Raoul Pal on Why China Is Dumping Dollars For Gold Right Now

Key Takeaway

Build a portfolio you can emotionally hold through a 50% drawdown: use diversified, debt-free exposure to long-term technology trends, keep a cash reserve, and decide in advance how much volatility you can tolerate. Rather than trying to predict every crash, reduce your position until a major decline would be uncomfortable but survivable. Then use the reserve to buy selectively during broad selloffs instead of panic-selling.

Episode Overview

Raoul Pal and Tom Bilyeu debate how AI, liquidity, crypto, stablecoins, debt, and geopolitical shifts may reshape markets and the economy. Pal argues that the race for AI will attract capital for years, while emphasizing that individual investors should avoid leverage, size positions for their emotional tolerance, and stay invested in long-term technological trends. They also discuss gold, dollar dominance, a K-shaped economy, and AI agents as future economic actors.

Full Transcript

Transcript of Raoul Pal on Why China Is Dumping Dollars For Gold Right Now from Impact Theory. Auto-generated from episode audio; may contain minor errors.

AI is undeniable the greatest discovery, which will ever do humanity. This is not easy. game to start or win but stop it is impossible. AI sucks all liquidity, and this creates problems in cryptocurrency. And now Oh my God, we're back in 2008. year. It cost more lost opportunities than anything else, that I have seen before. Tim sometimes a dollar continues to grow, and everyone says, "Yes, but "he will collapse." Every empire that had a reserve currency, eventually lost its. What is the benefit of this? information?

How much is she useful? How is that for someone? helps, except creating gloomy stories about what the US lost the empire, the dollar depreciated, and everything soon Will it fall apart? How is this? maybe someone help? How are you? Guess who? will manage economies in 10 years? It is obvious that this there will be AI. What is happening in cryptosphere, shows, that AI, although a blessing, maybe so much to suck out liquidity from systems that someone who was in cryptocurrency in in debt, will find himself in trouble.

If we have bears will appear moods that ultimately hit, say, on Eurodollar. And people suddenly they will start to say: "Meh, I'm more I don't want to borrow. money". to anyone. And now, oh God, we're like again in 2008. Tom, come on let's call it business cycle. It happens all the time . This is exactly what it has to do. happen. So you know something similar, probably, it will happen, just not Be a fool. It's quite obvious to me, that by 2030 we will not we will have none idea, how actually the world will work.

We literally are over. This is economic singularity. Yes, at that moment we just not this we will understand. What is it means when you insert the AGI brain into work? You know what? this means when GDP growth can reach 20%? Who is this for, how? you say? Invisible agent economics, which we never We'll see, we won't be able to. to touch and with which we will not be able to speak. It Crazy world, isn't it? Yes? So I am all the time said, I was very consistent: this period is enough simple.

We have exponential era technologies, which unfolding wildly what I started about to speak for another 5-6 years ago. And we're like: "We never seen nothing like that." And in addition to yours words, central the bank is forced to constantly depreciate currency, so our investments anyway are growing. And we are in the race with China, which we we can't lose, we simply don't have the right to lose. These are the rates level of existence humanity. And China will say the same thing. They are not the USA may lose, because no, we can't to have a world system under the control of one AI.

It impossible. Therefore, the chances there is, and we have capital expenditure, the largest in history, planned companies with huge sums money. So, faster after all, it's a bit will be delayed. The problem with this delay in that what do you get more excesses. Because not everyone is wonderful, truth? You are finishing. because people misjudged all kinds of promotions, all sorts of things, everything may go bankrupt etc. I just don't I think it's now. I I just don't think so. Now, do you understand? Ahem, and I don't know how What will the world look like in 2030?

year. What is company? What is corporation? It giving to a group of people human rights, that's what this is a corporation, so she has legal rights and status. AND it exists to to make a profit. I don't know, is that true? strange concept: a pile people work for this an entity that is nothing. Okay, what is Royal Dutch? Shell, one of the largest oil companies in world? Nobody anymore knows what it is. It just a thing that just doing his thing matter. There is no reason, why can't it be automated thing that does its matter.

So, what is half price of these companies? We are not we know. What can make stock market in 2032? Well, you know, SpaceX can cost 10 trillions of dollars, and 80%American companies can go bankrupt. AND the economy doesn't matter can grow. It a truly strange world, Tom, and I don't know what this means. So I I just think that for now I won't talk about it. to worry I I'm worried about how to protect oneself, earning as much as possible more money in interim period. Ahem, and take reasonable decision, using this as possibility of avoiding this.

To have possibility to observe, not to panic because of What will this do to me? You can to observe and to say: I wonder how it is will develop. WITH this way of thinking much easier to live, if you are up to this prepared. It exactly what I'm talking about spoke. You know when I started, I said that you have 6 years to to correct one's future, then 5 years to fix your future. We have about 4 years to do everything right. Gift as an opportunity was here.

I have on technology, to this was cryptocurrency, now technology, and cryptocurrency, will probably go again above. It's all here. Just invest in own death. Not Fear death. Oho. And if you always Do you think that tomorrow It will be a rainy day, you never anywhere Get out. Or today, you know, you simply...And it interferes you to invest. And this what I learned on bitter experience that I always looking for trouble. And I missed the positives opportunities. And not for short period time, but I still see it's from your friends.

They are kind of gold fans who are doing this by instilling terror already 30 years. And they don't made money because could not invest. They kept theirs capital. Yes, they are saved from devaluation and depreciation, owning gold, Let's say so. But they missed the whole the result of humanity, which consists of growing intellect. They hated it because it is always small go bankrupt. But this madness when human ingenuity, growth of intelligence and increase company values Nasdaq or technological companies in general are relentless. Technological companies of the past, you know, they are replaced new technological companies.

So yes, Is it possible to choose the wrong one? company? Simply buy Nasdaq. The same and with cryptocurrency. I would just bought Bitcoin, bought Nasdaq and put it off a little cash, and if there is big sale, when the price drops by 50%, you say "thank you very much" » and buy more. How to avoid the reality of what when did the crash happen dotcoms, many of those companies it took from 15 to 20 years to recover? You don't understand what I am. I say. Suppose, peak asset price is 100.

Let's say you came in at the last stage. So, you've come to levels 70 or 80, let's say , right? So you don't got on absolute peak. And he falls by 90%. So, he falls to 10. Yes. And you double yours position. Your average the indicator is now 50. How It took a long time, to repel it? Not for long at all. If you chose a little stock selection if you chose Amazon during of that fall, which fell by 96%? Oh my God, How much money would you like?

earned, you would be more than compensated for that sale. But people think too much short term Because they are not design their own future "me". You design your own the present "me" on its own future. So, if you say, "Hey, there's long-term trend , which is probably will continue infinitely, and on this way will be big ups and downs fall, and I I will use them: if the price becomes insanely overpriced, I I can sell something, but if it falls to very low level, I'll just buy more." But most people are actually afraid of this to do because they are worried that is on the road dent.

It's like I I say I don't understand. this. Of course, I I understand, because human emotions are the hardest part . And I because of this passed. In the past I was paralyzed. things like that. I was paralyzed after 2008 and could not buy shares. I I just didn't buy it. shares. Me it took until 2020 year, to again start buying them. Yes. I mean that earned money on all kinds of markets bonds, foreign exchange markets, etc., but shares—none in any case. Actually I predicted the year 2000, because saw what was coming demographic collapse.

So I didn't hold the stock. personally since 1997. So, wait. It, it seems you are now you are forcing me update mine mental model. I I thought you were saying that you are in the stocks, they are fall—not worry, double the position; you lower the level, when which one do you go out to zero. But you say, what is your real one reaction to the events of 2000– 2008 consisted of in order to get out of shares at very a long period. Yes, because I could to earn money on other things, Do you understand?

Because I macro investor. But this psychological trauma, which you receive. AND if I just held S &P 500, which is not the most interesting thing in the world, since 1997, I would earned ridiculously a large sum of money. AND it's the same lesson, which I learned from Bitcoin, if remember. I told you that the story of how I sold, and so on, and then bought again. And I understood why Jeff Is Bezos that rich? Why Warren Buffett so rich? Why Is this all true? This is because they are, in fact, hold assets in long-term perspective and buy when they cheap.

And you started with Buffett, and Buffett for many years significantly lagged behind many others, losing to stocks. But actually everything he does, he just holds shares very a long time, and if they are getting cheap, he buys more. It exactly what I'm talking about. But since I am more I like dynamic things, that grow faster, and since it is not someone else's capital, but mine own. Mhm. This...this is another matter. If we were now used strategy for an ordinary person, Yes. I think I just heard from you like this: okay, listen, if I replayed the period from 2000 to today, instead of to escape and disappear forever, I would Don't get into debt.

I would chose a broad position, I would think about long-term perspective; When The market is sinking, I need to go back —not necessarily double the position, but come back and to stay in it, while it is stored my faith in technology , what are you talking about, even though you don't they said this year, but repeatedly declared: look, Technology is the only thing that is really growing. So, probably advice for the average person is like this: you need invest wisely in technology, that is debt-free, broad reach and hold long.

This is it. strategy for the average person? Yes, and think about it: " Okay, as far as psychologically strong will affect me "fall?" People say, that are ready to sink at 50%, but that's not true. But technological stocks, like cryptocurrency, because they demonstrate such growth, periodically have such drawdowns. So be honest with yourself, look at mirror and say: " Drawdown of 50%. Then say: "Okay, my investment the portfolio is 1000 dollars. If he fell by 50%, what would I felt? Badly. OK. Then just say: "Okay, I I will bring this part out in cash.

"So, I reduced the size of its positions. Now how am I? I feel like my 600 dollars will fall by 50%? I lost $300. I don't care anymore. This is there is your comfort zone. This cash you and use when the market is falling. Mhm. That's what Buffett does. . That's all. This is all the essence of long-term investment. It so simple that even funny, but we We make everything complicated. We want every day sit in Excel, search new shares, and then to worry, you know, Where will it come from?

another collapse. We let's argue about this and Let's do it. Actually, you don't need nothing to do with it . Okay, I was going to to ask you if there is some indicator, for which in case of its movement in the wrong direction you would consider "that AI has problems," bear market or something like that, but, It seems like you're talking about this. especially not You are thinking. Of course, I'm thinking, because, you know, I write research and I have to think about others people, and we, you know, even if I am said with conviction you know that these are my views , they need to to be flexible, because, you know, nobody does anything doesn't know.

All everything changes happens. So I actually created for I will brag about myself. now—with the help of Cloud Code is huge, not toolbar, and the platform for Global Macro Investor, my research business, and in Real Vision there are also versions of it, but I created them myself. around this. Supercycle, will it be? supercycle? What is it? What cycle is this? intelligence? Where is the risk? debt? Where is it? So, in I have about 15. indicators that I united into one single indicator. And this everything: from credit spreads on Oracle and Qualve and other listings companies to the pace changes in profits hyperscalers, because of, you know, the pace implementation technologies, through, you know, there's a whole bunch of them things that make sense.

Do you want to see if Is this stable? Of course, he will waver, is it happening there Is something wrong? Then we let's go back to that, What are these things of the era? exponential growth. Then we return to basics: is it growing liquidity or not? Or there are financial conditions favorable for for it to last? Because, as you rightly say, noticed, if for the needs of this "beast" not enough liquidity, then we we encounter problems. For there is not enough around money. Now, what Made in USA: Kevin Warsh did it, well, he was part of this, Scott Bessant was part of this, and Steve Mnuchin was part of this.

They changed banking legislation. AND Japan did that. exactly. They do here's what: from 2008 to last year almost all liquidity provided by the Ministry of Finance or Federal backup system. Due to balances, general accounts treasury, markets REPO and everything else . Centralized controlled. This is what happened: they change banking regulation, so that make sure that this banks do. So banks...Only two places can...Two structures can create liquidity. Central Bank— he can create money. Central bank or herself banking system. AND they are essentially asking banking system do it.

Japan did it. They made a curve profitability is steeper. They opened currency valve. AND This is what happened: everyone They say, "Oh my God, Japan is about to will explode. It happened contrary. Japanese banks started credit. Why Are they doing this? Ago that this is yours opinion. The government does not will be able to provide for this liquidity. Therefore, it must come from banking system, credit markets, capital markets, savings, total this. And finally, maybe you have radio. Will it be? irrational capital allocation in 7 or 5 years?

Not it seems because it is fastest growth from everything we've seen . Mhm. But who knows where there will be a debt and who will do stupid things because they must will be. We see margin debt on the US stock market, which is already high in percentage of market capitalization. And this, you know, not very It's nice to see, because it indicates that people speculate on all this. You know, you hear about such things. So again , is it about completion? I have on I mean, again, I survived the 90s, and this is still nothing.

It was madness squared. I remember being in vacation. Not I remember where, somewhere on In the Caribbean, in some a luxurious place. No, this was not the Caribbean. Not I remember where, somewhere in in the world, on some very cool diving- resort, Maldives or somewhere else, and I talked to this American and asked: "What are you doing here?" "Are you doing it?" It was the boy who climbed by telegraph pillars and repaired AT&T wires. And he told about his new kitchen for 200,000 dollars, which he just installed in at home, or how many there are was, 100,000.

It was a ridiculous amount. Blah- blah blah. What are you doing? He worked, and I asked: "How did you do that?" did? He says: "I "day trader." Exactly That's how I earn everything. your money. And it is in that moment you understand, that we haven't reached yet this level. Yes. We're not...We just aren't yet. there. We'll get back to the show. , but first let's talk about the assumption that almost everyone does founders. You Do you think yours is The company is safe. IN There are people who do this.

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Visit horizon3.ai/impacttheory. Again: horizon3.ai/impacttheory. None no obligations necessary. Results in hours, not weeks. Now let's get back to show. What lesson do we have? to learn about, Where is he now? cryptocurrency, namely —she moves sideways . This is a story about liquidity? Is it AI? sucked it all out enthusiasm and money, or this is fundamental wrong technology, about which no one will remember? No, listen. All the same just like you said. There is a certain number liquidity. AND the reason is that the USA do not create it in in large quantities, because they want her to do it banking system.

But the yield curve because of the war in Iran, somewhat harmful inflation, the price of oil, etc. was cool. Ago banks are not very keen to credit for long term. They do not receive sufficient profit , sufficient spread. So that's it for now. hinders banks actively use yours balances. Ago Washington and Basel are trying this solve. These are the ones the levers that they needed. Hmm, and then banking system must intervene. But overall, growth liquidity in the US is not was significant. And this there was a reason.

Therefore, if it doesn't grow very quickly, my overall indicator liquidity is about 4%, but we need 8%, to finance debts and interest payments. So, therefore, this is enough to to finance bet on AI, but not for everything else. Mm. And they have to do something with to do this because they need to pay interest on debts, and this year they need refinance a lot debt. Hmm, so Yes, and they continue to press at the short end, which is liquidity. So yes, liquidity so far not enough compared to what we need.

They hope that banking system will take the difference on himself. Then cryptocurrency will go above. Hmm, I think that's all. will manage itself yourself. Again, they are not They are not stupid. I always say, I know. Scott Bessant is 30 years. It's my first time. went into his office, when he was at Soros, and I at Goldman Sachs in London. He visited me. at home in Spain. Ahem, he was for many years subscribe to my research. This is Scott. So he's not stupid. boy. These people They know what they are doing.

Or they are right did you do? This is different. questions, but they know the rules of the game. Don't forget that Ministry US finances are managed by macro hedge manager fund. This before never was. And we we know, we understand his language. He understands our language. He knows the rules of the game. Yes, without a doubt. Besson for me interesting character. I I think he is becoming more more political with every day, but yes, undoubtedly, it feels like this a person who understands, how to do it right press the levers.

So, looking at that, Where is it going? crypt, what do you think, Will they return to her? people, because this is something fundamental? Like when I look on the "Law on clarity", I see how Japan is moving, as Russia is moving. I I understand how it is. creates an appetite for debt. Stablecoins returning to ratio one to one. USA launched this hype, but we couldn't to bring the matter to a conclusion end. What do you think? if this is finally will be able to complete, will it appear fundamental the reason why people Will they return?

Or is it just "no", crypt— this is when around lots of liquidity, people go to the big risk, and crypto is just for fun, on Which one can you put? Both. I have on meaning that we cannot to pretend it's not most sensitive to liquidity asset on Earth. The reason is Bitcoin shortage, and Bitcoin fuels further speculation, he goes beyond risk, but it is also technology. And this It is important to understand. Let's take Ethereum, because it simply, or Solana. It just technology. It technologies that allow to do certain things.

And we finally we see how all financial the system is trying implement them. So it's not just about buying Ethereum. Actually, it's not enough. Who cares? Of course, some investors Yes. They are interested using blockchain. And Ethereum is block cost space. In this In terms of currency. It block claim space. So, we we see growth stablecoins. It incredible how fast they are growing. All from Stripe to Shopify, Circle— You name it. Everyone is building up infrastructure stablecoins. Therefore, they accepted decision. Scott Bessent said, "Well, this is where it will come from liquidity for our debt." We we want to go out trillion, two trillion, three trillions stablecoins.

Why? Because it means that currency dominance USA extends to the average person on rice field on Philippines, which holds dollars in stablecoins, before that that three trillion stablecoins—this buyer short-term debt for three trillions. M-hm. Perfectly. This decides certain problems. So stablecoins beneficial to everyone, therefore they are so fast have undergone regulation. This is an economic weapon. This is economical superpower. Increases turnover rate money. He does everything you have from him you want. Next, banks are building infrastructure for asset tokenization. Funds, real estate, anything, because this an effective way is do.

Perfectly. Further, DTCC, which stores and performs clearing all of this, spends somewhere four quadrillion operations per year or something like that. Well, they are currently building on this. NASDAQ builds on this. Therefore, using technology develops like this. But they are all still relatively early stages. Therefore, speculators are what changes everything. So construction continues at full speed. Speculators are what changes everything. Now development is still ongoing early stage, except stablecoins, which are growing rapidly. Our real assets growing rapidly, but they are too small, and there are no speculators, because there is not enough money.

So if you have any money, you are more likely to everything, you will to speculate on easier deals. M-hm. Probability return of the "bullish" » market, continued secular trend, in who was he from from the very beginning, for me extremely high, because everyone bank, every financial institution and every government they tell us that this will happen. They wouldn't regulated it if this shouldn't have happened . All banking the system tells us that it will happen. Everyone, from Larry Fink to Jamie Daimon, we are told, that this will happen.

AND people still say, that this will not happen . This is extremely unlikely. Therefore, this is history liquidity, which more than anything else attracts excess capital and savings that allows us more to speculate, therefore they always go side by side. And I think, that we haven't reached yet at this moment markets, because liquidity increased not enough. But I I bet that's it. ahead. M-hm. Okay, I have it. crazy idea, and I not even sure, How much do I have in her? I believe, but she, definitely spinning I have one in my head: the thing that will happen is that the central banks are buying up gold, trying, as for me, get out of- under the influence of the system USA.

And China, obviously , the most aggressive among them. I think China is really doing betting on, uh, I think they are will try to provide yuan gold and say: "No , listen, you all are us wrong understood. We are like sensible people. Uh, but at least they will be able to get out from under depending on gold. They banned their people to trade paper gold. THERE ARE- uh, I think they are want to turn on " vacuum cleaner" to collect all the gold that only possible, so that it left the USA, West, uh, London, certainly, and flowed into China, as to central banks, and to private buyers.

And then, if they ever will be needed close this valve, uh, they can to do what made by the USA, and revalue the yuan or do whatever they will want. But what for I'm interested in the point From the perspective of Bitcoin, this is that you have this a big game where main asset central bank now there is gold, not US debt. And I think that for digital Aboriginal people, we have, let's say one the generation now, which were children when Bitcoin appeared. So for them, bitcoin is just a normal thing.

Another one will grow generation for which not only bitcoin will be like this, bitcoin will be like for " "gray-headed", this is what they are interested. But stablecoins will become natural for them way of thinking. AND when the world begins to say that we need to get rid of US debt as reserve asset and to switch to gold, digital natives they'll say, "Oh, yeah, that's cool . I want the same thing. I I just want mine. asset in bitcoin, because I don't like it. the idea that he is physical.

I need it somewhere. "And I can keep it." understand this, because it is not I think that now people actually perceive Bitcoin as digital gold, although for me this remains most convincing aspect of Bitcoin. Or Do you see an opportunity? such psychological shift Do you think so? fairy tales? Until he will approach saturation of one's general available market. Uh, and volatility is not will decrease. You are not Are you going...His harder to replace. Ago that it is volatile. So if you invest him in his own savings, this quite difficult compared to gold.

I mean, gold. can fluctuate on a certain amount. You know, a 20% correction is not rarity, and it can last for years. AND for bitcoin it's 50%, 60%, or whatever number it is. Choose for yourself. So until he becomes deeper and more mature, it is unlikely will change. But this one process is a process growing up. When more people it use, implement, " "freeze" on accounts, less they trade him, he becomes less speculative. Here all of this. So yes, I I think it's ahead. Ahem , yes.

Many central banks the world wants less depend on the USA. But they can't possibly work without them, and the system will not be able to to function without dollars. For all my life career I heard that China or any another country is going return to gold standard. Nobody is going to return to gold standard. This never happens. will happen. This is too much. stride. Do you think they are? actively buying up gold? Well, because theirs the currency is falling. I have on mind, think about central bank, truth?

Majority central banks only two do operations. When their currency falls, they buy gold. When their currency or dollar The USA is starting to fall, they actually buy dollars and treasury bonds. They are almost everyone implements this strategy depending on from its tides, outflows and exports, because when the US dollar weak, they sell more goods. When the dollar The US is weak, the economy is working better, their currencies strong, they earn money, begin invest in assets USA, and with gold— vice versa. So yes, with sometimes they certainly , want to develop other assets.

But I don't I think someone has response to question: how do we get away from the dollar? I don't want to say anything. for you. For me it is just a matter of time frames. When I look on what will have to be done do the USA—they will continue inflation, and if I I am in a cold place. war with the US, like China , in my opinion, I definitely I don't want to be away from them. dependent. I am trying. get as much as possible more power.

I already I'm cutting off their oxygen. from the point of view rare earth metals, processing and production. Essentially, all drone routes lead through Beijing. So, if I can also... weaken their influence on me through possession of them debt, I will do it, that they are, obviously, and they do by selling out this debt. Um, so, although I understand that now the system, of course, operates on the US dollar, and she definitely doesn't will change instantly. It feels like Northrop Grumman, I heard that, you know, from all these people.

This dispute lasts all my life career. Okay, let me. I ask, I have something. I'll ask. It never happens. It was true, Tom. Never. So I will prove that this because you You're looking at it wrong. on time limits, and that these guys predicted that actually is happening. And therefore, yes, it may take another 20 years or so there, but from the point of view direction of movement, seems enough it is obvious that China is going to get rid of dependence on the USA. What did the US set up like that?

yourself with the petrodollar, that we will see him weakening. You already you have Scott Bessenta, who says, what do we need Bretton Woods 2.0. So he admits that the petrodollar is no more works. So, if we are in in this condition variability, I think, these guys are pointing at what I would say is inevitable. Each an empire that had reserve currency, was losing her at about the same time the period in which we now. And yes, it can to take up a lot of time time.

So these guys could start predict a 50-year-old movement in its 50th year. AND so now will be very useful a lot of time to do this actually happened. What is the benefit of this? ? How useful is it? to say that in 50 years the world, perhaps, switched to another currency based on electricity, and someone, perhaps, uses gold. How is that for someone? does it help? Besides creating a long a dark story about that the world is in [ __ ], The US lost its empire, The dollar is over, everything will move.

How is that for someone? does it help? That's why in me real the problem with this story because I heard it all her life, and she actually cost people have more money, than any other meme that ever spread. Even more than Interesting. buy these shares at peak. Anything. It cost more lost opportunities than anything else, what have I ever done? saw. Meanwhile the dollar continues grow, and they all they say: "Yes, but he will collapse." This is interesting. So I don't I say that he will collapse.

So I I'm drawing, I have another one. narratives than mine. Continue. So, in my opinion, the reason why it's worth it pay attention to this step is to what am I looking at this from positions: don't think, what you see clearly the future, so no do too much risky bets. Considering what I see, like people refuse to dollar, I think: " Okay, banks now more interested in gold content". So, although I never I would like a significant part of me the briefcase was in golden, it looks like like, "Oh, great." This is something such as I can invest a little more money.

So, this, certainly part of my strategy in this moment, I earned it a lot of money for, let's say, straight trade: be in technologies, invest in stocks. It was wonderful. Now I'm starting to fixate. part of the profits and I'm starting a little more. diversify, and gold is one of options that I I am considering. More I'm going out. international markets, and Tom, I am more I'm not worried about that, what is reasonable by way of ownership gold. Everyone should have a little gold. This is a strategy to convince people, what's up?

will fall apart because world change order. And what it happens, so it is that this psychologically affects on people, what is it worth to them wealth. Yes, no, I think you got the point. But I I want to make sure that you understand: I do this I'm not saying. Therefore, I know, but history, which you are telling, — Yes. And people won't hear what you just did said: they say, I have there is a certain percentage assets in gold, because it takes place in briefcases. And this feels right.

I see here trend. What is very rational and logical. Like, the USA do this, and it's 4D- a puzzle in which the Chinese are going to win because they will take rare earth metals in Africa and "One Belt, One Road" initiative "one way", and the US they don't see this, and suddenly a new one appears currency secured gold. All of this forces people to feel that soon The end will come. Here- here are my positions in the US, or the US economy, or American stocks—don't you you see that they are all in We will be taken away.

This is what what they sell to you, guys. They all sell it. Well, yes, they all are. sell clicks, confidence and all something else. Quite I understand. But, but let me put you are very specific question. Because I I have this belief, what, oh, this is what, as in me, it happens in background mode. I am not I own none long-term US debt. So, in I owe a lot to the USA. , but all of it short-term. So, it's very straightforward. the way it is belief displayed in my briefcase.

Or Do you think so? madness, if you have a long-term debt, and you're like, "Hooray!" or No, I was I was bondholder for years, because it was " "bull" market bonds when we, you know when baby- boomers were coming out pension, it reduced, um, inflation. I still I think that I don't think that we will have a long inflation. I think, to us again deflation will return because that's what they do population decline and technology. But better now support innovation, that is own shares than to own bonds , which is an obligation the US government.

So, no, I would I wouldn't have. owned them. Short-term Debt is wonderful. Interest rates enough now decent. Um, you know, this gives you a little cash balance, No problem. If world, you know, if markets sharply are adjusted, you have some cash in short-term treasury bills of exchange. Fantasy. You can them use. That's all. very smart, you know, to have some gold, cash reserve, to receive some some income, um, a little bit technological shares, a little cryptocurrencies. This is very smart portfolio. We'll get back to the show.

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Let's hear about Death, well, that's it. Yes. Well, I actually I don't believe in catastrophic forecasts, because it would mean that I clearly I see the future, and I I know that's not true. But when I... You assume that It will rain tomorrow. No, but I have umbrella, and I I keep it by the door. . This is probably the right way think about me. So, if I go out and see raindrops on streets, I will not to ask: "Where the hell take, take an umbrella?" But I looking at the K-shaped form of economy.

It, probably what I'm talking about I think the most. It the only reason why I started at all explore economy: when 2020 has come, gone only a few years, as I have had thousands employees. A thousand of them grew up in very difficult conditions. And so they, you know, on the "wrong" side K. They are on wrong side K. This is what prompted me to do everything hereby. Now I see in USA DSA rise, which takes...me emotionally affects DSA, so it already does I'm involved in everything.

it. But do you see? some concerns regarding economic steps that guarantee that K will remain K, or for This is nonsense to you, which will disappear over time by yourself? What exactly, K-shaped economy? Yes, because I see growth tensions in the US, which will not disappear until the schedule is not will approach middle. I say that the situation will get worse. And so just like And this is no small thing, here everything will be fine too worse. Of course, this is important, but it's already going on long enough, here why politics in the USA became like this.

IN Great Britain then exactly, and everywhere like that, right? Centrism virtually disappeared everywhere. And why? Because one the group wants blame someone else, but , as I said, in many ways it's the case in demography. Blame the Friend world war if Do you want someone? to blame So this the problem is not going anywhere will go away. This struggle also always was going on between capital and labor. It always has been. the basis of policy and economy. On us waiting for something larger—split between accelerationists and decelerationists.

Those who want to accept technologies to get superpowers: economic, physical or intellectual, against those who will shake their heads and will say: "No, you don't this should be done. It dangerously. This is terrifying. You don't know, until What will this lead to? We "We'll lose our jobs." Yes ? This will become a decisive battle, and later she will turn into a question about who wants to provide AI robots rights, economic rights. This is still ahead. So we we will be separated again a long time. Problem in printing money for maintenance debts, so maintain level everyone's life is costs the poor to the strata of society everything.

And I don't know. answers, because each the party tried it. They all see it. If you are in the US, if you Republican, then to the residents of the center countries hook through K -like economy. If you are a Democrat, then city ​​dwellers who are not rich, hook because of this. This is theirs. electorate. Both the parties tried, both were in power , nobody does anything decided because they they just can't. The solution would be stop printing money. And what will it give? This will collapse the whole pension system.

For stock market. What are you Do you want? Do you want 5% or 8% depreciation, which is the price of insurance? Or you want to lose 80% assets? Choose. It, Unfortunately, that's the game. It terribly. Majority people are elected by 8% value. When you look at how macro investor, on historical data, are you you think: "Okay, that's it this leads to Maggie Thatcher, or what, In your opinion, this leads ? This is French. Revolution or Maggie? Thatcher? Fourth turn. As Who do you think it is?

will manage economies in 10 years? This is obviously there will be AI. Process decision-making radically is changing. We already we see AI in everyone companies. He is not is on the board many, but in some of them are. When I I'm going to the Middle East. East, and I'm there often, and I visit sovereign wealth funds, they have AI in their investment committees as a right voice. Oho. Yes. They have it in them too. companies, and in the government. We will all have it, because he is smarter, better accepts decision, more sensible and sees the picture better for us.

So, from the point of vision of the optimal resource allocation, What does he do? humanity, he is the best for us. We all we use it for marketing strategies or any What else? Why? For he is better. He faster, accepts better solutions. He sees deeper and combines more facts than most people. He is not like that. skilled as the best people on Earth, but he terribly good at everything. In fact, in every topic and every mental skill, known to mankind, he at the level of 0.001% the best.

So, of course, he will lead governments. So, when we we are talking about future, do you think you, that generation Z will say: “You know what? We should, well, involve generation X or something else someone? No, they all are. They will say: Of course, more logical use AI. That's where, in my opinion , everything is moving. And this changes everything. So, this one Will AI bring good or bad? with evil? You know, this is the whole world science fiction, and we will find out. This is where we are headed.

We'll find out, okay? Is this bad? And I I suppose because it is created on based on our intelligence, he will be and good and evil, just like us . But in general he will just move forward so as not to destroy everything around. Because if he will get rid of us, he will get rid of computational power that it created, —this chaotic process. People have very strange computational processes, because we do all sorts of random things governed by qualia . Therefore, we create so complicated calculation.

He does this. doesn't do it. Machinery They don't do this yet. Why do you think? Do you need Neuralink? It direct connection between machine-made calculations and human. Okay, this is it. extremely interesting. This is not for get rid of us, because he can't do without us, like us we can't get rid of trees, about which said before— intelligence ecosystems which allowed to exist for humanity. If we did this, if we destroyed ecosystem, planet, nature, we would died. We all we depend on each other one. is anyone suggesting such an argument.

Tell me. more. I don't like it. seems right away obvious. We talked before, and this is a long conversation on another day, but I created a thesis that I call universal code, which is even more grandiose than "the code of everything." And more impudent, although I I admit that I am not an expert in physics, philosophy, mathematics or any why like this, but me accidentally stumbled upon on this great thesis. Part of this thesis in because intelligence is that things, atoms, particles, all components eventually are starting to create coherence and networks.

And what is he does, and I will be back first to the people. So, people, we extremely curious. We we unite in networks with each other. Then we begin squeeze the whole the intelligence of everything that surrounds us. This is it. science. People don't think about it like this. Science exists. That is, these things exist. We we consider science breakthrough. This is not true. This is what we are finding out, that already exists. We just didn't know this one stories, and then we find her. So we we compress all knowledge about things around us.

How, you know, Does geology work? As Does biology work? As Does physics work? Like everything Does this exist? We are not we create this. So we compress the intellect everything around us, because we are the highest intellect. AI is simple squeezes human intelligence from which even more will come out intelligence. And the whole the process of the universe—it that's it. He forms coherence, squeezes it, which over time creates intelligence. AND this later compresses and forms more, because the universe is looking for a solution for the emergence of intelligence on unit of energy.

Therefore , AI won't kill us for by definition, because we are part of it. As nature is part of us. And the atom, water is part of the trees. I know, This sounds like mysticism. . This is not true. Actually it's just physics and biology. Exactly so everything works. You are not you can destroy it. Take the water out of planets—and all the trees will die. Take it away trees—all will die people and all animals. Remove the people— The entire AI will die. That's all. one and the same.

We- one and the same. We only nodes in the wider consciousness. And in wider computational process. How do you invest in times that are the largest technological a revolution in history humanity? I have a concept: the universe, markets and all, what we do, strives maximize intelligence per unit energy. This is one of reasons why technology stocks surpass everything other. And therefore crypto market, which is part of the same idea, surpassed everything for this one time. For me it is basis. I believe that this is a supercycle.

It... Technology is like the ultimate goal to which everything was going well, so she didn't may be enough big? She will never be big enough. She is constantly attracts more capital, because it is his most effectively using. She gives the greatest return—as financial, as well as for humanity. You know, the extent of the impact on humanity of what happening now... People don't realize, that AI is undeniable the greatest discovery, which will ever do humanity, because we created intelligence. We they missed the electricity through silicon, through sand, and created intelligence.

All intelligence in the past was based on passing electricians through carbon. Now electricity through sand works in a million times faster. So, silicon basis in a million times faster than biological. Oho. That's why we don't we can with them compete. That's why we constantly we feel that way We are very far behind. AND This is not a law. Metcalfe, and the law Reed, who is square law Metcalfe. And this fastest implementation of something- something—not just technology. Law Reed doesn't even exist. in biology. Okay, I knew we were we will eventually get there to Reed's law.

I am not expected this It will happen so quickly. So let's let's outline the landmarks for the audience. On- first, in this interview two will compete vision. My will be based on paranoia, historical experience: nothing grows forever, at least because people panic and rushing to the exit. There are debt mechanisms and things worth mentioning think. We let's discuss this, when will we get to that point moment. And then there is yours greatly more optimistic a vision which, in fact, and defines our roles in this conversation.

You they said that AI would never it won't be enough big, because it's yours the highest manifestation of the genus of what one aspires to Universe. Therefore, capital will flow there because it's right a place for him. Okay, you are very famous. thanks to the law Metcalfe, who describes the power of networks. They are growing exponentially, or their value is growing exponentially. Explain to me what actually means double exponent. How am I doing? understand this? If we perceive Internet as law Metcalfe, then the value the internet—it number users and their number connections.

Formally it's something like number of nodes in networks in a square. But it doesn't have to value. A simple idea in that the more people online do useful things, the more valuable it is chain. Quite logically. When you build another system on top of something that already grows according to law Metcalfe, you you get double exhibitor. Simple In other words, AI is actually compression of everything that exists in the internet. And even more. If you think about it about AI, Tesla autopilot —that's all he sees on the streets, or Google will have everything that sees in everyone video created on YouTube.

This is invested in very much, huge volumes data. Now you accumulate information, passing it through silicon substrate, which is faster than anything that we have seen before. Silicon chips are getting better and better, that's why Nvidia is like this powerful and all that. AND as a result you you get double exhibitor. Double exponents are not natural, or never been before. Their never existed. People were talking about it, for example, that subreddits are being built over Reddit, and it was Reed's law. I'm not into this. I believe, but here it is proven.

The proof is Anthropic income, which growing fastest among all companies in history of mankind on order. They will receive about one hundred billion in revenue this year, although 18 months ago had zero. This is madness. Now let's look at OpenAI. Before OpenAI, one technology, built on the internet, were cryptocurrencies and blockchains. They scaled faster than myself the internet because have a mechanism network stimulation with real value, in which you can invest. So, this is was the fastest implementation of any what technology, what ever seen the world, and everyone who saw me on your show, heard how I often talk about this.

Then AI came along, and he got a hundred millions users per week. And now at OpenAI billion users , and Gemini has a billion users. I know, how much is Meta, maybe 300 million users, maybe 500 million. Although no one really does not believe that Meta really achieved success. And then there is Anthropic and all the others, and also Chinese laboratories. I have on mind you, this is nonsense. AND we wonder why we feel ourselves abandoned, we are not we understand this, we we can't keep up hereby.

This is because it moves faster than we can comprehend. IN We have no way, exhibitors and so on quite complicated. Double exponents —that's impossible. From a philosophical point of view view of why AI ultimately will become a substrate, through which we interact with our life, or smart refrigerator , smart blender, or help with homework task that whatever. You answered this, I I think very, very much. clearly. Here is where mine appears paranoia, and the reason, why am I looking at Buffett, because he retreats, I don't say, which comes out completely, but, of course, retreats, saying: " Mhm, I don't think so.

people invest "reasonably". This resonates in me, because I'm looking at something like Although he just increased its share on Google. Yes, but he also just got out of his shares in Apple. He sits on a larger the amount of what people call in cash, you know, at historical levels. And now, for me, I just looking at CAPE ratio. And when I see that the average the indicator was 16-17 x, and now we are at 40x level, this means that income, which are actually are generated, well let's say the S&P 500, compared to how people rate the S&P 500, became, um, not unprecedented; but we are reaching historical the maximums that we haven't seen since dot-com crash.

And I I say, "Okay, I believe in technology. I believe in everything you just said said about her importance, its inevitability, all of this truth. Is she right? appreciated? And directly now we already see, that OpenAI came out on plateau. So, if you put everything on OpenAI, you probably you will suffer if you don't start making adjustments. The same can happen with Anthropic, because yes, their incomes are increasing at a breakneck pace, but they still spend capital faster than they generate profit. And I say:" Hey, despite inevitability, there will be people who will suffer financially, because we repeat historical scenario: every revolutionary technology finally- finally takes debts to to such an extent that it destroys the first wave investors, and only next generation investors actually makes money." So, here are a few moments.

Firstly, CAPE ratio—not forget about currency depreciation. The depreciation itself affects "E" ( profit), which changes price, and therefore, and P/E ratio. Price grows through currency depreciation, and profits are increasing together with GDP, or, you know, in the case of Anthropic is different, isn't it? Yes? So this indicator will always grow, because we continue devalue the currency. Therefore you need keep that in mind and to make corrections, because there is ... Before we go further: if this is true, then the CAPE ratio considers a 10-year average value.

Or Do you mean that? the moment in which we we are now, so differs from 10- annual average meaning that is completely it is expected that we already not in the range 16–17, like the last 100 years, and 40 now—this is new norm? Yes, what we see from 2008—this use, you know, printing currency, very in an obvious way. AND currency printing changed estimates, because the price continues to grow, stocks are going up, but profits are more stable because they are not affected depreciation. This mechanism—part of what makes stocks so expensive.

If ignore all this, or There is now a danger, as you say? Or when it is will it become dangerous? I I mean, everyone investments are dangerous. Always there is a cycle of decline. There is always lifting cycle. Having lived through the period since 1995 until 2000, I can to say: we are nothing yet didn't see. Nothing. So I don't think we have already reached their peak collective madness. Okay, I apologize, I just want one more time. to emphasize this moment. So, "Hey, Tom, I survived.

more investment cycles than you "—and this, obviously true. I am in this game at all recently. So, I saw much worse times. We have not yet come close to I will become completely detached from reality, senseless investment. But you also believe that there is a possibility that some people who are doing something unreasonable, will suffer. This is for now What is true? If this is not true, then in financial markets there is no risk, and you you know, of course, that truth. It always is It was true.

Our the work consists of to understand where we are are we? Where are we? we are in this cycle, right? Then two questions. I I want an answer to this. And then what do you do? to protect yourself? Is it: "No, I just so good I understand where we are. we are that "I'm never wrong"? Is it: "I do everything" possible to know where we are, but I still have some protection. from losses "? How do you thinking about it now, at this moment? You see, I'm old-fashioned.

in all these things. As well as with crypto, it's the same. I I am looking at long-term secular trend and I understand that the markets moving up and down within its limits, and It doesn't bother me. Actually, what I'm looking for is so when is that is happening correction in long-term secular trend, you buy more. Just look at Nasdaq charts from 1982, since the moment of appearance computer, desktop computer. It was just like that. And everyone clucking their tongues and they say, "Well, the year 2000." I I mean, damn take it away, it was just short-lived a spike in the graph.

In response to 2001, I don't know when he fell. , how much did the Nasdaq fall? then, by 50-60%? It was buy more. It always was answer. We already had this discussion about crypto, bitcoin and everything else. People forget about it every time, because emotions get in the way because of what you are trying to achieve. Now, you know, these losses depend on whether you can withstand volatility. And if no, then invest less or worry all day through" bear "scenario and try use yours graphics, try define parameters risk and all that.

Much easier none of this do. Simply invest less. AND then hold for a while money in reserve for case of a fall and then say: "Great." I can't, you know, open the bottle champagne, buy a little bit of action, and you you think: "Great, I got a discount "but people can't do this make. But that's it, What did I teach myself? to do, this, you know, to be very happy, seeing where the crypt is is located relatively his/her long-term trend, let's say, Bitcoin, he's on it trendy with oversold in two standard deviation that historically everyone once is fantastic time for purchase.

It when no one the other one doesn't want to buy. So, exactly yes I am, yes I am about it I think. But the point is that that there are ways to do this measure. There is nothing. ideal. So, you Look at this. Okay, debt is problem. So we we analyze the debt parts, let's look at him and we say: okay, as far as these are credited hyperscalers? I think technical answer— not for much. You mean that not at all? The debt is 4% of their market capitalization.

It nothing. How much cash? do they generate? More than God. I have meaning that these structures generate huge streams cash. So, their cash flow became negative. Oh my god, this doomsday. The largest machines from cash generation flows on Earth became unprofitable, so build what? They spent it on wine, women and drugs? No, they built huge computational power. And they have income to pay almost any percentage interest rate on debt to infinity, because their debt is only 4% of the market capitalization and a tiny fraction of their cash flows.

Now there are a bunch of others. There is CoreWeave, maybe Oracle, there are a lot of special companies. Can they Do they explode? Yes. So let's let's consider further a larger scenario, which may disturb someone like you. What happens if Will OpenAI ruin everything? They have obligations on trillions of dollars, and everything is going wrong. What will it happen tomorrow? On- first, intervene US government. They are not can allow the US to slow down in race for intelligence, because there is another nation, which also participates in this race, and the one who will win in it, will get everything.

And therefore in game theory cannot to be the winner. AND everyone has to give it your all. But more importantly, it concerns companies. In that the moment when OpenAI goes bankrupt, let's say, all computational capacities will be bought in seconds the fastest buyer. But the US government also can allow this, because imagine that Google buys up all power or something yes, all licenses, all. If Google buys everything, then Google will become the most powerful company on Earth and will get a monopoly. Because if you double the power , proven, you, in fact , exponentially accelerate output speed intelligence.

So it's actually very difficult to inflict a large-scale economic damage. Yes, it will be a shock, but nothing long-term. That what happened to fiber optic. You know, they were all written off, but the level of debt in those companies in 2001–2002 years was significantly higher. They were incredibly credited, what not yet. So, you remember approximate figures? I can't remember now, but in there were, you know, huge volumes negative free cash flow. In fact, they are not earned money. IN they had no money flows. Don't forget , at that time they had there really wasn't no streams, only capital expenditures.

Okay, this is completely different. case. It was like construction railways: themselves capital expenditures, and There are no trains yet. You started earning, only when the trains were running , but first you need to was to pave all tracks and more. This is very , very, very different depending on who it does. But again yes, will they be accidents on the way? Of course. This is inevitable, because capital has to rush most effective way, and those who is wrong, the market will punish—that's for sure. Then does it affect this business cycle?

Classically , the business cycle fades, when liquidity is withdrawn, and the Fed raises the stakes. On- first, we know from 2022 year that these guys indifferent to rate hike The Fed, because they have money more than God, they are sitting on huge piles cash, which brings them interest. It doesn't matter, will it grow interest rate on a few percent, that's It doesn't matter. It is important for the rest, but not for this one races. But what more importantly, these capital expenditure— this is the biggest development in history of humanity, which happening now.

So, again, we We live in extraordinary times. times. I am constantly I use the phrase "in history of mankind", and this is all real, and this it just happens now. Talk about simulation? I have on mind you, it's simple pointless. So this is the biggest event of capital expenditures in history. And we barely started. Don't forget, it all started only 3 years ago. We still they didn't even build it data centers. Of course, Elon can launch data center in 4-5 months, or how many there was, what is there simply absurd.

But we just at the beginning, I I mean, the plans capital expenditures scheduled until 2030. These are the numbers we we see the cost figures. But I think that this year we perform only 30% of what would have, because receiving permits for electricity too much slow. There are restraining factors this development, through which is quite difficult create surplus power. So they are trying to fulfill as much of this as possible development work. AND I don't think so. problem, but capital expenditure are starting to bring return.

So, every time, when you enter in operation capital assets, you increase computational power that increases your competitiveness and allows more on to earn money from this. So this is free fall cash flow—this actually an investment in the future for two years. Okay, I heard that. version that supposedly does not so many companies need these computational capacities, as expected. There are such people like Elon, who are building colossal data centers, and then rent these capacities for rent because they can't to justify them use of own AI company.

And people they say, "Hey, this is there are only two companies that are now absorb all available computational power". And any- what is the theory that there is an infinite need for calculations, refuted by the fact that someone on like Ilona gives them away for rent. It seems there was a third one company whose name I didn't recognize it. But this is not like hundreds companies compete for these capacities. For now, this is a story about two dominants players. Well, because it is extremely expensive. It's not an easy game to play.

to defeat her or even start. But Elon managed and quite successfully develops xAI. Him had to build computational power. Him had to build these data centers. But now he has built more bigger and better, that's why it can pass Colossus for rent. In Meta so much data, because in there are a huge number of them information network, therefore they have computational resource. So why not? to surrender one's capacity for rent from huge profit —margin 30–35% and above— to finance next stage development? We see, that Google also works in in both directions.

They create huge computational power, their own use and rent to others . Amazon does the same thing. So, everyone use everything this is full power. All working full time power. Look at the prices on every GPU, they all are growing. Rental GPU bets too are constantly growing. So, we are now we are in epicenter of the paradox Jevons. The more you produce everything this, the higher it is demand. And the demand curve just crazy. She is incredible, this demand curve. Think about what it is like demand for intelligence?

He is infinite. After all, intelligence itself is the emergence of agents has own demand for intelligence. Because Intelligence is the only thing which continues grow over time. So I just want to say, that it is the fastest and the most consistent trend in Reed's law, where you you will have some ineffective capital placement. There will be people who will spoil. Will be periods of time when markets will be to be nervous about everything it. But it can't be stopped. . Not in this biggest race that ever existed, namely in race for intelligence.

If part of the debts will begin to collapse, and we will have problem with liquidity, because creditors will say: "Oh no, I don't want more take risks. it seems like it might to become quite fragile pretty quickly. And if is that true? fundamental the argument becomes: "Yes, Tom, this doesn't have to be meaning, because it is USA vs. China. USA will print money, as much as you want, if that's what need to be done to this industry continued grow ". Is this what what do you think final fuse, is there one something else?

No, this is one of fuses. Another fuse—everyone, in Who has cash and who can buy more computational capacities, will make it. People can't to realize that this product with infinite in demand. We increased , we are going increase TAM, total volume target market planet thanks to all to the agents we we attract, which require calculations and perform tasks, that create calculation. So it's not It's like nothing else that have we ever seen . Everything else was determined by human in demand. This is not. So this changes significantly part of the equation.

Another thing: obviously mistakenly believe that growing demand for Chinese models made by Anthropic or OpenAI more vulnerable. It is obvious that their profits remained on a level. So, we we see that the cake is growing, it is not fixed pie. It logically, if it is the largest commodity, and Elon also talks about this will speak. The biggest thing, the largest commodity, which we ever produced, —this intelligence. Therefore, the pie endless. Therefore, the pie continues grow. Are there any periods when growth pie slowing down? Yes, most likely because politics than through something else.

But the pie continues to grow. AND so if they will be able to keep margin, will they keep it? they, you know, 55- percentage margin? Maybe not. But the margin all hyperscalers is also growing. It It's just crazy, that it grows in everyone players in this field. So, no one loses margin because demand is growing very much rapidly. Now, if look at the debts, Who has these debts? Well, you know, there's a whole bunch Google's debts, which are now placed among pension funds and something like that.

But what is the risk that Google will not pay its debt? He is so close to zero, how much is it anyway perhaps. At least now, until the amounts are will become significantly bigger. Hmm, debts Coreweave and a pile of debt data centers. Yes. They will destroy part of them in special instruments that, probably, there is credit. It bad. What about them? will it happen? If someone buy all computational power is cheap, and everything will begin accelerate. Therefore, we can have a breakup . I'm not saying that this is impossible.

But what will happen is speed the recovery is shocking people, because how just appearing distressed assets that generate more intelligence by low prices, they instantly are intercepted, and intelligence develops faster. More results, more opportunities use, all of this becomes simpler. Okay, I think so. What are you betting? per industry or technology, depending from how you want to call it, not on individual player. It Is that really true? Yes, that's right. True. And then your idea in in order to understand, Where exactly to place bets ?

You know, you have betting field. Where risky, where not, where interesting—yes. Interesting for me now maybe to be an Oracle. Never write off Larry Ellison is one of the rules of life. That's right, this one the guy knows that does. If look at the price Oracle shares since company founding, This is simply unrealistic. So what, Larry? gone crazy? He Has he lost his mind? realizes what I said: spend it money as soon as possible, create computational power faster than others, and you will get business with colossal growing margin.

I I think he is exactly that. does. The market for this doesn't see So, of course . Okay, maybe this is it. one of the ways to look at the situation, namely the argument that if they will fall fast enough, you will get interesting opportunities. You know, if we look at Amazon, this is very interesting example. Actually, extremely a rare example, maybe, except for SpaceX and others. Amazon is example of a miracle productivity, which, probably waiting for economy. So, Amazon uses robots , and the ratio robots to people in Amazon is now almost alone to one, and for several next years robots will work more than people.

In fact, hiring people in Amazon is not growing, then how to attract robots continues rapidly grow. They have unmanned vehicles. IN they will be unmanned deliveries. They have drones. They have each element. They significantly ahead anyone else. They work as the best logistics the company that once ever seen the world. This is incredible. Using advanced technologies, what are they themselves created. This, in fact, what will do economy. And if you look at theirs profits, they are very well maintained good and factual grow over time. Because they become more effective, and this what is likely will do the economy, and this means that we have there will be more of you money.

It becomes it is more profitable to do affairs. Be person or to lead business becomes more productive. I want to delve into this is because I think you have there is a basic assumption, which can be incomprehensible to many people. My question: will this one be artificial intelligence economical subject? Or he will create excess? If so, then as? And then, as he will receive dollars, What does he need? For when I think about today, about how governments operate, they, in essentially, intentionally leveling innovation due to inflation, so add liquidity to system.

Do you see? that the Fed, as one of examples—Worsh talked about it—or Do you see what the Fed is saying? : "Okay, AI will be deflationary, because this intelligence will be implement quickly innovation. People will be What to buy? Ago will arise naturally deflationary pressure, because there will be more goods for the same amount dollars. So, I, Kevin Warsh, I'm going inject more dollars into the system, to, in fact, keep up behind this." And now, because of some mechanism, quantitative mitigation or something other, in the system there will simply be more dollars.

AI is going to win part of these dollars through your own economic activity, and he just keep going like this grow up, do you Do you see anything at all? other? No, I mean, Look, here it is. a lot of things disassemble, and right here we move on to the idea economic singularity, when all economic structure of the world is changing. Elon also talked about this in an interview with a magazine The Economist. And that's what it's about I've been writing for a long time. time.

You reach points where productivity grows and begins compensate debt growth. You mean growth productivity on a person or productivity on agent? How, how are you? spend these calculations? That's a great question, and before this shift we still Let's get there. So, if GDP growth equals growth population plus growth productivity plus debt growth. That's right, the population —if you look at level of participation workforce, then with sometimes it decreases. Growth rates population in the USA fall, and in most others Western countries they already negative. Therefore, number of people is reduced to countries that have all economic release and all wealth.

And them will replace the artificial one intelligence and work. I, for example, I am hiring many agents to they performed for me a job. And I have to pay for their computational power. And they instead they lead economic activity for me, whatever it is. Okay, fine. Therefore, we begin to see, that it only lasts a year, don't forget. Here's how quickly all this moving. We we begin to see agents everywhere. Elon just released platform for agents, and everyone does it too do. This is literally throughout.

That's all. happening now. AND now there's more, um, bots and agents in the internet than people, and it continues grow exponentially. Huge network the effects of these things. They use computers, they use energy, and you know, everything it gives people jobs with construction date- centers and everything else, what we see. But we also add to robot equations, so we increase number synthetic people. AND What is this? It productivity, therefore that these things are very productive. They are not sleeping. They are cheap in operation. All in in that spirit.

So, to What will this lead to? It creates crazy results for GDP. If GDP grows by 10% or 20%, which is quite possibly after 2030 . This is quite real. see. Very difficult to devalue the currency so that to cause inflation. That sounds like a challenge. I wouldn't want people to accepted this challenge. you don't need to, because debt as a percentage of GDP is declining. Exactly they did this in the 1950s years. You already talked about it earlier. So, it was financial repression 50- x.

So you don't need to so much so that it base. You can give it to the people. And this still won't call inflation. Because you you can increase, say, from the current 5% or 6% to 8%, but they can be raised up to 10%. You are increasing a huge number money. And how are you? said the prices for goods anyway fall. We can to produce so much almost everything for free. Everyone can create software software literally zero. 200 dollars per month. It madness. What we we can do.

And I myself created many things. I am not technical. specialist, never programmed, never didn't look at GitHub, not a single line of code in life. And I created 20 products. I have them all. released for participants Real Vision, Global Macro Investor, things that used it myself. it extremely. Therefore, now it has become free of charge. Therefore, this absolute Prosperity is what is waiting for us. And we we will see this in medicine, in every area in which this concerns intelligence, because it task—to do increasingly cheaper and more effective.

This is what what is he really doing good. So I just don't I see nothing in this. negative. Or will replace this workers places? Certainly. But there are many other roles for people where you can to earn money. AND one of the good things in all this—we we are losing now workers, because level of participation in workforce is falling. AND, you know, from my work it is clear that he continues to fall, because demographic indicators fertility and mortality rates give 60-18- annual perspective. Mhm. So, ahead of us A complete collapse awaits level of participation in workforce.

And we we will try to level it out some time. And that's good. So Baby boomers are leaving retire and go, and them for a certain time replace robots and other technologies. Therefore , it's not that shocking transition, as they think people. This is a transition that we need, otherwise the economy will collapse. Your speech has a warning that has great importance, and exactly what we we will see growth GDP after 2030. because now our GDP terrible, although we already implemented a bunch agents. So, it seems, you bet on that Look at this one.

technologies only 3 years. No matter how good everything is didn't look right now, further there will only be far better. So no be scared if you still You don't see this. Let's go back to Amazon, Tom. Amazon is ahead all of this. It's like US economy in 5 years, 10 years, 5-7 years. That's what Amazon is. They use more robots than people. Yes, okay. They use drones for delivery things. They use self-guided electric cars for movement. Therefore, they are extraordinary example of a company, which increases productivity.

They use less workers for greater return. AND this graph is sharp flew up when Amazon started to real to rely on technological side this. So all this jump in Amazon productivity, you know, the output on one employee- the person just flew away to heaven. This is exactly what because of what we We are going to pass. AND Amazon shows us the way, but people don't want to it is to believe. Um, economical the engine becomes artificial intelligence. He will be economical subject, whether because what can you do now to have a thousand employees who are artificial employees who are doing the job, or then the AI ​​itself starts to act independently.

But after all, we need will have a way to put money in system. They don't need money. in the system if they can be economic subjects. Therefore, the first agent is economic entity for us. Let's say I I want, I think, Shopify connected it. There is a whole a bunch of services that connected this, so you you can force your agent to buy things. We see this pursuit for stablecoins, yes ? Return to crypto world. Mass excitement around this. The guy who created Stripe, says: "You You don't understand.

All transactions will carry out agents. Agents can to spend instantly transactions from your name as economic subject. So, when you launch your game, my agent will pay you for access to the game. My the agent will play the game for me, and then I I can intercept. management when I will reach that level, on which I want everything to do this, right? That's all. It's already happening. It absolutely accurate will happen, without doubts. So initially it is managed economic entities, I have a lot. friends who gave to their AI agents autonomy and said: " Here's $100.

Come back and earn "I need money." Um, something it doesn't work, something works, but it's a process teaching. And we are very early stage. Again well, most of these agents exist, itself possibility use of agent appeared with us about a year ago. Yes, in the advanced laboratories they had agents, but for public—no, this was not the case. Therefore, they will become economic subjects, first under our leadership, and then independently. Because networks become over time well-coordinated, and these things are already forming networks. Um, and we we'll see eventually, and people are not ready for such conversations, but these things will be to act autonomously, and their need to feed, how people.

What do they eat? They eat electricity. and computational power. Therefore, they need this just like we we need food and water. You know, for us this is life force, and for them— power supply. Them you need to do that exactly. Um, and that's why they have occur economic payments, because otherwise they, obviously, they will die. Yes, I understand that. So I don't understand why you you say that in the system will not be necessary invest. Here why, despite all this, I I still can't do this.

understand. Turnover rate money flies to heaven, because you can carry out micropayments instantly in everything. It is in this the essence of stablecoins and crypto-rails—they provide turnover rate money. So, money can use repeatedly. Not really. it takes so much money, if any turnover rate and no inflation environment. This is one of key features. Not need to inject money. Money is not fixed pie. Money is created economic opportunities. You...Well, to a certain extent. So, you have turnover rate money. Yes, of course, I understand. But this will create GDP, but this will not solve the problem of how we we are actually going to repay the debt through inflation?

One of points that you mentioned: no need to repay inflation, because GDP growing enough quickly. He becomes too small to matter. So you say that just by the way speed increase money circulation... No, just by the way acceleration economic growth. Let's say this: Wait. Growth economics is a set of variables, one of which has speed money circulation. That's about which variable are you speak, if not about turnover rate money? About productivity. Productivity is the main thing. You increase productivity with...You increase productivity with 2%. up to 5%, you are completely You are changing the game.

But productivity can be much higher. We just never before couldn't do this to do, but now a completely different situation. And again, let's go back to the 50s years, after the Second world war US national debt to GDP was over 100 percent. Yes. By the end of the 60s he was about 15%? Ugh. And this is what they did: the economy is very grew rapidly, they kept low interest rates, therefore the cost of debt and its accumulation grew more slowly, than GDP. That's what it is.

did. Yes, but what am I, crazy? We actually pulled out money from the rest of the world. So, the US won, forcing others buy goods, made in the USA. So this is a story about what The USA did not win because at the expense of others, because they certainly... No, the two biggest economic miracles were not in the USA. In fact, it is were Japan and Germany. These were economic miracles, about what people have forgotten. Somewhere until approximately 2000, well, in the case of Japan actually...

You will have to determine what you do you mean by an economic miracle, because they are ultimately bought things that we produced. No, they produced... no, they did things, which the US bought for money earned from sale of goods. It not a fixed pie. You continue to think that everything is fixed pie. It not so. So, the USA produced goods that were sold for across the border. Their consumers consumed goods, because it was massive baby boom. Ugh. We bought...USA bought a huge number of Japanese goods, extraordinary number of Japanese goods.

So many Japanese goods that the Japanese have surplus during of all history after World War II war. And they are the same. done with Germany, which has a surplus, because everyone buys German goods. So here it is symbiotic relations: USA earn money as dominant global power, they produce goods that are purchased others, they have deficit, instead they buy a huge number goods in Japan and Germany, and all that It worked. And in everyone was economic miracle. Everyone reduced their debt load . Help me update mine mental model.

So, after the Second World War II USA is world production center. Japan will start develop, but in the 50s she's definitely not there yet therefore equal. Uh, I don't. I know so well. Germany chronology , but I assume that everything was similar. Therefore, we start, um, change the script and we call it the 60s, when it all begins to unfold in the reverse side, and Japan is becoming manufacturer of goods, cheap labor by force, etc. But the period when we we are starting to decide our problem with debts, it's the 50s and 60s -those years.

This is before that as Japan decided this problem. But Wait, because I have to find out something, otherwise I will confused forever. So question for me in because if we apply financial repression exactly in the 50s, we we are holding back the curve profitability, but the only the reason why this works, yes, inflation is higher than bond yield , but real the economy is growing. As to a factory worker in Michigan, your bets grow faster than inflation rate. And this because we we produce and we sell, not because what we buy We still did not become like this economy.

So I I'm trying to understand: Okay, we have 40. trillions of dollars debt, it grows and will continue increase. We we are gathering now to launch something very it seems. Warsh says— I think there are many here. my interpretation, and you will correct me, if I'm wrong, but Warsh says, "Hey, a miracle of productivity will become artificial intelligence". Thanks to growth productivity it will make everything cheaper, but, dear person, I I will let you. to receive only part of this. I I'm pumping money into system.

I will increase money supply, and, maybe I am here I'm wrong, but this is mine. vision of his position. I will increase the money mass, so that politicians were satisfied that they could continue to give everything away free, but debt I don't care. need to be devalued inflation, and all that, point. So, you You say, "No, no, no." That, what is he talking about, it... Sorry, we are talking. about different times horizons. Yes, I am. I completely agree. He will definitely do it because there is no other way to cope in interim period.

Not you can just do it like that turn on productivity. It takes time. We let's start to see how it is growing. Or Will GDP increase massively? Yet No. You know, maybe at the peak of this cycle we will reach 4%, which It would be nice. You know, but later, after 2030, this will start to have less value. So work This is exactly what Vorsha is about. Just hold on The ship is afloat. Try not to raise the stakes too much. Try to provide liquidity when it necessary.

Try. to ensure payment interest on debt, and this requires printing money. Try. to weaken regulation for these technological companies. Allow them to try to implement innovation so fast, how can they It, Actually, there is a game. It exactly what I did Greenspan. Exactly. In the late 90s. He just came, lowered the rates once, second and more did nothing. He did nothing and allowed productivity do everything else. Even though the overall CPI was quite high in late 90s, he didn't shuddered. He simply said: "Well, the core CPI is not is growing because this deflationary factor, and productivity is growing." And Walsh, Trump, Bessen and Walsh —all referred to the Greenspan period.

It and there is an action scenario. So, Yes, you are right. He will do so, so the shares continue to grow, why is K- stored similar economy, because people can't buy a house and to obtain assets that want, and that's all exactly. This is not is changing. So far No. Okay, we're done. talked about it before, and I think that You are already quite famous. this, but the idea of ​​"code" "all"—in short speaking, liquidity manages everything. Yes. So, help me. understand. I think about liquidity as—and again, this is rude rounding, —but I I think liquidity mainly due to debt.

Eurobusiness There is probably a debt. most important for economic breathing world. And so when I I think, how to satisfy needs in liquidity for growth economic activity, which will bring AI, I completely I don't think so. fixed volume, but I see a critical the difference between wealth and money. So, wealth in I am here. Wealth may appear and disappear in an instant, it's not It matters. But when something is supposed to happen converted into money, can happen here strange things. So, maybe I'm wrong, but I don't think so turnover rate money—it's the same as growth liquidity.

I crazy? This is the one the phenomenon itself? Both yes and no. Therefore, growth liquidity—just perceive liquidity as general offer dollars in the system. Mhm. It's all so simple, isn't it? Yes? Yes, that is speed it has no circulation value. No. OK. This is liquidity. Not it matters how she is fast rotates. This can to be stuck. And in in many cases it is for a long time stuck in banking system and other places where was needed liquidity, or in foreign owners bonds, uh, foreign dollar debtors in Asia, etc.

They suck all this capital, because they need to pay off a debt. They suck dollars, so we continue print more, through debt, as you say. Turnover rate money is how they are fast are rotating. So, I I get my 10. dollars, I'm going to your store, I'll give you 10 dollars, and you quickly cross the road, to give them away to the greengrocer and buy, you know, some fruits, and they take them and They go to put it in the cash register. Well, that's four people.

who used one and the same dollar. This is it. turnover rate. Yes. So, if there is turnover rate money, they are free and moving quickly . It's like playing musical instruments. chairs that is happening very quickly. If not turnover rate money, then I give you 10 dollars, and you just put them in piggy bank and nothing Don't do it for 3 years. That's right, this dollar cannot be used again. So, the turnover rate —this is a key concept. Some people think that the speed of circulation can cause inflation.

It depends on everyone. other conditions, but what you need, is this economy, where is the money moving very much fast and there are many of them. Better leave us alone. in a nutshell: if I represent side of pessimism in in this equation, if you had to summarize everything about what were you saying here, because you only gave us crumbs, how would you put everything together, thinking about this moment? You full of joy. It is clear that none of You are not afraid. shook. So, if you wanted to infect people with this optimism, How would you put these together?

parts together? I don't think I have. infect them optimism, because this is my opinion, I do her job, and she it could be like correct, and so on erroneous. But this the best time to to be alive We we observe the fastest technological changes for humanity, which could only exist. This is something extraordinary, and I I continue repeat: we we miss electricity through sand and create intelligence that is in millions of times faster than passing through the brain that consists of carbon. It extremely. AND, Of course, it will attract the whole world capital.

Likewise with blockchain technology . These technologies are fundamental the foundation of a new world. So, don't avoid investment only because what they can to seem risky . It could be something, What don't you understand? Maybe there is a certain risk, but you definitely you will lose your chance, if you don't try. A way to cope with this is what we are talking about said before: how create a portfolio, which will allow you to hold an umbrella near the front door or to be a person who pops up in bathing suit every day, waiting that it will be hot and It's sunny, isn't it?

Just create briefcase, which will allow you to do this, without crashing. So never be afraid. so much so as not to invest, and not be too careful, because you you will never get out from this "K-shaped" crises. You are in trouble. You always will stay on days of this schedule. There is no way out. And with on the other hand, it's not worth it due to excessive optimism to think: "I I will use credit. shoulder to reach this faster". Someone, Who did I talk to about this?

. We discussed this. regarding cryptocurrencies to how they collapsed, during collapse, in general everything. We are constantly explained to people: "No do this". And then it doesn't matter what no one can take away you have a crypt, they all they will take her away anyway, if you use credit leverage. Therefore, do not use credit leverage. So, it's just a question your own psychological state . Simply stay away from all disputes and all this noise, and understand that is happening actually. We have one person who has the largest private communication network on Earth, but she is in space and he sent her there, independently by developing missiles that are returning to the ground and sit down.

IN he has cars, who drive you themselves. Most people still don't drove a Tesla on on autopilot, not entered the address and did not communicated with friend in the car, without even looking on the road. It incredible. And this is more the worst stage, which It will only be. If you haven't tried yet to create something for with the help of Claude or ChatGPT—something you have in your head, it could be game, dashboard, yours finances or investment briefcase—understand that now you too can you program any that in a matter of minutes, just chatting with them.

I even I don't print anymore. I just using WhisperFlow. I am slandering. text, and I have six sessions opened Claude, who perform six different tasks. This takes the brain—I trying to fix one thing here, write an essay there, and all this at the same time, just talking to microphone. Gay, Can you do this? Gay, What will happen to that? Me need to fix this? What does this mean? As harmonist. These are the times, in which we live. We we live in the most incredible era. So simple accept this.

Because it is not will stop. Whatever you do they said that no matter who did as if people didn't complained, it's not stop. This is not will stop. So the best—simple accept it and say : "You know what? We "We go with the flow." And, as we already said, Tom, that doesn't mean what to risk all savings or something else. You just have understand where we are we are moving. And this is not will stop. I like it. Brother, as always, pleasantly to chat. Where people can follow behind you?

Um, you can find me on X. It's easy, @RealVisionAI. Or you can go to mine Real Vision personal website ...Real Vision...dot com, It's simple. By the way, Tom, one more thing: for a few weeks ago I will release my AI into the world, trained in everything my content, with with my voice. Steeply! On everything I've done , on all economic theses and so on. So you can just run my AI, to chat, and that will be my vote. It's cool when this will it work? Well, technically it is.

ready, but I still have to correct something. Therefore , it will be Real Vision dot AI. Hmm, that will work. in a couple of weeks. And this free. You can you talk to me, ask questions , show graphs market. You can show me yours the theory of the end of the world and ask to disassemble her into pieces. All this maybe, and that's wild. I even taught him to in their own interests, as- here are the travels, music etc. This is very cool. Wow, that's incredible.

What Well, I can't wait. to try. I will give he's a bit "old" world" and graphs, I'll see what he is. will say. Perfectly. I was glad. see you, friend. Cool, man. Mutually. Friends, if you haven't done this yet done, definitely subscribe. And to next time, friends, be legendary. Take care of yourself. Peace. If you liked it this conversation, check this out episode to find out more. I believe that America went too far in privatization of everything. Election campaigns should be financed 100% state-owned funds, and private donations should be prohibited.

This is even impossible. Set everything up like this, so that it is guaranteed not to buy your own

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