openpolitics.com

27:24
point you can go back to I think is the
1930s so that that’s why I really focus
on what I would describe as the role of
narrative it used to be I would call it
a you know I’ll use these kind of
academic terms I used to be a a weak
form narrative aesthetic that you know
oh yeah narrative and you know what
happens on CNBC and what the what they
you know what a politician says on
Bloomberg yeah that may be important in
a very short term but you know very
quickly the real world and earnings and
you know macro events that’s what’ll
will make the difference in markets and
I went from being I’ll call it that
again this week formed era to Vista to
what I’ll call is a semi strong
narrative this meeting well actually
these narratives can can overwhelm
reality for a for you know pretty long
time but ultimately reality will will
win out I gotta tell you Keith I’ve
become a strong form there to this today
the impact of air ative Xand forward
guidance for example with monetary
policy the CNBC talking heads are get up
there and they shake their finger at you
and they tell you how to think about the
world the the power of this now
augmented with as you’re describing
social media augmented by the 24/7
nature of financial news and political
news
I now think this can go on for a long
long time
29:01
which gets back I think to your original
29:03
question of well you know what is the
29:05
timing of these massive shifts and
29:07
markets and how long do we have to play
29:09
this game of capital markets being a
29:13
political utility my answer is pry for
29:17
quite a bit longer yet yeah well I mean
29:19
a lot of people on you know whether I
29:20
like that or not that is the game that
29:23
we’re in and that’s the game that I’m
29:24
playing but still there’s like I said
29:26
there’s a lot of I find that there it’s
29:28
it’s it’s it’s weird to say but I
29:31
actually think it’s easier to make money
29:32
and markets like this with a lot of
29:35
noise than any other kind of market I
29:37
mean volatility to me is a good thing
29:39
and it sounds like that’s why you guys
29:41
did well in o8 as well I mean oh wait to
29:43
be up in o8 well done by the way means
29:46
that you have to be able to embrace the
29:47
non-linearity of volatility and
29:49
understand that you don’t even have to
29:51
be grossly exposed to the market to pick
29:54
the right parts of it in the right
29:55
companies and there’s an anti fragility
29:57
to of the 1930s that I think is
29:58
interesting that’s developing here not
30:00
only at the human level but obviously on
30:03
the things that they create like the
30:04
companies and that like how much how
30:06
much of that do you think about not to
30:08
use you know to borrow to Lebs word
30:10
obviously on antifragility but you’re
30:12
seeing that’s what’s developed the
30:14
fragile and the levered which are one in
30:16
the same thing and the anti fragile and
30:19
those are flushed with cash that are
30:20
actually growing in this period well so
30:23
I’m I’m a big fan of talib the writer
30:26
you know of course he’s blocked me on
30:28
Twitter so on a personal level you know
30:33
tell em can be but nothing that the
30:35
easiest guy to get along with but there
30:37
are teeth they’re actually showing in
30:40
this conversation I think you’d be
30:41
scowling at me like you you know he’d be
30:44
using f-bombs he made it and it anyway
30:46
but even but his you know he’s comes up
30:47
with some good things with some good
30:49
well sure and and my field in
30:55
academia was statistics and you know
30:58
that statistical analysis and so Talib
31:02
comes from the same background and so we
31:04
are in violent agreement on everything
31:07
he writes about how we
31:08
assume these you know small tails on the
31:13
distributions and everything he writes
31:15
about fragility and and like swans and
31:18
the the overuse of modeling the right
31:20
I’m in violent agreement with ever it
31:22
with with everything that’s that’s your
31:23
problem that’s why you get blocked
31:25
there’s only way for once eleven to live
31:29
but but here’s what I would say though
31:31
though keep in terms of the fragility or
31:35
lack thereof in the system right which
31:37
is that there are so many aspects
31:39
particularly of our political systems
31:41
today that I think are are terribly
31:43
fragile right what and and in a in a
31:47
larger sense I think they’re similarly a
31:49
fragility when it comes to monetary
31:51
policy in in this country but but and
31:54
this is a such an important caveat I
31:56
think that that all of the policy
31:59
developments at the in in every central
32:03
bank right not just that the Fed but
32:05
really led by the Fed all of their
32:07
policy initiatives has been to build a
32:09
wall against deflationary shocks
32:12
mm-hmm because because that that was the
32:15
shock of 2008 going into 2009 with a
32:19
nationwide decline in home prices in the
32:22
United States and the ten trillion
32:25
dollars worth of financial products that
32:27
were built on on top of that of that
32:30
edifice you had an enormous deflationary
32:34
shock which which again to my word
32:36
stripped off that pleasant skin of
32:38
capitalism and democracy to reveal the
32:41
the naked sinews of power beneath and
32:44
and there was a real risk of those those
32:48
true powers you know not surviving right
32:52
so I think that what the system has
32:55
developed over the last decade is this
32:59
phenomenal array of whatever it takes
33:03
instruments to prevent deflationary
33:07
meaning financial asset price declines
33:11
of of a large nature right and and so I
33:16
even this sort of deflationary shock the
33:19
shock of a pandemic which I you know
33:21
outside of a Thurman
33:22
clear war I can’t imagine a greater
33:26
deflationary shock than worth the world
33:29
is experiencing today I I think I
33:34
believe that these the Arsenal that
33:38
central banks have developed against
33:39
these sort of deflationary shocks will
33:41
be successful on its own terms meaning
33:45
that it will and we’re seeing this today
33:47
be largely successful in preventing
33:49
financial asset price declines of a
33:54
system shaking nature where where I
33:58
think this this Arsenal is quite fragile
34:01
however is not for deflationary shocks
34:04
or I think it’s very strong but for
34:06
inflationary shocks and I know it seems
34:09
crazy to talk about inflationary shocks
34:12
when you have an unemployment rate
34:14
that’s gonna go to twenty plus percent I
34:16
know it seems crazy to talk about
34:19
inflationary shocks when you have a
34:22
decline in global trade as we’re serious
34:25
as we’re clearly experiencing with with
34:28
with this this pandemic and yet and yet
34:32
I absolutely believe with it with the
34:36
Alcala the unholy merger that we’re
34:39
seeing today between the Treasury the US
34:42
Treasury and the US Federal Reserve
34:44
where today you know I think today the
34:48
the Fed started its bond purchases right
34:50
yep where and this is I can’t you you
34:54
really could not have said this with a
34:55
straight face in 2008 the last time we
34:58
had prices but the Federal Reserve is
35:00
going to start taking credit risk of
35:02
corporations that the Treasury is always
35:06
said on on these muni bond purchases
35:08
that the that the Fed is going to start
35:10
doing the Treasury saying oh we’re going
35:12
to take the first lost position on these
35:14
things I mean this is this is the
35:16
creation of a Bank of the United States
35:19
right back in going back to Hamiltonian
35:22
and Jacksonian days where the United
35:25
States government is now in the business
35:28
of printing money spending money taking
35:33
you know risk right taking economic risk
35:38
in the economy it’s it’s something we’ve
35:41
never seen before and my strong view
35:44
it’s not a 2020 event may not even be
35:48
2021 I think it may be 2021 but I think
35:52
that the inflationary shocks from this
35:54
are enormous undeniable and that the
36:01
system that we’ve established since 2008
36:04
is anti fragile is not I’m sorry is
36:08
quite fragile right it is incapable of
36:11
dealing with those sort of shocks and
36:14
and so that’s where you know to get
36:17
around to that question you’re asking
36:19
before when does the turning happen when
36:21
when does it all change I think that’s
36:24
when it all changes when the policies
36:26
that we’ve built up over the last you
36:29
know going on 11 years now proved
36:31
incapable of dealing with the political
36:33
changes that come from this marriage of
36:37
Treasury and Fed to create a true Bank
36:40
of the United States well I think even
36:42
the the MMT crowd themselves the
36:45
academics and otherwise would would
36:47
ultimately agree with your conclusion
36:48
there it’s all good you can merge you
36:51
can have this unholy marriage as Henry
36:52
the 8th type set up between the Treasury
36:55
and the Fed until you have a certain
36:56
level of inflation then then we’re gonna
36:58
change how we think about it or change
37:00
what we do whatever they say but the
37:02
whole point about inflation if you have
37:04
economic stagflation and inflation is
37:06
perpetuating that is of course the
37:08
people get pounded again and then they
37:10
get more and more pissed off so demand
37:12
falls corporate profits are falling yeah
37:14
the prices are rising but you don’t get
37:16
and again this kind of harkens back to
37:18
the to the very low multiples that
37:20
actually equities in credit get when you
37:21
get a chronic kind of a stagflation I
37:24
I’m one do you agree with that I mean
37:27
because there’s different you can have I
37:29
call it in my four quadrant model you
37:31
can have a beautiful inflation quad to
37:32
both growth real growth and inflation er
37:34
accelerating at the same time or you can
37:36
have quad 3 which is what I just said
37:39
with stagflation like what are you
37:41
saying it would be are you saying either
37:44
no I I am saying that I
37:47
the stag flayed look and this goes back
37:50
to to what we’re talking about at the
37:52
very beginning we are it’s important not
37:53
to let your feelings you know get it get
37:56
in the way of your analysis of this
37:57
stuff when you’re responsible for other
37:59
people’s money and yeah and I’d always
38:01
kind of relegated the the stagflation
38:03
aries scenario to oh that’s and that
38:06
that’s that’s just you being you know
38:09
pissed off at kind of this this
38:11
corruption of capital markets and you
38:15
know what are you talking about III at
38:18
this point now though Keith my this the
38:21
stagflation Airy scenario has gone from
38:24
my edge case something that okay there’s
38:28
a there’s kind of a trivial chance of
38:30
that happening but but but let’s not
38:32
let’s not go beyond that yeah that’s
38:36
frankly that’s now my base case that’s
38:38
now my base case scenario what what once
38:41
we have the 2021 either make America
38:45
great act if Trump is reelected with two
38:47
trillion dollars worth of you know
38:49
infrastructure spending that’s that this
38:52
monetized by the Fed or if it’s you know
38:55
Biden or the Democrat it’ll be the you
38:57
know the green act or the the no
38:59
malarkey act for all I know
39:01
itis but but in both cases is gonna be
39:04
the same and thing right it’s gonna be
39:06
two trillion dollars worth of you know
39:09
building ziggurats and you know filling
39:12
up potholes
39:12
that’ll that that that will be directly
39:15
monetized I think at least half of that
39:18
directly monetized by the Fed and and we
39:20
go down this this path where you can’t
39:23
unring these bells and and and so and my
39:28
strong belief then is that what you end
39:30
up with is that your your process your
39:34
nomenclature that quadrant three it’s a
39:37
we’re mediocre growth because you’ve
39:40
pulled forward growth now for decades
39:42
there’s just no you know investment in
39:45
actual productive activities you’ve
39:47
transformed your capital markets again
39:49
into a utility not not it not a way of
39:52
channeling capital into real productive
39:55
growth and at the same time you
39:59
you know of course the United States
40:01
will be the best house in a in a in a
40:03
terrible neighborhood you know we’re all
40:07
going down this mmt path and so what you
40:10
end up with is a global stagflation Area
40:12
environment which again as you say just
40:15
accentuates the wealth inequalities that
40:17
have been built and exacerbated yes over
40:20
the last 40 years but particularly over
40:22
the last decade that’s I mean that
40:24
points many good points within the point
40:27
though on on productive growth I mean
40:29
actually back to your Burnet the
40:31
down point you know anybody knows that
40:33
first you know if you burn something
40:35
down you do have an opportunity to
40:36
rebuild something new particularly if
40:38
it’s with new capital with new
40:40
leadership you know that whole part of
40:41
capitalism gets missed in this whole
40:43
maybe not missed but I mean it’s
40:45
certainly not the consensus they’re like
40:46
okay it’s fine we’ll just you know have
40:48
these like you said these utilities
40:49
where we never burn anything down
40:51
therefore you can’t grow anything new
40:52
and that’s that’s to me you know that
40:54
that’s obviously a major problem in the
40:57
loop that we’re in but like you said now
40:59
we’re into the I guess you know it
41:02
trillions are starting to add up so you
41:04
do three trillion here and now the next
41:06
bill Pelosi’s bill I think she’s gonna
41:08
have to try to go first one and a half
41:10
to two trillion there and then another
41:12
two trillion there after you know we see
41:15
who gets elected it’s it’s an incredible
41:17
amount on any historical measure amount
41:20
of deficit as a percentage of GDP or
41:22
debt as a percentage of GDP I was
41:24
showing a chart last night you know
41:26
we’re actually in the number two
41:28
position chasing the Japanese on that
41:30
front both on the deficit spending and
41:32
on the debt do how do you think about
41:34
that and is it just well
41:37
well here’s what here’s what I don’t
41:39
think he that you know I would I don’t
41:41
think is that there’s this aha moment
41:43
where you know suddenly some bell rings
41:46
and the in the heavens and the the bond
41:48
vigilantes of the world say oh my god
41:50
this is too much and we’re going to
41:53
require that you know interest rates and
41:57
the interest rates start to go up in the
42:00
United States right that that is not
42:02
what I’m saying at all right in the in
42:06
the absence of a political narrative to
42:09
say oh my god this is terrible our
42:11
interest rates are going to go up
42:13
that that that that doesn’t happen this
42:15
is what I again wanted me about being a
42:17
strong form there to this right so that
42:21
that’s that’s not at all what I’m saying
42:23
I I don’t think that that the the
42:25
catalyst here is oh my god interest
42:29
rates are going to go through the roof
42:31
because the world is going to say oh the
42:34
United States is a bad credit risk right
42:37
again the United States is the worst
42:39
house in a bad neighborhood where but
42:41
you know where’s your strong nutty or
42:44
sound money you know alternative you
42:46
know the ECB please are you kidding me
42:48
so it that’s not what I’m describing is
42:53
the path that this takes what I’m
42:55
describing is the path you are leading
42:57
to about the zombification of an economy
43:00
as you’ve seen in in in Japan as I think
43:04
we are increasingly seeing it’s the
43:05
United States it it’s not that all this
43:08
money that’s being pulled forward
43:10
creates some crisis in the bond market
43:13
like you might see I don’t know in
43:14
Argentina right
43:16
what what what it leads to is this long
43:18
gray slog where we aren’t experiencing
43:23
real growth we’re just not and what and
43:26
what real growth we are experiencing is
43:28
being sucked out by the 1/10 of 1% to to
43:33
lead us to a world of you know bread and
43:36
circuses and in a world where that
43:38
divide between the haves and the
43:41
have-nots just gets more and more
43:43
entrenched in and and onerous unite how
43:49
does that change well frankly it changes
43:52
when you have a real world event like a
43:56
pandemic mmm-hmm that that can change it
43:59
if it’s not that it’ll be something else
44:01
like that ultimately you know I I laugh
44:03
about being a strong form narrative
44:05
issed that’s my market view that’s my
44:08
view as an investor have you as a
44:09
citizen as a human being is that these
44:13
real-world events this is how the
44:15
chickens come home to roost
44:17
it always altima boils down to politics
44:19
that ultimately we we will change but it
44:24
comes from the bottom up not from the
44:26
down mm-hmm I love that point and also
44:29
the point on Japan a lot of people that
44:31
are again you know they can get scared
44:32
out of their minds on debts and deficits
44:34
but they they often equate it to oh my
44:36
god you know Treasury yields are gonna
44:37
explode to the upside and the dollars
44:39
gonna burn yeah that’s probably the
44:41
worst position you could have had this
44:42
year throughout this period but again
44:45
the Japanese have had economics you know
44:47
nothingness for a long long time some of
44:49
them call it economic harmony by the way
44:51
and the and and you’ve never been paid
44:54
on that short position in Japanese
44:55
government bonds I’m not saying that
44:57
we’re gonna own Treasuries forever I
44:58
mean in fact I short Treasuries when
45:00
you’re in quad – you know quad – is when
45:03
the economy is legitimately accelerating
45:06
real real yields are rising and that’s
45:08
you know that’s the that’s where you
45:10
would get rid of that type of thing but
45:12
I do get you mean a lot of people a lot
45:14
of people are like always I guess there
45:16
are a lot of newsletter writers that
45:17
still make a living on this is you know
45:19
even even the bond King himself has been
45:22
saying bindings are gonna go up you know
45:24
back to when they stopped going up in q4
45:26
2018 so there’s a lot of noise on that
45:28
well Keith ah and what I would say is
45:31
that on the way to quad 3 right
45:33
stagflation you will absolutely develop
45:36
a wall street narrative that we’re in
45:39
quad 2 right right that that you know oh
45:42
man you know we’re this is this is the
45:44
best of all possible worlds because
45:46
that’s what Wall Street does you develop
45:48
narratives and stories that get people
45:50
to buy right that so so you’ll you’ll
45:54
have your chance right on the you know
45:58
to do whatever you want to on the bombs
46:00
in the quad – I do think the reality is
46:03
that stagflation Airy world you know one
46:06
last point about Japan I don’t think
46:10
that what Japan is doing is in in terms
46:13
of the way it’s handled it’s it’s it’s
46:15
monetary policies fiscal policy look I
46:18
get it
46:19
Japan is a country that is literally
46:22
dying and I say that not pejoratively I
46:26
mean that from a demographic perspective
46:28
I I mean that and so the course that
46:33
Japan is taken and I I don’t think is
46:36
off-base for alcoholic kind of
46:40
end-of-life care right thinking in terms
46:43
of long periods of time for a country I
46:45
don’t think that’s the right policy for
46:47
the United States III have to believe
46:50
that real growth real productive growth
46:54
it’s still possible for the United
46:57
States I truly believe that in my heart
46:59
and that’s why I get so sad
47:02
when I see our policies following this
47:06
path that that puts us in a position
47:08
where real growth is is next to
47:14
impossible because we are pulling
47:15
forward so much of consumption and and
47:19
and everything else from the future real
47:21
economic growth from the future too to
47:24
try to plug the hole of this
47:25
deflationary gap today yeah all on we’re
47:29
gonna take some questions so please fire
47:31
them in the queue you they’re gonna get
47:32
voted on and I’ll ask them but on that
47:34
point before I take the first question
47:35
here Ben I think like what I heard too
47:37
was a father speaking because you know
47:40
when you have Millennials or kids that
47:42
are younger than that generation you
47:44
know you do think about the future we do
47:46
have a demographic curve in that cohort
47:48
that is upward sloping that is quite
47:51
unique in this world the UK has one you
47:53
know just by virtue of having an
47:55
immigration policy and it is okay but
47:58
again like if you are quite you know you
48:01
like you said you’re not saying
48:02
pejoratively I mean quite literally
48:03
dying like in Italy the compound
48:06
five-year kegger for the 35 to 54 year
48:10
olds in Italy is gonna be negative 2%
48:11
for sure for the next five five years
48:14
they’re dying right but if you’re
48:16
growing and you have to grow into a
48:18
world where there’s no way for you to
48:20
become who your parents were from a
48:22
capitalist perspective that is the worst
48:25
that’s the worst thing I could possibly
48:27
imagine for our kids I it kills me yeah
48:32
you’re so you’re so right you’re so
48:34
right Keith in and what I find in you
48:38
know there’s how to say this the the
48:42
audience I have with epsilon theory and
48:44
we’ve got about you know a hundred
48:45
thousand email subscribers and some
48:47
multiple of that you know on the website
48:49
thank you it’s skews young it does it’s
48:52
skews young you know it’s not the grumpy
48:54
grandpas is it’s not you know who are
48:57
who are saying kids right it it skews
49:01
young because what I find in my my own
49:04
children and and and what I find you
49:07
know this is why it’s so energizing to
49:11
me is that I find the Millennials and
49:15
the you know younger than that they get
49:20
it they really do get it and and and and
49:23
they’re not they’re not angry right I’m
49:25
the one who’s as burnt as the down
49:26
there they’re there saying no I don’t
49:27
wanna I want a chance to make a change
49:30
yeah and and and that’s why I think is
49:32
so important to provide new venues new
49:38
narratives new stories to to harness and
49:43
to try to not lead or organize that that
49:47
energy but to but to show a path to show
49:51
a path of real growth not this fake
49:54
growth and and that that we’ve we’ve
49:57
kind of trained ourselves to accept and
50:00
I’m very actually I know it doesn’t come
50:02
across that way in my writing and cuz I
50:04
do I am angry I am angry about a lot of
50:07
things but I’m also very hopeful I
50:09
really am very hopeful and it really is
50:11
that energy and that in that that
50:14
determination of the you know my
50:18
children in your children that I think
50:20
will get us through this yeah I mean
50:21
it’s anger is an important emotion if
50:24
you want to get to the other side I mean
50:25
to use people’s current vernacular on
50:27
narratives the other side you should
50:29
hear me yell at my dog yeah I’m angry
50:30
but I want that one thing I want the guy
50:32
to start to behave okay first first
50:34
question actually the one that’s got the
50:36
most votes here Ben we only have 10
50:38
minutes unfortunately I could talk to
50:39
you for hours but it’s not even a
50:41
question it’s actually no question just
50:43
a thanks to Ben for all of his work
50:44
providing PPE to frontline workers so a
50:49
girl well thank you and and I do want to
50:52
take a second on that because we we are
50:57
making I think a very successful effort
50:59
at getting
51:01
PPE personal protective equipment masks
51:05
particularly straight into the hands of
51:08
the doctors and the nurses and the EMTs
51:10
and the the firemen who need it so
51:13
desperately and you know to date we’ve
51:16
we’ve raised a lot of money we’ve we’ve
51:18
we’ve gotten more than 60-thousand in 95
51:21
masks to more than 600 clinics and
51:25
hospitals and fire departments all
51:27
across the country I mention this
51:30
because this is what I mean about
51:32
bottom-up action we can all do this
51:35
right we we don’t need to wait for
51:37
somebody to organize this we don’t need
51:39
to wait for some politician to tell us
51:42
oh you know do this and don’t do that we
51:44
don’t need any permission we know it
51:47
needs to be done and we can all make a
51:49
difference in this respect so so thanks
51:51
to the the the person who wrote in as an
51:54
opportunity to encourage everyone to do
51:58
mmm do that’s John Boyd 101 by the way
52:03
I’m the mad major in Oh Duluth start
52:06
with doing you know so that’s that’s
52:07
important here’s a here’s a there’s a
52:09
long question this is a I want to know
52:11
the answer to this selfishly Keith sees
52:14
the world through a mathematical lens
52:15
Ben can you talk about Epsilon theories
52:18
natural language processing and how
52:20
you’re framing narrative mathematically
52:22
how could narrative machine work in
52:24
concert with a quantitative signal like
52:26
Keith’s a great great question that I’d
52:30
love to explore that with you key at
52:32
some point yeah so you know that again
52:36
my background is statistics and math and
52:38
and and the like the the world we live
52:42
in as we know is you can apply those
52:45
math and those techniques to the data
52:47
that you collect in the world and you
52:50
know it’s it’s like the old story of the
52:52
guy looking for a lost quarter and he’s
52:55
looking for it underneath the street
52:56
lamp and the prison says well is that
52:58
where you lost the quarter he says no I
52:59
lost it over there but the lights good
53:01
over here
53:02
and and and so we we we have these very
53:06
advanced mathematical techniques and you
53:09
know statistical approaches but it all
53:12
boils down to what are you applying it
53:14
on what’s the
53:15
you’re applying it on and so what we’ve
53:18
done for hundreds of years is we’ve
53:19
applied it to structured data we’ve
53:22
applied it to the things that we can
53:23
count in the world right – what we can
53:26
put on a spreadsheet yeah I’m old enough
53:28
to remember Lotus 1-2-3 right where’s oh
53:30
my god we got it spreadsheet now this is
53:32
fantastic so you know everything you get
53:35
off of Bloomberg it’s in the form of
53:37
structured data yep
53:39
what what what I’m trying to do in our
53:41
research program is trying to apply
53:43
these same old math techniques that have
53:47
been around for four decades right but
53:49
to apply it to things that are a little
53:51
harder to count in to measure it’s it’s
53:54
what we refer to as unstructured data
53:56
it’s all the it’s all the words that we
53:59
hear on CNBC at a given date you can
54:01
imagine that right is all the words and
54:04
articles that are published and you know
54:06
reuters and Dow Jones and the Journal
54:09
and Bloomberg on a daily basis it’s a
54:12
it’s a big data problem but today and
54:17
this has really been the the revolution
54:19
for my research over the last three or
54:21
four years because these are techniques
54:23
that I was trying to apply 30 years ago
54:25
and my doctoral dissertation but today
54:28
we can plug in to AWS Amazon we can plug
54:32
into Azure from Microsoft and I can get
54:35
as much computing processing power as I
54:38
want it’s like plugging and playing the
54:39
wall and getting electricity so the the
54:42
calculations we’re making the math we’re
54:45
applying it’s not complicated what’s
54:48
different today is our ability to have
54:52
all the words write all the words are
54:56
available in a data feed from my Dow
54:58
Jones or LexisNexis and then the just
55:01
the processing power to do the
55:03
calculations on it it’s all there at
55:06
your fingertips so again this is why I’m
55:08
hopeful that we can we can turn these
55:10
the tools of technology and science to
55:14
understanding our world better and to
55:17
see how narratives our form is it’s like
55:22
having a microscope and putting a you
55:24
know in the 1700s and saying oh I wonder
55:27
what this
55:28
you know drop of dirty Tim’s river water
55:32
looks like if I put it under this new
55:34
machine I built the microscope yeah and
55:36
you look at the microscope you go oh my
55:38
god there’s a whole world alive in there
55:40
mmm I think that’s that’s the research
55:42
I’m trying to do and I think it’s a
55:44
great marriage with the sort of
55:46
structured data analysis that I that I
55:48
did I know you do Keith yeah I think
55:49
there I mean that is the kind of citing
55:51
a book this morning called the the
55:53
future happens faster than you might
55:55
think
55:56
these are the guys that wrote or at
55:58
least that give out the X Prize every
55:59
year but you know everywhere you look
56:02
we’re on the edge of things like that a
56:03
friend of mine dr. Richard Peterson
56:05
wrote inside the investor’s brain he’s
56:07
really focused on memes word threads you
56:10
know using you know predictive tracking
56:12
algorithms to drag that out I think
56:13
there’s a great collaboration there so
56:15
you know I will talk to you I will take
56:17
you up on that by the way well I have
56:18
time for one more question here that’s
56:20
and I knew is we’re gonna get this
56:22
question because we haven’t really
56:24
addressed it but this is from Eric what
56:27
specifically will it take for the dollar
56:28
to be toppled and from being and from no
56:31
longer being the world’s reserve
56:32
currency
56:35
it’ll take a world war that the United
56:37
States loses and I mean I can’t say it
56:39
any stronger than that right I that
56:41
that’s the answer that I’ve ever been
56:43
able to hear on now and I like that I’m
56:45
gonna use that there there you go man I
56:49
mean the the dollar is is is part and
56:53
parcel of the United States military
56:58
might in the world I don’t know you know
57:01
a better way to say it than that
57:03
you know is it still saying you know
57:05
that governments today are insurance
57:08
companies with an army attached to them
57:11
I mean and that’s that’s what the United
57:13
States has become an insurance company
57:15
with an army attached to it and it’s
57:18
scrip right is the US dollar so you got
57:21
a you got either knock out the insurance
57:23
company you got to knock out the army
57:25
yeah on that script value on that like I
57:28
have a follow-up question I mean another
57:29
book I just recently finished which is a
57:31
history book called the splendid in the
57:33
vial and it’s a great book about you
57:36
know that moment in that particular
57:38
moment of risk in time and London
57:40
against Berlin and I was
57:41
to make the analogy between Washington
57:43
and Beijing a lot of people you know
57:45
we’ve had the through Citadis trap which
57:48
is another book about rising powers
57:49
attacking existing powers a lot of
57:52
people are getting a little closer on
57:53
this and and this might be a big last
57:55
question to ask you on on this ultimate
57:58
rising power China you know again
58:00
because that would be a sensibly the
58:02
night of status but again that would be
58:04
the potential threat there if you were
58:07
to have a World War is to have the
58:08
Chinese currency and the Chinese
58:09
themselves beat up on the US well so I I
58:15
can give you some examples of power
58:17
transitions as we call them that either
58:20
don’t happen like you know if you’d gone
58:22
back 40 years you’d be talking about
58:24
Japan Inc and Japan going to you know
58:28
past the United States as the largest
58:30
economy and the most important economy
58:31
in the world that didn’t happen the you
58:34
know Ashley Japan fell back and and so
58:37
there wasn’t that sort of power
58:38
transition there was really wasn’t a
58:40
risk of it being violent in any respect
58:42
you talk about the power transition
58:44
between the the United States overtaking
58:47
Great Britain right around the really
58:51
after the u.s. Civil War call it the
58:52
1890s like the 19th through the first
58:55
world war where you saw the United
58:56
States really come into its own as the
58:58
global superpower okay so I’m giving
59:01
examples of peaceful transitions
59:03
transitions that that don’t happen
59:06
they’re possible that they’re still
59:08
peaceful but to your point I can also
59:10
give you examples of transitions or near
59:13
transitions that that end up in war what
59:16
what I would say right and again it’s
59:19
it’s similar to you know you’re talking
59:22
about the fourth turning and India how’s
59:24
work absolutely there are cycles in
59:26
history absolutely there’s a recurring
59:29
pattern of what we call hegemonic powers
59:32
super powers and the countries that rise
59:35
in power to try to challenge them it’s
59:37
not preordained it’s not certain right
59:40
that that ends up in war and in military
59:43
conflict right that can absolutely
59:44
happen but it’s not preordained it
59:47
matters how we act right it matters the
59:52
stories we tell ourselves the narratives
59:54
we have
59:55
have the leaders we elect as to how this
59:58
all plays out and the last thing I’ll
60:00
say about this is let’s remember that
60:02
the problem with the the Peloponnesian
60:05
War if we put ourselves in the position
60:07
of Athens right the good guys they lost
60:11
that war they lost that war and it was
60:13
because of their overweening pride their
60:16
sending of expeditionary forces out in
60:19
this case to Syracuse they’re
60:21
overextension of themselves and their
60:23
hubris and thinking that they could
60:25
control the world I think that’s the
60:28
lesson we need to learn from the front
60:31
acidities and the Peloponnesian War is
60:34
to avoid that overweening pride that
60:37
hubris that of course where the natural
60:39
winners and anything that I mean for
60:43
those of you this hasn’t kind of come
60:45
across to you yet or not you know given
60:48
his wealth of knowledge you at some
60:50
points that it’s not been hunt I thought
60:52
it was like Benjamin Franklin you have
60:54
that look kind of look a little bit like
60:56
the guy you’re on you have your own farm
60:58
I think you have a 45 acre farm you live
61:00
on yeah yeah you’re a good guy too
61:03
I mean I think that that’s another thing
61:05
that we need more of on Wall Street is
61:06
people that can actually translate or at
61:10
least go across the bridge between like
61:12
okay here’s what I want to do in the
61:13
market but here’s what I want to do is a
61:15
human being and and those can be you
61:17
know some different things obviously at
61:18
certain points along that bridge so you
61:21
know uh awesome having a conversation
61:23
with you man i I’ve been looking forward
61:25
to this Keith thank you thank you very
61:26
much for having me on
61:27
well I I genuinely appreciate it and I
61:29
know that the audience does too I wish
61:31
we I wish we had more time but I promise
61:33
to stop myself up good stop myself up
61:36
because I rant too at an hour so thanks
61:39
thanks for your time we appreciate it
61:40
thank you
61:44
you
61:49
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