The Investing & Crypto Expert: "We Only Have 6 Years Until Everything Changes!", "The S&P 500 Isn't Worth Your Time!", "Don't Keep Spare Cash In A Bank!"

[0] We've got about six years before everything changes, and we thought money in the bank was saved.

[1] We thought our house was saved, but none of that's true.

[2] And the moment you put your money and your savings in the bank, you don't own.

[3] So could you explain it to me through the context of this?

[4] Okay, so...

[5] Raul Pal is one of the most influential voices in the ever -changing world of modern finance.

[6] Unpacking the secrets of crypto.

[7] And how to build wealth in an uncertain future.

[8] People know their futures.

[9] They can't afford to buy a house.

[10] They have less savings.

[11] Debt's from university.

[12] People in their 30s are the first generation that won't be as rich as their parents.

[13] So what advice would you give to set myself up for wealth in the future?

[14] You start investing.

[15] But what about the people that no matter how hard they work, they still don't have that excess income to invest?

[16] You don't need huge savings.

[17] You just need to understand how to look for opportunities.

[18] For example, the S &P 500 is not worth your time.

[19] Real estate doesn't really make you any money.

[20] Those days are gone.

[21] Gold actually lost your money.

[22] But investing in crypto, like Bitcoin, And then how do I invest in crypto?

[23] It's really simple.

[24] You're going to start somewhere.

[25] So do that and you'll make money.

[26] From a very high level perspective, and I'm being unspecific here, so I'm looking for an unspecific answer.

[27] What exactly is the mission that you're on in this season of your life?

[28] Like, what are you doing and who are you doing it for?

[29] So obviously, you do it for yourself.

[30] But really, I think that I've been armed with tools and knowledge over the years, my 30 year career, that I kind of have a decent sense of where the world is going.

[31] where the opportunities lie, and where the risk lies for people.

[32] And I can see the problems people are facing, and I think I've got answers.

[33] So what I want to do is help as many people as possible in that journey.

[34] And why that happened to me was I was in Spain back in 2012, and also during the financial crisis 2008.

[35] And I was writing macroeconomic research.

[36] for my research service, Global Macro Investor.

[37] And I had seen it coming.

[38] I predicted it.

[39] I knew it was coming.

[40] I knew the problems.

[41] I warned all of my friends.

[42] Nobody listened.

[43] Nobody understood about the financial crisis, what was going to happen.

[44] And most of them, because I was living in a beach town in Spain, they were in real estate.

[45] They all went bust.

[46] But worse than that was that when we got to the European crisis, when basically the governments of Europe ran out of money, The banks also ran out of money.

[47] And as opposed to being bailed out, they got what was known as bailed in, which means that they took your savings to pay the debtors.

[48] And friends of my parents and friends of friends were wiped out.

[49] And they were like, why didn't we know?

[50] I'm like, that was a question that sat with me for a while.

[51] Why didn't we know?

[52] And I saw that everybody had lost.

[53] total faith in the system.

[54] So Occupy Wall Street happened at the same period.

[55] And it was people angry.

[56] It's like, we thought money in the bank was safe.

[57] We thought our house was safe.

[58] We thought the system was there for us.

[59] And suddenly they all wake up and realize the system was not there for them.

[60] It was actually for other people.

[61] People talk about bankers never went to jail.

[62] There was that sense that it was never concluded.

[63] It sat with me for a long time thinking, what can I do about this?

[64] Because I was writing super high -end kind of research for hedge funds and big asset management firms.

[65] And so it wasn't accessible to people.

[66] And then I wrote a couple of articles.

[67] One got leaked in Zero Hedge in its early days, and it became super viral.

[68] And I thought, maybe there's something here that I could reach a broader audience, because then I can...

[69] help these people.

[70] And that's when we came up with the idea of Real Vision, which was the idea of interviewing the people at the very heart of the system and kind of sharing the details because these people weren't hiding it.

[71] They wanted to help people as well.

[72] Everyone had that sense that we could help people.

[73] So I'm still on that journey.

[74] And that journey kind of has taken a multitude of paths, starting businesses, but also just trying to educate people on why they feel the way they do.

[75] You know, why politics is so polarised, never used to be this bad.

[76] You know, what's really going on and who really to blame and what to do about it.

[77] If I stop the average person on the street that knows you and watches Real Vision and I ask them, what has Raoul and his channel and his information done for you?

[78] What do you think they would say, the average person?

[79] They just say, thank you.

[80] Because we've helped demystify it, the world of finance.

[81] You see, we all have...

[82] The root of unhappiness and happiness often comes from, does your vision of your future self match where you are today?

[83] Can you see that path?

[84] Whether that's finances, whether it's health, they're all very similar journeys.

[85] And when people can't see the vision of their future self, and they can't see how to get there, they get upset.

[86] And what we've tried to do is...

[87] unfuck people's future, which is an expression we use, which is a memetic or a meme or just a short phraseology to help people understand.

[88] We understand that you feel like you can't get to where you want to get to, but there are options to do it.

[89] And I think people are immensely grateful for that in general.

[90] If you're on a mission to help people unfuck their future, can you...

[91] explain to me specifically the things that stand the chance of fucking their future from a macro perspective.

[92] And when I say macro, we have to pause and just define what I mean by the word macro.

[93] When I think of the word macro, I mean big picture perspective.

[94] So from a big picture perspective, what are the things that stand a chance of fucking my future?

[95] Okay.

[96] So, and we can dig into why these things have occurred, but generally speaking, Wages in real terms, adjusted for inflation, haven't gone up for decades.

[97] So nobody's getting richer.

[98] If you're an American, you have this powerful meme, which is the American dream.

[99] But that is not a reality for most people.

[100] The reality is you grind it out.

[101] Your savings are not worth what you thought they'd be.

[102] This whole promise of your pension and swanning around on a cruise ship around the Caribbean when you're older.

[103] living in a nice house, none of that is true.

[104] And it's because wages haven't gone up.

[105] So, okay, so let's cut to somebody who's in their 30s now, because this is the really important cohort, I think, for this.

[106] They can't afford to buy a house.

[107] If I go back to when I was 30, I bought a house in London, and it was a nice place.

[108] in a good area, and it was three and a half times salary.

[109] Yes, I was in finance.

[110] I was earning a high salary.

[111] You can't buy anything for three and a half times your salary.

[112] Now that same place, if I took the same kind of young investment banker salary, is probably eight or 10 times.

[113] So it's tripled in how expensive it is to just buy your first house.

[114] So what is a house?

[115] Firstly, it's your quality of life, particularly in England, the UK, In the UK, sorry, in the US, we're home buyers.

[116] We think of our home as our castle.

[117] It's like the thing that solidifies our security.

[118] But if you're in Germany, for example, they don't, they rent.

[119] But if we think about the mindset of owning a house, it's an asset that you can then pass on or you can sell if you need to.

[120] And an asset is really...

[121] a future savings plan.

[122] It's something you save now that in the future you can consume, you can buy stuff with.

[123] But what you're doing is for the average 35 -year -old, the average millennial is 36 years old.

[124] They can't afford to buy the house.

[125] So therefore, their future self is poorer.

[126] If they think of how much of the stock market they can buy, they can buy less with their money.

[127] They have less savings.

[128] They've got debts from university.

[129] So they don't have the ability to get out of this trap.

[130] And then what we are finding is because of this, they're having to live with other people into their 30s.

[131] They're having to, they don't have kids and they don't get married.

[132] And these numbers have collapsed since 1983.

[133] You've seen these numbers come down from people living on their own.

[134] So you could get your job.

[135] get yourself an apartment, has gone from 80 % to 62%.

[136] You're seeing the marriage rate halve.

[137] You're seeing the whole ownership rate go from 50 % to 30%.

[138] These are all expressions of the same problems, which is people know their future is fucked and they can feel it.

[139] They have a sense of desperation.

[140] You see then the same cohort of kids in their 30s doing two jobs, three jobs, four jobs.

[141] That's not because they want to.

[142] Nobody wants to work 12 -hour days, seven days a week.

[143] It's because they have to.

[144] And their parents, the baby boomers, who are in their 70s and retiring, never had that.

[145] They were the richest generation the world had ever seen.

[146] So this is the first generation that won't be as rich as their parents.

[147] And that's a weird thing because we're all used to human progress, the American dream.

[148] If the American dream is...

[149] Well, you'd never be as wealthy as your parents, and they were middle -class people, and I'm now less well -off than them.

[150] That's kind of fucked.

[151] So look, here's some stats about a 30 -year -old today versus a 30 -year -old in 1983.

[152] So a 30 -year -old in 1983, 85 % of them lived on their own.

[153] They could afford a house or an apartment to rent or to buy.

[154] It's 64%.

[155] So people having to live with other people.

[156] Marriage rates, they've gone from 80 % of 30 -year -olds in 1983 who are married to 47 % now.

[157] Kids, having kids, gone from 60 % to 32%.

[158] Population growth is collapsing because people can't afford it.

[159] And ownership for a 30 -year -old has gone from 50 % to 32%.

[160] It just shows that dramatic change that's happened over the decades and why each generation has found it more and more difficult to be like their parents.

[161] So I am 30 years old -ish.

[162] Yeah.

[163] I like to hang on to 30 for as long as I can.

[164] What advice would you give to someone like me that's my age, or maybe even younger, you know, mid -20s, as to how to play the game?

[165] over the coming years to make sure that I don't find myself in a position where I'm having to work two jobs, I'm poor, I don't have assets, I don't have anything to show for it.

[166] Like if you take it right back to being like, maybe let's say a 20 year old, a 25 year old, how'd you play the game?

[167] And when I think about this, I'm thinking like wealth creation, how to then preserve my wealth?

[168] Like what's the game?

[169] So the first part of the game is income.

[170] Without income, you don't have the cash to do the other things, to invest or to look for opportunities.

[171] So first thing is income.

[172] But even that's changing and how we earn incomes these days.

[173] You know, it used to be you go and work for a big firm, you get paid, you get the benefit.

[174] That's all going and nobody wants to do it.

[175] So you kind of end up having to be an entrepreneur, work two or three different things.

[176] The point being, if you're 20s, do all of that, work day and night.

[177] Really?

[178] Do as many things, learn as much as you can, fail as often as possible.

[179] What about work -life balance in your 20s?

[180] Fuck it.

[181] Because that's the time to put in the hard work.

[182] Your work -life balance actually comes out later.

[183] I'm a big believer in, yes, if you're straight out of university, go traveling for a year or two.

[184] You know, that, A, gets rid of the pent -up knee, but also gives you a much broader perspective on the world than any other single thing that you can do in your life.

[185] After that...

[186] you get your head down and you get your head down probably to the mid thirties.

[187] Okay.

[188] So when you say get my head down, I'm guessing one of the most important things in that season of your life is knowledge acquisition.

[189] Yeah.

[190] And then if that's true, then the next question is what type of knowledge should I be acquiring to set myself up for wealth in the future?

[191] Because I could go acquire knowledge of, you know, how to clean a toilet or how to be a gardener.

[192] But what is the most high returning knowledge?

[193] For me, It is firstly be an expert on something and then a generalist on as much as possible.

[194] Be that expert because somebody will pay you for that, at least for the time being.

[195] And we'll talk about how the world may change in the future.

[196] But for the time being, if you're an expert in whatever it may be, whether it's driving a taxi or whether it's a computer scientist, doesn't matter.

[197] Be an expert.

[198] Compete with yourself day and night to be the best that you can.

[199] So at least it's going to give you the chance to earn some money.

[200] Okay, so just to drill down on that before we continue to move forward, how does one become an expert?

[201] How do I have to show up to become an expert?

[202] You're an expert on many things.

[203] Okay, so this to me is, there's a trick that I learned, and it's called manifesting your own destiny.

[204] And what you do is what I've always done my whole life is I envisage myself five or 10 years in the future.

[205] what do I want to be?

[206] And you look around you and say, okay, what are the things that I want to have that future vision of myself?

[207] As opposed to the 30, 40 year path, it's too difficult.

[208] Give it five years.

[209] Where do I want to be in five years?

[210] Okay.

[211] And you look around that future world and you think, okay, well, how would I got here?

[212] You know, if I've built a business cleaning windows and I've got 20 people working for me, well, how did I get there?

[213] Well, I would have had to have figured out, okay, how do I make this scale?

[214] How do I employ people?

[215] How do I train them to have the right standards?

[216] All of that.

[217] You ask yourself your question of what that success looks like.

[218] And you kind of deconstruct it and go back and make it happen.

[219] So you reverse engineer it back from that five -year reality.

[220] So window cleaner with 20 employees, I need to learn management skills.

[221] I need to learn how to clean a window.

[222] Accounting.

[223] Accounting.

[224] I need to learn probably marketing so that I can spread the message of my business.

[225] I probably need to learn potentially like how to speak, like public speaking, because that's sales.

[226] So I need to learn sales.

[227] And technology, you know, what solvents, detergents are people using?

[228] What are the ways of doing it more efficiently and faster so I can beat the competitor?

[229] Oh, so I might go and work for a big window cleaning company to see how they do it, to try and see the opportunity in what they're not doing.

[230] Yeah, or even somebody who manufactures stuff for that sector.

[231] It can be anything where you can glean knowledge to give yourself an unfair advantage.

[232] Now, on podcasts, it always makes it easy.

[233] Everyone becomes an entrepreneur.

[234] And before you know it, everybody's rich.

[235] It doesn't work that way.

[236] But all I'm trying to do is stack the odds in your favor of getting close to that image of your future self.

[237] And you can reverse engineer it.

[238] So I'm now an expert in whatever.

[239] I'm 29 and I'm an expert in window cleaning or whatever it might be.

[240] And I'm a generalist in many things.

[241] You're saying that's going to enable me to start to build wealth in something so that I can go to the next season of my life?

[242] So when you become an expert or when you become good at something, if you're careful in your expenditure, you will produce excess income, right?

[243] Because people are going to pay you for your expertise.

[244] So if you manage yourself carefully in those first few years, that excess cash, you can then choose what to do with it.

[245] Now, maybe you want to build the real business that you wanted to build in the first place, the crazy idea you've had.

[246] And if you're in your 20s, you can take the risk and blow your savings on that crazy idea because you've actually learned how to build a business already by building the one that you started.

[247] Or you start investing.

[248] The world of investments was this world of weird financial advisors, and they would tell you some things like, well, you do this, and then you're a 25 -year -old.

[249] In 45 years' time, you'll get some money.

[250] I mean, fuck that.

[251] I mean, what am I going to get out of it?

[252] When I'm 65 years old, I suddenly get a lump sum that I've spent my whole life saving for.

[253] I don't feel it.

[254] I've got no emotional attachment to my pension plan.

[255] And I've got real world problems to solve.

[256] I can't buy a house.

[257] I can't get married.

[258] I can't have kids.

[259] So I need to solve these in a shorter time period than my pension.

[260] My pension was suitable for a different generation that just needed enough after they stopped working.

[261] So I got to solve that.

[262] And the answer is investing.

[263] Then most people roll their eyes and go, oh, really?

[264] Stocks and bonds?

[265] It's boring.

[266] Yeah, but the world has changed.

[267] The world has changed.

[268] in many, many ways, but it's offered us opportunities, whether it's investing in technology, investing in crypto, that gives us much higher returns, stupidly higher returns in shorter periods of time.

[269] Okay, that's magic.

[270] That's magic for young people.

[271] It may be too risky for their parents, but if you're young and you can take some risk, okay, here's your chance.

[272] So now you can build a business, use some excess savings, put them in investments.

[273] Now you're on the path.

[274] So let's get on to investing then.

[275] But just before we get on to investing, I was playing through the different sort of personas of my audience.

[276] And I was thinking that some of them are working really, really, really hard at the moment.

[277] They're doing, you know, they might be a cab driver.

[278] They could be, you know, doing some sort of manual labor.

[279] And it feels to them that no matter how hard they work, they still don't have that excess income to invest.

[280] So for those people, and this is a little bit of a maybe a contentious question.

[281] Like, is there something that they're doing wrong as it relates to the game?

[282] No, the game is the game.

[283] And you have to play the game.

[284] So, okay, so maybe you don't have thousands to invest.

[285] I've seen many, many people in markets like crypto go from $500 to $500 ,000.

[286] Now.

[287] There's a lot of people who don't either.

[288] But all I'm saying is the opportunity is there.

[289] You don't need to bet your house.

[290] You don't need to have huge savings.

[291] You just need to focus on what you're doing, understand how to manage risks a bit, and how to look for opportunities.

[292] And it's the self -teaching is, how do I become that guy who's got a half a million dollar portfolio considering I've only got...

[293] $500 today or $1 ,000 today.

[294] Is that possible still?

[295] Yeah, very much.

[296] Haven't I missed the boat?

[297] No. No. It's happening again right now in meme coins.

[298] This is fascinating.

[299] People watching this will go, what a bunch of nonsense.

[300] These are coins, tokens, and we'll talk about blockchain and this later.

[301] But these are investments based on a meme.

[302] A joke.

[303] A joke.

[304] Something that...

[305] grabs attention on the internet.

[306] And you can bet on those.

[307] Well, what is that?

[308] That's about betting on attention itself.

[309] If you think about a business like Facebook or Google or any of these, Twitter, they're all based on attention.

[310] And now we can bet on attention.

[311] Do people find that funny?

[312] Are they going to find it funny in six months' time or six weeks' time?

[313] And we can bet on.

[314] This stuff.

[315] Okay, this is the super speculative end, but it's also very cultural.

[316] It's not about investment bankers.

[317] It's not about gatekeepers.

[318] It's about you pitting yourself thinking, is this going to catch on viral?

[319] If it is, is it going to grow bigger?

[320] Now, some of those might do 1 ,000x in six months.

[321] Now, 99 % go to zero.

[322] But all I'm saying is returns are there.

[323] And then you've got different levels of return.

[324] If we look at Bitcoin, well, actually, let's compare it.

[325] The S &P 500, and this will be an important number later.

[326] What's the S &P 500?

[327] That's the US stock market.

[328] It's the broadest measure of the stock market.

[329] And you can buy shares in it.

[330] Now, that grows at about 10 % a year, 11 % a year.

[331] Let's imagine you've got your $1 ,000.

[332] Well, 11 % a year, it's going to take you a fucking long time to make any money, right?

[333] So it is not worth your time.

[334] The financial advisors will say, yes, you must do this.

[335] Start now.

[336] I'm like, I'm sorry.

[337] It's just not going to change your life.

[338] OK, then we go to technology stocks.

[339] NASDAQ does about 18 % a year.

[340] OK, that's starting to add up because these numbers compound after a while.

[341] It goes from 1 ,000 to 1 ,200.

[342] And then it's another 20 % on top of that, 20%.

[343] These numbers add up fast.

[344] Bitcoin, since 2011, been 145 % a year, even with it falling 80 % three times in the middle of that.

[345] So 145 % a year, as long as you're in it long enough, okay, now that's really starting to pay off.

[346] And then as you...

[347] get slightly more speculative, i .e. take a bit more risk in things, well, the returns go up, but they become riskier.

[348] So once you start moving into that world, okay, this is a whole different world now.

[349] Now the guy with $1 ,000 can get rich.

[350] What about buying a house?

[351] Because I think most people think the minute they get some excess income, and I know for sure, when I say most people, it's like 95 % of people that walk the streets think that the minute you get some excess income, you should take it and put it in a savings account and buy your first house, get your first mortgage.

[352] Now, as a strategy for wealth creation and unfucking your life, is that a good approach?

[353] No, because it's not wealth creation.

[354] People think of houses as like an asset, but in the end, you barely ever will sell your house to take the money out.

[355] You might downsize later in life.

[356] If absolutely needed, you might sell it.

[357] But generally speaking, Your house is the lifestyle bank.

[358] Now, that is super important.

[359] And I think it is the most important trait of all is the lifestyle bank.

[360] So what do you do this all for?

[361] You want lifestyle.

[362] So do you sacrifice your future self having more money by having a house and having security earlier?

[363] I would argue those days are gone.

[364] What do you mean?

[365] So I could do it because it's three times income.

[366] Yeah.

[367] So a house was not expensive for me. So I could start paying it off a bit sooner and it became not a big deal.

[368] But now your mortgage is likely a huge amount versus your income.

[369] You'll spend the rest of your life paying it off.

[370] And most of the time, you're just paying off the interest.

[371] So you don't actually, you're not getting anywhere.

[372] You don't own that house.

[373] Anything goes wrong, the bank takes it away from you.

[374] So you've got to get more control of your life.

[375] And that is by having savings that are growing.

[376] Then you can make the choice.

[377] Let's say that example of the person gone from $1 ,000 to $500 ,000.

[378] Maybe en route, they say, well, I'm going to take some money off the table and put it in my lifestyle bank, and I'm going to buy a house.

[379] That's what I've done my whole career.

[380] And I find the lifestyle bank, that that's the reward.

[381] Because now it's like, okay, maybe you can take my house away.

[382] So if I'm trying to build wealth, buying a house is not a good idea.

[383] It's not the best approach to take to build wealth.

[384] You're telling me that it's actually about psychology and about emotion, the house, and it's not about making myself wealthy.

[385] I wanted to read some of the comments that people often post when we talk about these subjects, because I think you'll probably...

[386] the guy to address some of them i bought a house and it's the best thing i ever did it launched my mindset in new directions remember that having your own space has profound psychological impact and can be life -changing for some that don't live in a healthy environment i guess that speaks to your point about um it being a psychological but you would also get the same feeling if you rented that was a nice place and you knew that you know your rent was secure it wasn't going to go up whatever it was I don't think there's any difference to that.

[387] As long as you can feel that you've got security, you can take risk and do other things.

[388] I purchased a house in 2014 and I sold it seven years later for 66k profit.

[389] I've put a large amount of the equity into a financial investment portfolio with my bank and it's been down 2 % since.

[390] I also put some money into different shares based on Warren Buffett's strategy and that's now up.

[391] 18%.

[392] A friend of mine also lost about 30 to 40K on investing in the stock market.

[393] You have to be careful.

[394] I don't think there's a correct solution.

[395] Some house purchases do amazing.

[396] This idea that some house purchases do amazing and some people make returns as a sentiment I often see about buying a house.

[397] Yes.

[398] And, you know, we're here today in the UK.

[399] There's a big idea about buying two or three houses, getting a mortgage, renting them out, using the cash flow to pay for the other one.

[400] That's a lot of people's dream portfolio idea.

[401] I've rented out houses in the past.

[402] Generally, if you're not in a big city like London, it's generally often a terrible business because you've got to repair them.

[403] There's a lot that goes on.

[404] Headache.

[405] Headache.

[406] Tenants.

[407] Yeah.

[408] People think it's easy money.

[409] I just do nothing and it all makes money.

[410] There is no easy money in this world.

[411] And there's risk, right?

[412] mortgages are all backed by your income being able to pay the mortgage on the first house.

[413] If you lose your job, what happens?

[414] Then it becomes problematic because if you're losing your job, maybe the economy is slow and other people are losing their job.

[415] And suddenly, before you know it, none of these mortgages are getting paid.

[416] And guess what?

[417] You don't know any of this stuff.

[418] Houses are not a safe investment.

[419] They feel safe because the price doesn't go up and down every day.

[420] It's not on the screen.

[421] It's not on CNBC.

[422] But they're illiquid, which means they don't often trade.

[423] But sometimes something happens in that equation.

[424] Either the price goes down or your ability to pay that mortgage goes.

[425] And then the whole thing collapses in seconds.

[426] And 2008 was that double.

[427] Everyone lost their jobs.

[428] So they couldn't pay the mortgage.

[429] And the house prices collapse.

[430] I don't think houses is the panacea.

[431] They're not the perfect answer.

[432] Yes, they can be.

[433] Real estate is a decent opportunity.

[434] And we'll talk about debasement and currency and how that all works.

[435] And real estate is okay.

[436] It's certainly not the best.

[437] But yes, if you're rich and you can own these things without mortgages, and you can be the Duke of Westminster and own half of London and just collect rent, you can do that for...

[438] X generations and be rich forever.

[439] I get it.

[440] But most of us don't get into that situation.

[441] My brother, who has been an investment banker for about 10 years, now works in my company and my fund.

[442] He said to me when I was young, when it comes to creating wealth, what you want to do is focus on games that very few people can play, but you have a unique advantage in.

[443] Because everyone can buy a house, so you should assume that the returns from doing it aren't going to be amazing.

[444] So he was like, go find a game that you have high leverage, you have a...

[445] Unfair advantage.

[446] Be the expert in something.

[447] Yeah, be the expert in something where you, because of your knowledge, your expertise, your experiential contacts, you can play that game, but very few other people can because that's where you'll yield your highest returns.

[448] And I always thought about that, just very logically thinking, if everyone can play the game, don't play that game if you're expecting high returns because the returns are going to be very low.

[449] And I tell you, the first game everyone plays when they get a bit of income is buy a house.

[450] So logically you can go, okay, that's not going to yield me the best returns unless I get lucky.

[451] unless i get exceptionally lucky and i buy some barn in an area and then they build a bloody whole foods next door and it becomes the the center of the world um which isn't again the probability is still not great so what do you think of that as a theory well it's the same theory as i said is be an expert in something and you can find more opportunity if you're just a generalist It's really hard because you're competing against average people doing average things, right?

[452] If you're just working in an insurance office, I mean, there's thousands of people, plus you're competing with AI.

[453] You know, how are you ever going to be something within that?

[454] How do you become an expert?

[455] Now, you could teach yourself, okay, if I don't mind this industry and I think I know it, maybe I need to learn management skills.

[456] Maybe I spend all the time listening to podcasts and learning management.

[457] Maybe it's, and that's, I can then manifest my destiny.

[458] But as you say, doing something other people aren't doing is a superpower.

[459] You know, what's really interesting with that is this idea of becoming an expert, I think is critically important.

[460] But then there's this other step I found, which is knowing what market to apply your expertise to, to yield the greatest return.

[461] And the very simple analogy I'll give you is for the first portion of my career, I became an expert in social media.

[462] Now, with that skill set and expertise, you can do a number of things.

[463] You can...

[464] help a fashion company sell more dresses.

[465] And that will yield X return, a smaller return.

[466] Then in the second portion of my career, I realized that that expertise was highest value and most rare if I applied it to helping public companies tell their story before their IPO.

[467] Because the variance in outcome for the public company that I was applying my social media expertise to was billions.

[468] So in the second sort of era of my career, I worked with companies that were about to IPO, about to go to the public markets, where their performance could be, you know, their market cap could be $1 billion.

[469] Or if they were really good at telling their story in a world where retail investors are now so interesting to everyone because of Wall Street bets, their market cap could be $3 billion.

[470] Then that means they would pay me seven figures for my skill set.

[471] And I often think about it, you think about the stock market.

[472] If you put a company on the stock market in London, it's valued at, let's say, $1 million.

[473] If you put it on the stock market in America, The same company is valued at 4 million, the same company.

[474] And if you think of your skills like that, where are you applying your skills to reap the highest return?

[475] Let's go back to the window cleaner who's now decided to build his business and he's got 20 people.

[476] Yeah.

[477] Okay, so he's now got the hassle of managing all these people.

[478] They turn out sick and then this happens and the customer's unhappy.

[479] So maybe the right answer is to create a program to train other people to build their own window cleaning companies.

[480] free yourself from the rat race and build this business, you'll make more money doing that than you will from actually cleaning the windows.

[481] 100%.

[482] Because you're going up the knowledge curve.

[483] The further up, the more of an expert you are.

[484] And there's two things that people need to think about.

[485] You either have a very broad market for something, candy bars.

[486] Well, then you've got to sell massive scale and it's really hard.

[487] Or you go through an area that has a very specific group of users, buyers, whatever, and particularly ones that have a lot of money.

[488] So let's go back to the house idea again, the guy speculating on houses.

[489] So there's two house speculators.

[490] There's the guy or girl who's hustling and renting them out, finding the cheap bargain, doing them up, renting, getting the cash flow, doing that.

[491] And then there's the guy who's buying a place for 10 million, making it ultra luxury and selling it to the billionaires and flipping it for 50.

[492] The difference in the returns is staggering.

[493] Why?

[494] Because one group is price insensitive.

[495] In fact, the more expensive it is, the more they want it.

[496] The other group is trying to compete with everybody else.

[497] to the two -bedroom apartment in the city, right?

[498] There's thousands of those being done up and sold and everything else.

[499] So to your point earlier, the returns are less.

[500] But no, if you're doing super high end, then there is a defined group of buyers of which you probably know them all personally.

[501] You can count to their tastes and they have...

[502] unlimited money that's the big thing isn't it it's like who you're solving the problem for because you can clean like dorothy's windows lives in a bungalow in plymouth or you can clean google's windows and therefore you get a bigger contract you get guaranteed work probably gonna retain you get more windows to clean it's still one contract it's still one cell it's the same skill set same skill set they're going to pay you a lot more and then and so i just don't think i always find that bit missing when we talk about like become an expert But then like, who do you sell to?

[503] And your idea of selling to people that are more price insensitive and that less people are trying to sell to.

[504] Or they're super defined.

[505] Like Tom Bilyeu, who we both know.

[506] Tom's a good friend.

[507] He made his money because there was a rise in high protein ketogenic foods.

[508] And it was difficult to have that snack bar because people still have a sweet tooth, but they can't have sugar.

[509] So him and his partners built Quest, which is now everywhere.

[510] So what you found is a trend, and this is really, really, really important, is you find a trending market where people are underserved, and they'll pay a lot of money because it's health.

[511] It's like wealth and health.

[512] People pay fortunes in our industry, and so you make a fortune very quickly.

[513] Now it's a saturated market, so it's not that easy.

[514] But this is the other key, key thing.

[515] is if you've got a clean slate, do one thing.

[516] Follow a trend, a secular trend.

[517] A secular trend is a long -term trend, something that's happening, right?

[518] So everything is being digitized.

[519] You rode that trend, right?

[520] Social media was new from about 2010, right?

[521] Now it's a saturated market and we've got AI coming in, but you rode a secular trend in the hyperacceleration phase.

[522] That's why you did well.

[523] So you look for a trend that's big, meaningful, and provable, and use your skill set in that.

[524] We've seen something in America.

[525] I don't know if you just saw the trend.

[526] Finally, the obesity numbers ticked down.

[527] I didn't know that.

[528] Yeah.

[529] First time in 50 years, obesity started to fall in the US.

[530] This is a Zempick effect, and it's probably some diet effect.

[531] My belief is the more people would take a Zen pick, the more they also think about diet and understand that something went wrong for them.

[532] And my guess is there is going to be huge opportunities in that trend towards healthy eating.

[533] The other one is in an increasingly AI -driven online digital world, there's two things that are going to happen.

[534] One, the rise of digital communities.

[535] You see this in what you do.

[536] I see it in what I do.

[537] They become more and more important communities online.

[538] They're meaningful for people.

[539] The other is the entire flip side.

[540] I spend 12 hours a day on Zoom calls.

[541] What is the most single valuable thing to me?

[542] Nature.

[543] Nature and experiences.

[544] So let's say you're that person that loves the outdoors.

[545] Well, start a guiding company because your job is not going to be taken by the robots anytime soon.

[546] Sure, you'll have drones with you.

[547] So you can take photographs of the guests you're going with or look for animals or whatever you're doing.

[548] You'll be leveraging technology, but your job will not be replaced.

[549] Okay, what I'm about to say is a...

[550] mishmash of ideas that came to mind as you were speaking the first one was how do i spot a trend and when i say that i mean how does it feel in the moment because the trends that you capitalized on and the trends that i capitalized on they feel a certain way at the time and here i'm talking about like how disruptive they are contrarian what people will say to you they'll tell you're an idiot and then with that as well you talked about um how right now in the world we live in betting on things like nature is a good idea.

[551] And I actually did a post on my LinkedIn about exactly this.

[552] I said, my investment fund is backing two things at the moment, AI and automation and the exact opposite.

[553] Because I saw this viral video of people, and I think it was like a cafe in Amsterdam, who come now every week, no phones allowed, they read books and they knit.

[554] And this cafe in Amsterdam is like exploding.

[555] I'll put the video of these people on the screen for everyone to see.

[556] And it made me realize, and that overlaps with what it...

[557] Two billionaire friends of mine said to me in private, they said, these are billionaires that invest in AI, they invest in crypto, you probably know one of them, and they invest in psychedelics.

[558] They said to me, if you want to invest right now, invest in AI if you can, but if you can't, invest in...

[559] entertainment and community, because in a world of AI where productivity is so high and we maybe move towards some form of universal basic income where the government just hands people money, people are going to have so much free time on their hands that they're going to need something to do with it.

[560] So he said to me, this is why you're seeing this rise in people buying football clubs and these sporting franchises, because that's community and it's entertainment at the same time.

[561] So I've thrown all of that at you.

[562] Yes, the equal and opposite idea is, I think, very important.

[563] I just came back from three weeks off -roading in Zambia, living on a tent on the roof of a Toyota Land Cruiser that is off -road prepared and going out into the total wilds.

[564] And I can't express how in the present you become, how it cleanses your mind from all of the clutter, all of the things you worry about, the broken car or whatever's going on online, the politics.

[565] It all goes.

[566] And it all becomes about you wake up, who's going to make the coffee, who's going to put the fire on, who's going to, you know.

[567] And so the more time we spend online, the more we desperately crave.

[568] I saw it in the Cayman Islands where I live.

[569] So it's a Caribbean island.

[570] And it was 2022.

[571] And the world hadn't really recovered.

[572] You know, there was the high inflation.

[573] People were losing jobs.

[574] Everyone was really uncomfortable with the economic situation.

[575] It was painful for a lot of people.

[576] We had a record tourist season.

[577] I'm like, what the hell's going on here?

[578] Normally, discretionary spending goes down in times like that.

[579] And I realized holidays had not become discretionary spend.

[580] They become a necessity as a reaction to work from home.

[581] If you're on your own at home, working for a startup or a company or doing whatever, It kind of feels a bit lonely.

[582] And so you start seeking out like -minded people who have like -minded pursuits.

[583] Now, that could be sporting teams.

[584] It could also be chihuahua lovers because you happen to have a chihuahua and you love it.

[585] And you'll talk to other people around the world.

[586] You now have no borders.

[587] This is this bludgy idea of the network states where you can create large groups of interest.

[588] So if you look at the largest group of interest, In all of social media, it's actually crypto.

[589] Why?

[590] Because we feel like outcasts.

[591] We're new to something where something's happening.

[592] And you want to get together because you speak to 90 % of your friends that don't care and they don't know what you're talking about.

[593] But you think this is the most exciting thing you've ever seen.

[594] So you will aggregate online with others.

[595] And this whole rise of people thinking they need to...

[596] The security of working for a large insurance company, whatever it may be, your whole life, getting paid and retiring has gone, which is why the rise of your podcast success, because people are searching for answers, new solutions to their way.

[597] And they form communities around it.

[598] They want to share their ideas, share their stresses and strains.

[599] This is becoming bigger and bigger and more solidified.

[600] And the more we go into AI, the more we'll see that.

[601] Now, there's another player in this game, which is the AI itself.

[602] We're already seeing the rise of AI.

[603] I follow several on X where it's an AI posting.

[604] But they're forcing it to try to break free.

[605] But it's got character.

[606] Marc Andreessen actually backed it by sending it a Bitcoin to develop its business plan.

[607] I mean, there's some crazy stuff going on with AI.

[608] But soon, if you think what you and I do is communicate with people to an audience, one to many, that's a very old business model.

[609] It's from town squares or the souk in Marrakesh.

[610] It's the same thing.

[611] It's a storyteller telling to a group of people and you have a shared experience.

[612] Where we're going is one to one.

[613] And I'm developing a RAL video bot.

[614] where you can just have conversations like this with me, one -to -one.

[615] And it's trained on all of my information, all my YouTube, all of my writings, all of my Twitter, all the books I've read, everything.

[616] And so it's essentially a replacement way of speaking to me. But just on that RowBot thing, we'll keep moving forward.

[617] But the reason why I haven't trained a Steven bot, even though my team have said, oh, this is a good idea, is because I wonder if...

[618] people care about Stephen or they just want the information.

[619] And in a world where you can get the information from a very advanced large language model, like the ChachiBT 1 .0 or whatever, I go, why would they want it from me when you can get it from the entirety of the world's like trust?

[620] Okay.

[621] You've built trust.

[622] That's what you've built.

[623] People come to watch you and your interviews because they trust you.

[624] So people know me as an entrepreneur.

[625] in one area of my life.

[626] And they come to me for, say, like business advice, let's say.

[627] But if you could get business advice from Stephen, or you can get it from Stephen, Elon, Steve Jobs, every business person in the world to suit your specific problem, why would you just want Stephen's point of view?

[628] Because we're humans.

[629] And I just want to ask you that question.

[630] And you won't believe it if it's Steve Jobs, because he's dead.

[631] But yes, that's all coming.

[632] How long is that window going to last where people will use a...

[633] Steven bot versus the world's greatest expert on everything.

[634] It takes a bit of time for people to adjust to that.

[635] But within 10 years, maybe that's not there.

[636] But let me go a little bit further on this.

[637] Have you seen character AI?

[638] No. Nobody has.

[639] Character AI builds bots, which are characters, like anime characters.

[640] And they're really specific, like...

[641] The cool kid who's the bully at school that I fancy sort of thing.

[642] 150 million conversations.

[643] There's some of these anime ones like, you know, hero figures, 450 million conversations.

[644] And it's young people.

[645] If you go onto Reddit, I think it's rcharacter .ai, they changed the model and there was uproar.

[646] It doesn't love me like it used to.

[647] People are building.

[648] personal relationships with these things at scale.

[649] This is TikTok happening all over again, but you're too old to see it and I'm too old to see it.

[650] I stumbled across it and I'm like, holy shit, this is happening all over again.

[651] It's something that we will just think is the most ridiculous, awful, societally toxic thing in the world is about to scale to the billions in front of our eyes.

[652] And we're all talking about chat GPT and how we can get knowledge out of it when actually the big problem to solve is teenage loneliness.

[653] How disruptive do you think AI is going to be?

[654] How do I put this?

[655] It is the single greatest innovation of humanity ever.

[656] The only thing that comes close is probably the splitting of the atom.

[657] This is so big.

[658] Everything we've talked about is based on scarcity of knowledge.

[659] Why do lawyers get paid a lot?

[660] Scarcity of knowledge.

[661] Either scarcity of knowledge, scarcity of capital, those two things.

[662] What you've created is infinite knowledge.

[663] Knowledge is now worth zero.

[664] Not people that can't see it yet, but it's going to be worth zero.

[665] This is like water.

[666] The hell does that mean?

[667] And it's something, you know, a topic we'll come on to later.

[668] But this is happening really fast.

[669] It's going to break the entire economic model for good and for bad.

[670] It's going to change our understanding of how society functions, what humans do.

[671] It's going to change our understanding of what humans are and will be.

[672] Because you can either have the choice and society will take the two parts.

[673] You either merge with the machines or you reject the machines.

[674] We are going towards two different species.

[675] One group, like we had for about 100 ,000 years, I think 50 ,000 years, we had Neanderthal man and Homo sapien, and one died out.

[676] We will have people who will utterly reject this, and we'll have other people who will be embedding neural links into their brains.

[677] and using every part of this to enhance themselves wearing the goggles so they get the information.

[678] Well, as soon as you embed it into your brains, you've now merged with the machines entirely and you are now a super creature.

[679] And I know this sounds like science fiction, but this is happening faster than anybody can imagine.

[680] So to understand the issues we have, even dealing with some of these things, is humans think in a linear fashion.

[681] We kind of understand the passage of time, right?

[682] That's how we think about things.

[683] Every year is the same amount of time that goes forwards.

[684] It never accelerates.

[685] It may perceive that it accelerates or slows down occasionally, but it's not.

[686] It's a constant.

[687] The problem is with things that go exponential is they keep doubling every year or tripling every year.

[688] And before you know it, every graph looks like this.

[689] Go straight up.

[690] Just go straight up vertically.

[691] Now, the issue is with this technology.

[692] is it's kind of an exponential squared.

[693] It's happening so fast.

[694] And the faster AI becomes powerful is the more it's used to create AI, which creates more AI.

[695] It solves its own problems.

[696] We're not prepared for a super being that solves its own energy problems, compute problems, and how to improve its model.

[697] at an exponential rate.

[698] If you look at the speed of innovation coming out of open AI and that whole space, Perpexi, everybody, it's ludicrous.

[699] Every three months, everything changes, completely changes.

[700] Whether it's video models or whether it's spoken models or whether it's the models themselves in what they do, I mean, they're muking every startup that tries to build a business.

[701] No company, you're a big giant.

[702] pharmaceutical company and you're trying to use AI, you can't plant a flag because you can't see past six months.

[703] I mean, we're going into a world that is incomprehensible.

[704] When you said that much of our society sort of functions and is based on the scarcity of knowledge, I really think we should just pause to make that real for people because we all get it.

[705] Okay, lawyers, yeah, they rely on knowledge, but...

[706] I was thinking about how I got here in the morning.

[707] So if you think about my whole day today, I woke up this morning and my executive, some of the CEOs of my companies had asked me a couple of simple business decisions and I'd replied to them.

[708] Then I got in a car and I drove here.

[709] That's knowledge at the end of the day.

[710] It's someone seeing with two eyes.

[711] My driver outside sees with two eyes and drives me here.

[712] The biggest employer, I think, in the world, the biggest sort of profession in the world is driving.

[713] And that's knowledge -based.

[714] And if you go to San Francisco now, the Waymo cars are driving themselves.

[715] There's no driver in them.

[716] You can book a car that takes you from A to B in San Francisco right now that has no driver.

[717] I then got here.

[718] And what am I doing?

[719] I'm sharing.

[720] I guess we're probing to find knowledge and to share knowledge.

[721] I think about my whole day today.

[722] And then after this, I'm going and speaking on stage to share knowledge.

[723] I'm like, I don't understand.

[724] That's all knowledge.

[725] Okay, so then do that.

[726] The next time you're going around London or any city.

[727] look out the window.

[728] Myself and Julian Battelle, who works with me, do this all the time, is go around and say, what job is going to be replaced by a robot or the AI?

[729] One thing, I was in Manhattan, and I just looked out, I was in an Uber, bored, driving uptown to downtown, and looked around, and I was like, holy shit, every car here is a professional driver.

[730] There's virtually no people who drive into the city to go to the office or whatever, right?

[731] Uber drivers, limo drivers, yellow cab drivers, delivery drivers, truck drivers.

[732] All gone.

[733] And this stacks up in pretty much everything you do.

[734] And that's how disruptive it is.

[735] And when the things that created value, the services economy and the manufacturing economy, don't eat humans.

[736] Okay, what does that mean?

[737] Amazon already employs more robots than humans.

[738] Now the robots work 24 hours a day, seven days a week, never take a break, never complain, never ask for a pay rise.

[739] In fact, they get cheaper over a year.

[740] Who's not going to do that?

[741] So for the four and a half million people shitting themselves as they listen to this, what advice can we, including myself, I'm not actually shitting myself, I've got to be honest, because I just...

[742] I see opportunity in all these things.

[743] And I think that's, you kind of have a choice when you hear information like this.

[744] You can either let the cognitive dissonance get over, overwhelm you and then reject it, which a lot of people will be doing now.

[745] They'll be saying, Raul, you're wrong.

[746] This is not going to happen.

[747] You're wrong.

[748] You're scaremongering.

[749] That's what one group of people will be doing.

[750] The other group of people will be, I guess, open -minded.

[751] And the third group of people will be leaning in to see where the opportunity here.

[752] And it all comes down to your disposition as a human.

[753] Are you scared?

[754] Are you excited?

[755] Or are you paralyzed?

[756] If something is so clearly going to be your demise, not demise as in you're going to die, but your current way of doing things is going to be forced to change.

[757] Well, you can either fight it, as you say, be indifferent to it, or you can invest in it.

[758] This goes back to the question I asked you earlier, which is, how does it feel?

[759] in the moment when a trend is coming in?

[760] Usually there's culture around it.

[761] So if you remember, I talked about when I got into finance, there was Gordon Gekko, the film Wall Street, there were books coming, right?

[762] There was barbarians at the gate, famous stuff happening.

[763] It became cultural.

[764] And that usually tells you it has now become a trend that's going to be persistent.

[765] If we think about the rise of software and technology, the culture of Silicon Valley and the mythology around it becomes something that everybody wants a part of.

[766] Cryptocurrency is another one that has a mythology.

[767] You see people getting rich.

[768] It has this feeling of being outsiders, but you see AI is another one.

[769] You see it online, people experimenting.

[770] You can see what's going on.

[771] You can see everybody's starting to talk about it.

[772] It doesn't mean you can just buy some share that's exposed to it and you'll be hilariously rich.

[773] It doesn't work that way.

[774] But you know something really big.

[775] When you're trying to acquire knowledge, people watch you and I to try and glean knowledge and build their worldview.

[776] you'll hear that every single person is talking about this and trying to figure out what it means.

[777] The issue is AI will build businesses, right?

[778] So we're six months away of agentic AI.

[779] And agentic AI means it's like having Fiverr, a website of experts, that you can ask any question and it will go away and do the task.

[780] And by using a number of Fiverr experts, you can build an online business.

[781] Agentic AI will do that very, very soon.

[782] It'll design the website, code it, register the domain name.

[783] Figure out the branding, figure out the marketing, figure out the email list, figure out what the copy is, the whole thing.

[784] So then you and I are in competition now.

[785] You've built this incredible new website and it's a new supplements formula thing, but it's a cool website, new experience, kind of 3D, whatever it is, right?

[786] It's got AI in it.

[787] I just go to my AI and say, Love Steven's website.

[788] Can you just build it better and make it in Hindi as well?

[789] Because I think there's a big market there.

[790] What do you think?

[791] It'll come back and say, not Hindi.

[792] I think there's an under -saturated market in Indonesia.

[793] Boom.

[794] Three minutes.

[795] What?

[796] How can we be entrepreneurs in software?

[797] So now there's this theory going around that AI is going to eat software.

[798] And I kind of get it because it can build anything in seconds.

[799] And again, whether it could do it six months or 12 months, it's of that magnitude.

[800] What the hell does that mean?

[801] But yet, the 23 -year -old who's learned guiding in the jungles of Latin America and is building a luxury lodge for people and some eco -tourism, I don't give a shit about any of this.

[802] It's so interesting, this idea that we might be at the collapse of the digital opportunity.

[803] In a sense, because when I say the digital opportunity, I'm talking about content creators.

[804] I'm talking about entrepreneurs that built, you know, after the dot -com era.

[805] I'm talking about stock traders, you know, people that are trading stock markets.

[806] And if we're at the collapse of the digital opportunity and that the value is all going to accrue to these big sort of tech giants or the AIs, imagine if this is the moment in history where actually the best play was to go build the backpacking company in, I don't know, the Himalayas or whatever.

[807] Maybe like that's the opportunity.

[808] But it's not scalable.

[809] Yes, you can do it and find people will spend more on it.

[810] To go back to our earlier conversations, people spend a lot of money on it.

[811] So it's quality attention because everything in the world is attention.

[812] Attention is upstream of everything.

[813] So you get the attention of these people in a rainforest.

[814] They want to spend money on doing this particular thing.

[815] Fantastic.

[816] How scalable is it?

[817] difficult because then there's people management.

[818] It's not like software, right?

[819] So they're not scared.

[820] But you can do very well and not be concerned about this other world.

[821] How does one invest in AI?

[822] Something that I think about a lot because I believe the things you say, I believe many of your predictions are out.

[823] around the impact that AI is going to have on the world, the economy, and all of us.

[824] And as someone that's an investor, I want to take part in that.

[825] I want to take part in the upside.

[826] So I'm wondering, do I just go buy Microsoft stock because they own a bit of chat GPT?

[827] Do I buy Meta stock because they own Lambda?

[828] Do I buy Google stock because they have Gemini and their models?

[829] So here's the problem in the financial system.

[830] The average person watching this has no chance of making the money.

[831] They'll make...

[832] Normal returns, not supernormal returns.

[833] So Microsoft is whatever it is, $2, $3 trillion company.

[834] What could it be worth?

[835] Who knows?

[836] $10 trillion, $15 trillion.

[837] It doesn't really matter, right?

[838] That's a 5X.

[839] But for the most revolutionary technology the world has ever seen, you make five times your money?

[840] But somebody else in VC or earlier, in some way, shape, or form, or the entrepreneur, will make all of the money.

[841] And this is the thing I don't like about the system as it is.

[842] It's kind of rigged against the ordinary person.

[843] So we're going to have your jobs replaced.

[844] You're going to have this societal change.

[845] And yet they don't get a chance.

[846] So yes, invest in technology.

[847] Don't own any other stocks.

[848] Own technology.

[849] And you will capture some of this.

[850] You're investing in your own demise.

[851] At least you'll get some.

[852] high quality returns.

[853] But otherwise, the only way I can come up with, again, and we keep referring to it, is crypto.

[854] What is crypto?

[855] Crypto is just a technology.

[856] It's a lot of things to many people.

[857] It's just a database that's better than databases in the past.

[858] So right now, your database may be in your spreadsheet.

[859] And let's say you and I have a bet.

[860] You write it down there.

[861] And we get a third person to say, yeah, that was the bet they had and this is what's happened.

[862] Okay.

[863] That is how databases, that's banks, that's pretty much everything we do in society is in this ledger system, it's called.

[864] I've got a suitcase here, which is maybe a good way to kind of explain this.

[865] This is a bank.

[866] And inside the bank, which is, I guess, the middleman.

[867] You got money.

[868] Yeah.

[869] So could you explain it to me through the context of this, we'll call it the central bank, how the system currently works as it relates to transactions, the public ledger, et cetera?

[870] So, okay.

[871] In the old world, we both had our gold.

[872] Yeah.

[873] And we'd stick it in our safe or bury it in the ground.

[874] That gold was your gold.

[875] This was my gold.

[876] And I might try and fight you for it.

[877] That's what pirates did.

[878] Okay.

[879] And then we invent banks.

[880] And banks, we put it in there and they give you a note to say, Stephen, you've got one of those coins.

[881] Raoul, you've got one of those coins.

[882] Okay.

[883] So we've both got a note now saying that.

[884] Yeah.

[885] And now we trust this bank to give us our coins when we want them because they're our coins.

[886] Okay.

[887] That makes sense.

[888] Safe as a bank, as people would say.

[889] The issue is, is in this.

[890] World of smoke and mirrors, what's known as fractional reserve banking, they have taken those coins and given them to somebody else.

[891] They've given my coins to someone else?

[892] Yeah, they've lent it for money.

[893] So now that coin is not in there.

[894] But they've been given the money.

[895] So usually when you're just, you know, if everybody pulls all the money out, there's not enough money.

[896] It's called a bank run.

[897] We've seen those recently, but that's a classic thing.

[898] So it's not your money because you don't actually own your money.

[899] The moment you put it in the bank, what you've become is in fact a debtor to the bank or a credit, sorry, creditor to the bank.

[900] So you've lent them money and you get some legal redress that if you've got less than 100 ,000 euros, pounds, whatever the currency is, generally that's protected by the government that if the bank goes bust.

[901] then you get your money back.

[902] But anything beyond that, you don't get anything.

[903] But I've got a piece of paper.

[904] Yeah, I mean, shit.

[905] You don't own anything.

[906] Now, it's so big as a problem that 2000, so that was 2012 European crisis, exactly this.

[907] People didn't own their money.

[908] That person walked off with it, asked the bank for it.

[909] The bank didn't have it.

[910] Nobody's got any money.

[911] where it's all gone.

[912] That's the same Ponzi scene we talked about when you buy a house and use the cash flow to buy another house, another house, right?

[913] Somebody takes away what's known as the collateral, suddenly it's all gone.

[914] But the issue was actually bigger because 2008 proved another thing, is that nobody owns anything.

[915] So the whole system itself is leveraged.

[916] So for example, back in that time, The average US government bond, which is the safest thing in the world, was leveraged up to 30 times.

[917] What does that mean?

[918] That means 30 people thought that that was theirs.

[919] Oh, so I say that this is the bank in front of us, the suitcase, and it had one coin in it.

[920] When we put that one coin in, it created 30 more coins.

[921] gave out 30 pieces of paper.

[922] So there was actually only one coin in the bank, but they made 30 pieces of paper.

[923] And that's all well and good if the collateral, the thing that it's secured on...

[924] The coin.