Ray Dalio: Principles, the Economic Machine, Artificial Intelligence & the Arc of Life

[0] The following is a conversation with Ray Dahlia.

[1] He's the founder, co -chairman, and co -chief investment officer of Bridgewater Associates, one of the world's largest and most successful investment firms that is famous for the principles of radical truth and transparency that underlies culture.

[2] Ray is one of the wealthiest people in the world, with ideas that extend far beyond the specifics of how you made that wealth.

[3] His ideas that are applicable to everyone are brilliantly summarized in his book, principles.

[4] There are also even further condensed on several other platforms, including YouTube, where, for example, the 30 -minute video titled How the Economic Machine Works, is one of the best educational videos I personally have ever seen on YouTube.

[5] Once again, you may have noticed that the people I've been speaking with are not just computer scientists, but philosophers, mathematicians, writers, psychologists, physicists, economists, investors, and soon, much more.

[6] To me, AI is much bigger than deep learning, bigger than computing.

[7] It is our civilization's journey into understanding the human mind and creating echoes of it in the machine.

[8] That journey includes the mechanisms of our economy, of our politics, and the leaders that shape the future of both.

[9] This is the Artificial Intelligence Podcast.

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[11] at Lex Friedman, spelled F -R -I -D -M -A -N.

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[23] And now here's my conversation with Ray Dalio.

[24] truth or more precisely an accurate understanding of reality is the essential foundation of any good outcome I believe you've said that let me ask an absurd sounding question at the high philosophical level so what is truth when you're trying to do something different than everybody else is doing and perhaps something that has not been done before how do you accurately analyze the situation How do you accurately discover the truth, the nature of things?

[25] Almost the way you're asking the question implies that truth and newness have nothing, are almost at odds.

[26] And I just want to say that I don't think that that's true, right?

[27] So what I mean by truth is, you know, was the reality, how does the reality work?

[28] And so if you're doing something new that has never been done before, which is exciting and I like to do, The way that you would start with that is experimenting on what are the realities and the premises that you're using on that and how to stress test those types of things.

[29] I think what you're talking about is instead the fact of how do you deal with something that's never been done before and deal with the associated probabilities.

[30] And so I think in that, don't let something that's never been done before stand in the way of you doing that particular thing.

[31] you have a because almost the only way that you understand what truth is is through experimentation and so when you go out an experiment you're going to learn a lot more about what truth is but the essence of what I'm saying is that when you take a look at that use truth that find out what the realities are as a foundation do the independent thinking do the experimentation to find out what's true and change and keep going after that So I think that when you're thinking about it the way you're thinking about it, that almost implies that you're letting people almost say that they're reliant on what's been discovered before to find out what's true.

[32] And what's been discovered before is often not true, right?

[33] Conventional view of what is true is very often wrong.

[34] It'll go in ups and downs and, you know, I mean, there are fads and okay, this thing, it goes this way and that way.

[35] And so definitions of truths that are conventional are not the thing to go by.

[36] How do you know the thing that has been done before that it might succeed?

[37] It's to do whatever homework that you have in order to try to get a foundation.

[38] And then to go into worlds of not knowing, and you go into the world of not knowing, but not stupidly, not naively, you know, you go into that world of not knowing and then you do experimenting and you learn what truth is and what's possible through that process.

[39] I describe it as a five -step process.

[40] The first step is you go after your goals.

[41] The second step is you identify the problems that stand in the way of you getting to your goals.

[42] The third step is you diagnose those to get at the root cause of those.

[43] Then the fourth step is then now that you know the exact rules you design a way to get around those and then you follow through and do the designs you set out to do and it's the experimentation.

[44] I think that what happens to people mostly is that they try to decide whether they're going to be successful or not ahead of doing it and they don't know how to do the process well because the nature of your questions are along those lines like how do you know, well, you don't know.

[45] But a practical person who is also used to making dreams happen knows how to do that process.

[46] I've given personality tests to shapers.

[47] So the person, what I mean by a shaper is a person who can take something from visualization.

[48] They have an audacious goal, and then they go from visualization to actualization, building it out.

[49] That includes Elon Musk.

[50] I gave him the personality test.

[51] I've given it to Bill Gates and then give it to many, many such shapers.

[52] And they know that process that I'm talking about.

[53] They experience it, which is a process essentially of knowing how to go from an audacious goal, but not in a ridiculous way, not a dream.

[54] And then to do that learning along the way that allows them in a very practical way to learn very rapidly as they're moving toward that goal.

[55] So the call to adventure, the adventure starts, not trying to analyze the probabilities of the situation, but using what instinct?

[56] How do you dive in?

[57] So let's talk about it.

[58] It is being a, it's simultaneously being a dreamer and a realist.

[59] It's to know how to do that well.

[60] The pull comes from a pull to adventure.

[61] For whatever reason, I can't tell you how much of it's genetics and how much it's environment.

[62] But there's early on, it's exciting.

[63] That notion is exciting.

[64] Being creative is exciting.

[65] And so one feels that.

[66] Then one gets in the habit of doing that.

[67] Okay, how do I know?

[68] How do I learn very well?

[69] And then how do I imagine?

[70] And then how do I experiment to go from that imagination?

[71] So it's that process that one, and then the more one does it, the better one becomes that.

[72] You mentioned shapers.

[73] Elon Musk, Bill Gates.

[74] Who are the shapers that you find yourself thinking about when you're constructing these ideas, the ones that define the archetype of a shaper for you?

[75] Well, as I say, a shaper for me is somebody who comes up with a great visualization, usually a really unique visualization, and then actually builds it out and makes the world different, changes the world in that kind of a way.

[76] So when I look at it, Mark Benioff with Salesforce, Chris Anderson, with Ted, Mohammed Yunus, with social enterprise and philanthropy, Jeffrey Canada and Harlem Children's Zone.

[77] There are all domains have shapers who have the ability to visualize and make extraordinary things happen.

[78] What are the commonalities between some of them?

[79] The commonalities are, first of all, the excitement of something new, that quality of adventure and, again, that practicality, the capacity to learn.

[80] The capacity then, they're able to be in many ways full rage.

[81] That means they're able to go from the big, big picture down to the detail.

[82] So let's say, for example, Elon Musk, he describes, he gets a lot of money from selling PayPal his interest in PayPal.

[83] He said, why isn't anybody going to Mars or out of space?

[84] What are we going to do if the planet goes to hell?

[85] And how do we going to get that?

[86] And nobody's paying attention to that.

[87] He doesn't know much about it.

[88] He then reads and learns and so on.

[89] He says, I'm going to take, okay, half of my money, and I'm going to put it in there and I'm going to do this thing and he learns and blah blah blah and he's got creative okay that's one dimension and so he gave me the keys to his car with his one just early days in Tesla and he then points out the details okay if you push this button here it's this the detail that so he's simultaneously talking about the big the big big big picture okay when does humanity going to abandon the panel, but he will then be able to take it down into the detail so he can go, let's call it helicoptering.

[90] He can go up, he can go down and see things at those types of perspective.

[91] And then you've seen that with the other shapers.

[92] And that's a common thing that they can do that.

[93] Another important difference that they have in mind is how they deal with people.

[94] I mean, meaning there's nothing more important than achieving the mission.

[95] and so what they have in common is that there's a test that I give these personality tests because they're very helpful for understanding people and so I gave it to all these shapers and one of the things in workplace inventory test is this test and it has a category called concern for others.

[96] They're all having concern for others.

[97] This includes Mohamed Eunice who invented microfinance social enterprise impact investing is mohaman unis received the Nobel peace prize for this congressional medal of honor uh one of the um a fortune determined one of the 10 greatest um entrepreneurs of our time he's built all sorts of businesses to give back money and social enterprise a remarkable man he has nobody that i know practically can have more concern for others.

[98] He lives a life of a saint.

[99] I mean, a very modest lifestyle, and he puts all his money into trying to help others.

[100] And he tests low on what's called concern for others, because what it really, the questions under that are questions about conflict to get at the mission.

[101] So they all, Jeffrey Canada, who change Harlem Children's Zone and develop that to take children in Harlem and get them well taken care of not only just in their education, but their whole lives.

[102] harm him also concern for others what they mean is that they can see whether though individuals are performing at a level that an extremely high level that's necessary to make those dreams happen so when you think of let's say steve jobs was famous for being you know difficult with people and so what and i didn't know steve jobs so i can't speak personally to that but his comments on do you have a players and if you have a players if you have a players if you put in B players, pretty soon you'll have C players and so on.

[103] That is a common element of them, holding people to high standards and not letting anybody stand in the way of the mission.

[104] What do you think about that kind of idea?

[105] Sorry to pause on that for a second, that the A, B, and C players and the importance of, so when you have a mission to really only have A players and be sort of aggressively filtering for that.

[106] Yes, but I think that they're all different.

[107] ways of being a players.

[108] And I think, and what a great, a great team, you have to appreciate all the differences in ways of being a players.

[109] Okay.

[110] That's the first thing.

[111] And then you always have to be super excellent, in my opinion, you always have to be really excellent with people to help them understand each other, themselves, and get in sync with them about what's true about them and their circumstances and how they're doing so that they're having a fabulous personal development experience at the same time as you're dealing with them.

[112] So when I say that they're all different ways, this is one of the then qualities.

[113] You asked me, what are the qualities?

[114] So one of the third qualities that I would say is to know how to deal well with your not knowing and to be able to get the best expertise so that you're a great orchestrator of different ways so that the people who are really, really successful, unlike most people believe that they're successful because of what they know, they're even more successful by being able to effectively learn from others and tap into the skills of people who see things different from them.

[115] Brilliant.

[116] So how do you, when that personality being, first of all, open to the fact that there's other people see things differently than you and at the same time have supreme confidence in your vision is there just the psychology of that do you see a tension there between the confidence and the open -mindedness and no it's funny because i think we grow up thinking that there's attention there right that there's a confidence and and the more confidence that you have there's a tension with the open -mindedness and not being sure okay um confident and accurate are almost negatively correlated many people.

[117] They're extremely confident and they're often inaccurate.

[118] And so I think one of the greatest tragedies of people is not realizing how those things to go together because instead it's really that by saying I know a lot and how do I know I'm still not wrong and how do I take that the best thinking available to me and then raise my probability of learning.

[119] All these people think for themselves, okay?

[120] I mean, meaning they're smart, but they take in like vacuum cleaners.

[121] They take in ideas of others.

[122] They stress test their ideas with others.

[123] They assess what comes back to them in the form of other thinking.

[124] And they also know what they're not good at and what other people who are good at the things that they're not good at.

[125] They know how to get those people and be successful all around.

[126] because nobody has enough knowledge in their heads.

[127] And that, I think, is one of the great differences.

[128] So the reason my company has been successful in terms of this is because of an idea meritocratic decision -making, a process by which you can get the best ideas.

[129] You know, what's an idea of meritocracy?

[130] An idea meritocracy is to get the best ideas that are available out there and to work together with other people in the team to achieve that.

[131] That's an incredible process that you described in several people.

[132] places to arrive at the truth, but I apologize if I'm romanticizing the notion, but let me linger on it.

[133] Just having enough self -belief, you don't think there's a self -delusion there that's necessary, especially in the beginning you talk about in the journey, maybe the trials or the abyss.

[134] Do you think there is value to deluding yourself?

[135] I think what you're calling deluding is a bad word for uncertainty, okay?

[136] So, in other words, because we keep going back to the question, how would you know and all of those things?

[137] No, I think that delusion is not going to help you, that you have to find out truth, okay, to deal with uncertainty, not saying, listen, I have this dream, and I don't know how I'm going to get that dream.

[138] I mentioned in my book principles and described the process in a more complete way than we're going to be able to go here.

[139] But what happens is I say you form your dreams first and you can't judge whether you're going to achieve those dreams because you haven't learned the things that you're going to learn on the way toward those dreams, okay?

[140] So that isn't delusion.

[141] I wouldn't use delusion.

[142] I think you're overemphasizing the importance of knowing whether you're going to succeed or not.

[143] Get rid of that, okay?

[144] If you can get rid of that and say, okay, no, I can have that dream, but I'm so realistic in the notion of finding out, I'm curious, I'm a great learner, I'm a great experimenter.

[145] Along the way, you'll do those experiments, which will teach you more truths and more learning about the reality so that you can get your dreams.

[146] Because if you still live in that world of delusion, okay, And you think delusion's helpful.

[147] No, the delusion isn't, don't confuse delusion with not knowing.

[148] Yes.

[149] But nevertheless, so if we look at the abyss, we can look at your own that you describe.

[150] It's difficult psychologically for people.

[151] So many people quit.

[152] Many people choose a path that is more comfortable.

[153] I mean, the heartbreak of that, you know, breaks people.

[154] So if you have the dream and there's this cycle of learning, setting a goal and so on.

[155] What's your value for the psychology of just being broken by these difficult moments?

[156] Well, that's classically the defining moment.

[157] It's almost like evolution taking care of.

[158] Okay, now you crash.

[159] You're in the abyss.

[160] Oh, my God, that's bad.

[161] And then the question is, what do you do?

[162] And it sorts people.

[163] Okay.

[164] And that's what that's, some people get off the field and they say, oh, I don't like this and so on.

[165] And some people learn and they have the and they have a metamorphosis and it changes their approach to learning it the number one thing it should give them is uncertainty you should take an audacious dreamer guy who wants to change the world crash okay and then come out of that crashing and saying okay I can be audacious and scared that I'm going to be wrong at the same time.

[166] And then how do I do that?

[167] Because that's the key.

[168] When you don't lose your audaciousness and you keep going after your big goal and at the same time you say, hey, I'm worried that I'm going to be wrong, you gain your radical open -mindedness that allows you to take in the things that allows you to go to the next level of being successful.

[169] So your own process, I mean, you've talked about it before, but it would be great if you can describe it because our darkest moments are perhaps the most interesting.

[170] So you're on with the prediction of the of another depression.

[171] Economic depression.

[172] Yes, I apologize.

[173] Economic depression.

[174] Can you talk to what you were feeling, thinking, planning, strategizing at those moments?

[175] Yeah, that was that was my biggest moment, okay?

[176] Building my little company, this is in 1981, 82.

[177] I had calculated that, American banks had given a lot more money to lent a lot more money to the Latin American countries than those countries are going to pay back and that they would have a debt crisis and that this had sent the economy tumbling and that was an extremely controversial point of view.

[178] Then it started to happen and it happened in Mexico defaulted in August 1982.

[179] I thought that there was going to be an economic collapse that was going to follow because there was a series of the other countries.

[180] It was just playing out it as I had imagined.

[181] And that couldn't have been more wrong.

[182] That was the exact bottom in the stock market because central banks, he's monetary policy, blah, blah, blah.

[183] And I couldn't have been more wrong.

[184] And I was very publicly wrong and all of that.

[185] And I lost money for me and I lost money for my clients.

[186] And I was, I only had a small company then, but I had to, these were close people.

[187] I had to let them go.

[188] I was down to me as the last I was so broke.

[189] I had to borrow $4 ,000 from my dad to help to pay for my family bills.

[190] Very painful.

[191] And at the same time, I would say it definitely was one of the best things that ever happened to me, maybe the best thing from happened to me, because it changed my approach to decision making.

[192] It's what I'm saying.

[193] In other words, I kept saying, okay, how do I know whether I'm right?

[194] How do I know I'm not wrong?

[195] It gave me that.

[196] And it didn't give up by audaciousness because I was in a position.

[197] What am I going to do?

[198] Am I going to go back, put on a tie, go to Wall Street and just do those things?

[199] No, I can't bring myself to do that.

[200] So I'm in a juncture.

[201] How do I deal with my risk and how do I deal with that?

[202] And it told me how to deal with my uncertainties.

[203] And that taught me, for example, a number of techniques.

[204] First, to find the smartest people I could find who disagreed with me and to have quality disagreement.

[205] I learned the art of thoughtful disagreement.

[206] I learned how to produce diversification.

[207] I learned how to do a number of things.

[208] That is what led me to create an idea meritocracy.

[209] In other words, person by person, I hired them, and I wanted the smartest people who would be independent thinkers who would disagree with each other and me well so that we could be independent thinkers to go off to produce those audacious dreams because you have to be an independent thinker to do that and to do that not independently of the consensus, independently of each other, and then work ourselves through that because who know whether you're going to have the right answer.

[210] And by doing that, then that was the key to our success.

[211] And the things that I want to pass along to people, the reason I'm doing this podcast with you is, you know, I'm 70 years old.

[212] And that is a magical way of achieving success.

[213] If you can create an idea of meritocracy, it's so much better.

[214] in terms of achieving success and also quality relationships with people.

[215] But that's what that experience gave me. So if we can linger on a little bit longer, the idea of an idea of meritocracy, it's fascinating, but especially because it seems to be rare, not just in companies, but in society.

[216] So there is a lot of people on Twitter and public discourse and politics and so on that are really stuck in certain sets of ideas, whatever they are.

[217] so when you're confronted with an idea that's different than your own about a particular topic what kind of process do you go through mentally are you arguing through the idea with a person sort of present is almost like a debate or do you sit on it and consider the world sort of empathetically if this is true then what does that world look like does that world make sense and so on.

[218] So what's the process of considering those conflicting ideas for you?

[219] I'm going to answer that question, but after saying first, almost implicit in your question is it's not common.

[220] Okay.

[221] What's common produces only common results.

[222] Okay.

[223] So don't judge anything that is good based on whether it's common, because it's only going to give you common results.

[224] If you want unique, you have a unique approach.

[225] Okay.

[226] And so that art of thoughtful disagreement is the capacity to hold two things in your mind at the same time.

[227] The, gee, I think this makes sense and then saying, I'm not sure it makes sense and then try to say, why does it make sense?

[228] And then to triangulate with others.

[229] So if I'm having a discussion like that and I work myself through and I'm not sure, then I have to do that.

[230] I have to do in a good way so I always give attention for example what let's start off what does the other person know relative to what I know so if a person has a higher expertise or things I'm much more inclined to ask questions I'm always asking questions if you want to learn you're asking questions you're not arguing okay you're taking in you're assessing when it comes into you does that make sense or you're learning something are you getting epiphanies and so on And I try to then do that.

[231] If the conversation, as we're trying to decide what is true and we're trying to do that together and we see truth different, then I might even call in another really smart, capable person and try to say what is true and how do we explore that together and you go through that same thing.

[232] So I would, I said, I describe it as having open -mindedness and assertiveness at the same time.

[233] that you can simultaneously be open -minded and take in with that curiosity and then also be assertive and say, but that doesn't make sense.

[234] Why would this be the case?

[235] And you do that back and forth.

[236] And when you're doing that kind of back and forth on the topic like the economy, which you have, to me, perhaps I'm naive, but it seems both incredible and incredibly complex, the economy, the trading, the transactions, that these transactions between two individuals somehow add up to this giant mechanism.

[237] You've put out a 30 minute video.

[238] You have a lot of incredible videos online that people should definitely watch on YouTube.

[239] But you've put out this 30 minute video titled how the economic machine works.

[240] That is probably one of the best, if not the best, video I've seen on the internet in terms of educational videos.

[241] So people should definitely watch it, especially because it's not that the individual components of the video are somehow revolutionary, but the simplicity and the clarity of the different components just makes you, there's a few lightbul moments there about how the economy works as a machine.

[242] So as you described, there's three main forces that drive the economy, productivity growth, short -term debt cycle, long -term debt cycle.

[243] The former productivity growth is how valuable things, how much value, value people create, valuable things people create.

[244] The latter is people borrowing from their future selves to hopefully create those valuable things faster.

[245] So this is an incredible system to me. Maybe we can linger on it a little bit, but you've also said what most people think about as money is actually credit.

[246] Total amount of credit in the US is $50 trillion.

[247] Total amount of money is $3 trillion.

[248] That's just crazy to me. Maybe I'm silly, maybe you can educate me, but that seems crazy.

[249] It gives me just pause that human civilization has been able to create a system that has so much credit.

[250] So that's a long way to ask, do you think credit is good or bad for society?

[251] That system of that's so fundamentally based on credit.

[252] I think credit is great, even though people are all.

[253] often overdo it.

[254] The credit is that somebody has earned money.

[255] Yeah.

[256] And, you know, and what happens is they lend it to somebody else who's got better ideas and they cut a deal.

[257] And then that person with the better ideas is going to pay it back.

[258] And if it works well, it helps resource allocations go well, providing people like the entrepreneurs and all of those.

[259] They need capital.

[260] They don't have capital themselves.

[261] And so somebody's going to give them capital and they'll give them credit and along those lines.

[262] Then what happens is it's not managed well in a variety of ways.

[263] So I did another book on principles, principles of big debt crises that go into that.

[264] And it's free, by the way.

[265] I put it free online as a PDF.

[266] So if you go online and you look principles for big debt crises under my name, you can download it in a PDF or you can buy a print book of it.

[267] And it goes through that particular process.

[268] And so you always have it overdone in always the same way.

[269] Everything, by the way, almost everything happens over and over again for the same reasons.

[270] Okay.

[271] So these debt crises all happen over and over again for the same reasons.

[272] They get it overdone.

[273] In the book, it explains how you identify whether it's overdone or not.

[274] They get it overdone.

[275] And then you go through the process of making the adjustments according that and then and it explains how they can use the levers and so on if you didn't have credit then you would be sort of everybody sort of be stuck so credit is a good thing but it can easily be overdone so now we get into the what is money what is credit okay you get into money and credit so if you're holding credit and you think that's worthwhile keep in mind that the central bank, let's say, it can print the money.

[276] What is that problem?

[277] You have an IOU, and the IOU says you're going to get a certain number of dollars, let's say, or yen or euros.

[278] And that is what the IOU is.

[279] And so the question is, will you get that money and what will it be worth?

[280] And then also you have a government, which is a participant in that process, because they are on the hook.

[281] They owe money.

[282] And then will they print the money to make it easy for everybody to pay, so you have to pay attention to those two.

[283] I would suggest like you recommend to other people.

[284] Just take that 30 minutes and it comes across pretty clearly.

[285] But my conclusion is that of course you want it.

[286] And even if you understand it and the cycles well, you can benefit from those cycles rather than to be hurt by those cycles because I don't know the way the cycle works is somebody gets over indebted they have to sell an asset okay then I don't know me that's when assets become cheaper how do you acquire the asset it's a whole process so again maybe another another dumb question but there are no such things as dumb questions there you go but what is money so you've mentioned you know credit and money it's another thing that if I just zoom out from an alien perspective and look at human civilization, it's incredible that we've created a thing that's not, that only works because currency, because we all agree it has value.

[287] So I guess my question is, how do you think about money as this emerging phenomenon?

[288] And what do you think is the future of money?

[289] You've commented on Bitcoin, other forms, what do you think is, it's history and future?

[290] How do you think about money?

[291] There are two things that money is for.

[292] It's a medium of exchange, and it's a storehold of wealth.

[293] Yes.

[294] So money, you know, so you could say something's a medium of exchange, and then you could say, is it a storehold of wealth?

[295] Okay.

[296] So those, and money, is that vehicle that is those things and can be used to pay off your debt.

[297] So when you have a debt and you provide it, it pays off your debt.

[298] So that's that process.

[299] And it's a, I apologize to interrupt, but it only can be a medium of exchange or store wealth when everybody recognizes it to be of value.

[300] That's right.

[301] And so you see in the history around the world and you go to places, I was in an island in the Pacific in which they had as money these big stones.

[302] And literally, they were taking a boat, this big carved stone, and they were taking it from one of the islands to the other, and it sank the piece of this big stone piece of money that they had, and it went to the bottom, and they still perceived it as having value.

[303] so that it was even though it was in the bottom, and it's this big hunk of rock, the fact that somebody owned it, they would say, oh, I'll own it for this and that.

[304] I've seen beads in different places, shells converted to this in mediums of exchange.

[305] And when we look at what we've got, you're exactly right.

[306] It is the notion that if I give it to you, I can then take it and I can buy something with it.

[307] So it's a matter of perception.

[308] Okay.

[309] And then we go through the then the history of money and the vulnerabilities of money.

[310] And what we have is through history, there's been two types of money, those that are claims on something of value, like the connection to gold or something.

[311] That's right.

[312] That would be.

[313] Or they just are money without any connection, and then we have a system now, which is a Fiat monetary system.

[314] So that's what money is.

[315] it will last as long as it's kept of value, and it works that way.

[316] So let's say central banks, when they get in the position of like they owe a lot of money, like we have in the case, it's increasingly the case, and they also are a bind, and they have the printing press to print the money and get out of that, and you have a lot of people might be in that position.

[317] then you can print it and then it could be devalued in there and so history is shown forget about today history is shown that no currency has last had every currency has either ended as being a currency been or devalued as a currency over periods of time long periods of time so it evolves and it changes but everybody needs that medium of exchange and everybody needs that storehold of wealth so it keeps changing what is money over a period of time.

[318] But so much is being digitized today.

[319] And there's this ideas that are based in the blockchain of Bitcoin and so on.

[320] So if all currencies, like all empires, come to an end, what do you think, well, do you think something like Bitcoin might emerge as a common store of value, a store of wealth, and a medium of exchange?

[321] the problem with bitcoin is that it's not an effective medium exchange like it's not easy for me to go in there and buy things with it and then it's not an effective storeholder value because it has a volatility that's based on speculation and the like so it's not a very effective saving that's very different from facebook's of a stable value currency which would be effective as both a medium of exchange and a storehold of wealth, because if you were to hold it and the way it's linked to, the number of things that it's linked to, would mean that it could be a very effective storehold of wealth.

[322] Then you have a digital currency that could be a very effective medium exchange and storehold of wealth.

[323] So in my opinion, some digital currencies are likely to succeed more or less based on that ability to do it.

[324] Then the question is, what happens.

[325] Okay, what happens is, do central banks allow that to happen?

[326] I really do believe it's possible to get a better form of money that central banks don't control, okay?

[327] A better force of money that central banks don't control.

[328] But then that's not yet happened.

[329] And we also have to, and so they've got to go through that evolutionary process.

[330] In order to go through that evolutionary process, first of all, governments have got to allow that to happen, which is to some extent a threat to them in terms of their power, and that's an issue.

[331] And then you have to also build the confidence in all of the components of it to say, okay, that's going to be effective because I won't have problems owning it.

[332] So I think that digital currencies have some element of potential, but there's a lot of hurdles that are going to have to be gotten over.

[333] I think that it'll be a very long time, possibly never, but anyway, a very long time before we have that, let's say, get into a position that would be in a effective means relative to gold, let's say, if you were to think of that, because gold has a track record, you know, thousands of years all across countries.

[334] It has its mobility, it has the ability to put it down and has certain abilities.

[335] It's got disadvantages relative to digital currencies, but central banks will hold it like there's central banks that worry about others, you know, other country central banks might worry about whether the U .S. dollar is going to print and not that.

[336] And so the thing they're going to go to is not going to be the digital currency.

[337] The thing they're going to go to is gold or something else, some other currency.

[338] They've got to pick it.

[339] And so I think it's, It's a long way to go.

[340] But you think it's possible that one day we don't even have a central bank because of a currency that cannot be controlled by the central bank is the primary currency?

[341] Or does that seem very unlikely?

[342] It would be very remote possibility or very long in the future.

[343] Got it.

[344] Again, maybe a dumb question, but romanticize one, when you sit back and you look, you describe these transactions between individuals, somehow creating short -term debt cycles, long -term debt cycles, productivity growth.

[345] Does it amaze you that this whole thing works?

[346] That there's however many million, hundreds of millions of people in the United States, globally over 7 billion people, that this thing between individual transactions, it just, it works.

[347] Yeah.

[348] It amazes me. Like, I go back and forth between being in it, and then I think, like, how did a credit card, how does that really possible?

[349] I'm still used, like, look, a credit card, I put it on, the guy doesn't know me. Yeah, it signs, okay, we're making the digital injuries.

[350] Is that really secure?

[351] sure enough and that kind of thing and then it goes back and it goes this and it clears and it all happens and it what i marvel at that and those types of things is because of the the capacity of the human mind to create abstractions that are true you know it's imagination and then the ability to go from one level and then if these things are true then you go to the next level and if those things are true, then you go to the next level.

[352] And all those miracles that we almost become common, it's like when I'm flying in a plane or when I'm looking at all of the things that happen.

[353] When I get communications in the middle of, I don't know, Africa or Antarctica, and we're communicating in the ways where I see the face on my iPad of somebody, my grandkid and I look at this and I say, wow, yes, it all amazes me. So while being amazing, do you have a sense the principles you described that the whole thing is stable somehow also?

[354] Or is this, are we just lucky?

[355] So the principles that you describe, are those describing a system that is stable, robust, and will remain so?

[356] Or is it a lucky accident of our early history?

[357] My area of expertise is economics and markets, so I get down to like a real near.

[358] nitty -gritty.

[359] I can't tell you whether the plane is going to fall out of the sky because of its particular fundamentals.

[360] I don't know enough about that, but it happens over and over again and so on it gives me faith, okay?

[361] So without me knowing it.

[362] In the markets and the economy, I know those things well enough in a sense to say that by and large that structure is right, what we're seeing is right.

[363] Now, whether there are disruption, and it has effects that can come not because that structure is right, I believe it's right, but whether it can be hurt by, let's say, connectivity or journal entries.

[364] They could take all the money away from you through your digital entries.

[365] There's all sorts of things that can happen in various ways that means that that money is worthless or the system falls, but from what I see in terms of its basic structure and those complexities that still ticked my breath away, I would say knowing enough about the mechanics of them, that doesn't worry me. Have you seen disruptions in your lifetime that really surprised you?

[366] Oh, all the time.

[367] This is one of the great lessons of my life is that many times I've seen things that I was very surprised about and that I realized almost all of those I was surprised about because because they just, they were just the first time it happened to me. They didn't happen in my lifetime before.

[368] But when I researched them, they happened in other places or other people lifetimes.

[369] So, for example, I remember in 1971, the dollar, there was no such thing as a devaluation of a currency, didn't experience it.

[370] And the dollar was connected to gold, and I was watching events happen, and then you get on and that definition of money all of a sudden went out the window because it was not tied to gold and then you have this devaluation and so and then or the first oil shock or the second oil shot or so many of these things and what I but almost always I realized that they um when I looked in history they happened before okay they just happened in other people's lifetimes which led me to realize that I needed to study history and what happened in other people's lifetimes and what happened in other countries and places so that I would have timeless and universal principles for dealing with that thing.

[371] So I, oh yeah, I've been some, you know, the implausible happening.

[372] But it's like a one in a hundred year storm.

[373] Right.

[374] Okay.

[375] Or it's or.

[376] They've happened before.

[377] Yeah, they've happened.

[378] Just not to you.

[379] Let me talk about, if we could, about AI a little bit.

[380] So we've, Bridgewater Associates manage about $160 billion in assets.

[381] And our artificial intelligence systems algorithms are pretty good with data.

[382] What role in the future do you see AI play in analysis and decision making in this kind of data rich and impactful?

[383] area of investment?

[384] I'm going to answer that not only an investment, but I give a more all -encompassing rule for AI.

[385] As I think you know, for the last 25 years, we have taken our thinking and put them in algorithms, and so we make decisions.

[386] The computer takes those criteria, algorithms, and they put them, and they're in their and that takes data and they operate as an independent decision maker in parallel with our decision making.

[387] So for me, it's like there's a chess game playing and I'm a person with my chess game and I'm saying it made that move and I'm making the move and how do I compare those two moves.

[388] So we've done a lot.

[389] But let me give you a rule.

[390] If the future can be different from the past and you don't have deep understanding.

[391] You should not rely on AI.

[392] Okay?

[393] Those two things.

[394] Deep understanding of...

[395] The cause -effect relationships that are leading you to place that bet in anything.

[396] Okay?

[397] Anything important.

[398] Let's say if it was do surgeries and you would say, how do I do surgeries?

[399] I think it's totally fine to why, all the doctors do the surgeries, you can put it on, take a digital camera and do that, convert that into AI algorithms that go to robots and have them do surgeries, and I'd be comfortable with that.

[400] Because if it keeps doing the same thing over and over again and you have enough of that, that would be fine, even though you may not understand the algorithms because if the thing's happening over and over again and you're not asking, the future would be the same.

[401] That appendicitis or whatever it is will be handled the same way the surgery, that's fine.

[402] However, what happens with AI is, for the most part, is it takes a lot of data with a high enough sample size and then it puts together its own algorithms.

[403] Okay, there are two ways you can come up with algorithms.

[404] you can either take your thinking and express them in algorithms or you can say put the data in and say what is the algorithm when you that's machine learning yeah and when you have machine learning it'll give you equations which quite often are not understandable if you would try to say okay now describe what it's telling you it's very difficult to describe and so they can escape understanding And so it's very good for doing those things that could be done over and over again if you're watching and you're not taking that.

[405] But if the future is different from the past and you have that, then if the future is different from the past and you don't have deep understanding, you're going to get in trouble.

[406] And so that's the main thing.

[407] As far as AI is concerned, AI and let's say computer replications of thinking in very ways, I think it's particularly good for process.

[408] But the notion of what you want to do is better most of the time determined by the human mind.

[409] What are the principles?

[410] Like, okay, how should I raise my children?

[411] It's going to be a long time before AI, you're going to say it has a good enough judgment to do that.

[412] Who should I marry?

[413] All of those things.

[414] Maybe you can get the computer to help you.

[415] But if you just took data and new machine learning, it's not going to find it.

[416] If you were to then, take what are my criteria for any of those questions and then say put them into an algorithm and you'd be a lot better off than if you took AI to do it.

[417] But by and large, the mind should be used for inventing and those creative things.

[418] And then the computer should be used for processing because it could process a lot more information, a lot faster, a lot more accurately and a lot less emotionally.

[419] So any notion of thinking in the form of processing type thinking should be done by a computer and anything that is in the notion of doing that other type of thinking should be operating with the brain, operating in a way where, you know, you can say, ah, that makes sense.

[420] You know, the process of reducing your understanding down to principles is kind of like the process, the first one you mentioned, type of AI algorithm where you're encoding your expertise.

[421] You're trying to program, write a program.

[422] The human is trying to write a program.

[423] How do you think that's attainable?

[424] The process of reducing principles to a computer program.

[425] Or when you say when you write about, when you think about principles, is there still a human element that's not reducible to an algorithm?

[426] My experience has been that almost all things, including those things that I thought were pretty much impossible to express, I've been able to express in algorithms, but that doesn't constitute all things.

[427] So you can, you can, who, you can express far more than, you can imagine you'll be able to express.

[428] So I use the example of, okay, it's not, how do you raise your children?

[429] Okay.

[430] You will be able to take it one piece by piece.

[431] Okay.

[432] How, how, at what age, what school?

[433] And the way to do that, that with my experience, is to take that and when you're in the moment of making a decision or just past making a decision to take the time and, to write down your criteria for making that decision in words, okay?

[434] That way you'll get your principles down on paper.

[435] I created an app online call.

[436] It's right now just on the iPhone.

[437] It'll be on Android.

[438] I try getting an Android.

[439] Come on now.

[440] It'll be a good on Android.

[441] It'll be, in a few months it'll be on Android.

[442] Awesome.

[443] But it has an app in there that helps people write down their own principles because this is very powerful.

[444] So when you're in that moment where you've just, you're thinking about it and you're thinking your criteria for, you know, choosing the school for your child or whatever that might be and you write down your criteria or whatever they are, those principles, you write down and you, that will at that moment make you articulate your principles in a very valuable way.

[445] And if you have the way that we, operate that you have easy access so the next time that comes along you can go to that or you can show those principles to others to see if they're the right principles you will get a clarity of that principle that's really invaluable in words and that'll help you a lot then but then you start to think how do i express that in data and it'll shock you about how you can do that you'll form an equation that will show the relationship between these particular parts and then the essentially the variables that are going to go into that particular equation and you will be able to do that and you take that little piece and you put it into the computer and then take the next little piece and you put that into the computer and before you know it you will have a decision -making system that's of the sort that I'm describing so that you're almost making an argument against an earlier statement you've made you're convinced me at first he said there's no way a computer could raise a child essentially but now you've described in making me think of it if you have that kind of idea meritocracy you have this rigorous approach of bridgewater takes an investment and apply to raising a child it feels like through the process he just described we could as a society arrive at a set of principles for raising a child and encode it into computer.

[446] That originality will not come from machine learning.

[447] The first time you do, so that the original, yes.

[448] That's what I'm referring to.

[449] But eventually, as we together develop it and then we can automate it.

[450] That's why I'm saying the processing can be done by the computer.

[451] So we're saying the same thing.

[452] We're not inconsistent.

[453] We're saying the same thing that the processing of that information and those algorithms can be done by the computer in a very, very effective way.

[454] You don't need to sit there and process and try to weigh all those things in your equation and all those things.

[455] But that notion of, okay, how do I get at that principle?

[456] And you're saying you'd be surprised how much you can express.

[457] That's right.

[458] You can do that.

[459] So this is where I think you're going to see the future.

[460] Right now we, you know, to our devices, and we get information to a large extent.

[461] And then we get some guidance, we have our GPS and the like.

[462] In my opinion, principles, principles, principles, principles, I want to emphasize that.

[463] You write them down.

[464] You've got those principles.

[465] They will be converted into algorithms for decision -making, and they're going to also have the benefit of collective decision -making, because right now individuals, based on what's stuck in their heads are making their decisions in very ignorant ways.

[466] They're not the best decision makers.

[467] They're not the best criteria, and they're operating.

[468] When those principles are written down and converted into algorithms, it's almost like you'll look at that and follow the instructions, and it'll give you better results.

[469] Medicine will be much more like this.

[470] You can go to your local doctor and you could ask his point of view and whatever, and he's rushed, and he may not be the best doctor around and you're going to go to this thing and give that same information or just automatically have an input in that and it's going to tell you okay here's what you should go do and it's going to be much better than your local doctor and that the converting of information into intelligence okay intelligence is the thing we're coming out with um again i'm 70 and I want to pass all these things along.

[471] So all these tools that I've found need to develop all over these periods of time, all those things I want to make them available.

[472] And what's going to happen as they're going to see this, they're going to see these tools operating much more that way, the idea of converting data into intelligence.

[473] Intelligence, for example, on what they are like?

[474] Right.

[475] Or what are your strengths and weaknesses?

[476] Intelligence on who do I work well with under what circumstances.

[477] Personalized.

[478] Intelligence.

[479] We're going to go from what are called systems of record, which are a lot of, okay, information organized in the right way, to intelligence.

[480] And we're going to, that will be the next big move in my opinion.

[481] And so you will get intelligence back.

[482] And that intelligence comes from reducing things down to principles.

[483] to that's how it happens so what's your intuition if we look at future societies do you think we'll be able to reduce a lot of the the details of our lives down to principles that would be further and further automated i think the real question hinges on people's emotional emotions and irrational behaviors.

[484] I think that there's subliminal things that we want.

[485] Okay.

[486] And then there's cerebral, you know, conscious logic.

[487] And the too often are at odds.

[488] So there's almost like two you's in you, right?

[489] And so let's say, what do you want?

[490] Your mind will answer one thing.

[491] Your emotions will answer something else.

[492] So when I think about it, I think emotions are, I want.

[493] I want.

[494] I want inspiration.

[495] I want love is a good thing, being able to have a good impact, but it is in the reconciliation of your subliminal wants and your intellectual wants so that you really say they're aligned.

[496] And so to do that in a way to get what you want.

[497] So irrationality is a bad thing if it means that it doesn't make sense in getting you what you want.

[498] But you better decide which you're satisfying.

[499] Is it the lower level you, emotional, subliminal one, or is it the other?

[500] But if you can align them.

[501] So what I find is that by going from my, you experience the decision, do this thing subliminally.

[502] And that's the thing I want.

[503] It comes to the surface.

[504] I find that if I can align that with what my logical me wants and do the double check between them and I get the same sort of thing, that that helps me a lot.

[505] I find, for example, meditation is one of the things that helps to achieve that alignment.

[506] It's fantastic for achieving that alignment.

[507] And often then I also want to not just do it in my head.

[508] I want to say, does that make sense help you?

[509] And so I do it with other people.

[510] And I say, okay well let's say I want this thing and whatever does that make sense and when you do that kind of triangulation you're to use and you do that with also the other way then you certainly want to be rational right but rationality has to be defined by those things and then you discover sort of new ideas that the drive your future so it's always you're always at the edge of the set of principles you've developed you're doing new things always right that's where the intellect is needed.

[511] Well, and the inspiration.

[512] The inspiration is needed to do that, right?

[513] Like, what are you doing it for?

[514] It's the excitement.

[515] What is that thing?

[516] The adventure, the curiosity, the hunger.

[517] What's, if you can be Freud for a second, what's in that subconscious?

[518] What's the thing that drives us?

[519] I think you can't generalize of us.

[520] I think different people are driven by different things.

[521] There's not a common one, right?

[522] So, like if you would, take the shapers, I think it is a combination of, subliminally, it's a combination of excitement, curiosity.

[523] Is there a dark element there?

[524] Is there, is there demons?

[525] There's their fears.

[526] Is there, in your sense, something dark that drives them?

[527] Most of the ones that I'm dealing with, I have not seen that.

[528] I see the, what I really see is, who, if I can do that, that would be the most dream and then the act of creativity and you say ooh so excitement is one of the things curiosity yes is a big pull okay and then tenacity you know okay to do those things but definitely emotions are entering into it then there's an intellectual component of it too okay it may be empathy it may can i have an impact can i have an impact the desire to have an impact That's an emotional thrill, but it also has empathy.

[529] And then you start to see spirituality, but a spirituality I mean the connectedness to the whole.

[530] You start to see people operate those things.

[531] Those tend to be the things that you see the most of.

[532] And I think you're going to shut down this idea completely, but there's a notion that some of these shapers really walk the line between sort of madness and genius.

[533] Do you think madness has a role in any of this?

[534] Or do you still see Steve Jobs and the Al Musk as fundamentally rational?

[535] Yeah, there's a continuum there.

[536] And what comes to my mind is that genius is that often at the edge of, in some cases, imaginary genius is at the edge of insanity.

[537] And it's almost like a radio that I think, okay, if I can tune it just right, it's playing right.

[538] But if I go a little bit too far, it goes off.

[539] Okay.

[540] And so you can see this.

[541] Kay Jameson was studying bipolar.

[542] What it shows is that, you know, that's definitely the case.

[543] Because when you're going out there, that imagination, whatever, is at the, can be near the edge sometimes.

[544] It doesn't have to always be.

[545] So let me ask you about automation that's been a part of public discourse recently.

[546] What's your view on the impact of automation of whether we're talking about AI or more basic forms of automation on the economy in the short term and the long term?

[547] Do you have concerns about it, as some do, or do you think it's overblown?

[548] It's not overblown, I mean, it's a giant thing that'll come at us in a very big way in the future.

[549] We're right at the edge of even really accelerating it.

[550] It's had a big impact and it will have a big impact.

[551] And it's a two -edged sword because it'll have tremendous benefits.

[552] And at the same time, it has profound benefits in employment and distributions of wealth because the way I think about it is there are certain things human beings can do.

[553] And over time, evolved to go to almost higher and higher levels and now we're almost like we're at this level you know it used to be your labor and you would then do your labor and okay we can get past the labor we got tractors and things and you go up up up up up and we're up over here and up to the point in our minds where okay anything related to mental processing the computer can probably do better and we can find that.

[554] And so other than almost inventing, you're at a point where the machines and the automation will probably do it better.

[555] And that's accelerating and that's a force.

[556] And that's a force for the good.

[557] And at the same time, what it does is it displaces people in terms of employment and it produces wealth gaps and all of that.

[558] So I think the real issue is that that has to be viewed as a national emergency.

[559] In other words, I think the wealth gap, the income gap, the opportunity gap, all of those things, that force is creating the problems that we're having today, a lot of the problems, the great polarity, the disenfranchised, not equal, not anything approaching equality of education, all of these problems, a lot of, problems are coming as a result of that.

[560] And so it needs to be viewed really as an emergency situation in which there's a good work, good plan worked out for how to deal with that effectively so that it's dealt with effectively.

[561] Because it's good for the average, it's good for the impact, but it's not good for everyone and it creates that polarity.

[562] So it's got to be dealt with.

[563] Yeah, and you've talked about the American dream, and that that's something that all people should have an opportunity for, and then we need to reform capitalism to give that opportunity for everyone.

[564] Let me ask on one of the ideas in terms of safety nets that support that kind of opportunity.

[565] There's been a lot of discussion of universal basic income amongst people.

[566] So there's Andrew Yang who's running on that, he's a political candidate running for president on the idea of universal basic income.

[567] What do you think about that, giving $1 ,000 or some amount of money to everybody as a way to give them the padding, the freedom to sort of take leaps, to take the call for adventure, to take the crazy pursuits?

[568] Before I get right into my thoughts on universal basic income, I want to start with, the notion that opportunity, education, development, creating equality so that people say there's equal opportunity and is the most important thing.

[569] And then to find out what is the amount?

[570] How are you going to provide that?

[571] How do you get the money into a public school system?

[572] How do you get the teaching how do you what do you the fleshing out that plan to create equal opportunity in all of its various forms is the most pressing thing to do and so i'm you know that is that the opportunity the most important one you're kind of implying is the earlier the better sort of like opportunity to education so in the early development of a human being is when you should have the equal opportunities that's the most important Right.

[573] In the first phase of your life, which goes from birth until you're on your own, and you're an adult and you're now out there, and you deal with early childhood development, okay, and you take the brain and you say, what's important?

[574] The child care, okay, like the, it makes a world of difference, for example, if you have good parents who are trying to think about instilling the stability in a non -traumatic environment, to provide them, so I would say the good guidance that normally comes from parents and the good education that they're receiving are, you know, the most important things in that person's development.

[575] The ability to be able to be prepared to go out there and then to go into a market that's an equal opportunity job market to be able to then go into that kind of market is a system that creates not only fairness, anything else is not fair.

[576] And then in addition to that, it also is a more effective economic system because the consequences of not doing that to a society or devastating.

[577] If you look at what the difference in outcomes for somebody who completes high school or doesn't complete high school or does each one of those state changes.

[578] And you look at what that means in terms of their costs to society, not only themselves, but their cost and incarceration costs and crimes and all of those things.

[579] It's economically better for the society and it's fairer if they can get those particular things.

[580] Once they have those things, then you move on to other things.

[581] But yes, from birth all the way through that process, anything less than that is bad, is a tragedy and so on.

[582] So that's what I, yeah, those are the things that I'm estimated.

[583] And so my, what I would want above all else is to provide that.

[584] So with that in mind, now we'll talk about universal basic income.

[585] Start with that.

[586] Now we can talk about U .S. Well, right, because you have to have that.

[587] Now the question is what's the best way to provide that.

[588] Okay.

[589] So when I look at UBI, I really think is what is going to have?

[590] happen with that $1 ,000, okay?

[591] And will that $1 ,000 come from another program?

[592] Does that come from an early childhood developmental program?

[593] Who are you giving the $1 ,000 to, and what will they do for that $1 ,000?

[594] I mean, like my reaction would be, I think it's a great thing that everybody should have almost $1 ,000 in their bank and so on.

[595] But when do they get to make decisions or who's the parent, a lot of pit times you can give $1 ,000 to somebody and it can have a negative result.

[596] It can have, you know, they can use that money detrimentally, not just productively.

[597] And if that money's coming away from some of those other things that are going to produce the things I want and you're shifted to, let's say, to come in and give a check, doesn't mean its outcomes are going to be good in providing those things that I think are so fundamental important.

[598] if it was just everybody can have a thousand dollars and use it so when the time comes and use it well that would be really really good because it's almost like everybody you'd wish everybody could have a thousand dollars worth of wiggle room in their lives okay and i i think that would be great i love that but i want to make sure that these other things that are taking care of so if it comes out of that budget and um you know i don't want it to come out of that budget that's going to be doing those things and I you know so you have to figure it out and you have a certain skepticism that human nature will use may not always in fact frequently may not use that thousand dollars for the optimal to support the optimal trajectory some will and some won't one of the big advantages of universal basic income is that if you put it in the hands let's say a parents who know how to do the right things and make the right choices yes for their children because they're responsible and you say, I'm going to give them a thousand dollars wiggle room to use for the benefit of their children.

[599] Wow, that sounds great.

[600] If you put it in the hands of, let's say, an alcoholic or drug addicted parent who is not making those choices well for their children.

[601] And what they do is they take that thousand dollars and they don't use it well, then that's going to produce more harm than good.

[602] Well put, you're, if I may say so, one of the richest people in the world.

[603] So you're a good person to ask, does money buy happiness?

[604] No, it's been shown that once you get over a basic level of income so that you can take care of the pain, you know, you can health and whatever, there's no correlation between the level of happiness that one has and the level of money that one has.

[605] That thing that has the highest thing that has correlation is quality relationships with others' community.

[606] If you look at surveys of these things across all surveys and all societies, it's a sense of community and interpersonal relationships.

[607] That is not in any way correlated with money.

[608] You can go down to native tribes in, you know, very poor places, or you can go in all different communities.

[609] And so they have the opportunity to have that.

[610] I'm very lucky in that I started with nothing, so I had the full range.

[611] I can tell you I, you know, I'm not having money, but, but, but, but, but, but, and then having quite a lot of money and I, you know, I did that in the right order.

[612] So you start from nothing in Long Island.

[613] Yeah.

[614] And my dad was a jazz musician, but I, but I had all really that I needed because I had two parents who loved me and took good care of me and I went to a public school that was a good public school and basically you know that you don't need much more than that in order to that's the equal opportunity part anyway what i'm saying is no i experience the range and and there are many studies on the answer to your question no money does not bring happiness bring money gives you an ability to make choices does it get in the way in any way of forming those deep meaningful relationships.

[615] It can.

[616] There are lots of ways that it makes negative.

[617] That's one of them.

[618] It could stand in the way of that.

[619] Yes.

[620] Okay.

[621] But I could almost list the ways that it could stand.

[622] It could be a problem.

[623] Yeah.

[624] What does it buy?

[625] So if you can elaborate, you mentioned a bit of freedom.

[626] At the most fundamental level, it doesn't take a whole lot, but it takes enough that you can take care of yourself and your family to be able to learn, do the basics of have the relationships, have health care, the basics of those types of things.

[627] You know, you can cover the patients and then to have maybe enough security, but maybe not too much security.

[628] That's right.

[629] that you essentially are okay okay that is that's really good and you don't that's what that's what money will get you and everything else is uh could go either way well no correlation more there's more okay then beyond that what it then starts to do that's the most important thing yes but beyond that what it stands to do is to help to make your dreams happen in various ways okay so for example now I you know like in my case it's those dreams might not be just my own dreams their their impact on others dreams okay so my own dreams might be um I don't know I can pass along these at my stage in live I can press along these principles to you and I can give those things or I can do whatever I can go on an adventure I can can start a business.

[630] I can do those other things, be productive.

[631] I can self -actualize in ways that might be not possible otherwise.

[632] That's my own belief.

[633] And then I can also help others.

[634] I mean, this is, you know, to the extent when you get older and with time and whatever very, you start to feel connected, spirituality, that's what I'm referring to.

[635] You can start to have an effect on others that's beneficial and so on, gives you the ability.

[636] I could tell you that people who are very wealthy who have that feel that they don't have enough money.

[637] Bill Gates will feel almost broke because relative to the things he'd like to accomplish through the Gates Foundation and things like that, you know, oh my God, he doesn't have enough money to accomplish the things he wishes for.

[638] But those things are not, you know, they're not the most fundamental things.

[639] So I think that people sometimes think money has value.

[640] Money doesn't have value.

[641] Money is, like you say, just a medium of exchange at a store all the well.

[642] And so what you have to say is what is it that you're going to buy?

[643] Now, there are other people who get their gratification in ways that are different from me. But I think in many cases, let's say somebody who use money to have a status symbol.

[644] What would I say?

[645] Or that's probably unhealthy.

[646] But then, I don't know, somebody who says, I love a great, gorgeous painting, and it's going to cost lots of money.

[647] In my priorities, I can't get there.

[648] But that doesn't mean, who am I to judge others in terms of, let's say, their element of the freedom to do those things.

[649] So it's a little bit complicated.

[650] But by and large, that's my view on money and wealth.

[651] So let me ask you in terms of the idea of much of your passions in life has been through something you might be able to call work.

[652] Alan Watts has this quote.

[653] He said that the real key to life, secret to life, is to be completely engaged with what you're doing in the here and now.

[654] And instead of calling it work, realize it is play.

[655] So I'd like to ask, what is the role of work in your life?

[656] life's journey or in a life's journey.

[657] And what do you think about this modern idea of kind of separating work and life balance?

[658] I have a principle that I believe in is make your work and your passion the same thing.

[659] Okay.

[660] Okay.

[661] So that's similar.

[662] In other words, if you can make your work and your passion, it's just going to work out great.

[663] And then, of course, people have different purposes of work.

[664] And I don't want to be theoretical about that.

[665] People have to take care of their family.

[666] So money at a certain point is an important component of that work.

[667] So you look beyond that.

[668] What is the money going to get you and what are you trying to achieve?

[669] But the most important thing, I agree, is meaningful work and meaningful relationships.

[670] Like if you can get into the thing that your mission, that you're on, and you are excited about that mission that you're on.

[671] And then you can do that with people.

[672] who you have the meaningful relationships with.

[673] You have meaningful work and meaningful relationships.

[674] I mean, that is fabulous for most people.

[675] And it seems that many people struggle to get there, not necessarily because they're constrained by the fact that they have the financial constraints of having to provide for their family and so on.

[676] but it's I mean most you know this idea is out there that there needs to be a work -life balance which means that most people we're going to return to the same things most doesn't mean optimal but most people seem to not be doing their life's passion not be not unifying work and passion why do you think that is well the work -life balance there's a life arc that you go through starts at zero and ends somewhere in the vicinity of 80 and there is a phase and there's a and you could look at the different degrees of happiness that happen in those phases i can go through that if that was interesting but we don't have time probably for it but you get in the part of the life the that part of the life which has the lowest level of happiness is age 45 to 55 and and and because as you move into this second phase of your life.

[677] Now, the first phase of your life is when you're learning dependent on others.

[678] Second phase of your life is when you're working and others are dependent on you and you're trying to be successful.

[679] And in that phase of one's life, you encounter the work -life balance challenge because you're trying to be successful at work and successful at parenting and successful and successful in all those things that take your demand.

[680] And they get into that.

[681] And I understand that problem in the work -life balance.

[682] The issue is primarily to know how to approach that.

[683] Okay.

[684] So I understand it's stressful.

[685] It produces stress and it produces bad results and it produces the lowest level of happiness in one's life.

[686] It's interesting as you get later in life, the levels of happiness rise and the highest level of happiness is between ages 70 and 80, which is interesting for other reasons.

[687] But in that spot, and the key to work -life balance is to realize and to learn how to get more out of an hour of life, okay, because an hour of work, what people are thinking is that they have to make a choice between one thing and another, and of course they do, but they don't realize that if they develop the skill to get a lot more out of an hour, it's the equivalent of having many more hours in your life.

[688] And so, you know, that's why in the book principles I try to go into, okay, now, how can you get a lot more out of an hour?

[689] That allows you to get more life into your life, and it reduces the work -life balance.

[690] And that's the primary struggle in that 35 to 45.

[691] If you could linger on that, so what are the ups and downs of life in terms of happiness, in general and perhaps in your own life, when you look back at the moments, the peaks?

[692] It's pretty much the same pattern.

[693] Roli in one's life tends to be a very happy period, all the way up.

[694] and 16 is like a really great happy, you know, I think like myself, you start to get elements of freedom, you get your driver's license, whatever, but 16 is there.

[695] Junior year in high school quite often could be a stressful period to try to think about the high school.

[696] You go into college, tends to be very happiness, generally speaking.

[697] Freedom.

[698] And then freedom, yeah, friendships, all of that.

[699] Freedom is a big thing.

[700] and then you, and then 23 is a peak point kind of in happiness, that freedom.

[701] Then sequentially, one has a great time, they date, they go out, and so on, you find the love of your life.

[702] You begin to develop a family.

[703] And then with that, as time happens, you have more of your work -life balance challenges that come and your responsibilities.

[704] and then as you get there in that mid part of your life that is the biggest struggle.

[705] Chances are you will crash in that period of time you'll have your series of failures, that's that, that's when you go into the abyss, you learn, you hopefully learn from those mistakes, you have metamorphosis, you come out, you change, you hopefully become better and you take more responsibilities and so on.

[706] And then when you get to the later part as you were starting to approach the transition in that late part of the second phase of your life before you go into the third phase of your life.

[707] Second phase is you're working and trying to be successful.

[708] Third phase of your life is you want people to be successful without you.

[709] Okay?

[710] Yes.

[711] You want your kids to be successful without you because when you're at that phase, they're at making their transition from the first phase.

[712] the second phase and they're trying to be successful and you want them to be successful without you and you have your parents are gone and then you have freedom and then you have freedom again and that with that freedom and then you have these history is shown with this you have friendships you have perspective on life you have different things and that's one of the reasons that that later part of the life can be real it on average actually it's the highest very interesting thing if they there are surveys and say how good do you look and how good do you feel and and that's the highest survey the person now they're not looking the best yeah and they're not feeling the best right maybe it's 35 that they're actually looking the best and feeling the best but they rank the highest at that point survey results of being the highest that's so fascinating in that 70 to 80 period of time because it has to do with an attitude on life then you start to have grandkids oh grandkids are great and you start to experience that transition well so that's what the arc of life pretty much looks like and and i'm experiencing it you know that's you've heard that when you meditate we're all human we're all mortal when you meditate on your own mortality having achieved a lot of success on whatever dimension what do you think is the meaning of it all the meaning of our short existence on earth as human beings.

[713] I think that evolution is the greatest force of the universe and that were all tiny bits of an evolutionary type of process where it's just matter and machines that go through time and that we all have a deeply embedded inclination to evolve and control.

[714] to evolution.

[715] So I think it's to personally evolve and contribute to evolution.

[716] I could have predicted you would answer that way.

[717] It's brilliant and exactly right.

[718] And I think we've said it before, but I'll say it again, you have a lot of incredible videos out there that people should definitely watch.

[719] I don't say this often.

[720] I mean, it's literally the best spend of time.

[721] And in terms of reading principles and reading basically anything you write on LinkedIn and so on.

[722] is a really good use of time.

[723] It's a lot of light bulb moments, a lot of transformative ideas in there.

[724] So, Ray, thank you so much.

[725] It's been an honor.

[726] I really appreciate it.

[727] It's been a pleasure for me, too.

[728] I'm happy to hear it's used to you and others.

[729] Thanks for listening to this conversation with Ray Dalio.

[730] And thank you to our presenting sponsor Cash App.

[731] Download it, use code Lex podcast.

[732] You'll get $10 and $10 will go to first, a STEM education nonprofit that inspires hundreds of thousands of young minds to learn and to dream of engineering our future.

[733] If you enjoy this podcast, subscribe on YouTube, get five stars on Apple Podcasts, support on Patreon, or connect with me on Twitter.

[734] Finally, closing words of advice from Ray Dalio.

[735] Pain plus reflection equals progress.

[736] Thank you for listening and hope to see you next time.