← Tom Bilyeu's Impact Theory
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- [00:00]
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What's up guys? Today I am really excited to have Raoul Paul join us again to help explain another crazy time in the crypto and stock markets. Raoul is one of the most notable macro investors and he predicted the global financial crisis way before most people. On his third appearance here on Impact Theory, we're digging right into understanding the current state of the crypto markets, the fraud in the FTX scandal, and the central bank cycles impacting our emotional cycles. I hope you guys love listening to this episode as much as I enjoyed recording it. And if you do, please leave a review on the podcast. It really is the best way to support us so that we can help get this out to more people just like you trying to reach their full potential. I'm Tom Bilyeu and welcome to Impact Theory. Raoul Paul, welcome back to the show my friend.
- [01:52]
A
It's always good to be here dude,
- [01:54]
C
always good to have you. It seems like we're always in some sort of tumultuous time. So FTX saga continues. Seems like fraud abounds. Total mayhem. How far does that go? What do you think is going to happen to crypto now?
- [02:10]
A
I think even last time we talked about we need to pass out crypto into component parts so people understand. Because if not it, Silver feels like this huge clusterfuck going on and nobody knows what it is. Firstly, the central banks are taking liquidity out of the system and have been for a while. That has hit all assets and so crypto down 75%, much like many technology stocks around, down about the same. So that's been going on, that's been putting the market under pressure. At the same time, when you get to the bottom of the liquidity cycle, if you think about it, if you think there's a bunch of people in the street saying, hey buddy, can you lend me a buck? And you've only got five bucks. And there's 10 people asking, well, five people aren't going to get it. And that's what happens at the bottom of the liquidity cycle. Those who really need money don't get it and they blow up. So in June, we spoke in the aftermath of that. That was basically the blowing up of liquidity cycle. Suddenly you find out that all of the people who are running leverage in crypto were getting blown up and they couldn't get any money from borrowers or they couldn't get any money, you know, from investors. And so that had this huge ramification. So June was actually worse than now because pretty much it triggered everything, do you think, psychologically?
- [03:32]
C
Because right now I feel like the biggest.
- [03:34]
A
Oh, no, right now this is the. I'll come on to this in a sec. But yes. So June was the actual damage. Right. That was the. Basically the nuke button to say leveraging crypto, as we've always talked about, don't go together. Right. So that blew up massive balance sheets, Three Arrows Capital, all of them. But one of them was hidden and we didn't know. And that was Alameda. We knew there were a massive shop, we knew they were kind of a bit sketchy, but they kind of said, it's fine, but they weren't fine. So at that point they were probably $9 billion in the hole, which is a staggering amount of money. Now, we don't know the exact numbers yet and we won't do for a long time, but there were a staggering amount of money in the hole and that was papered over by ftx.
- [04:24]
C
When you say papered over, what does that mean?
- [04:26]
A
They gave them FTT tokens, which is the. The token that is part of the FTX ecosystem that they control. An Alameda control, and then gave them a loan against it. That's what it first appeared, but the plot's thickened a lot since then. But that's. So basically they actually went up under in June. So what we're seeing now is the end of the June thing. It was the bit that didn't happen that did happen, if you know what I mean.
- [04:55]
C
So they were able to hide it on paper, keep the perception that they were fine, keep. And when you say they, I assume you mean FTX loaned Alameda FTT to, quote, unquote, paper over their losses and make it look like they still had.
- [05:10]
A
And then they gave them cash in exchange for that Collateral, but that cash was customer money. Right now this is. We're in the realms of bad bad. That's what the story appeared to be. And I have been speaking a few times and said, well, you can kind of understand that if Sam Bankman Fried's going to lose his entire empire in June, you might be psychologically pushed to do something bad in the hope that maybe you can avert it. Right, if the 10% chance is worth it. But I asked the question a while ago and I did. This big Twitter space is like, it is not clear to me that there wasn't systemic fraud in this whole thing to start with. The story is now clear coming out, it's coming out in waves. And again, nothing is verified here, but it's starting to appear that FTX was just a front for Alameda to capture customer order flow to give them an advantage. It's now becoming clear that ftx, Alameda, because we can now assume they're basically the same entity, which is very bad to have a trading operation that takes advantage of customers. We've also seen that they changed their strategy from being these lower risk traders doing arbitrage, buying one thing, selling another, or very quick trading to big position takers. And it seems that the lunar debacle was them just providing liquidity all the way and it blew them up and they pretended it didn't hurt them, but it seems that Alameda itself had changed what it was doing quite a while ago and was basically a punter. Then there's the confusion of who all these people are. And half of these people don't check out properly. We then hear from the guy, the guy who's gone in as CEO, who's now the liquidating CEO, and he's like, I've done Enron, I've done all of these. This is the worst mess I've ever seen. So again, news flow's coming out slowly, but it feels like there was never any proper accounting, that there was never any customer positions that weren't being used by Alameda. Again, not clear yet that they just pulled everything together and there was no particular Bitcoin or anything else that you thought you bought on FTX that was being stored for you, that it was just giant pool of cash that they were just abusing. And it's becoming clearer even after Sam Bankman Fried's tweets recently to a journalist that maybe constructed his whole personality as well, and that none of that was real.
- [07:48]
C
So that that whole Twitter thread was really unnerving. He since came out and Said, oh, I didn't know that was going to be public. But nonetheless, that was his take from the. You know, me being the savior and doing all this for good was really just Persona, and it wasn't really real. And I was like, wow. I was shocked that he was so. For coming about it. What do you think? And I know that there's going to be a lot of speculation to answer this question, but what do you think it is that he understood that allowed him to pull this off? Was it that he understood the weakness in the way that investors were getting greedy, in the euphoria of the market? Does he understand something about market making that allowed him to trick people? Like what? What he. Because when you hear how people talk about this guy, they're like, yo, he's the biggest genius ever. Like, this guy's amazing. Very bright. Accomplished investors are like, this kid's the future. It's. You know, it was on. Oh, God.
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A
Who.
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C
Who had it on their website where they actually had the transcript? Sequoia. I mean, Jesus, Sequoia is gigantic. So what is it that sbf, Sam Bankman Fried understood that he took advantage of here?
- [09:08]
A
There is a cult of personality that happens in Silicon Valley that we invest in the founders. That was the Elizabeth Holmes thing, right? The same thing was you appear like a genius, you act like a genius, people give you money. And he's a smart guy, right? There's no doubting Sam's not a smart guy. What I think he saw, probably inadvertently, was that in banking, we'd gone through this, which was the banks used to be trading firms and would have customer. And there's famous shops like Salomon Brothers, who were huge at this. And then what happened is they would abuse that because they would kind of. They wouldn't take the customer money. Well, they kind of would because it's all the same balance sheet. So the bank might blow up, but they would also trade against the customers. And then the regulator said, no, no, no, you're not doing that. Then 2008 comes along, so you've now got what's known as customer and house. And there's a Chinese wall. The wall means you two can't speak to each other because you have privileged information if you're advising, or you have balance sheets, et cetera, and you guys were the customers. We can't give it to the rest of the firm because we would abuse it. So that is fine, except that in 2008, the trading side blows up of the banks, and the customers are going to get hurt. Because everyone have to get bailed out. So then they changed the regulations and said trading has to be a much smaller part in crypto. None of that exists. You can do whatever the fuck you want. I don't even know what to do. Is illegal. I'm not even sure using customer deposits is illegal in crypto because Gary Gensler and others had not regulated it depends what jurisdiction, how far their regulations got. But this is a problem. I mean I got caught out in another one at futures brokerage. I mean this is not a crypto thing, this is a fraud leverage thing. I got caught out in MF Global which was a huge futures broker and it was run by the ex CEO Goldman Sachs who was the senator for New Jersey as well. I mean this guy was one of the most powerful people in the world. John Corzine, super famous. And so I have my entire trading funds with them because it's John Corzine, it's MF Global, the biggest brokerage firm in the world. He gets confused and kind of thinks he's Goldman Sachs, takes a huge bet on European government bonds, blows up and lo and behold he's been using customer money. So it happens endlessly in the securities industry because that little pot of gold which is customer money, people just can't keep that eye on the precious that's over there. They want it, they can use it. I can make return on capital. And then it goes wrong. So this story is as old as the hills. It's a deep fraud, so it seems. It's now on the scale of Bernie Madoff and Elizabeth Holmes and Enron. It's an accounting fraud, it's a cult of personality fraud. It's many, many things. It appears again we don't yet know. But as the news flow comes out it's staggering. So to go back to your earlier question is what's the knock on effect here from here? So my hypothesis is this was the final outcome. This was the whale that happened right the end of the crisis. So I think much like an earthquake, we had an earthquake here. Like when was it? January 2020. 2020 was a freaky year. We started with a massive earthquake in the Cayman Islands which never happens. And you know, for a week afterwards you feel the aftershocks and you're oh my God, is this a bigger one? That's what's going on now. So yes, there are going to be some other firms that get into trouble but pretty much all of the levered trading houses, the levered customers all got taken out quite a while ago. In between January and June, the levered trading shops, the people who were lending money to the trading shops, people like Celsius and blockfi, all of those guys, they've all blown up. So who's left? There's a couple of trading firms like Jump and Genesis, and that's it. So they would probably be smaller aftershocks if they failed. So what we've got is peak freak out because the earthquake happened and everybody's hypersensitive. I've never in my career seen sentiment like this, both in crypto and the stock market.
- [13:54]
C
Really?
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A
I mean, Twitter is so bad. I put up a relatively bullish chart, just marginally bullish to say, maybe the NASDAQ's priced in a big recession. I must have had a hundred comments of anger. How dare I suggest. I'm like, wow, people. I mean, there's anger, resentment, fear. At this moment of a scale that wasn't in 2008, wasn't in 2001. I've never seen anything like it.
- [14:30]
C
I haven't been through this before. So I can only say that. That the having gone now through a cycle of euphoria to doom and despair, that the shift is so stark. And it really got me looking at, okay, is something happening that hasn't happened before, or is this, like you said, a tale as old as time? And that got me thinking about money as a game and people not realize, like, so I've gone on this journey of trying to learn and understand money going back to 2020, when I was just really paranoid for people that, you know, whether it was friends, employees, whatever, I knew there were going to be people that were going to go through a hard time. I was going to be fine because I had capital that was going to see me through. But I knew that a lot of people were going to really struggle. And so I wanted to be the one on one primer of money. As I got into that, the more I realized, wow, this really is a game. Like, it's a board game. It has rules. There are things that you can do, can't do, and a big part of it is the human psychology of it all and understanding where people get happy, sad, whatever. And so trying to parse all of that out. When I think about the nature of. You talked about a liquidity cycle. Walk me through, what are these cycles? So you have a quote, the scam. Ponzi crowd will be buyers in the next cycle. So what is this cycle of money exactly that allows you to go, yes, there was fraud. Yes, this is a problem but repeat, repeat, repeat, repeat, repeat. And there's still something workable here.
- [16:11]
A
So there is an expression Warren Buffett's used. It is when the tide goes out, you see who's swimming naked. So the tide out in this is liquidity. And liquidity is driven by central banks trying to stop inflation. So they raise interest rates when they think there's inflation. It slows down the economy. It's harder to borrow money. The whole economy slows down and we restart. It's called the business cycle. And you and I have talked about this in the past. So the economies are cyclical. They're naturally cyclical. Because the credit cycle, even without central banks, is you kind of lend or borrow too much money. Then something happens at the margin and you're like, oh, shit, I borrowed or lent too much money. And you pull it all back again, and then you do it again. Right? So the central banks try and soften that cycle, but they still create it and use it to try and not let economies go too far, like hyperinflation or depression, whatever it is. Right? So that's what they're trying to do. That cycle drives the movement of asset prices. And so that's the stock market, the bond market, equity market, the currency market, the crypto market. And with that cycle becomes the human emotion cycle. And the human emotion cycle is, I'm making a fortune. I'm a genius. I'm a genius. I can never go wrong. I'm going to be rich. Extrapolate, extrapolate. Future vision of myself is now going to be driving a Lambo and et cetera. And if you think about it, and that's exactly what happens to all of us. And we have to fight that demon is you start extrapolating out and you start thinking, my vision of my future self has now been ratcheted up. So investments are just a manifestation of your future self. Right. That's what we're trying to do. You've got that vision of what you'd like to be. And to get there, you invest, because that will deliver that. So if your investments do well, you start stupidly readjusting yourself higher all the time. So then what happens is when the market goes against you, you have to go through the emotional inner journey of, oh, maybe I won't get there. Right. That's really hard for people. It's emotionally really hard to kind of plant a flag on. That's what my future is definitely going to be. Definitely. Because I'm really good at this investment game. To. I was completely wrong. And what happens is you then over extrapolate on the downside. If this continues, crypto's going to zero all of my savings that I've been dollar cost averaging listening to Tom and Rel. It's all bullshit. You know this has been a scam. It's the exact opposite. But when you step back, you take a nice logarithmic chart of Bitcoin and anybody can do that on TradingView or any of those charting things. And it's a nice smooth upward trend which is the adoption of cryptocurrencies and blockchain technologies as a new financial system and a way of exchanging value on the Internet. In the middle of that on a log chart, it just looks like it slowly does that. On a linear chart it looks like this. No, it looks like more correct. It does this collapse and what happens is everybody goes when it goes up on a linear chart, it's a bubble. People who aren't involved, then we all get to the over extrapolation of like we're all going to be billionaires, let's order my Lambo. Then it starts coming down its denial. Typical the human phases of emotion. And then you get to anger and despair, which is where we are now. But that's all that whole story of humanity, liquidity, central banks is all within this long smooth uptrend that keeps going and people forget it. They forget it at the bottom and they forget it at the top. And it's as simple as that. So to go back to what you were suggesting, has anything changed in the crypto market? Not a thing. Is the technology being utilized? Has Solana just agreed to use to use their blockchain with Meta for NFTs? Yes. Are Google working with Solana? Yes. Is Ethereum being built out? Did Defi fail? No. Does the decentralized financial system idea? Yes. Are cryptocurrencies being exchanged in a value system on the Internet? Yes. Is the number of people growing in that ecosystem? Not a lot because it's stabilized. But if you look at the past cycle, so the 2017 peak to the low in 2019 we lost about 80% of the active wallet addresses. When I look at it now, we've lost about 30 because the adoption keeps rising. So it really is a psychological game and it's a long term game because and you've talked about this is we're not involved because we can make money over a one year time or a two year time. We're saying, listen, the bet here is if you hold on and if you add at the Bottom of the panic cycle and just keep holding and don't use leverage and just be sensible about what you're doing and don't keep checking the market every day. The probability of you coming in at the end of the decade and having manifested your future self in a way that probably might be quite unexpected. And if you do that, you won't go through that emotional journey. Yeah.
- [21:53]
C
This is the story of money is, is solidifying into two things for me. You, you've got a game that has rules and you have human psychology that is so big and chaotic it becomes very difficult to track. And then on top of that, most people don't understand the rules of the money. Hearing Sam Bankman Fried talk about how you become a market maker, how you can effectively create value out of nowhere, you can do that fraudulently, you can do that well. So if you look at global currencies, those were all value created out of nowhere. For people that know about fiat currency, fiat means by decree. This is valuable because I say it's valuable and we all go along with it. Which then had me thinking about specialization because I was really trying to get to what is the root cause of all of this. I think it comes down to the efficiencies that are created through specialization. So we all realize our life gets a lot better if I handle my one little piece of the world. You handle your one little piece of the world. Hopefully it's a piece that you find thrilling in a way that I don't. And I find mine thrilling in a way that you don't. And so now we're all contributing to the whole. But I have to have some way to exchange. So I'm not trying to constantly exchange Christmas because we can't barter because I've got.
- [23:11]
A
In this digital age, there's nothing to barter with you with.
- [23:14]
C
Right, right.
- [23:15]
A
Because you're doing non physical, you're not making cheese and I'm. I'm not growing sheep. So we don't have.
- [23:21]
C
Even if you were though, even that's a pain in the ass.
- [23:23]
A
Yeah, totally.
- [23:24]
C
So like. Oh God. Like trying to figure out, imagine how many spreadsheets you would have to. Have to figure out how many toenail clippers equal how many oranges. Right. It's like, oh God. So that, that would be a literal nightmare. And so we create this very wise layer of abstraction. But then it like that layer of abstraction creates all these potential games. So for instance, quantitative easing. I mistook that for a thing that we have done. As long as there have Been central banks. I didn't realize that's a 2008 invention. And so you. For people that are just listening, Raoul was nodding like that. I had no idea that that was something.
- [24:10]
A
So, Tom, to be fair, as with all of these things, the game is actually very old, but the lipstick, they add to it. So quantitative easing is a way of saying we're going to debase the money. But you'll hear, you'll see on Twitter, people say, well, it's not debasement because. And they talk about some mechanism. The net effect is the same because they're too much debt. What the hell do we do with too much debt? You either have a massive inflation or you debase your currency. The Roman emperors used to clip the corners off the coins. And in fact, anybody who's ever used gold as a system of money has always debased their money by clipping the edges off. At first you don't notice because they take 3% off, and then before you know it, they're just cutting them in half and saying, there you go, it's the same. And then the empire collapses. That story is several thousand years old.
- [25:08]
C
What's the difference? That goes back to rules of the game. What's the difference between inflation and debasing the currency? I thought inflation was a result of debasing the currency.
- [25:17]
A
Yeah, this is where everybody got this wrong. And I've been bleating on about this forever. Inflation is a generalized rise in prices. The price of eggs goes up, the price of gas in your car goes up, the cost of employing people goes up, et cetera. Debasement of currency is this really weird little trick. Things of fixed supply or relatively fixed supply go up immensely optically because the price of the currency's fallen. Things of variable supply, like wages, corporate earnings don't, and they don't go as much. So what you find is, after quantitative easing, what happens? Stock market goes up, gold goes up, cryptocurrencies go up, housing goes up, Buying art goes up. All of that stuff. Assets. So assets are a way of storing wealth. That's what an asset really is. So in relative terms, they've held their price and the currency's fallen makes them look like they've gone up in price. It's not. And this is what everybody gets confused with. This is why price earnings ratios have gone up so much, because the earnings doesn't move as much as the price of the asset because it's a small fraction of it. So pes keep going up the more we debase currency if you want to see another example, you look at charts of the Venezuelan stock market in Venezuelan Bolivars and it goes straight up. If you put it in US dollars, it's actually down 99%. So. So it doesn't create a generalized rise in prices. This is what everybody confused because they think it, they thought it was an increase in the money supply in a way that you and I could get it. We can go buy more stuff. It doesn't work that way. All right.
- [27:04]
C
So would inflation happen though if you didn't have debasement?
- [27:08]
A
I am not a monetarist. I don't believe inflation is always and everywhere a monetary phenomena. Interesting. I think it is a supply demand phenomena above all things. Some people claim it's a supply and demand for money phenomena. I don't believe that because of the 1970s, inflation is as provable as it possibly can be. Was driven by demographics. The baby boomers all hit 30 at the same time, bought their first house, their first car, their first blah blah, blah, blah, blah. And that what was caught, that's what caused the inflation of the 70s. We've never had inflation like that before or since. Because guess what? We've never had such a big cohort of 25 to 30 year olds all at the same time. So what do you have?
- [27:56]
C
Things that have a limited supply.
- [27:58]
A
Correct. Or by anything because they used to live with their parents and before you know it, they're buying duplicate stuff because you live with your parents, there's one car or two cars, whatever it is, right? You leave, there's now another car and you meet a girlfriend or a partner, there's another car. So you've now doubled the cond and you bought a house. So that's a second house that didn't exist before. That's why demographics are deflationary and inflationary depending where you are in the demographic cycle.
- [28:28]
C
Okay, this whole idea of demographics as destiny is really interesting. Here's a question that I've never thought of before. Would we run into a problem if you could. So one, let's put a finger on debasement. Debasement is the government creates money out of nowhere and so they literally just make it up. So if we were back in the days of printing, you would just turn the printer on. That's why they call it printing money though. Now it's just a database entry. But if we were back in the printer days, you would print more. Would we run into a problem if we couldn't create more money? Because more people are being born, the population is going up. If money. Like I. I think about this sometimes with Bitcoin.
- [29:09]
A
That's what a depression is. A depression is when there's not enough money for the demands, like literal money. So what happens is the opposite of the debasement. Assets get devalued and currency, which is the thing that's in scarce supply, but the money is the thing that everybody desperately needs. When that is extreme, that's a depression. What we're seeing now is the opposite. So we've got inflation, but they've reduced liquidity to try and cool the demand, and people preferring to try and get hold of money as opposed to assets, and the price of assets has gone down, so they've actually done the opposite. Quantitative tightening is the opposite of quantitative easing. So theoretically, if quantitative easing causes assets to go up, then quantitative tightening should make asset prices go down because you're making currency scarcer. Simple.
- [30:12]
C
Okay, so one, I've asked this question before, but I forget the answer. How do they quantitatively tighten? How do they get money out of supply? Because they're not going around burning paper dollars. So how are they doing it?
- [30:25]
A
They're just buying it. So they're buying bonds from banks or other participants.
- [30:31]
C
Wouldn't that put money into the system? Because at that point they're buying something. So, sure, they.
- [30:38]
A
Sorry, they're selling off their bond inventory. So they're doing the opposite. Right.
- [30:42]
C
So they give people something, but they take the money and then they hold it.
- [30:45]
A
Correct.
- [30:46]
C
And so that. I wrote that down as you were talking about a depression. A depression, really? Isn't that the money goes away? A depression is that the money is now locked in people's wallets, bank accounts, whatever. They still have it. They're just not moving it. Is that correct?
- [31:04]
A
And you can't get it for love or money. You just. You want the money. And so the depression is what? All the assets fall in price. You know, it's that it's all supply and demand in certain ways.
- [31:18]
C
Yeah, it's all psychology. I mean, this is the utterly fascinating thing that I'm sure we'll keep looping back to. Okay, so money isn't moving during a depression. And so I was talking to Robert Breedlove about this, and I still have a nagging feeling, as much as I don't right now with my limited understanding, I don't like that money's being inflated right now with my limited understanding, I absolutely love Bitcoin because I see how it's going to hold my wealth over time. But there is a Part of me that keeps asking the question, am I actually mad at them using this cycle? Because if this game really is psychology and we get all of the innovation and everything that we get because of innovation and to get people to innovate. And I'm remembering now how Robert swatted this down. But I'll be curious to hear your thoughts. So I keep. My default position is that people innovate because money is moving. So you make something and people don't think that their money will be worth more over time if they hold it. So it is not a good asset in that sense. They think it'll be flat. That's how I think most people think of it. I think inflation is sort of invisible. Most people don't account for it until you get into a higher inflationary environment. And so they think of their money as being flat. In truth, their money is actually declining in buying power because of inflation. But they think of it as flat, or at least I always have. So I think of my money as flat. People think of their money as flat. So if I want a Kit Kat bar today, I'm just gonna give you money for it and I'm gonna eat the Kit Kat. But if I think this is like the. The joke that people make about the guy that bought a pizza for, you know, 20 Bitcoin or whatever, it's like, bro, that's $67 million, you know, or whatever, at the hype. And so what a fool you were. That is when your money is depreciating instead of inflating or deflating. Excuse me. Instead of inflating. So you've got this trick that happens psychologically when the banks put money into the system. You feel like your money's going to be worth the same tomorrow that it is today. And so you don't have a problem spending it. Does that seem crazy to you?
- [33:36]
A
No. So it's all about this marginal propensity to consume or to save or whatever, and that's your expected future value of money. The reason there's not a lot of velocity of money in bitcoin, there's a lot of hodlers, is that the general view is, well, I'm going to be better off if I just hold it. Which is why nobody's going to use bitcoin as a transaction layer, apart from lightning, because it's just the blockchain rails. But why would you? Because nobody wants to be the bitcoin pizza guy. So you don't. So it's actually kind of deflationary in that respect. And all of this is a game. It's a game of who are the other competitors in this game, who are the rules, as you would call them? Okay, we've got the central banks, they want to do one thing to us, we've got the asset prices, and they can do another thing based on whatever's going on there. If you're investing commodities or equities or whatever, and I need to navigate that to get to where I want to get to. And I have this base assumption that my cash is going to be flat. So I put 10 grand in a bank. I'm assuming my 10 grand is worth 10 grand. We know it's not. But in a one year time horizon, we don't really care if it's worth 10 grand 2% less because we don't notice that. So then we're looking at the other levers and saying, okay, what is going to deliver what Tom wants, which is I want my money to offset debasement, not inflation. Because crypto's done a terrible job of that, as has everything, including gold. I mean, virtually nothing offset this inflation we've just had. So that kind of took us all by surprise. But the debasement, well, I just divide all of these assets by the Fed balance sheet. That's really interesting. The S and P kind of goes nowhere. It's right at the bottom now since 2008. So as they started using the Fed balance sheet, debasing the currency, the stock market has just accounted for that. The Fed balance sheet's been doing that, the stock market's done that, but actually they've netted each other out. You haven't got any richer, gold fails, you've actually got poorer versus the Fed balance sheet. So the big gold narrative failed, I don't know, because probably because of crypto. So people just had a less marginal propensity to use it. In a digital age, gold is not actually that useful. The NASDAQ did actually pretty well. We're still not back up to 2008 levels or 2007 levels, but it's been going up. Why? Technology. Technology is a secular trend. The S&P 500 does not have a secular trend behind it. And then when you put crypto, crypto is the only thing that's really outperformed because what you've got there is you've got technology and this kind of whole network adoption model. And it works really well for debasement of assets because it's scarce. Technology companies aren't scarce, really. You can just keep building them. But you can't do it here, so it works phenomenally well. So you're taking the bet that future Tom wants to not have screwed up. And therefore future Tom wants to choose the asset that he thinks best represents the set of risks that he sees that being played at the table in the game. And that risk to you is debasement of currency, which I think is probably the larger risk. And therefore bitcoin or crypto is the best bet to take. But it depends what future you is, depending who's watching this and what they need. Because some people want to protect, some people want to grow, some people want to. Yeah, there's different motivations, but generally it's protect what you've got so you can maintain your level of your. Who you are. Because nobody wants to ratchet down the reality or their expectations of themselves.
- [37:56]
C
There's psychology again. So velocity of money. This is a very interesting concept, and I hope everybody takes me as you would take somebody who is learning something. Every time I get a new piece of this puzzle, it does feel like the emotional ups and downs are easier to deal with. I won't say that I feel that I'm better at predicting, and I do want to talk at some point before we go about looking forward to 18 months and what that looks like. But first, I want to contend with this idea of velocity of money. So the rate at which money moves seems to be the thing that the Fed is trying to influence because they understand the psychology. So roaring 20s, if I had to guess, high velocity of money, 1930s. I know, because you said earlier that a depression is when the money stops moving. So depression, low velocity of money. I think it was Jerome Powell that said recently, I want to keep cranking up rates because it will slow the economy. Yes. And if I go too far and I break a bone, that's okay, because I have tools that I know how to use to fix a broken bone,
- [39:04]
A
but I don't have tools facing your currency.
- [39:07]
C
Exactly. So. But this goes back to the velocity of money. And so, okay, I'm. I'm put putting this all in context of a guy who has a. A meaningful, not a scary, but a meaningful part of my net worth in Bitcoin, because I believe in the narrative of it will hold value over space and time. There's an interesting note there to be made about, did bitcoin just inflate gold? Which is an utterly fascinating thought. And that 50 years from now, will there still be gold and bitcoin? Anyway, so I believe in bitcoin. I believe in its ability to hold that. But I also have this feeling, especially now, sitting in the soup of all this madness has happened in crypto with fraud. Yes, it happens everywhere.
- [39:56]
A
Cool.
- [39:56]
C
But my punchline is that regulation. I'm always tempted by the libertarian notion of just like, don't tread on me, let me do my thing. Then I'm like, humans, like, they'll find the edges. There are psychopaths among us. Even if SBF didn't mean to be just absolutely ruinous psychopath, that's what ended up happening. And I can only imagine the human agony expense of 9. Whatever billion dollars that ends up getting lost. Like, whoa, that just absolutely devastating. Okay. So sitting in that soup, I find myself going, I'm actually okay with a certain amount of government. I pay a lot of taxes. I do have a breaking point where I start to get really annoyed and feel like it's being overstepped and misused. Let me try to put all the context on the table here. But I don't feel like just, ah, no, regulation is the right answer. We need some regulation to all of this to keep people from going crazy. But, God, is it my ignorance that's telling me that the central banks may not be the worst thing ever. Oh, I know how people that know more than me are going to have a seizure. But I can't help but think, given that this is a game of psychology, given how easy it is to sort of nudge humans in a direction that they could clamp down on their money, be too paranoid to spend it, and that it isn't necessarily a bad thing that we do have this tool to nudge it now. Conspiracies, the beasts from Jekyll Island. Like, I understand all of it. And so it's like, it's all sort of bad. But on balance, I come down on, I don't know, the system seems reasonably functional. How crazy does that sound from your far more knowledgeable perspective?
- [41:47]
A
So there's a few things. First, velocity of money is, as you say, but it's a demographic phenomena. So velocity of money has been super low since 2000.
- [42:00]
C
So not influenced by the Fed?
- [42:02]
A
No.
- [42:03]
C
Interesting. Whoa. Okay. Shocking. You're smacking my worldview around.
- [42:07]
A
They have not been able to.
- [42:10]
C
Interesting.
- [42:11]
A
Because psychology. Who is hoarding money? Baby boomers. The same people who cause the inflation are causing the deflation or disinflationary trend, because they're hoarding money because they're now 75 years old and all you want to do is make sure you don't die destitute at 85 or 90. Right. Imagine if you're homeless at 85, right. So you are driven by one of the strongest psychological factors you have is I cannot get any worse than I am today. So you're a hard stop, so you won't spend. So the baby booms have stopped velocity of money and I've proven this with charts over time that that's what's causing it. That's why we've got this disinflationary trend in the world, even though we're in a temporary inflationary trend. And it's been that, that the Fed have debased currency to try and offset the baby boomers have. And I did this whole long two and a half hour thing that people should watch on The Real Vision YouTube channel with Robert Breedlove about why we got here. It's a very long two and a half hour video and I can't tell you how important it is. But the baby boomers with the debasement of currency over time found that their income didn't go up, but the assets did because there was too many of them competing for these assets. This is before debasement and so they borrowed money to fund the gap. When we started the big debt boom, it was all driven by this demographic. So, yeah, go and check out that video. I think it's pinned to our YouTube channel. That's a big issue here. It's a bigger issue with this demographic game because that's one of the rules of the game that you can't change.
- [43:54]
C
So what happens over the next 15 years as boomers start dying?
- [43:57]
A
They will get, firstly, more propensity to not spend. So when my dad retired, dad used to quite like spending money. You know, he, he was reasonably, you know, he was a middle class, reasonably did reasonably well, not phenomenally well. And what happened the moment he retired, he's like, fuck, this is a fixed sum of money. I don't know how long I'm going to live for and my wife's probably going to outlive me. So his spending pattern probably in two years fell 65%. He was the guy who buy champagne, he'd go out for dinner with friends, buy a bottle of champagne, whatever, blah, blah, blah. By the time he hit 76, he'd be on the 5 Euro special at the supermarket because he just didn't want to not run out of money. The worst thing for him is him to die, which he did, and leave my mum with no money because then his whole sense of self is tied up. So anyway, so it's really strongly driven by these kinds of things. So I think as they get older, it actually gets worse.
- [45:10]
C
But they are going to die. So we've got, I'm going to guess 15ish years and then they start dropping like flies.
- [45:17]
A
That's right. And that's. So then we've got the other issue, which is depopulation of the world, right. That's coming at scale. But this gets offset by technology. So if you look at Amazon warehouses, Amazon is employing robots at a faster rate than humans. And the robots, there's now half a million of them and at 1.5 million people work for Amazon. But the robots work three times as many hours and are probably twice as productive. And they never have a holiday. Nothing. Right. So that's going to happen at scale and replace the baby boomers.
- [45:54]
C
But what's going to happen when the baby boomers money floods into the system? I mean, that's, I heard some crazy number about how much money baby boomers have locked, but they're going to give that. I mean, charity, kids, whatever, but it's, it's going to come in in a pretty rapid.
- [46:08]
A
I've heard this story before. There's one economy that's led everything. That's Japan. The issue was, is that people start living longer. The Japanese actually passed on the wealth to their retired kids.
- [46:26]
C
Whoa.
- [46:27]
A
That was the problem because if you had your, if you live to 90 and you had your kids at 20, your kids are 70 by the time you die.
- [46:36]
C
Wow.
- [46:38]
A
And so they didn't get the wealth effect of the part. Changeover in wealth. Now, not every economy's as long living as Japanese. And The Americans are 42nd longest living. It's inexcusable considering how much they spend on healthcare as a percentage of gdp. It's inexcusable what happens in the US
- [46:58]
C
but you just can't eat like that. I'll just say it.
- [47:01]
A
Yeah, you can't eat like that and you can't have the drug companies involved as far as they are. So I don't know if there's a big wall of money coming, Tom, that's almost more scary. And I think people's jobs get replaced by technology. But I think there is a productivity boom which we've not had for a long time because of this retired population and debt. I think this, what I call the exponential age, this rise of technologies may give us more wealth per gdp, so it'll manifest itself in ways that we don't know now. It doesn't matter if it's stuck, right? Because as long as it's in a pension fund that's investing in VC that's driving technology, it's okay. I mean, worst thing to happen is you spend it on bags of chips and cans of drink because then you're creating food inflation. What you actually want is it to create GDP growth. So by pension funds lending it or giving it, investing in companies, VC companies, you're fueling new technology, new wealth, new gdp.
- [48:08]
C
Okay, so that brings me back to velocity of capital, people putting funds into the market. If you could snap your fingers and make central banks go away, would you?
- [48:20]
A
Probably not. I'm kind of like you. I'm actually quite centrist in most things. I can see the absurdities of. Of everything. But given the basket of stuff, I asked many people who were like, I hate the Fed. I'm like, okay, 2008, what would you have done? Well, I wouldn't have got there in the first place. I'm like, okay. But they did. And how do you get there in the first place? Well, and again, watch that video with, with Rolt Breedlove. I'm like, well, that was a factor of globalization. Would you have stopped that and foreseen the outcome of that? And then that was a function of the baby boomers and World War II. And there were so many factors. It's like, no, they're doing the best that they can. Now. Nobody wants the debasement of currency. But if you don't, what is the outcome? That's what I ask people. If you don't buy the debt, if you allow the collateral of the system, because the US is the most indebted economy in the history of the world as a percentage of world GDP.
- [49:26]
C
Whoa.
- [49:27]
A
It's over 100% of world's GDP in debt.
- [49:33]
C
That's a lot.
- [49:34]
A
And that's not just. That's the country, the people, the corporations, it's the whole lot. Total debt. So what do you want to do? What do you want to do? Do you want to let all of that collateral go to zero? The whole system burns to the ground and a complete destruction of lifestyle. Even whether we're living in a fancy lifestyle driven by debt and other stuff. Do you want to destroy all of that? I don't think you would. I don't think anybody would. So in which case you need the central banker to try and just juggle the bloody balls in the air. And yes, we get angry because it kind of gets. The rich get richer because it keeps driving those assets up and the poor get poorer so we have to focus somehow on that. But America doesn't like the idea of helping poor people. They think it seems to be you're a communist. It's ridiculous. You know, why would you not have a welfare state if you've destroyed the ability for wages in real terms to rise over the last 50 years? They've not risen at all. So you need to think about this. And this is why technology people are thinking about universal basic income because these same people in the workforce are going to compete against robots. They have no chance, zero chance. So there is a lot of structural issues here. And I don't think you can do this without government and I don't think you can do it without central banks. And I don't think central banks, they've made some mistakes, some big mistakes. They made a mistake in 1997, which was cutting interest rates to defend the stock market. The leverage hadn't built as big by then and we could have had a clearing event and the leverage wouldn't build up. That's what's happening in crypto, right? The leverage can't build up. It just cannot do it because it keeps getting blown out.
- [51:23]
C
Why?
- [51:24]
A
Because there's no counterpart. But look at how vicious the cycles are. So do you want the whole economy to go through the crypto cycle? Well, you can do that. That's not having a central bank. There's so many trade offs as you suggest. So I think for a generalized population you would trade smoothness and some level, acceptable level of debasement or inflation, whatever. You're looking at some acceptable level versus an economy that does this. And you can't, you don't know when to save or how to invest because the wealth, I don't even think we
- [52:05]
C
would ever get there. I think people would turtle up so fast you would just be in protect mode, man. Even just looking at. So I as somebody who.
- [52:15]
A
But this is going to make us really hated this video Tom by some because we're both saying the same thing and people are going to go, how dare you? Can't you get it doing.
- [52:25]
C
I get it. And that's the thing I wanted people to know, like hey, the beast from Jekyll island, the conspiracies like I, they may even all be true. Let's just assume for now that they are true. All of it is still born out of the nature of the human animal and they're having now been in, I'll say blockchain instead of crypto because the part that I function in is very much not a Currency. Looking at that and going, hey, I, I'm totally down for some rules. I would just like to know what those rules are. I don't want to have to guess at what the rules are. And then you come later and you're very angry. So I like to just, let's have what the rules are. We can debate the rules, we can fight about the rules, all that, but now we can move forward in a far more reasonable way. But I don't think that things settle on stability if you have the ability for the more powerful. That could be physical, could be intellectual. I really think Sam Bankman Fried has a talent for being able. And it could be just of this moment where that sort of. He's got the geek chic look. He's. I've never, I, I actually haven't even seen an interview with him. But I will assume that what I hear is correct, that he's a very smart guy. He's certainly able to convince people that he's a smart guy. So he understands something about this that he was able to leverage against other people. And I think that will always happen. And what governments are, is basically, this is going to sound terrible, but governments are the weaker people, saying, well, we're going to get our asses handed to us physically, intellectually, so let's come together as a collective. And as much as like that can spiral into tyranny. I'm well aware, as somebody who runs a business in California, let me tell you how aware I am of that There is a pathological side on that side, but I think there's a pathological side on this side. And if we're going to find a real path forward, I think people need to understand the rules of the game. I think we have to stabilize the rules of the game.
- [54:33]
A
I'm going to add some complications to this too, please.
- [54:36]
C
Of course.
- [54:36]
A
So one of the arguments about the Fed that people have is they're not elected officials and therefore we should have a say how much our currency gets debased or whatever. But the crowd is not always very good at making these decisions either. And Brexit is a great example. Brexit. The unintended consequences have been enormous.
- [55:03]
C
I don't know anything about it. So what have been the second and third order consequences?
- [55:07]
A
So there was, yeah, all these Brits love to go on holiday to Spain, France, Italy. They had all their holiday homes. They got to retire. They wanted to spend six months a year in one country. And now they're finding they're not allowed to. And they have to leave. And they're like, what? But we're British, how dare you? And we're like, no, no, you're not part of the EU anymore. You have no rights. You have no rights over the healthcare system there. And they're like, well, this is not what we agreed to. At the border in France, you can drive a car from France to Spain to Italy to Austria, do anything you want. You don't even go to passport control. Brits at the border in huge long lines, getting in and have to produce all the right papers. They're like, but we're British, how dare you? You voted out. So normally speaking, that should have been done not as a referendum, it should have been done as a political process. And that was going on as a process that takes years of debate and discussion. And voters can say, we like that party because they're against leaving or for leaving, and that's fine. But it gets debated properly over an extended period of time. What we did was say you make decision instantly and everyone's like, well, okay, completely not given the tools and they screw up. So do we want to give the same tools to everybody with interest rates? Do they even know what drives the economy now? I don't think the Fed are particularly good with that either. I think they do a terrible job on forecasting the economy. And that's why Fintwit gets so angry with them, is like, it's bloody obvious we're going into recession and you won the battle on inflation, but you're going to keep fighting and you're going to make it worse for people and then people are going to lose their jobs, they're going to be angry at you again, and this and so on and so forth. But nobody's ever managed to make the business cycle flat. Nobody. It's a degree of what, volatility you'll accept.
- [57:15]
C
Yes, exactly. Talk to me about Japan and the uk. So it seems like demographics is playing a huge role. Maybe Brexit is playing a huge role, but they're having very substantive issues. When I got married to a British, the pound was at almost 2 pounds to, or, sorry, $2 to 1 pound. And now it was like 103, like a month ago. So what is happening?
- [57:51]
A
The UK lost a huge amount of its buffer because it basically shut shop on immigration.
- [58:00]
C
Why is that bad?
- [58:02]
A
Because the demographics are getting older. So GDP growth is actually a pretty simple formula over time. GDP growth is population growth plus productivity. If you've got old population, you don't have any productivity because they don't work. And an old population means your population's shrinking, so your GDP goes down. So Japan has suffered that. And what happens generally is that's offset by leverage. People add debt. So Japan is the older population. They do have more productivity because they've got industry there and the industry can become productive over time. The UK's got no industry left, it's just service economy. There's nothing left. And because they've now knocked themselves out of the eu, I could be a guy who manufactures tiles and I could sell them to some guy in Paris and construction firm in Paris can't do it anymore without taxes, so you've completely ruined that. So all of their levers now are basically devalue your currency. They've got very little room for maneuver. The Japanese have had a lot of room for maneuver because the population saved so much money, because they have a system of saving. The Brits, like the Americans have a system of debt. It all came from actually Margaret Thatcher and Ronald Reagan is where it all came from. But the Japanese are slightly opposite, so they kind of manage their economy better so they don't have violent swings. Just doesn't grow, just doesn't go anywhere.
- [59:35]
C
Now I've heard that they really tried to stimulate the economy and just couldn't correct.
- [59:40]
A
They can't create inflation. Why? For the same phenomena we talked about, there's a bunch of 80 year olds, a massive amount of them, who are like, I just need to have enough money to live on for the rest of my days. And I'm Japanese, so I might live to 100. So I retired at 70, I have 30 years of money. I mean half, most people find it hard enough to save for a bloody house deposit. How do you save for 30 years of living without a job? And what does that do for your psychology and your spending habits? Huge. People forget all of these kind of bigger picture equations. So Japan didn't allow their interest rates to rise because they've used a lot of debt to keep everything going. They allow the interest rates to rise, it causes a bigger problem. But by doing that, because now people
- [60:32]
C
can't, they can't pay the interest on the debt.
- [60:34]
A
Correct. So you kind of slowly have to devalue or you do it all in one go, which is nobody can pay the debt. So what they chose was actually quite a rapid devaluation of currency by fixing bond yields at 0.2% while the rest of the world was seeing bond yields at 4%. And the central bank said, no, they're not going, we're just going to buy every bond you try and sell us until there was no liquidity left in the bond market. And the bond market doesn't even trade. And this is the second most indebted economy in the world. And the bond market that stopped trading because the Japanese central bank bought all the bonds. But what it meant was the currency collapsed because you're debasing your currency by that quantitative easing route, which is you are basically printing money to buy bonds.
- [61:28]
C
So if they're the core problem that they're struggling with is demographics, is there any way out for them other than immigration?
- [61:38]
A
Yeah, technology. That's what I think the solve is. I think the fourth turning is technology solves this because the logical conclusion of world population growth, which is essentially going to zero. So the birth deaths rate of the entire world is like 1%. So I'm crazy now. So yes, populations like India and the Middle east are very young, but they've all stopped having kids. So the whole world is going through the same cycle on a lag with Japan at the front, then Europe, Europe and South Asia, South Korea, Taiwan, all the same. Then the us, Then Latin America, then Africa, the Middle east and India. So all population is going to collapse, which is what Elon Musk keeps talking about. And the solution to that is technology. You need to create productive units with less people because you've lost the relationship.
- [62:36]
C
You need to create productive units that somehow funnel the money into other people's hands. Or are you saying that as long as they're creating something that people can get somehow, some way that the quality of life maintains. I'm trying to make that make sense. I keep coming back to velocity of money. If money isn't getting into my hands and going out of my hands for things that I want.
- [62:57]
A
No, you don't matter in this equation really, because the big GDP growth is the growth of the population which is shrinking. Right? So that whole part's gone for the whole world. Immigration doesn't solve it. It can solve it for single countries, but not for everybody. Plus productivity. You're an old population, they're not productive. Okay, so that sounds like you've got a broken system and debt is the outcome. But at some point people can't pay the debt. The velocity of money thing doesn't help in this equation because you're not actually creating enough GDP growth to service the debt. And if debt growth is higher than GDP growth, debt is the income level.
- [63:46]
C
Are you talking about debt at the country level? Because I don't see how GDP helps at an individual debt level.
- [63:52]
A
Well, GDP is the total amount of activity within the economy. That's what you do.
- [63:58]
C
Yeah, but it's being done by robots. That helps Jeff Bezos and Elon Musk, but it doesn't help my mom.
- [64:04]
A
And this is why we need a distribution of capital. Now there are ways, and I think crypto is one of them, which means that we can participate in these communities and get paid in a reward system for being a community driven person that's good for the community. So that is where we're seeing it in Reddit, where we start seeing this nexus between social tokens and NFTs creates an economy in your cultural community. And so I can be a good actor and I can get paid in an asset that has value and a system of money that has value. To me, that may be fungible with the outside world.
- [64:42]
C
You don't think that becomes a Black Mirror episode real fast?
- [64:45]
A
Everything does, my friend. We haven't even got to the end of this story. But that is. Yatsui calls it universal basic equity. And I think that's right. But the universal basic income side is going to have to be solved for the exact reason is I am not doing a job and earning the money myself. The robot or the AI is doing the job. Now can I monetize my digital identity so I participate in the advertisers doing that or in the network and you know, I attach myself to a network where I get monetized or I get share that? Yes. So that's a free. That's a free market form of universal basic income. But yes, we have to solve this because if not, there's going to be a few people who are going to be so ridiculously rich. The world has never seen anything like it. We're already seeing that and we've got a big problem. But that's not the bigger problem. The Black Mirror is clearly because AI is accelerating so fast as our robotics, there's no need for humans at all. So there's two parts of this and it's the phase that is almost inevitable. One is that at first we become augmented humans, so we use the AI. So I use Grammarly, right? That's augmented AI to make me a better speller because I'm pretty ADD and I can't spell anything ever. So it helps me. Okay, that's augmented human and that will become much bigger. But obviously in the end we don't need humans. Yeah, this. And that's the singularity.
- [66:22]
C
Yes. I think the singularity will probably come even sooner. If we keep the definition that the singularity is the moment at which we can no longer predict the future because it's just changing so fast.
- [66:34]
A
Okay, so I think the singularity is when the predominant species is the computer.
- [66:43]
C
Okay, so you predict a world where we merge with computers or where computers wipe us out, or we just stop breeding.
- [66:50]
A
We start first and it always ends up in the latter because of the exponential knowledge accumulation. There's a great book and you've got to read it. Homo deus. And it goes, I've read it. That's a huge detail of why and how. And again, he doesn't need to be right on everything. But a computer actually acts as a virus. Code is a virus, an AI is a virus. And they're because of how they morph and change, they're unstoppable. And we were that beforehand on Earth as humans, we were the unstoppable force. Now again, this doesn't have to be utopian dystopian, because that Black Mirror episode could be in 50 years time, 100 years time, 200 years time. I don't know, don't really care. My guess is from here to the augmented humans part is probably a renaissance.
- [67:41]
C
Very interesting. Why do you think it becomes a renaissance?
- [67:44]
A
Because you should be married to a break. You should say renaissance. I'm married to an American. We all speak this hybrid now. So the why? Because I think that productivity explodes from the rise of technology. Augmenting us as humans mean that we get the financial benefit at first. I think that biotech, sciences, Internet of things, robotics, AI, big data, cloud space, they're all going to be like a complete step change, like discovering oil again.
- [68:27]
C
Right.
- [68:27]
A
If world activity is another way of thinking of it is how much productivity can you get out of one unit of energy? We're going to create a lot more. And I think within this, we're going to drive down the cost of energy to near zero.
- [68:38]
C
Because once people say that a lot, how do you think that happens? Is it just getting better at solar
- [68:43]
A
is it's just not using fossil fuel. So fossil fuel has a fixed cost because we need to get out of the ground and we can get efficient at it. So shale became more efficient, so it lowered the cost of energy overall. But as we start marginally eating away at new forms of energy, whether it's solar, wind, nuclear, whatever it may be. Right. Hydrogen, who knows, Right? And yes, of course, right now they don't scale big enough to replace fossil fuel. And yes, we'll use fossil fuels for chemical manufacturing. And stuff like that. So it's not going away as an industry. But all of these forms, geothermal, end up cheaper at generating energy than others because technology keeps driving them. Even fossil fuels have got cheaper really because of shale and stuff like that. You can produce more of it at the lower price, but we just don't necessarily. Because we need to extract it out of the ground. It's actually harder than eventually extracting out of the sky more efficiently. So I think the cost of energy comes down, so it's negligible. Okay, what does that mean for society? That was the one restriction we had was output from a unit of energy, a kilojoule, what it gives us in productivity. Well, if that changes, that changes the whole game too. I think this is all up for grabs. And again, some of this is going to be pretty societal. Breaking some of it will be amazing for people because of how medical science will change dramatically because now even the medical scientists have realized, the geneticists have realized it's all code and that as opposed to be a binary code where like quadratic code and that's all humans are. And in fact, you can distill almost all life forces down to code and it's like, okay, you know, and therefore you can solve it in different ways. So there's a lot coming at us and it all seems terrifying, but you can either fear change or embrace it.
- [70:38]
C
Yeah, I actually don't find it terrifying. I was going to ask you. When you think about the rise of AI, genetic editing ceasing to be biological matter and instead migrating more towards silicon or whatever it's going to be, is that like dark clouds and wolves howling in the background or is that light and expansive for you?
- [71:02]
A
It just is. There's no way. It's not going to happen. And you can say, well, governments aren't going to allow it or whatever. Right? Yeah. But maybe in Israel they do allow it. And if you can hear that, you can live another 20 years because some scientist in Israel has done something for you, you're going to do it. It's unstoppable. You can ban AI in Europe, but if the Chinese are using it, you're at a massive strategic disadvantage and they'll destroy everything, take all of your money. So you are. Game theory suggests that it will go that way, which is the law of unintended consequences. You never realize that this is what humanity would get to because we always thought of ourselves as the kind of God creature and we looked back at all of evolution and said, oh, because they were worse than us. They were idiots. I mean, the Brits did this back at the peak of the British Empire. They would use, they would say kind of British and God were the same thing. America has much similar language. And we would go to countries as Brits. Well, I'm a half Indian, so that was one of the countries they invaded. But they would, they would say, you know, we're kind of. And Darwin had come about and they would say we're kind of Darwinianly advantaged by God, that we are the stronger people. I mean, and so humans just didn't realize that they're replaceable too much like the dinosaurs were. And that system doesn't happen overnight, it happens over time. So it just is, Tom. And you can't. I think some of it's light, some of it's dark. And I didn't think we'd think this conversation was going to go here, but it did.
- [72:48]
C
No, I mean, so this, this is all that interconnectedness for me of realizing that the game of money is really just a game of human psychology. And if you understand the psychology, then you can begin to, I think, go through the ups and downs with less emotional volunteer volatility. That to me, I think is, is a really important part. Just to put a capstone on the what is the future? I agree with you that it just is. It seems so inevitable. And when I first started saying that to myself, it sounded a little nihilistic. And so I was like, okay, that is.
- [73:22]
A
And I went through the same journey.
- [73:24]
C
Yeah. Cause I didn't. I don't think or feel anything nihilistic. I want to steer this as well as it can be steered, but because it feels so inevitable, then I just started thinking about, okay, how do we navigate this? Well, And I think one, if you've read Fahrenheit 451, that explains the sort of middle term part where you'll get a bifurcation of society, where some people like me are going to embrace the technology and want more AI in my life and looking for ways to leverage that and use it and understand over time where that's going to go and that it'll be tough to keep up with. And therefore one of the first things I would want to do is either I can right now get behind non germline editing of the genetic code, but edit genetic code and or begin to merge with technology. I find that very, very interesting. And maybe it doesn't happen in my lifetime. Fair enough. But you know, whether that's 200 years or 2,000 years from now.
- [74:21]
A
It's already happening, Tom. Look, how many of your friends wear an Apple watch or an aura ring
- [74:25]
C
or even people that have a cochlear implant. I mean, it's like getting real.
- [74:29]
A
Yeah. Even you with those little Apple EarPods in. Right. That is augmented, Tom.
- [74:35]
C
No doubt. I mean to think that you and I are effectively speaking telepathically over a huge distance, it's really. It's pretty crazy. Yeah, it is. That to me is. It's exciting if you can embrace the inevitability. But I think before we get there, there's going to be a lot of problems because of that bifurcation. Knowing what I know about humans, they are going to collide very dramatically. And that's where like being aware of how things will skew towards tyranny on both sides, that's where I get a little worried. So to the.
- [75:09]
A
I agree. And again, you and I have talked at depth about the fourth Turning. This is exactly what it is. It's where demographics meets wholesale societal change and technological change. That whole thing is terrifying, exciting, anxiety creating, messy, confusing. And we're right in the middle of that. We can all feel it written large, right?
- [75:37]
C
Yeah, I wish we were in the middle of it. I have a very bad feeling that we are right at the beginning and it already feels this like, ooh, like sparkly and like, oh, there might be a powder keg here. But yeah, I think that you. If demographics are as difficult to contend with as it seems like they are, I think then that if the birth rate doesn't increase, you know, God bless Elon for doing his best to both get people to pay attention and just himself populate the Earth. If we aren't able to contend with that fast enough and AI and robotics really becomes the only way, that's obviously going to dramatically accelerate that. And I.
- [76:16]
A
There's no ifs, Tom. Amazon, Walmart, they've all done it. They've flipped the switch. The change has happened. There's no if. It's like. And the more robots there are, the mess humans there'll be. Because why would anybody want humans when there's not enough jobs? Because of the robots. So it is. Demographics is destiny. And there's not a damn thing you can do about it, particularly when you're competing against something that is cheaper. And that's why the millennials didn't have kids in the rate that their parents did is because they came into the workforce competing with their parents for one first generation history to do that, because the baby boomers didn't have enough money, so they stayed in the workforce longer. Secondly, they had to compete against the Chinese workers and thirdly, they had to compete against the AI, the computers and the robotics. Of course the millennials aren't going to have kids.
- [77:13]
C
Yeah, that's interesting. But they're not even having sex. And that one is there, there's, there's, this is so layered. There's so many different things going on. Like as I get into that and I've started talking about. So I have a lot of millennial and Gen Z employees and like even talking to them, they have such a different perspective on what life is. So I think a lot in terms of frames of reference. Right? So baby boomers, life gave them one frame of reference. I'm a Gen Xer that gave me a different frame of reference. Millennials, Gen Z each have their own frame of reference. And it seems to you self evident that that's the way the world is. What I find fascinating about social media is it allows all these frames of reference to like clash and come together. And so everybody seems crazy to everybody else. And then you've got the algorithmic rabbit hole effect where you're in echo chambers and you only hear your own thing. So you're constantly around people that share your frame of reference. Really interesting, man. It's really interesting. What do you think all this means for the next 18 months as you look forward as a macro guy and you have to try to make some sense of this?
- [78:23]
A
I know it's to be true that the only answer to a debt laden aging population is what I refer to as more cowbell stimulus. Stimulus is the status quo. That's why you like Bitcoin, because you can sense that stimulus is the status quo, the debasement of currency. It's the only way. Because if GDP growth doesn't grow as fast as debt growth, your income is not covering your payments. It's as simple as that. And the only way of juicing GDP growth in that formula is debt. So debt needs to grow, the economy needs to grow fast enough that it pays it off. But now each unit of debt lowers the each unit of debt gives you less GDP than it did. So it's now $3 of debt gives you $1 of GDP growth. And it's been going like this. Okay, so if that is the construct within which we live the truth, then at some point if I look at the future and say I'm going to live in nine months in the future is the central bank raising interest rates, There's Almost a zero chance really. Well, because we've already got to the tipping point where inflation is starting to fall. Just the extrapolation of interest rates mean that they will be below the Fed funds rate by about March or April next year. So therefore. And what the Fed going to go to what, 10%? What's left? Rubble. People rioting in the streets. Right. You can't do it. So you've got to the point, you're getting close to the point where the rate of change changes and in six to nine months time the Fed are likely to have stopped and probably cut because stimulus is the only way the world works.
- [80:16]
C
So they raise rates just to lower them again.
- [80:19]
A
Correct. So they lower the rate of inflation, but then it's like, oh shit, we need to bring up GDP growth because if not, we all go bust. Right. And we need asset prices to rise because you can't let the collateral go bust. That's what's just happened in crypto. The collateral left, TT token, the Luna token, all this stuff went bust. End of game. All the leverage gets blown up. So they can't allow that. So stimulus comes.
- [80:40]
C
Does that work in the same way? So what happened for people that don't know what happened with ftx, there were people that wanted to sell their FTT and get their money out and they couldn't and so they just paused. Sorry. Or whatever you had on their exchange because they were off gambling it. So you wanted to get that back, you couldn't because they had used it somewhere else. Now I'm assuming that we have that same problem of the government always has to be able to buy the people that want to cash out. Is that the issue?
- [81:08]
A
No, it's even a bigger issue than that, Tom. If you borrow money to buy a house and the value of your house goes down 50%, you're insolvent.
- [81:20]
C
Only if I want to sell though. If I don't need to sell, I'm fine.
- [81:24]
A
Yes. That negative equity means that the banks then become massively proactive in not doing any more lending. That was 2008. The collateral went down. So what else do we borrow against? We borrow against our jobs, I. E. You go to the bank or you use a credit card, it's because you've got income. Right. You lose that, that's your asset, your income that you generate. Right. You can't borrow money, the whole system blows up. You can't pay any of your other debts if you're, if the. In the stock market, in the financial markets, people borrow against bonds and they borrow against stocks and they borrow against all sorts of other elements of wealth. If those things go down too much, then people stop asking for their money back because the collateral doesn't cover the loan. And that's the issue that the society faces. So it's at every level here, it can't happen. So if your share price goes down too much, you probably can't borrow money if you're a public company because people then worry, can you pay them back? Your income goes down, all of this stuff. So therefore, I think that as I said, this is how the world works is stimulus. Now, in this particular phase of the world, and therefore looking out nine months, the probability is, knowing what we know about debt and demographics, that the central bank has not only stopped raising rates, but is probably easing rates to try and balance out. As you talked about, this is what you want them to do, right? You want them to try and just stop the worst part of the collapse and the worst part of the boom. So they'll be doing that. The probability is that they will also be trying to inject money into the economy because there's no velocity of money, because these old people. So that's quantitative easing. What does that do? Asset prices go up again. So all roads lead to asset prices going up over time. It's a trick because they're devaluing the value of the currency. It's a trick. But then you've got, you've taken the bet and I've taken the bet, which is like. Well, we like crypto because we think it not only offsets this whole mechanism because it's a fixed asset, but it also is a technology that we think unlocks a whole bunch of other opportunities and therefore it's valuable. So that becomes a superior bet. And I can't get to a more superior bet. And I've tried and I've gone through everything. I just wrote a huge long 160 page article about all of this in Global Macro Investor and I still can't get to a position where in this construct of the world that Bitcoin, Ethereum just don't become even more and more dominant and valuable.
- [84:13]
C
How much do you think that it's
- [84:15]
A
because just to clarify that for people, one of the reasons it's so valuable is like what you're doing, you're building this whole kind of NFT metaverse projects all involved in blockchain, right? You're building an applications layer on top of the, of the ecosystem, whether it's Ethereum or whatever you're using, right? But Basically you've realized that you want to build in this ecosystem that's making Ethereum or whatever you're doing more valuable. And so it goes on.
- [84:45]
C
Yeah, and that's one of those things that especially right now, there's real opportunity for builders for sure. I'm actually really glad. I'm heartbroken for all the people that have lost, but I'm very glad that in my corner of the blockchain world that the gamblers and the people that were just there for the money have been wiped out. It no longer feels like a sound investment for them, which is good because it shouldn't be treated like an investment. It should be treated like you would treat an interaction with Disney. Right. It should be emotion based, it should be connection with the ip. Anyway, so that is very interesting. But even I like I'm ultimately I'm chain agnostic. So right now we're building on Ethereum. So I wonder, is it Bitcoin or is it something that mimics digital gold? Is it Ethereum or is it some other thing that has the same kind of properties but better adoption?
- [85:40]
A
You know, I don't know and I don't care. Is the answer like you are because
- [85:44]
C
you'll move as you see it happening?
- [85:46]
A
Yeah, I'm agnostic too, just because I think that ETH has the superior benefits. Because you're building on ETH and we're real vision of building our NFT community on eth. Now whether you use Polygon in the middle or not doesn't really matter, but I see people doing it on Solana. Okay, that's interesting. Not a lot of people doing it on some chains and Bitcoin. Nobody's doing it on a tool because you can't, because no smart contracts at scale. But Bitcoin has this other value proposition that's cool too. But yeah, I'm agnostic. But our game, I want to manifest my future self. My game is to back the right horse. Which is what you are exactly doing with your bitcoin bet is you're saying, you know what, this probably adds to my real estate and the businesses I'm building and will help me deliver to myself my promises.
- [86:35]
C
Now what do you think about what Zuckerberg is doing with Meta? Do you think that's just insane, the amount of cash flow that he's pouring into it? Or do you have a different take?
- [86:46]
A
He didn't have a choice. Human interaction is going into the metaverse. What that means to different people is different things. But it's going to be a more immersive 3D, like experience doesn't have to be VR, could be AR, could be even just more 3D, render, browser rendering kind of stuff. That ability to interact with humans in this new very digital age. I mean, this is a very 2D experience for us. And if there was a way that was a little more 3D and we could have people gathered around us, listening in the same room and we could see their faces or their PFPs, okay, it feels more human. Even though it sounds non human, it's actually more humanistic. I think he realized that, that you are going to adapt or die. So he has to go through the S curve moment and take the big bet. I think he'll pull it off. What does that mean? Because people again immediately jump to this dystopian black mirror. Mark Zuckerberg owns this whole Metaverse world. It's not you. And I will have probably calls like this, maybe in his version of the Metaverse or another one. And it, it's like you use one email server, I use another. I don't know what you use, I don't really care. You might use Gmail and I use Outlook. You know, it's. We will just use whatever is suitable and they will make tools that are going to work really well for large corporations, people at scale, people in third world countries that don't get access. And so I think the probability of success for him is, is high. And I think the market is mispricing that probability because what they've done is taken cash flow out now to invest in the future later. And the investor's like, I don't know if this is going to work. Amazon went through the same when they did aws. Everyone's like, what the fuck are you doing? You're doing cloud server when you're a retailer. And they're like, not really. We think there's a big opportunity. And they were right. So Apple's doing the same bet with ar. We just don't see it yet. But they've been plowing money into it. And Google have been doing this forever with AI. You know, they've all played, they're all taking a different path for this exponential age and placing their bets at scale because if not, they're out of the game.
- [89:06]
C
Yeah, I agree with that. What, what'll be very interesting to see is given sentiment, given, going back to what you said at the beginning of the episode, that you've never seen a sentiment like this and seeing how negative people are in crypto when FTX blew up I was like, oh my God. Like, this is really like, sentiment was already bad, but this is really gonna get people just screaming that this is all a scam and all that. And I was like, okay. As a builder, I just keep coming back to my thesis on what the technology allows me to do. And every time I look at that, I'm like, part of me is excited that so few people believe in it because I'm just gonna keep going, keep building and as long as we can cross the chasm, because you need to find ways to invite people into that world and if they're like, you know, so averse to it that you can't even get them to look at you, you have a problem. I think that will be short term, measured in, call it three to five years. But long term, I agree that I think that this is where people are going. It is the most logical outcome, knowing what I know about humans and what the technology is going to be able to do. And watching Mark navigate this will be really interesting because he's getting pummeled by Wall Street. They don't like what he's doing. He's lost a tremendous amount of value. But he has voting control. So it's a question of is he going to stay that course and keep building. And as somebody building in that same space, I am so grateful for what he's doing. And I don't understand other people in the space. I mean, I suppose it's what you're saying about they're worried about a black mirror version of the world where, you
- [90:38]
A
know, some big problems are really noticeable thing. And I see it because I was the macro guy who was always looking for the downside because I just make money out of it. And I changed my, my thesis based on what I was seeing in technology and, and all of these things. And this is probably the solution. And what I got back was a response that I did not expect, which was anger, not debate, not. Yeah, I'm not sure if you're right. Anger. And it took me by surprise and I realized that change is happening too fast and it's happening too fast for the investors in Facebook. They can't assess it. So they either turn, they, you either do what we're doing, which is like, we're just going to embrace it. We're just going to move forwards. Let's see where this crazy journey goes. And others look back and go, I want those white picket fences and my Mustang with 18 liter Mustang and I want that because I can't deal with this. They are Angry because their American dream, again, it's the psychology of human self has been shattered. They're still saying my future lies ahead. But so if, remember we talked about at the peak and at the bottom, humans over extrapolate with emotion. I'm now totally bastard. Now I'm the richest man in the world. And so this societal change is doing the same thing. And people just think this is the end of the society, that they understood the American dream that they were given and they don't want anything to do with it. And the rest of us are going, actually, maybe that's a new exciting place. And I could both make money out of it and enjoy it and go along for the ride and see that. And that is played out in Twitter all day, every day. But it's an amazing emotional anger that I think is based around a mentality of a fixed pie versus a growing pie, an infinite pie. And those of us who have started to look forward are now firm believers in the pie is probably infinite, depending how you address it.
- [92:52]
C
Yeah, talk to me more about that. I have a guess that this is going to go back to what you were saying about robotics and AI and that you're getting more energy or more GDP out of each kilojoule, or I forget the exact way that you said it.
- [93:06]
A
Okay, so let me, let me go through this. The fixed versus the growth mentality. The fixed mentality is if you dare use another source of energy, you're going to rob us of the fossil fuel jobs and stuff that we have. And that is bad. As opposed to, oh, well, if it evolves, we can probably get more energy than we, you know, we can get more kilojoules out of a unit of energy if we don't use fossil fuels. That's probably net big for society because you could build more stuff and do more stuff with it. The fixed mindset is, no, you can't replace fossil fuel with solar. It doesn't work. The equation doesn't work. And I'm like, you don't have to replace it all. We can have both. But if it's not such a large part and we can create cheaper or more efficient energy elsewhere, net net. The pie grows. Is it? I mean, the central banks don't like to see their pie changing. Their pie is. Well, there's crypto. It's a whole new system of money. So. No, no, no, no. Our pie was this. You can't just come in with this new pie. And we have. That's exactly what's happened. Yeah.
- [94:18]
C
20, 22 feels like the rate of change has really accelerated and I've started telling people, hey, plant the flag in your mind. 2022 was the year that AI became really usable and like a day to day person's life.
- [94:30]
A
Have you seen the interview I did with Ahmed Mostak on Real Vision?
- [94:35]
C
Tell me more.
- [94:36]
A
Oh my God. It's probably the best interview I've ever done. He's an old mate of mine. He was a global macro investor, subscriber, hedge fund manager, macro guy. He had done some other stuff and he's been on Real Vision a few times in his old guys. I saw him on Twitter talking about AI. So I'm like, what the fuck are you up to? Come and talk to me on Real Vision. And then he releases. He'd been kind of private what he was doing and he's just built stability diffusion and Stability AI, which is the largest source open AI project in the
- [95:08]
C
entire world because I've seen some of the uses of that. It's crazy.
- [95:13]
A
So he compressed every image that ever existed on the Internet down to a 2 gigabyte file.
- [95:21]
C
What?
- [95:23]
A
And he's doing it with music, he's doing it with video, he's doing it the written word. So OpenAI is one of them. Google has got their other version, DeepMind and his is the open source version, which is terrifying because it means it's unstoppable, but it's mind blowing. So you've got to watch the interview because like you, I kind of thought I had a handle on how fast this is moving. My whole interview again, Emad E M A D most a Q U E. He's a Brit hedge fund manager. Not the guy you'd imagine is going to do this. He's just raised his first hundred million dollar round. He's only been going for two years, Tom.
- [96:08]
C
Wow.
- [96:09]
A
He built his own supercomputer. He wasn't the richest dude in the world, he was just an ordinary guy. In two years and even Sergey Brin and everybody went to his launch and everyone's jaws to the floor saying, holy shit, this has just changed everything.
- [96:27]
C
Yeah. So obviously I follow what people are using AI and media for. We've actually started using it here at Impact Theory to amazing results. And I've started seeing people showing, oh, we're using stable diffusion, here's what we got. But I didn't even know what stable diffusion was. I didn't know. I knew it was AI, but that's all I know about it. And the results are astonishing. And as a creative, what it Lets you do. Dude, when I think back even 10 years, let alone 20 years, bro. When I was in film school, we edited on Steenbecks. It was a gigantic metal contraption that you cut like with basically scissors and taped it back together. Like, I'm not that old. So the fact that we've come that far to now seeing people do stuff with stable diffusion and turn, literally instantly turn like a person moving into an animated cartoon, it's unbelievable. So as a creative, I love it. To your point about the Renaissance, two
- [97:26]
A
years old, Tom, he's like, we barely started. And what he did, the trick that he did that the others didn't do, the others all went, this is too powerful a technology. We're not going to give it out to everybody. So we'll give bits of it out like GPT3. And he's like, it's too powerful a technology not to give it to everybody. So then you've got 10,000 people building already on top of what he's built. So it's just going to be like a virus now. It's just going to explode. And now to think through that one is we are. This is why I've been begging on Twitter. We are an urgent need for digital id, blockchain driven digital id, because this interview can be done by AI. It just ingests all of your interviews, all of my interviews, and say, hey, get Tom and Raoul to talk about societal collapse or whatever it is, right?
- [98:16]
C
Did you hear the Rogan and Steve Jobs interview? I mean, look, it's obviously early days, but how well they captured the vocality, especially of Rogan, where when he would be like trailing off, the AI would trail off. Now, my only beef with AI in its current inception is that they always feel like they're about to make a point, but they never quite make the point. But I mean, if that's where we're at now, where are we going to be in 20 years? It'll be insane. Insane.
- [98:46]
A
And so think of societal stress when you don't know a single thing, what is true and what is not.
- [98:55]
C
Right?
- [98:55]
A
And that is not happening in five years time or 10 years time, that's happening next year. You know, GPT4 comes out next year and GPT3 is so powerful anyway, I hate to think what GPT4 is like. So nothing we read, nothing we watch, nothing we hear is verified from its source of truth any longer. So we so urgently need a system of authentication. So anything that appears with you will have the token that I can scan or do whatever Check in my browser to know, yes, this is authentic Tom, or this is AI Tom, and maybe you've got your own AI Tom, and that's okay, but you need to know what's authentic Tom and what's AI Tom. In two years time, we're going to break society unless we do this, because we need to go through the elections in the United States with AI. Dude.
- [99:50]
C
So this to your point, the other day, Lisa came over, my wife, and I was showing her my TikTok feed, and I was like, hey, do you think this guy's attractive? And she's like, yeah. And I. He was probably, like, 25, something like that. And I said, would you believe me if I said that he was 35 years old and she's looking closely and she's like, I guess. And I said, would you believe me if I said, that's not a human, that's AI. And she was like, what? She had no idea. She's looking right at him, trying to, like, judge his age, and had no idea. He's not real. And this was a video, man. It wasn't even a still. It was a video of him speaking. And she didn't realize that it was AI. I was like, oh, my God.
- [100:28]
A
Like, this is.
- [100:29]
C
Yeah, to your point, we're gonna need something to authenticate. And also, it's just as. Again, somebody that builds a media company, the thought of being able to create characters where I can, like, give them backstory, motivation, all that, and then another character, backstory, motivation, all that, and then put them together and they will react in a way that surprises me now. It's like you can get into creating these very rich, surprising experiences.
- [100:56]
A
Yeah. But you know where that leads to. Right. You give a character a backstory, and it lives. Now, of course, right now, we're not at the point where it's conscious, but it lives enough that it writes its own story.
- [101:09]
C
Yeah.
- [101:10]
A
And all the characters write those stories. Where does that story go? We don't know. We've already seen that Microsoft AI that they tried to put on Twitter, and it became a Nazi within a week? And they were like, oh, dear, we need to stop. So it's just. It's. It's fascinating. Right. So what you're creating now literally could have a life of its own.
- [101:33]
C
Yeah. I mean, look, as a writer, that's always the fantasy. Now, do I want them to become conscious beings? I don't know about that. But for them to be able to surprise me, that would be. I mean, that.
- [101:44]
A
Dude, what if they get their own followers, they don't have to be conscious, they just have to be AI and they have their own followers and they start developing a political opinion based on their interaction with followers. And before you know it, they're, they've now got a million followers, they're more powerful than Tom and they're now trying to influence elections.
- [102:04]
C
Yeah, it's crazy. It's crazy. I mean so I, it sounds crazy,
- [102:08]
A
but it's gonna happen, right?
- [102:11]
C
It will, you'll be able to put guardrails in. And so this is where now of course some people are going to. And they're going to have AI that goes bananas 100%. There's no doubt. And there are going to be some people like that they're AI so it's not even like oh well people know it's AI and they will ignore them. No they won't. So for sure there's no doubt. But to the double edged side of that sword, as a creative somebody thinking about making immersive worlds, it it I, I am now completely in your camp. I've never thought about it as a renaissance, but you're absolutely right. Before this all the counter peg explodes, it's going to be pretty amazing.
- [102:51]
A
So here's another thing for you. My strong belief is that Elon Musk did not buy Twitter because he wants to own social media. Once you see AI, you cannot unsee it. Once you see the robots, you cannot unsee them. So he's built cars with self driving AI right. And it's still obviously developing, but it's developing fast. He then is developing the Optimus robot yet again. Everyone's saying it's never going to happen. Of course it's going to happen.
- [103:23]
C
How many things does the guy have to do before people go wow, he's really capable of pulling things off and
- [103:28]
A
even if he doesn't do it, somebody else will. So what is the next step? Right, your character that you're building your characters, right? How do you personality. The biggest way of having a robot that can make you tea or do whatever or you send to Mars and it can be building up Civilization station in Mars is by feeding it Twitter because you've got all of humanity losing its mind, loving, hating, scamming all of humanity's there and then the next thing he says is what I'd love to do is add video. Well, because TikTok has been doing this, they've been scraping the AI for the Chinese state, so it appears for facial recognition and human understanding and AI tools and the other thing he Talked about was I'd love to get long form content. We like all of those things. Video, long form content, short form. What he gets is all elements of humanity to train AI from. I'd pay. If you were the richest man in the world and you're building AI and you're building robots and you're building all this stuff, would you pay 44 billion for the largest proprietary data pool in the world, should you want it?
- [104:41]
C
If you know how to monetize it for sure. Well, and I think he's, he's going to go even farther than that. He's. I mean this is one of those when people tell you what they're doing, it's probably best to believe them, especially when they have a track record like that. He's. I'm going to create the ultimate payment platform. I'm going to make the WeChat of the West. And if he can pull that off, it becomes so much bigger than what it's been thus far. It'll be very interesting to watch that.
- [105:09]
A
And also the, the other thing is that he has just fired, got rid of about 90% of the stuff.
- [105:17]
C
Yeah.
- [105:17]
A
People don't realize. I can see people saying well, well, Twitter won't be here tomorrow. It's not like Twitter is people pedaling behind the scenes. It's technology. It actually doesn't need the humans to run it on a day to day basis apart from to fix a few bugs. But it's not like it bugs every day, so he gets to rebuild it anyway. That was a lot longer than we thought as a chat, wasn't it brother?
- [105:38]
C
As always, man, I so enjoy this. Where can people follow you at Raul
- [105:43]
A
R A O U L GMI on Twitter and if you go to my profile there, there's a free newsletter that's macro one go that go to our YouTube channel, the Real Vision. I think it's called Real Vision Finance YouTube channel. Go and watch that interview with myself and Robert Breedlove. I think you'll like that. And if not, you can check out more details on realvision.com I love it, boys and girls.
- [106:04]
C
If you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.
- [106:08]
A
Peace.
- [106:09]
B
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