Trade Wars, Student Debt, and the K-Shaped Economy: Navigating Financial Turbulence Today | Morgan Housel On Impact Theory w/ Tom Bilyeu Pt. 2

Summary

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Impact Theory Podcast Summary

Episode: Trade Wars, Student Debt, and the K-Shaped Economy: Navigating Financial Turbulence Today
Host: Tom Bilyeu
Guest: Morgan Housel
Date: January 30, 2026

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Episode Overview

This episode features author and economic thinker Morgan Housel in a deep, candid discussion about the realities behind today’s troubling economic headlines. Tom and Morgan break down the complex cycles of empires, the fate of the US dollar, inflation, trade wars, student debt, demographic shifts, and the resulting K-shaped economy. The pair challenge doom-and-gloom narratives, explore historical parallels, debate the resilience of the American system, and offer both macro and personal financial wisdom for uncertain times.

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Key Discussion Points and Insights

1. Cycles of Empires and the Dollar's Global Role

• Tom’s Argument: Post-WWII, the US ascended as the global superpower and reserve currency. Today, with China’s rise, declining dollar dominance, and surges in global gold reserves, Tom argues the US could be approaching a point of structural collapse as past empires did.

  • Notable Quote:
    “We are, we haven't lost it yet, but we are rapidly losing the ability to export our inflation ... Structurally, right now we are set up for one of two options ... grow, right? Or we are going to either rapidly go bust or slowly go bust.” – Tom Bilyeu [07:39]

• Morgan’s Counterpoint: While agreeing with some risks, Morgan insists that mechanisms of collapse are never as linear as they appear. Despite fears in every past crisis, global investors have historically rushed into US treasuries for safety.

  • Notable Quote:
    “Anytime you say because of A, we're going to have B and then C and then D, it almost never works like that ... The smartest people making the most logical predictions. Wrong, wrong, wrong, wrong, wrong.” – Morgan Housel [11:21]

2. Lessons from Economic History: Humility and Complexity

• Each crisis (e.g., 2008, COVID-19) brings predictions of the dollar’s demise, but the system proves more resilient than expected, largely due to its complexity.
  • Notable Quote:
    “If you haven't engaged with history, everything feels unprecedented.” – Morgan Housel [54:08]

3. What Does 'Collapse' Actually Mean?

• Tom defines "collapse" as the historical point when empires burdened by debt and currency dilution ultimately self-destruct.
• Morgan prefers to envision a muddling period: protracted high inflation (4-6%), slow growth, and rising social dissatisfaction. The Britain-to-US transition post-WWII is cited as an example of decline without societal collapse—a “pleasant and quaint place to live.”
  • Notable Quote:
    “There's other scenarios other than Mad Max ... the UK ceded its power, had high inflation, had high unemployment, but it was not Mad Max.” – Morgan Housel [22:08]

4. Role of Financialization and the Elite

• Tom outlines how post-imperial Britain retained global influence through financialization, banking, and central banks manipulating economies and benefiting elites, often to the detriment of the average person.
  • Notable Quote:
    “There's a far more distressing game being played than I think people realize ... There is this mechanism called inflation and it benefits bankers and it does not benefit the average person.” – Tom Bilyeu [25:37]

5. Demographics: The Population Decline Problem

• China and Others: Declining birth rates in China, Japan, Korea, and most of Europe bode poorly for long-term economic growth.
• US Prospects: The US maintains better (albeit declining) demographics, buoyed by immigration—a wildcard for the future.
  • Memorable Moment:
    “There were fewer babies born in China in 2025 than there were in 1776.” – Tom Bilyeu [28:09]

6. Student Debt and the New Economic Reality

• Morgan argues student debt has “virtually ruined a generation,” sticking with borrowers even after bankruptcy due to policy design. He describes the government loan system as a root driver of exorbitant tuition.

  • Notable Quotes:
    “I think it's not hyperbole to say it virtually ruined a generation.” – Morgan Housel [32:19]
    “What an unbelievable business model for schools... the incentives of it were just so unbelievably broken.” – Morgan Housel [34:08]

• A silver lining: As a share of income, household and corporate debt is at multi-decade lows, although this is partly due to fewer young people owning homes and sheer aversion to credit post-2008.

7. Systemic Risks and the “Surprise” Factor

• Major risks are almost never the problems widely discussed; it’s the surprises (e.g., 9/11, COVID-19, Pearl Harbor) that inflict the greatest damage.
  • Morgan’s Advice:
    “If you are only saving for the risks that you can envision ... you're going to be caught off guard by the surprise 10 times out of 10 ... I have a level of savings and liquidity and lack of debt that seems excessive.” – Morgan Housel [53:26]

8. Trade Wars and the K-Shaped Economy

• Trade wars (esp. US-China tariffs) are almost universally seen by economists as self-destructive—“the refined sugar of economic policy.”

  • Notable Quote:
    “The one thing almost every economist agrees on ... is that trade wars are self destructive and tariffs are terrible.” – Morgan Housel [46:33]

• The "K-shaped recovery" amplifies class divides: stock market and asset owners thrive while working and middle classes lag behind.

9. Reframing Uncertainty: Historical Perspective

• Understanding cycles in Western history can provide solace and humility; while each era feels unprecedented, most follow recurring patterns.
• Philosophical approach: Recognize limits of prediction, resist stress over the unknowable, and prioritize living well in the present.
  • Notable Quotes:
    “At every one of those episodes where it's been the same movie in the past, nobody was able to predict what happened next ... So I might as well enjoy it. Eat, sleep and be merry. Because tomorrow we die.” – Morgan Housel [56:09]

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Timestamps of Key Segments

• Reserve Currency & Empire Loops: [00:25] – [08:03]
• Faith in the Dollar & Predicting Collapse: [08:03] – [13:22]
• Lessons from Fallen Empires: [17:52] – [23:08]
• Financialization and Elite Power: [23:15] – [27:06]
• China's Demographic Crisis: [28:09] – [30:18]
• Student Debt and Broken Incentives: [32:19] – [36:48]
• Trade Wars as Economic Self-Harm: [46:06] – [47:50]
• How to Navigate Uncertainty: [53:08] – [56:26]

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Memorable Quotes

• “The future is going to surprise you in some way, so don’t think that you see it clearly. I certainly don’t.”
  – Tom Bilyeu [13:22]

• “If you haven't engaged with history, everything feels unprecedented.”
  – Morgan Housel [54:08]

• “Eat, sleep and be merry. Because tomorrow we die.”
  – Morgan Housel [56:24]

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Actionable Takeaways

• Embrace Humility: Extreme complexity means experts are often wrong—stay humble in forecasts.
• Save for the Unknown: Build more liquidity and financial resilience than seems necessary.
• Contextualize Economic Fear: Realize current turbulence isn’t unique; history is full of transitions and eventual recoveries (or at least survivable new normals).
• Stay Sane in Uncertainty: Avoid stress over the future by focusing on living well today, rather than trying to predict the next crisis.
• Challenge Simple Narratives: Beware of over-simplified explanations for economic shifts, whether from the left or the right.

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Final Thoughts

Morgan and Tom’s conversation is a masterclass in clear-eyed, historically grounded thinking. It sheds light on the profound uncertainty of today’s economic climate, debunks both utopian and dystopian myths, and empowers listeners to adopt a pragmatic, humble, and resilient mindset in finance and life. Whether worried about the fall of empires or daily personal finances, the “same movie” keeps playing—those who understand this can thrive amid the turbulence.

Transcript

[Tom Bilyeu]

Reggie, I just sold my car online.

[Morgan Housel]

Let's go, Grandpa. Wait, you did? Yep, on Carvana.

[Tom Bilyeu]

Just put in the license plate, answered a few questions, got an offer in minutes.

[Morgan Housel]

Easier than setting up that new digital picture frame. You don't say.

[Tom Bilyeu]

Yeah, they're even picking it up tomorrow. Talk about fast.

[Morgan Housel]

Wow. Way to go. So, about that picture frame. Ah, forget about it. Until Carvana makes one, I'm not interested.

[Tom Bilyeu]

Car selling made easy on Carvana. Pickup fees may apply. Let's talk about the choice you're being forced to make in every meeting. And I'm going to guess you're in back to back meetings all day. Client calls, team check ins, strategy sessions, whatever. One after another, you're scrambling, trying to remember what was said, what you promised, who's responsible for what. PLOD solves this. It's a dedicated AI assistant for conversations. It captures meetings and calls without having to pull out a notebook. PLOD records everything, then automatically delivers transcripts, summaries and action items. Over 1.5 million people have already made the jump. Right now, listeners can get 10% off or more by using the code TOM10. Just type P L A U D AI TOM into Google or simply search PLAUD on Google and use the code TOM10 to get started today. You can sayings are incredible. You can wear it, you can hold it, whatever works best for you. Welcome back to part two of this incredible conversation. Without further ado, here we go. Okay, I'm going to give you my full argument in the hopes that you can pull me back to your side. So heard wonderful things you put forward. Here's why I think they will not work this time. And we're going to need a different solution. So after World War II, we become the world's reserve currency. We are among the developed world. We're essentially the only untouched country. So everybody else has been thrashed. We're going to be. First of all, they owe us a ton of money. And we're going to help them rebuild. And we become the world's reserve currency. So now we can print our money like crazy and tax the entire world or anybody that holds our reserve currency through inflation. And so that switch alone is massive. And so we also haven't done the waves and waves and waves of money printing that we have now done. So yes, we're coming out bad debt to GDP after the war, but the war stops. And so now you're not having to pull all that debt. World owes you a ton of money. They're starting to pay that off. You start to Export inflation, way better scenario. Now you're in a position where the number of transactions or the dollar transactions taking place. It used to be, I think 72% in the late 90s of all transactions globally were settled in dollars. That number is now in the 50s. So we've been steadily declining now for 25 plus years. The world is actively moving away from the dollar for the first time in more than 30 years. There's Central banks globally now hold more reserves in gold than they do in dollars and they are specifically migrating towards that. You now have a true compet, which is China, which we didn't have before. Russia sort of made it look like they did smoke and mirrors at the end of World War II, but they obviously didn't. They end up collapsing. China really is a pure competitor. I think you said this on camera. But we, China is better at making things and we are currently. So that puts them in the position that we were in at the end of World War II.

[Morgan Housel]

Yes.

[Tom Bilyeu]

And they are actively trying to get the world to move away from the dollar and move on to the digital yuan. They're building a gold corridor so that people can hold the gold if they don't trust China because China understands we're authoritarian. So some of you guys are going to be a little bit skeptical that we won't confiscate your wealth. So we'll store the gold in your country, we'll decentralize it, all of that. Our goal is just to get you guys off the dollar. So we are, we haven't lost it yet, but we are rapidly losing the ability to export our inflation. Given the wild things that Trump is doing, from an international perspective, maybe it all settles down, but it could also escalate. Europe is talking about using what they call their economic bazooka, which is to dump the debt that they own from America. And for anybody that doesn't understand the whole debt thing, it's if the US if there's no appetite for US debt, the credit markets freeze. That brings us to the meaning that US can't raise money to pay off its debt. Now you're in crisis. If the US were to default, it's like anybody going bankrupt. Suddenly nobody wants to give you money. Where are all your friends? Nowhere to be found. And that brings the next thing, which is we can't raise rates. We're in fiscal dominance. We owe so much money already that just the interest on our debt is the second biggest line item. It's bigger than some entitlements. So this is a massive number if that number were to go up to 10, 15, 20%, the whole system breaks. The US will, it will have to hyper inflate its currency in order to make those payments, which will cause anybody who's on the fence about the dollar to be like, well, we're done with the dollar. We're going to move faster to gold, to silver, to Bitcoin, to whatever, but it isn't going to be the dollar. And, and so now you end up in this dust spiral. This is exactly why Ray Dalio, the most successful hedge, hedge fund manager of all time, going, yeah, I. Moving to Dubai, moving to. I think he's more Singapore. But it's like, he obviously is super skeptical of the US Buffett has publicly stated, I'm super skeptical of what the US Is doing. I'm pulling back out of the markets. I'm sitting on this insane pile of cash. And I'm also looking at markets outside of the U.S. it's like, I agree with you that history has these loops and some of the smaller loops are positive. If we were going into a recession, I wouldn't be worried about it at all. It's a couple years of whatever, and as long as you're not trading on margin or, you know, underwater in debt, you're going to be fine. You make it to the other side. But when there is a certain point where every single empire before us has taken on too much debt and printed too much money and then their empire collapses. And I'm just saying the bad news is when you look at the mechanisms of the economy, structurally, right now we are set up for one of two options. Trump's crazy, unhinged global policies. He's able to bully our way to controlling oil and other resources, and he deregulates so much that we grow our way out of this. Because your point is the only option that I see, which is you have to grow, right? Or we are going to either rapidly go bust or slowly go bust. But you don't have, without the growth, you don't have more than 10 years before you cross the 130% debt to GDP. And again, history says every, every empire fails for sure, 100%. And every country that has ever gone over 130% debt to GDP for more than 18 months has ended up with internal violence. So revolution or civil war. And like, we're just poised for that number to snap and grow very fast if we don't walk this insane tightrope of somehow some way having a president put policies in place that allow us to actually grow.

[Morgan Housel]

I don't, I don't think I have substantial pushback to what you said. But I would say this. If you made, if you said what you just said verbatim to me in 2008, you know, 15 some odd years or whatever, whatever that was 17 years ago, I would have agreed with every word too. If you said that to me in 2004 and people were saying this in 2008, there was. That argument that you just said was everywhere. It was everywhere. All the, that was the most popular argument was the dollar's doomed. Too much debt, you can never grow your way out of it. 2007, 2008, that was the narrative. And it didn't happen, at least to the extent that it did. So it's not to say that it can't. Of course it can. It's happened elsewhere. But I think the mechanism that will cause it is not as obvious as it can be made out to be. And I would say this. As recently as this year, in the last eight weeks, when shit hits the fan, what do people buy? By and large, it's still treasuries in dollars. And so people can say they don't trust the dollar printing too much money. You could say that. All too long they say that. But what do they actually do with their money now? Would that last forever? Probably not. But the mechanism of it, we've printed too much money, it doesn't work. Too much debt, don't trust the politicians, don't touch Trump. Whatever the narrative might be, what people are still doing with their money is there. The other thing I would say is you, you mentioned a very interesting statistic, which is that 1990s, the US dollars settled 70 some odd percent of payments and today it's 50 some odd percent. What did interest rates do during those two periods? It felt like a rock. And this is another. Your statistics are right. You're not making these up, you're saying. Right. Things that are actually true. But what the consequence of that I think is, is less fitting with the narrative of, of, of what you begin with. Because in the 1990s, when dollar dominance all day long, interest rates were higher than they are right now. Right. And so it's not quite as clear.

[Tom Bilyeu]

What though, as faith in the dollar.

[Morgan Housel]

That we had higher interest rates back.

[Tom Bilyeu]

Then, that people were still dealing in dollars despite any of our distresses, because there was still a sense that America was the stable global hegemon, that there really were no alternatives, we did not have any peers. And so it was like, yeah, there's really nothing to do but the dollar. And by the not yet gone on the 2000.com bubble burst. Money printing spree. The 2008 housing crisis. Money printing spree. The COVID money printing spree. 40% of all dollars ever created in the history of America have been created since what, 2020. So it's like.

[Morgan Housel]

But what do people do? During the COVID meltdown when it really looked like we were on the verge of Great Depression 2.0 and probably should have been, we got a very lucky outcome, I think. What did, what, what did global investors buy during that period? Treasuries.

[Tom Bilyeu]

Yeah, but they're buying gold now.

[Morgan Housel]

They've been buying gold in the last couple months.

[Tom Bilyeu]

Bollock.

[Morgan Housel]

Yes. And it did in 2010, 2011 as well.

[Tom Bilyeu]

Even if you just look at central banks, you're not unnerved by that in terms of them?

[Morgan Housel]

I'm not not unnerved by it. I'm not complacent about it. Everything that you're saying could easily happen. And so this is not you and I debating separate points. I just think the economy is so unbelievably complex that anytime you say because of A, we're going to have B and then C and then D, it almost never works like that. And there's, and there's. If you're familiar with the history of economic forecasts, it's the most humbling thing in the world. The smartest people making the most logical predictions. Wrong, Wrong, wrong, wrong, wrong, wrong. There's. It's the most humbling profession that's ever existed. Even if you're saying things that are so unbelievably like, how could that not be the case? I was one of the people in 2008 who said, Dollar is doomed. Printing way too much money because the financial crisis, way too much debt, bailing out the banks, bailing out the auto companies. It's never going to end. That was me. I was that. I wrote about it. So I can. You can go find those articles I wrote about that in that period and I felt very confident about that. And I think what I didn't appreciate then, that I do now is the complexity of it is just unbelievably complex. It's the most complicated system that we have in the world. You know, there's, you know, 8 billion people, there's 25 million businesses in the world all interacting. Different languages, different cultures, different wants, different needs, different time horizons, all interacting together. New politicians every two years, new presidents every four to eight years. It's a very complicated thing, and history is littered with terrible decisions and meltdowns. It's, it's, it's, it's all that. It's also littered with examples, whether it is the end of World War II or the 1970s or the late 1990s or 2008 or maybe today, of the obvious narrative in hindsight being completely wrong.

[Tom Bilyeu]

Okay, so you so that's lots of a pushback.

[Morgan Housel]

I'm not saying what you're saying is wrong. I'm just saying I come from an A level of pure humility when trying to figure out what the economy is going to do next.

[Tom Bilyeu]

I think that's incredibly wise. And I'm the same. I write deep dives on these topics, and my punchline is always remember, the future is going to surprise you in some way, so don't think that you see it clearly. I certainly don't. Taking a short break, but there's more. Impact theory after Stay tuned. When temperatures drop, your wardrobe either works or it doesn't. Doesn't Premium materials aren't just about luxury. They're functional requirements. Mongolian cashmere, Italian leather wool coats that actually keep you warm. That's performance gear. I ordered a Mongolian cashmere sweater from Quince as a gift last month. When it arrived, I was very impressed. Super soft, high quality. Exactly what you'd expect from luxury cashmere, except it was $50 instead of $400. Quint's cuts out the middlemen and traditional markups. No department stores, no luxury retail overhead. Same factories producing for high end brands. Same materials, same rigorous standards for craftsmanship and ethical production. They just deliver it direct. Their winter lineup has everything you need. Mongolian cashmere sweaters, wool coats, down jackets. Italian leather and suede outerwear built to hold up season after season. Classic styles that don't fall apart after one winter. Plus free shipping on every order, 365 day returns and zero risk. Refresh your winter wardrobe with Quint. Go to quint.comimpactpod for free shipping on your order. Plus that 365 day return policy now available in Canada too. That's quite Quince. Q U I n c e.com impact pod free shipping and 365 day returns quince.com impact pod every SIM card has a permanent ID. It's called an IMSI. Your carrier assigns it once and it never changes. That ID follows you everywhere. Your carrier tracks it. Advertisers track it. Bad actors track it. VPNs can't hide it, and encrypted apps can't change it. Cape solves this with identifier rotation. Your SIM ID automatically changes every 24 hours. Same phone number, new identity every single day, making you untraceable. But Cape doesn't stop there. Your phone number itself is protected by a 24 word cryptographic phrase. Your voicemail is encrypted, your payment data is tokenized. And Kape's enhanced signaling protection blocks suspicious network connections before attacks happen. Head to Cape Co Impact and use Code impact to get 33% off your first six months with CAPE. That's C A P E co Impact and be sure to use Code impact to save 33%. Let's talk about getting the most out of your health data. Your Apple Watch collects an incredible amount of data, then does absolutely nothing with it. That's not health tracking, that's just data hoarding. Bevel turns that data into actual intelligence. This is what your Apple Watch should have been from day one. Bevel consolidates everything into one platform. Sleep tracking, nutrition logging, fitness monitoring, recovery scores, habit tracking, stress levels, all in one place instead of scattered across five different apps. Bevel's AI is also proactive. It doesn't wait for you to ask questions. It analyzes your metrics in real time and tells you what you need to know. It holds you accountable to your goals. It remembers your lifestyle and tailors every suggestion specifically to you. And your data stays private, stored on your device, not on servers. Head to Bevel Health Impact and use Code Impact to get your first month free. That's B E V E L Health Impact. Thanks for staying tuned. Now let's get back to it. There are narratives that you feel comfortable with. So we started with the idea that housing is this incredibly important issue from which many other problems cascade.

[Morgan Housel]

Yeah.

[Tom Bilyeu]

Is there a narrative or a data point about how empires fall, about how currencies lose their status that you do believe in?

[Morgan Housel]

One of the issues with this is that when we're studying fallen empires, the sample size that we're dealing with is so incredibly small. And it's never apples to apples. And if you really get deep into it, is there, is there truly any comparison between the Roman Empire and the United States today? Philosophically, maybe, but in terms of the structure of the global economy and I mean, it's very difficult to make the right comparison. Well, like psychologically philosophical comparisons, ego, see that kind of thing too.

[Tom Bilyeu]

But I'll give you one. So tell me if this is crazy. I think there is architecture in the human mind that says debt is incredibly useful, but it will stop working. But by then you're addicted to the growth. And so you will eventually dilute your currency, like, eternally. Everybody who's ever made money has always started devaluing the currency by mixing it with another metal, clipping the edges off so you don't notice. Somehow, some way, they find a way to inflate the currency. Yeah, right now we use money printing. We call it quantitative easing, whatever. But it's the same idea as shaving off some of the gold from the coin. So given that every economic system ever in all of human history has done the same two things, take on too much debt and fake money, for lack of a better word, that seems directly applicable to why we have the problem now. And the third thing that we always do, always and forever, is we resent those who have more than us. And when those levels get intolerable, then we flip the tables. Yeah, and I see those, those, those are the only three things that I need people to believe in for me to say we're in trouble. Not that I know that we're going to collapse this year, next year, 10 years, I don't know.

[Morgan Housel]

So here's maybe the difference between you and I. Sorry, did you have my. We both agree we're in trouble. It sounds like maybe your definition of trouble is some version of collapse. Yes, and I think the most likely definition of Trouble is, is 10 years of muddling economic growth with high inflation. And by high inflation, I don't mean hyperinflation. I mean, maybe it's 4, 5, 6%, which sucks and pisses a lot of people off, but this is. But it's not. But, but that's not collapse per se. Even if collapse is one of the options, I don't think it's the most likely option. It also hit me that I said earlier that what you just said, if you told me that in 2008, I would have said. And it didn't necessarily happen. It just hit me the year in which, actually what you just said was being said by almost Everybody, was, yes, 2008, but more, more long. It was 1930 to 1932 that every. The most common narrative was printing money, devaluing currency, way too much debt, bad politicians, way too much inequality.

[Tom Bilyeu]

War is coming.

[Morgan Housel]

War is coming. War came and it came. And by the way, if, if that's the, if that's the comparison of just, oh, we're just going to head into the Great Depression in World War II. And by the way, World War II, by and large happened because of the Great Depression. Those two things are very closely Linked, of course, and World War I before that. But if, you know, if, if I'm saying that's. That's the analogy, well, that's, that's not very optimistic as well, is it? And the other period of just real shit show economics was the 1970s. And that's probably. If I were to make. What is the most likely outcome to get out of this, which is different than a prediction, Just what do I think is the most likely? It's probably something like that. And we're the 1970s. Slow growth, high inflation, a lot of pissed off people, a lot of political revolutions, if you want to call that, you know, not terrible revolutions, but the Reagan revolution. Let's say that by and large, we muddled through and we look back at it as a terrible period, which is why people don't think fondly of Jimmy Carter as president. And also within that era was Watergate and Vietnam. So there was just a lot in the 1970s, it was just America suc. America sucks right now. But we got through it. And I, and I think if we had a time machine and you and I went back to New York in 1976, we would not find it to be a hellhole. We might find elements of it quite pleasant. Here's another example of this. What other country lost its empire because it had too much debt and overextended in the last hundred years and ceded its power to the next superpower, the uk? The UK that ceded its power to the United States. But if you go back Pre World War I, certainly the UK was the Empire, you know, the, the Queen Victoria area, that was, that was the United States of its time. And then it ceded that power, lost that power because I had way too much debt, particularly after World War II, way more than we had. And several, you know, terrible things that happened. And by and large, it was a pleasant place to live over the last 80 years. And so that's why I say the scenarios in which this could be. There's other scenarios other than Mad Max. And that was what the UK did. That was what the UK was. The UK ceded its power, had high inflation, had high unemployment, but it was not Mad Max. It was by and large a pretty pleasant and quaint place to live. And I think that's the most likely outcome in the United States.

[Tom Bilyeu]

Yeah, it's interesting. I certainly don't project a Mad Max outcome to America, but I look at countries that have had a previous empire and then what happened? Yes, the UK has done well, but there's a very dark secret from Where I'm sitting about UK's success coming out of it is they never relinquished control of banking. And so now as you get into the Brussels, London of it all and you start talking one world government, this is conspiracy theory, this is tinfoil hat. I wanna, I always tell my audience that with this topic in particular, but, but there is something interesting about. We're living through part of the glory and the side effects of a hyper financialized world right now. So I try to get people, people hate it when I say this, but I try to get people to understand that the stock market, while brilliant, amazing and has given so many wonderful things, is best understood as a casino and when you understand it as gambling, that you're betting on something that 20 years from now people will value this thing more than they do today, that's what you're betting on. I'm not even saying day trading, I'm saying even long term, you're just saying my bet is that this will be more valuable to people than it is today.

[Morgan Housel]

Great.

[Tom Bilyeu]

And maybe looking historically that's a good bet. I love it. And I'm super invested in the stock market. I think it's very wise and there are all kinds of wonderful things that come from it, but it really is a stock market. And by the way, the really big players that you hear about are playing a totally different game. Unless they're value investors like Warren Buffett, like a lot of them are in there betting on things going up and down. They can make a ton of money off the stock market doing poorly. And so now there gets to be a lot of the manipulation of markets and the warfare that goes along, who thinks that they're smarter and doing all of that kind of stuff. And so when you look at London, you look at this idea of one world government who benefits the most from getting a K shaped economy, the people that control the banks, the hyper elites that are playing this incredibly enriching or impoverishing game in the stock markets of understanding the flows of money, understanding the macro movements and economies. And so if you're a London banker and you see, oh, we just lost our empire, we owe all this money to the Yanks, and we know how this game plays out. If you can hold on to the one thing, which is if we can get the Yanks to build a central bank, which we did back in 1913, now all of a sudden if we can group up and Europe, which is true, has like the central bank of central banks and then we can print money and siphon off through the worldwide tax of inflation, we can still siphon off a ton of wealth. And so it is like there's a far more distressing game being played than I think. People realize they can feel something's wrong because of the K shaped economy, but they don't understand the mechan of money well enough. And to be honest, like even I feel like I'm still early in my journey of like really understanding how all this stuff plays out, which is whenever I talk about London I say look, this is pure tinfoil hat. But it's like, oh, it fits the outcome that I see a little too well. It doesn't mean that I'm not overfitting it. It doesn't mean that there's not some other completely innocent explanation. And maybe people have all the good intentions in the world, it just plays out like that. But nonetheless there is this mechanism called inflation and it benefits bankers and it does not benefit the average person. And what average person is dealing with right now is due to money printing and the knock on effect of inflation.

[Morgan Housel]

I think that's right. And the other thing I would say about why the UK analogy probably isn't, isn't the best right now is because the UK seated its empire to a friendly rival, the United States, and the.

[Tom Bilyeu]

United getting its ass handed to it in a war. Like it was like you're going to make different decisions when you're fatigued. And it's, it's a really interesting thing that if you look at Ray Dalio, Ray is just like, listen, eventually you'll get in a war so bloody everyone will just fall down exhausted and say fine, world order is, is acceptable.

[Morgan Housel]

Yeah.

[Tom Bilyeu]

And so that's where England was, it.

[Morgan Housel]

Was like, didn't have a lot of choices.

[Tom Bilyeu]

They didn't have a lot of choices.

[Morgan Housel]

When, when you go from number one to number two and you're. And number one, who replaces you is a friend, right? Your closest friend, your best buddy in the world who wants you to win and you want them to win. That's different than if you cede your power, if the United States cedes its power to China. Now this is maybe a separate topic, but what is now very well known and was in the headlines this week is to the extent to which China's birth rate has not collapsed, it has just fallen through the floor. The statistic this week was there were fewer babies born in China in 2025 than there were in 1776.

[Tom Bilyeu]

Yo, right?

[Morgan Housel]

And that's been going on for a very long time. But the decline has been going on.

[Tom Bilyeu]

Bad when you enforce one child policy.

[Morgan Housel]

Yeah, but even after they lifted that and after they went out, it's a cultural preference for fewer children. And that decline's been going on for a long time. And it's not, it has not sped up. It has gone supernova in the last 10 years.

[Tom Bilyeu]

How much worse are they than us from a birth rate perspective?

[Morgan Housel]

If you look at the domestic birth rate in the United States, it's higher than almost everywhere else in the developed world. It's not high, and it's much lower than it used to be in the United States. The wild card for the United States and almost no other country has, and certainly China doesn't have, is immigration, which goes through, ebbs and flows unbelievably high three years ago, marching towards zero now. And so, so that's very difficult to predict what that will be over the next 25 years. You brought up a point earlier that is, is I guess, inarguable that any empire that has this level of debt that has been extended to the extent the United States is, has, has collapsed. I, I would bring up another, another analogy and I would say, and I know the answer to this, this is a rhetorical question. What country in history has succeeded for more than five or 10 years with a shrinking population? None. None. Never. None. And China's population is 1.4 billion right now. The new forecast, I think is by 2070, maybe so this is a long term forecast will be down to 600 million. Yo, right? And what country, when you know what creates GDP growth, There's two things. There's two ways to grow your economy. You increase the number of people or you make those people more productive. That's what economic growth is. And China took the first half of that equation, the increase in number of people, and it didn't bring it to zero. It put in a hurricane headwind on top of it. And so, you know, maybe AI and robots make us all so productive that it makes up for that. That could be the case because US demographics are better. It's the cleanest shirt in the dirty laundry bin. But relative to what it was for the last century, it sucks. It's much worse, but relative, you know, but not just China. Japan's been a basket case for a long time. You know the statistic 10 years ago, I'm sure it's worse now. Where adult diapers outsell child diapers in Japan, like, there's your sign.

[Tom Bilyeu]

I heard that before, but that's still.

[Morgan Housel]

There's your sign. Right? It's just terrible. Demographics. But now. So Japan was kind of the. The front runner in this. China's terrible. Russia is abysmal. South Korea is very bad. Italy, going down the list. Spain, those are. They're all absolutely terrible demographics. A lot of that is a very long history of the richer countries come. The fewer kids people want to have, which is why you go to sub Saharan Africa, they have 10 kids. You go to Manhattan, where people make $5 million a year, they have two. So there's a very long history of that, and I think we've just supercharged that back to maybe we come first, full circle to housing. You know, it's. It's more expensive to raise kids these days. And if half your income is going to rent or a mortgage payment, you need to think less. The statistics that I started with, if you can't buy a house, you're less likely to get married and have kids. There's other factors going on here, but this all kind of fits into that puzzle too.

[Tom Bilyeu]

Now, will the inevitable mortality cliff that boomers are facing, is that going to alleviate any of these problems?

[Morgan Housel]

The boomers had a lot of kids. The millennials are a big generation.

[Tom Bilyeu]

But I'm saying boomers are about to die, so.

[Morgan Housel]

And currently doing it.

[Tom Bilyeu]

Yeah. So is that going to alleviate the housing situation? Yes. Are they going to pass down enough money that some of this stuff starts to equal out, or no.

[Morgan Housel]

Maybe to some extent. But for the, the millennial generation, for a lot of them, I'm. I'm a millennial, and I think statistically, my parents will be alive for another 20 or 25 years, statistically. So it might be. I think what you're saying is true, but it could be the case that by the time the boomers are actually. That my parents are boomers, by the time that they, their generation is fully passed the baton onto millennials, millennials are going to be in their 60s. And so the idea of, like, well, you'll get your house then, like, when you're 65, that's not going to move the needle too much.

[Tom Bilyeu]

Woof. Okay, so what do you think about, like, student loans, individual debt? Like, how does that play into your thoughts about where we are?

[Morgan Housel]

I can give you two sides of this one, particularly student loans. I think it's not hyperbole to say it virtually ruined a generation. Kind of young millennials and all of Gen Z, you know, just really, I. I think particularly millennials, if you were of college age in the mid-2000s, everybody told you go into debt, it's worth it. Just Just do it. Just, just pay. Just sign the documents, sign the loan, your life will be better. It doesn't matter if you go to Jim Bob University and get a degree in art history. It doesn't matter. Going to 200 grand in debt. And that's what a lot of 18 year olds who didn't have a prefrontal cortex developed yet were told and did. And of course the results are disastrous for us. And debt, student loan debt is one of the only debts that will travel with you after bankruptcy. You can't discharge it. You know, you can go, you could, you can go into gambling debt and real estate debt and discharge it all in bankruptcy and walk away like it never happens. Student loans are with you for life.

[Tom Bilyeu]

What do you think about that? That feels evil to me.

[Morgan Housel]

On one hand, I get why it happens. Because if it wasn't like that, most 22 year olds who graduate have no assets, so they have no risk to go into bankruptcy. Let's just go. So graduate with your dad and go bankrupt. You have no asset. They can't take any of your assets. You have 20 bucks in your bank account.

[Tom Bilyeu]

That's all you have loaning to them.

[Morgan Housel]

Yes, that's, I think that's, that's what it is. Or make it much more contingent on what kind of degree it is.

[Tom Bilyeu]

Correct.

[Morgan Housel]

So the idea of going into 200 grand for a medical debt because you're going to be a surgeon, like still a lot of debt, but okay. The idea of going into that much debt for an art history degree or whatever it might be. No, no, no, no offense to the humanities, but I mean that's the idea that we price it the same and by and large give the same amount of debt for the same degree is, is, is, is insane. And, and the other thing is that whenever you just stimulate demand like that, it just pushes up price. So let's say we lived in a world. It's, it's kind of too hard to put the toothpaste back in the tube now. We've like, you can't. If you just stop student loans tomorrow, this, it would collapse. But let's say we go back and there was never government issued student debt. There's still private debt. You still go to JP Morgan, get a student loan, but it's priced differently and they want to know what degree you're getting. But there's no federal student debt. What would happen is tuition at private universities wouldn't be 75 grand today, it'd be 35 grand or whatever it would be when you Stimulate demand but you don't increase supply. Prices go up. It's always going to be the case. And what a unbelievable business model for schools. You'd be like, we have 18 year olds who can barely tie their shoes. They're still technically effectively children and they can sign a document and get 200 grand that they just funneled to us and we can raise the price by 20 next year and they won't even care. They won't even. Amazing business model. So of course they did that. And they build towers and sports centers and whatnot. I, I think they're all, well, by and large, well meaning people. But the incentives of it were just so unbelievably broken. Now I can give you the other side of the story. If you look at debt, interest payments and debt overall as a percentage of income, it's very low right now. It's very low right now. It peaked just during the financial crisis 2008, 9, 10, where it was very high. And it's been being chewed down ever since.

[Tom Bilyeu]

And so those levels, new people going in, not as an average across everybody.

[Morgan Housel]

An average across everybody.

[Tom Bilyeu]

All households already come down, has been.

[Morgan Housel]

Coming down for 15 years and is at a level now that we haven't really seen in 20 or 30 years. Okay, this, I think, I think probably a lot of that. Well, it's a couple of things. Some of it is bad, which is that the homeownership rate among the young generation is much less than it used to be.

[Tom Bilyeu]

About that.

[Morgan Housel]

And so they don't have mortgage debt. They would love to have mortgage debt. The best thing in their life would be to have some mortgage debt. But they don't. They're renting, which is not debt. So that's part of it. I think there's also a, in a good way still the aftershock scars of 2008. That made a lot of people, particularly millennials, scared of debt in a great way, particularly credit card debt. And so their aversion to it. There's still a trillion plus dollars of credit card debts and hasn't gone away. But as a share of income relative to what it was in the late 90s, early 2000s is much lower today.

[Tom Bilyeu]

That's great news. I actually didn't know that.

[Morgan Housel]

Yeah, yeah, that. And here's another thing I've written about this before, this gets a little technical, but government debt as a share of GDP has gone way up. We've, we've established that.

[Tom Bilyeu]

Yeah.

[Morgan Housel]

Household debt and corporate debt as a share, as a share of their income has gone down. And if you average those two things together, the whole pot, all economic debt, government, private, corporate, everything. All debt as a share of. Of all income. It's gone up. It has gone up, but not. Not to the extent that it has because the increase in government debt has been muted a little bit by the decline in household debt as a share of income.

[Tom Bilyeu]

That's really interesting. We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. I want to talk about energy, one of the most important things in your life. Most high achievers run on caffeine and willpower until their body forces them to stop. But that is not a strategy. That's just a countdown to being tired all the time. Real energy comes from cellular health. And that's exactly what Nandica is built to deliver. This isn't another stimulant disguised as wellness peaks. Nandica is a ceremonial cacao nootropic built with ingredients that actually fortify your cells. Ceremonial grade cacao fermented Pu erh tea from 250 year old trees. I'd heard so much about it, I tried it myself. It is fantastic. Full spectrum Reishi including spore po. Every ingredient is selected for maximum bioavailability and cellular impact. The result is calm, sustained energy without the jitters or crash. Set your longevity goals in motion. Get 20% [e-mail] impact that's P I Q U E life.com impact I want to talk about energy, one of the most important things in your life. Most high achievers run on caffeine and willpower until their body forces them to stop. But that is not a strategy. It's just a countdown to being tired all the time. Real energy comes from cellular health. And that's exactly what Nandica is built to deliver. This isn't another stimulant disguised as wellness peaks. Nandica is a ceremonial cacao nootropic built with ingredients that actually fortify your cells. Ceremonial grade cacao Fermented Pu erh tea from 250-year-old trees. I'd heard so much about it. I tried it myself. It is fantastic. Full spectrum reishi including spore powder. Every ingredient is selected for maximum bioavailability and cellular impact. The result is calm, sustained energy without the jitters or crash. Set your longevity goals in motion. Get 20% [e-mail] impact that's P I Q U E life.com impact thanks for sticking around. Let's get right back into the action. I don't remember if it's Greenspan or somebody else, but there was one time where they were leveraging like I think they had to clamp down on Treasuries. And so but they knew that they needed to get debt into the market to keep things humming and so they really leaned on corporate debt.

[Morgan Housel]

Yeah.

[Tom Bilyeu]

And so it'd be interesting knowing that that number hasn't gone up as much. I wonder if they're still.

[Morgan Housel]

The number's gone up, but as a share of income. That's a different, different story. And I think what you're referring to is in the 1990s when we had balanced budgets and the forecast was balanced budget and surplus as far as the eye can see. And Greenspan, if that forecast came true. It obviously did not. It was almost the opposite because forecasting is difficult in the economy.

[Tom Bilyeu]

Yeah.

[Morgan Housel]

If that came true, his fear was that central banking wouldn't work because there wouldn't have been enough debt to engage in open market operations to buy and sell debt. And so the idea was maybe the central bank that maybe the Fed can start buying corporate debt because there wouldn't be enough Treasuries. Obviously we solved that problem by trillions of dollars of deficits. So if we don't have that issue now.

[Tom Bilyeu]

Well, they also did buy corporate debt. That's the more during the financial crisis.

[Morgan Housel]

Sure. I mean all those, all those acronyms, PPIP and all these vehicles that they created in 2008 to buy it. I, I would say I think if we did not, this might be very contentious. I have a feeling you're going to disagree with this, so maybe this is a good conversation. I think if we did not have Ben Bernanke at the Helm in 2008, we would have had the next Great Depression. I think we got unbelievably lucky that the guy who ran the Federal Reserve was the world's foremost authority on central banking during the Great Depression and had gigantic balls during that time.

[Tom Bilyeu]

It's interesting. It's one of those like you're saying about I look out in my backyard and there's a forest and how lovely that feels. And so am I heartbroken that they didn't bail the houses. Not really. I wouldn't have wanted to see us go through a depression, obviously. And at the same time, if you don't have moments of failure, then the bad behavior continues.

[Morgan Housel]

Yeah. And I would rather hard balance between those two.

[Tom Bilyeu]

Yeah, no joke. And I'm certainly not saying that this stuff is easy, but I would rather we let micro failures happen constantly yeah. Rather than let these huge failures. Like I would even rather go through a depression than go through states seceding from the United States, which is like the path that it feels like we're on right now. I would rather go through a depression than us succumb to Thucydides trap because we need some way out of the debt.

[Morgan Housel]

Yeah.

[Tom Bilyeu]

The just absolute growing hatred between the left and the right, populism in general, to me, is entirely a result of debt and money printing. And so all of that stuff, I think, ends up with some percentage chance. I rank it high, you rank it low, but like some percentage chance of tearing at the very fabric of this country. Not in a way that we're going to disappear. I do not think that. But I do think that history shows that. Oh, no, no. You constantly go through these cycles of three to five years of catastrophic warfare inside your country or outside, from the outside, and millions of people die.

[Morgan Housel]

Yeah.

[Tom Bilyeu]

And that's just how it goes. And so would I rather go through a depression than millions of people die in war? Yes, I would.

[Morgan Housel]

The one counter to that is I think a lot of wars are. Are initially caused. The spark is. Is depression. It's economic depression that causes the spark. What's going on in Iran right now, I'm by no means an expert in the slightest in that. I'm just a tourist who reads the headlines. But what really sparked the recent protests is when their currency collapsed versus the dollar. You know, most people can put up with a lot of. In government as long as they are gainfully employed and have full valleys. Once you take that away, there's a great quote from, From a Russian poet who's talking about people in the Gulags. And he said, you can turn any saint into a monster in two weeks if you deprive him of food and shelter and. And warmth and whatnot. Anybody turns into a monster in two weeks. And so I think. I think a lot of that was in. In Germany. How do you take one of the most peaceful, civilized countries of Germany in the early 20th century and turn them into the absolute monsters that they became in the 1930s and 40s? Well, a lot of it is very, very complicated, but a lot of it is the comp. Their economy completely collapsed, utterly collapsed in the 1920s. Hyperinflation. Everything went to hell in the 1920s. And, and there's a lot of evidence that in that situation, when you completely deprive people of any semblance of normalcy or even food in a lot of these situations, they say, what Else you got. Let's try something else. Who's this guy Adolf over here? He's got his Samson. Let's give him a shot.

[Tom Bilyeu]

Nice and charismatic.

[Morgan Housel]

And I think there's actually many scenarios in which it came damn close to that in the United States. The fact that FDR was, was elected and we got fdr, who was a flawed man and it was very unpopular at the time. He's become less popular or less unpopular over time. But at the time, especially in the 1930s, before he became the war hero of the 1940s, in 1930s, a lot of people hated the guy. He was, he was the picture of everything that was wrong with America and he was going to be. He was the emperor kind of thing. He was not a. Not a popular guy in the slightest. And very interesting thing. I think about this a lot. There was in 1932 a very well organized plot. It was called the business plot, where a lot of very wealthy business people in America came together and wanted to organize, did organize what was going to be a coup and they were going to force FDR out of office and replace him with a Marine general named Smedley Butler who would effectively. Smedley Butler, great name. And he would effectively become dictator of the United States. And in an era where that happened in Germany and Italy and go on down the list of where that was happening. And as I said earlier, fascism was not a dirty word at that point. It came damn close to happening. It didn't. Obviously, I've never heard of this because it didn't happen. And so a lot of people don't pay attention to the things that didn't happen. They don't pay attention to the terrorist attacks that were thwarted.

[Tom Bilyeu]

I'll take some information on near misses if I can get it.

[Morgan Housel]

Yeah, no, it's. It's a very interesting thing because it was very well organized and funded by a lot of wealthy people to do it. And so we know the story that happened. But there's a lot of alternate alternative histories in which the United States wouldn't have survived the Great Depression. And so that's why maybe to your point of you'd rather go through a depression than go through that. I think depression very often causes that. Yeah, that war and misery.

[Tom Bilyeu]

Yeah, yeah. There's no doubt about that. Economics is at the base of the pyramid. All things spring forth from the economics.

[Morgan Housel]

Yes.

[Tom Bilyeu]

And speaking of, what do you think about all the trade warfare that's going on right now between us and even historic allies?

[Morgan Housel]

Here's the analogy that I'VE used and I think I stole, I stole this analogy from someone. I can't take credit for it but you're actually the expert here on food and nutrition whatnot and very debate. There's a lot of debates in nutrition, how much protein you should eat, keto, vegan. There's a lot of debates. The one thing, the one thing, ferocious debates. I think the one thing everyone agrees on is that refined sugar is bad. Is that fair?

[Tom Bilyeu]

Yeah. Even that you're going to have people that say all that matters are calories.

[Morgan Housel]

But yeah, am I directionally fair in that? On the right one, economics is very contentious. What should we do? Should we go left, right and tax rates. A lot of ferocious debates. The one thing that almost every economist agrees on from either side is that trade wars are self destructive and tariffs are terrible. It's one of the only things in which there is bipartisan both sides agreement. It's the equivalent of refined sugar. And I feel like what a trade war is doing is put your fruits and vegetables away. It's time to pound some white sugar. That's effectively what we're doing. It's self destructive. And, and do you think that I understand why it's to. I understand why it happens, why it's smart politically.

[Tom Bilyeu]

Because what is get reelected.

[Morgan Housel]

What is every company and country done in the last year? They come groveling to Donald Trump on their knees and say please sir, can I have an exemption? Please sir, what can I do? If you're seeking for power, it's a wonderful thing, it's a wonderful sword to hold over people. But economically it's, it's always a disaster and always has been. I mean we've tried it millions of times in other countries. Every, there's been trade wars for thousands of years. And we've tried it in the United States. We've tried, we've tried it all over the place. It never ends well. And so I think it's self, it's self defeating.

[Tom Bilyeu]

Do you think that there is a necessary reordering of the world order that needs to happen right now or is this just a maniac on the loop loose?

[Morgan Housel]

I think it's closer to the latter. Now I have a lot of empathy for people who their jobs were lost to, to China in the last 50 years. And those people are right to be upset, of course, but I'd be upset. You'd be upset if that was your life and that was your livelihood and you felt like you got shipped away and you want to do something about it so you can have empathy for that and understand why something needs to be to change. And also say, this is not. This is not the way to do it. That the way to do it is. But I think this is true for a lot of things in economics that the era in the United States, from probably about 1950 to 1980, when the US had virtually a monopoly on global manufacturing, where there was a lot of peace and tranquility, at least relatively 1970s, of course, we're kind of a shit show, but by and large a pretty good era. That was the anomaly. That was not the norm for which we should expect to go down to. That was the outlier. That was so many crazy confluence of events that came together that gave the United States this unbelievable bounty of economic prosperity that we enjoyed. And I think there's a lot of damage that has been done in the last 30 years or so of assuming that that was normal and what we're going through right now is abnormal when I think the opposite is true. That what we're going through right now historically is probably closer to normal. And what we had back then was this unbelievable unsustainable advantage that we will never go back to again. And so when people want to recreate that old America when we had manufacturing dominance with much higher wages and whatnot, that was such an outlier event that I think is very hard to repeat.

[Tom Bilyeu]

Do you think it's something that we should be aiming for or is AI just like, makes it unrealistic?

[Morgan Housel]

Well, certainly the reason that garment manufacturing and plastic toy manufacturing was sent to China and Cambodia and wherever it was else is because we don't want to do that in America and we shouldn't because the wages are so low that we would not want to do it and no one will be willing to do it. You know, if we brought garment manufacturing back to United States and we had a sock factory here, you know, the people would only. There's two options. You could either pay those people a dollar an hour, or socks are going to cost 50 bucks when you cost them, or, you know, whatever it would be, neither of those outcomes would be, would be acceptable to anybody in the United States. So that's why those factories are shipped to Cambodia. And what we're really good at in the United States is very advanced manufacturing, building airplanes and rocket ships and things like that. And tech entrepreneurship, that tends to be what we're very good at in the United States. And people get, I think, caught up in the idea of a trade deficit as a symbol of unfairness. And the example I Use if I had a leak in my sink and I called a plumber, plumber comes over my house, fixes my sink, I give him a couple hundred bucks, whatever it costs. The plumber probably didn't buy my book. Probably. Let's say the plumber didn't buy my book.

[Tom Bilyeu]

Let's hope he did though.

[Morgan Housel]

I hope he did. But let's say he doesn't. I have a trade deficit with the plumber. I gave him 300, he didn't give me anything return other than his product that he sold me, his skill that he sold me. I have a trade deficit with him. Did he rip me off? No, that's a mutual exchange for someone. He had a skill that I don't and I benefited from him. It was a mutually beneficial transaction. And I think that is by and large what happens in global trade, which is that China is better at some things than we are. They're better at low end manufacturing and they're willing to do low end manufacturing when we're not.

[Tom Bilyeu]

Yes, heard totally. But do. Can you understand why if you're a country that's like, okay, I buy everybody's stuff but nobody buys my stuff, why at some point they go, I'm gonna, I'm not even gonna let my people buy stuff from you unless you start buying stuff from us.

[Morgan Housel]

I think that can be a false notion because we have a pretty big trade deficit in goods, we have a massive trade surplus in services. We sell a shitload of services to.

[Tom Bilyeu]

Other people, makes people act like that.

[Morgan Housel]

I think it is a very understandable that I can empathize with yearning to go back to an era that for many people, not everybody, but for many people was better than we have it today. And a politician made a very smart logo off this Make America great again. The yearning to go back, which can be colored by false nostalgia. Like in many ways it wasn't as great as we remember it to be, but in some ways it was better. And the yearning to go back to that I think is always going to be very appealing to the people, whether it was them or their parents who benefited from that era. And they feel like on the K shaped economy they're on the, they're on the lower end of the K. That's always going to be a very appealing thing to it. I think a lot of problems in politics is that if somebody disagrees with you, it is, well, you're an idiot and you're uninformed. That's the knee jerk reaction. Without asking, well, what have you experienced in life That I haven't. That makes you think that? And if I were in your shoes, would I believe the same thing? And I think nine times out of 10, the answer is yes. And so I can look at that yearning for nostalgia, and I could come up with 10 reasons why it's dumb and we shouldn't do that, and it's false nostalgia to begin with. I can also say, if I was in your shoes, I'd probably be saying the exact same thing with as much fervor as you do. So I think that's. That's a lot of it.

[Tom Bilyeu]

All right? Tons of uncertainty. You're really good at helping people figure out how they should be thinking in any given scenario. How should people be thinking about this moment? With the fact that I can't see the future, you can't see the future, but there's a lot of, like, oh, God in the air. How should people be dealing with this uncertainty?

[Morgan Housel]

I'll give you two answers, one technical, one philosophical, technically, and this is what I do with my own money. If you are only saving for the risks that you can envision, that you can put your finger on, you're going to be caught off guard by the surprise 10 times out of 10. And what does the most damage by far in history are the surprises Pearl Harbor, 9, 11 Covid that nobody sees coming until they happen and do all the damage in the world. The solution to that for me has always been I have a level of savings and liquidity and lack of debt that seems excessive. And if you were to look at it right now, you would. You might say, morgan, what are you saving for? Are you saving, like, what, you have all this cash. What are you saving for? And I say, I don't know. I'm saving for a world in which the biggest economic risk of the next year is something that you and I are not talking about. It's not in the newspaper. Nobody's talking about it, because that's always the case, always will be the case. So save an amount that feels like it's excessive. That is the only way in which you have a fighting chance to survive the risk that you can't envision. That's the technical answer. I'll give you. The philosophical answer is there's a great quote that I love, which is, when you haven't engaged with history, everything feels unprecedented. And a lot of what we consider uncertainty today is the idea that what we're going through is unprecedented. And I think if you just become a loose amateur historian of Western history in the last hundred, 200 years, whatever you want to do. You will see that the cast of characters changes, the plot changes a little bit, but it's the same movie over and over again. It's the same amount of uncertainty. It's the same greed, fear, overreaching. It's the same thing over and over and over again. That doesn't make things better or even. Not even necessarily make you an optimist, although I think it can. But it relieves a lot of the uncertainty when you're like, we've done this a million times before and a lot of those times it ended bad, it ended very badly. But let's not pretend that this is the first time that we've been dealing with these things. It's not. And I think for me, that's made me. I think it's made me calmer and humbler. It's made me calmer in the sense that if you think we've never dealt with this before, it makes it feel ten times scarier. Whereas if you're like, I've done this, we've done this before. And a lot of times that ended poorly, but we've done this before. And it's made me humbler in the sense of at every one of those episodes where it's been the same movie in the past, nobody was able to predict what happened next. Nobody made it. And so rather than sitting here and dwelling on what might happen in the next 10 years, which I think nobody can know, I would rather try to live in the moment and hang out with my kids and go for a walk and read good books and enjoy it without pretending. Because what a lot of stress is, is like yourself trying to remove the uncertainty by trying to create a narrative of what you know is going to happen next. It's a false sense of assurity that you give yourself to remove the uncertainty. And I, I just don't even try it. I don't even try to do it. It's there. It's always going to be there. We're never going to get rid of it, so I might as well enjoy it. Eat, sleep and be merry. Because tomorrow we die.

[Tom Bilyeu]

Cheers to that, Morgan. Thank you, man. I love spending time with you. Tell people where they can find the latest book and how to stay current with you.

[Morgan Housel]

My three books, the Art of Spending. The Art of Spending Money. Same as ever in the Psychology of Money. Every half decent thought I've had about money are in those books. That's where you can find it and they are excellent. Thanks so much.

[Tom Bilyeu]

For sure. Boys and girls, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace. There are two types of people in this world. Those who wait for the perfect time to start, and those who start now and figure it out along the way. If you are ready to stop waiting and start taking control of your nutrition, I want you to listen. Most people know they should be getting proper nutrition every day. The challenge is not the knowledge. It's consistency. That's where AG1 comes in. It's a foundational nutritional supplement that turns good intentions into daily action. One scoop, one drink. That's it. No more complicated routines, no more putting it off until tomorrow. Just mix it with water and you're supporting your immune health for the day. AG1 isn't about quick fixes or temporary solutions. It's a nutritional supplement designed to become part of your daily ritual. Because real transformation happens through the small decisions you make every single day, it's never too late to create a new, healthy habit for 2025. So try AG1 for yourself today. And AG1 is offering new subscribers a free $76 gift. When you sign up, you'll get a welcome kit, a bottle of D3K2, and five free travel packs in your first box. So make sure to check out drinkag1.comimpact to get this offer again. That's drinkag1.comimpact to start your new year on a healthier note.