Fake $30 Billion Fraud Found Guilty! - Patrick Bet David On FTX Collapse & Upcoming Market Crash | Transcription

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Introduction

Intro (00:00)

If you want to be successful, you've got to be paranoid. Think about the fraud verdict that was just handed down in the FTX case. A lot of paranoia during the due diligence process would have gone a long way. Also, there are just so many warning signs in the economy right now that people really need to be paranoid about what comes next. Right now, 86% of executives believe a recession is coming. Seven stocks alone account for 28% of the S&P 500. Debt has reached just absolutely dizzying heights. And here to discuss all of this and more and what you should do about it is Patrick Bette David. FTX, Sam Bankman-Free just gets convicted on all seven counts. Absolute madness, obviously fraud at the deepest level. As I look at what's happening, it feels like yet another one of these pieces of instability on an economic chessboard right now that is all over the map with a whole lot of things going on. I'm curious to get your take, not only on FTX, but how you think this ultimately fits into a landscape that feels very unsustainable with the amount of debt and printing that we have going on right now? So one that's great news is accountability. As long as accountability is being done, that's good.

Economic Trends And Predictions

Sam Bankman-Freed Gets Convicted (01:16)

This guy stole $8 billion from people's money. We're not talking $8 million or $80 million, $8 billion. And he was practically buying politicians, what he was doing left and right. Second biggest donor behind George Soros. George Soros gave, I don't know what his number was, but this guy was in the 29 million range is what he was. He one time offered Trump, "How much do I have to give you to not run?" I don't know if you're aware of this or not. I did hear that. And Trump jokingly said a billion dollars. He said, "I will give you money for you not to run." Think about what he wanted to do behind closed doors. He literally looked at everybody as a pawn, as a way to move them. So the guy getting 100 years, we're going to see obviously what happens when this thing ends, but did you ever see the paper that his mother wrote years ago about personal responsibility? Do you remember that? I didn't read it, but I heard about it. And that's one of those things, super distressing. Did you read the book Going Infinite? No, I did not. Really, really interesting. It got bad reviews. So I'm not sure why it got bad reviews. Going Infinite. Going Infinite. I'm almost certain that's the name of the book. Somebody can fact check me on that. But it was really fascinating to hear how this was somebody who was completely unemotional on the inside, who I'm going to guess just literally had no feelings or thoughts about taking the money. And he was so going back. So this idea of people having a messianic complex, people become so convinced that they know what's right for the world, that, "Oh, whatever we need to do, I'm going to be able to work this out. I'm smart enough to figure this out. It's worth whatever risk." And really trying to completely remake the world in his own image. And do I think that it was fraud in the way that Bernie Madoff committed fraud? No. But did he just blatantly steal people's money in order to put people's money at risk in order to shape the world the way that he wanted it? Yes. It was just absolutely crazy hearing the detail, like page after page of somebody who didn't even seem to know where all the money was going, just used everything like his own piggy bank and was splashing so much money around and had the sense it was going to last forever. Really, really pretty horrifying. Yeah. But two things that makes me think about. One, the people who are in that space who did some similar things are sitting around saying, "I don't want this thing to bring more attention to me on what happened with me." So this is going to scare a lot of other bad actors that are worried if they're going to be found out. Company-wise, there's some other companies that are also a little bit concerned about how they're going to be doing the financing. But I want to read this to you. His mother, SPF's mother, was a Stanford law professor, once wrote an article beyond blame. And she said, "We have to move past this whole concept of personal responsibility." Her words, "We have to get past this concept of personal response, the limits of personal responsibility. The fact that we have gotten so little in return for our blame-mongering at least opens up the possibility that people would be receptive to a new approach. The next time something goes terribly wrong, like your son going to jail for 100 years and stealing $8 billion, suppose that instead of immediately asking, "Who is to blame?" we were to ask, "How can we fix this problem?" "Yes, mom. How did you raise a son like this that stole $8 billion from people?" So to me, this is multi-dimensional. I don't know his mother. I've never broke bread. I don't know who she is. If mom is a Stanford law, that means this is a smart mom. And if he is able to convince this many people to give him this much money, and convinces guys like, I don't know if it's Shamat or Thiel or one of these guys that he raised all this money and they said, "Hey, we recommend you having a board." And he says, "Go F yourself. I don't need a board to tell me what I'm doing." Who the hell in the first place trusted giving this guy this much money without a board? Who? So for the people that are upset, "I cannot believe I lost this much money for my client." Next time you're giving somebody to manage money for you, ask them, "Any reason why we're giving this guy at this age this much money and you don't have a single board seat?" Let me get this straight. You guys don't have a single board seat? Yes, we don't have a single board seat. Who negotiated this deal? Who the hell is this guy? Has he done four, is he the modern day Steve Jobs with three other exits in the past that you're going to say, "Yeah, this guy we can depend on." Is he Elon Musk? No, he's just a regular guy. Okay, so the people who did that, you have to kind of give a little bit of blame to them for not getting greedy. And by the way, this is a lot of smart people that were involved. We're not talking about regular people. But the fact that this has taken place, where this guy went from being the modern day, what did Cramer call them? He called them the modern day JP Morgan Chase. Do you remember this? Cramer called them the modern day JP Morgan Chase. If you can quote that, it may be somebody else, but I think it was Cramer. He was screaming off the top of his lungs and all these people that got FTX money, that they're going to have to come back and maybe that's going to show up again. But I don't really put a lot of blame on those guys. They're just getting sponsorship money. You either pick the money or you don't pick the money. You're picking the CEO. But it's pretty wild to see what's going on here. But the best news is a certain level of accountability for this to be taking place.

Euphoria on Markets (07:01)

No doubt. Yeah, going back to the idea that they didn't even demand a board seat. I mean, this is really ultimately what the euphoria looked like. Now, I had never been through a market cycle of euphoria. I had no idea what the signs were. I mean, now obviously I'm familiar with the, when your shoeshine guy starts giving you stock tips, that's when it's time to sell. And it really did have that sense of like, nobody wanted to miss out on the one grand slam that was going to come out of this. And that reading going infinite was utterly fascinating about like what he was really like, how awkward he was and how people started reading that as like genius. And then of course he really was smart. It's not like he wasn't bright, but he was, I mean, yeah, I don't know how much of this ties to the idea of his mom and nobody's taking blame. I don't know. There's something very undisciplined. Like if I were just going to take it down to, uh, do I think he's nefarious or do I just think he believed he could do no wrong, believed he was the smartest guy in the room, which ended up being the punchline to Enron. I think the documentary is called the smartest guys in the room. And it's like you, this is so my thesis, one thing I'm really banging a drum on now is just getting people to distrust themselves. Like I set my company up where anybody can tell me when they think I'm doing something wrong. I unfortunately am not smart enough to run this company where I'm going to make every decision and be right every time. And so I constantly need people being a checks and balance system, letting me know when they think I'm doing something stupid so that I'm not blinded. And it feels like when you have this Messiana complex put together with somebody who really believes that they're the smartest person in the room and who's going to tell them otherwise, like you guys don't know what I do and look at all the success that I've had and I'm a singular mind and I'm going to be able to do this. And if you have those two things together, that really is how you go off the terrifying deep end.

WeWork (09:01)

Three things. One is WeWork. I don't know if you're following WeWork with what they're going through. In 2017, they were valued at $47 billion. You know how much SoftBank gave them in 2017? You know what they raised? $18.9 billion. They missed a $95 million interest payment. They're about to shut down. WeWork. Andy Fastel, who is a CFO of Enron. One day, I'm in a four seasons in Dallas. I'm doing a business planning session and once a quarter I would go away. I'm at the hotel 20 miles away from my house but I would have a room full of stickers and stuff on the board and I'm just writing what we're going to be doing. So I go down, I'm swimming, then I go to the sauna, I'm sitting there. How you doing? How you doing? Good. What do you do? I'm this. Oh, no way. Yeah. How long have you been in the financial industry? 28 years. Who are you with? Morgan Stanley, Dean Witte. Great. You know, I'm looking at a couple speakers to bring to my event. Who would you recommend? Oh, who I'm going to tell you you're going to think I'm crazy. Who's that? Andy Fastel. Who is Andy Fastel? The CFO of Enron. The CFO of Enron? Yes. Do you by any chance have his number? He says if I give you his number, please don't tell him I give you his number. I said, let me call this guy. I'll tell him I got the number from somewhere but I won't give the name. I call Andy. Andy is paranoid. He doesn't know who I am. Yeah. Three years later, I bring Andy as a keynote speaker at Vault Conference last year. You know how I opened this up? I said the reason why I brought Andy in is to help you guys not go to jail. Andy gets up. He opens it up this way. He says in this year, the number one CPA magazine of the year, I was the CFO of the year. He says then the next thing I want to show you, this is my jail card. Wow. My jail ID card. One year I'm the CFO of the year running Enron with 100,000 employees. Next year, you know, I'm in jail. They found a way to kind of scare his wife as well and they kind of separated him and he had to go do six, eight years, whatever it was. Anyways, the moral of the story is this. Study very close to who you're in business with. Quibi raised billions of dollars and went out of business in no time. They were paying actors $100,000 a minute to do 12-minute movies. Do you remember those days with Kevin Hart and all that stuff and Katzenberg and all these guys were involved in it? But if you see something coming in that even the brightest of the brightest of the brightest minds are getting involved in, ask some of the questions. Do we have a board seat? Who's in the ear of the CEO? Who's talking to the CEO? What are his values and principles? Does his mother believe in personal responsibility? What are we dealing with here? So ask more questions before you jump in with excitement because other people are getting involved. Well, so here's another fascinating thing that, um, I think we'll have more things to say on this topic later, but the idea that what you have are a set of ideas because they were effective altruists and I didn't know anything about it until I read the book, but reading the book, it was like, okay, he was an effective altruist. He hired a bunch of effective altruists. Some of the people that helped them raise money were effective altruists. And so there was this mindset and I won't be able to do effective altruism justice enough, but it's basically what is the, um, I think they take a utilitarian approach. So what's the best good that can be done with this. So what's the most good you can do with your life. What's the most good you can do with the money. And so in trying so interesting, cause this ties into your idea of selfish versus selfless. And so they really believe that they were the most selfless people around and that they were just trying to run everything through an equation of like, what's the the greatest number of good that this can go off and do. And in some weird way it breaks. And so even though it really does sound awesome, like you're really saying, I'm not going to live a lavish life. I'm going to give all this money away in all these different ways. But, and now I'm just really hypothesizing here. This wasn't in the book, but as I was reading the book, I kept getting this feeling that I think part of what ended up happening is the algorithm running in the back of your mind is as long as these dollars go do the most good, it doesn't matter sort of where they end up. And so he had largely a political agenda and was just like, Oh, these dollars will be best spent. They're not thinking like, well, we only have so many dollars that we can spend and there are, or should be capital restrictions. You can't mix funds, right? That all got way farther back, got pushed way farther back into the recesses of his mind versus what's the highest good in his mind that this money can be put towards. Now, again, I'm super speculating. He didn't say any of that. I don't know that, but that's how it felt reading the book. And these are the results. These are the results that we experienced now for me, a basic red flag. Now, earlier we were talking, you and I, if I asked you for $10 million, I said, I'm going to take $5 million off the table. You don't get any board seats and I'm going to pay myself $500,000. You all the red flag, red flag, red flag, red flag versus no, here's where it's going to go. This is what we're going to be doing. How do you not have, when you're given that kind of money, how do you not have a board seat and accountability to hold a young entrepreneur CEO accountable? How? I can answer that question. So you are in a position where you have a lot of capital because this is a time where capital is just flying everywhere.

Capital is Just Flying (14:43)

So you have a ton of capital that you have to deploy. You start hearing of this Wunderkind who just has this crazy investing strategy where he's arbitraging in South Korea and it all sounds absolutely brilliant. And he is the next big thing. He's an effective altruist. He's not even doing it to get wealthy. He'll show up in these meetings in like cargo shorts and no shoes, not having been. Yeah. And so all of a sudden it's like, okay, is he crazy or is he a crazy genius? And so the narrative starts swinging to, he's a crazy genius. And so yes, he shows up and yes, he's going to play video games while he's on the call with you, but that's because his brain works so fast that he has the, basically he's able to fractal his mind and do the video game over here. And so as that becomes the narrative, people are buying the story. And so people will buy the best story to quote Morgan Housel again. Morgan says, it's never the right data point. It's not even the right answer. It's the best story that's going to win. And so the story they were telling about this guy, because I remember I was really on the periphery of hearing about him and it was like, he was the good guy. He was the guy that had all the right incentives, all the right reasons was just doing good with his money. Wasn't trying to be rich, didn't live a lavish life, which wasn't entirely true. Um, but the story was there. And when the story's there, everyone's euphoric number only go up. You've got a ton of capital you have to deploy. You find a once in a generation genius. He's being validated on stages with Bill Clinton and whoever, and all of a sudden it's like, okay, well the cost of being able to get in on this is that we're not going to get a board seat. Here's the crazy thing though. The question is, is he going to get pardoned? The question is, is he going to be able to get released? The question is, how many people did he give money to that are afraid if he leaks information of what happened that maybe campaign funding could come out. Maybe he has more control over other people. Is he kind of a modern day Epstein, not the kid stuff, but more how he held people hostage with money and formation on the back end. The next thing is going to be who's going to turn on him that took money from him and how they're going to react. Um, because if things start getting weird, it tells you he's got a lot of Intel on some very powerful politicians in America. Yeah. Yeah. So we only have to wait a few days for at least sentencing and then we'll see beyond that. All right. As I think about all this, it goes back to what I started with. We're, we're on sort of shifting sands here. We've got a very complex macro, uh, environment. And what, what does all that mean? Do you still think that we have a recession coming?

Hospital economy (17:35)

And if so, what do we do about it? Good question. So let's go through this. You know how, uh, a doctor, uh, has seen 5,000 patients over the last 20 years. Okay. And he's got a very niche thing that he does. It could be skin. It could be, you know, uh, kids. It's but it's very specific. And a lady comes in and she says, this part of my body hurts. No problem. But 420 people have come and I've said this part of their body hurts in his mind out of the 420, it breaks down to four different things. It's either this, this, this, this. So now as a doctor, he's going to use a process of elimination. Let me test this. That tells me it's not this. Boom, boom, boom. Great. It's not this. Let's take blood and urine. It's not this. Let's take an MRI. It's not this. Let me take a sample. It's this great. Now, you know, okay. What's the worst thing a doctor can tell you when you go to him, the doctor says, what?

Negative amortization payment (18:42)

I don't know. I don't know. That's the worst thing when he says, I don't know what's wrong with you. I've never seen this before. That's like the last thing you want to hear. Tell me I have this, or I have this, or I have this, but do not tell me I've never seen this before. So today's economy. When's the last time we had this case study? Let's look at case studies. Okay. What's different between today and 2008 market crash? 2008 market crash was about no income, no assets, NINA, loans. Banks were giving them money left and right. Hey, stated income. You're trying to qualify for a $720,000 loan. How much money did you make last year, Tom? Oh, I'm a school teacher, $48,000. You're not going to get qualified for this, Tom. I'm going to ask this question one more time. How much money did you make last year? I just told you $48,000. Do you want to get qualified for this or not? Yeah. Okay. One more time. How much money did you make last year? $62,000. That's what it was. No income, no assets in 2008, right? 2007. And then I remembered the month when I knew it's over because the one guy in LA who was making 400 grand a month had an office in Topanga Valley, in Topanga or Canoga, 30,000 square feet of office space. November of 2007, he shuts it down. And this is right after you're seeing WAMU, Countrywide, you know, all these other companies that are doing what they're doing. Very problematic when that took place. So then you saw cities like Riverside Community, Riverside County, 65% houses foreclosure. Then you had loan modification. Then you have people that were buying five, six homes paying the negative amortization payment, which means if you got a loan, this was a program that came here from Australia. With the story you always hear about that this program was in Australia. We brought in America was meant to only be for people who are affluent. Okay, you got a $20 million loan on a house. You got $40 million on a bank account. I'll give you 20 million. No problem. You got four payments to make. You got your 15 year loan, which is going to be the biggest loan. You got your 30 year fixed, which is going to be reasonable, but it's not a 15 year loan. Then you have your interest only that you're literally only paying interest and the loan stays the same amount. Or you got your negative amortization payment, which means the loan gets bigger every month that you pay it because it's negative amortization. Every month the loan gets bigger.

Just do the math (21:11)

Okay, so for example, for the average person in America would have been something like this. It would have been negative payment was $1200 a month. Interest only was $1800 a month. 30 year fixed was $3100 a month and 15 year was $4500 a month. Okay, so people are like, dude, buy another house and another house and another house and another house and another house and I got five houses that I'm paying $1200 on. I can't afford to do that, except that was only for two or three or five years. And then all of a sudden your $1200 payment goes to $4200 times five houses. How do you pay $20,000 a month? You can't do it. Boom. Foreclosure, foreclosure, foreclosure. So that's not the case study of today. The case study of today is somehow some way the government thought it's a good idea to lower interest rates to 1% and we had 3% loans that were going on. And then we talked about 128 month expansion. By the way, if there's no COVID, that would have been 150 month expansion that we would have had. That's not good to have 150 month expansion because during that cycle that we went on, Tom, money was so cheap that people were just picking up money and buying stuff left and right. It was so cheap. Go get a house, go get a car. Rates were low. You know, these big companies are getting $50 million lines, $100 million lines, $200 million lines. Go get as much money as you can. Then COVID hits. When COVID hits, philosophically, it was a shit show. Go work from home 18 months. That's what you got to do. Essential, non-essential. And then when that took place, companies like Twitter and many others said, add Twitter under Jack Dorsey. You can work from home for the rest of your life. What a noble company. That's what we got to do. And then so we go through that cycle and then people started abusing employers and they had two jobs that they weren't telling anybody, but they're making 82 here and 88 here. So they're making $170,000 thinking they can do this fraud that they're doing for the rest of their lives. And then they're living a $170,000 a year lifestyle, not realizing that's not going to be around forever. And then the money that they put into the system, all of a sudden, people have cash in the bank like never before. So we had $2.2 trillion of cash, Americans. Every quarter, that thing went from $2.2 trillion to $1.7 trillion to $1.4 trillion to $1.1 trillion. And our savings as a nation kept going lower and lower and lower and lower. So then we have more money being printed into the economy. And then we had the election. Then now COVID is gone. Now we got to get people to come back to work. They don't want to come back to work. They want to work from home. Then companies like David Solomon, Goldman Sachs, they start saying, "No, you got to be there for accountability on Monday morning and all this other stuff. If you don't, you're not getting your bonus." People started kind of getting creative. "That's unfair. That's not cool. I'm going to go get another job." Many did. Then some companies came out and said, "No, we're just not doing that." And then that is taking place. And then you have a bit of war. You have craziness going on with another war. You have all of these things taking place. And then suddenly, Jerome Powell sees inflation is going to 8%. Wait a minute, what's going on here? We got to lower it to 2%. How do you lower it to 2%? Let's start increasing interest rates.

We raised 4.88% in the shortest amount of time ever (24:35)

We raised, this is crazy, we raised 4.88% in the shortest amount of time ever in the history of America. There's a chart on Statista. You got to see this. It's a great visual. And it shows historically when we've had to increase rates, it's over a three-year span, or it's over a six-year span, or a three and a half-year span. No, no. This is over a 12-month, 15-month span. 4.88%. Boom. Like this. Hoping inflation goes down. Okay. Inflation moves a little bit. Sales of homes to the lowest in 20 years. Mortgage applications lowest in 27 years. People who were doing loans, I don't know if you have friends who were doing loans or mortgages or real estate. These are guys that were making a half a million dollars three years ago per month. They're not making nothing right now. Guys who were making $100,000 a month or having a hard time making $8,000 a month right now in loans. There is no loan application. Because even new homes are not being sold to do the loans of new homes. So home sales are down because typically when refi comes down, people will sell homes. No one's selling homes today. Why are they not selling homes today? Because they're still sitting on some cash and they don't want to give up that 3% loan they got a year and a half ago. And then you look at the data. Okay, let's just say I do sell this house. I got to go buy another house. But I got to get that house at 8%. I'm not willing to do it. Why would I do it? So I'm not going to. There is no motive to sell the house. So now what's the ticking time bomb? A few things. One, Jerome Powell is trying to increase rates, hoping unemployment increases because that's what we need. They need the unemployment to increase. It's not moving. It's still 3.7, 3.5, 3.8, 3.9. It's not moving. It's right there. Okay, so either we need unemployment to go up or we need people to run out of money. If people run out of money and they're stressed out, guess what they do? They're going to sell the house. So today numbers came out saying it's 55% more cheaper to rent than buy. This is the highest we've had ever. It's 55% cheaper to rent than to buy today. This is not a buying season. This is a renting season. Okay, this is what Wall Street Journal and many of these other articles will talk about. Okay, meanwhile the economy is growing. The economy is going up. Dow Jones, oh it's killing it. Based on seven companies. Magnificent seven. You know who these magnificent seven companies are? Nvidia. You got these Facebooks, the Amazons, the Apples. These seven companies that are preventing the company from country, the market from having a crash. Then while all this stuff is taking place, Powell now is dealing with a war. He's afraid. He wants to raise the rates a quarter, but due to the war that took place in Israel, he doesn't. Then data shows, which is by far the most interesting data to answer your question here, is how much after these five situations will we raise the rates multiple times in a span? This being the shortest in the most condensed time frame. How long does it typically save? Is there a formula of when recession comes, if at all? Here's what they realize. Recession usually comes on average 11 months after the last month they raise the rates. So what does this mean? If Powell's no longer going to raise the rates and the last time they raised the rates was September, let's just say, that means recession is going to come when? Not October. So you got October, November, December, January, February, March, April, May, June, July, August. August of next year. Three months before election. That's if it follows the trends of the last five times when they raised interest rates. So how did I start off the story? I talked about the doctor that has met 4,000 different patients in the 420.

The Fundamentals for the Next Economic Crash To Be Far Worse than the 2008 Crisis - The (28:27)

You're kind of going through this. The problem of everything I just told you could be completely wrong because there's a fifth when the doctor says, "I've never seen this before." So we've never seen current climate before for us to be able to put it and say, "Well, according to this and according to that, we've never had this situation before." Yeah, that's the thing that makes me really tense. But there are fundamentals that when I look at, I think, "Ooh, it isn't possible to sustain this." So the thing that I just keep coming back to is debt and interest. And when you look at the charts that show the interest payments and how they're going to go up and up and up, and even people that locked in, say, three-year fixed rates at really low rates in the corporate market, that all goes away in a few years. And so you start looking at just the absolute behemoth numbers that are going to be due to service that money, and it becomes completely untenable. And the bad news is it becomes untenable both at the individual level, where we're more in debt than, I forget, ever or close to it. But individuals are in psychotic amounts of debt. Corporations are in ridiculous amounts of debt. And the nation is in a ridiculous amount of debt, all while we've had two major printing events since 2008. And so now you really have a very unstable market. So there's a great quote called Minsky's Financial Institutional Hypothesis, Instability Hypothesis, excuse me. And he said, "When an economy is stable, people get optimistic. When people are optimistic, they go into debt. When they go into debt, the economy becomes unstable." And now that's even without the crazy rising in interest rates. So we have this, for me, it seems self-evident that there is going, that gravity insists that things come back down, but they haven't yet. And so just when I want to get bullish and be like, "Hey, obviously this is all going to come crashing down," it just keeps not and not and not. My intuition is that a recession is inevitable, but the market can remain crazy longer than you can remain solvent, whatever the quote is. Why hasn't it happened yet? And how do you think about, because obviously you have similar concerns that I have, only the paranoid survive, but how do we turn paranoia into an action plan? Yeah, so everything is right now about mapping out different possibilities. So for example, if we're right now in a conference room and we got bored to write on, we would write on, you and I would write down and we would say, "Okay, World War III takes place. What do you think are the chances of this taking place?" Ray Dalio says 50%. Yes, he does. Jamie Dimon says, "This is the most dangerous times we've had in America in decades." Okay, cool. So if World War III happens, what happens to the economy? Who's going to be the parties involved? Are we going to be involved purely through proxy or is there going to be attack here? Then you write down the possibilities. Okay, if this happens, what are you going to do? If this happens, what are you going to do? Then next, what happens if unemployment all of a sudden goes to 7% 6%? What happens if inflation goes down? What happens if Powell starts lowering rates back down to 5, 4%? Holy shit, that's going to be crazy. So you got to write all of these different scenarios down. But here's a couple of things that we have to be thinking about and you said, which was fascinating. One, so credit card debt, highest it's ever been. You know what's the craziest thing about credit card debt being the highest it's ever been? Tam, the average interest rate on credit card is the highest it's ever been. Forget about the debt. So people are worried about the debt. So imagine the interest rates in the last five years has gone like this to 23%. The average is 23% on credit card. You know what 23% means? That means the debt doubles about two and a half years. That's like loan shark numbers. That's loan shark. Three years your debt is doubling, right? But that's what we got right now on credit cards. Okay, so our debt is record breaking. The forgiveness for your school loan is gone. So now you have to start paying forward. That's three, four hundred dollars a month that people are expecting. I think October, November is starting. Then let's set that part aside. Go to the corporations you were talking about that are borrowing money. This year their interest payment on corporation that borrowed money is going to end up being around five hundred and thirty billion dollars. Just interest. Next year it's going to 730.

The Three First Signs that Show an Economic Crisis is about to Happen (33:05)

Next year it's going to 1.1 trillion. In the next five years it's going between 1.3 to 1.5 trillion dollars just on the corporate debt that we're talking about. By the way, next part. Car payment, a credit. No one's affected. Good credit. They're making the credit payments on time. Mortgages. We're not saying anything crazy with people with bad credit not making payments. We're still good. Car payments in subprime. They're seeing a spike in defaults where people are not making car payments. The first sign you're seeing on what's taking place. No problem. Let's go to the next one that's the scariest one. US has 33 trillion dollars of debt. Worse it's ever been. The highest it's ever been. No problem. What does that really mean? No one can really figure it out. Here's what it means. All the money that we have, about 8 trillion of it, the rates are gonna recalibrate and we're gonna have to have new rates that we're going.

The After Burning Desire (NFT) (33:54)

Every single time the rates go up one point, just one point for the US government, our interest payments, Tom, increases by 320 billion dollars. So imagine we raise rates by three points. Just interest, it's a trillion dollars more per year. If it's six percent, two trillion dollars more per year. That's that. Then last thing that I'll just kind of get you to be thinking about. So anytime you want to know if the economy is back to normal, go to Vegas. Vegas is humming. Okay, we're good. And always, whenever you go to Vegas, talk to cab drivers and talk to the drivers who are doing Uber. Always ask, how's conventions doing? How are you seeing with traffic? Are you noticing things canceling? No, this has been crazy for us the last three months. Everything's good. But if they start seeing a downturn, they're typically an indicator of what's to come. The transportation industry, we consult for a lot of transportation companies at Bdavid Consulting. One of my friends, I'm about to go meet with them right after this, their construction company does very well. We have these three clients that we have who are doing transportation. Two of them are doing 100 million, 80 million a year. Numbers are down 40-50 percent. One of them is doing a billion a year. Their revenue is down 70 percent. So let's actually talk about transportation. Why would transportation be down 70 percent? Aren't Walmart, Amazon companies ordering stuff to ship it from here to there? Why would that be lowering? What do they know that we don't know? Again, these are people who have data to insider stuff that we can sit there and say, these are great indicators when you're studying these things and what's going on. Does this mean recession is going to come here? Like I told you earlier when we were talking, my bigger fear is a reverse market crash, which Venezuela just went through, which all of a sudden the rates get lowered and Dow and S&P goes. And Dow goes from 33, 40, 45, 50, 55, 60 just goes voom. Is that just the dollar losing its purchasing power? Yes, exactly. That's what happens. The more we're printing, like for example, a Michael Jordan card years ago, a BGS nine and a half sold for $78,000. I was like, oh my God, that's crazy. But then all of a sudden all of these boxes kept entering the marketplace of 1986 FLIR. So guys started buying these things and they were sending more to get graded at Beckett and PSA. The more they got cards graded, that $78,000 card BGS nine and a half became a $60,000 card, $50,000 card, $40,000 card, $30,000 card. You can probably buy BGS nine and a half today for $20,000, $25,000. So the inventory increases the more we print money, the more you print dollars and it's more accessible, the less it's value, the less it's worth. So these are some things that's going on today. So you sit there and you're like, okay, so does this mean guys are not going to make a lot of money? No, no. You're going to see the first trillionaire in the next 24 months because none of this is going to affect the guys at the top. None of it. This printing money, every time they print money, the guys at the top make more money. If there's anybody that should be against printing money, it's low and middle income families. If there's anybody that should be against printing money, it's them. If there's anybody that's for printing money, guess who it is? The guys at the top. Why? Because the poor in middle America can't keep money. They spend it and when they spend it, what do they buy? A product owned by somebody in the S&P 500 or other people who have businesses. Money flows up. They can keep printing money all they want. So when low and middle income families are like, look at these guys, all they care about is themselves. Let that bill pass for 2.7 trillion dollars. You simply look at them and you say, you have no clue how money works. You have no idea how money works. Guess what? Let's print 10 trillion dollars. Rich are okay with it.

How to Buy a Ferrari In 12 Months (38:31)

You ain't going to get the rich complaining about printing 10 trillion dollars or 5 trillion dollars. BlackRock's going to be like, all right, cool. We're at 8 to 10 trillion dollars of money in our ETFs and we're buying up a bunch of different companies. We're buying up all these properties today. Right now it's going to be nothing, but in the next few years you have to go through us and we dictate the market and we're going to own it all and what are you going to do about it? You know, these are a lot of different moving parts that is going on to me and again for me, the idea of middle America not being able to make the money they need to make to be able to afford a house, send their kids to school, live in a nice place, enjoy some of their dreams, maybe not the biggest ones, but some of their dreams are going to become a reality. Middle America is getting smaller and smaller and smaller every single time we print money. You can reboot your life, your health, even your career, anything you want. All you need is discipline. I can teach you the tactics that I learned while growing a billion dollar business that will allow you to see your goals through. Whether you want better health, stronger relationships, a more successful career, any of that is possible with the mindset and business programs in Impact Theory University. Join the thousands of students who have already accomplished amazing things. Tap now for a free trial and get started today. For people that don't understand the mechanisms of printing money, it goes like this. You have to have a mechanism by which you put this new money that you created out of thin air by fiat, literally just saying it now exists. You have to put it into the system. The way it's put into the system is by buying assets because typically low and middle income people don't buy assets, they buy products like you were saying, then they aren't beneficiary of that unless there are stimulation checks. Now those, they will get sent directly to them. So there are ways to put it in their pocket, but what you're effectively doing is socializing losses. So you are spreading the loss out across everybody because while I get it that because I own assets, I'm going to be disproportionately either protected or actually gain, the gain isn't real. And so it's really, I'm looking at the price is going up and it makes me feel like, Oh, I really did something. But in the end I didn't in the end, it just, my dollar buys less. And so it takes more dollars to buy the same thing because nothing fundamentally happened. The business that I own a piece of did not become more productive and therefore can actually generate more by adding more value to the world. So once you understand that, like I actually, as a wealthy person do complain when people print money, cause I'm like, Hey, there is a point at which you break everything because the money is just going to hyper inflate and it isn't only going to be the stock market that goes up. It's going to be the cost of bread and gas and taking your family to a movie and all of that.

Global Manufacturing And Investment Tactics

Money printing due to COVID in a great depression (41:23)

And so, um, look, I I'm conflicted. In fact, Patrick, but David, you're gonna educate me here. I'm conflicted about money printing because the only reason I got into doing financial content and quite frankly, learning about financial content or finance in general, uh, was because of COVID when COVID happened. This was me not being very far out from having worked at quest. And I had a thousand employees in the inner cities. And I was like, they're all going to get obliterated. I'll be fine. I'll still be rich on the other side of this, but they're going to get wiped out because I didn't know money printing. I didn't know that they were going to socialize losses. And in doing that, that actually kept us from going into something that probably should have been worse than the great depression. And they money printed their way out of it. And we ended up being okay because it was spread across a lot of people. Now, I hate that I was taxed without, um, without it being acknowledged as a tax. And I feel that I've paid an inordinate amount of money, but if that's what stops everybody from going into a horrendous depression, I don't know. I don't know that it was a bad idea, but I know that it, because I am such a student of Ray Dalio, I know that governments, once they start money printing, they can't stop. And every time in human history that has been used as a tool it's used until it breaks until it breaks every time without exception. And that typically as it's racing towards breaking, I think it's what eight out of the last 14 times, it's ended up in a hot war. So usually as the debt, the big debt cycle go watch Ray Dalio's video as the big debt cycle comes to an end and, and, uh, money's inflating away to nothing. Debt is completely out of control. Nobody can make their payments. Everybody's defaulting. You have to have a complete reset of the wealth, which is, I think why everybody calls this the great reset or the big reset or whatever, because we are, we are actually stopping. We are forestalling catastrophe right now by printing, but we are only forestalling it and nobody I've had a lot of people on the show. Nobody can tell me how you pull out of this death spiral other than austerity. And no one's going to do fucking austerity. Yeah. Well, I mean, Ray, when he, uh, did that one video, if you've never seen that one video, it's like 32 minutes where he explains the history of money and finance and what's going on. If you use five ways, got like 20 or 30 million views, very few 32 minute finance videos are going to have that many because everybody wants to watch it. But yeah. So how can you fix this thing? Well, the question, my question would be, is it a, how do you fix this thing in a year? No, one's going to know how to fix it because it's not going to happen. How do you address this and make progress towards, you know, getting better that day over a 20 year span? Okay. Now we're talking 40 years span, even better. Then you have to forecast and see what solutions are going to be needed the next 20, 30, 40 years. The problem with America today is the following. Here's one of the problems with America, which by the way is a beautiful thing, but it's also a problem. Whoever that gets elected, we have cyclical cycles. Okay. You got Carter gets elected. Then it's Reagan senior. Then you have Clinton. Then you have Bush. Then you have Obama. Then you have Trump. Then you have Biden. So Republican Democrat, Republican Democrat, Republican Democrat. So every time you do this, every eight years, the system is like changing. So cycles are changing. Whatever you're doing is changing. So you can't really consistently build on a philosophy over a 20 year period because in America, you can't put a 20 year plan in place. There is no such thing as a 20 year plan in America because whoever's the next guy that's going to come take your job is going to say, no, we're not building that wall. No, we're not going to do that. No, we're going to cut those benefits. No, we're going to add these benefits. No, we are going to spend more money. No, we are going to do that. No, we are going to leave this war. No, we are going to get into this war. These things, the complexity of what we're asking about is challenging because no one leader is going to run for 20 years. We just don't have that. Okay. Would you want it? In a way, when it comes down to the economy, yes, I would want it selfishly for me and you because we're alive today.

Possibilities for fixing the problem (45:46)

Is it good for America long-term? Absolutely not. Okay. Absolutely not. Because if that one person's a shitty person that gets into office for 20 years, this thing's gone. It's destroyed. Okay. So at least this allows us to not be able to go super extreme because you have to get it through Congress and Senate and it's already complicated enough to do that. But to fix this thing, you're never going to have both sides agree philosophically, economically on what they're going to be doing over a 20-year span.

Made-in-India iPhones and Chinese Overexpansion (46:19)

All right. Let's go to the next side that we're talking about while all this stuff is going on. You have the war right now with China and India that is also taking place with iPhones are now being made in India. You can now get iPhones where on the back of it, it says made in India. First time, not made in China. It says made in India. Really? Guess who blocked TikTok in their country? India. Guess who's blocked a hundred apps of China? India. India is not afraid of China. Now, why does China not like India? Why do they always behind closed doors talk shit? Yet at the same time, they're part of BRICS. You got Brazil, you got Russia, you got India. You got China. And I think it's South Africa that's part of the BRICS, right? Okay. So they're part of the same thing, but there's also a way of competing. The reason why I like India a lot, and I think India is going to play a very important role here, is because India has seen how China negotiated with US and they've realized we're not doing that. But India has also seen the mistakes China made with the one child rule and over expansion and what's going on with a lot of these properties that they build out in cities that looks like, just like Paris. I don't know if you've seen the city they build in China. It's a city. Everything Paris has, it has. It looks identical to Paris. If you Google this kind of architecture, if I tell you, if I show you the picture, you will think it's Paris. They spend billions of their own money to build a city replicating exactly Paris. That's what China did. Okay. So we're talking about, you know, the whole everything, everything they have, they have a Champs-Elysees, same exact model that they have over there. Exactly. When you see the pictures, like when we're done, I can't wait for you to see these pictures to see what that looks like. So China over expanded very quickly. India's watching. China, they had their one child policy. The average age of a Chinese right now is 38.4 years old. India is 27, 28. India's IIT Institute is producing incredible engineers. Many companies here will hire Indian engineers and they're rockstars, better than MIT in many cases. So I think India's very important for the next 20, 30, 40 years. Very important. As long as India is there, China's going to hate it. They're not going to like it. The fact that Tim Cook right now has got a very hard job. I think Tim Cook in the span of four weeks lost $350 billion of valuation for Apple in four weeks. $350 billion. Okay. One, because iPhone 15 didn't do what they expected it to do. Two, because China is now giving them a hard time because China is their number one market of iPhones they sell. Now China is sitting there saying, wait a minute, we sell more iPhones in this country than anywhere else, yet you're giving our business to India? Who the hell do you think you are? Then on the back end, the real war that's taking place is the semiconductor chips. And there's different levels to the semiconductor chips that's being built. And China's specialized in the cheapest kind to make, the easiest kind to make, where some countries have specialized on the tough kinds to make when it comes onto semiconductor chips. This is why China can't stand Taiwan being there.

Chips, Taiwan, and Global Manufacturing (49:41)

This is why China wants Taiwan because Taiwan specializes in building the extremely technical semiconductor chips that the rest of the world uses. And then there's complete other aspects to this that you can get even deeper on. So Taiwan's going to play a very important role. We can't have a Russia Ukraine or Israel, Palestine, Gaza, Armenia, Azerbaijan, Turkey. We can't have that taking place with Taiwan. Taiwan needs to stay separate. That needs to stay protected. How we do that? I don't know how we're going to do that. We're getting involved in one too many wars, but if Taiwan stays free and China relies on them because China destroyed the world during COVID, absolutely destroyed. We realize 80% of medications being built there, 80% of the technology that we needed is being built there. They controlled everything. Car pricing, use prices went up 50%. What are you talking about? You mean to tell me I bought this car for $90,000. It's used. You're willing to pay me $130,000? Yes. Are you serious? Yes. Why? We don't have chips to make cars. Are you kidding me? No. Rolexes. They were making Rolexes for 18 months. They didn't have equipment to make Rolexes. You go to a Rolex shop that had one watch. Like what do you have? We only have one watch. Can I order Rolex? No. We're 12 months. You're not going to get. Are you serious? Yes. Nothing. This is what was going on at Rolex store. So again, the stuff that gets me optimistic is India, is Taiwan, is we're committed to the semiconductor business here. The things that concern me is China, is Erdogan wanting to be involved in the Israeli war because most people don't realize the most powerful military in the Middle East is not Israel. Israel is powerful, but Israel has 300,000 soldiers of which I think 150 is a reserve. Turkey has nearly 400 active, 350,000 active soldiers, the number one military in the Middle East if Turkey gets involved. So we have all these dead things that we're looking at. Obviously the military industrial complex which Eisenhower talked about where be careful with these companies like Raytheon and Boeing and General Dynamics and these guys that are making a lot of money when there's wars. We have to be careful with that taking place. We have to be very careful with that one that's taking place. But yeah, it's very complicated, very complex. Ray Dalio says a depression could be possibly around the corner. A lot of these guys are fearing what is taking place today. Michael Burry shorted the S&P 500, 1.6 billion dollars of his clients money and now he did it in a way where you're kind of protected, but still he's not optimistic about the S&P 500, what it's going to be doing. One too many moving parts for us to sit there. What will happen? The rich are still going to get rich. The innovators are still going to find a way to win. The people who learn how to use AI on their side, they're going to advance and excel even more. The acceleration and the disparity between the rich and the poor is going to get wider and wider and wider. Why? Because most people are going to spend majority of their lives on Instagram, on YouTube, on TikTok. They're not going to learn a new skill set. They're not studying AI right now. They're not studying technology right now. They're not learning new skill sets right now. Harvard did an article, Harvard Business Review, did an article saying to stay competitive right now every 18 months you have 10 new skill sets to learn as an executive. It wasn't like that. It used to be 10 new skill set every five years. Now we have to learn 10 new skill sets every 18 months. How the hell do we keep up? So that, this is the part where, you know, we talk about the only the paranoid survive. Like right now you have to be looking at this shit's out there. What part of it do I control? What part of it do I have no control over? If not a billionaire or a hecta or a deca millionaire, man I got to figure out a way to increase my market value or else I'm going to get crushed. You're going to over the next 10-20 years. If you're going to spend more time on Netflix, more time watching all these shows, more time playing all these games, more time watching all these TikTok, Instagram, if you're going to spend more time on that than building value for yourself and learning new skill sets, yes the market's not going to favor you the next 18 to 36 months. But if you do that, fortunately for that community they're going to be okay. This doesn't mean a recession is still not coming though.

THE TIME TO PREPARE IS NOW! (53:58)

Okay so let's start pulling apart some of the issues. So the geopolitical part of this comes down to is there something that we can do to position ourselves and you were talking earlier about we create a matrix and it's like okay do we go to war how bad is it like all the different scenarios and we run through them. So but let's sort of put the pieces on the table. We have global conflict and that's gonna do what it's gonna do and we need to think about what the plan of attack is there or how we position ourselves well. We have the debt crisis which is just probably the thing that weighs the heaviest on my mind. It seems the most inevitable and because it's so in plain sight and not at all sexy but nobody's freaking out that one makes me the most nervous because you can just run the math and it seems inevitable that it things have to break for that to work. You've got the what we'll call the cold war of manufacturing where that's going, Apple, China, India all competing but ultimately how do people begin to actually put together a battle plan. So one of the you had a really good video about advice for young men and one of the things that you said was you need to be aware of what's going on and I really woke up to that at the beginning of COVID. COVID was a grand moment where it's like look behind the curtain there's a wizard of oz and I began to see how things were actually happening. That was very revelatory and just as if you want to be an entrepreneur the ironic advice that I'm going to give you is you need to learn about the body because if you can get control of your body if you can change your physique you're going to find discipline consistency you're going to see that it really adds up to an actual transformation and you can apply all of that to business ones or yeah to business to anything really. Once you begin to understand how the world actually works now you can begin to position yourself to weather any storm but you really do have to understand how the pieces move around the chessboard how you're being manipulated and I don't it certainly has not then provided me a sense of clairvoyance and oh I know exactly what to do but I feel like it makes me ask a better caliber of question.

I HAVE A CUSTOM OF PLAYING OFFENSE, INVESTORS NEED TO PLAY DEFENSE. (55:41)

To me the caliber of question right now is what is the position someone should be working themselves into? So I'll paint the picture that I think and then tell me if you disagree if there's a better thing. Okay number one I think because only the paranoid survive there's actually two things you need to be paranoid about right now. Paranoia number one is you can pull out of the market too soon and miss real opportunities and since no one is going to be able to accurately forecast the timing you have to be thoughtful about that. So one strategy might be just that you dollar cost average in every day make sure that you have a certain amount of savings so that you're not going to find yourself in a panic situation and as Morgan Housel said the whole purpose of having cash in a bull market is to make sure that you don't have a forced sale in a bear market. Now I thought that was a really wise way so what I'm going to present to people is there's so many variables on the table and I don't know how they're going to go I just want you to be in a position where you have optionality. So we're going to optimize for options to do that you're going to want to be largely in cash and index funds which is not going to sound sexy and when I say cash I'm talking money market treasury bills something like that. Five points right now. Yep which is fucking amazing all day every day I'll take it. Now would not be the time in my opinion to invest in anything where you're not just an absolute complete expert where you have so much disproportionate knowledge that you're able to really recognize a deal when you see it. So I've heard you talk a lot about some commercial real estate stuff that you're looking at because you know things are going to go on sale you oddly enough I still find this so fascinating you really understand the baseball card market so you'll know a deal when you see a deal. So it's like that to me optionality cash only investing either sort of blindly in index stocks not just completely removing yourself because you could miss you know it could be six months a year before two years before this is who knows we really can't predict it but that we are in a time of such volatility that if you are not taking every step with sort of maximum paranoia you're making a mistake. So that's I'm sure if somebody were here they'd have a lot of questions for that but that's my rough guidance to myself. I think it was fantastic I think it was fantastic and we're very aligned look I mean here here's also the thing right like where you're you're sitting there watching some of these guys sitting on a lot of cash why are they sitting on a lot of cash are they sitting on a lot of cash and just in case shit it's the fan is that what they're doing or they're just kind of sitting on a lot of cash wondering I don't really know what's going on when I say people I mean work Berkshire Hathaway I mean these these guys have a lot of cash right now they're sitting on the table and you know maybe they're not buying value stocks yet because they don't yet believe value stocks are here Berkshire Hathaway okay if you're not in this business if you're not in the business of investments financial advisor broker day trader don't play around do not play around and get crazy about it um crypto a lot of people got into crypto and nft and that was not their world they didn't know about it they lost a lot of money I mean a couple guys made 90 million dollars but the people that bought their stuff lost 89 million dollars but they got their money there's a lot of guys that made the money in nfts but it was a gamble for everybody and everybody's like oh my god but I believe it and all this other stuff okay great it's pretty crazy you know what about this and what about that now does that mean nfts are going away absolutely not my kids still buy stuff on roadblocks and skins and all that there's an element of it that is not going to go away guaranteed is there 95 of nfts that are not coming back yes probably some of them are going to be gone again my opinion I I have interest in things I know about and I'm interested in like right now you know I'm looking at stuff the card market got destroyed the last six months destroyed guys are sitting on big cards they were thinking they're going to make a lot of money on it they're not right now okay cars that would have sold for two million dollars two years ago are selling for 400 000 today but they're going to end up selling for that value they're not going away because it's art it's non-duplicatable assets you can't duplicate these pieces especially if it's things that are very few off okay so if one of one they're not going to go away art jamie diamond's got a 900 million dollar art collection why they dana white is telling me about a picture he has in his office he showed me this yesterday that he paid 200 000 for that picture is probably worth eight to ten million dollars today art money in art being made again non-duplicatable assets are very very valuable whatever there's few of very valuable but only touch it if you know a lot about it if you don't don't even get close to it if you know nothing about crypto don't even get close to it don't get too crazy oh my god i'm hearing you know bitcoin's going to go to 100 000 it may go to 500 000 but don't do it because you're guessing because somebody else said it do it because you've done a lot of due diligence in it so if you don't want to have that kind of a risk tolerance indexing is the way to go to play it safe now to the small community of crazies that have an itch and a tolerance for madness okay this isn't everybody this is some when you have a certain amount of money i'm talking to my golden guy he comes in we're having our conversation he says hey here's what i think we can do with this amount of money i said okay what about it he says here's the strategy we can use the next 90 days i said okay so do you have any questions for me he says i got one question for you are you okay if in the next six months we lose 55 million dollars in this what a great question just straight up now like no i'm not okay with this a big nut he says uh no problem totally get it then we can't go the way that this is one of the options we can go on because what do you think about a chance of a world war three happen next six to twelve months i don't know man i don't know if i'm at 50 but i'm at 10 well 10 is pretty high yeah i agree okay if that happens how bad is it going to be you know like during covid that went to 18 000 i don't know if you remember for that minute that that went to 18 000 and i was like holy shit what's going on but very quickly went back to 32 000 so it recovered very quickly okay so what does this mean if you think a possibility of craziness is going to happen that you keep cash and it happens you can buy in dollar cost average okay yes you think you're that brilliant that you can time it historically very few people have been able to do it and those who did got purely lucky do you want to be part of that camp because most people historically what happened to them they missed being in the market on the five best days right and missing those five best days ended up costing them the difference between making 13 over a 20-year period to making 7.8 and that's a lot of money by the way between those two so if that's not the world you want to play don't do it don't at all do it for me the game we're playing is a different game the game is there's going to be a lot of assets for sale the next couple years okay and if you've

Psychology Of Power And Redefining Ideals

Buying opportunities (01:03:40)

made the right choices and you have cash and some of these assets don't perform the next couple years there's the opportunity to pick up assets there's the opportunity to pick up small businesses i'm talking to a guy who runs a you know a business that they're doing 34 million a year and he i said how many companies are there in the marketplace that you could buy right now that are between five to ten million dollars there's at least eight how many of them can't stand you one of them we never talk i said okay the other seven how many of them love you three of them dude your four know you they know of me but we don't have a relationship get it close to them as soon as possible make the following phone call he says what do i tell these guys this is what the call sounds like hey john listen we're both in the same industry how's business and you'll know by their answer how it's doing you're gonna say oh great unlike xyz we did 32 percent last month over last year proved okay great guess what that's not who you want to talk to next call you got six more left okay hey larry how are things oh um yeah i mean look i mean some areas we're doing good some areas uh why what what's going on did somebody tell you something okay boom check what's the conversation larry here's what's going on the reason why i'm calling you we're getting calls from guys in our space and some of them are not one are not doing as well as they thought they were going to do and they're about to run out of cash and they're calling us because we have access to certain relationships and contracts and technology that they want to take advantage of i thought just to give you a call because we're within the same space are you in a place right now where you want to entertain possibility of a partnership where we can help you with our company or no if no let's i'm not going to impose but if you are maybe we can have that conversation five second pause uh you know about nine months ago i would have told you to go to hell but uh yeah maybe we can talk perfect um when do you want to come to the office or would you

Do not wait to go cash out (01:05:30)

like us to come to your office would it be okay if we first met at a coffee shop away from everybody no problem let's do that then you go sit down what's going on look man i don't know if i want to do because i heard this and i heard that and i heard this i don't want to be ripped off and i don't want to be this and i don't want to be done bro let's just see what we can do with the numbers if we can't great if we can't we'll support you go do your thing then the conversation starts so there's different levels right now the marketplace if you have cash a lot of it companies are going to be for sale the next three six twelve months and there's going to be a lot of opportunities for you to increase your market share within the industry if not you're somebody that doesn't have a very high risk tolerance do not screw around the next six twelve months thinking you're no stradamus and you can predict the future because the market's going to destroy you it's undefeated yeah yeah timing the market is a ludicrous proposition people nonetheless do it but what i find is that it actually attracts people that have a gambling mentality that was my biggest surprise getting into crypto because i don't have a gambler's mentality at all uh so i just had a failure of theory of mind so i did not see that coming and then i was in a chat group and i realized oh my god all of these people are poker players i was like this is the same mentality like to them they're getting a gambler's high right now of taking a risk on some crazy coin and you know rolling the dice and seeing if they can time everything correctly and i just thought whoa okay that's a a very different beast so yeah in given that my goal is to help people put together ideas that are actually going to help serve them um this to me feels like the time to learn what paranoia positive paranoia really is success is really a game of mixing optimism and paranoia you're going to need both and if you don't have a constant sense of this could all go wrong i could be wrong i could have the timing wrong maybe there really will be a recession maybe there won't be a recession um if right now feels like peak predictability you're really in trouble that would be the thing i would just red flag instantly if you feel like you have a real sense of what's going on uh yeah i would say not the right move and so figuring out okay how do we deal in a time of massive uncertainty what i find so interesting about ray d'alio and it makes me very sad that he doesn't like to talk about this is that ray is extraordinarily good at understanding the historical trends the problem is everything is sort of plus or minus 50 years and it's like when you've got a swing like that there's just almost nothing you can do with it but let me ask you do you see because i think one of the real um one of the real roads maybe it's a 0.1 chance maybe it's a 70 chance uh what do you think the odds that we are already in some sort of roman empire like decline meaning already in it and that it will happen in the next 10 to 15 years um i don't i don't know if we're there i'm not i'm not in the doom and gloom yet why because um the great thing about capitalism is what here's the best thing about capitalism capitalism prevents you from doing stupid things because it's going to hurt your capital okay when i recruited sales people over the years i gave score there's a scoring system in this book choose your enemies wisely on who you can have your running mates 15 qualities for running mates and you score them based on six different qualities okay i would look at guys and i would say which one of the people i work with is going to give me the least amount of headaches and here's what i learned okay extremely good-looking guys and girls single in their 20s gave me the biggest headaches why because everybody wanted to be with them and testosterone levels high at that level and guess what they're gonna fool around you may be high one month and kill it next month you're dating three girls in the office and one of my best girls who made a lot of money last year you just broke her heart you left her for another girl she can no longer come to the office because she's embarrassed and she left us to another company so do that for about three years and then go see 17 therapists who have no clue what sales is like then you're going to realize i have to change my approach then i'm sitting there and saying man that guy over there is so boring dude he is so boring nothing's exciting about him but he went from making 500 a month selling insurance to a thousand dollars a month three months later to making two thousand dollars a month three months later to making four thousand dollars a month a year later then he's making six thousand dollars a month six months later then a year

Patience promotes psychological stability. (01:10:52)

later he's making eight thousand dollars a month then three and a half years later he's making eighteen thousand dollars a month steady man you are there's nothing about you that inspires me but you know what here's what i learned he was married and he had kids so what's the point he has to make it work he has to make it work because he has to protect those two kids that he has he has a mortgage he has to make it work he can't go screw around he's married the likelihood of him going and clubbing and partying with all the other single people and smoking and doing ecstasy is lower so i realized i have to invest my time in people who are the most bankable long term stable home stable relationship more things to live for more things to work hard for more things that will prevent you from making stupid decisions perfect now bring that into the roman empire following all this other stuff okay jamie diamond is not going to want to screw up what he's doing and his legacy is going to matter to him because there's no way in the world he's going to let sandy wilde be able to say i told you guys that guy felt he was a nobody he's not going to let that happen and he's running the most you know company that every day seven trillion dollars they see come in and out jp morgan chase right um apple amazon gates microsoft these guys have assets are they going to let something crazy happen to it i don't know musk who is standing up against the establishment he's not okay with what the establishment's trying to do and with social media a lot of this bullshit's being exposed whether it's talking about esg and what black rock and you know they're trying to do or open society foundation or these dei scores cei scores which california is famous for they're getting exposed right and people are talking about it so social media is allowing us to hold people accountable i don't know if you saw what just happened right now this week with supreme court having a discussion to say social media companies cannot take anything off their websites whoa this week so censorship at the highest level you don't have the right to take anything down people can post whatever they want that's crazy if we go that direction is that a preliminary preliminary it's not done yet no it's fully preliminary you gotta look into it yes so you got my attention so so because supreme court is now what five four right so now it's kind of like they can impose and kind of push the envelope there okay and they can protect sanity in america with some of the ways that businesses have been bullying people during covid covid what it did do which was great it was so awesome in one area you know what it was what's that quote you know absolute power you know reveals what this person is driven by right you know and and lincoln said if you want to test someone's character give them power and see what they do guess what during covid who do we give power to fauci cdc california new york uh governors of some states have literally too much power they were like emperors pretty much you know hey if somebody in la you see them without wearing a mask text this word and we'll find them and what are you talking about you're paying people in la to snitch on other people it's a part-time job what do you do for a living i snitch i make six grand a month really yeah what an incredible way of making money so during covid if we're not oblivious and not naive we realize what the people of powell really wanted to do and we saw that in europe everybody's walking around with their covid passport and they're kind of doing this kind of stuff um so to me it was fantastic to really see them show their cards oh this is what you're trying to do to america we're not going to let that happen what did that do it got guys like rogan to flip i'm no longer on your side you got guys like elon musk oh so you were full of shit the entire time i thought you were trying to do something good got it i'm not part of your camp i'm going to go by twitter scott galloway this guy's full of shit professor galloway there's no way in the world he's going to buy he's bluffing all of you he's fooling all of you there's no way he's going to buy twitter elon musk bought 100 of twitter and now scott galloway on bill marr last week with andrew komo saying we need to show some grace we were wrong during covid we were wrong during covid wow i'm sorry professor galloway did you show grace did you show grace oh now you want grace but you never gave everybody grace and you're this professor from new york who's had exits of a couple companies and you've not taken salary from uc berkeley respect you you simply go and do the work i've seen the money you've given to berkeley three and a half four million dollars but you don't have any grace you didn't show people grace so what happened now but it was beautiful you saw what universities were doing harvard got exposed

The people of power revealed their real motives. (01:15:38)

during covid no more campus you guys got to go home okay so does that mean the annual tuition is still 60 000 or it's discounted to 20 000 no no still 60 000 what for what you're not giving me food you're not giving me place to stay you still want me to pay 60 000 yes we do bingo you just showed your true colors beautiful that was fantastic hey we want you guys to go and work from home really yes all right shit so i'm living in new york i'm working for xyz company they're paying me 250 grand a year i can't live normal life in new york i'll go live in florida work from home except now i'm not paying the taxes oh no no no no we don't want you to work from home why now i can't work from home from florida no we want you to come back to new york now got it so you screwed up the policies but now i'm in florida i'm not coming back to new york because i actually love florida and i'm stuck here and people from california went and worked from home in texas and now they're saving a 13 now they're not coming back so they were like oh people are going to come back they never came back the people never came back so this this empire is falling the great equalizer tom is social media if social media sticks around and they can't silence people from sharing their thoughts and opinions i'm not talking about people getting up there and saying we should go do this i'm not talking about that i'm saying hey what about this and we start questioning things then the people of power that revealed their cars not everybody but the establishment that wants to control more the people they're like yeah we're not we're not doing that bro yeah what do you do if you're playing poker with somebody okay and you're going for the river and you didn't hit you know fly you know whatever uh pick something you didn't hit your three of a kind okay you missed everybody got two pair it's a jack you got a jack you got a jack on the board all of a sudden you're about to bluff the guy maybe go in 50 of what the chip is you know there but one card accidentally falls on the ground and you see it it's an ace and there's an ace on them what are you gonna do what are you gonna do you already know you lost so guess what the establishment revealed their cards and we saw it and if we don't realize it and do something with it and they still move their agenda it was our fault all along but if we saw it and we unify and we come together saying hey guys we the people have the power they're gonna push us around we love this country let's fight for what makes this country great let's go and support what this country was great about let's bring it back to that let's be a little bit more responsible let's have better incentive programs let's expect better policies from them let's hold them accountable to what they say they're gonna do now we can go in the better direction and we encourage certain people to run and get involved in politics and office so i don't think it's gonna happen because i think on one end capitalists the rich people are not gonna want to lose all them all their money so they're eventually gonna be like yeah i don't support what you're doing soros yeah i don't support what you're doing charlie monger said something very interesting he says look i love larry finke but i don't want him as my emperor what a thing to say monger here's a guy that's 94 years old i don't know how old he is but mid 90s you say hey i respect larry finke but i don't want him as an emperor because they know what larry finke's trying to do people are not dummies right so those types of people i think are gonna fight each other enough and if we keep our eyes open this will continue to be the greatest country in the world and hopefully even better if we rise up to it if not the best days are behind us if we don't learn our lesson from the last three years growing a business is hard and if you're in the thick of it you know that as your business grows new challenges will be coming at you from every conceivable angle manual processes are multiplying and there is no one source for up-to-date data 36 000 that is the number of businesses which have upgraded to net suite by oracle net suite is the number one cloud financial system streamlining accounting financial management inventory hr and more manage risk get reliable forecasts and improve your margins right now you can download net suite's popular kpi checklist designed to give you consistently excellent performance absolutely free at netsuite.com slash theory that's netsuite.com slash theory to get your own kpi checklist netsuite.com slash theory it's interesting i have a slightly different take if i put my i'm paranoid hat on uh so i think that at some point we started attacking the very idea of structure itself which is how you end up getting into the gender conversation and once you start if it takes hold and it's a very difficult argument to figure out how to be both compassionate and draw hard boundaries you put lines and boundaries and one thing we didn't talk about is you create rituals that create lines that i'm no longer a child i'm now an adult like really clear demarcation points instead of like oh transition effortlessly anytime from anything to anything it's one of those ideas that sounds awesome and it sounds loving and it sounds caring but the outcome of it is is to tear at the infrastructure that holds the society up and so it's pretty interesting this

Rituals to redefine ideals. (01:20:53)

is something that douglas murray who i have not ever sat down with but i'm very familiar with his work he's talked a lot about camille lapalia has talked a lot about this that in end stage empires they become obsessed with pulling apart the structures of the society and it tends to manifest as a conversation around the ultimate structure which is male female so this is one of those it's a positive feedback loop and again i'm just wearing my paranoid hat i'm i'm not betting against america i love it i want to be here um in fact i i this is gonna be weird i can't believe i'm about to say something that's gonna sound political it is not meant to be political but i want to fly an american flag i want to remind people that this is a beautiful country and that it's worth fighting for ideals of personal freedom etc etc uh and that the way that we rebuild is by putting structure in place that has a metric associated with it so we can see whether we're moving in the right direction or not that would be the the thing so anyway it this feels like a positive feedback

What attitudes can unwind the sense and speak again truth. (01:22:31)

loop i don't have a clear picture on how at a societal level we unwind it but i do understand it at the individual level and the things that we as an individual person can do uh to make sure that we are doing something that will be very sweet you're very sweet and here's what i mean by it um i am so confused when i hear a guy who created thousands of jobs created a billion dollar of value for people who owned equity that you're worried about saying i don't want to be political about the american flag because it may offend somebody no i didn't say that i know that but what i'm saying to you is even the fact that you gave that qualification to me is um is where i uh i don't think we need to be there here's what i mean by that i'm talking at this christian school that my kids go to and the dean what is what is above a dean whatever the what do they call the person that runs the school what's thought it was dean no there's one other guy there's something about it that uh whatever it is the dean reports to these guys do you guys know what that's called or no not principal it's a different name they have for him headmaster is it headmaster sure okay so headmaster and uh he gets up there and he's giving this talk to 600 kids and he's bringing me up veterans day he's like wow you know america's not perfect and we have this and we have flaws and all this like peak of covid like a year and a half ago i'm standing there i'm like dude like where have you lived you know have you lived in iran have you lived in other places like what they think about this place and i get up and i and i say first of all thank you for this and ba ba ba ba ba and i said america is the greatest country in the world okay and you know we don't care if you're christian i don't know what your faith is we're getting along i'm middle eastern bro you're white every time we're together we get along best conversations when i'm talking to you fantastic conversation i got so much respect for you to build what you build your wife came in sweetheart gave me a hug warm welcome your peers your people here how you're working how you're moving what you're doing having a blast creating great content great conversations but i do think we need to we need to have some um pride in how great of a country we live in i think we need to sell it i have governor de sentis on the podcast two days ago we did an hour live podcast he flew into the office and it was a great conversation he's one of the candidates that's uh you know potentially presidential candidate i said can you sell america please sell america and you know each did his best to sell america in his point of view but i think we need to do a better job selling america saying selling the ideas of america here's what happened the last couple years i'm having this conversation i don't know if i'm having this conversation with rogan or whoever i'm having to come maybe it was on the road yeah it's on the rogan podcast we're talking on communities that hurt america okay i said one is the tolerant christians who heard america they're like that's okay it's okay it's you're either a christian or you're not you can say whatever you want about muslims but what yes guess what muslims are they believe their religion okay you're not going to be able to say things about their prophet you can't go say something about prophet muhammad see what happens go say something about jesus see what happens yeah it's okay he's just upset you know okay cool all right the other one is libertarians because libertarians who are like do your thing bro as long as you do your thing i'm good do your thing do your thing do your thing do your thing do your thing do your thing all right now they're doing their thing with your kids now what do you want to do it's too late it's in your school well no no no i didn't say that well i'm sorry you said libertarian to each his own well no no no that doesn't mean you come and do this to my kids no it's called as long as you do your thing i'm good to do your thing they came back and haunted you through your kids no i'm not cool with that well then maybe maybe you're not really a libertarian maybe there's a different element to your politics that you got to really reconsider the the the wealthy you know conservatives who raise good kids who all of a sudden have all this money but they're afraid god forbid it leaks that they have an element of conservative oh my god i may lose my body i may lose this i may lose that and go we won't be invited to those parties and they're not going to like us and whatever so today i'm having a conversation with chris cwomo cwomo and i have turned into very good friends we don't agree together politically we have a great conversation to get i'm at his house in in sag harbor and we have lunch and we go to his place and all of a sudden he surprised me with a call with robert downey jr hey what's up pbd what's up robert downey and i say hey kids come see what this is oh my god it's imagine a reaction of kids who watch iron man die and they're like crying saying he's alive he's alive he's alive right in the flesh but we're having this conversation i'm sitting thinking to myself did these guys know my political positions that i take and we're getting along it's okay it's not the end of the world this is what i believe in you know but these

Cultural Commentary And Social Impact

Getting the Backing of the Big Brands (Apple, Facebook, Google) (01:27:43)

republicans that conservatives that took their money and they're like look as long as we protect our money just buy real estate have some assets but don't do anything with all this money we have no problem the other guys went and bought new york times the other guys went and bought wapo time magazine china owned forbs 95 of forbs was owned by china and 2021 international woman of the year is who hillary clinton what she doesn't run a business how about oprah winfrey how about cheryl sandberg you give it to hillary what what does she do in business forbs is all business the guy who ran forbes the son the guy who started it was his father but the guy that ran it that took it to the next level he had a jet google this it says capitalist tool his jet on the corner the name of the plane was capitalist tool his yacht it would say capitalist tool the helicopter said capitalists tool these are the tools a capitalist used he had all biggest collection of those eggs you know the russian eggs there's a name for those russian eggs faberge that was estimated to be half a billion dollars well this he had 15 of them his

The Rule of Giving: "Don't Give to the Poor, Promote Givers" (01:28:43)

best friend was elizabeth taylor best friend for his 70th birthday party if you've never seen this guy's documentary his 70th birthday party everybody's there you know what he gives to everybody on his birthday party a rolex who does that this guy's a capitalist at the core and guess what we admired back then wow life for the rich and famous today is life of the poor and the miserables no we're admiring things that people are grown up to want to pursue no we got edified the guys have busted their tails to build a company we got edify the people

The Amazing People Biden Chose to Honor on Women's International Day 2021 (01:29:09)

that are creating economy we got edify people that are going out there being good net positive to society we need more tom billy's in america but those three communities and i can keep going with a couple other communities but i'll stick to those three communities i think they have they have they have uh they have given others a lot of uh power as a as a as a guy who's an atheist for 25 years of my life in the army i've told this story before in the army i was invited to go to this uh uh camp with this man seven-year-old man and you know we were able to jump into this lake and play pool and all this stuff but every night for one hour he had to sit down with him and listen to him read the bible and i would sit in the back i'm like dude you can tell me about bible all you want why don't you go back to iran and see what i saw when we got bombed now go ahead go see what i saw go see the parks i used to go to and these buildings that were torn down when i see what's going on right now in

When bombs exploded, they would tape the windows down (01:30:09)

palestine israel i lived this i the whole alarm uh attention attention red signal means that planes have crossed the border the enemy is here you know what that does when i listen to this i go to youtube sometimes and listen to to see how quickly i can go to the eight-year-old kid and see it the other day my sister sends me a picture says hey this is me and you at eight years old you remember this i said okay what's the big deal with this picture we got a lot of pictures like this she says you know how

How quickly are they taking it away? When we grew up vs. now (01:30:27)

you always talk about the windows dad used to tape look at the windows i see the windows as the tapes from my dad they put the tapes because when bombs would explode they didn't want the glass to explode all over us they wanted to stick together that's what we did in iran and you know so today when you see this whole concept of you know i'm at this camp in the military you know he gives me a bible he says this my parents gave me this bible december 24th of 1974 and son i think you need this more than me i said sir i promise you're giving it to the wrong guy he says just please take it from me you need this i said i don't need this keep it it's a gift your parents gave you i have the bible till today gives it to me i don't read the bible it sits at my barracks in the army but i started praying three times a week three times a day every day and here's how my prayer was god i don't believe you exist i think it's for weak people but if you do exist cool let's see what you got if you don't it's going to feel good talking to myself anyways because i know nobody in boot camp now from iran there's not a lot of iranians in boot camp so eventually that idea of having faith is what hitler feared he did not want people to have faith the whole detrick bonhoeffer story if you read what he did he didn't want people to have faith he wanted to eliminate having faith does that remind you of anything we can't pray anymore we can't do the pledge of allegiance when kids go to school but we should learn about lgbtq stuff yeah it makes a lot of sense let's take out faith and let's replace it with somebody may be gay you may be gay your mommy and daddy don't know so guess what happens parents in florida are saying we don't feel comfortable because our kids want to transition and governor the sentence doesn't allow so we're moving to california they're coming to your state and people have started making decisions saying it's okay if they take these pills when they're 18 years old what are you talking about what are you talking about so an under under 18 years old i can't own a gun i can't join the army i can't under 16 i can't own a car i can't have a driver's i can't drink alcohol but i can change my sex you tell me somebody who has common sense sell that to me over 18 go do it totally get it under 18 in what logical manual of a group of 100 people that can reason they could say this makes sense there is no none of that's gaslighting so we have to sit there and listen to it and say and by the way i know this is off-brand for you this is not the kind of conversations you have on you know i don't want I don't want you to get uncomfortable, but-- - I am completely comfortable. - For me, I think we need to go back to square one. We need to go sit there and I was having this conversation with a group of people who are not Christians and I said "You got five countries to live in. "Where do you want your kids to be raised?" A country that's atheist. They don't believe in any of them. A country that's Catholic. A country that's Muslim. A country that's this. A country that's Christian. "Where do you wanna raise your kids?" "Where do you wanna raise your kids?" And they're like "Well, probably more country that's this." "Okay, why?" "Why?" "Because the values and principles are X, Y, Z." "Great, no problem." Even we had a debate the other day. I had two Muslims and I had two Christians on a podcast and they're debating each other. And the guy's talking about all these things and then I said "Listen, I have a lot of Muslim friends. "I have great conversations. "Why don't people immigrate to Muslim countries? "Why do Muslims come to America?" "I don't know. "Why do we in America have all these "different denominations all over the place?" "Nobody cares." "Why don't they move into these other places?" "Oh, it's purely economical." "Okay, why aren't we moving into many of these other places "that economically they have a lot of oil?" "Why are we not doing that?" "Well, it's this, this, that." "Totally get it. "By the way, to the Christians who get upset and are like, "Well, you know, but you don't understand "what Muslims are doing and they're gonna do this "and eventually they're gonna run America." "Of course they are." "How could you say that?" "They're having 2.9 kids per woman "and the rest are not, not even close." So mathematically, yes, we're eventually gonna have a Muslim president if we haven't already had one eight years ago. We're gonna have Congress being controlled by them and that's also Senate. On the competitive side, instead of being upset about it, why don't you start having more kids? We're not having enough kids. So the people that should be having more kids are not having enough kids and the people that shouldn't be having kids are having way too many kids. This is also a problem that we're not talking about. So to me, we have a lot of issues. Some we can address the next three to five years. Some that we can fix and make progress on the next 10 years. Some of it's gonna be 20 and then some of it is what Ray Dalio talks about. And he's talking investments, but I'm talking a cycle of 50 years that it's gonna take us. But these are the types of things that we should have open dialogue about. We should be comfortable selling America. We got 53 million immigrants in America, more than any other country in the world and it's not even close. There's a reason for it. We can ask the question why. Maybe we offer the best thing in the world. And we need to protect that. And people who come here, it shouldn't be, I'm having this conversation with one guy on my podcast. I said, if an immigrant comes to America, who owes who? Does America owe immigrants something? Was the immigrant owes the country something? Oh, America owes the immigrant. America doesn't owe immigrants nothing. Nothing. The person coming here owes America everything 'cause they let you in. That's who owes the other person. Well, no, how could you think like that? You're thinking like what they did 100 years ago. No, no, it's called logic. It's called logic.

How do you show gratitude as an immigrant? (01:36:13)

You're allowing me to come into your homeland and you owe me? Dude, you don't owe me. I owe you. Thank you. So how do you show gratitude? How are you gonna show gratitude? So you're an immigrant now in America. How are you gonna make America a better place? Like what we had before when you would go to, what's that island that you would go to and you would show what talents you're bringing and then it would let you into America? - Ellis Island. - Ellis Island, right?

Faith And Quantitative Analysis

Why should `you` earn the right (01:36:37)

Okay, so what do you bring to the table? Nothing, I'm just excited about the benefits you guys offer. But what do you bring to the table? We need to kind of present this argument. Why should you earn the right to come to America? And what can we do to get the best immigrants coming here? What can we do to get the most educated people coming here who are from IIT graduate people? What can we get the people that are best in math, that are bringing something here? These are very basic common sense conversations that the last three years, people from academia and universities have confused the hell out of kids where kids coming out of college today are questioning common sense. I had a guy that's one of my C-suite executives. Every time I would talk to him, I would say, "How's your daughter doing? "How's your daughter doing? "How's your daughter doing?" He says, "Breaks my heart." I said, "Tell me why." My daughter and I were like this. I spent $200,000 sending her to this XYZ school in Illinois. Every year my daughter hated me more. By the fourth year, she didn't even wanna come back to the house. She moved to LA. I said, "You gotta be kidding me." He says, "Pat, I spent $200,000 to lose my daughter? "Now here's the thing. "Odds are my daughter's probably gonna come back, "but she may come back at 32. "I could lose 10 years of my daughter's life at this age. "At this age." I will look at his face. This is a performer. This is a rock star. He's a leader. He's at multiple exits. He's a leader, successful guy. But you could see the anguish on his face. That's not cool. That's not cool. So you want me to send my kids to you and you pin them against me and I'm the one that paid the money to go to your college? That's not okay while you're sitting on $60 billion of money in your endowment that you can afford to pay every single student's college tuition for the next 100 years, yet you want us to pay you $60,000 per year and I stay home instead of going to your college? Yeah, you showed us who you are and I am not gonna forget it. I'm gonna impose and I'm gonna keep talking about this stuff and enough people are gonna sit there and say, that was an interesting conversation. Maybe we need to think about that, babe. Did you hear what he just said? Did you hear what she just said? And then collectively, two, three, four, five, 10 years down the line, like I used to not be awakened to see what's really taking place 'cause my head's down building a business. I don't care about politics. I'm just simply trying to build a business and then all of a sudden you're like, nah, man, I got four kids, an 11, 10 and a seven year old and a two year old. We gotta kinda be involved. I know I went off tangents but when you made that comment about I don't wanna be political America, I think you're the prime example of what makes America great and we need more people like you. - Yeah, so let me make sure what I said is clear. So what I said was I can't believe that this is a political statement, but it is. Loving America shouldn't be political. I wish I could say who the following person is because people know him, but I have somebody I'm friendly with. I would not call him a friend. I just don't know him well enough, but people certainly know his family. And he said, oh, I put an American flag up in front of my house. And I was like, I guarantee that's gonna get torn down. He was like, yeah, it already has been. And I was like, ah, I hated that that was obvious that in Los Angeles, flying a flag is a political statement that for many borders on right wing extremist.

I hated that this is a statement (01:39:52)

And that is so startling to me as a child of the 80s where I was supremely proud to be an American. It was awesome and I could take it for granted. I mean, obviously not everybody in America loved America, but that's how it seemed. I thought all of us, like there was just enough people that were so proud of America that you could take for granted. So I never knowingly ran into anybody that didn't love America as a kid. It was an awesome feeling. And as that has waned, I've often said to my employees, like, I'm sad that you guys didn't get to grow up in the 80s when you knew, and look, true, not true, almost as a matter, but you knew America was the greatest country in the world, that the world was gonna get better by the day. You knew who the bad guys were. You knew who the good guys were and you were it. Like we were exporting our culture everywhere. Everybody wanted to come to America. It was awesome. And to have watched that flag is crazy. Now for me, the way that you speak as a warrior and you refer to the cause, that's my language, clearly not yours, but like, that's how you feel to me. And that isn't my natural voice. And I get a lot of shit from people I respect a lot in the natural way that I talk. You said I was very sweet. I'm actually not trying to be sweet. I'm trying to exist in the world of actually understanding all the pieces that are at play so I can build a strategy that will actually be effective. And so what I see is that you're in a fight over values. And as long as you understand that you're in a fight over values, and then you can either realize you have to convert them religiously because values are religion. You have to convert them religiously or you have to defeat them. I won't even get into what that means, but those are your options. And so I'm simply trying to be honest with myself about what the battle really is because it isn't that they don't understand your position. It's that they think you are wrong and that you are going to ruin lives. And I think that's how you think about them, that it is they are wrong and they're going to ruin lives. And I will say people with ineffective ideology are wrong and they're going to ruin lives. That's certainly my stance. So then it just becomes a question of where do we, where are we all drawing lines about what's right and what's wrong? But once you want, like to me, there are only two conflicts you can have. There is much to do about nothing where you just have different base assumptions. So we believe different things to be true, but we don't even realize it. So I believe the world works this way. You believe the world works that way. And if we could at least explain that to each other, then we could be like, oh, wow. If the world really did work that way, then I would understand why you see it that way. Collision of values is there is a God. God is good. God is right. And God gives us these commandments in a book. And if you adhere to them, you're good. And if you don't adhere to them, you're bad. Now, if I don't have that value, now we've got a problem because there's, it's not that you don't understand what I'm saying. Like I don't believe in God.

Your God is a signal youre intrinsically in tune with your faith. Whether you accept it or not is your choice. (01:43:15)

As far as I can tell, it is just self evident that there is no God. Now, however, and this gets where fucking, I drive people crazy. But since I know everyone has a God-shaped hole in their heart and that you eject religion at your fucking peril. And what we are living through right now is this is what it looks like when you eject religion. It will get filled with something because people have a God-shaped hole in their heart. They are going to have a religion. They are going to have something that makes them feel like a Messiah a hundred percent. And the fact I've heard you talk about this. So I know you know, George Soros literally referred to himself as a God and said that I have a Messiah complex that I worry sometimes we'll get out of control. It's like, yeah, that's the human condition. And so we all want to feel like we have done something so grand and so joyful to this world that we feel a bit of that Messiah complex. And I'm team be paranoid, distrust yourself. That's my team. I think people blind themselves and act a fucking fool and they take everybody down with them. Now I'm also optimistic and I know that we're capable of love and so right now I have kind of a dark hat on because I want people to understand what my position is. My position is people are fucking stupid. They do dumb shit all the time. And I'm one of those dumb people. And so I'm really trying to understand what's actually happening because I have my God as you said earlier, they have their God and I could get them to understand my God which is probably rounded closest to freedom. And they're still going to disagree. And now because I know how violent and destructive humans can be for the last three years I have been like, ooh, you know when an earthquake first starts, you don't know if it's gonna be bad or really minor. When 2020 popped off, I'm very fortunate to have an extraordinary view. But from that extraordinary view, I could see LA burning. And one of the photos on Twitter was a picture of my house and it said, burn the rich. And I'm watching LA burn as I'm reading that tweet. And I'm like, well then I feel the ground slipping underneath me and I don't know how bad it gets. And so I opened all this with, now's the time for paranoia. I don't know what the future holds. Maybe tomorrow everything's great. And Israel diffuses and Ukraine and Russia diffuse and all is well and Taiwan gets left alone for another generation. Maybe, that'd be awesome. And I don't know, I don't know. I can't predict the future. But God damn, can I feel the sands moving under my feet? Yes. Do I know if it's about to be big or small? No.

Why Tom does it religiously (01:46:20)

Why do you create content? Why did I start or why do I do it now? Why do you do it now? You don't have to do it. You have plenty of money. Why do you do it? You're trying to be famous? I don't think so. I don't have-- Why do you create content? I need to be famous. I create content because I-- I don't think that's you. I don't see you as a guy that's doing it because you want, can I take a selfie with you, Tom? I don't see you as a guy like that. Yeah. I do it for one reason and one reason only. I really believe that I am of average intelligence and the thing that separates me and my beautiful house and all my money is-- that separates me and all of that from an average person is a set of ideas. And these ideas don't feel like they are mine. I feel like I am a steward of-- if I were really going to put hard language to it, I'm a steward of the Tao Te Ching meets Carol Dweck's mindset book with a little bit of Angela Duckworth and Jocko Willink thrown in for good measure. Those ideas are so powerful and so effective that if anyone adopts them, they will make their life better. Now, once you know that that is true, if you have my wiring, then you want to get those ideas out as fast as you fucking can. So A, I love seeing other people have that moment of awakening where they realize that they're capable of more. And I'll tell you a story. And this is a true fucking story. And it's one of my favorite stories. It's tragic. But I know it was real. Somebody I love and care about very much who, at a time when nobody knew who I was and I'm driving a Ford Focus, I meet a former drug dealer. And he's working for me. And I say, look, don't bring violence to my floor. And I'll give you every opportunity in the world because I can tell you're smart. And so we have this pact. And he comes in, and he works, and he's incredible. And he helps me unify a line made up of both Crips and Bloods. Long story. And he's like, hey, originally I was going to use this job as a front for my drug money. But you've really shown me that I can actually leverage my intelligence to do something straight. Ended up being awesome. This guy turned his life around, turned his family's life around. It was unbelievable. It's one of the things I'm most proud of in my life is just having been some small part of this guy's transformation. Ends up getting killed by two kids who stole a car. Fucking stupid, but whatever. At his funeral, his daughter came up to me and said-- actually, she said this from the front of the room. I want to thank Tom and Lisa. We all know my dad was a gangster. And you-- she didn't say taught him ideas, but just to bring it full circle. You taught him a set of ideas. They changed his life, and they changed mine. And she ended up going from almost getting kicked out of school to being valedictorian of her class like seven years later. It was just absolutely unbelievable. And she's like, our lives will never be the same because of these ideas. And dude, my whole life-- because I believe in meaning and purpose. It's the most important thing. I'm highly verbal. I know I'm good at this. And so eight years ago, I said, put me in front of a camera, and I will get these ideas out to the world aggressively. And that's why I do it. Interesting.

Shared biases, statistics, and outcome-based measurements (01:49:48)

So profound story with that guy, by the way. If you don't bring violence here, blood, cribs, unifies, then still in the car, they kill him. I think there are certain people who have the ability to communicate a message and get people to see things that others cannot see are almost responsible to do something with those gifts. You can choose to be 100% selfish and not do anything with it, or you can choose to do with it, which you are doing a lot with the ideas where the daughter says, set of ideas that change the way I view things. Let's set faith aside. Forget faith. We're not debating faith or God. This is not the podcast to do faith or God. That's simply a different conversation over dinner, if we ever do it. But if you're a math guy and you're a data guy and you're a guy that knows x plus y equals z, then you know what works and what doesn't work. You know what philosophies work and doesn't work. You can take the position of, you know, Patrick, you have your ideas, and the people in California have their own ideas. And they have their reasons for that. And you as a capitalist, freedom, all this stuff, it's this, great. But there has to be a way to measure and see which ideas produce better results. And then if you do, which is proven, then what's our job to do? Is our job to sit on the sidelines and not offend the people who were wrong and let them keep harping and convincing others that they're right? Is our job to sit on the sidelines and allow them to keep confusing kids in universities? Is that our job to do? Is our job to allow these guys that keep asking for $60,000 of tuition today, which when you look at inflation and cost of living, where cost of living's increased since 1980, 212%, but cost of education has increased 1,200%? You mean education has improved 1,000% over the last 40 years? You and I know it hasn't. You and I know a four-year degree doesn't have any more meaning today than it did in 1980s. Maybe it had more meaning in 1980 than today, because today our teachers are more political figures, and they're more social organizers dividing people against each other. Yeah, so I think for me, I'm not worried about the faith conversation.

Set Faith Aside: Just do the work and focus on the numbers (01:52:25)

I know what it is to be an atheist. I was one for 25 years. I have my own reasons for doing what I did. For me, it's more about a numbers guy, a data guy, who watched everybody. On my mother's side, believed in rich people were greedy. And my dad's side believed poor people are lazy. And from my mom's side, who were communists, whose Bible was the Communist Manifesto, and my dad was an imperialist, it took me 20 years to realize who was right, maybe even 25, 30 years to realize who was right. We had a family relative of ours. His name was Luther Alhase, amazing man. This was my guy I looked at. When I was a kid, we'd go to his house in Upland. You know where Upland is. Upland is a couple hours away from here, San Antonio Boulevard, closer to Rancho Cucamonga, is where it's at, like an hour and a half away from here. Without traffic, it's 45 minutes to an hour. Once here, we'd go to his house. You'd go all the way up San Antonio. Then you'd make a left on the street. And at the end, it's his house. He had a massive 40-foot bird nest here, bird cage here. You'd pull up. He always had a Cadillac parked here. He liked Jaguar. And one of his relatives, Alfred, would live here above the parking lot, above the garage. And then you walk into the door. To the right was his office. You walk a little more hallway, all the way down is his bedroom. He had a Jacuzzi in his bedroom, living room here. You'd make a left, come down here is the kitchen, big island. I would always sit closest to the window, my backs to the street. I would sit here. And I would watch them talk, because I'm not family. My dad was best friends with his brother since they were born in Iran. So Lutter was an entrepreneur. He made a lot of money. He owned golf courses. If you went straight, you made a left. You came here. There was a pool table. He had a picture on the wall. Everybody was dressed white, family, daughter, son, everybody. And then he had a picture with Al Gore, even though he was a conservative. Why do you have a picture with Al Gore? Good friends with Al Gore? As a conservative. OK. And he would go outside. He had a big TV here. We would watch the Bulls play. Pool, swimming pool outside, changing room here, like a smaller to one bedroom play. There's basketball court, tennis court here.

Personal Influences And Societal Observations

Luther & his impact on PBDs life (01:54:38)

And he had a garden of fruit and all this stuff. And I would watch him, how he would be with his kids. He would always poke and challenge him to debate issues. He would say, I no longer believe in God. I had a moment today. You guys have been sold a bag of lies. Jesus wasn't real. And his kids, they would lose their minds. And they would go on a three hour debate. And he would say, OK, I'm back to believing again. And he would say next thing, such and such president is making a worse decision ever. How could you say that? And it was always, how could you say that? And the whole family was debating. I was fascinated. Every year I'd see him. So from 13 years old till 18, I saw him seven times. And I saw this guy as a possibility of one day I can be like him. Anyways, later on in life I ended up winning in business. And he died four years ago, three or four years ago. We're at Rafi's place in Glendale. And his daughter sees me, Jackie. And his son, Vladimir, who's a pastor now in San Jose. When I was a troubled teenager, he invited me to be part of this basketball organization called the Century City Basketball Association. Century City Basketball. We would play at Echo Park. Terrible community, Echo Park. Not a safe place at that time. Not a terrible community, not a safe place. So shootings, all this sub-blood, crib, black diamonds. Everybody would be there and we'd play basketball. Marasava, Trucha, all of us. So he was patient with me as a kid. And then I joined the army and boom. So we're at Rafi's place. And I said, Jackie, I want to say something to your dad. He says, great. I said, do you mind if I come over? No problem. 20 people are sitting at that table. They have a big family. I says, Uncle Luther, can I tell you something? He says, yes. He stands up. I speak to him in Assyrian and English. It's like Assyrian English together, Aramaic. I say, you don't know this, but for 10 minutes, I recite vivid memories I have of what this man did. And I kept saying, you did this one time and you would do this and you would do that. And you said this to your daughter one time. He said this to your son. I was sitting there when you confused them with faith and business and this, this, that. And this is how you would watch Michael play and Magic play and you would do this. I'm describing his entire house. He no longer lives in that house. He's crying. I say, you don't know this, but you're the reason I'm a businessman today. If it wasn't for you, I wouldn't be where I'm at today. My dad played a role of love and being a man, but you played the role of me being an entrepreneur. He inspired me. And at 33 years old, I go to my mom. And I said, mom, can I ask you a question? Yes. Why did you always say bad things about Luther? What did he do to you? You always said he's rich, he's greedy, he's this, he's that. And my mom, I respected her a lot for what she said to me. She says, you know what? Maybe because once he made the money and he was running his companies, we never saw him again. I said, mom, he's busy. He's running businesses.

Dont play neutral (01:57:25)

We're not family to him. He said, no, you're probably right. But I didn't like the fact that I didn't see him because I actually liked him. You tell me this at 33 years old, do you know how much this affected me when I was 13, 14 years old? I thought this was a bad man. He says, no, you're right. And we just had this conversation. My mom's no longer a communist, but at that time, you know, that's the-- What's the point here? The point here is, if you have proof that a certain way of ideas and philosophies works, sell it constantly and protect it and defend it. Don't play vanilla. Don't play neutral. I think sometimes us, you're no longer a small time guy, bro. You're a very big guy. We got a lot of influence. You got a lot of people that follow what you gotta say. And you're very, you know, when you kind of, you do your humble brag, you're a super smart guy. You're like, you're a super smart guy. I'm not at your level of, you're a very, very smart guy on the way you process issues and what way you can talk and you're very reasonable and non-emotional. You stay, you know, where you are when you're explaining it. I think it's a risk for us not to defend the logical things that prove that way worked better. And then we sell it over and over and over again because eventually you're gonna produce 50 other Tom Billiards, 100 other Tom Billiards, and that's all it's gonna take. You're not gonna need to have another million Tom Billiards. You just need 100 Tom Billiards. If another 100 Tom Billiards do what you do, then we're protected the next 24 years. But if we're a little bit too timid and too careful to defend ideas that have proven to have worked, again, set aside faith. You can take faith any way you wanna take it. I think we have to be louder warriors, like you use, I use that word, true believer crusaders of selling. Guys, people bitch about the rich people don't pay taxes.

The Rich Don't Pay Taxes (01:59:20)

You know what percentage of taxes rich pay? The top 5% pays 80% of taxes. What are you talking about? No, AOC said this. No, no, this is pure data. How dare you say that? No, no, how dare she say that and confuse the shit out of you? This is data, guys. This is not for me. This is how tax was paid to the IRS. I never knew. Are you sure about this? Go verify it. It's on the US government website. That's insane. Of course it is. But they sold you a bag of goods and you bought it 'cause it was for sale. Stop going to Macy's and looking for sale ideas. Pay full retail and don't buy these ideas that are nonsense 'cause they're stealing decades away from your life.

Haters (02:00:07)

That's the only difference for me where, like I remember five years ago when I started, 30 years ago when I started talking politics, dude, trust me, I remember what everybody in the marketplace said about me. I know exactly what people were saying about me because word would come back to me and they would say, "Kiss of death for PBD. "He's done." We had three million subscribers at the time and I decide to talk politics. And I'm like, "Dude, I don't know how to do this part "'cause I know it's gonna piss a lot of people off." But I'm respectful and I'm curious and I'll talk to anybody. I don't care who you are. You can be a communist professor from Riverside County. You can be Slavoj Zizek. You can be anybody. I'll sit down with you, let's have a conversation. Noam Chomsky, come on down, let's talk. I don't have any problem, right? Well, we started a podcast on a separate channel with zero subscribers. Our first live podcast was 57 people watching us. We got seven comments, we were so excited. Now imagine how hard that is to do because you got a three million subscriber channel on this side and now you have to start from scratch. You know about this. I know you know about this. And then all of a sudden that grows and now Valuetainment just crossed five million today and PBD Podcast is at 1.45 whatever it's at and we're getting however many eyeballs on a monthly basis. What happened? Was it a risk? Yes. Did we get people thinking? Yes. People stop me now, they say, man, I gotta tell you, man, I never missed a podcast. How about the entrepreneur? I watched that stuff but I really wanna know what you think about current events and da da da da da. Very interesting. What does this mean? This means I think people want to know a little bit more about what Tom Bilyeu thinks. That's all I'm saying. Maybe they wanna know a little bit more because that brain has a lot to offer and the life you've experienced can give people perspective but more from a position of there is a scoreboard. This philosophy won but this philosophy is louder. Don't let the noise convince you that this philosophy is not working. This is the right way to live. I think we have to sell that and I think some people are afraid of doing that at that level. PBD, what a joy this has been. You've got the new book coming out in December. Choose Your Enemies Wisely. People should absolutely get it. I read every word, it's fantastic. - Amen.

About The Speaker

Following Patrick (02:02:33)

Where else can people follow you? - I mean you can order that on Amazon but you can find me YouTube, Twitter, all over the place. Patrick Bay, David O'Reilly Entertainment. - I love it. Well worth the time boys and girls. Speaking of things that are well worth your time, if you haven't already, be sure to subscribe and until next time my friends, be legendary. Take care, peace. To learn more about these complex topics, check out this episode with the one and only Jordan Peterson. - Man, I am beside myself with excitement to have you. ]