an amazing time to, to either pick some blue, you know, top quality stocks or to index across the s and P500.
- [61:12]
Tom Bilyeu
Now I don't know what it is in the UK but it's like 55% of people own stocks and 45% don't. So roughly half.
- [61:20]
Daniel Priestley
Half, yeah. So, so it's a great time to, to get more people doing that.
- [61:24]
Tom Bilyeu
We're just not educating them or why. Like the answers exist but people are not taking you up.
- [61:30]
Daniel Priestley
A lot of people just don't have any money available to, to do this. Financial education, like financial literacy, financial education. The other thing too is there just is always winners and losers. Like it sucks.
- [61:40]
Tom Bilyeu
We both agree that the middle class, you said in the 90s it was like you could just be the average person and win. Now the Average person is losing.
- [61:47]
Daniel Priestley
Let's explain what's causing that though. It's caused by technology and inflation.
- [61:52]
Tom Bilyeu
And I think inflation is 98% of it.
- [61:55]
Daniel Priestley
No, that's not necessarily true because the same sort of jobs don't exist as what used to exist. Think it's not the only picture. It's not the only picture. There was a post war. Let's talk.
- [62:07]
Tom Bilyeu
Are you going to stay on this point? Because I want to fight about it.
- [62:09]
Daniel Priestley
Let's. Let's start with me qualifying where I'm coming from.
- [62:13]
Tom Bilyeu
Okay.
- [62:13]
Daniel Priestley
The post World War II era. And then let's lock horns. The Post World War II era was a very special era. There was a massive amount of destruction and, and things needed rebuilding. So there was a huge construction boom. Construction booms are no joke. Look at Dubai. It's mostly fueled by putting up buildings. There's a huge economic engine in building stuff. So constructing things, building things. You know, rebuilding UK after the Blitz. Huge amount of money going into productive investment, which is the rebuilding of the economy. Women largely hadn't entered the workforce. So you had a labor shortage relative to today that any job that needed doing had to be done by a man. In the UK, 300,000 people died. So we actually had another labor shortage where we just had 300,000 less young men to do those jobs. So there was a labor shortage, there was a construction boom. Then add a baby boom. Now baby boom, they just went and had the biggest population boom and all of that baby boom. We needed schools when they came of school age. We needed hospitals for them to be born in. We needed shopping centers to sell nappies and baby food. We needed bicycles for when they all got their first bicycle. We needed to print and publish records when they all got into music and wanted to listen to the Beatles. We then needed to get them more houses when they hit, when they wanted to move out of home. So we had this lump of, huge lump of people that needed an unprecedented amount of resources to accommodate that lump. So in advance of that lump, everything that they touched boomed. In 1970s, they all wanted a used car. Do you know what the 1970s was kind of known for as a boom? The used car boom. Right. Used car salesmen had gold chains and disco suits. They were making so much Money in the 80s, they wanted home appliances, they wanted stereo systems. Sony boomed because they gave them what they wanted. They then wanted credit cards. Boom. Amex, Visa. Right? Boom. Then they wanted to fill their houses full of furniture. Ikea, boom. Walmart, boom. So everything the boomers touch they boom, right? And you know, the same people who were screaming at the Beatles and now in retirement, they're actually in their retirement years. So they're screaming for health care and they're screaming for these things. And they've also accumulated this. The generations after the boomers are smaller than the boomers. So we actually have surplus created by the boomers, which now doesn't require economic activity to absorb that surplus. So the boomers boomed all these things like houses and hospitals and all this. We don't have a population pyramid anymore. We have almost like a chimney stack. So that post war era, that is a very, very special time in history where we needed lots of jobs, we needed, we had lots of houses and cheap houses. The, the demographics were different, the technology was different, all of those things were different. That is, you can't just simply flick a switch and then say, oh, let's go back to that middle class era. If we then look at the technology, the technology of the day called the factory or the workplace or the office, it was an amazing technology that had a superpower. And the superpower, let's call it an office building superpower, is take anyone of any skill level, plug them into this big machine, and you will get some sort of economic output from them that will be normalized. The economic output of Arnold schwarzenegger or Danny DeVito on a factory floor is almost the same. So if you had Arnie sitting next to Danny DeVito and they're both working together in a factory, there's not a, there's not a huge opportunity for Arnie to go that way and Danny DeVito go that way. Because the factory environment normalizes the economic output of each individual, regardless of differences. Same as the office environment and the construction environment. These are environments that just normalize value. Now, if the environment is normalizing value, everyone gets paid the same and everyone's happy about that because they can kind of see I roughly do the same amount of work as this person. Now, as soon as you remove those guardrails, as soon as you take the walled garden out, if you've got Michael Jordan up against me, the differences are going to start showing, right? So, or Arnold Schwarzenegger up against Danny DeVito or Einstein up against a normal person, or Cindy Crawford up against a normal person, suddenly as soon as you remove that walled garden, you just go, oh, boom, we're going to go up. You're going to be paid this and you're going to be paid this, right? So now we don't have a middle. We actually have widening inequality based upon the fact that we don't have a collective environment that normalizes value anymore. So this new economy that we're in, unfortunately, is a lot like athletics. It's a lot like the music industry. It's a lot like the public publishing industry that you end up with people who are in the right place at the right time with the right talent getting extraordinary results. So it's called a power lawyer, a power law of distribution. So the digital environment, it creates all the 9010. It creates a power law distribution. Over here, the old world is a bell curve distribution, but unfortunately, that bell curve distribution was created by the technology of the day. And this distribution is created by the technology of the day.
- [67:49]
Tom Bilyeu
All right, guys, that's it for part one with Daniel Pre Sleep. There's more to come in part two. Make sure you're following impact theory and leave us a review on Apple or Spotify. It actually helps a lot. And until next time, my friends, be legendary. Take care.