 Hello and welcome to the session today. This is Professor Farhad in the day session. I'm going to be meeting with Andre Polgar. Andre Polgar is the founder of One Minute Economics, which is a channel similar to mine, but it deals with economics. I strongly encourage you to go ahead and view it. But the main topic today is his new book, The Age of Anomaly. Andre is the author of this book. And in this session, he's going to tell us a little bit more about his channel. So if you're an econ students, you can check it out. And also, but what the most important thing is he's going to tell us about his textbook and a little bit about his background. So Andre with no time wasting, please go ahead and get started. Perfect. First of all, thanks a lot for having me on. And some of you might have come across a few of my economics videos over at One Minute Economics. And I've been doing it since 2015, although 2015 has been mostly on and off. So 2016 has been the year where I started genuinely taking the channel seriously. It basically just started out as me fooling around and wanting to make an animation or an animation or two. And I started with inflation, deflation, supply and demand, just the basics. And I said that maybe I'm going to publish one of these animations, let's say once every, once every couple of months. And I'm going to see what happened. Well, what happened is that people liked them and they encouraged me to make more. And I did and I moved on to stuff like how our banking system works because a lot of people want to know but few understood it properly. And I said, okay, let me try to teach fractional reserve banking. And then I said, okay, let me try to teach people about the infamous derivatives that everyone talks about when referring to the previous financial crisis. Let me try to explain those. And I've managed to do that as well. And basically I realized that I was reasonably good at making complicated stuff easy to understand. And not only that, on the one hand, I have lots of students who get in touch with me and say, look, I appreciate what you're doing. I finally understood things that I thought I was never gonna get. So on the one hand, there's the academic dimension or if you will, the part of my audience that consists of students, people who, you know, are having bachelors in economics, people who have MBAs and whatever. But on the other hand, I also have regular people, people who aren't necessarily interested in economics or passionate about economics. And my message to them has always been, look, no matter how hard you try, you cannot escape the idea of making economic decisions. And even by not making an economic decision, you're actually deciding not to do anything. And there are gonna be consequences. And at the same time, though, I understand that people have lives and families and whatnot, so I tell them, look, you can spend 10 hours binge watching stuff on Netflix and that's fine. But give me one minute of your time and in that minute, I promise I'm gonna teach you everything I know really about economics. And this is my main driving force behind the book I'm releasing this week, which is called The Age of Anomaly. I'm gonna show it to you guys real quick. Can you please hold it a little bit? Yes, The Age of Anomaly, Sparring Financial Crisis in Sea of Uncertainty. Thank you. Yep, it's a huge book. It's a huge book. It's like 400 plus pages. But those of you who have read my first book or those of you who follow me on YouTube are gonna know that I write in a very conversational way. So it's not gonna be as if there's this arrogant economics professor talking to you from his ivory tower instead. You're gonna think of me as just having a good friend teach you stuff, a friend who happens to be good at economics and money related stuff. And I feel- I agree. I tell people about my book that, you know, I'm not the type of person who panics. I'm not, you know, your average dooming gloomer who thinks that the world's gonna end any minute. No. And that's actually my main driving force because I assert that when someone like myself becomes genuinely worried, it might be a good idea to at least pay attention to the things I'm saying. And through the age of anomaly, I take things in a logical manner and I tell people, look, I'm worried about what's coming. I expand in the book and we're gonna chat about this a little later on about what's coming. And in the end, I have two goals with the age of anomaly. One, by guiding you through history, by drawing conclusions and, you know, finding common denominators, I try to help people increase the likelihood that they're gonna spot the next financial crash early on. But two, I also tell them, they need to have the humility it takes to understand that even someone like myself who thinks about these things 24 seven, pretty much, even someone like myself might be taken by surprise by whichever Black Swan event, for example, would cause deflationary shock or something like that. And therefore my second goal is telling people, look, you might not be able to predict, quote unquote, anything. So it makes sense to dedicate just as much time and energy toward becoming more financially resilient in general. And these are basically the two things I focus on because make no mistake, we are now having a comfortable conversation. We are living in times of relative prosperity and when for better or worse, systems are working. But I am worried about at least one major scenario in which, you know, one major scenario that we can consider generation defining. It's not, it's not, I'm not worried. And I actually would like to expand on this. And I'm not worried about, please go ahead. Yes, I could you just, I like your dot-com comparison in the book, how you go from the dot-com to the sub-prime market crash. Could you walk us through this and tell us how it happens, I read the book, it's interesting, but if you're just in your own words, tell us what happened to interest rate and how the effect of the dot-com planted the seeds for the sub-prime and what do you think is gonna happen next? I'm very glad you raised this point because actually let us start with the dot-com bubble. And I can use it to explain to people that I'm not worried about a market crash. Like, unlike many of my peers, like actually I'm a pretty hands-on guy, like I don't just, you know, talk about assets, I trade them as well. So if I'm not, I even trade, I even occasionally trade cryptocurrencies on leverage. So if there's anyone on this planet who isn't spooked by volatility, it's myself. But even someone, you know, for someone like me, this is what I wanna stress. I'm not worried about the market crashing. I'm not worried about, you know, a 60% crash or whatever. No, I'm worried about a change of narrative. And let us please indeed take one step back and remember the dot-com bubble. Yes, please. The market crashed. People were panicking, but the narrative was this. Don't worry, central banks and governments are here to save the day. Yes. And in fact, they have taken the size of action. They have lowered interest rates from 6.5%, all the way to 1%, which may not seem like much today, but it was a huge deal back then. Yes. And the narrative prevailed ultimately, quote unquote, that they were saved. But this came at a price because that easy access to cheap money facilitated the inflation of an even bigger bubble, the real estate. And as we all know, in 07 to 08, it collapsed as well. And this time, once again, the narrative was pretty much the same. Yeah, we have a market crash, everyone's panicking, but don't worry, central banks and governments have it all under control, except that the market demanded an even bigger dose of stimulus. Now, fortunately, from the 1% they were lowered to, rates had gone up in the meantime to 5.25%. So not all the way to 6.5%, but still, something decent you could have worked with. But still, it was not enough to lower them to 1% again. They had in the US to be lowered all the way to zero, and in the European Union and Japan, they even went negative. Negative, negative. But even that was not enough. Money had to be pumped directly into the system to the tune of 85 billion per month in the US, 40 in mortgage-backed securities and 45 in treasuries in the European Union, the ECB at the height of its QE pumped even more if we transform it in dollars. And in the end, just please think about this. In the US, from 1913, when you're Third Central Bank, the Federal Reserve, from 1913, up until the Great Recession, so in approximately 100 years, the monetary base had grown to $850 billion or so. $85 billion multiplied by 12 means that at the height of QE, they have pumped one trillion per year into the system. So more in one year than had existed from 1913 up until the Great Recession in almost 100 years. And this is what people need to understand. Of course, the business cycle does not scare me. Of course, we're gonna have another recession. Of course, there's gonna be another crash. And once again, most likely, the same narrative is going to be pushed. Yeah, don't worry, I know you're panicking, but hey, we're the government, we're the central bank. We have it all under control, except one. Not even in the United States, you know, we are now only once has it happened that more time passed between recessions. Yes, it's a decade now. Without a recession, it's gonna be a record. So cyclically speaking, if you wanna phrase it that way, we're kind of do or overdo a recession. Yes. And the problem is that in so many years, interest rates haven't gone up dramatically in the US. Let's not even talk about the European Union and Japan where things are even worse. So at least when it comes to the Great Recession, interest rates have gone up again to 5.25%. This time, the growth rates, the recovery rate of interest rates has been anemic, has been ridiculously anemic. Yes. So that's one. Then there's two, of course, much like a drug addict. The QE. The economy, once it has been hooked on, economic cocaine, if you wanna call it that, once it has been hooked on this, it's going to demand an ever-increasing dose. And of course they're gonna give it, they're gonna say maybe in the West for example, hey, we're gonna lower interest rates to negative 1% and we will pump 3.5 trillion into the system per year this time. If the market says, sure, then we might be good to go for another business cycle, but things are so ridiculous. And this is not a prediction, like if you're on the 10th story of a building and the guy or what tells you that he wants to jump, you're gonna tell him, don't jump, you're gonna die. You're not making a prediction. You're stating the opposite. It's a reality, yes. Yeah, and the same principle is valid in our case. The fact remains that sooner rather than later, the market is going to say no. And this no, not the crisis before it, that no is what bothers me. That no is what keeps me up at night because the knowing question basically means that the market will say, we no longer have confidence in the ability of governments and central banks to manage things. And unfortunately, people don't realize just how thin the thread is that holds our otherwise well-functioning systems together and that thread is mostly confidence. When that is lost, all bets are off. The banking system. One event could trigger that. Who knows what event? Is it the trade war? Is it who knows what the event would be? Perhaps maybe it's a trade war. Maybe it's a banking crisis over in Italy. Maybe it's something else. One financial institution, like just like what happened with the subprime market, Periba, just they went down and they brought everybody else with them. Exactly, exactly. And this confidence means that most people don't realize that there's no such thing or at least this is true for the overwhelming majority of banks. There's no such thing as a bank that could withstand it if three out of 10 people want their money back. Yes. Because we're on a fractional reserve system. Exactly. The same way, the same way the monetary system is confidence-backed as well. And once that confidence is lost, of course, institutions like the IMF have contingency plans. Like the IMF says, don't worry about it. If people lose confidence in the dollar in the euro and the yen, we're just gonna have a new reserve currency for the world is gonna be our SDRs and we're just gonna use that. But it's just, it's so foolish to assume that in a climate where things are serious enough to generate a loss of confidence on such a large scale, we can predict what's gonna happen. Would you say that basically the Federal Reserve, they used older bullets? There are bullets at this point. If something happened, would you characterize it this way? I'm not sure if they're completely out of bullets, but they're pretty darn close to it. Yes. That's alarming. That's very alarming, yes. It is alarming. Certainly alarming enough for me to say, look, I'm gonna just put my professional life on hold for a while and be all over YouTube. I'm on your channel. I'm everywhere promoting the book. Also, worth noting, I don't particularly care about the money. Like, for example, if people buy this book, if they buy it until Sunday, it's gonna cost 99 cents. And it's 99 cents for a 400 plus page book. I'm not exactly gonna laugh all the way to the bank after this promotion. And the same way, I have an email address set up which is called friends at ageofanomaly.com where maybe some people are gonna see this video when the price has gone up again. Maybe they live in a country that doesn't do business with Amazon and the places where the book is available. If anyone cannot afford the book or if anyone is not able to buy it because they live in a country that's not supported by these stores, just shoot me an email and you can put it maybe in the description, Andrei, sorry, friendsatageofanomaly.com. Yes, I will. And I'll give you a book for free. Like, I'm genuinely making this my top priority, you know? When you sell it- Yes, I see a lot of passion, a lot of passion, yes, absolutely. Yeah, like if someone, even if you cannot afford $1 or whatever it is, if someone wants to read my book, I promise I'm gonna get them the book. And this is kind of like the war that those of us like you and I who are in the education space are fighting. It's a war for people's minds. It's a world, it's a war for people's attention because you know how difficult it is to get someone to pay attention to education related stuff, you know? If we look at the disproportionate media consumption habits of people on Netflix and everywhere and how unwilling they are to allocate even a small portion of that time to educating themselves, to gaining knowledge, it's not even funny. And a lot of these people, a lot of these people are barely getting by. They're living paycheck to paycheck now when for better or worse, especially in the developed world countries like the United States, Germany and so on, for better or worse, at least systems are kind of sort of functioning, you know? And let's not even start to think about what would happen if these people who are barely getting by as it is have to deal with something similar to what I envision in my book. And the stakes are very, very high. Very high, absolutely. Very high in my opinion. Absolutely, absolutely. So at this point, what keeps you up at night the most, would you say, if you wanna characterize it that way? Concerns. My main concern is not so much, you know, my main concern has to do with the perspective of the average person because as I mentioned in my book, throughout history, throughout history, the average person tends to be on the losing end whenever something like this happens because inevitably, inevitably, when confidence in the system is lost, there will be a huge transfer of wealth. And that's precisely the average person that tends to be on the losing end of this transfer of wealth. And that is what keeps me up at night. And that is what made me, like I have, I think I've shot about 100 collaborations in anticipation of this book. I'm gonna be all over YouTube. I worked pretty close to 24-7 to kind of spread the word about my work as much as possible. And maybe I did it for a selfish reason. At the end of the day, I did it because I don't wanna feel guilty. I wanna say that after the next financial crisis, as educators, sometimes we feel that way. Yes, absolutely. Yeah, I don't wanna have kind of like this, this feeling of guilt ultimately. Yes, yes. Would you like to add anything? Would you like to share anything with my subscribers, with my viewers, with the world? What I wanna tell people is this. And it's the only thing I'm asking of them. Like if you pick up the age of anomaly, great. If you subscribe to my YouTube channel, I would be happy to have you on. But even if you don't wanna do that, at least don't close this browser window and move on with your life. I consider it a huge, huge win. If you guys just take a few minutes to meaningfully think about the things we've discussed. Do your own research, draw your own conclusions, but at least think about these things because there's no escaping them. And when the inevitable occurs, because again, as you've seen, I'm not in the business of making predictions. As far as this campaign up, I'm honest concern. As far as me spreading awareness about my work is concerned, I am here to state the obvious. And this is what people need to understand. We are on an unbelievably, unbelievably unsustainable path. And when it all comes crashing down, and again, history is our guide. It's going... And you did a good job historically outlining that process. You showed it again and again at the beginning of the book, historically crashes do happen. And you had multiple, multiple facts of that. Exactly. And can I tell you exactly when and how things are going to unfold? No, I cannot. But what I can tell you, and this should be, I think, the conclusion of our show, what I can tell you is that I would much rather start preparing a year too early than a week too late. I see. Absolutely, absolutely. Thank you, Andrei. This is Farhad Accounting Lectures. Once again, One Minute Economics. You can check it out as an accounting students. Thank you very much and good luck. Thank you guys for watching us. Take care. Bye-bye.