Are you seeing signs that we're in an AI

bubble and therefore a economic

collapse?

>> The classic signs and that has

implications for the economy and it's

bad for the society and everybody loses

money but we also have some other things

that are going on that happen around the

same time and I can go through these if

you want please.

>> So what I'm saying is clear because I'm

a global macro investor

>> and you were one of the few managers to

foresee the great financial crisis.

>> Yes. And so right now we're very excited

about AI and we should be very excited

because it's going to be revolutionary

changes [music] but it's creeping into

almost everything. The way I look at it

is I look at the human body and I see

like it's replacing the body and so on

and then it replaces some aspects of the

mind levels of thinking and reasoning.

But at the same time we have another

problem that's existing geopolitics. I

mean that China is a larger trading

partner with most countries than the

United States is

>> and that's a changing of the world order

>> that is one of the ingredients right and

then also you've got large wealth gaps

the government don't have enough money

and so [music] when you have the

downturn then you have people at each

other's throats

>> so a lot of people they're thinking

about how to sort of secure their future

how do they all prepare

>> let me say that history has shown that

it's not the most intelligent people

that are the most successful but the key

thing to keep in mind is

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>> Ray, for people that might not know who

you are, you founded Bridgewater

Associates in a two-bedroom apartment in

1975, and you grew it to the world's

largest hedge fund. What was the the

total amount of cumulative net gains

that you delivered for those investors

over that period?

>> I think it was something like 53

billion. We produced about a 12% return

with no never any significant losses and

it was uncorrelated with other

investments. And you were one of the few

managers to foresee the great financial

crisis which allowed Bridgewwater to

post positive returns of 9.5%

in 2008 while the S&P 500 plunged by

almost 40%.

>> Yeah. Let me start with the thing that

I'm most curious about because I sat

here with an investor called Jeremy

Grantham who you might know.

>> He told me that we're staring in the

face of an AI bubble and therefore a

economic collapse potentially.

>> If you look at the data, it would be

compatible with history for the peak to

be very soon. Everything is in line.

This is I think the biggest investment

bubble in American history.

>> What's your perspective on that?

>> He's right. I don't want to jump to

conclusions as much as I want to explain

reasonings that lead up to conclusions.

I'm at a stage in my life that I want to

help people understand cause effect

relationships. What they call a bubble

is when the price goes up uh a lot and

companies do very well and then it

collapses and that has implications for

the economy. It has implications for the

markets like 1929 bubble, okay? or the

2000 bubble. Okay. Which is the dot

bubble.

>> Does it impact real people as well? Cuz

you said the economy.

>> Did 1929 bubble bursting impact

[clears throat] real people? Yes. The

great depression followed because what

happens is there's a new technology that

comes along that's revolutionary. The

dotcom bubble which was 2000 all the

stuff that we have that's wonderful new

technology. People get into that

technology. They say that's miraculous.

I can bet on that. I'm I'm sure it's

going to be successful and then they bet

on it and sometimes they borrow money to

bet on it and they lose sight that the

price of it matters. So it goes up and

up and it's everybody's thing, you know,

like right now we're very excited about

AI and we should be very excited because

it's going to be revolutionary changes

and it did at the same time. So I want

to buy some of that and everybody wants

to invest in some of that and what they

do is they don't pay attention to the

price and there's a certain mechanics.

People will borrow money. Wealth is not

the same as money. So you see a lot of

people getting wealthy but you can't

spend the wealth. You have to sell the

wealth to get money because you can only

spend money, right? So what happens is

when they need money for one reason or

another taxes change or interest rates

go up and so they have to pay their debt

service and so on there is a pricking of

the bubble so that what happens is it

falls. Okay. And when that happens,

people lose money. And as they start to

lose money, the process works in reverse

because uh when they made a lot of

money, they have a lot of collateral,

right? They can go borrow money because

they're worth a lot. And that compounds

on its way up. And then when it comes

down the other way, it works the other

way. Okay? Now you got to pay your debt.

And so then you have to start to sell

assets. And then there's less demand for

things, right? So there's less demands

because if you're losing money because

you put some money in the stock market

and that company and so on, you're going

to spend less. And as you spend less,

then somebody else's income goes down,

right? You don't go to the restaurants.

The economic downturns that typically

follow a bubble like the Great

Depression. The late 20s was fantastic.

If you talk about changes and and

experiencing, this was the first time

there was electricity in houses. So it

was the first time you would have

refrigeration and you would have

lighting in houses. This was the first

time that you had um cars popular that

you could get. First time airplanes,

first time you had radio and so

everybody knew that they were going to

be great in the future and they were

great in the future. But at the same

time what happens is as they buy them

and they stock socks go up and they

borrow money to buy them and so on um

and the profits don't live up to the

price then that causes this other

dynamic and it produced the great

depression. So let's say that I buy this

and this is a unit of artificial

intelligence. So, let's say I buy one

share in one of the big AI companies

right now. Because investors are so

excited about AI, they value this at

$100. This unit that I have here, they

say it's worth $100. So, my net worth is

now $100. I go to the bank because I

have this net worth, this paper worth

$100, and I ask the bank for a 50% loan

on this thing that I own. They give me

$50. Now, I have $50. And then something

happens in the economy which means that

the investors who have invested in this

and investors generally now need money

to pay off their other debts that they

have. So this could be a war, it could

be some kind of event that takes place

and suddenly everybody rushes to sell

their assets like this one. And so when

I go to sell this, the price of it has

now plummeted to say maybe $25. But I

took a loan at the bank for $50. So I

own the bank $50. But now this thing

that I have that was worth $100 a couple

of months ago is now worth $25 and I'm

$25 in a hole. So I have to quickly

sell. And then with everybody selling

all the price of assets dropped. People

stop spending money at the restaurants.

Like you say, there's less money around

and then the bubble has burst and we're

in this sort of declining.

>> You got it.

>> Okay. Good. All right. Fine.

>> And it happens

because it must happen. I mean meaning

in these tremendous uh changes uh

there's very little that's known. So

anybody who's in the business of making

AI uh can't be precise. They don't know

exactly how much money is going to come

in. Right? So there's either one of two

things. You either don't invest enough

and then the competition runs away or

you uh invest a huge amount and you

can't be precise. Okay. And so when that

dynamic happens it's a problem. So yes,

you said it very well. So I'm going to

repeat one other thing to emphasize.

What's quite common now is you can issue

stock for uh let's say you raise $50

million

and you value the company at a billion.

>> Only [clears throat] $50 million was

actually spent on that company. But now

if you raise that, you're a billionaire.

>> Mhm.

>> Okay. Because the accounting value of

that, what do you own? You own stock

that is valued at a billion dollars.

Nobody paid a billion dollars or

whatever it is, right? And now you own

that stock. But that stock um you can't

spend because you can't spend wealth.

>> Mhm.

>> In order to spend it, you have to sell

some of that stock to get money.

>> Yeah.

>> Right. And quite often there's an

interest rate rise because that you know

let's say as there's a fever and there's

an inflation then the central bank wants

to try to put the brakes on that a bit.

Okay. What does that mean? It means

people who have debt in a sense have to

come up with more money

>> because when you own the debt hold the

debt you have to come up with money to

pay the debt and that dynamic works

between us. We've said it uh clearly I

think we understand the dynamic. So they

they have to exist. Now we have another

problem that's existing. Okay. So we're

talking about the bubble. Okay. But we

also have some other things that are

going on that happen around the same

time. A big gap between the rich and the

poor and which also means the left and

the right, the politics of it, right?

Just as we have now. When you have the

downturn,

um then you have people at each other's

throat. So if we take politics, what you

see is this that they don't have enough

money. The governments don't have enough

money. We have big budget deficits.

Okay? Where do you get the money from in

order to pay those bills? The UK has had

I think six out of the last seven years

there's been a new prime minister. And

because there's not enough money for the

government and so what you start to see

is people come in with their claims. But

there's this how do we get the money?

And then people run who have money. They

say I don't want to be in this tax zone

that's going to be and then they leave.

And so there's a domestic political

problem that is not people compromising

the same way they used to compromise.

Right? So now you have the politics

which compounds this. And and then you

have a world this is what I call the big

cycle. You have a world in which also

the geopolitics changes. By geopolitics

I mean country to country. Okay. There's

a system under normal circumstances when

there's a more dominant power, they

impose their order and that becomes more

peaceful. But when you have um uh

arguments of how things should go, those

arguments start to turn into conflicts,

right? And so those things tend to

happen together. That's why I refer to

that as the big cycle, that dynamic that

is the confluence of the money, the

internal conflict politically and the

external conflict which is what we're

going through. And and the problem is I

think that people don't know the cycle.

So every day we go to our sources of

information and you see this latest

news, but they don't connect the dots in

in understanding that cycle. Closing off

on this point of the bubbles. What is it

that makes bubbles pop? So if we are in

an AI bubble at the moment and it is

going to pop at some point, what is the

like they call it a black swan event?

There are a few of them. There are

bubbles and then the things that prick

the bubbles. Okay, the things that prick

the bubbles typically in the beginning

are something that means that I have to

sell some wealth to get money and that's

usually a rise in interest rates. It

could be something like wealth taxes,

something that means I very wealthy, but

typically the tightness of money because

during that spot there's inflation

pressures and central banks decide that

they want to tighten monetary policy and

so on. It becomes that the um amount of

money that I can get by owning that debt

at the higher interest rates is greater

than the amount of money I could get on

my equity investments. That's part of

it. Also what you see is a lot more

production of stock and what I mean by

that issuance of stock. Think of that

the supply and the demand. There's

there's demand, right? And we've been

talking about the demand that makes

stocks go up. You know how we create

this wealth. But there's also um supply.

So you can issue stock. It's very issue

there. There's almost nothing that's

easier to produce than stock. So if I

own a company, I can just uh print more

equity.

>> Yes. Today you could probably go out and

say, "I'm going to make a company and

I'm going to take it uh public and you

go to your audience and your crowd and

you can say I'm going to make stock."

>> Okay? So it becomes when there's a when

there's a market that wants stock,

>> there's a production of stock.

>> Okay? And that supply of stock together

with the other that I'm mentioning the

the need for getting money and so on um

causes the um the the bubble to pop.

>> Are you seeing signs that we're in a

bubble?

>> Yeah. Yeah. Yeah. Classic signs that

we're in. And the bubble I should

emphasize it's not a um you're in a

bubble or you're not in a bubble. It's a

degree thing. Okay. There is also that

it's in weak hands. I can look at now

who is in these companies right and is

it in strong hands or weak hands classic

strong hands is that when weak investors

not knowledgeable investors then put a

lot of money into it particularly if

that's in a leveraged way

>> way with debt

>> with debt or they can buy an op a a

leveraged version of that like there are

ETFs now that are leveraged versions of

the stock market and they and so on and

so they get into that. It's more like

they're crapshooting. Okay? And then

that's a sign of a bubble. So I I've

listed a few of those signs. Those are

the major signs of those bubbles. And so

that when it goes down, then you get the

fear. Then you get the need I to raise

cash and that dynamic works its way out

in the form of then the reverse

happening. In other words, everything

becomes cheap and everybody has um the

spending and the things you mentioned.

>> If we are in an air bubble and it is

going to bust, you know, I had a friend

of mine contact me and he said,

"Stephen, I think we're in this an AI

bubble and he's running an AI company."

So, he said to me, "I'm going to raise

lots of money now so that when the the

markets come down and investors are

fearful, they don't want to invest in

companies. People stop spending as much.

They start thinking about their

subscriptions and start canceling

subscriptions, we're going to be good

and we're going to be able to buy up

some of our competitors who are going to

be struggling." So he's just raised um

hundreds and [snorts] hundreds of

millions of dollars for his AI company,

>> right? And it's probably like that easy.

>> Yeah, it was easy now,

>> right?

>> The question here is like what should at

different levels? So like the the

average Joe on the street up to

entrepreneurs that are running

companies, how does how do they all

prepare for an economic bubble that

might burst?

>> He's such a good example. And what that

does and just following it through on

what we were saying a minute ago is that

increases the supply of AI stock.

>> Okay. Yeah. because he sold stock more.

>> Yeah.

>> Right.

>> And so as he and others do that more

this greater supply of stock comes in

and and so he wants to get ahead of it

>> in that dynamic and then you know that

contributes to the bubble but um how do

they prepare? How does the average

>> I would also say something the future is

very unknown

and people should not be timing

sophisticated investors have a real

challenge even in timing a bubble so on

uh the important thing always is to

diversify now we're going to go back to

money the basics of money management and

I by the way I personally have gone

through the cycle because I didn't have

any money and then I did then I a lot of

money and I remember uh the cycle very

well. What happens is as you start off

um I used to count how many months I

would be okay a certain amount of money

how much m I would be okay if no more

money came in if I lost my job or

whatever I did I'd mostly never I worked

two years for somebody but in other

words if money didn't come in and it

would be months and then years and so on

to build that security because I take

care of my family and so on and So what

um as we're looking at these things,

these are the choices that you have in

order to be able to say, do I buy my

house or apartment? Do I put my money

into cash? And what happens to money is

you have to put it into something

because um they'll pay you interest on

it. Okay? So that's your cash deposit

and so on. And people think that that's

the safest. It's not. It's the worst

investment over a long long period of

time because inflation will eat it away.

>> You mean putting it in a bank? Just

leaving in a bank, please in whatever

form, a money market fund, a whatever it

is that is that shortterm, I'll deposit

it and it'll give me an interest rate.

Okay.

>> Okay. And that's what they think about

as cash. You know, nobody leaves it

literally in cash because if it's

literally in cash, it doesn't earn

interest. So why shouldn't I put it

there and get some interest on it? And

so that's cash and people think that

that's the safest. It has the lowest

return guaranteed almost to have the

worst return over the longer period of

time.

>> People keep cash because it feels safer.

>> That's right. And I'm saying it's not

safer because of inflation.

>> Explain that to me in simple terms.

>> Okay. Well, if I got no interest rate,

um then what I would do is I'd lose to

to the inflation rate.

>> And what's the inflation rate? Well,

three and a half or 4%

happens to be about where it is now.

>> A year.

>> Yeah. A year.

>> So that de at least $3.5 a year.

>> That's right.

>> If I just leave it in cash.

>> That's right. Okay. Now I'll get an

interest rate on it if I put it

someplace and it'll give me maybe uh an

interest rate that's somewhere in that

vicinity similar to that.

>> Three four five four%.

>> And then I have to pay taxes on it.

>> Oh, you have to pay taxes on the gain.

>> You're Yeah. Okay. Right. Even though

you really didn't gain relative to

inflation, you still have to pay the

taxes on whatever you've earned or

something anyway over the long term it's

a lousy return because also think about

returns also come from productivity and

over a period of time people learn how

to do things better and so on. So then

you can invest in let's call this stocks

okay that we'll call that the stock

market. this is cash and then you think

on the stocks and then the stocks can go

up or down um and then they have this

dynamic that we're talking about that

creates these big cycles and the busts

and those cycles when they go down um go

down um 60 70%.

Okay, that that's what a bare market

looks like. Woo! What a what a dive.

Okay, this is gold. That's gold and the

these are bods and this is your house

and that's uh Bitcoin. Okay, so these

are the choices. They each

um change for certain reasons. I'll

digress into that in a minute, but what

happens is they go like this when gold

goes up. Uh tends to be that the bonds

will go down in value or your house and

these change in a certain way. And so

the best thing to do is to have a

diversified portfolio of that. When you

have that rather than any one, you uh

won't reduce your return, but you will

reduce your risk.

>> And diversified means having a little

bit of each,

>> right? A certain amount. And you have to

know how to balance them because of

their volatility.

This one stocks is more uh volatile than

this one. And my own recommendations are

you start first of all with what you

need. Should I uh buy a place or should

I use that money and I could travel more

and so on. One of the advantages of the

house, the apartment and whatever is

it's your environment. Your environment

is important. It produces forced

savings. Sometimes that forced savings

is good. It is a it typically is taxed

better. it's a it's a better vehicle for

tax over a period of time. But I'm not

arguing for this alone, but I'm saying

when I'm looking at this, then I think

this one gold is um very interesting

because when all of these tend to do

badly, this tends to do well. Okay. So

it's a very effective diversifying

because this was money not until u 1971

and it's still the second largest

reserve currency. Central banks hold

reserve currencies. So it has qualities

that are different from this and this

has qualities like when the value of

money goes down because of inflation.

This

>> bonds okay and bonds are basically

lending the government money.

>> That that's right. If you lend the money

at a certain interest rate and then

inflation and interest rates rise,

you're kind of locked into that interest

rate. And so it has its own problems.

The more important thing I would say is,

you know, you save up and you say, how

many years can I live if money doesn't

come in? Okay. And then you take that

and you say, how could I be secure? So I

don't want to put it into one thing that

can go down 70%. So how do I diversify

that? That's my main headline.

>> A lot of people in the comments of our

last episode um they were asking this

like how does this apply for someone who

doesn't have much money, maybe doesn't

have any asset. Say they're 30 years

old. They um have I don't know $100

disposable income and they're thinking

about how to sort of secure their

future. What is the advice for someone

in that situation?

>> Your only asset is yourself and and I

guess what you're going to get from the

government. How do you sell yourself at

at getting a better income or how much

how are you getting money from the

government?

>> Mhm.

>> You selling yourself is the main thing.

This is one of the big problems now with

artificial intelligence and other

machines uh replacing people and and

different types of jobs. It becomes more

difficult. It produces that big wealth

gap while you're having more

productivity. Everybody wants more

productivity because it means how do you

produce things more efficiently but

that's um contributes to the income gap

because your productivity equals your

income for a large extent and then you

have the and you know the political

dynamic. It's tough to get yourself out

of this position that you mentioned. You

know I'm imagining that person. Okay.

It's not easy. there is this giant

polarity. If you're in the top 10% of

talent, let's say the world's your

oyster. But nowadays, in order to be

there, okay, that's that's difficult.

Find something that uh gives you the

ability to sell your time for good

money. Is that going to be that you're

driving an Uber? Is that going to be

that you have the talent and you're

going to be able to understand AI and

contribute that understanding to a

company that values that or what is your

skill? You found this. Okay. And and you

found the way. Okay. But you need money.

Okay. And the the thing that you want to

do, what you're doing, and I'm lucky

enough to do is to make your work and

your passion the same thing. And don't

forget about the money part.

>> Yeah. I amum I one of the things that I

I think I didn't realize earlier in my

career is that whatever skills you have

will be valued differently in different

contexts or industries should I say. So

for example say that my skill here and

I'm not trying to flat on myself but say

my skill here is working

>> having conversations right? Let's say

that's what it is. there's lots of

places I could have conversations and

those places would value my ability to

have conversations wildly differently

per hour.

>> Right?

>> So I often think this and speak to my

friends about this when they they tell

me their skills I say let's look at the

different industries and how they would

value the skills you currently have

differently. A good example again you

know you could be an Uber driver or you

could chauffeur radalio.

Now I imagine those two things pay

wildly differently but the same skill of

driving a car broadly speaking.

>> I agree with all that.

>> And so I think that's one way to just

you know the other way is you go ask

your current boss for a promotion but

again they're going to value you in the

context of their other employees the

market in that industry etc. So it you

might get 10% but you're not going to

see a step change necessarily. So that's

something that I always say to people.

>> Absolutely right. And another um law of

something and I think it's almost a law

of everything. It's a law if you

um buy almost anything is those at the

top

whatever the thing you're buying. If

you're buying a painting, a piece of

furniture, a piece of clothing, a a

person's time or whatever,

command premiums that are many multiples

of the average. It's almost like if you

could invest

10% more

of your time, your effort, your skill to

go up.

>> Mhm.

>> Okay. You will get

twice as much

>> for 10% better something like that.

Okay.

>> So that's part of the formula of life

and a formula of employment. And so if I

think if you keep what you wrote up and

what I'm bringing up in mine, that helps

you position yourself and know what to

do.

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Thank you so much. We didn't mention

this thing here actually, so I probably

should talk about it because people are

talking about it a lot right now, which

is uh

>> Bitcoin

>> or Bitcoin.

>> What's your perspective on Bitcoin? I

know the market in Bitcoin is down at

the moment.

>> I have about 1% of my portfolio in

Bitcoin because there's different kinds

of money and the money that you can't

print, that's one kind. This is the

other kind of money that you can't

print.

>> Gold.

>> Yeah. You cannot crack it with

technology. You can hold it, you own it.

It's there's a saying that it's the only

financial asset that is not somebody

else's liability. Somebody has to give

you something for it. It has that. So,

in my category of wanting, let's say,

make sure that I have some hard money,

which for most people should be between

five and 15% of their portfolio. I

prefer that. I'm pointing to uh the gold

bars here uh rather than um the Bitcoin.

>> Is it still in your view a gold light

asset?

>> Yes, it's it's a type of money that

can't be printed, but

there are technologies that can um hurt

it. In other words, if there's quantum

computing and it can be monitored by uh

governments and so on, it could be taxed

and digital currencies are somewhat

similar.

>> But you don't like Bitcoin as much as

gold because of privacy reasons as well.

>> And when the governments say I don't

want it, they have the power therefore

to do whatever they want with it. And

central banks will not own any

significant amount of that because of

the reason I said they they want their

transactions to be private and in their

control. Think about how different it

would be for Russia. Okay? They

confiscated these kind of other assets.

Um they didn't get these

>> gold.

>> Okay. Gold. And so um what you're seeing

even particularly in this time of

conflict is um that there's a sense that

if I'm holding this others won't get it.

>> You mentioned a second ago the impact

you think AI is going to have on the

economy broadly but also again to real

people's lives. There's lots of debate.

I mean there's been a debate over the

last 10 10 10 years or so within the

world of AI. You had the big AI CEOs

originally saying that AI would cause

job disruption and that you know you've

even had some of the CEOs more recently

saying work will become optional in a

world of super intelligence. At the same

time we have robotics coming over the

horizon. So you've got this sort of

convergence of intelligence and then I

don't know you could think of it like

muscles like physical muscles or ability

at the same time. Um we're seeing AI

accelerate and its capabilities.

What does this mean for the average

person and their job and who's going to

benefit from this AI revolution in your

point of view? It means that you will

either be cutting edge and capable and

among that top fraction of a percent

down to 10% of the population who is um

cutting edge and using it and

accelerating or uh you will if you're in

a thinking job uh be at risk of being uh

replaced. We're coming into a world

where we can automate everything. The

evolution of man

was we had the agricultural era and

there was no real inventiveness and then

man invented the machine

and that the machine did is it replaced

man's physical necessity. So men used to

be like oxen in the agricultural field

and so on and they were replaced by

tractors. And then there was we entered

the industrial age. First you had the

printing press that allowed people to

learn and then you had these inventions,

the industrial revolution, the first

industrial revolution. And what you had

is the replacing the physical that man

would do in factories then and so on.

And so the way I look at it is I look at

the human body and I see like it's

replacing the body and so on and it's

coming up higher and higher and then it

replaces some aspects of the mind that

you can computerize and it's coming up

and up and it's replacing higher and

higher levels of thinking and reasoning.

Okay. So that path is part of the

evolutionary path that is happening.

Okay. So then you start to say what do I

have to offer? And so an answer to who

benefits from it? Those who benefit from

it are those who are um the capitalists

with the ideas that replace u the

workers. And so if you look at there's

revenue for businesses. When you buy

something in a store, there's revenue.

Okay? And if you look at the share that

is going to workers, you see that share

going down. And if you look at the share

that's going to those who own that

business, that share is going up.

That's, you know, how do they share that

revenue in terms of the cost? And you

see that that's rising. And so um this

is an evolutionary process and it's true

that what happens is you get more uh

free time. Okay. So now the society has

to think how do I deal with this? So for

example, the work week which used to be

you know a 60 or 70 hour work week goes

down to less than a 40hour work week and

there's more time but there needs to be

u you know how do you create a bottom

and so we're going through this phase in

which there is this upper end that is

making incredible amounts of wealth as

we describe and then this lower end that

is um then having these challen

challenges. We've have a relatively good

economy and the um difficulty of college

graduates to uh get employment has

increased significantly. And I can tell

you that in in many businesses, it

becomes more of a pain in the neck to

have a college graduate uh let's say do

it. They you have to train them. you

have to and and many of those tasks many

of that thing can be done uh very

quickly with the AI and with

computerization and as you get into

robotics you're going to have that h

happen right the speed of the disruption

that we're seeing because of the amount

of capital that's flowing into these AI

frontier models like the anthropics and

open AI etc etc is is quite different

from anything else sort of the

historical precedences we've seen

through the industrial revolution where

it took time to build the tractors.

>> There's an element of speed. What

happens usually is the bubble bursts.

>> Mhm.

>> And now you have the cyclical dynamic of

that while the technology, you know,

evolves. But the the supply demand and

the debt problem that we just talked

about then come in. And so unemployment

is due to you typically u some sort of a

combination of a financial crisis that

like we talked about the debt and stocks

going down and people not having

collateral and then therefore not buying

uh assets and that dynamic that causes

the unemployment rate that factor that's

the sort of economic reasons but in

terms of the AI agent robotics being

able to replace you I've sat with Dar

from Uber and Dar said that he imagines

in the future the 9 million riders that

they have around the world doing

deliveries will be replaced by

autonomous vehicles, autonomous robots.

>> Those 9 million drivers careers that you

have will be out of work conceivably in

the you know talking about being honest

about the situation.

>> Yeah, I think again it goes to physical

AI as well, right? So I think 20 years

from now you can imagine that those 9

million will be

20 million uh AVs maybe but we have time

between now and then partially because

we don't operate in the virtual world

right we operate in the physical world

you have to get the regulations up you

have to build the cars you have to build

the sensor stacks the the models have to

get there so there is time between now

and then but you can imagine the

majority of our trips being fulfilled

killed by robots of some kind.

>> The unemployment rate gets very

influenced by the bubble bursting and

the economy going down. You see that

spike.

>> You certainly have the evolutionary

change that you're referring to.

>> Okay.

>> Okay. In other words, there's this

evolutionary thing in which they uh like

he says um you know the tractor replaces

the laborer or the assembly line worker

is technology is replaced and that is an

evolutionary thing that goes

continuously for you know many years and

in the way that you're describing

because you asked about the unemployment

rate. I just wanted to emphasize that

the unemployment rate is very heavily

affected by that bubble bursting.

>> So, okay, you've got two forces at once

then. You've got when the bubble bursts,

everybody, as we said, needs cash. So,

they start cutting their costs. So,

that's when they start laying people off

and they start looking around their

company and go, "Forget growth. We just

need to survive. So, we're going to lay

off that team and that team and that

team." And then you see unemployment

going up. And then you've got this sort

of underlying shift happening at the

same time which is workers are replacing

their team members with AI agents or

robotics or in the factories they're now

using robots to do factory work etc. And

that's the sort of current slow march

forward.

>> Right? So I have this chart. Okay. What

this represents this line is the um

evolution of technologies. In other

words, we have greater and greater

learning and doing things better. And

that's the evolution that we're talking

about that also machines replace people

or replace their tags over that period

of time. Then you have this big cycle

which is typically lasts for about a

lifetime on average about 80 years. Uh

we went through that the last time 1945.

There are orders. There's a monetary

order. There's a domestic political

order. There's a geopolitical order.

Okay? You have the bubble bursting.

Okay? You have this. This is what we're

talking about. Um that dive and then

when you go through that, you break down

these orders. And when they break down,

then um you would get rid of the debt

burden. So you get rid of the monetary

system as you're used to it. you um may

get rid of the domestic order. Many

countries orders, their systems end. I

mean, they all end at some point. And

so, they can break down quite often in a

time of great internal conflict. Does

the system last and that happens at that

time. And so, that's that big breakdown.

But still, what you're talking about is

and and I and I agree with you, this

keeps going up. Okay? Because learning

you don't unlearn what you've learned.

So as this goes up and and you're you

you still keep this thing going up,

okay? But you have the big cycle, the

debt, the conflict type of movement. And

these little cycles are the cycles that

we see in this roughly on average, let's

call it an 80-year period, but um uh you

see the um you see the recession and

recession has higher unemployment

and so on. Then they stimulate monetary

policy. They make money looser. Then the

economy goes up and you have prosperity.

Then you go into a bubble. Okay, that

and you run lower on capacity because

you're using up the capacity. Inflation

rises, they tighten monetary policy and

then you have the re the recession that

follows. So these movements from one

recession to the next recession, that

cycle that I've just described on

average has lasted about six years,

uh, give or take about three.

So that's the way it looks. So I'll play

this back for you to make sure I

understand it. There is a sort of bigger

macro bubble which is over 80 years

which is the changing of the world

order. Yep. You get deeper and deeper

and deeper in debt over a lifetime. So

let's say your debt capacity you have a

certain amount. So the government's debt

capacity for example it can borrow when

you wipe it out here then you can build

it up and build it up until it starts to

squeeze. debt service starts to squeeze

out

>> and that's a changing of the world

order.

>> That is one of the ingredients, right?

So, okay, we have too much debt. At the

same time, what you're building up is

you're building up great wealth gaps

because capitalism, and I love

capitalism, but it's it here's the

reality. It creates big differences in

income and wealth. And when it does

that, that also creates differences in

people's opportunities because the rich

people can educate their children well

and they can give them all the benefits.

I mean, education is a big benefit.

That's why there should be broad-based

excellent education. But all of that

happens and so you see wealth gaps build

up. So like the industrial revolution

leads into the guilded age. Okay, the

guilded age looks a lot like now, you

know, people buying expensive things and

looking very gilded. And then it leads

to the robber barons. And the robber

barons are people who are considered,

you know, the um that they're uh taking

advantage the billionaire class and it

becomes that cycle. So that's the way it

works. So you've got this 80year sort

of, you know, boom and then there's a

collapse which sort of ends in conflict

and the changing of the new world order

and then within there you have these

little um bubbles which really economic

bubbles that go up and down, recession,

people get very excited, they they they

contract, they get excited, they

contract and then you have the the

straight line here which is the sort of

techn technological improvement across

the spectrum of ideas and technologies

and all these things and

>> it keeps going

>> and it keeps going regardless of this

boom and bust because as you say people

never forget I so a couple of questions

on this then I don't even know which one

to dive into first but let's go for I

guess just closing off on the last point

that I was I was getting at is there's

this narrative that there'll be new jobs

created because of AI and robotics and

everyone will be fine. A lot of this

narrative comes from Silicon Valley

>> who is producing the technology that

doesn't want to be attacked because

they're

>> making a lot of money. they may have an

act and they're in the good

>> desire to have a certain perspective. I

think objective

um people uh in Silicon Valley and there

are a number of them would say it's

going to have a big employment but you

you you can see it um in the wealth who

owns stocks and who doesn't own stocks.

Okay. Now if you own stocks

um um you're very happy now. Okay. And

if you don't own stocks, you're not

getting that benefit of owning stocks.

So that in and of itself creates a

greater greater wealth even aside from

employment. Okay. So there are these

forces to create the greater uh wealth

gaps, right? Roughly 61% of US adults

own stock in some form and most of them

hold it indirectly through their

retirement plan. Only 20% of Americans

directly own individual stocks or shares

through a brokerage account. While over

half of Americans own stocks, ownership

is heavily concentrated. The top 10% of

households hold almost 90% of the stock.

How do you feel about this narrative

coming from predominantly Silicon Valley

that there'll be new jobs created that

we can't yet forecast and everyone will

be fine? They point to the industrial

revolution. They say, "Look, when the

tractors came, we thought everyone was

finished. When factories came, we

thought everyone was finished. But look,

we figured some other stuff out

>> because if you look at that, this is

this what um thing I'm saying that as

your body is more and more replaced with

your mind, then you can do that. But

when your mind is replaced and your body

is replaced,

uh what is it that you have to sell?

>> What is it that we have to sell as

humans once our body and our minds are

replaced? what man has

um is emotions

and has

um intuitions. There are certain things

that artificial intelligence doesn't

have. And so if you have to get down to

what those things are

um you know does the um robot give a

good massage? does uh you know what is

it that is left and so we will wrestle

with what it is that is left. Okay. But

I think that for the foreseeable future,

those who can work very well where they

have an exceptional human intelligence

and work in partnership with the

artificial intelligence

that they are going to be at the cutting

edge of all of this.

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life. So if you had kids that were 16

years old now, Ry, and they said, "Dad,

what what do you think based on

everything you know about the future?

What should I be doing?"

>> First of all, there's the question of

what what what matters most in your

lifestyle. Uh so I'm going to get

philosophical, not uh assuming that the

highest income is the best. Okay? Um

because happiness,

you want happiness and health. And so in

answering your question, there's very

little correlation between the amount of

money you have and the level of

happiness that you have past the basic

level. And so I could be answer your

question first, which the obvious way is

to say to earn the most amount of money.

And I want to start off in saying that

um you know my experiences and so on is

um like I love being in nature and it

doesn't cost me hardly anything. I mean

it depends where your pull is and so

don't lose sight of your pull and what

it's about. What you want to do is you

want to get above the level that you uh

don't have to panic. We just earlier

discussed how many months can I live and

to be able to secure that and to be

excited and have that passion or that

whatever it is the life that I want to

have. So I just want to emphasize keep

in mind of that. But then also you know

my principle is make your work and your

passion the same thing and don't forget

about the money part right so know your

nature. Um, this is what I tell my

grandkids, okay? You have a feel and you

also have a nature. It's not just your

preferences. People think differently.

Some are more adventurous, some are less

adventurous, some are more conceptual or

artistic and can think with imagination

and they love doing that. Some people

don't like that. Some people want to

make life should be more concrete and

more certain and so on. That's your

nature. You're partially you're a lot

born with that nature and you also learn

it in your earlier years. We know this

of h how neuroplasticity works and so

on. So we are all on a journey to um

find the match between our nature and

our path and you find th that path but

you can't forget about this money part

when you're pursuing that path.

>> Don't forget about the money. So if your

you know grandkids came to you and they

said I want to become a lawyer would you

say listen that's forgetting about the

money because I think AI might take that

job or would you say yes? Would you if

they said I want to be

>> I think you uh

>> I want to do a thinking job.

>> Let me say that history has shown

that it's not the most intelligent

people or the most intelligent species

that are the most successful

and it's not no necessarily those that

work the hardest although these things

are very important. It is the those who

species and and people who are also most

adaptable and and so there's going to be

great change in your lifetime. Okay? And

so yes, today it's artificial

intelligence, but if you went back um

not long ago, we didn't even know

artificial intelligence would exist the

way artificial intelligence today

exists. And the future will be like

that. So when you're nailing it down,

you know, it used to be make sure that

uh you know how to um code and then

claude code comes along and all of those

who are coding um or worry about their

jobs. Okay. So what is it that matters?

Okay, it is um it is the approach to

life in a sense that produces that um

you know the the general understanding

and also the adaptability.

I think a lot has to do with knowing

yourself. That's why in building

Bridgewater uh the personalities of the

person were very important in what

suited their jobs. And then I uh built

this uh personality profile test. Then I

made it online for anybody to go take.

It's about 30 minutes. It's free online.

It's called Principles U. That'll tell

you a lot about your nature. Okay? But

your goal is to find that nature. And

what what are the paths? And there are

several paths and they're constantly

changing to find that nature. Okay? You

experiment, you learn. Okay? But you

know, you probably uh were pulled into

this job by your nature, right? And so

and and you made it work. And here it

is. It works in all of those dimensions.

And it's like that for everybody.

>> Yeah. It's it's it's interesting because

you look forward to the future. And I I

think if I was a young person at this

stage and I was trying to set out where

to aim my career, I would be more

confused now than ever before,

especially cuz they're also contending

with this uh unemployability crisis

amongst entry levels.

>> But if you're talking about you'd be

confused because you can't anticipate

the future, that's right. That's just

the way it is, right? And and if you say

what is it that I need given that

reality, okay, I need to I need to learn

I need to know how to maximize the use

of tools like AI to be able to in

increase what I know and how do I use

that to the best of my ability to be as

useful as possible doing things that

fulfill me.

>> Mhm.

>> Okay. So that's what you need to do.

You're asking what you need to do. Uh

just get over the fact that you don't

know what the future's going to be like.

So if you're looking for an answer, is

it going to be a computer programmer? Is

it going to be this or that? No, just be

maximize your ability to know which is

so easy to do nowadays, right? So

maximize that and then maxim use that to

maximize your usefulness and in jobs

that make you happy. And that's the

thing that that's the best I can give

you in terms of more my 16-year-old

that's the best I I can give them

because I I don't want to mislead them

that it's the thing that it's the

particular job. Okay. That'll mislead

them.

You talked about this 80year cycle which

results in this new world order and it

sounded like you were saying that near

the end of the cycle you see wealth

inequality and you see the guilded age

where some people have lots of nice

things and other people at the other end

are struggling and this is a function of

capitalism. First of all, um

it's a reality

that it's not only just a um a a wealth

gap difference and if the majority

system is not working for the majority,

well, you're going to have a problem.

And yes, it is um it's contributed to

these things where one wants to create

more opportunity through education and

through other basics that there's

certain level at a floor that nobody

should go underneath

because it's bad for them and it's bad

for the society. And just to embellish

on that point, my wife and I live in

Connecticut. It's the on a per capita

income basis, I think it's the second

richest state, but 22% of the high

school students have either dropped out

of high school or are failing with

absentee rates of greater than 25%.

And as a result, a lot of it is gangs,

shootings, drugs, and so on that leads

to a lot of incarcerations.

and the bill for incarcerations

has become uh larger than the education

budget. When you have that kind of cycle

and so on, the system has to work for

most of the people and and so on. So you

um you you have that um dynamic, but it

all comes down to productivity.

And so um the way I look at it is the

government run by almost anybody can't

make these things run well. I mean,

governments do not make things run well.

So, what is it like to give them the

money and expect that they're going to

make things work well? And so, you look

at this set of circumstances and you

say, who is going to make it work well?

And and I don't know the answer. And

these are budget considerations and so

on. You have to prioritize the things

that make it work well. And and you know

what that is? That is uh educating

people to be productive and civil. We

don't talk enough about civility, you

know, how you work together to be able

to achieve a a productive result. And

the way these cycles go, it's more

likely that they're going to have a big

fight and we're going to have, you know,

a debt problem and those kinds of things

than how we're going to come together

and work out how to achieve this

environment which takes care of

wonderful education and productivity of

people and all of that to make the

society work better uh for most people.

And that's the way it looks and that's

what's happened. Capitalism leads to

inequality it seems.

>> Yeah.

>> So

>> that doesn't have to. There are some

societies

um like in in Singapore, some of the

Scandinavian countries, some some

societies there is a a floor that

everybody

can have um good education, adequate

housing and adequate health care. The

foundations,

okay? Because if you go below those

levels,

the society will pay terribly for it

because those people will become

liabilities, not assets of the society.

They'll be disruptive. So, what about

wealth taxes? Because this is the big

debate now that the big debate in the UK

at the moment is tax the rich. It's been

all over our news over the last couple

of weeks. The big debate in New York and

LA is wealth taxes and tax the rich.

Good idea, bad idea. It's a very

difficult idea in the following ways.

I'm just talking about the mechanics.

They have to sell the wealth

and and that contributes to get the

money to pay the taxes. That's one of

those things that can cause the bubble

to burst as we're talking about.

>> And then [clears throat]

um operationally

it's very difficult unlike if they did

it as um stepped up tax basis. In other

words, right now when you die, your

capital gains gets put aside and you

don't have to pay capital gains taxes,

you pay inheritance taxes. And there are

ways that you can raise taxes and not

hurt the economy. But we do have to

realize that it will lessen investment

because what wealth is mostly used for

is to put it into investment. So you

have to do this with a at the same time

the improvements in those that are going

to improve productivity like education

and so on. If you're just making

transfer payments, wealth payments and

you undermine the productivity of the

society by doing that. In other words,

you're just giving it for consumption

and so on. And the money is going from

what was capital expenditures and those

kinds of investments that make uh a

better more productive society to go to

in a sense consumption and so on that

doesn't produce that pro productivity

that's going to be a problem. So you

have to think how do you make people

productive and how do you make your

society productive for most people or

you're going to have to find a way where

you say that other group of people who

is not productive um the overall society

can have a higher level of productivity

but we're going to still establish this

bottom that I'm talking about the bottom

in education the bottom in conditions

and then you have to say who is capable

of doing

building a uh a society that will be

productive.

>> And who is that?

>> Well, as I say, you have this dynamic

problem that um um typically a

privatelyowned,

capitalist

business will do better than their

government counterparty.

>> Okay? So, a business is more productive

typically than a government entity. that

system.

>> So entrepreneurship, you need

entrepreneurship.

>> Yeah. And capitalist, in other words,

people who are capable of making the

thing they're responsible for

productive. Okay. Run efficiently. Run

efficiently. So you need those

indisputably. And if you're doing that

in government, you need that in

government in order to be able to do it.

And government has its own uh it first

of all, it doesn't attract many of those

people. And then it also has by its

nature knowing many people have gone

into it, it it is almost dysfunctional

as it causes all of this arguing and

problem. So those who want to be most

productive tend not to go there and also

um it doesn't uh distribute well. These

people do not they're not on the ground.

They don't have the direct contact. They

don't know what it's like. And as I'm

describing, I see this politicians Yeah,

the politician who says I'm u I'm going

to you know so you still have to come

back to the question who's going to make

it run efficiently.

>> This is something that I've made for

you. I realized that the direio audience

are strivvers. Whether it's in business

or health, we all have big goals that we

want to accomplish. And one of the

things I've learned is that when you aim

at the big big goal, it can feel

incredibly psychologically uncomfortable

because it's kind of like being stood at

the foot of Mount Everest and looking

upwards. The way to accomplish your

goals is by breaking them down into tiny

small steps. And we call this in our

team the 1%. And actually this

philosophy is highly responsible for

much of our success here. So what we've

done so that you at home can accomplish

any big goal that you have is we've made

these 1% diaries and we released these

last year and they all sold out. So I

asked my team over and over again to

bring the diaries back but also to

introduce some new colors and to make

some minor tweaks to the diary. So now

we have a better range for you. So, if

you have a big goal in mind and you need

a framework and a process and some

motivation, then I highly recommend you

get one of these diaries before they all

sell out once again. And you can get

yours at the diary.com.

And if you want the link, the link is in

the description below. What is the UK

currently a cautionary tale of? It's the

classic cycle. They have gotten over

indebted,

underproductive,

and they've run out of choices. In other

words, there's not enough money. Okay?

And because there's not enough money

um to to do all the things, then they've

gotten this internal political conflict

going. And you've had uh six out of the

last seven years you've had a a new pro

prime minister because somebody else

comes in and they got their promise

and and the promise doesn't pan out and

it doesn't take long to be that that I

don't believe your promise anymore. So

you bring the people in and then you

throw them out.

>> We just had a new prime minister

yesterday.

>> Yeah, I know. I'm It's all part of this

cycle. And so what happens is they don't

have the financial and the people move.

It's just logical, right? It's just when

you're heavily indebted

and you're not as productive and you've

got large wealth gaps. What are you

going to do? It's politics. Um you're

going to say, "I can't raise taxes

because if I raise taxes, besides having

great in conflict, um people are going

to leave."

Okay? So, I can't I can't cut benefits

because those who are receiving whatever

those benefits are are the ones that are

suffering. I mean, what am I going to

do? Cut those benefits? So, now uh okay,

but wait a second, I'm running a big

deficit or I don't have enough money.

So, where does the money come from? How

do I get out of not getting more in

debt? And then what does that mean for

the person who's lending to you? They

don't want to lend to you, right? So,

you're not going to get the money to

finance the deficits. It's mechanics.

>> So, what is it they have to do to get

out of that situation?

>> They're going to have to have a, you

know, a major

restructuring. You're going to have to

um

>> go bankrupt.

>> Wipe down.

>> Yeah. Well, well, the the way the

central banks work now is they do a

mixture of printing money which produces

inflation and then restructuring the

debt in some way like maybe changing the

maturity

and and in these cycles quite often they

put in capital controls because they

think people are leaving so they don't

want them to leave and take their money

with them. So they put in capital

controls that says you can't leave with

your money. Okay? And they'll have exit

taxes and that's the type of thing that

happens until you know there's period of

great turbulence. Then you um through a

combination of restructuring the debt.

Restructuring the debt means like quite

often you lengthen the maturity of the

debt. Okay.

>> I think what's needed is a strong

middle.

>> What does that mean? Right now there's a

left and right and they're extreme and

as long as they're at war with each

other that's going to make things worse.

>> Yeah.

>> If you can find that middle course so

that those at most extreme

um

are more alienated than those who say

you know we're going to have to figure

this out together. And then what I would

do that leadership that core I would

have um something like a bipartisan

commission in which smart people meaning

who understand how economics and these

things work of both parties work

together to uh come up with a small and

difficult plan. In other words, you're

going to have to make difficult changes

in order to make that um work well. But

if you can achieve that, you know, like

sometimes in history, great leaders of

opposing sides have been able to come up

with a plan. I mean, that's how the

constitution was made. You come up with

a plan for operating that way and then

you impose those difficult changes. And

that when I say this, I I say that

that's very difficult and very long

shot. But um unless you have bipartisan

support, unless you do it in a way where

the pain is shared

um and there's a sense that there is a

um we're doing the right thing as well

as not a sense just a reality of doing

the right thing to make most people

productive. That is the best path

forward. If you were a young

entrepreneur,

you know, 21 years old, would you build

a company in the UK now if you had a

choice? And if not, why not? And if so,

why?

>> I would uh exist without and try to

exist without borders.

>> What does that mean practically? In

other words, put aside all of these

things that we're talking about to a

large extent and say where are the

places in the world that are that have

the vibrancy that have the capital that

have uh the elements that are needed.

There are bright spots in the world and

I'd want to be around the most

intelligence doing the most cutting edge

terrific things and be global. In other

words, don't be just stuck in a

provincial place. Go to these places

that are what I might call almost

renaissance states that are good things

are happening and these qualities exist

that not only good education, the

civility, the vibrancy, be in those

places, but be able not just in one.

There's a Chinese, not a Chinese Hong

Kong expression, I think that a smart

rabbit has three holes. And what it

means is like if the one place that you

go to uh it may not be the place that u

remains the best place there are riskier

places. The riskier places are those

that don't have the elements I mentioned

the education the civility the

productivity all of those things.

>> So would you would one of those places

for you be the United Kingdom? Cuz me

and my friends talk about this

sometimes. you know, I've got I've

invested in lots of companies there and

the founders come to me and ask me these

kinds of questions, which is is based on

everything that's going on with this

turmoil and the big cycle. Um, what's

going to happen if I continue to build

my company here in the United Kingdom?

>> I think that um I think the United

Kingdom as it goes through these

difficulties is as a whole a more

difficult place. And then there are

pockets of it that when they're

operating are in their pockets very

stimulative um having those elements

just like in the United States there are

places and pockets that have those

however they're within a system and a

place that is um not um not healthy. The

real dominant narrative we're seeing, as

I said this week, is that because

there's this problem, you said there's

not enough money. The the most popular

narrative, which I think is supported by

about 70% of people, is that people over

10 million net worth, there's this is

something proposed by one of my former

guests, Gary Stevenson, who did a

documentary last week, should have a 2%

wealth tax.

>> My preferred way is to stop people from

hoarding enormous amounts of wealth for

enormous amounts of time. That's my

That's basically my preferred method.

There's also the wealth tax method.

There's also capital gains as a method.

There's a lot of different ways here.

There's a lot of different ways here.

But you have to deal with the problem of

if you do not do not tax very wealthy

individuals and very wealthy families,

their share of the pie will obviously

grow over time and they will and they

are as we are watching squeezing out

ordinary families.

>> And this is kind of it would raise I

think it I think they said $20 billion

or something like that but it would

raise some money. Um so the the big

debate in the country at the moment is

yeah do we one way to raise money would

be this wealth tax. Proponents of that

or I should say um people that are

against that say people will leave. If

you took all of the money of people in

the in the top,

not in other words, taxed at a 100%

you're not going to come up with enough

money because it's such a small

percentage of the population and but and

but in addition, yes, the people will

leave. Then you change the laws so that

you make them retroactive.

In other in other words, you say the law

means you're going to be taxed as of a

past date so that if you leave

um we're going to get your money or then

you put in capital controls. All of this

has happened before. Wealth taxes would

be new. Wealth taxes are

administratively difficult because how

do you value all this wealth that is not

easily valued and such things? But yes,

what you've just said is um well

recognized.

>> You mentioned earlier that this big

cycle takes place, this one here on the

front of your book, The Changing World

Order, happens roughly every every 80

years.

>> Yes. It's like health.

What I mean is it varies on average,

let's say, what is the life expectancy

of a person? But life expecties or how

long people live vary. I wouldn't uh uh

emphasize too much u the amount of time

exactly as much as I would uh look at

your condition. Where are we in this um

at the moment in terms of the symptoms

or markers of the next big

>> well we're over in this vicinity over

here um you know we're on the and when

we say that um the US the UK number of

other countries are um later in that

cycle when there's the loss of the

things that we've been talking about

overindebed is more overind

indebtedness, the loss of power.

>> So, we're in the collapse period of the

decline.

>> Yeah, the decline. I'll call that the

the decline.

>> And you've studied this for how long in

terms of

>> 500 years of the cycles for 500 years

and in a number of countries. It's in

that book. These are objective measures.

This is not subjectivity. You can

measure these things. You can measure

the level of indebtedness. You can

measure the uh education levels and the

competitiveness. You can measure all

these things in clearly measurable

numbers that show the health just like a

physical exam.

>> When there's a new world order because

of this decline through history over the

last 500 years, has there ever been two

superpowers that emerged as the dominant

superpowers or is it just tends to be

one? In the past, prior to World War I,

there was no

World War I happened and then World War

II happened because the world came

together and there was one world

essentially. Before that, there were

regions and they would have the

different powers and you could have a

powerful China or India could be very

powerful at the same time as the UK or

uh the Dutch and whatever would be

powerful and they weren't in that one

world. And the basic issue is when you

have one world and you have

disagreements,

you're always going to have

disagreements. How do you resolve those

disagreements? Cool.

>> War. Okay. It does. Maybe it's not

physical war. Maybe it's whatever it is,

but there's a disagreement. Where does

the border lie? Where does this Okay.

The rulesbased

order is a theoretical

um conception of the United States

coming out of World War II because

there's the idea of how do you govern

and you have representatives and you

have them in the United Nations and so

on and you know that's a nice theory but

the reality is when that comes and is

inconsistent with power which wins power

or of that rulebased system. So by

nature to answer your question it means

tends to be a dominant power. We will

see China and I think the United States

I think the most likely beneficial

outcome is that it becomes more

regional.

Okay. China has no desire to occupy

control other countries for for various

cultural reasons and things that I can

go into and and they their basic

objective is to not be cut off, not be

harmed and then also be as good as they

can be and and be competitive following

their approach to a system which is very

much a top-down controlled system that's

an extension of Confucianism which is

like the family and that's what they

want to do. You can possibly have this

region thing, but you're not going to

have the dominant world power. If that's

the case, you have some chance that

there's a great conflict, but I think

that um there's enough wisdom in a sense

to um not want to go there.

>> So, there's always there's pretty much

always been a superpower through

different cycles. There's been one

dominant power through these historical

cycles. You're saying that you believe

in the next decline there won't be one

dominant power which has been the US for

the last 80 odd years. There will be two

because you you can't foresee there

being a conflict at the scale that would

result in one dominant power.

>> The strength of each country will be how

they take care of themselves.

uh are they going to be strong or are

they going to be weak based on how they

educate their population, how they spend

their money, how they manage themselves,

those will determine the relative powers

of those countries, right? And so

that'll be true certainly for the United

States and China. And so as we go

forward, how will those systems deal

with those issues in the best possible

way? and that I would say as long as the

United States remains a power but it's

in it has a risk of uh of having a very

bad set of circumstances through debt

and conflict and these things that erode

it'll be from within that those things

um particularly

uh could change that relative balance of

power and similarly if China managed

itself badly that could change that

given that if they both remain powerful

entities then what you're going to see

is um I believe more the recognition

that there are regions okay just like

the there's the Americas okay and that

becomes heavily much more the region and

where that spills over and then there's

the region um around China the um AP

apac countries um and th that region and

that there would be the development

within those regions and I do believe

the avoidance of the big war that would

be very uh detrimental. There are issues

like the Taiwan issue, but the Taiwan

issue will be handled by in my opinion

most likely not militarily

in the sense that um there will be a

great war between the United States and

China over it, but in the pressures that

are going to be created so that there is

a reunification of China.

>> You mentioned conflict though. The