00:00:00
you can't keep spending and bring down
00:00:02
inflation so here's what I think we're
00:00:04
not going to be able to bring an
00:00:06
interest rate to a high enough level to
00:00:09
give a good real return to Holders of
00:00:12
credit without causing a contraction in
00:00:15
economic activity the cause effect
00:00:18
relationships are by and large Timeless
00:00:20
there is evolution evolution is how
00:00:23
something changes over a period of time
00:00:25
and then around those things are these
00:00:28
Cycles because if they're put in the
00:00:30
same position let's say a Federal
00:00:32
Reserve is put into a position of having
00:00:33
to decide do you have defaults or do you
00:00:36
print money there's a choice and that
00:00:38
choice repeats over history and so you
00:00:41
can see what are the indicators of that
00:00:43
position and what are the reactions and
00:00:45
what are the choices so the cause effect
00:00:48
relationships by and large remain the
00:00:50
same through history but there's always
00:00:52
a reason we're changing the world order
00:00:54
okay in
00:00:55
1945 we started the New World Order what
00:00:58
I mean is throughout history there's a
00:01:00
fight for control cuzz there's no world
00:01:03
court that you go to and plead your case
00:01:05
and so there's a fight for power so
00:01:07
there's a war and then the winners come
00:01:08
out of that war and the winners set the
00:01:10
rules and so 1945 the United States had
00:01:13
80% of the world's money gold was money
00:01:16
at the time it had half the world's GDP
00:01:19
it had a monopoly on military power so
00:01:22
the US Set the World Order that's why
00:01:24
the United Nations is in New York
00:01:25
Washington DC has the IMF in the world
00:01:28
bank and its currency became the Reserve
00:01:30
currency because of that set of
00:01:31
circumstances things evolve things
00:01:34
change over history so the three big
00:01:37
things that are changing now that
00:01:39
haven't occurred in our lifetime is the
00:01:41
amount of debt and money creation which
00:01:43
affects the value of money and you could
00:01:45
see it affecting what's going on every
00:01:47
day the large debt puts Central Bankers
00:01:49
in a choice do you pay it back with hard
00:01:52
money or do you pay it back with printed
00:01:54
devalued money and if you pay it back
00:01:56
with hard money it's hard in other words
00:01:59
that's when you have debt crisises so in
00:02:01
all cases they eventually print money
00:02:04
and that produces inflation that's the
00:02:06
place we are at this moment the second
00:02:08
is when there's a great internal
00:02:10
conflict usually when there's a large
00:02:12
wealth and values Gap at the same time
00:02:15
as you have a financial problem then you
00:02:17
get populism populism of the left and
00:02:19
populism of the right in other words
00:02:22
those who feel disenfranchised want
00:02:24
people who are going to fight for them
00:02:25
they don't want compromisers they don't
00:02:27
want them to be in the middle cuz middle
00:02:29
means that they're not fighting for them
00:02:30
they want them to have guts so you have
00:02:32
populace of the left and their positions
00:02:34
Harden and there are no compromises
00:02:37
that's why we're potentially in a
00:02:38
situation that you could see in one of
00:02:40
these elections that neither side would
00:02:42
accept losing perhaps we see that maybe
00:02:45
you don't follow the rulings of the
00:02:46
Supreme Court anyway these things have
00:02:49
not happened in our lifetime but they
00:02:51
happened many times in history so if you
00:02:53
look at that you see from those patterns
00:02:56
why the gaps become greater and the
00:02:58
positions Harden and you see see the
00:03:00
dynamic so that's the second and the
00:03:02
third is the rise of a great power to
00:03:04
challenge the existing great power in
00:03:06
other words I gave you the example have
00:03:08
the United States was so dominant in
00:03:11
1945 now it's not as dominant it is not
00:03:14
dominant in other words China and the
00:03:16
opposition is as strong as the United
00:03:19
States and its allies and so we have a
00:03:21
conflict and there are five kinds of
00:03:23
wars and they start in this order just
00:03:25
sequentially typically a trade War a
00:03:27
technology War a geop political
00:03:30
influence War then you get into a
00:03:33
capital and economic Warfare which we
00:03:35
are now with sanctions they always
00:03:37
happened in history and then there's a
00:03:38
military war and so you could see that
00:03:40
progression happen through time I think
00:03:43
that there's a tendency to look at the
00:03:46
economy in a rear viw mirror seeing low
00:03:48
levels of inflation and also not
00:03:51
understanding monetary inflation there
00:03:52
are two types of inflation there's an
00:03:54
inflation when the demand is pressing up
00:03:57
against the ability to produce so we had
00:03:59
kind of inflation unemployment rates go
00:04:01
down and there's a limit to the capacity
00:04:03
to produce there's also a monetary
00:04:05
inflation and a monetary inflation means
00:04:08
very simply if you produce more money in
00:04:10
credit if that increase is greater than
00:04:13
the production of the goods and services
00:04:14
prices will go up it creates a spiral
00:04:17
which we're seeing now in other words
00:04:18
the selling of bonds so it makes the
00:04:21
imbalance become greater because not
00:04:23
only do you sell the bonds to pay for
00:04:24
the deficit gs do but holders of bonds
00:04:28
choose to sell bonds because they're are
00:04:29
not producing a good real return now
00:04:32
that just mechanistically may be a
00:04:33
little bit tricky for some people but
00:04:35
what that means is when you have a big
00:04:37
Supply demand imbalance like that either
00:04:39
interest rates have got to go up to
00:04:41
curil that demand or the central bank
00:04:43
has to print more money and they always
00:04:45
print more money so that Dynamic of
00:04:47
monetary inflation the type of thing
00:04:49
that makes the 70s or the type of thing
00:04:51
that makes inflationary depressions like
00:04:54
happened in the Yar Republic in Germany
00:04:56
in early 1920s that kind of inflation I
00:04:58
don't think is paid attention to
00:05:00
inevitably there's a certain amount of
00:05:02
debt that has to be paid and one man's
00:05:04
debts are another man's assets and the
00:05:06
more debt you have the bigger the
00:05:08
problem is and so when you have a lot of
00:05:10
debt and you have to pay it back you're
00:05:12
either going to pay it back in hard
00:05:13
money or you're going to pay it back in
00:05:15
depreciated money and that becomes the
00:05:18
choice of the central bank that's why
00:05:19
you get stagflation that's why we have
00:05:21
an environment like we have now you have
00:05:23
economic weakness you have a stagnant
00:05:26
economy low growth and with high
00:05:28
inflation and that happened through this
00:05:30
monetary situation that I'm describing
00:05:32
in which the Central Bank tries to deal
00:05:34
with a middle course other words what
00:05:36
does the Central Bank want not too high
00:05:38
inflation and not too low growth and so
00:05:41
when there's a lot of debt because one
00:05:43
man's debts are another man's assets it
00:05:45
becomes very difficult Balancing Act and
00:05:47
that is when you have stagflation when
00:05:49
you produce it so just like in the 1960s
00:05:51
late 60s we spent a lot of money on guns
00:05:53
and butter we called it Vietnam War
00:05:55
social programs and so on we wrote too
00:05:58
many checks relative to the the money we
00:06:00
had in the bank which was gold at the
00:06:01
time 1971 the devaluation then they
00:06:04
print a lot of money into that
00:06:06
stagflation so stagflation is the middle
00:06:09
course when there's two different so
00:06:10
think about it this way how does he
00:06:12
literally fight inflation because
00:06:14
everybody says type money policies and
00:06:16
how do you fight inflation the way that
00:06:17
happens is you get people to spend less
00:06:19
by taking money and credit away from
00:06:20
them so he will reduce the amount of
00:06:23
money and credit that's available the
00:06:24
Federal Reserve is going to sell $1.1
00:06:26
trillion of debt that it has Deb assets
00:06:29
bonds and then they're going to raise
00:06:31
interest rates so they create a squeeze
00:06:33
that reduces demand at the same time as
00:06:36
people don't have enough money because
00:06:38
inflation is high the buying power is
00:06:40
less and then what that act is is to
00:06:43
reduce buying power again to reduce
00:06:45
inflation but it comes at a big cost and
00:06:48
that is stagflation I want to explain
00:06:50
inflation in a very simple way there's a
00:06:52
certain amount quantity of buying that
00:06:54
is of how much money and credit you're
00:06:56
given divided by the amount of quantity
00:07:00
of goods and services sold in other
00:07:02
words if there's a lot more money and
00:07:04
credit produced than there is goods and
00:07:06
services produced you will have an
00:07:08
inflation and the magnitude will be a
00:07:10
function of that ratio over that period
00:07:12
of time there was a very enormous amount
00:07:16
of money and credit that was produced
00:07:18
and there were some bottlenecks and
00:07:20
shortages of production and disruption
00:07:23
because of mostly of a combination of
00:07:26
covid and also geopolitical issues so
00:07:28
there was some some effect most of the
00:07:31
inflation came from the production we
00:07:33
attribute it we can go down to actually
00:07:35
calculate it most of that was due to the
00:07:37
enormous increase in money and credit
00:07:40
and spending that was produced if you
00:07:42
now look at the United States it's no
00:07:44
longer dominant militarily it's no
00:07:46
longer dominant economically because
00:07:49
China has become comparable and is a
00:07:51
larger trading partner with other
00:07:52
countries than the United States is the
00:07:54
amount of trade and so on it's a very
00:07:56
unique power think about it you can
00:07:58
print the money that the world will
00:08:00
accept now that means when they accept
00:08:02
it they buy your bonds they buy your
00:08:05
debt that's what they hold these in
00:08:06
which are promises to receive this
00:08:08
currency that you could print so there
00:08:10
are two things now that are jeopardizing
00:08:12
that position dollars now strong but
00:08:15
there are two things you know we want to
00:08:16
hold on to that position two things that
00:08:19
threaten it first is the printing and
00:08:21
devaluing money but all countries right
00:08:23
now are doing it so in all countries
00:08:25
currencies are depreciating against
00:08:27
goods and services prices and then the
00:08:28
other issue which is interesting is the
00:08:30
weaponization of the dollar in the form
00:08:33
of sanctions America is certainly in
00:08:36
relative decline in other words has been
00:08:39
education is not the same military power
00:08:41
is not the same economic power is not
00:08:43
the same if we're looking at you know
00:08:45
how we're behaving with each other it is
00:08:47
not the same this is the question all
00:08:50
currencies usually during these period
00:08:52
of time depreciate together so in the
00:08:53
1930s all the currencies depreciate they
00:08:56
depreciated that then against gold they
00:08:58
depreciated against assets against real
00:09:01
estate prices and a number of things but
00:09:02
we're coming into a new world in which
00:09:05
the real question is what will be the
00:09:07
new currency and it may not be just a
00:09:08
government currency is it crypto is it
00:09:10
gold is it other things and we'll find
00:09:13
out so a currency is a medium of
00:09:15
exchange and we'll have all of those
00:09:16
currencies continue to be including the
00:09:18
dollar but it's also a storeold of
00:09:20
wealth and that means that the bonds or
00:09:23
what you store it in has to have a real
00:09:26
return and none of the major currencies
00:09:28
have that that's why you're seeing
00:09:30
movements out of all of those and into
00:09:32
other assets and why you're seeing the
00:09:34
bond market sell off the production is
00:09:36
now going based on ideological and
00:09:39
political considerations in other words
00:09:41
I talked about self-sufficiency if you
00:09:43
look at China will be self-sufficient
00:09:45
the United States will be
00:09:46
self-sufficient multinational companies
00:09:48
are going to worry about where they're
00:09:50
going to have trade and so on so the
00:09:52
notion of how do I deal with
00:09:54
self-sufficiency we're in a world where
00:09:57
ideological and political
00:09:59
forces are allocating resources more
00:10:03
than economic given the uh risks in the
00:10:06
world they want to be self-sufficient
00:10:09
and similarly the United States wants to
00:10:11
be more self-sufficient and other
00:10:13
countries are wanting to be more
00:10:14
self-sufficient because they're worried
00:10:16
about being cut off it's the nature of
00:10:19
the Beast capitalism is a fabulous way
00:10:22
of allocating resources to get rich but
00:10:25
it gets people at different rates they
00:10:26
get very big differences and also
00:10:28
produces is a lot of debt that's part of
00:10:30
the capitalist process and so when
00:10:32
there's this large debt and when there's
00:10:34
a large wealth Gap people feel
00:10:36
disenfranchised so what happened in
00:10:38
Europe you know four major democracies
00:10:40
chose autocracies because of the fight
00:10:42
between the left and the right then they
00:10:44
called it fascism and communism but
00:10:46
those two the right and the left and how
00:10:48
to deal with it has always happened so
00:10:50
you go back to the French Revolution in
00:10:52
all of those cases there were moderates
00:10:54
there were people in the middle who said
00:10:55
we have issues and we have to deal with
00:10:57
those types of issues but the PO poity
00:10:59
becomes greater when the causes that
00:11:01
people are behind are more important to
00:11:04
them than the system the system is in
00:11:06
Jeopardy you know how it is how did
00:11:08
Donald Trump get elected what was the
00:11:10
characteristics of the population you
00:11:12
can go back and you could see that so
00:11:14
you have fighters on both sides who are
00:11:16
not not want to compromise they don't
00:11:17
want it's considered weak and if you're
00:11:19
in the middle you will have to pick a
00:11:21
side and fight there's a loss of the
00:11:23
middle what we need right now in my
00:11:25
opinion is a strong middle you need a
00:11:28
strong middle but you also have a
00:11:29
political system where you have two
00:11:31
parties and because of those two parties
00:11:34
there's a tendency to become more and
00:11:35
more extreme because those extremities
00:11:38
on each part of their party become a
00:11:40
stronger so to win a nomination measures
00:11:42
of extremism is that roughly speaking
00:11:45
about 30% of the population is rather
00:11:49
extreme of the right and about 15% is
00:11:52
Extreme of the left of course that
00:11:55
represents then the majority of the
00:11:56
Republican party is in that category and
00:11:59
then a very important part of the
00:12:01
democratic party is on the yet the
00:12:04
majority of Americans are in the middle
00:12:06
so you still have given those numbers
00:12:08
they add up to maybe 40 or 45% of the
00:12:11
population but we don't have a party in
00:12:13
the middle you don't have a middle
00:12:15
investing in education and
00:12:17
infrastructure through history have been
00:12:18
the most important ingredients you can't
00:12:20
make better Investments than in
00:12:22
education and infrastructure they pay
00:12:25
and they produce a better a more
00:12:26
broad-based Prosperity but we don't do
00:12:28
that because of certain reasons the
00:12:30
Constitution and the like but in order
00:12:32
to do that you need a platform of the
00:12:34
middle you need a spokesman I think that
00:12:36
draws people away from the extremes
00:12:38
toward the middle if you did have a
00:12:40
third political party and I'm not saying
00:12:42
that's practical but I would say then
00:12:44
you could have a platform and then you
00:12:46
could have somebody that you could look
00:12:47
at or candidates that say I am for the
00:12:50
middle and that would help to neutralize
00:12:52
because otherwise history has shown you
00:12:55
go to greater and greater extremism and
00:12:57
then you have the battle and I think
00:12:58
that that's what we should be afraid of
00:13:00
most is that those extremists in a
00:13:03
battle having a type of Civil War which
00:13:05
I think there's a reasonable chance of
00:13:07
when I say a Civil War I think that the
00:13:09
rule of law and Constitution can be of
00:13:13
diminished value relative to power such
00:13:17
as in the elections neither side
00:13:19
accepting lose it such as the Supreme
00:13:21
Court makes rulings that are not
00:13:24
followed by states such as population
00:13:27
moving from one state to another other
00:13:29
because the values in that other state
00:13:31
are more there so then it becomes a make
00:13:34
me type of situation rather than saying
00:13:37
what is the law it says make me do that
00:13:40
thing and now when we lose that kind of
00:13:42
rule of law and respect for the whole I
00:13:44
think that's a type of Civil War when
00:13:46
you watch that who knows where that
00:13:47
leads it could lead to violence you know
00:13:50
the whole idea in the constitution of
00:13:52
holding arms you know and how many there
00:13:54
are more arms than there are people and
00:13:56
so on and when you get into a make me
00:13:58
mentality
00:13:59
you could get into an armed situation
00:14:02
where a lot of people in guns and crazy
00:14:03
things I'm not going that far but I'm
00:14:05
saying could let's bring that back a
00:14:07
notch and talk about can we imagine you
00:14:10
and I we know history and we look at
00:14:12
today and it's different could we see
00:14:15
the failure of following the rule of law
00:14:17
and the Constitution so somebody gets
00:14:19
elected and you now know who's going to
00:14:21
be in the seat or you don't follow that
00:14:23
and you get into a power-based situation
00:14:26
yes there's a possibility and the fact
00:14:27
that we consider that to a significant
00:14:30
possibility I put the odds of something
00:14:32
like that at about 40% history has also
00:14:35
shown and we see it that people have to
00:14:37
pick a side they pick a side and they
00:14:39
speak to so you watch in the media do
00:14:41
you get unbiased reporting you know it's
00:14:44
hard to come by even exchanges of
00:14:47
thoughts it wasn't like this even the
00:14:50
issue let's say of you know Disney in
00:14:52
Florida in the past each could have a
00:14:55
different perspective you wouldn't
00:14:58
weaponize you wouldn't retaliate to the
00:15:00
same extent that we're retaliating with
00:15:02
exercises of power and so on you have to
00:15:04
benefit the majority of the people it's
00:15:06
narrowing um just by any of the measures
00:15:09
since 1980 per capita income for the
00:15:11
bottom 60% of the population has not
00:15:14
risen if you ask your surveys it's a
00:15:17
failure every system needs to be
00:15:19
improved and modified and made better
00:15:21
and I'm a mechanic so I just look at the
00:15:24
cause effect relationship it is because
00:15:26
there is an element in which the
00:15:29
reinvestment of gains do not go down to
00:15:33
create the basics what are the basics
00:15:35
here's all you need parents who take
00:15:37
good care of you a good public education
00:15:40
system add equal opportunity that's all
00:15:42
you need as existed throughout history
00:15:44
you give those things to people and by
00:15:46
and large you have a much more
00:15:48
prosperous you could draw the talent
00:15:49
from wherever it is so those are the
00:15:52
things and we're in a spiral because
00:15:54
also the children who grow up in some of
00:15:57
these areas from childhood and they
00:15:58
don't have the parents they don't have
00:16:00
the circumstances in terms of the basic
00:16:02
equal education and so on and that
00:16:05
population is a growing population and
00:16:07
so we see then the disenfranchised other
00:16:10
issues is because that population so
00:16:12
let's just go back how did Donald Trump
00:16:15
get elected as president there was a
00:16:17
population that was a disenfranchised
00:16:19
population that wanted somebody who was
00:16:21
going to fight for him like populist do
00:16:23
the profit system alone is not good
00:16:26
enough the history of these situations
00:16:29
make one worry about such things because
00:16:33
the conflict and so on goes through a
00:16:35
difficult time I believe that we're at a
00:16:38
moment in which we have a choice and it
00:16:41
largely depends on how we are with each
00:16:43
other we being Americans Americans and
00:16:46
then we being it could be Americans and
00:16:48
Chinese but we as humans have a choice
00:16:50
of how we are going to be with each
00:16:52
other the world has more resources than
00:16:55
it has ever had it has more wealth than
00:16:57
it ever had it has in inventiveness that
00:17:00
will produce fabulous gains and that'll
00:17:02
continue but the issue is really are we
00:17:05
going to be dealing with that as a
00:17:08
together Society it's very simple don't
00:17:10
go to war with each other work together
00:17:13
right don't go to war if you do that and
00:17:15
you realize we're all in this together
00:17:17
and then I don't care how you get there
00:17:19
in terms of that element I do believe
00:17:21
even thoughtful disagreement of the art
00:17:23
of thoughtful disagreement I believe in
00:17:24
win-win relationships not lose lose
00:17:27
relationships and my principle is is if
00:17:29
you worry you don't have to worry and if
00:17:31
you don't worry you need to worry you
00:17:33
need to worry because if you worry you
00:17:35
will do the things that prevent you from
00:17:38
happening the thing you're worrying
00:17:39
about so for example if I look at the
00:17:42
term Civil War and I look at the term
00:17:45
International war and I can paint a
00:17:48
picture a realistic picture of what that
00:17:50
looks like so the people really see it
00:17:52
like the people who went through those
00:17:54
Wars in history saw it if I can paint
00:17:56
that picture and then say one thing we
00:17:59
can agree on is we don't want that okay
00:18:01
we do not want that so how that's why I
00:18:04
would like to see in the United States
00:18:05
I'd like us to see us get strong I'd
00:18:07
like to see a strong middle anybody who
00:18:10
has gone through a war this is true for
00:18:12
history you see what happens is the
00:18:14
polarity becomes so great that there's
00:18:16
no talking there's just Mutual
00:18:18
intimidation and there's a fight and you
00:18:19
get beyond the stage and the middle gets
00:18:22
lost there's the capacity a lot of
00:18:25
capacity to increase the size of the pie
00:18:27
and divide it better and I'm capitalist
00:18:29
so I don't mean just handing out money
00:18:32
wastefully but I mean there's so many
00:18:34
opportunities to improve productivity
00:18:37
and produce opportunity in various ways
00:18:40
that I just can't believe that we're not
00:18:41
doing it and we could do it you point
00:18:44
out in the book that often a rising
00:18:47
power and a declining power where they
00:18:49
cross end up in a war do you believe
00:18:51
China and the United States are going to
00:18:53
end up in a war I believe that there's a
00:18:56
significant risk of it but I don't think
00:18:58
it's probable as I say well there are
00:19:00
five types of Wars we're in four of them
00:19:03
right and we're at the edge of a fifth
00:19:05
which is a shooting War that's right so
00:19:07
we are in a trade War we are in a
00:19:09
technology War we are in a geopolitical
00:19:11
influence war and we are to some extent
00:19:13
a capital and economic War we are there
00:19:17
and we are dealing with military issues
00:19:20
particularly as they pertain to Taiwan
00:19:22
we're close could Taiwan be the thing
00:19:24
that led us to war if we go to a
00:19:26
military war it'll almost certainly be
00:19:29
the Taiwan issue I think we want to
00:19:31
contain kind of their concerns are
00:19:33
mostly the domestic concerns how do they
00:19:36
deal with the demographics issue how do
00:19:39
they deal with um their own domestic
00:19:42
issues you know when you run a country
00:19:44
the major issues are the internal issues
00:19:46
how do you make sure you deal with
00:19:48
corruption how do you deal with all the
00:19:49
issues that they face poverty in the
00:19:52
east in the western part of China
00:19:54
environmental issues the property bubble
00:19:57
that's bursting the co issue so look at
00:19:59
it this way it's a big thing the
00:20:02
population in China the Capas are more
00:20:05
than four times that in the United
00:20:06
States since I started going to China in
00:20:09
1984 per capita income has increased by
00:20:12
27 times if it increased to half of what
00:20:16
the United States is that would mean its
00:20:18
economy would be twice the size of the
00:20:20
United States so it's a big for the main
00:20:22
reason that China did not denominate its
00:20:25
exports and trade in the currency and
00:20:28
did not denominate its lending is that
00:20:31
they didn't want to be a threat to the
00:20:32
United States because that's a
00:20:34
threatening act if the United States
00:20:36
loses now we were in a different era
00:20:38
then just to explain it they became the
00:20:40
largest trading country in the world in
00:20:42
other words did more trade than any
00:20:43
other they could have operated in their
00:20:46
currency in terms of lending
00:20:47
International lending they're the
00:20:49
largest lenders and they could have done
00:20:51
that in their currency they chose not to
00:20:53
because they perceiv that that would be
00:20:55
a threat and we're not trying to disrupt
00:20:56
the world order but now we have a
00:20:58
different set of circumstances worldwide
00:21:00
this leadership was the same of the same
00:21:02
mind and I think is pretty much today
00:21:05
they don't want to disrupt the world
00:21:07
order but they want to be as great as
00:21:09
they can be they want to be as rich and
00:21:11
powerful and so on but they don't want
00:21:13
to disrupt the world order if you look
00:21:15
at history and you understand
00:21:17
international relations which is very
00:21:18
much like Confucianism what you have is
00:21:21
called a tribute system and that means
00:21:23
each country is in the place they know
00:21:26
their place they know the hierarchy I
00:21:28
can the old days it's almost like other
00:21:30
countries would be almost a vassal State
00:21:32
you would say I know that you have the
00:21:33
power you pay respect and you operate in
00:21:35
a harmonious way but the idea of War um
00:21:39
is a horrendous idea so I think that
00:21:42
they would probably be just as happy if
00:21:44
you divided the world in half their half
00:21:46
and we had our half and there was peace
00:21:48
in the world I'm just saying an
00:21:49
objective is not to dominate the world
00:21:53
an objective is to operate in a way
00:21:55
where there is no such World however
00:21:57
that they are as strong powerful and
00:21:59
healthy and prosperous as they can be I
00:22:01
think it's very difficult for a lot of
00:22:03
Americans who hold close to them the
00:22:06
treasured I live the American dream I
00:22:09
know equal opportunity I know the
00:22:11
ability to speak up I know that those
00:22:13
types of values but it's difficult for
00:22:15
other Americans to understand why they
00:22:18
have a different point of view about
00:22:19
what works better a very good example of
00:22:21
a cultural case I think it was the NBA
00:22:23
team an individual spoke out on Hong
00:22:25
Kong and the Chinese not only punished
00:22:27
that team but they punished the NBA and
00:22:31
in our like I would say everyone should
00:22:33
have the right to their opinions and to
00:22:35
be able to have free expression in their
00:22:37
view if somebody's doing something wrong
00:22:40
that they will punish the group they'll
00:22:42
punish the family because the group is
00:22:44
supposed to be responsible for that they
00:22:46
don't understand it from the internal
00:22:49
values way having to do with confusion
00:22:53
ISM the history why it's more autocratic
00:22:56
top down what they believe about
00:22:58
democracy the Chinese leadership is
00:23:01
paranoid mostly about maintaining the
00:23:03
power of the Communist Party well they
00:23:05
would view that as very similar to us
00:23:08
saying the power of the Constitution
00:23:10
because that is the system that's the
00:23:11
order in 1949 they made a system and
00:23:15
that's the system when we think of party
00:23:18
we think of that same multiple party
00:23:20
type of thing they think of it as very
00:23:22
top down very hierarchical and it's like
00:23:25
the family vice president of China W
00:23:27
chian described to me he said it's top
00:23:30
down Americans are bottom up and the
00:23:32
question is by the way we have this
00:23:33
issue are we fighting for that ideology
00:23:37
these are bigger questions are we
00:23:38
fighting for a democracy and capitalism
00:23:42
or do we believe that others can find
00:23:45
their own approaches and they the best
00:23:47
approach went out that becomes a big
00:23:49
question as we pursue it so that is
00:23:51
their approach may not be my Approach
00:23:53
they will not give that approach up any
00:23:57
more than Americans would give give up
00:23:58
the Constitution let's say or their
00:24:00
freedom of speech up so we just have to
00:24:02
understand it's like a religion you know
00:24:04
as we have different religions all
00:24:06
around the world they're deeply held
00:24:08
beliefs and each believes in that
00:24:10
they're going to get the right outcomes
00:24:11
by pursuing them and what do you do
00:24:13
about that there's also the question of
00:24:15
Human Rights and clearly the Chinese
00:24:17
have a different view than a lot of
00:24:19
people around the world how do you
00:24:20
approach that well there's me and
00:24:22
there's every one of us uh it's a cosmic
00:24:24
question every one of us who buys
00:24:27
products or all the business that are
00:24:28
operating and interacting with China or
00:24:31
operating in many countries I could list
00:24:33
a number of countries the
00:24:35
interconnectedness of the relationships
00:24:37
with China we import 22% of our
00:24:40
manufactured goods comes from China if
00:24:42
you're buying your Apple or you're
00:24:43
buying your sneakers you're in a
00:24:45
position that's somewhat similar to me
00:24:46
in terms of thinking about what the
00:24:48
issues are what I do is I rely on the
00:24:52
guidance of the government both
00:24:54
governments I think in studying their
00:24:56
dynasties I studied the tong Dynasty is
00:24:58
around 600 and I studied also other
00:25:00
societies it is the things that I've
00:25:02
talked about before it is in broad-based
00:25:04
education the confusion system was the
00:25:07
first meritocracy that came in to create
00:25:10
broad-based education and then they
00:25:11
would have exams and the people who
00:25:13
would get the jobs would be the people
00:25:15
who were the most capable and they got
00:25:16
away from corruption and those types of
00:25:18
things I wouldn't characterize some
00:25:20
things as Chinese I think that there in
00:25:23
the history of China there have been
00:25:24
good dynasties and there have been bad
00:25:26
dynasties but there's always the common
00:25:28
ingredients of what Mak a country
00:25:30
successful and they've been that way
00:25:32
uniquely if you do look at the history
00:25:34
I've studied the powers and the
00:25:35
different strengths China has hit
00:25:37
through history up until around 1840
00:25:40
been always like number one or two in
00:25:42
the country because of hard work because
00:25:44
of meritocracy because of being highly
00:25:47
civilized in other words they are
00:25:49
working in the same direction and they
00:25:50
operate well to be productive together
00:25:52
those are the same elements but it's not
00:25:54
just Chinese if you go back to many
00:25:57
empires and many civilizations those
00:26:00
elements have been the Timeless and
00:26:01
Universal elements that have been the
00:26:03
source of success but of course there's
00:26:04
always a balance between being a
00:26:07
revolutionary it's always how far do you
00:26:09
take it so in China right now there's
00:26:11
entrepreneurship investing in all the
00:26:13
ways empowering and it's really a
00:26:15
capitalist type of approach among
00:26:17
entrepreneurship that they'll call it
00:26:19
State capitalism that kind of an
00:26:20
approach and then there's the question
00:26:22
of order so it is always in getting that
00:26:25
balance correctly because you can have
00:26:27
disorder like in the United States we
00:26:29
could have enough disorder that that
00:26:32
could be disruptive to that process so
00:26:34
it's always the issue of getting that
00:26:35
balance right right now I think the Tilt
00:26:38
in China has been a bit more autocratic
00:26:41
and so they're trying to strike this
00:26:42
balance with also creating what they
00:26:44
call Little Giants program for
00:26:45
entrepreneurship and so on I think it's
00:26:47
become too much that way and I think
00:26:49
just in the United States we're becoming
00:26:51
a little disorderly any descent in China
00:26:53
oh descent there's not the same kind of
00:26:55
open descent as there is in the United
00:26:57
States in terms of how people could
00:26:59
speak as freely nor the media speaking
00:27:01
freely or even listening to things no no
00:27:03
no descent descent is more under the
00:27:06
surface particularly now the leadership
00:27:09
evolved greatly also by the
00:27:11
circumstances when he first came to
00:27:13
power about 9 years ago there were two
00:27:15
big issues corruption and that the
00:27:18
system five major Banks lent to state
00:27:20
owned Enterprises and local governments
00:27:23
and there was no Capital Market for
00:27:25
small medium-sized businesses and
00:27:27
Entrepreneurship and so if you take on
00:27:30
the progress they made they made
00:27:31
tremendous progress along those lines
00:27:33
they now have Capital markets and
00:27:35
they've done a tremendous job of
00:27:37
reducing in a country which is ruled by
00:27:38
the Communist party right but in their
00:27:40
way of doing it which is that it's run
00:27:42
like a company sort of there's a board
00:27:44
and they operate that way but in that
00:27:45
time there was a move toward more at
00:27:48
first two fiveyear terms so when they
00:27:50
moved into the second 5year term because
00:27:52
of infighting there was this what they
00:27:54
call Core management so there are seven
00:27:57
standing members of the PO
00:27:58
and four of them became more of the
00:28:00
allies of shishi ping and there is a
00:28:02
belief that they're going into a more
00:28:04
challenging environment and then they
00:28:05
had the series of challenging and it's
00:28:07
become more autocratic than it was
00:28:10
before more nationalistic I would say
00:28:12
they feel more threatened and it's
00:28:15
created more nationalism so we've begun
00:28:17
this Dynamic where it's no longer a
00:28:20
win-win relationship it's more like a
00:28:22
ches gate in other words where do you
00:28:23
put the pressures on we're in a war the
00:28:26
power of man it's in man's hands to be
00:28:29
able to work well together and to come
00:28:31
up with the inventiveness if we did
00:28:33
those things well I'm not worried at all
00:28:36
the acts of nature being such a dominant
00:28:39
thing I didn't know that and then I saw
00:28:41
that there are charts in that book that
00:28:42
shows life expectancy shows per capita
00:28:45
GDP and seeing that these things would
00:28:48
last maybe their 10 years maybe their 5
00:28:50
to 10 years really terrible Wars and so
00:28:53
on but they don't kill most people and
00:28:55
most people get through them one way or
00:28:56
another and then they pass and then you
00:28:58
move on to a Higher Living standard and
00:29:00
so that Arc just always keeps coming up
00:29:02
because of man's adaptability and
00:29:04
inventiveness the power of that also
00:29:07
came through loud and clear and that's
00:29:08
why I keep coming back to the point that
00:29:11
man has that power and also it just
00:29:13
comes down to using that power and being
00:29:15
good with each other it very much
00:29:17
depends on the people too that the
00:29:19
people play an important role the
00:29:21
dynamic between what the people allow or
00:29:24
demand of their leaders is very
00:29:26
important it's not just the leader but
00:29:28
what I learned about leadership was good
00:29:31
leadership varied according to the time
00:29:33
and the circumstances that existed so
00:29:35
for example Adenauer who was one of the
00:29:38
great leaders in Henry's point of view
00:29:40
what came about after a country lost the
00:29:43
war and it required a certain type of
00:29:45
great man for that particular time and
00:29:48
so as time change and circumstances
00:29:51
change the definition of what a great
00:29:53
leader changes but a great leader in any
00:29:56
case understands the circumstances and
00:29:59
has the vision to carry that forward and
00:30:01
that there's a dynamic with the
00:30:03
population and so can you get the
00:30:05
population behind you even when it's a
00:30:07
disorderly population that becomes the
00:30:10
great question can there be great
00:30:11
leadership unbalanced having really
00:30:14
looked at dynasties and looked at
00:30:16
history and examined it and looked for
00:30:19
the lessons and think about the moment
00:30:20
we are in at this moment I'm thinking
00:30:23
primarily the United States optimistic
00:30:25
or pessimistic um concerned
00:30:28
sure it goes back to the point before I
00:30:30
would say I would be more pessimistic
00:30:33
than optimistic but I believe the power
00:30:37
is in the population if they find a
00:30:40
strong middle if they work together 1971
00:30:43
I was clerking on the floor of the stock
00:30:45
exchange and Nixon got on television on
00:30:48
Sunday night and I watched him tell the
00:30:50
country and tell the world that the
00:30:52
promise to take paper dollars and turn
00:30:55
them in for gold was going to be
00:30:56
defaulted on and I was shocked never
00:30:59
experienced that in my lifetime I went
00:31:01
on the floor of the stock exchange I
00:31:02
thought it would go down a lot it went
00:31:04
up a lot I was wrong so I studied
00:31:06
history and the exact same thing
00:31:09
happened on March 5th 1933 by Roosevelt
00:31:12
doing it over the radio the exact same
00:31:14
thing and so that taught me that I
00:31:17
needed to do that of course I needed to
00:31:19
study the Great Depression I needed to
00:31:20
study the 1929 to 33 period and it
00:31:23
happened in exactly the same way exactly
00:31:26
a debt crisis when you hit zero interest
00:31:28
rates and the Federal Reserve couldn't
00:31:30
ease anymore and I saw that and for the
00:31:33
first time since then in 2008 the
00:31:36
Federal Reserve printed a lot of money
00:31:38
and bought a lot of financial assets I
00:31:40
would not have understood that if I
00:31:42
didn't understand that 1929 to 33 period
00:31:46
so I learned the lesson but I like to do
00:31:48
it as though I'm going through the real
00:31:49
experience I like to not read history in
00:31:53
retrospect but read the papers as things
00:31:55
are transpiring and imagine that I'm
00:31:57
going through through it so elements I
00:32:00
think of a currency that I think that
00:32:01
are important is can you buy and sell
00:32:04
things all around the world with it is
00:32:06
it going to be private currency that
00:32:08
you're not dependent on others like gold
00:32:10
one of the things about gold is it has
00:32:12
intrinsic value so because of that it's
00:32:15
perceived intrinsic value but you're not
00:32:16
looking for a payment for somebody
00:32:18
whereas in others you have to have money
00:32:21
coming in in some exchange that the
00:32:23
government can't control it and we're in
00:32:26
an environment now when you have a
00:32:28
currency that's a threat it's so good
00:32:30
that it's a threat to the existing
00:32:32
currency governments will Outlaw it and
00:32:34
they have done that with Bitcoin in a
00:32:36
number of places including China and I
00:32:39
think that they have those
00:32:41
vulnerabilities the digital currencies
00:32:43
they have that I have a tiny bit of it
00:32:45
there's always something new and I
00:32:47
really need to experience it I need to
00:32:49
learn about it and I never know for sure
00:32:52
that that's not the one that's going to
00:32:53
be there so I have a little bit in the
00:32:54
portfolio because when you start to
00:32:56
think about what are the current CES
00:32:58
that have those qualities I'm talking
00:33:00
about that you can keep them that you
00:33:01
can go around the world and so on what
00:33:03
are they they are very limited in number
00:33:06
I never really worked for money there
00:33:07
was irony people have asked me what it
00:33:10
means not to work for money because I
00:33:12
made a lot of money and I guess what I
00:33:14
mean is the world wants what you have to
00:33:17
give right and if you're having fun
00:33:20
you're going to give better things right
00:33:22
so if you have a passion and you're
00:33:24
loving it and you're creative the
00:33:26
world's going to want it and so it's an
00:33:28
accident to make the money really it's a
00:33:31
joy to play the game and then it's an
00:33:33
accident to make the money if you can be
00:33:35
in that kind of a game
