 Today I am here with Ray Dalio who needs no introduction. Most notably Ray has a new book out Principles for dealing with the changing world order. Why nations succeed and fail ray welcome Thank you. Thank you for having me The very first sentence of the introduction in your book is this quote the times ahead will be radically different From those we've experienced in our lifetimes though similar to many times in history Unquote do we see this today and current market prices? And if so, which ones? We certainly see it today and market prices and in everything that's happening. So There are Three sometimes maybe we could stretch that to five big things that are happening and they are reflected in market prices And the dynamics behind them and their change Will reflect will be reflected in changes in market prices and those three those three big ones are first that which is happening with money and credit in other words when you get close to a zero interest rates and You spend a lot more money than you earn Then the government does that that means that a lot of money is printed and it moves its way through the system in a way that is reflected in market prices and So that is what is happening now the second is the very large internal conflicts that we're having that are due to wealth gaps political gaps And so on that influence the left and the right and the dynamic between them That affects tax pro policies that affects capital flows and the like and They're reflected in market prices and will change as those circumstances change And the third big influence is the rise of a great power China to challenge the existing leading power and the existing world order and That is being reflected in market prices But will be reflected more as those circumstances change So those are the three big influences to answer your questions that are Reflected maybe not yet adequately and we have to look ahead of what things will change the other two are That have been reflected through history and I didn't have a full appreciation of until I studied the last 500 years of history those two are Technology and inventiveness changes We're accelerating the rate at which they are occurring and that Adaptability and change is affecting our lives in big ways. So you cannot ignore the Technologically and inventiveness changes and the fifth are acts of nature You know, the one thing that was interesting to me when I studied the last 500 years of history is that acts of nature and they could be climate related droughts and floods and pandemics had cost more lives and toppled more civilizations Than anything else, including wars. So they are something that comes along Irregularly, you know when you have the pandemic or the drought or that that event that comes along once in a hundred years Or so they have had big effects too So pandemic is a reminder of those but those are the drivers and they will remain the main drivers and As they change Prices will continue to change But if I look today say at equities prices, they seem fine if I look at the 10-year yield for the US It's not crazy high Should I just assume that these matters are more or less going to work out fine given those market prices or are those prices wrong? No, I think you have to look at the dynamic behind those prices And I think I would look at them a bit differently Regarding the dynamic behind those prices It is that we are spending more than we are earning by a lot individuals and the country as a whole and That that Needs we need money that the partially because of the political issues partially for all the reasons you that you know So a lot of debt and my debt is being created that is also Producing the need for a lot of money and as a result of that we have very negative real interest rates real interest rates of short-term interest rates are significantly negative and even bond yields real bond yields are Over a hundred basis points negative And so when one looks at the return of owning those bonds That is a a very bad return I don't it means that if you save in those assets and you put it away that you will lose buying power at probably a rate of 3 to 5 percent per year we can guess what inflation is and we could talk about that But you will lose that and that tax on your buying power Makes one will not want to be saving in those assets that it want it makes one want to borrow in those assets and the availability of credit credit and the that set of circumstances drives money into other assets and into those assets are in investment assets As well as goods and services and so what we see now is that stocks are not expensive Not very expensive maybe a little bit more so than normal relative to bonds Which are very expensive, but still not expensive in relation to cash And so they are all Having unexpected returns that are comparatively low and we have an inflationary period So it's very important to understand the paradigm that we're in and how that dynamic works And so as the inflation pressures Become an issue and we have relatively let's say stronger growth Those things will start to change and so the big question That the markets look at is how will that change as a result? I will the Fed or reserve and until central banks begin to tighten Monetary policy because these things will change and what will tax policies be and the like and those things will affect Market prices going forward. It's unsustainable Help me put this in the context of finance theory if I look at the literature on finance It's very hard to predict excess returns. We're not even sure beta predicts excess returns firm size Maybe a little price to book value. Maybe a little Are you suggesting that the factors you're citing predict excess returns? If so, why don't we find that in the research literature? If not, why do we think they have predictive power? Do they predict excess returns? Polarization credit rise of China they don't seem to in finance papers You know, there's so many people who write finance papers and then there are people who? Make money in the markets. I can't speak for those who are writing the finance papers But I can't answer your question in terms of the predictive value of those things Okay So as we deal with the mechanics mechanics of debt or excess returns there's always throughout history a debtor and a creditor and There's always throughout history the ability to create demand by creating debt and by creating money and Then there become clear preferences for doing one or the other There are environments like the late 1970s when Federal Reserve Chairman Paul Volcker tightened money and wanted to make it good to save and Bad to borrow and have credit that set of circumstances Was caused and that action was caused by things that happened before it and that produces high Real interest rates and the like and that produced the environment that we had Largely the disinflationary environment that we had that followed similarly the 1960s led to the 1970s the 60s had too much debt creation due to war and Vietnam and What we call guns and butters policies that were spending more than we were earning and that led to the necessity in 1971 for the Federal Reserve for the president of the United States to Acknowledge that they would no longer be able to pay The dollar claims in gold and to default on the gold claim and to devalue the exchange rate and to devalue the dollar which led to the 1970s inflation and so on so there are always all through history The dynamic in which there are high real interest rates and it pays to be a saver For sometimes and there are times when there are very very low real interest rates and the need To create a lot of money and credit and it pays to have assets Of the opposite side of assets and busy been positioned In the opposite way and that's been true throughout history and that's the main driver So I think when we look forward we can use those as guides To what's likely to happen in the way of excess return. It's in fact the way the system works in other words and investors borrowers and lenders look at the relative expected returns of cash bonds and Other asset classes and move their money between those things Based on the relative pricing and that's why for example when there is a rise in Interest rates a tightening of monetary policy and short-term interest rates are risen rise Relative to short longer-term interest rates So the yield curve begins to flatten and so on that we see that there is a slowing in the economy and a slowing in Capital availability lending long-term lending. There's a shift to Saving and as a result there's a slowing of the economy. That's to me how the system works If I look at the macroeconomic literature, it seems to me even GDP when we run statistical tests It's hard to distinguish that from a random walk with trend. So there's not a lot of obvious mean reversion in the system I would I don't see it that way. I wouldn't have been in the business. It's not work that way I couldn't I You may I think we're referring to different things You're referring to what you're reading in the literature now I'm referring to my 50 years of experience and what I'm doing and so we have a different perspective about those things But tell me what's wrong with the literature Those are actual numbers taken from government databases. You run statistics on them Returns are close to a random walk GDP is close to a random walk with trend It's not random at all. In other words, do you think where interest rates are is? Random Do you think do you think it's random? Do you think? That if these things change let's let's let's take that example if do you think that? It would be random that the Federal Reserve would type monetary policy Do you think it's random that we're having inflation pressures? Do you think it's random? Do you think those things are random? I think the market has a model of what will happen. It's hard to beat that model But look at it this way. The factors you're citing to me. They're publicly available information, right? We're we're talking about them on a podcast. Why shouldn't they already be in market prices? The market is like any it's like a poker game I've played the poker game for over 50 years and I'm saying there are It's a zero-sum game relative to what's priced in and the smart people take money away from those who are less smart and That's the way it works. I wouldn't be in the business. I wouldn't be on your podcast. I presume unless that was true Well, it's one thing to think some people are smarter than others But if they're smarter than others with respect to the ability to just spot publicly available information It seems that's easy to copy We should then be able to go back in history look at those same pieces of information and use them to predict expected returns But we can't do that Well, some can and some can't and I guess you look at the track records over long periods of time and you decide who can and who can't Let me ask you a few questions about reserve currencies Which is a key theme in your book if deindustrialization is a real problem including for national security Isn't having a reserve currency actually a disadvantage? I'm sorry. I didn't understand your question. Please clarify your question if deindustrialization is a problem for a nation's middle class for its national security The deterioration of its capabilities to earn money industrialization You your services would work just as well. It doesn't have to be in the industry per se, right? So by deindustrialization I presume you mean the weakening of its earning power And the weakening of its economy is that what you're referring to and it's hard for the United States to build its own ships We depend on inputs say from South Korea So a strong dollar in that sense is bad Isn't it then also bad if the dollar is a global reserve currency rather than good? No, it's the dollar as a reserve currency Gives one the ability to print the world's money And is that on net a good or bad thing? net net It's like debt. Is that a Net good or bad thing it is both a good and bad thing being able to create debt Gives you the buying power being able to Print the world's currency such as when we were in the COVID crisis and being able to Print the currency that around the world will be accepted allowed us to get sell more debt that We could sell more debt Because when you buy debt, it's somebody else's Currency in other words when one owns debt the seller of that the buyer of that debt is owning your promise to deliver them Currency and when you have the world's reserve currency, it allows you to get into more debt Now it getting into more debt has historically if not done correctly or not done sustainably In a way it creates obligations to pay back and those obligations to deliver currency and pay back have produced different types of problems in the future and So debt is very short-term Stimulative and it's longer-term Depressing and the ability to do that and have others take on our liability as John Conway said when he was the Treasury Secretary And the dollar Was the valuing and a risk He said The dollar is our currency, but it's your problem and that has a net benefit It's a net benefit, but it like most things It can It's cyclical because you have to pay back and it produces problems Sometimes when you pay back so the United States is more indebted As a result of it being a reserve currency and it all depends on you know, who's going to get stuck with that But Germany in Japan can often borrow at lower interest rates than we can so does having the number one reserve currency matters so much It matters to the extent that Germany and Japan don't have anywhere as much foreign debt and their their amount of Japan has incredible levels of debt It's domestic, but they still find people willing to take it. It's domestic debt You can trade it on foreign markets right trades at very low yields, but it's domestic debt In other words, they found their population to buy it. They're a net creditor country The United States is a net debtor country. Sure But again at the margin if you look at the debt position of Japan how much of it they've de facto monetized By trading for zero coupon bonds the fact that debt sells perfectly well on global markets for the prices and yields it does The fact that if the The main almost all the main owners of Japanese debt are the Japanese central bank and the Japanese population It sells very little on net on public markets Oh sure, but the yen is traded internationally and Japan has done this without the value of the end collapsing hardly Because of the supply demand that I've just described to you. I mean if the United States had to say if We would then have to have this giant debt monetization We would have to do what they are doing and they'd have to be in a whole different position if we had to take our debt the external amount of debt and then say that we're going to get into a creditor position and That we're if we get into a creditor position and then we're in a situation where All of our populations owning it then we could be in a position. That's analogous to that But I think I've answered your question. We just have a different view If we think about macroeconomic cycles Christina Romer claims a lot of downturns are the result of Fed contractions Jim Hamilton claims that some downturns are the result of high oil price shocks And you have a theory of debt cycles if you're just trying to portion out mentally How many of the cycles are Fed contractionary shocks? How many are oil shocks? How many are debt cycles? How do you see that landscape? I think that there is There's goods and services that exist in a certain quantity and then there's a certain amount of money and credit and they interact And that throughout history if you have let's say an oil shock That is not Accommodated by an easing of met Central bank policy in other words of the production of more money and credit Then if there was when I'm saying if there was the same money and credit and you had an oil shock Then as oil goes up something else would have to go down and it would produce a Set of circumstances one set of circumstances. It wouldn't produce the same inflation it wouldn't produce it would produce a consequence And it would produce a transfer of wealth from those who are Selling the oil at a high price. They get a what they get gain wealth And it would produce a decrease in the wealth from those who are Having to pay that higher price so for example, it would make Middle Eastern countries richer and it would make American country companies and American entities poorer and That's what would happen in a world in which We were to look at those items and that certainly can cause a downturn in the economy Similarly now where you can print money and credit you can create money and credit and it could have its effects But to answer your question about Do do oil shocks or Fed policy have an effect? The answer is both because for other reasons the tightening of money and credit Reduces demand for things and as a result of the reducing the demand for things it Weakens the economy so both an oil price shock or some of the shock or Federal reserve tightening can cause the economy to weaken But so that's sort of the answer to your question and then it would have different implications Depending on whether the central banks provided more or less money and credit We're speaking in November of 2021 Are currently observed rates of inflation in the United States coming to be transitory? And what do you understand by that term? Well, I'll start I'll start by what I understand by the term and then I'll answer your question by transitory, I think everybody understands that to mean temporary shocks that Don't become Chronic and therefore we don't have a chronically higher rate of inflation. We have It sort of settles back to the older rates of inflation that existed before it, but it doesn't it's not a Problem that's what I mean by A transitory did you agree with that definition? Sure, that's fine. Yeah, okay, so in terms of No, I don't believe it'll be transitory. I believe that There are there are two main sources of Inflation there's the usual supply and demand for goods cyclical inflation so that when there's a Demand for something that there can't be a greater amount of supply being produced for it There's an upward pressure in that price and so that comes from strong demand Pressing up against capacity limitations that cyclical inflation and it depends on how far the central bank Accommodates that so that's the cyclical inflation. The second is monetary inflation when the the production of debt as large But the central bank produces more money and credit that has the effect of Devaluing the value of money and credit which doesn't show up really as it look doesn't look like it is going down As much as it looks like other things are going up so that you see Things going up as they are now and then And that's monetary inflation I think right now we have both cyclical inflation and monetary inflation so that if you look at The demand for everything right now the demand is greater than the capacity. It's really a demand excess demand issue but Provided by a lot of money and credit being put out and we also are running Large deficits and as we start to look farther forward And we have these very cheap interest rates, which means that it pays to buy things like like let's say houses I mean practically there's no interest rate to speak of and now a lot of loans are made on interest only loans even so with hardly any interest rate and Not having to pay back principal payments in terms of the amount of ridiculousness that it's gotten to that way There's a lot of demand for those kinds of things and now that could be cyclical But I don't believe when I look forward that our deficits or the Will be primarily cyclical so I look then to the issues of politics and The the issues of the deficits and the needs for money and credit or the desires for money and credit And I think that they'll be structural and I think then also there are certain changes in expenses for example while I believe that climate change and Moving to cleaner energy and other such moves is very good for our Ecosystem in the long run. It's also very expensive and it makes less Efficiency so that's going to at that same time add to inflation. So yeah, my worry or belief is That that will increasingly be built into the process, which we're seeing for example in terms of Changes in compensation Changes in many many things everybody's seeing inflation around them And it's not just something that's going to settle back So if I take the cyclical piece, it's going to require enough of a tightening if you would have to deal with that enough of a tightening in in monetary policy to stop that buying and that the Consequences of that would be very bearish for Markets and it would be very bearish for the economy and I believe Too bearish for the Federal Reserve to want to tolerate and that would only deal with the cyclical inflation pressures Whereas at the same time we have the structural issues of those kinds of deficits that need to be monetized So for those reasons, I don't believe it's transitory that we will go back to what we experienced before If you had to describe it in its most fundamental terms your advantage as an investor compared to other professionals Is it that you're smarter you process more information you have better managerial methods? How would you pin down your unique advantage and expertise? Well a few things I I Systemized and built an organization That Systemized the process to seek the timeless and universal truths of the cost-effect relationships so We have you know, we have 1,400 people or so We have we spend hundreds of millions of dollars each year on On data and quantitative and and I think it's really that The building of timeless and universal Decision rules that have gone back. I'm when I say timeless and universal I learned What Early on that many things that happened to me and came as a surprise Were things that didn't happen in my lifetime But happened many times before the first of those in 1971 I was clerking on the floor of the New York Stock Exchange When on August 15th President Nixon got on and said we are not going to pay the gold I went on the floor of the stock exchange that never happened to me before I thought it would be a crisis and everything would go down and I and I was a Totally wrong and I found out that at the stock market that morning went up more than it had in decades And that led me to research and find out that in on March 5th 1933 the President Roosevelt did the exact same thing and it led to the exact same result and I learned at that mistake I learned that Things that I happened in my lifetime, but I didn't have but but happened before and I didn't experience were good Just rules and so I needed to study for example the dynamic of the Great Depression and by studying that dynamic of the Great Depression I and we at Bridgewater were able to anticipate the 2008 financial crisis and do very well in it only because we looked at those things that happened You know before and so it's that which led me to do this study I did this study not to write a book. I did the study because Because these things that are happening now did not happen in my lifetime So I wanted to study the cycles and like the rise and decline of reserve currencies Empires and so on so I needed to study the last 500 years and so what is conveyed in this book is What I learned from doing those studies those patterns and I put it out there for people to judge for themselves The merit of of them. They can judge for themselves. I I understand different people might have different views And it's totally their prerogative It's out there for people to learn and it's been that approach and the system is Asian of that approach With a lot of great people that has been the basis of our success Your management idea for radical transparency. Where did that come from and how did it evolve? When did you start it? You know, I started Bridgewater I didn't even think of it as starting as a company, but I just two years after I got out of school and then and it was a You know me and there wasn't a company really there was somebody I'd Played rugby with and we and then a couple other people and the idea was where We're gonna be truthful with each other Truthful and transparent. I have this belief that what brings me satisfaction is Excellent work and excellent relationships and I believe that I was taught it really in the markets through my experience That being as accurate as possible is my goal than that to get at truth What is true is fundamentally important in both? making better decisions and also Making good relationships trustful relationships. And so for that reason I it seemed apparent that Whether it's in the markets or it's with dealing with people that Being radically truthful and trying to work things through to find out what the best thing to do given those realities are is Fundamentally beneficial. So I think I was All through my life maybe to some extent I was influenced to do that It just seems like such the such the op Obviously Better thing to do than to be the other. I think it's very odd that the world questions Being very radically truthful and radically transparent with each other to try to find out what's true That's I think that's a that's a problem that the world faces in terms of Those sort of things but anyway, I came by it that way and I wouldn't compromise it and as the company grew so as I say we grew from a couple of people and my Two bedroom apartment it came out of the other part of the other bedroom and then it grew and as we grew to you know, let's say 1500 people there needed to be an organization and a culture that is built around those things and And and and so that became paramount importance and so we built our culture and it's and it's it's not for some people and it's great for other people and so with time We've done that and and that's what we do and that has served us really great It served us not only in terms of the investment management aspects of it But it's also served us very well in our Relationships that we can talk about anything frankly and that we can deal with anything and as a result of that It produces the dealing with things well, and it also produces better Relationship so it's been something that I believe it has been key to our success And it's also something I recommend very highly I understand people aren't used to it and so on it can be adapted to it and it so I recommend that That's how it developed and what's your model for why more of the world hasn't followed suit? Is it that leaders are cowards too many workers are too emotionally fragile just status quo bias or or what? I think it's It starts partially Neurologically and partially How we're raised There's an instinct to view disagreement as a fight There's a fight-or-flight response sometimes to To disagreement rather than a curiosity to try to find out What's true, and then I think that we're raised in an educational system in which people are Reinforced for having the correct answer like there is a correct answer I mean certainly there's a correct answer two plus two is four, but sometimes in things that there isn't and that to not know well or to And to disagree are you know bad things and So I think we're raised that way And I think it becomes sort of a habit that Disagreement Causes angst so my theory I asked neuroscientists. I asked psychologist about it and They come back with those kinds of answers as to why that's the case But I do find that I found it in in Bridgewater in other ways that that's pretty For from for most people not maybe half the population or more With practice and in an environment in which it's valued intellectually And that they can get used to it and then not want it any other way So if let me just reverse it and I would I would sort of say like Like I would say to anybody Do you want me if we disagree do you want me to have a good conversation with you like maybe I think you and I are having some Disagreement as to how the economy works or whether the markets are efficient and so on. Okay Can is this a good thing or is that something that produces angst? I think it's a good thing and then And do you want me to be totally transparent with you about what I think or do you want me to hold it to to myself and And ask you the same question. I'd say it I want to hear whatever you think and And and because if it's on the table We can deal with it and if it's not and so there's two parts to our brain There's the Intellectual part of our brain and there's the emotional part of our brain and the intellectual part of the brain Usually says yes I would like to know and I'd like to be able to have that exchange and the emotional part of our brain Seems in conflict with that. That's what the psychologists and Neuroscientists say and that's why it's interesting to them to see how we've created this Different sort of culture. It's not it's not easy, but it's like It's like eating healthy and doing exercise or so on and if you're around a lot of people who recognize that It's healthy and you lived in that kind of an environment You probably would not you'd probably want to do that and You in fact maybe not wouldn't want it to be the other way. So many people who Work at Bridgewater would find it very difficult to work in most other companies because it wouldn't operate that way So that's what I that's what I think causes it. That's what anyway experts who are more expert at such figuring out the reasons explained to me and That brings true and it's been consistent with our Experiences with work from a distance. We're now recording many more business calls So do you think your method of recording every conversation in the company will actually win out through a kind of backdoor mechanism? I think The recording just to be clear is for the purpose of providing transparency because I Think that the wrestling around with questions Is something that a lot of people don't get exposure to and so when I was running the company? You know and everybody comes out with answers, but not no real thinking behind those answers that wouldn't be something that I would have wanted if I was in their shoes and So I wanted to share that now what? It's something people could do or not do it. You know, you don't have to record it. You can't record it truthfulness, but the the being the putting up the reality of if it's true and you You could show it and everybody will judge whether it's true for themselves So that recording and showing it I don't know whether others will do it or how they will use it. I suspect they're not Using most of those to try to get at truth. I'm just saying that that's helped me and us a lot What do you think you know about psychometrics that other bosses do not? How do you use psychometrics more effectively? Well, I think I know a lot about Psychometrics because of my experiences and the pursuit of it as an important interest to me And I think that most Bosses don't know anything about psychometrics and I would encourage them to learn about psychometrics. So psychometrics Psychometrics are means by which asking a bunch of questions and so on helps to measure how somebody Thinks about things. It's common sense if we ask a bunch of questions We can learn about what your profile is so online for free I put out our Version that I worked with three great psychometricians to produce and people can experience them for themselves It's called principles you go online It takes about a half hour to do and see how well it describes How you think what your preferences are and there's a cool thing That allows you to have somebody else do the same and you could put it in and you could see what? It how it describes your relationship Based on how you think now the reactions to those things have been amazing that they're amazingly effective But it's not a new science. It's something existed a long time ago started a long time ago I started because I saw that people people's approaches to thinking were different and And I didn't understand it. So I gave a hundred and fifty managers in my company first the Myers-Briggs test and It came back and I asked them how accurately it described how they thought rated on a scale of one to five 85% of them said it described them as of as a four or five. So very well and And I read these descriptions and in some cases I believe I said I can't even believe that people think that way we are thinking ways are different and Based on those preferences. So yes psychoma psychometrics. I have spoken to the best psychologist the the ones who helped me build this other Test that is now available free for everyone principles you it's called. It's free online Was developed with me working with Adam Grant John Golden and Brian little and if you look at their credentials and so on they've been doing this for lifetimes and So they're the experts. It's that's my interest and that's why I have an interest in it And I think other people who run organizations or really have to deal with relationships should look into What psychometrics can do to help them? Do you think Bridgewater on net is selecting for agreeableness or disagreeableness as one might express? We much prefer dishonest thoughtful disagreeable agreeableness because We don't want Answers as much as we want reasoning to examine the reasoning that leads to the answers If you apply psychometrics to the United States of America our moral character and psychology, where exactly are we falling short? most of all I think the I think the greatest problem that we have is Fighting with each with each other over views and opinions to the point that We are risking a civil war And the question should run for all disagreements and all major disagreements is How do you know you're right? You know if two people are in a disagreement About There are opinions of whether you like something or not. So let's let me put them into two categories You have an opinion about something. I have an opinion. Will the stock market go up or down or in Is tomorrow going to be like this or that and we have an opinion that opinion If there are two people have an opinion How do you know you're the one that has the right one or the wrong one? I've learned from mistakes that That's my I worry about being wrong and That by worrying about being wrong. I don't know if I'm the wrong one or the right one The only way I can get to that answer is to find the smartest people I know who disagree with me and I hear their reasoning And that's a that's a path that Has has worked well, but I think if we now apply this to The country as a whole and we have disagreement The our biggest I think our best question is how are we going to successfully and not? antagonistically get to the desired answer and so I Think it requires thoughtful disagreement frankly I think there's only two things. I really care about I don't I don't care about Care more than anything that we together as a country Come up what resolve our differences as democracy used to work resolve our differences and be productive if we can be productive and resolve our differences So that we have internal order and harmony I don't really care much about other things there are some opinions that It's got to be exactly this way or that way and I think that we're in a dangerous situation I have a principle which is if the cause you are behind or the cause the people are behind Are more important to them than the system The system is in jeopardy and I think that's the case now. So, yes, I would wish that If I was President of the United States, I think it's such an important thing. I would probably have a buy By partisan cabinet and I would try to bring together the middle of the middle And then have those in the middle try to deal with those at the extremes because I'm afraid that those at that There will be a pulling to each of those extremes And that there will be irreconcilable differences between those extremes and that it will Threaten rule of law and threaten democracy So that's what I think about it as it relates to politics and government It's striking to me how much your approach to US history is Informed by what I take to be an understanding of Chinese history. So the cyclical emphasis, but what is your favorite Chinese dynasty and why? well, I I studied Just to be clear on your first statement. It's not Chinese or American as is described in the book I took all powers that existed over the last 500 years 11 of those powers the Empires the rising and I looked at them all and then I also because the patterns existed in China and China's I feel I need to understand China. Well, I also took the dynasties back to 600 So I saw these patterns over and over again and they're not Chinese. They're not American They're universal because human nature is human is universal And anyway, so when I look at a Chinese dynasty or a great European power and so on There's the parts of them. They all have risen and they have all declined and So when we say that we like a dynasty I like the things that make it rise and be healthy And I don't like the things that make it to climb and be unhealthy So I don't feel there's a dynasty or an empire that I admire In totality, it's those things that I admire and what those things are Across is they're measured in the book. I gave 18 measures of them But there are certain basic things like and that they come down to a lot and one it's like It starts partially with leaders who make things work well There's a cycle there's a new order and a new order means that after some conflict the new power takes over They win and that there's a leader or leaders Who then at that point have to consolidate their power from those who were in opposition to them and so on and then they have to Build a direction and that direction comes down to basic things such as first and foremost Education and when I mean education, I mean both education Of facts like Kent. Do you know your these facts? Can you and can you read write and do arithmetic kind of thing? but also Education in civility on how to behave well with others and your personal responsibility which is usually traditionally has been a guided by the family or Guided by could be guided by religion it could be by in the schools But to know how to be a person of good character and relate well to others so this the science Dynasties that did that and you could look at the beginning of all of those dynasties the Tang dynasty The Song dynasty the Ming dynasty just as you could look at it in terms of the early stages of many many empires Including our own the American Empire and after World War two particularly, okay education and then converting that education and that civility to Productivity to be able to work well in a harmonious way with each other competitive harmonious way to raise the Living standards so that you are earning more than you are spending This is a fundamental thing productivity and earn more than your spending so you don't depend on the building up of debt that eventually you can't pay back and Then and that rise and then there's I see in all these dynasties and all these empires That there becomes then more debt creation sometimes more speculation And there become greater gaps greater Always they become greater wealth and opportunity gaps wealth gaps because the cycle Produces of this different opportunities and some people make a lot of money and others don't so naturally produces a wealth gap But that wealth gap can be self-reinforcing Because the parents who are who have more money give their kids better Advantages and they have more power than those who are Born into families that don't have much and so they become that wealth gap And so and then they become higher and higher levels of indebtedness I've seen this all across countries all across empires and then sometimes because they have borrowing capacity Like having a reserve currency they can borrow a lot of money They do that and so they produce larger wealth gaps more speculation and Larger and larger wealth gaps and then something comes along like they can't do that They can't live on the debt anymore or they And their various reasons and then you see deterioration you can see deteriorations in even the notion of What people are going after you know some of a poor family having to struggle Or a poor society having to struggle develops different values than one that is born rich and And is operating that it can be in fact decadent in terms of you know The way that they're operating and so on and that's an ingredient to decline And so all of the dynasties that are all of the societies that I've seen Have had that and in many some cases acts of nature came along to where there's And there's an internal conflict over the things I just mentioned They're not having all of them not having enough money printing a lot of money Being in a situation where they're at odds with each other And then often the rising power challenging that so you see the decline of the Ming dynasty For that reason you see the decline of the Qing dynasty. You see the decline of France You see the decline of others for the same reasons there are these Also these foreign powers that there's a conflict with and everything and then sometimes there are these acts of nature like the that the big drought or the big Flood or something that causes a famine or a Pandemic and then that happens and then that throws everything in the kilter too. So I see those patterns happening over and over Everywhere so I there's no one dynasty There's just I like I like those that do it well, and I don't like I don't admire those who don't How does transcendental meditation? Improve your work relationships, and why choose that kind of meditation rather than some other? Um Transcendent I I'll take your second question first. Just circumstances led to me. I Learned transcendental meditation because it was the thing that came popped in front of me, and I was lucky enough to grab it it was when the Beatles went to India and and they said they talked about transcendental meditation and it's a big thing and There was a center in New York and you and then I went and I learned then and that was Well, that was 1969 so many years ago that was a long time ago and okay now how it affects Transcendental meditation Like I gather a number of other types of that meditation has a mantra and a mantra is a sound that you repeat in your mind You're sitting there quietly and maybe one might think of something like ohm would be a Classic example you repeat ohm in your mind when you're sitting there quietly and what that does it takes your mind away from your thoughts Your thoughts are like jumping around and they call it monkey brain You know, you can't control your thoughts. They're jumping all over and by repeating that word or sound over and over again You eventually learn to Go into that sound rather than it sort of crowds out all the other stuff and then eventually it disappears and then you go into Trans transcending let's say transcendental state Which means that there's quiet and peacefulness and you actually don't see anything and you're descending into your subconscious Now your subconscious Is like the word implies it's below what we're conscious about but it's very important in how we think most of our decisions really Come from our subconscious, you know, we talk about emotions and things there They're subconscious and when you're in your subconscious and and you've got this peaceful state not only does that peaceful state Give you tranquility and so on and very restful, but it also gives you an equanimity of calmness and a clarity and it taps into your subconscious because in your subconscious is where the Creativity comes from, you know, you don't sit there and say I'm gonna work hard to be creative Creative ideas are the sort of things that come to you in a hot shower You're not even there and then this idea comes to you and it bubbles up and so by putting it With the subconscious, that's good You tap into that and then what I found is that aligning the subconscious and the conscious Is also like aligning the emotions with the intellect Because we get mixed messaging, you know, like I say, it's like your two brains Your conscious brain that might be your logical brain and then your subconscious brain That's your emotional and and you're getting different messages And so the meditation helps to align those and deal with the things that are coming at you And of course my business and my life Brings me a lot of things that are coming at me and they could be, you know, stressful or they could And I find that by being able to have that kind of state of mind where I can align them Remain have that equanimity and make the decisions. I found that to be very helpful What do you enjoy most in jazz music? I I Enjoy most the Combination of extreme talent and spontaneity Particularly when people can do that together That is something when you listen to really talented musicians who could do it like improv and They can play off of each other and do it that way name a group Well, yeah, I I particularly like Jazz at Lincoln Center and I like Winton Marsalis and the Winton Marsalis band Three quick questions to close. I'll just give you all three First, why are we undervaluing the ocean right now? Second, why are Kate Buffalo dangerous and third? What are you going to do next? The floor is yours The First let's establish that the ocean is the biggest thing on this planet the most important environment We undervalue it because we don't have contact with it It's like a sheet the earth Above the ocean the deepest the highest point ever is is Equal to the greatest depth the Marianas trench 11,000 meters They are both the peaks of the same, but the ocean is 72% of the world's surface So that means that the space and what it's occupying and the lives that live in it and all of that is more than twice as large as all of the continents combined and it has an Enormous impact on our lives, but when we look at it, we just see this sheet Over it that is that that's going up and down and we don't explore it and we don't so people who haven't had Have haven't seen beneath that sheet or Intellectualized what is beneath the sheet are undervalued for that reason for me? I Jacques Cousteau helped me and excited me and so as a result of that I Have been excited about the ocean and I realize the importance of the ocean and as a result One of the things that I've passion of mine I've created a ship, which is the best oceanographic exploration and media ship on the seas and it is Capturing it's we have explorers and Scientists go on it and they use it and they capture that and then they're going to be showing that on National Geographic and Disney Plus so that people get inspired about it But anyway, I think it's for that for those reasons that they don't and I'm working to rectify that by making that availability It's called ocean X if anyone wants to go on and see what it's doing you can go on You can search for ocean X and it'll explain that but that's Cape buffalo Well Cape buffalo are Have killed more people than any other species more than hippopotamuses have Even more than hippopotamuses What what they are Okay, so what do I think about Cape buffalo? I think you're probably Referring to my having bow hunted Cape buffalo Which is I Love being in nature. I love the interactions with species and So that that experience Which is you know Requires focusing one's attention playing the edge correctly and being in that environment is something that Is Has been something invigorating so I assume that's why you're asking that question And as terms of what is coming next I'm in I'm 72 years old I'm in the I'm in an arc There's a life arc and I'm in the part of the life arc of transitioning Out of my second phase of my life to my third phase of my life I believe life takes place in sort of three phases the first phase is you're dependent on others you're learning Second phase, you know, you graduate from school you graduate from whatever College or high school and you go and you go to work and increasingly Others are you're working and others are dependent on you and you're trying to be successful And then as you go to your third phase in life You No longer have any desire to be more successful yourself You start to care about others and you particularly care about others who will be beyond your your children your grandchildren and the like But also the society and what you want to do is Instinctively pass along those things that have been helpful And that's the phase of life that I'm in and so while I'm still Playing my game of the markets and the economy I'm also so I'm doing these studies and doing these investments and all that I like it The the joy of transitioning my company to have others run it my family It's like I'm having my family adult children I'm my I don't want to be responsible for their lives I'm there when they need me and so on and I'm here to pass along the things And so I think that what's next for me is I'm I probably will There's this book which is passing along what I think are the most important things of our time And thoughts people could take or leave them, but I think they're important others have thought Henry Kissinger Larry Summers others have Said that this is a very important book and anyway people could judge for themselves My next will be to complete my Economic and investment principles because I do think differently about economics and investments and some people Which I believe is what has given me the edge So I'll I want to pass that along. I imagine then in something therefore like a year or two I will do that and then I will go quiet Again everyone raise a new book is called Principles for dealing with the changing world order why nations succeed and fail Ray Dalio. Thank you very much My pleasure. Thank you very much