B (4:52)

Dude who's making pizzas in the back of the pizza shop and has 10k in the bank. He heard all of that and he was like, hey, damn.

A (4:59)

First of all, if the homeboy making pizzas has 10k in the account, this is my man.

B (5:06)

If he owns a pizza shop, I feel like he owns, he needs a little bit more operating conference.

A (5:09)

I didn't hear the word own. I, I saw him in the back like clocking $7 an hour.

B (5:14)

So when he hears all this, he was like, yeah, this is cool, Tom, but like, I need to worry about these pepperonis. What does this practically? Like, if you can sum it up in two, three, sentence. I appreciate the expanse and thank you for the. The Econ Bros are like, yes, we got it, we'll go do it. But for, you know, the pizza flippers. What's. Give it to us kind of in a. In the Lego. Explain it to me like, I'm five way.

A (5:33)

If you can borrow money from mom and dad, you can go buy pizza, toys, whatever you want. So a lot of people are going to come in and buy that pepperoni pizza from you. When the kids can't borrow money from mom and dad anymore. And now they got to work, like, a whole lot of chores for a lot less pay, all of a sudden, they're not splashing out on pizza. It's. It's only Nintendo and Fortnite, and pizza gotta go. So now everybody's gonna feel that pinch of there's just less dollars. People feel. Not only do. Not only are people less rich, meaning they have less access to money, even if it's debt, but they feel less rich.

B (6:21)

Got it.

A (6:21)

And so now they start acting in a way where it's like, ah, I don't want to spend this money.

B (6:26)

All right, I'm gonna ground this again. So a couple. There was a couple workers in the chat that was like, drew, that's me. So thank you for asking. I was like, all right. So we grounded that. When there's not enough, a lot of free money splashing around, people withdrawal. So that's why the stock market pulled in.

A (6:38)

Well, people actually. So the nature of the debt changes. People realize, oh, I've got to pay back my Japanese debt now because I can't make the Delta anymore. So now I'm at risk. So I've got to sell, but I've got to sell now. Whenever you have to sell now, odds are you're going to sell at a discount. When you start selling at a discount, it sends, like, economic pheromones into the world. And people realize, oh, people are selling at a discount. Something bad is happening.

B (7:07)

We all got to sell.

A (7:08)

I'm going to sell now so I can get the hell out. And you see these huge dips because people are thinking short term, people start panic selling. And because most of the people in the market are trading on margin. So debt, $1.2 trillion of margin exists in the system. That debt has requirements that, hey, in your Robinhood account or wherever you're doing it, you have to have at least this much in collateral. If you don't. Don't worry, Drew. I'm just going to auto sell the things in your account to make sure that I, Robinhood, am fine. It's called being liquidated. And so if the numbers get off in your account, you could Lose everything literally instantaneously at the speed that AI can detect, do the transfer, and now, poof, it's all gone. So, and by the way, if that trade doesn't happen fast enough, you can find yourself upside down because it can go into the negative where we weren't able to sell your assets, but you still owe us the money.

B (8:18)

Now you owe money. Now on the US Side, we're seeing the US treasury bond markets to start to rise. And some people are saying those two things are tied. Scott Besson talked about it yesterday.

A (8:27)

You're going to see how interconnected the global financial markets are. And so people will borrow Japanese yen and invest in Nvidia as one very real, very concrete example, because Nvidia is like just returning like crazy. People think this is going to last forever, so they take that money out and they put it into Nvidia.

B (8:48)

Borrowing from Japan cost me 2%. Nvidia gives me 30% returns. I pay the 2% off, I walk away with that delta.

A (8:55)

Correct. And so when I become upside down, because either the rate of the yen that I have to pay back is now higher than the delta that I'm making, or I look at the market and I see, oh, the thing that I was counting on giving me a yield is actually negative. So now I'm going to owe that debt and I'm trapped in the market. So the question is, do I panic, sell and take a big loss on what I bought it for, but I can still pay back my debt, or do I hope that fingers crossed that we don't stay in this position and I've got plenty of time to go back and pay that off later. And so people start selling because they think, well, I've already made a bunch of money, so I don't need to make more. But I cannot have the exposure of the debt in Japan because I don't know where this is going to stop. And if this is Japan essentially collapsing economically, well, this may go like that for five to 10 years. And so it's not like I have any safety guarantees whatsoever. So I'm underwater on Nvidia, but I'm still ahead of my debt. So let me liquidate. Lost a bit, but I'm not going to be negative in my account. I'll pay off my debt, I'm good. But that then causes a cascade in the value of Nvidia. And because people do not understand that the stock market is a casino, they don't realize that this is all just paper value. It's worth whatever somebody says it's worth not a dollar more, not a dollar less. And so when people panic for that period of time, it's really worth less. And so people can get trapped, they get emotional because they don't know is this going to be down forever or is this going to be down for 24 hours? So they panic, sell, and then that drives the cost, the price down even more. It starts liquidating more people because the value of their stock, which is on AI's light speed level, is like. Well, you dip below the liquidation point for a millisecond. Tough. It triggers a cascade of events where you get wiped out. And so that's how the red just tumbles. And it keeps getting worse and worse and worse and worse and worse until basically everybody's liquidated and then it stabilizes again. But then that's a lot of people that just got, in some cases lost their entire net worth.

B (11:06)

Yeah. So out of that 1.5 trillion, these are actual portfolio accounts and things that are kind of impacting that.

A (11:12)

This is why I'm as I tried to wrap my head around the stock market. It always pissed people off. But I would say, wait, this is like trading baseball cards. That was my first understanding of it in my 20s and everyone laughed at me. And now the more I learn about it, it's like that curve. It's like idiot says, this is like baseball cards. Guy in the middle's like, you don't understand how sophisticated this is. And then the guy that actually understands, it's like, this is like trading baseball cards. Yeah, I've gone on that journey. This is like trading baseball cards. This is a casino. They are only worth what people say they're worth. Even something that pays dividends can trade below what you would make. Just collecting the money off the dividends doesn't matter. It, it only trades at the price that people are willing to pay. That means this is a psychological game. That means you are gambling on what the emotional state of people is going to be, period. End of story. Anyone that says any different than that is lying to you now. Or they just don't understand it, which I will never get.

B (12:13)

They're lying to themselves based off the story that everybody, somebody else told them.

A (12:16)

Correct. Now, the stock market has huge advantages. It's good. It's amazing. Debt has huge advantage.

B (12:21)

That's right. That's where I'm going.

A (12:23)

Yeah, but, oh my God, this stuff becomes a problem.

B (12:26)

The Japanese bond market breaks. US stocks are going to take a tumble. Is the s and P500 dead? Should we go to gold. I have six months of cash in my bank account. Should I leave that in there? Should I move it?

A (12:37)

I will walk people through the way to think about it, the mental framework. I'll tell you what I'm doing. I do not advise people to attach their boat to my way of thinking. They need to formulate their own way of thinking. That way we don't both get wiped out. Should I be making poor decisions? But it goes like this. So what do we do in a time where countries don't trust each other, so the world order is unstable? I don't know who's going to be friends today and who's going to be friends tomorrow. I don't know if people are going to war. I don't know what that's going to do. I don't trust people to pay back their debt. So you start setting the table like that and you go, okay, well, in times of massive uncertainty, what are the usual plays? One recognize with massive humility that you cannot predict the future well. So you want to have a diversified portfolio that diversifies across economic forces. So what are the economic forces? You've got things like high risk. So when you've got high risk, you've got a lot of volatility. That's going to be the area that pulls back first. That's why you see these lightning crashes in the price of the stock, stock market in a way that you're probably not going to see in something like gold. Gold typically isn't going to go up super fast. It's not going to go down super fast, not by huge swings. Because what gold has shown over time is in times of uncertainty, people go there not because they expect a massive return. They go there to protect themselves against inflation. And so they're just moving to that saying, this is where you park your money when you're like, I don't know what the fuck is going to happen. So it is as close to I'm going to bury my money in the backyard as you're going to get. But I want to bury my money in the backyard in a way that it can't be inflated away. So cool. Gold has been that forever. Bitcoin is trying to be that. Bitcoin trades more like a tech stock right now. But I think that it's got long term legs. But that's a me thing. So people need to be thoughtful. They need to formulate their own opinion about what they think about how the human mind is going to react to bitcoin. I have a thing that says the world is only getting more technical. When you start thinking about wanting AI to be able to do whatever the hell you want it to do, you're going to give it digital money. You don't want that digital money to be owned by the government. I think everybody sees now people alive today will see how rapidly a government can become unstable. And so I think they're going to go, yeah, don't want anything controlled by the government. Government has a history of seizing gold. When protesters started getting shot in Iran, the price of bitcoin went skyrocketing there because they just started gobbling up as much as they could. And so it's like. And sorry, prices aren't local. They started buying rapidly there it was.

B (15:19)

It outdid the local currency.

A (15:20)

Right?

B (15:21)

Yeah.

A (15:21)

So they. I think people will look at that and go, this is decentralized. I like that. It's far easier to move than physical gold. That's my beef with physical gold also. I feel like I can quote unquote, see it. Whereas gold, I'm just taking somebody's word. No, no, no. You really do own physical gold, Tom. It's all good. So I'm like, so anyway, you start doing that. So my portfolio looks like I still own quite a bit of debt, but it's all extraordinarily short term. It's all US debt primarily though I do have some corporate, but I've been slowly backing out of that for the last year. The reason there is that I know that they'll at least print money to cover that. And so at least US government debt is saying every holder of dollars will suffer as Tom suffers. So I'm like, okay, like there's some balancing thing there, but I am going to be migrating more and more out of that into things like gold, gold mining stocks, silver, silver mining stocks, bitcoin. I'm already massively deployed, Eth. I'm already massively deployed, but I might start picking up some more there international exchanges so that I'm. I'm still in risk on markets because I think that's important because you don't want to miss out on something that goes up because again, I don't think I can see the future clearly. I'll stay in the US just not overly indexed on the US and just try as much as possible to spread my risk around with a profile that looks like somebody who is paranoid that the world order is no longer stable.

B (17:04)

Do you do any money markets like savings, that type of thing or do you just keep cash as cash and.

A (17:09)

We'Ll get back to the show in a second. But first let's talk about a problem you just can't solve on your own. You'd need to quit your job for like six months just to remove your data from the Internet. Your personal information is on hundreds of data broker sites right now. Your address, your phone number, your email, even your Social Security number. You can remove it yourself, but it would take hundreds of hours to track down every site and submit removal requests. And that's just round one. Your data reappears constantly, so you'd have to repeat the process every few months. It is designed to be impossible. Incogni though, solves this problem. They track down your data across hundreds of sites and remove it automatically. You authorize them once, then they handle everything. They keep removing your data as it reappears. Just go to incogni.com impact and use code impact for 60% off an annual plan. Try it risk free for 30 days. Now let's get back to the show. Well, no, no, it's all in short term government debt. So treasuries, bonds, individual. Sorry, by the way, just, I saw one question in the chat. So they're like, okay, good for you, but what about us? That is for you guys. So this is where I am always emotionally traumatized that people do not think that they have enough money to invest in the stock market. And you downgrade your life in whatever way you need to in order to start saving money. And listen, I understand if you've got kids and all that. The emotional pain of that may be worse than just dealing rolling the dice on economic uncertainty. I totally get that. I've got nothing but empathy for it. But no matter what, you need to find a way to save money for your own emotional reasons. Everybody hopefully at this point knows the story of the janitor who retired a millionaire because he just lived super frugally and socked away, you know, whatever, $25 out of every paycheck. I forget what it was, but it was a ridiculously small amount of money. But over the 40 years that he worked, that compounding interest became incredible. And so when you're playing a 40 year game, then you really can start to make money. Getting rich quick is not going to happen. So right now the thing that I would most aggressively people to form a mental model around is how do I protect myself from instability? And the things that protect from instability are the things that we've been talking about. They are going to be commodities, productive assets. And part of the reason that commodities like gold are so important is there's no counterparty risk or at least you can limit it so that bitcoin again. So don't buy silver now because it's hot. Don't buy silver now thinking that it's going to go up in price. Buy silver now because you have a mental model that goes something like 60 to 70% of the value of silver is determined by industrial use. It's used in high tech manufacturing, it's going to be important in robotics and AI. Therefore it's likely to maintain its value. That this is not a thing that people can just one day go now we don't care about silver anymore. So if I had money in silver, while the price may not go up and it may even go down, it's not going to go down. If inflation, all hell breaks loose and inflation goes crazy, that's going to probably remain relatively stable. It will have drawbacks, as all things do, but that's probably going to be relatively stable. When you think, think about inflation can get into the double digits. That's where that kind of thing gets scary. So I don't know what other words to say to people other than I get it, like if you don't have a lot of money, I understand that you're going to be deploying small amounts of money to the things that I said. But part of what makes the stock market the magically delicious thing that it is, you can buy a fraction of a share. So get in. There's such things as penny stocks. Not that I'm advising that. I'm just saying that for somebody to say they can't get into the market because they don't make a lot of money is nonsensical and is exactly how you get wiped out because you're not looking at, okay, well how do I, how do I put $100 into gold, whatever. But find ways to start socking away some money and protect yourself as much as possible from inflation.

B (21:41)

And Mark Cuban said it best. The most guaranteed return you can do is pay off debt. Because if you're paying 23% on a credit card, you get 23% returns if you just pay your credit card off. And that money could go into your pocket instead of to Capital One, American Express, wherever you send it to.

A (21:54)

So yes, and I agree, penny stocks should not have even come out of my mouth. I am not telling people to buy penny stocks. There are two types of people in this world. Those who wait for the perfect time to start and those who start now and figure it out along the way. If you are ready to stop waiting and start taking control of your nutrition, I want you to listen. Most people know they should be getting proper nutrition every day. The challenge is not the knowledge, its consistency. That's where AG1 comes in. It's a foundational nutritional supplement that turns good intentions into daily action. One scoop, one drink. That's it. No more complicated routines, no more putting it off until tomorrow. Just mix it with water and you're supporting your immune health for the day. AG1 isn't about quick fixes or temporary solutions. It's a nutritional supplement designed to become part of your daily ritual. Because real transformation happens through the small decisions you make every single day, it's never too late to create a new, healthy habit for 2025. So try AG1 for yourself today. And AG1 is offering new subscribers a free $76 gift. When you sign up, you'll get a welcome kit, a bottle of D3K2 and five free travel packs in your first box. So make sure to check out drinkag1.comimpact to get this offer again. That's drinkag1.comimpact to start your new year on a healthier note. Well, the holidays have come and gone once again. But if you've forgotten to get that special someone in your life a gift, well, Mint Mobile is extending their holiday offer of half off unlimited wireless. So here's the idea. You get it now, you call it an early present for next year. What do you have to lose? Give it a try at mintmobile.com/switch limited time 50% off regular price for new customers. Upfront payment required $45 for three months, $90 for six months or $180 for 12 month plan taxes and fees. Extra speeds may slow after 50 gigabytes per month when network is busy. See terms.