The Judgment Call Podcast

Maciej Wojtal is the founder and CIO of Amtelon Capital which is focused on investing in Iranian equities. Maciej has worked with Citigroup and JP Morgan before running his own fund.

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Torsten Jacobi: Maciej, welcome to the Podcast. Thanks for coming on, really appreciate that.

Maciej Wojtal: Yes, thank you for having me here.

Torsten Jacobi: Hey, absolutely. You run something really interesting and you are the cofounder and the CIO of Amtalan Capital, which really focuses on investing primarily in equities in Iran, from what I understand. That sounds really cool, really unique. I have never heard about an investment fund out there that actually invests in Iran. How did that happen? How did you get started on why Iran? Why not something that's a little more politically correct, so to speak?

Maciej Wojtal: Yes, well, it is super exciting. And when I speak to the local regulator in Iran, they tell us that we are their favorite foreign investor, foreign institutional investor, because we are the only one. There is really no other foreign institutional investor in Iran, so we are the only ones. So I decided to launch Amtalan Capital back in 2016, when JCPOA, the nuclear agreement, was implemented. And the reason why Iran and not something else was actually pretty simple. There was no other market. There's still there is still no other market at this moment in the world with lower evaluations, a higher growth potential, both like a long term structural growth potential, as well as near term growth that will be coming from the reopening of the country or reintegration of the country with the rest of the world. And to be honest, this is potentially the last opportunity of this size. So the type of opportunity, I mean, is a transformational opportunity. So country going from one situation, because it's not from one system to another, I don't expect any political, you know, revolution or transformation there. But the economic situation will change, will change from a, you know, decades of sanctions, where the economy was basically cut off from the rest of the world to the economy that is slowly opening up, catching up with the rest of emerging markets, with everything good that happened in the rest of the emerging markets over the last two decades. And on top of that, no one is there. So Americans cannot touch it. So all the big funds out there have to wait until the primary US sanctions are lifted. So suddenly you get, you get to go to a new market like this of this size and invest before the big US funds go there. It doesn't happen too often. And what I mean of this size, what I mean by this size is, you know, that's another unique thing is that you may have some frontier markets that you can get excited about because of demographics, you know, growth potential, whatever. But usually they have no capital markets. You can go and launch startups, build a factory, a bank, whatever. And here you already have pretty well developed capital markets, stock market with 600 companies. Right now it's around $250 billion market cap. Back in 2016, it was already $100 billion market cap. And right now several hundred million dollars turnover per day. And so, you know, big enough market to be attractive even for big investors. I mean, too big to ignore basically. And for us with a new fund, startup fund that wants to basically focus on this niche and do the initial fundraising and so on. Well, there was looked as an amazing setup with everything that we needed in place. So hence the decision. And, you know, the important thing is that I had no connections to Iran. So I actually had never met an Iranian in my life before my first visit to Tehran. So I had no bias. It wasn't the case that, you know, my, I don't know, half of my family was actually from Iran. So it was somehow convenient for me to focus on this market and maybe travel more, whatever. No, I was able to focus on any market out there. And Iran was just based on the risk reward that I saw there. Risk being obviously geopolitics, but it seemed to be at that time turning in, you know, with the more positive momentum and rewards coming from the lowest valuations in the world. And all this and all this growth potential look to me like, yeah, exactly like the best risk reward out there.

Torsten Jacobi: Yeah. So it's either very gutsy or very crazy decision that you made a couple years back. I hope it's the former. One thing that I heard you talk about on another show is that you compared Iran right now to a post 1990s Russia. Eastern Germany that is very low earnings to valuation ratios. You had, where, yeah, just the climate where everyone had this this appreciation of change, appreciation of the future. Entrepreneurship was strong and was really grassroots. I will be seeing now in the U.S. where you need to be a $3 billion. No, it's something where we all fell. Then I was part of that in Eastern Germany, where we all fell. The future is kind of in our hands. I mean, they did this grassroots, massive collabs, grassroots entrepreneurship, as he describes it, what we are missing. And it really drove these in Eastern Europe really quickly into what a decent part of the European community where they are right now, rather than 10, 15 years. It happened really quickly. Why do you say Iran is at a similar precipice? And do you see any catalyst that it will very quickly, say the next 10 years, will be more like a normal Middle East country, which is, you know, the Middle Eastern countries all are, they have quite a bit of turmoil. At least some of them. We just talked about Syria and a couple of episodes ago. What do you think Iran is at a precipice?

Maciej Wojtal: Yeah, look, so it is fair to compare it to Eastern Europe in the 90s. It's not the same. It's always different. But what I mean by that is that certain dynamics may be similar. So going from one system that is restricted in some way, in Eastern Europe, it was, you know, socialism slash communism, and this, people were entrepreneurial, but they were not free to really, to really, you know, do what they wanted to do. And then after 1989, all this unlocked. So in Eastern Europe after 1989, all this energy was unlocked, basically, and people started really wanted to work and they started chasing their dreams. And this, and you could see this entrepreneurial entrepreneurship in action. It was quite chaotic in the 90s. You know, I lived in the 90s in Poland, and it was chaos. I mean, there were, you know, institutions were not working properly. It was corrupt. Bureaucracy was a huge headache. It was absolutely a mess in many places. But it worked. And the pace of changes was amazing. So everything was very dynamic. So after 10 or 20 years, Poland changed completely. And the rest of Eastern Europe, it became much more stable, much more easy to forecast, but also hence much more institutionalized in every corner. But hence also the, you know, your expected return also much closer to the mean, let's say, to whatever from, I don't know, investing in real estate right now in Eastern Europe is similar to Western Europe, actually, in terms of your risk reward. So this is what I expect in Iran. A similar growth coming from people who are entrepreneurial and from foreign investment. Because look, the same, the same role as Eastern Europe played for Western Europe in the 90s, for Germany mainly, but also France, Italy, where Eastern Europe was basically a hub, a source of cheap labor, where it made total sense to locate your factories over there, take advantage of this cheap labor force, and then also be ready to benefit from the growing middle class that was showing up there like 10 or 20 years later. And suddenly it was, you know, it became an important consumer market. Same thing will happen in Iran. I mean, Iran, look, Iran is quite a big country. It's 84 million people. They have the largest oil and gas reserves combined, oil and gas reserves in the world. Plenty of zinc and zinc and copper resources as well. But the most important resource is the population, is the Iranian population. It's a well educated society with a median age of 30 years old, where I think it's not, it's unlike the rest of the Middle East. It's not very similar to other Middle Eastern countries. It's, you know, the sense of 5,000 years of history that they have is you can feel that. And this is what's been important for them generation after generation, so this focus on education and so on. So you have very skilled labor force, which because of the sanctions, is right now cheaper than in Vietnam. So, you know, the average salary is probably around $200 in Iran. You can even hire computer scientists, so people who can code for, you know, 800 bucks, whereas, you know, even in usually Novgorod somewhere in the middle of Russia, it costs you $3,000, right, to hire someone. So, right now for you, if you're a big, you know, European or Asian company corporation and want to, looking for a place to manufacture stuff, and then also to start promoting your brand because you will find, you know, you want to be present in the new consumer market, it's a no brainer to go there. But also, you know, it's not only that, it's not only these 84 million people because Iran has very good links with other countries in the region. All the neighbors, so Iran plus all the neighboring countries, it's 500, more than 500 million people. And countries like Iraq or Afghanistan, which is obviously in the news right now, they import most of their products from Iran, the products they consume from Iran, not only oil or gasoline, but, you know, food, cars, car parts, even cement, so things that are not that easy to import. So, companies that are based in Iran are well positioned to export in the whole region. So, this is another argument for big multinationals to go to Iran, as soon as, you know, geopolitics set up. So, this is one, another reason why I think that, you know, it could be similar to Eastern Europe. Of course, the differences are big as well because, you know, Eastern Europe, or at least, you know, Central Europe was on the path to NATO and then European Union quite quickly. So, nothing like this will happen in Iran. But what will, what might be similar, and I think will be similar, is that big investment, big FDI investment should come from European, major European companies, you know, which are already there. A lot of Swiss and German companies and French and Italian companies are already there, have been operating under the radar throughout the Trump administration, just not to get into trouble, but have been, you know, patiently waiting for, for an opportunity to scale up their, their operations. And we are in talk, we are in touch with them with, we're speaking with all of them to understand what's going on. And, and yes, and they're all thinking about expanding their operations, same for big Japanese companies.

Torsten Jacobi: Well, when we, we just talked about sanctions, but only briefly, and I think this is, this is a huge catalyst, right? So maybe we, we, we roll up at this story of sanctions a little bit, right? So from what I know, this is very limited, the sanctions were put in place for the nuclear, uranium enrichment, that a lot of countries were concerned that there's a nuclear weapon that Iran will build and use against Israel. I think that was the biggest concern, a really near term concern. And then it was an agreement reached, I think it was under the Obama administration that they stopped doing this. They only use it for civilian purposes for a couple of nuclear power plants. And then once they adhere to this, it would be, and that was, I think the story of the end of the Obama administration, that was basically catalyst for working with Iran with less sanctions, right? So there's still sanctions in place with much less. And then Trump came around, a picture changed in Iran was that the big, big bogeyman, based on the analysis of that administration, that there was a lot of states funded terrorism. And we know that Iran does it through a proxies. And obviously what's terrorism and what's the freedom fight, it's very difficult to say sometimes, right? So we do know that there is a gray line, a gray zone, that we see this in Taliban, with the Taliban in Afghanistan, who were friends, enemies. Now they are like an administration really, really don't know what they are and who they are to an extent. So maybe you can help us understand what happened to these sanctions. Are they justified? And do you think they just going to go away very soon under the Biden administration, which would be obviously huge catalyst?

Maciej Wojtal: So there are many different types of sanctions. And those sanctions have been in place for quite a long time. I mean, you know, the first, the first event that influenced the relations between Iran and the US was obviously the Iranian Revolution, 1979. And the takeover of, of, of the US embassy and the American hostages. So, you know, it happened a long time ago. But it's based on what I, what I managed to, to find out and understand. This is something that basically poisoned the relations for the, you know, decades to come. It's, it's, it's actually amazing. But this, this, this one event was so strong that it fueled the, you know, the propaganda on both sides, meaning American politicians were using this argument to, you know, to portray Iran as the, as the bad actor always, and, and, and, and was very much in line, you know, with the recent history and, and with the sentiment in the US. Iran obviously did the opposite. I mean, the same thing, but towards the US in its own country. So, you know, death to America for the last 40 or 50 years. And, and, and, and this is the, the, the big Satan and the whole poll, maybe not the policy, but, you know, the philosophy of the country is very much centered around, you know, the active fight against, you know, the US. So it's a problem because that when they sit down and want to talk, it's just much more difficult because even if they want to make a deal quickly and smoothly and they agree on the principles, they have a lot of this sentiment that is a very, you know, long term and well established on both sides that they need to deal with. So I think this is actually the biggest issue in speaking to each other. Then at some point they also had, you know, more hard line leadership on both sides, right? So either, you know, on the US side, when Iran was getting into the axis of evil or any, you know, this type of philosophy, then in Iran, you had Ahmadinejad, who was, you know, basically talking about removing Israel from the map and, and firing missiles and, and he got, I think, the, the very heavy UN sanctions on the country where even Russia and China voted to impose, you know, sanctions on Iran. So, and that was, I think, you know, somewhere between 2009 and 2013. So what changed later, and then Obama actually initially increased sanctions on Iran before making a move offering to negotiate an offering to, to side the nuclear deal, which happened in 2015, was implemented 2016. And the nuclear deal said that UN sanctions were lifted, and US secondary sanctions were lifted. So what was left were US primary sanctions. Now, what that means is, so US primary sanctions basically say that Americans cannot touch Iran. They cannot invest there. They cannot do business with Iranians and so on. Nothing. And US secondary sanctions say that everyone else should not be doing, you know, either the same thing as Americans or, or to a less extent. So what happened was that the secondary sanctions were lifted. UN sanctions were lifted. So suddenly all non US persons were allowed to engage with Iran. And that was in 2016. That was, you know, where we got involved with Iran, why there was a lot of excitement in Europe, especially about, you know, business in Iran, because the legal obstacles were gone. Now, this, this obviously changed with the change of the US administration. But that was, but that was the situation then. And look, like the big, big opening, meaning when Americans could start to invest in the country in Iran, Iran could happen after primary sanctions were lifted. But this, this will be a longer time process. I mean, this will require a Congress approval. This will require, so Republicans will have to be, I think at least 10 Republicans will have to be on board. So it will not happen soon. And it would have to be combined with, with also, you know, other things that Iran would commit to. So not only the nuclear, the uranium enrichment that you mentioned. So, so yes, okay. So going back to Obama, Obama said, you stop uranium enrichment. And, and we, and we lift the secondary sanctions. And, well, pretty much this, this is what happened. Now, what Obama wanted in the long term. And then what Trump said was that, okay, but we want you to also stop doing other things, like meddling in the region. So stop sponsoring all the, all the militias, all the, all the groups across the region that are causing problems. And, and also stop working on your missiles on your ballistic systems. So when Iran hears that, they are saying, well, first of all, missiles, I think it's a no go. They will, I think they will never agree to, to stop working on, on, on, on their, well, defense systems or missile systems, they say it's only defense systems. Why? Well, they look after the revolution. So 79, where the country was, you know, still not well set up. Saddam Hussein, the leader of Iraq at that time, attacked Iran, using actually a lot of weapons that he got from Americans. And Iran didn't have any missiles at that time. And they couldn't defend against, you know, what, what, what, what Hussein was throwing, throwing at them. And at that time, Iran actually reached out for help, you know, Europe, the US, to the neighbors, and so on. And they didn't get any help from anyone. And now they are using this argument. And I think it actually makes sense that, look, we have the right to protect ourselves. We experienced, you know, a serious eight year war that was devastating. No one helped us. So sorry, but we will not negotiate on that. And so this is one argument. And then when it comes to, you know, the, the groups working in the region, well, it's more nuanced. I mean, obviously, the US will say, look, these are terrorists, and you're just supporting terrorists. Iran will say, look, as you, as you pointed out, these are freedom fighters, or these are Shia minorities in a Sunni, Sunni region. And, you know, and they need help because they are a minority and, and everyone around them is aggressive. So we are just supporting our own. And this is, or we are supposed to supporting, you know, Palestine, or, or the minority in Lebanon, or, or Yemenis, or Shia minority in Nigeria, actually. So yes, this is, this is the philosophy. Then, you know, the US will say, which is a valid argument, look, they behave like terrorists. So, you know, their tactics are like terrorists. So, so that's why, you know, they are terrorists. And, you know, and, and, and the argument, it's, it's not, it's not easy to, to resolve. So, I think it will be, for Iran, it's also part of their defense strategy. Let's say that they are getting involved in the region before anything comes to Iran. Look, Iran is the most stable country in the region. Like really nothing, nothing happens there. Tehran, city of 10 million people, 10pm at night, you see women walking by themselves, nothing is happening. And it's not because police is on every corner. No, it's just, it's just pretty safe. Okay, probably I stick to the better parts of Tehran. But still, okay, it's a 10 million city, 10 million people city. So everything is happening in the city. And, and, you know, in the center, you just feel safe. And they say, Okay, that's partly because we do, we are active in the region, and we don't wait for the problems to come to us. So, well, these are, these are, this is what they're discussing about. I don't think that the Iranians would, that it will be easy to make Iranians just stop getting involved or stop working on their missiles. Unless there is like a really long term incentive, long term deal, where they would get a lot, they would benefit a lot from the only something like this would make them, you know, change their strategy, change their behavior.

Torsten Jacobi: Yeah. Well, you know, but what's, what's very difficult from the outside, and you are an Iranian insider now, that's why I'm asking, it's, and I noticed from Eastern Germany, think about it, how difficult it was to see what is what the people on the ground, the actual people who live in that country, what is their opinion, and what is an oppressive government, tyrannic government opinion, right? So we see this in North Korea, we see this in Iran, we kind of assume this for China, maybe true or not, we assume this for Russia, maybe true or not. But we have trouble and I think the US is always very careful to make that distinction, even though it gets lost. We know it is, there's people on the ground who have maybe very different incentives, very different goals, very different objectives, very different opinions, but they are not, they're not allowed, they are not able to, to really create a voice in that country because of suppression, or maybe because they are too stupid, you know, you can say this about Eastern Europe, why did the revolution in 89 not happen in 96 or 49? That's a very interesting discussion to have, I think. So what, when you, and you said that earlier, there isn't a big political revolution that you see coming up, and I think the US was very supportive when there's demonstrations and then they die down after two days because people lose their jobs, and you know, there's a lot of ramifications from this. When you, when you get a sense of what people on the ground actually feel, even though they are not able to officially say that, and maybe that this event, but what do you think are the goals of the population? Do they differ from the administration? Is that something you can talk about?

Maciej Wojtal: Yes, so I think it's, in Iran you have, it's a, it's a, it's a quite diverse society. So you have, you know, different parts of population may, may think in a bit different way. So the wealthy parts of Tehran are, in terms of their mindset, in terms of their aspirations, ambitions, the lifestyle that they would like to have, it's, it's very much like, like Western Europe, like, like the Western world. The same goes in terms of how religious they are, their, what, what they need, what they want in terms of personal, you know, freedom, political freedom, and so on. On the other hand, when you go to smaller cities, people are much more conservative. You can even see this in the way, you know, they dress, the way, you know, what, what lifestyle they have, which is much more religious, much more dogmatic in terms of mindset. So, so yeah, so it's, so it's not the case that, you know, all Iranians think the same. There is no opposition in the country. For, you know, different reasons, I probably think it's, it's similar to China, which, which is a, you know, it's a, it's a, it's a quite an efficient machine, right, that is working there, the system, and, and that's it, and it's just controlling everything. So I think it's just similar, similar picture there. And so, but people, you know, at least over the last, you know, four years, when it was really tough, I mean, and it was really depressing, depressing because they had a lot of hope. It was amazing. It was so much hope like 2016, 17. And then Trump came over and, and, and this hope was crushed, right? So without getting into argument, whether, you know, what was justified was what not. Just what I, what I saw when I talked to people was that they're optimism, you know, and, and, and hope that I could see 2016 was gone, completely gone. And, but still, you couldn't sense that people suddenly thinking about, you know, revolution going out on the street and not, I don't know, fighting with the government or who, or whoever, whoever, people were more always focused on evolution. So they won't change. They want, like everywhere, usually want the system to change in one way or another, maybe in Iran, a bit more, but, but more for evolution than revolution. That's, that there was always my, my sense, maybe, maybe it might change, but I've, this is what I've always experienced.

Torsten Jacobi: Yeah, I remember the days of 89, when, you know, people were on the streets, but it was all, I mean, it was 99, 99.9% peaceful, right? And then people were like, well, simply if you want to go to Western Germany for a couple of days, and they were like, okay, you can go, but you have to, like, go through this process, right? And then a week later, they said, oh, you can still go, but you can't, you can only go to Berlin. And then a week later, they were like, okay, you can go wherever you want. And a week later, okay, now you get, the Western Germany would give you money when you come over, right? Just to visit Western Germany. It was a very interesting program. And this changed so quickly, like it was an evolution, but the evolution was every week, there was a different reaction to that pressure. So I feel like it always starts with an evolution, but the speed of the evolution looks to the outside of like a revolution, like nobody wants violence. So I think this is true for both sides.

Maciej Wojtal: So it's a different pace in Iran, because I think it's more driven by demographics than, than political events, you know, in Eastern Europe, things had a catalyst and it just started, started happening quickly. In Iran, this is actually a similarity with, with other Middle Eastern countries is that, you know, whatever philosophy was the dominant one back in 1979, and over the following, you know, two decades, it cannot be the same philosophy right now, because the majority of the population were born after the revolution, and they just cannot relate to the slogans to, you know, to this, to this original philosophy. So they, they have different aspirations. They have different worldview and mindset. And, and that's why the system has to change, I think. Same thing in Saudi Arabia, right? People are just super young. They, they, they know what they want from the internet, basically. And so that's why they, they, they, they also need to adjust. So it's not because the system wants to adjust, it doesn't have a choice. They need to adjust. So, but that's why it's also happening much slower, I think, over there.

Torsten Jacobi: Yeah, I fully agree with that. And I was just in Egypt for a couple of weeks. And I, you can see it in Egypt, too, right? To see this, this huge modern part of Egypt, which is propelled by young people. But I mean, it goes up to the 40s, I feel. And then you have this, this, this other part of Egypt, which kind of clashes with it, which is, you know, very comfortable Muslim values, traditional values, keeping you safe, keeping you in the right mind space, being close to God, which is really what I think the, the most popular philosophy to look at your own country for a long time. And now these young people are there. And they, they kind of, they both just want, I think they just want to be left alone, right? But making a cohesive policy out of this is almost impossible because they're kind of at current philosophy, how we look at the world, they're kind of opposite ends. We see this in Afghanistan right now, right? So we thought it's going to be modern democracy, but oh, you know what, actually, what a good part of their country once is the opposite, which is no democracy and being close to God, being close to Islamic values, being close to Sharia. And that's kind of a surprise, right? So the end of history didn't arrive. Like Fukuyama said, it is the end of history. History is still going on, right? So there's always something new. But talking about something new, I want you to give us an idea of what is really hot in Iran right now. So we know there's a lot of state owned enterprises that are basically probably not your focus, but there must be other great businesses. And we heard of Bitcoin mining, but other businesses that are worth investing into where you think this is really going to rock it the next 10 years, with or without a big catalyst. Where would you, where do you actively research right now what kind of businesses?

Maciej Wojtal: So now there's, you know, the good thing about Iran is, is that it's a, you know, proper economy, well diversified economy. So all this oil and gas is just, you know, maybe 5% of GDP used to be 15, 15 before sanctions. And now it's somewhere, I don't know, in single digits somewhere. So the rest you have, you know, manufacturing services, most of, most of industries, most of sectors are there, because they, they didn't have a choice. They had to develop all the different industries to become, you know, to do as much as possible self sufficient because of the sanctions. So, so, so that basically they could survive all the restrictions put on them. And it worked. And so and so this was one thing, but also they had enough scale, a scale of, you know, again, this 84 million people, but also the export markets that are around them, where Iranians, you know, have have traditional historical connections. Many of these countries speak the same language. So, so it was easy, easy for them to export. So what we are looking for is last four years. And I think right now it's also a similar time that it's, it's worth looking at companies that are basically dollar assets that just happen to be listed in Tehran. So you have exporters or companies that sell domestically, but at prices that are benchmarked against some, some global prices. And whenever the local currency drops depreciates, you know, their revenue just jumps together with the dollar, their earnings accelerate even more because of operational leverage. They keep their costs in depreciated real and their revenue is in dollars. So all the, all the additional, you know, dollar appreciation, all this additional revenue goes straight to, you know, to operating profits. And so, so these are the companies that usually tend to benefit, show the acceleration of profits first when the currency depreciates. And so right now the currency started to depreciate again in the second half, which, which we expected to some extent because there's a couple of factors. Usually after the presidential election, the currency depreciates a bit because they try to stabilize it before the election. Then you had lockdowns again. And lockdowns do have an impact because important sources of hard currency that goes into Iran are, is the regional trade. One, one, one source is the big trade, but this is affected by US sanctions. So whatever Iran was selling to China, Japan, you know, South Korea, European countries, and so on. So to China, they still sell, but, but it's not that easy to, to get payment. And so the regional trade, which is not really affected by sanctions, so whatever goes to Iraq, Afghanistan, Turkey, Uzbek istan, whatever. And this is an important source of hard currency. So when you have lockdowns, then, you know, for a couple of weeks, border crossings are closed, then you don't have enough dollars. And there are some imports, imports of some essential goods that just have to happen, whatever the price of the dollar, right? So, so, so very inelastic. So it will just, you know, the dollar could just jump when there is not enough supply. On paper, the central bank has quite big reserves, or foreign reserves. But in reality, they cannot access access them. So they, whatever they can access is just not enough. So, so, you know, at the end, they have to print money more than they would like to, which, you know, again, fuels inflation, which fuels the depreciation of the local currency. So we have this moment right now, when, again, you had some lockdowns, plus Afghanistan was off for some time. But it's actually going back to normal very quickly from the Iranian point of view. So a week ago, the main border crossing for trade between Iran and Afghanistan was reopened. And now all three, I think, are open and working properly. Afghanistan reduced the customs, custom duties on the Iranian gasoline and oil imports. So, so this has has resumed as well. And, well, I was reading that actually the Taliban leadership was interrun six months ago, you know, before the takeover, basically, of the country. So potentially, you know, there was a deal done at that time that Iran would be very pragmatic, basically, with the relations with Afghanistan. And I think this is what's happening. Same, same for Pakistan, same for, you know, Russia, China, and so on. So, so anyway, so what I wanted to say is that right now you have a couple of factors that affect the the currency. So the dollar is is moving higher. Given the exchange rate of the dollar versus real, and the expected future profits, profits of of the Iranian exporters, well, the share prices are way too low. So easy money right now is to buy by shares of the of the exporters of Iranian exporters. Now, what else is interesting, what is driven by macro and all the last four years were very much driven by macro, were the domestically oriented industries. So companies that were selling domestically were benefiting a lot from sanctions and currency depreciation, because their competitors were just priced out of the market. So when you had the big currency move, you know, even exporters from China were just too expensive. And, and everything, and because of sanctions, everything was getting more difficult. So making the payment, you know, arranging the logistics, and so on. So we saw local companies, even though the whole market was was not growing, was was was stable. The local producers were gaining market share so you could see growth there. And, and, and we were able, because there is so much data being reported by by the local listed companies, that we were able to track this on a monthly basis to understand the volumes per product line, and the unit prices, you know, at which they were selling, to understand, okay, so who is doing better and versus our expectations and so on. So these are, these are, they're actually, you know, they're, as you know, there are many misconceptions about Iran in the West, right? In all areas, right, from misconceptions about the population, where, I don't know, many people or newspapers or media are just trying to portrait Iran as country of terrorists who who hate, you know, Jews and Israel and so on, to, to, you know, good misconceptions about the economy of Iran that is just bleeding and and it's just Venezuela or Zimbabwe and just fall apart and so on, which is obviously all far from from being true. You know, when it comes to population, it's a very tolerant and open society. When you go there and someone speaks any, even as a tourist and someone speaks any English, he will approach you and just to have a chat with you, you have, you know, Catholic Christian churches, Orthodox churches, Jewish synagogues, Zoroastrian, you know, churches, temples, and everyone is doing his own thing in terms of religion. So, so it's absolutely not true that they're like intolerant. So it's actually a very open society and same for the economy, where actually, because of the diversification of the economy, because of the fact that big part of the economy is focused on exports, then focus on exports, they end because of the fact that they just allowed the real to depreciate and didn't fight, you know, to just defend it, you know, with, with, with any reserves they had. They, they helped it to, you know, the local companies to improve competitiveness and, and actually help the, the economy under tough sanctions under Trump. If interesting thing is that unemployment actually went down after under Trump, unemployment in Iran, because manufacturing companies had such, you know, great couple of years, I think there were two years that when they had like record profit growth, that they, they increased employment, you know, they started hiring people. So it was like counterintuitive. But going back to your question. So you, we are looking at a couple of manufacturers that are providing specialized machinery to the, to the domestic petrochemical and steel plants. There is a very big petrochemical and steel industry in Iran. You know, petrochemical industry is probably together with, with the Saudi petrochemical industry. These are the most profitable industries in the world, petrochemical industries. Well, obviously thanks to the cheap gas that they have. Also Iran makes more than a million cars per year. So the steel industry is big and all the related industries as well. And there are companies that provide some specialty, you know, parts machinery to these bigger plants, where those manufacturers have very strong pricing power because, well, because they are so small and specialized in the big picture for the, for the big manufacturers that they don't really care that much about the pricing. And it's also very difficult to import them. So, so they have a good pricing power. It's, they don't have a competition from the foreign competition. So, so we are looking at those. We're looking at some local brands in, in the, in the cleaning products and in the companies that make just everyday equipment, household equipment. And they're also well positioned to have strong brands, well positioned to, to grow their businesses. There is one interesting supermarket chain that is growing online delivery, exactly the same as you could find in, I don't know, Okada in the UK or some other companies in, in Western world. So, so this is something where we see strong growth over the next couple of years over the next decade. I mean, my favorite company, if I could buy the whole company, we're actually working on it. So one thing is, is, is, you know, being active on the, being an active manager on the stock market. But we're looking also at a couple of companies that we would basically like to take over, like separate from the fund, just arrange an SPV and, and take advantage of the fact that I think over the next couple of quarters, there may be some opportunities that will not happen again, you know, a couple of years from now, because it will be still too early for the big players from the West to go on and get involved, because it will always take time to get a set, you know, to set yourself up to, you know, your presence in Iran compliant with all the regulations, sanctions and so on. You know, it will take, you know, 18 months or whatever. So, there will be a window where it will be, it should be possible with some sanctions, the key sanctions lifted, it should be possible to acquire some assets from sellers that don't care. And just to give you an example, you know, there is a, for example, a holding company that, that holds brands, consumer staples, bad brands like personal hygiene products, they have around 20% of the market, well known brands and so on. So, this is the type of stuff when you have foreign investors that go to some new frontier market, they always go for these, these type of investments, first, right, brewery, you know, soap maker, whatever, right. So, it sounds like, it sounds like out of a Jim Rogers playbook. Exactly. Exactly. You would buy those companies on the heartbeat. So, even in frontier markets, they often trade at 20, 25 times earnings, even if the market trades at 10 or whatever, right. So, here we're looking at one holding company that is also trading at the below the NAV. So, effectively, you can buy these assets at around, you know, let's say five times earnings. And just to give you the order of magnitude, 20, they control 20% of the local market plus they export a bit. And, and it's valued at $100 million. I mean, $100 million for 20% market share in a big country like this, profitable, super profitable, you're buying this at five times earnings. Yeah. I'm pretty sure that Unilever will be happy to pay 10X, you know, in a couple of years. So, this is the type of stuff that it would be super excited about to, to just, to just take over, you know, in full.

It sounds really exciting. I mean, that sounds like a slam dunk. I'm seeing it from the outside and if there's ever a catalyst coming up there, the one thing that I hear from you is really, I, I find that will counterintuitive, but maybe these, all these sanctions actually helped Iran. And here's the argument is most countries that export a lot of commodities, they sooner or later fall into the Dutch disease. So, there isn't much you can do about it. And you see this in Africa a lot, because the economies are so small, it literally takes one oil field to destroy the value of their currency, currency appreciates, which you think, oh, the good thing. Well, it is, if you are getting money from that oil field, but if you are an entrepreneur and in the services sector, not part of that, of that commodities extraction, you're in trouble because local labor compared to the US dollar is extremely expensive. That happened in most African countries because they found commodities to a certain extent. Angola is the best example. And Nigeria, it basically destroys your own economy. It seems like the sanctions and the inability to export has helped Iran to stay competitive, because what you're saying seems extremely competitive. Well, educated labor force for $200, $500 a month is incredible, right? So, this is a great deal that you will hard press to find even anywhere in the world. So, maybe all these sanctions, as terrible as we feel they are, and it's probably the hampered economic growth, they put the whole country on a different track than it would be if it was just on the gas extraction. Well, definitely. But that happened a long time ago, right? I mean, not because of Trump's sanctions. So, maybe there was a risk some time ago, but I don't know, wouldn't be able to tell that Iran would end up with an economy similar to Iraq, for example, where it's 90% or more, it's just oil, right? And nothing. Saudi Arabia. Yeah, I think I'm sorry, Arabia, where literally nobody has to work and nobody does work. So, it seems like they want to change it, but it's just impossible that right now it's too late. They try to take away some of the social handouts and then they got scared that people might just revolt, right? And go on three of the streets and threaten the royalty, right? So, they backed away. So, look, but it's also a different tradition, different culture in Iran. You know, these are Persians. I mean, they were building the first highways so that caravans could go faster, right? So, I guess it's in their blood. Plus, you know, the location of Iran. I mean, this is another, look, this is another catalyst. So, Belt and Road Initiative, you know, the Chinese big project to connect, you know, the Chinese cities with Western Europe. This is a real thing. And Iran is exactly, you know, on this path. And potentially, it's one of the key, yes, I would say it's one of the key elements to it. So, you'll really have a train, a freight train that goes from Shanghai or Xi An, I think, in China to Tehran. And it cuts the time and cost quite significantly versus the sea route. Especially right now, when you don't have, you know, all the problems with the containers and the ships that you have right now and the inflation of the shipping cost. So, Iran is important for China from that perspective. It's also important for China because it's one of the sources of energy, of long term energy supplies for China, which they need. And they're, you know, they think very long term, so they want to secure those. It's not only Iran. They're speaking about the same thing with Saudi Arabia and so on. But this is what they need. So, and what Iran needs, Iran needs money. Iran needs investment. Iran is underinvested. And they're invested in so many areas. So, pretty much whatever money you invest in Iran, it will be a productive investment, most likely, right? Because there is stuff that is needed. If you build infrastructure, it will fuel growth for the next generation, right? So, it's a very productive investment. So, it's not like, you know, Japan in the 90s. So, they signed this long term partnership where China said, look, we're going to invest $400 billion over the next 25 years. And a big part of it will be invested, will be front loaded. So, invest more at the beginning. We will invest in your oil and gas infrastructure. So, we will help you produce more oil. And we'll build highways, airports, ports. And also, we will help you upgrade your petrochemical industry, if I remember correctly. So, I mean, the details are quite vague and they never published it. So, we will see obviously. But, and Iran will have to pay for it. But, they will pay in discounts, in big discounts on oil that they will sell to China. So, when you look at it from Iran perspective, look, Iran's GDP, I mean, it's always difficult to calculate it because you don't know which exchange rate to take, I mean, from which period. But let's say it's $200 billion. So, they are getting, you know, $400 billion over 25 years. So, it's like 8% GDP per year. But it's actually front loaded part of it. Directed into the areas where investment is really needed. So, it will be very productive, helping to grow for the next 25 years. And all they have to do is they actually have to dig up more oil, with which Chinese will help them, and just sell it at a 30% discount. So, what's the alternative? Well, the alternative is that this oil will just remain underground because with sanctions they wouldn't be able to sell it and to extract it, probably. And they would be getting no money. So, it actually looks, you know, this is a bigger deal than Eastern Europe got from the European Union Cohesion Funds. It's actually bigger than Marshall Plan. So, it's a huge thing for Iran. And so, they still haven't published the details, which is obviously an argument that maybe it will not happen. But on the other hand, it makes sense. It makes a commercial sense. So, it's not based on some friendship that they want to show that Iran is close with China and against the US or whatever. Something that can easily change. But it's just based on common interest and it makes a commercial sense. That's why I'm quite optimistic about that. So, and this is actually a pretty good alternative for Iran when it comes to JCPOA negotiations. So, Iran can actually say, well, to some extent that, look, we don't have to do it. We could go together with China. But Iran understands that, you know, their position versus China is stronger if they also have JCPOA signed with the West, right? So, they actually need both. But anyway, so this is one of the catalysts that could happen to Iran as well over the next two decades. Yeah. One thing that comes to mind too is a bit like we, you know, Jim Rogers was so bullish on China in the 90s. So, I thought every book was basically put your money in China, put your money in China. And he was right, but he was also wrong in the sense of for the outside investor who expected an open equity marketplace, you know, where equities would rise up without state intervention. It didn't happen that way. So, as an outsider to start a company in China or to be active as an investor on the ground, it's still hard. It was always hard since the 90s. Investing in equities was very, it didn't go where the GDP growth went, which clearly he was right on that, right? So, there was no doubt about it. But making money of this forecast was hard. And I feel if something could happen with Iran, China and Russia, you know, they already play these war games together. And it's always against Taiwan or it's against some, it's against Vietnam, some someone out there. I feel like there is an obviously that's a downside. You doesn't have to materialize, but there's this access developing against, you know, the U.S. or against Europe. And while the investments would still grow and Iran will undoubtedly grow, it's hard to really profit from this because a company, it's difficult to sell at equities, but difficult to get the money out. It's maybe the equity, the shareholders are being defrauded by the government, right? So, the money is going somewhere else, it's going into the actual stakeholders, it's going. So, I always feel that is this, we think of it a public marketplace and equity marketplace as something that works with our rules that the EV has established, and it sooner or later grows the equity. But I don't think that really happened in China and also Russia. That's the problem with all these big oil companies where we never know who's actually controlling them or where does the money go. Do you think that there's a huge risk of in Iran? And you obviously are ready to take that risk, but how do you make sure you're not, you're losing your pair, even do the economy grow, right? But the equity investment today will never really return any profits, the cash that you get out and your bank account. Yeah, okay. So, first of all, Iran is not Russia, meaning the structure of the economy is different. Russia, much more reliant on commodities and on this state owned, huge state owned companies. I had a couple of wealthy Russians on an investor trip in Tehran, and well, they were super excited because we were stuck in the traffic, you know, in this taxi Tehran, and they were looking around to like, wow, it's like Moscow from 20 years ago or from 30 years ago. Also, you know, the city is similar size, the traffic is as bad, you know. But then I told them, we were talking about the economy, and I said that look, probably half of the country, half of the economy is controlled by the state one way or another. So state linked entities. In Iran, it's revolutionary guards, plus some state owned entities, religious foundations, you know, different entities in different countries, but it's roughly half of the economy. And these Russians just looked at me and okay, so they screwed up. I mean, why only half? I mean, it's like, from the Russian perspective, it's only half, right? Because in Russia, it's, I don't know, 80, 90%, right? And then when you read about it, it's actually the average for the emerging economies, you know, from India, Brazil, even to South Korea, if you look atables that some sort of, I don't know, also linked entities, it's usually around 40, 50%. So this is pretty much in line. So there is much more private business that has nothing to do with commodities. So this is the big difference. And it's, and it's also visible on the stock market. The stock market has 50 different industries listed, with the biggest one being, I don't know, petrochemicals, probably with something must be like 25% of the market cut, and then lowers some mining, some banks, some telecoms. But you have everything, pretty much everything that you, that you see in other markets. So you have different exposures, so exposures to different parts of the economy. So there's always something in the bull market, like fundamentally, right, where, where things are improving. So, so, so this gives you the opportunity to, to find businesses where the, the, the, the majority owners have similar, you know, aligned interests with, with minority shareholders. Yes. So, so that's the main difference with, with, with these countries, then you could say, okay, that if foreign investors don't go there, then there will be not enough money and these equities will stay cheap forever, for example. Well, I'm not sure. So I don't, I don't, I actually wouldn't worry about that. I mean, it can stay at four times, five times earnings. If they stay for a longer time at those, at those valuations, I'm happy to wait. Okay, I'll wait. I'll be collecting at that time, you know, with, with those valuations, I'll be collecting 20% dividend use. So I wouldn't be, and also last year, when you had a bull market in the local equity equities, you had four or five million, you know, retail investors coming to the market and, and obviously just driving higher. So there is, you know, capital in a lot of retail capital as well. But also, you know, so think about the last four years. So under Trump, you had pretty tough situations. So the currency dropped by 85% under Trump. And yet the stock market, the index returned, well, roughly doubled, so around 100% in dollar terms. So even in those, you know, really, this bad situation with super unstable economy, geopolitics were basically people were talking about some military conflict every quarter, right? Or, or, or if not, then new sanctions were coming in. You had, you had a very good performance of the stock market. I think it was the best equity stock market in the world in 2019. The, yes, 2020 was also decent. Yeah, so, so, so, so it's, it's, it's, and the stock market at the end of the day, it's, it's driven by, by earnings growth. So, so this is the question you need to answer, right? Will earnings grow there? Or will they, will they just become stagnant there or just go down? Look, another point that you made is that, you know, those sanctions actually helped the economy as a whole, because it had to diversify, it had to, it had to adjust to unstable conditions, which is, I think, I think it's pretty good because local companies are like the opposite of the Western companies. Western companies are, you know, organized just in time, right? But be super efficient, maximize, you know, your margin and, and, and work, work, you know, just to deliver, deliver goods just in time. So in Iran, they are organized just in case, right? Because people understand that they don't know the future and the future, they expect the future to be volatile. So they really have to be built to survive, right? So this is, this is a good thing now, but it will be also a source of additional profits, I think, in the future, because now, now think about the economy that is, that is opening up. When you have, when you have opening up of the economy, Iran starts selling more oil. They will get at least $50 billion per year from oil revenue. $50 billion sold, sold the problems in Iran, meaning budget deficit, the trade balance, financing of imports. With this, with this amount, everything is pretty much sold. So what happens? Inflation stabilizes, because the inflation now, and mainly because of, of the currency depreciation. Before Trump, inflation was single digit. It actually touched seven or eight percent at some point, but it was around 10% for quite a long time. And there is no reason why it shouldn't go back there. So when you have stable prices, local companies, local consumers as well, but local companies would be able to, to forecast things to, to maybe make long term plans, long term investment plans. So they will start to invest. Also, interest rates should go down. When inflation goes back to 10%, you know, why, why, and there is no problem with budget deficit. Why interest rate, you know, due to maturity on, on the local bills should be 22%. I mean, it will be lower. So, so with lower interest rate, lower financing costs and better stability in the macro stability, companies will start to invest. Plus, they will also be able to allow themselves to maybe keep, I don't know, lower inventories, not plan for war, but just plan for normal, you know, business as usual conditions, which should help improve their margins. Exporters will actually be able to to export without looking, trying to disguise their, their products as non Iranians. So just maybe smuggling them through Oman or Pakistan or whatever, this costs money, everything costs money, and offering discounts to entice the buyers. So, and this hurts them, their margins. So, so this will help with the margins plus volumes will go higher because many exporters are just selling below their capacity. So you have with economy that, that is, you know, reintegrating with the rest of the world, a lot of good things will happen, including the, which will affect profits, which will affect investment, which will affect GDP growth. And also, with, you know, lower interest rates, this is another argument why those valuations will just not stay at, you know, where they are now, which we see, you know, we find companies that are trading at forward three to four times earnings, right? And, and, and with those kind of valuations, investment risks are really, really manageable. I mean, you don't have to worry about this. Yeah, it sounds really fascinating. Just so, so we know that as a disclaimer, anyone can invest at what point in your fund, what's the minimum, and yeah, it excludes anyone who is a US person, right? Everyone else, anyone else can invest? Yes. So everyone who is not a US person and anyone who could who can invest at least 100,000 euros. So this is our regular regulatory minimum, because we are classified as alternative investment fund, and we can only offer the fund to professional investors who are defined in the Netherlands. This is where we are based as anyone who can invest 100,000 euros. Okay. Well, that was fascinating. That was very enlightening. Mashe, thank you so much for your time. That was awesome. What a great insight into your lot. Great. Thank you, Thurston. Talk to you soon. Thank you, Mashe. Thanks. Take care. Bye.

Jared Dillian is the author of Street Freak: Money and Madness at Lehman Brothers, named one of the top business books of 2011 by Businessweek magazine.

Jared runs The Daily Dirtnap, LLC, which provides daily market commentary and insight to a range of institutional clients.

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Torsten Jacobi : Jared, thanks a lot for coming unto the Judgment Call Podcast, I really appreciate that.

Jared Dillian: Yeah.

Torsten Jacobi : Hey, thanks for taking the time.

And you know, you have a really interesting history, and it's something that's becoming a bit of a theme though, is you started in an investment bank, and you worked for Lehman Brothers, then you wrote a book, you became an author, and now you're an internet personality, you run your own internet business, your own content business. Maybe you can tell us a little bit more about this transition, how this came upon, and how do you feel, was it the right choice looking back, or do you feel like, well, no, I want to go back to an investment bank?

Jared Dillian : No, it was absolutely the right choice.

It was funny because I was talking to my old boss at Lehman, this is the guy that I worked for 2001, 2002, and he told me a story of, you know, when I worked for him, we used to get the Garmin letter.

I don't know if you know Dennis Garmin, but we used to get the Garmin letter at Lehman Brothers, and he had probably the biggest financial newsletter. It was a daily letter, and I used to get this stuff, and you know, I liked it. I didn't, you know, I didn't think his writing was the best, but I said, this is an amazing business. I was like, you can just get paid to write about finance, you know, I'd never heard of this before.

So around 2003, you know, I had this idea in my head that I wanted to write a financial newsletter, so I had some ideas, and my initial idea was it would be sort of a retail newsletter.

I would charge a very small amount of money, about $150 a year, and I would do personal finance stuff, and then I would do seminars and stuff like that.

And I figured if I had 1,000 subscribers, I would make $150,000 a year, and that would be enough.

And then what happened was, while I was at Lehman, I was put in charge of the ETF desk, and I was told to just grow the business, because the business was very small. They said grow the business, so my idea was to do that through writing.

So I started writing market commentary and sending it out to people, and it was very popular, and it grew, and it grew, and it grew. So by the time the bankruptcy came around, I had several thousand people on my list, and I said, you know, I can easily monetize this, so the day the bankruptcy, I sent out a message.

I said, I'm going to start a newsletter, and you know, hundreds of people said I'll sign up.

So I quit Lehman Brothers, and I started the business, you know, I formed an LLC, and I got some office space, and about six weeks later, I started sending out content again, and I got a few hundred people to sign up, and that was the beginning of the newsletter.

So that was in 2008, and about that time, I was also approached to write a book about my time at Lehman Brothers.

There was a literary agent that found me and asked me to write a book about it, and initially I said no, but six months later, I came around and I said yes.

So while the early days of writing the newsletter, I was writing this book, and that came out in 2011.

So there's just been a bunch of stuff since then, I started writing from Alden Economics in 2014, I wrote another book in 2016, I'm an op ed columnist at Bloomberg, I've taught finance at the undergraduate level and graduate level at school, and I just, I know I had a radio show for the last two years, which is coming to an end tonight, but we're going to convert that into a podcast, and my goal is to make this the number one finance podcast.

Torsten Jacobi : So that's really ambitious.

Jared Dillian : Yeah, I mean, you're really all in on becoming not just an internet personality, but really making this content machine work, right?

Torsten Jacobi : A lot of people, you know, from the VC business, they go into a Substack, right?

Jared Dillian : That seems to be the technology platform to use, and also the idea that you pay a relatively small amount, and it's geared towards consumers.

Torsten Jacobi : Is that still the model that you're using, or you switch to a B2B model, where you basically do it for hedge funds and other investment banks, small investment banks, from the office?

I do both. You know, my customers, I have institutional customers, and I have retail customers. So in terms of substack, I don't use substack, I use a different proprietary system.

You know, a substack takes 10% of revenue, so that's a little bit much for me.

The nice thing about substack is that they do handle all the payments and stuff like that, so I do that myself now, which is a little bit time consuming.

Torsten Jacobi : When you look back, do you feel like the world of finance has changed quite a bit, and thatt here's more knowledge, or people are more aware of what's going on out there, or do you think we're still looking into a similar perplexing environment, as it was 10 years ago?

Jared Dillian : Well, I think more people are engaged in finance. But I would say that a lot of people have learned a lot of bad ideas and bad habits.

The meme stocks are a pretty good example. I have a Coast Guard friend on Facebook who trades the meme stocks, he's always posting about AMC and stuff like that, and he says these words like I've never heard before.

He talks about holding the line and ladder attack and stuff like that. I don't know what this is, but it's not finance. I don't know what you're doing, but this isn't the right way to learn things.

So I formed this entity two years ago called Jared Dillion Money, and that was where the radio show came from.

I did the radio show under Jared Dillion Money.

This is a personal finance platform. So really teaching the basics, not just about investments, but also about debt and credit cards and mortgages and stuff like that. So that's what I've been doing for the past two years.

Torsten Jacobi : Well, I think what a lot of people are looking for, and I think this is where the meme stocks came from, is this call option.

Jared Dillian : So this is really high, is it beta?

Torsten Jacobi : You want something that moves very much, even if the stock doesn't move so much.

Jared Dillian : It's more of a big gambling, right?

Torsten Jacobi : But gambling not in that sense that the hedge funds always win.

It's something where you can actually, we have a weapon that works seemingly enough.

We've seen this earlier this year, where you as a 20 year old have a big enough weapon.

You can become a millionaire overnight, and the hedge funds give you that money.

That's pretty rare, right?

Jared Dillian : I don't remember many of those situations in the last 10 years, when it seemed like the hedge funds are at a disadvantage at least momentarily.

Torsten Jacobi : No, I think that's a narrative that got put forth after the GameStop incident.

Jared Dillian : I don't think, I mean, look, there were a couple of hedge funds that were harmed by that moving GameStop, but I can tell you that retail investors, if you're trading call options on GameStop through Robinhood, people are making money off of you.

The market maker behind those trades is Citadel. They have some very sophisticated people who understand volatility, who know how to model a volatility surface, like, I mean, yes, like if you buy a call option on GameStop and it goes up very quickly, you'll make money, but you're at a huge disadvantage.

Torsten Jacobi : So it isn't something you can actually win at least, I mean, the odds are definitely against you, right?

Jared Dillian : This hasn't changed I think there was a short period of time about four or five months ago, six months ago, when you could win at it, but I think that window is closed.

Torsten Jacobi : When you wrote two books by now, you wrote first something that is more of a description of what happened at Lehman, and then it's a novel that you wrote later on that is complete fiction, I assume.

Was it harder to write a novel than the accounts that you gave for Lehman, or do you feel it's the same amount of effort?

Jared Dillian : Oh, it was much harder to write a novel.

I mean, just to put this in perspective, you know, Street Freak, my first book, the memoir, it was 135,000 words, and I wrote it in eight months.

All the evil of this world, which is my novel, is 70,000 words, and I wrote it in five years. It was much, much harder, much harder.

Torsten Jacobi :  Is that because you just wanted to do it perfect? Like, we noticed some Jordan Peterson and his first book took him 20 years to write because he rewrote it literally every week. Do you want it to get the narrative perfect, or because there were so many layers you had to go through?

No, I mean, I was a perfectionist about it, but the creative process when it comes to actually dreaming up events and places and people you've never seen before, it's just a lot slower and it's a lot harder.

I tell people that book is the hardest thing I've ever done, and I never want to write fiction again, like it's too hard, but at the same time, I'm the most proud of it. I really think All the Evil of This World is an amazing book, and it's the best thing I've ever done.

Torsten Jacobi : What is it about? What story are you illustrating?

Jared Dillian : So it's about a trade that takes place March 2, the year 2000. It's about when 3Com spun off Palm, I don't know if you remember Palm pilots, but from 20 years ago.

So it was a spin off trade, and it's an options trade that takes place on 3Com, but it involves seven different people from a clerk on the exchange to a broker on the exchange, to a market maker in a bank, to a hedge fund portfolio manager, seven different people, and it's just each chapter is their story, and they're all interconnected.

And each chapter is written in a different voice as to that person's personality.

So each one is written completely different.

It was the most ambitious thing that I could possibly do, and the engineering behind it was very difficult, but it worked out.

Torsten Jacobi : What's your own personal opinion or something you've learned over time about inflation?

Jared Dillian : It's this big debate, and we had deflation versus inflation was actually a big topic, and we now feel the majority has shifted to some form of inflation, and we know how much it is.

Torsten Jacobi : What is your personal opinion? Where will this end, and how high will inflation go, or will we just see inflation disappear?

Jared Dillian : I'm very much in the inflation camp. Actually, on my radio show last night, I interviewed Peter Atwater, who is at Financial Insights.

He really studies behavior and psychology and stuff like that in the markets.

And I said to Peter, I was like, I think inflation is 90% a psychological phenomenon.

And he says, I disagree with you.

I think it's 100%.

So what's happened in the last year is we've had a reversal of 40 years of disinflationary psychology, and we suddenly switched to an inflationary psychology. So this is how this works.

If you think that there is going to be inflation, if you think prices are going to rise, if you think there are going to be shortages, then you accelerate economic activity.

You buy more of things.

You buy faster.

And everybody doing this together drives prices up.

So what happened when Volcker became Fed Chair back in 1979, it was about reversing the psychology.

And he had to raise interest rates a lot and crush the economy in order to reverse that psychology.

So there's no appetite to do that right now.

So inflation is 5% in change.

It's undoubtedly going to go higher.

I don't know how fast it's going to go higher, but it will go higher.

Torsten Jacobi : What I find mesmerizing, and I agree with you, it's definitely, there's a lot of psychology in there, what I find mesmerizing is that we see bond yields that haven't moved at all right there, like 10 year bond is what, 0.2%.

If you are somewhat rational investor, how can you, with 5% projected inflation per year, right, so that's at least 30%, 40% of your bond that goes away after a five year period of 10 years, even worse, how would you even think about accepting this rate?

Like why does this market even exist? Everybody should have gone away, right? This money should be gone.

Jared Dillian : Yeah, I mean, rates should be higher, interest rates are a function of a couple of things, he supply and demand for loanable funds.

They're also a function of the supply and demand for treasury securities.

I mean, ultimately, like if there's more demand for bonds and like it, it doesn't necessarily have to come from US investors, it can come from overseas or wherever, also from the Fed.

I mean, the Fed is still buying $120 billion a month. So I mean, that's where the demand's coming from.

Torsten Jacobi : Yeah, we has Harley on and his ETF is kind of a call option for increasing interest rates over the next couple of years and it's a slow moving, like you don't lose a ton, you don't have a huge negative carry, so to speak, where you only lose a little bit every year. And I think everyone agrees with this, but obviously it's down so far, right?

Torsten Jacobi : But do you feel like we see much lower rates in the yields first, I mean, effective rates before we see higher inflation price in or we will definitely see interest rates going up?

Jared Dillian : I have pretty high conviction that interest rates have bottomed and I think they will go higher. I just, I don't know when that'll happen or how fast it'll happen. I also don't know what the catalyst will be. But I do think rates have bottomed.

Torsten Jacobi :  When you look into another topic that a lot of people are kind of worried about and I've been very worried, workily on the podcast is we've seen GDP growth relatively slow over the years and we've really seen a population isn't growing as much as the GDP growth via population growth and via productivity growth.

Folks have way more information, they have all these entertainment options, but we don't feel like we get much more for the same amount of investment and that's the lacking productivity growth.

So you feel like A, this is real and B, is this something we can do about it and should we do something about it?

Jared Dillian : No, I think it is real. I heard something interesting and I'll remember who said it, but if we had this, we had these massive productivity gains 20 years ago, back when the internet first came around and it dramatically increased productivity. We were having productivity growth of like 6%.

And that's gone down over time and you'd say, well, technology has gotten so much better.

Well, the way people use technology has changed.

For example, you used to work an eight hour day and you would work for eight hours and now people work for four hours and they're on Facebook and Twitter for four hours. So they work the same amount of time, but the internet has created diversions where they're actually not being as productive.

And if you think about GDP, all it really is is the number of people working times how many hours they work times the productivity.

And if GDP growth is slowing, I mean, one of the things you identified as population growth is slowing down, number two, how many hours they work, people are simply working less, average hourly earnings has gone down.

You hear these discussions about working four day weeks and stuff like that.

People work way less than they did 20 years ago and we just talked about the productivity part of it.

So yeah, I mean, we used to have a consistent GDP growth of about 4% a quarter.

And now it's about 2% to 3% a quarter.

And if you look at Europe and Japan, it's lower than that.

And that's where we're going.

Torsten Jacobi :  Do you feel like there's something that policy wise we could do? I mean, I always feel like capital allocation is broken.

That's why we have such low productivity growth because we put it in enterprises already have way too much money and we give them almost interest free money and it is almost interest free.

We kind of price out all the other businesses, small to medium sized companies, basically anything that's not in the S&P 500 doesn't have a chance as a life anymore.

Everyone is into this big trend following bigger, bigger, bigger, which makes sense to an extent,

But it's like this, the stock market is trend following the venture market is trend following nobody tries something new, it seems from time to time.

Jared Dillian : I mean, you've seen some crazy stuff because big tech companies, like you said, basically have these zero cost of capital. And by the way, when companies, if they have a zero cost of capital and they don't have any attractive investment opportunities, then they buy back stock. And that's another thing that's been going on for the last 10 years.

Torsten Jacobi : I feel like, and I don't know if you read Nassim Taleb, he came out with this thesis and said, well, we really have to look into individual entrepreneurship in the sense of risk taking, right?

So we have to take a risk, do something useful for society, and then we scale it up so everyone in the world can use this advantage that you've come up with, right?

It doesn't have to be an actual business, but it's a personal risk that people take.

Do you feel like, and he makes it sound like this is a big part of the missing productivity growth that is not enough distributed risk taking, but obviously his book is about fragility.

Do you feel like that's something where, when you look at people and you just mentioned your friend from Facebook that you follow on Facebook, do you feel like we're returning the corner there as well, where we see this individual risk taking is really carrying on in the 20 to 30 year old group, or that's something that's still kind of alien?

Jared Dillian : I mean, I think it's just a function of the capital markets, because I saw this before. I saw this in the dot com bubble, and you had a bunch of people trading and participating in the markets, and that was a short period of time that lasted for a year or two, and then it disappeared. So I think the same thing is going to happen.

 Torsten Jacobi : So we have a bunch of people who go out there, slay the dragon, but we have lots of dragons out there, and then they come back and give us gold. I think that's kind of the metaphysical idea, how we can fix productivity growth.

I don't know if there's more or less risk taking now than 10 or 20 years ago.

Jared Dillian : I mean, if you go back to like, I mean, I think it's actually gotten better. I think in 2018, you saw some pretty crazy valuations of startups.

The scooter company, so Bird and Lime had multi billion dollar valuations.

You saw the dog walking app, WAG have a billion dollar valuation, that's kind of come down over time.

You know, a lot of this was driven by a Russian to VC funds and also SoftBank, SoftBank alone is probably about 50% of the VC market and push valuations higher.

Torsten Jacobi : Well, when you look at stuff that's not crazy overvalued where you feel like this is an opportunity to go long, where would you look right now? Is it energy stocks for instance that seems to be, well, when I talk to investors, they keep telling me about energy stocks and seems to be very undervalued, but where are there opportunities where you feel like people should take a look at?

Jared Dillian : Energy, basic materials, agriculture, real estate, any inflation sensitive stuff. Energy's had a nice little pullback in the last month or two, which provides a pretty good entry point.

Torsten Jacobi : A lot of people like the uranium trade.

Jared Dillian : I think that's got a lot more legs in it, trying to think of what else.

Financials look pretty good. If you think that rates are going to go up, which I think they are, the curve will get a bit steeper, banks, insurance companies, stuff like that.

....

Jared Dillian  : And, you know, there are very few good financial innovations, and if you go back over the last

100 years, probably the biggest one is the 30 year fixed rate mortgage, right?

That enabled 70% of people in the country to own a house.

That was a good innovation.

Just when the mortgage market, you know, the mortgage backed security was a good innovation.

Securitization was a good thing for the mortgage market, it made the mortgage market more liquid, it lowered rates, so I think that was a good thing.

When you start talking about, you know, things like CDOs and complex derivatives, I like to call that unicorn piss.

You know, that's just complexity for the sake of complexity, and I think when it comes to financial innovations, like complexity is really the enemy, and I really, you know,

I don't know, I mean, I hesitate to say this, but I think in the last 100 years, I think we've thought of everything.

I don't think there's any more ways to slice and dice what we already have.

I don't think there's going to be much in the way of financial innovation, and I think that's kind of reflected in the stock prices of the banks, you know, which haven't really, you know, they've done okay, but they haven't really done all that well since 2007, 2006.

Torsten Jacobi : When you look into a world of DeFi, decentralized finance, right, crypto, do you think it's, I think we both will agree that it's a bubble, but do you think it's a crazy bubble, it's, but it or it has the potential to really basically get rid of all the banking out there, right? It's all the banking become computers, right, that run in the cloud and run on the blockchain. Do you think that's realistic?

Jared Dillian :  I think it's realistic 20 years from now.

Torsten Jacobi : And this is the cycle that all new technologies follow, right? So you have a new technology like the internet back in the late 90s, and you have this massive investment bubble, and then it deflates, and then you have this period of time over the next 10 or 15 years where people forget about it.

Jared Dillian :  And if you look at a chart of the NASDAQ over the last 20 years, that's what happened.

It peaked in 2000, it bottomed in 2002, and then it didn't do anything for 10 years. So I think Bitcoin is going to, not just Bitcoin, but crypto and DeFi is going to follow the same pattern.

I think we are in the midst of a bubble right now, I think two or three years from now, people will have kind of forgotten about it, but these are important innovations.

And yeah, 20 years from now, we might have the ability to do this.

...

Torsten Jacobi : So when you go to Europe, you have the regulations that you see in the financial markets are

extremely, well, I would say comprehensive, right? So banks are basically a piece of the government that is to an extent true in the U.S. as well with certain credit unions, but I think investment banks shows that there's another wall to this.

Do you think finance is a good indicator of how well an economy does? Say we compare different countries, would you feel like we can begin analysts just the financial industry and then see, well, this is what we see in the financial industry and that's why we feel like this country is relatively developed, relatively free market, or that's not a good indicator?

Jared Dillian : I think it's a good indicator. I mean, I can't think of too many times in history when the economy has done well, but the banking system is not.

The banking system has always been an indicator of the health of the economy.

Torsten Jacobi : Well, one more thing that I had, and we can make a few cuts here, personalities, and I

think finance is really driven by major personalities, who are people that you admire, right?

People that you listen to, but you also admire because they've done something incredible

in the industry.

Jared Dillian :  I had a boss at Lehman Brothers, who was very, very smart and also very, very ruthless and very, very focused, and he's been very successful in the industry.

He was a mentor to me.

He put me in charge of the ETF desk.

He gave me complete freedom to run it, and he was a terrific guy, and I have a lot of respect for him.

Torsten Jacobi : I'm curious from how you, when you look at commentators, there seems to be a part of that market that is very stable, very static in their opinions, you know, they have a similar prediction whenever you ask them, and then there's people who change their prediction on the other end of the spectrum, like in an instant, there's this, I think it's an analyst, I forgot which bank he was working on, he literally made within four weeks the prediction that Bitcoin, when it was still going up hit 150,000, and then four weeks later, he changed his mind, so I know it's going to go down to 15,000, because the market, and I'm not sure what changed, and the market actually changed, right, the movement there, the basically trend following, the trend where Bitcoin started to change.

Jared Dillian :  I have some thoughts on this, you know, what's interesting, so, you know, as you said, I'm sort of a financial personality on the internet, and, you know, it's a competitive market, you know, there's a lot of people offering commentary and advice, and the people who are most successful financially, doing what I do, never change their minds, never change their minds, take a guy like Lacey Hunt, okay, he's been saying interest rates are going lower forever, he's been saying we're having deflation forever, he hasn't changed his mind, he has followers, he has disciples, he has people who hang on his every word, because it's this one view that they believe in, you know, and I'm more in the second camp, like I changed my mind all the time, I can believe one thing one day, and a couple of weeks later I can believe the exact opposite thing, and in terms of my business, in terms of writing a newsletter and getting subscriptions, it's actually not that good of a thing, because you know, people want you to be consistent over time, but you know, the markets, they have this property called non stationarity, it's a game where the rules are constantly hanging, okay, so you can do one thing in the markets, and it works for a while, but then the rules are going to change, and you have to do something different, so you have to be very adaptable, but it's not, it's not really conducive to selling commentary or advice.

Torsten Jacobi : So would the answer be that if you come to a certain conclusion, and let's assume you're right with that, you just have to like wait out the trade, and as longer you can wait out the trade is better, and obviously with Warren Buffett, I think a lot of people overlooking that fact, he didn't do much in his youth, right, in his 20s and 30s, I mean he did stop, he educated himself, but he wasn't like a magical investor, and he started investing and nothing happened for like, what, 10, 15, 20 years, and then suddenly it really became a bigger number, and numbers are massive, but what I think is so unique about him is hat he basically has one similar, it has changed over time and morphed, but he has one similar investment style, but he's seeing the returns now compounded over 50 years, and that's what's giving him, what's giving him these big numbers, and he had to be very consistent to execute this, so is that the right theory, you come to a certain conviction and then you just wait for it to come true, and hopefully it's all alive when it comes through?

Jared Dillian : So there's two parts to that, and one part of it is you need a lot of patience, and Warren Buffett has, that's his one virtue more than anything, he has a lot of patience, and you also have to manage risk and conserve capital, so that when your trade is out of favor, which it inevitably will be, you can manage your drawdowns and stay in the trade.

Torsten Jacobi : Yeah, but psychologically so hard, right, because that might mean for 20 years you don't see anything in your P&L, the only losses.

Jared Dillian : He was, what was the name of the firm he ran, International Value Advisors, I think, IBA, he was a value manager, a deep value guy, almost a stress, but like a deep value guy, and you know, back 20 years ago, he had assets of 20 billion, and it went down to 1 billion, and after 20 years, he climbed to the top of a building and jumped off, and he committed suicide.

Yeah, I mean, basically right when value just started to outperform.

So I mean, it's, yeah, I mean, it's brutal, like you, it takes an incredible amount of patience and an incredible amount of conviction to say that, you know, I'm right, and I'm going to stick through this no matter what happens, you know, just on a micro level, you know, I'm in the inflation trade, and that's been out of favor for the last couple of months, and that's been a little bit difficult.

I've taken a drawdown of about 6%, which is pretty manageable, you know, but you, you know, price determines your mood, and it's very difficult to hold that kind of conviction when you're sustaining losses like that.

 Torsten Jacobi : Yeah, it's kind of a buy and forget, right, you should almost never look at your portfolio again, if that's your strategy, right, but you accept massive drawdowns, if you feel you're going to be vindicated once that day comes, it's unpredictable when it comes.

I think, well, when I see, you know, Eric, we now had that book about the dead philosopher, the most famous philosopher, the dead, and unfortunately, it's, you know, it takes a long time for your fame to become, to outlive yourself.

I feel like this is what very convicted investors in a similar position, right, they built their philosophy, they hang on to it, and they're probably right, but during, in their lifetime, they rarely see, they only see the negatives in terms of social recognition, because they don't get any, right, everyone hates them, and they're outlaw, but then they really have to wait until the end, or often they don't even see it in their lifetime to see being vindicated and being right.

There seems to be a connection that people don't really make, so I feel like there's a religion, there's a connection between religion and the VCs, very stoic investors in, in the industry that, as you said, haven't really changed their mind and are willing to sit it out forever.

Jared Dillian : I, you know, I don't like taking drawdowns, I'm a little bit of a wimp, so, you know, I can, you know, I can, I have the ability to change my mind, you know, but with regard to the inflation trade, I mean, I think this is, I think this is a secular trade.

And in the context of a couple of months, I think that's a, that's a pretty short time around the wait, so I'm willing to stick through it.

 Torsten Jacobi :  But we print so much money, it needs to go somewhere, right? So for me, it's really mesmerizing versus black hole. We can say, yeah, as the price is certainly, but it's just a massive amount of money that we printed 60% of all the dollars ever in the last, what, 18 months?

But where did they go? It cannot be 5% deflation. That's, that's, that's nothing.

Jared Dillian : It's not about productivity or China or anything.

It's about psychology.

It's, it's 100% about psychology.

Torsten Jacobi : I'm going to start finding a way to, to spend money. Thanks for sharing your thoughts. That was really interesting.

Stephen Clapham is a retired hedge fund partner who now trains stock analysts at some of the world's largest and most successful institutional investors. Stephen is also the author of The Smart Money Method: How to pick stocks like a hedge fund pro and hosts his own podcast.

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Stephen, thanks a lot for coming on the Judgment Call Podcast. I really appreciate it. Wow, thank you for having me. I'm looking forward to it. Hey, absolutely. I'm sorry about my improvised setup here today, but I hope you can still manage that. So you run a company called Behind the Balance Sheet and you also recently published a book that's called The Smart Money Method. And both I thought are really interesting and we want to dive a little deeper into both of the topics that you illuminate there. Maybe you can give us a very quick intro into how you got into the financial world in the first place and what inspired you to write the book and what's kind of the 30,000 feet view of what's in the book. Okay, so nothing inspired me to get into finance. It was purely accidental and serendipitous. I had accepted a job at a very senior level, one of the largest companies in the UK, where I was reporting to somebody that was reporting to the CFO, Finance Directorate. I was interviewed by the CFO for the job at a relatively young age and they gave me the job and they were delighted to have me and I accepted the role and they then called me up and they said, oh, we made a bit of a mistake because you're too young. You can't be this grade until next year and I said, well, what do you mean? And they said, well, you know, don't worry, only a little bit less money and there'll be a slightly fewer benefits and we'll make you up next year. And I said, well, I'm very sorry, but you know, as far as I'm concerned, we had a deal and I'm not allowing you to renege in that deal. If you have such a stupid philosophy that somebody has to be a certain age before they're qualified to do the job, then I suggest you go and look elsewhere because I'm not really interested in working for an organisation where merit doesn't overcome age. And I was recounting this tale and a friend of mine said, oh, well, that sounds a bit upsetting, but why don't you go into the city? And I said, well, don't be stupid. I don't know any of the cities for people with privileged backgrounds that won't suit me. And he said, well, no, I think you'll find that things are opening up and I said, well, how would I do that? Well, I don't know. How would I get? I don't even know where to start. And he said, well, I don't know either, but my secretary's husband, he works at a stockbroker and I bet you he'll see you and explain, you know, what sort of things you might be able to do. And I said, well, that'd be fantastic, so he called up his secretary at home and she said, oh, yeah, of course, he would be delighted to see Steve of Egan come in next Wednesday at 8.30. So next Wednesday at 8.30, I rock up to this stockbroking firm and this very nice chat Bob Carl spends half an hour telling me what it's like to be a research analyst. And I'm thinking, oh, man, that sounds like fun. And he says, well, why don't you come and work for us? And it was, you know, I hadn't gone there to get an interview, I'd gone there simply to learn and understand what the city was about. And I, you know, I went to work for him and it was a brilliant job. I really loved doing it, found it incredibly interesting, incredibly exciting. And I never really looked back. And so my career spanned the sell side where I was an analyst covering various sectors for many years, and I then was asked by one of my clients, a big hedge fund, if I would go and work for them. And I did that and I thought, oh, wow, this is even more fun because I'm doing the work that I really enjoy, which is, you know, researching companies. And I don't have to deal with a pesky clients because when you're an investment bank or you're on the sell side, there's a reason it's called a sell side because you have to sell to people. And although I really enjoy the relationships, the marketing part of it was, you know, a bit dull, you know, I mean, I remember one firm I worked for, you were given a big cardboard sheet every month and you did it all the days of the month and tick boxes and you had a list of clients you had to call and you had to make a hundred phone calls a month. Surely not anything to say, you know, I thought you shouldn't call people unless you had something interesting to say. Anyway, so I moved to the buy side and it was really an amazing journey, absolutely fantastic fun. And I then ended up setting up my training and research consultancy behind the balance sheet in 2018, the fund that I'd worked for, we decided to close it with the performance hadn't been very good and it really wasn't a lot, it really wasn't much fun coming in every morning at 7.15 and leaving at 7 o clock and not making any money and we decided to close it. I had assumed that I would just get another job, I found it more difficult because nobody wanted to employ an analyst aged 50. So I set up the consultancy and it's been fantastic fun and, you know, why did I set up the book? Well, I started the book because I've been doing all this training and I thought, well, maybe people would, you know, find the book helpful, I could write a book that was interesting and I had the basis of it and so the book was published in November last year and somewhat to my surprise it's been really very popular and, you know, loads of people have emailed me saying, oh, this is the book I wish I had when I was started in investing. Loads of people email me saying, oh, this is fantastic because we now understand what we should be doing. Some people email me saying, this is brilliant because you convinced me that I don't want to do my own investing because it sounds a bit difficult, but I've had all sorts of very positive feedback and the book, essentially, it's kind of got some of my actual real life experiences woven through it, but it's really a book about the process I developed as an analyst at very large hedge funds to research companies and so it's something like a how to guide, but it's a more practical how to guide. We don't really talk about any of the theory at all, we just go through how do you invest and how my process developed and how do I look at a company, so how do I start, how do I find an idea and then once I've found an idea, what do I do with it, how do I examine it, how do I explore it, how do I look at an industry, how do I look at a company and I then go through, I don't go through in great detail with the financials, you know, obviously I sell training courses which help people how to read a balance sheet and how to understand a set of accounts and that could be a whole book and I wanted the book to be something that anybody could pick up and that they wouldn't be turned off by it, that they wouldn't be put off because it was all about reading balance sheets, so we cover a bit about the balance sheets, we cover how to look at management and also stuff like how do you think about the macro, we put in, I finished writing it just as COVID started at peak, so I probably made June last year, I finished the book and I thought I really should put a paragraph or a chapter about COVID, started out as small and then I ended up doing a whole chapter on it which with the benefit of hindsight, I'm not sure that I should have included that, I think the book would have had a longer validity, a longer shelf life without it perhaps, but some of the points that I made there, initially they didn't look that smart because I had been talking quite a lot about the issues in supply chains because when COVID happened I felt that supply chains would get very stretched and it was interesting, you know, now I hadn't anticipated how long it would take for that to feed through into the system, but obviously there's huge supply chain pressures now. Yeah, I mean that's a whole other avenue we could talk about, but I love how positive you see your own career over the years and how you combine that part of that's what I love to do and obviously we know the financial industry pays really well and the interesting way you found your way into it, I think that's pretty unique, that's really awesome. I think one point that you're really famous for is being in forensic accountants, so looking into a company and just from their financials and whatever they have in their public reporting to see if this is a company that maybe makes things look a little bit too good to be true or is probably on the verge of being fraudulent, and we know there's a couple of really active investors who kind of do this all the time and there was a bunch of cases with Rebian where a lot of people said, well, this is the biggest fraud ever, there's so little technology, there's so much potential opportunity that everyone who is investing into this company basically doesn't want to see what's actually going on, it's empty promises and the balance sheet is basically, it's all cooked up and the technology as well. Maybe you can give us a glimpse, what are the things that you're looking out for when you do this? How do you determine there's a pattern of fraud or there's a pattern of something fishy going on? It's very kind of you to say that I'm famous, I don't think I'm famous at all and the forensic accounting is only one aspect of what I do and the thing is that I don't understand I don't believe you can be an effective investor or as effective as you might be without having due regard to the financial statements. Now, obviously in today's markets, there is a lot of stocks that are making very large losses that are very highly valued and people aren't really paying a huge amount of attention to today's profitability but you do for a very large number of companies, a very high proportion of the stock market, you do have to understand how the company makes its money, how it generates cash flow and even for those companies that lost making today, you do have to think about how they're going to generate cash at some point in the future and I know there's lots of people who invest without even opening their accounts, a funny story was I was approached by a group of private investors in London to do a course, an in person course for them and these are a group of value investors, they invest predominantly in small cap stocks and I agreed to do the day with them because I had some clients that paid for a day and I didn't have enough critical mass and so I put the two groups together and I said I'm going to go through a particular example, bring a copy of their accounts because they normally when people did this in my office, I would give them copies of the accounts but these people being value investors, they were chiselling me on the price and they didn't want to do it in my office, they wanted to do it in their premises so I didn't fancy carrying bags, the accounts are quite long right, so you've got 250 pages of accounts and you've got multiple copies, it would be quite heavy to carry with your laptop and everything else, these guys came, two of them came, they didn't bring their accounts, they brought the preliminary release and these two people were full time professional investors and they didn't even know what a set of accounts was, which I find this just bizarre, now they would argue that they'd been perfectly successful and they'd done well and they didn't need anything more than this, obviously if you're in a bull market and we've been in a bull market for over a decade, you can get away with shortcuts, however it's my view that no analysis, no proper research can be done in a company, it can't be complete unless you look at the financial statements and obviously if you're a professional investor and the bulk of my business is doing training for professional investors and every single one of them have a fiduciary duty, they can't not look at their accounts, so their accounts to me are central to an understanding of a business because of a financial representation of what's happening in that business and I can go through a balance sheet and I can tell you, if you showed me a balance sheet today right now and you didn't tell me the name of the company, I could tell you with a surprising degree of precision what sort of business it was, just by looking at the balance sheet, well without looking at being now, without looking at the cash flow and I think people just underestimate the power of financial statements, they're very much less used than they should be. But aren't they, and you outlined a couple of those ways in publicly, aren't they, and I think this is where I come in, I always feel we have all this regulation in financial markets, but it's kind of a, it's a tug of war between the regulatory fiat that's out there and says, well this is how you should construct your own balance sheet, this is how our gap works, right, there's certain accounting practices that are important to you and we have public accounting companies and we have regulators, but it seems like it's a cat and mouse game, you can always hack this, you can always come up with a way where you defer losses, where you bring profits into, that will be future profits, you bring it into the present, it seems like it's so easy to fake that a lot of people are discounting it and say, well, why don't I even look at this, if the company's basically can, well we know that Tesla has very strange cash flows that are definitely not positive, but they're suddenly making enormous profits and made it in the S&P 500, if something is at odds there, I mean the stock price was only moved because they went into the index, not because they suddenly made millions, billions of profits. Yeah, I mean obviously, you know, when you prepare a set of accounts there's a certain amount of judgement involved, there's a certain amount of estimates involved and of course an unscrupulous CFO and an unscrupulous CEO can bend the numbers and make them appear as they wish and you can do that for quite a long period, if you want to commit a fraud, you can do so, but I think, you know, every fraud that I've looked at has given off signals that would have enabled the competent investor to avoid and know that there was something wrong and to steer clear of it and, you know, the problem with a fraud is that, you know, it can do very well for a time because if you're making up the numbers, you can look very, very good, right, people don't make up the numbers to show a declining revenue, they make up the numbers to make them look good and so obviously what happens with all these situations is the stock goes up and sometimes goes up very steeply and can continue going up for years until the fraud is uncovered, but when the fraud is uncovered, usually it's a zero or a near zero, so I think the smart investor understands what they need to look at in order to identify these situations and then once they've identified them, they either steer clear of them or if you've got the appetite for it, you can go short and, you know, going short of fraud is a dangerous activity because the fraudster will force the price up against you and often you'll be in the company of other people who identify the same thing as you are, are also short and as you get this ebb and flow because the fraudster sees the share price going down, ramps it up again, the shorts get scared or forced to cover, the share price gets ramped up even more, more shorts have to cover, then more shorts cover, so you get this seesaw effect, but the ending is always the same because, you know, you can't continue a fraud forever because sooner or later you'll get found out and so if you're smart, you understand the rules, the accounting rules, you understand when companies are taking undue advantage of them and you avoid those situations and maybe, you know, have a long dated put option which will pay off over time or, you know, if you're a professional investor and you're prepared to ride the ebb and flows, then you'll be able to trade on the short side, but without having that knowledge and those skills, I think you're at a massive disadvantage and pre COVID, I've been pointing out that the number of companies in the S&P 500 and indeed in the mid cap space who were exaggerating their numbers was a record, I mean, it was like the latter half of the 1990s when there was a huge amount of fraud, there's a series called NEPA and the NEPA corporate profit margins after tax, if you plotted them against the S&P 500, in the second half of the 1990s the S&P 500 still carried on going up and the NEPA margin started to go down because there's crocodile jaws and exactly the same thing happened from the second half of the 2010s and the S&P is still going up through the roof and the NEPA margin is going down through the floor. Now, there are certain inconsistencies between these two measures because obviously the S&P 500 includes a lot of overseas earnings, more so than it did 20 years ago and the NEPA margins includes a lot of SMEs because they're based on the filings with the Inland Revenue Service, the Inland Revenue Service in the United States, so they're based on tax data, so there's an inconsistency between the two but generally speaking those two numbers, those two trends have always, when they started to go apart, they've always met again, they've always started to recover again and the same thing will be true this time, we've been in a period in which there's been an undue amount of fraud and if you're exposed to it, your bull market will end because if you've got a big position in a fraud and it goes to zero, it will really damage your portfolio and I think people have been too complacent. Yeah, I'm with you, I'm fully with you. What I'm interested obviously in is that where do you see this great line that someone goes to a fraud from a creative accounting standard, right? So when people ask me about Tesla, what I think about Tesla, I think it's one of the most creative accounting frauds ever but it's also one of the most forward looking, most interesting companies I've seen in a long time that also has massive scale effects that isn't a small player, so I'm really not sure what I should think of Tesla is that something I endure and I tolerate because I know this company has that potential in terms of making the world a better place, right, very utopian, not necessarily making a lot of money, hopefully that is part of the game but it's obviously very far out cash flows but how much should them, when you see these signs, where does fraud begin and how much of this would you discount? Where would you say, well I accept that because there is so much to this company that even if they are fraudulent, maybe it's just the CFO and the CEO has no part in it, like do you make this distinction or do you say okay there's one ounce of fraud in this thing going on? Well, I mean I've never said that Tesla is a fraud, I've criticised for that, that's coming from me. Yeah, I mean I've criticised Tesla's accounting and certainly there are a lot of things that are wrong with the way Tesla does its accounting and it's been able to present the numbers that it wants to present because it's been very inconsistent in the way it approaches various issues and the Tesla earnings are not really a proper reflection of what a more conservative finance guy would produce but it's slightly irrelevant because whether they're making $1 of earnings or $2 of earnings is not, today is not what Tesla is about and it doesn't necessarily make any difference to the share price but generally speaking, if I feel a company is fraudulently representing its earnings then I will not invest, it doesn't matter how good the story is because I believe that if I'm going to put my capital to work, I want to put it to work with people who have a high degree of integrity and honesty and if they don't have that, I'm slightly nervous, I think in the book, I can't recall exactly sometimes as I wrote it but I talk about investing with billionaires, family owned businesses have tended to be a very good place to invest, you run the risk with a family owned business or founder led business, you do run the risk that there could be a fraud because they're much more capable of doing something fraudulent but that's in a very small minority of cases and generally speaking, founder led businesses tend to do quite well and if you invest with billionaires, you tend to do even better and I talk about in the book, investing with crooks so if you have someone who has been to jail and they've come out of jail and they've started a business and the business has been highly successful, many institutional investors feel uncomfortable because they think if this goes wrong, people are going to point the finger at me and say how could you not have known because that guy went to jail and as a consequence, there have been instances where it's been possible to make very, very profitable investments simply because many institutional investors would shy away from the stock until the story became too good to ignore, once it becomes super successful, a much larger company, you'll go okay and you get that sweet spot where nobody wants to touch it, the business is doing really well, you can buy it really, really cheaply and then when people eventually get on board, you've made a fantastic return and you haven't taken a huge amount of risk because at the end of the day, that guy that started off in jail, he's found in the company always wealth is in the company, you're in the same, exactly in the same position as he is and I found those that can be really attractive and very profitable opportunity. With that exception, if I feel that there's something dishonest about a company, dishonest about management, usually it's better just to stay away because even if you think, oh yeah, I could make money in this, I think a big part of investing is being able to sleep at night and if you, you don't want to wake up at night wondering about an investment, you want to be able to sleep at night and devote your attention to the next opportunity or to managing your portfolio or whatever, so I believe that honesty and integrity and management is a must have. I don't know if you've had the chance and now we know the result, but if you've had the chance the last couple of years to look into Wirecard and Wirecard was a European business actually based in Germany that seemed to have cornered the market for credit card payments in Europe at the time. It turned out that basically none of their revenue actually existed, so they just swapped revenue between different subsidiaries and different third parties that partially existed, partially didn't exist and so they did this with a relatively small amount of money. So if I remember correctly, it was worth and market cap $100 billion, they were supposedly having about a billion dollars in revenue, a few maybe 100 million in profits, but the actual cash that has been found so far was way less than this. So it seems like with very small amounts of money they could create a massive balloon of revenues and then a massive balloon of market cap because the story was so good. That seemed almost too easy to be true and yes it was a little opaque, but it wasn't completely difficult to say, well something really strange is going on because nobody who was a user of this potential merchant service, nobody knew them in the market, right? There was always a big red flag, nobody really used them, but apparently they made a lot of money, nobody knew who actually used, which companies, which customers actually used that software. Well I mean, Moircard is pretty obvious, I mean the FT did the big expose, I think it was February 2019, if I remember correctly, I remember having an exchange on Twitter with Lucy McDonald who was then the global CIO equities at Allianz and Lucy is a fantastic person, brilliant investor and she didn't own Moircard and she said, well Steve, what is it a fraud? I never like to say in public, yes this is a fraud because if you say that and it is a fraud, they're going to come after you, they're going to start suing you and they're going to cause all sorts of trouble. So I didn't say Moircard is a fraud, but I said there are all sorts of question marks about this and there were some very clear question marks about Moircard. It had, if I remember correctly, a billion and a half of cash on its balance sheet and then it went and raised a Euro bond or, yeah I think it raised a Euro bond and then it did another one and I think at the end it had 2.5 to 3 billion euros of cash on the balance sheet and it had a billion and a half of debt, I don't know why would you, why would you have that, you know, if you've got a billion of cash, why would you be going out and raising debt, that makes sense, sounds like Uber to me, I'm sorry, it sounds like Uber, Uber has this massive cash pile right from the equity investors but they keep on raising debt as well, so they're taking money from wherever they can, that's how they formulate it. Well, you have to ask yourself, if a company has a lot of cash in its balance sheet, you have to ask yourself, well why would it be raising more equity or why would it be raising more debt, I mean cash, you know, in some European countries you've got to pay to hold cash, you know, why would you, why would you want more of it, most genuine companies are desperate to get rid of their cash and you know, I've been very involved with the Greensill de Bac and you know, highlighting what went wrong at Greensill which we started highlighting, I don't know, well over a year ago and one of the, one of the interesting things about the supply chain finance business is that many European corporates that've got cash are funding supply chain finance because of a way of investing the cash profitably in the short term without having to pay interest, negative interest rates on the cash. So you know, any, I think particularly today, any business that you see that has got a big pile of cash in its balance sheet and is then going to the market either for equity or debt, you've got to ask yourself, well is there a good reason for that? Now you may, I don't know the particular case you mentioned, I can't think of why there would be a good reason but maybe there is, you know, I don't, I'm sure there are companies that might do that, I mean one reason you might have is if for example you had a large lease book and you had a lot of equipment coming off lease and you had a lot of short term expires so you might just need more liquidity in order to manage that but generally speaking and certainly in the case of water card, the cash balances and the need for more capital was a very clear indicator that all was not well. Yeah, yeah that's a really good point, when you look at banks and particularly the ones that you know they're a little less step fast so to speak, what do you think of the accounting practices in the banking industry especially? I always feel it's kind of a big leap of faith that you have to take if you look into banks accountants accounts because simply most of what they own are securities that are marked to market and that can change at any time right, so there's a drawdown 40, 50% and then whatever was their profit for the last couple of years just evaporates in a few days. What do you think of the accounting system and how well banks are reflected in this because it seems to me it just doesn't really fit them or maybe I'm just seeing it incorrectly from the outside. Yeah, before I get on to the banks I should have just said on water card what was remarkable about it was that the FT, the big campaign, I think it was February 2019 and then you know Baffin said the other journalists are wrong but it took until June 2020 for the whole thing to unravel and this is the remarkable thing about some of these frauds is that you would imagine that as soon as the FT started asking questions, people started looking, you would imagine the whole thing would implode, you would imagine that stock market investors would run a mile but no, I mean it carried on and it's quite amazing to me how people are prepared to just not ignore all the evidence and still hang on to slender thread of hope that this was really something that was going to make them a lot of money. When it comes to banks, I have a sad admission to make so I worked for the largest financial hedge fund in the world and I was one of, I don't know how many partners we had, seven and eight and we had two portfolio managers, a banks analyst, an insurance analyst, a property analyst and I did the non financial stuff and I used to go out to lunch with my colleagues and the banks analyst would start talking to the insurance analyst and they could have been talking Dutch, in fact the banks analyst was Belgian so they could have been talking Dutch but you know they were, honestly they were talking a different language and from examining up close how some of the best financials investors in the world were looking at banks, I came to the conclusion that banks and insurance companies were for people who were more intelligent than I am. I'm just a simple guy right and banks are incredibly complicated. I remember Sunday Times in the UK was celebrating the 50th anniversary of its business section and they asked me to do a piece on how accounts have changed in 50 years and they managed, I said well get me a set of 50 year old accounts because you know we need to look at what it looked like and only one they could find was the Midland Bank and the Midland Bank accounts in 1967 I think it was, they were something like 30 pages long and it was basically just a balance sheet, there was no data at all and I then got at the successor company which is HSBC and the HSBC accounts that year, I think it was 2017 I might be wrong but the main accounts were 520 pages long, they also published four subsidiary bank accounts each of which was 200 or 300 pages long, just to go through the accounts would have been several man months of work you know because the detail in these things is an extremely difficult thing to do, I work with a guy called Mark Rubenstein who publishes a great newsletter called Net Interest and Mark like me worked at Hedge Fund, he ran the Lansdowne Global Financials Fund which was then the number two financials fund in the world and he knows banks inside out and backwards and if I ever have to do any work in a bank I go to Mark because the point you make is a more general one and this whole thing of having very complex accounts, lots of Mark to Mark accounting, lots of weird spurious investments, that is not a characteristic that is exclusive to the banks, you know if you opened the accounts of any of the Chinese tech companies you would see very similar pattern and they are similarly very opaque because you don't know how those investments have been valued, you don't know whether they have been valued on the basis of an open market transaction or a related party transaction, you don't know who has valued them, you don't know whether the basis evaluation is accurate and I think many of these companies are carrying investments in their balance sheet where the auditor probably doesn't know what they are worth, if anything you know I suspect the CFO of the company would struggle to value the businesses precisely and there is an inherent danger in that, the more complex things become the more opportunity there is for obfuscation if not fraud and the more complicated it is the less chance you have of getting an information edge without doing a huge amount of work and people don't want to do that, people don't want to invest that amount of time you know so if I, I mean if highly unlikely anybody would make me the CFO of a public company but if I were and if I wanted to cheat what I would do is I would make it super complicated because I know once a guy is above a certain level of complexity people just struggle their shoulders and they give up. Yeah, well yeah eventually you are going to run out of cash, it is kind of this pyramid we are building right so we create transactions between different affiliated third parties, we create these valuations that are not marked to market as you say it could be subsidiary that was just moved around different other subsidiaries and that's how we got to the market price, in the end I mean the cash needs to run out and currently we are in this space and you said that earlier that we are in this constant bull market but we also have this rise of the loss making companies which we saw earlier in the 90s and we keep seeing this every couple of years in certain stage of the mania but isn't that slightly different this time and here is why, we print so much money right and we still don't have any inflation nobody knows where all this money goes so that's a big mystery maybe you can help me understand this is like a black hole where all this money sinks in like we know there is people who work in the Japanese central bank they print literally billions every day and this money just disappears it's zero inflation and then the other thing is well if we have such low interest rates generally and the expectation is that they keep on saying though isn't that the only rational thing to do is to go into loss making now but future extensive cash flow so to just change the risk paradigm we basically just invested the call option that's what the millennials have figured out right you just buy call options and they hope for the best it kind of worked out the Tesla and a couple of others but that seems to be suddenly rational that you say well I might lose the whole thing but it's a call option for the future maybe long term in the future and that's the only thing that works because otherwise the growth the normal growth so to speak it's gone anyway so we're never going to go back to three four five percent GDP growth well you've you've made a lot of very bold statements there I mean you said there's no inflation I would disagree with that I mean I know that the headline figures say that there's been no inflation for forever but if I look at what it costs to run my household I can tell you that there is very very real inflation in my household I think we printed 60% including electronic dollars 60% of all dollars I were printed in the last 18 month and we don't have 60% inflation we have maybe 10% or 6% or whatever the number really is yeah but I mean we don't have it today you know you should never underestimate the time lags in the system you know economic systems are very complicated and the things take a lot of time to work through and there is this argument about you know is this current burst of inflation transitory or is inflation endemic in here to say I think quite a lot of economic commentators have said that we are in a new inflationary environment I listened to the podcast I'm trying to remember which one I think it was macro voices and they had David Rosenberg on and David Rosenberg I've got a huge amount of time and respect for it he helped me a lot in 2008 because he was very very she helped me understand the housing market and so on in America and I I respect for him and I thought he did a very good job of a very persuasive job of explaining why there wouldn't be inflation this time around because under Trump you 3% unemployment and you'd know inflation then so why should we have inflation now but I listened to a webinar with Dylan Grice who I used to know when he was a strategist at Societé Générale and Russell Napier who was former strategist at CLSA and who I've known for some years and who's a Palomine and who I think is one of the most brilliant people I've met and you know he's got an astonishingly powerful mind I mean just amazing and he last year said you know I've come to the conclusion that this inflation is coming to an end and we're going to enter an inflationary period and he's got some quite extreme views on the consequences of that I mean I just look at this very simply we have I thought when post the global financial crisis I thought they'd injected enough money to create some inflation and I was slightly surprised that they didn't manage to but you know we've done that in spades again on top of you know money being thrown on top of money and then even ever higher quantities it seems slightly impossible to me that we won't get any inflation and obviously we've got a period right now where we've got rising energy prices and whenever you've had whenever you've had inflation it's usually been accompanied by higher energy prices energy feeds into everything and so we've got higher energy prices we got loads of loads of businesses that are struggling to produce supply and what are they doing they're putting up price and we've had an era in which it's been an era in which the rewards have accrued to the capital owners and labor has had a really pretty bad time and I suspect that labor will seek to have a better time obviously in the 1970s you had powerful unions and they were better able to represent labor and have this cost push inflation labor led inflation and we're not in a period today in which that's as straightforward particularly when you've got the rise of the gig economy particularly when you've got globalization and you can send stuff to India or Vietnam you know I outsource some of my work and some of the subcontracted work to India and subcontract some stuff I had some stuff this morning from Vietnam you know I've got a guy in Vietnam who draws does drawings for me because it's a lot cheaper than doing it in London central London obviously so those will continue to be a cap on the rate of labor inflation but guess what you know globalization has been around for a long time and the people in Vietnam probably want a bit more money and everywhere synchronously is recovering from the pandemic and we have got inflation today and I interviewed Mario Gabelli for Real Vision two or three weeks ago and I was interested to do this because Mario is 79 and he's one of the very few investors who have lived through the era of inflation in the 1970s in markets you know there are people who have been around then and remember it as a child but there are relatively few people that actually were investing then and I was keen to understand from him you know what it was like working in the stock market when inflation was very high he was slightly reticent on that but he made this amazing comment he said inflation is a bit like toothpaste once it gets out the tube it's very hard to get it back in and you know I think that's what we'll find we've got a very high level of inflation today and I think we'll find it very difficult to bring it under control because the central banks will not want to put up rates and if you don't put up rates that inflation will carry on because its rate increases that historically have been the cure for inflation and that I think is why in inflationary environments equities have suffered massive deratings and it's quite possible this time around that the inflation will actually not impact equities so badly Russell Napier's view is that it'll be even worse than before and I think that's a possibility and I'll be quite an extreme view there's a possibility that we'll see deratings in the expectation of higher rates but if there's slow to go up rates they may be slow to bring inflation under control which may make people even more worried about future rates it's a very very uncertain picture I don't have a very strong view on how it will pan out but I do believe that we'll be seeing higher inflation than we have formally and I should just say on this that the official figures I mean I don't really understand how they compile the official figures but when I look at my big bucket of spending I suffer and have for the last ten years suffered very high levels of inflation because what do I spend money on? I spend money on my children's education that's been going up that has not been a deflationary environment I can promise you if you're trying to educate your kids in central London it costs a lot more than it did ten years ago what else do I spend money on? Medical insurance. My medical insurance is a multiple obviously I'm older and my children are older and my wife is older so obviously that all affects the premium but I'm sure like for like the premium I've gone up a lot. I see where you're coming from I fully see where you're coming from and you're absolutely correct I feel I'm more on the David Rosenberg side and I see it like if you leave this macro view for a second and zoom in what I see and right now here in Kenya what I see is that prices for anything in Kenya have come down they say well this is COVID you know everything is a little down and the tourist economy is down but it's also food because suddenly there's all these delivery apps here not just Uber Eats and you could get anything delivered for 50 cents it comes from the other end of the town and it's still being delivered and it seems so incredibly efficient and in the economy and Kenya is always a little ahead but it wasn't exactly an efficient delivery economy that existed two years ago now some restaurants were great others were crappy but it was generally expensive I always think of Kenya as an expensive place now I feel like it's the opposite it's not just it's not like Southeast Asia but it's moved so much in two years with tons and some of these elements where I always thought well food is so important it's maybe not the big budget item anymore but it is in Kenya way bigger budget and percentage wise than it is say in London and the prices here dropped a lot because suddenly you get food from anywhere in the city and obviously Uber does a lot of promotions all the delivery apps do promotions with investors money so I feel like when I see what happened in Kenya it's the opposite right it dropped is a huge deflation because mostly of technology entrepreneurship and I always start a little bit with this view if we feel I think we all agree that maybe we have a really good thought on this and I had Mike agreeing on in the last episode we kind of hit a similar topic where we felt so we know the technology is deflationary and see which we know China is deflationary so we're all good on this but but we also on the other hand feel the productivity growth is low we also feel that entrepreneurship is what it should be and NASA talent obviously is very very very strong in that opinion and I absolutely share that well what's going on if entrepreneurship isn't doing this what is creating this this this extremely low yields and bonds that people have been not just ignoring I think they're tolerating it for a long long time is something doesn't really add up is entrepreneurship so good and we make the world a better place and make everything cheaper or is entrepreneurship so terrible and we don't produce any growth rates and like in my mind something is something isn't add up isn't adding up from what I see in a micro level and what we just talked about in a macro level well you've you've touched on an ironic example of how the money flooding out of central banks is created deflation in certain pockets of the world because if there wasn't so much money floating around highly loss making companies and interest rates were slow highly loss making companies wouldn't be valued as highly and it would be you know there's so much capital around that there's loads of companies competing to do delivery and they're prepared to lose bucket loads of money in order to be the last man standing well that's that's a product of the fact there's too much capital floating around and it's too cheap right well guess what when that situation comes to an end as inevitably it will because all that capital is being being burned right because I've got no idea how much it costs to get a piece of a meal from a restaurant on the other side of Nairobi to you but I can promise you it's more than 50 cents right and you know the cheap meal delivery they're coming at a loss right and you know at some point in the future reality will set in because one or two or three of these players will start to go bust because they'll run out of capital because their shareholders will run out of patience and the money won't be free and the money won't be as plentiful and restaurants right in terms of restaurant delivery they take a 25 to 35 percent margin on the delivery apps so they basically show up say you can maintain your own prices but we you have to drop your prices by 35 percent because it's all margin if you want to be on the platform and it you know to an extent it needs to be competitive what's the in restaurant price and this is extremely deflationary because food prices made in restaurants just drop 35 percent worldwide but yeah but I mean in a global sense of the macro sense which I think is amazing for for consumer comfort yeah but I mean look you know we especially in covid we've had no choice but have more deliveries but it's not quite the same experience is it having a delivery versus going to going to the restaurant and yeah I mean they're they're taking the 30 percent 25 percent commission but it still doesn't cover the cost of delivery for many of these for many of these deliveries you know if I just look at just eat and I look at my local if I open my just eat app the the first choices on there are restaurants that have a very very low price point and I've never I've never looked at any of the delivery companies I've got no idea what the real economics are but I'm I would question whether the the current pricing and the current volumes are sustainable because it seems to me that there's a lot of just to eat deliveries or Uber Eats or you know whatever whichever delivery company you want where you're delivering a $10 meal or a $20 meal and they've got to pay the the rider they've got to pay for the petrol they've got to pay for the software they've got to pay for the infrastructure and it doesn't make sense right it does doesn't make economic sense to me I mean it may be that we'll find out that I'm wrong and that they can somehow manage to scrape together a living but I'm firmly of the view that there's been a flood of money creating a flood of capacity which is creating a price war amongst the participants and when the flood of money goes away the flood of capacity will diminish over time and the cost will go up and what you have today is likely an artificial construct because there's too much competition and when that when you know when things settle down the cost of this will will go up to you because yeah it must do I mean you know some of these some of these services they use the restaurants own delivery people so all it is is a platform and you know from the perspective of the restaurant yeah they're very happy to get this incremental custom because it keeps their kitchen busier and they still can offer seats in the restaurant so it's very good economics but when the guy the restaurant own delivery guy comes to my house and says here's your delivery isn't he going to say well why don't you order direct next time and we'll throw in a free milkshake or a free dessert or because why should they give away the economics and I think that's the that's a big issue to to my mind it's an interesting area it's one that I would like to spend a bit more time on because it's one that I don't fully understand today and I would like to understand a bit better so I should probably probably you should never talk about something you don't understand that you'd probably never talk in public about the theories that you're still working on and formulating and trying to I stood I do this all the time I think no it's you know it's it's part of this this this mind building that that we do on the internet and I think this is what YouTube is all about is that it's all unfinished business and yes there is negatives to this and there's way more chatter than it maybe should be and there is not enough effect sometimes but I think this it really helps me understand who other people think even if the finished opinion might not be relevant yet right it's not fully formed and I actually was it was just in your boat it felt delivered this delivery business is is a is going to be the graveyard of many many companies and all these billions are gone and I recently changed my opinion I felt like the last 12 month and obviously COVID it was a big boost for them something happened there and people are suddenly I feel these businesses are great and I'm late with that because venture capital investors thought that a long time ago right and some of the public investors too but well who knows maybe they still gonna die who cares I had I wish I had I had some of those answers I don't anyways what what I want to go back a little is when you look at current and you touched on the Chinese internet companies and we just spoke about delivery companies maybe you have some examples where you feel like well either this particular sector this industry or this this geography you feel like or the specific companies that is something where investors right now should look twice because you feel man these numbers just look too good it better you better if you go along and want to invest in a company you better look twice right now where where would these these companies or these groups classes of companies be well Torsten I produced a report a forensic accounting analysis of the five largest Chinese tech companies last summer and if you if people are interested they can go to my website behind the balance sheet dot com and it's on sale there for I think we've reduced the price it was $5,000 I think we're now charging £3,000 or £3,500 for it and we've done a comprehensive review of what of what's going on in these businesses and I think my clients that have paid good money for that that report would wouldn't thank me for you know issuing the findings publicly on on air but I mean one of the one of the issues I think that people need to think about quite carefully is if you look at those five companies over the last six years they have invested something like five vision funds or a vision fund each if you like into the hundred billion right so they so collectively they've invested nearly five hundred billion dollars in venture capital tech you know there's the ten cent investment in Tesla some of it has been outside China but they're predominantly within China and clearly the vision fund itself has had a significant influence in the valuations of tech the tech sector and early stage tech investing course yeah if you if you do five of them and concentrate it in a single country there is no way that you haven't influenced the price and there's a circularity to the arguments here because these companies are saying that they're that they're that their investments are worth this price and of course you know many of these investments now come to the Chinese stock market and are are still highly valued but the whole chain has been supported by a huge push of capital into it by this by these by these corporations and you know I asked myself well what would these businesses be worth without that now you might argue that that capital was needed in order to create some of these new businesses but I don't know if you remember seeing pictures of the mountains of bicycles you remember that so that all those like all those bike caps and in Shanghai they had you know mountains of bicycles that were just bulldozed and put in a tip and ended up in the rivers right in tons of rivers in China and I saw it in Thailand that was one of those really cheap car sharing not car sharing bike sharing carts that you could use but we are thinking I don't know people probably that listen to this they think of electric bikes like Lyft and Uber have those but they were extremely cheap bikes like a $20 bike that was rented out for like $5 a day so they were crappy bikes right and they were just all thrown into the river because people hated that so much and they didn't use it anymore yeah but I mean the point the point I was trying to make was that there were you know there's a lot of money burned yeah and a lot of that money has been burned a lot of that money has been wasted I mean you know that's in a way you know that's part of capitalism and that's part of the whole ecosystem in tech because you expect some of the money to be wasted but you know I think we'll look back on this period with you know a mixture of admiration and trepidation and I think well why did nobody say that these businesses were not worth what they were being changing hands at yeah yeah it's often you know I think this is this is a really tough question there is and you said that earlier you can't call them a fraud because once you do you're you make yourself liable to lawsuits or at least potentially so there's a lot of voices that that raise a concern we sort of with FT but what when is that moment right when is the catalyst actually ready when when when do these voices actually create a feedback effect that the bubble bursts and that's so extremely difficult to forecast and I think this the voices are there but they're being ignored and I remember that from 98 I mean there were tons of people who said well this is unsustainable just not gonna not gonna create any long term effect on these evaluations and something good came out of the bubble right but it was different than what we expected and definitely the bubble burst but I don't know I talked about that with Mike it's not very helpful to just stand on the sidelines and say oh it's a bubble it might go on for the next 20 years right longer than we give we have lifetime left well I mean you know I wouldn't say the whole stock market is in a bubble but I think there's certain certainly pockets of stock market which are are so and you know if you look at Nicola I mean I remember saying to somebody you know Nicola had been valued at 20 billion then there was all the who have but they'd fake the videos and all that and the share price fell and it was only but only valued at 8 billion and I said well you know 8 billion I mean what 8 billion for what you know because it didn't it seems to me like a big 8 billion was a big valuation for for what it represented I think there's a lot of areas like that where the the valuations just look crazy to me I mean there there's a UK company I better not say its name but I can remember visiting the company oh probably 15 I don't remember exactly 10 15 years ago and they do fuel cells and they had this brilliant idea for fuel cells and we're 10 15 years further on and there are no I mean they haven't got a working product they've burned you know they've burned millions millions of pounds but they're now valued at 10 20 I've forgotten how much but you know 20 times what they were valued at when I looked at them and I looked at them and I thought it's too risky so we're you know we're all this time for the wrong this invested they burned all this additional cash they aren't any I mean I suppose they're further forward technically but they don't have a working product that people are buying there's still an early stage company and they're valued at 20 times what they were valued at when I wouldn't put my money in and it's like well you know I don't I don't know the details about that business today but I know for sure that share price is going to fall by 90% you know it's obvious right and I think there's lots of pockets of bubbles in in in markets today but you know you always you end of a bull market you always have some bubbles right yeah well that is a great a great way to close this podcast I know your time is very valuable Stephen thanks for for joining us that was awesome thanks for sharing your insights well Josh and thanks for having me I'll just do before I go it's a plug for my book the smart money method how to invest like a hedge fund pro if you want to find me I'm on Twitter at Steve Clapham and my website is behind the balance sheet calm where we've got a load of useful material if you sign up for our newsletter we've got tons of free training content and of course we sell investing courses and these courses are really really helpful if you're looking to improve your investing skills you're a private investor you want to do something more than read a book have a look at our website behind the balance sheet calm Torsten thank you so much for having me it's been a great fun so it's been awesome and we're going to put all these links into the episode now just click on us magic thank you all right take it easy talk to you bye bye

Mike Green has been a student of markets and market structure for nearly 30 years. Mike works with Simplify to create ETF products that give retail investors an edge. Before that Mike has worked with Logica Capital Advisers and Thiel Macro.

You may watch this episode on Youtube - #100 Mike Green (The gravitational force of passive investing on capital allocation and geopolitics).

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Torsten Jacobi: Mike, welcome to the Judgment Call podcast. Thanks for coming. We appreciate that.

Mike Green: Thank you, Torsten. It's a pleasure to be here.

Torsten Jacobi:  Hey, so your claim to fame is really the passive investment bubble, and you also recently joined Simplify, one of the most interesting ETF creators out there. My first question is for listeners out there who haven't heard of this particular bubble that you've been describing for a couple of years now, what are the core tenants of your thesis there, and what do you think is wrong with passive investment? Because a lot of us think of this as a very safe and potentially very lucrative investing stone.

Mike Green: Well, I think this is one of the challenges that in terms of my theory and what I've observed about the market and how it's playing out is that for most investors, there's a natural attraction to being in a passive vehicle. Your objective is very much to just try to match the return of the market, and so it feels like it is the right choice, and you're seeking out lower fees, you're seeking out broad exposure, you're diversifying as you would expect, etc. And so it is a winning combination from the investor standpoint on an individual basis. The problem is, like many phenomenon, when you expand it and it becomes the dominant feature, it becomes a tragedy of the commons. And so the first place you have to start with passive investing is to understand that the basic theory behind it is predicated almost referred to as the efficient market hypothesis. And so the efficient market hypothesis was a theoretical construct that was created in the 1950s and 1960s, most closely associated with Eugene Fama. The idea is very straightforward. The prices in the market represent all of the information or the best estimate, the best intersection of information that exists across the market. And this is the idea that prices are set on a fundamental basis. So I as a single investor look at Microsoft, I make a forecast of the cash flows, I estimate what the future performance is going to be. I make some estimate in terms of what I expect it to be worth in the future, and then I compare that versus my cost to capital, discount that back to the present value and buy Microsoft. So the theory is that millions and millions, potentially billions of people doing this contribute to a market in which it is extraordinarily difficult to gain an information edge. And that's a really important component is that the expectation is that prices reflect information. There's an issue associated with that, which is that prices don't actually represent information, prices represent transactions. So when you look at a market, what you're actually seeing is not where the price is right now. It's where the last transaction happened. And it's a presumption that we're making that the next transaction is going to be close to that price. There are few events in history where we have seen that not be the case. The crash in 1987 would be a great example. The crash in 1929 would be a great example in the volatility space, the events of Allmageddon, February 5, 2018, where the next morning you woke up and the price of a security XIV had fallen 95%. We've seen this in a couple of different situations. That is a good indication of this phenomenon that it's not actually information, but it's transactions that are occurring. And once you recognize that that's happening, then you recognize that passive players violate the actual underlying philosophy of what a passive player is supposed to be. According to the work of Bill Sharp, which is used and cited for the rationale for why passive outperforms an aggregate, the idea is very straightforward. An active investor is one who transacts, who trades off the information. And a passive investor is simply one who holds all the securities in the market. The problem is that leaves no mechanism for how you get in the market or how you get out of the market. It's effectively a pure paper portfolio theory. If I were to track the market, which is what an index is designed to do, then I would meet that criteria. But the minute I begin to participate, I change the underlying structure. That's the flaw in the ointment, because now what we have is we've grown passive to the size, the passive investment strategies, the vanguards, black rocks, even the fidelity, Schwab's, etc., of the world who increasingly rely on S&P 500 indices or total market indices. They are every day in the market representing the lion's share of the net transactions, the buying that is occurring. And when that happens, you need to actually start to disaggregate and say, okay, what is the mechanism that these vehicles are trading off of? And they don't trade off of information. They trade off of flows. The rules for passive are incredibly simple. Did you give me cash if so, then buy? Did you ask for cash if so, then sell? Nowhere in there is there any information about the performance of an underlying security. And within the indices themselves, you also get an inversion of the traditional process of price formation. So one of the things that I did as I began to develop this theory was I went out and I surveyed active investors, people like myself, discretionary investors. And I asked them a very simple question. When you receive a new inflow or you receive an outflow, what is your propensity to invest given valuation? So a Schiller type valuation, zero times or one times earnings up to 100 times earnings, what's your propensity to invest or to sell stocks when you receive an instruction from your end investor? And what you found in that is as you would expect, the discretionary investor is more willing to sell at high prices or high valuations and less willing to sell at low valuations. They're more willing to buy at low valuations, less willing to buy at high valuations. When you run a system that is built on those rules, then it's a mean reverting system. As valuations rise, people become less willing to deploy capital, valuations retreat. Passive works in the exact opposite fashion. As valuations rise, the incremental marginal capital, because you're doing so on a market cap weighted basis. So how does something get to high market cap? It rose in price. If its price is not directly tied to the fundamentals, as is rising in price, its valuations are rising. And so you end up with the perverse dynamic where the market becomes very momentum weighted. Effectively, the dominant flow of capital is money coming in on a momentum weighted basis, which means that the largest companies receive incrementally more capital. The companies that have risen the most receive incrementally more capital. And those that are lagging behind really aren't receiving any significant marginal inflows. It gets even worse than that because as we begin to switch from the active managers, firing the active managers, discretionary managers, and replacing them with the index or passive managers, that signal becomes amplified. The value based or marginal forward return based process of the discretionary manager is under redemption, meaning the stocks that they like are getting sold, the stocks that they hate are getting bought back. And the passive players are dominating it. And in my analysis, this is what's going on in the markets today.

Torsten Jacobi: I wonder, and this is very fascinating. And the first time I heard this, I'm like, well, now it finally explains why value investing, and the whole idea of value is really rare, because it simply has made a ton of money the last 20 years. And that's kind of where I come from is where is this margin of safety, right? But where can I see low valuations that potentially rise in the future? And usually that's not what happens in the market. It's kind of a continuous trend following that we see out there. What I want to do is, is that a bit of a maybe bigger follow up to the nifty 50, right? So we saw this in the 60s, 70s, there is this information gap that you just talked about, there is market players on the market that see the whole market, right? They see all the investment opportunities. But there's a lot of people in a not so informed public out there who don't have the time for it. And they just go into the big names, right? They know that used to be Nasdaq in the 2000s. And we just want to be in Yahoo, we want to be in Petz.com, because it sounds good and we heard about it, right? That's the only reason we invest in it. We really don't care about valuations because we think about the future. And in the future, these companies will make a ton of money. And is it just on a bigger scale now that we see these valuations rise so much in the index investing that was kind of a theme that Warren Buffett gave us, I feel, and this will fall apart because the sharks, the smart investors so to speak, they are already circling passive investing and they will come down in it sooner or later, because it's just not such a smart idea to keep buying Apple the same stock, irrespective of the price.

Mike Green: So there's a lot to unpack in that observation, right? Everything ranging from people seeking out safety to Warren Buffett. Let's hit each of those in turn. So a recreation of the nifty 50 in the 1970s, right? The nifty 50 in the 1970s was a group of roughly 50 stocks that people basically just said buy at any price, right? They were the Polaroids, the Codex, et cetera, the world that represented effectively unlimited growth potential. I think that there's an element of that in that you see the market narrowing and concentrating, but the question becomes why, right? Is it because people are objectively looking at the top 50 stocks and saying these represent a unique feature and was that the case even then, right? We kind of hear these things filtered through history, right? What I would suggest was likely happening in the 1970s was that you had a broker approved list that they were able to go out and tell their investors. This was also a time period where there was a change in what's referred to as the ERISA rules, right? Which govern all of the retirement pension accounts, et cetera. And so there was in all likelihood an approved list that people didn't have to seek out approval on an individual basis to trade those names. And so the market naturally concentrates there, right? It's a little bit like if you have a teenage son and they need to come to you to get permission to go with their friends in a car, but they don't need to get permission from you to take the car and go out, right? What are they going to end up doing? They're going to end up driving their car to a parking lot somewhere, leaving the car there and then hopping in their friend's car, right? Because they want to remove the frictions associated with it. Ultimately, that I would guess is what happened in the 1970s, right? I spent less time actually studying that dynamic of the market than I have in other areas. Today, you have an even more concentrated variant of that where the money that goes into retirement accounts in the United States, primarily through 401Ks and IRAs, we've introduced a series of rules that make it very difficult for a corporation sponsoring a 401K, right? Which is a defined contribution plan or for a registered investment advisor offering investment alternatives to their clients. We've made it very difficult for them to do anything other than the cheapest, lowest cost index solutions, right? They're actually exposed to liability and being sued by their clients for putting them into products that violate what's referred to as the fiduciary standard, right? Which is a standard that says, ultimately, was their best interest at heart rather than something else, right? Now, whether they're actually guilty of violating that when they put money into something other than a Vanguard product or into a State Street product or into a BlackRock product, I'm very skeptical that that's the case. But having been through legal challenges myself at various points in time, the correct strategy is to avoid litigation risk, right? And so everyone is kind of being forced into these strategies, regardless of whether they think it's a good idea. And then the last thing that I would say on that is, when we talk about the dynamics of value investing or the Warren Buffett margin of safety type approach, the problem is that we know in history this worked, but it hasn't worked for give or take the past 10 years or 20 years, right? It's a little bit more in debate if we include the dot com cycle. But people are ultimately forced to say, am I willing to pay for this theory or do I want to believe my own eyes, right? And increasingly, people are opting out of that process, right? There's no reason why a human being whose job is to go to work and figure out mortgage applications or to conduct surgery on people who have a brain tumor or to be the nurse who's attending under those conditions, right? There's absolutely no reason for them to be involved in a discussion around the theories of the efficiency of markets and whether active managers can add skill, etc. They just opt out because it's a confusing question. And so we're trapped in this situation where the mechanisms that are supposed to provide a negative feedback loop, in other words, meaning dampening these effects, right? Not negative in terms of bad outcomes, but negative in terms of dampening are being eviscerated and we're being replaced increasingly by positive feedback loops that amplify these events.

Torsten Jacobi: Yeah, I find that I think this is this is just the other kind of this kind of this the other side of that coin is what the your theory predicts is because we have this this herd is impede into one direction, we would see higher volatility in events like we had last March than we would see otherwise simply because there's no discretionary, no smart virus left, right? Smart virus in our definition right now, they buy when the valuations are low and those are good investments are simply on the price. But what we see instead of passive investors who say, well, I don't I don't think there's something going on in the stock market. So I just shot up this buy algorithm that they usually have because as you say, they have no sell algorithm besides retirement, maybe, but generally there's only a buy mechanism. There's no there's no other side that works against this on selling securities. And so volatility is higher than we would see otherwise. And we a little bit of drawdown was 60% maybe in the S&P during March. It's it's pretty big, right? Even on a historic scale, it went down to what we saw in 1990 and 29, 1930s.

Mike Green: Yeah, so just very quickly, it wasn't 60% or anywhere close, it was more like 30%. But it felt awfully bad. And this more important the more important feature about what happened in March 2020 was the speed and from February 2020 to March 2020 was the speed of the fall, right? So barring the single day type events around a March 1980 or October 1987. This was by far the fastest and deepest market decline that we'd ever seen, right? The question is why did that happen? Or was it was it unique to the dynamics of COVID, right? And the fact that the world basically came to a stop and we weren't certain what was going to happen? Or was there something in the structure of the market that contributed to that? My analysis is that it's the structure of the market. And that helped me in the immediate aftermath, to turn around and say on March 26, I published a piece that said, look, I think the markets are going right back to all time highs are going to go faster than anyone thinks. And the reason why is X, right? It's because of the dynamics of market structure. It was you can think about it as simply as when the events of January and February began to occur, many of the thoughtful discretionary traders looked around the world and saw the headlines coming in that this pandemic was gaining steam and that places like Italy were already shut down, right? And shutting down. And they tried to sell the market, right? And tried to short the market, tried to do various things. Because there had not yet been any impact in flows and employment, right? So Paychecks were continuing to roll into passive vehicles. You had this opposite impulse where the market was pushed higher. I would argue in February, you saw people who were too early, right? So we all are familiar with the movie The Big Short, right? And you remember the pain that Christian Bale, Michael Burry experienced as he was early to this trade, right? Investor redemptions, people firing him, you have no idea what you're talking about, etc. You could tangibly feel that in the markets in late February. People are sitting there going, what in the world is going on? Why are markets making all time highs, even as we have this pandemic going on, followed by this incredible crash, right? That incredible crash was effectively a very small fraction of passive players experiencing sales for the first time, right? So the active managers tried to sell. The passive managers did not receive the same net buy order that they normally are receiving. And as a result, the market very quickly shifted into an imbalance that caused a collapse. That's my analysis of what ended up happening. And the scary part about what emerged is if you look at the reports that Vanguard and a few others have come out with since, trying to effectively allay the concerns around this issue of market structure. Vanguard will point out less than 1% of our clients actually sold into this event. Well, my reaction to that is, well, what if it had been 2? What if it had been 5? There is no solution to that when entities of that size try to sell.

Torsten Jacobi: Yeah, I would feel, I mean, given that it's basically just a buy program that BlackRock and Vanguard have right now, if money comes in, as you pointed out, if ever they want to sell more, then there's only the fact, there's nobody else, maybe some foreigners, maybe it's going to be Saudi Arabia who's going to buy that, because the price is so good. But besides that, I feel there is no entity left to absorb 10%, 20%, whatever they've accumulated. And I think this is a structural risk, but it's also, the question is a little bit, what is the actual yield on these investments in the future? And what I was thinking about, and I think this also is very interesting given your thesis, what do you see in productivity growth? So we all know that markets sooner or later go along with productivity growth. And the whole world goes along with this. The competitiveness of whole nations or whole places in the world goes along with this. What we've been seeing is relatively low productivity growth. And that's Peter Thielstein, someone you worked with very closely for a couple of years. And what a lot of other scientists pointed this out before, and researchers, what one of the thesis is, is that we are just investing in the wrong vehicle. So this is where the passive investing comes in. It's companies who might not give us a 10%, a 15% return on equity. No, those are companies who are already in layers and layers of that out there. And they're just scraping out 1%, a half a percent in growth. So our GDP growth also on our expectations of GDP growth have been going down so much. Because we're investing in wrong vehicles, we're putting the money, we are not efficient at research allocation and capital allocation, because we're just putting it in bigger and bigger vehicles out there. And we see this in the startup world quite a bit, where we see there is lots of demand in the really, really early stages, but then basically nothing until you're a unicorn and you go IPO of over $50 billion. Do you think that makes sense that it has such a strong impact on GDP growth?

Mike Green: Well, again, I think that there's multiple angles there. So first, when you talk about a stock market being tied to elements like productivity growth or earnings growth, etc., that's trying to link it back to the fundamentals. And I'll just give you a very simple thought experiment. What if the government made it illegal for you to sell a stock on a downtick? So in other words, you could or you could only sell a stock at a new all time high. So you've heard me talk about this. So that sounds like a great idea. We're going to change the rules of the stock market because we want the market to be at all time highs. And all that means is that the market stops functioning. And so the classical example of this is exactly Nazi Germany, where it was viewed that the performance of the stock market was an indication of the success of the Nazi regime. Therefore, rules were set in place that prevented the stock market from going down. When you did that, you broke the role of the stock market. So the role of the stock market, and this is one of the things that I also have spent some time talking about, is not to provide retirement to people. That's just not its objective function. The objective of a stock market is to facilitate the allocation of capital. And so when we change the function of the market, when we shift it away, and our regulator is the Federal Reserve, for example, changes the objective function of the market from trying to efficiently allocate capital and set the marginal cost of capital through the discretionary application of investment. And instead, we flip it to a utility that is designed to guarantee a certain level of retirement for people in our society because we refuse to engage in the process of underwriting a social safety net. Well, then we've broken it in the same way that the Nazis broke their stock market and it will increasingly fail in its function of allocating capital. So I absolutely agree with Peter on that, but I do think it's really important to understand that by changing the rules and by changing the structure of the market, changing the behavior of the participants, we're increasingly inhibiting the ability of it to allocate capital. The second point that I would make is that when you look at the technology unicorns, etc., they're increasingly not going through an IPO process. Unless you're an actual market practitioner professional in the space, you tend not to pick up the difference between the two. But for example, Palantir went public through a direct listing, meaning in other words, it did not seek out a pool of active managers who are willing to understand and invest in Palantir and agree to hold it and effectively underwrite and sponsor it. They didn't seek out an investment bank that was going to play that role. Instead, they directly listed it onto the exchange and basically said, here's what we think the valuation is, here's where we're going to list it. And when it shows up there and the advantage of doing a direct listing or of doing a special purpose acquisition company is it actually expedites the process of index inclusion. So more quickly, the vanguards and black rocks of the world have to start buying these names. It's a trick that is being played. Instead of seeking out the active managers who are losing assets, you're trying to get the passive managers to be forced to buy you as quickly as possible.

Torsten Jacobi: Yeah, it seems to me as a torrent of money started by the Fed who sets it artificially. It's a Soviet Union instrument. I can never understand why we set interest rates. I grew up in that part of the Soviet Union. I didn't like it. And we have this as the hub of our economy. We have a Soviet planning committee. I think it's 10 people who set interest rates that have a huge impact on what's going on in the whole country or basically in the whole world. And then also we started QE. We started all these programs to come up with an artificial liquidity and it's pumped into the same stream that we just described, this passive investment sooner or later. Because we know, as you said, if prices for securities drop too much, then retirement is broken. And then the whole U.S. is basically broken because we all rely, besides our house assets, we rely on a certain price of assets within a certain range. 10% is probably fine, but 50% real problem. Is there a way out or are we just mere in it until it goes all to zero?

Mike Green: I mean, that's a really hard question, right? Because you're asking me to predict a future that.... Well, with all humility, I do not have the answers. I have models that suggest what can happen, right? And so the way I try to approach these problems is I try to figure out the rules that the players are forced to play by. And then I will build agents that effectively mimic that behavior, operate under those rules, and then I'll set them loose. And I will either give them capital or take capital away. I'll allow them to trade with each other, etc., to create a fast forward simulation of what the constraints or the impact of a market can be. Now, by definition, I'm never going to capture all the features of the market. And so where it becomes really interesting is when you have something like passive that is so large that it'd be a little bit like trying to ignore the white polar bear that's trying to break down your door, right? Just pretend it's not there. It's not going to get you, right? It doesn't work. And so you're able to capture a large scale picture of it. The behavior of the Fed is similar, right? So what the Fed is doing is the Fed is increasingly moved from a model where they use interest rates to target inflation and accelerating or weakening economy. And instead, they're recognizing, again, referring back to the efficient market hypothesis, that the market based signals allow them to theoretically expand their information set by working through what's called the expectations channel. So under that model, if stock prices are falling, right, the information that is contained in the market tells you that the economy is weakening. If the market is rising, then the information that is in the economy is telling you the expectations are rising, therefore, the economy is strong, right? By targeting that indirect mechanism, they're trying to effectively get a jump on lagging indicators like unemployment, recessions, et cetera, right? Famously, if you look at the NBR declarations and recessions, they don't occur for 6 to 12 or even 24 months after the event, right? So it's pointless from a forecasting standpoint. The problem, of course, is if the Fed's model of how a market works is increasingly at odds with how that market works, right? So if it's no longer an expectations channel, and instead, it is a flows channel, and that behavior of the market is increasingly driven by the changing character of the holders moving from active discretionary managers to passive managers, if that's clouding the information that you're getting, right? It's like driving through a rainstorm, right? Your windshield is filtering information in a way that it can be confusing for you. You should lower your speed. Ironically, because there's increasing reliance on financial assets for retirement and for spending, particularly for the baby boomer generation, the Fed almost needs to react faster and faster and faster, right? So doing the exact opposite of what you would expect if you're driving in a rainstorm, right? That in turn, if I can predict the Fed's reaction function, and I know that the Fed is going to step in and the Fed is going to try to support financial assets, well, that tells me, as a professional investor, that I now have a Fed put, right? That the regulators are going to step in and support asset prices, well, that encourages me to put on more leverage, right? And to take a more concentrated position and hold less margin of safety because I know they're doing it for me. And in fact, if you have an asset like a US bond, right, that has, because of the Fed's reaction function, now has a negative price correlation with the risky assets, right? Because people expect that the Fed is going to cut interest rates on a risk off event. That would cause the price of the bond to go up, right? So that becomes the same behavior that I would expect from an S&P put. The difference is an S&P put loses money over time. The bond makes money over time as long as interest rates are positive, right? And so I now have a positive carry put. Well, if you run through the math of what the optimal portfolio looks like under a positive carry put, it moves to a levered portfolio. So instead of a 60 40, you move to a 150 100 portfolio. And when you move to a 150 100 portfolio, the demand for financial assets rises, it forces prices even higher than they otherwise would have been. And now we have another positive feedback loop that gets created, right? And so it's positive feedback loop after positive feedback loop that's propelling this thing higher. Eventually, the Fed is going to be forced to respond in one of two ways, either by directly buying financial assets on a risk off event, right? And that is, you know, just to form a closet nationalism, but all the rewards are being given to those who own the assets, or the Fed is going to have to try to get bond prices even higher by taking interest rates negative. And the problem with negative interest rates is it takes that put that I just described to you that says it's a positive expected value put, and it turns it into a negative expected value put, right? So when we cross that threshold, my expectation is actually that the system begins to break that levered portfolio has to be delevered. That's unknowable, right? I can't know that that's what's going to happen. But that's what my model suggests occurs.

Torsten Jacobi: I feel like we are what when you said that earlier, we didn't build a retirement model like Europe has done and a lot of countries in Asia have done that's run by the government. What I usually don't like about these models is they they just distribute whatever comes in, right? So whatever billions come in, they distribute it right away. So basically the idea is we can never spend more than we take in, which is great. But on the other hand, there's really no incentive to invest in something useful to invest in your own future. So I think the idea that we put our money into a potential economic growth should reward the US, right? So just just seeing that capital allocation should put us into one, two, three percent more GDP growth than anyone else in the world. And we are a bit like that, right? So our GDP, it has more volatility, but it's better than in Europe and it's better than Asia. So I think this is kind of a winner. And now we are dealing with the with the after effect of being on the winning side of that construction of society. And is there anything else for the crash? I mean, in the end, I think people get the message, I think they're smart enough to realize what's going on, but nobody has to worry about it as long as the asset is rising, right? It's kind of like the house prices. Yes, we heard worries about the big shorts that was out there, that message, but it was completely ignored because people had no incentive for this because for 30 years, they were only rising for 50 years. It's bad. The only way out of this is the big crash of whatever passive investments we're seeing. And people actually have losses. They have retirement portfolio and they say, I want to do this again. I got to get out of stocks now, stay in bumps, or I don't know, do my own startup, whatever the alternative for this is.

Mike Green: Well, so to me, the crash is not the solution. It is a symptom of the way the system is set up, right? And I would actually argue that the likely outcome from a severe crash becomes a loss of the role of markets. Effectively, we in hindsight, after the event, begin to make the regulatory changes that we probably should have done in advance, right? So if you see people's pensions destroyed or 401ks destroyed in a market crash, is it politically unacceptable to allow those consequences to emerge, right? Do we end up with money printing in the form that we had with the coronavirus? I think the template has been very clearly laid out. And people are very aware of that, which is part of the narrative around, well, eventually, the dollar is going to collapse. And therefore, you need to be in gold, Bitcoin, whatever else, right? Buy real assets. Again, the future is unknowable. I just can't emphasize that enough. But there are components of inevitability around that in systems dynamics as a phrase. It's called posiWid. The proof of a system is what it does, right? And so when we move to a system that directs savings and retirement assets towards the large publicly traded companies, right? And so even within the Vanguard Total Market Index, it is limited in its representation, basically, to companies over $100 million in market capitalization. And you can see a very pronounced effect when a company becomes eligible for inclusion, right? You saw that with the S&P 500 and Tesla, for example. When that system is set up that way, what it should lead to is a decline in the number of smaller companies and a decline in the number of privately held nonpublic companies, right? Because they have a much higher cost of capital than the subsidized cost of capital created by the inclusion, the creation of these rules. And so this is exactly what we're seeing. We're seeing a loss of dynamism in the small privately held business space and a concentration of resources at the large publicly traded space, right? The unicorn phenomenon, as you might highlight it, right? You cross that chasm and you effectively suddenly enter into a world in which almost unlimited capital is available to you. Tesla, again, would be a good example of a company that has been able to tap capital markets to obtain funds that otherwise couldn't have AMC, GameStop, et cetera. They're all doing the same thing. That's just the way the system is set up. And so it's likely to continue in that fashion. And the frightening thing for me, right? You mentioned the dynamics of warning about the housing bubble or warning about the crash in 2000, et cetera, is that people tended to learn bad lessons from that, right? So the lessons associated with housing were that, oh, well, housing prices got too high and therefore they crashed, right? Well, that's not actually what happened at all, right? The system was set up so that it encouraged fraud and it was the frauds, the first payment defaults that resulted in the structured products, the MBS, effectively failing versus expectations. And once those models were called into question, pricing model uncertainty played through and suddenly you could no longer lever your portfolios and sustain that demand, right? That's what the big short was really all about. We're now at a point where 10 years later, housing prices are much higher, right? And they're even higher in a lot of ways relative to incomes and rents, et cetera, than they were then. Why? Why has that been able to happen if that was so obviously a bubble? Again, it goes back to what's the structure of a market. The thing that worries me most is that throughout most of human history, the vast majority of people had no access to owning the means of production or owning their own house, right? If you were in the Western societies, you were a surf who existed on a thatch covered shack that the Lord of the Manor owned and you could be ejected if you refused to do the work that he wanted you to do, right? You had no mechanism by which you could gain ownership of that or get freehold status. The idea that you could have an ownership of your local factory was completely absurd, right? This is part of what spurred the growth of communism with the thoughts of Marx and totalitarianism, right? It's entirely plausible that we go back to that world, right? Because the way the system is actually set up, it's designed to narrow the wealth. It's designed to concentrate the ownership of the factors of production into fewer and fewer hands. And that's just how the system is set up. And we're at a point where maybe it's early enough that we can begin to change that and we can begin to make a educated statement about how we want to diffuse the surplus associated with our relatively high levels of productivity or we're not going to. And inertia tends to drive people to say, I'm not going to do anything until a crisis occurs. And so, to me, the crash is an inevitable part of it. But ironically, I'm not sure that it allows the system as it's currently constructed to continue. And that's what I'm fighting against. That's what I'm trying to raise awareness of. That's what I'm trying to get people to be prepared for. The products that we're developing at Simplify and that we offer at Simplify are designed to protect people to a certain degree in those events so that they retain purchasing power in those events, right? As well as products that are designed to allow people to retain purchasing power in a runaway market event, right? Which, in my analysis, is just as plausible in any period as the crash.

Torsten Jacobi: Yeah, I find this, this is the hardest question at all. One of the hardest questions in life is, if you see, if you get, and I think you want to something there, and so other investors, they can see certain bubbles, certain overmilligrations coming. And there's two options that you have. One, you get in and you try and follow. Or you say, well, this is a bubble that might crash. Like, you just see this with Bitcoin. So I'll say on the sidelines. But the thing is with Bitcoin, I stay on the sidelines, but it went up 100x. Just because I thought it's a bubble already, but it was worth 100. Now, but it came up to about $60,000. It's incredible. And I missed out on all of this, which is not my proudest moment in history. So there is a moment where you feel like, is it the 10x? Is it 20x? At some point, even if you felt it is a bubble and it's terrible, then we'll go to zero. I feel bad about that decision looking back, even though it was a rational decision, because I think Bitcoin is a sore value. It's a terrible concept. And it doesn't work as a payment currency on the internet, which was designed to be, now became different things over time. None of these I foresaw. So you are in the end, right? In your mind, and you foresee, and we don't know how Bitcoin will end, but it might still go to millions. But what I'm trying to say is, even if you ride with your hypothesis, seeing this massive wealth generation and being not part of it as a professional fund manager, or just as an individual for decades is a real problem. So with the lifespan that we have on earth, I feel like, even if you are contrarian, you're right, but it takes 20 years to play out. I don't know if you, as a social being, gain any benefits from this, because for 20 years, people will say you are nutcase and you're crazy, and we don't want to talk to you at all.

Mike Green: Well, I've been married for 20 years, so I'm familiar with that experience. Yes. So you hit on a couple of important points, right? Is the classic John Maynard Keynes observation that the markets can remain irrational for longer than you can remain solvent? Most professional money managers have a very finite period of time for their views to come true, right? If I tell you for three years that markets are going to crash and markets don't crash, then you're going to fire me and replace me with somebody who didn't say the markets are going to crash, right? Now, ironically, that process creates conditions for the markets to crash, right? Because eventually, prices get bit up by people saying, you know, I don't think markets could ever crash, and then there's nobody left to buy, right? That process, again, you know, people do not model with that degree of sophistication when they think about something like an efficient market hypothesis, where the idea is it's based on information. So if I do the extra work, it's actually called the Grossman Stiglitz Paradox, right? Theoretically, as markets become more disjointed from fundamentals, the incentive for me to do an increased fundamental work rises, right? But because I have a finite life, right, I've got 12 months, I've got 24 months, or I've got 36 months in which to prove my thesis, and that outcome is largely stochastic in its nature, to bet on that mean reversion, to bet on that solution becomes problematic, right? So again, from my standpoint, the only way to play the game is to participate and to choose nonlinear payout functions where I am sacrificing a portion of the distribution of returns in order to improve my outcomes on either right tail or left tail. And again, this goes back to the work that I've done, which suggests that the markets are increasingly skewed in either direction, right? So the left tail events, the downside events, the extreme events like coronavirus or the volmageddon crash to the fourth quarter of 2018, those become more frequent in their construction and more severe in their magnitude. But the expectancy of the market to drift higher and to drift higher at an accelerating rate is increased, right? So I need to participate but protect my tails. You know, all of this presumes, of course, that my analysis of what's occurring is correct, right? It doesn't have to be, you know, you're effectively paying a small penalty to protect in today's market. But that doesn't necessarily have to be the case all the time, right? And Bitcoin would be a good example of that, right? Bitcoin was a pure call option. Actually, one of your prior guests that I listened to, I mentioned, I listened to Imran, he described Bitcoin as effectively a call option, right? Well, that's 100% correct. That's what it is, right? Now, it has a call option in two fronts, right? One, is it going to, quote, unquote, work as a store of value? And two, is it going to be adopted as a world reserve currency? My analysis of Bitcoin is that there's almost 0% probability of it being adopted. And actually, I would say that that's increasingly clear that it will not be adopted as the world's reserve currency, right? It constrains the behavior of the powers that be too much, right? It was designed in the aftermath of 2008 as a reaction, basically a libertarian reactionary function to the flexibility of the monetary base that people took offense at. And as a result, it's just too hard, right? I mean, crazily enough, it is too hard. That makes it the perfect vehicle for people who want to speculate, because all they have to do, they don't need to worry about the supply schedule, they just need to worry about the demand schedule, right? Stock market is very different, prices rise a lot, the supply schedule will increase theoretically because management teams are going to be issuing additional shares, new companies will try to come public, etc. Bitcoin makes that easier. And you see this in things like the stock to flow models that people tried to use that are now, of course, breaking down, where those presume a supply function and demand function is relatively continuous. My view is that that's likely to fail, that Bitcoin itself is fundamentally flawed, and that we're highly unlikely to see the sort of adoption that people propose. But it's a good vehicle to try to do that. And it also then highlights a second feature, which is that the products that we as professional investors have, by and large, constructed for the investment world are targeted at those who have money, right? So, you know, the design of our retirement programs, things like target date funds, etc., that have become very popular in 401ks, and as a broad philosophy of how people should allocate capital, they're designed to start with the end goal, right? You're supposed to have x number of dollars at your retirement, right? So, I've succeeded in my plan. Now, let's work backwards, right? Well, 69 is just the year before 70, and 68 is the year before 69, and 67 is the year before that. And if I go back in this deterministic fashion, I get to 22, and I say, okay, here's what I need to do as a 22 year old to be able to secure that future, right? Well, nowhere in there are we considering the volatility of the income stream, nowhere in there are we considering the potential rise of or emergence of liabilities that were unanticipated, nowhere in there are we considering the fact that the person may just become tired and not want to actually do this for 40 years, right? Or 50 years, right? And so, the millennials and those younger are looking at this and saying, wait a second, this system, this deterministic retirement system that you're trying to set up using quote unquote, volatile instruments, doesn't come anywhere close to achieving the objectives that I might personally have, right? So again, Imran highlighted the fact that he wanted to establish financial security at a young age so that he could go travel with his wife or he could do various other things, right? Well, those objective functions for young people are not wrong, right? We tend to treat them with disdain and say, you know, just stop eating the avocado toast as if that additional $7 that they would save off their breakfast, if it's slowly accumulated in a deterministic fashion, we'll give them the ability, you know, to retire in style. They're understandably rejecting that and saying, we want more volatile instruments, we want more call like instruments, things that have very asymmetric payoffs, that buy me some of that optionality. I'm not prepared to just sit there and, you know, go into a factory and work for the next 50 years as those before them might have been taught.

I think this is very rational with the millennials, so that they go to crazy call options like Robin Hood, literally test our call options on Bitcoin. And that they also, and I think this is what Alexander Barth put me up with this, it's this idea of intentionalism in the sense of I want to build something that creates the best possible quality of life for me from, and I start from scratch, like literally, I don't take any preconceived notions like retirement accounts or the boomer world. I just start from scratch on what's the best life and it's often more optimized for quality than the quantity of money, because quantity of money is important and it does how you well be, but there is quite a bit of limits. Warren Buffett famously said more than $100,000, you just don't need it. I don't, he never paid himself, at least that's the tail, never paid himself more than this. And I think this is what a lot of people now not just realize, it's been out there for a while, but they actually put it in production and they go to Bali, become a digital know, I don't feel like, well, I spent 110, now have a better life than when I'm in San Francisco or in the area. And that's quite, you know, it sort of speak, right? But it doesn't really help our GDP numbers. The quality of life is risen, but the GDP numbers probably gone down by quite a bit. And that's the confusing part. I wanted to pick your brain on something that might be related, maybe not, is this huge deflationary pressures that we see from technology and from China, which probably is related, because China is doing what we don't do, right? So they are efficient in the sense of market cap and putting their money in the market, where they feel like they can create something that's cheap and better. We don't see this in the US anymore, maybe having a new startup, it's interesting and it's over, but it loses a ton of money. It does nothing cheaper than taxes, maybe a little bit, but it's producing huge losses. In China, I feel like we still have this old theory of capitalism. If you want to create a successful company, you have to do something better and cheaper, both at the same time, maybe just one of those. Do you think we'll, and that's, that was always a driving force of capitalism, that it drove people forward with better solutions? Do you feel that's something that the US is missing out on? What kind of is our role to contribute? Because for now, we are not exporting a lot of private capital, that's still Japan's role of saving. What is the American role to contribute in the sense of there is deflation out there, we know that technology is happening, but what can we do to bring GDP numbers back to about two, three, four percent without the artificial change that the fat might introduce? Well, so I think that there's, again, a complex question. There's a couple of areas that I would push on. The idea of technology as a deflationary component is absolutely true, but it has certain characteristics to it that I think are important to identify. So there are two different types of technology. There's exploitation and there's conservation. Exploitation is effectively a new discovery. Oil has a chemical energy content that is higher than coal or is higher than virgin wood that is being burned. Therefore, it's able to be used more efficiently. It creates a greater surplus of energy. The discovery of that and the technology to refine it, crack it into kerosene, various other components, powered a innovative type of growth. Things that couldn't have been done before could now be done. The density of energy in a nuclear reaction is similar. It creates conditions under which you can accomplish things that you simply couldn't do before. The other type of innovation that occurs is the conservation component, which is me saying I can do more with less. I can shrink the diameter of a copper wire and send the same amount of electricity over it. So those two vectors have very different implications. A true innovation actually shifts outward both the aggregate demand and aggregate supply curve and does so where the demand tends to rise faster than the supply because you need to build up the infrastructure. It creates a ton of demand for cement, creates a ton of demand for copper, it creates a ton of demand for electrification and therefore consumption of fuel, etc. The natural result of that because we've got this new innovation that raises the return on those higher priced commodities is that you get a durable commodity expansion, you get this capital spending boom, and then the aftermath of that is how do I figure out how to do things cheaper and do it better and use less copper per unit of production. We just went through this expansion where effectively we said, okay, we're going to move production from the United States where we have to pay workers $50,000 or $70,000 to show up in a factory and sit there with a degree of attention and focus. We've taken that and we've moved them to China where they work for $13,000. That process of relocation created a boom in the development of China. Now the problem for China is that yes, they've been very, very efficient in terms of building that capacity and servicing Western demand associated with it, but the presumption that everybody has is that China is ultimately going to be able to consume at a significant level and therefore you're going to create the demand for this. China has such negative demographics that you're already beginning to see the relevant population components, the younger generation begin to collapse. China's graduating high school classes today are about 50% of the size that they were 25 years ago. That means that they are going to have less demand for apartments. That means they're going to have less demand for sofas, dishwashers, air conditioning units, etc. What you actually have done in China is you've built a tremendous surplus of productive capacity that has no outlet other than to sell to the West at increasingly distressed pricing. I don't know if that's, I mean your analysis is correct, but I feel like demand is not created just by booming populations. Yes, there is an element to this and we see this in GDP numbers, of course, and we can just assume the population will be stable or decreasing from now on. This for the next 100 years, who knows what comes after. And that's the whole other issue, but I think the world is one by increasing productivity and I think the productivity of uncertain elements of society, it's not everywhere, but if you go to China, and I went to all over China a couple of years ago, when it would be so good, easily, it's an amazingly productive on this mid, mid level income society, the infrastructure is top notch. You'll see people extremely focused on work ethic on education. So I think the productivity rights is what fuels consumption because you can afford it. Like everyone who has money will sooner or later consume and some people choose to give their money away, but most of us, in some point, we maybe give the money to someone else who consumes our children, maybe we'll get to consumption. I think this is productivity growth is ultimately linked to this and I feel China has done good in productivity growth better than anyone else out there, even if it's on a low level, a cheap level, so to speak. So I didn't answer your question earlier about productivity and I think this is one of the key issues that you ultimately face. When we talk about productivity growth, it's really important to disaggregate it and not treat it as this national phenomenon. So there are multiple avenues of productivity that occur. One is that you can give me more factors of production. You can give me a factory in which to work and therefore I can turn out widgets at a faster pace. The other thing that you can do is you can invest in me as a human being and raise my educational level, my skill level, so that I myself understand the process of widget creation better and therefore can contribute along the technology and human experience matrix that says, hey, have we considered trying this experiment to make the widgets better? There's a third component which is you put me in a widget factory on the very first day. I have no idea what I'm doing and I have a very high chance of cutting off my thumbs in the widget making machine. By the time I've been there for 30 years, it's second nature for me to make widgets and I'm incredibly good at it. So when you work across these, and there's actually a fourth vector, which is do I only hire people that look a certain way or that have certain sexual genitalia because of the constraints of my societal behavior, and that reduces the labor matching function. It makes it less efficient if I'm only willing to hire white males. Every single one of those factors of production was meaningfully affected in the 20th century, dramatically affected. So we introduced things like electrification and automation and in carpentry terms, a jig is effectively the thing that you design once that helps you then cut things or measure things, et cetera, on a continuous basis. We made huge investments in the mechanical equivalent of jigs, the manufacturing equivalent of jigs, which is just another way of saying a factory. We also dramatically improved the experience base of the labor force on two vectors. One is the educational vector and the second is the time in the labor force. At the start of the 20th century, the average American had a third grade education. By the time we finished the 20th century, the average American had finished high school and it actually started some form of college. That's a huge gain in educational experience. It wasn't just in terms of the number of years. The years themselves changed. So the number of days you would spend in school in 1900 is far less than the number of days you would spend in school on any given year as you came to the end of the 20th century. So we increased the skill base of the population. The second thing we did is we largely addressed the majority of events that could lead to a premature exploration of your skill set. In other words, we introduced antibiotics, we introduced modern surgical techniques, etc. that allowed people to survive through their middle age, through their middle age, their individual middle age, and obtain tremendous amounts of experience. We also introduced civil rights that allowed minorities and women to participate in the labor force in the way that they hadn't. So when you run through all these vectors and you actually properly account for the impact that they have on productivity, you discover that there's almost no technological impact. It's incredibly small. And so what we're actually experiencing today is many of those factors have moved into reverse. The population is aging. It's moving past the productivity peak, which tends to be around 45 years of age, and increasingly the marginal player in the labor force is somebody over the age of 45. That's definitely true in places like Europe. It's accelerating in terms of places like Japan and China. And as a result, you're going to see a natural decline of productivity on that vector. The educational component, once you move past secondary education, high school, in terms of a general education process, you're not doing anything to enhance your productivity by studying underwater basket weaving. You're basically developing some social skills and the ability to hang out with your friends and drink heavily, but you're not really adding anything to society. And so we are increasingly allocating resources to very marginal forms of education that are not actually enhancing our productivity. And the last component is that we effectively have no mortality before the age of 65 anymore. The prospect of mortality for anything other than a cancer related disease or some form of accident, which again, we're working on that vector, is effectively nil. And so everything is now focused on extending the life of those over the age of 75. And I hate to put this in the most gross terms, but who the hell cares? What's the advantage of extending from an economic basis, somebody's lifespan from 75 to 95? It just means that they're going to be consuming the resources that otherwise could have been passed to the next generation. It's a terrible, horrible thing for an asset manager to say because the vast majority of my clients are older, but it's true. I'm surprised you say that because it seems to me, I mean, I haven't really thought deeply about it, but we had Aubrey de Grey on who's a big proponent of we can live forever, rather than literally very soon, not just like an entire year or so now. And he basically said, well, it's really self fulfilling because we accumulate skills over our lifetimes. Yes, some of them might get outdated, but let's assume a good amount of them are still worthwhile, but at age of 60, why wouldn't that process keep continuing forever? Why do we go through this? You know, I'm going to shut down when I'm 60, I'm going to retire, and then I'm just going to go into a box. Why don't we just keep pushing this our 40s into our 400s, so to speak? Why would it be any different? And he convinced me with this, but it seems really simple to me. And so we will be even more productive at 200 than we are at 40 because we accumulate way more skills. Yeah, so unfortunately, the evidence is actually pretty clear that that's not the case. Right. So remember that productivity is a function of change in skills. Right. So by the time I'm 200, my marginal improvement from the year I was 199 is effectively zero. So in other words, there's no productivity growth. Well, that's interesting. Yeah, never thought about this. So you're saying if you have a lot of old people, then productivity growth is already limited. So you're carrying it more. Correct. The second component is remember that by the time I'm 200, if I haven't bought a house, I'm probably never going to buy a house. Yeah. Right. Interesting. Yeah. You know, the third component is if I live to 200 or 400, you know, I've accumulated a social network in a particular location that effectively means my geographic mobility is zero. Right at 200, I'm not going to pick up and leave my lifelong friends who I've now been in relationship with for 150 years to go strike out and do something else. Right. So geographic mobility collapses. Like it's just, it's a fundamentally flawed way of thinking in a techno utopian framework that is just absurd. Okay, you're very strong in that one. But don't you like the idea of like having different lives? So I say this about myself and I know it's true. I always feel I had three or four different completely different lives already. I can't, I can't even mimic the person I used to be when I was 20. I spoke a different language, lived in a different place. It's something completely different, a different opinions. I don't feel I'm the same person and all the cells have changed obviously too. So I really think from a metaphysical level, I've lived several lives already. And I'm actually very excited to live 20 more lives. Maybe this will run out in five years, who knows. But for now, I'm super excited to have, I don't know, be, be something completely different, be an actor for 20 years and then do something completely different that I've never thought of, that it's only enabled by technology. Isn't that something that, that is possible? Like do, do we, do we only live on this one time stream that goes from, okay, I grow up, go to college, do some work, I'll spend, wait for my retirement and then live a little and go into this box. Isn't there more to it? And it can't be enabled this with this living extremely long and in turn also would seem very different productivity because it's not just, you know, you just keep continuing your behavior you've done 40 years before you, you've become a very different person. You buy a house at 150. Why not? Because you have a new job, new life, I don't know, a new life partner. Utopian? I think it's a little utopian, right? So, so first of all, it's both utopian and I think dismissive of the fact that you literally just articulated that you experience that, right? So I mean, we live multiple lives, right? I experienced life as an infant, I experienced life as a toddler, I experienced life as an elementary school student, I experienced life as a post pbs and high school or I experienced life as a college graduate, I experienced life as a young employee in a series of ventures, I experienced life as an entrepreneur, I experienced life as a husband, I experienced life as a father, right? I'll eventually experience life as a grandfather, I hope, right? Like, all of those are different stages in life and are different experiences that I can't gain access to unless there is a timeline associated with it. Now, one of the features of going to 400 as compared to expiring at 90, which is kind of the target for me, getting uncomfortably close to that, more than halfway there, right? It's possible for it to extend out, but the costs associated with that in the form of senescence, right? So losing skills that I have accumulated, losing the capabilities that I have accumulated, become increasingly high. The costs of making changes as I indicated in terms of developing new friendships, right, become increasingly high, right? And so the more you extend all of that, effectively what you're doing is, and this is not, you know, I don't think it's crazy, I think there's actually a lot of evidence behind this, but you create elements of extended natalism, right? So, you know, children don't grow up as fast as they used to, right? They don't move to the next adventure, they extend the time that they stay with their family. Paradoxically, that's actually reinforcing, you know, again, the positive feedback loop, right? And in a very negative fashion, it's reinforcing many of the other components that we're experiencing, right? So if a young man makes it to 25 or to 30, and he hasn't experienced a substantive relationship, if he hasn't actually had a serious interpersonal sexual relationship with somebody else because of this extended childhood feature, the odds are increasingly high, they're not going to procreate. Yeah, right. And so interesting. Yeah, no, I hear you. The question is to, this must have happened before, right? So we've had average lifespans already extended, so like, say, 65 now, before it was 50s, 45, but I don't exactly know the numbers, and infant mortality had a big impact. So maybe it's not as big, but it's fascinating. So GDP growth is really lowering because we stretch out the same development life cycle of a human over more years. So, per year, we will see a less, a smaller GDP growth than this. But if you live longer, it's going to go down even further, right? Paradoxically, yes. Interesting. That's so interesting. I never thought about that. Okay, that's a real problem. We got to get people, but this isn't my change, right? So we can influence people to live slightly different, at least theoretically. Well, there's a number of people, I mean, now we're off very much in theoretical space, right? And it becomes very much a function of philosophy. So there's the techno utopian framework, and I would fully subscribe to it. If I got to live to 250, and I was in top physical condition, and effectively, if I extended the period from give or take 20 to, I'm feeling it as I come out the other side, but let's say 20 to 55. If I extended that period and made that a 250 year stretch, and then I had a 10 year glide off into the sunset fairly quickly after that, right? Effectively, a Logan's run type structure. Sure, then maybe something different would happen. But that's radically different than what has occurred so far, right? So when you talk about the changing lifestyle or the changing life cycle, you effectively addressed infant mortality, right? So give or take in the 19th century, if you were a woman and you gave birth, the prospect of your child dying before their first year was roughly 10%, right? Now the odds are vanishingly small, right? Fractions of a percent. If you were 35 years old, and you cut yourself while you were shaving, and you didn't know to properly disinfect it with soap or alcohol, the odds of you're getting a subsist infection were discomfortingly high, right? And we address that with antibiotics, right? And so, you know, we've managed to kill bad choice of phrase, but we've managed to remove the things that prevent you from living to maturity, right? Those are unquestioned goods. Ben Franklin lived into his 80s, right? Like, you know, made it quite a long way, right? There was no barrier that was addressed there. What we have done to this point is address the kind of, or at least through the 1950s, we addressed the probability that you were going to die before you hit retirement, and we removed that level of mortality. That's an unquestioned good. Extending the retirement period, which is what we've done basically since 1968, that's actually quite debatable how good that is, right? I mean, it's really not at all clear. It's a terrible way to say it. I say it with all respect for the contributions that those who are older have made, and no desire to put it in the reverse, but you're effectively increasing a degree of patriotism, right? Where they are parasites living off of the surplus that is produced by the rest of society. I don't want people to take away that I think old people are parasites, right? I just, like, but, but is this the same thing? I know, I understand. I understand. That's really interesting. I never thought about it that way. I mean, the obvious idea is of longevity research is you can target any age that you want to be, right? So if you can, if you can stop aging, you can push it down to any level you want. So you can target 28, 25, 18, whatever you want. There's a few things you can't do. You probably can't make your skull as small as an infant. But besides this, you can move anywhere you want on that timeline. And you're going to stay there forever as long as you get your shot every two weeks or whatever the time frame will be. And I think this is, this is incredibly utopian. I agree with you. But the, the ability to, to, to transform our consciousness into something so much longer, it seems to me obvious that we get better because I feel I'm much more efficient now than I was at 20. But I really see your argument, the incremental change might not be that big. And that's probably a big problem. No, that's absolutely the case. I mean, if I, you know, look, my knowledge base is deep, but my learning pace is slow. I recently hired a 17 year old intern who's, you know, developed a remarkable interest in financial markets. The pace at which this kid learns and reads is just astonishing, right? I mean, it's, it's, it's so remarkable relative to the way my brain now plods through things, right? Now I have more neural connections and a better understanding of the overall system. But if, if I were to candidly say to you, you know, like, who do you want to place the future bet on? I'd go with him versus me. One thing that transpired to me, I don't know if you, you ever felt that I feel in terms of investment decisions and I mean, broad investment decisions, not necessarily do I pick stock ARB, but like in a, in a broader what sector am I engaged in as an entrepreneur? I feel like as less, I knew as more dumb I was, as more as just, I just want to be part of this. I thought I made better decision in terms of RI than I did when I was procrastinating, very smart about it, doing long, long term models, short term models, because by the time that I was on my investment hypothesis was set, most of the gains were already out. Like I waited too long. So that's my gut feeling as more and no, so now as hard it is for me to make good gut decisions. And that prevents me because other people may also gut decisions and later decisions as well, that prevents me from being early in a cycle and actually make worse. Well, it's different because it's not as risky, but I feel I make worse investment returns than before. Have you noticed this too? Or is it because we're in a paradigm change and we need new hands, you know, we need the 17 year olds to take over. Well, you put me in a difficult position because I'm a portfolio manager and you want me to admit that I make worse investment decisions than I did before. You have 17 year old interns. That's right. I've got 17 year old intern for that. So I think the way I would describe your skill set as you get older is you get better at saying that can't be true. That can't be right. If you're really good at what you do, you have developed a skill set that allows you to say the math there must be wrong. And we talked a little bit at the start about what I would consider unique about Peter Teal or the approach that he has taken or that has led me to these types of insights. What I would argue that Peter has, and I probably have it to a much smaller extent, is a lack of embarrassment of saying why. Why do you say that? Why do you say there's a God in the sky? Why do you say that the earth was created in this way? Why do you say that markets behave in this fashion? Why is that the case? The fact that US markets have returned 8% on average over the past 100 years in the form of US equity markets, why? And if you are comfortable asking that question and having people effectively treat you as if you're a moron, it requires a certain level of intellectual arrogance to be able to continue to question where people are like, dude, I answered your question. I told you because. Well, that's not a satisfactory answer to me. It's not a satisfactory answer to Peter. And so what you're actually doing is you're creating the conditions for you to potentially develop a deeper understanding or a vector of attack in an option framework that says, well, what if that's not true? How do I exploit it? And how can I place a small bet that could grow into a large bet? So there's elements of that that I think you get better at as you gain experience and you get older as long as you're willing to retain that plasticity. And you don't want to try to become this August respected citizen who nobody ever questions themselves, right? Because unless you're willing to have yourself questioned in the same way on your beliefs, then you can't really actually embrace that approach on your own. And it's one of the things I really try to do. Like I always encourage people when I talk to them about passives that challenge me, tell me why you think I'm wrong. Maybe there's a piece of information that I haven't considered, right? And so you just, you constantly have to be open to that, right? Now, with all candor, can I also feel elements of that slipping away, right? Is my memory as good as it was when I was 25? No, right? My ability to form novel and interesting thoughts is probably less than then, right? Actually unquestionably less than then. But my ability to push in the right areas to direct the increasingly limited resources that I have is unquestionably better, right? Now, back to the productivity discussion, if I make it to 200 and I don't look like a crypt keeper, is that going to continue to improve? I'm very skeptical of it. That's a really good question. So a lot of investors that don't want to do trend following and don't go into the three months cycle, they strike me as very contrarian, right? And they built their brand portfolio with their contrarian view. So I'm, I have Mark Farber on, he definitely does that. And we talked about, you know, usually ends up by gold, or I find it's a little, not a disrespecting, because you know, way, way, way more than I do, probably all of us. But it seems to me, so there's two problems being contrarian, investor one seems to me, the recommendations always ended by silver, by gold, maybe by crypto. And I'm like, okay, this, this is really boring, right? I mean, this is all you come up with after 60 years. It doesn't, it doesn't sound that interesting to me. And then, so there's always an element of this is not just that, but I feel like this is really intellectually boring. And that's strange for me. And then the other problem is, as a contrarian investor, you basically, you're literally against everyone. And you, you've got to be out there and face what you just said, you're a moron for a while, but you might have to sit it out for 10, 15 years, you can really lonely. Like maybe you're right. And maybe you're not just maybe maybe 100% right. But I feel that is a price to pay in social, the social dilemma, so to speak. So I'd rather be a part of society and be wrong for 20 years than be right. But like, nobody wants to talk to me because I'm so abrasive. I don't know how you deal with this. You seem to have a way to deal with this. I think it challenges in the mess more or less is a lot of other really successful investors who are or their tradeoff is, I don't know how they did the tradeoff. They're very successful. They have a lot of money, but I think that is they paid a heavy price for their success. Yeah. So, so look, I look at strategies, you know, if you think about what gold, silver, Bitcoin or crypto have in common, they are all mechanisms of saying, I think the tribe is headed in the wrong direction. And therefore, I'm going to opt out of participating in the tribe. Right. You guys all go on your nomadic adventure, heading off in search of, you know, XYZ, right, the waters, the watering hole, the, you know, next source, I'm going to stay here in my cave and not participate and just wait for you guys to recognize what a terrible choice you made. And when you come back, I'm going to own the cave and you're going to have to pay me rent. Yeah. Right. Like, yeah, that's functionally what we're trying to do. Right. It's a terrible strategy, but it has an evolutionary precedent. Right. Think about lions hunting or cheetahs hunting on the African plains. Right. Antelopes in general have the strategy of trying to stick together. Zebras are intentionally designed so that their stripes make it confusing when they stick together to attack the tribe. Right. But there are, there's an evolutionary feature that leads to some zebras and antelopes to occasionally take a left as compared to a right. Right. And the reason for that is, is it builds robustness in the system in two fronts. One is if you're actually being chased by a lion, right, then the, the, it separates that individual from the herd and becomes effectively an altruistic sacrifice. Right. The other one though, is what happens if everybody's veering right and you're actually headed for a cliff. Right. And so that actually enhances the evolutionary robustness of the population. There's a reason why we pay attention to cataclysmic forecasts. Right. Like I, I can sound much more serious if I say to you, there's going to be a crash. You have to protect yourself this way, et cetera. And exactly to the point, I'll have about a three year time horizon in which that can be borne out. And if it gets borne out, then I get to become very wealthy and very successful. And what am I going to do? I'm going to tell you, there's an impending crash that's going to come next. Right. Like I'm just going to keep doing the same thing over and over and over again. I sound far less sober by saying, no, look, the way the system is set up, it's designed to cause this. Right. And so you have to participate. You have to stay with the tribe, but you also have to have a effectively a parachute so that if you go over the cliff, you know, you're able to land successfully. Right. Yeah. That's a far more nuanced and difficult conversation to have. Right. And I agree with you. You know, I've said this elsewhere, like just from an evolutionary perspective, we are wired to take very seriously cataclysmic events. If I say to you, there's berries in the bush, your reaction function could be, yeah, that's great. I see the berries too. Right. I'll have to remember that and come back to that at some point in the future when I'm hungry, but I'm not hungry right now. If I say to you, we're on the plains of Africa, obviously, if we're in San Francisco, as we both are, if I say to you, there's a lion in the bush, you're going to think I'm a kook. But if we're on the plains of Africa, I'm like, holy crap, Torsten, there's a lion in that bush. Right. You're really not going to spend a lot of time going over and looking in the bush, be like, you sure that's a lion? I don't think that's a lion. Maybe it's a lion. You're going to run. Right. You're just going to get out of there. Right. And so that's what those contrarian, right, and I would actually describe them as cataclysmic investors, are trying to do, right, by creating an element of perceived sobriety while everyone else is alleged to have lost their minds. They're drawing attention to themselves. They're attracting attention, et cetera. And, you know, I'm on record as telling people, like, the solution is just to vote better. Right. If we all try to leave the tribe, the tribe disintegrates, and we're unable to, you know, conduct productivity enhancements and surplus enhancing activities, but we could pick our leaders better. Right. We could soberly say, like, what are we actually trying to accomplish? Right. Do we really want to try to all march off this cliff, you know, with the idea of being on the other side of this cliff, there's nirvana? I think that's a terrible choice. Right. And so what would I try to do? I try to say, look, the guy who is leading us is a sociopath. Right. We shouldn't be following them. Right. Vote better is the language that I try to use for people. The problem is, is that we're just so distracted. We're so frantic right now. The survival function of people trying to retain their standard of living in a society with the type of surplus that we have in the United States or the developed world is a degree of panic associated with it. And I just don't think people are able to assess it in a rational, fundamental framework. And there's a cost to that as well. Right. I mean, I mentioned being married for 20 years. Like the number of times my wife has been driven completely insane by my insistence on saying, well, wait, what are the actual facts? Forget the emotional content. Let's, you know, try to figure this out. You know, what are the rules of the system and how the game should be played, et cetera. It doesn't make you a very social. It's not an easy person to get along with. Right. And so money management tends to be a solitary, you know, a solitary process. Yeah. I like how you put this. And I like the approach that you take. And I think I'm very opposed to the libertarianism, the extreme or narco capitalism that says, well, we'll just get rid of the dollar and the introduced Bitcoin. I mean, even just let's take it at face value and say, let's do this in practical value. This is crazy. And it's so easy to, to, to fix what's wrong with the dollar compared to this, right? Because it's such a proven value working system. If you feel there is something really wrong with this as a reserve currency. So I, I, I like the approach that you introduced where you say, well, the incremental changes is what we should focus on, even if it takes a little more of a push to overcome what's wrong with the system over the, the status, the systems and so to speak. I think that's awesome. What, if we talk about, let's go back to finance a little bit one more time. We obviously talked about the passive investment bubble. Where else do you see there is a bubble that we could potentially relatively easily trade against? I think there was a problem with the 2007 bubble, that it was so hard to trade against. I spoke with Harley about that, finding someone who sold you CDS and CDS option was like impossible. Like there were like 10 people even had access to this outside of an investment bank. But what, where do you feel there is a bubble that's forming relatively cheap to trade against with, with a certain instrument that others on our listeners should look at? Well, so this was part of the, this is part of the objective function for simplify. And one of the reasons why I transitioned away from the hedge fund space and into the ETF space. So, you know, my, my work is always focused on this dynamic of what is the market structure, what are the rules, how does it guide, you know, effectively trying to turn it back into a board game effectively and say what are, what are the rules and strategies that would optimize or that this system would lead to, right? Yeah. The rules were changed in September of 2020 about what can be included in an ETF. There's something called the derivative rule that has now standardized the process that allows me and the, the rest of the team, it's simplified to design products that facilitate access to those types of trades, right? So we're actually in the process of, of building a strategy that will allow retail participation in things like CDX type structures, right? Harley has introduced a product that has a character to it that, that embeds what's called a, an OTC over the counter customized derivative designed to protect against interest rate increases, right? So we're trying to facilitate the access to these vehicles and we're trying to detune them in a way that makes them appropriate for use in retail portfolios, right? So exposure to the markets with protection embedded in, etc. So, so this is getting easier because the rules are changing, right? And I think that's a really, really important component. And we're not yet at the point where I would argue the feedback loops are such that these trades have become crowded in that fashion. They represent a tiny fraction of the market at this stage. In terms of the, the challenge that we have on trading bubbles, right, is it's very, when you trade a bubble or you experience a bubble, you always have to ask yourself, what is the catalyst for it to end, right? Because otherwise you're trying to effectively step in front of a steamroller. And you know, my flows discussion that I had at the start is the right way to think about that. If everybody wants to buy a house and everybody is buying houses and has access to the credit that allows them to buy houses, right, then the prices of houses are going to continue to go up. And anything that is built on the assumption of housing prices continuing to go up in terms of its suitability is going to be very, very difficult to bet against. It's when that capacity to borrow money is withdrawn, right? And so the next marginal buyer is not there. And they're not able to drive prices higher that those systems begin to break, right? Now, it's in examining those rules that you ultimately have to get to it. Now, if I look at markets, the obvious break that is occurring is the baby boomers heading into retirement, right? They are beginning to take withdrawals. The challenge is this different type of investment, right? So I mentioned that passive investing is now about 44% of the market. In the US, it's less than that elsewhere, although gaining share rapidly in much of the rest of the world for regulatory reasons. But that's not a homogenous distribution, right? Meaning it's not equally distributed, right? So baby boomers own much more active. Millennials and younger generation own much more passive. And so as that aging is occurring, we're continuing to see money flow into passive strategies with very little in the prospect of outflows. Until that breaks, I don't think that you actually see these bubbles correct. And so you need to be able to participate in trade in both directions. On the other side of where do I think that there are bubbles or where are things that are more proximate? I keep getting drawn back to these debates on what is inflation and are we going to experience inflation? Are we going to see a collapse in the dollar, et cetera? I'm very, very skeptical of that because if I look at where I think the actual fundamental bubbles are, it's in places like China, right? Where they have optimized the Chinese system to sell the labor product of their population to the rest of the world. As their labor population declines, the productivity and the efficiency that would have to be realized by that declining share of the population rises. So effectively, there's a standard level of productivity improvement that is required that actually goes up even though the easy changes have already been made. And the domestic population that can consume that falls, right? So China is increasingly in this scissor move that to me feels very much at odds with the way the rest of the world thinks about it. And the biggest concern that I have about China is the potential for China to receive false signals about this, right? Because as that surplus emerges, as you sell to the rest of the world, you actually paradoxically build up domestic resources that make you think that you're invincible. And it becomes a very short hop, skip and jump to saying, okay, well, now let's try to invade Taiwan and take it over in the way we did Hong Kong. Or let's try to expand in other ways, right? I feel this is definitely going to happen. If you ask me, there's a 99% possibility that China is going to be on the expansion on a territorial regime. It's not going to be just Taiwan, it's going to be most of Asia. And that's obviously going to be a pushback from Australia, the US, Europe, Europe to a lesser extent. And that's, I think, and I don't actually know what the reason is. I've been talked about on the podcast here for psychological reasons. We talked about the reason that the model of China, as you just outlined, is a monoculture and it maybe comes to an end of its growth. I think this is also putting pressure on it. I think there is a huge, but this event is probably necessary, right? A, for now, we say that for the US to wake up, to actually figure out where our strength and what should we do with our economy, because if it's just rolling a lot comfortably, we will never make any useful changes. And then on the other hand, it will, it's this ultimate show of productivity growth, right? So when we look back into wars in the past, as terrible as they are, they also show usually that the more productive society wins. And often that's the more free society, not always, strangely enough, but generally, this is the more free society. So we know how this will turn out, but I'm pretty convinced this will be the catalyst. So there will be a strong or maybe not a strong, but some of a hard war building that China, this probably is the catalyst of China being a much smaller economy after that, maybe 10, 20 years from now. I wish we could avoid it, but I just don't feel that the ingredients are right for avoiding such a war. I think it's, I tend to agree with that. I think it's hard to put that sort of determinism on it, right? So the, you know, the conditional probability was referred to as a Bayesian probability is, you know, if X happens, you know, what is the probability of Y conditional on X, right? The point that I would make with China is that if China moves relatively quickly to a militaristic framework, then that scenario is almost definitionally true, right? So if China decides to invade Taiwan in the next two or three years, then, you know, you'll almost unquestionably see China try to expand in that fashion. The flip side of that though is that the costs of their demographic pressures are going to become increasingly obvious. And so, you know, we tend to think about China as this place that has unlimited population component, but that population component is increasingly skewed very, very old. And when you're skewed old, you can't participate in the military. And the fighting force is a fraction of the military, right? So the U.S. currently has a support ratio because we project ourselves internationally of about 10 to 1. So you need roughly 10 people working in logistic support for every fighting member of the army, right, or the military. China has a much lower ratio because it's all domestic. They don't have foreign bases deployed with the exception of their first bases that they built in places like Eritrea, etc. Sri Lanka may may may may fall in the same fashion. But as they expand, that support ratio is going to rise as you try to expand the size of the military, right? And you try to expand the geographic scope of the military. And that then flies directly in the face of their demographics because the population that is available to fill that is shrinking. Right. And so I actually think that there's a high probability of something happening relatively soon. But if it doesn't, then China moves fairly quickly into a much less powerful mode. Yeah. Yeah, I tend to agree with you. The interesting part obviously is that we are still by far the largest trading partner of China, right? So I always wonder, you can't go to war with the largest trading partner. I mean, you can. I think Germany did this, but that that was it worked for like five years and the economy fell apart. I think everybody knows that. So that's kind of the only thing that where I say, well, this is not going to happen because that's what you can replace your largest trading partner a little bit. But in the end, you've got to feel the pain sooner or later. But if you extend credit or you find a lot of customers that are not as rich as Americans. Well, again, I think that there is an element of it depends, right? So the largest trading partner is always domestic. So what matters is their domestic economy. What matters is our domestic economy. Yeah, the proportion that comes through import, export and global trade is relatively small for almost all countries other than Korea, Germany, it's, you know, Taiwan is a great example, etc. The second question becomes, can you not, can you create a knockout punch that effectively invalidates your trading partner's response function, right? So if China were to rapidly take Taiwan, what are we going to do about it? Yeah, nothing. We will not immediately at least. Not immediately, potentially, not never, right? I mean, what is our reaction function been to the very clear violation and takeover of Taiwan in advance of the 2047 deadline, right? Nothing, or not Taiwan, I mean, Hong Kong. Absolutely nothing, right? We've done nothing. Do you guys want to go to war with Taiwan? Maybe, I think, Vietnam, but I don't think so. Maybe Korea, I think this is where the line will be drawn eventually. But definitely, I don't think Taiwan will be an issue. I mean, it will be an issue, maybe Australia will go to war, but I don't think the US will be involved. I think the prospect of Australia going to war without the US against China is functionally zero, right? Yeah, but they surprised me and that already puts us away a topic, but we're really surprised in Australia, despite being so politically correct and being having really strange attitudes the last five years on China, they seem to be really harsh, which is really surprising to me. I don't know where this comes from because they need so much money for China. So some things, they were like the biggest friends of China for a long time because they made the most money from that. Yeah, I mean, I think it's important to distinguish what you mean by friends, right? So they were very strong trading partners. A tremendous amount of commodity wealth was created, a tremendous amount of real estate wealth has been created by Chinese nationals effectively seeking a democratic regime as an exit vehicle, right? So there's been a tremendous amount of disruption that's occurred. The domestic Australian population, I think, is increasingly frustrated by that, but they have an identifiable external feature there that is maybe different than the US. The US has not quite figured out the role that China is playing in disrupting a lot of the standards living, although I think that's starting to change, right? If we go back five years ago, these discussions were far less common. There's a huge difference between kind of the ability to stand up on principle and the ability to stand up in practice, right? And Australia's economy is so deeply integrated and tied with China that it becomes very hard. But everything that China is doing, right, they have this idea of wolf warrior diplomacy, et cetera, that you've heard talked about, right? The Australians see this very, very clearly. They understand that they are at threat from this. And the Chinese are being very explicit in their behavior and making it easier for Australia to separate itself from China, right? By overreacting to everything that Australia does, where Australia says, hey, that's not a good way to behave. And China says, shut up, sit down, you're our bitch, right? That naturally causes Australia to be like, what? No, we're not going to do this anymore, right? And effectively, that becomes the overwhelming phenomenon at some point. But that is what China is doing. China is way prematurely effectively standing up and saying, we're your largest trading partner, we're your largest trading partner, don't tell us what to do. Right? Yeah. I don't know if it's premature. I feel like I can't measure it and you have way more access to data. I feel like the self confidence, the new self confidence of China is probably based on real data. I don't know, maybe it's just made up. Who knows? But I feel like there's something going on, either profits or just the way the economy runs, where they run out of investment vehicles. I think that seems to be what you reflected on earlier, that there is this jump from a mid level economy that they're not making. They don't know how or they don't know what to, and that's kind of, they have the same problem. We all have certain leaders, we don't know where to put our money. They have this generous amount of savings that you could put in infrastructure, but that's kind of done. So they don't know what to put in the next level and maybe territorial expansion is what they're looking for to keep the peace internally. I think there's a separate issue. So democracies are very messy because they allow democracies and republics to a lesser extent are very, very messy because they allow a diffuse set of objectives to exist. What I want to accomplish with my voting pattern and what I would prefer to occur can be radically different than what you want to occur. We have to effectively negotiate that out. As you move towards a more totalitarian system, and this is really what's happened with China is that they've unquestionably moved to a more autocratic totalitarian system since the emergence of Xi in 2013. As that occurs, there's paradoxically both a gain in efficiency and a loss of information. So the efficiency is we stop all the squabbling about, do we build the Three Gorges Dam? You just disappeared for me. I'm not sure if you're back. We remove all the discussions around, do we build the Three Gorges Dam? And it becomes, how quickly do you want us to build the Three Gorges Dam? You saw this with the Roman Republic into the Roman Empire. Once Augustus takes charge, what does he do? He builds beautiful, wonderful structures that exist in the center of Rome and give the indication that everything is better than it's been before. Why? Because I've taken a diffuse set of objectives and I've focused them. You see this within team building exercises all the time. You need a leader, you can't have everybody be a chief. China is experiencing Nazi Germany the exact same thing. So you experience this coalescing of objectives that creates the perception of improved productivity. The resources can grow. Mussolini, Hitler, etc. What were the phrases that the population used? At least they made the trains run on time. The single biggest risk though that you face in that is that that also has its own negative feedback loop in which the information that makes it to the decision maker is increasingly filtered by those who want to avoid losing influence with that individual. So it becomes a series of yes men and that in turn actually raises the risks of military conflict. Can we take Taiwan? Yes, we can, sir. That's a perfect description of how this end game looks like. This is the last question. I know your time is very valuable. I've really enjoyed this. What do you feel is beyond if we say this happens in the next 10 years? That will be my conviction two days of war. It's partially a hot war which ends up being China being a different animal than it is now. Obviously, we still want to be a China. If you take that a little further, do you see any other big trends out there where you're relatively convinced they're going to happen? Because you analyze the transport so much. These things are going to happen. We don't know who the winners are yet, but those things are going to happen next 20 or 30 years. Is there any gut feelings that come to mind right away? Well, I mean, so I do a little bit of advisory work for the US government. What I keep emphasizing is it's almost impossible for us to lose this battle, but we can lose the war by becoming our enemy in the process. So republics and democracies are messy. They are naturally inefficient in their provision of services because they're such a diffusion of objective functions. What do I want out of my government? Maybe different than what you want. When you eliminate that and you focus it, you raise the productivity of the public sector. It becomes very good at doing one thing, producing military equipment to fight a war. But there's an inevitable loss in terms of the individual freedoms that are associated with that. The thing that worries me most is I've seen how quickly we as Americans are confronted with the inefficiencies of the public sector and how we're increasingly beginning to say, would somebody just make the damn trains run on time? Or could we at least have trains? Can we get trains? I'd like to have trains. We're moving in that direction where we're effectively saying our elected representatives are incompetent and engaged in squabbling and corruption. We need to move toward the authoritarian system where it's set to achieve exobjectives. You see the US splitting in terms of tribalism along those objectives. That's my single biggest fear. On the positive side and where I'm much more positive than most people is I look at human innovation and I tend to think that what we're experiencing right now is, I mentioned the two different types of productivity. The innovation and the exploitation are almost exhausted on the exploitation. The things that we're doing more with less, like we've taken the ultimate form of it, we don't even need to have factories in the United States. We can accomplish it with extraordinary productivity by paying Chinese to do it for us. We're at the tail end of exhausting that exploitation feature that is tied to things like telecommunications, etc. I can get on a phone and I can get on a Zoom call and I can talk to my factory in China and I can say, I need you to produce X for the US market and the logistics features that allow me to ship that across the ocean, etc. We're approaching the exhaustion of that process. Does that create the opportunity for innovation on the other side as we reassure that productive capability? Do we introduce automation so that our TVs and patio furniture and clothes are made with much lower labor content and with much greater degrees of customization, etc.? I think the answer is probably yes. But what does that require also? It requires us to advance factors of production. The single biggest factor of production that we're struggling with right now is the provision of very, very low cost base load energy. I'm extremely hopeful, probably utopian in my belief that we will eventually move to various forms of nuclear power that provide that base load energy that has everybody turn around and say, man, there are so many things that I can do now that I couldn't do before because the energy is so much cheaper and so much more uniformly available that that's where my hope lies that will advance in that way. I'm very good friends with people like Josh Wolfe, etc. That sort of techno utopianism where it's not about some magical, hey, we can solve the world's problems if I only get to live forever. We can actually take the structures of the factors of production and meaningfully improve the life experience and this capability of the human capital capability of the average individual or the median individual, much more than the average, increasingly, because of the character of the distribution of wealth and skill sets in our population. I'm very excited for that, but it requires hard choices and there's risk associated with those hard choices that we move in an authoritarian path. That's my guarded, optimistic outlook on where we stand. Well, I'm very happy that I got an utopian thought out of you. You're welcome. I'm actually an optimistic person. You are. I wouldn't say utopian, I wouldn't say utopian, but that's great. I mean, that's, it's a fine line to walk. I fully agree. Mike, thanks so much for doing this. It was awesome. I learned so much. Thanks for sharing. I really appreciate that. Take care.

Thaddeus Kozinski is a professor of theology and philosophy at the Divine Mercy University. He is the author of Modernity as Apocalypse: Sacred Nihilism and the Counterfeits of Logos and The Political Problem of Religious Pluralism: And Why Philosophers Can't Solve It.

You may watch this episode on Youtube - Thaddeus 'the Catholic' (Pluralism, Liberalism, Postmodernism, Idolatry, World Government).

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Today's welcome to the judgment call podcast really appreciate thanks for coming You're welcome. Thanks for having me on torsten. Hey, absolutely I looked into you a little bit and there's two books that you wrote and it stood out and got quite a bit of recognition One is where you talk about what role does religious pluralism have in society? How nation states should actually be a construct and is that even possible which we all think it is right? So that's kept I guess the consensus and the other book that I took a quick look at is How Catholicism really fits into modern society and what what happened to Catholicism? Because it went through so many changes at least the public perception during the last 100 years So i'm excited to talk about this and you're also just in that before when we spoke earlier you mentioned A couple of other topics that I think are really relevant to today's discussion about what's going on in the world So maybe like my first question is how did you start with philosophy and how do you select those topics? So why are certain things closer to your heart like those topics? We just talked about and others that you come across from what you feel others are not as relevant to you You just leave them by the wayside a little bit well, I I started out in college as a pre med major math and science Towards my junior year I was reading And I wasn't practicing religion at this point. I was kind of a Nietzschean In my in my behavior and thought even though I didn't know who Nietzsche was, you know what I mean? I was sort of uh, I was a de facto Nietzschean living for extreme extreme experiences trying to defy uh the status quo you know Trying not to be a conformist all that and I was searching though at that point And I I actually read one particular book which sort of opened up a whole new world to me And was called the screw tape letters by c.s. Lewis Have you heard of the book? I have not no I have not so the screw tape letters are fictional letters written from uh a devil in hell called screw tape To his nephew wormwood and the whole book is about how to How to get this one particular individual into hell and so what lewis does is he incorporates a lot of uh social commentary and spiritual truth in this But what happened to me when I read that was I thought wow, this could be true There really might be the spiritual world out there of of truth of comprehensive metaphysical spiritual truth And I I really felt the the the reality of that from this book It really it really floored me And so at that point I got really interested in reading reading these things. Um reading spiritual works of lewis and uh other other theologians and That got me interested in moving away from the sciences into philosophy and theology and so um I then uh Enrolled in a program called uh saint john's college uh in anapolis, maryland, which teaches the great books only They're one of the first great books colleges and I took the master's program there and read through the whole canon of great works All the philosophy theology literature history that I didn't really get uh undergraduate Um as I was going through that program. I discovered playdough who became uh, I just fell in love with his writings especially the republic And what really floored me was his discussion of democracy and book eight of the republic Where he basically says that he depicts democracy as a kind of relativistic Carnival of everyone doing their own thing and everybody's happy and self satisfied Except that it's the beginning of tyranny For playdough because what happens is is in that vacuum the tyrant Is born and the tyrant is completely a slave to his passions and makes everybody else enslaved to his will And that just floored me. I never I never read anything like that and it he also described the way in which the political order is Uh, a kind of macrocosm of the order of the soul And that was also uh new to me and that got me interested in political philosophy And uh, I had also become interested in the catholic intellectual tradition, particularly its philosophical tradition Combinating in st. Thomas Aquinas So I went to catholic university and and took 12 courses Uh in for my phd. Uh, a lot of them on st. Thomas Um, I discovered allister mackentire's writings at this point and his radical critique of secular liberalism Um, and I also discovered the social encyclicals of the popes, especially leo the 13th Um, where he talked about what a christian political order looks like and should look like and how it connects to the truths of the gospel And so at that point I decided I wanted to write um, my dissertation on Uh, what I call in my in my book that came out of that the political problem of religious pluralism um Looking at plato looking at Aristotle looking at Aquinas looking at jack baritain allister mackentire john walls Um and seeing what the problem really was Uh in our culture And and that's what I tried to um Figure out in that book. Yeah, that sounds fascinating. I mean those are I I feel I've only even heard of the subset of those books And I've only read a couple um of them as well. Um, this sounds really fascinating when when we look into Let's say a popular opinion is that political pluralism So the the the ability to To and compass all kinds of religion into one nation state kind of what the what the u.s. Um It kind of isn't because it's kind of based on a on a christian philosophy, but it kind of Um prides itself in disability to it. So any anyone with any kind of religion and have anyone that have a guaranteed ability to To practice that religion and bring it into this this microcosm of what's modern, um america First question would be do you feel america is? Pluralist is really pluralist as you would perceive it and be what do you think it's not working out so well? Uh the answer to the question of whether we have a genuine plurality of And even and even from the beginning of the founding is genuinely pluralist is is no Um, and you have to sort of think about what it means to be pluralist. Um Uh, you know John Locke in his letter on toleration Um said that uh, the the true the mark of the true church is toleration Uh, he also said every church is orthodox to itself And in his uh Other writings maybe including that one as well. He He forbid uh, both atheists and catholics to be part of this New enlightened, uh, social contract. The reason he did that is because he had a suspicion there that Neither the atheists nor the catholic could actually abide by Uh, the kind of implicit rules of the social contract and what the rules are there is a sort of religious relativism Um, in other words, uh, you could you could practice your religion your philosophical doctrines Whatever you think about values, uh, in the civil sphere in the sphere of private life But when it comes to public life when it comes to the laws Uh, when it comes to the the sort of life of the common good, it's the civil society that determines these things Well, what that means though is that the civil society the political, uh, authority has decided that no religious truth or institution such as the catholic church Has any political authority whatsoever has any authority to determine Um, you know Uh Reality, uh, it's like like he says every church is orthodox to itself So, um, in my opinion lock was was pretty much an atheist. Um, and his his christian noises were superficial and rhetorical What he's really setting up was the first secularist purely secularist state And that is indeed what we have in the united states. It's not a christian, uh, nation It may have been full filled with christian citizens from the the colonies But uh, insofar as you have the constitution and declaration what you really have is a secular regime Uh, where religion is, uh, ultimately privatized And and the church has no political, uh, moral authority whatsoever And so what I mean by saying that pluralism doesn't mean that it's not a christian nation Pluralism doesn't exist is that in order to, um, you know, live in an american culture You have to kind of adopt at least de facto or a modus fivendi A kind of strict separation Of your deepest held beliefs And and the and the common good in the political order, but this is this is a very, um Uh, distorted and perverted way of understanding, uh, your religion Um, the catholic religion for instance has things to say about the common good about the truth and about the purpose of human life It has things to say about, um What political authority is where it comes from and how laws should be made and what and what they should be ordered to It's not a private institution In fact, it has a higher authority than any state because it was instituted by god himself Now when you when you go around and interview catholics about that issue Um, and I was first introduced to this way of understanding political theology by reading leo the 13 Specifically his encyclical called immortale day on the christian constitution of states Most catholics and christians and theistic believers in general um When you ask them the role of their religious beliefs their practices their church um In relation to public authority political authority the culture they will give you an answer That is more or less lockian Which means that we're all lockians now, which means that we're not really pluralist Okay, we have superficial differences in our religious confessions, but we're all accepting a certain understanding of the relation of church and state of the supernatural the natural of reason and faith of nature and grace of um Of the sacred and the profane We're all basically accepting a more or less lockian enlightenment Uh liberal view and I'll just finish with this. Alistair McIntyre says um, what we have in our society are Radical liberals and conservative liberals, but we're all liberals and there isn't a place in public discussion where Liberalism itself is put to the critique is put under scrutiny Because what what's really going on is our our religion is big l liberalism and most people are Are basically practicing denominations of big l liberalism Catholic liberalism protested liberalism even muslim liberalism Atheist liberalism, but the problem is is that the the the main architectonic mode of understanding your own beliefs The relation to your life the relation to public life Uh are all filtered through this ideology Which is antithetical actually to authentic traditional um religious and metaphysical truth Yeah, so if I follow this correctly What and this is this is certainly interesting What do you say we don't have the pluralism because the flow of the religions on its they don't really stand on its own they're not able to To express all the knowledge that they have they stop short of this and we have this this the super meta meta Physics on the method ethics on top of that that actually determine the place of religion So religion cannot grow out of its place of boxing and every religion is hope it's in a similar box So to speak but the actual That the the meta ethics that we have accepted is liberalism and that is something we don't really see right So this is something that came off the enlightenment when we talk about religions all the time But we all feel and I I see this slightly different But I think the popular consensus is this is something that helped the old people It doesn't help us as much anymore. It's still around but the utility has gone down That's kind of what I get from most guests here on the podcast They say if it even has the utility it's so small we can ignore it. I I see that differently I feel there is quite a bit of utility still left But the actual superstructure now is how do we We how do we determine and I mean there's a nation state. There's a global government something that we all expect to happen in The year let me just sit on top of that, right? Let me just jump in with the way you frame that it's very interesting Um, most people don't see any utility now in religious belief and practice. You see more utility That's exactly liberalism liberalism, uh makes everything a means to an end Even those things that are ends and so the idea of looking at religion As a useful thing like even george washington or john ams. I forgot who was said, you know Um religion is good for you know, uh american culture keeps people good and you know, okay The whole idea of religion Of truth of god himself is that it can never be Merely a utilitarian good it is that which everything else is ordered to including the political order Uh, and so but I'm just reading i'm just reading nicolas weight. That's something I I and I think it it goes to the quarter I'm just reading nicolas weight and uh, I think he's getting to the heart of it as as well as as I I couldn't he's really going into so what is the survival value? What is the utility value not just in making us richer, but actually it's a viable value. So why are Religious groups usually blessed with a higher fertility rate. So that means we have more likely answers to those of more religious people as non religious people there's especially good example with the roman empire where in the the older greek Parts the fertility rate was terrible kind of what we what we see right now And in the new christian population, which was initially very small. It was a huge fertility rate so they basically took over the roman empire from within and I I strongly believe they this the utility the survival is the ultimate Utility out there because we all need to survive and our genes need to survive and I think this is this group evolutionary um Biology in terms of how would your group can survive and I think it really illustrates as well I think this is where religion fits in so well and I think this is still true This hasn't changed and I think any kind of superstructure we put on top of this will never change that No, I agree with you that those who get married and have indecisible marriages Tend to have healthier lives too. That's true too. Um, I mean these are all the benefits. Uh, you might say of of living a A life that perfect your soul. There's going to be um, you might say fringe benefits, but again What we're dealing with in the area of religion? um Is something that evolutionary biology can see in from a certain lens, but ultimately it's it's not really what it is It's not what it's about. It's not it's um, again, it's it's we're dealing with so when you mentioned survival as being the only end That's not true or that's debatable at least physical survival Um, obviously the the christian religion teaches us that the ultimate purpose of life is eternal salvation, but god this life is a trial It's not meant to just be a long life or even survival um, and so, um, you know that truth trumps all other true scientific philosophical economic evolutionary biologist biological But let me let me just get back to something. I just want to sort of give you a couple instances of of my thesis about the way in which um Consciousness is transformed by uh, second liberal secularism even in even in religious people um, the the most caricature example is is mario qualmo saying Uh in the 90s, perhaps I forgot it was that you know, I'm personally opposed to abortion, but uh publicly. I support it So we're dealing with an issue of something where you're he's completely divided in his public life and his in his life as a governor um He's going to promote what what he believes privately is the is the murder of unborn babies Because that's what he's supposed to do as as a good, uh, american uh, politician The other example is um, justice kennedy in plan parenthood versus kasey supreme court decision in 1995 Just kennedy is a catholic and he he gave this um This this this statement as a kind of basis for this decision which had to do with abortion rights um at the heart of liberty Is the right to define one's concept of existence? of meaning of purpose Uh of the cosmos and the meaning of human life So if you think about this, um, that's like a first commandment. You have the right to determine reality. It sounds like nichia most um And that is the basis of liberty as uh, david dc schindler has uh come out in a book Very helpful. Yeah, I highly recommend, uh, a book called freedom from reality by dc schindler our catholic theologian um He he argues that that freedom has become um, the ultimate end, but what what what freedom is is potency over actuality in other words the constant um multiplication and availability of options Each option is equally insignificant non teleological Non authoritative but as long as you have the option you're in this Perpetual state of potency to to change your life to to make decisions to change your gender or whatever it is That understanding is a metaphysical understanding. It's false. Um, it It basically is a kind of a front to the actuality of reality of god. It makes us determiners of reality That's very well articulated by justice kennedy there And so these are the deep metaphysical Um problems the metaphysics even before the spiritual the metaphysics is what we're dealing with We have a kind of liberal metaphysics that is Uh, colonizing everyone's thinking and acting and they don't even realize it that that's what I see Yeah, I think this is a fascinating view that I agree with you that isn't really put out into debate as as much and uh, you know, I just said alexander barton a couple of episodes ago And it's something he he's been pondering with is basically when I when I read his books correctly and there's a lot in there is We we we gonna see reality More like quantum physics and what he means by this is quantum physics basically does away with this one true reality one Unmeasurable reality. We suddenly have maybe multiverses. We suddenly we can't really say where the particles are We know they are somewhere in that club, but we can't measure them if we do they go it goes away, right? So I think that is there is in philosophy Especially there is a way to deal with this this problem that the what's kind of there? What's newton's problem right newton felt we can solve this we can find the ultimate truth The ultimate truth is close to where god is and once we find out the ultimate truth We just we just scale up and I think this is what we did with the with the enlightenment But now we we realize that there's so many different truths out there So the speed of light is the truth, but can we overcome it? Yes There's a lot of different ways now We also know that quantum physics and on its basic philosophical challenges It doesn't work with any of the truth, you know spiritual spiritual or physical But the physics can't I mean if you're modern day physicists and want to describe That quantum physics you you sound like crazy person you sound like or you're in some crazy philosophy you sound worse than the Lenin and What I'm trying to say is what do we challenge if we say if we challenge or if we adopt this view that there is not just one single reality Is quantum physics? And the way we see the world there which is it seemingly from my point of view ultimately that there is no single truth There's no single worldview. Isn't that what we do with religions right now? And don't we have to Look don't we have to be guided by quantum physics and philosophy because ultimately we have to solve that Yeah, well, I think a good author on this question is Wolfgang Smith He's wrote he's written quite a bit on quantum physics and theology And he makes a distinction between the mathematical modeling Uh in the natural sciences, especially in the modern enlightenment modeling view a representational view and the sort of deeper perennial philosophy understanding of reality There is of course an interplay between human knowledge and interpretation and perspective and and the real And it's not as if the enlightenment view from nowhere where all we have to do is come up with this um airtight universal cultureless historic history lists Perfect Cartesian kind of modeling where we can then see reality as it is regardless of perspective Regardless of religious belief Relate regardless of our historical cultural situation I think the good thing about post modernity And and I guess quantum physics is that it's taken away that naive realism Uh about how we encounter reality, but I think we go too far When we make statements like you made where there's more than one reality or there is no architectonic, uh, You know metaphysical reality that we can know as it is Um, I could just give you a pretty clear example of how that's self contradictory. Um The law of non contradiction in logic can never be violated Um, so no matter what you you may think that physics is telling us the statement that For instance, there is more than one truth. Okay, that statement itself is either true or false um, if it's true then it's then Then then that statement itself is either true or false about that multiple reality But now you have the easy way out would be making it um Making it relatable to the observer kind of what would Einstein did, right? So if if you move if the if you take the the the movement of the observer into account That's how suddenly the the space time was suddenly not the same I mean space time is still the same but the the time works differently depending on how quickly well But but see that's that's easy way out, but but that statement itself is not perspective. Uh, it's not perspectival. It's absolute uh to say something like um reality is is uh Is determined to some extent by the Perceiver is that statement itself? Uh perceptually determined because if it is then someone else might have a different perception and not accept that what i'm getting at is You you you fall you fall against the rockhard reality of the law of noncontradiction Aristotle said uh in his um in his law in his organ on um when he dealt with uh the law of noncontradiction Um, he did not try to prove it That demonstrate the truth of this principle. The principle is something cannot be and not be at the same time in the same respect Okay, x is x Uh x is not not x. Okay, this sort of what do we do about the multiverse? Say let's assume for a moment the multiverse is is all the possible options in your life and all of our lives They exist somewhere else. There's an unlimited amount an infinite amount of universe. So let's assume it for a moment It's a theory and might never be proven. Whatever. Well, let's assume it's true, right? And we what what that actually what the universe could be is just a quantum computer So we're just a random fluke could be could be Very different anyways So if if we say it's true in that universe and we by definition can't see outside the universe But the opposite is true in the next universe just like a one one consciousness away What do we do about that fact? Um, because the highest order that we look at are all the multiverses at the same time And maybe there is an observer that can see all of them at the same time not us. We have limited to one universe All right do about that. I I'm I'm still I don't think you're tracking the fact that That you still don't you still can't escape the law of non contradiction. Okay if you have one if I say to you that there are multi universes and We can only understand our one universe Um, you should say to me. Well that might that statement itself That you could only know one of the multi universe one of the universes multi universe that that statement itself is only true For the one universe we're in In another universe. It's true that we know all the universes now when you think about that When you think about that's all right another call when you think about that it doesn't it doesn't work. It's self contradictory um It's either the case that we are limited to our perspective to one universe or we're not It's not the case that in some other universe That doesn't apply. You really can't deny the law of non contradiction. So let me just get to what I think Is the upshot of of quantum physics and all this it's this That we do have limited understanding Of reality a great book on this is mysticism by Evelyn underhill. It's the classic work on mystical knowledge. Okay You read way more than I do and I read a lot Well, no, we read we read different. There's an awesome recommendations. No, there's an awesome recommendation mysticism by Evelyn underhill A beautiful a beautiful amazing work by the great mystical writer English writer anglican Um, but what what she gets out of that book and and this is also uh In treatises about negative theology right st. John of the cross for instance um We certainly have um Limited understanding reality is inexhaustible reality is In a in a certain extent infinite. Okay, because it reflects the infinity of God Now at the same time, that's true. God has given us the power of intellect the power of human reason um, which is able to understand reality as it is um, accurately Not perfectly in the sense of exhaustively comprehensively we never stop learning we never stop plumbing the depths of reality in heaven. I believe We will spend an eternity inquiring and thinking and questioning and wondering Um, the beginning of philosophy is wonder Because we wonder why the thing is the way it is that wonder Uh is concludes in knowledge Okay, where we figure out the cause of the effect that we're wondering about whether it's a balloon going up or whether it's quantum physics That knowledge that we have Uh is maybe accurate, but it's provisional in the sense that there may be more truths to learn about this But this is but this this way of understanding knowledge as asymptotic and inexhaustible Is not the same as postmodern skepticism Um, I mean there is something called a scientific method. There is something called certainty in metaphysics and philosophy It starts out in the principles of logic. It's not it's not like there'll be another universe Where the law of noncontradiction isn't true. That's unthinkable. It's unreal Um, I mean it's like saying god can both exist and not exist at the same time And now we know this because of quantum metaph quantum physics What quantum physics as as far as I understand it is teaching us is something about the mystery of being And something about the indeterminacy of matter now. That's something Aristotle knew 25 hinge years ago. Aristotle said matter is intrinsically potency. It has no determinability It's determined by form and in so far as form Is never going to fully be able to Uh bring matter to perfection in this life. There's always going to be a certain kind of uncertain to your Uh Imperfection in our knowledge of material objects as matter itself is indeterminate I think that's what quantum physics is telling us. There's an indeterminacy in in in matter As you get to the reality, I think that's the problem that they can't perceive reality or that That reality becomes things that we are not used to obviously We will find a higher level of obstruction and then we will maybe come back to the ultimate place of reality Can I can I hold you there for one second? Yeah, go ahead Postmodernism a lot of people describe things to postmodernism that it isn't and I think a lot of stuff isn't postmodernism People don't realize. Okay. Well, what's your reading of postmodernism? Not necessarily what we just talked about just what is reality, but what do you feel is is is reading with What did it contribute to to where we are right now in philosophy or maybe there isn't anything useful? well, um In one way postmodernism is nothing more than another Mode or level of modernism. It's not its own thing. I think it takes certain Patterns and trajectories that are found in the Enlightenment and brings them to a logical conclusion So for instance, if you want to say that Nietzsche is the first postmodern perhaps, right? What did Nietzsche do? Well, he took the Enlightenment inheritance Of this kind of evacuated a very very um anemic understanding of reality that that came from Enlightenment science and social sciences Um, and he looked at it and said, you know, this is this is a house of cards This is this is merely just a prejudice of a kind of uh, the last man as bourgeois emaciated You know nonheroic non tragic Uh, person who wants to be able to control his his life and and have comfort and security Um, and Nietzsche said look this is this is just inhuman. This is disgusting. This is aesthetically ugly Uh, and he was right in that sense now Because the secular Enlightenment ideology was a kind of reductionism Um, it it looked at all those, uh elements of human life, uh the mystery of life drama religion the sacred Uh, the Dionysian and it tried to kind of neuter it with a kind of, uh, soft Apollo apollinary and You know Mathematization and and and Reductionism it is disgusting. Um, and he called and he said the last man blinks, right? God is dead Uh, do you know what we've done? Do you know how to uh, drink up the sea and and he blinked the last man blinks because He has no comprehension of even Nietzsche's question So in that sense what Nietzsche was pointing to was a kind of dead end In the Enlightenment now what Nietzsche did though was he instead of trying to return to or progress towards a more Adequate notion of human reason and human will um He abandoned the whole desire of truth at all And he really rejected the creaturely status of human beings. He basically said we're not even creatures. We're gods um The the the the whole sort of uh perennial uh understanding of of humanity beginning with with with homer but but proceeding from Plato and on is that we are participants in Uh reality we are creatures in in a reality that we can know and love and perfect ourselves in uh, Nietzsche wanted to throw all that out because he he saw it uh, resulting in Because it's misreading of christianity uh, resulting in um, uh, uh, a kind of inhuman Uh bloodless kind of kind of enlightenment science Well, that's and and heidegger had the same critique, right? Um in his in his writings But but but I think what Nietzsche did was he threw out the baby with the bath water as it were use a cliche um, because in the end We can't we can't defy Reality and determine it. It's there It beckons us to conform to it to participate in it because ultimately it's the reality of god and so um postmodernism in in its good in a good sense tries to tell us that there's a kind of mystery and um Uncertainty in our human knowledge in a bad sense postmodernism then becomes the enlightenment Uh on steroids when it makes claims like There is no truth. There's only perspective. Um, there is no ability to uh to have uh, you know, metaphysical knowledge These are dogmatic ideological Certainties the kind of certainties that it was supposedly upset about in the enlightenment Right. I don't know where you read those out. Um, I mean, I read some photos and there and they definitely don't mention this So the idea that there is no truth. There's multiple truths. Yes, but there is no truth No, or there's maybe that's that's what you're saying just in different words So maybe that's that's what where the confusion comes from for myself Um, but when I read Nietzsche do I feel he is and I just read the the the thus books our sister Uh last week again, and I felt many this guy's depressed and he's going to the he's coming up into the month He's going to the cake and comes down. It's like, oh my these people don't get it, right? I feel he's not seeing and that surprised me that you you were you totally well I don't know enough about your model of thought But I felt like he is he is too critical of what's going on in his own social environment or what's going on in germany at the time Right, sure. Right. Yes, and he attributes this to christianity, which might be true or not But I grew up in Germany. I know these people are very secular now and they still live in the same very small minded Yes, not great environment for someone who has a philosophical philosophical mind or any kind of Inquiring mind like Nietzsche. So I think he he had the good of all this to christianity, which I think is not true at all Um, there's a lot of the things you should have made and I think he I don't know what it was Maybe he didn't have enough social content. He didn't have enough people not enough statesmen not enough, um, bishops to talk to He never got there because there's a lot of greatness in In what the old testament in utah summit can teach us and he was seemingly never interested in this That's how I read at tsc Maybe he he was and then he got really disappointed never wrote about it But in his books I never see he never explained the greatness of christian dot No, he didn't he miss he look he had a problem. He was raised by his sisters see I mean, um, look, there's a lot going on psychologically But and I do I do admire Nietzsche spirit in some ways, but it ultimately became demonic I mean, uh, in other words, we have to always remember that the word became flesh logos the logos Okay, e michael jones is very good on this. He just wrote a book called logos rising on the history of logos and history of Of um, what he means by logos is the being of things the reality of things um And st. John's gospel in the beginning was the logos the arcay in greek um What this means is the ultimate reason of things the ultimate reality of things we are not determiners of this We are participants in it. We are able to articulate it We're able to live in it participated, but ultimately We are not its determiners and the ultimate way of living What we're here for is to conform our wills to the divine will Okay, and Nietzsche said no I am going to determine Reality by my will And who wants to join me now? That's ultimately satanic Okay, that's ultimately satanic. That's ultimately um, a blasphemous rejection of god's reality Now we don't want to idolize the language so derrida the deconstructionists I've read derrida. I understand what he's doing. He's saying that words um Are referencing other words. We have to be careful not to idolize our linguistic apparatus as if it were The same as the the deep reality we encounter. I can understand that um deconstructing um language Uh might be a way of allowing god's reality to come forth. This is this is what the negative theologians say This is what meister eckhart says. This is what the cloud of unknowing says st. John of the cross um catholic theology understands that although our language Derives from and is able to penetrate into reality because god is language. He is the word We have to recognize that they're still created things our concepts are created our words are created the uncreated Um is an infinite uh distance between anything created. We don't want to become idolaters So in so far as deconstructionism post modernism A quantum theory however you want to put it in so far as it works as a hammer to destroy idols Which masks and counterfeit reality? I think it's a good thing, okay? But in so far as that post modernism deconstruction itself becomes an idol a counterfeit And deprives people of participation In god's reality. I think it could be demonic and evil And so that's that's how I that's how I would put it That's an interesting interesting way to look at this. You know, I I talked to a lot of christians And many of them are not practicing christianity much, you know, maybe a christmas Um, yeah, me too I find this a really odd thing there in there. You know, I asked a lot of people Why did you kind of leave the catholic church or why you end up practicing and they're like, um, They don't really have an answer But then they seem to know it's the right thing to do for them personally, right? And they seem to be in good company because when I go back to germany, for instance, this church is everywhere But literally no attendance outside of christmas but What what I find that interesting a lot. I feel like when I when I read the Quran and it's really strict rules on idolatry Yeah, I think makes a lot of sense that to me goes all the way back to the Torah and it's just taking it It's spelling it out the Torah is a too, but it's kind of it's not spelling it out as much I don't know why maybe because there was a lot of little polyistic stuff going on during the Really developments of israel. Yeah, but I feel christianity or he deat on it not israel What I feel christianity is so open to idolatry. There's saints some just saints everywhere in christian history, right? there is Things that symbolize um, and I think jesus itself is you could argue that there's there's Replacements for god all over the place in christian history and they seem to have no issue with this So I feel like christianity was always very easy going on idolatry. They didn't really well wait. Wait. Wait. Wait. I wouldn't put it that way Um, it's easy going on incarnational religion. Okay, so what christianity tells us is that god comes into The very warp and wolf of human life. He becomes a human being. Okay He becomes a baby everything material everything individual idiosyncratic and particular and messy god has now become one with right So that's where the karan and the Torah depart of christianity. They and playdough too, right? all of them would say that that's that represents a kind of Desacration of the divine to come that low The catholic church teaches not only does it become a human it becomes a piece of bread And a particle and a drop of wine the eucharism. Yeah Yeah, and and these saints and these relics and the liturgy And the sacred sites and the pilgrimages and the sacrament sacramentals. These are all a manifestation and A participation in that one incarnation now. That's not idolatry to worship the human nature of christ Okay, as um as francis taught us that we should nobody can see the pope or other institutions Well, hold on. Let me just let me just finish my statement about to worship to worship the human nature of christ It's not idolatry because that human nature is Intimately connected and in a sense one with the divine Okay, so it's not idolatry idolatry is when you take human concepts human language and Forget neglect the infinite difference between anything created And god and remember the church herself is both human and divine so in its human element It's going to be full of sin and messiness and betrayal and crime In its divine element. It's pristine And that and that combination is there throughout history if you want if you want to reject it You could become a purist like calvin Or have your own little bible believing church because you reject the corruption, but remember Um, that's that's departing from the nature of the the church that christ set up human and divine with all its messiness And it's very But it's it's I find that interesting that we use the word idolatry in a very different way than I would expect that I know you're coming from a different standpoint. Well, let me know. Well, how do you use it? How do you using it? Well, I for me it's always and this might be not not the The the the official way, but it's anything that could be a worship in place of god. Yes Anyone who has divine authority in place of god, this is what all the religions are worried about right? I agree with that Yeah, I agree with that. Yeah, so mohammed is just this dude and he got he got some he got some Very special revelations from god But actually, you know, don't worry so much about mohammed really worry about a lot And I think this is the Torah message and christianity went all the way to the other side and it's okay I mean, there's nothing wrong with this. I'm just saying it then still saying idolatry It's redefined if you say you you you're worried about idolatry and christianity because it's already happened, I feel Well, wait a minute. So The way that you worship god, okay, so the first first of all, let's put it this way God himself wants to be worshiped Through the mediator. He's given us jesus christ who is both god and man Okay, and so Well, so okay, so if that's true Um, then god likes mediators. Okay, he likes that We're the the medieval understanding of the cosmos is sacramental everything is both a symbol an image um a pointer a Participation in god and it's also not god. Okay Um, the father Is the ultimate principle the son and the holy spirit are equal But there's a kind of sense in which the son reveals the father the holy spirit You know participates in the love between the father and the son The trinity becomes man and jesus jesus establishes a church which is physical and human And there's a tradition. There's liturgy. There's sacraments None of this is idolatry from a christian perspective because all those things Are mediators to the eternal father jesus himself being the ultimate Participate so I mean to me. It's very simple. The reason why I'm a christian is because There's only one consciousness That was ever United with the ultimate reality of things that was jesus christ. He was that consciousness Christianity enables me To be in an intimate participation in that consciousness so that I experience the father the way His son experienced that's the gift of grace Uh, they call it theosis in the eastern church becoming god Deification christianity permits and And celebrates and and is its whole purpose is to deify every individual to make us one with god to make us god By participation jesus was god by nature All of us are able to become god by grace now if that's true. That's a pretty good religion I would say your german friends who don't go to church don't believe that's true Or they don't want it to be true. They don't care anymore. They don't they don't care writers I think they're free writers, you know, they you live in certain value systems and you you feel like And I think this was coming In the middle ages is that warriors would go out. They would live a very cruel life Right, they would kill anyone who comes their way and they would take slaves And then but he also had a priest and he wrote the priest was to not just necessarily tell them what you should do I mean, obviously they would listen to him maybe sometimes But he would really absolve them and they would become christians just before they died on the battlefield Right, so you have like your last moments and then you can go to heaven I think those are the free writers and I think this is a bit what we see in modern society We have people who who kind of take the benefits out of it But they're like, why would I invest in this because for me myself? It doesn't make any difference in their from their point of view is kind of like you're wanting this one vote makes no difference Right, that's corrupt. That's a corruption. That's a big corruption of religion to use it again We get back to that original thing we talked about. What is it going to do for me? Right, so a typical kid goes to mass and says, what am I going to get out of this? I'm not getting it. They look at it as entertainment in other words What you have is a kind of self centered self absorbed individualistic almost narcissistic attitude Where everything becomes Normal Examples all over what do you mean by normal? What do you mean by normally people question the benefit of believing in god? This is like tour all over the place and there's even people who say there's this one book in I don't know where where this I think it's book number 15 Where the whole book is about why would I believe in god? It makes no sense. Why restrict myself so much and I'll got it Yeah, what do I get out of it? And I think this is very very natural for everyone because I don't have this You need certain self centeredness, right? Okay. It's natural in the sense that it's beginning We all are you familiar with Kirkegaard's three levels of consciousness? Yes, but it's been a while. Yes. Well, so there's the aesthetic level Which is the lowest level where everything is just a sort of means to the end of kind of diversion pleasure aesthetic Sensibility then there's the conversion to the ethical where Um now now you give up your pleasure your self centered desire for satisfaction Therapeutic well being all that whatever it might be and now you seek to live according to ultimate moral values and And you're not seeing those moral values as something that could do something for you You are obeying it almost as if it were the end not your own personal satisfaction, but conforming to that moral value That's like Kant Emmanuel Kant kind of the categorical imperative, but that's not the highest the highest is the religious Where you even transcend the ethical now and and that's Abraham. That's Abraham for kirkegaard Because he he overcomes the ethical now what you're talking about with this idea of like what is it going to do for me? That's still the aesthetic level. It's very low level of consciousness. Um, I mean, you're still looking at at yourself as a kind of Um, it's like, you know, you're the center of the universe, right? I'm not saying That religious consciousness does away completely with arrows. That's kind of arrows, right? You're trying to be filled by something, right? Yeah, but the whole point of of religious consciousness And this is true of all the religions. I think is to put you into the mode of um a kind of uh selfless Uh obedience to something that is absolute, which you know will fulfill you ultimately better than anything else And you actually become kind of united with this so you become a source of of goodness to others This is agape love, right? The love of self giving self sacrificial love In other words, there's a great quote by Benedict Pope Benedict before he before he resigned. He says the the arrows Eros Desires agape So in other words, the erotic love of the Greeks and the and the pagans Actually finds its fulfillment in the love of agape Which is self giving love so eros and agape are actually unified. It's not just one of the other, right? It's not like you have to be either the self centered esteed or the selfless saint. It's actually that your ultimate desire For fulfillment is is fulfilled in the love of god Um, so anyway, that's a paradox, right? It's a mystical paradox. Well, maybe it's also the way of life, right? It's where the stages we go through from being very young and having a certain eon reality and then being old and seeing seeing Obviously the same reality if we may say so, maybe it's has changed But we've come to different conclusions One thing I always goes on in my mind. I don't know the conclusion Maybe you've seen this or maybe some people have thought about this when you read in rand and your Her objectivism, right? So it is that's more of that's more economic theory than this But it's very very centered. Yeah, how do you reconcile this with with kicker guard or You know, there is selflessness is the highest form of what you just said, right? Selflessness would be the highest form Well, hold on. I so there's two opposite extremes and they're both wrong One is the the the on randy and self centered uh individualism where there's just ego get get over it We're just egocentric beings who want power and control and uh termination Forget the stupid loving of what she says Well, wait, but but she does dismiss Mercy and and love of others right as a kind of principle for life. Doesn't she I mean Yes, but but that's more she's focused on outcome She's kind of uh, you know, you do whatever you want, but give me the best possible outcome and this is from her view of history The best input for the best possible outcome. That's kind of well what what she's rebelling against is this hypocritical altruism idea altruism is the opposite altruism is Instead of acting for my self interest. I'm going to act for someone else's self interest And it's it's irrational. Why would you act for someone else's self interest? What about yourself? Public public is the altruism, but yes in private. It's give me more, right? Yes. Yes. Yes. Now this industrial process and industry complex here in the in san francisco, right? It's supposedly in the interest of homeless, but actually you just want to make your company who gets 90 percent That's right. That's right. So all altruism is really hidden self interest, right? So but that's the problem with altruism is it's not true love. Okay? true love is St. Thomas Aquinas has a very interesting image for this in the love of caritas charity What happens is is yourself? Extends its scope to encompass and include the good of another so that when you love another You're actually loving yourself because yourself has now been identified with that other. It's almost eastern, right? It's almost like hindu because there's just one self right big s Yeah, but all the major religions seems to me from the eastern to the theistic have this notion of escaping from the ego to some extent, right? And that's what we're talking about the limited narrow Torturous desires of the ego that can't be fulfilled. How do you how do you? How do you escape from that? And the first step is to want that escape? It's like the addict who recognizes that he's at the bottom and his addiction is just endless and infinite and insatiable And so he desires another mode of consciousness something other than the addictive now Maybe he becomes addicted to religion or something right there, but at that point he's not transcended Yeah, well, this is this is this is a very difficult call to make that's something that I've been thinking about recently And maybe that's that's an old old deal in in in philosophy Why are we getting so addicted so easily? Well food addiction addiction to sex addiction to religion could be anything And alcohol and it's tons of substances that we have discovered that all makers addicted coffee another good example Why is that and why do we have that and you could say oh, well it's these chemicals But we had a disability idea that we want to get addicted It seems to be hardwired into our system. What I felt like is the addiction is like an emotion, right? So that it's we it's too many variables. That's why we have emotions sometimes our rational mind can't solve it Probably most of the time to be honest. Yeah, and but we still have to move forward We can't just get stuck and stay in bed for a while. I'd never leave our caves. That's why we have emotions, right? So we can solve really complicated equations in a in a heartbeat And the same is maybe true for for addiction. This is my little theory because What are we actually motivated by and you're not motivated? We're motivated by really complex stuff Let's bring simple stuff and really complex stuff long term so and how do we reconcile this? Well, maybe for the dictions because it's better than having no motivation at all being in our cave the whole day and just Wanted being suicidal. No addictions at least drive us somewhere on the way Maybe find something useful, right? We find out about something that's Well, you go to to other people run doesn't be in come up with some inventions because we want more coffee, right? We want it cheaper. That's what it is. We want more caffeine. Yeah. Yeah. Yeah. I like that I mean it kind of it kind of makes addiction almost a coping mechanism Um for the complexity of life. I mean, there's nothing worse than being suicidal and having depression with no no attractions whatsoever So maybe addiction is a way of um At least getting out of that and giving your sense. I mean, but I I guess I I feel like in the end We're we're going to be addicts to the day we die because um, the addictive mode is more or less The the the mode of somebody who hasn't completely fulfilled his spiritual nature. Um, I don't think Jesus Christ was an addict Um, I don't think Mary the mother Mary was an addict Um, I think addiction has something to do with sin In other words choosing the particular good Uh over the universal good Um, but we think this is very good on this. Uh, but we think this is consolation of philosophy That's one of the classics of uh, the philosophical tradition. He was a fifth century Um, roman, uh curator and and catholic. Uh, he was killed executed for supposedly betraying the goth uh king at the time But he was set up. Anyway, he wrote a book in prison called the consolation of philosophy and he said, um, you know Lady philosophy comes to visit him and he says come on boy. If you're you're you're crying and whining because you don't have your freedom And you're gonna die. You have everything you need And he says what do you mean everything I need he says you have the truth you have the ultimate good All you have to do is love it And what she says is is that all the particular goods in the world? Um, they're all desirable because they are bits and pieces and Participations in this universal absolute goodness, which we really desire and the key to life is to Desire that wholeness more than the particulars. Well, that's easier said than done Hey, isn't it? Because it's not like there's this big ball of being and goodness that we could just choose like on a menu, right? It's always this deferral Right this deferral and I think ultimately addiction can only be overcome by grace the gift of god and through prayer I mean, it really can't be overcome by human effort What I always feel like religion is a big error correction system So it has utility, but it's the error correction of pure self interest, which is 99 percent in my for my point of view The right answer for human endeavor, but one percent of the time It's really a bad idea because we need there's lots of other functions of religions in terms of trust building and but it is this error correction figure and if we have this error correction in in religion It obviously will once you could say once you ascend it to being properly religious You don't need to be addicted anymore because you have you have Something to to orient yourself towards so you have real goals, right? It's more the more complex goals The trouble obviously with that is is that you have to accept something that's really old that 100% work for our ancestors or at least more than more it has 51 percent, right? So I feel like they won the kid in the casino because they read the right book That's kind of my answer. But is that true in the future? Maybe most likely but not necessarily so right? So it's kind of like the the past results of a mutual fund didn't necessarily predict the future results Most likely they will still be true But it could be that housing suddenly tanks and then beyond means a lot of money So I feel that's that's another problem as more people join in and just you know Those are a margin along in what religion teaches us and not the difficult stuff in the Torah But like you know the 15 rules from Deuteronomy If that's all they really do then maybe it's not as useful anymore That's what I'm trying to say And I think this is also a postmodernist argument if we all in this bubble and we don't really look out of it Then maybe the usefulness of that religion has expired. You need to push against, right? You need someone needs to discriminate against you. That's what I'm always saying We need more discrimination because then our strengths come out. We have too little of this, right? We do a bit. I know why why we we go into this might bubble But we need other people to push against us and we're like, okay This is good and I mean we can be good, right? But if Religion isn't challenged anymore or maybe I don't know how you look at this But I feel the the persecution of early christians really It made it shine and made a bubble and made it spark but if If nobody's really interested in religion, that's kind of often what I see out there people This is like the 15th most important priority. Nobody really cares about religion either way, right? It may be a little bit because they say oh america shouldn't be 100% christian But besides that people are not that interested in religion. I think this is the problem needs to be sexy again And that's kind of only happen if people really push against it Well, I think it's happening. Actually, um, there's a movement in america called traditionalism Uh people young people especially having a lot of big families going to the latin mass um being very much interested in st. Thomas Aquinas and john of the cross and Kind of a very robust rich um Catholicism there's there's a movement. Um in political theology too dc schindler is one of them. I mentioned freedom from reality has a book called Politics of the real there's a journal called new polity Um, these are people who are advocating for a kind of almost a renaissance of a medieval understanding of religion um radical orthodoxy john millbank, um these people um, there there is this movement and Is it a mass movement and obviously obviously it's not a mass it's not a mass movement But but there is a populist movement. I think among catholics in america for instance There's a priest now named father james ultiman L al t man He has just been reprimanded uh by his bishop callahan of wisconsin taken away all his faculties He can't say mass publicly. He can't hear confessions publicly. The reason this has been done is because he has been an outspoken uh In his sermons and in his public life against abortion Against the democratic party for being supportive of abortion Against uh homosexual behavior as a sin. He's also come against the vaccine mandates and uh, uh, covid 19 propaganda um Because of that his own bishop has reprimanded him doing doing the bidding of the secular Uh kings you might say who? Uh, who do not like to see this kind of dissent from uh, liberal liberal secular cultural norms and so He is being defended by a lot of catholics. I mean a lot of the people in his diocese We have right now an elite of bishops in america who are really just kind of Uh middle middle management bureaucrats Uh, just trying to keep the status quo and we have some renegade holy priests and holy laity who are fighting against these bishops So it's an interesting uh drama going on right now in in the american catholic church um I don't think the same thing's happening in europe exactly. There are some bishops like bishops schneider um Who who are also um, you might say very rare profits at this time Um calling out the gospel trues against them. I don't see I don't see Yeah, you know, I that's that's really great. Um, and what what i'm missing what i've always been missing the last few years is a real public um Public um debate within the catholic church or other churches, especially by the bishops um That they actually they they they stick out the future of of their own church Of what's not their own church, but they are the ones elected to run it, right? Yeah Um And it's not happening this public debate doesn't it never comes to me Maybe it's happening with inside the churches and it's all good and it's like a political party But you know, we we perceive political parties more like entertainment as a show right now There is an element of we we put things out there. We see what happens This had never happens and from my point of view and this is because I maybe only watch certain Um, only have a certain view in reality. I've never seen bishops and I won't see that right. I'm interested in them, but I they're not I Um, what what are you can you explain to me? What would they be debating exactly? The future of their own church and I'm like elements. You just said that that they are doing this, but this is not public to me This is not oh, no, you're right. You're right. It doesn't happen. Okay. What happens is is that those there's only a party line It's like communism. It's like there's a party line. That's it. Anyone who just sent from this party line I mean, is there actually a public debate now on whether or not There should be mandated vaccines. No, if you if you say you're against this you you're censored you're canceled doctors and and and scientists and Politicians anyone ago? I mean what we have now this gets back to the beginning. I was talking about this unreality. We have We have this kind of totalitarian party line and on many on many issues climate change and Covid 19 and Canceled That's kind of what was the implicit assumption that are already baked in. That's what they were going on about And kind of you know, it turns now. It's there. It's it's other assumptions more from the political left They're not just speaking to the cake. So but let's see the problem with postmonitor postmonitism says on the one hand that it's against any imposed ideological Truth on society and culture human behavior and choices But on the other hand, this is the problem with postmonitor. It creates a vacuum because you cannot you have to have certain natural law Political truths as the basis of any conversation or political order if it's all up for grabs, you know what happens and this is this gets back to the beginning This is what play dough said you want to know what the first month postmodern society ever depicted It's play dough's republic book eight when he describes a democracy It's perfect postmodern play land one day you choose to uh walk your dog on the other day you play your instrument on the other He and he says there's many many color. It's like a many colored Jacket Socrates says something like that everyone has their own lifestyle and everyone could do what they want and right right at the beginning I'm sorry, right There's a latent totalitarianism coming and that's described in the next phase of the devolution because the tyranny comes right out of the democracy And why is that? Why does postmodern relativism and skepticism? and denial of any overarching Moral or or spiritual or metaphysical truth that we could know and abide by Why is the rejection of that? tend to lead to What Benedict the pope called the dictatorship? Listen to this dictatorship of relativism The dictatorship of that's a paradox. How can relativism be a dictatorship? Right. Yeah, you can't know I can see that but There's a lot of good to this relativism too So I'm not convinced I and especially I see this in the sciences and I see this in a lot of other fields Where they put their potential this relativism to be extremely good now. Okay. Yeah, we do it 100% of you vote You know, this is America. We overdo everything but then usually we come back to the middle line Well, I hope we come back Right. So it looked really bleak and then we are probably one of the most advanced in the covid response anywhere on the planet Because we've overdone everything but we we've also focused on what works. Um, fortunately finally Um, I want to go back a little bit into political philosophy And that's one thing I think that a lot of people are They have fear about this and they don't really know how to think about that but I think the the catholic church is a really good answer to this and The the so we have this the set up of nation states around us, right? So they we don't really know whether you're versatile successful We can make up theories now But at the moment of time everyone got behind the nation states and they are the political Thing to live with for the last 200 years before it was, you know, nobody even thought about nation states really or maybe they thought But it wasn't popular And wasn't widely adopted So we have the system and it might be there forever or it might actually go into a world government And what what a lot of a lot of people make that claim? I think it's true Pretty much anything you touch now is going to be a global problem sooner or later We saw this with the al Qaeda rights of global terrorism just starts out in afghanistan and tomorrows in new york So there's more and more things that we see with the global warming or not global warming, but it is a global issue If we assume that it's going to be a continuous drive for this global government Do you think that will happen a b? How could it look like is it model after the catholic church who was kind of the first global government kind of organized like the roman empire but with a with a theology behind and see What should we expect? Who should this whole relative isn't get worse? Maybe gets better and what do we expect of of how much? Subsidiarity will we see in there? So what will happen to cities or will happen to states or will happen to other countries? Will they all just become one super global empire or but how independent can we think about these items? Yeah, these are these are some sophisticated questions. I don't have a lot of on the ground experience or knowledge in these realms I would just say that I think we just we pretty much disagree about What's going on right now? I in terms of the the the covid stuff I I don't know if you're familiar with the great reset claus schwaab the world economic forum the fourth industrial revolution Um, and the billen millen the gates foundation And the kind of movers and shakers um in these in these areas They are planning for us. So it's called the global reset. Um, which is a kind of nightmarish Hunger games type situation where you'll own nothing and be happy claus schwaab said in a uh video Um, and we will all be renters in other words serfs to this sort of technocratic, uh regime Of of ai and digital tracking and uh bio Bio digital kind of uh, technocracy to me. This is a nightmare This is certainly not subsidiarity. This is not democracy. This is totalitarian global It's global totalitarianism to mean the likes of which we've never seen that makes soviet union look like disneyland That's the nightmare scenario. That's being played by have to accept it, right? No, no, no, that's my point My point is that that's what these psychopaths want and they've said it. They've stated it. They've come out It's not even a conspiracy theory. They have told us what they want society to look like it's got youth and it's got a kind of Um, eugenic component. It's got this nightmarish, uh, smart city surveillance state Security state. I mean just look just if you want to know more about this the best one of the best spokesman through this is james corbett Uh, james corbett is an independent, uh, journalist He has a program called the corbett report very worth looking into maybe even have it on your program Now when you just said we don't have to accept this i agree This gets back to the positive remember you mentioned say something positive. Okay. Um, there is there is there is a possibility now for a kind of resistance to this to these elites and If that were to happen, uh, if people were to find their spiritual center um, their source if they were to find their dignity and their rights if they were to, um You know stand up against, uh This this this the propaganda and the and the totalitarianism that's coming To them in the name of safety and health and security and all this If that were to happen, believe me, there are a lot of resistance right now. Robert F. Kennedy jr Is one of the greatest heroes right now. Um, children's health defense. Uh, riner fulmick Um, is another one to look into f u e l m i c h. He's a german, uh, and california and the lawyer Um, the these two are our heroes. David martin is another one. There are groups that are populist groups um grassroots groups, uh People defending parents rights children's rights small business rights. Um health health rights health privacy rights autonomy bodily sovereignty And i guess there's also ones, uh, you know new california state for instance is one trying to develop a new way of Understanding how to run, uh california, which is subsidiarity true democracy not these elitists. So there is a there is a movement And it's growing and it's it's a war. I think we're in a war and so I don't know what's going to happen It's either going to go in the nightmarish direction Or in the direction of of a true beautiful, um Almost utopian true democracy where truth and goodness reigns Uh and where people have are are are are treated with dignity and respect Now I think that's not going to happen unless there's a spiritual revolution happen That's going to happen that needs to happen And and and I for one thinks it's going to come through um the grace of jesus christ and our lady Uh and something called, uh the flame of love which has been prophesized Um, but I think this spiritual movement is always is going to happen within the religions as well. Um, where the people Uh reject their counterfeit leaders and the counterfeit Enlightenment last man religion and and really go back to the roots of tradition their traditions, right? Not this counterfeit that we see Um, I do feel do yeah, I mean, I I I know where you're coming from and I think he's a very valid concern What I feel do is And that's a bit bit based on my experiences Because creating a worldview that incorporates those things But also incorporates the future, right? So the the reality is always more in progress and you can say well, maybe we just leave the things that work and we don't touch it That's that's a certainly an approach And I think you're also we have to give people more credit than what it's do. Yes We all go crazy in social media and we all are influenced by the feeds But people are still people and they can't make up their mind. It might take them a while. It might take them a few years, right? but they're not idiots and They they can filter out and the brain adopts really quickly to these two propaganda, you know I lived in for just a few years out of socialist propaganda Every single person that I I interviewed later and talked to later They knew that the official newspapers never only like three or four. They were all propaganda So you would wait did they know it at the time or only later? No, they all knew it the whole time I'm maybe not in 19 I don't know 51 but in Europe in 1955 everyone knew everyone involved So you assume the exact opposite now. You still don't know what else is going on. So that's a problem But you never believe what's in the newspaper that everyone knew that wow, that's good to hear But you couldn't say it right you could you could not I mean you could say it to somebody really trust Do you think that's true now though? I mean, I know I'm in marin. I'm in marin county, california and It doesn't seem like too many people recognize that they're being lied to no It's it's say you go down. Wow. I was just not about my dad would be a big it's not a debate right everyone's going to agree with you and Yes, it takes a while to trickle through the population But people going to get there and they're going to be on the internet and be open about it because then Cancel culture. Yes. Yes. Say first, right? So a silent majority you're saying kind of yes, and I think this will drive Um, in the end the the major developments and also we see what makes money, right? What what makes sustainable amount of money and alexander bart was telling me about this You know what influences are doing seems to be very short term because they're selling a reputation for money That's great. But it isn't a long term thing The long term thing is to get the tension is to get eyeballs what people are really interested in monitor that also will will derive a real um A real stream of money And this is I think what would you see out there if capitalism is so valuable? And if this uh, democracy survival, then it needs to defend itself a little bit, right? So if it's the first little war it already gives up and it's like nobody wants it anymore Then maybe it wasn't that great in the first place. Yeah, that's what I always say So if you know, we would have all lost against nazi germany Maybe because we deserved it because nazi germany was better and it turned out it wasn't better And we figured this out pretty quickly. Yeah, right six seven ten years And I think the same is true enough is China if China is so much better than we are maybe we are going to speak Chinese And this is going to be fine. I think it's not going to be our future But it's I mean not it. I don't want to speak Chinese But I'm saying the worldview that we have it needs to be challenged and it needs to overcome obstacles And we shouldn't just throw in and say oh the old government's all going to be the end No, no, I mean there's a lot going on that people can still Change there I like your idea. So what you're saying is these these represent challenges Um, even the evilest of them to um, you know in a sense forced people to um To choose what they really want to be what they really want and if they don't Then maybe they should be Uh in a way taken over by these things or in other words, I get what you're saying It's a sort of opportunity to sort of determine and if you don't have if you don't have those challenges, you don't grow Uh, I guess yeah, that makes sense It probably the Roman Empire, right? So it fell apart Yeah, nobody really knows why but it actually because nobody wanted it anymore And it was better to have Roman ideas but outside the Roman Empire. That's really blossom. Yeah. Yeah. Yeah like the Germanic and all that Yeah, I mean um, I guess my only question is what I find is so many people because of the fear that's been put into them um And and just they're they're trying to make a living Uh with with so much Inequality and so much taxation and just and just so difficult, especially with the lockdowns right now I think people are in a trauma traumatic state A lot of people and I don't know how well they can actually accept challenges in that state, right? I mean, you know And a lot of people don't understand what propaganda is even they can't they can't tell the difference Or they like the propaganda Um, they just like it it it it pushes some buttons on it flatters them Yeah, and and I mean you might say well, they deserve it then but it's like I kind of feel like they're victims Like they haven't been prepared well to determine Um, not a lot of people in America have a good classical liberal arts education that teaches them how to think I mean, they they haven't been given that um because you didn't need it, right? It was not required what you want. That is a tech job. We're basically right. That's right You don't care about anything else. You just do some coding and yes, basically just repeat the lines you get from from Yeah, yes, that's what made money, right? But that's maybe we are at the end of this cycle Well, maybe I hope so. I hope so. Yeah. No, I think I mean what's needed more than ever are people who can think outside the box literally and and and have a sense of their identity and history and culture I mean, I feel like sometimes we're in the kind of 1984 Or brave new world a synthesis of the two. I mean 1787 I feel we're more Adline, but yeah, who knows we will know afterwards, right? So but I'm really happy that we overcame came a nice go to other countries They have all kinds of they depicted certain covid responses But they stuck to it for for quite some time in us all the states that are different approach Well, only few states had a very different approach And but we all came together now and we have the best covert response. We're over this right more or less With my comeback who knows but we found solution that seemed to be the best for our economy and that is gold I mean, that's not an easy challenge this this covert thing, especially mentally Well, we'll see what happens. I I don't trust I don't trust that they I think this was an opportunity For a lot of bad people to use this Um, in a way that gave them more coercive power and control Um, and for rights to be taken away 9 11 was very similar with the patriot act and all that Um, so I don't know if they want to let go of this. I I really do hope that you're right that the people will um Ex respond to what's happening in a way that brings out the best in them Um, but again, I I do think this has to do with spiritual awakening And a kind of repentance a detachment from From their idols and from their from their addictions and to choose courage. I think courage is the most important Courage by far is the most important virtue right now for people um to develop Yeah, well, I'm in you. I hope this is actually gonna gonna change things to the better Um, why don't we why don't we see what happened in like six months from that? I'll talk again Hey, I'd love to already see some good stuff. All right. Let's do it. Sounds good. It was awesome. Thanks for coming It was so interesting and I gotta read up on all the books that you mentioned All right, some golden ones in there. I feel yeah, thanks for talking to me dorsen Absolutely. There's toxin. All right. Bye. Bye. Take it easy

You may watch this episode on Youtube - Max Wiethe (The state of financial industry and financial journalism).

Max Wiethe is an editor and journalist at Real Vision where Max hosts a weekly series of interviews with financial industry heavyweights.

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I actually saw something yesterday, a guy who was talking about like, go on zero hedge and there are articles that are promoting stocks. And he actually, he said back in the 80s, he got a call or his dad got a call from basically a boiler room broker telling him that it was the height of Billy Crystal, if you know the comedian Billy Crystal, his career, he said, this company is making the next Billy Crystal movie and got him to invest $2,000 and he ended up losing all of his money. Not a ton of money, but in the 80s, $2,000 was a good chunk of money and he was basically saying these websites where you can promote a stock and then they'll just have a little disclaimer down at the bottom, it's like so and so may have received compensation to write this article. Like that's the same guy as the people in the Wolf of Wall Street who were calling you and saying like, I've got Aerotine international investment and like when you see it on a website, it doesn't feel like it's a broker because it's not a broker, but that person is being compensated to write that article about that stock and if you can't tell, if you can't see those little things, you might not understand the biases of that information. So there's lots of things like that that I think are important. I mean, happy to just talk about content in general and how I think about it. I think you'll find... I want to get into this. Yeah, I said I think you'll find once you get me going, we will have no problem filling time. Yeah. Well, we don't want to just fill time, but I'm really curious about your insight and you've seen the industry from a different point of view than most of us. And maybe you can just go there right now. One thing that a lot of people in the financial industries or industry are very much involved with it, but they're also passionate to an extent with it is regulation, right? So there is a ton of amount of regulation with financial industry. It seems so easy to innovate new cars and just come out with something completely new. And over the century, the last, what is it, since the late, probably since the beginning of time, but we really see what's still left since I'd say that the 18th century, there's been a lot of regulation that prohibits certain behavior, like you just gave us an example about zero hedge. I don't want to put zero hedge. I just like use them as an example of a website where it could be anywhere, right? What I'm trying to say is from where I come from, and we should get into this topic a little deeper, I always feel there is a lot of regulation that's so complicated to enforce that creates so much red tape that it's probably not worth it. If you have trust in the investment, if you have trust in the active participant in that marketplace in the financial industry, maybe people just have to wise up. That's where I come from, where I feel like, well, if you fall for this thing, that's your problem, right? So there shouldn't be a Soviet state that protects you from it. It's called capitalism. And to a large extent, people will always push the boundaries and you have to look at this. The government and the SEC cannot help you. Yeah, to an extent, I would tend to agree with you that there is a certain level of responsibility. And where regulators fall into this, the fact that they have to disclose, for instance, this example that I gave of what seems like an article, a nonbiased editorial article, which is actually a promoted piece where that company has hired this person, whether they paid them in stock, whether they paid them in options, whether they paid them in cash, they do have to disclose that at the bottom. So there is some layer of regulation already in there, or else they probably wouldn't disclose that sort of thing. So their fingerprints are still already there. And there is a level of like, you have to... But is it necessary, right? Is it even... Doesn't it promote a false sense of confidence? Because all these disclaimers under restrictions, they don't do anything. I mean, I don't feel that there is... Unless you have a really strong prosecution and a real way to enforce it, that probably makes it worse. You should only have laws you can enforce 99%, 100%. And most of these laws are barely enforceable, like inside a trading, right? That's basically not enforceable. We hear these every 10 years. Yeah. I mean, it's... And it's generally... I mean, we have... You've got all the news about Nancy Pelosi and the congressmen who are able to trade off of what they know. It's not illegal for them to know that Facebook is only going to get fined $10 billion and that the market is probably going to rally on that and then they can buy call options or something like that. That's not illegal. Yeah. Why would she buy so many call options otherwise? What? Yeah. Well, what's the alternative explanation where she's buying so many call options on these things? I mean, I haven't looked at the specific case and I don't think the Facebook example that I gave is exactly what happened in this case, but the basic premise of that there are two sets of rules. And that actually it's generally easier to go after lower level people than it is higher level people. And I think even the IRS has said that when it comes to going after tax crimes, that it's much easier for them to go after the guy with a small business who's maybe worth a couple of million dollars, who made an honest mistake in trying to navigate the incredibly complex tax system than it is the guy who's worth $200 million dollars, who's actively trying to circumvent the laws through loopholes, which are not intentional. It's much harder for them to go after that guy than it is the guy who's worth $2 million. And I think the same is true a lot of times with financial crimes that would fall under the realm of the SEC, that it's just they're going up against people who, one, know the regulations and two can afford to fight these sorts of things. So it often comes down to the little guy, like there was a story about some junior guy at a bank a few years ago who he made $80,000 off of his insider trading or it was less than a million dollars and like he was one of the people who got prosecuted and think about all the trades that happen out there that people make so much more money on and those are the types of scraps that regulators are going after and not because the right laws aren't in place, but they don't have the resources and if they did have the resources, would it be worthwhile for them to allocate the resources to fighting these fights, which are much harder to win? I mean, it's just it's the sheer intensity is an information problem, right? So we won the laws of Valentine that and I fully understand where the notion of protecting the consumer comes from. And I think this is all good, right? But what we end up with is a massive amount of law that is very, the enforcement is very uneven. That's what I'm trying to say. So you, I'm not sure if I prescribe to the thesis that it hits the little guy. I think it just hits random people. So it's kind of like littering on the on the freeway, right? So the fines are so high because it's basically unenforceable because you would have to have a camera everywhere and, you know, take pictures of the license plates. So that's what I feel we have with the financial regulation. There's a lot out there, but it creates mostly red tape. And I don't think the world would be different if insider trading would not be a crime. I don't even know if it is a crime in other countries. I actually doubt it is in many other countries. Yeah, I would tend to agree with you, but it's not politically palatable to go backwards in that way. Like I just, I just don't, I just don't think it's, I don't think that the average American really understands how, how the whole financial system works. And you know, that's part of the reason that companies like Real Vision and podcasts like yours exist is because people don't want to know. And there's a subset that do want to know. But they either, I think a lot of people don't have the time. They care tangentially, but they really aren't that interested in it. My argument is the entire financial services industry exists partially because people don't really care. Why else would you outsource the most important thing, your financial future to someone else? It's because either one, you don't have the time, two, you don't have the horsepower or three, you're just not interested in it. And I think it's probably mostly a combination of two and three, or I mean of one and three there, that people don't have the time and they don't have the interest. And I think the amount of people who aren't interested in it is surprisingly high. But I mean, just imagine if they took away insider trading laws, how easy of a populist sort of cry of like, can you believe that they did this in a sort of Occupy Wall Street sort of way? A politician could jump on that, whether it would really have the type of change in the way people are actually conducting themselves. I'm sure things would get a little bit more egregious in the fact that people wouldn't be as big into hiding how they distributed this information. But it would be pretty easy for a politician whose consumer or whose voter base were not the traditional financial markets people to seize on that and use it. And so it would be politically, I think, unpalatable for that sort of thing to take place. Yeah. Well, I mean, a lot of people make that argument that, and that's very specific to this is if insider trading wouldn't be a crime, then we would see less volatility if new news come out. Like the market would be slightly more predictable, but less volatile because the insiders would know first and they would buy, and then the markets would move a little more smooth. So that's just one argument for it. I don't want to get stuck with this. You work with real vision and you interview a ton of really smart people. You see what they think about the financial markets where there's options to make money and also to lose a lot of money. Maybe you can give us an idea of how you got into this whole career for you now into that job and what did you learn from people that you interviewed? What do you feel is their sentiment right now? Do they think the world has gone crazy or has it always been crazy? It's just a little more crazy now. Well, I mean, to go all the way back to sort of how I got into it, I was a real vision subscriber fan before I was an employee here. And it started back when I was in college. I was a physics major. I went into school, was very good at math and science, and I thought I was going to be the next great scientist. And you realize very quickly, I think at least if you're self aware, oftentimes that there are certain things where either one, because you don't love it as much as you thought you did, or two, that you actually don't have the same horsepower as some of these other people. And I tested it into basically the highest level of math that you could. And I was passing, but it wasn't easy. And there was a 15 year old in my class, and in the US, we start college at 18. So I was 18, there was a 15 year old in my class, and he was getting hundreds, and not really paying attention all that much, and I was just kind of, it's like watching somebody dunk a basketball. And you realize, I'm probably not going to play in the NBA when you first see that person do that. It's a whole different level of skill than I will maybe ever have. And I kind of quickly realized I'm probably going to have to do something else with my life. And I found that a lot of the skills I was learning in physics were probably transferable, pretty transferable to finance, economics, those areas. And I wanted to probably do that after school, but I didn't want to give up on my physics degree. I really liked what I was learning there, but I realized I needed to learn something outside of what I was learning in school to be able to make that transition. I was fortunate enough that growing up, my dad worked in finance, and he really taught me a lot. And to this day, he's still just like an incredible resource to be able to call and ask, and there are things that he doesn't know. And he's generally pretty honest with me about what he doesn't know, but it's a huge resource to be able to have that. And I definitely can't say that he was super influential because he actually showed me real vision. So he sent me real vision and said, if you really want to do this, you should start watching these guys. And so I started watching real vision. I got out of school, kind of took a dead end job, and something opened up here at real vision. Actually not on the editorial team, it was more on the business strategy side. I was really interested in how to make the business grow. I thought it was a great business, which I really thought I understood the customer and the potential audience and how I could help make it grow. And I was probably under qualified for that job. And so they ended up not giving me that job, but they liked what I wrote. I wrote a cover letter that they thought was interesting and clever. And my first boss took a shot on me and made me a sort of editorial assistant position. And I was low man on the totem pole, and now almost three years later, I've worked my way up and I've seen, we've really grown up a lot since then. I think when I started, it was still very much a startup, and we're kind of in that transition phase coming out of startup, but those environments, those types of environments can really, really, really give you opportunity if you're willing to take a chance on something that maybe you don't have the experience, and really seizing those opportunities allowed me to grow into the role that I am now as an interviewer. And yeah, just getting to interview these people is a pretty incredible job, and you get to learn so much interviewing them on camera, but so much of the learning comes actually off camera in the preinterviews. Like you and I, we talked, and it was pretty brief, but sometimes I'll chat with these guys for three hours off camera, and I'll talk to them for 45 minutes on camera. And it's that sort of off the camera director's cut stuff where I'm getting their truly unfiltered ideas. That's where the real learning happens, I think, for me. And as far as whether the world is more crazy now, as compared to other times, I generally tend to push back against that. Finance is all about cycles. The world moves in cycles, and I think one of the most repeatable cycles that people often miss is Old Man tells Young Man, the world is going crazy. I think that is a cycle that is as old as humanity, and I tend to, yes, there are peaks and valleys, and to say that World War II wasn't a crazy time is just wrong, like that was a crazy time for humanity, but overall, in the world, things are probably just as crazy as they ever have. They're different, and difference is hard to deal with. It's really, really hard to do. We do not change, I think, as beings. Change is hard for us to deal with, and so the longer you're alive, the longer you will see, the more change you will see, and for a lot of people, I think that's really hard to adjust to. Yeah. Yeah, I find that an interesting argument when you say that's an old cycle, and I read Ray Dalos's book about these long term cycles, about the growth of an economy and how to currency develop. He has these cycles going back thousands of years, and I think he's onto something. I just feel maybe both are right. The world is going crazy, but it's also changing, right? As a young person, you don't see it as a change. You just assume this is the status quo. You don't care about what happened the last 50 years, why it happened, you don't care. You just think about the future, and I think both of these play a big role, especially right now when we see this massive change, mostly the room, I think, by technology, software on AI is eating the world, and it might not happen in five years, and the singularity might not happen in 2038, but it's definitely going to happen. That's my conviction. Obviously, we call it the singularity because we're out of words and descriptors, so it could be anything. Literally, it could be just a quantum computer that we have instead of a PC, and that might not change that much in the end, but I think there's more to it, and obviously, we can all just speculate where it goes, and we've done this on the podcast quite a bit. But I find it really interesting when you said that earlier, when you interview people, and that's something that Jim also echoed, and he does these polar exhibitions, and he has the BBC on doing documentaries, and there's a couple of directors and producers, what he said, you know, when I took the teams out, they really only put the most boring parts in the actual documentary. And then I made an episode with them, just 15 minutes extra, that was kind of behind the scenes, the director's cuts and things that didn't work out, or funny moments, but also just elements you would never see. We actually see the crew, and he said that easily became the most popular episode. So there is something weird about that, so we want to see a scripted show, and we want to see a certain element of predictability, and when we see something on TV or on a podcast. But then we also want to see the rest, and we want to see this, how would that actually happen if it would completely be non scripted, be completely random, if we see elements of that semi famous person that we never really expected. And I had to have some guests on the podcast too, where I discovered a side of the personality I just never expected, to the better, to the sometimes the worst, and I'm really still surprised that maybe it's a competitive industry in anything where people stand in front of a camera. Many of them, over time, with the competitive industry, they become, how do I say that, they become especially human being. I don't know if that's something you also noticed. No, could you, what was that last word, I just want to make sure I got it correct. Special human being, right, so in a sense the competitive pressure of being in the limelight of absorbing this attention of, by necessity being different than other people in the industry, by, and especially in the financial industry where this is a billion dollar leverage, right, you make the right call, and you make a five billion dollars a month, so you have a tremendous leverage that puts you, you know, in a very different category, maybe more like a king like position, but you better be right, right, and if you're right, the rewards are basically endless. Oh, and nobody attributes any of it to luck, it's, I think I've heard it called like the trader's put, which is if you're wrong, you got unlucky, but if you were right, you were a genius, and then if you're wrong, it's your client's money, you can always just, if you're, if you can tell your story well enough, you can raise more money, it's not your money, if you've got, if you've gotten good enough at telling the story and being able to sell that, and you know, there's certain parts of the business that are more performance driven, and there's certain parts that are all about asset gathering, certain parts that are all about just reducing frictions for, you know, big institutional investors, like if it's easy for this person, if there's no career risk, some of the most interesting interviews I've done with people delve into this idea of how career risk drives decision making and finance, I would say that that's probably one of the most interesting things, and it's, it's like if, if BlackRock is doing it, how much easier do you think it is to push that through your investment committee? If you're, if you're a pension fund or you are, if you are a big institution, how much easier is it for you to bring something that is exactly what everybody else in the business is doing, the supposed smartest guys in the room are all doing it, that can be very easily pushed through an investment committee, whereas taking a chance on a young guy who's got new ideas is incredibly difficult to push that through, and so, you know, how those sorts of things drive decision making is, is pretty interesting. And what you let this heartening do, I mean, I feel like, so when I look at the perfect economy, we would, we would hope for, you know, there's a, and that's the Taliban explained that quite a bit. And I think this is something that I really wanted to make a theme of this podcast is just this entrepreneurship of taking risk, like, like a fund manager taking a risk and not doing what BlackRock does and not just trying to follow him, but taking a calculated risk, but out of his, his or her own convictions. Isn't it this heartening that this is happening less often than we expect? Like, shouldn't that be the default case that everyone is really just using your own judgment? Yeah, I mean, in the sort of like creative destruction, perfect idea of what drives, what drives an economy, I would, I would tend to agree with you, I try not to get disheartened about too many things. I find that it doesn't work for me as a person to let, let these things get to me. It's very easy for me to, to get sort of like tamped down by these realizations. And I try not to get disheartened, but I know what you mean. I guess my, this is as old as, this is a human, this is a human thing. It's, it's very old. The idea of maximizing outcomes for ourselves versus maximizing outcomes for society. Like, I think that that's an age old problem. Like why would, why would a bunch of knights decide to support the king and, you know, keep the peasantry as, as peasants? But because it, no, they're, they have no chance of becoming the king, the real king. But their lives are still so much better. And is it maximizing things for society in that moment in time? Like probably not. And arguably you could say they didn't know any better. And they thought that, you know, the divine right of kings was the best way to rule it. But I find it hard to believe that there weren't a couple of, of knights in their day who just kind of did the way, weighed their, weighed their odds and said, fighting for the king, that's a good trade. Yeah. But I mean, that's not necessarily what I mean. I, I, I mean, I, I think self interest is 99.9% the right call to make. And I'm fully with Ayn Rand. If you watch the movies, if you read the books, at this very hard to argue against her. But on the other hand, so there is obviously the error correction on society level. But what I'm trying to say is what we want is everyone in this new society, we are building right now, right? And then new quantum society, so to speak, for every, we don't have one reality anymore. We have like millions of realities. What we want is that every single individual actor is not, is really acting rational for in his or her own reality and making a rational, good judgment call. It might be very different because we all have different realities from person to person. Well, what I'm trying to say, it's based on real judgments and not of trend following. Because what I see in, in finance, and you just mentioned that the trend following and being on the safe side, just because it is what other people are doing. I mean, I just started on zero heads today. It was the same analyst who like, I think six months ago would say Bitcoin will go to a million. And then today he said, oh, Bitcoin is probably going down to 10,000. I'm like, so what changed? And like, oh, it, the trend changed, right? So I'm like, really, that's, that's your analysis. And that's where you, you work for an investment back. I mean, holy shit. I mean, maybe he's all right, right? So, so I'm not saying that's a bad call to predict the future, but it isn't any, it doesn't add to the value for society. It doesn't do anything. Yeah, I mean, I don't think I'm all the way there with you on, on it not like it being inherently bad. I just look at these human nature issues as being inherent. And there are people, there are people who are able to, to think beyond them and their personality, their, their means or whatever it may be allows them to, to do otherwise. Like there's a, there's a saying here in America, it's called fuck you money. It's your ability to say fuck you to somebody if you have enough money. It doesn't matter how powerful that person is basically because of, you know, the property rights we have here. There's a certain amount of money that you are going to be fine no matter what. And you can be that contrarian. And so not, I just don't think everybody has that, has that status. And, and I, I just, yeah, I think that that's a part of the, it's a part of the system. And I don't think it's a part of the system that will, that will ever change. I think we are, we are much simpler beings than, than our, you know, our hopes for the, for the height that humanity can reach. We will reach it, but it's not because we're going to achieve some great state of consciousness. I think it's just because we churn forward over time. Slowly we churn forward. Yeah. I think we have slightly different views on humanity there. Maybe two, two high hopes that are not realistic. That's probably, probably true. Well, let's go back to, to what we see with, with financial media right now. So we, we, there is what I see out there, and that's kind of my, my 30,000 feet description of that particular part of journalism is that it's held holding up relatively well. When we, when we look into political news or general interest news, they become really massive, right? They're very, they're very opinionated. They don't have, the facts don't really matter anymore. The facts shouldn't matter. It's, it's, it's something where you want engagement on Facebook. You write this to get a bunch of likes or hates, so to speak. And that's kind of it, right? So it's not, it's not, it doesn't have any, any real content anymore. I feel with financial news, it's, it's not a big problem. There's a lot of interest from the general public and it hasn't gotten as messy as other parts of, of news, right? When you, when you look at Fox News and CNN. Yeah. So, so that is a really good development. And I also feel it's just, maybe me, I feel there is more interest in financial news than ever. Maybe that's because of crypto or because other things change around it or more people have interest by stocks with Robinhood. It's, it's something people deeply care about. And it's not for the others. It's for myself. Maybe I can get ahead of the market. That's what the individual mess of things. Yeah. I think so. I would agree with your assessment that it hasn't gotten even close to as bad. And I can tell you in the feedback that we get from our customers, if we ever stray too far into politics, and you have to cover politics because it does affect markets. I mean, there was a whole period, you know, if you remember in 2018, it was market up on, on easing trade tensions, market down on, on heightened trade tensions. So to not cover it is just wrong. You have to, but there is a bridge too far where we see our audience is just like, that's not why it's not why we're your customers. We are not your, your customers or your subscribers or members because we want to be talked to about politics. We are here for the facts. We are here for markets. And I think that, you know, at least with our customers, I've definitely, definitely seen that. But that doesn't mean that the same sort of pandering doesn't happen from time to time where you're doing something. It's less for hate. I would say that the hate clicks are probably, it's less powerful in, in financial media, but the true love clicks, like bias confirmation, love, I have seen it. I have seen it where, you know, I do an interview on gold in May of 2020. It doesn't do nearly as well as the interview I do on gold in August of 2020 that basically top ticks the market. And it's because people, they, they see that price action, it changes sentiment. And now the interview that is, that is matching their beliefs, that is helping them gain confidence in a belief that they already hold is received much better than the video that is challenging their beliefs. That's trying to get them to say, Hey, there's this thing that might be happening that you need to pay attention to. It's not that that video gets hate, but it isn't embraced in the same way. So I do, I do see some of that bleeding in and, and sometimes, sometimes I would, you know, I, to use your word, it's disheartening. But again, it's human nature that, that people are, are, that this happens. And I fall into it too, like I'm not saying, I'm not saying I don't fall into the same bucket because I'm a consumer. I'm a consumer of the same content. I have an investment account. I'm by no means a sophisticated investor or anything like that. But I, I fall into the same things. And I'm just fortunate enough to work behind the curtain that I am much more in the front of my mind about recognizing these biases. And am I feeling this way because of those human nature flaws that we discussed earlier? Yeah, I was, I was thinking you would say, Well, financial media still has a business model. And so it doesn't need to, as you say, pender, I had a more direct award for what's going on on Facebook. But they, it's just not required because there's enough money, the CPMs are high enough, and there's enough money in subscriptions, you don't have to worry about this. And other industries there, and especially general news receivers, the most, but that's, that's going through tons of other industries. The advertising revenue model is that. And so it's a subscription model. Maybe the New York Times has brought it back, but they've done it through pandering, which I think is a really bad idea. And they got to pay for this. But at least they find subscribers, because they have to have a boogeyman, right? So without a boogeyman, they're not going to keep those subscribers. But who knows? I think this is why we, we see that we just, we see that with universities, wherever you see your business model is faltering, you go into some extreme. And maybe that's actually a rational decision. But financial media didn't have to go through this yet. Maybe it will happen once everything's no fee, right? Robinhood is kind of pushing the edge there. Yeah, yeah, there is something to be said about that. I mean, it is, it is the audience that everybody wants. You either have money, or you want to have money and you're willing to invest your time into something that is educational. Some of it is, I call it infotainment. There is certainly stuff that is hard education. There's stuff that's purely entertainment. And then there's a middle ground. And I think most of it really falls on a spectrum. It's not black or white what it is. But yeah, that's what makes the audience so, so enticing to, to advertisers. I think the subscription model is really what I'm most familiar with. I've seen some of the advertising models. I run, I ran our YouTube channel here at Real Vision for a while, and you get to see some of the CPMs. And in just researching, you know, what the YouTube standards are, like I can tell you that, yeah, finance content is getting, is getting higher marketing dollars than a lot of other stuff out there. And depending upon what's hot at any moment in time, I mean, the numbers can, can get really, really high up there. And that has allowed it. But as you said, there is free stuff moving in. And there is I mean, there's, there's tons of people putting out great, great work for free. And I think that finance, because of how sought after the audiences, and as well, the amount of money that can be made on in some cases, acquiring one customer for certain products is just huge amounts of money. If you can get one customer, if the product is, you know, prime brokerage services, or something that is really, really high level, you can make a lot of money just bringing in one customer. So I think that there will be a moat for a long time. But, you know, the same sort of problems that came to, that came to traditional media will eventually make their way here. And we'll have to, we'll have to think about that. I think, you know, what you said about the New York Times, I do agree that there is some level of like pandering to an audience that comes in, and that's why they've succeeded. But I also think it's very similar to what's happening with hedge funds. Like people talk about how hedge funds are like a dying, a dying business. Well, there are some hedge funds that are doing very, very well. And they're the big platform model hedge funds that are sort of the big names, and they have great infrastructure. And they're now actually taking the best talent instead of the best talent leaving that hedge fund and starting that hedge fund and starting their own shop. It's worth it for that really, really good portfolio manager to just stay there. And that doesn't mean that there won't be money made in hedge funds because the industry is dying. It's just going to be at certain places. It's like the newspaper business is the same way. Yes, the newspaper business is dying. But there's still going to be people making a lot of money at the New York Times, Washington Post, those sorts of places. And I look at it the same way. It's a platform model that is taking over there. Yeah, I mean, I'd love to talk about that further. The opportunities lie. And we have entrepreneurs on the show and we have a bunch of VCs. And that's always one of my first questions. And it seems finance, at least when I follow what other entrepreneurs do, there's always crypto. There's always a DeFi startup that someone is just joining. When I look into my Twitter feed, I feel like the half the world is now in some kind of business that entertains the crypto finance ecosystem. And so this seems to be a huge opportunity and relatively, because that's one complaint, maybe that's an old man complaint, you will say, that I have here on the podcast where I feel the amount of opportunities and the debt of opportunities for people under 30 is relatively, I feel is much smaller than prior generations. I think this is the overhang, this huge debt that we have from the Fed. So maybe it's a generational thing. Maybe they just have other preferences. Maybe there's just something wrong with them. Who knows? I mean, I'm still getting there. I think I have a couple of good theories too. But anyways, I feel the theory, the total amount of opportunities is much lower. But finance, and that's specifically that crypto sector seems huge. Everyone seems to be invested. Everyone seems to be interested in investing. So maybe there's other bubbles that you see. I'm not saying this is a bubble because it's got a pop. But finance, when you look at the finance industry and beyond, where do you see great opportunities right now? We know hedge funds is not one because you shouldn't want to be a hedge fund manager these days. But you should have a decentralized finance startup, right? But what else is out there? Well, if you are raising money, definitely DeFi is the place to be. And I would call it a magnet. It's a talent magnet at this point in time that's pulling in a lot of people. Look, in the same thing, you were talking about the singularity. I don't think we're close to the singularity in finance, but information edge is being eroded as data becomes more and more available. I think, I forget which interview it was on Real Vision, but there's a Real Vision interview where somebody talked about when Warren Buffett started out, he used to have to go to the library in Omaha to learn about a stock. That's edge. People don't have the persistence to go and do that. Now, I can pull out my phone. I can get it all. I can write a program that's reading in new data, scraping the web for data. I can write algorithms to process that. If everybody's doing it, I mean, unless you're the best of the best or you have some literal physical advantage, I mean, I don't know if you've ever read or interviewed anybody who is with Flash Boys. They talk about being a foot closer to the exchange. Unless you have literal physical edge like that, what is your edge? When I think about opportunity in finance, I think about mostly the opportunity for me as a retail investor. Where are they not? Where can they not be? Where can the power players? Where is it? One, either because of regulation, they can't go. Two, compliance. And three, it's just not worth it for them. It's not worth it for a big asset manager to do research on a $30 million stock. And if they did the research, they probably the position that would work for their liquidity needs would probably be so small that it's not worth it for them to even do the research. That $30 million company could end up being a $30 billion company. But it doesn't matter because it's not worth it for them to do the research. And the position that they would take is not going to have a material impact on their returns. And so for somebody like me, that's a place that I can go where there is a real potential for me to find opportunities that the market is not appreciating. That's what the whole game is, is finding things that are not being appreciated. And so I look at that. I look at I'm pretty bullish on US cannabis for similar reasons. These institutions literally are not allowed to own it. They're not allowed to own it. It doesn't matter that the companies are trading at one third of the valuations of the Canadian companies, which they can invest in because Canada is fully legal and it's listed on the right exchanges there. They can't own it. I can own it. So that's an edge. So that's when I think about opportunity for me. When it comes to big picture within the business, financial content, I think that the marketing and the content side of things is super far behind. And that's part of the reason you're seeing this explosion of podcasts. You're seeing people taking this much more seriously. Goldman Sachs has GS talks. Everybody has their own podcast. Some people have multiple podcasts. They're doing podcasts. They're hiring. I work for now at Real Vision. I got to do a lot of those interviews on the editorial side, but I've actually moved over to our branded content wing, where I'm getting hired by brands to help them make content that sometimes we're helping distribute it. Sometimes we're not. But that, to me, is a mega trend. You think back to... And you can find some of these websites out there. You go to a hedge fund and the website is just emailinfo at xyzfund.com. Because the old idea was, if I'm good enough, then the money will come. And there's only so much money that you can have that works with your strategy. So I don't need to market. I don't need to talk. But I think that that is changing. And it's certainly a trend now. But I think content in general is just going to be a trend. You talked about this singularity. And I sort of agree that a lot of the computational things... Are we really going to need entry level accountants in 20 years to do basic auditing stuff? Or is there going to be software 20 years from now that can do what a first year accountant would do? And is there going to be a guy at the top who's sort of checking over, making sure these programs are doing everything correctly? That's true. But the guy... There's still going to be a business owner who needs to be marketed that accounting firm. And that human being is going to be that human being is going to be making the decision on who to hire. And they're going to want a human being to convince them to hire them. And so I think the same thing is true in finance. Even as more stuff is automated, more stuff becomes... Yeah, you know what that sounds like? That sounds like we become the underclass of the machines. Think about it. So the machines will make most of the grunt work and also the more complex work because they will grow easily outside of what we can comprehend in math. That's almost there already. So maybe there's... The hedge fund manager might still be there. But there's literally one guy who oversees billions of dollars and all the other computers. Maybe there's a developer too. It's a very small operation. And you see this even in factories, right? There's all robots and there's a bunch of dudes walking around, checking the robots from time to time. Or girls, doesn't have to be dudes. What I'm trying to say is that the role that's left for humans is literally talking to other humans and sell them stuff. So it's the only role we have left, right? Marketing and sales, which seems to be... This is a great industry and we are the ultimate consumer. Machines, why they only consume energy, right? At least... Energy and information. That's all they need. For now, why does my change, right? They might get some real taste there. But what I'm trying to say, it seems like the humans are this, you know, this underclass of just peddling it to the not so smart beings, not so conscious beings out there. So... And I think you're onto something there. What I just feel is... Maybe we should aspire to more, right? I don't know if this is, again, if that's realistic. But when I see decentralized finance, these things are extremely complicated. You can't even really... Maybe that's because they're bogus. But it's really difficult to even explain them to someone else. In these investor pitches, you need to have a PhD to even understand the pitch, which is already extremely simple, simplified compared to what they actually have to do in their coding. So... And the whole abstraction of crypto isn't easy to understand in the first place. So I feel like there is a ton of ambition in there. I don't know if it will work out. Maybe it's just a bubble and it will all just crash and it will never be a business, never really known set right now, I guess. So maybe I'm too far away from it. But do you think we can make that distinction? There is especially in finance, we go towards higher complexity and that's a human endeavor first. I mean, complexity and decisions. And this is where the human should be. We should get out of these low paying, as you said, accountants, but also sales and other things that are kind of repetitive, right? They're customized to other humans, but they're repetitive. Well, I think some of that has to do with the fact that most people probably don't have the skills to do these things that are at the higher levels. I mean, you talked about the lack of opportunity for people, you know, my age, my generation, and maybe it's changed for people younger than me. I kind of think I was really at like a crossroads. I was born in 1994. And I remember my second grade class was the last class to be taught cursive instead of typing. And so there was this, you know, it was right at the edge where people were saying like, oh, these computers are probably here to stay. But your teacher could decide whether she was a cursive teacher or she was a typing class. And I had other students exactly my age and it depended on what teacher they had, whether they were taught typing or whether they were taught cursive. And, you know, in some ways, I don't want to say it wasn't it definitely wasn't too late. But we were sold an idea that it was a choice, whether to be technologically savvy or not, versus now I think there's much more. And I'm not totally on board with like, we need to send everybody back to school and teach them to code. That's not what I'm saying. But there is a certain level of, you know, people aren't quite aren't quite adept enough at some of the things that really drive human progress. And then I also believe that actually like a lot of human progress is driven by a relatively small a lot of human progress is driven by a relatively small group of people. And I have this conversation with people all the time, you know, I generally believe that like UBI is some form of UBI type thing is inevitable, because like I don't see this trend of things stopping. And I like to say that socialism is the bribe that capitalists pay to avoid communism. And I think that that is true. And the big argument that I always get the push back to UBI is how how is human progress going to go on if everybody's getting paid to just sit on the couch. And my response to that would be, I don't think you've ever met a truly creative person. If you really think that way, like these people who drive human progress, they can't stop. They they it's what drives them, they want to create, they have to create. I mean, how does somebody make $200 million and keep going? It's because they need to keep pushing. And some of it is greed, like there is a greed level. And some people are driven by greed. But I think that a lot of people are driven by something within them. And at the, and those are the people who are really pushing things at the margin. That's not that like we can't all play our part in like making society better and adding value. But when we talk about like, what pushes us forward? I think it's a much smaller group of people than you think. Yeah, I don't know if UBI is the best solution. I like the idea of UBI. I do. And I just a government handout always is a little suspect to me. And I always feel it's it's sooner or later going to get we're going to inflate out of this or whatever the UBI amount is. It's not great. It's it's for me, it's the second best solution. It's the second best solution. I want some form of it. Maybe there's something we can do with copyrights with NFTs. Maybe maybe there's something we can do that has that part of UBI, but it's also market driven, right? So it's an asset we can play with. And it's not just something we give to people. I don't, I think it's not ideal, but we have to get there, right? I mean, we do see right now that whatever is the next wave of innovation gets monopolized so quickly. And these cycles get shrink more and more. And soon it's going to be a week. I mean, from the first you hear about this, because it's just being discovered, the quantum computer, until it's monopolized, it's like a week. And nobody can keep up with this anymore. So there is a problem. And you don't have this. The typical cycle of capitalism that we used to see is, it's just so compressed. And it ends in the monopoly player that makes 100% of the profits. And people don't literally, Google has a problem for many years now. They just don't know what to do with all this money. They overpay everyone by 100%. And they still have tons of profits to shift them all around the world. They still have tons of money to just, just comes the raining down, right? They don't know what to do with it. Yeah, but what if there are some benefits to scale? And I'm just playing devil's advocate here. Like there are some benefits to scale. And so what if, but what if instead of that all going to the monopolist, it's, it's spread out, it's spread out across. And so, yes, we are getting the benefit of XYZ firm doing, doing all of it and the efficiencies of scale that come from that and from them owning it. But it's just that that efficiency is then split between the person who has, who has brought this value to society and society. But it stops eventually, right? So the, the, the efficiency gains. There is a moment when they're the strongest and then it, you just don't have to innovate anymore. Nobody can access this market. We see this with certain parts of, of Google's business, not as much as Google search, which I think we're all so happy with. But we definitely see this with the Google ads. We know that there's only Facebook as a somewhat competitor. It's not the same thing. And we know this is the price of a sky high. And for most startups especially, this is just not the place you want to be. And 10 years ago, you wanted to be in Google AdWords. This is the place where you wanted to be. This is how you build a business. It's impossible now. You can only be there if you're Expedia and even Expedia has trouble making it work. Well, and I think Expedia, aren't they getting, you know, taken down by Google flights? Yeah. Google has their own app and they're going to prioritize Google flights over Expedia unless Expedia pays them an arm and a leg in an efficient amount of money. Officially, their partners and Expedia doesn't make any money with flights. They'd rather get rid of the whole flight search. They don't care about it at all. They want the traffic, which is all flights, but they make all their money with hotels. Right? So this is really strange. They operate it at a huge loss. So if they can find an agreement, but someone runs the whole flight business for them, but it happens that the same get the same distribution of hotel traffic, they would do it right away. So that's a dirty secret of that particular business, that there's no money in flights for a long time now. Yeah. I mean, what I'm talking about is way further down the line than where we are right now. And I just, yeah, what I'm talking about with UBI and whatnot is way, way further down the line. I just, I think it comes down to the idea that things are going to be done by fewer and fewer people, I think, for the most part. We will see some opting out of the labor force and that unless you want the means of production to be seized, you got to do something about it as the haves. The haves have to do something to... But isn't just thinking a part of being in the labor force? Like remember, we had all these people working in farms, 90% of the population. And then nobody works in a farm anymore. I never met anyone who works at a farm, right? Literally at a farm. I mean, people work there, but they're like, they run the business. Nobody actually does it. The only farmer I ever met or I ever heard of, like that I knew was a billionaire who was doing it for fun. He owned R&L carriers. My dad managed their account and he was a trucker for fun or I mean, he owned a logistics company and he owned a farm and it was just for fun. I don't know if he ever made any money off of the farm. Well, what I'm trying to say, you call this labor and then now everyone sits in an office and just plays on their Facebook page for eight hours and then doesn't work for 10 minutes, right? And we call this work, right? Just because you're in an office or you're at home and you log on somewhere in the morning. But what if just thinking about a creative solution is a problem and you go about your life, 99% about just thinking, right? And then you have one good idea in your life and that makes enough money for the rest of your life. Wouldn't that be cool? Yeah, but that's the idea that some amount of subsistence living would prevent that sort of thing from happening. I just don't buy. I think... Oh, I agree. I agree. I'm kind of a V.I. I'm just saying I think that might be a smarter way to handle this, not that we shouldn't give people money. I think that's a good idea. Yeah, I'm with you, but I'm kind of in the same way you were like, I'm sensing some libertarian vibes coming from you. And I actually think it's like the perfect middle ground, UBI between the left and the right. There's a really interesting thing we had on Real Vision, the CIO of the Alaska Permanent Fund. So in the 70s, they found all this oil in Alaska and it was in state owned land. And so they started taking the oil out and they decided that the money would go into basically a sovereign wealth fund. So Alaska, the U.S. doesn't have a sovereign wealth fund in the same way that like Norway does, but the state of Alaska does. And Alaska has some sort of libertarian undercurrents to it. And they actually have a form of UBI. It pays out a UBI to the citizens of Alaska every year. They get a check from the Permanent Fund. And the reason they did that is because they didn't sort of trust the government with the money. The idea was like, we know what to do with our money better than you know what to do with our money. And I tend to agree that people who really want to better themselves, which I believe is most people, know what to do with their money better than somebody who says, we're going to help you out and we're going to give you this subsidized housing. I would rather just give somebody a check and they can decide how much of it goes to housing, how much of it goes to food, how much of it goes to health care or whatnot. Like they know what their needs are probably better than some bureaucracy does. Yeah, that would also open up another really interesting discussion about taxes. But before we go there... I mean, we're way off of financial media at this point. Yeah, I want to go back a little bit. And so Alexander Bart and his really deep thoughts, they kind of, they open up that view that's been, it's been something that's been talked about for 20 years. And the basic idea is he says, well, think about the new upper class and underclass. When we talk about the new upper class, where would that be? And he calls it the netocrat, netocracy. And where those... And it's obviously it's a bit of a Marxist term, but what he is trying to say there is the... And I think this really applies to financial media and finance in some is the curator, the person who has all that information, has their hands on all the networks, but can find out that sliver of relevant information that's important to the participant or to the audience, the curator talks to. That's an idea that we talked about for 20 years. And I feel we have a lot of curators out there, but they aren't necessarily the most powerful or the richest people. Yes, there is a network of individuals and they hold relevant information, but they also hold power, right? And power doesn't necessarily mean this in the postmodernist meaning. What I'm trying to say is, do you think we will see this rise of independent curators? So people who basically out of their own intelligence, out of their own ability to create relationships during their life, they will become these massively interesting, powerful, rich people who have the ability just by shifting around information. We will see hundreds of thousands, maybe millions of these curators taking off. That's kind of the thesis of Alexander. Okay, so I would say that, I mean, what is Facebook and Googlebot curators? And arguably they've gotten super rich and super powerful. That's what Facebook is. They're curating and then the algorithm is doing it. The algorithm is what's curating. So there are these super rich curators, but I think it is that competition that you were talking about that makes it so that unless you have the huge, huge network like Facebook or Google, where the entire world is going to Google to search, so a huge percentage of the world is on Facebook. That huge network, that's why they have so much value. But it's still, if you don't have the network, it's hard to monetize it. What if it's not massively machine aided? That's a good point you make, but let's find something that's not basically an algorithm. Oh, I mean, there are good businesses in the curation realm. I mean, there's a young guy who I've interviewed on Real Vision whose name is Edwin Dorsey and he has a newsletter. And his newsletter is just keeping track of all the activist short selling campaigns that are out there. And he writes some original work, but a big reason why I subscribe and he's very nice because I'm in the media and he gave me a free subscription, but I would probably pay for it if I had to is because it's all right there. It's curated for me. By him, he's keeping track of all the new reports that come out. He has another one for SEC comment letters and there's some value there. And you know what? I believe he makes pretty good money. He's younger than me. He's fresh out of college and in the grand scheme of things for people his age, he's doing phenomenally well, especially to be his own boss, but there is a cap. There's a cap on that. What is that the new hedge fund monitor? That's what Thomas Duncan was telling me. Basically, he says the newsletter, the paid newsletter is the new hedge fund manager, right? Because you don't, as a hedge fund manager, they commit capital to you, you move it around, all this regulation. You don't want this anymore. You just keep people idea and tell them, okay, if you still want to have those ideas in the future, just pay me a thousand bucks. Yeah. I mean, there's huge, huge money to be made in that, but it's not. I don't think it's the same like masters of the universe billionaire hedge fund manager business. You can be good, but that upper class that you were talking about, the true upper class, I think it's very difficult to get to that level as an individual. I'm sure there will be some people who do so in this game, and in many ways, real vision is a curation business. We have internal people who are creating content and we certainly do that, but so much of what my job was before is to have my finger on the pulse of who's saying interesting and worthwhile things that our audience wants to hear about. That was my job was to curate. It's kind of like a description of a journalist, right? Think about it. The journalist used to be this intermediary who takes a lot of irrelevant information, kind of bundles it up, makes it more easy to understand. It's neutral. It doesn't go political. Now it's all changed. But the business model for the journalist that leads writing for these big newspapers, that's imploded. And the question is, and we all thought about that Curator creates the value, but it's seemingly very hard to monetize this continuously. It's not a digital content sort of work. Substack is great. But Alexander makes that claim that this is going to be the new overlord, the class of overlords. How many words hard to say? There's a black... Do you know the show Black Mirror? Yeah, yeah, of course. Have you the episode where they're all on the stationary bikes and they go back to their rooms and then there's just the content creators? I remember that one. You should go back and watch it. You have to earn credits to not be served ads for pornography. And then there's a few people get to be like the shows, the content creators, the talking heads that are at the TV. And it is this very dystopian world that kind of, in some ways, what I was talking about with content sort of taking over everything, it's like if you are not at the cutting edge of technology and managing these automated systems and helping to build new automated systems, or you're not a talking head, your greatest value to society is working, sitting on a treadmill and generating electricity while you don't get fat. I mean, it is a dystopian. It is Black Mirror. I'm not trying to say that that's the future, but it is very interesting that that is the case. But the thing is, there's still a kingmaker. In that, the person who becomes the content creator is still not the king. There's still a kingmaker who's picking that person, and that's the people who own the platforms, like Substack. A lot of what you're talking about in the newsletter that I referenced is Substack. The people who are on Substack can generate great lives for themselves. You could make a couple million dollars a year, but the investors of Substack, the people who own that platform are the ones who are getting super rich, and they're the ones who can deplatform you, who can say, hey, we want to pump your newsletter because we think that that's the one that can make us the most money. Those are the kingmakers in that in your sort of upper class, lower class scenario. I think that that's the true upper class. Now, those other people who are making great livings, they're upper class in the more traditional sense, but they're still not the kingmakers. Those are the platform owners. Yeah, I tend to agree with you. I think the world there is a ton of competition between platforms as well, and you can just move from YouTube to another video platform. But Joe Rogan, Joe Rogan being bought to go to just Spotify is an example. It's a short list, right? It's a relatively short list. Where do you go? They can all ban you, and then you can say, well, I do my own thing. I do like what Alex Jones did. I do my own video site. Yes, you can, but it gets harder and harder as more platform you take with you, right? You have to rebuild the platform. You end up back in 2000 when we all just, I don't know, we relanded flash just to get our website up and up and going. So that's a good argument. I feel like the these platforms are relatively short. I mean, the list of platforms is really short. I mean, even if you think about like, we can think about platforms, lots of different spaces, there's maybe a few hundred, maybe just a few thousand, and that's the whole list. And many of them just invest so much in marketing, they will never make any money. Like they do follow the Silicon Valley model where you just out compete everyone in marketing, but you never have any intention to make money. Then you go IPO, and then you just sell off the business to retail investors, and you hope it one day will make money. Well, I saw a tweet the other day, which was kind of making fun of this, which was, I remember, I'm old enough to remember when eyeballs were a vanity metric for VCs. Like people used to, you know, like we've got this many eyeballs on our website, and people would kind of be like, yeah, but do you make any money? And it's completely flipped now where it's like, how many eyeballs do you have? It's the network, how much power do you have in your network? Tell me how many eyeballs you have versus like, do you make money? That's not really, it's not really on anybody's mind. It's just going to lower your valuation because you have less users. That's really good. I think that's a great indicator for boom and bust cycles. There's valuation metrics in the startup industry because you absolutely correct that flip completely, and it goes along with the business cycle of that industry. Yeah, and look, and part of the reason it happens is because there is some truth to it. And because what happened, I mean, Google makes a lot of money, Facebook makes a lot of money, and they do that because of these network effects and these eyeballs. So there is some truth to it. But what you talked about, it's a very short list of the platforms that really have power. And so it's how much of it is like tantalus. How much of this chase for eyeballs is an Apple that's right there that you'll never be able to reach. And how much of it is real, and there's real value in that. And I'm sure there are some platforms that are going to succeed and they're going to reach that Apple. But I think I would probably say that a lot of them won't. Or at the very least, they'll get bought out. They won't become king makers. There will be a point where they might have a potential to challenge one of the existing players. And in the current state of the world, they have been allowed to be bought up by the existing platform, like Instagram. Instagram had true innovation, and they were building a competing platform, and they were allowed to just be bought. And until that changes, I don't see the list getting much longer of the platforms. But there will be niche, there will like real vision is trying to be a platform. And within a niche that we want to own, and we think we can be the best finance platform. But we're not trying to be the platform for everything, for every single thing, like in the same way that a social media platform or a search engine might be. There are little pockets of opportunity there, certainly. That's the final thing. When you look at your own work, and where you are at the company, is that what gets you up in the morning? What is this thing that really excites you, where you feel like, well, there's so much potential, I could work on this forever. And it's just there is something there, even if you maybe haven't put it into its category yet. I mean, what gets, I mean, my current work with the brands, the thing that gets me probably the most excited is I do believe that there is a ton of work to be done. Like, look, I'm not, I'm in the grand scheme of things, relatively fortunate, but I am not part of that ruling class that we talked about. And so, you know, a lot of my drive is just wanting to have some degree of freedom over the choices I make in my life. And unfortunately, in today's society, not unfortunately, I don't really think it's that unfortunate. I think it's inevitable, but like that requires some level of financial success. So that's a huge driver. I think I would be remiss to not highlight that, that I'm just a young guy trying to get by. But no, I really, I really want to get into finance is the most finances is arguably the most calm complex system out there. And I study that and try and understand it is just so much fun. Yeah, I have a question for you there. And that's kind of my argument that I made earlier. So we have this, this, this lower productivity growth over the last 20 years, much lower than what we saw in 60s and 70s. So lots of debate about this. We also know that clearly there's some real innovation going on. And it seems to be speeding up or slowing down. Nobody really knows. But emotionally, we feel it's, it's, it's speeding up a lot. And we don't see this in productivity numbers. And we also see that a lot of the new generation had troubles with big opportunities. I fully agree. Again, this might be the young guys complaining, right? But what you just said, I think it's, it's one, one thing that I've noted is really important. And I'm glad you said that maybe the way that you want to live and the way that you outline your life, the way what's more important in the quality of your life, this is becoming your, and Alexander would say most sacred decision making. So if we have a priority or hierarchy of decision making, we have the more sacred things up top, and then it gets less and less sacred as we go down. Like we don't care if you use Uber or Lyft, that's really all the way down, right? But if you drink. But the ability to take an Uber or Lyft to not like we just had, we just had horrible rains here in New York. And there are people who are wading through disgusting water in the subway. And probably like if I were that person, I am fortunate enough to be able to say, no, I'm not wading through that water. I'm taking an Uber. There are people who don't have that decision. They don't have that decision. What I'm trying to say is for you, for yourself, and that's just you as an example, just a very personal opinion, someone offers you a lot of money, but it's 20 hours or 18 hours a day. Michael Moolkan style, you have to get up 4am, call everyone, just your soul is gone, right? After like a week. Would you do this for a few million dollars, or would you rather have a great quality of life for the next five years? And yes, you might make some money, save some money, who knows. What do you feel, and if you can be that honest, what do you feel is more appealing to you? And it goes back to UBI, right? Because UBI would take the downside away, but you would be poor, right? I would probably say, I mean, guaranteed millions, and how long do I have to do it? Five years, and you may kind of know, a million, 1.5, 2 million a year, something like that. I come away at the end of the five years with between five and 10 million in the bank. But like you basically have a heart attack, like everything, no vacation, your health is ruined, and it's no sleep, no family. No family? It's like the partner lifestyle. That's what they said, called the young lawyers, right? So when I started law, a bunch of my fellow students, they went to law firm, they told them, okay, your life, it's not going to happen for the next five years. Don't even think about it, or you will never make it in this firm. And they said, okay, I'll just suspend my life for five years. Very willingly. I didn't make any money, right? It was just, you might become a partner. I mean, they made one, two and a half years. Eventually. I mean, it's a decision that I don't know the answer to, and I think that is why it's such a good question, is because that is the crux of human existence in many ways, is this decision between quality of life and future quality of life. But it's a marshmallow test. It's a marshmallow test. And if I can truly be out in five years, have five to 10, then guaranteed. I mean, I think it's hard to turn that down. I think it's hard to turn that down at this age. I mean, I, you know, I'm in a relationship right now. I think that would, that that's probably like the biggest decision I would have. But I mean, I look at, I look at what I have right now with real vision. And I often tell people that real vision is like the ultimate positive carry option. Like I am getting paid. You know, I am not, not making like investment banking, like what you're talking about money. But I can afford a nice apartment here in New York, and I can afford to do the things that I like to do. And at that same time, I get to have incredible conversations with people where I'm not only learning about future opportunities for myself. I'm also getting to build a network. Real vision itself is just such a fascinating business to be able to learn in. I feel like I'm getting an MBA just getting to see it because it's small enough that I get a window into these other departments. I get to really see how the whole thing functions. And, and, and there's, and there's great upside potential and you know, they give us equity in the business and whatnot. So there's, there's upside potential in that. And so, really, would you, would you, would you agree that people your age slightly, older slightly, younger, they are more curious about the quality of life these days than compared to other generations of is very difficult to compare. But let's, let's, would you, would you feel that's true? Or would you, do you think no, that's just because your opportunities are in there so they automatically go towards quality? I think it's much more the, the latter. And it's partially, it's partially opportunity. It's partially a cultural change in who, who raised us and what we were told. I really think, I really think that that is, is hugely important in a sort of like fourth turning sort of way, like you're very much influenced by the generation that raised you that came before you and there's just kind of cycles in that. But it's the, the line is very clear. Like somebody in my generation, like I'm 26. So somebody like 25 or younger, the idea of going to work at like an unknown startup, I think is much more attractive to them than somebody who's 35, we're working at a fang company was everything. Like that's, that's what success is to them. And the other one, there's sort of this, this, I don't want to work for the man, but I also want that tech upside and I want the cool job. And it's only slightly different. But, but there are some, some little cultural differences there. And yeah, I think, I think quality of life is more important for us. And I see it, I see it as a political shift. There's an interview that we, we did for real vision that is, is coming out, that is coming out soon with, with a manager, his name is Russell Clark, who, you know, he basically says that like that's, that's really his core thesis is this shift in attitudes from capital to labor. And I think this quality of life argument is part of it. And, you know, people are not falling for the $500 signing bonus to take the shitty McDonald's job, they're not falling for it, a $500 signing bonus, like they don't care. Yeah, what I've been saying about COVID, it's conspiracy about millennials who want quality of life and boomers who basically stay at home anyways. So everyone in between gets squeezed, but everyone younger than 25 and everyone older than 55 thought it's awesome, because all they wanted to do is stay home anyways, right? There was, there was no, there was like a dream come true. And for the generation in between where I belong, it wasn't such a great idea. With the COVID response, right, the COVID response on the lockdowns, it was something where people, and I was always amazed, they wanted immediately to cloudify themselves or just get out of the normal life, that normal life that had no value to them. And that was pretty stunning to me. And we had like similar threats before that obviously there was no social media, but they were taken very differently. And I feel like is this, there is this very strong desire of quality of life with a different way. And maybe that's because the opportunities play a role, I think, but maybe it's being more strong that lies below this. And that also explains to me, if I need productivity growth, it's so much lower because we have quality, but we don't, it comes at the same price. So you wouldn't never see this in those productivity numbers, the way we count them right now. Yeah, I think you, I think you, you're kind of onto something with the, that spread there. And I think it's like my parents around age 60, you know, sort of the young boomers, they were kind of half promised the company man thing, the idea of like, you get your pension and you work at the same company for 40 years, like they saw people have that, and then they didn't get it themselves. I think, you know, not to fall into the classic like millennials as the boomers had it better, but you know, I still think they had it better regardless, but there was sort of like the, the early boomers and then the previous generation, they had that, the true American dream, they got the full American dream. And they're realizing they're like, Oh, I'm probably going to live to be 100. Like, do I have enough savings for 35 years? Like, there is the same sort of like disillusionment about the opportunity that is out there. And I have this conversation with my mom. And then I look at your generation as sort of had the same opportunity as those late boomers, but they didn't have the false illusion. And so there's a bit of pragmatism that that Gen X is kind of known for this sort of like, I've always had to do it on my own. I've always, you know, I've always known that the world was shit. And, and that's where you are. And then the millennials are sort of eschewing that, but I'm going to try hard anyway, where we're kind of like, the world is shit, but we don't have the same opportunity set, I think that was available to your generation. And that's why we're, we're kind of there. But it's relative, like you still had less opportunity than my parents did. But when my parents look at what their parents had, it's that Delta, it's the Delta that is the problem. Yeah, it's a change of expectation. That's the problem. It's not the opportunity. It's the Yeah, it's the Delta. And so I think that's why we're seeing it is that that problem. I just as a related thought, and this goes somewhere completely different. But what I like where we are right now, I think a lot of this is related because we don't have any new frontiers, right? So the amount of frontiers we have, we have a digital frontier, but it's a digital frontier. It's not the same as a real frontier. We don't, we don't exactly go for a conquest or discovering new places for the land around there. They immediately, just all you have to do is put seeds in and then they immediately make money. I mean, this stuff grows on its own more or less. If you watch Jeremy Clarkson, he tells you otherwise, but it's basically the story. And so we don't have that access to something that we can just by being there and netting it to our productive society makes us more money, right? We can't just go, we want to go to a new planet. Do you think what's, if we go and once we go to new planet, planets, the same set of high opportunities will come back or these things are not there? I think it'll be much cheaper and easier to send robots up there to do the sorts of things that we, that we want. We can make so much money on Mars. Think about the minerals. I mean, it like Robert was telling me this, you can, you can literally just, I mean, if you take harvest the, some Mars probably too, but also the asteroids, the, you can't harvest that much because then the, the price of platinum and gold goes to zero because there's so much out there. And obviously it depends on your launch costs and there's a couple of things involved. There's robots or humans. There is so much more out there in terms of potential that anything we know, any society we know, will just be resect, right? Because things that we consider as valuable gold, that number go to zero. Well, I mean, that's why, why has, you know, individual investing and retail investing exploded. It's, it's in many ways, it's an undiscovered frontier. These people are realizing that there is, instead of going out and panning for gold or, you know, settling the West, whatever it may be, crossing the Atlantic Ocean to discover America, that is gone, but you can buy a call option and change your life. Yeah. Exactly. And that's why it has exploded. So I mean, when we talk about frontiers, that's a frontier. I mean, people, but it's a mind frontier. It's not the same, I feel, as going to Mars. That would make me more excited. Yeah. Yeah. I think it would. I'm, I'm staying here personally. I can tell you, I can tell you right now I'm staying here and I'm like, we can't even control our own climate, but we're going to terraform Mars. It's the same thing. One needs more CO2. The other one needs less. So yeah, I, I, yeah, I'm just like, I don't know. I mean, I think that there's tremendous, tremendous value that will be created with, you know, technology that involves space, whether it's going to Mars, whether it's asteroid mining, I'm a little bit more skeptical on in my lifetime, in my lifetime. I'm a little bit more skeptical on that. But in terms of, in terms of some of the other stuff that's being done, I, I'm not, I'm not like a total space bear. But I'm not, I'm definitely not a, I'm a contrarian by nature. Those types of growth businesses. I've, I find that I have like a hard time seeing the future doesn't, doesn't really work for me. And that's one of the things that I'm coming to terms with right now as a, as an individual investor is trying to understand, you know, what, what makes sense to me and emotionally what I can deal with. And I'm, you know, kind of coming to the terms of the fact that I'm probably more of like a Seth Claremont, like keep 50% of my money in cash. And then when everybody else is panicking, go buy because I'm a contrarian by nature. So why not be a contrarian when there's blood on the streets and, you know, the whole buy, buy low sell high thing. So yeah, but starter fund is a great convexity. And it's more, you know, as more of a, but it, but it's a normal realm startup. It is, as better your convexity. Yeah. But the problem with that is, I think that that is one of the biggest competition forever. But there's one of the biggest lies that has been perpetuated is like you take startup, like they show the, they show the returns for VC, but they don't show you is the return distribution. They don't show you how much of the skew of the reason that VC out performs public equities is due to the top 10% of VCs. Most VC funds actually underperform. Most of them do. And most people don't have access. There's too much capital chasing too few of these great startups. And they all want to have a 16 Z. They all want to have Y combinator. They all want to, it's the deals are going there. Why is LeBron James such a great investor? Is it because LeBron James is a great investor or because people want LeBron James to be on their investor list? And so he gets all of the deal flow that you could possibly imagine that, that, that he gets. Yeah, I agree. So, so, but yeah, it's great investing in startups. And I had this thing with my mom, she was like, real estate, she wanted to buy a rental property. And she was like, I'm going to invest in this startup. I know the CEO instead of investing in this. And I was like, just so you know, the stats tell you that angel investing is a terrible way to invest your money. But she wants to do it. And granted, she has insight into the business and direct access to the, you know, executives. But it's still crazy to me that like, I sold her just like remind her like, unless you're at the top of the distribution, the top of the food chain, you're probably going to lose money. Or you're just going to be right with that one startup. Well, and there's another interesting thing which we didn't get on, which is the way like what was hot when you were coming of age influences what you are interested in investing in in the future. And there's like some really good stuff to show that like people who sort of came of age in the 90s, really into real estate. And what do you know, like my generation and in some ways, I think your your generation as well, you know, tech kind of came up. And so like, what do you know, like everybody thinks that VC is is like the only way to go and everybody's going that way. And, you know, as I said, I'm a contrarian by nature, but I try to, you know, skate where the puck is going. Lex, this is a good topic. We got to pick it up next time. We're going to run out of time. Yeah, this was awesome. We covered so much. I know. And I'm sorry that we I'm sorry that we didn't get on financial media that much. Hopefully, hopefully you can find a way to to to bill it because we got much more into humanity and society and all that much. I like it. I like that a lot.

You may watch this episode on Youtube - Julio Maria Muhorro (Tales of Entrepreneurship in Africa).

Julio Maria Muhorro is an entrepreneur and business coach based in Mozambique and South Africa.

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Julio, thanks for coming to the Judgment Call podcast. We really appreciate that. Thank you so much for having me. I'm so excited to have this conversation with you, man. Hi, same here, same here. We spoke a couple of months ago, and we were just chatting about that. There were a couple of things we really wanted to talk about, and you are a very successful entrepreneur. You're quite young. You do all this for Mozambique, and now you're in South Africa. Maybe you tell us a little bit about yourself, and what really motivated you to become an entrepreneur so early in your life? Sure. It all started for me when I was just about to graduate for university, and I realized I didn't have a job afterwards, like many people. One of my friends, he was already an entrepreneur doing some transportation business, and he wanted to go into developing short term courses. He had all the entrepreneurial experience, but he knew nothing about academia, per se, or knowledge based businesses, but there was my jam. I was a lecturer at a university to help pay for my scholarship and my fees, and the university I was studying in, and my parents were teachers. Education and knowledge based stuff was really my jam. We joined forces and we started this company out of scratch, two young people, and I remember we really went over what we thought it was right, because I had no experience developing courses. My experience at the time was just delivering courses. I remember I had to Google how to build a session plan for a workshop and stuff like that, but then in three months, we trained almost 600 people in total. For you to think this is like a startup that no one heard of, and the key of our success early in the stage is that we were quite doing a lot of interactions with the market. We did all the research piece, we asked students what they wanted to learn, we kept their contact details, so when we launched the courses, we sent them SMS and all that stuff, and the energy was just cool and vibe. I mean, I was giving teachings and classes like eight hours a day, and I didn't want them to be boring, so I really made sure that it was interactive and fun, and people really appreciated. From that place, back in the days in Mozambique, business mentors, advisors, there was not even words we were used to it. It was at a time in the business where I felt I was making good decisions, but I wasn't making great decisions, and I just didn't know how I could make that leap. It made sense to me to get a job while my co founder was still running the business, and that's what I did. I joined them as a mechanical company called Idea Lab. They are major in supporting entrepreneurs in a more of ecosystem level, so they work with different stakeholders to support entrepreneurs, and they work with entrepreneurs directly with trainings, with events, with advisory, and I joined them to work on marketing, and then because of my background, I became a business advisor and mentor to the startups and a trainer. In two years into that business, they invited me to launch the very first business incubation program in Mozambique, so there for me was huge because I was usually the generation that heard that, well, you should start businesses, you should do stuff, but we just don't know how young people, we just don't know how to do those things, and I was given the chance to be in a place where I could help other young people to follow their dreams, so they were super cool, and in two years, their business grew, and for me, what was growing was this sense that I should be able to do more, like I wanted to do more, I wanted to explore the world, I just didn't know how back again, and it really went home when I was in Bahrain in the Middle East, we were doing a speaking engagement there, the Global Entrepreneurship Congress, which is one of the biggest entrepreneurship events in the world, and after speaking, this bunch of one up guys, they come to me and like, Julio, can you just have like a small talk with you after, you know, the big session, we really want to get deep into some stuff, I went there, we talked with them, and I remember the guy told me like, Julio, now I know what I need to do with my life and my business, like, I have, I'm clear, so clear, deep down, I was just feeling empty, like, I was literally just showing up, I was so depleted, because I knew I wanted to do more, and I wasn't doing it, that it was really starting to, you know, down, way down in my productivity and stuff, so that led me to launch my current business for Knowledge International, where we focus on helping entrepreneurs and executives directly, by offering power coaching, training and speaking engagements, and for the corporates, we offer them knowledge consultancy, so we help them harness the power of knowledge of their people, so they can start growing their business from a place that really feels good to them. There was a very long story, the shortest I could tell you. I mean, this seems that a lot has been going on, and, you know, you have your own venture, you already worked with an incubator, and now you're doing your second venture, so this is also what I think a lot, including me, and a lot of people are interested in that is, you know, Africa is kind of, as a bigger destination, and then Southern Africa, Sub Saharan Africa, is always hailed as this enormous potential, and we, in terms of investment opportunities, and in terms of what knowledge based business models could do for the large population, and I had Daniel Gross on who runs a completely virtual incubator pioneer, and he's had a lot of investments that he did in South Southern Africa, but also including Nigeria, so there's a lot of potential. We sometimes, it's hard to grasp this, right? It's a big population, its connectivity is increasing quite nicely. The last time I was in Mozambique, what was interesting for me was I was in Maputo, and most of the internet connections I could get out of hotels, or coffee shops were really slow, but then I just tapped into LTE, and it was like a hundred ambit everywhere, all over the countryside on our holy smokes, so I didn't see that coming. I was super fast and super cheap, it was like a dollar for a gigabyte. Anyway, so there seems to be a slightly different way that each country obviously goes, and maybe it's a different kind of connectivity. What I'm trying to get to, when you look at the opportunities that you see for entrepreneurs, how does this stack up, and I know you've been awarded one of the most prominent entrepreneurs in Africa a couple of years ago, give us an insight where you feel these opportunities are real, and they may be just made up. For sure. I guess we need to start taking a step back, and just put Africa in a bit more of context for our listeners. So the first thing is that when you look at the world map, you see this huge chunk of land altogether is Africa, and unlike other continents like Europe or America, or North America or South America, even though it's a continent, it's all together, we couldn't be more different, even though we have so many similars. So that's the first point, and each country has slightly different nuances in terms of cultures, and what people value, and what type of business can flourish. But something that I found that's quite different from African markets than we have from any other markets, it's how mobile our money is. I mean, if you look at countries like Zimbabwe, they really don't have yet money anymore, and they just use mobile money. And mobile money, it's not like you transfer yourself on PayPal, it's the money that is associated with your mobile phone. So you can transact using your mobile phone. That's a huge difference from the rest of the world when it comes down to Africa. And the original Bitcoin, right? It came from Kenya, right? Yeah, yeah, from Kenya. First, I forgot the name to be, what is it called, in Kenya. I forgot the name. I forgot, but in Mozambique and Tanzania, it's in PESA right now, and it's owned by Vodacom, or Vodafone in other countries. I think that's the one, the original Bitcoin, or the African PayPal. It is, it literally is. And I guess Molotov foreigners, they sort of get stuck with that, like how is it possible? That's one of the main differences. And the other difference is, in terms of logistics, even though it's our all continent, and you will think that, well, it will be so cheap and easy to travel and, you know, travel only people, but also, you know, merchandise, or stuff, travel around the continent. That's not the case. So there is a lot of opportunities and challenges within logistics per se. But to really go to your point, Africa is literally the land of opportunities. What you really need to do to tap into those opportunities is start looking at them from the lenses of the local people, right? So Africa has this whole story of, you know, being colonized by different European countries, and then people finding their independence back again, and then with globalization, we're trying to sort of like align the rest of the world. It's very important that as someone that comes from outside Africa, or even just a different country within the continent of Africa, that you allow yourself to have the empathy with the locals and understand what they're coming from, and what really matters to them. And they will say it's the main reason why a lot of foreign investors, they fail when they come to Africa, is that they try to replicate, you know, either based on the weather, because the weather in subparts of Mozambique can be compared with California, and they think that the same way people operating in California in the US is going to be the same way they're operating in Mozambique. So no, there are opportunities, but really look at them from the perspective of the locals. Yeah, yeah, absolutely. It's interesting that you mentioned the weather. I think that's when you think about a couple of episodes ago, we talked about impact investing. When you talk about pure agriculture investments, I think those are something, when you think of enabling local farmers, have organic products, those are investment ideas that are very popular. I don't feel they are, they're not easy to pull off, let's put it this way, because of the issues you just described. It's possible, I know there are stories in Malawi, for instance, but it's hard to scale them, so you end up with relatively small farms, and it's a patchwork, and logistics is a huge issue of getting anything out. For instance, I was dreaming to become a nuts farmer in Malawi. I talked to a couple of people in Malawi, and they have those, what is that called, the really high nuts, oh my gosh, I forgot about those. Anyway, so this is another one. It's grown in Hawaii. Macadamia? Macadamia, yeah, sorry, couldn't come up with the name. No worries. So there's a big internal market for macadamia nuts, so there's a bunch of farms over there, it's very fertile grounds, but getting those macadamia nuts, and it's apparently extremely cheap to grow them, compared to anywhere else in the world, but getting those nuts out was incredibly difficult, because even just small quantities like the FedEx or UPS, which are present, it was a logistical nightmare. So sooner or later, you can get them for one fourth of the price that you're waiting for, if you have even small quantities and their high quality. So if something is missing in between, this missing link is something you just look at certain variables, and then, well, I gave up becoming a nuts farmer in Malawi. Maybe this was a good idea, or maybe not. I still love the idea. But you know, there's also something both mentioned. So for those who doesn't know, Malawi is a country that sits almost in the center of Africa, so there's no straight link from any port or shore to Malawi, unless it's the Lake Malawi, and it's a huge lake, but then it's a lake, it's not the sea, you don't have connections to other places in the world. They're making hard for logistic companies to really work on, that's one, and also there is the whole political tension, and I guess the Lake Malawi is a great example. So it's one lake that in Malawi, it's called Lake Malawi, in Mozambique, where I'm from, it's Lake Nyasa, which is the province that the lake sits on, and in Tanzania, it's Lake Tanganyika. So there is a lot of this ownership over different African assets, I'll say, and sometimes it can be hard for all the countries to agree. One of my clients is working to build a railway, they were supposed to connect Malawi, Mozambique, and Tanzania. But even then, we don't have a railway link in the entirety of Mozambique, for instance, in the same country. So yeah, there are challenges in that, but also there are opportunities on how we can be creative in building those bridges and building those links. Yeah. Well, one thing I feel that strikes me as coming with great potential and relatively limited challenges is digital content. So the internet connectivity has gone up quite a bit. The last time I was in Akra in Ghana, I probably hit the fastest internet, I was like 3, 400 mbit in any random location, I'm like holy smokes, what is this? Because they probably have this new undersea cable that just goes through on the location where Akra is, and it's close to the sea. So that was great to see, and it's a very English speaking population with very high levels of English proficiency. And I was thinking, well, you can start from call centers, but also producing content, we all think about the YouTube world, right? We think about premium content you can actually sell. I thought, this is easy because, well, all you need really is fast internet access, and from then on, you basically just keep going from there and find premium. Obviously, you can do this for the local market, but with the connectivity, you can also do this for the non local market. And that seems to be where Indian Bangladesh is really taking off. They have been doing this for 20 years and they seem to be successful. I don't know how billions, how big these businesses have gotten, but they seem enormous to me from what is visible to me on the internet. It's not something I see so much that has taken off yet that my change or is already changing in coastal communities in Africa. Yeah, 100%. And I see a rising of knowledge based or really just online essence based business that I'm going to call it that way. And I actually have examples. So here in South Africa, there is this comedian called Lassizwe. So he managed to, he has a million and a half followers on Instagram, if I'm not mistaken. So basically, he's all comedies around the different tribes in South Africa and the main ones being the whites, the collards, and the black. And he always have like, you know, how will a black mom react? How will a white mom react and stuff like that. And it's very relatable in South Africa and some of other African countries. But he has grown so much in such a short period of time because of the digital, as you mentioned. But then I also got a chance to meet Elsa Majimbo from Kenya. So she now has two million followers and she collaborated with people like Naomi Campbell, Big Brands, Valentino and stuff. And her like comedies more around, you know, people not showing up on time and more of like international stuff. So that even though her and Lassizwe did start quite on the same time, because one is like targeting the world, you know, more general stuff, she was able to grow a bigger audience. So there is this growth happening there and associated with that there is a growth of personal brands and knowledge based companies happening as well. And I guess the most challenge or what entrepreneurs really struggle here in Africa is deciding if they want to stay local, if they want to go national or global. Because unlike many other countries in the world, at least in Europe or in America, we don't have just one language in African countries, right? We have many languages, usually one or two are the official languages. So there's a ton of languages too, right? But whatever. I think the general issue oftentimes seems to be, and that's always the issue obviously in a content based economy, is how do you monetize it, right? How do you develop it from a free product into a premium product or a decent premium product? And that's always really hard. That takes a lot of money, it takes a lot of resources to get there, right? Because you need to challenge, you need to know what customers want at what point of time, so they are eager and interested to buy into it. And, you know, Netflix is probably the best example. Early on, we're bidding with a lots of money for those content rights to stream in different countries. And they had it per country, and then they changed it, and then they didn't want to go international, and then they only wanted to go international. They changed every couple of years, right? And this is a good example where obviously it's foreign content, and it's very expensive content, but still, it's a good example where they also changed the way what they charge. So it's about $10, $14 a month in the US, but I know in France and Mexico, it's only like $5. I don't actually know what it is in Kenya, but they figured out a way to price it for each individual country. And that's obviously the, you could start local, you know, if obviously nobody can bid for Hollywood rights, you know, Musk can help us, but there is always content that's that's bringing people are ready to pay for if you find that audience, right? So if you find an audience that has enough of a pain point, so to speak, that doesn't have too high enough opportunity, because so they actually pay for your content. Yeah, and I will say that in the end, really, it becomes comes down to the revenue model you want to have in your business. So, you know, you can go in models where you charge the beneficiary, the end user, but you can also have sponsors or corporate clients, they pay you so that you can give your product and service for people that actually need, but cannot afford it. So you can be quite creative. And I think this point ties back with your investment point. Because something that I found, especially with a foreigner starting to come to invest in Africa, is the sense of is the knowledge and the trust on the knowledge people are presenting to them, you know, and being able to really rely on the partner, because usually you cannot fly in and out every time, or, you know, their language barriers and it is just the local context that as a foreigner, you don't know, but the locals might know, and they might be able to build the bridges to help you out. So I guess, yeah, it comes down to the revenue model and how you just monetize your trust in general, you know, the social capital you're bringing and you want to bring in your company. Yeah, not everyone can be like Mark Zuckerberg and launch a couple of balloons, right, to bring the internet to Africa. And, you know, when you look at it now, it looked kind of, it looked good on paper, right, it was a good PR stunt. But when we now look at Facebook, it's this weird spying machine that he wanted to get to everyone, right, because it's Facebook traffic that he wants, he doesn't care about the other services. Yeah, and being honest, when you're open a conversation, I was actually talking about how Instagram is disrupting markets. Because usually people look at, you know, governments disrupting markets, developing governments, you know, from Europe, coming to Africa to disrupt the market again, and we forget how corporations do it. And I was talking about if you have picture to entrepreneurs, like doing the same business, let's say they are in photography, and they all have 2000 followers in December 2020, the entrepreneur in the US, let's say he is in Florida, he get access to reels, he's able to crazy expand his reach, not just in a local level, but in international level, that will probably mean that he will have more followers and probably more money after six months, while the entrepreneur in Mozambique didn't have access to real in the first place. And I understand the difference or the tailoring made by location, but we're talking about a digital product. And what's worse is then when entrepreneurs have access to reels, you won't have the magnified exposure anymore. So literally, you see a corporation completely disrupting international markets, even though it's a digital company. So therefore, location shouldn't be a problem unless the person doesn't have access to internet, but still you see it happening. Yeah, that's a really good topic. When we see these big platforms, obviously, it's kind of they're all made like a pyramid scheme, right? So you want to be in early, and then you have the biggest benefit. And then as long as later you come, it's more like you're your dad consumer. So you're not getting the two way traffic that you want. It's basically you just you're liking someone else's post, nobody will like your post, right? So it's for the for the narcissists, you want to be really early in that game with that eventually pays off. You notice narcissism entrepreneurship, maybe that's a little too little too harsh. But building your personal brand, you want to be early in those markets and that often this can be a challenge. I think it's also a cultural challenge, right? So I grew up in Germany, and they are generally they rather be late adopters, so they don't want to be early adopters in anything. They're good at being late adopters, and then really excelling at building perfect products. But if you have with this mindset, then it's it's not good to be early, because the product hasn't doesn't have this maturity yet. So as an entrepreneur, it's really difficult to sell early adopter products, it's basically impossible. So say we have the same the same product is the same example you just made. And say it's a software product and targets early adopter early adopter companies or consumers. It's really tricky to get an initial critical mass in Europe, it's almost impossible. And I think the same probably applies to a lot of African markets. But the same product in the same sales pitch will get you a million customers in the US, because there's so many early adopters here, right? And they will test it, they will like it or they think it's crap, and then you will never go anywhere. But at least you have that potential and then you roll it out globally. But you don't have that option. I think a lot of Israeli companies have found that niche, they develop their tech business role, because they know how to develop tech, but they know there's no there's very small country. And it's they're not exactly super early adopters from a marketing perspective, they are in terms of hardware technology. So what they've done, they've basically just said, we're never going to market it here, we just have the back end here, and we just do all the marketing in the US. And if it works, it works in the US, and then we roll it out in Israel. So even if a lot of products developed in Israel are not even available, unless you have a VPN, there's always a way around it, but they're not directly marketed to Israeli customers. And I totally relate with that. I mean, my first 100 coaching customers, they are all from US, Canada, and the UK. I mean, for many reasons, the early adoption is one of them, but also the the, you know, the buying power, right, like people in the US and Europe, they're using dollars and euros. And the amounts that I feel my work is being honored, I mean, it will probably take six months for the regular moves and become to be able to afford a one hour session with me, right. So even as an entrepreneur, I had to work around my mindset and understanding that, you know, if I am finally able to charge what I really deserve from my high paying clients, I can then build initiatives that really support the entrepreneurs that need support, but they cannot afford it. So that's one that's super important that you mentioned that. And when it comes down to Africa, I feel most people just assume that people are not early innovations because they don't want to be early innovation, which is not true. Usually what happens is that there is so much risk associated with that early innovation that I actually prefer to see it validated, you know, and proof bulletproofed before I can afford to take the risk. And it's actually something that I do my best to entrepreneurs is even when it comes down to investing. If you're coming from a background where you feel you cannot take that much risk, don't gamble about, you know, on how much you can make, really choose your affordable loss, right. So I usually say to entrepreneurs like you have an idea, you want to validate it. How much are you willing to lose? Let's say you try it out and you figure out that the business doesn't work for you, or doesn't work at all. How much are you willing to invest and lose? Chances are you're not going to lose that money, you're going to learn something from it and sometimes even make the money back. But just having that mindset that it's not about how much you're going to win, but how much you're willing to lose, just give you that piece of mind to start making the steps to break the poverty cycle. Does it make sense for you? Yes, I mean, yes. Obviously, I think that that's that's why it's a good topic. Your your league as into is, you know, what I think entrepreneurship has gotten a lot of this, that the word entrepreneurship people immediately think of the Silicon Valley type entrepreneur, right, that needs billions of venture capital. And this venture capital obviously is a very trend following. So they invest into a trend and they want to get out of this investment as soon as possible, definitely within the next two or three years, if they can, right. So it's kind of this soft bank idea that you have to have this massive one billion dollar minimum, that's kind of their minimum now, right. And they can invest up to 10 billion in the start of like, think about rework, nobody knows why they invest that much money, but they must have a plan, right. So someone has a plan at soft bank, I hope, I don't know. We hope we hope people can do whatever they want with their money. But I'm trying to say this, but I agree much more with NASA talent subscription of entrepreneurship, which is really the individual risk taker. So what we want is an as as high as possible, ideally, 20, 30, 40, 50% population is an enormous way bigger than what we see right now in the description as entrepreneurship. And we don't want necessarily a company that has hundreds of million dollars of venture capital or any kind of capital infused into it. For me, that's not a startup. What I want is the entrepreneur who goes out just as you said that earlier, who goes out validates an idea conviction of his or hers, and then runs this against the market and sees what comes out of it. And yes, most of them will still fail, this will not change. But this risk that someone took will solve a big, small part of that equation, but it adds up to a bigger, bigger, bigger equation for the whole population. And the whole population benefits because they then realize, oh, well, this is how this is how good this specific thing can be solved. Right. So when we think about how good digital solutions have gotten, how good the iPhone has gotten, this is possible, but iPhone's maybe not a good example. But because it's too centralized. But if we all go out and do our, do contribute to the betterment of the world, right, of society, then it really adds up. So this wave of entrepreneurship multiplies throughout the society. The problem obviously is, how do you convince yourself to take this six month off, this 12 month, right, to say, well, you know, I'm already living in squalor, so to speak. So I really can't afford to do this. But I think this is really doesn't really matter how it's a routine mindset, right? It's, it doesn't really matter how poor you are, how you can afford it. It's, okay, there is something on the other side that A helps me, but also B has a huge upside. And this is why I should start now. And I think this is so difficult to get this motivation pinpointed for entrepreneurs. And I often feel the public initiatives, like government initiatives, they don't really do much about that, like they want to, but they don't really, it's important to have the opportunities. It's you want to, you want to look more to the outside than, okay, you're covered for the next six months. That's my personal point of view. That's obviously very difficult to instill in people. 100%. And being honest with you, you know, all my work is based on the concept that success is 80% internal game and 20% external game. So the 80% you have your identity, your mindset and your energy. And only then you work on the strategies, you're going to change the context, which is the 20%. And I like to give this laptop example to people. It's like, when you want to buy a computer, you get to choose between a Windows based or a Mac based computer, right? That's the identity of a computer, the hardware and the software. But then if you buy the brand new Mac book on earth, you still need to install some programs to make it run and work for you and do whatever you want, like Adobe Photoshop, Zoom, whatever it is. And that's your mindset. It's all the beliefs that you have and all the programs that are running in your mind that allows you to show up in the way that you want to show up. And then going back to the laptop example, if we have the most expensive laptop in the world, with all the premium programs installed, eventually you need to connect it to a power source, otherwise it will die out. And that's how you see the entrepreneurs trying and going back and giving up and try it again and giving up. But the thing is, if you work on upgrading your identity and updating your mindset, so you can start shifting your energy to create the strategies and implement them becomes way more easier, compared if you didn't have that prework done before. And I always say, like, everyone knows that if they want to lose fat and be muscled, they need to do three things, sleep right, eat right and exercise right. And if you grab your phone, you're going to find a professional to help you out. So why is not everyone in their optimum fitness level? I was asking the same thing when I was managing the business incubator, where we actually had pretty good success rates, like 80% of people increasing revenue, and at least 70%. But then my question was, what was wrong with the other ones? They didn't made it. They had a great idea. They were actually showing up. What was wrong with them? And then only when I found that is all this mindset piece that is missing when it comes down to entrepreneurship, that gets people blocked. If you go and Google entrepreneur images, you're going to see people on their suits in New York, as you mentioned, in Silicon Valley. And that's not the true of what really being an entrepreneur really means. And a lot of my work, especially with early stage entrepreneurs, is just break all those false belief systems and really start helping them create their own definition of entrepreneurship and understand how they can play full out. And also associated with the concept of you need to quit your job to start your business. And that's not true. Especially if you're starting out, you do want to be accountable and responsible with your time and your money. And like 99% of the times when you start a business, it doesn't need a full time employee. Even if you put all your hours, do you still need to give the market some time to give you feedback so you get to interact and keep moving forward? Yeah. I like what you just said. I think this is very very motivational. What I hope we're going to see is really 9 billion people, 9 billion brains, to generate one unique idea and market that with India and each. And hopefully we're going to see this in the next 50 or 100 years. And in the end, what happens is you do a succession of different projects or events. Alexander Bard would call them events. So the event is less than a company. So the company is, you know, you have HR, you hire people, and it's all just nonsense. Nobody wants to do anymore. So an event is you create something that can be like an idea, it can be a product, it can be a website, it can be an app, whatever that is, and you get traction either. And generally, it's some viral kind of route, right? People for whatever reason love what you're doing. Now, the hit rate is pretty low. You cannot assume just because you're smart, intelligent, you're going to have 100% hit rates. Now we're going to have, right? There's tons of other people going for the same market. But if everyone just does a succession of these events in his life, in her life, and what's so cruel about this is it will be a going viral if it makes sense, if it's productive, right? If it saves the problem, that's real for very, very low cost. And we would have access to 9 billion super apps, right? That's someone else, bro. That's kind of in my mind. Now this won't be apps, right? There's going to be AI, it can be any kind of algorithm, can be any kind of backend software. But if you get to this level to never have to repeat the same thing, and the same workflow that we do every day that we are all bored of. And now we have this problem in the US that many, many labor jobs, there's just no labor anymore, right? So this is very difficult. And I feel like what is a good thing, right? I want people to get out of this and get into something creative. Obviously, we still, we probably have to solve with automation. But we would all be so much better off because we all would make so much more money if we adopt this mindset in my mind. Obviously, you got to get some payoff. That's obviously the problem, right? So with all these, say you do 100 of these events in your life, right? So one a year. But if your payoff comes on average of the 50, what do you do in the first 50 years? You're going to be really poor because you literally have no income. So and I understand that you can keep your job. And that's great. I think this is great. Otherwise, you don't have to do this full time. But you have to come up with 100 unique ideas that could become a product. And I think this is what we should teach our children. And this is what, the market is global immediately. So that's, that's, I think it's this wonderful incentive you said earlier. If you have enough bandwidth, you have the same market access in, I don't know, in Mombasa than anyone in Silicon Valley, there's literally no difference. And that's such a great incentive. Like you did the millions of dollars right in front of your keyboard, so to speak, right? It's obviously there's more to it. It's not that easy. But that's the mindset that I would love that our children have and our young adults, and then I think they have this with Bitcoin, right? Bitcoin, but it's a maniac, it's a bubble. But that's really all going to because we say, well, why don't I buy some calls on Tesla because I just downloaded Robinhood and it's $500, maybe it's going to make me a million dollars, maybe not, but that's okay. 100%. And I guess the main thing for me is as we're changing mindsets of individuals is like one of the reasons why I'm so obsessed over power is that my understanding is that the world is not a better place yet because there's so many people struggling with their own relationship with power, right? So you have people in positions of power, but they're not in tune with their own power. So they're doing this horrible stuff trying to protect themselves and have a safe life, completely ruin over the life of countries and nations, sometimes even entire continents because of that egoistic and fragile state they are right now, right? That's one thing. And the other thing that I always state my entrepreneurs is that you need three pillars to build your legacy, whatever that means like for you, right? If you're talking about long term or generational wealth or just living a life you love, you need to focus on your income, in your impact and your integrity, meaning that and most people think that it's either one or the other, which is not, but you need to have your bills paid as a human being, your basic needs, and you have to have all the money that you need to build the life that you want to have. But the thing is that money most probably going to come if you are really in tune and connected with your impact you want to create in the world, right? As you mentioned, how you want to change people's life and it will be your local village, it will be your town, your city, your country, internationally, now with the internet, but as long as you're connected with that impact and you start realizing that the more impact you do, this should really grant you more money so that you can extend your income and your impact. And then you need to do those two things, remaining in integrity with yourself. And people think that integrity is just about, you know, not doing the wrong thing, you know, don't fall into corruption, don't cheat on a business alliance or something like that, which is true, but it goes beyond that. So to me, integrity speaks about you playing full out. You have this deep dream and deep desire to impact people, start showing up accordingly. You know, that's really being integrity with yourself, it's you know you are lacking, you know you are BS in your way, then stop doing that and start doing it, but you know it's right, you know, start playing full out and start really harnessing all the amazing stuff that is around you to help you grow and thrive. Yeah, I think the three eyes sound really interesting, we didn't have the three T's in marketing, I always forget what I asked, product, you know, I think you absolutely spot on, you know, the integrity is really for me something, you're in it for the long term, like not the event that you produce might not be long term, but you want to do something that long term helps as many people as possible. And I do think, you know, you might correct me with this, I do feel it's good to think globally, like to think about global issues and solve them with something very local, like with the specific piece of the puzzle. This is old saying, you know, think global, think globally and act local. Act local, yeah. Yeah, act local. I think it still applies, but it's obviously to produce something, and I think this leads us to another phenomenon that we see is that if you behave in that way, and I think we're all drawn to this way of leading our life, I think it's already happening for a couple of us, not for everyone, but for a lot of us. What happens is to identify something that where you think you do something better than anyone else on the planet, you have to download a lot of knowledge, right? So you will spend a lot of time just in research, constant download of YouTube, whatever you research, just because you have to find that last little bit that you can add on GitHub, for instance, that last little line of code that makes everything so much better, and that you could potentially transform into an event. So what happens to is that you spend 18 hours a day in this virtual world, because otherwise you cannot identify these things, I feel. They don't just come down to you while you're going through the garden. I mean, maybe it does, but you know, you have to do the hard work before that. Yeah, there are two things on what you said. So the first is, if there is one thing COVID taught us is that we are more connected than we think we are. So again, if you are thinking about starting a business, if you're already starting a business, literally, there is no reason why you shouldn't aim for the whole world. Of course, there is all the steps you need to take to make it happen. But really, the world is your playground. And I guess the second point on, you know, people having their business and stuff, most people that I found, they struggled with this concept of having to commit with a business idea for their entire lives, pretty much with the job thing, right? And honestly, people like you are getting it all backwards. The number one thing you should have like crystal clarity around is your purpose. And I know it sounds like scary and daunting your purpose. But if you identify your why, you realize that, okay, so in my case, my why, it's all about power and making sure that we remember our power, we step in on it and we help others doing the same, right? Now, that's my why. But what I can do to really manifest that purpose, it could be a million different things. I could be doing what I'm doing being a power coach, but I could be a nurse in Mexico, making sure that people have the most healthy environment to recover and come back to their power. You know what I mean? I could have been selling street food in Bali, the food that is really real food and is healthy for you and give you the energy for you to show up in power. So your what can always be flexible, you know, depending on where you are in your life and what you're really passionate about at the moment, but your why will remain the same. And then the how is that collaboration that you were mentioned, you know, that interaction between other people that downloads and all that stuff that allows you to really go into the steps you need to take to make your business successful. But it all starts by you accepting, embracing, and choosing that that's going to be your purpose and you are committing to that. And the research bit is just incredible. The more you know, the more you will be able to have information. I always think about the what is a collaboration between you and the universe, right? It's that is what you know. And what the universe has to offer. And you find where those two overlap. This is usually what you should be doing right now. Okay, it's getting pretty deep there. I get that a lot. We're gonna be just already arrived at the universe. Hey, before that, I want to talk about the universe. So that's that's good. One thing I keep wondering about. So this is my thesis, right? This is this is how I want these nine billion brains to be interconnected in the in the Hive brand, right? Okay, we're already on that quite quite a bit into this development. But what I'm seeing on the other side is, so for a long time, these things, it's kind of works like like acting, right? So you go to LA, you you do crazy shit that you're really not proud of a couple of years later, but you just want to get in, right? You want to get in, you get this role, and they say, no, you don't have a you don't have a name. So we don't pay you anything. You're like, what do you mean? They said, yeah, you use it as a platform. And you're like, okay, whatever. But you're going to get some royalties, right? So if this show gets on syndicated TV, you might make, I don't know, $5,000 every month for the rest of your life. And it's a big F, right? If it's not a hit, then you won't get anything. But you can tell people, well, I played an important role. Yeah. And but this is how the world will look like, right? So there's a cash flow problem for this for my development. So we can talk about UVI, a lot of people talk about this. And then the other problem that I see a little bit is, when we talk about it in economy, it should be a resource allocation business, right? So money, productive capacity, labor, think about Karl Marx a little bit. It is actually not run like how Marx realized what what what came out of it. But what the early stage of Marxist analysis was, right? So how do we allocate this? And we do allocate it right now by price. So whoever pays me the most, this is what I'm going to do, right? But if I develop my own idea, and I know I can only monetize it in the future, maybe five years, maybe five months, I don't know, how does this resource allocation feedback loop actually work, right? Because there's not someone I can go to and say, oh, how much do you pay me for that per hour or per month? You can't nobody can give you price for this, right? So how do you how do you how do you balance this one word where you say, well, we feel this is really good for the for the universe, for the human society, but we can't price it right now. An economist or other people can't price it because this has a lot of potential. But right now it has zero cash flow. So how do we price these opportunities? And how do we also, once we say, oh, we're going to give you UBI, once, how do we stabilize this could be global UBI, right? How do we stabilize this that people are actually doing what we want them to do and not just slacking, right? Or maybe slacking is good. That's another assumption. So let's start with the whole I have this crazy idea, but the world is not ready for it right now. Or there is no pricing system about it right now. And I found, especially with African entrepreneurs, right? There is a lot of Bitcoin is actually the great example. It's a great example. So in many countries, Bitcoin is signed to get a more illustration around it. And, you know, after Elon Musk announced that it will be a set in Bitcoin payments and other companies are doing so Bitcoin is it become it became more of a mainstream type of thing. But for instance, in Mozambique, there is no financial law whatsoever around cryptocurrency in general. And I remember I was a personal entrepreneur that he has a lot of experience with Bitcoin. He has a whole background in financing. So he's like the best person I knew that could help you make the crypto investments. And he was like, there is just no legislation like at all. I don't even know how can I register my company to begin with to be legal and actually do be able so that I can actually be able to have like bigger clients like other corporations and other organizations. And the exercise I did with him is like, okay, if we shift your watch just a little bit, you're not necessarily a Bitcoin or cryptocurrency advisor right now. What can you do that still aligns with you what you value? And then you can start monetizing it right now. So we created this entire business model where he will have for courses basic, you know, around cryptocurrency. And actually he made contracts with some universities. So in their financial lecture, they will have him come in and give a lecture around, you know, cryptocurrencies and the new financial system that's coming up. So if you're flexible again on your what you can create pilots, prototypes that you can charge for and charge actually this and mine, depending on what you're doing, they will allow you to not only just be able to pay your rent right now and pay your bills right now, but start building those foundations from when your big dream is possible for the world. Does it make sense, their first part? Yes, I mean, yes, I mean, some businesses definitely have you can change the business model around and you come up with a different revenue stream. I think this is a great idea. But what usually happens is you get sucked into these big platform economies. And I'm always a little skeptical of the YouTube economy, the Instagram economy, whatever, because yes, you build your personal brand. And that's great to an extent. But I don't I think it's a weird shortcut of this. This is what I have in mind. It's a you're kind of you're not honest with your audience when you're an influencer, because they never know if this is real or you just do it for the money. So this is really weird, you destroy your brand once you once you go too far commercial. And the other problem is YouTube can always say, Oh, you did something bad. And then you got right, you've gone from Apple, you've gone from the you just gone. I mean, they can always switch you off. Now, they cancel you. It's literally the console culture when they cancel people all the time, right? If they don't make money with them, they cancel them. And I mean, so what they should be able to do to cancel them. But as the platform economies, I think all the upside is with the platform you wrong. Yeah, the average upside for you can still work out beautifully that these platforms have a place. But I feel for entrepreneurship, just becoming an Uber driver is not entrepreneurship. I mean, there is entrepreneurial qualities in it, right? But because Uber has so much more data than you can ever gather, even if you're the smartest driver in the whole network, this light years ahead of you. So it's, I want to move people a little bit out of these platforms and use them for what they award. But this is a really these platforms gain people's minds. And that's the problem. And people, it's people's problem because they're not smart enough to realize this, right? And I understand that way. But this, that you run with YouTube, you run against huge AI is you don't have chance, unless you have to write mindset. Yeah, that's for sure. And for me, that sort of speaks more around mindset again, and specific around long term mindset. Something that I found, especially with most African cultures, it's not something that is ingrained in our mindset, you know, like in Africa, children as are usually seen as wealth. And it's like, whatever you couldn't make it for yourself, your children will probably be able to write. And it's like a long reason, or there's a long list of reasons why most Africans think like that, because it's like, you know, if I survived a colonialism, if myself, I survived that all colonialism stuff, then my kids don't need to survive that, right? But then they need to fight a civil war. And then they're gonna solve the civil war. But then my grandchildren get to actually live a proper life, you know what I mean? So there is all this concept that the next generation will continue. That's how African things long term, they don't usually think long term around my life being long term, and all the stuff that I can do in long term. And with that, it comes that really quick win mindset. And honestly, I don't mind if you start driving Uber so that you can get to a point where you can do what you really love to do, right? And that's the point I believe you're trying to make. It's not, I mean, if you can use those platforms, it's great. The problem starts when you allow those platforms to use you. So you become a slave to whatever they want to say, right? I sell a lot of entrepreneurs like you don't work for Instagram. It's okay for you to take a day off, you know, it's okay to not be the algorithm every day. You don't work for Instagram, you work for yourself. And the way that I at least protected myself against being or feeling trapped with all those platforms in making sure that I have different themes of income that I know if I don't show up on Instagram, it's not a big deal. I can still live with that. So that's one. And two, it's I'm really clear around my purpose. So, and even like when I get like overwhelm of opportunities, it's very easy for me to say no to what doesn't really is aligned and to say yes to what really is aligned, even though it can be quite inconvenient. So if you start living from your purpose, again, going back to that bigger conversation, a lot of those, all of that noise, you are able to distinguish it and see what really fits for you or not. How does that answer your question, Dorsen? Yes, it does. But, you know, it's difficult. And I think it is, we're talking about this learning curve. And I know it goes back to this, you know, you become, you become a slave to the machine. That's the risk that we're talking about, right? So people think their phones and their iPads, they do things for that. They control them, but no, they control us. And you see this now 10 years, 15 years and they totally control us, because in the end, it's someone else on the other side of that app, right, that controls you. It's a psychologist often. So it's not really fair, these things, because there's massive amount of knowledge that works against you. But the only chance, and that's obviously the problem, the only chance to succeed in my model that I want is to be the person who knows the most about that specific problem. But that means you have to download so much knowledge that you spent 20 years just downloading 30 years of downloading knowledge. And then you generate one little line that makes the world a better place. I guess that's the only way to do it. But the risk is that you're just, you know, you're continuously being made addicted to these platforms is pretty high. And I think we are still on that, that, that transformational phase where people are not really aware what's going on with these platforms has changed a lot the last two years. I think we are in a different ballgame now. The, the, the might is easily, is easily adaptable to this. But that, that is obviously the risk that I feel. And, but, but the huge payoff is obviously that you can come out of a country, a region, a place where you don't have much to come in with the people around you besides social atmosphere. But this, you have this, this global, this global opportunity just waiting for you. That's what I'm trying to get at, right? How do we, how do we get people to see this for what it is or not? When I go back to my hometown, nobody sees the internet. They all do. They're two Facebook pages, right? And they don't, they don't care about the internet. I'm like, why on earth are you not seeing the opportunity? Like, what do you mean? The internet is just for watching Netflix. I'm like, Oh my God. Yeah. But this is how people think because their mind is not open and I can't open it, right? Yeah. Maybe I can help open it a little bit over time or maybe I can see, I can identify a trend that opens people. I think this is also, this is the problem in Africa. It's a very local tribal culture and the global opportunity is there, but it's not really evaluated properly. You know, you spoke so much wisdom in that piece, man. So one hand is this notion that entrepreneurs need to be good enough to be able to do something, right? Like I need to accumulate all the knowledge I can to be good enough to do it. And honestly, I'm going to call that BS. A lot of it, we say that it's because we don't want to offer a service that's less than someone deserves. But actually the main reason why we do that is because we feel, we don't feel confident enough over the knowledge that we have, and we don't see that as valuable as it is for other people. And we have the crazy stories. I mean, my story was around my accent. And for the longest of time, I was like, people are going to hate my accent. I'm going to speak with those American folks. You're going to be like, you sound weird. We don't want to work with you. But what I found is actually people, especially from North America and Europe in general, they actually love my accent. And I was like, how? Because for me, there was such a barrier that people wouldn't be able to understand me and stuff, but that wasn't true at all. So a lot of the times we think that we need to get the next course and the next training for us to start doing something. And again, that's not true. If you can start, and I guess it also align with lower entrepreneurs, they wanted to start big. They want to start with the office. They want to start, you know, being on social media and television and all that stuff. But if you're willing to start small and be, I'm just starting out my business, I'm figuring this out as I go, you start realizing that people are way more willing to support you and give you feedback and input for you to, you know, grow and develop as an entrepreneur. So that's one of the pieces that I feel you don't need to download eight hours. Yeah, by the way, I really agree with you. This is, but this is more motivational part. Yes, you need to get out of what you have and not wait to make it perfect. I fully agree with you. But in order to survive the economics in that marketplace that I have in mind, there's no room for two people who are doing the same thing. There's one person that's being chosen. And this is the person that does it for the least amount of money and the most elegant way. It might be the user interface. Like Airbnb, a lot of people say, well, we had VRBO 20 years earlier, what's special about Airbnb? Well, it's the user interface in the market, right? And now it's also obviously the network effects because they are the most popular. Can I challenge you that a lot of it comes from really is a scarcity mindset when we think that opportunities are limited. And if, you know, if I take a place, this is someone that someone needs to lose their place for me to take it, which it is true in some certain, you know, into a certain degree, you know, if I have $20, I can either pay you or the other guy for the same product that costs $20, which in part is true. But to me, the real issue here, the real problem is when we think that I cannot even start because I'm not good enough. I'm saying that you can start with what you have and you still, you still have a development plan for yourself, you know, the way you allow you to keep learning and keep growing. And I know it can be quite crazy, but you want to survive in business. And I guess that's your point. You want to survive in business forever. If you're only focused on being doing business as usual, you need to cater for business of tomorrow and doing those downloads and opening up for new experiences, how you get it. But two is if you acknowledge what makes you unique as an entrepreneur and you bring that to your business, you realize that there are people they will buy from you because it's you. And that's why you see like a lot of talking social media around focus on your niche, focus on your niche, focus on your niche. Because if you have a clear niche, a niche is not just your customer segment is your customer segment plus your offer plus what you do for them for your customer segment, you realize that, well, I can help entrepreneurs. They are starting out when they reach their five million mark. I'm not the guy to help them out. Then I need to send them to someone else. You know what I mean? So there is opportunity for almost everyone really. It's a matter of you understanding where do you fit in and that personal development and business development and growth really matters, but don't allow that to stop you from starting. Start and then learn what you need to learn on because it also usually say that people make. When you are starting out, you assume you might need all those different skills that when you are doing your business, you realize that people are not valuing all those stuff that you thought you know they will value. So there is that balance, that dance that I believe we should master as entrepreneurs. I agree. Obviously, you got to find a jumping off point and then you go to where you become that one singular solution, but what I think is important is all these things are not a zero sum game. So every single solution that helps us think about Google, how much more productive we are and we can do things we could never dream of without the original Google search engine. So every single one of this innovation doesn't have to be technical innovation necessarily. It can be any kind of innovation. Those are adding to the game and that's how it is. It's a completely non zero sum game. What that means is everyone who participates helps everyone make more money. That's the funny part of this economy. So as more people do this dance, as more people have a chance to make more money, what they are already doing right now, one day it will become outdated and then they have to jump to the next one. Let me just add there, Thorsten. I think as an entrepreneur, you should also ditch the belief that you have to do everything by yourself and I believe you are really bringing that point that be open to collaborate with other people. I have programs that sell for $10,000 and I don't do 100% of the work. I work with other people that can add value way better than I can and that specific unique combination that I have with them, it's so unique as you're mentioning that makes people to buy it. So you don't feel like you have to be the only one coming in with the innovation and with solutions. You can always find great partners. Yeah, absolutely. Let me take this a little further. So let's assume I work with an incubator, you work with a DLF, I work with an incubator here in the US, but it doesn't really matter, it can be location independent. How would you go about knowing what you know in a particular case in Africa and in Mozambique? But how would you go about saying, what we just talked about, how do we bring this into a reality? Obviously in a very, very small portion, but how do we create that mindset fostering kind of set of incentives? How do we go about will we describe something that happens with or without us? We're not needed, we're just seeing it happening, we're just spectators for this digital revolution. But if we want to make money from this conviction, how would you go about it? Maybe that's part of what IDLF already does. Yeah, it is part of what IDLF does, it's part of Orange Corner's incubator I manage does, and it's part of what my business does right now. So the first thing I say is it actually step zero will be get clarity around the stakeholders involved. You know, especially if you're talking about entrepreneurship, ecosystem, you have from academia, research, institutions, the government, entrepreneurs, banks, financial institutions, all those folks, you need to understand who they are first in the ecosystem you're trying to operate. Step number two is to identify the gaps within the ecosystem. And just to give you a context, the incubator we launched in Mozambique, Orange Corner, it already happened in South Africa, they had three business centers here. And part of my work was to get the experience they had tailored it to the Mozambican market and create something that the Mozambican market was needing. But we did it in a way that was so beautiful, I guess, that they invited us to train program managers from Angola, Sudan, to replicate that Orange Corner concept within their countries. And the way we did it wasn't by just showing them what we've done, but by giving them the framework that I'm giving you partially right now. So get clarity around the stakeholders, then the gap within the ecosystem. And then you have to decide why you're going to be your role. And that's key. Like your unique selling point, what can you bring to the table in that ecosystem that no one else can? Because you can identify three to four gaps and realize that you're actually only good at fixing half of one gap. So focus on that. And the third point will be get a local partner. I mean, I never heard of a program that was successful in a foreign country that was implemented by foreigners without having local people. Without having local people, they can even understand the context and can bring that level of empathy that only a local person means. And when I say local, it's not just, you know, Julio from Mozambique, it's like, if you're doing something with women, I'm not going to be your guy 100% because I'm a guy that is a level that they would never fully empathize with me. 50% only. At least, you know, like, and I can even push it to 70. I can put like to 70% to say like, you know what, I'm a guy so I can be your father, I can be your brother, I can be your son. So I can give you three perspectives. So 70%. But there is a point I won't make it. So have the local point in touch. Well, I'm asking also specifically, we have this huge bubble in early stage investing in many parts of the world, especially in the US. And you have tons of incubators, seed funds. And, you know, they grill you all day about what is your USP? What are you? Well, why should we invest in you? And that's all good, right? They should do that. That's perfect. And then you ask, you turn around the question, say, why would I want you guys to invest in my business? And they say, yeah, it's about the network effect. And I'm like, what are you talking about? Make it more and more concrete for me, right? And they say, well, we've been doing this for 10 years. I'm like, that's nice, right? But I've been doing this for 20 years, whatever. So this makes a difference. Maybe that's even a bad thing. Track record is not, as we say, the past results and predict the future results. What I'm trying to say is the investor USP. And in the end, it's a valuation to me, right? So you pay me the highest price. So you, oh my God, if you know how to sell a company to Sequoia, that's even better. A lot of your companies go IPO. That's also selling point. But in the end, the price is very, very few points for an incubator or a seed fund or any VC fund really has much of a USP to deliver beyond the valuation. Like, they want to make it sound differently. And we had Benjamin here on the podcast, and he was very, very, very outspoken about this. But if I keep thinking about this, in the end, valuation is really the most important part. You give me more money for my future project. That's great. And you're my guy, otherwise, you know, probably not. But that's weird, right? Because if you do this with startups, it's the opposite. It's strange. I mean, I have a confession. I run the incubator for two years, and now another colleague is running it because I'm running my business. And for the two years, we didn't offer any entrepreneur sort of cash or funding or cash flow or, you know, overdraft or anything like that. So I think a huge change of mindset is happening even within the US is realizing that sometimes too much money can actually cripple the business because it will just spend on stuff that doesn't really matter. And they don't really understand the concept. And what's worse is that that takes the chance of the entrepreneur to win the right to be in the market. And for me, that's when you reach a point where you are way past break even as an entrepreneur, and you understand that as is, you can actually survive off of that business. And you'd only need funding to accelerate your growth over something that has been already been validated, tested, and improved. I mean, that's the key for me when finance come through. But then investment in cash, it's not the only type of investment entrepreneurs need. Speaking from experience, you know, love entrepreneurs, especially in Africa, they don't have support from their families to drill the entrepreneurial journey. You know, being an entrepreneur is not something as desirable as it is in the US, as it is in Mozambique or in other African countries, especially for the older generations. So just having, you know, some sort of certification on accreditation or just association, I remember when I won that award that you mentioned, I had entrepreneurs coming with their families and be like, I told you, I know one of the 100 most influential young Africans, I'm doing something right. And just that changed the entire life, you know, family life situation, because now their parents are actually supporting them as entrepreneurs. So there is a lot of psychological support entrepreneurs need, you know, that validation and reassuring that they're doing the right thing by trying to change the world. That's one of them. There is a lot of things around access to markets. And I, I fight every day around, you know, the main issue in Africa is just access to markets and not even funding to begin with. But it's just really presenting an entrepreneur with a client that they get a chance to try their products, experiment, improve on them. So when they get to the next client, they won't be making the same mistake they were doing beforehand. And if you think about holistically about supporting entrepreneurs, realize that funding comes in, in a very specific moment to just break a cycle that entrepreneurship is at, but never as a, you know, an initiated of movement is an accelerator of breakthrough. If that makes sense. It's like technology, you know, makes it well. Yes, I fully fully understand where you're coming from. But the reality is a little bit, you know, think about different. Yeah. Think about, I have my children go to very good school here in Silicon Valley. And it's, it's just so much money spent on these kids. I mean, on average, for instance, New York state spends $30,000 a year on every student that's includes, you know, primary education, $30,000 per student is a massive amount of money that mostly goes into administration, whatever it actually goes to, nobody really knows. Nobody knows. Absolutely not needed. I mean, even 3000 is actually pretty high nowadays building costs. And I mean, there's a certain you have to have competitive salaries or understand there is a certain limit to this. What I'm trying to say is if you grow up in that environment where everything is already cared for, you don't strive, you don't improve, you don't, you don't, you don't find that edge that's necessary to an extent to come up with the best solution on the planet, right? We go back to this unique angle. And there is a space, there's enough space for 9 billion to come up with something that's unique and best on the planet. So 100 billion. It doesn't matter how many millions of people and AIs people have for this. But if you, if you, if you can't go to an elementary school in Ethiopia, right, you go to a little village in Ethiopia or in Mozambique, you know, you're basically all you have is your phone, but you have desperate conditions. But sometimes I feel maybe that's better because you have, you get this desperation, you get this hunger, literally often, unfortunately, but also this intellectual hunger. What do you have the same access? You have the same mobile phone, the same YouTube videos. You can watch the same MIT courses. Maybe that's actually better. That's what's going on in my mind. Now, maybe I'm crazy, you know, it's, it's maybe just me. But sometimes I feel maybe this should be better because in my own experience, and that's my own experience growing up in, in, you know, communist Eastern Germany, kind of like X, communist Mozambique, that definitely helped me. I feel it helped me this experience and I didn't have to go for 40 years. That would be a different story. But for five years of that experience, or a little bit of conscience consciousness, I mean, you know, I was a kid, obviously, but still it helped me a little bit to see, okay, this is an alternative reality and that could be really shit easy, but I get your stuff together. And I don't know, maybe that's better than being, okay, I'm already so rich and so great, but I hadn't done anything for it, right? But as a kid, you don't, you think everything, everything you do is because of you because you're so great. Yeah. So can I challenge that? And this was my personal belief for many years that entrepreneurs needed, actually, I believe that successful people needed struggle to drive. And while in part, you do need to go through a moment where you need to redefine who you are and how you want to show up, that doesn't necessarily need to be what people, what other people will consider struggle, right? Remember, everyone struggles with a different thing in a certain point of their life, regardless if it is financial struggle, mental struggle, emotional struggle, whatever the struggle it is. So that's the first point. And I found, and it's actually psychology's research around it. People show up today, not based on their past experience, but based on what they believe is possible around the future. And the example they give is like, you know, when a woman was going to a date, a date meant to, they can shave, you know, but they only shave because they're going to the day tomorrow, not because they had a date before. You know what I mean? So human beings, they're way more wired to show up today as they believe the future will be. So if you have entrepreneurs that are struggling in Mozambique or wherever in Southeast Asia or wherever in the world, if they don't have a belief that the future can be better, and if they can actually contribute or participate in the happening of their future, they're not going to change. And the same thing happens with people who are coming from more wealthy backgrounds. If their belief is that they're going to be always wealthy and they have, they don't need to do anything about it, they won't change, you know? And it's actually, it's more easy, more easily they will go to bankruptcy that they're going to keep the money in the family. And the whole study around generational wealth and stuff. But my point is, it's not about the past, it's about what you believe is possible in the future and your role in it. That's what really determines how we show up today. I think that's, I would say both things are very important. But I mean, I fully, I fully agree with that point that you're today's action, a really determined prediction for the near term future. A lot of people say this is the next two years, a difference for most people, but this is something that people feel like they have a handle on, right? And the next 20 years, people like, oh, that's too much going, too many variables outside. You never know what happens, you know, there's COVID, nobody really knows. It could have had a great impact or no impact. And it had, I'd say, a medium impact, but depending on what business you run, might have a devastating impact or really positive impact for you, right? It's just changed things around. When you, well, let's go, let's zoom out a little bit and go a little bit to the macro perspective. When you see countries that are being traded as great places for innovations to come out of, it's in Africa, we usually see immediately South Africa, Nigeria, Kenya. And then the list gets a little thinner. People are like, Tanzania was great. And there's a lot of stuff that probably more infrastructure investments that didn't go the way they were hoping. But then the list gets really thin. There isn't on everyone, everyone's mind is Ghana, which is certainly still on the list and there's Mozambique. But there's what, about 50 countries in Africa. Why is the list so thin? What do you think is that still the case? And do you think it will, what ranking will we see and what impact will we see over the next 10 years? I mean, the first thing I would really like people to get is that there is a lot of political interest when you went built those ranking, because usually it's the, you know, entrepreneurship index or, you know, quality of life in South Africa. That is a lot. And I mean a lot of political interest and I can give you even a Mozambican example. So 2019, actually 18 to 19, Mozambique went low and every index you can find around investment and entrepreneurship and business. Once they realized how much money they were losing over the investment they were having in the north of my country. Like from, like really, like from one day to the other, Mozambique went up on the ranks, but nothing changed. I promise you nothing changed. So that's one thing you should be aware of. Everyone's gaming the statistics. Everyone's gaming the statistics to play to their interests, right? Again, it's their conversation around people in position of power. They are not feeling powerful. And that's creating all those cascading effects in other people's life. That's one. And two is even if you just talk with your business friends or just friends in general, people will all you give, will always give you a perspective on what they fail. It's good or bad for you. Right? So in my example, the first time I heard about Dubai, it was one of my friends who told me like, you should never go to Dubai. It's like all plastic, all those buildings, like they're empty half of them. There's nothing for you there. So I went to Bahrain. I told the story at first, it's in the Middle East. And then I went to Dubai. I made so much amazing connections, so many amazing connections and actually spoke some good deals. And I actually found out there is a whole side of the Middle East that people don't show up in terms of research, as you mentioned, from Israel and stuff, you know, from environment and all this, the things that's not being communicated. So there is always this sort of like personal filter that people puts on when they give you recommendation about a place or if you should go or not go to a place. And I always say, if you can see by yourself, that's good. If you can't, you can Google on YouTube, you can see videos, you know, on how Mozambique looks like, how Tanzania looks like. And if you could make a connection with someone in that country and ask the person their perspective on it, at least we have more options to build your own opinion around the place. And it really doesn't matter if it is, you know, just a town next to yours or whatever, but just understand that and understand that everyone will give you feedback from where they are coming from and what is their best interest. And if you're willing to challenge that, I mean, there are amazing opportunities waiting for you, like 100%. You might need some work and I especially think with the case in Africa is that mainly the main language in the UN is English. So they always write English speaking countries first and then French and then Portuguese ones. So there is always that filter. But I mean, if you are in America or whatever, and you're willing to learn Portuguese or French, you know, what's stopping you? Yeah, there's nothing about the languages. Yeah, there's something. Yeah. I think there's a little more to this. I fully agree with you. There's certainly the view on the ground often differs. And this is just statistics. I'm with you. But I think there is once if we force ourselves to take a macro view, there is something too, too that how maybe it's an obvious it's certainly not always justified. But as the lightliness, for instance, how to move money in and out in South Africa is extremely easy, right? You will won't have any trouble. The currency exchange rate might change a little bit. That's obviously a risk every day. But then you go, I don't know, Malawi. And it's, it gets way more tricky to move certain amounts of money in and out. It's possible, certainly, but you've got to talk to some government officials to get big money in and out and they will want their cut. Is it 1%? Is it 10%? We will find out, right? And so it's, it's, it's getting, it's just getting harder. It adds additional layers of bureaucracy to it. Now you can choose a business where you don't have that problem, right? So it is just digital businesses. You don't have to move a ton of money around. And you can have your credit card processing done in Hong Kong or wherever, right? On Singapore. So you don't have that problem. But, and that's also the same, the same amount of, you know, infrastructure is often a big deal. Can you rely? It's basically a cheap resource you're using. We've been thinking of infrastructure as well, like God gave and ding. No, it's a cheap resource that someone else built and you can just use it for free, right? That's what roads basically are. And if they don't exist, then we'll only have to change your business model or build your own infrastructure. You notice with mining, mining corporations usually have, and they're used to building your own infrastructure. So they put in a train or they put in a road because otherwise they can't get it out. And that's already baked into the cake. So that this talk about infrastructure, I think it's a little self serving sometimes because a taxpayer paid for it. And why they did it? That's often not so clear, right? Because the government decided it's a good idea. Generally, it is, but it's not always a good idea to build huge infrastructure projects, right? Yeah, I'm not at all. We call them white elephants in Mozambique. Yes. You know, there's a big golf between what's needed and what's being done. And that's what that goes. There's this airport in Sri Lanka. I don't know if you've seen this. They built a second airport. But nobody wants to fly there because there's no people around. There's no roads leading there. So they have elephants from the jungle going on the runway. So it's literally white elephant project. And we have so many stories like that in Mozambique. Like full fledge, less top of the, you know, top of the line buildings that's like in the middle of nowhere. Yeah. Yeah, that's obviously, you're interesting. That's government bureaucracy. So, but what kind of the last thing I wanted to ask you, and maybe you're very bullish about this, is crowdfunding, right? So crowdfunding kind of gives us this idea that we had Darren Marble on and we talked about basically it's it, you're obviously blind to what's going on. And I think pioneer works a little bit like this too. Do it's not directly crowdfunded. It's a big pool of money that goes into it. So you only focus and that's that used to be the idea, right? So when we talk about the stereotypes and discounts and people saving, you say, well, we want to, your money goes to Nigeria and say, well, is it a donation? I said, no, no, no, it's a profit making money. And you're like, oh, how do I ever get that money out? So I assume I make a ton of money. So there's immediate hesitation for good reason, I feel why some of this is stereotyping. But some of this is real. I mean, it's tricky. So what crowdfunding offers is basically it gives you this, this bias free filter, you see the investment opportunity to either say thumbs up or down and you put a little bit of money to it because you like it emotionally or because you think this is trending or whatever reason you have to put $100 into this business. It could be a boon. But when I see crowdfunding that raise, well, noticeable about some money, it's we're back to them to mostly use businesses, right? Because again, there's certain early adopter advantages are very tricky to replicate in other locations. But do you think crowdfunding is kind of a bit of the solution to the problem, especially for most of it? Even to my own surprise, the answer is yes. So I actually have an example. So let's speak of speaking with another comedian. So the reason why I'm bringing all those committed examples that I've been working with them for the last few weeks, so I have them fresh in mind. But there is this comedian in Mozambique that started to make, so the news in Mozambique can be quite comic, really quite comic because they have different accents and people say stuff that really doesn't make sense. So he basically impersonates them on funny videos on YouTube and social media. And then one guy one time, I think he, I don't know what happened, but he said, like, stop just liking my videos, ask me for my npezza number so that you can send me money about it. And he started crowdfunding like that. And people really pay every time he posts something people pay. And if you stop to think about it, business models that operates with only fans, for instance, it's pretty much the same concept, but people pay you so that you show up something, right? It could be you making a fun video or something else. But I'm seeing more, especially with Africa, where it's easy to grow with economies of scale, especially if you go with digital content that, you know, you just produce it one and just share it. It's quite, it's quite an interesting finding opportunity. I'll say that the other side of the coin is that there is no real resolution for registered businesses to receive sponsorship. With those specific words, so you can change it as really payment for views. If you change that, you can receive that money legally. Again, there are a few, and I guess you're getting any stock. No, no, no, we don't get any stock. It's pretty much like our fund, you just give the money for, but you could buy, say, an Algerian startup that issues shares, that wouldn't be a problem, right? It's not something you're prohibited from as a consumer. No, no, that's not the US for the longest time. Now, that's not a problem. You can list your company in the, we'll call it the value exchange market. You can list your company, people can buy shares. That's not a problem. That's not a problem. I guess the main problem with early investment, it's not tailored to startups. Anything that's sort of everywhere, you know? The deadlines are not real. Startups usually like the support and access to markets, so they can pay back the money and stuff like that. Yeah. Well, yeah, the question is, you know, with crowdfunding, it's kind of in between, I make a donation, you know, Kiva. And on the other hand, it's, I put my money in a retirement fund that maybe also allocates a little bit to venture capital. You know, there's always like a mixed allocation. Well, with crowdfunding, you're somewhere in between, you're like, hmm, I just, I know I could lose this money, but maybe I make a lot of money back. And, but then you want like a legal system that at least a little bit enforces it. In the end, there's no full enforcement. Everybody knows that. So the company does make it, or if it gets drawn out in legal battles, then there's no profits to be harvested. That's just the way it is. But you kind of want that idea that you bought 0.11% of that company. So you get 0.11% when it goes up, you know, for instance, well, there's dilution, there's more to it. But I think that's what people want. And that's, it's more cultural thing, right, than a legal, you can, you can legally enforce it. But obviously, this is a little shaky. You want the culture to support this, you want the trust of a marketplace or an institution. Yeah. And my experience is that different African countries, they're sort of keeping up with all the financial changes differently. So again, in Mozambique, there's no relation around crowdfunding, even around social businesses. So we still get taxed as a regular business will do. So there are those things. And my understanding is that the government is sort of trying, is starting to listen to the startups and entrepreneurs that are even making some tests like small ones. But if I have to like bet, it's a long short, it's a long term shot. It's a long range shot with that. But there is always, there are ways that you can navigate to those maps, but you need to probably have the local, the local expertise to help you out in any African country, really. The same thing to Malawi, Zambia, Zimbabwe, Nigerian, even in Tunisia, even though it's white Africa, right? But it's still in there. You have the challenges. Yeah. Tunisia is very special. I actually like Tunisia a lot as a traveler. It's a great place. It's a great value. I think they have the cheapest airport taxes I've ever seen. It's like $2. And they get you anywhere in 60 miles radius. It's amazing. Tunisia is really amazing. And it's even like when we speak about Africa, it's so interesting how Southern Africa is different from Eastern Africa. It's different from Western Africa. It's different from Northern Africa. And it's still the same continent. It needs more exposure. You know, it needs more exposure on all levels, I feel. That's something that I guess it's not just Africa, right? It feels like the United States sort of rules communication in the planet and exposure in the planet. But again, there's a lot, I mean, you travel a lot, you know this, but there's a lot of beautiful and amazing stuff happening in Africa that you have no idea. Now, like local people with almost nothing doing so much for their community, do you just be like, how can the world don't know about this? Yeah. Well, in the end, it's, you know, the attention economy. Obviously, we have the same problem we talked about earlier. You have to find this unique niche and then you have to keep scaling it. And yes, it's a question of money. And that is, there's a part of capitalist power structure involved. Let's put it this way. But it's really when we talk about the informationalism to use that term that Alexander coined, it's really you, if you have sooner or later, and I think this is definitely true sooner or later, if you have something interesting enough, then it will get global scale. And it doesn't really matter where you start from. Yes, is it easy in English? Yes, it is easier in the US. But think about Gangnam style is an exception. But just think about it. The most watched video of all times, right? Comes in the language that nobody speaks. It's funny, but it looks like any other video out there. It's an earworm. Yes, but there's so many, and it just makes it right. So long term, I guess, this core innovation, whatever that innovation is, move in. And I think it's, I think it's a core power law of informationalism, that this is this holds true. Now obviously, cancel culture is a problem, but you can always go to another platform, right? And then you might get canceled again. But you can build your own platform, you know, the Twitter like platform. But it also speaks about you using more decentralized platforms, you know, like Telegram, WhatsApp, if you use WeChat from China as well, decentralized to an extent to a certain government, I guess, it's the best way to put it. But there's also something around you as an entrepreneur, being uncomfortable and showing up for all that visibility that you want. And like 50, no, 60% of the clients I work with, specifically on their exposure component, the main drop back for they don't have in the exposure is that they're not comfortable with what they might entice. There is a huge failure of success and failure of failure, you know, like I do put all this work and doesn't work out or what if this actually works out in my life change forever. So you should be able to take action because of all that fear. Yeah. Well, I feel all the games we play with each other, these social games, they're rigged, right? They're all rigged in someone's favor. You just need to find out are they rigged in your favor, potentially, or in someone else's favor. And then that's it. But that's true for any anything we do in life. If you think of life as a real world simulation, and everyone plays these roles, that we don't even know why you play it, you could just snap out of the role. But then people look at you crazy and say, No, no, no, I can't do it. They obviously know it's a role, but they don't want to get out of it. They're rigged in their favor. Like think about an airport gate agent, right? They have all the power to let you on the slide or not. And they really use that power. They make sure that they're a boss. And that's why they show up at work. They don't show up because you get paid whatever $5 an hour, $15 an hour. They want to exercise that power and get off on it, which is great, right? But you have to find in life this place for an airport agent, it's their way of finding a game that's rigged in their favor, at least emotionally. And you just have to find one that's rigged in your favor. It takes a while. And it's online the same problem as offline. It is. And if I can make a recommendation, a book that actually two books, they really change my perspective on systems. So the first one is Outliers by Malcolm Gladwell. I believe it's his name. And what really struck me is that he really said what you're saying, like, there is always a system, you need to figure it out how the system works. And then you get to choose, like, are you going to play with the system? Are you going to play the system? Or are you going to destroy the system completely? So that's super key. And the second book is The Good to Great from Jim Collins, and really speaks about you having that unique selling point, that unique value proposition. But it's not just what you are good at, it's also what the world needs and why you can be the best at doing, as you're mentioning, and doing that in a way that feels good for you and your team as you're growing your company. And, like, there's tons of research around. So I highly recommend you checking out these books if you haven't already. Yeah, I've read Outlier. I haven't read Jim Collins, right? That was the second book I mentioned. I gotta look that up. That sounds interesting. I'm running out of time. Thanks for coming on there. That was awesome. That was a great chat. Thanks for doing this. Thanks for taking the time. I love it. I love it. Thank you very much for having me. Absolutely. Looking forward to next time. Sure. Well, take it easy. Talk soon. Talk soon. Bye.

You may watch this episode on Youtube - #96 Alexander Bard (The philosophy of everything).

Alexander Bard is a musician, author, lecturer, artist, songwriter, music producer, political activist and philosopher.

Alexander is co-author of a number of books incl. Syntheism - Creating God in the Internet Age, The Futurica Trilogy and Digital Libido.

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Torsten Jacobi: Alexander, welcome to The Judgment Call broadcast. Thanks for coming. Really appreciate it. Thanks for taking the time. I know you're busy.

Alexander Bard: Well, thank you for having me.

Torsten Jacobi: Absolutely. Hey, so you are a 21st century philosopher, and I feel after reading two of your books, you wrote a couple of those over the last decades. I actually read Fruturica Trilogy and The Digital Lividone. I started with Sintiism. I feel they're very, very accessible. It's a philosophy that's relatively easy to read, which is, you know, not easy to find. And I feel like you've seen the future, and now you just write about it. So how did that happen? How did you make yourself so aware of the future?

Alexander Bard: Well, I should first of all honor my co writer, Jan Söderkvist. He's very experienced and extremely learned. And we're the same age. We met about a year before we started writing together, but I would say the accessibility in our work, and I'm glad if they're accessible. We do our utmost to make velocities as accessible as it possibly can be without losing any of the quality. We don't compromise on the quality. And I think Jan is the guy who really does a lot of the work in making the text in Swedish and German language as accessible as possible. But we don't compromise on the quality. And these are, of course, this is philosophy. I mean, the philosopher is the guy who tries to observe the world at the furthest possible distance. But if somebody's even further behind the philosopher trying to see the bigger picture, that's the philosopher. So the philosopher is always the guy who tries to look at the world with the biggest possible picture. And of course, then also the biggest time scale. And that's what we try to do as philosopher. And of course, we are humans ourselves and we write to humans. So we are discussing the human condition constantly, but from a very large degree.

Torsten Jacobi: Yeah, what I love about your books is that, you know, you go come from really first principles from very abstract principles, but you make really concrete predictions. And that's something that I admire with the records while he goes from very abstract predictions and come or thinking frame of thinking and he goes down to very specific predictions. So it becomes way more accessible. I think this is pretty rare. It's pretty awesome.

Alexander Bard: Yeah, our first three books were redistributed or actually relaunched as the Ferturica trilogy. And the term Ferturica actually is a new literary term. It literally means the mixture of philosophy and futurology. And when you think about if you're going to do futurology really deeply, you're also going to discuss things that do not yet exist. Because obviously, there are new things happening constantly in history. And since you have to speculate on that which does not exist yet, you are going philosophical because you're actually philosophical the same day you use a new term to describe something. So philosophers are when they're good, they're really good at just nailing something you have a sense of, but suddenly there's a word for it. And because you have that word, you can start discussing it. I give an example, in our first book, The Net of Crest, we discovered that there wasn't really a term for using resources in a sustainable way over time. So say you're trying to you have a certain resource here, and you don't want to exploit it because if you exploit the resource, you're basically exhausting it. What happens if you actually have in your mindset, you're set that you're going to use a resource, but you're going to refurbish it, you're going to replace it again, it's going to turn back against you can use it all over again. For example, you do that in agriculture, compared to mining and mining, you take the ore out, you take the metal out, and you throw in the garbage cans, where in farming you actually have to renew it because you have to use the same earth the next year. And there wasn't a word for that. So we started using the word exploitation as the opposite explanation. And then it became a standard term in sociology and anthropology. And now it's a widely used term. These kinds of things you want to do as a philosopher, you want to find these new words, where you actually nail something that people have already considered, but there isn't probably a possible term for it yet. And that's what we do as philosophers called the invention of concepts.

Torsten Jacobi: Yeah. Well, we often associate, at least in the current time, making up new boards with postmodernists, right? And they are also, that is kind of the prior generation of philosophers, right, the last 30, 40, 50 years. And they have been really interested in the human collaboration and about themes that are inside our human existence that are governing us, but they, we don't really know they're there, right? So they've been criticizing them for the longest time and trying to find out what is actually, why are we here? What are those themes of human interaction that are governing us? But none of us really consciously knows about them. From reading your books, I never really found out what is your thought on postmodernist. Do you think they were spot on or did they were right at that time frame or they are just wrong?

Alexander Bard: No, I mean, I mean, you make, you make your priorities and philosophers do too. And yeah, I read Baudrillard and Lyotard, they were great, certainly Derrida, they profound work that I find very useful. But a lot of the so called postmodernists were very obsessed with the symbolic. And this will live in a very medialized world to the media is very, very important to us. They would then go through, for example, history of literature and then describe the work of literature and have a critique on that. And they stayed very much in what's called the Symbolic Order. Now, what I found fascinating though, when I started working in the 1980s, this was like 20 years before I started writing, because you have to think through your philosophy properly first before you write it. And I'm 60 years old, and I debuted when I was 39, but I had a career in music industry before that. But most philosophers should actually have another career first of some kind. And I was an economist and a music producer. Then I became a philosopher because you have nothing to say when you're young. And the young philosophers are right, brilliantly when they're young, they have to regret it the entire life, even Heidegen and Wittgenstein regretted their works of their youth, their entire life. So it's a good thing to do like a monocon, just work hard and then wait and then publish everything in a few years. That's important. My career moves were very smart. But anyway, so what I did in the 1980s and 1990s, when I started exploring the idea, maybe I should be a philosopher after all, was to discover that the two major revolutions in human society in the 10th century, which were cosmology, we suddenly discovered that cosmos was huge, right? And also on the micro level, we discovered of course, philosophers didn't deal with this. A few of them did, of course, and some of them even inspired the quantum physicists and the cosmologists like Alfred Jordan. But the vast majority of philosophers were stuck in big academic institutions, most in France, Germany, the UK, and they were only about going through the texts and going through the hermeneutics of what we're finding in monocon. Whereas our entire worldview is rapidly changing, both in the cosmic level on the microsoft. And at the same time, the new technology came along, what we call the internet today, which is data talk for zeros and ones, and not only were there zeros and ones that could be processed at almost, you know, enormous speeds and make the world more intelligent itself, but also this was happening globally. And now we got the satellites everywhere, we got this one thing, like the world has now become one huge computer. And that's what the internet is. And nobody was writing about it. It's just like, it's just flabbergast, which is like, why aren't philosophers spending time in cosmology, quantum physics and digital, when these are the big new themes of our times, we're actually philosophers should come to be. So I was, I'm kind of, I don't, I'm not part of the postmodernist agenda at all. I found the overcoming of modernism also kind of dated and not too exciting. And I wasn't really interested. I agree with Bruno Latour. He, he wrote a little, a clever little book with a perfect chapter called We Were Never Moderns. And, and in a way, human beings have not changed at all. And over the last 10,000 years, we have not changed. If anything, we become more stupid, but our environment around us has changed. Environment is becoming increasingly technological, increasingly informative. And that's something we have to respond to. That means the human condition is changing. The proper philosophy for the 21st century deals with the time it's asked me to what it means to be human, and then rapidly changing aspect, what it means to be human within a highly technological environment.

Torsten Jacobi: Yeah, that's what I love about your books. You, you talk about the netocracy. So the, this emerging change, and it's been a class struggle, a power struggle that comes upon, I think they already see this when we, when you talk about that, is that the intention that goes to only very few accounts in this, in the very active nodes of this social network that we all are plugged into. And I've been criticizing this for a long time, is that, you know, 99.99% of the interaction of the engagement social media go to a very, very tiny amount of accounts. Everything else doesn't really exist out there. Those are the ones with the power, right? Those are the ones that are favored in the next 10 to 20 years.

Alexander Bard: Yeah, the telecom companies all sold us the light 30 years ago that the internet will be accessible for everybody, which it is to a certain extent. And then we somehow power will be dispersed equally for everybody. And of course, that was not the case. It wouldn't be the case. We have different types of talents and some people are just very, very sad to witness the media. And it's a lot about being able to network and collaborate. And that's why the old ideas, for example, being an atomic cell, being individual or dying, because that's no longer a functional strategy in the internet world. You have to be incredibly collaborative. And we shouldn't be too impressed with the things we've seen so far, because a lot of the things we've seen so far, for example, the influencers who came along in the 2010s, they will evaporate and disappear in no time at all, because they're actually using old ideas and old ideology, which is to promote myself at all times, very American, always be ready with a sales pitch. But they're actually doing an environment that eventually will kill all of them, because that's not what the internet is about. You have to sort of figure out how does the internet work? And over time, what will pay off? And over time, what will not pay off in this kind of environment? And we wrote the netocrats the first book 21 years ago, we basically said we use both marks and each and we started looking at the internet society and sort of the digital age and how this would be different from previous periods of history. And when we did that, we discovered that it's almost like being in Paris in 1789, knowing that the old paradigm are all out in Versailles having a party. And none of them can read or write or count. They're just old money. They're not even old money. They're just old titles, old entitled, right? And they have a party out there and they think the future is going to be precise. They're all locked up there, 40,000 people. Whereas in Paris, you have hundreds of thousands of people who can read, write, and count, and read tabloids, newspapers every day, and start to read encyclopedias, which are like works of everything that's ever could be imagined from A to Z, you know, the precursors to be completed today. Yeah, that's the story of this information, this knowledge. And of course, these people who live in the small departments of Paris thought that, what the heck, we should take over around the world. And the world should be run from cities and not from the countryside. It shouldn't be run by nobility. It should be run by a new bourgeoisie. And the bourgeoisie will then build factories. I mean, the factories, they will manufacture things that the world would love to buy. And this will cause world trade to explode. And of course, all the power should move to us. And this was key in the French Revolution. Of course, it got bloody and messy because people didn't know what they were doing. But when Napoleon came along, 11 years after the French Revolution, and he was not nobility, he was not a royal, he was not from the church, he was a poor, peasants guy, of course, like the lowest of the low in French society, but he was therefore he had a perspective of the whole new paradigm. He had everything to gain by playing himself to be the king of the new paradigm. And he was, and of course, Hegel and the other philosophers were incredibly inspired by what Napoleon achieved. He basically said that, yeah, Napoleon conquered Germany, and he plundered us and he burned us down. Doesn't matter. Napoleon is the shit. If you just look at Napoleon and then start constructing institutions, Napoleonic institutions, the way schools are universities, hospitals, political institutions, parties, corporations, companies, factories, all these institutions we created over the last hundred years are Napoleonic structures, because they built on the idea that all those involved in these structures can read, write, and count. And that unleashed enormous amounts of power and creativity in human society, put Europe at the center of the world map. It even made it possible for the Europeans to conquer and slaughter three other continents, which they did. You cannot deny that it was successful. And that success was down to the fact that what happened in Paris was interesting, whereas what happened in Versailles was dying. And ever since Versailles slowly died, and we're going to see the same thing now, because the internet, just at the printing press before, it's a revolution on such a massive scale, it completely changed how we communicate one another, how we intelligently try to foster value out of the different systems that we create, that it takes a whole new set of skills to be a netocrack in that case, to be successful in this environment. And we've only seen the beginning of that right now in the 20th century. People will then see more and more of it, but we'll see the old institutions of politics and academia and old industry fall apart. So it's going to get very messy before.

Torsten Jacobi: I find this really interesting. We see this power struggle right now playing out, right? So we have kind of a revolution in the US, and then the capital was taken for a moment, and then we don't know what actually goes on with our elections. So the trust in the institutions and in representative democracy is at all times low. Everybody sees that, but we, a lot of people just push it towards, well, this is part of this, this is a transitionary process, and we're going to go through this digitalization. But in the end, we'll come back to things that we've learned, like democracy and some of these core values will never end, core democracy and representative democracy as we developed it. But you, you draw a different outlook, right? That might look quite different from what you've known during the last 100 years or so.

Alexander Bard: Yeah. To begin with, my favorite philosopher is Hegel. And he was a German. So here we go. Yeah. Okay. What would Hegel say? Well, Hegel would say, why are you making the assumption that the political zone will be of equal size over time? Politics can either be more or less important in a society. And what we've seen over the last 30 years is that politics become less and less important, why it's become more and more entertaining and had more and more media attention. Now, the fact that something gets media attention, like this Biden Trump, Biden Trump, that's more like television. That's our television. It's basically a reality show. And I always remind people that what actually happened was that Donald Trump took his TV show to the White House for four years, Nancy Pelosi played the evil witch, and finally it was over four years later. And then a really lukewarm Biden show moved in or something. But if you look at politics in itself and its influence as a whole, the power of politics has been diminishing over the last 30 or 40 years. And it's doing so quite rapidly now. And that's exactly why nobody who really wants to be powerful moves into politics any longer. We lead politics to kind of mediocre people who are more interested in the attention of it. They see it as a reality TV show. And that's essential politics is also becoming. So the question is, then, if power is a constant in society, the power is leaving politics, it's not really interesting to spend any more time on trying to resuscitate politics because politics is over. It's more interesting where is power moving inside. And the term we use for that in our work is sensocracy. So if you think of like digital, like we have satellites now everywhere around the planet, and we have, you know, fast Wi Fi cables everywhere, and everything is getting connected with everything else on the planet, and it's moving towards zero cost as well. So everywhere on the planet connected with everywhere else, it's almost so cost efficient now, it's moving towards zero cost. That is the internet. The internet on the book, the global empire basically said, here's a planet called Earth. Here's a network. And then you put the network on the planet and we call it the global empire. Please note that the global empire we use the term is not a human empire. It's a logical empire. Technology has no reason to have any borders at all. Technology will work itself towards being one huge cloud covering the entire planet because that benefits technology. So that's where we'll end up. Now, if you see that worldview, then, okay, so for example, you might say that, oh, I'm going to go offline today. I'm going to turn off my laptop. I have too many Zoom meetings. I go off with the kids somewhere. I always tell the guys, well, I congratulate you on thinking you're going offline because if you go into public park, you will actually have sensors everywhere, follow whatever you do. Look at your eyes and they know who you are, know who your kids are. You can't go offline anymore. Now, if you can't go offline any longer, that itself is a system. And that system is called synsocracy. Sensors and sensors. Sensors that measure our senses, the interactive human senses and all that they call this synsocracy. Now, the people who are interested in this idea, of course, the Chinese, but the Chinese have decided they are going to create their version of the synsocracy and it's going to be a dictatorship. Rome by one guy at the top. Since 2014, the impingus implemented the Chinese version of the synsocracy. So it's about time the rest of us try to figure out an alternative to that, because we obviously don't want a dictatorship. And I'm not going to moralize against the dictatorship. I'm just going to say they're not very sustainable. They tend to be bloody over time. They tend to be very dysfunctional. They tend to be virus resistant leak out of laboratories when you have the dictatorship. So nobody wants to tell the dictator because he might be upset. To take six months for the virus news to reach his ears and therefore these societies are very vulnerable. We know that communist China today is vulnerable. We don't want it. Now the question is then what possibly could be a synsocracy that, for example, has installed power sharing as a function of the technology cell from day one? And these are questions that very few people have even started to think about. But once you start to think about things like politics and law and AI and economics and future relations of power, boom, you understand synsocracy is the shit. You need to deal with these things. You need to do so.

Torsten Jacobi: Yeah, I'm fully with you. I think this is really the future lies in its often, well, there's a couple of things that scare people. And I think that's when they stop thinking about this and kind of kind of get worried. One is that you also, and I think this goes along with all of this, you talk about the demise of the nation state. And what we're going to get in turn is a supranational major world government. And what we think of is that it's going to look somewhat Chinese, like the European units, tons of bureaucrats. And there's, you know, it's going to look like a COVID regime. Some bureaucrats, the sites that we all have to follow, there's really no wiggle room. It doesn't have to be that way. But a lot of people associate that immediately, I guess. And then I think a lot of people now what happened is because of this loss in institutions, they have gone very much in this anarcho liberal thinking frame. So anything that's coming from the government, any regulation is terrible. And we should have Bitcoin and it should be like an algorithm that basically rules us. That's what Bitcoin is, right? It's kind of, there's some people involved, there's some voting rights, but generally you're ruled by even more algorithms. And I think the European Union tried this, especially the Germans. And I don't think it's really successful. So humans want to be ruled by other humans. Ideally, they can select kind of the group, but, or maybe by them, by their own decision making only. But I feel like we go on one side very far off into, I don't want to be ruled by anyone. I basically want to live in my virtual forest. And on the other side, you have the super monocultural, strong bureaucratic UN idea. And that's what I feel people are worried about. What do you think is a good solution? 

Alexander Bard: Let's try to find the nectocrats that exist already and then look at their current behavior. And I will say the best place to find nectocrats today is to go to places like Panama, Dubai, and Singapore. Small countries, right? Tightly controlled. They were like gated communities to happen to small nation states. And when you talk a little bit about Singapore, yeah, it's kind of a, it's almost dictatorship, but really not. So you can speak your mind, but actually there's a small elite that controls and runs everything. But the way it works is that people move to Singapore from all over the world if they can't afford it. It's terribly expensive. Taxes are low, though. Social services are fantastic. Do you get the best value for money you could possibly have anywhere in the world? As long as you can pay the rent, Singapore is fantastic on the not only country, it also has an airport. You can fly anywhere in the world in 24 hours without any problems at all. Dubai is the same thing. That's why these places are located where they are. Now, when you talk to people, though, who live in Singapore are highly successful, they work tech, socially successful, they use the online world to their advantage. So they have all these, all these sort of, they sort of fill all the boxes for being netocrats. We wrote about 21 years ago when they weren't getting it. We have many netocrats there. So for example, we have to sit with an Iranian young woman in Dubai, and she has three kids and Nani's, and a great husband who works hard like her, and they have careers. And then I ask her, what is the shake of Dubai, which is actually a local dictatorship? What if the shake of Dubai doesn't give you what you want? Well, then I'm just going to pack everything, take my Nani, set everything with me, and move to Singapore in 10 hours, or somewhere else. And you're going to see more and more of these places like Singapore, Dubai, Panama is one of them. What's interesting with Europe is this also possible in Europe. You've got places like Slovenia, Estonia, small countries that, for example, I've been working with these countries. The working philosophy is trying to figure out what's the benefit of having a small country of only maximum two million people, what everybody knows, everybody else. There's just basically one major city and airport, and then maybe some of, you know, like, Slovenia has a fantastic scene in one end, and Mediterranean beaches in the other. I mean, what more could you ask for, right? Now, these small countries are the new model, I think, brought in this huge empire like China and America that's hard and hard to contain. They're more and more problematic, more and more internal conflict that could even tear them apart eventually. Because when it comes to technology, technology would be imperial. Technology would be global imperial. It doesn't owe more to the way human beings do. We have time borders. We go criminal no time at all. As soon as we live tribal size, so we can move to anything larger than tribal, our loyalties disappear in no time at all. And that's how we human beings operate. So these systems have to take that into account, and people can be tribal and give them tribe, give them clan, give them family, for God's sake, because otherwise they will not be mentally fit at all. So I'm all for the reinvention of these sort of forms of social gatherings that work for humans. But I would say when it comes to nation, that took a huge effort. The nation state was actually originally invented by the Hebrews and the Phoenicians through an alphabet they constructed 800 before Christ. Prior to that, the Persians invented the first proper empire that a power sharing installed. The US Constitution's origin are actually the Persian empire about 500 years before the Hebrews created the first nation state. So we know people have experimented reforms that are larger than tribe, they're called nations, they're called empires in the past, but it's been this way hard to make people collaborate in larger social gatherings unless you have technologies and law to reinforce those processes. That's what we should keep in mind. I would say today, I would go and ask these guys to move to places like Singapore and Dubai and talk to them and say, what do you want? Because what they want will be the demands of the new sort of nature of practice.

Torsten Jacobi: Yeah, I had Pablo on my friend Pablo a couple of episodes ago who lives in Dubai and I think he would absolutely agree with you. And at the end, I was jokingly saying, well, you love Dubai so much, right? So you're running for public office and he's like, well, what are you talking about? So even on a local level, there is no self government, it's all it's a dictatorship completely top down. I was really surprised by this because a lot of dictatorship allows a certain level of local governance. You can be not the mayor, but you can be your neighborhood director, so to speak, but those don't exist. And I thought, well, this is really odd, right? So it's as you said earlier, these dictatorships, even if they've been never lent dictatorships, that the risk goes higher and higher every year that they're just going to come crashing down. They're great if they are going the right way, but they are terrible if they're going the wrong way.

Alexander Bard: Yeah, but they're not corporations. You think corporations are dictatorships. In a corporation, you've got owners and the owners install a board and then before the board, somebody's responsible for running the corporation. It's run like an dictatorship. If it doesn't suit you, you can leave. And that is the model that I see a lot of these things have been run because you can run things quite efficiently that way. And of course, Singapore will have its peak and it will have its fall and Dubai will have its peak and will have its fall because all systems, all human systems always have rises and falls. And the question is then for how long can these sort of city states that would dominate the world now, how long will they last? And I think here's what benefit of being European rather than American at the moment. Europe has a long history of city states. It was called the Middle Ages, right? And actually, there was quite a good time in European history. So for example, Germany is both in a lot of different smaller city states, and it's tried to be an empire that mimics the French and the British and tried to create the German Empire in the 19th century for a brief while. But actually, I think all these models that are smaller, more decentralized actually work better now because the technologies will take care of all the other things. So all the benefits of scale you had when you built the nation states, certainly to build an empire, all these supposed benefits of scale, the European Union sort of built the idea that we could have benefits of scale equal with the United States of America. And therefore, the European Union was a good idea. But now it turns out there are no benefits of scale left. Actually, the most prosperous places on the planet are now small city states. And when it comes to example, the COVID 19 vaccination programs, who was the head? Israel? Who else? United Arab Emirates? Who else? Bahrain? Europe? Iceland? Yeah. Then you go again. You see, when it comes to something like that, quickly get the vaccine. So get people vaccinated and get the economy back to normal. These small city states were far better, even in China and America.

I think there's a lot of magic there. And a couple of episodes ago, I talked to Joshua about the nation states and he was very clear and he was like, well, these things were only there to rally the people, they motivated people and they were they were better than the empires because nobody could really attach themselves emotionally as much to an empire. So the nation states were better at this. And now this is not with the case anymore, because we are more and more rallying about what we see on Facebook. But if that's something that happens in Germany and Sweden or the US, it doesn't really matter anymore. Yeah, I would even add that Empire nation haven't really stood against each other. Two different alternatives and actually work very well together. So for example, why Christ was killed, we should be honest about it. But the Saddukite sect killed Christ, the ones who killed the Jewish sect, the Jewish sect. It was because Christ clearly, whoever was historical figure, Joshua Nasser, was really rebellious. As a result, the Hebrews who break loose from the Romans. And to them, that was ridiculous. The Hebrews were a special nation within the Roman Empire, highly privileged. Under Herodists, for example, prior to Christ's arrival, then uncertain, they were the central things because actually, they were trained to be the first nation ever within the Persian Empire. Just switch from Persian Empire to Roman Empire. And the way it works is that in an empire, you have a court language. And the court language, how you communicate on the top level of the entire empire, but then you can allow people on a lower level, have their own folk religions, folk languages, their own dialects and things. And that's how you run a good empire. That's the Roman Empire was run for hundreds of years. That's the Persian Empire, for example, thousands of years prior to that. That's what the best Chinese empire can run too. And that actually makes sense. So if you have a sort of court language that unifies the military, the priesthood, and the court, then you can have local cultures. And actually, the idea of universal human rights and freedom of speech and freedom of thought all originate in imperial structures. Because it's precise about having an imperial structure that if you can locally do what you want, but globally, we have to be coherent, then you're ready to create a different place where you can allow people to do that. And it's the same thing when it comes to freedom of speech, freedom of thought, freedom of religion or whatever, you still have to live within a Germany or a France where actually adhering to the nation's laws, it's an ultimate religion or a system, that's the court language equivalent, you can then allow for expression of smaller entities within that larger container. So if you look at empire that way, then we understand, okay, that's how we learned, for example, why freedom of thought, freedom of expression of good ideas, long term good ideas, they make society more sustainable, and also more creative, and therefore they're good ideas. So, but then nation, nation is essentially, we can all read and write the same language, and it requires a highly educated population until the printing press came along. And here's the beauty of it. What Christianity told the Europeans inherited from the Jewish religion was that you could have different layers of community. And it's that Christianity said there's a community called church, and there's another community called state. So pay to the emperor what you do to the emperor, that state structure, and then pay to the lord to be part of the church. And the beauty of doing that is that the Europeans could think at different levels. And what then happened was that when Christianity started falling apart after the printing press arrived, and people could read and write to begin with their own Bibles in their own local language, but they could also read and write in a local language or communicate in that language, we got the nation states of Europe. And so if you, for example, spoke the dialect of Hanover, or rather, you wrote the way you spoke in Hanover, you became a German eventually. If you wrote the way you spoke in Oxford, you became an Englishman. And that's where we got the nation states of Europe. They became one. Yeah, a lot of people bring forward that argument. I don't know if this is something you would refer to as our future. There is a, there is a super national but very limited government that's more resembling a dictatorship that's more strict. And then we have the US state system that's relatively independent. So we have a federation of global states that are relatively independent. It can't be cities or it can't be states, doesn't have to be a certain size of body. Everyone can kind of choose and might look similar to what we have or very different, but we have one super national government that's relatively strict and not as accessible as more like what we think of a dictatorship. So we, it has maybe run by a philosopher king. A lot of people think that. Yeah, I know, but I'm not, I'm not a play to this. I think it's a terrible, terrible, terrible idea. So no, rather I'm the kind of guy who hopes that Puerto Rico, despite having a totally ruined economy. Puerto Rico is one of the worst and greatest. It's just loans like mad. They've been borrowing money for decades to become dependent on America. Puerto Rico is one of the most expensive colonies ever. But if Puerto Rico does know how to make a decision, whether they go independent or try to become the 51st state of the United States, I do hope they go for the independent thing because they go for the independent thing. They have examples of Panama and Costa Rica and other countries in Latin America that have tempted a lot of really wealthy older marathons to move there, take the money with them, live the good life and have prospering economies because of it. So I think the city state model should actually depend. I'm just waiting for, I thought Brexit was fantastic. I hope Scotland leaves the UK next. But I think the more we have spin offs that make cultural sense because the Scottish today feel more Scottish than the field British. And that's because it's Edinburgh and Glasgow and a few other cities. And there's, there's a sense of community between this, between these people. It's a long history of Scotland being independent from England. And they basically discovered that, why are we going dependent? And then we make alliances with others who do not have to be English to be Ireland, more than anything, we make alliances with others when it suits us. Because making alliances in a sort of crypto digital environment moving into it will be much easier than the past. And you can have a lot of different alliances. But how those alliances affect one another can also be controlled by AI. And I would say that, no, I do not want any philosopher things in here at all, not at all. And certainly we don't want to solve the economy. That would be the price of paper that I think that the more we have decentralized smaller units and efficient technologies and all of the levels that operate, the better off we are. And when it comes to a shared law for all of humanity, we already have one. It's called the internet protocol. Well, people didn't realize what the internet protocol was installed in the 1980s, which is the formation of which everything else online is built. It actually became a global standard. And law is your standard. If you have the same law in one town or the next town, it's the same standard. So you can move from one town to the next. You know what the law is. You can pay according to the law. That's what we're talking about here. The internet protocol is already like a US constitution, but it's really a world constitution that has already been installed. And for good or bad, we have to live with it from now on because it's now getting fixed and built into crypto, built into AI, built into everything that would then connect with the online world. I think you just go with the price of Ethereum in the last couple of minutes, Alexander, because that's where the economic incentive and smart contracts come together with the self governance. One thing that you really focus on the books, and I think this is awesome, you really focus on the non zero or something. I think Adam Smith would love this. It's really where can we create those games that leave both participants in or whatever many participants are in that game better off at the end. Everyone wins on average, which is very different than a lot of these zero sum games that we see in modern day politics, where we take some subsidies from there and move it to somewhere else in the population. Nobody really wins in this stuff. So I think that's awesome. One thing that I found really interesting in your books is that you basically say, well, competition will be less and less interesting. What we really have to focus on is this global cooperation. Cooperation is a non zero sum game and everyone will be better off. I'm a little, I found this surprising because I feel when we, in the other chapter, when we look at enterprises these days, we all see an increasing amount of competition out there. Margins are shrinking everywhere. So it seems to me for entrepreneurs, the competition is actually much stronger than before. How should entrepreneurs react to that? No, but I love the Silk Road. And okay, and if you travel along the Silk Road and you learn the culture of like for thousands of years, people are traded and they ship the goods back and forth from Xi An in China all the way to Cairo and Egypt, all the major cities of the Middle Ages were along all the world. Now, fantastic. The biggest and most successful human construction ever in the Silk Road. When you walk into the bazaars along the Silk Road, you discover that there's this beautiful mix between collaboration and competition going on because the collaboration action is the framework itself. So it's called Membranix. So Membranix is that you got to prove that you're worthy of being a trader inside the bazaar. And that permit can be, you know, it can evaporate and be gone in no time at all if you don't behave according to the rules of that environment. That is collaborative. So the collaborative part is that we allow you in and you represent a certain community when you walk in here and you expect you bring the best possible goods from that community you want to trade. And then you can trade with all other communities and see what they can offer. And that's how you do the trading. And in the trading, you have the element of competition. So, oh, okay, we got Persian carpets here. We got five different types of Persian carpets. They're slightly different because they come from different parts of Persia. They're all Persian carpets. If you want a Persian carpet, look at all five and maybe the price ultimately decides what you think. So if you can get the same quality of low price, you probably go for the low price. There's a competitive element in trade that is fantastic, but it's always contained within a collaborative network. And once we understand this, but of course, yeah, that's what we have nation state governments and we have standards for trade. And of course, we've had central banks in the past to print money and the money was used for trade. And while we were trading, we were competitive. Now, this is all up in the air. It's up in the air because the old institutions that try to control these things using military force and therefore had a monopolies of these things called nation states. They're gone. They're no longer relevant with crypto and everything else. We've got to mind these things. But we still have to create these containers of collaboration because we have to trust the common side of collaboration. You will not really do a good deal at the end of the day anyway. You'll be at the bottom heap of all trading if you don't trust that your body you trade with. So that will criminal network. Criminal networks always end up at the bottom and take care of the shit that nobody else wants to do because you don't want to go to jail. That's what the criminal network is. As soon as you legalize criminal opportunities, you actually move those networks up to a higher level where they're actually facing more competition, which is why criminal networks often hate being legalized because actually they're not that good at what they do. Now, when you see these different layers, then you discover the beauty of collaboration and competition. But our message when we say that we should leave competition and go to collaboration in general today is because we're leaving a highly competitive paradigm behind us. The highly competitive paradigm was built on the cart and count and we called individualism and then we put it as an ideology inside capitalism and the nation state is the old structure we'll live with until now. It's now falling apart because of capital problems by the internet, even it's killing capital or making it rather secondary. It's killing the nation state structure, also making it secondary and of course killing individualism. Why? Because nobody follows somebody who goes online and just doesn't want shit talk about themselves all the time. It's called narcissism and we're sick of it. But we love to hear stories and getting involved with communities online that welcome us as participants within those communities. And that's what we talk about synthesis and synthesis practices that we will even have a spirituality that originally very much emphasized the collaborative aspect of humanity going forward. Yeah, well, I think I'm all the way with you with that. I just feel there is this amount of software businesses that are eating their way through all different industries right now. And what happens is it's generally a winner takes all game. So there is one company that is big enough has enough VC dollars and that's the one that takes over the world and that goes for any business you can automate that they are or anything where you have enough data or you have preexisting algorithms. I feel the competition is so strong that only one so wide creates a natural monopoly and then ten years later falls apart. These things, these cycles are getting quicker and quicker. But from my point of view, I feel like the competition is speeding up. And maybe you're saying the same thing. You're just you're saying that it's more if you collaborate. No, we've already seen that digital offers a very fast dialectical relationship between centralization and decentralization. So what happens is that when things become too decentralized, for example, Silicon Valley is basically over. Silicon Valley has peaked already. It's falling apart rapidly. People have been leaving the sun for this. Why? Because it became an unsustainable environment, incredibly expensive with a low quality of life. So why would you even say that? But also because that model, which was a higher and higher concentration towards everything. But at the end of the day, when Facebook started launching their own Tinder platform, nobody wanted to do Tinder on Facebook. Now, you're going to cruise for women or cruise for men or whatever and have sexual encounters with people. You don't want your grandmother to be in the same place. If Max Zuckerberg couldn't even figure that out, could he? No, he couldn't. That's why Facebook failed now so many times. Because they don't understand what it means to be human and how easy it actually is now in the app world to have different functions and things. I'll give you another example. I do a lot of online work just like you do. And I love it. I used to work with television, boring, like mad, and I'm not super difficult. Online is much nicer. But people then asked me, so are you two dependent on YouTube then in that case? YouTube is a massive force, right? And I say, no, not really. But the reason why I'm not dependent on YouTube is I know ready to date 11 year olds only send links to each other. And they don't even remember which platform they check. So if you become independent from platforms, that means you become independent as an agent, and you can then start networks with other people, and they don't even know either on which platform they're operating, meaning that platform loses power. If the platform starts squeezing you by forcing more ads into your communication, or trying to squeeze more money out of you, then you start to think, why am I still with that platform? Because my friends don't pair which platform I use, and the conditions of being there and getting worse is like being again a trader with a bazaar, so to quote, it's just like, if this bazaar is getting unfriendly and too expensive for me to be in, then probably the other traders are thinking the same way. Maybe there's another bazaar being built somewhere so I can go there. And that's exactly what's happened on a platform. So I don't believe that all the internet will end up being incredibly centralized. The Chinese are certainly trying that. I don't think it will work. I think it will be very decentralized because we can now, even with our own hard drives, break entire internet functions today. And a lot of smart kids and hackers do, where we're totally independent of big tech. I think it's kind of scared the general big tech when they discovered this sort of forcing their customers into being locked in in some kind of environment is no longer work. Personally, I stopped using Apple products. I hate Apple. I'd be absolutely honest with you because they try to force me to use their products, everything I did, and then charge me prices that were Louis Vuitton when they're really H&M. And I'm just like, no Apple, you're not that good. You're not worth that kind of money. I prefer to use cheap stuff instead and be more democratic and talk to people in a more informal, flatter way. And the way to do this is you use a lot of different technologies, a lot of different platforms, and then play them out against each other. Yeah, I mean, that's a very hopeful message. I hope you're right. I just feel we all build up our Facebook groups, right? And then Facebook said, oh, we don't show you posts anymore to that group because you don't have enough engagement. And there's Facebook pages out there with 80 million subscribers that you basically delivered to Facebook more, less directly. They obviously delivered some too. And then you get three likes and you get zero exposure. And you're like, whoops. So there's a lot of investment at me or mind investment and hopes that we had for these platforms that as you, I think you're absolutely right, that they have disappointed us and we can move on. But obviously it's another investment. So what I'm talking about. But isn't it interesting that during the Corona year, we spent more time online than ever before and probably spent more time online than we'll do for many years to come. We probably will go more physically connected. But we did. Facebook lost market share everywhere because they don't give us what we expect them to, but they, they're so high minded. They're so high minded about their own brilliance that we think, you know, irreplaceable. And this is a typical mistake as Peter Pan said. A typical mistake that tech entrepreneurs make. And I think that's because they happen to be successful and we're lucky to run into the right people at the right time. They're somehow irreplaceable ones. Now you also understand one very post Platonist philosophy because we tend to be more conservative. No, no, no, we, we don't want them. We don't want them. But one thing you and I have discussed is actually this question of attentionalism, which is probably one of the hardest concepts we launch in our books, although probably also moving forward. Yeah, you have to help me, you know, with the isms. I'm there's this good amount in the books and I'll get confused. So help us understand. Well, what do you guys mean by that? Okay, so again, back to the bazaars along the Silk Road. Most of the time you trade it. So you're bar to trade it. See, I gave you something, you gave me something back. The problem with that is that I always had to find the guy that exactly what I wanted. I had to have something that he wanted from me. So if you started trading three or four people together, there was a much greater chance you would get a non zero gain that all four traders would gain from it. It was a more sophisticated way to borrow. Then you got coins introduced to synthesis and started, wow, thousands can be involved. Now, of course, that way we come in with the printing press starting in Germany in 1450. Within 100 years, we started printing money. We printed money and put little, you know, metal things and stuff in them. So they couldn't easily be copied. But therefore they could be used as points. This made paper money made trade even more efficient and basically kickstarted something called capitalism. Now, the problem though is that capitalism eventually ended up with incredibly being just the hardest competition in the global scale. So we say you're looking at the 1960s, the Second World War has been over for about 20 years. More or less everybody except China yet is still then dragging to the global economy. And we China opening up 10 years later, the entire world is dragging to the global economy. Now that means paper money is floating everywhere. It's then becoming abstract money, which is digital money. And of course, now we just transfer sums here and there, and we have certification methods and bank IDs and whatever, and it works. But the problem is this. This is the 1960s, marketing and advertising has taken over become more important. Why? Because it's harder to reach people. And then we think because we send more money, more resources of marketing and advertising, we think it's more successful. We should rather look at it the other way around. If you work for a company and that company has to spend more money on something, it's because become weaker at that one thing, and it becomes harder to be successful at it. But the business trust of marketing advertisers became fiendish and difficult. And when you came to the 1980s, the whole idea that you would sell a product and tell people what the product was and what price it had, like you're done in bazaars with that model was gone, you started making up stories instead about products, about lifestyle and how to connect. So the Coca Cola button was no longer a drink with sugar and stuff in it. You purchased for a certain time. But rather, Coca Cola became a lifestyle, Miami South Beach, you were a fashion model, or you were a rock star or whatever. Snap your drink, Coca Cola. So this would, you would associate all these tech person, these sounds in Coca Cola, right? Now the digital came along. And it got even worse, even more difficult. Why? Because now it's a war over your eyeballs. It's a war over your eardrums. It's a war over your attention. And here comes the big problem. When you start starting attention historically, we human beings regard attention as something sacred. It's not profane. When we go to the market and buy and sell things, we can do that from Monday to Saturday. That's usually when we sort of trade stuff and we trade our own bodies and our work. It's our work and we get paid for it. But we do a lot of trade Monday to Saturday. But on Sunday, we expected to go to church and spend time with our family. Why? These are sacred activities. We don't make money from go to church. We don't make money from being part of the community. We don't make money from raising kids. We do it out of love. It is sacred to us, incredibly deeply human. And this is where the fight is now. And advertisers and marketing people are getting furious about trying to get into the sacred space that human beings have. And that's when we see mental breakdowns. No, exploding everywhere. We have all these ideas that maybe there's something eerily and weird about the world going on. It's just internet. All I'm saying is that digital makes it possible for marketing advertising people to pack your senses straight on. But digital also makes it possible for you to kill them when they do it. That's called spam filters with ad lockers. And I think historically, I think spam filters and ad lockers are two of the most important, most human democratic instruments ever invented. Because we hate spam these days. We hate sales pictures. We hate people that contact us without us even having permitted them to do so. We're furious with that. But the marketing and advertising people, they're getting more and more cynical. They're like Facebook, who employed thousands of psychologists to make us addicted. That's evil, right? And that's what tech people are doing now. They're evil. They're literally openly non human evil. They're worse than AI would ever be. Even AI would back off because AI would see this does not lead to any constructive results. And I began to say, I've got a one liner abuse to feed firms to spray. But I'm saying that we will probably in the future regard the abolition of advertising as even more important to us in human history and the abolition of slavery. Because that's how much we hate advertising. That means capitalism is dead as we knew it. Capitalism is dead. Capitalism can no longer go. Capitalism is completely dependent on investing money into an operation and forcing yourself onto people like a rapist through marketing and everything. That's capitalism. So this is action. This means there's a huge return to sacredness, a huge return to religion. People are becoming more spiritual. They have to come back in here because we need to recreate the sacred space, the private space around ourselves. There isn't profane and isn't public. And that's what we sort of like Christ did when he walked in the temple, one of the great things he was there. He walked in the through all the money guys out of the temple said, it's none of your business being here. It's not that he was going to be wrong. We traded money. It's just that it's not our religion because religion is sacred. And I think these are the really interesting topics today. Yeah, I think that's what I really want to talk about too. I'm just want to say I'm not as harsh with marketing, but what I wanted to ask you is, we've lost that and that's a recurring theme on the podcast. So I keep asking people, why did we lose all this productivity growth that we used to take for granted? And we had in the 60s and 70s and then it somehow stopped. And then we know Peter Thiele's quipping. We wanted a flying plane, flying cars. And what we got is actually 140 tweets characters in a tweet. So something clearly went wrong. And what I associate and that's what I'm trying to get to what I associated that with is that we are not daring enough. That's why we have negative interest rates. Why are we not daring enough? Well, because this motivation that we used to have from God that we used to have maybe from this individualism from this card, it's gone. We are this, we are this just and head on the head on his enjoying being since 1968. That's completely just following the limb big system pressures and everything else is, you know, we don't want to go to the moon. We barely want to go to Mars. We don't, these mega projects, this historic project of where humanity wants to be, they're all gone. I don't see them anymore. If I see them, they get canned, you know, two years later. Peter Thiele is right about that his boyish dreams will not happen, but he's wrong about this actually would be interesting today. Because going to the moon, once we got to the moon in 1967, yeah, that was news for one day. If it would go to Mars, that'd be news for one day. Then we, yeah, there are some humans on Mars or crazy nuts over there. It's no better than Siberia anyway. We might as well stay in Siberia. Now, I'm an economist myself. I would say that you can't measure productivity growth the way you measure GDP growth. Actually, the way you measure GDP growth, GDP growth, we get a big pandemic COVID 19. It undeniably is a huge cost of mankind. But because people work harder and work more to save lives, because the disease is stoning the system, you get GDP growth. At the end of the day, solving problems was interesting. But if the problem doesn't even occur, then you have a lower productivity growth, because you actually solve the problem once and for all, the problem will not return to haunt you. A lot of productivity growth comes from returning to a problem that's never solved. It's called subscription services. That's why medical companies hate accidents, because they actually solve the problem. They prefer to put down pills for years and years and years and never solve the problem, because that's how they make money. Here's to say to men as well, watch out when you argue with a woman, because you probably don't want to solve the problem. You probably want to milk the problem for years to come. She can do that. She gets away with a lot of fun. But watch out for how systems actually are solving their problems. And when you solve a problem, that leads to negative economic growth, because it wants to come on. It's no longer a measure. I would say, what we're missing out, what is deflation and repression in the economy at the moment, are two reasons. One of them is the technology itself solves so many problems that weren't solved before and therefore creates new markets for those things to be exposed to. They don't necessarily resolve in growth, because you solve the problem that you've added a new activity. And actually, the new activity is more efficient than the old activity was, which means you get lower growth. So you've got to watch out when you measure these things. And the other thing that people don't understand with deflation or repression is that deflation present, yes, it's a sign that we're not spending enough of the money that we're printing. And that will probably lead to deflation eventually. But the current deflation or repression also because money cannot solve the problems we have. You cannot throw more money onto marketing and advertising. You think you're going to get through. You're only going to be an even bigger, even worse rate, if you do. And that's what corporations usually do when they get more money. They're more like, yeah, let's spend it on more marketing, more advertising. And then their competitors do the same. And it's a race against death. They spend more and more and more on marketing and advertising, rather than spending more and more making an even better product. And then trust the algorithms, which is what they should do. I think marketing and advertising will do the job for them. Once you make the switch, though, that the payback on marketing and advertising falls towards zero. I think, for example, woke is an example of that at the moment. You already have corporate neutrality as a new term in America. It took about two years to get there. Meaning the people who have discovered that woke is only costing you money. It's a terrible mistake by marketing people to go political with the corporation. So instead, by going for corporate neutrality, like Coinbase, based on the most attractive technology companies in the world today because of that, if you go towards corporate neutrality and kill woke, you're actually saying, we're going to kill all the marketing advertising. We're going to throw it out the door. We're going to make the best possible product in the world, after which the algorithms would point to us anyway without spending a single penny. That is the future of technology. And that is when you will see a slight inflation or pressure come back in and higher productivity growth in general, because of course, then innovation can really start. That's what people see. So we're looking at, say, towards the 2030s and 20s. Yeah. So you're saying that really it is about the core innovation. And most startups these days are about 80% marketing spend and then 10% R&D and then 10% whatever, raising funds. So they have basically a big marketing organization. Very few of them actually do any basic research or find that necessary or more than in the marketplace. Like VCs don't really want them to be invested in R&D because they can't really see the ROI right away. And Google and Facebook have fooled all these companies to believe that we can now target the ad so it fits perfectly and doesn't irritate people and gets to the person who would really like to see the ad. Okay. That's like a cynical sociopathic rapist telling you that, oh, you failed to rape this woman yesterday because you were too close. You know what? We're going to help you really rape the right woman. So we're going to look at the map and find exactly the woman who you can undisturbedly rape for as long as you like. That's what they're promising you. It's not any better. It's capitalism at its worst because it's the end of the world. The only thing that can overcome this predicament with both were tenacilism. And gladly, I see the crypto companies are doing precisely that. They learned from the mistakes the big pick made and they've learned that we don't ever want to rape anybody. We don't even want to seduce anybody. We don't ever want to have any sales pitches because that in itself looks like we're just going to put our product out there and if it works, it will work. I'll give you a perfect example. Where in Germany are you located at the moment? Oh, I'm in Greece. You're in Greece? Great. You're in Athens, right? Athens has Google Maps. If you look at Google Maps, you've got restaurants. And probably by now, people use Google Maps so much when they go out in Athens. Any restaurant with a grade of lower than 3.5 probably dead by now. It might even be that any restaurant with lower than 4.0 is dead by now because people like to go to good restaurants. And they could get good rates even if they're only decent if they're cheap. People can say, yeah, it's infotainment value, meaning that I can go to cheap restaurants and get decent food and I can go to decently priced restaurants and get good food and I will give them best grades. And then all the other restaurants are gone. Now, if that's the case, if nobody goes to restaurants in longer grays unless they check Google Maps first, that means you could start a restaurant and you invite only five guests. And you give them absolutely top experience. Best dining experience they have at. And you give them a nice bill afterwards and they pay for the bill. And you have five guys who walk out the door and give you five out of five Google Maps. That means your restaurant's going to apply point to all the next day. You're going to have a long queue outside your restaurant within a week. You're going to serve people the next summer, every day packed because you created that initial first fantastic experience for five people without making a single ad anywhere. That's how you use algorithms if you're clever. And if you figure that out, then you've figured out quite a lot these days and you stop spending on marketing advertising, get out of that game and probably leave or sign, go to the streets of Paris, immerse yourself in the new and in doing business and being productive in the new environments. Rather than think that the older environments are ever going to come back. Advertising, as far as I'm concerned, is dead and over. Yeah, so you would consider, you think advertising is a misdirection of what you've been taking and that's where we see this low productivity growth. We don't really invent anything. It's kind of like tobacco, right? It makes us addictive to something that is wrong. And if you get rid of it, we go back to the innovation then productivity growth comes back. Let's assume we measure it correctly. I know this is a big debate, but in the end, one thing that's always wonderful to measure, maybe not so wonderful in the core sense, but it's worse. In worse, you see who's more productive. As terrible as a war is, but the war is won by a more productive nation most of the time, 90% of the time. And it's never about which weapons you have. It's the ones you developed during the war and can afford. Let's put it this way. Yeah, you can add ideologies that's clever on top of that. For example, when the person invented that, we're going to conquer Babylon. We're not going to boil the children oil, but actually going to invite them to co rule the empire with us. I was like 533 before Christ. One of the most dramatic ideas ever, because then the person has invested less than an army that actually become more victorious. So ideologies can add value to that. Who do you try to deal with innovation? Yeah, yeah, that's a great segue to religion. I want to talk to you about that because it's such a big part of what you would you would you investigate in the trilogy. And what you really exemplify, and I've never read that anywhere else, it's really how we look into Abrahamic religions as a way that we felt we are bound to the thought process of Abrahamic religions and then discard change that. We thought about the individual, right? And now we in this third process, or maybe it's much longer numbers than this. And in this process, now we really we've lost our way. And the only way out is to become like Nietzsche, right? To find that ubermensch to to define ourselves and define our values in this crazy, more crazy world that looks more like quantum mechanics that we now discover. That seems to be a bit of the thesis, probably misquoted to you 100%. But that's what I get. I would say that Nietzsche's cause of the death of God today would call the death of a paradigm. It was a certain god that died. It was the Protestant god that died in Europe. And he saw something rise after that because of a new paradigm that people could read and write, the Bible was no longer than the literature people had. And therefore, they would have a different world. So I'd say the death of a paradigm is what I'm interested in on the rise of a new paradigm that hopefully rises quickly enough to take over. Because if you don't have a new paradigm rising over an old one dying, you get the problems. That's what you historically get. So let's see we're heading in. I would say you can't even talk about the last world. One of the things I knew when I started working in the 1980s was that I can't really buy this mythology that all started with the Greeks and the Greeks were somehow European, because the Greeks saw themselves as like protection against barbarians to the north of a civilized world where they were very minor enough more. They saw the Egyptians, the Babylonians, the Persians and the Indians to civilize. That was the world. Middle East was the world. It was the West, the original West. So I don't buy into that. I converted the Zoroastrianism myself. I started dollies and Buddhism for years. I learned Sanskrit and Vesta, some Mandarin, so I could study Chinese, Indian scriptures, the original versions. And I discovered that it's just where actually thousands of years older in the Europe. And I also think the Greek Hebrew connection was constructed in the 19th century by German and French colors. Really, it is the Hebrew Persian connection that is the origin of the West. And therefore, we can also include Islam into that, but not only the Abrahamic faith, but also the pre Abrahamic faiths and pagan cultures and all the other things. Now, on top of that, we created other religions. You always have military religions and you have priestly religions that aren't the same ones as the Falken religions. And the priestly religions, in our sight, it is academia. The military religions of our society, they're the state, the nation state, and tidy between those are the markets. These are religious institutions. They both have certain beliefs that certain things are good for humanity, at least they're good for the institutions themselves and nothing else. And therefore, these things will operate in certain ways. And these are built starting in Venice in the 14th century forward, printing press held it along with a paper money and they'd all exploded. And then we got Western capitalism. But none of this is granted in history that it will stay around forever. And if you if you fundamentally change the very conditions for that, for example, if you completely prevent capitalism from being able to communicate to people the way it has been doing for the last 100 years, it's probably not even capitalism. Because if you completely destroy the communicated process of capitalism, which we are doing at the moment, then it's no longer meaningful to discuss capitalism. And it's much more meaningful to discuss what if we look at the world from the intentional perspective, like, what is it that I give my attention to? Where do I project infotainment value to something? Does this inform me or does it entertain me? Hopefully both. That's where I will keep my eyeballs and my eardrums, my focus and also get fed. And you know, have all my needs taken care of. And that's what algorithms that's a good algorithm to build exactly in that direction. Give us that advantage. And that's why sort of an algorithmic society, as we call it, is what society makes for itself. And here comes the important part. That makes it enormously important to train people to think that certain things are sacred, not that things are perfect. Sacred is that you will never sell. And private and public, meaning that that which you offer on Instagram and the pictures of your kids and all those things you put out there, without plundering your soul completely and emptying it, all content, that's public, right? What people are now discovering is they need to create much larger private zones or otherwise they could sell. And I'm really interested in these philosophical questions, you know, what does it mean to be private? What does it mean to be sacred in the in the sort of world we're moving into now? And we will for sure know that everybody wants access for a sacred space. Everybody wants to go because the only way to get our attention is to have access to our own sacred space. But we don't want the traders to be in there at all. Yeah, one thing that's that's really fascinating. One thing that I immediately always think of, and that might not be something you've looked into, but you looked into everything, that's that's what I'm discovering. You have the answer to all these these problems. Very often, I think they're very, very profound the way you thought about them. One thing that I always feel comes to religion is this mandate to improve yourself that, you know, it's kind of this error correction to our limbic system. We have this limbic system, it drove us forward, it's kind of like our ant and we are an animal. But then the religion comes on top of it creates more trust and kind of error correct certain behaviors that are just too short term because we want to have a long term positive outcome. Sometimes they go along or often they go along. Sometimes they don't. And that's what we use religion for. And that's kind of when we are talking about algorithms now, when I think this is also the new way we talk about this, this religious instinct, it's all over the place like everything is possible, right? So everything is possible and not possible at the same time. So what I'm, I think what religion gave us is to give us this mandate, okay, this is a way how you should develop because it makes you and the society around you more successful. Now that seems to be harder to find to get to this point, because we can't just open up the Bible, we can. I think the utility is still there, but there is a cultural disincentive to do this and be like, okay, you have to find your own way. And I don't think a lot of people have the ability to do this. I mean, I feel like I can get there one day, but by that time, I'm probably dead. So I don't get this, this, I get the wisdom maybe when I read the Bible, but I don't get the mandate because I don't behave like the Bible. No, I don't think the Bible works any longer. And this is why I think Christianity is over done with, but I'm very pro religion. I think we need new religion, or we have to go to older religions that are more sustainable and are more suitable for the kind of world you live in now. So I don't look for legists that preach supernatural phenomena in our life after death or anything like that. We don't believe in it long, but luckily there are legists that even older than Christianity never did that. They didn't take the shortcuts. They didn't do the quick fix thing that Christianity did. It made Christianity popular. And both Christianity and Islam suffer from their popularity. They suffer from the fact that there are a lot of shortcuts and quick fixes about this storytelling that actually is no longer credible. But on the other hand, if you talk to somebody today, the class, probably the class, there is secular atheists and they're over religion, overdone with it. You essentially hear a very self obsessed cynical nihilist talking, right? And why would you trust a cynical nihilist? The problem is if you throw religion out the door, you haven't really understood what religion does to you and the way it's supposed to shape you and domesticate and train you for your next step in your life. So in tribal religion, how are we to be elders? Right? The old matriarch and the old patriarch, they have an ultimate power. And their job is to train you from being a child into being an adolescent and then from adolescence to being a proper young adult. And then from a young adult into slightly older adult and then become a parent and then take responsibility for others and therefore receive the blessing of the community, having purpose and meaning in your life. And when you think of it this way, I mean, I've worked with tribes all over the world for years, right? I don't see any of these modern predicaments with mass depression and has lost the lost sense of purpose and meaning. I've never seen that in the Amazon. I just never seen it. And I'm not romantic about the crimes. Hey, they buy t shirts and jeans as soon as they can and they go online and get wifi and start playing funny games as soon as they do. So I'm not saying we should go back in their life, but I say we should understand what religion is. Now, religion though, it's two different types of religion that we developed over time. The first one is the original religion which is called nomadology. This is basically the religion of the nomadic tribe. It constantly has to be on the move. It has to be on the move. So all change is just to move from one spot to the next to survive. That's all change. Everything else is circular. Everything returns to the same. There are seasons, there are days and nights and everything returns to the same. This is called the nomadological mindset. Hinduism is a perfect example of a completely nomadological religion. And that has been very hard for India to be, for example, the explorative industrial superpower on a par with America and Europe. They're getting around that now by not being Hindus any longer because according to Hinduism, everything should remain the same. You should stay within your account. You should not leave anything, which is very nomadological. What happened about 4,000 years ago, starting in Persia, this is the origin of the West dimension that comes with Persians through Hebrews and onto the Greeks. And that comes to Hellenism that comes to the West dimension, comes the idea that a dramatic change can happen in history that changes things forever. And thereby changes the rules. And of course, this idea occurred for the first time when we permanently settled. So your mind is just like, okay, we're not going to move tomorrow. I don't have to focus my entire mind on the change of territory and move from one place to the next to survive. I can actually stay in the same place. I can trade in this place. I can farm. I can tame and investigate animals. I can stay here. What am I going to do with my boiling head in that case? Ideas, right? So we move from genetics to memetics and we move towards exploration. This is where we get the first innovations in history. The first proper innovations that changes everything forever. And the idea that the sun can live in a better world than the father, is to not be the sore astronauts who started preaching first. Judaism, Christianity, Islam, the eventological religions, even the sort of scientists that we have to deal with the belief that you can go to Mars with them or Moscow, whatever you like. All of these ideas are eventological faiths. And I think that's important. I think what the West can contribute in dialogue with China, Japan, and India these is that we got on to the eventological pattern 4,000 years ago. And that was actually a really good idea. Now we need even more eventologies today to make the planet make it more sustainable and resilient so that future generations can live here. But why would we do that? That's a perfect, perfect example of the next growth sector, the next productivity growth comes within making the container more sustainable. That's why I'm an ecotopian, not environmentalist. I think technology is the solution to the current problems that environmentalism is crossing. Well, I think the same way, exactly the same way. And I think the same about climate change. When you, and I love this in the book, you talked about common, this is something I personally experienced. And you said, well, this is basically just a Christian cult. So it kind of takes values out of Christianity, takes them to an extreme, then makes itself God, which obviously Christianity is has always has this problem with that Dollar Tree. There are saints everywhere. It's not as strict as Islam or for Judaism. But we still have these cults being generated. A lot of people think of vocism as one of the similar cult Christian cult that comes out of it and goes similar ways as communism. You can argue about that. Do you feel there is something right now that there is a bit of new religion that will fulfill that, right? This QAnon. A lot of people think about that. What do you feel comes closest enough to this new religion that takes a lot of these learnings and maybe gives us this new direction that's maybe positive you never know before, actually people. Well, I'm interested in peer, I'm interested in peer religious. I'm interested in religion in the sense that we can have a dialogue with the Chinese and maybe, and great competitive alternatives to what they're dreaming about doing with solosocracy. But that's really imperialism. That's what philosophy really is. So you put that on the philosophical like, okay, what is the future of whatever replaces politics? What are the places I can give you? I want to give you all of these different institutions, the global institutions that are tangible over time, or are they just anarchists or pluralists? We try to figure that out. That's a map you're trying to build. Meanwhile, the vast majority of people will fall straight into what we call the golden age of sects and cults. We wrote a paper in 2012 that it is not about this. And the golden age of sects and cults means that the worse these sects and cults are, the more horrific they are, the weirder they are, the stranger they are, probably the more they will attract. But unfortunately, human beings have lost it completely. It will only go after even more ambivalents. We're trying to look for dangers everywhere. So what we're looking for, phenomenologically, we're observing and taking in the world. We're looking for what is the weirdest thing out possibly. And if it's weird, we start to think it's true these things. But the word is getting subserv to most of us. Actually, the weirdest proposal we can find looks like the most credible one around. And this is what we meant. This was nine years ago, and we're seeing it explode. Now cannot know these cults. There'll be over no time at all. Occupy most of what is over no time too. I mean, you can't do anything any longer and get people to walk out of the streets spontaneously, demonstrating as something for three days. You know, it's like Occupy Wall Street is stating Wall Street for three days. They didn't even know the Wall Street guys were no longer in Wall Street. I hadn't even done the research. And after three days, the financiers came to Wall Street to meet them and sold them tshirts and said, I was there. Yeah, be the skip. So they were great. They were including the capitalist system that we're supposed to be demonstrating at because there were two nights in a row. And I'm not sure if you can understand what's going on. But that's what I see a lot of these days. I see a lot of these stories. So we will have a lot of that in Europe this summer. I'm sure about that. I think we created an enormous pressure concern with the COVID lockdown. And hey, people are going where they're aware of it. But we're saying this in the book is for the video. We're saying that we've got to see more and more of this weirdness and anxiety. Because we don't have a central ordering place that I'm there with and then create more credible stories. It's two layers. It's the imperial layers of monotheism originally was the other for a public level is politics. But in Catholic faith, you have God is an abstract concept. There's three aspects of God. But actually, you'll go and worship the Virgin Mary or some saints anyway, because you can relate to them, you can't relate to God. It's the same thing for people today. People can only relate to other people. That's the vast majority of people can do that. The very few people can relate to the abstract are the ones that will be in control. Because they're always the guys who get the power. But for the vast majority of people, they must relate to something much more concrete. And that concrete thing will be different forms of iconologies. There will be celebrity worships and you know, saints and martyrs or whatever and and George Floyd's or whatever you've got. They will go for these things. But these all of these sects and cults might look very powerful and impressive, because they big stands for quickly, but they also fall apart quickly because they have no sustainability ability. Yeah, but sooner or later, I think this process has been going on all the time. There is something that we produce that makes us that we stick to for like a certain amount of time, but it also makes us more productive, right? I think this is what I think they were the Christianity. It was a cult that was crazy. They all celebrate the safety of Jesus Christ. It made people productive. They had more babies. And then 200 years later, it took over the big emperor in the world and then it took over the world, right? So it's a big success story that happened with relative short time frame once enough people associated themselves with it. We don't have that yet, which is probably a good thing. Because I read that when you when you spoke about Nietzsche, where you co author that we, yes, we want to be the Ubermensch, but on the way to get there, there's going to be a lot of medium stages where we kind of follow a false island instead of improving really ourselves. And this is these these medium state religions, right? The only communism only relived for like 100 years or 200 years. Well, I defend the word communism. I always say that I'm a communist, but I'm not a socialist. Because I think that actually even Marx made the same mistake that he would accuse Leninow. He was simply hurrying to mark. Common is basically just the tribal life, the trust of the tribe, and split the shared resources within the tribe. So that's what communism meant. It's longing back tribal life, tribal life is possible. While I'm saying this tribal life is probably regulated with the help of technology, and you can have you can have small you can have larger groups that just try within a sort of communist utopia. The communism can only be one voluntary and it can only practice by an elite, which is exactly opposite of what the left to promise people. So I would say if you go from capitalism to socialism, you can go from socialism to communism. But then you have to remember that Marx was heroic, just like Nietzsche. He just think he went his heroic course would be a group of people of proletariat who wouldn't be there. We would then see the necrocrats today take that role. But that's that's that's all I say with Marx. And then I leave it at that. What I'm saying is that woke, for example, is not Marxist at all. Work is completely Rosso. This is Rosso. This is this is I'm born a tabula rosa and I can pretend that I'm anything gender whatever like a skin color. And if you don't like that, then fuck you that I'm going to kill your whole responsible forever and milk you for all your resources, because I'm going to do victimhood calls from now. Right. And that's of course why a lot of black Americans hate Black Lives Matter, because they don't want to go into this woke mode or victim and say, yeah, we have a terrible past. But actually, we have done done that. We've dealt with that. We can all be successful. So why don't we look ahead instead of staying within that sort of realm of constantly returning to our own failure, as if we enjoy it. But I think it's Rosso that's problematic here. Yeah, because people have a certain bad conscience. I think it trades on other people in society having a bad conscience because otherwise you just ignore that claim, right? But the claims of vocalism has been taken very seriously by a big majority of people. And the first reaction is, oh, you tell me you're a victim. Okay, let me investigate. Can I give you the benefit of that? So it's kind of trading on this Christian attitude, I feel that that we still have. Maybe that's just the slave and that's where I feel that's where it came from. Yeah. And it's incredibly problematic. And it's not going to win in the long run anywhere. I mean, in a way, the world is becoming like India. Say India with a Singapore next door for the elite. That's probably more what the world will look like in 50 years time. And I'm learning from India. And I'm just saying, well, the complexity that we have to deal with. And hopefully they're not going to war one another too much, create society that's very similar to India. Now, for good or bad, I like India a lot, right? It's been a lot of poverty that they've also done very well in the last 30 years. So the only problem with India is to maintain peace over time and not to create too much rivalry in very densely populated urban communities. They went for the caste system. So instead of saying that your father did this, you might want to do something very different. And your archetype might be different from your father. In this sense that your father did this, you must therefore do the same thing. You must do it the way he did it and not do it any way differently than he did. That creates zero incentive for non zero some games, right? That's just just splitting the same cake all the time and probably larger population, smaller cake makes it even worse and you get even poorer. And that's the problem you get for the caste system. The caste system, what I want to avoid, but other than that, to live in a society with so much complexity on so many different levels to still make that work and having a sort of a religion that's implemented in different ways in different institutions of different levels too, that the Indians are managed to do, I think actually is a model of must be studied. For no other reason, India is the only country we know in the world that cannot be run the way communist China is run today. But India is for sure immunized against the kind of system communist China. They call themselves communist in many Indian states. Yeah, they do, but they are democratic communist parties you vote for and you can vote them out of power. The only place in the world that acts as democratic communism means successful practice. And East Bengal and several of the states in India have done quite well on the communist rule, but this is a communist democratic rule, right? So it's not Maoist communism or Chinese communism, it's not communism or decree. They're actually through the through the voice of the people from the need. And of course, it's all depending on which ones of the castes you get to vote for you in the elections. That's India. India's becoming generalized in a very fast way at the moment. And there's a lot of interesting things that I work a lot in India, especially before the corona was there all the time. And I find it very fascinating because I've argued for over 20 years that the world would increasingly look like India. So learn from what India did well and did less well. Because that's so interesting. I lived in India for a while and I was really shaken by that. It's a sense of I care about myself and not about anything else. Like you see this basically in sidewalks or you see about cities, it's really parcel up in certain individual behaviors. And it's very different in some concept than when you think of Europe, right, where everything is top down. Maybe that's the idea in India, but it never really worked that way. Or it's really parceled out in my individual success. And there's a caste system, I never could wrap my mind around the caste system, why this still still exists and hasn't been competed away. I couldn't wrap my mind around this. So something happened or didn't happen in India that you got, you got the top down within the castes. That's trick. So for example, Amazon, Amazon raster, and there's a small raster minority in India are very successful India called the Parsis. They're probably the most successful ethnicity in the world when you look at educational levels and even beat the Israelis. So there you go. But the Parsis, I live with the Parsis, they actually live as if they were a caste in the Hindu system, exactly why they're so tolerated. But because the guts are at the strong sense of top down structure within their own community, they in practice live like in the lead cast within Hindu society. For example, social acceptable for Parsis to marry a Brahmin, as you marry a Brahmin, you marry someone at the top of the Hindu system. So the Brahmins love the Parsis, friends around and love to marry the Parsis family. Even Indira Gandhi, for example, married a Parsis. So technically speaking, her sons are all you're going to put on for what is a raster and not a Hindu. So when you learn these things when you live in India, it's going, okay, so it's within these structures that top down works, where society as a whole operates as a kind of massive huge bottom up thing that occasionally can pop something and pop out of it. It can work for a while. It can be say a local little empire or some kind of nationality to pop up for a while, but then it probably falls down back into the community. But really, all you do all the time with your narrative storytelling is connect the community in such a way they don't go to war with another war, the absolute hell. And that is fundamental to religion. And that's where you have the yogis everywhere. Where do the yogis live? In between tribes, in between castes. They're not a category you can fit into anywhere else, but they just go between. And if yogis are horizontal go between in a side like India, then you can figure out that's how shameless work in tribal communities too, because they're similar. And that means they can also then take care of the vertical communication, which is talking to the gods in Europe. And that's exactly what religion starts with the yogis. It starts with the yogis relationship between tribes, what's in between worlds, androgynous in between men and women, the shamanic, shamanoid in between tribes, and the horizontal communication with foreign forces and forces outside of your control. These studies, they can also communicate vertically. That's the underworld to the upper world. Because they can do so, you go to them with your concerns and your life. And they're neutral. They're not involved in this sort of rivalry, some power games that the rest of us are constantly. That's so fascinating. I mean, the way you take apart that part of Indian religion, that's incredible. I've never heard something like that, so intense. I wanted to ask you two more questions. The first one is, when you look at the last 20, 30 years, you've been saying you really focus on philosophy the last 20 years. What surprised you the most? What turned out different than what you initially predicted? It's usually to do with the speed of change. So technology can change slower than you expected, because there are more hurdles than you thought there would be. And there's suddenly motivated or unmotivated, but very definite resistance to innovation. Then something like COVID 19 comes along, and some departments slow things down. But the vast majority of technological development was actually hurried up this year. That's exactly why the stock exchange is doing so well. Because the tech companies have gone through the route. Why? Because we discovered that a lot of things we did before, the physical bodies have spent tons of time on, can actually be done through tech. And we can save time, save energy, do other things without money. So that is, it's not necessarily productivity growth, but it's a growth in the terms of quality of time that we have to spend on other things. So that just speeds up things. Then I could say digital libido was released in 2018, working on process and event for at least in 2020. Oh, suddenly digital libido was prophetic in less than two years. Because a lot of the things we thought we wrote the book would happen in, say, 20, 30 years time, happened already two years later because of COVID 19. So I would say our future logical map has been correct. The important things we talked about have happened or are about to happen. What people don't realize yet is that all the old institutions will go before this is over. And they will fight, try to stay relevant, to stay alive. And they will accuse them of all kinds of things when we don't want to say them, right? But like you and I don't do television, we're on mind everything we do. I think it pays off to go into the new world, the new technologies and new ways of communicating as quickly as possible. Because again, the sooner you learn the new technologies, the sooner you learn programming, the sooner you'll learn to use media and all these things, the better off you are once these things are implemented in the large scale. I'm fully with you. And we just talked about the future. Records, while obviously came up with the theme of the singularity now, has supposedly happened in 2038. Is that something you are on board with? Do you feel it's going to happen and it's going to be a massive amount of brain power? Do you really have no way to predict what's beyond it? Or do you feel it's not going to look like as fantastic as records while it makes it out to be? Probably not. Fantastic for whom? That's the question. I would say we wrote about this in the synthesis book a lot. It's actually a response to what I think is Kurzweil's very sort of amateurish, a bit infantile, fantasistic. But we work with that constantly. So what this is called is called emergencies. An emergency is that something suddenly happens. There's a certain state of complexity where certain things apparently can occur, often just for once and ever again. But after an emergence of real importance, you get an emeritus vector. I give you a perfect example, for example, physics. Now, some at a certain stage, physics became chemistry. Chemistry operates very differently from physics. And the same way, at least on one planet, one time, quite a long time ago, life suddenly occurred and biology came out of chemistry. And we all know this was on planet Earth. So we have biology here now and we deal with biology as its own emergence vector. That's what a singularity is. A singularity is nothing more or less than an emergence. But the question here is really this one. It's very, very likely that we will have a point in time where technological development will certainly kick in a whole new year. And what will then happen cannot be described with any of the vocabularies or any of the narratives we've explored before. You could not explain biology to somebody only with chemistry. You can't, right? But once biology exists, then it makes sense to explain and start a fantasist about what could come after biology. Now, probably nobody who did biology or wasn't about biology, it's kind of weird to talk about this, because you need mind to talk about the biology, but mind is a later emergence. And its own emergence vector. When people talk about this difference in mind and matter, and there's a mind matter problem and all that, yeah, no, it's only a question of prior to the emergence of pure biology, after the emergence, you've got something called mind that requires biology built on it that is a different category, not yet. And in this sense, we could even speak of technology itself as its own emergence when human beings discovered they could extend their own bodies, which is tech, and technology is how you extend your own body, make yourself more powerful, by creating tools that add strength to your body. That's what technology means. When the technological development that happens with human beings and homo sapiens, and we know some animals also have very rough technologies, rally development, we started to develop these technologies in hunting tribes. And then eventually it was picked in with printing process. And before that was the language. And the fact that you could, you could write down everything you invented during your life. So the next generation could build on your knowledge and didn't have to reinvent everything, right? That is essential with civilization. And all of this develops. Yeah, it's quite likely we get to a certain point where, oh, wow, things just suddenly changed in a way that this could not have been imagined. Now, for good or bad, when that happens, it's like Quentin Melissu, the French philosopher, said, he said once, there's only one word for that action. That's the word God. He came up with a wonderful one line. He said, God is way too important a concept lead to the religious. And because we don't have any other word for the unthinkable. And that's when the synthesis of book we say, instead of saying that God created the world that we live in his creations, that's ridiculous. creations can have existed forever, or creations can come out of creations. We don't need a God for that. Actually, we should not have one to begin with, to think it properly. But if God is a great word, why don't we take it back as a God is something that could still happen. And I don't think we have another word for I think, I think Kurzweil's proposal, which is the singularity, I would say, why not just call it God that we're Cynthia us, the God of creativity or creativity is God. So something that could be a God called Cynthia us that could occur in history. And that will change everything forever when that happens. Do you feel like God to is kind of like this, what we say, if we don't know what it is, because that's kind of, you know, what we've been doing for a long time, we can't explain that it's God. Or do you feel we had it somewhere. And, and maybe there was an alien creator that that kind of helped us, you know, gain this consciousness, a couple of things that he had with humans that nobody else could even copy by now, right? Like other primates have a copy consciousness. Do you feel like they have someone. If an alien creator would have created this, or somebody would have had to create the alien creator, you end up with turtles all the way down, you can't. We have not created anything to begin with, only mimics everything. The consciousness is also overrated. I'm a big fan of the mind of the consciousness of America. Most of the things you do in your life are consciousness. And it's only as an insight, you make up a story about why you did what you why you did. Your wife yells at you. And then he said, yeah, I was responsible for that. But somebody has to invent something that is responsible, right? So subjectivity is actually quite, in our philosophy, quite marginal. We're very much focused on human being a bodied, embodied person, embodied creatures of kind. And that's as we're not different from other animals. But on top of that, we have a mind that starts to go off. And we have language to which we could communicate with each other the way that animals cannot do. And that's essentially what it means to be you. So we're not headed somewhere, like we are not the bootloader for machines, we're not just like providing spare parts for some alien intelligence that needed another ship, so to speak, right? That's kind of no, no, no, no. And I'm not a determinist. I'm neither determinist nor indeterminist. I think both positions are wrong. We know from physics, for example, that determinism is determinism happens locally. We kind of say that the world globally, as a whole, the entire universe of its development over the last 14 billion years, that that is deterministic. No, it isn't way too complex to understand from determinism or indeterminism. It's not a program. Because where the hell was that program written in that case? You know, it's just, yeah, no. But once you go into... You just don't see it. No, no. But once you go into what a wave function collapses, they realize, oh my god, there's no free program to any of this at all. It's just complexity is colliding without the complexity, it's colliding without the complexity. And it's called pan dialecticism. The whole way you look at the world. And once you see the world that way, it becomes kind of challenging. Well, if I knew everything that would happen in the world, all that was where I could put it. No, you could not. Because actually, there are moving all of these things, and there are in relations in one another, and they're also exposed to gravity and decoherence, every one of them. So you cannot forget at all where gravity is. After the future is contingent, and it's only in hindsight that we try to make the world look like necessity. Yeah. So we should give up on science. No, not at all. That's kind of like, that's a bit like this, you know, I don't know about quantum mechanics, how complicated it gets, and with the multiverse theories, and nobody can really... We don't have a good, good wave. No, I don't believe the multiverse theories are interesting, even. I think they're boring. And I know super student theories are interesting to study. They just allow everybody to perform without wanting to limit their body. Because they have some interesting concepts that are used to stop it, because super students aren't very interesting either. What is interesting actually is studying space time. I was always interested in that question. And that was like a question that physicists wanted to avoid, because it was so feature difficult, because like, well, if you don't understand the background on which you base everything else, then you haven't really gone to the bottom of understanding reality. You're lazy, right? If you don't understand what space is, and certainly if you don't understand what time is, which is philosophically incredibly interesting, then you haven't really done your homework. Because if you think space time is a given that we cannot understand on which of the atoms are dancing, then you're still back at Newton. I fully agree. Where do you think should I look in order to understand space time and actually beyond that concept? Because a lot of people I talk to on the podcast, they feel like, well, this is light speed, it's general relativity, special relativity, and that's about it. We don't want to assume more, because then the equations don't work. We don't want to talk about that, right? We don't want to talk about the early stage of the universe, what's before the big bang, because we don't have data, we can't measure it. So they discuss it immediately. Oh, yeah. No, no, no, no. I believe in the big bounds firmly so. Bojavod showed the equation in 2011. You remove the infinities and the series from the mathematics, and the infinities and the series do not exist at physical reality, then you can actually understand it was a big bang. Now, how the big bounds operated, Bojavod's theories, Penrose's interesting theories about it can do a lot of work that way. No, I think we should just be deeper, go deeper in science. And I think Lee Smalling has done fantastic work. He parted off with one of my colleagues, a great Brazilian philosopher, and they wrote a couple of really great books, and they're very, very concerned with the question of time. My proposal is that time are actually two different things. It's just, like Bergson said, time and duration aren't necessarily the same things. And that's because time arrives in discrete units for one moment to the next, where duration is a continuity. And this could also explain why you never can reunite quantum physics as we know it with a relativity theory, because one of them is actually built on continuities in mathematics, and then it was built in discussions. And once you operate with discussion, it's like trying to title the number of five. So it's three plus 14, and then it starts forever and never ends, because the circle is perfectly continuous, whereas the discrete mathematics of its cardinal numbers is not. So you cannot unite these two. You have to live with them. And actually, that's how our worlds fundamentally are. Hegel had done physics, who would have been obsessed with the difference between this question and continuity. It's a deep, deep philosophical question, and it now eats into the very fabrics of our reality. When you think about the next couple of years, you just explained the world and the universe. What are the questions you really want to solve? Is there something where your fingers are burning? That's something you really want to write a book about the next couple of years. Oh, there's so many things. Some things get stuck, and you don't get any further. And some things just explode in your face. And then somebody comes up with surprising new ideas of where it is. What was that? That's interesting. Oh, it even relates to my philosophical world. I must study that. Something I might have to work with. If you pens on, there are surprises all the time. But what I work towards though, getting older is a better understanding what it means to be human. And that's like a fixed entity. And that's why I say to people, it's not even psychology, because you should study, they should study archetypologies. Study what different types of humans are there. Just spend time doing that. If you do have the policy and then you go into archetypology, you understand humans. You've actually not wasted a single minute of your time, because humans will always be humans. Or humans will be humans at least for a very, very, very long time to come. Even if we're synthetically biologically starting altering ourselves and getting rid of decisions before we get to them and things like that, that's not a part of the medical revolutions we had 200 years ago. But they won't alter our minds. And they won't alter what it means to be human. And the human body is so clean this year. We have not even begun to touch the surface of understanding what we are. But we can see through our behaviors and our psychological constructs of the world, we can see what it means to be human. And that's better transparent in technology. Because if you want to focus on technology, you have to relearn everything every three to four years. Yeah, a lot of people think that when going through technology now, it goes through a similar phase. We kind of jokingly say opening eyes like a teenager, right? It has the same intelligence. Not that it has a real intelligence, right? But we are re creating children in form of technology. So we go through what being human actually means, get through the same models, and eventually get to where adults are or where someone really lies like you is. And that's what technology wants it has. There's one machine you can spread it out all over the universe, so to speak, right? All machines can learn it in some way. So that's this big thing that people feel in the next 20 years. Once we've decoded humanity, we can make the better human, the forever living human that goes through the universe. Yeah, that's what quantum, because the most interesting thing with quantum computers is the possibility for them to do AI on a par with synthetic biology, because it requires so much number of crimes. And of course, the other thing I want AI to do is to finally design the fusion nuclear reactor that actually works, right? Because we can only gamble when we have human designers designing those things, right? With AI, we could probably design it if we want. AI will short all the limitations of anything. I would say also because there's a limited intelligence is the right word. When we speak of will to power as a deeply human force, right? Machines cannot experience will to power at all, because the power itself is only electricity when you put it into a machine. It only pushes things forward, as electricity does. It can therefore have to be interested in intelligence, gathering and processing, because that happens to be just quick operation. It cannot be interested in what we call pathos, your feelings or emotions, how you react to things, how your senses react to other things. Then you don't want emotions there, right? I think that's why machines cannot crack jokes and there sounds the right, sound terribly eerie and weird, like it sounds like somebody trying to copy something that's right. I think machines can create culture for people with really bad tastes. The sophisticated requirement for your taste, like you ought to be surprised or transformed by culture, it cannot happen with machines, we know them. Because they are stuck with the destruction. It's stuck with the series of one, even if they operate series of one, almost the infinity. It doesn't matter. It's still just series of one you do when you do technology. So yes, I expect the machines to conquer outer space for us, because we're not fit to go there. So let's leave outer space to machines that then kidnap some bacteria and take with them and model as they so wish, and therefore they can create life forms around the planets and things. So the sort of dull, gray, cold universe we're looking at to think of something way more exciting. That could be interesting. So we then as humans could go and visit for a week or so in March or something before we want to get back first again, which is our hope, right? As far as the human body's concerned, and as far as we can take biology, biological development, we as human beings will be stuck on this planet for hundreds or possibly thousands of years. It's only hubris to think otherwise. But the fact that you and I don't care whether a third guy goes to Mars or whether the shame that we happen to like goes to Earth, that will happen within the generations. And that will be happy to send the machine that's much more adaptable to the Mars. So being human necessarily in your mind means we have to have a human body and the limitations of the human body and be without the humans. It cannot be something that a machine can ever, I don't know, I want to say Emily, but I think they have to have this survival strategy and they will sooner or later copy that survival strategy. So they will behave like that. You need emotion. But then the machine must be a neurological functioning machine, not anything we know today. And then it must have bloodstreams and things. And then it's no longer a machine, is it? Then you're basically building Frankenstein's monsters and you're building a human. So the description of a human that you just described, we're far from that. We're moving very fast, very fast computing is what we do. And what that can do is... Yeah, Alexander, I'm really looking forward to that answer in your next book. I really thank you for your time. I mean, you've been very generous with this. That was awesome. That was incredible. Thanks for coming on. It's been a pleasure and I've been here for totally selfish reasons having this discussion. Alexander, that was awesome. Thanks so much again. Thank you so much. Take it easy. Bye for now. Talk to you later. Bye, Alexander. Bye.

You may watch this episode on Youtube - #95 Imran Lakha (How to use option strategies to improve your market edge).

Imran Lakha has been working with Citibank, Bank of America and Credit Suisse trading options. He now teaches options strategies at Options Insight.

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Torsten Jacobi: Yeah, we love to have you on and we know your specialty is option trading. And do we also know you've been all old, all street, different banks, credit, Swiss, city bank over the years, and you've been doing this for a long time. And I was curious, what attracted you to the financial industry in the first place? And then why did you leave Wall Street at some point?

Imran Lakha: Okay, so in terms of what attracted me to Wall Street, I guess, you know, I did mathematics and economics at university. I was the son of an accountant. So my dad was in finance, both my brothers were kind of in finance as well. And so because I was always pretty decent at maps and had those quantitative skills, it was like, what career can I go into and utilize the skills that I have? And, you know, going to London School of Economics set me up to be able to, you know, be attracted by those big banks on Wall Street where, you know, as a 20, 30 year old, you can you can make good money and, you know, you can get some decent security and live a good life, right? That was the kind of goal when I originally started. I was brought up to be very motivated to get myself secure and comfortable in life, right? So, you know, my dad struggled, you know, he moved here. When he was 20 years old, he struggled through various jobs that he would, he was quite skilled, like in terms of knowledge and stuff, but he had to do jobs that were kind of, you know, maybe a little bit basic for him. And he didn't want us to go through the same strife, right? So he, he kind of taught us that, you know, work hard at school, get the skills, get a good job and make set yourself up, basically, right? So it's very Asian, very Asian mentality. But it kind of worked, right? It was, it was certainly worked on a materialistic level, like allowing me to earn enough money to get myself comfortable, you know?

Torsten Jacobi: Yeah. Why did you end up, and I know you changed positions for different banks over the years, but I know you took a break a couple of years ago, and then you left Wall Street once out.

Imran Lakha: So actually, you know, a lot of that initially was driven by my wife. Yeah. So she, she was really keen on traveling before we had kids. So we were married for about, you know, seven years. We weren't in a rush to have kids, but we were like, you know, if we're going to have kids, she really, really wanted to see the world a bit and travel. And because my career was going pretty well, you know, I hadn't really taken the plunge until then. And, and it just came to a nice point in my career where I was feeling pretty burnt out. I've been doing it for about 10 years. And she really wanted to travel before we had kids. So I was like, you know what, I'm going to put my hand up, take voluntary redundancy, and let's use the money I get to travel the world. So that's what we did before we had kids. It's amazing.

Torsten Jacobi: Yeah, it sounds a bit like Jim Rogers, right? He, he took his money, he went on this two year long trip, you know, I think he did two trips around the world, both of them were around two years old. And then he ran his own shop after that, right? So he, he joined the ranks of the legendary investors who run their own shop, the company, the publisher, publishing newsletter, we know this is something that is as a business model, really, really popular right now, the stack exchange. Is that something that you, where you felt like, well, I can either make more money, or this is just fits my lifestyle better? How did you, how did you transition this way out of Wall Street at that point?

Imran Lakha: Well, my, my actual transition out of Wall Street happened later. So when I came back from traveling, I wasn't desperate to go back to banking. I was, I was kind of fishing around to see if there were any hedge fund opportunities, didn't manage to find any, and then ended up joining an old boss of mine at Citibank, and actually got back to banking, which was slightly annoying, because I was kind of enjoying not being in it. But it was only later after I had kind of, you know, had my little go on the buy side, you know, satisfied that sort of itch, scratch that itch as it were. And then it was only then that I was okay, now it's time to maybe try something else. And that was the teaching, because I'd always quite enjoyed the idea of teaching and I'd always in, you know, throughout my career at banks, I'd always trained people that came through, and, and that was something that I really liked to do. And I found that I was quite effective at it. So then I was like, okay, so I've got a bunch of knowledge on a subject that's quite niche, and I've got a lot, I've got a big network of contacts that I could probably, you know, turn into clients, you know, ex colleagues or whatever that I might have. So why not give it a go? So that was the night when I created Options Insight.

Torsten Jacobi: And Options Insight help us to understand that a little better. It's really about trading options in the market, what's available to the retail investor, or does it go in a different direction?

Imran Lakha: No, well, when I first started Options Insight, it was about how, how do I leverage my network, right? So I've got a bunch of old colleagues at banks, some of them are asset managers who are old clients of mine. I've got some brokers who I used to be their clients, all these people who have, I've probably have staff, junior staff who need proper training, and probably don't get proper training, right? So it was actually at the start, it was more of an institutional product and an institutional offering that I was giving, because that was the contacts that I already had, right? And no one, no one in the public sphere, no one in retail knew me, right? So, so it was very much the first couple of years, just leveraging those contacts, building up my content, building up my sort of product suite. And it was only post COVID, really, that I realized that, you know, the people who really need the education and are still out there looking for it, and are more consistently always going to be there, are the retail traders, right? And as the growth in retail trading exploded in the last couple of years, particularly in options, and I was seeing some really basic sort of errors or mistakes that I think, you know, novice option traders kind of make, I was like, these are the people that I need to try and educate, right? So then it was a case of try to build that sort of profile that I'm not just for institutions, even though I've been on Wall Street for 20 years, and those are the people who I know and know me, I'm happy to teach the retail people, because, you know, it doesn't have to be only professionals, you can, you can teach this knowledge to anyone, right? So that was the goal and that was the idea.

Torsten Jacobi: Yeah, I feel like they should make your initial course mandatory on Robinhood. I was really surprised, you know, I had a portfolio for, I don't know, 25 years, first eTrade, you know, that was the first online broker a long time ago. Anyway, from the minute I started, but Robinhood, about two years ago, 18 months ago, I was really surprised that the approval to, for option trading used to be a pain, like it was possible, but you needed to file some documents and you need to text something, you needed to validate your ID. I think that's all true with Robinhood too. But I feel like I was instantly approved for options trading, and I couldn't believe it, I could suddenly, I could, I could sell calls, I could buy points, it was amazing. But from, and I think I know what I'm doing, well, we all think that, right? But I do have 20 years of experience with the subject, not in detail. But I was really surprised that Robinhood really opened up options trading to the masses. And I had this suspicion, that might be just me, that most people have no idea what these options actually do, right? Why are they so different, why are they different than the equity that I'm investing in? What is all this game about, why would they decay? That seems to be not really open to the retail investor, at least from what I see in the Robinhood app.

Imran Lakha: Yeah, I mean, that's a no brainer. I mean, I actually, the regulators should make it compulsory for platforms that offer the use of leveraged products, like options, to make sure that those, those people using that platform have got a minimum level of education, because you're totally right, you know, people can lose all their money in a week with some of the crazy things that they're doing by buying one week call options on a, on a crazy hot meme stock. I mean, it's insane. Yeah, so yeah, I totally agree. I mean, I think that's the problem. Like, people just, you know, get into fads and trends, right? And the fad and the trend was, okay, what's the next hot stock like Tesla or whatever, that's going to explode? And how can I turn a small amount of money into a large amount of money? And, you know, on these, on these Reddit forums, they all got excited and they all started doing the same trades and it became self fulfilling, I guess to an extent. But yeah, I would love to be able to, and it's not, it's not because I want to necessarily, you know, capitalise on this, right? But I just don't like the idea that these, a large part of a large percentage of these people at some point are going to lose all their cash, right? And if there was a way of preventing that, that would be a good thing, right? Because the idea of all these retail traders losing the 10 or 20 grand that they have to play with is not a nice thought really, right? You know, banks can afford to take it on the chin and lose a few billion here and there, because they'll always get bailed out by the government, right? But the retail guy won't.

Torsten Jacobi: Yeah, I found it quite mesmerising when they, when the data that I've seen about raw trade is extremely young, it's most likely male. And they bet a relatively small amount of money, between $500 and $1000. Yeah, I think it's a little bit, you know, we, I've been talking on the podcast a lot about the dearth of opportunities. This generation probably has the highest overhang from the previous generation in that, in, in, in mainstream thinking that is hard for them to, to break out and use new opportunities. Yes, you can drive for Uber, but it's not going to, not going to change your life, right? Do you know there's a level, there's like a glass ceiling, so to speak, as an Uber driver, and it makes cash. And I think from that point of view, I actually feel it's kind of smart what they do. They take this bet that most likely won't go anywhere. But if it pays off, you're going to have a few hundred thousand in your portfolio, just two days later. But worst case scenario, and most likely scenario, your money is gone. And this, this virtual casino, what the odds are certainly probably better than going to Vegas to get, if you're thinking about $200,000 or a million dollars that you want to, want to, want to bring back. I think this is actually a pretty, I almost want to say it's a smart way to make money. I know how crazy it is, right? But if, if you don't have enough opportunities to get to these levels, because most people, you know, under 30, they can never buy a house in San Francisco. I don't, I don't know if it's ever going to change.

Imran Lakha: I guess, you know, another way to think about it is they're all buying a lottery ticket, but you can have multiple winners and they can share, share the payout basically, right? And the more, the more people they get to buy the lottery ticket, the more likely they are to get paid out, right? So that's kind of the game that they're playing, which, like I say, it's fine. And it's great when it works. And, you know, I wrote an article, one of, one of the things that I do occasionally is, is write articles about the market and just, just to sort of put my thoughts down on paper and they go on my blog on my website. And I wrote an article about the retail army, because I was loving what was going on with the retail army and how they were, you know, sticking it to the, to the hedge funds and stuff and creating short squeezes and stuff like that. And it's great, but it's great while it works. But then when you, when you get these problems, like, oh, you know, your account just got, your account got frozen because we've got margin issues on our side. And now you can't do anything. You know, had they had the foresight or the knowledge to be able to maybe do some smarter trade implementation, right? Then maybe they could protect themselves against that tail risk. I don't know, right? I don't know for sure. I mean, trade, even if you know how to trade options well, it doesn't mean you're always going to call the market correctly. But it's just, you know, the trade, for example, the trade that I was doing when the GameStop stuff was happening was quite funny. It was in one of the other stocks, BlackBerry. And BlackBerry was kind of following the AMC and the GameStop price action. It was one of the meme stocks as well. And it was, I think it was at like $26, $27, something like that. And I was like, you know, this thing might just keep going. It might do a GameStop, right? So, but the bowl is absolutely on the moon, like the bowl was in the hundreds. Okay. So I sold, I think the stock was at $26, $27. I sold the $15, $10 put spread, the $15, $10 put spread. And I collected $2.5 for that thing. And it was expiring in like two or three weeks. Okay. So it was miles out of the money. And I was collecting half the premium of the most it could ever be worth. Okay. And that was happening in two weeks, it was going to expire. Right. So I was like, rather than trying to buy this stock and take the risk that it drops in my face, that's the best expression of being long this stock. Right. And as it happened, I was completely wrong. The stock dumped 40% over the next week. And I lost no money. Right. So if I just bought the stock, I would have lost 40%. But because of the pricing of that put spread and understanding how the optionality works and where the opportunity lies, I was able to sell that put spread and take a zero hit on a 40% drop in the stock. And then I just cut my position. And it was fine. Right. So, so that's what I want to learn. That's what I like to be able to empower people to learn how to kind of swing the odds in their favor a little bit.

Torsten Jacobi: Right. Yeah, I love that. You know, what I am, what I was my experience with options, it's the market is incredibly illiquid. It's very difficult often to get a good price for that option. Depending even on relatively well known stocks, I think I had some Uber calls. And I felt like, I don't know what the strike price was, but there were like five of them traded the whole day. I'm like, holy smokes. I mean, this is not exactly a small stock. Right. And there's always something going on where I feel like the market maker, someone on the other side is way more inside than I have. That's probably true in all of Wall Street. But I feel with options, I feel like, especially that's, I don't know actually what's going on behind this. So maybe you can help us a little bit, but when you just eliminated one of those strategies, what are the strategies where you feel like you still have an edge out there, even do Wall Street is basically against you. And these computers are super smart.

Imran Lakha: Yeah. I mean, when you're talking about liquidity, I mean, I think that's a bit of a special case on the Uber side. Like, you know, big large, relatively large cap names, options markets are quite liquid if you know what the expires are that trade, right? So the problem I think you had there was most likely you were picking some obscure expiry that was like a weekly expiry rather than one of the monthly expires, where that's where most of the trading volume is. So you'll get better pricing on that. So you kind of need to know what is the stuff that trades liquidly, like even on something like the VIX, for example, right, the VIX index, you can trade options on the VIX, but the monthly expires are super liquid, whereas the weekly expires are horrible. And that's on something as deep and as liquid as the VIX, right? So you kind of need to know what you should be, which instruments provide you the liquidity, right? In terms of where the edge is, the edge is in understanding how to implement a trade, right? So you're right, on trade execution, you are probably going to give some edge away, right? But so if you're like trying to trade it on a super short term horizon and day trade it, then the odds are not in your favor, right? But the odds, the way to swing the odds in your favor are to have slightly longer time horizons, right? And know that the structure or the strategy that you're using is optimal for the market conditions and for your view, basically, right? And you should also be careful to not constantly buy options all the time across everything, right? Because systematically paying premium is generally a losing game. So you want to try and be a bit more selective about how much premium you burn and when you burn it, basically, right? That's kind of how I, that's my general sort of feeling.

Torsten Jacobi: Yeah, I read the original post of the GameStop saga and I think it appeared in early November, second week of November. And basically the idea that was given in that original post was why don't we buy really long dated call options? And the same thing happened for Tesla. So this was, this was like the go to strategy for people on Reddit by long dated three months, as long as they could find it on Robinhood, basically, and I think they don't go so far out. That's a big problem. You can't buy a two year option. Even if that exists for professional traders, it doesn't really show up on Robinhood. And what I found interesting, they bought this three month or two and a half month option, it was a long user was available. And the stock barely moved during that time. And the second it expired two days later, it started to explode when like 5,000% higher. So it was a little bit from the original post this year, if you don't roll over your options, you would have given up all the upside through your health and position basically till the end, it only moved 20% until then. When you look into two options strategies, what does it kind of do? You just said that short term, it's a problem. What is a typical investment horizon? Is it two months? Is it one week?

Imran Lakha: Yeah, that's a good question. I mean, generally, I prefer to err on the side of buying a bit of extra time. So I might have a view on an underlying, but I'm not arrogant enough to think that my timing is going to be perfect. Maybe it's just because I've been doing it for 20 years, so I know how often I'm wrong. So the idea then is say, okay, well, how much does it really cost me to give myself an extra month for this view to play out? So rather than buying a July option right now, maybe I should go to August or September. Yeah, so always err on the side of buying a bit of extra time for your view to play out is kind of my default. And then it's like, how much am I having to really pay extra in terms of volatility premium to push myself further out the curve basically, right? So that's kind of, and then that's one thing, that's my general sort of default in terms of if I'm expressing directional views using options. And then like you said, rolling is very important, right? So if if it turns out that my thesis isn't playing out as quick as I thought, or so I can change my mind, right? And then just say, okay, can I salvage back some premium? Because my views changed. If my view hasn't changed, and I still like the scenario that that stock or that underlying is going to go in the direction I think, but it's not playing out, and I'm getting within a month of expiry of my trade, then I think, how can I make that premium that's left? How can I make that live for longer? So where could I roll that premium to what strike and what maturity to just keep that premium alive for a bit longer, right? Because you just don't want it to get to the point where it's very digital, where it's very binary, whereas you get one bad week in the stock, and now your options definitely dead, basically, right? And that tends to happen when you let the option get too close to expiry. So the people who play it from the professional side and the more statistical side will always want their long premium to be sitting in maybe a one to three month expiry. And when it gets too short dated, and it starts to get too binary, and the theta, and the theta bleed basically gets too heavy, then you push it out to a longer expiry to make it live for longer. Well, that's kind of how I think about it.

You would have to sell that option and just buy a new one, right? Correct. Yeah, exactly. When you look at the markets right now, there seems to be a lot of trend following going on, right? So it seems there is, and that's kind of my green topic a little bit, there's too few people who buy on value, who buy on their conviction, right? So we always have those, those contrarians, right? So they buy things and they're ready to hold it forever, some worn buffets, you know, as long as it's my return on equity is the same as what I projected. I'm good. It doesn't matter what the stock prices ever, because it will eventually be realized. But there seems to be what when you look at the markets right now, there seems to be a ton of trend following, right? Nobody actually is able to go out there anymore and say, well, this is the mania, crypto is crazy. But crypto, I mean, it just came down a little, but usually it would just double the next day, just because we're because someone said, oh, we're gonna be in in a bubble. When you, is that for you an investment criteria? You feel like, well, this is too, too big. I'm looking at more specific trading opportunities. So I would say trend following is definitely a valid strategy. You know, think about CTAs and why they exist, right? But go back to the turtle traders, right? And the birth of the CTAs, you know, that was trend following. And that worked, right? And they managed to teach people who knew nothing about trading and make them profitable traders by following a very simple trend following strategy. So clearly, it used to work and there was value in it. Now, whether or not there's as much value in it now, or it's as consistently profitable, it is debatable. I would argue there is still value in it just because why, you know, when you're a momentum or a trend follower, what I think you're basically getting rewarded for is patience. So you will, you will, you will basically find a trend, right? You will establish a trend that is established and you will say, you know, this is why I think that trend is, is going to continue. And I'm willing to just be in that trend and stay with it basically, right? And if you have the ability to size your risk and be patient enough with that position, that's kind of your edge, right? That you're not getting puffed out of the position on the first sign of a drawdown basically, right? So I think momentum seeking does get rewarded because it's some, but it depends on the time horizon, right? You need to probably look for, so the way I think about momentum is find longer term trends that you, that you expect can persist for years maybe, right? And have some sort of way to size into those trends and follow those trends and some indicators maybe that you use to identify those trends, right? But then around that, what a nice overlay strategy on top of that is to look for mean reversion in the shorter term time horizons, right? Because that's a valid strategy as well, right? You know, things can get frothy and things can get overstretched away from their mean. Simple things like Bollinger Bands allow you to sort of see that in terms of charting. So, you know, but then you look at daily time frequencies or even, you know, four hourlies or whatever, and they will give you a different sort of outlook about your short term tactical positioning that will sometimes kind of neutralize your longer term trend holdings. But then once those things mean revert back to their averages, then you're happy to unwind your tactical mean reversion bets and get back to the trend following position, right? So I think they work hand in hand as complementary strategies basically, but just across different time horizons. If that makes sense. Yeah, I'm trying to parse it. I'm obviously not from the industry. One thing that I think a lot, which is a big struggle right now, is basically all the trades are heavily impacted by either deflationary or inflationary scenario. Whatever you do right now, you have to have a position more or less. You can basically, this is very difficult, I feel to find anything right now that's completely neutral and not affected if either of the scenario comes true. So you've got to have a view of the future. Will it be inflationary and strongly inflationary? It seems to be this very bifurcated right now. Or will this continuous technology deflation keep going? China is very deflationary. It's just the bigger trend, which isn't this little trend that basically is a blip over the years. And we've seen deflation or deflationary scenario for a long time. Where do you stand on this? Yeah, I sympathize with both sides of the argument. And I've been talking about this on my YouTube channel recently. So I did one video a couple of weeks back, which was talking about how inflation looks like it might overshoot in the short term. And these are the reasons. And then literally the week after I was spelling out the case for the case against inflation. And I think David Rosenberg in his latest piece, and he was on podcasts recently, and he was spelling out why he doesn't believe in inflation longer term and he thinks it will be transitory and he actually agrees with the Fed. It's hard to argue against what he's saying. The structural forces are strong. And these inflationary dynamics are because of factors that clearly are temporary. So you've got to assume these stimulus checks are not just going to keep coming forever. I mean, maybe they will, but your default base case needs to be at some point, they're going to expire because you're seeing the disincentives for people to work in the non farms numbers. And we've got another one coming this Friday. And if that's a bad number, it's going to be not because there's not demand for jobs, not because we don't want people to work. The job vacancies are sky high, but no one wants to go and work because they're getting paid free money from the government. So you are starting to see states in the US, you know, stop the unemployment benefits in an attempt to force people back to work. And hopefully you'll see that come through the jobs numbers over the summer. So June, July, August. So that I think that needs to happen. And that will address some of the kind of potential wage inflation that maybe we might start to see. And then, you know, people talking about Europe is not affected by this, right? So Europe seems to be because we have this scenario for the US, but beyond Europe, I'm currently too. It seems Europe has always had great generous benefits, right? If you if unemployment benefits, I remember that when I left in Germany, where large stretches of the population were all unemployment benefits, nobody had worked in 20 years. And that was not that was pretty normal. It was still in the decent neighborhood, right? It wasn't a neighborhood where you get shot at night. And it's somehow, I mean, Europe doesn't have any inflation, right? So it keeps giving people checks for 20 years. But inflation hasn't really shown up in the longest time in Europe, if anything, it's negative not rates. Yeah, that's true. And I mean, the structural I suppose the structural deflationary forces, you know, that spring to mind, right, are obviously technology, the big one, right? Demographics is another one. So what what is the demographic profile of Europe look like versus maybe places where we are seeing more inflation? That's probably a factor. And those and those structural demographic forces aren't going away, right? So, yeah, I think longer term, I kind of agree that we're not going to get some massive runaway inflation that's going to that's going to force yields higher. And it's the end of it, right? Is the end of bomb markets, basically. But I think in the short term, we might get an overshoot, right? In short term, we could get an overshoot. I don't think it will be enough to force the Fed to act. And so I think the interesting thing is what what a commodity market is going to do, right? So the way I've been playing and using, I've been using commodity markets as a bit of an inflation hedge, right? I think everybody's onto this trade. That's what commodities have done so well, you know, energy stocks and commodities obviously are kind of somewhat in sync. And they've been doing pretty decently. There's a whole electric car thing going on in the background with precious metals. But I sometimes I'm not sure it's just because all the traders think this is a good hedge or maybe because it is a good hedge. Yeah, no, that's, I mean, it's valid point, right? Because at some point, it's fully priced or, you know, too much money's in it. And it requires an unwinder, you know, that these are the whole trading game theory and psychology aspects you need to be aware of, right? Is the money in commodities, is it fast money? Is it fickle weak hands that are going to dump it at first side of trouble? Or is it a structural mega trend that's going to keep going for a long, long time? Now, arguably, because of the governmental sort of agenda towards clean energy and electrification and all that stuff, you'd have to think, or it's certainly easy to construct the argument that the demand for copper is going nowhere, right? And then not only have you got a strong demand story, because we need to have a shitload of copper to, you know, to do what we need to do for the electrification of the world, right? So demand side's there, and then you look at the supply side and you see there hasn't been enough capex, there's a supply shortage, it's going to take a while for that supply shortage to be addressed. So you can see copper, the copper mega trend being there, but then maybe some other commodities are getting a bit, you know, far ahead of themselves, like the agricultural commodities, like corn and wheat and things that have started correcting a little bit recently. You know, what if there is some bumper harvest in the US, right? This time round, all of a sudden, that supply shortage goes away and those things get sold another 30% quickly, right? Who knows, right? So I think you've got to be careful about what you own in commodities and make sure that you're comfortable with the underlying fundamental trends that are there, but then they also offer you a general kind of inflation hedge and a real asset type thing in your portfolio, right? Because having too many bonds in your portfolio right now against your equity exposure doesn't feel that sensible and that that goes back to your recent podcast with Harley, right? Talking about the correlation between bonds and equities going higher, if rates go higher, you know, then bonds aren't offering you any diversification. So how do I get that diversification in my portfolio? And I think some move towards real assets and commodities that have got a real demand, a real supply demand story going on that isn't about to disappear. Maybe that's the pivot that people are making in their portfolios away from bonds and into real assets, right? Yeah, sometimes I feel like the demand from bond is kind of came in by default because remember for the last 40, 50 years, people had been pitched, the simple investment approach put 60% on equities, 40% on bonds and more people got on the train to invest, right? So either that's demographic or this is just because we're richer, whatever it is that seems to be surplus of savings and we haven't put them in government savings as you would have to do in China, right? So what we did, we followed the 6040 model. I did it quite some time ago and I felt really confident with this because it gives you some stability, like think back to 2008, the bonds were doing well, relatively well compared to the equity portfolio that didn't do so well at least initially. Yeah, there is a lot of science to it, but I feel like that's what I'm trying to say, people are buying these bonds not because they want to buy bonds, no, just because it's basically inherent into this strategy. It's kind of what Mike Green is saying with the passive investors, they don't want to actually buy this stock, they just buy it because it's in that index and because it's in this index and you buy into that mutual fund or this index tracking fund that they're being bought. So it's in the fall of the investment because I cannot come up with any scenario where rational investor buys 0.2% bond with a perceived inflation of 2% that we always had, right? You can argue it's more like a point five or it's a 3.5, but it's somewhere we always had 2% more or less the pet target over a long time, right? Why on earth would you buy such a bond if you want to hold it, right? I couldn't agree more, like negative real yielding bonds, why are you putting them in your pension fund? You're basically saying I want a guaranteed loss, right? That's what I want, right? Maybe they know something they don't know, right? Maybe they're ahead of us, that's what I sometimes say, but there's something going on there. Yeah, I think it's more related just to the mandates of some of these funds where they just have to hold X amount of bonds, right? They have to hold some paper that doesn't look like equities because of the riskiness of equities and the volatility of equities. So they've got nothing else to own, right, other than these ridiculous negative real yielding bonds, but and then the truth is the price appreciation of those bonds hasn't been that bad until maybe recently as yields have backed up. So even though the yield on it is negative, I'm getting price appreciation out of it. So as long as I don't hold it to maturity, I'm getting a total return off it, right? Sounds like Bitcoin to me. You know, I don't want to hold it down, right? I just want to write it up all the way. Well, there you go. The definition of a bubble, right? Then, you know, if people look at Bitcoin and say it's a bubble that they should look at what bonds have done for the last 50 years, right? 40 years. I mean, that's clearly a bubble too, right? So one thing I want to pick your brain on is they call it the gamma meltup. So something that happened last year and we know a little bit about that story what SoftBank did. We don't know all the insights, but there's a rumor that they had the trader with lots of experience and options from Deutsche. And the idea was that SoftBank said on this portfolio with very strongly depreciating assets, all of these were underwater. They're real investments, right? And they put a billion each usually into those investments. So yeah, they raised 100 billion and two funds are 200 billion and they usually put a billion or more in. And the trouble was the valuations were falling because the real tech market was was dropping, especially because everything was dropping, right? In March and April last year. And the strategy came up with was why don't we try to manipulate the global market for tech stocks? And they weren't really focused on game stock and the meme stocks, but they were focused on why don't we push up the valuation in the public markets of the main trading stocks. And that includes Amazon, includes Apple, but mostly the mid tier, I'd say not necessarily the banks, because they of course were on a strong high valuation already. And I'm curious if that's even possible. So the conspiracy theory goes like this, they put a few billion, maybe five to 10 billion into call options. And what these call options did, of course, they wanted to drive up and did lots of leverage in it, they wanted to drive up the valuations, but it created this this effect that prices for these options went higher than the options or the equities went higher, the options dealers had to buy it because they had to hatch, they had to buy more than it went higher and higher. So would we saw this massive appreciation of tech stocks that kind of hit a lot of us by surprise, maybe you foresaw them, but it seemed a bit like market manipulation from South Bank conspiracy theory. Would you think that's even possible? If I give you 10 billion, can you create a government? Well, I mean, yeah, I think it's very dependent on the stocks that you choose and how deep those stocks are. So literally how much volume do I need to buy in a stock to have market impact, right? So that, you know, it's hard to move a stock like Apple or Amazon, right? They are very, very deep. I don't know exactly the numbers, but you need to buy a lot of stock to move those names, right? A GameStop is not hard to move, right? If you've got a decent amount of capital behind you, creating gamma squeezing GameStop and AMC, like which happened last week, even right, that's not that difficult, I don't think. But Tesla, Tesla, like 12 months ago, and now it's a huge number, but 12 months ago, it wasn't a huge company. Well, not by the standards of ESP. Yeah, but you know, I don't think you can really call it market manipulation because the guy who's buying those calls is putting his money where his mouth is, right? He's, it's not like it's some official body that's like going in there and spooking the market and telling them that they have to buy and forcing other people to act, right? They are asking a bank or a dealer for a price and they are saying, mine, I'll buy that for you at that premium, right? And that dealer then has to go and recycle that risk. And if that dealer can't find other offsetting proxies for that risk, whether in the NASDAQ options, because that's the index that that stock resides in or other tech names that are highly correlated to that stock, and they have to just go straight back into that market and buy the stock. And they realize that they're having to force the stock up by 10% in a day because they've sold too many options. That's not market manipulation. That's just really bad pricing on the part of the dealer that hasn't priced the liquidity of the stock properly, right? In the, in the optionality that they just sold, right? So really, it's about how efficient the option market prices things and realizes the impact that it's going to have for the volumes that it's offering clients. Now, there's definitely a tendency over the last sort of 10 years for banks to offer the wrong price liquidity to good clients. So that's one of the reasons why I left banking, right? So a lot of my day job was making prices to clients in ridiculous size and volume at prices that made no economic sense to me, because, and that was the only way I was going to maintain market share and win those trades from those clients, right? So maybe there's some of that going on where dealers are just forced to give soft bank an amazing price, knowing that they're just going to have to go into the market and lift the stock. And we're going to lose money on it, but they don't care because they need to keep their clients happy, basically, right? So then, so you see what I mean? Whereas if everyone was pricing it efficiently and saying, right, this guy wants to buy a billion dollars worth of premium in call options, what is the realistic market impact is going to have? And I'm going to show him the right price for that option. Then maybe it wouldn't have as much market impact, and you'll be at a recycle that risk over time and you'd be able to go softly, softly with it. But I think maybe there's an element to the dealers who offer that liquidity, the kind of got a gun to their head forced to offer the wrong price liquidity. And then they go and they make they have the market impact that we all get to see, basically, right? So yeah, that's good. That's called the Goldman Sachs trade, right? So if you have your margin of the Goldman Sachs monster trade with you, you you're definitely having an edge in the market. But I also feel it's a bit like it's a common BC strategy. So say you, you, Sequoia, right? So what you would do, you have a few companies in your portfolio, they all are worth 100 million in valuation, say 200 million, like a random number and they raise their recent rather than that. And you know that the threshold for a unicorn is a billion dollar valuation. So you do the next round, you only put in whatever 50 million, don't put in a lot of money. But you do this not on 500 million, which the starter would accept easily, what 600 million or 700, no, no, you say that the valuation is going to be a billion, right? You're only, you're still only putting 50 million in, you don't really care, right? So you're not negotiating hard for the best price, because you know that if you put it in a one billion bracket, you can move the market. Someone else will come in and say, oh, I'm going to buy this for two billion and then you just double your money, which wouldn't happen if you do the same thing with the 200 million dollar, 300 million dollar valuation. So what I'm trying to say is there is obviously because something is so big, they leverage their position in a way, obviously behind scenes, maybe more than in public markets. But what they did, they kind of moved the whole portfolio because we think, okay, well, they had 10 billion or whatever they put in, 5 billion at risk. And that's true, right? These things could have sucked. But it's a hedge against their portfolio, even if it wouldn't have done anything, it would maybe have stabilized at least the the bloodletting and the rest of their portfolio, which is 200 billion. So I think it's very well played. It's kind of like a PR standard. From their point of view, if it's a hedge to the rest of their portfolio, then yeah, it could make sense for them. And like I say, by putting that size up, you know, you're kind of cornering the market almost, right? You're creating a size that the market is not really comfortable digesting. So it's probably going to move that trade in your favor. So maybe there's some truth there, right? But like I said, I don't think that's, I still wouldn't call that market manipulation because the market should be efficient enough to price that accordingly, right? If your size is so big that it corners the entire market, the market should charge you for that, right? And the market should find the level where it's statistically the right price to sell that amount of risk to you, right? Do you see what I mean? Right, but you know, the efficient market theory has been debunked so many times in the warm up. Yeah, I agree. I don't believe we're in that. Yeah, we can just speculate how they pulled it off. I don't want to wish anything bad on SoftBank. What I'm trying to say is they facilitated a really big strategy and it worked beautifully well. What I'm trying to find out, is it even possible? And it's, I have a gut feeling it is, but I've never ran the numbers because I really don't know enough about it. I think it is possible, but I think it's more possible in smaller cap names, right? I just think the big deep liquid names, it's much, much harder, right? Whereas for the, and we're seeing it, right? We're seeing it live and up close like last week with AMC. There was a load of weekly call options that got bought and the stock was up obscene amounts in a very short amount of time, right? So it's still happening, right? They're just so small, you know, even if they go to a building, I don't know what their market cap is, they're really, really small. So in the options volume is really small. It's very easy to move those around. Exactly. Literally just a thousand people on red and you're good to go. Exactly. Executed trade. I want to ask you about another strategy that seems to be going on that's selling or buying volatility, right? And for me, it seems, it's extremely easy. Once we have one of those events like COVID when volatility explodes and we've seen public markets 50, 60, 70, the VIX is printed really high. You definitely want to, you want to bet on a job in the VIX because it always happens because of the pattern. If it doesn't happen, the world is ending, right? If it goes to 200, I think the public markets end because there's no price that you can really find. So I would always take that back. And on the other hand, if it's extremely low and we saw this, I think 2017, there is times when volatility is extremely low and it's 10 or below that even at single digits. And that seems to me, if you can hold it, if you can, and we talked about that earlier, very shortly, if you can make it work that you can express this investment over long enough time frame, say six months, 12 months, 18 months without paying too much, you always win. I mean, looking back at historic data only, you always win with your strategies. Yeah. So I mean, volatility is a mean reverting asset, right? That by nature of it, right? It is mean reverting. And you know, something I often talk about is the kind of gravity of the VIX, right? So whenever the VIX pops and goes up 30, 40, 50, whatever it is, it's like throwing a stone up in the air. And you know that stone's coming back down to earth. It's inevitable. Okay. And I guess what you're saying is, well, it's also the lower it goes, it's inevitable that it's going to spike at some point. Now, I would say your confidence about it dropping back down after it's spiked is much higher than your confidence about when you buy it, having any idea on the timing of when it's going to go up, basically, right? So I would say as a kind of expected value or proposition, I think selling it after a spike is going to have a higher probability of success than just buying it when it's low. Okay. Now, when you sell it, you obviously are taking a risk, right? I mean, the reason why the vol's just gone to 40 or 50 is because the market's crazy in going, you know, very volatile. And so it could well go to 80 or 100. And that's exactly what happened in March last year. So there are ways to kind of cap your risk, right? There are ways to sort of limit the risk that you're going to take, even though you're still selling vol, you can cap it. So an example, a way that I sold vol in March, April, 2020, was I sold cool spreads on the VIX, right? So the VIX was at 80. I think the front month futures were about 80 or something like that. And I was selling the 100, 110 cool spread for about two vol puts, right? And that doesn't sound like an amazing trade, right? Because you're selling something for two, that if it maxes out, it's going to be worth 10, right? So risk reward, is that amazing? Doesn't sound it, right? But the reality is, for it to actually lose you 10, and actually doesn't lose you 10, it loses you eight, because it's 10 minus what you took in for it, which was two. For you to lose that money, it needs to go to 110 and stay there, right? And it's already at a place where it's probably not going to stay there, it's already at 80, right? So the probability is massively skewed in your favor, that the vol is just going to collapse and you're going to collect those two vol points, right? But the beauty is, is because you've capped the amount that you can lose, you're never going to actually blow up on that trade, right? And also, even if vol went to 100 or 110, at some point in the life of that trade, I'd probably still be able to cut that position and only lose maybe two or three. I wouldn't lose the full eight until it got to expiring, right? So really, if I think about it that way, I'm selling something for two, which might lose me two or three, which I'll cut it if it does maybe, let's say because vol might go to 200 or whatever. But the chances that it goes to zero and makes me that full two points is very, very high, right? So that's a smart way to kind of sell vol when vols are crazy high, basically, right? You know, other people, other ways to sell vol when vols are high are maybe buying put structures on the VIX as well, maybe selling iron condors. That was another way that I did it. I think I did May expiry iron condors on the S&P, where the S&P was down at 23, 24, 2300. I was selling iron condors, which are basically cool spreads and put spreads, selling both of them to collect premium, but again, knowing the max that I can lose. And having confidence. This is a bit like a strangle. It's a strangle. It's not a strangle, it's a strangle, but you buy a strangle behind it. So it's like sell a strangle, but buy a strangle further out so you cap how much you can lose again. You always limit, when you sell volatility, it makes sense to try and find ways to limit your damage if you get it wrong, basically, right? So that's the kind of, that's what the professionals should be doing, basically. There's probably a lot of professionals who don't do that still, but that's how I like to approach it when I sell vol, basically. Well, often people sit on a lot of big investments, right? And the, the, just selling or buying volatility is just an expression of the hedge. So they don't want to hedge the hedge, right? They just want to have the full risk. Sure. Yeah, yeah. That's true. So call overwriting is a good example, right? When you, when you own the stock and you're happy to sell a 110% call against it, and you don't need to buy anything against that, because if you get called out of that stock position, you don't mind 10% above where we are, right? So totally right. That's a natural, that's a natural supply of volatility that the, you know, clients are happy to sell, right? And then on the buying vol side of things, this is where it becomes a bit more tricky because the cost of carry is, is like, you know, your enemy, basically, right? The theta and the premium bleed, that's your enemy. And you've got to find ways to mitigate or minimize that, I guess, right? And people have various ways they do that. And some people just write, some people just say, you know, I'm going to pay that cost of carry, I'm going to write it off. And it's just something that, you know, a good example is Nassim Taleb and Mark Spitznagle, right? The guy's, the universal, universal, I think, is the name of the fund. And they just always buy ridiculously out of the money puts with a very small fraction of their capital, so that they, they've always got the crash risk, basically, right? And, and one day that crash risk will make 50x or 100x. And that's fine. That's when they'll, they'll look like heroes when the market's down 30%, everyone else is dying. And they're, they're in a position of strength where they can buy up cheap risk assets, basically, right? So they did that. I think they made some ridiculous returns last year in the thousands of percents in those funds. So that's not a bad way to go as well, right? Just buying. But they've lost money, they lost money every single year, right? They lost 10% every year. Well, no, no, they lose, they tear up, they tear up that premium that they lose every year. So let's say they spend 3% a year that they tear up, but they're fully allocated to the market, right? So with the other, with the other 97% of their portfolio, they're not like, they're not messing around with a bit of bonds and a bit of equity and a bit of this and a bit of that, they're just fully along the market. So in a year when the market's up, they've participated to whatever the upside in the market is by a factor of 97%, which more than compensates them for what they've been tearing up on premium, basically, right? So that would be really cheap, right? So at least 3% of like a really cheap price for that kind of insurance that gives you an upside that the market actually goes up. Yeah, I mean, it's a barbell strategy though, right? So it's, it will work in a rallying market, you're going to make money, you might slightly underperform the benchmark because you're 97% invested as opposed to 100. But who cares, right? Like that's still probably a half decent return on an average up here. But then in the down years, you need a big down year, right? You need, you need a 20, 30% type correction for those deep out of the money puts to ever be worth anything, right? If you get a 5% correction, that doesn't do you any favors because you actually take the entire 5% drawdown on your equity loans and your puts never perform, right? So, so it's a barbell strategy that works in, in both extremes, but it doesn't really work in that middle ground where we're kind of drifting a little bit lower and having small corrections, but they, they don't care because they look at the market and they say these small drawdowns just get bought, basically, right? The buy the dip mentality, if the drawdowns 5 or 10% within a few months, it gets bought and we're rallying again, right? So they're kind of saying it's only worth having protection when it turns into a 20, 30% drawdown, which I can kind of sympathize with, right? But the question is, do other fund managers need you for going long? I mean, they can do this themselves, right? So when, when you have an investor say you have an institutional investor, why would you go to a hedge fund? They can put their money into long positions anyway. Sometimes they are very, very different, certain instruments for generally long positions and equities, everybody can buy, but they really need you for this magic optionality that pays off very nicely in down heroes, right? So why not just focus on that aspect? It seems to be for other institutional investors the most interesting part because for some other reason, they cannot invest into more exotic material. Yeah, I mean, I think that, you know, I, I've spent some time training asset managers, right? And the reason why I get that business is because one of the biggest mistakes institutional fund managers make when they use options is they, they get the approval that they need a hedging strategy because it, because it improves their risk profile, right? But what happens is every time the market dips, they never monetize any of their protection, okay? And then the market just rallies back again. And all that ends up happening is that their hedging program is just a drag on performance. It's never actually monetized. Never monetized. And that's because no one's really trained unless you're a practitioner who's used options that for 20 years and has seen it all before and has thought about all the different ways to monetize and capture these moves in, in volatility and in, in spot, you know, you kind of don't have a game plan for monetization. All you know is that I need the disaster hedge because if we get 50% drawdown, I don't want to lose my shirt and I want to, I don't lose my job, right? Yes. But, but it seems like these hands just make you, make you sleep better, but they don't actually make you money. And whenever I ran, I ran a lot of, you know, backtesting and automated trading strategies, I never could find a single one. And this might be the percargery I use where I felt like the hedge made me money even long term, right? So this is also born Buffett's philosophy is like, well, if you have to hedge, then something is wrong with your strategy. You've got to find something you're so convinced and you can sleep with, sleep, do the night, despite not having a hedge, or just don't do it, just put it in cash or put it into something under your mattress. Yeah. I mean, I don't necessarily agree with that just because, you know, and this is part of the course that I give, right? So at the start of it, when we're talking about hedging portfolios, it's like, why am I hedging? Why don't I just liquidate my exposure? Right? What is the, what's the point in holding a position and having a hedge against it? And there are reasons, right? Like you may well think that there's a load more upside in the asset and you want to have that upside participation, but there's something on the horizon that is making you nervous. And there's a tail risk that you want to hedge. And you don't mind giving up some performance to just be covered for that tail risk, right? So that is, that is a valid argument. And so I don't think the, what that, I don't think that thing about. So it's very short term. When you think of it, say, maybe we've just went through a pandemic, but markets are basically back where we started more or less depends kind of on the market, but more or less. So it's a time horizon that the hedge works out for say, six months, 12 months, whatever that moment in time is. But then after that, you're basically back to normal sooner or later. I mean, you know, the markets go anywhere, but that seems to be from the last 30 years, our experience. Now, this might be skewed, right? The next 30 years might be completely different. But yeah, but the problem is like people are measured by drawdowns and sharp ratios, right? So yeah, if you can, if you can close your eyes for a year and say, don't worry, the market's going to recover because the Fed's got my back and it's my own capital and I've got no one banging down my door saying, what the hell are you doing with my money? Yeah, you're right. You don't need a hedge, right? Really. But given that you're competing for capital against a bunch of other funds and the thing that people measure you on is your drawdowns, your sharp ratios and all these things, that's why you need that structural hedge in your book to help prevent those drawdowns when they come to show, look, I'm outperforming, I lost less than the benchmark did in that drawdown, which is why you want to give me your money rather than passive, rather than just passively invest in the spider ETF, right? So I think that's the reason why you want it. But you just need to have protocols in place to understand how to monetize that, right? So which, you know, it's not like there's a magic formula where, and this is again, you know, you just need to teach people what are the go to ways to monetize and then they've got to use their own kind of discretion and skills to pick those ways, right? So really a really easy example, right, is let's say you do a risk reversal. So let's say you've got exposure to the market, but you don't mind giving up some of that exposure up 10% and you're going to sell a 10% out of the money call option, right? Get that premium and buy whatever put you can with that premium basically, okay? So that allows you to have some crash protection, yeah, and you receive a little bit of premium from those calls, okay? Now let's say the market dumps, right? Let's say you do that risk reversal and the market dumps, okay? That call option that you sold for 2% or whatever the hell the premium on that call option was, right? That call option is now worth nothing most likely, okay? But you're still short that call option, right? So a really easy way for you to monetize some of the hedge that you just did is to buy back that call option for next to nothing, yeah? So all you've ended up doing is selling that call and buying it back for and you've captured that money. That money is locked in, okay? So that's your one way of monetizing your hedge. So then if the market was to recover over the next month, you've got ammunition to resell a new call option, right? And you've managed to trade around that position and trading around that position is what is going to help you over the long term fund some of that bleed that you have systematically in your portfolio that you that you can't at the moment do anything about and is annoying you and making you think twice about doing hedging basically, right? And then on the put side, your options would be things like rolling those puts down to lower strikes, maybe rolling them to future maturities, if the curve, if the volatility curve has moved in an extreme manner, all sorts of other options. But you get my point, right? Like you don't have to just take the position off and now not have a hedge on your book anymore. You just need to know what are the kind of smart ways that I can monetize this protection and kind of effectively stop myself just bleeding money all the time when the market just mean reverts back after these shallow dips. When that mean reversion happens, I've managed to capture some of it, right? That's the general sort of idea. That's why I tried to teach in my options versus management course. Well, you got to know the market timing, which is obviously quite an art. I just feel the Holy Grail and all this is and I hope you're going to get there is the edges also make money, right? We put an edge in to protect something, but it also should consist of the well, consistent the obviously is a question of definition, but it should make money over the long term. That would be ideal. That's the Holy Grail. Yeah, I mean, that is the Holy Grail. I would say a better starting point is to say, if I can manage to just have a hedge that doesn't really cost me much money, then I'm happy, right? For you to make money off your position and make money off your hedge, you're kind of asking for a lot, I would say, right? It's not impossible, but that really is like pretty much superior to sell to structural investors and to a lot of investors if you can pull it off, right? Obviously, maybe it's impossible. It can never be done. But if you can get close to that the ideal scenario, because I feel like the hedge fund industry is definitely consolidating, right? So what's, it was had a big boom in the late 90s, 2000s, and then it's consolidating because it seems there isn't enough innovation coming out of it. But pretty much anyone can do what a hedge fund can do with a Robinhood app. It's on the slightly lower price level, certainly, and there's structural benefits to it. But if it's not insider trading, what is actually a hedge fund good for? Right? So what's left? What's left? What do they do with these guys that nobody else can do? Obviously, and they have to disclose a lot of their strategy. I mean, not in detail, but there is a certain level they have to disclose. So you feel like, no, I can do this myself. And I think this is what structural investors or a lot of these large investors, pension funds have been doing. They say, oh, well, we don't put a lot of money in hedge funds. There is a lot of demand for this. It seems compared to the size of the hedge fund industry. Yeah, I mean, I definitely agree that these more sophisticated strategies are becoming much more accessible and much easier to implement for everyday investors, whether it's real money funds or whether it's even retail guys, 100% agree. I mean, the thing that the hedge fund guys bring to the table is they've got the experience. Usually, they've got decades of experience, probably maybe some of them from the sell side have moved over to the buy side, maybe some of them have been there for a long time. So and if they've managed to stay on the buy side for a long amount of time, it means their track records are pretty good. And so they're doing something right, basically, right? They've kind of mastered their art, as it were. But you're right. What a lot of them do is probably quite replicable with some basic education. I would say. Yeah, it seems like I don't know who coined that. But if you have a paradigm shift, you want 20 year olds trading your money. And if you just have an extension of the current trading scenario, you want someone who's in his 50s or 40s, right? And maybe that's what we see with Robinhood, all these 20 year olds making money. Or maybe not, I don't know. Yeah, I mean, take enough numbers. Back to your point, what you made about bonds earlier, right? I mean, have we gone into this new paradigm where rather than owning a bond, I should just own like some low, some low earnings, high duration tech stocks instead. Because in the scenario where bonds do well, those stocks are going to do much better. Right? You see what I mean? So like the arc, the arc innovation ETF is kind of the poster child for duration right now. Why am I going to hold actual duration in treasuries or European even worse, like even lower yielding bonds, long duration assets, when I can own the arc ETF, which is also a long duration asset, but is going to have staggering upside because it captures all the growth potential, right, of all these innovations that are happening in the world, right? So maybe that's the paradigm shift where the young guys are coming in, and they get excited about those growth opportunities and those ideas. But it's the same conditions that will make both those investments profitable. But the high growth stocks are going to make a lot more money than the bonds are, right? But Imran, I'm not sure if I really understand that correlation, because I know it's there, but I don't understand, to be honest, why? Because say most tech companies, they're plenty of money, like money for them is not a problem. There's often the like for Google, for the longest time, it was a problem to spend all that money in something that would earn a future return. I think it's still the case of cash flows and llamas. So they have bonds and they do raise money in financial markets, but actually, once they have a certain size, they really don't have to, they're almost like a government, right? So they're really all talk in that sense. Why are they so addicted and related to low interest rates? It's not the mega caps. It's the guys like Palantir and, you know, you just look through the ARK Innovation ETF, right? It's the guys that don't have any earnings and therefore don't really have any cash flow. They've got no free cash flow, but in 10 years, 20 years, they're expected to have loads of earnings, right? And those future earning streams are what are being discounted at incredibly low yields, which are creating value to those stocks, basically. That's all it is. But it also assumes a venture capital, which usually goes along with public markets or public markets, IPOs and valuations are being transported into seed funds right away, right? That's always a problem. So you say you have an IPO, it takes about three to four years for most companies or more, and you say, but in that moment that someone goes IPO, these valuations are being applied to seed funds retroactively, but you're projecting the next three years are going to be just like the market valuations right now, which is never true, right? So in two years, this is a very short time frame typically, it's like a year or two, and then they drop, and then it goes, it's like the cycle. So I always feel like Palantir, they are more related to what is the actual IPO valuation, which yes, you can say it's discounted cash flow, but I mean, it's basically just creative thinking, what the next IPO price is for Palantir, right? Well, Airbnb, that is 100 billion, but the fire financing one was what, five billion, that's massive difference. It cannot be, I mean, you can always come up with the cash flow scenario, but it doesn't really random, that's right, the randomness of those things are really massive. Yeah, and there's cycles, right? I mean, clearly the SPAC bubble that kind of seemed to pop early this year, I mean, we saw it, right? So there will be kind of manias and cycles of manias in these type of things, and we see it, right? So the savvy investors who are getting into this space need to be aware of where they think they are in this cycle mania, and not try and pile into these names at the top of the mania, right? But like kind of allocating into some of these names that you've done a bit of due diligence on, that you think have got the kind of business model and some edge, some competitive edge that means they will survive and they will be in that space in 10, 20 years, then I think it can make sense when that space looks like it's having an unwind of some of that speculative prof, because there's going to be a lot of people who just get into it without doing any homework, right? So I would say you do your homework, you find out which names you like and why you like them, and then you wait for unwinds of the speculative prof in them to enter your positions, and you hold those positions for a long, you have a 5 to 10 year, maybe longer horizon on those positions, but you're using the unwind and the pain of those unwinds to get into those positions basically, right? And you had some opportunity recently when ARC was doing particularly badly, went sub 100, and you were able to dip your toes into some of those names, and maybe you don't do your full size, you know, leave yourself some powder, dry powder to do more if there's more unwinding to be done, but that's kind of how I would approach accumulating some of those names that you believe in basically for the long term growth story. Yeah, I feel it's very hard to, you know, if you have a value perspective to find anything that is of good value, because by the time it is very low value, in one of those super crazy crises where I think the world is going to end, like the financial crisis could have brought down the financial system, right? It didn't, but it could, and the pandemic could have made life, you know, if it was as bad as we all thought, could have ended financial trading, and any kind of trading for a long long time, it didn't turn out to be that bad, usually it doesn't, but so for value investors it is almost never a way to get into these markets, and what I'm trying to say with this is in value investing, I'd say is a directional person who buys on a PE ratio that's 12, whatever, you know, that there's more to this, but let's say this is our filter, and the return of capital is good, and the return on equity is good, and whatever. So these numbers seem to be extremely long term positive, but you can't use them anymore because stuff never gets that low unless, you know, big crisis is coming around. Well, what I'm trying to say is for all the other investments, you can just bet basically someone buying more of this for a higher valuation in 10 years from now because there's more free money going around, or more money being printed. I think this has been the investment strategy for the last 30 years that seems to work. Anything else is, if you go from really macro view, it's this doesn't really work anymore, because it's too unpredictable. I totally agree that value investing has become impossible in the negative yielding world, basically, right? Because, you know, like, there used to be a point to doing, to bad to kind of analyzing the valuation of the company, because there was some mean reversion there, right? It was like, if value, if your PE is above 50, you want to sell it, if your PE is sub 10, you want to buy it, and there's a mean reversion around PEs, right? And in terms of in companies that are within the same industry or whatever. But now PEs don't matter, right? The Amazons never had a PE. I don't know what it is now, but for most of its life, Amazon's never had a PE probably below 100, right? But it's been one of the best investments you could ever could have had, right? So, you know, it goes down to this kind of exponential theory that Real Vision have been talking about a lot recently, right? So, you know, these long term investments are more not about valuation, they're about picking what are the exponential trends, right? What are the trends that are going to become the networks of the future, right? What are the things that are just going to span across the entire planet? And every single person with an iPhone is going to be using that application or that product, basically, right? And whatever the PE is, whatever the PE is of those things is actually completely irrelevant, right? Because PE only matters, and valuation only matters. If the money that we use to buy it has got any value, yeah? But when you can pull however many trillion out of thin air to bail out an economy that just shut down for a year, right? How can you really attach value to anything, basically, right? I think it's quite difficult, I would say. And that's kind of what I'm coming to terms with, right? Yeah. But that's, isn't that, isn't that what investment is about? Well, don't you, you know, isn't investment bound to an idea of value being represented in numbers, in money, right, in dollars or whatever currency you use? I think this is the core of investment. If, and I agree with you, if we follow down that road, then what is investment, what's left of it, right? Besides a mania building, that's kind of, kind of, that's our current, right? So we go into these crazy manias, which are rational at some point, they are, but they pop and then they drop and then the next meme start, it seems to be continuation of this with the future. Yeah, I agree, right? But that's, we've got a mania in central bank balance sheets, right? Yeah, yeah, I agree. I mean, look at the rate of growth of central bank balance sheets, right? I mean, it's parabolic. So that's the problem, like, so it shouldn't be a major surprise that asset prices are exhibiting similar characteristics, right? Now, I'm not saying you should go and jump on every mania that's out there, right? But what I'm saying is you should, you should be aware that these manias can persist for much, much longer than you think is rational. But the beauty is, is once you know how to use optionality to participate in these manias, then you can contain your risk, right? You can contain your downside. And that's kind of how I got into Bitcoin, basically, right? Because I wasn't really a massive believer in Bitcoin. I didn't think it's going to become the new central bank. I don't think it's going to become the new reserve currency. But last summer, I came to terms with the idea that in a world where FBX currency gets printed for fun, yeah, and just created it out of thin air, and we, as entrepreneurs, I'm sure you noticed, you have to work pretty damn hard to make $100,000, right? Yeah, they can print trillions at the drop of a hat. So like, when you see that happening, you start to lose faith and lose trust in your institutions and your governance, basically, right? And whether Bitcoin is, whether it's true or not, Bitcoin is selling itself as a way of getting away from that system and buying into a system that is peer to peer, that is not controlled by a central planner, that is, you know, controlled by the people, basically, right? But all around the world has no jurisdiction, no central jurisdiction. And, you know, it's something, it's like building a trust, it's building something that we think we can trust and we can believe in, right? Now, whether it's going to happen or not, who knows, which is why you would never put 20% of your portfolio into it, right? As a starting point, that would be a bit insane. Wait, I sold my house and put it on Bitcoin. And I know people who have, and they're crazy, and I would never, and I think that's mental, and they might get lucky, but they might get very unlucky, right? But, but I feel like me, I put probably maybe 3% of my kind of investment assets into it last summer. And that's grown quite a decent way, right? So maybe 30%. And I'm sitting there thinking, wow, now, do I want to de risk and take some off or do I just want to let this thing run? Now, because I put only 3% in at the start, it makes sense. The whole reason for putting 3% in is because it had potentially 100x upside over the next decade, right? So there's no point now taking it off. But what I can do is I can put option strategies over the top of it, which mean when it goes, if it goes back to zero, because something crazy happens, like the Mike Greens of the world think might happen, right? Let's let's, you know, he's a hater of it. And I was hilarious listening to him and him and pump like kind of sparring on the whole Bitcoin thing, right? But but basically, if it goes to zero, I'm not going to lose all my money that I made, I'm going to lose some of it, but I'm going to get to keep at least half of it basically, right? And so that's what that's what I like. I like that fact that the options markets there allows me to do things that will help me retain some of those gains I've made in this highly speculative asset, but also allows me to maintain further upside participation if that thing continues, right? And that's how I look at it. What kind of options are available for Bitcoin? I wouldn't know what to do with Bitcoin. The first place is that options on the ETF that has Bitcoin as an underlying instrument. No, so that probably will come about at some point, but the ETFs aren't really very sort of, I don't think they're necessarily all over the place and easily accessible for everyone yet. So once they become, then they'll probably be an option on ETF. But at the moment, like, there's really only one go to place for retail, which is Derabit, which is the exchange for crypto, the options exchange of crypto. Now, Derabit, I believe is not available to US investors. So if you're outside of the US, then you can participate and you can have an account on Derabit and you can trade. The CME did list options on Bitcoin about a year or two ago, but because it's the CME, I think there's some size issues there. So you need to be very large institutional size to be able to participate in that. So I think for the retail, it's very much Derabit is the place to be. That's where I trade my stuff, Derabit. I like that name. I like that name. Yeah. One thing I was immediately thinking of, I don't actually know if this is even the strategy, but then you get a ton of leverage and so you can go at 5x long and 2x short at the same time. I don't even know if that makes sense, but this is the only thing I think you can play around with the current Bitcoin exchanges. You can change the leverage you want, but I don't know of any direction. Is that kind of leverage long or leverage short exposure you're talking about? Yes, that's kind of the only thing you can play with. Yeah, but the problem with that is that I think those are daily rebalance structures. I hate those structures. They're not nice. Yeah, they immediately sell your stuff. The margin calls come in quickly. Yeah, I would stay away from those types of products personally, because what they don't like, those products, is the chop. When there's a choppy price action, you get buried in those products basically. Those products will only work if you get a trend that just goes in the same direction every single day for a week or two weeks, and you happen to be the right side of it, then yes, you'll make a load of money. But if there's choppiness, which there always is inevitably with things like Bitcoin, that choppiness is eating up your performance and is actually costing you money. I would stay away from those, but I would learn how do I get that leverage and how do I get that exposure via optionality? Are there any smart strategies that I can do like call spreads or call ratio type structures that give me that participation? That's kind of how I like to play it on the upside. But in general, do you believe in this? And we talked about, you sound like a believer. I find that we have to use religious terms for monetary instruments. But do you feel like it is a useful store value? I can't wrap my mind around this. So I get the full libertarian streak, but the store value, and it's just the broken currency for the internet, it just doesn't work. It should be abandoned, everybody should know about that. And it also is a shitty store value from my point of view, but obviously the world disagrees. Where do you stand? Yeah, that's a good question. I mean, I think as a store of value, generally, something that can drop 50% over the weekend, for me calling it a store of value is insanity. So I don't call it a store of value. I call it a kind of fiat currency debasement hedge, a long term fiat currency debasement hedge that doesn't cost me any carry, and is a call option on the adoption of this thing, basically. And that's what got me excited about it, because I was like, I can effectively be long a call option here, that's something that could go up 10, 20, even 100x, right? That's what call options can do. But most call options cost me time decay. Most options, I have to put premium down, and that premium is decaying through time. It felt like this was a call option, which was actually making a crewing value through time, as more people learn about it, and as the network kind of spread, and your adoption cycle grew, basically, right? And you don't often get to own optionality that doesn't decay on you, basically. So for me, that's what was attractive about it, not that it's a store of value, because store of value needs to have some stability in my mind. But it's like, if you are losing trust in fiat money, which is not a difficult thing to get your head around, what the hell is fiat money when they can pull 20 trillion out of nowhere? Then it's like, yeah, maybe it makes sense to have something in this thing, because this is an alternative, right? This is doing something different, right? Now, that doesn't mean that I think it is necessarily the solution. But who am I to know whether it's the solution? All I know is it offers me an alternative. It has some slightly different characteristics to being in the normal monetary system that is governed by central banks, right? And it's got this, it's got this cool sort of adoption kicker, where the more people who understand it and see it and throw a bit of money into it, that that is going to help you, basically, right? So that's what it is. I don't see it, I'm not part of the religion by any stretch, right? But I'm, I'm just open minded to it, basically, right? And I don't feel like I have to be a lover or a hater of it. I think I can be relatively agnostic. And I think I can benefit from it going up and maybe even going back down. At some point, I might skew my positioning to be short this thing, right? So right now, using optionality, of course, I've never been naked short it. But I'm happy to go, go both ways on that if I think there's a good reason to, right? So yeah, I like how you put it, that's like basically a free option. Do that's a bit true with any volatile stock, right? So if you find any instrument that you go along, that's not a volatile, it's gives you a free call option, right? And whatever positive story it is, whatever, like a startup, right? Really interesting that the positive convexity for the startup founder is such a beautiful thing, because it always is a huge call option, even doing just on the stock, you don't need to buy any call options, right? Because you notice it could be a billion dollars tomorrow, or it most likely will never be more than anything. Yeah, I mean, that's totally right. That's the great thing about equity. I mean, I guess with companies, though, you've got to know if they're burning money or not, right? Like some of these startups might just be burning money that they will run out of time. I'd say that's one benefit that Bitcoin has. Those are the ones you want, the ones that go up all the time. Higher burn rate is usually an indicator of growth and growth is what people want. Yeah, you're right. You don't want to have any money. That's a bad idea. You know, Uber had so much money on their balance, she could try to get rid of it. That's quite interesting, isn't it? That tells you a lot about the world that we live in right now, but yeah. It's a funny story, but if there's no growth anymore and people go into 0.5% long term bonds, something strange is going on. So maybe one day we know what's going on, 10 years from now, we're like, look back. So that's so easy. You know, as a wise man once said, I think our goal isn't to predict it's just to be less wrong than everyone else, right? We know we're going to be wrong on a lot of stuff. We're trying to be less wrong, you know? I like that. I like that. I got to think about that, but that's, I really like that. Emron, with that message, thank you for coming on the podcast. Thanks for doing something very insightful. I learned so much. No, it was really nice to chat. Thanks for having me on. Great. Absolutely the same here. Until next time. Take care. Emron, talk soon. Bye bye. See you. Bye.

You may watch this episode on Youtube - #94 Erik Lentz (How to build an actual warp drive).

Apologies for the sound quality during the first few minutes - it gets much better after the initial five minutes!

Erik Lentz is a Ph.D. physicist and focuses on the theoretical, computational, and experimental aspects of searching for dark matter as well as faster than light travel.

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Torsten Jacobi: Eric, thank you so much for coming on the podcast. I really appreciate it. Thanks for taking the time.

Erik Lentz: Oh, thank you for inviting me. Hey, absolutely.

Torsten Jacobi: Eric, you changed the world recently and you gave us faster than lights if you travel, at least theoretically, right? You published a paper recently where you outlined the options, how we can achieve that. And it's been so long and I had many people here on the podcast who were very, very convinced that this barrier can never be broken. So I'm really curious about your thoughts and maybe you can help us a little bit more, how you came up with this, what did you do before and what makes you so confident that this could actually be a possibility?

Erik Lentz: I mean, I've been interested in this field for decades. I think a lot of people who get into STEM as a profession, we're all fans of science fiction in one form or another as children. And for me, it was definitely Star Trek. And I was really fascinated by the whole world that was set up by all the series and movies and whatnot. And I really resonated with the technology that seemed to facilitate all these things. And one that really stood out to me, that was really the physical link between the interstellar community possible was the warp drive. Otherwise, you'd be spending tens of thousands of years just trying to communicate across this vast network of civilizations. And so this seemed to be a really key point. And as it became older, it became obvious to me that someone would have to invent such a thing. And so it's been a fascination to see if something like one of these plot devices like the warp drive technology would actually be possible in the real world. And it took some time in order to build the technical acumen in order to be able to pursue that. But the desire was always there. And so what happened that, say, 2021 or really 2020 became the year that this paper came out for me is that I found the time to actually really delve into the topic. And we can, I guess, thank the pandemic for that because I found myself sitting at home with a lot of free time on my hands trying to find a way to fend off cabin fever and this project that I really wanted to do. And so I built into the literature to see what the status of people who had passed had been because, as your listeners may know, there is some existing literature on the concept of warp drive. You could say it kind of started seriously with Al Cubietti in 1994 when he was still a graduate student. He made this Al Cubietti drive this first example of a mechanism that could transport observers like you or me, people who move primarily through time rather than space, find a way that they could move effectively through this manifold of space time effective papers in the decades since then. And like you said, the literature seemed to indicate that this was while you could create such imaginary geometries, they were not really feasible because they had all sorts of problems, namely having to do with what sort of matter and energy would be needed to force them. And so this was something that was still problem in the literature when I looked back into the spring of last year. And I wanted to see if there were any loopholes, if there were any stones left unturned in all of the possible solutions to Einstein's relativity. That would allow for both a mechanism that could transport things at arbitrary speed, including faster than the speed of light as well as – that not necessarily need these exotic sources of energy and matter. And so the process that I undertook to do that was essentially just start to delve in the different types of geometries that would provide these properties that I would use that I would use that I would use that I wanted and constrain down, come up with a set of rules that would narrow down that set of solutions and these other constraints like positive energy and other things. And eventually, I found this vision set of rules that I could construct via a computer simulation how one of these geometries would take the example of one of these geometries and that's what you saw in the paper last year and what's been circulated in the past few months in the media. So this is all very exciting. I don't know if I'd say I've completely changed the world yet because there are still a lot of challenges ahead to this sort of research, but it is very exciting.

Torsten Jacobi: That sounds fascinating, Eric. When you published this paper and it's been a couple months since then, when you would have to explain your theory to a 13 year old, how would that work? Maybe we can be in that same position. How can we actually get to that point where we can travel faster than the speed of light? What is necessary and what effect are we taking advantage of?

Erik Lentz: Well, we're taking effect of the advantage that unlike special relativity, special relativity is usually what we appeal to when we think of nothing can move faster than the speed of light. That's relativity. That's actually not quite true in the context of special relativity and the principle of special relativity says that two objects cannot move relative to each other at a single point faster than the speed of light. So this is a very local statement when we bring it into the context of general relativity. So because moving from special relativity where we're all moving on this flat background space time and Kosti space time, and we make that space time in the context of general relativity dynamic and reactive to the matter and energy that lay on it, there are a few tricks that we can take advantage of. Namely that if we separate bodies, there's now no longer a principle that says that the bodies cannot move away from each other or towards each other, being at two different points effectively faster than the speed of light. In fact, we see a phenomenon like this, we believe, in our own universe, namely this acceleration quantity, the fact that galaxies very far away from us appear to not just be moving away from us, but accelerating away from us. This is a phenomenon called inflation. There's also a period that we believe in the early universe where a much more violent form of inflation happened where objects moved away from each other at a rate that increased exponentially with time. And as it becomes further.

Torsten Jacobi: Some of those outer galaxies and planets, from what I remember, they move away faster than speed of light. So we can never catch up, never see that galaxy.

Erik Lentz: Precisely, precisely. And by virtue of them being further apart and this acceleration mounting with that increasing separation, eventually they start moving away from you faster than the speed of light and they fall out of what's called causal contact. It means that you can't communicate with them anymore via something like a light beam. And they fall behind what we refer to as a horizon, an event horizon, of a different type than say you'd find around a black hole, but similar in effect that you can no longer communicate between these two bodies. And we're essentially doing something similar with the warp drive. We're taking advantage of something that kind of looks like inflation, a much more complicated form of inflation because it doesn't necessarily just inflate. It also contracts. And use this to our advantage in order to effectively make some motive device that propels us through this space time. The alkybietic metric is maybe the most intuitive form of this concept in that when you calculate what's called the extrinsic curvature, it's the form of curvature. It essentially tells you how space is being curved in the presence of the higher dimensional space plus time manifold. But what it tells you is for the alkybietic metric, you have this nice picture of what almost looks like a wave. And this is what is propagated in the media very often, that you have some flat region in the center of this warp bubble. Also can be referred to as a soliton because it's nice and compact in size. And in this center flat region is where you'd put a ship or some such thing. In front, on the leading edge of the bubble in the direction of travel, you have this dip in the graph that's most often circulated. And this tells you that we have a relative contraction of this extrinsic curvature. It's kind of telling you that the space is being compressed in front of the bubble. And behind, we have this peak in the extrinsic curvature which is telling us that the space behind is relatively expanded. Now, the combination of these things kind of gives us an intuitive feel that we are kind of making the distance to our destination shorter and the distance from our origin point longer. This is not entirely accurate because this region of locally contracting expanded space does not extend all the way to the destination or from the origin. But it does give us a nice intuitive feel for that you're essentially dragging yourself along by pulling yourself by contracting space in front of you and renormalizing it behind you by expanding it. Now, other solutions are a bit more complicated in that and the interpretation becomes a little less clear. But most of these solutions do have similar, all of the solutions have curvature of one form or another. The particular type of curvature that's put in this plot of this nice acubiety drive wave shape, most of them are nonzero but not all of them. There is one example, one well known example called the Natadio drive where that particular form of the curvature is zero everywhere.

Torsten Jacobi: Yeah, well, I know that was mentioned in what I read about the white paper. It would reduce the speed of travel, say to the next star system, to a few years or a few dozen years instead of, I think, a current propulsion systems that we have would be a few hundred years, a few thousand years, right?

Erik Lentz: Well, current chemical rockets, they're limited by their exhaust velocity and how much fuel you can carry, which the limit is, the entire vessel is made of fuel. And at that limit, you are essentially, I believe, limited to about twice the exhaust velocity, instantaneous exhaust velocity. So with current chemical rockets, we're talking about some tens of kilometers per second, which translates to tens of thousands of years to get to Proxima Centauri, which is a bit excessive. There are somewhat fewer terms.

Torsten Jacobi: There was recently a story about that. I think it was three generations, right? I don't know if you watched that movie. What do you think? They had children. They basically had children that were born in a traveling rocket, so to speak. And they were primed and raised by themselves and no parents around. There was one parent around, but he kind of dies early. And then the idea is that they will, their grandchildren will actually be at the same age when they reach their destination. It's only about 100 years, right? That's not super long. And then the whole ship kind of falls apart until then there's a lot of struggle, and eventually they make it. So it's a good movie, though, it's well done.

Erik Lentz: But I believe the rocket probably used in that movie was a nuclear rocket because their exhaust velocity is much, much higher. The energy levels able to be utilized from nuclear fuel, whether it's fission, fusion's obviously much better. The utilization percentage is much higher. But I believe, yeah, there have been some studies to say that, say, with a nuclear fusion rocket, it may be possible to make the trip to speed one ship up to some tens of percent of the speed of light. Of course, that would take some time. And so the journey would take maybe a generation or two.

Torsten Jacobi: Yeah. Freeman Dyson worked on the Orion spacecraft. He was one of the co conspirators. Right. And they had supposed to have micro explosions, nuclear explosions, and that would propel them if they were controllable. Also, depending on how much material they take with them, unless they go close to a star and refuel, I don't know, that's so feasible. But at least it sounds faster, it sounds more and more sustainable. But it never, because of the nuclear arms treaty, it never went into any testing from what we know. Maybe it's hidden from us, that part of history.

Erik Lentz: Perhaps I knew though that there were some tests of fission rocket systems, I believe, all the way up into the early 70s. But those were also discontinued. There are some, I guess, small collections of engineers and physicists who would like to resume those tests. Just because the specific propulsion of those engines is much higher than chemical rockets. But I don't know what the status of that is.

Torsten Jacobi: Yeah. Well, there's people who say we have these bases on Mars. In the movie, we communicate with the aliens there. And that's where we build all the rockets, on the dark side of Mars, right? Well, maybe that's a little bit too much of a conspiracy. Going back to what you came up with, it generally seems so with the precedent that lights we traveled initially, it all sounds relatively easy until we realized, whoa, the amount of energy that's required. And often, that seems to be bigger than the sun. And that's where the discussion ends, because we don't know how to harvest even a portion of the sun properly, the solar cells here. But we are really far away from harvesting the full sun power. Fremant dice was working on something similar. How does that work with your theory that you are suggesting?

Erik Lentz: Well, my theory is, I guess, also impractical from a total magnitude of energy viewpoint. The previous studies, previous warp drive studies, required, yes, on the order of solar mass magnitude energy. And I'm not just talking about the radiative pressure of the mass. I'm talking about converting every kilogram of mass in the sun into an actionable form of energy, the E equals mc squared type of conversion. A perfect conversion. Not only was it. A perfect conversion, right, that has never been achieved. Well, only via matter, antimatter annihilations. Those are the only ones that I'm familiar with. We don't use them to often. Not only. Seasonings. It's a little expensive at the moment. I think some thousands of trillions of dollars per gram. It's a little out of our reach. But in any case, not only did the total magnitude of energy need to be of the order of solar masses, the sign was also what made it impractical. Not only did you need that magnitude, but you needed to make it out of some media that we don't know exists in that sort of concentration and that sort of density. We needed exotic matter, things with negative energy density, of some very astronomical size. We needed to be able to make that. We needed to be able to make it stable. There were some initial papers. I think by fending in forward, they were the first ones to make the computation of the Alcubietti Drive to say, OK, it may be possible that we use properties of the vacuum, use a chasmier effect in order to make naturally occurring exotic matter. We essentially make the width of this bubble so small that we get a chasmier effect so the local energy density can, via quantum effects, become negative. But in order to make that bubble wall thin enough so that these would naturally occur, we would need to make them on the order of hundreds of Planck lengths. Planck lengths are, oh gosh, what is it? Oh, it's 10 to the minus 30 or so centimeters or so across. It's extraordinarily small, far beyond the distance scales that we can probe, say with the LHC, some many orders of magnitude beyond that. But you'd need to make that all the way around a bubble and say, if you made the bubble interior 100 meters in radius, the total effective negative energy you'd have to make that bubble in the bubble wall would exceed the total magnitude energy in the visible universe by orders of magnitude. So it becomes extremely impractical, very much a problem. So instead of making it naturally occurring a chasmier effect to fuel this, you'd want to find some naturally occurring stable source of negative energy density, which we may have some hints of something similar to that going on with dark energy, sources of inflation that we seem to be observing in the universe, but we don't know precisely what the sourcing media looks like. But in order to make that in such high densities and such concentrated quantities, we have no idea. It's much easier to, say, take things with positive energy density, atoms, things that you and I are made of, and try and manipulate that to make very high density dynamic fluids in order to source such things. But before last year, we didn't really know how to make a solution that could utilize these sources and actually make a warp drive out of them. And that was the impetus for me looking into literature and making the paper that we saw come out last year and get published in the early months of this year. Just to be sure, with what you're suggesting in that paper, what is the amount of energy required just to go to Alpha Centauri? Right. Right, right, right. The energy question. So the energies are similar in magnitude to the old estimates. But the sign is correct now. Now we have positive energy densities. But to make something radius 100 meters go at the speed of light, we would need some tens of percent of the solar mass equivalent in order to do that. So very high amounts. 20% of the sun, we would need. Yeah, say 20%. Right. So five times 10 to the 29 kilograms of material compressed into something that is 200 meters across. And that's to go the speed of light. Not faster. In order to go faster, you'd need more energy. But then you could get to Alpha or Proxima Centauri in a little over four years.

Torsten Jacobi: Yeah. When we think of this, and we obviously in an extremely early age, that's all theoretical. But if we take this all the way out, say we're going to be way more efficient. And it's only going to take 1% of the sun to travel that far. And maybe an even better speed. So we make magnitudes of improvements. I'm thinking of the early days of the internet, right. We put all this fiber under the ocean. We thought, oh, it's not going to be enough. And then five years later, we realized, oh, man, we 100 times more efficient. So we actually put too much fiber underneath the oceans. But as I'm saying, there's going to be a huge amount of efficiency gains to be made if you ever get into a practical solution. But I mean, we only have one really easy applicable source of energy in our solar system, right. It seems like still an amazing amount of energy that we have to procure. Even if you get way more efficient, interstellar travel, we're going to get rid of all this suns, right. If you take it from such a solar source, it doesn't mean that's what it's going to be. But it seems inherently very limited. So if anyone comes up with interstellar travel, it seems to be we have to agree. Right, wouldn't we be seeing a blinking out of all the stars in our galaxy? The stars should be going away. That's what I'm trying to say, right. Because I mean, the equations that you make, they're right. Or you can't do much about it. The energy seems to be, if we are curving space, just to go to the next star system, it seems to be a huge effort. There shouldn't be a lot of stars left. If someone else in the universe sooner or later has come up with such a travel system.

Erik Lentz: Right. So I would agree that if we cannot make extreme savings in the energy efficiency of these warp drives, then if they ever become feasible, that would pose an existential threat to the rest of the galaxy. I still have some hope that gains in efficiency can be made far beyond the one or two orders of magnitude that you just mentioned. I'm hoping that something on the order of tens of orders of magnitude can be of savings can be made in the energy density. There have been studies, again, in the context of the acubi eddy drive, the natario drive, things that already used exotic matter, in order to save energy on tens of orders of magnitude scales. So maybe bringing the energy from 10 to the 30 kilograms to 10 to the 20 kilograms, 10 to the 10 kilograms, maybe even down to the kilogram scale. And if we're talking about a kilogram scale, then maybe we're in the realm of something like a fusion generator or even a fusion generator. Especially if we say, slow ourselves down for the prototypes, which I think would be inevitable. You'd want something that is both smaller in diameter. So maybe you are putting something the size of a small satellite into one of these warp bubbles, and you're making it move, say, some kilometers per second in orbit. Maybe you're just having it change orbit above the Earth. Then you don't need nearly as much energy as well. You can scale it down in that way, but you'd also need some other energy saving mechanisms just to get there.

Yeah, that's where we want to go. We want to go to the stars, because otherwise we begin almost to go there right now. I mean, it takes a little bit of effort, but maybe Elon brings us to Mars in 10 years from now. One of those problems that we have with traveling close to the speed of light is that time is so relative that the people inside that spacecraft have a very different perception of reality and how time goes than the people who haven't traveled. So we would never be able to return into the same time. I think depending on the speed, it could be thousands of years different when you return, like the Earth has either. I know I always confuse who's traveled quicker, but you definitely, in hundreds of generations after you've left, I don't know, that's only for one eight year trip to Opposite Ari and back in 10,000 years into the Earth's future. But with a warp drive, we can avoid this, and of course, how this works. Right, so the twin paradox, that example from special relativity, where you have two twins, one moves away, experiences time at seemingly a slower rate because when they return, the one that went on a trip has aged relatively little compared to the one that stayed on Earth. So how this changes is because they change reference frames. Right, they start in the same reference frame, then one twin accelerates to something close to the speed of light, and you get all of these dilation effects. They accelerate again to return, and then they come to a standstill relative to the original twin. But Eric, if you travel at the speed of light, the time stands still and you don't age, right? It's not possible. Sorry, close to the speed of light, near light speed, near light speed. Sorry, I was being imprecise. But in the case of the warp drive, if you were to recreate this twin experiment, you start off with one on Earth, one gets in a ship, the bubble forms around it, and off they go, seemingly accelerating from the viewpoint of the one on Earth. They see the ship go get farther away. But within the warp bubble, the second of the twins never feels any acceleration. They do not accelerate. They do not effectively change frame of reference with respect to the original twin. So the rate of passage of time locally for both of these twins remains the same. Because the ship is in the same position. The reason why they're separating, while not necessarily experiencing different rates of passage time, yes, is because of the curvature. But so the twin that's traveling goes to Proxima Centauri. The curvature collapses so they can actually, say, look around. And this twin has aged, say, if they're moving at the speed of light, the drive moves at the speed of light. They've aged four years. They've seen four years go by from within the ship. Then they get back in the ship, the warp bubble reaccumulates, and they come back to Earth to tell everyone about what they've seen. And they come back, and it's been total, say, eight or nine years. But also, the original twin on Earth has also aged that same amount. So you don't necessarily have the same problem of being able to explore the universe, but never being able to tell anybody about it because your civilization is long since dead. Yeah, that's really neat. It really solves a lot of practical problems on that. I guess, although it does necessarily mean that in order to really see much of the surrounding galaxy, you really have to be able to accelerate faster than the speed of light because you're still limited by the passage of time for the people in the ship. So you really want to not just meet the speed of light. You really want to get beyond a 10, 100, 1,000 times in order to really be able to travel, say, to the galaxy center and back in a reasonable amount of time within your lifetime. Yeah. So there's still that shot. What happens if we travel, say, 10,000 times the speed of light? So let's assume that's in that warp drive. That's in a future scenario. What happens to time when that person that travel comes back to work, would that still hold true that time has moved the same for both twins? Or would that be a different constellation? I mean, I think it would be effectively true. You can, of course, design one of these warp drives that does have the ship inside experience some acceleration. So you do have this difference in time rate of passage. But beyond that, no, they should match fairly precisely up to, I suppose, what happens during the process where the warp bubble is sort of accumulating in magnitude, what would be seen by somebody outside of it as the acceleration phase as the ship moves off. And that is actually something that hasn't been done in the literature, a precise mechanism for accelerating or decelerating one of these. Although I imagine because of the very calm nature of the spacetime inside of the bubble, it would be fairly straightforward to maintain that throughout the entire process. So they wouldn't experience any acceleration, so the rate time of passage wouldn't change. But there's the question of, OK, so what happens if you are going to see a star that is moving relative to the Earth? You're going to have to, there's going to be, effectively, some dilation between your original frame of reference and your destination. So you're going to have to match that in some way. And so there'll be some effect when you're exploring whatever that star or other galaxy, whatever your destination is. There'll be whatever physics goes on during that time. And then you'll have to reverse the process and come back. So there may be some effects from matching the trajectory of your destination. But if we're just dealing with the plainest of scenarios and the two objects are sitting on a relatively flat spacetime and moving, not really moving relative to one another, you shouldn't really see that sort of impact. You know what it sounds like? It's a bit like the Stargate universe. I'm a big fan of the science fiction shop. And what their pseudoscience, so to speak, is, right? So they have these gates, and you basically go through an event horizon. And you don't even have to move, right? So you're exactly being rerepresented on the other side of the event horizon. And it's not a beaming device. It doesn't sound like Star Trek. But when I hear that, I feel like the ship is basically, it only needs to move a few inches, right? Because space is moved so much around that the ship movement doesn't matter much anymore, right? And depending on how much you use, how you create that warp bubble. But let's assume we can make it a gate, like literally something we have at home, like a home device. You literally just enter the warp revenue, and you jump in, and you jump out on the other side, or push it out, let's say that. And we wouldn't necessarily, I mean, we can basically travel in a space suit, right? Because we are in it only for a few seconds, and then we come out on the other side. Do you think we can go that far? I mean, that's kind of the general assumption that I put into my solution. And what has been done with the other solutions is that it's a very calm area inside the bubble. You're essentially in free fall, right? So if like somebody out on a spacewalk, you have the sensation of floating. And even as the bubble forms around you, or dissolves around you as you reach your destination, you feel virtually no sensation whatsoever, as far as motion is concerned. Our typical intuition about motion really is based on acceleration or vision of things moving relative to us. You would have some sensation of seeing things move by, but you wouldn't have the sensation of acceleration. You wouldn't feel that you were being cold or pushed or anything like that. So there's also no radiation problem, right? A lot of people felt that warp drives were huge radiation issues. Well, yeah, so there are problems with radiation from a couple different viewpoints. There's the hawking radiation issue that if you create a warp drive fast enough, you create an event horizon. You essentially isolate the inside of the bubble from the rest of the universe. And that has its own just classical physics problems in terms of how do you, if you were able to make one of these things and you have a horizon, how do you communicate with the rest of the bubble? So when you reach your destination, you can actually dissolve it and rejoin the rest of the universe and actually observe what destination you went out to go see. And that's a whole other problem. But having to do with radiation, once you create one of these event horizons, there is this concept of hawking radiation where if virtual particles are created on either side of the horizon, they will be out of causal contact and be unable to annihilate with one another. And so you get effectively radiation of particles that are created on your side of the event horizon and they can impinge on you. And there have been some calculations of the radiation that would possibly result from such a horizon. And it's not good. However, however, the, I think some of these difficulties can be overcome simply by virtue of geometry of the interior region, right? The initial Cubietti drive was very spherical in shape. The shell, the shape of the event horizon was very spherical. So everything that would appear on either side of the horizon would propagate towards the center. So the ship would, the entire volume of the interior would be radiated. It's possible that if you shape the edge of the horizon in such a way, you may be able to create regions that are radiation free. Correct. Yeah. So that may be one way around it. It's not necessarily omitting radiation within that calm region altogether. But it's, I think, a step in the right direction. There's another problem having to do with radiation in that you have this shell that's moving at faster than the speed of light. What happens to things it runs into, right? There's space dust, there's comets, there's all sorts of things that it could possibly encounter on the way to its destination. What happens to those? Well, with the standard QBA drive, it seems like all of these objects that impinge on the leading edge of the bubble get stuck. They get their time rate of change as they move through this high region of high curvature. Essentially, they get swept up with the bubble and they move along with it. So you have this mounting shell of energy on the leading edge of the bubble. And what happens when you then stop the bubble, if you're able to overcome this horizon problem and stop your drive at your destination, what happens to all this energy on the leading edge? Well, it seems like it gets radiated out in front of you in almost kind of some very coherent pulsed laser beam. And so that could also be potentially very dangerous to your destination mostly. But that might also be something that can be overcome via geometry that you could perhaps instead of necessarily catching everything, you could change the front end of the shell or change the geometry, not just the shape, but the actual degrees of curvature so that instead of getting caught in the leading edge, you might be able to deflect it around. And it would essentially come out the back end of your drive relatively unimpinched on. One thing that I immediately thought of is when we now think about, I love how detailed you are already into this, when we think about a faster than light speed travel, someone in this universe must have done it. So that's known as kind of a Fermi paradox, which isn't going to be a paradox, it seems to be just a lunch note. But anyways, it's become quickly known as this. Others must have done this and why didn't they visit us? And maybe when you talk about the issues that there are of a faster than light speed travel, is it possible that some of the things we see in the universe are kind of a pollution created by other people creating warp drives, thinking about black holes, thinking about pulsars, car stars. All these things that we see, maybe they are just pollution, where some of the warp craft didn't work properly. Is that something that ever occurs to physicists or this is just too much science fiction? I think it occurs to physicists. But I also believe that there is a mantra that happens in physics, particularly in astrophysics, as they encounter new phenomena that they are unfamiliar with, they don't know, they see some gamma ray source, some repeating gamma ray source or unrepeated, some new phenomenon that they are unfamiliar with, what exactly is causing it. And I think for a lot of them, not some small part of their brain is saying, oh, maybe it's some sign of intelligent life of some advanced civilization. But then this mantra also comes into their mind, okay, it can't be aliens. I can't say it's aliens because that's perhaps, that I'll get branded as the person who says everything is aliens. And so they look everywhere, but for a result. And so far, that seems to be working out fairly well. But as we advance our own knowledge of what different phenomenon we can create via technology, like possibly this warp drive, we're confronted with questions, Fermi Paradox like questions, do these things, can they actually exist? And if they exist, and we can create them, why hasn't everyone else? Why don't we see signs of this? In the case of the warp drive, you already mentioned one, right? Why don't we see suns blinking out because we need so much energy seemingly to make one of these? And maybe if these things are actually happening, there is a means of saving vast amounts of energy so you do not need so much. Maybe you only need an asteroid's worth, something like 10 to the 12 kilograms. Those are much more difficult to see disappearing from other star systems. As far as seeing the effects of, say, the creation and acceleration and deceleration and diffusion of one of these drives, it may be that such signals are very focused. That instead of seeing some gamma ray burst, which radiates in many different directions, fortunately for us, with such intensity that we even being light years or tens of thousands of light years or millions or billions of light years away, we can pick up some few light particles, some few photons in our telescopes. It may be that these drives are very efficient in that they don't give off much in the way of excess radiation. That's also possible. I'm a little less sure of that one considering some of my recent thoughts on how one would actually accelerate one of these drives. Because not only do you need to satisfy the Einstein equations, which are what tell you, given a particular source of matter and energy, how the space time is going to react. You also need to satisfy the general relativistic form of conservation of momentum or refer to as conservation of stress energy, the covariant conservation of stress energy. You need to, if you're going to create something that propagates across space time, this thing cannot just create non trivial stress energy out of nowhere. There has to be some equal and opposite type of reaction in a covariant geometric sense. What does that look like? That might be a possible signal, but precisely what that sort of radiation or geometric disturbance, maybe there's some gravitational wave given off by one of these drives as they accelerate or decelerate. I don't know yet, but these are definitely things that I'm thinking about. What's great about the warp drive is it gives us the option that someone could visit us mostly in real time, but we think of the long term space travel. So far we always felt like, well, the time horizon is so far off. We notice from light that by the time the light gets here from a few million light years away, that's a million years have passed from the source where we actually got the light from. I guess so far we always felt, well, the time horizon might be so different, might we track aliens maybe relatively useful in a useful way for 200 years or 300 years or maybe 1,000 years or 2,000 years, but that's about it. But the time horizon just for interstellar travel could be so easily just off by a few million years that it wouldn't be very easy to miss that life that now finally can track aliens. That seems to be a very convenient way to get out of the Fermi Paradox. But with a warp drive you don't have to excuse anymore because it would be real time so to speak. You could. I mean, you still have that problem because it leads me to this question, do you feel time in the universe, it is the same for everyone involved, is it necessarily the same or do you think that's what you think right now but this concept will change over time? There's a lot of different times in there. Well, so this is something that I've thought about on and off as a fan of science fiction as somebody who likes to think about these different possibilities. So I would say regarding things like the Fermi Paradox and why we haven't already made contact or will we ever make contact if we ourselves manage to become this star faring species. My current thought is that it is very difficult to get to this point. It is very difficult to, there are a lot of pitfalls in evolving technology and society in a way that is sustainable, that can be, that is long term, that won't necessarily collapse at some point and necessarily have to start over or worse the species that was responsible for it no longer exists so that they can't repeat this building process technologically speaking. I wouldn't be surprised if life does exist in such quantities that one might believe from the Drake equation or versions of the Drake equation that these barriers may be very high to moving to a point where you can observe say via telescopes or whatnot other civilizations even though you're still bounded by the speed of light and then transfer from there into a space faring civilization. I think that is a relatively large barrier, you have a lot of different technological advancements that need to happen in a way that doesn't necessarily prove catastrophic for the species such as nuclear power. Nuclear power can be a wonderful tool but it can also be very destructive. So it may prove to be the key to interstellar travel even if it starts off being in a subliminal sense using one of these projects like Project Orion where you have essentially a very large nuclear rocket moving at some 10% of the speed of light to nearby stars or if we can maybe create a warp drive that is powered or finds its source of power from a fusion reaction, just a very efficient one and a very efficient warp drive that the society that builds this and is able to advance this and facilitate all of this has to also survive alongside. You need to be able to cultivate the people or equivalent of people whatever these alien civilizations look like that can make these advancements in understanding and advancements in instrumentality and advancements in the various technologies that are in the ecosystem. There are just so many planets and we know that the basic ingredients for life are everywhere. I think there was bacteria on Mars, I'm not sure if that's true but there was suspicion and there was water so the basic ingredients for life and their carbon atoms they're all over the place and yes I mean I agree with you that there's a civilization challenge which comes with consciousness especially this upgrade to life which is still a perplexing question to me why only one part of the primate's got it and no one else in the animal's universe can ever catch up to it seems really odd to me but let's assume this is the way and I mean that this is eventually coming out everywhere but it's a vital this the basic mechanisms of the universe seem to be relatively simple in that sense there's an abundance of energy and there's an abundance of probability that there must be more out there and yes I agree I mean there's always challenges but from my point of view and correct me if that's wrong I know I get a lot of flak for this is we seem to be headed somewhere like we are we are definitely working against entropy it's more complicated when we build it's more universe chattering by the day you know their power is the latest to it but it's going to be way more technology and I feel we're headed somewhere and people say well it's like the ants on one side of the room they come to the other side it doesn't mean it's we're headed somewhere yes but I mean we are talking about moving space around so we can travel theoretically only but maybe practical in 500 years 10,000 years whatever the number this is I feel that definitely someone put us up to this challenge it's not randomness to me but that might be because I'm part of it right because I'm biased but it's just seems so strange that you compare this to ants on one side of the room making it to the other they're not headed anywhere it's random maybe maybe not it's it's just it's not a good good analogy we I mean it what compels because you're talking to somebody who for some reason felt compelled to try and make one of these you know earth shattering inventions theoretically but yeah I definitely feel right right we we right we have to feel that we can be audacious enough to try these things and definitely some of us do feel that way enough of us certainly otherwise I do question that sometimes you know what that that I'm on the right track or or the like but I definitely do feel compelled to to try new things and is this purely an evolutionary byproduct right is this something that is just me or our species trying to better and perpetuate itself just purely from a fitness perspective or is there something there's something deeper going on that that that is that is a question I do not feel qualified to answer all I know is that I do definitely feel compelled to make to make these improvements to be able to facilitate humanity to be able to reach further than it's been able to before in this one small way but I do feel that compulsion but it's a gut feeling and it's a gut feeling of what I want to talk about it it's I feel like and it just goes back to to you know what Newton all this has been saying it's when you look at the universe doesn't feel like there is a creator doesn't feel like someone created this as a simulation you know you could say that or created it as an environment to test the theory or to to build you know with it's I always feel the big bang such a bad excuse you're like okay we can't talk about it because we can't see it and there's a big bang and really that's it I mean isn't there should we really at least speculate about is there a reasoning that someone put us up to this challenge and we are like this child that now grows up and there might be other children across the universe that's how this seems to me um but obviously that's a gut feeling right this is very difficult to ever prove the scientific theory but it seems to me much more likely than it's all just random and the big bang was this random event in the universe never happened before it can never happen again and it will eventually be flayed back to the big bang it's all a little intentionally blindfolded yeah this conversation surrounding simulation I find very interesting how it starts off in a very technical viewpoint but then almost takes on a spiritual uh nature in the end almost a religious uh uh context in the end um very interesting how that that that has uh has evolved um that conversation but in terms of the philosophical conversation around the origin of the universe um I I think it hmm how do I say this well do you feel there's only one universe or there's more than one and that's you know a quantum mechanical actual theory that's being discussed for every single reason there is another universe many worlds many worlds um well I think I think there's a lot to still be explored uh in the origins of quantum mechanics um I think yeah many worlds is is one it's you very quickly if you think about many worlds and uh especially if you fold in string theory to that that you have every available type of physics present in the universe by universe I mean all of reality even those parts that we can't see um that have fallen out of causal contact with us or we're never in causal contact with us really um but express physics a little bit differently and may or may not contain life so that really all possibilities are presented or a simulation that somebody some thing some entity has fine tuned this universe uh to create life possibly or some or for some reason that is beyond our comprehension um or or it's also possible that our conception of quantum mechanics is still uh very uh very new very imperfect uh that we don't necessarily have uh enough of the pieces together to understand exactly where um uh quantum physics fits into uh fits into how our universe operates right and because of that I I somewhat defer these um these conversations a little bit I think there's a lot more to be done uh without necessarily appealing to anthropic reasoning uh at this point so because you could say yes the universe is the way it is because otherwise we wouldn't be here to observe it yeah you know it's it the the parameters are are sensitive enough that if they are much different than poof uh you and I wouldn't be talking um that that is one possibility and I suppose it'll always be there but I think there's uh I think I'm not completely satisfied with it I I think there's um I I you know that there are other possibilities uh theoretical possibilities that I think uh should be explored before we you know in my mind throw up our hands and say it had to be this way or we wouldn't necessarily be here um and then I I take a a similar perspective on on the simulation conversation it it's quite possibly true uh but there's uh you know there's only so uh so much one can do about that once one accepts that uh unless one then changes the conversation of I want to understand the universe or I want to understand the mind of the creator of that simulation or yes however you want to to phrase uh what we are currently living in I mean it's certainly just you just you just transfer the the the you know every physicist I think wants to actually learn about the nature of the universe at least an astrophysicist and you know that's kind of the in an origin motivation um an original motivation and if these rules of the universe are they following someone's someone's purpose someone's plan or is that they're all random well that's certainly you can debate about this and that's I think it's very popular right now to say well there cannot be a creator or if they want I don't want to I don't want to know about it but you I think I always feel like this isn't a little bit of utility discussion is right so yes the universe might be just this quantum computer that's all random and we are just like you're like this part of the cloud we're like in a in a big big server wreck and we just don't know it right it could be um we are basically in a wreck space of the of the universe but maybe this thing's got to have a purpose right I always feel like it's very rare to come across something in life you don't know I don't none of us notice the purpose but it has a purpose and this purpose is often well it's it's it's it's boxed into higher order purposes let's put it this way so there is a huge hierarchy of purposes sitting on top of pretty much anything that exists in lab because usually it gets outcompeted or forgotten oh from my point of view obviously there is there is some hierarchy of purposes out there and that seems to be it there's a utility right something has to be worthwhile to be to be existing and that discussion never enters I feel the modern discussion about the universe from from a I'd say hardcore scientific standpoint but that would be awesome because I think it would make speculating or coming up with new theories somewhat easier or am I seeing is all wrong well I I think kind of in the undercurrent of of what you just said is this concept of when you're talking about worth and whatnot there's really still a very human content that worth it from a human perspective I mean how do we conceive of worth apart from ourselves that's that's a much more difficult question from you know from within our society or within ourselves it's it's much easier well much easier we can also get very philosophical about that as well I mean what is the reason of time well why do we have time I don't want to I don't want to say this is something that has to be working on earth that's silly but why why do we have gravity and gravitational waves why I mean are you just there for what so I think this discussion is useful obviously yes we cannot just judge by the order of our current planet earth that's a little silly it's a tricky question it is a tricky question and oftentimes we come we come upon these these phenomena like a gravitational wave or whatnot as a byproduct of of our attempt to understand the universe right gravitational waves weren't necessarily the impetus for forming the general theory of relativity they were a result of it right out the initial attempt was to formulate to fold in gravity to this concept of of the relativity principle and then some years after well not many years after really I think it was only a handful that the the concept of that you'd have this self propagating radiation type solution in the form of these two polarizations of gravitational waves analogous to what you'd see with the electromagnetic field and light that you would also see this and just trying to keep it you know close to humans concept of human concept of meaningfulness we pursue we seem to oftentimes pursue physical theories let's say in within the 20th century based on some sort of need for an explanation there's some phenomena that we didn't necessarily understand and we needed something to to fill in the gap and there are a number of different approaches to that top down bottom up type of approaches just you know filling in a common one that's still fairly popular today there's a phenomena you don't understand it's a particle make a particle out of it usually God is you know it's kind of been replaced it it's kind of been replaced as as our understanding the universe has become more technical is that explanation that this appealing of a certain type of of explanation it's a particle anthropic reasoning it's a we're just in a simulation it seems like we're oftentimes substituting you know one one default explanation for another and we've managed to stumble around stumble through and and seemingly make progress by progress I mean able to come up with technical explanations that fit the data and seem reproducible and also fit new phenomenon to degree until we find another another phenomenon that that evades us for that moment but but the reasoning just seems to be largely there are people who definitely go a different route they will they will appear appeal to some other type of reasoning elegance is a popular one how successful that's been is another conversation but there but but go ahead one of these things you know to be all so super curious about this things that go faster than speed of light because since Einstein we have this this speed break right everything is suddenly so slow that we can't really experience the day at the universe at all and we just talked about your theory of creating a warp drive and how this could work or what else is out there where we know that's faster than the speed of light where we are pretty confident okay this this goes beyond the speed of light and we might be able to either use it for for transmitting information or for travel one day or just to see the end of the universe right so there are a couple phenomena again those that we don't completely understand that that seem to have seem to have properties that are superluminal or non local dark energy appears to be one of those right it seems to have properties at least as near as we can tell that aren't necessarily entirely local the the types of interactions and whatnot or the very fact that it induces this very global phenomenon of inflation on the universe has has that sort of impact another common one which is maybe what you're getting at is this concept of in quantum mechanics of entanglement various non local qualities of of interaction or or non interaction really of constraint with within within particle physics this is something that I've thought about some and maybe picked on from picked up on from some of my previous research with dark matter is that that we have this concept of a non local interaction or not sorry I keep calling it interaction we have of non local phenomena within particle physics due to how identical particles from a quantum perspective how they interact with one another and how they can become correlated over very vast distances due to their statistics how this could possibly be used for something like communication is is is not well understood in fact many people believe that it it cannot that either by some arguments of a real of relativity that you aren't actually transmitting well some arguments of information there you aren't actually transmitting information say if you have the classical bell spins example where you have some quantity of known spin or some particle of known spin say spin zero and it's a massive particle that decays into two smaller particles with entangled spin so say one has spin up in some orientation the other one would necessarily have to have spin down to conserve total angular momentum and then these two particles because they have excess energy propagate away from each other very quickly not necessarily faster than the speed of light but but say you have a detector at one of the ends of some experimental hallway and you want to detect what the spin is once you detect the spin once you specify the spin of one of those decay products you know what the other spin is but did you actually transmit information could you actually manipulate the spin or did you merely detect the spin that the difference between transmitting information and using this non local effect or it just being a purely observational non local effect really seems to rest with can you dictate what spin it had because if you can you if you can say okay I'm going to make sure the spin of this byproduct is up the other one is down and if you can make the next one down up up up down you can then start to transmit information to the other end of this hallway in a way that is necessarily subluminal or superluminal even though the original products of this decay never propagated away from each other faster than the speed of light yeah so I'm not sure if I don't I don't really know the terms well but I think the example is always made and you just condense it to a hallway but the example is made of there's a particle once these these these particles are entangled it once it changes on one side of the universe and the other side of the universe and would change immediately which changes well in the same split second or you know the same moment obviously the observation is a whole other problem once we observe one we interact with two particles so we only observe one but we actually change two particles on two sides of the universe that seems to be it seems really stunning is that still true or is that physics doesn't doesn't necessarily believe that's that's what's happening well there still is so yeah simple answer is that there's still an element of that which is true the the challenges and where things get a little bit messy is can you do anything with it is there utility to it from a from an information theory perspective or from a transmission of information perspective that that that that I believe the majority would say no there's still some people who think that it's possible but is there some some significance to this effect from a purely physics perspective as opposed to from an engineering perspective I would say yes and my you know I've done a little bit of thinking of this and with respect to dark matter and if your dark matter necessarily is this highly correlated fluid what would that would mean for the structure of the universe or structure say of our galaxy but that's that's a bit different than necessarily transmitting information from one end of the galaxy to the other you need to have that level of control over what one of the particles on one side was doing and you know such that you could effectively not just know what the particle on the other side is doing but also transmit a message to whomever might be observing that other particle just seems such a hopeful message that this this is even so cool right because I said as much as he's a genius he kind of it's a big dollar right maybe you can help me understand the concept of dark matter a little better right maybe you just refer to this dark energy dark matter what do we know about it is that something that is we we can't see it and it's it's cool is it something that it's really inside our universe or we feel like what do we know about it and how does it actually work and does it does it is it bound by the same relativity relativity concept that we know from light let's see so yeah the concepts of dark energy and dark matter you can consider the term dark maybe not to be as much of a technical term as maybe just insight into our knowledge of these things dark as in we we don't really know much we're in the dark on these but this is kind of in the in the vein of of you know make a particle out of it not not quite to that extent but but similar to in terms of phenomena that we seem to observe we don't entirely understand and this is our way of trying to reconcile observations with our understanding so the observations actually for dark matter occurred first so back in the 1930s there were a number of observations of at first galaxy clusters so the hierarchy of structure in our universe extends you know to from so gaseous nebulas solar systems entire galaxies and then collections of galaxies these are the structures that we can see structure collections of galaxies and also voids in between galaxies that can also be quite quite volumous and so in the 1930s these of these clusters of galaxies were observed for their kinematical properties how fast are they moving relative to each other to try and determine say massive one of these clusters would be and it was found and this research was done initially by Fred Zicky and his collaborators that the amount of mass that would be necessary to keep one of these bodies virially bound or essentially bound by its own gravity was approximately a hundred times or more greater than the amount of mass that you would estimate based on the amount of light that was given off by each of these galaxies and mapped to a certain mass so if it if a certain galaxy was so bright it you there's this little table that you could look up okay it's or a graph you could look up and oh it's you know this galaxy would be 10 to the 9 solar masses based on the total number of stars it was thought that would make up that galaxy but there was this huge disconnect between how much mass you could see and how much mass you couldn't this mass appeared to be dark or not just dark but invisible perhaps right depending on your precise model it's possible that you could actually see through it depending on what it was made out of and so this these observations then extended from clusters of galaxies down in scale to individual galaxies with these famous rotation curve that if you were to take the total mass that you'd observe in a galaxy like Andromeda and you were to map out that mass density from the visible matter and just according to that plot the rotation curve that you would expect from that matter of a fictitious body rotating around that center you'd expect because the galaxies are very centrally dense that and very compact that you'd have this curve that would go up to some maximum value and then drop back down to zero so the stars on the edge of the galaxy would be rotating very slowly but you could also observe via Doppler shifts relativistic effect how fast these bodies are actually moving and the actual rotation curve had this initial increase towards the center but then it flattened out and stayed relatively constant quite far out indicating that either our concept of gravity was incorrect on these scales or there was some other material present in that galaxy that was also gravitating in the creating a more intense gravitational field within the galaxy and especially out in these outer reaches of the galaxy that required these bodies to move that much faster in order to maintain their radial displacement from the center of the galaxy and and and there's been a lot of other mounting evidence about why we think that there there's something either wrong with gravity or there's another form of matter present in the universe that we cannot see similarly with dark energy we have these acceleration and we believe that there might be some media present in the universe with very different properties from matter that's causing this inflation type behavior in our universe today but focusing in on dark matter having you know these possible options of something wrong with our theory of gravity or some new material present a lot of focus has actually gone on there's some new material present that we don't necessarily understand what could it be and there have been many many theories put out ranging from it's a new fundamental particle to it's a bunch of black holes that are individually very small but there are so numerous that we we can't really see them they don't necessarily have large accretion discs that are radiating that we could see surrounding them my the research that I've done has been more on the there's a new fundamental particle in in the physics of our universe that we have yet to observe but can exhibit these properties and more specifically than that I've been thinking about the axion the axion is a very particular one that you had a question yeah no no no I'm just listening I'm I don't I don't know anything about it I know what I was hoping for and you know obviously you already indicated that this is all just work in progress but I was hoping for is that a lot of this dark matter if it exists might be not bound by by by light right so in the sense of it doesn't it gives us a way out of this to speak break but that's might be or might not be the matter we just don't know enough about it right well I as far as a possible new source of media that would have exotic properties that could possibly get us beyond the speed of light barrier based purely on its properties on the material properties of that one source it would most likely be what it most likely be with dark energy if dark energy actually does turn out to be some new fundamental field in in physics of a physical field as opposed to a field of study yeah do we see it also in our galaxy or is that something beyond you see from afar well so so so dark energy in order to have the properties to imbue the our current universe with the properties we think it does would have to be very diffuse in fact it wouldn't mess it would interact it would gravitationally interact with itself but the way it would interact is very different from how we would think about matter if we have matter it's attracted to other matter right you'd have it you'd expect it to collapse locally it turns out that this dark energy any perturbations in it that might cause it to collapse if it had some nice classical mass and it had some Lagrangian that very much looked like looked like standard matter it does not appear to act that way it appears that if you were to give various perturbations to whatever the dark energy field is that these perturbations would dissipate it would be repelled from the regions of higher energy density in the dark energy field would dissipate they would all flatten out and we'd have this very diffuse field throughout the visible universe and so to answer your question our current concept of what a dark energy physical field would look like is that it would be present everywhere you know throughout the earth it would just be very very weak and only on the largest scales of the universe would be able to see its effect because gravity being a scale free force meaning that it acts equally strongly at all distances or it has has this nice inverse square law and as far as the gravitational acceleration fields concern that that all the other forces would dissipate in intensity but this one field at the largest scales in our universe gravity seems to dominate and so that's why you'd have that why that's why a field that is a nearly homogeneous across the entire universe would dominate the physics on those on those length scales but so that would be the one that I would think possibly would have properties that would be inherently non local that would maybe give us some insight into physics that could transmit information faster than to be like possibly right we still know very very little about it that it that this may not be the case at all dark matter seems to be if it is in fact a matter like field a fundamental field it behaves very much like standard matter that we've encountered before in that it if you were to expand a say a box if you take a cosmological box of this dark matter and there was so much inside at one time at some time t1 and via the expansion of the universe the box would grow in physical size at some time t2 the total amount of matter in that box would stay the same but the density would scale down as one over the volume the three dimensional volume that might seem relatively a benign statement but not everything necessarily behaves like that light doesn't behave like that right because if you were to have so much energy density and light and then expand it not only do you have the same say you have the same number of photons inside that box but the wavelength of the individual photons would increase with the size of the box so the energy of the individual photons would go down meaning that the total energy inside that box would decrease and the energy density would decrease faster than with matter dark energy sorry dark matter as as well as we know it scales more like the former so it's a it's a it seems to behave much like a standard matter field particularly when we also look at the how it forms structure in the universe it seems to collapse very similarly to matter in fact it's it's almost the ideal type of matter because it doesn't have all these other interactions say with photons and it's not it's not giving off a lot of heat or radiation it's really key it's it's a really well conserved interaction which means it's not going the disturbances in the dark matter field when they collapse they're not going to collapse as tightly as the matter that you and I are made out of or the you either made out of it's very sticky it sticks to itself it it really allows for a very tight collapse which is why the distribution of matter the baryonic matter stuff that you are made out of in say simulations of structure formation indicate that the galaxies are going to collapse to be much smaller than the surrounding halo of dark matter the halos of dark matter which is what we call essentially the galaxy the galaxy analog in the dark matter world are going to be much bigger than the visible galaxies which explains those rotation curves because even though there's dark matter all throughout the visible part of our galaxy if this model holds the distribution of the matter in the dark of the dark matter in its halo is going to extend far beyond our farthest star in our galaxy and so it's going to look like from the perspective on the scale of our galaxy it's going to look like there's just some continuing distribution of matter that just goes on forever which is going to create this flat rotation curve for our stars yeah well a lot of a lot of people I don't know this how scientific this is a lot of people who are up psychedelic drugs they typically make that assertion and we will get to the dark matter there they make this assertion that we are we are restricted in our in our current you know three dimensional plus time world and once you on this trip a lot of people come back and you know it's just a few milligram of active ingredients almost well many people come back I'd say 50% say well there is another multidimensional space so there is something that is in the same space as we are right but it's it's basically in a dimension that we cannot penetrate that we cannot you kind of like dark matter a little bit right obviously this we're talking about slightly more very different different concepts things beyond our perception right normal perception you know they could be it's very oxley they could be you know like a dark matter there is something else out there but it's it's it's the aliens are already they're they're they're here already right but they're in a different dimension that dimension very weakly interacts with what we are seeing but it is the core concept and I think this is where people are going with this is not that we are actually that the time and space and what we are preserving that's just one random dimension that we are for some reason for whatever reason we chose to see it's actually consciousness that makes the universe and there is this argument that goes a little further is that without consciousness without anyone who can feel time like we can do it like animals we have the impression they can't feel time you live in it but they can't feel it so without consciousness it's the singular property that the humans have which is really strange if you define it relatively narrow you can always go further with this but it what what a lot of people make that claim I don't know how scientific that is that we actually the consciousness is that core concept of the universe and these other dimensions they're hidden from us but they're there and if we could access them then we would see the real universe so to speak right that's kind of how does this is drawn along I don't know what you think about that there's a lot to try and pack there maybe I'll ask you a question okay so what constitutes consciousness is it human consciousness or is there some ubiquitous consciousness that we're talking about that's a very good question I would define it as something where you can feel time is passing so it's a concept where you realize well there is a past there's a future it's kind of what we do we build the simulations and figure out okay what are we going to do next and what is our goal this you don't see in the animal world as much we call them instincts and they can't at least express their version of the future we can rather be learned how to do this which seems pretty singular but it's kind of my just my understanding the concept we can obviously define it bigger I can say well anything that could be conscious and has any point in time but I feel it's more of an experience right so well what I find so exciting is that without anyone with a consciousness time doesn't really exist I mean to to the planets this time really exists without the observer who's conscious I don't actually know what answers yeah I would have some some difficulty answering as well so I would say that yeah humans are seem to be unique on our planet in terms of the ability to plan the ability to have a you know sort of coherence time to our concept of reality that allows us to make plans and and see the results thereof and make adjustments based on that but there are there are limitations to that I mean our ability to record with with high fidelity with even longer time coherence than say our memory has shown us that our memory is not necessarily perfect so I do have I would have some questions about what exactly we mean by our concept of the passage of time because the way I think about it has to do with in terms of accessing the past has to do with memory or how we store previous experience and and we found a number of ways to do that right thousands you know many many years ago before reading and writing and YouTube we had you know you know our own local drives to store this on and it did fairly well we came up with many different ways to improve on our on our memory songs and things like that in order to improve the coherence time even many times across generations of of the past and of information but and and we definitely have this ability to abstract to imagine what the future will be but I don't know about you but I imagine all sorts of different possibilities in the future and most of them never happen I'm wrong most of the time right you find that with with research you think oh man I've got this great idea for a warp drive find and it's going to work like this and it's going to require this much energy and it's going to go this fast and it's going to require matter with such and such properties that are going to all work out and then you try it and you know either just by pen and paper via you know the mathematics underlying mathematics and it doesn't work and then you try something else and it doesn't work again it but eventually maybe something does work but it wasn't necessarily original concept so we can't perfectly predict the future we can't we're becoming better at remembering the past but in terms of you know this some some idea of underlying consciousness encoding the concept of time it does it does it seems also weirdly aligned right this we you can only consciousness can really find time as it is as they're really intensely connected whatever the real connection is and then the speed of light some it you know you will you will probably say well that's another very human centric approach but that's a lot of coincidences that that I see there and they only have in the last whatever 40 50 you mean the constraint of the speed of light yeah well it it goes a long time right so so light and time are so so the speed of light and time are so in that angle in our current concept of the universe yeah but it's also possible that just as a hundred years ago we didn't necessarily see that connection it may be that that midnight may not be the complete connection there may be something even more fundamental to our concept that we can well I hope because I oftentimes have an easier way of understanding it if there's some technical explanation if there's some way that you can precisely express you know oftentimes via math how you know a a mechanism for how the universe operates that's more accurate than what we have because it may be that right this concept of space and time they're all just very nice markers that allow us to conceptualize that they're really just abstractions of human beings to make order of chaos right even these concepts these words that are coming out of my mouth are are examples of that right the concept of chaos but it but yeah this is this has gotten us very far just like you know the various other ways that we stumble around to try and understand the universe but is is something closer is something more accurate this this concept of consciousness of of some ubiquitous consciousness via a simulation or or some other some other system that's that that's a good question I I'm not smart enough to understand it but I feel like there is there is too many coincidents in our current theory I mean it's it's too it the pieces fall too much into place and I think there's something else out there but again I don't know the answer to it so I can only answer the question I'm definitely not smart enough to understand it and come up with the unifying theory I think that's but because of quantum theory and the esoterics that it introduces to this nice need model I think people are longing for this and a lot of people have been working on this made good progress but so far we have nothing that gives us new predictions right this is what a model means it makes better predictions than the old one at least one subset of predictions right it's it's like Newtonian mechanics it will not replace it it will just go into a different sphere and right it'll have a larger context or or whatever the case yeah yeah galaxy white galaxy white travel that's what we want that's hopefully your next right paper how do we jump to the next galaxy yeah well I don't know I at this point I just want to see if I can build one of these things even in small scale you build up to it do you think it's possible you can you do running some experiments you think it's still not all well I think still there's an amount of theoretical work that needs to be done first like as I've mentioned throughout the conversation I need to nail down a mechanism for creating and accelerating one of these things right right now all of them have just existed right the the the way that they've been presented is that they existed and infinite it's always been there they will always be there but that's not really physical and not very helpful from an experimental point of view but if you can find away a mechanism to create one of these things and if you can find a way to make it energetically efficient enough that you could create one in a lab strong enough to be detected by some instrument then we have the makings of of an experimental verification but those two elements need to come need to be completed first which which are things that I'm are very much on my mind right now because I would like to see this I would I would like to see experimental verification or or evidence that the path that I'm on is you know it's faulty for some reason that that maybe I'm mistaken no you gotta call Robert Zuprin you know he's been writing the book on tickets for space and he's been working on ways how we can actually get anywhere and on in the solar system and beyond and he he details that what we need to do this and he would love to you know I think he would he would love that theory and then would probably give a lot to make it happen oh okay well excellent yeah wonderful yeah I would uh that that at very least it would be a very exciting conversation um I think so too I think so too but I would very much like to see that happen yeah same here thanks for this update I hope it's gonna work out and then a couple of years you come back and you say well we just built this thing and why don't you try it out that would help oh yeah thank you so much for taking the time that was awesome thanks for all the insight yep thanks again for the invitation it was a very interesting exciting conversation I was glad we were able to make it happen thank you and looking forward to next time all right thank you yes bye bye you too bye bye bye you