RPF0540-Is_US_Government_Bankruptcy_a_Sure_Thing_with_David_Stein
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00:00:30.000 | Today on Radical Personal Finance,
00:00:31.000 | I have a special treat for you.
00:00:33.000 | A joint show with my friend David Stein,
00:00:36.000 | who is the host of the excellent
00:00:39.000 | Personal Finance and Investing podcast
00:00:41.000 | called Money for the Rest of Us.
00:00:44.000 | Back on episode 466 in June of 2017,
00:00:49.000 | I recorded an episode called
00:00:52.000 | The USA's Long-Term Fiscal Gap
00:00:55.000 | and Why It Matters to You.
00:00:57.000 | America's Fiscal Insolvency and Its Generational Consequences.
00:01:01.000 | And I read an essay by Professor Lawrence Kotlikoff.
00:01:04.000 | I believe I read his testimony that he presented
00:01:06.000 | to the US Congress on the subject of
00:01:09.000 | what is referred to as the unfunded liabilities
00:01:13.000 | of the US government.
00:01:15.000 | Unfunded liabilities are those promises
00:01:18.000 | that have been made to citizens
00:01:21.000 | of promises of benefits,
00:01:24.000 | but promises that have not been paid for
00:01:26.000 | nor has money been allocated to those benefits.
00:01:30.000 | Well, after I published that show,
00:01:31.000 | I received an email from David.
00:01:32.000 | He wrote to me and he said,
00:01:34.000 | "Joshua, I think you're wrong about this."
00:01:36.000 | And we intended to get together and record it,
00:01:39.000 | but I pulled off during the fourth quarter of 2017
00:01:43.000 | and the first quarter of 2018.
00:01:44.000 | I pulled back from doing a bunch of interviews
00:01:46.000 | and we didn't get it done until now,
00:01:48.000 | where I recently got together with him
00:01:50.000 | to debate this subject.
00:01:52.000 | So the audio you're about to hear
00:01:54.000 | is David and me sitting down
00:01:56.000 | and trying to figure out who's right.
00:02:00.000 | And I think you'll hear the challenge of that.
00:02:05.000 | David is a really knowledgeable guy.
00:02:08.000 | He worked for many years as an institutional investor
00:02:11.000 | and now, of course, is his own private investor.
00:02:14.000 | And then he teaches investing on his podcast,
00:02:17.000 | Money for the Rest of Us.
00:02:18.000 | And I would say that the two of us would represent
00:02:21.000 | a fairly mainstream perspective in our experience.
00:02:24.000 | He came from the world of institutional investment advice.
00:02:28.000 | I came from the world of personal financial planning
00:02:31.000 | and personal investment advice.
00:02:32.000 | But both of us were involved in fairly mainstream approaches
00:02:36.000 | to investing.
00:02:37.000 | But yet, both of us are trying to figure out the answers
00:02:40.000 | to these difficult questions,
00:02:41.000 | as is anybody who's involved in the world of investing,
00:02:44.000 | which is, sadly or appropriately, all of us.
00:02:50.000 | And so I hope you enjoy this discussion
00:02:52.000 | as we try to wrestle through some of these issues.
00:02:55.000 | This show does not have a lot of facts and figures.
00:02:57.000 | We chose to focus on the simple audio discussion,
00:03:00.000 | but I still think it can serve you.
00:03:03.000 | You'll hear this audio in a couple different parts.
00:03:06.000 | David's show is usually about 30 minutes long,
00:03:08.000 | and so we were trying very hard to fit
00:03:10.000 | that time constraint for his show.
00:03:14.000 | But I was still frustrated at the end of 30 minutes
00:03:16.000 | that I didn't feel like we'd arrived at an answer.
00:03:19.000 | So how could an episode of Radical Personal Finance
00:03:21.000 | be only 30 minutes, especially an interview?
00:03:24.000 | So I finished the show, and then I said,
00:03:26.000 | "David, we've got to get to the bottom of this,"
00:03:28.000 | and thus you'll hear the difference in the audio.
00:03:31.000 | So enjoy this conversation between me
00:03:33.000 | and my friend David Stein.
00:03:38.000 | David Stein, welcome back to Radical Personal Finance.
00:03:41.000 | It's good to be here.
00:03:42.000 | So a number of months ago, I recorded a show
00:03:45.000 | talking about the future of basically
00:03:49.000 | the U.S. government economic situation,
00:03:52.000 | the fiscal situation.
00:03:54.000 | And in that show, I talked extensively about
00:03:57.000 | Lawrence Kotlikoff's discussion of the unfunded liabilities
00:04:01.000 | of the U.S. government, and I started the process
00:04:04.000 | of declaring my position on the unsustainability
00:04:08.000 | of current U.S. government and fiscal policies.
00:04:12.000 | It's my personal opinion that the U.S. government
00:04:16.000 | and the U.S. American culture is effectively bankrupt,
00:04:22.000 | and that the process of that bankruptcy
00:04:24.000 | will proceed forward over the coming decades.
00:04:28.000 | I don't know a time, but it'll take--
00:04:30.000 | over the coming decades, we'll see that bankruptcy
00:04:33.000 | more and more become apparent, the great default,
00:04:37.000 | as some people have termed it.
00:04:39.000 | Now, after that show, you emailed me,
00:04:41.000 | and you said, "Joshua, I don't agree with you."
00:04:44.000 | And in that email, you said, "Let's talk about it."
00:04:46.000 | So here we are, months too late,
00:04:48.000 | but we're finally getting back to talking about it.
00:04:50.000 | So what I thought would be fun is let me, in short,
00:04:53.000 | describe my understanding, and I want to keep today's show
00:04:56.000 | free of a lot of numbers and detail.
00:04:58.000 | That's better discussed in writing.
00:05:00.000 | But I'll very briefly describe my position,
00:05:02.000 | and then I want to hear your position
00:05:03.000 | and hear what you believe and don't believe.
00:05:07.000 | It seems to me that if I do an analysis
00:05:10.000 | of the last century of U.S.-American spending
00:05:14.000 | and government policy, it seems like we have made commitments
00:05:20.000 | on the level of government that we will never be able to keep.
00:05:24.000 | Most importantly, Medicare, Medicaid, and Social Security--
00:05:28.000 | or I guess I should rephrase that order--
00:05:30.000 | Medicaid, Medicare, and Social Security
00:05:32.000 | are effectively bankrupt.
00:05:34.000 | They don't have enough money to cash the promises
00:05:36.000 | that they have made.
00:05:37.000 | And so over the coming decades,
00:05:39.000 | I expect those to be, over time, defaulted on
00:05:43.000 | in a myriad of ways.
00:05:45.000 | And I look at the political situation in the United States,
00:05:49.000 | and I see no possibility.
00:05:51.000 | I see no political impetus.
00:05:53.000 | I see no one who's standing and saying,
00:05:55.000 | "Let's stop borrowing money. Let's pay our bills.
00:05:57.000 | "Let's actually balance our budget.
00:05:59.000 | "Let's actually figure out how to run
00:06:01.000 | on the money that we take in.
00:06:03.000 | "Let's figure out how to adjust taxes and revenue
00:06:05.000 | "to be at least equal, let alone pay off debt."
00:06:09.000 | What do you think?
00:06:11.000 | Well, I think it gets back to what is money.
00:06:15.000 | In other words, a lot of the analogies--
00:06:18.000 | the U.S. is like a business or a household,
00:06:21.000 | so it has constraints, but it doesn't.
00:06:24.000 | The government's money--
00:06:26.000 | essentially, it's magic money.
00:06:28.000 | Money is digital.
00:06:30.000 | And so when we look at what happens
00:06:33.000 | when the government spends, it's not--
00:06:35.000 | doesn't have to sit there and wait
00:06:37.000 | for this money to show up.
00:06:39.000 | And so when you go back to what Kotlikoff,
00:06:41.000 | in his generational accounting,
00:06:43.000 | he's looking at all these promised payments,
00:06:45.000 | and he discounts them into today's dollars,
00:06:47.000 | and he looks at the potential tax revenue
00:06:50.000 | and discounts it to today's dollar,
00:06:52.000 | and there's this huge fiscal gap.
00:06:54.000 | But the U.S. government has run a deficit
00:06:57.000 | basically forever since it's been around,
00:07:01.000 | and if--think about it in terms of monopoly money.
00:07:05.000 | If it was just monopoly money,
00:07:07.000 | we wouldn't have these things.
00:07:09.000 | So while I might agree with you
00:07:11.000 | that there's some fundamental decline
00:07:14.000 | in the U.S. government,
00:07:16.000 | I don't think--
00:07:18.000 | there's not a fiscal constraint.
00:07:20.000 | And we have examples of that.
00:07:22.000 | We have Japan that has a much greater debt
00:07:26.000 | to GDP than the U.S.
00:07:28.000 | But what do you have happening?
00:07:30.000 | You have the Japanese central bank
00:07:32.000 | effectively buying that national debt.
00:07:34.000 | They now own 40%.
00:07:36.000 | They've bought it out of money
00:07:39.000 | they created out of thin air.
00:07:41.000 | But that doesn't mean there's no constraints,
00:07:44.000 | and that's where I think it's the key.
00:07:47.000 | It's not that the government can spend
00:07:49.000 | as much as it wants,
00:07:51.000 | because the wealth of a country
00:07:53.000 | is the ability of the private sector
00:07:55.000 | to produce goods and services that we can eat.
00:07:58.000 | So if a government like Venezuela
00:08:00.000 | is spending ridiculous amounts of money
00:08:05.000 | and buying off its population,
00:08:07.000 | yet has destroyed the private sector,
00:08:10.000 | then you have massive inflation
00:08:12.000 | because you have essentially
00:08:14.000 | a collapsing economy.
00:08:16.000 | There's not enough food.
00:08:17.000 | The government's spending money,
00:08:19.000 | and you have hyperinflation.
00:08:21.000 | But in an economy like the U.S.,
00:08:23.000 | where you have a robust private sector,
00:08:25.000 | and our deficits are small
00:08:28.000 | relative to the size of the economy,
00:08:30.000 | we can continue indefinitely
00:08:33.000 | like we've been doing
00:08:35.000 | and have done for centuries.
00:08:37.000 | And it's not going to be a collapse
00:08:39.000 | based on accounting.
00:08:41.000 | If there's going to be a collapse,
00:08:42.000 | it's going to be based on
00:08:44.000 | a morally bankrupt government
00:08:46.000 | that doesn't follow the rule of law.
00:08:49.000 | So interestingly,
00:08:51.000 | I just have been reading--
00:08:53.000 | I'm late to the party.
00:08:54.000 | I've been aware of it for a time,
00:08:55.000 | but I've just been reading
00:08:56.000 | David Stockman's book,
00:08:57.000 | The Great Deformation.
00:08:59.000 | Are you familiar with that book
00:09:00.000 | or have you ever read it?
00:09:01.000 | I am, and I don't necessarily
00:09:02.000 | agree with him either.
00:09:03.000 | Right.
00:09:04.000 | So I know a lot of people--
00:09:05.000 | He's a very, of course, divisive figure.
00:09:07.000 | But I've not read the book.
00:09:08.000 | I've read reviews.
00:09:09.000 | I might have started it.
00:09:11.000 | I'm only partway into it,
00:09:13.000 | but it's something I've been
00:09:14.000 | really grappling with this question.
00:09:16.000 | He lays out a very strong case
00:09:18.000 | that in the 2008 financial collapse,
00:09:22.000 | that the moral connection
00:09:24.000 | between the natural free market system
00:09:27.000 | and the government getting involved,
00:09:28.000 | that that moral connection was broken.
00:09:30.000 | And he makes a very strong case
00:09:32.000 | that all of the governmental intervention
00:09:34.000 | was unnecessary.
00:09:36.000 | Now, I also read the official U.S. report
00:09:41.000 | that was issued by the inquiry
00:09:43.000 | into the financial collapse,
00:09:45.000 | and of course they would disagree
00:09:46.000 | with one another.
00:09:47.000 | So the moral dimension is one thing,
00:09:49.000 | but let's stick with the--
00:09:51.000 | I agree.
00:09:52.000 | Go ahead.
00:09:53.000 | I don't think the government
00:09:54.000 | should have intervened.
00:09:55.000 | Right, okay.
00:09:56.000 | How they do.
00:09:57.000 | And I don't necessarily agree
00:09:58.000 | that the Federal Reserve
00:09:59.000 | should be creating money
00:10:01.000 | as part of the quantitative easing program.
00:10:03.000 | I don't think that was necessary.
00:10:05.000 | But that's separate from the fact
00:10:06.000 | that they can.
00:10:07.000 | Right.
00:10:08.000 | So I think I have to acknowledge,
00:10:10.000 | and I want to acknowledge,
00:10:11.000 | that for all of the talk
00:10:13.000 | of doomsday and collapse
00:10:15.000 | that we've seen people talk about
00:10:17.000 | for decades,
00:10:19.000 | it hasn't happened yet.
00:10:21.000 | So those who say it's inevitable
00:10:24.000 | have to reconcile,
00:10:26.000 | well, it hasn't happened yet,
00:10:27.000 | and lots of people have said
00:10:28.000 | it was inevitable long ago.
00:10:30.000 | But do you think there is a limit
00:10:33.000 | with regard to deficit spending?
00:10:36.000 | Do you think there is a limit?
00:10:37.000 | And if there is, what would it be?
00:10:39.000 | Because after I recorded that show,
00:10:41.000 | I had a listener who seemed
00:10:43.000 | very well informed write to me
00:10:44.000 | and said, "Joshua, you're wrong,
00:10:46.000 | "and you're wrong because you think
00:10:47.000 | "that there's a limit."
00:10:48.000 | And we've proven that there effectively
00:10:50.000 | is no limit on government spending,
00:10:52.000 | and what you need to do is read
00:10:53.000 | this, this, this, this,
00:10:54.000 | which demonstrate that there's no limit.
00:10:56.000 | The government continue to do this
00:10:57.000 | because, as you say,
00:10:59.000 | the government controls the monetary supply.
00:11:01.000 | They can print more money.
00:11:02.000 | They can always satisfy their obligations
00:11:04.000 | because there is effectively no limit.
00:11:06.000 | No, and the limit is the ability
00:11:09.000 | of the private sector to produce.
00:11:11.000 | You're seeing Venezuela as a country
00:11:13.000 | where they've met their limit.
00:11:15.000 | They have impeded the ability
00:11:18.000 | of farmers to grow crops.
00:11:21.000 | They don't have enough food.
00:11:23.000 | And it didn't matter that the government
00:11:25.000 | can create money out of thin air,
00:11:26.000 | can create cryptocurrencies,
00:11:28.000 | because there isn't enough to eat.
00:11:30.000 | And so that's the fundamental limit.
00:11:33.000 | Where there's not a limit,
00:11:34.000 | and oftentimes people, you'll see articles
00:11:37.000 | that don't understand how
00:11:38.000 | the monetary system works,
00:11:40.000 | will say, "Well, our grandchildren
00:11:42.000 | "are going to have to pay for this debt
00:11:44.000 | "that we've incurred."
00:11:45.000 | Now think about that.
00:11:46.000 | Has anybody come to you
00:11:48.000 | from your great-great-grandparents
00:11:50.000 | asking for the debt that the government
00:11:53.000 | took on beginning of this century?
00:11:56.000 | - I would say yes, but in this way,
00:12:00.000 | that a significant portion
00:12:02.000 | of the federal expenditure,
00:12:04.000 | I don't have the number in front of me,
00:12:06.000 | but I would say, what, 15, 20%
00:12:08.000 | of the federal expenditure
00:12:09.000 | is currently spent on interest,
00:12:11.000 | no, it would be less than that,
00:12:12.000 | interest on the federal debt.
00:12:13.000 | And that debt has accumulated
00:12:15.000 | since World War II.
00:12:16.000 | So we are still currently paying interest.
00:12:19.000 | - Oh yeah, we pay interest on it,
00:12:20.000 | but nobody's collected it,
00:12:21.000 | because what is government debt?
00:12:24.000 | It's assets of most of us.
00:12:27.000 | In other words, that interest
00:12:29.000 | flows right back into the economy,
00:12:31.000 | and it becomes income.
00:12:33.000 | You always have to look at
00:12:34.000 | who's on the other side
00:12:35.000 | of the balance sheet.
00:12:36.000 | Government debt are household assets.
00:12:40.000 | And what is creating that debt each year?
00:12:43.000 | Because one of the things people talk about,
00:12:45.000 | we need to have a balanced budget.
00:12:47.000 | Well, the government can set
00:12:49.000 | what they want to spend.
00:12:51.000 | They really don't have control
00:12:52.000 | over the revenue,
00:12:53.000 | because that is determined
00:12:55.000 | by the decisions of households
00:12:57.000 | and businesses,
00:12:58.000 | how much they want to save.
00:12:59.000 | And let me just give a brief example.
00:13:01.000 | Just think of, if businesses
00:13:04.000 | and households decide
00:13:06.000 | that they want to save more,
00:13:08.000 | that means they spend less.
00:13:09.000 | And if they spend less,
00:13:11.000 | then they're buying less
00:13:12.000 | from other households and businesses,
00:13:14.000 | which means their income drops,
00:13:17.000 | which ultimately means
00:13:19.000 | that there's less tax revenue.
00:13:21.000 | Because if businesses,
00:13:23.000 | if people are trying to save more,
00:13:25.000 | and businesses are trying to save more
00:13:26.000 | by spending less,
00:13:27.000 | then other businesses
00:13:28.000 | aren't going to have as much income.
00:13:30.000 | People aren't going to have many jobs,
00:13:31.000 | so there'll be less tax revenue,
00:13:32.000 | and that naturally puts the government
00:13:34.000 | into a deficit position.
00:13:36.000 | Even if the budget was balanced
00:13:37.000 | at the beginning of the year,
00:13:38.000 | we're going to spend, whatever,
00:13:40.000 | $5 trillion here,
00:13:42.000 | and we hope to get
00:13:43.000 | $5 trillion in revenue,
00:13:45.000 | as soon as the household
00:13:46.000 | and business sector decide
00:13:47.000 | they don't want to spend as much,
00:13:49.000 | then the revenue drops,
00:13:50.000 | the tax revenue.
00:13:51.000 | And that's why we naturally
00:13:52.000 | have bigger deficits
00:13:53.000 | during times of recession,
00:13:55.000 | because of unemployment benefits.
00:13:57.000 | But it's ultimately
00:14:00.000 | the fiscal situation
00:14:01.000 | of the federal government
00:14:02.000 | is determined
00:14:04.000 | by households and businesses.
00:14:06.000 | Assuming that the government
00:14:09.000 | isn't out of control
00:14:10.000 | in terms of its spending.
00:14:11.000 | I mean, there has to be
00:14:12.000 | some basic understanding
00:14:15.000 | as we're not going to be
00:14:16.000 | like Venezuela, right?
00:14:18.000 | And if we don't have that,
00:14:20.000 | then we're in trouble.
00:14:22.000 | And I used to have optimism
00:14:27.000 | that perhaps somebody,
00:14:30.000 | especially the Republicans,
00:14:32.000 | who ran on the idea
00:14:33.000 | that we're going to be
00:14:34.000 | fiscally constrained,
00:14:35.000 | I used to have optimism
00:14:36.000 | that the Republicans
00:14:37.000 | might follow through
00:14:38.000 | at some point.
00:14:39.000 | But with this recent,
00:14:40.000 | what I would term a boondoggle,
00:14:42.000 | with this recent boondoggle
00:14:44.000 | of tax bill a few months ago
00:14:47.000 | and spending bill
00:14:48.000 | that was passed
00:14:49.000 | by Republican-controlled
00:14:50.000 | Congress and Senate
00:14:52.000 | and signed by a Republican president,
00:14:53.000 | I have lost any optimism
00:14:56.000 | that there's any serious politician,
00:14:58.000 | with the exception of maybe Rand Paul,
00:15:00.000 | who staged some theatrical objections.
00:15:04.000 | But it seems like
00:15:05.000 | there's almost nobody
00:15:06.000 | who actually stands
00:15:07.000 | for fiscal constraint.
00:15:09.000 | So I've lost that optimism.
00:15:11.000 | But let me go back.
00:15:12.000 | Let's talk about coffee.
00:15:13.000 | Go ahead.
00:15:14.000 | - Hang on a second.
00:15:15.000 | I don't, yes,
00:15:16.000 | but I don't think
00:15:17.000 | they're out of control.
00:15:18.000 | In other words,
00:15:19.000 | we could run a 3% to 4%
00:15:21.000 | deficit to GDP indefinitely.
00:15:24.000 | We've done it.
00:15:25.000 | And it's just,
00:15:27.000 | it's been done.
00:15:29.000 | And it goes back to showing,
00:15:32.000 | when is the collapse gonna occur
00:15:34.000 | from a fiscal standpoint?
00:15:36.000 | Japan has twice as much debt
00:15:38.000 | to GDP as the US.
00:15:40.000 | So 240% debt to GDP.
00:15:42.000 | We're about 103%.
00:15:44.000 | And Japan is doing just fine
00:15:47.000 | and doesn't have issues
00:15:49.000 | with inflation
00:15:50.000 | because their population
00:15:51.000 | is shrinking.
00:15:52.000 | And so again,
00:15:53.000 | the constraint is,
00:15:54.000 | is there enough people
00:15:56.000 | to produce the goods and services?
00:15:58.000 | And it'll be interesting to see
00:16:00.000 | because Japan will get into trouble
00:16:02.000 | way, way sooner than the US.
00:16:04.000 | If there is a constraint,
00:16:06.000 | Japan is gonna get in trouble.
00:16:07.000 | But right now,
00:16:08.000 | it's just not there.
00:16:10.000 | - Okay, so here's the point though.
00:16:12.000 | The numbers that you're referencing
00:16:13.000 | are on-book liabilities.
00:16:17.000 | The official federal debt
00:16:20.000 | as is calculated,
00:16:21.000 | which is what,
00:16:22.000 | 20 trillion-ish?
00:16:23.000 | - Yeah, 20 trillion.
00:16:24.000 | - About 20 trillion.
00:16:25.000 | Whereas what Kotlikoff's point is,
00:16:28.000 | is the unfunded liabilities,
00:16:29.000 | which in his estimation,
00:16:30.000 | depending on the year of his work,
00:16:32.000 | range anywhere from 180 to 200 trillion dollars.
00:16:35.000 | And what he's describing there
00:16:36.000 | is the commitments,
00:16:38.000 | the promises that are made
00:16:40.000 | to the recipients of Medicaid,
00:16:42.000 | Medicare, and Social Security
00:16:44.000 | that are not accounted for
00:16:46.000 | in official on-budget debt.
00:16:48.000 | And so here's where,
00:16:51.000 | in my guess,
00:16:52.000 | I've spent about a decade
00:16:54.000 | kind of thinking about this.
00:16:56.000 | And a decade ago
00:16:58.000 | when I started to think about it,
00:16:59.000 | I had this impression that,
00:17:02.000 | well, one day,
00:17:03.000 | the federal government's just gonna run out of money,
00:17:04.000 | and they're not gonna,
00:17:06.000 | that's not possible
00:17:08.000 | unless you have a society in anarchy.
00:17:10.000 | Because the power behind the US dollar
00:17:13.000 | as a made-up currency
00:17:14.000 | without any fundamental connection
00:17:16.000 | to anything constraining,
00:17:18.000 | the power is the taxing authority
00:17:20.000 | of the entity,
00:17:21.000 | of the state behind it,
00:17:23.000 | and the state's ability to use force
00:17:25.000 | to enforce their taxation.
00:17:26.000 | And so on that basis,
00:17:28.000 | the US government can always
00:17:30.000 | write any number of checks that they want
00:17:32.000 | because they have the monopoly
00:17:35.000 | or the majority of force,
00:17:37.000 | and so they can force tax revenue,
00:17:38.000 | and they can just write checks.
00:17:40.000 | But the problem is,
00:17:42.000 | what are those checks worth
00:17:43.000 | when they actually get there?
00:17:44.000 | And so I don't see any way
00:17:47.000 | that all of a sudden
00:17:48.000 | that all of the hoopla
00:17:51.000 | over government shutdowns notwithstanding,
00:17:54.000 | which is just, in my mind,
00:17:55.000 | political theater,
00:17:57.000 | I don't think that at some point in time
00:18:01.000 | you just stop,
00:18:03.000 | that the US government stops writing checks.
00:18:06.000 | But I do think that the value
00:18:08.000 | of what is promised
00:18:10.000 | continually constricts.
00:18:11.000 | And it goes back to the world of financial planning.
00:18:13.000 | What did I tell when I was working
00:18:14.000 | as a financial planner?
00:18:15.000 | What did I tell all of my younger clients?
00:18:16.000 | And it was just a standard
00:18:18.000 | in the world of professional financial planning.
00:18:20.000 | Don't plan on Social Security.
00:18:22.000 | Now that's just the tip of the iceberg
00:18:23.000 | because Social Security
00:18:24.000 | is one of the healthier ones.
00:18:25.000 | When you go to Medicare and Medicaid
00:18:27.000 | and you look at the numbers that are required,
00:18:30.000 | there's no way that I don't see any way
00:18:34.000 | that those promises can be fulfilled.
00:18:37.000 | And that's what I refer to as default.
00:18:41.000 | - Well, and again, that's the,
00:18:43.000 | first off, my issue with Kotlikoff
00:18:45.000 | is it takes everything from the future
00:18:47.000 | and puts it in the present.
00:18:49.000 | We do this year by year.
00:18:53.000 | So five years from now,
00:18:54.000 | when it comes to Social Security and Medicare,
00:18:57.000 | the government can create the money.
00:18:59.000 | I think we at least agree on that.
00:19:01.000 | - Right, I agree.
00:19:02.000 | - The issue is, will it be any doctors
00:19:04.000 | or hospitals to service the retirees that are sick?
00:19:08.000 | And that's the constraint.
00:19:10.000 | If they've created money
00:19:12.000 | and there's not enough doctors
00:19:13.000 | because everybody's retired,
00:19:14.000 | then we're gonna have inflation.
00:19:16.000 | But through advances in artificial intelligence, robotics,
00:19:21.000 | just productivity increases.
00:19:22.000 | If there's a private sector that can,
00:19:26.000 | it's a question of accounting.
00:19:28.000 | Get the money to the retirees
00:19:30.000 | so they can pay the doctors that are there.
00:19:33.000 | Now, if the doctors already have too much business
00:19:36.000 | and there's not enough doctors,
00:19:37.000 | then you have inflation.
00:19:39.000 | That's the constraint.
00:19:40.000 | The constraint isn't the accounting.
00:19:42.000 | And great example.
00:19:43.000 | So I used to have one of my clients
00:19:46.000 | as an institutional advisor was a retirement home.
00:19:51.000 | And they had a $30 million portfolio.
00:19:55.000 | But they also had financial statements.
00:19:56.000 | So every year in their financial statements,
00:19:58.000 | they would have their fees that they'd collect.
00:20:01.000 | But a big portion was realized gains.
00:20:04.000 | And then they would have their expenses.
00:20:06.000 | So they had their wealth,
00:20:07.000 | which was their actual investments,
00:20:09.000 | but they had their financial statements.
00:20:11.000 | And I remember one year, the CFO came to me and said,
00:20:15.000 | "We don't have enough gains
00:20:17.000 | "because my financial statement shows we're losing money."
00:20:21.000 | Yet their portfolio was up that year.
00:20:24.000 | And so I suggested, well, we could sell some stocks
00:20:27.000 | and realize the gains from an accounting perspective.
00:20:30.000 | And she's like, "No, we can't turn the portfolio."
00:20:33.000 | But in fact, that's what she wanted.
00:20:34.000 | She wanted her accounting statement to look better fiscally
00:20:38.000 | when their wealth over here was their actual investment assets
00:20:41.000 | with a ton of unrealized gains.
00:20:43.000 | It's the same with this type of generational accounting.
00:20:47.000 | The balance sheet looks terrible.
00:20:49.000 | The government has always been insolvent
00:20:52.000 | because it always spends more money than it receives.
00:20:56.000 | The issue is the wealth.
00:20:58.000 | The wealth are the people and the households, the businesses.
00:21:01.000 | Will they be able to supply enough goods and services,
00:21:05.000 | including medical treatment, for the populace?
00:21:09.000 | We can take care of the accounting issues,
00:21:11.000 | getting the money from whatever other people,
00:21:14.000 | but if we don't have the capacity to produce,
00:21:17.000 | then we're in trouble.
00:21:18.000 | So for the sake of argument, let me grant your point.
00:21:21.000 | Let's assume that accounting doesn't matter
00:21:25.000 | because I concur with your point.
00:21:29.000 | Somebody who has a failing business and mountains of debt
00:21:33.000 | isn't necessarily doomed to guaranteed bankruptcy.
00:21:37.000 | They can't create money either.
00:21:39.000 | Correct, which is always--
00:21:41.000 | the government has a monopoly on money creation
00:21:43.000 | and on force to extract tax revenue.
00:21:47.000 | But let's go then back to a realistic accounting of the future
00:21:51.000 | because those financial decisions are predicated upon
00:21:57.000 | the productivity of the sector, the health of the economy.
00:22:01.000 | And I would dissent with your point that the government
00:22:04.000 | has always been insolvent, the US government.
00:22:07.000 | I don't see that in history.
00:22:08.000 | It seems as though there have been times of insolvency.
00:22:11.000 | Right after the Revolutionary War,
00:22:13.000 | the early US-American government inflated like crazy,
00:22:17.000 | but it's gone through periods.
00:22:19.000 | But for the last, say, since the early first quarter
00:22:23.000 | of the 20th century, there has been this continual trend
00:22:27.000 | towards increasing levels of debt, increasing promises, etc.
00:22:31.000 | Because it loses money every year.
00:22:32.000 | I mean, when I say insolvent, I'm saying they're--
00:22:35.000 | like most businesses cannot lose money every single year.
00:22:39.000 | I mean, they're effectively insolvent, and the government can,
00:22:41.000 | but by some definitions, it would be insolvent.
00:22:44.000 | So now let's talk about cultural capital.
00:22:46.000 | And I'm so torn on these issues because on the one hand,
00:22:50.000 | I can't deny that Wall Street--
00:22:53.000 | for the sake of using a very collectivized term--
00:22:56.000 | Wall Street has been deeply productive with their assets.
00:23:00.000 | Wealth is growing.
00:23:03.000 | But I don't see the same strength reflected in the US-American culture.
00:23:07.000 | I see a very sick US-American culture,
00:23:10.000 | and I'm concerned with the idea that there is enough cultural capital
00:23:16.000 | to sustain through for decades.
00:23:20.000 | And so am I.
00:23:21.000 | What do you think?
00:23:22.000 | Oh, exactly.
00:23:23.000 | And I've talked a lot about some of those issues on my show
00:23:26.000 | in terms of income inequality, just the state of education,
00:23:30.000 | just the state of ethics.
00:23:33.000 | If people-- because money is trust.
00:23:37.000 | And if we no longer have trust as a society,
00:23:40.000 | if we don't trust our neighbors, if we don't trust businesses,
00:23:43.000 | if we don't trust government, then you're right.
00:23:46.000 | We're in serious trouble.
00:23:49.000 | But what bugs me is the focus doesn't get put on that.
00:23:55.000 | It gets put on the government's balance sheet.
00:23:58.000 | And we get into this, we need to balance the budget.
00:24:01.000 | Why don't we focus-- why don't we understand what money is
00:24:04.000 | and understand since we're no longer on the gold standard
00:24:07.000 | that we can create as much money as we want,
00:24:09.000 | why don't we make sure we have policies that assure
00:24:13.000 | that decades down the road we have a functioning private sector,
00:24:17.000 | a productive private sector, an educated private sector.
00:24:21.000 | That's what worries me, not accounting issues
00:24:24.000 | regarding how money is created, et cetera.
00:24:28.000 | Because all the evidence shows to date
00:24:31.000 | that between the central bank and the U.S. government,
00:24:34.000 | the money can be created.
00:24:36.000 | What's not clear is whether hopefully the private sector
00:24:40.000 | will still function in the decades down the road.
00:24:43.000 | But we can take it year by year and hopefully solve these issues,
00:24:46.000 | but not get distracted by this sideshow of the national debt.
00:24:53.000 | Where do you see reasons for optimism at the moment?
00:24:59.000 | I am really excited by the--
00:25:03.000 | first off, I think people are fundamentally good.
00:25:05.000 | I've been traveling for three months,
00:25:07.000 | or I guess a month and a half now.
00:25:09.000 | And people are good, and they want good things.
00:25:14.000 | And a lot of people are trying.
00:25:16.000 | And we certainly have problems, but I think by and large,
00:25:20.000 | society are good people trying to do the best for their families.
00:25:24.000 | That's a positive.
00:25:26.000 | I think the flexibility, the freedom we still have
00:25:29.000 | to start businesses here, and we don't have--
00:25:32.000 | people complain about red tape, but it's so much easier
00:25:34.000 | to start a business here in Cuba where they've effectively
00:25:38.000 | outlawed any private business other than running a restaurant,
00:25:42.000 | running out a room in your house, driving a taxi.
00:25:47.000 | That's it.
00:25:49.000 | Here we have that flexibility.
00:25:51.000 | I think the advances in robotics, in artificial intelligence,
00:25:55.000 | the ability--our ability to produce goods and services
00:25:58.000 | is growing dramatically.
00:26:00.000 | Now, that's creating potentially unemployment problems
00:26:04.000 | to where we might have everything we need,
00:26:08.000 | but nobody has a job because we can create so much.
00:26:13.000 | That's a potential issue.
00:26:14.000 | Again, that's an accounting issue.
00:26:16.000 | How do we get money to the people?
00:26:18.000 | But if we have the goods and services,
00:26:20.000 | then I'm optimistic about that.
00:26:24.000 | So I'll give you my list, and then I'll ask for your list
00:26:26.000 | of what you're concerned about.
00:26:27.000 | My list would be, number one, I'm encouraged
00:26:31.000 | by the decentralization of information.
00:26:36.000 | I'm encouraged that now a 10-year-old child
00:26:40.000 | in the poorest neighborhood of the United States
00:26:43.000 | or even the world can access the knowledge of the world
00:26:47.000 | through a $40 smartphone, and I'm deeply encouraged about that.
00:26:54.000 | I'm encouraged about the decentralization
00:26:57.000 | of education and schooling.
00:26:59.000 | I think that by the leader, for example, Salman Khan
00:27:03.000 | with the Khan Academy, I think that he is the harbinger
00:27:09.000 | of just a massive change in education.
00:27:12.000 | I don't function--I don't live in kind of mainstream circles,
00:27:16.000 | but I don't know--I hardly know any young couples
00:27:21.000 | who are parents who are sending their children
00:27:24.000 | to government schools.
00:27:25.000 | Almost everybody is looking for other alternatives,
00:27:27.000 | and I see that as a great opportunity for children
00:27:32.000 | to be trained, and instead of being stultified
00:27:35.000 | and dumbed down by the monopoly on education,
00:27:39.000 | I see that as positive.
00:27:41.000 | I agree with you as far as the ability to start businesses.
00:27:45.000 | I still live in the United States of America
00:27:47.000 | simply because I don't know anywhere better.
00:27:49.000 | If there were better, I would go,
00:27:51.000 | but I don't know anywhere better, and it is much easier
00:27:54.000 | to start businesses in the United States than that.
00:27:58.000 | So I agree with you on those things,
00:28:00.000 | and I see that it's still--it's never been easier
00:28:07.000 | to meet the basic needs of a person or a family,
00:28:11.000 | of shelter over their head, of food in their belly,
00:28:16.000 | than it--it's never been easier than it is today.
00:28:18.000 | And I'm very enthusiastic about some of the advances
00:28:23.000 | in being able to shelter and feed people
00:28:26.000 | using robotic and AI technology
00:28:31.000 | to grow crops locally within the city
00:28:34.000 | using very calculated computer-controlled systems
00:28:38.000 | or to 3D-print houses for people for $5,000
00:28:42.000 | that are safe and comfortable and warm.
00:28:44.000 | So I'm very motivated and optimistic about those trends.
00:28:48.000 | And just the increasing ability for individuals
00:28:52.000 | to connect with other individuals.
00:28:53.000 | I do see those things as positive.
00:28:55.000 | What are you concerned about?
00:28:56.000 | What trends do you see that keep you up at night?
00:29:01.000 | I'm concerned about tribalism,
00:29:04.000 | people breaking down into groups.
00:29:06.000 | And one of the things I hate when people say
00:29:11.000 | they should do this or they should do that
00:29:13.000 | as opposed to we should solve this together.
00:29:16.000 | So the strife, the--just how mad people get.
00:29:22.000 | It's not--in politics, for example,
00:29:26.000 | it's not enough to disagree.
00:29:28.000 | They hate the other side.
00:29:30.000 | And that terrifies me.
00:29:32.000 | It really does.
00:29:34.000 | The lack of ethics, the corporations
00:29:41.000 | that knowingly pass on costs to innocent,
00:29:47.000 | negative externalities, and just lie.
00:29:51.000 | I mean, that will destroy a country.
00:29:54.000 | And so on one hand, I go around
00:29:57.000 | and I think people are basically good,
00:29:59.000 | but I think people get selfish and they forget.
00:30:02.000 | They don't think about the consequences
00:30:05.000 | of some of their actions sometimes,
00:30:07.000 | particularly in business.
00:30:09.000 | So--but I think, generally speaking,
00:30:14.000 | things are better done on the local level,
00:30:16.000 | and I've talked about that on my show.
00:30:18.000 | I don't worry about bureaucracy,
00:30:20.000 | big government, and things of that sort.
00:30:22.000 | I think there's some things--
00:30:24.000 | because the government actually has the power
00:30:26.000 | to create money, there's some things better
00:30:28.000 | for the government to finance,
00:30:30.000 | but then have it implemented at the local level.
00:30:33.000 | If we get to the point where everything's created
00:30:38.000 | very easily for what we need,
00:30:40.000 | but people don't have enough jobs,
00:30:42.000 | then I think the solution is not to have
00:30:44.000 | the federal government hire a bunch of people,
00:30:46.000 | but finance businesses, give them grants
00:30:50.000 | to hire people to go visit the elderly
00:30:52.000 | or things like that, but it needs to be done
00:30:54.000 | at the local level.
00:30:56.000 | But those are my concerns.
00:30:58.000 | I think it's just a lack of integrity concerns me,
00:31:02.000 | the breaking down into tribes,
00:31:04.000 | income inequality concerns me,
00:31:07.000 | when businesses, all they care about is profit,
00:31:10.000 | so they don't pay their workers enough,
00:31:12.000 | and ultimately they--
00:31:14.000 | and it shouldn't be the government mandates it,
00:31:16.000 | I'm saying as a business we shouldn't be short-sighted,
00:31:19.000 | we should pay our people fairly.
00:31:21.000 | Now it's hard to figure out, business is hard.
00:31:24.000 | It concerns me that businesses generally,
00:31:26.000 | it's easier to buy back stock,
00:31:28.000 | which is one of the things driving the stock market,
00:31:31.000 | as opposed to investing in the future
00:31:33.000 | and investing in their people.
00:31:35.000 | Again, there's always a balance,
00:31:36.000 | but it's easier to buy back stock as a CEO.
00:31:39.000 | You get the immediate impact,
00:31:41.000 | you don't have the uncertainty of other areas.
00:31:44.000 | I mean those are a few of my concerns,
00:31:46.000 | but generally I'm optimistic,
00:31:49.000 | and I think these are issues we can solve.
00:31:53.000 | - I'll give you just a few of mine,
00:31:55.000 | obviously this is not comprehensive,
00:31:57.000 | but a few of mine would be,
00:31:58.000 | I agree with you, I concur with you,
00:32:01.000 | about the lack of ethics.
00:32:04.000 | We've lost, as the United States of America
00:32:07.000 | moves into what seems to be,
00:32:10.000 | under current understanding,
00:32:11.000 | what seems to be a post-Christian era,
00:32:13.000 | we've lost a common ability to talk about ethics,
00:32:16.000 | where we all affirm the existence of a moral standard,
00:32:21.000 | but we dissent about what moral standard there is.
00:32:24.000 | And so different people view things differently,
00:32:27.000 | on discussion of something like minimum wage.
00:32:30.000 | You have two people, one person says,
00:32:32.000 | you must mandate a minimum wage,
00:32:34.000 | because that's morally right,
00:32:35.000 | another person, I would say,
00:32:37.000 | you must not mandate a minimum wage,
00:32:39.000 | because that's morally wrong.
00:32:40.000 | Not that you shouldn't pay someone,
00:32:41.000 | but that's a use of coercion and force.
00:32:44.000 | And so I see this continually,
00:32:46.000 | as we've lost the ability to discuss things
00:32:49.000 | within a frame where we can find common understanding,
00:32:53.000 | and we lack a common discussion of ethics.
00:32:58.000 | - And I agree with that.
00:33:00.000 | - And we don't teach ethics,
00:33:02.000 | because of this concern,
00:33:05.000 | we don't teach formally ethics.
00:33:07.000 | We do in some place.
00:33:09.000 | I went through,
00:33:10.000 | when I was getting my master's degree in financial planning,
00:33:12.000 | one of the capstone courses was a discussion of ethics.
00:33:14.000 | And it was drawn from an entirely secular perspective,
00:33:21.000 | and the philosophy professor who was leading that charge,
00:33:25.000 | I asked her, I said,
00:33:26.000 | what is the basis for these ethical issues?
00:33:29.000 | And how do you know what is right in the situation?
00:33:33.000 | What is right in this financial planning situation?
00:33:35.000 | What is right for this company?
00:33:36.000 | How do you reason from this?
00:33:39.000 | And since there's no agreement on those first principles,
00:33:42.000 | the application of it becomes different.
00:33:44.000 | I'm concerned about the,
00:33:46.000 | I agree with you about tribalism,
00:33:48.000 | and I see it as so dangerous,
00:33:50.000 | because especially in the United States of America,
00:33:52.000 | from my assessment,
00:33:54.000 | we've lost any kind of,
00:33:56.000 | we've lost a majority of our common cultural understanding.
00:34:00.000 | I don't feel almost any connection
00:34:04.000 | to somebody who is a US American.
00:34:07.000 | Just because somebody's an American,
00:34:09.000 | I don't feel any kind of national pride,
00:34:12.000 | or national sense of identity with them.
00:34:15.000 | I feel that sense of connection to people
00:34:18.000 | who are outside of that,
00:34:19.000 | but I often feel more culturally connected
00:34:23.000 | to somebody who shares more of my worldview,
00:34:25.000 | who's of another skin color, from another continent,
00:34:28.000 | than I do of my neighbor,
00:34:29.000 | because there doesn't seem to be
00:34:31.000 | that historical identity that's being passed on.
00:34:36.000 | And I don't know how a nation continues to function
00:34:39.000 | if it doesn't have a common heritage,
00:34:41.000 | a common creed that is passed on
00:34:45.000 | from generation to generation.
00:34:47.000 | I've lost that myself.
00:34:48.000 | I feel very little connection to the neighbor,
00:34:52.000 | to my neighbors.
00:34:53.000 | And then increasingly,
00:34:54.000 | there doesn't seem to be much outworking
00:34:58.000 | of that sense of community.
00:35:00.000 | The communities tend to be siloed,
00:35:03.000 | and not geographic in nature,
00:35:05.000 | but ideological in nature.
00:35:07.000 | And without belaboring the point,
00:35:09.000 | it's hard for me to find a whole lot of examples
00:35:13.000 | where things are really flourishing,
00:35:16.000 | where people are really feeling good,
00:35:17.000 | where people are working towards common progress.
00:35:22.000 | I'm sure they exist,
00:35:23.000 | just hard for me to find.
00:35:24.000 | - I think they do.
00:35:25.000 | But I think the key is,
00:35:27.000 | just go out and meet people.
00:35:30.000 | I mean, I'm sure you do it, right?
00:35:32.000 | But meet your neighbors, reach out, be human.
00:35:36.000 | I do think as a nation,
00:35:38.000 | we have a common set of values,
00:35:41.000 | freedom, entrepreneurialism, et cetera.
00:35:45.000 | - I think other nations do too.
00:35:47.000 | But one of the things that does concern me
00:35:49.000 | is where America's the greatest country in the world
00:35:52.000 | is what politicians say.
00:35:53.000 | Well, you know, there's a lot of great places.
00:35:56.000 | And there's a lot of amazingly good people everywhere.
00:36:00.000 | And we just need to be kinder to the people
00:36:05.000 | and connect more with people.
00:36:07.000 | And I think that's one thing the internet has done,
00:36:10.000 | is to allow sort of that common language,
00:36:13.000 | that common connectivity.
00:36:15.000 | And while we might have some of these moral discussions,
00:36:19.000 | minimum wage, et cetera,
00:36:21.000 | if we get to the point where we just straight out steal,
00:36:24.000 | and that becomes accepted, that's the problem.
00:36:27.000 | - But we already are.
00:36:29.000 | And here's my argument.
00:36:32.000 | We already are there.
00:36:33.000 | So half of the population says,
00:36:37.000 | those other people shouldn't have it,
00:36:39.000 | so we're gonna take from them to give to these people.
00:36:42.000 | I call that theft.
00:36:43.000 | Now, it's theft by majority vote, but that is theft.
00:36:46.000 | And so certainly, is it different than me going
00:36:49.000 | and pilfering the stapler from my boss's office?
00:36:53.000 | In a sense, but at its fundamental basis,
00:36:55.000 | it's no different.
00:36:56.000 | So you talk about this heritage of freedom.
00:36:58.000 | I don't see it.
00:36:59.000 | Maybe it's a generational thing,
00:37:01.000 | but I don't see a lot of people,
00:37:02.000 | I don't hear a lot of people talking about,
00:37:04.000 | I affirm your right to individual freedom.
00:37:06.000 | It feels to me, speaking very subjectively,
00:37:09.000 | it feels to me like a lot of people wanna say,
00:37:12.000 | no, you don't have the freedom to do this.
00:37:14.000 | No, you don't have the freedom to do that.
00:37:16.000 | You wanna start a business cutting hair?
00:37:17.000 | Yeah, you have to go and apply for a license.
00:37:19.000 | You wanna go and move into this occupation?
00:37:21.000 | You need to go and ask for a license.
00:37:23.000 | It's a constant stricture on freedom,
00:37:26.000 | so I disagree and dissent.
00:37:29.000 | We don't have a common heritage of freedom.
00:37:30.000 | We talk about it.
00:37:31.000 | We talk about defending freedom,
00:37:33.000 | but I don't see the common heritage.
00:37:35.000 | - Those are issues on the margin.
00:37:37.000 | You can still, even if you have to get the license,
00:37:40.000 | we can talk about the amount of regulation you need
00:37:42.000 | to cut people's hair.
00:37:46.000 | You can't do that in Cuba.
00:37:48.000 | - You can do it until you get reported
00:37:51.000 | and until the government goons start knocking on your door
00:37:53.000 | and say, are you cutting hair illegally?
00:37:55.000 | I have been in meetings with people.
00:37:57.000 | One lady, one was a client of mine.
00:37:59.000 | I don't know how she ended up as a client of mine.
00:38:01.000 | She was cutting hair in her living room in the inner city
00:38:05.000 | and doing that until she got the knock on the door
00:38:08.000 | from the government goons saying,
00:38:10.000 | we heard that you're doing
00:38:11.000 | unauthorized business activities here.
00:38:13.000 | We're a lot closer to Cuba than we once were.
00:38:16.000 | That's what I see.
00:38:18.000 | - We probably are, and that's a different discussion
00:38:22.000 | in terms of how much regulation there should be.
00:38:24.000 | You and I have talked about your inability
00:38:26.000 | to have chickens here in Palm Beach County.
00:38:30.000 | - Right.
00:38:31.000 | - You've talked about it on your show,
00:38:34.000 | but yes, but those are issues
00:38:37.000 | regarding policy and the limits.
00:38:41.000 | At the end of the day, though,
00:38:43.000 | the theft that you discuss,
00:38:45.000 | again, the government can create the money, right?
00:38:49.000 | They're not really taking money from you
00:38:51.000 | and giving it to somebody else.
00:38:53.000 | They're taking money from us because we have taxes.
00:38:57.000 | Then the other hand is creating the money to spend,
00:39:01.000 | and we have to come together
00:39:02.000 | in terms of how much should they spend
00:39:04.000 | and what they should spend it on
00:39:06.000 | and the amount of policy.
00:39:08.000 | Coming full circle, those are issues
00:39:11.000 | other than the accounting of what the national debt is.
00:39:14.000 | I think that's sustainable for many years in the future,
00:39:19.000 | but we take it one year at a time.
00:39:20.000 | - My closing question for you,
00:39:22.000 | do you affirm that it's possible
00:39:27.000 | that there would be various forms of default,
00:39:29.000 | bankruptcy, and collapse?
00:39:31.000 | In coming decades, and if it were possible,
00:39:36.000 | what would you look for?
00:39:38.000 | - I would look for just complete lack
00:39:43.000 | of honesty with our leaders.
00:39:46.000 | The government's been taken over by,
00:39:49.000 | be it the private businesses or whatever,
00:39:53.000 | and you can tell.
00:39:55.000 | I don't think we're there yet.
00:39:56.000 | We're still arguing about
00:39:58.000 | what the money should be spent on,
00:39:59.000 | but we are a far cry from,
00:40:02.000 | I'll give the example of Venezuela,
00:40:04.000 | where the government is threatening their citizens
00:40:08.000 | that you have to vote for me
00:40:10.000 | or we will not give you your food stipend
00:40:12.000 | because they're starving.
00:40:14.000 | We're not even close to that yet,
00:40:16.000 | and for that, I'm fortunate,
00:40:18.000 | but we could get there,
00:40:19.000 | and that's why we all have to be involved
00:40:22.000 | as citizens in terms of who's elected
00:40:25.000 | and at the local level, get involved locally,
00:40:28.000 | and get out and meet our fellow citizens,
00:40:31.000 | and don't just stay indoors
00:40:33.000 | in our gated communities.
00:40:35.000 | - So I affirm that I could be wrong,
00:40:39.000 | and I hope that I am.
00:40:40.000 | We're certainly not in Venezuela,
00:40:42.000 | but I hope that all of us can work together
00:40:44.000 | to avoid that fate.
00:40:47.000 | Thank you for coming on.
00:40:48.000 | - Hey, it was fun.
00:40:49.000 | - That was 37 minutes.
00:40:53.000 | So here's, I'm gonna,
00:40:54.000 | I turned the recorder back on
00:40:56.000 | 'cause I just wanna hear this.
00:40:57.000 | So we got that time pressure off.
00:41:02.000 | The issue that I face,
00:41:12.000 | and I'm asking this sincerely,
00:41:14.000 | how old are you now?
00:41:16.000 | - 53.
00:41:17.000 | - Okay, so you're about 20 years older than I am,
00:41:20.000 | and you've been involved in a similar path
00:41:22.000 | as I have in terms of the financial world.
00:41:24.000 | I don't wanna be a catastrophist or an alarmist.
00:41:27.000 | I don't want to scream that the sky is falling
00:41:33.000 | when the sky is not falling,
00:41:34.000 | which is why I'm very sensitive
00:41:36.000 | to the people who make foolish decisions
00:41:39.000 | and say, well, by 2010,
00:41:44.000 | the world's gonna collapse,
00:41:46.000 | and the US dollar's gonna be worth,
00:41:47.000 | I think those things are so overblown and overstated.
00:41:49.000 | - 'Cause you're selling a newsletter.
00:41:51.000 | - Yeah, yeah, the US dollar
00:41:52.000 | is the strongest currency in the world,
00:41:53.000 | but I also don't want to just be a Pollyanna
00:41:57.000 | where everything is perfect
00:41:59.000 | because I see throughout history
00:42:02.000 | a systematic ebb and flow of growth and decline,
00:42:10.000 | growth and decline.
00:42:11.000 | Empires collapse.
00:42:12.000 | They do collapse,
00:42:13.000 | and so just because somebody has said
00:42:15.000 | it will collapse and it hasn't yet
00:42:17.000 | doesn't mean that it's necessarily not gonna collapse,
00:42:19.000 | and I think back to the question of freedom.
00:42:21.000 | I hear almost nobody advocating for freedom.
00:42:25.000 | I don't hear, and I think political leaders are important
00:42:29.000 | 'cause they reflect the population
00:42:30.000 | to the extent that anybody can reflect the population.
00:42:33.000 | I don't reflect the population.
00:42:34.000 | I'm a voice crying in the wilderness
00:42:37.000 | just kind of saying what I think is right,
00:42:39.000 | but a politician needs to appeal
00:42:42.000 | to a larger branch to get elected
00:42:47.000 | if a democratic action works as it's supposed to,
00:42:50.000 | so a politician is gonna reflect the culture.
00:42:53.000 | Tell me who you hear talking about
00:42:57.000 | and advocating for freedom
00:42:58.000 | as a fundamental principle of US American society.
00:43:04.000 | - Well, I guess it depends on your definition for freedom.
00:43:07.000 | I think--
00:43:08.000 | - You choose the definition.
00:43:09.000 | Just tell me who.
00:43:10.000 | I'm not, sorry, I'm not being snarky with you,
00:43:13.000 | but I don't care about the definition,
00:43:14.000 | but what would you define as freedom
00:43:16.000 | or any definition you want, I guess.
00:43:19.000 | - The ability to get up and provide for my family
00:43:25.000 | and go where I want to go
00:43:28.000 | and within reason do what I want to do
00:43:35.000 | without necessarily impeding or putting harm on others.
00:43:41.000 | I think we have that,
00:43:44.000 | and so I think it's more a question of degrees.
00:43:47.000 | Maybe we don't have as much freedom as we would like,
00:43:50.000 | and we can argue about laws and regulations, et cetera,
00:43:55.000 | but as I've traveled around the world,
00:43:57.000 | we have so much more freedom than,
00:44:01.000 | we have plenty of freedom.
00:44:03.000 | And you and I have talked about zoning issues, right?
00:44:07.000 | I mean, governments overstep their bounds
00:44:11.000 | because, and I've seen this at the local level, right?
00:44:14.000 | At the local level,
00:44:15.000 | it's amazing how much influence you can have at the local level
00:44:19.000 | to the extent that they've outlawed chickens
00:44:21.000 | in Palm Beach County,
00:44:22.000 | but they used to outlaw chickens in Rexburg, Idaho.
00:44:25.000 | Well, the citizens came together and said,
00:44:28.000 | there's a lot more places in the US
00:44:30.000 | where you can have chickens in cities now
00:44:32.000 | than there were 20 years ago.
00:44:33.000 | - Right.
00:44:34.000 | - Because as citizens,
00:44:35.000 | we decided we want that freedom at our local community
00:44:39.000 | to have fresh eggs.
00:44:41.000 | And so I think, I mean,
00:44:43.000 | that's an example where freedom's gone the other way,
00:44:46.000 | despite where we are.
00:44:48.000 | And so I do, I just,
00:44:52.000 | I don't feel constricted day to day
00:44:54.000 | in terms of what I can do.
00:44:55.000 | I really don't.
00:44:57.000 | You start a radical personal finance.
00:44:59.000 | I started money for the rest of us.
00:45:01.000 | Nobody said you couldn't do that.
00:45:04.000 | Many places, they would have.
00:45:07.000 | And so that's a freedom.
00:45:09.000 | That's a huge freedom we have today
00:45:11.000 | that we didn't have 30 years ago.
00:45:13.000 | Everybody can create their own content,
00:45:15.000 | have their own radio station,
00:45:17.000 | in terms of a podcast.
00:45:19.000 | - Right.
00:45:20.000 | - That's a huge freedom.
00:45:21.000 | - So I affirm that the United States of America
00:45:23.000 | enjoys more of these freedoms
00:45:25.000 | than on most places in the world.
00:45:27.000 | I affirm that.
00:45:28.000 | As I've traveled, every time I leave the country,
00:45:30.000 | I'm just so thankful for the opportunities.
00:45:33.000 | I think, and I've said this on the show many times,
00:45:36.000 | if you, and I probably, it's been a while,
00:45:39.000 | so I've been outside the border,
00:45:40.000 | so maybe it's time to take my own advice,
00:45:41.000 | but if you're feeling downcast
00:45:44.000 | about your possibilities that you have in life,
00:45:46.000 | get on an airplane and go somewhere else,
00:45:48.000 | and you'll be thankful for your job.
00:45:50.000 | My wife and I, on our honeymoon,
00:45:52.000 | we traveled to Haiti,
00:45:53.000 | and that's just off the shores of Florida.
00:45:56.000 | I always come back from these places
00:45:58.000 | just thankful that I can have a job,
00:46:00.000 | that I can work, that I can do it,
00:46:02.000 | because when you're in a world
00:46:03.000 | where 75% of people can't even get a job,
00:46:08.000 | who want a job, it's so broken
00:46:11.000 | that you're thankful for the ability
00:46:13.000 | to go and get any menial job whatsoever
00:46:16.000 | in the United States of America.
00:46:18.000 | And perhaps I am prone to thinking like an ideologue,
00:46:24.000 | but I just look at something as simple as work freedom,
00:46:28.000 | as freedom.
00:46:29.000 | A majority, seemingly,
00:46:31.000 | a significant percentage of the population
00:46:34.000 | believes that it's...
00:46:38.000 | I have a number of friends
00:46:39.000 | who are immigrants to the United States of America,
00:46:42.000 | and most of them, from different countries,
00:46:48.000 | a couple of them are out of compliant status
00:46:51.000 | with the United States in terms of immigration law.
00:46:54.000 | Several of them are in compliance
00:46:55.000 | with the United States in terms of immigration law.
00:46:58.000 | But I am so frustrated at the idea
00:47:02.000 | that the US government thinks
00:47:04.000 | that it has the moral authority and right
00:47:08.000 | to tell a person,
00:47:10.000 | "No, you can't work for...
00:47:14.000 | "No, you can't go and do honest, productive work
00:47:17.000 | "to provide for your family
00:47:18.000 | "because you haven't applied for the proper paperwork,"
00:47:21.000 | or that the US government would have the temerity
00:47:23.000 | to think that it can say to an employer,
00:47:26.000 | "No, you can't hire this person
00:47:29.000 | "because they don't have the appropriate visa requirements
00:47:33.000 | "to do honest work that you need them to do."
00:47:36.000 | Now, maybe I'm in a--
00:47:37.000 | - Now, what's fascinating about that, right,
00:47:39.000 | 'cause that, I agree with you,
00:47:42.000 | and that, which is why this is a great conversation,
00:47:45.000 | that's not a conservative position.
00:47:47.000 | - No, no, and this is my frustration with,
00:47:50.000 | this is what I am fed up with,
00:47:53.000 | with the political world,
00:47:57.000 | because it's like every about 50 years,
00:48:02.000 | the Democrats and the Republicans basically swap places
00:48:05.000 | and take each other's positions,
00:48:07.000 | about every 50 years,
00:48:09.000 | and that's what frustrates me,
00:48:10.000 | because I've not heard of a Republican position,
00:48:14.000 | I've not heard of a Republican,
00:48:18.000 | maybe there are,
00:48:19.000 | I don't hear a Republican politician
00:48:21.000 | affirming somebody's right to work.
00:48:22.000 | Now, flip it around, let's just pick on the Democrats,
00:48:24.000 | so we pick on everybody and annoy every listener.
00:48:27.000 | On the same hand,
00:48:30.000 | there are lots of Democrats and Democratic politicians
00:48:34.000 | who say, "You should be able to hire somebody
00:48:37.000 | "regardless of their immigration status,
00:48:39.000 | "but we're going to require you, at the threat of force,
00:48:43.000 | "to pay them $15 an hour,
00:48:46.000 | "whether the work that they're doing for you
00:48:47.000 | "is worth $15 an hour or not."
00:48:49.000 | And so I deny both of those premises.
00:48:52.000 | I affirm the fact that any person
00:48:56.000 | should be able to make any other private contract
00:48:59.000 | with any other person,
00:49:00.000 | as long as the work is moral and ethical and legal,
00:49:04.000 | as long as those things are there,
00:49:06.000 | without interference, that's freedom.
00:49:08.000 | But I don't hear anybody affirming that.
00:49:12.000 | And so when you talk about freedom,
00:49:14.000 | yes, we do have freedom,
00:49:15.000 | but I look at it and say,
00:49:16.000 | is this not an inheritance from centuries of work
00:49:21.000 | that are unique to the US-American experiment?
00:49:25.000 | Because the early colonists of the United States
00:49:30.000 | were desperately longing for freedom.
00:49:33.000 | They were seeking religious freedom.
00:49:35.000 | And now I find myself, as a religious minority,
00:49:39.000 | with much of my religious freedom diminished,
00:49:44.000 | and what religious freedom I do enjoy
00:49:47.000 | banished to the idea of private practice
00:49:50.000 | as long as it's not public
00:49:51.000 | or as long as it has no effect on your actual life.
00:49:55.000 | And so I look at that and say,
00:49:57.000 | the heritage was freedom,
00:49:59.000 | but where is the continuing press towards freedom?
00:50:02.000 | I don't see it.
00:50:03.000 | All I see is a continual stricture.
00:50:04.000 | Now, compared to the rest of the world,
00:50:06.000 | absolutely, it's there,
00:50:07.000 | but I don't see that change.
00:50:10.000 | - No, no, no, and I agree with that.
00:50:11.000 | I think religious freedom,
00:50:13.000 | there's less of it than it was.
00:50:15.000 | And I don't know.
00:50:19.000 | And so I use this as evidence for my position
00:50:23.000 | that this common,
00:50:24.000 | I don't think we don't speak a common understanding.
00:50:28.000 | I don't hear those common ideas
00:50:32.000 | reflected in US-American culture.
00:50:34.000 | I hear the platitudes of,
00:50:37.000 | we live for freedom, fight for freedom, et cetera.
00:50:40.000 | We all inherit the freedom that people have died for.
00:50:43.000 | I hear the platitudes,
00:50:44.000 | but I don't see much of the results.
00:50:46.000 | Much of the freedom seems to me to be
00:50:49.000 | enlarged by individuals,
00:50:54.000 | but largely by individuals with technological changes.
00:50:59.000 | There are tremendous freedoms.
00:51:01.000 | That's why I stated those things,
00:51:02.000 | like the destruction of the monopoly on the press.
00:51:05.000 | I love that.
00:51:06.000 | I'm thrilled with it.
00:51:07.000 | Now, it's very uncomfortable, right?
00:51:09.000 | You gotta deal with fake news and all this stuff,
00:51:11.000 | but it is a good thing for freedom.
00:51:13.000 | And I'm the inheritor, for example, home education.
00:51:17.000 | Just simple things.
00:51:19.000 | I was born at home when I was born
00:51:23.000 | in a time when home birth
00:51:25.000 | was not particularly officially sanctioned.
00:51:28.000 | I was homeschooled at a time
00:51:31.000 | when home education was not officially sanctioned.
00:51:34.000 | It was very much a gray area.
00:51:35.000 | Whereas today, it's relatively easy
00:51:38.000 | for anybody who wants to take control of those things to do it.
00:51:41.000 | But I don't hear that common conversation.
00:51:43.000 | So, I'm ranting and raving,
00:51:44.000 | and I don't know what my point is,
00:51:45.000 | so I'll let you say something smart.
00:51:47.000 | - Well, I'll just wrap up.
00:51:49.000 | Get on the road like you plan on doing,
00:51:51.000 | and travel around, and come to Idaho.
00:51:55.000 | There's a lot of freedom out in Idaho.
00:51:57.000 | - Indeed. Thanks, David.
00:51:59.000 | Thank you for listening.
00:52:01.000 | You've honored me with your time and attention,
00:52:03.000 | and I'm grateful for that.
00:52:05.000 | And I hope that I've effectively served you today
00:52:08.000 | with some ideas and strategies and tactics
00:52:10.000 | and techniques and tools
00:52:12.000 | that will help move you towards your goals.
00:52:15.000 | Before you go, three simple requests.
00:52:18.000 | One, if there's an idea that's been helpful to you
00:52:21.000 | in today's show, make a plan to take action on it.
00:52:25.000 | Listening does lead to learning,
00:52:28.000 | but learning in and of itself
00:52:29.000 | doesn't automatically lead to a life change.
00:52:33.000 | It's action that leads to a life change.
00:52:37.000 | So, take action.
00:52:39.000 | Two, take something that was helpful to you
00:52:41.000 | in today's show and share it
00:52:44.000 | with somebody that you care about.
00:52:46.000 | I'm depending on you to be a co-laborer with me
00:52:50.000 | in helping me to propagate the message
00:52:53.000 | that I'm seeking to share.
00:52:55.000 | That helps the person that you are engaging with,
00:52:59.000 | and it also helps you because teaching others
00:53:02.000 | is one of the most effective ways for you to learn
00:53:05.000 | and for you to cement your learning.
00:53:08.000 | Three, if there's an idea that's been
00:53:11.000 | specifically helpful to you
00:53:12.000 | and if you're gaining financial benefit
00:53:14.000 | from Radical Personal Finance,
00:53:16.000 | I'd be grateful if you'd consider paying me
00:53:18.000 | for this work voluntarily.
00:53:21.000 | Come by radicalpersonalfinance.com/patron
00:53:23.000 | and you can sign up there to support the show
00:53:25.000 | at whatever level you feel is right for you.
00:53:28.000 | This is a voluntary support.
00:53:30.000 | That's my Patreon page.
00:53:32.000 | You can support me with a dollar a month,
00:53:34.000 | five dollars a month, ten dollars a month,
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00:53:41.000 | and if it's achieving financial results in your life,
00:53:45.000 | I'd be grateful for your financial support
00:53:48.000 | at radicalpersonalfinance.com/patron.
00:53:52.000 | Hey parents, join the LA Kings on Saturday, November 25th
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